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

Author: Will Beacham

2021/01/25

Germany’s business confidence index, compiled by the ifo Institute, declined in January as the country’s lockdown is “unlikely to end” on 14 February as planned, financial analysts said on Monday.

Europe’s chemical sector faces a carbon bill of around €1bn in 2021 amid a ramp up in regulatory measures around the world.

The shipping woes that have dogged the chemicals sector for months show no sign of abating, with disrupted international trade flows driving up prices and limiting availability, with European issues exacerbated by confusion and gridlock following the UK’s departure from the EU.

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

PODCAST: Europe chemicals face €1bn 2021 carbon bill as global action intensifies
By: Will Beacham 2021/01/25 BARCELONA (ICIS)--Europe’s chemical sector faces a carbon bill of around €1bn in 2021 amid a ramp up in regulatory measures around the world.

  • Europe carbon prices rose from €25/tonne in October 2020 to €35/tonne today
  • Expect a big shift from global to local supply chains as pandemic exposed weaknesses, carbon taxes to enable change
  • Beyond 2030 there may be no more worldscale chemical projects built
  • Automotive semiconductor shortage highlights vulnerabilities of global supply chains

Click on the headline to hear the podcast

Shortages, skyrocketing prices continue for chems shipping
By: Tom Brown 2021/01/25 LONDON (ICIS)--The shipping woes that have dogged the chemicals sector for months show no sign of abating, with disrupted international trade flows driving up prices and limiting availability, with European issues exacerbated by confusion and gridlock following the UK’s departure from the EU.

Shipping costs have skyrocketed over the last few months, with market sources reporting that they have been quoted six times or more the level seen in mid-2020, when prices first started to climb.

““Every day and week the sea freight costs are going up,” said a European trader.

Germany’s business climate worsens as lockdown could go beyond mid-February
By: Jonathan Lopez 2021/01/25 LONDON (ICIS)--Germany’s business confidence index, compiled by the ifo Institute, declined in January as the country’s lockdown is “unlikely to end” on 14 February as planned, financial analysts said on Monday.

The pandemic’s second wave has hit Germany hard, and the country’s health services have been under pressure since December; unlike in the spring of 2020, Germany’s death toll has surpassed 1,000 on several days in January this year.

January’s economic performance was hit by the lockdown, with falls in practically all economic sectors – including manufacturing, construction, trade, and services – although the fall in confidence during the month is far from the lows posted in the second quarter of 2020.

China holiday-travel curbs dampen petrochemical restocking
Petrochemical restocking in China this year will not be strong as in the past as the usual heavy manufacturing disruption that accompanies the Lunar New Year holidays may not happen, with travel curbs in place to ward off another wave of coronavirus infection in the country.

India's Reliance net profit rises in Sept-Dec despite drop in revenue
Reliance Industries Limited's (RIL) net profit rose by 13% year on year in the three months to 31 December 2020 despite a drop in revenue, the Indian chemicals major said late on Friday.

US adds oil, gas drilling rigs as count rises for ninth week
By Adam Yanelli 2021/01/22 HOUSTON (ICIS)--The US saw an increase in the number of oil and gas drilling rigs in operation this week, rising for the ninth week in a row, despite rising concerns about how an outbreak of the coronavirus in China will impact crude oil demand

Japan’s au Jibun Bank flash manufacturing PMI slips to 49.7 in Jan
By Nurluqman Suratman 2021/01/22 SINGAPORE (ICIS)--au Jibun Bank’s flash manufacturing purchasing managers’ index (PMI) for Japan slipped to 49.7 in January from the final reading of 50.0 in December 2020 as output fell amid rising costs, the Japanese bank said on Friday.

A PMI reading below 50 indicates a contraction in the manufacturing economy.

"Despite a return to growth in new orders for the first time since December 2018, falling output and employment levels and rising cost pressures dampened operating conditions," au Jibun Bank said.

Washington state in US denies permit for methanol plant
By Al Greenwood 2021/01/21 HOUSTON (ICIS)--The Washington Department of Ecology denied a permit for a proposed methanol plant in that state's town of Kalama.

The department denied issuing the shoreline-conditional-use permit because of concerns about greenhouse-gas emissions, it said. As a result, Washington state could fail to meet its greenhouse-gas targets that were set by its legislature.

The plant is being developed by Northwest Innovation Works (NWIW). The methanol would be used in China’s methanol-to-olefins (MTO) plants.

