Purified terephthalic acid (PTA)

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As one of the key ingredients for manufacturing polyester fibres and bottle resin, purified terephthalic acid (PTA) is one commodity that remains in high demand in all the key production hubs around the globe. By keeping track of market fundamentals, price trends and activity in the sectors influencing downstream demand, market participants can make the most of opportunities as they arise. But it’s vital to act quickly.

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Purified terephthalic acid (PTA) news

PODCAST: H2 May acetic acid demand weighed by India inventories, China downstream weakness

SINGAPORE (ICIS)–In this podcast, ICIS editors Hwee Hwee Tan and Jady Ma discuss the current trends in Asia's acetic acid market. China demand softens on difficulty in passing on high costs to downstream users India inventory at multimonth high since end 2023 South Korea plant restart dents northeast Asia spot demand

24-May-2024

DuPont flags $60 million in dis-synergies from break-up, assures on PFAS liabilities

HOUSTON (ICIS)–DuPont expects about $60 million in dis-synergies from its break-up into three independent publicly traded companies, CEO Ed Breen and CFO Lori Koch told analysts in a conference call on Thursday. The US specialty chemicals and materials company announced late on Wednesday that it plans to separate its electronics and water businesses into two publicly traded companies while the existing DuPont, dubbed “New DuPont”, will continue as a diversified industrial company. The dis-synergies were largely related to insurance, audit fees, leadership and boards, that is, “public company stand-up costs”, Koch said. The dis-synergies were “not a huge number” and would be across all three companies, she said. As for separation costs, those are estimated at $700 million, with the biggest cost items being IT separation and tax, legal and audit work, she said. DIVESTMENT NOT RULED OUT While DuPont is pursuing spin-offs and is not running a parallel M&A processes for electronics and water, it does not entirely rule out divesting them. “If somebody wants to call and propose something, we are going to listen to it,” Breen said in response to analysts' questions. He also said that the water business, which is relatively smaller, may be spun off before electronics. The timing for the separations is good as markets are coming out of destocking cycles, Breen noted. Especially in semiconductors, “we are going into a real upcycle”, he added. DuPont has been working on the separation for about six months and expects to complete it within the coming 18-24 months, he said. The relatively long completion timeline is mainly due to tax matters as DuPont intends to execute tax-free separations, he said. In some of the countries where DuPont operating, a separated business must be run for a full 12 months before it gets tax-free status, Breen said. New DuPont, with annual sales of $6.6 billion, and the electronic spin-off (sales: $4.0 billion), are expected to have investment-grade balance sheets whereas the smaller water business (sales: $1.5 billion), may not, Koch said. PFAS As for DuPont’s liabilities for poly- and perfluoroalkyl substances (PFAS), those will be allocated between the three companies pro rata, based on their earnings before interest, tax, depreciation and amortization (EBITDA) in the last year before the spin-off, Breen said. The amount of PFAS liabilities may not be that large as DuPont expects to “make great progress” on settling claims by the time the spin-offs will be completed in 18-24 months, he said. BREEN’S NEW ROLE Breen will step down as CEO on 1 June, to be succeeded by Koch. However, he will continue as full-time executive chairman of DuPont’s board of directors, focusing on the separations, including the appointment of the spin-off companies’ boards and the hiring of their management teams. Breen would not rule out that he may join the boards of the electronics and water spin-offs but added that a decision has yet to be made. PROFILES OF THE THREE COMPANIES' MARKETS New DuPont, focused on healthcare, advanced mobility, and safety & protection: Electronics, focused on semi-conductors and interconnect solutions: Raw materials used by the electronic business include, among others, monomers, pigments and dyes, styrenic block copolymers, copper foil, filler alumina, nickel, silver, palladium, photoactive compounds, polyester and other polymer films, polyethylene (PE) resins, polyurethane (PU) resins, polyvinyl chloride (PVC) compounds and silicones, according to DuPont's website. Water, focused on reverse osmosis, ion exchange, and ultra filtration: Raw materials used by the water business include, among others, methyl methacrylate (MMA), styrene, polysulfone, high density polyethylene (HDPE), polyethylene (PE), aniline, calcium chloride, caustic and sulfuric acid, according to DuPont's website. DuPont's shares traded at $78.44/share, down 0.13%, at 11:00 local time on the New York Stock Exchange. With additional reporting by Al Greenwood Thumbnail photo source: DuPont

