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Moldovan gas market should couple with Romania – Moldovagaz CEO
Moldovan gas market and incumbent Moldovagaz undergo major changes related to market and transit Coupling with Romanian market would help speed up implementing daily balancing Political developments may determine the direction taken by the market LONDON (ICIS)–Moldova’s best chance to consolidate its gas sector is to couple up with the Romanian market, the CEO of gas incumbent Moldovagaz told ICIS on 24 May. Speaking on the 25th anniversary of the company, which is majority owned by Russia’s Gazprom, Vadim Ceban said the country and Moldovagaz were facing major changes including the establishment of a competitive market, an internal reshuffle and not least the future of the Russian gas transit from 2025. Ceban said the key step towards establishing a competitive gas market in line with EU rules would involve setting up a functional balancing market. Nevertheless, he warned Moldova would struggle to introduce balancing operations in the immediate future because this would entail scaling up the deployment of smart metering and ensuring there were enforceable penalties for imbalances. To fast-track the process, Moldova should consider coupling the market with Romania’s, which already has a daily balancing market and benefits from the experience of a variety of participants including domestic producers and suppliers, Ceban said. As an EU candidate member, Moldova is expected to implement rules related to establishing market competition, unbundle transmission operations and consolidate institutions. UNPRECEDENTED CHANGES The country is going through unprecedented changes, transitioning from being fully dependent on Russian supplies in 2021 to buying volumes from a range of sources on all regional markets. Last year, it also divested transmission operations , which had been historically held under the Moldovagaz umbrella. These were transferred to Vestmoldtransgaz, a company majority owned by the Romanian gas grid operator, Transgaz, and which is the main stakeholder in the Iasi-Ungheni pipeline connecting the two countries. Trading has already been picking up on an organised platform hosted by the Moldovan branch of the Romanian gas exchange, BRM, and more liquidity is expected to build up as various segments of consumers are deregulated and new companies enter the market, including from abroad. Earlier this month, the Romanian state producer Romgaz opened a new branch in Moldova, expecting to trade locally and support Moldova’s security of supply. Nevertheless, although Romanian traders welcome tighter relations with Moldova, they have also warned that Romania itself would need to improve its market conditions as the government continues to regulate wholesale and retail prices. TRADING Moldovagaz itself is considering the organisation of operations in a way that its current subsidiary Transautogaz could focus on trading on the free market, while another branch, Flacara Albastra, would be tasked to supply consumers on the regulated market, Ceban said. Moldovagaz is responsible for supplying gas to households, which cover the bulk of the market. This is part of the company’s public service obligation introduced by the government. Ceban insists Moldovagaz should not be seen as a market monopoly because its historical objectives since its foundation on 24 May 1999 were to guarantee security of supply for the country. In fact, the company has been changing so much that it secured natural gas on the BRM East Energy platform for delivery in May at a price that was slightly lower than the gas secured under the long-term Russian contract. He also insisted the state-wholesaler Energocom which has been taking an increasingly important role in the market over the last three years should overhaul its operations to ensure that trading on the free market is separated from its main responsibility to build up stocks for security of supply. RUSSIAN GAS TRANSIT Ceban agreed the company was also facing the challenge of securing gas for Transnistria, a Russian-controlled breakaway state internationally recognised as being part of Moldova from 2025. The region on the left bank of the River Dniester currently receives around 2 billion cubic meters annually via Ukraine. However, as Ukraine’s own transit agreement with Russia’s Gazprom expires on 1 January 2025, and Kyiv is adamant it will not renew the contract, Moldovagaz is already exploring alternative options to secure the gas coming in reverse from Turkey. Ceban said an abundance of supplies in the Balkan region and Romania is already helping Moldova to secure gas at heavily discounted prices. “Until a few years ago Moldova was buying at TTF plus, now it can secure the gas at TTF minus,” he said. Nevertheless, many of the objectives that need to be achieved will also depend on the political direction that the country takes following presidential and parliamentary elections this and next year, Ceban conceded.
