TOPIC PAGE: War in Ukraine, gas crisis

Updated at 10:30 GMT on 26 May. Please scroll down to see headlines.

The war in Ukraine has caused oil and especially gas price volatility, as restricted flows from Russia to Ukraine caused values to spike to record-breaking levels before collapsing to pre-war levels.

Since December 2022, unseasonably mild winter weather hit demand, reversing gas prices. However millions of tonnes of chemical and fertilizer production remain offline across Europe thanks to the elevated gas prices and poor macro-economic conditions which have impacted demand.

Europe’s energy challenge is immense and put into stark relief by the response to Russia’s war in Ukraine. Cutting the ties that bind EU and non-EU nations to Russian gas and oil will be extremely painful this year and in years to come.

This topic page examines the impact of the Ukraine conflict on oil, gas, fertilizer and chemical markets.

Image credit Vadim Ghirda/AP/Shutterstock

Europe’s energy markets witnessed a year of record prices and extreme volatility in 2021. Russia’s invasion of Ukraine has led to more difficult conditions for global markets since then.

GAS SUMMARY

• Gas storage remains robust in Europe, winter demand fell thanks to mild weather
• Poor downstream demand still affecting industrial production, gas demand
• Record shipments of liquefied natural gas (LNG) to Europe so far in 2022/23
• LNG plus Norwegian, Algerian, Azerbaijani pipeline imports compensate for Russian supply shortfall
• Europe LNG processing operating at full capacity
• Nord Stream I and II pipelines damaged by explosions, zero flows to Europe
• EU implements voluntary 15% cut to consumption

AMMONIA SUMMARY

• Russia supplies 20% of global seaborne ammonia market
• Disrupted supply has pushed up fertilizer and food prices

OIL SUMMARY

• Friendship oil pipeline flows through Ukraine
• Russian oil feeds around a quarter of Europe demand
• Europe seeks to end reliance on Russian crude oil
• EU agrees ban on seaborne imports from 5 December 2022, petroleum products from 5 February 2023
• From 5 December Russian crude oil cargoes will only be insured if subject to price cap

CHEMICALS SUMMARY

• Millions of tonnes of capacity remain offline despite gas cost collapse
• Elevated oil, gas prices dent consumer confidence and demand
• Prospect of recession, more cheap imports from Asia
• Margins, prices under pressure due to collapsed downstream demand

Sanctions and measures against Russian exports of oil and gas have sent shockwaves across the global economy, lifting the cost of living, impacting industrial and agricultural production and potentially leading to social unrest.

How vulnerable are energy and energy-related Russian supplies to disruptions?
Europe has historically depended for close to 40% of its annual gas consumption on Russian supplies, imported via four routes – Ukraine, Belarus-Poland as well as the Nord Stream 1 and TurkStream corridors linking Russia to Germany and Turkey via the Baltic and Black Sea, respectively.

Overall Russian pipeline supplies were limited throughout 2021 and further reduced in 2022. By the end of last year Russian pipeline supplies fell to less than 10% of Europe’s total gas imports compared to 40% in the previous year.

Russian volumes shipped through Ukraine to Europe are now at third of what they should be as part of a five-year transit agreement

Russia has banned exports of gas to several EU countries, and the Nord Stream I and II pipelines have been damaged. In 2022 flows via Yamal and Nord Stream 1 stopped completely.

European petrochemicals players faced even higher gas prices as a result, though these have since collapsed to pre-war levels. Fertilizer companies – where gas can account for 80% of costs – have been forced to curtail production. Chemicals were affected, especially those with high exposure to gas prices through utilities or feedstocks.

If the conflict escalates, Ukraine transit pipelines may come under attack but disruptions could be limited because the infrastructure has been built to grant flexibility, allowing the operator to reroute flows away from potentially damaged segments.

AMMONIA IMPACT
The Togliatti-Azot pipeline, the world’s longest ammonia pipeline stretching 2,471km from the Togliatti Azot plant in Russian Samara Oblast to the Ukrainian Black Sea port of Yuzhny, could be caught up in the cross-fire. Russian ammonia supplies account for around 20% of the global seaborne merchant ammonia market each month.