Mideast chemical supply tight on container shortages, Asian plant shutdowns
By Felicia Loo 2021/01/21 SINGAPORE (ICIS)--Middle East's petrochemical markets are facing tight supply, mainly due to shortage of containers, with shipment difficulties to last until March. Plant shutdowns in Asia exacerbated the tight supply conditions, overshadowing demand from strong to stable in certain sectors in the Middle East.

Japan's chemical exports rise by 10% in Dec, overall shipments up 2%
By Nurluqman Suratman 2021/01/21 SINGAPORE (ICIS)--Japan's chemical exports rose by 10.0% year on year in December 2020 to yen (Y) 833.9bn as overall shipments abroad rose for the first time in two years, official data showed on Thursday.

USA’s INVISTA licenses technology to Sinopec Yizheng for new PTA line
By Nurluqman Suratman 2021/01/21 SINGAPORE (ICIS)--INVISTA and China’s Sinopec Yizheng have reached a technology licensing agreement for a new purified terephthalic acid (PTA) line in Jiangsu province, the US producer said on Thursday.

Indian chemicals industry bats for increasing duties on imports
By Priya Jestin 2021/01/21 MUMBAI (ICIS)--The Indian chemicals and petrochemicals industry, which is now seeing a slow recovery in demand, expects the government to support its growth trend by introducing measures to reduce unnecessary imports.

PODCAST: Global ACN supply restrictions continue to dominate talk in Q1
By Jane Massingham 2021/01/20 LONDON (ICIS)--The global acrylonitrile (ACN) market is expected to remain tight through Q1, although uncertainty looms in the shape of Chinese New Year and how it may impact on regional demand. ICIS pricing editors Jane Massingham (Europe), Li Li Chng (Asia) and Lucas Hall (US) discuss the latest developments in the ACN market and what lies in store.

PODCAST: Jet and bio fuels in 2021 – what are the trends?
By Andrew Putwain 2021/01/20 LONDON (ICIS)-- Jet fuel has been one of the oil products hit hardest by the pandemic. With vaccines now being rolled out will there be more support in 2021 - even as the market faces pressures to turn to more sustainable biofuels? Market analyst Man Yiu Tse and crude oil reporter Andrew Putwain look at the big trends for 2021 in jet fuel and biojet alternatives.

Malaysia central bank keeps accommodative monetary stance amid new lockdown
By Pearl Bantillo 2021/01/20 SINGAPORE (ICIS)--Malaysia’s central bank decided on Wednesday to maintain an accommodative monetary policy as it acknowledges that new coronavirus-related restrictions will hit near-term economic performance. Its overnight policy interest rate was kept at 1.75%.

Singapore’s 2020 chemical fixed asset investments fall; overall FAI grows
By Nurluqman Suratman 2021/01/20 SINGAPORE (ICIS)--Singapore’s chemical fixed asset investments (FAI) fell by 18.9% year on year to Singapore dollar (S$) 4.11bn in 2020, but overall FAI rose despite the challenges arising from the coronavirus pandemic, official data showed on Wednesday.

India’s GNAL delays commissioning of new caustic soda line to August
By Priya Jestin 2021/01/20 MUMBAI (ICIS)--India’s GACL-NALCO Alkalies & Chemicals Ltd (GNAL) has pushed back the scheduled commissioning of its greenfield 266,667 tonne/year caustic soda plant in Dahej to August 2021, a company source said on Wednesday.

VIDEO: China non-carbide VAM supply to tighten further on EVA start-ups
By Anna Xiang 2021/01/19 SINGAPORE (ICIS)--Watch industry analyst Anna share her views on China's domestic vinyl acetate monomer (VAM) market for 2021.

Chip shortage threatens global auto sector, demand for chemicals and polymers
By: Will Beacham 2021/01/18 BARCELONA (ICIS)--A global shortage of computer chips is threatening the nascent recovery of automotive production, as well as demand for automotive chemicals around the world.

Semiconductor chip manufacturers have struggled to meet demand growth in the fourth quarter of 2020 and into 2021 as the automotive sector rebounded from Coronavirus lockdowns, especially in China. Increased sales of computers and electronic devices through the pandemic have also boosted demand.

Auto production is already disrupted by the shortage of chips. Germany’s Audi has slowed production and has furloughed 10,000 employees, according to an interview quoting company CEO Markus Duesmann in the UK Financial Times on 17 January.

INSIGHT: UK chemicals face continued disruption from post-Brexit paperwork, container shortages
By: Will Beacham 2021/01/18 BARCELONA (ICIS)--UK chemical companies and their 27 EU trading partners are still struggling with new paperwork requirements and disrupted logistics, two weeks after the country left the Single Market and Customs Union.

