Xylenes

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 13 September. Customers more willing to pay green premium as net zero transition gathers pace Chemical companies will find it easier to charge a green premium as the cost of carbon increases, fossil feedstock availability declines and customers realize the true value of the products they are buying. Global oil demand growth lowest since 2020 on China slowdown Global crude oil demand continued to decelerate in the first half of the year, the International Energy Agency (IEA) said on Thursday, with consumption growth of 800,000 bbl/day year on year the weakest since 2020. IPEX: Index falls in August as weak demand, softer crude put downward pressure on chemical prices in Asia The ICIS Petrochemical Index (IPEX) was down 1.3% in August month on month as weak downstream demand and softer upstream crude oil costs continued to exert downward pressure on chemical prices in northeast Asia. Europe PX, OX spot prices tumble on softer Asian market, lower contract values Europe paraxylene (PX) and orthoxylene (OX) spot prices plummeted week on week in the week ending 6 September, on the back of softer values in the influential Asian market and lower domestic contract prices, respectively. Demographic drag on chemicals to deepen A continuing flow of poor economic data caused further stock market jitters in September, and as the prospect of a meaningful recovery in the global economy recedes into next year, new analysis suggests that the demographic drag on growth may be stronger than previously thought.

16-Sep-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 September 2024. Asia LAB struggles amid crude oil weakness; Q4 supply to tighten By Clive Ong 13-Sep-24 13:40 SINGAPORE (ICIS)–Asia’s linear alkylbenzene (LAB) market remains in the doldrums with sentiment staying cautious following recent slippages in crude oil prices, while supply could tighten in the fourth quarter. INSIGHT: China-US trade tensions build as anti-dumping cases increase By Fanny Zhang 12-Sep-24 18:35 SINGAPORE (ICIS)–The US has become the top target of China’s anti-dumping cases for chemical imports, underscoring growing trade barriers between the world's two biggest economies. Saudi Arabia fosters closer ties with China; Aramco, Chinese firms sign fresh deals By Nurluqman Suratman 12-Sep-24 12:39 SINGAPORE (ICIS)–Energy giant Saudi Aramco has signed new agreements to advance separate expansion plans with Chinese petrochemical producers Rongsheng and Hengli. China Aug petrochemical markets tumble; weak demand persists By Yvonne Shi 11-Sep-24 16:38 SINGAPORE (ICIS)–Domestic prices of most petrochemicals in China declined in August due to weak demand and new capacity, with not much improvement in market conditions expected throughout September. Asia solvent MX facing headwinds in Sept amid various bearish factors By Jasmine Khoo 10-Sep-24 12:13 SINGAPORE (ICIS)–Within Asia, trading activity for solvent grade mixed xylenes (MX) in certain import markets like southeast Asia is poised to take a hit going forward into the later part of September. Heavy rains, floodings continue in north Vietnam in Yagi’s wake By Nurluqman Suratman 09-Sep-24 16:42 SINGAPORE (ICIS)–Heavy rains and floodings continued in northern Vietnam on Monday, two days since Super Typhoon Yagi made landfall in the region and killed more than 20 people. UPDATE: Sumitomo Chemical to close two Singapore MMA/PMMA lines by end-Sept By Nurluqman Suratman 11-Sep-24 12:48 SINGAPORE (ICIS)–Sumitomo Chemical will close two of its three production lines for methyl methacrylate (MMA) monomer and polymethyl methacrylate (PMMA) in Singapore by the end of September this year, the Japanese producer said on Wednesday. PODCAST: Weak fuel LPG demand to weigh on China 2024 propane/butane imports By Lillian Ren 11-Sep-24 10:50 SINGAPORE (ICIS)–ICIS has revised down its forecast for China’s combined imports of propane and butane for 2024 because of weaker-than-expected demand in fuel applications. Wang Yen, Senior Analyst speaks with Lillian Ren, analyst on the China propane, butane and LPG markets. UPDATE: Indonesia starts ‘safeguard measures’ probe into LLDPE imports By Izham Ahmad 10-Sep-24 18:09 SINGAPORE (ICIS)–Indonesia has initiated an investigation as to whether “safeguard measures” would be needed in response to a sharp increase in imports of linear low density polyethylene (LLDPE), its trade ministry said.

