Methyl tertiary butyl ether (MTBE) and ethyl tertiary butyl ether (ETBE)

HOUSTON (ICIS)–Global average rates for shipping containers rose for the first time since January, workers at freight rail carriers Canadian National (CN) and Canadian Pacific Kansas City (CPKC) have voted in favor of a strike, and the US regulator that oversees railroads finalized a rule allowing reciprocal switching, highlighting this week’s logistics roundup. CONTAINER RATES Shipping container rates have been rising steadily since December when attacks by Houthi rebels on commercial vessels in the Red Sea forced carriers to take the longer route around the tip of the African continent before leveling off last week. This week, the global average for 40-foot shipping containers rose by 1%, according to supply chain advisors Drewry and as shown in the following chart. Rates from Shanghai to the US East Coast edged slightly higher, but rates from China to the West Coast edged slightly lower, as shown in the following chart. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said that the overall container market has settled into a new routine that avoids the Red Sea. “Though significant backlogs, congestion and equipment shortages seen during the first few weeks of the crisis have dissipated, adjustments have resulted in some moderate but ongoing disruptions,” Levine said in a weekly update. He said that even after falling drastically since the beginning of the year, prices remain well above normal and are likely to increase relative to this new floor as demand is set to increase for peak season. 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), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEMICAL TANKERS US liquid chemical tanker freight rates assessed by ICIS were unchanged this week. From the US Gulf (USG) to Asia, the market has been quieter this week as a holiday-shortened week has sidelined some key players. There have been only a few parcels quoted, which is placing downward pressure on freight rates for smaller lots. Larger base cargoes of monoethylene glycol (MEG), methyl tertiary butyl ether (MTBE), and methanol have been popular chemicals on this route, keeping larger freight rates steady. From the USG to India, the market has been very quiet. PORT OF BALTIMORE Since the opening of a fourth channel into the Port of Baltimore, 171 commercial vessels have transited the waterway, including five of the vessels that were trapped inside the port after the containership Dali struck the Key Bridge, causing it to collapse, according to the Unified Command (UC). The MSC Passion III entered the port on 29 April, according to vesselfinder.com, making it the first container ship to enter the port since the accident. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. But a market participant in Ohio told ICIS previously that it is seeing delays in delivery times for imports as vessels originally destined to offload in Baltimore are getting re-routed to other ports. PANAMA CANAL Wait times for non-booked vessels ready for transit edged for higher both directions this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 2.5 days for northbound traffic and 5.6 for southbound traffic. The PCA will increase the number of slots available for Panamax vessels to transit the waterway beginning 16 May and will add another slot for Neopanamax vessels on 1 June based on the present and projected water levels in Gatun Lake. RAILROADS Workers at freight rail carriers Canadian National (CN) and Canadian Pacific Kansas City (CPKC) have voted in favor of a strike. A first work stoppage could occur as early as 22 May, if no new collective agreements are reached by then, officials at labor union Teamsters Canada Rail Conference (TCRC) said in a televised announcement on 1 May. The rail carriers warned that a work stoppage would disrupt supply chains throughout North America and constrain trade between Canada and the US and Mexico. The two railroads account for the bulk of freight rail traffic in Canada. Meanwhile, chemical industry participants were largely supportive of a final rule adopted by the Surface Transportation Board (STB) on reciprocal switching for inadequate service by railroads, but think the scope was too narrow and it does not cover a significant portion of rail traffic. For the first time, the STB said it is requiring that three service metrics be maintained on a standardized basis across all Class 1 railroads. In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail. Rail is also the predominant shipping method for US ethanol. Additional reporting by Kevin Callahan and Stefan Baumgarten Please see the Logistics: Impact on chemicals and energy topic page

