Oleochemicals

Capitalising on demand for sustainable, green options 

Discover the factors influencing oleochemicals markets

Growth in the global oleochemicals market is supported by demand for products seen as safe and natural. Seen as the sustainable green option by business, consumers and regulatory authorities has driven demand. They have uses in industrial additives and lubricants; food processing, animal feed and for manufacturing detergents and personal care products, often as replacements for petroleum-derived commodities.

However, market trends for oleochemicals are heavily dependent on feedstock pricing and availability, and fundamentals can change quickly based on upstream movements and biodiesel-related legislative shifts. ICIS provides price updates for key regions and makes oleochemicals markets more transparent and predictable by delivering world-class commodity intelligence. Our reports analyse actual price levels and short-term drivers and put market trends in a historical context.

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Oleochemicals news

Brazil’s Unigel gets green light from creditors for debt restructuring

SAO PAULO (ICIS)–Unigel has agreed a Brazilian reais (R) 3.9 billion ($791 million) debt restructuring with its creditors, which has saved the beleaguered styrenics, acrylics and fertilizer producer from filing for bankruptcy for the time being. The agreement includes raising a new $100 million credit line that will mature in 2027, and give its shareholders “economic benefits corresponding” to 50% of the company, it said. An intention to improve the company’s governance structure is also included, although Unigel did not disclose further details. The restructuring will consist of the issuance of new debt securities and participatory securities in exchange for the cancellation of current debts. One-third of Unigel’s creditors, those with earlier maturities, have agreed to the deal and will apply for 90-day protection to finalize it, which has been made possible under Brazil's financial laws. “The plan will allow the improvement of the company's capital structure, with an increase in its liquidity and a significant reduction in leverage, in order to guarantee the continuity of the business plan that was severely impacted by the crisis in the global petrochemical industry,” said Unigel’s CEO, Roberto Noronha. CFO André Gaia said the new funds will be partly directed to finalizing projects such as Unigel's sulphuric acid plant at Camacari in the state of Bahia. Construction has been on hold since 2023 when the company's financial position deteriorated. The plant is 80% complete, and when fully operational it should produce around 450,000 tonnes/year. REVIVALUnigel’s fortunes took a turn for the worse in 2023 on the back of high input costs – especially at its natural gas-intensive fertilizer operations – poor demand and low prices. It has not published a financial report since Q1 2023, something contemplated under Brazilian financial law for companies under stress. After a poor Q1, Fitch and S&P both lowered the company’s credit ratings several times and put Unigel’s debt obligations at the lowest level to indicate a high probability of default. However, “intense negotiations” with creditors that began in October, after Unigel failed to pay a coupon on one of its bonds, appeared to bear fruit in November when it reversed its decision to shut down the Bahia fertilizers plant. For that to take place, Unigel’s talks with its creditors were accompanied by talks with the government and its appointees to lead the state-owned energy major Petrobras, which supplies natural gas to Unigel. President Luiz Inacio Lula da Silva has repeatedly said that Brazil needs a stronger fertilizer industry as is too dependent on imports to cover booming demand from its growing agricultural sector.  The sector has made Brazil one of the world’s breadbaskets and accounts for around a quarter of the country's output. Although details have not been made public, in December, the two companies agreed a tolling agreement for Unigel’s fertilizers plants in Camacari and Laranjeiras, in the state of Sergipe. The two plants were leased from Petrobras in 2019. Capacity at the Bahia plant is 475,000 tonnes/year for ammonia and 475,000 tonnes/year for urea. The Laranjeiras facility has a capacity of 650,000 tonnes/year of urea, 450,000 tonnes/year of ammonia, and 320,000 tonnes/year of ammonium sulphate (AS). The Petrobras-Unigel agreement in December came just weeks after Unigel charged Petrobras for its “unbearable natural gas prices” when it explained to workers at the Camacari plant about redundancies resulting from its closure. As part of the talks with its creditors, Unigel divested its Mexican subsidiary which produces acrylic sheet Plastiglas for an undisclosed amount in December. With an expected improvement in chemicals and fertilizers prices and a helping hand from Petrobras and/or the Brazilian government, Unigel may have managed to avoid a bankruptcy which many had taken for granted a few months ago. At the annual meeting of the Latin American Petrochemical and Chemical Association (APLA), held in Sao Paulo in November, one petrochemicals source foresaw this week’s events. “Unigel has been in financial trouble many times before, and it always got through them. This time looks bad, but it may yet again save the day,” the source said. Focus article by Jonathan Lopez Thumbnail shows Brazilian money. Image by RHJPhtotos.

