Energy and Chemical Industry Outlook for 2026 with S&P Global - Ep. 241

Geopolitics, energy volatility, and persistent oversupply are reshaping the global chemical industry as 2025 draws to a close. Victoria Meyer sits down with Kurt Barrow and Andrew Neale from S&P Global to address the forces driving today’s market dynamics, the impact of government policies, and the shifting landscape heading into 2026. They break down how new sanctions, tariffs, and energy transition policies are influencing everything from oil prices and supply chains to chemical production strategies worldwide. 

The episode explores regional strengths and vulnerabilities, with North America, the Middle East, and China taking leading roles amid rationalization and capacity closures in Europe and South Korea. Kurt Barrow and Andrew Neale share insights on how chemical producers are responding to cost shifts, supply chain resets, and evolving consumer demand. The conversation also previewed the upcoming World Petrochemical Conference and CERAWeek, emphasizing the need for industry leaders to stay agile in response to accelerated change, emerging technologies, and global market imbalances. 

 

Victoria, Kurt, and Andrew discuss the following this week: 

•  Why government action, oversupply, and shifting demand are redefining 2025 in the chemical markets.
•  How new sanctions, oil movements, and policy shifts impact feedstocks and chemical production.
•  Real-world examples of how canal disruptions, freight rate swings, and tariffs are reshaping global sourcing.
•  Regional winners and losers as energy prices, assets, and investments shift across Europe, China, and the US.
•  Key strategies for chemical leaders navigating consolidation, energy transition, and market shifts ahead.

 

 

Killer Quote:  "We’ve gone from that globalization to regionalization—that almost helps some of your high cost players very short term...that’s a very near term. How long that lasts if we have another round of tariff movements—European, and we will, but European, I don’t know what it is, but we will in Q2."  —Andrew Neale 

Subscribe to The Chemical Show on YouTube 

 

***Don’t miss an episode: Subscribe to The Chemical Show on your favorite podcast player.
***Like what you hear? Leave a rating and review.
***Want more insights? Sign up for our email list at https://www.thechemicalshow.com 

• (00:01) - - Introduction & Welcome
• (01:31) - - Energy Market Shifts & Government Actions
• (05:27) - - Tariffs, Trade, and Global Uncertainty
• (09:40) - - Chemical Demand and Investment Cycle
• (12:55) - - Feedstock Price Trends & Impact
• (18:09) - - Regional Winners & Losers in Chemicals
• (21:43) - - Deepening Structural Shifts
• (27:52) - - Energy Transition: Progress & Roadblocks
• (33:06) - - Looking Ahead: Preparing for 2026
• (34:48) - - Conferences & Final Remarks

Creators and Guests

Host

Victoria Meyer

Host of The Chemical Show; founder and President of Progressio Global

What is The Chemical Show: Where Leaders Talk Business?

Looking to lead, grow, and stay ahead in the trillion-dollar global chemical industry? The Chemical Show - the #1 business podcast for the chemical industry - is your go-to resource for leadership insights, business strategies, and real-world lessons from the executives shaping the future of chemicals. Grow your knowledge, your network, and your impact.

Each week, you'll hear from executives from across the industry - from Fortune 50 to midsize to startups. You’ll hear how they're tacking today's challenges and opportunities, their origin story (what got them here!), how you can take and apply these lessons and insights to your own business and career.

We talk:
- Business Transformation
- Innovation
- Digitization of business
- Strategy
- Supply Chain
- and so much more

Founder and host Victoria King Meyer is an expert interviewer - who brings out the best in each guest. She gained her industry experience at leading companies, including Shell, LyondellBasell and Clariant. Today, she is a high-performance coach and advisor to business leaders in chemicals and energy, as well as the host of The Chemical Show podcast, and founder of The Chemical Summit.

Follow us on LinkedIn for the latest!

Websites:
https://www.thechemicalshow.com
https://www.thechemicalsummit.com
https://www.progressioglobal.com

Victoria Meyer [00:00:01]:
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. Welcome back to the Chemical show, where leaders talk business. Today I am speaking with Kurt Barrow and Andrew Neal, S. And P Global. And you guys know these guys.

Victoria Meyer [00:00:35]:
Kurt's been on the podcast before. This is Andrew's first time, so we're going to initiate him nicely and both of them are going to share some insights and updates about what's the current state of the chemical markets in 2025 and what's our outlook as we start heading into 2026. So, Andrew and Kurt, welcome to the Chemical Show.

Kurt Barrow [00:00:55]:
Thank you.

Andrew Neal [00:00:56]:
Thank you.