ICIS Economic Summary: Confidence rises on ‘soft or no landing’ scenario for US economy
NEW YORK (ICIS)–Economists are growing ever more confident on a soft landing for the US as they continue to ratchet up growth forecasts – now to the point where it’s hardly a landing at all. After all, consensus estimates for 2024 GDP growth at 2.4% are nearly on par with the 2.5% gain seen in 2023. ICIS likewise forecasts US GDP growth of 2.4% for 2024. On a quarterly trajectory, growth is expected to bottom out in Q3 at 1.3%. Source: US Bureau of Economic Analysis, ICIS forecast Softer consumer price index (CPI) inflation data, weak retail sales and a Services PMI (Purchasing Managers’ Index) moving into contraction have renewed hopes of rate cuts by the Federal Reserve – the consensus now being two cuts this year, starting in September. The core CPI coming in weaker than expected at 3.6% for April versus 3.8% in both March and February kicked off the latest bout of optimism, quickly sending 10-year Treasury yields down below 4.5%. Retail sales in April were flat from March and up 3.0% year on year – well below expectations and down from a 0.6% monthly gain in March. This suggests consumer spending is slowing in the face of slower job and income gains, and lingering inflation. Source: ICIS forecasts Notable year-on-year gains were in ecommerce (+7.5%), miscellaneous store retailers (+8.8%) and restaurants and bars (+5.5%), while declining categories were led by furniture and home furnishings (-8.4%), sporting goods, hobby, musical instruments and books (-4.7%) and building materials and garden equipment (-1.0%). This highlights weakness in consumer discretionary purchases – a key point cited by big box retailer Target in its Q1 results. Services inflation has been the sticking point, but relief may be ahead. The ISM US Services PMI in April dipped into contraction (below 50) for the first time in 16 months, dropping to 49.4 from 51.4 in March. Meanwhile, the ISM US Manufacturing PMI also dipped into contraction, with a reading of 49.2 in April after expanding in March for the first time in 17 months to 50.3. After a long period of industrial recession, there are green shoots of a manufacturing revival, but the road ahead looks bumpy. Chemical companies posted somewhat better-than-expected Q1 earnings and guided to a seasonally stronger Q2 and a gradual recovery for the rest of the year, with growth and resilience in the Americas, stabilization in Europe and slow recovery in China. However, weakness in US housing and durables continues. Rate cuts could jump-start demand in both as higher sales of new and existing homes in turn spurs spending on durables such as furniture, carpets, consumer electronics and appliances. So far, many people seeking to move are simply locked into their homes because of low-rate mortgages secured or refinanced years ago. Buying another home would essentially double their financing costs. US housing starts jumped 5.7% in April to a 1.36 million unit pace, with gains in the multi-family segment. In the single-family segment, starts eased 0.4% to a 1.03 million unit pace. April starts were off 0.6% year on year. ICIS projects housing starts to rise slightly from 1.42 million in 2023 to 1.45 million in 2024. Meanwhile, light vehicle sales rose 1.1% to a 15.74 million unit pace in April and were up 0.4% year on year. ICIS projects a slight gain in light vehicle sales, from 15.5 million units in 2023 to 15.8 million in 2024. The ICIS US Leading Business Barometer (LBB), a key forward-looking indicator for the US business cycle, ticked up 0.1% in April – the second gain in the past three months following a 21-month stretch of declines. This appears to be signaling improving conditions in manufacturing and some transport industries. The greatest risk to the improving economic outlook is an external supply shock. With heightened geopolitical tensions around the world and an increasing trend towards protectionism in markets, this bears watching closely.
Brazil’s Triunfo petchems restart odd one out as wider industry still disrupted – consultant
SAO PAULO (ICIS)–Most of Rio Grande do Sul’s industrial plants remain shut or operating at very low rates as the Brazilian state reels from the floods, with the restart at the Triunfo petrochemicals hub an exception rather than the norm, a chemicals consultant at MaxiQuim said to ICIS. Mauricio Jaroski, a director at the Porto Alegre-based consultancy, said Rio Grande do Sul’s economy is likely to take a big hit from the floods, with the recovery taking up to a decade. The consultant said that the picture in the state remains dire. Hundreds of roads remain blocked, the Port of Porto Alegre – the state’s largest city – remains shut and the Port of Pelotas only reopened this week. He said the hit to industrial companies based in the state will be large and long-lasting. Jaroski, chemicals engineer himself and native of Rio Grande do Sul, said he fears the recovery will take many years, and Rio Grande do Sul may become another New Orleans in the aftermath of Hurricane Katrina in 2005. He admitted his assessment is a “pessimistic” one. He is a gaucho after all, as residents of the state are called, and in his words one can feel the fears most gauchos will have in mind: how long will the recovery in one of Brazil’s most prosperous states take? Will it fully recover? STILL FLOODING ONE MONTH ONRio Grande do Sul’s heavy rains which turned into flooding started at the end of April and lasted about a week. However, consequent albeit weaker rainfall kept coming, while overflown rivers upstream were still to flood areas downstream on their way to the sea. As of Friday, the floods have left 163 deaths, while 65 people remain unaccounted for. More than 63,000 gauchos are still taking refuge in shelters, and 580,000 remain displaced from their