Epoxy resins

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)–An EU probe into China wind turbines and a US anti-dumping investigation against epoxy from China and other Asian countries are some of the latest examples of the growing use by policymakers of regulatory measures to support local industry against allegations of unfair competition. Producers in western regions, particularly the EU, are increasingly pushing back against the impact of lower-priced imports from China on local markets, with regulators looking to tariffs and policy measures to ease industry struggles and diversify supplies. The EU’s probe into Chinese wind turbines under the Foreign Subsidy Regulation and the US anti-dumping case for epoxy against China, South Korea, Taiwan, Thailand and India are fresh examples of this. Asia Pacific suppliers have gained ground in the European epoxy market since the pandemic, and the downstream wind sector has also become increasingly pressured. As reliance in those spaces increasingly shifts to external markets for supply, questions emerge about the viability of local players in the face of these dynamics, as well as the implications for the energy transition and whether domestic supply is structurally adequate to meet future demand. STRING OF ADD CASES In the wake of these pressures, there has been a wave of Anti-dumping investigations in the chemicals sector in the west, mainly aimed at China. Olin and Westlake have submitted anti-dumping duty (ADD) petitions for epoxy in the US against China and other Asian countries, based on allegations that producers in these countries have sold large volumes of product at “unfairly low prices” in the US market, which is claimed to have caused injury to US producers/industry. On the face of it, the trade data does not support claims of substantial dumping of volume, with pretty low imports from three of the five key Asia-based manufacturers. However, there is growing speculation that a similar ADD claim is afoot in Europe, but there has been nothing official on this so far. Run rates have been reduced in Europe for a prolonged period to manage high costs, low demand and increased import flow from China/Asia. CHINA EPOXY, EUROPE CAPACITY Chinese epoxy is exported to Europe at around €1,900/tonne DDP in April and in some cases below. This is around €500-600/tonne below European levels and at least a few hundred euros cheaper than other Asian sources. If an anti-dumping investigation were to come in Europe and duties were to be implemented, could the EU structural capacity meet its demand needs between now and 2030? Structural nameplate capacity for epoxy in Europe is forecast to be slightly over 700,000 tonnes/per year, potentially with an additional 20,000-30,000 tonnes/year if a new Chimcomplex epoxy project is finalised. This stands against an actual consumption estimate of 466,000 tonnes/year by 2030, according to ICIS S&D data, although total actual production is expected to remain closely aligned to demand. “If an ADD were to go ahead in the EU, the region could be self-sufficient from an epoxy perspective,” said ICIS Aromatics and Derivatives Consultant Michele Bossi. CHINA EPOXY GAINS SHARE IN EU As we have seen with the ramp up in Chinese/Asian epoxy imports into Europe since the pandemic, there is potential that China could eat into the key EU downstream wind sector, with Chinese wind turbines being offered up to 50% lower than European-made wind turbines and with deferred payments of up to three years. European manufacturers are not allowed to offer deferred payments due to OECD rules. These favourable conditions for Chinese wind turbines are likely to sway wind park developers in the EU and the wider west. China is benefitting from subsidised materials up and down the chain, access to cheap land, financing and energy, according to a wind energy player, who said “something needs to be done to protect the Western OEMs and the supply base”, adding