You Don’t Have to Be a Weather Man: Feedstock Risk Is Blowing Through Chemicals

Key Findings

General Thoughts: Natural gas volatility now translates into risk, as export integration, consolidation, and midstream optionality reprice feedstock economics, slow marginal investment, and lift risk premiums.
Supply Chain/Commodities: Propylene prices increasingly reflect operational reliability and feedstock economics, as outages, cracking mix, and integration shape volatility, spreads, and regional competitiveness.
Energy/Upstream: Energy sector capital allocation now determines chemical feedstock pricing power, as export-linked infrastructure, contract structures, and project timing shape US NGL competitiveness globally.
Sustainability/Energy Transition: Incumbent plastics producers investing selectively in circularity during weak pricing lock in future share, while cost-only global restructurers risk enduring strategic disadvantage.
Downstream/Other Chemicals: Global freight rate normalization masks security-driven capacity elasticity, as selective Suez returns, insurance friction, FX, and carrier discipline shape rates, costs, and competition.