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

Author: Will Beacham

2020/10/20

Chevron Phillips Chemical will defer a final investment decision (FID) on its joint venture US Gulf Coast petrochemicals project in light of uncertainty amid the coronavirus (Covid-19) pandemic, a spokesperson said on Tuesday.

The company’s planned joint venture US Gulf Coast II petrochemicals project with Qatar Petroleum would include a 2m tonne/year ethane cracker and 2m tonnes/year of high density polyethylene (HDPE) capacity downstream.

Chevron Phillips Chemical had planned to make an FID in late 2020 or early 2021 with targeted start-up in 2024.

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

Chevron Philips Chemical to defer FID on second US Gulf Coast petrochemicals project
By: Joseph Chang 2020/10/20 NEW YORK (ICIS)--Chevron Phillips Chemical will defer a final investment decision (FID) on its joint venture US Gulf Coast petrochemicals project in light of uncertainty amid the coronavirus (Covid-19) pandemic, a spokesperson said on Tuesday.

China’s polyester demand to stay strong on feedstock cost, rising export orders
By: Judith Wang 2020/10/20 SINGAPORE (ICIS)--China’s polyester demand is expected to remain healthy till the end of October amid rising feedstock cost and improving export demand.

Formosa defers major construction on US Sunshine petrochemicals project
By Joseph Chang 2020/10/19 NEW YORK (ICIS)--FG LA LLC, a member of the Formosa Plastics Group, has deferred major construction at its Sunshine petrochemicals project in Louisiana, a spokesperson said on Monday.

PODCAST: UK-EU27 chemicals face severe Brexit disruption with or without a deal
By: Will Beacham 2020/10/19 BARCELONA (ICIS)--In the midst of the pandemic, the UK chemical sector and its EU27 trading partners must face up to the reality of severe disruption to trade with or without a free trade deal coming into force.

  • With or without a deal, cross-channel trade will be disrupted
  • New hurdles will include customs declarations and Rules of Origin
  • EU27 customers may stop sourcing from UK
  • Brand owners now spending 35-40% of time on redesigning packaging for recyclability

SABIC, Saudi Aramco eye expanding scope of oil-to-chemicals project
By: Nurluqman Suratman 2020/10/19 SINGAPORE (ICIS)--Saudi Aramco and SABIC are now looking at integrating existing refineries in Yanbu, Saudi Arabia with a world-scale mixed feed steam cracker and downstream olefin derivative units, as part of their planned oil-to-chemicals project.

Asia butac, etac prices touch 7-month high on vibrant trade, snug supply
By: Melanie Wee 2020/10/19 SINGAPORE (ICIS)--Asia butyl acetate (butac) prices touched a seven-month high, bolstered by brisk import demand amid constrained spot availability, a scenario that is envisaged to extend into November.

Brisk trade activity in the week ended 16 October propped up the market, pushing up butac as well as related Asia ethyl acetate (etac) prices.

Effect on US MEG of EU antidumping investigation yet unclear
By: Antoinette Smith 2020/10/16 HOUSTON (ICIS)--US monoethylene glycol (MEG) participants are weighing the announcement of an EU anti-dumping investigation on imports from the US and Saudi Arabia, leaving the US market uncertain as to the effects of the probe.

Singapore petrochemical exports shrinking for more than two years
By: Nurluqman Suratman 2020/10/16 SINGAPORE (ICIS)--Singapore's petrochemical exports in September slumped by 23.8% year on year, shrinking continuously for more than two years.

Shipments have been hit hard by the US-China trade war that started in mid-July 2018, and further deteriorated with the onset of the coronavirus pandemic this year.

PODCAST: Pandemic lifts Europe IPA, ethanol demand by 60-70,000 tonnes/year
By: Will Beacham 2020/10/15 BARCELONA (ICIS)--Demand for hand sanitisers has added a permanent uplift of 60-70,000 tonnes/year to Europe's isopropanol and ethanol markets.

