Oleochemicals

SINGAPORE (ICIS)–Energy giant Saudi Aramco has signed new agreements to advance separate expansion plans with Chinese petrochemical producers Rongsheng and Hengli. Signing conducted during China Premier Li’s state visit to Saudi Arabia Deals with the Chinese firms part of Aramco's downstream expansion Aramco moves closer to acquire 10% of Hengli Petrochemical Chinese Premier Li Qiang and Saudi Crown Prince Mohammed Bin Salman on 11 September discussed cooperation in energy, investment, and trade, according to state news agency Saudi Press Agency (SPA). In a separate meeting with GCC secretary general Jasem Mohamed Albudaiwi in Riyadh, Li called on China and Gulf Cooperation Countries (GCC) countries to align their development strategies and “speed up free trade agreement negotiations”, according to Chinese state media Xinhua. Li is in the Middle East on 10-13 September for state visits to Saudi Arabia and the UAE, both members of GCC. The four other members of GCC are Bahrain, Kuwait, Oman and Qatar. PLANS WITH RONGSHENG The new agreements follow a previously signed framework agreement with Rongsheng Petrochemical for a potential joint-venture expansion of Saudi Aramco Jubail Refinery Company (SASREF) facilities. SASREF operates a 305,000 barrel/day refinery complex in Al-Jubail, Saudi Arabia with downstream aromatics units that can produce 260,000 tonnes/year of toluene and 275,000 tonnes/year of benzene, according to the ICIS Supply and Demand Database. Aramco now owns 10% of Rongsheng Petrochemical, bought for $3.4 billion, with further plans between the two companies to take stakes in each other’s subsidiaries. Rongsheng Petrochemical manufactures and distributes a range of petrochemical and chemical fiber products, including purified terephthalic acid (PTA), polyester yarns, polyester filaments, and polyethylene terephthalate (PET). The Saudi oil giant intends to acquire 50% of Ningbo Zhongjin Petrochemical (ZJPC), which is fully owned by Rongsheng, with plans to upgrade existing assets and jointly develop a new materials project in Zhoushan. The proposed Chinese yuan (CNY) 67.5 billion Zhoushan new materials project would produce polyethylene (PE), propylene oxide (PO), styrene, ethylene vinyl acetate (EVA), polyolefin elastomer and bisphenol A (BPA). Rongsheng, in turn, would acquire a 50% stake in Aramco’s SASREF, which operates a refinery in Jubail. POTENTIAL DEALS WITH HENGLI With Hengli, talks have advanced relating to Aramco’s potential acquisition of a 10% stake in the Chinese group’s petrochemical arm, subject to due diligence and required regulatory clearances.’ The two companies had signed a memorandum of understanding (MoU) on the proposed transaction in in April 2024. Hengli Group operates across the entire production chain of oil refining, petrochemicals, polyester film, and textiles. It is one of the biggest PTA producers in China. "China is an important country in our global downstream growth strategy," Aramco downstream president Mohammed Al Qahtani said. "These agreements reflect our collective intention to elevate our relationships in vital sectors to advance our downstream objectives." Aramco is targeting a fourfold increase in its crude oil-to-chemicals conversion capacity to four million barrels/day by 2030. Focus article by Nurluqman Suratman Thumbnail image: Chinese Premier Li Qiang meets with Saudi Crown Prince and Prime Minister Mohammed bin Salman Al Saud, and co-chairs the Fourth Meeting of the High-Level Chinese-Saudi Joint Committee with him at Riyadh's al-Yamamah Palace in Saudi Arabia on 11 September 2024.

