Naphtha

Flammable liquid hydrocarbon with multiple applications

Discover the factors influencing naphtha markets

A bellwether for the global economy, naphtha is used in a vast range of goods. It is also important in gasoline production. Global market drivers include demand for fertilisers, industrial paints and coatings, gasoline and for naphtha as a petrochemical feedstock, often from fast-developing countries such as China and India.

Despite its global importance, slim or negative margins can cause refineries to cut back naphtha production. The market is also sensitive to weakening manufacturing and increases in oil and gas production.

Naphtha can also be used to dilute crude oil to make it easy to pump and transport. It is then removed and recycled after the oil is processed. This has become more important as production has shifted from lighter crude oils to heavy crude oil.

ICIS monitors upstream feedstocks, with a weekly recap of movements in crude oil markets. We analyse the relationship of naphtha with competing commodities, and the effects of supply disruptions and geopolitical events.

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Naphtha news

LyondellBasell may make 2026 FID on US chemical recycling plant

HOUSTON (ICIS)–LyondellBasell could make a final investment decision (FID) in 2026 on a second chemical recycling plant, which it may build in the US at its refinery site in Houston, the CEO said on Friday. "FID, for the final step, I would expect that to happen in 2026," said Peter Vanacker, LyondellBasell CEO. He made his comments during an earnings conference call. The chemical recycling plant would feature LyondellBasell's MoReTec process technology. The plant could produce 100,000 tonnes/year of cracker feedstock. If LyondellBasell moves ahead with the MoReTec plant, it could be part of a larger project that would convert the Houston refinery into a sustainability hub. The refinery's existing hydrotreaters would be retrofitted so they could upgrade the output from the MoReTec unit as well as from third-party recycling plants. Once upgraded, the feedstock could be shipped by pipeline to LyondellBasell's cracker operations in nearby Channelview, where it will be converted into olefins. Those olefins would be polymerized to produce circular polyolefins, which LyondellBasell would market under its CirculenRevive brand. LyondellBasell could also retrofit other units at the refinery that would convert renewable material into distillates and feedstock that the company could process in its crackers. LyondellBasell could market the resulting polymers under its CirculenRenew brand. LyondellBasell did not provide details about the source of these renewable feedstocks. However, one source could be a storage and logistics hub in Harvey, Louisiana, that is being developed by Kinder Morgan and Finnish refiner Neste. The hub collects used cooking oil and other renewable feedstock, and it could be expanded at Neste's option. Neste pioneered the production of naphtha from renewable feedstock, and the Houston refinery is a short distance by sea from Harvey. In the future, the hydrogen that LyondellBasell would need for upgrading recycled and renewable feedstock could come from nearby blue and green hydrogen projects. LyondellBasell, Air Liquide, Chevron and Uniper are part of a consortium that is evaluating sites for a hydrogen and ammonia project on the Gulf Coast. The Houston refinery is the top choice for the site. More hydrogen could come from the proposed Houston HyVelocity Hub. It is among the hubs participating in the Department of Energy's Regional Clean Hydrogen Hubs program. SHUTDOWN OF HOUSTON REFINERY IN Q1In January, LyondellBasell will start shutting down the first crude distillation unit and coker train at the refinery. In February, the company will begin shutting down the second crude distillation unit and coker train, the fluid catalytic cracking (FCC) unit and other ancillary units. The refinery does not have a catalytic reformer. CONSTRUCTION STARTS AT GERMAN RECYCLNG PLANTIn September, LyondellBasell started construction at its MoReTec 1 plant in Wesseling, Germany, which will have a capacity of 50,000 tonnes/year and which should start up in 2026. Vanacker said the plant has a plastic-to-plastic yield of more than 80%. It can use 100% renewable power. Thumbnail photo: Plastic which can be recycled. (By Allison Dinner/EPA-EFE/Shutterstock)

