Propylene oxide (PO)

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Crucial in the manufacture of a range of end products from cosmetics to antifreeze, propylene oxide is industrially produced and traded on a major scale. Keeping track of trading activity, prices, output levels and demand fluctuations across all the key markets around the world means monitoring vast amounts of data. The rapidly changing market dynamics create opportunities for producers, buyers, sellers and traders of propylene oxide. However, the key to success is world class market intelligence. Be sure you are on top of all the market fundamentals to act quickly and decisively to secure a profitable deal.

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Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 11 October. Evonik plans major restructure of two business units as global competition intensifies German specialty group Evonik plans to restructure two of its business units, putting non-core assets up for sale, closure or partnerships. Hurricane Milton moves off Florida's east coast with damaging winds, heavy rainfall Hurricane Milton is moving away from Florida’s east coast but is still producing damaging winds and heavy rainfall in the state, according to the latest update on Thursday. Fundamental change still potentially ahead for chemicals industry Massive overcapacity along some value chains is likely to drive further fundamental shifts in the global chemicals landscape, with differentiation and innovation key to remaining competitive. Europe chems market overdue for restructure – Brenntag chief The European chemicals market is overdue a “massive” restructuring, the CEO of Brenntag said on Tuesday, to create players that can withstand competitive pressures from companies in higher-growth markets. Europe MPG outlook downbeat, but potential de-icing demand brings some hope Europe's mono propylene (MPG) spot market will likely remain subdued into early Q1 2025 against a tough macroeconomic backdrop.

14-Oct-2024

Chemical recycler Ioniqa files for bankruptcy protection

LONDON (ICIS)–Glycolysis-based chemical recycling technology company Ioniqa has filed for bankruptcy protection, the company announced in press release on Thursday. The company is headquartered in the Netherlands. It is concentrated on chemically recycling polyethylene terephthalate (R-PET). In the press release, the company stated that it has determined that “achieving a positive cash flow from its advanced polyester recycling technology will take too long.” Advanced recycling is a term that is often used as an alternative description for chemical recycling (although mechanical recyclers also use the term advanced recycling to refer to some mechanical recycling processes). It attributed this to the comparatively low price of traditional virgin PET and the supply chain for chemically recycled PET still being in development. It also attributed some of the blame to “the implementation of regulated mandatory standards for meaningful recycling levels… [being] too far out into the future.”  It stated that this meant that large-scale deployment of its technology was not economically feasible at this time. Ioniqa has a glycolysis-based chemical recycling demonstration plant in Geleen, The Netherlands, which has been operational since 2019 and has an estimated output of 8,000 tonnes/year according the ICIS Recycling Supply Tracker – Chemical. Investors in the site include The Coca Cola Company, Unilever, Indorama Ventures, Koch Technology Solutions, and Infinity Recycling’s Circular Plastics Fund. Chemical recycling is an umbrella term for a variety of methods that use different production routes and feedstocks to create new material from waste. This means that each process (and each technology and individual player) has vastly different cost-structures and the economics of each chemical recycling method vary substantially.  Coupled with this, achievable prices for chemically recycled products vary significantly between grade and polymer type. Common chemical recycling methods include pyrolysis, gasification, glycolysis, hydrolysis, methanolysis, and enzymatic hydrolysis. In chemical recycling, chemical processes are used to revert waste back to an earlier molecular state. Waste can be reverted back to monomer, building block chemicals, or all the way back to crude oil/energy. Chemical recycling alters the fundamental chemical properties of the material. In glycolysis, a transesterification catalyst is used to break the ester linkages. Typical catalysts include monoethylene glycol (MEG), diethylene glycol (DEG), propylene glycol (PG) or dipropylene glycol (DPG)..In glycolysis, a transesterification catalyst is used to break the ester linkages, which are replaced by hydroxyl terminals. This produces bisterephthalate (BHET) and PET glycozates. These can be reacted with aliphatic diacids to make: polyester polyols, which are in turn used in polyurethane (PU) foams; co-polyesters; unsaturated resins; and hydrophobic dyes. If combined with virgin BHET, the process produces chemically recycled PET via dimethyl terephthalate (DMT) or purified terephthalic acid (PTA) glycolysis. Typical catalysts include monoethylene glycol (MEG), diethylene glycol (DEG), propylene glycol (PG) or dipropylene glycol (DPG). Transesterification does not work on polymers such as polyolefins due to a lack of cutting points. As a result, glycolysis is predominantly focussed on PET, and this means that it typically uses sorted and separated monomaterial as a feedstock, which can add additional cost. The most common form of chemical recycling in Europe is pyrolysis-based. This is in large part being driven by demand from ambitious brand sustainability targets in the packaging sector. Many fast-moving consumer goods (FMCG) brands see chemical recycling as the only viable way to reach large scale food-grade packaging suitable recycled polyolefins given current EFSA requirements that 95% of input waste must be former food-contact to gain food-contact approval. Most PET input waste is sourced from used plastic drinks bottles, making it easier for R-PET producers to meet this 95% requirement than other polymers, and there is a well established R-PET food-grade pellet sector – using traditional recycling methods – across Europe. R-PET is also the only mechanical recycling technology recognised as suitable for producing food-contact material under European Commission regulation (EU) 2022/1616 on ‘recycled plastic materials and articles intended to come into contact with foods’. Pyrolysis-based chemical recycling uses heat and pressure – typically in the absence of oxygen, although it is sometimes present in controlled volumes – to transform waste feedstocks (most commonly plastic waste or end-of-life tyres) into an earlier molecular state. Pyrolysis-based plants targeting mixed plastic waste as feedstock – with a focus on polyolefins – currently account for more than 60% of all operating chemical recycling capacity in Europe according to ICIS Recycling Supply Tracker – Chemical. PET, however, does not pyrolyse. Highlighting just how variable achievable prices for chemically recycled materials can be, pyrolysis oil prices in Europe are currently regularly trading on the spot market anywhere from €800-2,200/tonne ex-works Europe depending on grade. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com Clarification: recasts glycolysis process technology paragraph