21-Feb-2024

Commercial production at Methanex's Geismar 3 in Louisiana delayed until late Q3

LONDON (ICIS)–Commercial production at Methanex's newly constructed 1.8 million tonne/year methanol plant, Geismar 3, has been delayed, potentially until the end of Q3, the Canadian producer announced. During the plant's initial start-up, there were complications with the unit's autothermal reformer (ATR). In a press release, Methanex said that following inspections, there was significant damage to a large number of supporting refractory bricks in the ATR which needed replacing. It is estimated that the total capital cost will not significantly exceed the upper end of the capital cost guidance of $1.30bn. Gesimar 3 is located in Louisiana and was originally scheduled to start up in Q4 2023. In Methanex's Q4 earnings report last month, it said the plant was in the process of starting up and was expected to reach full rates in February. The producer said, "Based on the preliminary findings of its root cause analysis, management believes that this issue relates to complications in the initial start-up process and is not a plant design or construction issue." Methanol is primarily used to produce formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. Smaller amounts go into production of dimethyl terephthalate (DMT), methyl methacrylate (MMA), chloromethanes, methylamines, glycol methyl ethers, and fuels applications such dimethyl ether (DME), biodiesel and the direct blending into gasoline.

20-Feb-2024

PODCAST: Phosphates, ammonia markets on standby due to low demand

LONDON (ICIS)–As the phosphoric acid settlement for Q1 is announced and India is eagerly awaiting further details on government subsidies, phosphates markets editor Chris Vlachopoulos and ammonia senior editor Sylvia Traganida discuss developments in their respective markets. They talk about demand, recent developments, and provide insight on the possible ways forward for both markets.

