Polypropylene (PP)

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With its unique properties and versatility, polypropylene (PP) is an invaluable global commodity, influencing key industries from packaging and automotive to electrical and household. Its ability to be manufactured into various end-uses such as plastic car parts and textiles has made PP an essential market to understand and navigate. Even the slightest change can have the most significant impact. This is why our experts are embedded in markets across the globe, monitoring, tracking and understanding developments affecting PP so you can make the best decisions with the right information.

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Polypropylene (PP) news

Saudi SABIC swings to net loss in 2023 on Hadeed sale, challenging market

SINGAPORE (ICIS)–Saudi Arabia’s chemicals major SABIC swung to a net loss of Saudi riyal (SR) 2.77bn ($739m) in 2023, largely due to one-off losses related to a divestment, while earnings from continued operations shrank amid challenging global market conditions. in Saudi Riyal (SR) bn 2023 2022 % Change Revenue 141.5 183.1 -22.7 EBITDA 19.0 36.4 -47.7 Net income from continuing operations 1.3 15.8 -91.8 Net income attributable to equity holders of the parent -2.8 16.5 – The company's net loss for 2023 was "driven mainly from the fair valuation of the Saudi Iron and Steel Co (Hadeed) business", SABIC in a filing to the Saudi bourse Tadawul on 27 February. In early September 2023, SABIC announced it had agreed to sell its entire stake in the Saudi Iron and Steel Co (Hadeed) to Saudi Arabia's sovereign wealth fund for SR12.5bn. The sale resulted in non-cash losses worth SR2.93bn. From continuing operation, full-year net income declined by 91.8% on reduced profit margins for major products, as well as lower earnings of joint ventures and associated firms. SABIC also incurred charges from non-recurring items amounting to SR3.47bn in 2023,“as a result of impairment charges and write-offs of certain capital and financial assets as well as provisions for the restructuring program in Europe and constructive obligations”. Meanwhile, SABIC’s average product sales price in 2023 fell by 21%, reflecting the global downturn in petrochemical markets, it said. Overall sales volumes fell by 2% year on year in 2023 amid sluggish end-user demand, the company said. "Year 2023 presented numerous challenges for the petrochemical industry – the market environment was shaped by lackluster macroeconomic sentiment, weak end-user demand, and a wave of incremental supply for a large suite of products," it said. The company's petrochemicals business posted a 20% year-on-year decline in sales to SR131.3bn in 2023, with EBITDA down by 42% at SR14.6bn. "The petrochemical industry navigates a challenging operating environment – underwhelming demand within our target markets led to lower year end product prices and there remains considerable uncertainty heading into the first quarter of 2024," SABIC CEO Abdulrahman Al-Fageeh said. "The announced divestment of Hadeed is proceeding as planned – this optimization of internal resources will enhance our core focus on petrochemicals," he said. SABIC is also pursuing a number of initiatives to address the "competiveness of our European assets" aimed at a "maintainable and modernized footprint in the region", Al-Fageeh added. The company plans a higher capital expenditure of between $4bn and 5bn in 2024, compared with $3.5bn-3.8bn last year. SABIC has started construction of its $6.4bn manufacturing complex in China’s southern Fujian province. The project will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. SABIC is 70%-owned by energy giant Saudi Aramco. ($1 = SR3.75)