homes. In the 12-million state, nearly 2.5 million people have been affected. Earlier this week, petrochemicals companies in the Triunfo hub, just outside Porto Alegre, said they were restarting their operations, including Brazil’s polymers major Braskem or styrenics producer Innova. At the peak of the crisis, 90% of the industrial fabric in the state was shut, according to the local authorities. While many large-scale industrial plants were not directly affected by the floods, most roads were blocked at some point, making transport of employees as well as inputs impossible. Jaroski said, however, that some smaller industrial plants, those ran by small- and-medium sized enterprises (SMEs), which are a key part to the state’s economy, got badly hit by the floods and remain shut to this day. The impact of the floods in some facilities, he added, was so severe that many of them may never be rebuilt and restarted: destruction beyond repair. “The situation remains very serious. Here in Porto Alegre, around a third of the city is still flooded [this interview took place on Thursday, 23 May]. The disruption you can see here makes us think that many companies will go bankrupt because they will not get the chance to recover,” said Jaroski. However, after a slow first week of the disaster in which the authorities were caught off guard, in the second week the federal and state authorities finally got to grips with the seriousness of the situation. They announced special credit lines for companies and households and special subsidies for those in low incomes. Jaroski was not impressed, however. “The recovery, whenever it starts, will be very slow. I fear we could have a slow recovery, similar to the aftermath of Katrina in the US, but with the added difficulty that Brazil’s financial means are not the US’, neither are we fast like the Americans,” he said. Moreover, while Triunfo may be restarting, MaxiQuim estimates that most companies further downstream in the plastics chain – from recyclers to converters – remain shut. Triunfo is a large complex which managed to resist the force of the water. But the many roads that connect it to the world did not, and currently only one of them has reopened to traffic, said Jaroski, with the consequent monumental traffic jams commonplace. “Infrastructure is still reeling, and that is a key problem. But the chaos is not limited to the roads. Just like in the plastics chain, disruption is widespread to all sectors. The state is a big shoes producer, for example: most companies’ leather and other materials have become unfit for purpose,” he said. “We are also hearing most machinery producers remain shut, with the consequent negative effect on the state’s exports as well as the knock-on effect to their customers. And what to say of agriculture, of course: one of the state’s strongest industries.” Automotive majors such as Volkswagen or Stellantis have indeed idled some plants in Brazil and Argentina as their parts suppliers in Rio Grande do Sul cannot deliver them. Meanwhile, fertilizers sources as well as analysts have said the hit to the agribusiness could potentially lower demand for fertilizers, potentially putting downward pressure on prices. Jaroski had started the interview appreciating the fact that ICIS had taken an interest on “knowing what is happening on the ground”. His words were not just polite manners. He said that one month on, “only people in Rio Grande do Sul are still very much aware of how serious” the situation remains, implying that interest from the rest of Brazilians is dwindling, as the news cycle imposes its logic of newer – and, if possible, more dramatic – stories to tell. While the media remain focused on the floods as the disaster is literally ongoing, other signs are showing people are moving on. Two weeks ago, Sao Paulo’s boards were full of signs calling residents to collaborate in the relief effort. By now, most signs are giving way to the adverts they usually display. It is now for Brazilian authorities – federal, state, municipalities – to make sure Rio Grande do Sul recovers as quickly as possible: Brazil cannot lose one of its economic engines for too long. Jaroski’s somber assessment is surely close to what the majority of the 12 million gauchos are feeling: despair, followed by uncertainty, followed by the fears that the future may never be as prosperous as the past. “We were a prosperous state until now, one of Brazil’s wealthiest. But I have a very bad feeling. It feels these floods have literally wrecked the economy: it will be very difficult to recover from this,” he concluded. Interview article by Jonathan Lopez

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Canada freight rail strike unlikely to begin before mid-July, rail carrier says
TORONTO (ICIS)–A possible freight rail strike in Canada is not likely to begin before mid-July, according to rail carrier Canadian Pacific Kansas City (CPKC). The ongoing uncertainties over the looming strike make it hard for Canadian chemical, fertilizer and other industrial producers, in particular exporters, to prepare for a work stoppage. After about 9,300 unionized conductors, train operators and engineers at freight rail carriers CPKC and Canadian National (CN) earlier this month voted for a strike as early as 22 May, Canada’s federal labor minister referred the matter to the Canada Industrial Relations Board (CIRB), a quasi-judicial tribunal charged with keeping industrial peace in Canada. The minister wants the CIRB to investigate if disruptions to the supply of certain products (heavy fuel, propane, food, chlorine and other water treatment chemicals) could pose safety and health issues. A legal strike or lockout cannot occur until the CIRB makes a decision. In a statement, CPKC said that while it remains unclear how long it will take for the CIRB to issue a decision, “based