- Tariffs are 0% from the UK-EU
- Tariffs average 4.5%, maximum 6.5% for other countries not covered by free trade agreements
- Rules of origin and customs declarations required from exporters and customers before products can cross borders
- Incomplete paperwork holding up trade at border
- DB Schenker pauses UK-EU operations
- Asia-Europe container rates at $4,000-6,000 as global pandemic-related shortage persists

Despite the post-Brexit free trade deal struck by UK Prime Minister, Boris Johnson, cross-border trade is still subject to a raft of new customs checks and procedures plus a global shortage of containers which continues to delay shipments and inflate costs.

Although tariffs have been maintained at 0%, all goods are now subject to rules of origin and other customs declarations.

Singapore petrochemical exports snap 27-month decline; up 11.5% in Dec
By Nurluqman Suratman 2021/01/18 SINGAPORE (ICIS)--Singapore's petrochemical exports in December 2020 increased by 11.5% year on year to Singapore dollar (S$) 1.25bn, ending more than two years of decline, official data showed on Monday.

The year-on-year expansion was the first recorded since August 2018, according to Enterprise Singapore.

China's 2020 GDP rises by 2.3% after 6.5% expansion in Q4
By Nurluqman Suratman 2021/01/18 SINGAPORE (ICIS)--China's GDP grew by 2.3% year on year in 2020, its slowest pace in more than four decades, after it reported a 6.5% expansion in its economy in the fourth quarter, official data showed on Monday.

France’s Total to invest $2.5bn in India’s Adani Green Energy
By Pearl Bantillo 2021/01/18 SINGAPORE (ICIS)--France’s Total will acquire a 20% interest  in Adani Green Energy Ltd (AGEL), along with a 50% stake in a 2.35 GWac (gigawatt alternating current) portfolio of the Indian solar developer’s operating solar assets, for a total of $2.5bn.

US WR Grace is willing to discuss sale to 40 North
By: Jane Miranda 2021/01/15 HOUSTON (ICIS)--WR Grace is willing to discuss a sale to 40 North, after the private investment firm raised its bid to $65 per share earlier this week, the US-based catalyst producer.

German chemicals reject calls to shut plants as pandemic hits hard
By: Stefan Baumgarten 2021/01/15 LONDON (ICIS)--Germany’s top chemical industry trade groups are rejecting calls to shut down plants as part of the country’s “hard lockdown” to contain the second wave of the coronavirus pandemic.

“A shutdown would be counter-productive, in all respects”, chemical producers group VCI and employers group BAVC said in a joint statement on Friday.

The chemical-pharmaceutical industry makes “key contributions” to containing the pandemic, the trade groups said, in vaccine production, the manufacture of essential medicines or as the most important upstream supplier for diagnostics, medical, and laboratory equipment manufacturers.

US to face heavy economic losses if trade war with China continues
By Pearl Bantillo 2021/01/15 SINGAPORE (ICIS)--The US economy is hurting itself if its trade war with China continues in the medium term, possibly shaving a large chunk of its GDP output with attendant massive job losses.

US' CME to launch ICIS-linked China specific origins methanol futures contract in Feb
By Nurluqman Suratman 2021/01/15 SINGAPORE (ICIS)--The CME Group aims to launch an ICIS-linked China methanol futures contract on the New York Mercantile Exchange on 22 February.

US infrastructure plan to be unveiled in February in 2nd step of massive stimulus
By Joseph Chang 2021/01/15 NEW YORK (ICIS)--US President-elect Joe Biden plans to unveil details of a major US infrastructure stimulus plan in February in his first appearance before a joint session of Congress after announcing his first step of massive fiscal stimulus.

China December exports grow 18.1% year on year; imports up 6.5%
By Yvonne Shi 2021/01/14 SINGAPORE (ICIS)--China’s total exports in December rose by 18.1% year on year to $281.9bn, according to preliminary data from the government.

Northern China LPG logistics hit by lockdowns, travel restrictions
By Lillian Ren 2021/01/14 SINGAPORE (ICIS)--LPG logistics have become challenging in northern China after a rising number of corona virus cases in Hebei, Liaoning and Heilongjiang forced a few cities into lockdowns, and led several cities to  impose travel restrictions.

Fed notes healthy US demand for PVC
By Al Greenwood 13-Jan-21 15:05 HOUSTON (ICIS)--US demand for polyvinyl chloride (PVC) was healthy during the past several weeks, the Federal Reserve said on Wednesday in its periodic survey of business conditions.

