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TOPIC PAGE: Coronavirus, oil price direction – impact on chemicals

China's domestic petrochemical prices had tumbled across the board in July because of weak demand, which is expected to persist in the months ahead as global economic growth cools down. Flare-ups of COVID-19 infections continue in parts of the country, prompting small-scale lockdowns at several cities during the week. Indonesia and Malaysia posted strong second-quarter annualized GDP growths of 5.4% and 8.9%, respectively, but the pace of expansion is widely expected to slow down for the rest of the year with external demand likely to weaken as global economies grapple with high inflation. Updated on 12 August 2022 On this topic page we analyse the impact of coronavirus and oil price dynamics on chemical markets and bring together the latest news reported by ICIS.  Scroll down to see the latest interactive graphics, podcasts and videos.  Click here to register for regular updates to help you navigate these challenging times. LATEST HEADLINES (Last updated at 09:30 GMT on 12 August 2022) Malaysia’s Q2 GDP expands 8.9%, growth to moderate on global uncertainties By Nurluqman Suratman 12-Aug-22 15:20 SINGAPORE (ICIS)–Malaysia’s economy grew by 8.9% year on year in the second quarter of this year on improving domestic demand, but heightened global uncertainties are expected to weigh on its growth outlook, the central bank said on Friday. High production costs erode Asian R-HDPE margins By Arianne Perez 12-Aug-22 13:48 SINGAPORE (ICIS)–As production costs of recycled high-density polyethylene (R-HDPE) blow moulding pellets remain high in Asia while demand stays lacklustre, sellers’ margins will continue to narrow in the weeks ahead. PODCAST: Asian olefins producers challenged to preserve margins in H2 – ICIS analysts By Morgan Condon 12-Aug-22 05:00 LONDON (ICIS)–Asian olefins capacity is set to increase in the coming months, but against the prospect of a global recession and challenging demand it is unclear how this will develop for producers. Trade data show US base oil export availability has not returned to pre-pandemic levels By Amanda Hay 12-Aug-22 03:04 HOUSTON (ICIS)–ICIS trade data reveal that the US has not yet returned to pre-pandemic export levels of base oils as supply constraints, shifting trade flows and high prices have curbed export activity. OPEC revises crude demand forecast down on slowing global economy By Jonathan Lopez 11-Aug-22 22:40 MADRID (ICIS)–While crude oil demand continued its “strong recovery” to pre-pandemic levels, economic growth showed signs of a slowdown in July and, with it, crude demand also took a hit, producing cartel OPEC said on Thursday. UK to face increased competition for LNG in fourth quarter By Hector Falconer 11-Aug-22 19:20 LONDON (ICIS)–Britain is likely to face increased competition for LNG supply in the fourth quarter of 2022 amid uncertainty over Russian piped supply to mainland Europe, supporting NBP winter contracts especially in the case of cold weather. Oil prices exposed to opposing fundamentals, extreme volatility By Cecilia Barreiro 11-Aug-22 18:58 LONDON (ICIS)–The August outlook for oil prices is subject to increased uncertainty resulting from a number of bullish and bearish factors. Russia’s invasion of Ukraine will continue to be a central driving force and keep oil markets volatile while rising global inflation is expected to keep a lid on demand. Singapore trims 2022 GDP growth forecast to 3-4% on global headwinds By Nurluqman Suratman 11-Aug-22 11:43 SINGAPORE (ICIS)–Singapore on Thursday trimmed its 2022 GDP growth forecast to 3-4%, from the previous estimate of 3-5%, due to the deteriorating global economic environment. SE Asia palm biodiesel to see record export volumes, healthy demand By Keven Zhang 11-Aug-22 11:15 SINGAPORE (ICIS)–Southeast Asia's palm methyl ester (PME) export volumes are likely to climb to record highs in July and August, as several bullish factors boost buying interest. Thai PTTGC Q2 net profit falls sharply amid lower chem margins By Nurluqman Suratman 10-Aug-22 15:30 SINGAPORE (ICIS)–PTT Global Chemical’s (PTTGC) net profit fell by 83.9% year on year in the second quarter, weighed partly by lower margins across all of its chemicals businesses, the Thailand-based producer said on Wednesday. Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under pressure By Nurluqman Suratman 10-Aug-22 12:42 SINGAPORE (ICIS)–Saudi petrochemicals major SABIC posted a 3.8% year-on-year increase in second-quarter net profit, while it expects margins to remain under pressure in the second half of 2022. INSIGHT: Indonesia economy surprises in Q2; prospects dim in H2 By Pearl Bantillo 10-Aug-22 21:03 SINGAPORE (ICIS)–Indonesia’s growth momentum is expected to weaken for the rest of the year and into 2023, as high inflation hits overall domestic consumption. External demand is being threatened by a possible global recession. China July petrochemical markets slump; outlook stays bearish By Yvonne Shi 09-Aug-22 08:00 SINGAPORE (ICIS)–China's petrochemical markets fell across the board in July on weak demand, which persists into August while supply is projected to grow for the rest of the year. INSIGHT: Business, chemicals indicators point to global downturn By Will Beacham 04-Aug-22 19:09 BARCELONA (ICIS)–New economic data combined with deteriorating chemical industry performance, suggests that the second half of the year could be bleak. Latest figures for July from Oxford Economics’ Global Business Sentiment Index show declining confidence about growth, and fears about downside risks while a recent profit warning from Covestro and slumping chemical prices suggest demand may be waning along supply chains. OUTLOOK: China’s PE market to feel pressure from imports, slowing demand growth By Joanne Wang 02-Aug-22 14:24 SINGAPORE (ICIS)–China’s polyethylene (PE) market may feel stronger pressure from increasing imports in the second half of 2022 amid weak overseas demand, while domestic producers may kick off another round of output reduction on squeezed margins and subdued demand. China’s domestic PE prices were largely on a downtrend in the first half of the year. Prices increased around the world in the first quarter as the Russia-Ukraine conflict pushed up crude prices sharply. Asia July industries – a mixed bag as battle with inflation continues By Nurluqman Suratman 02-Aug-22 13:59 SINGAPORE (ICIS)–Asia's manufacturing sector in July presented a mixed performance, with major economies in the northeast showing a marked slowdown in activity, as the region continues to contend with high input costs and weak demand. For China, both the official and non-official manufacturing purchasing managers' indices (PMI) for July indicated continued weakness in the world’s second-biggest economy Supply problems continued to disrupt German manufacturers in July – Ifo By Morgan Condon 01-Aug-22 17:27 LONDON (ICIS)–Bottlenecks continued to disrupt German manufacturing in July, with the majority of the chemicals industry hit by material shortages, according to the latest data from the Ifo Institute. Supply problems impacted 73.3% of German manufacturing companies surveyed by Ifo in July, down from 74.1% in June. Chemicals were less impacted than other downstream sectors. OUTLOOK: China’s oxo-alcohols weighed by slow demand recovery, increasing supply By Claire Gao 29-Jul-22 16:07 SINGAPORE (ICIS)–China’s oxo-alcohols markets will face downward pressure from slow recovery of demand and increasing supply, although the outlook of export is promising. OUTLOOK: US EDC likely to re-enter global markets in 2H as macroeconomic headwinds change flows By Bill Bowen 29-Jul-22 05:56 HOUSTON (ICIS)–US ethylene dichloride (EDC) is likely to see weakened demand and greater availability in the second half of 2022 as demand for its downstream derivative polymer weakens on less construction activity amid macroeconomic headwinds. INSIGHT: Europe industry facing difficult August as gas supply concerns mount By Nigel Davis 29-Jul-22 00:14 LONDON (ICIS)–It is almost like stepping back in time, with industrial sectors in Europe vying for the attention of governments and lawmakers to try to secure operations should the region’s gas crisis escalate. S Korea's S-Oil Q2 net income more than doubles; Q3 PX spread to weaken By Nurluqman Suratman 28-Jul-22 13:38 SINGAPORE (ICIS)–S-Oil's second-quarter net income more than doubled year on year on strong refining margins and robust aromatics demand, but the South Korean producer’s paraxylene (PX) spread is expected to weaken in July-September 2022. SE Asia August PE offers stable to soft but Vietnam market under intense pressure By Izham Ahmad 28-Jul-22 11:22 SINGAPORE (ICIS)–Initial spot import offers for August shipments of polyethylene (PE) in southeast Asia were announced either stable or softer this week as buying sentiment continued to be depressed by the slump in demand from China. VIDEO: China’s new EVA capacities to weigh on Q3 sentiment By Joanne Wang 22-Jul-22 12:29 SINGAPORE (ICIS)–Watch ICIS senior industry analyst Joanne Wang discuss the ethylene vinyl acetate (EVA) capacity increases in China and the recently launched EVA China RMB index. Chinese ethanolamines slump weighs on sentiment in Asia and India By Clive Ong 22-Jul-22 10:45 SINGAPORE (ICIS)–The ongoing slump in the ethanolamines market in domestic China continues to weigh on sentiment of players in Asia and India. OUTLOOK: European MMA demand uncertain amid wider economic challenges By Mathew Jolin-Beech 21-Jul-22 23:24 LONDON (ICIS)–The European methyl methacrylate (MMA) market is facing uncertain H2 demand amid wider geopolitical and economic challenges. Asia BDO remains weighed down by ongoing Chinese market slump By Clive Ong 21-Jul-22 16:53 SINGAPORE (ICIS)–Asian butanediol (BDO) market continues to be impacted by the ongoing slump in the Chinese domestic sector. Sentiment has turned increasingly bearish with participants anticipating further weakness in the near term. OUTLOOK: US MEG market expected to get longer through Q3 By Melissa Wheeler 21-Jul-22 05:10 HOUSTON (ICIS)–The monoethylene glycol (MEG) market is expected to remain long through Q3 as suppliers continue to offer more product. PODCAST: China’s base oils demand to be better in autumn, imports to decline YOY in H2 By Whitney Shi 20-Jul-22 15:11 SINGAPORE (ICIS)–ICIS analyst Jady Ma and Whitney Shi discuss the outlook of China's base oil market in this episode. Prolonged heatwave could hinder operations at Europe petrochemicals plants By Jonathan Lopez 19-Jul-22 18:09 MADRID (ICIS)–High temperatures across Europe could reduce operating rates at some petrochemicals plants, as cooling operations become more difficult, trade groups have warned. OUTLOOK: Middle East base oils market to face stable-to-soft demand in H2 By Izham Ahmad 19-Jul-22 10:46 SINGAPORE (ICIS)–The Middle East base oils spot market is expected to still face uncertainties in the final half of 2022 as supply of most grades is expected to be mixed, with demand expected to remain stable to soft due to sluggish economic growth and global automotive sales. World petrochemical sentiment weak as demand falters By Felicia Loo 15-Jul-22 14:12 SINGAPORE (ICIS)-Global petrochemical markets are mired in a challenging situation writ large, with demand dull as recession risks gather pace. VIDEO: Asia adipic acid demand struggles to reach pre-lockdown levels By Josh Quah 15-Jul-22 14:01 SINGAPORE (ICIS)–Watch ICIS editor Josh Quah discuss developments in Asia's adipic acid market. PODCAST: Chems sector resilient in Q2 but conditions forecast bleak for H2 By Tom Brown 14-Jul-22 18:44 LONDON (ICIS)–Projected second-quarter financial data for BASF hints that conditions for chemicals players may have been stronger than expected in the second quarter of 2022, but rising COVID-19 infection numbers in China only add to the slew of bearish news for the second half of the year. PODCAST: China's LDPE facing continued supply pressure By Joanne Wang 14-Jul-22 10:28 SINGAPORE (ICIS)–In this episode, ICIS analyst Jady Ma and Joanne Wang discuss the recent developments and outlook of China's low density polyethylene (LDPE) market. Europe PET high prices detrimental to sales in bearish climate By Caroline Murray 13-Jul-22 23:15 LONDON (ICIS)–The peak season for polyethylene terephthalate (PET) bottlers in Europe is the summer but the combination of extraordinarily high prices and the unstable economy is affecting sales. China PP hits lowest levels this year on slumping crude, weak demand By Lucy Shuai 13-Jul-22 16:43 SINGAPORE (ICIS)–China’s polypropylene (PP) prices fell to their lowest levels this year from slumping crude oil and weak downstream demand, on concerns of a global economic recession. Crude falls nearly $2/bbl on fresh China COVID-19 curbs By Nurluqman Suratman 12-Jul-22 11:08 SINGAPORE (ICIS)–Oil prices fell by nearly $2/bbl on Tuesday morning on worries over fresh COVID-19 restrictions in China, the world's biggest crude importer. INSIGHT: Demand uncertainty pressuring prices as downturn gathers momentum By Nigel Davis 11-Jul-22 23:43 LONDON (ICIS)–Movement in the ICIS weekly and monthly petrochemical indexes illustrate the strain being put on producers to hold prices in the face of increasing demand uncertainty and the volatile feedstock and energy cost environment. European melamine spot prices stable-to-soft; Q3 contract talks ongoing as supplier and consumer pricing ideas clash By Melissa Hurley 08-Jul-22 00:44 LONDON (ICIS)–European melamine third quarter contract discussions continued this week. More progress is expected towards the end of the week, heading in to next week. Talks between suppliers and consumers are divisive as pricing expectations remain unmatched. PODCAST: Europe's oxo-alcohols chain faces demand erosion amid economic uncertainty By Mathew Jolin-Beech 07-Jul-22 22:03 LONDON (ICIS)–The European oxo-alcohols chain faces a slowdown in demand from end use sectors as the wider geopolitical and economic uncertainties begin to bite. This ICIS podcast explores the latest developments for oxo-alcohols and its derivative markets. PODCAST: Global shortage of MEK eases, though US prices remain high By Nick Cleeve 07-Jul-22 17:58 LONDON (ICIS)–Methyl ethyl ketone (MEK) prices are softening globally as supply constraints ease, although prices in the US, a net importer, remain at extremely high levels, drawing exports from Asia and Europe. Asia petchems mired in bearishness on elevated recession fears By Felicia Loo 07-Jul-22 11:21 SINGAPORE (ICIS)–Asian petrochemical markets are in a jam, with price bearishness across the board as recession risks continue to mount. OUTLOOK: Tight supply concerns flip to reduced oil demand by Q4 By Barney Gray 07-Jul-22 00:49LONDON (ICIS)–Oil prices were in a post-Covid recovery phase prior to Russia’s invasion of Ukraine in February. Since then, H1 crude prices have been driven by the fallout from the war, reaching record highs. But the oil market will be characterised by major volatility and rising uncertainty as we head into H2. PODCAST: UK chemicals fighting Four Horsemen of the Apocalypse – CIA CEO By Will Beacham 05-Jul-22 22:48 LONDON (ICIS)–The UK chemicals industry is battling the quadruple challenges of Brexit, COVID-19, the cost of living crisis and the war in Ukraine, according to Stephen Elliott, CEO of UK trade group the Chemical Industries Association. OUTLOOK: Demand for low-end R-PET to continue