Polyvinyl chloride (PVC)

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Construction, electronics, and healthcare are just a few of the industries that rely on this flexible material. Polyvinyl chloride (PVC) is indispensable to modern day life in uses such as pipes and window profiles and other building materials. Global production volume amounted to 44.3 million metric tons in 2018. Understanding and engaging with such a significant market requires relevant and trusted data and insight.

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Polyvinyl chloride (PVC) news

Brazil’s Braskem pushes polymers recovery to 2026 despite some green shoots

SAO PAULO (ICIS)–Braskem’s said on Tuesday a recovery in polymers prices in earnest will now only take place from 2026, with the Brazilian petrochemicals major posting again a poor set financial result. Global prices for some of Braskem's key products – such polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) – remain depressed and, despite some positive pricing signs at the start of 2024, this year will be again a difficult one. However, according to chemicals equity analysts on Tuesday, Braskem’s results could indicate certain improvements in its operating conditions. The company’s stock jumped as much as 6% in Tuesday morning trading, although the gains had moderated by the afternoon to just over 3%. Earlier on Tuesday, Braskem’s said its losses had widened in 2023, year on year, while its earnings before interest, taxes, depreciation and amortization (EBITDA) fell nearly 65%. However, investors on Tuesday preferred to focus on Tuesday in Q4’s EBITDA, which went into positive territory, compared to Q4 2024, as well as a more moderate fall in revenue. Braskem (in $ million) Q4 2023 Q4 2022 Change 2023 2022 Change Revenue 3,369 3,613 -7% 14,113 18,733 -25% Recurring EBITDA 211 -32 N.A. 743 2,060 -64% Net income -317 -326 -3% -935 -70 1,234% “Q4 continued to be a difficult period for the petrochemical sector, so we consider a positive Braskem’s slight improvement in some price levels and spreads. Meanwhile, we see the company exploring some of the competitive advantages of its assets,” said equity analysts at Brazilian broker XP Investimentos. “However, we think it is too early to interpret this as a structural turnaround for the sector in 2024.” A VERY LONG DOWNCYCLEBraskem’s quarterly results conference calls have become an affair in which the most valued answer is when the company expects the recovery in earnest to take place. During most of 2023, the company’s executives would say that the global markets would start recovering this year and give way to the upcycle in 2025 onwards. However, on Tuesday both the company’s CFO, Pedro Freitas, and his second on board, the head of investor relations, Rosana Avolio, made it clear that some green shoots appearing in coming quarters would not mount to what the producer would consider a recovery. “2024 will be the year of a transition towards normalization, but still within the downcycle. We expect prices to start recovering in 2025 and for them to achieve sustained, higher levels in 2026,” said Avolio. “However, prices at the start of 2024 are better than we were expecting,” she added. Freitas placed the beginning of the upcycle in 2026-2027. Other Latin American petrochemicals players are also expecting a recovery only in two- or three-years’ time. In February, Mexico’s Orbia said China’s PVC overcapacities were to cast a shadow globally until at least 2026 while announcing it was stopping any expansion in that material until prices went up to, at least, $1,200/tonne. Front page picture: Braskem’s facilities in the state of Sao Paulo, Brazil Source: Braskem

19-Mar-2024

AFPM '24: INSIGHT: Biden ending term with regulatory bang for US chems

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

18-Mar-2024

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 15 March. US CPI inflation 'sticky' at 3.2%, may delay Fed rate cuts – ICIS economist US inflation, as measured by the consumer prices index (CPI), rose 0.4% month on month in February, leaving it up 3.2% year on year, the Bureau of Labor Statistics (BLS) reported on Tuesday. LyondellBasell sees signs of modest improvement in Q1 – CEO LyondellBasell is seeing some indications of modest improvement in its businesses, particularly in North America and Europe, with packaging being the strongest end market, its CEO said on Wednesday. US Trinseo seeks to sell stake in AmSty Trinseo has started the process to sell its 50% stake in Americas Styrenics (AmSty), the US-based engineered materials producer said on Wednesday. US outage to boost March Asia-Atlantic spot acetic acid, VAM trades Asia-Atlantic spot trades for acetic acid and vinyl acetate monomer (VAM) are expected to increase after supply gaps in the US and Europe emerged following an unexpected plant outage in the US. Potential for oil market deficit in 2024 as demand expectations grow – IEA Higher oil demand expectations and fresh production cuts from the OPEC+ alliance could push the 2024 crude market balance from a surplus to a slight deficit if the voluntary reductions remain in place for the rest of the year, according to the International Energy Agency. INSIGHT: US aromatics, refining output recedes as peak oil approaches Peak oil demand in the US could lead to a further decline in refining capacity, which will tighten supplies of benzene, toluene and xylenes (BTX) for downstream chemical producers. Unipar expects hardship in Argentina but Brazil PVC demand should recover Unipar’s operations in Argentina are set to face pressure from the current recession but a bright spot could appear in higher civil engineering activity in Brazil, propping up demand for polyvinyl chloride (PVC), the Brazilian chemicals producer said on Friday.

