BARCELONA (ICIS)–The EU needs a powerful industrial strategy to deliver the massive expansion in renewable energy required to power energy-intensive sectors which will provide locally made raw materials, according to a coalition of regional trade groups. Europe currently lacks policies to sustain and grow sectors such as chemicals, cement, steel and other metals which have suffered an unprecedented curtailment of production in recent years due to the impact of the energy crisis, the groups said in a joint statement released on Tuesday. Accelerated wind deployment will be central to delivering the decarbonization of Europe’s economy, said the group, adding that wind already delivers 20% of electricity consumption in Europe and is therefore a strategic resource for Europe’s industry. “Chemicals, steel, aluminium, copper and cement are all a vital part of the European wind supply chain. Europe needs strong energy and electricity intensive industries in order to deliver the massive expansion of renewables,” said the group. It calls for locally produced materials and equipment for energy and other low-carbon infrastructure to be made in Europe. That will require globally competitive clean energy and access to raw materials. Energy intensive industries have experienced unprecedented curtailment of production in recent years due to the impact of the energy crisis, said the group. Addressing this challenge must be at the core of a new Industrial Deal for Europe. Faster renewables deployment will help reducing energy bills for consumers. According to Marco Mensink, director general of Europe’s main chemicals trade group Cefic: “We will only make a business case for Europe and be able to implement the Green Deal if Europe creates strong and innovative partnerships, across multiple value chains. The first step is to develop a plan for direct electrification for industry, then we jointly focus to help create the necessary infrastructure and new wind energy capacity.” This joint statement echoes messages in February’s Antwerp Declaration for a European Industrial Deal,  signed by more than 1,200 business leaders. This new statement is signed by trade groups Cefic, WindEurope, CEMBUREAU, the European cement association, steel group EUROFER and Eurometaux, Europe’s Metals Association. Europe’s uncompetitive energy and feedstock cost position has put it at the forefront of a global wave of permanent plant closures and restructuring plans. Click on the image to make it larger. Thumbnail photo: Cefic’s headquarters in Brussels, Belgium (Source: Cefic)

SINGAPORE (ICIS)–Singapore’s petrochemical exports rose by 6.5% year on year to Singapore dollar (S$) 1.18 billion in May, while overall non-oil domestic exports (NODX) dipped, official data showed on Tuesday. The country’s NODX slipped by 0.1% year on year to S$14.3 billion in May, extending the 9.6% decline in April, Enterprise Singapore data showed. Singapore’s NODX highlights differing economic trends between advanced economies and China, Jester Koh, associate economist at Singapore-based UOB Global Economics & Markets Research, said in a note on Tuesday. “Singapore’s NODX by key markets somewhat reflects the asynchronous growth path between advanced economies (namely the US and Eurozone) versus China,” he said. “NODX to China remained resilient… which is consistent with the stronger than expected Q1 2024 GDP although we remain circumspect on the outlook given the weaker than expected industrial production and fixed asset investment data in May while both new and used home prices continued to contract,” he said. NODX to the US and EU experienced significant declines in May, likely due to the impact of higher interest rates on investment and consumer spending, Koh noted. Singapore’s non-electronic NODX, which includes pharmaceuticals and petrochemicals, fell by 6.0% year on year to S$10.6 billion in May following the 12.6% contraction in April. Singapore’s non-electronic NODX to its top 10 markets were mixed in May, with shipments to China slumping by 24.3%. Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majors ExxonMobil and Shell. The continued growth in petrochemical shipments abroad tracked the improvement in the country’s overall factory activity in May. The purchasing managers’ index (PMI) edged up to 50.6, a 0.1 point gain from the previous month, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on 3 June. This was the ninth straight month that it remained in expansionary territory. A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction. The improvements in the new orders (May: 52.0, April: 51.7), new export orders (May: 51.3, April: 51.0) and output (May: 50.9, April: 50.6) sub-indices suggest that underlying end-demand fundamentals remain intact, UOB’s Koh said. “The anticipated easing of financial conditions towards the latter half of the year as central banks in major advanced economies begin to reduce policy rates could provide some tailwinds to global investment and consumption activity,” he added. Meanwhile, supplier delivery times likely rose in May after vessels were diverted around the Cape of Good Hope, away from the Red Sea, to avoid ongoing conflicts, according to Koh. This rerouting led to an increase in nautical miles and longer sailing times as corroborated by the decline in the supplier deliveries subindices for May, he said. The overall supplier deliveries PMI sub-index slipped to 50.3 in May from April’s 50.4. “The recent port congestion in Singapore may have been further exacerbated by the announced increase in import tariffs by the US to target Chinese exports in strategic sectors such as semiconductors, EVs, batteries and solar cells as exporters scramble to ship goods to the US ahead of the 1 Aug 2024 implementation timeline for some export categories,” Koh added. Separately, Singapore’s port authorities are still dealing with an oil spill that occurred after a dredger collided with Singapore-flagged bunker vessel Marine Honour at the Pasir Panjang Terminal on 14 June. In its latest update on 17 June, the Maritime Port Authority (MPA) of Singapore said that oil recovery assets have been deployed today to skim and collect the remaining oil spillage off the water surface to minimise further spread of the oil. Port operations have not been affected by the incident, according to the MPA. Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China’s chemicals producers are said to be focusing on being “nimble and agile” in response to weaker demand growth, ample local supply of intermediate chemicals and increasingly sophisticated end-use markets. This involves producing everything up and down the value chains only when it makes economic sense and increasing the differentiation of grades for a broader range of more sophisticated applications. Local producers are reported to be tripling their range of polyethylene (PE), polypropylene (PP) and polyurethane (PU) grades as they broaden their licensing of technologies. A lot of this differentiation is aimed at supplying chemicals and polymers for higher-value downstream industries such as electric vehicles and batteries. There are said to be plenty of intermediate chemicals available locally that can compete with opportunistic imports. Local producers of intermediates are also reported to be able to make better domestic netbacks than selling overseas. Customers of the local intermediate producers increasingly value reliable suppliers who can provide a wider range of grades, technical services and local currency deals, I’ve been told. The ability of chemicals importers to compete on price alone seems to be under challenge as a sustainable business model. Future winners in China could be the Tier 1 suppliers. These suppliers would make all the grades necessary to serve ever-more sophisticated local end-use markets, which would require constantly successful R&D and good technical services. This points towards China becoming a vast continent-sized market that largely serves itself in speciality chemicals and composites, as well as commodity chemicals. I earlier discussed how self-sufficiency is increasing in commodity chemicals resulting in a pivot by “overseas-based” producers to specialities and composites. China could become just about entirely self-sufficient in commodity grades of PP, polyethylene (PE) and in paraxylene (PX) and ethylene glycols (EG) by 2030. The latter two chemicals are of course pure commodities. Note the above phrase “overseas-based” rather than overseas, as the foreign investors in China are in strong positions to take advantage of this vas and rapidly maturing market. For reasons discussed today, I don’t believe that the pivot by overseas-based producers to specialities and composites will work if it is based on exporting to China. What should the overseas-based producers do? Pretty much forget China as an opportunity as they focus on the rest of the world. And here’s the link: https://www.icis.com/asian-chemical-connections/2024/06/chinas-ever-more-sophisticated-chemicals-markets-could-entirely-serve-itself/ 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.

