Energy

Navigating the energy transition in a strategic and sustainable way

Harness the power of connected

commodity markets


In the unfolding energy transition, the desire to meet climate goals must be balanced with commercial objectives and the need for secure supply. Empower your business and support the transition to greener energy with a transparent view of today’s interconnected and unpredictable energy markets.

Build resilient strategies with instant access to reliable pricing, supply and demand data for both established and emerging energy markets. Comprehensive news, analysis and market outlooks for the short, medium and long term help you understand markets as diverse as natural gas, LNG, power including wind and solar, crude oil, refined products, carbon, hydrogen and ammonia.

Make sense of the changing regulatory and policy landscape with direct access to a team of 100 energy experts.

ICIS’ industry-leading data and analytics are accessible through a range of channels. Set your business up for success with tailored data delivered through our subscriber platform, ICIS ClarityTM or through our Data as a Service (DaaS) solutions. Gain a full view of the energy value chain with customised solutions that integrate ICIS data into your workflows via your existing data solution provider.

Energy commodities we cover

With over 10,000 market insights every year, ICIS offers a global perspective on interconnected energy markets, referencing weather, shipping, chemicals, fertilizers and more. To learn more about the solutions we offer for each of the commodities below, please click on the relevant link.

Crude oil & refined products

Remodel for success in the changing energy landscape with reliable supply, demand and trade flow data.

Natural gas

Optimise performance with ICIS data, used by the majority of gas market participants as their preferred reference for the most liquid European benchmark (TTF).

LNG (Liquefied natural gas)

Capitalise on opportunity with ICIS’ industry-leading integrated LNG analytics solution featuring live cargo tracking.

Power & renewables

Inform your decision-making with reliable short, medium and long-term power forecasts and expert analysis of policy, regulation and macroeconomic impact.

Carbon

Understand the evolving European carbon landscape and reduce carbon price exposure with ICIS, the leader in carbon market intelligence.

Hydrogen

Lead the way to a traded hydrogen market with trusted, data-driven analysis of market-forming activities and unrivalled interactive analytics.

ICIS Energy Foresight podcast

Hear an expert view on the longer term trends impacting energy markets.

ICIS Hydrogen Insights podcast

Hear experts from around the world discuss topics including policy developments, regulation, supply, demand and cost of production.

Energy solutions

Set your business up for success with ICIS’ complete range of market intelligence, data services and analytics solutions for energy. Visit Sectors to see how we can help you stay one step ahead.

Minimise risk and preserve margins

Remain competitive with reliable, up-to-date price forecasts, supply and demand, cost and margin data.

Adapt quickly as events unfold

Capitalise on opportunity and minimise exposure, with news and in-depth analysis of the key events impacting energy markets.

Maximise profitability in volatile markets

Benefit from a complete view of energy markets with integrated solutions featuring pricing, market commentary, in-depth analysis and analytics.

Model with accuracy

Optimise results with ICIS data seamlessly integrated into your workflows and processes.

ICIS Energy Foresight

Identify new opportunities with an integrated analytics solution combining reliable, quantitative data and expert analysis. Offering a comprehensive, cross-commodity view of historic, current and future market conditions, featuring data models that are updated daily, optimise profitability with ICIS Energy Foresight.

Energy news

LOGISTICS: Asia-US container rates fall; tanker rates stable to softer; bridge collapse causing delays

