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Crude Oil17-May-2024
SINGAPORE (ICIS)–Singapore’s petrochemical
shipments rose by 26.5% year on year in April
to Singapore dollar (S$) 1.34 billion,
reversing the 3.6% decline in the previous
month, official data showed on Friday.
Overall exports of chemicals and chemical
products in April fell by 34.5% year on year to
S$3.59 billion, extending the 37% contraction
in March, Enterprise Singapore said in a
statement.
The country’s overall non-oil domestic exports
(NODX) fell by 9.3% year on year to S$13.9
billion, extending the 20.8% decline in the
preceding month.
Non-electronic NODX – which includes chemicals
and pharmaceuticals – fell by 12.3% year on
year to $10.9 billion in April following the
23.2% contraction in March.
NODX shipments to the US and EU fell sharply in
April, while exports to China rose last month.
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 drop in the country’s NODX in April mirrors
weaker manufacturing activity seen during the
month.
The country’s purchasing managers’ index (PMI)
slipped to 50.5 in April from 50.7 in March,
marking the eighth consecutive month that the
reading has remained above the 50 mark,
according to data from the Singapore Institute
of Purchasing and Materials Management (SIPMM).
A PMI reading above 50 indicates expansion in
the manufacturing economy, while a lower number
denotes contraction.
In a separate survey of private manufacturers,
Singapore’s April PMI eased to 52.6 from 55.7
in March, financial information and services
provider S&P Global said on 6 May.
For the whole of 2024, Singapore’s economy is
expected to expand by 1.0-3.0%, compared with
actual GDP growth of 1.1% growth in 2023, the
ministry said.
Focus article by Nurluqman
Suratman
Polypropylene17-May-2024
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson: Blood bags, syringes,
disposable hospital sheets, gowns and medicine
packaging. Modern-day medicine, which has
greatly extended the quantity and quality of
our lives, would be impossible without the
plastics industry.
Computers, smartphones, washing machines,
refrigerators and automobiles cannot be
manufactured without plastics and chemicals.
Think of women in the developing world who
still have to wash clothes by hand (this is,
sadly, how some patriarchal societies work).
Imagine the time and energy they would save if
their families can afford their first washing
machine, enabling girls and women to spend more
time at school and freeing them up to attend
college.
The absence of decent roads in developing
countries doesn’t matter a jot because, since
the invention of the smartphone, buying and
selling goods and services, issuing
microfinance and keeping accounts up to date
can be done on the go.
The scale of future demand for nine of the
world’s biggest synthetic polymers is
illustrated by the chart in today’s post.
We forecast that global demand for the resins
will this year total 299 million tonnes, up
from just 79 million tonnes in 1992 which I
believe was the start of the Petrochemicals
Supercycle. By 2024, we predict that demand
will reach 515 million tonnes – a 72% increase.
The question on the exam paper is how we meet
this demand in as sustainable a fashion as
possible. This is going to require a new
industrial revolution.
Jim Fitterling, CEO of Dow Chemical, provided
the best summary I have seen of the challenges
that lie ahead for the chemicals industry. This
was in a speech he gave in New York on 8 May.
He highlighted the strain on electricity supply
resulting from the growth in artificial
intelligence, making it harder for the
chemicals industry to secure the renewable
electricity it needs to decarbonise.
While it was “almost fashionable” to blame
producers for plastics waste, around 3bn people
around the world lacked access to basic waste
management. About 95% of leakage occurs in
emerging markets with underdeveloped waste
management systems, he said.
Demand for recycled plastics outstrips supply
and was growing, but the ecosystem to collect,
sort and efficiently recycle plastics waste was
not keeping up, he added.
Government support for these efforts would be
critical – policies that preserved the many
benefits of plastics while also helping
eliminating waste, the CEO said.
Through its history, the chemical industry had
a formidable record of achievement in
overcoming challenges and can do it again in
making the energy transition a reality and
ending plastics pollution, said the Dow CEO.
Key to this was harnessing talent – not just
chemical talent, but a new generation of
workers who understood robotics, AI, machine
learning and analytics, he said.
Hear, hear! Let’s get on the with this new
industrial revolution.
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.
Ethylene16-May-2024
HOUSTON (ICIS)–Dow’s operations in Terneuzen,
the Netherlands, and Tarragona, Spain, have
attractive costs for a region that is
struggling to remain competitive against other
parts of the world with cheaper energy, the CEO
said on Thursday.
