Expandable polystyrene (EPS) and polystyrene (PS)

SAO PAULO (ICIS)–Brazilian chemicals producers are lobbying hard for an increase in import tariffs for key polymers and petrochemicals from 12.6% to 20%, and higher in cases, hoping the hike could slow down the influx of cheap imports, which have put them against the wall. For some products, Brazil’s chemicals trade group Abiquim, which represents producers, has made official requests for the import tariffs to go up to a hefty 35%, from 9% in some cases. On Tuesday, Abiquim said several of its member companies “are already talking about hibernating plants” due to unprofitable economics. It did so after it published another set of somber statistics for the first quarter, when imports continued entering Brazil em masse. Brazil’s government Chamber of Foreign Commerce (Camex) is concluding on Tuesday a public consultation about this, with its decision expected in coming weeks. Abiquim has been busy with the public consultation: it has made as many as 66 proposals for import tariffs to be hiked for several petrochemicals and fertilizers, including widely used polymers such polypropylene (PP), polyethylene (PE), polyethylene terephthalate (PET), polystyrene (PS), or expandable PS (EPS), to mention just a few. Other chemicals trade groups, as well as companies, have also filed requests for import tariffs to be increased. In total, 110 import tariffs. HARD TO FIGHT OFFBrazil has always depended on imports to cover its internal chemicals demand, but the extraordinary low prices coming from competitors abroad has made Brazil’s chemicals plant to run with operating rates of 65% or lower. More and more, the country’s chemicals facilities are becoming white elephants which are far from their potential, as customers find in imported product more competitive pricing. Considering this dire situation and taking into account that the current government in Brasilia led by Luiz Inacio Lula da Silva may be more receptive to their demands, Abiquim has put a good fight in publica and private for measure which could shore up chemical producers’ competitiveness. This could come after the government already hiked import tariffs on several products in 2023 and re-introduced a tax break, called REIQ, for some chemicals which had been withdrawn by the previous Administration. While Brazil’s chemicals production competitiveness is mostly affected by higher input costs, with natural gas costs on average five times higher than in the US, the industry is hopeful a helping hand from the government in the form of higher import tariffs could slow down the flow of imports into Brazil. As a ‘price taker region’ given its dependence on imports, Latin American domestic producers have taken a hit in the past two years. In Brazil, polymers major Braskem is Abiquim’s commanding voice. Abiquim, obviously, has always been very outspoken – even apocalyptic – about the fate of its members as they try to compete with overseas countries, namely China who has been sending abroad product at below cost of production. The priorities in China’s dictatorial system are not related to the balance of markets, but to keep employment levels stable so its citizens find fewer excuses to protest against the regime which keeps them oppressed. Capitalist market dynamics are for the rest of the world to balance; in China’s dictatorial, controlled-economy regime the priority is to make people feel the regime’s legitimacy can come from never-ending economic growth. The results of such a policy for the rest of the world – not just in chemicals but in all industrial goods – is becoming clear: unprofitable industries which cannot really compete with heavily subsidized Chinese players. The results of such a policy in China are yet to be seen, but subsiding at all costs any industry which creates employment may have debt-related lasting consequences: as they mantra goes, “there is no such thing as a free lunch.” Abiquim’s executive president urged Lula’s cabinet to look north, to the US, where the government has imposed hefty tariffs on almost all China-produced industrial goods or raw materials for manufacturing production. “[The hikes in import tariffs] have improved the US’ scenario: despite the aggressive advance in exports by Asian countries, the drop in US [chemicals] production in 2023 was of 1%, while in Brazil the index for production fell nearly by 10%,” said Andre Passos. “The country adopted an increase in import taxes of over 30% to defend its market from unfair competition. The taxation