HOUSTON (ICIS)–Shipping container rates continue to fall, liquid chemical tanker rates are stable to softer, and the bridge collapse at the Port of Baltimore has led to longer delivery times for imports, highlighting this week’s logistics roundup. CONTAINER RATES Rates for shipping containers from east Asia and China to the US continue to fall along with average global rates as capacity remains ample to handle the longer routes as commercial vessels continue to avoid the Suez Canal. Supply chain advisors Drewry said average rates ticked lower this week but remain 64% higher than the same week a year ago, as shown in the following chart. Rates from Asia to the US and Europe have also continued to fall, as shown in the following chart. Drewry said it expects a minor decrease in Transpacific spot rates and for stability along the Transatlantic and Asia-Europe trade lanes. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates along the US East Coast have fallen since the collapse of the Key Bridge in Baltimore, which signals to him that regional container traffic continues to flow. Levine said downward pressure will continue because of soft demand and it being the slow season for container trade, but that if threats persist in the Red Sea and commercial vessels continue to divert away from the Suez Canal, prices will remain above normal. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. They also transport liquid chemicals in isotanks. PORT OF BALTIMORE The Unified Command (UC) continues to remove containers from the Dali and clear wreckage from the collapsed bridge at the entrance to the Port of Baltimore. Source: Key Bridge Response 2024 While the closure of the port has not had a direct impact on the flow of chemicals, a market participant in Ohio said it is seeing delays in delivery times for imports as vessels originally destined to offload in Baltimore are getting re-routed to other ports. The US Army Corps of Engineers (USACE) expects to open a limited access channel 280 feet wide and 35 feet deep by the end of April, and are aiming to reopen the permanent, 700-foot-wide by 50-foot-deep federal navigation channel by the end of May, restoring port access to normal capacity. As of 11 April, approximately 38 containers have been removed, the UC said, which is necessary for safe access to them begin removing the segments of the fallen bridge that lie across the ship’s bow. While marine traffic is still limited, 69 vessels have transited through since the creation of the temporary alternate channels. LIQUID CHEM TANKERS US liquid chemical tanker freight rates as assessed by ICIS held mostly steady this week – except from the US Gulf Coast (USG) to India. There is downward pressure on rates along the USG-Asia trade lane as several outsiders have come on berth for both April and May, adding to the available tonnage for completion cargos. On the other hand, rates from the USG to Rotterdam were steady this week even as space is limited and there are no outsiders on berth. Contract tonnage continues to prevail, with continued interest in styrene, MTBE and ethanol. There has been activity on the spot market, but owners are still working with COA customers to finalize their needs before committing to others. For the USG to South America trade lane rates remain steady with several inquiries for methanol widely viewed in the market. PANAMA CANAL Wait times for non-booked vessels ready for transit edged higher both directions this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times last week were 0.8 days for northbound traffic and 0.8 days for southbound traffic. Please see the Logistics: Impact on chemicals and energy topic page With additional reporting by Emily Friedman and Kevin Callahan

12-Apr-2024

Crude demand expectations fall for 2024 as trends shift back to pre-COVID pattern – IEA

LONDON (ICIS)–The International Energy Agency (IEA) on Friday cut crude oil demand forecasts for the year, with rates expected to fall further next year as consumption returns to the pre-COVID-19 trend, increasing the odds of a peak in oil consumption this decade, the agency said. The IEA expects crude demand growth to average 1.2 million barrels/day this year, an increase from October projections of 900,000 barrels/day but a decline from the 1.3 million barrels/day projected in its monthly oil market report in March. This level of growth is expected to slow next year to 1.1 million barrels/day, representing a shift back to the trajectory of crude demand before the pandemic, increasing the chances that global demand will peak this decade, according to the agency. “Global oil demand growth is currently in the midst of a slowdown… bringing a peak in consumption into view this decade,” said Toril Bosoni, IEA head of oil industry, and markets and oil market analyst Ciaran Healy. “This is primarily the result of a normalization of growth following the disruptions of 2020-2023, when oil markets were shaken by the COVID-19 pandemic and then the global energy crisis sparked by Russia’s invasion of Ukraine,” they added. Global crude oil demand 2011-25 (Source: IEA) Increasing fuel efficiency standards and electric vehicles comprising a larger chunk of the auto market are also affecting the rate of oil demand growth, the IEA added. Crude supply growth is expected to average 770,000 barrels/day this year, led by non-OPEC sources, particularly the US, offsetting a projected 820,0000 barrel/day decline year on year from OPEC+ cuts. Production growth could firm to 1.6 million barrels/day next year. Despite the projected demand declines this year, compared with growth of 2.3 million barrels/day in 2023, pricing has risen sharply in recent weeks, up by $8/barrel from early March to more than $90/barrel this week, on heightened geopolitical tensions and the prospect of a tighter supply-demand balance this year. “Russian refinery outages added to product market unease, while OPEC+ put pressure on some countries to increase compliance with agreed voluntary production cuts through Q2 2024,” the IEA said in its latest monthly oil market report. “Escalating oil supply security concerns are set against a backdrop of solid global oil demand growth of 1.6 million barrels/day in the first quarter and a more upbeat outlook for the global economy,” the agency added. In its latest oil forecast released this week, OPEC left GDP and crude demand growth expectations unchanged at 2.8% and 2.2 million barrels/day respectively. Thumbnail photo: An oil pump jack at the Vaca Muerta shale oil and gas play, Argentina. Source: Matias Baglietto/NurPhoto/Shutterstock 

