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There are endless potential uses for synthetic rubbers which can be found in everything from vehicle tyres to footwear. Spikes in demand occur frequently due to the breadth of downstream sectors in play, as well as the changeable market dynamics of each. Synthetic rubbers market players therefore need fast and easy access to accurate, relevant and timely information. This way, the right decisions can be made quickly.
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Saudi SABIC swings to net loss in 2023 on Hadeed sale, challenging market
SINGAPORE (ICIS)–Saudi Arabia’s chemicals major SABIC swung to a net loss of Saudi riyal (SR) 2.77bn ($739m) in 2023, largely due to one-off losses related to a divestment, while earnings from continued operations shrank amid challenging global market conditions. in Saudi Riyal (SR) bn 2023 2022 % Change Revenue 141.5 183.1 -22.7 EBITDA 19.0 36.4 -47.7 Net income from continuing operations 1.3 15.8 -91.8 Net income attributable to equity holders of the parent -2.8 16.5 – The company's net loss for 2023 was "driven mainly from the fair valuation of the Saudi Iron and Steel Co (Hadeed) business", SABIC in a filing to the Saudi bourse Tadawul on 27 February. In early September 2023, SABIC announced it had agreed to sell its entire stake in the Saudi Iron and Steel Co (Hadeed) to Saudi Arabia's sovereign wealth fund for SR12.5bn. The sale resulted in non-cash losses worth SR2.93bn. From continuing operation, full-year net income declined by 91.8% on reduced profit margins for major products, as well as lower earnings of joint ventures and associated firms. SABIC also incurred charges from non-recurring items amounting to SR3.47bn in 2023,“as a result of impairment charges and write-offs of certain capital and financial assets as well as provisions for the restructuring program in Europe and constructive obligations”. Meanwhile, SABIC’s average product sales price in 2023 fell by 21%, reflecting the global downturn in petrochemical markets, it said. Overall sales volumes fell by 2% year on year in 2023 amid sluggish end-user demand, the company said. "Year 2023 presented numerous challenges for the petrochemical industry – the market environment was shaped by lackluster macroeconomic sentiment, weak end-user demand, and a wave of incremental supply for a large suite of products," it said. The company's petrochemicals business posted a 20% year-on-year decline in sales to SR131.3bn in 2023, with EBITDA down by 42% at SR14.6bn. "The petrochemical industry navigates a challenging operating environment – underwhelming demand within our target markets led to lower year end product prices and there remains considerable uncertainty heading into the first quarter of 2024," SABIC CEO Abdulrahman Al-Fageeh said. "The announced divestment of Hadeed is proceeding as planned – this optimization of internal resources will enhance our core focus on petrochemicals," he said. SABIC is also pursuing a number of initiatives to address the "competiveness of our European assets" aimed at a "maintainable and modernized footprint in the region", Al-Fageeh added. The company plans a higher capital expenditure of between $4bn and 5bn in 2024, compared with $3.5bn-3.8bn last year. SABIC has started construction of its $6.4bn manufacturing complex in China’s southern Fujian province. The project will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. SABIC is 70%-owned by energy giant Saudi Aramco. ($1 = SR3.75)
AdvanSix petitions US to impose Superfund taxes on imports of nylon 6, capro
HOUSTON (ICIS)–AdvanSix has requested that the US impose Superfund taxes on imports of nylon 6 and caprolactam (capro). On Tuesday, AdvanSix did not immediately respond to a request for comment. AdvanSix proposed a tax rate of $14.77/ton. The next step is for the government to gather comments and consider requests for hearings about AdvanSix's request. The deadline to file comments or request hearings is 22 April. HOW THE SUPERFUND TAX WORKSThe US introduced the Superfund taxes in mid-2022 on taxable chemicals and imports of taxable substances. The proceeds raised by the taxes will help replenish the government's Superfund program, which pays for clean-up at waste sites. The Superfund tax regime divides materials into two groups. The first group is levied on the sale or use of 42 chemicals by producers or importers. Many of these chemicals are fundamental building blocks such as ethylene, propylene, butadiene (BD), benzene, toluene, xylene and methane. The second group is restricted to imports and covers substances that are sold or used in the US. This second batch of taxes applies to substances that contain at least 20% of the 42 taxable chemicals. In addition, the taxable rate would depend on the proportion of the 42 taxable chemicals contained in the substance. The request by AdvanSix falls under this second group. As part of its request AdvanSix filed two petitions asking the US to add nylon 6 and capro to its list of taxable substances. Thumbnail shows nylon Image by Shutterstock.
