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.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 10 May. Europe propylene supply rebalancing on derivative restart, cracker issues Propylene spot supply is returning to a more balanced position with a key derivative unit now back on stream and a couple of cracker issues disrupting output. Europe businesses face tough market and regulatory hurdles in long term – LyondellBasell Market conditions in Europe are likely to remain challenging in the long term while changing regulations are increasing costs for businesses, LyondellBasell Industries said on Thursday, after announcing a strategic review for most of its operations in the region. LyondellBasell launches review of European assets LyondellBasell has launched a strategic review of the bulk of its operations in Europe, the producer said on Wednesday, based on its strategy to focus on assets perceived to have long-lasting competitive advantage Chandra Asri aspires to become regional player with Shell Singapore purchase Chandra Asri is looking to develop its presence in southeast Asia and become a key regional player with its purchase of Shell’s refining and petrochemicals assets in Singapore alongside commodities major Glencore, the Indonesia-based firm said on Wednesday. IPEX: April index rises for fourth month in a row on firmer pricing in northwest Europe, northeast Asia 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. BASF puts ammonia, methanol, melamine plants up for sale at Ludwigshafen BASF has engaged plant sale specialists International Process Plants (IPP) to sell idled ammonia, methanol and melamine units located at its loss-making Ludwigshafen site in Germany.

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 10 May 2024. PODCAST: APIC ‘24: Asia recycled plastics sees sustainable finance focus By Damini Dabholkar 10-May-24 12:22 SINGAPORE (ICIS)–Sustainable finance is a key interest for companies seeking to enter the recycled plastics market in Asia or to expand their current capacities. Despite the various financial instruments available, the absence of a clear entry point often results in uncertainty for firms. In this podcast, ICIS analysts Chua Xin Nee and Joshua Tan explore the different types of sustainability-related loans available and their successful use cases. China-SE Asia arbitrage flow for MTBE unworkable on oil price falls By Keven Zhang 10-May-24 11:50 SINGAPORE (ICIS)–The arbitrage of methyl tertiary butyl ether (MTBE) from China to southeast Asia can be reopened, after blenders in southeast Asia finish consuming their existing inventory. PODCAST: Weak demand expected for Asia propylene and downstream PO By Damini Dabholkar 09-May-24 15:02 SINGAPORE (ICIS)–Asia’s propylene market will continue to see weak demand, although potential curbs in plant run rates in China amid weak margins could lend support. China exports return to growth in April amid signs of improving demand By Nurluqman Suratman 09-May-24 14:31 SINGAPORE (ICIS)–China’s April exports rose by 1.5% year on year to $292.5 billion in April, reversing the 7.5% contraction in March supported by signs of improved global demand, customs data showed on Thursday. China petrochemical market edges up in Apr, demand outlook remains weak By Yvonne Shi 08-May-24 13:20 SINGAPORE (ICIS)–China’s petrochemical market edged up in April, with the ICIS China Petrochemical Index – which tracks 17 key products in the domestic market – rising slightly by 1.60% to 1267.60 by the end of the month as compared with March. Singapore April manufacturing slows amid persistent external headwinds By Nurluqman Suratman 07-May-24 11:59 SINGAPORE (ICIS)–Singapore’s manufacturing activity fell in April as a result of decreased export orders triggered by external demand headwinds and high global interest rates. NE Asia C3 talks to kick off, but supply concerns weigh on buyers By Julia Tan 06-May-24 12:02 SINGAPORE (ICIS)–Discussions for June arrivals will kick off as China returns from the Labour Day holidays, even with the potential headwinds of poor downstream demand and ample supply from Southeast Asia.