on precedent, it is unlikely the parties will be in a position to initiate a legal strike or lockout before mid-July or later”. Labor union Teamsters Canada Rail Conference (TCRC) said that it would have to give 72-hour notice before starting a strike, meaning that the earliest date for a strike to begin is at least 72 hours after the CIRB makes its decision. After TCRC and the rail carriers made no progress in the latest collective bargaining talks ended 21 May, the parties are scheduled to meet again next week to continue negotiations with the assistance of federal mediators. IMPACTS ON CHEMICALS AND FERTILIZERS Freight rail work stoppages can quickly affect logistics in the chemical, fertilizer and other industries, and a simultaneous stoppage at CPKC and CN, which are Canada’s biggest rail carriers by far, would magnify impacts. The uncertainties about the exact timing of strike actions has already created difficulties in planning for sulfur importers and exporters in North America. “We are just waiting to see what will happen. We did quite a bit of sulfur business before the situation about the strike happened, but it is very difficult to know what to do next”, a source at a major exporter of sulfur told ICIS earlier this week. In the fertilizer industry, about 75% of all fertilizer produced and used in Canada is moved by rail and the industry depends on rail to move product across the country and into international markets. In the chemical industry, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail. In the run-up to potential strikes, producers need to prepare, longer strikes can force them to curtail production or shut down plants, and after a strike ends it can take weeks for normal operations to resume. Canada freight rail traffic, ended 18 May: Source: Association of American Railroads With additional reporting by Julia MeehanPlease also visit Logistics: Impact on chemicals and energy Thumbnail photo source: Canadian Pacific Kansas City
VIDEO: Europe R-PET looking at a more stable market for June
LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: More stable outlook for June looking likely Lower-priced PET could limit June offers Italian bale prices, PET imports could impact R-PET in coming weeks
UK Q3 energy price cap falls but Q4 increase likely
UK Q3 energy price cap falls to £1,568, in line with lower wholesale energy prices Q3 cap is £122 lower than Q2, also decreases year on year Q4 wholesale prices at premium to Q3, indicating the Q4 cap is likely to rise Additional reporting by Matt Farmer LONDON (ICIS)–The UK energy price cap for July-September has fallen quarter on quarter and year on year in line with lower wholesale gas and power prices, energy regulator Ofgem said on 24 May. Introduced in January 2019, the cap sets the maximum price that gas and electricity suppliers can charge end-users for each unit of energy consumed. Ofgem sets the price cap through a methodology that factors in a range of supplier operating costs, including ICIS wholesale energy price assessments, as well as VAT and network costs. Looking ahead, if forward prices for delivery in the fourth quarter of 2024 remain at current levels, the wholesale component of the cap for the period October-December is expected to be higher than for the preceding three months. FALLING PRICES ICIS assessed the NBP gas Q3 ’24 contract at an average 70.09p/th between 16 February to 17 May – the period used by Ofgem to calculate wholesale energy costs. This was lower than the previous year when the equivalent contract averaged 108.966p/th. Prices have steadily declined from their peak after Russia’s invasion of Ukraine, but prices remain more changeable than before the invasion with greater exposure to LNG markets. Gas is a key price driver of the UK power market, meaning that UK power prices have tracked a similar bearish trend with Q3 ’24 at a significant discount to Q3 ’23. ICIS assessed the UK power Baseload Q3 ’24 contract at an average £64.72/MWh between 16 February and 17 May, 45% lower than the Q3 ’23 over equivalent dates. The Q3 ’24 contract has maintained a premium to its European counterparts which indicates that the UK is likely to import power from neighbouring countries, including France, through the delivery period. Data from French grid operator RTE shows that nuclear output is set to average 48.1GW in the period 1 July to 30 September, a subsntial 12.7GW above the 2019-23 average. CAP OUTLOOK Both gas and power Q4 ’24 prices are currently at a premium to Q3 ’24, which will likely result in a higher wholesale component of the cap for the fourth quarter than for July-September. According to ICIS price assessments on 23 May, the NBP Q4 ’24 was 14.2p/th above the Q3 ’24 and the UK power Q4 ’24 Baseload was £11.30/MWh above the Q3 ’24. British gas storage in 2024 has maintained similar levels to those seen in 2023, at around 1.4bcm. However, LNG imports in 2024 have fallen to approximately one-fifth of those seen in 2023. Current British gas prices do not support LNG imports compared to stronger competition in Asia, and stronger prices in continental Europe. If this remains the case throughout summer, British prices may have to rise to attract LNG, pushing up the cap in the fourth quarter of 2024. On the power side, French nuclear availability is another key driver for UK power prices through the fourth quarter of 2024. The UK power Q4 ’24 Baseload contract was €106.56/MWh on 23 May, or €3.485/MWh above its French equivalent, indicating the UK is likely to import power from France during the fourth quarter of 2024. French nuclear availability is set to average 47GW in the period 1 October to 31 December, 6GW above the five-year average, RTE data showed. However, unplanned outages and downward revisions in nuclear availability would be bullish drivers for UK and French power prices.
