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Speciality Chemicals23-Apr-2024
BARCELONA (ICIS)–Recent cracker closure
announcements in Europe and Japan may be the
first of many as the industry grapples with
chronic overcapacity driven by China and the
Middle East.
Three cracker closure announcements in
Europe, Japan since late March
1.4 million tonnes of capacity affected,
but up to 20 million may be needed
Europe, Japan, South Korea suffer from
higher costs
Negative chemicals demand growth possible
in China
China still dominates global chemical
markets
Opportunity to pivot sites to low carbon,
local markets
In this Think Tank podcast, Will
Beacham interviews ICIS Insight
Editor Nigel Davis, 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.
Speciality Chemicals23-Apr-2024
LONDON (ICIS)–Eurozone private sector activity
continued to thaw in April, moving further into
growth territory as a resurgent service sector
offset a manufacturing industry sinking deeper
into contraction.
North-south divide eases as Germany, France
condition improve
Manufacturing sector weakens in eurozone,
UK
Input cost inflation likely to pressure
European Central Bank
The eurozone composite purchasing managers’
index (PMI) for the month firmed to 51.4, a
substantial increase from 50.3 in March and the
highest level in nearly a year, as the bloc
continued to gradually lift out of a protracted
downturn. A PMI score of above 50.0 signifies
growth.
The north-south divide that has characterised
recent months, with Mediterranean nations
firming while Germany and France remained mired
in contraction, eased during the month, with
more-broad-based momentum among key economies.
Germany returned to growth during the month,
while France came close to stabilising,
according to PMI data provider S&P Global.
Momentum also continued to build for the UK
economy, which hit an 11-month high of 54.0,
despite the manufacturing sector slipping back
into recessionary territory at 49.1, with
momentum also sinking for producers in the
eurozone.
At 45.6, the eurozone manufacturing sector PMI
reading represented a four-month low and the
13th consecutive month of contraction, although
the industry outlook was buoyed by signals of
firmer demand driven by the global inventory
cycle.
Price pressures intensified slightly during the
month as average input costs across the goods
and services sector saw the fastest combined
increase over the past year after cooling in
March. Despite manufacturing sector input
pricing remaining on contraction footing, the
decline was the smallest in 14 months.
Higher cost and sales price inflation is likely
to be noted by the European Central Bank’s
monetary policy committee, according to Cyrus
de la Rubia, chief economist at Hamburg
Commercial Bank, which helps to assemble the
eurozone PMI dat.
Odds are still strong for the first interest
rate cuts to fall in June, he added, but
the price increases are likely to present a
stronger challenge to the decision, and
potentially slow the cadence of additional
reductions.
“The PMI figures are poised to test the ECB’s
willingness to cut interest rates in June.
Accelerated increases in input costs, likely
driven not only by higher oil prices but also,
more concerningly, by higher wages, are a cause
for scrutiny,” he said.
“Concurrently, service sector companies have
raised their prices at a faster rate than in
March, fuelling expectations that services
inflation will persist. Despite these factors,
we expect the ECB to cut rates in June.
However, we… expect a more cautious approach,”
he added.
Consultancy Oxford Economics also expects the
first rate cut to come in June despite the
growing evidence of stronger upward pressure on
inflation.
“The increase in output prices remains above
its long-term average, driven by the services
sector, but we do not think sticky services
prices will prevent the ECB from cutting rates
in June,” said Oxford senior economist Leo
Barincou.
Despite the ongoing disruption in the Red Sea,
supply chains continued to tighten, with
manufacturing supplier delivery times falling
for the third consecutive month as a result of
fewer shipping delays. A steep reduction in
input purchases by eurozone manufacturers also
eased pressure on logistics.
Early second-quarter conditions point so far to
a 0.3% expansion in eurozone GDP and a 0.4%
uptick in for the UK compared to the first
three months of the year, according to the
data.
Focus article by Tom Brown.
Thumbnail photo: A statue of a bull outside
the Amsterdam Stock Exchange, Netherlands
(Source: Hollandse Hoogte/Shutterstock)
Ammonia23-Apr-2024
LONDON (ICIS)–The urea market is expected to
remain subdued as Chinese exports resume over
the next few months and given Iranian producers
eagerness to move product before any fresh
sanctions are imposed.
China exports to resume but challenges
remain
Iran offers over 200,000 tonnes for May
India’s return unlikely before June
In this podcast, ICIS senior editors Sylvia
Traganida and Deepika Thapliyal discuss the
global supply and demand situation for urea and
ammonia, and the future developments for both
products.
