Uptown Funk: European Ammonia Margin Improvement, Troubled Strategies, and EU Decarbonization Challenges

Companies Mentioned: Yara, CF Industries, Nutrien, LSB Industries, Westlake, Sherwin-Williams, PPG, Albemarle, Mercedes, Stellantis, VW, Freeport LNG, Dow, LyondellBasell, ADNOC, Shell, OMV, BP, Reliance, Fertiglobe, Covestro, H2Global, Fortescus, Freepoint Eco-Systems, D.R. Horton, Amazon
Commodities Mentioned: Ammonia, PVC, Lithium, EVs, Natural Gas, Ethane, Crude Oil, Polyethylene, Biofuels, Hydrogen, Carbon Dioxide, R-PET, Biodiesel

Key Findings

General Thoughts: We highlight improving European ammonia producer fundamentals and Yara 2Q24 results as we take a cautious view of ammonia in 2H24 before our more constructive views start to materialize in 2025/26.
Supply Chain/Commodities: We discuss the transformation toward building products at Westlake that has paid off for shareholders, the weakness in lithium that has hurt Albemarle, and PPG vs. Sherwin-Williams equity trends.
Energy/Upstream: We provide a price table looking at the drop in US natural gas and USGC ethane during the past three months compared to Crude oil and ex-US naphtha prices – a positive trend for US chemical producers.
Sustainability/Energy Transition: Following Yara and H2Global conference calls, we provide our views and discuss whether the EC can maintain its positive momentum toward energy transition amid still-stiff challenges.
Downstream/Other Chemicals: We discuss US mortgage rate weakness spurring homeowner refinance activities, which could free up more funds for homeowners to spend on improvements and other notable global trends.