Base oils

HOUSTON (ICIS)–Global rates for shipping containers are surging, liquid chemical tanker rates were mixed, and wait times at the Panama Canal have eased, highlighting this week’s logistics roundup. CONTAINER RATES Container rates surged this week after rising last week for the first time since January amid general rate increases (GRIs) implemented because of rising demand and as continued Red Sea diversions have overall capacity fully deployed. Maersk CEO Vincent Clerc said during a Q1 earnings conference call that demand is trending toward the higher end of its guidance. Average global rates surged by 16% over the week, according to supply chain advisors Drewry and as shown in the following chart. Meanwhile, rates from Shanghai to the US West Coast jumped by 18%, and rates from Shanghai to the East Coast soared by 16%, as shown in the following chart. Drewry expects freight rates ex-China to continue increasing in the upcoming week amid a huge demand spike and tight capacity. Capacity is growing from newly built ships, according to international freight platform ShipHub, who said that 2.83m 20-foot equivalent units (TEUs) of container ship capacity is on order for 2024, after 2.34m TEUs were ordered in 2023. That is almost double the capacity added in 2021 and 2022, which were both around 1.1m TEUs. Shipping analysts Linerlytica said that over-capacity concerns are on the backburner with containership diversions to the Cape route effectively removing more than 7% of the total fleet. Rates from North China to the US Gulf were flat this week after spiking the previous week, as shown in the following 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), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEM TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged but fell from the US Gulf (USG) to ARA. From the USG to Rotterdam, there are bits of part cargo space still available for April. This trade lane has been mostly quiet over the last few weeks. If this trend continues, this route could face further downward pressure. On the other hand, from the USG to the Caribbean, rates have risen slightly since last week leaving the market overall mixed. Methanol continues to be active out of this market to various destinations. From the USG to Brazil, space remains tight despite the slow market as only a handful of indications being seen in the market.  Space is available for H1 May out of Columbia and H2 May out of the USG. Although ICIS does not assess spot rates from the USG to the Mediterranean, this trade lane has continued to tighten up, with several cargoes of Glycols, Caustic and Veg Oil fixed. There is limited space for May which may likely cause rates to further tighten, although there could be some working space for June. PANAMA CANAL Wait times for non-booked vessels ready for transit fell for both northbound and southbound transits this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 4.4 days for northbound traffic and 6.5 days for southbound vessels. The 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. PORT OF BALTIMORE The Key Bridge Response Unified Command (UC) is scheduled to use precision cuts made with small charges to remove a large section of the Francis Scott Key Bridge wreckage from on top of the container ship Dali, which struck the bridge on 26 March and caused its collapse. Source: Key Bridge Response 2024 The exact time of the precision cuts will depend on multiple environmental and operational factors. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. Additional reporting by Kevin Callahan

