Daily Chemical Reactions

Crop Price & Ex-US Fertilizer Input Cost Strength Favors US Ammonia Producer Returns & Its Clean Transition
May 24, 2024
Commodities Mentioned:
Polyolefins, Ethane, Ethylene, Methanol, Ammonia, Chlor-Alkali, Polyethylene, Natural Gas, Polymers, LNG, Crude Oil, Biomass, Hydrogen, E-Fuels, EVs, Carbon Capture, Steel, Cement, Renewable Diesel, SAF, Biomethane, Ethanol, Corn, Wheat, Soybean, Cotton, Canola
Companies Mentioned:
Nutrien, CF Industries, LSB Industries, Dow, Coca-Cola, Pepsi, Anglo, BHP, Brenntag, Siemens Gamesa

Daily Chemical Reaction

Crop Price & Ex-US Fertilizer Input Cost Strength Favors US Ammonia Producer Returns & Its Clean Transition

Key Findings

  • General Thoughts: Crop price strength and rising Ex-US natural gas prices relative to the US since mid-May paints an improved picture of US ammonia producer fundamentals, also benefiting clean domestic production initiatives.
  • Supply Chain/Commodities: We discuss recent chemical production cost shifts in the US and Europe, relating to relative economics and continued headwinds facing European industry, which remain positive for US exporters.
  • Energy/Upstream: European and Asian natural gas prices increased last week at a pace that outpaced US price strength, and Brent crude oil prices stepped lower WoW. We also highlight US refinery margin movements YTD.
  • Sustainability/Energy Transition: We focus our exhibits on US (and global) biofuel and bio-product markets, given the recent rebound in crop prices, which could hinder expansion plans if downstream prices fail to keep pace.
  • Downstream/Other Chemicals: NOAA issues its highest-ever early US hurricane season forecast for 2024, which lifts the risk for tighter chemical markets due to production impacts and looser crop markets due to export issues.

Exhibit 1: European ammonia production margins fall to YTD low, decline relative to US ammonia margin levels.

Source: Bloomberg, C-MACC Analysis, May 2024

See PDF below for all charts, tables and diagrams


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