RIO DE JANEIRO (ICIS)–Huntsman’s assets in Europe are not energy intensive and have been spared from the energy crisis, but more broadly, the 27-country EU is still lacking a comprehensive policy to address the issue, the CEO at US chemicals major Huntsman said on Friday. Peter Huntsman, one of the chemical industry’s most outspoken CEOs, said the company is not planning to divest any asset in Europe but said the region should stop its “nonsense” about reindustrialization and implement policies that create actual economic growth. The CEO added he is feeling “bullish” about the coming quarters regarding demand, arguing the chemical industry had gone to “hell” and was just coming back from the steep low prices of 2023. In North America, Huntsman said the construction industry should post a marked recovery in the coming quarters after two years in the doldrums because of high interest rates because, he argued, even with current interest rates, the industry will adapt. Huntsman’s sales and earnings in the first quarter fell again, year on year, as higher sales volumes could not offset low selling prices; the company said, however, that a notable improvement in sales volumes quarter on quarter should be a signal that the recovery is underway. Among others, Huntsman produces polyurethanes (PUs), which are widely used in the construction and automotive sectors. EUROPE NONSENSEPeter Huntsman on Friday first referred to the EU’s need to stop its “nonsense” about reindustrialisation, without elaborating further, but he was more measured when asked about the company’s assets in that region. He nonetheless made clear that he thinks European governments have yet to formulate, two years into the region’s biggest energy crisis in decades, appropriate policies to address the issue. “What I am most concerned about Europe is high energy costs. Most of our businesses there are not energy intensive assets, so they are competitive; in fact we have some strong businesses there, and our margins in Advanced Materials [the division] are stronger there than in other parts of the world,” said Huntsman, speaking to reporters and chemical equity analysts on Friday. “There are businesses in Europe in which you will do OK, such as aerospace, lightweighting. But if you are energy intensive, if you produce fertilizers, glass, cement… you have some portfolio concerns there. Energy prices are too high, and this is not being addressed by governments, they still have to come up with realistic policies to address that.” Europe’s construction has also taken a hit from the crisis after interest rates shot up to bring down inflation, with projects put on hold and many building companies in financial distress. Huntsman’s CEO said he is not hoping for a strong recovery anymore in that sector in Europe, but simply for stability, which could come with governments taking more decisive action to prop up GDP growth. “If we look at the past two years… We are looking for stability: it is the volatility that concerns us the most. We need to see Europe stop its the nonsense policies around reindustrialization and get the economy growing once again,” he said. See Huntsman assets in Europe at bottom table. NORTH AMERICA CONSTRUCTIONPeter Huntsman was feeling more optimistic about North America’s construction sector, where even if high interest rates stay for longer, builders will adapt to the situation, easing the way towards a recovery. “US builders are doing two things: if interest rates were to stay where they are, they are going to adapt, perhaps building smaller units, and if rates do come down, that will open up demand quite a bit higher than it has been in the last couple of years. There are big gaps [in housing stock] which need to filled,” said Huntsman. “I am increasingly feeling better and better [about an improvement in demand]. In Q1 we saw a lot of inventory drawdown, now we are seeing a slow, steady recovery as we try to get back to average inventory levels. By and large inventory levels feel pretty thin in MDI [methylene diphenyl diisocyanate] and we look forward to moderate growth in coming quarters.” MDI is consumed mainly in PU foams, used in construction, refrigeration, packaging, and insulation. MDI is also used to make binders, elastomers, adhesives, sealants, coatings and fibers. Huntsman’s CFO, Philip Lister, also at the press conference, added that in a normal year the company’s growth in volumes from the first quarter to the second would be around 5%, as construction and other seasonal activities enter their annual peak. “This year, we are expecting more [than 5% growth],” said Lister. CHINA ELECTRIC VEHICLESHuntsman’s CEO said China’s electric vehicle (EV) sector continues to boom, although potential trade restrictions in the EU, after those imposed by the US, could start denting China’s dominance in that sector. However, the company also knows what China’s dominance in the sector, thanks to the country’s strong public support for it, can mean for western producers: in 2023, Huntsman suspended an EV battery materials project in the US because of aggressive imports from China. But the CEO added that even if China’s EV sector slowed down, the company would still be able to tap into other growing markets such as lightweighting or insulation, among others. “The automotive sector continues to be one of the strongest areas of growth in China. How long that continues [remains to be seen], but probably for some time still,” said Huntsman. “There is a broader question about [trade in the EV chain] with the US, which has been extremely limited, or Europe, where there is a lot of talk about limitations to China’s EVs.” He added that despite sluggish activity in the residential construction sector because of financial woes in building companies, exemplified by the demise of major company Evergrande, subsectors such as energy conservation, insulation, building materials and infrastructure are still doing well. “By and large we are seeing in China a slow but steady recovery in volumes and pricing. Elsewhere, I am getting more bullish. A year ago, we were in a nightmare, and we expected a recovery in the second half [of 2023] which didn’t happen and got worse and worse, until we found ourselves in hell,” said Huntsman. “At the beginning of this year we have seen good, reliable, consistent growth. What we need to see is that growth continues in the second half of this year.” HUNTSMAN ASSETS IN EUROPE Product Location Capacity (in tonnes) Aniline Wilton, UK 340,000 Epoxy resins Bergkamen, Germany 18,000 Monthey, Switzerland 120,000 Duxford, UK 10,000 Isocyanates Runcorn, UK 70,000 Maleic anhydride (MA) Moers, Germany 105,000 MDI Rozenburg, The Netherlands 470,000 Nitrobenzenes Wilton, UK 455,000 Polyalolef Grimsby, UK 15,000 Polyester polyols Huddersfield, UK 20,000 Rozenburg, The Netherlands 86,000 Unsaturated polyester resins (UPRs) Ternate, Italy 8,000 Source: ICIS Supply & Demand Database Front page picture: Huntsman’s headquarters in The Woodlands, Texas  Source: Huntsman Additional reporting by Miguel Rodriguez-Fernandez