10-May-2024

HOUSTON (ICIS)–Global base oils markets face regionally unique pricing dynamics but largely stagnant underlying demand and sufficient supply amid still challenging macroeconomic conditions. Crude oil price volatility and its effect on refining economics will be a key driver going forward this year. Tighter European spot availability of Group I Ample supply, demand weakness drives unprecedented low Group III in US Chinese prices weaken versus import US Group II fills regional supply gaps in Middle East, Asia during H1 ASIATight supply of Group II will likely be alleviated to some extent in May and June. Significant volume upwards of 10,000 tonnes of US-origin Group II lots comprising 70N, 110N, 220N and 600N grades landed on Indian shores in the first-half of April, and a second shipment of a similar size was also heard to have arrived in India in late April. The below graph compares CFR 150N India prices with FOB Asia NE and FOB USG export prices for the same grade. This is likely to more than offset the reduced supply of South Korean and Taiwanese cargoes, especially that of heavy grade 500/600N, in recent months. Demand for South Korea-origin Group II cargoes was relatively strong in April in regions such as India and the UAE, while demand in other parts of Asia such as China and southeast Asia was subdued. May to June is typically a lull season for base oils from the key downstream lubricants sector. ICIS analysts forecast Asia Group II prices to dip slightly in May before recovering in June. As for Group I, spot availability of southeast Asian material continued to be in short supply, with sporadic offers of Thai-origin brightstock cargoes heard. With few alternatives of Group I imports from other sources such as Europe or the Middle East, the tight supply situation is expected to persist in the coming months. CHINAMost downstream lubricant producers in China are expected to maintain steady purchasing pace in May, and the unusual weakness in March and April trade sentiment may sustain, too. Trades were far weaker than expected in these two months, the traditional peak demand season for base oil. Group II price gains in Asia were noticeable through March and April, compared with small increases in China. Such a price divergence is expected to widen in May partly as Asian refiners may further hike their export prices in view of expected supply shortage caused by robust demand in southeast Asia. However, slow growth in China’s real economy such as the automobile and industrial sectors may lead to flat buying demand for lubricant oils, hence domestic lubricant oils producers may continue to buy base oils on a need-to basis, according to many producers. The average import costs of contractual Group II base oils are expected to be higher than their sale prices in China during April, said key importers, citing increasing export prices from Asian refiners and depreciating Chinese yuan against the US dollar. This, combined with ample supply of domestic Group II materials amid limited routine maintenance, may cause significant price spreads between domestic and imported Group II base oils. Therefore, downstream producers are expected to cut the usage of imported cargoes. The lubricant oil producers and importers in China may have little import interest as a result. USGroup II and Group III prices have diverged, with Group II spot rising on tighter availability following a slew of exports in Q1 and two price increases this spring up to 55 cents/gal on 100N. The price increases were implemented on the back of higher costs for crude and VGO and affected term contract customers to a greater degree, but spot prices have been pressured upward in tandem to a lesser extent. The availability issue may be temporary as it is due to unconfirmed work by one refiner, other refiners being sold out and production of Group III cutting into Group II yields. Group III suppliers have not raised prices in 2024. Rather SK Enmove’s 4cSt posted price is down by 50 cents/gal over two separate decreases this year. Separately, Motiva has reduced its 4cSt posted price by a cumulative 65 cents/gal. ICIS spot 4cSt has fallen by 15%, while spot 100N has risen by 8.2%. The US 4cSt price decline has been unprecedented, bringing US Group III lower than Asia. The graph shows the US 4cSt price as it compares with the Asia 4cSt price and the US 100N price. US EIA data show: Production up 5.5% YTD compared to 2023 Consumption down 29.5% YTD compared to 2023 (-27.2% in January and -32.2% in February) Demand data are worse than 2023 so far this year, which explains the heavy export months of Q1 and potentially why Group II supplies are more balanced domestically in early May. ICIS analysts forecast a general downtrend to flat pricing for the remainder of the year. EUROPEEuropean domestic Group I base oils spot supply limitations, a key driver of spot price increases in the last month, are expected to continue in May and early June. SN150 remains the tightest grade, closely followed by SN500. Domestic brighstock supply is balanced, contrasting with the export market, where shortages drove price hikes from March through April. In the European export market, availability is likely to remain limited through the rest of Q2. Players are expected to continue prioritising domestic supply, and very few offers are anticipated for the export market. Brightstock is expected to be tight for export now that Eni has stopped production at Livorno. A limited number of producers offer brightstock in sufficient volumes for export requirements, and the removal of Eni from the market means there will be significantly less availability. While lower demand at the beginning of Q2 offset the limited availability, buying interest looks set to increase further into the quarter and as a result there could be supply shortages. Buying interest has been increasing from west Africa, north Africa and east Africa in early May, and this is likely to continue throughout Q2. Demand from west Africa will then drop off in Q3 amid rainy season. ICIS analysts forecast European Group I prices to rise through August. MIDDLE EASTGroup II remains oversupplied in the UAE following bulk arrival of volumes from Asia and the US in late April and H1 May, and the trend is likely to persist into late May and early June. Import volumes from the US and northeast Asia upwards of a combined volume 25,000 tonnes of 110N, 150N, 220N and 500N/600N have dampened fresh imports’ interest from Asia. The recent firmness in offers and selling indications for northeast Asian 150N and 500N/600N exports have thus resulted in weak response from regional importers. The UAE market in the Middle East continues to rely on sourcing low viscosity index (VI) Group I base oils from Iran in the absence of spot high VI availability from Asia, Europe and from within the region. Spot Group I supply from Asia and from within the region is likely to remain curtailed as major producers in these markets opt to focus on contractual commitments. This is expected to sustain demand and prices for Group I Iranian product in the near term. The Eid ul Adha holidays in mid-June may temper imports’ and ex-tank offtake in H2 June before recovering in July. ANALYSTS’ VIEWWith ICIS crude forecast currently expecting crude to hover around the $90/barrel mark for most of the remainder of the year, this could keep some pressure on base oils pricing. With VGO, while slightly elevated vs typical spreads with crude, gas oil and fuel oil, moving broadly in line with crude, higher crude prices flow through to lower base oils margins for producers. We have seen European prices rise on the recent crude rise, where cash margins are close to their sustainable minimum, while other regions have held stable. Upward pressure may come in Asia where gas oil price rises over the summer might have the most significant effect on the base oil market, resulting in upward pressure there due to competition from fuels producing units. In the US, where margins are highest currently, there is expectation of a flat to declining market on sufficient length in supply. Base oils are used to produce finished lubricants and greases for automobiles and other machinery. Focus article by Amanda Hay, Eashani Chavda, Samantha Wright, Matthew Chong, Whitney Shi, Veena Pathare and Michael Connolly