Around two thirds of those volumes are exported via Yuzhny, with the rest reaching European and global markets via Baltic ports. Ammonia is a prime material for fertilizers, so curtailments could potentially lead to higher food prices and shortages.

Ammonia market players are scrambling to cover positions and assess options as the Russian invasion of Ukraine saw loadings at the key export hub of Yuzhny halted with immediate effect.

Russian nitrogen fertilizer major Togliatti confirmed the suspension of the transit of ammonia to the Black Sea port via pipeline to ensure the safety of people living in the vicinity of the lengthy conduit.

OIL PIPELINES VULNERABLE
Supplies on the world’s longest oil pipeline, the Friendship (Druzhba) pipeline, could be threatened if the conflict leads to tough sanctions. The pipeline carries oil from central Russia 4,000km west to Ukraine and Belarus and runs close to the Belarus-Ukraine border. Russia exports around 5m bbl/day, of which half are exported to Europe, including via this pipeline.

Russian oil accounts for about a quarter of Europe’s consumption, with the Druzhba pipeline carrying close to 1m bbl/day.

Sanctions have been imposed on imports of Russian crude oil and products by sea, but the ban does not include pipeline oil.

Europe consumed most exports of Urals, Russia’s biggest export grade, in 2021 after Saudi Arabia boosted market share in China. Almost 10m tonnes of Urals went through Rotterdam in the first half of last year, up 2m tonnes on 2020.

Germany stands most exposed because it gets 25% of its oil from Russia.

SInce the ban came into place, Russia has successfully switched exports mainly to China and India, though priced at a steep doscount.

CHEMICALS IMPACT
Gas and electricity are important components in the production costs of many chemicals. Surging gas and feedstock prices in Europe have caused big hikes in contract and spot prices. Now millions of tonnes of fertilizer and chemical capacity are offline in Europe.

ICIS has also created an interactive timeline which shows the history of the gas impact since July 2021.

These products have been most badly affected by outages in Europe, with more than half of capacity offline or running at reduced rates in some cases.

Analysis by the ICIS Margin Analytics team shows the products which are most exposed to energy and gas prices in Europe as a feedstock or utility.

Europe is at a competitive disadvantage to other regions and some customers are seeking new sources of lower-priced supply, especially from Asia and the Middle East.

Collapsed demand means that millions of tonnes of European chemicals capacity remains offline despite much lower gas costs.

The conflict in Ukraine has pushed European gas prices back up to record levels, forcing exposed chemical producers to cease production, or add further energy surcharges.

Rising oil prices since late 2021 have already put chemical margins under pressure, and volatility has continued into 2022. As oil and naphtha prices soared, margins for ethylene production based on naphtha went negative for the first time ICIS record began. The are now are swinging wildy in tandem with oil price movements.

Chemical producers are struggling to pass on increasing feedstock and energy costs in Europe. Elevated oil and gas prices also dent downstream consumer confidence and spending, with recession a possibility later in 2022 or 2023.

What contingency plans are being put in place?
Europe prepared for a difficult winter although rising storage fullness levels, falling demand and more import capacity for liquefied natural gas (LNG) have helped it get by, assuming there will not be an extensive cold spell.

As of 6 March, storage facilities across Europe were 54% full compared with just 20% last March.

Some 30bn cubic meters of new capacity were added between September 2022 and March 2023. The capacity includes offshore terminals in the Netherlands, Germany and Estonia/Finland.

Demand has been decreasing by more than 20% in the industrial sector in north-west European countries and by 20-30% for households in Germany, according to official data.

Nevertheless, there is a possibility that Russia may completely stop its gas supplies to Europe via the last two remaining routes – Ukraine and Turkey, which could lop off some 70 cubic meters of Russian gas entering Europe daily.

In such a scenario, the most affected countries would be those in eastern and central Europe, which are landlocked and have been struggling to secure regasified LNG from importing countries.

For oil markets, in case of an attack but no international sanctions, the worst-case scenario would be for approximately 240,000 bbl/day of lost Russian exports via Ukraine.

There are other seaborne routes, including the Russian Black Sea port of Novorossiysk.

Gas rationing – impact on Europe petrochemicals, fertilizers

Embattled European fertilizer and petrochemical producers may be the first in line to cut gas consumption if the region experiences a cold snap in the weather.

