Synthetic rubbers

SINGAPORE (ICIS)–Saudi Aramco continues its quest for downstream petrochemical investments in the world’s second-biggest economy, adding Hengli Petrochemical in a list of target companies in which the global energy giant intends to acquire a strategic stake. The acquisitions in China are in line with Aramco’s Vision 2030 of expanding its downstream business. Aramco is currently in discussion to acquire a 10% stake in Hengli Petrochemical as the companies signed a memorandum of understanding (MOU) on 22 April covering supply of crude and raw material, product sales and technology licensing. Hengli Petrochemical owns and operates a refinery and petrochemical complex at Liaoning province with 400,000 bbl/day of refining and 1.5 million tonnes/year ethylene capacities. The Chinese producer also operates several chemical plants in Jiangsu and Guangdong provinces. The deal "aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements", Aramco said in a statement on 22 April. Since 2022, Aramco has embarked on major investments in China, which involved taking strategic stakes in companies with major petrochemical projects under way. Chinese companies Planned investments Date of announcement Remarks Hengli Petrochemical 10% stake 22 Apr 2024 Rongsheng Petrochemical Cross acquisition talks – Rongsheng to acquire 50% stake in Saudi Aramco Jubail Refinery Co (SASREF); Aramco to take a maximum 50% stake in Rongsheng’s Ningbo Zhongjin Petrochemical 2 Jan 2024 To jointly develop Zhongjin’s upgrading/expansion and a new advanced materials project in Zhoushan Shandong Yulong Petrochemical 10% stake 11 Oct 2023 Shandong Energy is currently building a refining and petrochemical complex in Yantai called Shandong Yulong Petrochemical – a joint venture project with Chinese conglomerate Nanshan Group Shenghong Petrochemical 10% stake 27 Sept 2023 Rongsheng Petrochemical 10% stake 27 Mar 2023 Deal completed in Jul ’23 Huajin Aramco Petrochemical Co (HAPCO) a $12 billion joint venture, Aramco holds 30% 11 Mar 2022, final investment decision made Project broke ground in Mar ’23; to come on stream in 2026 Aramco CEO Amin Nasser in late March indicated that the company intends to continue making further investments in China’s chemicals sector with local partners, noting that the country has a "vitally important" place in the company’s global investment strategy. The energy giant aims to increase its liquids-to-chemicals throughput to 4 million barrels per day by 2030, which will require a wider footprint in China, the world’s biggest chemical market, analysts said. The investments will fuel further growth in the Chinese economy, they added. Focus article by Fanny Zhang Thumbnail image: The Guoyuan Port Container Terminal in Chongqing, China, on 29 February 2024. (Costfoto/NurPhoto/Shutterstock)

23-Apr-2024

SINGAPORE (ICIS)–Aramco and China’s Hengli Group have entered into discussions regarding the potential acquisition of a 10% stake in Hengli Petrochemical, the Chinese company said on Tuesday. Based on the memorandum of understanding (MoU) signed on 22 April, the partners will also cooperate on crude and raw material supply, product sales as well as technology licensing, it said. The deal "aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements", Aramco said in a separate statement. Hengli Petrochemical owns and operates a refinery and petrochemical complex at Liaoning province with 400,000 bbl/day of refining and 1.5 million tonnes/year ethylene capacities. The company also owns several chemical plants in Jiangsu and Guangdong provinces.

