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Updated at 10:45 GMT on 27 May
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The war in Ukraine caused oil price volatility
which has increased as surging COVID-19 cases
in China led to fresh lockdowns which have hit
demand. China is the world’s second biggest
economy and largest oil importer.
India is facing a more severe shortage of
fertilizers and edible oil amid wide-ranging
trade disruptions as the Ukraine war rages on,
with financial sanctions tightening on Russia.
Europe’s energy challenge is immense and put
into stark relief by the response to Russia’s
war in Ukraine. Cutting the ties that bind EU
and non-EU nations to Russian gas and oil will
be extremely painful this year and in years to
come: the actions proposed by the European
Commission put that into context.
This topic page examines the impact of the
Ukraine conflict on oil, gas, fertilizer and
chemical markets.
Image credit Vadim
Ghirda/AP/Shutterstock
Europe’s energy markets witnessed a year of
record prices and extreme volatility in 2021.
Russia’s invasion of Ukraine has led to more
difficult conditions for global markets in
2022.
GAS SUMMARY
Gas storage low in Europe, winter demand
30% higher than rest of year
Record shipments of liquefied natural gas
(LNG) to Europe so far in 2022
LNG could ease Europe shortages if Russia
supplies cut
Europe LNG processing operating at full
capacity
On 27 April Russia suspended gas deliveries
to Poland and Bulgaria
AMMONIA SUMMARY
Russia supplies 20% of global seaborne
ammonia market
Disrupted supply has pushed up fertilizer
and food prices
OIL SUMMARY
Friendship oil pipeline flows through
Ukraine
Russian oil feeds around a quarter of
Europe demand
Europe seeks to end reliance on Russian
crude oil
CHEMICALS SUMMARY
High Europe gas and electricity prices
force price hikes, energy surcharges
Volatile oil and feedstock prices dent
chemical producer margins
Elevated oil prices dent consumer
confidence and demand
Europe is heavily reliant on Russian gas and
exposed to disruptions in supply, but
Russia is also an important oil exporter and a
supplier of fossil fuel products, which find
their way to international markets via
Ukraine’s ports.
Any interruptions in supplies caused either by
cyber or physical attacks or sanctions in
response to them could send shockwaves across
the global economy, lifting the cost of living,
impacting industrial and agricultural
production and potentially leading to social
unrest.
ICIS has taken a broader perspective, asking
how vulnerable energy and energy-related
supplies are to disruptions, what contingency
plans are put in place and what could be
expected in the upcoming weeks.
How vulnerable are energy and
energy-related Russian supplies to
disruptions?
Europe depends for close to 40% of its annual
gas consumption on Russian supplies, imported
via four routes – Ukraine, Belarus-Poland as
well as the Nord Stream 1 and TurkStream
corridors linking Russia to Germany and Turkey
via the Baltic and Black Sea, respectively.
Overall Russian pipeline supplies were limited
throughout 2021, and since the beginning of
this year producer Gazprom has shipped only
one-third of the gas that it was expected to
deliver to European consumers via Ukraine as
part of a five-year transit agreement.
On 27 April Russia banned exports of gas to
Poland and Bulgaria. European petrochemicals
players could face even higher gas prices as a
result.
If the conflict escalates, Ukraine transit
pipelines may come under attack but disruptions
could be limited because the infrastructure has
been built to grant flexibility, allowing the
operator to reroute flows away from potentially
damaged segments.
AMMONIA IMPACT
The Togliatti-Azot pipeline, the world’s
longest ammonia pipeline stretching 2,471km
from the Togliatti Azot plant in Russian Samara
Oblast to the Ukrainian Black Sea port of
Yuzhny, could be caught up in the cross-fire.
Russian ammonia supplies account for around 20%
of the global seaborne merchant ammonia market
each month.
Around two thirds of those volumes are exported
via Yuzhny, with the rest reaching European and
global markets via Baltic ports. Ammonia is a
prime material for fertilizers, so curtailments
could potentially lead to higher food prices
and shortages.
Ammonia market players are scrambling to cover
positions and assess options as the Russian
invasion of Ukraine saw loadings at the key
export hub of Yuzhny halted with immediate
effect.
Russian nitrogen fertilizer major Togliatti
confirmed the suspension of the transit of
ammonia to the Black Sea port via pipeline to
ensure the safety of people living in the
vicinity of the lengthy conduit.
The Samara Oblast-based giant also confirmed
the shut down of four of its seven ammonia
units, with the other three plants operating at
reduced rates.
OIL PIPELINES VULNERABLE
Supplies on the world’s longest oil pipeline,
the Friendship (Druzhba) pipeline, could be
threatened if the conflict leads to tough
sanctions. The pipeline carries oil from
central Russia 4,000km west to Ukraine and
Belarus and runs close to the Belarus-Ukraine
border. Russia exports around 5m bbl/day, of
which half are exported to Europe, including
via this pipeline.
Russian oil accounts for about a quarter of
Europe’s consumption, with the Druzhba pipeline
carrying close to 1m bbl/day. Should sanctions
be imposed and exports hindered, Europe will
need to secure alternative cargoes from the
global market.
Europe consumed most exports of Urals, Russia’s
biggest export grade, in 2021 after Saudi
Arabia boosted market share in China. Almost
10m tonnes of Urals went through Rotterdam in
the first half of last year, up 2m tonnes on
2020.
Germany stands most exposed because it gets 25%
of its oil from Russia.
CHEMICALS IMPACT
Gas and electricity are important components in
the production costs of many chemicals. Surging
gas and feedstock prices in Europe have caused
big hikes in contract and spot prices.
Europe is now at a competitive disadvantage to
other regions and some customers are seeking
new sources of lower-priced supply, especially
from Asia and the Middle East.
The conflict in Ukraine has pushed European gas
prices back up to record levels, so some
chemical producers may consider ceasing
production, or adding further energy
surcharges.
Rising oil prices since late 2021 have already
put chemical margins under pressure, and this
has continued into 2022. As oil and naphtha
prices soared, margins for ethylene production
based on naphtha went nagative for the first
time ICIS record began. The are now are
swinging wildy in tandem with oil price
movements.
Chemical producers are struggling to pass on
increasing naphtha feedstock and energy costs,
especially in Europe. Elevated oil prices also
dent downstream consumer confidence and
spending.
What contingency plans are being put in
place?
US and European officials have been planning
for backup LNG supplies. Exports of LNG from
Algeria, Qatar, the US and even Australia have
been discussed as alternatives. Although Europe
imported a record 11bn cubic metres (bcm) of
LNG in January alone, half of which were
sourced in the US, much of future supplies
would depend on price as well as supply and
processing capacity.
Europe is
proposing to replace 100bn cubic metres
(m3) of Russian gas with alternative supplies
by the end of the year.
“In this scenario, there would be huge problems
unless Europe gets it act together. I estimate
that even with new liquified natural gas (LNG)
supplies from the US, Norway, and Qatar plus
energy efficiency measures and more use of
renewables, Europe would still be short by
30-40bn m3,” said ICIS senior energy editor,
Aura Sabadus.
You will find more infographics at Statista
If the Asian premium were to increase, LNG
cargoes would head in that direction, even as
seasonal European winter gas demand is on
average 30% higher than the rest of the year.
Supply disruptions caused by escalating
tensions may lead to a price rebound,
incentivising more LNG to return to Europe.
However, European import terminals are already
operating at nameplate capacity. A record of
5,000GWh/day was reached in mid-January,
according to EU data.
Even if more LNG were to reach European
terminals, countries in central and eastern
Europe which rely on Russian flows shipped via
Ukraine, would struggle to secure imported LNG.
For oil markets, in case of an attack but no
international sanctions, the worst-case
scenario would be for approximately 240,000
bbl/day of lost Russian exports via Ukraine.
There are other seaborne routes, including the
Russian Black Sea port of Novorossiysk.
ICIS publishes May oil price
forecast
The crude price has switched from being driven
by supply, to driven by demand in recent weeks.
China’s future oil demand growth is under
question, with lockdowns ongoing in many
cities. Furthermore, the IMF has downgraded
global GDP growth for 2022 by 0.8%, whilst the
US Fed is expected to raise interest rates by
0.5% in May; these will inevitably reduce oil
demand growth for the remainder of the year.
The EU may impose direct sanctions on Russian
crude oil sales later this year. The exact
details of the sanctions are still unclear, but
it is likely that the sanctions will be
implemented in a phased manner over the course
of 2022. The phased nature of the
sanctions does mean that the overall impact on
prices will be much more muted than previously
expected, as it will give Russia time to find
alternative buyers of the crude such as India,
and therefore Russia’s overall exports will be
negatively impacted, but much less so than if
the sanctions were due to be implemented
immediately.
Nevertheless, if the oil sanctions are
implemented, this will be a bullish move and is
accounted for in the ICIS base case forecast,
where the May Dated BFOE price is expected to
average at $111/bbl.
Europe is managing to significantly reduce its
purchases of Russian crude – Germany, for
instance, has halved its imports of Russian
crude. But overall, Russian crude exports have
largely returned to pre-crisis levels, as India
substantially increases its Russian import
volumes to take advantage of extremely large
discounts (-$38/bbl). New oil supply is due on
the market in May as the US and other allies
release ~1.3 million barrels per day for 6
months, providing the market with much needed
supply over the medium term. However, ICIS
anticipates a strong summer driving season in
the West, pushing prices to over $120/bbl in
late summer.
Crude prices are expected to fall considerably
from these levels in winter 2022/2023 as a
combination of high energy costs, high
inflation and higher interest rates leads to
lower economic growth and less overall oil
demand. ICIS expects crude prices to fall below
$100/bbl in early 2023.
Ukraine conflict threatens Europe oil
and chemicals production
With Russia’s invasion of Ukraine, sanctions
could cut supplies of crude oil through the
Druzhba pipeline, threatening oil refinery
operations and chemicals production at
installations in Hungary, Slovakia, Czech
Republic, Poland and the former East Germany.
Russian oil supplies up to a quarter of
Europe’s crude imports, with refineries in
central and eastern Europe, which are attached
to the Druzhba pipeline, particularly reliant
on these supplies. Any interruption to these
supplies could force refineries to reduce
operating rates unless they can find
alternative supplies.
Analysis of the ICIS Supply & Demand
database shows that the countries Druzhba runs
through, except for Germany, are reliant on
Russian crude oil for more than half of their
imports, led by Slovakia which obtained 96% of
its supplies from Russia in 2021.
Chemical production downstream of refineries in
these countries could be impacted by any
reduction in operating rates. The ICIS data
forecast that for 2022, 2.79m tonnes of
ethylene (11% of total European capacity) and
2.34m tonnes of propylene (12% of total
European capacity) are reliant on refineries
located along the Druzhba pipeline. While some
alternative sources of crude oil could be
sourced, it is unlikely normal levels of
operations could be maintained.
Michael Connolly, ICIS Principal Analyst
Refining said: “Although many have built
alternate sources, keeping full operating rates
would be difficult for them as they rely on a
consistent and reliable source of crude. Most
refiners in Europe are aware of the risk of
Russian crude and over the past 5-10 years have
tried to reduce their dependence, or at least
to build some capability to have an alternate
supply – it doesn’t mean they would be
unaffected, but there should be a little bit of
resilience, depending on the site.”
Connolly explained that some land-locked
refineries along the Druzhba pipeline have
built pipelines to the coast, allowing
alternative sources of crude oil to be sourced.
However, these pipelines may not have capacity
to feed the whole refinery.
A spokesperson for Grupa LOTOS said: “The LOTOS
refinery has dealt with suspended supplies by
land before. Due to the contamination of
Russian oil with chlorines, PERN, the
state-owned operator of transmission and
storage infrastructure, had to completely
discontinue the transmission of crude oil from
the eastern direction between 24 April and 9
June 2019.”
He added that scheduling of oil supplies by sea
helped to secure volumes sufficient to maintain
an unchanged level of throughput and maximise
fuel production.
TotalEnergies and PKN Orlen declined to comment
while MOL and PCK have not yet replied to
requests for comment.
A ban or restrictions on exports of Russian
crude oil is one amongst many possible
sanctions against Russia in the event of an
invasion or incursion into Ukraine. Russia
claims it has withdrawn some military forces
from the border with Ukraine but the US White
House say there is no evidence of this
happening.
Base oils buyers are switching from Russian to
European sourcing amid fears of sanctions
against these products.
European polymer markets are also seeing some
impact. A regional polymer seller said: “What
we do see, making the market a bit murky, is
Russian suppliers eliminating European stock
… fire-selling their stocks particularly in
eastern Europe and this is putting pressure on
prices.”
UKRAINE CHEMICALS UNDER THREAT
With Russian forces advancing across Ukraine,
chemical and fertiliser facilities may be
threatened by physical damage, interrupted
power and gas supplies or logistics disruption.
Kalush cracker closed
Karpatnaftohkhim’s cracker at Kalush has been
closed down because of the imposition of
martial law in Ukraine. It has capacity
(tonnes/year) of 250,000 (ethylene); 117,000
(propylene) 110,000 (LLDPE), 300,000 (PVC),
100,000 (benzene).
Black Sea export hub
closed
Ammonia market players have scrambled to cover
positions and assess options as the Russian
invasion of Ukraine saw loadings at the key
export hub of Yuzhny halted with immediate
effect.
Russian nitrogen fertilizer major Togliatti
confirmed the suspension of the transit of
ammonia to the Black Sea port via pipeline to
ensure the safety of people living in the
vicinity of the lengthy conduit.
The Samara Oblast-based giant also confirmed
the shut down of four of its seven ammonia
units, with the other three plants operating at
reduced rates.
Russia
export disruptions to shift global trade flows,
future capacities threatened
Disruptions to Russia’s chemicals and polymers
exports will
change trade flows, particularly to Europe
and Asia, as international sanctions, lack of
logistics and even “self-sanctions” limit
volumes.
While Russia’s capacities are relatively small
on a global scale, they can still have a
significant impact on regional markets if these
exports are disrupted.
Key Russia exports include methanol,
polyethylene (PE), polypropylene (PP), styrene
and paraxylene (PX).
Russia has increased exports of high density
polyethylene (HDPE) and polypropylene (PP) in
particular in 2020 and 2021 as new capacity
started up from SIBUR’s ZapSibNeftekhim complex
in Tobolsk in 2020.
LATEST HEADLINES
Malaysia’s PCG Q1 net
profit rises 42.1% on stronger
prices
By Nurluqman Suratman 27-May-22 15:33
SINGAPORE (ICIS)–PETRONAS Chemicals Group’s
(PCG) net profit rose by 42.1% year on year in
the first quarter of this year on the back of
higher product prices, the Malaysian producer
said on Friday.
China
Jan-Apr industrial profits growth slows to
3.5%
By Fanny Zhang 27-May-22 15:32 SINGAPORE
(ICIS)–China’s industrial profits in the first
four months of 2022 increased by 3.5% year on
year, the slowest in 16 months, data from the
National Bureau of Statistics (NBS) showed on
Friday.
SE
Asia biodiesel in bearish market on tepid
Europe demand
By Felicia Loo 27-May-22 15:23 SINGAPORE
(ICIS)–The southeast Asian palm methyl ester
(PME) biodiesel market maintained its bearish
sentiment, amid a closed arbitrage window to
move cargoes westwards.
Asia
soap noodles market to stay soft into Q3 amid
waning demand
By Helen Yan 27-May-22 15:04 SINGAPORE
(ICIS)–Asia’s soap noodles market is likely to
remain soft into the third quarter (Q3) on
tapering demand as consumers keep a tight lid
on their costs-of-living expenses amid
inflationary pressures and a looming global
recession.
China
LPG prices fluctuate on elevated costs, weak
demand
By Candy Nie 27-May-22 14:07 SINGAPORE
(ICIS)–China’s liquefied petroleum gas (LPG)
prices seesawed in a tight range in May,
generally hovering above yuan (CNY)
6,000/tonne, but the market may come under some
downward pressure in June on demand woes.
China’s mixed aromatics
import loss widens a bit amid higher
costs
By Yvonne Shi 27-May-22 11:43 SINGAPORE
(ICIS)–Theoretical margins for importing mixed
aromatics widened slightly within the negative
territory due to larger gains in import costs.