01-Nov-2024

UPDATE: SCG invests $700 million in Vietnam’s LSP ethane enhancement project

SINGAPORE (ICIS)–Thailand’s Siam Cement Group (SCG) will invest $700 million to pave the way for Vietnam’s first integrated petrochemical complex to use US ethane as feedstock for production. Project completion slated in end-2027 Ethane to account for as much as two-thirds of LSP cracker feedstock Bulk of investments go toward handling/storage of ethane The project, which will mean increased feedstock diversification for its wholly owned Vietnamese subsidiary Long Son Petrochemicals (LSP), is expected to be completed by the end of 2027, SCG said in a bourse filing on 30 October. LSP is currently working with Vietnamese authorities to acquire necessary certificates and permits to build storage and supporting facilities at the complex in Bah Ria-Vung Tao province in southeastern Vietnam. The cracker at the site can produce 950,000 tonnes/year of ethylene, 400,000 tonnes/year of propylene, and 100,000 tonnes/year of butadiene (BD). Once the ethane enhancement project is completed, LSP will be able to utilize ethane for as much as two thirds of its total feedstock, in addition to propane and naphtha. By utilizing imported ethane from the US as raw material, “LSP can significantly enhance its competitiveness through lower feedstock cost and flexibility, while also lowering carbon emissions”, SCG said. Majority of the investment will go toward handling and storage of the ethane feedstock, which requires temperature as low as minus 90-degree Celsius, it said. LSP was completed at a cost of $5.2 billion whose commercial operations began on 30 September 2024 "following a comprehensive test period", SCG said. The Thai conglomerate first announced the plan to use US ethane as feedstock for LSP in September, noting that over the past three years, its average price has been lowered by around 40% compared with those of naphtha and propane. Most crackers in Asia use naphtha as feedstock whose prices track highly volatile upstream crude movement. “In light of the existing petrochemical trough with historical low margin, and current volatile global economic environment, LSP is closely monitoring the market situation and will adjust the run rate of its operation during this challenging period for petrochemical business,” SCG said. Focus article by Pearl Bantillo (adds details throughout) Initial reporting by Fanny Zhang Thumbnail image: Container cargo ships unload at a port in Hai Phong, Vietnam on 25 May 2015. (Minh Hoang/EPA/Shutterstock)

31-Oct-2024

UK to accept fuel-exempt mass balanced chemical recycling in UK plastic packaging tax

LONDON (ICIS)—The UK government will support the use of mass balance for chemical recycling under the UK plastic packaging tax using a fuel-exempt accounting approach at site-level, it published in a consultation response late on Wednesday. The original consultation on “Plastic Packaging Tax – chemical recycling and adoption of a mass balance approach” was conducted from 18 July-10 October 2023. “Chemical recycling can complement the use of mechanical recycling technologies by enabling more types of plastic to be recycled and by producing a higher grade of recycled plastic, which can be used in regulated sectors such as food contact packaging. Chemical recycling therefore has the potential to help increase rates of plastic recycling,” the UK government said in its consultation response. As part of the consultation response, the government also announced that it will phase out the use of pre-consumer material as contributing towards recycled content thresholds in tax calculations. Under the UK Plastic Packaging tax, any packaging which is predominantly plastic by weight, and that does not contain at least 30% recycled material is subject to a charge of £217.85/tonne on the total weight of the packaging. When the tax was introduced, both chemical and mechanical recycling were accepted as contributing toward the target, but there was no decision on the acceptance of mass balance. In mass-balance, a certified volume of renewable or recycled material is input across a production run but may not be evenly distributed across each individual product. For example, a plant may use 30% recycled material overall, but one piece of produced packaging could contain 100% recycled material, and the next 100% virgin material, or any mix between those two extremes. Via this method, market players are able to state that they use a certain percentage of recycled or renewable material in their products, without having to prove that percentage in each individual product produced. Mass-balance is widely used in a number of industries and is not exclusive to either mechanical or chemical recycling. There have been different proposed accounting rules for mass-balance, all of which alter the possible recycled polymer output allocations, and therefore profitability throughout the chain, pyrolysis oil’s competitive position against mechanical recycling, and the sector’s attractiveness to investors. Under fuel exempt mass balance accounting rules, volumes used in fuel applications would not be attributable as recycled material, but material not ending up in fuels would be freely attributable across the value chain. Given that pyrolysis oil  – the dominant form of chemical recycling in Europe – is used as a naphtha substitute in a cracker, many see acceptance of mass-balance as an essential enabler for chemical recycling to count towards recycling content thresholds. The UK government will not adopt definitions of chemical recycling under ISO standard 15270:2008, arguing that definitions of chemical recycling must be process and technology neutral. “The government intends to introduce a definition of chemical recycling in line with the proposed definition by the European Coalition for Chemical Recycling, for the purpose of the tax. This will enable businesses to use a mass balance approach to account for recycled material produced from any technology or process that meets the definition of chemical recycling,” the government stated. The government also said that differing units of measurement may be used at different parts of the supply chain. For example, mass being used at polymer and packaging level, and a Lower Heating Value approach used at refinery level. The government further stated that accredited certification schemes will be necessary to audit and certify the mass balance volumes, and it intends to accredit multiple certification schemes. The government also signaled that while it is not currently making changes to medical exemptions under the tax at present it intends to remove this exemption once more chemically recycled plastic is available. “Producers and importers of medical packaging are encouraged to start considering how to include more recycled plastic in their packaging as chemical recycling capacity, feedstock levels, recyclate availability increase, and advancements in technology are developed,” it stated. There was no timeframe announced for when these changes would take place. Clarity on the UKs approach to mass balance will be welcomed by the market. Despite structural tightness of pyrolysis oil in Europe, buying interest in 2024 to date has been lower than that seen in 2023 largely due to ongoing legal uncertainty over approaches to mass balance accounting.  Legal uncertainty was one of the factors cited by Quantafuel in August for the cancellation of its 100,000 tonne/year pyrolysis-based chemical recycling project in Sunderland. On 16 July the British Plastics Federation (BPF) submitted a joint letter it had coordinated to the incoming Exchequer Secretary James Murray MP, calling for an urgent response to the previous government’s mass balance consultation. ICIS covers 3 grades of pyrolysis oil in its Mixed Plastic Waste and Pyrolysis Oil Europe pricing service . ICIS also offers mechanical recycling, waste bale, biodiesel, hydrogen, and virgin price coverage, giving you the complete picture across the sustainability value chain. For more information, please contact Mark Victory at mark.victory@icis.com.

