Polyethylene terephthalate (PET)

Staying ahead of the many drivers impacting the PET market 

Discover the factors influencing polyethylene terephthalate (PET) markets

Utilised universally for synthetic fibers, films, packaging and bottle production, polyethylene terephthalate (PET) is the most common thermoplastic polymer resin of the polyester family. As it is the world’s recyclable packaging choice for many foods and beverages, it is crucial for market participants to stay in touch with each driver and every movement in the PET marketplace.

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Polyethylene terephthalate (PET) news

PRC '24: PODCAST ICIS recycled plastics experts highlight key topics, trends for week ahead

GRAPEVINE (ICIS)–The Plastics Recycling Conference is underway in Grapevine, Texas, and Senior Market Editor Emily Friedman and Senior Analyst Andrea Bassetti break down the key topics among discussions and presentations at the show: US R-PET market experiencing a divergence from historic trend, as well as stark regional differences Chemical recycling capacities still set to grow through 2028 Recycling markets facing virgin, import price pressure and sluggish demand in H1 2024 To learn more, ICIS recycled plastics experts Emily Friedman and Andrea Bassetti will be giving a presentation "Insights from the Analysts" on Wednesday, 27 March at 10:00AM CST. The Plastics Recycling Conference (PRC) takes place on 25-27 March in Grapevine, Texas. Please reach out on LinkedIn to connect with us at the show!

26-Mar-2024

CDI Economic Summary: US Fed expects to stay on course with three rate cuts

NEW YORK (ICIS)–The US Federal Reserve is sticking to its forecast of three quarter-point rate cuts this year and is now planning to soon slow the pace of its quantitative tightening (QT) program of draining liquidity from the financial system to the tune of $95 billion a month – all good news for the overall economy and the chemical sector. Economists are becoming more sanguine on the outlook with upward revisions to 2024 GDP forecasts, though inflation expectations are also ticking a bit higher. ICIS projects US GDP growth of 2.2% for 2024, down from 2.5% in 2023 – a year in which every economist forecast a recession. However, growth is expected to slow from the surprisingly strong 3.3% pace in Q4, bottoming out at 1.2% in Q2 and Q3. US GDP forecasts – a soft landing Source: US Bureau of Economic Analysis, ICIS forecasts Inflation is easing, but the road will be bumpy with services pricing remaining sticky and goods prices potentially slowing in their pace of decline. On the services side, rents have been stubbornly high. The US Consumer Price Index (CPI) in February was up 3.2% year on year with core CPI (excluding food and energy) up 3.8% – still too high for rate cuts. Forecasts for the timing of the first cut are coalescing around the summer with June a distinct possibility. US retail sales came in weaker than expected, rising 0.6% month on month in February and up just 1.5% from a year ago. Notable year-on-year gains were in ecommerce (+6.4%) and bars and restaurants (+6.3%). Declining categories were led by furniture and home furnishing stores (-10.1%), building material and garden equipment dealers (-6.1%) and gas stations (-4.5%). The labor market remains healthy with the unemployment rate at 3.9% and wage gains continuing. While the US economy overall has proven resilient, the manufacturing sector is still in recession. The ISM US Manufacturing Purchasing Managers’ Index (PMI) in February fell to 47.8 from 49.1 in January, its 16th consecutive month in contraction (below 50). On the other hand, the Services PMI has seen 14 consecutive months of expansion. The chemical industry is off to a tepid start to 2024. Dow reiterated its forecast of flat Q1 sales versus a better-than-expected Q4 that was bereft of the usual seasonal destocking, as inventories had already been drawn down. Indeed destocking in the chemical sector is now largely done. LyondellBasell sees “modest improvement” in Q1 with solid demand for polyethylene (PE) domestically and in the export market. The outlook for two key end markets is brightening somewhat. ICIS projects housing starts to rise from 1.42 million in 2023 to 1.47 million in 2024 and 1.50 million in 2025. Light vehicle sales are expected to rise from 15.5 million units in 2023 to 15.9 million in 2024 and 16.4 million in 2025 – still below pre-pandemic levels of 17.0 million in 2019. US housing starts in February jumped 10.7% to a 1.52 million pace – up 5.9% year on year, with January figures also revised higher. Light vehicle sales rebounded 6.0% to a 15.81 million unit pace in February. Meanwhile, geopolitical turmoil and disruptions to shipping in the Red Sea will continue to be a headwind for the global economy. With major elections worldwide this year, including in the US, the chemical industry is on watch for policy shifts in regulations as well as trade. The reshoring/deglobalization trend is on the ascent – hand in hand with protectionism as global competition intensifies.

