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TOPIC PAGE: Ukraine
TOPIC PAGE: Ukraine
Updated at 09:30 GMT on 13 May. Please scroll down to see headlines. The war in Ukraine caused oil price volatility which has increased as surging COVID-19 cases in China led to fresh lockdowns which have hit demand. China is the world’s second biggest economy and largest oil importer. India is facing a more severe shortage of fertilizers and edible oil amid wide-ranging trade disruptions as the Ukraine war rages on, with financial sanctions tightening on Russia. Europe’s energy challenge is immense and put into stark relief by the response to Russia’s war in Ukraine. Cutting the ties that bind EU and non-EU nations to Russian gas and oil will be extremely painful this year and in years to come: the actions proposed by the European Commission put that into context. This topic page examines the impact of the Ukraine conflict on oil, gas, fertilizer and chemical markets. Image credit Vadim Ghirda/AP/Shutterstock Europe’s energy markets witnessed a year of record prices and extreme volatility in 2021. Russia’s invasion of Ukraine has led to more difficult conditions for global markets in 2022. GAS SUMMARY Gas storage low in Europe, winter demand 30% higher than rest of year Record shipments of liquefied natural gas (LNG) to Europe so far in 2022 LNG could ease Europe shortages if Russia supplies cut Europe LNG processing operating at full capacity On 27 April Russia suspended gas deliveries to Poland and Bulgaria AMMONIA SUMMARY Russia supplies 20% of global seaborne ammonia market Disrupted supply has pushed up fertilizer and food prices OIL SUMMARY Friendship oil pipeline flows through Ukraine Russian oil feeds around a quarter of Europe demand Europe seeks to end reliance on Russian crude oil CHEMICALS SUMMARY High Europe gas and electricity prices force price hikes, energy surcharges Volatile oil and feedstock prices dent chemical producer margins Elevated oil prices dent consumer confidence and demand Europe is heavily reliant on Russian gas and exposed to disruptions in supply,  but Russia is also an important oil exporter and a supplier of fossil fuel products, which find their way to international markets via Ukraine’s ports. Any interruptions in supplies caused either by cyber or physical attacks or sanctions in response to them could send shockwaves across the global economy, lifting the cost of living, impacting industrial and agricultural production and potentially leading to social unrest. ICIS has taken a broader perspective, asking how vulnerable energy and energy-related supplies are to disruptions, what contingency plans are put in place and what could be expected in the upcoming weeks. How vulnerable are energy and energy-related Russian supplies to disruptions? Europe depends for close to 40% of its annual gas consumption on Russian supplies, imported via four routes – Ukraine, Belarus-Poland as well as the Nord Stream 1 and TurkStream corridors linking Russia to Germany and Turkey via the Baltic and Black Sea, respectively. Overall Russian pipeline supplies were limited throughout 2021, and since the beginning of this year producer Gazprom has shipped only one-third of the gas that it was expected to deliver to European consumers via Ukraine as part of a five-year transit agreement. On 27 April Russia banned exports of gas to Poland and Bulgaria. European petrochemicals players could face even higher gas prices as a result. If the conflict escalates, Ukraine transit pipelines may come under attack but disruptions could be limited because the infrastructure has been built to grant flexibility, allowing the operator to reroute flows away from potentially damaged segments. AMMONIA IMPACT The Togliatti-Azot pipeline, the world’s longest ammonia pipeline stretching 2,471km from the Togliatti Azot plant in Russian Samara Oblast to the Ukrainian Black Sea port of Yuzhny, could be caught up in the cross-fire. Russian ammonia supplies account for around 20% of the global seaborne merchant ammonia market each month. Around two thirds of those volumes are exported via Yuzhny, with the rest reaching European and global markets via Baltic ports. Ammonia is a prime material for fertilizers, so curtailments could potentially lead to higher food prices and shortages. Ammonia market players are scrambling to cover positions and assess options as the Russian invasion of Ukraine saw loadings at the key export hub of Yuzhny halted with immediate effect. Russian nitrogen fertilizer major Togliatti confirmed the suspension of the transit of ammonia to the Black Sea port via pipeline to ensure the safety of people living in the vicinity of the lengthy conduit. The Samara Oblast-based giant also confirmed the shut down of four of its seven ammonia units, with the other three plants operating at reduced rates. OIL PIPELINES VULNERABLE Supplies on the world’s longest oil pipeline, the Friendship (Druzhba) pipeline, could be threatened if the conflict leads to tough sanctions. The pipeline carries oil from central Russia 4,000km west to Ukraine and Belarus and runs close to the Belarus-Ukraine border. Russia exports around 5m bbl/day, of which half are exported to Europe, including via this pipeline. Russian oil accounts for about a quarter of Europe’s consumption, with the Druzhba pipeline carrying close to 1m bbl/day. Should sanctions be imposed and exports hindered, Europe will need to secure alternative cargoes from the global market. Europe consumed most exports of Urals, Russia’s biggest export grade, in 2021 after Saudi Arabia boosted market share in China. Almost 10m tonnes of Urals went through Rotterdam in the first half of last year, up 2m tonnes on 2020. Germany stands most exposed because it gets 25% of its oil from Russia. CHEMICALS IMPACT Gas and electricity are important components in the production costs of many chemicals. Surging gas and feedstock prices in Europe have caused big hikes in contract and spot prices. Europe is now at a competitive disadvantage to other regions and some customers are seeking new sources of lower-priced supply, especially from Asia and the Middle East. The conflict in Ukraine has pushed European gas prices back up to record levels, so some chemical producers may consider ceasing production, or adding further energy surcharges. Rising oil prices since late 2021 have already put chemical margins under pressure, and this has continued into 2022. As oil and naphtha prices soared, margins for ethylene production based on naphtha went nagative for the first time ICIS record began. The are now are swinging wildy in tandem with oil price movements. Chemical producers are struggling to pass on increasing naphtha feedstock and energy costs, especially in Europe. Elevated oil prices also dent downstream consumer confidence and spending. What contingency plans are being put in place? US and European officials have been planning for backup LNG supplies. Exports of LNG from Algeria, Qatar, the US and even Australia have been discussed as alternatives. Although Europe imported a record 11bn cubic metres (bcm) of LNG in January alone, half of which were sourced in the US, much of future supplies would depend on price as well as supply and processing capacity. Europe is proposing to replace 100bn cubic metres (m3) of Russian gas with alternative supplies by the end of the year. “In this scenario, there would be huge problems unless Europe gets it act together. I estimate that even with new liquified natural gas (LNG) supplies from the US, Norway, and Qatar plus energy efficiency measures and more use of renewables, Europe would still be short by 30-40bn m3,” said ICIS senior energy editor, Aura Sabadus. You will find more infographics at Statista If the Asian premium were to increase, LNG cargoes would head in that direction, even as seasonal European winter gas demand is on average 30% higher than the rest of the year. Supply disruptions caused by escalating tensions may lead to a price rebound, incentivising more LNG to return to Europe. However, European import terminals are already operating at nameplate capacity. A record of 5,000GWh/day was reached in mid-January, according to EU data. Even if more LNG were to reach European terminals, countries in central and eastern Europe which rely on Russian flows shipped via Ukraine, would struggle to secure imported LNG. For oil markets, in case of an attack but no international sanctions, the worst-case scenario would be for approximately 240,000 bbl/day of lost Russian exports via Ukraine. There are other seaborne routes, including the Russian Black Sea port of Novorossiysk. ICIS publishes oil price forecast on 30 March The crude price will continue to be driven by the Russia-Ukraine crisis in the immediate short term. ICIS assumes no major further escalation in the Russia/Ukraine conflict – recent peace talks indicate a potential de-escalation in the near term. At present, Russian crude exports have reduced by ~1.5 million bbl/day – we expect exports to further reduce in the near term, even with peace talks underway. ICIS also expects China’s Covid cases to continue to rise in the