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India central bank cuts interest rates to rev up slowing economy
MUMBAI (ICIS)–India’s central bank on Friday reduced its benchmark interest rate for the first time in nearly five years, to address slowing economic growth amid heightened global geopolitical uncertainty and continued weakness in the Indian rupee (Rs). Benchmark interest rate cut by 25 basis points to 6.25% Monetary policy stance kept at "neutral" Year-to-March ’26 GDP growth forecast at 6.7%; inflation at 4.2% In its monetary policy decision, the Reserve Bank of India (RBI) cut its policy interest rates to 6.25% from 6.50% previously and retained its monetary policy stance at “neutral”. Meanwhile, it has maintained the repurchase (repo) rate at 6.50% since February 2023. The last time it reduced this repo rate was in May 2020. India is a giant emerging market in Asia, whose economy ranks among the fastest growing in the world in recent years. The country is also a major importer of petrochemicals. RBI’s monetary policy meeting, the first under its new governor Sanjay Malhotra, was conducted days after India’s budget for the fiscal year 2025-26 was presented to parliament, in which the government cut personal income tax in a bid to boost consumption and growth. “While inflation has declined and is expected to further moderate in the next financial year, and economic growth is expected to recover, it is still much lower than the last fiscal. This has opened up the space for easing the repo rate,” Malhotra said. Malhotra assumed the RBI governor post in December 2024. While the central bank remains optimistic about India’s growth outlook, following a good monsoon season and an anticipated revival of capital expenditure, global factors could slow down growth, he said. “The world economic landscape remains challenging with slower pace of disinflation, lingering geopolitical tensions and policy uncertainties,” the RBI said in its official statement. “The strong [US] dollar also continues to strain emerging market currencies and enhance volatility in financial markets,” it added. At 08:30 GMT, the Indian rupee was trading at Rs87.40 to the US dollar. It plunged to an all-time low of Rs87.58 against the US dollar on 6 February. RBI has projected India’s GDP growth rate for the next fiscal year ending March 2026 at 6.7% – near the high end of the finance ministry’s growth forecast of 6.3% to 6.8%. In fiscal Q2 (July-September 2024), the south Asian country’s actual GDP growth slowed to 5.4%, the weakest in almost two years due to sluggish manufacturing growth and weak consumption. It was also significantly lower than the RBI's projection of a 7% growth for the quarter. The government will release its third quarter GDP data on 28 February. RBI GDP Forecasts FY 2025-26 April-June (Q1) 6.7% July-September (Q2) 7.0% October-December (Q3) 6.5% January-March (Q4) 6.5% Meanwhile, inflation forecast for the current fiscal year has been retained at 4.8%, with fiscal Q4 (January-March 2025) inflation revised down to 4.4% from 4.5% previously on easing food inflation. The RBI has projected retail inflation to be at around 4.2% in the next fiscal year. “Headline inflation after moving above the upper tolerance band in October, has since registered a sequential moderation in November and December,” Malhotra said. While food inflation is expected to soften further over the next few quarters, core inflation is expected to rise but remain moderate, he added. However, rising uncertainties in global financial markets, coupled with continuing volatility in the global energy prices and adverse weather events could present upside risks to the RBI’s inflation projections, the RBI said. In December, consumer inflation eased to a four-month low of 5.22% on easing food prices RBI inflation forecasts FY 2025-26 April-June (Q1) 4.5% July-September (Q2) 4.0% October-December (Q3) 3.8% January-March (Q4) 4.2% Focus article by Priya Jestin
07-Feb-2025
INSIGHT: South Korea broadens aid for struggling petrochemical industry
SINGAPORE (ICIS)–South Korea is streamlining regulations to make it easier for regions densely populated by petrochemical companies to qualify as "industrial crisis response areas", a designation that unlocks government support and financial assistance to mitigate impact of market downturns. Yeosu, Ulsan, Daesan petrochemical hubs to benefit Focus shifts to manufacturing for crisis designation Voluntary business restructuring encouraged This designation also unlocks access to tailored assistance in areas like employment stability, R&D, commercialization, market access, and consulting, according to a Ministry of Trade, Industry and Energy (MOTIE) administrative notice released on 5 February. The new regulation follows a wide-ranging support package unveiled by the government on 23 December 2024, aimed at bolstering the competitiveness of its domestic petrochemical industry, which is facing a global oversupply driven by expansions in China and the Middle East. This policy shift is expected to benefit major petrochemical hubs such as Yeosu, Ulsan, and Daesan, providing them with greater access to resources designed to mitigate economic downturns and to support continued growth within the sector. Previously, the high proportion of the services sector in cities like Yeosu hindered their ability to be designated as industrial crisis response areas. The revised