23-Apr-2024

HOUSTON (ICIS)–INEOS Styrolution is temporarily shutting its styrene plant in Sarnia, Ontario, after nearby residents complained they became ill from the plant’s emissions. “At INEOS Styrolution, ensuring the health and safety of our employees and community is paramount,” the company said in a statement. “We are temporarily shutting down our facility located in Sarnia, Ontario, Canada, to perform maintenance and address a mechanical issue. We will resume operations once addressed.” The plant has capacity to produce 445,000 tonnes/year of styrene and 490,000 tonnes/year of ethylbenzene (EB), according to the ICIS Supply and Demand Database. The shutdown came after the Aamjiwnaang First Nation community asked the government to close the plant when members complained of becoming sick and said that data indicated high levels of benzene in the air. Members reported having headaches, nausea and dizziness due to poor air quality. Aamjiwnaang First Nation describes itself as a community of about 2,500 Chippewa Aboriginal peoples located on the St Clair River in the city limits of Sarnia. Last week, Ontario Environment Minister Andrea Khanjin said that she expected the company to “quickly identify and reduce” emissions at the site, according to news reports. In 2020, the Ministry of Environment, Conservation and Parks created the Sarnia Area Environmental Health Project to look into concerns that residents expressed about air pollutants and other quality-of-life impacts from living close to industrial operations in the area. The project includes regularly measuring air quality for potential health risks. The shutdown will further tighten the North American styrene market, which has experienced a number of outages that have put upward pressure on contract and spot prices. Styrolution’s Texas City, Texas, plant has been shut since mid-2023. In addition, Total remains on force majeure from its joint-venture CosMar unit in Carville, Louisiana, and LyondellBasell’s propylene oxide/styrene monomer (POSM) plant in Channelview, Texas, is undergoing maintenance. Shell recently restarted its Scotford, Alberta, styrene unit but it is not operating at full capacity, according to market sources. US styrene contract prices in April were assessed at their highest level since Q3 2023 due to the rise in spot prices, which are up approximately 50% since the beginning of the year. Styrene is a chemical used to make latex and polystyrene resins, which in turn are used to make plastic packaging, disposable cups and insulation. Major North American styrene producers include AmSty, INEOS Styrolution, LyondellBasell Chemical, Shell Chemicals Canada, Total Petrochemicals and Westlake Styrene.

22-Apr-2024

SINGAPORE (ICIS)–Persistent production constraints have driven Asia’s spot prices for butadiene (BD) to near two-year-high levels, but how the rally goes from here may hinge on downstream demand conditions. Prolonged under-utilisation of regional crackers dented regional BD output Exports from China helped to plug some of these supply gaps Mixed views about downstream demand outlook In this podcast, ICIS editors Ai Teng Lim and Aviva Zhang discuss how regional supply and demand balance has evolved across different Asian outlets and how this may pan out from here for the near future.

22-Apr-2024

SINGAPORE (ICIS)–ICIS analyst Sijia Li and senior industry analyst Joanne Wang discuss developments in China's polyolefins market. ICIS experts will be available at ChinaPlas, a major annual plastics and rubbers exhibit in Asia, which runs in Shanghai on 23-26 April.

22-Apr-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 12 April. NEWS Argentina’s inflation up to 288% in March, but central bank cuts rates on ‘pronounced slowdown’Argentina’s annual rate of inflation rose to 287.9% in March, up from 276% in February, the country’s statistical agency Indec said on Friday. Argentina to scrap import duty on urea and UAN fertilizer In Argentina, the government plans to remove import duties on urea and urea ammonium nitrate (UAN), which are currently at 5.4% and 3.6% respectively, said Economy Minister Luis Caputo on X, formerly Twitter. Brazil’s inflation falls below 4% in March Brazil’s annual rate of inflation fell to 3.93% in March, down from 4.50% in February, and its lowest reading since June 2023, the country’s statistical agency IBGE said on Wednesday. Brazil’s Unigel ‘vehemently’ denies irregularities in Petrobras contract Unigel has “vehemently refuted” the existence of any irregularity in its tolling contract with Petrobras for two fertilizers plants, the Brazilian chemicals producer said on Wednesday. Mexico’s inflation down to 4.2% in March Mexico’s annual rate of inflation fell in March to 4.2%, down from 4.40% in February, the country’s statistics agency Inegi said on Tuesday. Argentina PVC sector faces headwinds amid infrastructure investment reductions Argentina polyvinyl chloride (PVC) sector faces challenges as the government reduces infrastructure investments in 2024, with an estimated 7.5% decrease in projects. Chile inflation falls to 3.7% in March Chile’s annual inflation rate fell in March to 3.7%, down from 4.5% in February, according to the country’s statistics office INE. Brazil’s automotive output barely up in Q1, sales rise 9% Brazil’s petrochemicals-intensive automotive output rose by 0.4% in the first quarter, year on year, to just below 550,000 units, the country’s trade group Anfavea said on Monday. PRICING LatAm PP domestic prices fall in Chile, Mexico on competitive offers from abroad, lower US spot PGP prices Domestic prices fell in Chile, Mexico due to competitive offers from abroad and lower US spot propylene costs. In other Latin American (LatAm) countries, prices were unchanged. LatAm PE international prices stable to down on lower US export prices International polyethylene (PE) prices were assessed as stable to down across Latin American (LatAm) countries on the back of lower US export prices. Weather conditions start to slightly shift PET demand in Latin America Polyethylene terephthalate (PET) prices remained stable in Brazil, with a slight softening in consumption coinciding with stabilized temperatures. However, demand continues to exceed expectations when compared with the corresponding period last year.

