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Gas03-Jun-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 31 May 2024.
APIC
‘24: Transition to low-carbon, high value-added
products crucial for Asia – KPIA
chair
By Nurluqman Suratman 31-May-24 09:36
SEOUL (ICIS)–A technological transition to low
carbon-based and high value-added products is
“absolutely necessary” for the Asian
petrochemical industry, to address challenges
posed by the shift towards carbon neutrality,
the chairman of the Korea Petrochemical
Industry Association (KPIA) said on Friday.
APIC
’24: INSIGHT: Asia SM capacity remains in
expansion but growth eases
By Jenny Yi 31-May-24 13:30 SEOUL
(ICIS)–Asia’s capacity for styrene monomer
(SM) started its expansion cycle in 2019 and
reached the peak in 2021. Capacity increase is
expected to decelerate significantly in 2024
but will remain higher than demand growth.
APIC
’24: India chemicals demand to surge; ample
Asia supply weighs on prices
By Nurluqman Suratman 30-May-24 07:00
SEOUL (ICIS)–India’s petrochemical demand is
set to surge in 2024, driven by robust economic
growth and industrial production, but
suppressed prices caused by ample supplies and
new capacities in Asia will negate any benefit
to domestic producers, the Chemicals &
Petrochemicals Manufacturers’ Association
(CPMA) of India said.
INSIGHT: Surging freight
rates hamper Asia petrochemical
trades
By Pearl Bantillo 29-May-24 17:54
SINGAPORE (ICIS)–A severe shortage of
containers and vessel space as commercial ships
take a much longer route to avoid the Red Sea
has sent freight rates skyrocketing in recent
weeks, artificially propping up petrochemical
prices even as demand remained generally weak.
APIC
’24: Policy fragmentation stalls Asia’s
plastics circularity drive
By Nurluqman Suratman 29-May-24 11:00
SEOUL (ICIS)–Asia’s journey towards a circular
plastic economy is gaining momentum, but the
region’s diverse waste management practices and
fragmented regulations present challenges to
realizing this vision.
Asia
refined glycerine demand stays tepid on weak
downstream ECH market
By Helen Yan 28-May-24 14:20 SINGAPORE
(ICIS)–Asia’s refined glycerine demand is
likely to remain tepid, with buyers and sellers
locked in a tug-of-war amid an uncertain
outlook.
India
to develop Iran’s Chabahar port; expand
international trade
By Priya Jestin 27-May-24 17:34 MUMBAI
(ICIS)–India and Iran are currently charting
plans to acquire equipment and machinery to
enhance the capacity and increase vehicular
movement at Chabahar port, after the two
countries signed a 10-year deal to develop part
of the Iranian port.
China
Apr industrial profits up 4% on year; reverses
Mar fall
By Fanny Zhang 27-May-24 13:16 SINGAPORE
(ICIS)–China’s industrial profits in April
increased by 4.0% year on year, reversing the
3.5% contraction in March, official data showed
on Monday.
Speciality Chemicals31-May-2024
HOUSTON (ICIS)–Global rates for shipping
containers continue to surge, liquid chemical
tanker rates were flat to lower, and the Panama
Canal Authority (PCA) is increasing the maximum
allowable draft to transit the Neopanamax
locks, all highlighting this week’s logistics
roundup.
CONTAINER RATES
Global rates for shipping containers continue
to surge, although the rate may be slowing.
Global average rates from supply chain advisors
Drewry rose by 4% this week, a slower pace from
the double-digit increases over the previous
two weeks.
The following chart shows that average rates
are approaching $4,250/FEU (40-foot equivalent
unit).
Rates from Asia to the US are also at new highs
for the year, as shown in the following chart.
Rates continue to be pressured higher because
of unrest in the Middle East, specifically
attacks on commercial vessels by Yemen-backed
Houthi rebels.
Houthis even claimed responsibility for an
attack on the USS Dwight D Eisenhower, an
aircraft carrier stationed in the Red Sea.
US and UK responded by sending fighter jets to
strike Houthi targets in Yemen.
Rates are likely to continue rising, according
to ocean and freight rate analytics firm
Xeneta.
“The ocean freight container shipping market
has seen rapid and dramatic increases during
May and that is set to continue with further
growth in spot rates,” Peter Sand, Xeneta chief
analyst, said. “On 1 June, spot rates will
reach a level we have not seen since 2022 when
the COVID-19 pandemic was still wreaking chaos
across ocean freight supply chains.”
