Ethylene vinyl acetate (EVA)
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Ethylene vinyl acetate (EVA) has a wide range of foaming and packaging applications. It can also be used in hoses and tubes, adhesives, wire and cable insulation, as a coating for heat sealing and for encapsulation in solar cells, according to the ratio of ethylene to VA.
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Ethylene vinyl acetate (EVA) news
PODCAST: Asian olefins to see support amid tighter supply, Panama congestion persists
SINGAPORE (ICIS)–Asia's ethylene (C2) market saw supply tighten amid fewer volumes from the US in Q1 as a direct result of congestion at the Panama Canal. Over in the Asian propylene (C3) markets, while arbitrage flows remain curtailed by high freight rates, some emerging interest has been gleaned in the market as regards moving Asian material westwards. In this podcast, ICIS market editors Josh Quah and Julia Tan discuss Asia's olefins flows, with a forward view on the March market. C2 sees support from constrained deep-sea supply NE Asia C2 and C3 outlooks for March Impact of shipping congestion on olefin trade flows
QatarEnergy, CP Chem start building $6bn Ras Laffan polymers complex
SINGAPORE (ICIS)–QatarEnergy and US’ Chevron Phillips Chemical (CP Chem) have started construction of their joint venture integrated polymers complex at Ras Laffan Industrial City in Qatar. The $6bn project will include an ethane cracker with capacity of 2.08m tonnes/year of ethylene, making it the largest ethane cracker in the Middle East and one of the largest globally, CP Chem said late on Monday. It will also include two high-density polyethylene (PE) derivative units with a total capacity of 1.68m tonnes/year. The two firms secured $4.4bn in financing for the Ras Laffan project in October last year. The PE units will use CP Chem’s MarTech loop slurry process to produce high-density PE (HDPE), which will be primarily meant for exports. The project is being developed by a 30:70 joint venture company of CP Chem and QatarEnergy. “This project advances CP Chem’s long-held strategy to expand its operations in regions where feedstock is reliable and abundant and will help meet the global demand for polyethylene products," CP Chem president and CEO Bruce Chinn said. Qatar holds the third-largest proven natural gas reserves in the world which positions it as a key player in the global energy market and a primary exporter of liquefied natural gas (LNG). CP Chem is providing project management services to oversee the engineering, procurement and construction of the facility. The Ras Laffan Petrochemical Complex is Qatar Energy’s largest investment in the local petrochemicals sector, the Qatari firm said in a separate statement issued on 19 February. The project will raise Qatar’s overall petrochemical production capacity to about 14m tonnes/year by the end of 2026, it said. “There is no doubt that this is an important landmark in QatarEnergy’s downstream expansion strategy as it will reinforce our integrated position as a global energy player and generate significant economic benefits for the country,” Qatar’s minister of state for energy affairs Saad Sherida Al-Kaabi said. CP Chem and QatarEnergy operate three joint ventures in Qatar, namely, Qatar Chemical Co, Qatar Chemical Company II, and Ras Laffan Olefins Co. In the US, the two companies, through their Golden Triangle Polymers joint venture, are also building a similar integrated polymers facility in Orange, Texas, which is expected to start up in 2026. Thumbnail image: Qatar minister of state for energy affairs Saad Sherida Al-Kaabi on 19 February 2024 (Source: QatarEnergy)
Asia petchem markets await China's demand signals after holiday
SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. Asia markets eye China's post-holiday demand signals China's economic health remains central concern Prices likely to rise amid supply constraints Markets in Asia took a breather in the week of 12-16 February, with Lunar New Year holidays in China, Taiwan, Malaysia and Singapore, while countries such as South Korea, Japan and Indonesia observed public holidays as well. Market participants are cautious about the post-holiday market; while some downstream buyers will restock after the holidays, there is concern that existing inventory held by domestic China producers and distributors will largely satisfy demand until early March. PRICES LIKELY TO RISE AMID SUPPLY CONSTRAINTSPetrochemical prices in Asia are expected to continue to increase in February, supported by capacity losses from outages and run-rate reductions, according to ICIS