03-May-2024

SAO PAULO (ICIS)–Brazilian chemicals producers are lobbying hard for an increase in import tariffs for key polymers and petrochemicals from 12.6% to 20%, and higher in cases, hoping the hike could slow down the influx of cheap imports, which have put them against the wall. For some products, Brazil’s chemicals trade group Abiquim, which represents producers, has made official requests for the import tariffs to go up to a hefty 35%, from 9% in some cases. On Tuesday, Abiquim said several of its member companies “are already talking about hibernating plants” due to unprofitable economics. It did so after it published another set of somber statistics for the first quarter, when imports continued entering Brazil em masse. Brazil’s government Chamber of Foreign Commerce (Camex) is concluding on Tuesday a public consultation about this, with its decision expected in coming weeks. Abiquim has been busy with the public consultation: it has made as many as 66 proposals for import tariffs to be hiked for several petrochemicals and fertilizers, including widely used polymers such polypropylene (PP), polyethylene (PE), polyethylene terephthalate (PET), polystyrene (PS), or expandable PS (EPS), to mention just a few. Other chemicals trade groups, as well as companies, have also filed requests for import tariffs to be increased. In total, 110 import tariffs. HARD TO FIGHT OFFBrazil has always depended on imports to cover its internal chemicals demand, but the extraordinary low prices coming from competitors abroad has made Brazil’s chemicals plant to run with operating rates of 65% or lower. More and more, the country’s chemicals facilities are becoming white elephants which are far from their potential, as customers find in imported product more competitive pricing. Considering this dire situation and taking into account that the current government in Brasilia led by Luiz Inacio Lula da Silva may be more receptive to their demands, Abiquim has put a good fight in publica and private for measure which could shore up chemical producers’ competitiveness. This could come after the government already hiked import tariffs on several products in 2023 and re-introduced a tax break, called REIQ, for some chemicals which had been withdrawn by the previous Administration. While Brazil’s chemicals production competitiveness is mostly affected by higher input costs, with natural gas costs on average five times higher than in the US, the industry is hopeful a helping hand from the government in the form of higher import tariffs could slow down the flow of imports into Brazil. As a ‘price taker region’ given its dependence on imports, Latin American domestic producers have taken a hit in the past two years. In Brazil, polymers major Braskem is Abiquim’s commanding voice. Abiquim, obviously, has always been very outspoken – even apocalyptic – about the fate of its members as they try to compete with overseas countries, namely China who has been sending abroad product at below cost of production. The priorities in China’s dictatorial system are not related to the balance of markets, but to keep employment levels stable so its citizens find fewer excuses to protest against the regime which keeps them oppressed. Capitalist market dynamics are for the rest of the world to balance; in China’s dictatorial, controlled-economy regime the priority is to make people feel the regime’s legitimacy can come from never-ending economic growth. The results of such a policy for the rest of the world – not just in chemicals but in all industrial goods – is becoming clear: unprofitable industries which cannot really compete with heavily subsidized Chinese players. The results of such a policy in China are yet to be seen, but subsiding at all costs any industry which creates employment may have debt-related lasting consequences: as they mantra goes, “there is no such thing as a free lunch.” Abiquim’s executive president urged Lula’s cabinet to look north, to the US, where the government has imposed hefty tariffs on almost all China-produced industrial goods or raw materials for manufacturing production. “[The hikes in import tariffs] have improved the US’ scenario: despite the aggressive advance in exports by Asian countries, the drop in US [chemicals] production in 2023 was of 1%, while in Brazil the index for production fell nearly by 10%,” said Andre Passos. “The country adopted an increase in import taxes of over 30% to defend its market from unfair competition. The taxation for some inputs, such