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Gas29-Apr-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 26 April 2024.
Thailand’s SCG Q1 net profit slumps 85%; eyes
better H2 conditions
By Nurluqman Suratman 26-Apr-24 12:45 SINGAPORE
(ICIS)–Siam Cement Group (SCG) posted an 85%
year-on-year decline in Q1 net profit on losses
from chemicals operations, but the Thai
conglomerate expects the segment’s earnings to
recover in H2 on improved olefins demand and
expected restart of its Vietnam petrochemical
complex.
China VAM exports jump; shipments to India
surge in Q2
By Hwee Hwee Tan 25-Apr-24 13:42 SINGAPORE
(ICIS)–China’s vinyl acetate monomer (VAM)
spot offers have tumbled, boosting buying
interest in its outbound cargoes, and lifting
its exports to India to a multi-month high into
the second quarter.
SE Asia PE May offers mostly rangebound; demand
still weak
By Izham Ahmad 24-Apr-24 14:09 SINGAPORE
(ICIS)–Initial spot import offers for May
shipments of polyethylene (PE) in southeast
Asia were announced mostly rangebound so far in
the week, while buying interest remained under
pressure near recent lows.
Saudi Aramco eyes stake in Hengli
Petrochemical; prowls for more China
investments
By Fanny Zhang 23-Apr-24 14:13 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.
PODCAST: Production constraints keep Asian BD
spot trades buoyant in Q1, demand outlook
mixed
By Damini Dabholkar 22-Apr-24 17:35 SINGAPORE
(ICIS)–Persistent production constraints have
driven Asia’s spot prices for butadiene (BD) to
near two-year-high levels, but how the rally
goes from here may hinge on downstream demand
conditions.
CHINAPLAS ’24: PODCAST: China PP exports
strong, imports weak in Q1
By Sijia Li 22-Apr-24 16:23 SINGAPORE
(ICIS)–ICIS analyst Sijia Li and senior
industry analyst Joanne Wang discuss
developments in China’s polyolefins market.
Speciality Chemicals26-Apr-2024
HOUSTON (ICIS)–Global shipping container rates
are starting to moderate, the Panama Canal
expects to increase transits in May, and liquid
chemical tanker spot rates are mixed,
highlighting this week’s logistics roundup.
CONTAINER RATES
Global shipping container rates are plateauing
as shipowners have implemented blank sailings
to control capacity and as some carriers have
announced general rate increases (GRIs).
Freight forwarder Flexport said in an update on
25 April that GRIs announced for ex-Asia
westbound routes are expected to stick amid
high utilization from carriers.
Flexport noted three factors that supported the
increases – a slight increase in demand because
of the May labor holiday in China; reduced
capacity from the increase in blank sailings;
and increased congestion at ports and equipment
challenges from certain carriers.
Participants in the US polyethylene
terephthalate (PET) told ICIS they are seeing
higher freight costs as shipping in the Red Sea
and now the Strait of Hormuz continues to be
disrupted.
Rate increases have also been announced for
cargo heading to the Middle East region.
Global container shipping major Mediterranean
Shipping Company (MSC) announced $200/TEU
(20-foot equivalent unit) effective 17 May for
all cargo leaving the US and Puerto Rico going
to the Middle East.
Global container rates from supply chain
advisors Drewry were flat this week, as shown
in the following chart.
Rates from North China to the US Gulf also held
steady, although at levels higher than were
seen in December before the attacks on
commercial vessels in the Red Sea, as shown in
this chart from ocean and freight rate
analytics firm Xeneta.
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), which are shipped
in pellets.
They also transport liquid chemicals in
isotanks.
LIQUID CHEM TANKERS
US chemical tanker freight rates assessed by
ICIS were mixed this week with rates
rising for parcels from the US Gulf (USG) to
Brazil and India. However, rates from the USG
to ARA decreased and all other trade lanes held
steady.
From the USG to Brazil, this trade lane has had
limited availability for H1 May loading.
However, mid and H2 May have showed a few more
options with an outsider on berth currently to
South America. This could place downward
pressure on this route.