Russia, Europe’s largest gas supplier, has been limiting exports to less than a quarter of its deliveries two years ago and may stop them altogether amid its political stand-off with the EU.

Policymakers recommend voluntary reductions but say these would become mandatory in case of a supply emergency jeopardising the bloc’s security.

DEMAND REDUCTION
The EU’s largest consumers include households, accounting for 37% of total demand, electricity and heat generation covering around 30% and industrial consumption accounting for another 30%.

Record high gas prices and an ongoing gas supply crunch over the least year had forced consumers to limit or stop production or seek import substitution globally. The mild winter has alleviated this situation.

FERTILIZERS
The fertilizer sector, one of the most gas-intensive industries, has also been one of the most affected so far as gas can account for up to 80% of production costs. Production has been cut back drastically because it is no longer economic.

PETROCHEMICALS
On the petrochemicals side, there are now deep production cuts for products such as methyl methacrylate (MMA) and melamine which are heavily exposed to natural gas for utilities or as a feedstock.

Producers are making detailed plans for rationing, particularly in Germany, where the chemicals and pharmaceuticals industry uses about 140 TWh per year, or about 15 percent of Germany’s gas consumption.

Gas is mainly used by petrochemicals to generate energy such as electricity and steam as well as to fire furnaces for production complexes such as crackers.

Sites are able to lower operating rates significantly, but they may be forced to close if gas supplies drop so much that production becomes uneconomic or difficult from a technical perspective.

Companies with flexibility are switching from natural gas to liquefied petroleum gas (LPG) or other sources of energy.

Ukraine conflict threatens Europe oil supply, chemicals production

With Russia’s invasion of Ukraine, sanctions could cut supplies of crude oil through the Druzhba pipeline, threatening oil refinery operations and chemicals production at installations in Hungary, Slovakia, Czech Republic, Poland and the former East Germany.

Russian oil supplies up to a quarter of Europe’s crude imports, with refineries in central and eastern Europe, which are attached to the Druzhba pipeline, particularly reliant on these supplies. Any interruption to these supplies could force refineries to reduce operating rates unless they can find alternative supplies.

Analysis of the ICIS Supply & Demand database shows that the countries Druzhba runs through, except for Germany, are reliant on Russian crude oil for more than half of their imports, led by Slovakia which obtained 96% of its supplies from Russia in 2021.

Chemical production downstream of refineries in these countries could be impacted by any reduction in operating rates. The ICIS data forecast that for 2022, 2.79m tonnes of ethylene (11% of total European capacity) and 2.34m tonnes of propylene (12% of total European capacity) are reliant on refineries located along the Druzhba pipeline. While some alternative sources of crude oil could be sourced, it is unlikely normal levels of operations could be maintained.

Michael Connolly, ICIS Principal Analyst Refining said: “Although many have built alternate sources, keeping full operating rates would be difficult for them as they rely on a consistent and reliable source of crude. Most refiners in Europe are aware of the risk of Russian crude and over the past 5-10 years have tried to reduce their dependence, or at least to build some capability to have an alternate supply – it doesn’t mean they would be unaffected, but there should be a little bit of resilience, depending on the site.”

Connolly explained that some land-locked refineries along the Druzhba pipeline have built pipelines to the coast, allowing alternative sources of crude oil to be sourced. However, these pipelines may not have capacity to feed the whole refinery.

A spokesperson for Grupa LOTOS said: “The LOTOS refinery has dealt with suspended supplies by land before. Due to the contamination of Russian oil with chlorines, PERN, the state-owned operator of transmission and storage infrastructure, had to completely discontinue the transmission of crude oil from the eastern direction between 24 April and 9 June 2019.”

He added that scheduling of oil supplies by sea helped to secure volumes sufficient to maintain an unchanged level of throughput and maximise fuel production.

UKRAINE CHEMICALS UNDER THREAT

With Russian forces present in Ukraine, chemical and fertilizer facilities may be threatened by physical damage, interrupted power and gas supplies or logistics disruption.

Kalush cracker closed

Karpatnaftohkhim’s cracker at Kalush has been closed down because of the imposition of martial law in Ukraine. It has capacity (tonnes/year) of 250,000 (ethylene); 117,000 (propylene) 110,000 (LLDPE), 300,000 (PVC), 100,000 (benzene).

