Welcome to The Chemical Show, the podcast where chemical means business.
I'm your host, Victoria Meyer, bringing you stories and insights
from leaders, driving innovation and growth across the chemical industry.
Each week, we explore key trends, real world challenges, and the
strategies that make an impact.
Let's get started.
Just a quick reminder that if you are listening to this as an audio podcast
and you are interested in seeing the charts That were shared and that we're
discussing during today's episode Head on over to our YouTube channel
so it's YouTube and it's the chemical show podcast and you can listen to and
watch today's episode there and See the charts that Kurt and Tony are sharing.
Thanks
Victoria: Okay, we're going to get things going.
Thank you everyone for joining us today for the first Chemical Show live of 2025.
I am super excited to have you guys here, and I'm very happy to have Tony Potter
and Kurt Barrow from S& P Global, with us today, sharing their insights on
the chemical market outlook for 2025.
So, these guys both bring a wealth of experience in energy and chemicals and
are here to share that with us today.
So I'm going to stop sharing my screen.
We're going to start conversing and, we'll make this happen.
Kurt and Tony, thanks for joining me today and welcome to the chemical show.
Kurt: having us.
Victoria: So I like to start every episode, with just a little bit about you.
Tell us how you got interested in energy and chemicals and then how did
you get into this wonderful world of watching markets and analyzing what's
happening and advising customers?
Kurt, I'm going to start with you.
Kurt: Sure, yeah, well, Victoria, I'd like to say there was some big grand
plan and I had this big vision that I was going to be this oil analyst, right?
The reality is when I came out of university with my engineering
degree, uh, Exxon had the biggest number on the job offer.
Right?
So I came to Houston and started with Exxon.
And then, You know, really enjoyed my time there was really interested in the
business side went got an MBA and then went out to work for consulting and a
small kind of boutique consulting firm in the refining down downstream space.
Then that company got bought is as oftentimes happen by the, which
kind of rolled up into to, uh.
It's been it's been a great career, not not really super plan, but, uh,
you know, enjoy my time kind of in industry on the technical side, did
a lot of consulting and then now I run research right for for oil.
And it's just such a dynamic.
Interesting industry, you know, tied into the economies and geopolitics and there's
just always so much to learn technology and obviously energy transition.
And so it's just kept my interest and I've, uh, steady with it.
Victoria: Awesome.
Love it.
Tony, how about you?
Tony: Not dissimilar story.
Um, I love this job.
It's prepared to study.
Um, I grew up with the chemical industry on my doorstep.
My dad worked for ICI Wilton up in the northeast of England for 27 years.
And in fact, they built ICI Wilton in my grandmother's back garden,
literally after World War II.
Is that when you guys made a
Victoria: lot of money as land barons and stuff, Tony?
Tony: No, no, She was, she didn't, she didn't own all that land, don't worry.
I did a ChemEng degree.
I started at Exxon as well at Foley refinery in the UK.
I was nine years into my career.
I was a typical Exxon engineer, being a plant supervisor and a
project manager and things like that.
When I went to the European head office in Brussels, for Exxon chemical, and
it was there, I actually found out that the job I do now even exists.
And I became, uh, on behalf of Exxon, the clients of consulting
companies like the old.
CMAI, where I eventually became a partner.
And we sold CMAI to IHS in, in 2011.
And then the, the journey with CMAI, IHS, IHS market, the logo keeps
changing on my business card every two or three years, but I'm more
or less still doing the same job.
But I've had the privilege of doing it, not just in Europe,
but I was four years in Dubai.
I was five years in Singapore.
I've had the privilege of sort of talking to C level clients all over the world.
It's fantastic.
Victoria: That's great.
And I, I think, you talk about it being a global career.
I think many of us in the industry, myself included, didn't realize how
global my career would be before I joined.
The industry and certainly have loved every bit of that.
Kurt: Tony was in spent time in Dubai station there a while and in Singapore.
I was actually in Singapore as well.
So, yeah, very, very, very much.
So very interconnected getting more connected all the time.
Victoria: Absolutely.
So let's talk about what's going on in the market today.
How would you characterize 2024?
And what are you seeing and expecting in 2025?
