When the Tide Goes Out: Refining Holds, Chemicals Must Cut

Key Findings

General Thoughts: Global average ethylene production margins collapsed in early 4Q25 then stabilized modestly, but only restructuring like high-cost cracker closures can loosely replicate refining’s recent margin lift sustainably.
Supply Chain/Commodities: Propylene markets remain oversupplied, with Asia as the global clearing mechanism, leaving standalone producers more exposed than cost-advantaged integrated C3-chain derivative producers.
Energy/Upstream: Cheap US gasoline prices reflect year-end oversupply, not strength, while rising China refinery runs add products globally, pressuring cracks and reinforcing downstream margin normalization into 2026.
Sustainability/Energy Transition: Thyssenkrupp Nucera’s cash flows beyond hydrogen cushion its losses, proving diversified industrial platforms outlast subsidy-gated electrolyser demand resets better than pure-play peers.
Downstream/Other Chemicals: Range-bound USD and geopolitically volatile freight delays repricing, distorting arbitrage, and rewarding regionalized, balance-sheet-resilient players navigating prolonged uncertainty into 2026.