that some western OEMS claim to be victims of Chinese competition but are moving their production to China in order to be competitive. However, it stressed that “it is a very short-term strategy and will only result in losing to China.” Excess capacity of subsidised Chinese wind turbines “is not only dangerous for our competitiveness. It also jeopardises our economic security,” said Commission Executive Vice-President for Competition Margarethe Vestager and new inquiry Commissioner. “The EU probe into potentially unfairly subsidised Chinese wind turbine manufacturers is to ensure a fair competition and level the playing field between European and Chinese manufacturers eager to enter the European market,” said the official WindEurope spokesperson. EU WIND PROBE UNLIKELY TO AFFECT THE ENERGY TRANSITION “The number of new wind projects expected to come online before 2030 – and therefore to meet the EU’s 2030 targets – is largely independent of the origin of the wind turbine manufacturers,” highlighted the official spokesperson at WindEurope. It added that bottlenecks for additional projects coming online before 2030 are linked to other factors such as grid build out and grid connection queues, permits for new wind farms; (maritime) spatial planning and the availability of sufficient space for new wind energy projects. Although the EU Wind Energy package has provided action points to address these areas and support the sector. EU ENERGY TARGETS WITHIN REACH FOR 2030 WindEurope forecasts that the EU will come close to reaching its energy targets for 2030, irrespective of the EU probe into Chinese wind turbines, with the EU expected to install 29 GW a year on average over 2024-30. This will bring the EU’s installed wind capacity to 393 GW in 2030, compared to the 425 GW needed to deliver Europe’s climate and energy targets. Improvements in permitting and a rebound in investment has enabled the “EU wind energy targets of 2030 to be within reach”, according to WindEurope. OTHER SUPPORTThe bloc’s Net-Zero Industry Act – intended as a response to the US Inflation Reduction Act will introduce non-price criteria in renewable energy auctions and public procurement, which means that countries will need to apply this to at least 30% of volumes auctioned each year. This criteria is intended to help the EU’s clean-tech industries compete by prioritising elements such as environmental sustainability, resilience, cybersecurity, business conduct, innovation and ability to deliver on time, alongside the overall project price. The Carbon Border Adjustment Mechanism (CBAM) from 2026 should help level out the playing field of complying with EU emissions rules, requiring non-EU producers importing into the bloc to declare emissions and buy certificates to pay for them. While the EU is providing support to the wind sector to promote domestic demand and take measures to level-out the playing field, the same is not the case in the chemicals/epoxy sector. The inflow of cheap Chinese imports into the west is part of a bigger issue, with structural overcapacity mainly in China against a weak demand backdrop globally and a high-energy and raw material cost environment in Europe  putting the region on the back foot versus other regions. Lack of cost competitiveness in the chemicals sector in Europe continue to weigh heavily on western players, with two chemical giants ExonnMobil and SABIC the most recent casualties, with some cracker and derivative operational closures. "Everyone is welcome to trade with Europe. But they have to play by the rules,” said Vestager, Executive Vice President of the European Commission in her recent speech. But tariffs can only help to some extent, with  regional cost differences and overcapacity mainly in China structural issues that still need to be addressed. Additional reporting by Aura Sabadus, Gretchen Ransow, Michele Bossi, Will Beacham, Tarun Raizada and Nigel Davis Europe Graphics: Yashas Mudumbai