12-Apr-2024

USDA calling for smaller ending corn stocks in April WASDE

HOUSTON (ICIS)–The US Department of Agriculture (USDA) is calling for smaller ending corn stocks, while for soybeans it is forecasting higher ending supply, according to the April World Agricultural Supply and Demand Estimates (WASDE) report. For the corn outlook the monthly update is projecting not only the lower amount of ending stocks but also greater usage of the crop for ethanol and feed and residual use. Corn used for ethanol is being raised by 25 million bushels to stand at 5.4 billion bushels based on data through February from the Grain Crushings and Co-Products Production report and weekly ethanol production data as reported by the Energy Information Administration (EIA). Feed and residual use is also being increased by 25 million bushels to 5.7 billion bushels based on indicated disappearance during the December-February quarter. With no supply changes and use rising, the WASDE said ending stocks are now projected lowered by 50 million bushels to 2.1 billion bushels. The USDA said season-average farm price received by producers is now down by 5 cents to $4.70 per bushel. For soybeans, the outlook for supply and use not only expects higher ending stocks but also lower imports, residual use and exports. The monthly update said the soybean trade is being reduced on the pace seen to date and expectations for future shipments. With the trade changes and slightly lower residual, soybean ending stocks are raised by 25 million bushels to 340 million bushels. The agency said the season-average soybean price is now forecasted lower by 10 cents to $12.55 per bushel. The next WASDE report will be released on 10 May.

11-Apr-2024

ExxonMobil to sell Fos–sur-Mer refinery in France

LONDON (ICIS)–ExxonMobil’s French affiliate, Esso SAF, plans to sell its Fos-Sur-Mer refinery near Marseille, France, along with fuel terminals in Toulouse and Villette, by the end of the year, officials announced on Thursday. The buyer is Rhone Energies, which is a consortium between oil and commodities trader Trafigura and Entara. About 310 Esso employees are expected to transfer to Rhone Energies. The sale is subject to regulatory and other approvals. Financial details were not disclosed. The sale of the refinery, which has a crude oil processing capacity of 7 million tonnes/year, is part of Esso's long-term strategy in France to maintain the competitiveness of its operations while guaranteeing continuity of supply to its customers in the south of France, it said. Esso will continue to supply the fuel market in southern France and the proposed sale will not impact its other activities in France, it added. Entara, which was established by former executives of Crossbridge Energy, will operate the Fos-sur-Mer refinery. Trafigura plans to enter into a minimum 10-year exclusive crude oil supply and product offtake agreement, ensuring that the refinery has a secure supply of on-demand feedstock at competitive costs and a reliable off-taker of refined products destined to the domestic market, it said. The refinery will continue to be an important contributor to energy security in the region and would benefit from Trafigura’s global trading and logistics network, said Ben Luckock, Global Head of Oil for Trafigura. Oil and petroleum products will continue to play an important role in supporting growing global energy demand during the transition currently underway to a low-carbon economy, Luckock added. Rhone Energies intends to invest in the sustainability of the site to reduce its carbon footprint while also investing in growth projects enabling further co-processing of biogenic feedstocks to produce renewable fuels. In related news, ExxonMobil Chemical France announced earlier on Thursday that it plans to close its chemical production at Gravenchon in Normandy in 2024, subject to relevant government approvals. That closure is entirely separate from the proposed sale of the refinery, officials said. Additional reporting by Nel Weddle Thumbnail photo: A worker walking past ExxonMobil’s Fos-sur-mer complex. Source: Guillaume Horcajuelo/EPA/Shutterstock

