Mixed plastic waste and pyrolysis oil

LONDON (ICIS)–Imagine you sold a product with no control over how much of it was produced at any one time; that you had to sell it within weeks of it being produced regardless of what the demand for it was like; and that the demand was constantly changing. For most waste managers, no imagination is required, this is their daily reality. And it’s one of the biggest drivers of volatility throughout the recycling chain globally. Waste originates from both the general public and industry, and as a result, the composition and quantity of waste generated at any one time varies continuously depending on consumer behaviour and industrial production trends. Waste managers typically hold contracts for waste collection with municipalities. They cannot turn material away. Because of variations in consumer and industrial production trends, different countries can have vastly different supply at any one time. The quality of that input waste (how contaminated it is, the tensile strength etc.) depends on a variety of factors including how it's been treated and stored before its entered the chain, the type of additives it contains, what other materials it has come into contact with (because contact with substances such as polyvinyl chloride (PVC) causes contamination), level of discolouration, gel content, and odour. Coupled with this, the more times a polymer has been recycled, the lower its tensile strength, and typically end-use suitability becomes increasingly limited. How many cycles it takes before the waste material becomes unusable varies from polymer-to-polymer, process to process, and level of other degradation. The longer you store waste (this is typically, but not exclusively, in the form of bales) without reprocessing it – or selling it on for reprocessing – the more it degrades. This can be due to a number of things, including the contaminants it contains, thermolytic degradation (from heat – typically the sun), and hydrolytic degradation (from water – common in the case of polyethylene terephthalate (PET). Meanwhile, new (and perhaps more valuable) strains of waste are constantly entering the chain, and warehouse space is limited. If the waste quality is too low, then waste managers either need to dispose of the material, sell it to the burn-for-energy sector, or use it captively for energy creation. Burn-for-energy bales typically sell at negative values, whereby sellers pay for the removal of waste based on cost saving against alternative disposal methods. As a result, most waste managers look to offload bales within a timeframe of around 4-6 weeks (although this varies from market to market). Reprocessed recycled material, meanwhile, serves a huge variety of end-use markets. Major offtake markets include, but aren’t limited to, packaging, construction, automotive, outdoor furniture, refuse bags, strapping, and horticulture. Demand between the end-uses also varies dramatically, and players in each market purchase for differing reasons. Some markets, such as packaging, are heavily driven by brand sustainability targets and regulation, other markets, such as construction, mostly purchase on cost saving against virgin. This has huge impacts on willingness to pay, Intensifying legislative and consumer pressure on sustainability in packaging over the past few years has seen a significant pricing gap develop between display packaging suitable, and non-display packaging suitable grades across most global recycled polymer markets. There is currently, for example, a spread of up to €1,500/tonne between the highest priced grade of Europe recycled polypropylene (R-PP) pellet (which is a post-consumer natural grade predominantly used in domestic goods and cosmetic applications), and the lowest priced grade (which is black injection-moulded pellets, which typically serves non-packaging applications). Ideally (from their point of view) waste managers and recyclers would primarily serve applications driven by sustainability targets where premiums are typically highest. Nevertheless, each downstream market has differing technical requirements  – with display packaging and automotive typically having the strictest technical requirements and construction, bin bags and outdoor furniture the lowest. This means that there is typically a higher volume of material sold into non-packaging applications. While sorting allows waste managers to extract the valuable fractions and, to an extent, control contaminants etc. it doesn’t control the input waste mix. So the type of material suitable to serve each application is changing constantly. There is also a direct correlation between feedstock waste quality and reprocessed output quality for both mechanical and chemical recycling. This creates a continuous supply/demand mismatch that is often underappreciated by players newly entering the market. This mismatch coupled with the need to offload material relatively quickly is the reason, for example, 90% mixed polyolefin bale prices have traded as high as €600/tonne ex-works NWE (northwest Europe) and as low as €0/tonne ex-works NWE since July 2022. Because waste fractions typically produce a variety of different flake and pellet grades depending on what is extractable from individual bales – especially for recycled polyolefins – they typically react to system wide demand in each locality. Individual flake and pellet prices, though, often react to demand from specific end-use markets. This can result in periods where waste bale prices are high but prices for some flake and pellet grades those bales serve are low, resulting in squeezed margins. This is especially true for grades that are purchased for cost-saving reasons, meaning that they need to aggressively compete with virgin and off-spec material. The reverse also regularly occurs, whereby bale prices can be low because demand in key end-uses such as construction is weak and general availability of waste is high, but volumes extracted for packaging suitable grades are limited and demand from that particular sector is firm. It is also increasingly common for material with broadly identical specifications to trade at different price levels depending on which sector it is being sold into. Further distortions in the chain are created because reprocessed material such as flakes and pellets can be stored for long-periods of time, and flake and pellet producers are not forced to offload material as quickly as waste managers. This leads to fragmented and localised downstream markets where spreads against feedstock costs and profitability are constantly shifting. Volatile feedstock costs also results in challenges for investment. This is particularly true for emerging technologies such as chemical recycling and bio-based plastics. Thatis because new producers seeking private investment are often required to project future costs (typically for a period of at least 5 years), with waste feedstock typically their largest variable cost. The unpredictability of waste values make this a herculean task. When players first explore circular plastic markets, they are often surprised by the variability and fragmentation of prices through the chain. In the majority of cases the direct cause can be traced back to the feedstock waste markets. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

