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Investment thesis
The unfortunate explosion at the Texas LNG export facility may have reduced LNG supplies to the EU by as much as 1.2 Bcf/day, for months to come. If that were not bad enough, Siemens (
BASF A Potential Loser And Dow A Likely Winner In This Geopolitical Turbulence
Summary
- Within the context of growing global scarcity and geopolitical tensions, the investing scene is starting to resemble a minefield, and there is no knowing where the next mine will explode.
- The latest example of it is the double-hit to EU gas supplies from US LNG export disruptions, as well as sanctions-related disruptions to NS1 flows, which is sending prices surging.
- BASF uses natural gas as a feedstock for its petrochemical manufacturing. High prices will cut into its profits, while in an extreme case, BASF can be asked to shut operations.
- On the other side of the pond, Dow Inc has no direct exposure to Russian gas issues, while LNG export disruptions should keep its input costs down.
- In the longer run, US LNG exports may become a casualty of politics as pressures to keep household bills from spiraling out of control may cap natural gas prices in the US, while the EU will see its situation become direr.
My name is Zoltan Ban, I have a BA in economics. I am a personal investor with over a decade and a half of active trading experience.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of DOW, BASFY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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