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Speciality Chemicals08-May-2024
BARCELONA (ICIS)–Europe’s chemical industry
stands to benefit in the long-term from the
expansion of wind, solar and other low carbon
methods of producing energy.
– Growth in renewables means spot electricity
prices can turn negative if demand dips
– Europe electricity prices higher than pre-war
as tied to price of natural gas, now mainly
liquefied natural gas (LNG)
– Europe sees significant growth in
solar, while wind faces delays due to supply
chain issues
– Decarbonizing includes reducing emissions
from gas plants via carbon capture and storage
(CCS) and other technologies
– Challenges include grid infrastructure to
transport electricity across regions with
varying renewable output
– Despite regulatory hurdles, there is
political will for grid investment as part of
the energy transition
In this Think Tank podcast, Will
Beacham interviews ICIS power markets
editor Andrea Battaglia, ICIS
head of power analysis Matthew
Jones, 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.
Polyvinyl Chloride08-May-2024
SINGAPORE (ICIS)–Asia’s polyvinyl chloride
(PVC) markets are expected to see some
uncertainty in the coming months, with factors
like China’s domestic demand, the impact of
India’s monsoon and some policy changes
expected to shape the landscape.
June offers from Asian producers awaited
next week
SE Asian economies see healthy growth in
Q1, expected to support PVC demand
Low domestic demand in China encourages
exports, especially to India
In this chemical podcast, ICIS editors Jonathan
Chou, Damini Dabholkar and analyst Lina Xu
discuss recent market conditions with an
outlook ahead in Asia.
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here.
Butanediol08-May-2024
SHANGHAI (ICIS)–Asia’s 1,4-butanediol (BDO)
market continues to be pressured by oversupply
amid slowing demand.
With the first peak season in March to April
ending, demand in some sectors has started to
slow.
In this chemical podcast, ICIS markets reporter
Corey Chew reports from China on market
expectations before Enmore’s 14th BDO and
Derivatives Development Forum.
Global News + ICIS Chemical Business (ICB)
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Ethylene08-May-2024
SINGAPORE (ICIS)–Japanese majors Asahi Kasei,
Mitsui Chemicals and Mitsubishi Chemical on
Wednesday said they have agreed to perform a
joint feasibility study on feedstock and fuel
conversion at their ethylene production
facilities in western Japan to accelerate their
carbon neutrality targets.
“The joint feasibility study is expected to
raise the speed and efficiency of the
transition to carbon neutrality of the
companies’ ethylene production facilities and
each company’s petrochemical products,” they
said in a joint statement.
The three companies will study “concrete
measures” to drive their move towards carbon
neutrality such as replacing petroleum-derived
resources with biomass feedstock and conversion
to low-carbon fuel, while also studying optimal
future production arrangements.
In order to achieve carbon neutrality by 2050
in accordance with the target set by the
Japanese government, the three chemical giants
have each adopted policies to become carbon
neutral by reducing greenhouse gas (GHG)
emission targets to effectively zero.
“However, if initiatives are taken by each
company individually, the speed of
implementation and efficiency of GHG reduction
are limited,” they said.
“This makes it increasingly necessary for
multiple petrochemical manufacturers located
nearby to cooperate with one another through
mutual provision of technology and joint
implementation of measures that contribute to
carbon neutrality.”
Ethylene07-May-2024
HOUSTON (ICIS)–Following a
better-than-expected 2024 first quarter, US
compounder and formulator Avient raised its
full-year guidance for adjusted earnings before
interest, tax, depreciation and amortization
(EBITDA) by $5 million at the low end.
Sales into the defense market, along with raw
material deflation, were the key earnings
drivers in Q1 and Avent expects both to support
earnings through 2024, CEO Ashish Khandpur and
CFO Jamie Beggs told analysts during the
company’s Q1
earnings call on Tuesday.
New 2024 guidance
Previous 2024 guidance
Pro forma 2023 adjusted
EBITDA
$505 to $535 million
$510 to $535 million
$501.8 million
SALES IMPROVING IN MOST END
MARKETSAvient sees demand
conditions “generally improving across all
regions”, with improved momentum in consumer,
packaging, healthcare, defense and industrial
end markets, the executives said.