  • Hand sanitisers and disinfectants create up to 60-70,000 tonnes/year new demand for IPA in 2020, or 14-16%
  • Renewed appeal of IPA versus ethanol as a feedstock for these products could boost demand further
  • Players eye automotive sector and phenol/acetone production to gauge IPA imports from Asia into Europe
  • Potential for growth on higher IPA grades (cosmetics, biocide, pharma, electronics) in 2021

Click on the headline to hear the podcast.

Europe nylon demand recovery may not last as second wave hits confidence
By: Marta Fern 2020/10/15 LONDON (ICIS)--European downstream demand for nylon 6 and 6,6 had been gradually recovering from the destructive effects widespread coronavirus lockdowns had on industrial output and consumer demand.

However, the outlook has turned very uncertain again as the pandemic resurges strongly in Europe, with mixed views about the market's fortunes in the fourth quarter.

Nylon 6 contract prices for September tonnes settled at a double-digit increase from August on a euro per tonne basis.

Asia petrochemicals track strong post-holiday gains in China markets
By Nurluqman Suratman 2020/10/15 SINGAPORE (ICIS)--Some petrochemical markets in Asia took the cue from strong post-holiday gains in China caused by restocking and tight supply, with the sudden price surge likely to cool off buying appetite in the near term.

Asia’s butyl acrylate prices jump on demand surge
By Li Li Chng 2020/10/15 SINGAPORE (ICIS)--Asia’s butyl acrylate (butyl-A) prices jumped on a surge in buying in India.

With the regular supply disrupted and shipments delayed from a key supplier in the Middle East, and the production situation unclear, buyers sought cargoes from other Asian sources, pushing up spot prices across Asia.

China petrochemical markets gain in active post-holiday trade
By Yvonne Shi 2020/10/14 SINGAPORE (ICIS)--China's domestic petrochemical markets are registering strong post-holiday gains on the back of tightened supply and robust restocking demand.

India’s SBR demand rises ahead of festive season in Nov; higher offers
By Helen Yan 2020/10/14 SINGAPORE (ICIS)--India’s demand for styrene butadiene rubber (SBR) continues to rise ahead of the festive season in November, prompting higher offers amid limited spot availability and rising feedstock cost pressure.

US IPA demand is down, imports show signs of slowing
By Deniz Koray 2020/10/13 HOUSTON (ICIS)--After an unprecedented surge in demand in the spring, US isopropanol (IPA) demand continues to trend downwards.

Latin American GDP to fall by 8.1% in 2020 - IMF
By Al Greenwood 2020/10/13 HOUSTON (ICIS)--Latin America's GDP will likely contract by 8.1% in 2020, the worst among the major regions of the world, the International Monetary Fund (IMF) said on Tuesday in its World Economic Outlook (WEO).

Asian epoxy resins supported on cost pressure; demand outlook upbeat
By Ai Teng Lim 2020/10/13 SINGAPORE (ICIS)--Asian export offers for epoxy resins are firm as sellers sought to protect margins, and might be under further upward pressure if feedstock prices do not ease soon.

Upbeat economic data for key outlets like China bolstered sellers’ confidence that demand support for epoxy resins would strengthen moving forward.

India to boost consumer, capital spending by $10bn amid pandemic
By Nurluqman Suratman 2020/10/12 SINGAPORE (ICIS)--India is taking steps to boost consumer and capital spending by about $10bn to shore up its coronavirus-hit economy, Finance minister Nirmala Sitharaman said on Monday.

The measures include advance payment of a part of the wages of federal government employees and allowing government employees to spend tax-exempt travel allowances on goods and services, Sitharaman said at a news briefing.

Shell advances Pennsylvania cracker project as more workers return to site
By: Joseph Chang 2020/10/12 NEW YORK (ICIS)--Shell is making progress on its 1.5m tonne/year US ethane cracker and polyethylene (PE) project as more workers return to the site, a spokesperson said on Monday.

PODCAST: Capturing growth from sustainability tops EPCA agenda
By: Will Beacham 2020/10/12 BARCELONA (ICIS)--How to capture growth from sustainability amid rapid changes in end use markets and the energy mix topped the agenda at this year’s virtual European Petrochemical Association (EPCA) meeting.