23-May-2024

BLOG: A personal view of the new petrochemicals world

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: Here is a personal view of where the petrochemicals world is heading with the conclusions or scenarios from today’s post detailed below (the debate is the thing as this is how we move forward together): The US chemicals industry (with benefits trickling down to Canada) continues to thrive thanks to the Inflation Reduction Act, tariffs and feedstock advantages. Local demand growth could surprise on the upside as local investments, especially in greener petrochemicals production, continue. Dow Chemical is, for example, pressing-ahead with its two-phase plans for developing its site at Fort Saskatchewan in Canada, involving lower-carbon capacity additions. It is also talking about building a lower-carbon cracker in the US Gulf later-on which would be “scrap and build” – shutting down an older higher-carbon cracker complex. Europe sees a new industrial master plan. It won’t be perfect, there will be lots of trial and error and the problems will remain of coordinating government policies across the 27 EU members, enforcing EU-level policies that are only directives rather than regulations and the complexity of policies (the EU Green Deal is some 40,000 pages long). But Europe moves towards unified electricity, plastic-waste and bio-feedstock markets that the Antwerp Declaration called for. Some capacities are rationalized. A combination of these shutdowns, more protection and more EU-wide coordinated support for green incentives return the industry to good profitability. Crucially as renewable electricity capacity increases, European energy and thus electricity costs decline. China’s chemicals demand grows at 1-3% per year, down from long-term historic growth rates of around 10% or more. This places major pressure on the big petrochemical exporters to China – South Korea, Singapore, Taiwan, the Middle East and on the US in these products – PE, PVC and MEG. Weaker-than-forecast Chinese demand growth combines with increased Chinese self-sufficiency. This reduces the size of import markets. As regards self-sufficiency, China pushes its operating rates higher in order to minimize imports in response to supply-chain insecurities arising from geopolitical tensions. But China’s petrochemicals exports struggle because of the increase in trade measures. China is a well-established major exporter in PVC, PTA, polyester fibres and PET bottle and fibre grades. More recently it became a major exporter in PP. Trade measures against China provide opportunities for other exporters. As petrochemicals markets become more regional, some of the big new export-focused petrochemicals projects come into question. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

23-May-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 17 May. Europe PET/PTA industry on high alert as freight costs soar Another shock to the logistics system is rippling through the European polyethylene terephthalate (PET) value chain but the impact is only so far just touching the surface. Europe oxo-alcohol spot prices face pressure from growing supply Prices in the European oxo-alcohols spot market were stable to lower this week as there is now plenty supply of all grades. IEA cuts 2024 crude forecast as OECD Q1 demand slips into contraction The International Energy Agency (IEA) on Wednesday cut its expectations for global crude oil demand growth as demand from the OECD shifted into contraction territory in Q1 and as refinery margins continued to slump into the spring period. Non-OPEC+ crude supply growth to slip in 2025, Latin America to drive non-OECD output – OPEC Increases in crude oil supplies from outside the OPEC+ bloc of countries is expected to decline slightly year on year in 2025, with the US and Canada expected to remain the backbone of OECD production increases and Latin America driving the rest of the world, according to OPEC. IPEX: Global spot IPEX slips as decline in Asia offsets gains in other regions, crude The global spot ICIS Petrochemical Index (IPEX) slipped 0.1%, as a fall in the northeast Asia index failed to offset gains in other regions and a rise in crude oil prices.

20-May-2024

PODCAST: Europe sulphur, sulphuric acid tightness key concerns for H2 2024

LONDON (ICIS)–It is rare to see sulphur or sulphuric acid take center stage in Europe when discussing a lack of feedstock for downstream petrochemicals – but the tight supply of both have been key talking points in Q1 and Q2. Senior editor for sulphuric acid, Andy Hemphill, and Julia Meehan, managing editor of ICIS Fertilizers, take a look at the origins of this current tightness and explore any options the industry has to counter it.