26-Mar-2024

Saudi Aramco eyes further chemical investments in China with local partners

SINGAPORE (ICIS)–China has a "vitally important" place in Saudi Aramco's global investment strategy, with the energy giant actively developing additional investment opportunities with its Chinese partners in the chemicals sector, Aramco president and CEO Amin Nasser said. The global oil major’s strategic goals in chemicals are “well-aligned” with China’s, he said in a keynote speech at the China Development Forum in Beijing on 25 March, noting that the country “is already a powerhouse representing 40% of global [chemical] sales”. Aramco, through its chemicals arm SABIC, is planning to increase its liquids-to-chemicals throughput to 4m barrels per day by 2030, Nasser said. Saudi Aramco accelerated its push into China’s refining and petrochemical sector last year with strategic investments that are aligned with Saudi Arabia's Vision 2030 diversification goals. This includes the 10% stake acquisition in Rongsheng Petrochemical Co for $3.4bn last year. Saudi Aramco, together with Chinese partners Norinco Group and Panjin Xincheng Industrial Group (PXIG), is also building a 300,000 bbl/day refining and ethylene-based steam cracking complex in Panjin City, in northeast China's Liaoning province at a cost of around $12bn. The Liaoning project is expected to come online in 2026. “We are also pleased that SABIC’s partnership in Fujian is on-track to commence construction of a major chemicals facility at an estimated cost of $6.4 billion,” Nasser said. The Fujian complex will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. SABIC’s other major investments in China include three compounding plants in Shanghai, Guangzhou and Chongqing; a joint venture with Sinopec in Tianjin; a technology centre in Shanghai and a customer centre office in Guangzhou. SUSTAINABLE DEVELOPMENT Demand for lower greenhouse gas emissions (GHG) materials – especially advanced composites and non-metallics in general – is growing rapidly, Nasser noted. Aramco’s research efforts in developing GHG materials are consistent with Chinese President Xi Jinping’s stance that sustainable development is the “golden key” for future success, he said. “We agree with China’s pragmatic and prudent approach to energy transition…I believe there are wide-ranging opportunities to jointly develop advanced GHG emission reduction technologies.” China has distinct strengths in renewables and critical materials, while Aramco and Saudi Arabia have a clear interest in solar, wind, hydrogen, and electro fuels, Nasser said. “These areas have great long-term potential, and combining our strengths could match our ambitions,” he added. Focus article by Nurluqman Suratman