28-Feb-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 23 February. NEWS Argentina manufacturing output falls 12% in December Argentina’s recession is hitting the petrochemicals-intensive manufacturing sectors hard, with output down 11.9% in December, year on year, the country’s statistics body Indec said late on Thursday. Mexico’s secondary activities output up 1.2% year on year in December Output in Mexico’s petrochemicals-intensive secondary activities rose in December by 1.2%, year on year, the country’s statistics office Inegi said this week. Pause in PVC projects ‘prudent’ until prices rise to $1,200/tonne – Orbia CEO Depressed global polyvinyl chloride (PVC) prices prompted Orbia to take the “prudent” decision to put new projects on hold, the CEO of the Mexican chemical producer said on Thursday. Petrochemicals margins could worsen in 2024 – Mexico’s Alpek Mexican chemicals producer Alpek’s stock was falling more than 3% on Wednesday afternoon after the company issued a downbeat guidance for 2024 in which petrochemicals margins could worsen from the already weak 2023 averages. Brazil's Braskem Q4 main chemicals, resins sales fall on lower demand Braskem’s main chemicals and resins sales in its domestic market fell by 15% and 9%, respectively, in the fourth quarter, year on year, on the back of persistent poor demand, the Brazilian petrochemicals major said this week. Brazil’s Unigel gets green light from creditors for debt restructuring 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. US Stepan recovering LatAm surfactants market share, margins – CEO Stepan is recovering its share in the Latin American surfactants market following supply chain disruptions in the second half of 2022, Scott Behrens, CEO of the US-based company, said on Tuesday. PRICINGLat Am PP domestic prices fall in Colombia on cheaper imports Domestic polypropylene (PP) prices were down in Colombia due to more competitive prices for imported products. In other Latin American countries, prices were steady. Lat Am PE buyers on the sidelines waiting for March prices Domestic, international polyethylene (PE) prices were assessed unchanged this week across Latin American countries. Mexico PET industry expecting stable sales during the upcoming peak bottle season Polyethylene terephthalate (PET) prices in Mexico held steady this week, with weak demand and ample supply in February. Brazil ethanol sales continue to face positive results in 2024 According to Unica, Brazil's ethanol sales grew by 38.22% in January over the same time frame in 2023. With this achievement, sales volume has surpassed its highest point since October 2020.

26-Feb-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 23 February. Europe PE/PP contract prices reach three figure hikes for February Contract prices for European polyethylene (PE) and polypropylene (PP) have settled upwards from initial moves earlier in February, in the pivotal third week of the month. Chemical firms back call for stronger business environment in EU The chief executives of BASF, INEOS, Covestro, Clariant and Dow Europe among others on Tuesday backed a new declaration calling for stronger European Commission prioritisation of business, calling for an industrial deal to be placed at the core of the new Parliament. Europe propylene limitations raise concerns down value chain The European propylene (C3) supply and demand balance is in a tighter than expected position due to a combination of healthy demand and planned and unplanned production constraints. BASF navigates low-growth environment as China Verbund spending continues As BASF prepares to provide more detail on its 2023 financial performance, the Germany-based chemicals major is to navigate the still-chilly waters of 2024 as spending on its flagship China Verbund site in Zhanjiang continues and project pipelines face ever-tougher scrutiny. INSIGHT: EU chemicals plead for help while production sinks to 1999 levels As chemical production in Europe plunges to levels last seen during the 2008/9 financial crisis and back in 1999, industry leaders are urging the EU to improve the regulatory framework and do more to protect them from unfair competition. But with the fundamentals of supply and demand so out of balance globally, there are limits to how much politicians can achieve in Europe.

26-Feb-2024

BLOG: Record levels of oversupply and the “Doublespeak” of the old market language

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Global polyolefins markets are such that the old phrases we use have become "Doublespeak", hiding real meanings. For example, recent mentions of "tight markets" on the Red Sea crisis and a wave of shutdowns should be read as "slightly less long markets". Stick with the data which always gives you the true perspective: Global polyethylene (PE) capacity exceeding demand is forecast to average 26m tonnes a year in 2024-2030, according to the ICIS Supply & Demand Database. This compares with just 7m tonnes a year in 1993-2023 (1993 marked the start of “China’s economic miracle”). Global polypropylene (PP) capacity exceeding demand is forecast to average 24m tonnes a year in 2024-2030 versus 6m tonnes a year in 1993-2023. So far in 2024, average NEA PE integrated variable cost margins have fallen to minus 27 under the blog's new margins index, a record low. NEA integrated naphtha-based variable cost PP margins have so far this year been at minus 28 in another new index, equalling the previous record low in 2022. The average China CFR PE price spread – weighted for the different grades – over CFR Japan naphtha costs has fallen to just $73/tonne so far this year, the lowest since our price assessments began in 1993. And while you stick with the data, remember this essential context: China's economy is undergoing a long-term structural slowdown. Get used to it and come to us for advice about what you should do next. 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.