10-Oct-2024

China petrochemical futures retreat on demand worries

SINGAPORE (ICIS)–China’s petrochemical futures tumbled on Wednesday morning as a lack of further economic stimulus measures from the government left investors worrying about demand. At the end of the morning session, polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures led the slump, with losses ranging from 2.4-3.5%. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than $3/bbl. In physical markets, spot transactions were sluggish at most petrochemicals, including acetone, butadiene, acrylonitrile, propylene oxide, upon resumption of trade due to weak demand. China had a week-long National Day holiday on 1-7 October. Futures market gains in the previous session lost steam as market hopes for additional economic measures did not materialize. In a briefing on 8 October, the National Development and Reform Commission (NDRC) – China’s top economic planner – provided no details on how to execute the aggressive measures announced in late September. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. ($1 = CNY7.07)

09-Oct-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 4 October. NEWS Brazil’s manufacturing expands healthily again in September on stronger demandBrazil’s manufacturing sectors posted a significant improvement in September on the back of an increase in production, stronger job creation, and accelerated sales growth, analysts at S&P Global said on Tuesday. Mexico’s manufacturing contraction deepens in September as perfect storm gathers paceMexico’s petrochemicals intensive manufacturing sectors deepened their contraction during September as a perfect storm of lower orders, lower output and lower employment levels is forming, analysts at S&P Global said on Wednesday. Colombia manufacturing falls further into contraction in SeptemberThe manufacturing sector in Colombia fell further into contraction territory in September on the back of weak demand which dented factory output, analysts at S&P Global said. Chile’s manufacturing starts Q4 in good form, central bank forecasts healthier growthChile’s economy has had several ups and downs in the past 12 months, including flirting with a recession, but the petrochemicals-intensive manufacturing sectors and macroeconomics point to healthier growth in Q4 and into 2025. INSIGHT: Brazil’s booming economy creates problems of its own – but chemicals absent from bonanzaBrazil's economy has beaten the odds in 2024, and GDP growth is expected to top 3% for the year, although this success is coming accompanied by a series of challenges – not least inflation and interest rates, which remain high. INSIGHT: Optimism over Mexico’s Sheinbaum tempered by fears of executive over-reachClaudia Sheinbaum’s historic swearing-in this week as the first female Mexican president and the optimism it infused could quickly turn sour if her party Morena continues approving one-party, structural reforms thanks to the ‘supermajority’ of two thirds of seats in parliament. Agribusiness titan Bunge concludes sale of its share in BP Bunge Bioenergia in BrazilGlobal agribusiness titan Bunge announced it has completed the previously announced sale of its 50% share in BP Bunge Bioenergia to BP, which now owns 100% of the business. Verde AgriTech successfully renegotiates loans with their creditors in BrazilFertilizer producer Verde AgriTech has announced a successful renegotiation with the banks holding 73% of its outstanding loans. Brazil’s Innova BOPP capacity to nearly double with Polo Films acquisitionChemicals producer Innova is to increase its production capacities for biaxially oriented polypropylene (BOPP) film by 86% to 130,000 tonnes/year if its planned acquisition of Polo Films goes ahead as planned. Colombia’s central bank cuts rates by 50 basis points to 10.25%Colombia’s Banco de la Republica decided late on Monday to cut its benchmark interest rate by 50 basis points to 10.25% in a split decision among members of its monetary policy committee. PRICING Mexico PP domestic prices fall tracking propyleneDomestic polypropylene (PP) prices dropped in Mexico tracking lower propylene costs. In other Latin American countries prices were assessed unchanged. Mexico domestic PE prices fall on ample supply, soft demandDomestic polyethylene (PE) prices fell in Mexico on ample supply and soft demand while being unchanged in other Latin American countries.

