Polyvinyl chloride (PVC)

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tariffs on several products in 2023 and re-introduced a tax break, called REIQ, for some chemicals which had been withdrawn by the previous Administration.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

30-Apr-2024

SINGAPORE (ICIS)–Siam Cement Group (SCG) posted an 85% year-on-year decline in Q1 net profit on losses from chemicals operations, but the Thai conglomerate expects the segment’s earnings to recover in H2 on improved olefins demand and expected restart of its Vietnam petrochemical complex. H2 conditions to improve on chemicals recovery Long Son Petrochemicals complex restart targeted in July Olefins prices to stabilize in Q2, recover later in 2024 In Thai baht (Bt) million Q1 2024 Q1 2023 % Change Revenue from sales 124,266 128,748 -3.5 EBITDA 12,623 12,170 3.7 Net profit 2,425 16,526 -85.3 *Earnings before interest, tax, depreciation and amortization First-quarter EBITDA increased on higher contribution of businesses related to cement and construction. The company's listed SCG Packaging (SCGP) subsidiary, meanwhile, posted a 15% year-on-year increase in EBITDA to Bt5.2 billion as sales rose by 1% to Bt34.0 billion. Chemicals results in Bt million Q1 2024 Q1 2023 % Change Revenue from sales 45,376 46,805 -3.1 EBITDA 1,289 2,445 -47.3 Net profit -1,866 1,356  – Petrochemicals demand remained weak in the first quarter due to ongoing geopolitical tensions and weak global economic conditions, the company said in a filing to the Stock Exchange of Thailand on 24 April. The first-quarter loss in the chemicals business, however, was mainly due to lower equity income from associates and start-up expenses of the company's Long Son Petrochemicals Complex (LSP) in Vietnam. Its 100%-owned integrated petrochemical complex completed initial test-runs early this year but was shut in March due to equipment issues and will remain down up to June. SCG expects to restart the facility in July for the final test run, followed by commercial operations beginning August 2024. In the first quarter, the company sold around 306,000 tonnes of both polyethylene (PE) and polypropylene (PP) products, down 22% year on year following the shutdown at Rayong Olefins' (ROC) cracker. SCG now expects olefins demand to improve gradually in the second half of 2024 as supply in the region is expected to be limited due to a series of planned maintenance, particularly in China and southeast Asia. It expects stable olefins prices in the second quarter and a recovery in the latter half of 2024 as demand growth is expected to exceed capacity additions. Polyvinyl chloride (PVC) demand in Asia continues to face challenges due to the persistent real estate crisis in China, while supply is impacted by high inventory in China resulting in more exports to Asia. Focus article by Nurluqman Suratman ($1 = Bt37.05)

26-Apr-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 19 April. Europe markets downbeat, crude prices subside following blasts in Iran Europe stock markets shifted onto bearish footing in morning trading on Friday in the wake of explosions in Iran that escalated fears of ever-higher tensions in the Middle East. Europe OX demand remains flat as “higher for longer” rates hinder construction activity Demand for orthoxylene (OX) in Europe remains stable at soft levels as lacklustre appetite from the key construction industry persists due to the high interest rates imposed by central banks. PVC 2024 conference attendees gloomy on demand outlook European polyvinyl chloride (PVC) demand is likely to remain weak in 2024, as early hopes for a recovery in the first half of the year have been dashed, according to sources on the side lines of PVC 2024 in Edinburgh, UK a conference for PVC market players in Europe. France Chimie calls for sector support as crisis continues and structural changes limit investments Chemicals production growth in France could be limited to 1% in 2024 as many companies prepare to implement structural cost saving measures and limit investments for growth, the trade group France Chimie said on Tuesday. Europe market jitters ease despite ongoing Middle East tensions Chemical stocks in Europe have firmed in line with the general market in midday trading on Monday, as oil prices subsided and investor unrest eased despite ongoing tensions in the Middle East. IPEX: Global spot index edges down on softer values in northwest Europe The global spot ICIS Petrochemical Index (IPEX) edged down on the back of lower spot values in northwest Europe, where derivative production problems continue to hamper appetite for some chemicals.