coming weeks, raising concerns about its oil demand outlook in the near term. ICIS expects that this will lead to a small decrease in prices in April compared to March levels. The only source of sizable oil production increases which could fill the gap left by reduced Russian exports, would be Iran, which could add 1.3m bbl/day within 6 months of a nuclear deal being agreed. Looking into the summer, ICIS expects the Russia/Ukraine conflict to continue but will no longer be at the forefront of the zeitgeist. It is expected that major oil importers such as China and India will look to find a way to purchase Russian crude at a steep discount and by utilising the Yuan-denominated financial system, in order to avoid the risk of sanctions from the West. This will help to restore some of the lost Russian barrels back onto the market. Demand is also expected to be very strong in the summer due to the usual summer demand bounce, with prices expected to reach a high of over $125/bbl during this period. Crude prices are expected to fall considerably from these levels in winter 2022/2023 as a combination of high energy costs, high inflation and higher interest rates leads to lower economic growth and less overall oil demand. ICIS expects crude prices to fall below $100/bbl during this period. Ukraine conflict threatens Europe oil and chemicals production With Russia’s invasion of Ukraine, sanctions could cut supplies of crude oil through the Druzhba pipeline, threatening oil refinery operations and chemicals production at installations in Hungary, Slovakia, Czech Republic, Poland and the former East Germany. Russian oil supplies up to a quarter of Europe’s crude imports, with refineries in central and eastern Europe, which are attached to the Druzhba pipeline, particularly reliant on these supplies. Any interruption to these supplies could force refineries to reduce operating rates unless they can find alternative supplies. Analysis of the ICIS Supply & Demand database shows that the countries Druzhba runs through, except for Germany, are reliant on Russian crude oil for more than half of their imports, led by Slovakia which obtained 96% of its supplies from Russia in 2021. Chemical production downstream of refineries in these countries could be impacted by any reduction in operating rates. The ICIS data forecast that for 2022, 2.79m tonnes of ethylene (11% of total European capacity) and 2.34m tonnes of propylene (12% of total European capacity) are reliant on refineries located along the Druzhba pipeline. While some alternative sources of crude oil could be sourced, it is unlikely normal levels of operations could be maintained. Michael Connolly, ICIS Principal Analyst Refining said: “Although many have built alternate sources, keeping full operating rates would be difficult for them as they rely on a consistent and reliable source of crude. Most refiners in Europe are aware of the risk of Russian crude and over the past 5-10 years have tried to reduce their dependence, or at least to build some capability to have an alternate supply – it doesn’t mean they would be unaffected, but there should be a little bit of resilience, depending on the site.” Connolly explained that some land-locked refineries along the Druzhba pipeline have built pipelines to the coast, allowing alternative sources of crude oil to be sourced. However, these pipelines may not have capacity to feed the whole refinery. A spokesperson for Grupa LOTOS said: “The LOTOS refinery has dealt with suspended supplies by land before. Due to the contamination of Russian oil with chlorines, PERN, the state-owned operator of transmission and storage infrastructure, had to completely discontinue the transmission of crude oil from the eastern direction between 24 April and 9 June 2019.” He added that scheduling of oil supplies by sea helped to secure volumes sufficient to maintain an unchanged level of throughput and maximise fuel production. TotalEnergies and PKN Orlen declined to comment while MOL and PCK have not yet replied to requests for comment. A ban or restrictions on exports of Russian crude oil is one amongst many possible sanctions against Russia in the event of an invasion or incursion into Ukraine. Russia claims it has withdrawn some military forces from the border with Ukraine but the US White House say there is no evidence of this happening. Base oils buyers are switching from Russian to European sourcing amid fears of sanctions against these products. European polymer markets are also seeing some impact. A regional polymer seller said: “What we do see, making the market a bit murky, is Russian suppliers eliminating European stock … fire-selling their stocks particularly in eastern Europe and this is putting pressure on prices.” UKRAINE CHEMICALS UNDER THREAT With Russian forces advancing across Ukraine, chemical and fertiliser facilities may be threatened by physical damage, interrupted power and gas supplies or logistics disruption. Kalush cracker closed Karpatnaftohkhim’s cracker at Kalush has been closed down because of the imposition of martial law in Ukraine. It has capacity (tonnes/year) of 250,000 (ethylene); 117,000 (propylene) 110,000 (LLDPE), 300,000 (PVC), 100,000 (benzene). Black Sea export hub closed  Ammonia market players have scrambled to cover positions and assess options as the Russian invasion of Ukraine saw loadings at the key export hub of Yuzhny halted with immediate effect. Russian nitrogen fertilizer major Togliatti confirmed the suspension of the transit of ammonia to the Black Sea port via pipeline to ensure the safety of people living in the vicinity of the lengthy conduit. The Samara Oblast-based giant also confirmed the shut down of four of its seven ammonia units, with the other three plants operating at reduced rates. Russia export disruptions to shift global trade flows, future capacities threatened Disruptions to Russia’s chemicals and polymers exports will change trade flows, particularly to Europe and Asia, as international sanctions, lack of logistics and even “self-sanctions” limit volumes. While Russia’s capacities are relatively small on a global scale, they can still have a significant impact on regional markets if these exports are disrupted. Key Russia exports include methanol, polyethylene (PE), polypropylene (PP), styrene and paraxylene (PX). Russia has increased exports of high density polyethylene (HDPE) and polypropylene (PP) in particular in 2020 and 2021 as new capacity started up from SIBUR’s ZapSibNeftekhim complex in Tobolsk in 2020. LATEST HEADLINES CRUDE SUMMARY: A mixed bag of market drivers moves crude lower By Barney Gray 18-May-22 14:12 LONDON (ICIS)–Crude prices dipped in afternoon trading on Wednesday. The easing of Chinese coronavirus restrictions gave rise to hopes of a demand boost and reports of reduced Russian production in April were balanced by news that the US is planning to relax sanctions against Venezuela. European Commission ramps up renewables targets to phase out Russia energy dependence By Tom Brown 18-May-22 12:04 LONDON (ICIS)–The European Commission on Wednesday set out new targets for renewable power development, decarbonising road transport and improving energy efficiency as the EU seeks to wean itself off of Russian oil and gas supplies. Rotterdam coal rises amid ongoing geopolitical uncertainty By David Battista 18-May-22 11:43 LONDON (ICIS)–The front-year Rotterdam coal price gained nearly $19/tonne between 10 and 17 May, due to ongoing uncertainty in the wider energy complex amid fallout from the Russian war in Ukraine. Finland could struggle to meet demand should Russian supplies stop By Daniel Muir 18-May-22 11:02 LONDON (ICIS)–Russian gas supplies to Finland could end as soon as 20 May, according to Finnish state-owned energy company Gasum, which could lead to shortages in the summer. EU revises its transition targets to cut reliance on Russian gas By Diane Elijah 18-May-22 10:58 LONDON (ICIS)–The president of the European Commission, Ursula von der Leyen, on 18 May presented the EU’s strategy to phase-out its reliance on Russian gas. Operating costs for LNG vessels rise on Ukraine war By Hal Brown 18-May-22 10:14 LONDON (ICIS)–Operating expenses (OPEX) are rising for LNG vessels crewed by Russians and Ukrainians. Austrian gas storage rules target dependence on Russia By Ed Martin 18-May-22 10:02 LONDON (ICIS)–The Austrian government is seeking to rapidly implement a raft of new storage regulations aimed at boosting security of supply and reducing dependence on Russian gas. CropEnergies warns Germany on plans to reduce biofuels production By Stefan Baumgarten 18-May-22 08:54 LONDON (ICIS)–Germany must not reduce the use of biofuels from arable crops, the CEO of biofuels producer CropEnergies said on Wednesday, adding his voice to the country’s latest “fuel-versus-food” debate. INSIGHT: Europe refineries and chemicals would be hit by Russia oil, products ban By Will Beacham 18-May-22 07:14 BARCELONA (ICIS)–European oil refineries and downstream chemical plants will come under increasing financial pressure from higher logistics costs and crude oil prices if a proposed ban on Russian oil and refined