NEW YORK (ICIS)–US-based coatings producer PPG is seeing robust demand for sustainable products from customers, some of which rely on new, more energy efficient processes, said an executive on Monday. “Across the board there is strong pull… because when you look at [our customers’] narrative to the consumer, everybody is using sustainable advantage as a way to move market share,” said Peter Votruba-Drzal, vice president, Global Sustainability at PPG. “The challenge is to move with the speed and agility that’s required from customer industries. Large, mature industries are transforming right in front of us – the powertrain (EV) transformation in automotive, for example. The same holds when you look at how they will ultimately paint cars in the future,” he added. Votruba-Drzal spoke to ICIS at the New York Stock Exchange (NYSE). The time to get new, more sustainable products to market varies by industry, from being relatively quick – a matter of months – on the architectural coatings side, to longer for automotive, marine, aerospace and packaging, he pointed out. MARINE COATINGSIn the marine sector, the International Maritime Organization (IMO) is targeting a 20-30% reduction in greenhouse gas (GHG) emissions by 2030. “Marine coatings have a lot of sustainability benefits that are being pulled by the industry. The introduction of non-toxic anti-fouling technologies plus the benefits of fouling resistance which improves fuel efficiency over time, helps [shippers] meet their carbon emissions goals and reduces their cost of operation,” said Votruba-Drzal. On 5 June, PPG announced a collaboration with digital maritime sustainability platform RightShip to foster the development and adoption of sustainable marine solutions. PPG has a biocide-free silicone hull coating that helps vessels achieve up to 20% power savings and up to 35% lower GHG emissions versus traditional antifouling coatings, according to the company. SUSTAINABILITY + COST BENEFIT = PREMIUMIn most cases, simply introducing a more sustainable product is not enough to warrant a price premium, he pointed out. “Our customer typically requires improved performance – lower operating cost, less waste, energy efficiency – in addition to the sustainable benefit. We can partner with customers and create mutual value so that we both partake in the financial benefits,” said Votruba-Drzal. However, in other areas such as Europe’s architectural coatings market, consumers are willing to pay more for a more sustainable solution with the same performance, he added. Greener specifications, such as from builders of commercial real estate, are also driving demand for more sustainable products with lower carbon footprints, as building owners seek to achieve certain levels of LEED (Leadership in Energy and Environmental Design) certifications, he said. “If we’re working with a coil coatings customer and can provide a low carbon footprint solution, they win market share in the building,” said Votruba-Drzal. Coil coating is a continuous, automated process for coating metals prior to fabrication. TRANSFORMATION IN COIL COATINGS“In the coil industry, a fascinating transformation has been happening”, and only in the past two years or so, the executive said. Coil coatings operations are moving from using football field-length ovens fired by natural gas, to a much more compact electron beam system of around 30 yards in length, he explained. “You eliminate all of the burning of the fossil fuel and carbon emissions, as it runs off electricity which can be renewable power,” said Votruba-Drzal. “Here is a mature industry of 50-plus years that used to be heavily focused on operational throughput costs on the technology side. Now suddenly all these formulations are changing into electron beam curing. And so it resets the opportunity for market share gains,” he added. PROGRESS ON SUSTAINABILITY GOALSPPG in May 2023 introduced 2030 sustainability goals, including a 50% reduction in Scope 1 and 2 GHG emissions (from operations and purchased energy) and a 30% reduction in Scope 3 emissions (mostly from purchased raw materials) from a 2019 base, validated by the Science Based Targets initiative (SBTi). Source: PPG As of its May 2024 update, it has achieved 10% reduction in Scope 1 and 2 emissions, and a 12% reduction in Scope 3 emissions. PPG has also assessed 97% of key suppliers against sustainability and social responsibility criteria. Scope 1 and 2 emissions account for only 4% of PPG’s total carbon footprint. Further reductions to Scope 1 and 2 will primarily come from replacing motors and equipment on mixers, and using more renewable power. The bulk comes from Scope 3 emissions, with the primary components being raw materials, and how paint shops use PPG’s products, said the executive. Often the location of a supplier’s facility plays a key role in the carbon footprint of the products coming out of that site, he pointed out. “You can have a material made by a manufacturer that has operations in Asia as well as in other regions, that tie into very different electrical grids. And how green that grid