11-Oct-2024

HOUSTON (ICIS)–Roaring ashore as a Category 3 hurricane late 9 October and bringing fierce winds, heavy rainfall and significant inland storm surge Hurricane Milton inundated the Tamp, Florida area, which is a key hub of the US fertilizer industry. In the aftermath of the storm there were market sources, based in this region, who were reporting being unharmed but that they were now facing considerable flooding, which was causing property damage in places and overall restricting public movement. The section of Florida pounded by Milton is the location of not only production sites but also storage and logistic operations as well as corporate office facilities and the home to the numerous employees of the local fertilizer industry. The Port of Tampa, which handles about 25% of domestic fertilizer exports, said on their website that recovery efforts have begun, and that staff is working with the US Army Corps of Engineers, US Coast Guard and other maritime partners to assess landside and seaside operations. “Our port is currently without power. Some damage was observed to buildings but there has been no significant damage to docks, so far. The port is accessible through main gates, but please be advised there are road closures and flooding concerns in the surrounding roadways to our port,” the Port of Tampa announced. “We are working with our fuel terminal operators to assess their facilities and learn when they will be able to return to service. Individual port tenants will make independent decisions on when to resume their operations.” The extent of impacts to the fertilizer industry were not yet clear but Canadia fertilizer producer Nutrien, who only has the White Springs phosphate facility within Florida, said the company is still dealing with the impacts of the last storm but was able to avoid further issues from this hurricane. “While Nutrien’s White Springs phosphate facility was not impacted by Hurricane Milton, we are continuing to assess the timeline for White Springs’ restart following Hurricane Helene.  Nutrien’s nitrogen facilities were not impacted by Hurricane Milton,” said a Nutrien spokesperson. Fertilizer titan Mosaic, who not only has their headquarters within Tampa but also has numerous assets for production and logistics, said their immediate focus is on their workforce. “As Hurricane Milton has now passed through central Florida, we are working to contact our employees and confirm their safety. When conditions allow, we'll begin assessing the impacts on our operations,” said Mosaic. There were concerns ahead of the storm over the potential environmental consequences of Milton as Florida has 25 stacks of slightly radioactive phosphogypsum waste that are a by-product of phosphate fertilizer production. The fear that the winds and rains could release the material across the land and water resources that are nearby as has occurred in past hurricane events. There was no immediate report of the conditions of the stacks as of late 10 October but ahead of the storm Florida environmental officials had said they were preparing and would have all resources available to oversee the regulated facilities and operations. Sources said the areas that were more south of Tampa were apparently struck harder but there has not been full confirmation of the damages inflicted with a source saying it is a “different story down there”. There were weather reports of over 18 inches of rain having been received in nearby St Petersburg, Florida. The hurricane also generated several strong tornadoes as it approached which are being blamed for some of the physical damage to structures. A market participants said that with it being less than 24 hours since landfall it was going to take some time for the fertilizer industry to assess the scale of the impacts from Milton, saying it is “too soon for that”. Federal and state officials have not yet projected an estimated amount of damages as assessments were just barely getting underway. It likely did great harm to the Florida citrus industry with orange groves bearing fruit and drawing close to their harvest period. It is feared that it will be determined in the coming days that the storm’s intensity will result in a substantial decline in production this season, with others crops having also been exposed to harm like sugarcane and strawberries.

