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BARCELONA (ICIS)–Signs of slight improvement
in production and demand in early 2023 may not
be proof that a real recovery is underway for
the global chemicals industry.
ICIS data shows mild pick up in pricing,
production
More optimism in chemical industry
But no strong evidence of uptick in demand
Persistent weakness in construction,
automotive, electronics
Rising production may simply be inventory
building
Global economy hit first by energy price
shock, now inflation, rising interest rates
Prospect of persistent downturn
Tepid GDP forecasts for 2023
Flood of excess polypropylene (PP)
threatens global market
In this Think Tank podcast, Will
Beacham interviews ICIS Insight
Editor, Nigel Davis, ICIS
Senior Consultant Asia, John
Richardson, and Paul
Hodges, chairman of New Normal
Consulting.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here.
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges’ and John Richardson’s
ICIS
blogs.
07-Feb-2023
LONDON (ICIS)–The Hydrogen Chemistry Company
(HyCC) has contracted both Kraftanlagen
Energies & Services and Nel as the
engineering contractor and technology supplier
respectively for its H2eron renewable hydrogen
project in the Netherlands.
The H2eron plant, which will have a capacity of
40MW and is slated to produce its first
hydrogen in 2026, is located in Delfzijl in the
northeast of the country near the German
border.
Kraftanlagen has been contracted by HyCC for
the front-end engineering design (FEED) of the
plant, as well as an order having been placed
by HyCC to Nel for the supply of the
electrolysis stacks.
The stacks will be Nel’s atmospheric alkaline
electrolysers and will produce renewable
hydrogen from a combination of renewable power
and water.
The hydrogen that will be produced at the plant
will be used by SkyNRG for the production of
sustainable aviation fuel.
A final investment decision (FID) is due on the
project in 2024, with the environmental permit
having already been received.
The National Climate Agreement in The
Netherland plans for 3-4GW of renewable
hydrogen production capacity by 2030, with the
country also seeking to forge international
partnerships to import hydrogen and/or hydrogen
carriers (such as ammonia) into its ports for
easy distribution to several industrial
clusters.
07-Feb-2023
LONDON (ICIS)–The chemicals sector was
described as “the alpha and the omega” of
industry by an EU Commissioner last week who
outlined some near-term targets as part of the
the EU Chemical Industry Transition Pathway.
Director General of DG Grow for the European
Commission, Kerstin Jorna, said there is a
strong case for policy making in the chemicals
industry, because of its scale and the
sustainability challenges surrounding it.
“It is like the alpha and omega, because it is
at the beginning of all the substances that are
being used and it is at the end when it is
being recycled, so there is a policy case for
the chemicals industry,” said Jorna in an
interview with Cefic Director General, Marco
Mensink.
“At the same time, it is important to see the
business case because it is an industry that is
totally connected into global value chains, so
we need to find a process where the policy
perspective and the business perspective can
meet.”
In a year’s time, Jorna hopes the pathway has
enabled headway on renewable energy at the
factory gate, that there is increased access
and a decline in price, as well as an increase
in hydrogen (both for use as a fuel and a
feedstock in chemicals processes).
If there is an identifiable trend in 12 months’
time, this will encourage investment decisions
on the manufacturing side, as energy
availability and security remain prescient
concerns for European producers.
Cefic has recently changed its statutes so that
the industry body can carry out projects, not
just research and advocacy for its members, to
tackle the many challenges facing the sector,
but more information is needed to enable
progress.
“The available information on electricity
around Europe is where we need much more
information, as some companies want to
electrify but there is no copper wire,” Mensink
cited as an example.
Ultimately, the course of action boils down to
going to Member States and asking what the
national plan is for the chemicals industry,
and then using the Transition Pathway document
to work out the future with unions and other
stakeholders.
“That is the philosophy for going to the Member
States. It is not that a technology is good or
bad…we need to go from primes and models to
countries and clusters, and maybe in the end
have company and regional pathways,” he added.
By laying the groundwork this will allow for
all-round de-risking – of supply chains, inputs
and regulation to allow companies to scale up
innovation.
“We talk about raw materials in Europe, but
what is really our European business case is
innovation, so how do we scale that quicker? It
will require cooperation between the public and
private sectors,” said Jorna.
Taking this action will not just encourage
investment but will challenge the industry to
think about how to upgrade skills in the
sector, and benefit society more broadly.
SINGLE MARKET
PERSPECTIVEWhile the single
market has previously been seen as a ‘big
regulatory machine’ according to Jorna, and in
its 30th year, and the transition pathway can
be used as an opportunity to declutter some of
the bureaucracy.
“We see the single market is not only about
removing barriers, it is about making sure that
there are critical inputs available – chips or
raw materials – and it is the execution of the
single market,” she added.