26-Mar-2024

Dow, ExxonMobil among chems picked in US $6 billion CO2 cutting program

HOUSTON (ICIS)–A $6 billion industrial decarbonization program by the US will fund many chemical projects being developed by Dow, ExxonMobil and other companies, featuring projects as diverse as using carbon dioxide (CO2) as a feedstock, recycling plastic and burning hydrogen as a fuel, the Department of Energy (DOE) said on Monday. The following describes the seven chemical projects chosen by the US. ExxonMobil is developing the Baytown Olefins Plant Carbon Reduction Project in Texas. The project will use new burner technologies to combust hydrogen instead of natural gas for ethylene production. The project should cut more 2.5 million tonnes/year of carbon emissions, or more than 50% of the cracker's total emissions. The project will receive up to $331.9 million from the government. A subsidiary of Orsted plans to build a 300,000 tonne/year e-methanol plant on the Gulf Coast in Texas. The subsidiary, Orsted P2X US Holding, expects the e-methanol will be used as fuel for marine shipping and transportation. E-methanol is made with CO2 with green hydrogen. Orsted is already developing such a project in Sweden. The Texas project will receive up to $100 million from the government. BASF plans to develop a project in Freeport, Texas, that will convert liquid byproducts into synthesis gas (syngas) using plasma gasification and renewable power. Syngas is a mixture of hydrogen and carbon monoxide (CO). BASF will use the syngas as feedstock for its operations in Freeport. The project will receive up to $75 million from the government. LanzaTech and T.EN Stone & Webster Process Technology plan to develop a project on the US Gulf Coast that will capture CO2 emissions from crackers. It will then use green hydrogen and a biotech-based process to convert the captured CO2 into ethanol and ethylene. LanzaTech has developed strains of bacteria that ferment CO2 using hydrogen as an energy source. The name of the project is Sustainable Ethylene from CO2 Utilization with Renewable Energy (SECURE), and it will receive up to $200 million from the government. Ashland's subsidiary, ISP Chemicals, plans to replace natural gas boilers with electric heat delivered by a thermal battery at its plant in Calvert City, Kentucky. Other partners in the project include the Tennessee Valley Authority (TVA) and Electrified Thermal Solutions (ETS), which is supplying its Joule Hive system. The project will receive up to $35.2 million from the government. Dow's project will be developed on the US Gulf Coast and it will capture up to 100,000 tonnes/year of CO2 from ethylene oxide (EO) production. The project will then use the CO2 to produce chemicals used in electrolyte solutions to make domestic lithium-ion batteries. The project will receive up to $95 million from the government. Eastman is building a chemical recycling plant in Longview, Texas, that will use its methanolysis technology to break down waste polyethylene terephthalate (PET) into dimethyl terephthalate (DMT) and monoethylene glycol (MEG). The plant plans to use thermal energy storage combined with on-site solar power to reduce the carbon intensity of its process heating operations. It will receive up to $375 million from the government. DETAILS ABOUT THE US PROGRAMThe US expects the program will cut more than 14 million tonnes/year of emissions of CO2 from 33 projects. On average, each of the projects will cut carbon emissions by 77%. Out of the $6 billion, $489 million will come from the Bipartisan Infrastructure Law, and $5.47 billion will come from the Inflation Reduction Act (IRA). The fund will target the following: Seven chemical and refining projects. Six cement and concrete projects. Six iron and steel projects. Five aluminium and metals projects. Three food and beverage projects. Three glass projects. Two process heat-focused projects. One pulp and paper project.

25-Mar-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 22 March. NEWS AFPM ’24: LatAm petchems brace for slow path to recovery with all eyes on ChinaThe petrochemicals downturn in Latin America is likely to be the longest ever as Chinese and global overcapacities dampen prices in the world’s quintessential “price taker” region for chemicals. Brazil’s Braskem losses widen in 2023 on poor polymers markets Losses at Braskem widened further in 2023 to more than $900 million on the back of poor market dynamics in polymers, the Brazilian petrochemicals major said late on Monday. Brazil’s Braskem pushes polymers recovery to 2026 despite some green shoots Braskem’s said on Tuesday a recovery in polymers prices in earnest will now only take place from 2026, with the Brazilian petrochemicals major posting again a poor set financial result. Argentina’s manufacturing down 6% in Q4, sector hardest hit amid GDP contraction Argentina’s petrochemicals-intensive manufacturing output fell by 6% in the fourth quarter, year on year, making the sector hardest hit by the recession, the country’s statistical office Indec said on Wednesday. Mexico’s central bank joins monetary policy easing, cuts rates to 11% Mexico’s central bank cut this week the main interest rate benchmark by 25 basis points to 11%, finally joining other Latin American central banks in easing borrowing costs as inflation has fallen consistently. Brazil's central bank cuts interest rates to 10.75% Brazil’s central bank cut again this week the main interest rate benchmark, the Selic, by 50 basis points to 10.75%. Brazil’s farmers import 40% more urea in February before end of season In Brazil, urea imports in February were at 490,328 tonnes, up 40% from 349,452 tonnes in February 2023 as farmers stepped up purchases ahead of the close of the season, according to customs data. PRICING AFPM ’24: LatAm PE margins remain squeezed on imports Polyethylene (PE) imports are expected to remain high throughout Latin America during the second quarter, with deliveries from the US to continue dominating. AFPM ’24: Latin America PP demand still in doldrums, supply ample on high imports Latin America polypropylene (PP) supply is to remain sufficient in coming months due to lackluster demand, with a high level of imports still the predominant feature. AFPM ’24: LatAm PS supply to remain ample; demand to drop due to seasonality Latin America’s polystyrene (PS) supply is to remain ample as demand continues to be weak. Ethanol prices rise amidst stable supply and demand in Brazil Prices for hydrous ethanol were assessed higher this week, with stable supply and demand across the country.

