Daily Chemical Reactions

North American Methanol Producers Should Increasingly Benefit From More Than Low Costs
February 1, 2024
Commodities Mentioned:
Methanol, Ammonia, Propylene, Paraxylene, Helium, Lithium, Maleic Anhydride, Ethylene Oxide, Titanium Dioxide, Acetic Acid, Crude Oil, Natural Gas, Carbon, Hydrogen, Biofuels, Coal, Aluminum
Companies Mentioned:
Methanex, Enterprise Products, American Vanguard, Arkema, Corteva, Chevron Phillips Chemical, Messer, Ineos, Fortune Minerals, Samsung SDI, Shell, OMV, Venator, Honeywell, Meghmani Organics, Idemitsu Kosan, Hebei Haiwai, Coromandel International, Gurit, Uniper, Phillips 66, Enbridge, Valero, Origin Energy, Glenfarne, ADNOC, Venture Global, Chevron Lummus Global, Sibur, Altus Power, Vitol, Nel, Plug Power, Ascend Elements, ExxonMobil, Baker Hughes, Lhyfe, GE Vernova, Linde

Daily Chemical Reaction

North American Methanol Producers Should Increasingly Benefit From More Than Low Costs

Key Findings

  • 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

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