Daily Chemical Reactions

Weak Global Economy Weighs On Energy Transition Material Growth – Bad For Investment, Sets Stage For Future Inflation
December 1, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Livent, Albemarle, SQM, ExxonMobil, Glencore, DuPon, Huntsman, CF Industries, Incitec Pivot, Eastman, Ineos, Lanxess, Standard Lithium, Air Liquide, LCY Chemical, LyondellBasell, Neste, Lhyfe, RecycLiCo, Zenith, Wanhua, Samsung C&T, Lotte Chemical, Arkema, Tosoh, PetroChina, Topsoe, Standard Gas, Yara, North Sea Container Line, TotalEnergies, Mitsubishi Electric, Petrobras, First Quantum, Breakthrough Energy, Williams, Maersk, Vopak, Amogy

Daily Chemical Reaction

Weak Global Economy Weighs On Energy Transition Material Growth – Bad For Investment, Sets Stage For Future Inflation

Key Points

  • The C-MACC Clean Energy Mineral Index fell to a new YTD low in November, as weak economic conditions influence demand more than energy transition growth and favor slowing investment.
  • This setting could persist well into 2024, with the recovery afterward exposing sizable critical mineral shortages because of the investment lag – more of an issue for the West than for China.
  • We discuss China’s graphite export controls targeting the US, ammonia price support and US margin improvement due to cost relief, and the set-up for increased global chemical sector M&A.
  • We highlight US refinery margins falling to a YTD low this week and the November decline in China refinery operating rates amid export fuel quotas – both are weighing on crude oil demand.
  • China, US, Japan, and Eurozone manufacturing activity contracted in November, which we flag along with showing recent weakness in crop prices, though they are much higher than in 2019.

Exhibit #1: The C-MACC Clean Energy Mineral Index fell ~8% MoM to a new YTD low in November.

Source: Bloomberg, C-MACC Analysis, December 2023

See PDF below for all charts, tables and diagrams


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