as phenol, resins and adipic [acid], for example, exceeds three digits. “Here, we are suggesting an increase in rates to 20% in most claims … We need to have this breathing space for the industry to recover,” he concluded. As such, the figures for the first quarter showed no sign of imports into Brazil slowing down. The country posted a trade deficit $9.9 billion during the January-March period; the 12-month accumulated (April 2023 to March 2024) deficit stood at $44.7 billion. A record high of 61.2 million tonnes of chemicals products entered Brazil in Q1; in turn, the country’s industry exported 14.6 million tonnes. Abiquim proposals for higher import tariffs Product Current import tariff Proposed tariff Expandable polystyrene, unfilled, in primary form 12.6% 20% Other polystyrenes in primary forms 12.6% 20% Carboxymethylcellulose with content > =75%, in primary forms 12.6% 20% Other polyurethanes in liquids and pastes 12.6% 20% Phthalic anhydride 10.8% 20%  Sodium hydrogen carbonate (bicarbonate) 9% 35% Copolymers of ethylene and alpha-olefin, with a density of less than 0.94 12.6% 20% Other orthophthalic acid esters 11% 20% Other styrene polymers, in primary forms 12.6% 20% Other silicon dioxides 0% 18% Other polyesters in liquids and pastes  12.6% 20% Commercial ammonium carbonates and other ammonium carbonates 9% 18% Other unsaturated polyethers, in primary forms 12.6% 20% Polyethylene terephthalate, with a viscosity index of 78 ml/g or more 12.6% 20% Phosphoric acid with an iron content of less than 750 ppm 9% 18% Dinonyl or didecyl orthophthalates 11% 20% Poly(vinyl chloride), not mixed with other substances, obtained by suspension process 12.6% 20% Poly(vinyl chloride), not mixed with other substances, obtained by emulsion process 12.6% 20% Methyl polymethacrylate, in primary form  12.6% 20% White mineral oils (vaseline or paraffin oils) 4% 35% Other polyetherpolyols, in primary forms 12.6% 20% Other unfilled epoxy resins in primary forms 12.6% 20% Silicon dioxide obtained by chemical precipitation 9% 18% Acrylonitrile-butadiene rubber in plates, sheets, etc 11% 35% Other organic anionic surface agents, whether or not put up for retail sale, not classified under previous codes 12.6% 23% Phenol (hydroxybenzene) and its salts 7% 20% Fumaric acid, its salts and esters 10 ,8% 20% Plasticizers and plastics 10 ,8% 20% Maleic anhydride 10 ,8% 20% Adipic acid salts and esters 10 ,8% 20% Propylene copolymers, in primary forms 12.6% 20% Adipic acid 9% 20% Unfilled polypropylene, in primary form 12.6% 20% Filled polypropylene, in primary form 12.6% 20% Methacrylic acid methyl esters 10 ,8% 20% Other ethylene polymers, in primary forms 12.6% 20% Acrylic acid 2-ethylhexyl esters 0% 20% 2-Ethylexanoic acid (2-ethylexoic acid) 10. 8% 20% Other copolymers of ethylene and vinyl acetate, in primary forms 12.6% 20% Other unfilled polyethylenes, density >= 0.94, in primary forms 12.6% 20% Polyethylene with a density of less than 0.94, unfilled 12.6% 20% Other saturated acyclic monoalcohol acetates, c atom <= 8 10. 8% 20% Polyethylene with a density of less than 0.94, with filler 12.6% 20% Triacetin 10. 8% 20% Sodium methylate in methanol 12.6% 20% Stearic alcohol (industrial fatty alcohol) 12.6% 20% N-butyl acetate                              11% 20% Stearic acid (industrial monocarboxylic fatty acid) 5% 35% Alkylbenzene mixtures 11% 20% Organic, non-ionic surface agents 12.6% 23% Ammonium nitrate, whether or not in aqueous solution 0.0% 15% Monoethanolamine and its salts 12.6% 20% Isobutyl alcohol (2-methyl-1-propanol) 10.8% 20% Butan-1-ol (n-butyl alcohol) 10.8% 20% Styrene-butadiene rubber (SBR), food grade as established by the Food Chemical Codex, in primary forms 10.8% 22% Styrene                                9% 18% Hexamethylenediamine and its salts 10.8% 20% Latex from other synthetic or artificial rubbers 10.8% 35% Propylene glycol (propane-1, 2-diol) 10.8% 20% Preparations 12.6% 20% Linear alkylbenzene sulfonic acids and their salts 12.6% 23% 4,4'-Isopropylidenediphenol (bisphenol A, diphenylolpropane) and its salts 10.8% 20% Dipropylene glycol 12.6% 20% Butanone (methyl ethyl ketone) 10.8% 20% Ethyl acetate                                 10.8% 20% Methyl-, ethyl- and propylcellulose, hydroxylated 0.0% 20% Front page picture: Chemical production facilities outside Sao Paulo  Source: Union of Chemical and Petrochemical industries in the state of Sao Paulo (Sinproquim) Focus article by Jonathan Lopez Additional information by Thais Matsuda and Bruno Menini

