Margin Mirage? Cost Curves, Not Hype, Will Ultimately Define Chemical Markets in 2025

Companies Mentioned: Nutrien, CF Industries, Yara, Fertiglobe, ExxonMobil, BASF, Celanese, Huntsman, Alpek, Vopak, Sherwin-Williams, Navigator Gas, ADNOC, Venture Global, Linde, BHP, Bloom Energy, Chart Industries, BYD, Core Power, Petrobras, Xodus
Commodities Mentioned: Ammonia, Fuels, Hydrogen, Polyethylene (PE), Ethylene, LLDPE (Linear Low-Density Polyethylene), Crude Oil, Natural Gas, Ethane, LNG (Liquefied Natural Gas), Solar, Batteries, Carbon Capture, Copper, EVs (Electric Vehicles), Corn, Soybean, Ethanol, Coarse Grain

Key Findings

General Thoughts: Global cost curve developments favor lower prices and compressed margins in low-cost regions. We discuss why we are more constructive in global ammonia markets than polyethylene in 2025.
Supply Chain/Commodities: We discuss recent ammonia market developments, following producer 4Q24 reports and 2025 outlooks, and the significant amount of polyethylene capacity set to begin production in 2025 in China.
Energy/Upstream: We highlight the recent strength in US natural gas and USGC ethane prices relative to Brent crude oil prices and Europe and Asia natural gas. We also discuss rising USGC ethane exports to China in 2025.
Sustainability/Energy Transition: We discuss rising Western tariffs on China’s clean energy technology, global clean technology manufacturing shifts, and the global carbon capture investment spending drop YoY in 2024.
Downstream/Other Chemicals: Global freight rates reflect the downward pressure YTD, which we view as a plus for trade but negative for manufacturers in high-cost areas, and we discuss our constructive view of corn markets.