Ethylene

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Ethylene markets can react to changes quickly. It’s crucial for buyers, sellers and producers to stay alert and aware of what’s happening, both in their region and internationally. Unplanned cracker outages at major facilities can have a strong impact on regional and global ethylene markets. And polyethylene – the largest downstream sector for ethylene – is particularly sensitive to packaging demand shifts.

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Ethylene news

APIC '24: Thailand chemicals demand to recover after challenging 2023 – FTIPC

SEOUL (ICIS)–Thailand's petrochemical industry is expected to recover in 2024 as demand improves following a challenging 2023, which was marked by a global economic slowdown, inflation, and high energy costs that dampened consumption. The Federation of Thai Industries' Petrochemical Industry Club (FTIPC), in a report prepared for the Asia Petrochemical Industry Conference (APIC), noted that uncertainties in the global economy, including the recent Israel-Hamas conflict, China's economic stagnation, and instability in US and European financial markets, have impacted the Thai economy. KEY SEGMENTS IMPACTED This challenging environment has already impacted key petrochemical segments. Ethylene consumption, for example, declined in 2023 due to weaker economic conditions and subdued demand. in '000 tonnes/year 2020 2021 2022 2023 Total Capacity 4,609 5,409 5,409 5,360 Production 4,516 5,045 4,530 4,463 Consumption by derivative products* 4,719 5,040 4,478 4,463 Exports 44 99 63 41 Import 163 43 87 95 *Consumption netbacked from polyethylene (PE), ethylene dichloride/vinyl chloride monomer (EDC/VCM), ethylene glycol (EG), and styrene monomer (SM) production Demand for ethylene is expected to remain under pressure in 2024 due to feedstock volatility, weak derivative demand, and increased competition from new capacities in China, southeast Asia, and the US. Additionally, polymer converters are grappling with major concerns such as geopolitical uncertainties, global recession fears, and high inflation rates, as consumers limit spending and further weaken demand for end-use sectors. OUTLOOK AND CHALLENGES AHEAD Looking ahead, Thailand, southeast Asia's second-largest economy, is projected to grow by 2.2%-3.2% in 2024, fueled partly by a rebound in exports and increased private and public investment. However, the recovery in global demand for petrochemicals is not expected to fully materialize until the second half of 2024, according to the FTIPC. This is due in part to a supply glut in Asian markets caused by increased production capacity in China, Vietnam, Indonesia, and Thailand itself, as well as the Middle East, which has prompted producers to reduce output or maintain inventory levels to preserve profit margins. Volatile economic conditions, geopolitical conflicts, new rules of global trade, and the trend of reducing carbon emissions and greenhouse gases present both opportunities and challenges for the petrochemical sector, the FTIPC said. “Businesses must adapt to this changing landscape by enhancing competitiveness, flexibility, and continuous adaptation amidst external uncertainties,” it said. “Integrating business operations with sustainable development is crucial, with a focus on sustainable business growth that meets the demands of consumers in a low-carbon and net-zero emission society.” Focus article by Nurluqman Suratman

30-May-2024

Global chemical industry poised for M&A boost from Japan, India in 2024 – DC Advisory

