Chemicals

HOUSTON (ICIS)–Gevo has received a patent for its process that converts ethanol into olefins in a single step, providing another way to make propylene from renewable feedstock, the US-based renewable chemicals producer said on Monday. The patent, No 12,043,587 B2, addresses the company's process that relies on catalyst combinations for the process, which can make propylene and butylenes, which are also known as butenes. Gevo had licensed the technology to LG Chem. Chemical companies have had limited ways to produce propylene or butylenes from renewable feedstock. Technology already exists to dehydrate ethanol to produce ethylene. Companies could then convert the ethylene to propylene through a metathesis unit, but that would require an additional step and another plant, which would increase costs. Another route is to hydrotreat natural oils and used cooking grease to produce renewable naphtha. That naphtha could then be cracked in traditional ethylene plants to produce olefins and aromatics. This process faces possible feedstock constraints if companies wish to use nonfood feedstocks. Already, oleochemical producers that rely on tall oil have had to compete with renewable diesel producers for feedstock. Gevo did not compare the costs of its process to these existing ways to make propylene and butylenes from renewable sources.

16-Sep-2024

NEW YORK (ICIS)–It has been a long time coming and there is plenty more time before the chemical industry finally sees a meaningful upturn in the durable goods cycle, in turn giving a much-needed boost to commodity chemicals, according to Jefferies. “We expect demand stabilization in 2025, with a restock cycle and a rate-driven durables goods cycle in 2026-2027 to set the stage for the next period of tight commodity chemical supply/demand balances – MDI (methylene diphenyl diisocyanate) and methanol first, in our view, then acetyls, then olefins,” said Laurence Alexander, analyst at Jefferies, in a research note. In his base case scenario, the analyst sees US durable goods demand flat to down 3% in 2025 and up around 10% in 2026. The anticipated turn in the cycle for housing and durable goods would be a strong catalyst for shares of Eastman, Huntsman, Avient and DuPont, he pointed out. For chemicals in the near term, Alexander expects Q3 2024 to show a return to “normal seasonality” and Q4 volume outlooks to be trimmed 1-2% on more caution on the Christmas spending season – especially in Europe – as well as automotive production this winter. TRIMMING OUTLOOK FOR CELANESEGiven the softer near-term outlook, the Jefferies analyst also trimmed his earnings per share (EPS) estimates on Celanese for Q3 (by $0.06 to $2.84), Q4 (by $0.05 to $3.09) and for 2025 (by $0.10 to $10.40). “Credit easing is likely needed to trigger a demand rebound, and any tailwind from an improved credit environment will likely not be evident until mid-2025 at the earliest,” said Alexander. “Although destocking has faded, demand trends remain broadly sluggish with few signs of a recovery. European demand has yet to trough, North America is flattish and the recovery in Asia has been muted,” he added. By end-market, he sees electronics likely rebounding but at a slower pace until consumer confidence improves and automotive production accelerates. Consumer durables and construction demand is likely to remain soft into next summer. And automotive demand is muted overall, with headwinds to production schedules likely in the near term. Longer term, he expects better momentum in electric vehicle (EV) sales in China. Focus article by Joseph Chang

16-Sep-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 September. INSIGHT: Wall Street reaction to Methanex/OCI deal negative on valuation, leverage Methanex’s announcement that it will acquire OCI Global’s international methanol business for $2.05 billion drew a swift negative initial reaction, with its stock price plunging 7.9% at the close of its first day of trading after the announcement. Storm Francine veers path, could potentially hit petchems hubs in west Louisiana Storm Francine continues strengthening into a hurricane as it approaches the southern costs of the US, but its path could veer slightly west and potentially hit key petrochemicals sites in Louisiana which border with Texas. US chem, oil operations begin shutting ahead of storm Francine Some chemical and upstream oil and gas companies are shutting down operations ahead of Tropical Storm Francine, which is expected to strengthen into a hurricane on Tuesday night and make landfall along the US coast of Louisiana on Wednesday or Wednesday night. Francine strengthens into hurricane, heads for US Gulf Coast Francine has strengthened into a hurricane and is moving northeastward across the Gulf of Mexico, with landfall expected in Louisiana, US, on Wednesday afternoon or evening. Louisiana chemical plants shut down as Hurricane Francine nears landfall, major capacities at risk Several chemical companies are shutting down plants in Louisiana, with others taking other precautionary measures as the eye of Francine – now a Category 2 hurricane – approaches the coast for imminent landfall. Hurricane Francine passes over Louisiana parish with many chem plants Ascension parish, home to Geismar and its many chemical plants, was among the regions hardest hit by Hurricane Francine, which has caused hundreds of thousands of power outages. SHIPPING: Asia-USEC container rates plunge by 20% as shippers avoid possible ILA strike Average global rates for shipping containers fell significantly this week, including a 21% decrease from Shanghai to New York, as shippers are shifting cargo deliveries to the US West Coast to avoid the planned strike on 1 October.

