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.