ab 27 March 2026 Global Research Chemicals Sector The regional playbook for the chemical industry Prices up, capacity adjustment, final volumes down? Earlier this week, we hosted a call for investors during which we discussed how the conflict in the Middle East is impacting the chemical industry in each region. Cyclical chemical companies are currently increasing prices to compensate for higher costs, and those in Europe and the US may benefit from capacity closures in Asia given the lack of feedstock suppl ...

ab Global Research owered by UBS Evidence Lab YES P 24 March 2026 EMEA Sustainability Middle East tensions: here we go again for Europe's energy? Middle East escalation raises the stakes for European energy markets Tensions in the Middle East raise European energy security concerns, with oil and gas markets responding to escalation risks. The UBS Energy team highlights increased complexity versus 2022 due to potential prolonged disruption in the Strait of Hormuz, which reinforces the importance of energy sy ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Asia-Pacific Oil & Gas** industry, highlighting the impact of rising fuel prices and geopolitical disruptions on oil and gas demand in the region [1][7]. Core Insights and Arguments - **Oil Demand Pressure**: Rising fuel prices, significantly higher than crude oil prices, are putting pressure on oil demand in Asia. Many importers are now spending close to **5% of GDP** on oil, historically linked to slower economic growth [1][44]. - **Gasoline Demand Stress**: Retail gasoline prices have surged by **30-40%** in countries without subsidies, such as Vietnam and Cambodia, leading to reduced driving and increased remote work [2][19]. - **Jet Fuel Vulnerability**: Jet fuel prices have increased more than gasoline and diesel due to tight supply and low inventories. Airlines may cut flight frequencies and raise fares, dampening demand over time [3][35]. - **LNG Disruptions**: Countries like Pakistan, Bangladesh, Vietnam, and the Philippines are facing power outages and rationing due to LNG supply disruptions, forcing a switch to coal and cutting gas-fired generation [4][63]. - **Fertilizer Supply Tightening**: Natural gas shortages are tightening feedstock supply for fertilizer production, raising the risk of weaker crop yields and higher food inflation by autumn [5][66]. - **Impact of Strait of Hormuz Closure**: The closure has disrupted **15 million barrels per day** of crude and **80 million tonnes per annum** of LNG, significantly affecting Asia, where **80-90%** of energy flows through this route [7][41]. Additional Important Content - **Behavioral Changes**: Early behavioral changes in response to rising fuel prices include reduced driving and increased work-from-home arrangements [2][19]. - **Government Responses**: Various Asian governments are implementing measures such as subsidies, price controls, and demand reduction strategies to mitigate the impact of rising fuel costs [46][62]. - **Regional Disparities**: Countries like China and Japan are more resilient due to larger strategic reserves and diversified sourcing, while countries like Pakistan and Bangladesh are more vulnerable [5][48]. - **Long-term Implications**: If the conflict in the Middle East persists, there is a high probability of GDP growth contraction in both emerging and developed markets in Asia [7][44]. - **Air Travel Impact**: The conflict has led to a **2.6%** decline in global commercial flights, with airlines facing higher fuel costs and potential demand reduction due to increased fares [30][35]. Conclusion The Asia-Pacific Oil & Gas industry is currently facing significant challenges due to geopolitical tensions, rising fuel prices, and supply chain disruptions. The implications for demand, government policy responses, and long-term economic growth are critical areas of concern for investors and stakeholders in the region.