09-May-2024

HOUSTON (ICIS)–The entire Americas Styrenics (AmSty) joint venture (JV) is for sale, and not just Trinseo’s 50% stake, Trinseo CEO Frank Bozich said on Thursday. The company announced in March it started the process to sell its 50% in the styrene and polystyrene (PS) JV with Chevron Phillips Chemical (CPChem). During Trinseo’s Q1 earnings call on Thursday, Bozich clarified that the entire AmSty was for sale, not just Trinseo’s stake. He added that since the March announcement, Trinseo has seen indications of interest from a number of potential strategic and financial buyers. He did not name potential buyers or say how much money Trinseo expects from the sale. The process of “actively” marketing the JV has not yet started, he said. The JV agreement between Trinseo and CPChem includes a number “prescriptive elements” that need to be completed before a joint marketing of the JV begins, he said. Trinseo expects a deal with a buyer to be signed by early 2025 and will use the proceeds from its share from the sale of AmSty to pay down debt, he added. Trinseo is also trying to sell its wholly owned styrenics assets. The company's other businesses include Latex Binders, Base Plastics and Engineered Materials. Additional reporting by Al Greenwood Thumbnail shows a cup made of polystyrene. (Image by ICIS)

09-May-2024

ORLANDO (ICIS)–BASF Corp CEO Mike Heinz is optimistic that a binding agreement could be reached during the next round of negotiations of the UN plastic waste treaty, he said on Wednesday. BASF had sent a team to the previous round that was held in Ottawa, he said. "The feedback that we received from them was cautiously optimistic." Heinz made his comments in an interview with ICIS at this year’s NPE: The Plastics Show. He also gave the keynote address at the trade show. Another reason for optimism is that all of the parties are pursuing the same objective: to prevent plastic waste from entering the environment, Heinz said. An agreement would be one that all stakeholders could live with. He acknowledged some disagreement about how to achieve that objective. Some want to curb production of plastic, he said. BASF and others want to achieve it by curbing pollution. Already, BASF and other chemical companies are incorporating recycled materials into their products. Recycling can be part of a larger sustainable production chain, under which chemical complexes rely on renewable energy to make products from recycled and renewable materials that can be recovered and reused. These materials can be used to make wind blades, electric vehicles (EVs) and other products critical to reducing emissions of carbon dioxide (CO2). Heinz summed up the path to a sustainable future as resting on three three pillars: make, use and recycle. SUSTAINABILITY VERBUNDDuring his speech and in a subsequent interview with ICIS, Heinz described what could be characterized as a Verbund based on sustainability. "This will take some time, but the good news is we already have some concrete examples on how it can be done," Heinz said. As an example, he held up a jacket made with 100% recycled nylon 6 from BASF that was sold by Inditex, the owner the clothing brand Zara. Heinz pointed to BASF's equity stakes in European wind packs. By 2030, BASF wants green energy to account for 60% of its power consumption. For chemical companies, one of the most power-hungry processes is steam cracking. BASF, SABIC and Linde are developing an e-cracker that would rely on electric furnaces to generate the heat needed to produce ethylene. The electricity could come from renewable sources, which would significantly reduce the CO2 emissions of steam cracking. Crackers can process renewable naphtha made from natural oils or pyrolysis oil produced at chemical recycling plants. It will take time for these feedstocks to become abundant, but the model is possible, and BASF is making chemicals with such feedstocks. New, renewable feedstocks can lead to new chemistries that result in materials that have better qualities than those based on petroleum.  