regulations will now assess "regional stagnation" based solely on the manufacturing sector, excluding service industries. This change will allow regions heavily reliant on manufacturing, particularly petrochemicals, to meet the designation criteria more readily. MULTI-PRONGED STRATEGY A cornerstone of the government's latest plan is encouraging voluntary business restructuring, encompassing facility closures, sales, joint ventures, efficiency improvements, and new business acquisitions. To facilitate these changes, the government will implement legal reforms and offer a range of financial and tax incentives. These include extending the grace period for acquiring 100% of holding company shares from three to five years and streamlining merger reviews with the Korean Fair Trade Commission (FTC), the country's regulatory authority for economic competition. A dedicated consultation channel between MOTIE and the FTC will further expedite reviews and support restructuring efforts. Separately, the government plans to provide up to Korean won (W) 3 trillion ($2.1 billion) in financing packages for petrochemical companies seeking to revamp their business portfolios, including expanded access to a W1 trillion business restructuring fund managed by the Korea Development Bank. For designated Industrial Crisis Response Areas, existing loan maturities from policy financial institutions will be extended, principal repayments deferred; national tax payment deadlines extended; and seizure and sale deferred for up to one year. Beyond restructuring, the government is targeting cost reduction. The duty-free period for crude oil used in naphtha production will be extended by a year until the end of 2025 and import surcharges on liquefied natural gas (LNG) used as industrial raw materials will be refunded. A "fast-track" approval process will be implemented for ethane terminal and storage tank construction to facilitate access to cheaper raw materials. Additional cost-saving measures include expanding electricity rate options through distributed power trading and rationalizing safety regulations. The plan will also support R&D focused on shifting production from general-purpose petrochemicals to specialized, high-value-added products. An "R&D Investment Roadmap for 2025-2030" will be unveiled in the first half of this year, and preliminary feasibility studies for high-value and eco-friendly chemical material technology development will be conducted. The support ratio for regional investment subsidies in Industrial Crisis Response Areas will be increased, national strategic and new growth technologies will be identified, and a W50 billion "High-Value Specialty Fund" will be established to promote production of specialty chemicals. DOMESTIC PRODUCERS STRUGGLE South Korea's four largest petrochemical manufacturers – LG Chem, Lotte Chemical, Kumho Petrochemical and Hanwha Solutions – faced continued challenges in 2024. LG Chem reported a net loss of W899.2 billion in the fourth quarter, reversing the net profit of W128.5 billion a year ago due to decreased demand for both petrochemicals and battery materials. It also reported an operating loss of W252 billion in the same period. The company has revised down its capital expenditure plan for the year to W2 trillion-3 trillion from W4 trillion previously as it navigates the market downturn. Separately, as part of its global expansion strategy, LG Chem has secured a deal to supply cathode materials to Prime Planet Energy and Solutions (PPES) – a joint venture of Japanese carmaker Toyota and appliance maker Panasonic – starting 2026. The company will focus on developing eco-friendly materials and technologies that align with PPES' low-carbon vision. Meanwhile, major ethylene producer Lotte Chemical in Q3 2024 reported a loss of W514 billion, on "delayed demand recovery, lower product spreads due to currency depreciation, one-time costs from maintenance at overseas subsidiaries, and rising shipping costs". The company is now pursuing an asset-light strategy, which involved liquidation of its Malaysian synthetic rubber production subsidiary Lotte Ube Synthetic Rubber (LUSR) – a joint venture with Japan’s Ube Elastomer. Based in Johor, Malaysia, LUSR produces 50,000 tonnes/year of polybutadiene rubber (PBR). Lotte Chemical also plans to generate W1.4 trillion in proceeds from sale of stakes in overseas subsidiaries. Synthetic rubber major Kumho Petrochemical Co reported on 4 February a Q4 net income of W61.3 billion, down 33% year on year, due to weak market demand due to a year-end drop in raw material prices; with operating profit shrinking by about 72% to W10 billion despite a 19% increase in sales to W1.8 trillion. Insight article by Nurluqman Suratman ($1 = W1,446) Thumbnail image shows an aerial view of a container pier in South Korea's southeastern port city of Busan. (YONHAP/EPA-EFE/Shutterstock)
07-Feb-2025
Dutch regulator fires energy market manipulation warning shot