Victoria Meyer [00:00:57]:
Awesome. So I'm just going to start with a. I'm going to ask both of you guys the same question, which is if you think about 2025 and this wonderful world that it's been and you had to characterize it in three words or less, what would it be?

Kurt Barrow [00:01:11]:
I'm going to say two words or two phrases. Dynamic and government influence.

Victoria Meyer [00:01:18]:
That's so good.

Andrew Neal [00:01:19]:
All right, Andrew, I'll go from, I guess looking a little bit further downstream, volatile and continued oversupply.

Victoria Meyer [00:01:28]:
Okay. All right, well, and that's a good way to get started. So let's talk about it. Where are we currently as we sit here recording at the beginning of November 2025? And let's maybe start with the fundamentals, which is energy and oil. Kurt.

Kurt Barrow [00:01:46]:
Sure, yeah, no, I'll start at the front of the chain and let let Andrew kind of pick up, pick up the pieces, as it were. Right, Listen, I said dynamic. Right. And that's not, that's not just kind of this year. That's if you look back, I guess, a little bit of history. Right. If you think back five years. Right.

Kurt Barrow [00:02:03]:
I mean, five years ago we were in Covid, you know, and then we tried to restart the economy quite rapidly, hit some supply chain issues. More on the chemical side. Actually. Oil was, you know, supply chains were fine. We actually had the invasion of Russia, the Russian invasion of Ukraine. That obviously sent energy prices crazy in Europe. And we all know the kind of the fallout consequences of that. I mean, also very resilient.

Kurt Barrow [00:02:28]:
The energy system has proven quite resilient. I mean, we shipped 5 million barrels a day of oil halfway around the world. Right. As we put in the government influenced bans. Right. The original bans of oil from Europe and The US and so flash forward right. To today, we're still working through that. Right.

Kurt Barrow [00:02:50]:
We've got new sanctions from the Trump administration, quite strict sanctions, if they enforce them around the Rosneft Luka oil, potentially locking them and anybody who buys Russian oil out of the US Financial system. These are really strict sanctions, like what we're applying to Iran. Right. So fundamentally we're oversupplied, as Andrew said, and we can come back and talk a little bit about what that means for 26, but it's also quite volatile at the same time.

Victoria Meyer [00:03:20]:
Yeah. So question for you on this, Kurt. And I think about some of the conversations I was having with folks a couple years ago that talked a lot about the supply chain influence and not so much about supply chains being broken, but the fuel standards. How is that playing out? To the extent that you, I saw that look on your face. To the extent that you're able to comment like I'm not hearing, I'm not hearing anybody talk about it currently. However, this must have an influence somewhere along the way.

Kurt Barrow [00:03:51]:
It will. I'd say that the whole energy transition more broadly has become more pragmatic, I guess maybe is the right term to use. There's some pretty interesting shifts happening in terms of parts of the world that are actually accelerating the energy transition. That's primarily China. And then slowing. Right. Obviously quite dramatically in the US But I think slowing in some of the OECD markets as well. Right.

Kurt Barrow [00:04:16]:
I think if you sit and have honest conversations with some of the OECD companies in the markets in Asia. Right. They'll tell you things are slowing there, even if they haven't really changed the, you know, the policy documents quite yet.

Victoria Meyer [00:04:31]:
Yeah. And how, what about the tariff picture? How are tariffs playing out when we think about energy and oil primarily playing.

Kurt Barrow [00:04:40]:
Out from the demand side. Right. And the risk around, what does that mean for oil demand, the actual sanctions themselves or the tariffs? I should say the tariffs themselves, with a few exceptions, we can back talk about, you know, ethane, propane into China, US ethane and propane into China. That was one that had some fits and starts to it. But everywhere else, it's not really directly impacting trade. It's more about the uncertainty of other tariffs, other products and how that plays through. It's also kind of whipsawing some of the demand because we're front running some trade into the US Ahead of known changes in tariffs. And that's playing through the pet chem sector largely, but it's also affecting things like diesel demand.

Kurt Barrow [00:05:27]:
Right. Where we're seeing large freight movements and then everything kind of slows dramatically down.

Victoria Meyer [00:05:33]:
Got it, got it. Okay, so Andrew, over to you. Let's talk chemicals. What are you seeing in the wonderful world of chemicals?

Andrew Neal [00:05:42]:
So I think piggybacking on the, on the back of Kurt. I mean, the one thing that I'd add on the. All of the factors that influenced us over the last couple of years coming out of COVID was that China recovery was, was much more dramatic in terms of delayed coming out. We saw that sort of bullwhip effect come back out through 22, 23. So that had an additional impact. But I think preceding all of that was that long, prolonged period of pretty decent returns through the teams ended up with a whole host of people around the world investing in capacity, primarily China, but around the rest of Southeast Asia, Middle east as well. And we're now seeing 2019, 2020, all of that capacity start to hit markets. And, and that hasn't changed.

