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Mixed plastic waste and pyrolysis oil news

Crude demand expectations fall for 2024 as trends shift back to pre-COVID pattern – IEA

LONDON (ICIS)–The International Energy Agency (IEA) on Friday cut crude oil demand forecasts for the year, with rates expected to fall further next year as consumption returns to the pre-COVID-19 trend, increasing the odds of a peak in oil consumption this decade, the agency said. The IEA expects crude demand growth to average 1.2 million barrels/day this year, an increase from October projections of 900,000 barrels/day but a decline from the 1.3 million barrels/day projected in its monthly oil market report in March. This level of growth is expected to slow next year to 1.1 million barrels/day, representing a shift back to the trajectory of crude demand before the pandemic, increasing the chances that global demand will peak this decade, according to the agency. “Global oil demand growth is currently in the midst of a slowdown… bringing a peak in consumption into view this decade,” said Toril Bosoni, IEA head of oil industry, and markets and oil market analyst Ciaran Healy. “This is primarily the result of a normalization of growth following the disruptions of 2020-2023, when oil markets were shaken by the COVID-19 pandemic and then the global energy crisis sparked by Russia’s invasion of Ukraine,” they added. Global crude oil demand 2011-25 (Source: IEA) Increasing fuel efficiency standards and electric vehicles comprising a larger chunk of the auto market are also affecting the rate of oil demand growth, the IEA added. Crude supply growth is expected to average 770,000 barrels/day this year, led by non-OPEC sources, particularly the US, offsetting a projected 820,0000 barrel/day decline year on year from OPEC+ cuts. Production growth could firm to 1.6 million barrels/day next year. Despite the projected demand declines this year, compared with growth of 2.3 million barrels/day in 2023, pricing has risen sharply in recent weeks, up by $8/barrel from early March to more than $90/barrel this week, on heightened geopolitical tensions and the prospect of a tighter supply-demand balance this year. “Russian refinery outages added to product market unease, while OPEC+ put pressure on some countries to increase compliance with agreed voluntary production cuts through Q2 2024,” the IEA said in its latest monthly oil market report. “Escalating oil supply security concerns are set against a backdrop of solid global oil demand growth of 1.6 million barrels/day in the first quarter and a more upbeat outlook for the global economy,” the agency added. In its latest oil forecast released this week, OPEC left GDP and crude demand growth expectations unchanged at 2.8% and 2.2 million barrels/day respectively. Thumbnail photo: An oil pump jack at the Vaca Muerta shale oil and gas play, Argentina. Source: Matias Baglietto/NurPhoto/Shutterstock 


ExxonMobil to sell Fos–sur-Mer refinery in France

LONDON (ICIS)–ExxonMobil’s French affiliate, Esso SAF, plans to sell its Fos-Sur-Mer refinery near Marseille, France, along with fuel terminals in Toulouse and Villette, by the end of the year, officials announced on Thursday. The buyer is Rhone Energies, which is a consortium between oil and commodities trader Trafigura and Entara. About 310 Esso employees are expected to transfer to Rhone Energies. The sale is subject to regulatory and other approvals. Financial details were not disclosed. The sale of the refinery, which has a crude oil processing capacity of 7 million tonnes/year, is part of Esso's long-term strategy in France to maintain the competitiveness of its operations while guaranteeing continuity of supply to its customers in the south of France, it said. Esso will continue to supply the fuel market in southern France and the proposed sale will not impact its other activities in France, it added. Entara, which was established by former executives of Crossbridge Energy, will operate the Fos-sur-Mer refinery. Trafigura plans to enter into a minimum 10-year exclusive crude oil supply and product offtake agreement, ensuring that the refinery has a secure supply of on-demand feedstock at competitive costs and a reliable off-taker of refined products destined to the domestic market, it said. The refinery will continue to be an important contributor to energy security in the region and would benefit from Trafigura’s global trading and logistics network, said Ben Luckock, Global Head of Oil for Trafigura. Oil and petroleum products will continue to play an important role in supporting growing global energy demand during the transition currently underway to a low-carbon economy, Luckock added. Rhone Energies intends to invest in the sustainability of the site to reduce its carbon footprint while also investing in growth projects enabling further co-processing of biogenic feedstocks to produce renewable fuels. In related news, ExxonMobil Chemical France announced earlier on Thursday that it plans to close its chemical production at Gravenchon in Normandy in 2024, subject to relevant government approvals. That closure is entirely separate from the proposed sale of the refinery, officials said. Additional reporting by Nel Weddle Thumbnail photo: A worker walking past ExxonMobil’s Fos-sur-mer complex. Source: Guillaume Horcajuelo/EPA/Shutterstock


