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Ethylene08-May-2024
ORLANDO (ICIS)–BASF Corp CEO Mike Heinz is
optimistic that a binding agreement could be
reached during the next round of negotiations
of the UN plastic waste treaty, he said on
Wednesday.
BASF had sent a team to the previous round that
was held in Ottawa, he said. “The feedback that
we received from them was cautiously
optimistic.”
Heinz made his comments in an interview with
ICIS at this year’s NPE: The Plastics Show. He
also gave the keynote address at the trade
show.
Another reason for optimism is that all of the
parties are pursuing the same objective: to
prevent plastic waste from entering the
environment, Heinz said. An agreement would be
one that all stakeholders could live with.
He acknowledged some disagreement about how to
achieve that objective. Some want to curb
production of plastic, he said.
BASF and others want to achieve it by curbing
pollution.
Already, BASF and other chemical companies are
incorporating recycled materials into their
products.
Recycling can be part of a larger sustainable
production chain, under which chemical
complexes rely on renewable energy to make
products from recycled and renewable materials
that can be recovered and reused.
These materials can be used to make wind
blades, electric vehicles (EVs) and other
products critical to reducing emissions of
carbon dioxide (CO2).
Heinz summed up the path to a sustainable
future as resting on three three pillars: make,
use and recycle.
SUSTAINABILITY
VERBUNDDuring his speech and in
a subsequent interview with ICIS, Heinz
described what could be characterized as a
Verbund based on sustainability.
“This will take some time, but the good news is
we already have some concrete examples on how
it can be done,” Heinz said.
As an example, he held up a jacket made with
100% recycled nylon 6 from BASF that was sold
by Inditex, the owner the clothing brand Zara.
Heinz pointed to BASF’s equity stakes in
European wind packs. By 2030, BASF wants green
energy to account for 60% of its power
consumption.
For chemical companies, one of the most
power-hungry processes is steam cracking. BASF,
SABIC and Linde are developing an e-cracker
that would rely on electric furnaces to
generate the heat needed to produce ethylene.
The electricity could come from renewable
sources, which would significantly reduce the
CO2 emissions of steam cracking.
Crackers can process renewable naphtha made
from natural oils or pyrolysis oil produced at
chemical recycling plants.
It will take time for these feedstocks to
become abundant, but the model is possible, and
BASF is making chemicals with such feedstocks.
New, renewable feedstocks can lead to new
chemistries that result in materials that have
better qualities than those based on petroleum.
The products can also help customers
achieve their own sustainability goals. Lighter
plastics can allow automobiles to travel
farther on a tank of gasoline or on a battery
charge. Other plastics will be critical to make
EVs safe.
Products can be designed to last longer, he
said. When they do reach the end of their
lifecycles, they can be designed to be easier
to recover and recycle.
STEPS NEEDED TO ACHIEVE
SUSTAINABILITYDuring his keynote
speech, Heinz noted that while the chemical
industry is part of the problem, it can be a
bigger part of the solution.
Change will require passionate people,
innovation and collaboration, he said. In
particular, the chemical industry needs to
collaborate with lawmakers and nongovernmental
organizations (NGO) to come up with those
solutions.
Produced by Plastics Industry Association
(PLASTICS), NPE: The Plastics Show takes place
6-10 May in Orlando, Florida.
Interview article by Al Greenwood
Thumbnail shows a plastic bottle, which can
be recycled. Image by
monticello/imageBROKER/Shutterstock
Speciality Chemicals08-May-2024
LONDON (ICIS)–LyondellBasell has launched a
strategic review of the bulk of its operations
in Europe, the producer said on Wednesday,
based on its strategy to focus on assets
perceived to have long-lasting competitive
advantage.
The producer will conduct a review of its
European olefins, polyolefins, intermediates
and derivatives businesses, driven by its move
announced last year to reinvest in its
strongest performing operations.
“At the 2023 Capital Markets Day, we stated our
intent to concentrate our portfolio around
businesses with long-lasting competitive
advantage and to reinvest around those
advantaged areas generating superior returns at
meaningful scale. These criteria have not
changed,” said Lyondell CEO Peter Vanacker.
