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AFPM ’24: Lubricant additives may recover in 2024 after severe destocking – LANXESS exec

SAN ANTONIO (ICIS)–Lubricant additives demand may recover this year following major destocking in 2023, said the head of LANXESS’ business. “What we hear from our customer end-use segments is that in most cases, destocking is over and inventories are at reasonably low levels. The general theme that’s playing out is that customers are manufacturing to the extent of what is potential real demand, and not restocking,” said Neelanjan Banerjee, senior vice president of Lubricant Additives at LANXESS. ICIS interviewed Banerjee on the sidelines of the International Petrochemical Conference (IPC), hosted by the American Fuel & Petrochemical Manufacturers (AFPM). “We saw that play out very strongly in Q1 in many areas, such as automotive engine oils, where there was the biggest collapse last year. So that’s been a decent comeback,” he added. However, given the volatility from geopolitical tensions, high inflation and high interest rates impacting consumer behavior, how that is going to play out in the coming quarters has to be very closely watched, he pointed out. One area of growth is in calcium sulfonate greases which are increasingly replacing lithium greases because of lithium’s extreme price volatility over the past two years tied to electric vehicles (EVs). LANXESS’ calcium sulfonate greases are used in passenger vehicle, heavy duty vehicle and marine applications. SURGE IN INDUSTRIAL LUBRICANTSThe company is also seeing higher demand for sustainable industrial oil additives that also offer high performance, he said. “This is driving innovation in the industry by suppliers who have the ability to conduct R&D and offer the molecules that meet the highest safety standards – favorable HSC profile, low VOC emissions and low carbon footprint,” said Banerjee. “We also expect there to be consolidation in the industry for players that cannot meet these requirements,” he added. In the US, increased investment from the US Inflation Reduction Act (IRA), the CHIPS Act and the Bipartisan Infrastructure Law (BIL) has spurred increased demand for industrial lubricants, said the executive. This includes additives and packages for metal-working fluids, hydraulic fluids, gear oils, compressor oils, greases, as well as increasing demand for formulated calcium sulfonate complex greases. “As a result, we are increasing our resources dedicated to providing solutions to industrial customers and applications in the Americas,” including sales, technology and potentially laboratory support in the US, said Banerjee. EV TRANSITION IMPACTThe EV transition is expected to happen but more slowly than initially anticipated in the US, with 16.3% of total US light vehicle sales being EVs in 2023 – up from 12.9% in 2022, he noted. However, EVs comprised just 1.2% of the US car parc (number of vehicles on the road) in 2022, he added. In the internal combustion engine (ICE) market, lubricant sales are primarily driven by the replenishment and maintenance market, and this continues to dominate, the executive pointed out. EV fluids will more likely be filled one time for the life of the vehicle and primarily sold to OEMs, and it will be years before the impact of EV fluid volumes becomes significant, Banerjee said. The industry is working to understand and develop specifications for a variety of fluids required by EVs such as driveline fluids, hybrid engine oils, specialty greases and immersion cooling fluids, and LANXESS has active solution development under way for all these EV fluids. Regulations and legislation could drive EV adoption higher, but the trajectory is highly uncertain as automakers and consumers may not be ready, he said. “I still feel ICE technology will be there for years to come… Regulations are a topic that has to play out with governments worldwide,” said Banerjee. Challenges for the EV transition include price volatility in battery materials, retraining of the automotive workforce, and overall high prices for EVs, he noted. “People were very excited about the possibilities, but the harsh reality today is that even with all the new regulations in play, the cars are getting heavier and more expensive,” said Banerjee. “The world has to get that right – it’s not that easy,” he added. COOLING FOR DATA CENTERSAn emerging growth end market is data centers which enable cloud, AI, autonomous driving and cryptocurrency mining capabilities. “The lubricants industry has been busy positioning their basestocks as suitable immersion cooling fluids for both EVs and data centers,” said Banrjee, who noted that LANXESS has developed two families of cooling fluids based on synthetic basestocks and formulated with antioxidants, yellow metal inhibitors and antifoams. “We believe a sizeable market will develop for these cooling fluids in the next few years,” he added. Unlike in EVs, direct immersion cooling of data centers is being applied today. LANXESS is developing both single-phase and two-phase immersion cooling solutions. “Once you dunk a computer into a liquid, materials compatibility is a design requirement, and one key trend is also to move away from fluorinated hydrocarbon coolants due to PFAS health effects,” said Banerjee. Interview article by Joseph Chang Front page picture source: LANXESS   Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC took place on 24-26 March in San Antonio, Texas.