16-Feb-2024

INSIGHT: Low virgin chemicals pricing intensifies sustainable transition challenge – Borealis CEO

LONDON (ICIS)–Lower pricing for virgin petrochemicals in Europe on the back of a prolonged demand trough is exacerbating the challenge of building out sustainable products portfolios into a core spine of a chemicals business, according to the CEO of Borealis. The Austria-based petrochemicals producer is in the process of substantially increasing its sustainable and circular products offerings, completing its acquisition of Italy-based recycled polypropylene specialist Rialti in November. The company also agreed to acquire Integra Plastics, a Bulgaria-based producer of recycled polyethylene and polypropylene, that month. VIRGIN VS RECYCLED The push to develop circular products as a core plank of Borealis’ operations have become more difficult amid strained profitability and low pricing for conventional plastics, according to CEO Thomas Gangl. “What we want to do is focus on establishing circularity as a viable business,” he said. “This is tricky in general, and even more tricky in times of low prices for virgin material. On the other hand, I truly believe that this is not an optional topic, and is the way forward and we see for Borealis.” “The current environment, with lower demand for products, lower prices and margins, has of course been a difficult situation for us as well. Even more difficult in this environment, is making the mid- and long-term structural changes that we need,” he added. Lower pricing for virgin material has been a challenge for the mechanical  recycling sector, with production units tending to be smaller-scale than gigantic fossil-based petrochemicals production plant, and utilising newer technology. Those market characteristics can make for higher costs, and periods of cheap and plentiful fossil-based materials regularly challenge the pace of recycled product market adoption. “We need to go to a more circular product portfolio. During times when the material is so cheap, it is very difficult to afford for customers to buy something with a premium.  That is a challenging situation for the transformation,” he said. PERFORMANCE The company reported 2023 operating profit of €18m for its European asset base, excluding its nitrogen fertilizers business, which it sold to AGROFERT in July last year. The long-anticipated divestment has also allowed the company to simplify its approach to moving into a more circular business model, according to Gangl. "The proceeds that we have received from the sale were very good, and it is also about focus in difficult times. With the transformation towards circularity, we need to focus on the polyolefin business, and the nitrogen business was a big distraction from a management point of view," he said. The 2023 figure is a huge decline from the €703m generated -also excluding fertilizers – the previous year, amid high inflation and weaker margins and negative inventory effects. “The European asset base that Borealis is operating, excluding the big joint ventures such a Borouge, recorded €18m operating profit in 2023, a small profit compared to the record year 2022, but 2023 was a tough year for our industry, especially so for European based part of our industry, with high energy prices, inflation, a lot of imports," said CFO Daniel Turnheim. "Don't get me wrong, we are anything but happy with that sum, but it's still in a solid positive territory," he added. Slow ramp-ups and production issues for some new assets at Baystar, the company’s Texas joint venture with Total, also limited profitability last year. This is due in part to the 625,000 tonne/year scale of the polyethylene unit, which can present unique challenges when ramping up output “With this as the biggest machine ever built, you would expect to see some ramp-up curve… but we are convinced that this year this ramp-up curve will be continued and hopefully at the end of the year we will see a very stable operation,” Turnheim said. NO BIG SHIFTS IN 2024 No strong improvements are expected this year compared to last, with OMV projecting that operating margins for its European olefins and polyolefins assets will slip further in 2024, despite polymer sales and cracker operating rates projected to increase. OMV holds a 75% stake in the business, with Borealis standing as the Austria-based oil and gas major’s key foothold in downstream petrochemicals. OMV is in talks with Abu Dhabi sovereign oil major ADNOC on potential closer cooperation on petrochemicals, including the combination of subsidiaries of Borealis and Borouge as equal partners. Gangl declined to comment on the talks. Europe indicator operating margins (/tonne)  2024 (projected) 2023 Ethylene 490 507 Propylene 370 389 Polyethylene 320 322 Polypropylene 320 355 “I think what we really will see in 2024 is that the situation is not substantially different to 2023,” said Gangl. “It will be another challenging year. And so everyone has, therefore, focus on topics where there is the highest value to be delivered." Like most European players, an ever-intensifying focus on costs and efficiencies is the order of the day, Gangl said, with further consolidation in producers’ European asset base a strong possibility. !We've done a lot in working on margins, pricing, variable costs, fixed costs. This is the name of the game for European players, and therefore we need to continue this journey,” he said. “We have seen some first closures of assets last year and also here I expect that the one or the other will be added in the next years,” he added. LEGISLATIVE REFORM With the institution of a new European Parliament later this year as part of a wave of general elections that will see changes in national leadership for nearly half the population of the globe, sustainability legislation is likely to see some shake-ups. Marco Mensink, director general of European chemicals trade body Cefic, has predicted that Commission support on sustainability investment will be focused on the first movers and the highest spenders as industrial strategy rises up the agenda. With the sustainability transition comprised of the reinvention of numerous value chains and those shifts needing to happen in parallel to create a circular economy, what is lacking beyond investment is clarity, according to Gangl. “We are not happy with the timing of what is required from legislation and what we need to do now. We are taking steps without knowing exactly what the legislation will look like, and this is of course creating some issues,” he said. The US Inflation Reduction Act includes scope to cover operational expenses for new production units in value chains that may not yet be profitable, and an issue in Europe remains an obstacle to maturity of cleaner feedstock product markets, Gangl added. “We can for example, produce more products derived from bio-based feedstocks but as long as this is not supported by legislation, customers will not pay the extra costs for that. And this is where we then need a lot of smaller investments as well,” he said. “So it's not only one big investment, it's many smaller investments, and these will be delayed if there is no change in the approach by regulators,” he added. Insight by Tom Brown Thumbnail photo: Borealis' office in Taylorsville, US. Source: Borealis Clarification: recasts seventh paragraph