And Kurt, let's start with you because I know the feedstocks is really
the starting point of everything.
Kurt: Yeah, no, no, absolutely.
Maybe I'll share a slide or two here.
Right.
And help kind of talk through this.
So, you know, fundamentally, the fundamentals right in the
oil, in jail space, maybe to a lesser degree and natural gas is
the rental over supply, right?
Or or headed into more of an oversupply.
Right?
We're, uh, producing more oil than than we need.
Right?
So the global oil supply system, you know, Is, adding more to the market
than, uh, the, the, the new, right?
And there's, there's a number of reasons on demand.
We could talk about China is not growing at kind of the rate we'd expected.
Evs are a small part of the weak demand today.
It actually has more to do with kind of vehicle fuel efficiencies.
But, you know, in a general sense, right?
We've got oil.
Prices kind of moving, moving downward.
And we can come back and talk about, you know, Trump and tariffs and some of the
factors that are affecting the oil price, you know, kind of day to day week to week.
But, but I think the key takeaway is, is that we are, in our view, at least
in the base case headed on a, on a general generally downward track for
Brent if you kind of shift over a little more into the feedstock side, 1
of the big dynamics of the past few years is, you know, It's just the amount
of NGOs that were coming out of the U.
S.
supply system.
And that's, you know, part of that was coming as associated, in
jails from the oil production.
And some of it was coming from the, some of the wet gas plays and the
growth, the natural gas and the, the LNG, uh, to the, to the, uh.
You know, feed the LNG plants and so forth, right?
We do think that there's a number of factors that will start to
slow that, still growth, right?
And still relatively impressive growth, you know, two or 300, 000
barrels a day, but that is kind of one of the factors we see.
And it's, it's part of the longer trend, right?
We'll come back and talk a little bit about, but, you know, at a high level,
because of some of the fuel economy standards in, cars and trucks around the
world, because we are starting to see, some electrification of transport, in
some markets, there's a number of reasons that we do expect the oil demand globally.
Right, refined products in particular and transport fuels to start to
plateau and peak, and that's going to have some real direct implications
for, for feedstocks, right?
It's going to mean that we have less, NGL growth, you know, of
ethane, propane, to use as feedstocks when you come back to naphtha.
Uh, and we'll need to essentially get more, Hydrocarb out of the crude
system out of the refining system, to supply that, you know, to meet demand
growth and chemicals that we, you know, Tony, Tony will talk about.
So, that's that's kind of in a nutshell, right?
Kind of the short and long term view, Victoria.
Victoria: Yeah, so at one point we talked about a shortage, right, that we were
running out of cheap feedstock, that the Middle East wasn't going to have
feedstock anymore, and of course the U.
S.
With its really strong basis in natural gas, has been a very strong
part of the, the feedstock chain.
Do we still have those conversations?
Are we running out of petrochemical feedstock?
Kurt: Yeah, I'd say we're not running out.
That's a good context, right?
If you go far enough back, right?
We kind of thought we were running out or had those concerns.
And then, as you said, the supply kind of rose a guy to the Middle East.
And then, and then the US, we found title, right?
Shell gas and title oil.
I would say we're not worried about availability of these thoughts.
I think it's more about the costs and economics.
That will ultimately come with that right because we again we won't
have as much surplus in gls, right?
So the ngl Markets are quite interesting.
They're one of the few markets that that we view as Not so much demand pull, right?
It's not the demand, like you have in gasoline, right?
You think about gasoline demand or or ethylene, right?
You think about, you know, the pull from the derivative plants, right?
The jail business is much more of a supply push.
Business, right?
They're a, they're a byproduct of natural gas and crude oil production.
You're generally not drilling for NGLs.
Um, and then you kind of need to, to clear the market with those NGLs, right?
And the, the clearing market is, petrochemicals, right?
It's, it's the marginal market for, um, oil and gas.
For NGLs and so it becomes really a price signal, right?
At which point, you would switch that flex cracker or over long term,
you know, change your investment profile to to those feedstocks, right?
And so if you.
If you take our view, right, that we're, we're not going to have as
much in jails, then effectively, you just need to go back to the refining
system and get more feedstocks now, but they may cost you a little more.
