Daily Chemical Reactions

Waiting On The World To Change – Best To Be In A Low Production Cost Region, Period!
May 14, 2024
Commodities Mentioned:
Methanol, Ammonia, Lithium, Polyacetal, Polymers, Crude Oil, Natural Gas, Shale, Coal, Lignite, Nuclear, Hydrogen, E-Fuels, Olefins, EVs, Solar, Wind
Companies Mentioned:
OCI Global, Fertiglobe, Iowa Fertilizer, Methanex, CF Industries, Brenntag, Albemarle, Arcadium, Home Depot, Equinor, ExxonMobil, Oxy, Anglo American, BHP, Lithium Americas, Lithium Royalty Corp., LyondellBasell, Mitsubishi Gas Chemical, Chevron, Hess, Fisker

Daily Chemical Reaction

Waiting On The World To Change – Best To Be In A Low Production Cost Region, Period!

Key Findings

  • General Thoughts: North American methanol producers hold a substantial production cost advantage relative to Europe and Asia, allowing for greater profitability but also a selective approach to clean expansions and premiums.
  • Supply Chain/Commodities: We discuss OCI Global 1Q24 results and its commentary toward the US and Europe, recent weakness in lithium spot prices and DLE expansions, and discuss continued margin pressure in Europe.
  • Energy/Upstream: We show recent strength in US natural gas relative to Europe and Asia, and Brent Crude oil, and discuss the movement away from coal-based power in Germany as favoring tightness in its power markets.
  • Sustainability/Energy Transition: US subsidies for clean hydrogen are among the highest globally but differ in structure from Europe, which we discuss while also showing a country-level view of clean tech manufacturing.
  • Downstream/Other Chemicals: Home Depot 1Q results missed most expectations, which we discuss along with showing US mortgage rate movements, and we discuss demand and sentiment indicators worth consideration.

Exhibit 1: North American methanol producer cost advantage substantial, most of Europe and Asia at breakeven.

Source: Bloomberg, C-MACC Analysis, May 2024

See PDF below for all charts, tables and diagrams

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