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Crude Oil23-Apr-2024
SINGAPORE (ICIS)–Saudi Aramco continues its
quest for downstream petrochemical investments
in the world’s second-biggest economy, adding
Hengli Petrochemical in a list of target companies in
which the global energy giant intends to
acquire a strategic stake.
The acquisitions in China are in line with
Aramco’s Vision 2030 of expanding its
downstream business.
Aramco is currently in discussion to acquire a
10% stake in Hengli Petrochemical as the
companies signed a memorandum of understanding
(MOU) on 22 April covering supply of crude and
raw material, product sales and technology
licensing.
Hengli Petrochemical owns and operates a
refinery and petrochemical complex at Liaoning
province with 400,000 bbl/day of refining and
1.5 million tonnes/year ethylene capacities.
The Chinese producer also operates several
chemical plants in Jiangsu and Guangdong
provinces.
The deal “aligns with Aramco’s strategy to
expand its downstream presence in key
high-value markets, advance its
liquids-to-chemicals program, and secure
long-term crude oil supply agreements”, Aramco
said in a statement on 22 April.
Since 2022, Aramco has embarked on major
investments in China, which involved taking
strategic stakes in companies with major
petrochemical projects under way.
Chinese companies
Planned investments
Date of announcement
Remarks
Hengli Petrochemical
10% stake
22 Apr 2024
Rongsheng Petrochemical
Cross acquisition
talks – Rongsheng to acquire 50%
stake in Saudi Aramco Jubail Refinery Co
(SASREF); Aramco to take a maximum 50%
stake in Rongsheng’s Ningbo Zhongjin
Petrochemical
2 Jan 2024
To jointly develop Zhongjin’s
upgrading/expansion and a new advanced
materials project in Zhoushan
Shandong Yulong Petrochemical
10% stake
11 Oct 2023
Shandong Energy is currently building a
refining and petrochemical complex in
Yantai called Shandong Yulong
Petrochemical – a joint venture project
with Chinese conglomerate Nanshan Group
Shenghong
Petrochemical
10% stake
27 Sept 2023
Rongsheng Petrochemical
10% stake
27 Mar 2023
Deal completed in
Jul ’23
Huajin Aramco Petrochemical Co (HAPCO)
a $12 billion joint venture, Aramco holds
30%
11 Mar 2022, final investment
decision made
Project broke ground in Mar ’23; to come
on stream in 2026
Aramco CEO Amin Nasser in late March indicated
that the company intends to continue making
further investments in
China’s chemicals sector with local
partners, noting that the country has a
“vitally important” place in the company’s
global investment strategy.
The energy giant aims to increase its
liquids-to-chemicals throughput to 4 million
barrels per day by 2030, which will require a
wider footprint in China, the world’s biggest
chemical market, analysts said.
The investments will fuel further growth in the
Chinese economy, they added.
Focus article by Fanny Zhang
Thumbnail image: The Guoyuan Port Container
Terminal in Chongqing, China, on 29 February
2024. (Costfoto/NurPhoto/Shutterstock)
Ethylene23-Apr-2024
SINGAPORE (ICIS)–Aramco and China’s Hengli
Group have entered into discussions regarding
the potential acquisition of a 10% stake in
Hengli Petrochemical, the Chinese company said
on Tuesday.
Based on the memorandum of understanding (MoU)
signed on 22 April, the partners will also
cooperate on crude and raw material supply,
product sales as well as technology licensing,
it said.
The deal “aligns with Aramco’s strategy to
expand its downstream presence in key
high-value markets, advance its
liquids-to-chemicals program, and secure
long-term crude oil supply agreements”, Aramco
said in a separate statement.
Hengli Petrochemical owns and operates a
refinery and petrochemical complex at Liaoning
province with 400,000 bbl/day of refining and
1.5 million tonnes/year ethylene capacities.
The company also owns several chemical plants
in Jiangsu and Guangdong provinces.
Ammonia22-Apr-2024
HOUSTON (ICIS)–US corn plantings are now 12%
completed with soybeans at 8%, according to the
latest US Department of Agriculture (USDA)
weekly crop progress report.
While some areas continue to see wet weather,
the current pace of the corn crop is equal to
the 12% achieved in 2023 and ahead of the
five-year average of 10% completed.
Texas remains in the lead with 68% of its crop
finished, followed by North Carolina at 51%.