30-Apr-2024

SINGAPORE (ICIS)–China has imposed anti-dumping duties (ADD) on imports of methyl isobutyl ketone (MIBK) from South Korea, Japan and South Africa for another five years starting 20 March 2024, the Chinese Ministry of Commerce said. There were no changes in the duty rates, which range from 15.9% to 190.4% depending on origin. Company Duty rate South Korea   Kumho P&B Chemicals Inc 18.5%   All others 32.3% Japan   Mitsui Chemicals Inc 45.0%   Mitsubishi Chemical Corporation 47.8%   All others 190.4% South Africa   Sasol South Africa (Pty) Ltd 15.9%   All others 34.1% The ADDs had been in place for five years from 20 March 2018 to 19 March 2023, and were extended for another year of investigation. The ministry said scrapping the measure would result in re-occurrence of dumping.

20-Mar-2024

LONDON (ICIS)–German biofuels producer Verbio is pushing into renewable chemicals with a €80 million -100 million commercial-scale ethenolysis project that will use rapeseed-based biodiesel to produce specialty chemicals. Strategic move to renewable chemicals; 17,000 tonnes/year of 1-decene, 32,000 tonnes/year of methyl 9-decenoate, (9-DAME); Produced from renewable rapeseed methyl ester (RME), using ethenolysis and innovative metathesis catalysts. Ethenolysis is a chemical process in which terminal olefins are degraded. In chemical terms, it is a cross metathesis. The "VerBioChem" project, adjacent to Verbio’s bio-refinery at the Bitterfeld chemicals production hub in Saxony-Anhalt state, is expected to be commissioned in 2025, Andreas Kohl, the company's head of specialty chemicals and catalysts, told ICIS. Regular production at the "first-of-its-kind" commercial-scale ethenolysis  plant should start in 2026, he said. Groundbreaking is scheduled for May. “To our knowledge, it will be the only plant worldwide to operate an ethenolysis process,” he said. 1-decene is mainly used to produce polyalphaolefins (PAO), which are used as group IV lubricants, Kohl said. The 1-decene market is estimated at about 500,000-700,000 tonnes/year, according to Kohl.  Producers of fossil-based 1-decene include INEOS, ExxonMobil, and Chevron Phillips Chemical (CPChem), among others. 9-DAME has applications in surfactants, lubricants, polymers and other specialty markets. While 9-DAME is currently not available on the market in larger quantities, Verbio sees it as a “platform molecule” for use in solvents, surfactants and lubricants, Kohl said. The Bitterfeld plant might also produce C18 diacids in various forms in the medium term, he said. Verbio has been in contact for a couple of years with partners and on request supplies customers with kilogram samples of 1-decene and 9-DAME from a pilot plant, he added. UNIQUE CATALYSTSThe company has developed a unique in-house process for ethenolysis, based on proprietary metathesis catalysts from its 100%-owned subsidiary, XiMo, Kohl said. The process allows the use of ethylene “as kind of a scissor” to split the biodiesel, he said. XiMo specializes in metathesis catalysts, specifically of "Schrock-type" tungsten, molybdenum and ruthenium complexes, he said. Richard Schrock, one of the founders of XiMo, was co-winner of the 2005 Nobel Prize in chemistry for his work on developing the olefin metathesis method in organic synthesis. To serve the ethenolysis plant’s captive needs, as well as the wider chemical industry, XiMo is investing in new capacity close to Budapest, Hungary The 10 tonne/year of metathesis catalyst project in Hungary, which will