HOUSTON (ICIS)–The US Department of Agriculture (USDA) is anticipating larger corn and soybean supplies and ending stocks according to the May World Agricultural Supply and Demand Estimate (WASDE) report. For corn, the outlook is for not only increased supply and stockpiles, but also greater domestic use and exports with the current corn crop being projected at 14.9 billion bushels. This is a dip of 3% from last year’s record as a decline in area is partially offset by an increase in yield. Right now, the yield projection is at 181.0 bushels per acre and is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2023 period. With higher beginning stocks, total corn supplies are forecasted to be at 16.9 billion bushels, the highest since 2017-2018. Total US corn use is forecast to rise just under 1% relative to a year ago on higher domestic use and exports. Food, seed and industrial use is forecast at 6.9 billion bushels. Corn used for ethanol is unchanged relative to a year ago, based on expectations of flat motor gasoline consumption. Feed and residual use is projected higher on larger supplies and lower expected prices. Corn exports are forecasted to rise by 50 million bushels to 2.2 billion bushels, supported by a reduction in exports for Argentina, Brazil, Russia and Ukraine with the US projected to be the world’s largest exporter for the second consecutive year, with an expected increase in global market share. With total US corn supply rising more than use, ending stocks are up 80 million bushels from last year, and if realized, would be the highest in absolute terms since 2018-2019. The season-average farm price for corn is now being projected at $4.40 per bushel. For soybeans, the monthly update is calling for not only higher supplies and ending stockpiles but also upticks in exports. Currently the soybean crop is being projected at 4.45 billion bushels, up 285 million bushels on higher area and trend yield. With higher beginning stocks and production, soybean supplies are forecast at 4.8 billion bushels, up 8% from 2023-2024. Soybean exports are forecasted to come in at 1.83 billion bushels, which would be up by 125 million bushels from 2023-2024 with higher exports this fall due to a lower Brazilian 2024 harvest. With strong seasonal exports after harvest followed by pressure from larger South American production in 2025, the US. share of global exports is forecast at 28%, down from the prior five-year average of 32%. Ending stocks are projected at 445 million bushels, up 105 million bushels from last year. The current season-average soybean price is forecasted at $11.20 per bushel compared with $12.55 per bushel in 2023-2024. The next WASDE report will be released on 12 June,

HOUSTON (ICIS)–Global rates for shipping containers are surging, liquid chemical tanker rates were mixed, and wait times at the Panama Canal have eased, highlighting this week’s logistics roundup. CONTAINER RATES Container rates surged this week after rising last week for the first time since January amid general rate increases (GRIs) implemented because of rising demand and as continued Red Sea diversions have overall capacity fully deployed. Maersk CEO Vincent Clerc said during a Q1 earnings conference call that demand is trending toward the higher end of its guidance. Average global rates surged by 16% over the week, according to supply chain advisors Drewry and as shown in the following chart. Meanwhile, rates from Shanghai to the US West Coast jumped by 18%, and rates from Shanghai to the East Coast soared by 16%, as shown in the following chart. Drewry expects freight rates ex-China to continue increasing in the upcoming week amid a huge demand spike and tight capacity. Capacity is growing from newly built ships, according to international freight platform ShipHub, who said that 2.83m 20-foot equivalent units (TEUs) of container ship capacity is on order for 2024, after 2.34m TEUs were ordered in 2023. That is almost double the capacity added in 2021 and 2022, which were both around 1.1m TEUs. Shipping analysts Linerlytica said that over-capacity concerns are on the backburner with containership diversions to the Cape route effectively removing more than 7% of the total fleet. Rates from North China to the US Gulf were flat this week after spiking the previous week, as shown in the following 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), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEM TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged but fell from the US Gulf (USG) to ARA. From the USG to Rotterdam, there are bits of part cargo space still available for April. This trade lane has been mostly quiet over the last few weeks. If this trend continues, this route could face further downward pressure. On the other hand, from the USG to the Caribbean, rates have risen slightly since last week leaving the market overall mixed. Methanol continues to be active out of this market to various destinations. From the USG to Brazil, space remains tight despite the slow market as only a handful of indications being seen in the market.  