Virus-related restrictions in north China hit petrochemical transport
By Yvonne Shi 2021/01/13 SINGAPORE (ICIS)--Coronavirus-related restrictions in parts of northern China - including Hebei province, where cases of infections recently spiked - are hitting transport of petrochemicals in the region.

PODCAST: China lockdowns could hurt chemical imports, industrial production
By Will Beacham 2021/01/12 BARCELONA (ICIS)--Major new coronavirus lockdowns in China could threaten demand for chemical imports, and hurt industrial production of products for local consumption and export.

PODCAST: Asia PE sets to see support from strong feedstock, high shipping costs
By Jasmine Khoo 2021/01/13 SINGAPORE (ICIS)--Southeast Asia’s polyethylene (PE) market ended a turbulent year in 2020 with major price increases but early 2021 fundamentals suggest shipping costs and feedstock prices are still likely to drive prices in the first quarter.

Asia petrochemical shares mostly lower amid new virus-linked lockdowns
By Nurluqman Suratman 2021/01/12 SINGAPORE (ICIS)--Asia’s petrochemical shares were mostly lower on Tuesday on new lockdowns in parts of the region amid the unabated surge in coronavirus cases, which topped 90m globally.

Malaysia to impose two-week limited lockdown from 13 January
By Pearl Bantillo 2021/01/11 SINGAPORE (ICIS)--Malaysia's Prime Minister Muhyiddin Yassin said on Monday that a limited lockdown will be in place for two weeks from 13 January to contain the spread of coronavirus infections in the country.

Taiwan's FPCC 2020 net income slumps 80% on lower margins
By Nurluqman Suratman 2021/01/11 SINGAPORE (ICIS)--Formosa Petrochemical Corp (FPCC) has reported an 80% decline in its 2020 net profit as margins weakened amid the coronavirus pandemic.

GPCA cancels Dubai meeting in February on worsening health situation
By: Jonathan Lopez 2021/01/11 LONDON (ICIS)--The Gulf Petrochemical Association (GPCA) annual meeting planned for February has been cancelled as the coronavirus pandemic worsens globally, the industry group said on Monday.

In the past week, coronavirus cases in the UAE have risen sharply, although the country has for the most part kept the pandemic at bay.

The GPCA meeting was due to be held in Dubai, one of the UAE’s seven emirates.

Europe butac prices surge on very tight supply, BASF force majeures continue
By Nick Cleeve 11-Jan-21 14:43 LONDON (ICIS)--European butyl acetate (butac) spot prices have risen sharply, with the ICIS midpoint reaching its highest level since March 2017.

Butac prices were assessed at €1,400-1,500/tonne FD (free delivered) NWE (northwest Europe) - an increase of €150-200/tonne.

Sources referred to prices far above the assessed range, but significant business at these levels could not be confirmed.

Supply is very tight due to major producer BASF’s active force majeures and limited availability of feedstock n-butanol (NBA).

PODCAST: Europe chemicals’ challenges for the 2020s
By: Jonathan Lopez 2021/01/11 LONDON (ICIS)--After the health crisis recedes, the European chemicals industry’s challenges will remain unchanged - sustainability, recycling and how it can achieve carbon neutrality by 2050.

The ICIS European news desk analyses what is in store in this podcast with News Editor Jonathan Lopez, Deputy News Editor Tom Brown, News Reporter Morgan Condon, and Insight editor Nigel Davis.

Click on the headline to hear the podcast.

Taiwan's FPCC 2020 net income slumps 80% on lower margins
By Nurluqman Suratman 2021/01/11 SINGAPORE (ICIS)--Formosa Petrochemical Corp (FPCC) has reported an 80% decline in its 2020 net profit as margins weakened amid the coronavirus pandemic.

India to impose antidumping duty on PA imports from Russia
By Priya Jestin 2021/01/11 MUMBAI (ICIS)--India will impose a five-year antidumping duty (ADD) of $159.43/tonne on phthalic anhydride (PA) imports from Russia.

India defers import certification requirements for some chemicals
By Priya Jestin 2021/01/11 MUMBAI (ICIS)--India has deferred the implementation of mandatory Bureau of Indian Standards (BIS) certification requirement on imports of ethylene glycol, toluene, butyl acrylate, terepthalic acid and phthalic anhydride to mid-2021.

PODCAST: Europe MTBE demand to recover in Q2, methanol price pressure continues
By: Eashani Chavda 2021/01/07 LONDON (ICIS)--ICIS editors Eashani Chavda and Nazif Nazmul discuss market fundamentals and expectations for European methyl tertiary butyl ether (MTBE) and methanol.