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: NWE, southern Europe colorless flake prices rise Bale prices in NWE, Italy increase Growing sense that flake and pellet prices getting close to their ceiling

BARCELONA (ICIS)–A more optimistic outlook for the global economy and chemicals could be jeopardized by rising geopolitical instability. Current downturn reminiscent of 1970s’ oil shock Global GDP growth could start to recover from 2025 Geo-political risks are rising and could jeopardise economy Chemicals CEOs slightly more upbeat PMIs show China manufacturing now expanding But China challenged by debt, property bubble, youth unemployment, demographics Expect 2-3%/year China GDP growth in 2030s as population declines Europe economy is stabilising, driven by services US economy should see a soft landing In this Think Tank podcast, Will Beacham interviews ICIS chief economist Kevin Swift, ICIS Insight editor Nigel Davis 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.

LONDON (ICIS)–ICIS senior oil analyst David Jorbenaze discusses developments in the global crude markets, with geopolitical tensions and global economic trends continuing to shape the Q3 2024 market outlook, as the OPEC+ alliance weighs the next steps in its production accords. Highlights: -OPEC Supply Strategy Adjustments: Considering easing production cuts in Q3 2024 if oil prices stay above $90/bbl, in response to rising global demand and increased output from non-member countries. –Economic Recovery and Demand Growth: Supported by a rebounding Chinese economy and global economic growth, leading to higher expected oil consumption into 2025. -Geopolitical Risks and Market Volatility: Increased tensions, particularly between Israel and Iran, along with potential interest rate hikes by the Federal Reserve, contribute to heightened market uncertainty and price fluctuations.

TORONTO (ICIS)–Workers at freight rail carriers Canadian National (CN) and Canadian Pacific Kansas City (CPKC) have voted in favor of a strike. A first work stoppage could occur as early as 22 May, if no new collective agreements are reached by then, officials at labor union Teamsters Canada Rail Conference (TCRC) said in a televised announcement on 1 May. The rail carriers warned that a work stoppage would disrupt supply chains throughout North America and constrain trade between Canada and the US and Mexico. The two railroads account for the bulk of freight rail traffic in Canada. Canada-based chemical and fertilizer producers rely on rail to ship more than 70% of their products, with some exclusively using rail. In the run-up of strikes, producers have to make preparations. Longer strikes can force plant shutdowns and after a strike ends it can take weeks for normal operations to resume. For the first 17 weeks of 2024, ended 27 April, Canadian chemical railcar loadings were 233,074, up 3.1% from the same period in 2023, according to  the latest freight rail data released on 1 May. Chemical industry sources had warned about the possibility of a rail strike in Canada early last month. The country’s labor law requires a minimum of 72-hours notice prior to a strike or lockout. TCRC represents about 9,000 CN and CPKC engineers and conductors. The previous collective agreements expired on 31 December 2023. Thumbnail photo source: CN

LONDON (ICIS)–Eurozone industrial sector momentum sank further into contraction territory in April, to hit a four-month low as new orders declined by the sharpest rate seen in 2024. The eurozone manufacturing purchasing managers’ index for April slumped to 45.7 in April compared with 46.1 in March, a third month of consecutive declines, after jumping to 46.6 in January from 44.4 in December. Driven by still-bearish conditions in Germany, Austria, France and Italy which counterbalanced firmer growth in Greece and Spain, the figure represents the 22nd straight month of recession for the sector. A PMI score of above 50.0 signifies growth. On the plus side, factory output shrank at the slowest rate this year, delivery times shortened during the month and declines in manufacturer operating costs were the most modest seen in 2024. Released on Thursday by S&P Global, the data is in line with recent reports from the UK and the US, showing that manufacturing activity in both economies sank back into contraction territory last month. For the UK and US, March was the first month of tentative expansion in months, but since then demand in the US has softened and the Red Sea crisis has exacerbated declining output, new orders, employment and stocks of purchases in the UK. What is going to rescue the eurozone economy? Although it is a difficult question, one thing is clear: It’s not the manufacturing sector,” said Hamburg Commercial Bank chief economist Cyrus de la Rubia. “A plethora of evidence highlights the stark absence of demand, as evidenced by a rapid decline in new orders, unmatched in speed over the past four months and devoid of international support,” he added, noting that current conditions “portends a postponement of any semblance of recovery.” Thumbnail photo source: Photo source: Ying Tang/NurPhoto/Shutterstock