K+S Potash Canada unveils long term growth plan
for Bethune mine
By Mark Milam 26-May-22 12:59 HOUSTON
(ICIS)–K+S Potash Canada (KSPC) has announced
a long-term growth plan which includes a focus
on planning for a sustained increase of potash
production at its Bethune mine.
Azoty swings to Q1 profit of Zl 882 after
securing maximum ferts
output
By Will Conroy 26-May-22 12:51 LONDON
(ICIS)–Second largest European fertilizer
maker Grupa Azoty swung to a first-quarter net
profit of zloty (Zl) 882m ($205.1m) from Zl 86m
a year ago as it managed to maintain fertilizer
production at maximum capacity throughout the
quarter, the Polish company said.
Strong downside risk for the German power far
curve
By Anne Petersen 26-May-22 11:56 LONDON
(ICIS)–German clean spreads for this winter
and the years ahead have soared since the
outbreak of the war in Ukraine putting them
well in the money for Q4 ’22 onwards and
suggesting a strong downside risk for the
German power far curve.
FOCUS: Competition for US LNG intensifies as
new deals are signed
By Ruth Liao 26-May-22 11:34 HOUSTON
(ICIS)–Even before the Russia/Ukraine war, US
LNG developed as the prime destination for
flexible, hub-linked export volumes to serve
both Atlantic and Pacific markets.
Slovakia rules out coal-fired power plant life
extensions
By Lukasz Kulesza 26-May-22 11:14 LONDON
(ICIS)–The government of Slovakia told ICIS it
has ruled out extending lifespans at the
country’s existing coal plants despite any
energy security concerns as Europe seeks to
pivot away from Russian gas.
Ukraine’s Naftogaz calls for Nord Stream 1 EU
rules derogation to be
lifted
By Aura Sabadus 26-May-22 09:57 LONDON
(ICIS)–The Ukrainian gas incumbent Naftogaz
has called on the European Commission and
member states to revoke a derogation from EU
regulation granted to Nord Stream 1 and suspend
flows via the pipeline amid concerns over the
reliability of Russia’s Gazprom as a supplier.
Ukraine, Hungary extend firm capacity trial for
gas imports
By Aura Sabadus 26-May-22 09:53 LONDON
(ICIS)–The Ukrainian and Hungarian gas grid
operators GTSOU and FGSZ have extended a pilot
project for firm import border capacity into
Ukraine until the end of March 2023, according
to a GTSOU statement.
Above-average LNG sendout amid ongoing influx
of shipments to Europe
By Victoria Tchen 26-May-22 06:52 LONDON
(ICIS)–European LNG sendout is forecast to
remain above the three-year May 2019-2021
average of 254mcm/day for the last week of the
month, as Europe remains a prime destination
for cargoes, ICIS Analysis shows.
Singapore April chemicals
output falls 3.4%; overall manufacturing up
6.2%
By Nurluqman Suratman 26-May-22 14:28
SINGAPORE (ICIS)–Singapore’s chemicals cluster
output in April fell by 3.4% year on year,
weighed down by plant turnarounds and weak
demand in the petrochemicals segment, official
data showed on Thursday.
INSIGHT: Asia glycerine
to see China demand in Q3, arbitrage
opportunities in EU
By Helen Yan 26-May-22 12:00 SINGAPORE
(ICIS)–Asia’s glycerine market may face upward
price pressure in the third quarter (Q3) due to
an anticipated pick-up in demand from China as
it eases its lockdown restrictions amid
prevailing tight supply in Europe.
East,
south Asia ethanolamines demand wanes on
buyers’ caution
By Clive Ong 26-May-22 11:53 SINGAPORE
(ICIS)–Ethanolamines demand in east and south
Asia has waned as uncertainty over near-term
economic outlook intensified.
South
Korea raises key rate to 1.75% amid rising
inflation
By Nurluqman Suratman 26-May-22 11:30
SINGAPORE (ICIS)–South Korea’s central bank on
Thursday raised its key interest rate by 25
basis points (bps) to 1.75% as inflationary
pressures have remained high.
INSIGHT: China crude
consumption softens amid COVID-19
lockdowns
By Pearl Bantillo and Fanny Zhang
25-May-22 12:00 SINGAPORE (ICIS)–China’s
consumption of crude has softened as industrial
production is hit by pandemic-related
restrictions in place since February, with no
sign of the government giving up on its
zero-COVID policy.
VR Group’s Russia-Finland rail closure hits
Russian methanol exporters
By Eashani Chavda 23-May-22 09:54 LONDON
(ICIS)–Finnish railway company VR Group is
preparing a plan to stop the transport of goods
between Russia and Finland and has begun to
terminate contracts, in yet another blow to the
Russian methanol market.
US economists ratchet up inflation expectations
– survey
By Stefan Baumgarten 23-May-22 09:00 HOUSTON
(ICIS)–US inflation is set to be worse than
previously expected, according to a panel of 53
economists in the National Association of
Business Economists’ (NABE) May outlook survey.
France’s GRTgaz considering direct export
capacity to Germany
By Andrea Battaglia 23-May-22 08:43 LONDON
(ICIS)–French gas exports to Germany could
increase as a project to allow physical exit
flows at the Obeirgailbach-Medelsheim point is
currently being looked into, French
transmission system operator GRTgaz confirmed.
German business sentiment up in May; outlook
flat
By Morgan Condon 23-May-22 05:11 LONDON
(ICIS)–Business sentiment in Germany improved
in May, but the outlook is flat, according to
the Ifo research institute.
INSIGHT: War drives up China toluene exports as
pandemic weighs on local
demand
By Veronica Zhang 23-May-22 04:20 SINGAPORE
(ICIS)–China toluene market prices have soared
since May, with few prompt deals done as export
demand surged on the Russia-Ukraine crisis and
local demands were curbed by Covid-19 pandemic.
Germany’s economy could begin recovering by
year end – institute
By Stefan Baumgarten 20-May-22 13:57 LONDON
(ICIS)–Germany’s economy could begin to
recover by the turn of the year – if there are
no additional impacts from geopolitical
conflicts, and if the sharp rise in energy and
raw material prices moderates, the country’s IW
Institute of the German Economy said in its
spring 2022 forecast.
US gas supply crunch could ease by ’23 – trade
group
By Ruth Liao 20-May-22 13:10 HOUSTON
(ICIS)–Tightening US natural gas supply that
has not kept up pace with rising demand has
been a driving factor for the Henry Hub futures
benchmark, although increased supply is
expected to re-balance the US market into 2023,
according to an American Gas Association (AGA)
market webinar.
Germany’s producer prices rise at record pace,
chems up 29.5%
By Stefan Baumgarten 20-May-22 11:11 LONDON
(ICIS)–Producer prices in Germany rose at a
record 33.5% year on year in April amid Ukraine
war impacts and high energy prices, in
particular for natural gas, the country’s
federal statistics agency reported.
Russia’s Gazprom halts gas supply to
Finland
By ICIS Editorial 20-May-22 11:02 LONDON
(ICIS)–Russian gas supplier Gazprom Export
informed Finnish gas importer Gasum on Friday
that contracted supplies would be halted at 7am
local time on 21 May.
Clariant eyes strong first-half 2022 despite
headwinds
By Morgan Condon 20-May-22 06:04 LONDON
(ICIS)–Clariant is making gains towards its
2025 financial targets, driven by a strong
first half of 2022, CEO Conrad Keijzer asserted
at its delayed 2021 financial results
announcement.
Potash offers slip from
all-time highs amid reduced demand; supply
concerns continue
By Andy Hemphill 20-May-22 17:59 LONDON
(ICIS)–Offer pricing in the global muriate of
potash (MOP) fertilizer market has slipped
slightly from all-time highs, necessitated by
buyer resistance to high-priced tonnes and
reduced demand in some nations.
Urea
market weak despite high-volume Indian
purchase
By Deepika Thapliyal 20-May-22 17:27
LONDON (ICIS)–The urea market outlook remains
weak despite India buying nearly 1.7m tonnes,
as there is no major demand anywhere else.
Asia
oleochem players mull over Indonesia’s latest
palm oil DMO policy
By Helen Yan 20-May-22 17:19 SINGAPORE
(ICIS)–Asia’s oleochemical market players are
mulling over the latest news that Indonesia
will reimpose its domestic market obligation
(DMO) policy on palm oil.
Asia
PBT market softens on weak demand, economic
uncertainty
By Clive Ong 20-May-22 16:02 SINGAPORE
(ICIS)–The Asian polybutylene terephthalate
(PBT) market remains under downward pressure on
prevailing weak demand. Some participants
anticipate further potential weakness in the
near term as demand showed little pick-up.
Asia
biodiesel sentiment bearish on weak buying
appetite
By Felicia Loo 20-May-22 15:55 SINGAPORE
(ICIS)–The southeast Asian palm methyl ester
(PME) biodiesel market was down on bearish
sentiment and weak demand from major buyers
Europe and China.
Asian
fatty alcohol players retreat as CPO falls on
export ban removal
By Helen Yan 20-May-22 12:42 SINGAPORE
(ICIS)–Asia’s fatty alcohols buyers and
sellers are holding off any bids and offers in
the near term due to declining crude palm oil
(CPO) prices, after the Indonesian authorities
announced on Thursday that it will lift the
palm oil export ban on 23 May.
Asia
BDO under pressure as tepid demand persists,
economic uncertainty
By Clive Ong 20-May-22 12:17 SINGAPORE
(ICIS)–The Asian butanediol (BDO) market
remains under downward pressure from prevailing
soft demand in the region. Buying momentum
could remain slow in the near term from
economic headwinds from the Ukraine conflict
and Russian sanctions, as well as the lockdown
in China which looks set to ease.
US
gas supply crunch could ease by 2023 – trade
association
By Ruth Liao 20-May-22 09:03 HOUSTON
(ICIS)–Tightening US natural gas supply that
has not kept up pace with rising demand has
been a driving factor for the Henry Hub futures
benchmark, although increased supply is
expected to re-balance the US market into 2023,
according to an American Gas Association market
webinar on 19 May.
CRUDE SUMMARY: Global economic concerns make
for volatile session
By Barney Gray 19-May-22 14:08 LONDON
(ICIS)–Oil prices rebounded during a volatile
session even as global economic concerns
weighed on sentiment. Bullish factors such as
Shanghai’s planned easing of coronavirus
restrictions and a tightening supply balance
provided upside.
Limited pool of FSRUs available for European
LNG import projects
By Yasmin Yonan 19-May-22 11:49 LONDON
(ICIS)–Following European commitments to phase
out Russian gas there has been increased demand
for Floating Storage and Regasification Units
(FSRUs) to facilitate LNG supply.
EU governing
bodies reach agreement on new gas storage
targets
By Diane Elijah 19-May-22 15:13 LONDON
(ICIS)–On 19 May, the European Parliament and
the Council of the EU announced they
provisionally agreed on new gas storage targets
mandating that storage facilities in the EU27
be 80% full by 1 November 2022 and 90% full the
following years.
To enter into force, the new rules must be
formally adopted by the parliament and the
council and then published in the official
journal of the EU.
ICIS calculated that shippers in the EU27 will
need to inject 42.4 billion cubic metres (bcm)
in storage between 19 May and 1 November to
refill stocks to 80% of their capacity by 1
November. This is the target that they must
achieve.
Asian
PX market split between strong US octane
demand, negative Chinese PTA
marginsBy Samuel Wong
19-May-22 18:39 SINGAPORE (ICIS)–Asian
paraxylene (PX) prices were supported by a
strong gasoline market in the US, coupled with
firm demand for octane blendstocks.
Mideast polyols demand
weakens, upstream PO
declines
By Damini Dabholkar 19-May-22 18:22 SINGAPORE
(ICIS)–Prices of polyols were softer this
week, on account of weaker demand and lower
upstream prices. Overall, the outlook is
bearish as supply in Asia remains ample and
demand in the Middle East has weakened
significantly after the Eid holiday.
Philippines’ central bank
hikes policy interest rate by
25bpsBy Pearl Bantillo
19-May-22 18:26 SINGAPORE (ICIS)–The
Philippines’ central bank hiked its policy
interest rate on Thursday by 25 basis points
(bps), following a rebound in economic activity
and amid elevated inflationary pressures.
GLM
COMMENT: Europe and Asia’s changing LNG price
relationshipBy Edward Cox
19-May-22 17:28 LONDON (ICIS)–East Asian spot
LNG has almost always been priced at a premium
to the ICIS TTF given the former’s high
dependency on LNG and with Europe able to tap
into more domestic gas production and pipeline
imports.
Japan
Apr chemical exports rise 8.5%, total exports
up 12.5%
By Nurluqman Suratman 19-May-22 13:24
SINGAPORE (ICIS)–Japan’s chemical exports rose
by 8.5% year on year to yen (Y) 1,036bn in
April but overall trade remained at a deficit
following a jump in imports, official data
showed on Thursday.
CRUDE SUMMARY: A mixed bag of market drivers
moves crude lower
By Barney Gray 18-May-22 14:12 LONDON
(ICIS)–Crude prices dipped in afternoon
trading on Wednesday. The easing of Chinese
coronavirus restrictions gave rise to hopes of
a demand boost and reports of reduced Russian
production in April were balanced by news that
the US is planning to relax sanctions against
Venezuela.
European Commission ramps up renewables targets
to phase out Russia energy
dependence
By Tom Brown 18-May-22 12:04 LONDON (ICIS)–The
European Commission on Wednesday set out new
targets for renewable power development,
decarbonising road transport and improving
energy efficiency as the EU seeks to wean
itself off of Russian oil and gas supplies.
Rotterdam coal rises amid ongoing geopolitical
uncertainty
By David Battista 18-May-22 11:43 LONDON
(ICIS)–The front-year Rotterdam coal price
gained nearly $19/tonne between 10 and 17 May,
due to ongoing uncertainty in the wider energy
complex amid fallout from the Russian war in
Ukraine.
Finland could struggle to meet demand should
Russian supplies stop
By Daniel Muir 18-May-22 11:02 LONDON
(ICIS)–Russian gas supplies to Finland could
end as soon as 20 May, according to Finnish
state-owned energy company Gasum, which could
lead to shortages in the summer.
EU revises its transition targets to cut
reliance on Russian gas
By Diane Elijah 18-May-22 10:58 LONDON
(ICIS)–The president of the European
Commission, Ursula von der Leyen, on 18 May
presented the EU’s strategy to phase-out its
reliance on Russian gas.
Operating costs for LNG vessels rise on Ukraine
war
By Hal Brown 18-May-22 10:14 LONDON
(ICIS)–Operating expenses (OPEX) are rising
for LNG vessels crewed by Russians and
Ukrainians.
Austrian gas storage rules target dependence on
Russia
By Ed Martin 18-May-22 10:02 LONDON (ICIS)–The
Austrian government is seeking to rapidly
implement a raft of new storage regulations
aimed at boosting security of supply and
reducing dependence on Russian gas.
CropEnergies warns Germany on plans to reduce
biofuels production
By Stefan Baumgarten 18-May-22 08:54 LONDON
(ICIS)–Germany must not reduce the use of
biofuels from arable crops, the CEO of biofuels
producer CropEnergies said on Wednesday, adding
his voice to the country’s latest
“fuel-versus-food” debate.
INSIGHT: Europe refineries and chemicals would
be hit by Russia oil, products
ban
By Will Beacham 18-May-22 07:14 BARCELONA
(ICIS)–European oil refineries and downstream
chemical plants will come under increasing
financial pressure from higher logistics costs
and crude oil prices if a proposed ban on
Russian oil and refined products comes into
force later this year.
CRUDE SUMMARY: Oil price bounces after weekly
downtrend
By Barney Gray 13-May-22 15:47 ONDON (ICIS) –
Oil prices enjoyed a bounce on Friday but ended
the day down week on week as bearish sentiment
continued to weigh on demand. In its May
report, the IEA forecast that world oil demand
growth will slow from 4.4m bbl/day in Q1 to
1.9m bbl/day in Q2 and will ease back to growth
of less than 0.5m bbl/day in the second half of
the year. For the full year, demand is now
expected to increase by 1.8m bbl/day to 99.4m
bbl/day.