products comes into force later this year. CRUDE SUMMARY: Oil price bounces after weekly downtrend By Barney Gray 13-May-22 15:47 ONDON (ICIS) – Oil prices enjoyed a bounce on Friday but ended the day down week on week as bearish sentiment continued to weigh on demand. In its May report, the IEA forecast that world oil demand growth will slow from 4.4m bbl/day in Q1 to 1.9m bbl/day in Q2 and will ease back to growth of less than 0.5m bbl/day in the second half of the year. For the full year, demand is now expected to increase by 1.8m bbl/day to 99.4m bbl/day. Germany’s biofuels industry wary amid new fuel-vs-food debate By Stefan Baumgarten 13-May-22 14:22 LONDON (ICIS)–Germany’s biofuels industry is watching closely as rising food prices have sparked a new “fuel-vs-food” debate and may even bring an end to racing on the country’s highways (“Autobahn”) without speed limit. US PVC gets inquiries from Ukraine after two months of silence By Bill Bowen 13-May-22 12:59 HOUSTON (ICIS)–US suppliers of polyvinyl chloride (PVC) are getting inquiries from plastics processors in Ukraine, a surprise development in a war-torn market that has been almost completely silent in recent weeks. Germany’s raw material price index falls month on month By Stefan Baumgarten 13-May-22 11:37 LONDON (ICIS)–Germany’s raw material price index fell 12.0% month on month in April, following a sharp March increase amid the Ukraine war, Hamburgisches WeltWirtschafts Institut (HWWI) said. Ukraine starts landmark commercial electricity exports to Moldova By Aura Sabadus 13-May-22 09:45 LONDON (ICIS)–Ukrainian electricity company Ukrhydroenergo started landmark commercial exports to Moldova on 12 May, less than two months after both countries synchronised with the European power grid, the Ukrainian electricity transmission system operator Ukrenergo confirmed. Chemicals production in EU, eurozone fell in March in wake of Ukraine invasion By Morgan Condon 13-May-22 07:46 LONDON (ICIS)–Chemicals production fell in the EU and eurozone in March compared to the previous month, according to the latest data from the EU’s statistical agency Eurostat. UK plastics export ban on Russia not likely to impact producers – trade group By Tom Brown 13-May-22 07:16 LONDON (ICIS)–The British Plastics Federation (BPF) on Friday backed the UK government’s plans to ban exports of plastics and chemicals and impose import tariffs on certain products to Russia. Asia petrochemical supplies rise as China exports grow amid weak yuan By Fanny Zhang 13-May-22 16:13 SINGAPORE (ICIS)–Asia’s petrochemical markets are being weighed down by growing supply, with China exporting more products – spurred by the weak yuan and poor domestic demand amid lockdowns. INSIGHT: Indonesia consumer demand at risk; may not prolong CPO export ban By Pearl Bantillo 13-May-22 12:00 SINGAPORE (ICIS)–Indonesia’s consumer demand recovery is being threatened by elevated commodity prices, with April inflation exceeding the 3% mark, while the government has taken to banning exports of crude palm oil (CPO) and its derivatives to ease surging prices of domestic cooking oil. Asia fatty acids remain soft on China lockdowns and Indonesia export ban uncertainty By Helen Yan 13-May-22 15:05 SINGAPORE (ICIS)–Asia’s fatty acids market is likely to remain soft in the near term, due to the economic slowdown in China and the expected removal of Indonesia’s export ban on crude palm oil (CPO) sometime in May. Asia’s BD spot discussions see uptick on prompt demand, but outlook still clouded By Ai Teng Lim 13-May-22 14:49 SINGAPORE (ICIS)–Discussions in Asia’s spot butadiene (BD) market took a bullish turn this week, as buying interest for prompt delivery supplies picked up alongside some production hiccups. Gazprom faces $12bn bill and penalties if it fails to pay for Ukraine transit – CEOs By Aura Sabadus 11-May-22 14:25 LONDON (ICIS)–Russia’s Gazprom could face a $12bn bill related to an old arbitration claim and additional multi-million dollar penalties if it refuses to pay for the gas transiting Ukraine to Europe. CRUDE SUMMARY: Oil rallies on improved sentiment after early-week losses By Barney Gray 11-May-22 14:10 LONDON (ICIS)–Oil prices recovered ground on Wednesday as the EU sought unanimous support over its decision to ban Russian oil imports. INSIGHT: Can US, global economies avoid recession amid a whirlwind of headwinds? By Joseph Chang 11-May-22 12:10 NEW YORK (ICIS)–Can the US and major economies around the world avoid a recession in the face of what can only be called a whirlwind of headwinds? Europe naphtha refinery margins stay pressured, but gasoline spikes to multiyear highs By Shruti Salwan 11-May-22 11:59 LONDON (ICIS)–European naphtha market fundamentals remain exceptionally weak amid improved availability and weakening feedstock demand capping any major upsides posed by falling ICE Brent crude oil futures and high gasoline refinery margins. Second FSRU will double the Netherlands’ LNG regas capacity by Q3 ’22 By Victoria Tchen 11-May-22 11:37 LONDON (ICIS)–Dutch gas infrastructure company Gasunie announced on 10 May it has signed a five-year binding contract for the lease of a floating storage regasification unit (FSRU) from US LNG company New Fortress Energy. Council of the EU agrees position on new gas storage rules By Diane Elijah 11-May-22 11:16 LONDON (ICIS)–On 11 May, the Council of the EU adopted its position on the new EU gas storage rules . This means negotiations with the European Parliament to agree on the final text of the new rules can now start. Bulgaria holds LNG supply talks with US; expects deliveries from 1 June By Luka Dimitrov 11-May-22 11:06 LONDON (ICIS)–Importing US LNG could bring cheaper gas prices for Bulgarian consumers than signing a new long-term pipeline contract with Russian state supplier Gazprom. Germany introduces law to speed up LNG project development as pivot away from Russian gas gathers pace By Arlind Neziri 11-May-22 10:55 LONDON (ICIS)–The German government on Tuesday announced it was introducing the LNG Acceleration Act as it continues its push to diversify its supply away from Russian gas. Austria to buy up to 1.4bcm of gas with federal funds to build strategic stocks By Edward Martin 11-May-22 10:42 LONDON (ICIS)–Austrian operator Gas Grid Management (AGGM) on 10 May launched a tender to procure 12.6TWh – or roughly 1.2-1.4 billion cubic metres (bcm) depending on calorific value – of gas with federal funding. PCK Schwedt faces uncertain future as Germany moves to ban Russian oil By Stefan Baumgarten 11-May-22 10:28 LONDON (ICIS)–Germany’s PCK Schwedt refinery faces an uncertain future as the nation firmly supports the proposed EU embargo on Russian oil. US natural gas futures scale to historic highs in volatile trading By Ruth Liao 11-May-22 09:26 HOUSTON (ICIS)–Uncertainty on timing of supply has driven the volatility in US gas futures, as the Henry Hub front-month contract soared to new historic highs on 5 May, only to crash lower for two sessions and rebound. UK targets chems, plastics trade in latest Russia sanctions By Tom Brown 11-May-22 08:32 LONDON (ICIS)–The UK’s latest round of sanctions on trade with Russia targets chemicals trade flows, with export bans and import tariffs announced this week. PODCAST: Ban on Russian crude, products would disadvantage Europe refiners, chemicals By Will Beacham 11-May-22 08:22 BARCELONA (ICIS)–A ban on Russian imports of oil and refined products in Europe would increase logistics costs and exclude refineries and integrated chemical producers from deeply discounted crude oil. Russia declines to reroute Sokhranivka gas flows after Ukraine’s force majeure By Aura Sabadus 11-May-22 06:11 LONDON (ICIS)–The European benchmark ICIS TTF firmed at the open on 11 May as natural gas flows from Russia to Ukraine over the Sokhranivka border point ceased, following the 10 May declaration of force majeure by grid operator GTSOU. China petrochemicals stay soft in April; demand concerns remain By Yvonne Shi 10-May-22 16:44 SINGAPORE (ICIS)–China’s petrochemical markets remained soft in April, weighed down by COVID-related lockdowns which will continue to dampen demand in the near term. Asian polyacetal spot discussions stable amid mixed demand outlook By Ai Teng Lim 10-May-22 13:37 SINGAPORE (ICIS)–Discussions for Asian exports of polyacetals (POM) have been rangebound this week, but it remains to be seen how the regional demand-supply balance may shift if various geopolitical issues, like the Russia-Ukraine turmoil and the COVID-19 lockdowns in China, stretch longer than expected. Asia naphtha market contango deepens, China lockdowns curb demand By Melanie Wee 10-May-22 12:45 SINGAPORE (ICIS)–Asia naphtha markets are under pressure from downbeat demand amid persistent lockdowns in China, exacerbated by poor downstream margins. CRUDE SUMMARY: Oil price rallies further as tight supply concerns mount By Barney Gray 06-May-22 14:06 LONDON (ICIS)–Oil prices continued their rally on Friday as worries over global economic growth were trumped by tighter supply concerns. Outlook for ammonium sulphate remains bright through Q2 – AdvanSix By Al Greenwood 06-May-22 13:27 