16-Sep-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 6 September 2024. Strong regional currencies weigh on Asia recycling exports The weakening of the US dollar against major currencies in Asia since August will continue to strain exports of recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE), and recycled polypropylene (R-PP). Asia refined glycerine market stagnates on stand-off between buyers and sellers Asia’s refined glycerine market may likely continue to remain tepid in the near term due to a persistent stand-off between buyers and sellers. UPDATE: Oil falls by $1/bbl, Asia petrochemical shares tumble on global growth worries Asian petrochemical shares slumped on Wednesday as regional bourses tracked Wall Street’s rout overnight on poor data from both the US and China, with crude prices shedding more than $1/bbl in late Asian trade. At the close of trade in Tokyo, Mitsui Chemicals fell 3.07% and Sumitomo Chemical tumbled by more than 4%, with the Nikkei 225 index down 4.24% at 37,047.61. Asian PX hits fresh year low, levels last seen in December 2022 Asian paraxylene (PX) prices hit a fresh year low, amid a lack of buyers' confidence and overnight losses seen in upstream crude markets. INSIGHT: China-Canada trade frictions may affect MEG trade flows Trade frictions between China and Canada have intensified recently following the Canadian government’s decision to impose tariffs on imports of electric vehicles (EVs) as well as steel and aluminum from China starting 1 October. INSIGHT: Qatar to emerge as PVC exporter next year when $279 million plant comes online Qatar will become an exporter of polyvinyl chloride (PVC) as early as next year when commercial operations start at its first plant, because its 350,000 tonne/year capacity will be more than 10 times the state's annual imports. Asia titanium dioxide Sept key drivers to be stock levels, exchange rates While the titanium dioxide (TiO2) spot price in Asia is likely to find support with the start of the traditional demand season in September, a large-scale revival now seems unlikely.

