Rich Sumner: Thanks, Ahmed. Right now we seasonally see Iran lower into the fourth and first quarter. That’s typically what we see in some of it. It’s hard to say how much of this is operating rates, gas constraints and then ultimately is there any other factors at play. I think we saw a really quite a low production quarter in the first quarter and it’s been slow to see Iran coming back in the market. Slower than what we’ve historically seen as we kind of move out of the first quarter. So we don’t know is that still they’ve got gas constraints happening or is it technical issues. But at this point we’re not seeing Iran moving back into the market the way we’ve normally seen it. I think just on the Middle East conflict generally, I think it hasn’t impacted methanol markets greatly just because there isn’t a lot of Middle East flows moving into Europe and where you’ve seen some supply chains being really impacted.
As Iran has become more directly involved, we’re going to continue to watch and see what if any impact that may have on them as we move forward. So difficult to say if what we’re seeing today how much of that is tying back to what we’re seeing geopolitically.
Hassan Ahmed: Understood. A two-part question on demand, near term as well as longer term. In the press release, you guys talked about sequentially global methanol demand being sort of down a smidge. You obviously talked about some outages on the MTO side of things, but conventional demand actually holding up quite firm. So on the narrow term side of things, do you attribute the conventional demand firmness to restocking or is it more organic demand growth that you’re seeing because of the macro environment? And then on the longer term side of things, I’ve been doing a fair bit of work on the marine opportunity. Could you just also sort of rehash your latest and greatest thought process longer term on the marine opportunity, particularly with different sort of fuel options available for that end market?
Rich Sumner: Thanks. So maybe I’ll address sort of what’s happening, what we’re seeing on demand first on the shorter term. When we move through Q1, the reason we say demand was slightly down was it’s focusing really on the MTO production rates. Overall, we estimate their production rates were maybe slightly below 80% because there were two units that took planned turnarounds, and that often happens in the period of tight supply. So they’ll do their maintenance when there’s not a lot of methanol available in the market. So we saw that and now those units are back up and the industry is operating at 85-90% operating rates. So that was kind of an MTO story. On the traditional chemical side, we saw relatively stable through the first quarter.
Now, it is Chinese Lunar New Year, so we do see a slowdown typically in the first quarter because of that. And because China consumes about 20 million tons of demand for traditional chemical applications. While we say we’re — as we move out of Q1, we’re seeing some positive signs that there are you know that that point to have a modest and stable demand growth in traditional chemical applications. China’s manufacturing numbers are better. Their exports are a bit better but they still have a domestic market that there and they’re trying to manage in that property and the housing markets putting pressure there. So, we’re seeing kind of slow modest growth and that would be our projection. Outside of China in Asia and U.S. and Europe, we’re seeing we’re seeing some positive indicators around that certainly improvements over last year.
When you look at Korea and Japan and their dependence on export markets that’s improved this year. And then Europe as well things came off they had a hit a base and now we see slow growth. So, what we’re seeing is sort of leveling out and what we call modestly growing demand relatively stable in those sectors. So, that underpins why we look and we look at — and think demand growth is probably something similar last year overall this year and that’s what it’s pointing to today. On your longer term question for marine fuels that area continues to grow. It has the momentum around ships continues to be really positive. Last year was the first year where methanol dual-fuel ships actually outpace the order on the order book outpaced LNG. The number of ships in the water now is at a level of about 280 ships and that will be on a on a staged timeframe between now and 2028, 2029 and it will really start in 2025 and kind of grow over the years.
Now, your question is what will that mean for demand? I think that’s what we’re really trying to figure out they have the ships and the owners have two choices as conventional well — between there’s methanol as a fuel or there’s traditional marine fuel — grain bunker fuels. And so their choices are going to come down to the relative economics of conventional fuels. It’s going to come down to that relative economics of low-carbon and their willingness to pay on those — for those lower carbon fuels as well as the clean burning attributes. And so there’s going to be a lot of things factoring into those decisions. That’s what our Low Carbon Solutions team is working on right now. We’re in many discussions with different shipping companies about both their future fuel choices and how we can bring cost competitive fuels to that market to meet their demand.
Hassan Ahmed: Very helpful Rich. Thank you so much.
Rich Sumner: Thanks.
Operator: Your next question comes from the line of Steve Hansen of Raymond James. Your line is open.
Steve Hansen: Yes, thanks. I appreciate him. Rich. Just wanted to go back to the G3, again, is there one or two key gating items that are really important here over the next month or two that you need to get through that will derisk it? Or will you not know until you get really close to start-up?