analysts. Among the 31 major petrochemical commodities covered by the ICIS Asia Price Forecast, average February prices for at least 22 of these commodities are anticipated to increase. Ethylene (C2), butadiene (BD) and styrene butadiene rubber (SBR) are expected to lead in terms of gains. In Asia’s C2 market, end-users who have yet to settle March arrival cargo are expected to hit the ground running once most of players return to the market this week. In the southeast Asia C2 market, demand enquiries were largely heard from Thailand last week, while other end-users in Indonesia have begun to look towards the April window for spot cargo. "The Asia C2 industry is likely to be characterised by tight supply in the weeks to come," said Paolo Scafetta, ICIS senior olefins analyst. "February should see about 7% of total monthly nameplate capacity lost due to downtime unless unplanned events cause further technical hiccups." The upstream naphtha market in Asia should be influenced by a few bearish factors, Scafetta added. These include the shift from naphtha to liquefied petroleum gas (LPG) as an alternative cracking feedstock and an improvement in supply from March as naphtha cargoes are expected to increase as Middle East refineries return from their maintenance. Asia's naphtha market is likely to be plagued with volatility in the short term as tensions in the Red Sea will continue to disrupt supplies. In Asia’s propylene (C3) market, trade was largely subdued during the Lunar New Year break but picked up towards the close of the week with most market players, except China, returning from their holiday. Talks and discussions in Taiwan commenced at the end of the week after the holidays ended. However, the post-holiday buying sentiment weakened on the back of ample supply, leading sellers to progressively lower their offers and selling indications. With buyers in China largely away from the market, overall business activity during the week was muted. In southeast Asia, while demand was also heard in Malaysia and Indonesia, most buyers continued to hold back from purchases on the expectation that supply tightness might result in an easing in offers down the road. In Asia’s benzene market, post-holiday restocking is expected to pick up in the second half of February amid strong competition for April and May cargoes from global players. February and March benzene cargoes have been already sold out and April cargoes are in strong demand. Benzene buyers based in both Asia and the West had actively sought procurement since end-January, for pre-holiday and pre-summer stocking up respectively. Asia's acetone market looks poised to maintain its strength. This is due to the high prices of benzene, reduced production leading to tighter supply, and a resurgence in trading flows between Asia and the West. A significant increase in demand for Asia acetone from the US market is bolstering this trend. Limited supply in the US, a result of low phenol production and ongoing allocations, is driving this demand. Meanwhile, supply within Asia is also constrained as phenol/acetone producers scale back production in response to unprofitable margins and decreased demand for phenol in China. In the xylene markets, further support in the market will be dependent on downstream sectors after the Lunar New Year holidays, with eyes firmly on China. For paraxylene (PX), there remains optimism for gasoline-blending demand heading into the second quarter, with positive arbitrage window economics for exports to the West. Firm upstream naphtha prices have also provided some support for PX. Several market participants noted there had been pre-buying of mixed xylenes (MX) and toluene by gasoline blenders to the US. Demand and price developments in the downstream purified terephthalic acid (PTA) and polyester sectors will help provide clarity about whether high PX costs can be absorbed down the chain. Asia's butyl acetate (butac) and ethyl acetate (etac) markets are poised to stay afloat on anticipated post-holiday demand, albeit at a gradual pace. Sellers of butac in both China and the region largely maintained their spot offers for March loading prior to the Lunar New Year holiday. Spot butac prices were on a downtrend in the early part of the fourth quarter of 2023 and have climbed since December, in part driven by cost pressures upstream as suppliers worked towards mitigating compressed margins. Asia’s methylene chloride (MEC) market might be bullish after the Lunar New Year holiday, as rising demand is likely to shift the market to a more balanced state. Most buyers were in a wait-and-see mode, monitoring prices