Recycled PET (R-PET)

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: FD NWE Colourless flake market entering more stable period during May UK flake prices still under upward pressure Demand outlook still hard to predict

10-May-2024

SINGAPORE (ICIS)–Sustainable finance is a key interest for companies seeking to enter the recycled plastics market in Asia or to expand their current capacities. Despite the various financial instruments available, the absence of a clear entry point often results in uncertainty for firms. In this podcast, ICIS analysts Chua Xin Nee and Joshua Tan explore the different types of sustainability-related loans available and their successful use cases. Tan will be speaking at the Asia Petrochemical Industry Conference (APIC) 2024 in Seoul, South Korea, on 31 May. His presentation is on “Asian recycled polymers – short-term hiccups to long-term optimism”, as part of the sustainability and circular economy panel. Visit ICIS during APIC ’24 on 30-31 May at Booth 13 in the Grand Ballroom Foyer in the Grand InterContinental Seoul Parnas. Book a meeting with ICIS here.

10-May-2024

SAO PAULO (ICIS)–Braskem will be able to deliver material to its customers from its other three sites in Brazil after it declared force majeure at its Triunfo complex following heaving flooding in the area, Brazilian polymers major CFO Pedro Freitas said on Thursday. Freitas did not clarify when the company expects its facilities in Triunfo, state of Rio Grande do Sul, could return to operations as the area reels from floods which started on 29 April. Freitas said Braskem’s facilities there – which account for 30% of its production capacity in Brazil – were not directly affected by the flooding, but the company is founding difficulties in transport to and from the complex. The floods in Rio do Grande do Sul, Brazil’s worst in 80 years, have caused widespread road blockages, landslides and a dam collapse. “The blockages made our operations inviable. Our assets are 100% safe and were not affected, but we are having difficulties with transport: from the coaches transporting our employees to the trucks taking material out,” said Freitas. “We contemplated bringing employees in by helicopter, but that wasn’t viable in for an extended period to keep operations running. In those conditions, we decided to stop operations in a safe and controlled manner.” The CFO was speaking to reporters and chemical equity analysts on Thursday following the publication of Braskem’s Q1 financial results. Despite Freitas’ assurances, the company only produces some polyethylene (PE) grades at its Triunfo facilities, and ⁠sources have said supply of products such as high density polyethylene (HDPE) and low density polyethylene (LDPE) could tighten in the force majeure goes on for an extended period. The same happens for some polypropylene (PP) products. In Brazil, Braskem is the sole manufacturer of PE and PP. Its market shares in 2023 were about 56% and 70%, respectively, according to figures from the ICIS Supply & Demand Database (SNDD). Brazil’s PP capacity is nearly 2 million tonnes/year, while PE capacity is about 3 million tonnes/year, of which 41% is HDPE, 33% is linear low density polyethylene (LLDPE) and 26% is LDPE. The Triunfo complex can produce 740,000 tonnes/year of PP, 550,000 tonnes/year of HDPE, 385,000 tonnes/year of LDPE and 300,000 tonnes/year of LLDPE. Triunfo PP capacity accounts for nearly 37% of Brazil’s PP capacity, while PE capacity accounts for about 40%. Difficulties in transport of employees at the Triunfo petrochemicals hub has also been the main reason for other chemicals companies in the complex such Innova and Arlanxeo to declare force majeure from their facilities. RAINS RETURN Rio Grande do Sul’s floods have brought the state to a standstill and, to make matters worse, rains returned on Wednesday, 8 May and forced some rescue operations for the more than 100,000 residents displaced to be suspended. In those conditions, Freitas would not venture in forecasting when the Triunfo complex could return to operations. “It could be some days still [to return to normal operations], perhaps more than a week. But with the rain back, we cannot really forecast when it will be,” said Freitas. “But we are optimising our sales from our other sites in the states of Sao Paulo, Rio de Janeiro and Bahia.” RECOVERY AT LAST? Braskem’s CEO, Roberto Bischoff, also present at the press conference, concluded saying that Braskem’s improved earnings during Q1 were the sign that things were improving for the company and Brazil’s chemicals producer generally. Earnings before interest, taxes, depreciation, and amortization (EBITDA) improved both year on year and quarter on quarter, although sales posted a more mixed result while the company posted again a net loss for the quarter. Braskem (in $ million) Q1 2024 Q1 2023 Change Q4 2023 Change Q1 vs Q4 Sales 3,618 3,743 -3% 3,369 7% EBITDA 230 205 12% 211 9% Net profit/loss -273 35 N/A -317 -14% “We are seeing better spreads in petrochemicals. After the efforts by the company to improve our financial resilience, we expect the results of that will continue showing for the rest of 2024,” concluded the CEO. Front page picture: Braskem's facilities in Triunfo, Brazil (Source: Braskem) With additional reporting by Bruno Menini