Black Sea export hub closed 

Ammonia market players have scrambled to cover positions and assess options as the Russian invasion of Ukraine saw loadings at the key export hub of Yuzhny halted with immediate effect.

Russian nitrogen fertilizer major Togliatti confirmed the suspension of the transit of ammonia to the Black Sea port via pipeline to ensure the safety of people living in the vicinity of the lengthy conduit.

The Samara Oblast-based giant also confirmed the shut down of four of its seven ammonia units, with the other three plants operating at reduced rates.

Russia export disruptions to shift global trade flows, future capacities threatened
Disruptions to Russia’s chemicals and polymers exports will change trade flows, particularly to Europe and Asia, as international sanctions, lack of logistics and even “self-sanctions” limit volumes.

While Russia’s capacities are relatively small on a global scale, they can still have a significant impact on regional markets if these exports are disrupted.

Key Russia exports include methanol, polyethylene (PE), polypropylene (PP), styrene and paraxylene (PX).

Russia has increased exports of high density polyethylene (HDPE) and polypropylene (PP) in particular in 2020 and 2021 as new capacity started up from SIBUR’s ZapSibNeftekhim complex in Tobolsk in 2020.

LATEST HEADLINES

Depressed US manufacturing activity weighing on PP demand
By Zachary Moore 26-May-23 05:40 HOUSTON (ICIS)–Demand for polypropylene (PP) in the US is facing a bearish short-term outlook as the US manufacturing sector remains in contractionary territory.

INSIGHT: A tale of two economies, as resurgent services eclipses languishing industry
By Tom Brown 25-May-23 23:05 LONDON (ICIS)–After the dark warnings of late 2022, ministers at the European Commission could be forgiven for sounding a little smug.

PODCAST: Rampant China chemicals overcapacity could rebalance by 2024/5
By Will Beacham 25-May-23 21:00 BARCELONA (ICIS)–Excess capacity plaguing China’s petrochemical markets could return to more balanced conditions by 2024/5 as the current wave of additions ends and demand gradually improves.

APIC ’23: INSIGHT: Asia petrochemicals navigate poor demand amid China start-ups; carve ‘green’ path
By Pearl Bantillo 24-May-23 19:50 SINGAPORE (ICIS)–Uncertainties will hound Asia’s petrochemical markets for the rest of the year and possibly into 2024 amid the global economic slowdown at a time of strong capacity additions in regional powerhouse China.

INSIGHT: Europe petrochemicals demand remains weak and prices under intense pressure
By Nigel Davis 23-May-23 23:10 LONDON (ICIS)–This striking chart from Germany’s chemicals and pharmaceuticals trade association, the VCI, does not even tell the full story for the country’s petrochemical and polymers sectors.

APIC ’23: Asia PE, PP margins to stay in unhealthy range despite China reopening
By Nurluqman Suratman 19-May-23 19:25 NEW DELHI (ICIS)–Asia’s polyethylene (PE) and polypropylene (PP) markets are expected to face poor margins across all production routes despite China’s reopening, an industry analyst said on Friday.

APIC ’23: Japan petrochemical plants run at 80% on current demand
By Pearl Bantillo 19-May-23 17:13 NEW DELHI (ICIS)–Japan’s petrochemical plants have been running at an average rate of about 80% amid demand uncertainties this year, an industry executive told ICIS.

INSIGHT: Fundamental Asia olefin imbalance persists despite better margins
By Joey Zhou 19-May-23 14:00 SINGAPORE(ICIS)–Asia olefin margins from major production routes have improved and remained in profitable territory since March, driven by lower feedstock prices.

Eurozone inflation rises on energy cost pressure
By Morgan Condon 17-May-23 20:05 LONDON (ICIS)–Eurozone inflation edged up slightly on persistent pressure from energy costs in April, as the rate for the wider EU showed a soft decrease, according to the latest data from the EU’s statistical agency Eurostat on Wednesday. Annual inflation in the eurozone rose to 7.0%, up from 6.9% in March.  In the wider EU, annual inflation fell to 8.1%, from 8.3% in the previous month. Compared to a year prior, inflation for the eurozone remained slightly softer, as the rate was pitched at 7.4% in April 2022, while the level remained stable on the previous year for the EU at 8.1%.