to shrink By Arianne Perez 04-Jul-22 15:03 SINGAPORE (ICIS)–Low-end applications of recycled polyethylene terephthalate (R-PET) will become less popular as the more competitive virgin PET continues to eat into its market share. China’s propylene faces headwinds from ample supply, weak demand in June By Yi Liang 04-Jul-22 10:21 SINGAPORE (ICIS)–China’s domestic propylene market continues to face headwinds from ample supply and sluggish end-user demand in June, with market sentiment turning bearish. Mideast petchem market sentiment bearish on weak demand By Felicia Loo 01-Jul-22 11:30 SINGAPORE (ICIS)–Sentiment in the Middle East petrochemical markets is bearish, as demand is tepid against a backdrop of ample supply. The soaring inflation rates have led to a reduced purchasing power, weakening buyers’ appetites. Asia AA and acrylates largely lower; sentiment softer on China downtrend By Li Li Chng 29-Jun-22 21:20 SINGAPORE (ICIS)— Asia’s acrylic acid (AA) and acrylate esters spot discussions were under pressure, with market sentiment bearish amid a downtrend in China. PODCAST: China PP to face uncertainties in H2 ’22 amid high costs By Lucy Shuai 29-Jun-22 17:47 SINGAPORE (ICIS)–ICIS analysts Jady Ma and Lucy Shuai discuss the recent developments and outlook of China's polypropylene (PP) market. PODCAST: Europe and Middle East isocyanates demand slows By ICIS Editorial 29-Jun-22 17:09 LONDON (ICIS)–Isocyanates Europe editor Zubair Adam discusses current demand and supply market trends for Europe with isocyanates Middle East editor Damini Dabholkar. US ethylene begins Q3 with ample supply, eroding margins By John Donnelly 29-Jun-22 05:45 HOUSTON (ICIS)–The US ethylene market is seeing ample supply, lower margins but decent derivative demand heading into Q3. INSIGHT: Energy demand rebound at a time of crisis, bp stats show By Nigel Davis 28-Jun-22 23:39 LONDON (ICIS)–Here is the energy crisis writ large. The chart, from bp as it released its latest Statistical Review of World Energy on Tuesday, shows the sharp rebound in energy consumption as COVID-19 restrictions eased and global economic activity recovered. PODCAST: Isocyanates face high costs, squeezed margins in H2 – ICIS analysts By Morgan Condon 28-Jun-22 21:02 LONDON (ICIS)–The isocyanates market is faced with steep production costs and weakening demand across downstream sectors, presenting the industry with a darkening outlook. European PVC shows signs of lengthening on demand, global trends By Chris Barker 28-Jun-22 17:29 LONDON (ICIS)–European polyvinyl chloride (PVC) contract prices for June have settled with rollovers to decreases compared to May, with indications that the outlook for availability has lengthened compared to earlier in the year. Asia ADA trade flows punch above weight in May By Josh Quah 24-Jun-22 13:57 SINGAPORE (ICIS)–Northeast Asia adipic acid (ADA) markets logged a large trade surplus in May, according to import-export data captured by ICIS Supply and Demand Database. Europe capro, nylon 6 markets face slow summer demand By Marta Fern 24-Jun-22 00:35 LONDON (ICIS)–European caprolactam (capro) and nylon 6 markets are facing persistent soft demand, which could weaken further in the coming months while the costs of production are on the rise. VIDEO: Asia MEG may face more challenges in H2 2022 By Judith Wang 23-Jun-22 17:16 SINGAPORE (ICIS)–Watch ICIS Senior Editor Judith Wang discuss current developments in Asia's monoethylene glycol (MEG) market and its outlook. China’s NBR import offers plummet with domestic losses, soft demand By Ai Teng Lim 23-Jun-22 15:56 SINGAPORE (ICIS)–China's import offers for acrylonitrile butadiene rubber (NBR) are at year-low levels, as sellers tried to chase deals with wider discounts. Tight tonnage and robust demand push Asian chemical tanker market, sentiment bullish By Luffy Wu 23-Jun-22 14:37 SINGAPORE (ICIS)–The Asian chemical tanker shipping market saw overall upward pressure amid high global bunker levels and regional tonnage tightness, drained by robust long-haul activities and clean petroleum product (CPP) markets. PODCAST: How may China respond to looming global energy crisis? By Bee Lin Chow 23-Jun-22 13:32 SINGAPORE (ICIS)–ICIS analysts discuss how China may respond to what seems like a looming global energy crisis. US SBR demand healthy from tyre sector, but tyre imports growing By Amanda Hay 23-Jun-22 05:34 HOUSTON (ICIS)–US styrene butadiene rubber (SBR) demand healthy for tyres, but North American tyre manufacturers face growing tyre imports. INSIGHT: Don’t stifle chemicals now in the face of energy uncertainty and climate reform – UK industry By Nigel Davis 22-Jun-22 22:20 LONDON (ICIS)-The UK chemical industry is now 6% larger than at the onset of the pandemic, chief executive of the country’s sector trade group, the Chemical Industries Association (CIA), said last week. PODCAST: China benzene prices hit 8-year high; cost and supply support to persist By Yoyo Liu 17-Jun-22 10:37 SINGAPORE (ICIS)–ICIS analyst Jady Ma and Yoyo Liu discuss the recent developments and outlook of China's benzene market. Asian BD buying slows as domestic China tumbles By Ai Teng Lim 17-Jun-22 09:48 SINGAPORE (ICIS)–Sentiment was duller in this week’s spot talks for Asian butadiene (BD) imports, as buyers retreated after the domestic China market suffered heavy losses early-week. PODCAST: Europe PET speculation rife in face of diverging upstream dynamics By Caroline Murray 17-Jun-22 00:07 LONDON (ICIS)–Mixed xylene prices are skyrocketing higher than PX prices and concerns over negative margins mount. PX June contract talks are ongoing. By contrast, MEG supply remains lengthy and demand has been low, pressuring down spot prices. The June MEG contract price also remains unconfirmed. INSIGHT: PET, politicians and TikTok – the industry’s battle for our attention By Matt Tudball 16-Jun-22 22:17 BRUSSELS (ICIS)–The battle for our attention is a fierce one. In the post-COVID-19 world, as employees we feel a sense of email overload and Zoom fatigue while as a consumer we face a constant bombardment of media telling us what we should be doing, thinking, eating, drinking and watching. Asian petrochemicals to rebound in June amid bumpy recovery – ICIS analysts By Ann Sun 16-Jun-22 12:12 SINGAPORE (ICIS)–Asian petrochemical market is expected to be generally firmer in June given higher crude prices and easing lockdowns in China, according to a latest Price Forecast by ICIS analysts. PODCAST: Global base oils supply and refinery margins to stay under pressure in H2 By Eashani Chavda 15-Jun-22 22:35 LONDON (ICIS)–ICIS editors Eashani Chavda, Samantha Wright and Amanda Hay are joined by ICIS analyst Mike Connolly to discuss the latest developments in Europe and US base oils markets. Key topics include: supply shortages, shifting trade flows, refinery margins and additive shortages. PODCAST: Chemical distributors see inflation hurting demand, downturn in prospect By Will Beacham 14-Jun-22 22:03 BARCELONA (ICIS)–Rising inflation is now hurting demand for chemicals, raising the prospect of a broad economic downturn later this year or in 2023, according to chemical distributors. China PE finds support from stimulus policies; eyes on demand performance By Sijia Li 14-Jun-22 14:57 SINGAPORE (ICIS)–China’s domestic polyethylene (PE) market entering June has found support from stimulus policies and costs. Looking ahead, players are focusing on demand recovery, with the easing of lockdowns in multiple regions amid decreasing COVID-19 infections. India domestic LAB prices rise; China demand improves as lockdowns ease By Clive Ong 10-Jun-22 11:53 SINGAPORE (ICIS)–India’s domestic prices for linear alkylbenzene (LAB) have spiked on the back of rising costs, but some players expect some headwinds with the monsoon season kicking off. Monsoon season to hamper India demand China demand sees uptick as COVID-19 restrictions ease China’s competitively priced cargoes still available in Asia (including India), Mideast Oil prices drop more than $1/bbl on partial lockdowns in China By Nurluqman Suratman 10-Jun-22 11:34 SINGAPORE (ICIS)–Oil prices fell more than $1/bbl on Friday on renewed demand fears after fresh COVID-19 lockdown measures were announced in China, but tight supply concerns capped losses. INSIGHT: Sustainability to remain the key driver for Asia recycled polymers By Arianne Perez 10-Jun-22 11:00 SINGAPORE (ICIS)–Capacity expansions of recycled polyethylene terephthalate (R-PET) and recycled polyethylene (R-PE) faced delays amid the onslaught of COVID-19, particularly last year, but overall growth of Asia polymers recycling is set to continue with sustainability as the main driver. PODCAST: European ACN market keeps a close eye on ammonia and propylene By ICIS Editorial 09-Jun-22 18:35 LONDON (ICIS)–The European acrylonitrile (ACN) market has good supply and some softening demand, but costs remain high. In this latest podcast, ICIS deputy managing editor Jane Massingham (Europe) talks to managing editor fertilizers, Julia Meehan and senior editor on olefins, Nel Weddle about the ammonia and propylene markets and what to expect in the months ahead. PODCAST: Asia benzene, styrene short-term outlook to hinge on demand-supply balance By Jasmine Khoo 09-Jun-22 11:35 SINGAPORE (ICIS)–Asia’s benzene prices have hit an all-time high on strong performance from the US amid the turnaround season, while styrene price gains have been lagging behind due to weak performance in the styrenics sector. In this podcast, Jasmine Khoo speaks with editors Angeline Soh and Trixie Yap on benzene and its key downstream styrene monomer (SM) and styrenics sectors. China PP exports may fall on narrow price gap with SE Asia By Lucy Shuai 08-Jun-22 17:09 SINGAPORE (ICIS)–With the lifting of COVID-19 lockdowns in China, as well as stimulus policies to boost the economy, China’s polypropylene (PP) prices have rebounded since late May. However, as PP prices have fallen in the southeast Asian market, China's PP exports may fall in June due to a narrow price gap. VIDEO: China PP demand set to improve in June as restrictions ease By Lucy Shuai 08-Jun-22 16:21 SINGAPORE (ICIS)–Watch industry analyst Lucy Shuai share her insights on the rebound seen in China's polypropylene (PP) market following the easing of strict COVID-19 curbs in the country. Asia Q3 biodiesel market sentiment to stay weak on poor European demand By Felicia Loo 07-Jun-22 12:13 SINGAPORE (ICIS)–The third-quarter market sentiment for southeast Asian palm methyl ester (PME) biodiesel is expected to remain weak amid poor buying requirements from Europe, a key importing region for southeast Asian material. Germany's chemicals hit hard by China lockdowns, automotive sentiment improves – Ifo By Jonathan Lopez 03-Jun-22 16:49 MADRID (ICIS)–Lockdowns in China to contain the coronavirus pandemic have had a major impact on export-intensive industrial sectors in Germany such as chemicals, research institute Ifo said on Thursday. Asia MEG rebounds on higher crude, demand recovery expectations By Judith Wang 03-Jun-22 10:50 SINGAPORE (ICIS)–Asia’s monoethylene glycol (MEG) weekly prices rebounded during the week amid stronger crude values and expectations of demand improvement due to easing lockdowns in Shanghai. Global chem production fell 2.9% year on year in April By Stefan Baumgarten 03-Jun-22 01:57 HOUSTON (ICIS)–Global chemical production volumes in April fell 4.1% month on month and 2.9% year on year, and they were off 0.4% year on year for the first four months of 2022, ICIS senior economist Kevin Swift said in a report on Thursday. China methanol to face ample supply, mixed demand performance By Doris He 01-Jun-22 21:05 SINGAPORE (ICIS)–China’s methanol market is expected to face overall ample supply from domestic and overseas producers in the near term, while demand may be mixed from different downstream sectors. INSIGHT: China, India to be main drivers of PVC supply, demand in Asia By Jonathan Chou 01-Jun-22 11:00 SINGAPORE (ICIS)–The coronavirus pandemic has changed how we live our lives, upending also supply and demand dynamics for polyvinyl chloride (PVC) and its related markets. Over two years on since the pandemic hit, much of Asia has attempted “living with COVID-19” in 2022, with some starting to treat it as an endemic disease. China SM margins likely to be squeezed by higher costs, weak demand By Tina Zhang 31-May-22 11:55 SINGAPORE (ICIS)–Margins in China's styrene monomer (SM) market are expected to continue to be squeezed in the near term, in view of rising feedstock benzene values and weak demand. China petrochemical market sentiment upbeat on Shanghai recovery plan By Fanny Zhang 30-May-22 13:27 SINGAPORE (ICIS)–China’s domestic petrochemical market sentiment is upbeat at the start of the week, with demand expected to recover when the two-month lockdown in Shanghai is lifted in June. Asian epoxy market stable, Chinese domestic market outlook ambiguous By Luffy Wu 27-May-22 11:54 SINGAPORE (ICIS)–The Asia epoxy resins market saw overall stable market sentiment while buyers exhibited improved price acceptability compared with in April. Asia nylon market cautious as Shanghai inches towards June reopening By Josh Quah 26-May-22 16:16 SINGAPORE (ICIS)–The lockdowns have been damaging for Asia's nylon market, with prolonged demand loss particularly felt in the CFR (cost & freight) China market. There have been recent signs, however, that the worst may have passed in the lead up to the reopening of key cities in China. PODCAST: Weak demand from lubricants, China’s Group II base oil import margins to be negative By Whitney Shi 25-May-22 14:09 SINGAPORE (ICIS)–ICIS analyst Jady Ma and Whitney Shi discuss the recent developments and outlook of China's base oil market. INSIGHT: China crude consumption softens amid COVID-19 lockdowns By Pearl Bantillo 25-May-22 12:00 SINGAPORE (ICIS)–China’s consumption of crude has softened as industrial production is hit by pandemic-related restrictions in place since February, with no sign of the government giving up on its zero-COVID policy. INTERVIEW: China emergence from lockdowns, stimulus to recharge auto and construction – Covestro CFO By Joseph Chang 25-May-22 05:17 NEW YORK (ICIS)–China’s easing of and potential emergence from COVID-19 lockdowns along with government stimulus should spark a major recovery in its automotive and construction markets, the chief financial officer (CFO) of Germany-based Covestro said on Tuesday. Asian MMA peaks in May; outlook pending clarity amid easing restrictions in China By Li Li Chng 24-May-22 13:47 SINGAPORE (ICIS)–Asian methyl methacrylate (MMA) peaked in May, after increasing around 17% since H2 February. Market players are awaiting clearer picture on China’s lifting of COVID-19 lockdowns and restrictions. PODCAST: Europe PE and PP update and outlook By Ben Lake 23-May-22 23:42 LONDON (ICIS)–Senior editor, Vicky Ellis, and market editor, Ben Lake, join forces to discuss a distinct change in the polymers market. The frenzied activity in March and April has given way to a far more relaxed sentiment in May – on the buy-side, at least. Vicky and Ben give their outlook for June and take a look at events that could shake up the markets again. INSIGHT: China PE demand to rebound from June, but slow road ahead By Amy Yu 23-May-22 18:27 SINGAPORE (ICIS)—China polyethylene (PE) demand is expected to firm as COVID-19 containment measures ease, but the pace of recovery remains hindered by remaining lockdown measures. ANALYSIS AND RESOURCES

