Propylene oxide (PO)

SAO PAULO (ICIS)–Storm Francine continues strengthening into a hurricane as it approaches the southern costs of the US, but its path could veer slightly west and potentially hit key petrochemicals sites in Louisiana which border with Texas. According to a Tuesday morning update from the US’ National Hurricane Center (NHC), the storm is to become a hurricane when it makes landfall later in the day, although it should weaken soon after that as it heads north. On Monday, the NHC already said the storm would develop into a hurricane, but its forecasted trajectory then was to hit central parts of Louisiana – including New Orleans – but not the industrious western part of the state. Louisiana has declared a state of emergency; the state has just commemorated the 19th anniversary of Hurricane Katrina, which brought havoc to New Orleans’ outer and poorer suburbs from which many are still recovering. If the current, Tuesday morning forecast holds, key petrochemicals-heavy municipalities in Louisiana such Plaquemine, Geismar, Baton Rouge, and Taft, among others, could be hit by Francine’s gusts. Companies such as Methanex or CF Industries, with production facilities in the areas, had not responded to a request for comment about their hurricane preparations at the time of writing. “Francine is moving toward the north-northeast near 8 mph (13 km/h).  A turn to the northeast with an increase in forward speed is expected later today or tonight.  On the forecast track, Francine is anticipated to be just offshore of the coasts of northeastern Mexico and southern Texas through this [Tuesday] afternoon, and then move across the northwestern Gulf of Mexico, making landfall in Louisiana on Wednesday,” said the NHC. “After landfall, the center is expected to move into Mississippi on Wednesday night or Thursday. Maximum sustained winds are near 65 mph (100 km/h) with higher gusts. Strengthening is expected through Wednesday morning, and Francine will likely become a hurricane later today or tonight [Tuesday]. Francine is expected to weaken quickly after landfall.” CHEMICALS, OIL, GASLouisiana is home to many large petrochemical hubs that produce polyolefins, polyvinyl chloride (PVC), caustic soda, ethylene oxide (EO), ethylene glycol (EG), isocyanates, polyols, and ammonia among many others. The state has numerous refineries. Several offshore oil wells are off of the coast of Louisiana. Companies will often evacuate them and shut-in oil wells – majors such as Shell or ExxonMobil have announced so. The Gulf of Mexico accounts for about 14% of total US crude production and 5% of dry gas production, according to the country’s Energy Information Administration (EIA). The state is home to the Louisiana Offshore Oil Port (LOOP), the only deepwater oil port in the US. If the port shuts down, then the US would lose an important outlet for oil exports. That could offset some of the shut-in wells. Louisiana is also home to two large terminals that export liquefied natural gas (LNG) in the western part of the state. Sabine Pass LNG is in Sabine, Louisiana, and Cameron LNG is in Hackberry, Louisiana. Any shutdowns could affect domestic natural gas markets if the terminals spend too much time offline. Domestic gas supplies could build up, causing local prices to fall. Prices for ethane, the predominant feedstock for ethylene production, typically follow those for natural gas. Ethane prices could fall further if Francine disrupts operations at any of the crackers in Louisiana. LOUISIANA VS TEXAS IMPACTResidents of the Gulf Coast, from Mexico's Yucatan peninsula to the US' state of Alabama, are well accustomed to living with extreme weather events. In times of storms and hurricanes, many turn to specialized sites such as Space City Weather, which on Tuesday did not seem too worried for the fate of Texas – more so about Louisiana's. Space City Weather's main analyst, Houston-based Eric Berger, reiterated on Tuesday the hurricane will be "no joke" in Louisiana, even if for many Texans it will have looked like more like “a regular late" summer day. “The tropical system will remain well offshore from Texas, and effects for most of our area will be minimal. In fact, I would go so far as to say that by tomorrow [Wednesday] people in Houston will be going, ‘Hurricane? What hurricane. This was a joke.’ Well, people who didn’t know better will be thinking that at least — but not readers of this site,” said Berger. “Francine will not be a joke for southern Louisiana. The tropical storm has sustained winds of 65 mph and is likely to move inland Wednesday afternoon or evening as a Category 2 hurricane. The state’s most populated area, from Baton Rouge to New Orleans, will be directly impacted with winds, rains and storm surge.” The analyst concluded saying that for the most part Houstonians will not be able to tell a hurricane is passing offshore on Tuesday and Wednesday. “Skies will be mostly cloudy, with highs in the mid-80s [degrees Fahrenheit, around 29°C], which is cooler than normal for this time of year,” said Berger. “Perhaps that’s our greatest takeaway from this storm, some slightly cooler days. I’m not complaining.” Source: US National Hurricane Center