Dutch regulator 'reprimanded' company over possible market manipulation on TTF gas hub Price manipulation on major benchmark hub can cost other participants, consumers Company in question to be 'closely watched', trader committed to 'no longer engage' in such behaviour Additional reporting by Jamie Stewart LONDON (ICIS)–The Dutch energy regulator has "reprimanded” an international company for "possible market manipulation" at the TTF gas hub, according to a statement released 6 February. The statement was clearly intended to deter market participants from attempting to "mark the close", as it termed the behaviour, adding such behaviour was "an illegal trading practice". It did not reveal the company in question and did not cite any specific penalty. The Dutch Authority for Consumers and Market (ACM) added it would "continue to keep a close watch on the company" and that the trader had pledged to no longer "engage in this conduct". MARKET INFLUENCE According to ACM, the practice of "marking the close" can occur if a market participant influences the reference price on a wholesale energy market by buying or selling close to the moment that a settlement price is determined. This can involve bidding for orders with a much higher asking price or buying excessively large volumes on offer right before the market close, as a result of which the price spikes up. The reverse can also be true, with the price range pushed down by repeatedly offering volumes at a lower price or selling excessively large volumes. As a result of a closing value that does not otherwise reflect market fundamentals or the prevailing price range, other traders, as well as Dutch and other European energy consumers, foot the bill for forward contracts that later settle at this closing price. IMPLICATIONS The cases cited by ACM concerned the short-term Day-ahead contract at the Dutch TTF gas hub. The ICIS TTF Day-ahead is a benchmark price commonly used across the energy industry. The TTF is by far the most traded hub in Europe, and market moves would affect other hubs not only locally but across the continent. Rules across Europe governing energy market trade are laid out in the EU’s Regulation on Wholesale Energy Market Integrity and Transparency which covers market abuse including market manipulation and insider trading. ICIS POSITION Richard Street, international regulatory affairs head at ICIS’ parent company LexisNexis Risk Solutions, said: “We were aware of the issues referred to by ACM. We have strict data standards that allow us to remove any off-market trades. "Market participants who make trades they know are off-market can pre-empt any issues by marking these deals as ‘P&C’ or contact us confidentially to make us aware of the circumstances surrounding unusual activity." Street added it was "clearly disappointing that ACM has had to publicly reprimand certain traders for their behaviour" but he was hopeful that this "sends a clear message that regulators are watching and will take action where necessary”. The Dutch regulator added: it was "calling on market participants and other relevant stakeholders on the wholesale energy markets to share information about possible illegal trading activities. They can do so using ACER’s Notification Platform. See also ACM’s website: Reporting suspicious energy trading." Eduardo Escajadillo EDITOR'S VIEW How price reporting is done is of vital importance to maintain trust in the integrity of commodities markets, and in the price formation process itself. This is important because these markets, in some way, touch all of our lives. Price reporting agencies (PRAs) such as ICIS welcome the support of regulators in ensuring a robust price discovery environment. In this case the Dutch regulator ACM has flexed its muscles, reminding all market participants of their obligations, as well as its own as a watchdog with a duty to consumers. Best practice in the discipline of price reporting is defined by the EU Benchmarks regulation, which as a benchmark administrator ICIS aligns its practices to, as well as the long-standing IOSCO principles of best price for price reporting in commodities markets. ICIS has long been a voluntary signatory to the IOSCO principles and is audited against these principles every year. PRAs best-practice models also lay out how to deal with unusual trading patterns. Central to the approach is transparency if transactions are deleted from a price assessment process, which does happen from time to time. For example, this British NBP gas market comment published by ICIS as recently as 30 January, said: “February '25 trades recorded at the time of the close at the value of 130.500p/th were deemed to be outside of the prevailing range of verified market information reflecting the value of the contract at that time and were therefore excluded from the assessment and ICIS indices.” Our publicly available pricing methodologies, for example our gas methodology, give more details regarding ICIS price reporting practices. Jamie Stewart
06-Feb-2025
BP puts Gelsenkirchen, Germany refinery, crackers up for sale