After a 35% year-on-year increase in Q1,
defense sales amid the ongoing geopolitical
tensions, Avient expects those sales to
continue growing through 2024, albeit not at
the first quarter’s hot pace, they said.
Avient’s Dyneema-brand fiber
technology is used in the personal protection
of soldiers and law enforcement and border
control officers.
While Avient’s utilization rates in defense are
high, the company is able to meet forecast
demand growth and expects no capacity
limitations this year.
However, it may add capacities in the future,
depending on demand, which can be “lumpy” in
that market, they said.
Defense accounted for 7% of Avient’s total 2023
sales of $3.14 billion, with more than half of
those sales in the US. Avient acquired the
Dyneema business from DSM in 2022.
Telecommunications and energy, however, are
among the weaker end markets, with
first-quarter sales down double-digit and
weakness continuing into the second quarter.
Destocking in the capital-intensive
telecommunications market continued in Q1, with
no meaningful rebound in that market expected
until 2025, the executives said.
Telecommunications accounted for 4% of Avient’s
2023 sales.
BY REGION
Regionally, Avient sees good momentum in the US
in markets such as consumer packaging, defense,
building and construction, industrial and
infrastructure.
“Destocking in those markets is over”, Khandpur
said.
With the exception of telecommunications and
energy, overall demand in North America is
“coming back quite well”, he said.
However, persistent inflation is delaying the
timing of interest rate cuts,
which could weigh on sales in end markets such
as building and construction, transportation
and industrial, the executives said.
In China, about 70% of Avient’s sales go into
the local market, putting the company into a
good position as that country’s economic
policies transition to focus on the domestic
market, the executives said.
In Europe, demand in packaging and healthcare
is improving, but Avient expects the region’s
overall year-on-year sales growth to be soft.
Consumer confidence in Europe is weak and
eurozone
manufacturing continues to signal
contraction, they noted.
Meanwhile, the stronger US dollar has become a
headwind, they added.
Sales by region in 2023:
RAW MATERIAL DEFLATION
Raw material deflation will continue to support
margin expansion in the second quarter, albeit
to a lesser extent than in the first quarter,
the executives said.
In the first quarter, Avient saw
better-than-expected pricing for non
hydrocarbon-based raw materials such as
pigments and certain performance additives.
Primary raw materials used in Avient’s
manufacturing operations include polyolefin and
other thermoplastic resins, titanium oxide
(TiO2), inorganic and organic pigments,
specialty additives and ethylene.
Pricing, net of raw materials, should help
drive year-on-year earnings growth in 2024, the
executives said.
Also, the company expects additional margin
expansion due synergies and plant closures
related to its acquisition of
Clariant’s masterbatch business back in 2020,
Beggs noted.
M&A NOT A PRIORITY
In the near-term, Avient will focus on organic
growth and margin expansion whereas growth
through mergers and acquisitions (M&A) is
not a priority.
While Avient is not ruling out M&A, any
deals would be “small and bolt-on in nature”,
in areas like healthcare, sustainable solutions
or composites, with focus on Asia and Latin
America, Khandpur said.
“Premiums are pretty high” in M&A, he
added.
Thumbnail photo of Ashish Khandpur, who
took over as Avient’s CEO and president on 1
December 2023; photo source: Avient
Ethylene07-May-2024
SINGAPORE (ICIS)–Asia’s olefins brace for
headwinds amid sustained weak demand in May,
although some support is expected from
curtailed supply in China. Lengthening supply
from South Korea could continue to weigh on the
market’s outlook as it navigates upstream
volatility amid tensions in the Middle East.
Asia’s olefins market to see increasing
supply from South Korea in May
Relatively low PDH run rates could lend
support to NE Asia C3
Poor demand weighing on Asia C2 amid
multiple supply options for June arrivals
In this chemical podcast, ICIS editors Julia
Tan and Josh Quah discuss recent market
conditions with an outlook ahead in Asia.
Ethylene07-May-2024
ORLANDO (ICIS)–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.
