Engineering plastics (POM, PBT)

SAO PAULO (ICIS)–The founder of Unigel, aged 87, is actively fighting the Brazilian chemicals and fertilizers producer’s most decisive battle, one for its survival, as it tries to restructure its debts, one step away from bankruptcy. Henri Armand Szlezynger, who founded Unigel in 1966, has fought several financial battles before, and overcame them. But the current struggle is the most decisive yet because it could see him and his family losing their controlling stake at the producer if investment funds were to take over. Last week, Brazilian financial daily Valor reported the country’s fund IG4 was seeking to acquire a controlling stake in Unigel, citing several unnamed sources. IG4 and Unigel had not responded to a request for comment at the time of writing. Unigel producers styrenics and is one of Brazil’s few fertilizers producers, a sector it entered just a few years ago and which could prove to have been the reason for the company’s threatened demise. BELGIUM-BORN, BRAZIL-MADEIf ICIS had a profile section portraying chemicals industry people, Szlezynger would have featured in it several times. Szlezynger was born to a Belgian Jewish family in 1936 which moved to Brazil when he was just three years old as Europe was entering the abyss of war. The family had a good position and sent Szlezynger to the best schools in Brazil. After that, he went to the US to study chemical engineering at the Massachusetts Institute of Technology (MIT). Aged only 30, he founded Unigel. From there, on he went to become one of Brazil’s richest citizens, with Forbes estimating his net worth at Brazilian reais (R) 17.2 billion ($3.3 billion) in 2022. From its foundation 58 years, Szlezynger still controls the company, and his presence cannot go unnoticed: he still goes to Unigel’s headquarters in Sao Paulo every weekday, according to previous profiles of him published in the press. A remarkable fate for an 87-year-old. Unigel’s frantic 2023 was marked by high natural gas costs which made its fertilizer plants – and the company as a whole – a loss-making enterprise, a situation it tried to fix by knocking on the door of Brazil’s state-owned energy major Petrobras. With a government-appointee CEO, to say Petrobras is to say Luiz Inacio Lula da Silva, a President who has repeatedly said that Brazil must reduce its dependence on fertilizer imports. In Brazil’s economy, entrepreneurs and politicians tend to have close relationships, and Szlezynger has recurrently ticked the right boxes to get the support his company may have needed as the years and crises went by. In the north, stronghold of Lula’s Workers’ Party (PT), he has not shied away from showing sympathy with PT politicians. In southern and generally conservative-governed states, Szlezynger has had good relationships with politicians from the right. However, the business-politics link did not work for Unigel’s current downturn. Conversations with Petrobras were going nowhere while the company continued to lose millions every month. In a way, Unigel’s annus horribilis of 2023 ended slightly earlier, in October, when everything changed: the company failed to pay a coupon on one of its bonds, effectively defaulting on its debt obligations. Brazilian financial regulations give breathing space for companies in debt stress to negotiate their obligations with creditors, and Unigel is currently undergoing that process. Earlier in April, it said negotiations were progressing, without disclosing more detail. Jonathan Szwarc, head of Latin America credit research at Debtwire, a data firm specialized on leveraged capital markets, told ICIS that Szlezynger would not easily give up his controlling interest, but added the current crisis would be difficult to circumvent. “Unigel has had financial woes before and overcame them, but this time is quite different: once you fail to pay a coupon, things can go down very quickly. You are not meeting your debt obligations: a default,” said Scwarz. “The company has now an initial agreement with some of its creditors, but it would need to convince 50% plus one of them for it to be effective: we don’t know if that is the case. That’s where they are: seeking adherents to that initial agreement to bring it before a judge, who must approve the Extrajudicial Reorganization Process.” Will Szlezynger, after 58 successful years, be forced by circumstances to call it a day? Not that fast. Szwarc said that, in Unigel’s case, sentimental issues could be as strong as economic issues. “If they are up against it, Szlezynger may decide to reluctantly sell the company, but I really think that is the last option he contemplates," he said. "If Unigel was to be sold to a fund, I imagine he would prefer a Brazilian fund, with whom he would speak the same language business-wise, than a foreign fund." As an example, the analyst mentioned negotiations to raise $150m just in January, in the midst of the debt restructuring negotiations, through a group led by US investment fund Pimco, which is also the largest bondholder, according to reports at Brazilian financially daily Valor at the time. That deal, which could have given Unigel breathing space amid its restructuring, fell through because it would have brought closer what Szlezynger has fiercely opposed: the funds taking away from the founding family a controlling interest. “The company’s assets are good. But Unigel was very unlucky in terms of the petrochemicals and fertilizers downcycles combined. You must keep in mind that just in 2022 Unigel’s bonds were trading well over 100% [generating returns],” said Szwarc. “The assets will continue operating in any case: either under a new ownership structure, in which the Szlezynger may still have a stake even if it’s not the controlling stake, or under a potential bankruptcy, when the assets could be sold separately.” The analyst concluded saying he did fail to understand how Petrobras – the Lula-led government, effectively – had not paid more attention to Unigel, whose production of styrenics as well as fertilizers Brazil badly needs if the country is to reduce its dependence on imports. BRAZILIAN SAGAAmid all Unigel things that occurred in 2023, one of the most fascinating was its very public charge against Petrobras in November, when the company announced it would be shutting down one fertilizer plant in Camacari, state of Bahia, due to Petrobras’ “unbearable” pricing policy for natural gas. It was part of Unigel’s strategy, however, as it became clear later in December when the two firms signed a tolling agreement for the fertilizers assets, in what seemed to be Petrobras finally giving in on natural gas pricing. A Brazilian economic-political saga could not just end there. In March, Unigel announced it was halting its fertilizers production, still mentioning high natural gas prices, while Brazil’s Federal Audit (TCU in its Portuguese acronym) raised concerns about the tolling deal, which would have meant losses for Petrobras. As a state-owned company, Petrobras is audited by TCU civil servants. And as a company, the purpose of it is to make a profit: a sweet deal for Unigel on gas would not be following that logic, the auditors said. Adding to it all, Petrobras said earlier in April it was re-entering the fertilizers sector by re-starting a large fertilizer plant in Araucaria, state of Parana, idled since 2020. The energy major said fertilizers were now part of its strategic plan to 2028, adding it would therefore focus on “assets that already belong” to it. Unigel’s fertilizers plants at the centre of the story, Camacari and Laranjeiras, state of Sergipe, were a lease from Petrobras signed in 2019, when the prior Brazilian Administration wanted Petrobras’ to focus on crude oil. It was then when Unigel decided to go big on fertilizers. What does seasoned Szlezynger think about that move now? He would not be too hard on himself if he thinks it was a bad move indeed, which is putting at risk his nearly six decades business legacy. Petrobras returning to the fertilizers sector is, on the other hand, an expected move by Lula’s cabinet, who in general wants to expand the role of the state in the economy, or at least in those sectors where the country's trade deficit is large, such as fertilizers. The two plants leased to Unigel may end up, therefore, being run by Petrobras again at some point. Unigel and its relentless founder will need to fend for themselves amid the largest financial crisis ever hitting the company. At the end of the day, Lula's key constituency and the PT party's cadres would have had a hard time to digest the state was going to give strong and direct support to a private company owned by one of the richest citizens in the land. The Unigel saga continues and, whatever the next act is, Szlezynger is still likely to have a role in it. Insight by Jonathan Lopez