BARCELONA (ICIS)–BP plans to sell its to sell its Ruhr Oel refinery, crackers and downstream assets at Gelsenkirchen in Germany. The company will start marketing the assets immediately, with the aim of completing the sale this year, according to a statement published on 6 February by the UK headquartered energy giant. According to the ICIS Supply & Demand Database BP operates a refinery and two crackers with combined capacity of 1.065 million tonnes/year of ethylene, as well as units with 645,000 tonnes/year propylene, 430,000 tonnes/year benzene plus cumene, cyclohexane, methanol, toluene and ammonia facilities. BP said the assets for sale include DHC Solvent Chemie in Mulheim an der Ruhr. All refinery owners in Europe are under pressure to rationalise their portfolios thanks to the shift to vehicle electrification and high cost base. There is also intense competition from new refineries starting up in Asia and the Middle East. BP said the move is in line with its strategic drive to deliver a simpler, more focused, higher value company. The company said that it has implemented numerous projects to modernize the infrastructure of the refinery in Gelsenkirchen in recent years. This includes renewing the power grid and establishing an independent steam supply. The refinery can process crude oils from around the world, produce fuels and also has the potential to manufacture biofuels and process recycled plastics, said bp. Michael Connolly, ICIS principal refining analyst pointed out that the refinery is configured to give a moderately high yield of gasoline, meaning it is not really suited to the future of the European market, where vehicle electrification is hurting demand. He said BP already had plans to reduce the capacity of the refinery from 260,000 bbl/day to 155,000 bbl/day in 2025. “Undoubtedly it would have used Russian crude, but despite having access to seaborne crude, the loss of Russian crude through sanctions would have impacted financials,” he said. The economics of the facility will also be more challenging, as for all European refiners, because cracks or margins for gasoil production have declined to pre-Ukraine war levels, added Connolly. ICIS expects German crude refining capacity to fall from 2.1 million bbl/day in 2020 to 1.8 million bbl/day by 2026 and well off their peak refining capacity of 2.4 bd in 2007. Emma Delaney, BP executive vice president, customers & products said, “BP needs to continually manage its global portfolio as we position to grow as a simpler, more focused, higher-value company. After a thorough review, we have concluded that a new owner would be better suited for the site to take it forward. We are convinced that the refinery can unlock its full potential under new ownership.” Focus article by Will Beacham Graphics by Miguel Rodriguez-Fernandez Thumbnail photo: bp's refinery site in Gelsenkirchen, Germany (Source: BP) Clarification: recasts to explain BP has two crackers at the site.
06-Feb-2025
PODCAST: Look ahead to ICIS PET Value Chain Conference
LONDON (ICIS)–Senior editor, recycling Matt Tudball talks to Helen McGeough, global recycling analytics team lead about some of the key topics that will be discussed at the upcoming ICIS PET Value Chain Conference on 6-7 March in Amsterdam. Topics include: Improving the supply chain for recycled PET Getting access to good-quality feedstocks Deposit return schemes (DRS) growing in Europe Impact of high feedstocks on R-PET prices Spreads between virgin PET and R-PET
05-Feb-2025
Brazil’s Unigel appoints Dario Gaeta as CEO after debt restructuring greenlit
SAO PAULO (ICIS)–Brazilian chemicals producer Unigel has concluded its debt restructuring process worth Brazilian reais (R) 5.1 billion ($885 million) after a Sao Paulo business court greenlit the plans drawn up by creditors. Unigel said it would be able to deleverage its debts by around 50% with the restructuring process’ conversion of R5.1 billion of existing debt into new financial instruments. The restructuring puts an end to the decades-long private ownership of Unigel in the hands of its founder, 88-year-old Henri Armand Szlezynger. “The execution of the RE [restructuring] Plan marks a pivotal transition in Unigel’s governance framework, with Option A [main] Creditors now holding a 50% stake in the company’s equity structure,” said Unigel. The new majority owners headhunted for the CEO position the Brazilian executive Dario Gaeta, with decades of experience at industrial and agricultural companies. Up to 2024, he was chief operating officer at ethanol producer Atvos and, prior to that, he was the CEO at Tiete Agroindustrial, another company in the sugar and ethanol sector, according to Gaeta’s LinkedIn profile. Former CEO Roberto Noronha has been demoted to board member, and the vice president who has overseen the restructuring, Daniel Zilberknop, an old name in Unigel, has been appointed chairman of the board. Unigel’s new board composition Position Name Representative Chairman of the Board Daniel Zilberknop Independent CEO Dario Gaeta Not provided Board Member Marc Buckingham Szlezynger Cigel Board Member Roberto Noronha Santos Cigel Board Member Pedro Wongtschowski Cigel Board Member Fabio de Barros Pinheiro Creditors Board Member Kofi William Bentsi-Enchill Creditors Board Member Gregorio Mario Charnas Creditors The restructuring plan also signals an exit from the fertilizers sector, as already outlined at the beginning of the restructuring process by creditors. High prices for natural gas – fertilizers’ main feedstock – was the main cause for that part of the business to start faltering, dragging the rest behind it in the end. Some plants which were leased to Unigel by Brazil’s state-owned energy major Petrobras are reportedly on course to return under Petrobras’ umbrella, even if Unigel may continue operating them. Unigel, then, is to remain mostly what it was before it ventured into fertilizers and was caught up in a major sector downturn. The company mostly produces styrenics and acrylics. For products and capacities, see bottom table. SULPHURIC ACID PLANTEarlier in January, Unigel presented plans to finish construction of its sulphuric acid plant in the state of Bahia, which had been paused as the