Styrene

An end-to-end view of this key commodity 

Discover the factors influencing styrene markets

The multitude of factors which affect styrene markets at a local, regional and global level include upstream activity, particularly in the benzene market, plant operating capacity and status, macroeconomic factors and trends downstream in packaging and production. It is a lot to keep track of. The slightest shift can prompt a response which affects styrene prices and trade.

Our established team of commodity market experts monitor styrene and its interdependent markets closely. We then provide timely updates on changes as they occur. We ensure you have access to the latest data, including live updates on plant operating statuses and news as well as relationships with downstream and derivative markets. That way, you can decide quickly how to make the most of the market opportunities available.

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Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 15 March. Europe ethylene and propylene sentiment cautiously optimistic for remainder of H1 Given the better-than-expected demand conditions, with improved sales volumes and higher prices lifting many out of the mire that was 2023, the question on everyone’s lips is how long can we expect this state of affairs to last. Potential for oil market deficit in 2024 as demand expectations grow – IEA Higher oil demand expectations and fresh production cuts from the OPEC+ alliance could push the 2024 crude market balance from a surplus to a slight deficit if the voluntary reductions remain in place for the rest of the year, according to the International Energy Agency. Surging PET bottle bale prices threaten to ‘destroy’ Europe’s R-PET market Feedstock bale prices hit €930/tonne ex-works in Poland on Monday, prompting recycled PET participants to suggest such price levels threaten to destroy the R-PET market as they fear a repeat of 2022’s disastrous price volatility. Europe acetic acid, VAM contract talks for March focus on supply disruption March negotiations are underway for European acetic acid and vinyl acetate monomer (VAM) contract pricing with security of supply a key influence on negotiations amid LyondellBasell’s force majeure in the US and other disruptions to global trade flows. Caution caps optimism as peak season arrives for Europe styrene market Spot activity in the Europe styrene market was moderate in the week ended 8 March, as players attended a key industry event, while cautious and conservative sentiment persisted alongside crosswinds from ongoing demand weakness and thin liquidity, high feedstock costs and reduced availability. Participants pointed to only slight improvements in demand and market optimism from levels seen in 2023. Europe cracker margins up on firmer ethylene, co-products pricing Cracker margins in Europe rose in the week on the back of firmer ethylene and co-product pricing, ICIS Margin Analysis showed on Monday.

18-Mar-2024

US Trinseo seeks to sell stake in AmSty

HOUSTON (ICIS)–Trinseo has started the process to sell its 50% stake in Americas Styrenics (AmSty), the US-based engineered materials producer said on Wednesday. AmSty makes styrene and polystyrene (PS). The company has initiated the ownership provision in the joint venture agreement. That provision includes a structured mechanism that will lead to the sale of Trinseo's stake in AmSty. "We have a clear pathway to divest our interest in the joint venture," said Frank Bozich, CEO. "We expect the exit process to lead to a definitive arrangement no later than early 2025." Trinseo did not name any prospective buyers or how much money it could make on the deal. Trinseo will spend the proceeds of the sale on paying down $1.077 billion in recently issued term loans. Those loans mature in 2028. Chevron Phillips Chemical owns the remaining stake in AmSty. Trinseo is also trying to sell its wholly owned styrenics assets, with a focus on marketing individual plants and regional businesses. Trinseo's other businesses include Latex Binders, Base Plastics and Engineered Materials. Thumbnail shows a cup made of polystyrene. Image by ICIS.