Global oil demand expectations for 2023 increased in May on stronger China recovery – IEA
By Morgan Condon 16-May-23 22:25 LONDON (ICIS)–Global oil demand is set to increase in 2023, driven by strength in China, according to the International Energy Agency (IEA) on Tuesday. The IEA’s monthly oil report shows that demand is expected to rise by 2.2m bbl/day year on year in 2023, marking an average 102m bbl/day, supported by economic recovery in China surpassing expectations. Macroeconomic pressures and soft demand was reflected in weaker oil pricing in April and early May, caused lingering concerns of a recession in some regions. The IEA, however, increased its output forecast on a strong recovery in the second half of the year. China is expected to account for nearly 60% of global growth in 2023.

INSIGHT: Weak demand dominates chemicals in Q2 as economies drag
By Nigel Davis 11-May-23 00:41 LONDON (ICIS)–The persistence and wide spread of the demand slump is the key issue for chemical producers in 2023, now mid-way through the second quarter. Recent financial reporting from chemical companies of all types and in all locations has underlined the impact of weak demand on sales in the first quarter. The year-on-year comparisons have proved to be stark, and reduced production the driver of lower revenues at a time of still high costs of sales. Certainly, the focus in Europe and large parts of the rest of the world has shifted from energy costs (and availability).

Higher feedstock costs, slow demand maintain pressure on US polyether polyol margins
By Zachary Moore 21-Apr-23 06:41 HOUSTON (ICIS)–A combination of higher feedstock costs along with slower demand has been maintaining pressure on margins for US polyether polyol producers, with margins likely to remain compressed over the next few months.

INSIGHT: Plastics, petchems in Europe still waiting for construction season, Q2 may be reality check
By Vicky Ellis 20-Apr-23 21:45 LONDON (ICIS)–As warmer, sunnier days grow more frequent, Europe’s construction industry should be ramping up for a busy period. But the season is proving a disappointment, with weaker demand across a wide range of petrochemical and plastics products.

INSIGHT: Hope for 2023 European construction market recovery falters as spring demand uptick fails to materialize
By Nicole Simpson 19-Apr-23 20:52 LONDON (ICIS)–Since late 2022, chemicals players have been hopeful that better demand is just around the corner but optimism is faltering as economic conditions remain challenging and spring construction demand has failed to ignite.

INSIGHT: Diverse Asia April price trends for olefins and aromatics chain chemicals
By Jimmy Zhang 19-Apr-23 19:15 SINGAPORE (ICIS)– Weak consumer confidence and economic pressures are expected to weigh on the price outlook for Asia petrochemicals.

UK summer demand to drop, exports to France in Q3 likely
By Anna Coulson 19-Apr-23 00:07 LONDON (ICIS)–National Grid is confident that there will be sufficient supply to meet electricity demand over the summer, the UK’s Electricity System Operator (ESO) announced in its Summer Outlook 2023 on 18 April.

Global oil demand growth hopes pinned on faltering Chinese economy
By Barney Gray 12-Apr-23 18:42 LONDON (ICIS)–Chinese government data for March, published earlier this month, indicated that domestic consumer demand is weak and the manufacturing sector was under pressure at the end of Q1, which could hinder the anticipated China-led growth in global oil demand.

IMF keeps developing Asia 2023 growth forecast at 5.3%; trims India projections
By Nurluqman Suratman 12-Apr-23 13:23 SINGAPORE (ICIS)–The International Monetary Fund (IMF) has kept its 2023 growth forecast for developing Asia at 5.3% but trimmed its forecast for next year amid rising risks in global financial conditions.

INSIGHT: Europe chemicals must wait until 2026/7 for gas cost relief
By Will Beacham 11-Apr-23 22:58 BARCELONA (ICIS)–Although record inflows of liquefied natural gas (LNG) have helped European gas prices fall, a cold winter could see them soar, with relief from volatility only in prospect for petrochemical customers by 2026/7 when major new sources come onstream globally.

INSIGHT: Vietnam economy sputters as first petrochemical complex about to start up
By Pearl Bantillo 06-Apr-23 11:00 SINGAPORE (ICIS)–Vietnam hopes to stem deteriorating manufacturing conditions, borne of weak external demand, by cutting the cost of borrowing to spur domestic activity as it gears toward commercial operations of its first petrochemicals complex.