20-Feb-2024

Asia petchem markets await China's demand signals after holiday

SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. Asia markets eye China's post-holiday demand signals China's economic health remains central concern Prices likely to rise amid supply constraints Markets in Asia took a breather in the week of 12-16 February, with Lunar New Year holidays in China, Taiwan, Malaysia and Singapore, while countries such as South Korea, Japan and Indonesia observed public holidays as well. Market participants are cautious about the post-holiday market; while some downstream buyers will restock after the holidays, there is concern that existing inventory held by domestic China producers and distributors will largely satisfy demand until early March. PRICES LIKELY TO RISE AMID SUPPLY CONSTRAINTSPetrochemical prices in Asia are expected to continue to increase in February, supported by capacity losses from outages and run-rate reductions, according to ICIS analysts. Among the 31 major petrochemical commodities covered by the ICIS Asia Price Forecast, average February prices for at least 22 of these commodities are anticipated to increase. Ethylene (C2), butadiene (BD) and styrene butadiene rubber (SBR) are expected to lead in terms of gains. In Asia’s C2 market, end-users who have yet to settle March arrival cargo are expected to hit the ground running once most of players return to the market this week. In the southeast Asia C2 market, demand enquiries were largely heard from Thailand last week, while other end-users in Indonesia have begun to look towards the April window for spot cargo. "The Asia C2 industry is likely to be characterised by tight supply in the weeks to come," said Paolo Scafetta, ICIS senior olefins analyst. "February should see about 7% of total monthly nameplate capacity lost due to downtime unless unplanned events cause further technical hiccups." The upstream naphtha market in Asia should be influenced by a few bearish factors, Scafetta added. These include the shift from naphtha to liquefied petroleum gas (LPG) as an alternative cracking feedstock and an improvement in supply from March as naphtha cargoes are expected to increase as Middle East refineries return from their maintenance. Asia's naphtha market is likely to be plagued with volatility in the short term as tensions in the Red Sea will continue to disrupt supplies. In Asia’s propylene (C3) market, trade was largely subdued during the Lunar New Year break but picked up towards the close of the week with most market players, except China, returning from their holiday. Talks and discussions in Taiwan commenced at the end of the week after the holidays ended. However, the post-holiday buying sentiment weakened on the back of ample supply, leading sellers to progressively lower their offers and selling indications. With buyers in China largely away from the market, overall business activity during the week was muted. In southeast Asia, while demand was also heard in Malaysia and Indonesia, most buyers continued to hold back from purchases on the expectation that supply tightness might result in an easing in offers down the road. In Asia’s benzene market, post-holiday restocking is expected to pick up in the second half of February amid strong competition for April and May cargoes from global players. February and March benzene cargoes have been already sold out and April cargoes are in strong demand. Benzene buyers based in both Asia and the West had actively sought procurement since end-January, for pre-holiday and pre-summer stocking up respectively. Asia's acetone market looks poised to maintain its strength. This is due to the high prices of benzene, reduced production leading to tighter supply, and a resurgence in trading flows between Asia and the West. A significant increase in demand for Asia acetone from the US market is bolstering this trend. Limited supply in the US, a result of low phenol production and ongoing allocations, is driving this demand. Meanwhile, supply within Asia is also constrained as phenol/acetone producers scale back production in response to unprofitable margins and decreased demand for phenol in China. In the xylene markets, further support in the market will be dependent on downstream sectors after the Lunar New Year holidays, with eyes firmly on China. For paraxylene (PX), there remains optimism for gasoline-blending demand heading into the second quarter, with positive arbitrage window economics for exports to the West. Firm upstream naphtha prices have also provided some support for PX. Several market participants noted there had been pre-buying of mixed xylenes (MX) and toluene by gasoline blenders to the US. Demand and price developments in the downstream purified terephthalic acid (PTA) and polyester sectors will help provide clarity about whether high PX costs can be absorbed down the chain. Asia's butyl acetate (butac) and ethyl acetate (etac) markets are poised to stay afloat on anticipated post-holiday demand, albeit at a gradual pace. Sellers of butac in both China and the region largely maintained their spot offers for March loading prior to the Lunar New Year holiday. Spot butac prices were on a downtrend in the early part of the fourth quarter of 2023 and have climbed since December, in part driven by cost pressures upstream as suppliers worked towards mitigating compressed margins. Asia’s methylene chloride (MEC) market might be bullish after the Lunar New Year holiday, as rising demand is likely to shift the market to a more balanced state. Most buyers were in a wait-and-see mode, monitoring prices and observing what producers would offer after the Lunar New Year break, with market participants in southeast Asia eyeing a rebound in demand through Q2, around the Ramadan period. CHINA'S ECONOMIC HEALTH IN FOCUS ICIS analysts expect most of China's end-use consumption, including in industries such as agriculture and home appliances, to recover from March. The China government's Two Sessions policy meetings, widely seen as the most important political meeting of the year for the country, will be held on 4-11 March. ICIS analysts expect another series of policies to be introduced to stimulate economic growth. Further market and infrastructure investment can boost petrochemicals demand. Latest official data from China is pointing to some recovery from domestic tourism trips and revenues. Domestic tourism trips and revenues during the Lunar New Year holidays in China jumped by 34.3% and 47.3% year on year respectively, with their levels at 19.0% and 7.7% above pre-pandemic levels in 2019, data from the country’s Ministry of Culture and Tourism (MCT) shows. "Most official and private media channels have been reporting strong (or even exceptionally strong) Lunar New Year holiday consumption data, and markets risk getting caught up in the euphoria of the moment, under the supposition that China’s economy is suddenly bottoming out, driven by the Chinese people’s hidden passion for spending," research analysts from Japan's Nomura Global Markets Research said in a note. "Although we do see some strength in the data, we urge market participants to exercise caution," it said, adding that China's property sector continued its downward spiral, right before the Lunar New Year holiday, and there was no sign of a recovery during the holiday. "Despite the positive [Lunar New Year] data, we maintain our view that the ongoing economic dip is likely to worsen into the spring," Nomura said. With additional reporting by Josh Quah, Julia Tan, Seng Li Peng, Angeline Soh, Helen Lee, Keven Zhang, Melanie Wee and Samuel Wong Focus article by Nurluqman Suratman Thumbnail photo: Lunar New Year lanterns in Shenyang, northeast China's Liaoning Province, on 1 February 2021. Asia will closely watch China's demand signals after the Lunar New Year holiday amid concerns about the country’s economic health. (Source: Xinhua/Shutterstock)