27-Mar-2024

TOPIC PAGE: Sustainability in the fertilizers industry

Updated on 27 March. On this topic page, we gather the latest news, analysis and resources, to help you to keep track of developments in the area of sustainability in the fertilizers industry. LATEST NEWS HEADLINES New urea application rules to be implemented in England from 1 April By Deepika Thapliyal 27-Mar-24 LONDON (ICIS)–In England, famers will only be able to apply solid or liquid urea that is treated with an inhibitor from 1 April, according to new regulations from the Department for Environment, Food & Rural Affairs (Defra) that come into force next month. UPM Biochemicals launches new range of bio-based plant stimulants By Sylvia Traganida 27-Mar-24 LONDON (ICIS)–UPM Biochemicals has launched a new range of bio-based plant stimulants which is an alternative to fossil raw materials-based products, the Finnish paper and renewable chemicals firm said on Tuesday. Mabanaft signs letter of intent for supply of green ammonia from Canada By Sylvia Traganida 19-Mar-24 LONDON (ICIS)–Germany-headquartered energy firm Mabanaft has signed a letter of intent (LOI) with US-based Pattern Energy for the supply of green ammonia to Mabanaft. Yara Growth Ventures invests in electrolysis technology for low-cost renewable hydrogen By Sylvia Traganida 08-Mar-24 LONDON (ICIS)–Norwegian fertilizer major Yara has invested in Danish electrolysis technology company Dynelectro through its corporate venture capital team Yara Growth Ventures. Yara signs agreement with Acme Cleantech subsidiary on green ammonia By Sylvia Traganida 01-Mar-24 LONDON (ICIS)–Norwegian fertilizer major Yara has signed an agreement with GHC SAOC for supply of ammonia with reduced carbon emissions from Acme to Yara on a long-term basis. Idemitsu to join US clean ammonia project By Stefan Baumgarten 27-Feb-24 LONDON (ICIS)–Idemitsu Kosan has agreed to join a 1.2 million tonne/year clean ammonia project that Mitsubishi Corp and Proman plan to develop at Lake Charles, Louisiana, US, it said on Tuesday. Germany’s Heraeus invests in Japanese ammonia tech company By Stefan Baumgarten 22-Feb-24 LONDON (ICIS)–German technology group Heraeus has invested an undisclosed amount in Tsubame BHB, a Japanese company that has developed a precious metal-based technology for decentralized ammonia production. Malaysia’s PCG, Sarawak Petchem agree to study low-carbon ammonia and urea plant By Nurluqman Suratman 21-Feb-24 SINGAPORE (ICIS)–Malaysia’s PETRONAS Chemicals Group (PCG) and methanol producer Sarawak Petchem on Wednesday signed an agreement for a joint feasibility study aimed at establishing a low-carbon ammonia and urea production facility in Bintulu, Sarawak. Egypt’s Helwan signs agreement to produce black urea By Deepika Thapliyal 20-Feb-24 LONDON (ICIS)–In Egypt, Helwan has signed an agreement with SML-INNO UK Ltd to set up the world's first vertical integrated unit to produce black urea, with a capacity of 130,000 tonnes annually, the company said today. EU eases climate proposals after widespread farmer protests By Chris Vlachopoulos 07-Feb-24 LONDON (ICIS)–European Commission President Ursula von der Leyen announced on Tuesday that the EU has agreed to ease key demands in its climate proposal plans, following intense protests from farmers. Tecnimont awarded engineering contract for Portugal green hydrogen, ammonia plant By Graeme Paterson 05-Feb-24 LONDON (ICIS)–Tecnimont has been awarded an engineering contract to develop an integrated green hydrogen and green ammonia plant at Sines, Portugal, its parent company Maire said. EU CARBON BORDER ADJUSTMENT MECHANISM (CBAM) EXPLAINED What is it? The risk of carbon leakage frustrates the EU’s efforts to meet climate objectives. It occurs when companies transfer production to countries that are less strict on emissions, or when EU products are replaced by more carbon-intensive imports. This new mechanism would counteract this risk by putting a carbon price on imports of certain goods from outside of the EU. How will it work? EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules. Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods, the corresponding cost can be fully deducted for the EU importer. This will help reduce the risk of carbon leakage by encouraging producers in non-EU countries to make their production processes greener. A reporting system will apply from 2023 with the objective of facilitating a smooth roll out and to facilitate dialogue with non-EU countries. Importers will start paying a financial adjustment in 2026. How is the fertilizer industry affected? The fertilizer industry is one of the sectors to fall under the CBAM. The more energy-intensive nitrogen fertilizers will be affected most in the sector by the mechanism. NEW UREA APPLICATION NORMS IN ENGLAND The UK’s Department for Environment, Food & Rural Affairs (DEFRA) has imposed new regulations on urea application in England. Famers will only be able to apply solid or liquid urea that is treated with an inhibitor from 1 April. The move is aimed to reduce ammonia emissions, and would increase costs for farmers by an estimated £40/tonne. The new rules apply to any fertilizer that contains 1% or more of urea nitrogen, with applications of solid urea or liquid (urea ammonium nitrate) fertilizer from 1 April having to include a urease inhibitor Untreated solid urea or liquid UAN fertilizer can be applied between 15 January to 31 March each year. Untreated liquid UAN fertiliser can be applied after 1 April if agronomic justification is provided by a certified fertilizers advisor, mentioning ammonia losses will be at or below the level of when a urease inhibitor is included. Foliar urea applications targeting the crop, using normal spray nozzles do not require a urease inhibitor. The implementation of the Defra regulations was delayed by two years due to higher fertilizer prices and lack of supply following the covid pandemic and the Ukraine war. PREVIOUS  NEWS HEADLINES EU proposes relaxation in policy following farmer protests Biden Administration invests $207m in domestic fertilizer and clean energy endeavours Brazil’s state of Ceara, Bp sign MoU for green hydrogen site  Atome Energy in talks with buyers for green fertilizer from Paraguay unit Sweden's Cinis targets Asia potash market with Itochu partnership Helwan selects Eurotecnica's Euromel G5 technology for new melamine facility in Egypt India’s Adani Group plans $24bn green energy park; RIL to commission giga complex INPEX and LSB pick technology for US ammonia project Bayer partners with energy firms on hydrogen cluster in Germany S Korean group picks KBR tech for Malaysian green ammonia project Abu Qir signs MoU for green ammonia project in Egypt Yara aims to launch first container ship to run off clean ammonia India’s Odisha state approves green hydrogen, ammonia, methanol projects ADM announces launch of regenerative agriculture program in Brazil Fertiglobe completes first renewable ammonia shipment with carbon certification Allied Green Ammonia picks Topsoe’s tech for Australia project Germany’s VNG looks to secure offtake from