29-Apr-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 26 April. NEWS Mexico's potential ADDs on China plastics no panacea amid wider stiff competition – Alpek CEO Mexico’s potential antidumping duties (ADDs) on several China-produced plastics will not by itself bring the Mexican market back to balance as “stiff competition” is coming from many other fronts as well, the CEO at chemicals producer Alpek said on Wednesday. INSIGHT: Latin America’s nascent EV market increasingly a Chinese affair Latin America’s take-up of electric vehicles (EVs) has started to gain momentum, said the International Energy Agency (IEA) this week, with Chinese producers drawing customers with sharply lower prices than western, established brands. Mexico’s Alpek Q1 earnings fall but volumes up on shy demand recovery Alpek’s first-quarter earnings and sales fell year on year but improved quarterly on a slight demand recovery, particularly for polyesters, the Mexican chemicals producer said on Tuesday. PRICING LatAm PP domestic prices drop in Argentina on poor demand Domestic polypropylene (PP) prices dropped in Argentina this week. Despite producer prices being unchanged, local distributors have lowered prices due to poor demand. Market participants have reported a 40-60% drop in sales in the past few weeks. LatAm PE domestic prices down in Argentina on sluggish demand After more than a year, domestic polyethylene (PE) prices in Argentina were assessed lower due to sluggish demand. Argentina January PE imports down 32% month on month Argentina polyethylene (PE) imports decreased by 32% month on month in January, totaling 19,106 tonnes, according to the latest figures from the ICIS Supply & Demand database.