Germany’s biofuels industry wary amid new
fuel-vs-food debate
By Stefan Baumgarten 13-May-22 14:22 LONDON
(ICIS)–Germany’s biofuels industry is watching
closely as rising food prices have sparked a
new “fuel-vs-food” debate and may even bring an
end to racing on the country’s highways
(“Autobahn”) without speed limit.
US PVC gets inquiries from Ukraine after two
months of silence
By Bill Bowen 13-May-22 12:59 HOUSTON
(ICIS)–US suppliers of polyvinyl chloride
(PVC) are getting inquiries from plastics
processors in Ukraine, a surprise development
in a war-torn market that has been almost
completely silent in recent weeks.
Germany’s raw material price index falls month
on month
By Stefan Baumgarten 13-May-22 11:37 LONDON
(ICIS)–Germany’s raw material price index fell
12.0% month on month in April, following a
sharp March increase amid the Ukraine war,
Hamburgisches WeltWirtschafts Institut (HWWI)
said.
Ukraine starts landmark commercial electricity
exports to Moldova
By Aura Sabadus 13-May-22 09:45 LONDON
(ICIS)–Ukrainian electricity company
Ukrhydroenergo started landmark commercial
exports to Moldova on 12 May, less than two
months after both countries synchronised with
the European power grid, the Ukrainian
electricity transmission system operator
Ukrenergo confirmed.
Chemicals production in EU, eurozone fell in
March in wake of Ukraine
invasion
By Morgan Condon 13-May-22 07:46
LONDON (ICIS)–Chemicals production fell in the
EU and eurozone in March compared to the
previous month, according to the latest data
from the EU’s statistical agency Eurostat.
UK plastics export ban on Russia not likely to
impact producers – trade
group
By Tom Brown 13-May-22 07:16 LONDON (ICIS)–The
British Plastics Federation (BPF) on Friday
backed the UK government’s plans to ban exports
of plastics and chemicals and impose import
tariffs on certain products to Russia.
Asia
petrochemical supplies rise as China exports
grow amid weak yuan
By Fanny Zhang 13-May-22 16:13 SINGAPORE
(ICIS)–Asia’s petrochemical markets are being
weighed down by growing supply, with China
exporting more products – spurred by the weak
yuan and poor domestic demand amid lockdowns.
INSIGHT: Indonesia
consumer demand at risk; may not prolong CPO
export ban
By Pearl Bantillo 13-May-22 12:00
SINGAPORE (ICIS)–Indonesia’s consumer demand
recovery is being threatened by elevated
commodity prices, with April inflation
exceeding the 3% mark, while the government has
taken to banning exports of crude palm oil
(CPO) and its derivatives to ease surging
prices of domestic cooking oil.
Asia
fatty acids remain soft on China lockdowns and
Indonesia export ban
uncertainty
By Helen Yan 13-May-22 15:05 SINGAPORE
(ICIS)–Asia’s fatty acids market is likely to
remain soft in the near term, due to the
economic slowdown in China and the expected
removal of Indonesia’s export ban on crude palm
oil (CPO) sometime in May.
Asia’s BD spot
discussions see uptick on prompt demand, but
outlook still clouded
By Ai Teng Lim 13-May-22 14:49 SINGAPORE
(ICIS)–Discussions in Asia’s spot butadiene
(BD) market took a bullish turn this week, as
buying interest for prompt delivery supplies
picked up alongside some production hiccups.
Gazprom faces $12bn bill and penalties if it
fails to pay for Ukraine transit –
CEOs
By Aura Sabadus 11-May-22 14:25 LONDON
(ICIS)–Russia’s Gazprom could face a $12bn
bill related to an old arbitration claim and
additional multi-million dollar penalties if it
refuses to pay for the gas transiting Ukraine
to Europe.
CRUDE SUMMARY: Oil rallies on improved
sentiment after early-week
losses
By Barney Gray 11-May-22 14:10 LONDON
(ICIS)–Oil prices recovered ground on
Wednesday as the EU sought unanimous support
over its decision to ban Russian oil imports.
INSIGHT: Can US, global economies avoid
recession amid a whirlwind of
headwinds?
By Joseph Chang 11-May-22 12:10 NEW YORK
(ICIS)–Can the US and major economies around
the world avoid a recession in the face of what
can only be called a whirlwind of headwinds?
Europe naphtha refinery margins stay pressured,
but gasoline spikes to multiyear
highs
By Shruti Salwan 11-May-22 11:59 LONDON
(ICIS)–European naphtha market fundamentals
remain exceptionally weak amid improved
availability and weakening feedstock demand
capping any major upsides posed by falling ICE
Brent crude oil futures and high gasoline
refinery margins.
Second FSRU will double the Netherlands’ LNG
regas capacity by Q3 ’22
By Victoria Tchen 11-May-22 11:37 LONDON
(ICIS)–Dutch gas infrastructure company
Gasunie announced on 10 May it has signed a
five-year binding contract for the lease of a
floating storage regasification unit (FSRU)
from US LNG company New Fortress Energy.
Council of the EU agrees position on new gas
storage rules
By Diane Elijah 11-May-22 11:16 LONDON
(ICIS)–On 11 May, the Council of the EU
adopted its position on the new EU gas storage
rules . This means negotiations with the
European Parliament to agree on the final text
of the new rules can now start.
Bulgaria holds LNG supply talks with US;
expects deliveries from 1
June
By Luka Dimitrov 11-May-22 11:06 LONDON
(ICIS)–Importing US LNG could bring cheaper
gas prices for Bulgarian consumers than signing
a new long-term pipeline contract with Russian
state supplier Gazprom.
Germany introduces law to speed up LNG project
development as pivot away from Russian gas
gathers pace
By Arlind Neziri 11-May-22 10:55 LONDON
(ICIS)–The German government on Tuesday
announced it was introducing the LNG
Acceleration Act as it continues its push to
diversify its supply away from Russian gas.
Austria to buy up to 1.4bcm of gas with federal
funds to build strategic
stocks
By Edward Martin 11-May-22 10:42 LONDON
(ICIS)–Austrian operator Gas Grid Management
(AGGM) on 10 May launched a tender to procure
12.6TWh – or roughly 1.2-1.4 billion cubic
metres (bcm) depending on calorific value – of
gas with federal funding.
PCK Schwedt faces uncertain future as Germany
moves to ban Russian oil
By Stefan Baumgarten 11-May-22 10:28 LONDON
(ICIS)–Germany’s PCK Schwedt refinery faces an
uncertain future as the nation firmly supports
the proposed EU embargo on Russian oil.
US natural gas futures scale to historic highs
in volatile trading
By Ruth Liao 11-May-22 09:26 HOUSTON
(ICIS)–Uncertainty on timing of supply has
driven the volatility in US gas futures, as the
Henry Hub front-month contract soared to new
historic highs on 5 May, only to crash lower
for two sessions and rebound.
UK targets chems, plastics trade in latest
Russia sanctions
By Tom Brown 11-May-22 08:32 LONDON (ICIS)–The
UK’s latest round of sanctions on trade with
Russia targets chemicals trade flows, with
export bans and import tariffs announced this
week.
PODCAST: Ban on Russian crude, products would
disadvantage Europe refiners,
chemicals
By Will Beacham 11-May-22 08:22 BARCELONA
(ICIS)–A ban on Russian imports of oil and
refined products in Europe would increase
logistics costs and exclude refineries and
integrated chemical producers from deeply
discounted crude oil.
Russia declines to reroute Sokhranivka gas
flows after Ukraine’s force
majeure
By Aura Sabadus 11-May-22 06:11 LONDON
(ICIS)–The European benchmark ICIS TTF firmed
at the open on 11 May as natural gas flows from
Russia to Ukraine over the Sokhranivka border
point ceased, following the 10 May declaration
of force majeure by grid operator GTSOU.
China
petrochemicals stay soft in April; demand
concerns remain
By Yvonne Shi 10-May-22 16:44 SINGAPORE
(ICIS)–China’s petrochemical markets remained
soft in April, weighed down by COVID-related
lockdowns which will continue to dampen demand
in the near term.
Asian
polyacetal spot discussions stable amid mixed
demand outlook
By Ai Teng Lim 10-May-22 13:37 SINGAPORE
(ICIS)–Discussions for Asian exports of
polyacetals (POM) have been rangebound this
week, but it remains to be seen how the
regional demand-supply balance may shift if
various geopolitical issues, like the
Russia-Ukraine turmoil and the COVID-19
lockdowns in China, stretch longer than
expected.
Asia naphtha
market contango deepens, China lockdowns curb
demand
By Melanie Wee 10-May-22 12:45 SINGAPORE
(ICIS)–Asia naphtha markets are under pressure
from downbeat demand amid persistent lockdowns
in China, exacerbated by poor downstream
margins.
CRUDE SUMMARY: Oil price rallies further as
tight supply concerns mount
By Barney Gray 06-May-22 14:06 LONDON
(ICIS)–Oil prices continued their rally on
Friday as worries over global economic growth
were trumped by tighter supply concerns.
Outlook for ammonium sulphate remains bright
through Q2 – AdvanSix
By Al Greenwood 06-May-22 13:27 HOUSTON
(ICIS)–The outlook for ammonium sulphate
should remain bright through the peak of the
demand season in the second quarter, the CEO of
US producer AdvanSix said.
EU gas strategy to be presented in the second
half of May
By Diane Elijah 06-May-22 13:03 LONDON
(ICIS)–The European Commission plans to adopt
its REPowerEU strategy to end the EU’s reliance
on Russian fossil fuels on 18 May, subject to
confirmation nearer the time, a spokesperson
for the commission told ICIS.
CRUDE SUMMARY: Oil price gains on proposed EU
embargo on Russian crude
By Barney Gray 06-May-22 09:03 LONDON
(ICIS)–Oil prices consolidated gains on
Thursday as further details emerged regarding
the EU proposed ban on Russian crude.
INSIGHT: Ukraine war hurts Europe chemicals,
alters patterns of trade
By Will Beacham 06-May-22 08:29 BARCELONA
(ICIS)–Europe’s chemical industry faces
multiple headwinds which could see it lose out
to other regions, and lead to more sourcing
from further afield by downstream customers and
distributors.
France likely to remain
net power importer until nuclear availability
rises substantially
By Karishma Sadanandan 06-May-22 15:33
LONDON (ICIS)–France is unlikely to regain its
status as a net exporter of power until such a
time as nuclear availability rises closer to
historic seasonal norms.
SE
Asia biodiesel sales weak on poor
demand
By Felicia Loo 06-May-22 14:46 SINGAPORE
(ICIS)–The southeast Asian palm methyl ester
(PME) biodiesel market remained in weak demand
territory, amid poor uptake from Europe and
China.
Germany’s Evonik Q1 net
income rises amid higher selling
prices
By Nurluqman Suratman 06-May-22 14:16
SINGAPORE (ICIS)–Evonik’s net income rose by
around 69% year on year in the first quarter of
this year amid higher selling prices at its
performance materials and specialty additives
businesses, the German specialty chemicals
maker said on Friday.
Asia
glycerine gains on demand; arbitrage window to
Europe opens
By Helen Yan 06-May-22 14:04 SINGAPORE
(ICIS)–Asia’s spot glycerine prices increased
on the back of improving demand, with the
arbitrage window to Europe expected to remain
open in the near term.
Trinseo expects Q2
earnings to resemble Q1
By Al Greenwood 06-May-22 09:54 HOUSTON
(ICIS)–US-based styrenics and engineered
materials producer Trinseo expects its
second-quarter earnings to be similar to those
in the first quarter, the CEO said on Thursday.
China’s propylene market
in stalemate on strong costs, weak
demand
By Yi Liang 06-May-22 13:35 SINGAPORE
(ICIS)–Propylene prices in China’s Shandong
province fluctuated in a narrow range in late
April on cost pressures and bearish downstream
demand, after rallying from the recent low seen
on 17 March, alongside the crude slumps.
INSIGHT: Crude-led
inflation surge sparks global monetary
tightening
By Nurluqman Suratman and Pearl Bantillo
05-May-22 18:01 SINGAPORE (ICIS)–Strong crude
prices amid the Russia-Ukraine war have been
fuelling unprecedented spikes in inflation,
which major economies around the world set out
to tame by raising interest rates, some more
aggressively than others, while a few are
hoping to wait it out as much as possible.
China’s PP futures surge
2.51% on rising crude
futures
By Zhibo Xiao 05-May-22 15:59 SINGAPORE
(ICIS)–China’s polypropylene (PP) futures
prices rose by 2.51% on Thursday on the back of
rising crude futures values.
British gas NBP prompt to
deliver below May ’22 on oversupply
risk
By Kaja Sillett 05-May-22 13:00 LONDON
(ICIS)–LNG arrivals, mild forecasts and high
storage fullness should see British gas prompt
products remain below front-month indications
at the NBP through the rest of May, after
flipping beneath in April.
Shell
Q1 chemicals earnings rise 49.6% despite lower
sale volumes
By Nurluqman Suratman 05-May-22 14:53
SINGAPORE (ICIS)–Shell’s chemicals and
products unit posted a 17.7% year-on-year
increase in its first-quarter adjusted earnings
before interest, tax, depreciation and
amortisation (EBITDA), despite lower chemical
sales volumes, the energy firm said on
Thursday.
S
Korea’s Kumho Petrochemical Q1 net profit falls
22%; sales up 19%
By Pearl Bantillo 04-May-22 17:42
SINGAPORE (ICIS)–South Korean synthetic rubber
giant Kumho Petrochemical reported on Wednesday
a 22% year-on-year decline in first-quarter net
profit despite a double-digit sales growth.
Philippines’ Petron Q1
profit surges; petrochemical sales up
30%
By Pearl Bantillo 04-May-22 13:54
SINGAPORE (ICIS)–Petron’s first-quarter net
profit more than doubled year on year to pesos
(Ps) 3.6bn ($69m) on the back of strong crude
prices, the Philippines’ sole refiner said on
Wednesday.
Oil
rises more than $1/bbl on supply worries; China
woes cap gainsBy Nurluqman
Suratman 04-May-22 12:54 SINGAPORE (ICIS)–Oil
prices rose by more than $1/bbl on Wednesday on
concerns over tight supply after industry data
showed a drop in US crude and fuel inventories
last week, but worries over poor manufacturing
data from China capped gains.
Methanex stands to
benefit from market impacts of Ukraine
war
By Stefan Baumgarten 28-Apr-22 15:22
TORONTO (ICIS)–Methanex is benefiting from the
market-related impacts of the ongoing Ukraine
war and the sanctions imposed on Russia, the
CEO of the Canada-based international methanol
producer said on Thursday.
Thai
SCG Q1 net profit falls 41% on chemical margin
squeeze
By Pearl Bantillo 28-Apr-22 14:59
SINGAPORE (ICIS)–Thai conglomerate Siam Cement
Group’s (SCG) first-quarter net profit declined
by 41% year on year on squeezed chemical
margins due to high feedstock cost amid weak
China demand.
Asia
biodiesel buy/sell gap widens on CPO price
surge
By Felicia Loo 28-Apr-22 16:45 SINGAPORE
(ICIS)–Asia’s palm methyl ester (PME)
biodiesel faces a gaping buy/sell gap, a trend
expected to persist after Indonesia announced
its ban on feedstock crude palm oil exports.
Asia
palm shipping market cautious after Indonesia’s
export ban
By Luffy Wu 28-Apr-22 16:25 SINGAPORE
(ICIS)–The Asia palm shipping market is taking
a cautious stance after Indonesia announced an
export ban from 28 April on domestic cooking
oil and refined, bleached and deodorised (RBD)
palm olein, with an extension of the ban to
crude palm oil (CPO).
Tight
fuel ethanol supply to SE Asia persists; spot
prices firm
By Bonnie Yin 28-Apr-22 16:24 SINGAPORE
(ICIS)–Import supply of fuel ethanol in
southeast (SE) Asia tightened on limited
feedstock availability and improved demand from
other regions, with market indications higher.
