You Can’t Handle the Freight: Logistics Normalization Shatters the Inflation Cover Story

China’s slowing consumption and persistently low relative price inflation push excess supply outward, reviving export-led clearing and intensifying global price competition as logistics increasingly normalize through 2026.
Red Sea normalization collapses freight premiums, restoring Asia’s cost advantage and accelerating import-parity pressure on Europe, undermining margin assumptions across chemicals, polymers, and materials.
Policy efforts to curb China’s “involution” may arrive late, as trade routes incentivize exports first, delaying capacity discipline and extending pressure into Western markets, forcing high-cost closures amid low returns.
Lower inflation benefits consumers but strains producers, forcing many chemical sector executives to prioritize margin defense, restructuring, and cost-curve realism over near- to medium-term global growth narratives.
Otherwise, global cost curves reassert control as logistics normalize, exports clear imbalances, power and policy increasingly reshape margin profiles, and high-cost producers face intense restructuring activity in 2026.

Companies Mentioned: Maersk, Enterprise Products, Energy Transfer, Navigator Holdings, INEOS, LyondellBasell, OMV, Dow, ExxonMobil, Formosa Plastics, SABIC, LNG Canada, Texas LNG, Woodside, JERA, Entergy, Amazon, Microsoft, Alcoa, COSCO Shipping, Hapag-Lloyd, ZIM, Hyundai Merchant Marine, RPM International, Westlake, Huntsman, ADM, The Andersons, Valero, GEVO, Citroniq
Products Mentioned: Polypropylene, Polyethylene, Ethylene, Propylene, Methanol, Polyvinyl Chloride, Aromatics, Caustic Soda, Naphtha, Ethane, Crude Oil, Natural Gas, LNG, NGLs, Ammonia, Electricity, Coal, CO₂, Gasoline, Corn, Ethanol, SAF

Exhibit 1: US CPI momentum weakening versus China CPI signals a renewed skew toward imported goods disinflation.