Space is available for H1 May out of Columbia and H2 May out of the USG. Although ICIS does not assess spot rates from the USG to the Mediterranean, this trade lane has continued to tighten up, with several cargoes of Glycols, Caustic and Veg Oil fixed. There is limited space for May which may likely cause rates to further tighten, although there could be some working space for June. PANAMA CANAL Wait times for non-booked vessels ready for transit fell for both northbound and southbound transits this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 4.4 days for northbound traffic and 6.5 days for southbound vessels. 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. PORT OF BALTIMORE The Key Bridge Response Unified Command (UC) is scheduled to use precision cuts made with small charges to remove a large section of the Francis Scott Key Bridge wreckage from on top of the container ship Dali, which struck the bridge on 26 March and caused its collapse. Source: Key Bridge Response 2024 The exact time of the precision cuts will depend on multiple environmental and operational factors. 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. Additional reporting by Kevin Callahan

SAO PAULO (ICIS)–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. Two main ports in Brazil’s southernmost state remain closed, while fertilizers players have said demand is likely to be hit on the back of a reduced planting season. A spokesperson for Indorama said the company had suspended operations at Triunfo on 3 May until further notice. Indorama’s operations in Brazil are the result from its acquisition of Oxiteno and operates at Triunfo a methyl ethyl ketone (MEK) plant with a production capacity of 42,000 tonnes/year and a butene-2 plant with capacity at 42,000 tonnes/year, according to ICIS Supply & Demand. “Initially, we ensured that the emergency shutdown was carried out safely. Currently, we are carefully assessing the weather and logistical conditions, as well as the guidance from the relevant authorities, to determine the short, medium and long-term impacts [of the suspension],” said the Indorama spokesperson. Earlier in the week, Brazil’s polymers producer Braskem and styrenics producer Innova declared force majeure from its operations in Triunfo, as did styrene butadiene rubber (SBR) producer Arlanxeo. Official figures on Friday put the dead toll at 116, with more than 130 people still unaccounted for, while more than 100,000 remain displaced from their homes and nearly two million people in the 12-million-strong state are being affected by Brazil’s worst floods in nearly a century. To make matters worse, rains returned to Rio Grande do Sul by the latter part of the week, forcing authorities to suspend some rescue operations. Brazilians this week have kicked off a remarkable national mobilization to help alleviate the disruption gauchos – as citizens from Rio do Grande do Sul are known in Portuguese – are going through. From workplaces to residential buildings, from civil associations to companies, there is practically no place in the country where an effort to collect goods, food and money is not being deployed. PORTS CLOSED, AGRICULTURE HITThe Port Authority for Rio Grande do Sul, called Portos RS and which oversees operations at the Port of Rio Grande, Port of Pelotas and Port of Porto Alegre, said operations at the two latter facilities remain shut to traffic. The Port of Rio Grande is operating normally, it added. “[Portos RS] maintains operations at the Port of Porto Alegre suspended, due to the maintenance of the level of Lake Guaiba above the so-called flood level. At the Port of Pelotas, in the south of the state, the shipment of wood logs remains suspended and activities are paralyzed at the terminal,” the Authority said. “Regarding the crossing to Sao Jose do Norte [a city north of Porto Alegre], the vehicle and passenger transport service is suspended due to the high level of Laguna dos Patos.” This week, several fertilizers players said to ICIS demand is likely to be hit as planting for some crops which had just started is likely to be delayed, postpone, or cancelled. Moreover, seeds recently planted could also get damaged by high levels of moisture, potentially ruining their harvest. “There has been great damage to infrastructure in the state, with fertilizers mixers underwater and authorities still calculating the impacts,” said an urea trader. “The rice harvest is almost done, but wheat planting is in its early days and producers of urea believe demand destruction can happen due to the circumstances.” Another fertilizers source added that around 70% of soybeans in Rio Grande do Sul had already been harvested, but there is still 30% to be harvested which would now be at risk. It added that 30% would represent approximately 6.5 million tonnes of soybeans, or 5% of Brazil’s total production. Rio Grande do Sul is the main rice producer in Brazil, and the source said the harvest for that crop was already behind schedule when the rains started, with 78% harvested. “We estimate that the unharvested volume should significantly affect the supply of rice in Brazil, increasing the upward pressure on prices, “the source said. “Corn was also in the process of being harvested, with an estimated 83% harvested by the time the rains started. It is not possible yet to estimate precisely how much of this amount at risk has been lost.” Front page picture: Voluntaries working in Rio Grande do Sul organizing donations Source: Government of Rio Grande do Sul Additional reporting by Bruno Menini, Deepika Thapliyal and Chris Vlachopoulos