HOUSTON (ICIS)–The outlook for ammonium sulphate should remain bright through the peak of the demand season in the second quarter, the CEO of US producer AdvanSix said. EU gas strategy to be presented in the second half of May By Diane Elijah 06-May-22 13:03 LONDON (ICIS)–The European Commission plans to adopt its REPowerEU strategy to end the EU’s reliance on Russian fossil fuels on 18 May, subject to confirmation nearer the time, a spokesperson for the commission told ICIS. CRUDE SUMMARY: Oil price gains on proposed EU embargo on Russian crude By Barney Gray 06-May-22 09:03 LONDON (ICIS)–Oil prices consolidated gains on Thursday as further details emerged regarding the EU proposed ban on Russian crude. INSIGHT: Ukraine war hurts Europe chemicals, alters patterns of trade By Will Beacham 06-May-22 08:29 BARCELONA (ICIS)–Europe’s chemical industry faces multiple headwinds which could see it lose out to other regions, and lead to more sourcing from further afield by downstream customers and distributors. France likely to remain net power importer until nuclear availability rises substantially By Karishma Sadanandan 06-May-22 15:33 LONDON (ICIS)–France is unlikely to regain its status as a net exporter of power until such a time as nuclear availability rises closer to historic seasonal norms. SE Asia biodiesel sales weak on poor demand By Felicia Loo 06-May-22 14:46 SINGAPORE (ICIS)–The southeast Asian palm methyl ester (PME) biodiesel market remained in weak demand territory, amid poor uptake from Europe and China. Germany’s Evonik Q1 net income rises amid higher selling prices By Nurluqman Suratman 06-May-22 14:16 SINGAPORE (ICIS)–Evonik’s net income rose by around 69% year on year in the first quarter of this year amid higher selling prices at its performance materials and specialty additives businesses, the German specialty chemicals maker said on Friday. Asia glycerine gains on demand; arbitrage window to Europe opens By Helen Yan 06-May-22 14:04 SINGAPORE (ICIS)–Asia’s spot glycerine prices increased on the back of improving demand, with the arbitrage window to Europe expected to remain open in the near term. Trinseo expects Q2 earnings to resemble Q1 By Al Greenwood 06-May-22 09:54 HOUSTON (ICIS)–US-based styrenics and engineered materials producer Trinseo expects its second-quarter earnings to be similar to those in the first quarter, the CEO said on Thursday. China’s propylene market in stalemate on strong costs, weak demand By Yi Liang 06-May-22 13:35 SINGAPORE (ICIS)–Propylene prices in China’s Shandong province fluctuated in a narrow range in late April on cost pressures and bearish downstream demand, after rallying from the recent low seen on 17 March, alongside the crude slumps. INSIGHT: Crude-led inflation surge sparks global monetary tightening By Nurluqman Suratman and Pearl Bantillo 05-May-22 18:01 SINGAPORE (ICIS)–Strong crude prices amid the Russia-Ukraine war have been fuelling unprecedented spikes in inflation, which major economies around the world set out to tame by raising interest rates, some more aggressively than others, while a few are hoping to wait it out as much as possible. China’s PP futures surge 2.51% on rising crude futures By Zhibo Xiao 05-May-22 15:59 SINGAPORE (ICIS)–China’s polypropylene (PP) futures prices rose by 2.51% on Thursday on the back of rising crude futures values. British gas NBP prompt to deliver below May ’22 on oversupply risk By Kaja Sillett 05-May-22 13:00 LONDON (ICIS)–LNG arrivals, mild forecasts and high storage fullness should see British gas prompt products remain below front-month indications at the NBP through the rest of May, after flipping beneath in April. Shell Q1 chemicals earnings rise 49.6% despite lower sale volumes By Nurluqman Suratman 05-May-22 14:53 SINGAPORE (ICIS)–Shell’s chemicals and products unit posted a 17.7% year-on-year increase in its first-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), despite lower chemical sales volumes, the energy firm said on Thursday. S Korea’s Kumho Petrochemical Q1 net profit falls 22%; sales up 19% By Pearl Bantillo 04-May-22 17:42 SINGAPORE (ICIS)–South Korean synthetic rubber giant Kumho Petrochemical reported on Wednesday a 22% year-on-year decline in first-quarter net profit despite a double-digit sales growth. Philippines’ Petron Q1 profit surges; petrochemical sales up 30% By Pearl Bantillo 04-May-22 13:54 SINGAPORE (ICIS)–Petron’s first-quarter net profit more than doubled year on year to pesos (Ps) 3.6bn ($69m) on the back of strong crude prices, the Philippines’ sole refiner said on Wednesday. Oil rises more than $1/bbl on supply worries; China woes cap gainsBy Nurluqman Suratman 04-May-22 12:54 SINGAPORE (ICIS)–Oil prices rose by more than $1/bbl on Wednesday on concerns over tight supply after industry data showed a drop in US crude and fuel inventories last week, but worries over poor manufacturing data from China capped gains. Methanex stands to benefit from market impacts of Ukraine war By Stefan Baumgarten 28-Apr-22 15:22 TORONTO (ICIS)–Methanex is benefiting from the market-related impacts of the ongoing Ukraine war and the sanctions imposed on Russia, the CEO of the Canada-based international methanol producer said on Thursday. Thai SCG Q1 net profit falls 41% on chemical margin squeeze By Pearl Bantillo 28-Apr-22 14:59 SINGAPORE (ICIS)–Thai conglomerate Siam Cement Group’s (SCG) first-quarter net profit declined by 41% year on year on squeezed chemical margins due to high feedstock cost amid weak China demand. Asia biodiesel buy/sell gap widens on CPO price surge By Felicia Loo 28-Apr-22 16:45 SINGAPORE (ICIS)–Asia’s palm methyl ester (PME) biodiesel faces a gaping buy/sell gap, a trend expected to persist after Indonesia announced its ban on feedstock crude palm oil exports. Asia palm shipping market cautious after Indonesia’s export ban By Luffy Wu 28-Apr-22 16:25 SINGAPORE (ICIS)–The Asia palm shipping market is taking a cautious stance after Indonesia announced an export ban from 28 April on domestic cooking oil and refined, bleached and deodorised (RBD) palm olein, with an extension of the ban to crude palm oil (CPO). Tight fuel ethanol supply to SE Asia persists; spot prices firm By Bonnie Yin 28-Apr-22 16:24 SINGAPORE (ICIS)–Import supply of fuel ethanol in southeast (SE) Asia tightened on limited feedstock availability and improved demand from other regions, with market indications higher. Asia Group II base oils supply short in Q2, China demand stifled on lockdowns By Matthew Chong 28-Apr-22 15:12 SINGAPORE (ICIS)–Asia’s Group II base oils supply is expected to remain tight for the rest of the second quarter on reduced production. Asia’s soap noodles to see upward pressure as Indonesia extends export ban to CPO By Helen Yan 28-Apr-22 13:22 SINGAPORE (ICIS)–Asia’s soap noodles market is expected to see upward price pressure in the near term following the announcement by Indonesian authorities on 27 April, to extend the export ban on cooking oil to include crude palm oil (CPO) exports. Asia SBR spot discussions may waver with increased China exports By Ai Teng Lim 28-Apr-22 09:24 SINGAPORE (ICIS)–Asian spot import prices for styrene butadiene rubber (SBR) are losing some ground as more, and competitively-priced, materials emerged from China. Europe petchems face higher gas prices as Gazprom halts supplies to Poland, Bulgaria By Jonathan Lopez 27-Apr-22 11:50 MADRID (ICIS)–European petrochemicals players could face even higher gas prices after Russia’s state-owned Gazprom said it was halting deliveries to Poland and Bulgaria. Natural gas prices shot up nearly 20% in European morning trading after Russia demanded its gas supplies to Poland and Bulgaria are paid for in roubles (Rb) instead of US dollars. Bulgaria’s gas supply also to be halted from Russia, following Poland By Ruth Liao, Aura Sabadus 27-Apr-22 03:22 HOUSTON AND LONDON (ICIS)-Bulgaria’s gas supply from Russian producer Gazprom will be suspended starting 27 April, according to a statement from the country’s energy minister on 26 April. This follows earlier news from Poland’s PGNiG that Gazprom was also suspending its volumes through the Yamal pipeline. The Bulgarian energy minister’s statement said state company Bulgargaz and Bulgarian Energy Holding (BEH) found that the Russian decree to pay in roubles was not in line with their expiring contract and posed significant risks to the country. The statement said the ministry of energy, BEH and transporter Bulgartransgaz have taken measures to make alternative gas supply arrangements and no restrictive measures would be required for the country’s consumption. Asia’s volatile supply conditions for caustic soda may persist amid China lockdowns By Jonathan Chou 27-Apr-22 15:20 SINGAPORE (ICIS)–Asia’s supply conditions for liquid caustic soda could remain unpredictable in the near term amid uncertain supply conditions caused by continued lockdowns in China. France’s Air Liquide Q1 revenue rises 29.1% on surge in energy prices By Nurluqman Suratman 27-Apr-22 15:20 SINGAPORE (ICIS)–Air Liquide’s revenue rose by 29% year on year in the first quarter of this year, reflecting the sharp rise in energy