Butadiene and c4s

HOUSTON (ICIS)–Cold weather in the US Gulf Coast on Tuesday is expected to disrupt petrochemicals operations in Texas and Louisiana as companies take preventive measures. Temperatures fell sharply overnight from Monday and are expected to stay lower than the average for the time of the year in coming days, with potential rain, sleet and snow. The Houston metropolitan got snow in the early hours of Tuesday. The city is to record freezing temperatures all nights this week to Friday (see bottom table). CHEMICALS PLANTSUS Gulf Coast crude and petrochemicals players’ memories of the last disrupting cold snap in 2024 and winter storm Uri in 2021 are still fresh, with many fearing similar disruption this week as key petrochemicals hubs in the area are set to witness a similar cold snap. In such a scenario, companies have done all they could to minimize the disruption, although some factors could be outside their control despite the preparations. Germany’s chemicals major BASF said in a written response to ICIS late on Monday that its operations in Freeport, Texas, would “continue to run at as much capacity as possible” but conceded that potential snowfall could greatly complicate access to and from the site. As of Monday, BASF said: “[Due to the snow] roads possibly being impassable. As a result, BASF will have ride out crews arriving Monday evening and remaining until conditions improve, which is expected to be on Wednesday late morning,” said a spokesperson for the company. “Non-critical employees will work from home. The BASF site in Vidalia, Louisiana, will idle operations beginning Monday evening with a planned restart of Wednesday at noon.” As Houston recorded heavy snowfall overnight, BASF was enquired again about its impact on Freeport, but the company had not responded to the request at the time of writing. BASF’s spokesperson added the company’s sites in Geismar and North Geismar, in the state of Louisiana, would continue to run as normal. In another written response to ICIS, a spokesperson for Brazil’s polymers major Braskem said the company had activated its severe weather preparedness plan for its assets in La Porte, Seadrift, and Oyster Creek, all in Texas. “We will continue to monitor the severe weather and follow our protocols to ensure our team members and assets are safe during this time. We are working with our clients to minimize the impact of this weather event,” it added. A spokesperson for CPChem also said the company was monitoring the weather and “taking steps to prepare” its plants for any potential impact. A spokesperson for European chemicals major INEOS said the company's olefins, polyethylene (PE) and polypropylene (PP) units "have initiated winter storm" protocols. LyondellBasell would not comment. A spokesperson for the company said to ICIS: “As a matter of practice, we don’t provide specific details about our units, operational status, production figures, or supply for competitive reasons.” Pre-emptive shutdowns and operational disruptions reported so far include: BASF TotalEnergies cracker shuts down due to weather Formosa shuts Louisiana PVC unit ahead of freeze GCGV Portland, Texas, EG site down ahead of freezing temperatures Indorama's Clear Lake, Texas, EG site down for winter weather Indorama Lake Charles cracker shut due to weather Indorama shuts Port Neches, Texas, cracker ahead of winter storm Indorama's Port Neches, Texas, EG unit down ahead of winter weather Ingleside, Texas, cracker shut before winter storm LACC Lotte/Westlake Louisiana cracker and EG unit down ahead of winter weather Lyondell Channelview, Texas, crackers flaring on operations issues Lyondell La Porte, Texas, cracker sees weather-related flaring THREAT OF POWER OUTAGES AND GAS OUTAGESWhile industrial plants can avoid direct damage from cold weather, they can still be subject to power outages or the loss of natural gas supplies. If the forecasts for sleet and snow hold true, then this could cause powerlines to snap. Spikes in demand for heating can overwhelm the power grid in Texas, leading to widespread blackouts. Chemical plants and refineries rely on electricity to power motors and pumps. As of Tuesday, power supply should be sufficient to meet demand through 28 January, according to the Electric Reliability Council of Texas (ERCOT), which manages the flow of electricity in most of the state. The electricity grid in Texas was holding up reasonably well as of Tuesday morning, with nearly 48,000 power outages recorded according to Poweroutage.us. The figure is reasonably low for Texas' grid standards and was much lower than the more than 80,000 outages reported in California, a US state with similar population to Texas which is still reeling from wildfires around Los Angeles. Cold temperatures can also affect the flow of natural gas, potentially causing freeze-offs during which water or hydrates freeze or can create blockages. One such freeze-off caused on Monday a shutdown of a scrubber at an amine treater in Winkler county in west Texas, according to a filing with the Texas Commission on Environmental Quality (TCEQ). Low temperatures could disrupt operations at the plants that process natural gas. Since 2021, cold weather has disrupted US natural gas production during every winter, according to the Energy Information Administration (EIA). PROLONGED STRETCH OF FREEZING TEMPERATURESThe following table shows the weather forecast for the Houston metropolitan area this week, with temperatures listed in Fahrenheit first and, in brackets, in Celsius. Tuesday Wednesday Thursday Friday High 36 (2.2) 42 (5.6) 48 (8.9) 52 (11) Low 22 (-5.6) 29 (-1.7) 29 (-1.7) 37 (2.8) Source: National Weather Service Eric Berger, an analyst at Houston’s weather blog Space City Weather, said on Tuesday that infrastructure disruption should have cleared by Wednesday morning, although in some locations it may last practically all day. “After a cold start, high temperatures on Wednesday are expected to reach 40 degrees [Fahrenheit] or even a little warmer under sunny skies. The combination of mostly sunny skies and sublimation should allow for roads to mostly dry out, but for some locations, this may not happen until after noon,” said Berger. “I realize the uncertainty is no fun, but such snow and ice events are relatively rare in Houston, so we are working on limited data about local roads and their response to icy conditions. Most of Houston will fall into the upper 20s [Fahrenheit] on Wednesday night.” Front page picture: Houston's suburbs after heavy snowfall overnightSource: Adam Yanelli/ICIS Additional reporting by Al Greenwood, John Donnelly and Melissa Wheeler

