No Country for Cheap Goods: Inventory Games, Margin Flames, and Cost Curve Cowboys

Global Market Analysis

No Country for Cheap Goods: Inventory Games, Margin Flames, and Cost Curve Cowboys

Key Findings

• General Thoughts: Rising inflation across the US, China, and global supply chains is pushing up industrial price floors, benefiting select producers while hurting consumer affordability and high-cost manufacturers.
• Supply Chain/Commodities: Asia’s olefin market is facing a much harsher rationalization cycle than pre-conflict forecasts imply, as feedstock stress and financing pressure accelerate permanent capacity decisions.
• Energy/Upstream: Inventory depletion, tanker dislocation, and refined product tightness are separating physical energy profitability from headline crude benchmarks across global industrial supply chains.
• Sustainability/Energy Transition: The US CPI electricity index jumped higher in April, reflecting tighter grid availability and infrastructure bottlenecks, raising industrial costs despite weaker natural gas benchmarks.
• Downstream/Other Chemicals: China’s inflation rebound reflects tighter energy markets and logistics constraints, lifting industrial costs before demand restores downstream manufacturers’ pricing power.

Exhibit 1: US-China consumer inflation gap suggests that cost curves price consumers and producers differently.

Source: Bloomberg, C-MACC Analysis, May 2026

See the PDF below for all charts, tables, and diagrams