From the Asia-Pacific to US West Coast, market
average spot rates are expected to reach
$5,170/FEU on 1 June, which would surpass the
Red Sea crisis peak of $4,820/FEU seen on 1
February, Xeneta said.
This is an increase of 57% during May and the
highest spot rates have been on this trade for
640 days.
From the Asia-Pacific to US East Coast, spot
rates are expected to reach $6,250/FEU on 1
June, only slightly shy of the Red Sea crisis
peak of $6,260/FEU and an increase of 50% since
29 April.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and are shipped in tankers, container
ships transport polymers, such as polyethylene
(PE) and polypropylene (PP), are shipped in
pellets.
They also transport liquid chemicals in
isotanks.
LIQUID TANKER RATES
US chemical tanker freight rates assessed by
ICIS were mostly unchanged. However, rates
increased from Brazil to the US Gulf (USG) and
fell slightly from the USG to Asia and from the
USG to Brazil.
From the USG to Brazil, there continues to be
plenty of contractual volumes for both caustic
soda and monoethylene glycol (MEG).
All the regulars are open and have a lot of
tanks to fill.
This route has experienced significant downward
pressure due to market dynamics and because
activity here has been limited.
The USG to Brazil trade lane is expected to
remain at a standstill which could add further
pressure.
From the USG to Asia, freight rates declined
due to lack of interest.
PORT OF BALTIMORE
The Unified Command (UC) continues to clear
wreckage from the bottom of the Patapsco river,
projecting to fully restore the Fort McHenry
Federal Channel to its original 700-foot width
and 50-foot depth by 8-10 June.
The UC cleared a 400-foot-wide swath of the
federal channel on 20 May, permitting all
pre-collapse, deep-draft commercial vessels to
transit the port.
Source: Maryland State Police Aviation
Command
PANAMA CANAL
The Panama Canal Authority (PCA) is increasing
the maximum allowable draft to transit the
Neopanamax locks, effective immediately.
The PCA said the arrival of the rainy season in
the Canal watershed prompted the action.
Wait times for non-booked southbound vessels
ready for transit held steady this week for
northbound traffic and fell for southbound
vessels, according to the PCA vessel
tracker and as shown in the following
image.
Wait times a week ago were 1.5 days for
northbound vessels and 3.6 days for southbound
vessels.
Additional reporting by Kevin Callahan
Ethylene31-May-2024
SAO PAULO (ICIS)–Stellantis’ facilities in
Argentina remain shut and its plant in Goiana,
northeast Brazil, has also partially stopped, a
spokesperson for the global automotive major
said to ICIS on Friday.
In Argentina, Stellantis operates production
facilities in Ferreyra, in the Cordoba province
in the north, where trade with Rio do Grande do
Sul is commonplace. The company said
in mid-May those facilities had to shut due
to the lack of inputs.
On Friday, it added Goiana has now been
affected too and it is partially out of
operations.
“Both plants in Argentina are still out of
production. In Brazil, Goiana facilities has
partially stopped,” the spokesperson said.
Stellantis is the result of the merger between
Fiat Chrysler and PSA Group.
Germany’s automotive major Volkswagen stopped
production at three plants in the state of Sao
Paulo in mid-May due to the lack of inputs.
The company had not responded to a request for
comment at the time of writing.
Rio Grande do Sul is Brazil’s southernmost
state and petrochemicals-intensive automotive
parts producers there are major suppliers to
the rest of Brazil and Argentina.
As of Friday, the emergency services in Rio
Grande do Sul said 169 had died due to the
floods, while 44 remains unaccounted for.
Nearly 40,000 people are still taking refuge in
shelters, while 580,000 remain displaced from
their homes.
Nearly 2.4 million have been affected by the
floods.
Earlier in May, a spokesperson for Brazil’s
automotive trade group Anfavea did not respond
to questions from ICIS about the impact of the
floods on the sector’s annual output.
However, it said the trade group would publish
its first estimates at a press conference on 6
June, when it will publish production, sales
and export data for May.
In early May, at the press conference
presenting April data, the trade group said it
feared the sector could
be hit given Rio Grande do Sul’s importance
to Brazil’s auto industry.
The petrochemicals hub of Triunfo, near Porto
Alegre, returned to operations on
20 May, led by Brazil’s polymers major
Braskem, but a consultant in Porto Alegre said
to ICIS the reopening there was the odd
one out amid widespread disruption for most
industrial sectors.
As of Friday, the Port of Porto Alegre, the
state’s largest city, remained shut,
although Rio Grande and Pelotas ports were
operating normally.
The emergency services in Rio Grande do Sul
said 169 had died due to the floods, while 44
remains unaccounted for.