11-Apr-2024

PODCAST: Europe PE, PP see slow Apr start, ahead of ICIS conference

LONDON (ICIS)–Europe’s virgin polyethylene (PE) and polypropylene (PP) markets have been slow to start after the Easter break, with April opening differently as compared to March. The surprisingly strong trend for PE and PP in early 2024 has started to ease as panic restocking by converters, sparked by logistical issues due to tensions in the Red Sea, subsides. Ahead of the ICIS World Polyolefins Conference this week, ICIS editors look at early supply/demand signs for April and the changes from March. This podcast features Matt Tudball, senior editor for Europe R-PET and R-LDPE, and Vicky Ellis, senior editor manager for Europe virgin PE and PP. ICIS analysts and editors will be at the Ritz-Carlton Hotel in Vienna, Austria, on 10-11 April for the 10th edition of the ICIS World Polyolefins Conference. Industry leaders, including Berry Global, Borealis and Plastic Energy, will also share their insights during the conference.

09-Apr-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 5 April. NEWS Mexico’s automotive output falls nearly 13% in March Mexico’s automotive sector output fell by 12.75% in March, month on month, to just over 300,000 units, the country’s statistical office Inegi said on Wednesday. Sanitation framework, nascent LatAm lithium industry keeping Brazil’s chloralkali afloat – Abiclor Brazil’s chlorine and caustic soda sectors have kept afloat in better health than the wider chemicals industry as sanitation plans and new lithium exploitations across Latin America keep demand high, according to the director general at the country’s trade group Abiclor. Brazil’s chemicals, industrial output falls in February Brazil’s chemicals output fell in February by 3.5%, month on month, one of the largest falls among the subsectors measured, the country’s statistical office IBGE said on Wednesday. Petrobras ‘proactively’ engaging with Federal auditor about tolling contract with Unigel Petrobras continues to “clarify in a timely manner” all the information requested by the Federal auditor regarding its tolling contract with Unigel, a spokesperson for the Brazilian energy major said to ICIS on Tuesday. Brazil’s Unigel postpones Q4 results amid debt restructuring Unigel has postponed the publication of its Q4 and 2023 financial results as its debt restructuring is ongoing, the Brazilian chemicals and fertilizers producer said on Tuesday. MOVES: Brazil’s Unipar appoints Alexandre Jerussalmy as CFO Unipar has appointed Alexandre Jerussalmy as CFO and investor relations officer, effective immediately, the Brazilian chemicals producer said on Tuesday. Colombia’s manufacturing slows down in March on lower sales Colombia’s manufacturing output growth slowed down in March on the back of lower sales, although it marked its third month in expansion territory, analysts at S&P Global said on Monday. Brazil's manufacturing March output healthy on new orders, fueling job creation Brazil’s manufacturing continued expanding at pace in March on the back of a healthy new order book, prompting firms to increase workforces, S&P Global said on Monday. Mexico’s manufacturing steady in March but subdued US demand causes concern Mexico’s manufacturing output stayed stable in March but firms are getting increasingly worried about lower demand from the US, the key market for the country’s export-intensive manufacturers, analysts at S&P Global said on Monday. PRICING Lat Am PP domestic prices down in Argentina, Mexico on lower US PGP spot prices, weak demand Domestic polypropylene (PP) prices dropped in Argentina and Mexico on the back of lower US spot propylene prices and weak demand. In other Latin American countries, prices remained steady. LatAm PE international prices steady to lower on lower US export offers International polyethylene (PE) prices were assessed as steady to lower on the back of lower US export offers. Ethanol prices in Brazil experiencing surges during April The prices of hydrous ethanol surged during the initial week of April, propelled by consistent strong sales in Brazil. Unigel to raise PS April prices in Brazil Unigel is seeking an 11% price increase on all grades of polystyrene (PS) sold in Brazil starting on 1 April, according to a customer letter. Innova seeks April PS price increase in Brazil Innova is seeking a real (R) 1,000/tonne ($200/tonne) price increase, excluding local taxes, on all grades of polystyrene (PS) sold in Brazil starting on 1 April, according to a customer letter.