Norwegian low carbon ammonia plant Gentari enters into agreement with AM Green to invest into a green ammonia delivery platform ITOCHU Corporation, Orascom Construction sign MOU for development of ammonia bunkering in Suez Canal India developing port infrastructure for green hydrogen exports S Korea, Saudi Arabia firms sign 46 pacts, includes blue ammonia project INSIGHT: CBAM reporting begins, fertilizer exporters to EU challenged to account for carbon KBR to supply green ammonia tech to Madoqua Power2X site in Portugal Germany’s SOM to build green hydrogen, ammonia facility in Brazil’s Piaui state US ADM and Syngenta sign MoU to collaborate on low carbon oilseeds to meet biofuel demand Tecnicas Reunidas, Allied Green Ammonia to build green hydrogen and green ammonia plant in Australia Australian fertilizer producer Orica accelerates climate change targets Nestle, Cargill and CCm Technologies launch joint UK trial on sustainable fertilizer EnBW acquires stake in planned Norwegian ammonia plant  Yara Germany signs agreement for decarbonisation of cereal cultivation using green fertilizers Hyphen, ITOCHU ink MoU to explore potential Namibia hydrogen collaboration  INSIGHT: BASF grapples with demand trough, slow road back SABIC AN ships low-carbon urea to New Zealand US Cargill and John Deere collaborate to enable revenue for farmers adopting sustainability Canada’s Lucent Bio announces approval of biodegradable nutrient delivery patent Aker, Statkraft’s 10-year PPA to spur European renewable ammonia push further BASF, Yara Clean Ammonia to evaluate low-carbon blue ammonia production facility in US Gulf Coast Yara Clean Ammonia, Cepsa to launch clean hydrogen maritime corridor EU details CBAM reporting obligations Saudi Arabia’s Ma’aden exports its first low-carbon blue ammonia shipments to China US Bunge and Nutrien Ag announce alliance to support sustainable farming practices Maire subsidiary Stamicarbon wins US green ammonia engineering contract India’s IFFCO launches liquid nano-DAP fertilizer EU Parliament backs CBAM, emissions trading measures OCP granted €100m green loan to build solar plants at Morocco facilities EU unveils plans to tackle greenwashing India’s IFFCO and CIL to manufacture nano DAP for three years USDA awards Ostara funds to boost sustainable phosphate fertilizer output Canadian prime minister confirms fertilizer emission goal is voluntary US fertilizers industry increases carbon capture in 2021 – TFI Indian president calls for reduction in chemical fertilizer use IFFCO plans to export nano urea to 25 countries Amman selects Elessent Clean Technologies for Indonesia sulphuric acid plant Lotte Chemical forms clean ammonia consultative body with RWE and Mitsubishi Corporation Global 2020-2021 specialty fertilizer demand growth led by north America, Asia BASF and Cargill extend enzymes business and distribution to US Saudi Aramco awards sulphur facilities overhaul contract to Technip India sets green hydrogen targets for shipping, oil & gas, fertilizer sectors Germany misses climate target despite lower energy consumption TFI reacts to US Congress passing the Water Resources Development ActHelm becomes a shareholder in UK bio-fertilizer company Unium Bioscience Yara inks deal to deliver fossil-free green fertilizers to Argentina Canadian firms plan fuel cell generator pilot using green ammonia Deepak Fertilizers awards contract to reduce emissions, increase productivity Saudi Aramco launches $1.5bn sustainability fund to support net zero ambition CF Industries and ExxonMobil plan CCS project in Louisiana Canada’s plan to cut fertilizer emissions is voluntary – minister Canada’s fertilizer emission goal raises food production concerns Uniper, Vesta to cooperate on renewable ammonia site in the Netherlands German Uniper to work with Japan’s JERA on US clean ammonia projects ADNOC ships first cargo of low-carbon ammonia to Germany US Mosaic and BioConsortia expand collaboration to microbial biostimulant IMO deems Mediterranean Sea area for sulphur oxides emissions control Canada's Soilgenic launches new enhanced efficiency fertilizers technology for retail Austria's Borealis aims to produce 1.8m tonnes/year of circular products by 2030 European Parliament rejects proposed carbon market reform IFA ’22: southern Africa looks to bio-fertilizer as cheaper, sustainable option IFA '22: Indian farmers will struggle to embrace specialty fertilizers – producer Canadian Nutrien plans to build world’s largest clean ammonia facility in Louisiana Japan's JGC Holdings awards green ammonia plant contract to KBR Bayer to partner with Ginkgo to produce sustainable fertilizers Australia Orica and H2U Group partner on Gladstone green ammonia project Canada sets tax credit of up to 60% for carbon capture projects UK delays urea restrictions to support farmers as fertilizer costs at record high EU states agree to back carbon border tax Yara to develop novel green fertilizer from recycled nutrients USDA announces plans for $250m grant programme to support American-made fertilizer Canada seeks guidance to achieve fertilizer emissions target Fertilizer titan Pupuk Indonesia develops hydrogen/blue ammonia business India launches green hydrogen/ammonia policy, targets exports Canada AmmPower to develop green hydrogen and ammonia facility in Louisiana US DOE awards grant to project to recover rare earth elements from phosphate production Fertiglobe, Masdar, Engie to develop green hydrogen for ammonia production Czech Republic’s Spolana enhances granular AS production India’s Reliance to invest $80bn in green energy projects Yara, Sweden’s Lantmannen aim to commercialise green ammonia by 2023 Novatek and Uniper target Russia to Germany blue-ammonia supply chain Fertz giant Yara goes green with electrification of Norwegian factoryCanada Arianne Phosphate exploring use of phosphate for hydrogen technology FAO and IFA renew MoU to promote sustainable fertilizer use Sumitomo Chemical, Yara to explore clean ammonia collaboration Sri Lanka revokes ban on imports Tokyo scientists convert bioplastic into nitrogen fertilizer Aramco plans Saudi green hydrogen, ammonia project China announces action plan for carbon peaking & neutrality Saudi Aramco targets net zero emissions from operations by 2050 Fertiglobe goes green with Red Sea zero-carbon ammonia pro Australian fertilizer major Incitec Pivot teams up for green ammonia study INTERVIEW: BASF to scale up new decarbonisation tech in second half of decade – CEO India asks fertilizer companies to speed up production of nano DAP Japan's Itochu set to receive first cargo of blue ammonia for fertilizer use Norway's Yara acquires recycled fertilizers maker Ecolan Bayer Funds US start-up aims to cut nitrogen fertilizer use by 30% BP: Green ammonia production in Australia feasible, but needs huge investment Origin and MOL explore shipping green ammonia from Australia India’s IFFCO seeks to export nano urea fertilizer Sri Lanka reinstates ban on import of chemical fertilizers Nutrien to cut greenhouse gas emissions 30% by 2030 RESOURCES IFA – Fertilizers and climate change  TFI – Sustainability report 