Dow has crackers at both sites, and they can
use imported liquefied petroleum gas (LPG) as
feedstock to produce ethylene. The imports give
the crackers a cost advantage.
“Terneuzen and Tarragona are in great cost
positions, and both of those countries, the
Netherlands and Spain, have good energy
policies,” said Dow CEO Jim Fitterling. He
made his comments during an investor day
presentation.
“Going forward, I feel good about how they are
going to wind up, and we have good plans
there,” he said. “We have good line of site to
keep cost competitiveness.”
The company mentioned cracking more LPG at
Terneuzen to lower its costs.
Exports of LPG should increase from the US in
the next couple of years as midstream companies
complete terminal expansions. The US Gulf Coast
is running out of export capacity to handle
growing amounts of propane being produced in
the country.
EUROPE LACKS COST POSITION TO
EXPORTOther
companies are selling European businesses or
shutting down plants because of excess
global capacity and high costs.
Fitterling sees no signs that Europe is
considering any policies that could address
high energy costs.
“Europe is focused more on the stick, on carbon
emissions reductions,” he said. “They are not
focused at all on energy policy to drive down
energy costs. Energy costs are going to
continue to rise.”
Dow’s cost position does allow it to serve the
domestic market, but it is not in Europe to
export, Fitterling said. “Europe doesn’t have
the cost position any more to export.”
Dow will continue find ways to improve its cost
position at its European operations, he said.
But the company’s growth investments will be in
low-cost regions and in high value projects.
Global News + ICIS Chemical Business (ICB)
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Ethylene16-May-2024
SAO PAULO (ICIS)–Six years after the disaster
at Braskem’s rock salt mines in Brazil’s state
of Alagoas, the polymers major could continue
facing legal cases which could dent its cash
flow, according to analysts at US credit rating
agency Fitch.
Fitch downgraded the company’s credit rating in
December 2023 and placed it on what it called
‘Negative Watch’.
This week, following a very damning report
issued by Brazil’s Senate following a public
enquiry into the Alagoas disaster, the agency’s
analysts said that Braskem is likely to face
increase costs related to environmental,
social, and governance (ESG) challenges.
That would add, they said, to the expected poor
spreads for global petrochemicals in general,
which would be here to stay for at least the
remaining of 2024.
“Increased ESG risks and potential new claims
associated with the geological event in Alagoas
could worsen the company’s credit profile,”
said Marcelo Pappiani, a Fitch analyst covering
Braskem.
Fitch said Braskem has since 2019 disbursed
approximately Brazilian reais (R) 10.0 billion
($2.0 billion) on relocations, compensation,
the closure and monitoring of salt cavities,
and environment and other technical matters.
A spokesperson for Braskem said to ICIS on
Thursday the company would continue
collaborating with the authorities in their
enquiries about the Alagoas disaster but did
not comment on the specifics of the Senate’s
report.
“Braskem reiterates it was always willing to
collaborate with the public enquiry, promptly
collaborating providing all the information and
measures requested,” said the spokesperson.
“The company remains available to collaborate
with the authorities, as it has always been.”
NEVER-ENDING
DISASTERLate on Wednesday, the
Brazilian Senate published the final report
after its public enquiry into the Alagoas
disaster in 2018 which caused thousands to be
displaced from their homes in Maceio, the
capital’s state.
The report is to be voted by the Senate’s
plenary on 22 May.
Braskem’s rock salt mining caused the
displacement of the subsoil; the company used
the rock salt for production of caustic soda
and polyvinyl chloride (PVC), among others.
The 765-page report was highly damning for
Braskem, with vice president Marcelo Cerqueira
and other seven people accused of environmental
crimes as the company’s activities resulted in
the geological event.
Nearly 15,000 households had to be relocated,
and some of Maceio’s neighborhoods evacuated in
2018 remain ghost areas to this day.
The report was not only damning for Braskem but
also for Brazil’s authorities, especially the
National Mining Agency (ANM) as well as the
Ministry of Mines and Energy for failing to
implement the controls which are required.
THE GROUND KEEPS
MOVINGTo make matters worse for
Braskem, just last December there were further
movements in the subsoil which made residents
and authorities fear
another geological event, a prospect which
in the end did not materialize.
