Chemicals

SAO PAULO (ICIS)–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. The plant had a production capacity of 28,000 tonnes/year of TDI, which is a key feedstock to produce polyurethane foam. Production there stopped on 14 October. Rio Tercero said it would dismiss 1,250 employees. “This decision [to shut the TDI plant] is mainly due to the transformation the sector has undergone worldwide, with the emergence of large-scale plants, especially in Asia, which are producing an oversupply of TDI which caused global prices to fall abruptly in recent years,” said the company. “Another determining factor is the limited production capacity of our Rio Tercero plant, which makes it impossible to compete with larger global companies.” The spokesperson said Rio Tercero would now “become a TDI trader” to ensure the continuity of the company, given that it will still need the product to produce polyaluminum chloride (PAC), an inorganic coagulant used in water purification. The company's PAC production capacity stands at 58,000 tonnes/year, according to the spokesperson. As well as PAC, Rio Tercero also produces sodium hypochlorite, with a production capacity of 97,500 tonnes/year, and sodium hydroxide, with a production capacity of 11,000 tonnes/year. All the remaining production plants are operating normally, the spokesperson said. The company is a subsidiary of Buenos Aires-based Grupo Piero. According to local media reports, the provincial government has contacted the union to express its support to the plant’s workers, but it remains unclear whether the government could make any significant intervention to avoid the closure. EASIER TO SHUT PLANTSUnder the new Administration of Javier Milei which took office in December 2023, labor laws have been eased and firing employees has now become easier for companies. Earlier in October, US chemicals major Dow also said it would stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics. The company had already tried to close that plant earlier, but pressure from the trade unions and tighter labor regulations at the time made the company backtrack in its plans. According to the ICIS Supply & Demand Database (ISDD), with Rio Tercero’s TDI Plant now shut and Dow’s in the process of shutting its polyols facility, no company in Argentina will produce any isocyanates or polyether polyols. Consequently, companies producing polyurethane (PU) will have to import all their inputs, among other examples. Rigid PU foams are used mainly in insulation, refrigeration, packaging and construction, while flexible PU foams have applications such as upholstery, mattresses and seats. Polyols can also be used in elastomers, adhesives, coatings and fibers. Front page picture: Petroquimica Rio Tercero’s facilities south of Cordoba city, Argentina Source: Petroquimica Rio Tercero Additional reporting by Al Greenwood