  • Industry must change rapidly to meet need for low carbon, sustainable Europe
  • With oil refineries closing, less naphtha availability may drive recycling
  • Coronavirus has accelerated existing paradigm shifts
  • BASF’s troubles reflect industry situation in Europe
  • Polyethylene (PE) demand could fall rapidly if furlough schemes cut

Listen to this podcast with Caroline Ciuciu CEO, EPCA; John Richardson, ICIS senior consultant, Asia; Paul Hodges, chairman New Normal Consulting and ICIS Insight editor, Nigel Davis.

Click on the headline to hear the podcast.

BASF earnings ‘momentum’, more divestments to support further expansion, dividend - bank
By: Jonathan Lopez 2020/10/12 LONDON (ICIS)--Better-than-expected third-quarter financial results, as well as potential divestments will support BASF’s future expansions and dividend payment, investment bank Credit Suisse said on Monday.

On 8 October, the German chemicals major - bellwether for the European petrochemicals industry - released preliminary financial results for the third quarter showing how the pandemic has upended previous expectations.

The producer said it expects up to €2.8bn in asset impairments in the third quarter; key downstream industries for BASF like automobile and aviation remain well below pre-pandemic levels.

SE Asia PP hits eight month high, supply tightness to continue
By Leanne Tan 2020/10/12 SINGAPORE (ICIS)--Southeast Asian polypropylene (PP) spot prices have risen to an eight month high, with the market likely to remain supported by regional supply tightness in the near term.

China petrochemical shares gain; yuan weakens post-holiday
By Nurluqman Suratman 2020/10/12 SINGAPORE (ICIS)--China’s petrochemical shares were higher on Monday, leading gains in Asia, while the yuan (CNY) weakened after the central bank tweaked its foreign exchange policy.

Canada adds jobs in September, unemployment rate dips
By: Stefan Baumgarten 2020/10/09 TORONTO (ICIS)--Canada’s economy continued to add jobs in September as most businesses and workplaces have re-opened following the coronavirus-related restrictions and shutdowns

Pandemic accelerates refinery shift from petrochemicals to renewables - analyst
By: Will Beacham 2020/10/09 BARCELONA (ICIS)--The pandemic has boosted numbers of refinery-linked renewables projects whilst causing delays and cancellations to traditional petrochemicals projects, according to an ICIS analyst.

With lockdowns causing a rapid collapse in demand for transport fuels, oil refiners are now questioning the need for investments in mega petrochemical projects as recycling and the sustainability agenda have continued to accelerate during the pandemic.

Michael Connolly, senior consultant with the ICIS global refining team said: “Decisions have been fast-tracked by the pandemic. Where people previously were unsure about these transitions, the pandemic has shown how quickly demand can be reduced. This has been a catalyst for people to make these decisions.”

Source: ICIS Supply & Demand Database

IPEX up 8% in September as key petrochemical prices rise
By: Nigel Davis 2020/10/09

LONDON (ICIS)--ICIS petrochemical indexes rose again in September as prices captured in the indexes generally improved. The global index was up 8% from August.

Markets are stronger with supply tightness supporting some prices. The strength of recovery is uncertain, however, and tied to the ongoing impact of coronavirus lockdowns on important end-use markets.

The regional and global IPEXs are shown here alongside the latest relative price movements of the 12 commodities on which the IPEXs are based.

By Pearl Bantillo 2020/10/09 SINGAPORE (ICIS)--Iran’s economy is being battered by heightened US sanctions that constrain oil production and exports, and rising levels of coronavirus infections in the country, with GDP expected to shrink for the third consecutive year.

Asia naphtha markets to stay buoyant on consistent demand, tight supply
By Melanie Wee 2020/10/08 SINGAPORE (ICIS)--Asia naphtha markets are poised to draw support from a combination of steady downstream demand and potentially crimped supply on reduced deep-sea western cargo flows.

Philippines' Petron mulls permanent closure of Bataan refinery
By Pearl Bantillo 2020/10/08 SINGAPORE (ICIS)--Philippines’ refiner Petron is mulling shutting down its 180,000 bbl/day refinery in Bataan permanently if the government fails to level the playing field in the industry.

