Chemical Market Analysis

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Chemical & Associated Industries

C-MACC has extensive expertise in the chemical and related industries. With a background in both finance and chemistry, we offer services that provide market analysis, news discovery, expert perspectives, and valuable data. Our services are used by corporations and investment firms to gain insights and make informed decisions.

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what we are talking about today

Daily Chemical Reactions

Crop Price & Ex-US Fertilizer Input Cost Strength Favors US Ammonia Producer Returns & Its Clean Transition

Crop Price & Ex-US Fertilizer Input Cost Strength Favors US Ammonia Producer Returns & Its Clean Transition

General Thoughts: Crop price strength and rising Ex-US natural gas prices relative to the US since mid-May paints an improved picture of US ammonia producer fundamentals, also benefiting clean domestic production initiatives.

Supply Chain/Commodities: We discuss recent chemical production cost shifts in the US and Europe, relating to relative economics and continued headwinds facing European industry, which remain positive for US exporters.

Energy/Upstream: European and Asian natural gas prices increased last week at a pace that outpaced US price strength, and Brent crude oil prices stepped lower WoW. We also highlight US refinery margin movements YTD.

Sustainability/Energy Transition: We focus our exhibits on US (and global) biofuel and bio-product markets, given the recent rebound in crop prices, which could hinder expansion plans if downstream prices fail to keep pace.

Downstream/Other Chemicals: NOAA issues its highest-ever early US hurricane season forecast for 2024, which lifts the risk for tighter chemical markets due to production impacts and looser crop markets due to export issues.

How The Markets Look 

The Weekly Catalyst

North American Spot PE Margins Fall Below 1Q24 Average Levels; Domestic Natural Gas Feedstock Costs Surge WoW

North American Spot PE Margins Fall Below 1Q24 Average Levels; Domestic Natural Gas Feedstock Costs Surge WoW

Polymer Market Trends: US spot polyethylene (PE) spot integrated margins have trended lower than their 1Q24 average due to rising costs and export price weakness – a near-term rebound appears unlikely to us.  

Chemical Market Trends: Asia base and intermediate spot chemical prices declined relative to US levels WoW, and we also highlight the decline in US spot methanol prices relative to recent regional natural gas strength.   

Feedstock Market Trends: US natural gas and USGC ethane prices WoW rose ~17% and ~9%, respectively, outpacing crude oil, Ex-US naphtha, and Ex-US natural gas upticks, pinching the US feedstock cost advantage.

Agriculture Market Trends: Crop prices moved higher WoW, while spot ammonia values, on average, mainly were unchanged, with North American producers seeing margin erosion again WoW due to higher costs.

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what we are covering

Sunday Thematic & Weekly Recap 

A Cascade Of Trouble In Europe; Few Industries Will Be Unscathed, Including Autos

A Cascade Of Trouble In Europe; Few Industries Will Be Unscathed, Including Autos

While we primarily focus on the struggles of the chemical industry in Europe, its economic challenges extend downstream because operating costs are high, and its basic industries must pass through costs to customers.

The EU seems to be paying little attention to the de-industrialization discussions that the chemical industry is championing – maybe it will feel different when the auto industry is struggling, which is quite likely! 

The same challenge will likely face other high-cost regions for chemical production, though most of these do not face the same strict decarbonizing plans that exist in Europe, which are raising costs and causing shutdowns.

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Valuable insights for critical subjects

Sustainaility & Energy Transition

Can China Decarbonize Its Coal Industry and Create Low-Carbon Fuels At The Same Time?

Can China Decarbonize Its Coal Industry and Create Low-Carbon Fuels At The Same Time?

1st Topic of the Week: As the West imposes more tariffs against China in clean tech and EVs, China is driving down a path of innovation around low-cost, low-carbon fuels and materials that we likely have no chance of catching in the West – will countries and corporates sacrifice sustainability targets to avoid China?

2nd Topic of the Week: This week because of our monthly Ag report – published on Wednesday, we look at biofuels and particularly falling US credits caused by credit oversupply. Like the European carbon price, the drop in value will alter the economics of projects still in the pre-FID phase and may cause delays.

Otherwise: We question some of OCI’s hope for its blue ammonia, look at the immediate need for fuel cells for power and the longer-term need for small nuclear if the technology owners can stay in business long enough.

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weekly sERVICE

Hydrogen Economy Update 

Mandated Expense – Can Europe Afford Its Current Pathway?

Mandated Expense – Can Europe Afford Its Current Pathway?

Most of the European hydrogen projects that we cover need high premium pricing, which they are getting through grants, subsidies, and fuel value mechanisms that allow fuel makers to pay the necessary high prices.

But this is expensive, and someone must pay – in a worst case below we estimate a hydrogen subsidy growing to 1.3% of current EU GDP by 2040 – things are expensive in Europe and even higher costs will limit GDP growth.

Carbon pricing in Europe also factors into hydrogen economics, blue and green, and with weaker carbon pricing, because of industrial cutbacks, some of the projects in the chart below will need even more subsidies.

We remain convinced that the electrolyzer market could face chronic oversupply for years, yet governments keep funding expansion – this will not lead to lower costs it will lead to bankruptcy – more next week.

Meanwhile, ammonia pricing is trending down globally, and this will make some of the blue and green projects more challenging as company directors and lenders pay more attention to current pricing than forecasts.

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Polymer Pricing Service

Polymer Price Expectations Report

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