US auto sector faces economic headwinds on rising interest rates, higher prices
By Adam Yanelli 05-Apr-23 05:05 HOUSTON (ICIS)–US March auto sales ticked lower from February as economic headwinds have replaced supply chain issues as obstacles facing the industry that relies heavily on chemicals.

Developing Asia 2023 GDP to grow faster at 4.8% but downside risks remain – ADB
By Nurluqman Suratman 04-Apr-23 12:10 SINGAPORE (ICIS)–Developing economies in the Asia Pacific region are projected to grow at a faster pace of 4.8% this year and in 2024 on the back of higher consumption, tourism and investments due to continued easing of pandemic restrictions, but downside risks remain, the Asian Development Bank (ADB) said.

INSIGHT: Europe chems look to tough Q2 as economic indicators remain choppy
By Tom Brown 03-Apr-23 21:47 LONDON (ICIS)–With expectations growing for some of the headwinds buffeting the chemicals sector to ease in the second half of the year, conditions remain challenging for the second quarter, while economic indicators point to a continuing “volatile phase” according to an analyst.

Oil surges after surprise OPEC+ output cut, lifting Asia naphtha, benzene
By Nurluqman Suratman 03-Apr-23 12:57 SINGAPORE (ICIS)–Oil prices rose by more than $6/bbl on Monday after the OPEC and its allies unexpectedly announced further production cuts of about 1.16m barrels per day on Sunday.

Hungary unlikely to reach EU intermediate gas storage targets
By Irina Breilean 29-Mar-23 12:53 LONDON (ICIS)–Hungary may not reach the next EU intermediate storage fullness target on 1 May, ICIS analysis indicates. EU intermediate targets have been in place since November 2022, in preparation for the start of the 2023 gas winter. The targets apply to all member states with underground gas storage sites on their territories and directly interconnected to their market areas. Intermediate targets are in force for 1 February, 1 May, 1 July, and 1 September, two months ahead of the beginning of the gas year. ICIS data shows storage sites across Hungary were 33.2% full on 27 March, a 26.2 percentage point increase compared to last year. However, this still stands 3.8 percentage points short of the upcoming May target of 37%.

Joint gas purchasing uptake may be slow as buyers locked into contracts
By Gretchen Ransow 28-Mar-23 23:20 LONDON (ICIS)–Uptake of the EU’s joint purchasing model may be limited in its first year, as companies were already locked into contracts due to “huge panic” about prices in 2022, European Commission vice-president Maros Sefcovic told the European Parliament’s Committee on Industry, Research and Energy (ITRE) on 28 March. However, if the platform does prove successful the EU wants to extend the model beyond gas to other strategic commodities such as hydrogen, critical raw materials or technologies linked to the energy transition. Sefcovic told ITRE on 28 March that there was still much work to do but joint gas purchasing would give valuable experience for the future.

Ukraine’s new policy proposals to ‘revolutionise’ energy sector
By Aura Sabadus 28-Mar-23 00:22 LONDON (ICIS)–Ukraine is preparing a raft of wide-ranging regulations that could pave the way for the complete overhaul of its energy sector. The step is a priority for the mid-term, a senior Kyiv-based lawyer told ICIS. Maksym Sysoiev, partner at global law firm Dentons, said the reconstruction of the energy sector is deemed a priority for Ukraine and added that if all regulations that are now under discussion are implemented, they would trigger a “revolution” in the energy sector.

Russia to extend export restrictions on fertilizers until November
By Deepika Thapliyal 27-Mar-23 22:39 LONDON (ICIS)–Russia is planning to extend restrictions on fertilizer exports until November to guarantee availability in the domestic market, according to the country’s agriculture minister Dmitry Patrushev. Current restrictions on exports are valid until end-May. To curb inflation and to ensure that there was a reliable supply of fertilizers to its farmers, the government imposed export quotas in December 2021. The restrictions have continued since the war with Ukraine broke out in February 2022, although they have not had a significant impact on the availability of Russian fertilizer exports – apart from nitrates.