10-Oct-2024

LONDON (ICIS)–Glycolysis-based chemical recycling technology company Ioniqa has filed for bankruptcy protection, the company announced in press release on Thursday. The company is headquartered in the Netherlands. It is concentrated on chemically recycling polyethylene terephthalate (R-PET). In the press release, the company stated that it has determined that “achieving a positive cash flow from its advanced polyester recycling technology will take too long.” Advanced recycling is a term that is often used as an alternative description for chemical recycling (although mechanical recyclers also use the term advanced recycling to refer to some mechanical recycling processes). It attributed this to the comparatively low price of traditional virgin PET and the supply chain for chemically recycled PET still being in development. It also attributed some of the blame to “the implementation of regulated mandatory standards for meaningful recycling levels… [being] too far out into the future.”  It stated that this meant that large-scale deployment of its technology was not economically feasible at this time. Ioniqa has a glycolysis-based chemical recycling demonstration plant in Geleen, The Netherlands, which has been operational since 2019 and has an estimated output of 8,000 tonnes/year according the ICIS Recycling Supply Tracker – Chemical. Investors in the site include The Coca Cola Company, Unilever, Indorama Ventures, Koch Technology Solutions, and Infinity Recycling’s Circular Plastics Fund. Chemical recycling is an umbrella term for a variety of methods that use different production routes and feedstocks to create new material from waste. This means that each process (and each technology and individual player) has vastly different cost-structures and the economics of each chemical recycling method vary substantially.  Coupled with this, achievable prices for chemically recycled products vary significantly between grade and polymer type. Common chemical recycling methods include pyrolysis, gasification, glycolysis, hydrolysis, methanolysis, and enzymatic hydrolysis. In chemical recycling, chemical processes are used to revert waste back to an earlier molecular state. Waste can be reverted back to monomer, building block chemicals, or all the way back to crude oil/energy. Chemical recycling alters the fundamental chemical properties of the material. In glycolysis, a transesterification catalyst is used to break the ester linkages, which are replaced by hydroxyl terminals. This produces bisterephthalate (BHET) and PET glycozates. These can be reacted with aliphatic diacids to make: polyester polyols, which are in turn used in polyurethane (PU) foams; co-polyesters; unsaturated resins; and hydrophobic dyes. If combined with virgin BHET, the process produces chemically recycled PET via dimethyl terephthalate (DMT) or purified terephthalic acid (PTA) glycolysis. Typical catalysts include monoethylene glycol (MEG), diethylene glycol (DEG), propylene glycol (PG) or dipropylene glycol (DPG). Transesterification does not work on polymers such as polyolefins due to a lack of cutting points. As a result, glycolysis is predominantly focussed on PET, and this means that it typically uses sorted and separated monomaterial as a feedstock, which can add additional cost. The most common form of chemical recycling in Europe is pyrolysis-based. This is in large part being driven by demand from ambitious brand sustainability targets in the packaging sector. Many fast-moving consumer goods (FMCG) brands see chemical recycling as the only viable way to reach large scale food-grade packaging suitable recycled polyolefins given current EFSA requirements that 95% of input waste must be former food-contact to gain food-contact approval. Most PET input waste is sourced from used plastic drinks bottles, making it easier for R-PET producers to meet this 95% requirement than other polymers, and there is a well established R-PET food-grade pellet sector – using traditional recycling methods – across Europe. R-PET is also the only mechanical recycling technology recognised as suitable for producing food-contact material under European Commission regulation (EU) 2022/1616 on ‘recycled plastic materials and articles intended to come into contact with foods’. Pyrolysis-based chemical recycling uses heat and pressure – typically in the absence of oxygen, although it is sometimes present in controlled volumes – to transform waste feedstocks (most commonly plastic waste or end-of-life tyres) into an earlier molecular state. Pyrolysis-based plants targeting mixed plastic waste as feedstock – with a focus on polyolefins – currently account for more than 60% of all operating chemical recycling capacity in Europe according to ICIS Recycling Supply Tracker – Chemical. PET, however, does not pyrolyse. Highlighting just how variable achievable prices for chemically recycled materials can be, pyrolysis oil prices in Europe are currently regularly trading on the spot market anywhere from €800-2,200/tonne ex-works Europe depending on grade. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