07-Oct-2024

Asia petrochemical trades subdued; China post-holiday demand uncertain

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

07-Oct-2024

EPCA '24 PODCAST: Solvents market overview and outlook ahead of EPCA

LONDON (ICIS)–Ahead of the approaching European Petrochemical Conference (EPCA) in Berlin 7-10 October, ICIS editors discuss market conditions in a variety of solvent markets. Market updates on methyl ethyl ketone (MEK), methyl isobutyl ketone (MIBK), isopropanol (IPA), phenol, acetone, toluene, mixed xylenes, glycol ethers and propylene glycol ethers, butyl acetate and ethyl acetate Trade flows and impact of freight rate movements Overcapacity versus low demand levels Upcoming maintenance programs In this episode, Jane Massingham talks to editors Nick Cleeve, Jane Gibson, Zubair Adam, Cameron Birch and Marion Boakye.

27-Sep-2024

Mexico’s cabinet amends again import, export permits for chemicals, fuels

SAO PAULO (ICIS)–The Mexican government has amended for the third time the decree regulating import and export permit requirements for several chemicals as well as fuel products and re-opened the door for 20-year permits. Among others, there were amendments published for permits to import key building blocks within the petrochemical industry, such as naphtha; products within the aromatics chain such as benzene and toluene; or within olefins such as ethylene, propylene and butadiene (BD). Within fuels, import permits for jet kerosene or biodiesel were amended, as well as those for feedstocks such as methyl tert-butyl ether (MTBE). Read the list of products in the decree’s annexes (see here, in Spanish). The government said it was aiming to simplify the procedures by providing greater legal certainty and clarity to interested parties, seeking to facilitate compliance with obligations by considering the type of merchandise, its use, and the quantities requested. These import and export permits apply when the product is related to the energy industry or derives or is produced from hydrocarbons. For lubricants and additives, recent regulatory amendments have made it necessary to obtain a Permit for the import of such products, when classified under certain specific tariff codes. Some of the updates referred to the term of the permits for import and export, an aspect in which the government is backtracking its earlier decision from 2020 to withdraw 20-year permits existent at the time, according to a note to customers by the Mexican office of law firm Holland & Knight. “Permits are granted for different validity periods that vary based on the nature of the merchandise and its intended use. For merchandise intended for sporting events and research trials, both for import and export, the validity is sixty days. Standard permits for one year and five years may also be requested,” said Gabriel Ruiz, partner at the law firm. “Furthermore, permits for export may be granted for periods exceeding five to twenty years, provided the need for such permits is justified in the interest of social and economic benefit, subject to approval by the Ministry of Energy (SENER).” The decree also establishes specific requirements for obtaining prior import and export permits, differentiating the requirements based on the validity of each type of permit. Regarding renewals, permits granted for one year may be renewed up to two times for the same validity, while five-year permits may be renewed once for the same duration. For permits exceeding five years intended for export, the renewal will be singular and may extend up to half of the original validity; in the case of twenty-year permits, the renewal will be limited to the same proportion. The new rules published on 18 September came to amend a decree originally issued in December 2020, later amended in November 2022 and November 2023. These amendments were part of wider changes included in the Energy Reform passed in 2013, which sought to liberalize Mexico’s energy sector. The current Administration’s approach, however, has been keeping the state-owned energy companies – crude major Pemex or utility CFE are two of them – at the center of the country’s energy landscape. Front page picture source: Shutterstock

