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Acrylonitrile Butadiene Styrene14-May-2024
HOUSTON (ICIS)–The biggest plastics trade show
in the Western Hemisphere returned last week
after a six-year hiatus. Delegates returned to
consider an industry that is increasingly being
shaped by government policy which is favoring
sustainability and electric vehicles (EVs)
while restricting the use of some classes of
chemicals that are used in processing aids.
SUSTAINABLE CONTENTThe
regulatory outlook is influencing companies’
sustainability goals, and that is influencing
which plastics they buy and which ones are made
by producers.
Sustainability was the most prominent theme at
the show. The title of
the keynote address given by BASF Corp CEO
Mike Heinz was “Our Plastics Journey: The Road
to Shaping a Sustainable Future”.
Other examples of sustainability at the show
include the following:
Executives from SABIC and
NOVA Chemicals talked at lengths about
what their companies are doing to incorporate
more recycled content into their materials.
Renewable plastics producers CJ CheilJedang
and Danimer Scientific had booths showcasing
their grades of polyhydroxyalkanoate (PHA), a
renewable polyester.
GREENMANTRA showcased
its chemical recycling technology, which
breaks down plastics to produce waxes, which
are then then uses to make additives that
make it easier to incorporate waste plastic
into finished products.
If the exhibitor booths and keynote address
weren’t enough to drive home the prominence of
sustainability, delegates only had to consider
the recent round of talks for
the UN plastic waste treaty. It was held
just days before NPE.
While the plastics industry is advocating curbs
on pollution, several groups at the talks were
pushing for curbs on production. US lawmakers
have repeatedly introduced bills that would
impose moratoria on new plants.
A small number of US states
are adopting mandates that require minimum
amounts of recycled content. A few states are
also adopting policies calling for extended
producer responsibility (EPR).
The outlook of regulations is causing consumer
goods producers and other plastic consumers to
start seeking out sustainable materials now, so
they have time to rearrange their supply chains
and so prepare for the anticipated regulations.
POLICIES PROMOTING EVS,
LIGHTWEIGHTINGGovernment support
should rekindle sales of EV and pull them
out of what could be a temporary lull,
according to BASF. The world will need more EVs
if it wants to achieve its carbon-cutting
goals.
In the US, the federal government and
individual states are adopting and proposing
policies that will promote EV adoption.
The Environmental Protection Agency (EPA)
introduced a new tailpipe rule that will
require the US light vehicle fleet to emit
progressively smaller amounts of carbon dioxide
(CO2).
The EPA is
expected to decide if California can
adopt its Advanced Clean Car II (ACC II),
which would phase out the sale of ICE-based
vehicles by 2035. If the EPA grants
California’s request, that would trigger
similar programs in several other states.
The US Department of Transportation (DOT)
is
proposing stricter efficiency
standards under its Corporate
Average Fuel Economy (CAFE) program.
EVs have material challenges that are
different from automobiles powered by internal
combustion engines (ICEs), and these are
increasing demand for new grades of plastics.
Some plastics will need to tolerate higher
voltage environments, while others will need
good thermal management properties.
BASF and other companies at NPE showcased how
several of their materials were meeting these
challenges.
At the same time, auto companies will want
materials that will lighten their vehicles so
they can travel farther on a battery charge.
ICE automakers also want to lighten their
vehicles, in part to comply with stricter
emission requirements.
Longer term, Dow highlighted
the revolutionary ramifications that
autonomous vehicles will have on the plastic
industry.
Such vehicles are driven almost entirely by
machines, which should greatly reduce crashes
and accidents. Dow said automakers could
replace nearly all steel and aluminum paneling
used in automobiles with plastic alternatives.
SUBSTANCES OF CONCERNDow
and Clariant highlighted the ramifications of
substances of concern, so called because
regulators are concerned about their effects on
safety.
The latest such substance include per- and poly
fluorinated alkyl substances (PFAS), which are
used in many polymer processing aids (PPAs).
Clariant has recently introduced a
hydrocarbon-based processing aid.
