Early Year Chemical Hopes Diminish: Costs Rise, Demand Generally Weak, Margins Under Fire!

Companies Mentioned: H.B. Fuller, Celanese, Methanex, Mitsui, SABIC, LyondellBasell, CF Industries, Nutrien, LSB Industries, Koch Fertilizer, Woodside, ExxonMobil, Fertiglobe, Clean Hydrogen Works, CNOOC, Shell, DuPont, Eni, OMV, PQ, Repsol, Amogy, POET, Valero, ADM, Green Plains, The Andersons, AM Green, DP World, ARPA-E, Growth Energy, Stiphout Plastics, Aramco
Commodities Mentioned: Methanol, Ammonia, Hydrogen, Acetic Acid, Polyamide, Natural Gas, Corn, Nitrogen, Crude Oil, Plastic, LNG, Ethanol, Biofuels, Lithium

Key Findings

General Thoughts: Many hopes for an early-year rebound in chemical market conditions have been squashed due to weaker-than-expected demand and higher feedstock costs, putting 1Q25 sector profit expectations at risk.
Supply Chain/Commodities: We discuss the 2H24 strength in global methanol and ammonia spot prices and why we see more downward pressure on Western methanol prices in 2025 than ammonia prices relative to Asia.
Energy/Upstream: We highlight recent strength in chemical feedstocks, the considerable strength in natural gas prices, and the EIA view that natural gas and crude oil prices face downward pressure from current levels in 2025.
Sustainability/Energy Transition: We discuss the recent weakness in US ethanol production margins, market outlook expectations from the EIA, and input price strength creating headwinds for clean-product developers.
Downstream/Other Chemicals: The US consumer price index (CPI) posted below many expectations in December; however, it elevated relative to the China CPI, which implies headwinds for US manufacturers relative to China.