21-Jan-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 17 January. INSIGHT: Trump bump to boost US GDP growth I am reminded every four years when there is a new US administration of the 1966 Western action movie, “The Good, the Bad and the Ugly” starring Clint Eastwood, Eli Wallach and Lee Van Cleef as the good, the bad and the ugly. It is in this vein that we will review new policies from the incoming administration and their likely impact on the economy and the chemical industry. Crude buoyed by cold weather, sanctions, China recovery – oil CEO The rally in crude markets could get continued support from cold weather, sanctions and a recovery in demand from China, the CEO of US crude producer Hess said on Tuesday. Latest US sanctions could hit Russia oil supply – IEA The latest tranche of US sanctions on Russia’s oil trade could affect flows from the country, while weather-related production shut-ins in North America could also impact global supply, the International Energy Agency (IEA) said. 2025 chemicals demand outlook highly uncertain on geopolitics – LANXESS CEO After two years of a severe downturn, the global demand outlook for chemicals in 2025 is extremely uncertain pending geopolitical and policy developments with a new US administration, upcoming elections in Germany and US-China relations, said the CEO of Germany-based specialty chemicals producer LANXESS. US steadies 2025 growth outlook as Europe struggles – IMF Global economic growth this year is expected to increase modestly compared to 2024, the International Monetary Fund (IMF) said on Friday, as stronger expectations of US growth offset an increasing bearish outlook for Europe. INSIGHT: US is adding no new ethylene capacity for first time since 2010 The oversupply of chemicals has caught up with one of the world's lowest cost producers. In 2025, the US will add no new ethylene capacity, the first time since 2010. INSIGHT: US tariffs on Canadian oil would harm the US and Canada US President-elect Donald Trump is expected to quickly move forward with his proposed 25% tariff on all imports, including oil and energy, from Canada and Mexico after taking office on Monday 20 January.