24-Sep-2024

Brazil increases import tariffs for more than 80 chemical, fertilizers products

SAO PAULO (ICIS)–The Brazilian government’s committee on foreign trade Gecex-Camex approved late on Wednesday an increase in import taxes on more than 80 chemical and fertilizers products, with the new rate up to 20% for most materials. Among some of the products affected are widely used chemicals such polypropylene (PP), polyethylene, (PE), polyvinyl chloride (PVC), polystyrene (PS), and polyethylene terephthalate (PET). See bottom list for details. Previous rates stood between 7.6% and 12.6%. The new rates will apply from October and are valid for one year. The decision is yet to be approved by Mercosur, the trading common area formed by Argentina, Paraguay, and Uruguay, as well as Brazil, which is the dominant economy in Mercosur. The cabinet, thus, gave in partly to the pressure by chemical producers in Brazil. Earlier this year, individual companies as well as the trade group representing producers, Abiquim, had proposed to increase tariffs in more than 100 chemicals. The decision was widely anticipated by analysts, and it is expected to immediately prop up earnings for some of Brazil’s largest producers such polymers major Braskem or chlor-alkali major Unipar. Brazil has been the recipient of large amounts of imports from Asia and, to a lesser extent, the US which have greatly dented domestic producers’ market share. Sectors that opposed increasing tariffs, including plastic transformers represented by Abiplast, expressed their disappointment after Wednesday’s measure by Gecex-Camex. “[The decision was taken even though] Abiplast and other trade groups have exhaustively demonstrated to the government the harmful impacts of increases in import tariffs on raw materials,” said Jose Ricardo Roriz Coelho, president of Abiplast, in a letter to the trade group’s members seen by ICIS. “We will continue to fight to ensure that these unreasonable measures are reversed.” Product Current Tax Rate Proposed Tax Rate Plaintiff Phosphoric acid with iron content less than 750 ppm 9% 17.5% Abiquim Sodium hydrogen carbonate (bicarbonate) 9% 20%* Abiquim Isobutyl alcohol (2-methyl-1-propanol) 10.80% 20% Abiquim Isobutyl alcohol (2-methyl-1-propanol) 10.80% 20% Elekeiroz Inc. Phenol (hydroxybenzene) and its salts 7.20% 12.6%* Abiquim Phenol (hydroxybenzene) and its salts 7.20% 12.6%* Rhodia Brasil SA Butanone (methyl ethyl ketone) 10.80% 20% Abiquim Ethyl acetate 10.80% 20% Abiquim n-butyl acetate 10.80% 20% Abiquim n-butyl acetate 10.80% 20% Rhodia Brasil SA Other saturated acyclic monoalcohol acetates, c atom <= 8 10.80% 20% Abiquim Methacrylic acid methyl esters 10.80% 20% Abiquim Methacrylic acid methyl esters 10.80% 20% Unigel Holdings Inc. Adipic acid 9% 20% Abiquim Adipic acid 9% 20% Rhodia Brasil SA Maleic anhydride 10.80% 20% Abiquim Maleic anhydride 10.80% 20% Elekeiroz Inc. Fumaric acid, its salts and esters 10.80% 20% Abiquim Dioctyl orthophthalates 10.80% 20% Abiquim Dioctyl orthophthalates 10.80% 20% Elekeiroz Inc. Dinonyl or didecyl orthophthalates 10.80% 20% Abiquim Hexamethylenediamine and its salts 10.80% 20% Abiquim Monoethanolamine and its salts 12.60% 20% Abiquim Other anionic organic surface-active agents, whether or not put up for retail sale, not classified under previous codes 12.60% 20% Abiquim Polyethylene with a density of less than 0.94, with filler 12.60% 20% Abiquim Polyethylene with a density of less than 0.94, without filler 12.60% 20% Abiquim Other unfilled polyethylenes, density >= 0.94, in primary forms 12.60% 20% Abiquim Other copolymers of