Daily Chemical Reactions

High Competitive Barriers & Limited Capacity Growth Combine To Drive Relative Outperformance, For Some
April 11, 2024
Commodities Mentioned:
Critical Minerals, Copper, Lithium, Nickel, Hydrogen, Propylene, Crude Oil, Propane, PDH, Renewable Power, Ethane, NGL, SAF, Wind Turbines, EVs, Batteries
Companies Mentioned:
ExxonMobil, Aramco, Albemarle, Invista, TotalEnergies, DG Fuels, Johnson Matthey, BP, Equinor, VW, Shell, JP Morgan

Daily Chemical Reaction

High Competitive Barriers & Limited Capacity Growth Combine To Drive Relative Outperformance, For Some

Key Findings

  • General Thoughts: Overly optimistic demand views, with many being tied to energy transition, have led to increasingly poor capital deployment decisions, and especially in areas with lower relative competitive barriers.
  • Supply Chain/Commodities: Within the metals space, copper has been the one to watch, in our view, as demand growth is robust and is accelerating against limited new investment in supply and long lead times to correct this.
  • Energy/Upstream: We highlight recent movements in US propane prices, which have trended upwards since 2H23 in absolute terms and relative to both Asia propane and USGC ethane, and flag other energy industry trends.
  • Sustainability/Energy Transition: We highlight a general comparison of clean technology advancements in China, Europe, and the US, and discuss other topics such as needed infrastructure growth to support energy transition.
  • Downstream/Other Chemicals: We discuss investor sentiment, using venture capital funding for start-ups, as a general gauge, and we flag several regional demand and economic indicators worth consideration this week.

Exhibit 1: Copper has rebounded to early 2023 levels, while average global lithium prices remain well below this level.

Source: Bloomberg, C-MACC Analysis, April 2024

See PDF below for all charts, tables and diagrams


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