NEW YORK (ICIS)–The global chemical sector should see increasing mergers and acquisitions (M&A) activity through the rest of 2024 following a depressed 2023, driven in part by portfolio restructuring among Japanese companies as well as increasing interest by Indian buyers, according to an investment bank. “In 2024, we are seeing increased levels of M&A activity as companies reevaluate their portfolios and seek strategic opportunities to drive growth, while navigating a constantly evolving landscape that is currently marked by technological advancements, shifting geopolitical alliances and an increasing emphasis on sustainability,” said investment bank DC Advisory in a report by managing director Federico Mennella and others. It expects the portfolio re-evaluation of Japanese chemical companies to accelerate and spur future M&A activity. China’s aggressive capacity expansion in commodity chemicals has greatly pressured Japanese companies exporting petrochemicals to China. Just under a third of Japan’s petrochemical output is exported, and China accounted for around half of exports in 2022, the investment bank pointed out. “Japanese production of ethylene has dropped to its lowest in 25 years due to China’s fast-growing capacity,” said DC Advisory. “As a result, Japanese diversified chemical companies such as Mitsubishi Chemical, Mitsui Chemicals and Resonac Holdings have recently announced strategies to restructure their petrochemical businesses, such as divesting, collaborating with other companies and to consider IPOs,” it added. Japanese chemical companies have also become more active on the buy side as they transition towards specialty, low-carbon and more sustainable business models. In April 2024, Japan-based Shin-Etsu Chemical announced its planned acquisition of Japan-based semiconductor materials company Mimasu Semiconductor Industry through a tender offer for shares. Shin-Etsu already had a 43.87% stake in Mimasu. In October 2023, Sumitomo Bakelite agreed to buy Asahi Kasei’s Pax packaging and films business serving the pharmaceutical, industrial and food sectors. DC Advisory advised Shin-Etsu and Sumitomo Bakelite on their respective transactions. Other recent deals involving Japan-based buyers include Sumitomo Corp/Saconix, DIC/PCAS Canada and Fujifilm/Entegris’ electronic chemicals business. INDIA AS A BUY-SIDE FORCEMeanwhile, India’s chemical industry has grown sales by over 6%/year on average since 2012 and is now further benefiting from global supply chain diversification, the investment bank pointed out. “We… believe the China Plus One Strategy, set up to minimize supply chain dependencies on China by diversifying the countries they source from, will drive growth in the Indian chemicals industry and prompt further M&A in the sector,” said DC Advisory. “With the Indian public markets recently valuing the specialty chemicals sector at a lifetime peak, we expect Indian companies in the sector will be eager to utilize available cash and if required raise further equity to do global acquisitions,” it added. The investment bank sees Indian buyers as consolidators for global assets in agrochemicals, active pharmaceutical ingredients (APIs), and specialty chemicals CDMO (contract development and manufacturing organization) segments. In November 2023, India-based carbon black producer PCBL Ltd announced the acquisition of India-based water treatment and oil and gas chemicals company Aquapharm Chemicals for $456 million. In June 2023, Bain Capital announced the acquisition of India-based Porus Labs, a producer of ag and specialty chemicals. “Large global funds such as CVC through its investment in Sajjan (2021) and Bain with its investment in Porus Labs, both leading Indian chemicals manufacturers, have created specialty chemicals platforms with an Indian company as the anchor asset from which they can acquire global businesses,” said DC Advisory. OTHER POSITIVE DRIVERSThe overall backdrop is also becoming more positive for chemical deal-making with increased earnings visibility in the sector for 2024; streamlining of portfolios toward growth subsectors; continued consolidation in sectors such as adhesives, coatings, pigments, ag chemicals and flavors and fragrances; and continued interest by private equity buyers, particularly in the sustainability aspect of chemicals, DC Advisory pointed out. The energy transition and the circular economy are also driving chemical sector growth and M&A activity. “We believe chemicals and materials companies that do not incorporate sustainability into their business models will not find buyers and may even struggle to survive, while those driving the change to a cleaner future will be in high demand from both private equity and strategic buyers,” said DC Advisory. Focus article by Joseph Chang

29-May-2024

APIC '24: PODCAST: NE Asia C2 in oversupply; SE Asia prices under pressure

SINGAPORE (ICIS)–Northeast Asia remained in oversupply of ethylene (C2), and downstream margins remained weak. Capacity growth in China is expected to slow down, while in southeast Asia, the market is likely to remain under pressure in H2 2024. NE Asia players on lookout for H2 arrivals Margins at stand-alone derivative units remain weak Weak NE Asia prices, open US arbitrage window weigh on SE Asia; downstream demand tepid In this podcast, ICIS markets editor Josh Quah and analysts Amy Yu and Shariene Goh discuss trends in the Asian ethylene market and what we can expect in the near future. Visit us at Booth 13, Grand Ballroom Foyer at the Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.

