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HOUSTON (ICIS)–Despite the global softening demand environment for recycled plastic resins, Q1 2023 US plastic scrap trade data shows increased import and export volumes in comparison to the lull seen in Q4 2022. US plastic scrap exports uncharacteristically increase, driven by grades of polyethylene (PE) US plastic scrap imports rebound marginally Canada and Mexico continue to be strong trade partners In light of the consistent downward trend in plastic scrap exports over the last 10 quarters, Q1 trade data from the US Census Bureau – noted by the HS code 3915 – shows a reversal of trend with a 10% increase in volume quarter on quarter. In total, 107,714 tonnes of plastic scrap were exported from the US this past quarter. The last time plastic scrap exports increased quarter on quarter was in the height of the COVID-19 pandemic, which brought extreme volatility to the recycled plastics markets. Overall, the data suggests the decreasing trend will continue year on year, as Q1 2023 volumes remain 10% below those from Q1 2022. In the last seven years, plastic scrap exports have experienced a 79% drop when comparing 2022 to 2015, which represents the period prior to the enactment of the Chinese National Sword policy. Plastic scrap derived polymers of ethylene, HS code 3915.10, continues to be a primary driver of US plastic scrap exports and was noted to be one of the main contributors to the increase in overall export volume in Q1. As a major producer of virgin PE, the US market heavily relies on the ability to export material in order to balance the domestic supply environment. Among the top destination countries for US plastic scrap exports were Canada, Mexico, India, Malaysia and Indonesia, with Canada and Mexico accounting for 54% of the overall volume. Intra-North American recycled plastic trade relationships continue to show strength, as Canada and Mexico not only dominate as plastic scrap export destinations but also as top sending countries for US plastic scrap imports. In Q1 2023, Canada was responsible for 44% of the total US plastic scrap imports, including sending 40% of the total polyethylene terephthalate (PET) scrap volume at 13,766 tonnes. This comes as little surprise due to the geographical advantages related to the transport of plastic scrap and finished recycled resins across US borders. With respect to PET scrap imports specifically, other top sending regions include Asia and Latin America. Overall, US plastic scrap import volumes increased only 3% quarter on quarter and remain down 14% year on year, coming in at 92,106 tonnes total. Weakness in import volumes is likely linked to the extreme market softness several grades of recycled plastic continue to experience. Demand remains pressured by the darkening economic outlook, impacting all industries, from consumer goods to construction. Focus article by Emily Friedman

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to both US coasts surged this week following the successful implementation of general rate increases (GRIs), while container ships were starting to back up at West Coast ports after a breakdown in negotiations for a new labour agreement between dockworkers and the ports, highlighting this week’s logistics roundup. According to online freight shipping marketplace and platform provider Freightos, GRIs implemented this week were partially successful. Judah Levine, head of research at Freightos, said support for the GRIs could have come from concerns of slowdowns at West Coast ports amid renewed labour strife and the impact it could have on effective capacity. Levine said higher rates to the East Coast could reflect low-water surcharges for container ships traversing the Panama Canal. Container ships are relevant to the chemical industry because, while most chemicals are liquids and are shipped in tankers, container ships transport polymers such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. PANAMA CANAL The Panama Canal Authority began imposing new draft restrictions in April because of low water levels amid a drought. The PCA lowered the maximum authorised draft to 47.5 feet from 50 feet for neopanamax vessels in April and lowered it further to 44.5 feet on 24 May and was scheduled to lower it to 44 feet on 30 May. The PCA postponed implementation of the 44-foot restriction until 13 June after significant rainfall fell in the region and plans to lower it to 43.5 feet on 25 June. WEST COAST LABOUR ISSUE Container ships were backing up at West Coast ports amid allegations that union labourers were staging concerted and disruptive work actions after negotiations for a new labour agreement between dockworkers and the ports seemed to break down. The union denied taking any actions, but as of Wednesday, there were six vessels in port whose exits were being delayed, and four vessels at anchor or due to arrive that were seeing delays in getting a berth. The list was compiled by MESC staff where the agent specified by phone call or email that its delay was because of a labour shortage. “Basically, every container vessel is having their schedule pushed back by about a day or two,” MESC said. “The main cause I have seen is due to lack of ‘lashers.’” Lashers secure cargo on a vessel to avoid shifting. MESC said that some agencies either did not want to comment as to the labour shortage being the reason for vessel delays, or the emails received containing schedules did not specify the reason for a delay. The Port of LA said it saw minimal impact to some of its terminals on Friday but had to close the gate for the afternoon at one of the seven terminals in the complex on Monday. A spokesperson for the port said all terminals were open and operating on Tuesday. LIQUID TANKER SHIPPING Liquid chemical tanker rates from the US outbound were stable to softer this week, with decreases seen from the US Gulf to Asia and from the US Gulf to Brazil. Rates for liquid chem tankers from Brazil to Europe, Asia and the US Gulf rose as the country has more material available for export, which is putting upward pressure on rates. TRUCKING The trucking market remains soft amid soft consumer demand for goods following the Memorial Day holiday. FTR Transportation Intelligence said they saw sharp drops in both spot volumes and truck postings because of the holiday. Total load activity fell 14.1% – the largest drop of the year so far – following a decrease of nearly 8% in the previous week, FTR said. Volume was almost 41% below the same week last year and about 23% below the five-year average, according to FTR. But rates have shown an uptick recently. Data from Freightwaves Sonar showed slight improvement in both spot and contract rates this week, as shown in the following chart. Focus article by Adam Yanelli Additional reporting by Taylor Merrell

