News library

Subscribe to our full range of breaking news and analysis

Expert pricing, news and analytics

Complete your details, and a member of our Sales team will guide you through the purchase process.

Viewing 1-10 results of 56434
CDI Economic Summary: US Fed rate cuts delayed on sticky inflation, economic resilience
CHARLOTTE, North Carolina (ICIS)–With disinflation having stalled above the US Federal Reserve’s targeted rate, Wall Street expectations of six rate cuts this year have evaporated. Interest rate futures are now moving towards fewer cuts and along the lines the latest Fed “dot plots” of three cuts this year. Any cuts that were to emerge will not happen until May or June. Starting with the production side of the economy, the January ISM US Manufacturing PMI registered 49.1, up 2 points from December and the 15th month in contraction. Only four industries out of 18 expanded, and weakness remains broad-based. But production moved back into expansion, as did new orders. The latter featured a 5.5-point gain to a positive 52.5 reading. This is always a good sign. Order backlogs contracted, however, at a faster pace. Both new orders and order backlogs, when combined with the reading on inventories, are good indicators of future activity. Inventories contracted, which could provide a floor for output. The long and deep de-stocking cycle could be ending, with the possibility for restocking this year. Meanwhile, the ISM US Services PMI improved 2.9 points to 53.4, a reading indicating modest expansion. The Manufacturing PMI for Canada remained in contraction during January while Mexico expanded. Brazil’s manufacturing PMI improved into expansion. Euro Area manufacturing has been in contraction for 18 months, and the region continues to skirt recession. China’s manufacturing PMI was slightly above breakeven levels for the third month, as its recovery continues to face headwinds. Other Asian PMIs were mixed. AUTO AND HOUSING OUTLOOKTurning to the demand side of the economy, light vehicle sales slumped in January due to severe winter weather. This allowed inventories to move up, but they still remain low compared to historical norms. Economists see light vehicle sales of 15.9 million this year before improving to 16.3 million in 2025. The latest cyclical peak was 17.2 million in 2018. Pent-up demand continues to provide support for this market. Homebuilder confidence remains in negative territory but is improving. Housing activity peaked in Spring 2022 and into mid-2023, with the latest housing reports being mixed. We expect that housing starts will average 1.42 million in 2024 and 1.48 million in 2025. We are above the consensus among economists. Demographic factors are supporting housing activity during this cycle. There’s significant pent-up demand for housing and a shortage of inventory. Falling mortgage interest rates will also support affordability and thus demand. RETAIL SALES FALLWith severe winter weather in much of the nation, nominal retail sales fell back in January. Sales were weak across most segments, but sales at restaurants and bars advanced. Spending for services is holding up, but the overall pace is slowing. Job creation continues at a good pace, and the unemployment rate is still at low levels. There are 1.4 vacancies per unemployed worker. This is off from a year ago but at a historically elevated level, which is still fostering wage pressures in services. Incomes are still holding up for consumers. INFLATION STILL HIGH BUT WILL EASEThe headline January Consumer Price Index (CPI) was up 3.1% year on year and core CPI (excluding food and energy) was up 3.9%. Progress on disinflation has been made but appears to be stabilizing. Economists expect inflation to average 2.7% this year, down from 4.1% in 2023 and 8.0% in 2022. Inflation is expected to soften further to 2.3% in 2025. Our ICIS leading barometer of the US business cycle has provided a signal consistent with the “rolling recession” scenario in manufacturing and transportation. The services sectors, however, continue to expand but are slowing. Recent readings show stabilization in this leading index, which is encouraging. US GDP FORECAST POINTS TO SOFT LANDINGAfter real GDP rose 5.8% in 2021 and then slowed to a 2.5% gain in 2022, the much-anticipated recession failed to materialize. In 2023, the economy expanded by 2.5% again. US economic growth is slowing from the rapid pace of Q3 and Q4, but those gains will aid 2024 performance which is showing a 2.1% gain. A cyclical slowdown in economic activity is occurring in 2025, economic growth should average 1.7% for the year. WEAKER OUTLOOK FOR EUROPE, CHINALooking overseas, recent global indicators show slow economic growth and soft commodity prices. Europe is skirting a shallow recession. The conflict affecting Red Sea seaborne trade adds to supply chain disruptions, costs and uncertainty for the region. Within the context of demographic headwinds, continued property sector woes and soft export markets, China’s economy has lost momentum. The government and Bank of China are responding with stimulus measures. For more updates and interactive charts, visit our ICIS Topic Page – Macroeconomic Outlook: Impact on Chemicals
Equinor’s H2H Saltend hydrogen project granted planning permission
600MW low carbon plant located in Northeast England Potential application for Cluster Sequencing Track-1 Expansion Site due to be operational by the end of the decade LONDON (ICIS)–Equinor’s H2H Saltend low carbon hydrogen project has been granted planning permission by East Riding of Yorkshire Council, the company said in a press release 20 February. The plant is due to have a capacity of 600MW with carbon capture technology applied and is slated to begin commercial operations by the end of the decade. Equinor said that this was a major step forward for the project, with a potential application being prepared into the UK government’s upcoming Cluster Sequencing Track-1 Expansion process which is due to launch later this year as part of the East Coast Cluster. The hydrogen set to be produced is expected to be used in chemical processes by nearby companies, as well as being blended with natural gas at the Triton power station, with 900,000 tonnes/year of CO2 expected to be stored in sub-sea aquifers. The H2H Saltend project is part of Equinor’s Hydrogen to Humber ambition, which is forecast to produce 1.8GW of low carbon hydrogen within the region by 2030. The UK has ambitions to have 10GW of hydrogen capacity up and running by 2030, of which a maximum of 5GW will be low carbon hydrogen with the remainder being electrolytic hydrogen. Data from ICIS Analytics showed that UK hydrogen demand is due to increase from 21TWh this year to 72TWh by 2030, of which the chemicals sector is forecast to account for 20TWh (28%) of total UK hydrogen demand.
VIDEO: Europe R-PET FD NWE colourless flake prices rise again in February
LONDON (ICIS)–Senior Editor for Recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Further rises in FD NWE colourless flake in February Flake and bale prices rise in eastern Europe Demand driven by restocking, tight availability

