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Bisphenol A25-Oct-2024
LONDON (ICIS)–Weak demand continues to be a
concern in the European acetone and phenol
chain and in the wider chemicals industry and
Q4 will remain tough, in view of year-end
considerations, but when will demand turn a
corner?
Europe ICIS editors Jane Gibson (acetone and
phenol), Heidi Finch (bisphenol A and epoxy
resins), Meeta Ramnani (polycarbonate), Mathew
Jolin-Beech (methyl methacrylate) and ICIS
senior analyst Michele Bossi (aromatics and
derivatives) discuss current market conditions,
in particular demand challenges, in view of
residual macro and geopolitical headwinds,
although easing interest rates and the trade
defense investigation for epoxy bring some
hopes and opportunities in Europe.
However, global oversupply driven by growing
capacity in China, falling deep sea freight
rates making imports more interesting again and
the need for restructuring actions in PC and
regulatory changes are just some of the
challenges that the chain is facing.
Demand fundamentally weak across markets;
Q4 destocking on top
Acetone/ phenol length to increase when
turnarounds end, on poor demand
Some hopes, but no big expectations of
recovery for 2025
EU epoxy AD case could support more
domestic sourcing in 2025
Global oversupply, Asian exports likely to
continue to weigh on the chain
Restructuring in Europe PC production
BPA ban in food contact materials a blow,
but widely expected/prepared for
Podcast editing by Meeta Ramnani
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Ethylene25-Oct-2024
SAO PAULO (ICIS)–Spanish chemicals sales are
expected to rise in 2024 by 4.8%, compared with
2023, to €86.5 billion while output is expected
to expand by 7.1%, the country’s chemicals
trade group Feique said this week.
The enviable figures for chemicals are expected
to be repeated in other manufacturing sectors
as well as in the services sector, which makes
up around 80% of Spain’s economy and includes
its powerful tourism industry.
For 2025, Feique forecasts chemicals sales will
rise by 4.2%, compared to 2024, pushing the
country’s chemicals sales over the €90 billion
mark for the first time. Output is expected to
rise by 3.2% next year.
As far as the economy’s ups and downs, the
2010s will be a decade most Spaniards will want
to turn the page on after the country’s banking
sector had to be bailed out by the EU in the
hangover of its housing bubble, with the
consequent strict austerity policies which were
the only game in town at the time.
Spaniards can feel a bit more upbeat about the
2020 as its equator approaches, after a start
which made many feared a lost decade was on the
cards amid a health emergency that put the
country under one of Europe’s strictest
lockdowns, in a place where being outside is
the norm, and with tourism brought to its
knees.
It was not to be. Society’s mental health may
still be reeling, and may do so for years to
come, but the economy’s health is evident and,
moreover, the recovery is reaching sectors
outside services, creating hopes the
much-needed diversification in the economy
might finally be taking place.
Just like after its accession to the EU in the
1980s, generous and well-targeted subsidies
from the 27-country bloc are propping up the
green economy and, with it, manufacturing.
However, the motor of the recovery has once
again been tourism: more than 80 million people
visit Spain annually, a trend increasing
post-2020.
Much has been written about how after the
pandemic consumers are prioritizing spending on
‘experiences’, rather than goods: Spain has
developed over the past 50 years one of the
world’s strongest tourism sectors.
Meanwhile, the booming and fiscally prudent
Germany of the 2010s has in the space of just
two years turned into the sick man of Europe as
it pays a high price for its decades-long
geostrategic error of over depending on Russian
natural gas, an error which has hit the
chemicals industry hard.
The IMF said this week Germany’s output in 2024
is expected to be flat, compared with 2023, a
year which was already hard on Germany as the
peak of the energy crisis sank in.
Spain’s healthy macroeconomic and chemicals
sector-specific figures come against a backdrop
of political woes. Spain has not been immune to
the current European trend of strong and
corrosive polarization. Since July 2023, the
center-left government has been navigating in a
minority in Parliament.
Pedro Sanchez’s cabinet minority has raised the
prospects it may not be able to pass a Budget
for 2025, the most important vote annually in
Madrid’s Congreso de los Diputados.
While under Spanish law, the cabinet could
extend this year’s Budget into next, its
inability to pass a new Budget to implement its
recent electoral promises would weaken it
greatly.