19-Feb-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 16 February 2024. Singapore Jan petrochemical exports rise 8.7%, NODX up 16.8% By Nurluqman Suratman 16-Feb-24 09:55 SINGAPORE (ICIS)–Singapore’s petrochemical exports in January rose by 8.7% year on year to Singapore dollar (S$) 1.11bn ($822m), with non-oil domestic exports (NODX) posting a 16.8% growth for the month, official data showed on Friday. Asia fatty acids market faces cost pressures on strong palm oil prices By Helen Yan 15-Feb-24 13:10 SINGAPORE (ICIS)–Asia’s fatty acids market is likely to face costs pressures from recent spikes in upstream crude palm oil (CPO) prices, while demand is expected to stay tepid. PODCAST: Asia R-PE, R-PET see slow 2023; legislations, waste management to shape future By Damini Dabholkar 15-Feb-24 14:07 SINGAPORE (ICIS)–Asia recycled polymers markets were sluggish for the most part in 2023. In early 2024 too, challenges that dim the short-term outlook persist. INSIGHT: Indonesia polls raise questions over Nusantara, import curbs By Pearl Bantillo 13-Feb-24 19:27 SINGAPORE (ICIS)–Indonesia, southeast Asia’s biggest economy, will go to the polls on 14 February to elect a new president, posing uncertainties on continuity of economic policies, from import restrictions coming into effect in March to incumbent President Joko Widodo’s flagship project of building a new capital called Nusantara in Kalimantan province. Asian EPDM market quiet amid holidays; demand outlook mixed By Ai Teng Lim 13-Feb-24 17:22 SINGAPORE (ICIS)–Discussions for Asian spot imports of ethylene propylene diene-monomer (EPDM) ground to a halt this week, with much of Asia out of action on extended Lunar New Year holidays.