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Chemicals and Petrochemicals** industry, focusing on the impact of the ongoing **Iran War** and its implications for energy costs and supply chains [2][3][9][62]. Core Insights and Arguments 1. **Bullwhip Effect Dynamics**: - The severity of the bullwhip effect is inversely correlated with the duration of the oil shock, with shorter conflicts leading to more violent market swings due to panic ordering [4][14]. - An extended oil shock could lead to structural adjustments in the industry, fundamentally altering cost structures and demand patterns [15][20][131]. 2. **Impact on Chemicals and Petrochemicals**: - The chemical industry is identified as "ground zero" for the oil shock, with feedstock constraints leading to significant production bottlenecks [9][62]. - Fertilizer prices have surged by 30%, locking in food inflation through 2027, regardless of oil price normalization [5][12][76]. 3. **Sector-Specific Amplifications**: - Primary metals, particularly aluminum and steel, are expected to experience severe bullwhip effects due to high energy costs, with potential margin risks for downstream fabricators [10][49]. - The automotive sector faces mixed demand signals, with higher fuel prices and economic uncertainty impacting consumer behavior [11]. 4. **Geopolitical and Economic Implications**: - The interconnectedness of global supply chains means that disruptions in one region (e.g., Taiwan semiconductors) can have cascading effects across various industries, including automotive and electronics [6][131]. - Europe is expected to face structural headwinds, making its chemicals less competitive during recovery phases, while Asian producers may capture a larger market share [18][19]. 5. **Long-Term Trends**: - The crisis is likely to accelerate pre-existing trends such as the transition to electric vehicles (EVs), manufacturing migration to ASEAN, and the expansion of the US chemical industry [20][134]. Additional Important Insights - **Food Sector**: The food processing industry is experiencing a classic bullwhip effect due to consumer hoarding and input cost pressures, leading to structural disruptions rather than temporary ones [70][72]. - **Defense Sector**: Increased defense spending is creating competition for components, amplifying disruptions in civilian sectors that rely on the same materials [13][115]. - **Inventory Strategies**: Companies are advised to adopt different inventory strategies based on their scenario outlook, with quick resolution scenarios favoring those who maintained destocking discipline [17][19]. Conclusion - The ongoing geopolitical tensions and energy supply shocks are reshaping the chemicals and petrochemicals landscape, with significant implications for production, pricing, and competitive dynamics across various sectors. The bullwhip effect is a critical factor to monitor as it influences both immediate and long-term market conditions [21][22][127].

Core Insights - The Iran war is causing an oil shock, with Brent crude oil prices around $105 per barrel and US West Texas Intermediate at approximately $99.50 per barrel, both up over 70% this year [1] - This oil shock is more concentrated in the energy sector compared to the broader supply chain crisis and inflation surge seen in 2021 and 2022 [2] Economic Impact - Goldman Sachs estimates that the surge in oil prices could reduce global GDP by about 0.3% and increase headline inflation by roughly 0.5 to 0.6 percentage points over the next year [3] - The bank has revised its global growth forecast down to 2.6% from 2.9% and expects headline inflation to be 2.9% on a fourth-quarter basis [3] Trade Dynamics - Global trade exposure to the Middle East is limited outside of oil and gas, with non-energy trade with Gulf economies accounting for only about 1% of global trade [4] - Comparatively, post-pandemic disruptions in China and East Asia affected over 20% of global trade, indicating that the supply chain disruptions from the Iran war will be much more limited [5] Industry-Specific Risks - Inputs like sulfur, nitrogen, and ammonia, while important for agricultural productivity, are not critical chokepoints for global manufacturing and could be rationed if necessary [6] - Methanol, a chemical used in various industries, poses a potential risk as Iran accounts for nearly one-fifth of global production capacity, which could impact downstream markets [7] Shipping and Freight Costs - Shipping data indicates that non-tanker ocean freight costs have decreased since the onset of the war, while the rise in airfreight costs would contribute less than 5 basis points to global inflation [8]

Company Overview - Methanex is a leading global supplier of methanol, utilizing an integrated supply chain and a fleet of ocean-going vessels to serve industrial customers worldwide [6] - As of the latest data, Methanex's stock price is $52.92, with a market capitalization of $4.1 billion, revenue of $3.56 billion, and net income of $213.78 million [4] Recent Transaction - On February 17, 2026, Orion Resource Partners disclosed the acquisition of 77,291 shares of Methanex, valued at an estimated $2.88 million based on quarterly average pricing [1][2] - This transaction increased Orion's total position value in Methanex by $3.06 million, reflecting both trading activity and price appreciation [2] Market Performance - Methanex shares have increased by 45% over the past year, significantly outperforming the S&P 500's gain of approximately 21% during the same period [7] - The company's stock surge is attributed to improving supply dynamics and geopolitical factors, particularly the U.S.-Iran conflict, which has contributed to a roughly 30% increase in stock price this year [9] Financial Performance - In its most recent results, Methanex reported annual revenue of $3.6 billion, a slight decrease from $3.7 billion the previous year, and net income of $145 million, down from $250 million [10] - The company has focused on a deleveraging plan, returning $54 million to shareholders through dividends and repaying $200 million of a term loan, while holding approximately $3.7 billion in total debt and lease obligations [10] Investment Implications - The acquisition of Methanex shares by Orion Resource Partners indicates a broader investment thesis on industrial demand and commodity-linked businesses, rather than a one-off trade [11] - The key variable for Methanex remains methanol pricing, which is currently influenced by geopolitical pressures, suggesting potential volatility for long-term investors [11]