29-May-2024

Midstream consolidation continues as US Energy Transfer makes $3.25 billion deal

HOUSTON (ICIS)–Energy Transfer plans to acquire WTG Midstream for $3.25 billion, the latest deal in an ongoing consolidation of the industry that provides feedstocks to chemical plants. Energy Transfer is acquiring WTG from affiliates of Stonepeak, the Davis Estate and Diamondback Energy, it said on Tuesday. The deal should close in Q3 2024. The deal includes eight natural gas processing plants that have a total capacity of 1.3 billion cubic feet/day. Two additional plants are under construction that will add another 400 million cubic feet/day of capacity, with the first starting up in Q3 2024 and the second in Q3 2025. Natural gas processing plants extract ethane and other natural gas liquids (NGLs) from raw gas produced from oil and gas wells. The NGLs are then shipped to fractionators which extract the individual products. Ethane and other NGLs are the main feedstock that US crackers use to make ethylene. The deal also includes a 20% stake in the Belvieu Alternative Natural Gas Liquid (BANGL) pipeline. The BANGL will stretch for 425 miles (683 km) and will have an initial capacity of 125,000 barrels/day, expandable to more than 300,000 barrels/day. It will connect the Permian basin to the fractionation hub in Sweeny, Texas, on the Gulf Coast. The pipeline could be completed in H1 2025. Other partners in the pipeline include MPLX and Rattler Midstream, a company formed by Diamondback Energy. SURGE IN MIDSTREAM M&AEnergy Transfer's acquisition is the latest in a surge of deals in the midstream industry. The following lists some of the more recent mergers and acquisitions (M&A). Phillips 66 agreed to buy Pinnacle Midland Parent from Energy Spectrum Capital for $550 million ONEOK is buying NGL pipelines from Easton Energy for $280 million EQT is acquiring Equitrans Midstream in a deal that the Wall Street Journal valued at $5.5 billion Energy Transfer completed its $7.1 billion merger with Crestwood Equity Partners in November 2023 ONEOK completed its $18.8 billion acquisition of Magellan Midstream Partners in September 2023 Phillips 66 completed a deal for additional units of DCP Midstream, raising its stake to 86.8% The deals come amid a flurry of new projects being built by midstream companies, which includes processing plants, pipelines, fractionators and terminals. When completed, the infrastructure will provide feedstock to petrochemical plants in the US and the world. Thumbnail shows pipeline. Image by Global Warming Images/REX Shutterstock

28-May-2024

Houston storm disrupts chems, knocks power out for thousands

HOUSTON (ICIS)–Powerful thunderstorms in Houston and the Gulf Coast disrupted operations at chemical plants while leaving more than 700,000 without power as of Friday. The storms hit Houston on Thursday evening. TPC Group reported that severe weather caused a power outage, which led to flaring at its butadiene (BD) operations in Houston. Power was restored, and operations returned to the site, TPC said in a filing with the Texas Commission on Environmental Quality (TCEQ). Lotte Chemical has delayed the restart of its cracker and downstream ethylene glycol (EG) unit in Lake Charles, Louisiana, to next week because of bad weather, according to market sources. Lotte did not immediately respond to a request for comment. The storm created winds of 40-78 miles/hour (64-126 km/hour), according to the National Weather Service. Such strong winds created widespread power outages throughout the region. In the late morning, more than 700,000 customers were without power in the Houston area, according to CenterPoint Energy, a power company that is the main transmission company. Overall, more than 777,000 outages were reported in Texas, according to PowerOutage.us. Another 90,000 outages were reported in Louisiana, another state that is home to several petrochemical plants and refineries. The winds reached hurricane force in downtown Houston, where many petrochemical companies have corporate offices. “This was an incredibly dangerous and destructive storm, impacting one of the largest cities and busiest travel hubs in America,” said AccuWeather Chief Meteorologist Jonathan Porter. “Downtown Houston has not seen wind damage like this since Hurricane Ike in 2008 and Hurricane Alicia in 1983. The winds were even stronger at greater heights because they experienced less friction from low-lying buildings and trees, according to AccuWeather. Wind gusts of 33 miles/hour near ground level would equate to 80 miles/hour at six stories and 90 miles/hour at 10 stories. The wind strength at those elevated stories would be the equivalent of a Category 1 hurricane on the Saffir-Simpson wind scale. Preliminary damage estimates from AccuWeather point to $5 billion to $7 billion in total damage and economic loss from the storm in southeast Texas, it said. So far, major railroad companies have not issued any alerts about disruptions to their lines. Port Houston said its terminals are operating as usual. Additional reporting by Adam Yanelli and Melissa Wheeler  (adds paragraphs 3, 5-6, 9-13) Photo shows aftermath of the storms that hit Houston. Image by ICIS.