Longer term are the possible ramifications of
the prioritization process that the EPA
has started on five chemicals. The
regulator would like to start the
prioritization process on five additional
chemicals each year.
The prioritization process is the first step in
determining whether a chemical poses an
unreasonable risk. If the EPA makes such a
finding, then it will proceed with the risk
management phase, in which it will propose ways
to manage the unreasonable risks.
If the chemicals are used in plastics, then any
subsequent restrictions could cause companies
to find alternative materials.
EXCESS PLASTICS
CAPACITYExcess plastic capacity
will likely persist even as destocking ends and
demand recovers. NOVA Chemicals expects future
expansion
will be on pause until later in the decade.
Lost cost regions like North America should
suffer less than higher cost regions like
Europe. SABIC recently started up its first
ethylene and PE production in the US through
its joint venture with ExxonMobil, while
announcing plans to shut down a cracker in
Europe. The company did not rule out further
capacity rationalizations
Produced by Plastics Industry Association
(PLASTICS), NPE: The Plastics Show took place
6-10 May in Orlando, Florida.
Insight by Al Greenwood
Thumbnail shows cups made out of plastic.
Image by Shutterstock.
Speciality Chemicals14-May-2024
BARCELONA (ICIS)–The closure of chemical
plants in Europe and elsewhere could remove
essential raw material supplies, threatening
the future of downstream industrial value
chains.
Global oversupply, driven by China,
forecast to reach over 200 million tonnes/year
by 2028
Interconnected value chains threatened if
important raw materials cease production
Globally 20 million tonnes of ethylene
capacity may need to shut down to keep
operating rates healthy
In Europe 5.6 million tonnes/year of
polypropylene (PP) capacity may need to close
Integrated chemicals sites under threat if
parts shut down
Industry associations could help plan to
maintain critical raw materials supplies
Anti-dumping measures could protect exposed
markets
China polyvinyl chloride (PVC) overcapacity
may increase exports globally
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.
Crude Oil14-May-2024
LONDON (ICIS)–Increases in crude oil supplies
from outside the OPEC+ bloc of countries is
expected to decline slightly year on year in
2025, with the US and Canada expected to remain
the backbone of OECD production increases and
Latin America driving the rest of the world,
according to OPEC.
The group projects that crude supply growth
from countries that are not signed up to the
declaration of cooperation (DoC)– encompassing
OPEC member states and ally nations that have
agreed to coordinated production cuts – will
stand at 1.1 million barrels/day next year.
Representing a modest decline from the 1.2
million barrel/day production growth OPEC
projects for non-DoC nations this year, the
2025 increase is expected to drive total output
from the region to 54.1 million barrels/day.
The US is expected to drive a substantial
proportion of the total production growth
expected from non-DoC nations, representing
nearly half of the total projected growth at
0.5 million barrels/day, while Canada is
expected to increase output by an average of
0.2 million barrels/day.
Latin America is expected to be the key source
of non-OECD growth excluding OPEC+ countries,
with output expected to grow 0.3 million
barrels/day next year on average, a slight
decline from the 0.4 million barrels/day
projected for this year.
Interest rates, inflation, geopolitics and
reduced investment in exploration and
production by oil majors as players seek to
clip costs are all serving to cloud the picture
on future demand and output, OPEC added.
“The anticipated trajectory and pace of
inflation’s decline, particularly within the
services sector, are poised to influence crude
oil production costs going forward,” OPEC said
in its monthly oil report.
“The potential influence of the present limited
investment commitment in upstream E&P
projected for 2024 and 2025 on production
levels remains uncertain amid an ongoing drive
for efficiency and enhanced productivity
throughout the industry,” the cartel added.
The organization left its 2024 non-DoC oil
supply, global demand and GDP forecasts
unchanged from its April report, at 1.2 million
barrels/day, 2.2 million barrels/day and 2.8%
respectively.
Thumbnail photo: An oil well in Jebel
Dukhan, Bahrain. Source: Jakub
Porzycki/NurPhoto/Shutterstock
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Crude Oil14-May-2024
LONDON (ICIS)–German economic sentiment
improved further in May from the previous month
following stronger-than-expected growth in the
first quarter, research institute ZEW said on
Tuesday.
