Part of our confidence/concern that prices can continue to rise in the chemical space in general stems from what seems to be very strong demand – again confirmed in earnings reports overnight, as well as in the rail data from today's daily report, as well as inventory data that suggest we are below recent ratios to shipment trends. The inventory piece is the great unknown here because the supply chain shocks of the last 20 months will have reset expectations around “safe” levels of inventory and it is hard to judge whether the new “comfort” normal will be back to the trend in the chart or 50% higher! If the new comfort level is materially higher than in the past, demand growth will remain strong and price momentum could continue through 2022. Our expectations for a mega-cycle in basic chemicals and polymers – targeting late 2023 and 2024 could be dragged forward because of higher apparent demand the time to buy the equities could be now, on that basis.