ethylene and vinyl acetate, in primary forms 12.60% 20% Abiquim Copolymers of ethylene and alpha-olefin, with a specific gravity of less than 0.94 12.60% 20% Abiquim Unfilled polypropylene in primary form 12.60% 20% Abiquim Propylene copolymers, in primary forms 12.60% 20% Abiquim Expandable polystyrene, unfilled, in primary form 12.60% 18% Abiquim Other styrene polymers, in primary forms 12.60% 20% Abiquim Other styrene polymers, in primary forms 12.60% 20% Unigel Holdings Inc. Polyvinyl chloride, unmixed with other substances, obtained by suspension process 12.60% 20% Abiquim Polyethylene terephthalate of a viscosity index of 78 ml/g or more 12.60% 20% Abiquim Polyethylene terephthalate of a viscosity index of 78 ml/g or more 12.60% 20% Alpek Polyester Pernambuco SA Other unsaturated polyethers, in primary forms 12.60% 20% Abiquim Ex – Surfactant polymer class preparation, silicone free 12.60% 12.60% Abiquim Ex – Solvent-free modified polyester class preparation 12.60% 12.60% Abiquim White mineral oils (vaseline or paraffin oils) 3.60% 35% Abiquim Silicon dioxide obtained by chemical precipitation 9% 18% Abiquim Silicon dioxide obtained by chemical precipitation 9% 17% Rhodia Brasil SA Other silicon dioxides 0% 18% Abiquim Commercial ammonium carbonates and other ammonium carbonates 9% 18% Abiquim Styrene 9% 18% Abiquim Styrene 9% 18% Unigel Holdings Inc. Butan-1-ol (n-butyl alcohol) 10.80% 20% Abiquim Butan-1-ol (n-butyl alcohol) 10.80% 20% Elekeiroz Inc. Propylene glycol (propane-1, 2-diol) 10.80% 20% Abiquim Dipropylene glycol 12.60% 20% Abiquim Triacetin 10.80% 20% Abiquim Triacetin 10.80% 20% Denver Specialty Chemicals 2-Ethylexanoic acid (2-ethylexoic acid) 10.80% 20% Abiquim 2-Ethylexanoic acid (2-ethylexoic acid) 10.80% 20% Elekeiroz Inc. Salts and esters of adipic acid 10.80% 20% Abiquim Other esters of orthophthalic acid 10.80% 20% Abiquim Other esters of orthophthalic acid 10.80% 20% Elekeiroz Inc. Phthalic anhydride 10.80% 20% Abiquim Phthalic anhydride 10.80% 20% Petrom Petrochemicals Mogi das Cruzes S/A Ammonium nitrate, even in aqueous solution 0% 15% Abiquim Pigments and preparations based on these pigments 12.60% 20% Abiquim Linear alkylbenzene sulfonic acids and their salts 12.60% 23% Abiquim Organic surface-active agents, non-ionic 12.60% 23% Abiquim Alkylbenzene mixtures 10.80% 20% Abiquim Stearic acid (industrial monocarboxylic fatty acid) 5.40% 35% Abiquim Stearic alcohol (industrial fatty alcohol) 12.60% 20% Abiquim Sodium methylate in methanol 12.60% 20% Abiquim Other ethylene polymers, in primary forms 12.60% 20% Abiquim Filled polypropylene, in primary form 12.60% 20% Abiquim Other polystyrenes in primary forms 12.60% 20% Abiquim Other polystyrenes in primary forms 12.60% 20% Unigel Holdings Inc. Polyvinyl chloride, unmixed with other substances, obtained by emulsion process 12.60% 20% Abiquim Polymethyl methacrylate, in primary form 12.60% 20% Abiquim Polymethyl methacrylate, in primary form 12.60% 20% Unigel Holdings Inc. Other polyether polyols, in primary forms 12.60% 20% Abiquim Other polyesters in liquids and pastes 12.60% 20% Abiquim Other polyurethanes in liquids and pastes 12.60% 20% Abiquim Carboxymethyl cellulose with content >=75%, in primary forms 12.60% 20% Abiquim Carboxymethyl cellulose with content >=75%, in primary forms 12.60% 20% Denver Specialty Chemicals Styrene-butadiene rubber (SBR), food grade according to the Food Chemical Codex, in primary forms 10.80% 22% Abiquim Acrylonitrile-butadiene rubber in sheets, plates, etc. 10.80% 35% Abiquim Latex of other synthetic or artificial rubbers 10.80% 35% Abiquim  

