Benzene

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Discover the factors influencing benzene markets

Rapidly changing market dynamics are a constant reality for buyers, sellers and traders of benzene who must closely track highly active markets in the US, Europe, Asia-Pacific and China. This high demand petrochemical is extracted from crude oil for industrial use, so markets also react quickly to even the smallest fluctuations in oil prices. To make solid and lucrative trades, multiple factors must be monitored constantly, so when opportunities occur, they are acted on straight away.

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Benzene news

Brazil's Braskem restart at Triunfo to kick off petchem hub normalization

SAO PAULO (ICIS)–Braskem has restarted operations at its Triunfo facility in the flood-hit state of Rio Grande do Sul, which will allow other players in the petrochemicals hub to start up their plants as many depend on input from the Brazilian polymers major to operate. On Monday (20 May), Braskem said it would restart its units at Triunfo – where the producer has around one-third of its Brazilian production capacity – with the expected process to take around two weeks. A spokesperson for Innova told ICIS that the styrenics producer’s plants at Triunfo were ready to begin operations as soon as Braskem, which supplies Innova with key feedstock benzene, had started up. The spokesperson did not respond to questions about the financial hit Innova would suffer from the Triunfo outage, but said it had been able to its supply customers with material from its other units in Brazil. “For polystyrene [PS], for instance, our Manaus production unit was able to absorb the tonnage previously allocated to Triunfo, so that we could avoid any negative impact on our customers," said the spokesperson. Meanwhile, a source at Innova told ICIS late on Monday that it aims to restart its PS, styrene, and ethyl benzene (EB) plants on 22-23 May. However, due to low production volumes, it would be prioritizing customers in Brazil rather than exporting any material. The restart process, however, may not be without hiccups. A source in Brazil's petrochemicals industry said on Tuesday that highway BR-386, a 525-kilometer road linking Porto Alegre with the interior of the state as well as the south of Santa Catarina state, remains partially blocked. "Drainage is still a problem. The blockage of the BR-386 and the lack of trucks are making distribution very difficult," said the source. "Yesterday [Monday], they managed to dispatch 15 trucks out of Triunfo, while the daily average on normal days stands at around 400 trucks." THE BEGINNING OF THE ENDIn what has become one of Brazil’s worst flooding disasters, the state of Rio Grande do Sul came to a standstill on 29 April with hundreds of roads blocked, widespread landslides and a dam collapse. As of Monday, the floods had caused 157 deaths while another 88 people are unaccounted for, according to Rio Grande do Sul’s emergency services. Over 76,000 people are still taking refuge in shelters, while nearly 600,000 have been displaced from their homes. In the 12-million people state, nearly 2.5 million have been affected by the floods which have badly hurt its economy. Although  petrochemicals plants at Triunfo have not been damaged by the flooding, access to them became almost impossible at the peak of the crisis. This forced companies in the hub to declare force majeure, including Braskem, Innova, and styrene butadiene rubber (SBR) producer Arlanxeo. As of Tuesday, none of the force majeures had officially been lifted. Indorama’s subsidiary in Brazil said it was idling its plants, although it has yet to declare force majeure. A spokesperson for Indorama told ICIS that the situation at its plants remains unchanged from last week. Arlanxeo had not responded to a request for comment at the time of writing. Although petrochemical facilities at Triunfo are restarting, other industrial players are still reeling from the floods with widespread stoppages. Earlier this week, automotive global majors Volkswagen (VW) and Stellantis said they were stopping production at some Brazilian and Argentinian plants due to a lack of input from automotive parts producers in Rio Grande do Sul. Meanwhile, fertilizers players have said to ICIS that demand could be hit, potentially resulting in lower prices as Rio Grande do Sul is also a major agricultural state in Brazil. Analysts at S&P Global said that while petrochemicals producers in the state may be spared from a large financial hit, fertilizers players are likely to be more negatively affected. Front page picture: Braskem's facilities at the Triunfo petrochemicals hub in Rio Grande do Sul Source: Braskem Additional reporting by Bruno Menini