BLOG: Oil and financial markets start to wake up to geopolitical reality

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at how geopolitics are now driving oil markets. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author and do not necessarily represent those of ICIS. Paul Hodges is the chairman of consultants New Normal Consulting.


PODCAST: Europe PE, PP see slow Apr start, ahead of ICIS conference

LONDON (ICIS)–Europe’s virgin polyethylene (PE) and polypropylene (PP) markets have been slow to start after the Easter break, with April opening differently as compared to March. The surprisingly strong trend for PE and PP in early 2024 has started to ease as panic restocking by converters, sparked by logistical issues due to tensions in the Red Sea, subsides. Ahead of the ICIS World Polyolefins Conference this week, ICIS editors look at early supply/demand signs for April and the changes from March. This podcast features Matt Tudball, senior editor for Europe R-PET and R-LDPE, and Vicky Ellis, senior editor manager for Europe virgin PE and PP. ICIS analysts and editors will be at the Ritz-Carlton Hotel in Vienna, Austria, on 10-11 April for the 10th edition of the ICIS World Polyolefins Conference. Industry leaders, including Berry Global, Borealis and Plastic Energy, will also share their insights during the conference.


No major economic policy impact from S Korea legislative elections

SINGAPORE (ICIS)–South Korea's legislative elections on 10 April will unlikely have a material impact on the country's near-term economic policies, but a majority win by the conservative People Power Party (PPP) would allow President Yoon Suk-yeol to implement his fiscal priorities. His People Power Party does not control majority of the 300-seat National Assembly, which is dominated by its rival Democratic Party since 2020. "President Yoon Suk-yeol could find it easier to advance his fiscal and economic reform agenda if the opposition’s current majority in the National Assembly is reduced or overturned," Fitch Ratings said in a note. Yoon, who was elected as South Korea’s president in March 2022, has proposed to eliminate capital gains tax but this continues to face opposition from the Democratic Party. In January, the South Korean government leader pledged to overhaul the country's tax system, which he perceives as excessively burdensome, discouraging stock investments. "Passage of the administration’s fiscal rule, which is under discussion in the [legislative] body, could help anchor fiscal policy in the medium term," Fitch Ratings said. If the ruling PPP wins, it is expected to have a positive effect on tax reforms, corporate value-up programs, and lifting a short-selling ban, as the government pushes for these reforms in the National Assembly, Global Markets Research said in a note. However, should the opposition democratic party win, they are likely to urge increased fiscal spending in 2025 and beyond, aligning with their preference for an expansionary fiscal policy, it said. With the democratic party currently in the majority, South Korea's budget for 2024 was passed with few changes to the government’s original proposal. "However, both parties are calling for some kind of fiscal stimulus – the DP argues for a cash transfer programme, while the PPP prefers a reduction in value-added tax (VAT) – and fiscal policy may, therefore, turn more supportive for growth in the second half of this year," ING said. "Although the general election will likely change the current political landscape, we expect the election results to have a limited impact on economic policy, as the National Assembly does not have executive powers," Nomura said. "We believe the general election results will have no impact on monetary policy as the Bank of Korea (BoK) will remain independent, regardless of the election results,” it added. The BoK, which is scheduled to meet two days after the parliamentary elections, is expected to deliver a dovish hold on interest rates in response to intensifying slowdown in the domestic economy, Nomura said. "We expect the BOK to enhance its dovish signals, including a dovish tweak to the policy statement and lowering the dot plot, which would support our forecast for a first 25 basis point cut in July, and subsequently take the policy rate down substantially to 2.5% by end-2024, from the current 3.5%." In March, South Korea’s central bank indicated interest rate cuts were unlikely in the first half of 2024 as inflation remains above target. It has left its benchmark interest rate unchanged at 3.50% since January 2023. Consumer inflation in March stood at 3.1%, unchanged from February, amid higher oil prices. South Korea is Asia's fourth largest economy – after China, Japan and India – and a major petrochemical net exporter. Its GDP growth weakened to 1.4% last year from 2.6% in 2022, weighed down by high interest rates; economic slowdown by China, its biggest trading partner; and poor global demand for memory chips, its primary export. Focus article by Nurluqman Suratman


