Field Of Spreads: Wartime Profits Face a Longer Investment Test

Key Findings

General Thoughts: Wartime spreads can flatter expansion economics when disrupted trade supports regional premiums that proposed projects cannot assume will persist throughout their operating lives.
Supply Chain/Commodities: Imported ammonia can sustain European fertilizer production despite local ammonia curtailments, limiting downstream pricing gains that weaker domestic production might suggest.
Energy/Upstream: Record demand across several US grids can reward generators without improving manufacturing margins, making electricity contracts and grid expansion charges central to competitiveness.
Sustainability/Energy Transition: Lower ETS compliance costs can sustain European plants, but ethanol imports show why renewable fuel mandates alone cannot secure domestic production or new investment.
Downstream/Other Chemicals: Higher Chinese feedstock costs need not reduce chemical exports when overseas sales cover incremental costs, sustaining competitive pressure despite weaker producer earnings.