Chemicals

BARCELONA (ICIS)–Changing trade flows driven by increasing friction between China, the US and their allies mean there will be demand for new chemical logistics routes and infrastructure, according to the executive chairman of chemical logistics group Bertschi. As direct chemical exports from China to the US decline, and more trade barriers go up, countries in Eastern Europe, southeast Asia plus Mexico and Turkey are acting as a stopping off points for indirect exports, while new chemical manufacturing also springs up in these areas, said Hans-Jorg Bertschi. He said: “The geopolitical situation also plays an important role – there are two blocs now – western countries and the BRICs (Brazil, Russia, India, China) led by China where we see a certain fragmentation of global trade. Chemical flows between China and the US are shrinking and we also now see a lot of triangulation trade where bridge countries in between take advantage of the situation.” Speaking on the side lines of the European Petrochemical Association’s annual conference in Berlin, he explained that China now transports a lot more chemicals to Mexico, where local manufacturers add value and then export finished goods to the US. Chemical producers – some from China – are building plants and businesses in Hungary and Turkey. There is also a flurry of activity in Morocco, India and Vietnam, which are all changing trade patterns around the globe, the executive believes. He said: “The reality is that new countries are emerging, which I call bridge countries between the blocs – some do not yet have the right chemicals infrastructure so here I would expect to see more investment in chemical logistics and supply chain infrastructure where there is growing local demand in addition to demand from regional fragmentation.” OTHER CHEMICAL TRADE FLOWS ALTER Bertschi pointed out that there is a clear increase of imports from the US to Europe based on the US feedstock advantage and growth of new-build facilities which are very efficient. “This has been going on for 3-4 years and will develop further. If you look at the average cracker size in Europe it’s about 350,000 tonnes/year whereas new world scale crackers are around 1 million tonnes/year. Also the average age of Europe’s crackers is 40-50… so I expect to see more closure announcements here, and more imports from the US, the Middle East and eventually from China.” CHEMICAL RECYCLING WILL DRIVE NEW LOGISTICS The chemical recycling sector is growing, with 83 projects in Europe alone recorded in the ICIS Recycling Supply Tracker – Chemical.  Globally the database records 173 sites and this nascent part of the chemical industry will create some completely new logistics requirements and trade flows according to Bertschi. He pointed out that the current linear model for chemical production just requires oil and gas to move mainly by pipeline to refinery and cracker sites. The finished products –  chemicals and polymers – are then distributed to downstream customers. The circular economy creates new flows of material which will require logistics support: “But now, with renewables, we have new flows of product which will require inbound logistics to deliver feedstocks into these plants. Pyrolysis oil will then be produced across regions which will require complex inbound logistics to refineries.” Bertschi has started placing storage centers near to crackers, plus heating and testing facilities for pyrolysis oil, which is a product of chemical recycling which can be used as a circular feedstock for chemical production. “This is not homogenous – it needs to be analysed before it is put into a cracker.  Previously just a pipe was needed but now complex inbound logistics will be required. We will import pyrolysis oil from across Europe and the US and some of this is already happening – this is at the beginning but it is becoming one of our growth drivers.” Interview by Will Beacham Image credit: Georgios Tsichlis/Shutterstock

22-Oct-2024

SINGAPORE (ICIS)–The short-term demand outlook for recycled polymers from Asia remains sluggish especially for low-value grades, mainly due to poor economics and brand users’ preference of cheaper virgin plastics. Upcoming regulation in deep-sea regions fails to support Asia recycled polyethylene terephthalate (rPET) exports Asia recycled polyethylene (rPE), recycled polypropylene (rPP) remain traded mostly in domestic markets Investments into recycling continue across Asia despite weak demand In this chemical podcast, ICIS senior editor Arianne Perez discusses recent market conditions with an outlook ahead in Asia.

