Polypropylene (PP)

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 12 April. NEWS Argentina’s inflation up to 288% in March, but central bank cuts rates on ‘pronounced slowdown’Argentina’s annual rate of inflation rose to 287.9% in March, up from 276% in February, the country’s statistical agency Indec said on Friday. Argentina to scrap import duty on urea and UAN fertilizer In Argentina, the government plans to remove import duties on urea and urea ammonium nitrate (UAN), which are currently at 5.4% and 3.6% respectively, said Economy Minister Luis Caputo on X, formerly Twitter. Brazil’s inflation falls below 4% in March Brazil’s annual rate of inflation fell to 3.93% in March, down from 4.50% in February, and its lowest reading since June 2023, the country’s statistical agency IBGE said on Wednesday. Brazil’s Unigel ‘vehemently’ denies irregularities in Petrobras contract Unigel has “vehemently refuted” the existence of any irregularity in its tolling contract with Petrobras for two fertilizers plants, the Brazilian chemicals producer said on Wednesday. Mexico’s inflation down to 4.2% in March Mexico’s annual rate of inflation fell in March to 4.2%, down from 4.40% in February, the country’s statistics agency Inegi said on Tuesday. Argentina PVC sector faces headwinds amid infrastructure investment reductions Argentina polyvinyl chloride (PVC) sector faces challenges as the government reduces infrastructure investments in 2024, with an estimated 7.5% decrease in projects. 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. PRICING LatAm PP domestic prices fall in Chile, Mexico on competitive offers from abroad, lower US spot PGP prices Domestic prices fell in Chile, Mexico due to competitive offers from abroad and lower US spot propylene costs. In other Latin American (LatAm) countries, prices were unchanged. LatAm PE international prices stable to down on lower US export prices International polyethylene (PE) prices were assessed as stable to down across Latin American (LatAm) countries on the back of lower US export prices. Weather conditions start 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.

15-Apr-2024

HOUSTON (ICIS)–Shipping container rates continue to fall, liquid chemical tanker rates are stable to softer, and the bridge collapse at the Port of Baltimore has led to longer delivery times for imports, highlighting this week’s logistics roundup. CONTAINER RATES Rates for shipping containers from east Asia and China to the US continue to fall along with average global rates as capacity remains ample to handle the longer routes as commercial vessels continue to avoid the Suez Canal. Supply chain advisors Drewry said average rates ticked lower this week but remain 64% higher than the same week a year ago, as shown in the following chart. Rates from Asia to the US and Europe have also continued to fall, as shown in the following chart. Drewry said it expects a minor decrease in Transpacific spot rates and for stability along the Transatlantic and Asia-Europe trade lanes. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates along the US East Coast have fallen since the collapse of the Key Bridge in Baltimore, which signals to him that regional container traffic continues to flow. Levine said downward pressure will continue because of soft demand and it being the slow season for container trade, but that if threats persist in the Red Sea and commercial vessels continue to divert away from the Suez Canal, prices will remain above normal. 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. Source: Key Bridge Response 2024 While the closure of the port has not had a direct impact on the flow of chemicals, a market participant in Ohio said it is seeing delays in delivery times for imports as vessels originally destined to offload in Baltimore are getting re-routed to other ports. 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. As of 11 April, approximately 38 containers have been removed, the UC said, which is necessary for safe access to them begin removing the segments of the fallen bridge that lie across the ship’s bow. While marine traffic is still limited, 69 vessels have transited through since the creation of the temporary alternate channels. LIQUID CHEM TANKERS US liquid chemical tanker freight rates as assessed by ICIS held mostly steady this week – except from the US Gulf Coast (USG) to India. There is downward pressure on rates along the USG-Asia trade lane as several outsiders have come on berth for both April and May, adding to the available tonnage for completion cargos. On the other hand, rates from the USG to Rotterdam were steady this week even as space is limited and there are no outsiders on berth. Contract tonnage continues to prevail, with continued interest in styrene, MTBE and ethanol. There has been activity on the spot market, but owners are still working with COA customers to finalize their needs before committing to others. For the USG to South America trade lane rates remain steady with several inquiries for methanol widely viewed in the market. PANAMA CANAL Wait times for non-booked vessels ready for transit edged higher both directions this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times last week were 0.8 days for northbound traffic and 0.8 days for southbound traffic. Please see the Logistics: Impact on chemicals and energy topic page With additional reporting by Emily Friedman and Kevin Callahan