A key part of this is in shoring up supply
chains, the significance of which have been
highlighted in the wake of the pandemic and the
Russian invasion of Ukraine.
The challenge in rolling this pathway out
across member states corresponds to the
challenge of viewing the single market as one
entity rather than a group of 27 economies.
While engagement on a macroeconomic level has
varied between nations, Jorna believes that the
Commission holds some responsibility in
coordinating the implementation of the
transition pathway.
Mensink cited that thinking about the single
market in an holistic way would benefit
European competitiveness, as from a US
perspective, “the difference between Antwerp
and Rotterdam is one gate.”
BIGGER PICTUREMensink
acknowledged that when the Green Deal was
launched, no one realised the extent of
regulations, with the four transitions tackling
climate neutrality, circularity, the chemicals
strategy for sustainability, and
digitalisation.
“This will be the start of a long journey for
us with our members to explain what comes out
of Brussels. We have just dropped the rock in
the pond, the ripples have started to move,
before it is out there,” he said.
“We have said that if we accept the Green Deal,
you need to trust us that we will make it
workable over time, as the initial reaction is
to say, ‘make it go away’.”
The challenge for both Cefic and the EU
Commission is looking at the issues from an
aggregate level and seeing how this break down
into every company’s perspective for the
business case: inputs, skills, investments, and
markets in the future.
The transitions facing the chemicals sector is
long lasting and will not be covered by the
current investment cycle but will endure over
the next five to ten business cycles, according
to Jorna.
By having a longer-term perspective, Mensink
advised that sequencing measures in the right
order could prevent short-lived investments –
in a boiler for a chemistry that would
disappear, for instance – it would provide
clarity.
The chemicals industry is the second sector
after tourism to get the Transition Pathway
treatment from the Commission, and the previous
rollout has highlighted the need for shared
databases to enable more efficient policy
making.
PUBLIC PRIVATE
PARTNERSHIPBoth Jorna and
Mensink were keen on the longevity of the
Transition Pathway as a way of sustaining
meaningful changes.
Jorna said good policy making should make sense
on the ground and from a company perspective,
and this has sometimes been where communication
has broken down between public and private
sectors.
The legislative guide aims to breakdown the
overall transition into operational steps to
enable coordination between regulatory
timelines and company investments to see
clearly what the next steps should be.
While the incoming of a new Commission or
government has previously disrupted progress
towards long-term goals due to legislative
change, Jorna stated that changes in unions or
companies can also interrupt work towards these
targets.
“If we can own the Transition Pathway to shape
our future on the basis that there will be
enough room to innovate, that would be a good
ambition to have,” she said.
Insight by Morgan Condon
07-Feb-2023
LONDON (ICIS)–Oil prices may be in for a bumpy
ride in February as interest rate hikes by
major central banks battle tight supply caused
by the EU ban on refined Russian oil products.
OPEC+ removed themselves from the situation,
stating they will be sticking to their 2m
bbl/day output cut amid uncertainty surrounding
China’s economic recovery and the loss of
Russian oil products from the market.
Watch ICIS market experts identify this week’s
five main crude oil price drivers.
07-Feb-2023
MUMBAI (ICIS)–India has again delayed a
planned import certification mandate for five
chemicals by six months to August-September.
The Bureau of Indian Standards (BIS)
certification mandate for acetic acid, methanol
and aniline will be pushed back to 3 August,
the Ministry of Chemicals & Fertilizers
announced on 2 February.
For morpholine and acetone, accreditation now
be required on 1 August and 13 September,
respectively, it said.
The mandatory BIS certification was expanded to
cover more chemicals and petrochemical imports
in 2019 as a non-tariff barrier against
inferior imports.
07-Feb-2023
SINGAPORE (ICIS)–Asian purified terephthalic
acid (PTA) producers are in the midst of
assessing the impact of their exports following
a powerful earthquake that hit
southeast Turkey and parts of Syria.
As shown on the chart below, around 79% of
Turkey’s PTA imports for 2022 came from Asia,
according to the ICIS Supply & Demand
database.
The biggest share came from South Korea at 40%
of total imports, while China represented a
total of 38% of total imports, ICIS data shows.
Producers in Asia are considering to postpone
their shipments especially to the Iskenderun
port, while several others added that ports
such as Mersin port are currently seeing
limited impact.
Deliveries of natural gas to parts of the
affected areas and some crude pipeline flows
have been halted.
Operating rates at downstream converters, blow
moulding industries and the end markets might
see a decline amid infrastructural and
logistics challenges.
According to several market sources, operating
rates at Koksan’s PET facilities might have
been affected, with the production units being
located at Gaziantep. No further details could
be obtained at the time of writing.
According to ICIS Supply & Demand database,
Koksan operates two 216,000 tonne/year PET
units located at Gaziantep.