12-Sep-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 6 September. EU chemicals production gradually firming, short of recovery levels – Cefic Chemicals production in the EU has continued to firm through 2024, but weak demand is keeping output growth below recovery levels, with energy prices still substantially above US levels in the region, trade body Cefic said. Europe jet fuel prices hit new lows on supply overhang, crude softness Average European jet kerosene spot prices for cargoes fell 6% week-on-week while barge prices dropped 5% from the week prior as supply overhang and lack of demand continues to haunt the market. Europe markets slump on US, China demand worries, commodity shocks Europe chemicals shares and public markets slumped on Wednesday in the wake of sell-offs in Asia and the US on the back of growth fears and a crude oil sell-off. Europe August acetic acid contracts roll over Acetic acid contract pricing for August was assessed at a rollover in Europe amid balanced supply and seasonally low demand. Global spot index up on gains in NE Asia, NW Europe The global spot ICIS Petrochemical Index (IPEX) was up for the first time in four weeks in the week ending 30 August, on the back of increases in northeast Asia and northwest Europe.

09-Sep-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 6 September 2024. Strong regional currencies weigh on Asia recycling exports The weakening of the US dollar against major currencies in Asia since August will continue to strain exports of recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE), and recycled polypropylene (R-PP). Asia refined glycerine market stagnates on stand-off between buyers and sellers Asia’s refined glycerine market may likely continue to remain tepid in the near term due to a persistent stand-off between buyers and sellers. UPDATE: Oil falls by $1/bbl, Asia petrochemical shares tumble on global growth worries Asian petrochemical shares slumped on Wednesday as regional bourses tracked Wall Street’s rout overnight on poor data from both the US and China, with crude prices shedding more than $1/bbl in late Asian trade. At the close of trade in Tokyo, Mitsui Chemicals fell 3.07% and Sumitomo Chemical tumbled by more than 4%, with the Nikkei 225 index down 4.24% at 37,047.61. Asian PX hits fresh year low, levels last seen in December 2022 Asian paraxylene (PX) prices hit a fresh year low, amid a lack of buyers' confidence and overnight losses seen in upstream crude markets. INSIGHT: China-Canada trade frictions may affect MEG trade flows Trade frictions between China and Canada have intensified recently following the Canadian government’s decision to impose tariffs on imports of electric vehicles (EVs) as well as steel and aluminum from China starting 1 October. INSIGHT: Qatar to emerge as PVC exporter next year when $279 million plant comes online Qatar will become an exporter of polyvinyl chloride (PVC) as early as next year when commercial operations start at its first plant, because its 350,000 tonne/year capacity will be more than 10 times the state's annual imports. Asia titanium dioxide Sept key drivers to be stock levels, exchange rates While the titanium dioxide (TiO2) spot price in Asia is likely to find support with the start of the traditional demand season in September, a large-scale revival now seems unlikely.

09-Sep-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 30 August. Europe OX post-summer restocking intentions unclear as weak demand lingers Restocking operations after the summer were once common practice in the European orthoxylene (OX) market, but this year could be different. BASF to shut down adipic acid production at Ludwigshafen next year BASF is to end production of adipic acid and several downstream units at Ludwigshafen, Germany, as part of structural changes underway at the site, the company said on Thursday. Rising costs, outages fail to rattle sluggish propylene oxide market in Europe Outages at domestic suppliers, a local unit being flagged for a potential sale and rising production costs have failed to rattle a sluggish European propylene oxide (PO) market. Europe August nylon 6,6 contract prices soften in a slow market European nylon 6,6 contract prices for August softened from July levels, posting highly varied monthly deltas. Global spot index slips on lower prices in northeast Asia, US Gulf The global spot ICIS Petrochemical Index (IPEX) slipped by nearly one-percentage point in the week ending 23 August, on the back of price falls in northeast Asia and the US Gulf.