Andrew Neal [00:06:26]:
We're still in that. Going back to the three words continued oversupply. And we're just working that off. And I think if we look now through the middle of 2025 coming in, it was oversupplied Q2 volatility. We saw a lot of supply chain sort of move backwards and forwards. The US couldn't export a whole host of materials out to China. Pet chem wise, you saw a couple of million tons of polyethylene couldn't import a lot of finished goods. So we saw uncertainty and basically sort of a block on orders initially.

Andrew Neal [00:06:59]:
So on a year we see demand growth. We probably lost about a quarter of our growth this year from what we were expecting beginning of year. So still growing. We're still well over sort of 10 million plus tons of base chemical demand load, but we've lost some of that growth just through some of those uncertainties.

Victoria Meyer [00:07:18]:
Yeah. And I guess from a. If I think about chemicals and the way it just ties down to the consumer, lots of mixed reports depending on, you know, which outlet you look at, et cetera. And yet the economy is certainly the US economy still seems to be holding steady. So you would assume that while there's demand growth loss, there's still just base demand that's going okay.

Andrew Neal [00:07:42]:
I mean, the fundamentals of things that people are buying day to day are still growing. The opportunistic purchases are still not as big. And Kurt mentioned some of our automobile buying habits are changing. We're not all jumping into the EVOO pool straight away and some of those decisions being pushed back inflation at 10%. I think we still do the weekly grocery shop but we don't make those big purchases. And some of those are where houses and autos are, where we're seeing that pullback. And that's just not pulling through chemical demand quite as strongly as it, as it has been sort of previously. Look, we expect that to recover.

Andrew Neal [00:08:20]:
It's just what's driving our economy growth at the moment. And at the moment there's a lot of service led, not quite so much from the fundamentals and manufacturing side of things.

Victoria Meyer [00:08:28]:
Yeah, that makes sense. And what about, I mean, supply chain? And we talked a little bit about how disrupted supply chains have been. Some of it's tariff related. Is it primarily tariff or is it physical disruptions? What are you seeing?

Andrew Neal [00:08:41]:
This year we come in with the ongoing physical disruption around the Suez. We've got congestion around the Panama in terms of our canals and shipping routes. But really it was that container freights in and out and around Asia. So we track a container index which is an amalgamation of all the big container freight routes around the world. And if we look at five year averages, Q2, June, July, we ended up sort of at a five year high almost, which was just, you know, instead of going to China for that material, you're going to Vietnam, you're going to Thailand. A lot of those supply chains are shifting around since then. We've ended up almost at five year lows now. So we have industry is re and the supply chain has reset itself pretty quickly to be able to optimize through that.

Andrew Neal [00:09:31]:
And we're seeing freight rates come down, it's less for the consumer. So it's actually helping sort of what that end use cost is that's passed on to consumer, US consumers and customers.

Victoria Meyer [00:09:40]:
So I've heard a couple different points of view on this. In terms of Q1 seemed to be kind of slow because people are trying to figure out what is actually happening from a tariff from a economic perspective. Q2 There was better clarity about what the tariffs were and people were moving purchases and moving ahead on business, including. A couple of things I was hearing recently was about companies actually building in tariff pricing even though they weren't realizing tariffs, but kind of pushing in pricing early to accommodate tariffs that may or may not come. And then I've heard quite honestly from several companies that Q3 was bad. Now earnings reports are coming out. Now it seems to be a mixed bag. But what are you hearing and seeing with your, your customers and folks you talk to?

Andrew Neal [00:10:31]:
I think it depends upon product and value. Chain. I mean we, you say Q1 was, it was uncertain, but there was a, we saw a whole host of benzene, for example, end up in the US through Q1 because they knew something was coming in the US being net short took that option to move product meant we saw very little through Q2. Q3 has been, I think agree on how much tariff get passed on to customers. I mean, if, if we look at our economists at S and P, they're actually sort of pushing this year down a little bit to say that that tariff pass on is not going quite as fast as maybe previously was expected. So that's weighing on some of our GDP views of this year, next year, on when US customers are finally going to be paying those costs.

Victoria Meyer [00:11:17]:
Yeah, makes sense, makes sense. Okay, so we've talked about kind of digging it a little bit deeper just in terms of what the, the short term, what you guys are seeing here in the short term as it relates maybe to feedstock. Let's talk about, you know, if we play out the rest of this year and heading into first quarter. What do you see in there, Kurt?