proceed parallel with the ethenolysis project in Bitterfeld, is due to be in production in 2026. XiMo’s metathesis catalysts “represents a new tool for the chemical industry", for use in industrial processes in the renewable, polymer, flavors and fragrances, agrochemicals and various other markets, Kohl said. STRATEGIC SHIFT TO CHEMICALS Verbio's biofuels are mainly sold into the energy market, “but this is not necessarily the future for us”, Kohl said. While the company has existing biodiesel-linked chemicals production (phytosterol and glycerin), it decided several years ago to expand in renewable chemicals in a bigger way – driven by an ambition to add more value to biodiesel, reduce Verbio's dependence on the biofuels energy market, and help "defossilize" the chemical industry, he said. “We want to become much more independent of the political decisions that are influencing the biofuels market, and chemicals will be a major part of the company in the future,” Kohl said. Although the chemical industry keeps working to reduce its carbon footprint, most of its products are based on carbon and will continue to be so, he said. The challenge, therefore, is to defossilize the industry, which means getting away from fossil-based carbon, leaving three main sources of carbon: carbon capture; recycling; and biomass, Kohl said. “Biomass is a very versatile, a very interesting source of carbon, and it is here today” as companies are already producing chemicals from biomass, he said. Verbio, with its expertise in biomass, is well positioned to expand in renewable chemicals, he said. With the ethenenolysis plant, Verbio will start to serve the chemical industry “with unique, renewable and biobased molecules with a low CO2 footprint”, Kohl said. “This will enable our customers to take a big step towards climate neutrality, saving CO2, attacking scope three emissions, and it will help to defossilize the chemical industry,” he said. The carbon footprint of the new ethenolysis plant will be “at least” about 70-80% lower than that of a fossil-based 1-decene plant, he said. Verbio is undertaking the project’s basic engineering and execution in-house, rather than contracting it out, he noted. FOOD VERSUS CHEMICALS Rapeseed (known as canola in North America) is readily available in Germany as it is part of crop rotation, Kohl said. While using rapeseed for chemical production could trigger debates similar to the “food versus fuels” controversy, it is important to realize that only about 40% of the mass of rapeseed is oils, he said. The remaining 60% is a protein-sugar fraction that is needed in cattle feed “to close the protein gap” and thus supports the food sector. If Germany did not have the rapeseed protein, it would have to import even more soya from South America, he said. He also noted that the use of biomass to make biofuels and other renewable products has been found to stabilize the overall agricultural market in Europe and provide farmers with sustainable income, thus keeping them in business. Verbio at a glance: Sales for the 12 months ended 30 June 2023: €1.97 billion. Employees: about 1,200. Operations in Germany, Poland, Hungary, India, US and Canada. Production of biodiesel and bioethanol: nearly 930,000 tonnes. Production of biomethane: 1.08 GWH. Existing chemical production: phytosterol and biodiesel glycerol (glycerin) CEO: Claus Sauter Headquarters: Zorbig, near Leipzig, Germany Source: Verbio Thumbnail photo source: Verbio Interview article by StefanBaumgarten.