Although COA nominations are still up in the
air, a few regular owners hope to have more
space and a broker says that time will tell
when this space fills up.
From the USG to Asia, regular players have said
they are full on most of their positions
through this time, which has placed some upward
pressure on smaller parcels as it has become
harder to find space for them.
Currently, the USG to Asia market appears to be
in a fragile balance between the interest in
larger slugs, and the growing number of players
looking for stainless steel vessels in the USG
for May, according to a broker.
BALTIMORE BRIDGE
The Unified Command (UC) announced the opening
of a new channel at the Port of Baltimore that
has allowed ships trapped inside the port to
leave.
The Fort McHenry Limited Access Channel, which
runs the length of the northeast side of the
federal channel, provides additional access to
commercially essential traffic.
The limited access deep draft channel has a
controlling depth of a minimum of 35 feet, a
300-foot horizontal clearance, and a vertical
clearance of 214 feet.
Starting Monday, April 29, operations to remove
the Dali will require suspension of transits
through the Fort McHenry Limited Access
Channel.
Once deemed safe, the channel will reopen for
commercial traffic.
PANAMA CANAL
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.
Wait times for non-booked vessels ready for
transit edged lower for northbound vessels and
rose for southbound vessels this week,
according to the Panama Canal Authority
(PCA) vessel
tracker and as shown in the following
image.
Wait times a week ago were 3.0 days for
northbound traffic and 2.9 for southbound
traffic.
The Panama Canal Authority (PCA) said current
forecasts indicate that steady rainfall will
arrive later this month and continue during the
rainy season, which would allow the PCA to
gradually ease transit restrictions and traffic
could return to normal by 2025.
Please see the
Logistics: Impact on chemicals and energy topic
page
With additional reporting by Melissa
Wheeler and Kevin Callahan
Recycled Polyethylene Terephthalate26-Apr-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including:
Flake, food-grade pellet sellers looking at
higher May offers
Buyers considering more PET volumes,
looking at non-EU R-PET imports
Mixed coloured flake price views vary for
May
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.
Polypropylene26-Apr-2024
PODCAST: Caution, closures, mismatched demand and recycling –
big themes from World Polyolefins 2024
LONDON (ICIS)–The choppy economic backdrop,
unprecedented growth of global polyolefins
capacity, and how Europe can pivot under
pressure from chunky legislation, were huge
themes at the 10th ICIS World Polyolefins
conference.
Fresh from the stage, ICIS experts dig into the
biggest themes that cropped up for delegates
including converters, brands and producers in
Vienna.
In this podcast, PE and PP senior editor Vicky
Ellis is joined by fellow senior editor Ben
Monroe-Lake, senior analysts Emiliano Basualto,
Lorenzo Meazza and Egor Dementev, and
polyolefins consultant John Richardson.
Crude Oil26-Apr-2024
SINGAPORE (ICIS)–The Japanese yen (Y) fell to
an all-time low on Friday after the Bank of
Japan (BoJ) held interest rates near zero
despite rising pressure to support a weakening
currency.
Yen trades at above Y156 against US dollar
BoJ last intervened in forex market in
September 2022
Tokyo March consumer inflation eases
At 09:07 GMT, the yen was trading at Y156.52
against the US dollar, off the intra-day low of
Y156.81, as Japan’s central bank maintained its
benchmark policy rate at 0%-0.1% as widely
expected.
This marked the weakest the yen had been since
August 1990 when it tumbled to around Y150 to
the dollar.
A weaker yen is a boon for Japanese exporters,
making their products competitive in overseas
markets, but translates to higher import costs,
thereby dampening consumer spending, and
hurting smaller businesses, which are
struggling to raise wages.
With the exchange rate crossing the key Y155
mark, markets are on high alert for some form
of or even direct intervention from the central
bank.
The BoJ last intervened in the foreign exchange
market in September 2022, when the yen tumbled
to Y145.90 yen against the greenback.
“Now that USD/JPY has glided through the 155
level, markets are now on high alert for
Japanese FX [foreign exchange] intervention.