HOUSTON (ICIS)–Passed in the Senate on the last day of the legislative session, Connecticut lawmakers have recently finalised the details of a recycled content mandate in House Bill 6664, requiring plastic beverage containers sold in the state to contain at least 25% post-consumer recycled (PCR) content by 1 January 2027, which will then increase to 30% PCR content by 1 January 2032. The bill is now headed to the governor’s desk to be signed. These rates and dates come over six months after the deadline set forth in the recycled content related Senate Bill 928, passed in June of 2021. Per SB 928, the Commissioner of Energy and Environmental Protection was to submit to the governor and the General Assembly recycled content requirements on 1 December 2022. Now, five states have active recycled content mandates that apply to plastic products, with two states, California and Washington, already in action. This comes at a time where some recycled plastic resins, such as post-consumer recycled polyethylene terephthalate (R-PET) are seeing flat to soft demand due to the macroeconomic headwinds facing the consumer goods industry. 2023 packaging sales volumes are predicted to be flat to lower than in years past, resulting in production cutbacks to avoid heavy inventory builds, leading to less resin purchased overall, recycled or virgin. Buyers are heard to be purchasing on a month to month basis or flat out delaying orders in an effort to manage the uncertain economic outlook. Despite the current soft environment, long-term recycled content goals, both voluntary and regulatory, suggest there is still much progress to be made with regard to increasing recycled content percentages, as noted by the most recent reports from the Ellen MacArthur Foundation Global Commitment, as well as from California’s 2022 PCR content mandate reporting cycle.