13-Mar-2024

Brazil’s Unigel halts fertilizers production on high natural gas prices

SAO PAULO (ICIS)–Unigel is to “temporarily stop” nitrogen fertilizers production because of high costs and low prices, effective on Wednesday, the Brazilian chemicals and fertilizers producer said. Unigel said natural gas prices in Brazil are one of the highest in the world, and six times higher than in the US or the Middle East, “despite efforts” by multiple stakeholders, including the government, to lower them. “Unigel suffered losses throughout 2023 and also in 2024, but it retained the majority of its staff in expectations that negotiations and work fronts seeking to reduce the price of natural gas would be successful,” said the company. “The company will continue to have a minimum infrastructure for maintenance and preservation of assets, in addition to ensuring compliance with legal and socio-environmental commitments.” Unigel’s move comes after it signed a tolling agreement with Petrobras in December for the functioning of two nitrogen fertilizers plants in the states of Sergipe and Bahia. The two plants were leased to Unigel by Petrobras in 2019. It also comes just weeks after Unigel’s creditors agreed to a debt restructuring of the company’s beleaguered financial metrics. The plant in Camacari, Bahia, can produce 475,000 tonnes/year of ammonia and 475,000 tonnes/year of urea. The plant in Laranjeirs Sergipe, can produce 650,000 tonnes/year of urea, 450,000 tonnes/year of ammonia and 320,000 tonnes/year of ammonium sulphate (AS). “[After leasing the plants in 2019] Unigel contributed to reducing the country's extreme dependence on the import of nitrogen fertilizers by approximately 15%, which is essential for agribusiness, today the most important sector of our economy, and directly impacts Brazilians' food security,” said Unigel. “Furthermore, Unigel is the only national producer of ARLA, an additive added to diesel engines to reduce the emission of polluting gases.” The company added that once the precedent conditions in the tolling contract have been met, it would be able to “reevaluate the resumption” of production. Unigel's chemicals divivions produces styrene and polystyrene (PS), among other materials. Front page picture source: Unigel

06-Mar-2024

INSIGHT: Indorama flags peak oil demand in possible plant closures

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

Asia petchem markets await China's demand signals after holiday

SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. Asia markets eye China's post-holiday demand signals China's economic health remains central concern Prices likely to rise amid supply constraints Markets in Asia took a breather in the week of 12-16 February, with Lunar New Year holidays in China, Taiwan, Malaysia and Singapore, while countries such as South Korea, Japan and Indonesia observed public holidays as well. Market participants are cautious about the post-holiday market; while some downstream buyers will restock after the holidays, there is concern that existing inventory held by domestic China producers and distributors will largely satisfy demand until early March. PRICES LIKELY TO RISE AMID SUPPLY CONSTRAINTSPetrochemical prices in Asia are expected to continue to increase in February, supported by capacity losses from outages and run-rate reductions, according to ICIS analysts. Among the 31 major petrochemical commodities covered by the ICIS Asia Price Forecast, average February prices for at least 22 of these commodities are anticipated to increase. Ethylene (C2), butadiene (BD) and styrene butadiene rubber (SBR) are expected to lead in terms of gains. In Asia’s C2 market, end-users who have yet to settle March arrival cargo are expected to hit the ground running once most of players return to the market this week. In the southeast Asia C2 market, demand enquiries were largely heard from Thailand last week, while other end-users in Indonesia have begun to look towards the April window for spot cargo. "The Asia C2 industry is likely to be characterised by tight supply in the weeks to come," said Paolo Scafetta, ICIS senior olefins analyst. "February should see about 7% of total monthly nameplate capacity lost due to downtime unless unplanned events cause further technical hiccups." The upstream naphtha market in Asia should be influenced by a few bearish factors, Scafetta added. These include the shift from naphtha to liquefied petroleum gas (LPG) as an alternative cracking feedstock and an improvement in supply from March as naphtha cargoes are expected to increase as Middle East refineries return from their maintenance. Asia's naphtha market is likely to be plagued with volatility in the short term as tensions in the Red Sea will continue to disrupt supplies. In Asia’s propylene (C3) market, trade was largely subdued during the Lunar New Year break but picked up towards the close of the week with most market players, except China, returning from their holiday. Talks and discussions in Taiwan commenced at the end of the week after the holidays ended. However, the post-holiday buying sentiment weakened on the back of ample supply, leading sellers