25-Mar-2024

INSIGHT: Controversial EU Packaging and Packaging Waste Regulation approaches adoption

LONDON (ICIS)–Details of the provisional agreement on the Packaging and Packaging Waste Regulation (PPWR) have been published, containing a number of wide-ranging elements which will reshape the packaging sector across the next two decades. The regulation is now reaching its final stages but has faced a fraught journey through the various legislative chambers of the EU and has remained divisive among both legislators and the markets. Under the provisional agreement the regulation will introduce: Mandated packaging recyclability Minimum recycled content and reuse targets across packaging – albeit with potential derogations based on availability of recycled material Mandatory deposit return schemes (DRS) and separate packaging collection targets New reporting and labelling obligations The extension of extended producer responsibility (EPR) schemes A restriction on the placing on the market of food contact packaging containing per- and polyfluorinated alkyl substances (PFAS) above certain thresholds A restriction on plastic collation films except for transportation purposes The possibility of bio-based plastic contributing to recycling targets The allowance of imports to count towards recycling targets provided they are of similar quality as domestic material and have been separately collected The Committee of the Permanent representatives of the Governments of the Member States to the European Union (Coreper) endorsed the Packaging and Packaging Waste Regulation on 15 March following amendments to the provisional agreement reached by the EU Parliament and EU Council (but not endorsed by the EU Commission) during the trilogue negotiations. The European Parliament Committee on Environment, Public Health and Food Safety (ENVI) endorsed the provisional agreement on 19 March. NEW RE-USE TARGETSBy 1 January 2030, 40% of most transport packaging used within the EU – including e-commerce – will need to be reusable and ‘within a system of reuse’. This includes pallets, foldable-plastic boxes, boxes, trays, plastic crates, intermediate bulk containers, pails, drums and canisters of all sizes and materials, including flexible formats or pallet wrappings or straps for stabilisation and protection of products put on pallets during transport. From 2040 this will increase to 70%.  Some players said that this amounted to a defacto ban on flexible plastic transport packaging because of the difficulty in reaching the reuse target. By 2030, 10% of grouped packaging boxes for stock keeping or distribution will need to be re-usable. Controversially, cardboard boxes will be exempt from these reuse targets, which could see an increased shift to the material. Dangerous goods transport packaging, large scale equipment transport packaging, and flexibles in direct contact with food and feed as defined in Regulation (EC) No 178/2002, and food ingredients as defined in Regulation (EU) No 1169/2011 will also be exempted. By 2030, distributors of alcoholic and non-alcoholic beverage sales packaging will need to meet a 10% reuse target, which will increase to 40% by 2040. Some classes of alcoholic beverage, including highly perishable alcoholic beverages will be exempted. RECYCLABILITY AND REUSEBy 2030 all packaging must be recyclable or reusable. To be classed as recyclable, packaging must be: Designed for recycling Separately collected Sorted in to defined waste streams without affecting the recyclability of other waste streams Possible to be recycled so that the resulting secondary raw materials are of sufficient quality to substitute the primary raw materials Packaging recyclability performance grades are to be established by packaging category and classified as grades A, B or C. After 1 January 2030 any packaging that falls below grade C will be restricted from sale in the market. After 1 January 2038 packaging classified below grade B will be banned from sale in the market. Under the legislation, along with design for recycling assessments from 2035 an additional assessment will be added based on the weight of material effectively recycled from each packaging category – with the packaging categories under the design for recycling assessment established in Article 6 paragraph 6 of the provisional agreement. The EU Commission will be given power to adopt delegated acts to establish the detailed criteria for the design for recycling criteria under the packaging categories, with criteria to be set-out by 1 January 2028. Also from 2035, a requirement that material be ‘recycled at scale’ will be added to the recyclability assessment, with the EU Commission able to amend the thresholds. The definition of packaging waste recycled at scale requires separate collection sorting and recycling of material across the EU as a whole (including of waste exports) in installed infrastructure for each of the packaging categories of at least 55% for all materials except for wood which requires at least 30%. Assessments of recyclability will include the impact on recycling systems of the inclusion of things such as barriers, inks and labels. By the end of 2026 the EU Commission will be required to prepare a report on ‘substances of concern’ that might negatively affect recycling or reusability, with additional restrictions added for those substances under recyclability assessments. Member states will be able to request the EU Commission consider restricting substances they consider detrimental to recycling. Within 7 years from the date of application of the regulation, the Commission will be required to evaluate whether the design for recycling requirements have contributed to minimising substances of concern. A five-year exemption on meeting recyclability targets will be given for innovative packaging, along with an exemption for medical goods and medical goods packaging, dangerous goods and packaging for food-contact material specifically made for infants. Sales packaging made from lightweight wood, cork, textile, rubber, ceramic or porcelain is also expected to be exempted from most of the recyclability requirements. MINIMUM RECYCLING TARGETS FOR THE PACKAGING CHAINUnder the provisional agreement, from 1 January 2030, or three years after the introduction of the related implementing act (whichever is later) all plastic packaging placed on the market in the EU must include a minimum percentage of recycled content from post-consumer waste – by weight – of: 30% for contact sensitive packaging (this is generally packaging that comes into contact with food or medical supplies), excluding single-use bottles made from polyethylene terephthalate (PET) as the major component 10% for contact sensitive packaging made from plastic materials other than PET, except single use plastic beverage bottles 30% for single use plastic beverage bottle 35% for all other packaging By 2040, this will increase to: 50% for contact sensitive plastic packaging made primarily from PET, except for single use plastic beverage