18-Mar-2024

India’s Chemplast Sanmar starts up specialty paste PVC plant

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

04-Mar-2024

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 23 February. LyondellBasell to lease California plant to produce recycled resins from waste LyondellBasell has acquired a recycling plant in California from PreZero in which it plans to produce post-consumer recycled resins from plastic waste, the US chemicals major said on Tuesday. Brazil’s Unigel gets green light from creditors for debt restructuring Unigel has agreed a Brazilian reais (R) 3.9 billion ($791 million) debt restructuring with its creditors, which has saved the beleaguered styrenics, acrylics and fertilizer producer from filing for bankruptcy for the time being. Mexico's Orbia to pause PVC investments after weak Q4 results Orbia will be pausing polyvinyl chloride (PVC) capacity expansion due to weak market economics which weighed on its 2023 earnings, the Mexico-based producer said. US Huntsman expects gradual recovery, seeks to boost prices and volume Huntsman expects a gradual recovery to take hold in 2024, in which the company will attempt to pursue higher prices and recover share, the CEO said on Thursday. Pembina to supply Dow Canada net-zero petchem project with ethane Canadian midstream energy firm Pembina Pipeline has entered into long-term agreements to supply Dow’s upcoming net-zero petrochemicals project at Fort Saskatchewan in Alberta province with 50,000 bbl/day of ethane.

26-Feb-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 23 February. NEWS Argentina manufacturing output falls 12% in December Argentina’s recession is hitting the petrochemicals-intensive manufacturing sectors hard, with output down 11.9% in December, year on year, the country’s statistics body Indec said late on Thursday. Mexico’s secondary activities output up 1.2% year on year in December Output in Mexico’s petrochemicals-intensive secondary activities rose in December by 1.2%, year on year, the country’s statistics office Inegi said this week. Pause in PVC projects ‘prudent’ until prices rise to $1,200/tonne – Orbia CEO Depressed global polyvinyl chloride (PVC) prices prompted Orbia to take the “prudent” decision to put new projects on hold, the CEO of the Mexican chemical producer said on Thursday. Petrochemicals margins could worsen in 2024 – Mexico’s Alpek Mexican chemicals producer Alpek’s stock was falling more than 3% on Wednesday afternoon after the company issued a downbeat guidance for 2024 in which petrochemicals margins could worsen from the already weak 2023 averages. Brazil's Braskem Q4 main chemicals, resins sales fall on lower demand Braskem’s main chemicals and resins sales in its domestic market fell by 15% and 9%, respectively, in the fourth quarter, year on year, on the back of persistent poor demand, the Brazilian petrochemicals major said this week. Brazil’s Unigel gets green light from creditors for debt restructuring Unigel has agreed a Brazilian reais (R) 3.9 billion ($791 million) debt restructuring with its creditors, which has saved the beleaguered styrenics, acrylics and fertilizer producer from filing for bankruptcy for the time being. US Stepan recovering LatAm surfactants market share, margins – CEO Stepan is recovering its share in the Latin American surfactants market following supply chain disruptions in the second half of 2022, Scott Behrens, CEO of the US-based company, said on Tuesday. PRICINGLat Am PP domestic prices fall in Colombia on cheaper imports Domestic polypropylene (PP) prices were down in Colombia due to more competitive prices for imported products. In other Latin American countries, prices were steady. Lat Am PE buyers on the sidelines waiting for March prices Domestic, international polyethylene (PE) prices were assessed unchanged this week across Latin American countries. Mexico PET industry expecting stable sales during the upcoming peak bottle season Polyethylene terephthalate (PET) prices in Mexico held steady this week, with weak demand and ample supply in February. Brazil ethanol sales continue to face positive results in 2024 According to Unica, Brazil's ethanol sales grew by 38.22% in January over the same time frame in 2023. With this achievement, sales volume has surpassed its highest point since October 2020.