19-Apr-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 5 April. India’s urea imports plunge in January as country plans to end imports by 2025 In India, urea imports were at 400,542 tonnes in January, down 69% from 1.3m tonnes in January 2023 as requirement for fresh purchases decreased due to above average stock availability, according to customs data. European Commission implements definitive dumping duties on China PET As of 3 April, certain types of polyethylene terephthalate (PET) originating from the People’s Republic of China (PRC) will be subject to anti-dumping duties imposed by the European Commission. Costs, margins a pressing concern in the Europe epoxy industry, talks firmer for April The continued uptrend in raw material costs is piling on the pressure in the Europe epoxy industry and triggering price rise proposals for April, as profitability issues mount. Eurozone inflation declines further in March as energy costs drop, food inflation slows Inflation in the eurozone continued its slow downturn in March, falling to 2.4%, Eurostat said on Wednesday, as energy price declines continued and upward pressure on food and industrial goods lessened.

08-Apr-2024

MUMBAI (ICIS)–India’s Epigral Ltd has commissioned its 45,000 tonne/year chlorinated polyvinyl chloride (CPVC) resin line at its facility in Dahej in the western Gujarat state. “Epigral now has a total CPVC resin capacity of 75,000 tonnes/year, positioning it as the largest CPVC resin facility in the world at a single location,” it said in a disclosure to the Bombay Stock Exchange (BSE) on 3 April. Epigral, formerly known as Meghmani Finechem Ltd, is a leading integrated manufacturer of chemicals in India, producing caustic soda, chlorine, caustic potash, chloromethanes, CPVC and hydrogen peroxide at its Dahej facility. “With this [CPVC] expansion, we are advancing towards our goal of becoming a multi-product company, geared up to enhance contribution from the derivatives and specialty chemicals segments,” Epigral chairman & managing director Maulik Patel said. The increased capacity will help the company meet rising global and domestic demand for CPVC resins, it said, adding that the increased capacity will also help reduce India’s reliance on imports of the material. Domestic demand for CPVC currently stands at around 250,000 tonnes/year and is expected to grow at an annual rate of 10-13%, a company source said. Separately, the company expects to commission its 35,000 tonne/year CPVC compound facility before June 2024. India currently imports its CPVC resin and CPVC compound requirements, and the new plant will help Epigral cater to domestic demand for both products. Meanwhile, the company also expects to commission its chlorotoluene and downstream value chain facility in the current calendar year, the company source said. Once operational, the chlorotoluene facility will produce intermediates for manufacturing pharmaceutical and agrochemical active ingredients. “Right now, India imports its chlorotoluene requirement completely from China, Japan, and Europe. We expect to cater to custom manufacturing companies that are currently importing this raw material,” the company source added.

04-Apr-2024

HOUSTON (ICIS)–The collapse of the Francis Scott Key Bridge in Baltimore is wreaking havoc on logistics and freight movements in the immediate region, but the incident has yet to have any impact on shipping rates, and costs for shipping containers from Asia to the US continue to fall, highlighting this week’s logistics roundup. PORT OF BALTIMORE The Port of Baltimore remains closed to all vessel traffic following the bridge collapse early Tuesday morning. The unified command (UC) said on-scene crews continue to assess and monitor for spilled oils and hazardous substances to prevent further discharge or release into the marine environment as 14 containers on the Dali that were holding hazardous materials were impacted during the collision. The chemical components assessed were soap products, perfume products, or not otherwise specified resins, the UC said. Salvage efforts have begun but will take some time and according to the local US Coast Guard authorities the port is officially closed for the near future. Some of the chemical products most likely impacted are caustic soda, veg oil, base oils, ethanol, biodiesel and a variety of others. South African producer Sasol told ICIS that a terminal inside the port with the company’s name has not been used by the company since it opened its major facility in Lake Charles, Louisiana. Specialty chemical producer WR Grace has a terminal in the port, according to a map of the port on the Maryland state government’s website. The company did not immediately respond on Friday to questions about the terminal. The port is one of the largest in the US for auto imports and exports. Global shipping major MSC is advising customers that passage to and from the port will not be established “for weeks if not months”. Containers already on the water will be rerouted and discharged at an alternate port where they will be made available for pick-up upon completion of the usual import documentary procedure, MSC said. Customers with containers at the origin, whether gated in or booked but not yet gated, need to contact the origin booking office immediately to decide whether they wish for the cargo to be carried to the alternate ports in the US. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said more vessels arriving at alternative ports, or longer port calls as vessels offload more containers, could cause some congestion at those ports, meaning delays for shippers. “But ocean freight is now in its slow season between Lunar New Year and peak season that typically starts in June or July,” Levine said. “And at the moment there is no significant congestion at any of the major East Coast ports.” CONTAINER RATES FALL FURTHER Average global rates for shipping containers continue to fall after surging in December when Houthi rebels began attacks on commercial vessels in the Red Sea. Shippers began to divert away from the Suez Canal because of the attacks, which added days and sometimes weeks to traditional trade routes and tightened available capacity. Shippers brought all floating capacity online, increased sailing speeds and brought into service newbuilds to help alleviate the situation. Softer overall demand also helped ease stressed supply chains. Average rates and rates from Shanghai to the US and Europe have fallen steadily since the first of the year according to supply chain advisors Drewry and as shown in the following charts. Levine said the Baltimore closure could put some upward pressure on rates but that he expects it would be temporary. 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. LIQUID TANKER RATES STEADY While many tanker shipping routes from the Americas remained subdued with no significant price changes, the Transatlantic eastbound route remains firm as there continues to be a lot of interest seen in the market this week, although space remains tight. On the bunker side, fuel prices have been steadily decreasing as well on the back of softer energy prices; however, week over week remain relatively mixed. PANAMA CANAL Wait times for non-booked vessels ready for transit edged higher this week, according to the PCA's vessel tracker and as shown in the following image. Wait times last week were 1.2 days for northbound traffic and 1.4 days for southbound traffic. Additional reporting by Kevin Callahan Thumbnail image shows the Dali and the collapsed Francis Scott Key Bridge in Baltimore, Maryland, from www.keybridgeresponse2024.com