20-Jan-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 17 January. US steadies 2025 growth outlook as Europe struggles – IMF Global economic growth this year is expected to increase modestly compared to 2024, the International Monetary Fund (IMF) said on Friday, as stronger expectations of US growth offset an increasing bearish outlook for Europe. Europe jet fuel prices lift off with Brent surge, but demand fails to take flight Jet fuel spot prices in Europe climbed in the week to 14 January, mirroring a rally in upstream Brent crude and gasoil values. However, activity in the physical market remained sluggish, weighed down by low buying interest and abundant supply. Latest US sanctions could hit Russia oil supply – IEA The latest tranche of US sanctions on Russia’s oil trade could affect flows from the country, while weather-related production shut-ins in North America could also impact global supply, the International Energy Agency (IEA) said. Europe naphtha climbs on Brent gains amid sluggish buying, weaker margins Open-spec naphtha (OSN) spot quotations in Europe have been on an upward trajectory, rallying on the back of firming Brent crude values. This was despite subdued blending requirements and poor feedstock demand which kept market liquidity low. PP and PE Africa markets rebalance, some price rises emerge amid lacklustre demand Spot prices in the African polypropylene (PP) and polyethylene (PE) markets were mostly stable in the first full week of January, although upward momentum was felt in high density polyethylene (HDPE) and low density polyethylene (LDPE) due to tightening supply.

20-Jan-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 17 January. UPDATE: Oil jumps by more than $1/bbl on fresh US sanctions on Russia By Nurluqman Suratman 13-Jan-25 11:54 SINGAPORE (ICIS)–Oil prices surged by more than $1/barrel on Monday on supply disruption concerns following latest round of US sanctions against Russia's energy sector. Strong upstream market, seasonal demand support Asia isomer MX By Jasmine Khoo 14-Jan-25 12:10 SINGAPORE (ICIS)–Strong overall performance in crude oil futures is poised to lend support to Asia’s isomer grade mixed xylenes (MX) market in the near term, although uncertainty looms over the region ahead of the incoming Donald Trump administration in the US. China posts record trade surplus in 2024; trade tensions threaten exports By Nurluqman Suratman 14-Jan-25 17:30 SINGAPORE (ICIS)–China has been rushing to ship out goods ahead of new US tariffs under the Trump administration which should keep exports growth strong in the short term, but external demand is projected to slow in line with a weaker global economy in 2025. ICIS China Dec petrochemical index inches up; Jan demand hazy By Yvonne Shi 15-Jan-25 15:55 SINGAPORE (ICIS)–The ICIS China Petrochemical Price Index in December increased by an average of 1.2% from the previous month, largely on account of tight supply in some markets, with players not expecting a strong demand recovery in the near term. China PP cargoes pre-sold at lower prices may impact post-holiday demand By Lucy Shuai and Zhibo Xiao 15-Jan-25 12:01 SINGAPORE (ICIS)–Downstream factory activity in China has been gradually winding down ahead of the Lunar New Year holidays from 28 January-4 February, resulting in weaker spot demand for polypropylene (PP). India petrochemical prices rise as rupee tumbles to all-time low By Jonathan Yee 16-Jan-25 15:25 SINGAPORE (ICIS)–India’s currency – the rupee – slumped to a record low in the week, pushing up both domestic and import prices of some petrochemicals in the south Asian country amid stable demand. Indonesian rupiah tumbles to 6-month low after surprise key rate cut By Nurluqman Suratman 16-Jan-25 15:48 SINGAPORE (ICIS)–The Indonesian rupiah fell to its weakest level in more than six months on Thursday following an unexpected loosening of monetary policy on 15 January to spur growth in southeast Asia's largest economy. PODCAST: Asia BD bullish on supply constraints, but demand outlook hazy By Damini Dabholkar 17-Jan-25 13:32 SINGAPORE (ICIS)–The Asian spot market for butadiene (BD) saw a bullish start to 2025, as prices in both Chinese yuan and US dollar terms surged dramatically. In this latest podcast, ICIS senior editor Ai Teng Lim and industry analyst Elaine Zhang come together to discuss the factors moving prices and to take a peek into what may lie ahead for downstream demand.