08-Apr-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 5 April. India’s urea imports plunge in January as country plans to end imports by 2025 In India, urea imports were at 400,542 tonnes in January, down 69% from 1.3m tonnes in January 2023 as requirement for fresh purchases decreased due to above average stock availability, according to customs data. European Commission implements definitive dumping duties on China PET As of 3 April, certain types of polyethylene terephthalate (PET) originating from the People’s Republic of China (PRC) will be subject to anti-dumping duties imposed by the European Commission. Costs, margins a pressing concern in the Europe epoxy industry, talks firmer for April The continued uptrend in raw material costs is piling on the pressure in the Europe epoxy industry and triggering price rise proposals for April, as profitability issues mount. Eurozone inflation declines further in March as energy costs drop, food inflation slows Inflation in the eurozone continued its slow downturn in March, falling to 2.4%, Eurostat said on Wednesday, as energy price declines continued and upward pressure on food and industrial goods lessened.

08-Apr-2024

Brent crude falls by more than $2/bbl on hopes over Israel-Hamas ceasefire talks

SINGAPORE (ICIS)–Brent crude fell by more than $2/barrel on Monday as tensions in the Middle East eased after Israel's withdrew more troops from southern Gaza and signaled that it was willing to resume talks for a ceasefire to end the six-month conflict. Product ($/bbl) Latest at 01:08 GMT Previous Change Brent June 88.99 91.17 -2.18 WTI May 84.94 86.91 -1.97 On 5 April, benchmark crude prices rose to seven-months as rising tensions in the Middle East were fuelling fears of supply disruption, with further concerns about Iranian crude exports. Israel and Hamas have dispatched delegations to Egypt ahead of the Eid holidays to engage in new discussions regarding a potential ceasefire. Eid ul-Fitr holidays mark the end of the Muslim fasting month of Ramadan. Since the beginning of the year, Israel has been reducing its presence in Gaza to ease the burden on reservists as it faces mounting pressure from its ally, the US, to address the humanitarian situation, particularly following recent killing of seven aid workers. Israeli defense minister Yoav Gallant on 7 April said that Israel is prepared to manage any scenario with Iran, following Tehran's threat to respond to the assassination of Iranian generals on 1 April in the Syrian capital of Damascus. Crude prices have been on the rise in recent weeks due to anticipated constraints on oil supplies. OPEC and its allies (OPEC+) have re-affirmed their commitment to maintaining production cuts until the end of June. Additionally, Russia, a major oil producer, has indicated its intention to implement further reductions in production. The fuel production in Russia was further hindered by Ukrainian strikes targeting the nation's oil infrastructure, resulting in the shutdown of several major refineries. Market participants now await release of monthly oil reports from the International Energy Agency (IEA), US Energy Information Administration (EIA) and OPEC this week for better clarity on supply and demand forecasts for this year.