12-Aug-2022

TOPIC PAGE: War in Ukraine, gas crisis

Updated at 08:30 GMT on 12 August with latest headlines. Please scroll down to see headlines. Map of gas-related outages updated at 17:45 GMT on 22 July.  The war in Ukraine first caused oil price volatility, which increased as surging COVID-19 cases in China led to fresh lockdowns, hitting demand and disrupting supply chains. China is the world’s second biggest economy and largest oil importer. Now Russia's decision to reduce flows of natural gas to Europe means the continent has to look forward to a winter of potential rationing, which could hit chemical production. Tightened supply has also sent gas prices soaring, with high costs forcing production cuts, especially in fertilizers. India is facing a more severe shortage of fertilizers and edible oil amid wide-ranging trade disruptions as the Ukraine war rages on, with financial sanctions tightening on Russia. Europe’s energy challenge is immense and put into stark relief by the response to Russia’s war in Ukraine. Cutting the ties that bind EU and non-EU nations to Russian gas and oil will be extremely painful this year and in years to come: the actions proposed by the European Commission put that into context. This topic page examines the impact of the Ukraine conflict on oil, gas, fertilizer and chemical markets. Image credit Vadim Ghirda/AP/Shutterstock Europe’s energy markets witnessed a year of record prices and extreme volatility in 2021. Russia's invasion of Ukraine has led to more difficult conditions for global markets in 2022. GAS SUMMARY Gas storage low in Europe, winter demand 30% higher than rest of year Record shipments of liquefied natural gas (LNG) to Europe so far in 2022 LNG could ease Europe shortages if Russia supplies cut Europe LNG processing operating at full capacity Russia resumed flows through Nord Stream I pipeline, but at reduced levels EU plan calls for a 15% cut to consumption, industry may face much higher reductions AMMONIA SUMMARY Russia supplies 20% of global seaborne ammonia market Disrupted supply has pushed up fertilizer and food prices OIL SUMMARY Friendship oil pipeline flows through Ukraine Russian oil feeds around a quarter of Europe demand Europe seeks to end reliance on Russian crude oil CHEMICALS SUMMARY High Europe gas and electricity prices force price hikes, energy surcharges Volatile oil and feedstock prices dent chemical producer margins Elevated oil prices dent consumer confidence and demand CEOs plan now for winter gas rationing BASF says it will have to close Ludwigshafen site if gas supplies fall below 50% for a prolonged period Europe is heavily reliant on Russian gas and exposed to disruptions in supply,  but Russia is also an important oil exporter and a supplier of fossil fuel products, which find their way to international markets via Ukraine's ports. Sanctions and measures against Russian exports of oil and gas have sent shockwaves across the global economy, lifting the cost of living, impacting industrial and agricultural production and potentially leading to social unrest. ICIS has taken a broader perspective, asking how vulnerable energy and energy-related supplies are to disruptions, what contingency plans are put in place and what could be expected in the upcoming weeks. How vulnerable are energy and energy-related Russian supplies to disruptions? Europe depends for close to 40% of its annual gas consumption on Russian supplies, imported via four routes – Ukraine, Belarus-Poland as well as the Nord Stream 1 and TurkStream corridors linking Russia to Germany and Turkey via the Baltic and Black Sea, respectively. Overall Russian pipeline supplies were limited throughout 2021, and since the beginning of this year producer Gazprom has shipped only one-third of the gas that it was expected to deliver to European consumers via Ukraine as part of a five-year transit agreement. Russia has banned exports of gas to several EU countries, and reduced flows through the Nord Stream I pipeline. European petrochemicals players face even higher gas prices as a result. Fertlizer companies – where gas can account for 80% of costs – have been forced to curtail production. If the conflict escalates, Ukraine transit pipelines may come under attack but disruptions could be limited because the infrastructure has been built to grant flexibility, allowing the operator to reroute flows away from potentially damaged segments. AMMONIA IMPACT The Togliatti-Azot pipeline, the world’s longest ammonia pipeline stretching 2,471km from the Togliatti Azot plant in Russian Samara Oblast to the Ukrainian Black Sea port of Yuzhny, could be caught up in the cross-fire. Russian ammonia supplies account for around 20% of the global seaborne merchant ammonia market each month. Around two thirds of those volumes are exported via Yuzhny, with the rest reaching European and global markets via Baltic ports. Ammonia is a prime material for fertilizers, so curtailments could potentially lead to higher food prices and shortages. Ammonia market players are scrambling to cover positions and assess options as the Russian invasion of Ukraine saw loadings at the key export hub of Yuzhny halted with immediate effect. Russian nitrogen fertilizer major Togliatti confirmed the suspension of the transit of ammonia to the Black Sea port via pipeline to ensure the safety of people living in the vicinity of the lengthy conduit. The Samara Oblast-based giant also confirmed the shut down of four of its seven ammonia units, with the other three plants operating at reduced rates. OIL PIPELINES VULNERABLE Supplies on the world’s longest oil pipeline, the Friendship (Druzhba) pipeline, could be threatened if the conflict leads to tough sanctions. The pipeline carries oil from central Russia 4,000km west to Ukraine and Belarus and runs close to the Belarus-Ukraine border. Russia exports around 5m bbl/day, of which half are exported to Europe, including via this pipeline. Russian oil accounts for about a quarter of Europe’s consumption, with the Druzhba pipeline carrying close to 1m bbl/day. Should sanctions be imposed and exports hindered, Europe will need to secure alternative cargoes from the global market. Europe consumed most exports of Urals, Russia’s biggest export grade, in 2021 after Saudi Arabia boosted market share in China. Almost 10m tonnes of Urals went through Rotterdam in the first half of last year, up 2m tonnes on 2020. Germany stands most exposed because it gets 25% of its oil from Russia. CHEMICALS IMPACT Gas and electricity are important components in the production costs of many chemicals. Surging gas and feedstock prices in Europe have caused big hikes in contract and spot prices. Europe is now at a competitive disadvantage to other regions and some customers are seeking new sources of lower-priced supply, especially from Asia and the Middle East. The conflict in Ukraine has pushed European gas prices back up to record levels, so some chemical producers may consider ceasing production, or adding further energy surcharges. Rising oil prices since late 2021 have already put chemical margins under pressure, and this has continued into 2022. As oil and naphtha prices soared, margins for ethylene production based on naphtha went nagative for the first time ICIS record began. The are now are swinging wildy in tandem with oil price movements. Chemical producers are struggling to pass on increasing naphtha feedstock and energy costs, especially in Europe. Elevated oil prices also dent downstream consumer confidence and spending. What contingency plans are being put in place? US and European officials have been planning for backup LNG supplies. Exports of LNG from Algeria, Qatar, the US and even Australia have been discussed as alternatives. Although Europe imported a record 11bn cubic metres (bcm) of LNG in January alone, half of which were sourced in the US, much of future supplies would depend on price as well as supply and processing capacity. Europe is proposing to replace 100bn cubic metres (m3) of Russian gas with alternative supplies by the end of the year. “In this scenario, there would be huge problems unless Europe gets it act together. I estimate that even with new liquified natural gas (LNG) supplies from the US, Norway, and Qatar plus energy efficiency measures and more use of renewables, Europe would still be short by 30-40bn m3," said ICIS senior energy editor, Aura Sabadus. You will find more infographics at Statista If the Asian premium were to increase, LNG cargoes would head in that direction, even as seasonal European winter gas demand is on average 30% higher than the rest of the year. Supply disruptions caused by escalating tensions may lead to a price rebound, incentivising more LNG to return to Europe. However, European import terminals are already operating at nameplate capacity. A record of 5,000GWh/day was reached in mid-January, according to EU data. Even if more LNG were to reach European terminals, countries in central and eastern Europe which rely on Russian flows shipped via Ukraine, would struggle to secure imported LNG. For oil markets, in case of an attack but no international sanctions, the worst-case scenario would be for approximately 240,000 bbl/day of lost Russian exports via Ukraine. There are other seaborne routes, including the Russian Black Sea port of Novorossiysk. Gas rationing – impact on Europe petrochemicals, fertilizers Embattled European fertilizer and petrochemical producers may be the first in line to cut gas consumption as political pressure is mounting to save supplies ahead of a difficult winter. As Russia, Europe’s largest gas supplier, has been limiting exports to less than a quarter of its deliveries two years ago and may stop them altogether amid its political stand-off with the EU, Brussels has now issued guidance to reduce demand by 15% between 1 August 2022 – 31 March across member states. Policymakers recommend voluntary reductions but say these would become mandatory in case of a supply emergency jeopardising the bloc’s security. DEMAND REDUCTION The EU’s largest consumers include households, accounting for 37% of total demand, electricity and heat generation covering around 30% and industrial consumption accounting for another 30%. Record high gas prices and an ongoing gas supply crunch over the least year have already been forcing industrial consumers to limit or stop production or seek import substitution globally. Data compiled by ICIS Gas Analytics show that overall year-on-year gas demand has declined by 8.2% in the year to date and by 3.9% for the same period over the 2015-2019 average. EU proposals for demand reduction released on 20 July indicate the industrial sector may be priority target for major reductions, with three sectors – glass, ceramics and chemicals – consuming half of the sector’s total. FERTILIZERS The fertilizer sector, one of the most gas-intensive industries, has also been one of the most affected so far because with gas prices soaring more than five times the long-term average in recent months, the cost to produce ammonia and urea rose to $1,700/tonne and $1,250/tonne respectively. This is around 60% above the current market price of these key products of the fertilizer sector. ICIS experts focusing on the fertilizer sector estimate that as much as 40% of urea production may have been cut year on year in Europe, although the information is difficult to confirm since there is no official confirmation on specific output