Real Asset Chartbook

This is the first edition of the Real Asset Chartbook. This document arose from an internal need at Massif Capital to consolidate and streamline our process of monitoring liquid real asset markets. It remains a work in progress but is extremely useful in its present state. 

The Chartbook will be released weekly, on Fridays, after the market closes. It will be an evolving document that gets added to over time as the dashboards and models we use internally to track the energy, materials, and industrial markets are converted into easily digestible formats. 

We hope you find it as useful as we have.

Chart of the Week

The Conference Board CEO Confidence Survey (Right Chart) provides insights into the sentiment of US CEOs regarding current and future economic conditions. It serves as a leading economic indicator, reflecting business leaders' expectations for their industries and the broader economy. The Q1 2025 CEO Survey, released on February 20th, surged to levels not seen since 2017/2018, driven by optimism about pro-business policies, reduced regulations, and lower borrowing costs under new government leadership.

The Chief Executive Group Confidence Survey (Left Chart) is a monthly survey conducted by Chief Executive magazine and related platforms. It gauges the sentiment of CEOs across industries regarding current and future business conditions, providing insights into their economic outlook and expectations for their businesses.

A key question for investors presently is does the timely Chief Executive Group Confidence survey paint a picture of reality or just a snapshot of recent policy chaos that does not represent the long-term positive trend implied by the Conference Board survey.

This Weeks Essential Real Asset Reading

• The Device Throttling the World’s Electrified Future

• Offshore Energies UK - Business Outlook Report, 2025

• Dallas Fed First Quarter 2025 Energy Survey

Excerpt from our Latest Long-Form Research

On March 12th, we released a report examining investment opportunities in water technology for a water constrained industrial economy. We focused specifically on a trio of companies in Japan that produce the worlds most advanced Ultra Pure Water production equipment.

The following is and excerpt from that report:

WATER’S CRITICAL ROLE IN INDUSTRIAL OPERATIONS

Many of the most technologically complex water challenges reside not in prominent places like agriculture but in manufacturing and materials refinement. Water is a fundamental input across numerous industrial processes, with applications ranging from dilution and steam generation to washing and cooling. Corporate supply chains are estimated to account for two-thirds of all water consumption, and seven major sectors—food, textile, energy, industry, chemicals, pharmaceuticals, and mining—affect 70% of the world’s freshwater use and pollution. These figures underscore the substantial water dependency of industrial activities worldwide. The water footprint varies significantly across industries, not only in terms of quantity but also quality.

While the water quantity problem gets most of the attention, as it often appears/is a more immediate threat to people, water quality is a significant issue for businesses that directly impacts product quality, operational efficiency, and plant and equipment maintenance. A recent Barclays research note warned that the consumer staple sector, including agriculture, food, and beverage companies, is facing a potential $200 billion impact from water scarcity risks—roughly three times higher than the costs of the carbon-related dangers those businesses face. A 2020 CDP report, based on data from nearly 3,000 companies, warned of even more significant business losses, potentially eclipsing $300 billion per annum if water risks were not mitigated.

Other industries face even more challenging issues. The semiconductor industry, for example, is the largest consumer of Ultra Pure Water (UPW) globally, where it is indispensable in the manufacturing process. Integrated circuits and microchips require extreme precision and cleanliness during fabrication, with cleaning processes accounting for over 30% of production steps. UPW removes microscopic particles, residues, and chemical contaminants from silicon wafers at various stages—such as etching, deposition, and resist stripping. The purity of UPW ensures that no foreign ions or organic compounds interfere with the delicate semiconductor structures being created.

A single semiconductor wafer can require thousands of gallons of UPW during production. A 30 cm wafer, for example, may consume up to 2,200 gallons of UPW during cleaning. Given the increasing miniaturization of semiconductor components—measured in nanometers, the demand for ultrapure water with even stricter specifications continues to grow.

The power generation sector uses UPW primarily in thermal and nuclear plants for boiler feedwater and turbine systems. High-purity water minimizes scaling and corrosion within boilers and turbines by eliminating dissolved salts and gases that could otherwise degrade system components over time. UPW also plays a role in condensate polishing systems that recover steam condensate for reuse within power plants. By maintaining high water purity levels, these systems improve operational efficiency and reduce maintenance costs.

Ultra-pure water also serves critical roles in the chemical and phramacutical industries, where its exceptional purity is leveraged to enhance chemical reactions, reduce environmental impact, and ensure product quality. The unique characteristics of UPW—free from most ions, organic compounds, and particulates—make it indispensable in applications where even trace impurities can lead to contamination.

When companies in these sectors do not adequately manage their water usage and quality, they face significant risks. Problems with water accessibility generate operational vulnerabilities, exposing industries to supply chain disruptions with direct repercussions on industrial and economic growth. These challenges are not new to company management teams but remain an afterthought for investors.

According to a recent Bloomberg report, water scarcity and drought were mentioned as risks in 1,739 out of 2,400 survived company annual reports last year, up from 682 out of 2,400 in 2019, and the use of the phrase “water scarcity” was used by 919 companies vs. 278. According to the same report, environmental shareholder proposals for Russell 3000 companies have increased each of the past four years to 665 in the 2024 proxy season. Yet only five resolutions were related to water. Though water scarcity is a global issue, its localized nature prevents the topic from getting the same attention as CO2, limiting discussion about global water markets or other mechanisms to curb consumption.

Research has shown that companies, particularly small ones, experience declines in sales and employment when urban water services are disrupted. Dry shocks cost two to four times more than wet shocks in terms of lost income.8 According to an analysis of sales losses due to water shortages, businesses experience measurable financial impacts with each additional water shortage in a month. CDP estimates that at least $15.5 billion worth of corporate assets have already been left stranded by the disruption of water access. The following represents a relatively minor list of examples of businesses impacted by water-related issues, these examples are principally pulled from a recent Bloomberg Intelligence Report: Water Risk 2025 Global Outlook.

• Antofagasta: Spent $1.5 billion to double seawater use at its Centinela mine in Chile, mitigating risks from water scarcity.

• ADM (Archer-Daniels-Midland): Faces potential production disruptions at four processing complexes reliant on the Mississippi River, which could cost up to $640 million. Drought-related upstream supply disruptions might add another $70 million in losses.

• Chemours, Cabot, and Orbia Advance: These companies declared force majeure as government restrictions in Mexico’s Tamaulipas state, imposed to address drought conditions and forced them to idle plants.

• Dow: The company estimates that water-related risks could cost between $315 million and $1.8 billion. Its largest US-based chemical plant is particularly exposed to water stress.

• 3M, DuPont, and Chemours: Faced litigation over contamination from PFAS (“forever chemicals”), resulting in settlements exceeding $11 billion. These lawsuits stem from allegations of polluting U.S. drinking water with toxic substances.

• In 2020, TSMC had to truck water over long distances to sustain chip production during a local water shortage in Taiwan, significantly increasing operational costs.

• Severe drought led to the abandonment of over half of the cotton crops planted in the U.S. Southwest for two consecutive years.

• Constellation Brands: Abandoned an almost completed brewery project in Mexico due to water scarcity, resulting in a $660 million write-down. The company opted to build a $1.3 billion alternative plant farther south, which increased logistics costs.

• BASF: Incurred $250 million in additional costs when low water levels on the Rhine River disrupted shipping during a 2018 drought.

This economic reality underscores the business case for water technology investments that improve reliability and resilience.

Massif Capital’s Long-Form Research is available exclusivly for Real Asset Handbook Subscribers