19-Sep-2024

Thai SCG to run Vietnam petrochemical complex on US ethane

SINGAPORE (ICIS)–Thai conglomerate Siam Cement Group (SCG) plans to use ethane imported from the US as feedstock for its Long Son Petrochemical (LSP) complex in Vietnam to boost the project’s long-term competitiveness. Storage, supporting facilities for ethane to be built on site Ethane targeted as major feedstock for LSP cracker; C2 market “turbulence” expected LSP commercial operations start October SCG is in talks with a contractor for the new ethane storage project, with construction of the facilities expected to take about three years to complete, the company said in roadshow presentation on 16 September. “The site is equipped with a central utility system, ready for the installation of ethane gas storage tanks and pipelines,” the company said in a separate statement on 16 September. SCG has yet to finalize the capital expenditure for the project, and the prospective US ethane supplier for LSP was not disclosed. The $5.4bn LSP project in Ba Ria-Vung Tao province is Vietnam’s first integrated petrochemical complex and is 100%-owned by Thai conglomerate SCG. The mixed-feed cracker at the site currently uses propane and naphtha feedstocks imported from Qatar under a long-term supply deal. The cracker can produce 950,000 tonnes/year of ethylene; 400,000 tonnes/year of propylene; and 100,000 tonnes/year of butadiene (BD). SCG said that LSP is already operating flexible gas cracker which can use a variety of feedstocks, including ethane, propane, and naphtha. Ethane imported from the US is currently cheaper by $200-400/tonne than existing feedstock, SCG said, noting that the average price of ethane has been around 40% lower than that of naphtha and propane over the past three years. The feedstock derived from shale gas also provides greater price stability as it is linked to US natural gas prices, unlike naphtha, which is influenced by oil price fluctuations. FEEDSTOCK DIVERSIFICATION The enhancement to LSP's feedstock flexibility is part of SCG's efforts to bolster its chemicals business in the face of global oversupply, low demand and oil price volatility, SCG said. For ethylene (C2), the company expects "future turbulence" in the market, especially in 2027-2028 amid a wave of new global cracker additions, especially in China. Global ethylene supply is projected by SCG to grow at a slower average rate of around 3-4% in 2025-2030, compared with 5% in 2019-2024. China will comprise around 53% of new ethylene supply additions in 2025-2030, it noted. SCG expects an "extended chemicals trough with low margin" in 2025-2030 amid continued naphtha price volatility. “The current global situation and the future outlook over the next 2-5 years will be marked by increased volatility,” SCG CEO and president Thammasak Sethaudom said on 16 September. “All SCG businesses are moving forward with strategies that align with these dynamics while also reducing carbon dioxide emissions…to ensure long-term competitiveness.” LSP COMMERCIAL OPERATIONS START OCTOBER The LSP complex has completed performance test runs in September and is on track to start commercial operations next month, according to SCG. Its utilization rate following start-up will be "determined by global demand dynamics", it said. LSP’s downstream plants include a 500,000 tonne/year high density polyethylene (HDPE) unit; a linear low density PE (LLDPE) unit of the same capacity; and a 400,000 tonne/year polypropylene (PP) unit. The cracker had an outage in February due to a technical issue and resumed normal operations in August. It had declared a force majeure in February due to issues at the cracker that also shut its downstream PE and PP units. Credit ratings agency Fitch Ratings in a note on 17 September said that it expects LSP to ramp up its utilization rate to 70-80% in 2025, “supported by its cost competitiveness versus imports and the flexibility to use both propane and naphtha as feedstock”. Imports currently fulfil nearly all of Vietnam's petrochemical requirements. Focus article by Nurluqman Suratman Thumbnail photo: Aerial view of SCG's Long Son Petrochemical Complex in Vietnam (Source: SCG)