26-Feb-2024

Asia petchem markets await China's demand signals after holiday

SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. Asia markets eye China's post-holiday demand signals China's economic health remains central concern Prices likely to rise amid supply constraints Markets in Asia took a breather in the week of 12-16 February, with Lunar New Year holidays in China, Taiwan, Malaysia and Singapore, while countries such as South Korea, Japan and Indonesia observed public holidays as well. Market participants are cautious about the post-holiday market; while some downstream buyers will restock after the holidays, there is concern that existing inventory held by domestic China producers and distributors will largely satisfy demand until early March. PRICES LIKELY TO RISE AMID SUPPLY CONSTRAINTSPetrochemical prices in Asia are expected to continue to increase in February, supported by capacity losses from outages and run-rate reductions, according to ICIS analysts. Among the 31 major petrochemical commodities covered by the ICIS Asia Price Forecast, average February prices for at least 22 of these commodities are anticipated to increase. Ethylene (C2), butadiene (BD) and styrene butadiene rubber (SBR) are expected to lead in terms of gains. In Asia’s C2 market, end-users who have yet to settle March arrival cargo are expected to hit the ground running once most of players return to the market this week. In the southeast Asia C2 market, demand enquiries were largely heard from Thailand last week, while other end-users in Indonesia have begun to look towards the April window for spot cargo. "The Asia C2 industry is likely to be characterised by tight supply in the weeks to come," said Paolo Scafetta, ICIS senior olefins analyst. "February should see about 7% of total monthly nameplate capacity lost due to downtime unless unplanned events cause further technical hiccups." The upstream naphtha market in Asia should be influenced by a few bearish factors, Scafetta added. These include the shift from naphtha to liquefied petroleum gas (LPG) as an alternative cracking feedstock and an improvement in supply from March as naphtha cargoes are expected to increase as Middle East refineries return from their maintenance. Asia's naphtha market is likely to be plagued with volatility in the short term as tensions in the Red Sea will continue to disrupt supplies. In Asia’s propylene (C3) market, trade was largely subdued during the Lunar New Year break but picked up towards the close of the week with most market players, except China, returning from their holiday. Talks and discussions in Taiwan commenced at the end of the week after the holidays ended. However, the post-holiday buying sentiment weakened on the back of ample supply, leading sellers to progressively lower their offers and selling indications. With buyers in China largely away from the market, overall business activity during the week was muted. In southeast Asia, while demand was also heard in Malaysia and Indonesia, most buyers continued to hold back from purchases on the expectation that supply tightness might result in an easing in offers down the road. In Asia’s benzene market, post-holiday restocking is expected to pick up in the second half of February amid strong competition for April and May cargoes from global players. February and March benzene cargoes have been already sold out and April cargoes are in strong demand. Benzene buyers based in both Asia and the West had actively sought procurement since end-January, for pre-holiday and pre-summer stocking up respectively. Asia's acetone market looks poised to maintain its strength. This is due to the high prices of benzene, reduced production leading to tighter supply, and a resurgence in trading flows between Asia and the West. A significant increase in demand for Asia acetone from the US market is bolstering this trend. Limited supply in the US, a result of low phenol production and ongoing allocations, is driving this demand. Meanwhile, supply within Asia is also constrained as phenol/acetone producers scale back production in response to unprofitable margins and decreased demand for phenol in China. In the xylene markets, further support in the market will be dependent on downstream sectors after the Lunar New Year holidays, with eyes firmly on China. For paraxylene (PX), there remains optimism for gasoline-blending demand heading into the second quarter, with positive arbitrage window economics for exports to the West. Firm upstream naphtha prices have also provided some support for PX. Several market participants noted there had been pre-buying of mixed xylenes (MX) and toluene by gasoline blenders to the US. Demand and price developments in the downstream purified terephthalic acid (PTA) and polyester sectors will help provide clarity about whether high PX costs can be absorbed down the chain. Asia's butyl acetate (butac) and ethyl acetate (etac) markets are poised to stay afloat on anticipated post-holiday demand, albeit at a gradual pace. Sellers of butac in both China and the region largely maintained their spot offers for March loading prior to the Lunar New Year holiday. Spot butac prices were on a downtrend in the early part of the fourth quarter of 2023 and have climbed since December, in part driven by cost pressures upstream as suppliers worked towards mitigating compressed margins. Asia’s methylene chloride (MEC) market might be bullish after the Lunar New Year holiday, as rising demand is likely to shift the market to a more balanced state. Most buyers were in a wait-and-see mode, monitoring prices and observing what producers would offer after the Lunar New Year break, with market participants in southeast Asia eyeing a rebound in demand through Q2, around the Ramadan period. CHINA'S ECONOMIC HEALTH IN FOCUS ICIS analysts expect most of China's end-use consumption, including in industries such as agriculture and home appliances, to recover from March. The China government's Two Sessions policy meetings, widely seen as the most important political meeting of the year for the country, will be held on 4-11 March. ICIS analysts expect another series of policies to be introduced to stimulate economic growth. Further market and infrastructure investment can boost petrochemicals demand. Latest official data from China is pointing to some recovery from domestic tourism trips and revenues. Domestic tourism trips and revenues during the Lunar New Year holidays in China jumped by 34.3% and 47.3% year on year respectively, with their levels at 19.0% and 7.7% above pre-pandemic levels in 2019, data from the country’s Ministry of Culture and Tourism (MCT) shows. "Most official and private media channels have been reporting strong (or even exceptionally strong) Lunar New Year holiday consumption data, and markets risk getting caught up in the euphoria of the moment, under the supposition that China’s economy is suddenly bottoming out, driven by the Chinese people’s hidden passion for spending," research analysts from Japan's Nomura Global Markets Research said in a note. "Although we do see some strength in the data, we urge market participants to exercise caution," it said, adding that China's property sector continued its downward spiral, right before the Lunar New Year holiday, and there was no sign of a recovery during the holiday. "Despite the positive [Lunar New Year] data, we maintain our view that the ongoing economic dip is likely to worsen into the spring," Nomura said. With additional reporting by Josh Quah, Julia Tan, Seng Li Peng, Angeline Soh, Helen Lee, Keven Zhang, Melanie Wee and Samuel Wong Focus article by Nurluqman Suratman Thumbnail photo: Lunar New Year lanterns in Shenyang, northeast China's Liaoning Province, on 1 February 2021. Asia will closely watch China's demand signals after the Lunar New Year holiday amid concerns about the country’s economic health. (Source: Xinhua/Shutterstock)