09-Sep-2024

BUENOS AIRES (ICIS)–For years, Latin American petrochemicals companies have been trying to increase diversity within to better represent the consumers they want to sell their products to – without much success. Company boards and middle management levels continue to be mostly populated by men, and most of them tend to be white, in a region where ethnic minorities are sometimes the majorities. The environmental, social, and governance (ESG) mantra has been used so many times that it has become a bit futile. A few statistics to show off positive trends are one thing – real change is another. Companies need to go the extra mile to be as plural as society. And in some Latin American countries like Brazil, that mostly means one thing: blackness, in the country outside Africa with the largest black population. They will need to hire and promote people who will not conform to the norm; visionary people who will be wise enough to know a company will not reach its sales potential until they try, at least, to resemble the society they operate in. Brazil’s polymers major Braskem – the largest petrochemicals producer in Latin America – seems to have found one of those people: meet Debora Ferraz, global senior HR manager at the company and specialist in diversity, equity, and inclusion (DE&I) issues. “My job is not only about gender inequality, although that is still a big part of it, of course. My job goes much further than that and it involves making Braskem more like the country: in Brazil, 50% of the population are black or have black roots,” said Ferraz. “We have now established a system in which the HR person looking to hire will not see in what university the candidate coursed his or her studies. Before, we always ended up hiring people who were anything but plural: they all spoke English, they all came from the same universities. Behavior is now the key element in our hiring processes.” Ferraz went on to say that in Braskem’s Mexican operations, a country with painful statistics showing sexism is women’s everyday life, a hiring process will not go ahead if there is not at least one woman shortlisted. In Europe, where nationality is probably the biggest factor determining discrimination, Braskem pays more attention to that; in the US, it is veterans of war, many of whom find themselves lost in a competitive labor market after 20 or 30 years of service, she said. Ferraz was speaking to delegates at an event about sustainability organized by the Latin American Petrochemical and Chemical Association (APLA). Her talk captivated the audience, and it was recurrently referred to thereafter. RACISM: LONG SHADOWBrazil is Latin America’s largest economy, with 220 million consumers, and it is a case increasingly studied when it comes to racism and discrimination. The shadow of four centuries of Portuguese Empire rule, where enslaved black Africans composed the bread and butter of the workforce, have left a mark present still today, in all aspects of life. “The black and brown [Brazilians with black roots] populations represent 9.1% and 47% of the Brazilian population, respectively. Yet, the share of these population is lower in the indicators that reflect higher levels of life conditions,” said a report by Brazil's statistics office IBGE in 2022. “This indicator already shows a disadvantage of those populations when inserting in the labor market. The proportions of the black and brown populations among those unemployed and underutilized are higher than what they represent in the labor force,” it added. Racism is so ingrained in Brazil that when the country officially abolished slavery in 1888, the last nation in the western hemisphere to do so, it gave no rights worth the name to its black population and even decided to go as far as Italy or Japan to look for the workers it needed to feed its nascent industrial sectors. Hence the large Japanese or Italian minorities present in the country, who were allowed to integrate fairly well and some of whom went on to build business empires, quickly becoming part of the economic fabric. Meanwhile, blacks remained at the favelas, Brazil’s famous shanty towns, only mixing with the non-black population when they went to do the badly paid jobs, many times in the informal economy. Fernando Henrique Cardoso, the Brazilian center-right president who stabilized the economy in the 1990s and gave way to the successes of President Luiz Inacio Lula da Silva in his first and second terms (2001-2011), has become a reference in racism studies. A quote by Cardoso lies in one of the walls of Sao Paulo’s Museu Afro-Brasil, which only opened its doors in 2004 and is a painful journey through Brazil’s most shameful past, a quote which sums up why the integration of all Brazilians will be a long-term and laborious enterprise. “An economic system which was based in slavery and violence for four centuries creates a deformed society,” said Cardoso. And a deformed society will invariably take many decades – hopefully not centuries – to be fixed. Companies like Braskem should make more efforts to bring people like Ferraz in but, most importantly, listen to what they have to say and follow their advice – Ferraz is black herself, and without doubt she will have suffered racism. “We need to aim to have a good representation of society within the company. To get serious with this, we must have quantitative targets: we can do continuous training with employees, but if we don’t set clear targets, nothing will be achieved,” said Ferraz, who has been in her current post since 2022. “Up to that year, 30% of our workforce was black but that figure had not changed in the preceding 15 years, no matter how many trainings we did. Since 2022, that figure has increased to 37%. What has changed? That we set clear targets, and we are fighting hard to achieve them. I speak monthly with the CEO and with other board members, because they are the first ones who must believe in this.” Speaking at the same panel, Paola Argento, head of diversity at Argentina’s energy and petrochemicals major YPF, corroborated that until a company does not employ a plurality of workers – each of them feeling free enough to bring its own singularity to the workplace – a company will not reach its potential. “If we all come from the same universities, the final product we offer will not be innovative. Plurality allows us to produce better products and services. These days, most consumers do care about these issues, so the lack of plurality and innovation will end up negatively affecting sales,” said Argento. “But to achieve this true plurality of thinking, the highest executives at a company have to understand it and be fully behind it.” The APLA sustainability event runs in Buenos Aires on 4 September. Front page picture source: Brazil's statistics office IBGE Insight by Jonathan Lopez