bottles 25% for non-PET contact sensitive plastics, with the exception of single use beverage bottles 65% for single use beverage bottles and all other plastic packaging The recycled content targets will allow the use of material from ‘third countries’ – those outside of the EU – the allowance of which has been one of the most contentious and heavily lobbied parts of the bill on either side of the argument. Material from outside of the EU will need to have been separately collected, and have equivalent specification to the requirements listed in the PPWR, the Waste Framework Directive (2008/98/EC), and the Directive on the reduction of the impact of certain plastic products on the environment ((EU) 2019/904). Medical packaging, transportation of dangerous goods, compostable plastic packaging and food packaging for infants and young children will be exempt from the recycled targets. The Commission is obliged to adopt implementing acts establishing a methodology for the calculation and verification of these recycled percentages by 31 December 2026. The Commission will be able to amend the targets based on "excessive prices of specific recycled plastics" and on the grounds that the amount of recycled content would pose a threat to human health or result in non-compliance with Regulation (EC) 1935/2004 – or to any plastic part representing less than 5% of the total weight of the whole packaging, which would typically include things such as functional barriers. By 1 January 2028 the Commission will be required to assess the need for further exemptions from recycled content targets for specific plastic packaging based on a lack of suitable recycling technologies. It will have the power to introduce implementing acts to amend the recycled content targets based on those assessments. Member states will also be able to exempt economic operators from the recycled content targets for 5 years as long as: that Member State has reached 5 percentage points above the 2025 recycled targets for recycling of packaging waste per material It is expected to reach 5 percentage points above the 2030 target (as assessed by the EU Commission) It is on track to meet waste prevention targets under the PPWR It has reached a 3% waste prevention by 2028 compared with a 2018 baseline The economic operators have adopted a corporate waste prevention and recycling plan that contributes to achieving the waste prevention and recycling objective The five year exemption can be renewed by Member States provided the conditions remain filled. This would appear to lead to the prospect of uneven trading conditions across the EU. The targets will be calculated by year and manufacturing plant. The 2030 targets under the PPWR will replace the targets set out in the Single Use Plastics Directive (SUPD) from 2030, but the pre-2030 targets in the SUPD will remain. EPR schemes will be extended under the legislation and must be set-up to ensure that fees to producers (or those with producer responsibility in the case of imports) are sufficient to cover the ‘full waste management’ cost of packaging waste, but actual fees are not stipulated in the legislation. The provisional agreement states that players contributing to EPR schemes should be given priority access at market prices to recycled material corresponding to the amount of packaging placed in a Member State by each individual economic operator. SINGLE-USE PLASTICS, PACKAGING WASTE TO LANDFILL, AND PFAS BANSThere will be further bans on single-use plastics introduced by the PPWR, which remain broadly inline with those proposed in the EU Council’s bargaining position. Significantly, for the recycled low density polyethylene (R-LDPE) flexible market this includes a ban on plastic film wrap grouping bottles, cans, tins, pots, tubs, or packets together in multi-packs at point of sale, but will not include wrap used for business-to-business distribution. This could also impact on pyrolysis-based chemical recyclers because post-consumer flexibles have been identified by the sector as a potential key feedstock source. The agreement also includes a ban on food-contact packaging containing PFAS above certain thresholds. There will also be a restriction on sending packaging waste that can be recycled to landfill or incineration, which could result in a higher sorting requirements and costs for waste managers. BIO-BASED MATERIALBy three years from the entrance in to force of the PPWR the EU Commission will be obliged to review the state of technological development and environmental performance of bio-based plastic packaging. Following this, the Commission will be required to bring forth legislative proposals for targets to increase the use of bio-based plastics in packaging, this will include the possibility of bio-based material contributing to recycling targets for food-contact material where recycled material is not available. This is likely to impact most heavily on the polyolefins and polystyrene sectors. CHEMICAL RECYCLINGThe original commission draft appeared to clarify and support the use of chemical recycling as counting towards the targets as long as its end use is not for fuel or backfill. In a blow for chemical recyclers, however, the wording around definition of recycling has been removed, and now refers back to Directive 2008/98/EC which forms the basis of the majority of EU recycling legislation definitions. Directive 2008/98/EC defined recycling as “any recovery operation by which waste materials are reprocessed into products, materials or substances whether for the original or other purposes. It includes the reprocessing of organic material but does not include energy recovery and the reprocessing into materials that are to be used as fuels or for backfilling operations." This has left the legal status of chemical recycling uncertain, particularly for pyrolysis – the dominant form of chemical recycling in Europe – where mixed plastic waste is commonly converted to pyrolysis oil – a naphtha substitute – before being reprocessed into recycled plastics. MEMBER STATE TARGETS AND DEPOSIT RETURN SCHEMES (DRSs)Member state targets and obligations to implement DRSs remain broadly the same as in the EU Council’s bargaining position paper. The exception is that the figure on the collection figure for member states to exempt themselves from a DRS scheme has been increased to 80% by weight of applicable packaging placed on the market for the first time in 2026, up from 78% in the EU Council's bargaining position. The legislation's passage through the EU has been fraught, with the EU Commission objecting to the provisional agreement between the Parliament and the Council, and with widespread talk circulating in the run up to the vote that the members would not support it at Coreper. These factors are understood to be behind the last minute amendments. The regulation now faces a final approval vote in the EU Parliament’s April plenary session, if it passes that vote it will be adopted in to law. Insight by Mark VictoryAdditional reporting by Matt Tudball