17-May-2024

India’s GAIL to set up C2/C3 pipeline for Pata petrochemical complex

MUMBAI (ICIS)–State-owned GAIL (India) Ltd plans to lay an ethylene/propylene (C2/C3) liquid pipeline from its gas processing complex at Vijaipur in the central Madhya Pradesh state to its Pata petrochemical complex at Auraiya in the northern Uttar Pradesh state. “The project will augment feedstock availability with additional polymer production at Pata Petrochemical Complex, reduce energy consumption and carbon footprint,” the company said in the notes accompanying its fiscal Q4 results. GAIL’s financial year ends in March. The proposed project is expected to cost Indian rupees (Rs) 17.9bn ($215m) and will be commissioned within 32 months, it said. Once operational, the pipeline will have the capacity to transport 950,000 tonnes/year of liquid feedstock to the Pata complex, it added. GAIL reported on 16 May a near-fourfold jump in net profit for the fourth quarter ending 31 March 2024 to Rs21.8bn, from Rs6.0bn in the same period last year. For the full fiscal year 2023-24, GAIL’s net profit increased by 67% year on year to Rs88.4bn. “The robust performance during the year was primarily driven by better physical performance across all major segments, despite lower prices in petrochemicals and liquid hydrocarbons,” GAIL managing director and chairman Sandeep Gupta said. GAIL currently operates a 200,000 tonne/year high density polyethylene (HDPE) plant; two linear low density polyethylene (LLDPE)/HDPE swing plants with capacities of 230,000 tonnes/year and 400,000 tonnes/year; and a 10,000 tonne/year butene-1 line at its Pata complex. The company is also setting up a 60,000 tonne/year polypropylene (PP) unit at the complex which is expected to come on stream in the current calendar year 2024. ($1 = Rs83.45)

17-May-2024

Dow CEO touts cost position in Terneuzen, Tarragona sites amid tough European outlook

HOUSTON (ICIS)–Dow's operations in Terneuzen, the Netherlands, and Tarragona, Spain, have attractive costs for a region that is struggling to remain competitive against other parts of the world with cheaper energy, the CEO said on Thursday. Dow has crackers at both sites, and they can use imported liquefied petroleum gas (LPG) as feedstock to produce ethylene. The imports give the crackers a cost advantage. "Terneuzen and Tarragona are in great cost positions, and both of those countries, the Netherlands and Spain, have good energy policies," said Dow CEO Jim Fitterling. He made his comments during an investor day presentation. "Going forward, I feel good about how they are going to wind up, and we have good plans there," he said. "We have good line of sight to keep cost competitiveness." The company mentioned cracking more LPG at Terneuzen to lower its costs. Exports of LPG should increase from the US in the next couple of years as midstream companies complete terminal expansions. The US Gulf Coast is running out of export capacity to handle growing amounts of propane being produced in the country. EUROPE LACKS COST POSITION TO EXPORTOther companies are selling European businesses or shutting down plants because of excess global capacity and high costs. Fitterling sees no signs that Europe is considering any policies that could address high energy costs. "Europe is focused more on the stick, on carbon emissions reductions," he said. "They are not focused at all on energy policy to drive down energy costs. Energy costs are going to continue to rise." Dow's cost position does allow it to serve the domestic market, but it is not in Europe to export, Fitterling said. "Europe doesn't have the cost position any more to export." Dow will continue find ways to improve its cost position at its European operations, he said. But the company's growth investments will be in low-cost regions and in high value projects.