16-Sep-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 13 September. NEWS Argentina chemicals, industrial July output falls as industry bears brunt of recession Argentina’s chemicals and manufacturing outputs fell in July by 5.4% and 2.6% year on year, respectively, as the industrial sectors remain the most affected by consumers’ squeezed budgets. Argentina’s progress on fiscal consolidation still challenged by inflation – economist The Argentinian’s government attempt to turn the economy around has had certain successes in the fiscal front, but high inflation is still challenging the outlook as it continues to eat up on gains elsewhere, according to an economist at Buenos Aires-based Fundacion Capital. Brazil's Petrobras launches natural gas processing unit in Rio de Janeiro Petrobras has begun start-up procedures for Brazil's largest natural gas processing unit (UPGN) in Itaborai, near Rio de Janeiro, the state-owned energy major said on Wednesday. Brazil’s inflation breaks upward trend in August, but some subsectors keep rising Brazil’s annual rate of inflation fell to 4.24% in August, down from 4.50% in July, but analysts pointed to how some price rises in certain sectors continue unabated. Mexico inflation falls below 5% in August, paves way for more interest rate cuts Mexico's annual rate of inflation fell quite considerably in August to 4.99%, down from July’s 5.57%, a development which is to reinforce the next cut to interest rates later this month, according to analysts. Argentina’s August inflation falls below 240% but monthly price increases remain over 4% Argentina’s annual rate of inflation fell in August to 237%, down from July’s 263%, but monthly price rises stood over the 4% mark, the country’s statistical office Indec said this week. Dutch Nouryon expands sodium chlorate capacity in Brazil, starts up new site Nouryon has expanded its sodium chlorate capacity in Brazil by starting up a new manufacturing site in Ribas do Rio Pardo, state of Mato Grosso do Sul, the Dutch chemicals producer said on Tuesday. Petrobras, Gerdau sign MoU for decarbonization projects Brazil’s Petrobras and steelmaker Gerdau have signed a non-binding Memorandum of Understanding (MoU) to evaluate commercial opportunities in decarbonization initiatives, the Brazilian energy major said this week. PRICING LatAm PP international prices steady to lower on cheaper imports International polypropylene (PP) prices were assessed as steady to lower across Latin American countries due to competitive offers from abroad and lower US propylene spot prices. LatAm international PE prices steady to lower on cheaper offers from abroad International polyethylene (PE) prices were assessed as steady to lower across Latin American countries due to cheaper offers from abroad. Latin America PVC business monitors potential supply tightening due to maintenance in Q3 Polyvinyl chloride (PVC) prices in Latin America remained steady this week, with the market closely watching US Gulf prices for potential changes in pricing strategies.  

16-Sep-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 13 September. Customers more willing to pay green premium as net zero transition gathers pace Chemical companies will find it easier to charge a green premium as the cost of carbon increases, fossil feedstock availability declines and customers realize the true value of the products they are buying. Global oil demand growth lowest since 2020 on China slowdown Global crude oil demand continued to decelerate in the first half of the year, the International Energy Agency (IEA) said on Thursday, with consumption growth of 800,000 bbl/day year on year the weakest since 2020. IPEX: Index falls in August as weak demand, softer crude put downward pressure on chemical prices in Asia The ICIS Petrochemical Index (IPEX) was down 1.3% in August month on month as weak downstream demand and softer upstream crude oil costs continued to exert downward pressure on chemical prices in northeast Asia. Europe PX, OX spot prices tumble on softer Asian market, lower contract values Europe paraxylene (PX) and orthoxylene (OX) spot prices plummeted week on week in the week ending 6 September, on the back of softer values in the influential Asian market and lower domestic contract prices, respectively. Demographic drag on chemicals to deepen A continuing flow of poor economic data caused further stock market jitters in September, and as the prospect of a meaningful recovery in the global economy recedes into next year, new analysis suggests that the demographic drag on growth may be stronger than previously thought.

