Polypropylene (PP)

HOUSTON (ICIS)–Average global rates for shipping containers fell significantly this week, including a 21% decrease from Shanghai to New York, as shippers are shifting cargo deliveries to the US West Coast to avoid the planned strike on 1 October. A strike by union dock workers at East Coast and US Gulf ports seems more likely after International Longshoremen’s Association (ILA) Wage Scale Delegates voted unanimously last week to support leadership’s intentions to walk off the job if a new labor deal is not agreed to when the contract expires on 30 September. Supply chain advisors Drewry said the shift has led to a decrease in demand that has pressured prices lower. Average global rates for 40-foot containers fell b y13% as shown in the following chart. As much of the peak-season demand has been pulled forward either to avoid tariffs or the labor issues, Drewry expects east-west rates to fall further in the upcoming weeks. The following chart from Drewry shows the decrease from Shanghai to both US coasts, as well as from Shanghai to Rotterdam and Genoa which have also fallen significantly. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates from Asia to the US West could face upward pressure the deadline to make the decision to shift coasts has about passed. “Transatlantic shippers still have a little time left to move containers, and the approaching cutoff may be supporting the $300/FEU (40-foot equivalent units) increase in daily rates so far this week,” Levine said. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES STEADY Rates for liquid chemical tankers ex-US Gulf were unchanged this week. On the transatlantic eastbound trade lane contract cargoes are keeping things steady with owners looking to fill holes of open space. October contract volumes on the transpacific route remain tentative but a shipping broker expects part cargo space to be available across the regular players. The USG-South America east coast trade lane was quiet this week, but the regular owners have space for prompt loading. Thumbnail photo: A container ship carrying cargo on its way to Antwerp Harbour. (By OLIVIER HOSLET/EPA-EFE/Shutterstock)

13-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

HOUSTON (ICIS)–A strike by union dock workers at East Coast and US Gulf ports seems more likely after International Longshoremen’s Association (ILA) Wage Scale Delegates voted unanimously at the end of their two-day meeting to support leadership’s intentions to walk off the job if a new labor deal is not agreed to when the contract expires on 30 September. The ports, represented by the United States Maritime Alliance (USMX), contend that the offer on the table “demonstrates a willingness by our members to reach a new deal before the end of this month,” and that it remains committed to reaching a new deal before the current agreement expires. Last week, both parties submitted documents with the US Federal Mediation and Conciliation Service (FMCS) informing the agency of a dispute between the parties, as required by law. The looming work stoppage would have major impacts on the US economy, and the National Retail Federation (NRF) has urged both sides to resume negotiations. Union delegates from the 13 port areas included in the current agreement received a strike mobilization plan from ILA Executive Vice President Dennis A Daggett during the two-day meeting that will be implemented if a new agreement is not reached in time. USMX said in a statement posted to its website that “the ILA continues to strongly signal it has already made the decision to call a strike and we hope the ILA will reopen dialog and share its current contract demands so we can work together on a new deal, as we have done successfully for nearly 50 years”. USMX said its offer includes industry-leading wage increases, retention of the existing technology language in the current agreement, which already formalizes that there will be no fully automated terminals and no implementation of semi-automated equipment or technology/automation without agreement by both parties to workforce protections and staffing levels, increases to retirement account contributions, higher starting wages and continuation of premier health care coverage. The ILA is seeking better pay, including container royalty. Market participants have said a strike by dockworkers would not have much of an impact on liquid chemical tankers. One reason is that most terminals that handle liquid chemical tankers are privately owned and do not necessarily use union labor. Also, tankers do not require as much labor as container or dry cargo vessels, which must be loaded and unloaded with cranes and require labor for forklifts and trucks. But more liquid chemicals are being moved on container ships in isotanks. CONTAINER RATES Rates for shipping containers from east Asia and China to the US fell again this week and global average rates continued to fall at a faster rate, according to multiple analysts. Supply chain advisors Drewry in its World Container Index showed average rates down by 8%, as shown in the following chart. The decrease in rates from China to both US coasts is shown in the following chart from Drewry. Despite the looming threat of a port strike in the US, transpacific Eastbound freight rates have seen a slight dip this week, Drewry said. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said the looming strike may be pushing more volumes to the West Coast, supporting some rebound in rates since mid-August, but prices are nonetheless 15% below their high for the year reached in mid-July. “Some of this rate decline is likely also due to capacity increases, including from opportunistic carriers who launched transpacific services when rates were spiking earlier in the summer,” Levine said. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEM TANKER RATES STABLE Rates for chemical tankers ex-US Gulf were unchanged this week on trade lanes assessed by ICIS. Rates firmed on the USG to Mediterranean, and to Mexico’s East Coast. The firming is due to a lack of available tonnage amid more inquiries and fixtures along these trade lanes. However, rates to both Asia and India are facing downward pressure, especially for stainless steel vessels. The downward pressure is likely to hold into next week. Overall, throughout September the spot market should remain soft as there is open partial space in the US Gulf and as most owners continue to depend on contract tonnage. Bunker fuels in the USG were slightly lower following the weaker energy complex. PANAMA CANAL MAINTENANCE The Panama Canal will be conducting maintenance from 10-25 September on the center wall culvert of the Gatun Locks but is not expected to limit transits, according to the Panama Canal Authority (PCA). Although the culvert maintenance will increase the time required to fill and empty the chamber in both lanes at Gatun Locks, this should not affect significantly the capacity of the Panamax Locks to warrant a booking condition change. Since the culvert outage is at Gatun Locks, Neopanamax vessels should not be affected as result of this maintenance. The PCA added an additional booking slot effective 1 September, bringing the total number of passages allowed per day to 36, almost at par with the 36-38 transits/day seen before a drought forced the PCA to limit transit for the first time in its history. There are 10 slots for Neopanamax vessels, 20 for supers and six for regular vessels. The better conditions at the canal are likely to improve transit times for vessels traveling between the US Gulf and Asia, as well as between Europe and countries on the west coast of Latin America. This should benefit chemical markets that move product between regions. Wait times for non-booked southbound vessels ready for transit are 2.6 days for northbound vessels and 0.4 days for southbound vessels on 6 September, according to the PCA vessel tracker. Additional reporting by Kevin Callahan Visit the ICIS Logistics – impact on chemicals and energy topic page Thumbnail image shows a container ship carrying cargo on its way to Antwerp Harbour. (Olivier Hoslet/EPA-EFE/Shutterstock).