30-Oct-2024

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 25 October. Asia's naphtha market eyes demand uptick By Li Peng Seng 21-Oct-24 11:38 SINGAPORE (ICIS)–Asia's naphtha intermonth spread was near a two-month high recently and it may be able to hold firm in the near term on reduced arbitrage volumes in November and anticipated demand growth ahead. Energy transition plan reset needed with renewed focus on Asia – Aramco President By Jonathan Yee 21-Oct-24 14:22 SINGAPORE (ICIS)–Saudi Aramco chief Amin Nasser on Monday called for a new energy transition plan that considers the needs of all countries, specifically those in Asia and the broader Global South, amid growing oil demand. Asia ACN regional producers bullish on tighter supply; India’s BIS deadline nears By Corey Chew 22-Oct-24 11:07 SINGAPORE (ICIS)–Asia acrylonitrile (ACN) prices saw a recent uptrend the past two weeks, with plants of key regional producers in Taiwan and South Korea under planned maintenance. PODCAST: Macroeconomic pressure continues to weigh on Asia recycling sentiment By Damini Dabholkar 22-Oct-24 17:13 SINGAPORE (ICIS)–The short-term demand outlook for recycled polymers from Asia remains sluggish especially for low-value grades, mainly due to poor economics and brand users’ preference of cheaper virgin plastics. Emerging Asian economies’ strong growth to subside amid China slowdown – IMF By Nurluqman Suratman 23-Oct-24 12:07 SINGAPORE (ICIS)–Emerging Asian economies are expected to see strong economic growth subside, partly due to a sustained slowdown in China, the International Monetary Fund (IMF) said on Tuesday. PODCAST: Asia methanol impacted by geopolitical uncertainty, supply cuts expected in Q4 By Damini Dabholkar 24-Oct-24 23:00 SINGAPORE (ICIS)–Asian methanol markets in recent weeks were driven more by sentiment than changes in fundamentals as participants respond to an escalation of the conflict in the Middle East. However, some supply changes in coming months are expected to alter the landscape in Q1 2025. Supply glut casts shadow over Asia PC market recovery By Li Peng Seng 25-Oct-24 13:08 SINGAPORE (ICIS)–China's polycarbonates (PC) spot demand has remained sluggish as ample supplies have kept purchases on a need-to basis, and this trend will persist through yearend.

