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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Propylene oxide (PO) news

PODCAST: China propylene capacity expected in H2; demand to also improve

SINGAPORE (ICIS)–Asia’s propylene (C3) market will continue to see new capacities coming from China in H2 2024, while demand is also likely to improve as new derivative projects come up. Margin challenges may continue to impact the market by altering the operations for C3 and its derivatives. As China is the largest producer and consumer globally, dynamics in the country will impact the wider Asia C3 market. In this podcast, ICIS senior analyst Joey Zhou discusses with ICIS analyst Seymour Chenxia the trends and outlook for Asia’s C3 market in 2024.


PODCAST: China PDH operators eye H2 by-product amid poor margins

SINGAPORE (ICIS)–Squeezed by high propane costs and weak propylene prices, some Chinese propane dehydrogenation (PDH) operators are turning to a potential lifeline: commercializing hydrogen, a valuable byproduct of their operations. Join ICIS LPG analysts Lillian Ren and Shihao Zhou as they discuss how commercializing hydrogen could turn the tide for China's PDH producers. They'll delve into current market challenges, the potential of hydrogen as a lifeline, and what this shift could mean for the future of the industry.


Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 28 June. US June propylene contracts rise on higher spot prices US June propylene contracts for the majority of market participants settled up 2 cents/lb on higher spot prices. US consumer confidence and ICIS leading business barometer fall in June US consumer confidence fell in June, as did the ICIS US leading business barometer (LBB). Aditya Birla Chemicals plans new US epoxy facility in Texas Aditya Birla Chemicals is planning to build a new epoxy facility in Beaumont, Texas, according to the company. Flat chemical prices to increase in coming quarters; volumes booming – US HB Fuller Most chemical prices have stabilized, and a few are posting small rises, a trend which should strengthen in coming quarters as global manufacturing picks up, executives at US-headquartered adhesives producer HB Fuller said on Thursday. SHIPPING: Panama Canal increases drafts, to add another transit slot on 5 August The Panama Canal Authority (PCA) has increased the maximum allowable draft to transit the Neopanamax locks effective immediately, announced that another increase will take effect on 11 July, and will add an additional booking slot in the Neopanamax locks during Booking Period 2 for booking dates beginning 5 August.


India’s GAIL to build $7.2bn Madhya Pradesh petrochemical complex

MUMBAI (ICIS)–State-owned GAIL (India) Ltd plans to invest Indian rupee (Rs) 600 billion ($7.2 billion) to build an ethane cracker and its derivative plants in Madhya Pradesh. The cracker will have a 1.5 million tonne/year capacity and will be set up at Ashta in the Sehore district of the state in central India, GAIL said in a regulatory disclosure to the Bombay Stock Exchange (BSE) on 10 June. GAIL did not provide product or capacity details of the ethylene derivatives it plans to produce at the complex. “Around 800 hectares of land shall be provided by the MP [Madhya Pradesh] Industrial Development Corporation, for which the state government has already initiated the process,” GAIL said. Project construction is expected to begin by February 2025, with commercial production likely in the financial year ending March 2031, it added. Investment on the project is still pending approval from GAIL management board, and the mode of financing yet to be decided. The Madhya Pradesh state government has approved the project and land will be allotted soon, state chief minister Mohan Yadav had said in a statement on 7 June. He said that “petrochemicals like linear low density polyethylene (LLDPE), high density polyethylene (HDPE), mono ethylene glycol (MEG) and propylene will be produced” at the site. The new project is part of GAIL’s initiative to enhance its petrochemical portfolio, a company source said. “The demand for petrochemicals is increasing in the country, led by expanding industrial, construction and manufacturing,” he said, citing an 8-9% annual growth rate in India’s polymer demand. In March 2024, GAIL had signed a tripartite agreement with Oil and Natural Gas Corp (ONGC) and Shell Energy India to explore opportunities for the import of ethane and other hydrocarbons at Shell Energy Terminal in Hazira in the western Gujarat state. Separately, the company recently announced plans to set up liquid pipeline for ethylene (C2), propylene (C3) from Vijaipur to Aurai in the northern Uttar Pradesh state. At Pata in the same state, GAIL will begin operations at the 60,000 tonne/year PP plant by December 2024. At Usar in the western Maharashtra state, GAIL expects to begin operations at its 500,000 tonne/year propane dehydrogenation unit (PDH) and 500,000 tonnes/year polypropylene (PP) line by April 2025; and its 50,000 tonne/year isopropylene project by December 2025. In the southern Karnataka state, the company expects to bring on line its 1.25m tonne/year purified terephthalic acid (PTA) plant in Mangalore by March 2025. GAIL had acquired JBF Petrochemicals in June 2023 which allowed it to add PTA to its existing petrochemical portfolio. ($1 = Rs83.49) Focus article by Priya Jestin