10-Oct-2024

HOUSTON (ICIS)–Warmer waters in the Atlantic Basin could make record-setting hurricanes like Milton and Beryl more common, which strengthened rapidly to become major storms that caused significant damage. Most of the petrochemical and refining capacity of the US is along the Gulf of Mexico, making the plants vulnerable to the disruptions caused by more powerful hurricanes that could become more common in the future. Rising exports of energy, chemical feedstock and plastics from the US Gulf Coast have caused local hurricanes to have global consequences. If wind shear becomes more common, then it could offset some of the strengthening effects that warmer water will have on hurricane development. RECORD-SETTING HURRICANE SEASONWarm water is like rocket fuel for tropical storms and hurricanes, and that led to the rapid intensification of Milton, which strengthened from a tropical storm into a Category 5 hurricane in less than two days. By midday on Monday, the rapid strengthening of Milton placed it among the top three Atlantic hurricanes, behind only 2005's Hurricane Wilma and 2007's Hurricane Felix, said Alex DaSilva, lead hurricane expert at the meteorology company AccuWeather. Milton had set another record as the strongest hurricane to occur in the Gulf of Mexico, according to Levi Silvers, research scientist at the Department of Atmospheric Sciences at Colorado State University, which publishes regular hurricane forecasts. Milton was also the Gulf's strongest hurricane since Rita in 2005, Silvers said. Milton would weaken to a Category 3 hurricane before making landfall on Wednesday night. AccuWeather estimates that Milton could cause more than $200 billion in damage and economic loss. Earlier on July 2, Beryl set its own record by becoming the earliest Category 5 hurricane to form in the Atlantic basin, beating the previous record holder by an astounding two weeks, DaSilva said. According to Silvers, Beryl also accumulated more cyclone energy than any other storm occurring before August. "Basically, it was the strongest early storm we have had by several measures." After forming in the Atlantic Beryl weakened after passing over Mexico's Yucatan peninsula before making landfall in Texas and disrupting operations at several petrochemical plants. AccuWeather estimated that total damage and economic loss caused by Beryl was $28 billion to $32 billion. Hurricane Helene set a record for the amount of available atmospheric moisture, also known as precipitable rain, according to AccuWeather. Such extreme amounts of moisture allowed Helene to carry it far inland, leading to rapidly rising river levels and flash flooding. AccuWeather estimates that Helene caused $225 billion to $250 billion in damage and economic loss in Florida, Georgia and the Carolinas. WARM WATER THREATSIf the planet continues to warm, one of the consequences would be elevated water temperatures. Warmer waters contributed to the strength and rapid intensification of these three hurricanes, DaSilva said. The danger is not just the surface temperature of the Atlantic but also something that meteorologists call ocean heat content, DaSilva said. Ocean heat content reflects water temperatures below the surface. A warmer planet will also heat up the atmosphere, allowing the air to hold more moisture. That would lead to more rainfall and greater risks of floods. "I am concerned that we are going to be seeing more episodes of rapid intensification," DaSilva said. "The tie between sea surface temperatures and rapid intensification – we are pretty confident about that." Silvers also expressed concern about the threat posed by elevated water temperatures. WIND SHEAR REMAINS UNKNOWN VARIABLEMeteorologists are less sure if wind shear could become more common in a warmer planet, DaSilva said. Wind shear usually discourages the formation of tropical weather. If wind shear does become more common, it could partially offset the effects of warmer water. In a world with more wind shear, it might not generate more hurricanes, but those that do form will strengthen rapidly into more powerful storms, DaSilva said. The length of the Atlantic hurricane season could also expand by starting sooner than the current June 1 date, DaSilva said. DaSilva doubts that the Atlantic season would last beyond its November 30 end date, because wind shear becomes more common during the final months of the year. Silvers, though, said it is difficult to determine if the timing of Atlantic storms will change in the future. "This season is a perfect example, with record breaking storms before and after the peak of the season, but almost nothing during the historical peak," Silvers said. MORE DISRUPTIONS FOR US, GLOBAL CHEMICALSMost of the petrochemical plants and refineries in the US are on the Gulf Coast, so more powerful hurricanes would leave them more vulnerable to damage and shutdowns. The US now exports significant amounts of polyethylene (PE), polyvinyl chloride (PVC), vinyl chloride monomer (VCM) and other chemicals. Hurricanes disrupt port operations, so those exports could be delayed, increasing the risk of global shortages. DISRUPTIONS TO WORLD'S CHEMICAL FEEDSTOCKSIn addition, the US is increasingly relying on exports to take away excess ethane and liquefied petroleum gas (LPG) produced from its oil fields. These petrochemical feedstocks are being imported by an increasing number of crackers and propane dehydrogenation (PDH) units, with GAIL (India) became the latest to announce plans to build an ethane cracker. Nearly all of the terminals that handle these exports of ethane and LPG are on the Gulf Coast, and all of the expansion projects are in the region. Hurricanes could disrupt operations at these terminals and interrupt the supply of these feedstocks to crackers and PDH units throughout the world. HURRICANES DISRUPT US LNG TERMINALSThe majority of US LNG capacity is on the Gulf Coast and its preponderance will only increase as the country starts up more terminals. This will have effects on US and global energy prices. Disruptions in global shipments could raise LNG costs. In the US, extended shutdowns of LNG terminals would increase supplies of natural gas, pushing prices lower for it and ethane. Lower ethane prices in the US could increase margins for ethylene derivatives. DISRUPTIONS TO US OIL EXPORTSThe Gulf Coast is a large exporter of oil, with major terminals in Corpus Christi, Houston and Nederland in Texas. In addition, the Gulf Coast is home to the Louisiana Offshore Oil Port (LOOP), the only deepwater crude port in the US. Companies are planning more offshore ports. Enterprise Products received a deepwater port license for its Sea Port Oil Terminal (SPOT), which could load 2 million bbl/day of crude oil. If built, it would be built 30 nautical miles off the Texas coast. In 2020, Phillips 66 and Trafigura Group announced that they created a 50/50 joint venture called Bluewater Texas Terminal to develop an offshore deepwater oil port 21 nautical miles east of the port of Corpus Christi. Energy Transfer is proposing its Blue Marlin Offshore Port, which could load up to one very large crude carrier (VLCC) per day. Texas GulfLink, a subsidiary of Sentinal Midstream, is developing a deepwater oil terminal off the Gulf Coast. If built, these offshore oil ports would be vulnerable to hurricanes, along with the onshore terminals on the Gulf Coast. That could restrict global oil supplies and push prices higher. Higher prices would increase costs for crackers that use naphtha as a feedstock. Insight article by Al Greenwood Thumbnail shows damage caused by Hurricane Milton. Image by Chris Urso/Tampa Bay Times/ZUMA Press Wire/Shutterstock