Kurt Barrow [00:11:36]:
Yeah, so lower prices, right? And you know, in summary. But let me, let me put a little context around that, right? I think in the oil side, right, in the crude oil markets, we've got a lot of oil coming to market, right? We've got long duration non OPEC projects. You know, we got Guyana, we got Brazil, we got some Canadian oil sands. And then on top of that, right, as, as you know, right. OPEC plus has made the decision to bring additional barrels into, into the market.

Victoria Meyer [00:12:04]:
That was just the market need those barrels.

Kurt Barrow [00:12:07]:
No, they don't. They don't. Now they, it hasn't been totally obvious through this part of the year for a couple reasons, right? I mean summer is the high demand period. So the gasoline season was pretty good. There was a fair bit of travel kind of in the, in many of the markets and there was a lot of burning of fuel oil for power in the Middle east, just which is pretty seasonal, Right. There was also another dynamic here that we all need to watch and that is the stock build of oil in China. China built a significant amount of oil this year and so that was kind of off the radar. It's not well reported.

Kurt Barrow [00:12:48]:
It's not something that they put out monthly reports on oil builds or anything like that.

Victoria Meyer [00:12:52]:
What would be the reason for that, Kurt? Why would they do that?

Kurt Barrow [00:12:55]:
Fundamentally, it's the tension between the US and China is how we read this, right? I mean China has always been very Concerned about security of supply, self reliance. And I think it's that increased tension, it's not to play that out as to where that might ultimately, where that tension might ultimately go. But the reality is, right, there is a strategic rivalry now between the US and China. And so they, you know, I think we're stockpiling oil kind of ahead of that because the reality is that China is actually getting close to peak oil demand. Right. Because of the EVs, because of some of the other policies. They've actually been quite aggressive on energy transition, not solely for environmental reasons. A lot of it I think goes back to their energy security and their industrial policy right around making batteries, making EVs just like they do with other clean tech technologies.

Kurt Barrow [00:13:55]:
But anyway, they built that. But we have a really oversupplied fourth quarter this year is where we really think it hits. And then that extends into 2026. Right. And that puts us in the, you know, the upper 50s crude oil price. Right. For next year.

Victoria Meyer [00:14:12]:
So what does that do for us? What does it do? And what does it do to chemical the market?

Kurt Barrow [00:14:17]:
So that's half of the equations. What that means is that we're going to have cheaper nafta. Right. So NAFTA very closely tied to crude oil prices, you know. Right. The other side of the equation is the gas, the particularly the US natural gas. And it's actually moving the other way because of the LNG plants that we're going to be start up. Right.

Kurt Barrow [00:14:34]:
We have some additional increase in gas price to incentivize the drilling that's needed to fill those, the feed gas into those plants. And so that puts us in a 450 type gas price regime. Henry Hub for next year. So that narrows a bit the advantage of the gas based crackers. Still low on the cost curve. Right. But it does narrow that some to the degree that that helps Andrew sell more chemicals. Right.

Kurt Barrow [00:15:04]:
Because you get a low feedstock price that maybe flows through to a degree.

Victoria Meyer [00:15:09]:
Yeah. Interesting. And is it going to help you variables?

Kurt Barrow [00:15:14]:
Sorry, Victoria, let me add one more thing. I guess the two key uncertainties around that, one of them goes back to these Rosneft Lukoil sanctions. Right. So if those are enforced in a meaningful way enough that it would take Russian barrels off the market. We have the spare capacity it's sitting in in Saudi Arabia and a few other OPEC members. But that would be a pretty bullish signal if they had to reduce the amount of spare capacity and start pumping even more oil. And then the other one is OPEC plus itself. Right.

Kurt Barrow [00:15:47]:
They could reverse their decision to change course and take oil back out of the market at some point if they so choose.

Victoria Meyer [00:15:57]:
So does any of this help Europe? I mean, because that's a big part of the European chemical narrative, let's say, and probably this is a narrative that cuts across industries and markets is the high cost of energy. Of course we know that they were dependent on Russian energy with the Russia Ukraine war, they stopped getting a lot of that energy, that oil, the gas, etc. What does this do? What is more oil in markets, more production, lower prices, what does that do for Europe if anything, from an energy.

Andrew Neal [00:16:30]:
Perspective, from a chemicals perspective?

Victoria Meyer [00:16:32]:
How about both?

Andrew Neal [00:16:33]:
How about both?

Victoria Meyer [00:16:33]:
I'll give you guys both the chance to answer that. How's that?