29-Mar-2024

HOUSTON (ICIS)–The administration of US President Joe Biden is proposing a wave of regulations before its term ends in 2025, many of which will increase costs for chemical companies in the US and persist even if the nation elects a new president later this year. The prospect of such consequential policies comes as delegates head into this year's International Petrochemical Conference (IPC), hosted by the American Fuel & Petrochemical Manufacturers (AFPM). Changes to the Clean Waters Act, the Risk Management Program (RMP) and the Hazard Communication Standard are among the most consequential policies being considered by US regulators. Electric vehicles (EVs) could receive more support from federal and state governments. This would increase demand for plastics used in EVs while discouraging refiners from making further investments, which could limit US production of benzene, toluene and mixed xylenes (MX). The failure of Congress to re-authorize the nation's chemical site security program could spell its end. REGULATORY PUSH DURING ELECTION YEARSuch a regulatory push by the Biden administration was flagged last year by the Alliance for Chemical Distribution (ACD), the new name for the National Association of Chemical Distributors (NACD). The group was not crying wolf. The next nine months could rank among the worst for the chemical industry in terms of regulatory change and potential issues, said Eric Byer, president of the ACD. "Whatever it's going to be, it will come done fairly aggressively." The Biden administration has proposed several consequential policies. For the Clean Water Act, the Environmental Protection Agency (EPA) is developing new requirements, which will require chemical producers and other companies to develop plans to address the worst possible discharge from their plants. The ACD warned that the new requirement would raise compliance costs while doing little to reduce the already small number of discharges by plants. The final rule is scheduled to be published in April 2024. For the RMP, changes could require chemical companies to share information that has been off limits since the 9/11 terrorist attacks, according to the American Chemistry Council (ACC). The concern is that the information will fall into the wrong hands, while significantly increasing costs to comply with the new requirements, according to the ACD. The Occupational Safety and Health Administration (OSHA) is introducing changes to its Hazard Communication Standard that could create more burdens for companies. The ACD warned that some of the changes will increase costs without providing a commensurate improvement in safety. The EPA has started the multiyear process that, under the regulator's current whole-chemical approach, will lead to restrictions imposed on vinyl chloride monomer (VCM), acrylonitrile (ACN) and aniline, a chemical used to make methylene diphenyl diisocyanate (MDI). This is being done through the nation's main chemical safety program, known as the Toxic Substances Control Act (TSCA). MORE POLICIES PROPOSED FOR EVsThe Biden administration is proposing additional polices to encourage the adoption of EVs. For chemical producers, more EVs would increase demand for plastics, resins and thermal management fluids that are designed to meet the material challenges of these automobiles. At the same time, the push towards EVs could limit sales of automobiles powered by internal combustion engines (ICEs), lowering demand for gasoline and diesel. Refiners could decide to shut down and repurpose their complexes if they expect demand for their main products will stop growing or decline. That would lower production of aromatics and other refinery chemicals and refined products. The Biden administration is moving on three fronts to encourage EV sales. The EPA is expected to decide if California can adopt its Advanced Clean Car II (ACC II), which would phase out the sale of ICE-based vehicles to 2035. If the EPA grants California's