Propylene

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

30-May-2024

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

30-May-2024

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.

29-May-2024

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.

28-May-2024

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.

27-May-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 17 May 2024. Asia melamine makers grapple with increased costs, slowing demand By Joy Foo 17-May-24 11:53 SINGAPORE (ICIS)–Asia’s melamine spot market for China-origin product was largely stable in the first half of May, even though feedstock urea prices continued to rise, but demand may weaken for the rest of the month. Singapore's April petrochemical exports rise 26.5%; NODX down 9.3% By Nurluqman Suratman 17-May-24 10:45 SINGAPORE (ICIS)–Singapore's petrochemical shipments rose by 26.5% year on year in April to Singapore dollar (S$) 1.34 billion, reversing the 3.6% decline in the previous month, official data showed on Friday. PODCAST: China PP exports to weigh on SE Asia on ample propylene supply By Damini Dabholkar 16-May-24 21:55 SINGAPORE (ICIS)–The ample supply of propylene in Asia and new polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Tanker incident triggers rate hike on South Korea-Japan trades By Hwee Hwee Tan 16-May-24 11:28 SINGAPORE (ICIS)–The intra northeast Asia tanker market is expected to remain stable despite recent volatility in South Korea-Japan chemical freight rates, following a fatal tanker incident off Japan’s west coast. US hikes tariffs on $18bn worth of China imports, including EVs By Nurluqman Suratma 15-May-24 12:20 SINGAPORE (ICIS)–US President Joe Biden is ramping up tariffs on $18 billion worth of imports from China, including electric vehicles (EVs), semiconductors, batteries and other goods, in a move that the White House said was a response to unfair trade practices and intended to protect US jobs. Asia polyester discussions stable amid reduced supply, lower feedstock prices By Judith Wang 14-May-24 14:55 SINGAPORE (ICIS)–Asia’s polyester export discussions were little changed as the pressure of reduced supply in China was balanced out by weaker feedstock prices.

20-May-2024

MUMBAI (ICIS)–State-owned GAIL (India) Ltd plans to lay an ethylene/propylene (C2/C3) liquid pipeline from its gas processing complex at Vijaipur in the central Madhya Pradesh state to its Pata petrochemical complex at Auraiya in the northern Uttar Pradesh state. “The project will augment feedstock availability with additional polymer production at Pata Petrochemical Complex, reduce energy consumption and carbon footprint,” the company said in the notes accompanying its fiscal Q4 results. GAIL’s financial year ends in March. The proposed project is expected to cost Indian rupees (Rs) 17.9bn ($215m) and will be commissioned within 32 months, it said. Once operational, the pipeline will have the capacity to transport 950,000 tonnes/year of liquid feedstock to the Pata complex, it added. GAIL reported on 16 May a near-fourfold jump in net profit for the fourth quarter ending 31 March 2024 to Rs21.8bn, from Rs6.0bn in the same period last year. For the full fiscal year 2023-24, GAIL’s net profit increased by 67% year on year to Rs88.4bn. “The robust performance during the year was primarily driven by better physical performance across all major segments, despite lower prices in petrochemicals and liquid hydrocarbons,” GAIL managing director and chairman Sandeep Gupta said. GAIL currently operates a 200,000 tonne/year high density polyethylene (HDPE) plant; two linear low density polyethylene (LLDPE)/HDPE swing plants with capacities of 230,000 tonnes/year and 400,000 tonnes/year; and a 10,000 tonne/year butene-1 line at its Pata complex. The company is also setting up a 60,000 tonne/year polypropylene (PP) unit at the complex which is expected to come on stream in the current calendar year 2024. ($1 = Rs83.45)

17-May-2024

SINGAPORE (ICIS)–The ample supply of propylene in Asia and new polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Asia C3 to lengthen after PDH restarts 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. Visit us at Booth 13 at the Grand Ballroom Foyer at the Grand InterContinental Seoul Parnas! Book a meeting with ICIS here.

16-May-2024

SINGAPORE (ICIS)–Asian oxo-alcohols buyers maintained a wait and watch approach, amid the possibility of added plant capacities in China weighing on market sentiment. The acrylonitrile (ACN) market continues to see limited spot demand in the northeast Asia market. Even as downstream acrylonitrile-butadiene-styrene (ABS) has seen higher production rates recently, 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 SE Asia and NE Asia. In this podcast, ICIS editors Julia Tan and Corey Chew discuss trends in the Asia propylene and derivatives markets. Visit ICIS during APIC ’24 on 30-31 May at Booth 13 in the Grand Ballroom Foyer in the Grand InterContinental Seoul Parnas. Book a meeting with ICIS here.

15-May-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 10 May. Europe propylene supply rebalancing on derivative restart, cracker issues Propylene spot supply is returning to a more balanced position with a key derivative unit now back on stream and a couple of cracker issues disrupting output. Europe businesses face tough market and regulatory hurdles in long term – LyondellBasell Market conditions in Europe are likely to remain challenging in the long term while changing regulations are increasing costs for businesses, LyondellBasell Industries said on Thursday, after announcing a strategic review for most of its operations in the region. LyondellBasell launches review of European assets LyondellBasell has launched a strategic review of the bulk of its operations in Europe, the producer said on Wednesday, based on its strategy to focus on assets perceived to have long-lasting competitive advantage Chandra Asri aspires to become regional player with Shell Singapore purchase Chandra Asri is looking to develop its presence in southeast Asia and become a key regional player with its purchase of Shell’s refining and petrochemicals assets in Singapore alongside commodities major Glencore, the Indonesia-based firm said on Wednesday. IPEX: April index rises for fourth month in a row on firmer pricing in northwest Europe, northeast Asia The ICIS Petrochemical Index (IPEX) was up 1.5% in April month on month as production constraints continue to push contract prices up across some commodities, mainly in northwest Europe and northeast Asia. BASF puts ammonia, methanol, melamine plants up for sale at Ludwigshafen BASF has engaged plant sale specialists International Process Plants (IPP) to sell idled ammonia, methanol and melamine units located at its loss-making Ludwigshafen site in Germany.

13-May-2024