Andrew Neal [00:16:36]:
Okay, so from a chemicals perspective, I mean we've already saw Europe struggled with that high energy price for a couple of years and we've seen chemical companies one by one now start to make decisions around that, which has probably been two, three years in the making, but it's gaining momentum. And now we've seen from a cracker perspective, all of the global majors, or many of them have all taken their high cost global asset out, which is invariable in Europe. So Dow, Exxon, even Sabic have all taken that opportunity to right size and sort of hedge trim their global cracking assets. Unsurprisingly, it's in Europe because even your derivative costs, your trying to move that to market, your energy costs in processing and your polymers just make it unprofitable. Especially in a world where the US and the Middle east has brought on so much capacity. China's become a little bit more self sufficient in a lot of products. So that Middle Eastern and US capacity is now swinging targeting Europe, which is a little bit of a sitting duck in many instances for some of those products. So that's kind of playing out and that's sort of our narrative around Europe for the next couple of years.

Andrew Neal [00:17:51]:
Europe has historically built itself sort of an export orientated industry to some of those small certain products. And really it's right sizing that with an energy and a gas price of where European sits, it's just not competitive to be able to push that into markets outside of its borders.

Kurt Barrow [00:18:09]:
Got it, yeah. So listen, Europe's importing energy, right? They're importing crude oil, they're importing gas now. And on top of that, you know, the policy regime there is quite constraining. They had a very forward leaning energy transition programs. You know, we're seeing some shifts in that, but it takes. Europe moves quite slow. Right. Because of the structure of how that's done through Brussels.

Kurt Barrow [00:18:36]:
Right. I think as you go from the public opinion to the, to the polls to the elections to the elections of the various different members in the different parts of the EU organizational structure. Right. The parliament and so forth, that just takes a long time. Right. So Europe's really struggling in some ways beyond just the energy price, right?

Victoria Meyer [00:19:00]:
Yeah, and I think that's right. And as I heard on a conference I was at last week, somebody on the panel was from Europe, a European policy wonk, I'll say. And it's, you know, the Beauty of the EU is 27 countries inside of one European Union. The downside is 27 countries inside one European Union that has to reach agreement. And that's not, it's not easy to do. So obviously they've got some challenges. So I'm going to come back to the kind of what we're talking about here near term. And Andrea, maybe you've already touched on this, but you know, lower energy costs should be good.

Victoria Meyer [00:19:35]:
Who becomes the winners? So when you think about the chemical markets, who are the winners? When we have this lower energy cost environment, is it everyone, is this helping the integrateds more than the non integrateds or is it kind of agnostic?

Andrew Neal [00:19:48]:
Those that are fully integrated on lower energy have an advantage. If you're at the top end of that curve, you've got less. I mean, the US is going to probably lose about $200 per tonne of cost advantage on an ethane based ethylene derivative if we're looking at things like polyethylene. So that becomes less of a disadvantage for those European players. If you're going pure commodity hdpe, lldpe, you're still not going to be able to compete from a scale perspective, from a cost perspective. But it puts a little bit more evenness in that play. For those in the sort of upper Q3, Q4, lower Q4 type quartiles, those that are still at the top of Q4 are still going to be at the top of Q4. There's still going to be those that are, that are price setting at plus or minus zero margin and making decisions on whether they want to run their asset through another turnaround cycle.

Andrew Neal [00:20:41]:
Do they turn around for another three, four years? We're seeing that increasingly. You know, questions around going into those and spending that Capex or OPEX on maintenance.

Victoria Meyer [00:20:51]:
Yeah, interesting. Okay, so if we play this out slightly longer term over the next one to two years so you know, one of the things I thought was interesting, Andrew, you talked about how the investments that were being made in 2018, 2019, we're seeing them come to life and come to fruition now. One I hear especially China companies, Chinese assets continuing to progress and be built heading into 2030, we've certainly seen and, and these are big projects that tend to be more of the green projects, you know. So I'm thinking about dowsing at zero cracker. A lot of the sustainability projects, those have all gotten paused is the official wording. Right. And then we're seeing a lot of rationalization. You had a nicer term for it.

Victoria Meyer [00:21:44]:
What do you see happening? Like what's. It seems like we're in a period of structural shifts across the chemical industry.

Andrew Neal [00:21:53]:
I think a couple of things. We've gone from that globalization to regionalization that that almost helps some of your high cost players very short term. I mean we see it when supply chains, all contracts, you know, there's, there's less opportunity a little bit. So that's a very near term how long that lasts. Like if we have another round of tariff movements. European, and we will, but European, I.

Victoria Meyer [00:22:14]:
Don'T know what it is, but we.

Andrew Neal [00:22:15]:
Will in Q2, I mean, you know, we continue to watch. That's a very upside potential in terms of that new wave of capacity. Look, it continues to be built. I was in China a couple of weeks ago and, and they took around all of that new. It's shifting to be from sort of that private to state. And you know, there's a different focus. It's becoming a little bit more managed in the capacity that's being added. But there are still licenses that are going through, even some of those that are long delayed.