‘Extremely active’ 2024 Atlantic hurricane season could mirror 2020, threaten US Gulf chem production

HOUSTON (ICIS)–The 2024 Atlantic hurricane season is expected to be extremely active, and has similar characteristics to the 2020 season, meaning it could threaten offshore oil and natural gas production in the US Gulf and chemical producers along the Gulf Coast. Source: Colorado State University (CSU)  A report late last week from researchers at CSU follows a report released on 27 March by US meteorology firm AccuWeather that also predicted an active hurricane season. The US National Oceanic and Atmospheric Administration (NOAA) will issue its first seasonal hurricane report in late May. So far, the CSU team said it is seeing similar characteristics to hurricane seasons in 1998, 2010 and 2020. The 2020 season saw 30 named storms, of which 13 became hurricanes and six of those were major storms. Storms in 2020 that impacted chemical operations included: Tropical Storm Marco hit Louisiana on 24 August. Days later, Hurricane Laura made landfall as a powerful category 4 storm in Louisiana near the border of Texas. Then, Hurricane Sally made landfall on 16 September in Alabama as a category 2 storm, followed by Tropical Storm Beta which made landfall less than a week later in Texas. Hurricane Delta followed a similar path as Hurricane Laura, making landfall on 9 October as a category 2 storm in Louisiana. Weeks later, Hurricane Zeta hit Cocodrie, Louisiana, as a category 2 storm. Hurricane Laura knocked 16% of total US ethylene capacity and 11% of total US propylene capacity offline, according to the ICIS Supply and Demand Database. About 18% of polyethylene (PE) production was offline, and 26% of polypropylene (PP) production was offline. Styrene butadiene rubber (SBR), a synthetic rubber used to make tires, had 46% of its US capacity offline. The CSU team said record warm tropical and eastern subtropical Atlantic sea surface temperatures are the primary factor for the active season prediction. “When waters in the eastern and central tropical and subtropical Atlantic are much warmer than normal in the spring, it tends to force a weaker subtropical high and associated weaker winds blowing across the tropical Atlantic,” researchers said. “These conditions will likely lead to a continuation of well above-average water temperatures in the tropical Atlantic for the peak of the 2024 Atlantic hurricane season.” Warm ocean waters serve as the fuel source for hurricanes, the CSU team said. “In addition, a warm Atlantic leads to lower atmospheric pressure and a more unstable atmosphere,” they said. “Both conditions favor hurricanes.” The current El Nino is likely to transition to a La Nina by the peak of the season – from August to October. Hurricane season begins on 1 June and runs through the end of November. Hurricanes and tropical storms can disrupt the North American petrochemical industry, because oil and gas production are concentrated in the Gulf of Mexico. Also, many of the nation's refineries and petrochemical plants are along the US Gulf Coast in the states of Texas and Louisiana. Even the threat of a major storm can disrupt oil and natural gas production, because companies must evacuate US Gulf platforms as a precaution. Thumbnail image shows a weather satellite orbiting over a hurricane. Photo by John Pulsipher/image from Shutterstock