Focus article by Samuel Wong
Thumbnail photo: Photo illustration of a
Richter diagram displayed on a smartphone and a
flag of Turkey. (Source: Nikolas
Kokovlis/NurPhoto/Shutterstock)
Click
here to view the Construction – impact on
chemicals topic page.
Click
here to read the Ukraine topic page, which
examines the impact of the conflict on oil,
gas, fertilizer and chemical markets.
07-Feb-2023
HOUSTON (ICIS)–Global engineering firm KBR
announced their green ammonia technology,
branded as K-GreeN, has been selected by
project partner Enaex for the recently revealed
HyEx green ammonia project in Chile.
It is planned that through the HyEx project
that technologies for having stable green
ammonia plant operations during the fluctuation
of renewable energy from photovoltaic power
plant will be studied.
The construction site will be in Tocopilla
which is within the Antofagasta Region and it
planned that the ammonia plant will have an
annual production rate of 18,000 short tons.
Schedule completion is currently set for 2025
with Japanese firm Toyo Engineering Corporation
(TOYO) and global ammonia marketer Mitsui also
involved in the project which recently
announced that a feasibility study had been
funded for HyEx.
“We are thrilled to be part of this project
that will demonstrate Chile’s potential to
harness renewable energy for green ammonia
production,” said Doug Kelly, KBR president,
Technology.
“The innovative concepts that will be
incorporated in this project will achieve
industrial scale production of green ammonia
using renewable energy from photovoltaic and
wind power.”
Since 1943, KBR said it has licensed and
designed over 250 grassroot ammonia plants
worldwide.
06-Feb-2023
HOUSTON (ICIS)–Gas producer Linde has
announced it signed a long-term agreement to
supply clean hydrogen and other industrial
gases to OCI’s new world-scale blue ammonia
plant in Beaumont, Texas.
Linde said it will build, own and operate an
on-site complex which will include autothermal
reforming with carbon capture, plus a large air
separation plant, and will be integrated into
their Gulf Coast industrial gas infrastructure.
The total investment will be approximately
$1.8bn and the project is expected to start up
in 2025 and will supply clean hydrogen and
nitrogen to OCI’s 1.1m short ton/year blue
ammonia plant, which is set to be the first US
greenfield blue ammonia facility of this scale
to come onstream.
Linde said it will supply clean hydrogen by
sequestering more than 1.7m tonnes of carbon
dioxide emissions per year.
In addition to supplying OCI, Linde is set to
provide clean hydrogen to existing and new
customers in the region, addressing the
increasing demand from companies to decarbonize
their operations. The facility will also supply
atmospheric and rare gases to existing and new
customers.
“Linde’s capabilities are already enabling the
transition to a low-carbon-intensity economy.
Our strategy is to support decarbonization by
working with off-takers, like OCI, to safely
and reliably supply low-carbon industrial gases
at scale,” said Sanjiv Lamba, Linde CEO.
OCI said it sees the Beaumont facility as
strengthening their world-leading blue ammonia
and clean fuels platform which will allow them
to supply both the US and export markets with
blue ammonia which help decarbonize
hard-to-abate sectors such as agriculture,
power and marine fuels at a competitive cost.
“Linde’s expertise in managing large-scale and
complex engineering projects, and safely and
reliably delivering industrial gases, made it a
solid choice as a partner for this project.”
said Ahmed El-Hoshy, OCI CEO.
06-Feb-2023
LONDON (ICIS)–The UK government has published
guidelines for hydrogen producers seeking to
produce hydrogen using fossil fuels with carbon
capture and storage (CCS).
The guidelines cover those who produce hydrogen
and aim to use it within the same installation
or project, and for projects that aim to export
and sell the hydrogen to third parties.
The CO2 associated with the hydrogen’s
production should also be transported by
pipeline or other means and stored in permanent
underground geological storage facility or used
as a product itself.
The guidelines have been developed between
environmental regulators (Environment Agency,
Natural Resources Wales, Northern Ireland
Environmental Agency, Scottish Environment
Protection Agency) and industry stakeholders.
The guidance for production is relevant for
“large-scale industrial plants” that are either
new hydrogen plants or retrofits of existing
plants that are typically greater than
100tonnes/day of hydrogen production capacity,
equal to 140MW capacity at a lower heating
value.
However, the UK government said that “smaller
plants should use this guidance until further
guidance is available.”
The guidance says that an overall CO2 emissions
capture rates from hydrogen production should
be “at least 95%” for an average performance
over an extended period.
For steam methane reforming, the regulators
expect that more than 95% of CO2 can be removed
from the reformer flue gases, or that the plant
is designed such that hydrogen is used as the
fuel gas for the reformer or there is CO2
removal prior to the hydrogen purification.
For autothermal reforming and partial
oxidation, which use an air separation unit,
heat recovery is encouraged and that heat to be
used within the rest of the hydrogen production
process.