10-Sep-2024

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

02-Sep-2024

SINGAPORE (ICIS)–Saudi Arabian producer Methanol Chemicals Co's (Chemanol) specialty chemicals subsidiary Madarat Al-Dhara Chemicals Co has signed an agreement to secure a long-term supply of ethylene oxide (EO) from Sadara Chemical Company. The EO supply is intended for Madarat Al-Dhara's methyl diethanolamine (MDEA) and choline chloride projects, Chemanol said in a filing to the Saudi bourse, Tadawul, on 29 August. Details on cost and volume of the EO supply deal were not disclosed. "Chemanol aims to become one of the largest producers of specialty petrochemicals in the region given that all targeted products would be the first of their kind in the region," the company said. Financial and capacity details of the MDEA and chlorine chloride projects were not disclosed. "Such products would be used in many vital and strategic industries such as oil and gas Industry, nutrition additives industry, extraction of environmental harmful gases, carbon capture and storage technologies and others." MDEA is crucial for gas purification, while choline chloride plays roles in animal nutrition, chemical processes, and industrial applications. In May, Chemanol completed its Saudi riyal (SR) 80 million ($21 million) acquisition of an 80% stake in Global Company for Chemical Industries (GCI), a specialty and fine chemicals manufacturer. The company is aiming to expand its specialty chemicals market share and diversify its product offerings.

