TOPIC PAGE: Coronavirus, oil price crash – impact on chemicals

Author: Will Beacham

2020/09/18

On this topic page we analyse the impact of coronavirus and the oil price collapse on chemical markets and bring together the latest news reported by ICIS. To visit the ICIS energy markets topic page, click here

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LATEST HEADLINES

NE Asia C3 import talks take a back seat amid China re-stocking
By Jude Chan 2020/09/18 SINGAPORE (ICIS)--Import deals and discussions slowed to a crawl in the northeast Asian propylene (C3) market, as buyers in China turned to the domestic market for prompt cargoes to replenish their inventories before the country’s week-long holiday at the start of October.

S Korea aromatics output to take hits as refiners eye Oct run-rate cuts
By Nurluqman Suratman 2020/09/18 SINGAPORE (ICIS)--South Korea's production of aromatics may be affected as domestic refineries mull cutting run rates further in October on poor margins amid sluggish demand.

INSIGHT: Asia's key petrochemical markets expect supply to pile up in Q4
By Felicia Loo 2020/09/18 SINGAPORE (ICIS)--The year 2020 has been roasted by the pandemic hitherto, with the petrochemical outlook for the fourth quarter being no exception as supply exceeding demand expected to be the case for major products.

Dow boosts Q3 profit outlook on packaging, durables, personal care
By Joseph Chang 2020/17/09 NEW YORK (ICIS)--US-based Dow expects Q3 earnings to come in better than previously forecast on improving key end markets and polyethylene (PE) dynamics, the chief financial officer said on Thursday.

Asia benzene buoyed by firm crude; arbitrage window to US still shut
By Clive Ong 17-Sep-20 13:19 SINGAPORE (ICIS)--Asia’s benzene market was bolstered by firm crude oil futures, following US offshore production shutdowns from Hurricane Sally. The uptick in benzene prices, however, appeared to be still tempered by ample availability in Asia.

New projects to boost China’s light olefins imports in 2021-2022
By Lillian Ren 17-Sep-20 14:29 SINGAPORE (ICIS)--China is expected to see a major rise in imports of light olefins -  propane/butane and ethane - in 2021 and 2022 to meet new demand driven by start-up of propane dehydrogenation (PDH) and steam cracker projects. China will need to import 5.04m tonnes and 8.47m tonnes of LPG/ethane in 2021 and 2022 for those new capacities, respectively, though part of the demand will be met by domestically produced feedstock.

EU chemicals exports to continue to be hit by emerging economies setback
By: Nigel Davis 2020/09/16 LONDON (ICIS)--EU chemicals trade has shrunk this year as the coronavirus pandemic has spread and lockdowns have restricted industrial activity and consumer goods demand.

Trade is vitally important for the sector which has enjoyed a strong trade balance over the years. Chemicals has benefited hugely from globalisation and from broad-based tariff reductions.

A key question is how the pandemic will impact trade over the longer term.

Through lockdowns, local production for local supply was of vital importance. Producers worked hard to supply and work with customers as best they could, but long trade routes came under particular pressure.

China EPDM demand slows down ahead of week-long October holiday
By Helen Yan 2020/09/16 SINGAPORE (ICIS)--China’s demand for ethylene propylene diene monomer (EPDM) has started to slow down as buyers have mostly completed procurements ahead of the country’s week-long holiday in October.

Asia MTBE to be buoyed by arbitrage flows, supply cutback
By Keven Zhang 2020/09/16 SINGAPORE (ICIS)--Asia's methyl tertiary butyl ether (MTBE) prices were supported by stronger demand as buyers were attracted to low prices, while the near-term market is expected to stay buoyed by arbitrage flows and supply disruption.

India August exports fall 12.7%; imports down 26%
By Pearl Bantillo 2020/09/16 SINGAPORE (ICIS)--India’s total exports extended their double-digit declines, falling 12.7% year on year in August to $22.7bn, while imports fell a steeper 26.0% to $29.5bn, official data showed.

