Wall Street Analysts: Citrini’s Strait of Hormuz Field Report (Full Version)

It is clear from most of our conversations that the damage inflicted on oil refining and natural gas processing infrastructure has been severe—and significantly underestimated. Moreover, the current tightness in refined product markets far exceeds that in crude oil markets—precisely why this portfolio is overweight in refiners and refined-product-related assets. However, with transportation reopening, we expect near-term crude oil prices to decline—at least in the short run. We believe the U.S. petrochemical industry still offers the greatest asymmetric opportunity within these sectors. We lack sufficient confidence to forecast short-term U.S. equity market movements, as they depend not only on the outcome of this conflict. Historically, outcomes have exhibited a highly dispersed distribution. If our assumption about sustained recovery in Strait of Hormuz traffic proves incorrect—and if traffic fails to continue rising in mid-to-late April, instead effectively shutting down—the global equity markets would likely plunge sharply (by approximately 15–20%). Our base case remains that, as the conflict escalates and persists, equity markets will continue experiencing sharp volatility—but concerns over a global energy crisis will gradually give way to a more nuanced view: Strait traffic will increase, accompanied by elevated—but non-catastrophic—prices. The damage inflicted on Gulf-region petrochemical infrastructure has already exerted a structural impact on this market, and we believe it is now approaching a potential cyclical inflection point—possibly making it the most asymmetric position. U.S. petrochemical companies with continued access to low-cost domestic feedstocks stand to benefit enormously from global supply dislocations and soaring prices. "Even before the Middle East conflict erupted, we had begun seeing signs of market improvement in Q1. Now, price action and supply dynamics are evolving rapidly—and constructively. As early as March, we announced price-increase initiatives across every region and business unit globally." Global logistics have become highly uncertain. Affected by the Middle East situation, up to 50% of polyethylene supply is currently offline, constrained, or disrupted. Furthermore, inventory levels across the entire value chain are at historic lows. Dow Chemical raised polyethylene prices by $0.10 per pound in March, then followed up with another $0.30 per pound increase in April—double the previously anticipated $0.15. Last week, Dow CEO James Fitterling predicted that even after the Strait of Hormuz reopens, restoration of normal supply could take 250–275 days—given priority shipping rights granted to oil, natural gas, and fertilizer cargoes. The capacity destruction is real—and the rebuilding timeline is measured in years—not quarters. We favor U.S. producers positioned advantageously: Dow Chemical (DOWUS) and Westlake Chemical (WLKUS) are our primary holdings. Even if the Strait of Hormuz were to reopen fully tomorrow, we do not expect prices to revert to pre-conflict levels. This is especially meaningful for stocks still down ~50% from their historical highs. Macroeconomic Environment Short-Term Interest Rates Approximately two weeks ago, we executed a trade: shorting ES (S&P 500 futures) while going long SFRH7.

Latest! Global Chemical Companies’ Billion-Dollar Club: 13 Chinese Companies Make the List

Rank Company Headquarters 2021 Chemical Sales Revenue (USD millions) 1. BASF Germany 92,964 2. Sinopec China 78,358 3. Dow USA 54,968 4. ExxonMobil USA 52,544 5. LyondellBasell USA 46,173 6. SABIC Saudi Arabia 43,210 7. INEOS UK 43,045 8. Formosa Plastics Taiwan, China 39,799 9. ChemChina China 38,663 10. Hengli Petrochemical China 27,964 11. Linde Ireland 27,926 12. Mitsubishi Chemical Japan 27,874 13. Nutrien Canada 26,861 14. Air Liquide France 25,197 15. Rongsheng Petrochemical China 24,157 16. Bayer Germany 23,900 17. Shell UK 23,355 18. LG Chem South Korea 22,325 19. Wanhua Chemical China 22,284 20. Sherwin-Williams USA 19,945 21. Toray Industries Japan 19,847 22. Braskem Brazil 19,603 23. Covestro Germany 18,810 24. Shin-Etsu Chemical Japan 18,475 25. Sumitomo Chemical Japan 17,895 26. Evonik Germany 17,688 27. PPG Industries USA 16,802 28. Asahi KASEI Japan 16,791 29. DuPont USA 16,653 30. Yara Norway 16,616 31. LOTTE Chemical South Korea 15,832 32. Corteva USA 15,655 33. Indorama Thailand 14,726 34. Mitsui Chemicals Japan 14,363 35. Shanghai Petrochemical China 13,699 36. Solvay Belgium 13,524 37. 3M USA 12,880 38. Ecolab USA 12,733 39. Hengyi Petrochemical China 12,592 40. Showa Denko Japan 12,502 41. Mosaic USA 12,357 42. Borealis Austria 12,009 43. Westlake Chemical USA 11,778 44. IFF USA 11,656 45. Henkel Germany 11,403 46. AkzoNobel Netherlands 11,339 47. Arkema France 11,259 48. DSM Netherlands 10,886 49. Eastman Chemical USA 10,476 50. Air Products USA 10,323 51. EuroChem Switzerland 10,202 52. Sika Switzerland 10,122 53. Sasol South Africa 9,924 54. Johnson Matthey UK 9,274 55. Nippon Paint Japan 9,094 56. Tongkun Group China 8,997 57. LANXESS Germany 8,938 58. Orbia Mexico 8,783 59. Celanese USA 8,537 60. Huntsman USA 8,453 61. Tosoh Japan 8,181 62. OCP S.A. Morocco 8,016 63. Air Water Japan 7,914 64. Grupo Alfa Mexico 7,705 65. Kumho Petrochemical South Korea 7,393 66. WACKER Chemie Germany 7,342 67. Olin USA 7,327 68. Givaudan Switzerland 7,312 69. ICL Israel 6,955 70. RPM USA 6,708 71. Eni/Versalis Italy 6,611 72. CF Industries USA 6,538 73. Xin Feng Ming Group China 6,388 74. Chemours USA 6,345 75. OCI Netherlands 6,319 76. Teijin Japan 6,316 77. Mitsubishi Gas Chemical Japan 6,285 78. UPL India 6,207 79. Kingfa Science & Technology China 5,905 80. Norinco Huajin China 5,895 81. Kuraray Japan 5,734 82. PhosAgro Russia 5,707 83. Petronas Chemicals Malaysia 5,556 84. Hanwha Solutions South Korea 5,509 85. Lonza Switzerland 5,259 86. Kaneka Japan 5,205 87. Nouryon Netherlands 5,161 88. FMC USA 5,045 89. Trinseo USA 4,828 90. Avient USA 4,819 91. Clariant Switzerland 4,783 92. Firmenich Switzerland 4,696 93. Shanghai Huayi China 4,657 94. Symrise Germany 4,525 95. Axalta USA 4,416 96. KG Chemicals South Korea 4,309 97. Daicel Japan 4,167 98. Uralkali Russia 4,155 99. Orica Australia 3,942 100. Asian Paints India 3,885 101. Elkem Norway 3,850 102. Kansai Paint Japan 3,733 103. Tronox USA 3,572 104. Cabot USA 3,409 105. Albemarle USA 3,328 106. H.B.

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