28-Oct-2024

INSIGHT: After Milton, global chems face future of rapidly intensifying hurricanes

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

Asia petrochemical trades subdued; China post-holiday demand uncertain

SINGAPORE (ICIS)–Petrochemical trades in Asia may pick up mid-week with as Chinese markets re-open after a week-long holiday, but industry players remained bearish on demand recovery prospects. Trades subdued during 1-7 October China holidays Crude, naphtha prices rise amid geopolitical tensions China to announce more economic policies Crude gains on escalating Middle East tensions, weather-related disruptions in northeast Asia and the monsoon season in India were all factors that will affect trading this week. In late Asian trade, Brent crude breached $79/barrel, while US crude was trading at above $75/barrel, on growing fears of a wider conflict in the Middle East a year since the Israel-Hamas war began. Demand concerns, particularly in China, however, continue to cap gains. Prices of naphtha – the main petrochemical feedstock in Asia – typically track gains in upstream crude market. At noon, naphtha prices stood at $700/tonne CFR (cost & freight) Japan. With firm naphtha prices, production margins of petrochemical producers get squeezed. In the propylene and polymeric methylene diphenyl diisocyanate (PMDI) markets, players were awaiting clearer direction from China, whose players will return to the market on 8 October. For acetic acid, import demand from India slowed down as the seasonal monsoon in the country, which should have ended in late September, extended its stay and is expected to affect restocking ahead of Diwali holiday in end-October/early November. Diwali is the Hindu Festival of Light and is a major holiday in India. In Taiwan, Typhoon Krathon directly hit its petrochemical hub of Kaohsiung last week, causing power outages that affected plant operations at the site, with some units likely to be shut for days. In the case of Taiwan VCM (TVCM)’s 450,000 tonne/year vinyl chloride monomer (VCM) plant, it sustained equipment damage and may have to be down for 7-10 days, sources said. The consequent reduction is supply of some petrochemicals, however, will likely have a minimal impact on markets as demand remains largely weak. EYES ON CHINA Market players are expecting more economic measures from China post-holiday, which will follow a slew of policy announcements days before its week-long National Day celebration. China’s State Council announced on 6 October that the National Development and Reform Commission (NDRC), the country’s top economic planning body, will hold a press briefing on 8 October. In its announcement, the State Council referred to “systematically implementing a package of incremental policies to solidly promote economic growth, structural optimisation and sustained momentum of development”. China’s recent economic stimulus package have boosted investor sentiment, mainly in the equities markets, but there were doubts over any near-term lift to economic activity. Focus article by Jonathan Yee Additional reporting by Seng Li Peng, Jonathan Chou, Helen Lee, Shannen Ng and Hwee Hwee Tan

07-Oct-2024

ICIS launches Europe recycled polyolefin agglomerates pricing

LONDON (ICIS)–Underlying demand for European recycled agglomerates has increased throughout 2024, and is expected to rise sharply as pyrolysis-based chemical recycling scales. The majority of recycled polyolefin agglomerates are currently used by mechanical recyclers. Nevertheless, pyrolysis based chemical recyclers are increasingly targeting agglomerates as a feedstock. While chemical recycling can process waste types that it would be difficult or impossible for mechanical recyclers to use, though, it is a myth that there is no link between the input waste quality and output quality of chemical recyclers, and that chemical recyclers can use any form of waste. Take pyrolysis-based chemical recycling as an example. Pyrolysis-based plants targeting mixed plastic waste as feedstock – with a focus on polyolefins – currently account for ~60% of all operating chemical recycling capacity in Europe according to ICIS Recycling Supply Tracker – Chemical. Typically, pyrolysis-based processes aim to limit chlorine content in bales- due to corrosion risks –  polyethylene terephthalate (PET) content in bales – because it doesn’t pyrolyse and it creates oxygenation – nylon and flame retardants – which also oxygenates the process. They also typically aim to minimise moisture content, because loose water molecules in the reactor can cause changes to pressure values. The production of pyrolysis oil requires an inert atmosphere (i.e. heating in the absence of oxygen). The quality of input waste is one of the largest dictators of output quality across pyrolysis oil grades, dictating the type of impurities and boiling point. Boiling point, chlorine, sulphur, fluorine, nitrogen and oxygen contents are among the key determiners of pyrolysis oil prices – with an average spread of €1,150/tonne currently being seen between the lowest value (tyre-derived) and highest value (naphtha substitute) grades of pyrolysis oil that ICIS prices. Any sorting that needs to be done to remove the presence of these materials in the input bale adds additional cost and slows throughput. Pyrolysis oil can be – and often is – run through an upgrader or purifier to enhance its properties, but the quality of input waste has an impact both on yield and quality – and, therefore, profitability. This is one of the reasons the environmental impact of pyrolysis oil remains unclear and varies from producer to producer. While pyrolysis oil producers continue to test with a wide-range of waste input qualities, many producers are turning to agglomerations of polyolefins, and it is expected to become a leading feedstock for pyrolysis-based chemical recycling in the mid-term. This is in response to some of the challenges chemical recyclers have found with pre-treatment and sorting on site. This is particularly connected to the need to adapt processes continuously to account for continually shifting feedstock mixes. Pre-treating and sorting at waste manager level creates economies of scale and prevents the slowdown in throughput sometimes associated with chemical recyclers sorting on site. The use of agglomerates helps pyrolysis oil producers: Limit impurities such as sulphur, fluoride, oxygen, chlorine and nitrogen in finished pyrolysis oil – which typically results in a higher realizable price for that pyrolysis oil, and greater feasibility for use in a cracker Enable placing feedstock straight into the reactor and thereby save on capital expenditure Ensure a more consistent feedstock, with pre-treatment handled at waste managers which benefit from economies of scale and long-standing technical know-how Avoid slowing throughput and the expense of onsite sorting Avoid degradation and allow players to stockpile material ahead of plant scale-ups Target specific waste input mixed (although this can result in additional cost premiums) In response to the growing interest in recycled polyolefin agglomerates, ICIS has launched a new recycled agglomerates price index as part of its mixed plastic waste and pyrolysis oil (Europe) pricing service. The new index is for spot prices of agglomerated forms of mixed polyolefin material containing at least 95% polyolefin content and a maximum moisture content of 3%. It is assessed weekly on an ex-works Europe basis. The mixed plastic waste and pyrolysis oil (Europe) pricing service also offers pricing for mixed polyolefin bales, high plastic content refuse derived fuel (RDF) bales, reject unsorted plastic waste bales from municipal recover facilities (MRFs), and 3 spot price series for pyrolysis oil (tyre derived, non-upgraded, and naphtha substitute). For more information on these new series, or to share feedback, please contact Mark Victory at mark.victory@icis.com.