16-Sep-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 September 2024. Asia LAB struggles amid crude oil weakness; Q4 supply to tighten By Clive Ong 13-Sep-24 13:40 SINGAPORE (ICIS)–Asia’s linear alkylbenzene (LAB) market remains in the doldrums with sentiment staying cautious following recent slippages in crude oil prices, while supply could tighten in the fourth quarter. INSIGHT: China-US trade tensions build as anti-dumping cases increase By Fanny Zhang 12-Sep-24 18:35 SINGAPORE (ICIS)–The US has become the top target of China’s anti-dumping cases for chemical imports, underscoring growing trade barriers between the world's two biggest economies. Saudi Arabia fosters closer ties with China; Aramco, Chinese firms sign fresh deals By Nurluqman Suratman 12-Sep-24 12:39 SINGAPORE (ICIS)–Energy giant Saudi Aramco has signed new agreements to advance separate expansion plans with Chinese petrochemical producers Rongsheng and Hengli. China Aug petrochemical markets tumble; weak demand persists By Yvonne Shi 11-Sep-24 16:38 SINGAPORE (ICIS)–Domestic prices of most petrochemicals in China declined in August due to weak demand and new capacity, with not much improvement in market conditions expected throughout September. Asia solvent MX facing headwinds in Sept amid various bearish factors By Jasmine Khoo 10-Sep-24 12:13 SINGAPORE (ICIS)–Within Asia, trading activity for solvent grade mixed xylenes (MX) in certain import markets like southeast Asia is poised to take a hit going forward into the later part of September. Heavy rains, floodings continue in north Vietnam in Yagi’s wake By Nurluqman Suratman 09-Sep-24 16:42 SINGAPORE (ICIS)–Heavy rains and floodings continued in northern Vietnam on Monday, two days since Super Typhoon Yagi made landfall in the region and killed more than 20 people. UPDATE: Sumitomo Chemical to close two Singapore MMA/PMMA lines by end-Sept By Nurluqman Suratman 11-Sep-24 12:48 SINGAPORE (ICIS)–Sumitomo Chemical will close two of its three production lines for methyl methacrylate (MMA) monomer and polymethyl methacrylate (PMMA) in Singapore by the end of September this year, the Japanese producer said on Wednesday. PODCAST: Weak fuel LPG demand to weigh on China 2024 propane/butane imports By Lillian Ren 11-Sep-24 10:50 SINGAPORE (ICIS)–ICIS has revised down its forecast for China’s combined imports of propane and butane for 2024 because of weaker-than-expected demand in fuel applications. Wang Yen, Senior Analyst speaks with Lillian Ren, analyst on the China propane, butane and LPG markets. UPDATE: Indonesia starts ‘safeguard measures’ probe into LLDPE imports By Izham Ahmad 10-Sep-24 18:09 SINGAPORE (ICIS)–Indonesia has initiated an investigation as to whether “safeguard measures” would be needed in response to a sharp increase in imports of linear low density polyethylene (LLDPE), its trade ministry said.

16-Sep-2024

HOUSTON (ICIS)–Average global rates for shipping containers fell significantly this week, including a 21% decrease from Shanghai to New York, as shippers are shifting cargo deliveries to the US West Coast to avoid the planned strike on 1 October. A strike by union dock workers at East Coast and US Gulf ports seems more likely after International Longshoremen’s Association (ILA) Wage Scale Delegates voted unanimously last week to support leadership’s intentions to walk off the job if a new labor deal is not agreed to when the contract expires on 30 September. Supply chain advisors Drewry said the shift has led to a decrease in demand that has pressured prices lower. Average global rates for 40-foot containers fell b y13% as shown in the following chart. As much of the peak-season demand has been pulled forward either to avoid tariffs or the labor issues, Drewry expects east-west rates to fall further in the upcoming weeks. The following chart from Drewry shows the decrease from Shanghai to both US coasts, as well as from Shanghai to Rotterdam and Genoa which have also fallen significantly. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates from Asia to the US West could face upward pressure the deadline to make the decision to shift coasts has about passed. “Transatlantic shippers still have a little time left to move containers, and the approaching cutoff may be supporting the $300/FEU (40-foot equivalent units) increase in daily rates so far this week,” 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 STEADY Rates for liquid chemical tankers ex-US Gulf were unchanged this week. On the transatlantic eastbound trade lane contract cargoes are keeping things steady with owners looking to fill holes of open space. October contract volumes on the transpacific route remain tentative but a shipping broker expects part cargo space to be available across the regular players. The USG-South America east coast trade lane was quiet this week, but the regular owners have space for prompt loading. Thumbnail photo: A container ship carrying cargo on its way to Antwerp Harbour. (By OLIVIER HOSLET/EPA-EFE/Shutterstock)