Asia petrochemicals demand tepid on macroeconomy, oversupply concerns
By Nurluqman Suratman 24-Mar-23 14:16 SINGAPORE (ICIS)–Asia’s petrochemical markets continue to face tepid demand as economic recovery in regional bellwether China remains slower than initially expected, with new production capacities adding to oversupply concerns.

European acrylates subdued with underwhelming demand
By Mathew Jolin-Beech 24-Mar-23 01:26 LONDON (ICIS)–The European acrylates markets are all currently subdued with demand described as “soft.”

CDI Economic Summary: US regional banking crisis lowers odds of soft landing
By Joseph Chang 23-Mar-23 22:21 NEW YORK (ICIS)–The failure of two sizeable banks (Silicon Valley Bank and Signature Bank) in the US and the crisis of confidence contagion spreading to other regional banks and now European financial institutions threatens to significantly tighten lending conditions at the very least, further slowing economic growth and potentially tipping US and European economies into recession.

Asia PMDI import markets bearish on poor downstream demand
By Shannen Ng 23-Mar-23 15:12 SINGAPORE (ICIS)–Asian import markets for polymeric methylene diphenyl diisocyanate (PMDI) were dominated by largely bearish sentiment in the week ended 22 March.

PODCAST: Asia, Mideast PS demand tepid on competitive imports, feedstock volatility
By Damini Dabholkar 23-Mar-23 11:14 SINGAPORE (ICIS)–Asian and Middle Eastern polystyrene (PS) markets are seeing slow demand with regional supply remaining relatively unchanged.

INSIGHT: US Fed undeterred from 2% inflation goal means more tough times ahead for chemicals
By Joseph Chang 23-Mar-23 05:34 NEW YORK (ICIS)–Even amid a regional banking crisis, the US Federal Reserve remains undeterred in its goal of bringing inflation down to its 2% target. This was evidenced by another 0.25 percentage point rate hike and will mean weakening economic conditions, a lower chance of a soft landing and a more challenging demand environment for chemicals going forward.

Phenol energy surcharges will start to disappear on lower TTF, but no demand improvement seen
By Jane Gibson 23-Mar-23 00:57 LONDON (ICIS)–Falling upstream gas prices may offer chemical sellers and buyers some relief but the impact on demand levels has yet to be significant.

PODCAST: Plunging shipping rates point to normalising global logistics, Europe under pressure
By Will Beacham 22-Mar-23 22:58 BARCELONA (ICIS)–Steep falls in container shipping rates indicate that the pandemic-induced logistics crisis may be drawing to a close, but this now makes Europe more vulnerable to a flood of cheap imports from Asia.

US R-PET buying sentiment weakens in wake of banking crisis
By Arianne Perez 22-Mar-23 20:11 SINGAPORE (ICIS)–Asian exporters of recycled polyethylene terephthalate (R-PET) cargoes are expected to continue to see cautious buying from converters in the US following the banking crisis.

INSIGHT: New PE/PP capacities risk derailing nascent Asia polyolefin recovery
By Izham Ahmad 22-Mar-23 17:28 SINGAPORE (ICIS)–A wave of new polyethylene (PE) and polypropylene (PP) supply in Asia is threatening to upend the tentative demand recovery the region has been experiencing since the end of the Lunar New Year holidays as new suppliers fight to establish market share in an increasingly crowded market.

Asia polyamide 6,6 Q2 mood darkened by fiscal year closing, demand outlook
By Josh Quah 22-Mar-23 13:12 SINGAPORE (ICIS)–Asia’s nylon polyamide 6,6 (PA66) markets remain weak, ahead of turnarounds coming up for some producers in northeast Asia.

China PP prices fall to nearly three-year low amid increasing supply, lower-than-expected demand
By Lucy Shuai 22-Mar-23 12:44 SINGAPORE (ICIS)–China polypropylene (PP) prices fell to a nearly three-year-low amid increasing supply and lower-than-expected demand, and the market may remain under pressure in Q2.

Asia naphtha swings to multi-month lows on volatile crude
By Melanie Wee 21-Mar-23 13:42 SINGAPORE (ICIS)–Asia’s naphtha markets can expect heightened volatility, largely tracking crude oil futures movement, as demand prospects are being weighed down by market jitters over the health of the global banking system.