Recall that 155 had been the level that many in
the Japanese banking community had felt would
elicit BoJ FX selling operations,” said Chris
Turner, ING’s global head of markets and
regional head of research for UK and central
and eastern Europe.
“If and when the BOJ does come in – the amounts
could be sizable. However, intervention can at
most slow the USD/JPY advance – unless that is
the broad dollar trend reverses.”
The US, Japan and South Korea on 17 April aired
serious concerns over the heavy depreciation of
the yen and the Korean won, agreeing to
consult closely on matters relating to exchange
rate movement.
The trilateral gathering, attended by US
treasury secretary Janet Yellen, Japanese
finance minister Shunichi Suzuki and South
Korean finance minister Choi Sang-mok, was held
on the sidelines of the International Monetary
Fund and Group of 20 (G20) finance leaders’
meetings in Washington.
The Japanese yen has continued to slide despite
the BoJ’s historic monetary policy shift in
March, when the central bank hiked interest
rates for the first time in two decades, ending
eight years of negative interest rates.
The decision to abandon negative rates signaled
a growing confidence that Japan was finally
emerging from a period of falling prices or
deflation.
In a report released on Friday, the BoJ said
that it expects core consumer inflation to
average 2.8% for the year ending March 2025,
before easing to 1.9% in the following fiscal
year. The central bank has a 2% inflation
target.
Latest data out of Japan’s capital of Tokyo
showed that consumer inflation in April eased
to 1.6% from 2.4% in March, official data
showed.
Focus article by Nurluqman
Suratman
Ethylene26-Apr-2024
SINGAPORE (ICIS)–Siam Cement Group (SCG)
posted an 85% year-on-year decline in Q1 net
profit on losses from chemicals operations, but
the Thai conglomerate expects the segment’s
earnings to recover in H2 on improved olefins
demand and expected restart of its Vietnam
petrochemical complex.
H2 conditions to improve on chemicals
recovery
Long Son Petrochemicals complex restart
targeted in July
Olefins prices to stabilize in Q2, recover
later in 2024
In Thai baht (Bt)
million
Q1 2024
Q1 2023
% Change
Revenue from sales
124,266
128,748
-3.5
EBITDA
12,623
12,170
3.7
Net profit
2,425
16,526
-85.3
*Earnings before interest, tax,
depreciation and amortization
First-quarter EBITDA increased on higher
contribution of businesses related to cement
and construction.
The company’s listed SCG Packaging (SCGP)
subsidiary, meanwhile, posted a 15%
year-on-year increase in EBITDA to Bt5.2
billion as sales rose by 1% to Bt34.0 billion.
Chemicals results
in Bt million
Q1 2024
Q1 2023
% Change
Revenue from sales
45,376
46,805
-3.1
EBITDA
1,289
2,445
-47.3
Net profit
-1,866
1,356
–
Petrochemicals demand remained weak in the
first quarter due to ongoing geopolitical
tensions and weak global economic conditions,
the company said in a filing to the Stock
Exchange of Thailand on 24 April.
The first-quarter loss in the chemicals
business, however, was mainly due to lower
equity income from associates and start-up
expenses of the company’s Long Son
Petrochemicals Complex (LSP) in Vietnam.
Its 100%-owned integrated petrochemical complex
completed initial test-runs early this year but
was shut in March due to equipment issues and
will remain down up to June.
SCG expects to restart the facility in July for
the final test run, followed by commercial
operations beginning August 2024.
In the first quarter, the company sold around
306,000 tonnes of both polyethylene (PE) and
polypropylene (PP) products, down 22% year on
year following the
shutdown at Rayong Olefins’ (ROC) cracker.
SCG now expects olefins demand to improve
gradually in the second half of 2024 as supply
in the region is expected to be limited due to
a series of planned maintenance, particularly
in China and southeast Asia.
It expects stable olefins prices in the second
quarter and a recovery in the latter half of
2024 as demand growth is expected to exceed
capacity additions.
Polyvinyl chloride (PVC) demand in Asia
continues to face challenges due to the
persistent real estate crisis in China, while
supply is impacted by high inventory in China
resulting in more exports to Asia.