19-Feb-2024

TiO2 prices to improve after Q1 – Tronox co-CEO

HOUSTON (ICIS)–Tronox expects titanium dioxide (TiO2) prices to reverse their downward trend and begin improving after the first quarter, John Romano, co-CEO of the US-based producer said in an update on Friday. In Q4 2023, TiO2 prices were down 6% year on year and down 1% sequentially from Q3. While prices in the 2024 first quarter would still be relatively flat, compared with Q4 2023, “I would suspect as we start to migrate out of the first quarter, we will start to look at pricing opportunities across all regions”, Romano told analysts during Tronox’s Q4 2023 earnings call. "We are hopeful to see some sort of [price] movement as we move into Q2,” he added. Tronox's TiO2 business is at the "forefront of a recovery" and “we have already begun to see a pick-up in demand for TiO2 that is more positive than we would see normally at this time of the year”, Romano said. January sales were strong and Tronox is seeing continued strengthening in the market for February and March orders books, he said. The improvement is across all end markets – coatings, paper, plastics and specialties, he said. “We are confident that destocking has largely run its course, and we are seeing customers restocking and moving into more normal buying patterns”, he said. Tronox’s price expectations do not include potential upside from the EU anti-dumping investigation of Chinese TiO2 imports into Europe, Romano noted. A final recommendation from the EU investigation is not expected until Q4, although provisional anti-dumping duties (ADD) could be put in place as early as Q2, he said. OPERATING RATES Meanwhile, the company is ramping up operating rates from historical lows as it moves through the current first quarter, Romano said. Through 2023, Tronox incurred significant costs from running assets at low utilization rates because of the soft market demand, and over the past two years its TiO2 volumes were down "roughly" 27%, Romano noted. However, with demand improving now, Tronox expects its TiO2 volumes to increase by 12-16% in the first quarter, sequentially from Q4 2023, he said. The higher rates will boost the earnings margin, which in the second half of 2024 could return to the “normal” low-to-mid-20% range – “and that’s without a lot of movement on prices”, Romano said. "Price is an opportunity" while running its plants at more normalized levels will be "a big driver" in Tronox's profitability going forward, he added. Also helping margins are lower chlorine prices in North America, he noted. In North America, Tronox is a buyer of chlorine, which is a feedstock for chloride-based TiO2 production. Elsewhere, it has own chlorine production. Tronox’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin was 13.7% in Q4 2023 – down from 17.4% in Q4 2022 and 17.5% in Q3 2023. In Q4 2023, Tronox’s TiO2 sales volumes fell about 4% sequentially from Q3, partly due to higher than expected seasonality in North America, as well as the Red Sea logistics issues that delayed some stock transfer shipments to cover an outage at a Tronox plant at Botlek, Netherlands. RED SEA As for the Red Sea shipping congestions, Romano said that Europe-based TiO2 production could get “a little bit of benefit” from this. The Red Sea issues were a “a bit of a short-term anomaly” in terms of spot freight rates, which were higher than Tronox put into its forecasts, he said. However, overall, Tronox is seeing positive moves on freight, he said. After freight rates have risen of the past two years, they were starting to abate, which would be a tailwind for Tronox in 2024, although currently some rates have been negatively impacted by the Middle East tensions, he said. BOTLEK During the Botlek outage, which was due to a delayed restart by steam supplier, Tronox was able to meet customer demand by shipping in inventory from its other sites, Romano said. The company expects insurance proceeds of at least $15 million in 2024 that will cover the costs it incurred in working around the outage and meet customer demand, he said. RARE EARTHS Romano also said that Tronox is exploring opportunities to extract rare earths from the mineral sands it mines at its operations in South Africa and Australia. In 2024, Tronox expects to invest $130 million in two mining projects in South Africa to replace existing mines that are reaching the end of their lives. The investment will maintain the feedstock pricing advantage the company has over non-integrated competitors. The integrated TiO2 producer has nine pigment plants, six mines and five upgrading facilities worldwide. Thumbnail photo of Tronox co-CEO John Romano, who is due to take over as CEO with the retirement of co-CEO Jean-Francois Turgeon on 1 April; photo source: Tronox