29-Apr-2024

HOUSTON (ICIS)–Global shipping container rates are starting to moderate, the Panama Canal expects to increase transits in May, and liquid chemical tanker spot rates are mixed, highlighting this week’s logistics roundup. CONTAINER RATES Global shipping container rates are plateauing as shipowners have implemented blank sailings to control capacity and as some carriers have announced general rate increases (GRIs). Freight forwarder Flexport said in an update on 25 April that GRIs announced for ex-Asia westbound routes are expected to stick amid high utilization from carriers. Flexport noted three factors that supported the increases – a slight increase in demand because of the May labor holiday in China; reduced capacity from the increase in blank sailings; and increased congestion at ports and equipment challenges from certain carriers. Participants in the US polyethylene terephthalate (PET) told ICIS they are seeing higher freight costs as shipping in the Red Sea and now the Strait of Hormuz continues to be disrupted. Rate increases have also been announced for cargo heading to the Middle East region. Global container shipping major Mediterranean Shipping Company (MSC) announced $200/TEU (20-foot equivalent unit) effective 17 May for all cargo leaving the US and Puerto Rico going to the Middle East. Global container rates from supply chain advisors Drewry were flat this week, as shown in the following chart. Rates from North China to the US Gulf also held steady, although at levels higher than were seen in December before the attacks on commercial vessels in the Red Sea, as shown in this chart from ocean and freight rate analytics firm Xeneta. 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 CHEM TANKERS US chemical tanker freight rates assessed by ICIS were mixed this week with rates rising for parcels from the US Gulf (USG) to Brazil and India. However, rates from the USG to ARA decreased and all other trade lanes held steady. From the USG to Brazil, this trade lane has had limited availability for H1 May loading. However, mid and H2 May have showed a few more options with an outsider on berth currently to South America. This could place downward pressure on this route. Although COA nominations are still up in the air, a few regular owners hope to have more space and a broker says that time will tell when this space fills up. From the USG to Asia, regular players have said they are full on most of their positions through this time, which has placed some upward pressure on smaller parcels as it has become harder to find space for them. Currently, the USG to Asia market appears to be in a fragile balance between the interest in larger slugs, and the growing number of players looking for stainless steel vessels in the USG for May, according to a broker. BALTIMORE BRIDGE The Unified Command (UC) announced the opening of a new channel at the Port of Baltimore that has allowed ships trapped inside the port to leave. The Fort McHenry Limited Access Channel, which runs the length of the northeast side of the federal channel, provides additional access to commercially essential traffic. The limited access deep draft channel has a controlling depth of a minimum of 35 feet, a 300-foot horizontal clearance, and a vertical clearance of 214 feet. Starting Monday, April 29, operations to remove the Dali will require suspension of transits through the Fort McHenry Limited Access Channel. Once deemed safe, the channel will reopen for commercial traffic. PANAMA CANAL 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. Wait times for non-booked vessels ready for transit edged lower for northbound vessels and rose for southbound vessels this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 3.0 days for northbound traffic and 2.9 for southbound traffic. The Panama Canal Authority (PCA) said current forecasts indicate that steady rainfall will arrive later this month and continue during the rainy season, which would allow the PCA to gradually ease transit restrictions and traffic could return to normal by 2025. Please see the Logistics: Impact on chemicals and energy topic page With additional reporting by Melissa Wheeler and Kevin Callahan