company's financial woes increased. Unigel said it would invest $36.8 million to finish up the plant in Camacari, aiming to start it up by September. Production capacities were not disclosed. When fully functioning, the plant will allow Unigel to reduce its acid purchases in the open market. Acid is a key chemical used in many other chemical and industrial processes. Jonathan Szwarc, head of Latin America credit research at data firm specializing in leveraged capital markets Debtwire, who covered Unigel in the past, said by reducing its dependency on imports the sulphuric acid plant was a sound project from which Unigel’s could start building up its recovery. “The numbers for that project are sound. From my time covering Unigel, I remember the return on investment was expected to be very healthy: in up to four years, the company expects to have paid off the investment, such are the large amounts of acid it has to purchase in the open market,” said Szwarc. Earlier this month, Unigel also presented, for the first time in several quarters, a financial forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) up to 2030. The company has not published any financial results since 2023, a provision contemplated under Brazilian corporate law for companies in financial distress. For 2025, Unigel said it expected upsides coming from a 5% increase in Brazil’s styrene import tariff ($4 million positive contribution) and a higher rate in the REIQ tax benefit system for chemicals companies ($14 million). According to Unigel, its EBITDA could rise to $182 million by 2030. Unigel forecasts 2025 2026 2027 2028 2029 2030 EBITDA (in $ million) 49 142 164 176 173 182 Whether Unigel’s medium-term forecasts are realized remains to the seen, as it ultimately is a company in very deep financial distress for the past year and a half, operating in a market – petrochemicals – which is going through one of the longest sector’s downturns. “2030 is indeed quite a long forecast on this occasion. But, of course, for a judge to approve your restructuring plan you must present some sort of credible plan: detailed forecasts on financials, on spreads, on production…” said Szwarc. “Whether those forecasts end up realized, that’s another matter. But as we say in this world – an Excel [spreadsheet] can withstand almost anything,” he concluded, ironically. ($1 = R5.76) Additional information by Yashas Mudumbai Focus article by Jonathan Lopez
04-Feb-2025
UPDATE: China retaliates with 15% tariff on US LNG
UPDATE: China retaliates with 15% tariff on US LNG SINGAPORE (ICIS)–China has announced a 15% tariff to be imposed on coal and LNG imports from the United States as a retaliation to US trade tariffs, the country’s Ministry of Commerce said in a statement. “In accordance with the Tariff Law of the People’s Republic of China, the Customs Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China and other laws and regulations and the basic principles of international law, and with the approval of the State Council, additional tariffs will be imposed on some imported goods originating from the United States starting from 10 February 2025.” A 10% tariff will also be imposed on crude oil, agricultural machinery, and a score of other products. US president Donald Trump and Chinese President Xi Jinping are expected to talk this week on trade and other issues. The US has imposed 10% tariffs on Chinese goods starting 4 February. “This will drive even more US volumes into Europe, and leave portfolio players with suboptimal logistical flows,” said Saul Kavonic, oil and gas analyst with research firm MST Marquee. “Chinese buyers will pay the tariffs, so will be trying to minimize the US volumes they take contractually, and swap that out for non-US volumes. This benefits other regional producers such as Australia, who will be seen as relatively more reliable after this. “The negative impact on US LNG from these tariffs will only partly offset the strong appetite from other buyers to procure more US LNG under pressure from Trump to rebalance trade deficits. The tariffs will create material market inefficiencies, which will benefit some LNG traders in the regions. It may push prices higher everywhere on the margin, as flows become suboptimal.” CHINA IMPORTS China imported 4.4 million tonnes of LNG from the United States in 2024, ICIS data shows, out of a total of 79.24 million tonnes. If the tariff is enforced and stays beyond the upcoming negotiations expected this week between US President Donald Trump and Chinese President Xi Jinping, importers could optimize the US-based positions by diverting them elsewhere. However, the imposition of tariffs on energy by the Chinese government fundamentally means higher energy costs for the country, which increases the cost of industrial production and inflationary pressure. The growing tensions in the commercial relationship between the countries could also equate to reluctance by Chinese buyers to commit to new long-term positions with US-based suppliers. Political tensions with the US could turn Chinese buyers to alternative sources of LNG and pipeline gas, including Russia. The move is the latest in a series of tariff exchanges that so far have involved Canada and Mexico in addition to China. The market anticipates that the next wave of tariffs could target members of the European Union. EU states are unlikely to impose retaliatory tariffs on imported energy, as the cost of gas is already growing following the halt of Russian pipeline gas supplies to the region. Roman Kazmin