Nearly 40,000 people are still taking refuge in
shelters, while 580,000 remain displaced from
their homes. Nearly 2.4 million have been
affected by the floods in the 12-million people
state of Rio Grande do Sul.
The automotive industry is a major global
consumer of petrochemicals, and chemicals make
up more than one-third of the raw material
costs for an average vehicle.
The automotive sector drives demand for
chemicals such as polypropylene (PP), along
with nylon, polystyrene (PS), styrene butadiene
rubber (SBR), polyurethane (PU), methyl
methacrylate (MMA) and polymethyl methacrylate
(PMMA), among others.
Front page picture: Stellantis’ facilities
in Ferreyra, province of Cordoba, Argentina;
archive image
Source: Stellantis
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Ethylene31-May-2024
SAO PAULO (ICIS)–The Port of Porto Alegre
remains shut one month after severe flooding
hit the Brazilian state of Rio Grande do Sul,
while trade groups are asking the authorities
to extend their financial support to speed up
the recovery.
Innova, a company based at the Triunfo
petrochemicals hub near Porto Alegre, told ICIS
on Friday its operations were slowly returning
to normal, without giving more details.
Meanwhile, the Federation of Industries of the
State of Rio Grande do Sul (FIERGS) demanded
this week more support on top of the credit
lines already announced by state and federal
authorities.
PORTO ALEGRE REELS
Porto Alegre, a city of 1.5 million people and
the largest in the 12 million population state,
has been hit hard by the floods. A consultant
told ICIS last week that, at the time,
around one-third of the city remained
flooded, with industrial parks practically
shut.
Therefore, its port closed to operations at the
beginning of the floods and remains shut,
according ot the Port Authority for Rio Grande
do Sul, called Portos RS, which also oversees
operations at the Port of Rio Grande and the
Port of Pelotas, as well as at those at Porto
Alegre.
The Port of Rio Grande was never affected,
while the Port of Pelotas returned to normal
operations in mid-May.
While maritime transport may be starting to
experience some return to normality – except in
Porto Alegre –roads in the state remain heavily
disrupted.
This week, a minister in President Luiz Inacio
Lula da Silva’s government committed to having
most main roads functioning by mid-June.
The Triunfo petrochemicals hub, near Porto
Alegre,
returned to operations on 20 May, with
Brazil’s polymers major Braskem leading the
way, but for the moment, road transport remains
difficult as only one road to and from the hub
is open to traffic, with congestion
commonplace.
In its response to ICIS, the spokesperson for
Innova did not respond to questions about road
access to the site.
“Our operations are flowing normally and moving
towards full normality,” it said.
Braskem had not responded to a request for
comment at the time of writing.
MORE SUPPORT
This week, trade group FIERGS said the credit
lines announced by the authorities of Brazilian
reais (R) 15bn ($2.86bn) would need to be
extended to secure a prompt recovery in the
state, one of Brazil’s wealthiest and a key
industrial and agricultural player.
The president of the trade group, Gilberto
Porcello, said the financial support announced
was “still insufficient” because of the
magnitude of the disruption and the
difficulties companies are finding to restart
their operations.
Moreover, Porcello said the interest rates
announced for the credit lines – of 1% for
machinery purchases, 4% for small- and
medium-sized enterprises (SMEs) and of 6 % for
large companies – were low compared with market
rates, but he demanded credit lines are “zero
or negative” rates.
“Given the critical situation of the productive
sector, the ideal would be resources at zero or
negative interest rates. [Moreover, the
slowness in regulation for the
operationalization of new credit lines by the
main public banks, such as Caixa Economica
Federal and Banco do Brasil, increases
uncertainty, especially in a volatile economic
scenario,” he said.
“Any delay due to bureaucracy could compromise
the effectiveness of the measures and delay the
economic recovery of affected regions. At this
moment, the companies’ need is for the lines to
be operated immediately.”
He concluded saying that the “immediate”
reconstruction of highways, roads, and bridges
was also crucial to facilitate the return to
normal activity.
As of Friday, the emergency services in Rio
Grande do Sul said 169 had died in the floods,
while 44 remain unaccounted for.
Nearly 40,000 people are still taking refuge in
shelters, while 580,000 remain displaced from
their homes.
Almost 2.4 million have been affected by the
floods.