Its sentiment indicator increased by 4.2 points
from April to 47.1, the highest level since
March 2022.
Source: ZEW
The Mannheim-based group’s assessment of the
current economic situation in Germany was also
higher, by 6.9 points to -72.3.
Source: ZEW
In the wider eurozone, ZEW’s economic sentiment
indicator and current assessment were also up
from April.
“The confidence increases. Following the
stronger-than-expected growth of the German
economy in the first quarter of 2024, both the
assessment of the current situation and
economic expectations have become more
favourable,” ZEW President Achim Wambach said.
Signs of an economic recovery are growing,
bolstered by better assessments of the overall
eurozone and of China as a key export market.
“The increased optimism is reflected in
particular in the sharp rise in expectations
for domestic consumption, followed by the
construction and machinery sectors,” Wambach
added.
Petrochemicals13-May-2024
NEW YORK (ICIS)–Chemicals distributor Univar
Solutions is seeing relatively steady demand
this year with greater strength on the
specialties side versus industrials. Meanwhile,
the North America reshoring trend is set to
drive demand in later years as new
manufacturing plants are built, its CEO said.
“We had a good Q1. We saw modest growth in our
industrial business and better growth in our
ingredients and specialties business. Our
results on [the latter] side would have stood
out very favorably against our public peers in
that space,” said David Jukes, CEO of Univar
Solutions, in an interview with ICIS.
Looking ahead, while a number of chemical
producers expect a stronger demand pick-up in
H2, there is little evidence to point to that
at the moment, he pointed out.
“Whether there will be a [meaningful] recovery
in H2, I don’t see what that’s based on, other
than hope. Hope is not a strategy and so we’re
managing our business very carefully,” said
Jukes.
“We have grounds for optimism that we’re going
to see some growth, irrespective of what the
market does. Whether the market will have a H2
recovery, I have absolutely no idea. I think
that’s based on, ‘It’s got to get better some
day’. If it does, that’s great but I’m not
banking on that. We think our future is very
much in our own hands,” he added.
Univar has improved its reliable delivery
performance and customer NPS (net promoter
scores) to record levels, with its digital
channels helping to keep customer business
“stickier”, as well as attract new customers,
the CEO said.
Demand for durables continues to lag, and there
is no surge of restocking yet.
“Consumers don’t think the economy is going
very well… That’s [US President Joe] Biden’s
problem right now. No matter how much you say
it, consumers aren’t seeing it. Airline tickets
and hotel rooms may be expensive, but
refrigerators and cars are still on discount,”
said Jukes.
“We’re through all the destocking of last year
but you’re not seeing wholesale restocking.
You’re seeing people buying for what they need
today and what they need for tomorrow [rather
than longer term],” he added.
Univar’s fast and reliable service model can
help customers stock up when they need it, but
one consequence is that it does not have solid
medium-term visibility since customers are not
ordering for six months from now, he pointed
out.
“We’re seeing steady demand. People are not
expecting prices to fall and not expecting them
to rise, and are buying things as they need
them. If something fundamental changes in
demand patterns, it would be nice, but we don’t
bank on that,” said Jukes.
HEIGHTENED COMPETITION LEADS TO
INNOVATIONA more competitive
market in chemicals is leading to greater
demand for innovation when it comes to
formulations, the CEO said.
“When markets get highly competitive as they
are now, the specialty players look for ways to
differentiate their products. Our formulation
labs and kitchens, and our applications
development people are really busy being
innovative,” said Jukes.
“People will want to change a formulation, and
create something different as a way of getting
competitive advantage, particularly as you
think about having more sustainable products in
those portfolios. We’re seeing a lot of
activity and growth in this area,” he added,
pointing to more innovation taking place in the
specialties and ingredients area.
RESHORING/NEARSHORINGMeanwhile,
the reshoring/nearshoring trend is pointed to
boost demand for chemicals in North America in
the coming years, with some impact already
kicking in, he said.