“We are actively looking at our growth
opportunities throughout North America as well
as South America,” said Sami Al-Osaimi,
executive vice president, polymers, SABIC. He
made his comments during a presentation at this
year’s NPE: The Plastics Show.
Al-Osaimi said the Americas is a very key
strategic market for SABIC. The company has
seen good momentum in North America.
“We are definitely going to really make sure
that we leverage what exactly our customers
require,” he said.
About two years ago, SABIC and ExxonMobil
started operations at an integrated
polyethylene (PE) and ethylene glycols (EG)
complex in Corpus Christi, Texas, US, under the
Gulf Coast Growth Ventures (GCGV) joint
venture. The startup marks SABIC’s first
US-based ethylene and PE production, albeit
through a joint venture.
At the same time, Al-Osaimi acknowledged the
challenges facing the industry.
The market is contending with the
consequences of a surge in new ethylene
capacity that has started up in recent years.
ICIS estimates that up to 20 million
tonnes/year may need to shut down to keep
operating rates at healthy levels. High-cost
regions are bearing the brunt.
Earlier in April, SABIC announced plans to
shut down a cracker in Geleen, the Netherlands.
ExxonMobil revealed plans to shut down its
cracker in France
during that same week.
Al-Osaimi did not rule out further capacity
rationalizations during a question-and-answer
session that followed his presentation at NPE.
“SABIC always is looking to its operations in
Americas, globally, and how to become more
efficient and effective to support our
customers to really develop the right
solutions,” he said. “This is going to be an
ongoing process.”
OPPORTUNITIES IN CHEM RECYCLING,
E-CRACKINGSABIC is further
improving chemical recycling technology to make
it more effective and efficient, he said.
SABIC and Plastic Energy are developing a
chemical recycling plant under a joint venture
in Geleen.
Completion had been expected in the fourth
quarter of 2023.
There are still challenges with scaling up the
technology, Al-Osaimi said. Still, SABIC is
open to expansion, with possible sites
including the US, Saudi Arabia and other
regions.
In addition, SABIC, BASF and Linde
recently started up a demonstration unit of
an electric cracker (e-cracker). As the group
demonstrates the technology, it would explore
expanding the site and potentially building new
units, Al-Osaimi said.
STRATEGY OF COLLABORATION,
INNOVATIONIn prepared remarks,
Al-Osaimi elaborated on how SABIC was
navigating the challenges in the market by
stressing its focus on innovation and
collaboration with customers.
The company is focusing on end markets such as
advanced packaging, automotive, transportation,
building and construction, consumer goods,
electrical components and health and hygiene,
he said.
Electric vehicles (EVs) have material
challenges, that present opportunities for
SABIC. The company is developing polymers to
prevent thermal runaway – part of its larger
BLUEHERO initiative, Al-Osaimi said.
Companies that build automobiles powered by
internal combustion engines (ICEs) still want
to lower their weight to improve their fuel
efficiency and reduce their greenhouse gas
emissions, he said. That is creating demand for
lighter weigh materials.
Produced by Plastics Industry Association
(PLASTICS), NPE: The Plastics Show takes place
6-10 May in Orlando, Florida.
Focus article by Al Greenwood
Thumbnail image shows polyethylene (PE),
which is used in plastics bags. (Photo by
Elaine Thompson/AP/Shutterstock)
Crude Oil07-May-2024
SINGAPORE (ICIS)–Saudi Aramco’s net income
fell by 14.4% year on year to Saudi riyal (SR)
102.3 billion in the first quarter amid lower
crude oil volumes and weakening downstream
margins, the energy giant said on Tuesday.
in SR billions
Q1 2024
Q1 2023
% Change
Sales
402.04
417.46
-3.7
Operational Profit
202.05
222.18
-9.1
Net profit
102.27
119.54
-14.4
Early this year, Saudi Arabia’s government
ordered Aramco to halt its oil expansion plan
and to target a maximum sustained production
capacity of 12m barrels/day, 1m barrels/day
below the target announced in 2020.
In the first quarter, Aramco’s downstream
income before interest, income taxes and zakat
(annual Islamic tax) slumped by 64% year on
year to SR4.62 billion.