27-Mar-2024

AFPM ’24: Europe must take action to stop deindustrialization – Huntsman CEO

SAN ANTONIO (ICIS)–The EU must take action on industrial policy instead of just talking about it, to stem the tide of deindustrialization, the CEO of Huntsman said. While the US is boosting its manufacturing base with programs such as the Inflation Reduction Act (IRA), as imperfect as it may be, the EU has yet to implement any meaningful policies to support manufacturing, according to Huntsman chief Peter Huntsman. “One thing the IRA does is transmit to the rest of the world is that the US is open for business, or trying to be open for business… whereas Europe is sending a sign that it’s really not open for business,” he said. Huntsman spoke at a breakfast meeting at the International Petrochemical Conference, hosted by the American Fuel & Petrochemical Manufacturers (AFPM). Recalling recent conversations with EU prime ministers, European Commission President Ursula von der Leyen and industry CEOs, he expressed disappointment at the outcome from these meetings. “All I heard during the entire meeting was, ‘We need to talk about it’,” said Huntsman. ‘BEYOND THE POINT OF TALKING’“It’s beyond the point of talking. When you start to see the rapid deindustrialization with plants shutting down”, it is not readily reversible, he added. Companies that decide to invest in chemical projects elsewhere are not going to suddenly come back to Europe if it ever regains competitiveness, he said. “You’re not going to get companies coming back to Europe. You’re just [trying] to stop the bleeding and that’s what Europe should be focused on right now – and I don’t believe that is happening, unfortunately,” said Huntsman. The US needs a strong Europe – economically, militarily and diplomatically, he pointed out. “The world is at a loss when Europe is meandering in the dark, unsure what to do with its industrial policy,” said Huntsman. “I’m not here bashing Europe – I’m here begging Europe… I’ve spent almost half my time in Europe, especially in the last 12 months. I’ve met more politicians and have spent more time lobbying in Europe than I have in my entire career combined,” he added. UNREALISTIC ENERGY EXPECTATIONSPlans to rapidly transition away from hydrocarbons and towards renewables are not well thought out, he said. Huntsman supports the Antwerp Declaration for a European Industrial Deal but said it needed stronger policy around hydrocarbons and the use of oil and gas for industrial development. Powering Europe’s cement, steel, electric vehicle (EV) and chemical industries – just those industries along – by 2050 would require around 500,000 onshore wind turbines on an area the size of Spain, or solar panels covering an area the size of Ireland, or 836 nuclear plants, he said, citing a study by Accenture. “Do policies take this into account?” Huntsman asked. The International Energy Agency (IEA)’s projections on rapidly declining oil, natural gas and coal supply through 2050 for Europe as well as the rest of the world are completely unrealistic, he said. “The problem is that people are making policy around this” and companies believe they will be penalized if they don’t meet these targets, said Huntsman. “This is going back to the Stone Age, and nobody seems to care. They are making policy around this,” he added. The fall in Europe’s energy consumption in the past several years and the more recent fall in costs are not so much due to conservation or sound policy but to deindustrialization, he contends. “That is not an incentive to invest. It’s quite the opposite,” said Huntsman. Deindustrialization is being reflected in the stock prices of European chemical stocks, which are trading at around a 15% discount to their US-based counterparts on an EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortization) basis, the CEO pointed out. Europe also has to determine if it will fight more effectively in trade against dumping from other countries – not just China, as well as how it implements carbon taxes on imports, he said. ENERGY AND REGULATORY PRESSURESHuntsman said he is “comfortable” on the position of its assets in Europe today but wants to see how energy and industrial policy plays out in the next year or so. While European energy prices have subsided recently, they are still high and subject to the vicissitudes of international trade until Europe decides to secure its own energy future, he said. And on the regulatory front, a third-party study commission by Huntsman found that EU regulations will cost the company an additional €75-80m over the next 8-10 years, nearly half of its payroll in the region. “To offset that, we either have to raise prices, which makes Europe that much less competitive, or cut the workforce,” said Huntsman. As this is simply unsustainable for companies like Huntsman, Europe has to decide if they want industry or not. Offshoring supply chains and thus also CO2 emissions, will only worsen competitiveness as well as harm the environment, he said. “A lot more is being said than done. I’m not terribly optimistic there will be any [shift in] industrial policy in Europe. But perhaps the upcoming election will do something,” he added, referring to the EU Parliamentary elections in June. Europe will land on its feet – it’s just a matter of how much it will cost before it does so, he noted. “We’ve got to be able to work together as an industry. We’ve got to be able to speak more loudly and advocate for what we all know to be true, and mot worry about being cancelled,” said Huntsman. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC took place on 24-26 March in San Antonio, Texas.