The products can also help customers achieve their own sustainability goals. Lighter plastics can allow automobiles to travel farther on a tank of gasoline or on a battery charge. Other plastics will be critical to make EVs safe. Products can be designed to last longer, he said. When they do reach the end of their lifecycles, they can be designed to be easier to recover and recycle. STEPS NEEDED TO ACHIEVE SUSTAINABILITYDuring his keynote speech, Heinz noted that while the chemical industry is part of the problem, it can be a bigger part of the solution. Change will require passionate people, innovation and collaboration, he said. In particular, the chemical industry needs to collaborate with lawmakers and nongovernmental organizations (NGO) to come up with those solutions. Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida. Interview article by Al Greenwood Thumbnail shows a plastic bottle, which can be recycled. Image by monticello/imageBROKER/Shutterstock

08-May-2024

LONDON (ICIS)–LyondellBasell has launched a strategic review of the bulk of its operations in Europe, the producer said on Wednesday, based on its strategy to focus on assets perceived to have long-lasting competitive advantage. The producer will conduct a review of its European olefins, polyolefins, intermediates and derivatives businesses, driven by its move announced last year to reinvest in its strongest performing operations. "At the 2023 Capital Markets Day, we stated our intent to concentrate our portfolio around businesses with long-lasting competitive advantage and to reinvest around those advantaged areas generating superior returns at meaningful scale. These criteria have not changed," said Lyondell CEO Peter Vanacker. The strategy announced at the 2023 investor day was based around three pillars: prioritizing growth spending on businesses where the company “has leading positions in expanding and well-positioned markets”, growing circular solutions earnings to $1 billion/year by 2030, and shifting from cost controls to a broader idea of value creation. Energy-intensive industries in Europe have been challenged by the sharp increase in gas prices seen since Russia’s invasion of Ukraine, which remain substantially above pre-war and pre-pandemic norms despite falling dramatically since the nadir of winter 2022. Described by former BASF chief Martin Brudermuller earlier this year as a “systemic” change to the European operating environment, the higher cost of operating Europe has prompted a number of reviews by large global players. BASF is looking to cut €1 billion off the annual operating costs of its Ludwigshafen, Germany, complex. The company tapped plant sale specialists International Process Plants this week to explore the sale of its Ludwigshafen ammonia, methanol and melamine units, idled in 2023 due to high production costs. Dow also announced plans to review underperforming and smaller assets. A significant proportion of any cuts had been expected to land in Europe, although the US major has not given an update on the process since it was announced in early 2023. Indorama Ventures is also currently reviewing six assets out of its "West" portfolio for potential shutdown. While global gas pricing has come down, the cost of shipping gas will always be higher than sending it through a dedicated pipeline, as was the case with the Russia-derived natural gas that made up around half of the EU’s energy consumption prior to the war. As part of its stated intent to continue developing its sustainable and circular business, investments in a commercial-scale MoReTec plant, LyondellBasell's proprietary technology to convert plastic waste into liquid raw materials, and the development of a circularity hub in the Cologne, Germany region, will continue as planned, the company said. “The company will prioritize its investments to align operations with our circularity and net zero ambitions," Vanacker added. "We understand that strategic assessments can create uncertainty for our employees and customers, but we are committed to operate our assets safely and reliably throughout this process." LyondellBasell European prodcution Product Capacity (kt) Ethylene 1,805 HDPE 1,260 LDPE 740 MTBE 810 Polypropylene 2,175 Propylene 990 Propylene Oxide 785 Styrene 680 TBA 970 Update re-leads, adds detail throughout Additional reporting by Graeme Paterson, infographics by Yashas Mudumbai