Crude demand on ‘treacherous’ path to recovery due to transport, remote working - IEA
By: Jonathan Lopez 2020/09/15 LONDON (ICIS)--The recovery in crude oil demand is on a “treacherous” path as a resurgent coronavirus pandemic in Europe and India, among other places, keeps transport in the doldrums, the International Energy Agency (IEA) said on Tuesday.

With infections rising in Europe again, working remotely remains commonplace. This has resulted in a sharp reduction in demand for energy and transport, with the aviation sector taking the largest hit as travel has fallen dramatically this year.

The IEA’s Oil Market Report on Tuesday reduced its estimate for crude oil demand in the second half of 2020 by 400,000 bbl/day, and forecast that average demand for 2020 will be 91.7m bbl/day - a level not seen since 2013.

German economy improves in September but banking remains a concern - Zew
By: Morgan Condon 2020/09/15 LONDON (ICIS)--The German economy has continued to improve in September despite some worrying indicators, economic research group Zew said on Tuesday.

The Zew Indicator of Economic Sentiment for Germany rose 5.9 points in September, month on month, to 77.4 points.

“Stalled Brexit talks and rising coronavirus cases could not dampen the positive mood," said Zew president Achim Wambach.

"However, the still negative outlook for the banking sector reveals fears of a rising number of loan defaults in the coming six months.”

Developing Asia GDP to contract in 2020, first recession in almost six decades – ADB
By Nurluqman Suratman 2020/09/15 SINGAPORE (ICIS)--Economic prospects in developing Asia have worsened amid a revival of coronavirus cases in some areas, with regional GDP expected to contract by 0.7% this year, the Asian Development Bank (ADB) said on Tuesday.

Asian ECH firm, but sentiment may shift on impending restarts
By Ai Teng Lim 2020/09/15 SINGAPORE (ICIS)--Asian spot discussions for epichlorohydrin (ECH) continued to edge up this week, supported by ongoing tightness in prompt supplies.

However, the bullish sentiment seems to have started to waver somewhat, market sources said, now that several regional plant maintenance are wrapping up, which could turn the supply situation around.

PODCAST: Why ‘peak oil’ may coincide with ‘peak plastic’
By: Will Beacham 2020/09/14 BARCELONA (ICIS)--BP’s new energy review suggests the world is heading for ‘peak oil’ while the same trends may mean we have also reached ‘peak plastic’.

  • 'Peak oil' may coincide with 'peak plastic' as circular economy undermines demand for virgin petrochemicals
  • Lower oil production will impact availability of chemical feedstock
  • Expect shift to renewables to impact chemicals demand from automotive
  • Why China’s new five year plan meeting is as important as the US elections
  • Lockdowns are not the best way out of the pandemic

Click on the headline to hear the podcast.

INSIGHT: Chemicals demand for crude to fall as energy transition takes hold
By Nigel Davis 2020/09/14 LONDON (ICIS)--This is BP’s latest view of how demand for oil as a feedstock for plastics and man-made fibres will develop over time.

The UK oil major on Monday released its latest Energy Outlook which has raised the question among commentators of ‘peak oil’ and how oil demand might not recover to pre-coronavirus pandemic levels.

The outlook presents some of the detail in thinking behind BP’s transformation into a much more customer-focused international energy company.

It is the detail that is informing current strategy, which includes a 40% reduction in oil and gas production.

Source: BP Energy Review 2020

Eurozone chemicals output up slightly in July, industrial recovery shows ‘signs of fatigue’
By: Jonathan Lopez 2020/09/14 LONDON (ICIS)--Chemicals output in the eurozone rose slightly more than 1% in July, month on month, a lower increase than average industrial production levels, the EU’s statistical office Eurostat said on Monday.

In the wider 27-country EU, chemicals output also rose slightly more than 1%.

These modest increases compared with more than 4% increase in industrial production in both the EU and the eurozone.

However, the increase was not enough yet to compensate for falls in output during the second quarter amid lockdowns.