20-Jan-2025

TORONTO (ICIS)–US President-elect Donald Trump is expected to quickly move forward with his proposed 25% tariff on all imports, including oil and energy, from Canada and Mexico after taking office on Monday 20 January. Tariffs to hurt US industry and consumers US refiners rely on Canadian crude Canada oil embargo could jeopardize national unity So far, Trump has given no indication that he may exempt Canada’s oil from the tariffs. Canada supplies more than 4 million barrels per day of oil to the US, accounting for the majority of US oil imports. The oil goes mainly to US Midwest refineries, such as BP’s Whiting plant in Indiana, that are configured to process heavy Canadian crude. The move could be felt in the US as well as Canada. IMPACTS ON US The US Midwest refiners buy the Canadian oil at a discount, a price advantage they would lose with the tariffs. The refiners will not be able to quickly secure alternative sources of heavy crude, and neither will they be able to quickly reconfigure their processing units to lighter oil. The tariffs will raise US domestic energy prices, in particular gasoline prices – running counter to Trump’s campaign promises to address inflation and reduce costs for consumers. US inflation expectations have already been rising, partly because of the planned tariffs. Higher inflation expectations could prompt the US Federal Reserve to delay further rate cuts and possibly even raise rates, slowing the economy. The imported cheap Canadian crude frees up higher-priced US oil for export to other nations, allowing the US to run a trade surplus in oil with those countries, an advantage that may be lost if tariffs are imposed. ICIS feedstocks and fuels analyst Barin Wise said that it was hard to believe that Trump would place tariffs on Canadian oil as this would cause a big problem for US refiners processing the oil, with very limited alternatives to run in their plants. "This would cause prices to rise, which is the last thing Trump would want to see," Wise said. "I suppose we will know for sure shortly." IMPACTS OF OIL EMBARGO ON CANADA There was much discussion this week in Canada about responding to the US tariffs by imposing an oil embargo or putting an export tax on oil. However, analysts noted that those counter-measures would have self-defeating impacts on Canada: Producers in oil-rich Alberta province ship oil to eastern Canada on a pipeline system that passes through Wisconsin and Michigan (Enbridge’s Line 5) before re-entering Canada near the Sarnia refining and petrochemicals production hub in Ontario. In case of a Canadian oil embargo, Trump would likely stop the flow of Canadian oil on Line 5 to destinations in eastern Canada. As a result, an embargo would not just hit the US but cause a supply squeeze and higher energy prices in Ontario and Quebec, which are home to much of Canada’s auto, aerospace and other manufacturing. An oil embargo could also give new life to the Michigan state government’s efforts to shut down Line 5, because of environmental concerns. Canada could use rail to ship oil from Alberta to eastern Canada, but this would be expensive and there is not enough railcar capacity to replace the lost pipeline volumes. Canada could import oil through Montreal and other Canadian East Coast ports to replace the Alberta oil, but that would also be expensive. Furthermore, the flow of a pipeline (Enbridge’s Line 9) supplying refineries in Ontario and Quebec goes from west to east, and not from east to west. A flow reversal would be a costly undertaking. Once the US Midwest refiners have reconfigured their refineries to lighter oil or found alternative sources of heavy crude, they may not want to go back to Canadian crude if the tariffs are lifted later. Alberta, as well as Saskatchewan, would lose substantial revenues from their oil exports to the US. Both provinces have said they oppose an embargo. CANADA MUST AVOID UNITY CRISIS However, there is much more at stake for Canada. The premier (governor) of Alberta, Danielle Smith, has warned that the country’s national unity would be jeopardized if the federal government imposes an embargo. She refused to endorse a joint statement by the federal government and 12 of Canadas 13 provincial premiers at a summit this week, on Canada’s position in facing the US tariff threat. The statement is broad and does not even mention oil, but