Andrew Neal [00:22:42]:
We expect to get approvals for some products, so things like aromatics. There's a little bit of a pause and now it's not a upturn. But 26 could end up being more derivative. If demand continues to grow from a polyester sort of shipping it into the US perspective or around the world, that helps a little bit. If gasoline. Kurt said gasoline was a little bit stronger, we saw pockets of that. If that stays a little gives us some support, you end up with some opportunity. I think on the cracking side, the capacity build is still relentless and we're going to see that matched with over the next 12, 18 months, some more decisions around closures.

Andrew Neal [00:23:22]:
If we're looking at Asia, you've got at least all of the South Korean assets. There's two and a half to three and A half million tons there that are going to be announced and that's going to take a year or two to play out. You've got more in China. Their anti involution policy sort of adds another. We think about 6 million tonnes of capacity that will be taken out of the market now. That will be replaced with more crackers. So it's not as if it's, it's gone for good, but it's still capacity that's slowly coming out. There's probably another million and a half, something like that out of Europe that we see being announced.

Andrew Neal [00:23:55]:
I mean, we've seen some sale announcements or sort of discussions. There's probably a little bit more of that. There's a few crackers that still a little bit vulnerable before 27, 28 time period and we start to sort of reach that bottom.

Victoria Meyer [00:24:08]:
So I know you guys talk to, I mean, you talk to a lot of people across the industry. I know that you mentioned that this is, this is the busy period, especially as we're all approaching year end and everybody's trying to get clarity first. You know, their strategies get clarity and close business, all the other things. It seems to me that as older, less cost effective assets in Europe shut down, we're obviously seeing the European base of production diminish. We're starting to see this. And you're talking about seeing this in South Korea. There's a shift, right? And so part of this was a natural growth shift and now there's a contraction and growth shift. As you talk to executives across the industry, is there a sentiment of concern about being globally imbalanced? I mean, I guess we've always been, if you could say it's.

Victoria Meyer [00:25:01]:
There was a moment in time when we were evenly balanced across regions. That was probably a, you know, a point in time, maybe a year. And so there's always been some imbalance, but we feel like we're moving to a period of extreme imbalance. Is this a concern when you talk to leaders across the industry or do they just say this is about moving to low cost regions and optimizing where products are produced?

Kurt Barrow [00:25:24]:
Yeah, it's an interesting question, right, because I think there's a little bit of dichotomy there because we're talking about rationalizing assets and I'd say the other thing, right, that we've seen, we thought this would happen and now it is consolidation kind of ahead of rationalization. Right. So we haven't seen a ton of M and A, but we've seen, you know, places where companies have joined Joint ventures or other sort of alignments. Right. To help bring a group of assets together and then you can kind of select the ones you want right to the weaker ones. But it is interesting dichotomy in that we are seeing maybe a bit more of an imbalance, as you say, globally, but at the same time we're seeing supply chains, concern about localization of supply chains and supply chain vulnerability kind of across the economy and chemical supply chains are part of that. So a little early to tell maybe from my perspective of how that plays out. But yeah, I think it's interesting dichotomy there.

Victoria Meyer [00:26:26]:
Yeah, fair enough.

Andrew Neal [00:26:27]:
I also think that having oversupply and under supply around the world, we were comfortable with that when trade barriers were low. As soon as you start to put tariffs and trade barriers in place, we're less comfortable with big supply demand imbalances around the world. And I think that's causing some shipping flows to move. I mean we saw it very short term in the sort of Q2 as tariffs were agreed at various rates. But longer term there is that shift away from. As China becomes a little, a lot more self sufficient in certain products. There's still somewhere we fundamentally see sort of that Middle East US flow to China will continue. That's going to impact where growth and assets keep on being closed.

Andrew Neal [00:27:09]:
I think that if I, if I look at Europe a little bit, I mean some of those, some of those rationalizations we're seeing, the companies want to maintain their customer base, they're not going to be giving up those existing customers. They're just going to look to supply it from others. So some of that shift of trade flows will be companies supplying with their own material just out of US or Middle east joint ventures at a lower cost. But they're going to want to, they're not going to be turning away customers next year, I don't think.

Victoria Meyer [00:27:37]:
Yeah, and interesting.

Andrew Neal [00:27:38]:
For lower demand.

Kurt Barrow [00:27:39]:
Yeah.

Victoria Meyer [00:27:40]:
And it's an interesting mix of, as you say, regionalization and globalization in a different way. So very interesting times. So we've got, well, we've got about 10 minutes left. Do we want to talk energy transition? Because I would say five years ago we couldn't have done this without talking about energy transition. And now maybe there's a question of what energy transition. And yet I think it's still happening just quietly slower.