25-Mar-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 22 March. Much improved outlook from manufacturers in Germany The business climate for manufacturing in Germany improved markedly in March, the Munich-based ifo Institute said on Friday, with its latest survey results supporting wider views on an improving economy. Eurozone private sector moves closer to stability in March, UK firms The eurozone private sector came close to stabilising this month, driven by a more pronounced return to growth footing for services, but the disparity between a stronger southern Europe and ongoing weakness in France and Germany continued. INSIGHT: SAF catalyst technology could also boost biochemicals production Catalyst technology used to power the first transatlantic flight conducted by a commercial airline which used 100% sustainable aviation fuel (SAF), could also have applications in chemicals production if a market can be developed to allow for commercial scale up. INEOS to end ethanol production at Grangemouth in Q1 2025 Slowing demand and cheap imports were cited as the key reasons why INEOS decided to halt production of synthetic ethanol at its Grangemouth site in the UK in Q1 2025. Europe PE/PP contracts settle up from February, sentiment noticeably weaker In Europe, polyethylene (PE) and polypropylene (PP) contracts for March have settled up from February and above the monomer, although sentiment has weakened.

25-Mar-2024

BLOG: Global 2024 PE demand could have been 74m tonnes lower if incomes, population drive market

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: If I had a dollar for every time I’d heard that population and income growth are the defining factors behind the petrochemicals demand boom of the last 30 years, I would be retired by now. I could be sitting on some desert island, watching plastic waste wash onto what was once a pristine beach. But the historic data doesn’t appear to support the accepted wisdom on population and income growth, as today’s long and detailed post argues: On this basis, global polyethylene (PE) demand would have been just 52m tonnes in 2024 versus the ICIS forecast of 126m tonnes. The China market would have been just 10m tonnes versus 43m tonnes; the Developing World ex-China 13m tonnes versus 44m tonnes and the Developed World 29m tonnes versus 38m tonnes. Global demand 74m tonnes higher than might have been the case was the result of: Trade liberalisation, wealth growth as opposed to just income growth (think of the China property bubble); youthful populations, most importantly in China; innovations in packaging (not all of them of use to society); and few concerns about plastic waste. What happens next given the big changes to all these positive demand drivers that are discussed in today’s post? Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