21-May-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 3 May. Freight rates spike again, nudging Europe PET buyers back home Shipping costs may be making European polyethylene terephthalate (PET) imports prohibitively expensive, giving domestic sellers an opportunity to individually lift prices. Eurozone manufacturing activity dips again in April as order momentum fades Eurozone industrial sector momentum sank further into contraction territory in April, to hit a four-month low as new orders declined by the sharpest rate seen in 2024. Legal confusion limits Europe's pyrolysis oil trade as tyre-derived price fall Europe's tyre-derived pyrolysis oil spot prices fell this week following discussions of increased availability as pilot plants continue to scale, coupled with pressure from low-priced offers from overseas – particularly Asia. Europe May benzene contract drops in weaker market The Europe benzene May contract price has settled at €1,117/tonne, down by €151/tonne from April and snapping an uptrend that began in January. European polyols market bearish as demand pressures continue Demand for polyols in the European market remains under pressure, as major end sectors are facing difficulties, however there are different views for consumption going into May.

06-May-2024

Styrolution shutting Sarnia styrene plant after resident complaints

HOUSTON (ICIS)–INEOS Styrolution is temporarily shutting its styrene plant in Sarnia, Ontario, after nearby residents complained they became ill from the plant’s emissions. “At INEOS Styrolution, ensuring the health and safety of our employees and community is paramount,” the company said in a statement. “We are temporarily shutting down our facility located in Sarnia, Ontario, Canada, to perform maintenance and address a mechanical issue. We will resume operations once addressed.” The plant has capacity to produce 445,000 tonnes/year of styrene and 490,000 tonnes/year of ethylbenzene (EB), according to the ICIS Supply and Demand Database. The shutdown came after the Aamjiwnaang First Nation community asked the government to close the plant when members complained of becoming sick and said that data indicated high levels of benzene in the air. Members reported having headaches, nausea and dizziness due to poor air quality. Aamjiwnaang First Nation describes itself as a community of about 2,500 Chippewa Aboriginal peoples located on the St Clair River in the city limits of Sarnia. Last week, Ontario Environment Minister Andrea Khanjin said that she expected the company to “quickly identify and reduce” emissions at the site, according to news reports. In 2020, the Ministry of Environment, Conservation and Parks created the Sarnia Area Environmental Health Project to look into concerns that residents expressed about air pollutants and other quality-of-life impacts from living close to industrial operations in the area. The project includes regularly measuring air quality for potential health risks. The shutdown will further tighten the North American styrene market, which has experienced a number of outages that have put upward pressure on contract and spot prices. Styrolution’s Texas City, Texas, plant has been shut since mid-2023. In addition, Total remains on force majeure from its joint-venture CosMar unit in Carville, Louisiana, and LyondellBasell’s propylene oxide/styrene monomer (POSM) plant in Channelview, Texas, is undergoing maintenance. Shell recently restarted its Scotford, Alberta, styrene unit but it is not operating at full capacity, according to market sources. US styrene contract prices in April were assessed at their highest level since Q3 2023 due to the rise in spot prices, which are up approximately 50% since the beginning of the year. Styrene is a chemical used to make latex and polystyrene resins, which in turn are used to make plastic packaging, disposable cups and insulation. Major North American styrene producers include AmSty, INEOS Styrolution, LyondellBasell Chemical, Shell Chemicals Canada, Total Petrochemicals and Westlake Styrene.