US RPM invests as pandemic raises DIY demand to new, higher base
By Stefan Baumgarten 2020/10/07 HOUSTON (ICIS)--The coronavirus pandemic has raised demand from the DIY and home improvement sector to a new and permanently larger business base, Frank Sullivan, CEO of US-based specialty coatings, sealants and building materials company RPM International, said in an update on Wednesday.

Asia manufacturing improves in Sept, but coronavirus risks remain
By Nurluqman Suratman 2020/10/07 SINGAPORE (ICIS)--Asia's manufacturing economy mostly improved in September as producers continued to ramp up their operations following the easing of coronavirus restrictions, but weak external demand could still weigh on export-oriented economies in the region.

Asia MLLDPE supply constraints likely to persist in the near term
By Leanne Tan 2020/10/07 SINGAPORE (ICIS)--Supply of metallocene linear low density polyethylene (MLLDPE) in Asia is likely to stay constrained in the near term, amid various regional outages and reduced US imports.

EPCA '20: Get ready for Reach 2.0, “a massive game changer” - Cefic
By: Will Beacham 2020/10/06 BARCELONA (ICIS)--The European Commission is about to launch a major revision to the Reach chemicals regulation which, amongst 70 new measures, could see entire classes of substances being banned.

Cefic director general Marco Mensink discusses the regulatory shifts facing the European chemicals sector in this podcast interview with ICIS Chemical Business editor Will Beacham

  • Root and branch reform of Reach launches 14 October
  • Chemicals Strategy for Sustainability to include 70 regulatory or legal measures
  • More hazard-based or generic assessment of risk
  • Will ban groups of substances rather than individual substances
  • Will impact trade flows for EU imports

Click on the headline to hear the podcast.

China September chemicals buoyed by firm demand, supply pressure
By Yvonne Shi 2020/10/06 SINGAPORE (ICIS)--China's chemical markets  in September were generally buoyed up by firm demand due to pre-holiday restocking and tight supply for some products.

Twenty of the 33 petrochemicals tracked by the ICIS China team had price increases in September from August, eight of which rose by more than 10% with the strongest growth logged by propylene oxide (PO) at 37%.

Thirteen products posted price declines, five of which had more than a 5% slump.

EPCA ’20: Chems sector to emerge leaner from the pandemic, project pipeline to narrow – Dow CEO
By: Tom Brown 2020/10/05 LONDON (ICIS)--The chemicals sector is likely to emerge from the coronavirus pandemic leaner and more focused following the tough decisions required during the downturn, and the number of new projects moving forward is likely to fall, according to the CEO of Dow.

The pandemic has led companies to become leaner operators and for management teams to drastically pare down operating expenses to preserve margin and liquidity during the economic contraction seen this year, according to Dow chief Jim Fitterling.

This means that the new operating environment for the chemicals sector is similar to previous economic backdrops, dominated by tighter spending and efficiency, he added.

“The new normal will resemble the old normal that we’re familiar with, forcing us to be leaner and more focused,” he said, speaking at the virtual annual meeting of the European Petrochemicals Association (EPCA).

PODCAST: EPCA president Marc Schuller
By: Will Beacham 2020/10/05 BARCELONA (ICIS)--The coronavirus pandemic is pushing Europe’s petrochemical sector in new directions, but with a more flexible approach the industry can emerge stronger for long-term success.

  • Very limited visibility means maximum flexibility required
  • End-use markets behaving in new and unusual ways
  • Pandemic has accelerated pre-existing trends
  • Europe faces new trends such as energy abundance, re-shoring of supply chains
  • EU Green Deal is a big opportunity for Europe petrochemicals

Click on the headline to hear the podcast.

Asia TiO2 supply to remain snug; buying to pick up in H2 Oct
By Joson Ng 2020/10/05 SINGAPORE (ICIS)--Asia’s titanium dioxide (TIO2) supply is likely to remain snug in the near term, with buyers expected to be more active in the second half of October.

VIDEO: Uncertainty, volatility and potential for long term structural change in the oil markets
By: Ajay Parmar 2020/10/02  LONDON (ICIS)--Senior Analyst Ajay Parmar discusses the outlook for crude oil in view of OPEC+ production cuts.