Finland's Neste to supply renewable feedstock to Korea’s Lotte Chemical

SINGAPORE (ICIS)–Neste will be supplying renewable feedstock to South Korea’s Lotte Chemical for the production of polymers and chemicals, the Finland-based refiner said on Monday. "Lotte Chemical will use Neste RE at the company’s Korean sites to produce various common types of plastics and chemicals in Lotte Chemical’s broad product portfolio," it said in a statement. "With chemicals and plastics still largely depending on fossil resources, both companies see an urgent need to make a switch to more sustainable alternatives." Neste RE is a ISCC (International Sustainability and Carbon Certification)-certified feedstock for polymers and chemicals made from renewable raw materials such as waste and residue oil and fats. Financial details and timeline of the collaboration were not disclosed.


Brent crude falls by more than $2/bbl on hopes over Israel-Hamas ceasefire talks

SINGAPORE (ICIS)–Brent crude fell by more than $2/barrel on Monday as tensions in the Middle East eased after Israel's withdrew more troops from southern Gaza and signaled that it was willing to resume talks for a ceasefire to end the six-month conflict. Product ($/bbl) Latest at 01:08 GMT Previous Change Brent June 88.99 91.17 -2.18 WTI May 84.94 86.91 -1.97 On 5 April, benchmark crude prices rose to seven-months as rising tensions in the Middle East were fuelling fears of supply disruption, with further concerns about Iranian crude exports. Israel and Hamas have dispatched delegations to Egypt ahead of the Eid holidays to engage in new discussions regarding a potential ceasefire. Eid ul-Fitr holidays mark the end of the Muslim fasting month of Ramadan. Since the beginning of the year, Israel has been reducing its presence in Gaza to ease the burden on reservists as it faces mounting pressure from its ally, the US, to address the humanitarian situation, particularly following recent killing of seven aid workers. Israeli defense minister Yoav Gallant on 7 April said that Israel is prepared to manage any scenario with Iran, following Tehran's threat to respond to the assassination of Iranian generals on 1 April in the Syrian capital of Damascus. Crude prices have been on the rise in recent weeks due to anticipated constraints on oil supplies. OPEC and its allies (OPEC+) have re-affirmed their commitment to maintaining production cuts until the end of June. Additionally, Russia, a major oil producer, has indicated its intention to implement further reductions in production. The fuel production in Russia was further hindered by Ukrainian strikes targeting the nation's oil infrastructure, resulting in the shutdown of several major refineries. Market participants now await release of monthly oil reports from the International Energy Agency (IEA), US Energy Information Administration (EIA) and OPEC this week for better clarity on supply and demand forecasts for this year.


Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 5 April 2024. Oil at six-month highs; Brent crude at above $91/bbl on Mideast tensions By Nurluqman Suratman 05-Apr-24 11:00 SINGAPORE (ICIS)–Oil prices were extending gains, with Brent crude hitting past the $91/barrel mark on Friday, fueled by escalating geopolitical tensions in the Middle East which could disrupt supply amid output cuts by OPEC and its allies (OPEC+). INSIGHT: NE Asia C2 shipments slower for May, arb narrowing for SE Asia By Josh Quah 04-Apr-24 21:35 SINGAPORE (ICIS)–With spot discussions now turned to May arrivals, Asia ethylene markets are in a wait-and-see moment. Taiwan petrochemical operations normal despite 7.7-magnitude quake By Nurluqman Suratman 03-Apr-24 15:18 SINGAPORE (ICIS)–Operations at most petrochemical plants in western Taiwan were unaffected by a major quake that struck off the eastern coast of the island early on Wednesday, but the port at Formosa Petrochemical Corp’s (FPCC) Mailiao refinery was reportedly shut. Singapore March manufacturing improves; external headwinds persist By Nurluqman Suratman 03-Apr-24 12:12 SINGAPORE (ICIS)–Manufacturing activity in Singapore improved in March, boosted by higher export orders, but may remain weighed down in the near term by global economic weakness. INSIGHT: India’s PVC in the eye of the storm; ADD inquiry launched, BIS regulation looms By Damini Dabholkar 02-Apr-24 16:00 SINGAPORE (ICIS)–India’s polyvinyl chloride (PVC) market was active over the past two weeks, with April offers being announced, and notifications being released for two regulations.