22-Apr-2024

Europe market jitters ease despite ongoing Middle East tensions

LONDON (ICIS)–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. Asia-Pacific equities had tumbled in earlier trading on the back of growing hostilities over the weekend after Iran launched ordinance into Israeli airspace late on 13 April. The Israel Defence Force (IDF) confirmed the attack, with Rear Admiral Daniel Hagari stating in a briefing on Sunday that none of the 170 drones launched from Iran had entered Israeli airspace, and fighter jets mobilized to intercept cruise and ballistic missiles had shot almost all of them down. The handful of ballistic missiles that crossed into Israeli territory were intercepted and fell at the Nevatim airbase in the south of the country, but damage to infrastructure was limited and the base is currently operational, he added. Lingering unease from the attack, and the potential for an Israel-Iran conflict to escalate further bled into early Monday trading, with Hong Kong’s Hang Seng index and Japan’s Nikkei 225 index closing down 0.72% and 0.74% respectively. Taiwan and India felt the chill more keenly, with the Taiwan SE and Bombay Sensex bourses closing down 1.38% and 1.14% respectively. European bourses were less unsettled on Monday, with Germany’s DAX and France’s CAC 40 trading up 1.01% and 1.09% respectively, while the UK FTSE 100 was little changed at 13:10 BST. European chemicals stocks moved higher on Monday, with the STOXX 600 chemicals index trading up 0.34% from Friday’s close, with Solvay, Evonik and Arkema among the biggest gainers. The decline in oil prices also deepened from earlier in the day, with the value of Brent crude June futures dropping 87 cents to $89.58/barrel in noon trading. The fall in crude values represents a decline in the overall risk premium priced in at present in response to Middle East tensions, but they are a long way from a more comprehensive rollback. Oil prices have increased by over $8/barrel since mid-March. Crude and downstream pricing as of 12:00 BST Monday Product Latest Previous Change Brent June 89.58 90.45 -0.87 WTI May 84.74 85.66 -0.92 Naphtha 677.00 695.00 -18.00 Benzene 1203.00 1205.00 -2.00 Styrene 1800.00 1815.00 -15.00 An attack from Iran had been threatened for weeks following a strike on its embassy in Damascus, Syria. The fact that the response was telegraphed in advance, consisted largely of slow-moving drones and resulted in little damage and no fatalities, has reassured markets that there is scope for a de-escalation. “The fact that there was limited damage and no loss of life may also provide some comfort to the market, as it may mean a more measured response from Israel,” said ING analysts in an oil market note issued on Monday. Iran said it considers the conflict concluded and US diplomats are reportedly urging restraint in Israel, but further salvos, which will represent Iran’s first direct attack on Israel, means that tensions could rapidly intensify. “The US and allies are pushing for a diplomatic response, while the risk is that hardliners within the Israeli government push for a more aggressive response,” ING added. Multiple western governments have officially condemned Iran for the attack which took place on the same day that Iran’s Revolutionary Guard Corps seized a ship passing along the Strait of Hormuz, according to data provider Xeneta. Any moves to sanction Iran or measures that could restrict the country’s flow of oil into global markets could tighten supplies in the short term, ING added. Focus article by Tom Brown Thumbnail photo: The bell ceremony at the Euronext exchange in Brussels, Belgium. Source: Shutterstock

15-Apr-2024

AFPM '24: INSIGHT: New US auto emission rule to boost plastic demand, squeeze refiners