is, basically impacts the carbon footprint associated with that product,” explained Votruba-Drzal. With global operations, PPG can also provide the same product at different levels of carbon footprint, depending on where it makes it, and ships it from, he added. RECYCLED AND BIO-BASED RAW MATERIALSPPG also uses recycled and bio-based raw materials in certain formulations. Its Mexico coatings company Comex uses recycled tires as a filler for waterproof roof coatings. Recycled polyethylene terephthalate (R-PET), acrylics, elastomers, polyurethanes and polyolefins can all be incorporated into coatings, he noted. “This is an emerging space of circularity where getting the scale matters,” said Votruba-Drzal, who pointed to partnerships between companies to develop new technologies and ecosystems. Interview article by Joseph Chang

SAO PAULO (ICIS)–Brazil’s authorities’ response to the devastating floods in Rio Grande do Sul was appropriate, while that of civic society was “marvelous and exemplary”, according to the CEO at chemicals trade group Abiquim. Andre Passos is a gaucho himself, as people from Rio Grande do Sul are called. The state is one of Brazil’s most industrialized and is also an agricultural powerhouse. At the beginning of May, there were concerns the state’s machinery – all levels: federal, state and municipal authorities – could not cope with what Passos described as “five Katrinas together”, in reference to the hurricane which devastated New Orleans in the US in 2004. Abiquim’s CEO said, however, that the state’s response proved adequate overall by triggering the state of emergency and that way allowing authorities to release large-scale funds quicker. Authorities have opened credit lines with favorable interest rates, although trade groups in the state have said more will be needed for the economy to recover. Passos was more decisive in his praise for gauchos and Brazilians at large and how they responded to the crisis: he said he had been humbled and somehow overwhelmed by that response. STATE RESPONSEBrazil’s President Luiz Inacio Lula da Silva received some criticism early in the crisis due to his slow response, and many voices said the state of emergency should have been declared earlier than one week after the crisis had started. Most analysts expect Brazil’s GDP growth to be negatively affected in 2024 due to the floods. Manufacturing activity in May sharply slowed down, the petrochemicals-intensive automotive sector was heavily affected and that month’s inflation figures showed prices rose in part due to the floods. Rio Grande do Sul is also home to the Triunfo petrochemicals hub, key in Brazil’s polymers chain and which restarted operations late in May, including the largest producer there, Braskem. In early May, some analysts said the floods were Lula’s ‘Katrina moment’, in reference to US President George W Bush in 2004 and how it became the quintessential example of lack of leadership skills in a crisis. According to Passos, Lula – and the state at large – would have passed the test. “The Federal authorities took the correct decision in declaring the state of emergency, in looking at this crisis an exception, so they can have the necessary freedom to allocate resources quicker. We must keep in mind: people working for the state in Rio Grande do Sul – for the federal, the state and the local authorities – were also heavily affected, personally,” said Passos. “That undoubtedly will cause a delay in the response: civil servants’ houses and families were also in the middle of the crisis. This was a tragedy the size of five Katrinas, so you clearly will have an impact in the state’s capacity to act, but they are coming back and the response is now being adequate, considering also the limitations you will have in a country like Brazil.” BRAZILIANS’ RESPONSEAmid the severe destruction, Passos said however the anonymous acts of kindness of gauchos in the past six weeks had been overwhelming. As well as praising those anonymous citizens who went out of their way to help, he also said he had been happily surprised to see companies who, at the moment of the state’s direst needs, put their corporate interests behind to unite in their response. He tells how Abiquim coordinated the distribution of oxygen during the crisis out of Rio Grande do Sul’s two plants producing oxygen, coordinating efforts from the producers as well as others in the chain who were necessary to distribute it. “From the first moment, companies agreed for Abiquim to have a central role, without affecting their market share or the redistribution of customers or anything like that. We had several challenges at the peak of the crisis to distribute the oxygen in liquid form, in trucks,” said Passos. “That’s where you get those anonymous acts of heroism. If the truck found a logistical hurdle, everyone around would literally leave what they were doing and try to open way for the truck. Schools, churches, any sort of public building seemed to turn into refuges to help those who were forced out of their houses. Those acts speak of a marvelous civic response, from gauchos but also from the rest of Brazilians, who for weeks had Rio Grande do Sul in their minds and hearts and also helped.” ICIS published the first part of this interview on 14 June. In it, Passos said Abiquim is demanding not only higher import tariffs, so domestic producers’ market share is protected in the face of imports, but also a plan to lower natural gas prices and a stimulus program to support the chemicals production chain. Front page picture: Braskem’s facilities in Triunfo, in Brazil’s Rio Grande do Sul state  Source: Braskem Interview article by Jonathan Lopez

