Trade Fog, Commodity Margin Smog – Clarity Ahead?

C-MACC Sunday Executive Summary

Trade Fog, Commodity Margin Smog – Clarity Ahead?

• US commodity chemical equities have underperformed YTD, following a period of significant underperformance in 2H24, as global trade uncertainties have boosted concerns surrounding its already challenged market setting.
• We observe commodity chemical equities declining and forward profit expectations also falling. In contrast, EV/FWD EBITDA multiples have risen, suggesting that the market believes business cycle improvement is ahead.
• The Bloomberg global trade policy uncertainty indicator has surged to a record high, but the VIX has recently declined, and we discuss other volatility measures implying moderation after planned trade actions next week.
• Absent structural crude price strength and/or more aggressive global restructurings in high-cost regions, we do not foresee significant improvement in commodity chemicals in 2H25/2026, likely keeping valuations in check.
• Otherwise, we discuss our constructive view of corn markets, which could notably benefit from biofuel policy, which would benefit ammonia markets, and highlight our hydrogen and sustainability research from last week.
• Part of the C-MACC team will be out of the office next week for events with our waterpower project, Issaquena Green Power, that will include areas with limited cell phone service. We will publish our weekly base chemical research on Tuesday, April 1, and our sustainability report on Friday, April 4, will include our weekly hydrogen research. Please get in touch with Sakina Nayani at Sakina.Nayani@c-macc.com for immediate assistance.

• Companies Mentioned: LyondellBasell, Dow, Olin, Westlake, Huntsman, AdvanSix, ExxonMobil, CP Chem, Phillips 66, Braskem, Shell, OMV, ADNOC, Borouge, Borealis, Nova, Woodside Energy, Gulf Coast Ammonia LLC, Nutrien, CF Industries, LSB Industries, Koch Fertilizer, Fertiglobe, Corteva, Vopak, Aramco, BASF, Bloom Energy, Plug Power, Sinopec, Next Hydrogen, Sungrow Hydrogen, Thyssenkrupp, Ceres, Hydrasun, Nel, Air Liquide, Michelin, Metacon, Hygreen, Guofu, Amazon, Meta, Google, Dominion Energy, Oklo, ArcelorMittal, Norsk Hydro, Duke Energy, Citadel, Red Chalk Group
• Products Mentioned: Ammonia, Polyethylene (PE), Ethylene, PVC, Chlor-Vinyl, Methanol, Corn, Soybeans, Natural Gas, Crude Oil, Hydrogen, Ethanol, Platinum, Nickel, Iridium, LNG, Biofuels, Fertilizers

Exhibit 1: US commodity chemical equity underperformance YTD furthers its significant relative weakness in 2H24.

Source: Bloomberg, C-MACC Analysis, March 2025

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