08-May-2024

LONDON (ICIS)–In this latest podcast, markets editor Nazif Nazmul interviews Paddy Lowe, CEO and founder of the synthetic fuels producing company Zero Petroleum. Synthetic fuels can play a vital role in slashing emissions across the transport sector in the coming years, although the road to scaling up is fraught with obstacles, as well as opportunities. Synthetic fuels, also known as e-fuels, are derived from renewable electricity, air and water. The power-to-liquid process entails chemical conversion of energy. Energy density of synthetic fuels and compatibility with international combustion engine (ICE) vehicles could provide a long-term decarbonisation alternative to electric vehicles (EVs) and biofuels Rail, marine, aviation, agricultural sectors can utilise synthetic fuels alongside road transport Synthetic fuels gaining traction in the aviation industry in the form of e-SAF Achieving cost parity with fossil-based gasoline will still take approximately 10 more years Legislative support likely to expedite time needed to achieve economies of scale Production process reliant on sourcing vast amount of renewable energy Click here to open in a new window.

08-May-2024

LONDON (ICIS)–German industrial production fell 0.4% in March month on month, but output from the chemical-pharmaceuticals sector rose slightly according to statistical data released on Wednesday. Bundesbank, chem-pharma production order volume index (2021=100): March 2024 February 2024 March 2023 Q1 2024 Q4 2023 Q1 2023 92.6 91.6 85.7 90.1 84.6 86.3 Production in the energy-intensive industries, which includes chemicals, remained flat month on month in March but rose 4.8% in Q1 2024 from Q4 2023. In the automotive industry, which is an important end market for chemicals, March production rose 0.6% from February. March 2024 production +/- change from February Total output from industry, construction and energy -0.4% Industrial production -0.4% -Intermediate goods -0.6% -Capital goods 0.1% -Consumer goods -1.4% Energy -4.2% Construction 1.0% (source: Statistisches Bundesamt, Wiesbaden) Industrial production was down 3.4% from March 2023 while total production from industry, construction and energy was down 3.3%. LACK OF ORDERSAccording to a survey by the Munich-based research group ifo on Wednesday, a shortage of new manufacturing orders worsened in April, slowing the overall economy. In manufacturing, 39.5% of companies reported a lack of orders, up from 36.9% in ifo’s January survey. In the chemical industry the share of companies reporting a lack of orders was 46.6% in April. In related news, a labor union has threatened “massive” strikes in the building and construction sectors after a failure to reach a new collective agreement with their employers. Along with the auto sector, building and construction are important end markets for the chemicals industry.