HOUSTON (ICIS)–Meteorologists are tracking two tropical disturbances, one in the US Gulf and the other in the Atlantic Ocean, but neither are expected to have any major influence on chemical plant operations. In the US Gulf, there is a broad area of low pressure in the Bay of Campeche and conditions are conducive for gradual development with a tropical depression or tropical storm likely to form by midweek, according to the US National Hurricane Center (NHC). Regardless of development, the NHC said several days of heavy rainfall are expected across portions of southern Mexico and Central America. Locally heavy rainfall is also expected to spread over northwestern portions of the US Gulf by the middle of the week. An area of cloudiness and thunderstorms located several hundred miles east of the Bahamas is also showing conditions that could be conducive for some development over the next few days as it moves west-northwest, the NHC said. The system is likely to approach the southeast US coast by Thursday or Friday. There is likely to be increased focus on US Gulf petchem production this summer as the US National Oceanic and Atmospheric Administration (NOAA) is predicting the greatest number of hurricanes in the agency’s history. NOAA forecasters with the Climate Prediction Center said that the hurricane season – which started on 1 June and runs through 30 November – has an 85% chance to be above-normal, a 10% chance of being near-normal and only a 5% chance of being below-normal. The prediction of 17-25 named storms is the highest ever, topping the 14-23 predicted in 2010. A storm is named once it has sustained winds of 39 miles/h (63km/h). Damage from hurricanes can lead to increased demand for chemicals, but hurricanes and tropical storms can also disrupt the North American petrochemical industry because many of the nation’s plants and refineries are along the US Gulf Coast in the states of Texas and Louisiana. In 2022, oil and natural gas production in the Gulf of Mexico accounted for about 15% of total US crude oil production and about 2% of total US dry natural gas production, according to the US Energy Information Administration (EIA). Even the threat of a major storm can disrupt oil and natural gas supplies because companies often evacuate US Gulf platforms as a precaution.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 14 June. Higher import tariffs one leg of wider plan to save Brazil’s besieged chemicals producers – Abiquim Proposals to sharply increase chemicals import tariffs are only one of the three aspects Brazil’s chemicals producers have proposed to the government to save their “besieged” operations, according to the CEO at trade group Abiquim. INSIGHT: Chem M&A outlook brightens amid surge of deal announcements Chemical companies have started the first half of 2024 announcing potential sales and separations of several businesses, which could lead up to busy cycle for mergers and acquisitions (M&A). Mexico’s petchems supply flowing despite Altamira disruption, but industry crisis could continue The drought affecting the Altamira petrochemicals hub in Mexico’s state of Tamaulipas is not yet affecting the supply of chemicals, but the water restrictions for industrial players could continue, sources said this week. US Fed expects only one cut in 2024, keeps rates steady The Federal Reserve lowered its forecast for rate cuts in 2024 to just one from three as it voted on Wednesday to keep its benchmark interest rate steady at 5.25-5.5%. Canada rail labor union to hold new strike ballot Canadian rail labor union Teamsters Canada Rail Conference (TCRC) will hold a new strike vote because an earlier mandate for industrial action will expire on 30 June, it said in an update. Styrolution to permanently shut Sarnia styrene plant in Canada INEOS Styrolution will close its 445,000 tonnes/year styrene production plant in Sarnia, Ontario, Canada, by June 2026, the company announced Tuesday. IPEX: Global spot index edges down on lower values across all regions The global spot ICIS Petrochemical Index (IPEX) fell by 0.7% in the week ending 7 June on losses across all regions, not least northwest Europe. Chile’s Petroquim navigating better than peers pressure from Asian material – exec Polypropylene (PP) producer Petroquim is also facing pressure from lower-priced material sent from Asia, but the company’s “dedicated” service to customers has kept its sales spared from a larger hit, according to the commercial manager at the Chilean company.