09-May-2024

ORLANDO (ICIS)–BASF Corp CEO Mike Heinz is optimistic that a binding agreement could be reached during the next round of negotiations of the UN plastic waste treaty, he said on Wednesday. BASF had sent a team to the previous round that was held in Ottawa, he said. "The feedback that we received from them was cautiously optimistic." Heinz made his comments in an interview with ICIS at this year’s NPE: The Plastics Show. He also gave the keynote address at the trade show. Another reason for optimism is that all of the parties are pursuing the same objective: to prevent plastic waste from entering the environment, Heinz said. An agreement would be one that all stakeholders could live with. He acknowledged some disagreement about how to achieve that objective. Some want to curb production of plastic, he said. BASF and others want to achieve it by curbing pollution. Already, BASF and other chemical companies are incorporating recycled materials into their products. Recycling can be part of a larger sustainable production chain, under which chemical complexes rely on renewable energy to make products from recycled and renewable materials that can be recovered and reused. These materials can be used to make wind blades, electric vehicles (EVs) and other products critical to reducing emissions of carbon dioxide (CO2). Heinz summed up the path to a sustainable future as resting on three three pillars: make, use and recycle. SUSTAINABILITY VERBUNDDuring his speech and in a subsequent interview with ICIS, Heinz described what could be characterized as a Verbund based on sustainability. "This will take some time, but the good news is we already have some concrete examples on how it can be done," Heinz said. As an example, he held up a jacket made with 100% recycled nylon 6 from BASF that was sold by Inditex, the owner the clothing brand Zara. Heinz pointed to BASF's equity stakes in European wind packs. By 2030, BASF wants green energy to account for 60% of its power consumption. For chemical companies, one of the most power-hungry processes is steam cracking. BASF, SABIC and Linde are developing an e-cracker that would rely on electric furnaces to generate the heat needed to produce ethylene. The electricity could come from renewable sources, which would significantly reduce the CO2 emissions of steam cracking. Crackers can process renewable naphtha made from natural oils or pyrolysis oil produced at chemical recycling plants. It will take time for these feedstocks to become abundant, but the model is possible, and BASF is making chemicals with such feedstocks. New, renewable feedstocks can lead to new chemistries that result in materials that have better qualities than those based on petroleum.  The products can also help customers achieve their own sustainability goals. Lighter plastics can allow automobiles to travel farther on a tank of gasoline or on a battery charge. Other plastics will be critical to make EVs safe. Products can be designed to last longer, he said. When they do reach the end of their lifecycles, they can be designed to be easier to recover and recycle. STEPS NEEDED TO ACHIEVE SUSTAINABILITYDuring his keynote speech, Heinz noted that while the chemical industry is part of the problem, it can be a bigger part of the solution. Change will require passionate people, innovation and collaboration, he said. In particular, the chemical industry needs to collaborate with lawmakers and nongovernmental organizations (NGO) to come up with those solutions. Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida. Interview article by Al Greenwood Thumbnail shows a plastic bottle, which can be recycled. Image by monticello/imageBROKER/Shutterstock