for some inputs, such as phenol, resins and adipic [acid], for example, exceeds three digits. “Here, we are suggesting an increase in rates to 20% in most claims … We need to have this breathing space for the industry to recover,” he concluded. As such, the figures for the first quarter showed no sign of imports into Brazil slowing down. The country posted a trade deficit $9.9 billion during the January-March period; the 12-month accumulated (April 2023 to March 2024) deficit stood at $44.7 billion. A record high of 61.2 million tonnes of chemicals products entered Brazil in Q1; in turn, the country’s industry exported 14.6 million tonnes. Abiquim proposals for higher import tariffs Product Current import tariff Proposed tariff Expandable polystyrene, unfilled, in primary form 12.6% 20% Other polystyrenes in primary forms 12.6% 20% Carboxymethylcellulose with content > =75%, in primary forms 12.6% 20% Other polyurethanes in liquids and pastes 12.6% 20% Phthalic anhydride 10.8% 20%  Sodium hydrogen carbonate (bicarbonate) 9% 35% Copolymers of ethylene and alpha-olefin, with a density of less than 0.94 12.6% 20% Other orthophthalic acid esters 11% 20% Other styrene polymers, in primary forms 12.6% 20% Other silicon dioxides 0% 18% Other polyesters in liquids and pastes  12.6% 20% Commercial ammonium carbonates and other ammonium carbonates 9% 18% Other unsaturated polyethers, in primary forms 12.6% 20% Polyethylene terephthalate, with a viscosity index of 78 ml/g or more 12.6% 20% Phosphoric acid with an iron content of less than 750 ppm 9% 18% Dinonyl or didecyl orthophthalates 11% 20% Poly(vinyl chloride), not mixed with other substances, obtained by suspension process 12.6% 20% Poly(vinyl chloride), not mixed with other substances, obtained by emulsion process 12.6% 20% Methyl polymethacrylate, in primary form  12.6% 20% White mineral oils (vaseline or paraffin oils) 4% 35% Other polyetherpolyols, in primary forms 12.6% 20% Other unfilled epoxy resins in primary forms 12.6% 20% Silicon dioxide obtained by chemical precipitation 9% 18% Acrylonitrile-butadiene rubber in plates, sheets, etc 11% 35% Other organic anionic surface agents, whether or not put up for retail sale, not classified under previous codes 12.6% 23% Phenol (hydroxybenzene) and its salts 7% 20% Fumaric acid, its salts and esters 10 ,8% 20% Plasticizers and plastics 10 ,8% 20% Maleic anhydride 10 ,8% 20% Adipic acid salts and esters 10 ,8% 20% Propylene copolymers, in primary forms 12.6% 20% Adipic acid 9% 20% Unfilled polypropylene, in primary form 12.6% 20% Filled polypropylene, in primary form 12.6% 20% Methacrylic acid methyl esters 10 ,8% 20% Other ethylene polymers, in primary forms 12.6% 20% Acrylic acid 2-ethylhexyl esters 0% 20% 2-Ethylexanoic acid (2-ethylexoic acid) 10. 8% 20% Other copolymers of ethylene and vinyl acetate, in primary forms 12.6% 20% Other unfilled polyethylenes, density >= 0.94, in primary forms 12.6% 20% Polyethylene with a density of less than 0.94, unfilled 12.6% 20% Other saturated acyclic monoalcohol acetates, c atom <= 8 10. 8% 20% Polyethylene with a density of less than 0.94, with filler 12.6% 20% Triacetin 10. 8% 20% Sodium methylate in methanol 12.6% 20% Stearic alcohol (industrial fatty alcohol) 12.6% 20% N-butyl acetate                              11% 20% Stearic acid (industrial monocarboxylic fatty acid) 5% 35% Alkylbenzene mixtures 11% 20% Organic, non-ionic surface agents 12.6% 23% Ammonium nitrate, whether or not in aqueous solution 0.0% 15% Monoethanolamine and its salts 12.6% 20% Isobutyl alcohol (2-methyl-1-propanol) 10.8% 20% Butan-1-ol (n-butyl alcohol) 10.8% 20% Styrene-butadiene rubber (SBR), food grade as established by the Food Chemical Codex, in primary forms 10.8% 22% Styrene                                9% 18% Hexamethylenediamine and its salts 10.8% 20% Latex from other synthetic or artificial rubbers 10.8% 35% Propylene glycol (propane-1, 2-diol) 10.8% 20% Preparations 12.6% 20% Linear alkylbenzene sulfonic acids and their salts 12.6% 23% 4,4'-Isopropylidenediphenol (bisphenol A, diphenylolpropane) and its salts 10.8% 20% Dipropylene glycol 12.6% 20% Butanone (methyl ethyl ketone) 10.8% 20% Ethyl acetate                                 10.8% 20% Methyl-, ethyl- and propylcellulose, hydroxylated 0.0% 20% Front page picture: Chemical production facilities outside Sao Paulo  Source: Union of Chemical and Petrochemical industries in the state of Sao Paulo (Sinproquim) Focus article by Jonathan Lopez Additional information by Thais Matsuda and Bruno Menini