Kurt Barrow [00:28:09]:
Yeah, it is, it is. Right. And I think, I mean this might be a good point, Victoria, just to mention, right, we are, we are going to have the Cira week and wpc, the World Petrochemical conference in March in Houston. Right. Same week on two sides of Discovery Green Park. So a lot of what we're talking about here is really interesting discussion around kind of what we're going to deep dive into there. But the energy transition, like I said, it's accelerating in some parts and slowing in other parts of the world in different, different parts of the value chain. I'd say things like electrification, if you step back and look at it at a high level, we've been relatively successful globally at electrification, but not so successful on decarbonization.

Kurt Barrow [00:28:53]:
Right. To actually reduce emissions of our molecules, if you will. Right. And again, it's going to be really interesting. The big impact on the oil side, the early big impact on the oil side has been electric vehicles. And you know, we're selling about 1 in 10 cars in the US as is some sort of plug in vehicle, maybe 1 in 4 in Europe and about 1 in 2 in China. The US and Europe is largely stalled out and China continues to grow. And just like they're overbuilding capacity and chemicals and steel, concrete, they also overbuilt capacity in vehicle production broadly.

Kurt Barrow [00:29:34]:
And electric vehicles, we're seeing a lot of exports for those, you know, that are listening, who've traveled the world, you know, you know that you oftentimes see Chinese vehicles and you know, in Brazil, in Rio and Thailand, Bangkok, you know, kind of around the world. So one of the interesting things will be kind of how does China's, what's China's influence of the automotive sector and you know, how many of those are electric vehicles versus ice? That's a part of the transition. And then the other part, I think coming back a little bit maybe to the Pechem side, one of the dynamics that we see is that we do have peak oil demand globally in the call it the 2030, 2035 timeframe. And juxtapose that with the continued growth in feedstock requirements from the chemical side. And so that means, you know, we're going to have less refinery output to feed the chemical system. You know, we've got a pretty detailed analysis of kind of how we think that plays out in terms of where do you work and you go get some more naphtha molecules, right? And you know, hit, hit, look at the gasoline pool, right? Gasoline demand slowing. There's a lot of naphtha and gasoline. So there's, there's some steps like that that we think will occur.

Kurt Barrow [00:30:56]:
But ultimately down the road, you know, a decade or two, we need to go deeper into the crude oil barrel and, and all this is to say that things like NAFTA get a little more expensive. Right. Or at least relative to crude oil. And so that's, that's a piece of the, that's the feedstock piece of the energy transition.

Victoria Meyer [00:31:17]:
Yeah. Do you see coal still playing a big role in the future? I mean, I know there was a lot of work in certain areas, especially coal to olefins technologies and stuff. Does that still have a role to play?

Kurt Barrow [00:31:31]:
I'll let Andrew talk about the olefins side, but we do see coal generally slowing in the broader power energy side and even the stuff they're building in China. Just as an aside, a lot of the coal fired power you're seeing being built in China is not really operated that much. It's almost like peaking coal plants. Again, it goes back to that energy transition or that energy security conversation around China. But Andrew, I'll let you talk to coal to oliphants, I guess.

Andrew Neal [00:32:03]:
Coal to oliphants. It was, it was something that's walking around there. A couple of weeks ago, it was more surprisingly on the agenda than I thought. And especially in a world where energy transition and you know, we see the carbon emissions coming out of a, of a coal based polyethylene molecule being huge. They're still becoming more efficient and working on the efficiency of that. Talking around decarbonization of that now that's a, that's a heavy decarbonization program to be able to get that even on par. So in terms of new assets being built is probably more of a question mark. But certainly as part of their diversity of, of that security of feedstock, they see that as having a big role to play.

Andrew Neal [00:32:43]:
So they kind of have that, that complete split. They've got the, the coal based, the naphtha based and now the ethane based ethylene, all within borders, all with slightly different markets as well. But there's also a huge industry and a huge, huge part of population which is reliant upon some of those coal based, frankly, systems towns which are all based upon that.

Victoria Meyer [00:33:06]:
Yeah, interesting. All right, so final question, which is 2026. I asked you to describe 2025 in three words. I'll give you more than three words for 2026. But I guess the bottom line is what should we be anticipating or how should leaders and chemical companies be readying themselves for 2026? What are we looking forward to?

Kurt Barrow [00:33:32]:
So I think we'll get some clarity on some things. Right. So if I go back to my initial on the, on the Energy side.

Andrew Neal [00:33:38]:
Right.