08-May-2024

ORLANDO (ICIS)–SABIC is looking for further opportunities for growth in the Americas as part of its strategy to navigate an era of excess capacity around the world, one that has led it and other producers to shutter capacity in high-cost regions, an executive said. "We are actively looking at our growth opportunities throughout North America as well as South America," said Sami Al-Osaimi, executive vice president, polymers, SABIC. He made his comments during a presentation at this year’s NPE: The Plastics Show. Al-Osaimi said the Americas is a very key strategic market for SABIC. The company has seen good momentum in North America. "We are definitely going to really make sure that we leverage what exactly our customers require," he said. About two years ago, SABIC and ExxonMobil started operations at an integrated polyethylene (PE) and ethylene glycols (EG) complex in Corpus Christi, Texas, US, under the Gulf Coast Growth Ventures (GCGV) joint venture. The startup marks SABIC's first US-based ethylene and PE production, albeit through a joint venture. At the same time, Al-Osaimi acknowledged the challenges facing the industry. The market is contending with the consequences of a surge in new ethylene capacity that has started up in recent years. ICIS estimates that up to 20 million tonnes/year may need to shut down to keep operating rates at healthy levels. High-cost regions are bearing the brunt. Earlier in April, SABIC announced plans to shut down a cracker in Geleen, the Netherlands. ExxonMobil revealed plans to shut down its cracker in France during that same week. Al-Osaimi did not rule out further capacity rationalizations during a question-and-answer session that followed his presentation at NPE. "SABIC always is looking to its operations in Americas, globally, and how to become more efficient and effective to support our customers to really develop the right solutions," he said. "This is going to be an ongoing process." OPPORTUNITIES IN CHEM RECYCLING, E-CRACKINGSABIC is further improving chemical recycling technology to make it more effective and efficient, he said. SABIC and Plastic Energy are developing a chemical recycling plant under a joint venture in Geleen. Completion had been expected in the fourth quarter of 2023. There are still challenges with scaling up the technology, Al-Osaimi said. Still, SABIC is open to expansion, with possible sites including the US, Saudi Arabia and other regions. In addition, SABIC, BASF and Linde recently started up a demonstration unit of an electric cracker (e-cracker). As the group demonstrates the technology, it would explore expanding the site and potentially building new units, Al-Osaimi said. STRATEGY OF COLLABORATION, INNOVATIONIn prepared remarks, Al-Osaimi elaborated on how SABIC was navigating the challenges in the market by stressing its focus on innovation and collaboration with customers. The company is focusing on end markets such as advanced packaging, automotive, transportation, building and construction, consumer goods, electrical components and health and hygiene, he said. Electric vehicles (EVs) have material challenges, that present opportunities for SABIC. The company is developing polymers to prevent thermal runaway – part of its larger BLUEHERO initiative, Al-Osaimi said. Companies that build automobiles powered by internal combustion engines (ICEs) still want to lower their weight to improve their fuel efficiency and reduce their greenhouse gas emissions, he said. That is creating demand for lighter weigh materials. Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida. Focus article by Al Greenwood Thumbnail image shows polyethylene (PE), which is used in plastics bags. (Photo by Elaine Thompson/AP/Shutterstock)