Europe top stories: weekly summary
LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 23 February. Europe PE/PP contract prices reach three figure hikes for February Contract prices for European polyethylene (PE) and polypropylene (PP) have settled upwards from initial moves earlier in February, in the pivotal third week of the month. Chemical firms back call for stronger business environment in EU The chief executives of BASF, INEOS, Covestro, Clariant and Dow Europe among others on Tuesday backed a new declaration calling for stronger European Commission prioritisation of business, calling for an industrial deal to be placed at the core of the new Parliament. Europe propylene limitations raise concerns down value chain The European propylene (C3) supply and demand balance is in a tighter than expected position due to a combination of healthy demand and planned and unplanned production constraints. BASF navigates low-growth environment as China Verbund spending continues As BASF prepares to provide more detail on its 2023 financial performance, the Germany-based chemicals major is to navigate the still-chilly waters of 2024 as spending on its flagship China Verbund site in Zhanjiang continues and project pipelines face ever-tougher scrutiny. INSIGHT: EU chemicals plead for help while production sinks to 1999 levels As chemical production in Europe plunges to levels last seen during the 2008/9 financial crisis and back in 1999, industry leaders are urging the EU to improve the regulatory framework and do more to protect them from unfair competition. But with the fundamentals of supply and demand so out of balance globally, there are limits to how much politicians can achieve in Europe.
Asia top stories – weekly summary
SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 23 February 2024. Asia BD spot market buoyant with active China exports By Ai Teng Lim 23-Feb-24 10:54 SINGAPORE (ICIS)–Discussions for Asian butadiene (BD) imports picked up this week as China embarked on active export sales. SE Asia PE March offers firmer as tight Middle East supply persists By Izham Ahma 22-Feb-24 10:12 SINGAPORE (ICIS)–Initial spot import offers for March polyethylene (PE) shipments in southeast Asia were announced firmer in the week ending 23 February, with many major Middle Eastern suppliers still showing limited spot volume available. Japan January chemical exports up 11%; overall shipments at record high By Nurluqman Suratman 21-Feb-24 13:20 SINGAPORE (ICIS)–Japan's chemical shipments in January rose by 11.2% year on year to yen (Y) 865.9bn ($5.8bn), with overall exports hitting a record high for the month, thus, easing some concerns over Asia's highly industrialised economy which tipped into a technical recession in the second half of 2023. Asia petchem markets await China's demand signals after holiday By Nurluqman Suratman 19-Feb-24 13:56 SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. PODCAST: Asian olefins to see support amid tighter supply, Panama congestion persists By Julia Tan 21-Feb-24 19:51 SINGAPORE (ICIS)–Asia's ethylene (C2) market saw supply tighten amid fewer volumes from the US in Q1 as a direct result of congestion at the Panama Canal.
INSIGHT: BASF's additional fixed and variable cost reductions in Ludwigshafen reflect Germany’s challenges
LONDON (ICIS)–BASF has suffered in Germany and across Europe from energy high costs and poor demand that continue to drive structural change. Much weakened competitiveness is forcing the company to tackle the situation at the upstream businesses by adapting production capacities to market needs. But plants not operating at 80-90% because of weak demand are a drag on profitability and something has to be done to sustain the operations at Ludwigshafen and maintain the cost-effective Verbund structure on which the company relies. “We have to say goodbye to the good old times in Germany,” BASF CEO Martin Brudermuller said on Friday on release of the company’s fourth quarter and full year 2023 financial results. Weak demand is on-going, although BASF believes that chemicals production globally will 2.7% this year compared with a tough 1.7% increase in 2023. Most growth, however, is expected to come in China. The company’s European operations are under significant pressure, and BASF is feeling the impact in its Chemicals and Materials segments where it has major production capabilities. Chemicals segment earnings (before interest, tax and special items) last year were down 82% at just €361m. Materials segment earnings were down 55% at €826m. Chemicals includes the building block petrochemicals while Materials includes engineering plastics and polyurethanes, among other systems, and their monomers. Gas costs in Europe are still twice what they were and four to five times higher than those in the US. Global supply and demand imbalances for major upstream chemicals are damaging structurally as well as in the short term and BASF has to adapt its giant Ludwigshafen production complex to the new realties. There will be plant shutdowns, Brudermuller said on Friday. Ludwigshafen is so big that it is impossible to imagine BASF without it, or at least to imagine a significantly changed production footprint. Nevertheless, against the backdrop of Germany and Europe’s challenged industrial position and an uncertain industrial manufacturing future the way it is transformed over the next few years will reflect the