Snowpack surplus may curb Italian power and gas prices

SWE volumes flip to surplus on Italian Alps for the first time in two years – CIMA This should support Italy’s hydropower margins and pressure power, gas prices Snowmelt should lift water reservoirs above average, boost hydro and limit gas needs LONDON (ICIS)–Abundant snowfall on the Italian Alps through February and March boosted the snowpack after two years of deficit from severe drought, which has resulted in a confident outlook for hydropower generation this summer and could pressure Italian power and gas prices. For the first time in two years the Italian Alps’ snow water equivalent (SWE) volumes, a measure of the water contained in the snow, flipped above the median over the last 12 years, in particular the Po river basin, Italy’s largest river, shown by data up to 1 April published by the Italian CIMA Research Foundation’s study on 4 April. This was a significant improvement from the first part of the past winter, when CIMA’s data initially indicated a snowpack deficit. The surplus of SWE volumes brings some security of supply as most of Italy’s water reservoirs and hydropower plants are located in proximity to the Alpine region. However, CIMA warned that while the overall SWE volumes for Italy showed a slight surplus, the central and southern basins were recorded at a deficit. Although, the deficit is unlikely to cause a risk for hydropower supply, as most of the capacity is concentrated in the north. “The reason for these differences [between the Alps and the Apennines] is, as always, linked to rainfall and temperatures,” said Francesco Avanzi, hydrologist at the CIMA Foundation, in the report. Avanzi also said that March had more precipitation in the northern and central region of Italy, but on the other hand the Apennines had temperatures that were more than 2.5°C higher compared to the average of the last decade throughout winter, which led to less snowfall and early melting of the snow. The study showed that further snowfalls are very unlikely, while early snowmelt could also represent a risk in the hottest summer months if it leads to a lack of water from the mountains over the third quarter. “For [the SWE surplus] to be truly useful in the periods when we need water most, the snow must remain snow for a few more weeks” Avanzi indicated in the report. IMPACT ON POWER The snow surplus can support the refill of water reservoirs and hydropower supply margins, providing secure supply of power. Additionally, higher SWE levels can reduce heatwave-related risks for the gas-fired generation plants located along the Po river. During past summers, heatwaves and low river levels caused gas plants to curb their power output due to difficulties in cooling their systems. Italy has 22.1GW of hydropower generation capacity, mainly from run-of-river and poundage and pumped hydro storage, according to ENTSO-E data. In 2023 hydropower generation totalled 39.3TWh, accounting for more than 15% of the total generation and representing the country’s top renewable generation source and the second power supply source behind gas, according to grid operator Terna. Wider hydropower supply margins means that cheaper electricity could be available this summer, therefore pressuring Italian power products and narrowing their premium to key European neighbours. IMPACT ON GAS Stronger hydropower output could also reduce the need for gas-fired generation this summer and result in lower gas consumption for producing electricity, which is potentially a bearish factor for PSV prices with delivery this summer. Combined-cycle gas turbines are Italy’s main source of power supply, with a 45.1GW-strong fleet and a total output of almost 134TWh in 2023, accounting for more than 52% of the total power supply mix over the same year. In 2023, Italy consumed 21 billion cubic metres of natural gas for electricity generation, or 35% of the total gas consumption according to gas grid operator SNAM. Improving hydro margins could further pressure Italian gas demand, continuing the declining trend seen in 2023. Note: Snow water volume graphs published with the permission of CIMA Research Foundation


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