and observing what producers would offer after the Lunar New Year break, with market participants in southeast Asia eyeing a rebound in demand through Q2, around the Ramadan period. CHINA'S ECONOMIC HEALTH IN FOCUS ICIS analysts expect most of China's end-use consumption, including in industries such as agriculture and home appliances, to recover from March. The China government's Two Sessions policy meetings, widely seen as the most important political meeting of the year for the country, will be held on 4-11 March. ICIS analysts expect another series of policies to be introduced to stimulate economic growth. Further market and infrastructure investment can boost petrochemicals demand. Latest official data from China is pointing to some recovery from domestic tourism trips and revenues. Domestic tourism trips and revenues during the Lunar New Year holidays in China jumped by 34.3% and 47.3% year on year respectively, with their levels at 19.0% and 7.7% above pre-pandemic levels in 2019, data from the country’s Ministry of Culture and Tourism (MCT) shows. "Most official and private media channels have been reporting strong (or even exceptionally strong) Lunar New Year holiday consumption data, and markets risk getting caught up in the euphoria of the moment, under the supposition that China’s economy is suddenly bottoming out, driven by the Chinese people’s hidden passion for spending," research analysts from Japan's Nomura Global Markets Research said in a note. "Although we do see some strength in the data, we urge market participants to exercise caution," it said, adding that China's property sector continued its downward spiral, right before the Lunar New Year holiday, and there was no sign of a recovery during the holiday. "Despite the positive [Lunar New Year] data, we maintain our view that the ongoing economic dip is likely to worsen into the spring," Nomura said. With additional reporting by Josh Quah, Julia Tan, Seng Li Peng, Angeline Soh, Helen Lee, Keven Zhang, Melanie Wee and Samuel Wong Focus article by Nurluqman Suratman Thumbnail photo: Lunar New Year lanterns in Shenyang, northeast China's Liaoning Province, on 1 February 2021. Asia will closely watch China's demand signals after the Lunar New Year holiday amid concerns about the country’s economic health. (Source: Xinhua/Shutterstock)
Asia top stories – weekly summary
SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 16 February 2024. Singapore Jan petrochemical exports rise 8.7%, NODX up 16.8% By Nurluqman Suratman 16-Feb-24 09:55 SINGAPORE (ICIS)–Singapore’s petrochemical exports in January rose by 8.7% year on year to Singapore dollar (S$) 1.11bn ($822m), with non-oil domestic exports (NODX) posting a 16.8% growth for the month, official data showed on Friday. Asia fatty acids market faces cost pressures on strong palm oil prices By Helen Yan 15-Feb-24 13:10 SINGAPORE (ICIS)–Asia’s fatty acids market is likely to face costs pressures from recent spikes in upstream crude palm oil (CPO) prices, while demand is expected to stay tepid. PODCAST: Asia R-PE, R-PET see slow 2023; legislations, waste management to shape future By Damini Dabholkar 15-Feb-24 14:07 SINGAPORE (ICIS)–Asia recycled polymers markets were sluggish for the most part in 2023. In early 2024 too, challenges that dim the short-term outlook persist. INSIGHT: Indonesia polls raise questions over Nusantara, import curbs By Pearl Bantillo 13-Feb-24 19:27 SINGAPORE (ICIS)–Indonesia, southeast Asia’s biggest economy, will go to the polls on 14 February to elect a new president, posing uncertainties on continuity of economic policies, from import restrictions coming into effect in March to incumbent President Joko Widodo’s flagship project of building a new capital called Nusantara in Kalimantan province. Asian EPDM market quiet amid holidays; demand outlook mixed By Ai Teng Lim 13-Feb-24 17:22 SINGAPORE (ICIS)–Discussions for Asian spot imports of ethylene propylene diene-monomer (EPDM) ground to a halt this week, with much of Asia out of action on extended Lunar New Year holidays.
INSIGHT: US chemicals may benefit from ultra-low priced natural gas through H1 '24