Banning Russian gas exports to Europe might become “a subject for consideration” as the EU is focusing on potentially approving other sanctions against Russia, the vice-president of the European Commission for interinstitutional relations Maros Sefcovic told ICIS in an exclusive interview on 9 June. He said EU countries have proven over the last year they can manage without Russian gas but added that any measures that might be taken would have to be considered and executed with “great care.” Banning Russian gas “might become another subject of our consideration because at this time we are focusing on making sure there is another package of sanctions that is being approved,” the vice-president said. “If there are further steps in that direction it’s difficult to say now but we clearly have proven we can manage without Russian gas.” Since the start of Russia’s invasion of Ukraine last year, Russia has reduced its pipeline gas supplies to European buyers by more than 80%, raising questions whether to ban pipeline supplies ahead of the phase-out date proposed by the EU in 2027. In an exclusive interview with ICIS, Walter Boltz, energy advisor to the Austrian government, said pipeline volumes could be banned as early as this year. Sefcovic said: “The phasing out of Russian gas will happen sooner or later even without having any explicit language in that regard. […] Of course, when we say we are phasing out Russian gas, we mean all of it but the question is how are we going to check it, how are we going to control it? LNG is a different animal from pipeline gas. We have to look through with great care to ensure that if we propose something it’s properly executed.” Sefcovic said the Commission is constantly monitoring the circumvention of sanctions on other commodities such as oil. He said one of the critical measures adopted over the last year was the introduction of a requirement asking companies which subscribed to the newly-launched AggregateEU platform to sign a declaration of honour guaranteeing they would not trade Russian gas. AGGREGATEEU The AggregateEU platform was launched by the EU last year in a bid to boost security of supply in Europe and ensure consumers have access to cheaper gas prices. The first tender was held in May and new bids and offers are expected from buyers and suppliers between 26 June and 10 July, as confirmed by Sefcovic in a speech held on 9 June. Sefcovic, who was also commissioner for energy and has been spearheading AggregateEU, said the demand for gas via the platform was “impressive” noting that in Energy Community contracting parties such as Moldova and Ukraine, which were also invited to participate, buyers and sellers were matched 100% and 80% respectively. One of the concerns raised by traders was that the new platform may help them secure below-market prices since participants would still compete with each other for supplies. GAS PRICES However, Sefcovic said he received confirmation from colleagues in an Eastern European country that companies could secure prices below market levels. “I got a political assessment from a colleague from an Eastern European country who said what they got was significantly better priced than what they were getting on the market. He said if they we had more resources they could buy much more.” Following Russia’s invasion of Ukraine and the drop in Russian exports, gas deliveries have reversed their historical direction, flowing West to East. This has put landlocked central and eastern European countries, which cannot access LNG, at a premium over western European countries with access to the sea. LNG Sefcovic said the Commission was also working to ensure that more buyers, including those in landlocked countries have access to LNG. “The demand for gas [via AggregateEU] was impressive but it was a bit atomised. We are trying to work closely with companies which want to act as central buyers. “The advantage of the platform is that smaller volumes can be grouped together and presented to LNG suppliers because they have to work with cargoes and they need to find a landing point,” he explained. Sefcovic did not comment on whether the new arrangements implemented via AggregateEU could replace the existing internal gas market. However, he said that since the start of the war and last year’s energy crisis, ‘structural changes have happened, are ongoing and will continue,’ noting that one of the most critical structural changes to date is the phase-out of Russian imports. UKRAINE WAR RISK INSURANCE The loss of Russian transit may also impact Ukraine, the historical corridor for Russian supplies to Europe, as the country is contemplating securing a new role in Europe’s energy market once the existing transit contract expires at the end of 2024. The EU is currently working with Ukrainian stakeholders, European traders and western political allies to establish a war risk insurance that would allow companies to inject gas in Ukraine’s vast storage facilities, Sefcovic said. The country has over 25bcm of capacity of which 10bcm can be used by European companies. However, the war and political risk associated with Ukraine is deterring some traders from injecting and storing gas in the country. “It’s clear [that because of the war in Ukraine] we cannot rely any longer on the usual model of insurance and reinsurance,” Sefcovic said. He conceded that Ukraine’s storage capacity would be a “strategic asset” for European energy security and admitted that any insurance that would be put in place would require political support. “We are now trying to look into the matter how we can compose that insurance package which would simply allow the traders to go in and use this very important Ukrainian facility. “It will be very difficult to do it just by one institution. We are talking to our international financial institutions, our EU banks, and also to member states’ promotional banks as well as traders. “We need to have some kind of shared risk to lower the risk premium for everyone,” he added, noting the Commission was working to get a relevant instrument as soon as possible but he could not give an exact time frame. Aura Sabadus

HOUSTON (ICIS)–Senior Editor for Recycled Plastics, Emily Friedman, discusses the latest developments in the US recycled polyethylene terephthalate (R-PET) market, including Present softening US PET bottle bale prices ahead of the summer supply boost Falling flake and pellet prices due to competitive imports Moderate to soft R-PET demand outlook for rest of year