request, that would trigger similar programs in several other states. The EPA's light-duty vehicle proposal would impose stricter standards on tail pipe emissions. The US Department of Transportation (DOT) is proposing stricter efficiency standards under its Corporate Average Fuel Economy (CAFE) program. The AFPM opposes these measures. It said the EPA's light-duty vehicle proposal and DOT's new CAFE standards are so demanding, it would force automobile companies to produce a lot more EVs, plug-in hybrids and fuel-cell vehicles to meet the more ambitious requirements. LAX OVERSIGHT OF SHIPPING RATES IN WAKE OF HOUTHISThe ACD raised concerns that the US is not doing enough to address the possibility that shipping rates and delays have increased beyond what could be justified by the disruptions caused by the drought in Panama and by the Houthi attacks on vessels passing through the Red Sea to the Suez Canal. The ACD accepts that costs will rise, but it expressed concerns that shipping companies could be taking advantage of the situation by charging excessive rates on routes unaffected by the disruptions. These include routes from India and China to the western coast of the US, Byer said. "Why are you jacking up the price two or threefold?" LABOR NEGOTIATIONS FOR US EAST COASTThe work contract will expire this year for dockworkers and ports along the East Coast of the US. Byer warned of a possible strike if the talks become too contentious. On the West Coast, dockworkers and ports reached an agreement on a six-year work contract. CFATS ON LIFE SUPPORTByer expressed concerns about the future of the main chemical-site security program, called the Chemical Facility Anti-Terrorism Standards (CFATS). CFATS is overseen by the Cybersecurity & Infrastructure Security Agency (CISA), which is under the Department of Homeland Security (DHS). CISA lost authority to implement CFATS on 28 July 2023, when a bill that would have re-authorized it was blocked from going to a vote in the Senate. Without CFATS, other federal and state agencies could create their own chemical-site security regulations. This process has already started in the US state of Nebraska, where State Senator Eliot Bostar introduced LB1048. Other nearby states in the plains could introduce similar bills, because they tend to follow each other's lead, Byer said. Many of these state legislatures should wrap up sessions in the next couple of months, so lawmakers still have time to propose chemical-site security bills. The ACD is most concerned about larger states creating chemical-site security programs, such as California, Illinois, New Jersey and New York. SENATE RAIL BILL REMAINS PENDINGA Senate rail safety bill has been pending for more than a year after a bipartisan group of legislators introduced it following the train derailment in East Palestine, Ohio. Congress has about 10 months to approve the bill before it lapses, Byer said. For bills in general, action during an election year could happen around the Memorial Day holiday in May, the 4 July recess, the August recess or before the end of September. After September, legislators will be focused on campaigning for the 5 November election. TEXAS BRINGS BACK TAX BREAKS FOR INDUSTRIAL PROJECTSTexas has revived a program that granted tax breaks to new chemical plants and other large industrial projects. The new program is called the Texas Jobs and Security Act, and it replaced the lapsed Chapter 313 School Value Limitation Agreement. The old program was popular with chemical companies, and their applications were among the first public disclosures of their expansion plans. The new program has already attracted applicants. Summit Next Gen is considering a plant that would convert 450 million gal/year of ethanol into 256 million gal/year of sustainable aviation fuel (SAF). Hosted by the AFPM, the IPC takes place on March 24-26. Insight article by Al Greenwood Thumbnail shows a federal building. Image by Lucky-photographer