Smith said she could not endorse it as it did not rule out an embargo or an oil export tax. “Alberta will simply not agree to export tariffs on our energy or other products, nor do we support a ban on exports of these same products,” she said on social media. Smith added that an oil embargo was also unacceptable as politicians in eastern Canada, she claimed, had blocked the Energy East oil pipeline project to ship oil from Alberta to Ontario and Quebec and to export markets. The cancellation of Energy East deprived Alberta of an important opportunity to reduce its dependence on the US market, she argued. She failed to mention, however, the Trans Mountain oil pipeline. The Liberal government under Prime Minister Justin Trudeau bought and expanded Tans Mountain by nearly 600,000 bbl/day, enabling oil shipments from Alberta to an export terminal near Vancouver. Trudeau noted this week that the government did this to the benefit of Alberta’s oil industry, with funding from all of Canada’s taxpayers. Smith has often disagreed with the federal government over oil and environmental issues. In 2022 she put in place an “Alberta Sovereignty Act” to challenge federal laws. The act has not yet been reviewed by Canada’s Supreme Court. Canada’s Globe and Mail newspaper, siding with Smith, warned against imposing an oil embargo or other oil export restrictions. Such measures would incite renewed separatist sentiment in Alberta, the paper said in an editorial on Thursday and reminded readers of the alienation caused in Alberta by former Prime Minister Pierre Trudeau’s National Energy Program (NEP) in the early 1980s. (Pierre was the father of Justin Trudeau). The NEP was seen by Alberta as an unfair attempt to redistribute its oil wealth to Ontario, Quebec and other eastern provinces. Instead of an embargo, Canada needed to use targeted tariffs that “inflict the greatest possible political damage on Mr Trump”, and it should particularly target exports from US swing states, the paper said. Longer-term, Canada needed to have a fresh look at projects such as Energy East to reduce its dependence on the US market, it added. However, Trudeau and Ontario premier Doug Ford insisted that Alberta put Canada first, ahead of its own needs. All options must be on the table, including an embargo, in case the trade conflict escalates, they said. Commentators said that even if Trump exempts Canadian oil, Canada should consider an oil export tax as it could not allow a large part of its economy being devastated by the US tariffs while Alberta does business as usual with the US. Pierre Poilievre, leader of Canada’s opposition Conservatives, has yet to state whether he would use an oil embargo as a weapon in a trade dispute. The issue of Canada’s response to the US tariff challenge is expected to be at the center of the upcoming election campaign. Elections that must be held before October but will likely be called earlier. The Conservatives are far ahead of Trudeau’s Liberals in opinion polls on the elections. Furthermore, the Liberals are in disarray. Trudeau last week announced his resignation, and the Liberals have opened the process of selecting a new leader who will then also take over as the new prime minister until the elections. Meanwhile, the federal government has prepared a list of US products to be targeted with potential retaliatory tariffs. Details will be released only after Trump moves ahead with the tariffs, officials said. According to public broadcaster CBC the list includes certain US-made plastics products. In Canada’s chemical industry, trade group Chemistry Industry Association of Canada (CIAC) this week joined the Canadian Association of Petroleum Producers (CAPP) and others in forming a new group to jointly confront the imminent US tariff threat. Canada’s chemicals and plastics industry accounts for more than Canadian dollar (C$) $100 billion (US$69 billion) in annual shipments. Nearly two-thirds of those shipments are exported to the US, with a reciprocal value returning to Canada from the US, according to Ottawa-based CIAC, which speaks for Canada’s chemical and plastics industry (US$1=C$1.44) Insight by Stefan Baumgarten Thumbnail photo of Imperial Oil’s Cold Lake oil sands site in Alberta; the Toronto-listed ExxonMobil affiliate is one of Canada’s largest oil companies, and it also produces petrochemicals. Photo source: Imperial Oil.