04-Feb-2025
India to roll out 20% ethanol-blended fuel by March
MUMBAI (ICIS)–India is set to roll out a 20% ethanol-blended (E20) fuel mandate by March – about nine months ahead of schedule – as there will be enough availability of the environment-friendly additive in the domestic market without endangering sugar production. 2.5% price hike for C-heavy molasses to deter feedstock diversion away from sugar Rice feedstock prices reduced to boost production Auto companies to soon launch 100% ethanol vehicles For the year ending October 2025, the Indian government has approved on 29 January a 2.5% hike in the procurement price of ethanol made from C-heavy molasses, which contain the least sugar among three types of available sugarcane feedstock. India’s ethanol supply year (ESY) is from November to October. The price adjustment acts as an incentive for producers to use the C-heavy feedstock to make ethanol, instead of the A and B molasses that typically go into sugar production. Domestic oil manufacturing companies (OMC) such as Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) will now have to pay a higher price for ethanol made from C-heavy molasses. The government-determined ethanol price was last revised in November 2022. Meanwhile, to further encourage ethanol production, the government on17 January 2025 reduced the price of rice feedstock by more than 24% to Rs22.50/kilogram (kg) amid a surplus. Rice and maize are alternative feedstocks for ethanol production. This decision has helped to make ethanol produced from rice feedstock more economically viable, Grain Ethanol Manufacturers Association (GEMA) treasurer Abhinav Singal said. The government had banned the use of rice as feedstock for ethanol production from July 2023 to August 2024. Notwithstanding the lifting of the ban, ethanol producers were still finding rice prices too high to make production economically viable. “Stability in feed prices will boost ethanol production from rice. The earlier rate was unviable for the units,” Singal said. Nearly 65% of the ethanol produced in the country is sourced from sugarcane while the remaining 35% comes from grains, including maize and rice. India will achieve 20% blending of ethanol in gasoline in the next two months and will soon be able to blend more than 20% ethanol in gasoline if the need arises, India’s petroleum and natural gas minister Hardeep Singh Puri said at the Auto Expo 2025 on 21 January. In 2023-24, there was a phased roll-out of 20% ethanol in select outlets across the country, with full implementation initially targeted by 2030. The target full implementation was brought forward to 2025-26 as ethanol availability is now assured following a series of measures taken over the past two years, industry sources said. “We have increased ethanol blending in fuel from 1.5% per cent in 2014 to 10% in May 2022, which was well ahead of the November 2022 deadline and now the target of 20% blending has also moved forward significantly,” he added. “Our current distillation capacity, which is at about 16.83 billion litres, is projected to cross 17 billion litres, and will leave us with ample opportunity to blend beyond 20%,” he added. India achieved ethanol blending of 18.2% in gasoline in December 2024, official data show. The government is currently working on a plan to bring down retail prices of ethanol for use as fuel in vehicles with flexible fuel engines, India’s road transport and highways minister Nitin Gadkari said at the Sugar-Ethanol and Bio Energy India Conference on 30 January. Around nine companies in India will soon be launching cars and two-wheelers that run on 100% ethanol, he added. Major automobile manufacturers, including Mahindra & Mahindra, Toyota, Hyundai, and Tata, will introduce 100% ethanol-powered vehicles over the next five months, with two-wheeler makers also adopting the technology, he said. Focus article by Priya Jestin ($1 = Rs87.08)
04-Feb-2025
Japan's Sumitomo Chemical cuts stake in Sumitomo Bakelite
SINGAPORE (ICIS)–Japan's Sumitomo Chemical has sold a portion of its stake in specialty chemicals producer Sumitomo Bakelite as part of a broader plan to enhance its financial performance through asset sales. Sumitomo Chemical on 4 February said that it has sold around 5.25 million shares of Sumitomo Bakelite for around yen (Y) 19.1 billion ($123 million), the Japanese producer said on Tuesday. Sumitomo Bakelite produces a range of chemical products, including phenolic, epoxy and polyimide resins, as well as other specialty chemicals. The stake sale reduced Sumitomo Chemical’s stake in the specialty chemicals producer to 10.6% from 15.6% previously. Sumitomo Chemical expects a one-time gain of around Y17.7 billion from the sale in its non-consolidated financial results for the year ending 31 March 2025. "Sumitomo Chemical is implementing its short-term intensive performance improvement measures aimed at ensuring a V-shaped recovery in fiscal 2024 and strengthening its financial position to lay the groundwork for future fundamental structural reforms," the company said. On 3 February, the company announced that it will be divesting 66.6% of its share in wholly-owned subsidiary Sumitomo Chemical Engineering Co (SCEC) by 31 March to Japan's JFE Engineering Corp for an undisclosed fee. Sumitomo Chemical will retain