Asia butac/etac prices near six-month highs on supply constraints
By Melanie Wee 2020/09/14 SINGAPORE (ICIS)--Asia’s butyl acetate (butac) prices touched a near six-month high, buoyed by supply constraints in China amid plant maintenance, with an expected uptick in demand set to liven up the market.

VIDEO: China melamine market subdued; demand may pick up from H2 Sept
By Joson Ng 2020/09/14 SINGAPORE (ICIS)--Watch ICIS editor Joson Ng discuss the latest developments in the Chinese melamine market.

Asian MMA firmer after 8 weeks; heavy turnarounds to support
By Li Li Chng 2020/09/14 SINGAPORE (ICIS)--Asia’s methyl methacrylate (MMA) spot prices rose for the first time after holding stable for eight weeks, due to tight supply, firmer feedstock and improved sentiment, tracking a bullish China domestic market.

The heavy turnaround period in Asia from August to November will likely provide support to the market.

In the week ended 11 September, MMA prices for bulk parcels of 500 tonnes and above were at $1,380-1,420/tonne CFR (cost & freight) southeast (SE) Asia, up $20/tonne from the previous week, according to ICIS data.

Global construction sector to grow 35% to 2030 on urbanisation, softer pandemic impact
By: Morgan Condon 2020/09/11 LONDON (ICIS)--The petrochemicals-intensive construction sector is expected to continue expanding as relentless urbanisation in China and other developing economies fuels above-than-average growth.

Analysts at Oxford Economics said this week that in spite of the coronavirus pandemic, the sector is anticipated to grow by nearly 35% to 2030, reaching a total of $5.8tn.

This forecast, however, is on the proviso that a vaccine is rolled out in early 2021, and that no second wave of infections causes further lockdowns.

There has been significant regional variation following quarantine restrictions imposed earlier in the year, as industrial activity slowed in a bid to cap rising infection rates.

Japan petrochemical exports shrinking; economy deep in recession
By Pearl Bantillo 2020/09/11 SINGAPORE (ICIS)--Japan’s export volumes of key petrochemicals have shrunk in the first seven months of 2020, with external demand likely to stay muted, as the world’s third-biggest economy wallows in deep recession amid the pandemic.

China BD producers may export to Taiwan, South Korea in October
By Helen Yan 2020/09/11 SINGAPORE (ICIS)--China’s butadiene (BD) producers are seeking export opportunities in South Korea and Taiwan in October, as domestic supply is expected to lengthen while availability elsewhere in Asia remains tight.

Growth opportunities for PET suppliers despite economic gloom
By: Morgan Condon 2020/09/09 LONDON (ICIS)--Polyethylene terephthalate (PET) suppliers remain confident of opportunities to grow despite the challenging economic climate and growing environmental concerns facing the industry.

Industry participants discussed how the PET market could combat challenges facing the industry on Wednesday as part of the ICIS PET Value Chain Virtual Conference.

“Packaging has emerged as the true champion for the pandemic situation and how it has been managed to best serve the public,” said Rohit Maindwal, chief operating officer at JBF Industries.

Europe plastic taxes may favour PET, pandemic drives packaging demand
By: Tom Brown 2020/09/09 LONDON (ICIS)—Plastics packaging taxes rolling out across Europe are likely to favour polyethylene terephthalate (PET) over other polymers, such as polypropylene for some food and drink applications due to greater ease in sourcing secondary material, a consultant said on Wednesday.

Plastic taxes being introduced by Italy and the UK among others that focus on recycled content are likely to drive some plastics consumption in the packaging sector toward PET due to the mature existing market for non-virgin PET, said Joe Papineschi, director of environmental consultancy Eunomia.

The effects of this are already perceptible in some sectors, he said, noting that the French yoghurt sector is increasingly shifting from polystyrene (PS) to PET packaging due to incentives for recycled content.

PODCAST: Virtual PET Value Chain Conference: Volatility and sustainability amid a challenging economic climate
By: Melissa Hurley 2020/09/09 LONDON (ICIS)--ICIS Senior Editor Melissa Hurley discusses some of the topics emerging from the Virtual PET Value Chain Conference taking place 9-10 September 2020 with European PET Senior Editor, Caroline Murray.