06-Sep-2024

SINGAPORE (ICIS)–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). Fewer September deals expected as buyers resist changes in currency conversion Importers of recycling feedstock benefit from weakening of US dollar Asian recyclers wary of interest cuts by the US Fed Asian recyclers were largely relieved to see downward correction on container freight costs in August, but the ease in transportation costs were countered by foreign exchange fluctuations. Exporters of recycled polymers from key markets such as Japan, Thailand, Indonesia and Malaysia have struggled to close deals for September loading. Buyers were resisting the strengthening of major Asian currencies against the US dollar, resulting in an impasse in spot negotiations. A strong currency makes exports less competitive as buyers continue to use the US dollar for transactions in both term and spot commitments. As of 02:05 GMT, the Thai baht and the Indonesian rupiah registered the biggest month-on-month gains against the US dollar among four currencies of major Asian exporters. Exchange rates versus $1 Currencies 6 Sept (As of 02:05 GMT) % appreciation (month on month) Japanese yen (Y) 143.29 2.5 Thai baht (Bt) 33.56 5.8 Indonesian rupiah (Rp) 15,389.10 4.6 Malaysian ringgit (M$) 4.34 3.4 Source: www.xe.com Recyclers, on the other hand, have been unwilling to lower their prices amid high production costs and eroded margins. Due to this, majority of recyclers in the region expect September spot negotiations to be lower than that of August. “Our buyers [of R-PET flakes] within Asia were strongly resisting higher prices and they prefer to halt negotiations than to shoulder the foreign exchange fluctuations,” a Thailand-based R-PET producer said. A few buyers hedging their exposure to foreign exchange volatility were still able to secure spot quantities, but majority of buyers are not hedged. On the other hand, Asian recyclers which purchase US dollar-denominated feedstock benefited from the exchange rate fluctuations. Asian recyclers expect export volumes to remain dampened and are concerned about interest rate cuts by the US Federal Reserve. As regional recyclers continue to position themselves as net exporters of R-PET, R-PE and R-PP, currency fluctuations and decisions by the Federal Reserve retain great implications to overall trade from Asia. Focus article by Arianne Perez Thumbnail image: A 10,000-Japanese yen note and $1 US dollar notes, 3 July 2024. (Taidgh Barron/ZUMA Press Wire/Shutterstock)