15-Oct-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 11 October. NEWS Dow shuts Argentina polyols plant on global oversupplyDow has decided to stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics, the US chemicals major confirmed to ICIS on Wednesday. Brazil growth story props up chloralkali sector; Argentina still distant from being out of woods – CloroSurBrazil’s healthier than expected growth in 2024 has greatly propped up the chloralkali sectors, while Argentina's woes, although improving, will take some time to be fixed, said the director general at Brazil’s trade group Abiclor. Brazil’s September inflation ticks up to 4.4% on drought-induced higher electricity, food costsThe drought affecting Brazil filtered through consumers prices with higher energy bills and foods prices, pushing the annual rate of inflation to 4.4%, up from 4.14% in August, the country’s statistics office IBGE said on Wednesday. Argentina’s chemicals output down 3.5% in August, manufacturing down 6.9%Argentina’s chemicals and some petrochemicals-intensive sectors such as manufacturing and construction continue to bear the brunt of the recession, with output falling again in August, the country’s statistics office Indec said on Tuesday. Chile’s September inflation down to 4.1%, central bank expected to cut rates furtherChile’s annual rate of inflation fell in September to 4.1%, down from July’s 4.7%, reinforcing analysts’ expectation the central bank is to cut interest rates further later this month. Brazil’s Q3 automotive output highest since 2019Brazil’s petrochemicals-intensive automotive output posted in Q3 its best quarter since 2019 and fully recovered its pre-pandemic levels, trade group Anfavea said. Lula signs law to promote cleaner energy in BrazilOn Tuesday, President Luiz Inacio Lula da Silva officially signed into law the Combustivel do Futuro (PL 528/2020), a significant legislative step aimed at promoting cleaner energy in Brazil. Mexico's Alfa completes key step towards Alpek spinoffThe proposed spinoff of Mexican polyester producer Alpek has reached a key milestone, with corporate parent Alfa saying on Tuesday that it has solicited consents from more than 90% of the holders of a batch of senior notes. Argentina’s inflation falls to 209%; monthly price rises finally below 4% markArgentina's annual rate of inflation fell in September to 209%, down from 237% in August, the country’s statistics office Indec said on Thursday. Brazil’s Grupo Potencial to expand soybean oil-based biodiesel plant in ParanaBiodiesel and glycerine producer Grupo Potencial is to invest Brazilian real (R) 600 million ($107 million) to expand its facility in Lapa, in Parana state’s region of Curitiba, to up its capacity to 1.62 billion liters/year (1.42 million tonnes/year) of biodiesel, the government of Parana said this week. PRICING LatAm PP international prices increase in Chile, Peru on higher Chinese offersInternational polypropylene (PP) prices increased in Chile and Peru on the back of higher offers from China, while in Argentina and Brazil, prices dropped tracking competitive offers from abroad. LatAm PE international prices fall on competitive US export offersInternational polyethylene (PE) prices fell across Latin American (LatAm) countries on competitive offers from the US. Brazil expanding sectors drive PVC import surgeBrazil's polyvinyl chloride (PVC) imports emerged in 2024, driven by the improved demand from the construction and automotive sectors.

14-Oct-2024

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at  'reinvention' as a critical issue for the industry. 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.

14-Oct-2024

LONDON (ICIS)–Ahead of the 3rd ICIS Recycled Polymers Conference in Berlin on 7 November, Senior Analyst for Recycling Egor Dementev discusses the challenges and opportunities for both mechanical and chemical recycling with Annick Meerschman, Innovation Director at CEFIC. Topics covered include: Innovations driving plastic recycling in Europe Chemical recycling technology evolution Impact of legislation and regulation Challenges facing the recycling industry

14-Oct-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 11 October. Evonik plans major restructure of two business units as global competition intensifies German specialty group Evonik plans to restructure two of its business units, putting non-core assets up for sale, closure or partnerships. Hurricane Milton moves off Florida's east coast with damaging winds, heavy rainfall Hurricane Milton is moving away from Florida’s east coast but is still producing damaging winds and heavy rainfall in the state, according to the latest update on Thursday. Fundamental change still potentially ahead for chemicals industry Massive overcapacity along some value chains is likely to drive further fundamental shifts in the global chemicals landscape, with differentiation and innovation key to remaining competitive. Europe chems market overdue for restructure – Brenntag chief The European chemicals market is overdue a “massive” restructuring, the CEO of Brenntag said on Tuesday, to create players that can withstand competitive pressures from companies in higher-growth markets. Europe MPG outlook downbeat, but potential de-icing demand brings some hope Europe's mono propylene (MPG) spot market will likely remain subdued into early Q1 2025 against a tough macroeconomic backdrop.