- Winter driving season drives demand for MTBE lower in January

- Demand expected to improve by Q2 at the earliest

- Methanol market bullish on supply shortages, healthy demand

Click on the headline to hear the podcast

Qatar re-opens chemical trades within GCC after diplomatic breakthrough
By Felicia Loo 2021/01/08 SINGAPORE (ICIS)--With Saudi-led Gulf Cooperation Council (GCC) members restoring relations with Qatar, polyethylene (PE) and polypropylene (PP) processors in Saudi Arabia can now supply products to the Qatari market.

PODCAST: Faltering China chemicals signal caution for 2021
By: Will Beacham 2021/01/05 BARCELONA (ICIS)--Softening chemicals demand and prices in China may be an early sign of trouble ahead for the global industry in 2021.

  • High inventories, weaker demand for China chemicals
  • Falling China prices may signal trouble ahead for recovery
  • Strong economic, chemicals recovery in H2 2020
  • Paradigm shifts apparent in 2020 will accelerate through 2021
  • Includes new demand patterns, supply chains, energy balances, circular economy, advanced manufacturing

Click on the headline to hear the podcast.

Asia manufacturing continues recovery in December
By Nurluqman Suratman 2021/01/07 SINGAPORE (ICIS)--Asia's manufacturing activities mostly improved in December, affirming the region's economic recovery despite a recent pick-up in coronavirus infection rates.

INSIGHT: Outlook dimming on downside risks, possible China price inflection
By Nigel Davis 2021/01/06 LONDON (ICIS)--Petrochemicals companies' fortunes have improved over the past three months as demand has strengthened and prices increased.

December IPEX up 6.5% on rising prices in Europe and the US
By Miguel Rodriguez Fernandez 2021/01/06 LONDON (ICIS)--The ICIS Petrochemical Index (IPEX) continued to climb in December, increasing by 6.54% for the month, tracking price increases for most of the major petrochemical and plastics commodities.

VIDEO: Key drivers for Asia petrochemical markets in 2021
By Soo Hwee Peh 2021/01/06 SINGAPORE (ICIS)--Watch Asia managing editor Soo Hwee Peh as she shares some of the key drivers that will shape Asia's petrochemical markets this year.

East Asia and Pacific economy to expand 7.4% in 2021 - World Bank
By Nurluqman Suratman 06-Jan-21 11:55 SINGAPORE (ICIS)--Economic growth in east Asia and the Pacific is projected at 7.4% in 2021, reversing an estimated contraction of 0.9% in 2020, led by a strong rebound in China, the World Bank said late on Tuesday.

INSIGHT: ESG to drive chemicals growth and investment in 2021 and beyond
By Joseph Chang 2020/12/18 NEW YORK (ICIS)--As we say goodbye, or good riddance to 2020, one key positive development for the chemicals industry is the sharpening focus on ESG (Environmental, Social, Governance) - a trend that will only accelerate in the years to come and offer great opportunity to develop new business models.

INSIGHT: Sustainability and recycling set to dominate 2021 agenda
By: Helen McGeough 2020/12/18 LONDON (ICIS)--The events of this year may have been unpredictable but 2021 offers no improved certainty given the continuing effects of the coronavirus pandemic and onset of a global economic downturn.

Sustainability may have slipped in the focus, if not agenda, of consumers to corporates alike due to other priorities, but it is set to return with fervour next year.

There had been an expectation that demand from the packaging sector would grow sharply in 2020 from recycled high density polyethylene (R-HDPE) and recycled polypropylene (R-PP) amid the growing focus on sustainability, but much of this growth was curtailed by the impact of coronavirus.

Backlogs at testing facilities, concerns about entering new supply chains amid the pandemic, and workforce and financial pressures led firms to concentrate on core products.

Japan raises fiscal year ‘21 GDP growth forecast to 4% on stimulus
By Nurluqman Suratman 2020/12/18 SINGAPORE (ICIS)--Japan's government on Friday raised its economic growth forecast for the next fiscal year - starting April 2021 - on a price-adjusted real terms to 4.0% from 3.4% previously, supported by its latest coronavirus stimulus package.

Singapore Nov petchem exports down 18.5%, NODX slips 4.9%
By Nurluqman Suratman 2020/12/17 SINGAPORE (ICIS)--Singapore's petrochemical exports fell by 18.5% year on year to Singapore dollar (S$) 955.8m in November, weighing on overall non-oil domestic exports (NODX), official data showed on Thursday.

ANALYSIS AND RESOURCES

ICIS chemicals coronavirus Impact Demand Model November 2020 by willbeacham on Scribd