Meanwhile, passing a Budget for 2025 before the
year-end would come to guarantee the cabinet’s
survival for at least another two years – if
needed, it could expand 2025’s budget into
2026. The term is due to end in 2027.
While the economy booms, Spanish politics is
suffering a Latin Americanization
process – experts’ theory that political
instability and fragmentation, leading to
weaker Administrations, is the new norm after
the hangover of the 2008 financial crash came
to end the previous bi-partisan system of
alternance in office.
‘ROCKET’ DOMESTIC ECONOMY IS CHEMICALS
GAINThis week, the IMF raised up its GDP growth
forecast for Spain in 2024 to 2.9%, up from
its July forecast of 2.4% and one percentage
point above its forecast a year ago.
In 2025, Spain’s output is expected to expand
by 2.1%. Both years, the country’s growth is
set to be well above that of the eurozone’s two
largest economies, Germany and France.
IMF GDP GROWTH
FORECASTSWorld and main European
economies
2024
Versus July forecast
2025
Versus July forecast
World
3.2
0.0
3.2
-0.1
Germany
0.0
-0.2
0.8
-0.5
France
1.1
0.2
1.1
-0.2
UK
1.1
0.4
1.5
0.0
Italy
0.7
0.0
0.8
-0.1
Spain
2.9
0.5
2.1
0.0
The healthy macroeconomic figures are filtering
down nicely to the chemicals sector, still
feeling the scars of the falls in sales and
output in 2023, after years of relentless
growth except for 2020.
Strong domestic demand and, in 2024, a recovery
in exports – which account for around
two-thirds of Spain’s chemical sales have
allowed the sector to weather the storm better
in peers in other major eurozone economies.
In the post-pandemic instability, Spanish
chemicals sales rose sharply in 2021 and 2022,
as prices globally shot up, but fell by nearly
7% in 2023 as prices came down, with output
declining by 0.7% compared with 2022.
In 2024, the story has been one of growth
again, as already forecast in an
interview with ICIS in July by Feique’s
director general.
“Prices are recovering from the lows we saw in
2023 – I think by the end of the year selling
prices on average should reach pre-crisis
levels. Demand at home is holding up strongly
and exports remain healthy,” said Juan Labat at
the time.
“In Spain, production of basic chemicals is
recovering strongly, and this is important
because output in that subgroup had fallen the
most, down 11% in 2023, but it is up 8% year to
date [to July]. Practically all sectors are
performing well – paints, personal care,
pharmaceuticals… Considering the economics of
countries around us, the Spanish economy is bit
of a rocket.”
For comparison, chemicals sales in Germany, the
largest chemicals producer in Europe, stood
at €229.3 billion in 2023, in a powerful
manufacturing sector which employs 470,000
workers. For comparison again, Spain’s
chemicals companies are expected to close 2024
with a 250,000-strong workforce.
However, the headline positive figures hide
underperformance in key sectors, according to
Feique’s President, Teresa Rasero, who is also
the board’s chair at Spain’s subsidiary of
French industrial gases major Air Liquide. This
week, Feique’s annual assembly re-elected her
for the post for another year.
Rasero said that while consumer chemicals,
specialties, and health products are growing
healthily, basic chemicals are still struggling
with high energy costs, worsened by Spain’s
“non-existent or very low” public support for
energy-intensive industries, compared with
peers such as Germany or France.
In the EU jargon, this is called the carbon
emission rights expenses. Feique said that
figure in Spain in 2024 is expected to stand at
a mere €300m annually in coming years, well
below the support which neighboring countries
have deployed, which runs into the billions.
“[Emissions expenses compensation is]
non-existent or very low compared to the few
countries that have established a comparable
regime. The problem is that it is precisely the
production of basic chemicals or other similar
energy-intensive industrial sectors that are
essential to maintaining our strategic
autonomy,” said Rasero.
“We need more competitive energy prices and to
accelerate the decarbonization processes, which
are key aspects for the future of the European
productive economy.”
Feique’s president said the €300 million
support in Spain is set to fall very short in a
chemicals sector which would need €3 billion
annually in investments to decarbonize between
2025 and 2050, according to the trade group’s
forecast – a whooping €75 billion which will
hardly be realized if all the effort is to come
just from the private sector.
The trade group said the annual €3 billion
would need to be distributed in €1.7 billion
for capital expenditure (capex) to build and
modernize chemicals plants; €850 million for
operational adjustments during technological
transitions; and €450 million for maintenance
and regulatory compliance.