02-Oct-2024

BLOG: China PP sales turnover collapses by $4.6bn after the end of the Supercycle

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. We now have 32 months of trade and pricing data since the end of the 1992-2021 Chemicals Supercycle and so it is worth taking stock of what the numbers are telling us. And as we have 32 months of information to draw on since the end of the Supercycle, which is from January 2022 until August 2024, it is worth making like-for-like comparisons with the 32-month period immediately before the end of the Supercycle – May 2019 until December 2021. Focusing just on polypropylene (PP) with the story the same in many other products: South Korea and Taiwan saw declines in PP sales turnover in China of $1.1 billion and $694 million respectively when this two 3-month periods are compared. Despite its feedstock advantages, Saudi Arabia saw its turnover fall by $681m followed by Singapore at $633m and Thailand at $613 million . Losses across China’s top ten trading partners totalled $4.6bn. The only winner was, not surprisingly, the Russian Federation with a turnover gain of $102 million. Another symptom of a chronically oversupplied market has been a collapse in margins as another chart in today’s post illustrates: In May 2019-December, the average of both naphtha and PDH-based PP margins was $281/tonne, but this fell to just $12/tonne in January 2022-September 2024. And this latter period has involved many weeks of negative margins. A pivotal turning point in global chemicals markets, the most important since 1992, was the Evergrande Moment. And yet far are too few references to this essential context. China’s debts and its demographics told us from as early as 2011 that a steep fall in economic growth had to happen. We also knew from 2014 onwards, thanks to a shift in government policy, that much-greater chemicals self-sufficiency was on the way. This gave producers plenty of time to build strategies that reduced their dependence on China. But how many companies took note of what the demographic and debt trends were telling us? How many took note of the threat to China’s exports from 2018 onwards as the geopolitical environment deteriorated? My suspicion is that far too few companies were ready for the changes now well underway, which are reflected in the above demand, supply, sales turnover and margins data. This was because people chose to believe misleading nonsense about the “rise of China’s middle class” when the numbers on China’s per capita incomes, the country’s birthrate and the rise in its debts exposed the myth. The chemicals industry is science and data driven except, seemingly, in one critical area:  Macroeconomics. 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.

