Daily Chemical Reactions

North American Methanol Margins Could Shrink by Year End, But Unlikely To Turn Negative – Others Face This Risk
May 29, 2024
Commodities Mentioned:
Methanol, Ammonia, Natural Gas, Ethylene, Propylene, Acetic Acid, Crude Oil, Polypropylene, Naphtha, Biodiesel, LNG, Hydrogen, E-Fuels
Companies Mentioned:
Methanex, OCI, Mitsui, LyondellBasell, Celanese, Nutrien, CF Industries, LSB Industries, ConocoPhillips, Marathon Oil, Energy Transfer, Gail, McPhy, Hytlantic, Plug Power, TotalEnergies

Daily Chemical Reaction

North American Methanol Margins Could Shrink by Year End, But Unlikely To Turn Negative – Others Face This Risk

Key Findings

  • General Thoughts: North American methanol producers benefit from a significant cost advantage relative to most Asian and European peers – we discuss our 2H24 methanol market concerns and constructive long-term outlook.
  • Supply Chain/Commodities: Methanol demand significantly ties to downstream chemical end-markets, ranging from acetyls to olefins, mainly reflecting global oversupply and lifting the risk for global margin challenges in 2H24.
  • Energy/Upstream: We highlight a refiner in India locking into a contract for discounted Russian crude oil and show the URALS price discount to Brent to show sizable cost benefits for those able to access Russian oil markets.
  • Sustainability/Energy Transition: European clean hydrogen production growth expectations are significant, but most initiatives through 2030 appear set to miss government targets and many corporate forecasts.
  • Downstream/Other Chemicals: We discuss the consensus view for a global macroeconomic advance in 2H24 relative to 1H24, where we foresee limited upside risk and, more likely, a setting of missed corporate expectations.

Exhibit 1: The North American methanol producer cost advantage relative to most abroad is greater than in 2016-19.

Source: Bloomberg, C-MACC Analysis, May 2024

See PDF below for all charts, tables and diagrams


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