13-Mar-2024

HOUSTON (ICIS)–While Indorama Ventures reviews six sites for possible closure, it will consider signs that oil demand will continue growing in emerging Asia while peaking in Europe and North America – a trend that would alter the regional costs of a principal polyester feedstock, making it more attractive to import it from Asia than make it in the West. Benzene, toluene and mixed xylenes (MX) are produced in refineries, and they are among the fundamental building blocks for the chemical industry. If oil demand peaks in the West, that would discourage refiners from expanding capacity or making the expensive investments needed to maintain existing production levels. That would tighten supplies for these building blocks, affecting costs for chemicals as varies as phenol, styrene and paraxylene (PX). By contrast, oil demand has yet to peak among emerging economies in Asia. There, refiners will continue to increase capacity to meet growing demand for diesel and gasoline. Supplies of aromatics should continue growing in those regions. Indorama is taking the prospect of peak oil seriously because a key polyester feedstock, purified terephthalic acid (PTA), is made from PX, and PX is extracted from MX. If Western PTA prices become too expensive, then it would make more sense for Indorama to shut down its high-cost plants in the West and purchase the feedstock from producers in Asia that can sell material at a lower price. Indorama did not specify which plants it could close. PEAK OIL IN WEST SPELLS END OF NEW REFINERIESIndorama expects oil demand in the West will soon peak, perhaps in 2025 or 2026, said Aloke Lohia, Group CEO of Indorama. He made his comments in an interview with ICIS. His comments are backed by statistics from the Energy Information (EIA). Outside of the post-COVID rebound in 2021, gasoline demand in the US has been running below pre-pandemic levels. In 2023, it reached a summertime peak of nearly 9.60 million bbl/day. That is more in line with summer levels in 2015. Given the outlook for oil demand in the West, Indorama is betting that refiners will unlikely make the pricey investments necessary to increase capacity. "No one is looking to build a new refinery," Lohia said. Refiners could even shirk from making the investments needed to maintain existing capacity. "We believe there will be de-growth in refineries in the West and hence high cost for crude oil derivatives that has hurt our competitiveness, especially in Europe," Lohia said in prepared remarks. Actions by refiners are bearing this out. LyondellBasell plans to shut down its Houston refinery because it cannot justify the capital expenditures needed to keep the 100+ year old complex running. Although ExxonMobil recently expanded its refinery in Beaumont, Texas, the last time a refiner made a comparable investment was in 2012, when Motiva expanded its refinery in Port Arthur, Texas. Several refiners have converted existing units to process vegetable oils and similar feedstock to produce renewable diesel and sustainable aviation fuel (SAF). LyondellBasell could convert its Houston refinery into a sustainability hub. OIL DEMAND TO CONTINUE GROWING IN EMERGING ASIAUnlike the West, Indorama expects oil demand to continue growing in emerging Asia. Governments in this part of the world have less aggressive schedules for reducing carbon emissions, with net-zero goals further out in the future, Lohia said. Reducing carbon emissions boils down to renewable electricity. Instead of producing power by burning coal and natural gas, countries would do so with renewable sources such as solar panels, wind turbines and hydropower. Renewable electricity could also be used to generate heat. Emerging economies have limited power production, and they want to use that electricity to rapidly industrialize, according to Indorama. De-carbonization and industrialization will compete for limited power generation. That will place a limit on the expansion of charging stations needed for electric vehicles (EVs). Until emerging markets build out electrical infrastructure, they will still need petroleum-based fuels. Consequently, emerging markets are giving themselves more time to reduce carbon emissions. In China in particular, some companies could rush to complete new expansion projects before decarbonization deadlines take effect, Lohia said. China already has too much capacity, so this building spree will worsen the supply glut. As it stands, crude oil processing in China reached 14.8 million bbl/day in 2023, an all-time high, according to the EIA. Growing refining capacity should increase supplies of aromatics such as PX, the feedstock used to make purified terephthalic acid (PTA). That should depress PTA production costs. INDORAMA'S PLANGiven the global outlook for chemical feedstock produced at refineries, Indorama is considering a plan that would reduce consumption of these feedstocks at its Western operations. Instead of producing feedstock at high-cost plants, Indorama would import the material from Asia. Production lost from any closures would be offset by increasing utilization rates at Indorama's low-cost plants. The move would significantly increase Indorama's overall operating rates and lead to double-digit returns on capital employed (ROCE) for the two businesses most exposed to MX, Combined PET (CPET) and Fibers. US SHALE MAY SPARE DOMESTIC PLANTSThe calculus is less straightforward for Indorama's US operations. Critically, these operations include methyl tertiary butyl ether (MTBE), an octane-boosting gasoline blendstock that is made with methanol and isobutylene. In the US, both of these chemicals are made from shale-based feedstock, giving Indorama a substantial cost advantage. When gasoline prices rise, Indorama's MTBE operations can earn the company very attractive margins. Those fat MTBE margins would offset the higher costs involved with producing PTA from PX extracted from MX. MX is another octane-boosting blendstock, so its price tends to rise and fall with that for gasoline. In effect, MTBE provides Indorama with a hedge against higher MX costs for its US PET operations. MX is not the only feedstock used to make PET. The other is monoethylene glycol (MEG), a chemical made from ethylene. US ethylene producers predominantly on ethane as a feedstock, giving them a cost advantage. For Indorama's PET operations in the US, shale gas gives the company a cost advantage on the MEG side and a hedge on the PTA side. Thumbnail shows bottle made of PET. Image by monticello/imageBROKER/Shutterstock Insight article by Al Greenwood