Asia
Group II base oils supply short in Q2, China
demand stifled on lockdowns
By Matthew Chong 28-Apr-22 15:12 SINGAPORE
(ICIS)–Asia’s Group II base oils supply
is expected to remain tight for the rest of the
second quarter on reduced production.
Asia’s soap noodles to
see upward pressure as Indonesia extends export
ban to CPO
By Helen Yan 28-Apr-22 13:22 SINGAPORE
(ICIS)–Asia’s soap noodles market is expected
to see upward price pressure in the near term
following the announcement by Indonesian
authorities on 27 April, to extend
the export ban on cooking oil to include crude
palm oil (CPO) exports.
Asia
SBR spot discussions may waver with increased
China exports
By Ai Teng Lim 28-Apr-22 09:24 SINGAPORE
(ICIS)–Asian spot import prices for styrene
butadiene rubber (SBR) are losing some ground
as more, and competitively-priced, materials
emerged from China.
Europe petchems
face higher gas prices as Gazprom halts
supplies to Poland, Bulgaria
By Jonathan Lopez 27-Apr-22
11:50 MADRID (ICIS)–European
petrochemicals players could face even higher
gas prices after Russia’s state-owned Gazprom
said it was halting deliveries to Poland and
Bulgaria.
Natural gas prices shot up nearly 20% in
European morning trading after Russia demanded
its gas supplies to Poland and Bulgaria are
paid for in roubles (Rb) instead of US dollars.
Bulgaria’s gas supply also to be halted
from Russia, following
Poland
By Ruth Liao, Aura Sabadus 27-Apr-22
03:22 HOUSTON AND LONDON (ICIS)-Bulgaria’s
gas supply from Russian producer Gazprom will
be suspended starting 27 April, according to a
statement from the country’s energy minister on
26 April.
This follows earlier news from Poland’s PGNiG
that Gazprom was also suspending its volumes
through the Yamal pipeline.
The Bulgarian energy minister’s statement said
state company Bulgargaz and Bulgarian Energy
Holding (BEH) found that the Russian decree to
pay in roubles was not in line with their
expiring contract and posed significant risks
to the country. The statement said the ministry
of energy, BEH and transporter Bulgartransgaz
have taken measures to make alternative gas
supply arrangements and no restrictive measures
would be required for the country’s
consumption.
Asia’s volatile supply
conditions for caustic soda may persist amid
China lockdowns
By Jonathan Chou 27-Apr-22 15:20 SINGAPORE
(ICIS)–Asia’s supply conditions for liquid
caustic soda could remain unpredictable in the
near term amid uncertain supply conditions
caused by continued lockdowns in China.
France’s Air Liquide Q1
revenue rises 29.1% on surge in energy
prices
By Nurluqman Suratman 27-Apr-22 15:20
SINGAPORE (ICIS)–Air Liquide’s revenue rose by
29% year on year in the first quarter of this
year, reflecting the sharp rise in energy
prices contractually passed on to Large
Industries customers, the French industrial
gases and services firm said on Wednesday.
Japan’s Toyota FY2021
global output surges, domestic production
slumps
By Nurluqman Suratman 27-Apr-22 15:05
SINGAPORE (ICIS)–Japan’s automaker Toyota on
Wednesday said that its worldwide production
surged to 8.57m units in the year ending 31
March 2022 but domestic output slumped to a
45-year low.
Norway’s Yara Q1 net
income surges on higher
prices
By Nurluqman Suratman 27-Apr-22 14:47
SINGAPORE (ICIS)–Yara’s net income surged to
$947m in the first quarter of this year,
reflecting higher selling prices which more
than offset higher natural gas costs, the
Norwegian fertilizer major said on Wednesday.
Indonesia’s ban on RBD
palm olein to see limited impact on
oleochemical market
By Helen Yan 27-Apr-22 12:25 SINGAPORE
(ICIS)–Indonesia’s ban on domestic cooking oil
and refined, bleached and deodorised (RBD) palm
olein is expected to have limited impact on the
oleochemical market as players adopt a
wait-and-see stance.
INSIGHT: China PP exports
to rise in May on new start-ups, stronger US
dollar
By Lucy Shuai 27-Apr-22 12:00 SINGAPORE
(ICIS)–China’s polypropylene (PP) imports and
exports both fell in the first quarter of 2022.
The volume of imports may remain low, but
exports are likely to rise in the near term.
Asia
MPG sentiment to weaken further amid sellers’
competition
By Jasmine Khoo 27-Apr-22 11:34 SINGAPORE
(ICIS)–Asian market sentiment for
monopropylene glycol (MPG) in May is poised to
weaken from a persistently widening gap between
Chinese origin industrial-grade propylene
glycol (PGI) cargoes and those of other
regional origin.
China’s April
Group II base oils imports expected to slump on
negative margins
By Whitney Shi 26-Apr-22 18:20 SINGAPORE
(ICIS)–China’s Group II base oils imports
started to drop in March and are expected to
fall sharply in April, in response to deeper
negative import margins from March-April.
SE
Asia-China methanol arbitrage window opens,
demand uncertain
By Keven Zhang 26-Apr-22 13:42 SINGAPORE
(ICIS)–Losses in the key China market exerted
downward pressure on methanol prices in
southeast Asia, as the arbitrage window between
the two regions opened.
Northeast Asia Power
Play: The struggle between nuclear, coal and
gas generation at record LNG
prices
By Alex Siow 26-Apr-22 12:44 In the face
of record high LNG spot prices – and strong
prices across commodities – ICIS have noticed
that the three major baseload fuel of nuclear,
coal and LNG seemed to be struggling to meet
demand. In Japan and South Korea, the
much-needed additional nuclear generation, has
again been delayed while gas and coal ability
to respond is limited.
Global EDC supply may
stay tight despite rising Asian
availability
By Jonathan Chou 26-Apr-22 12:29 SINGAPORE
(ICIS)–While spot ethylene dichloride (EDC)
supply within Asia may increase, availability
from the US and Europe is expected to remain
curtailed due to an ongoing force majeure
declaration and higher production costs
respectively.
Netherlands working on Russian fuel
independence by end of 2022
By Arlind Neziri 25-Apr-22 11:27 LONDON
(ICIS)–The Dutch government is working on
making the Netherlands independent from Russian
fossil fuels by the end of 2022, according to a
22 April announcement.
Oil flows ongoing despite Bryansk explosions –
trader
By Richard Price 25-Apr-22 07:08 LONDON
(ICIS)–Explosions shook two oil facilities in
the western Russian city of Bryansk early on
Monday, home to a section of the Druzhba
pipeline – a key export route for Russian crude
headed to Europe.
German regulator begins gas consumption survey
to prepare for supply
shortages
By Eduardo Escajadillo 22-Apr-22 12:39 LONDON
(ICIS)–The German Federal Network Agency
(BNetzA) is to start gathering data from grid
operators and large consumers in the THE market
area, as a part of the first early warning
level of the country’s gas emergency plan , the
regulator announced on 21 April.
UK grid constraints could limit export
potential to Europe
By Rob Dalton 22-Apr-22 12:29 LONDON (ICIS)–UK
grid and export constraints could limit the
country’s ability to maximise its potential as
an LNG import location for onward supply to
Europe this summer, as the continent strives to
meet EU-proposed storage obligations by autumn.
Danish storage to lean on tight German
supply
By Daniel Muir 22-Apr-22 11:49 LONDON
(ICIS)–Danish gas stores may be facing a
175mcm gap going into gas winter, according to
ICIS analysis.
India market softens on Russian supplies, China
lockdown
By Keven Zhang 22-Apr-22 07:22 SINGAPORE
(ICIS)–Trades for methanol into India were
concluded at lower levels, with extensive
volumes of Russian spot cargoes arriving in
May.
Eurozone manufacturing nearly stalls in April
as war worsens bottlenecks
By Jonathan Lopez 22-Apr-22 05:56 MADRID
(ICIS)–Manufacturing activity across the
eurozone nearly stalled in April as supply
chain bottlenecks worsened because of the
Russian invasion of Ukraine, according to the
S&P Global PMI index.
INSIGHT: Upstream, energy volatility drives
demise of the quarterly
contract
By Will Beacham 22-Apr-22 05:26 BARCELONA
(ICIS)–A large scale switch from quarterly to
monthly contracts is under discussion in
Europe, driven by extreme volatility in
upstream feedstock and energy costs.
China
firms eyed as Shell markets its share in
Sakhalin-2 LNG project
By Roman Kazmin 22-Apr-22 15:55 SINGAPORE
(ICIS)–The share of Shell’s stake in the
Sakhalin Energy Sakhalin-2 LNG project in the
Russian far east could be sold to Chinese
energy companies, a Moscow-based source
confirmed to ICIS on 22 April.
Asia
PBT demand tepid, margins stay
tight
By Clive Ong 22-Apr-22 11:52 SINGAPORE
(ICIS)–The Asian polybutylene terephthalate
(PBT) market remains under downward pressure
with demand on the wane, while sellers expect
limited improvement in margins for the near
term.
US
PPG Q1 income falls on higher costs, supply
chain disruptions and geopolitical
impacts
By Adam Yanelli 21-Apr-22 16:26 HOUSTON
(ICIS)–US PPG saw a decrease in year-on-year
income for Q1 on higher costs, ongoing supply
chains constraints, the initial impacts from
Russia’s invasion of Ukraine and increasing
COVID-19 restrictions in China, the paints and
coatings producer said on Thursday.
INTERVIEW: Chemicals
M&A activity to slow on Russia/Ukraine war,
inflation impact – banker
By Joseph Chang 21-Apr-22 15:48 NEW YORK
(ICIS)–Chemicals mergers and acquisitions
(M&A) activity in 2022 will likely slow
from the strong pace in 2021 on heightened
energy volatility and economic uncertainty from
the Russia/Ukraine war along with higher
interest rates and other factors, an investment
banker said on Thursday.
INSIGHT: Early US chem
earnings show resilience amid
war
By Al Greenwood 21-Apr-22 11:10 HOUSTON
(ICIS)–US chemical earnings covering the first
months of 2022 have shown resilience, and
companies have seen demand hold up despite
inflation and the start of Russia’s invasion of
Ukraine.
Dutch
AkzoNobel Q1 profit shrinks 29% amid supply
chain disruptions
By Pearl Bantillo 21-Apr-22 15:17
SINGAPORE (ICIS)–AkzoNobel’s first-quarter net
profit fell by 29% year on year as sales
volumes dipped 7% due to continued supply
constraints, with negative impact from the
Russia-Ukraine war and COVID-19 restrictions in
China
Indian NBR import
discussions gain on supply
constraints
By Ai Teng Lim 21-Apr-22 15:50 SINGAPORE
(ICIS)–Indian import discussions for
acrylonitrile-butadiene-rubber (NBR) are
gaining ground, as cargo availabilities of
deep-sea origin dwindle, prompting buyers with
concrete requirements to raise bids and secure
replacement volumes from Asia.
China’s offshore oil
giant CNOOC shares gain 28% at Shanghai
debut
By Fanny Zhang 21-Apr-22 16:39 SINGAPORE
(ICIS)–The share price of China’s biggest
offshore oil producer, CNOOC, gained 27.7% over
their initial public offering (IPO) of yuan
(CNY) 10.8/share at their debut on China’s
A-share market, in contrast to a 2.3% slump in
the Shanghai composite index on Thursday.
INSIGHT: Will growing US LNG exports erode
petchem feedstock advantage?
By Joseph Chang 20-Apr-22 14:18 NEW YORK
(ICIS)–It was back in 2013 at the start of the
US liquefied natural gas (LNG) building boom
when several US chemical and other
manufacturing company executives came out
against exports, arguing that the country would
be shipping away its feedstock advantage
overseas.
CRUDE SUMMARY: Oil prices volatile as demand
concerns dominate sentiment
By Barney Gray 20-Apr-22 14:11 LONDON
(ICIS)–Oil prices were in negative territory
for most of Wednesday, spurred by weak demand
signals from the US Energy Information Agency
(EIA) offsetting bullish supply indicators.
However, a late rally left crude prices
comparatively flat on the day.
ICIS VIEW: UK can become key LNG conduit for
continent but faces capacity
restrictions
By Rob Dalton 20-Apr-22 10:58 LONDON
(ICIS)–The UK has emerged as a strong
contender to be a key supplier of gas to
mainland Europe this summer as infrastructure
constraints combine with new EU storage
obligations and favourable locational spreads.
Russia eases restrictions on fertilizer
exports
By Deepika Thapliyal 20-Apr-22 10:00 LONDON
(ICIS)–In Russia, the government has eased
restrictions on fertilizer exports by raising
export quotas for producers by nearly 700,000
tonnes until 31 May, according to a resolution
signed by Prime Minister Mikhail Mishustin.
Germany on track to meet gas storage targets
with current injection rates
By Arlind Neziri 20-Apr-22 09:55 LONDON
(ICIS)–Current German gas injection rates,
which have seen fullness rise four percentage
points this month to 26%, could lead to Germany
meeting its mandated storage targets in August
and October, if sustained.
Germany’s producer prices jump 30.9% in March
on Ukraine war impact
By Stefan Baumgarten 20-Apr-22 09:04 LONDON
(ICIS)–Producer prices in Germany rose 30.9%
year on year in March, the highest increase
since 1949 when the country’s statistical
agency began tracking the data, it said.
Russia’s petchems, crude and LPG export duties
down in May
By Sergei Blagov 20-Apr-22 06:09 MOSCOW
(ICIS)–Russia’s export duties levied on some
petrochemicals products and crude oil will
decrease in May.
EU car sales fall in March as war in Ukraine
impacts auto production
By Morgan Condon 20-Apr-22 06:08 LONDON
(ICIS)–Car sales in the EU fell in March and
for the first quarter overall compared to the
previous year, the European Automobile
Manufacturers’ Association (ACEA) said.
France’s chemicals sales up 6% in 2021 but
slowdown expected on energy costs, geopolitical
woes
By Jonathan Lopez 20-Apr-22 05:49 MADRID
(ICIS)–France’s chemicals sales – including
pharmaceuticals – rose by 6% in 2021, year on
year, to €69bn, the country’s trade group
France Chimie said .
Malaysia exports more palm oil in Q1 on
sunflower oil disruption
By Helen Yan 20-Apr-22 03:35 SINGAPORE
(ICIS)–Supply disruption of edible vegetable
sunflower oil due to the Russia-Ukraine
conflict and restrictions on palm oil exports
to the US have seen Malaysia diversifying and
increasing its palm oil exports to other
countries and regions.
CRUDE SUMMARY: Crude plummets on fears of lower
growth forecasts
By Cecilia Barreiro 19-Apr-22 14:08 LONDON
(ICIS) – Oil prices eroded from Monday’s rally
on concerns over demand growth after the IMF
said the global economy will strongly
decelerate in 2022 because of Russia’s invasion
of Ukraine. These projections were enough to
offset bullish pressures stemming from a wave
of closures at Libya’s oilfields and the
reopening of China’s manufacturing plants
across Shanghai.
Germany’s Henkel prepares Russia exit amid
growing pressure on firms to
leave
By Stefan Baumgarten 19-Apr-22 12:32 LONDON
(ICIS)–Henkel is preparing to exit its
business in Russia, where it employs about
2,500 people, the Germany-based international
adhesives and detergents major said.
Gazprom’s gas production stable, European piped
exports drop in Q1 2022
By Diane Elijah 19-Apr-22 10:28 LONDON
(ICIS)–Russian producer Gazprom’s gas
production between 1 January and 15 April
amounted to 155.9 billion cubic metres (bcm),
or 1.3% more than in the same period last year,
the state-controlled company announced on its
Telegram channel.
INSIGHT: Record natgas prices are raising costs
for US chemical producers
By Al Greenwood 19-Apr-22 10:26 HOUSTON
(ICIS)–Prices for natural gas are hitting
highs not seen since 2008, raising feedstock
and energy costs for petrochemical producers.
Russian coal ban puts bullish pressure on
German gas Cal ‘23
By Eduardo Escajadillo 19-Apr-22 10:12 LONDON
(ICIS)–The EU ban on Russian coal imports may
support the Calendar Year 2023 contract on the
German THE hub, ICIS analysis shows.