APIC '24: Global energy transition to impact chemical feedstocks availability – consultant

SEOUL (ICIS)–The effect of the global energy transition will extend beyond energy sources and become more pronounced after 2030 – impacting the availability of petrochemical feedstocks, a senior industry consultant said on Thursday. "The energy transition is a very wide terminology, which actually goes well beyond energy and materials that will be used in the future," Stefano Zehnder, vice president of consulting at ICIS, told delegates at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea. This shift, he explained, will significantly affect the types of materials used in the future and this has important implications for the refining industry. "Oil demand alone does not describe the role of global refining," Zehnder said. Large-scale refining capacity rationalization is expected as refining operations become more exposed to fluctuations in fuel demand, he said. "As refining operation will become more and more exposed to the fuel side, they will be increasingly targeting the petrochemical feedstock area," Zehnder projects. Zehnder also presented a longer-term scenario projecting a substantial reduction in oil demand post-2030, driven by the increasing penetration of sustainable fuels. Despite the evolving energy landscape, "the refining industry remains the dominant provider of feedstock for the petrochemical industry", he said. "We don't think is going to change much into the future." "Post 2030, longer-term scenarios will envisage an important reduction of oil demand, accelerating the trends visible in the medium term," Zehnder added. Although the reduction size in demand will be function of specific assumptions on the key drivers of fuel demand, the impact on “conventional” refiners is likely to be even more pronounced. "This scenario implies a loss of 11 million barrels/day of crude processing. The main factor is [the] assumption related to sustainable fuels, with annual contributions from non-gas liquids (NGLs) gradually flattening." The shift away from fossil fuels to sustainable alternatives will also affect the production of petrochemical feedstocks that are traditionally derived from oil refining. Zehnder highlighted that this transition could lead to a shift in the availability of key feedstocks such as naphtha and propylene. Through to 2049, reducing refinery runs and gasoline yields will affect propylene availability from global refineries, Zehnder explained. "As FCC capacity will decline, higher propylene yields will be required." During the same period, Zehnder noted, "SAF technologies can contribute to renewable naphtha availability, with bio/renewable also potentially contributing to renewable naphtha availability, including bio/renewable diesel to bunkers." Focus article by Nurluqman Suratman


APIC '24: Chemical plant closures to accelerate amid unprecedented oversupply

SEOUL (ICIS)–Announcements of chemical plant closures are expected to gain momentum throughout 2024 as the industry now realizes that demand will not improve measurably anytime soon to offset languishing margins, a senior industry analyst said on Thursday. Speaking at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea, ICIS vice president of chemical analytics Alex Lidback said that "margins for most products are suffering”. Lidback that demand is still growing for base chemicals overall but noted that the growth is slowing. "It’s very difficult to grow your way out of this [excess capacity]," he said. Global base chemical demand growth Lidback attributed the current market woes to excess capacity additions in recent years, particularly in China, resulting in persistent excess capacity in base chemicals such as ethylene, propylene, ethylene glycol, paraxylene (PX), and styrene. "The over-capacity is unprecedented – unless there are extensive shutdowns, the market will not rebalance most products anytime soon," Lidback said. "Major capacity shutdowns will take place when companies decide not to maintain existing assets and delay FIDs [final investment decisions]." This glut of supply has severely eroded profit margins, pushing many producers into the red. “If you go back to previous down cycles, China helped grow out of this excess capacity,” Lidback noted. The situation is different this time around, as China is no longer able to absorb the excess capacity, adding that the imports of base chemicals have declined by 12 million tonnes from 2020 to 2023, he said. China's imports "Growing out of this excess capacity state will take too long, China will not be the savior," Lidback said. The industry will need to make some difficult decisions to rebalance the market, including permanent plant closures, project delays, and even cancellations. “So, what we think is gonna happen over the next few years is starting this year is we're gonna start to see the announcements of permanent closures." While low-cost assets in the Middle East and North America are secure, higher-cost producers in other regions are vulnerable, the ICIS analyst said. Several factors have delayed necessary decisions, including the financial stability of many companies entering the downturn, the integration of some chemical firms with refining operations that benefited from favorable crack spreads, and the lingering hope of a strong demand rebound. "A lot of companies entered this down cycle in a pretty good financial state, which allowed them to ride the wave a little bit further through these tough margins," Lidback said. However, the anticipated demand recovery has not materialized. Lidback recalled the optimism that followed a strong first half of 2022, but noted that the second half was "terrible," and that the hoped-for improvement in 2023 had not occurred. "The hope was that the first half of 2023 would be slow, but the second half of 2023 would be a very strong demand year. Obviously, that didn't just transpire, and we haven't seen really any major improvement in 2024." Lidback also pointed to the high cost of capital as a factor that is making it more difficult for companies to invest in new projects. “It’s a lot harder with these types of interest rates in reverse sitting around 7%. And I’ll tell you that for FIDs, you go to a [management] board right now and ask for a project – that’s going to be really difficult." Focus article by Nurluqman Suratman