Those recent events, as well as this week’s
report, keep bringing back the Alagoas disaster
into the spotlight and seem set to keep
haunting the company for several quarters to
come, said the Fitch analysts.
“We believe the environmental and ecological
impacts of the salt mine collapse in the
context of sinking land in Alagoas could damage
Braskem’s financial position … Uncertainty
about current and upcoming lawsuits is high,
with negative outcomes potentially pressuring
cash flow and adversely impacting the company’s
financial results,” they said.
“The company could also face social impacts
from new claims and reparation costs to victims
and neighboring communities, in addition to the
14,446 families relocated to other areas.”
The Alagoas liabilities are casting such a long
shadow for Braskem that Abu Dhabi’s energy
major ADNOC, who seemed the strongest candidate
to acquire Novonor’s controlling stake in
Braskem, walked away earlier in
May, reportedly on the back of those
liabilities.
“We believe the prospect of Novonor selling its
stake in Braskem hit an impasse after the
December 2023 salt mine collapse, with ongoing
uncertainty regarding the repercussions of the
geological event,” said Fitch.
Neither the Senate report nor Fitch’s credit
rating warning seemed to dent investors’
interest on Braskem’s stock on Thursday though,
with shares trading nearly 1.45% higher on the
Sao Paulo stock exchange Bovespa by midday
local time.
Following ADNOC’s announcement it was throwing
the towel on Braskem, Braskem’s shares opened
the next trading session down more than 14%.
Gas16-May-2024
LONDON (ICIS)–ICIS hydrogen editor Jake Stones
meets with Hydrogen Europe CEO Jorgo
Chatzimarkakis to discuss some of the largest
developments to befall the EU hydrogen market
this year, namely the progression of the Net
Zero Industry Act, the new terms and conditions
for the second EU Hydrogen Bank auction, and
lastly the results of the pilot auction were
published to the market, indicating the first
projects to be granted a fixed subsidy via the
bank’s mechanism.
Over the episode Chatzimarkakis weighs in on
key considerations around these topics, such as
what the budget might be for the second
auction, how the criteria for the new auction
has changed compared to the first, and the
importance of the pilot auction’s results are
for the wider European hydrogen economy.
Propylene16-May-2024
SINGAPORE (ICIS)–The ample supply of propylene
in Asia and new polypropylene (PP) capacities
in China are expected to weigh on discussions
in southeast Asia over the coming months.
Asia C3 to lengthen after PDH restarts in
China, SE Asia volumes
China PP exports to weigh on SE Asia
discussions
Asia PP prices to come under pressure in
June-July
In this podcast, ICIS editors Julia Tan, Jackie
Wong and Lucy Shuai discuss current trends in
Asia’s propylene and PP markets, and what we
can expect going forward.
Visit us at Booth 13 at the Grand Ballroom
Foyer at the Grand InterContinental Seoul
Parnas!
Book a meeting with ICIS
here.
Crude Oil16-May-2024
SINGAPORE (ICIS)–Japan’s economy shrank by
2.0% on an annualized basis in January-March
2024 as domestic consumption and capital
spending weakened.
Weak yen fuels inflation, hurts consumer
spending
Core inflation slows but remains above 2%
target
Japan central bank faces tough challenge of
balancing growth and inflation
The first-quarter reading reverses the 0.4%
year-on-year growth in October-December 2023.
On a quarter-on-quarter basis, Q1 GDP posted a
0.5% contraction, according to preliminary data
released by Japan’s Cabinet Office on Thursday.
Private consumption, which makes up more than
half of Japan’s economic growth, fell by 0.7%
in the first three months of 2024, marking the
fourth straight quarter of decline and
extending the 0.4% decline in the last three
months of last year.
Capital spending – a crucial component of
private demand – decreased by 0.8% in the first
quarter, reversing the 1.8% expansion in the
fourth quarter.
Net exports of goods and services fell by 0.3%
in the first quarter.
The sharp decline of the Japanese yen (Y) to
levels not seen since 1990 has raised concerns
about increasing living costs and depressed
consumer spending.
At 04:12 GMT, the yen was trading at around
Y154 to the US dollar, strengthening from the
recent record low of around Y159 in late April.