02-Sep-2024

LONDON (ICIS)–BASF is to end production of adipic acid and several downstream units at Ludwigshafen, Germany, as part of structural changes underway at the site, the company said on Thursday. Production of adipic acid will conclude at the site over the course of 2025, while units to manufacture cyclododecanone (CDon) and cyclopentanone (CPon), which utilize adipic acid as a raw material, will cease in the first half of the year. The company is planning to cut around €1 billion in costs from the site, with new CEO Markus Kamieth expected to fully set out what steps will be taken at the company’s capital markets day in September this year. The company had already cut back adipic acid production capacity at the site in 2023, but had kept a some capacity onstream to feed into those downstream units. BASF expects to cease deliveries of CDon and CPon, which are used in nylon 12 and pharmaceuticals production respectively, and is in talks with customers, the company added. It will continue to produce adipic acid in Onsan, South Korea, and Chalampe, France, BASF added. The decision was taken as part of the ongoing strategic review of site operations to “ensure competitiveness under changing market conditions”, the company said in a statement. Around 180 workers will be affected by the closures, with BASF planning to explore the possibility of employment positions elsewhere within the group. “These closures are part of the development of a long-term target picture for the transformation of the Ludwigshafen site,” said BASF industrial relations director Katja Schwarpwinkel. Thumbnail photo: BASF's Ludwigshafen, Germany production complex. Picture source: BASF Updates throughout

29-Aug-2024

LONDON (ICIS)–BASF is to end production of adipic acid and several downstream units at Ludwigshafen, Germany, as part of structural changes underway at the site, the company said on Thursday. Production of adipic acid will conclude at the site over the course of 2025, while units to manufacture cyclododecanone (CDon) and cyclopentanone (CPon), which utilize adipic acid as a raw material, will cease in the first half of the year.

29-Aug-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 23 August 2024. INSIGHT: Asia BD capacity growth to accelerate to 10% in 2025 By Ann Sun 23-Aug-24 10:35 SINGAPORE (ICIS)–The Asian butadiene (BD) market is anticipated to experience large-scale capacity expansion between Q4 this year and end-2025, with nine projects scheduled to begin operations. Asia BDO market demand unable to reduce inventories, oversupply persists By Corey Chew 22-Aug-24 11:16 SINGAPORE (ICIS)–The Asian 1,4-butanediol (BDO) market has been going through a downtrend that started about a month ago, mainly due to the falling domestic China market. INSIGHT: China's EVA capacity expected to exceed 2.6 million tonnes in 2024 By Amy Yu 20-Aug-24 17:12 SINGAPORE (ICIS)–China's EVA capacity is forecast to exceed 2.6 million tonnes in 2024, a year-on-year growth rate of 17%, considering Jiangsu Hongjing New Material a new plant with 200,000 tonnes/year is scheduled to come on stream in Q4. INSIGHT: China plasticizer alcohols' supply growth accelerating By Lina Xu 19-Aug-24 17:08 SINGAPORE (ICIS)–China's plasticizer market is diversifying, leading the supply expansion of feedstock alcohols amid high requirements for end-products and growing emphasis on sustainability in operations in recent years. Asia naphtha back in the black within a day; volatility to stay By Li Peng Seng 19-Aug-24 11:06 SINGAPORE (ICIS)–Asia's naphtha intermonth spread returned to the positive zone on 16 August, after slipping into the red the day before for the first time this year, with volatile trades expected to persist amid uncertainties over supply balances. INSIGHT: China’s MEG export market changes amid volatile global fundamentals By Cindy Qiu 22-Aug-24 14:00 SINGAPORE (ICIS)–China’s monoethylene glycol (MEG) exports have been on an uptrend in recent years due to the rapid expansion of domestic capacity. MEG exports totalled around 93,000 tonnes in January-June 2024 and are expected to exceed 150,000 tonnes for the year as a whole. India’s BPCL to invest Rs1.7 trillion on capacity growth over five years By Priya Jestin 20-Aug-24 12:58 MUMBAI (ICIS)–India’s state-owned Bharat Petroleum Corp Ltd (BPCL) plans to invest rupee (Rs) 1.7 trillion ($20.3 billion) over the next five years to grow its refining and fuel marketing business, as well as expand its petrochemicals and green energy businesses.