12-Apr-2024

LONDON (ICIS)—ExxonMobil Chemical France has announced plans to close its chemical production at Gravenchon, in Normandy in France in 2024, subject to the relevant government approvals. According to a press release, the steamcracker and related derivatives units and logistics facilities will be shut down. The company said the site has lost more than €500 million since 2018 and despite efforts to improve the site’s economics, it remains uncompetitive. According to the ICIS Supply & Demand database, the cracker has the capacity to produce 425,000 tonnes/year of ethylene and 290,000 tonnes/year of propylene and was started up in 1967. A butadiene (BD) unit is also at the site and associated derivatives include polyethylene (PE), polypropylene (PP). ExxonMobil's nearby Port Jerome refinery will continue to operate supplying fuels, lubricants, basestocks and asphalt. The closure will impact 677 jobs through 2025. ExxonMobil said this planned closure is entirely separate from the Esso S.A.F. announcement regarding its proposed sale of the Esso Fos-sur-Mer refinery and South France logistics assets. Charles Amyot, president of ExxonMobil companies in France said: “It has been a very difficult decision for us to take, but we cannot continue to operate at such a loss.” This week Saudi Arabia's Sabic also revealed plans to permanently close its Olefins 3 cracker – one of two at their Geleen, Netherlands site.

11-Apr-2024

LONDON (ICIS)–Europe’s virgin polyethylene (PE) and polypropylene (PP) markets have been slow to start after the Easter break, with April opening differently as compared to March. The surprisingly strong trend for PE and PP in early 2024 has started to ease as panic restocking by converters, sparked by logistical issues due to tensions in the Red Sea, subsides. Ahead of the ICIS World Polyolefins Conference this week, ICIS editors look at early supply/demand signs for April and the changes from March. This podcast features Matt Tudball, senior editor for Europe R-PET and R-LDPE, and Vicky Ellis, senior editor manager for Europe virgin PE and PP. ICIS analysts and editors will be at the Ritz-Carlton Hotel in Vienna, Austria, on 10-11 April for the 10th edition of the ICIS World Polyolefins Conference. Industry leaders, including Berry Global, Borealis and Plastic Energy, will also share their insights during the conference.