Baltic states look to LNG in push to diversify
from Russian gas supply
By Daniel Muir 19-Apr-22 10:04 LONDON
(ICIS)–Latvia, Estonia and Finland would have
to collectively replace around 3.4 billion
cubic metres (bcm)/year of Russian piped gas if
they were to eliminate Russian imports.
Poland-Belarus border paraffin wax prices up,
deliveries from Russia drying
up
By Cameron Birch 19-Apr-22 10:03 LONDON
(ICIS)–Spot prices for semi-refined paraffin
wax at the Poland-Belarus border were assessed
higher by triple digits amid continued strong
levels of demand and a worsening supply
picture.
Supply chain woes
to worsen, high food prices potentially
‘tragic’ – ICIS economist
By Jonathan Lopez 19-Apr-22
15:05 MADRID (ICIS)–The war in Ukraine is
set to worsen supply chain woes for the rest of
2022 while the hike in food prices as
fertilizers values rocket could have “tragic”
consequences in emerging countries, according
to an economist at ICIS.
Kevin Swift, Senior Economist for Global
Chemicals at ICIS, said the EU’s proximity to
Russia puts the 27-country bloc at high risk of
an energy crisis if supplies of crude oil or
natural gas were to be halted.
Europe,
developing economies to bear brunt of Ukraine
war hit – IMF
By Jonathan Lopez 19-Apr-22
15:00 MADRID (ICIS)–European and
developing economies are to bear the brunt of
the economic hit caused by Russia’s invasion of
Ukraine as the world economy yet again
experiences “a major shock”, the International
Monetary Fund (IMF) said on Tuesday.
In its April World Economic Outlook (WEO)
projections, the IMF sharply reduced its global
GDP growth forecast for 2022 by 0.8 percentage
points to 3.6%; the world economy grew by 6.1%
in 2021.
US gas futures
surge on supply concerns
By Ruth Liao 18-Apr-22 23:18 HOUSTON
(ICIS)–The US gas futures front-month contract
continued to gain upward momentum, as the May
’22 contract on the NYMEX broke through
$8.00/MMBtu on Monday during intraday trading.
The NYMEX front month settled at $7.82/MMBtu,
buoyed by supply concerns mainly from limited
upstream growth and facing multi-year lows in
storage levels.
Germany bets on floating LNG import terminals,
environmentalists sceptical
By Stefan Baumgarten 15-Apr-22 09:21 LONDON
(ICIS)–Germany’s government is seeking to rent
floating liquefied natural gas (LNG) import
terminals to quickly move away from Russian gas
– but critics warn of a lack of transparency
and environmental impacts.
US natural gas reaches new record high on tight
supply
By Fauzeya Rahman 14-Apr-22 17:47 HOUSTON
(ICIS)–US natural gas prices reached new
multi-year highs on Thursday as tight
production coupled with April weather-driven
demand boosted the Henry Hub benchmark.
US oil, natgas drillers add rigs as energy
prices continue to soar
By Adam Yanelli 14-Apr-22 15:22 HOUSTON
(ICIS)–US oil and natural gas drillers each
added two new wells this week amid volatile
energy markets boosted by supply concerns.
CRUDE SUMMARY: Oil prices up on Russian
rhetoric
By Barney Gray 14-Apr-22 14:11 LONDON
(ICIS)–Crude prices were up as the impending
loss of up to 3m bbl/day of Russian output in
May offset bearish factors.
Europe plans to increase regasification
capacity as it pivots away from Russian
gas
By Hal Brown 14-Apr-22 11:11 LONDON
(ICIS)–Since Russia’s invasion of Ukraine,
Europe has announced its intention to develop
an additional LNG import capacity of around
33mtpa with reports of new projects coming
through regularly.
Tightening supply may limit European gas
storage injections in April
By Gretchen Ransow 14-Apr-22 11:06 LONDON
(ICIS)–Constrained Norwegian supply and
limited wind generation are likely to cap
storage injections in the latter part of April.
France issues demand side response rules to
mitigate potential gas supply
disruptions
By Andrea Battaglia 14-Apr-22 11:03 LONDON
(ICIS)–The French transmission system operator
could ask large gas consumers with consumption
exceeding 5GWh per year – roughly 0.5million
cubic metres (mcm), including gas-fired power
plants and industrial consumers, to reduce or
fully halt their gas consumption in case of
extreme supply tightness, according to a new
law decree published on 8 April.
France’s new LNG project could curb interest in
MidCat pipeline
By Andrea Battaglia 14-Apr-22 10:59 LONDON
(ICIS)–As Europe seeks ways to reduce its
dependence on Russian gas, political leaders in
France and Spain recently mulled a revival of
the Midi-Catalunia (MidCat) pipeline project,
aiming to increase the interconnection capacity
of the Iberian Peninsula.
EU calls for full embargo of Russian energy,
fast-tracks adoption of new storage
rules
By Diane Elijah 14-Apr-22 10:26 LONDON
(ICIS)–The European Parliament called for
additional sanctions against Russia including
an immediate full embargo on Russian oil, coal,
gas and nuclear fuel, in a non-binding
resolution adopted with a vast majority on 7
April.
Europe’s gas-to-coal switch profitable despite
Russian coal ban
By Raymond Shi 14-Apr-22 10:15 LONDON
(ICIS)–Europe’s clean dark spreads are likely
to remain profitable enough to encourage
gas-to-coal fuel switching in the medium term,
despite an incoming blanket ban on coal imports
from Russia.
US New Fortress plans US Gulf Fast LNG
project
By Fauzeya Rahman 14-Apr-22 09:58 HOUSTON
(ICIS)–US developer New Fortress wants to
build a 2.8mtpa offshore LNG export plant in
the US Gulf and start operations by the first
quarter of 2023.
Covestro’s Steilemann warns of consequences of
embargo on Russian gas
By Nigel Davis 14-Apr-22 09:29 LONDON
(ICIS)–An immediate embargo on natural gas
from Russia would be short-sighted and threaten
entire production and supply chains and
thousands of jobs, Covestro CEO and VCI
president elect, Markus Steilemann, has warned.
Asia’s PBT holds steady
while demand remains tepid
By Clive Ong 14-Apr-22 17:14 SINGAPORE
(ICIS)–The Asian polybutylene terephthalate
(PBT) market was stable amid thin trade. Demand
in Asia remains soft with uncertainty expected
to stay elevated in the near term.
NE
Asia ethylene downcast; China demand to stay
weak
By Yeow Pei Lin 14-Apr-22 12:03 SINGAPORE
(ICIS)–Northeast Asia’s spot ethylene prices
fell for a second week, hobbled by deeper
downstream output cuts in China amid
COVID-related logistic bottlenecks.
India
March exports hit record high; fertilizer
imports up eightfold
By Priya Jestin 14-Apr-22 16:19 MUMBAI
(ICIS)–India’s exports in March rose 19.8%
year on year to $42.2bn – exceeding the $40bn
mark for the first time – on continued increase
in demand for its engineering goods and
petroleum products.
Singapore tightens
monetary policy as inflation threatens
economy
By Nurluqman Suratman 14-Apr-22 14:01
SINGAPORE (ICIS)–The Monetary Authority of
Singapore (MAS) will allow the Singapore dollar
to appreciate against a basket of
trade-weighted currencies to tackle rising
domestic inflation, which threatens economic
growth this year.
Singapore Q1 GDP
moderates to 3.4% amid manufacturing
slowdown
By Nurluqman Suratman 14-Apr-22 10:46
SINGAPORE (ICIS)–Singapore’s economy grew by
3.4% year on year in the first quarter,
moderating from the 6.1% expansion in the
fourth quarter of 2021, amid a slowdown in
manufacturing, official advance estimates
showed on Thursday.
US natgas rises to just under $7.00/MMBtu on
supply concerns
By Ruth Liao 13-Apr-22 17:07 HOUSTON (ICIS)–US
gas futures soared nearly 5% higher on
Wednesday amid supply concerns, as the Henry
Hub front-month contract briefly crossed over
the $7.00/MMBtu mark during trading before
settling just below.
US crude futures surge $3.65/bbl on supply
concerns
By Ignacio Sotolongo 13-Apr-22 15:12 HOUSTON
(ICIS)–NYMEX WTI crude futures for May
delivery extended the previous session’s rally
and recouped all of the previous week’s losses,
settling at $104.25/bbl, up $3.65, as the loss
of Russian oil exports due to sanctions will
start impacting global supplies in May.
CRUDE SUMMARY: Oil prices continue firming on
the loss of Russian crude supplies in
May
By Barney Gray 13-Apr-22 14:22 LONDON (ICIS)–A
demonstrable lack of progress in ending the
Russia-Ukraine war has offset bearish US
inventory data, as the market braces itself for
the loss of up to 3m bbl/day from Russia in
May.
Grupa Azoty unaffected by EU sanctions on
stakeholder – company
By Will Conroy 13-Apr-22 10:35 LONDON
(ICIS)–Poland’s Grupa Azoty on Tuesday said in
a statement that sanctions imposed by the EU
and other western powers on Russian oligarch
Viatcheslav Kantor, who indirectly owns 19.82%
of the company, are not expected to have an
impact on its operations.
Crude demand hit by China lockdowns, Russian
supply to be 1.5m bbl/day lower in April –
IEA
By Jonathan Lopez 13-Apr-22 10:15 MADRID
(ICIS)–Severe lockdowns implemented in China
to contain the spread of the pandemic are set
to reduce global crude oil demand this year,
the International Energy Agency (IEA) said.
Canada’s central bank hikes key rate as Ukraine
war accelerates inflation
By Stefan Baumgarten 13-Apr-22 10:08 TORONTO
(ICIS)–Canada’s central bank on Wednesday
raised its target for the overnight lending
rate by 50 basis points, to 1.0% from 0.5%, and
said rates would need to be further increased
to curb rising inflation.
German institutes slash GDP forecast, Russian
gas halt would spark
recession
By Stefan Baumgarten 13-Apr-22 08:38 LONDON
(ICIS)–Leading German economic research
institutes have slashed their 2022 forecast for
the country’s economic growth – and are warning
that a sudden interruption of Russian gas
supplies would lead to a recession.
Russia’s naphtha exports down sharply in March
as buyers turn away – IEA
By Jonathan Lopez 13-Apr-22 06:51 MADRID
(ICIS)–Petrochemicals companies in Europe and
most major markets shunned naphtha from Russia
during March, as sanctions against the country
were announced, the International Energy Agency
(IEA) said.
Asia
MEG discussions slip to lowest in 2022 as
demand deteriorates
By Judith Wang 13-Apr-22 17:45 SINGAPORE
(ICIS)–Asia’s monoethylene glycol (MEG)
discussions slipped to their lowest levels
since the beginning of the year, as downstream
demand deteriorated amid further operation cuts
from major polyester producers.
Affordability could
derail the role of gas in India’s energy
transition
By Joachim Moxon 13-Apr-22 16:5 Winter is
over, but the start of spring has brought
little relief to a stretched global LNG market.
In late January, ICIS assessments for delivery
to India briefly touched below $20/MMBtu for
March delivery and this now seems as low as it
will get for spot prices in 2022.
Asia
naphtha jumps on crude oil gains; shrugs off
thin demand
By Melanie Wee 13-Apr-22 13:28 SINGAPORE
(ICIS)–Asia’s naphtha prices jumped on
Wednesday, tracking crude gains, but the market
is poised for volatility against a backdrop of
cautious demand as supply concerns loom.
US crude futures surge $6.31/bbl on OPEC
warning
By Ignacio Sotolongo 12-Apr-22 16:09
HOUSTON (ICIS)–NYMEX WTI crude futures for May
delivery settled at $100.60/bbl, up $6.31, in
response to OPEC’s monthly report warning that
Russian oil and gas exports will be impossible
to replace if sanctions for Russia’s invasion
of Ukraine target energy.
US to allow sales E15 gasoline this summer to
help reduce gasoline prices
By Adam Yanelli 12-Apr-22 15:51 HOUSTON
(ICIS)–The US plans to increase domestic fuel
supplies by authorizing E15 gasoline – gasoline
blended with 15% ethanol – to be sold this
summer.
German chems can cope without Russian coal –
VCI
By Stefan Baumgarten 12-Apr-22 11:49 LONDON
(ICIS)–Germany’s chemical industry can cope
without supplies of coal from Russia, chemical
producers’ trade group VCI said.
Gas-to-coal fuel switching to remain profitable
despite Russian coal import
ban
By Raymond Shi 12-Apr-22 10:33 LONDON
(ICIS)–Clean dark spreads are likely to remain
profitable enough to encourage gas-to-coal fuel
switching in the medium term, despite an
incoming blanket ban on coal imports from
Russia.
Russian urea exports to Brazil halve in
Q1
By Deepika Thapliyal 12-Apr-22 10:23 LONDON
(ICIS)–In Brazil, imports of urea from Russia
declined 53% in the first quarter, while total
imports were at over 1.6m tonnes, down 17% from
nearly 2m tonnes in the same period of 2021,
according to the ICIS Supply and Demand
Database.
Germany’s March chem wholesale prices jump
40.1% on war impact
By Stefan Baumgarten 12-Apr-22 09:51 LONDON
(ICIS)–Chemical wholesale prices in Germany
kept rising sharply in March – 40.1% year on
year and 6.7% month on month – according to the
latest data from the country’s federal
statistics agency.
Ukraine crisis to hit global growth but
refinery margins soar in March –
OPEC
By Tom Brown 12-Apr-22 08:59 LONDON ICIS)–OPEC
on Tuesday revised down global GDP growth
expectations for the year from 4.2% to 3.9% on
the back of the invasion of Ukraine, while a
growing supply-demand imbalance drove refinery
margins to the highest levels since the
pandemic last month, according to the group.
PODCAST: Europe buyers look to Asia as
logistics crisis persists
By Will Beacham 12-Apr-22 08:05 BARCELONA
(ICIS)–Downstream customers in Europe are
seeking new supplies of chemicals from Asia as
they avoid high prices and Russian material,
but the global logistics crisis may persist for
the rest of the year.
Most European urea imports up in 2021; Russian
imports to fall on sanctions
By Deepika Thapliyal 12-Apr-22 07:00 LONDON
(ICIS)–Urea imports rose for most European
countries in 2021 despite prices being at
record highs, except for some including Spain
and the UK, which saw slight year-on-year
declines.
German economic sentiment sinks further in
April, stagflation on the horizon –
Zew
By Tom Brown 12-Apr-22 06:21 LONDON
(ICIS)–Expectations for Germany’s economic
growth sank further in April compared to the
previous month, with the assessment of future
prospects falling further and expectations that
the next half-year could see the country
descend into stagflation, institute Zew said.
Demand slowdown weighs on
Asia polyester talks; outlook
bearish
By Judith Wang 12-Apr-22 16:48 SINGAPORE
(ICIS)–The overall demand slowdown in China
has weighed on polyester discussions, while
major polyester producers in China are cutting
operations amid rising inventories and a
bearish market outlook.
China
petrochemicals supply chain struggles amid
pandemic curbs
By Fanny Zhang 12-Apr-22 14:33 SINGAPORE
(ICIS)–China’s entire petrochemical supply
chain is facing strong headwinds due to tough
pandemic-related restrictions in place at
various production hubs, including Shanghai.
Oil
rises more than $2/bbl on OPEC tight supply
warning
By Nurluqman Suratman 12-Apr-22 13:21
SINGAPORE (ICIS)–Oil prices rose more than
$2/bbl on Tuesday, reversing sharp losses in
the previous session, after OPEC warned it
would not be able to replace supply lost from
Russia due to sanctions.
China
March vehicle markets slump; sales down 11.7%
on year
By Fanny Zhang 12-Apr-22 11:59 SINGAPORE
(ICIS)–China’s vehicle markets took hits from
increasing outbreaks of COVID-19 in March, with
sales down by 11.7% year on year to 2.23m and
production losing 9.1% to 2.24m units, official
industrial data showed on Monday.
US gas futures rise nearly 6%, hit highest
level since 2008
By Ruth Liao 11-Apr-22 17:21 HOUSTON (ICIS)–US
natural gas futures on the NYMEX scaled higher
to $6.64/MMBtu on Monday, the highest
front-month settlement for the Henry Hub
benchmark since October 2008.