27-Mar-2024

VIDEO: European gas insight outlook week 13

LONDON (ICIS)–Gas in Focus deputy editor Marta Del Buono talks about key drivers for the current weeks affecting European gas market:. Increasing geopolitical tensions support European gas prices ICIS technical analysis also indicates some bullish sentiment in the oil and coal prices US hurricane season may have a knock-on effect on European gas markets Click here to watch

26-Mar-2024

Saudi Aramco eyes further chemical investments in China with local partners

SINGAPORE (ICIS)–China has a "vitally important" place in Saudi Aramco's global investment strategy, with the energy giant actively developing additional investment opportunities with its Chinese partners in the chemicals sector, Aramco president and CEO Amin Nasser said. The global oil major’s strategic goals in chemicals are “well-aligned” with China’s, he said in a keynote speech at the China Development Forum in Beijing on 25 March, noting that the country “is already a powerhouse representing 40% of global [chemical] sales”. Aramco, through its chemicals arm SABIC, is planning to increase its liquids-to-chemicals throughput to 4m barrels per day by 2030, Nasser said. Saudi Aramco accelerated its push into China’s refining and petrochemical sector last year with strategic investments that are aligned with Saudi Arabia's Vision 2030 diversification goals. This includes the 10% stake acquisition in Rongsheng Petrochemical Co for $3.4bn last year. Saudi Aramco, together with Chinese partners Norinco Group and Panjin Xincheng Industrial Group (PXIG), is also building a 300,000 bbl/day refining and ethylene-based steam cracking complex in Panjin City, in northeast China's Liaoning province at a cost of around $12bn. The Liaoning project is expected to come online in 2026. “We are also pleased that SABIC’s partnership in Fujian is on-track to commence construction of a major chemicals facility at an estimated cost of $6.4 billion,” Nasser said. The Fujian complex will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. SABIC’s other major investments in China include three compounding plants in Shanghai, Guangzhou and Chongqing; a joint venture with Sinopec in Tianjin; a technology centre in Shanghai and a customer centre office in Guangzhou. SUSTAINABLE DEVELOPMENT Demand for lower greenhouse gas emissions (GHG) materials – especially advanced composites and non-metallics in general – is growing rapidly, Nasser noted. Aramco’s research efforts in developing GHG materials are consistent with Chinese President Xi Jinping’s stance that sustainable development is the “golden key” for future success, he said. “We agree with China’s pragmatic and prudent approach to energy transition…I believe there are wide-ranging opportunities to jointly develop advanced GHG emission reduction technologies.” China has distinct strengths in renewables and critical materials, while Aramco and Saudi Arabia have a clear interest in solar, wind, hydrogen, and electro fuels, Nasser said. “These areas have great long-term potential, and combining our strengths could match our ambitions,” he added. Focus article by Nurluqman Suratman

26-Mar-2024

Dow, ExxonMobil among chems picked in US $6 billion CO2 cutting program

HOUSTON (ICIS)–A $6 billion industrial decarbonization program by the US will fund many chemical projects being developed by Dow, ExxonMobil and other companies, featuring projects as diverse as using carbon dioxide (CO2) as a feedstock, recycling plastic and burning hydrogen as a fuel, the Department of Energy (DOE) said on Monday. The following describes the seven chemical projects chosen by the US. ExxonMobil is developing the Baytown Olefins Plant Carbon Reduction Project in Texas. The project will use new burner technologies to combust hydrogen instead of natural gas for ethylene production. The project should cut more 2.5 million tonnes/year of carbon emissions, or more than 50% of the cracker's total emissions. The project will receive up to $331.9 million from the government. A subsidiary of Orsted plans to build a 300,000 tonne/year e-methanol plant on the Gulf Coast in Texas. The subsidiary, Orsted P2X US Holding, expects the e-methanol will be used as fuel for marine shipping and transportation. E-methanol is made with CO2 with green hydrogen. Orsted is already developing such a project in Sweden. The Texas project will receive up to $100 million from the government. BASF plans to develop a project in Freeport, Texas, that will convert liquid byproducts into synthesis gas (syngas) using plasma gasification and renewable power. Syngas is a mixture of hydrogen and carbon monoxide (CO). BASF will use the syngas as feedstock for its operations in Freeport. The project will receive up to $75 million from the government. LanzaTech and T.EN Stone & Webster Process Technology plan to develop a project on the US Gulf Coast that will capture CO2 emissions from crackers. It will then use green hydrogen and a biotech-based process to convert the captured CO2 into ethanol and ethylene. LanzaTech has developed strains of bacteria that ferment CO2 using hydrogen as an energy source. The name of the project is Sustainable Ethylene from CO2 Utilization with Renewable Energy (SECURE), and it will receive up to $200 million from the government. Ashland's subsidiary, ISP Chemicals, plans to replace natural gas boilers with electric heat delivered by a thermal battery at its plant in Calvert City, Kentucky. Other partners in the project include the Tennessee Valley Authority (TVA) and Electrified Thermal Solutions (ETS), which is supplying its Joule Hive system. The project will receive up to $35.2 million from the government. Dow's project will be developed on the US Gulf Coast and it will capture up to 100,000 tonnes/year of CO2 from ethylene oxide (EO) production. The project will then use the CO2 to produce chemicals used in electrolyte solutions to make domestic lithium-ion batteries. The project will receive up to $95 million from the government. Eastman is building a chemical recycling plant in Longview, Texas, that will use its methanolysis technology to break down waste polyethylene terephthalate (PET) into dimethyl terephthalate (DMT) and monoethylene glycol (MEG). The plant plans to use thermal energy storage combined with on-site solar power to reduce the carbon intensity of its process heating operations. It will receive up to $375 million from the government. DETAILS ABOUT THE US PROGRAMThe US expects the program will cut more than 14 million tonnes/year of emissions of CO2 from 33 projects. On average, each of the projects will cut carbon emissions by 77%. Out of the $6 billion, $489 million will come from the Bipartisan Infrastructure Law, and $5.47 billion will come from the Inflation Reduction Act (IRA). The fund will target the following: Seven chemical and refining projects. Six cement and concrete projects. Six iron and steel projects. Five aluminium and metals projects. Three food and beverage projects. Three glass projects. Two process heat-focused projects. One pulp and paper project.