Click on the headline to hear the podcast.

INSIGHT: Veolia aims to create global giant in recycling, waste with Suez takeover offer
By: Mark Victory 2020/09/09 LONDON (ICIS)--Veolia’s has launched an unsolicited offer to acquire Suez, eyeing the creation of the largest waste and recycling management group in the world.

Each firm is individually a global recycling and waste management major - in 2019, Veolia revenue posted sales of €27.2bn, while Suez's stood at €18.02bn; both are headquartered in Paris.

Veolia announced its unsolicited offer to acquire Engie’s 29.9% stake in waste and water group Suez on 30 August.

Israel-UAE peace deal to open trade opportunities for polymers
By Nurluqman Suratman 2020/09/09 SINGAPORE (ICIS)--The peace agreement between between Israel and the UAE could open up new opportunities for polymers trade in the Middle East, but may have limited impact on overall market dynamics in the region.

Asia naphtha spirals to one-month low on crude oil rout
By Melanie Wee 09-Sep-20 11:56 SINGAPORE (ICIS)--Asia naphtha prices fell to a one-month low in response to weaker crude oil futures, despite sustained spot demand for October shipments that served to keep the product’s crack spread afloat.

India to implement ‘rules of origin’ norms for imports from 21 September
By Priya Jestin 2020/09/08 MUMBAI (ICIS)--India ‘rules of origin’ norms, which are expected to come into force on 21 September, will help reduce the dumping of goods and stop imports of low quality products, a government official said on Tuesday.

Fitch raises '20 oil-price forecast while lowering that for '22
By Al Greenwood 2020/09/08 HOUSTON (ICIS)--Fitch Ratings raised its oil forecast for 2020 while lowering it for 2022, the credit-rating agency said on Tuesday.

Germany H1 chems, pharma sales fall 6% but sector posts 'signs of recovery'
By: Tom Brown 2020/09/08 LONDON (ICIS)--Germany's chemicals and pharmaceutical sales fell over 6% in the first six months of 2020, trade body VCI said on Tuesday, with the projected fall for the year likely to at a similar level.

A temporary spike in demand for cleaning agents and medicines was insufficient to offset the extent of the fall in demand and productivity caused by the coronavirus pandemic and the lengthy lockdown the country underwent through March and April, VCI said.

The fall was most dramatic for the second quarter - sales fell 11.5% year on year and quarter on quarter, with producer pricing dropping an average of 3.2%.

South Africa Q2 GDP plummets 51% on lockdown
By: Jonathan Lopez 2020/09/08 LONDON (ICIS)--South Africa's second-quarter GDP contracted by 51% compared with Q1 due to the strict lockdown enforced to contain the spread of the coronavirus pandemic which caused the collapse of most economic activity, according to Statistics South Africa (Stats SA).

The national statistical service of South Africa said only the seasonal agricultural sector managed "to keep its head above the water" with an increase of 15%.

Key petrochemical-intensive sectors like manufacturing and construction fell well over 70%.

"The punch in the gut was severe. Perhaps the second quarter of 2020 will become known as the pandemic quarter," said Stats SA.

PODCAST: pandemic drives shift to circular economy, $400bn petchems investments at risk
By: Will Beacham 2020/09/07 BARCELONA (ICIS)--Coronavirus is accelerating the shift from a linear to circular economy, putting $400bn in petrochemical investments at risk of redundancy.

  • “Peak Plastic” reached on switch from linear to circular economy
  • $400bn in petrochemical investments may become redundant
  • No-deal Brexit increasingly likely from January 2021
  • Chemical companies must ensure they and their suppliers are ready

Click on the headline to hear the podcast.

NE Asia polyester yarn gains on rising feedstock cost, better demand
By Judith Wang 2020/09/08 SINGAPORE (ICIS)--Polyester yarn prices in northeast Asia are rising on the back of higher feedstock cost and better offtake amid seasonally strong demand.