13-Sep-2024

SITGES, Spain (ICIS)–Chemical companies will find it easier to charge a green premium as the cost of carbon increases, fossil feedstock availability declines and customers realize the true value of the products they are buying. The cost of living crisis and poor profitability down industrial value chains mean that companies are resistant to paying more for low carbon and more sustainable products. But that will change as regulators push up the cost of carbon content in materials while the switch away from fossil fuels will make green alternatives more attractive, according to panel speakers at  the Fecc (European Association of Chemical Distributors) annual congress in Sitges, Spain. They argue that people will be willing to pay a green premium once there is regulatory support for carbon pricing, which will incentivize customers to take account of the savings low carbon products offer. Richard Jenkins, senior vice president for coatings solutions at France’s Arkema said: “The number of carbon credits will reduce, the number of companies seeking them will increase, and this will drive up the value of CO2 avoidance. So when I’m sitting in front of customers, I’m telling them they have to consider the whole cost of carbon – it might cost more per unit but overall you are saving on the costs of CO2.” The EU’s Emission Trading System (ETS) works under the principle of “cap and trade” where  companies are granted allowances for the maximum amount of CO2 they may emit from their facilities. They may buy and sell their allowances but the overall volume is steadily reduced each year in line with the EU’s climate targets. As they become more scarce, the price tends to increase. Georg Winkler, senior partner for consultants McKinsey & Company added: “If you decarbonize polyethylene (PE) packaging and then break down the actual costs, they are tiny – this should only change the price of the product by a cent or so. Also, if we have a single-use-plastics tax in Europe then we can point out the cost saving to our customers.” Ib Jensen, president and CEO of Swedish specialty chemicals group Perstorp said: “I don’t like the term green premium; I prefer the term fossil discount. Consumers are increasingly ready to pay a premium, especially in B2C (business-to-consumer), but also in B2B (business-to-business) they are appreciating [the need for a] green premium.” As the transition to low-carbon transportation accelerates, demand for diesel and petroleum will decrease, leading to the closure of more oil refineries. In turn this will reduce availability of petrochemical feedstocks for chemical production, potentially pushing up the cost of these materials. Arkema’s Jenkins said: “I don’t believe that today’s fossil-based chemistry will remain at the same scale and cost that it is today. We drive a lot less than we used to and some of my suppliers are telling me that some raw materials will be less available in the future. I think the old solutions may start to cost more, and as we get to scale the cost of new solutions will come down.” He added: “There is a lot of focus on energy efficiency so solutions which contribute to an overall cut in the cost of use are important. Now you’re talking about value rather than per unit cost – what it is doing and enabling and solving versus what it is, which is product push.” The Fecc annual congress takes place in Sitges, Spain from 11-13 September 2024. Focus article by Will Beacham Thumbnail photo source: Jeppe Gustafsson/Shutterstock

13-Sep-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The soundtrack of my youth was the Canadian rock band, Rush. In the fabulous Tom Sawyer, the lyrics include: “His mind is not for rent, always hopeful yet discontent, he knows changes aren't permanent, but change is”. Don’t let your mind be rented by anybody who tells you that the global chemicals industry isn’t going through the most profound set of changes in its modern-day history. Nobody knows all the details of the changes that will be permanent. Anybody who claims they do know will lead you down a path away from essential scenario planning. We do know that in this world of flux and chaos at a micro level, the following macro trends are here to stay: Sustainability, ageing populations across most of the G20, much more volatile geopolitics, ever greater economic, social and political disruptions caused by climate change and the end of debt bubbles. How will, for example, geopolitics and rising trade tensions reshape global polycarbonate (PC) trade flows, demand and trade flows? In today’s post,  I look at scenarios for China’s net imports or net exports of polycarbonate in 2024-2030 based on levels of trade tensions and its ability to export to third-party countries such as Mexico. These countries have become a means by which China is getting around the trade tensions by relocating export-focused manufacturing plants. The ICIS base case forecasts that China’s PC demand growth will fall to an annual average of 3% in 2024-2030 from 17% in 1992-2023. Assuming this 3% demand growth, capacity growth at 4% and an operating rate of just 47% in 2024-2030 (the 1992-2023 operating rate averaged 68%), ICIS forecasts that China’s PC net imports will be around 460,000 tonnes a year. Let’s imagine in a world of increased trade tensions, China decides it cannot afford to rely on large volumes of imports. Because of the trade tensions, it also cannot export significant quantities of PC to countries such as Mexico to make autos, etc. Under this outcome, let’s keep demand and capacity growth the same in the base case but raise operating rates to 55%. Average annual net imports fall to just 80,000 tonnes. What if, though, trade tensions are not that bad? If we again keep demand and capacity growth the same as the base case but raise the operating rate to 63%, China becomes a net exporter at an annual average of 460,000 tonnes between 2024 and 2030. I plan to attempt to build new demand and supply models today's demographic, geopolitical, debt, sustainability and climate change realities. This is going to be immensely difficult. Failure will be a big part of any success. But given today's events, do we have any other choice? 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.

