Global Polyolefin Demand Will Rise Through 2029; However Oversupply Is Inevitable Absent Unprecedented Rationalizations

Daily Chemical Reaction

Global Polyolefin Demand Will Rise Through 2029; However Oversupply Is Inevitable Absent Unprecedented Rationalizations

Key Findings

• General Thoughts: We discuss low-cost global polyolefin producers painting a positive picture of demand through 2029; however, global supply growth outpacing demand is the major global problem, and it is a risk to all players.
• Supply Chain/Commodities: Global chemical producer’s profits, on average, show sequential improvement in 3Q24, but face declines in 4Q24, as evidenced by our spot market data and by sector 2024 profit guidance cuts.
• Energy/Upstream: We flag the build-out of US utility power production and infrastructure, where capital costs are being factored into the rate cases for consumers, which does not translate into a “cheap” electricity setting.
• Sustainability/Energy Transition: We discuss the First Solar legal challenge targeting those suspected of misusing its IP on its 3Q24 earnings call, and we comment on the recent trend of Western clean project cancellations.
• Downstream/Other Chemicals: We highlight the BASF view of global light vehicle production and the impacts of Chinese vehicle exports on vehicle producers in other regions, including Europe, among other relevant trends.

Exhibit 1: Borouge may be right regarding polyolefins demand growth relative to GDP; however, supply outpacing demand and keeping operating rates under pressure is likely the major global challenge during the 2025-29 period.

Source: Borouge – October 30, 2024 – Investor Day Presentation

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