30-Apr-2024

SINGAPORE (ICIS)–China's manufacturing activity expanded for a second month in April amid improved overseas demand, but the rate of expansion weakened amid higher production costs, official data showed on Tuesday. China’s April manufacturing purchasing manager's index (PMI) moderated to 50.4 in April from 50.8 in March, but remained in expansion territory, indicating that the recovery of industrial activity will continue into the second quarter, data from to the National Bureau of Statistics (NBS) showed. A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction. The production subindex rose to 52.9 in April from 52.2 in March, hitting a 13-month high, while both new orders and new export orders remained in expansion, indicating that the demand recovery seen in March "was not just a blip", Dutch banking and financial services firm ING said in a note. “Though economic activities continued to expand, more manufacturers are facing higher costs,” said senior NBS statistician Zhao Qinghe. “The new order index and new export order index for industries including automobiles and electrical machinery and equipment are both above 53, indicating domestic and foreign market demand in related industries has increased.” The employment sub-index was little changed but remained in contraction for the 14th consecutive month, as there continues to be a mismatch between hiring demand and the labor supply, it said. Separately, a joint private-sector survey conducted by Chinese media group Caixin and S&P Global of Chinese manufacturers rose to 51.4 in April from 51.1 in March, marking the sixth successive monthly improvement, with growth the most pronounced in 14 months. The April reading was the highest since February last year as manufacturers’ output and total new orders continued to grow, with the corresponding subindexes reaching new highs since May 2023 and February 2023, respectively. “Price levels remained low. Although the gauge for input costs reached a six-month high, the cost increase was limited," said Wang Zhe, senior economist at Caixin Insight Group. Improved supplier logistics in April led to shorter delivery times, encouraging manufacturers to increase purchasing and build larger inventories of raw materials and finished goods, he said. “China’s economic performance in the first quarter surpassed market expectations, with steady growth in manufacturing and a gradual recovery in consumption," Wang said. "Across different product categories, consumer goods were no longer the best performer as investment goods gained momentum in April with increased production and sales, showing signs of the improved downstream gradually benefiting upstream markets." Focus article by Nurluqman Suratman

