The Thrill Is Gridlocked: Propylene, Methanol, and Power Struggles With Focus On Returns!

Companies Mentioned: Braskem, Pinnacle Polymers, Dow, Invista, Enterprise, LyondellBasell, ExxonMobil, Methanex, Celanese, Mitsui, Ineos, Wacker, Qatar Energy, Sabalan Petrochemical, Energy Transfer, Chevron, Engine No. 1, GE Vernova, ADNOC, RWE, TotalEnergies, BP, Air Liquide, United Energy, Iberdrola, Shell, Amazon, Meta, Republic Services, Blue Polymer, Maersk
Commodities Mentioned: Methanol, Natural Gas, Acetic Acid, Vinyl Acetate (VAM), PVC, Propylene, Batteries, Coal, LNG, Naphtha, Hydrogen, Ammonia, Carbon

Key Findings

General Thoughts: US spot polymer-grade propylene prices have fallen relative to Europe and Asia, and we argue that downside risk in this market is now limited, based on our view of global feedstocks and PP-to-PGP spreads.
Supply Chain/Commodities: We discuss global spot methanol price trends, as we think Western price premiums relative to Asia are poised to fall – we flag recent overseas start-ups and cost developments to support our view.
Energy/Upstream: We discuss the impact of stalling renewable energy projects on efforts to expand the US electrical power grid, as delays in this area increase our constructive view of natural gas for US power generation.
Sustainability/Energy Transition: We discuss our takeaways from the RWE 4Q24 earnings call, including its lifted IRR return requirements for growth projects, and our views of environmentally geared activist pressure on BP.
Downstream/Other Chemicals: We highlight further declines in global container freight rates, weakness in the US Dollar, a still weak global demand setting, and some policies that could add incremental costs to US exports.