30-Aug-2024

SAO PAULO (ICIS)–Argentina’s petrochemicals players are in a wait-and-see mode about the effects a cut to import tariffs announced this week could have in the market and whether it will lower prices which, for many materials, remain higher than global prices. Earlier this week, the Argentinian cabinet said it would cut the so-called PAIS tax from 17.5% to 7.5% from 2 September. Introduced in 2012, the PAIS acronym responds to the name Tax for an Inclusive and Solidary Argentina (Impuesto Para una Argentina Inclusiva y Solidaria) and was presented by the at the time left-leaning administration as a tax on purchases of foreign currency. In practice, given that most imports are priced in dollars, the tax ended being practically an import tariff and contributed to Argentina becoming one of the most closed economies to trade in the world. President Javier Milei, in office since December 2023, has promised to turn the system upside down and make the Argentinian economy a bastion of liberalism. The cabinet’s intention is to end import tariffs altogether. The minister for the economy, Luis Caputo, has been quoted in the Argentinian press as saying the country should be “moving forward in the elimination of all export duties, a perverse tax that we do not like and hinders” Argentina’s economic progress. PETROCHEMICALS MUST WAITThis week, sources in Argentina, who have been reporting higher prices for several materials compared to the rest of the world for months, were sceptical of any quick effect from the cut to the PAIS tax. Some estimated, however, that the lower rates could slash petrochemicals import prices, on average, by $200/tonne. Most sources also mentioned the example of Dow, which is the sole polyethylene (PE) producer in Argentina and has greatly benefited from the closed economy up to now. Petrochemicals and the wider industrial sectors, including construction, remain the hardest hit industries amid the country’s recession, which is trying to digest the ‘shock therapy’ being implemented by the government. Consumers are squeezed and few can afford the luxury of even thinking about purchasing the higher-priced, petrochemicals-intensive durable goods, which are the ones which could revive the beleaguered chemicals industry. Moreover, those with stocks of materials purchased in imports under the previous PAIS rates are unlikely to lower their prices until they sell them – that period could be a few weeks or a few months. “Plastic sales remain weak because people think prices will go down with the tax reduction. But I am not convinced the reduction will be immediate and all at once. Prices could only come down once the new imports under the new regime come into force,” said one source at a large distributor. “It will be slow process, over one or two months – we will have to see how petrochemicals producers react and whether they start lowering prices straight away or do it in phases.” This source and others said Dow announced to its customers in Latin America prices increases of around $100/tonne for most materials, although that increase was not applied in Argentina, said the distribution source. Dow is Argentina’s sole producer of polyethylene. It operates facilities at the Bahia Blanca petrochemicals hub, south of Buenos Aires. According to ICIS Supply & Demand, it has the capacity to produce 730,000 tonnes/year of ethylene, 307,000 tonnes/year of high density polyethylene (HDPE), 329,000 tonnes/year of linear low density polyethylene (LLDPE), and 40,000 tonnes/year propylene. As the sole PE producer in a country locked up to external trade, Dow has greatly benefited in the past two months. Sources reported earlier in the year the company was selling PE at $2,400/tonne, when global prices stood at around $1,200/tonne. The price increase announced earlier in the year added more doubts to the company pricing strategy. Dow had not responded to a request for comment at the time of writing. The source at the large distributor added, “Dow’s $100/tonne increase was not implemented it in Argentina as prices remain higher than global prices. “If the reduction in the PAIS tax brings a reduction of $200/tonne, for example, perhaps Dow first decides to raise prices by $100/tonne and then take the $200/tonne hit and see what the market’s reaction is. Right now, we do not know how it will play out.” STAYING PUTAnother source at a petrochemicals distributor, with decades of experience behind him, described the largest recession it has seen in its career. In such an environment, he went on to say, prices should go down to prop up demand, at least, according to economy theory. But Argentina, it added, has escaped economy theory often in past decades so nothing can be taken for granted. The source even added that it was mulling whether to attend an industry event next week in Buenos Aires, just in case a business opportunity is lost while it attends the conference. On 4 September, the Latin American Petrochemical and Chemical Association (APLA) is holding its annual conference on sustainability, which together with its logistics event and the annual event are the three highlights in the Latin American petrochemicals markets. “There is a strong, very strong recession, and we have to be very attentive to each business that emerges in order to be on the edge of not losing the opportunity or do a bad sale,” said the source. Font page picture source: Shutterstock Focus article by Jonathan Lopez

29-Aug-2024

HOUSTON (ICIS)–Canada plans to impose a 100% tariff on all electric vehicles (EVs) made in China, effective on 1 October, and on top of the 6.1% tariff it already imposes on such automobiles, the government said on Monday. The tariff includes electric and certain hybrid passenger automobiles, trucks, buses and delivery vans, the government said. In addition, the government plans to impose a 25% tariff on imports of steel and aluminum products from China, effective on 15 October. The tariffs will not apply to Chinese goods in transit on the day that the duties come into force. Canada could impose more tariffs against other Chinese imports following a 30-day review, it said. Those imports could include batteries and battery parts, semiconductors, solar products and critical minerals. For other countries, Canada plans to limit which ones are eligible to participate in its Incentives for Zero-Emission Vehicles (iZEV), Incentives for Medium and Heavy Duty Zero Emission Vehicles (iMHZEV) and Zero Emission Vehicle Infrastructure Program (ZEVIP). Eligibility would be limited to products made in countries with which Canada has negotiated free trade agreements. CANADA'S EV DUTIES FOLLOW THOSE BY US AND EUEVs made in China have become the target of punitive duties by a growing number of regulators. Earlier in the month, the European Commission announced plans to impose up to 36% countervailing duties on EVs from China. US tariffs on Chinese EVs were scheduled to reach 100% on 1 August. EVs typically consume more plastics on a per unit basis than automobiles powered by internal combustion engines (ICEs). EVs also pose different material challenges, which is increasing demand for different plastics and compounds. Policies that prolong the use of ICE-based vehicles could extend the operating life of the nation's refineries. Companies could be more willing to invest in maintenance and repairs if they are confident that they could recoup their investments. Refineries produce many building block chemicals, such as propylene, benzene, toluene and mixed xylenes (MX). Thumbnail shows an EV charging station. Image by Xinhua/Shutterstock