09-Apr-2024

HOUSTON (ICIS)–The 2024 Atlantic hurricane season is expected to be extremely active, and has similar characteristics to the 2020 season, meaning it could threaten offshore oil and natural gas production in the US Gulf and chemical producers along the Gulf Coast. Source: Colorado State University (CSU)  A report late last week from researchers at CSU follows a report released on 27 March by US meteorology firm AccuWeather that also predicted an active hurricane season. The US National Oceanic and Atmospheric Administration (NOAA) will issue its first seasonal hurricane report in late May. So far, the CSU team said it is seeing similar characteristics to hurricane seasons in 1998, 2010 and 2020. The 2020 season saw 30 named storms, of which 13 became hurricanes and six of those were major storms. Storms in 2020 that impacted chemical operations included: Tropical Storm Marco hit Louisiana on 24 August. Days later, Hurricane Laura made landfall as a powerful category 4 storm in Louisiana near the border of Texas. Then, Hurricane Sally made landfall on 16 September in Alabama as a category 2 storm, followed by Tropical Storm Beta which made landfall less than a week later in Texas. Hurricane Delta followed a similar path as Hurricane Laura, making landfall on 9 October as a category 2 storm in Louisiana. Weeks later, Hurricane Zeta hit Cocodrie, Louisiana, as a category 2 storm. Hurricane Laura knocked 16% of total US ethylene capacity and 11% of total US propylene capacity offline, according to the ICIS Supply and Demand Database. About 18% of polyethylene (PE) production was offline, and 26% of polypropylene (PP) production was offline. Styrene butadiene rubber (SBR), a synthetic rubber used to make tires, had 46% of its US capacity offline. The CSU team said record warm tropical and eastern subtropical Atlantic sea surface temperatures are the primary factor for the active season prediction. “When waters in the eastern and central tropical and subtropical Atlantic are much warmer than normal in the spring, it tends to force a weaker subtropical high and associated weaker winds blowing across the tropical Atlantic,” researchers said. “These conditions will likely lead to a continuation of well above-average water temperatures in the tropical Atlantic for the peak of the 2024 Atlantic hurricane season.” Warm ocean waters serve as the fuel source for hurricanes, the CSU team said. “In addition, a warm Atlantic leads to lower atmospheric pressure and a more unstable atmosphere,” they said. “Both conditions favor hurricanes.” The current El Nino is likely to transition to a La Nina by the peak of the season – from August to October. Hurricane season begins on 1 June and runs through the end of November. Hurricanes and tropical storms can disrupt the North American petrochemical industry, because oil and gas production are concentrated in the Gulf of Mexico. Also, many of the nation's refineries and petrochemical plants are along the US Gulf Coast in the states of Texas and Louisiana. Even the threat of a major storm can disrupt oil and natural gas production, because companies must evacuate US Gulf platforms as a precaution. Thumbnail image shows a weather satellite orbiting over a hurricane. Photo by John Pulsipher/image from Shutterstock

08-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

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China could end up as the world’s second-biggest polypropylene (PP) net exporter in 2024-2030 behind the Middle East. Today’s scenarios involve China seeing average annual PP net imports of 4.9m tonnes in 2024-2030 (the ICIS base case), average annual net exports of 1.7m tonnes under Downside 1, or annual average net exports of 7.2m tonnes under Downside 2. Downside 2 – where China could be second the global export league table behind the Middle East – seems very unlikely given rising trade tensions. Nevertheless, both the downsides in today’s post demonstrate just how much the petrochemicals markets in general have changed since late 2021. Only two-and-half years ago, you had to make such big adjustments to the ICIS base cases to get to significantly increased rates of China PP and other petrochemicals self-sufficiency that the adjustments didn't make sense. Now, just relatively minor changes are required to produce big declines in China's projected net imports because of the following: The collapse of the property developer Evergrande in September 2021 signalled that China had moved into an era of lower economic and therefore petrochemicals demand growth. I flagged this up at the time and it has now become accepted wisdom. The end of the property bubble, worth some 29% of China’s GDP, has occurred as China’s ageing population exerts more downward pressure on the economy. A lot more new petrochemicals capacity has been added in China. And here’s the thing: There’s a total of 10.5m tonnes/year of unconfirmed China PP capacity in the ICIS Supply & Demand Database between 2024 and 2030 that are not factored into any of today’s trade-flow scenarios. China has pretty much bankrolled the global petrochemicals industry since 1992, the year of Deng Xiaoping’s Southern Tour. Such was the subsequent strength of China’s consumption growth versus insufficient investment in local capacity that the petrochemicals industry became over-reliant in lucky events in just one country. Now our luck has run out. 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.