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: FD NWE Colourless flake market entering more stable period during May UK flake prices still under upward pressure Demand outlook still hard to predict

SINGAPORE (ICIS)–Sustainable finance is a key interest for companies seeking to enter the recycled plastics market in Asia or to expand their current capacities. Despite the various financial instruments available, the absence of a clear entry point often results in uncertainty for firms. In this podcast, ICIS analysts Chua Xin Nee and Joshua Tan explore the different types of sustainability-related loans available and their successful use cases. Tan will be speaking at the Asia Petrochemical Industry Conference (APIC) 2024 in Seoul, South Korea, on 31 May. His presentation is on “Asian recycled polymers – short-term hiccups to long-term optimism”, as part of the sustainability and circular economy panel. Visit ICIS during APIC ’24 on 30-31 May at Booth 13 in the Grand Ballroom Foyer in the Grand InterContinental Seoul Parnas. Book a meeting with ICIS here.

HOUSTON (ICIS)–Global base oils markets face regionally unique pricing dynamics but largely stagnant underlying demand and sufficient supply amid still challenging macroeconomic conditions. Crude oil price volatility and its effect on refining economics will be a key driver going forward this year. Tighter European spot availability of Group I Ample supply, demand weakness drives unprecedented low Group III in US Chinese prices weaken versus import US Group II fills regional supply gaps in Middle East, Asia during H1 ASIATight supply of Group II will likely be alleviated to some extent in May and June. Significant volume upwards of 10,000 tonnes of US-origin Group II lots comprising 70N, 110N, 220N and 600N grades landed on Indian shores in the first-half of April, and a second shipment of a similar size was also heard to have arrived in India in late April. The below graph compares CFR 150N India prices with FOB Asia NE and FOB USG export prices for the same grade. This is likely to more than offset the reduced supply of South Korean and Taiwanese cargoes, especially that of heavy grade 500/600N, in recent months. Demand for South Korea-origin Group II cargoes was relatively strong in April in regions such as India and the UAE, while demand in other parts of Asia such as China and southeast Asia was subdued. May to June is typically a lull season for base oils from the key downstream lubricants sector. ICIS analysts forecast Asia Group II prices to dip slightly in May before recovering in June. As for Group I, spot availability of southeast Asian material continued to be in short supply, with sporadic offers of Thai-origin brightstock cargoes heard. With few alternatives of Group I imports from other sources such as Europe or the Middle East, the tight supply situation is expected to persist in the coming months. CHINAMost downstream lubricant producers in China are expected to maintain steady purchasing pace in May, and the unusual weakness in March and April trade sentiment may sustain, too. Trades were far weaker than expected in these two months, the traditional peak demand season for base oil. Group II price gains in Asia were noticeable through March and April, compared with small increases in China. Such a price divergence is expected to widen in May partly as Asian refiners may further hike their export prices in view of expected supply shortage caused by robust demand in southeast Asia. However, slow growth in China’s real economy such as the automobile and industrial sectors may lead to flat buying demand for lubricant oils, hence domestic lubricant oils producers may continue to buy base oils on a need-to basis, according to many producers. The average import costs of contractual Group II base oils are expected to be higher than their sale prices in China during April, said key importers, citing increasing export prices from Asian refiners and depreciating Chinese yuan against the US dollar. This, combined with ample supply of domestic Group II materials amid limited routine maintenance, may cause significant price spreads between domestic and imported Group II base oils. Therefore, downstream producers are expected to cut the usage of imported cargoes. The lubricant oil producers and importers in China may have little import interest as a result. USGroup