US crude futures slide $3.97/bbl on length
liquidation
By Ignacio Sotolongo 11-Apr-22 15:13 HOUSTON
(ICIS)–NYMEX WTI crude futures for May
delivery settled at $94.29/bbl, down $3.97/bbl,
on market sentiment that the co-ordinated
effort by members of the International Energy
Agency (IEA) to release barrels from strategic
petroleum reserves will help alleviate the loss
of Russian barrels.
BASF projects Q1 profit drop on Wintershall Dea
Nord Stream 2 loan
write-downs
By Tom Brown 11-Apr-22 11:02 LONDON
(ICIS)–BASF’s first-quarter net income is
likely to fall substantially year on year,
largely on the back of impairments related to
its Wintershall Dea oil and gas joint venture
unit, particularly on loans to the
presently-halted Nord Stream 2 pipeline, the
Germany-based firm said.
OGE plans construction of pipeline link for
Wilhelmshaven LNG terminal
By Eduardo Escajadillo 11-Apr-22 10:59 LONDON
(ICIS)–Germany’s Open Grid Europe (OGE)
intends to complete the connection line for the
floating storage regasification unit (FSRU) at
Wilhelmshaven by the end of 2022, the company
announced over the weekend.
North Sea oil market slump challenges tight
supply narrative
By Richard Price 11-Apr-22 10:00 LONDON
(ICIS)–Crude oil’s meteoric rise to $140/bbl
after Russia’s invasion of Ukraine pointed to
the tightest market in decades. However,
signals in the physical market and newly
emerging demand concerns have seen sentiment
reshape. The reality is that Russian crude has
still been finding its way into the European
refining ecosystem, but these volumes should
wane throughout April.
Dow acquires stake in LNG import terminal in
Stade, Germany
By Jonathan Lopez 11-Apr-22 09:51 MADRID
(ICIS)–Dow has acquired a stake in Hanseatic
Energy Hub GmbH (HEH), a consortium building a
liquefied natural gas (LNG) terminal on its
Stade facilities in Germany, the US chemicals
major said.
Suspended German coal phase-out could save 2bcm
of gas in 2023
By ICIS Editorial 11-Apr-22 09:09 LONDON
(ICIS)–Suspending Germany’s coal phase out by
two years would limit demand for natural gas by
2 billion cubic metres (bcm) in 2023, according
to ICIS modelling.
Russia among top three urea exporters to the US
in January-February
By Deepika Thapliyal 11-Apr-22 08:17 LONDON
(ICIS)–In the US, urea imports were at 870,551
tonnes in January-February, up 16% from 749,060
tonnes in the same period of 2021, according to
the ICIS Supply and Demand Database.
INEOS calls on UK government to allow test
fracking site
By Tom Brown 11-Apr-22 07:02 LONDON
(ICIS)–INEOS has requested that the UK
government allow it to develop a shale gas test
site in the country, a year and a half after
writing down the value of its exploration
assets in the space after the country declared
a moratorium on fracking.
March
IPEX up 8.6% on firming prices in northeast
Asia, US Gulf
By Miguel Rodriguez Fernandez 11-Apr-22
18:14 LONDON (ICIS)–The ICIS Petrochemical
Index (IPEX) rose by 8.6% month on month in
March, as rising feedstock crude oil and energy
prices pushed petrochemicals and plastics
prices higher globally.
Asian
MEK soars to new high on US, Europe
demand
By Julia Tan 11-Apr-22 17:46 SINGAPORE
(ICIS)–Asian methyl ethyl ketone (MEK) import
markets continued to soar to new highs in the
week ended 8 April, as demand from the US and
Europe kept trading levels high and selling
pressure low despite tepid demand from Asia.
China
March petrochemicals track crude gains;
lockdowns keep output low
By Yvonne Shi 11-Apr-22 15:51 SINGAPORE
(ICIS)–China’s petrochemical markets mainly
tracked crude gains in March, with additional
upward pressure from tighter supply on reduced
local production due to pandemic-related
lockdowns.
Topic Page by Aura Sabadus and
Will Beacham. Additional
reporting by Richard
Ewing and Sophie
Udubasceanu. Maps and graphs by
Yashas Mudumbai.
27-May-2022
LONDON (ICIS)–It had to happen eventually.
Since late 2021, chemicals producers have been
passing on substantial price increases to keep
up with energy, raw material, and inflation
costs, while multiple CEOs warned that,
eventually, those cost increases would hit
consumers.
Chemicals producers are very early in the chain
to products being completed and then sold, but
signs are emerging from multiple sectors that
those price increases are starting to be felt,
and impact on demand at a point where costs of
living are surging and consumer caution is
increasing.
A huge market sell-off that originated in the
US and rippled through stock exchanges in Asia
and Europe late last week was triggered by
unexpectedly weak results from big-box retail
chains in the country.
Walmart adjusted full-year sales expectations
and Target noted a “well below expectations”
first quarter.
Walmart’s CEO Carl Douglas McMillon stated on
an earnings call that the firm was seeing
margin erosion from customers prioritising food
purchases over bigger-ticket items and less
pressing spending on electronics and other
capital goods.
Another bleak note for the makers of capital
goods and their suppliers was sounded by
technology firm Cisco, which also reported a
bearish outlook on the back of a logistics
environment that has deteriorated further in
the wake of the Russia-Ukraine war, and
lockdowns in China.
FOOD COSTS
The darkening macroeconomic environment has
resulted in a slight moderation of some
commodity pricing, with the pace of crude price
growth more muted despite some tightness in the
chain, while remaining at high price levels
relative to mid-2021.
Both WTI and Brent benchmarks remain over
$110/bbl.
–
A slight reduction in price pressures for raw
materials could stand to reduce costs for
chemicals producers, but is less likely to buoy
consumer spending as food pricing has continued
to rise, as highlighted by IMF chief Kristalina
Georgieva, speaking at a World Economic Forum
(WEF) panel this week.
“We have commodity price shock in many
countries, [and a] particular shock I want to
bring your attention to is food prices …
Because of that sense that maybe the economy’s
getting into tougher waters,” she said.
“The oil price went down, but food price
continues to go up, up up. Why? We can shrink
the use of petrol when growth slows down, but
we have to eat every day.”
European energy prices continue high as the
continent tries to wean itself off Russian oil
and gas imports in an extremely tight
timeframe.
Even the UK, which is less directly dependent
on Russian natural gas but is more exposed as a
consequence to open market pricing, is looking
at a potential hike in the annual energy price
cap to £2,800 per household in October,
following a 50% increase to £1,970 last month.
Jonathan Brearley, head of UK energy regulator
Ofgem, described the current situation as a
once-in-a-generation event, and warned that 12m
people, close to a fifth of the whole country,
could be pushed into fuel poverty by the hike.
In the face of those projections, it seems
trivial to draw attention to the prospect of
lower spending on electronics, cars, and home
decoration.
However, the fact is that the higher costs
chemicals firms have been pushing down the
chain will push up the cost of those items at
time when consumers are much less interested in
buying them.
Chemicals pricing 2020-2022
Source: ICIS
Even if the energy crisis were resolved
tomorrow, the long tail of value chain cost
hikes from upstream to downstream means that
those higher prices would be likely to remain
through much of the year.
As it is, chemical company executives will be
eyeing a potential scenarios in the second half
of the year where end user demand falls but
production costs remain high.
The IMF cut its global GDP growth expectations
practically in half last month, from 6.1% to
3.6%, while the European Commission slashed its
forecast for the EU in 2022 to 2.7% from 4%,
noting that the war is sustaining economic
headwinds that had been expected to subside.
3.6% is a long way from zero growth or
recession, but the IMF’s Georgieva did not rule
out a slip into negative growth for some
regions.
“What we may see is recession in some countries
that … haven’t recovered from the previous
crisis, highly dependent on energy imports from
Russia or imports of food,” she said.
The EU, with its crippling dependency on
Russian energy and intricately woven food
supply lines, fits that description extremely
well.
TWO-SPEED RECOVERY
From a chemicals sector perspective, the
outlook could be even darker, as a substantial
driver of what growth there is is coming from
the service sector.
Recent purchasing managers’ index (PMI) data
for the eurozone shows manufacturing growth
close to a standstill, while service sector
performance is more robust.
This is an inverse of the situation during the
pandemic when consumers, unable to travel or
socialise, poured cash into new capital goods
and home improvement.
Now, after two years of being trapped at home,
and facing the highest energy and inflation
levels since the 1970s, consumers are
prioritising what discretionary cash they do
have for restaurants, concerts, and holidays.
Commenting on recent French business climate
data, ING economist Charlotte de Montpellier,
noted that current indicators point to a
two-speed economy, with services in the fast
lane.
“In the industrial sector where weaknesses are
accumulating, we are seeing deteriorated
prospects, falling foreign order books, weak
demand due to high prices, and supply
difficulties,” she noted.
Over the last few years, the watchwords for the
chemicals sector have been diversity and
resilience, with firms moving to diversify
their end-market exposure and targeting less
cyclic portfolio mixes.
SECTOR RESILIENCE
Food and healthcare sector demand is likely to
remain strong irrespective of the current
economic storm, and shortages that have dogged
certain sectors over the last few years may
keep demand for some consumer goods stronger
than it would have been.
The semiconductor chip drought over the past
two years has created pent-up demand for
vehicles and consumer electronics that is
likely to continue to filter through despite
the current market climate.
This is borne out by a less pessimistic view on
exports from Germany’s automotive sector. The
most recent survey by think tank Ifo showed
that export optimism had improved slightly
among manufacturers, despite little expectation
of any improvement in the immediate future.
This could speak to players adapting once more
to the latest tumult for the global economy as
much as any expectation that any of the current
headwinds will subside any time soon.
As much as anything else that industrial
producers have learned since 2020, an ability
to come to terms with and adapt to previously
unthinkable market conditions may be one of the
most fundamental.
With a land war in Europe, food shortages, and
energy conditions not seen since the fuel
crisis of the 1970s, following straight on the
heels of a global pandemic, company
responsiveness may be an even greater
competitive differentiator than forward
planning.
Insight article by Tom
Brown
27-May-2022
China’s consumption of crude has softened as
industrial production is hit by
pandemic-related restrictions in place since
February, with no sign of the government giving
up on its zero-COVID policy.
Crude imports for the year are projected to
grow at the second-slowest pace in over two
decades at 1.7% “due to COVID-19 resurgence
since mid-March and the soaring crude prices”,
according to ICIS senior analyst Jean Zou.
Granted the lockdowns in China have been
damaging for Asia’s nylon market, with
prolonged demand loss particularly felt in the
CFR (cost & freight) China market, but
there have been recent signs that the worst may
have passed in the lead up to the reopening of
key Chinese cities.
Asian methyl methacrylate (MMA) peaked in May,
after increasing around 17% since H2 February.
Market players are awaiting clearer picture on
China’s lifting of the lockdowns and
restrictions.
Updated on 27 May with news story
links
On this topic page we analyse the
impact of coronavirus and oil price dynamics on
chemical markets and bring together the latest
news reported by ICIS.
Scroll down to see the
latest interactive graphics, podcasts and
videos.
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here to register for regular updates to
help you navigate these challenging
times.
LATEST HEADLINES (Last updated
at 09:00 GMT on 27 May 2022)
Asian epoxy
market stable, Chinese domestic market outlook
ambiguous
By Luffy Wu 27-May-22 11:54 SINGAPORE
(ICIS)–The Asia epoxy resins market saw
overall stable market sentiment while buyers
exhibited improved price acceptability compared
with in April.
Asia nylon market cautious as Shanghai
inches towards June
reopening
By Josh Quah 26-May-22 16:16 SINGAPORE
(ICIS)–The lockdowns have been damaging for
Asia’s nylon market, with prolonged demand loss
particularly felt in the CFR (cost &
freight) China market. There have been recent
signs, however, that the worst may have passed
in the lead up to the reopening of key cities
in China.
PODCAST: Weak demand from
lubricants, China’s Group II base oil import
margins to be negative
By Whitney Shi 25-May-22 14:09 SINGAPORE
(ICIS)–ICIS analyst Jady Ma and Whitney Shi
discuss the recent developments and outlook of
China’s base oil market.
INSIGHT: China
crude consumption softens amid COVID-19
lockdowns
By Pearl Bantillo 25-May-22 12:00 SINGAPORE
(ICIS)–China’s consumption of crude has
softened as industrial production is hit by
pandemic-related restrictions in place since
February, with no sign of the government giving
up on its zero-COVID policy.
INTERVIEW: China
emergence from lockdowns, stimulus to recharge
auto and construction – Covestro
CFO
By Joseph Chang 25-May-22 05:17 NEW YORK
(ICIS)–China’s easing of and potential
emergence from COVID-19 lockdowns along with
government stimulus should spark a major
recovery in its automotive and construction
markets, the chief financial officer (CFO) of
Germany-based Covestro said on Tuesday.
Asian MMA peaks
in May; outlook pending clarity amid easing
restrictions in China
By Li Li Chng 24-May-22 13:47 SINGAPORE
(ICIS)–Asian methyl methacrylate (MMA) peaked
in May, after increasing around 17% since H2
February. Market players are awaiting clearer
picture on China’s lifting of COVID-19
lockdowns and restrictions.
PODCAST: Europe
PE and PP update and outlook
By Ben Lake 23-May-22 23:42 LONDON
(ICIS)–Senior editor, Vicky Ellis, and market
editor, Ben Lake, join forces to discuss a
distinct change in the polymers market. The
frenzied activity in March and April has given
way to a far more relaxed sentiment in May – on
the buy-side, at least. Vicky and Ben give
their outlook for June and take a look at
events that could shake up the markets again.
INSIGHT: China PE
demand to rebound from June, but slow road
ahead
By Amy Yu 23-May-22 18:27 SINGAPORE
(ICIS)—China polyethylene (PE) demand is
expected to firm as COVID-19 containment
measures ease, but the pace of recovery remains
hindered by remaining lockdown measures.
Asia BDO under
pressure as tepid demand persists, economic
uncertainty
By Clive Ong 20-May-22 12:17 SINGAPORE
(ICIS)–The Asian butanediol (BDO) market
remains under downward pressure from prevailing
soft demand in the region. Buying momentum
could remain slow in the near term from
economic headwinds from the Ukraine conflict
and Russian sanctions, as well as the lockdown
in China which looks set to ease.
INSIGHT: US
supply chain problems may continue for two more
years
By Al Greenwood 19-May-22 21:00 HOUSTON
(ICIS)–US supply-chain problems could persist
for another two years because new problems
continue to pop up. Since the pandemic started
more than two years ago, problems continue to
compound problems, said Eric Byer, president of
the National Association of Chemical
Distributors (NACD). He participated in a
conference call with the ACC.
Markets sell-off drives down Europe
chemical stocks
By Tom Brown 19-May-22 19:28 LONDON
(ICIS)–European chemical company stocks fell
on Thursday amid a wider market sell-off as
below-expectations US retail financials and
high domestic inflation drive fears that
falling consumer demand could result in a
recession.
PODCAST: China’s
MMA demand recovery to lag despite Shanghai
reopening
By Olivia Dai 19-May-22 15:06 SINGAPORE
(ICIS)–ICIS analyst Jady Ma and Olivia Dai
discuss the recent developments and outlook of
China’s methyl methacrylate (MMA) market.
Asia
fatty alcohols near-term demand may pick up on
China lockdown easing
By Helen Yan 18-May-22 12:14 SINGAPORE
(ICIS)–Improved Chinese demand may lend
support to Asia’s fatty alcohols market, as
China gradually eases its COVID-19 lockdown
restrictions. This is amid expectations that
Shanghai, a major port and key financial and
production hub, is likely to open up fully from
1 June.
Increase of PP, PE imports from China
in Pakistan due to lockdowns
By Nadim Salamoun 17-May-22 23:29 DUBAI
(ICIS)–Chinese polypropylene (PP) and
polyethylene (PE) breakbulk and containerized
cargoes have been increasingly available in the
Pakistani market, directly competing with Gulf
Cooperation Council (GCC)-origin material. The
situation could be attributed to the increased
lockdowns in China, which have negatively
impacted domestic demand.