There is now 3% of the crop emerged, which is
ahead of the 2% rate of last year and the
five-year average of 2%.
Soybeans have reached 8% completed, with the
current progress equal to the 8% achieved in
2023 and above the five-year average of 4%.
The top state for plantings is Arkansas with
43% of their soybeans done, with Louisiana
close behind with 42% of its crop planted.
For the other key crops, the USDA said cotton
was now at 11% planted, with sorghum at 17% and
spring wheat up to 15% completed.
Titanium Dioxide22-Apr-2024
SAO PAULO (ICIS)–US titanium dioxide (TiO2)
and zircon producer Tronox’s shares were up
strongly on Monday after the company said its
earnings in the first quarter had come between
9-31% higher than the analysts’ consensus.
Tronox earnings before interest, taxes,
depreciation and amortization (EBITDA) stood at
$131 million in Q1. Analyst consensus expected
that figure to be between $100-120 million.
Tronox’s shares were up 5.87% in Monday
afternoon’s trading at the New York Stock
Exchange (NYSE), compared with the last close
on 19 April.
EBITDA posted strong growth compared with the
fourth quarter, although it fell year on year.
EBITDA is the preferred metric to measure a
company’s financial health as it strips out
external factors out of the company’s control.
Sales rose in all metrics for titanium dioxide
(TiO2) and zircon, a mineral that increases
resistance on glass and metal. The company’s
main end market is the paints and coatings
sector, where TiO2 is the key feedstock.
In February, the company already gave a hint
its performance was proving better than
expected when it
raised operating rates for TiO2, with the
company confident at the time that pricing for
that material had bottomed out and should
start
improving after Q1.
These are Tronox’s key products – TiO2 sales
rose in Q1 by 8% year on year, and by 17%
quarter on quarter.
Zircon posted even better metrics, although its
weight within Tronox’s portfolio is much lower
than TiO2’s. In Q1, zircon sales rose by 22%
year on year, and by 54% quarter on quarter.
Tronox (in $/million)
Q1 2024
Q1 2023
Change
Q4 2023
Change Q4 2023 vs Q1
2024
Revenue
774
708
9%
686
13%
EBITDA
131
146
-10%
94
39%
EBITDA margin
16.9%
20.6%
-3.70%
13.7%
3.2%
Net income/loss
-9
25
N/A
-56
N/A
TIO2, ZIRCON AND
OUTLOOK“Costs continued to trend
favorably as a result of improved absorption
from higher production volumes and the absence
of non-repeating charges in prior quarters,”
said Tronox’s CEO, John D Romano.
The company added its priorities for the rest
of 2024 would be prioritizing investments which
“are critical to furthering our strategy” as
well as bolstering its liquidity on the back of
what it expects will be market recovery.
The Stamford, state of
Connecticut-headquartered producer added it
will also aim to resume debt payments as well
as “evaluate strategic high-growth”
opportunities for potential acquisitions but
fell short of disclosing more details.
STOCK JUMP EXPECTED
“Management attributed the guidance
raise [to Q1 financials] to demand outpacing
expectations for both TiO2 and zircon,” said
analysts at Alembic Chemical Advisors.
“Management also stated that in line with their
year-end earnings call guidance, their costs
continue to trend favorably as a result of
improved absorption from higher production
volume and the absence of non-repeating charges
in prior quarters.”
Analysts at Alembic Chemical did forecast
Monday’s sharp price increase, adding it would
return to more normal trading patterns after
the excitement subsided.
The chemical equity analysts at Alembic
recommended selling Tronox’s stock to cash in
gains while the rises on the positive Q1
preliminary results sentiment lasted.
Speciality Chemicals22-Apr-2024
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on
19 April.
NEWS
Brazil’s
Petrobras, China’s CNCEC mull petchems,
fertilizers joint projects
Petrobras and China’s chemicals major CNCEC
have signed a memorandum of understanding (MoU)
to explore petrochemicals and fertilizers joint
projects, the Brazilian state-owned energy
major said on Thursday.
INSIGHT: Argentina’s petchems hit
hardest by recession as country holds breath
under Milei
Argentina’s petrochemicals are taking a severe
hit amid the recession, with falls in demand
for some materials of up to 50%, but companies
and the country are holding firm under the new
President’s economic shock therapy.