16-May-2024

NPE '24: INSIGHT: Big themes at NPE include sustainability, EVs, toxicity rules

HOUSTON (ICIS)–The biggest plastics trade show in the Western Hemisphere returned last week after a six-year hiatus. Delegates returned to consider an industry that is increasingly being shaped by government policy which is favoring sustainability and electric vehicles (EVs) while restricting the use of some classes of chemicals that are used in processing aids. SUSTAINABLE CONTENTThe regulatory outlook is influencing companies' sustainability goals, and that is influencing which plastics they buy and which ones are made by producers. Sustainability was the most prominent theme at the show. The title of the keynote address given by BASF Corp CEO Mike Heinz was "Our Plastics Journey: The Road to Shaping a Sustainable Future". Other examples of sustainability at the show include the following: Executives from SABIC and NOVA Chemicals talked at lengths about what their companies are doing to incorporate more recycled content into their materials. Renewable plastics producers CJ CheilJedang and Danimer Scientific had booths showcasing their grades of polyhydroxyalkanoate (PHA), a renewable polyester. GREENMANTRA showcased its chemical recycling technology, which breaks down plastics to produce waxes, which are then then uses to make additives that make it easier to incorporate waste plastic into finished products. If the exhibitor booths and keynote address weren't enough to drive home the prominence of sustainability, delegates only had to consider the recent round of talks for the UN plastic waste treaty. It was held just days before NPE. While the plastics industry is advocating curbs on pollution, several groups at the talks were pushing for curbs on production. US lawmakers have repeatedly introduced bills that would impose moratoria on new plants. A small number of US states are adopting mandates that require minimum amounts of recycled content. A few states are also adopting policies calling for extended producer responsibility (EPR). The outlook of regulations is causing consumer goods producers and other plastic consumers to start seeking out sustainable materials now, so they have time to rearrange their supply chains and so prepare for the anticipated regulations. POLICIES PROMOTING EVS, LIGHTWEIGHTINGGovernment support should rekindle sales of EV and pull them out of what could be a temporary lull, according to BASF. The world will need more EVs if it wants to achieve its carbon-cutting goals. In the US, the federal government and individual states are adopting and proposing policies that will promote EV adoption. The Environmental Protection Agency (EPA) introduced a new tailpipe rule that will require the US light vehicle fleet to emit progressively smaller amounts of carbon dioxide (CO2). 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 by 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. EVs have material challenges that are different from automobiles powered by internal combustion engines (ICEs), and these are increasing demand for new grades of plastics. Some plastics will need to tolerate higher voltage environments, while others will need good thermal management properties. BASF and other companies at NPE showcased how several of their materials were meeting these challenges. At the same time, auto companies will want materials that will lighten their vehicles so they can travel farther on a battery charge. ICE automakers also want to lighten their vehicles, in part to comply with stricter emission requirements. Longer term, Dow highlighted the revolutionary ramifications that autonomous vehicles will have on the plastic industry. Such vehicles are driven almost entirely by machines, which should greatly reduce crashes and accidents. Dow said automakers could replace nearly all steel and aluminum paneling used in automobiles with plastic alternatives. SUBSTANCES OF CONCERNDow and Clariant highlighted the ramifications of substances of concern, so called because regulators are concerned about their effects on safety. The latest such substance include per- and poly fluorinated alkyl substances (PFAS), which are used in many polymer processing aids (PPAs). Clariant has recently introduced a hydrocarbon-based processing aid. Longer term are the possible ramifications of the prioritization process that the EPA has started on five chemicals. The regulator would like to start the prioritization process on five additional chemicals each year. The prioritization process is the first step in determining whether a chemical poses an unreasonable risk. If the EPA makes such a finding, then it will proceed with the risk management phase, in which it will propose ways to manage the unreasonable risks. If the chemicals are used in plastics, then any subsequent restrictions could cause companies to find alternative materials. EXCESS PLASTICS CAPACITYExcess plastic capacity will likely persist even as destocking ends and demand recovers. NOVA Chemicals expects future expansion will be on pause until later in the decade. Lost cost regions like North America should suffer less than higher cost regions like Europe. SABIC recently started up its first ethylene and PE production in the US through its joint venture with ExxonMobil, while announcing plans to shut down a cracker in Europe. The company did not rule out further capacity rationalizations Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show took place 6-10 May in Orlando, Florida. Insight by Al Greenwood Thumbnail shows cups made out of plastic. Image by Shutterstock.