The daunting task is clearly showed in the
headline figure of what the industry must
achieve: Spain’s chemicals must reduce 12.4
million tonnes of annual CO2 emissions by 2050.
DECARBONIZATION FUND: WHO
PAYS?The Spanish cabinet has
spent months negotiating a bill with employers
and employees representatives an industrial
policy, with both sides supporting the overall
bill’s targets.
With the decarbonization challenge hurrying
along, Spain may be finally coming to terms
with the fact that its weakened manufacturing
sectors need revival, so it is able to weather
storms such as the 2020 shock, when airports,
hotels, and beaches remained empty.
Spain’s manufacturing accounts for around 12%
of its GDP. Economists’ mantra about a healthy
economy being one in which 20% of its output
comes from manufacturing only rings true, among
the EU’s major economies, in Germany, after
decades of delocalization and
deindustrialization in most of Europe.
Spain’s attempt to pass an industrial policy
worth the name is also a bit of a novelty: the
country’s policymakers had not sat to negotiate
a similar initiative since the 1980s, when the
country seemed to confidently put most of its
eggs in the tourism basket, Barcelona’s 1992
Olympics catalyst included.
With that industrial policy bill expected to
pass, Feique is proposing to include in its
implementation the creation of a
decarbonization fund.
“[The Decarbonization Fund could be financed
with] at least 50% of the income from emission
rights, which last year reached €3.5 billion.
We estimate the fund should aim for a figure
close to €2.5 billion annually, which would
help guarantee the continuity of our country’s
strategic industrial assets in a competitive
manner,” said Rasero.
In the past years, Feique’s executives have
said, publicly but also privately, that the
cabinet has been prone to listen to the trade
group’s lobbying, giving an access to the
corridors of power it lacked in the past, as
the cabinet aims to expand and improve
manufacturing employment.
Taking advantage of that, Feique is confident
the bill will include proposals to implement
carbon contracts which would resemble those
already in place in EU countries such as
Germany and the Netherlands – another chemistry
hub due to its location – as well as Denmark.
“Our objective is that carbon contracts for
difference [compensation to energy-intensive
sectors] can be applied to essential
technologies for decarbonization such carbon
capture, utilization, and storage (CCUS),
electrification, hydrogen, and renewable gases,
oriented both to supply and demand
requirements, when necessary,” said Rasero.
SPAIN POLICIES, EU-WIDE
DECISIONS
The 27-country EU remains, despite recent
setbacks and delays to key policies, the
world’s self-declared champion in the effort to
decarbonize, a move which could not come sooner
in a region which mostly lacks all the
conventional energy sources that have fueled
the modern industrial era.
Whether the bloc and the world at large are
able to decarbonize in such a relatively short
period of time – target for 2050 in the EU,
2060 in countries such India or China – remains
to be seen.
However, for Spain specifically, climate change
deceleration and adaptation are set to be key
challenges in years to come, as increasing and
more intense heatwaves and droughts hit its
powerful agricultural sector, as well as human
health.
However, certain wave against urgent
decarbonization targets is gaining traction in
the EU, fueled by climate change skepticism
related to the loss of jobs. The trend is
reaching the EU’s capital Brussels, where
policymakers are considering delays in the
targets.
Turning upside down an industrial model created
over the past two centuries in just two decades
was always going to be a challenge, to put it
mildly.
Industry players in all sides – employers and
employees – around the EU have, have been
lobbying hard for some of those delays, which
will invariably increment regulatory burdens
and, most likely, costs.
In July, Feique’s Labat he said the EU’s new
approach to industry was good news, but added
finetuning is needed
if the EU is serious about safeguarding its
diminished remaining industrial fabric.
For example, he was very critical of the many
changes to the deadlines for phasing out some
polluting technologies, which only contribute
to create uncertainty for many businesses, he
said, arguing companies do want to go greener
but are fearful of failing along the way if the
regulatory environment is unstable.
“What we saw, for example, with Green Deal
targets for certain technologies to be phased
out by 2035, which soon after the Deal’s
passing were changed to 2033: that is simply
not serious and the opposite of legal
certainty,” said Labat.
“We want to go greener, but it would help if
the authorities understood the huge undertaking
this will mean. And, obviously, companies in
our sector don’t work out their capex [capital
expenditure] plans with just the short or
medium term in mind: those assets are planned
for several decades.”