to progressively lower their offers and selling indications. With buyers in China largely away from the market, overall business activity during the week was muted. In southeast Asia, while demand was also heard in Malaysia and Indonesia, most buyers continued to hold back from purchases on the expectation that supply tightness might result in an easing in offers down the road. In Asia’s benzene market, post-holiday restocking is expected to pick up in the second half of February amid strong competition for April and May cargoes from global players. February and March benzene cargoes have been already sold out and April cargoes are in strong demand. Benzene buyers based in both Asia and the West had actively sought procurement since end-January, for pre-holiday and pre-summer stocking up respectively. Asia's acetone market looks poised to maintain its strength. This is due to the high prices of benzene, reduced production leading to tighter supply, and a resurgence in trading flows between Asia and the West. A significant increase in demand for Asia acetone from the US market is bolstering this trend. Limited supply in the US, a result of low phenol production and ongoing allocations, is driving this demand. Meanwhile, supply within Asia is also constrained as phenol/acetone producers scale back production in response to unprofitable margins and decreased demand for phenol in China. In the xylene markets, further support in the market will be dependent on downstream sectors after the Lunar New Year holidays, with eyes firmly on China. For paraxylene (PX), there remains optimism for gasoline-blending demand heading into the second quarter, with positive arbitrage window economics for exports to the West. Firm upstream naphtha prices have also provided some support for PX. Several market participants noted there had been pre-buying of mixed xylenes (MX) and toluene by gasoline blenders to the US. Demand and price developments in the downstream purified terephthalic acid (PTA) and polyester sectors will help provide clarity about whether high PX costs can be absorbed down the chain. Asia's butyl acetate (butac) and ethyl acetate (etac) markets are poised to stay afloat on anticipated post-holiday demand, albeit at a gradual pace. Sellers of butac in both China and the region largely maintained their spot offers for March loading prior to the Lunar New Year holiday. Spot butac prices were on a downtrend in the early part of the fourth quarter of 2023 and have climbed since December, in part driven by cost pressures upstream as suppliers worked towards mitigating compressed margins. Asia’s methylene chloride (MEC) market might be bullish after the Lunar New Year holiday, as rising demand is likely to shift the market to a more balanced state. Most buyers were in a wait-and-see mode, monitoring prices and observing what producers would offer after the Lunar New Year break, with market participants in southeast Asia eyeing a rebound in demand through Q2, around the Ramadan period. CHINA'S ECONOMIC HEALTH IN FOCUS ICIS analysts expect most of China's end-use consumption, including in industries such as agriculture and home appliances, to recover from March. The China government's Two Sessions policy meetings, widely seen as the most important political meeting of the year for the country, will be held on 4-11 March. ICIS analysts expect another series of policies to be introduced to stimulate economic growth. Further market and infrastructure investment can boost petrochemicals demand. Latest official data from China is pointing to some recovery from domestic tourism trips and revenues. Domestic tourism trips and revenues during the Lunar New Year holidays in China jumped by 34.3% and 47.3% year on year respectively, with their levels at 19.0% and 7.7% above pre-pandemic levels in 2019, data from the country’s Ministry of Culture and Tourism (MCT) shows. "Most official and private media channels have been reporting strong (or even exceptionally strong) Lunar New Year holiday consumption data, and markets risk getting caught up in the euphoria of the moment, under the supposition that China’s economy is suddenly bottoming out, driven by the Chinese people’s hidden passion for spending," research analysts from Japan's Nomura Global Markets Research said in a note. "Although we do see some strength in the data, we urge market participants to exercise caution," it said, adding that China's property sector continued its downward spiral, right before the Lunar New Year holiday, and there was no sign of a recovery during the holiday. "Despite the positive [Lunar New Year] data, we maintain our view that the ongoing economic dip is likely to worsen into the spring," Nomura said. With additional reporting by Josh Quah, Julia Tan, Seng Li Peng, Angeline Soh, Helen Lee, Keven Zhang, Melanie Wee and Samuel Wong Focus article by Nurluqman Suratman Thumbnail photo: Lunar New Year lanterns in Shenyang, northeast China's Liaoning Province, on 1 February 2021. Asia will closely watch China's demand signals after the Lunar New Year holiday amid concerns about the country’s economic health. (Source: Xinhua/Shutterstock)