Spot discussions for polyester partially oriented yarn (POY) 150 denier (D) were at $0.83-0.88/kg FOB (free on board) NE (northeast) Asia, up from $0.80-0.86/kg FOB NE Asia in the week ended 1 September.

Typhoon Haishen hits South Korea; NE Asia port congestion set to continue
By Nurluqman Suratman 2020/09/07 SINGAPORE (ICIS)--Typhoon Haishen made landfall in South Korea's southern peninsula on Monday, worsening the shipping congestion across northeast Asia as it forces fresh port closures in the region.

Asia naphtha prices tumble 5% on losses in crude oil futures
By Melanie Wee 2020/09/07 SINGAPORE (ICIS)--Asia’s naphtha prices yielded to falls in global crude oil futures, even as market fundamentals are being cushioned by steady spot demand for October.

Global IPEX climbs 3.5% in August as recovery continues
By: Nigel Davis 2020/09/04 LONDON (ICIS)--A 3.5% higher global IPEX for August underscores the continued petrochemicals recovery from the depths of the coronavirus-driven slump earlier in the year.

The increased US and northwest Europe price indexes illustrate the recovery taking hold in these regions while the more muted increase in the northeast Asia ICIS Petrochemical Index (IPEX) reflects some pressure on prices as supply and demand balanced out through July and August.

Butadiene volatility persists, with August prices much higher in all three regions, the markets having lost considerable value earlier in the year.

VIDEO: Downward pressure grows on Europe R-PET
By: ICIS Editorial 2020/09/04 LONDON (ICIS)--Matt Tudball, senior editor, Recycling, looks at initial feedback from European recycled polyethylene terephthalate (R-PET) marker price discussions for September, including:

  • Increased pressure on post-consumer bottles and flakes
  • Possible narrowing of spread between high and low end of flake prices
    Supply and demand outlook

Click on the headline to see the video

Singapore August manufacturing weakens; tepid recovery likely
Author: Nurluqman Suratman 2020/09/04 SINGAPORE (ICIS)--Singapore's manufacturing sector slightly weakened in August as new export orders slowed down, with recovery in factory conditions going forward likely to remain tepid amid subdued external demand.

China PA sentiment upbeat on improved demand
By Ai Teng Lim 2020/09/04 SINGAPORE (ICIS)--Discussions for spot imports of phthalic anhydride (PA) took a positive turn this week in China and may continue to gather pace if uptick in downstream offtake is sustained.

German auto market remained weak in August; sales down 20%, production 35% lower
3 September 2020 3:04 pm
LONDON (ICIS)--The German auto market remained weak in August, with new-car registrations down 20% year on year and domestic auto production down 35%, according to data from industry trade group VDA on Thursday.

The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material cost of an average vehicle.

Several chemicals have a significant percentage of their demand tied to the global auto industry. These include nylon resins, styrene butadiene rubber (SBR), polypropylene (PP), acrylonitrile-butadiene-styrene (ABS), polymethyl methacrylate (PMMA), and polycarbonate (PC).

Five Japan trading firms attract funds from investment guru Buffett
By Pearl Bantillo 2020/09/03 SINGAPORE (ICIS)--Five Japanese trading firms - Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo - have attracted funds from US billionaire and investment guru Warren Buffett, while global trade is being pummelled by the coronavirus pandemic.

VIDEO: China ACN firms on higher list prices amid supply fluctuations
By Dan Lu 2020/09/03 SINGAPORE (ICIS)--Watch industry analyst Dan Lu discuss current developments in China's acrylonitrile (ACN) market which has seen prices rising amid tight supply.

Typhoon Maysak forces port closures as it makes landfall in Busan, South Korea
By Nurluqman Suratman 2020/09/03 SINGAPORE (ICIS)--Typhoon Maysak made landfall early on Thursday on the southern coast of Busan, South Korea, forcing the closure of ports in the region.