In another interview with ICIS in July, the
chemicals lead at the country’s main trade
union, Comisiones Obreras (CCOO), said the
industry’s workers do see an opportunity in the
EU Green Deal, rather than a threat, but added
that tight
timeframes risk jeopardizing that support.
“We have had cases, like in automotive, where
obviously adapting a plant producing combustion
engine vehicles to produce EVs [electric
vehicles] is an expensive and time-consuming
process: the authorities want us to go faster
than we could possibly go,” said Daniel
Martinez at the time.
“And, still on EVs, the infrastructure across
the EU – with a few exceptions – remains far
from what is needed for a full transition
towards electric mobility. We need to be
realistic here.”
All in all, he concluded, moves by some
political groups in the EU to practically
dismantle the Green Deal are not welcomed by
the chemicals industry as a whole, which is set
to benefit from the green transition, he said,
describing himself as a “techno-optimistic.”
This week, Rasero said the EU’s current music
about industry is starting to rhyme, after the
recent publication of official reports by
Enrico Letta and
Mario Draghi, showing a potentially
competitive pathway towards an EU’s
decarbonized industry, as well as the approval
of the EU’s Strategic Agenda 2024-2029.
She also mentioned the chemical industry’s own
Declaration of Antwerp. While fully
supporting decarbonization efforts by 2050, the
private-led initiative was mostly an emergency
cry for extended state support if the endeavor
is to be successful.
“The EU must propose an industrial model that
is simultaneously oriented towards
sustainability and competitiveness, and which
always keeps in mind the objective of reducing
the costly and complex regulatory framework and
the administrative burdens that flood us with
inefficiencies,” said Rasero.
“The model must serve to reduce the cost of
energy in the EU, guarantee access to critical
and strategic raw materials, and effectively
transform industrial sectors while respecting
technological neutrality.”
SPAIN CHEMICAL
SALESTurnover in thousand
million euros
Annual change in %
Source: Feique
Insight by Jonathan Lopez
Polyethylene Terephthalate25-Oct-2024
LONDON (ICIS)–Senior editors Caroline Murray
and Matt Tudball interviewed Marco Piscitelli,
founder and CEO of International Gate, at the
company’s customer event in Verona, Italy on 23
October to get his views some of the key topics
impacting the European polyethylene
terephthalate (PET) and recycled PET (R-PET)
markets, including:
‘Theoretical’ global oversupply of PET and
how freight, energy costs and economics all
play a part in the market
The importance of customers finding the
right partners to navigate challenges in 2025
The ‘Recycling Revolution’ and the impact
of the Single Use Plastics Directive (SUPD)
The ‘chaos’ around the lack of legislative
clarity facing the PET and R-PET markets in
2025
Suitability of single pellet solutions
(SPS) for brands with high recycled content
targets.
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Crude Oil25-Oct-2024
SINGAPORE (ICIS)–Fossil fuels will still
account for a huge portion of southeast Asia’s
energy mix, projected at 70% by the end of the
decade, but carbon capture and storage (CCS)
projects should help the region achieve its
emissions goal.
SE Asia not hitting renewable energy
targets
CCS deemed most cost-effective means to hit
emission targets
Subsidies key to promote CCS investments
Currently, the region relies on coal, oil and
gas for about 80% of its energy requirement
amid strong economic growth, with the share of
renewable energy low at less than a fifth of
the total.
Southeast Asia has only achieved 16% of
renewable energy in its current energy mix,
well below the 22% target by 2035, ASEAN Centre
for Energy (ACE) deputy executive director Beni
Suryadi at the recently concluded Asian
Downstream Summit in Singapore.
The Asian Downstream Summit on 23-24 October
was held during the Singapore International
Energy Week (SIEW) conference, which ends
Friday.
Economic development and geopolitical
uncertainties have played roles in the region’s
inability to achieve the targeted energy mix,
he said.
Southeast Asia is expected to become the
world’s fourth largest regional economy in
2030, he said.
Against this backdrop, CCS is expected help the
region ensure energy security while helping it
to become carbon neutral, Suryadi said.
CCS will be the “most cost-efficient” support
for energy security in the region, but the
energy transition will need significant
financial and technical support, said Pattabhi
Raman Narayanan, advisor at engineering
consultancy Becht Canada.
Raman also stressed the importance of
international cooperation in this undertaking.