13-Sep-2024

HOUSTON (ICIS)–Chemical companies continue to assess the impact from Hurricane Francine on Thursday after the storm made landfall on Wednesday as a Category 2 hurricane on the Louisiana coast. Ascension parish, home to Geismar and its many chemical plants, was among the regions hardest hit by Hurricane Francine, which has caused hundreds of thousands of power outages. Meteorologists at the National Hurricane Center (NHC) have downgraded Francine to a post-tropical cyclone that is continuing to produce heavy rainfall across parts of Tennessee, Mississippi, Alabama, Georgia and the Florida panhandle, as shown in the following image. Source: National Hurricane Center (NHC) CHEMICAL OPERATIONS Several chemical companies shut down their plants ahead of Francine's landfall on Wednesday evening and are assessing damage on Thursday, while some are in the process of restarting. Shell's refinery and chemical sites in Louisiana do not appear to have serious damage from Hurricane Francine, the producer said "at this early stage" on Thursday. Shell is conducting a thorough post-hurricane damage assessment at Geismar and Norco to ensure the integrity of its equipment, systems and processes. Downstream issues have caused Shell to curtail oil and gas production at Appomattox, Mars, Vito, Ursa and Olympus following Hurricane Francine, it said Thursday morning. Shell did not specify the downstream issues. Dow said its sites in Louisiana are safely resuming normal operations. It is unclear what steps it took in preparation for the storm and whether those steps had any effect on operations or production. BASF is assessing the impacts from Hurricane Francine at facilities located in the path of the storm, the company told ICIS in an update on Thursday. Louisiana is home to just above 25% of the total ethylene capacity in the US, according to the ICIS Supply and Demand Database. It also has close to 50% of the country’s vinyls chain capacity – for polyvinyl chloride (PVC), chlorine, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and caustic soda. Other significant exposures close to 50% of total US capacity include methanol, ethylbenzene (EB), styrene and low density polyethylene (LDPE). UTILITIES More than 262,000 customers in Louisiana were without power as of Thursday afternoon, according to the website poweroutage.us. The total was higher than 350,000 earlier in the day. There were more than 38,000 without power in Alabama, 13,000 in Mississippi and 11,000 in Tennessee. Ascension and Assumption parishes as well as the coastal parts of Lafourche and Terrebonne parishes appear to be among the hardest hit, said Entergy, a power company. OIL AND GAS The Louisiana Offshore Oil Port (LOOP) suspended all marine operations on 11 September, according to its website. An estimated 41.74% of current US oil production and 53.32% of US natural gas production in the Gulf of Mexico was shut in as of Thursday, according to the Bureau of Safety and Environmental Enforcement (BSEE). PORTS The US Coast Guard has not yet activated Port Condition Recovery at the Port of New Orleans, but pilots are understood to be ready and able to start moving traffic once cleared. Lake Charles is also currently closed awaiting the Coast Guard to survey the channel, which may happen early on Friday. Operations at Pascagoula, Florida, and Mobile, Alabama, have also been suspended due to adverse weather, according to GAC Hot Port News. RAILROADS Railroads are telling customers to expect delays as they assess damage from the storm. BNSF issued an embargo impacting traffic between Beaumont, Texas, and New Orleans, Louisiana, including Amelia, Texas. The embargo affects interchanges at Amelia, Beaumont and New Orleans. While the embargo is in effect, permits may not be issued until the storm’s impact has been assessed. CSX is closely monitoring the remnants of Hurricane Francine as it moves north-northwest, potentially affecting the CSX network. While no service areas are currently impacted, customers with shipments through the CSX Southeast and Southwest regions could experience potential delays. Leading up to the storm, CSX implemented measures to protect its employees, customers and communities. "Our team is working diligently to ensure minimal service disruptions while maintaining the highest safety standards," CSX said. Norfolk Southern is operating as scheduled and a market participant told ICIS the railroad said it will work with connecting carriers to utilize alternative gateways where possible. The New Orleans Public Belt Railroad said on Thursday that it resumed operations at 14:00 local time (19:00 GMT) following damage assessments. With the Port of New Orleans shut down, railroad companies warned customers of delays as traffic will be diverted following the port's flood-gate closure. Additional reporting by Tracy Dang, Al Greenwood, Stefan Baumgarten, Emily Burleson, Bryan Campbell and Melissa Wheeler Track the latest updates on Hurricane Francine and its impact on chemicals on the Topic Page: Storm Season 2024.

12-Sep-2024