26-Apr-2024

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Flake, food-grade pellet sellers looking at higher May offers Buyers considering more PET volumes, looking at non-EU R-PET imports Mixed coloured flake price views vary for May

26-Apr-2024

MUMBAI (ICIS)–India’s Bhansali Engineering Polymers Ltd (BEPL) plans to nearly triple its acrylonitrile butadiene styrene (ABS) capacity at Abu Road in the northwestern Rajasthan state to 200,000 tonnes/year by March 2026. The plant’s current capacity is 70,000 tonnes/year. The company has determined that a bigger expansion than initially planned is possible after awarding work on the expansion to Japan’s Toyo Engineering, it said in a filing to the Bombay Stock Exchange (BSE) on 20 April. In January 2024, BSEL had proposed a capacity expansion to 145,000 tonnes/year. “After [a] detailed analysis [by Toyo Engineering] it was concluded that overall ABS capacity of 200,000 tonnes/year can be achieved and will be a better option compared to the earlier proposal,” BEPL said. The expansion project will be funded through internal accruals, it said, adding that cost of the expansion project will be finalised by June.

24-Apr-2024

TORONTO (ICIS)–Following the conclusion of a consultation period, Canada’s federal government has published a formal notice in the Canada Gazette for its planned Federal Plastics Registry. The registry will require plastic resin manufacturers, producers of plastic products and service providers to annually report on the amounts and types of plastic they put out in the market, and where the plastic ends up. Environment minister Steven Guilbeault said at a webcast press event on Monday that the registry would create an inventory of plastics data, with the objective of providing transparency about the production, distribution, sale, use and disposal of plastics in Canada. Industry knew what kind of plastics is being produced, to whom it is sold, and how it is used, the minister said. The registry, in turn, would put this information into one place and make it accessible to the public, researchers and non-governmental organizations, enabling them to track plastics production and plastics use, he said. The registry would have a similar role in fighting plastic pollution as the annual greenhouse gas (GHG) inventory reports the government uses in combatting emissions, he said, adding that without this information it was hard to tackle these challenges. The first phase of reporting to the plastics registry’s IT system is due to begin on 29 September 2025. UN PLASTICS POLLUTION TREATYIn related news, delegates from more than 170 countries on Tuesday gathered in Ottawa for the fourth session of the UN’s Intergovernmental Negotiating Committee on Plastic Pollution (INC-4) to develop an international legally binding treaty on containing plastic pollution. The event runs from 23-29 April. German chemical producers’ trade group VCI and Chemistry Industry Association of Canada (CIAC) said they are supporting the fight against plastics pollution. VCI is looking to INC-4 and a subsequent final INC-5 to be held in South Korea in November for a global commitment to a circular economy, in which plastic products are reused or recycled, rather than ending up as waste in the environment, it said. At the same time, VCI stressed the benefits of plastics. An across-the-board "demonization" of plastics would end up harming the climate and the environment, rather than helping it, said VCI director general Wolfgang Grosse Entrup. “A sustainable future requires plastics," he said and pointed, as examples, to plastics used in wind turbines, electric vehicles (EV) and packaging – applications in which plastics help avoid carbon dioxide (CO2) emissions, he said. Likewise, CIAC vice president of policy Isabelle Des Chenes told media in a webcast event that plastics, for example, help preserve food. "There's a lot of plastic and there's a lot of plastic for a reason," she added. Additional reporting by Tom Brown Thumbnail photo of environment minister Steven Guilbeault; photo source: government of Canada

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

SINGAPORE (ICIS)–ICIS analyst Sijia Li and senior industry analyst Joanne Wang discuss developments in China's polyolefins market. ICIS experts will be available at ChinaPlas, a major annual plastics and rubbers exhibit in Asia, which runs in Shanghai on 23-26 April.