HOUSTON (ICIS)–US chemical producers should continue to benefit from natural gas selling at historically low levels, a trend that has lowered feedstock costs just as their foreign competitors are paying more for oil-based material. For the most part, US feedstock costs tend to follow those for natural gas, while those for much of the world follow prices for oil. Right now, US producers are enjoying a sweet spot of elevated oil prices and falling gas prices Low gas prices do not reflect the US president's attempt to pause new LNG permits, since the nation's export capacity is due to double by the end of 2027 for projects that fall outside of the scope of the pause Henry Hub futures do not break $2/MMBtu until July, after which they gradually rise because of summer cooling demand, restocking for winter and the imminent start up of three new LNG export plants in 2025 LOW GAS PRICESUS spot prices for natural gas at Henry Hub are unusually low for the winter. On Wednesday, they closed just above $1.60/MMBtu. Outside of the COVID pandemic, the last time they dipped below $2/MMBtu in the winter was in 2016. Before that, the last time that winter time gas prices were below $2/MMBtu was at the turn of the millennium. US CHEMICALS MARGINS SPIKEUS crackers predominantly rely on ethane as a feedstock. Prices for ethane tend to rise and fall with those for natural gas because a certain amount of the material can be burned as fuel. Indeed, US ethane has been trading below 20 cents/gal for several days. By contrast, petrochemical prices tend to rise and fall with those for oil because much of the world relies on naphtha as a feedstock. Brent oil contracts have remained above $75/bbl since late December. The recent combination of elevated oil prices and low gas prices have increased US contract margins for ethylene, according to ICIS. These rose to $524/tonne for the week ending on 9 February. With the exception of a single week in 2023, US contract margins for ethylene have not been this high since April 2022, according to ICIS. At that time, Brent crude futures contracts exceeded $100/bbl, and prices for natural gas were above $5.50/MMBtu. FAVORABLE ETHANE COSTSUS producers know a good deal when they see it. Many of their crackers have the flexibility to consume different feedstock, and they are overwhelmingly favoring ethane over all others. More than 85% of the ethylene produced in the US uses ethane as a feedstock, according to the latest figures from the American Fuel & Petrochemical Manufacturers (AFPM). Cracking ethane maximizes ethylene production. If ethane cracking remains favorable, that will increase production of ethylene. OUTLOOK FOR ETHANEAs low as ethane prices are right now, they have room to fall further. Ethane can be used as a chemical feedstock or burned as a fuel. Right now, the fuel value of ethane is about 11 cents/gal based on spot prices at the Henry Hub. The fuel value is even lower at other natural gas hubs such as the Houston Ship Channel and Waha hub in the Permian basin in western Texas. As long as ethane sells at a meaningful premium above its fuel value, the market will have an incentive to recover the material instead of selling at a significant discount to the fuel system. Even if the ethane ends up in storage, it is worth more than ending up as fuel. Already, US ethane inventories are well above the five-year average because companies have such a large incentive to recover the material. If the trend continues, the US will run out of ethane storage capacity. Prices for ethane would fall. OUTLOOK FOR NATURAL GASThe factors that are dragging down natural gas prices should continue through the first half of 2024. Temperatures remain seasonally mild, which have depressed heating demand. US production of natural gas remains high because much of it is produced as associated gas from oil wells. Prices for oil remain high enough to support crude production. Many of these oil wells are in shale basins, so their ratio of gas to oil production increases over time. As temperatures become warmer, more US consumers will rely on air conditioners to stay cool, and that will increase demand for gas-fuelled power generation. Further out in 2025, companies will begin operations at new LNG export plants. The following three new LNG projects should begin operations that year. Figures are in millions of tonnes/year. Project Name Developer Project Capacity Corpus Christi Stage 3 Cheniere 10 Golden Pass NG Exxon/QatarEnergy 15.6 Plaquemines LNG Venture Global 20 Source: ICIS LNG Edge These projects will start up regardless of the fate of the proposed halt in new LNG projects by US President Joe Biden. The projects had already received all of their approvals prior to the proposal, so they will begin operations regardless of whether the US adopts the pause. Another two LNG projects should start in 2027, as shown below. Figures are in millions of tonnes/year. Project Name Developer Project Capacity Rio Grande LNG Phase 1 NextDecade 17.6 Port Arthur LNG Sempra 13 Source: ICIS LNG Edge Insight by Al Greenwood Thumbnail shows natural gas. Image by Shutterstock.