limitations. PETROCHEMICALS On the petrochemicals side, there have been no reports of shutdowns or production reductions, but producers are making detailed plans for rationing, particularly in Germany, where the chemicals and pharmaceuticals industry uses about 140 TWh per year, or about 15 percent of Germany's gas consumption. Gas is mainly used by petrochemicals to generate energy such as electricity and steam as well as to fire furnaces for production complexes such as crackers. Sites are able to lower operating rates significantly, but they may be forced to close if gas supplies drop so much that production becomes uneconomic or difficult from a technical perspective. BASF’s Ludwigshafen site is the world’s largest integrated chemical complex owned by a single company and confirmed to ICIS that it will have to shut down if gas supply collapses by more than half for a sustained period of time. Ukraine conflict threatens Europe oil supply, chemicals production With Russia's invasion of Ukraine, sanctions could cut supplies of crude oil through the Druzhba pipeline, threatening oil refinery operations and chemicals production at installations in Hungary, Slovakia, Czech Republic, Poland and the former East Germany. Russian oil supplies up to a quarter of Europe’s crude imports, with refineries in central and eastern Europe, which are attached to the Druzhba pipeline, particularly reliant on these supplies. Any interruption to these supplies could force refineries to reduce operating rates unless they can find alternative supplies. Analysis of the ICIS Supply & Demand database shows that the countries Druzhba runs through, except for Germany, are reliant on Russian crude oil for more than half of their imports, led by Slovakia which obtained 96% of its supplies from Russia in 2021. Chemical production downstream of refineries in these countries could be impacted by any reduction in operating rates. The ICIS data forecast that for 2022, 2.79m tonnes of ethylene (11% of total European capacity) and 2.34m tonnes of propylene (12% of total European capacity) are reliant on refineries located along the Druzhba pipeline. While some alternative sources of crude oil could be sourced, it is unlikely normal levels of operations could be maintained. Michael Connolly, ICIS Principal Analyst Refining said: “Although many have built alternate sources, keeping full operating rates would be difficult for them as they rely on a consistent and reliable source of crude. Most refiners in Europe are aware of the risk of Russian crude and over the past 5-10 years have tried to reduce their dependence, or at least to build some capability to have an alternate supply – it doesn't mean they would be unaffected, but there should be a little bit of resilience, depending on the site.” Connolly explained that some land-locked refineries along the Druzhba pipeline have built pipelines to the coast, allowing alternative sources of crude oil to be sourced. However, these pipelines may not have capacity to feed the whole refinery. A spokesperson for Grupa LOTOS said: "The LOTOS refinery has dealt with suspended supplies by land before. Due to the contamination of Russian oil with chlorines, PERN, the state-owned operator of transmission and storage infrastructure, had to completely discontinue the transmission of crude oil from the eastern direction between 24 April and 9 June 2019." He added that scheduling of oil supplies by sea helped to secure volumes sufficient to maintain an unchanged level of throughput and maximise fuel production. TotalEnergies and PKN Orlen declined to comment while MOL and PCK have not yet replied to requests for comment. UKRAINE CHEMICALS UNDER THREAT With Russian forces advancing across Ukraine, chemical and fertilizer facilities may be threatened by physical damage, interrupted power and gas supplies or logistics disruption. Kalush cracker closed Karpatnaftohkhim's cracker at Kalush has been closed down because of the imposition of martial law in Ukraine. It has capacity (tonnes/year) of 250,000 (ethylene); 117,000 (propylene) 110,000 (LLDPE), 300,000 (PVC), 100,000 (benzene). Black Sea export hub closed  Ammonia market players have scrambled to cover positions and assess options as the Russian invasion of Ukraine saw loadings at the key export hub of Yuzhny halted with immediate effect. Russian nitrogen fertilizer major Togliatti confirmed the suspension of the transit of ammonia to the Black Sea port via pipeline to ensure the safety of people living in the vicinity of the lengthy conduit. The Samara Oblast-based giant also confirmed the shut down of four of its seven ammonia units, with the other three plants operating at reduced rates. Russia export disruptions to shift global trade flows, future capacities threatened Disruptions to Russia’s chemicals and polymers exports will change trade flows, particularly to Europe and Asia, as international sanctions, lack of logistics and even “self-sanctions” limit volumes. While Russia’s capacities are relatively small on a global scale, they can still have a significant impact on regional markets if these exports are disrupted. Key Russia exports include methanol, polyethylene (PE), polypropylene (PP), styrene and paraxylene (PX). Russia has increased exports of high density polyethylene (HDPE) and polypropylene (PP) in particular in 2020 and 2021 as new capacity started up from SIBUR’s ZapSibNeftekhim complex in Tobolsk in 2020. LATEST HEADLINES Malaysia’s Q2 GDP expands 8.9%, growth to moderate on global uncertainties By Nurluqman Suratman 12-Aug-22 15:20 SINGAPORE (ICIS)–Malaysia’s economy grew by 8.9% year on year in the second quarter of this year on improving domestic demand, but heightened global uncertainties are expected to weigh on its growth outlook, the central bank said on Friday. High production costs erode Asian R-HDPE margins By Arianne Perez 12-Aug-22 13:48 SINGAPORE (ICIS)–As production costs of recycled high-density polyethylene (R-HDPE) blow moulding pellets remain high in Asia while demand stays lacklustre, sellers’ margins will continue to narrow in the weeks ahead. PODCAST: Asian olefins producers challenged to preserve margins in H2 – ICIS analysts By Morgan Condon 12-Aug-22 05:00 LONDON (ICIS)–Asian olefins capacity is set to increase in the coming months, but against the prospect of a global recession and challenging demand it is unclear how this will develop for producers. Trade data show US base oil export availability has not returned to pre-pandemic levels By Amanda Hay 12-Aug-22 03:04 HOUSTON (ICIS)–ICIS trade data reveal that the US has not yet returned to pre-pandemic export levels of base oils as supply constraints, shifting trade flows and high prices have curbed export activity. Gas-fired generation drives German power Cal ’23 By Anne Petersen 12-Aug-22 00:45 LONDON (ICIS)–The price of gas remains the main driver for the German power Cal ’23, despite the German government’s focus on limiting the use of gas for power production. OPEC revises crude demand forecast down on slowing global economy By Jonathan Lopez 11-Aug-22 22:40 MADRID (ICIS)–While crude oil demand continued its “strong recovery” to pre-pandemic levels, economic growth showed signs of a slowdown in July and, with it, crude demand also took a hit, producing cartel OPEC said on Thursday. UK to face increased competition for LNG in fourth quarter By Hector Falconer 11-Aug-22 19:20 LONDON (ICIS)–Britain is likely to face increased competition for LNG supply in the fourth quarter of 2022 amid uncertainty over Russian piped supply to mainland Europe, supporting NBP winter contracts especially in the case of cold weather. Oil prices exposed to opposing fundamentals, extreme volatility By Cecilia Barreiro 11-Aug-22 18:58 LONDON (ICIS)–The August outlook for oil prices is subject to increased uncertainty resulting from a number of bullish and bearish factors. Russia’s invasion of Ukraine will continue to be a central driving force and keep oil markets volatile while rising global inflation is expected to keep a lid on demand. Singapore trims 2022 GDP growth forecast to 3-4% on global headwinds By Nurluqman Suratman 11-Aug-22 11:43 SINGAPORE (ICIS)–Singapore on Thursday trimmed its 2022 GDP growth forecast to 3-4%, from the previous estimate of 3-5%, due to the deteriorating global economic environment. SE Asia palm biodiesel to see record export volumes, healthy demand By Keven Zhang 11-Aug-22 11:15 SINGAPORE (ICIS)–Southeast Asia's palm methyl ester (PME) export volumes are likely to climb to record highs in July and August, as several bullish factors boost buying interest. PODCAST: Global chemical prices collapse, Europe prepares for dry summer, tough winter By Will Beacham 10-Aug-22 22:43 BARCELONA (ICIS)–Global chemical prices are falling just as Europe braces itself for more summer heatwaves, drought and a winter of gas rationing. Thai PTTGC Q2 net profit falls sharply amid lower chem margins By Nurluqman Suratman 10-Aug-22 15:30 SINGAPORE (ICIS)–PTT Global Chemical’s (PTTGC) net profit fell by 83.9% year on year in the second quarter, weighed partly by lower margins across all of its chemicals businesses, the Thailand-based producer said on Wednesday. Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under pressure By Nurluqman Suratman 10-Aug-22 12:42 SINGAPORE (ICIS)–Saudi petrochemicals major SABIC posted a 3.8% year-on-year increase in second-quarter net profit, while it expects margins to remain under pressure in the second half of 2022. INSIGHT: Indonesia economy surprises in Q2; prospects dim in H2 By Pearl Bantillo 10-Aug-22 21:03 SINGAPORE (ICIS)–Indonesia’s growth momentum is expected to weaken for the rest of the year and into 2023, as high inflation hits overall domestic consumption. External demand is being threatened by a possible global recession. Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under pressure By Nurluqman Suratman 10-Aug-22 12:42 SINGAPORE (ICIS)–Saudi petrochemicals major SABIC posted a 3.8% year-on-year increase in second-quarter net profit, while it expects margins to remain under pressure in the second half of 2022. China July petrochemical markets slump; outlook stays bearish By Yvonne Shi 09-Aug-22 08:00 SINGAPORE (ICIS)–China's petrochemical markets fell across the board in July on weak demand, which persists into August while supply is projected to grow for the rest of the year. Asia BDO extends losses as demand at a low ebb By Clive Ong 04-Aug-22 16:47 SINGAPORE (ICIS)–The Asian butanediol (BDO) market extended losses with the downtrend still firmly entrenched. Market participants expect further downside potential in the near term as the decline that started in April does not appear to have run its course. PODCAST: LPG substitution of higher-priced LNG limited in China By Yan Wang 04-Aug-22 15:37 GUANGZHOU (ICIS)–ICIS analysts Wang Yan and Xu Fei discuss with Asia deputy news editor Pearl Bantillo why China is not aggressively using liquefied petroleum gas (LPG) as substitute for liquefied natural gas (LNG) in fuel applications in industries despite global supply concerns and soaring LNG prices. Asian import offers for NBR fall with weak demand, outlook bleak By Ai Teng Lim 04-Aug-22 10:34 SINGAPORE (ICIS)–Asian spot import offers for acrylonitrile butadiene rubber (NBR) have slipped lower as sellers widened discounts to chase deals in a low-demand market. India July exports slip; trade deficit widens to record $31bn By Priya Jestin 03-Aug-22 14:43 MUMBAI (ICIS)–India’s merchandise exports in July dipped for the first time in over a year, while increased imports of crude oil and coal bloated the country’s trade deficit to a record $31bn. Asia butac, etac slump; demand tepid on weak regional currencies By Melanie Wee 02-Aug-22 17:41 SINGAPORE (ICIS)–Asia’s butyl acetate (butac) markets are being weighed down by tepid demand as continued weakness of currencies in the region continues to undermine imports. Asia July industries – a mixed bag as battle with inflation continues By Nurluqman Suratman 02-Aug-22 13:59 SINGAPORE (ICIS)–Asia's manufacturing sector in July presented a mixed performance, with major economies in the northeast showing a marked slowdown in activity, as the region continues to contend with high input costs and weak demand. OUTLOOK: Asia epoxy resins to stay sluggish; price competition may intensify By Luffy Wu 02-Aug-22 13:46 SINGAPORE (ICIS)–Uncertain end-demand outlook and recession fears continue to haunt Asia’s epoxy resins market, with aggressive exports from China forcing some regional suppliers to lower offer. South Korea July inflation nears 24-year high at 6.3% By Nurluqman Suratman 02-Aug-22 12:26 SINGAPORE (ICIS)–South Korea's consumer price index (CPI) rose by 6.3% year on year in July, accelerating from 6.0% in the previous month and the fastest rate recorded in nearly 24 years. OUTLOOK: Europe soda ash market considers quarterly prices as yearly contracts see further correction By Anne-Sophie Briant-Vaghela 28-Jul-22 18:33 LONDON (ICIS)–Northwest Europe (NWE) and Black Sea contract prices rose 3% and 5.4% from Q2 contract prices this week, marking a third adjustment to annual agreements settled in Q4 last year, as the market reconsiders the pace at which to negotiate prices going forward in the face of heightened volatility in upstream markets. OUTLOOK: Asian OX demand to stay soft, export opportunity to the West By Samuel Wong 28-Jul-22 16:47 SINGAPORE (ICIS)–Demand for Asian orthoxylene (OX) is expected to stay soft for the second half of the year, amid a pessimistic downstream demand outlook going forward. Shell Q2 chemicals loss of $158m as margins hit By Nigel Davis 28-Jul-22 17:54 LONDON (ICIS)–Higher feedstock and utility costs and higher turnaround activities hit Shell’s chemicals earnings in the second quarter, the energy giant said on Thursday. PODCAST: Asia C2, downstream recovery in H2 fraught with risks By Jasmine Khoo 28-Jul-22 15:25 SINGAPORE (ICIS)–The first half of 2022 saw widespread cutbacks in Asia’s cracker and downstream operating rates as the market faced more headwinds from the war in Ukraine and COVID flare-ups in China. Belgium’s Solvay Q2 underlying profit jumps on higher prices, strong demand By Pearl Bantillo 28-Jul-22 14:42 SINGAPORE (ICIS)–Solvay’s second-quarter underlying profit increased 70% year on year on the back of higher prices and a 6% increase in sales volumes amid strong demand across key markets, the Belgian specialty chemicals producer said on Thursday. S Korea's S-Oil Q2 net income more than doubles; Q3 PX spread to weaken By Nurluqman Suratman 28-Jul-22 13:38 SINGAPORE (ICIS)–S-Oil's second-quarter net income more than doubled year on year on strong refining margins and robust aromatics demand, but the South Korean producer’s paraxylene (PX) spread is expected to weaken in July-September 2022. Fitch downgrades PTTGC rating as high costs to hit earnings By Pearl Bantillo 25-Jul-22 17:44 SINGAPORE (ICIS)–Fitch Ratings has downgraded PTT Global Chemical’ long-term national rating and senior unsecured rating to “AA” from “AA+” given weaker earnings prospect for the Thai producer. Singapore June core inflation at 4.4% – highest since Nov 2008 By Nurluqman Suratman 25-Jul-22 14:11 SINGAPORE (ICIS)–Singapore's core year-on-year inflation in June stood at 4.4%, up from 3.6% in May and the highest hit since November 2008, official data showed on Monday. India's RIL Q1 oil-to-chems earnings jump 63%; cracker rates fall to 87% By Nurluqman Suratman 25-Jul-22 12:36 SINGAPORE (ICIS)–Reliance Industries Ltd's (RIL) oil-to-chemicals net profit increased by around 63% year on year in its fiscal first quarter ending June 2022 on the back of higher oil and product prices. BLOG: Europe’s gas crisis: the implications for global chemicalsBy John Richardson 25-Jul-22 11:41 SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The European chemicals is no doubt in the midst of intensive crisis management because of the risk that this winter will see power cuts and interruptions in the supply of natural gas supply needed for feedstocks and to run furnaces, etc. INSIGHT: Weakening Asian currencies stifle petrochemical demand By Felicia Loo 22-Jul-22 13:41 SINGAPORE (ICIS)–The continued depreciation of Asian currencies against the strong US dollar is quashing hopes of a petrochemical demand recovery, as imports become more expensive, eroding the purchasing power of buyers in the region. INSIGHT: Europe chemicals must prepare now for deep gas cuts By Will Beacham 22-Jul-22 11:00 LONDON (ICIS)–Chemical companies across Europe need to prepare now for an almighty battle over gas rationing as winter approaches. The Nord Stream pipeline is back online at around 40% capacity, but it may continue to operate at very reduced rates and could easily be switched off again if the Kremlin decides to continue using it as a political weapon to hurt Europe’s economy. Gas rationing is still likely this winter, with or without this source of supply. INSIGHT: Ferts, petchems in firing line as EU gas stockpile pressure intensifies By Aura Sabadus 20-Jul-22 18:38 LONDON (ICIS)–Embattled European fertilizer and petrochemical producers may be the first in line to cut gas consumption as political pressure is mounting to save supplies ahead of a difficult winter. As Russia, Europe’s largest gas supplier, has been limiting exports to less than a quarter of its deliveries two years ago and may stop them altogether amid its political stand-off with the EU, Brussels has now issued guidance to reduce demand by 15% between 1 August 2022 – 31 March across member states. Gas flows resume on Nord Stream pipeline but remain below capacity By Tom Brown 21-Jul-22 12:22 LONDON (ICIS)–Flows resumed on Thursday along the Nord Stream natural gas pipeline between Russia and Europe, but the volume of deliveries remains significantly below capacity. Running between Russia and Germany, the pipeline is a key part of the EU’s energy infrastructure, and there had been questions over whether gas deliveries would resume once work had been completed. Inflation to stay ‘undesirably’ high in mid-term – ECB’s Lagarde By Tom Brown 21-Jul-22 23:42 LONDON (ICIS)–Inflation levels in the eurozone are expected to remain high for some time, European Central Bank (ECB) president Christine Lagarde said on Thursday, as the bank moved to hike each of its key interest rates and prepare a new bond purchase scheme. OUTLOOK: Asia PX to take cue from downstream in H2; tight supply to ease By Samuel Wong 21-Jul-22 13:57 SINGAPORE (ICIS)–Asia’s paraxylene (PX) is expected to take its cue from the downstream purified terephthalic acid (PTA) market in the second half of 2022, moving away from the previous strong support from gasoline blending markets. Developing Asia GDP growth cut to 4.6% on China slowdown – ADB By Nurluqman Suratman 21-Jul-22 12:05 SINGAPORE (ICIS)–The Asian Development Bank (ADB) on Thursday cut its GDP growth forecast for developing Asian countries to 4.6% from its previous projection of 5.2%, with China’s growth lowered by a full percentage point to 4.0%. INTERVIEW: Financing market a major headwind for chemical deals – banker By Joseph Chang 18-Jul-22 23:53 NEW YORK (ICIS)–Extremely challenged debt markets will be a major headwind for leveraged chemical deals going forward, an investment banker said. Global weekly spot IPEX down significantly on falls across regions By Yashas Mudumbai 18-Jul-22 17:40 LONDON (ICIS)–The spot chemicals index dropped by 5.2% as falls across regions continued, according to the latest figures from the weekly ICIS Petrochemical Index (IPEX). Asia July petrochemicals on general downtrend; sentiment to stay bearish By Jimmy Zhang 18-Jul-22 17:07 SINGAPORE (ICIS)–Downward price corrections have been seen for crude and Asia’s petrochemicals markets in July, following a general increase in June. ICIS expects the bearish sentiment to continue throughout the month as previous sharp increases in crude prices may not be seen again for the rest of 2022. OUTLOOK: Asia FAE demand to stay soft on sluggish Chinese economy By Helen Yan 15-Jul-22 17:37 SINGAPORE (ICIS)–Asia’s fatty alcohol ethoxylates (FAE) demand is expected to remain soft in the near term due to prevailing weak market conditions and a sluggish Chinese economy. OUTLOOK: Asia VAM correction accelerates; H2 demand to stay weak By Helen Lee 15-Jul-22 15:48 SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) market correction has accelerated (this week) since late May (late May refers to the start of the correction) on broad-based demand slowdown, with inflationary pressures dampening the outlook in the second half. Indonesia palm oil shipments surge 89% in June after lifting export banBy Nurluqman Suratman 15-Jul-22 15:20 SINGAPORE (ICIS)–Indonesia's shipments of palm oil and its derivatives surged by 89.3% year on year in June following the lifting of an export ban a month earlier, official data showed on Friday. World petrochemical market sentiment weak as demand falters By Felicia Loo 15-Jul-22 14:12 SINGAPORE (ICIS)-Global petrochemical markets are mired in a challenging situation writ large, with demand dull as recession risks gather pace. OUTLOOK: East, South Asia LAB at a crossroad amid elevated economic uncertainty By Clive Ong 15-Jul-22 11:12 SINGAPORE (ICIS)–Linear alkylbenzene (LAB) markets in east and south Asia are at a crossroad with the path ahead mired in uncertainty. With outlook increasingly clouded, participants found decision-making an onerous task. Inflationary pressures could impact economic growth in Europe for coming years By Morgan Condon 14-Jul-22 22:55 LONDON (ICIS)–The European economy is set to hit record highs for inflation this year as the Russian invasion of Ukraine has driven energy and food prices higher, but volatile macroeconomic conditions obfuscate when sentiment will calm down. INSIGHT: Asia C2, downstream recovery in H2 fraught with risks (Part 2) By Yeow Pei Lin 14-Jul-22 13:00 SINGAPORE (ICIS)–The outlook for Asia's ethylene derivatives remains largely weak in the second half of 2022. Capacity is growing across downstream sectors but demand is uncertain amid China's zero-COVID stance and global recession fears. INSIGHT: Asia C2, downstream recovery in H2 fraught with risks By Yeow Pei Lin 13-Jul-22 13:00 SINGAPORE (ICIS)–The first half of 2022 saw widespread cutbacks in Asia’s cracker and downstream operating rates as the market, which was already sagging under the weight of huge capacity increases in South Korea and China, faced more headwinds from the war in Ukraine and COVID flare-ups in China. Singapore tightens monetary policy further to tame inflationBy Nurluqman Suratman 14-Jul-22 13:53 SINGAPORE (ICIS)–Singapore's central bank unexpectedly tightened its monetary policy on Thursday in a bid to quell mounting inflation pressures, which are expected to continue heating up this year. OUTLOOK: China base oils imports to continue decline in H2 By Whitney Shi 