Right?
So the nap, the crack may be a little wider.
Ultimately, we may need, you know, we think we will go into,
deeper conversion, like different cruel, the chemical technologies,
Victoria: yeah.
So I know this week, I was reading that Lyondell Bissell is starting
to shut down the Houston refinery.
And of course, that's been something that's been coming for a long time.
does you see this affecting the market availability?
Kurt: Yeah, so, so, um, yeah, essentially, right.
Broader demand trends, it's on the chart here, right?
We will see rationalization.
We have, we've, we've seen rationalization, for a long time, right?
We used to have whatever the number was twice as many refiners in the U.
S.
Actually, in hindsight, the industry rationalized a little more than
we maybe should have because when demand came roaring back and, oh,
the Russian invasion of Of Ukraine and the high natural gas
price kind of exacerbated that.
Victoria: Got it.
All right.
And as you guys might have noticed, my internet has decided to be
a little unstable, but we are going to push through with this.
So Tony, let's talk about chemical markets.
And when you see, you know, when we talk about this influence,
the feedstock picture, how do we start taking this into chemicals?
Okay.
Tony: Yes, so I mean, just a message on feedstocks, you know,
wherever the industry produces, advantage price, ether, it's
going to get cracked eventually.
The US isn't going to run out of ethane any, any time soon.
The Saudis have a gas initiative and, you know, we were hearing numbers that
there'll be sufficient incrementally then for, you know, another 6, 000, 000
tons of ethylene and that's before they get on to, all of their crude oil to
chemicals complexes that they they'd like to build at some point in the future.
but generally, the industry is oversupplied.
It's built its way into a problem in most value chains.
What I show here is sort of incremental capacity in the.
Bars for ethylene globally, the bars of the incremental capacity,
the gray shaded area in the background is the incremental demand.
And you can see that period starting in 2020, when the bar, the height of the
bars is much higher than, than the demand.
The height of the shaded area behind the color coding.
China is is red.
And, you know, you can see China is accounted for a good 50
percent of incremental capacity in in the last few years.
And so.
Industry capacity utilization is quite poor.
You go back 4 or 5 years.
It was up at 90 percent and that's effectively full on
an employee basis, right?
Every year, the industry, you know, shuts 4 percent down for planned maintenance,
turnarounds, loses another 4 percent to unplanned outages, when you're talking
about 90 percent capacity utilization, the industry's full, you know, and you
go back 4 Pre 2020 prices and margins were very good for the industry.
Last year, industry capacity utilization bottomed out around 80%.
That's the black line on this.
And you can see it's a long, slow haul up to the sort of, mid to
high 80s where, you know, the industry, the NAP, the cracking
industry can, can leverage margins, generally, profitability is poor.
The industry is talking about rationalization.
That process has started mainly in Europe, but you know, we'll
get some closures in Japan.
We'll probably get some closures in Korea this cycle for the first time.
The place that's actually very disciplined about closing all
small capacity down is China.
Often goes unnoticed, but, you know, they build 1.
5, 2 million tons of new capacity and they quietly shut, you know,
150, 200, 000 ton old cracker, which is exactly what they should do.
But, you know, I've seen a few of these cycles now, and there's never
enough rationalization to sort of jumpstart this, into a sort of
profitable area of industry utilization.
you know, I would say in the ideal world for the producers, they'd shut down 20
million tons of capacity and that black line would take a step change upwards
and all would be sweetness and light.
And that's not going to happen.
Everyone wants someone else to go first.
We can envisage, you know, 5 or 6 million tons of rationalization this
cycle and, you know, the industries into that, not all doom and gloom.
So, you know, for your U.
S.
listeners, it's the nap, the cracking industry that's challenged.
That's the high cost.
And if we maybe go forward a couple of slides we publish this every week.
So this is a sort of spot variable cost of production for ethylene for.
From from various feedstocks.
These are generic crackers.
They're not any particular.
So, you know, the lowest cost production right at the moment,
the bottom left is, you know, U.
S.
ethane cracking.
It's as cheap as Saudi ethane cracking right now.
The generic NAPTHA crackers prevalent in Europe and Asia, the two orange
bars on the right hand scale.