HOUSTON (ICIS)–The new greenhouse gas restrictions that the US imposed on automobiles will speed up the adoption of electric vehicles (EVs), which will have several knock-on effects on plastics, lubricants and chemicals produced by refineries. Under the new greenhouse gas standards, EVs and plug-in electric vehicles (PHEVs) will make up a growing share of the nation's light automobile fleet at the expense of internal combustion engines (ICEs). EVs and PHEVs consume larger amounts of plastics on a per-capita basis than autos powered by ICEs. If the prevalence of ICE-powered vehicles declines as forecast by the US, then that would lower demand for fuel, discouraging refiners from expanding or making expensive investments on their units. That could lower production of aromatics and other refined products. DETAILS OF NEW EPA TAILPIPE RULEThe new rule requires the US light vehicle fleet to emit progressively smaller amounts of carbon dioxide (CO2), as shown in the following table. Figures are listed in grams of CO2 emitted per mile driven. 2026 2027 2028 2029 2030 2031 2032 Cars 131 139 125 112 99 86 73 Trucks 184 184 165 146 128 109 90 Total Fleet 168 170 153 136 119 102 85 Source: EPA The US will have to greatly increase its reliance on EVs to meet such standards, according to the EPA. The regulator forecasts what its new rule will entail for the makeup of the US light vehicle fleet. It presented three scenarios that make different assumptions about the share of EVs, PHEVs, hybrids and autos powered by ICEs. Hybrid vehicles rely predominantly on ICEs, while PHEVs rely predominantly on batteries, which is why they need to be plugged in to recharge. The following charts show the three scenarios. Scenario A 2027 2028 2029 2030 2031 2032 ICE 64% 58% 49% 43% 35% 29% Hybrid 4% 5% 5% 4% 3% 3% PHEV 6% 6% 8% 9% 11% 13% EV 26% 31% 39% 44% 51% 56% Source: EPA Scenario B 2027 2028 2029 2030 2031 2032 ICE 62% 56% 49% 39% 28% 21% Hybrid 4% 4% 3% 6% 7% 6% PHEV 10% 12% 15% 18% 24% 29% EV 24% 29% 33% 37% 41% 43% Source: EPA Scenario C 2027 2028 2029 2030 2031 2032 ICE 61% 41% 35% 27% 19% 17% Hybrid 4% 15% 13% 16% 15% 13% PHEV 10% 17% 22% 27% 32% 36% EV 24% 26% 30% 31% 34% 35% Source: EPA IMPACT ON PLASTICSEVs and hybrids typically consume more plastics than ICEs, according to Kevin Swift, ICIS senior economist for global chemicals. Swift compared two automobile models that their manufacturers offered in ICE, hybrid and EV versions. The following chart shows how plastics consumption fared across the three versions. Not only do EVs tend to consume more plastics, they impose different challenges on the materials. Because EVs need to be recharged, their systems are running even when the vehicles are stationary. Materials must have the durability to maintain their properties after several thousands of additional hours of use. The wires and cables within EVs generate heat through electrical resistance, so materials need to manage heat. Materials used in battery packs and the charging equipment need to have flame retardancy to prevent thermal runaway. Some materials must withstand high voltages from fast charging times, while others need to shield sensors and other electrical components from electro-magnetic interference (EMI) and radio frequency interference (RFI). As EV production grows, demand for these materials will increase. IMPACT ON BASE OILSIf the EPA's forecasts come true, then demand for base oils used in engine lubricants will decline. EVs lack ICEs so they do not use motor oil. However, EVs still have moving parts so they will require greases and lubricants. A more lucrative opportunity may lie in thermal management fluids. Petroleum-based thermal management fluids avoid the problems that come with using water-based cooling fluids like glycols in electric vehicles. In time, EVs could manage heat by relying on direct immersion cooling. Here the battery, the inverter and the motor are submerged in a bath of thermal management fluids. The base stocks that would be used in thermal management fluids will be a combination of polyalphaolefins (PAOs), esters and polyaklylene glycols (PAGS). IMPACT ON AROMATICSA faster adoption of EVs could speed up the arrival of peak oil demand. Figures from the US Energy Information Administration (EIA) show that gasoline demand in the country peaked in 2018. That peak was barely higher than the previous record set in 2007. Refiners are not going to add new capacity or make expensive investments if demand for their primary products have stagnated. As their units age or suffer damage from fires and other accidents, refiners could choose to shut operations or convert their complexes to produce renewable fuels or other sustainable products. The consequences would cause production to stagnate or even decline for benzene, toluene and xylenes (BTX), chemical building blocks that are primarily produced in refineries in the US. Downstream consumers of these chemicals will have to consider imports if they wish to maintain their operations. US COULD LAVISH MORE POLICIES ON EVSUS EVs could get more supportive policies in the months ahead. 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 US Department of Transportation (DOT) is proposing stricter efficiency standards under its Corporate Average Fuel Economy (CAFE) program. The American Fuel & Petrochemical Manufacturers (AFPM) has raised concerns about the new EPA rule as well as the two pending policies that would provide further support for EVs at the expense of vehicles powered by ICEs. It raised more concerns on Thursday right before the group's International Petrochemical Conference (IPC), which begins on Sunday. “At a time when millions of Americans are struggling with high costs and inflation, the Biden administration has finalized a regulation that will unequivocally eliminate most new gas cars and traditional hybrids from the US market in less than a decade,” said Chet Thompson, AFPM CEO, said. “Whether you are a Republican or Democrat, Congress has to make a decision whether to protect consumer choice, US manufacturing workers and our hard-won energy security by overturning this deeply flawed regulation,” Thompson said. “Short of that, our organizations are certainly prepared to challenge it in court.” Insight article by Al Greenwood Thumbnail image shows an electric vehicle (EV) charging station in Takoma Park, Maryland. Photo by MICHAEL REYNOLDS/EPA-EFE/Shutterstock