13-May-2024

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 3 April 2024. Asian BD discussions under pressure as buying slows down By Ai Teng Lim 03-May-24 11:06 SINGAPORE (ICIS)–Asian spot butadiene (BD) import discussions are slipping due to slowing demand, fueled by holiday closures this week and persistent external macroeconomic headwinds. SABIC Q1 net income falls 62%, warns of industry overcapacity By Nurluqman Suratman 02-May-24 10:55 SINGAPORE (ICIS)–SABIC's net income fell by 62% year on year to Saudi Riyal (SR) 250 million in the first quarter amid a drop in prices and sales volumes, the chemicals major said late on Wednesday. CHINAPLAS ’24: PODCAST: China's polymer industry targeting high-end products amid fierce competition By Zhibo Xiao 30-Apr-24 16:17 SINGAPORE (ICIS)–ICIS analysts Sijia Li, Yvonne Shi, Zhibo Xiao, Lucy Shuai, Joanne Wang and Cindy Qiu discuss the trends in China's polyolefins and polyester markets. China domestic acetic acid demand to weaken; sellers eye more exports By Jady Ma 30-Apr-24 11:25 SINGAPORE (ICIS)–China’s domestic acetic acid market may face headwinds from increased supply and weaker demand in May after generally firming up in April, while producers are exporting more volumes. Asia BPA makers will not increase run rates until margins improve By Li Peng Seng 29-Apr-24 12:25 SINGAPORE (ICIS)–Asian bisphenol A (BPA) makers are expected to stay entrenched in the months ahead despite falling Chinese imports, as they seek to combat firm feedstock costs. Saudi Aramco, Chinese Rongsheng plan liquids-to-chemicals JV in Jubail By Nurluqman Suratman 29-Apr-24 11:55 SINGAPORE (ICIS)–Saudi energy giant Aramco and Chinese Rongsheng Petrochemical are planning a joint venture liquid-to-chemicals expansion project in Jubail, Saudi Arabia.