  • How are the cuts from OPEC+ faring?
  • We discuss the major threat to those cuts
  • What are the major demand concerns going forward?

Click on the headline to see the video.

US, UK stock futures slump after Trump tests positive for coronavirus
By Pearl Bantillo 2020/10/02 SINGAPORE (ICIS)--US, UK stock futures plunged on Friday after President Donald Trump tested positive of the novel coronavirus about a month before the US elections.

Crude falls after Trump tests positive for coronavirus
By James Dennis 2020/10/02 SINGAPORE (ICIS)--Crude oil futures fell by more than $1/bbl on Friday to its lowest levels since mid-September after it was announced that US President Donald Trump and his wife had tested positive for the coronavirus.

US President Trump, wife test positive for coronavirus
By Pearl Bantillo 2020/10/02 SINGAPORE (ICIS)--US President Donald Trump and first lady Melania Trump tested positive for the coronavirus, about a month before the US presidential elections.

Asia petrochemicals drift in quiet trade as NE region goes on holiday
By Pearl Bantillo 2020/10/01 SINGAPORE (ICIS)--Spot petrochemical trades in Asia were largely muted at the start of October as most of the northeast region was on holiday.

Before going on a long holiday, China delivered upbeat September manufacturing data, which could buoy up overall sentiment upon players’ return a week later.

Sumitomo, Saudi Aramco lend $2bn to boost Petro Rabigh’s working capital
By Pearl Bantillo 2020/10/01 SINGAPORE (ICIS)--Japan’s Sumitomo Chemical and Saudi Aramco have jointly loaned out a total of $2bn to Rabigh Refining and Petrochemical Co (Petro Rabigh), which faced shortfall of working capital as “the market environment has rapidly deteriorated” since end-2019.

Sumitomo’s share to the total loan was $750m, equivalent to its 37.5% stake in Petro Rabigh, it said in a statement on Thursday.

China SBR imports slow down ahead of October holidays
By Helen Yan 2020/09/30 SINGAPORE (ICIS)--China’s styrene butadiene rubber (SBR) imports have slowed ahead of the country’s long holiday in October, while demand for November cargoes may wane amid an unclear outlook.

Asia MTBE supply-demand imbalance to remain amid slow demand recovery
By Keven Zhang 2020/09/29 SINGAPORE (ICIS)--Asia’s methyl tertiary butyl ether (MTBE) outlook appears bearish, with slow demand and long supply expected to continue and will likely maintain in relatively close correlation with the gasoline and crude oil markets in the near term.

Developing East Asia and Pacific 2020 GDP growth to slow to 0.9%
By Nurluqman Suratman 2020/09/29 SINGAPORE (ICIS)--Economic growth in developing East Asia and the Pacific region is expected to slow down this year to 0.9%, the slowest pace since 1967, weighed down by the coronavirus pandemic and efforts to contain its spread, the World Bank said late on Monday.

PODCAST: China recovery may be on shaky foundations
By: Will Beacham 2020/09/28 BARCELONA (ICIS)--China’s economic recovery may be frail as it relies on surging exports rather than fragile domestic demand.

  • China’s economic bounce back may be on shaky foundations
  • China market sentiment, prices influence developing economies
  • Pandemic impact on emerging economies could hurt global polymer growth
  • Turkey and Africa polyethylene (PE) and polypropylene (PP) markets steered by China
  • Risk of global depression, social unrest with imposition of more strict lockdowns

Listen to this podcast interview with Paul Hodges chairman, International eChem and author of the pH Report; John Richardson ICIS senior consultant, Asia and ICIS Insight editor, Nigel Davis. This week's special guest is Ben Lake, markets editor for Africa and Turkey PE and PP.

Click on the headline to hear the podcast.

With China's economy on a roll, domestic petchem demand brightens up
By Felicia Loo 2020/09/28 SINGAPORE (ICIS)--While major world economies are still struggling with the coronavirus pandemic that has bruised their economies, China is on the fast lane to recovery, supported by Beijing’s stimulus measures.

ANALYSIS AND RESOURCES

June 2020 Coronavirus presentation given by ICIS Analytics experts.