21-Mar-2024

INSIGHT: SAF catalyst technology could also boost biochemicals production

LONDON and BARCELONA (ICIS)–Catalyst technology used to power the first transatlantic flight conducted by a commercial airline which used 100% sustainable aviation fuel (SAF), could also have applications in chemicals production if a market can be developed to allow for commercial scale up. The SAF used on the voyage, dubbed Flight100, was a SAF blend containing 88% HEFA hydroprocessed esters and fatty acids (HEFA) supplied by AirBP, the specialised aviation division of BP, and 12% SAK synthetic aromatic kerosene (SAK) supplied by Virent, a subsidiary of Marathon Petroleum Corporation. Virent developed the SAK in conjunction with Johnson Matthey, using the latter’s proprietary BioForming sugars to aromatic process. Feedstocks such as sugar beet, sugar cane, and corn are currently used in the process, which is also capable of utilising cellulosic sugars as feedstock. Current forms of SAF linked to HEFA and Fischer Tropsch Synthetic Paraffinic Kerosene (FT-SPK) require conventional jet fuel blending to enable an 8-25% aromatics presence to enable optimum fuel burning. Fossil-based conventional jet kerosene is blended with HEFA and FT-SPK based SAF to create a balance between the paraffins and aromatics required to ensure proper fuel system operations. The BioForming sugars to aromatics process results in bio-based aromatics in the SAK, which enables up to a 100% drop in form of SAF, and can be compatible as a jet kerosene replacement. The SAK can also be blended with other types of SAF to boost the overall SAF content in the fuel mix. The BioForming process could potentially play a vital role in helping scale up the much-needed global SAF capacity expansion required to meet the aviation sectors’ aim to reduce emissions. The International Civil Aviation Organization (ICAO) adopted a global framework in November 2023, in which member states committed to strive towards reducing carbon emissions in international aviation by 5% by 2030 using SAF, low carbon aviation fuels, and other clean energy sources. The EU is implementing a minimum SAF blend of 2% starting from 2025. Mandated SAF blending rates in airports across the bloc will increase to 6% by 2030, 20% by 2035, and 34% by 2040, eventually reaching 70% by 2050. The US Department of Energy (DOE) published a plan that sees the country potentially meeting 100% of its projected jet fuel demand with SAF by 2050. A 10% blending target by 2030 has also been set by the OneWorld airline alliance, which includes British Airways, American Airlines, Qatar Airways, Cathay Pacific, Malaysian Airlines, and others as members. Currently, SAF makes up just over 0.1% in the global aviation fuel mix, which continues to be dominated by fossil-based jet kerosene. Johnson Matthey must overcome any possible financial hurdles that may arise before it can scale up its BioForming technology. Clariant was forced to shutdown its bioethanol plant in Podari, Romania, which also used cellulosic biomass as a feedstock. The company struggled to license out its Sunliquid technology while grappling to ramp up capacity of its bioethanol plant amid challenging operating economics. Johnson Matthey and other companies spearheading technological developments in biofuels and bio-chemicals will have to consider lessons incurred from other projects and integrate such learnings into future plans. BIOCHEMICAL FEEDSTOCK POTENTIAL According to David Kettner, president and general counsel at Virent, this technology has huge potential as a feedstock for chemicals production because it can use a variety of feedstocks to produce the sugars required for the process. This includes lignocellulosic sugars from woody biomass or agricultural residues. One third of the output of the process can be used for biochemical production and the company has already cooperated with companies such as Coca Cola where it produced bio-polyethylene terephthalate (PET) packaging. Virent also cooperated with Japan’s Toray Industries to produce polymers which were used by the Patagonia clothing brand to produce a 100% bio-based polyester product. The chemical feedstock produced by the process most closely resembles mixed xylenes. “The stream itself looks very much similar to what you would see coming out of a reforming unit," Kettner said. "You would take your mixed xylenes cut and be able to put it directly into existing processes for the production of benzene, toluene and xylenes, all of which have strong uses in polymer applications.” He said a demonstration plant currently produces around one barrel/day of bio-reformate with the potential to scale up to commercial levels “very comfortably”. Iain Gilmore, senior manager of Catalyst Technologies at Johnson Matthey added: “We are working at the moment with Virent and Marathon at commercializing the technology and we're pretty confident we can get the size of plants up in the region of 300,000-400,000 tonnes/year of bio-reformate. The project is going through the engineering and design phase, but is not yet at the stage where a formal announcement will be made. Johnson Matthey and Virent have also developed a joint licensing model which is currently being taken to market, led by Johnson Matthey. Insight by Nazif Nazmul and Will Beacham Thumbnail photo: A 100% SAF-fuelled Virgin Atlantic flight (Source: Justin Lane/EPA/EFE/Shutterstock)