($1 = R5.24)
Recycled Polyethylene Terephthalate31-May-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including:
June prices stable
Italian bale prices rise in latest round of
auctions
Demand uneventful but some pockets of
improvement
Chemical Recycling31-May-2024
LONDON (ICIS)–Freepoint Eco-Systems Belgium NV
is planning to build an 80,000 tonne/year
pyrolysis-based chemical recycling plant in
Ghent, Belgium, the company announced in a
press release.
The plant will use mixed plastic waste diverted
from incineration as an input, although there
were no further details of the grade of mixed
plastic waste that will be used. It will be
situated at North Sea Port’s Kluizendok site,
following the signing of a long-term concession
agreement between the two companies for the
development.
Construction on the site will not begin until
the permitting process is completed, which is
expected in 2025. Freepoint Eco-Systems is
currently engaged in feedstock sourcing and
financial planning for the site.
The plot at North Sea Port is large enough to
potentially expand the capacity to 160,000
tonnes/year.
Freepoint Eco-Systems has several ongoing
pyrolysis-based chemical recycling projects at
various stages of development in the US,
where it has also recently signed an
offtake agreement with Dow. This is
its first project announced in Europe, but
according to the press release, the company is
currently developing several European projects.
In Europe, pyrolysis oil prices have remained
largely stable across much of 2024 due to
ongoing legislative and macroeconomic
uncertainty, following a period of high
volatility in Q4 2023. Across the past seven
months, prices for naphtha substitute pyrolysis
oil have traded as low as €1,700/tonne ex-works
Europe and as high as €2,200/tonne ex-works
Europe on the spot market. Non-upgraded
pyrolysis oil, meanwhile has traded as low as
€1,200/tonne ex-works Europe and as high as
€1,700/tonne ex-works Europe.
Throughout, pyrolysis oil prices have remained
disconnected from movements in virgin naphtha.
Similar to trends in pyrolysis oil prices
themselves, the spread between virgin naphtha
and naphtha substitute and non-upgraded
pyrolysis oil prices (the amount by which these
grades of pyrolysis oil are trading above
virgin naphtha) has broadly increased since
October, while the spread between virgin
naphtha and tyre-derived pyrolysis oil has
broadly decreased.
The same trend is
also seen in the spread between feedstock mixed
polyolefin bale prices and high plastic content
RDF bale prices.
Nevertheless, the spread between standard mixed
polyolefin bales (which have not been
pre-treated) and pyrolysis oil prices has been
broadly falling in 2024, following a recovery
in demand from the mechanical recycling sector
(albeit from a low base), which pushed mixed
polyolefin bale prices higher during a period
of stability in pyrolysis oil values.
While the spread between mixed polyolefin bales
and pyrolysis oil remains wide, these mixed
polyolefin bales typically require additional
sorting and processing. The challenges involved
in sorting and pre-treating material have seen
pyrolysis oil producers increasingly target
pre-treated forms of mixed polyolefins, such as
agglomerates, which trade at higher prices.
Uncertainty over the legal status of pyrolysis
oil, and in particular, uncertainty over
mass-balance accounting rules, continues to
push buyers to the sidelines of the market and
limit activity. Spot prices across all grades
remained stable this week as a result.
The EU’s Technical Advisory Committee (TAC) had
been due to take a decision on mass-balance
accounting rules under the Single-Use Plastics
Directive (SUPD) at the end of March. It was
understood from players familiar with the
matter that the TAC decision has been delayed
due to ongoing discussions with regulators, but
this is yet to be officially confirmed. A final
vote on mass balance accounting under the SUPD
continues to be expected before the end of the
year, but a firm timetable has not been
announced.
Tight supply of plastic-derived pyrolysis oil,
though, continues to mean there is currently
little downward pressure on prices, but this
tight supply was largely priced-in during Q4
2023, when testing cycles were at their peak.
ICIS covers 3 grades of pyrolysis oil in
its Mixed Plastic Waste and Pyrolysis Oil
Europe pricing service. ICIS also offers
mechanical recycling, waste bale, biodiesel,
hydrogen, and virgin price coverage, giving you
the complete picture across the sustainability
value chain. For more information, please
contact Mark Victory at mark.victory@icis.com.
Ethylene31-May-2024
SEOUL (ICIS)–The global petrochemical supply
glut will take some time to run its course and
focusing on portfolio optimization and higher
value products would be the way forward, LG
Chem CEO Hak Cheol Shin said on Friday.
“China will continue to build although there is
a slowdown in new projects,” said Shin, who is
also the chairman of the Korea Petrochemical
Industry Association (KPIA).
It would take a few years to see a rebalancing
in supply, he said on the sidelines of the
Asia Petrochemical Industry Conference (APIC).