prices contractually passed on to Large Industries customers, the French industrial gases and services firm said on Wednesday. Japan’s Toyota FY2021 global output surges, domestic production slumps By Nurluqman Suratman 27-Apr-22 15:05 SINGAPORE (ICIS)–Japan’s automaker Toyota on Wednesday said that its worldwide production surged to 8.57m units in the year ending 31 March 2022 but domestic output slumped to a 45-year low. Norway’s Yara Q1 net income surges on higher prices By Nurluqman Suratman 27-Apr-22 14:47 SINGAPORE (ICIS)–Yara’s net income surged to $947m in the first quarter of this year, reflecting higher selling prices which more than offset higher natural gas costs, the Norwegian fertilizer major said on Wednesday. Indonesia’s ban on RBD palm olein to see limited impact on oleochemical market By Helen Yan 27-Apr-22 12:25 SINGAPORE (ICIS)–Indonesia’s ban on domestic cooking oil and refined, bleached and deodorised (RBD) palm olein is expected to have limited impact on the oleochemical market as players adopt a wait-and-see stance. INSIGHT: China PP exports to rise in May on new start-ups, stronger US dollar By Lucy Shuai 27-Apr-22 12:00 SINGAPORE (ICIS)–China’s polypropylene (PP) imports and exports both fell in the first quarter of 2022. The volume of imports may remain low, but exports are likely to rise in the near term. Asia MPG sentiment to weaken further amid sellers’ competition By Jasmine Khoo 27-Apr-22 11:34 SINGAPORE (ICIS)–Asian market sentiment for monopropylene glycol (MPG) in May is poised to weaken from a persistently widening gap between Chinese origin industrial-grade propylene glycol (PGI) cargoes and those of other regional origin. China’s April Group II base oils imports expected to slump on negative margins By Whitney Shi 26-Apr-22 18:20 SINGAPORE (ICIS)–China’s Group II base oils imports started to drop in March and are expected to fall sharply in April, in response to deeper negative import margins from March-April. SE Asia-China methanol arbitrage window opens, demand uncertain By Keven Zhang 26-Apr-22 13:42 SINGAPORE (ICIS)–Losses in the key China market exerted downward pressure on methanol prices in southeast Asia, as the arbitrage window between the two regions opened. Northeast Asia Power Play: The struggle between nuclear, coal and gas generation at record LNG prices By Alex Siow 26-Apr-22 12:44 In the face of record high LNG spot prices – and strong prices across commodities – ICIS have noticed that the three major baseload fuel of nuclear, coal and LNG seemed to be struggling to meet demand. In Japan and South Korea, the much-needed additional nuclear generation, has again been delayed while gas and coal ability to respond is limited. Global EDC supply may stay tight despite rising Asian availability By Jonathan Chou 26-Apr-22 12:29 SINGAPORE (ICIS)–While spot ethylene dichloride (EDC) supply within Asia may increase, availability from the US and Europe is expected to remain curtailed due to an ongoing force majeure declaration and higher production costs respectively. Netherlands working on Russian fuel independence by end of 2022 By Arlind Neziri 25-Apr-22 11:27 LONDON (ICIS)–The Dutch government is working on making the Netherlands independent from Russian fossil fuels by the end of 2022, according to a 22 April announcement. Oil flows ongoing despite Bryansk explosions – trader By Richard Price 25-Apr-22 07:08 LONDON (ICIS)–Explosions shook two oil facilities in the western Russian city of Bryansk early on Monday, home to a section of the Druzhba pipeline – a key export route for Russian crude headed to Europe. German regulator begins gas consumption survey to prepare for supply shortages By Eduardo Escajadillo 22-Apr-22 12:39 LONDON (ICIS)–The German Federal Network Agency (BNetzA) is to start gathering data from grid operators and large consumers in the THE market area, as a part of the first early warning level of the country’s gas emergency plan , the regulator announced on 21 April. UK grid constraints could limit export potential to Europe By Rob Dalton 22-Apr-22 12:29 LONDON (ICIS)–UK grid and export constraints could limit the country’s ability to maximise its potential as an LNG import location for onward supply to Europe this summer, as the continent strives to meet EU-proposed storage obligations by autumn. Danish storage to lean on tight German supply By Daniel Muir 22-Apr-22 11:49 LONDON (ICIS)–Danish gas stores may be facing a 175mcm gap going into gas winter, according to ICIS analysis. India market softens on Russian supplies, China lockdown By Keven Zhang 22-Apr-22 07:22 SINGAPORE (ICIS)–Trades for methanol into India were concluded at lower levels, with extensive volumes of Russian spot cargoes arriving in May. Eurozone manufacturing nearly stalls in April as war worsens bottlenecks By Jonathan Lopez 22-Apr-22 05:56 MADRID (ICIS)–Manufacturing activity across the eurozone nearly stalled in April as supply chain bottlenecks worsened because of the Russian invasion of Ukraine, according to the S&P Global PMI index. INSIGHT: Upstream, energy volatility drives demise of the quarterly contract By Will Beacham 22-Apr-22 05:26 BARCELONA (ICIS)–A large scale switch from quarterly to monthly contracts is under discussion in Europe, driven by extreme volatility in upstream feedstock and energy costs. China firms eyed as Shell markets its share in Sakhalin-2 LNG project By Roman Kazmin 22-Apr-22 15:55 SINGAPORE (ICIS)–The share of Shell’s stake in the Sakhalin Energy Sakhalin-2 LNG project in the Russian far east could be sold to Chinese energy companies, a Moscow-based source confirmed to ICIS on 22 April. Asia PBT demand tepid, margins stay tight By Clive Ong 22-Apr-22 11:52 SINGAPORE (ICIS)–The Asian polybutylene terephthalate (PBT) market remains under downward pressure with demand on the wane, while sellers expect limited improvement in margins for the near term. US PPG Q1 income falls on higher costs, supply chain disruptions and geopolitical impacts By Adam Yanelli 21-Apr-22 16:26 HOUSTON (ICIS)–US PPG saw a decrease in year-on-year income for Q1 on higher costs, ongoing supply chains constraints, the initial impacts from Russia’s invasion of Ukraine and increasing COVID-19 restrictions in China, the paints and coatings producer said on Thursday. INTERVIEW: Chemicals M&A activity to slow on Russia/Ukraine war, inflation impact – banker By Joseph Chang 21-Apr-22 15:48 NEW YORK (ICIS)–Chemicals mergers and acquisitions (M&A) activity in 2022 will likely slow from the strong pace in 2021 on heightened energy volatility and economic uncertainty from the Russia/Ukraine war along with higher interest rates and other factors, an investment banker said on Thursday. INSIGHT: Early US chem earnings show resilience amid war By Al Greenwood 21-Apr-22 11:10 HOUSTON (ICIS)–US chemical earnings covering the first months of 2022 have shown resilience, and companies have seen demand hold up despite inflation and the start of Russia’s invasion of Ukraine. Dutch AkzoNobel Q1 profit shrinks 29% amid supply chain disruptions By Pearl Bantillo 21-Apr-22 15:17 SINGAPORE (ICIS)–AkzoNobel’s first-quarter net profit fell by 29% year on year as sales volumes dipped 7% due to continued supply constraints, with negative impact from the Russia-Ukraine war and COVID-19 restrictions in China Indian NBR import discussions gain on supply constraints By Ai Teng Lim 21-Apr-22 15:50 SINGAPORE (ICIS)–Indian import discussions for acrylonitrile-butadiene-rubber (NBR) are gaining ground, as cargo availabilities of deep-sea origin dwindle, prompting buyers with concrete requirements to raise bids and secure replacement volumes from Asia. China’s offshore oil giant CNOOC shares gain 28% at Shanghai debut By Fanny Zhang 21-Apr-22 16:39 SINGAPORE (ICIS)–The share price of China’s biggest offshore oil producer, CNOOC, gained 27.7% over their initial public offering (IPO) of yuan (CNY) 10.8/share at their debut on China’s A-share market, in contrast to a 2.3% slump in the Shanghai composite index on Thursday. INSIGHT: Will growing US LNG exports erode petchem feedstock advantage? By Joseph Chang 20-Apr-22 14:18 NEW YORK (ICIS)–It was back in 2013 at the start of the US liquefied natural gas (LNG) building boom when several US chemical and other manufacturing company executives came out against exports, arguing that the country would be shipping away its feedstock advantage overseas. CRUDE SUMMARY: Oil prices volatile as demand concerns dominate sentiment By Barney Gray 20-Apr-22 14:11 LONDON (ICIS)–Oil prices were in negative territory for most of Wednesday, spurred by weak demand signals from the US Energy Information Agency (EIA) offsetting bullish supply indicators. However, a late rally left crude prices comparatively flat on the day. ICIS VIEW: UK can become key LNG conduit for continent but faces capacity restrictions By Rob Dalton 20-Apr-22 10:58 LONDON (ICIS)–The UK has emerged as a strong contender to be a key supplier of gas to mainland Europe this summer as infrastructure constraints combine with new EU storage obligations and favourable locational spreads. Russia eases restrictions on fertilizer exports By Deepika Thapliyal 