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DEEP RESEARCH · REFINING & PETROCHEMICALS

The War Is Winding Down: Two Variables for Petrochemical Spread Recovery

A short memo on China's low-cost crude advantage and the impact of higher U.S. gas prices on NCC competitiveness

Published: 2025-06-29 · Industry memo · Naver Blog original

You are responsible for your own investment decisions. This material is research and is not a buy or sell recommendation.

0. Bottom line first

My core view has two parts: the period when Iranian and Russian crude was supplied unusually cheaply to China appears to be ending, and if rising U.S. gas demand lifts gas prices, NCC competitiveness can become relevant again.

Petrochemical Turnaround VariablesFeedstock gap and gas prices
China crudePossible narrowing of Iran/Russia discounts
U.S. gasDemand growth and price pressure
NCCRe-rating if gas-based cost advantage weakens
If low-cost feedstock premiums fade, NCC spread recovery deserves another look.

1. China's Low-Cost Crude Environment

Interpretation: The view is that the era of especially cheap Iranian and Russian crude flowing into China is approaching an end. If Chinese chemical producers previously enjoyed a major feedstock advantage, a narrower discount could change the competitive landscape.

2. U.S. Gas Prices and NCC Competitiveness

Interpretation: If U.S. gas demand rises and pushes gas prices higher, the cost advantage of gas-based crackers can weaken. Higher gas prices could reopen a window in which NCC assets become competitive again.

Sources

Naver original