You know, it's that right hand end of the chart that sets the general level
of petrochemical and polymer pricing.
So, you know, all of the things being equal, the old price moves up and down.
So does NAPTHA.
So does ethylene, polyethylene, benzene, styrene, you name it.
But what you can see is, you know, U.
S.
Ethan, best producer has got a.
Six, 700 a ton cost of production advantage relative to a typical,
nap, the cracker right now.
So, you know, if you've got advantage price feedstock, money is being
made, in some parts of the world.
And then, then there are other little niches that are doing quite well.
When we talk about an 80 percent capacity utilization, actually
the high cost end, the industry, the nap, the cracking industry.
is disproportionately pulled back more, and that actually creates shortages of
co products, and the obvious one at the moment is C4s, so there's a shortage
of crude C4 molecules and you know butadiene margins are doing great as a.
As a result of that, but those are niches.
Victoria: Hey, Tony, when we look at this slide real quick is, the yellow
orange bars of European nap then Asia nap that is that to indicate that
that's where the price is being set.
If we think about a traditional supply demand curves that are price setters.
Tony: It's exactly, it's the requirement of the high cost producer
to cover their cost of production more or less sets the price.
If you go over to this one, so this is, you know, basket of base chemicals.
And this is the industry nameplate capacity utilization
and the top blue lines, ethylene.
I talked about that.
It went from 90 to down to 80.
The purple lines, paraxylene.
You know, that was also up at 90 percent a few years ago, and that bottomed out
last year at around 70%, but actually Parazilin has been doing okay, right?
And so industry capacity utilization of nameplate capacity
utilization isn't the full story.
You've got to get it where the effective utilization is,
where the pinch points are.
And in the case of aromatics, the gasoline industry has been supporting it.
So, you know, high octane values and all the money has been made
in making the toluene and the xylene for its octane value.
If you had to buy mixed xylenes on the market, you know, there was
no extraction margin to produce para xylene or ortho xylene.
That's maintained some margin in the aromatics industry.
Kurt's already mentioned gasoline balance is probably lengthening
as a result of, you know, huge refineries like the Dangote refinery.
As that premium and octane comes off, then.
Paraziline will begin to experience the full impact of that, you know, 70, 75%.
Victoria: Okay.
And how does this play out when we go further down the value chain?
Obviously, because these are kind of the big building blocks.
Where do you see it taking into more differentiated products
or more specialty products?
Tony: We define a specialty as as something that's sold on the
basis of its performance rather than its cost of production.
So it can cover a multitude of things, but what's a specialty
depends where you sit in the.
In the value chain, I talked to some Middle East producers, and they talk
about specialties and really, they're going to produce intermediates.
That's a mixed bag, um, depending on the industry and the overbuild.
But if you look at the, financial performances, you know, of the Clarions
and, you know, the big specialty chemicals producers, they've suffered as well.
But we expect that to start picking up.
Victoria: How about the wonderful world of plastics, right?
Cause obviously a big part of the ethylene value chain goes into
polyethylene and then, you know.
Polypropylene and all the other polys.
Tony: Most of it, most of this ends up in plastic one way or another, ethylene
into polyethylene, PVC, propylene, polypropylene, PET from parazylene,
benzene into, you know, the styrenics, so most of it actually ends up in polymers,
one way or another, and the polymer plants get built on the same cycle
as the monomer plants, so, you know, you build a, you build an ethylene
plant, you build the polyethylene and the polypropylene with it.
So the curves look more or less the same and, you know, are equally as challenged.
Yeah, it can be a bit misleading to talk about ethylene profitability, you know, on
its own, because you've got to look at the integrated economics into the derivative,
but I should say the polyethylene curve looks the same as the ethylene curve.
Victoria: So global chemical markets are imbalanced, in a way that I've never seen
and, and we've gone through a few cycles.
You've already referenced how overbuilt it is.
But, if we think about just the, the regional dynamics are
shifting quite a bit, right?
Suffolk's director general, Marco men sink recently warned that the
chemical and the European chemical industry is at a breaking point.
With over 11 million tons of capacity being Shut down over the past couple
of years or at least announced.