19-Feb-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 9 February 2024. India methanol gains on lower Iran volumes amid plant outagesBy Keven Zhang 09-Feb-24 14:38 SINGAPORE (ICIS)–Indian methanol spot market continued to be driven by supply outages in Iran, with a trade concluded higher than the previous week. INSIGHT: Asia benzene remains profitable supported by demand in 2024 By Jenny Yi 08-Feb-24 22:27 SINGAPORE (ICIS)–Asia benzene supply growth will moderate in 2024 compared with last year, which saw the the peak of the latest capacity expansion cycle. The downstream market still maintains rapid capacity growth, however, which exceeds the supply growth rate of benzene. Asia adipic acid struggles to keep up with cost pressure ahead of holidays By Josh Quah 08-Feb-24 13:44 SINGAPORE (ICIS)–Adipic acid (ADA) prices in Asia have been on a general upward trend since around mid-December 2023 for China-origin cargoes. INSIGHT: Asia ABS supply length will intensify amid China expansions By May Hu 08-Feb-24 10:00 SINGAPORE (ICIS)–ABS (acrylonitrile butadiene styrene) capacity growth in Asia peaked in 2023 and will be sustained in 2024 on massive new capacities coming on stream in China. China petrochemical demand may stay muted post-holiday By Yvonne Shi 07-Feb-24 15:09 SINGAPORE (ICIS)–Low market confidence has kept petrochemical restocking in China tepid before the Lunar New Year holiday, with players refraining from building up inventory given uncertain demand recovery in March. China Jan petrochemical markets gain on restocking; Feb holidays to hit demand By Yvonne Shi 06-Feb-24 14:58 SINGAPORE(ICIS)–China’s domestic petrochemical markets gained in end-January on the back firm crude prices and some restocking ahead of the Lunar New Year holiday, with demand in February likely to weaken. Asia titanium dioxide spot market may be fuelled by bullish sentiment By Joson Ng 05-Feb-24 16:56 SINGAPORE (ICIS)–The titanium dioxide (TiO2) spot market in Asia is likely to see supply factors driving the market in February. India hikes infrastructure capex for fourth year; Rs11.1tr set for 2024-25 By Priya Jestin 05-Feb-24 14:49 MUMBAI (ICIS)–India’s government has announced plans to increase its capital expenditure on infrastructure projects to rupees (Rs) 11.1trn ($134bn) in its interim budget for 2024-2025, up 11% from the previous fiscal year, boosting the funds available for the sector for the fourth consecutive year.

13-Feb-2024

INEOS Aromatics closes one of two PX units at Texas City, Texas site

HOUSTON (ICIS)–INEOS Aromatics has closed one of its two paraxylene (PX) units at its Texas City, Texas site, according to a company spokesperson. The Texas City site houses two PX units, which are both capable of producing a total of 925,000 tonnes per year, according to an INEOS Investor Day presentation. This accounts for close to 30% of total North American PX capacity. Demand for PX has been lackluster since the beginning of Q3 last year, as downstream polyethylene terephthalate (PET) and purified terephthalic acid (PTA) demand fell following peak bottled beverage season during the summer months. Additionally, imports of PX surged in Q3 as price margins widened between domestic PX and Asia PX, as Asia PX prices dropped, incentivizing players to purchase more imported material. PX is predominantly used as a feedstock to produce PTA. Other outlets include dimethyl terephthalate (DMT), di-paraxylene, herbicides and solvents. Both PTA and DMT are used to make PET. Around 98% of PX is used to produce polyester via PTA or DMT. DMT is also used to manufacture polybutylene terephthalate (PBT) resin. Major producers of US PX are ExxonMobil, Flint Hills Resources, Indorama and INEOS Aromatics. Thumbnail shows bottles made with PET, which is produced with PX. Image by Shutterstock. 

08-Feb-2024

India’s Coromandel to expand phosphoric, sulphuric acid production

MUMBAI (ICIS)–India’s Coromandel International Ltd (CIL) plans to increase the phosphoric acid and sulphuric acid capacities at its Kakinada complex in the southeastern Andhra Pradesh state at a cost of rupees (Rs) 10.3bn ($124m). The company plans to increase its phosphoric acid capacity by 48% to 2,300 tonnes/day and its sulphuric acid capacity by 43% to 6,000 tonnes/day, it said in a filing to the Bombay Stock Exchange on 30 January. Coromandel expects to complete this expansion project within 24 months and will finance the project through internal accruals and loans, it added. Separately. Coromandel’s fertilizers facility at Ennore in the southern Tamil Nadu state remained shut following an ammonia leak in December 2023, a company source said on Tuesday. The gas leak from the company’s ammonia unloading subsea pipeline on 26 December led to the hospitalisation of 52 people from nearby villages. A technical committee constituted by the Tamil Nadu state government has ascertained that the ammonia pipeline may have been damaged due to a significant relocation of heavy granite boulders when Cyclone Michaung hit the Tamil Nadu coast on 3 December. In its report on 5 February 2024, the committee has asked Coromandel to replace the offshore pipelines and install state-of-the-art monitoring, automatic control and accident prevention systems. The company will also have to pay an environmental compensation of Rs59.2m to the Tamil Nadu Pollution Control Board (TNPCB). “Following the unfortunate incident of ammonia gas leakage at the Ennore fertiliser facility, the company has taken necessary measures to ensure safety of people in and around the complex. Currently the plant is closed and the company is in the process of addressing the matter,” the company official said. Coromandel operates 16 manufacturing facilities with a total capacity of 4.5m tonnes/year of fertilisers, according to its website. ($1= Rs83.05)