APIC '24: PODCAST: China PP exports to weigh on SE Asia on ample C3 supply

SINGAPORE (ICIS)–Ample propylene (C3) supply in Asia and new downstream polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Asia C3 to lengthen after propane dehydrogenation (PDH) units restart in China; SE Asia volumes China PP exports to weigh on SE Asia discussions Asia PP prices to come under pressure in June-July In this podcast, ICIS editors Julia Tan, Jackie Wong and Lucy Shuai discuss current trends in Asia's propylene and PP markets, and what we can expect going forward. (This podcast first ran on 16 May.) Visit us at Booth 13, Grand Ballroom Foyer of the Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.


APIC '24: PODCAST: Asia C3 derivative demand still slow amid uncertainty

SINGAPORE (ICIS)–Asia's oxo-alcohols buyers maintained a wait-and-watch approach on the market amid possibility of added plant capacities in China. The acrylonitrile (ACN) market continues to see limited spot demand in northeast Asia. Even with recent higher production rates at downstream acrylonitrile-butadiene-styrene (ABS) plants, ACN producers were unlikely to increase operating rates. For the acrylates downstream, butyl-A market in Asia continues to take direction from Chinese domestic prices. With India's Bureau of Indian Standards (BIS) requirements preventing Chinese-origin imports, cargoes from China were flowing into southeast Asia and northeast Asia. In this podcast, ICIS editors Julia Tan and Corey Chew discuss trends in the Asia propylene (C3) and derivatives markets. (This podcast first ran on 15 May.) Visit ICIS during APIC ’24 on 30-31 May at Booth 13, Grand Ballroom Foyer of the Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.


APIC '24: PODCAST: Weak demand persists for Asia propylene, downstream PO

SINGAPORE (ICIS)–Asia's propylene market will continue to see weak demand, although potential curbs in plant run rates in China amid weak margins could lend market support. Downstream, China’s propylene oxide (PO) import demand may continue to be adversely impacted by domestic start-up capacities, while demand in the main downstream polyols sector is unlikely to recover in the second quarter. South Korea June-loading propylene volumes likely to increase month on month Domestic Chinese PO start-ups to keep domestic supply lengthy, hampering import demand Global PO supply ex-China remains tight; downstream polyols likely muted in Q2 In this chemical podcast, ICIS editors Julia Tan and Shannen Ng discuss trends in the Asian propylene and PO markets. (This podcast first ran on 9 May.) Visit ICIS during APIC ’24 on 30-31 May at Booth 13, Grand Ballroom Foyer of the Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.


Proman Stena Bulk launches methanol-fueled chemical tanker in Singapore

SINGAPORE (ICIS)–Proman Stena Bulk, a joint venture between Sweden-based tanker firm Stena Bulk and Swiss methanol producer Proman, on Thursday officially launched its sixth methanol-fueled joint venture chemical tanker in Singapore. The 49,900-deadweight tonnage (DWT) vessel called Stena Prosperous will be bunkered with a 20:80 green methanol and conventional methanol blend, they said in a joint statement. The fuel blend used by the vessel delivers carbon dioxide equivalent (CO2e) savings of 31% compared with a ship that runs on Very Low Sulphur Fuel Oil (VLSFO), with lower emissions of particulate matter (PM), sulphur oxides (SOx), and nitrogen oxides (NOx). Stena Prosperous is the last of six vessels in Proman Stena Bulk’s joint venture fleet of methanol-fueled tankers order placed in 2019, with the first ship delivered in June 2022. “With its cleaner burning qualities, methanol delivers immediate air quality benefits today, and the pathway demonstrated by our 20/80 blending strategy here in Singapore means that ship owners are also increasingly seeing it as a viable marine fuel for the future,” Proman CEO David Cassidy said. All six vessels running on methanol are now in commercial operation, with two on long-term time-charter. The fleet is currently crewed and operated by Stena Sphere company Northern Marine Group, which has highlighted that technical similarities of the tankers to conventionally fueled vessels mean they do not require a completely new set of operating procedures. Using methanol instead of conventional marine fuels virtually eliminates particulate matter and SOx, and cuts NOx by up to 80% during combustion. Technologies such as carbon capture, storage and utilization used in the production process cut emissions further, and green methanol produced from biogas can bring more than 90% greenhouse gas (GHG) emissions savings. Additional reporting by Keven Zhang


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