06-May-2024

Besieged by imports, Brazil’s chemicals put hopes on hefty import tariffs hike

SAO PAULO (ICIS)–Brazilian chemicals producers are lobbying hard for an increase in import tariffs for key polymers and petrochemicals from 12.6% to 20%, and higher in cases, hoping the hike could slow down the influx of cheap imports, which have put them against the wall. For some products, Brazil’s chemicals trade group Abiquim, which represents producers, has made official requests for the import tariffs to go up to a hefty 35%, from 9% in some cases. On Tuesday, Abiquim said several of its member companies “are already talking about hibernating plants” due to unprofitable economics. It did so after it published another set of somber statistics for the first quarter, when imports continued entering Brazil em masse. Brazil’s government Chamber of Foreign Commerce (Camex) is concluding on Tuesday a public consultation about this, with its decision expected in coming weeks. Abiquim has been busy with the public consultation: it has made as many as 66 proposals for import tariffs to be hiked for several petrochemicals and fertilizers, including widely used polymers such polypropylene (PP), polyethylene (PE), polyethylene terephthalate (PET), polystyrene (PS), or expandable PS (EPS), to mention just a few. Other chemicals trade groups, as well as companies, have also filed requests for import tariffs to be increased. In total, 110 import tariffs. HARD TO FIGHT OFFBrazil has always depended on imports to cover its internal chemicals demand, but the extraordinary low prices coming from competitors abroad has made Brazil’s chemicals plant to run with operating rates of 65% or lower. More and more, the country’s chemicals facilities are becoming white elephants which are far from their potential, as customers find in imported product more competitive pricing. Considering this dire situation and taking into account that the current government in Brasilia led by Luiz Inacio Lula da Silva may be more receptive to their demands, Abiquim has put a good fight in publica and private for measure which could shore up chemical producers’ competitiveness. This could come after the government already hiked import tariffs on several products in 2023 and re-introduced a tax break, called REIQ, for some chemicals which had been withdrawn by the previous Administration. While Brazil’s chemicals production competitiveness is mostly affected by higher input costs, with natural gas costs on average five times higher than in the US, the industry is hopeful a helping hand from the government in the form of higher import tariffs could slow down the flow of imports into Brazil. As a ‘price taker region’ given its dependence on imports, Latin American domestic producers have taken a hit in the past two years. In Brazil, polymers major Braskem is Abiquim’s commanding voice. Abiquim, obviously, has always been very outspoken – even apocalyptic – about the fate of its members as they try to compete with overseas countries, namely China who has been sending abroad product at below cost of production. The priorities in China’s dictatorial system are not related to the balance of markets, but to keep employment levels stable so its citizens find fewer excuses to protest against the regime which keeps them oppressed. Capitalist market dynamics are for the rest of the world to balance; in China’s dictatorial, controlled-economy regime the priority is to make people feel the regime’s legitimacy can come from never-ending economic growth. The results of such a policy for the rest of the world – not just in chemicals but in all industrial goods – is becoming clear: unprofitable industries which cannot really compete with heavily subsidized Chinese players. The results of such a policy in China are yet to be seen, but subsiding at all costs any industry which creates employment may have debt-related lasting consequences: as they mantra goes, “there is no such thing as a free lunch.” Abiquim’s executive president urged Lula’s cabinet to look north, to the US, where the government has imposed hefty tariffs on almost all China-produced industrial goods or raw materials for manufacturing production. “[The hikes in import tariffs] have improved the US’ scenario: despite the aggressive advance in exports by Asian countries, the drop in US [chemicals] production in 2023 was of 1%, while in Brazil the index for production fell nearly by 10%,” said Andre Passos. “The country adopted an increase in import taxes of over 30% to defend its market from unfair