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Polyethylene Terephthalate06-May-2024
ORLANDO (ICIS)–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.
The
US Consumer Price Index (CPI) was up 3.5%
year on year in March, with economists
expecting inflation to average 3.1% this year,
which is above the US Federal Reserve’s target
of 2%. As a result, interest rate futures are
now moving towards fewer cuts.
Elevated interest rates continue to negatively
impact the petrochemicals industry, including
US polyethylene terephthalate (PET), as high
interest rates continue to result in weaker
household spending.
Additionally, the US PET market continues to
experience capacity adjustments. In March of
2023, Alpek Polyester announced it would be
indefinitely shutting down its
Cooper River, South Carolina, PET site. A
few months later in September of 2023 the
integrated polyester plant being built by
Alpek, Indorama and Far Eastern New Century
(FENC), under the joint venture
Corpus Christi Polymers, announced it was
pausing construction at its Corpus Christi,
Texas, site because of inflation as well as
high construction and labor costs.
Globally, Indorama announced in
March 2024 that it is eyeing multiple sites
and it is aiming to shut down.
Without interest rate cuts, headwinds in the US
and global PET market will likely continue
through 2024, despite an optimistic demand
outlook for 2024 compared to 2023.
Thumbnail image shows multicolored PET
preforms for plastic bottles
Produced by Plastics Industry Association
(PLASTICS), NPE: The
Plastics Show takes place 6-10 May in
Orlando, Florida.
Caustic Soda06-May-2024
HOUSTON (ICIS)–Heavy rainfall that caused
flooding from rising rivers over the weekend
was mainly to the north and east of the major
petrochemical plants closer to the Gulf Coast,
and has had little to no impact on operations.
Rainfall totals over the past 48 hours were
around 2 inches at the most, according to data
from the Harris County Flood Control District.
But the region was already waterlogged as
rainfall totals for the previous seven days
were as high as 13 inches, meaning the
additional weekend rains had no avenue to drain
and collected in low-lying areas.
There are no significant chances of more rain
in the near term, according to the latest
forecast from the National Weather Service.
The flooding did not affect power generation or
delivery in the region.
According to poweroutage.us, there were almost
5,000 customers in Texas without power on
Monday morning, with none in Harris county.
Ethylene06-May-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 3 May.
Besieged by
imports, Brazil’s chemicals put hopes on hefty
import tariffs hike
Brazilian chemicals producers are lobbying hard
for an increase in import tariffs for key
polymers and petrochemicals from 12.6% to 20%,
and higher in cases, hoping the hike could slow
down the influx of cheap imports, which have
put them against the wall.
US manufacturing
falls back into contraction in April, prices
rise
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.
SABIC Q1 net
income falls 62%, warns of industry
overcapacity
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.
US TiO2 producer
Kronos to shut down production via sulfate
process in Varennes, Canada
Kronos Worldwide, a titanium dioxide (TiO2)
producer headquartered in Dallas, Texas, US is
planning to permanently shut down sulfate-based
production at its location in Varennes, Quebec,
Canada.
US Huntsman
assets in Europe spare from energy hit, but EU
policies erratic – CEO
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.
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Speciality Chemicals06-May-2024
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on 3
May.
NEWS
Besieged by
imports, Brazil’s chemicals put hopes on hefty
import tariffs hike
Brazilian chemicals producers are lobbying hard
for an increase in import tariffs for key
polymers and petrochemicals from 12.6% to 20%,
and higher in cases, hoping the hike could slow
down the influx of cheap imports, which have
put them against the wall.
Mexico’s
manufacturing slows on weaker exports, Chinese
competition
Mexico’s manufacturing sectors slowed down
slightly in April on the back of tough
competition, particularly from China, and weak
demand from abroad, which caused a fall in
output, analysts at S&P Global said on
Thursday.
Brazil’s
manufacturing at nearly three-year high on
booming demand
Brazil’s manufacturing sectors continued
booming in April on the back of a sharp
increase in new business intakes, which led to
higher output and job creation, analysts at
S&P Global said on Thursday.
Mexico increases
PET import tariff again in attempt to shield
economy
In the last week of April, Mexican President
Andres Manuel Lopez Obrador introduced an
amended version of the Tariff within the
General Import and Export Duties Law to enforce
import duties, or temporary duties, on products
falling under 504 tariff items, including
polyethylene terephthalate (PET) resin. These
new duties will vary from 5% to 50%.
Brazil’s Braskem
Q1 resin sales fall 5% yearly, on prioritizing
sales with higher added
value
Braskem resin sales in its domestic Brazilian
market dropped by 5% in Q1, year on year, on
the back of prioritizing sales with higher
added value in the period, the Brazilian
petrochemicals major said on Friday in its
quarterly production and sales report.