a 33.4% stake in SCEC following the sale. "SCEC will maintain a good relationship with the Sumitomo Chemical Group as it works to maximize its synergies with the JFE Group," the company said. SCEC provides engineering, procurement, construction, operation and maintenance services for environmental facilities, energy facilities, including liquified natural gas stations and renewable energy plants, as well as chemical plants. In the nine months to 31 December 2024, Sumitomo Chemical swung into a net profit on improved selling prices at its core essential and green materials segment, the Japanese producer said on 3 February. in Japanese yen (Y) billions Apr-Dec 2024 Apr-Dec 2023 % Change Sales 1,904.8 1,806.9 5.4 Operating income 145.4 -160.6 Net income 28.6 -109.8 The company's selling prices for synthetic resins, methyl methacrylate, and industrial chemicals rose due to higher raw material costs during the period. However, aluminum shipments declined following the group's exit from the business, resulting in a ¥8.8 billion decrease in essential and green materials sales revenue to Y672.9 billion. Despite this, the segment trimmed its core operating loss by Y16.2 billion to Y44.3 billion, aided by better market conditions, although the financial performance of its 37.5%-owned Saudi chemical producer Petro Rabigh deteriorated. Saudi Aramco owns 62.5% of Petro Rabigh. MANAGEMENT CHANGES Sumitomo Chemical on 3 February announced that Nobuaki Mito, the company's senior managing executive officer, will take over as the company's new president. Mito is expected to be inaugurated as representative director and president of Sumitomo Chemical in June this year, while incumbent president, Keiichi Iwata, will become chairman. ($1 = Y155.20)
04-Feb-2025
CORRECTED: INSIGHT: US tariffs unleash higher costs to nation's chem industry
Correction: In the ICIS story headlined “INSIGHT: US tariffs unleash higher costs to nation's chem industry” dated 3 February 2025, the wrong volumes were used for the following imports: Canadian ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94; Canadian polyethylene having a specific gravity of 0.94 or more, in primary forms; Canadian polyethylene having a specific gravity of less than 0.94, in primary forms; Canadian polypropylene, in primary forms; Canadian mixed xylene isomers; Mexican polypropylene, in primary forms; and Mexican cyclohexane. The US did not import cyclohexane from Mexico in 2023. A corrected story follows. HOUSTON (ICIS)–The tariffs that the US will impose on all imports from Canada, Mexico and China will unleash higher costs for the nation's chemical industry, create supply-chain snarls and open it to retaliation. For Canada, the US will impose 10% tariffs on imports of energy and 25% tariffs on all other imports. For Mexico, the US imposed 25% tariffs on all imports but the countries' presidents said on Monday the tariffs are being paused for a month. For China, the US will impose 10% tariffs on all imports. US IMPORTS LARGE AMOUNTS OF PE FROM CANADAUS petrochemical production is concentrated along its Gulf Coast, which is far from many of its manufacturing hubs in the northeastern and midwestern parts of the country. As a result, individual states import large amounts of polyethylene (PE) from Canada – even though the nation as a whole has a large surplus of the material. Even Texas imports large amounts of PE from Canada – despite its abundance of plants that produce the polymer. In addition, polyester plants in North and South Carolina import large amounts of the feedstocks monoethylene glycol (MEG) and purified terephthalic acid (PTA) from Canada. The US as a whole imports significant amounts of polypropylene (PP) and polyvinyl chloride (PVC) from Canada – again, despite its surplus of these plastics. The following table lists some of the main plastics and chemicals that the US imported from Canada in 2023. The products are organized by their harmonized tariff schedule (HTS) code. HTS PRODUCT MEASUREMENT VOLUMES 3901.40.00 Ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94 kilograms 1,319,817,405 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 1,088,071,523 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 420,561,390 2917.36.00 Terephthalic acid and its salts kilograms 407,710,439 2905.31.00 Ethylene Glycol kilograms 329,542,378 3902.10.00 Polypropylene, in primary forms kilograms 271,201,880 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 188,800,413 2902.44.00 Mixed xylene isomers liters 746,072 2905.12.00 Propan-1-ol (Propyl alcohol) and Propan-2-ol (isopropyl alcohol) kilograms 87,805,095 3901.30.60 Ethylene-vinyl acetate copolymers kilograms 71,372,396 Source: US International Trade Commission (ITC) IMPORTS FROM MEXICOMexico is not as large of a source of US petrochemical imports as Canada, but shipments from the country are still noteworthy. The following table lists some of the main plastics and chemicals that the US imported from Mexico in 2023. HTS PRODUCT MEASUREMENT VOLUMES 2917.36.00 Terephthalic acid and its salts kilograms 69,230,708 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 34,674,435 2915.24.00 Acetic anhydride kilograms 25,294,318 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 24,005,371 2915.31.00 Ethyl acetate kilograms 18,855,544 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 14,469,582 3902.10.00 Polypropylene, in primary forms kilograms 8,849,478 Source: US International Trade Commission (ITC) IMPORTS FROM CHINAChina remains a significant source for a couple of noteworthy chemicals despite the effects of the tariffs that US President Donald Trump imposed during his first term in office. The following table shows 2023 US imports from China. HTS PRODUCT MEASUREMENT VOLUMES 29152100 Acetic acid kilograms 21,095,566 39093100 Poly(methylene phenyl isocyanate) (crude MDI, polymeric MDI) kilograms 206,642,886 Source: US International Trade Commission (ITC) China's shipments of plastics goods are more significant. OIL TARIFFS WILL HIT US REFINERSCanada and Mexico are the largest sources of imported crude oil in the US, and the heavier grades from these countries complement the lighter grades that the US produces in abundance. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units. Refiners cannot swap out heavier Canadian and Mexican grades with lighter US grades. Instead, they will need to pay the tariffs or find another supplier of heavier grades, possibly at a higher cost. The following table shows the largest sources of imported crude in 2023. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 Source: Energy Information Administration (EIA) US refiners could take another hit from higher catalyst costs. These are made from rare earth elements, and China remains a key source. TARIFFS TO RAISE COSTS FOR FERTILIZERCanada is the world's largest producer of potash, and it exports massive amounts to the US. It is unclear how the US could find another source. Russia and Belarus are the world's second and third largest potash producers. Together, the three accounted for 65.9% of global potash production in 2023, according to the Canadian government. Canada accounts for significant shares of other US imports of fertilizers. The following table lists some of Canada's fertilizer shipments to the US in 2023 and shows its share of total US imports. Figures are from 2023. HTS PRODUCT MEASUREMENT VOLUME % 31042000 Potassium chloride metric tonne 11850925 88.8 31023000 Ammonium nitrate, whether or not in aqueous solution metric tonne 295438 76.6 31024000 Mixtures of ammonium nitrate with calcium carbonate or other inorganic nonfertilizing substances metric tonne 29203 75.7 31055100 Mineral or chemical fertilizers, containing nitrates and phosphates metric tonne 1580 66.1 31022100 Ammonium sulfate metric tonne 947140 49.6 31052000 Mineral or chemical fertilizers, containing the three fertilizing elements nitrogen, phosphorus and potassium metric tonne 147850 41.4 Source: US ITC SUPPLY CHAIN SNARLSIf US companies choose to avoid the tariffs and seek other suppliers, they could be exposed to delays and supply chain constraints. Other companies outside of the petrochemical, plastic and fertilizer industries will also be seeking new suppliers. The scale of these disruptions could be significant because Canada, Mexico and China are the largest trading partners in the US. The following table lists the top 10 US trading partners in 2023 based on combined imports and exports. Country Total Exports ($) General Imports ($) TOTAL Mexico 322,742,472,406 475,215,965,697 797,958,438,103 Canada 354,355,997,349 418,618,659,183 772,974,656,532 China 147,777,767,493 426,885,009,750 574,662,777,243 Germany 76,697,761,127 159,272,068,221 235,969,829,348 Japan 75,683,130,214 147,238,042,342 222,921,172,556 South Korea 65,056,093,590 116,154,470,335 181,210,563,925 UK 74,315,228,810 64,217,031,774 138,532,260,584 Taiwan 39,956,725,574 87,767,403,487 127,724,129,061 Vietnam 9,842,922,146 114,426,076,081 124,268,998,227 Source: US ITC RETALIATIONUS petrochemical exports would be tempting targets for retaliation because of their magnitude and the global capacity glut. China, in particular, could impose tariffs on US chemical imports and offset the disruptions by increasing rates at under-utilized plants. So far, none announced plans to target chemicals on Sunday. Canada's plans to impose 25% tariffs on $30 billion in US goods does not include oil, refined products, chemicals or plastics. That batch of tariffs will take place on February 4. Canada will impose 25% tariffs on an additional $125 billion worth of US goods following a 21-day comment period, it said. The government did not highlight plastics or chemicals in this second batch of tariffs. Instead, it said the tariffs will cover passenger vehicles and trucks, including electric vehicles, steel and aluminium products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles and recreational boats. In a statement issued on Sunday, Mexico's president made no mention of retaliatory tariffs. Instead, she said she will provide more details about Mexico's response on Monday. China said it will start legal proceedings through the World Trade Organization (WTO) and take corresponding countermeasures. RATIONALE BEHIND THE TARIFFSThe US imposed the tariffs under the nation's International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat. In a fact sheet, Trump cited illegal immigration and illicit drugs. Saturday's executive order is the first time that a US president imposed tariffs under IEEPA. Prior IEEPA actions lasted an average of nine years. They can be terminated by a vote in Congress. Insight article by Al Greenwood (Thumbnail shows containers, in which goods are commonly shipped. Image by Shutterstock)
03-Feb-2025

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