Chemical Market Analysis
Focused and RelevantProviding value-added research and strategic consulting services using chemical industry expertise
2022 C-MACC Coverage of Companies and Commodities
what we are talking about today
Daily Chemical Reaction
Come Together Or Adjust Product Suite – Sitting Still Is Not An Option For Most In Energy & Chemicals
Energy and chemical sector strategic ties will strengthen as value-chain integration benefits rise this decade, with global cost positions shifting in favor of those marrying these positions.
We view ExxonMobil in an enviable position regarding its integration and discuss a couple of takeaways from its product solutions presentation, displaying its further push into chemicals.
Those lacking upstream integration, such as Dow, are taking action toward cleaner feedstocks, energy, and more sustainable products. Those sitting still will face rising competitive challenges.
We discuss movements from ADNOC, who appears to be evaluating Braskem and Covestro, per news reports – low-cost feedstocks targeting high-cost regions will remain a global trend.
We also comment on the growth in China’s crude oil imports from Russia in August, several sustainability and clean energy trends, and numerous downstream demand developments.
Soul To Squeeze – More Global Production & Tighter Spreads Ahead, Europe Reflects The Most Regional Risk
Global base chemical values have increased with crude-oil-based feedstocks in 3Q23. However, polymer values have risen more relative to monomer values in Asia than in the US and Europe.
We view the recent support in Asia polymer values as negative for Western markets, especially Europe, as it favors Asian producers staying on course to boost supply in late 2023 and 2024.
The stage appears set for Western polymer-to-monomer spread contraction in late 2023. Due to its feedstock cost advantage, North American producers are best poised to weather this storm.
We discuss the global reliance on China rare earth materials as part of its energy transition and the rapid development of solar and wind, driving up net project costs rather than deflating them.
We highlight recent movements in the Baltic Exchange Dry Index and August US home starts and mortgage rate trends and discuss challenges with sourcing skilled labor and related inflation.
Kermit’s Swamp Years – More Chemical Cookies Than Monsters, Low Prices, & Singing “It’s Not Easy Being Green”
Methanol, similar to ammonia, appears set to benefit from rising demand beyond traditional channels, but low prices are limiting its supply growth prospects in a low-carbon economy.
Existing low-cost ammonia and methanol producers are in a better risk-adjusted position to convert their units, relative to most new technologies, to meet low-carbon product demand.
Crude oil prices reflect strength this week relative to natural gas, and this chemical cost curve ratio continues to increase in favor of North American producers compared to Europe and Asia.
We highlight the comparative strength of the US PPI for automotive chemicals than in most chemical commodities YTD, our UAW strike concerns on supply chains, and our 2024 concerns.
We provide market share estimates for chemicals consumed in autos in light of the UAW strike and US steel idling a plant in response. We also flag other relevant global news and price trends.
weekly sERVICE
Hydrogen Economy Update
Enthusiasm Wanes As Cost Rise – China (and India) Likely Win
The slowdown in hydrogen activity in the West is apparent in Exhibit 1 and apparent in the lack of new projects that we track weekly. Escalating costs suggest that incentives may be inadequate.
China became the market leader in solar modules and batteries because relative speed to the market drove scale efficiency on top of other cost advantages. This will happen with electrolyzers.
Local demand for electrolyzers is high in China and any foreign investors outside of the US and Europe will have no qualms about buying equipment from China – a couple of projects below could benefit.
As costs escalate in the US and Europe, we are making it very challenging to set up real competition with Chinese manufacturers, and delays to US and European projects just give China more experience.
There is potential for India to become a low-cost equipment provider and given better relationships between the West and India, this could provide challenges for US and European equipment makers.
Valuable insights for critical subjects
ESG, Recycling & Climate
So Many Moving Parts: Some Moving The Wrong Way and Some Not Moving Fast Enough – Feedback from Pack Expo and CMA’s WCF
For a first effort, CMA put on a well-attended and comprehensive event last week with a strong sustainability theme throughout and bad news for polyolefins.
Our theme last week around suspension of disbelief was addressed in the bleak outlook for polyethylene and polypropylene oversupply and its likely persistence.
Energy transition and sustainability were featured throughout the event, but the idea of who pays for it all was mainly left hanging, with more hope than solutions.
what we are covering
Sunday Thematic & weekly recap
So Many Moving Parts: Some Moving The Wrong Way and Some Not Moving Fast Enough – Feedback from Pack Expo and CMA’s WCF
For a first effort, CMA put on a well-attended and comprehensive event last week with a strong sustainability theme throughout and bad news for polyolefins.
Our theme last week around suspension of disbelief was addressed in the bleak outlook for polyethylene and polypropylene oversupply and its likely persistence.
Energy transition and sustainability were featured throughout the event, but the idea of who pays for it all was mainly left hanging, with more hope than solutions.