14-Oct-2024

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US continued to fall after a lengthy strike was averted at US Gulf and East Coast ports and as peak season volumes have largely been pulled forward. The International Longshoremen’s Association (ILA) strike lasted just three days, and market analysts expect backlogs created by the work stoppage to be cleared up in two to three weeks, or even less at the Port of New York/New Jersey. Some ports extended gate hours to allow more time for containers to be delivered or picked up. Nathan Strang, the US Southwest director of ocean freight for Flexport, said the company is seeing relatively fluid terminal operations and railroad operations. Strang said all detentions and demurrage rules from the Federal Maritime Commission (FMC) remain in effect but noted that time frames for detention and demurrage restarted on 7 October after the strike ended. CONTAINER RATES FALL Global average rates for shipping containers continued to fall, according to multiple analysts. Supply chain advisors Drewry has its World Container Index (WCI) at $3,349/FEU (40-foot equivalent unit), which is down by 4% and shown in the following chart. Drewry said Shanghai to Los Angeles container rates fell by 5%, and Shanghai to New York rates fell by 3%, as shown in the following chart. Following the tentative deal between the ILA and the ports, Drewry expects rates ex-China to continue to decrease marginally in the coming weeks. Online freight shipping marketplace and platform provider Freightos said rates fell by a larger degree, but its rates had been higher. Judah Levine, head of research at Freightos, said carriers are also planning to reduce deployed capacity on the transatlantic trade lane later in the month in the hope of preventing rates from falling back to the $1,600-1,800/FEU level they had maintained for much of the year. “With the strike over and peak season demand largely behind us from a significant pull forward of volumes in the last couple months, transpacific container rates should continue to ease on the seasonal lull in volumes between peak season and Lunar New Year,” Levine said. 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 TANKER RATES UNCHANGED US chemical tanker freight rates held steady again this week for most trade lanes, even though vessel demand is growing for some routes. Most rates from the major chemical hubs remain sideways as a good portion of the market were attending the European Petrochemical Association (EPCA) conference in Berlin. The USG to Asia lane was also quiet following holidays. Although it is likely that increased exports ex–USG will be seen going into Europe and Asia, primarily as clean petroleum products (CPP) tonnage continues to focus on alternative cargoes in the petrochemical space, thereby adding to spot availability, which is already well supplied. On the transatlantic front, the eastbound leg is expected to warm up with cargoes being quoted including styrene to ARA from several US Gulf ports. With additional reporting by Kevin Callahan Visit the ICIS Logistics – impact on chemicals and energy topic page

11-Oct-2024

HOUSTON (ICIS)–Some ports in Florida have resumed operations while millions in the US state remain without power after Hurricane Milton made landfall earlier in the week, south of the fertilizer hub of Tampa. A few ports in Florida have maintained Port Condition Zulu, under which they are closed to inbound and outbound vessels. Others have reopened and have set Port Condition IV, which is a hurricane seasonal alert to which ports return after a storm. The following table summarizes the port conditions in Florida. Port Status Condition Port of Pensacola Open Normal Port Panama City Open Draft restrictions Port St Joe Open Normal Port Tampa Bay Closed Zulu SeaPort Manatee Closed Zulu PortMiami Open IV Port Everglades Open IV Port of Palm Beach Open IV Fort Pierce Open with Restrictions IV with restrictions Port Canaveral Open IV Jaxport Open IV Port of Fernandina Closed Zulu Source: US Coast Guard OUTAGESFlorida has more than 2.2 million reported outages, according to the website poweroutage.us. That is down by more than 1 million versus the immediate aftermath of the hurricane. Prolonged outages can disrupt economic activity and slow down demand for plastics and chemicals. CSX WARNS OF RAIL DELAYSThe railroad company CSX warned of delays while it works to clear tracks, install generators and conduct repairs. All routes north of Jacksonville, Florida are open with no anticipated issues, it said. The area south, from Callahan to the north end of Anthony, is also clear. Work continues in central Florida, and CSX is addressing washouts on the Carter and Vitis subdivisions. The CFR line should be open later Friday night, providing a potential route into Winter Haven. CSX is making contingency plans for possible issues with a gas pipe washout near the Miami area. IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin (UPR) production in Lakeland and Kathleen, Florida. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. Near Tampa is Florida's phosphate mining operations in Bone Valley, which covers parts of Hardee, Hillsborough, Manatee and Polk counties. In all, Florida has 27 phosphate mines, of which nine are active, according to the Florida Department of Environmental Protection. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida’s Big Bend region. On 30 September, Mosaic said its Riverview operations were off line following water intrusion from a storm surge caused by Hurricane Helene. Thumbnail Photo: Hurricane Milton. (By Cira/Noaa/Planet Pix via ZUMA Press Wire/Shutterstock)