15-Apr-2024

LONDON (ICIS)–Chemical stocks in Europe have firmed in line with the general market in midday trading on Monday, as oil prices subsided and investor unrest eased despite ongoing tensions in the Middle East. Asia-Pacific equities had tumbled in earlier trading on the back of growing hostilities over the weekend after Iran launched ordinance into Israeli airspace late on 13 April. The Israel Defence Force (IDF) confirmed the attack, with Rear Admiral Daniel Hagari stating in a briefing on Sunday that none of the 170 drones launched from Iran had entered Israeli airspace, and fighter jets mobilized to intercept cruise and ballistic missiles had shot almost all of them down. The handful of ballistic missiles that crossed into Israeli territory were intercepted and fell at the Nevatim airbase in the south of the country, but damage to infrastructure was limited and the base is currently operational, he added. Lingering unease from the attack, and the potential for an Israel-Iran conflict to escalate further bled into early Monday trading, with Hong Kong’s Hang Seng index and Japan’s Nikkei 225 index closing down 0.72% and 0.74% respectively. Taiwan and India felt the chill more keenly, with the Taiwan SE and Bombay Sensex bourses closing down 1.38% and 1.14% respectively. European bourses were less unsettled on Monday, with Germany’s DAX and France’s CAC 40 trading up 1.01% and 1.09% respectively, while the UK FTSE 100 was little changed at 13:10 BST. European chemicals stocks moved higher on Monday, with the STOXX 600 chemicals index trading up 0.34% from Friday’s close, with Solvay, Evonik and Arkema among the biggest gainers. The decline in oil prices also deepened from earlier in the day, with the value of Brent crude June futures dropping 87 cents to $89.58/barrel in noon trading. The fall in crude values represents a decline in the overall risk premium priced in at present in response to Middle East tensions, but they are a long way from a more comprehensive rollback. Oil prices have increased by over $8/barrel since mid-March. Crude and downstream pricing as of 12:00 BST Monday Product Latest Previous Change Brent June 89.58 90.45 -0.87 WTI May 84.74 85.66 -0.92 Naphtha 677.00 695.00 -18.00 Benzene 1203.00 1205.00 -2.00 Styrene 1800.00 1815.00 -15.00 An attack from Iran had been threatened for weeks following a strike on its embassy in Damascus, Syria. The fact that the response was telegraphed in advance, consisted largely of slow-moving drones and resulted in little damage and no fatalities, has reassured markets that there is scope for a de-escalation. “The fact that there was limited damage and no loss of life may also provide some comfort to the market, as it may mean a more measured response from Israel,” said ING analysts in an oil market note issued on Monday. Iran said it considers the conflict concluded and US diplomats are reportedly urging restraint in Israel, but further salvos, which will represent Iran’s first direct attack on Israel, means that tensions could rapidly intensify. “The US and allies are pushing for a diplomatic response, while the risk is that hardliners within the Israeli government push for a more aggressive response,” ING added. Multiple western governments have officially condemned Iran for the attack which took place on the same day that Iran’s Revolutionary Guard Corps seized a ship passing along the Strait of Hormuz, according to data provider Xeneta. Any moves to sanction Iran or measures that could restrict the country’s flow of oil into global markets could tighten supplies in the short term, ING added. Focus article by Tom Brown Thumbnail photo: The bell ceremony at the Euronext exchange in Brussels, Belgium. Source: Shutterstock