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.

INSIGHT: BASF’s additional fixed and variable cost reductions in Ludwigshafen reflect Germany’s challenges
LONDON (ICIS)–BASF has suffered in Germany and across Europe from energy high costs and poor demand that continue to drive structural change. Much weakened competitiveness is forcing the company to tackle the situation at the upstream businesses by adapting production capacities to market needs. But plants not operating at 80-90% because of weak demand are a drag on profitability and something has to be done to sustain the operations at Ludwigshafen and maintain the cost-effective Verbund structure on which the company relies. “We have to say goodbye to the good old times in Germany,” BASF CEO Martin Brudermuller said on Friday on release of the company’s fourth quarter and full year 2023 financial results. Weak demand is on-going, although BASF believes that chemicals production globally will 2.7% this year compared with a tough 1.7% increase in 2023. Most growth, however, is expected to come in China. The company’s European operations are under significant pressure, and BASF is feeling the impact in its Chemicals and Materials segments where it has major production capabilities. Chemicals segment earnings (before interest, tax and special items) last year were down 82% at just €361m. Materials segment earnings were down 55% at €826m. Chemicals includes the building block petrochemicals while Materials includes engineering plastics and polyurethanes, among other systems, and their monomers. Gas costs in Europe are still twice what they were and four to five times higher than those in the US. Global supply and demand imbalances for major upstream chemicals are damaging structurally as well as in the short term and BASF has to adapt its giant Ludwigshafen production complex to the new realties. There will be plant shutdowns, Brudermuller said on Friday. Ludwigshafen is so big that it is impossible to imagine BASF without it, or at least to imagine a significantly changed production footprint. Nevertheless, against the backdrop of Germany and Europe’s challenged industrial position and an uncertain industrial manufacturing future the way it is transformed over the next few years will reflect the new realities. The complex has lost money recently – although it does bear the costs of the BASF global HQ amongst its overheads. Most of the company’s employees work there. A new cost reduction programme reduction of €1bn, adds to previous recent plans to address high costs. Plants and jobs will be impacted. New technology will be applied, and the company talks about tackling fixed costs and significantly trimming variable costs. “The situation is serious, so we are explicitly not ruling out any measures,” Brudermuller said. Taking carbon reduction plans into account also, the range of chemicals produced at Ludwigshafen is expected to change. The company has to factor into its plans the costs of decarbonisation of assets, some of which are many decades old. Its CFO, Dirk Elvermann said on Friday that the new reality will have an impact on manufacturing industry in Germany. BASF has to change its approach, he added, and adjust the type and dimensions of upstream and downstream assets. There will be a push towards the downstream, more downsizing and materials will be sourced from elsewhere, he indicated. BASF expects global economic weakness to continue this year with chemicals demand, impacted by high interest rates, rising only slowly in moderately growing customer industries. China growth is somewhat stronger, but uncertain. The company does not expect much from Europe while it foresees a slight slowdown in growth in the US. “We can’t do magic here,” Brudermüller said on Friday. That is possibly a phrase that applies to the company’s asset footprint in Germany as much as market conditions. Insight by Nigel Davis
Austrian regulator under pressure to keep current gas transport tariff methodology