11-Oct-2024

LONDON (ICIS)–The risks for Germany’s chemical industry keep rising, economists said during a webinar hosted by chemical producers’ trade group VCI, and noted: Weak demand, domestically and abroad Investments stall Geopolitical uncertainty Contrary to hopes at the start of the year, Europe’s largest economy is likely to shrink for a second straight year in 2024, the government said this week in revising its previous 0.3% GDP growth projection to a 0.2% decline. The economy shrank 0.3% in 2023 and has not been able to generate strong growth since 2018. Weak or negative GDP trends translate into lower demand for chemicals. So far this year, demand for chemicals from nearly all domestic key customer industries, except food and paper, has been weak, said VCI economist Christiane Kellermann. Year-on-year % changes in domestic chemical sales, by major customer markets, January-August 2024: Construction: -3.9% Plastics: -4.5% Metal products: -7.4% Autos: -5.8% Food: +1.5% Glass, ceramics: -7.8% Paper: +0.9% Printing products: -7.3% Furniture: -7.3% Machinery: -8.3% Electrical equipment: -16.1% Source: VCI Many of the chemical industry’s customers in manufacturing are curbing their production, and in the important construction end market there is no noticeable recovery. Meanwhile, export sales of German chemicals were weak in most regions, with the exception of Asia, Kellermann said. Year-on-year % changes in chemical exports, by region, January-July: EU: -2.5% Non-EU Europe: -1.1% Asia: +1.8% North America: -3.6% Latin America: -3.4% Source: VCI INVESTMENTSThe low demand translates into low production rates and low capacity utilization. In fact, over the past two-and-half years chemical producers have been running plants at utilization levels that were below profitability thresholds, Kellermann said. As companies suffer low demand in Germany, with little prospect of improvement, and cannot run existing plants and equipment at profitable levels, it does not make sense for them to invest in new plants, she said. In a recent VCI survey, 74% of chemical companies said they were unlikely to invest in expanding production in Germany, she noted. Only 15% said they were likely to invest in expanding production while 9% were undecided, according to the survey. Companies cited the country’s bureaucracy and long project permitting processes, high energy and labor costs, and high and complicated corporate taxes as key obstacles to investing in Germany. Only 13% said that a lack of trained workers deterred them from investing in the country. With little or no new investment, “import pressures” rise and the chemical industry’s export capabilities will decline in coming years, she said. Germany’s chemical industry loses in international competitiveness, in particular in energy-intensive basic chemicals, she added. GEOPOLITICAL RISKS Michael Gromling, an economist from the German Economic Institute in Cologne, who was also presenting at the VCI webinar, estimated that in order to return to a meaningful growth path and achieve a recovery (“Aufschwung”), Germany needed to generate annual average GDP growth of 2.5% from 2025 through 2030. This, however, was “not realistic”, given the weakness across all industries and the geopolitical and structural challenges companies face, he said. The country’s industries were export-dependent and therefore sensitive to geopolitical tensions, trade conflicts and protectionism, he said. Geopolitical tensions were holding back investment decisions, and without a detente it would be very difficult for Germany to achieve its Aufschwung, he said. An end to the Ukraine war and peace in the Middle East would be a “game changer”, creating an opportunity for reviving the global investment cycle, he added. However, rather than relaxing, tensions could further sharpen after the 5 November US presidential election, he said. Gromling did not say which candidate – current Vice President Kamala Harris or former President Donald Trump – he sees as the greater risk. For the time being, VCI maintains its 2024 growth forecast for the country’s chemical-pharmaceutical production unchanged at 3.5% (excluding pharma: +5.0%). If realized, the increase would only partially offset last year’s 7.9% production decline (excluding pharma: -10.4%). However, VCI may cut its 2024 sales forecast of 1.5% as exports were trending weaker than expected, Kellermann indicated. Focus article by Stefan Baumgarten Thumbnail image source: VCI