GOVERNMENT SUPPORT NEEDED FOR CCS
PROJECTS
The main challenges facing countries in
southeast Asia in implementing CCS include cost
of capture, cost of shipping and bankability.
To encourage more investment in carbon capture
technology, governments may be required to step
in and offer subsidies, as is currently the
case in Europe, said Neeraj Kumar, director of
commercial chemicals and business development
at Vopak Terminals Singapore, a unit of Dutch
logistics firm Vopak.
Infrastructure also needs to be built up, he
added.
“To begin any project, to have a long-term
infrastructure … we do need a long-term
commitment. We are talking about 15, 20 years
of commitment to make that value chain
sustainable, to pay for it,” Kumar said.
“The government needs to step in and coordinate
the first three people to make that jump (and
invest in CCS).”
Singapore has taken the first step. The
city-state announced in March this year that it
is partnering a consortium formed by global
energy majors ExxonMobil and Shell to study the
feasibility of a cross-border CCS project and
start development by 2030.
Indonesia’s state-owned energy company
Pertamina is also working with ExxonMobil to
advance an evaluation on a CCS hub as of May
2024, while its government has agreed with
Singapore to collaborate on cross-border CCS.
Meanwhile, Malaysia’s state-owned Petronas in
June 2024 agreed to collaborate with
Norway-based risk management firm DNV to
develop CCS value chains across southeast Asia.
Separately, the Paris-based International
Energy Agency (IEA) said on 22 October that
southeast Asia needs to
increase its clean energy investments to
$190 billion by 2035 to achieve its climate
goals.
Focus article by Jonathan Yee
Polyethylene Terephthalate24-Oct-2024
HOUSTON (ICIS)–US recycled plastics Senior
Editor Emily Friedman and Americas recycled
plastics Analyst Josh Dill, reflect on their
experiences and key takeaways from the 2024
Paper and Plastics Recycling Conference held in
Chicago, Illinois this week.
Listen in as they dive into various topics
regarding material recovery facilities (MRFs),
extended producer responsibility (EPR),
recycled content brand commitments, chemical
recycling and more.
Ammonia24-Oct-2024
HOUSTON (ICIS)–Canadian ammonia production
technologies firm AmmPower announced it has
entered a strategic collaboration with FuelCell
Energy to participate in pilots of distributed
ammonia production.
The company said the partnership will result in
the integration of AmmPower’s modular ammonia
production units with FuelCell Energy’s highly
efficient solid oxide electrolyzer systems,
improving clean ammonia production efficiencies
and opening new commercial avenues.
AmmPower’s Independent Ammonia Making Machine
(IAMM) is designed to produce up to four tonnes
of carbon-free ammonia daily using renewable
electricity.
By coupling this technology with FuelCell
Energy’s solid oxide electrolyzer the joint
effort is expected to reduce energy consumption
by over 25% compared to traditional processes.
The company said that the FuelCell Energy’s
Solid Oxide Electrolyzer Cell produces hydrogen
at nearly 90% electrical efficiency without
excess heat and can reach 100% efficiency when
using excess heat.
Further it noted that hydrogen produced from
electrolysis can be stored long term and
transported, allowing energy from wind, solar
and nuclear to be available on demand.
“As we look forward, our focus is on applying
these advanced technologies to meet the
critical needs of agriculture and industrial
sectors, where ammonia plays a key role,” said
AmmPower CEO Gary Benninger.
“This partnership is about more than just
technological innovation, it’s about providing
practical solutions that enhance productivity
and sustainability in vital industries.”
Polyester Staple Fibres24-Oct-2024
LONDON (ICIS)–Plastics Recyclers Europe (PRE)
has called on the EU to restrict imports of
material failing to meet the EU’s environmental
requirements to bulwark the industry against
recessionary pressures, the industry
association said in a press
release on Thursday.
The press release cited recommendations in a
report by Mario Draghi on EU Competitiveness,
and stated that “Creating a level playing field
will be key to making the green transition
sustainable and safeguarding the
competitiveness of the EU’s industry in the
long run.”
The press release also called measures and
targets introduced in core EU legislation
“unrealistic,” given what it perceives as
stalling growth in the sector, “as capacities
would need to at least double by 2030.”
The press release calls on the recently elected
EU institutions to enact immediate measures to
“solve the key issues threatening the existing
plastics sorting and recycling infrastructure,
as well as future investments. Without these
measures, the future of European plastic
recycling appears uncertain.”