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 14 June. NEWS  INSIGHT: Brazil, Mexico currencies take a hit, energy policy under Sheinbaum remains in spotlight The Mexican peso continued sliding this week as the new President Elect Claudia Sheinbaum’s Morena party achieved the “super-majority” investors feared, which could open the door to one-party constitutional reforms, while her energy policy remains on the spotlight. Argentina’s inflation down to 276% in May, first fall in 10 months Argentina’s annual rate of inflation fell in May to 276.4%, down from April’s 289.4%, the country’s statistical office, Indec said, the first fall since July 2023 and six months after President Javier Milei took office. Higher import tariffs one leg of wider plan to save Brazil’s besieged chemicals producers – Abiquim Proposals to sharply increase chemicals import tariffs are only one of the three aspects Brazil’s chemicals producers have proposed to the government to save their “besieged” operations, according to the CEO at trade group Abiquim. Mexico’s petchems supply flowing despite Altamira disruption, but industry crisis could continue The drought affecting the Altamira petrochemicals hub in Mexico’s state of Tamaulipas is not yet affecting the supply of chemicals, but the water restrictions for industrial players could continue, sources said this week. Brazilian pulp producer Suzano to acquire 15% stake in Austria’s Lenzing Brazilian pulp producer Suzano has agreed to acquire a 15% stake in Austrian cellulosic fibres company Lenzing for €230 million, paying €39.70/share, officials said on Wednesday. Brazil fertilizers interactive trade flow map January-May 2024 The Ministry of Development, Industry and Foreign Trade for Brazil has released fertilizer trade figures for January-May 2024. Future disruption to Panama Canal will depend on El Nino intensity – expert Despite arrangements put in place to make the Panama Canal fit for a changing climate, future disruption at the Americas key shipping route will depend on a variable no-one can predict: the intensity of future El Niño weather phenomenon, according to an expert at maritime services provider CB Fenton on Tuesday. Mexico’s chemicals output up 7.2% in April, manufacturing up nearly 4.0% Mexico’s chemicals output rose by 7.2% in April, year on year, well above the 3.8% increase in overall manufacturing activity, the country’s statistical office Inegi said on Tuesday. Chemical tanker prices rise as much as 75% since 2020 on lack of liquidity – expert Chemicals tanker prices have risen globally 30-75% in the past four years on a lack of liquidity, an expert at Chile-headquartered chemicals bulk operator Ultratank said on Tuesday. Brazil’s inflation up to 3.93% in May; prices rise sharply in floods-hit state Brazil’s annual rate of inflation rose in May to 3.93%, up from 3.69% in April, with notable price rises registered in food products, especially in the floods-hit state of Rio Grande do Sul, the country’s statistical office IBGE said on Tuesday. Closures of high-cost assets to accelerate in Europe, northeast Asia – ICIS Announcements of closures for high-cost assets, especially in Europe and northeast Asia, are likely to accelerate in coming quarters as the global petrochemicals industry is forced to rationalize, according to an ICIS analyst on Tuesday. Venezuela’s Pequiven, Turkey’s Yildirim mull petchems, ammonia facilities Venezuelan state-owned petrochemicals producer Pequiven has signed an agreement with Turkey’s conglomerate Yildirim to consider building petrochemicals and ammonia facilities in the country, according to the Venezuelan Ministry of Economy. Chile’s Petroquim navigating better than peers pressure from Asian material – exec Polypropylene (PP) producer Petroquim is also facing pressure from lower-priced material sent from Asia, but the company’s “dedicated” service to customers has kept its sales spared from a larger hit, according to the commercial manager at the Chilean company. PRICINGLatAm PP international prices steady to higher on squeezed margins, higher freight rates International polypropylene (PP) prices were assessed as stable to higher across Latin American countries because of higher freight costs and squeezed margins. LatAm PE international prices steady to up on higher offers from abroad International polyethylene (PE) prices were assessed as steady to higher across the region on the back of higher offers from abroad. Plant status: Alpek Polyester’s Altamira plants ceases operations due to water scarcity in Mexico Mexico’s chemicals producer Alpek has declared force majeure for purified terephthalate acid (PTA) out of its 1 million tonnes/year facilities in Altamira, state of Tamaulipas, on the back of the severe drought which has restricted water supplies to industrial companies. Stable PET prices in Mexico prevail amid supply challenges Throughout this week, polyethylene terephthalate (PET) prices have remained stable in Mexico, as per market observations. However, industry participants believe that this stability might not last long.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the tariff war starting on Electric Vehicles 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. Paul Hodges is the chairman of consultants New Normal Consulting.