competition. The taxation for some inputs, such as phenol, resins and adipic [acid], for example, exceeds three digits. “Here, we are suggesting an increase in rates to 20% in most claims … We need to have this breathing space for the industry to recover,” he concluded. As such, the figures for the first quarter showed no sign of imports into Brazil slowing down. The country posted a trade deficit $9.9 billion during the January-March period; the 12-month accumulated (April 2023 to March 2024) deficit stood at $44.7 billion. A record high of 61.2 million tonnes of chemicals products entered Brazil in Q1; in turn, the country’s industry exported 14.6 million tonnes. Abiquim proposals for higher import tariffs Product Current import tariff Proposed tariff Expandable polystyrene, unfilled, in primary form 12.6% 20% Other polystyrenes in primary forms 12.6% 20% Carboxymethylcellulose with content > =75%, in primary forms 12.6% 20% Other polyurethanes in liquids and pastes 12.6% 20% Phthalic anhydride 10.8% 20%  Sodium hydrogen carbonate (bicarbonate) 9% 35% Copolymers of ethylene and alpha-olefin, with a density of less than 0.94 12.6% 20% Other orthophthalic acid esters 11% 20% Other styrene polymers, in primary forms 12.6% 20% Other silicon dioxides 0% 18% Other polyesters in liquids and pastes  12.6% 20% Commercial ammonium carbonates and other ammonium carbonates 9% 18% Other unsaturated polyethers, in primary forms 12.6% 20% Polyethylene terephthalate, with a viscosity index of 78 ml/g or more 12.6% 20% Phosphoric acid with an iron content of less than 750 ppm 9% 18% Dinonyl or didecyl orthophthalates 11% 20% Poly(vinyl chloride), not mixed with other substances, obtained by suspension process 12.6% 20% Poly(vinyl chloride), not mixed with other substances, obtained by emulsion process 12.6% 20% Methyl polymethacrylate, in primary form  12.6% 20% White mineral oils (vaseline or paraffin oils) 4% 35% Other polyetherpolyols, in primary forms 12.6% 20% Other unfilled epoxy resins in primary forms 12.6% 20% Silicon dioxide obtained by chemical precipitation 9% 18% Acrylonitrile-butadiene rubber in plates, sheets, etc 11% 35% Other organic anionic surface agents, whether or not put up for retail sale, not classified under previous codes 12.6% 23% Phenol (hydroxybenzene) and its salts 7% 20% Fumaric acid, its salts and esters 10 ,8% 20% Plasticizers and plastics 10 ,8% 20% Maleic anhydride 10 ,8% 20% Adipic acid salts and esters 10 ,8% 20% Propylene copolymers, in primary forms 12.6% 20% Adipic acid 9% 20% Unfilled polypropylene, in primary form 12.6% 20% Filled polypropylene, in primary form 12.6% 20% Methacrylic acid methyl esters 10 ,8% 20% Other ethylene polymers, in primary forms 12.6% 20% Acrylic acid 2-ethylhexyl esters 0% 20% 2-Ethylexanoic acid (2-ethylexoic acid) 10. 8% 20% Other copolymers of ethylene and vinyl acetate, in primary forms 12.6% 20% Other unfilled polyethylenes, density >= 0.94, in primary forms 12.6% 20% Polyethylene with a density of less than 0.94, unfilled 12.6% 20% Other saturated acyclic monoalcohol acetates, c atom <= 8 10. 8% 20% Polyethylene with a density of less than 0.94, with filler 12.6% 20% Triacetin 10. 8% 20% Sodium methylate in methanol 12.6% 20% Stearic alcohol (industrial fatty alcohol) 12.6% 20% N-butyl acetate                              11% 20% Stearic acid (industrial monocarboxylic fatty acid) 5% 35% Alkylbenzene mixtures 11% 20% Organic, non-ionic surface agents 12.6% 23% Ammonium nitrate, whether or not in aqueous solution 0.0% 15% Monoethanolamine and its salts 12.6% 20% Isobutyl alcohol (2-methyl-1-propanol) 10.8% 20% Butan-1-ol (n-butyl alcohol) 10.8% 20% Styrene-butadiene rubber (SBR), food grade as established by the Food Chemical Codex, in primary forms 10.8% 22% Styrene                                9% 18% Hexamethylenediamine and its salts 10.8% 20% Latex from other synthetic or artificial rubbers 10.8% 35% Propylene glycol (propane-1, 2-diol) 10.8% 20% Preparations 12.6% 20% Linear alkylbenzene sulfonic acids and their salts 12.6% 23% 4,4'-Isopropylidenediphenol (bisphenol A, diphenylolpropane) and its salts 10.8% 20% Dipropylene glycol 12.6% 20% Butanone (methyl ethyl ketone) 10.8% 20% Ethyl acetate                                 10.8% 20% Methyl-, ethyl- and propylcellulose, hydroxylated 0.0% 20% Front page picture: Chemical production facilities outside Sao Paulo  Source: Union of Chemical and Petrochemical industries in the state of Sao Paulo (Sinproquim) Focus article by Jonathan Lopez Additional information by Thais Matsuda and Bruno Menini

