News and analysis

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)–US corn plantings are now 12% completed with soybeans at 8%, according to the latest US Department of Agriculture (USDA) weekly crop progress report. While some areas continue to see wet weather, the current pace of the corn crop is equal to the 12% achieved in 2023 and ahead of the five-year average of 10% completed. Texas remains in the lead with 68% of its crop finished, followed by North Carolina at 51%. There is now 3% of the crop emerged, which is ahead of the 2% rate of last year and the five-year average of 2%. Soybeans have reached 8% completed, with the current progress equal to the 8% achieved in 2023 and above the five-year average of 4%. The top state for plantings is Arkansas with 43% of their soybeans done, with Louisiana close behind with 42% of its crop planted. For the other key crops, the USDA said cotton was now at 11% planted, with sorghum at 17% and spring wheat up to 15% completed.

22-Apr-2024

SAO PAULO (ICIS)–US paints and coatings producer Tronox’s shares were up strongly on Monday after the company said its earnings in the first quarter had come between 9-31% higher than the analysts’ consensus. Tronox earnings before interest, taxes, depreciation and amortization (EBITDA) stood at $131 million in Q1. Analyst consensus expected that figure to be between $100-120 million. Tronox’s shares were up 5.87% in Monday afternoon’s trading at the New York Stock Exchange (NYSE), compared with the last close on 19 April. EBITDA posted strong growth compared with the fourth quarter, although it fell year on year. EBITDA is the preferred metric to measure a company’s financial health as it strips out external factors out of the company’s control. Sales rose in all metrics for titanium dioxide (TiO2) and zircon, a mineral that increases resistance on glass and metal. In February, the company already gave a hint its performance was proving better than expected when it raised operating rates for TiO2, with the company confident at the time that pricing for that material had bottomed out and should start improving after Q1. These are Tronox’s key products – TiO2 sales rose in Q1 by 8% year on year, and by 17% quarter on quarter. Zircon posted even better metrics, although its weight within Tronox’s portfolio is much lower than TiO2’s. In Q1, zircon sales rose by 22% year on year, and by 54% quarter on quarter. Tronox (in $/million) Q1 2024 Q1 2023 Change Q4 2023 Change Q4 2023 vs Q1 2024 Revenue 774 708 9% 686 13% EBITDA 131 146 -10% 94 39% EBITDA margin 16.9% 20.6% -3.70% 13.7% 3.2% Net income/loss -9 25 N/A -56 N/A TIO2, ZIRCON AND OUTLOOK“Costs continued to trend favorably as a result of improved absorption from higher production volumes and the absence of non-repeating charges in prior quarters,” said Tronox’s CEO, John D Romano. The company added its priorities for the rest of 2024 would be prioritizing investments which “are critical to furthering our strategy” as well as bolstering its liquidity on the back of what it expects will be market recovery. The Stamford, state of Connecticut-headquartered producer added it will also aim to resume debt payments as well as “evaluate strategic high-growth” opportunities for potential acquisitions but fell short of disclosing more details. STOCK JUMP EXPECTED “Management attributed the guidance raise [to Q1 financials] to demand outpacing expectations for both TiO2 and zircon,” said analysts at Alembic Chemical Advisors. “Management also stated that in line with their year-end earnings call guidance, their costs continue to trend favorably as a result of improved absorption from higher production volume and the absence of non-repeating charges in prior quarters.” Analysts at Alembic Chemical did forecast Monday’s sharp price increase, adding it would return to more normal trading patterns after the excitement subsided. The chemical equity analysts at Alembic recommended selling Tronox’s stock to cash in gains while the rises on the positive Q1 preliminary results sentiment lasted.

22-Apr-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 19 April. NEWS Brazil’s Petrobras, China’s CNCEC mull petchems, fertilizers joint projects Petrobras and China’s chemicals major CNCEC have signed a memorandum of understanding (MoU) to explore petrochemicals and fertilizers joint projects, the Brazilian state-owned energy major said on Thursday. INSIGHT: Argentina’s petchems hit hardest by recession as country holds breath under Milei Argentina’s petrochemicals are taking a severe hit amid the recession, with falls in demand for some materials of up to 50%, but companies and the country are holding firm under the new President’s economic shock therapy. Brazil's Petrobras re-enters fertilizers sector with restart at ANSA plant Petrobras is to restart its large-scale ANSA fertilizers plant in Araucaria, state of Parana, which has been idle since 2020, the Brazilian state-owned energy major said late on Wednesday. Pemex to remain ‘fiscal challenge’ for Mexico's new administration – S&P Beleaguered finances at Pemex, the Mexican state-owned energy major, will require support from the federal budget for years to come, the analysts at S&P said this week. Argentina’s lower rates helping central bank shore up balance sheet at savers’ expense – economist Argentina’s latest cut to interest rates had more to do with shoring up the central bank’s balance sheet, possible thanks to currency controls implemented by the prior Administration, than the actual control of price rises, according to the director at Buenos Aires-based Fundacion Capital. Latin America's fiscal consolidation at risk of slippages as plans postponed – IMF Latin America’s countries high debt levels require fiscal consolidation plans which in some cases are being postponed, increasing risks for the long-term financial stability of the region, the Director of the Western Hemisphere Department at the IMF said on Friday. 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. LatAm PE domestic price lower in Chile on cheaper US export offers Domestic polyethylene (PE) prices were assessed lower in Chile because of cheaper US export offers. In other Latin American (LatAm) countries, prices remained steady. Latin America’s February lube demand holds steady Lube demand in Latin America was relatively steady in February at a time of year when consumption typically falls in other markets like the US and Europe. The steady consumption coincided with lower base oils output in the region in February. LatAm PP international prices stable to up on higher freights from Asia International polypropylene (PP) prices were assessed as stable to higher because of increased freight rates from Asia to the region. However, Asian offers remain competitive compared to other origins like the Middle East and the US. Plant status: Dow Argentina shuts HDPE and LDPE plants on technical issues – sources US chemicals major Dow’s subsidiary in Argentina shut on 16 April a high density polyethylene (HDPE) plant due to a mechanical pump failure and a low density polyethylene (LDPE) plant due to technical failure, several sources said. Weather conditions starts 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. Weather conditions starts 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.