SINGAPORE (ICIS)–SABIC’s net income fell by 62% year on year to Saudi Riyal (SR) 250 million in the first quarter amid a drop in prices and sales volumes, the chemicals major said late on Wednesday. Losses from discontinued operations continue to weigh on results Overcapacity persists, pressuring the industry as market growth lags – CEO Spending range of $4 billion to $5 billion expected for 2024 in Saudi riyal (SR) billions Q1 2024 Q1 2023 % Change Sales 32.69 36.43 -10 Operational profit 1.21 1.76 -31 Net income 0.25 0.66 -62 “The decrease in net profit is attributed to lower revenues, lower results from associates and joint ventures in addition to losses from discontinued operations,” SABIC said in a filing on the Saudi bourse, Tadawul. SABIC swung to a net loss of Saudi riyal (SR) 2.77bn ($739m) in 2023, largely due to one-off losses related to a divestment. Q1 revenue fell following a 3% decline in average selling prices and a 7% reduction in sales quantities. “Global economic uncertainty remained high during the first quarter of 2024, caused by geopolitical and logistical issues. Adding to these challenges were high global inflation levels and strict lending policies,” SABIC CEO Abdulrahman Al-Fageeh said in a separate statement. Al-Fageeh in an investor call cautioned that overcapacity remains a challenge for the industry, creating a gap between supply and demand that is likely to persist throughout 2024. While positive demand signals emerged in Q1 2024, “the year outlook remains uncertain as the world still navigates through geopolitical situations with high inflation”, he said. SABIC plans to adopt a disciplined approach to capital expenditure, projecting a spending range of $4 billion to $5 billion for the year, compared with $3.5 billion to 3.8 billion last year. NEW PROJECTS SABIC has started construction of its $6.4bn manufacturing complex in China’s southern Fujian province. The project “would add a qualitative range of products to SABIC’s portfolio of chemicals and polymers and enhance the company’s presence in the Chinese market”, the company said. The project will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. SABIC also inaugurated the world’s first large-scale electrically heated steam olefins cracking furnace in Netherlands, which will pave the way for the company to fulfill its commitment to reach carbon neutrality by 2050. SABIC is 70%-owned by energy giant Saudi Aramco. ($1 = SR3.75) Thumbnail photo by SABIC Focus article by Nurluqman Suratman

HOUSTON (ICIS)–Global technology provider Topsoe has signed a contract with fertilizer producer CF Industries for support on a front-end engineering and design (FEED) study for a proposed low-carbon ammonia plant in Louisiana. Topsoe said it will license its SynCOR ammonia technology to CF which when combined with carbon capture and storage will enable the production of low-carbon ammonia. Currently CF is evaluating development of the plant project in collaboration with ammonia marketer Mitsui & Co. If the project advances, it is intended to create low-carbon ammonia for use as a decarbonized energy source. “We believe low-carbon ammonia helps unlock the door towards a net zero future. Our technology offers a cost-effective route to producing low carbon ammonia while also enabling carbon capture, at industrial proven scale,” said Henrik Rasmussen, Topsoe, managing director, the Americas. “CF and Topsoe have a long-standing relationship spanning many decades and we are proud to extend our collaboration with this award.”

HOUSTON (ICIS)–Economic activity in US manufacturing contracted in April after expanding in March, according to the Institute of Supply Management’s (ISM) latest purchasing managers’ index (PMI) survey released on Wednesday. March’s expansion followed 16 consecutive months of contraction. In April, the PMI fell from 50.3 points in March to 49.2 in April. PMIs below the neutral 50.0 mark indicate a contraction in manufacturing activity, readings above 50.0 indicate an expansion. In commenting on the April PMI survey, Kevin Swift, ICIS senior economist for global chemicals, noted that: Nine industries out of 18 expanded in April. The chemical industry gained for the fourth month after 16 months of decline. Overall manufacturing production fell back but continued to expand. Demand remains at the early stages of recovery and was softer last month. Customer inventories were deemed “too low” and employment contracted again during the month. New orders slipped back into contraction territory. Order backlogs contracted at a faster pace than in March. Inventories contracted at the same pace as in March. Both new orders and order backlogs, when combined with the reading on inventories, are good indicators of future activity, the economist said. PRICES He also noted that prices registered a 5.1-point gain to reach 60.9 in April – their strongest reading since June 2022. Prices are sensitive to changes in supply and demand and tend to provide a leading signal, he said. The rise in prices is “troubling” as it suggests that inflation readings in coming months may come in above expectations, he said. “The key is to watch the price of oil, which is a cost component for most manufactured goods, logistics, and many services,” he said. “If gains in disinflation prove stubborn, higher and longer interest rates are likely, and combined with an election year, provide an argument for no interest rate cuts,” he said. “Not good for housing and light vehicles, but good for savers,” he added. (source: ISM) Please also visit Macroeconomics: Impact on Chemicals. Thumbnail shows an automobile production line. Image by Martin Divisik/EPA-EFE/Shutterstock