06-Sep-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 30 August 2024. Asia EDC demand suppressed while deep-sea availability improves By Jonathan Chou 30-Aug-24 12:19 SINGAPORE (ICIS)–Soft downstream conditions are weighing on demand for ethylene dichloride (EDC) in Asia. Margins of some downstream polvinyl chloride (PVC) producers are being depressed by an influx of imports in the key markets of India and southeast Asia. SE Asia regional ethylene tightness sees more arbitrage opportunities By Josh Quah 28-Aug-24 18:07 SINGAPORE (ICIS)–The market thus far is on track to end the third quarter as anticipated in the ICIS outlook for second-half 2024. The two main regions in Asia’s ethylene markets – northeast Asia and southeast Asia – have diverged in terms of demand-supply fundamentals. INSIGHT: China PP exports to seek other outlets amid intense competition in southeast Asia By Lucy Shuai 27-Aug-24 17:34 SINGAPORE (ICIS)–As China's polypropylene (PP) capacity increases and a weak economy drags down demand, the imbalance between supply and demand has intensified and China's PP exports have surged. NE Asia ACN at the lowest point in a year, market players await seasonal demand By Corey Chew 27-Aug-24 11:11 SINGAPORE (ICIS)–The acrylonitrile (ACN) market saw prices fall significantly last week in the northeast Asia market, while the India market saw a smaller decrease. India's BPA price falls; sellers may face more pressure By Li Peng Seng 26-Aug-24 13:59 SINGAPORE (ICIS)–The average bisphenol A (BPA) spot price in India has fallen to a 2.5-month low recently on easing freight rates, and buyers may now hold back spot purchases if they could as they expect freight rates to undergo further downward correction. INSIGHT: China PP exports to seek other outlets amid intense competition in southeast Asia By Lucy Shuai 27-Aug-24 17:34 SINGAPORE (ICIS)–As China's polypropylene (PP) capacity increases and a weak economy drags down demand, the imbalance between supply and demand has intensified and China's PP exports have surged.

02-Sep-2024

LONDON (ICIS)–An unexpectedly active August for European polyethylene (PE) and polypropylene (PP) was rounded off by surprising news of an unexploded WW2 bomb and more details of which LyondellBasell sites might be sold or rationalised. Senior editors Vicky Ellis, Ben Lake and Samantha Wright look at what else made August unusual, and look ahead to September in this latest podcast on Europe, Africa and Turkey markets. Articles they refer to include: Joe Chang’s Insight article, A new kind of low-carbon PE, PP is coming in 2025, and low density polyethylene (LDPE), linear low density polyethylene (LLDPE) and PP multi-month spot price highs.

30-Aug-2024

MUMBAI (ICIS)–India’s JPFL Films Pvt Ltd plans to set up a new 60,000 tonne/year biaxially oriented polypropylene (BOPP) film unit in the western Maharashtra state, at a cost of rupee (Rs) 2.5 billion ($30 million). The company expects to begin operations at the new unit to be built at its Nashik complex in October 2025, its parent firm Jindal Poly Films said in a filing to the Bombay Stock Exchange (BSE) on 16 August. “The new line will help the company strengthen its market position and market share,” Jindal Poly Films said, adding that funding for the plant will be through internal accruals and bank financing. JPFL Films currently has a production capacity of 294,200 tonnes/year of BOPP and 170,000 tonnes/year of biaxially oriented polyethylene terephthalate (BOPET) at its Nashik facility. ($1 = Rs83.93)

27-Aug-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Whereas it might be reasonably straightforward to assess the future of China’s direct chemicals exports (today I look at polyester fibres and polypropylene as examples of the kind trade tension Heat Maps you need to create), the outlook for China’s exports of manufactured goods is murkier. See today's blog post for a full explanation, and the see the summary below: In practical terms, because China completely dominates some manufacturing chains, there may be no alternatives to China. It could be in the best interests of the West to do "win, win" deals with China. Take electric vehicles as an example. If you assume that EVs are going to dominate the EU market, and that the EU auto industry cannot catch up with China, why not invite China in to build EV factories in the EU, thereby protecting local jobs? This is what the Americans did with the Japanese auto industry back in the 1980s. Or industrial policy could work in the opposite direction as the China split with the West widens. A good example is the US Inflation Reduction Act. This might over the long-term even apply to value chains where China dominates including EVs. The split could widen to the point where we are much less dependent on China for everything from our smartphone components to our polyester shirts. Or in practical terms, will, as I said, deals be done and the world muddles through via Chinese car factories in Europe and exports from third-party countries like Turkey, Vietnam and Mexico? (Chinese components go to these countries, are assembled and move onto the West, thereby getting around the "sound and fury" signifying not a great deal of antidumping duties. This to some extent is already happening).Now that the Chemicals Supercycle is over, much more in-depth scenario planning is essential. 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.