Focus article by Nurluqman
Suratman
($1 = Bt37.05)
Crude Oil26-Apr-2024
SINGAPORE (ICIS)–Indonesia’s central bank has
unexpectedly raised its key interest rate to
stabilize its slumping currency – the rupiah
(Rp) – against the strong US dollar, with
further monetary tightening likely given high
possibility of worsening global risks.
Central bank move prompted by rupiah’s fall
to lowest since 2020
Strong US dollar sends global currencies
tumbling
2024 GDP growth forecast at 4.7-5.5%
At 02:45 GMT, the rupiah was trading at
Rp16,223 against the US dollar, easing from a
four-year low of Rp16,316 hit on 17 April.
On 24 April, Bank Indonesia (BI) hiked its
seven-day reverse repurchase rate by 25 basis
points to its highest since 2016 at 6.25%, and
also raised its overnight deposit and lending
rates by a quarter point to 5.50% and 7.00%,
respectively.
“Bank Indonesia continues orienting exchange
rate policy towards maintaining rupiah
stability against the impact of broad-based US
dollar appreciation,” the central bank said in
a statement.
RATE HIKES MAY CONTINUE AMID RUPIAH
WEAKNESS
The rupiah, along with other currencies in
Asia, has been tumbling against the US dollar,
which is being supported by higher-for-longer
interest-rate stance of the US Federal Reserve.
The US dollar is also generally considered a
“safe haven” for investors in times of global
economic distress.
From the start of the year to 23 April, the
rupiah tumbled against the US dollar by 5.1%,
according to Bank Indonesia, noting that the
depreciation was less severe compared with the
Thai baht’s 6.6% fall, the South Korean won’s
7.9% plunge and the Japanese yen’s 8.9% slump
over the same period.
“The key message delivered by BI was that
developments in the global economy have changed
rapidly alongside heightened risks and
uncertainties especially due to the shifting
stance of the Fed’s rate policy and
deteriorating geopolitical tensions in the
Middle East,” Singapore-based UOB Global
Economics & Markets Research said in a
note.
BI has been intervening to stabilize the
rupiah, which slumped to its lowest since 2020
around mid-April as the US Fed is unlikely to
cut interest rates anytime soon while escalated
tensions in the Middle East continue.
The Indonesian central bank’s April monetary
policy decision, like in October last year, was
in response to recent foreign exchange (FX)
weakness amid worsening external conditions, it
said. In October 2023, the central bank had
issued an urgent 25bps interest rate hike.
It deemed the move a “pre-emptive and
forward-looking step” to reduce the impact on
imported inflation and ensure headline
inflation remains within its 1.5-3.5% target.
In March, Indonesia’s inflation was higher than
expected at 3.05%.
“We think today’s decision was a hawkish hike,
and the rationale provided by BI underscores
that its strong focus on FX stability remains
in place,” Japan’s Nomura Global Markets
Research said in a note.
“We believe if the external backdrop does not
improve and IDR [Indonesian rupiah] pressures
persist, this may not yet be the end of BI’s
hiking cycle.”
GDP ON TRACK FOR SOLID
GROWTH
Southeast Asia’s biggest economy remains
resilient despite the build-up of global
uncertainty, BI said in a statement, with
average growth in the first two quarters of
2024 likely to exceed the 5.04% expansion in Q4
2023.
The central bank forecasts a 4.7-5.5% GDP
growth in 2024, compared with the actual 5.04%
expansion rate posted the previous year.
“Goods exports remain unfazed by declining
commodity exports given lower international
commodity prices and weak demand from
Indonesia’s main trading partners, such as
China,” it said.
Indonesia has been in trade surplus for the
47th consecutive month in March. The trade
surplus for the month at $4.5 billion
represents more than a fivefold increase from
February’s $800 million.
On a month-on-month basis, March exports
increased by 16.4%, the first monthly growth
this year, supported by the acceleration of
non-oil and gas (non-OG) exports, particularly
in crude palm oil (CPO), coal, and steel
commodities.
On a year-on-year basis, however, March exports
were down 4.2% to $22.4 billion, but the rate
of decline was narrower than February’s 9.6%;
while imports fell by 12.8% to $18 billion.