05-Mar-2024

LONDON (ICIS)–Fundamental long-term changes in global chemicals markets have prompted a significant review of strategy, Indorama Ventures said on Monday. The company suffered a heavy loss in 2023 against the backdrop of oversupplied markets and weak demand. Supply side pressure and weaker demand in China are among the factors that have created unprecedented industry conditions it said. It is shifting strategy to right-size operations, deleverage its business and cut costs. The company reported a 53% drop in earnings for 2023 as revenues fell by 17%, with fourth quarter EBIDTA down 46% on 8% lower sales. A net loss for the year of $310 million (from a profit of $884 million in 2022) included an asset impairment on an incomplete plant in Texas. The company said that it plans to reduce net debt by $2.5 billion to around $4.3 billion in 2026. This includes generating $800 million in cashflow from “operational improvements” and a further $1.7 billion from actions including divestments, “asset actions” and “select business listing”. The aim is to reduce its debt to EBITDA (earnings before, interest, tax, deprecation and amortisation) ratio to less than 3X. An asset optimization program is targeted at lifting the company’s operating rate from 74% to 89%, it said. This will include “moving to lower-cost facilities and right sizing manufacturing capacity”, it added. A further $450 million run rate of efficiency gains is planned to be in action by 2026. The sale of non-core assets and other “value unlocking strategies” aims to generate about $1.3 billion in cash proceeds. Indorama Ventures said that by leveraging sustainability innovation it can create an additional $350 million/year of value. Under the revised strategy the company’s Integrated Oxides and Derivative (IOD) business segment will be renamed Indovinya. Intermediate chemicals assets, including integrated purified ethylene oxide (PEO), ethylene glycol (EG) and methyl tertiary butyl ether (MTBE) assets will move to Indorama Ventures’ Combined PET (CPET) segment. Indovinya will focus on downstream products and for Indorama Ventures markets will include home & personal care, crop solutions, coatings & solutions and energy & resources, it said. A run rate of $527 million in efficiency gains was achieved in 2023 and the roll out of a new enterprise management system in 2024 will unlock further value, it added. A $308 million non-cash impairment was taken in Q4 2023 it said on the suspension of activity on the partially completed purified terephthalic acid (PTA)-polyethylene terephthalate (PET) joint venture with Alpek in Corpus Christi, Texas.

04-Mar-2024

PARIS (ICIS)–Arkema’s mergers and acquisitions (M&A) strategy will focus on smaller deals after a period of intense transformation into a specialty chemicals company, according to its CEO. Since its creation from Total’s chemicals operation in 2004, the France-headquartered group has reduced its exposure to commodities, while boosting specialty materials operations through organic investment and M&A. In 2006, its intermediates division accounted for 50% of group sales. Some of its big specialty acquisitions include the Sartomer business in 2011, Bostik in 2015 and Ashland’s adhesives business in 2022. Big disposals include the vinyl products business in 2012 and polymethyl methacrylate (PMMA) in 2021. A total of 26 acquisitions have added around €5bn in sales, while 20 divestments were worth around €3bn in revenues. The remaining intermediates comprise a fluorogas business and acrylic monomers. Speaking on the sidelines of the company’s 2023 financial results conference, CEO Thierry Le Henaff said: “We are very happy with our portfolio: it will continue to change a little bit, incrementally – we have done so much in terms of portfolio management…. Our M&A will now become more incremental.” However, capital expenditure will be increased as the company builds new plants for materials that take advantage of some of the key growth areas Arkema has identified. Le Henaff pointed out the projects and key product groups he identified during the company’s capital market day in October 2023. The CEO said: “The world is changing with the drive towards sustainability which offers opportunities. To take advantage of these we need to invest more than in the past. We will try to have a few significant projects in order to seize the opportunities from megatrends.” He said capex for 2024 is forecast to be €750m, €100m more than in 2023 and is expected to stay at these levels. Interview by Will Beacham Thumbnail photo: Arkema's Colombes, France, headquarters (Source: Arkema)

