China Oversupply Holds More Risk Than Rewards, Global Economic Pressures Weigh On Energy Transition Demand

Daily Chemical Reaction

China Oversupply Holds More Risk Than Rewards, Global Economic Pressures Weigh On Energy Transition Demand

Key Points:

• Low prices and high financing costs are stalling energy transition and chemical sector growth investments in a weak macroeconomic setting, increasingly relying on consumers for support.
• We highlight earnings reports from Livent, DuPont, and Huntsman, and we discuss rising sector commentary targeting competitive pressure from Chinese chemical and critical mineral supply.
• Numerous chemical companies have cut profit guidance for 2023, but Street estimates for 2024 are not falling enough, and many appear too high – this poses a risk for sector equities.
• We discuss significant troubles in the US offshore wind market, flagging commentary from Orsted and BP, and the broadening impact of higher interest rates on energy transition projects.
• North American oil and gas producers continue advancing efforts to benefit from higher-priced export markets, while domestic manufacturers struggle despite their global cost advantages.

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