Commodity prices are hugely impactful on chemical companies.
They're often the main input and chemical supply industries tend to be highly cyclical themselves.
There's other dimensions to this that can be important, such as location and access.
We'll use the EU US divide here as an illustration.
Activities elsewhere, particularly in China, are also hugely impactful to the chemical industry.
But the EU US divide is a good illustration of the kind of market dynamics that can be created through access.
US firms tend to have an advantage against EU firms, especially at time of recording.
In 20 24, 20 25, the shale boom of the two thousands onwards has created a huge supply of cheap raw materials to US chemical firms.
This supply isn't as readily available to their EU counterparts.
Events such as the Ukraine conflict make this worse.
This means that on a like for like basis, US firms have a big advantage.
It also shapes the industry.
EU players are forced to look for margin in new ways.
They tend to specialize in higher margin, more differentiated products.
They'll achieve this through brand R and D to create ip.
US firms can afford to go lower margin and can concentrate on more basic products such as packaging.
There are strong forces, which mean domestic players still have an edge.
Transport costs and safety can be an issue, and differentiation through IP still creates a strong position for domestic players.
Finally, tariffs and regulations may mean that domestic players have an edge.