20-Apr-22 10:00 LONDON (ICIS)–In Russia, the government has eased restrictions on fertilizer exports by raising export quotas for producers by nearly 700,000 tonnes until 31 May, according to a resolution signed by Prime Minister Mikhail Mishustin. Germany on track to meet gas storage targets with current injection rates By Arlind Neziri 20-Apr-22 09:55 LONDON (ICIS)–Current German gas injection rates, which have seen fullness rise four percentage points this month to 26%, could lead to Germany meeting its mandated storage targets in August and October, if sustained. Germany’s producer prices jump 30.9% in March on Ukraine war impact By Stefan Baumgarten 20-Apr-22 09:04 LONDON (ICIS)–Producer prices in Germany rose 30.9% year on year in March, the highest increase since 1949 when the country’s statistical agency began tracking the data, it said. Russia’s petchems, crude and LPG export duties down in May By Sergei Blagov 20-Apr-22 06:09 MOSCOW (ICIS)–Russia’s export duties levied on some petrochemicals products and crude oil will decrease in May. EU car sales fall in March as war in Ukraine impacts auto production By Morgan Condon 20-Apr-22 06:08 LONDON (ICIS)–Car sales in the EU fell in March and for the first quarter overall compared to the previous year, the European Automobile Manufacturers’ Association (ACEA) said. France’s chemicals sales up 6% in 2021 but slowdown expected on energy costs, geopolitical woes By Jonathan Lopez 20-Apr-22 05:49 MADRID (ICIS)–France’s chemicals sales – including pharmaceuticals – rose by 6% in 2021, year on year, to €69bn, the country’s trade group France Chimie said . Malaysia exports more palm oil in Q1 on sunflower oil disruption By Helen Yan 20-Apr-22 03:35 SINGAPORE (ICIS)–Supply disruption of edible vegetable sunflower oil due to the Russia-Ukraine conflict and restrictions on palm oil exports to the US have seen Malaysia diversifying and increasing its palm oil exports to other countries and regions. CRUDE SUMMARY: Crude plummets on fears of lower growth forecasts By Cecilia Barreiro 19-Apr-22 14:08 LONDON (ICIS) – Oil prices eroded from Monday’s rally on concerns over demand growth after the IMF said the global economy will strongly decelerate in 2022 because of Russia’s invasion of Ukraine. These projections were enough to offset bullish pressures stemming from a wave of closures at Libya’s oilfields and the reopening of China’s manufacturing plants across Shanghai. Germany’s Henkel prepares Russia exit amid growing pressure on firms to leave By Stefan Baumgarten 19-Apr-22 12:32 LONDON (ICIS)–Henkel is preparing to exit its business in Russia, where it employs about 2,500 people, the Germany-based international adhesives and detergents major said. Gazprom’s gas production stable, European piped exports drop in Q1 2022 By Diane Elijah 19-Apr-22 10:28 LONDON (ICIS)–Russian producer Gazprom’s gas production between 1 January and 15 April amounted to 155.9 billion cubic metres (bcm), or 1.3% more than in the same period last year, the state-controlled company announced on its Telegram channel. INSIGHT: Record natgas prices are raising costs for US chemical producers By Al Greenwood 19-Apr-22 10:26 HOUSTON (ICIS)–Prices for natural gas are hitting highs not seen since 2008, raising feedstock and energy costs for petrochemical producers. Russian coal ban puts bullish pressure on German gas Cal ‘23 By Eduardo Escajadillo 19-Apr-22 10:12 LONDON (ICIS)–The EU ban on Russian coal imports may support the Calendar Year 2023 contract on the German THE hub, ICIS analysis shows. Baltic states look to LNG in push to diversify from Russian gas supply By Daniel Muir 19-Apr-22 10:04 LONDON (ICIS)–Latvia, Estonia and Finland would have to collectively replace around 3.4 billion cubic metres (bcm)/year of Russian piped gas if they were to eliminate Russian imports. Poland-Belarus border paraffin wax prices up, deliveries from Russia drying up By Cameron Birch 19-Apr-22 10:03 LONDON (ICIS)–Spot prices for semi-refined paraffin wax at the Poland-Belarus border were assessed higher by triple digits amid continued strong levels of demand and a worsening supply picture. Supply chain woes to worsen, high food prices potentially ‘tragic’ – ICIS economist By Jonathan Lopez 19-Apr-22 15:05 MADRID (ICIS)–The war in Ukraine is set to worsen supply chain woes for the rest of 2022 while the hike in food prices as fertilizers values rocket could have “tragic” consequences in emerging countries, according to an economist at ICIS. Kevin Swift, Senior Economist for Global Chemicals at ICIS, said the EU’s proximity to Russia puts the 27-country bloc at high risk of an energy crisis if supplies of crude oil or natural gas were to be halted. Europe, developing economies to bear brunt of Ukraine war hit – IMF By Jonathan Lopez 19-Apr-22 15:00 MADRID (ICIS)–European and developing economies are to bear the brunt of the economic hit caused by Russia’s invasion of Ukraine as the world economy yet again experiences “a major shock”, the International Monetary Fund (IMF) said on Tuesday. In its April World Economic Outlook (WEO) projections, the IMF sharply reduced its global GDP growth forecast for 2022 by 0.8 percentage points to 3.6%; the world economy grew by 6.1% in 2021. US gas futures surge on supply concerns By Ruth Liao 18-Apr-22 23:18 HOUSTON (ICIS)–The US gas futures front-month contract continued to gain upward momentum, as the May ’22 contract on the NYMEX broke through $8.00/MMBtu on Monday during intraday trading. The NYMEX front month settled at $7.82/MMBtu, buoyed by supply concerns mainly from limited upstream growth and facing multi-year lows in storage levels. Germany bets on floating LNG import terminals, environmentalists sceptical By Stefan Baumgarten 15-Apr-22 09:21 LONDON (ICIS)–Germany’s government is seeking to rent floating liquefied natural gas (LNG) import terminals to quickly move away from Russian gas – but critics warn of a lack of transparency and environmental impacts. US natural gas reaches new record high on tight supply By Fauzeya Rahman 14-Apr-22 17:47 HOUSTON (ICIS)–US natural gas prices reached new multi-year highs on Thursday as tight production coupled with April weather-driven demand boosted the Henry Hub benchmark. US oil, natgas drillers add rigs as energy prices continue to soar By Adam Yanelli 14-Apr-22 15:22 HOUSTON (ICIS)–US oil and natural gas drillers each added two new wells this week amid volatile energy markets boosted by supply concerns. CRUDE SUMMARY: Oil prices up on Russian rhetoric By Barney Gray 14-Apr-22 14:11 LONDON (ICIS)–Crude prices were up as the impending loss of up to 3m bbl/day of Russian output in May offset bearish factors. Europe plans to increase regasification capacity as it pivots away from Russian gas By Hal Brown 14-Apr-22 11:11 LONDON (ICIS)–Since Russia’s invasion of Ukraine, Europe has announced its intention to develop an additional LNG import capacity of around 33mtpa with reports of new projects coming through regularly. Tightening supply may limit European gas storage injections in April By Gretchen Ransow 14-Apr-22 11:06 LONDON (ICIS)–Constrained Norwegian supply and limited wind generation are likely to cap storage injections in the latter part of April. France issues demand side response rules to mitigate potential gas supply disruptions By Andrea Battaglia 14-Apr-22 11:03 LONDON (ICIS)–The French transmission system operator could ask large gas consumers with consumption exceeding 5GWh per year – roughly 0.5million cubic metres (mcm), including gas-fired power plants and industrial consumers, to reduce or fully halt their gas consumption in case of extreme supply tightness, according to a new law decree published on 8 April. France’s new LNG project could curb interest in MidCat pipeline By Andrea Battaglia 14-Apr-22 10:59 LONDON (ICIS)–As Europe seeks ways to reduce its dependence on Russian gas, political leaders in France and Spain recently mulled a revival of the Midi-Catalunia (MidCat) pipeline project, aiming to increase the interconnection capacity of the Iberian Peninsula. EU calls for full embargo of Russian energy, fast-tracks adoption of new storage rules By Diane Elijah 14-Apr-22 10:26 LONDON (ICIS)–The European Parliament called for additional sanctions against Russia including an immediate full embargo on Russian oil, coal, gas and nuclear fuel, in a non-binding resolution adopted with a vast majority on 7 April. Europe’s gas-to-coal switch profitable despite Russian coal ban By Raymond Shi 14-Apr-22 10:15 LONDON (ICIS)–Europe’s clean dark spreads are likely to remain profitable enough to encourage gas-to-coal fuel switching in the medium term, despite an incoming blanket ban on coal imports from Russia. US New Fortress plans US Gulf Fast LNG project By Fauzeya Rahman 14-Apr-22 09:58 HOUSTON (ICIS)–US developer New Fortress wants to build a 2.8mtpa offshore LNG export plant in the US Gulf and start operations by the first quarter of 2023. Covestro’s Steilemann warns of consequences of embargo on Russian gas By Nigel Davis 14-Apr-22 09:29 LONDON (ICIS)–An immediate embargo on natural gas from Russia would be short-sighted and threaten entire