22-Apr-2024

HOUSTON (ICIS)–Costs for shipping containers from Asia to South America are soaring while rates are plummeting along the other major trade lanes and Maersk will resume transits through the Panama Canal after administrators said they expect to be back to normal in 2025, highlighting this week’s logistics roundup. ASIA-SOUTH AMERICA CONTAINER RATES Rates for shipping containers from Asia to the US and Europe continue to fall, but rates from Asia to South America are spiking, according to data from ocean and freight rate analytics firm Xeneta and as shown below. Market participants said space along the Asia-South America route has tightened as China is exporting a lot of electric vehicles (EVs) to Brazil. A market participant told ICIS that Chinese automaker BYD has booked more than 10,000 containers to ship EVs to Brazil in April. Autos are typically transported using roll-on, roll-off (RoRo) ships that are designed to carry wheeled cargo. But the surge in EV imports from China has taken up most of the RoRo capacity, forcing China to send autos in containers, which is more expensive. A 20-foot shipping container can hold one or two vehicles, and a 40-foot container can hold up to four standard-sized cars, according to IncoDocs, a shipping solutions provider. ASIA-US CONTAINER RATES FALL Rates from east Asia and China to both US coasts continue to fall, along with rates from Asia to Europe, as shown in the following charts. Asia-US rates from online freight shipping marketplace and platform provider Freightos were largely steady this week, suggesting to the company's head of research that rates might be nearing a floor. Judah Levine, head of research at Freightos, said if diversions continue into the Q3 peak season months, shippers can expect rates to increase relative to this floor. STRAIT OF HORMUZ Global shippers are watching the situation in the Gulf of Hormuz after Iran’s Revolutionary Guard Corps (IRGC) seized a container ship operated by Mediterranean Shipping Co (MSC) near the Strait. "If attacks like this one continue, broaden, or Iran moves to completely close the strait, Middle East container flows would feel the strongest impact," Levine said. A closure would see ports in Kuwait, Iraq and most of the United Arab Emirates (UAE) become inaccessible. Saudi Arabia, with access to their Red Sea port access already challenged, would see their Gulf port access cut off as well. "These disruptions would also impact container hubs in India some of which are part of services that connect south Asia and the Middle East," Levine said. 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. PORT OF BALTIMORE The Unified Command (UC) continues to remove containers from the Dali and clear wreckage from the collapsed bridge at the entrance to the Port of Baltimore. The US Army Corps of Engineers (USACE) expects to open a limited access channel 280 feet wide and 35 feet deep by the end of April, and are aiming to reopen the permanent, 700-foot-wide by 50-foot-deep federal navigation channel by the end of May, restoring port access to normal capacity. Source: Key Bridge Response 2024 LIQUID CHEM TANKERS US chemical tanker freight rates assessed by ICIS were stable to lower this week with rates for parcels from the US Gulf (USG) to Rotterdam and the USG to Brazil unchanged. However, rates from the USG to Asia ticked lower and all other trade lanes held steady. On this route, there is no shortage of glycol enquiries. From the USG to Rotterdam, there are bits of part cargo space still available for April. Most of the outsiders’ vessels that were on berth have already sailed, and only the regulars remain at this time as they push tonnage availability. Freight rates are now expected to remain steady for the time being. PANAMA CANAL Wait times for non-booked vessels ready for transit edged higher for northbound vessels and were unchanged for southbound vessels this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times last week were 0.9 days for northbound traffic. The Panama Canal Authority (PCA) said current forecasts indicate that steady rainfall will arrive later this month and continue during the rainy season, which would allow the PCA to gradually ease transit restrictions and traffic could return to normal by 2025. Global container shipping major Maersk said it will resume Panama Canal transits for its OC1 service beginning 10 May, ending its “two-loop” setup it established in January because of transit restrictions brought on by a persistent drought. Please see the Logistics: Impact on chemicals and energy topic page Additional reporting by Bruno Menini and Kevin Callahan