INTERVIEW: Brenntag CEO says Europe must play to its strengths
BARCELONA (ICIS)–Europe’s chemical sector is seeing a wave of commodity production closures, which is likely to accelerate as the region is suffering from structurally higher energy costs and depressed margins since it lost access to cheap Russian gas. There are fears that entire industrial value chains may lose access to essential raw materials and will have to rely instead on imports, which can be subject to logistics disruption. Some have likened the situation to a Jenga tower which will collapse if the wrong piece is removed. Brenntag  CEO Kohlpaintner believes the chemical industry in Europe should steer towards a higher degree of specialization and innovation, making the region a potential leader in specialty chemicals. He told ICIS, “Reinvestments or even new capacity in high energy value chains will not happen in Europe for as long as it does not solve the energy costs topic. The industry will react with a higher degree of specialisation and innovation, as it has in the past, but this adjustment will not go without pain.” Kohlpaintner believes bold transformational moves will be required by industry leaders in Europe.  “The entire chemical industry needs to think about how to reshuffle portfolios to create competitive players going forward. That is an overarching strategic question which the industry needs to figure out: it’s not the doomsday of the chemical industry in Europe, it will be a painful adjustment.” TRADE FLOWS OFFER OPPORTUNITIESAs the wave of closures gathers pace, Europe will become more of an import destination, especially for commodity chemicals sourced from low-cost and oversupplied countries such as the US and China. This could create opportunities for distributors such as Brenntag which is already gearing up by acquiring assets which will enable these shifting trade flows. According to Kohlpaintner, “We believe that trade flows will change: moving LNG from North America to Europe is just the first ambassador of what’s to come. It will gradually go down the value chain.” The Essentials business has reorganized internally into regions, supported by a global sourcing organization which can take a worldwide view on sourcing to adapt to new trade flows. Brenntag Specialties, on the other hand, is steered by global end use markets. According to Kohlpaintner, “By breaking down the regional view of our business we can really look at global trade flows and how Brenntag can participate here. We will source still domestically if it makes sense, but we always have alternatives and that is a key strength.” In December 2023, Brenntag announced it would acquire Solventis Group, a glycols and solvents distributor with access to port facilities at Antwerp in Belgium. A month earlier the group bought chlor-alkali distributor US Old World Specialty Chemicals, giving it access to sea terminal facilities to enhance its exporting capabilities. Ewout Van Jarwaarde, CEO of Brenntag Essentials, said, “Brenntag Essentials has implemented a “triple” strategy of leveraging our last mile service operations, regional sourcing and supply chain services and global supply chain capabilities. We are investing into what we call a “tollgate” – these are big transportation hubs with access into regional markets. Here we have sufficient storage capacity to bring in, for example, large vessels into the trade flow between North America and Europe.” He added, “With this we secure access to supply for those European partners that really need it, and also offer great optimization opportunities in case of energy price or demand fluctuations or supply fluctuations everywhere in the world.” COMPANY SPLITS ITS BUSINESSESAt a Capital Markets Day in December 2023 Brenntag revealed it would legally split the Essentials and Specialties business to create fully autonomous businesses. The company is under pressure from activist shareholders to spin off its specialties business. According to Kohlpaintner, “The specialties business model is substantially different from the industrial chemicals business model. This is why we are continuing the disentanglement of our two divisions down to the legal entity disentanglement, to be prepared for further steps.” “That leads us to a clear conclusion that the legal entity driven full-line distributor model, at least on the scale Brenntag is operating, is obsolete. We need to focus on what our suppliers really need from our Essentials or Specialties divisions. There is very little overlap,” he said. The CEO believes that by splitting the company, Brenntag will be ready to participate in more distributor consolidation or other strategic moves by 2025/2026. “We want to be prepared to seek all the opportunities which can arise and for that we need to disentangle first.  