07-May-2024

SINGAPORE (ICIS)–Saudi Aramco's net income fell by 14.4% year on year to Saudi riyal (SR) 102.3 billion in the first quarter amid lower crude oil volumes and weakening downstream margins, the energy giant said on Tuesday. in SR billions Q1 2024 Q1 2023 % Change Sales 402.04 417.46 -3.7 Operational Profit 202.05 222.18 -9.1 Net profit 102.27 119.54 -14.4 Early this year, Saudi Arabia’s government ordered Aramco to halt its oil expansion plan and to target a maximum sustained production capacity of 12m barrels/day, 1m barrels/day below the target announced in 2020. In the first quarter, Aramco's downstream income before interest, income taxes and zakat (annual Islamic tax) slumped by 64% year on year to SR4.62 billion. The drop in downstream earnings reflects weakening refining and chemicals margins, partially offset by inventory valuation movement, it said. The drop in group earnings was partially offset by lower production royalties, an increase in crude oil prices compared to the same period last year and lower income taxes and zakat. Despite having a capacity of 12 million barrels/day, Saudi Arabia currently produces about 9 million barrels/day as part of production cuts initiated by OPEC and its allies in October 2022 and further voluntary cuts by Saudi Arabia and other OPEC+ members in April 2023, all designed to stabilize oil prices. Following an OPEC+ meeting in June 2023, Saudi Arabia – the world's top crude exporter – announced a further oil production cut of 1 million barrels/day. “Looking ahead, I expect our portfolio to continue to evolve as we aim to contribute to an energy transition that offers solutions to climate challenges, but at the same time recognizes the need for affordable, reliable, and flexible energy supplies," added Amin Nasser, Aramco's President and CEO. Aramco's chemicals arm SABIC and China's Fujian Energy and Petrochemical Group Co held a groundbreaking ceremony to mark the start of construction at the SABIC Fujian Petrochemical Complex in China's Fujian province during the first quarter. The project 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. Thumbnail photo : One of Aramco's US offices (Source: Saudi Aramco)

07-May-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. No matter which petrochemical or polymer you examine, the story is similar. To illustrate this point, let’s today look at polyvinyl chloride (PVC). As China’s economy boomed, largely thanks to the growth in its exports, so did its petrochemicals demand, increasing the gap between China’s consumption and that of the much more populous Developing World ex-China region. China’s 2008-2009 US$586bn economic stimulus package – which largely went into housing and infrastructure – seems to have had a much bigger effect on the country’s PVC demand than in some other products. Up until the Evergrande turning point in September 2021, China’s investment in housing and infrastructure continued at apace. It appears as if stimulus greatly increased the importance of Chinese PVC demand as a driver of global PVC demand: Between 1992 and 2008, China’s share of global demand averaged 17% per year; in 2009-2024, the ICIS Supply & Demand Database expects China’s share to reach 40%. China’s demand growth averaged 10% per annum between 1992 and 2023. But growth is forecast to decline to 3% per year in 2024-2030. This decline is in line with what ICIS expects in other products. Between 1992 (the start of what I see as the Petrochemicals Supercycle) and 2023, global PVC capacity exceeding demand was estimated by ICIS as averaging 8m tonnes a year. As with many other products, ICIS forecasts a big increase in global PVC capacity exceeding demand in 2024 -2030. During this period, capacity exceeding demand is expected to average 15m tonnes a year. In another parallel with other products, China’s self-sufficiency in PVC has reached the point where it has swung from being a major net importer to being a net exporter. Trade tensions between China and the West have been building since Mike Pence, the then US Vice President, made a landmark speech in October 2018. Could this translate to more protectionism in global PVC markets? It is a scenario worth considering as China seeks to increase its exports, challenging the US which accounts for the lion’s share of export trade. During the Petrochemicals Supercycle, the world was becoming ever-more globalised rather than what we are seeing today – the reverse. China was the tide that lifted all ships. Almost every year, its growth surprised on the upside, guaranteeing success for even the least-competitive plants. We didn't we have to worry about big increases in China’s self-sufficiency in PVC, polyethylene (PE) and polypropylene (PP). Now everything has changed, making big picture analysis of China’s economic problems and the global geopolitical landscape crucial. This kind of analysis has become as important if not more important than studying cost-per-tonne economics. 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.