HOUSTON (ICIS)–ExxonMobil expects to make in 2024 a final investment decision (FID) on a chemical recycling plant and two other projects, the company said on Friday. The company’s ExxonMobil Baton Rouge division in Louisiana is considering the chemical recycling plant as well as a unit that will produce ultra-pure isopropyl alcohol (IPA), also known as isopropanol, and a polyolefin thermoset resin plant based on technology developed by Materia, a business acquired in 2021, the company said. “The final investment decision will be in 2024; we are currently assessing the scope and economics of each opportunity and competing for investment dollars on a global level,” ExxonMobil said. The company already has a commercial scale chemical recycling plant at its complex in Baytown, Texas, US. That plant started up in late 2022, and it is able to process more than 36,000 tonnes/year of plastic waste. The plant relies on ExxonMobil’s Exxtend process technology, in which the plastic is heated under a limited oxygen environment to produce pyrolysis oil or naphtha-like products to be used in the production of petrochemical products. The polyolefin thermoset resin is branded as Proxima, and it is based on dicyclopentadiene (DCPD). The resin is designed to be alternative to epoxy resins, vinyl ester resins and unsaturated polyester resins (UPR). The materials can be used in a number of applications, including wind turbine blades, electric vehicle parts, construction and anticorrosive coatings. The resins are based on olefin metathesis catalyst discoveries made by Robert Grubbs and his research team at the California Institute of Technology. Grubbs received the 2005 Nobel Prize in Chemistry for these discoveries. The acquisition includes Materia’s headquarters and technology centre in Pasadena, California and its manufacturing facility in Huntsville, Texas. Additional reporting by Stefan Baumgarten and Emily Friedman Thumbnail shows plastic. Image by RICHARD VOGEL/AP/Shutterstock

LONDON (ICIS)–Iberdrola and Trammo have signed a framework agreement for the purchase and sale of up to 100,000tonnes/year of renewable ammonia from 2026, it was announced 9 June. The deal has sparked Iberdola to announce that the company will build a renewable ammonia plant in southern Europe with a total investment of some €750m including European funding. The renewable ammonia plant will be supported with the construction of 500MW of renewable electricity generation assets to fuel the plant. The renewable ammonia produced will be purchased by Trammo before being sold and delivered to end users. Renewable ammonia has been cited as a major component of the global hydrogen economy, and is could become the hydrogen carrier of choice once trade flows begin to start in the coming years. Several large ports in Europe are building ammonia import plants as well as ammonia cracking facilities to extract the hydrogen before being further transported via pipeline. Moreover, many countries (Canada, Namibia, Saudi Arabia for example) are due to export renewable ammonia in large quantities in the near future to maximise the ability for other regions, especially Europe, to take advantage of a large renewable resource elsewhere in the world.