The prospect of further rationalization in the
petrochemical industry – a hot topic during
APIC – would depend on the type of capacity and
location, he said.
When asked about the prospect of LG Chem
divesting cracker operations, Shin said that
the company never had plans to do so.
He noted that the focus was on ensuring
feedstock competitiveness and being focused on
adding value in the right niche market segments
where there was willingness to pay.
The two-day conference ends Friday.
Crude Oil31-May-2024
SEOUL (ICIS)–The European chemical industry is
bracing for continued weakness in 2024, with
demand remaining soft globally due to sluggish
growth in the US and a slowdown in China, an
industry official said on Friday.
“The European industrial sectors are out of
recession but still a long way from any dynamic
growth,” European Chemical Industry Council
(Cefic) director general Marco Mensink told
delegates at the Asia Petrochemical Industry
Conference (APIC) in Seoul, South Korea.
Despite the challenges in the region, there are
glimmers of optimism as destocking nears
completion and business expectations show signs
of improvement, Mensink said.
However, the surge in Chinese chemical exports
to Europe remains a major concern, as it
intensifies competition and puts pressure on
European producers, he said.
GEOPOLITICAL TENSIONS AND EUROPEAN
ELECTIONSThe ongoing war in
Ukraine exacerbated the challenges facing the
industry, Mensink noted.
It has triggered a renewed focus on strategic
independence, with European policymakers
seeking to reduce the region’s reliance on
external suppliers for critical raw materials
and chemicals, he said.
This could lead to increased investment in
domestic production and recycling capacity, but
it also raises concerns about potential trade
barriers and protectionist measures, Mensink
said.
The upcoming European elections are expected to
further solidify this trend, with defense and
security likely to dominate the political
agenda, he said.
“Post the elections, the European Commission
will have one priority only and it’s called
defense,” Mensink said.
“So, the rebuild of the European army knowing
the situation in Ukraine … going as it is,
will make defense and security the number one,
number two and number three topics in the next
policy cycle,” the Cefic director general said.
This could have a significant impact on the
chemical industry, as policymakers grapple with
the complex trade-offs between economic
competitiveness, environmental sustainability,
and national security, he added.
INNOVATION AND
CIRCULARITY
Amid the challenges, the industry is also
showing signs of resilience and adaptability
with companies investing in innovative
technologies, such as chemical recycling and
digital product passports, to meet stringent
environmental regulations and consumer demands,
Mensink said.
“Waste-based and bio-based feedstocks are
increasingly important for us,” he said,
highlighting the growing importance of circular
solutions in the chemical sector.
The push for greater circularity is not only
driven by environmental concerns but also by
geopolitical considerations, as it can help
reduce Europe’s dependence on imported raw
materials, Mensink said.
Focus article by Nurluqman
Suratman
Crude Oil31-May-2024
SEOUL (ICIS)–Singapore is converting its
petrochemicals hub of Jurong Island into a
sustainable energy and chemical (E&C) park
to achieve its emission reduction targets by
2030, the chairman of the Singapore Chemical
Industry Council (SCIC) said on Friday.
This involves collaborative efforts between the
government and industry to expand the
production of sustainable products and
facilitate sustainable production practices
within the E&C sector, Henri Nejade told
delegates at the Asia Petrochemical Industry
Council (APIC) in Seoul, South Korea.
Jurong Island is the 3,000-hectare nucleus of
Singapore’s E&C sector, hosting over 100
global companies in refining, olefins
production, and chemical manufacturing.
“Singapore’s goal for the 2030 Green Plan is
for the E&C sector to enhance its
production of sustainable goods to four times
the levels seen in 2019 and to achieve over six
million tonnes of carbon reduction annually
through the adoption of low-carbon solutions,
targeting net zero emissions by 2050,” Nejade
said.
To reach these goals, Singapore’s government
has recently announced establishment of a
Future Energy Fund with an initial investment
aimed at accelerating the nation’s transition
to cleaner fuels, by investing in critical
infrastructure and sustainable energy projects.
The fund, announced by the Singapore Economic
Development Board (EDB) in the national 2024
budget, is set up with an initial injection of
Singapore dollar (S$) 5 billion ($3.7 billion).
Driven by climate change concerns, the E&C
sector is evolving, with countries prioritizing
low-carbon alternatives, Nejade noted.
“This evolution is expected to reduce demand
for carbon-intensive fossil fuels while
promoting cleaner energy sources,” he said.
“However, a complete transition to renewables
may take some time, with challenges including
market imbalance and supply chain disruption in
the chemical industry.”
($1 = S$1.35)
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