11-Oct-2024

BARCELONA (ICIS)–German specialty group Evonik plans to restructure two of its business units, putting non-core assets up for sale, closure or partnerships. The Coating & Adhesive Resins and Health Care businesses will be extensively reorganized, with operations generating sales of €350 million slated for strategic changes, the company said on Friday. In Health Care, production of keto acids for pharmaceutical applications in Hanau, Germany, is to be discontinued at the end of 2025, with the loss of around 260 jobs. For the sites in Ham (France) and Wuming (China) active in the same business, partnerships or divestments are being evaluated. The amino and keto acids business generates sales of around €100 million. In future, the Health Care business line will focus on what Evonik considers to be its growth areas: lipids for mRNA and gene therapies, drug delivery systems, and cell culture ingredients. Caspar Gammelin, head of the Nutrition & Care division, said: “Our amino and keto acids businesses in Ham and Wuming are strong and offer great potential. With investments in these sites, these businesses could reach their full potential and flourish. We are therefore examining options such as partnerships or divestments that would allow the businesses to prosper.” COATINGS RESTRUCTURE Evonik’s Coating & Adhesive Resins business line will focus on two core areas for growth: liquid polybutadienes as additives for adhesives and sealants or tires, and specialty acrylics for medical technology and the packaging industry. The business line’s existing polyolefins business, with sales of around €100 million, will be transferred to the C4 chain business at Evonik. In the future, the business will be sold as part of the C4 chain business. The €150 million turnover polyester business for coating and adhesive applications is to be sold. It has around 330 employees in Germany and China. The largest site, with around 250 employees, is in Witten (Germany). A smaller plant in Shanghai has around 30 employees. Lauren Kjeldsen, head of the responsible division Smart Materials, said: “To be successfully competing in the long term globally and to generate the necessary margins, investments are needed – and other companies for which polyester is a core business can realize these better than we can.” Evonik, like many of its peers in the European chemical sector, is under intense pressure from mainly China-driven global overcapacity, with companies under pressure to take radical action to focus on core assets and close or sell other operations. As well as the ramp-up in global production capacity, the region is being battered by a global slump in demand and a high cost base, which has led to collapsing margins and a wave of capacity closures across Europe. Thumbnail photo: Evonik's Essen, Germany, campus. Source: Evonik