12-Jul-22 13:43 SINGAPORE (ICIS)–China’s base oils imports slumped year on year in January-June 2022 on strong import prices, which will likely persist into the second half although demand from downstream lubricant producers could improve in the third quarter. LNG shipping activity rises in both basins By Roman Kazmin 12-Jul-22 11:39 SINGAPORE (ICIS)–South Korean shipowner H-Line has chartered a vessel for a single voyage on behalf of the incumbent KOGAS as charter activity steps up in the Atlantic and Pacific basins. Crude falls nearly $2/bbl on fresh China COVID-19 curbs By Nurluqman Suratman 12-Jul-22 11:08 SINGAPORE (ICIS)–Oil prices fell by nearly $2/bbl on Tuesday morning on worries over fresh COVID-19 restrictions in China, the world's biggest crude importer. OUTLOOK: Asia naphtha braces for H2 with trepidation, frail demand By Melanie Wee 12-Jul-22 10:33 SINGAPORE (ICIS)–Asia naphtha markets are headed for challenging times as cautious demand outweighs oil supply concerns. Europe petchems natgas worries rise as Nord Stream 1 enters maintenance By Morgan Condon 08-Jul-22 17:18 LONDON (ICIS)–The threat of short gas supply in Europe is causing concern in the region’s petrochemicals industry and could begin to weigh down on production. INSIGHT: UK chemicals battle 'Four Horsemen of the Apocalypse' By Will Beacham 08-Jul-22 18:23 LONDON (ICIS)–The UK’s chemical sector is battling against “The Four Horsemen of the Apocalypse” as it is battered by the fallout from Brexit, COVID-19, the cost of living crisis and the war in Ukraine, according to the CEO of trade group The Chemical Industries Association (CIA). Malaysia May chemicals sales up 7.7%; high inflation threatens production By Nurluqman Suratman 08-Jul-22 16:16 SINGAPORE (ICIS)–Malaysia's chemicals sector sales in May rose by 7.7% year on year, supporting the overall expansion in manufacturing revenue, but inflation headwinds are expected to continue to weigh on overall factory activity. NE Asia ethylene stays weak; August demand recovery likely tepid By Yeow Pei Lin 08-Jul-22 10:53 SINGAPORE (ICIS)–Northeast Asia’s spot ethylene import prices fell for a 14th week as poor downstream demand continued to outweigh production cuts. Crude trades below $100/bbl on global recession fears By Nurluqman Suratman 07-Jul-22 12:02 SINGAPORE (ICIS)–Oil prices were extending losses on Thursday, with both key benchmarks trading below the psychological $100/bbl mark, amid growing concerns that the global economy will again plunge into a recession. Asia petchems mired in bearishness on elevated recession fears By Felicia Loo 07-Jul-22 11:21 SINGAPORE (ICIS)–Asian petrochemical markets are in a jam, with price bearishness across the board as recession risks continue to mount. Elevated concerns on the economic front, from the fallout of the Russia-Ukraine conflict and sanctions on Russia, plus fears of upward spiralling inflation continue to weigh on sentiment. OUTLOOK: Tight supply concerns flip to reduced oil demand by Q4 By Barney Gray 07-Jul-22 00:49 LONDON (ICIS)–Oil prices were in a post-Covid recovery phase prior to Russia’s invasion of Ukraine in February. Since then, H1 crude prices have been driven by the fallout from the war, reaching record highs. But the oil market will be characterised by major volatility and rising uncertainty as we head into H2. Japan May trade deficit biggest in eight years; imports surge 48.9% By Pearl Bantillo 16-Jun-22 18:56 SINGAPORE (ICIS)–Japan posted its biggest trade deficit in eight years at yen (Y) 2.385tr ($18bn), with imports surging by 48.9%, largely due to high energy prices and sharp depreciation of the yen. US LNG deliveries to the UK in July set to be more profitable than Asian destinations By Kaja Sillett 16-Jun-22 18:36 LONDON (ICIS)–US LNG deliveries to the UK in July are set to be more profitable than to east Asian destinations, despite the British NBP July’22 contract remaining at a discount to the equivalent ICIS East Asia Index (EAX) price, according to ICIS calculations. India May exports grow 20.6%; trade deficit widens to $24.3bn By Priya Jestin 16-Jun-22 17:03 MUMBAI (ICIS)–India’s merchandise exports in May rose by 20.6% year on year to $38.9bn, backed by higher shipments of petroleum products and chemicals, but the country’s trade deficit widened due to high cost of energy imports. China MEG prices rise on stronger crude market By Cindy Qiu 16-Jun-22 14:57 SINGAPORE (ICIS)–China’s monoethylene glycol (MEG) prices have been on an uptrend since June, mainly driven by the bullish crude market, as supply-demand fundamentals remain largely unchanged. This has somewhat dampened market players’ confidence in the market outlook. Asian petrochemicals to rebound in June amid bumpy recovery – ICIS analysts By Ann Sun 16-Jun-22 12:12 SINGAPORE (ICIS)–Asian petrochemical market is expected to be generally firmer in June given higher crude prices and easing lockdowns in China, according to a latest Price Forecast by ICIS analysts. Asia BDO weakens on prevailing weak demand, ample supply By Clive Ong 16-Jun-22 11:32 SINGAPORE (ICIS)–The Asian butanediol (BDO) market remains on a downtrend with regional demand staying lacklustre while ample supply made buyers unhurried. Suppliers concede that buying interest showed limited signs of any revival with further market weakness a possibility. S Korea truckers' strike to hit Ulsan petrochemical output; halts port ops By Nurluqman Suratman 10-Jun-22 18:28 SINGAPORE (ICIS)–The ongoing nationwide strike by unionised truckers in South Korea are forcing several producers in the petrochemical hub of Ulsan to consider production cuts amid logistics disruption. SE Asia biodiesel market optimism rises on post-lockdown China By Felicia Loo 10-Jun-22 17:35 SINGAPORE (ICIS)–Market optimism in China to increase imports of southeast Asian palm methyl ester (PME) biodiesel helped bolster market sentiment to some degree amid higher weekly gains in feedstock crude palm oil (CPO) futures. Asia PET offers reaching level of last historic high on recent upstream price surges By Hazel Goh 10-Jun-22 12:15 SINGAPORE (ICIS)–Asia polyethylene terephthalate (PET) offers increased in the week and were approaching the level of the last historic high four years ago amid recent Asia upstream price surges. NE Asia ethylene stays bearish on ample supply, weak demand By Yeow Pei Lin 10-Jun-22 11:59 SINGAPORE (ICIS)–Northeast Asia’s spot ethylene prices stayed weak due to ample supply amid limited demand for end-June and first-half July arrival cargoes. India domestic LAB prices rise; China demand improves as lockdowns ease By Clive Ong 10-Jun-22 11:53 SINGAPORE (ICIS)–India’s domestic prices for linear alkylbenzene (LAB) have spiked on the back of rising costs, but some players expect some headwinds with the monsoon season kicking off. Oil prices drop more than $1/bbl on partial lockdowns in China By Nurluqman Suratman 10-Jun-22 11:34 SINGAPORE (ICIS)–Oil prices fell more than $1/bbl on Friday on renewed demand fears after fresh COVID-19 lockdown measures were announced in China, but tight supply concerns capped losses. S Korea truck drivers go on strike amid rising fuel costs, inflation By Nurluqman Suratman 08-Jun-22 14:17 SINGAPORE (ICIS)–South Korea's unionised cargo truck drivers are staging a nationwide, indefinite general strike at ports and container depots across the country in a move which could potentially impact petrochemical-related supply chains and logistics. East Asia and Pacific growth to slow to 4.4% in 2022 on China deceleration – World Bank By Nurluqman Suratman 08-Jun-22 11:54 SINGAPORE (ICIS)–Growth in East Asia and the Pacific is projected to slow to 4.4% this year from the 7.2% expansion in 2021, reflecting the marked deceleration in China, the World Bank said late on Tuesday. Asian PTA prices up on firmer feedstock costs, sustainability uncertain By Samuel Wong 08-Jun-22 11:51 SINGAPORE (ICIS)–Asian purified terephthalic acid (PTA) prices were supported by costs push because of higher feedstock paraxylene (PX) costs, but long-term sustainability is still a question amid a lack of strong demand growth in the downstream polyester sector. China May petrochemicals track crude gains; June demand to improve By Yvonne Shi 08-Jun-22 11:09 SINGAPORE (ICIS)–China’s petrochemical markets largely tracked gains in crude prices in May, accompanied by some improvement in demand as pandemic-related restrictions have started to ease. Japan's Q1 GDP revised to smaller contraction of 0.5% By Nurluqman Suratman 08-Jun-22 11:01 SINGAPORE (ICIS)–Japan's economy shrank less than initially reported in the first quarter, contracting by an annualised 0.5% instead of the initial 1.0% drop, on the back of improved private consumption, official data showed on Wednesday. Asia polyester prices gain momentum tracking higher crude, rising cost pressure By Judith Wang 07-Jun-22 16:27 SINGAPORE (ICIS)–Asia polyester prices gained further momentum as bullish crude futures and rising feedstock prices bolstered spot discussions, while demand has showed some improvement on easing lockdowns in China. Asia Q3 biodiesel market sentiment to stay weak on poor European demand By Felicia Loo 07-Jun-22 12:13 SINGAPORE (ICIS)–The third-quarter market sentiment for southeast Asian palm methyl ester (PME) biodiesel is expected to remain weak amid poor buying requirements from Europe, a key importing region for southeast Asian material. INSIGHT: India cuts raw material import duties to boost local production By Priya Jestin 07-Jun-22 12:07 MUMBAI (ICIS)–India has cut import duties on some raw materials in the hope of boosting overall domestic production amid surging inflation and rupee weakness. VIDEO: China PTA plants’ run rates stay low on high production costs By Winnie Huang 01-Jun-22 18:35 SINGAPORE (ICIS)–Watch industry analyst Lifang Huang discuss China’s purified terephthalic acid (PTA) market amid high production cost. PODCAST: China LPG prices fluctuate on elevated costs, weak demand By Candy Nie 01-Jun-22 17:44 SINGAPORE (ICIS)–ICIS analyst Jady Ma and Candy Nie discuss the recent developments and outlook of China's Liquefied petroleum gas (LPG)  market. Saudi Aramco’s June LPG contract prices continue downtrend By Candy Nie 01-Jun-22 15:10 SINGAPORE (ICIS)–Saudi Aramco’s term contract prices (CP) for June-loading liquefied petroleum gas (LPG) continued to edge down and hit a five-month low, the company announced on Tuesday afternoon. China MTBE cargoes face narrowing arbitrage opportunities into Europe By Jun Kai Heng 01-Jun-22 14:17 SINGAPORE (ICIS)–The reopening of the Chinese economy in June is expected to pressure arbitrage opportunities into Europe for Chinese methyl tertiary butyl ether (MTBE) cargoes. S Korea May petrochemical exports rise 14%, total exports up 21.3% By Nurluqman Suratman 01-Jun-22 12:32 SINGAPORE (ICIS)–South Korea's petrochemical exports rose by 14% year on year to $5.18bn in May, supporting the overall rise in shipments abroad, official data showed on Wednesday. Japan's au Jibun Bank May manufacturing PMI dips to 53.3 on slower output growth By Nurluqman Suratman 01-Jun-22 11:38 SINGAPORE (ICIS)–au Jibun Bank’s manufacturing purchasing managers’ index (PMI) for Japan slipped to 53.3 in May from 53.5 in April as new orders rose at a slower rate, the Japanese bank said on Wednesday. Topic Page by Aura Sabadus and Will Beacham. Additional reporting by  Richard Ewing and Sophie Udubasceanu. Maps and graphs by Yashas Mudumbai.