15-Apr-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 12 April 2024. China Mar petrochemical markets mixed; Apr demand on seasonal uptick By Yvonne Shi 12-Apr-24 14:19 SINGAPORE (ICIS)–Fluctuations in China’s domestic petrochemical markets were limited in March, yielding a mixed performance during the month, while a seasonal improvement in demand is expected in the near term. Tight intra-Asia container shipping space dampens recycling trades By Arianne Perez 12-Apr-24 13:34 SINGAPORE (ICIS)–Major Asian recyclers are feeling the pinch of continued uptrend in spot container freight costs for trade within Asia since March. Asia naphtha demand slows down; supply stays ample By Li Peng Seng 11-Apr-24 13:00 SINGAPORE (ICIS)–Asia’s naphtha crack, the spread between Brent crude and the chemical feedstock prices, hit a five-month low recently and it will remain under pressure in the weeks ahead as ample supplies, slower demand and firm crude prices limit any improvement in the spread. Asia ADA sees plant shutdowns amid supply overhang By Josh Quah 11-Apr-24 11:25 SINGAPORE (ICIS)–Asia’s adipic acid (ADA) markets have begun to crack under the cost pressure and weak demand from the main polyurethane (PU) downstream sector. Fitch downgrades China rating outlook to ‘negative’ as debts pile up By Pearl Bantillo 10-Apr-24 15:16 SINGAPORE (ICIS)–China’s fiscal challenges amid rising government debt and its prolonged property slump weighing on recovery prospects prompted Fitch to revise down its credit rating outlook for the world’s second-biggest economy to “negative” from “stable”. Korea trade body starts antidumping probe on China SM imports By Luffy Wu 09-Apr-24 14:18 SINGAPORE (ICIS)–The Korea Trade Commission has decided to initiate an anti-dumping investigation on imports of styrene monomer (SM) from China. INSIGHT: Positive China Q1 data overshadowed by property sector gloom By Nurluqman Suratman 09-Apr-24 12:00 SINGAPORE (ICIS)–China's economic narrative in early 2024 reflects a 'tale of two cities', with its ailing property sector once again playing the crucial protagonist against recent data which offered flickers of hope for the country's continued recovery this year. Saudi Arabia hikes benchmark May Arab Light OSP for Asian customers By James Dennis 08-Apr-24 18:15 SINGAPORE (ICIS)–Saudi Arabia, the world’s largest crude exporter, increased its Official Selling Prices (OSP) for its benchmark Arab Light crude for customers in Asia for the second month in succession. Oil slumps by more than $2/bbl on Israel-Hamas ceasefire hopes By Nurluqman Suratman 08-Apr-24 12:23 SINGAPORE (ICIS)–Oil prices fell by more than $2/barrel on Monday amid easing tensions in the Middle East after Israel further withdrew troops from southern Gaza and signalled a willingness to resume ceasefire talks with Palestinian militant group Hamas.