30-Apr-2024

LONDON (ICIS)–Eurozone private sector activity continued to thaw in April, moving further into growth territory as a resurgent service sector offset a manufacturing industry sinking deeper into contraction. North-south divide eases as Germany, France condition improve Manufacturing sector weakens in eurozone, UK Input cost inflation likely to pressure European Central Bank The eurozone composite purchasing managers’ index (PMI) for the month firmed to 51.4, a substantial increase from 50.3 in March and the highest level in nearly a year, as the bloc continued to gradually lift out of a protracted downturn. A PMI score of above 50.0 signifies growth. The north-south divide that has characterised recent months, with Mediterranean nations firming while Germany and France remained mired in contraction, eased during the month, with more-broad-based momentum among key economies. Germany returned to growth during the month, while France came close to stabilising, according to PMI data provider S&P Global. Momentum also continued to build for the UK economy, which hit an 11-month high of 54.0, despite the manufacturing sector slipping back into recessionary territory at 49.1, with momentum also sinking for producers in the eurozone. At 45.6, the eurozone manufacturing sector PMI reading represented a four-month low and the 13th consecutive month of contraction, although the industry outlook was buoyed by signals of firmer demand driven by the global inventory cycle. Price pressures intensified slightly during the month as average input costs across the goods and services sector saw the fastest combined increase over the past year after cooling in March. Despite manufacturing sector input pricing remaining on contraction footing, the decline was the smallest in 14 months. Higher cost and sales price inflation is likely to be noted by the European Central Bank’s monetary policy committee, according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which helps to assemble the eurozone PMI dat. Odds are still strong for the first interest rate cuts to fall in  June, he added, but the price increases are likely to present a stronger challenge to the decision, and potentially slow the cadence of additional reductions. “The PMI figures are poised to test the ECB's willingness to cut interest rates in June. Accelerated increases in input costs, likely driven not only by higher oil prices but also, more concerningly, by higher wages, are a cause for scrutiny,” he said. “Concurrently, service sector companies have raised their prices at a faster rate than in March, fuelling expectations that services inflation will persist. Despite these factors, we expect the ECB to cut rates in June. However, we… expect a more cautious approach,” he added. Consultancy Oxford Economics also expects the first rate cut to come in June despite the growing evidence of stronger upward pressure on inflation. “The increase in output prices remains above its long-term average, driven by the services sector, but we do not think sticky services prices will prevent the ECB from cutting rates in June,” said Oxford senior economist Leo Barincou. Despite the ongoing disruption in the Red Sea, supply chains continued to tighten, with manufacturing supplier delivery times falling for the third consecutive month as a result of fewer shipping delays. A steep reduction in input purchases by eurozone manufacturers also eased pressure on logistics. Early second-quarter conditions point so far to a 0.3% expansion in eurozone GDP and a 0.4% uptick in for the UK compared to the first three months of the year, according to the data. Focus article by Tom Brown. Thumbnail photo: A statue of a bull outside the Amsterdam Stock Exchange, Netherlands (Source: Hollandse Hoogte/Shutterstock)

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

22-Apr-2024

SINGAPORE (ICIS)–Singapore's petrochemical shipments in March fell by 3.6% year on year to Singapore dollar (S$) 1.16 billion ($853 million), extending the 2% contraction in the previous month and weighing on overall non-oil domestic exports (NODX), official data showed on Wednesday. March non-electronic NODX down 23.2% year on year March manufacturing PMIs show continued expansion Singapore economy forecast to grow 1.0-3.0% in 2024 Overall exports of chemicals and chemical products in March fell by 37% year on year to S$3.54 billion, reversing the 5.8% expansion in February, Enterprise Singapore said in a statement. The country's NODX for the month fell by 20.7% – a much steeper decline from February’s 0.2% contraction – to S$14 billion because of a high base a year ago, with shipments to most major trading partners posting declines. March non-electronic NODX, which includes petrochemicals and pharmaceuticals, fell by 23.2% year on year to S$11.2 billion. Overall NODX to seven out of Singapore's top 10 markets fell in March, but shipments to Hong Kong, Taiwan and China rose. Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majors ExxonMobil and Shell. In the first quarter, the country’s economy grew by 2.7% year on year in the first quarter, accelerating slightly from the 2.2% expansion in the preceding quarter, according to official advance estimates. On a quarter-on-quarter seasonally adjusted basis, Singapore’s economy expanded by 0.1%, extending the 1.2% expansion in Q4. The manufacturing sector in Q1 grew by 0.8% year on year, moderating from the 1.4% expansion in the previous quarter. "Within the sector, output expansions in the chemicals, precision engineering and transport engineering clusters more than offset output contractions in the electronics, biomedical manufacturing and general manufacturing clusters," the Ministry of Trade and Industry (MTI) said. For the whole of 2024, Singapore's economy is expected to expand by 1.0-3.0%, compared with actual GDP growth of 1.1% growth in 2023, the ministry said. Manufacturing activity in Singapore improved in March, with the Singapore Institute of Purchasing and Materials Management (SIPMM) purchasing managers' index (PMI) inching up to 50.7, marking the seventh straight month of expansion. In contrast, a separate survey of private manufacturers by financial information and services provider S&P Global showed Singapore’s March PMI eased to 55.7 from 56.8 in February. Focus article by Nurluqman Suratman Thumbnail image: Singapore harbour and the Marina Bay Sands Hotel, 16 March 2023. (Franz Neumeier/imageBROKER/Shutterstock) ($1 = S$1.36)