30-Apr-2024

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 12 April 2024. China Mar petrochemical markets mixed; Apr demand on seasonal uptick By Yvonne Shi 12-Apr-24 14:19 SINGAPORE (ICIS)–Fluctuations in China’s domestic petrochemical markets were limited in March, yielding a mixed performance during the month, while a seasonal improvement in demand is expected in the near term. Tight intra-Asia container shipping space dampens recycling trades By Arianne Perez 12-Apr-24 13:34 SINGAPORE (ICIS)–Major Asian recyclers are feeling the pinch of continued uptrend in spot container freight costs for trade within Asia since March. Asia naphtha demand slows down; supply stays ample By Li Peng Seng 11-Apr-24 13:00 SINGAPORE (ICIS)–Asia’s naphtha crack, the spread between Brent crude and the chemical feedstock prices, hit a five-month low recently and it will remain under pressure in the weeks ahead as ample supplies, slower demand and firm crude prices limit any improvement in the spread. Asia ADA sees plant shutdowns amid supply overhang By Josh Quah 11-Apr-24 11:25 SINGAPORE (ICIS)–Asia’s adipic acid (ADA) markets have begun to crack under the cost pressure and weak demand from the main polyurethane (PU) downstream sector. Fitch downgrades China rating outlook to ‘negative’ as debts pile up By Pearl Bantillo 10-Apr-24 15:16 SINGAPORE (ICIS)–China’s fiscal challenges amid rising government debt and its prolonged property slump weighing on recovery prospects prompted Fitch to revise down its credit rating outlook for the world’s second-biggest economy to “negative” from “stable”. Korea trade body starts antidumping probe on China SM imports By Luffy Wu 09-Apr-24 14:18 SINGAPORE (ICIS)–The Korea Trade Commission has decided to initiate an anti-dumping investigation on imports of styrene monomer (SM) from China. INSIGHT: Positive China Q1 data overshadowed by property sector gloom By Nurluqman Suratman 09-Apr-24 12:00 SINGAPORE (ICIS)–China's economic narrative in early 2024 reflects a 'tale of two cities', with its ailing property sector once again playing the crucial protagonist against recent data which offered flickers of hope for the country's continued recovery this year. Saudi Arabia hikes benchmark May Arab Light OSP for Asian customers By James Dennis 08-Apr-24 18:15 SINGAPORE (ICIS)–Saudi Arabia, the world’s largest crude exporter, increased its Official Selling Prices (OSP) for its benchmark Arab Light crude for customers in Asia for the second month in succession. Oil slumps by more than $2/bbl on Israel-Hamas ceasefire hopes By Nurluqman Suratman 08-Apr-24 12:23 SINGAPORE (ICIS)–Oil prices fell by more than $2/barrel on Monday amid easing tensions in the Middle East after Israel further withdrew troops from southern Gaza and signalled a willingness to resume ceasefire talks with Palestinian militant group Hamas.

15-Apr-2024

Sanitation framework, nascent LatAm lithium industry keeping Brazil’s chloralkali afloat – Abiclor