10-Oct-2024

SAO PAULO (ICIS)–Dow has decided to stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics, the US chemicals major confirmed to ICIS on Wednesday. Dow said global oversupply for polyols had caused the San Lorenzo plant to persistently operate at low rates. The company had already intended to halt polyurethane (PU) production there in 2021, but pressure from trade unions and the national government at the time stopped it from taking the decision. According to Dow, 40 employees at the plant will be affected by the closure, although trade unions say the figure is 120. The United Petrochemical Workers and Employees Union representing the plant’s employees said the company took the decision to shut the plant without notifying workers representatives, according to reports by local media in Santa Fe. Dow said, however, employees had been “notified in accordance” with Argentine labor laws. “The business driver for this final decision is aligned with the company’s strategy to optimize its asset footprint. The San Lorenzo production unit has been operating at low utilization rates, while there is an excess of installed capacity in polyol plants all over the world,” said the company. “Dow has worked to minimize any potential impact and is well positioned to meet customer demands and deliver the product mix needed to serve them. These customers may also acquire products from other suppliers at competitive prices, as they currently do.” The chemicals major said it would continue to “work closely with all stakeholders” of the San Lorenzo site to ensure an “orderly and smooth” transition. The PU plant had a production capacity of 50,000 tonnes/year, according to the ICIS Supply and Demand Database. Dow keeps a large presence in Argentina, where it is the sole producer of polyethylene (PE). Its main operating facilities are in Bahia Blanca, south of Buenos Aires, where it employs 3,000 workers in 12 production plants. Additional reporting by Bruno Menini

09-Oct-2024

SINGAPORE (ICIS)–Volatility marked the first few days of re-opening of China’s financial and commodities markets as investors’ initial hopes of more economic measures were crushed. Implementation plans for pre-holiday measures unclear Infrastructure-focused sovereign bonds to drive growth further China GDP growth to slow to 4.3% in 2025 – World Bank The highly anticipated return of Chinese market players after a week-long absence sparked a surge in the equities markets, with the closely watched CSI 300 – which tracks shares of the top 300 companies trading in Shanghai and Shenzhen, had surged by 11% on 8 October. “Expectations were high after the monetary announcements made [in] the week of 24 September and there were even news reports of up to a [yuan] CNY10 trillion ($1.4 trillion) stimulus,” hedge fund portfolio manager Rikki Malik said in a note issued on Wednesday for investment research and analysis firm Smartkarma. On Wednesday, the CSI300 index fell by 7%, reflecting concerns over the lack of concrete new stimulus measures from Beijing to sustain the rally. Other Asian equity indices tracked the weakness in Chinese bourses amid risk aversion also stoked by geopolitical jitters in the Middle East At 08:53 GMT, Hong Kong's Hang Seng Index was down by around 1.4% at 20,637.24, continuing from its sharpest single-day decline in 16 years in the previous session. Chemicals giant Sinopec was down by 3.61% and state energy firm PetroChina fell by 3.14% in Hong Kong. Elsewhere in Asia, South Korea's KOSPI Composite ended 0.61% lower to 2,594.36 while Japan's key Nikkei 225 closed up by 0.87% at 39,277.96 China’s petrochemical futures tumbled, with polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures leading the slump. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than 4%. POST-HOLIDAY POLICY BRIEFING UNDERWHELMS The National Development and Reform Commission (NDRC) – China’s top economic planner – held a briefing on 8 October in which chairman Zheng Shanjie said that China was "fully confident" of achieving economic targets for 2024. But his failure to detail sufficiently big or new measures rekindled market doubts about Beijing's commitment to ensuring the economy can climb out of its most serious slump since the global pandemic and achieve a 5% growth. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. Instead, the NDRC emphasized confidence in achieving the "around 5%" growth target for this year based on policy measures announced in late September. Toward this end, issuance of long-term sovereign and local government bonds will be accelerated to fund infrastructure projects well into next year. Additionally, the NDRC announced upcoming investments in key strategic areas totaling yuan (CNY) 100 billion, on top of plans to expedite CNY100 billion in central government investment originally planned for 2025. NO MAJOR NEAR-TERM IMPACT FROM STIMULUS MEASURES During the seven-day China holiday in the first week of October, domestic tourist trips grew 5.9% year on year, with revenues up by 6.3% over the same period. But the per trip spend was near flat at 0.4%, according to data from the Ministry of Culture and Tourism. Week-long holidays in the country, including the Spring Festival/Lunar New Year and Labor Day celebrations in February and May, respectively, typically result in spikes in domestic tourism spending. In October, domestic tourism activities remained positive this year while there were also reports of stronger outbound and inbound travel during the period. The two earlier major holidays in China – the Spring Festival and Labour Day holidays – had recorded stronger improvements across number of trips, total spend and spend per trip, according to Singapore-based UOB Global Economics & Markets Research in a note on Wednesday. "Although the recovery in outbound travel may dilute the demand for domestic tourism, the moderation in spend per trip continue to indicate more cautious spending amongst consumers," it said. "The initial spillover from recent PBOC [People's Bank of China]-led stimulus to consumer spending including the rollout of local government vouchers and promotions to boost consumption had been lacking in the National Day holiday statistics," UOB said. "This further affirms the need for stronger fiscal measures that target consumption and support to the labor market particularly with youth unemployment rate rising to 18.8% in Aug which continues to hamper the recovery in consumer confidence." Ahead of the National Day holidays, China’s central bank had announced stimulus measures estimated to be worth at least CNY3 trillion, which is equivalent to 2.3% of its GDP. These measures include a 50-basis point cut to banks' reserve requirement ratio (RRR), injecting CNY1 trillion into the financial system. Further measures include a CNY1 trillion capital injection to state-owned banks, a reduction in interest rates on existing mortgages to release CNY150 billion in funds, and CNY800 billion allocated to swap and re-lending facilities for stock purchases. “Investors were also disappointed that some of the 2025 budget would be pulled forward to this year, implying no new money, but… it is easier to issue special bonds which are off budget, rather than going through the rigmarole of increasing this year’s budget deficit,” said SmartKarma’s Malik. Markets will now be closely watching for further fiscal stimulus to support consumption and investment. “In addition, given the onset of winter, construction projects need to be started quickly. We fully expect there to be further issuance of ultra-long special bonds,” Malik added. Investors watching for signs of China's next policy moves now have three key dates circled on their calendars. In late October, the Standing Committee of the National People’s Congress (NPC) is scheduled to meet in late October. Meanwhile, China’s Q3 GDP is slated for release on 18 October; while country’s Politburo is due to meet early December, leading to the annual Central Economic Work Conference (CEWC). The CEWC is a pivotal annual meeting in China during which country's economic agenda is set for the upcoming year. The conference typically takes place over two to three days in December. CHINA 2025 GROWTH TO SLOW DESPITE STIMULUS – WB Economic growth in China is projected to slow to 4.3% next year from 4.8% in 2024 despite economic stimulus measures that China introduced in September, the World Bank warned in a report on 7 October. This is due in part to low consumer and investor confidence, property market weakness, an ageing population and global tensions, the multilateral institution said. “Recently signalled fiscal support may lift short-term growth but longer-term growth will depend on deeper structural reforms,” the World Bank said. “China has led growth in the region for more than three decades, but its relative growth is likely to slow down in future,” it added. Insight article by Nurluqman Suratman With contributions from Jonathan Yee ($1 = CNY7.07)