16-Feb-2024

India hikes infrastructure capex for fourth year; Rs11.1tr set for 2024-25

MUMBAI (ICIS)–India’s government has announced plans to increase its capital expenditure on infrastructure projects to rupees (Rs) 11.1trn ($134bn) in its interim budget for 2024-2025, up 11% from the previous fiscal year, boosting the funds available for the sector for the fourth consecutive year. In the previous budget – for the year ending March 2024 – infrastructure expenditure stood at Rs10tr, up 33% year on year. The earmarked spending for infrastructure for the next fiscal year is expected to account for 3.4% of the south Asian economy’s GDP, Indian finance minister Nirmala Sitharaman said during her interim budget speech on 1 February. The full and final budget for financial year 2024-25 will be presented in July, after the Indian general elections and formation of a new government in April-May 2024. India’s infrastructure spending would build on “the massive tripling of the capital expenditure outlay in the past four years resulting in huge multiplier impact on economic growth and employment creation”, Sitharaman said. The government has allotted Rs2.78tr to the Ministry of Transport & Highways for the development of road infrastructure across the country. For the Indian Railways, Rs2.5tr has been allocated, to help the government achieve its plan to create three economic railway corridors for seamless transport of energy products, minerals, and cement as well as to improve port connectivity. The government also aims to provide free electricity to 10m households through rooftop solar electricity. Separately, the government will also support construction of 20m houses across rural India over the next five years. This move is expected to increase the consumption of construction-related segments like cement, steel, paints and petrochemical products like polyvinyl chloride (PVC), etc. Based on the interim budget document, India’s nominal GDP growth for 2024-25 is projected at 10.5%, with the fiscal deficit as a ratio to GDP expected to narrow to 5.1% from 5.8% in the current fiscal year. The government aims to reduce its fiscal deficit to below 4.5% by 2025-26. India is the fastest-growing economy in the world, with real GDP growth for the year ending March 2024 projected at above 7.0%, which is expected to be sustained in the next fiscal year. Focus article by Priya Jestin ($1 = Rs83.15) Thumbnail image: Kite with the image of India Prime Minister Narendra Modi. Colourful Kite Making, Ahmedabad, Gujarat, India – 27 December 2023. India to hold general elections in April-May 2024. (Saurabh Sirohiya/ZUMA Press Wire/Shutterstock)

05-Feb-2024

PODCAST: Asia ethylene sees pre-holiday restocking; PVC mood less upbeat

SINGAPORE (ICIS)–Asia's ethylene (C2) market saw tighter supply from deep-sea origins and some restocking in January, ahead of the Lunar New Year holiday in February. Downstream polyvinyl chloride (PVC) demand was steady but buyers in some regions such as India were resistant to higher February offers. In this chemical podcast, ICIS market editors Damini Dabholkar, Jonathan Chou and Josh Quah discuss recent market conditions, with an outlook ahead in Asia. C2 deep-sea supply curtailed; pre-Lunar New Year restocking takes place NE Asia PVC supply mixed; producers struggle with squeezed margins India PVC buyers resist higher offers amid sufficient availability

29-Jan-2024

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