We're seeing significant overbuilds in china As well as pretty low
demand growth and then uh, we've got North america seems fairly strong.
But how do you see companies, both global companies and regional
chemical companies navigating this.
Because I'm certain this is a conversation you're having with leaders all the time.
Tony: Yeah.
I mean, if you look at let's take Europe as an example, I'm sat in Germany, where
I live and You know, you Europe's got probably the oldest cracker stock in the
world right plants are 1450 years old.
Some of them are even slightly older than that.
They're old and they're small.
There are A dozen at least old small crackers that have got a
capacity of 400, 000 tons or less.
When a world scale cracker, you know, people are building 1.
5, 2 million ton crackers these days.
And the thing is, they dotted around the coast of Europe.
They're not connected to anything other than their own derivative plants.
And so if you want to take a cracker shutdown decision, you have to
take a site shutdown decision.
And over the cycle, they've tended to be cash positive, right?
These things are fully depreciated.
As long as they don't need a big capital injection, there's cash to be made.
What's different in this cycle is that as Players are faced with the choice to
inject capital to de carbonize, right?
That's probably going to tip some of them into shutdown decisions.
And it's, you know, it's probably right that all small capacity shuts
down in favor of, you know, newer, bigger, more efficient capacity.
That's the way markets work.
But the exit costs are high in Europe.
Site remediation costs.
You've got the whole political factor.
No EU politician worth their salt wants to shut a, um, a chemical
complex down on their soil.
You know, France, I'm thinking France, Spain, Italy, where some
of these small crackers are.
And the politics is always about employment.
And that's the issue.
And so it's a slow process.
Ironically, as Europe talks about decarbonization and about, things like
CBAM, Carbon Border Adjustment Mechanisms, that actually could create effectively
a tariff around Europe that Prolongs the life of all small crackers, you
know, a lot of unintended circumstances.
So we'll see how that pans out, but Europe certainly started
that, that journey of shutdowns.
We talked about the players regionally, many of the players
in Europe are global players.
I mean, Exxon is shutting down a cracker in France.
Sabic is shutting down a cracker in the Netherlands you know, so they have
global supply strategies anywhere.
I'm not expecting Exxon to sell less polymer in Europe as a result of
shutting down the gravel machine cracker.
Um, the issue is where it comes from.
Victoria: Fair enough.
We started talking and Kurt referenced a little bit, um, You know, politics and
geopolitics and the influence, right?
So the U.
S.
has just brought in a new president, Donald Trump and administration in the U.
S.,
who's already making a lot of bold statements, about trade and tariffs.
We've seen presidential changes in a lot of other countries, leadership
changes, across the globe, both, uh, Latin America, Europe, right?
I mean, France had two or three snap elections last year.
We're starting to see it in Asia as well.
So, you know, I know you guys are tracking and monitoring, these political shifts.
What influence do you see this having on the chemical industry, either,
you know, this year or next year?
I know nothing is immediate, but how do you see this playing out?
Kurt: Yeah, so you're right.
Everybody's trying to monitor and see, you know, what exactly this means.
Right?
I think you laid it out.
Well, right.
I think the Trump administration's the one that everybody's looking at, but there's
been a number of shifts of different administrations, around the globe.
Right?
And I think, you know, what does this mean for energy?
What does it mean for policy?
What's this mean for trade and tariffs when they weren't a very, you know,
globally interconnected market or, you know, for oil and for chemicals.
Right?
And I think the other thing, right?
That we're
thinking about right is okay.
You know, what are not just the actions, but what are the reactions, right?
Because, Trump puts tariffs on Columbia, right?
What's, what's Columbia do, how do they react?
And then, you know, you've got some of the bigger players, that are kind
of in the middle, like India, Brazil
the, the one to keep good relations with the West and with, uh, with, uh, With
China and with Russia, perhaps, and so, how does all that, uh, all that, I think,
if you get down into kind of some of the.
Energy policies that Trump is, you know, has announced on the campaign
trail, signed some executive orders on.
some of those are quite impactful, uh, in the media.
Things like reduction of subsidies of electric vehicles, right?
That's going to slow, the sale of electric vehicles in the us.