12-Aug-2022

Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under pressure

SINGAPORE (ICIS)–Saudi petrochemicals major SABIC posted a 3.8% year-on-year increase in second-quarter net profit, while it expects margins to remain under pressure in the second half of 2022. Higher average selling prices and sales volumes were recorded in April-June 2022, but these were offset by increased feedstock costs and higher selling and distribution expenses, SABIC said in a filing to the Saudi bourse, Tadawul on 9 August. Saudi Riyals (SR) billion Q2 2022 Q2 2021 % change  H1 2022 H1 2021 % change Sales 56.0 42.4 32.0% 108.6 80 35.9% Gross Profit 16.6 13.7 21.3% 31.3 24.7 26.4% Operational profit 9.8 10.1 -2.5% 19.1 17.0 12.2% Net profit 7.93 7.64 3.8% 14.4 12.5 15.1% Second-quarter EBITDA (earnings before interest, tax, depreciation and amortization) margin fell to 24% from 32% in the same period of 2021, even as selling prices rose by 22% and sales volumes increased by 10% over the same period. Margins are being weighed down by the "slowdown in global GDP growth, lockdowns in China, conflict in Europe and continued supply chain challenges", SABIC said. The global GDP growth rate is now estimated to be between 2.5% and 2.8%, down from a previous projection of between 3.2% and 3.6%, it said. Q2 EARNINGS WEAKER VERSUS Q1 At SABIC's petrochemicals and specialties business, Q2 EBITDA slipped by 1% from the previous quarter to Saudi riyal (SR) 9.37bn ($2.5bn) despite a 4% increase in revenue to SR46.2bn. Monoethylene glycol (MEG) and methanol prices both weakened over the period, but methyl tertiary butyl ether (MTBE) prices hit their highest since 2013 on the back of strengthening crude and gasoline prices. For polyethylene (PE), second-quarter prices increased in the US and Europe, primarily driven by higher feedstock costs, but were relatively stable in other markets. In China, PE demand weakened due to COVID-19 restrictions in the second quarter. Polypropylene (PP) prices were also higher quarter on quarter due to higher feedstock cost. Focus article by Nurluqman Suratman ($1 = SR3.75) Thumbnail photo: SABIC headquarters in Riyadh, Saudi Arabia (Hassan Ammar/AP/Shutterstock) Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets. Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

10-Aug-2022

BLOG: China goes global in PP perhaps quicker than had been expected, badly disrupting the global industry

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Again, please don’t say we didn’t warn you. The main chart in today’s post suggests that under Downside 2, China would swing into a cumulative polypropylene (PP) net export position of 22m tonnes in 2022-2030 from being by far the world’s biggest net importer. We see this as the most likely outcome. This has been on the cards since 2014 when China said it would push much harder towards petrochemicals self-sufficiency in general. What seems to have added to the pace of this hugely disruptive turnaround are the zero-COVID policies and the Common Prosperity economic reforms. Despite this year’s local operating rate in line to fall to its lowest level since 2000, 2022 exports could reach 1.7m tonnes, up from 1.4m tonnes in 2021 and just 424,746 tonnes in 2020. There is a scenario where an increasingly confident Chinese industry plays a significant global role in exports of commodity and perhaps even high-value grades of PP. In such an event, the other major exporters in the Middle East and Asia would need to implement very different strategies from today. Such are the geopolitical and sustainability uncertainties that many other scenarios are possible. But we see it as essential that the global PP industry gameplans the implications of China becoming a major, perhaps even dominant, global PP player. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

08-Aug-2022

Indonesia Q2 economic growth accelerates to 5.44%

SINGAPORE (ICIS)–Indonesia’s economic growth in the second quarter accelerated to 5.44% year on year from 5.01% in the previous three months, thanks to double-digit expansions in transportation & storage and exports. Transportation & storage grew 21.27%, while export of goods and services was up 19.74% over the same period, data from Statistics Indonesia show on Friday. Manufacturing expanded by 4.01% in April-June 2022 On a quarter-on-quarter basis, southeast Asia’s biggest economy posted a 3.72% growth, backed by a 13.15% expansion in agriculture, forestry and fishing sector, and a 32% surge in government spending. Indonesia is the world’s largest palm oil producer and a major exporter of oleochemical derivatives, including fatty acids, fatty alcohols, glycerine and soap noodles. Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets.

05-Aug-2022

US meteorologists revise ’22 hurricane season forecasts, still expect ‘above average’ count

HOUSTON (ICIS)–US meteorologists issued revised forecasts for the 2022 hurricane season on Thursday. The US National Oceanic and Atmospheric Administration (NOAA) maintained its forecast for an above-normal season, while the team at Colorado State University (CSU) lowered its forecast to above normal from very active. NOAA forecasters slightly lowered the number of expected named storms to 14-20 from its previous forecast in May of 14-21. A storm is named once it has sustained winds of 39 miles/hour (63 km/hour). Of those, six to 10 could become hurricanes (winds of 74 miles/hour or higher), which is unchanged from its previous forecast, and three to five could become major hurricanes with winds of 111 miles/hour or higher, down from its previous prediction of three to six. Saffir-Simpson Hurricane Wind Scale Category Wind speed 1 74-95 miles/hour 2 96-110 miles/hour 3 111-129 miles/hour 4 130-156 miles/hour 5 157+ miles/hour CSU lowered its prediction to 18 named storms, which is down from the 20 it predicted in June. CSU researchers initially predicted 19 named storms in its first forecast in April, then revised it higher to 20 after more data on the development of the La Nina weather pattern emerged. NOAA administrator Rick Spinrad noted that August-October are the peak months for hurricane development and anticipates more storms on the way. So far, the current season has seen three named storms and no hurricanes in the Atlantic Basin. An average hurricane season produces 14 named storms, of which seven become hurricanes, including three major hurricanes. The CSU team said that current La Nina conditions are likely to persist for the rest of the Atlantic hurricane season. “We continue to anticipate an above-normal probability for major hurricanes making landfall along the continental US coastline and in the Caribbean,” the CSU team said. Petrochemical markets are already tight because of problems caused by logistical constraints and the busy hurricane season 2021. The Atlantic hurricane season runs through 30 November.