We need to be ready to play our cards when we need to. The chemical distribution industry is extremely fragmented – we’re still the leader but we have maybe only 5 or 6% market share globally.” He believes consolidation will gain speed and will happen in bigger steps. Many of the larger distributors are private equity owned and by definition this ownership will be limited in time as these groups seek an exit from their investments. The CEO prefers to continue with the strategy of bolt on acquisitions which need to become bigger as Brenntag itself grows. The company aims to spend €400 million to €500 million per year on M&A. “Nobody in the industry is deploying annual M&A funds on the level of Brenntag. In cases where larger combinations are possible and make sense, we also would know how to manage overlaps. But we continue to prefer bolt-on acquisitions at this time” he said. “Splitting the company is one, but only one option we want to be prepared for. How the world will look in 2025/26/27 nobody knows but I want to be prepared – and I don’t want Brenntag to act like a sleeping giant.” Interview by Will Beacham Thumbnail photo: Brenntag’s headquarters in Essen, Germany (Source: Brenntag) Clarification: 13th paragraph – Ewout Van Jarwaarde’s title is CEO of Brenntag Essentials
PODCAST: H2 May acetic acid demand weighed by India inventories, China downstream weakness
SINGAPORE (ICIS)–In this podcast, ICIS editors Hwee Hwee Tan and Jady Ma discuss the current trends in Asia’s acetic acid market. China demand softens on difficulty in passing on high costs to downstream users India inventory at multimonth high since end 2023 South Korea plant restart dents northeast Asia spot demand
Singapore Apr chemicals output rises 3.1%; overall manufacturing down 1.6%
SINGAPORE (ICIS)–Singapore’s April chemicals output rose by 3.1% year on year, supported by strong growth in the petroleum segment, official data showed on Friday. April output from the petroleum segment within the chemicals cluster rose by 9.3%, the Economic Development Board (EDB) said in a statement. Specialties and petrochemicals output within the overall chemicals cluster posted a 1.2% and a 0.8% year-on-year growth in April, respectively, with the former recording higher production of mineral oil and food additives. In the first four months of the year, output of the chemicals cluster increased by 5.6% year on year. Singapore’s overall manufacturing output in April fell by 1.6% year on year, but was up 7.1% on a month-on-month seasonally adjusted basis. Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majors ExxonMobil and Shell. The country’s petrochemical shipments abroad rose by 26.5% year on year in April, reversing the 3.6% decline in the previous month. Overall exports of chemicals and chemical products in April fell by 34.5% year on year, extending the 37% contraction in March. The country’s overall non-oil domestic exports (NODX) fell by 9.3% year on year in April, extending the 20.8% decline in the preceding month. GDP GROWTH FORECAST UNCHANGED Singapore maintained its gross domestic product (GDP) growth forecast for the year at a range of 1 to 3% as its economy grew by 2.7% year-on-year in the first quarter of 2024, the Ministry of Trade and Industry said on 23 May. The first quarter growth was in line with the ministry’s advance estimates and faster than the 2.2% growth recorded in the last quarter of 2023. The first quarter was also the quickest pace in 18 months since the economy grew 4.1% on a year-on-year basis in the third quarter of 2022. “Base effects continue to remain favorable in Q2 while growth momentum could strengthen in H2 2024 driven by the anticipated recovery in externally oriented sectors as financial conditions gradually ease should central banks in the advanced economies commence their rate cut cycles,” said Jester Koh, an associate economist at Singapore-based UOB Global Economics & Markets Research. Meanwhile, China’s recovery, bolstered by measures promoting equipment renewals, consumer goods trade-ins, and property market stabilization, should have positive spillover effects on Singapore and the broader region, Koh said. “We maintain our 2024 GDP growth forecast at 2.9%, which sits at the upper end of MTI’s unchanged forecast range of 1.0-3.0%,” he added. Focus article by Nurluqman Suratman
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