08-May-2024

HOUSTON (ICIS)–Following a better-than-expected 2024 first quarter, US compounder and formulator Avient raised its full-year guidance for adjusted earnings before interest, tax, depreciation and amortization (EBITDA) by $5 million at the low end. Sales into the defense market, along with raw material deflation, were the key earnings drivers in Q1 and Avent expects both to support earnings through 2024, CEO Ashish Khandpur and CFO Jamie Beggs told analysts during the company’s Q1 earnings call on Tuesday. New 2024 guidance Previous 2024 guidance Pro forma 2023 adjusted EBITDA $505 to $535 million $510 to $535 million $501.8 million SALES IMPROVING IN MOST END MARKETSAvient sees demand conditions “generally improving across all regions”, with improved momentum in consumer, packaging, healthcare, defense and industrial end markets, the executives said. After a 35% year-on-year increase in Q1, defense sales amid the ongoing geopolitical tensions, Avient expects those sales to continue growing through 2024, albeit not at the first quarter’s hot pace, they said. Avient’s Dyneema-brand fiber technology is used in the personal protection of soldiers and law enforcement and border control officers. While Avient’s utilization rates in defense are high, the company is able to meet forecast demand growth and expects no capacity limitations this year. However, it may add capacities in the future, depending on demand, which can be “lumpy” in that market, they said. Defense accounted for 7% of Avient’s total 2023 sales of $3.14 billion, with more than half of those sales in the US. Avient acquired the Dyneema business from DSM in 2022. Telecommunications and energy, however, are among the weaker end markets, with first-quarter sales down double-digit and weakness continuing into the second quarter. Destocking in the capital-intensive telecommunications market continued in Q1, with no meaningful rebound in that market expected until 2025, the executives said. Telecommunications accounted for 4% of Avient’s 2023 sales. BY REGION Regionally, Avient sees good momentum in the US in markets such as consumer packaging, defense, building and construction, industrial and infrastructure. “Destocking in those markets is over”, Khandpur said. With the exception of telecommunications and energy, overall demand in North America is “coming back quite well”, he said. However, persistent inflation is delaying the timing of interest rate cuts, which could weigh on sales in end markets such as building and construction, transportation and industrial, the executives said. In China, about 70% of Avient’s sales go into the local market, putting the company into a good position as that country’s economic policies transition to focus on the domestic market, the executives said. In Europe, demand in packaging and healthcare is improving, but Avient expects the region’s overall year-on-year sales growth to be soft. Consumer confidence in Europe is weak and eurozone manufacturing continues to signal contraction, they noted. Meanwhile, the stronger US dollar has become a headwind, they added. Sales by region in 2023: RAW MATERIAL DEFLATION Raw material deflation will continue to support margin expansion in the second quarter, albeit to a lesser extent than in the first quarter, the executives said. In the first quarter, Avient saw better-than-expected pricing for non hydrocarbon-based raw materials such as pigments and certain performance additives. Primary raw materials used in Avient’s manufacturing operations include polyolefin and other thermoplastic resins, titanium oxide (TiO2), inorganic and organic pigments, specialty additives and ethylene. Pricing, net of raw materials, should help drive year-on-year earnings growth in 2024, the executives said. Also, the company expects additional margin expansion due synergies and plant closures related to its acquisition of Clariant’s masterbatch business back in 2020, Beggs noted. M&A NOT A PRIORITY In the near-term, Avient will focus on organic growth and margin expansion whereas growth through mergers and acquisitions (M&A) is not a priority. While Avient is not ruling out M&A, any deals would be “small and bolt-on in nature”, in areas like healthcare, sustainable solutions or composites, with focus on Asia and Latin America, Khandpur said. “Premiums are pretty high” in M&A, he added. Thumbnail photo of Ashish Khandpur, who took over as Avient's CEO and president on 1 December 2023; photo source: Avient