20-Mar-2024

AFPM '24: INSIGHT: Biden ending term with regulatory bang for US chems

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

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 15 March. US CPI inflation 'sticky' at 3.2%, may delay Fed rate cuts – ICIS economist US inflation, as measured by the consumer prices index (CPI), rose 0.4% month on month in February, leaving it up 3.2% year on year, the Bureau of Labor Statistics (BLS) reported on Tuesday. LyondellBasell sees signs of modest improvement in Q1 – CEO LyondellBasell is seeing some indications of modest improvement in its businesses, particularly in North America and Europe, with packaging being the strongest end market, its CEO said on Wednesday. US Trinseo seeks to sell stake in AmSty Trinseo has started the process to sell its 50% stake in Americas Styrenics (AmSty), the US-based engineered materials producer said on Wednesday. US outage to boost March Asia-Atlantic spot acetic acid, VAM trades Asia-Atlantic spot trades for acetic acid and vinyl acetate monomer (VAM) are expected to increase after supply gaps in the US and Europe emerged following an unexpected plant outage in the US. Potential for oil market deficit in 2024 as demand expectations grow – IEA Higher oil demand expectations and fresh production cuts from the OPEC+ alliance could push the 2024 crude market balance from a surplus to a slight deficit if the voluntary reductions remain in place for the rest of the year, according to the International Energy Agency. INSIGHT: US aromatics, refining output recedes as peak oil approaches Peak oil demand in the US could lead to a further decline in refining capacity, which will tighten supplies of benzene, toluene and xylenes (BTX) for downstream chemical producers. Unipar expects hardship in Argentina but Brazil PVC demand should recover Unipar’s operations in Argentina are set to face pressure from the current recession but a bright spot could appear in higher civil engineering activity in Brazil, propping up demand for polyvinyl chloride (PVC), the Brazilian chemicals producer said on Friday.