Indonesia is one of the biggest net
importers of petrochemicals in southeast
Asia, fulfilling around half of its PE and PP
requirements respectively through imports,
according to the ICIS Supply and Demand
Database.
Focus article by Nurluqman
Suratman
Speciality Chemicals25-Apr-2024
LONDON (ICIS)–Lower pricing across most
business divisions drove a 12.4% drop in BASF’s
first-quarter net income year on year, with the
chemicals major maintaining full-year guidance
as sector demand shows early signs of recovery.
in € million
Q1 2024
Q1 2023
% Change
Sales
17,553
19,991
-12.2
Income from operations before
depreciation and amortization (EBITDA)
2,655
2,811
-5.6
Income from operations (EBIT)
1,689
1,867
-9.5
Net income
1,368
1,562
-12.4
The decline in sales was mainly driven by
“considerably reduced prices” as a result of
lower raw materials and energy prices in almost
all segments as well as lower precious metal
prices in the Surface Technologies segment, the
company said in a statement.
Despite across the board sales drops, earnings
before interest, taxes, depreciation and
amortisation (EBITDA) firmed for most units
other than surface technologies, which posted
an 11.5% decline year on year to €327 million.
The company saw strongest profitability
increases for the materials and nutrition and
care divisions, which saw EBITDA increase 21.8%
and 37% respectively during the quarter, to
€549 million and €261 million.
Negative currency effects contributed to the
sales decrease in all segments.
Q1 EBITDA, adjusted for one-off items, fell by
5.3% year on year to €2.7 billion.
Despite the decline in sales, the Germany-based
producer projects that EBITDA before special
items for 2024 will be between €8.0 billion and
€8.6 billion this year, up from €7.67 billion
in 2023 and in line with earlier forecasts.
Chemicals demand growth in the first three
months of 2024 was stronger than levels for the
wider industrial sector due to customer
restocking, after an extended period of low
reserves.
“The global chemical industry recovered
slightly in the first quarter of 2024. It grew
considerably faster than overall industrial
production because the customer industries
somewhat restocked their very low inventories,”
BASF said.
The announcement comes as Martin Kamieth
steps
into the role of BASF CEO, succeeding
Martin Brudermuller.
A 36-year veteran of the company, Kamieth steps
into the CEO role at a point where the company
is preparing to cut costs by €1 billion at its
Ludwigshafen headquarters, with the form of
those cuts and any closures to ensue yet to be
announced.
Speaking at today’s shareholders’ meeting
outgoing CEO Brudemuller acknowledged the
challenges facing BASF and Europe’s chemical
sector.
He spoke about the difficult choices which will
have to be taken at the company’s flagship
Ludwigshafen Verbund site, adding:
“Ludwigshafen will remain BASF’s largest site
and should be the leading chemical site in
Europe.”
The company expects global GDP growth of 2.3%,
substantially below IMF forecasts this month
of 3.2%.
The trend of chemicals demand slightly
outpacing general industrial output growth is
also expected to continue, according to the
company, which forecasts industrial production
increases of 2.2% compared to 2.7% for the
sector.
Despite recent volatility in crude oil pricing
on the back of escalated tensions between
Israel and Iran, which pushed Brent costs above
$90/barrel, the company continues to project
average values of $80/barrel for the year.
Additional reporting by Nurluqman Suratman
and Will BeachamThumbnail photo:
BASF’s Ludwigshafen, Germany headquarters
(Source: BASF)
(Update releads, adds detail throughout)
Gas25-Apr-2024
LONDON (ICIS)–On 19 April 2024, the UK
government’s hydrogen support scheme Hydrogen
Allocation Round 2 (HAR2) closed for
applications. To review the support programme
and the current position of the UK hydrogen
market, ICIS hydrogen editor Jake Stones speaks
with hydrogen consultant and demand-side
project manager Duncan Yellen. Over the
conversation, Yellen outlines:
Potential challenges facing the UK’s
hydrogen development plans
The best markets for selling hydrogen today
and their price points
What is the impact of transporting hydrogen
When can a tradeable hydrogen market
emerge?
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