08-Apr-2024

Oil at six-month highs; Brent crude at above $91/bbl on Mideast tensions

SINGAPORE (ICIS)–Oil prices were extending gains, with Brent crude hitting past the $91/barrel mark on Friday, fueled by escalating geopolitical tensions in the Middle East which could disrupt supply amid output cuts by OPEC and its allies (OPEC+). Prices looked set for a second weekly gain, with both contracts closing overnight at their highest since October 2023 following news reports that Israeli embassies are under threat of Iranian counterattacks. ($/bbl) Contract Low High Open Last (at 02:53 GMT) Previous Settlement Change Brent June 90.86 91.22 91.21 90.96 90.65 0.31 WTI May 86.64 87.07 86.86 86.72 86.59 0.13 On 4 April, Brent futures for June rose above $91/bbl before settling at $90.65/bbl, up by 1.5% from the previous session. Signs that production cuts by OPEC+ are tightening supplies amid robust global demand have been driving up crude prices in recent weeks, offsetting concerns that the US Federal Reserve will delay its interest rate cuts. The Joint Ministerial Monitoring Committee (JMMC) of OPEC+ met on 1 April recommended no change to the group’s output policy, which will keep the market in supply deficit through the second quarter. The meeting appears to have focused on compliance with supply cuts, with members which have overproduced in the first quarter set to submit compensation plans on how to achieve production cut targets by the end of April. The next JMMC meeting will be held on 1 June. Iran, OPEC's third-largest producer, has pledged retaliation against Israel as high-ranking military officials were killed on 1 April in an air strike on Iran’s embassy compound in Syria. Israel has not taken responsibility for the strike. The US has imposed new Iran-related counterterrorism sanctions against Oceanlink Maritime DMCC and its vessels, the Treasury Department said on 4 April. The Oceanlink Maritime DMCC-managed vessel Hecate recently loaded Iranian commodities valued at over $100 million via a ship-to-ship transfer from another sanctioned tanker, the Dover, on behalf of Iran’s Sepehr Energy Jahan Nama Pars (Sepehr Energy), it said. Sepehr Energy was sanctioned by the US Department of the Treasury’s Office of Foreign Assets Control in November 2023 for its role selling Iranian commodities, it said. In a marked shift, the US issued on 4 April its most forceful public condemnation of Israel since the start of its war with Hamas, warning that US policy on Gaza will hinge on Israel's actions to prioritize the safety of Palestinian civilians and aid workers. Remarks from US Federal Reserve chair Jerome Powell on 3 April unsettled investors after signaling that the Fed has time to assess data and it needs clearer signs of lower inflation before cutting interest rates, adding that recent strong US economic figures did not materially change the overall picture. A Fed rate cut is widely expected in June, but Powell indicated a necessity for further data before initiating any reductions. "The prospect of rate cuts amid a mid-cycle slowdown has fuelled optimism about the global economy," Australia-headquartered ANZ bank said in a note. "More importantly, an improvement in economic data in China has boosted sentiment and lifted expectations around crude oil demand." Both China and the US posted manufacturing growth in March, marking the first time in six months for China and one-and-a-half years for the US. This growth is expected to boost oil demand this year, especially since the US is the largest consumer of crude oil and China is the largest importer, researchers at Mint Finance said in a note for investment research and analysis firm Smartkarma. "With prospects of global oil demand improving, concerns over oil supply have intensified due to escalating conflicts in key oil-producing regions. This escalation will further tighten oil supply-demand dynamic, pushing prices higher." Investors are now eyeing the deadline for US sanctions relief on OPEC member Venezuela which ends on 18 April for further direction. If the US does not re-impose sanctions, Venezuela’s output could surpass the 1 million barrel/day threshold as early as December this year, rising to 1.12 million barrel/day by the end of 2025. If sanctions are re-imposed, production is expected to remain flat at about 890,000 barrels per day. “There are myriad arguments for and against reimposing sanctions, so the path that the US [takes] remains uncertain,” Rystad Energy’s senior vice president, Jorge Leon, said in a note. The sanctions on Venezuela were initially removed in exchange for the promise of fair and free, internationally-monitored elections in 2024. Focus article by Nurluqman Suratman Thumbnail image: Rescuers work near the destroyed consulate building of the Iranian embassy in Damascus, Syria, on 1 April 2024. (Xinhua/Shutterstock)

05-Apr-2024

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

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

04-Apr-2024

Contact us

In today’s dynamic and interconnected energy markets, partnering with ICIS unlocks a vision of a future you can trust and achieve. Our unrivalled network of energy industry experts delivers a comprehensive market view based on trusted data, insight and analytics, supporting our partners as they transact today and plan for tomorrow.

Get in touch to find out more.

READ MORE