Kurt Barrow [00:33:38]:
I think we'll have some clarity on the oversupplied market and how that's playing out. I think we'll have some clarity out of the White House. I mean there'll always be some zingers and some surprises but I think we'll know a little bit better where the geopolitics and some of the big relationships evolve to maybe some sort of steady state is maybe how I'd, I'd place it on the energy side, Andrew, for.

Andrew Neal [00:34:06]:
Chemicals I would say so going back we've got that relief on costs a little bit if you're a naphtha bass player and half the, you know, half the olefins and all of the aromatics really are. So you've got a little bit of a relief on that. I think from a demand perspective, again we're economics wise we're looking at similar GDPs 25, 26. So we're not expecting a bounce back from a demand perspective but we're demand should be steady.

Victoria Meyer [00:34:32]:
Am I right when you say we're.

Andrew Neal [00:34:33]:
Not writing off 26 demand? Yeah. And I think some, some of the capacity, we've got some value chains where capacity we don't see as much coming on next stream. Next year maybe it's 27, 28. So there's potentially a sort of a hiatus on where that trough, trough dips down to awesome.

Victoria Meyer [00:34:48]:
Cool. Well I, I guess good times guys. Good times in energy and chemicals And I know Kurt, you already touched on this but WPC and Sarah week are coming up and I know that's always a good place for leaders to learn more.

Kurt Barrow [00:35:05]:
Yeah, no it's, it's going to be quite a show this year. Right. So like I said it's one week right where we're both, both conferences will be going on the zero week in the Hilton and what we call wpc, the World Petrochemical Conference in, in the Hilton right right across Discovery Green and really just some really impactful programs. There's about 15,000 or so clients, hundreds and hundreds of our leaders in S and P Global and our analysts that are all on site really tackling all these questions not just about markets but technology, the geopolitics, the strategies kind of all in. I don't know Andrew, maybe you can give some color on the WPC program specifically.

Andrew Neal [00:35:54]:
Yeah, so I guess for WPC across the week where we're looking at strategic programs, so some of that's on specialties how those markets are sort of maybe shaping up a little different to commodities at the moment, circularity, it's a little bit slower than where it was 12 months ago, but there are still a whole host of companies that are interested in and pushing around that. But also things like shipping and finance, which ties, look, it's not important just for chemicals, but it ties us into the what's going on and the discussions on energy across the other side of, across the other side of Houston, downtown. So there's that specialty piece we have a day which is looking at effectively pulling executives from that global sort of industries, those top executives discussing tomorrow, next decade, where we see things headed, and then the traditional sort of breaking out into olefins, aromatics, methanol, those chemical feedstocks, where we see that changing. Still digging into China, Latin America, India, those growth regions where everybody in petrochemicals is looking for bits of optimism. So we've got a couple of sessions where we're focusing on those and we've got individuals from producers from those countries coming to to talk to us and discuss those markets. So across the week, all of that, plus plenty of networking opportunities to go and, to go and talk up and down, up and down, the various sites where we are.

Victoria Meyer [00:37:18]:
It's going to be exciting. And that's the week of March 23rd, is that right?

Andrew Neal [00:37:21]:
23Rd to the 27th. Yeah.

Victoria Meyer [00:37:23]:
All right. Good to see you guys in Houston.

Kurt Barrow [00:37:26]:
Yeah, look forward to seeing you.

Victoria Meyer [00:37:28]:
Awesome. All right, well, thank you for this. Anything else we should be covering before we stop covering?

Kurt Barrow [00:37:34]:
Do you have another 40 minutes, Victoria?

Victoria Meyer [00:37:36]:
Oh, gosh, no. That's. The honest answer is not, not this month, not, not for the next six weeks. How's that?

Andrew Neal [00:37:43]:
We can do it again in six weeks and it'll be different.

Kurt Barrow [00:37:45]:
Right?

Victoria Meyer [00:37:46]:
Anyway, just rerun it. All right, well, good. Well, thank you both for joining me today. This has been a great conversation.

Kurt Barrow [00:37:53]:
Same. Thank you.

Victoria Meyer [00:37:54]:
Yeah. And thanks, everyone, for listening. Keep listening, keep following, keep sharing, and we will talk with you again soon. Thanks for joining us today on the Chemical Show. If you enjoyed this episode, be sure to subscribe, leave a review, and most importantly, share it with your friends and colleagues. For more insights, visit thechemicalshow.com and connect with us on LinkedIn. You can find me at Victoria King Meyer on LinkedIn and you can also find us at the Chemical show podcast. Join us next time for more conversations and strategies shaping the future of the industry.

Victoria Meyer [00:38:31]:
We'll see you soon.