18-Mar-2024

Asia, Mideast petrochemical trades to slow down during Ramadan

SINGAPORE (ICIS)–Trades for several petrochemicals in Asia and the Middle East will slow down as markets observe Ramadan starting 10 March, with demand going into a lull amid shorter working hours during the Muslim fasting month. Converters hold ample inventory GCC demand for PP to rebound after Eid ul-Fitr Gaza conflict dampens EastMed market, outlook uncertain Most markets continue to struggle with poor demand as well as high cost amid geopolitical uncertainties in the Middle East and Europe. From 10 March, businesses in many Muslim-majority countries will operate on reduced hours, potentially affecting production and logistics, with significant business decisions likely to be postponed. INDONESIA IMPORT QUOTA FURTHER DAMPENS SENTIMENT In Indonesia – the world’s most populous Muslim nation and the second largest polyethylene (PE) consumer in southeast Asia after Vietnam – the seasonal slowdown in demand is exacerbated by uncertainties over the government’s import quota regulations. Industry players were recently informed by Indonesia’s trade ministry that most PE and PP grades would be exempted, but some worry that this could still change before the import quotas take effect on 10 March. Many converters are currently sitting on high stocks of PE, having boosted imports in the weeks after the government announced the new rules in December, before details were fleshed out. A few of them are now willing to re-enter the import market to order new supplies. “My customers have stopped talking to me for now. It’s both Ramadan and the import quota issue," said a PE supplier. "I feel that while prices have not really dropped … the demand has clearly slowed. Most buyers have already bought enough, and they are not willing to risk buying more,” the supplier said. “Ramadan and Lebaran (Eid ul-Fitr) are slow periods of demand,” he added. Eid ul-Fitr is a Muslim festival marking the end of Ramadan. In the upstream ethylene market in southeast Asia, inquiries from Indonesia have picked up since late February as buyers stock up for April and wanted to wrap up negotiations before Ramadan. Ethylene prices have increased because of tight supply amid operating issues at Chandra Asri’s cracker as well as limited supply coming from the Middle East. MIDEAST TENSIONS WEIGH ON TRADES Demand for both PE and PP in the Gulf Cooperation Council (GCC) is expected to improve after Eid ul-Fitr, as buyers restock after Ramadan's lull. In the East Mediterranean market, sentiment is likely to remain weak amid the Israel-Hamas war in Gaza. The war, now on its eighth month, and the weak economies of Lebanon and Jordan have dampened activity in both the PE and PP markets. Market conditions may not improve if a resolution to the war cannot be found soon. Since the start of the Israel-Hamas war on 7 October, sentiment was dampened throughout the region, with buyers in Jordan and Lebanon adopting a wait-and-see approach on markets. Hopes of an Israel-Hamas ceasefire ahead of Ramadan are fading following reports of more than 100 deaths of people waiting in a food aid line in Gaza. More than 100 people were killed on 29 February after Israeli troops fired on a large crowd of Palestinians racing to pull food off an aid convoy late last month, bringing the death toll since the start of the Israel-Hamas war to over 30,000, according to the Gaza Health Ministry. A continuation of hostilities beyond the start of Ramadan is now highly likely as several key issues remain unresolved. This could inflame tensions in the region significantly, with attacks by Yemen’s Houthi militants on shipping in the Red Sea likely to escalate. In toluene diisocyanate (TDI) and polymeric methylene diphenyl diisocyanate (PMDI) markets, GCC trades recently accelerated as some customers looked to stock up on volumes following recent spikes in costs of feedstock benzene and toluene in Asia. Some northeast Asian isocyanates producers announced sharp price increases in southeast Asia, which also impacted their volume allocations to other regions like the Middle East. In March and April, when supply for both TDI and PMDI is expected to be tight to normal due to some turnarounds in Asia, demand from GCC countries will likely slow down. Most businesses in the Middle East work fewer hours during Ramadan, which will impact overall activity. Focus article by Nurluqman Suratman Additional reporting by Josh Quah, Izham Ahmad and Damini Dabholkar Thumbnail image: Welcoming Ramadhan 2024, Medan, Indonesia – 27 February 2024 (Sutanta Aditya/NurPhoto/Shutterstock)