Avient sees end to destocking, raw material deflation to continue in H1 – execs
HOUSTON (ICIS)–While customers are managing inventories tightly as they monitor demand, Avient sees destocking coming to an end in key markets, with underlying demand starting to improve, the top executives of the US-based polymer materials company said on Wednesday. Demand improving in largest end markets, packaging and consumer, and in defense applications. CEO Ashish Khandpur and chief financial officer Jamie Beggs, speaking during Avient’s Q4 earnings call, said that packaging and consumer already benefited from slowing destocking in Q4 and that destocking “has largely come to an end” in those markets. DEMAND BY SECTOR The two markets account for more than 40% of Avient’s total sales of $3.14 billion in 2023 (Q4: $719 million). Although packaging and consumer sales were down year on year in Q4, they declined at a slower pace than in the previous quarters. Sequentially, packaging sales were down "only" 4% from Q3 and consumer sales were down 3%, despite the typical Q4 seasonality in Avient’s business, Khandpur said. At the same time, the pace of destocking in the healthcare end market has also started to slow, although Q4 sales into that market were down 9% year on year. Sequentially, Avient’s sales in healthcare were up 3% from Q3 as underlying demand from consumers in that sector remained steady, and Avient expects to see further improvements in demand in 2024. In building & construction and industrial, Avient sees continued softness. Those sectors are capital intensive and interest-rate sensitive. Telecommunications, which was the weakest end market for Avient in Q4, will likely remain soft through the first half of 2024. Meanwhile, Avient’s sales into the defense market continue to be strong, “in light of continued geopolitical tensions”, Khandpur said. DEMAND BY REGION Regionally, markets in the US and Canada, which account for 41% of Avient’s total sales, should continue to improve as consumer sentiment appears to be resilient, despite the higher interest rates. However, Avient has slightly more exposure to healthcare in the US and Canada than elsewhere, which could imply “potentially sluggish growth” in the near term, the CEO said. In the US telecommunications market, Avient expects to see stronger sales because of the $42 billion Broadband Equity Access and Deployment Program (BEAD) to expand high-speed Internet access. The boost in demand from telecoms should begin in the second half of 2024 and become more significant in 2025. Meanwhile, in the Europe, Middle East and Africa (EMEA) region (36% of Avient sales) demand is affected by consumers being cautious because of the geopolitical issues, high interest rates, and the lack of government stimulus and infrastructure spending, compared with the US. However, defense is a “bright spot” in EMEA, and destocking in packaging in the region seems to have ended. Packaging is Avient’s largest EMEA end market. For Asia (18% of Avient sales) the company has a cautious outlook due to the uncertainties in China. The company is waiting to see the effect on the economy of China’s government stimulus measures. Latin America, which currently accounts for only 5% of Avient's sales, is an important region as the company's customers are shifting production to Mexico and other countries amid the reshoring/near-shoring trend. Avient will follow its customers and if Latin America becomes a bigger manufacturing hub, the company will scale up is operations there, Khandpur said. Packaging is Avient’s largest end market in Latin America. Those sales were up year on year in Q4 and the company expects further sales growth in 2024. RAW MATERIALS Beggs noted that raw material price deflation, which supported margins in Q4, should continue to provide a benefit in the first half of 2024. The primary raw materials used in the company's segments – Color, Additives and Inks; and Specialty Engineered Materials – include polyolefin and other thermoplastic resins, titanium dioxide (TiO2), inorganic and organic pigments, specialty additives and ethylene. NO BIG M&A Meanwhile, Avient will focus on organic growth and is not likely to engage in big acquisitions as it still works to fully integrate two acquisitions. However, Khandpur would not rule out smaller, bolt-on deals. Three months ended 31 December: Q4 2023 Q4 2022 +/- % Sales 719.0 790.4 -9.0% Cost of goods sold 510.1 618.4 -17.5% Gross margin 208.9 172.0 21.5% Income/loss from continuing operations 27.6 -16.6 Net income 28.6 544.5 -94.7% Net income fell as Q4 2022 included a gain from discontinued operations of $561.5 million related to the sale of Avient’s distribution business. Thumbnail photo of Ashish Khandpur, who took over as Avient's CEO and president on 1 December 2023; photo source: Avient
INSIGHT: Low virgin chemicals pricing intensifies sustainable transition challenge – Borealis CEO
LONDON (ICIS)–Lower pricing for virgin petrochemicals in Europe on the back of a prolonged demand trough is exacerbating the challenge of building out sustainable products portfolios into a core spine of a chemicals business, according to the CEO of Borealis. The Austria-based petrochemicals producer is in the process of substantially increasing its sustainable and circular products offerings, completing its acquisition of Italy-based recycled polypropylene specialist Rialti in November. The company also agreed to acquire Integra Plastics, a Bulgaria-based producer of recycled polyethylene and polypropylene, that month. VIRGIN VS RECYCLED The push to develop circular products as a core plank of Borealis’ operations have become more difficult amid strained profitability and low pricing for conventional plastics, according to CEO Thomas Gangl. “What we want to do is focus on establishing circularity as a viable business,” he said. “This is tricky in general, and even more tricky in times of low prices for virgin material. On the other hand, I truly believe that this is not an optional topic, and is the way forward and we see for Borealis.” “The current environment, with lower demand for products, lower prices and margins, has of course been a difficult situation for us as well. Even more difficult in this environment, is making the mid- and long-term structural changes that we need,” he added. Lower pricing for virgin material has been a challenge for the mechanical recycling