19-Feb-2024

India’s Styrenix plans ABS, PS capacity expansions in Gujarat

MUMBAI (ICIS)–India’s Styrenix Performance Materials (SPM) expects to begin operations at its expanded acrylonitrile butadiene styrene (ABS) and polystyrene (PS) capacities at Dahej and Nandesari in the western Gujarat state before 2028, a company source said on Friday. SPM plans to invest Rs6.5bn ($78m) on the expansion projects. Its ABS capacity will grow to 210,000 tonnes/year over the next four years, from 85,000 tonnes/year currently; while its PS capacity will be raised to 150,000 tonnes/year over the next three years from the current 66,000 tonnes/year, based on the plan released in October 2023. Funding the brownfield expansions will be through a mix of internal accruals and debt, SPM said. “The expansion will be done in a phased manner and capacity will be increased gradually over the next few years,” the company source said. The expansion of production capacities will help SPM meet increasing domestic demand for ABS and PS, he sai. “We expect to see robust growth in in our existing markets like automobiles, household appliances, medical devices, electronics, [among others],” the source said. SPM is formerly known as INEOS Styrolution India. It was renamed in January 2023 after INEOS Styrolution sold its entire stake in the company to Shiva Performance Material in August 2022. ($1 = Rs83)

16-Feb-2024

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 9 February 2024. India methanol gains on lower Iran volumes amid plant outagesBy Keven Zhang 09-Feb-24 14:38 SINGAPORE (ICIS)–Indian methanol spot market continued to be driven by supply outages in Iran, with a trade concluded higher than the previous week. INSIGHT: Asia benzene remains profitable supported by demand in 2024 By Jenny Yi 08-Feb-24 22:27 SINGAPORE (ICIS)–Asia benzene supply growth will moderate in 2024 compared with last year, which saw the the peak of the latest capacity expansion cycle. The downstream market still maintains rapid capacity growth, however, which exceeds the supply growth rate of benzene. Asia adipic acid struggles to keep up with cost pressure ahead of holidays By Josh Quah 08-Feb-24 13:44 SINGAPORE (ICIS)–Adipic acid (ADA) prices in Asia have been on a general upward trend since around mid-December 2023 for China-origin cargoes. INSIGHT: Asia ABS supply length will intensify amid China expansions By May Hu 08-Feb-24 10:00 SINGAPORE (ICIS)–ABS (acrylonitrile butadiene styrene) capacity growth in Asia peaked in 2023 and will be sustained in 2024 on massive new capacities coming on stream in China. China petrochemical demand may stay muted post-holiday By Yvonne Shi 07-Feb-24 15:09 SINGAPORE (ICIS)–Low market confidence has kept petrochemical restocking in China tepid before the Lunar New Year holiday, with players refraining from building up inventory given uncertain demand recovery in March. China Jan petrochemical markets gain on restocking; Feb holidays to hit demand By Yvonne Shi 06-Feb-24 14:58 SINGAPORE(ICIS)–China’s domestic petrochemical markets gained in end-January on the back firm crude prices and some restocking ahead of the Lunar New Year holiday, with demand in February likely to weaken. Asia titanium dioxide spot market may be fuelled by bullish sentiment By Joson Ng 05-Feb-24 16:56 SINGAPORE (ICIS)–The titanium dioxide (TiO2) spot market in Asia is likely to see supply factors driving the market in February. India hikes infrastructure capex for fourth year; Rs11.1tr set for 2024-25 By Priya Jestin 05-Feb-24 14:49 MUMBAI (ICIS)–India’s government has announced plans to increase its capital expenditure on infrastructure projects to rupees (Rs) 11.1trn ($134bn) in its interim budget for 2024-2025, up 11% from the previous fiscal year, boosting the funds available for the sector for the fourth consecutive year.

13-Feb-2024

US Trinseo expects another net loss in Q1, may take more actions

HOUSTON (ICIS)–Trinseo expects another quarterly net loss in the first quarter after reporting one on Monday for its fourth-quarter results. The company has already shutdown some manufacturing capacity, and the company will continue to assess whether it should do more to "increase our manufacturing network flexibility", said Frank Bozich, CEO. Any such actions would allow the company to take advantage of cost differences among different regions while also improving profitability, lowering capital expenditures and optimizing working capital, Bozich said. At the same time, the moves would allow Trinseo to continue investing in higher-value products as well as sustainable ones. The following table compares the company's Q1 guidance to its Q4 and Q1 performance during 2023. Figures are in millions of dollars. Q1 '24 Q4 '23 Q1 '23 Net loss from continuing operations 77-67 265 49 Adjusted EBITDA 40-50 20 36 Source: Trinseo “The unprecedented drop in demand we saw starting in the third quarter of 2022 has persisted, and a great deal of macroeconomic uncertainty remains," Bozich said. “We are seeing stronger order loads to begin the year following the challenges we faced in the fourth quarter, and therefore, we expect significantly higher sequential profitability in the first quarter of 2024," he said. However, the first quarter should be the one with the lowest profitability because volumes are typically lower during that time of the year and because of plant turnaounds, Trinseo said. Also, the timing of newly awarded business will contribute to lower profitability. For all of 2024, Trinseo expects a similar constrained demand environment to 2023. Shares of Trinseo rose by 1.63% in afterhours trading. Q4 PERFORMANCEThe following table shows Trinseo's Q4 performance. Figures are in millions of dollars. Q4 23 Q4 22 % Change Net sales 837.5 975.2 -14.1% Cost of sales 817.2 978.4 -16.5% Gross profit 20.3 -3.2 – Net loss * 265.0 364.3 -27.3% Adjusted EBITDA 20.2 6.3 – *from continuing operations Source: Trinseo Trinseo makes styrenics and engineered materials. Thumbnail shows spoons made of acrylonitrile butadiene styrene (ABS), one of the resins made by Trinseo. Image by ICIS.

