Waiting On The World To Change – Best To Be In A Low Production Cost Region, Period!

Daily Chemical Reaction

Waiting On The World To Change – Best To Be In A Low Production Cost Region, Period!

Key Findings

• General Thoughts: North American methanol producers hold a substantial production cost advantage relative to Europe and Asia, allowing for greater profitability but also a selective approach to clean expansions and premiums.
• Supply Chain/Commodities: We discuss OCI Global 1Q24 results and its commentary toward the US and Europe, recent weakness in lithium spot prices and DLE expansions, and discuss continued margin pressure in Europe.
• Energy/Upstream: We show recent strength in US natural gas relative to Europe and Asia, and Brent Crude oil, and discuss the movement away from coal-based power in Germany as favoring tightness in its power markets.
• Sustainability/Energy Transition: US subsidies for clean hydrogen are among the highest globally but differ in structure from Europe, which we discuss while also showing a country-level view of clean tech manufacturing.
• Downstream/Other Chemicals: Home Depot 1Q results missed most expectations, which we discuss along with showing US mortgage rate movements, and we discuss demand and sentiment indicators worth consideration.

Exhibit 1: North American methanol producer cost advantage substantial, most of Europe and Asia at breakeven.

Source: Bloomberg, C-MACC Analysis, May 2024

See PDF below for all charts, tables and diagrams