sector, with production units tending to be smaller-scale than gigantic fossil-based petrochemicals production plant, and utilising newer technology. Those market characteristics can make for higher costs, and periods of cheap and plentiful fossil-based materials regularly challenge the pace of recycled product market adoption. “We need to go to a more circular product portfolio. During times when the material is so cheap, it is very difficult to afford for customers to buy something with a premium. That is a challenging situation for the transformation,” he said. PERFORMANCE The company reported 2023 operating profit of €18m for its European asset base, excluding its nitrogen fertilizers business, which it sold to AGROFERT in July last year. The long-anticipated divestment has also allowed the company to simplify its approach to moving into a more circular business model, according to Gangl. "The proceeds that we have received from the sale were very good, and it is also about focus in difficult times. With the transformation towards circularity, we need to focus on the polyolefin business, and the nitrogen business was a big distraction from a management point of view," he said. The 2023 figure is a huge decline from the €703m generated -also excluding fertilizers – the previous year, amid high inflation and weaker margins and negative inventory effects. “The European asset base that Borealis is operating, excluding the big joint ventures such a Borouge, recorded €18m operating profit in 2023, a small profit compared to the record year 2022, but 2023 was a tough year for our industry, especially so for European based part of our industry, with high energy prices, inflation, a lot of imports," said CFO Daniel Turnheim. "Don't get me wrong, we are anything but happy with that sum, but it's still in a solid positive territory," he added. Slow ramp-ups and production issues for some new assets at Baystar, the company’s Texas joint venture with Total, also limited profitability last year. This is due in part to the 625,000 tonne/year scale of the polyethylene unit, which can present unique challenges when ramping up output “With this as the biggest machine ever built, you would expect to see some ramp-up curve… but we are convinced that this year this ramp-up curve will be continued and hopefully at the end of the year we will see a very stable operation,” Turnheim said. NO BIG SHIFTS IN 2024 No strong improvements are expected this year compared to last, with OMV projecting that operating margins for its European olefins and polyolefins assets will slip further in 2024, despite polymer sales and cracker operating rates projected to increase. OMV holds a 75% stake in the business, with Borealis standing as the Austria-based oil and gas major’s key foothold in downstream petrochemicals. OMV is in talks with Abu Dhabi sovereign oil major ADNOC on potential closer cooperation on petrochemicals, including the combination of subsidiaries of Borealis and Borouge as equal partners. Gangl declined to comment on the talks. Europe indicator operating margins (/tonne) 2024 (projected) 2023 Ethylene 490 507 Propylene 370 389 Polyethylene 320 322 Polypropylene 320 355 “I think what we really will see in 2024 is that the situation is not substantially different to 2023,” said Gangl. “It will be another challenging year. And so everyone has, therefore, focus on topics where there is the highest value to be delivered." Like most European players, an ever-intensifying focus on costs and efficiencies is the order of the day, Gangl said, with further consolidation in producers’ European asset base a strong possibility. !We've done a lot in working on margins, pricing, variable costs, fixed costs. This is the name of the game for European players, and therefore we need to continue this journey,” he said. “We have seen some first closures of assets last year and also here I expect that the one or the other will be added in the next years,” he added. LEGISLATIVE REFORM With the institution of a new European Parliament later this year as part of a wave of general elections that will see changes in national leadership for nearly half the population of the globe, sustainability legislation is likely to see some shake-ups. Marco Mensink, director general of European chemicals trade body Cefic, has predicted that Commission support on sustainability investment will be focused on the first movers and the highest spenders as industrial strategy rises up the agenda. With the sustainability transition comprised of the reinvention of numerous value chains and those shifts needing to happen in parallel to create a circular economy, what is lacking beyond investment is clarity, according to Gangl. “We are not happy with the timing of what is required from legislation and what we need to do now. We are taking steps without knowing exactly what the legislation will look like, and this is of course creating some issues,” he said. The US Inflation Reduction Act includes scope to cover operational expenses for new production units in value chains that may not yet be profitable, and an issue in Europe remains an obstacle to maturity of cleaner feedstock product markets, Gangl added. “We can for example, produce more products derived from bio-based feedstocks but as long as this is not supported by legislation, customers will not pay the extra costs for that. And this is where we then need a lot of smaller investments as well,” he said. “So it's not only one big investment, it's many smaller investments, and these will be delayed if there is no change in the approach by regulators,” he added. Insight by Tom Brown Thumbnail photo: Borealis' office in Taylorsville, US. Source: Borealis Clarification: recasts seventh paragraph
VIDEO: Red Sea tensions will ripple through Europe chems markets in 2024
LONDON (ICIS)–The Red Sea crisis has shaken the European petrochemicals industry. Products like PTA and polypropylene, ethylene glycols and HDPE have been highly impacted by reduced imports from Asia. In the long term, there is a shift in buyer behaviour caused by geopolitical uncertainties. European buyers moving away from just-in-time delivery Fear of trade disruption pushes domestic chemical prices Reduced sentiment on just-in-time deliveries leads to inventory building Input from Chris Barker, Meeta Ramani, Heidi Finch, Nigel Davis, Tom Brown and Will Beacham.