II and Group III prices have diverged, with Group II spot rising on tighter availability following a slew of exports in Q1 and two price increases this spring up to 55 cents/gal on 100N. The price increases were implemented on the back of higher costs for crude and VGO and affected term contract customers to a greater degree, but spot prices have been pressured upward in tandem to a lesser extent. The availability issue may be temporary as it is due to unconfirmed work by one refiner, other refiners being sold out and production of Group III cutting into Group II yields. Group III suppliers have not raised prices in 2024. Rather SK Enmove’s 4cSt posted price is down by 50 cents/gal over two separate decreases this year. Separately, Motiva has reduced its 4cSt posted price by a cumulative 65 cents/gal. ICIS spot 4cSt has fallen by 15%, while spot 100N has risen by 8.2%. The US 4cSt price decline has been unprecedented, bringing US Group III lower than Asia. The graph shows the US 4cSt price as it compares with the Asia 4cSt price and the US 100N price. US EIA data show: Production up 5.5% YTD compared to 2023 Consumption down 29.5% YTD compared to 2023 (-27.2% in January and -32.2% in February) Demand data are worse than 2023 so far this year, which explains the heavy export months of Q1 and potentially why Group II supplies are more balanced domestically in early May. ICIS analysts forecast a general downtrend to flat pricing for the remainder of the year. EUROPEEuropean domestic Group I base oils spot supply limitations, a key driver of spot price increases in the last month, are expected to continue in May and early June. SN150 remains the tightest grade, closely followed by SN500. Domestic brighstock supply is balanced, contrasting with the export market, where shortages drove price hikes from March through April. In the European export market, availability is likely to remain limited through the rest of Q2. Players are expected to continue prioritising domestic supply, and very few offers are anticipated for the export market. Brightstock is expected to be tight for export now that Eni has stopped production at Livorno. A limited number of producers offer brightstock in sufficient volumes for export requirements, and the removal of Eni from the market means there will be significantly less availability. While lower demand at the beginning of Q2 offset the limited availability, buying interest looks set to increase further into the quarter and as a result there could be supply shortages. Buying interest has been increasing from west Africa, north Africa and east Africa in early May, and this is likely to continue throughout Q2. Demand from west Africa will then drop off in Q3 amid rainy season. ICIS analysts forecast European Group I prices to rise through August. MIDDLE EASTGroup II remains oversupplied in the UAE following bulk arrival of volumes from Asia and the US in late April and H1 May, and the trend is likely to persist into late May and early June. Import volumes from the US and northeast Asia upwards of a combined volume 25,000 tonnes of 110N, 150N, 220N and 500N/600N have dampened fresh imports’ interest from Asia. The recent firmness in offers and selling indications for northeast Asian 150N and 500N/600N exports have thus resulted in weak response from regional importers. The UAE market in the Middle East continues to rely on sourcing low viscosity index (VI) Group I base oils from Iran in the absence of spot high VI availability from Asia, Europe and from within the region. Spot Group I supply from Asia and from within the region is likely to remain curtailed as major producers in these markets opt to focus on contractual commitments. This is expected to sustain demand and prices for Group I Iranian product in the near term. The Eid ul Adha holidays in mid-June may temper imports’ and ex-tank offtake in H2 June before recovering in July. ANALYSTS’ VIEWWith ICIS crude forecast currently expecting crude to hover around the $90/barrel mark for most of the remainder of the year, this could keep some pressure on base oils pricing. With VGO, while slightly elevated vs typical spreads with crude, gas oil and fuel oil, moving broadly in line with crude, higher crude prices flow through to lower base oils margins for producers. We have seen European prices rise on the recent crude rise, where cash margins are close to their sustainable minimum, while other regions have held stable. Upward pressure may come in Asia where gas oil price rises over the summer might have the most significant effect on the base oil market, resulting in upward pressure there due to competition from fuels producing units. In the US, where margins are highest currently, there is expectation of a flat to declining market on sufficient length in supply. Base oils are used to produce finished lubricants and greases for automobiles and other machinery. Focus article by Amanda Hay, Eashani Chavda, Samantha Wright, Matthew Chong, Whitney Shi, Veena Pathare and Michael Connolly