22-Oct-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The recent clamor about new economic stimulus in China didn’t change anything. After initial stock market rallies, investors parsed the details and realized that Beijing was either unable or unwilling (it is surely a combination of both) to redirect the economy towards much greater domestic consumption and away from investment. It is what it is. The only question now is how low Chinese chemicals demand growth will go over the next decade and more. Will we see a negative growth in some years for some products, especially those tied to construction? Today’s main average polyethylene (PE) margins in northeast Asia between January 2014 and 18 October this year, weighted according to the estimated percentage shares of the three grades out of toral production in each of the 11 years from 2014 until 2024. As LDPE accounted for an average of just 16% in 2014-2024 versus 46% for high density PE (HDPE) and 38% for linear low density PE (LLDPE), then of course more weight was given to the margins of the latter two polymers. Despite all the sound and fury of the recent stimulus: Margins during the Chemicals Supercycle, from January 2015 until December 2022, averaged a positive $435/tonne. From January 2022 until August 2024 (before the most recent stimulus), they averaged minus $32/tonne. From January 2022 until 18 October 2024 (including post-stimulus), they averaged minus $29/tonne; from 1 September-18 October, the margins were at a positive $25/tonne. In other words, the most recent stimulus has barely moved the needle towards returning the northeast Asia PE business to a health condition. Chemicals and polymers are a very good barometer for broader economies. A view from this year’s European Petrochemical Association (EPCA): three to nine years before a full recovery This year’s EPCA in Berlin appeared as if it was attended by more senior executives than is usually the case. “Normally, companies send junior- to mid-level executives to the EPCA, but on this occasion more senior leaders were present because they wanted to try and gauge what happens next,” said one contact. I got the sense from my conversations at EPCA that there is recognition at board levels that the global chemicals industry is it an inflection point, not just because of events in China. The last chart in today’s post is a means of getting the debate going about the wider transformation taking place. Back to the downturn and China. Everyone I spoke to at EPCA recognized that China was front and center of the downturn, given the type of data I presented above. Estimates of when a full recovery might arrive ranged from a further three years to as many as nine years. But there was also a recognition, as the above chart suggests, that we may never fully return to the old market conditions. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

22-Oct-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 18 October. NEWSArgentina’s Rio Tercero shuts TDI plant on global oversupply Petroquimica Rio Tercero has shut its toluene di-isocyanate (TDI) plant in Cordoba on the back of global oversupply, a spokesperson for the Argentinian producer confirmed to ICIS on Tuesday. Brazil’s higher chemicals import tariffs kick off Brazil’s higher import tariffs on dozens of chemicals kicked off on Tuesday after the government published them on the Official Gazette late on Monday. Brazil’s Senate approves EU Reach-like rules to increase chemicals control Brazil’s Senate approved on 15 October the creation of a National Inventory of Chemical Substances aiming at “reducing negative impacts” of toxic chemicals on human and environmental health. PRICING Mexico PE domestic prices lower on weak demand, ample supplyDomestic polyethylene (PE) prices dropped in Mexico due to weak demand and ample supply. In other Latin American countries, prices were unchanged. Brazil hydrous and anhydrous ethanol sales surgeIn Brazil, 1.73 billion liters of hydrous ethanol were sold by Center-South units, representing a 4.36% increase over the same period in the previous harvest. This expansion demonstrates the domestic market's ongoing need for hydrous ethanol. Dow plans maintenance at LLDPE unit in Argentina – sourcesDow is having a scheduled maintenance at its linear 310,000 tonne/year low-density polyethylene (LLDPE) plant in Bahia Blanca, Argentina, until 5 November, according to market sources. Chile, Peru international PP prices drop on lower Chinese offers International polypropylene (PP) prices dropped in Chile and Peru on the back of lower offers from China. Chinese offers retreated this week, after rising the previous week due to higher crude oil prices.

21-Oct-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 18 October. IPEX: Global spot index rises again on increases in NE Asia The global spot ICIS Petrochemical Index (IPEX) rose for the second consecutive week in the week ended 11 October, by 0.3%, again due to price increases in northeast Asia. Argentina’s Rio Tercero shuts TDI plant on global oversupply Petroquimica Rio Tercero has shut its toluene di-isocyanate (TDI) plant in Cordoba on the back of global oversupply, a spokesperson for the Argentinian producer confirmed to ICIS on Tuesday. Brazil’s Senate approves EU Reach-like rules to increase chemicals control Brazil’s Senate approved on 15 October the creation of a National Inventory of Chemical Substances aiming at “reducing negative impacts” of toxic chemicals on human and environmental health. INSIGHT: Decarbonized chemicals, plastics gain momentum with multiple production pathways Momentum is building in the zero-to-low carbon chemicals and plastics space with many different pathways to production that will give customers more options to reduce their carbon footprint. US Ascend to close South Carolina plant, move polymer production to Florida Ascend Performance Materials plans to shut down its remaining operations Greenwood, South Carolina, and move the site's polymer production to its complex in Pensacola, Florida, US-based nylon producer said on Friday.

21-Oct-2024

LONDON (ICIS)–Join global analyst team lead for recycling Helen McGeough as she looks ahead to the 3rd ICIS Recycled Polymers Conference on 7 November in Berlin and tells Matt Tudball what she's looking forward to seeing from the diverse group of topics and presenters, including: Waste collection challenges and developments ICIS study on penetration rates of recycling in the wider virgin polymer market Chemical Recycling and its impact on the market Investment in recycling for low carbon solutions Prices of feedstocks impacting the recycled polymers chains 3rd ICIS Recycled Polymers Conference | Europe Hotel Palace Berlin, Germany | Conference: 7 November Training: 6 November You will be able to hear from out ICIS experts on the following session: Set the scene with ICIS: The European plastics recycling market landscape Panel discussion: Waste collection challenges and developments ICIS insight on pricing trends for plastics, mixed plastic waste and pyrolysis oil To discover more and register you place click here > https://events.icis.com/website/11605/home/

21-Oct-2024

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which reviews the Paris Motor Show and suggests 2025 will be make-or-break for European automakers. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author and do not necessarily represent those of ICIS. Paul Hodges is the chairman of consultants New Normal Consulting.