Gas companies oppose new transmission tariff calculation methodology from 2025 Changes would lead to soaring costs and block supply diversifcation New consultation on the cards, depending on regulator board’s decision LONDON (ICIS)–Gas companies have opposed proposals by the Austrian regulator to change the transmission tariff methodology from 2025 amid concerns the move would lead to ‘massive’ cost increases and block supply diversification efforts, according to responses published by E-Control on 23 February. If approved, the new tariffs at critical interconnection points with Germany and Italy could increase by 206% and 331% respectively. The proposals, which would see tariffs calculated according to booked capacity and distance, has sparked concerns from companies active in Austria. In one of the letters sent to E-Control, Austrian, German and Slovak producers and storage operators OMV, RAG, Uniper, Nafta and Pozagas said: “The massive and unforeseeable increase in tariffs will lead to a massive decline in capacity bookings which will inevitably lead to even higher tariffs. […] This is detrimental to the political aim to diversify gas supply sources.” Anglo-Dutch Shell echoed the views: “[The proposed methodology change] can greatly affect the economics of using the Austrian gas. “[It] risks to jeopardise the ambition to diversify away from Russian import, since it negatively impacts exactly the points Austria should leverage to diversify import routes.” The consultation ended on 21 February and the regulator’s board is now expected to review the responses in the next two weeks. The source close to E-Control said the board could temporarily extend the existing methodology. A new consultation may be organised following the board’s decision but the survey would have to take place before annual capacity auctions in July. UKRAINE GAS TRANSIT E-Control launched the consultation at the end of December, explaining the tariff review was necessary because the current regulatory period was coming to an end. Furthermore, the region is braced for major changes as the existing gas transit contract held by Ukraine with Russian producer Gazprom expires at the end of this year. Ukrainian officials said incumbent Naftogaz, which currently organises the transit, was unlikely to renew it, as the country has been fighting Russia’s all-out invasion since February 2022. Austria has been dependent on the Russian gas transiting Ukraine not only because it covers most of its internal demand but also because it helps bring in transit revenue. TRANSIT CONTRACTS Since Russia reduced its gas supplies to Europe, including to major buyers Germany and Italy, Austrian transit flows to these countries have nearly stopped. Nevertheless, many of the transmission contracts remain in place, even if they are not serviced. For example, there are around 20 companies currently holding long-term capacity on the Austrian TAG pipeline transiting gas to Italy which are due to expire in 2027 or 2028. There are reportedly another 10 on the line heading west and operated by Gas Connect Austria, which are due to expire in the early 2030s. These contracts are ship-or-pay, which means that the company booking capacity will have to pay for it regardless whether it is used or not. This could give network operators some flexibility in extending the current methodology. Nevertheless, the source close to E-Control said it would be reasonable to review the situation in 2025 once there is greater clarity regarding the Ukrainian gas transit.
Pembina to supply Dow Canada net-zero petchem project with ethane
TORONTO (ICIS)–Canadian midstream energy firm Pembina Pipeline has entered into long-term agreements to supply Dow’s upcoming net-zero petrochemicals project at Fort Saskatchewan in Alberta province with 50,000 bbl/day of ethane. Pembina is a major supplier of ethane to the petrochemical industry in Alberta. Dow announced in November that it will proceed with the construction of a new integrated ethylene cracker and derivatives facility in Fort Saskatchewan, to be completed in two phases, with in-service dates of 2027 and 2029. The first phase of the “Path2Zero Project” includes about 1.285 million tonnes/year of ethylene and polyethylene (PE) capacity and the second phase adds another 600,000 tonnes/year. Dow’s project represents “a significant increase” to the current ethane market in Alberta and is an important development for the oil and gas industry in the Western Canadian Sedimentary Basin (WCSB), Pembina said. To support Dow’s project, Pembina is evaluating several possible options to invest in new infrastructure, including incremental deep-cut processing capacity at certain gas plants, de-ethanizer expansions at existing fractionation