26-Aug-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 9 August. Europe propylene glycol ethers market to focus on imports until year end A balanced propylene glycol ethers market in Europe is widely expected to continue for the remainder of the year with the focus to remain heavily on changes in supply. Supply changes to drive European ethanolamines market into the autumn Supply changes are expected to remain the driving force in the European ethanolamines market for the remainder of the year. Europe ACN market to see seasonal demand shift in H2 2024 Evolving geopolitics-led supply chain developments and the macroeconomic picture will dominate changes to supply and demand in the European acrylonitrile (ACN) market in H2 2024. Europe methanol run rates to remain low to counterbalance demand European methanol demand is likely to remain stable in the second half of 2024, with limited recovery in derivative markets expected. Europe chems stocks tumble amid global sell-off on US economic fears Chemical stocks in Europe slumped in early trading on Monday after a market rout in Asia following bearish US economic data at the end of last week prompted fears of a slowdown.

12-Aug-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 9 August 2024. INSIGHT: The future of gasoline demand under India’s new fuel efficiency norms By Man Yiu Tse 08-Aug-24 12:00 SINGAPORE (ICIS)–India’s newly proposed Corporate Average Fuel Efficiency (CAFE) norms for passenger cars until 2037 will drive a significant shift towards compressed natural gas (CNG), hybrid, and electric passenger cars, reducing the dominance of gasoline models and influencing the long-term trajectory of gasoline demand. OUTLOOK: Asia Group I base oils supply constraints to persist in H2 amid demand uptick By Michelle Liew 08-Aug-24 11:03 SINGAPORE (ICIS)–Asia's Group I base oils supply, especially for heavy neutrals, is expected to remain tight in H2 2024 despite subdued demand, which may pick up towards September. PODCAST: China's Third Plenum signals optimism for Asia's propylene markets By Damini Dabholkar 08-Aug-24 00:32 SINGAPORE (ICIS)–The third plenary session of the Chinese Communist Party (CCP) Central Committee recently concluded in July, with the CCP underlining the country’s long-term economic strategy. This session, a significant event in China’s economic planning, serves as a guide for both immediate and long-term policies. OUTLOOK: Asia mixed xylenes market could continue to face headwinds By Jasmine Khoo 07-Aug-24 10:44 SINGAPORE (ICIS)–Mixed xylenes (MX) in Asia for both the isomer and solvent grades are expected to continue facing headwinds from various market factors. Asia shares rebound after sharp losses, oil prices rise more than $1/barrel By Nurluqman Suratman 06-Aug-24 18:32 SINGAPORE (ICIS)–Asian shares rebounded on Tuesday, staging a relief rally after historic losses the previous day, as fresh US economic data for July alleviated recession fears.

12-Aug-2024

SINGAPORE (ICIS)–The third plenary session of the Chinese Communist Party (CCP) Central Committee recently concluded in July, with the CCP underlining the country’s long-term economic strategy. This session, a significant event in China’s economic planning, serves as a guide for both immediate and long-term policies. Market balance healthier than expected on delays in capacity additions No specific stimulus policies announced, market participants eye 5% GDP target Market sentiment generally supported by Third Plenum Senior Editor Julia Tan speaks with Senior Analyst Joey Zhou on what China's Third Plenum could mean for Asia's propylene markets.