18-Mar-2024

SINGAPORE (ICIS)–Demand for China’s purified terephthalic acid (PTA) will get a boost as Indorama Ventures Ltd (IVL), a global producer of downstream polyethylene terephthalate (PET), shifts away from expensive integrated operations. IVL plant closures likely to focus on PTA – sources Tariff barriers dampen growth prospects for China PTA, PET exports China pins hopes on Belt and Road Initiative for new markets IVL cited overcapacity in China as one of the principal reasons for its new strategy – to procure cheaper feedstock from Asia, instead of running integrated facilities in the US. “A large portion of the refineries in the West are aged and losing their competitiveness. These facilities are expected to gradually close in the future,” ICIS senior analyst Jimmy Zhang said. The Thai company is the largest global PET resin producer with a 20% global market share and operates 147 production facilities in 35 countries, with its sales footprint covering over 100 countries in six regions – North America, Asia, Europe, the Middle East and Africa (EMEA), and South America. IVL 2.0 CALLS FOR SHUTDOWN OF SOME PTA UNITS Globally, IVL has a total production capacity of around 19m tonnes/year, the bulk of which or 67% are in combined PET business, which covers integrated PET, specialty chemicals and packaging, according to Thai investment research firm Innovest Securities. Integrated olefins derivatives account for 21% of the total capacity, while fibres have a share of 12%, it added. Market players said that in the US, IVL may prioritize shutting down PTA units over monoethylene glycol (MEG) units, whose production costs are still competitive compared with other global producers, thanks to their use of shale gas. “Given the current economic and market conditions, it is a wise decision to sell the assets which could not make money to ‘save its life’,” a trader in Asia said. In Asia, IVL currently operates three PTA assets – two in Thailand and one in Indonesia. According to market sources, the company could potentially mothball one of its less cost-effective PTA units in Thailand due to old age and technical issuSes. Its operations in Indonesia can better serve India, benefitting from competitive freight rates to IVL’s key market in Asia, they said. For now, IVL’s PTA plants in Asia still hold a unique export advantage in the south Asian country, as they are certified by the Bureau of Indian Standards (BIS). This certification was mandated by India late last year. Currently, no Chinese PTA producers have obtained BIS certification, reducing competition for IVL from Chinese imports. Origin swaps for PTA have taken place, with lower priced China cargoes being exported into southeast Asia as well as their downstream PET asset in Egypt. This enables Indorama to push for more exports to India at a much better price netback. This will unlikely change unless China PTA producers are able to obtain the BIS certification from India. Under its new masterplan dubbed “IVL 2.0”, IVL said that it will be reviewing six operating assets in the ‘West’ for potential shutdown, as it seeks to boost competitiveness. Including the Corpus Christi Polymers (CCP) joint venture project with Alpek and Far Eastern New Century (FENC) whose construction was halted, the number of projects under review total seven. IVL chief Aloke Lohia said that feedstock prices in Western markets are expected to increase over time as peak oil demand draws closer and refineries shut down, while the reverse will occur in emerging Asian markets as capacity rises, driving feedstock costs lower. The rise in refining capacity in China and India allows IVL to buy petrochemical feedstocks cheaper than they could produce them domestically,  Lohia had told ICIS. CHINA CAN FILL IN IVL PTA NEEDS China has the ability to export PTA at much lower cost amid a domestic oversupply, with the country’s annual production capacity now at more than 70m tonnes, only a small fraction of which – around 3m tonnes – are shipped abroad, according to the ICIS Supply & Demand Database. Over the years, China has continually increased its capacity across the entire polyester chain, granting Chinese producers a significant advantage in integration and scale for paraxylene (PX), PTA and PET, Zhang said. The country is now a major PTA exporter and has swung from being the world’s biggest net importer of polyester fibres and PET resins (bottle and film grade) to being the biggest net exporter, ICIS senior Asia consultant John Richardson said. But trade barriers in several countries hamper imports from China, raising the likelihood of “more barter trading activities” in the future, Zhang said. He is referring to a process in which Chinese cargoes will move to a duty-free country, which, in turn, will re-sell the volumes. With the change of origin, the cargoes can then be sold to markets with existing trade barriers to China duty free. “For example, it is likely that China will export more PTA to South Korea, while South Korea will export more PTA to other countries who set trading barriers for China,” Zhang said. CHINA CHANGES APPROACH TO TRADEWith anti-dumping investigations curtailing direct exports of PET to certain markets, China is moving away from western markets, shifting its focus on those covered by free-trade agreements within its Belt & Road Initiative (BRI). The country’s PET export market has shrunk since mid-2023 after the EU started anti-dumping investigations, with provisional duties on Chinese material activated in November of the same year. Anti-dumping investigations against Chinese PET, meanwhile, are ongoing in Mexico in North America and South Korea in Asia. China is expanding free-trade agreements (FTAs) with Belt & Road Initiative (BRI) and non-BRI member countries to counter growing geopolitical differences with the west, potentially leading to a shift in trading patterns as Chinese apparel and non-apparel production moves offshore to these nations, ICIS’ Richardson said. Overseas plants could be supplied by China-made polyester fibres, allowing the country to retain dominance in the global polyester value chain and offset rising labour costs, Richardson said. “Offshoring to the developing world may also enable China to make up for any lost exports of finished polyester-products to the West due to increased trade tensions,” Richardson added. China had signed 21 free trade agreements with 28 countries and regions as of August 2023, according to the Chinese state-owned Xinhua news agency. More than 80 countries and international organizations had subscribed to the “initiative on promoting unimpeded trade cooperation along the Belt and Road”, which is part of the BRI, it said. Source: Mercator Institute for China Studies (MERICS) Insight article by Nurluqman Suratman With contributions from Judith Wang and Samuel Wong Thumbnail image: Canal Container Transport, Huai'an, China – 12 March 2024 (Costfoto/NurPhoto/Shutterstock)