25-Mar-2024

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 22 March. AFPM '24: INSIGHT: Biden ending term with regulatory bang for US chems The administration of US President Joe Biden is proposing a wave of regulations before its term ends in 2025, many of which will increase costs for chemical companies in the US and persist even if the nation elects a new president later this year. AFPM ’24: US petrochemicals exports to become growing force but geopolitical risks loom In an era of intensifying global competition, the US petrochemical industry is primed to become a growing force as an enviable cost position from shale gas enables it to run at high rates and ramp up exports, especially in a high crude oil price regime. AFPM ’24: Red Sea, Panama issues to pressure shipping amid possible US port labor conflict The 2024 shipping outlook seems dire amid a drought in Central America that has lowered the number of ships allowed to pass through the Panama Canal and rebel attacks in the Red Sea that have led most carriers to divert away from the Suez Canal. AFPM ’24: LatAm petchems brace for slow path to recovery with all eyes on China The petrochemicals downturn in Latin America is likely to be the longest ever as Chinese and global overcapacities dampen prices in the world’s quintessential “price taker” region for chemicals. AFPM '24: INSIGHT: New US auto emission rule to boost plastic demand, squeeze refiners The new greenhouse gas restrictions that the US imposed on automobiles will speed up the adoption of electric vehicles (EVs), which will have several knock-on effects on plastics, lubricants and chemicals produced by refineries. AFPM ’24: INSIGHT: US Q1 base oil glut indicates that historic weak demand persists Historically weak base oil demand in the US has resulted in oversupply and unprecedented price spreads between producer posted prices, ICIS domestic market prices and ICIS spot export prices heading into this year’s International Petrochemical Conference (IPC).

25-Mar-2024

INSIGHT: Controversial EU Packaging and Packaging Waste Regulation approaches adoption