09-Oct-2024

LONDON (ICIS)–Massive overcapacity along some value chains is likely to drive further fundamental shifts in the global chemicals landscape, with differentiation and innovation key to remaining competitive. Slow demand in lengthy trough cycle conditions and the massive ramp-ups in production capacity seen in China since the start of the 2020s have left economics ”almost unsustainable” in some cases, according to Ketan Joshi, president for intermediates at BASF and member of the European Petrochemicals Association (EPCA)’s board of directors. “In several value chains, the overcapacities built up in China make the situation in China almost unsustainable when it comes to economics, which I assume will trigger some fundamental changes in the markets globally,” he said. “Differentiation and competitive offerings will be imperative for survival.” The radically changed competitive conditions for heavy industry in Europe relative to elsewhere in the world has highlighted the sluggishness of some industrial players to adapt to the new conditions. “I do believe that manufacturing industry in Europe became complacent to a certain extent in the past decade, so it is now really about trying to get back that innovation spirit,” he said. “If you talk about what the industry can do, then this is what the industry has in its own hand to drive, to differentiate and create a compelling value proposition for customers,” he added. BASF has taken a detailed look at its operations, particularly those in its Verbund site in Ludwigshafen, over the course of this year. Following the announcement in August of the closure of its Ludwigshafen adipic acid plant and several units, in the wake of a complete evaluation of the prospects for all units at the complex, further measures could yet be taken. The results of that deep dive were fairly promising, with 78% of Ludwigshafen production plants deemed competitive, while 16% were evaluated as facing short- to mid-term competitive risks and 6% seen as less competitive in the future, according to site director Katja Scharpwinkel. While the bulk of the company’s assets at its home based have been judged to be competitive, the current global market remains a challenging one, with manufacturing productivity continuing bearish and demand upticks still fairly minor. The most recent purchasing managers’ index (PMI) data for the eurozone shows manufacturing hitting a seven-month low in September, with conditions in Germany especially challenging, and the service sector also showing more marked signs of a slowdown. Chemicals demand slightly outpaced the general industrial market in the first half of the year, according to data from industry body Cefic, but remains substantially below recovery levels. BASF itself has guided for a slow recovery, with no big step changes in the subdued upward demand curve, and conditions remain challenging for intermediates. “From an intermediates perspective, it's been a challenging year, with demand developments remaining uncertain until the end of 2024, and no clear sign of any broad recovery. Customers continue to buy very cautiously, mainly keeping inventories very low, and competitive pressure stays high,” Joshi said. “Geopolitical uncertainties are driving large fluctuations in basic commodities, which I think is a major driver in markets at present, and that poses a major challenge for capex-heavy industries to really make decisions,” he added. While the macroeconomic picture is crucial to allow for a stronger rebound, companies need to adapt and innovate to meet the current challenges, he added. “To galvanize a broad recovery, several factors are necessary:  stable economic conditions play a crucial role in boosting investment, and increasing consumer confidence is necessary to drive consumption and spending,” he said. “But also continued innovation is vital to meet the evolving customer needs, and that is really what is required to stay competitive in the market.” “Traditionally, Europe led the industry in innovation, so it is important to get back the focus,” he added. Decarbonising production and offering a wider range of sustainable solutions will be core differentiators for the manufacturing sector, particularly as consumer tastes continue to evolve, according to Joshi. Strong pushes on research and scaling up production capacities for new markets and new products are difficult when producers are moving to aggressively cut costs and financing costs remain high. Many European countries, including Germany, have slipped down the international rankings of research and development spending and innovation, and the prospect of making big financial bets when markets are still forming remains a daunting prospect. “Without a doubt, moving towards more sustainability requires additional effort across the board. As I said, it cannot be an individual thing,” Joshi said. The European Parliament seems at present to be attempting to adapt to that challenge, without committing to the kinds of green subsidy frameworks seen in the US. Re-elected president of the European Commission, Ursula von der Leyen, has promised a clean industrial deal, and to cut red tape around permitting, although the pushback faced by BASF for its proposed cathode active materials plant in Finland and INEOS’ new cracker in Antwerp shows the continuing difficulty of building new production in the EU. While the policy specifics are still to be unveiled, the pronouncements by the new parliament are promising, according to Joshi, but permitting remains a real issue in Europe. “Right now, over 80 gigawatt of forthcoming wind capacity is stuck in lengthy permitting process in Europe, and eight times more that of solar energy capacity is in the permitting process compared to what is under construction,” he said. The ambition of the Commission’s targets, both for carbon reduction and for the use of non-fossil fuels and feedstocks, has been stymied to an extent by the continual revision of those goals, making it difficult for companies to commit to specific plans. The chemicals sector has one investment cycle left before the 2030 decarbonisation targets of a 55% reduction in carbon emissions compared to 1990 come into effect. The fact that new large-scale revisions to green industrial policy are still being drafted makes deploying that capital a challenge. “When ambitious targets regarding plastic recycling and accepted recycling technologies are reviewed again and again by governments, parliaments and regulatory authorities, it creates huge uncertainty in the chemical industry and delays investments,” he said. “We need a consistent policy, and we need those policies to stick to what the industry has already embarked into, so that the investments can happen,” he added. The roadmap for the evolution of the circular economy is also yet to be written for the chemicals sector. Companies looking at new markets often use acquisitions as a way in, but owning waste recycling infrastructure does not necessarily make sense for a chemical producer. Greater collaboration along these new value chains is necessary, and not all early steps may prove in hindsight to have been the best-optimised choices. The important thing is to start to make those steps, according to Joshi. “We cannot just aim for perfect solutions from the outset. We need to start implementing things and then improve as we go forward,” he said. “Partnership with waste suppliers, brand owners, technology leaders, will be required, because not everything can be done by a single player in the industry,” he added. The EPCA assembly runs until 10 October. Interview article by Tom Brown Thumbnail image source: Shutterstock

09-Oct-2024

SINGAPORE (ICIS)–China’s petrochemical futures tumbled on Wednesday morning as a lack of further economic stimulus measures from the government left investors worrying about demand. At the end of the morning session, polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures led the slump, with losses ranging from 2.4-3.5%. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than $3/bbl. In physical markets, spot transactions were sluggish at most petrochemicals, including acetone, butadiene, acrylonitrile, propylene oxide, upon resumption of trade due to weak demand. China had a week-long National Day holiday on 1-7 October. Futures market gains in the previous session lost steam as market hopes for additional economic measures did not materialize. In a briefing on 8 October, the National Development and Reform Commission (NDRC) – China’s top economic planner – provided no details on how to execute the aggressive measures announced in late September. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. ($1 = CNY7.07)