SAO PAULO (ICIS)–Brazil’s chlorine and caustic soda sectors have kept afloat in better health than the wider chemicals industry as sanitation plans and new lithium exploitations across Latin America keep demand high, according to the director general at the country’s trade group Abiclor. Abiclor's Milton Rego added, however, that the competitive challenges the chemicals industry faces in Brazil are common to both the parent industry and its chlorine subsector: high input costs, which make the whole industry suffer, infrastructure challenges and in the past two decades, fierce competition from China, not only in chemicals but for nearly all manufactured goods. However, given chlorine’s specific characteristics and its highly dangerous nature, shipments are more difficult, isolating the sector from the abundant, cheap imports other chemical products have had to face up to. This is well reflected in the operating rates in 2023: caustic soda and chlorine sectors averaged 70%, which is a low rate but higher than the overall chemicals industry’s at around 65%, according to figures from the Brazilian chemicals trade group Abiquim. WATER (FROM THE FAUCET) FOR THE PEOPLEBrazil will need a lot of chlorine in coming years. Despite all its natural wealth and the abundance of fresh water, around 33 million people in the 220-million strong country still do not have access to sanitized water yet. To tackle this, the previous Administration passed in 2020 the Reformulation of the Sanitation Legal Framework – or Novo Marco Legal do Saneamiento in Portuguese. Mostly through public-private partnerships, the plan envisages that by 2033 all Brazilians will be able to open the tap without fear of bacteria – and that means chlorine. Large Brazilian chemicals companies such as Unipar are tapping into the Marco Legal to expand their operations, in this case with a new chlorine plant in the northern state of Bahia. The largely de-industrialized and poorer Brazilian north is where still many cannot open the tap without fear of being infected. “The Marco de Saneamiento has some very clever points. On the one hand, it set the targets while improved the states’ ability to implement public-private projects, improving how they achieve the targets,” said Rego. “On the other, if the states do not achieve the targets, they could be penalized by not receiving the funds set up in the Marco for its development.” While the Marco de Saneamiento is set to place Brazil at the forefront in Latin America when it comes to sanitized water in people’s houses, some of the country’s perennial problems are still casting a shadow, said Rego. Namely, leaks in the water infrastructure as well as theft are still a cause for concern. Those two factors are also the ones that, despite all the sanitation work behind, make sanitized water still not suitable for drinking when it gets to Brazilian households. Even in the well-developed Sao Paulo and Rio de Janeiro, for instance, those who drink water from the faucet do so after filtering it. A far cry from the European systems, where water is safe to drink straight. “There have not been enough investments in keeping the water infrastructure systems up to date. The Marco de Saneamiento touches on the states’ responsibility in keeping the network functioning properly,” said Rego. “But no matter all the good intentions and plans to do so, when you get all those external factors [theft and leaks in the old networks, mostly] denting the quality of the water infrastructure network, it makes achieving the final goal harder.” CAUSTIC SODA: 3 MILLION DEMAND, 1.5 MILLION OUTPUTConsidering how chemicals producer have been besieged for much of the past two years by cheap imports coming into Brazil, the caustic soda situation may look enviable. Operating rates of 70% are not the panacea, Rego concurred, given the enormous spare capacity, but when compared to the wider industry, it is a healthier figure. In fact, Rego said the sector is already at pre-pandemic levels in terms of rates; a far cry from the wider industry, where operating rates continue to fall as global oversupplies for most chemicals keep denting domestic producers’ output. Brazil’s caustic soda output stands at around 1.5 million tonnes/year, but the country’s demand is at around 3 million tonnes/year. However, geography and industrial strengths play a part here. On one hand, most of the caustic soda imported into Brazil comes from the US via the Gulf Coast, and it is shipped to the northern states where aluminum production is strong. On the other hand, most of the 1.5 million tonnes produced domestically are produced in the south and serve the industrious southern states such as Sao Paulo or Rio de Janeiro. “Our caustic soda deficit is mostly covered by the US: from the Gulf Coast to the northern Brazilian ports the freight costs are not too high, and it is perfectly placed to serve the high demand from the aluminum sector,” said Rego. “We have become too accustomed in Brazil to talk about our industrial decadence and how that could be reversed, but the aluminum sector, for instance, remains strong and not only cater for Brazilian demand: it is also a sector managing to export to overseas markets.” Rego said the Brazilian chloralkali sector can also look with optimism and the booming lithium sector in Latin America. As of now, Brazilian producers are exporting to Argentina and Bolivia caustic soda and derivative hydrochloric acid (HCl) for the extraction of lithium, a key component for electric batteries as the world seeks to electrify transport. “We are confident those exports are set to expand to other Latin American markets,” said Rego. THE COUNTRY OF THE FUTURE, STUCK IN THE PRESENTRego’s fascination for how Brazil went from industrial superpower in the 1960s and 1970s to the current nearly-permanent industrial crisis – with agriculture and services coping much of the growth in the past few years – captivates the imagination of the listener. One should not forget the mantra which became a joke: in the 1950s and 1960s Brazil was ‘the country of the future’ and it did show in things like building a new capital from scratch in just 10 years or the fast-paced urbanization in places like Sao Paulo or Rio de Janeiro states, which had a great damaging effect on the environment. As an example: in a tropical paradise like Brazil, water is everywhere. Sao Paulo’s two rivers – Pinheiros and Tiete – are just a fraction of the several waterways that ran through the city before urbanization: they were all channeled and tunneled to make way for roads above them. Back to industry. The Brazil of the future stayed in the past. The 1980s economic crisis put the country on its knees, and China’s renaissance from the 1990s made the rest, according to Rego. “China increases sharply the competitiveness of most of its industrial products. But, as it has been said several times before, the logic in China’s economic system is not a capitalistic logic, and that has reverberations globally,” said Rego. “Globally, and locally in Brazil: China’s ascend meant Brazil’s descent, as much higher production costs here made our industrial goods less competitive. Funnily enough, this is also affecting Europe, especially in the past two years after war in Ukraine broke out and energy prices became very high.” Therefore, the US with its own shale gas revolution, the Middle East, and Asia are now the most competitive industrial regions, said Rego. Brazil’s prowess in agriculture, he added, cannot make the country forget that a healthy economy requires a strong industry, able to cater for domestic demand and also able to export. That is where Brazil’s interesting history stands at the moment. A new industrial plan recently presented by the government could help tackle some issues, said Rego, but there have been many industrial plans before and they failed to lift up industry’s prospects. Regarding chemicals, Abiquim used throughout 2023 an apocalyptic language to describe the state of the industry, warning the survival of several chemicals chains in Brazil was at risk. Rego preferred to describe Abiquim’s “necessary” lobbying as “eloquent” – but at the end of the day, the story is the same: with current high input costs, chemicals in Brazil are set to have a harder time than peers in other major economies. Front page picture: Promotional image of the Marco Legal do Saneamiento Source: Brazilian government Interview article by Jonathan Lopez