LONDON (ICIS)–Details of the provisional agreement on the Packaging and Packaging Waste Regulation (PPWR) have been published, containing a number of wide-ranging elements which will reshape the packaging sector across the next two decades. The regulation is now reaching its final stages but has faced a fraught journey through the various legislative chambers of the EU and has remained divisive among both legislators and the markets. Under the provisional agreement the regulation will introduce: Mandated packaging recyclability Minimum recycled content and reuse targets across packaging – albeit with potential derogations based on availability of recycled material Mandatory deposit return schemes (DRS) and separate packaging collection targets New reporting and labelling obligations The extension of extended producer responsibility (EPR) schemes A restriction on the placing on the market of food contact packaging containing per- and polyfluorinated alkyl substances (PFAS) above certain thresholds A restriction on plastic collation films except for transportation purposes The possibility of bio-based plastic contributing to recycling targets The allowance of imports to count towards recycling targets provided they are of similar quality as domestic material and have been separately collected The Committee of the Permanent representatives of the Governments of the Member States to the European Union (Coreper) endorsed the Packaging and Packaging Waste Regulation on 15 March following amendments to the provisional agreement reached by the EU Parliament and EU Council (but not endorsed by the EU Commission) during the trilogue negotiations. The European Parliament Committee on Environment, Public Health and Food Safety (ENVI) endorsed the provisional agreement on 19 March. NEW RE-USE TARGETSBy 1 January 2030, 40% of most transport packaging used within the EU – including e-commerce – will need to be reusable and ‘within a system of reuse’. This includes pallets, foldable-plastic boxes, boxes, trays, plastic crates, intermediate bulk containers, pails, drums and canisters of all sizes and materials, including flexible formats or pallet wrappings or straps for stabilisation and protection of products put on pallets during transport. From 2040 this will increase to 70%.  Some players said that this amounted to a defacto ban on flexible plastic transport packaging because of the difficulty in reaching the reuse target. By 2030, 10% of grouped packaging boxes for stock keeping or distribution will need to be re-usable. Controversially, cardboard boxes will be exempt from these reuse targets, which could see an increased shift to the material. Dangerous goods transport packaging, large scale equipment transport packaging, and flexibles in direct contact with food and feed as defined in Regulation (EC) No 178/2002, and food ingredients as defined in Regulation (EU) No 1169/2011 will also be exempted. By 2030, distributors of alcoholic and non-alcoholic beverage sales packaging will need to meet a 10% reuse target, which will increase to 40% by 2040. Some classes of alcoholic beverage, including highly perishable alcoholic beverages will be exempted. RECYCLABILITY AND REUSEBy 2030 all packaging must be recyclable or reusable. To be classed as recyclable, packaging must be: Designed for recycling Separately collected Sorted in to defined waste streams without affecting the recyclability of other waste streams Possible to be recycled so that the resulting secondary raw materials are of sufficient quality to substitute the primary raw materials Packaging recyclability performance grades are to be established by packaging category and classified as grades A, B or C. After 1 January 2030 any packaging that falls below grade C will be restricted from sale in the market. After 1 January 2038 packaging classified below grade B will be banned from sale in the market. Under the legislation, along with design for recycling assessments from 2035 an additional assessment will be added based on the weight of material effectively recycled from each packaging category – with the packaging categories under the design for recycling assessment established in Article 6 paragraph 6 of the provisional agreement. The EU Commission will be given power to adopt delegated acts to establish the detailed criteria for the design for recycling criteria under the packaging categories, with criteria to be set-out by 1 January 2028. Also from 2035, a requirement that material be ‘recycled at scale’ will be added to the recyclability assessment, with the EU Commission able to amend the thresholds. The definition of packaging waste recycled at scale requires separate collection sorting and recycling of material across the EU as a whole (including of waste exports) in installed infrastructure for each of the packaging categories of at least 55% for all materials except for wood which requires at least 30%. Assessments of recyclability will include the impact on recycling systems of the inclusion of things such as barriers, inks and labels. By the end of 2026 the EU Commission will be required to prepare a report on ‘substances of concern’ that might negatively affect recycling or reusability, with additional restrictions added for those substances under recyclability assessments. Member states will be able to request the EU Commission consider restricting substances they consider detrimental to recycling. Within 7 years from the date of application of the regulation, the Commission will be required to evaluate whether the design for recycling requirements have contributed to minimising substances of concern. A five-year exemption on meeting recyclability targets will be given for innovative packaging, along with an exemption for medical goods and medical goods packaging, dangerous goods and packaging for food-contact material specifically made for infants. Sales packaging made from lightweight wood, cork, textile, rubber, ceramic or porcelain is also expected to be exempted from most of the recyclability requirements. MINIMUM RECYCLING TARGETS FOR THE PACKAGING CHAINUnder the provisional agreement, from 1 January 2030, or three years after the introduction of the related implementing act (whichever is later) all plastic packaging placed on the market in the EU must include a minimum percentage of recycled content from post-consumer waste – by weight – of: 30% for contact sensitive packaging (this is generally packaging that comes into contact with food or medical supplies), excluding single-use bottles made from polyethylene terephthalate (PET) as the major component 10% for contact sensitive packaging made from plastic materials other than PET, except single use plastic beverage bottles 30% for single use plastic beverage bottle 35% for all other packaging By 2040, this will increase to: 50% for contact sensitive plastic packaging made primarily from PET, except for single use plastic beverage bottles 25% for non-PET contact sensitive plastics, with the exception of single use beverage bottles 65% for single use beverage bottles and all other plastic packaging The recycled content targets will allow the use of material from ‘third countries’ – those outside of the EU – the allowance of which has been one of the most contentious and heavily lobbied parts of the bill on either side of the argument. Material from outside of the EU will need to have been separately collected, and have equivalent specification to the requirements listed in the PPWR, the Waste Framework Directive (2008/98/EC), and the Directive on the reduction of the impact of certain plastic products on the environment ((EU) 2019/904). Medical packaging, transportation of dangerous goods, compostable plastic packaging and food packaging for infants and young children will be exempt from the recycled targets. The Commission is obliged to adopt implementing acts establishing a methodology for the calculation and verification of these recycled percentages by 31 December 2026. The Commission will be able to amend the targets based on "excessive prices of specific recycled plastics" and on the grounds that the amount of recycled content would pose a threat to human health or result in non-compliance with Regulation (EC) 1935/2004 – or to any plastic part representing less than 5% of the total weight of the whole packaging, which would typically include things such as functional barriers. By 1 January 2028 the Commission will be required to assess the need for further exemptions from recycled content targets for specific plastic packaging based on a lack of suitable recycling technologies. It will have the power to introduce implementing acts to amend the recycled content targets based on those assessments. Member states will also be able to exempt economic operators from the recycled content targets for 5 years as long as: that Member State has reached 5 percentage points above the 2025 recycled targets for recycling of packaging waste per material It is expected to reach 5 percentage points above the 2030 target (as assessed by the EU Commission) It is on track to meet waste prevention targets under the PPWR It has reached a 3% waste prevention by 2028 compared with a 2018 baseline The economic operators have adopted a corporate waste prevention and recycling plan that contributes to achieving the waste prevention and recycling objective The five year exemption can be renewed by Member States provided the conditions remain filled. This would appear to lead to the prospect of uneven trading conditions across the EU. The targets will be calculated by year and manufacturing plant. The 2030 targets under the PPWR will replace the targets set out in the Single Use Plastics Directive (SUPD) from 2030, but the pre-2030 targets in the SUPD will remain. EPR schemes will be extended under the legislation and must be set-up to ensure that fees to producers (or those with producer responsibility in the case of imports) are sufficient to cover the ‘full waste management’ cost of packaging waste, but actual fees are not stipulated in the legislation. The provisional agreement states that players contributing to EPR schemes should be given priority access at market prices to recycled material corresponding to the amount of packaging placed in a Member State by each individual economic operator. SINGLE-USE PLASTICS, PACKAGING WASTE TO LANDFILL, AND PFAS BANSThere will be further bans on single-use plastics introduced by the PPWR, which remain broadly inline with those proposed in the EU Council’s bargaining position. Significantly, for the recycled low density polyethylene (R-LDPE) flexible market this includes a ban on plastic film wrap grouping bottles, cans, tins, pots, tubs, or packets together in multi-packs at point of sale, but will not include wrap used for business-to-business distribution. This could also impact on pyrolysis-based chemical recyclers because post-consumer flexibles have been identified by the sector as a potential key feedstock source. The agreement also includes a ban on food-contact packaging containing PFAS above certain thresholds. There will also be a restriction on sending packaging waste that can be recycled to landfill or incineration, which could result in a higher sorting requirements and costs for waste managers. BIO-BASED MATERIALBy three years from the entrance in to force of the PPWR the EU Commission will be obliged to review the state of technological development and environmental performance of bio-based plastic packaging. Following this, the Commission will be required to bring forth legislative proposals for targets to increase the use of bio-based plastics in packaging, this will include the possibility of bio-based material contributing to recycling targets for food-contact material where recycled material is not available. This is likely to impact most heavily on the polyolefins and polystyrene sectors. CHEMICAL RECYCLINGThe original commission draft appeared to clarify and support the use of chemical recycling as counting towards the targets as long as its end use is not for fuel or backfill. In a blow for chemical recyclers, however, the wording around definition of recycling has been removed, and now refers back to Directive 2008/98/EC which forms the basis of the majority of EU recycling legislation definitions. Directive 2008/98/EC defined recycling as “any recovery operation by which waste materials are reprocessed into products, materials or substances whether for the original or other purposes. It includes the reprocessing of organic material but does not include energy recovery and the reprocessing into materials that are to be used as fuels or for backfilling operations." This has left the legal status of chemical recycling uncertain, particularly for pyrolysis – the dominant form of chemical recycling in Europe – where mixed plastic waste is commonly converted to pyrolysis oil – a naphtha substitute – before being reprocessed into recycled plastics. MEMBER STATE TARGETS AND DEPOSIT RETURN SCHEMES (DRSs)Member state targets and obligations to implement DRSs remain broadly the same as in the EU Council’s bargaining position paper. The exception is that the figure on the collection figure for member states to exempt themselves from a DRS scheme has been increased to 80% by weight of applicable packaging placed on the market for the first time in 2026, up from 78% in the EU Council's bargaining position. The legislation's passage through the EU has been fraught, with the EU Commission objecting to the provisional agreement between the Parliament and the Council, and with widespread talk circulating in the run up to the vote that the members would not support it at Coreper. These factors are understood to be behind the last minute amendments. The regulation now faces a final approval vote in the EU Parliament’s April plenary session, if it passes that vote it will be adopted in to law. Insight by Mark VictoryAdditional reporting by Matt Tudball