04-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

SAO PAULO (ICIS)–Brazil’s analysts and economists are increasingly thinking inflation will continue to rise in 2024 but remain upbeat about GDP growth this year, the Banco Central do Brasil (BCB) said in its weekly Focus Survey. Rates to stay higher for longer on inflation uptick Currency to remain weak to year end GDP growth robust this year, mixed opinions on 2025 The survey, on the prospects for the largest Latin American economy, revised upward projections for inflation, GDP growth, and the exchange rate of the real in 2024. Meanwhile, the recent uptick in inflation may not be enough for the central bank to raise interest rates, but the consensus among analysts is now that the main interest rate benchmark, the Selic, could rise in 2026. INFLATION According to the survey, economists now expect the 2024 IPCA consumer price index to end the year at 4.25%, up from the 4.22% projection in the previous week and the sixth consecutive weekly increase. The 2025 inflation outlook edged up to 3.93% from 3.91%, while projections for 2026 and 2027 remained steady at 3.60% and 3.50%, respectively. The latest inflation figures for July showed prices had risen for a fourth consecutive month, with the annual rate of inflation at 4.50%, well above the April low of 3.69%. However, official data this week for the so-called IPCA-15 – which measures the month’s first fortnight’s price rises – showed a small decrease from 4.50% to 4.35%. Analysts at Capital Economics, who have been suggesting the central bank could hike the Selic as soon as this year to contain the latest rise in inflation, said the IPCA-15 data published this week was likely to make the central bank pause for now when it meets again to set monetary policy in September. “The breakdown of the data showed that the fall in inflation was pretty broad based. Housing and health inflation fell particularly sharply to 3.6% year on year [in the first fortnight of August] and 5.8% year on year, respectively, although this was partly offset by a rise in transport inflation,” said Capital Economics. “Developments in underlying inflation were a bit more concerning. Our estimate of underlying core services inflation – which strips out volatile items – edged up in the first half of August.” SELIC The monetary easing cycle that started a year ago as inflation was coming down is now considered well and truly over. Most analysts expect the central bank to keep interest rates on hold for the rest of this year and potentially in 2025, with only a few forecasting a rise. Earlier in August, the bank left the Selic unchanged at 10.50%. During the inflation crisis, the Selic peaked in 2023 at 13.75%. This week, the Focus Survey showed Brazilian economists and analysts agree that the Selic will not be lowered this year – for the 10th consecutive week, despite the latest tribulations in the exchange rate and investors’ doubts about the government’s commitment to fiscal discipline. However, the average in this week’s survey showed they are still forecasting a half a percentage point fall for 2025 to 10.0%, also unchanged from the previous survey. The novelty this week was that, from an earlier projection for the Selic at 9.0% in 2026, economists have now upgraded that and expect interest rates to end that year at 9.5%, the first change in the forecast in 14 weeks. The 2027 rate expectation remained at 9.0%. “Many Copom [monetary policy committee at the BCB] members have sounded very hawkish in recent media comments, opening the door to a rate hike,” said Capital Economics this week after the IPCA-15 data was published. “The next meeting in September will be a close call, but we think that, on balance, the fall in inflation in the first half of August, alongside the Fed’s seeming confirmation that it will kick off its easing cycle in September, mean that it’s a bit more likely that Copom will leave rates unchanged at 10.50%.” GDP One bright spot in this week’s central bank survey was that Brazil’s economy is expected to continue on a strong recovery path, with analysts now forecasting GDP growth of 2.43% in 2024, up from 2.23% in earlier surveys. However, the forecast for 2025 was for a minor dip to 1.86% from 1.89%. Unlike Brazilian economists, the IMF said it expected Brazil’s economy to grow 2.4% in 2025 in July, in part as a result of the reconstruction efforts at Rio Grande do Sul. Brazil’s southernmost state, a key industrial and agriculture producer in the country, was hit by the severe floods in May and its economy came to a standstill for nearly a month. According to this week’s survey, GDP growth estimates for 2026 and 2027 remain steady at 2.0%. REAL EXCHANGE RATE The median projection for the exchange rate for the real to the US dollar in 2024 increased slightly to reais (R) 5.32, from R5.31. The real has sharply depreciated this year versus the dollar on the back of higher inflation and investors’ fears that the cabinet presided over by Luiz Inacio Lula da Silva wants to expand public services at the expense of a larger fiscal deficit. Lula’s direct attacks on the governor of the central bank have not helped either. As such, most economists no longer expect the exchange rate to hover around R5 to the dollar as it did at the beginning of the year. For 2024, they are now forecasting a dollar to be worth R5.32, while in 2025 it would be at R5.30 and in 2026 at R5.25. Focus article by Jonathan Lopez

28-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)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Blue flake prices rise at the low end in eastern Europe Wide range of views on eastern Europe bale prices Mixed coloured flake demand remains poor September price talks getting underway