Particularly for some of the, some of the big three automotive manufacturers,
maybe a bit less for Tesla, and so forth.
But things like oil production, the executive in the, in the White
House doesn't really have much to do with oil production in the us.
They will relax some of the regulations, some of the environmental
rules, shelve the methane Rule.
Um, but most of the drilling and most of the growth of oil production is on
state and private lands, and most of the decisions that the executives are
making on how much to drill is really being informed more by their shareholders
desire and the price of oil, right?
And so that in some ways.
You know, the administration could actually lower the price of oil
and actually reduce some of the drilling activity potentially.
Tony: And I think for chemicals, again, it depends on the responses
from, the other countries, right?
So, I mean, the U.
S.
exports a lot of polymers to China, if he slaps tariffs on plastic, right,
if China were to do the same, what tends to happen with tariffs is the
world rebalances, it just reshapes.
So a lot of plastic goes from the U.
S.
Gulf coast to China.
And then it comes back to the U.
S.
as finished goods, semi finished goods, right?
Maybe via Mexico, maybe via Vietnam, right?
All sorts of games can be played.
But, but let's say, let's pretend, you know, China slaps
a 25 percent tariff on U.
S.
plastics.
All that would happen is we'd probably see more U.
S.
exports to places like Europe.
And then the slack into China would be taken up by the Middle East,
so that the world would reshape.
To tariffs, right?
The bigger concern is, you know, what does inflation do to demand, and does that
depress the industry tariffs are going to lead to inflation, which potentially
could lead to low growth, right?
I mean, tariffs.
The U.
S.
could be shooting themselves in the foot here.
And you know, the U.
S.
is a big component of, of global demand.
That becomes an issue as well.
Victoria: I will tell.
So let's talk about sustainability and decarbonization.
Any conversation in chemicals, we would be remiss without that.
And that certainly also ties in politically because we're seeing a bit of
a waning of Interest or support for some of the commitments that were placed, at
the beginning of the decade or even prior to then, and I think in certain places,
you know, we say, well, we're here, right?
So there's significant investments in carbon capture.
There's been a lot of ongoing efficiency and carbon management.
There's a lot of green chemicals, circularity at play.
And yet, in many ways, we are still.
In our infancy, as it relates to sustainability and decarbonization,
and we've got this whole big question of who's going to pay for it?
Because sometimes it seems to only make sense when there's subsidies, right?
If we think about electric vehicles, for instance, and the knock on effect
it has, but we're, I feel like we're in a bit of a the pendulum is swinging.
How's that?
Um, how do you guys see this playing out, when you talk about
sustainability, decarbonization across energy and chemicals?
Tony: Yeah.
Um, I think there's a lot of very worthy projects out there that
together do not add up to enough.
Countries will miss targets.
I'm sort of more interested in whether individual company pledges meet targets.
And I think we're seeing evidence that.
2030 milestones are slipping to 2035.
Of course, the big thing in the chemical industry is the
circularity of polymers, right?
If you could perfectly recycle, every pound of polymer, you wouldn't
need to make much virgin polymer.
Um, at the moment, we estimate, you know, probably about 8 percent of
polyolefins are mechanically recycled.
Um, Globally, even if you assume a doubling and almost tripling
over the next years in those volumes is what we sort of expect.
It's not enough to blunt the underlying growth demand for virgin pollen.
Right.
So it takes the edge off it a little bit, but virgin demand keeps growing.
And that, that's an important message for the chemical industry.
It says that the chemical industry still needs to invest to grow.
So you've heard Kurt talk about, you know, the oil complex peaking, and then
in 2050, there's 12 and a half million barrels a day of, less of, of oil demand.
The chemical industry keeps growing.
And even if you assume them absolute massive increase in, in mechanical
recycling, the world's still gonna need to build another a hundred million tons of
ethylene between 2030 and 2050 at least.
And that's a very positive message for the industry in
terms of, you know, the need to.
And decarbonized.
The other thing that's going on is the, the advanced or the chemical recycling
where you turn plastic into, something that looks like chemical feedstock that
doesn't get rid of the need to build the cracker to process that, right?
So it, it, it impacts the feedstock balance.