facilities, potential new straddle facilities, and smaller expansion opportunities, it said. Furthermore, the Path2Zero Project will directly drive incremental ethane demand, the extraction of which should also increase the supply of other associated natural gas liquids (NGL) – propane, butane and condensate, Pembina said. The resulting NGL volume growth across the WCSB would benefit Pembina over a period of many years and support higher utilization and potential expansions of its asset its Alberta, it said. Pembina’s assets include gas processing facilities, the Redwater fractionation complex, the Peace and Northern pipeline systems, the Alberta Ethane Gathering System, and storage facilities. Thumbnail photo of Pembina’s Redwater fractionation complex north east of Edmonton, Alberta; photo source: Pembina
UK Q2 energy price cap falls quarterly, year on year
Additional reporting by Hector Falconer Q2 energy price cap falls to £1,690, in line with lower wholesale gas and power prices The Q2 cap is £238 lower than the Q1 cap and has also fallen year on year The Q3 price cap is likely to fall further if gas and power prices continue their bearish trajectory, however bullish drivers could limit losses LONDON (ICIS)–The UK energy price cap for April-June has decreased quarter on quarter and year on year in line with lower wholesale gas and power prices, energy regulator Ofgem said on 23 February. The cap was introduced in January 2019 and sets the maximum price that gas and electricity suppliers can charge end-users for each unit of energy consumed. Ofgem sets the cap through a methodology that considers a range of supplier operating costs, including ICIS wholesale energy price assessments, as well as network costs and VAT. The price cap is likely to fall further for the third quarter of 2024 if prices continue their bearish trajectory, however any bullish driver such as a hot summer could limit losses. FALLING PRICES ICIS assessed the NBP gas Q2 ’24 contract at an average 84.338p/th between 16 November and 15 February – the period used by Ofgem to calculate wholesale energy costs. This was much lower than the previous year when the equivalent contract averaged 228.967p/th between 16 November 2022 and 15 February 2023. Prices have declined steadily from their peak after Russia’s invasion of Ukraine, although NBP products are still well-above seasonal average levels seen before the energy supply crisis. As gas is a key price driver for the UK power market, UK power prices have tracked a similar bearish trend, with UK power Q2 ’24 prices significantly below Q2 ’23 prices. ICIS assessed the UK power Baseload Q2 ’24 contract at an average £76.02/MWh between 16 November and 15 February, 65% lower than the Q2 ’23 over equivalent dates. The Q2 ’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 front-quarter. Data from French nuclear fleet operator EDF shows that nuclear output is set to remain strong through the second quarter of 2024, averaging 46.5GW in the period 1 April to 30 June, 9.5GW above the 2019-23 average. CAP OUTLOOK Both gas and power Q3 ’24 prices are currently at a premium to Q2 ’24 price however, both contracts have continued to shed ground through the first quarter of 2024. Barring any shift in the underlying fundamentals, Q3 ’24 gas and power prices are likely to continue to fall, which could results in the Q3 price cap being lower than the Q2 cap. According to ICIS price assessments on 22 February, the NBP Q3 ’24 contract was 2.225p/th above the Q2 ’24 contract and the UK power Baseload Q3 ’24 contract was £2.65/MWh above the Q2 equivalent. From January to March 2018-2023 the NBP Q2 contract averaged 89.971p/th and the 2018-2023 average of Q3 when it was the front quarter was 85.072p/th – indicating that Q3 ’24 may dip below the Q2 ’24 price level nearing delivery. European gas storage sites currently sit at 65%, which is 22% above the 2017-21 average, according to data from Gas Infrastructure Europe. This, mixed with low levels of historical gas demand could continue to pressure Q3 prices – especially if the UK has a windy summer period which would mute gas-fired power demand. On the power side, heatwaves remain a risk factor in the third quarter, as this would support air condition demand in the UK and on the continent, therefore supporting power prices. High river water temperatures can also lead to reduced output at French nuclear plants, as reactors cannot be cooled effectively. This could also be a potentially bullish driver for UK power prices. Furthermore, low wind generation would also be a risk factor supporting UK power prices and increase gas-for-power demand.