09-Oct-2024

HOUSTON (ICIS)–Ports along Florida's Gulf Coast are closed to vessel traffic as Milton approaches the state's fertilizer hub in Tampa as a Category 4 hurricane. Port Tampa Bay and the nearby SeaPort Manatee have set Port Condition Zulu, which means that they are shut down to inbound and outbound vessel traffic. The following table shows the conditions of some of the ports in Florida. Port Status Condition SeaPort Manatee Closed Zulu Port Tampa Bay Closed Zulu PortMiami Open Yankee Port Everglades Open Yankee Port of Palm Beach Open Yankee Fort Pierce Open Yankee Port Canaveral Open Yankee Jaxport Open Yankee Port of Fernandina Open Yankee Source: Ports, US Coast Guard LANDFALL ON WEDNESDAYMilton is expected to make landfall on Wednesday near Tampa, Florida, after weakening to a Category 3 hurricane, according to the meteorological firm AccuWeather. Milton will remain a major hurricane when it makes landfall, with maximum sustained wind speeds of 111-129 miles/hour (178-208 km/hour). The following map shows the expected path of Milton Source: National Hurricane Center IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin production in Lakeland and Kathleen, Florida. Both are near Tampa. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. Near Tampa is Florida's phosphate mining operations in Bone Valley, which covers parts of Hardee, Hillsborough, Manatee and Polk counties. In all, Florida has 27 phosphate mines, of which nine are active, according to the Florida Department of Environmental Protection. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida's Big Bend region. On 30 September, Mosaic said its Riverview operations were offline following water intrusion from a storm surge caused by Hurricane Helene. RAIL CONTINUES RUNNINGOn 7 October, CSX said it is maintaining normal operations at its yards and terminals. Meanwhile, the railroad company is putting its safety protocols in place. Also on 7 October, Norfolk Southern warned customers to prepare for delays if they have shipments moving through the southeastern US. RECONSTRUCTION FOLLOWING MILTONHurricane Milton could be extremely destructive because of its winds, rainfall and storm surge. It will pass over the following metropolitan statistical areas. Region Population Tampa 3,342,963 Orlando 2,817,933 Jacksonville 1,713,240 Sarasota 910,108 Source: US Census Bureau Tampa and Sarasota could suffer storm surges of 10-15 feet (3.0-4.6 meters), according to the National Hurricane Center. Storm surges of 3-5 feet could hit the areas from Port Canaveral northwards, including Jacksonville, Florida. AccuWeather warned that the hardest hit areas could have storm surges of 23 feet. "We are very concerned that Hurricane Milton could become one of the most damaging and costliest storms that Florida has ever seen," said Jon Porter, AccuWeather chief meteorologist. “Our forecast for 120 miles per hour to 140 miles per hour wind gusts will result in significant destruction. We expect roofs to fail, as well as long-lasting and widespread power outages. These damaging winds will push inland right along the Interstate 4 corridor,” For hurricanes in general, reconstruction can translate to increased demand for many chemicals and polymers. The white pigment titanium dioxide (TiO2) is used in paints. Solvents used in paints and coatings include butyl acetate (butac), butyl acrylate (butyl-A), ethyl acetate (etac), glycol ethers, methyl ethyl ketone (MEK) and isopropanol (IPA). Blends of aliphatic and aromatic solvents are also used to make paints and coatings. For polymers, expandable polystyrene (EPS) and polyurethane (PU) foam are used in insulation. Polyurethanes are made of methylene diphenyl diisocyanate (MDI), toluene diisocyanate (TDI) and polyols. High density polyethylene (HDPE) is used in pipe. Polyvinyl chloride (PVC) is used to make cladding, window frames, wires and cables, flooring and roofing membranes. Unsaturated polyester resins (UPR) are used to make coatings and composites. Vinyl acetate monomer (VAM) is used to make paints and adhesives. POTENTIAL FOR DISRUPTION TO GULF OILHurricane Helene disrupted US oil and gas production in the Gulf of Mexico even though it passed through the eastern portion of the body of water. Hurricane Milton could have the same potential as it approaches the US. Additional reporting by Mark Milam Thumbnail shows Hurricane Milton. Image by National Hurricane Center.

08-Oct-2024

LONDON (ICIS)–Covestro will have invested around €100 million in its research and development (R&D) infrastructure and assets over the three years to 2025, the high-performance materials producer said on Tuesday. The investments include ‘direct coating’ technology for the automotive sector, and high-performance computers which can simulate chemical processes to develop recycling capability. Covestro has also enhanced its infrastructure and global sites in Leverkusen, Germany, Pittsburgh in the US and Shanghai in China. “Our investments in R&D are integral to our strategy of creating value for our customers. They are enabling us to expand and maintain our innovation pipeline at a high level,” said Sucheta Govil, Covestro chief commercial officer. Last week, Abu Dhabi state oil and petrochemicals player ADNOC launched a public takeover offer for Covestro, representing an equity value of €11.7 billion.

08-Oct-2024