17-Jan-2025

LONDON (ICIS)–Global economic growth this year is expected to increase modestly compared to 2024, the International Monetary Fund (IMF) said on Friday, as stronger expectations of US growth offset an increasing bearish outlook for Europe. Global GDP is expected to increase 3.3% this year, according to IMF’s latest economic outlook. Representing a 0.1 percentage point increase from the fund’s October 2024 outlook, the uptick is driven by a more robust forecast for the US offsetting weaker expectations for the eurozone and the Middle East. The US economy is expected to expand 2.7% this year, a 0.5 percentage point increase from the IMF’s October forecast, driven by a strong wealth effect – where consumers spend more as the value of their assets rise –  and supportive financial conditions. Eurozone growth for the year is expected at 1%,  a 0.2 percentage point downgrade from the IMF’s previous estimate, as continued weakness for manufacturing and exports continued to weigh on the bloc. Industrial weakness, political volatility and policy uncertainty all weighed on eurozone growth expectations, with substantially weaker expectations for many core economies, particularly Germany and France. Germany’s 2025 GDP is expected to expand by 0.3%, a 0.5 percentage point downgrade compared to October, while projected French growth of 0.8%represents a 0.3 percentage point markdown. China’s economy is expected to grow 4.6% this year, a 0.1 percentage point increase on the IMF’s October projections but below official targets of 5% and a decline from 2024, with 2026 expected to be weaker still at 4.5%. A $1.4 trillion stimulus package intended to alleviate local government debt burdens drove the modest uptick in the IMF’s growth expectations for the country. China’s growth rate next year is expected to be supported by increases to the statutory retirement age, which is expected to slow the decline in labor supply, the fund added. Moves by the OPEC+ alliance of countries to extend production cuts has resulted in  1.3 percentage point downgrade for Saudi Arabia growth expectations, to 3.3%. This downgrade also drove down growth projections for the Middle East and North Africa (MENA) as a whole, with the IMF cutting 0.5 percentage points of 2025 regional growth expectations to 3.5% Strong non-OPEC crude supplies and weak China demand are likely to drive a 2.6% decline in energy commodity prices, substantially below previous estimates, according to the IMF, while commodity prices overall are likely increase. Latin American growth expectations were  unchanged from previous IMF estimates at 2.5%. Despite stronger than previously projected US growth expectations, fresh tariff measures introduced by incoming President Donald Trump could hit global growth expectations in the mid-term, the IMF said. Fresh tariff measures could place upward pressure on inflation, along with the cyclic market positions of many key economies are more conducive to higher inflation today than in 2016, the IMF added. Restrictions on difficult-to-substitute raw materials and intermediate goods as a result of US tariffs or retaliatory measures could also heat up markets. “The risk of renewed inflationary pressures could prompt central banks to raise policy rates and intensify monetary policy divergence. Higher-for-even-longer interest rates could worsen fiscal, financial, and external risks,” the IMF said in the January world economic outlook. “ A stronger US dollar…could alter capital flow patterns and global imbalances and complicate macroeconomic trade-offs.” Focus article by Tom Brown Thumbnail photo: The bull on Wall Street (Source: Shutterstock)

17-Jan-2025

SINGAPORE (ICIS)–The Asian spot market for butadiene (BD) saw a bullish start to 2025, as prices in both Chinese yuan and US dollar terms surged dramatically. In this latest podcast, ICIS senior editor Ai Teng Lim and industry analyst Elaine Zhang come together to discuss the factors moving prices and to take a peek into what may lie ahead for downstream demand. Domestic China prices surge on supply factors, raising imports too Uncertainties prevalent on whether downstream demand will hold out Supply outlook uneven between China and wider Asia