PODCAST: Slowing
China will hurt global economy,
chemicals
By Will Beacham 17-May-22 21:29 BARCELONA
(ICIS)–As lockdowns, the Common Prosperity
policy and lacklustre export markets cut growth
in China’s economy, the global chemical
industry should prepare for negative demand
growth in 2022.
Easing of
lockdown provides limited support for Asian
IPA
By Julia Tan 17-May-22 19:31 SINGAPORE
(ICIS)–Asian isopropanol (IPA) markets saw
slightly mixed indicative prices in the week,
although market sentiment continues to be weak.
Market sources underlined on Tuesday that
demand was not likely to pick up until
mid-June. Despite news that Shanghai lockdowns
would begin to ease in early June, a number of
market participants were fairly sceptical that
this would provide significant support to the
Asian IPA markets.
Asia petrochemical supplies rise as
China exports grow amid weak
yuan
By Fanny Zhang 13-May-22 16:13 SINGAPORE
(ICIS)–Asia’s petrochemical markets are being
weighed down by growing supply, with China
exporting more products – spurred by the weak
yuan and poor domestic demand amid lockdowns.
The Chinese yuan (CNY) lost nearly 7% against
the US dollar from the start of April to 13
May, with the exchange rate at CNY6.79 to $1,
data from the People’s Bank of China (PBoC)
show. The yuan depreciation has caused a
narrowing or closing of arbitrage windows for
moving cargoes into China, while opening up
better export opportunities. With a weaker
yuan, the trading route “out of China” may stay
for a while, traders said. The country’s
domestic demand is significantly dented by
tight restrictions on people movement and
business activity following a strong resurgence
of COVID-19 infections, consequently, exerting
strong downward pressure on Asian markets.
Asia fatty acids remain soft on China
lockdowns and Indonesia export ban
uncertainty
By Helen Yan 13-May-22 15:05 SINGAPORE
(ICIS)–Asia’s fatty acids market is likely to
remain soft in the near term, due to the
economic slowdown in China and the expected
removal of Indonesia’s export ban on crude palm
oil (CPO) sometime in May. China lockdowns are
weighing on demand in Asia. “There is too much
uncertainty, with the market not sure when
China will lift its lockdowns and when
Indonesia will lift its export ban on palm
oil,” a regional supplier said. Market players
are adopting a cautious stance and buyers are
reluctant to commit to any large spot
purchases, given the uncertainty and
expectations that the export ban is likely to
be removed soon.
Container rates from China to US down
by 20% since Shanghai lockdowns
began
By Adam Yanelli 13-May-22 05:23 HOUSTON
(ICIS)–Rates for shipping containers from east
Asia and China to both US coasts have fallen by
between 13-20% since COVID-19-related lockdowns
began in Shanghai in March, and with China
holding fast to its zero-COVID-19 policy, the
trend could continue. The impact of the
lockdown measures on China’s available exports
has been significant, leading to the major
ocean shipping alliances announcing
cancellations of at least a third of their
scheduled sailings out of Asia through early
June.
US considers dropping Chinese tariffs
to fight inflation – Biden
By Al Greenwood 11-May-22 06:09 HOUSTON
(ICIS)–The administration of US President Joe
Biden is discussing whether removing the
tariffs imposed on Chinese imports would lower
inflation, he said on Tuesday. The US imposed
tariffs on billions of dollars’ worth Chinese
imports – including plastics and chemicals –
amid allegations of unfair trade policies on
the part of China, which included unfair
technology transfers and theft of intellectual
property.
INSIGHT: Can US, global economies avoid
recession amid a whirlwind of
headwinds?
By Joseph Chang 12-May-22 01:10 NEW YORK
(ICIS)–Can the US and major economies around
the world avoid a recession in the face of what
can only be called a whirlwind of headwinds? In
the US, the Federal Reserve is moving to tame
the inflation beast and engineer a soft landing
for the economy. Fed chair Jerome Powell opened
the FOMC (Federal Open Market Committee) press
conference on 4 May by addressing the American
people directly. “Inflation is much too high,
and we understand the hardship it is causing,
and we’re moving expeditiously to bring it back
down. We have both the tools we need and the
resolve it will take to restore price stability
on behalf of American families and businesses,”
said Powell.
Asian spot TiO2
to come under pressure from weak Chinese yuan
in early May
By Joson Ng 06-May-22 11:17 SINGAPORE (ICIS)–A
depreciating Chinese currency against the US
dollar could start to have an impact on the
Asian titanium dioxide (TiO2) spot market
starting in May.
Turkey PE and PP
prices stable, market quiet amid public
holidays
By Samantha Wright 05-May-22 23:53 LONDON
(ICIS)–Turkish polyethylene (PE) and
polypropylene (PP) values were steady this week
due to a lack of activity following a public
holiday.
Europe ABS, SAN
import challenge likely to
persist
By Yashas Mudumbai 05-May-22 19:20 LONDON
(ICIS)–Acquiring imports from Asia for
European styrene acrylonitrile (SAN) and
acrylonitrile-butadiene-styrene (ABS) market
players remains a challenge amid ongoing
logistical constraints. There has been some
tightness in supply due to reduced imports from
Asia.
INSIGHT: EU
Russia oil ban will further drive global
remapping of trade
By Tom Brown 05-May-22 19:11 LONDON (ICIS)–The
European Commission’s proposed ban on Russian
oil imports by the end of the year is more
likely to drive further remapping of global
trade flows than drive a spike in crude prices,
but the pain could be more substantial in
refined products markets.
Oil rises more
than $1/bbl on supply worries; China woes cap
gains
By Nurluqman Suratman 04-May-22 12:54 SINGAPORE
(ICIS)–Oil prices rose by more than $1/bbl on
Wednesday on concerns over tight supply after
industry data showed a drop in US crude and
fuel inventories last week, but worries over
poor manufacturing data from China capped
gains.
PODCAST: Europe
chemicals could face short periods of gas
rationing this winter
By Will Beacham 03-May-22 22:12 BARCELONA
(ICIS)–European chemical companies may be
forced to cut gas use for short periods this
winter if demand is very high and supply
crimped, though steps are being taken to avoid
this scenario.
Margin pressure
to persist in European ethanolamines
market
By Cameron Birch 03-May-22 21:33 LONDON
(ICIS)–Two main questions dominate the
European ethanolamines market as participants
make forecasts for the rest of Q2 and into Q3.
First, is the question of continued uncertainty
linked to feedstock costs, and, second, is the
uncertainty that surrounds the demand picture
across the continent.
Europe ADA, capro, nylon
markets to face slow demand in
May
By Marta Fern 30-Apr-22 01:41 LONDON
(ICIS)–European nylon 6 and 6,6 is facing soft
demand in May, as the downstream automotive
sector continues to struggle with shortages of
vital components, seasonally slower fibres and
yarns markets and high price points starting to
have negative effect on buying interest, amid a
cautious approach to stockholding levels.
Asia’s glycerine
market to face upward pressure when China lifts
its lockdowns
By Helen Yan 29-Apr-22 12:30 SINGAPORE
(ICIS)–Asia’s glycerine market is likely to
face further upward price pressure when China
lifts its lockdown measures, which is expected
to be sometime in May.
PODCAST: China
petrochemical trade face disruptions on
lockdowns
By Nurluqman Suratman 29-Apr-22 11:16 SINGAPORE
(ICIS)–In this episode of the podcast,
information manager Yvonne Shi discusses with
senior reporter Nurluqman Suratman the impact
of COVID-19 lockdowns in China.
US Q1
GDP falls amid Omicron, supply chain
disruptions
By Stefan Baumgarten 28-Apr-22 08:56
HOUSTON (ICIS)–US real GDP fell at an annual
rate of 1.4% in Q1, the Bureau of Economic
Analysis (BEA) said in an “advance
estimate” of Q1 GDP on Thursday.
Asia’s ABS
continues tumble since late March on poor
end-use demand
By Angeline Soh 28-Apr-22 19:04 SINGAPORE
(ICIS)–Asia’s acrylonitrile butadiene styrene
(ABS) sentiment was down for the sixth week, as
end-use consumption continued to dwindle from
the lockdowns across major market, China, amid
the Russia-Ukraine war.
Asia Group II
base oils supply short in Q2, China demand
stifled on lockdowns
By Matthew Chong 28-Apr-22 15:12 SINGAPORE
(ICIS)–Asia’s Group II base oils supply is
expected to remain tight for the rest of the
second quarter on reduced production.
Asian butyl-A
rebounds tracking China; outlook remains
uncertain on COVID-19
By Li Li Chng 27-Apr-22 21:33 SINGAPORE
(ICIS)–Asian butyl acrylate (butyl-A) prices
rebounded following the recent firm China
domestic price trend, but uncertainties about
the development of COVID-19 in China after the
Labour Holidays will likely keep players on
their toes.
Oil prices fall
$3/bbl on worries over China COVID-19
lockdowns
By Nurluqman Suratman 25-Apr-22 11:04 SINGAPORE
(ICIS)–Oil prices extended the previous week’s
losses on Monday, with Brent crude down more
than $3/bbl on worries that the prolonged
COVID-19 lockdown in China’s largest city,
Shanghai, will dent fuel demand.
INSIGHT: China MX
market wave under pressure from crude and
pandemic
By Veronica Zhang 25-Apr-22 10:00 SINGAPORE
(ICIS) –After the Lunar New Year Holiday mixed
xylenes (MX) prices in China surged on robust
crude oil. However, MX prices fell back heavily
in March as crude oil weakened and on the
resurgence of the pandemic.
Asia PVC spot
market weighed down by influx of China
supply
By Jonathan Chou 22-Apr-22 11:59 SINGAPORE
(ICIS)–Asia’s polyvinyl chloride (PVC) spot
market is being weighed down by an influx of
material coming from China, where domestic
consumption is hampered by lockdowns.
FOCUS:
Dow’s European crackers switch to propane from
naphtha
By Al Greenwood 22-Apr-22 02:00 HOUSTON
(ICIS)–Dow’s crackers in Europe are relying on
their flexibility to switch to propane
feedstocks in response to the sharp rise in
naphtha prices, the CFO said on Thursday.
China’s
zero-COVID strategy dampens petrochemical
demand
By Felicia Loo 20-Apr-22 12:28 SINGAPORE
(ICIS)–China’s petrochemical demand is being
chipped away amid stifling COVID-19 lockdowns
and supply-chain woes besetting the world.
Shanghai proposes to resume production
against pandemic control to ease China’s supply
disruption
By Yvonne Shi 19-Apr-22 14:19 SINGAPORE
(ICIS)–China’s chemical supply tightness is
expected to last for a while amid
transportation woes as a result of COVID-19
lockdowns, though over the weekend Shanghai
Municipal Commission of Economy and
Informatization issued guidelines to resume
work and production.
PODCAST: Demise
of the quarterly chemicals
contract
By Will Beacham 19-Apr-22 22:50 BARCELONA
(ICIS)–Some chemical markets, especially in
Europe, are shifting from quarterly to monthly
contracts, driven by upstream volatility. Could
this signal the demise of the quarterly
contract? In this Think Tank podcast, Will
Beacham interviews ICIS head of market
reporting, Barbara Ortner, ICIS Insight Editor
Nigel Davis, and Paul Hodges, chairman of New
Normal Consulting.
China MTBE
exports surge as COVID-19 hits domestic
demand
By Winnie Huang 19-Apr-22 17:57 SINGAPORE
(ICIS)–China’s methyl tertiary butyl ether
(MTBE) exports in March-May are expected to
reach up to 44,000 tonnes, as domestic
suppliers divert their cargoes to overseas
markets to ease heavy inventory pressure from
coronavirus-hit demand.
PODCAST: Asia LAB
mired in uncertainty as upstream markets roil
sentiment
By Jasmine Khoo 19-Apr-22 12:07 SINGAPORE
(ICIS)–In this episode of the ICIS Asia
podcast, Jasmine Khoo speaks with Clive Ong,
editor for the ICIS linear alkylbenzene (LAB)
and linear alkylbenzene sulphonate (LAS)
report, on recent developments in the regional
market.
INSIGHT: China
lockdowns to weigh on economy after moderate Q1
growth
By Pearl Bantillo 18-Apr-22 17:38 SINGAPORE
(ICIS)–Lockdowns in parts of China will weigh
on the world’s second-biggest economy in the
months ahead, after pulling a
better-than-expected 4.8% annualized growth in
the first quarter.
April extrusion-grade PC contract
prices hit record high on rising energy
costs
By Miguel Rodriguez Fernandez 14-Apr-22 17:31
LONDON (ICIS)–European extrusion-grade
polycarbonate (PC) contract prices rose in
April to a record high on the back of higher
energy costs, according to market information
gathered by ICIS. Extrusion-grade PC buyers
claim they are facing serious problems to
swallow new price rises as their margins are
narrow and downstream buyers are resisting new
increases. Besides, demand for some
extrusion-grade PC applications is waning. That
is the case for protective sheets, which used
to be in demand in 2020 and 2021 to contain the
spread of COVID-19.
INSIGHT: China’s COVID-19 lockdowns
take toll on textile demand; MEG market slows
to a standstill
By Judith Wang 14-Apr-22 10:00 SINGAPORE
(ICIS)–China’s widespread lockdowns amid its
zero-COVID strategy have dealt a blow to
downstream textile demand and weighed on spot
monoethylene glycol (MEG) discussions, although
stronger energy costs and regional supply cuts
are providing some support to the MEG market.
INSIGHT: China’s Q1 PP market in ‘M’
shape; Q2 to see tight supply, uncertain
demand
By Lucy Shuai 13-Apr-22 10:00 SINGAPORE
(ICIS)–China’s polypropylene (PP) market
performed bearishly after an initial bull run
in the first quarter of 2022, showing an
overall ‘M’ shape. Following rises on the back
of high upstream costs, the recurrence of the
coronavirus in many parts of China has caused
local authorities to escalate prevention and
control measures, hindering demand and
logistics and in turn dragging down domestic PP
prices. Amid the cost pressure and rising
Covid-19 infection cases, supply is expected to
remain tight in the second quarter. But demand
recovery depends on the pandemic.
China petrochemicals supply chain
struggles amid pandemic
curbs
By Fanny Zhang 12-Apr-22 14:33 SINGAPORE
(ICIS)–China’s entire petrochemical supply
chain is facing strong headwinds due to tough
pandemic-related restrictions in place at
various production hubs, including Shanghai.
Cargo deliveries were being hampered as truck
drivers were avoiding places with high
infection rates, where they would be stuck for
14 days of required quarantine. Cities that
recorded spikes in COVID-19 cases caused by the
more infectious Omicron variant are in
different forms of lockdown, which may be
prolonged as China is keeping to its zero-COVID
policy. Zhejiang, Jiangsu, Shandong and Hebei
are among the affected provinces.
US caustic soda bulk liquid freight
rates jump out of the US
Gulf
By Bill Bowen 09-Apr-22 03:10 HOUSTON
(ICIS)–Liquid bulk cargo freight rates out of
the US Gulf for liquid caustic soda,
particularly to the Mediterranean, jumped
higher during the week, moving up from about
$100-120/dry metric tonne (dmt) to
$180-200/dmt, or higher, depending on parcel
size, according to export market participants.
Demand for liquid chemical shipments to Europe
from Asia, the US, Latin America and the Middle
East is drying up the supply of bulk liquid
carriers out of the US Gulf.
Sentiment for Asian spot BD discussions
wavers on soft demand
By Ai Teng Lim 08-Apr-22 15:43 SINGAPORE
(ICIS)–Asian spot discussions for butadiene
(BD) have lost some ground this week, as some
sellers moderated expectations slightly to
induce buying and move some cargoes.
Asia fatty alcohols to be weighed on by
Chinese demand slump, falling
PKO
By Helen Yan 08-Apr-22 14:20 SINGAPORE
(ICIS)–Asia’s fatty alcohols market may face
further downward pressure in the near term due
to a slump in Chinese demand and declining
feedstock palm kernel oil (PKO) prices. Fatty
alcohols C12-14 prices have been trending down
in recent weeks on declining feedstock PKO
prices while Chinese demand has slumped amid
renewed lockdowns to contain the spike in
coronavirus infections.