PRE listed a number of challenges facing the
sector, including limited investment in
domestic recycling, an increase in imports of
recyclates from outside the EU, and increasing
lack of demand for recyclates produced in
Europe.
“These issues are feeding the existing
recession on the market – driving many
recycling companies out of business in 2023,
with further closures happening or planned in
the course of 2024. This downturn will continue
unless the situation is addressed urgently,”
the press release stated.
PRE cited its PRE Plastic Recycling Industry
Figures in Europe, 2022 study (the latest year
for which data is available) as evidence of
underinvestment, highlighting a drop in growth
of installed recycling capacity in Europe to
10.6% year-on-year in 2022, down from 17.7% in
2021.
PRE estimated year-on-year recycling
capacity growth (in millions of
tonnes/year)
Percentage increase year-on-year
2018
0.6
9.99999
2019
1.9
28.8
2020
1.1
12.94
2021
1.7
17.7
2022
1.2
10.61
Average since 2017
1.3
16.009998
*source: extrapolated from
PRE Plastic Recycling Industry Figures in
Europe, 2022
European recycling capacity in 2022 stood at
12.5 million tonnes/year, according to PRE
estimates.
If the 10% growth rate estimated by PRE in 2022
were to continue in the subsequent years to
2030 this would result in a capacity increase
to just under 27 million tonnes/year and a
growth from 2022 of just over 114%.
Nevertheless, if market capacity were to grow
at a consistent capacity year-on-year increase
to 2022 of 1.2 million tonnes/year, this would
result in around 22.1 million tonnes/year of
capacity by 2030, an increase from 2022 of just
under 77%.
The long-term average yearly growth since 2017,
according to data from PRE’s study is 1.3
million tonnes/year, this would result in
approximately 22.9 million tonnes/year of
capacity by 2030 at a consistent rate, an 83%
rise in capacity from 2022.
Headline figures do not tell the whole picture
for recycling capacity because of the wide
variation in technical properties of different
grades of recycling material, which limit usage
of multiple grades in key end-use applications
such as packaging.
2022 saw record high prices for recycled
polyolefins, and multiyear high prices for
R-PET because of supply shortages across the
chains and rising demand because of regulatory
and consumer pressure. Prices and demand fell
back was in 2023 due to the energy cost crisis,
followed by the cost-of-living crisis.
PRE also named the influx of imports as the
primary issue facing the market that needs
addressing by regulators.
“Many recyclers are struggling to survive in a
market flooded with uncontrolled imports that
fall short of EU requirements,” Ton Emans,
Plastics Recyclers Europe’s President, was
quoted as saying in the press release,.
As evidence of the damaging role of imports,
PRE cited
a study it published in February 2024. That
study was solely focussed on recycled
polyethylene terephthalate (R-PET).
High freight costs and unfavorable exchange
rates have limited the arrival of imports from
Asia in 2024 across recycling markets. But
falling freight rates in recent weeks have
reopened
the arbitrage window for R-PET flakes.
Imports of recycled polyolefins in to Europe
have historically been considerably less common
than imports of R-PET and have been
particularly limited in 2024, with
macroeconomics largely unfavorable.
PRE estimates that recycled polyolefins and
R-PET account for around 80% of
market capacity for recycled polymers.
Demand in 2024 across these recycled polymers
has become increasingly fragmented by grade,
end-use, location, and individual player
circumstances.
Buying interest across the majority of
non-packaging applications remains weak, with
construction offtake particularly limited.
Display packaging demand for recycled
polyolefins has remained more robust due to the
onboarding of projects from the sector during
Q4. This has been driven by a
variety of factors, including:-
The restarting of packaging projects
previously delayed in 2023
The approach of 2025 fast-moving consumer
goods (FMCG) recycling targets and FMCG players
looking to broaden the range of materials they
use to help meet those targets
Ambitious recycled content mandates forming
part of the proposed Packaging and Packaging
Waste Regulation (PPWR), which have led some
buyers to seek to establish relationships with
new suppliers to pre-position themselves
R-PET colourless flake and food-grade pellet
demand, meanwhile (which typically serve
packaging applications), varies from seller to
seller with some seeing good demand and order
volumes, while others choose to build stock
ahead of an anticipated pick up in demand in
2025.
Some sellers are less happy with the current
mood however, and there are concerns that high
stocks and the bearish PET outlook could lead
to tougher price talks in November and
December.