17-Apr-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 5 April. NEWS Mexico’s automotive output falls nearly 13% in March Mexico’s automotive sector output fell by 12.75% in March, month on month, to just over 300,000 units, the country’s statistical office Inegi said on Wednesday. Sanitation framework, nascent LatAm lithium industry keeping Brazil’s chloralkali afloat – Abiclor Brazil’s chlorine and caustic soda sectors have kept afloat in better health than the wider chemicals industry as sanitation plans and new lithium exploitations across Latin America keep demand high, according to the director general at the country’s trade group Abiclor. Brazil’s chemicals, industrial output falls in February Brazil’s chemicals output fell in February by 3.5%, month on month, one of the largest falls among the subsectors measured, the country’s statistical office IBGE said on Wednesday. Petrobras ‘proactively’ engaging with Federal auditor about tolling contract with Unigel Petrobras continues to “clarify in a timely manner” all the information requested by the Federal auditor regarding its tolling contract with Unigel, a spokesperson for the Brazilian energy major said to ICIS on Tuesday. Brazil’s Unigel postpones Q4 results amid debt restructuring Unigel has postponed the publication of its Q4 and 2023 financial results as its debt restructuring is ongoing, the Brazilian chemicals and fertilizers producer said on Tuesday. MOVES: Brazil’s Unipar appoints Alexandre Jerussalmy as CFO Unipar has appointed Alexandre Jerussalmy as CFO and investor relations officer, effective immediately, the Brazilian chemicals producer said on Tuesday. Colombia’s manufacturing slows down in March on lower sales Colombia’s manufacturing output growth slowed down in March on the back of lower sales, although it marked its third month in expansion territory, analysts at S&P Global said on Monday. Brazil's manufacturing March output healthy on new orders, fueling job creation Brazil’s manufacturing continued expanding at pace in March on the back of a healthy new order book, prompting firms to increase workforces, S&P Global said on Monday. Mexico’s manufacturing steady in March but subdued US demand causes concern Mexico’s manufacturing output stayed stable in March but firms are getting increasingly worried about lower demand from the US, the key market for the country’s export-intensive manufacturers, analysts at S&P Global said on Monday. PRICING Lat Am PP domestic prices down in Argentina, Mexico on lower US PGP spot prices, weak demand Domestic polypropylene (PP) prices dropped in Argentina and Mexico on the back of lower US spot propylene prices and weak demand. In other Latin American countries, prices remained steady. LatAm PE international prices steady to lower on lower US export offers International polyethylene (PE) prices were assessed as steady to lower on the back of lower US export offers. Ethanol prices in Brazil experiencing surges during April The prices of hydrous ethanol surged during the initial week of April, propelled by consistent strong sales in Brazil. Unigel to raise PS April prices in Brazil Unigel is seeking an 11% price increase on all grades of polystyrene (PS) sold in Brazil starting on 1 April, according to a customer letter. Innova seeks April PS price increase in Brazil Innova is seeking a real (R) 1,000/tonne ($200/tonne) price increase, excluding local taxes, on all grades of polystyrene (PS) sold in Brazil starting on 1 April, according to a customer letter.