HOUSTON (ICIS)–Demand for recycled polyethylene terephthalate (R-PET) is expected to remain moderate to soft in 2023 despite long-term recycled content goals, resulting in potential downward price pressure in the United States. To understand the US R-PET market, one must look at the basics of each major price driver including supply, demand production costs and quality. In terms of R-PET supply, the ICIS Mechanical Recycling Supply Tracker identifies nearly 120 mechanical recycling sites in the US with a total R-PET capacity of 1.9m  tonnes in 2022. Approximately 80% of the US R-PET capacity comes from post-consumer sources, primarily post-consumer bottles, while the remaining 20% is originated from post-industrial feedstocks. Ten states in the US have bottle bill programmes, also called deposit return schemes (DRS), to encourage container recycling. In addition, nearly 50% of the US R-PET capacity is food grade, which is a requirement for recycled resins to be used in new beverage containers. US R-PET mechanical recyclers footprintSource: ICIS, Recycling Supply Tracker – Mechanical, 2023 Evolving state regulations and voluntary brand-owner pledges to increase the use of recycled material are the main sustainability related demand drivers in the US in the long term. California’s minimum recycled content mandate for plastic beverage containers came into effect on 1 January 2022. Washington State and New Jersey have passed similar bills with recycled content mandates that start in 2023 and 2024, respectively, and include more product categories such as non-beverage containers, plastic carryout bags, and trash bags. Maine also passed a law requiring recycled content for plastic beverage containers starting in 2026. Despite future requirements to use increasing amounts of recycled plastic, current R-PET supply is healthy, borderline in excess, to meet today’s demand. From bottle to pellet, recycling costs include feedstock costs as well as other production costs. The key difference between the recycled and virgin resin markets is feedstock source, as the recycling industry uses plastic waste – a volatile material in terms of quality, availability, and price. Furthermore, recycling production costs have risen in tandem with higher labour and electricity costs, and higher financing rates across the nation. For recyclers, the challenge is to remain viable as a business, but also competitive to virgin resin prices to compete with some customer bases, which can cannibalise margins or flat out lead to production losses. The quality of recycled resins influences both demand and price, according to their performance, colour, and end-markets. The US market has traditionally used bottle flake most significantly in fibre applications, but the bottle-to-bottle market has grown strongly in recent years, given the sustainability agenda for fast-moving consumer goods (FMCGs). The demand for closed loop recycling, in a food contact application, also drives up the quality requirements in feedstock and recycle product. This increases prices for the highest quality clear PET bales as well as create the premium for food grade R-PET. ECONOMIC CONDITIONS WEAKEN DEMANDUS R-PET demand traditionally was dominated by the fibre industry, but due to current economic headwinds related to fibre products such as textiles or carpet, end market demand has been weak throughout 2023. Demand from the consumer goods companies, including bottled beverage producers, is currently flat despite long-term recycled content goals. While some consumer goods companies continue to purchase R-PET to meet their voluntary or regulatory targets for recycled content, the current economic headwinds have influenced other buyers to delay or limit orders of higher-cost recycled resins. The prices of virgin resin still have an influence on the demand for recycled materials for cost-sensitive buyers. When the delta between virgin and recycled feedstocks expands, in favour of virgin as the lower cost feedstock, buyers can be drawn towards a higher mix of virgin resin. This has been very evident in the market this year, as the economically incentivized client has shifted the focus to managing costs rather than driving plastics circularity. The combined market conditions have resulted in downward price pressure in the US for most recycled resin grades. For instance, according to Emily Friedman, Recycled Plastics Senior Editor at ICIS, “spot market colourless post-consumer R-PET flake and pellet prices have dropped across the US, reflecting continued demand weakness paired with pressure from competitive import cargoes”. In the next couple of months, R-PET demand is expected to remain soft, despite historical expectation of peak bottled beverage demand during summer season. Although sustainability-driven buyers are expected to maintain demand for US R-PET consistently, cost-driven buyers may switch back to higher volumes of virgin PET in their feedstock mix, especially as virgin PET prices drop due to ongoing destocking in the United States. In the next couple years, the market is expected to recover in preparation for the regulatory and voluntary recycled content targets. The return of demand is expected to put upwards pressure on R-PET supply and, therefore, prices in the near term, until there is substantial expansion in supply. Insight by Paula Leardini

LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen assessment continued to fall in value as downward pressure on prices came from a weak ammonia market. The ammonia-to-hydrogen northwest Europe assessment fell by an additional €0.03/kg on a weekly basis to stand at €4.15/kg on 8 June, losing value for the third straight week and less than half the €8.96/kg valuation from early January. The cost in the Netherlands for low carbon steam methane reforming (SMR) hydrogen rose €0.23/kg on a weekly basis to reach €2.80/kg on 8 June after having dropped back to €2.57/kg at the start of the month, but still stood below the ammonia-to-hydrogen equivalent. Baseload electrolysis in the Netherlands also rose as June progressed, pushed higher by the recovery on the European gas hubs, standing at €5.60/kg on 8 June after having dipped below the €5/kg mark at the beginning of June. AMMONIA MARKET Ammonia pricing continued to come under pressure from weak buying interest with Europe seeing particularly low ammonia consumption at the moment. Indeed, market participants are expecting further declines in pricing with the European Commission contemplating extending the suspension of the 5.5-6.5% import duty on ammonia and urea from all origins except Russia and Belarus. Some demand was heard from Turkey for early June cargoes, but US ammonia demand was seen as very low and production in Trinidad is back to normal levels as feedstock issues have been resolved. GAS MARKET The ICIS Dutch TTF July ’23 contract showed some signs of finding some support at the beginning of June, recovering from posting multi-year lows recorded right at the start of the month. Additional concerns over Russian gas supply into the region in conjunction with demand potentially picking up in pace as temperatures increase and air-conditioning demand kicks in led to a recovery in the TTF prompt. Gas stocks continue to grow at a slower pace than in previous years, with European stocks beginning 9 June with 196TWh in stock compared to 134TWh at the same time last year, ICIS data showed. However, stocks were 68TWh higher on an annual basis at the beginning of June and were 81TWh up year on year at the start of May, the data showed.

LONDON (ICIS)–Senior editor for recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Prices drop across almost all market sectors Demand remains well below expectations R-PET vs. PET debate continues