The guidelines also suggested that hydrogen
producers should consider purifying hydrogen
using a pressure swing absorption process.
Other sections of the guidelines surrounded
waste, water usage and disposal, monitoring of
processes, unplanned emissions and accidents,
noise and odour.
06-Feb-2023
NEW YORK (ICIS)–The US Inflation Reduction Act
(IRA), which was signed into law in August
2022, will accelerate the development of
hydrogen and carbon capture and storage (CCS)
projects, which in many cases will go together.
“There’s a lot of activity in this [low carbon]
space – a lot of interest particularly with the
IRA here in the US, but more generally around
the world. I think [there’s] a real focus on
low-carbon opportunities,” said Darren Woods,
CEO of ExxonMobil, on the company’s Q4 earnings
conference call in late January.
He added that the IRA “further reinforces” its
commitment to hydrogen and CCS.
US-based ExxonMobil in December boosted its
planned investments in its Low Carbon Solutions
business to $17bn from 2022-2027 – up from
$15bn in its prior plan.
ExxonMobil in January awarded a FEED (front
end engineering and design) contract to build
what it calls the world’s largest low-carbon
hydrogen facility at its site in Baytown,
Texas. The project would produce 1 billion
cubic feet (bcf)/day of blue hydrogen (with
carbon capture) and also offer CCS for
third-party CO2 emitters. The CCS project would
be able to store up to 10m tonnes/year of CO2.
For ExxonMobil’s Baytown olefins complex, the
project could cut CO2 emissions by 30% if
hydrogen is used to fuel cracker furnaces
instead of natural gas.
A final investment decision (FID) is expected
in 2024 with start-up planned for 2027-2028.
The Baytown project would be an initial
contribution to a cross-industry supported
Houston CCS hub which could capture and store
50m tonnes/year of CO2 by 2030 and 100m tonnes
by 2040.
US-based Chevron, which is also building
low-carbon businesses such as hydrogen and CCS,
sees the IRA potentially de-risking investments
to some extent.
“The IRA will probably accelerate some activity
in the US, there’s no doubt. Hopefully, what
that does is allow technologies to be
de-risked, the cost of technologies to be
reduced and the attractiveness of these
investments to improve,” said Mike Wirth, CEO
of Chevron, on the company’s Q4 earnings
conference call.
While the IRA doesn’t necessarily change
Chevron’s long-term view on how it builds those
businesses, “it does, perhaps, change the
trajectory at which some of those businesses
become more economically viable”, he added.
UK-based BP sees increased incentives for CCS
in the IRA supporting its greater use in the
power sector, as well as in industry and to
produce blue hydrogen.
Source: BP
Energy Outlook 2023
With the IRA and other incentives, the company
sees US CCS deployment reaching over 100m
tonnes/year by 2035 and close to 400m
tonnes/year by 2050, according to BP chief
economist Spencer Dale, in BP’s Energy Outlook
2023.
Ultimately, it will take tens or more likely,
hundreds of billions of dollars of investment
in hydrogen and CCS to decarbonise not just the
chemical industry, but all energy-intensive
manufacturing sectors in the US.
“What we start to see, with the IRA, is an
increase in the price on CO2. That’s been
raised to $85/tonne for the CO2,” said Dow CEO
Fitterling in an interview with ICIS
in November.
The IRA increases the 45Q tax
credits from up to $35/tonne for
captured CO2 used in enhanced oil recovery
(EOR) or in certain industrial applications,
and up to $50/tonne for CO2 in secure
geological storage, to $60/tonne and $85/tonne,
respectively, according to US law firm Gibson
Dunn.
“That actually helps quite a lot as an
incentive to capture the CO2, but what we have
to do now is build the carbon capture hubs and
the hydrogen hubs to make that happen,” said
Fitterling.
The Dow CEO said it would take between 6-8
hydrogen/carbon capture hubs in strategic
locations to decarbonise as much as 85% of the
entire chemical industry in the US, citing an
analysis done with the American Chemistry
Council (ACC).
“And in the IRA, both the funding and the price
on carbon help us get there,” he added.
Along with hydrogen and CCS, which represents
blue hydrogen, there will be greater investment
in US green hydrogen, driven by the IRA. Green
hydrogen involves electrolysis of water using
renewable power.
BP sees US low-carbon hydrogen usage increasing
to 4m tonnes/year in 2030 and 26m tonnes/year
by 2050.
Source: BP
Energy Outlook 2023
“The hydrogen incentives [in the IRA] are
especially supportive of green hydrogen, which
accounts for around 60% of US low-carbon
hydrogen in 2050, compared with around 25% in
[BP’s previous outlook in 2022],” said Dale.
Source: BP Energy
Outlook 2023
Insight article by Joseph
Chang
Thumbnail shows hydrogen. Image by
Shutterstock.
06-Feb-2023
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