22-Apr-2024

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

MUMBAI (ICIS)–Indian producer Mundra Petrochemicals Ltd has awarded engineering services company Nuberg EPC a contract to build its new 2,200 tonne/day chlor-alkali project in the western Gujarat state. “The project entails construction of the caustic soda plant within the 1m tonnes/year green polyvinyl chloride (PVC) project in Mundra, Gujarat,” Nuberg said in a statement on 11 April. Nuberg expects to complete the project within 15 months, without disclosing financial details of the contract. Nuberg EPC is a global engineering and turnkey project management company based in Noida in the northern Uttar Pradesh state. Mundra Petrochemical is a subsidiary of Adani Enterprises Ltd, which is owned by major Indian conglomerate Adani Group. The caustic soda project forms part of the Adani Group’s 2m tonne/year greenfield PVC project in Mundra. In March 2023, the company halted construction of the PVC project as it worked to secure project funding. A consortium of banks led by state-owned State Bank of India had agreed in July last year to finance a significant part of the company’s PVC project, according to media reports. The project involves setting up a 2m tonnes/year PVC plant in two phases with the first phase expected to be commissioned in the fiscal year ending March 2026.

12-Apr-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 5 April 2024. Oil at six-month highs; Brent crude at above $91/bbl on Mideast tensions By Nurluqman Suratman 05-Apr-24 11:00 SINGAPORE (ICIS)–Oil prices were extending gains, with Brent crude hitting past the $91/barrel mark on Friday, fueled by escalating geopolitical tensions in the Middle East which could disrupt supply amid output cuts by OPEC and its allies (OPEC+). INSIGHT: NE Asia C2 shipments slower for May, arb narrowing for SE Asia By Josh Quah 04-Apr-24 21:35 SINGAPORE (ICIS)–With spot discussions now turned to May arrivals, Asia ethylene markets are in a wait-and-see moment. Taiwan petrochemical operations normal despite 7.7-magnitude quake By Nurluqman Suratman 03-Apr-24 15:18 SINGAPORE (ICIS)–Operations at most petrochemical plants in western Taiwan were unaffected by a major quake that struck off the eastern coast of the island early on Wednesday, but the port at Formosa Petrochemical Corp’s (FPCC) Mailiao refinery was reportedly shut. Singapore March manufacturing improves; external headwinds persist By Nurluqman Suratman 03-Apr-24 12:12 SINGAPORE (ICIS)–Manufacturing activity in Singapore improved in March, boosted by higher export orders, but may remain weighed down in the near term by global economic weakness. INSIGHT: India’s PVC in the eye of the storm; ADD inquiry launched, BIS regulation looms By Damini Dabholkar 02-Apr-24 16:00 SINGAPORE (ICIS)–India’s polyvinyl chloride (PVC) market was active over the past two weeks, with April offers being announced, and notifications being released for two regulations.

08-Apr-2024

MUMBAI (ICIS)–India’s Epigral Ltd has commissioned its 45,000 tonne/year chlorinated polyvinyl chloride (CPVC) resin line at its facility in Dahej in the western Gujarat state. “Epigral now has a total CPVC resin capacity of 75,000 tonnes/year, positioning it as the largest CPVC resin facility in the world at a single location,” it said in a disclosure to the Bombay Stock Exchange (BSE) on 3 April. Epigral, formerly known as Meghmani Finechem Ltd, is a leading integrated manufacturer of chemicals in India, producing caustic soda, chlorine, caustic potash, chloromethanes, CPVC and hydrogen peroxide at its Dahej facility. “With this [CPVC] expansion, we are advancing towards our goal of becoming a multi-product company, geared up to enhance contribution from the derivatives and specialty chemicals segments,” Epigral chairman & managing director Maulik Patel said. The increased capacity will help the company meet rising global and domestic demand for CPVC resins, it said, adding that the increased capacity will also help reduce India’s reliance on imports of the material. Domestic demand for CPVC currently stands at around 250,000 tonnes/year and is expected to grow at an annual rate of 10-13%, a company source said. Separately, the company expects to commission its 35,000 tonne/year CPVC compound facility before June 2024. India currently imports its CPVC resin and CPVC compound requirements, and the new plant will help Epigral cater to domestic demand for both products. Meanwhile, the company also expects to commission its chlorotoluene and downstream value chain facility in the current calendar year, the company source said. Once operational, the chlorotoluene facility will produce intermediates for manufacturing pharmaceutical and agrochemical active ingredients. “Right now, India imports its chlorotoluene requirement completely from China, Japan, and Europe. We expect to cater to custom manufacturing companies that are currently importing this raw material,” the company source added.

04-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

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

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