PODCAST: US PVC supplies tighten on stronger demand, production cuts from Hurricane Laura
By Bill Bowen 2020/09/02 HOUSTON (ICIS)--US polyvinyl chloride (PVC) production remains constrained by Hurricane Laura impacts, as well as by coronavirus shutdowns, while demand is elevated due to home improvement sales.

China BD supply to grow on start-ups; demand outlook uncertain
By Dan Lu 2020/09/02 SINGAPORE (ICIS)--Butadiene (BD) supply in China will grow with new capacities coming on stream while the outlook on demand is uncertain, with a possible decline in production at downstream synthetic rubber market.

A combined capacity of 290,000 tonnes/year from three new plants is due to come on stream toward the fourth quarter.

Asia MEG nears six-month highs on regional output cuts, US shutdowns
By Judith Wang 2020/09/02 SINGAPORE (ICIS)--Asia’s monoethylene glycol (MEG) prices surged to their highest in nearly six months on tight supply amid cuts in regional output and hurricane-related plant shutdowns in the US.

India initiates antidumping-duty review on 2-EH from six origins
By Priya Jestin 2020/09/02 MUMBAI (ICIS)--India has begun investigations to review the anti-dumping duties (ADD) on 2-ethyl hexanol (2-EH) imports from the EU, Indonesia, South Korea, Malaysia, Taiwan and the US.

The current ADD on the product was imposed in March 2016 and is set to expire on 28 March 2021.

Asia naphtha market structure in positive zone on buoyant demand
By Melanie Wee 2020/09/01 SINGAPORE (ICIS)--Asia naphtha markets are poised for tailwinds as the market structure stays in positive territory, aided by healthy spot demand.

Caixin China manufacturing PMI rises to 53.1 in August
By Nurluqman Suratman 2020/09/01 SINGAPORE (ICIS)--Caixin's China general purchasing managers' index (PMI) rose to 53.1 in August from 52.8 in July on the back of higher new export orders, the Chinese media firm said on Monday.

S Korea August petchem exports fall 21.4%; total shipments down 9.9%
By Nurluqman Suratman 01-Sep-20 12:33 SINGAPORE (ICIS)--South Korea's petrochemical exports fell by 21.4% year on year in August, weighing on overall shipments of goods abroad, official data showed on Tuesday.

PODCAST: Chemicals downturn began in 2017 and has accelerated
By: Will Beacham 2020/08/31 BARCELONA (ICIS)—The downturn for global chemicals began back in December 2017, and has accelerated through the pandemic, coupled with a lack of visibility on future demand patterns.

  • Muted bounce back is underway for chemicals
  • Chemical capacity utilisation has fallen since December 2017
  • Accelerated during pandemic, and has not recovered

Click on the headline to hear the podcast.

Europe September propylene contract price agreed at a rollover
By: Nel Weddle 2020/08/31 LONDON (ICIS)--The European propylene September contract reference price has been set at €732.50/tonne, a rollover from August.

The settlement was confirmed by four producers and three consumers, two integrated, one non-integrated.

Primary driver naphtha values were slightly lower on average in August compared to July, while supply and demand fundamentals are largely steady overall, although there remains some disparity between grade and/or location.

Planned cracker maintenance is underway alongside the ongoing outage at Borealis’ Stenungsund, Sweden cracker. Prompt availability had been constrained by a couple of unexpected cracker issues earlier in August but these have been resolved. Refineries continue to run at reduced rates.

INSIGHT: Tech stock surge, digitalization hearten petrochemical industry
By Felicia Loo 2020/08/31 SINGAPORE (ICIS)--It will be inexpedient for the global petrochemical industry to continue moping during the pandemic as a recent surge in technology stocks is a game-changer.

Japan’s Showa Denko secures licence to process industrial waste
By Pearl Bantillo 2020/08/31 SINGAPORE (ICIS)--Showa Denko KK (SDK) intends to promote plastic chemical recycling as the company obtained in July a licence to process industrial waste, the Japanese producer said on Monday.

It has started accepting used plastics, which were crushed and molded, it said in a statement.

ANALYSIS AND RESOURCES

June 2020 Coronavirus presentation given by ICIS Analytics experts.