It's a very slow process.
And there are some parts of the world where it's hardly developed at all.
The only chemical, the only plastic.
That with substantially higher recycle rates is PET bottle resin.
And, and that's, that's fairly obvious.
The average consumer can identify it.
They can separate it.
You know, So you can collect it very, very easily.
And by the way, a lot of it gets down cycled into polyester fiber, right?
Only about 12 percent of bottles end up as new bottles.
But the total numbers, when you look at what gets reused as polyester,
that's that's more like 60%.
And then you look at how the chemicals made, right?
The decarbonization of the plants themselves.
That is a very slow process.
There are tests.
E furnaces, electric furnaces.
But no one's built a new cracker yet with E furnaces, right?
All these new crackers in China have conventional furnaces, when you add
it all up, you can't conceive of the chemical industry getting to net zero
without substantial carbon capture, you know, at the end of the pipe.
Kurt: I think on the energy side, right?
Very similar, right?
I think, policy matters, but so do economics, right?
And I think, uh, I think we're at that point where, companies, right?
Or try to try and figure out where the economics are.
I mean, there's been cost inflation in the supply chain, right?
So some of this, uh, kit is going to cost more than maybe
we thought a few years ago.
And then, we go back to Trump, right?
I mean the IRA, right?
The Inflation Reduction Act was the 800 pound gorilla and where a lot of companies
were putting a lot of attention, right?
Because there were some really big tax credits there that
looked quite, quite attractive.
But now that's all been put on hold in know, our own view is that a good
portion of that will continue on.
Maybe it gets suggested and relabeled a bit by the new administration, but,
but that uncertainty, right, is really.
It's something that companies have to have to struggle with that.
The economics aren't there, you know, what to what degree do you rely on policy?
And how much do you want to put that risk out there?
I just say 1 other quick thing on the at a 50, 000 foot level.
If you kind of step back and look at the energy, we have not done a lot of
decarbonization kind of Tony's point.
We've done a lot of electrification.
PV, solar and wind is economic, and we see a lot of growth in that.
Um, you know, in the West, in China, a lot of other markets in the Middle
East, as well, EVs also we're, you know, becoming somewhat successful, different
markets, but the actual decarbonization of the molecules of carbon, uh, still,
still in its, early, early stages, right?
Tony: Yeah.
And you asked about who pays.
I mean, ultimately the consumer.
Right.
What's interesting is the pull from the brand owners, uh, for
recycled plastics is, you know, is more than the availability of right
quality recyclers at the moment.
And that's why, you recycle pellets, you know, are trading
at a premium to Virgin pellets.
It's, it's got nothing to do with the cost of production of those, those recycled
pellets, it's the Dan owners and the Nestle's, you know, they want to be able
to print on their yogurt pot that that yogurt pot is 40 or 50 percent recycled,
uh, material and will the consumer pay?
Well, rich consumers in Europe.
We'll pay an extra penny, to go green.
Um, I think the evidence from the U S is even the green consumers.
No, I still want it as, as, as cheap as the Virgin plastic yogurt plus.
So, yeah,
Victoria: I want it to be good, but not expensive.
That's the message.
Well, this is.
This has been great, and I know we've covered a lot, and Tony and
Kurt, I really appreciate that.
Of course, we can only cover so much in our 40 minutes together,
and then we're leaving some time for questions, which I want to do.
And I know that you guys are going to be covering this in depth.
One, you do it all the time with clients, but then World Petrochemical
Conference is coming up, and I would imagine that we're going to see some
of these things in greater detail.
And, and more topics at WPC.
So can one of you guys talk about that a little bit?
What should we be expecting from WPC this year?
Uh, and, and who should be,
Tony: Anyone who is remotely connected with the chemical industry, right?
So whether it's, product managers, analysts, financial analysts,
producer, analysts, strategic planners, anyone involved in the
buying and selling of, of chemicals, you want to know what the industry
is going to look like going forth.
Come and talk to us.
It's the week of the 17th of March.
It's the 40th anniversary.
So we got some special guests who, you know, from the industry, scan the QR
If you want to send Kurt or I an email, we can probably wangle you a discount.