US Huntsman mulls commercial-scale MIRALON carbon nanotube project
HOUSTON (ICIS)–Huntsman is considering a commercial-scale project of its MIRALON carbon nanutube technology after it starts up a pilot plant mid-year, the US-based producer said on Thursday. The pilot plant will be in Texas, and it will produce 30 tonnes/year of MIRALON. “We feel that we should have sufficient data from that to initiate the larger expansion, which will be in 2025,” said Peter Huntsman, CEO. He made his comments during an earnings conference call. Huntsman did not disclose the capacity of the expansion, but he considered it to be a commercial scale reactor. From that point, increasing capacity would be a matter of additional reactors of that same size. In the next year or two, Huntsman will be able to inspect the product coming out of the plant and qualify the material. Even though the pilot plant has yet to start up, Huntsman indicated that the company is already producing material. “Right now, we’re able to sell as much as we’re able to make of the product,” he said. However, Huntsman is selling MIRALON to very high-end applications, such as satellites and to space agencies. Huntsman expects that economies of scale will broaden the end uses of the material. Right now, the company is considering concrete, tires and batteries for electric vehicles. Other applications stem from MIRALON’s ability to dissipate static charges. These include adhesives and floor coatings. It can also be used as a light-weight structural carbon fiber used in composites. Huntsman produces MIRALON via methane pyrolysis. Under it, natural gas is converted to solid carbon and hydrogen with little, if any, carbon dioxide (CO2). If process uses renewable energy, then it emits no CO2. Huntsman’s methane-pyrolysis process is different from other technologies because it produces a much higher grade of solid carbon, the company said. For most methane pyrolysis, the solid carbon is at best the equivalent of carbon black, according to Huntsman. Huntsman acquired the MIRALON technology in 2018 when it bought Nanocomp.
US Huntsman expects gradual recovery, seeks to boost prices and volume
HOUSTON (ICIS)–Huntsman expects a gradual recovery to take hold in 2024, in which the company will attempt to pursue higher prices and recover share, the CEO said on Thursday. So far, order patterns indicate that destocking has ended for most of Huntsman’s divisions, said Peter Huntsman, CEO. He made his comment during an earnings conference call. Prices and sales volumes seem to be gradually improving, and Huntsman sees signs of green shoots that had been absent during the past 12-18 months, he said. “Prices and volumes look to be gradually improving,” he said. Companywide Huntsman expects mid-single-digit growth in the first quarter versus the same time in 2023. In North America, destocking is ending in housing and construction, he said. In China, prospects are improving for infrastructure and automobiles, he said. Construction is having a bit of a rebound. Overall, the pickup in business following the Lunar New Year is stronger than what the company has seen in the last two to three years. Europe will have a gradual recovery, but Huntsman still warned about the risk of de-industrialization for the region. “We haven’t made strong cash flow out of Europe in two years,” Huntsman said “That’s unacceptable and it’s unsustainable.” With the prospect of a recovery, Huntsman expects to recover some of the sales it had lost in 2023, he said. It will try to recover lost volumes and push for what the CEO described as much needed price increases. Huntsman stressed that the subsequent restocking cycle will be gradual, and it will stretch out through the year. He does not expect a sudden surge in buying. Thumbnail shows polyurethane spray foam, which is made with MDI. Image by Shutterstock.
  • 1 of 5644

Contact ICIS

If you want to find out how our decision-making tools can help you navigate market shifts, contact us today. Simply fill in your details, submit the form and a member of our team will get in touch with you.

Need Help?

Need Help?