25-Mar-2024

PRC ’24: US rPET market deviating from historic trends in 2024

HOUSTON (ICIS)–As beverage and thermoform packaging demand ramps up amid seasonally tight polyethylene terephthalate (PET) bottle supply, the US recycled polyethylene terephthalate (rPET) market is showing split trends across regions. In many ways, the market is deviating from historic patterns heading into this year’s Plastics Recycling Conference (PRC). While demand on the East Coast remains robust, bale markets have yet to reflect any issues in supply, likely due to the continued import of rPET flake feedstock. On the West Coast, demand remains poor as customers have switched from domestic rPET to cost-competitive imported rPET or virgin material. At the same time, West Coast bale markets juggle limited seasonal supply and aggressive Mexican export interest. BALES In line with traditional seasonal supply tightening, availability post-consumer PET bottle bale feedstock remains constrained on the West Coast. As cooler weather persists across the country, it causes a decreased consumption of bottled beverages and thus, lower collection volumes. West Coast domestic recyclers are in heavy competition for limited feedstock with export interests, particularly from Mexico. Despite rapidly rising prices, several in the market believe Mexican buying activity will remain strong to feed local recycling capacities which have recently expanded. Even East Coast deposit bales were heard being routed to Mexican buyers. On the East Coast, supply remains balanced which is counter to the historic trend. Though demand for rPET pellet is robust on the East Coast, recyclers are supplementing operations with imported flake feedstock, which has alleviated pressure from bale markets. Imports of PET scrap into the US have jumped 33% year on year. As a result, market prices have minimally increased. As the weather continues to improve through the spring and into the summer, bottle bale supply is expected to lengthen. Even as the market passes the peak winter supply tightness, imported feedstock will be necessary as the US market continues to develop, as pelletization capacity has increased domestically, but annual collection of PET bottles remains stagnate, according the latest data from the National Association for PET Container Resources. Furthermore, some recyclers see the need to secure new sources of feedstock to protect future supply continuity. Within the last several months, Republic Services, a major waste management company and owner of 90 material recovery facilities (MRFs) nationwide, has opened their first of four recycling facilities. Now, rather than selling sorted PET bales on the market, this facility will consume those bales and produce rPET flake. FLAKE AND PELLETAs markets readjust to 2024 economic outlooks, demand across several industries is expected to increase in the second half of the year. That being said, this may be too late to significantly impact preparation efforts ahead of the summer beverage season, a key demand driver for the US rPET market. Recyclers located on the East Coast have found success in catering to beverage bottle demand, and are seeing steady orders, though volumes are by no means record breaking. Activity from fiber recyclers on the East Coast has been muted on soft downstream consumer demand in textiles and carpet. Much like in 2023, consumer brand companies are expected to continue to increase usage of post-consumer recycled (PCR) plastic in their product packaging to meet voluntary commitments and regulatory requirements. According to several industry groups, many brand companies are still far from reaching their targets. This comes as California, Washington and as of this year, New Jersey, mandate recycled plastic content in both food and beverage packaging as well as other plastic items such as bags in 2024. Though, not all US recyclers are feeling the impact of growing PCR usage. On the West Coast, recyclers continue to see weak sales and have had to scale back production rates significantly as customers are heard to have switched to imported rPET or virgin to save on cost. As a result, West Coast recyclers are now being squeezed between rising bale feedstock costs due to export competition, and low flake and pellet sell prices and volumes due to import competition. Though freight rates have increased since the start of the year due to the strain on the global logistics system from delays around the Panama and Suez canal, opportunities for imported materials continue to emerge from Asia and Latin America. As the US rPET market continues to develop amid a changing global backdrop, trends are expected to defy historic patterns. Several recyclers note the impact of the beverage season and overall, PET seasonality trend is weakening on the US rPET market. Now, imported flake lessens the criticality of winter bale supply tightness and sustainable packaging programs, which impact various types of consumer goods products, have provided some stability in demand across the full year. To learn more on seasonality and other fundamental recycled plastic pricing trends, ICIS recycled plastics experts Emily Friedman and Andrea Bassetti will be giving a presentation "Insights from the Analysts" on Wednesday, 27 March at 10:00 CST. The Plastics Recycling Conference (PRC) takes place on 25-27 March in Grapevine, Texas. Please reach out on LinkedIn to connect with us at the show! Insight article by Emily Friedman

