Consolidate, Integrate, Or Liquidate – Cost Curve Shifts & Oversupply Pressures Reshape Global Chemical Markets

Key Findings

General Thoughts: The global petrochemical cost curve has significantly flattened YoY, adding risk to already oversupplied markets, and sector restructuring and consolidation activity is gaining much-needed momentum.
Supply Chain/Commodities: We discuss the OMV and ADNOC consolidation of Borealis and Borouge and their planned purchase of Nova Chemicals. Shell is also considering divesting its US and European chemical businesses.
Energy/Upstream: Aramco reported 4Q24 results this week, and we joined its earnings call this morning, where management discussed the benefits of integration and pushing its upstream products downstream into chemicals.
Sustainability/Energy Transition: We joined the Plug Power 4Q24 conference call following news of its significant restructuring activities called “Project Quantum Leap” – we think “Project Prayer Circle” would be more fitting.
Downstream/Other Chemicals: We discuss recently imposed US tariffs on Mexico, Canada, and China, our more constructive view on US corn relative to soybeans, and US ethanol exports and potential trade retaliation risk.