19-Sep-2024

US Fed makes first cut since 2020; rate may reach 4.25-4.50% in Dec

HOUSTON (ICIS)–The Federal Reserve lowered its benchmark interest rate by a half point to 4.75-5.00% on Wednesday, and the central bank could lower it by an additional half point by the end of the year. The following table summarizes the current and past forecasts for rates, inflation and GDP by members of the Federal Reserve. 2024 2025 2026 Fed funds 4.4% 3.4% 2.9% June forecast 5.1% 4.1% 3.1% GDP 2.0% 2.0% 2.0% June forecast 2.1% 2.0% 2.0% Core PCE Inflation 2.6% 2.2% 2.0% June forecast 2.8% 2.3% 2.0% Source: Fed If the forecasts hold true, the US economy will achieve a soft landing, with inflation falling to the Fed's long-term goal of 2% without triggering a recession. FED NOTES WEAKER JOB MARKET, INFLATIONThe Fed said that the job market had slowed since the last time it voted on rates at the end of July. Inflation has moved closer to the Fed's goal but remains somewhat elevated. Unlike its previous statement in July, the Fed said it "has gained greater confidence that inflation is moving sustainably toward 2%". In addition, the Fed stressed its commitment to support maximum employment. Its last statement in July lacked such a statement. CHEMS WILL WAIT BEFORE RATES TRIGGER RECOVERY IN DURABLESChemical producers will have to wait before lower rates cause a recovery for demand in durable goods and housing. Both are key end markets for polymers such as polypropylene (PP), nylon, acrylonitrile butadiene styrene (ABS) as well as chemicals used to make polyurethanes, such as isocyanates, polyols and propylene oxide (PO). Huntsman said the lag is typically about two quarters. Ultimately, mortgage rates will need to approach 5% before markets for homes and durable goods can recover, according to Dow. Higher rates had made housing and durable goods like furniture and appliances less affordable. Because fewer consumers are buying homes and moving, they are purchasing fewer durable goods. LOWER RATES TEND TO BOOST OIL, CHEM PRICESTypically, prices for oil and other dollar-denominated commodities tend to rise as US interest rates fall. A rise in oil prices typically causes those for petrochemicals to increase. Margins for US-based producers benefit from higher oil prices because their plants predominantly rely on gas-based feedstock. By contrast, much of the world relies on oil-based naphtha, giving US producers a cost advantage. FIRST CUT IN MORE THAN FOUR YEARSThe last time the Federal Reserve lowered interest rates was in March 2020, during the COVID-19 pandemic. Lockdowns, government stimulus and recovery caused a surge in inflation, which led the Federal Reserve to begin raising the benchmark rate two years later in what became the most aggressive tightening campaign in more than 40 years. The Fed stopped raising the rate in July 2023. A year later, inflation started showing signs of approaching the Fed's target of 2%. At the same time, the labor market began cooling off and returning to more normal levels. Focus article by Al Greenwood Thumbnail shows money. Image by ICIS.

18-Sep-2024

Events and training

Events

Build your networks and grow your business at ICIS’ industry-leading events. Hear from high-profile speakers on the issues, technologies and trends driving commodity markets.

Training

Keep up to date in today’s dynamic commodity markets with expert online and in-person training covering chemicals, fertilizers and energy markets.

Contact us

Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of chemicals industry experts to deliver a comprehensive market view based on trusted data, insight and analytics, supporting our partners as they transact today and plan for tomorrow.

Get in touch to find out more.

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