02-Apr-2024

SINGAPORE (ICIS)–Vietnam's economy expanded at an annualized pace of 5.7 % in the first quarter of 2024, led by manufacturing and services, with the robust growth expected to continue in line with recovery in external trade. GDP growth fastest for Q1 since 2020 Q1 exports surge 17%, with US remaining Vietnam’s largest market 2024 official GDP growth target at 6.0-6.5% The Q1 GDP growth represents a strong acceleration from the 3.4% pace recorded in the same period of last year, but slower than the 6.7% Q4 2023 expansion, data released by the General Statistics Office (GSO) showed on 29 March. Vietnam is the fourth-largest economy in southeast Asia after Indonesia, Malaysia and Singapore. It is a net importer of petrochemicals such as polyethylene (PE) and polypropylene (PP). The country's domestic production of petrochemicals is concentrated at two sites in the central region – the Nghi Son refinery and petrochemical complex in Thanh Hoa province and the Binh Son complex in Quang Nhai province. "One key driver for the robust growth outcome in Q1 2024 has been external trade, with both exports and imports’ rising at the fastest pace since 2021, boosted by strong demand for products such electronics and phones," said Suan Teck Kin, head of research at Singapore-based UOB Global Economics & Markets Research. "The upswing in semiconductor sales since mid-2023 suggests that [trade] momentum is likely to continue further into the quarters ahead." Despite the ongoing Russia-Ukraine conflict and dark clouds of shipping disruptions in the Red Sea, Vietnam's exports of goods surged by 17.0% year on year to $93.1 billion while imports gained 13.9% to $85 billion. "Recovering exports and sustained foreign investment inflows and consumption are expected to be key drivers to Vietnam’s growth in 2024," consulting firm McKinsey & Company said in a recent report. Further recovery in domestic consumption following the government’s stimulus policies and the uptick in international tourism would support growth, it said. In January-February 2024, the US remained Vietnam’s largest export market, accounting for a 28% share, followed by China (14%), South Korea (7%), and Japan (6%). Q1 growth was also driven by contributions from the manufacturing and construction sector which grew by 6.3% year on year, and services which expanded by 6.1%. These sectors accounted for 41.7% and 52.2%, and 6.1%, respectively, of the overall headline growth in Q1, according to the GSO. Vietnam's industrial production for the period rose by 6.18% year on year, reversing the 5.9% decline in February. The improvement was driven by growth across three of the four main sub-indices – electricity and gas production; manufacturing and water supply; and waste management activities. Inflation pressures in Vietnam have eased, though the central bank is likely to continue to keep a close eye on inflationary pressures. Q1 consumer price index (CPI) rose by 3.8% year on year from 3.5% in Q4 2023, marking the fourth consecutive quarter that headline inflation has accelerated. "With Q1 2024 performance coming in within our expectation and setting a positive start for the year, outlook for 2024 remains bright though downside risks are still present, including conflicts between Russia and Ukraine and between Israel and Hamas which could disrupt global trade and energy/commodity markets," UOB's Suan said. "Nonetheless, the recovery in the semiconductor cycle, stable growth in China and the region, and the likely easing of monetary policy by major central banks this year will be supportive of the outlook." UOB expects Vietnam's GDP to grow by 6.0% this year, in line with the country’s official growth target of 6.0-6.5%. In Vietnam's political arena, the resignation of President Vo Van Thuong in late March 2024, the second president to resign in as many years, has cast a shadow over political stability in the country, Suan noted. However, it should be noted that president’s role in Vietnam is largely ceremonial and, therefore, unlikely to affect the country’s broad policy direction, he said. "Vietnam’s long-standing policy of welcoming investors and businesses is unlikely to be affected as the government sorts out the succession issue," Suan added. Focus article by Nurluqman Suratman Thumbnail image: At the Hai Phong Port, the largest port in the northern Vietnam, on 25 May 2015. (Minh Hoang/EPA/Shutterstock)

02-Apr-2024

SINGAPORE (ICIS)–INEOS said on Monday that it has completed acquisition of TotalEnergies’ 50% share in their three joint ventures, as well as some other infrastructure assets in France. The targets are Naphtachimie, Appryl and Gexaro, which were 50:50 joint ventures between INEOS and the French energy major at Lavera in southern France. Financial details of the acquisition were not disclosed. The deal includes one of Europe’s largest steam crackers which can produce 720,000 tonnes/year of ethylene under Naphtachimie; an aromatics business with a 270,000 tonne/year capacity under Gexaro; and a 300,000 tonne/year polypropylene (PP) business under Appryl. INEOS also acquired a naphtha storage, as well as other infrastructure assets, including part of TotalEnergies’ ethylene pipeline network in France. INEOS will now fully integrate the Naphtachimie, Gexaro and Appryl petrochemical businesses, assets and infrastructure into INEOS Olefins & Polymers South at Lavera in southern France, the company said. Gexaro, which is located on the Lavera refinery site will continue to be operated by Petroineos.