INSIGHT: Six
decades on, Brazil’s Unigel founder fights the
ultimate battle
The founder of Unigel, aged 87, is actively
fighting the Brazilian chemicals and
fertilizers producer’s most decisive battle,
one for its survival, as it tries to
restructure its debts, one step away from
bankruptcy.
PRICING
Lat Am PE
domestic prices fall in Argentina, Brazil on
cheaper imports, soft demand
Domestic polyethylene (PE) prices fell in
Argentina and Brazil due to competition with
cheaper imports and soft demand. In other Latin
American countries, prices were unchanged.
LatAm PP domestic
prices fall in Argentina, Colombia, Mexico on
lower feedstock costs, soft
demand
Domestic polypropylene (PP) prices fell in
Argentina, Colombia and Mexico on the back of
lower feedstock costs and soft demand.
Speciality Chemicals06-May-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 3 May.
Freight rates spike again, nudging Europe PET
buyers back home
Shipping costs may be making European
polyethylene terephthalate (PET) imports
prohibitively expensive, giving domestic
sellers an opportunity to individually lift
prices.
Eurozone manufacturing activity dips again in
April as order momentum fades
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.
Legal confusion limits Europe’s pyrolysis oil
trade as tyre-derived price fall
Europe’s tyre-derived pyrolysis oil spot prices
fell this week following discussions of
increased availability as pilot plants continue
to scale, coupled with pressure from low-priced
offers from overseas – particularly Asia.
Europe May benzene contract drops in weaker
market
The Europe benzene May contract price has
settled at €1,117/tonne, down by €151/tonne
from April and snapping an uptrend
that began in January.
European polyols market bearish as demand
pressures continue
Demand for polyols in the European market
remains under pressure, as major end sectors
are facing difficulties, however there are
different views for consumption going into May.
Gas06-May-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 3 April 2024.
Asian BD discussions under pressure as buying
slows down
By Ai Teng Lim 03-May-24 11:06 SINGAPORE
(ICIS)–Asian spot butadiene (BD) import
discussions are slipping due to slowing demand,
fueled by holiday closures this week and
persistent external macroeconomic headwinds.
SABIC Q1 net income falls 62%, warns of
industry overcapacity
By Nurluqman Suratman 02-May-24 10:55 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.
CHINAPLAS ’24: PODCAST: China’s polymer
industry targeting high-end products amid
fierce competition
By Zhibo Xiao 30-Apr-24 16:17 SINGAPORE
(ICIS)–ICIS analysts Sijia Li, Yvonne Shi,
Zhibo Xiao, Lucy Shuai, Joanne Wang and Cindy
Qiu discuss the trends in China’s polyolefins
and polyester markets.
China domestic acetic acid demand to weaken;
sellers eye more exports
By Jady Ma 30-Apr-24 11:25 SINGAPORE
(ICIS)–China’s domestic acetic acid market may
face headwinds from increased supply and weaker
demand in May after generally firming up in
April, while producers are exporting more
volumes.
Asia BPA makers will not increase run rates
until margins improve
By Li Peng Seng 29-Apr-24 12:25 SINGAPORE
(ICIS)–Asian bisphenol A (BPA) makers are
expected to stay entrenched in the months ahead
despite falling Chinese imports, as they seek
to combat firm feedstock costs.
Saudi Aramco, Chinese Rongsheng plan
liquids-to-chemicals JV in Jubail
By Nurluqman Suratman 29-Apr-24 11:55 SINGAPORE
(ICIS)–Saudi energy giant Aramco and Chinese
Rongsheng Petrochemical are planning a joint
venture liquid-to-chemicals expansion project
in Jubail, Saudi Arabia.
Ammonia03-May-2024
HOUSTON (ICIS)–Global hydrogen solutions
provider Plug Power has announced the signing
of a memorandum of understanding (MOU) with
Allied Green Ammonia (AGA) to supply
electrolyzer capacity for a proposed ammonia
facility in Australia.
The terms call for up to 3 gigawatts of
electrolyzer capacity for AGA’s upcoming
hydrogen to ammonia facility with the company
stating that the green hydrogen produced by
their electrolyzers help decarbonize the
ammonia production process.
AGA plans to establish a 2,500 tonne per day
green ammonia operation with the proposed
location at Gove Peninsula seen as being
strategically placed to align with Asia trading
partnerships.
Following the MOU, Plug and AGA plan to enter
an agreement to initiate a Basic Engineering
and Design Package (BEDP) for the project.
The BEDP is expected to advance mid-May of this
year, with final investment decision planned
for Q4 2025, with the progressive delivery of
the 3GW electrolyzer supply slated to begin in
Q1 2027.
“Ammonia producers have recognized the
substantial advantages of cost and carbon
reduction through electrolysis-based hydrogen,”
said Andy Marsh, Plug Power CEO.