new realities. The complex has lost money recently – although it does bear the costs of the BASF global HQ amongst its overheads. Most of the company’s employees work there. A new cost reduction programme reduction of €1bn, adds to previous recent plans to address high costs. Plants and jobs will be impacted. New technology will be applied, and the company talks about tackling fixed costs and significantly trimming variable costs. "The situation is serious, so we are explicitly not ruling out any measures,” Brudermuller said. Taking carbon reduction plans into account also, the range of chemicals produced at Ludwigshafen is expected to change. The company has to factor into its plans the costs of decarbonisation of assets, some of which are many decades old. Its CFO, Dirk Elvermann said on Friday that the new reality will have an impact on manufacturing industry in Germany. BASF has to change its approach, he added, and adjust the type and dimensions of upstream and downstream assets. There will be a push towards the downstream, more downsizing and materials will be sourced from elsewhere, he indicated. BASF expects global economic weakness to continue this year with chemicals demand, impacted by high interest rates, rising only slowly in moderately growing customer industries. China growth is somewhat stronger, but uncertain. The company does not expect much from Europe while it foresees a slight slowdown in growth in the US. “We can’t do magic here,” Brudermüller said on Friday. That is possibly a phrase that applies to the company's asset footprint in Germany as much as market conditions. Insight by Nigel Davis
Pembina to supply Dow Canada net-zero petchem project with ethane
TORONTO (ICIS)–Canadian midstream energy firm Pembina Pipeline has entered into long-term agreements to supply Dow’s upcoming net-zero petrochemicals project at Fort Saskatchewan in Alberta province with 50,000 bbl/day of ethane. Pembina is a major supplier of ethane to the petrochemical industry in Alberta. Dow announced in November that it will proceed with the construction of a new integrated ethylene cracker and derivatives facility in Fort Saskatchewan, to be completed in two phases, with in-service dates of 2027 and 2029. The first phase of the "Path2Zero Project" includes about 1.285 million tonnes/year of ethylene and polyethylene (PE) capacity and the second phase adds another 600,000 tonnes/year. Dow’s project represents “a significant increase” to the current ethane market in Alberta and is an important development for the oil and gas industry in the Western Canadian Sedimentary Basin (WCSB), Pembina said. To support Dow's project, Pembina is evaluating several possible options to invest in new infrastructure, including incremental deep-cut processing capacity at certain gas plants, de-ethanizer expansions at existing fractionation facilities, potential new straddle facilities, and smaller expansion opportunities, it said. Furthermore, the Path2Zero Project will directly drive incremental ethane demand, the extraction of which should also increase the supply of other associated natural gas liquids (NGL) – propane, butane and condensate, Pembina said. The resulting NGL volume growth across the WCSB would benefit Pembina over a period of many years and support higher utilization and potential expansions of its asset its Alberta, it said. Pembina's assets include gas processing facilities, the Redwater fractionation complex, the Peace and Northern pipeline systems, the Alberta Ethane Gathering System, and storage facilities. Thumbnail photo of Pembina’s Redwater fractionation complex north east of Edmonton, Alberta; photo source: Pembina
PODCAST: Asian olefins to see support amid tighter supply, Panama congestion persists
SINGAPORE (ICIS)–Asia's ethylene (C2) market saw supply tighten amid fewer volumes from the US in Q1 as a direct result of congestion at the Panama Canal. Over in the Asian propylene (C3) markets, while arbitrage flows remain curtailed by high freight rates, some emerging interest has been gleaned in the market as regards moving Asian material westwards. In this podcast, ICIS market editors Josh Quah and Julia Tan discuss Asia's olefins flows, with a forward view on the March market. C2 sees support from constrained deep-sea supply NE Asia C2 and C3 outlooks for March Impact of shipping congestion on olefin trade flows
Saudi Arabia’s December oil exports fall 16%; total shipments down 9.7%
SINGAPORE (ICIS)–Saudi Arabia’s oil exports in December declined by 15.8% year on year to riyal (SR) 72.0bn ($19.2bn) amid output cuts, with its share to total overseas shipments slipping by 5.3 percentage points to 73.1%, official data showed on Wednesday. Overall exports for the last month of 2023 declined by 9.7% year on year to SR98.5bn, according to the Saudi Arabia’s General Authority for Statistics. The country, which is the biggest crude exporter in the world and the de facto leader of oil cartel OPEC, has extended its voluntary oil production cut of 1m bbl/day by another three months to March 2024 amid the global economic slowdown. Meanwhile, Saudi Arabia’s non-oil exports (including re-exports) in December 2023 grew by 12.0% year on year to SR26.5bn, with shipments of products of chemical and allied industries posting a 5.5% increase, while those categorized under “plastics, rubber and articles thereof” fell by 7.6%. These two categories accounted for a combined 53.7% of Saudi Arabia’s total non-oil merchandise exports in December. China was Saudi Arabia’s biggest trading partner in December, with about a 15% share to total exports, followed by Japan and India, with shares of 11.0% and 8.8%. respectively. Total merchandise imports for the month declined by 7.1% year on year to SR60.4bn. ($1 = SR3.75)