14-Feb-2024

VIDEO: Red Sea tensions will ripple through Europe chems markets in 2024

LONDON (ICIS)–The Red Sea crisis has shaken the European petrochemicals industry. Products like PTA and polypropylene, ethylene glycols and HDPE have been highly impacted by reduced imports from Asia. In the long term, there is a shift in buyer behaviour caused by geopolitical uncertainties. European buyers moving away from just-in-time delivery Fear of trade disruption pushes domestic chemical prices Reduced sentiment on just-in-time deliveries leads to inventory building Input from Chris Barker, Meeta Ramani, Heidi Finch, Nigel Davis, Tom Brown and Will Beacham.

14-Feb-2024

India’s HPCL eyes Jan 2025 start-up for 9m tonne/year Rajasthan refinery

MUMBAI (ICIS)–India’s Hindustan Petroleum Corp Ltd (HPCL) expects to begin commercial operations at its greenfield 9m tonnes/year refinery at Barmer in the western Rajasthan state by January 2025, a senior company official said on Wednesday. “Once the refinery comes on stream, the petrochemical plants at the complex will be commissioned in a phased manner in around three months,” the official said. The refinery and petrochemical complex which is being built at a cost of nearly Indian rupee (Rs) 730bn ($8.8bn), has achieved nearly 80% mechanical completion and is expected to cater to increasing demand in north India, he added. The refinery will initially operate at around 80% of capacity, with full capacity utilisation expected by 2027, he said. Once operational, the petrochemical complex will have a polypropylene (PP) unit with two 490,000 tonne/year lines; and a linear low density polyethylene/high density polyethylene (LLDPE/HDPE) swing plant with two 416,000 tonnes/year lines. The complex will also produce 240,000 tonnes/year of butadiene (BD). The project has faced delays and cost escalation since work on the project started in 2018. It is being developed by HPCL Rajasthan Refinery Limited (HRRL), a 74:26 joint venture between Hindustan Petroleum Corp Ltd (HPCL) and the Rajasthan state government. ($1= Rs83.1)