Company Overview - Methanex (MEOH) shares increased by 6.4% to $53.01 in the last trading session, supported by higher-than-average trading volume [1] - The stock has gained 5.5% over the past four weeks, driven by optimism regarding favorable methanol industry conditions and strong demand in China [1] Earnings Expectations - Methanex is expected to report quarterly earnings of $0.92 per share, reflecting a year-over-year decline of 29.2% [2] - Revenue projections stand at $1.02 billion, which is a 13.7% increase compared to the same quarter last year [2] Market Sentiment - The consensus EPS estimate for Methanex has remained stable over the last 30 days, indicating that stock price movements may not sustain without changes in earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [4] Industry Comparison - Methanex is part of the Zacks Chemical - Diversified industry, where LyondellBasell (LYB) has seen a 0.4% decrease in its stock price, closing at $66.82 [4] - LyondellBasell's EPS estimate has decreased by 21.5% over the past month, indicating a challenging environment within the same industry [5]

Another corner of the energy market is being threatened by the war in Iran, as prices for methanol — essential to biofuel production — surge in Southeast Asia https://t.co/QdmSxnDFJt ...

Core Insights - Methanex Corporation (MEOH) reported a fourth-quarter 2025 loss of $89 million or $1.15 per share, a decline from a profit of $45 million or 67 cents per share in the same quarter last year [2] - Adjusted loss per share was 14 cents, significantly missing the Zacks Consensus Estimate of earnings of 81 cents [2] Financial Performance - Revenues increased by approximately 2% year over year to $968.8 million, but fell short of the Zacks Consensus Estimate of $994.4 million [3] - Adjusted EBITDA decreased around 17% year over year to $186 million [3] - Cash and cash equivalents stood at roughly $425.3 million at the end of the quarter, with cash flow from operating activities at $239 million [6] Operational Highlights - Production totaled 2,364,000 tons, up 26.7% year over year, exceeding the estimate of 2,338,000 tons [4] - Total sales volume in the fourth quarter was 2,689,000 tons, a 4.9% increase year over year, but missed the estimate of 2,809,000 tons [4] - The average realized price for methanol was $331 per ton, down from $370 per ton in the prior-year quarter and below the estimate of $343 [5] Future Outlook - The company anticipates 2026 production to be approximately 9 million tons of methanol and 0.3 million tons of ammonia, subject to various operational factors [7] - MEOH expects modestly higher adjusted EBITDA in the first quarter of 2026 compared to the fourth quarter of 2025, driven by flat sales volume and a slightly higher average realized price projected between $330 and $340 per ton [8] Market Performance - Methanex shares have gained 35% over the past year, contrasting with a 12.3% decline in the industry [9]

Core Viewpoint - Methanex reported a significant net loss of $89 million for Q4 2025, primarily due to an asset impairment charge and lower average realized prices, despite achieving a strong production volume and operational performance throughout the year [3][4][28]. Financial Performance - For Q4 2025, Methanex's net loss attributable to shareholders was $89 million ($1.15 per share), compared to a net loss of $7 million ($0.09 per share) in Q3 2025 [3][28]. - Adjusted EBITDA for Q4 2025 was $186 million, a slight decrease from $191 million in Q3 2025 [29]. - The company reported a full-year net income of $80 million for 2025, with total cash flows from operating activities amounting to $1,016 million [7][28]. Production and Sales - Methanex produced 2,364,000 tonnes of methanol in Q4 2025, an increase from 2,212,000 tonnes in Q3 2025, driven by higher production in Chile [7][14]. - Total methanol sales volume for Q4 2025 was 2,689,000 tonnes, up from 2,476,000 tonnes in Q3 2025, with Methanex-produced methanol sales reaching 2,390,000 tonnes [6][14]. - The average realized price for methanol in Q4 2025 was $331 per tonne, down from $345 per tonne in Q3 2025 [8][35]. Operational Highlights - The company achieved its best two-year safety performance in history and successfully integrated the acquired OCI Global's methanol business [4]. - Methanex ended 2025 with a cash balance of $425 million and repaid $200 million of its Term Loan A, aligning with its deleveraging strategy [7][14]. Market Outlook - Methanex anticipates production of approximately 9.0 million tonnes of methanol in 2026, with expectations for a slightly higher Adjusted EBITDA in Q1 2026 compared to Q4 2025 [26][27].