01-Apr-2024

SINGAPORE (ICIS)–China’s petrochemical futures markets were tracking gains in crude prices on Monday, with Brent trading at above $87/bbl, on bullish sentiment following a return of the world’s second-biggest economy into manufacturing expansion mode. Official, Caixin March manufacturing PMIs at above 50 China methanol, SM futures prices lead gains External demand picking up for selected goods At the close of morning trade, futures prices of major petrochemicals in Chinese commodity exchanges were up by 0.2% to 1.7%. China petrochemical futures markets Prices as of 03:30 GMT (CNY/tonne) % change vs 29 March Linear low density polyethylene (LLDPE) 8,279 0.60% Polyvinyl chloride (PVC) 5,803 0.20% Ethylene glycol (EG) 4,499 0.50% Polypropylene (PP) 7,542 0.80% Styrene monomer (SM) 9,451 1.40% Paraxylene* 8,534 0.70% Purified terephthalic acid (PTA) * 6,016 1.30% Methanol* 2,518 1.70% Sources: Dalian Commodity Exchange, *Zhengzhou Commodity Exchange At midday, Brent crude was up 30 cents at $87.30/bbl, while US crude gained 31 cents at $83.48/bbl. Crude futures were also supported by expectations of tighter supply amid output cuts by OPEC and its allies, which include Russia. Manufacturing activity in China expanded for the first time in six months, based on official data in March, generating a purchasing managers’ index (PMI) reading of 50.8, as companies accelerated production following the Lunar New Year holiday in the previous month. A separate reading by Chinese media group Caixin was more upbeat, with a higher March PMI reading of 51.1, the highest recorded since February 2023. In Caixin’s data, factory output continued to expand for the fifth straight month. The Caixin PMI surveys small and medium-sized enterprises (SMEs) and export-oriented enterprises located in eastern coastal regions, while the official PMI is tilted toward larger state-owned enterprises. A reading above 50 indicates expansion, while a reading below denotes contraction. “Both supply and demand expanded at a faster pace amid the market upturn. In March, growth in manufacturers’ output and total new orders accelerated, with the former hitting a 10-month high,” Caixin Insight Group senior economist Wang Zhe said. “External demand also picked up pace thanks to the recovery in the global economy, pushing the gauge for new export orders to its highest level since February 2023,” the economist added. “Overall, the manufacturing sector continued to improve in March, with expansion in supply and demand accelerating, and overseas demand picking up,” Wang said. “Manufacturers increased purchases and raw material inventories amid continued improvement in business optimism. However, employment remained in contraction and a depressed price level worsened,” Wang added Besides the seasonal effect, firming overseas demand also helped to push up Chinese factory activities, local brokerage Haitong Securities wrote in a note, citing that furniture, transportation equipment and electronics were enjoying strong demand. China is projected to post around a 5% GDP growth this year, slower than the 5.2% pace recorded in 2023, with a slumping property sector posing a major drag on overall economic prospects. Property and other related sectors account for about a fifth of China’s GDP. While the property slump may persist, other sectors such as electric vehicles, new energy and digital economy are posting healthy growth, said Zhang Junfeng, senior analyst at Shenzhen-based brokerage China Merchant Securities. Focus article by Fanny Zhang ($1 = CNY7.23) Additional reporting by Nurluqman Suratman Thumbnail image: At Lianyungang Port in east China's Jiangsu Province, 26 March 2024. (Shutterstock)

01-Apr-2024