Brazil’s
Petrobras re-enters fertilizers sector with
restart at ANSA plant
Petrobras is to restart its large-scale ANSA
fertilizers plant in Araucaria, state of
Parana, which has been idle since 2020, the
Brazilian state-owned energy major said late on
Wednesday.
Pemex to remain ‘fiscal challenge’ for
Mexico’s new administration –
S&P
Beleaguered finances at Pemex, the Mexican
state-owned energy major, will require support
from the federal budget for years to come, the
analysts at S&P said this week.
Argentina’s lower
rates helping central bank shore up balance
sheet at savers’ expense –
economist
Argentina’s latest cut to interest rates had
more to do with shoring up the central bank’s
balance sheet, possible thanks to currency
controls implemented by the prior
Administration, than the actual control of
price rises, according to the director at
Buenos Aires-based Fundacion Capital.
Latin America’s
fiscal consolidation at risk of slippages as
plans postponed – IMF
Latin America’s countries high debt levels
require fiscal consolidation plans which in
some cases are being postponed, increasing
risks for the long-term financial stability of
the region, the Director of the Western
Hemisphere Department at the IMF said
on Friday.
Chile inflation
falls to 3.7% in March
Chile’s annual inflation rate fell in March to
3.7%, down from 4.5% in February,
according to the country’s statistics office
INE.
Brazil’s
automotive output barely up in Q1, sales rise
9%
Brazil’s petrochemicals-intensive automotive
output rose by 0.4% in the first quarter, year
on year, to just below 550,000 units, the
country’s trade group Anfavea said on Monday.
LatAm PE domestic price lower in Chile
on cheaper US export offers
Domestic polyethylene (PE) prices were assessed
lower in Chile because of cheaper US export
offers. In other Latin American (LatAm)
countries, prices remained steady.
Latin America’s February lube demand
holds steady
Lube demand in Latin America was relatively
steady in February at a time of year when
consumption typically falls in other markets
like the US and Europe. The steady consumption
coincided with lower base oils output in the
region in February.
LatAm PP international prices stable to
up on higher freights from
Asia
International polypropylene (PP) prices were
assessed as stable to higher because of
increased freight rates from Asia to the
region. However, Asian offers remain
competitive compared to other origins like the
Middle East and the US.
Plant status: Dow Argentina shuts HDPE
and LDPE plants on technical issues –
sources
US chemicals major Dow’s subsidiary in
Argentina shut on 16 April a high density
polyethylene (HDPE) plant due to a mechanical
pump failure
and a low density polyethylene (LDPE) plant
due to technical failure, several sources said.
Weather conditions starts to slightly
shift PET demand in Latin
America
Polyethylene terephthalate (PET) prices
remained stable in Brazil, with a slight
softening in consumption coinciding with
stabilized temperatures. However, demand
continues to exceed expectations when compared
with the corresponding period last year.
Weather conditions starts to slightly
shift PET demand in Latin
America
Polyethylene terephthalate (PET) prices
remained stable in Brazil, with a slight
softening in consumption coinciding with
stabilized temperatures. However, demand
continues to exceed expectations when compared
with the corresponding period last year.
Speciality Chemicals22-Apr-2024
HOUSTON (ICIS)–The Panama Canal Authority
(PCA) will increase the number of slots
available for Panamax vessels to transit the
waterway beginning 16 May and will add another
slot for Neopanamax vessels on 1 June based on
the present and projected water levels in Gatun
Lake.
The PCA began limiting the number of transits
in August 2023 because of low water levels in
Gatun Lake brought on by a severe drought that
made 2023 the second driest year on record for
the Panama Canal watershed catchment area.
It was the first time in its history that
transits were limited.
The PCA opened two additional slots beginning
18 March, and a third on 25 March, bringing the
total to 27/day, after solid rainfall in the
region recently, but transits still remain well
below 36 under normal conditions.
The following table shows the number of
available slots for booking dates from 7-15
May.
The following table shows the number of
available slots for booking dates from 16-31
May.
The following table shows the number of
available slots for booking dates from 1 June –
14 July.
There will be some temporary reductions of
booking slots during scheduled maintenance
between 7-15 May, the PCA said.
The number of ships transiting the Panama Canal
daily – using a seven-day moving average – fell
to 24 as of 17 April from 27 on 8 April, and
compared with 38 on the same date a year ago,
according to the most recent update at IMF
PortWatch.
Wait times for non-booked northbound vessels
ticked higher to 1.8 days, and surged to 4.6
days for southbound vessels on 22 April,
according to the PCA vessel tracker.
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