The Weekly Catalyst
Global Chemical Update – Spot Market Whac-A-Mole
- US methanol prices fall relative to Asia WoW and margins broadly drop. The methanol market is perhaps a leading indicator for others as production responds to opportunity
- We discuss shifts in global integrated margins, vinyls and styrene WoW.
Chart of the day: USGC methanol spot values decreased 17.5% WoW to a level that now mirrors avg. Asia values (see fig. 44). But, despite the relative USGC spot price weakness, we find a significant downshift in Asia avg. methanol margins relative to USGC levels (as we show in our chart of the day to start the week). In our view, the key question is whether global demand will increase and Asia production will cut back enough to offset USGC supply likely itching to return to market in late 2Q/early 2H20 – WoW data points to trends supported in our recent report “When the levee breaks – US methanol margin pressure inevitable” and that improvement in global prices will unlikely surge near-term absent the cut back of Asia operating rates. We see more profit risk with methanol producers/merchant sellers, such as Methanex, relative to the derivative players, such as Celanese, currently. (Note that the spike in the chart has much to do with a very small denominator)
See PDF below for all charts