21-Oct-2024

LONDON (ICIS)–Despite a housing crisis in many of its cities, Germany’s new residential housing continues to decline. Permits fall Building decline hurts economy Benefits from interest rate cuts have not yet kicked in Residential construction permits continued to fall in August, according to the latest data by the country’s federal statistics agency on Friday: Permits fell 6.8% year on year to just 18,300 in August. For the first eight months, permits were 141,900 – down 19.3% year on year from 175,800 in the year-earlier period. Permits already fell sharply last year. Before 2023, they averaged 240,000/year, but even that was low compared with a government target, announced in 2022, of 400,000 new dwellings each year, construction industry officials said. TRADE GROUPS Construction industry trade group BFW Bundesverband Freier Immobilien- und Wohnungsunternehmen said that the situation in building and construction was “precarious”, not only for builders but for the overall economy. About 6.6 million jobs were linked to building and construction, a sector that was as important as the auto industry for the country's overall economy, the group said. Residential construction “is the key to economic growth in many other industries,” BFW said, adding that the government needed to act decisively to stop the sector’s “crash”. Another group, Zentralverband Deutsches Baugewerbe (ZDB), said that despite government measures, residential housing was not improving The construction industry hopes that the government will take additional measures after a “residential construction summit” (Wohnungsgipfel) scheduled to be held in Hamburg in December, ZDB added. A third trade group, Hauptverband der Deutschen Bauindustrie (HDB), was also pessimistic. Permits have now been falling for 28 months and pretty much everything that needed to be said about the decline has been said, HDB noted. The industry had made many suggestions to government to turn things around, with no effect, it added. INTEREST RATES Munich-based economic research group ifo said that the interest rate cuts by the European Central Bank (ECB) have not yet had any impact on Germany’s residential housing. Instead, interest rates on loans for households for residential construction remain high, the group said. In ifo’s September survey of residential construction, 52.9% of building and construction companies reported that order shortages worsened, compared with August. In a positive development, however, fewer orders were canceled than in August. The overall business climate in residential construction ticked up month on month, but “it would be going too far to speak of a glimmer of hope,” ifo said, adding, “The situation in residential construction remains serious.” According to German chemical producers’ trade group VCI, domestic chemical sales into the construction sector fell 3.9% year on year in the January-August period. The housing market is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins and derivative products, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibers, among many others. Please also visit the ICIS construction topic page and also visit Macroeconomics: Impact on Chemicals. Thumbnail photo source: ZDB

18-Oct-2024

LONDON (ICIS)–Construction output in the eurozone and EU marginally increased in August from the previous month, according to official data on Friday. Seasonally adjusted production in construction was up by 0.1% in the eurozone and by 0.4% in the wider EU. Building and specialized construction activity were higher in both blocs, while civil engineering output was lower, statistics agency Eurostat said in a statement. Construction activity for July was revised down, with a monthly fall of 0.5% in the eurozone and by 0.3% in the EU. Eurostat had initially reported largely flat output in both. On a year-on-year basis, August construction output fell by 2.5% the eurozone and by 2.4% in the EU. Numerous petrochemicals and specialty chemicals are key ingredients in products used for modern construction, including adhesives, ad-mixtures, sealants, coatings, paints, flooring, insulation and water proofing.

18-Oct-2024

LONDON (ICIS)–Chemicals sector executives are increasingly facing up to the idea that the sector is going through a process of reinvention, with no big recovery on the horizon and a return to pre-crisis normalcy less likely. Executives are now looking at next steps for the sector. In this Think Tank podcast, Tom Brown interviews Paul Hodges, chairman of New Normal Consulting, Katherine Sale,  ICIS head of editorial strategy, and Chris Barker, senior editor covering PVC and caustic soda, on impressions from the EPCA assembly. Growing acceptance of no big demand recovery, while demographic shifts to an ageing population reduce potential future demand growth Consolidation trend likely to continue, but environmentally sustainable products offer a growing opportunity Mood at EPCA less muted than previous two annual meetings, but far from positive Energy pricing less of an issue in 2024 so far but worries remain for 2025, with the specter of high costs likely to speed closures Caustic soda, chlorvinyls markets continue to suffer amid low demand, with substantial closures seen as necessary to balance the market Upcoming EU clean industrial deal likely to be a benefit, but will not be the end of regulatory conversation in Europe Tariffs continuing to proliferate in Europe against lower-cost imports, but do not address underlying competitiveness issue Click here to watch ICIS' analyst podcast on future chemical and recycling market trends from EPCA. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

17-Oct-2024