07-May-2024

ORLANDO (ICIS)–SABIC is looking for further opportunities for growth in the Americas as part of its strategy to navigate an era of excess capacity around the world, one that has led it and other producers to shutter capacity in high-cost regions, an executive said. "We are actively looking at our growth opportunities throughout North America as well as South America," said Sami Al-Osaimi, executive vice president, polymers, SABIC. He made his comments during a presentation at this year’s NPE: The Plastics Show. Al-Osaimi said the Americas is a very key strategic market for SABIC. The company has seen good momentum in North America. "We are definitely going to really make sure that we leverage what exactly our customers require," he said. About two years ago, SABIC and ExxonMobil started operations at an integrated polyethylene (PE) and ethylene glycols (EG) complex in Corpus Christi, Texas, US, under the Gulf Coast Growth Ventures (GCGV) joint venture. The startup marks SABIC's first US-based ethylene and PE production, albeit through a joint venture. At the same time, Al-Osaimi acknowledged the challenges facing the industry. The market is contending with the consequences of a surge in new ethylene capacity that has started up in recent years. ICIS estimates that up to 20 million tonnes/year may need to shut down to keep operating rates at healthy levels. High-cost regions are bearing the brunt. Earlier in April, SABIC announced plans to shut down a cracker in Geleen, the Netherlands. ExxonMobil revealed plans to shut down its cracker in France during that same week. Al-Osaimi did not rule out further capacity rationalizations during a question-and-answer session that followed his presentation at NPE. "SABIC always is looking to its operations in Americas, globally, and how to become more efficient and effective to support our customers to really develop the right solutions," he said. "This is going to be an ongoing process." OPPORTUNITIES IN CHEM RECYCLING, E-CRACKINGSABIC is further improving chemical recycling technology to make it more effective and efficient, he said. SABIC and Plastic Energy are developing a chemical recycling plant under a joint venture in Geleen. Completion had been expected in the fourth quarter of 2023. There are still challenges with scaling up the technology, Al-Osaimi said. Still, SABIC is open to expansion, with possible sites including the US, Saudi Arabia and other regions. In addition, SABIC, BASF and Linde recently started up a demonstration unit of an electric cracker (e-cracker). As the group demonstrates the technology, it would explore expanding the site and potentially building new units, Al-Osaimi said. STRATEGY OF COLLABORATION, INNOVATIONIn prepared remarks, Al-Osaimi elaborated on how SABIC was navigating the challenges in the market by stressing its focus on innovation and collaboration with customers. The company is focusing on end markets such as advanced packaging, automotive, transportation, building and construction, consumer goods, electrical components and health and hygiene, he said. Electric vehicles (EVs) have material challenges, that present opportunities for SABIC. The company is developing polymers to prevent thermal runaway – part of its larger BLUEHERO initiative, Al-Osaimi said. Companies that build automobiles powered by internal combustion engines (ICEs) still want to lower their weight to improve their fuel efficiency and reduce their greenhouse gas emissions, he said. That is creating demand for lighter weigh materials. Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida. Focus article by Al Greenwood Thumbnail image shows polyethylene (PE), which is used in plastics bags. (Photo by Elaine Thompson/AP/Shutterstock)

07-May-2024

SINGAPORE (ICIS)–Saudi Aramco's net income fell by 14.4% year on year to Saudi riyal (SR) 102.3 billion in the first quarter amid lower crude oil volumes and weakening downstream margins, the energy giant said on Tuesday. in SR billions Q1 2024 Q1 2023 % Change Sales 402.04 417.46 -3.7 Operational Profit 202.05 222.18 -9.1 Net profit 102.27 119.54 -14.4 Early this year, Saudi Arabia’s government ordered Aramco to halt its oil expansion plan and to target a maximum sustained production capacity of 12m barrels/day, 1m barrels/day below the target announced in 2020. In the first quarter, Aramco's downstream income before interest, income taxes and zakat (annual Islamic tax) slumped by 64% year on year to SR4.62 billion. The drop in downstream earnings reflects weakening refining and chemicals margins, partially offset by inventory valuation movement, it said. The drop in group earnings was partially offset by lower production royalties, an increase in crude oil prices compared to the same period last year and lower income taxes and zakat. Despite having a capacity of 12 million barrels/day, Saudi Arabia currently produces about 9 million barrels/day as part of production cuts initiated by OPEC and its allies in October 2022 and further voluntary cuts by Saudi Arabia and other OPEC+ members in April 2023, all designed to stabilize oil prices. Following an OPEC+ meeting in June 2023, Saudi Arabia – the world's top crude exporter – announced a further oil production cut of 1 million barrels/day. “Looking ahead, I expect our portfolio to continue to evolve as we aim to contribute to an energy transition that offers solutions to climate challenges, but at the same time recognizes the need for affordable, reliable, and flexible energy supplies," added Amin Nasser, Aramco's President and CEO. Aramco's chemicals arm SABIC and China's Fujian Energy and Petrochemical Group Co held a groundbreaking ceremony to mark the start of construction at the SABIC Fujian Petrochemical Complex in China's Fujian province during the first quarter. The project will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. Thumbnail photo : One of Aramco's US offices (Source: Saudi Aramco)

07-May-2024