24-Mar-2024

LOGISTICS: US Gulf, East Coast ports, dock workers eye new contract; Asia-US container rates continue to fall

HOUSTON (ICIS)–Negotiations are ongoing for a new labor agreement between US Gulf and East Coast ports and the International Longshoremen’s Association (ILA), Asia-US shipping container rates continue to slide, and liquid chem tanker spot rates ex-US Gulf are steady to higher, highlighting his week’s logistics roundup. GULF COAST, EAST COAST LABOR NEGOTIATIONS The contract between US Gulf and East Coast ports and the ILA expires at the end of September. The ILA, representing about 14,500 dockworkers, will be negotiating with the United States Maritime Alliance (USMX), which is representing 36 ports, including three of the busiest ports in the US in Houston, New York and New Jersey, and Savannah, Georgia. This comes after US West Coast ports and the International Longshore and Warehouse Union (ILWU) negotiated a new deal in 2023, but only after a contentious period that saw some port disruptions. Eric Byer, president and CEO of the Alliance for Chemical Distribution (ACD) (formerly National Association of Chemical Distributors), said the safe, reliable, and timely shipment of chemicals and chemical products are essential to the health and well-being of the entire nation. “Shippers and businesses are wary of another labor contract dispute following the narrowly avoided West Coast labor strikes last year,” Byer said. “As another labor contract deadline approaches, ACD is monitoring developments of the ongoing negotiations between the East Coast and Gulf Coast ports and the ILA to remain vigilant of potential delays and diversions of shipments.” Byer noted that US businesses are already dealing with global shipping challenges in the Red Sea and Panama Canal, and a new labor dispute at US ports would only exacerbate these existing challenges and jeopardize the efficient and economic transport of essential chemicals. “That is why we urge the ports and the USMX to continue to negotiate in good faith with the ILA and to swiftly come to an agreement ahead of the contract expiration this fall,” Byer said. CONTAINER RATES Container rates from Asia to the US continue to fall, along with global rates, according to supply chain advisors Drewry and as shown in the following charts. Container rates remain well above the levels seen before Houthi rebels began attacks on commercial vessels in the Red Sea, leading almost all vessels to divert away from the Suez Canal. Rates surged because the longer route around the tip of the African continent tightened capacity. Shippers brought all floating capacity online, increased sailing speeds and brought into service newbuilds to help alleviate the situation. Softer overall demand also helped ease stressed supply chains. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said most observers expect rates to remain above typical levels as long as the diversions continue as even though supply chains have adjusted to the longer routes, there are still extra costs for fuel and labor that must be accounted for. With rates currently at two-and-a-half times what they were in 2019, Levine said there is still room for further declines, but he expects them to settle at a new, elevated floor. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES US chemical tanker freight rates assessed by ICIS were steady to higher this week, as spot rates soared from the US Gulf (USG) to Brazil and edged higher on the USG to Amsterdam-Rotterdam-Antwerp (ARA). USG to Asia as spot rates remained overall unchanged. From the USG to Brazil, the spot market has picked up and is much tighter than it was a few weeks ago. The increased demand for space in March and into April has caused freight rates to significantly jump. Space is mostly gone until the latter half of April. From the USG to Asia, last week there was increased activity for smaller parcels that prompted owners to fill the void space from their contract of affreightment (COA) nominations and base cargoes. As a result, smaller parcel rates experienced downward pressure, but base cargo rates remained unchanged due to limited tonnage availability. PANAMA CANAL INCREASES DAILY TRANSIT SLOTS The Panama Canal Authority (PCA) added two additional Panamax slots and will add another slot on 25 March based on present and projected water levels at Gatun Lake. The PCA had said previously that it would reassess the number of slots after the rainy season in April/May. The increase will bring the number of daily transits allowed up to 27, which is still significantly lower than the average of 36-38 daily transits that were seen prior to the implementation of restrictions. But the PCA did not lower the limits to 18 in February as originally planned because of improved rainfall in the region. Wait times for non-booked vessels ready for transit edged lower this week, according to the PCA's vessel tracker. Wait times are 1.2 days for northbound traffic and 1.4 days for southbound traffic. Additional reporting by Kevin Callahan

22-Mar-2024

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