11-Oct-2024

LONDON (ICIS)–Imagine you sold a product with no control over how much of it was produced at any one time; that you had to sell it within weeks of it being produced regardless of what the demand for it was like; and that the demand was constantly changing. For most waste managers, no imagination is required, this is their daily reality. And it’s one of the biggest drivers of volatility throughout the recycling chain globally. Waste originates from both the general public and industry, and as a result, the composition and quantity of waste generated at any one time varies continuously depending on consumer behaviour and industrial production trends. Waste managers typically hold contracts for waste collection with municipalities. They cannot turn material away. Because of variations in consumer and industrial production trends, different countries can have vastly different supply at any one time. The quality of that input waste (how contaminated it is, the tensile strength etc.) depends on a variety of factors including how it's been treated and stored before its entered the chain, the type of additives it contains, what other materials it has come into contact with (because contact with substances such as polyvinyl chloride (PVC) causes contamination), level of discolouration, gel content, and odour. Coupled with this, the more times a polymer has been recycled, the lower its tensile strength, and typically end-use suitability becomes increasingly limited. How many cycles it takes before the waste material becomes unusable varies from polymer-to-polymer, process to process, and level of other degradation. The longer you store waste (this is typically, but not exclusively, in the form of bales) without reprocessing it – or selling it on for reprocessing – the more it degrades. This can be due to a number of things, including the contaminants it contains, thermolytic degradation (from heat – typically the sun), and hydrolytic degradation (from water – common in the case of polyethylene terephthalate (PET). Meanwhile, new (and perhaps more valuable) strains of waste are constantly entering the chain, and warehouse space is limited. If the waste quality is too low, then waste managers either need to dispose of the material, sell it to the burn-for-energy sector, or use it captively for energy creation. Burn-for-energy bales typically sell at negative values, whereby sellers pay for the removal of waste based on cost saving against alternative disposal methods. As a result, most waste managers look to offload bales within a timeframe of around 4-6 weeks (although this varies from market to market). Reprocessed recycled material, meanwhile, serves a huge variety of end-use markets. Major offtake markets include, but aren’t limited to, packaging, construction, automotive, outdoor furniture, refuse bags, strapping, and horticulture. Demand between the end-uses also varies dramatically, and players in each market purchase for differing reasons. Some markets, such as packaging, are heavily driven by brand sustainability targets and regulation, other markets, such as construction, mostly purchase on cost saving against virgin. This has huge impacts on willingness to pay, Intensifying legislative and consumer pressure on sustainability in packaging over the past few years has seen a significant pricing gap develop between display packaging suitable, and non-display packaging suitable grades across most global recycled polymer markets. There is currently, for example, a spread of up to €1,500/tonne between the highest priced grade of Europe recycled polypropylene (R-PP) pellet (which is a post-consumer natural grade predominantly used in domestic goods and cosmetic applications), and the lowest priced grade (which is black injection-moulded pellets, which typically serves non-packaging applications). Ideally (from their point of view) waste managers and recyclers would primarily serve applications driven by sustainability targets where premiums are typically highest. Nevertheless, each downstream market has differing technical requirements  – with display packaging and automotive typically having the strictest technical requirements and construction, bin bags and outdoor furniture the lowest. This means that there is typically a higher volume of material sold into non-packaging applications. While sorting allows waste managers to extract the valuable fractions and, to an extent, control contaminants etc. it doesn’t control the input waste mix. So the type of material suitable to serve each application is changing constantly. There is also a direct correlation between feedstock waste quality and reprocessed output quality for both mechanical and chemical recycling. This creates a continuous supply/demand mismatch that is often underappreciated by players newly entering the market. This mismatch coupled with the need to offload material relatively quickly is the reason, for example, 90% mixed polyolefin bale prices have traded as high as €600/tonne ex-works NWE (northwest Europe) and as low as €0/tonne ex-works NWE since July 2022. Because waste fractions typically produce a variety of different flake and pellet grades depending on what is extractable from individual bales – especially for recycled polyolefins – they typically react to system wide demand in each locality. Individual flake and pellet prices, though, often react to demand from specific end-use markets. This can result in periods where waste bale prices are high but prices for some flake and pellet grades those bales serve are low, resulting in squeezed margins. This is especially true for grades that are purchased for cost-saving reasons, meaning that they need to aggressively compete with virgin and off-spec material. The reverse also regularly occurs, whereby bale prices can be low because demand in key end-uses such as construction is weak and general availability of waste is high, but volumes extracted for packaging suitable grades are limited and demand from that particular sector is firm. It is also increasingly common for material with broadly identical specifications to trade at different price levels depending on which sector it is being sold into. Further distortions in the chain are created because reprocessed material such as flakes and pellets can be stored for long-periods of time, and flake and pellet producers are not forced to offload material as quickly as waste managers. This leads to fragmented and localised downstream markets where spreads against feedstock costs and profitability are constantly shifting. Volatile feedstock costs also results in challenges for investment. This is particularly true for emerging technologies such as chemical recycling and bio-based plastics. Thatis because new producers seeking private investment are often required to project future costs (typically for a period of at least 5 years), with waste feedstock typically their largest variable cost. The unpredictability of waste values make this a herculean task. When players first explore circular plastic markets, they are often surprised by the variability and fragmentation of prices through the chain. In the majority of cases the direct cause can be traced back to the feedstock waste markets. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

11-Oct-2024