“We’re thrilled to sign this MOU and partner
with AGA. Our expertise in constructing and
operating large-scale hydrogen production
facilities and our PEM electrolyzer
manufacturing capability to support their 3GW
project position us as the ideal partner for
this endeavor.”
AGA said this agreement is a critical first
step and a testament to the alignment of the
companies’ respective visions.
“This agreement, in light of Plug’s unrivalled
expertise and complementary technologies, is a
strong vote of confidence in our capabilities
and a significant milestone in the planned
delivery of Allied Green’s facility, which will
be one of the most energy efficient green
hydrogen and green ammonia projects globally,”
said Alfred Benedict, Allied Green Ammonia
managing director.
Speciality Chemicals03-May-2024
HOUSTON (ICIS)–Global average rates for
shipping containers rose for the first time
since January, workers at freight rail carriers
Canadian National (CN) and Canadian Pacific
Kansas City (CPKC) have voted in favor of a
strike, and the US regulator that oversees
railroads finalized a rule allowing reciprocal
switching, highlighting this week’s logistics
roundup.
CONTAINER RATES
Shipping container rates have been rising
steadily since December when attacks by Houthi
rebels on commercial vessels in the Red Sea
forced carriers to take the longer route around
the tip of the African continent before
leveling off last week.
This week, the global average for 40-foot
shipping containers rose by 1%, according to
supply chain advisors Drewry and as shown in
the following chart.
Rates from Shanghai to the US East Coast edged
slightly higher, but rates from China to the
West Coast edged slightly lower, as shown in
the following chart.
Judah Levine, head of research at online
freight shipping marketplace and platform
provider Freightos, said that the overall
container market has settled into a new routine
that avoids the Red Sea.
“Though significant backlogs, congestion and
equipment shortages seen during the first few
weeks of the crisis have dissipated,
adjustments have resulted in some moderate but
ongoing disruptions,” Levine said in a weekly
update.
He said that even after falling drastically
since the beginning of the year, prices remain
well above normal and are likely to increase
relative to this new floor as demand is set to
increase for peak season.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and are shipped in tankers, container
ships transport polymers, such as polyethylene
(PE) and polypropylene (PP), are shipped in
pellets.
They also transport liquid chemicals in
isotanks.
LIQUID CHEMICAL TANKERS
US liquid chemical tanker freight rates
assessed by ICIS were unchanged this week.
From the US Gulf (USG) to Asia, the market has
been quieter this week as a holiday-shortened
week has sidelined some key players.
There have been only a few parcels quoted,
which is placing downward pressure on freight
rates for smaller lots.
Larger base cargoes of monoethylene glycol
(MEG), methyl tertiary butyl ether (MTBE), and
methanol have been popular chemicals on this
route, keeping larger freight rates steady.
From the USG to India, the market has been very
quiet.
PORT OF BALTIMORE
Since the opening of a fourth channel into the
Port of Baltimore, 171 commercial vessels have
transited the waterway, including five of the
vessels that were trapped inside the port after
the containership Dali struck the Key Bridge,
causing it to collapse, according to the
Unified Command (UC).
The MSC Passion III entered the port on 29
April, according to vesselfinder.com, making it
the first container ship to enter the port
since the accident.
The closing of the port did not have a
significant impact on the chemicals industry as
chemicals make up only about 4% of total
tonnage that moves through the port, according
to data from the American Chemistry Council
(ACC).
The ACC said less than 1% of all chemicals
involved in waterborne commerce, both domestic
and trade volumes, pass through Baltimore.
But a market participant in Ohio told ICIS
previously that it is seeing delays in delivery
times for imports as vessels originally
destined to offload in Baltimore are getting
re-routed to other ports.
PANAMA CANAL
Wait times for non-booked vessels ready for
transit edged for higher both directions this
week, according to the Panama Canal Authority
(PCA) vessel
tracker and as shown in the following
image.
Wait times a week ago were 2.5 days for
northbound traffic and 5.6 for southbound
traffic.
The 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.
RAILROADS
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.
Meanwhile, chemical industry participants were
largely supportive of a final rule adopted by
the Surface Transportation Board (STB) on
reciprocal switching for inadequate service by
railroads, but think the scope was too narrow
and it does not cover a significant portion of
rail traffic.
For the first time, the STB said it is requiring
that three service metrics be maintained on a
standardized basis across all Class 1
railroads.
In the US, chemical railcar loadings represent
about 20% of chemical transportation by
tonnage, with trucks, barges and pipelines
carrying the rest. In Canada, chemical
producers rely on rail to ship more than 70% of
their products, with some exclusively using
rail.
Rail is also the predominant shipping method
for US ethanol.
Additional reporting by Kevin Callahan and
Stefan Baumgarten
Please see the
Logistics: Impact on chemicals and energy topic
page
Isocyanates03-May-2024
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
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