14-May-2024

PODCAST: Like blocks pulled out of a Jenga tower, chemicals closures could collapse value chains

BARCELONA (ICIS)–The closure of chemical plants in Europe and elsewhere could remove essential raw material supplies, threatening the future of downstream industrial value chains. Global oversupply, driven by China, forecast to reach over 200 million tonnes/year by 2028 Interconnected value chains threatened if important raw materials cease production Globally 20 million tonnes of ethylene capacity may need to shut down to keep operating rates healthy In Europe 5.6 million tonnes/year of polypropylene (PP) capacity may need to close Integrated chemicals sites under threat if parts shut down Industry associations could help plan to maintain critical raw materials supplies Anti-dumping measures could protect exposed markets China polyvinyl chloride (PVC) overcapacity may increase exports globally In this Think Tank podcast, Will Beacham interviews ICIS Insight Editor Nigel Davis, ICIS Senior Consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

14-May-2024

NPE '24: BASF Corp CEO optimistic of agreement at next UN plastic treaty talks

ORLANDO (ICIS)–BASF Corp CEO Mike Heinz is optimistic that a binding agreement could be reached during the next round of negotiations of the UN plastic waste treaty, he said on Wednesday. BASF had sent a team to the previous round that was held in Ottawa, he said. "The feedback that we received from them was cautiously optimistic." Heinz made his comments in an interview with ICIS at this year’s NPE: The Plastics Show. He also gave the keynote address at the trade show. Another reason for optimism is that all of the parties are pursuing the same objective: to prevent plastic waste from entering the environment, Heinz said. An agreement would be one that all stakeholders could live with. He acknowledged some disagreement about how to achieve that objective. Some want to curb production of plastic, he said. BASF and others want to achieve it by curbing pollution. Already, BASF and other chemical companies are incorporating recycled materials into their products. Recycling can be part of a larger sustainable production chain, under which chemical complexes rely on renewable energy to make products from recycled and renewable materials that can be recovered and reused. These materials can be used to make wind blades, electric vehicles (EVs) and other products critical to reducing emissions of carbon dioxide (CO2). Heinz summed up the path to a sustainable future as resting on three three pillars: make, use and recycle. SUSTAINABILITY VERBUNDDuring his speech and in a subsequent interview with ICIS, Heinz described what could be characterized as a Verbund based on sustainability. "This will take some time, but the good news is we already have some concrete examples on how it can be done," Heinz said. As an example, he held up a jacket made with 100% recycled nylon 6 from BASF that was sold by Inditex, the owner the clothing brand Zara. Heinz pointed to BASF's equity stakes in European wind packs. By 2030, BASF wants green energy to account for 60% of its power consumption. For chemical companies, one of the most power-hungry processes is steam cracking. BASF, SABIC and Linde are developing an e-cracker that would rely on electric furnaces to generate the heat needed to produce ethylene. The electricity could come from renewable sources, which would significantly reduce the CO2 emissions of steam cracking. Crackers can process renewable naphtha made from natural oils or pyrolysis oil produced at chemical recycling plants. It will take time for these feedstocks to become abundant, but the model is possible, and BASF is making chemicals with such feedstocks. New, renewable feedstocks can lead to new chemistries that result in materials that have better qualities than those based on petroleum.  The products can also help customers achieve their own sustainability goals. Lighter plastics can allow automobiles to travel farther on a tank of gasoline or on a battery charge. Other plastics will be critical to make EVs safe. Products can be designed to last longer, he said. When they do reach the end of their lifecycles, they can be designed to be easier to recover and recycle. STEPS NEEDED TO ACHIEVE SUSTAINABILITYDuring his keynote speech, Heinz noted that while the chemical industry is part of the problem, it can be a bigger part of the solution. Change will require passionate people, innovation and collaboration, he said. In particular, the chemical industry needs to collaborate with lawmakers and nongovernmental organizations (NGO) to come up with those solutions. Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida. Interview article by Al Greenwood Thumbnail shows a plastic bottle, which can be recycled. Image by monticello/imageBROKER/Shutterstock

08-May-2024

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