PODCAST: Subdued spot trading activity in Europe’s oxo-alcohols and derivatives markets
By Marion Boakye 21-Mar-23 03:35 LONDON (ICIS)–Throughout March – the oxo-alcohols and derivative markets in Europe have experienced weak spot demand, ample supply, and thin import opportunities.

INSIGHT: Constrained consumer budgets limit demand for major chemicals consuming sectors
By Nigel Davis 21-Mar-23 00:49 LONDON (ICIS)–This is by no means an easy time for chemical producers as the industry’s major downstream markets continue to be influenced by the impact on demand of rising costs and higher interest rates.

Europe’s chemical sector shrinks – battered by high costs, poor demand and cheaper imports
By Will Beacham 20-Mar-23 23:10 BARCELONA (ICIS)–Collapsing Q4 profits and losses for European chemical majors, together with low expectations for 2023, show just how badly the sector is still suffering.

Europe markets firm after emergency UBS Credit Suisse purchase
By Tom Brown 20-Mar-23 20:15 LONDON (ICIS)–European markets firmed on Monday after Switzerland-based banking group UBS announced plans to acquire embattled rival Credit Suisse, raising market hopes that banking sector contagion may be limited.

Global weekly spot IPEX down on price declines across regions
By Will Beacham 20-Mar-23 19:11 LONDON (ICIS)–The global weekly spot ICIS Petrochemical Index (IPEX) fell by 2.0% week on week on the back of lower index values across regions.

PODCAST: Asian PP markets grapple with increased supply, lower-than-expected demand in 2023
By Damini Dabholkar 20-Mar-23 19:06 SINGAPORE (ICIS)–Asian polypropylene (PP) markets are being challenged by increasing capacity in 2023, especially in the China market, while demand continues to recover more slowly than expected.

Crude dips to lowest since December 2021 on banking sector turmoil
By James Dennis 20-Mar-23 17:52 SINGAPORE (ICIS)–Crude prices declined on Monday to their lowest levels since December 2021 before recovering on growing financial concerns following equity market losses and instability in the banking sector in Asian trading.

Asia petrochemical shares, oil prices weaken after UBS rescue of Credit Suisse
By Nurluqman Suratman 20-Mar-23 12:43 SINGAPORE (ICIS)–Shares of petrochemical companies in Asia were mostly weaker and crude futures fell on Monday on fears of a banking crisis contagion, as troubled Credit Suisse was rescued by its Swiss rival UBS in a government-backed deal.

INSIGHT: European TiO2 operations at risk, but China may not be the answer
By Heidi Finch 17-Mar-23 17:53 LONDON (ICIS)–While energy costs in Europe are more relaxed  compared with 2022 peaks, the TiO2 marketand the wider chemical industry in Europe are still facing residual economic and demand headwinds. European production is at risk, while China/Asia capacity is increasing.

Asia glycerine demand weighed down by caution after US bank collapse and turmoil
By Helen Yan 17-Mar-23 11:48 SINGAPORE (ICIS)–Asia’s glycerine spot demand has been weighed down by prevailing caution following the collapse of two mid-sized banks in the US and plunging bank stocks in Europe.

INSIGHT: Banking contagion threatens to spread, hit chemicals demand hard
By Joseph Chang 17-Mar-23 05:47 NEW YORK (ICIS)–The failure of two sizeable banks (Silicon Valley Bank, Signature Bank) in the US and the crisis of confidence contagion spreading to other US regional banks and now European financial institutions threatens to significantly tighten lending conditions at the very least, further slowing economic growth and potentially tipping the US and European economies into recession.

Asia naphtha tumbles on tepid demand; crude oil losses
By Melanie Wee 16-Mar-23 12:56 SINGAPORE (ICIS)–Asia naphtha markets are under pressure on the back of fragile demand, while taking cues from global crude oil futures.

INSIGHT: Banking woes rattle US chem shares
By Al Greenwood 16-Mar-23 05:03 HOUSTON (ICIS)–Shares of US-listed chemical companies fell on Wednesday amid concerns about the implications of a string of bank failures.

Topic Page by Aura Sabadus and Will Beacham. Additional reporting by  Richard Ewing and Sophie Udubasceanu. Maps and graphs by Yashas Mudumbai.