08-Apr-2024

LONDON (ICIS)–Encouraging global manufacturing news this week included signals that new orders and output are continuing to expand as industries pull out of the lengthy trough. World manufacturing output increased in March for the third successive month, a sub index of the JP Morgan Global Manufacturing PMI indicated. The rate of growth accelerated to a 21-month high. The new export business trend improved and, while the index showed continued contraction, it did move closer to stabilisation with contraction at a similar pace to that shown in June 2022. The global manufacturing purchasing manager’s index (PMI) stood at 50.6 in March from 50.3 in February climbing to its highest reading since July 2022. Overall operating conditions have improved in each of the past two months, JP Morgan and the index compiler, S&P Global said. Chemical producers are in desperate need of demand growth as they seek to raise operating rates and respond effectively to the inevitable pull away from the downturn. Anticipating the pace of recovery is all important if profitability is to be underpinned effectively. Manufacturing growth has accelerated in the US and China although India led the rankings in March. The euro area is improving but remains a drag on the global rating. JP Morgan still talks of the steep downturn in Germany and Austria, a further contraction of manufacturing in France and a fresh decline in Ireland. Europe’s struggles to match output to demand were particularly tough last year. Data from Germany’s VCI show that Europe remained hardest hit by the global industrial crisis. Production was lowered in almost all industrial sectors. Consumer facing industries were hit by weak consumer consumption and higher interest rates impacted the capital goods and construction industries. In response to weaker demand regionally and globally and, particularly in the face of the energy crisis brought on by Russia’s invasion of Ukraine, European chemical producers have been forced to cut back. The VCI data show that chemicals production in the EU was moving sideways from 2020 and that production was reduced in 2022 because of much higher raw material and energy costs. 2023 brought little relief because of the demand downturn and certainly no turnaround towards the year end. “Production stagnated at a low level. A dynamic recovery cannot be expected,” the VCI said in March. It also noted at the time that demand was falling to a low level because of global weakness in industry, so the shift to manufacturing industry growth globally comes as welcome news. Unfortunately, the times when European chemical producers could look forward to taking full advantage of global industrial growth are probably in the past. Sector companies operate in a high cost environment which puts them at a competitive disadvantage compared to producers in other parts of the world. EU chemicals trade with the world’s largest consumer and producer of chemicals, China, was growing until 2022 but has declined since. Meanwhile China chemicals trade with Europe grew strongly from 2020, peaking in 2022. The chemicals trade balance turned negative in 2021 and was most strongly negative on a segment basis in 2022. The polyolefins picture is different with northeast Asia an important market for product from the EU plus the UK, as ICIS Supply and Demand Database information shows. But, as China continues to add capacity and moves towards much greater self sufficiency, the trade picture can be expected to change with opportunities diminishing. Splitting out petrochemicals the situation looks worse, although the EU trade deficit in petrochemicals with China retracted last year. Additional production capacities in China and relative domestic demand weakness had opened up opportunities for export to Europe while European prices remained relatively high. Europe will struggle to regain lost trade with the more dynamic industrial economies given its still-high cost base. The build up of capacities globally for some products put producers operating in high cost environments with older facilities at a distinct competitive disadvantage. If global manufacturing can continue in an expansionary phase and if more parts of the world move into that phase, then chemicals will benefit. The more cost efficient producers, however, would be expected to benefit disproportionately in the early phases at least of this industrial expansion. Insight by Nigel Davis ICIS Supply and Demand Database trade data visualisation by Yashas Mudumbai and Miguel Rodriguez-Fernandez