04-Apr-2024

China petrochemical futures track crude gains on upbeat March factory data

SINGAPORE (ICIS)–China’s petrochemical futures markets were tracking gains in crude prices on Monday, with Brent trading at above $87/bbl, on bullish sentiment following a return of the world’s second-biggest economy into manufacturing expansion mode. Official, Caixin March manufacturing PMIs at above 50 China methanol, SM futures prices lead gains External demand picking up for selected goods At the close of morning trade, futures prices of major petrochemicals in Chinese commodity exchanges were up by 0.2% to 1.7%. China petrochemical futures markets Prices as of 03:30 GMT (CNY/tonne) % change vs 29 March Linear low density polyethylene (LLDPE) 8,279 0.60% Polyvinyl chloride (PVC) 5,803 0.20% Ethylene glycol (EG) 4,499 0.50% Polypropylene (PP) 7,542 0.80% Styrene monomer (SM) 9,451 1.40% Paraxylene* 8,534 0.70% Purified terephthalic acid (PTA) * 6,016 1.30% Methanol* 2,518 1.70% Sources: Dalian Commodity Exchange, *Zhengzhou Commodity Exchange At midday, Brent crude was up 30 cents at $87.30/bbl, while US crude gained 31 cents at $83.48/bbl. Crude futures were also supported by expectations of tighter supply amid output cuts by OPEC and its allies, which include Russia. Manufacturing activity in China expanded for the first time in six months, based on official data in March, generating a purchasing managers’ index (PMI) reading of 50.8, as companies accelerated production following the Lunar New Year holiday in the previous month. A separate reading by Chinese media group Caixin was more upbeat, with a higher March PMI reading of 51.1, the highest recorded since February 2023. In Caixin’s data, factory output continued to expand for the fifth straight month. The Caixin PMI surveys small and medium-sized enterprises (SMEs) and export-oriented enterprises located in eastern coastal regions, while the official PMI is tilted toward larger state-owned enterprises. A reading above 50 indicates expansion, while a reading below denotes contraction. “Both supply and demand expanded at a faster pace amid the market upturn. In March, growth in manufacturers’ output and total new orders accelerated, with the former hitting a 10-month high,” Caixin Insight Group senior economist Wang Zhe said. “External demand also picked up pace thanks to the recovery in the global economy, pushing the gauge for new export orders to its highest level since February 2023,” the economist added. “Overall, the manufacturing sector continued to improve in March, with expansion in supply and demand accelerating, and overseas demand picking up,” Wang said. “Manufacturers increased purchases and raw material inventories amid continued improvement in business optimism. However, employment remained in contraction and a depressed price level worsened,” Wang added Besides the seasonal effect, firming overseas demand also helped to push up Chinese factory activities, local brokerage Haitong Securities wrote in a note, citing that furniture, transportation equipment and electronics were enjoying strong demand. China is projected to post around a 5% GDP growth this year, slower than the 5.2% pace recorded in 2023, with a slumping property sector posing a major drag on overall economic prospects. Property and other related sectors account for about a fifth of China’s GDP. While the property slump may persist, other sectors such as electric vehicles, new energy and digital economy are posting healthy growth, said Zhang Junfeng, senior analyst at Shenzhen-based brokerage China Merchant Securities. Focus article by Fanny Zhang ($1 = CNY7.23) Additional reporting by Nurluqman Suratman Thumbnail image: At Lianyungang Port in east China's Jiangsu Province, 26 March 2024. (Shutterstock)

01-Apr-2024

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