INSIGHT: Gulf players look to Europe as
Ukraine crisis continues, recession risk
remains
By Will Beacham 05-Apr-22 22:20 BARCELONA
(ICIS)–The war in Ukraine could see Gulf
petrochemicals producers strengthen their
collective footprint in Europe, as European
buyers look for new import sources, but the
risk of recession globally could still stand to
cut demand for Middle East petrochemicals.
Russia’s invasion of Ukraine is understood to
have led buyers in some European chemicals
markets to look elsewhere for product,
according to marker sources, opening up
possibilities for Middle East exporters to
seize market share.
Europe PX spot prices down on softer
Asian market, OX spot values
flatten
By Miguel Rodriguez Fernandez 04-Apr-22 18:27
LONDON (ICIS) — European paraxylene (PX) spot
prices fell week on week on the back of lower
values in the Asian PX market while orthoxylene
(OX) pricing in Europe remained stable,
according to market information gathered by
ICIS. Trade for Asian PX physical cargoes and
physical swaps declined last week, amid
increasing market uncertainties, which pushed
prices down in that region. New outbreaks of
COVID-19 in China had interrupted production
activities and disrupted supply chains, what
had a negative impact on demand.
Asia PBT stable
while volatile crude oil roils
sentiment
By Clive Ong 01-Apr-22 10:14 SINGAPORE
(ICIS–Asia’s polybutylene terephthalate (PBT)
market is expected to remain uncertain in the
near term amid the flux in the crude oil
markets and lower demand in China, though for
the time being prices are holding steady with
lower trading activity.
Congestion at US
ports could ease by end of year without further
‘jolts’ to the system
By Adam Yanelli 01-Apr-22 05:43 HOUSTON
(ICIS)–Congestion at US ports could ease by
year end as long as there are no more “jolts to
the system”, but continued strong demand for
goods by US consumers, new COVID-19 outbreaks
in Asia and possible labour strife between
shippers and West Coast dockworkers could make
the issue persist.
Asia EVA demand
buoyant on China PV sector growth, global
recovery
By Helen Lee 31-Mar-22 19:02 SINGAPORE
(ICIS)–Asia’s ethylene vinyl acetate (EVA)
demand outlook is buoyant amid growth in
downstream photovoltaic (PV) sector in China
despite new pandemic-related lockdowns in the
country.
Oil falls
by more $5/bbl on US’ reserves release plan,
weak China data
By Nurluqman Suratman 31-Mar-22 11:19 SINGAPORE
(ICIS)–Oil futures slumped by more than $5/bbl
on Thursday as the US is planning a massive
release from its strategic reserves to calm the
gasoline market, with overall sentiment further
weighed down by weak China data.
Asia
FAE market to soften into Q2 on higher
Indonesia levies and China
slowdown
By Helen Yan 28-Mar-22 16:52 SINGAPORE
(ICIS)–Asia’s fatty alcohol ethoxylates (FAE)
market is likely to soften in the near term,
due to declining feedstock fatty alcohol C12-14
costs and a slowing Chinese economy.
China
petrochemical logistics woes worsen on Shanghai
lockdown
By Fanny Zhang 28-Mar-22 16:34 SINGAPORE
(ICIS)–Further delays in petrochemical
deliveries in China can be expected as Shanghai
was placed under lockdown to contain
surging COVID-19 cases in the metropolis.
Shanghai starts city-wide
lockdown to fight pandemic
By Fanny Zhang 28-Mar-22 10:30 SINGAPORE
(ICIS)–China’s megacity of Shanghai announced
the start of a two-phase lockdown and mass
testing early Monday, in an effort to curb the
worst outbreak of COVID-19 so far in the city.
Oil
falls by more than $4/bbl as Shanghai lockdown
fuels demand worries
By Nurluqman Suratman 28-Mar-22 10:12
SINGAPORE (ICIS)–Oil prices fell by more than
$4/bbl on Monday on fresh demand worries
following news that local authorities have
imposed a two-phased lockdown of Shanghai over
nine days to control the spread of COVID-19.
ANALYSIS AND RESOURCES
27-May-2022
SINGAPORE (ICIS)–South Korean producer S-Oil
is running the No 2 residue fluidized catalytic
cracking (RFCC) unit at its Onsan refinery at
limited capacity, after restarting it following
a blast at the site that killed one person last
week.
The
blast occurred at the refinery’s alkylation
unit at about 20:50 Seoul time (13:50 GMT)
on 19 May. Alkylate is used a raw material for
the production of clean gasoline.
The company halted production at the No 2
alkylation plant, along with the nearby No 2
residue fluid catalytic cracking (RFCC) unit
and a paraxylene (PX) unit, at the site in the
southeastern city of Ulsan following the
incident.
The incident also caused the shutdown of its
No 2 methyl tertiary butyl ether (MTBE) unit.
S-Oil in a stock exchange filing on 23 May said
that it has resumed production at the No 2 RFCC
unit and plans to restart production at its No
1 paraxylene (PX) unit after scheduled
maintenance between 8 June and 15 July.
On-spec production at the No 2 RFCC unit –
which can produce 705,000 tonnes/year of
propylene – has been achieved but the plant is
still running at reduced capacity, according to
a company source.
The No 2 unit is expected to be “going to go
full [run rate] soon”, the source said, without
providing a timeline.
S-Oil’s polypropylene (PP) production process
linked to the No 2 RFCC unit has not been
restarted, the source said. The company’s PP
plant at the Onsan site has a 405,000
tonne/year capacity, according to the ICIS
Supply and Demand Database.
The company’s No 1 PX unit was initially
scheduled to undergo a scheduled 45-day
maintenance from 7-8 June.
The company’s No 2 PX unit was not affected by
the blast. The two PX units at the site have a
combined 1.7m tonne/year capacity.
S-Oil’s 300,000 tonne/year propylene oxide (PO)
plant at the Onsan site is currently running
normally.
The Onsan site can produce up to 187,000
tonnes/year of ethylene.
Energy giant Saudi Aramco is
the largest shareholder of S-Oil,
which is the
third biggest refiner in South Korea.
Focus article by Nurluqman
Suratman
Additional reporting by Samuel Wong, Tess
Tseng and Jasmine Khoo
27-May-2022
SINGAPORE (ICIS)–Thailand’s SCG Chemicals
plans to expand the capacity of its
Portugal-based subsidiary Sirplaste by 25%, in
response to strong demand for recycled plastics
in Europe.
The recycling firm has an existing 36,000
tone/year capacity post-consumer recycled
resins (PCR), of which 9,000 tonnes/year is
recycled high-density polyethylene (R-HDPE).
SCG Chemicals recently completed acquisition of
a 70%
stake in Sirplaste, which sells its
recycled plastics output in Europe.
The planned expansion will go hand in hand with
upgrading to high-quality recycled production
capacity to cater to a growing market in line
with SCG Chemicals’ environmental goals,
according to its parent firm – Thai
conglomerate Siam Cement Group (SCG) – in a
presentation to investors on Friday.
SCG Chemicals is looking at growing its
environment-friendly or green polymer portfolio
to 1m tonnes by 2030 and decarbonize current
operations by 20% by 2030 from 2021 levels,
with the goal of going carbon neutral by 2050.
The company has built Thailand’s first advanced
recycling demonstration plant, and is
“targeting creation of green feedstock and
food-grade resins with virgin-like
characteristics”, SCG said in the presentation.
The advanced recycling demo plant in Rayong
province with about 4,000 tonnes/year capacity
was launched in late January 2021.
The demo plant is expected “to develop and
scale-up chemical recycling technologies that
can turn post-use consumer plastic into
recycled feedstock for virgin plastic resin
production for petrochemical plants,” according
to SCG Chemical’s website.
SCG Chemicals is currently seeking regulatory
approval for a planned initial public
offering (IPO) on the Stock Exchange of
Thailand (SET).
27-May-2022
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson.
China’s 2022 polypropylene (PP) demand growth
may only be flat over next year, down from
earlier data suggested 4%, the blog believes.
Of course, we must be careful here. Time and
again, China has confounded the pessimists
through effective economic stimulus. Just look
what happened in H2 2020.
But you need to prepare a scenario for this
time being different because of claims that the
zero-COVID lockdowns will continue for most of
the rest this year.
Then again, the great news is that Shanghai –
responsible for at the very least 3.8% of
China’s GDP – has started to re-open.
As you stress test your business against
weaker-than-expected demand – using ICIS data
and the support of our excellent analysts and
consultants, including our great team in China
– also consider the downside risks for
China’s net imports. The blog’s latest
worst-case outcome for net imports sees them
falling to just 200,000 tonnes this year from
2021’s 3.4m tonnes.
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.
27-May-2022
HOUSTON (ICIS)–K+S Potash Canada (KSPC) has
announced a long-term growth plan which
includes a focus on planning for a sustained
increase of potash production at its Bethune
mine.
The company said production capacity is
intended to grow continuously over the next
couple of decades, and is currently targeted
toward 4m tonnes/year, which effectively
doubles the current production output of the
operation.
KSPC said it is currently undertaking a
feasibility stage, mapping out the future
milestones of growth and timelines for
supporting projects. The company will work
closely with provincial and federal governments
during this phase to ensure it can sustain
future growth.
“Optimising our business at Bethune mine
enhances the strong position of K+S as an
internationally-oriented producer of minerals
critical to agriculture and other industries,”
said Holger Riemensperger, K+S chief operating
officer.
“Bethune mine is looking at safely and
sustainably growing profitability while
simultaneously reducing environmental impact,
and building a more diverse and inclusive
workforce while continuing to engage with local
and Indigenous communities throughout all
stages of the plan.”
KSPC currently employs over 400 people at the
Bethune mine and Saskatoon and Port Moody
offices but it is currently seeking employees
in various engineering, IT, operations, trade,
and supporting roles, with a longer-term
outlook to hire more than a hundred additional
employees.
“The main focus right now is to establish the
team that will drive the growth plan and
associated projects,” said Sam Farris, KSPC
president.
“Planning for growth is an opportunity to
develop infrastructure and programs that will
continue our progress toward becoming
world-class, and I’m confident we’ll continue
to attract the talent we need across the
business to realise these opportunities.”
26-May-2022
HOUSTON (ICIS)–ACWA Power, OQ and Air Products
signed a joint development agreement to develop
a green ammonia project in Oman, the companies
said on Thursday.
The agreement follows a memorandum of
understanding (MoU) that the three signed in
December.
The project would use wind and solar energy to
power an electrolyser, which will split water
molecules into hydrogen and oxygen.
An air separation unit would extract nitrogen
from the atmosphere. Another plant would
produce ammonia from the nitrogen and the green
hydrogen produced from the electrolyser.
The companies would build the project in Oman’s
Salalah Free Zone and they would own equal
stakes.
The companies did not specify timelines or
capacities.
However, Air Products CEO Sefi Ghasemi said the
Omani project would be similar to the one
that his company is developing with other
companies in Saudi Arabia.
The Saudi project involves:
more than four gigawatts (GW) of renewable
power from solar, wind and storage
production of 650 tonnes/day of hydrogen by
electrolysis
production of 1.2m tonnes/year green
ammonia
The Saudi project plans to export the ammonia.
Once the ammonia arrives at market, the
hydrogen will be extracted and used as fuel.
26-May-2022
LONDON (ICIS)–The European phenol and
acetone markets are paying close attention to
demand in the downstream bisphenol-A (BPA),
epoxy resins, polycarbonate (PC) and methyl
methacrylate (MMA) markets because sectors
such as automotive remain slow and demand
caution is creeping into construction.
In this podcast, ICIS Europe senior editor Jane
Gibson discusses recent downstream market
developments with senior editor Heidi Finch,
markets reporter Mat Jolin-Beech and data
reporter Miguel Rodriguez-Fernandez.
European phenol and acetone turnarounds
end soon. Will demand match supply?
MMA market softens on weak demand and
Asian imports, counteracting local supply
disruptions
PC market lengthens as demand hit by high
product pricing, economic woes
BPA contract demand holds despite
derivative caution on supply constraints and
strong contract over spot trend
High costs, strong Asian export
competition and demand uncertainty present
challenge to Europe BPA and epoxy markets
26-May-2022
LONDON (ICIS)–The Ukrainian gas incumbent
Naftogaz has called on the European Commission
and member states to revoke a derogation from
EU regulation granted to Nord Stream 1 and
suspend flows via the pipeline amid concerns
over the reliability of Russia’s Gazprom as a
supplier.
In a letter sent to top EC officials this month
and seen by ICIS, Naftogaz said it was
imperative for the EU to review the derogation
granted to Nord Stream 1 in 2020, which exempts
the 55 billion cubic meter/year pipeline from
complying with EU requirements for unbundling
and third-party access.
Naftogaz said the exemption should be lifted
because of “significant changes in the security
of supply situation since 2020,” including
Gazprom’s decision not to increase supplies to
Europe in 2021 despite soaring demand and
Russia’s war against Ukraine since February
2022.
Nord Stream 1 was originally granted a
derogation from these requirements under EU
energy law partly as a result of security of
supply considerations.
DEROGATION
On 17 April 2019 the European parliament and
the Council adopted the directive 2019/692
amending the directive 2009/73 concerning
common
rules for the internal natural gas market.
The pipeline’s operator, Nord Stream AG,
submitted an application for derogation from
the application of the primary provisions of
the EU gas directive on 19 December 2019 to the
German Federal Network Agency (BNetzA) after
the changes to the EU gas directive were
implemented into German law by the amended
Energy Industry Act of the Federal Republic of
Germany (EnWG).
The derogation applies to the pipeline section
located on German territory, including German
territorial waters and is initially valid for
20 years, retroactively from the amended EnWG’s
entry into force on 12 December 2019.
With the letter sent to the EC, Naftogaz as the
organiser of the Russian gas transit via
Ukraine is calling for a formal reassessment of
the derogation, the total or at least partial
suspension of flows via Nord Stream 1 and their
rerouting via Ukraine.
Neither the EC nor BNetzA commented by
publication time.
CONTRACTUAL TERMS
The letter comes amid Ukrainian concerns that
Gazprom would seek to pay less for the shipment
of gas via its territory, despite a ship-or-pay
contract signed at the end of 2019, effectively
requesting the Russian producer to pay for
transit, even if it does not use the
transmission infrastructure.
The letter notes Gazprom cannot “unilaterally
relieve itself of contractual obligations.”
According to the five-year agreement concluded
at the end of 2019 with Naftogaz, as the
organiser of the transit via Ukraine, Gazprom
is expected to ship 109.6million cubic
meters/day between 2021-2024 via two border
points: Sokhranivka and Sudzha.
However, on 10 May 2022 the Ukrainian gas
transmission system operator GTSOU, which
executes the transit, decided to declare force
majeure and halt inflows via Sokhranivka in
eastern Ukraine, which had been under Russian
control for several weeks.
Naftogaz said the decision was taken amid
concerns that Russian troops or
Russian-affiliated individuals were stealing
transit gas and looking to divert it for use by
a regional cogeneration (CHP) plant as well as
a ferroalloy plant.
“If the operator [GTSOU] had taken no action,
it would have had to use its own gas to balance
the lacking volumes stolen by the occupiers. At
current gas prices, losses could amount to $1bn
per month,” the letter said.
REROUTING
GTSOU
offered Gazprom to reroute the gas free of
charge to the Sudzha border point, which has a
daily entry capacity of 244mcm. GTSOU and
Naftogaz say it is technically possible to
reroute the gas via this point, quoting the
example of 12-25 October 2020 when flows were
diverted from Sokhranivka to Sudzha during a
period of maintenance.
A source close to Naftogaz said Gazprom
responded to the force majeure letter to say
they would not recognise the claim and that
they would continue to ship gas via
Sokhranivka.
Gazprom further insists that if Ukraine fails
to offtake the gas delivered at this border
point it would lead to a proportional reduction
in payments, the source said, noting this could
be a violation of contractual terms.
Gazprom did not answer by publication time.
26-May-2022
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