“This is happening, and macroeconomics and
global events are feeding into that, whether
it’s Red Sea disruptions, worsening relations
with China or [turmoil] in the Middle East.
We’re having them all at once at the moment, so
there is a heightened trend to that reshoring
and nearshoring,” said Jukes.
“Some of that we won’t see the full impact of,
for a couple of years because it takes time to
build the infrastructure. But certainly for our
North America business, we are seeing good
signs, and that will only pick up over the
coming years,” he added.
DOMESTIC SOURCING AND
TARIFFSFor many years, Univar
has deliberately sourced the vast majority of
its products domestically. Thus, even being a
global distributor, the rising trend of
protectionism through tariffs is not a major
concern.
“It’s been a deliberate strategy for us for a
number of years… What it does create are some
opportunities for us to move domestically
sourced product for people who are being
impacted by it. That tends to be some of the
smaller companies,” said Jukes.
“We source domestically and sometimes that
means you perhaps find yourself on the wrong
side of a very competitive product that’s
coming in, but we’re not running this business
for this month. You’ve got to take a longer
view on this – you can’t live from transaction
to transaction,” he added, noting that Univar
is celebrating its 100th year anniversary this
year.
“We’ve taken a much more longer-term strategic
view, and it’s served us well,” said Jukes.
North America accounts for 75-80% of Univar’s
sales, with Europe at 20-25%. The distributor
also has a very small presence in China.
Interview article by Joseph
Chang
Ethylene13-May-2024
SAO PAULO (ICIS)–Up to 29 April, Brazil’s
President Luiz Inacio Lula da Silva may have
been feeling optimistic: the economic recovery
seems to have now reached all economic sectors,
including manufacturing, where he promised to
create more and better paid jobs.
However, on 27 April heavy rainfall started in
Brazil’s Rio Grande do Sul and two days later,
large parts of the state were flooded, hundreds
of roads blocked, landslides were widespread,
and a dam collapsed.
More than 150,000 have been displaced. As of
Sunday, the death toll stands at 136 and as
many remain uncounted for. In the
12-million-people state, it is estimated two
million have been affected by the floods.
While the rains have mostly stopped, many
cities remain still at risk of flooding as the
stream of several overflown rivers advances
towards the sea.
The state’s economy has come to a standstill.
Not many GDP growth forecasts have been updated
yet following the floods, but last week a
report by bank Bradesco said output could be
flat in 2024, compared with 2023.
Rio Grande do Sul is the fifth largest economy
in Brazil and an agricultural stronghold,
concentrating around 70% of the country’s rice
output. It is estimated 10% of it could have
been lost, and Lula has said imports will be
stepped up to cover for any shortfall of the
grain, which is on every Brazilian table, every
day.
Petrochemicals plants at the Triunfo production
hub, near the city of Porto Alegre,
remain under force majeure, mostly due to
the difficulty of bringing workers in, and
fertilizers players fear a hit to demand as
the planting season for some crops is set to be
affected.
KATRINA 2005; RIO GRANDE DO SUL
2024As the days went by, the
extent of the disaster was becoming clearer,
and the scenes broadcast to the world from Rio
Grande do Sul were sadly very similar to those
seen in 2005 in the US in the aftermath of
Hurricane Katrina.
Financial newswire Bloomberg quickly
came up with the analogy: Brazil’s worst floods
in nearly a century were Lula’s ‘Katrina
moment’.
US former President George W Bush became the
quintessential example of lack of leadership
skills in a crisis and, many criticized, lack
of compassion for the Black residents of poorer
areas of New Orleans, which were practically
left to fend for their own.
“His [Lula’s] advisers say he’s keenly aware
this may be his ‘Katrina moment,’ a reference
to the 2005 hurricane that caught US President
George W Bush off guard and entered the global
lexicon as shorthand for the failure of
leadership in a crisis,” said Travis Waldron on
9 May on Bloomberg.
“The response to the devastation is
particularly important for Lula’s leftist
presidency, premised on the philosophy that
governments should do more to meet the people’s
basic needs. The tragedy has consumed Lula’s
government.”