QatarEnergy, CP Chem start building $6bn Ras Laffan polymers complex
SINGAPORE (ICIS)–QatarEnergy and US’ Chevron Phillips Chemical (CP Chem) have started construction of their joint venture integrated polymers complex at Ras Laffan Industrial City in Qatar. The $6bn project will include an ethane cracker with capacity of 2.08m tonnes/year of ethylene, making it the largest ethane cracker in the Middle East and one of the largest globally, CP Chem said late on Monday. It will also include two high-density polyethylene (PE) derivative units with a total capacity of 1.68m tonnes/year. The two firms secured $4.4bn in financing for the Ras Laffan project in October last year. The PE units will use CP Chem’s MarTech loop slurry process to produce high-density PE (HDPE), which will be primarily meant for exports. The project is being developed by a 30:70 joint venture company of CP Chem and QatarEnergy. “This project advances CP Chem’s long-held strategy to expand its operations in regions where feedstock is reliable and abundant and will help meet the global demand for polyethylene products," CP Chem president and CEO Bruce Chinn said. Qatar holds the third-largest proven natural gas reserves in the world which positions it as a key player in the global energy market and a primary exporter of liquefied natural gas (LNG). CP Chem is providing project management services to oversee the engineering, procurement and construction of the facility. The Ras Laffan Petrochemical Complex is Qatar Energy’s largest investment in the local petrochemicals sector, the Qatari firm said in a separate statement issued on 19 February. The project will raise Qatar’s overall petrochemical production capacity to about 14m tonnes/year by the end of 2026, it said. “There is no doubt that this is an important landmark in QatarEnergy’s downstream expansion strategy as it will reinforce our integrated position as a global energy player and generate significant economic benefits for the country,” Qatar’s minister of state for energy affairs Saad Sherida Al-Kaabi said. CP Chem and QatarEnergy operate three joint ventures in Qatar, namely, Qatar Chemical Co, Qatar Chemical Company II, and Ras Laffan Olefins Co. In the US, the two companies, through their Golden Triangle Polymers joint venture, are also building a similar integrated polymers facility in Orange, Texas, which is expected to start up in 2026. Thumbnail image: Qatar minister of state for energy affairs Saad Sherida Al-Kaabi on 19 February 2024 (Source: QatarEnergy)
Asia petchem markets await China's demand signals after holiday
SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. Asia markets eye China's post-holiday demand signals China's economic health remains central concern Prices likely to rise amid supply constraints Markets in Asia took a breather in the week of 12-16 February, with Lunar New Year holidays in China, Taiwan, Malaysia and Singapore, while countries such as South Korea, Japan and Indonesia observed public holidays as well. Market participants are cautious about the post-holiday market; while some downstream buyers will restock after the holidays, there is concern that existing inventory held by domestic China producers and distributors will largely satisfy demand until early March. PRICES LIKELY TO RISE AMID SUPPLY CONSTRAINTSPetrochemical prices in Asia are expected to continue to increase in February, supported by capacity losses from outages and run-rate reductions, according to ICIS analysts. Among the 31 major petrochemical commodities covered by the ICIS Asia Price Forecast, average February prices for at least 22 of these commodities are anticipated to increase. Ethylene (C2), butadiene (BD) and styrene butadiene rubber (SBR) are expected to lead in terms of gains. In Asia’s C2 market, end-users who have yet to settle March arrival cargo are expected to hit the ground running once most of players return to the market this week. In the southeast Asia C2 market, demand enquiries were largely heard from Thailand last week, while other end-users in Indonesia have begun to look towards the April window for spot cargo. "The Asia C2 industry is likely to be characterised by tight supply in the weeks to come," said Paolo Scafetta, ICIS senior olefins analyst. "February should see about 7% of total monthly nameplate capacity lost due to downtime unless unplanned events cause further technical hiccups." The upstream naphtha market in Asia should be influenced by a few bearish factors, Scafetta added. These include the shift from naphtha to liquefied petroleum gas (LPG) as an alternative cracking feedstock and an improvement in supply from March as naphtha cargoes are expected to increase as Middle East refineries return from their maintenance. Asia's naphtha market is likely to be plagued with volatility in the short term as tensions in the Red Sea will continue to disrupt supplies. In Asia’s propylene (C3) market, trade was largely subdued during the Lunar New Year break but picked up towards the close of the week with most market players, except China, returning