06-Feb-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 2 February 2024: Asia R-PE spot market mood bolstered by PE price hikes By Arianne Perez 02-Feb-24 12:11 SINGAPORE (ICIS)–Buying appetite for recycled polyethylene (R-PE) in Asia has been significantly diminished due to inflationary pressures, along with the recent spikes in shipping costs. Snug supply props up Asia MEG; discussions to wane as holiday nears By Judith Wang 02-Feb-24 14:08 SINGAPORE (ICIS)–Snug supply has pushed up Asia’s monoethylene glycol (MEG) prices to the peak so far in 2024, but spot discussions are expected to wane in the coming week ahead of the Lunar New Year holiday. Cold snap disrupts China’s chemical freight market By Hwee Hwee Tan 01-Feb-24 13:05 SINGAPORE (ICIS)–An unusually frigid winter weather has been holding up China’s port operations, tightening tanker supply and pushing up chemical freight costs into February. INSIGHT: Asia PX-PTA-polyester chain margins expected to remain concentrated in the upstream in 2024 By Jimmy Zhang 01-Feb-24 22:54 SINGAPORE (ICIS)–Paraxylene capacity in Asia expanded at a compounded average rate of 11.6% from 2018 to 2023, ICIS data show, However, across the PX-purified terephthalic acid (PTA)- polyester value chain margins remained focused on the upstream. That focus for profitability is expected to continue in 2024. Asia ethylene sees headwinds amid curbed arbitrage, greater competition By Josh Quah 31-Jan-24 12:55 SINGAPORE (ICIS)–On the surface, Asia’s ethylene (C2) markets have looked to draw strength from pre-Chinese New Year restocking. Major producer diverts acetic acid, VAM supply to Europe from Asia By Hwee Hwee Tan 30-Jan-24 14:19 SINGAPORE (ICIS)–A major producer has decided to prioritise exports of acetic acid and vinyl acetate monomer (VAM) to Europe as the Red Sea crisis piled delays on inbound shipments, tightening supplies in Asia through to February. INSIGHT: NE Asia C3 braces for weak demand, SE Asia support likely in short term By Julia Tan 29-Jan-24 13:00 SINGAPORE (ICIS)–The average weekly price for spot propylene (C3) imports in northeast Asia continued to climb last week on restocking demand ahead of the Lunar New Year holidays and on recent gains in the southeast Asian spot markets. Asia naphtha bullish on supply crunch despite weak petrochemical margins By Li Peng Seng 29-Jan-24 09:33 SINGAPORE (ICIS)–Asia’s naphtha prompt supplies are expected to stay tight  as unrest at the Red Sea and Black Sea regions will continue to affect supply flows.

05-Feb-2024

Eurozone January inflation down slightly from December

LONDON (ICIS)–Eurozone inflation remained elevated in January though fell slightly from the previous month, according to official data on Thursday. January inflation stood at 2.8%, down from 2.9% in December when the rate rose month on month to curb a downward trend. The main drivers for higher January prices were food, alcohol & tobacco, statistics agency Eurostat said in its flash estimate which is subject to revision. Energy prices continued to fall in January, though by a lesser magnitude than in December. Inflation risks fuelled by the security situation in the Red Sea and broader conflict in the Middle East prompted the European Central Bank to hold its key interest rates at the end of January.

01-Feb-2024

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