26-Aug-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 16 August. Europe MA prices remain under upward pressure as new production issue curbs Sept availability European maleic anhydride (MA) spot prices continue to be under upward pressure this week as constraints in northwest Europe seem poised to restrict availability for September, too. Europe fatty alcohol spot prices stabilise after bullish H1 August European mid-cut fatty alcohol spot prices held steady this week after two consecutive weeks of €50/tonne increases. Eurozone chemical production up in June, Q2 GDP rises 0.3% Chemical production firmed in the eurozone for the second consecutive month amid a wider decline in industrial production during the month, with GDP in the region continuing to firm, growing by 0.3% in the second quarter. Germany’s Aug economic outlook down on US economy, Mideast concerns Sentiment for Germany’s economic outlook fell sharply in August on concerns over the US economy and the protracted conflict in the Middle East. MA rebounds in northwest Europe on new outage, price gap with south of region grows European maleic anhydride (MA) spot prices firmed this week on supply constraints in northwest and central Europe that arose in the first half of the week.

19-Aug-2024

SINGAPORE (ICIS)–Malaysia's economy is expected to maintain a strong growth momentum in the second half of the year, after expanding at a faster annualized rate of 5.9% in Q2, on the back of improving domestic spending and external demand. Q2 marks fastest GDP growth in six quarters Petroleum and chemical products led Q2 manufacturing growth Robust demand for non-electronics goods to boost exports On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 2.9% in April June, accelerating from the 1.5% expansion in Q1 2024, Bank Negara Malaysia (BNM) – the country’s central bank – said on Friday. Q2 growth was primarily driven by stronger domestic demand and further expansion in exports, according to BNM. For the whole of 2024, BNM forecasts the economy to post a 4-5% GDP growth, stronger than the 3.7% growth in 2023. The final year-on-year Q2 GDP print was revised up from the previous estimate of 5.8% and represented a strong acceleration from the 4.2% expansion in the preceding quarter. At 5.9%, the Q2 GDP growth was fastest quarterly growth recorded since Q4 2022, according to the Department of Statistics Malaysia showed. Malaysia is southeast Asia’s fifth-largest economy and a net exporter of polyolefins. It is also one of the largest producers and exporters of oleochemical products worldwide, contributing about 20% to global capacity, according to the Malaysian Petrochemicals Association (MPA). The country’s central bank expects household spending to remain strong in H2, driven by employment and wage growth and policy support. Investments will be fueled by ongoing projects, while exports will benefit from the global technology upcycle and robust demand for non-electronics goods, it said. However, downside risks include weaker external demand, geopolitical tensions, and lower commodity production, BNM said. CHEMICALS LEAD Q2 MANUFACTURING GROWTH The manufacturing sector registered in April-June 2024 grew by 4.7% year on year, up from 1.9% in the previous quarter, aided by a broad-based improvement across all sub-sectors. The petroleum, chemical, rubber, and plastic products segment led the expansion, with Q2 annualized growth accelerating to 4.1% from 1.1% in Q1. Q2 final consumption expenditure rose by 5.6% year on year, up from 5.1% in Q1, as private spending increased by 6.0%, up from 4.7% in Q1. Exports for the period rose by 8.4%, outpacing Q1's 5.2% growth, while imports posted a faster growth of 8.7% compared with 8.0% in Q1. Focus article by Nurluqman Suratman