17-Jan-2025

SINGAPORE (ICIS)–The Indonesian rupiah fell to its weakest level in more than six months on Thursday following an unexpected loosening of monetary policy on 15 January to spur growth in southeast Asia's largest economy. Rupiah weakened due to US policy uncertainty under Trump 2025 GDP growth forecast trimmed to 4.7-5.5% Inflation to remain within 1.5-3.5% target in 2025 The rupiah (Rp) was extending losses on Thursday, falling to as low as Rp16,383 against the US dollar in early trade. At 07:41 GMT, the rupiah was trading at Rp16,376 to the US dollar. In a surprise move, Bank Indonesia (BI) lowered its benchmark seven-day reverse repurchase rate by 25 basis points (bps) to 5.75% on 15 January. BI also reduced its deposit facility rate by 25bps to 5.00% and lending facility rate to 6.50%. "The decision is consistent with low projected inflation in 2025 and 2026…maintaining the rupiah exchange rate in line with economic fundamentals to control inflation within the target range and the need to bolster economic growth," BI said in a statement. BI last slashed interest rates in September last year for the first time in over three years. However, it subsequently maintained a steady policy stance at later meetings to stabilize the rupiah, which had come under pressure due to uncertainty surrounding US policy under Donald Trump. "The rate cut was unexpected as BI previously emphasized that its near-term policy stance is aimed at rupiah stability amid strong US Dollar," Malaysia-based equity research firm Kenanga said in a note on Thursday. "The shift reflects a focus on boosting growth amid slowing domestic expansion, low inflation, and rising global uncertainties, including geopolitical tensions, China's weak recovery, and policy changes in the US," it said. BI is expected to maintain an easing stance to bolster economic growth, Kenanga said, but concerns regarding rupiah stability may prompt a gradual and cautious approach, particularly as the US Federal Reserve may slow its rate cuts due to the resilience of the US economy. "We expect the rupiah to gradually strengthen by the end of 2025 on the expectations of lower US policy rate and an improving domestic economy, it said. "Nonetheless, we expect two more cuts, bringing BI’s policy rate to reach 5.25% in 2025." SLOWER GROWTH PROJECTED BI on 15 January revised its 2025 GDP growth forecast to 4.7-5.5%, slightly lower than its previous projection of 4.8-5.6%. This downward revision is attributed to weaker exports, subdued household demand, and lower private investment. Indonesia is a net importer of several petrochemicals, including polyethylene (PE) and polypropylene (PP), as well as the world's largest crude palm oil (CPO) producer – a key oleochemicals feedstock. Like most in Asia, Indonesia is export-oriented economy. Its full-year exports rose by 2.3% year on year to $264.7 billion, while imports increased by 5.3% to $233.66 billion, resulting in a trade surplus of around $31 billion, official data showed. For the month of December alone, the country’s trade surplus narrowed to $2.24 billion, marking the lowest surplus since July, as exports to key markets, including China, India, and Taiwan declined. Total exports for the month were up by 4.8% year on year at $23.46bn, while imports grew at a faster rate of 11.1% to $21.22 billion. For 2024, growth is expected to settle slightly below the midpoint of the 4.7-5.5% range, reflecting softer domestic demand. Indonesia's GDP grew by 5.05% in 2023, slowing from the 5.31% expansion the previous year due to sluggish exports. BI in its statement highlighted that the global economy is experiencing growth divergence, with the US exceeding projections due to fiscal stimuli and technological investments, while Europe, China, Japan, and India face sluggish growth. The global economic growth for 2025 is expected to reach 3.2%, driven by the strong US economy, it noted. However, US policy and inward-looking trade policies are prolonging disinflation and strengthening expectations of dovish monetary policy, leading to increased global financial market uncertainty, BI said. "Global economic developments require a strong policy response, therefore, to mitigate the adverse impacts of global spillovers, maintain stability and drive domestic economic growth," it added. In terms of inflation, CPI inflation averaged 2.3% in 2024, well within BI's target range of 1.5-3.5%. Inflation is expected to remain within this target in 2025, supported by ample domestic capacity to meet demand. Focus article by Nurluqman Suratman