Mitsubishi may make FID on new US MMA plant in Q2
HOUSTON (ICIS)–Mitsubishi Chemical America could make a final investment decision (FID) on a new methyl methacrylate (MMA) plant in the US in the second quarter, with start-up possible in 2028, the company said on Thursday. The plant, called the MCA Geismar Site, is proposed to be built in Ascension Parish in Louisiana state, and it will produce 350,000 tonnes/year using the company’s Alpha process technology. The site will also include a carbon monoxide (CO) plant, a methanol plant and a formalin plant. This will be the third plant that features the Alpha process, which uses ethylene, methanol and CO to make MMA. If Mitsubishi Chemical decides to move forward on the project, then construction could start in the second half of 2024, the company said in a statement. It should end in 2028, with operations starting later that year. The project already has achieved some regulatory milestones. The Louisiana Department of Environmental Quality (LDEQ) had scheduled a public hearing for the project for 1 February. In 2023, the regulator made a preliminary determination to approve construction of the project. Mitsubishi Chemical expects the department to approve its air permit application in March or April 2024, it said in a statement. ETHYLENE-BASED MMA MAY UPEND MARKETMMA is typically made from acetone, which is a co-product of phenol production. Mitsubishi as well as Roehm are building MMA plants that use ethylene and methanol instead of acetone as a feedstock. Roehm calls its process technology LiMA, and it will be used in a 250,000 tonne/year plant it is building on the Gulf Coast. If these new technologies proliferate, then they would create a new end-use for ethylene, and they could slow down the growth for a traditional outlet for acetone. Not only could that have ramifications for acetone, but the new MMA technologies could affect phenol markets. Phenol and acetone are co-products and are ultimately derived from benzene and propylene via cumene. Thumbnail shows an item made of polymethyl methacrylate (PMMA), which is made from MMA. Image by Shutterstock.
US natgas prices close below $2, benefiting chem margins
HOUSTON (ICIS)–US natural gas prices fell below $2 on Wednesday, which, barring the pandemic, represent the lowest winter-time level since 1997. Prior to 2020, the last time the front-month contract for Henry Hub natural gas traded below $2/MMBtu in February was in 1997, according to the Energy Information Administration (EIA). It is unusual for natural gas prices to fall to such low levels during the winter. Some of the factors dragging down prices are high production, a growing share of renewable power and a warm winter, said Fauzeya Rahman, ICIS Americas LNG editor. In October 2023, US meteorologists warned about warmer temperatures, which they attributed to the effects of the El Nino weather phenomenon. Such low gas prices should benefit US petrochemical producers because they predominantly use ethane as a feedstock to produce ethylene. Ethane prices tend to rise and fall with those of natural gas, while petrochemical prices tend to rise and fall with those of oil. While prices for natural gas have fallen, those for oil have remained at $70-80/bbl. Looking ahead, both oil and gas prices should rise as the year progresses, according to the latest Short Term Energy Outlook issued by the EIA. For all of 2024, average spot prices for natural gas should be $2.65/MMBtu up from $2.54/MMBtu in 2023. In 2025, average spot prices should reach $2.94/MMBtu. For Brent, oil prices should reach an average of $82.42/bbl in 2024, up slightly from $82.41/bbl in 2023. In 2025, average crude prices should fall to $79.48/bbl. The following table shows daily prices for natural gas since 1997. Source: EIA Thumbnail shows a gas flame. Image by Shutterstock.
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