The strategy announced at the 2023 investor day
was based around three pillars: prioritizing
growth spending on businesses where the company
“has leading positions in expanding and
well-positioned markets”, growing circular
solutions earnings to $1 billion/year by 2030,
and shifting from cost controls to a broader
idea of value creation.
Energy-intensive industries in Europe have been
challenged by the sharp increase in gas prices
seen since Russia’s invasion of Ukraine, which
remain substantially above pre-war and
pre-pandemic norms despite falling dramatically
since the nadir of winter 2022.
Described by former BASF chief Martin
Brudermuller earlier this year as a “systemic”
change to the European operating environment,
the higher cost of operating Europe has
prompted a number of reviews by large global
players.
BASF is looking to cut €1 billion off
the annual operating costs of its Ludwigshafen,
Germany, complex. The company tapped plant sale
specialists International Process Plants this
week to explore the sale of its Ludwigshafen
ammonia, methanol and melamine units, idled in
2023 due to high production costs.
Dow also announced plans to review
underperforming and smaller assets. A
significant proportion of any cuts had been
expected to land in Europe, although the US
major has not given an update on the process
since it was announced in early 2023.
Indorama Ventures is also currently reviewing
six assets out of its “West” portfolio for
potential shutdown.
While global gas pricing has come down, the
cost of shipping gas will always be higher than
sending it through a dedicated pipeline, as was
the case with the Russia-derived natural gas
that made up around half of the EU’s energy
consumption prior to the war.
As part of its stated intent to continue
developing its sustainable and circular
business, investments in a commercial-scale
MoReTec plant, LyondellBasell’s
proprietary technology to convert plastic waste
into liquid raw materials, and the development
of a circularity hub in the Cologne, Germany
region, will continue as planned, the company
said.
“The company will prioritize its investments to
align operations with our circularity and net
zero ambitions,” Vanacker added. “We understand
that strategic assessments can create
uncertainty for our employees and customers,
but we are committed to operate our assets
safely and reliably throughout this process.”
LyondellBasell European
prodcution
Product
Capacity (kt)
Ethylene
1,805
HDPE
1,260
LDPE
740
MTBE
810
Polypropylene
2,175
Propylene
990
Propylene Oxide
785
Styrene
680
TBA
970
Update re-leads, adds detail
throughout
Additional reporting by Graeme Paterson,
infographics by Yashas Mudumbai
Ethanol08-May-2024
LONDON (ICIS)–In this latest podcast, markets
editor Nazif Nazmul interviews Paddy Lowe, CEO
and founder of the synthetic fuels producing
company Zero Petroleum.
Synthetic fuels can play a vital role in
slashing emissions across the transport sector
in the coming years, although the road to
scaling up is fraught with obstacles, as well
as opportunities.
Synthetic fuels, also known as e-fuels, are
derived from renewable electricity, air and
water.
The power-to-liquid process entails chemical
conversion of energy.
Energy density of synthetic fuels and
compatibility with international combustion
engine (ICE) vehicles could provide a long-term
decarbonisation alternative to electric
vehicles (EVs) and biofuels
Rail, marine, aviation, agricultural
sectors can utilise synthetic fuels alongside
road transport
Synthetic fuels gaining traction in the
aviation industry in the form of e-SAF
Achieving cost parity with fossil-based
gasoline will still take approximately 10 more
years
Legislative support likely to expedite time
needed to achieve economies of scale
Production process reliant on sourcing vast
amount of renewable energy
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Speciality Chemicals08-May-2024
LONDON (ICIS)–German industrial production
fell 0.4% in March month on month, but output
from the chemical-pharmaceuticals sector rose
slightly according to statistical data released
on Wednesday.
Bundesbank, chem-pharma production
order volume index (2021=100):
March 2024
February 2024
March 2023
Q1 2024
Q4 2023
Q1 2023
92.6
91.6
85.7
90.1
84.6
86.3
Production in the energy-intensive industries,
which includes chemicals, remained flat month
on month in March but rose 4.8% in Q1 2024 from
Q4 2023.
In the automotive industry, which is an
important end market for chemicals, March
production rose 0.6% from February.