03-Apr-2024

SINGAPORE (ICIS)–Manufacturing activity in Singapore improved in March, boosted by higher export orders, but may remain weighed down in the near term by global economic weakness. The country’s purchasing managers' index (PMI) inched up to 50.7 in March, marking the seventh straight month of expansion, according to data from the Singapore Institute of Purchasing and Materials Management (SIPMM). A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction. Among sub-indices, new export orders rose to 51.4 in March from 51.3 in February, while output increased to 50.7 from 50.4 a month earlier. Supplier deliveries’ sub-index was the only one that continued to shrink in March, with a reading of 49.9 in March from 49.7 in February. Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majos ExxonMobil and Shell. Conditions were "possibly exacerbated by the disruptions in the Red Sea owing to geopolitical conflicts but the extent of contraction has been narrowing gradually", UOB Global Economics & Markets Research said in a note on Wednesday. In a separate survey of private manufacturers, Singapore’s March PMI eased to 55.7 from 56.8 in February, according to financial information and services provider S&P Global. Despite slowing from February, the rate of expansion remained strong and marked the 13th successive month in which business conditions improved in Singapore's manufacturing private sector. New orders for Singaporean goods and services increased for the 15th straight month and at the fastest pace since May 2023, S&P Global said. "This led to private sector output expanding at the joint-fastest pace since October 2022. Companies in the wholesale & retail sector reported the fastest increases in both new orders and output among the monitored segments," it said. MANUFACTURING RECOVERY TO BE UNEVEN While year-over-year comparisons may show gains due to the downturn in 2023, manufacturing momentum in the first half of 2024 could remain weak, UOB said. High global interest rates will continue to hamper external demand, with overall sentiment weighed down by property sector woes in China, the world’s second-largest economy. Supply chains may continue to face temporary disruptions due to geopolitical tensions in eastern Europe and the Middle East. A broader manufacturing recovery in Singapore, however, is possible in the second half of 2024 as central banks start easing monetary policy, fostering a rebound in investments and export demand. Focus article by Nurluqman Suratman Thumbnail image: A view of Brani terminal port in Singapore, 22 November 2023. (HOW HWEE YOUNG/EPA-EFE/Shutterstock)

03-Apr-2024

LONDON (ICIS)–Eurozone manufacturing sector activity slumped further in March as a regional divide in performance continued to widen, with activity in the Mediterranean expanding and northern member states remaining mired in negative territory. The sector's purchasing managers’ index (PMI) slipped to 46.1 compared with 46.5 in February, a three-month low, as producers continued to reduce input purchases despite a decline in supply constraints from Red Sea freight disruption, according to S&P Global data. A PMI score of above 50.0 signifies growth. Growth expectations remained weak despite a gradual uptick in producer confidence as inflation continued to drop, driving hopes for rate cuts from key central banks and a stronger economic rebound. The overall eurozone sector PMI masks a sharp divergence in fortunes between key member states. Greek manufacturing activity hit a two-year high at 56.9, with Spanish and Italian production also increasing month on month. Production in the Republic of Ireland and the Netherlands was muted at near standstill territory, with output in France and Austria languishing at 46.2 and 42.2 respectively. The weakest performing key eurozone economy during the month was Germany, where output fell to 41.9, the weakest since late 2023. “The eurozone's manufacturing sector usually runs on several cylinders, mainly the Euro-4 countries of Germany, France, Italy and Spain. Together they account for three quarters of the eurozone's manufacturing industry,” said  Cyrus de la Rubia of Hamburg Commercial Bank, which helps to compile the PMI survey data. “We currently have the unusual situation that two cylinders, Germany and France, are more or less out of action,” he added. UK manufacturing showed signs of a recovery in March, jumping to 50.3 from 47.5 in February, and from a flash estimate of 49.9, marking the first time the sector has been in growth territory since July 2022. New orders and supplier delivery times continued to improve, while employment and stocks of purchases deteriorated, albeit at a gentler pace than in February. Domestic demand drove new business inflows, with export flows remaining muted. “Production and new orders returned to growth, albeit only hesitantly, following year- long downturns, with the main thrust of the expansion coming from stronger domestic demand,” said Rob Dobson, director at S&P Global Market Intelligence. Manufacturing PMI Country March 2024 February 2024 Austria 42.2 43.0 Ireland 49.6 52.2 Spain 51.4 51.5 Netherlands 49.7 49.3 Italy 50.4 48.7 France 46.2 47.1 Germany 41.9 42.5 UK 50.3 47.5 Greece 56.9 55.7 Thumbnail photo: A coal-fired power station in Mannheim, Germany. Source: Arnulf Hettrich/imageBROKER/Shutterstock

02-Apr-2024