The drop in downstream earnings reflects
weakening refining and chemicals margins,
partially offset by inventory valuation
movement, it said.
The drop in group earnings was partially offset
by lower production royalties, an increase in
crude oil prices compared to the same period
last year and lower income taxes and zakat.
Despite having a capacity of 12 million
barrels/day, Saudi Arabia currently produces
about 9 million barrels/day as part of
production cuts initiated by OPEC and its
allies in October 2022 and further voluntary
cuts by Saudi Arabia and other OPEC+ members in
April 2023, all designed to stabilize oil
prices.
Following an OPEC+ meeting in June 2023, Saudi
Arabia – the world’s top crude exporter –
announced a further oil production cut of 1
million barrels/day.
“Looking ahead, I expect our portfolio to
continue to evolve as we aim to contribute to
an energy transition that offers solutions to
climate challenges, but at the same time
recognizes the need for affordable, reliable,
and flexible energy supplies,” added Amin
Nasser, Aramco’s President and CEO.
Aramco’s
chemicals arm SABIC and China’s Fujian
Energy and Petrochemical Group Co held a
groundbreaking ceremony to mark the start of
construction at the SABIC Fujian Petrochemical
Complex in China’s Fujian province during the
first quarter.
The project will include a mixed-feed steam
cracker with up to 1.8m tonne/year ethylene
(C2) capacity and various downstream units
producing ethylene glycols (EG), polyethylene
(PE), polypropylene (PP) and polycarbonate
(PC), among other products.
Thumbnail photo : One of Aramco’s US
offices (Source: Saudi Aramco)
Polyethylene07-May-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
No matter which petrochemical or polymer you
examine, the story is similar. To illustrate
this point, let’s today look at polyvinyl
chloride (PVC).
As China’s economy boomed, largely thanks to
the growth in its exports, so did its
petrochemicals demand, increasing the gap
between China’s consumption and that of the
much more populous Developing World ex-China
region.
China’s 2008-2009 US$586bn economic stimulus
package – which largely went into housing and
infrastructure – seems to have had a much
bigger effect on the country’s PVC demand than
in some other products.
Up until the Evergrande turning point in
September 2021, China’s investment in housing
and infrastructure continued at apace.
It appears as if stimulus greatly increased the
importance of Chinese PVC demand as a driver of
global PVC demand: Between 1992 and 2008,
China’s share of global demand averaged 17% per
year; in 2009-2024, the ICIS Supply &
Demand Database expects China’s share to reach
40%.
China’s demand growth averaged 10% per annum
between 1992 and 2023. But growth is forecast
to decline to 3% per year in 2024-2030. This
decline is in line with what ICIS expects in
other products.
Between 1992 (the start of what I see as the
Petrochemicals Supercycle) and 2023, global PVC
capacity exceeding demand was estimated by ICIS
as averaging 8m tonnes a year.
As with many other products, ICIS forecasts a
big increase in global PVC capacity exceeding
demand in 2024 -2030. During this period,
capacity exceeding demand is expected to
average 15m tonnes a year.
In another parallel with other products,
China’s self-sufficiency in PVC has reached the
point where it has swung from being a major net
importer to being a net exporter.
Trade tensions between China and the West have
been building since Mike Pence, the then US
Vice President, made a landmark speech in
October 2018.
Could this translate to more protectionism in
global PVC markets? It is a scenario worth
considering as China seeks to increase its
exports, challenging the US which accounts for
the lion’s share of export trade.
During the Petrochemicals Supercycle, the world
was becoming ever-more globalised rather than
what we are seeing today – the reverse.
China was the tide that lifted all ships.
Almost every year, its growth surprised on the
upside, guaranteeing success for even the
least-competitive plants.
We didn’t we have to worry about big increases
in China’s self-sufficiency in PVC,
polyethylene (PE) and polypropylene (PP).
Now everything has changed, making big picture
analysis of China’s economic problems and the
global geopolitical landscape crucial.
This kind of analysis has become as important
if not more important than studying
cost-per-tonne economics.
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.
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