production and supply chains and thousands of jobs, Covestro CEO and VCI president elect, Markus Steilemann, has warned. Asia’s PBT holds steady while demand remains tepid By Clive Ong 14-Apr-22 17:14 SINGAPORE (ICIS)–The Asian polybutylene terephthalate (PBT) market was stable amid thin trade. Demand in Asia remains soft with uncertainty expected to stay elevated in the near term. NE Asia ethylene downcast; China demand to stay weak By Yeow Pei Lin 14-Apr-22 12:03 SINGAPORE (ICIS)–Northeast Asia’s spot ethylene prices fell for a second week, hobbled by deeper downstream output cuts in China amid COVID-related logistic bottlenecks. India March exports hit record high; fertilizer imports up eightfold By Priya Jestin 14-Apr-22 16:19 MUMBAI (ICIS)–India’s exports in March rose 19.8% year on year to $42.2bn – exceeding the $40bn mark for the first time – on continued increase in demand for its engineering goods and petroleum products. Singapore tightens monetary policy as inflation threatens economy By Nurluqman Suratman 14-Apr-22 14:01 SINGAPORE (ICIS)–The Monetary Authority of Singapore (MAS) will allow the Singapore dollar to appreciate against a basket of trade-weighted currencies to tackle rising domestic inflation, which threatens economic growth this year. Singapore Q1 GDP moderates to 3.4% amid manufacturing slowdown By Nurluqman Suratman 14-Apr-22 10:46 SINGAPORE (ICIS)–Singapore’s economy grew by 3.4% year on year in the first quarter, moderating from the 6.1% expansion in the fourth quarter of 2021, amid a slowdown in manufacturing, official advance estimates showed on Thursday. US natgas rises to just under $7.00/MMBtu on supply concerns By Ruth Liao 13-Apr-22 17:07 HOUSTON (ICIS)–US gas futures soared nearly 5% higher on Wednesday amid supply concerns, as the Henry Hub front-month contract briefly crossed over the $7.00/MMBtu mark during trading before settling just below. US crude futures surge $3.65/bbl on supply concerns By Ignacio Sotolongo 13-Apr-22 15:12 HOUSTON (ICIS)–NYMEX WTI crude futures for May delivery extended the previous session’s rally and recouped all of the previous week’s losses, settling at $104.25/bbl, up $3.65, as the loss of Russian oil exports due to sanctions will start impacting global supplies in May. CRUDE SUMMARY: Oil prices continue firming on the loss of Russian crude supplies in May By Barney Gray 13-Apr-22 14:22 LONDON (ICIS)–A demonstrable lack of progress in ending the Russia-Ukraine war has offset bearish US inventory data, as the market braces itself for the loss of up to 3m bbl/day from Russia in May. Grupa Azoty unaffected by EU sanctions on stakeholder – company By Will Conroy 13-Apr-22 10:35 LONDON (ICIS)–Poland’s Grupa Azoty on Tuesday said in a statement that sanctions imposed by the EU and other western powers on Russian oligarch Viatcheslav Kantor, who indirectly owns 19.82% of the company, are not expected to have an impact on its operations. Crude demand hit by China lockdowns, Russian supply to be 1.5m bbl/day lower in April – IEA By Jonathan Lopez 13-Apr-22 10:15 MADRID (ICIS)–Severe lockdowns implemented in China to contain the spread of the pandemic are set to reduce global crude oil demand this year, the International Energy Agency (IEA) said. Canada’s central bank hikes key rate as Ukraine war accelerates inflation By Stefan Baumgarten 13-Apr-22 10:08 TORONTO (ICIS)–Canada’s central bank on Wednesday raised its target for the overnight lending rate by 50 basis points, to 1.0% from 0.5%, and said rates would need to be further increased to curb rising inflation. German institutes slash GDP forecast, Russian gas halt would spark recession By Stefan Baumgarten 13-Apr-22 08:38 LONDON (ICIS)–Leading German economic research institutes have slashed their 2022 forecast for the country’s economic growth – and are warning that a sudden interruption of Russian gas supplies would lead to a recession. Russia’s naphtha exports down sharply in March as buyers turn away – IEA By Jonathan Lopez 13-Apr-22 06:51 MADRID (ICIS)–Petrochemicals companies in Europe and most major markets shunned naphtha from Russia during March, as sanctions against the country were announced, the International Energy Agency (IEA) said. Asia MEG discussions slip to lowest in 2022 as demand deteriorates By Judith Wang 13-Apr-22 17:45 SINGAPORE (ICIS)–Asia’s monoethylene glycol (MEG) discussions slipped to their lowest levels since the beginning of the year, as downstream demand deteriorated amid further operation cuts from major polyester producers. Affordability could derail the role of gas in India’s energy transition By Joachim Moxon 13-Apr-22 16:5 Winter is over, but the start of spring has brought little relief to a stretched global LNG market. In late January, ICIS assessments for delivery to India briefly touched below $20/MMBtu for March delivery and this now seems as low as it will get for spot prices in 2022. Asia naphtha jumps on crude oil gains; shrugs off thin demand By Melanie Wee 13-Apr-22 13:28 SINGAPORE (ICIS)–Asia’s naphtha prices jumped on Wednesday, tracking crude gains, but the market is poised for volatility against a backdrop of cautious demand as supply concerns loom. US crude futures surge $6.31/bbl on OPEC warning By Ignacio Sotolongo 12-Apr-22 16:09 HOUSTON (ICIS)–NYMEX WTI crude futures for May delivery settled at $100.60/bbl, up $6.31, in response to OPEC’s monthly report warning that Russian oil and gas exports will be impossible to replace if sanctions for Russia’s invasion of Ukraine target energy. US to allow sales E15 gasoline this summer to help reduce gasoline prices By Adam Yanelli 12-Apr-22 15:51 HOUSTON (ICIS)–The US plans to increase domestic fuel supplies by authorizing E15 gasoline – gasoline blended with 15% ethanol – to be sold this summer. German chems can cope without Russian coal – VCI By Stefan Baumgarten 12-Apr-22 11:49 LONDON (ICIS)–Germany’s chemical industry can cope without supplies of coal from Russia, chemical producers’ trade group VCI said. Gas-to-coal fuel switching to remain profitable despite Russian coal import ban By Raymond Shi 12-Apr-22 10:33 LONDON (ICIS)–Clean dark spreads are likely to remain profitable enough to encourage gas-to-coal fuel switching in the medium term, despite an incoming blanket ban on coal imports from Russia. Russian urea exports to Brazil halve in Q1 By Deepika Thapliyal 12-Apr-22 10:23 LONDON (ICIS)–In Brazil, imports of urea from Russia declined 53% in the first quarter, while total imports were at over 1.6m tonnes, down 17% from nearly 2m tonnes in the same period of 2021, according to the ICIS Supply and Demand Database. Germany’s March chem wholesale prices jump 40.1% on war impact By Stefan Baumgarten 12-Apr-22 09:51 LONDON (ICIS)–Chemical wholesale prices in Germany kept rising sharply in March – 40.1% year on year and 6.7% month on month – according to the latest data from the country’s federal statistics agency. Ukraine crisis to hit global growth but refinery margins soar in March – OPEC By Tom Brown 12-Apr-22 08:59 LONDON ICIS)–OPEC on Tuesday revised down global GDP growth expectations for the year from 4.2% to 3.9% on the back of the invasion of Ukraine, while a growing supply-demand imbalance drove refinery margins to the highest levels since the pandemic last month, according to the group. PODCAST: Europe buyers look to Asia as logistics crisis persists By Will Beacham 12-Apr-22 08:05 BARCELONA (ICIS)–Downstream customers in Europe are seeking new supplies of chemicals from Asia as they avoid high prices and Russian material, but the global logistics crisis may persist for the rest of the year. Most European urea imports up in 2021; Russian imports to fall on sanctions By Deepika Thapliyal 12-Apr-22 07:00 LONDON (ICIS)–Urea imports rose for most European countries in 2021 despite prices being at record highs, except for some including Spain and the UK, which saw slight year-on-year declines. German economic sentiment sinks further in April, stagflation on the horizon – Zew By Tom Brown 12-Apr-22 06:21 LONDON (ICIS)–Expectations for Germany’s economic growth sank further in April compared to the previous month, with the assessment of future prospects falling further and expectations that the next half-year could see the country descend into stagflation, institute Zew said. Demand slowdown weighs on Asia polyester talks; outlook bearish By Judith Wang 12-Apr-22 16:48 SINGAPORE (ICIS)–The overall demand slowdown in China has weighed on polyester discussions, while major polyester producers in China are cutting operations amid rising inventories and a bearish market outlook. China petrochemicals supply chain struggles amid pandemic curbs By Fanny Zhang 12-Apr-22 14:33 SINGAPORE (ICIS)–China’s entire petrochemical supply chain is facing strong headwinds due to tough pandemic-related restrictions in place at various production hubs, including Shanghai. Oil rises more than $2/bbl on OPEC tight supply warning By Nurluqman Suratman 12-Apr-22 13:21 SINGAPORE (ICIS)–Oil prices rose more than $2/bbl on Tuesday, reversing sharp losses in the previous session, after OPEC warned it would not be able to replace supply lost from Russia