22-Aug-2024

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. 44% of total earmarked for refinery, petrochemical capacity growth Bina refinery/petrochemical project due for commissioning in FY2028-29 New refinery project being mulled As part of the investment initiative named ‘Project Aspire’, some Rs750 billion will go to increasing capacity at BPCL’s refineries and expand its petrochemical portfolio, company chairman G Krishnakumar said in the company’s annual report for the fiscal year ending March 2024. “The demand for major petrochemical products is expected to rise by 7-8% annually. This presents a strategic opportunity to expand refining capacity alongside the development of integrated petrochemical complexes,” Krishnakumar said. BPCL’s planned petrochemical expansions include the new petrochemical projects at its Bina refinery in the central Madhya Pradesh state, and the Kochi refinery in the southern Kerala state. The Bina project is a brownfield expansion that will raise the refinery’s capacity by 41% to 11m tonnes/year, to cater to the requirements of upcoming petrochemical plants, which include a 1.2m tonnes/year ethylene cracker and downstream units. The site is expected to produce 1.15m tonnes/year of polyethylene (PE), including high density PE (HDPE) and linear low density PE (LLDPE); 550,000 tonnes/year of polypropylene (PP); and 50,000 tonnes/year of butene-1 The complex will also produce chemicals such as benzene, toluene, xylene, the annual report said. “Technology licensors for all critical packages, and project management consultants for refinery expansion and downstream units have been onboarded and work at the site commenced in the first week of July 2024,” Krishnakumar said. BPCL has chosen US-based Lummus to provide technologies for the new ethylene plant and downstream units at the complex. The refinery will be ready for commissioning by May 2028, while petrochemical operations will begin in the financial year ending March 2029. At Kochi, BPCL’s 400,000 tonne/year PP project is progressing as per schedule and is on track for commissioning in October 2027. It plans to raise its Kochi refinery capacity by 16% over the next five years to 18m tonnes/year, based on data from the company’s latest annual report. https://subscriber.icis.com/news/petchem/news-article-00110958286 The company also plans to set up additional petrochemical capacities over the next few years. “To meet the anticipated demand beyond our planned expansions in Bina and Kochi, we are actively evaluating options for setting up additional integrated refining and petrochemical capacities within the next 5-7 years,” Krishnakumar said BPCL has begun evaluating options to set up a new refinery with a planned capacity of around 9 million to 12 million tonnes/year, a company official said, adding, “we are exploring a new refinery either on the east coast or at other locations”. In Mumbai, the company also plans to expand its refinery capacity by a third to 16m tonnes/year in the next five years, according to its annual report. In the eastern Odisha state, BPCL expects to begin operations at its 200 kilolitre/day ethanol plant at Bargarh by October 2024. Once operational, the integrated refinery is expected to produce both first generation (1G) as well as second generation (2G) ethanol using rice grain and paddy straw as feedstock. Focus article by Priya Jestin ($1 = Rs83.85) Thumbnail image: The Bharat Petroleum import terminal at Haldia in West Bengal on 13 March 2021. (Debajyoti Chakraborty/NurPhoto/Shutterstock)

20-Aug-2024

SINGAPORE (ICIS)–ICIS is introducing a new monthly domestic polypropylene (PP) block copolymer price index for South Korea starting from 16 August. This spot assessment on a delivered (DEL) basis is ICIS' first monthly index dedicated to the South Korean market. The new quote will track locally traded PP block copolymer resins with melt index (MI) between 30 to 60 that are mainly used for automotive applications. The launch of the quote is motivated by calls for more information and greater clarity on the domestic market conditions from South Korea's automotive industry as local prices deviate from export values. Previously, market participants have been using CFR (cost & freight) CMP (China Main Port) and prices of upstream chemicals like naphtha's, as reference points for domestic discussions. “ICIS has developed an index that is relevant for the South Korean domestic market,” ICIS Asia managing editor Peh Soo Hwee said. “This is in line with changing industry developments as taking direction from overseas markets such as China is no longer fit-for-purpose given the very different dynamics in Korea,” she said.

15-Aug-2024