19-Apr-2024

SAO PAULO (ICIS)–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. Tim Knavish added after PPG announced it was seeking to divest its US and Canada architectural operations, it has recorded more interest from potential buyers than expected, but “no numbers have hit our desk yet". Late on Thursday, PPG said its sales fell in the first quarter as European demand continued to be in the doldrums, but its earnings surged as input costs had fallen considerably. The company expects an overall improvement in industrial production globally in the second half of 2024. “We just have to get through the second quarter,” the CEO said, speaking to reporters and chemical equity analysts on Friday. As a paints and coatings producer, PPG's operations are petrochemicals-intensive. Among many others, one of its key raw materials is titanium dioxide (TiO2). COMING OUT OF THE DOWNTURNWhile Europe’s industrial downturn has been the steepest as the region took the largest hit from sharply higher natural gas prices after the Russian invasion of Ukraine, the US performance has been lacklustre. Amid overall economic growth, manufacturing has been the sick man of the mix for many months. That may have started to turn in March, with official and private bodies’ statistics showing growth in US manufacturing at last, and manufacturers optimistic for the months ahead. “We expect our sales volumes to continue recovering for the remainder of 2024…. We are only 19 days into the month, that’s only a sixth of the second quarter, but we are comfortable with the order book and shipments so far this quarter,” said Knavish. “We have been speaking to our key end-users in the past weeks and they are all saying the same thing about Q1 and Q2, but we are all expecting a return to more normal growth rates in H2 – we just have to get through Q2.” In Europe, however, some key markets such as France and the Nordics have yet to start any meaningful recovery, with sales there slower than the company was expecting, the CEO said. Despite this, in the eastern economies – with more emerging markets characteristics than the European western economies – there has been a notable improvement. “We are seeing green shoots in the east, where we have a strong position, so that gives optimism. We are also seeing that the deco [decorating] segment in those hard-hit countries [in Europe] is also bouncing back from the bottom, so we don’t expect it to get worse,” said Knavish. “The recoveries in the east, they are not the largest individually but when you add them together, they are an important part of our portfolio, countries such as Poland, Romania, Hungary or Czechia: we do see some green shots there.” However, he added that they were not “naive enough” to believe there will be a V shape recovery in Europe. ARCHITECTURAL DIVESTMENTAt the end of February, PPG announced it was seeking alternatives for its US and Canada architectural coatings business, which has been a drag on profits and sales volumes. The company said at the time it would study whether the division could be divested, be set as a standalone entity, or be part of a joint venture. The CEO did not give much away on Friday, saying it was early on, but the company was positively surprised with the level of interest, adding there had been “minimal if any” disruption to the daily operations of the division since the announcement. “There is a lot of chatter [about this]. But we are engaging key customers, employees, and engaging our owners. We expected strong interest, because of the strength of the brands and assets … The interest has been even higher than what we expected. We feel good right now,” said Knavish. “Until the numbers start coming in, and we can look at what is best for shareholder value creation, it is difficult to say [what the likely outcome will be]. We’ll have a much better view in another quarter or so.” INDIA TAKING OFFKnavish ended with an interesting reflection about India. Indians are about to start what is famously the largest democratic process in the world, which will end in June. Current Prime Minister Narendra Modi is widely expected to win a resounding third term in the general election, despite many analysts warning about increasing tensions between Hindus and Muslims, who are India’s largest minority, with 175 million people. But the key to Modi’s expected victory may well be all about the economy. “I have been going to India for 25 years. There has always been the talk of higher civil engineering works, higher industrial production [but it never seemed to come to fruition],” said the CEO. “Now, all that is happening, and the development is very noticeable for someone who has been going there regularly.” Front page picture: PPG's headquarters in Pittsburgh, in the US state of Pennsylvania Source: PPG Additional reporting by Deniz Koray

19-Apr-2024