Buyers in the sheet sector, in particular, can
afford to be more selective with their R-PET
flake purchases as they are not subject to the
Single Use Plastics Directive (SUPD) target
that requires 25% R-PET in PET beverage bottles
from 1 January 2025.
Focus article by Mark Victory
Additional reporting by Matt Tudball
Methanol24-Oct-2024
SINGAPORE (ICIS)–Asian methanol markets in
recent weeks were driven more by sentiment than
changes in fundamentals as participants respond
to an escalation of the conflict in the Middle
East. However, some supply changes in coming
months are expected to alter the landscape in
Q1 2025.
Gas shortages in Q4 lead to expectations of
lower supply
China market sees correction after
post-holiday exuberance
Downstream demand tepid, expected to see
slight recovery in Q4
In this chemical podcast, ICIS markets editor
Damini Dabholkar and senior analyst Ann Sun
discuss recent market conditions with an
outlook ahead in Asia.
Speciality Chemicals24-Oct-2024
HOUSTON (ICIS)–Higher interest rates and
weaker demand have led to shutdowns, layoffs
and a couple of distressed debt exchanges that
were considered defaults by ratings agencies.
Nylon producer Ascend Performance Materials
is closing a plant and
laying off workers at another site.
Cornerstone and SI Group held distressed
debt exchanges.
Mid-2025 recovery could be delayed if US
mortgage rates remain elevated due to growing
government debt.
ASCEND SUMS UP CHALLENGES FOR
CHEMSAscend’s nylon 6,6 business
is contending with a troubling mix of rising
supplies in polyamides and weak demand from its
key end markets of consumer goods, automobiles
and housing.
ICIS keeps track of global capacity for nylon 6
and nylon 6,6. By 2027, capacity should be
nearly 70% larger than levels in 2022. Nearly
all of the new capacity is being built in
northeast Asia, which includes China.
Another company, US-based paints and coatings
producer PPG,
is planning possible shutdowns and layoffs,
but these will be primarily in Europe and
certain other global businesses.
DISTRESSED DEBT EXCHANGES FROM SI
GROUP, CORNERSTONESI Group is
expected to complete what a ratings agency
considers to be
another distressed debt exchange, which
would lead to the company’s second restricted
default this year. SI declined to comment when
the ratings note was issued in September.
SI Group is facing the same difficult business
conditions as Ascend, according to Fitch
Ratings. Sales fell amid new capacity in China.
SI Group makes specialty chemicals used in
coatings, adhesives, sealants and elastomers
(CASE) as well as in lubricants, fuels,
surfactants and polymers.
Cornerstone, the sole melamine producer in the
US, is trying to sell some of its assets
to avoid a second default. The company also
makes acrylonitrile (ACN).
Demand fell for both products fell, leading to
large operating losses in 2023.
COMPANIES HOLD OUT FOR SECOND HALF
RECOVERYThe chemical industry is
hopeful that falling inflation and interest
rates will lead to a recovery in demand in
2025.
“It is only a question of when, not if,”
said Heidi Petz, CEO of Sherwin-Williams, a
US-based paints and coatings producer.
Polyurethane producers expect
a recovery could start in mid-2025,
coinciding with the start of the US
construction season and the cumulative effects
of what it expects to be subsequent declines in
interest rates.
Lower mortgage rates would make housing more
affordable, which would increase sales of new
and existing homes. That would increase demand
for furniture and appliances as well as for
chemicals used to make paints, coatings,
sealants and insulation.
Lower interest rates would also make
automobiles more affordable. The industry is
suffering from a temporary lull, with PPG
noting that original equipment manufacturers
(OEMs) started taking
unscheduled and prolonged downtime in Q3.
The decline in interest rates will depend, in
part, on US inflation remaining on track to
reach the central bank’s target of 2%.
The danger is that inflation remains stubborn
or, if it does fall, the lower benchmark
interest rate does not fully translate into
declines in longer term rates like US home
loans.
US home loans typically rise and fall with
yields on 10-year Treasury notes, and
an economist has warned that yields could
remain elevated because of the growing US debt.
The International Monetary Fund (IMF)
also warned about the consequences of
growing government debt.
If the link between longer term rates and
government debt holds true, then that could
limit or delay the recovery in demand expected
by many chemical companies that sell materials
used in durable goods.
Insight by Al Greenwood
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