Uh, or I think, uh, I think actually, I think, yeah, we do have a discount.
Victoria: I will, uh, I'll send it out.
We've got a, discount it's I will, uh, in fact, it's long, so I can't remember,
but we've got a 5 percent discount.
So, uh, use it.
Save some money and let people know that you heard it from me.
Tony: Format is, we have an executive conference.
That's a plenary with, CEO level speakers and panelists, you know, on that first
day, you'll get, uh, you get the basics of our economic outlook, our oil forecast.
We've got people like Dan Juergen, uh, speaking, uh, uh, but it's then in days
two and three, there's a multitude of breakout streams, some of them value
chain specific and all of Fin's ammonia stream, uh, refining and feedstock
stream, but some of them also as a whole day, dedicated to, circularity and.
The, and the developments there, so, you know, whether it's mechanical
recycling, advanced recycling, looking at the technologies involved, looking
at alternate feedstocks, you mentioned green chemicals, there's lots of green
chemicals, but they are very niche in relatively small volume and a very tiny
sliver of the supply pie right now.
But, you know, come and learn.
You know, the prospects for for all those areas of the industry, especially
the chemical stream as well, actually.
Victoria: Yeah, I will say one of the things I've always loved about
attending WPC, and I've been able to attend on and off through the years
is, um, it is one spot to get a lot of.
in-depth information.
And frankly, I'm not sure if I should admit this to you guys or not, but
as a, you know, as a small business owner, or sometimes even in a big
business, we couldn't necessarily afford to pay for the big programs that
you guys produce in terms of all the analytics and the data and subscribing.
And so, uh, attending WPC is great value.
Because the amount of information that is shared, that you can take and
directly apply to your business and look like the smartest person in the
room, because you know, what's going on.
Tony: Awesome.
What better endorsement?
Thank you.
Victoria: Absolutely.
Tony: But it's great, great networking as well.
You know, you come and you meet your industry peers, very social,
uh, events in terms of receptions and, and things like that as well.
But, but people from all over the world, it is a, it is a world.
Victoria: So, so I'm going to wrap up the formal part of this interview and then
we're going to move to questions, but I want to ask, Kurt and Tony, you know,
if there was one thing that you would advise a chemical leader, a strategist,
a business leader to be monitoring in 2025 to be ready to take action
in their business, what would it be?
Tony: I think, I think for chemicals, look, Dan, Dan turns are just brilliant.
Good for ruining, as you said earlier on, right?
You know, it's it is the opportunity to make your
organization that little bit leaner.
We all need to shed cost.
It doesn't matter what the industry is, but.
Becoming lean is also about becoming fit for future growth.
And, you know, this is a long downturn.
We had a long upturn in the, you know, 2010 to 2020.
We had, you know, people were talking about a super cycle.
We had a long period of profitability that's soon forgotten, right?
We're struggling now and it's a long downturn, but it
will come to an end, right?
And then the industry does need to invest.
To grow.
So it's about getting your organization fit for that growth and you need to be
studying your investment options now.
To start up in the early 2030s, and it doesn't matter who the president
of the United States is, right?
You're gonna build, a refinery, an energy plant or whatever, to
last 40 years, maybe 50 years, it's gonna see a few presidents, right?
So don't worry about who's in power.
Love
Victoria: it.
Thank you.
Current,
Kurt: keep that long view, right?
Uh, you know, I think, yeah, we are oil demand will be plateau.
And I think, you know, there's, we could all debate kind of win and how quickly.
So I think the whole feedstock, keeping that feedstock you over the long
term, and I think the coal climate sustainability will continue as well.
Different bases, different markets.
Right?
So don't get too balled up.
Don't, um.
Okay, too frozen right in, you know, we're going into a period of high
uncertainty like we talked about, but that doesn't mean, you shouldn't
be making business decisions and keeping kind of that long view across,
political systems will will ship, right?
And we'll be here 5, 10 years ago talking about a shift of
that pendulum back the other way.
Victoria: Awesome.
All right.
Well, Tony and Kurt, this has been excellent.
Thank you.
I really appreciate your time today and I appreciate everyone joining us.
Thanks for joining us today on The Chemical Show.
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