23-Aug-2024

MUMBAI (ICIS)–India’s state-owned Bharat Petroleum Corp Ltd (BPCL) plans to invest rupee (Rs) 1.7 trillion ($20.3 billion) over the next five years to grow its refining and fuel marketing business, as well as expand its petrochemicals and green energy businesses. 44% of total earmarked for refinery, petrochemical capacity growth Bina refinery/petrochemical project due for commissioning in FY2028-29 New refinery project being mulled As part of the investment initiative named ‘Project Aspire’, some Rs750 billion will go to increasing capacity at BPCL’s refineries and expand its petrochemical portfolio, company chairman G Krishnakumar said in the company’s annual report for the fiscal year ending March 2024. “The demand for major petrochemical products is expected to rise by 7-8% annually. This presents a strategic opportunity to expand refining capacity alongside the development of integrated petrochemical complexes,” Krishnakumar said. BPCL’s planned petrochemical expansions include the new petrochemical projects at its Bina refinery in the central Madhya Pradesh state, and the Kochi refinery in the southern Kerala state. The Bina project is a brownfield expansion that will raise the refinery’s capacity by 41% to 11m tonnes/year, to cater to the requirements of upcoming petrochemical plants, which include a 1.2m tonnes/year ethylene cracker and downstream units. The site is expected to produce 1.15m tonnes/year of polyethylene (PE), including high density PE (HDPE) and linear low density PE (LLDPE); 550,000 tonnes/year of polypropylene (PP); and 50,000 tonnes/year of butene-1 The complex will also produce chemicals such as benzene, toluene, xylene, the annual report said. “Technology licensors for all critical packages, and project management consultants for refinery expansion and downstream units have been onboarded and work at the site commenced in the first week of July 2024,” Krishnakumar said. BPCL has chosen US-based Lummus to provide technologies for the new ethylene plant and downstream units at the complex. The refinery will be ready for commissioning by May 2028, while petrochemical operations will begin in the financial year ending March 2029. At Kochi, BPCL’s 400,000 tonne/year PP project is progressing as per schedule and is on track for commissioning in October 2027. It plans to raise its Kochi refinery capacity by 16% over the next five years to 18m tonnes/year, based on data from the company’s latest annual report. https://subscriber.icis.com/news/petchem/news-article-00110958286 The company also plans to set up additional petrochemical capacities over the next few years. “To meet the anticipated demand beyond our planned expansions in Bina and Kochi, we are actively evaluating options for setting up additional integrated refining and petrochemical capacities within the next 5-7 years,” Krishnakumar said BPCL has begun evaluating options to set up a new refinery with a planned capacity of around 9 million to 12 million tonnes/year, a company official said, adding, “we are exploring a new refinery either on the east coast or at other locations”. In Mumbai, the company also plans to expand its refinery capacity by a third to 16m tonnes/year in the next five years, according to its annual report. In the eastern Odisha state, BPCL expects to begin operations at its 200 kilolitre/day ethanol plant at Bargarh by October 2024. Once operational, the integrated refinery is expected to produce both first generation (1G) as well as second generation (2G) ethanol using rice grain and paddy straw as feedstock. Focus article by Priya Jestin ($1 = Rs83.85) Thumbnail image: The Bharat Petroleum import terminal at Haldia in West Bengal on 13 March 2021. (Debajyoti Chakraborty/NurPhoto/Shutterstock)

