Global Chemicals As you were…

Research evidence excerpt

Global Chemicals As you were…

2 July 2026

Global Chemicals EquitiesChemicals

As you were…

◆ Chemical stocks and product prices are resetting to pre- Sriharsha Pappu*

conflict levels before full supply normalisation… Global Head of Energy & Materials HSBC Bank plc

sriharsha.pappu@hsbc.com

◆ Chinese ethylene supply was up 15% through May’26, +44 20 7991 9243

despite m-o-m drops over Mar/Apr/May – the glut is here… Yi Ru* (Reg. No. S1700520120001)

Head, A-share Petrochem & New Materials Research

HSBC Qianhai Securities Limited

◆ …and will steadily get worse through ’26-27, taking us back yi.ru@hsbcqh.com.cn

where we started – to trough profitability +86 21 5066 2008

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

Well, that was interesting. After four months of intense debate over the impact of the

supply squeeze caused by the conflict in the Middle East and the sustainability of

higher margins and utilisation (see Disruption playbook, 10 March 2026 and Mapping

capacity loss + what matters now, 31 March 2026), the sector is back where we

started. Commodity chemical stocks, in the US and in EM, have given up all of their

gains since the start of the conflict, while the broad-based chemical pricing index is

now up 10% since the start of March, after being up over 70% at one point in mid

April, despite full supply normalisation being, in our view, at least 1-2 quarters away.

So, how do we explain this? How can pricing be back to ‘normal’ when supply is

some distance away from being normal? Well, what the price is telling us is that the

market is well supplied, or on its way to ample supply. One part of this is of course

the market running ahead of fundamentals – price travels before product does.