01-Mar-2024

LONDON (ICIS)–Commercial production at Methanex's newly constructed 1.8 million tonne/year methanol plant, Geismar 3, has been delayed, potentially until the end of Q3, the Canadian producer announced. During the plant's initial start-up, there were complications with the unit's autothermal reformer (ATR). In a press release, Methanex said that following inspections, there was significant damage to a large number of supporting refractory bricks in the ATR which needed replacing. It is estimated that the total capital cost will not significantly exceed the upper end of the capital cost guidance of $1.30bn. Gesimar 3 is located in Louisiana and was originally scheduled to start up in Q4 2023. In Methanex's Q4 earnings report last month, it said the plant was in the process of starting up and was expected to reach full rates in February. The producer said, "Based on the preliminary findings of its root cause analysis, management believes that this issue relates to complications in the initial start-up process and is not a plant design or construction issue." Methanol is primarily used to produce formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. Smaller amounts go into production of dimethyl terephthalate (DMT), methyl methacrylate (MMA), chloromethanes, methylamines, glycol methyl ethers, and fuels applications such dimethyl ether (DME), biodiesel and the direct blending into gasoline.

20-Feb-2024

LONDON (ICIS)–Red Sea shipping issues have been the hot topic in Q1, with import delays opening up domestic demand opportunities and leading to a firmer price sentiment in some markets. There has been some increase in buying in January, but underlying demand is yet to recover in a shaky macro-economic climate. Europe ICIS editors Jane Gibson (acetone and phenol), Heidi Finch (bisphenol A and epoxy resins), Mathew Jolin-Beech (methyl methacrylate) and Meeta Ramnani (polycarbonate) discuss the impact of rising sea freight and feedstock costs in the acetone, phenol and derivatives markets. Phenol and acetone markets look to downstream demand pull for support Red Sea crisis set to continue impacting MMA supply for remainder of Q1 Europe epoxy and BPA markets exposed to Red Sea issues/import delays, tendency firmer European PC suppliers benefiting from the unavailability of Asian imports Podcast editing by Meeta Ramnani

09-Feb-2024

HOUSTON (ICIS)–Mitsubishi Chemical America could make a final investment decision (FID) on a new methyl methacrylate (MMA) plant in the US in the second quarter, with start-up possible in 2028, the company said on Thursday. The plant, called the MCA Geismar Site, is proposed to be built in Ascension Parish in Louisiana state, and it will produce 350,000 tonnes/year using the company’s Alpha process technology. The site will also include a carbon monoxide (CO) plant, a methanol plant and a formalin plant. This will be the third plant that features the Alpha process, which uses ethylene, methanol and CO to make MMA. If Mitsubishi Chemical decides to move forward on the project, then construction could start in the second half of 2024, the company said in a statement. It should end in 2028, with operations starting later that year. The project already has achieved some regulatory milestones. The Louisiana Department of Environmental Quality (LDEQ) had scheduled a public hearing for the project for 1 February. In 2023, the regulator made a preliminary determination to approve construction of the project. Mitsubishi Chemical expects the department to approve its air permit application in March or April 2024, it said in a statement. ETHYLENE-BASED MMA MAY UPEND MARKETMMA is typically made from acetone, which is a co-product of phenol production. Mitsubishi as well as Roehm are building MMA plants that use ethylene and methanol instead of acetone as a feedstock. Roehm calls its process technology LiMA, and it will be used in a 250,000 tonne/year plant it is building on the Gulf Coast. If these new technologies proliferate, then they would create a new end-use for ethylene, and they could slow down the growth for a traditional outlet for acetone. Not only could that have ramifications for acetone, but the new MMA technologies could affect phenol markets. Phenol and acetone are co-products and are ultimately derived from benzene and propylene via cumene. Thumbnail shows an item made of polymethyl methacrylate (PMMA), which is made from MMA. Image by Shutterstock.

08-Feb-2024