07-Aug-2024

HOUSTON (ICIS)–Avient has raised its 2024 guidance for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) following stronger-than-expected Q2 results: New 2024 guidance Previous 2024 guidance 2023 Adjusted EBITDA $515-540 million $510-535 million $501.8 million In the second quarter, Avient saw broad-based 5% organic sales growth in both of its segments: Color, Additive & Inks (CAI), and Specialty Engineered Materials (SEM). Both segments gained market share and benefited from inventory restocking in certain end-markets, CEO Ashish Khandpur and CFO Jamie Beggs told analysts during Avient’s Q2 earnings call on Tuesday. Tight cost control and raw material price deflation helped expand the adjusted EBITDA margin by 100 basis points year on year to 16.9% in the second quarter, they said. The better-than-expected performance was led by CAI, which saw improved demand and favorable raw material costs. MARKETS In terms of end-markets, growing sales into two of Avient’s largest markets, packaging (+8%) and consumer (+10%), had the greatest impact in the second quarter, said Khandpur. Both markets benefited from “some restocking”, particularly in Europe, he added. Sales growth in buildings and construction and healthcare was also strong. Although the macroeconomic indicators for building and construction remained weak, both the SEM and CAI segments gained market share and won new business in the US and Canada, Khandpur said. Meanwhile, destocking in the healthcare market has finally run its course, with Avient’s sales into that market up 10% year on year in the second quarter. Sales into the defense end-market continued to be driven by the global conflicts and certain NATO programs, with full-year sales growth expected in the low double digits, he said. The telecommunications and energy markets, which together account for about 7% of Avient’s total sales, however, remained “challenged”, with sales down in the double digits in the second quarter as customers reduced inventories. Telecommunications should improve in the second half as demand in the US has started to improve more recently, Khandpur said. In energy, Avient is seeing improving trends in the third quarter, in particular for applications designed to improve the reliability of the electrical transmission grid, he said. Artificial intelligence (AI) was raising electricity consumption, driving demand for electricity generation and distribution, with positive derivative effects on the materials Avient supplies to energy markets, he noted. Electric mobility and electrification are happening, and Avient aims to “become part of those fast-growing markets”, he added. LATIN AMERICA OPPORTUNITY Avient’s sales in Latin America grew by 19% year on year in the second quarter, driven by sales into the region's packaging market. That market saw strong demand in food & beverage and cleaning applications on the back of the recent floods in Brazil, as well as high temperatures and drought conditions in Mexico. Latin America currently accounts for only about 6% of the company’s total sales. However, going forward, Avient expects its Latin American packaging business to benefit from the near-shoring trend. The company’s position in the region is “strategic”, allowing it to serve original equipment manufacturers (OEMs) and brand owners who are looking to near-shore production and supply chains in light of global trade conflicts and political uncertainties, Beggs noted. RAW MATERIALS Avient realized about $35 million in raw material price deflation in the first half of 2024, Beggs said. However, the company does not expect this benefit to be repeated in the second half as it has started to see “modest levels of inflation” across the majority of its raw materials, including polyethylene (PE) and polypropylene (PP), as well as pigments and certain performance additives, she said. Primary raw materials used in Avient’s manufacturing operations include polyolefin and other thermoplastic resins, titanium oxide (TiO2), inorganic and organic pigments, specialty additives and ethylene. The executives did not comment on the current stock market turmoil and analysts on Tuesday’s call did not ask about this. Thumbnail photo of Avient CEO and president Ashish Khandpur; photo source: Avient

06-Aug-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 2 August. Freight headache distracts from Europe’s PE, PP existential crisis Europe may be insulated from ballooning global supply of polyethylene (PE) and polypropylene (PP) in the second half of 2024, as spiking Asian freight costs are the latest pain point to disrupt trade flows. Balanced to tight conditions could persist for Europe BD in H2 2024 European butadiene (BD) market fundamentals are likely to remain in a balanced to tight position for much of the remainder of 2024. Europe base oils Group II/Group III expectations heavily dependent on import logistics for H2 The European Group II and Group III outlooks for the second half of 2024 center strongly on imports, with several logistical issues across the globe throwing some uncertainty onto the markets. Europe H2 ethylene, propylene won't be a repeat of H2 2023, may be better than expected The second half of 2024 is looking brighter for Europe olefins markets compared to the same periods in 2022 and 2023. No demand crashes are expected, and there are several supportive factors that could make H2 2024 better than initially anticipated. Europe PVC uncertainty continues on weak demand, new antidumping charges on imports The European polyvinyl chloride (PVC) market faces a period of uncertainty in H2 2024, compounding the difficulties in long-term outlook since the coronavirus pandemic began in 2020, and only slightly mitigated by antidumping charges for US and Egyptian imports.

05-Aug-2024