Geopolitics – more uncertain than in decades – a view from the experts

Global Chemicals – Report 17 – October 28th 2025

Basic Chemicals – Despite what Dow suggests, still not enough being done to shorten the cycle

• Dow created controversy last week by suggesting 20 million tons of ethylene capacity was set for closure – we cannot get there, and much in the chart below is unconfirmed
• In prior work we suggested that the World needs to see at least 20 million tons of closures over the next couple of years to get a market turnaround in 2028 and offset additions
• While Dow’s estimate may turn out to be correct or even conservative, it is mutually exclusive from any idea that profitability can improve quickly – more pain = more closures.
• We do not believe that the US is immune from the oversupply problem as weaker international prices will drive more local competition – there is room for US consolidation
• There is potential for a lot more ethylene capacity driven by increasing US and Canada ethane availability as natural gas production grows for LNG; the ethane could be exported

Figure 1: There is a lot of unconfirmed hope in the chart

Source: Company reports, Dragoman and Pentant Analysis

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