08-Mar-2024

INSIGHT: Indorama flags peak oil demand in possible plant closures

HOUSTON (ICIS)–While Indorama Ventures reviews six sites for possible closure, it will consider signs that oil demand will continue growing in emerging Asia while peaking in Europe and North America – a trend that would alter the regional costs of a principal polyester feedstock, making it more attractive to import it from Asia than make it in the West. Benzene, toluene and mixed xylenes (MX) are produced in refineries, and they are among the fundamental building blocks for the chemical industry. If oil demand peaks in the West, that would discourage refiners from expanding capacity or making the expensive investments needed to maintain existing production levels. That would tighten supplies for these building blocks, affecting costs for chemicals as varies as phenol, styrene and paraxylene (PX). By contrast, oil demand has yet to peak among emerging economies in Asia. There, refiners will continue to increase capacity to meet growing demand for diesel and gasoline. Supplies of aromatics should continue growing in those regions. Indorama is taking the prospect of peak oil seriously because a key polyester feedstock, purified terephthalic acid (PTA), is made from PX, and PX is extracted from MX. If Western PTA prices become too expensive, then it would make more sense for Indorama to shut down its high-cost plants in the West and purchase the feedstock from producers in Asia that can sell material at a lower price. Indorama did not specify which plants it could close. PEAK OIL IN WEST SPELLS END OF NEW REFINERIESIndorama expects oil demand in the West will soon peak, perhaps in 2025 or 2026, said Aloke Lohia, Group CEO of Indorama. He made his comments in an interview with ICIS. His comments are backed by statistics from the Energy Information (EIA). Outside of the post-COVID rebound in 2021, gasoline demand in the US has been running below pre-pandemic levels. In 2023, it reached a summertime peak of nearly 9.60 million bbl/day. That is more in line with summer levels in 2015. Given the outlook for oil demand in the West, Indorama is betting that refiners will unlikely make the pricey investments necessary to increase capacity. "No one is looking to build a new refinery," Lohia said. Refiners could even shirk from making the investments needed to maintain existing capacity. "We believe there will be de-growth in refineries in the West and hence high cost for crude oil derivatives that has hurt our competitiveness, especially in Europe," Lohia said in prepared remarks. Actions by refiners are bearing this out. LyondellBasell plans to shut down its Houston refinery because it cannot justify the capital expenditures needed to keep the 100+ year old complex running. Although ExxonMobil recently expanded its refinery in Beaumont, Texas, the last time a refiner made a comparable investment was in 2012, when Motiva expanded its refinery in Port Arthur, Texas. Several refiners have converted existing units to process vegetable oils and similar feedstock to produce renewable diesel and sustainable aviation fuel (SAF). LyondellBasell could convert its Houston refinery into a sustainability hub. OIL DEMAND TO CONTINUE GROWING IN EMERGING ASIAUnlike the West, Indorama expects oil demand to continue growing in emerging Asia. Governments in this part of the world have less aggressive schedules for reducing carbon emissions, with net-zero goals further out in the future, Lohia said. Reducing carbon emissions boils down to renewable electricity. Instead of producing power by burning coal and natural gas, countries would do so with renewable sources such as solar panels, wind turbines and hydropower. Renewable electricity could also be used to generate heat. Emerging economies have limited power production, and they want to use that electricity to rapidly industrialize, according to Indorama. De-carbonization and industrialization will compete for limited power generation. That will place a limit on the expansion of charging stations needed for electric vehicles (EVs). Until emerging markets build out electrical infrastructure, they will still need petroleum-based fuels. Consequently, emerging markets are giving themselves more time to reduce carbon emissions. In China in particular, some companies could rush to complete new expansion projects before decarbonization deadlines take effect, Lohia said. China already has too much capacity, so this building spree will worsen the supply glut. As it stands, crude oil processing in China reached 14.8 million bbl/day in 2023, an all-time high, according to the EIA. Growing refining capacity should increase supplies of aromatics such as PX, the feedstock used to make purified terephthalic acid (PTA). That should depress PTA production costs. INDORAMA'S PLANGiven the global outlook for chemical feedstock produced at refineries, Indorama is considering a plan that would reduce consumption of these feedstocks at its Western operations. Instead of producing feedstock at high-cost plants, Indorama would import the material from Asia. Production lost from any closures would be offset by increasing utilization rates at Indorama's low-cost plants. The move would significantly increase Indorama's overall operating rates and lead to double-digit returns on capital employed (ROCE) for the two businesses most exposed to MX, Combined PET (CPET) and Fibers. US SHALE MAY SPARE DOMESTIC PLANTSThe calculus is less straightforward for Indorama's US operations. Critically, these operations include methyl tertiary butyl ether (MTBE), an octane-boosting gasoline blendstock that is made with methanol and isobutylene. In the US, both of these chemicals are made from shale-based feedstock, giving Indorama a substantial cost advantage. When gasoline prices rise, Indorama's MTBE operations can earn the company very attractive margins. Those fat MTBE margins would offset the higher costs involved with producing PTA from PX extracted from MX. MX is another octane-boosting blendstock, so its price tends to rise and fall with that for gasoline. In effect, MTBE provides Indorama with a hedge against higher MX costs for its US PET operations. MX is not the only feedstock used to make PET. The other is monoethylene glycol (MEG), a chemical made from ethylene. US ethylene producers predominantly on ethane as a feedstock, giving them a cost advantage. For Indorama's PET operations in the US, shale gas gives the company a cost advantage on the MEG side and a hedge on the PTA side. Thumbnail shows bottle made of PET. Image by monticello/imageBROKER/Shutterstock Insight article by Al Greenwood

05-Mar-2024

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