25-Mar-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 22 March. Much improved outlook from manufacturers in Germany The business climate for manufacturing in Germany improved markedly in March, the Munich-based ifo Institute said on Friday, with its latest survey results supporting wider views on an improving economy. Eurozone private sector moves closer to stability in March, UK firms The eurozone private sector came close to stabilising this month, driven by a more pronounced return to growth footing for services, but the disparity between a stronger southern Europe and ongoing weakness in France and Germany continued. INSIGHT: SAF catalyst technology could also boost biochemicals production Catalyst technology used to power the first transatlantic flight conducted by a commercial airline which used 100% sustainable aviation fuel (SAF), could also have applications in chemicals production if a market can be developed to allow for commercial scale up. INEOS to end ethanol production at Grangemouth in Q1 2025 Slowing demand and cheap imports were cited as the key reasons why INEOS decided to halt production of synthetic ethanol at its Grangemouth site in the UK in Q1 2025. Europe PE/PP contracts settle up from February, sentiment noticeably weaker In Europe, polyethylene (PE) and polypropylene (PP) contracts for March have settled up from February and above the monomer, although sentiment has weakened.

25-Mar-2024

China’s Sinopec 2023 profit falls 13% as chemicals incur loss for second year

SINGAPORE (ICIS)–Chinese producer Sinopec posted a 12.9% decrease in full-year 2023 net profit as product prices fell across the board, dragged down by operating losses in chemicals. Chemicals segment incurs CNY6.0bn ($832m) loss in 2023 Refining earnings surge 69% as crude prices fall 2024 C2 output growth to slow from 6.5% in 2023 Sinopec is a major chemical producer in China. In million yuan (CNY) 2023 2022 Change Revenue 3,212,215 3,318,168 -3.2% Operating expenses -3,125,387 -3,242,333 -3.6% Operating profit 86,828 75,835 14.5% Profits attributable to shareholders 58,310 66,933 -12.9% Among its four business segments, only chemicals reported a loss in 2023. The segment incurred operating losses for the second consecutive year. The 2023 figure, however, was much lower compared with 2022, aided in part by feedstock optimization and increased run rates of profitable plants. Operating profit (loss) in CNY million 2023 2022 Change Exploration & production              44,963 53,716 -16.3% Refining              20,608 12,211 68.8% Marketing & distribution              25,939 24,537 5.7% Chemicals              (6,036) (14,127) N/A The chemical market faced a tough oversupply condition last year, following a significant increase in China’s petrochemical capacity, with declining prices dampening production margins. China’s domestic chemical product prices in 2023 declined by 7.0%, with chemical margin at a low level, the company said. Its ethylene (C2) production in 2023 stood at 14.31 million tonnes, up by 6.5% from 2022. Sinopec’s total chemical sales volume last year increased by 1.7% to 83 million tonnes, it said. Meanwhile, operating profit from refining in 2023 surged 69% due to lower crude prices, with both refinery throughput and domestic sales of oil products hitting record highs. In 2023, Sinopec processed 258 million tonnes of crude, up by 6.3% from 2022. Domestic sales of refined oil products (including gasoline, diesel and kerosene) last year reached 188 million tonnes, up 15.8% from the previous year. For 2024, the company expects the Chinese economy will maintain a sustainable trend of recovery, with domestic demand for natural gas, fuel and chemicals to continue growing. It expects volatility in crude prices to persist. “Due to changes in global supply and demand, geopolitics and inventory levels, international oil prices are expected to fluctuate at medium to high levels,” Sinopec noted. “Our company will put more focus on value creation with priority given to profit generation, transition, upgrading, reform, innovation, and risk control,” it said. Sinopec 2024 forecasts 2024E* 2023 change Crude production (million barrels) 279.06 281.12 -0.7% Natural gas outputs (billion cubic feet) 1,379.70 1,337.82 3.1% Crude throughput (million tonnes) 260 257.52 1.0% Refined oil products output (million tonnes) 159 156 1.9% Domestic sales of oil products (million tonnes) 191 188.17 1.5% Ethylene production (million tonnes) 14.35 14.31 0.3% Capital expenditure (CNY billion) 173 176.8 -2.1% *Sinopec estimates Focus article by Fanny Zhang ($1 = CNY7.21) Thumbnail image: At the container terminal of Nanjing Port in Jiangsu Province, China, on 19 March 2024.(Costfoto/NurPhoto/Shutterstock)

25-Mar-2024

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