07-May-2024

ORLANDO (ICIS)–Headwinds for the plastics industry including higher cost of capital, weaker household spending momentum and capacity adjustments will likely persist through 2024, according to a presentation by Perc Pineda, Chief Economist at PLASTICS, at this year’s NPE show. The US Consumer Price Index (CPI) was up 3.5% year on year in March, with economists expecting inflation to average 3.1% this year, which is above the US Federal Reserve’s target of 2%. As a result, interest rate futures are now moving towards fewer cuts. Elevated interest rates continue to negatively impact the petrochemicals industry, including US polyethylene terephthalate (PET), as high interest rates continue to result in weaker household spending. Additionally, the US PET market continues to experience capacity adjustments. In March of 2023, Alpek Polyester announced it would be indefinitely shutting down its Cooper River, South Carolina, PET site. A few months later in September of 2023 the integrated polyester plant being built by Alpek, Indorama and Far Eastern New Century (FENC), under the joint venture Corpus Christi Polymers, announced it was pausing construction at its Corpus Christi, Texas, site because of inflation as well as high construction and labor costs. Globally, Indorama announced in March 2024 that it is eyeing multiple sites and it is aiming to shut down. Without interest rate cuts, headwinds in the US and global PET market will likely continue through 2024, despite an optimistic demand outlook for 2024 compared to 2023. Thumbnail image shows multicolored PET preforms for plastic bottles Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida.

06-May-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 3 May. NEWS Besieged by imports, Brazil’s chemicals put hopes on hefty import tariffs hike 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. Mexico’s manufacturing slows on weaker exports, Chinese competition Mexico’s manufacturing sectors slowed down slightly in April on the back of tough competition, particularly from China, and weak demand from abroad, which caused a fall in output, analysts at S&P Global said on Thursday. Brazil’s manufacturing at nearly three-year high on booming demand Brazil's manufacturing sectors continued booming in April on the back of a sharp increase in new business intakes, which led to higher output and job creation, analysts at S&P Global said on Thursday. Mexico increases PET import tariff again in attempt to shield economy In the last week of April, Mexican President Andres Manuel Lopez Obrador introduced an amended version of the Tariff within the General Import and Export Duties Law to enforce import duties, or temporary duties, on products falling under 504 tariff items, including polyethylene terephthalate (PET) resin. These new duties will vary from 5% to 50%. Brazil's Braskem Q1 resin sales fall 5% yearly, on prioritizing sales with higher added value Braskem resin sales in its domestic Brazilian market dropped by 5% in Q1, year on year, on the back of prioritizing sales with higher added value in the period, the Brazilian petrochemicals major said on Friday in its quarterly production and sales report. INSIGHT: Six decades on, Brazil’s Unigel founder fights the ultimate battle The founder of Unigel, aged 87, is actively fighting the Brazilian chemicals and fertilizers producer’s most decisive battle, one for its survival, as it tries to restructure its debts, one step away from bankruptcy. PRICING Lat Am PE domestic prices fall in Argentina, Brazil on cheaper imports, soft demand Domestic polyethylene (PE) prices fell in Argentina and Brazil due to competition with cheaper imports and soft demand. In other Latin American countries, prices were unchanged. LatAm PP domestic prices fall in Argentina, Colombia, Mexico on lower feedstock costs, soft demand Domestic polypropylene (PP) prices fell in Argentina, Colombia and Mexico on the back of lower feedstock costs and soft demand.

06-May-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 3 May. Freight rates spike again, nudging Europe PET buyers back home Shipping costs may be making European polyethylene terephthalate (PET) imports prohibitively expensive, giving domestic sellers an opportunity to individually lift prices. Eurozone manufacturing activity dips again in April as order momentum fades Eurozone industrial sector momentum sank further into contraction territory in April, to hit a four-month low as new orders declined by the sharpest rate seen in 2024. Legal confusion limits Europe's pyrolysis oil trade as tyre-derived price fall Europe's tyre-derived pyrolysis oil spot prices fell this week following discussions of increased availability as pilot plants continue to scale, coupled with pressure from low-priced offers from overseas – particularly Asia. Europe May benzene contract drops in weaker market The Europe benzene May contract price has settled at €1,117/tonne, down by €151/tonne from April and snapping an uptrend that began in January. European polyols market bearish as demand pressures continue Demand for polyols in the European market remains under pressure, as major end sectors are facing difficulties, however there are different views for consumption going into May.

06-May-2024