From Methanol to Graphite: Low-Cost Producers Thrive as Non-Integrated Buyers Face Mounting Risks   

Daily Chemical Reaction

From Methanol to Graphite: Low-Cost Producers Thrive as Non-Integrated Buyers Face Mounting Risks     

Key Findings

• General Thoughts: Western spot methanol spot prices surged to multi-year highs in 4Q24 in absolute terms and relative to Asia, a setting likely to persist in early 2025 to benefit low-cost producers but detriment of buyers.
• Supply Chain/Commodities: We discuss the drivers of Western methanol market tightness, China spot methanol and downstream market trends, and efforts in the US to boost import tariffs on graphite from China significantly.
• Energy/Upstream: We highlight the Ineos acquisition of upstream USGC assets from CNOOC, the drop in European naphtha prices relative to Brent crude oil, and the notable YTD drop in crude oil prices relative to US natural gas.
• Sustainability/Energy Transition: We provide some general views on Exxon’s recent corporate strategy update and its compelling financial and cost positions, likely to enable it to drive outsized returns in its new product lines.
• Downstream/Other Chemicals: We highlight more negative news flow out of Europe and our view that conditions for its manufacturers are unlikely to turn notably positive in early 2025, excluding the usual seasonal factors.

Exhibit 1: Methanex posts its highest North American non-discounted reference price for methanal in more than 10 years for January 2025, amid a substantial Western methanol price surge relative to Asia (see Exhibit 2).

Source: Methanex, Bloomberg, C-MACC Analysis December 2024 – latest US spot methanol price as of 12/19/24.

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