20-Aug-2024

LONDON (ICIS)–Fresh upcoming legislation in the EU and UK from 2025 are set to galvanise the biofuels sector by setting minimum targets for sustainable fuels usage in the aviation sector, but hesitance remains among the larger players. New mandates set to galvanise sector growth Larger incumbents still cautious about big bets Pace of demand growth after SAF mandates remains to be seen The EU sustainable aviation fuels (SAF) mandate will set a minimum floor for fuel at EU airports to contain at least 2% from 2025 and gradually tick up each year, to hit 6% by 2030. These targets ratchet up dramatically from that point, with the 2030-35 period likely to be a transformational period for the aviation sector,  as the SAF mandate to increase from 6% to 20% in just five years. By 2050, SAF is expected to become the dominant form of aviation fuel, with the EU mandating that airport fuels be 70% SAF by the midpoint of the century. Over the next 26 years, aviation firms and fuels producers will need to solve many colossal questions, including the precise composition of the fuels and how those raw materials can be sourced and scaled. Although the European Commission’s ambitions for SAF growth over the next half-decade are a far cry from the step changes required between 2030 and 2050, the introduction of those first minimum targets will be transformational. “I think it’s widely seen as a game-changer in the sector,” said ICIS markets editor for biofuels Nazif Nazmul. SAF currently makes up 0.1% of the global aviation fuel mix and approximately 0.5% in the EU, according to Nazmul, so a 2% target for next year means that airport fuel providers will be under pressure to ramp up capacity quickly. SLOWING AMBITIONS Despite this, the last few months have seen a spate of delays and cancellations from some of the largest entrants to the sector, in Europe and elsewhere. BP announced in June that it is dramatically scaling back its bet on SAF, in the wake of taking full ownership of Brazil-based sugarcane and ethanol major Bunge Bioenergia. The company has paused planning of two projects and continues to assess three others, which it attributed to a desire to simplify its new fuels portfolio. Shell also announced a pause to work on its flagship Rotterdam, Netherlands biofuels plant as part of a bid to control costs, but also “to assess the most commercial way forward for the project,” according to Shell downstream renewables and energy solutions director Huibert Vigeveno. The pause will allow Shell to optimize its project development order and reduce the number of engineers on the ground at the site, but projected savings are counterbalanced by a heavy price. Shell estimates that the write-down from the move will cost the company $600 million to $1 billion. STILL EARLY STAGE Shell has not commented on the capacity for the 2025 EU mandate to improve market conditions, but the impact of the new legislation could take time to trickle through the market. Spain's Cepsa, on the other hand, is proceeding with its €1.2bn, 500,000 tonnes/year biofuels project, with start-up scheduled for 2026. “There is a huge chunk of the aviation market that biofuels was not a part of previously, when biofuels were previously relegated to road transport,” Nazmul said. “But now it has opened up to aviation and I think this is something that definitely got the oil majors interested in the first place. But I think the scale is something that they're beginning to question. Is it something that they're able to pull off right now or should they wait for the market to get a little bit more mature?”, he added. A factor in many green chemicals and green fuels markets is the imminent extent of the scale-up dictated by policymakers at a point where many technologies thought to be necessary for decarbonisation are at the pre-commercial or pilot stage. As with chemical recycling, which has seen players try to step up quickly from pilot to small scale to commercial scale plants, biofuels players need to move fast to meet targets. But the economics of the sector remain challenging for now, and future prospects opaque, meaning that slower-moving fuel sector incumbents may hang back and let more specialized firms take the first larger steps. “The pace of market growth following the rollout of the mandates remains to be seen, which is why some larger players are opting to hold back for the time being,” Nazmul said. FEEDSTOCK, TECHNOLOGY QUESTIONS Like the rest of the bio-based materials sectors, the question of what feedstocks and technologies will be viable as the market grows remains unclear, with players betting on different routes. “That's the question no one knows for sure,” Nazmul said. Currently there are seven different routes to produce SAF, and it's kind of a gamble.” “Will there be enough feedstock? Will there be enough capacity? Will we be importing for example SAF from the US? Doesn't that defeat the entire purpose of slashing emissions when you're shipping these biofuels long distances?", he added. The wider world is observing the steps taken in Europe and the US to develop a viable commercial market for SAF, but few moves have been made outside those regions so far. The same may be the case for large energy sector incumbents, who have the financial flexibility to wait for the market to mature a little before going all in. 2025 may prove to be the starting gun for the sector to develop in earnest, but the real rewards may be further down the line. “Asian countries are really interested in SAF, we're seeing some investments in Japan, but countries like India and China are yet to really commit. It's a matter of time and I'm sure those companies and those countries are assessing the best possible options out there,” Nazmul added. SECTOR BACKGROUND Biofuels are liquid fuels derived from biomass, such as biodegradable agricultural, forestry or fishery products, municipal waste, or biodegradable industrial waste. Biofuels can be categorized into four generations: First-generation: Produced from food crops like corn and sugarcane using conventional technology. These biofuels have moderate costs, as they depend heavily on crop prices. Second-generation: Made from non-food biomass like agricultural residues, wood, and waste. These are more expensive due to the advanced technology required. Third-generation: Derived from algae and other fast-growing biomass, but have high costs that are expected to decrease with technological advances. Fourth-generation: Involve biofuels that capture and store carbon during production, often using genetically modified organisms. These also have high costs but may become more affordable as technology improves. Biofuels are increasingly popular across many industries but especially in the transportation sector. This is due to concerns over the impact and supply of fossil fuels, and the fact that many of these fuels are compatible with existing systems. Supply and demand have been bolstered by legislative mandates and corporate climate commitments aimed at promoting sustainability and the environmental benefits of biofuels. This has led to a significant increase in demand in recent years. While first-generation biofuels once dominated the market, there has been a significant shift towards second-generation biofuels. Despite incentives, the global transition to biofuels faces challenges. High costs and uncertainty about profitability hinder vital investments. Long-term take-up goals have also increased concerns over supply capabilities. Insight by Tom Brown and Zara Najimi Click here to visit the ICIS biofuels topic page

19-Aug-2024