March 2024 production
+/- change from February
Total output from industry, construction
and energy
-0.4%
Industrial production
-0.4%
-Intermediate goods
-0.6%
-Capital goods
0.1%
-Consumer goods
-1.4%
Energy
-4.2%
Construction
1.0%
(source: Statistisches Bundesamt,
Wiesbaden)
Industrial production was down 3.4% from March
2023 while total production from industry,
construction and energy was down 3.3%.
LACK OF ORDERSAccording
to a survey by the Munich-based research group
ifo on Wednesday, a shortage of new
manufacturing orders worsened in April, slowing
the overall economy.
In manufacturing, 39.5% of companies reported a
lack of orders, up from 36.9% in ifo’s January
survey.
In the chemical industry the share of companies
reporting a lack of orders was 46.6% in April.
In related news, a labor union has threatened
“massive” strikes in the building and
construction sectors after a failure to reach a
new collective agreement with their employers.
Along with the auto sector, building and
construction are important end markets for the
chemicals industry.
Speciality Chemicals08-May-2024
BARCELONA (ICIS)–Europe’s chemical industry
stands to benefit in the long-term from the
expansion of wind, solar and other low carbon
methods of producing energy.
– Growth in renewables means spot electricity
prices can turn negative if demand dips
– Europe electricity prices higher than pre-war
as tied to price of natural gas, now mainly
liquefied natural gas (LNG)
– Europe sees significant growth in
solar, while wind faces delays due to supply
chain issues
– Decarbonizing includes reducing emissions
from gas plants via carbon capture and storage
(CCS) and other technologies
– Challenges include grid infrastructure to
transport electricity across regions with
varying renewable output
– Despite regulatory hurdles, there is
political will for grid investment as part of
the energy transition
In this Think Tank podcast, Will
Beacham interviews ICIS power markets
editor Andrea Battaglia, ICIS
head of power analysis Matthew
Jones, ICIS senior consultant Asia
John Richardson and
Paul Hodges, chairman of
New Normal Consulting.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here .
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges and John Richardson’s
ICIS
blogs.
Polyvinyl Chloride08-May-2024
SINGAPORE (ICIS)–Asia’s polyvinyl chloride
(PVC) markets are expected to see some
uncertainty in the coming months, with factors
like China’s domestic demand, the impact of
India’s monsoon and some policy changes
expected to shape the landscape.
June offers from Asian producers awaited
next week
SE Asian economies see healthy growth in
Q1, expected to support PVC demand
Low domestic demand in China encourages
exports, especially to India
In this chemical podcast, ICIS editors Jonathan
Chou, Damini Dabholkar and analyst Lina Xu
discuss recent market conditions with an
outlook ahead in Asia.
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here.
Butanediol08-May-2024
SHANGHAI (ICIS)–Asia’s 1,4-butanediol (BDO)
market continues to be pressured by oversupply
amid slowing demand.
With the first peak season in March to April
ending, demand in some sectors has started to
slow.
In this chemical podcast, ICIS markets reporter
Corey Chew reports from China on market
expectations before Enmore’s 14th BDO and
Derivatives Development Forum.
Ethylene08-May-2024
SINGAPORE (ICIS)–Japanese majors Asahi Kasei,
Mitsui Chemicals and Mitsubishi Chemical on
Wednesday said they have agreed to perform a
joint feasibility study on feedstock and fuel
conversion at their ethylene production
facilities in western Japan to accelerate their
carbon neutrality targets.
“The joint feasibility study is expected to
raise the speed and efficiency of the
transition to carbon neutrality of the
companies’ ethylene production facilities and
each company’s petrochemical products,” they
said in a joint statement.
The three companies will study “concrete
measures” to drive their move towards carbon
neutrality such as replacing petroleum-derived
resources with biomass feedstock and conversion
to low-carbon fuel, while also studying optimal
future production arrangements.
In order to achieve carbon neutrality by 2050
in accordance with the target set by the
Japanese government, the three chemical giants
have each adopted policies to become carbon
neutral by reducing greenhouse gas (GHG)
emission targets to effectively zero.
“However, if initiatives are taken by each
company individually, the speed of
implementation and efficiency of GHG reduction
are limited,” they said.
“This makes it increasingly necessary for
multiple petrochemical manufacturers located
nearby to cooperate with one another through
mutual provision of technology and joint
implementation of measures that contribute to
carbon neutrality.”