Hurricane Katrina caused 1,836 fatalities and
the economic damage was estimated at between
$97 billion and $145.5 billion.
LULA AND HIS PLACE IN
HISTORYSeventy-eight-year-old
Lula is a true post-modern, spinning-expert
politician. Brazilian newspapers often report
on his inaccuracies in speeches and, just last
week, he and his Workers Party (PT) were under
scrutiny after Lula took part in a rally which
could be in breach of electoral regulations.
Under his spinning, Lula wanted his third term
– Lula 3, to differentiate it from the first
and second terms between 2003 and 2011 – to be
remembered as the Administration that
“re-built” Brazil after Jair Bolsonaro’s
pandemic-hit and rather divisive term
(2019-2023).
Facing his biggest test yet, Lula’s response
during the first week of the disaster was
rather slow. However, as the country enters the
third week of the calamity, there are
indications Lula is getting it, and has now put
his government on turbocharge mode and
practically all ministers are focused on Rio
Grande do Sul.
Following months of almost daily public
quarrels between ministers in the coalition
cabinet – Lula’s PT does not command a majority
in parliament – the renewed sense of common
purpose can only be a good thing for a country
in crisis.
Lula’s global commitments in 2024, with Brazil
holding the G20 presidency and hosting the
annual summit in Rio de Janeiro in November,
and in 2025, when the city of Belem will host
the COP30 climate summit, have now taken
something of a back seat.
Perhaps because of the authorities’ slow
response, the country at large seemed to be on
a wait-and-see mode during the first week,
hoping for the best but fearing the worst.
WAR EFFORT-LIKEBut when
the disaster was apparent both government and
citizens alike started a remarkable, war-like
almost effort to alleviate the pain of gauchos,
as citizens of the state are called in
Portuguese.
The President finally proposed the declaration
of state of emergency, which can speed up the
release of funds and the state’s wider
machinery to assist in the aftermath of the
floods, on 5 May: a week after the floods
started.
Parliament greenlit the proposal on 7 May, a
quick turnaround considering Brazil’s
standards.
Finance and Treasury ministers have announced
special credit lines for citizens and
companies, and low paid workers will have
access to special subsidies, while payments for
other benefits they are entitled to will be
brought forward.
Lula has visited the state three times.
Lula’s left-leaning cabinet does not hide its
intention to increase public spending although,
as long as taxation remains unchanged, higher
proceeds can only come from higher debt, which
has slightly increased under Lula 3. That’s
another debate for another day.
However, in what concerns the current crisis,
further increasing the debt burden to speed up
Rio Grande do Sul’s recovery will be good
debt in any case, the state being
one of the most prosperous in the country.
As we enter the third week of the floods, for
any of the 215 million residents in this
subcontinent-like country the disaster is now
inescapable and calls for action are
everywhere.
From workplaces to residential buildings, from
schools to universities, from civil
associations to companies, there is practically
no place where an effort to collect goods,
food, and money is not being deployed.
And, in a country where poverty levels are
still very high, it is humbling to see that
some of those who have very little are giving a
little bit, something. When tragedy strikes
next door, it is hard not to be moved.
Some personal thoughts to wrap up. Living in
Brazil and wishing this rich country could
deliver more of its wealth to many more of its
people, one can only hope Lula does not repeat
a ‘Bush moment’, not for his own sake or his
place in History books, but for the sake of
gauchos and Brazilians at large.
Hurricane Katrina and, mostly and foremost, the
poor way its aftermath was handled left deep
scars which are still evident. In 2019, a long
14 years after the Hurricane, this
correspondent visited outer areas of New
Orleans and, indeed, they were in stark
contrast with the quickly refurbished,
fancy-again, and tourism-heavy city center.
For many residents of the suburbs, most of them
Black, President Barack Obama’s promises of
reconstruction never materialized, while his
successor Donald Trump seemed to ignore the
issue altogether, they said.
The same cannot happen to the dynamic and
prosperous Rio Grande do Sul, an
export-intensive and diversified economy
accustomed to trade with the rest of the world
as much as with other Brazilian states.