In March to April, the yen had continued to
weaken despite the Bank of Japan’s (BoJ)
decision to hike interest rates in March for
the first time in 17 years, ending eight years
of negative rates.
The central bank is expected to proceed
cautiously in tightening monetary policy due to
the fragile state of the economy.
Japan’s nationwide core consumer price index
(CPI), which excludes fresh food items but
includes energy items, rose by 2.6% year on
year, data from the BoJ showed on 14 May.
The number represented a deceleration from
February’s 2.8% print but remained well above
the central bank’s 2% target.
“The year-on-year rate of increase in the CPI
is likely to be in the range of 2.5-3.0% for
fiscal 2024 [year ending 31 March 2025] and
then be at around 2% for fiscal 2025 and 2026,”
Japan’s Ministry of Finance (MoF) said in a
report on 15 May.
Meanwhile, underlying consumer inflation, which
excludes temporary fluctuations, is expected to
increase gradually and then be at a level that
is generally consistent with the price
stability target of 2%, it said.
“If the BOJ also expects GDP to recover in
2Q24, then the BoJ’s focus should remain on
high inflation and the JPY [Japanese yen] as a
major contributor to high inflation,” Dutch
banking and financial information services
provider ING said in a note on Thursday.
“April inflation is expected to ease quite
sharply due to a high base last year, but
pipeline inflation indicates upward
inflationary pressures building for the coming
months,” it said.
“We believe that the BoJ is ready to act in
July, as it confirms that strong wage growth is
boosting household spending,” it added.
Japan’s economy is likely to keep growing at a
pace above its potential growth rate, with
overseas economies growing moderately, as well
as financial conditions being accommodative,
the finance ministry said in its 15 May report.
Focus article by Nurluqman
Suratman
Isocyanates15-May-2024
HOUSTON (ICIS)–US builder confidence in the
market for newly built single-family homes fell
sharply in May as higher mortgage rates
“hammer” confidence, the National Association
of Home Builders said on Wednesday.
Mortgage rates averaged above 7% for the past
four weeks as a lack of progress on reducing
inflation pushed
long-term interest rates higher, NAHB said.
The NAHB/Wells Fargo Housing Market Index (HMI)
fell by six points from April to 45 in May –
its first decline since November 2023.
HMI readings below the 50 neutral mark indicate
that builders are pessimistic, readings above
50 that they are optimistic.
The high mortgage rates have pushed many
potential buyers back to the sidelines and the
market has slowed, NAHB said.
Another worry are new code rules that require
the US Department of Housing and Urban
Development and the US Department of
Agriculture to insure mortgages for new
single-family homes only if they are built to
the 2021
International Energy Conservation Code.
This would further increase the cost of
construction in a market “that sorely needs
more inventory for first-time and
first-generation buyers”, said NAHB chairman
Carl Harris.
NAHB chief economist Robert Dietz added: “The
last leg in the inflation fight is to reduce
shelter inflation, and this can only occur if
builders are able to construct more attainable,
affordable housing.”
The housing market is a key consumer of
chemicals, driving demand for a wide variety of
chemicals, resins and derivative products, such
as plastic pipe, insulation, paints and
coatings, adhesives and synthetic fibers, among
many others.
Please also visit the ICIS
construction topic page and
Macroeconomics: Impact on Chemicals.
Thumbnail photo source: NAHB
Acrylic acid15-May-2024
SINGAPORE (ICIS)–Asian oxo-alcohols buyers
maintained a wait and watch approach, amid the
possibility of added plant capacities in China
weighing on market sentiment.
The acrylonitrile (ACN) market continues to see
limited spot demand in the northeast Asia
market. Even as downstream
acrylonitrile-butadiene-styrene (ABS) has seen
higher production rates recently, ACN producers
were unlikely to increase operating rates.
For the acrylates downstream, butyl-A market in
Asia continues to take direction from Chinese
domestic prices. With India’s Bureau of Indian
Standards (BIS) requirements preventing Chinese
origin imports, cargoes from China were flowing
into SE Asia and NE Asia.
In this podcast, ICIS editors Julia Tan and
Corey Chew discuss trends in the Asia propylene
and derivatives markets.
Visit ICIS during APIC ’24 on 30-31 May at
Booth 13 in the Grand Ballroom Foyer in the
Grand InterContinental Seoul Parnas.
Book a meeting with ICIS
here.
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