02-Oct-2024

BLOG: Your new China stimulus noise-cancelling headphones: PE spreads and margins

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: Last week’s launch of a new “stimulus bazooka” by the Chinese government might lead to a rally in chemicals and polymer pricing. But so what if prices go up over the next few weeks? The price rises will be of little long-term consequence unless we see big shifts in spreads and margins in the key polyethylene (PE) market. Between January 2014 and December 2021, northeast Asia integrated variable cost naphtha-based PE margins averaged $451/tonne; from January 2022 until the third week of September, they averaged just $2/tonne. In late 2019/early 2020, northeast Asia PE margins briefly turned negative as oversupply increased. But the full downturn was delayed by reduced feedstock availability and a surge in PE demand resulting from the pandemic. Then came the Evergrande Moment Average CFR China PE price spreads over CFR Japan naphtha costs are at just $280/tonne so far this year, the lowest since our price assessments began in 1993. We have seen three consecutive years of new record-low spreads. It is of course no coincidence that the three years have followed the Evergrande Moment. HDPE spreads would have to rebound by 129%, LDPE spreads by 48% and LLDPE spreads by 88% to see a return to the old market conditions. Average PE spreads would thus have to rise by 80%. Follow the ICIS PE spread and margin data every week to discover whether a recovery is really happening in China. My view, as you know, is that China’s economy faces deep long-term challenges resulting from the end of the real-estate bubble and an ageing population. The extent to which it can maintain its dominant role in global exports is also in question because of a much more difficult geopolitical environment. I don’t believe that any amount of likely economic stimulus in China (there are political and economic limitations on stimulus) can fully address these challenges. It is what it is. We need to get used to a Chinese chemicals market where demand growth for some products might even go negative. You may disagree. But what we can and should agree on is the story that’s been consistently told by PE spreads and margins since January 2022. 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.

30-Sep-2024

India to be among global oil demand growth drivers in 2023-2050 – OPEC

SINGAPORE (ICIS)–India is expected be a major driver of global long-term oil demand growth through to 2050, alongside the Middle East and Africa, OPEC said in a report. Global oil demand to reach 120.1 million barrels/day in 2050 Petrochemical, road transportation sectors to be key demand drivers Annual average world GDP growth of 2.9% projected for 2023-2050 These regions were identified as the “key sources of incremental [oil] demand in the coming years”, OPEC said in its 2024 World Oil Outlook report released on 24 September. “India alone will add 8 million barrels/day to its oil demand during the forecast period [2023-2050].” OPEC comprises 13 oil producing countries led by Saudi Arabia, which is the world’s biggest crude oil exporter. Global oil demand is expected to increase by almost 18 million barrels/day, or by 17.5%, from 102.2 million barrels/day in 2023 to 120.1 million barrels/day in 2050. While non-Organisation for Economic Co-operation and Development (OECD) demand is projected to increase by 28 million barrels/day between 2023 and 2050, OECD demand is set to witness a decline. OECD refers to a group of 38 highly industrialized economies. The strong projected demand growth in the petrochemical sector, especially in Asia, will raise oil demand from naphtha production by 2.8 million barrels/day by 2050. The largest incremental demand during the forecast period is projected for the petrochemicals, road transportation and aviation sectors. Oil demand in these sectors in the long term is set to increase by 4.9 million barrels/day; 4.6 million barrels/day; and 4.2 million barrels/day, respectively. “Demand projections in the road transportation sector indicate strong growth over the current decade before stabilizing at levels above 50 million barrels/day for the rest of the forecast period,” OPEC said. “By then, the penetration of EVs [electric vehicles] is set to increasingly play a role.” The global vehicle fleet is projected to surge by about 71% from 1.7 billion in 2023 to 2.9 billion in 2050 with the fastest growth expected in the EVs segment. As for refined products, strong long-term demand growth is expected for ethane/liquefied petroleum gas (LPG). “The larger part of this demand growth relates to the use of ethane as a petrochemical feedstock, mainly in OECD Americas and the Middle East,” OPEC added. GLOBAL ECONOMIC GROWTH REMAINS ROBUST Global GDP is projected by OPEC to grow at an average rate of 2.9% per year between 2023 and 2050. Non-OECD countries are set to lead this growth, expanding at an annual rate of 3.7%, while OECD nations will experience more modest annual growth at 1.6%. As a result, in absolute terms the global economy is expected to more than double in size from $165 trillion in 2023 to $358 trillion in 2050. Focus article by Nurluqman Suratman Thumbnail image: Crude oil tanker Njord DF, 250m length, 44m height, flag Greece, Baltic Sea, 31 August 2024 (Olaf Krüger/imageBROKER/Shutterstock)

25-Sep-2024

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