15-Mar-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: Only a few people thought that China would reach self-sufficiency in purified terephthalic acid (PTA). I was among the few. Now China is a major PTA exporter. This followed China swinging from being the world’s biggest net importer of polyester fibres and polyethylene terephthalate (PET) resins (bottle and film grade) to being the biggest net exporter. Paraxylene (PX) could be the next shoe to drop as today’s post discusses. Given China’s total domination of global PX net imports – and the concentration of major PX exports in just a small number of countries and companies – the potential disruption to the global business is huge. The ICIS Base Case assumes China’s PX demand growth will average 1% per annum in 2024-2030 with the local operating rate at 82%. Such an outcome would lead to China’s net PX imports at annual average of 7.4m tonnes in 2024-2030. This would compare with 2023 net imports of 9.1m tonnes. Downside Scenario 1 sees demand growth the same as in the base case. But under Downside Scenario 1, I raise the local operating rate to 88%, the same as the 1993-2023 average. I also add 6.2m tonnes/year to China’s capacity, which comprises unconfirmed plants in our database. Downside 1 would result in net imports dropping to a 2024-2030 annual average of just 1.5m tonnes/year. Downside Scenario 2 again sees demand growth the same as in the base case, an operating rate of 90% and 6.2m tonnes/year of unconfirmed capacity Net imports would fall to an annual average of just 700,000 tonnes a year. As an important 26 February 2024 Financial Times article explores, China continues to build free-trade agreements with Belt & Road Initiative (BRI) and non-BRI member countries as a hedge against growing geopolitical differences with the West. We could thus see a significant shift in trading patterns as more Chinese apparel and non-apparel production moves offshore to these countries, with the overseas plants fed by China-made polyester fibres. China could thus maintain its dominance of the global polyester value chain via this offshoring process, thereby compensating for its rising labour costs. Offshoring to the developing world may also enable China to make up for any lost exports of finished polyester-products to the West due to increased trade tensions. This shift in downstream investments and trade flows could provide economic justification for just about complete PX and mono-ethylene glycols (MEG) self-sufficiency, which will be the subject of a future post. These are the only two missing pieces in China’s polyester jigsaw puzzle. 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.