04-Aug-2022

Summary of mid-year Europe OUTLOOK stories

LONDON (ICIS)–Here are the second half (H2) 2022 European OUTLOOK stories which ran on ICIS news throughout July and the first week of August. Tight supply concerns flip to reduced oil demand by Q4 Oil prices were in a post-Covid recovery phase prior to Russia’s invasion of Ukraine in February. Europe ethylene, propylene players face remainder of year with trepidation Attempting to predict the outlook for Europe’s ethylene and propylene markets in any given year is tricky at the best of times, but what about now? Europe MX supply and demand to face obstacles in H2 European mixed xylene (MX) supply and demand are expected to encounter a number of hurdles in H2 2022, and this is likely to limit any future market progress. Europe toluene H2 supply to be adequate, demand faces hurdles European toluene availability in H2 2022 is expected to be sufficient while consumption faces some limitations. Europe methanol supply to rise in H2, demand stable to soft European methanol market conditions are expected to lengthen in H2 2022 while demand is stable to soft depending on the application. European PE/PP players wait and hope for rebound from September Rollercoasters are overused as a metaphor for anything you can plot on a graph against time, or even any experience that elicits a variety of emotions. Europe PET caught between high costs and cheap imports Polyethylene terephthalate (PET) in Europe has an intricate dance to perform heading towards 2023 contract talks, as sellers consider high energy costs while buyers are lured by imports. European R-PET faces uncertainty, feedstock challenges The European recycled polyethylene terephthalate (R-PET) market stabilised in July as some monthly prices rolled over for the first time since October, but several factors including taxes, regulation, availability and macroeconomic issues make the outlook for the rest of the year increasingly uncertain. European base oils demand weakens for Q3, production curtailment likely to continue The European Group I base oils market has paused in early H2 (second half) 2022 as a seasonal demand lull sets in. Activity is expected to resume in September with players eager to see how the supply/demand landscape will develop. Turkey PE/PP markets uncertain amid economic woes Ongoing economic concerns across Turkey have thrown the polyethylene (PE) and polypropylene (PP) outlook into uncertainty amid crashing demand. European MEG market remains gloomy on poor demand, spot under pressure Conditions in the European monoethylene glycol (MEG) market have been weak for most of 2022 and the situation is unlikely to change this month, at the very earliest. Europe SBR demand expectations lower, production cost concerns European styrene butadiene rubber (SBR) demand could slow in 2H 2022, but worries over gas supply resurged this month, weighing on expectations about production costs. Europe PA and MA caught between imports and high energy prices Players in the European phthalic anhydride (PA) and maleic anhydride (MA) markets say the outlook for demand is bleak as pressure on production costs is unlikely to subside. Europe PS, EPS demand may improve in September, October but softer overall in H2 Softer demand trends are expected across the second half of 2022 in both the European polystyrene (PS) and expandable polystyrene (EPS) markets, although there could be temporary improvement in September and October compared to July and August. Uncertain half-year ahead for Europe's glycol ethers market Players in Europe's glycol ethers markets face an uncertain outlook for the second-half of the year. Europe biodiesel market set to grapple with supply chain issues in H2 The European biodiesel market is expected to face diverging demand trends colliding with supply chain issues for various grades through the remainder of 2022. Europe ethanol faces diverging supply, demand trends for H2 Europe's ethanol market is set for a turbulent second half as different ethanol grade segments are expected to grapple with diverging supply and demand trends for the remainder of the year. Europe ABS, SAN supply expected to stay balanced to long in H2 Supply in Europe's acrylonitrile-butadiene-styrene (ABS) and styrene-acrylonitrile (SAN) markets are expected to be balanced to long across the second half of 2022 because of softer demand trends and an uncertain outlook. Europe glycerine anticipates supply stability in H2 Europe's glycerine market will be increasingly reliant on imports from southeast Asia and south America to maintain stability of supply  through H2. Europe ADA, nylon 6,6 to face slow demand, ample supply in H2 The European adipic acid (ADA) and downstream nylon 6,6 markets are set for challenging trading conditions in the second half of 2022. Europe H2 AA and acrylate esters murky amid gas supply uncertainty The European acrylic acid (AA) and acrylate ester markets face a challenging 2H 2022 with uncertainty surrounding gas supply and prices adding to the difficulties. Europe ACN to face ample supply, weak demand and high costs in second half The outlook for European acrylonitrile (ACN) is rather gloomy and sources are getting ready for the second act, which is set to deliver yet more challenges to players. Europe capro, nylon 6 struggles to continue in H2 2022 The European caprolactam (capro) and nylon 6 supply chain is entering second half of 2022 battered by soaring input costs, seriously eroded producer margins and concerns over downstream affordability as both buyers and producers struggle to pass on rising costs in product pricing. European fatty acids/alcohols demand weakens for H2 After a firm H1 2022, European fatty acids and alcohols demand has weakened for H2 following increased availability both domestically and from Asian imports. Europe soda ash market considers quarterly prices as yearly contracts see further correction Northwest Europe (NWE) and Black Sea contract prices rose 3% and 5.4% from Q2 contract prices this week, marking a third adjustment to annual agreements settled in Q4 last year, as the market reconsiders the pace at which to negotiate prices going forward in the face of heightened volatility in upstream markets. Europe MDI, TDI demand conditions not so rosy in H2 2022 European toluene diisocyanate (TDI) and crude and pure methylene diphenyl diisocyanate (MDI) is headed on a downward trajectory in H2. Europe polyols supply to outstrip demand in H2 European flexible slabstock polyol availability is expected to be ample in H2 2002, as demand is on a downward trajectory. Africa PE, PP demand could suffer from cost-of-living crisis A cost-of-living crisis plays out very differently in weaker economies than in stronger ones. Europe plasticizers market faces unsettled H2 2022 Each key plasticizer in the European spot market has slightly differing dynamics at present, but the general H2 outlook will be shaped by low visibility, high production costs and inflationary pressures. Europe oxo-alcohols spot market faces uncertain H2 2022 Uncertainty looms over the European oxo-alcohols spot market as security of natural gas supply, tensions with Russia and inflationary pressures are clouding the outlook for H2. Headwinds to weigh on Europe BPA in H2 2022 Declining derivative demand and cheaper Asian imports could weigh on the European bisphenol A (BPA) market in 2H 2022. European melamine demand expectations reduced; suppliers face high production costs European melamine quarterly contract discussions are taking place in a very tough market environment. Suppliers struggle to meet consumer expectations due to production cost constraints that contradict the weak demand expectations and supply length caused by import pressure. Further weakness anticipated in the European propylene glycol ethers market With certain availability constraints set to ease into Q3 and few expecting any demand improvements before the autumn at the earliest, market participants widely expect further pressure on propylene glycol ethers through the summer, with significant uncertainty into September, linked to the health of the wider economy and key end uses. Headwinds could change course of Europe TiO2 in H2 2022 The downturn in European demand, a slow and export-hungry China market and conflicting price tendencies in Europe and Asia could lead to a change of course in the European titanium dioxide (TiO2) market in the second half of the year, after a prolonged upcycle. Soft demand, upstream cost uncertainties to define Europe PC in H2 2022 The European polycarbonate (PC) market faces a second half of the year in which demand levels are expected to be subdued and production costs will likely remain a source of uncertainty and increased volatility. European MMA demand uncertain amid wider economic challenges The European methyl methacrylate (MMA) market is facing uncertain H2 demand amid wider geopolitical and economic challenges. European POM supply issues to persist, PBT availability to be in balance with imports Supply for polyacetal (POM) and polybutylene terephthalate (PBT) in Europe is predicted to diverge, but both markets are expected to face issues with consumption in the second half of the year. Phenol and acetone at mercy of upstream, hoping for demand resurrection Feedstock and gas costs will be major influencers in the European phenol and acetone markets in H2 2022. Their impact on demand is the big question hanging over the market. High production costs, soft demand and strong uncertainty to define Europe MPG spot market The European monopropylene glycol (MPG) spot market has been defined by healthy supply and limited buying interest for an extended period and sources are unsure if the demand picture will shift in H2, and, if so, to what extent. Inflation and volatility to stress European refinery solvents in H2 2022 European refinery solvents markets will be at the whim of upstream feedstock and energy prices in the second half of 2022. Europe BDO market to remain in balance on subdued demand Persistent signs of demand weakness look set to hit the European butanediol (BDO) market in the second half of this year, although supply is likely to remain balanced despite production problems. Europe ECH supply could relax in the second half of the year Europe epichlorohydrin (ECH) supply could relax over the coming months, amid some derivative summer turnarounds, the prospect of more Asian imports and some debottlenecked capacity in Europe. Europe ethanolamines braces for output cutbacks amid cost issues, demand uncertainty Amid rising natural gas costs, certain European ethanolamines producers face the prospect of curtailing homologue production. Europe epoxy challenges mount, some downstream support needed The clash between opposing cost and market factors in the European epoxy sector is intensifying in July, as production costs soar, while demand is waning for various reasons. Europe LPG trajectory hinges on Asia recovery, seasonal demand boost A seasonal demand lull and poor Asian buying interest in Q2 translated into soft demand for European LPG cargoes but a pick up is expected by late Q3 as coronavirus restrictions are due to lift in Asia.

04-Aug-2022

Germany’s LANXESS Q2 net profit dips 7% on higher raw material, energy costs

SINGAPORE (ICIS)–LANXESS’ second-quarter net profit dipped by 7% year on year on lower margins amid rising raw material and energy prices, the German specialty chemicals firm said on Thursday. € million Q2 2022 Q2 2021 % change H1 2022 H1 2022 % change Sales        1,999        1,469          36.1        3,930        2,841 38.3 EBITDA           229           191          19.9           467           357 30.8 EBITDA pre-exceptionals           253           221          14.5           515           414 24.4 Operating profit             97             84          15.5           210           146 43.8 Net profit             93           100          (7.0)           191           164 16.5 Operating profit margin slipped to 4.9% in April-June 2022, from 5.7% in the previous corresponding period. “In an economic environment driven by sharply rising raw material and energy prices, all segments achieved higher sales than in the previous year in both the second quarter and the first six months,” LANXESS said in a statement. The German firm said that there was a positive contribution from businesses acquired from Emerald Kalama Chemical in 2021, while its high performance materials business unit is recognised as a discontinued operation, with restated prior-year figures for sales and EBITDA. In the first half of the year, EBITDA pre-exceptionals rose by 14.5% year on year to €253m. For the whole of 2022, LANXESS expects EBITDA pre-exceptionals to be between €900m-€1bn from around €800m in the previous year. *Earnings before interest, tax, depreciation and amortisation Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets.

04-Aug-2022

INSIGHT: Recycling as a solution to marine plastics pollution

SINGAPORE (ICIS)–Plastics pollution of the marine environment is a global challenge that the world is trying to tackle today. Marine debris is a global challenge; the top contributors of marine debris are from the southeast Asia region Recycling capacity distribution does not match up with population distribution in the region Current plans to combat marine pollution does not propose recycling as a direct solution to the problem According to a recent study, the top contributors of marine debris are from the southeast Asia region. Six out of ten ASEAN member states alone generate more than 31m tonnes of plastic waste in a year. While many of them are engaged in efforts to combat plastic waste, these efforts tend to be policy-centric with ambiguous goals that are open to interpretation and often difficult to meet without proper directions. To compound the problem, the sudden increase in volume of single use plastics and personal protective equipment (PPE) during the COVID-19 pandemic is putting additional stress on these countries as they tackle marine pollution. According to the study by International Union for Conservation of Nature (IUCN), the main sources of plastic debris in the ocean are land-based, coming from urban and stormwater runoff, sewer overflows, littering, inadequate waste disposal and management. The study also goes on to mention that many countries lack the infrastructure to prevent plastic pollution, including recycling capacities. The image below shows two heat maps that represent the population density of southeast Asia countries and their recycling capacities. It shows clearly that recycling capacities do not match up with population densities and instead are concentrated in specific regions of each country, such as the industrial hub in Rayong, Thailand for example. There are national and regional plans that combat marine litter directly or indirectly, but none of them are actively proposing recycling as a solution to the problem. Plan Relevant targets and/or focus areas Details Indonesia Sustainable Oceans Program Reducing Marine Pollution Emphasis on studies, data collection and increasing knowledge needed to make informed decisions on the investment of infrastructure India Plastics Pact 50% of packaging effectively recycled Indirectly reducing marine debris by creating regulations, Extended Producer Responsibility instruments and end market use for post-consumer packaging ASEAN Regional Action Plan for Combating Marine Debris Enhance coordination at the regional or international levels for achieving sustainable management of coastal and marine environments through responding to marine plastic pollution A framework of action components with an emphasis on a regional handbook focused on guiding principles, best practices and studies Southeast Asia will remain as the top contributor of marine plastic debris without the development of recycling capacities beyond the status quo. Implementing regulatory frameworks and policies, improving existing waste management infrastructure and educating the general public about the value of post-consumer waste with recycling as the end goal will amplify the effects of these efforts. The persistence of Fast-Moving Consumer Goods (FMCG) companies in trying to meet their global recycling targets further validates the need for strategic development of the recycling industry. The many national and international developments focused on regulatory frameworks to shift markets up the waste hierarchy towards recycle/reuse and beyond are essential but just one part of the solution. The role of the recycling industry is paramount to this move. But incentivising further investment in capacities and supporting infrastructural enhancements in collection to deliver the waste as feedstocks to those plants are essential and fall to the responsibility of the entire supply chain as well as governments. Insight by Joshua Tan

03-Aug-2022

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