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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

Strong Crop Production Expected– Lower Farm Incomes And/Or Renewable Opportunity?   

Strong Crop Production Expected– Lower Farm Incomes And/Or Renewable Opportunity?   

General Thoughts: Our second global agriculture monthly report targets crop market and input trends in early 2024, with a notable focus on fertilizer and downstream biofuel price and profit trends after producer reports.

Supply Chain/Commodities: Crop consumers expect still high farm income to spur crop production, and crop input suppliers expect it (and lower costs) to spur usage – most demand views leave little room for upside risk.

Energy/Upstream: US natural gas prices are weak and inventories are high, driving higher margins and incentives to invest in the US to consume gas. With LNG on hold, chemicals should step up, especially (blue) ammonia.

Recycled/Renewable Polymers: We discuss the high cost of decarbonizing ethanol markets and different US ammonia producer growth (greenfield vs. brownfield; blue, green, or grey) views beyond cheap natural gas.

Downstream/Other Chemicals: We note crop price trends and food producer price hikes to lift margins (despite falling crop prices) which have lifted food costs to a 30yr high as a percentage of US consumer disposable income.

Shifting Gears – Many 1Q24 Chemical Demand Views Similar To 4Q23, Costs Notably Different

Shifting Gears – Many 1Q24 Chemical Demand Views Similar To 4Q23, Costs Notably Different

General Thoughts: We discuss recent movements in global commodity chemical production costs in light of a few recent producer reports, as those seeing a flatter cost curve and falling prices face more tepid growth investment.

Supply Chain/Commodities: We discuss the Methanex G3 facility delay, flag Celanese 1Q24 and 2024 outlook commentary, and highlight Westlake 4Q results, US PVC margin trends, and other relevant chemical trends.

Energy/Upstream: We highlight recent movements in Brent Crude oil prices and US, Asia, and European natural gas, note impacts to LNG movements due to Suez Canal issues, and flag 2024 US power market curtailments.

Sustainability/Energy Transition: We discuss rising concerns with the availability of low-cost and green power to meet surging demand and comment on the IEA World Energy outlook that, in pockets, could prove too aggressive.

Downstream/Other Chemicals: We highlight freight rate movements showing still high rates between China, the US, and Europe, and we flag the recent rebound in mortgage rates and Home Depot outlook commentary.

How The Markets Look 

The Weekly Catalyst

North American Commodity Chemical Margins Strengthen In 1Q24 – Will It Last?

North American Commodity Chemical Margins Strengthen In 1Q24 – Will It Last?

Feedstock Market Trends: The North American natural gas/NGL advantage increased WoW relative to Ex-US petrochemical producers, pushing USGC ethylene spot margins based on ethane feedstock to a YTD high.

Chemical Market Trends: NW Europe base chemical prices reflected the most notable improvement WoW, with Asia reflecting the most weakness – a development that significantly benefits US exporters to Europe.

Polymer Market Trends: Western PE prices rose relative to Asia WoW, notably benefiting North American integrated PE producer margins. Global PP values were mostly unchanged, and US spot PP fell below PGP.

Agriculture Market Trends: Corn prices fell again WoW, pushing implied US farmer income lower and putting downward pressure on fertilizer use estimates. US ethanol margins fell WoW to a YTD low amid ample supply.

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weekly sERVICE

Hydrogen Economy Update 

What Do We Do with Intermittent Hydrogen? The Rush for Transport Is One Answer

What Do We Do with Intermittent Hydrogen? The Rush for Transport Is One Answer

As some of the hype comes out of the large-scale “panacea” hydrogen market, we see a rise in the number of transport-related initiatives – maybe because it is used for distributed limited volumes.

Pockets of curtailed power lead to pockets of low cash-cost but very intermittent hydrogen. Assuming you cannot build significant storage, options for use are to blend into a natural gas stream or liquefy for transport.

Hydrogen engines and storage tanks are heavy, but where weight is not as much of an issue – buses and short-haul delivery may make sense – especially in the hub and spoke operations. Otherwise, transport is a challenge.

We updated our cost models again this week and note that blue and grey costs have decreased in Europe and the US because of the global fall in natural gas prices. This is partly offset in Europe by weaker carbon credits.

Otherwise, we look at the dilemma for ammonia – long-term demand but weak current investment incentives. We also study why Chinese power is cheapening, carbon intensity, and why Linde likely has the right strategy.

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Valuable insights for critical subjects

Sustainaility & Energy Transition

Is Green Dead? Or Just Very Unwell

Is Green Dead? Or Just Very Unwell

1st Topic of the Week: Is Green Dead – Green strategies are not working and are becoming less popular. The high-cost challenges are adding to growing political divides, and we see this slowing progress significantly – cleaner versus green is a better pathway today – especially if cleaner is not expensive – good enough vs perfect is key.

2nd Topic of the Week: More Resets – Somewhat related to the above, we are seeing more examples of our theme from last week – target resets, with Albemarle lowering its expected growth rates for lithium, as an example – there is much more revised guidance ahead across multiple sub-sectors this year in our view.   

Otherwise – We look at the challenges in the recycled polymer chain as prices fall, the carbon intensity of hydrogen and the impact on credits, more power hurdles, a couple of company reports of interest, and PVC.

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what we are covering

Sunday Thematic & Weekly Recap 

Powerless – Electricity Challenges Extend Beyond Energy Transition Goals

Powerless – Electricity Challenges Extend Beyond Energy Transition Goals

We sum up a couple of weeks of focus on power availability and color, following our webcast earlier this week and some corporate announcements and comments that provide some focus – we suggest some band-aids.

Power demand is growing too quickly, and as fast as the world is adding renewables, it is struggling to keep pace with demand, let alone replace some of the less clean power sources – this is unlikely to change soon.

Electrification is now broadly viewed as a critical carbon abatement pathway. However, with data centers and other AI and crypto demand on a steep growth path, power supplies must grow faster than usual to keep pace.

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