16-Jan-2025

HOUSTON (ICIS)–A ceasefire and hostage release agreement between Israel and Hamas announced on Wednesday is unlikely to have much of an impact on crude oil and chemical markets, though it could lower the geopolitical premium. The agreement was reached through diplomacy by the US, Egypt, and Qatar, and will be implemented for the most part by the incoming administration of President-elect Donald Trump, US President Joe Biden said in remarks from the White House. ICIS feedstocks analyst Barin Wise said he does not expect that the deal will have a meaningful impact on crude oil markets because the affected region is not oil producing. “This may trim the geopolitical premium in crude since it eliminates a hot spot in the Middle East,” Wise said. “However, if we look at the market today, crude is up big on other factors, more than offsetting any effect the ceasefire may have.” Crude prices surged on Wednesday largely in response to fresh US sanctions on Russia, which the International Energy Agency said could crimp global supply. Futures prices for WTI settled on Tuesday at $77.50/bbl and rose to $79.51/bbl before midday. WTI settled at $80.04/bbl on Wednesday. IMPACT ON SUEZ CANAL TRAFFIC The agreement could help with capacity constraints in commercial shipping as container ships have been avoiding the Suez Canal for more than a year because of attacks by Houthi rebels on commercial vessels. Ships have been forced to use the much longer route around the Cape of Good Hope, which tightened shipping capacity and pushed costs for shipping containers higher. The reopening of the Suez Canal would have the greatest impact on normalizing the Asia-to-Europe container shipping route, but would also affect Asia-US rates, as shipping capacity would surge once carriers were able to access the shorter route. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and 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. Thumbnail image shows a crude oil tanker. Photo by Shutterstock

15-Jan-2025

LONDON (ICIS)–The latest tranche of US sanctions on Russia’s oil trade could affect flows from the country, while weather-related production shut-ins in North America could also impact global supply, the International Energy Agency (IEA) said. Announced on 10 January, the US imposed aggressive new sanctions on Russia’s oil trade, naming 183 vessels, including Russia-owned tankers and the ”shadow vessels” understood to be utilized to evade trade blockades. The shadow fleet refers to ships indirectly owned or controlled by Russia through shell companies or intermediaries to evade detection and sanctions. Over 100 of the sanctioned tankers had transported Russian crude to China and/or India in 2024, according to Matt Wright, lead freight analyst at data and analytics firm France-based Kpler. "When it comes to buyers, China and India, in general, tend to steer clear of dealing directly with tankers and entities blacklisted by the US Treasury," he said in a note earlier this week. US moves “may affect oil supply flows” the IEA said in its latest oil market report, but official purchases of Russia crude will still be possible at certain price points. “Exports on non-shadow tankers remain viable for Russian oil purchased below price caps,” the IEA said. Further complicating the early 2025 supply picture is scope for production constraints in the US in the event of extreme weather, with a winter freeze last year cutting output in the US and Canada by over 1.8 million barrels/day. A smaller drop is expected this year, but there could still be scope for weather in the region to tighten supplies, the IEA said. Potential for additional US sanctions on Iran-origin oil to be introduced by the new administration could also hit global supplies, the agency added, with sentiment already driving some players to pill back from oil supplies from Iran and Russia. “There is heightened speculation that the incoming US administration will take a tougher stance on Iran's oil exports, compounding the impact of US Treasury sanctions on Tehran,” the IEA said. 1.5 million barrels day of additional supply is expected from non-OPEC countries this year , and total output growth of 1.8 million/barrel day against 1.05 million barrels/day demand growth, according to the agency. While supply growth is likely is likely to be sufficient to cover demand, the fresh Russia sanctions could provide more headroom for OPEC+ signatory countries to release more barrels into the market after delaying the end dates for some production cuts. OPEC, also releasing its latest market predictions on Wednesday, left 2025 demand growth forecasts unchanged at 1.4 million barrels/day, and non-OPEC+ supply growth projections at 1.1 million barrels/day amid global GDP expansion of 3.1%. The cartel projects that demand and non-OPEC supply growth will remain around 2025 levels next year. Focus article by Tom Brown Thumbnail photo: An oil pipeline running through Alaska, US (Source: Shutterstock)

15-Jan-2025