2022 C-MACC Coverage of Companies and Commodities
what we are talking about today
Daily Chemical Reaction
Maybe We Need Another Hero – Western Economies Remain in Thunderdome, New BASF Supercomputer Set For Battle
Consensus Asia consumer price inflation expectations for 2023 have fallen in May relative to the US and Eurozone, suggesting it will benefit from lower inflation for a third consecutive year.
We highlight the significant ramp-up in clean energy investment relative to fossil fuels, as shown in the IEA World Energy Investment report – a trend benefiting China relative to the US.
We discuss the build-out of critical mineral supply chains, where China holds a leadership role relative to Western markets, implying supply chain risk surround many Western net-zero targets.
We flag the push at Dow for bio-based ethylene cracker feedstocks, the launch of the new BASF supercomputer, and the global reach of Nippon Shokubai in acrylics and super absorbents.
We highlight the recessionary conditions facing Germany, the significant food inflation that the country has seen during the past six months, and its falling export product market expectations.
How Much Is That Doggie In The Window? More Than a Land Cruiser If You Are Counting Carbon
Some European chemical producers have seen costs decline YTD relative to others. However, our global market study shows Europe overall in a more difficult spot than the US and Asia.
The energy industry desperately needs to put carbon emissions into perspective. We note that a medium-sized pet dog has a larger annual carbon footprint than a typical Toyota Landcruiser.
We highlight evidence that Asia, notably China, petrochemical production is increasing, while rail data in North America suggests that most domestic producers are running below nameplate.
We discuss the push to blend hydrogen with natural gas, highlight developments at Li-Cycle, and flag multiple items worth considering from the Navigator Holdings 1Q results presentation.
German business expectations are falling, China consumer demand is not meeting with most estimates, and headwinds facing US consumers are stiff, suggesting a still rocky economic setting.
Enough! The World Appears Awash With Chemical, Suggesting Some Earnings May Become Simply Red
We discuss the China polypropylene price decline MTD, highlighting more production, demand concerns, and its ability to source discounted Russian crude/feedstocks – a problem for the West.
The severe US propylene price decline from outage-driven 1H23 highs pushed its PDH margins lower, despite weakness in domestic propane, while Asia PDH margins have moved higher MTD.
Ford announces multiple partners to supply it with lithium amid a push to ramp EV production and following the lithium spot market collapse relative to 2022 highs to lessen supply chain risk.
We discuss the Neom Green Hydrogen Company project reaching FID, displaying its planned green power sources and production chain that face more challenges than likely meet the eye.
We discuss the unlikely rebound in global freight rates and shift gears to flag tepid near-term views from Lowe’s on the housing and construction market and mortgage rate strength WoW.
what we are saying about tomorrow
ESG, Recycling & climate
Electric Avenue: EV Competition Means Off-Ramp For Some
Several years ago, we created a group of “new energies/sustainability” stock indices, starting on 1/1/2019 – the EV index is the worst performer, despite Tesla.
Many companies are teetering on the verge of bankruptcy, some are already there, and others will, in our view, follow. The special sauce is not special enough.
In a developed industry, we would expect consolidation, but combining two different companies with distinct products and both burning cash gains nothing.
Also facing up to reality are fuels/materials from crops – input costs are too high, competition with the food chain is real, capital costs significant, stocks are down.
Otherwise, we look at polyester recycling and its high cost, Oxy’s grand carbon plans, who pays for blue ammonia, and why some hydrogen hubs will lose money.
what we are covering
Sunday Thematic & weekly recap
Brasnorealis – Son Of Lynolium – What sort of consolidation is key?
As Apollo and ADNOC take a look at Braskem, we note that consolidation always occurs in a chemical downturn, but this deal looks hard if synergies are the goal.
We have also noted that integration into captive hydrocarbons is likely more important for both chemicals and feedstock suppliers now – this deal misses that.