Breaking Bad: US Inflation, China Supply, Crude Consequences

Rising US inflation expectations and policy uncertainty risk further eroding consumer confidence, US export competitiveness, and domestic chemical sector investment amid enduring oversupply and low global prices.
China’s push to expand chemical production among select refiners will likely deepen domestic oversupply and flood export markets, intensifying pressure on European and Asia Ex-China producers struggling with high costs.
China’s refining-chemical integration and more favorable feedstock positioning favors could put its producers among its lowest-cost chemical suppliers, outpacing many global competitors underestimating its positioning.
Before CERAWeek, we discuss fossil fuel companies’ shifts away from their energy transition goals, considering their equity performance since Trump’s election and substantial long-term crude oil demand uncertainties.
Otherwise, we discuss activist efforts against Phillips 66, efforts at LyondellBasell to lift propylene integration, Bloom Energy hydrogen fuel cells targeting the on-site power market, and Plug Power efforts in Graham, TX.

Companies Mentioned: Phillips 66, Chevron, LyondellBasell, OMV, ADNOC, Borouge, Borealis, Nova Chemicals, Shell, BP, Aramco, ExxonMobil, Dow, Braskem, BASF, Enterprise Products, Energy Transfer, Targa Resources, Enbridge, MPLX, Sinopec, Albemarle, Freeport-McMoRan, Rio Tinto, SQM, Bloom Energy, Plug Power, Equinix, Ballard, Hyzon, CP Chem, Invista, SABIC, Westlake, Shintech, Formosa, Olin, Alpek, Chevron Phillips Chemical, Versalis, Heartland Polymers, Lhyfe, Volvo Cars, Thyssenkrupp, Stellantis, Tesla, BMW, GM, Arcadium Lithium, Sunnova
Products Mentioned: Crude Oil, Natural Gas, Ethylene, PGP, PE, PP, PVC, Naphtha, LPG, Ammonia, Methanol, Hydrogen, Fuel Cells, Electrolyzers, Biodiesel, Ethanol, Gasoline, Diesel, Jet Fuel, Copper, Lithium, Cobalt, Aluminum, Rare Earth Minerals, Nickel, Potash, Fertilizers, LNG, Aromatics, Olefins, Benzene, Styrene, CO2, Critical Minerals

Exhibit 1: Consensus US consumer price inflation expectations for 2025 have increased significantly since November.