15-Apr-2024

HOUSTON (ICIS)–Shipping container rates continue to fall, liquid chemical tanker rates are stable to softer, and the bridge collapse at the Port of Baltimore has led to longer delivery times for imports, highlighting this week’s logistics roundup. CONTAINER RATES Rates for shipping containers from east Asia and China to the US continue to fall along with average global rates as capacity remains ample to handle the longer routes as commercial vessels continue to avoid the Suez Canal. Supply chain advisors Drewry said average rates ticked lower this week but remain 64% higher than the same week a year ago, as shown in the following chart. Rates from Asia to the US and Europe have also continued to fall, as shown in the following chart. Drewry said it expects a minor decrease in Transpacific spot rates and for stability along the Transatlantic and Asia-Europe trade lanes. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates along the US East Coast have fallen since the collapse of the Key Bridge in Baltimore, which signals to him that regional container traffic continues to flow. Levine said downward pressure will continue because of soft demand and it being the slow season for container trade, but that if threats persist in the Red Sea and commercial vessels continue to divert away from the Suez Canal, prices will remain above normal. 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. PORT OF BALTIMORE The Unified Command (UC) continues to remove containers from the Dali and clear wreckage from the collapsed bridge at the entrance to the Port of Baltimore. Source: Key Bridge Response 2024 While the closure of the port has not had a direct impact on the flow of chemicals, a market participant in Ohio said it is seeing delays in delivery times for imports as vessels originally destined to offload in Baltimore are getting re-routed to other ports. The US Army Corps of Engineers (USACE) expects to open a limited access channel 280 feet wide and 35 feet deep by the end of April, and are aiming to reopen the permanent, 700-foot-wide by 50-foot-deep federal navigation channel by the end of May, restoring port access to normal capacity. As of 11 April, approximately 38 containers have been removed, the UC said, which is necessary for safe access to them begin removing the segments of the fallen bridge that lie across the ship’s bow. While marine traffic is still limited, 69 vessels have transited through since the creation of the temporary alternate channels. LIQUID CHEM TANKERS US liquid chemical tanker freight rates as assessed by ICIS held mostly steady this week – except from the US Gulf Coast (USG) to India. There is downward pressure on rates along the USG-Asia trade lane as several outsiders have come on berth for both April and May, adding to the available tonnage for completion cargos. On the other hand, rates from the USG to Rotterdam were steady this week even as space is limited and there are no outsiders on berth. Contract tonnage continues to prevail, with continued interest in styrene, MTBE and ethanol. There has been activity on the spot market, but owners are still working with COA customers to finalize their needs before committing to others. For the USG to South America trade lane rates remain steady with several inquiries for methanol widely viewed in the market. PANAMA CANAL Wait times for non-booked vessels ready for transit edged higher both directions this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times last week were 0.8 days for northbound traffic and 0.8 days for southbound traffic. Please see the Logistics: Impact on chemicals and energy topic page With additional reporting by Emily Friedman and Kevin Callahan

12-Apr-2024

LONDON (ICIS)—ExxonMobil Chemical France has announced plans to close its chemical production at Gravenchon, in Normandy in France in 2024, subject to the relevant government approvals. According to a press release, the steamcracker and related derivatives units and logistics facilities will be shut down. The company said the site has lost more than €500 million since 2018 and despite efforts to improve the site’s economics, it remains uncompetitive. According to the ICIS Supply & Demand database, the cracker has the capacity to produce 425,000 tonnes/year of ethylene and 290,000 tonnes/year of propylene and was started up in 1967. A butadiene (BD) unit is also at the site and associated derivatives include polyethylene (PE), polypropylene (PP). ExxonMobil's nearby Port Jerome refinery will continue to operate supplying fuels, lubricants, basestocks and asphalt. The closure will impact 677 jobs through 2025. ExxonMobil said this planned closure is entirely separate from the Esso S.A.F. announcement regarding its proposed sale of the Esso Fos-sur-Mer refinery and South France logistics assets. Charles Amyot, president of ExxonMobil companies in France said: “It has been a very difficult decision for us to take, but we cannot continue to operate at such a loss.” This week Saudi Arabia's Sabic also revealed plans to permanently close its Olefins 3 cracker – one of two at their Geleen, Netherlands site.

11-Apr-2024