Ethylene07-May-2024
HOUSTON (ICIS)–Following a
better-than-expected 2024 first quarter, US
compounder and formulator Avient raised its
full-year guidance for adjusted earnings before
interest, tax, depreciation and amortization
(EBITDA) by $5 million at the low end.
Sales into the defense market, along with raw
material deflation, were the key earnings
drivers in Q1 and Avent expects both to support
earnings through 2024, CEO Ashish Khandpur and
CFO Jamie Beggs told analysts during the
company’s Q1
earnings call on Tuesday.
New 2024 guidance
Previous 2024 guidance
Pro forma 2023 adjusted
EBITDA
$505 to $535 million
$510 to $535 million
$501.8 million
SALES IMPROVING IN MOST END
MARKETSAvient sees demand
conditions “generally improving across all
regions”, with improved momentum in consumer,
packaging, healthcare, defense and industrial
end markets, the executives said.
After a 35% year-on-year increase in Q1,
defense sales amid the ongoing geopolitical
tensions, Avient expects those sales to
continue growing through 2024, albeit not at
the first quarter’s hot pace, they said.
Avient’s Dyneema-brand fiber
technology is used in the personal protection
of soldiers and law enforcement and border
control officers.
While Avient’s utilization rates in defense are
high, the company is able to meet forecast
demand growth and expects no capacity
limitations this year.
However, it may add capacities in the future,
depending on demand, which can be “lumpy” in
that market, they said.
Defense accounted for 7% of Avient’s total 2023
sales of $3.14 billion, with more than half of
those sales in the US. Avient acquired the
Dyneema business from DSM in 2022.
Telecommunications and energy, however, are
among the weaker end markets, with
first-quarter sales down double-digit and
weakness continuing into the second quarter.
Destocking in the capital-intensive
telecommunications market continued in Q1, with
no meaningful rebound in that market expected
until 2025, the executives said.
Telecommunications accounted for 4% of Avient’s
2023 sales.
BY REGION
Regionally, Avient sees good momentum in the US
in markets such as consumer packaging, defense,
building and construction, industrial and
infrastructure.
“Destocking in those markets is over”, Khandpur
said.
With the exception of telecommunications and
energy, overall demand in North America is
“coming back quite well”, he said.
However, persistent inflation is delaying the
timing of interest rate cuts,
which could weigh on sales in end markets such
as building and construction, transportation
and industrial, the executives said.
In China, about 70% of Avient’s sales go into
the local market, putting the company into a
good position as that country’s economic
policies transition to focus on the domestic
market, the executives said.
In Europe, demand in packaging and healthcare
is improving, but Avient expects the region’s
overall year-on-year sales growth to be soft.
Consumer confidence in Europe is weak and
eurozone
manufacturing continues to signal
contraction, they noted.
Meanwhile, the stronger US dollar has become a
headwind, they added.
Sales by region in 2023:
RAW MATERIAL DEFLATION
Raw material deflation will continue to support
margin expansion in the second quarter, albeit
to a lesser extent than in the first quarter,
the executives said.
In the first quarter, Avient saw
better-than-expected pricing for non
hydrocarbon-based raw materials such as
pigments and certain performance additives.
Primary raw materials used in Avient’s
manufacturing operations include polyolefin and
other thermoplastic resins, titanium oxide
(TiO2), inorganic and organic pigments,
specialty additives and ethylene.
Pricing, net of raw materials, should help
drive year-on-year earnings growth in 2024, the
executives said.
Also, the company expects additional margin
expansion due synergies and plant closures
related to its acquisition of
Clariant’s masterbatch business back in 2020,
Beggs noted.
M&A NOT A PRIORITY
In the near-term, Avient will focus on organic
growth and margin expansion whereas growth
through mergers and acquisitions (M&A) is
not a priority.
While Avient is not ruling out M&A, any
deals would be “small and bolt-on in nature”,
in areas like healthcare, sustainable solutions
or composites, with focus on Asia and Latin
America, Khandpur said.
“Premiums are pretty high” in M&A, he
added.
Thumbnail photo of Ashish Khandpur, who
took over as Avient’s CEO and president on 1
December 2023; photo source: Avient
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