13-Mar-2024

MUMBAI (ICIS)–India’s Chemplast Sanmar began commercial production at its new 41,000 tonne/year specialty paste polyvinyl chloride (PVC) resin facility at Cuddalore in the southern Tamil Nadu state on 27 February. The new plant, which was set up at an investment of Rs3.6bn ($43m), has increased the company’s paste PVC capacity to 107,000 tonnes/year, a company source said. At Mettur in the same state, the company operates a 66,000 tonne/year specialty PVC paste plant. “The domestic demand for paste PVC is currently estimated at 160,000 tonnes/year," the source said. "Post expansion, the company will account for 83% of the domestic capacity and we expect to have a 66% share of the Indian market,” he added. Key applications for specialty PVC paste in India include synthetic leather for apparel, footwear and automotive upholstery. It is also used to make vinyl gloves. “There is a strong demand growth in PVC from the infrastructure and real estate sectors,” the source said. “We expect this healthy demand to drive the recovery in prices and margins over the next two to three quarters,” he said, adding that India is currently heavily dependent on imports. Separately, the company commissioned the first phase of its custom manufactured chemicals division (CMCD) in September 2023 and expects to bring the second phase on stream by June 2025, a company source said. The CMCD project at Berigai in Tamil Nadu is being set up in two phases at a cost of Rs6.8bn, and will produce advanced intermediates for the agrochemical, pharmaceuticals and fine chemicals segments. This project is expected to help the company expand into fine chemicals and pharmaceuticals, broaden its portfolio and access new markets and customers, the company source said. “We commercialized three new products in September 2023 and more products are under various stages of development,” he added. Despite the downturn in the global agrochemicals industry, Chemplast Sanmar expects reasonable growth from its CMCD business during the year, the source said. Chemplast’s wholly-owned subsidiary Chemplast Cuddalore Vinyls Ltd operates 331,000 tonnes/year of suspension PVC capacity in Tamil Nadu. The company also produces caustic soda, chlorochemicals, hydrogen peroxide at its three manufacturing facilities in the Tamil Nadu state and in Karaikal in the union territory of Puducherry. ($1 = Rs82.89)

04-Mar-2024

MUMBAI (ICIS)–India’s DCM Shriram plans to expand into the production of advanced materials through a greenfield epoxy resins plant, while its new epichlorohydrin (ECH) and caustic soda plants are due to start up in the next four months. “The company is planning to invest Rs10bn ($120.6m) over the next few years to set up a greenfield state-of the-art epoxy manufacturing plant,” it said in a statement on 28 February. Details on capacity, timeline and location of the plant were not provided. “We are bullish about this entry into the advanced materials space. We already have some of the key raw materials like ECH and caustic in our portfolio which paves a logical way forward into the epoxy and value-added products,” DCM Shriram chair and senior managing director Ajay Shriram said. “Advanced materials products like liquid epoxy resins, hardeners, reactive diluents and formulated resins are finding increasing applications in sectors such as wind-blades, EVs [electric vehicles], aeronautics, electronics, fire-proofing … [among other] industries,” it added. DMC Shriram expects to begin operations at its 51,000 tonne/year ECH plant at Jhagadia in Bharuch in the western Gujarat state between April and June 2024. It noted that more than “80% of the ECH produced globally is used in the manufacture of epoxy”. Separately, the company expects to begin operations at its expanded caustic soda at Bharuch in March, a company source said. Post expansion, the company’s caustic soda and chlorine capacities at the site will both be 60% higher at 813,000 tonnes/year and 715,696 tonnes/year, respectively, based on the company’s report submitted for environmental clearance in November 2019. “Our caustic soda project should come online in this quarter,” the source said. “We expect to take two years to ramp up capacity to full at the plant beginning with 50% capacity utilization in financial year 2024-25 and a gradual increase to around 90% by the end of fiscal 2025-26,” he added. India’s fiscal year ends in March. ($1 = Rs82.89)

04-Mar-2024