12-Feb-2024

PODCAST: Asia benzene lifted by higher oil prices, pre-holiday restocking

SINGAPORE (ICIS)–Asia's benzene prices trended upwards because of crude gains as well some pre-Lunar New Year restocking. Downstream styrene (SM) producers however, struggled with higher costs and low demand from sectors such as polystyrene (PS), expandable polystyrene (EPS) and acrylonitrile-butadiene-styrene (ABS). In this chemical podcast, ICIS editors Angeline Soh and Luffy Wu discuss recent market conditions with an outlook ahead in Asia. Benzene Feb cargoes sold out from pre-LNY stocking up, US demand as plants shut from winter storm Demand for March cargoes buoyed; buyers beyond Asia worried about tightened supply with upcoming derivative additions in China Asian styrene market players struggling with high costs but low demand Regional styrene exporters eyeing long-haul opportunities to Europe

31-Jan-2024

General Motors, China’s BYD to invest over $2.0bn in EVs at Brazilian facilities

SAO PAULO (ICIS)–General Motors is to invest Brazilian reais (R) 7.0bn ($1.4bn) in 2024-2028 at its facilities in the country to implement a “complete renewal” of its vehicle portfolio focusing on production of electric vehicles (EVs), the US automotive major said this week. Meanwhile, China’s EV major BYD also announced this week it would invest R3.0bn at its facilities in Camacari, in the state of Bahia. The company purchased the plant from Ford in 2023. The Brazilian government approved at the end of 2023 the so-called Mover program, which envisages tax breaks and incentives for greener mobility. Both GM and BYD’s announcements were made after weeks of talks with the government, although details of the agreements signed have not yet been made public. The automotive boost this week will have been music to the ears of both automotive executives in Brazil and the government presided by Luiz Inacio Lula da Silva, in office since January 2023. For the former, the announcements could be a catalyst for further growth in EVs, a sector in which Brazilian producers are lagging versus other big producing countries. In the past decade, those executives have presided over a sharp fall in output, down the peak of nearly 3.5m units/year in the early 2010s to just over 2.3m units produced in 2023. Brazil’s automotive exporting prowess to the rest of Latin America has dwindled on the back of fierce competition from overseas producers, mainly Chinese. For the government, the announcements will be a relief after the Lula Administration has struggled to show any sign of a revival in manufacturing, a key promise to its core electorate. Manufacturing stayed in contraction territory for most of 2023. President Luiz Inacio Lula da Silva made sure this week to capitalize on both announcements, which were made in Brasilia’s Planalto presidential palace. Earlier in the week, he also presented a 10-year industrial policy plan envisaging incentives for green investments to the tune of R300bn. The Mover program is part of that plan. TURNAROUNDIn GM’s case, the announcement this week is a remarkable turn of events after the company and some of its workers in Brazil were involved in a legal dispute after GM implemented 1,200 redundancies without prior consultation with trade unions. A judge disregarded the redundancies and ordered GM to rehire all workers. GM is a key automotive producer in Brazil. The company operates three production facilities in the state of Sao Paulo: Sao Jose de Campos, Sao Caetano do Sul, and Mogi das Cruzes. The company said the investments would also include research and development (R&D) of “innovative and customized” products for the Brazilian market as well as the “creation of new” businesses. “The factories will also receive developments that will make them even more modern, agile, and sustainable,” said GM. A large part of Brazil’s current vehicle fleet can also run on biodiesel, an element which has greatly helped reduced the country’s emissions from the transport sector but has also made producers rest in their laurels in terms of EV production. “Brazil is strategic for GM’s global business expansion plan. In addition to being a vehicle export hub for South America, it has a large engineering development center and is a market with high growth potential with a vocation for new technology vehicles, in line with the predominantly clean energy matrix of the country,” said Shilpan Amin, president of GM International. The official announcement from GM did not mention EVs but used the wording “sustainable mobility” instead. However, in the ceremony where the investments were announced GM’s vice president for South America, Fabio Rua, said: “Our investments in Brazil are focused on sustainability. Our future is all electric,” as quoted by Bloomberg. The automotive industry is a major global consumer of petrochemicals, and chemicals make up more than one-third of the raw material costs for an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA), among others. ($1 = R4.91) Focus article by Jonathan Lopez

26-Jan-2024

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