16-Aug-2024

MUMBAI (ICIS)–Indian Oil Corp (IOC) plans to beef up its petrochemical production capacity to 14m tonnes/year by 2030 which will increase the state-owned company’s petrochemical intensity index (PII) to 15%, nearly triple its current level, company chair SM Vaidya said. Total petrochemical investments to reach Rs1.2 trillion Domestic industry projected to grow at 8-10% over the next few years Local demand estimated to hit $1 trillion by 2040 Petrochemical projects worth Indian rupees (Rs) 300 billion ($3.6 billion) are under various stages of implementation, while feasibility studies are ongoing on projects worth Rs900 billion, based on IOC’s annual report for the fiscal year ending March 2024. The company’s current petrochemical production capacity stands at 4.28 million tonnes/year, based on its annual report for the fiscal year ending March 2024. IOC’s PII refers to the percentage of crude oil that is directly converted into chemicals. “We are integrating petrochemicals into our refining operations," IOC chairman SM Vaidya said at the company’s annual general meeting on 9 August. "This oil-to-chemical approach will enrich our value chain, meet rising petrochemical demand, reduce import reliance, and insulate the bottom line from the impacts of oil price fluctuations," he said. By 2026, its refining capacity will have increased by more than 25% from the current 70.3 million tonnes/year to 87.9 million tonnes/year, Vaidya said at  IOC’s annual general meeting on 9 August. By the end of the decade, IOC expects its refining capacity to be 107.4 million tonnes/year, according to the annual report released on 18 July. “In 2023-24, we successfully commissioned the first phase of naphtha cracker expansion and paraxylene-purified terephthalic acid (PX-PTA) revamp project in Panipat and an ethylene glycol plant at Paradip. These have propelled our PII to 6.1%,” Vaidya said. In November 2023, IOC increased the capacity at the naphtha cracker at its Panipat refinery complex from 857,000 tonnes/year to 947,000 tonnes/year. Following the PX-PTA revamp at its Panipat refinery, IOC has increased its PX production to 460,000 tonnes/year and PTA output to 700,000 tonnes/year, as per the company website. In March 2024, the company inaugurated its 357,000 tonne/year monoethylene glycol (MEG) project at its Paradip refinery complex. PETROCHEMICAL PROJECT PIPELINE Indian Oil plans to commission a 150,000 tonne/year butyl acrylate plant at its Gujarat refinery in the current financial year 2024-25. One of the company’s ambitious petrochemical projects include the mega complex at Paradip in eastern Odisha state, Vaidya said, noting that the Rs610 billion project is IOC’s “largest ever investment at a single location”. The petrochemical complex will include a world-scale 1.5 milion tonne/year naphtha cracker unit along with downstream process units for producing polypropylene (PP), high density polyethylene (HDPE), linear low-density polyethylene (LLDPE) and polyvinyl chloride (PVC). The Paradip petrochemical project is currently in implementation stage and the company expects to commission it by August 2029, IOC said in its annual report released on 18 July. As part of its future expansions, IOC expects to begin operations at the 200,000 tonne/year PP plant at its Barauni refinery and 500,000 tonne/year PP line at its Gujarat refinery before end-March 2026, based on the company’s annual report. IOC has also enhanced its lube oil base stocks (LOBS) capacity at its Haldia complex and is setting up new plants at its Gujarat and Panipat refineries, Vaidya said, adding, “we aim to increase the capacity from 730,000 tonnes/year to 1.5 million tonnes/year”. The company expects to commission the 60,000 tonnes/year polybutadiene rubber (PBR) plant at its Panipat refinery by March 2025 as per the annual report. These planned expansions by IOC will help meet the rising petrochemical demand in the country, IOC stated in its latest annual report. The domestic petrochemical industry is "poised for substantial growth, driven by India’s sturdy macro fundamentals, population expansion and presently low per capita polymer consumption," it said. India's overall petrochemical demand is projected to nearly triple by 2040, with the industry's value expected to reach the $1 trillion mark, said Indian minister for petroleum and natural gas Hardeep Singh Pur in a presentation at the Asia Petrochemical Industry Conference (APIC) in May 2023. Focus article by Priya Jestin ($1 = Rs83.91) Thumbnail image: An Indian Oil petrol pump in Kolkata, 17 January 2022. (By Indranil Aditya/NurPhoto/Shutterstock)

14-Aug-2024