Daily Chemical Reaction
North American Methanol Producers Should Increasingly Benefit From More Than Low Costs
- General Thoughts: North American methanol producers are in a good spot amid global trough conditions, given their relative low-cost position, low-carbon demand enhancements ahead, and slowing net global supply growth.
- Supply Chain/Commodities: We discuss Methanex 4Q23 results and takeaways from its earnings call, highlight multiple Chinese lithium producer profit cuts, and flag items from the Shell, OMV, and Enterprise Products reports.
- Energy/Upstream: We discuss our views of the LNG permit delays and feedback from multiple earnings calls, why it could be positive for US methanol, ammonia, and chlor-alkali producers, and flag strong oil company results.
- Sustainability/Energy Transition: The clean energy transition is being increasingly debt-financed relative to equity despite higher interest rates, and we discuss why blue hydrogen is poised to build out much faster than green.
- Downstream/Other Chemicals: We comment on the drivers of European inflation, Fed rate plateaus after prior increases, such as in 2006-2007, and North American chemical rail traffic strength relative to other segments YTD.
Exhibit 1: North American methanol producers command a significant cost advantage relative to Asia and Europe.
Source: Bloomberg, C-MACC Analysis, February 2024
See PDF below for all charts, tables and diagrams