The state has an edge in several economic
sectors, not only in agriculture but also in
industry and services. Its GDP per capita stood
at Brazilian reais (R) 50,700 ($9,830), versus
a national average of R42,250, according to the
country’s statistics office IBGE.
The poorest state in Brazil, Maranhao in the
north, had a GDP per capita of R17,500.
Rio Grande do Sul’s ambitions go as far as
having some wineries, a rarity in what is
considered a Tropical country. It is the only
state to produce wine because, given its
southernmost latitude, it has an actual winter
– of sorts – and wine connoisseurs
will know grapes can only thrive with cold in
winter months and decent heat in the summer.
Brazil needs more states like Rio Grande do
Sul, so any setback to its economic development
must be averted. Brazilian politicians, often
more focused on themselves than in those they
are meant to serve, have a golden opportunity
to show to the world that this is the new
Brazil they have been promising for decades.
The steps announced in the second week of the
disaster go in the right direction. Brazil’s
economy and its macro stability leave room for
the state to step in and support citizens and
companies in Rio Grande do Sul at their time of
most need.
The political tits-for-tats of the first week,
with exchange of futile accusations between the
conservative-led state and the left-led Federal
Administration, while on the ground the
disaster was exploding, cannot be repeated.
“Public anger over the handling of the COVID-19
pandemic by his predecessor, Jair Bolsonaro,
helped propel Lula to a narrow victory in
Brazil’s 2022 presidential contest. Now he
faces a calamity of his own,” concluded
Bloomberg’s Waldron.
“Lula’s response could help him regain public
approval of his leadership — or propel his
presidency into a downward spiral that he can’t
escape.”
($1 = R5.16)
The second part of this article, to be
published on Wednesday 15 May, will look at
Brazil’s climate change-related challenges;
whether extreme and rare events like the floods
in Rio Grande do Sul could become more common;
and the country’s preparedness for such
scenario
Insight by Jonathan Lopez
Ethylene13-May-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 10 May.
NPE ’24: Plastics
industry headwinds likely to persist through
2024
Headwinds for the plastics industry including
higher cost of capital, weaker household
spending momentum and capacity adjustments will
likely persist through 2024, according to a
presentation by Perc Pineda, Chief Economist at
PLASTICS, at this year’s NPE show.
IPEX: April index
rises for fourth month in a row on firmer
pricing in northwest The ICIS
Petrochemical Index (IPEX) was up 1.5% in April
month on month as production constraints
continue to push contract prices up across some
commodities, mainly in northwest Europe and
northeast Asia.
NPE ’24: SABIC
eyes growth opportunities in Americas amid era
of global overcapacity
SABIC is looking for further opportunities for
growth in the Americas as part of its strategy
to navigate an era of excess capacity around
the world, one that has led it and other
producers to shutter capacity in high-cost
regions, an executive said.
Brazil’s Braskem
deliveries safe despite Triunfo shutdown taking
off third of capacity – CFO
Braskem will be able to deliver material to its
customers from its other three sites in
Brazil after it declared force
majeure at its Triunfo complex following
heaving flooding in the area, Brazilian
polymers major CFO Pedro Freitas said on
Thursday.
Brazil’s Indorama
suspends operations at Triunfo, ports still
closed, fertilizers demand to be
hit
Brazil’s state of Rio Grande do Sul remains at
a standstill from the floods, with Thai
petrochemicals major Indorama’s subsidiary in
the country also suspending operations at its
Triunfo facilities, a spokesperson confirmed to
ICIS.
Sulphur13-May-2024
LONDON (ICIS)–It is rare to see sulphur or
sulphuric acid take center stage in Europe when
discussing a lack of feedstock for downstream
petrochemicals – but the tight supply of both
have been key talking points in Q1 and Q2.
Senior editor for sulphuric acid, Andy
Hemphill, and Julia Meehan, managing editor of
ICIS Fertilizers, take a look at the origins of
this current tightness and explore any options
the industry has to counter it.
Petrochemicals13-May-2024
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which looks at the latest demand shifts in the
smartphone market.
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.
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