This week's world news

25 June 2012 00:00  [Source: ICB]

ASIA

CHINA'S ETHANOLAMINES LOWER ON EO PLUNGE
China's ethanolamines prices continue to fall following steep declines in upstream ethylene oxide (EO) prices, which shed 17% in two weeks, market sources say. The prospects for price recovery for ethanolamines do not look bright because of poor downstream demand and weak upstream values, they added. "The price fall [of EO] is too much, which is beyond our expectation," a Zhejiang-based ethanolamines trader said. The extent of the price fall has caused panic in the downstream markets, with customers not buying the material as they are worried that prices will fall further, the trader said.

MANUFACTURING ACTIVITY IN CHINA SHRINKS IN JUNE
China's manufacturing - as measured by the HSBC flash purchasing managers' index (PMI) - has contracted for the eighth straight month in June as export order sentiment weakened, according to UK banking firm HSBC. The preliminary PMI fell to a seven-month low of 48.1 in June from a final reading of 48.4 in May. This followed April's final reading of 49.3. Exports are likely to decelerate in the coming months on the back of stronger external headwinds.

CHINA DOMESTIC MMA PRICES TO FALL FURTHER
China domestic methyl methacrylate (MMA) prices are expected to decline further, tracking falls in crude oil prices and weak downstream demand, say market sources. Domestic prices have fallen by 6-8% over two weeks because of weak demand from the downstream polymethyl methacrylate (PMMA) polymer, cast sheets, and acrylic resins for coatings and emulsions sectors. Some traders have been destocking cargoes to prevent further losses, while others are staying out of the market and preferring not to build inventories in expectation of a further fall in prices.

INDIA ACETONE DEMAND TO GROW AT 10%/YEAR TO 2015
Demand for acetone in India is expected to grow by at least 10% annually from 2012 to 2015, driven mainly by growth in the key downstream pharmaceuticals sector, according to Debashish Nandi, vice president of Reliance Industries. Speaking at the 7th ICIS World Phenol-Acetone Conference in Madrid, Nandi said Indian demand for acetone reached 160,000 tonnes in 2011 and is projected to reach 225,000 tonnes in 2015.


AMERICAS

US ETHANE PRICES TO BE DRIVEN DOWN - ANALYST
An oversupply of ethane in the US resulting from shale gas operations will drive down prices and increase profitability for cracker owners, global analyst Bernstein Research says. They said that during late 2010 and 2011, exploration and production (E&P) management teams looked at their success in gas supply, and began a process of redeploying capital. "Amid the disparity in pricing, with natural gas anaemic and crude strengthening to a record differential, the 'shift to liquids' became a major theme in the North American E&P space."

PAVCO BEGINS TO BUILD PVC IN COLOMBIA
Colombian polyvinyl chloride (PVC) pipe maker Pavco will begin construction this month of two new plants in Guachene municipality in the state of Cauca. One of the plants will manufacture three-meter tubing used for sewerage. The other plant will make geotextile-finished products for mining and road infrastructure. Both plants will be ready by June 2013.

US HOME BUILDERS GAIN CONFIDENCE IN JUNE
US housing contractors are reporting gradual improvement in the market for new, single-family residences, a survey says, and their confidence levels have reached their highest point since May 2007. The National Association of Home Builders (NAHB) said that its survey of member contractors - the housing market index (HMI) - rose one point in June to 29. That is the highest reading since the score of 30 recorded in May 2007 when the US home-building sector was already in steep decline.

US LEADERS SEEK TO ROLL BACK GREENHOUSE RULES
House committee leaders say the Obama administration's efforts to regulate greenhouse gas (GHG) emissions constitute overreach and a violation of congressional intent that will undermine US manufacturing and raise electricity costs. The chairman of the Energy and Commerce Committee, Republican Fred Upton, said the policies are "acting as one more roadblock to economic recovery and job growth."


EUROPE

SIBUR AND LINDE TO BUILD ETHYLENE PLANT IN SIBERIA
Russia's Sibur has signed an agreement with Germany's Linde to design and build one of the world's largest ethylene plants in Tobolsk, western Siberia. Sibur said that Linde will provide front end engineering and design (FEED) services for the ethylene plant. The plant is to be built at the ZapSibNeftekhim petrochemical complex in Tobolsk, which is being planned by Sibur subsidiary ZapSibNeftekhim. The plant will produce around 1.5m tonnes/year of ethylene.

NEW ASIA CAPACITIES WILL NOT HURT EUROPE PHENOL
The European phenol market does not see the new capacities that are due to come on stream in Asia in 2013-2015 as too much of a challenge, industry executives say. Speaking at the 7th ICIS World Phenol-Acetone Conference in Madrid, Spain, a panel of industry executives agreed that the new capacities are needed in Asia to soak up domestic demand for phenol derivatives, largely polycarbonate (PC) production. CEPSA Quimica senior vice president for commercial Fernando Irisarri said: "We are building a new plant in Asia because this is where we believe the market is."

EUROPE EPOXY MARKET FACES TOUGH FUTURE
Although the Asian epoxy resins market will continue to grow strongly, continued rationalisation is likely in more mature markets, according to Nigel Seymour, vice president of base epoxy resins and intermediates at US-based Momentive Speciality Chemicals. Speaking at the 7th ICIS World Phenol and Acetone Conference in Madrid, he said that the European market is facing several challenges, such as declining demand, higher raw material costs and volatility in earnings. "Without significant new market development, it could take five to six years to recover to 2007 [demand] levels," said Seymour.

EUROPE ACETONE IMMUNE FROM OVERSUPPLY ISSUE
European acetone "will always find a home" despite periods of heavy oversupply and weak demand, industry executives said last week. This is because acetone is a by-product of phenol, the production of which is driven by demand for phenol derivatives such as bisphenol A (BPA) and phenolic resins, rather than acetone. For every tonne of phenol made, 0.62 tonnes of acetone is produced. "The answer is simple, nothing technical; in general, demand for acetone is elastic and phenol is not. Acetone will always find a home," said Ron Coyle, commercial director at INEOS Phenol.

POLISH WORKERS' ZAP BID TO RIVAL SYNTHOS OFFER
Spolka Pracownicza Chemia-Pulawy, a limited liability company controlled by the employees and union members of Polish chemical producer Zaklady Azotowe Pulawy (ZAP), is to file a counter-bid to synthetic rubber maker Synthos' offer for the firm. The bid, due to be made by June 22, would be aimed at acquiring a controlling stake in ZAP through a "dividend model" - meaning that the holding would be paid for in annual tranches over a 10-year period.

DEAL TO SAVE DIOKI HAS FAILED - GOVERNMENT
Croatian government officials have failed in their attempt to save DIOKI Group from bankruptcy after they were unable to persuade major creditors to agree to a debt-to-equity restructuring deal, Croatia's economy ministry says. Attempts at finding a strategic investor that would rescue the low density polyethylene (LDPE) producer had also proved unsuccessful, but the search would continue, it added.


MIDDLE EAST & AFRICA

MIDEAST PP SUPPLY TO RISE ON WEAK DEMAND
Polypropylene (PP) supply from the Middle East is likely to increase, as recent sales volumes seen in Asia and Europe have been low and import interest in Egypt has weakened because of a recent duty imposed, industry players say. Middle East PP producers said they are facing a slow build-up in inventories, with lower-than-expected buying activity in Asia and Europe over the past few months after prices started to decline from April. From April to mid-June, spot PP import prices in China, Europe and Turkey fell by $172-390/tonne (€136-308/tonne) or 11.6-21.4%, according to ICIS


By: Joseph Chang
+1 713 525 2653



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