No Easy Way Out: Costs Rise, Pricing Power Determines Returns

Key Findings

General Thoughts: Rising input costs are exposing margin fragility across industries, shifting advantage to pricing power, as policy-driven demand hopes build to offset war-driven inflation and weak fundamentals.
Supply Chain/Commodities: Access to sulfur, not production, is shifting pricing power, boosting downstream inflation, destabilizing fertilizer flows, and concentrating value among logistics-controlled producers.
Energy/Upstream: Global LNG growth is failing to tighten US gas because infrastructure sets price, locking in regional dislocation and shifting capital toward advantaged feedstock and energy positions.
Sustainability/Energy Transition: Europe’s carbon policy forces industry into full-cost competition before convergence, redirecting capital toward low-cost regions and eroding low-carbon investment economics.
Downstream/Other Chemicals: Housing need not decline to pressure chemicals demand, as persistent inflation and elevated rates cap activity, delaying recovery and redirecting capital toward integrated systems.