22-Apr-2024

HOUSTON (ICIS)–The Panama Canal Authority (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. The PCA began limiting the number of transits in August 2023 because of low water levels in Gatun Lake brought on by a severe drought that made 2023 the second driest year on record for the Panama Canal watershed catchment area. It was the first time in its history that transits were limited. The PCA opened two additional slots beginning 18 March, and a third on 25 March, bringing the total to 27/day, after solid rainfall in the region recently, but transits still remain well below 36 under normal conditions. The following table shows the number of available slots for booking dates from 7-15 May. The following table shows the number of available slots for booking dates from 16-31 May. The following table shows the number of available slots for booking dates from 1 June – 14 July. There will be some temporary reductions of booking slots during scheduled maintenance between 7-15 May, the PCA said. The number of ships transiting the Panama Canal daily – using a seven-day moving average – fell to 24 as of 17 April from 27 on 8 April, and compared with 38 on the same date a year ago, according to the most recent update at IMF PortWatch. Wait times for non-booked northbound vessels ticked higher to 1.8 days, and surged to 4.6 days for southbound vessels on 22 April, according to the PCA vessel tracker.

22-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

LONDON (ICIS)–Deputy European gas editor Ed Martin and deputy Gas in Focus editor Marta Del Buono discuss European gas highlights from week 16 UK LNG imports low amid demand lull, new EU terminals Czech Republic relies on Ukraine storage due to German gas fee – Czech ministry Are cyberattacks a growing threat to energy companies? Click here to watch

22-Apr-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 19 April. IPEX: Global spot index edges down on softer values in northwest Europe The global spot ICIS Petrochemical Index (IPEX) edged down on the back of lower spot values in northwest Europe, where derivative production problems continue to hamper appetite for some chemicals. Argentina’s lower rates helping central bank shore up balance sheet at savers’ expense – economist Argentina’s latest cut to interest rates had more to do with shoring up the central bank’s balance sheet, possible thanks to currency controls implemented by the prior Administration, than the actual control of price rises, according to the director at Buenos Aires-based Fundacion Capital. US manufacturers ‘uniformly optimistic’ about 2024 activity – Fed Beige Book US manufacturers were "uniformly optimistic" in March about the prospects for the next 12 months on expected higher sales, the country’s Federal Reserve (Fed) Beige Book said on Wednesday. INSIGHT: Argentina’s petchems hit hardest by recession as country holds breath under Milei Argentina’s petrochemicals are taking a severe hit amid the recession, with falls in demand for some materials of up to 50%, but companies and the country are holding firm under the new President’s economic shock therapy. Green shoots spring in eastern Europe, strong interest in PPG’s architectural division – CEO Amid Europe’s industrial crisis, green shots have started to appear in eastern countries, giving hopes the downturn in the region has bottomed out, the CEO at US paints and coatings major PPG said on Friday.

22-Apr-2024

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at how autos are caught in the middle of a trade war and major changes in demand patterns. 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. Paul Hodges is the chairman of consultants New Normal Consulting.

22-Apr-2024

Gas industry representatives say sector must pursue integrated planning for efficient energy transition This means focus must shift from competing against power to how to balance renewables and hard-to-abate sectors European Commission must focus on necessary gas infrastructure investments in next mandate BRUSSELS (ICIS)–The gas industry needs better integrated planning with the electricity sector to achieve the energy transition and ensure efficient and cost-effective infrastructure investments, stakeholders said on 18 April. Discussing the outlook for gas in 2040 and beyond, panellists at the Eurogas annual conference in Brussels discussed the steps needed in the EU’s next political cycle to support a shift to renewable gases. Tatiana Marquez Uriarte, a member of European energy commissioner Kadri Simson’s cabinet, said the conversation had shifted from how to use gas as a transition fuel to how to use renewable fuels to balance electrification. The next European Commission will need to focus on adjusting infrastructure to use biomethane and hydrogen, she said, and handle the decentralised production of these gases. The viewpoint is similar to ongoing discussions in the power sector, where the urgency of upgrading networks, led to the release of the Commission’s grid action plan in November 2023. There is particular focus on distribution grids for the volumes of renewable energy they will carry. Marquez Uriarte said renewable gases such as biomethane would be locally produced and injected into the distribution grids, which meant upgrades and investments were required. “It is clear that we need to decarbonise big time and […] we need to have an integrated planning in order to make sure that we are not building parallel infrastructure,” said Walburga Hemetsberger, CEO of industry group SolarPower Europe. Egbert Laege, CEO of Germany’s SEFE, told the conference that the company was trying to break the chicken-and-egg question around infrastructure by starting to invest the billions of euros required. This means the investment would be done this decade and the infrastructure ready when biogas and hydrogen will be ready for transport. Both Hemetsberger and Laege called for policymakers and industry to take decisions on technologies in order to bring clarity for investors. “We have very much been thinking of electricity and gas systems as separate, and we urgently need to stop that, because I think it is very clear the green transformation will be predominantly driven by green electrons,” Laege said. This would allow the gas industry to learn how to support the transition, clarify where to invest and align infrastructure plans.

22-Apr-2024