from their holiday. Talks and discussions in Taiwan commenced at the end of the week after the holidays ended. However, the post-holiday buying sentiment weakened on the back of ample supply, leading sellers to progressively lower their offers and selling indications. With buyers in China largely away from the market, overall business activity during the week was muted. In southeast Asia, while demand was also heard in Malaysia and Indonesia, most buyers continued to hold back from purchases on the expectation that supply tightness might result in an easing in offers down the road. In Asia’s benzene market, post-holiday restocking is expected to pick up in the second half of February amid strong competition for April and May cargoes from global players. February and March benzene cargoes have been already sold out and April cargoes are in strong demand. Benzene buyers based in both Asia and the West had actively sought procurement since end-January, for pre-holiday and pre-summer stocking up respectively. Asia's acetone market looks poised to maintain its strength. This is due to the high prices of benzene, reduced production leading to tighter supply, and a resurgence in trading flows between Asia and the West. A significant increase in demand for Asia acetone from the US market is bolstering this trend. Limited supply in the US, a result of low phenol production and ongoing allocations, is driving this demand. Meanwhile, supply within Asia is also constrained as phenol/acetone producers scale back production in response to unprofitable margins and decreased demand for phenol in China. In the xylene markets, further support in the market will be dependent on downstream sectors after the Lunar New Year holidays, with eyes firmly on China. For paraxylene (PX), there remains optimism for gasoline-blending demand heading into the second quarter, with positive arbitrage window economics for exports to the West. Firm upstream naphtha prices have also provided some support for PX. Several market participants noted there had been pre-buying of mixed xylenes (MX) and toluene by gasoline blenders to the US. Demand and price developments in the downstream purified terephthalic acid (PTA) and polyester sectors will help provide clarity about whether high PX costs can be absorbed down the chain. Asia's butyl acetate (butac) and ethyl acetate (etac) markets are poised to stay afloat on anticipated post-holiday demand, albeit at a gradual pace. Sellers of butac in both China and the region largely maintained their spot offers for March loading prior to the Lunar New Year holiday. Spot butac prices were on a downtrend in the early part of the fourth quarter of 2023 and have climbed since December, in part driven by cost pressures upstream as suppliers worked towards mitigating compressed margins. Asia’s methylene chloride (MEC) market might be bullish after the Lunar New Year holiday, as rising demand is likely to shift the market to a more balanced state. Most buyers were in a wait-and-see mode, monitoring prices and observing what producers would offer after the Lunar New Year break, with market participants in southeast Asia eyeing a rebound in demand through Q2, around the Ramadan period. CHINA'S ECONOMIC HEALTH IN FOCUS ICIS analysts expect most of China's end-use consumption, including in industries such as agriculture and home appliances, to recover from March. The China government's Two Sessions policy meetings, widely seen as the most important political meeting of the year for the country, will be held on 4-11 March. ICIS analysts expect another series of policies to be introduced to stimulate economic growth. Further market and infrastructure investment can boost petrochemicals demand. Latest official data from China is pointing to some recovery from domestic tourism trips and revenues. Domestic tourism trips and revenues during the Lunar New Year holidays in China jumped by 34.3% and 47.3% year on year respectively, with their levels at 19.0% and 7.7% above pre-pandemic levels in 2019, data from the country’s Ministry of Culture and Tourism (MCT) shows. "Most official and private media channels have been reporting strong (or even exceptionally strong) Lunar New Year holiday consumption data, and markets risk getting caught up in the euphoria of the moment, under the supposition that China’s economy is suddenly bottoming out, driven by the Chinese people’s hidden passion for spending," research analysts from Japan's Nomura Global Markets Research said in a note. "Although we do see some strength in the data, we urge market participants to exercise caution," it said, adding that China's property sector continued its downward spiral, right before the Lunar New Year holiday, and there was no sign of a recovery during the holiday. "Despite the positive [Lunar New Year] data, we maintain our view that the ongoing economic dip is likely to worsen into the spring," Nomura said. With additional reporting by Josh Quah, Julia Tan, Seng Li Peng, Angeline Soh, Helen Lee, Keven Zhang, Melanie Wee and Samuel Wong Focus article by Nurluqman Suratman Thumbnail photo: Lunar New Year lanterns in Shenyang, northeast China's Liaoning Province, on 1 February 2021. Asia will closely watch China's demand signals after the Lunar New Year holiday amid concerns about the country’s economic health. (Source: Xinhua/Shutterstock)
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