14-Feb-2024

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 9 February. Brazil's chemicals output down 6% in 2023, producer prices fall by 17% Brazil’s chemicals output fell by 5.9% year on year in 2023, while plastics and rubber production rose by 1.2%, according to the country’s statistical office, IBGE. INSIGHT: Rough start to 2024 for chemicals, even as economic outlook brightens The US economy is proving most resilient but it is a different case for chemicals. And while the IMF raised its global GDP growth forecast for 2024 to 3.1% from a prior 2.9%, largely on an improving US outlook, chemical company guidance for Q1 following Q4 earnings calls all points to a rough start for the year. US natgas prices close below $2, benefiting chem margins US natural gas prices fell below $2 on Wednesday, which, barring the pandemic, represent the lowest winter-time level since 1997. INEOS Aromatics closes one of two PX units at Texas City, Texas site INEOS Aromatics has closed one of its two paraxylene (PX) units at its Texas City, Texas site, according to a company spokesperson. Brazil to reinstate antidumping duty on US PP Brazil is to reinstate antidumping duties (ADDs) on US polypropylene (PP), effective immediately after publication in the country's official gazette.

12-Feb-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 9 February. INSIGHT: Europe gets gas cost relief but poor demand, overcapacity weigh heavy With natural gas prices potentially falling towards pre-Russia-Ukraine war levels and possibly below, European chemical manufacturers may soon be rid of the competitive cost disadvantage which has dogged them for several years. Europe TiO2 market relaxed about Venator Duisburg closure, longer term impact to be assessed Reaction to Venator’s imminent closure of its standard TiO2 Duisburg, Germany plant is muted so far, as it had been widely expected for some time and underlying demand remains fragile. Europe toluene demand forecasts better than those for downstream markets and TDI After a slow start for toluene bulk demand and that of toluene diisocyanate (TDI) along with major end user sectors in Europe downstream in 2024, sentiment is more bullish for the former market versus the latter two. Germany chemical production falls to lowest level since 1995 Germany’s chemical production fell 10.6% in 2023, dropping to its lowest level since 1995, the country’s federal statistics agency said. Eurozone construction sees sharpest decline since mid-2020 in January The eurozone construction sector remained in contraction territory in January, with conditions chilling further during the month on the back of weak demand and declines across key markets, with little sign of recovery this year. European PE/PP spot prices continue to rise as contract offers in triple digits European spot polyethylene (PE) and polypropylene (PP) prices are still on an uptrend this week, while February contract offers have been made in the triple digits.

12-Feb-2024

Brazil to reinstate antidumping duty on US PP

SAO PAULO (ICIS)–Brazil is to reinstate antidumping duties (ADDs) on US polypropylene (PP), effective immediately after publication in the country's official gazette. The decision was taken on 8 February by the Executive Management Committee (Gecex) of Brazil's Foreign Trade Chamber (Camex). PP imports from the US into Brazil only represented 5% of the total PP imports in 2023. However, strong lobbying from besieged Brazilian domestic producers, who face stiff competition from lower-priced overseas material, prompted Camex to reinstate the ADD. In 2023, Brazil imported almost 510,000 tonnes of PP; less than 26,000 tonnes came from the US. Brazil's government extended the 10.6% ADD on imports of US PP in October 2023 for five more years. However, the government immediately suspended it. The measure must now be published in the Official Gazette (DOU) to take effect. PP is used for packaging, ropes, carpets, plastic parts, loudspeakers and automotive parts. Thumbnail shows rope made out of polypropylene. Image by Shutterstock. 

09-Feb-2024

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