due to sanctions. China March vehicle markets slump; sales down 11.7% on year By Fanny Zhang 12-Apr-22 11:59 SINGAPORE (ICIS)–China’s vehicle markets took hits from increasing outbreaks of COVID-19 in March, with sales down by 11.7% year on year to 2.23m and production losing 9.1% to 2.24m units, official industrial data showed on Monday. US gas futures rise nearly 6%, hit highest level since 2008 By Ruth Liao 11-Apr-22 17:21 HOUSTON (ICIS)–US natural gas futures on the NYMEX scaled higher to $6.64/MMBtu on Monday, the highest front-month settlement for the Henry Hub benchmark since October 2008. US crude futures slide $3.97/bbl on length liquidation By Ignacio Sotolongo 11-Apr-22 15:13 HOUSTON (ICIS)–NYMEX WTI crude futures for May delivery settled at $94.29/bbl, down $3.97/bbl, on market sentiment that the co-ordinated effort by members of the International Energy Agency (IEA) to release barrels from strategic petroleum reserves will help alleviate the loss of Russian barrels. BASF projects Q1 profit drop on Wintershall Dea Nord Stream 2 loan write-downs By Tom Brown 11-Apr-22 11:02 LONDON (ICIS)–BASF’s first-quarter net income is likely to fall substantially year on year, largely on the back of impairments related to its Wintershall Dea oil and gas joint venture unit, particularly on loans to the presently-halted Nord Stream 2 pipeline, the Germany-based firm said. OGE plans construction of pipeline link for Wilhelmshaven LNG terminal By Eduardo Escajadillo 11-Apr-22 10:59 LONDON (ICIS)–Germany’s Open Grid Europe (OGE) intends to complete the connection line for the floating storage regasification unit (FSRU) at Wilhelmshaven by the end of 2022, the company announced over the weekend. North Sea oil market slump challenges tight supply narrative By Richard Price 11-Apr-22 10:00 LONDON (ICIS)–Crude oil’s meteoric rise to $140/bbl after Russia’s invasion of Ukraine pointed to the tightest market in decades. However, signals in the physical market and newly emerging demand concerns have seen sentiment reshape. The reality is that Russian crude has still been finding its way into the European refining ecosystem, but these volumes should wane throughout April. Dow acquires stake in LNG import terminal in Stade, Germany By Jonathan Lopez 11-Apr-22 09:51 MADRID (ICIS)–Dow has acquired a stake in Hanseatic Energy Hub GmbH (HEH), a consortium building a liquefied natural gas (LNG) terminal on its Stade facilities in Germany, the US chemicals major said. Suspended German coal phase-out could save 2bcm of gas in 2023 By ICIS Editorial 11-Apr-22 09:09 LONDON (ICIS)–Suspending Germany’s coal phase out by two years would limit demand for natural gas by 2 billion cubic metres (bcm) in 2023, according to ICIS modelling. Russia among top three urea exporters to the US in January-February By Deepika Thapliyal 11-Apr-22 08:17 LONDON (ICIS)–In the US, urea imports were at 870,551 tonnes in January-February, up 16% from 749,060 tonnes in the same period of 2021, according to the ICIS Supply and Demand Database. INEOS calls on UK government to allow test fracking site By Tom Brown 11-Apr-22 07:02 LONDON (ICIS)–INEOS has requested that the UK government allow it to develop a shale gas test site in the country, a year and a half after writing down the value of its exploration assets in the space after the country declared a moratorium on fracking. March IPEX up 8.6% on firming prices in northeast Asia, US Gulf By Miguel Rodriguez Fernandez 11-Apr-22 18:14 LONDON (ICIS)–The ICIS Petrochemical Index (IPEX) rose by 8.6% month on month in March, as rising feedstock crude oil and energy prices pushed petrochemicals and plastics prices higher globally. Asian MEK soars to new high on US, Europe demand By Julia Tan 11-Apr-22 17:46 SINGAPORE (ICIS)–Asian methyl ethyl ketone (MEK) import markets continued to soar to new highs in the week ended 8 April, as demand from the US and Europe kept trading levels high and selling pressure low despite tepid demand from Asia. China March petrochemicals track crude gains; lockdowns keep output low By Yvonne Shi 11-Apr-22 15:51 SINGAPORE (ICIS)–China’s petrochemical markets mainly tracked crude gains in March, with additional upward pressure from tighter supply on reduced local production due to pandemic-related lockdowns. Oil falls by $3/bbl on worries over prolonged China lockdowns By Nurluqman Suratman 11-Apr-22 12:13 SINGAPORE (ICIS)–Oil prices fell by around $3/bbl on Monday on demand concerns amid prospects of prolonged COVID-19 lockdowns in China – the world’s largest crude importer. CRUDE SUMMARY: Oil prices steady after a second consecutive weekly fall By Barney Gray 08-Apr-22 14:18 LONDON (ICIS)–The International Energy Agency’s (IEA) decision to release 120m barrels of crude over the next six months continued to dominate sentiment, despite a tightening market outlook PODCAST: Global ACN players eye surging production costs alongside Russia-Ukraine developments By Lucas Hall 08-Apr-22 13:46 HOUSTON (ICIS)–Global acrylonitrile (ACN) players continue to eye surging production costs, particularly in Europe, as concerns over forward demand rise against the backdrop of the Russia-Ukraine conflict. German economic forecasts underestimate risks – VCI By Stefan Baumgarten 08-Apr-22 13:20 LONDON (ICIS)–While Germany’s research institutes cut their growth projections for the country’s GDP following Russia’s attack on Ukraine on 24 February, the new forecasts may still be on the high side, German chemical producers’ trade group VCI has warned. OMV saw Q1 petchem margins shrink, flags €2bn Russia write-down By Stefan Baumgarten 08-Apr-22 11:19 LONDON (ICIS)–Austrian oil, gas and petrochemicals major OMV saw key petrochemical margins shrink quarter on quarter in Q1, it said in a preliminary Q1 report. Germany’s upper house approves measure to fill up natgas storage By Stefan Baumgarten 08-Apr-22 15:31 LONDON (ICIS)–Germany’s upper house, the Bundesrat, on Friday approved legislative changes to ensure the country’s natural gas storage facilities are filled up in preparation for next winter. The legislation is part of measures the government is taking to address supply worries due to the Russia-Ukraine war. Russia supplies more than half of Germany’s gas. Ukraine’s farmers continue to buy fertilizers but sowing down by 60-70% By Deepika Thapliyal 08-Apr-22 13:15 LONDON (ICIS)–In Ukraine, demand for fertilizer continues despite the war, with farmers struggling to find product because of high prices. The sowing season for crops, which is underway, has seen disruptions after Russia invaded Ukraine on 24 February. Topic Page by Aura Sabadus and Will Beacham. Additional reporting by  Richard Ewing and Sophie Udubasceanu. Maps and graphs by Yashas Mudumbai.
Canadian Nutrien plans to build world’s largest clean ammonia
      facility in Louisiana
Canadian Nutrien plans to build world’s largest clean ammonia facility in Louisiana
HOUSTON (ICIS)–Canadian fertilizer producer Nutrien announced it is evaluating Geismar, Louisiana as the site to build the world’s largest clean ammonia facility, which it estimates could achieve output of 1.2m tonnes/year. The producer said the plan would build on the company’s expertise in low-carbon ammonia production and that clean ammonia will be manufactured using innovative technology to achieve at least a 90% reduction in CO2 emissions. Nutrien said the project will proceed to the front-end engineering design (FEED) phase, with a final investment decision expected in 2023. If approved, construction of the approximately $2bn facility would begin in 2024 with full production expected by 2027. The producer said the new clean ammonia plant would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure at its existing Geismar facility to serve growing demand in agriculture, industrial and energy markets. The plant is expected to be able to permanently sequester more than 1.8m tonnes of CO2 in dedicated geological storage each year. The company said the new plant will use auto thermal reforming technology to achieve the lowest carbon footprint of any plant at this scale and has the potential to transition to net-zero emissions with future modifications. “Our commitment to the development and use of both low-carbon and clean ammonia is prominent in our strategy to provide solutions that will help meet the world’s decarbonization goals, while sustainably addressing global food insecurity,” said Ken Seitz, Nutrien’s interim president and CEO. “Leadership in clean ammonia production will play a key role in achieving our 2030 Scope 1 and 2 emissions reduction goals, as part of our Feeding the Future Plan.” Nutrien said it has signed a term sheet with Denbury Inc. that would allow for expansion of the existing volume of carbon sequestration capability in the immediate vicinity at Geismar if selected as the final site of construction. Nutrien has also signed a letter of intent to collaborate with Mitsubishi Corporation for offtake of up to 40% of expected production to deliver to the Asian fuel market, including Japan, once construction is complete.
INSIGHT: Massive US retail inventory pile-up a big warning
      for chems
INSIGHT: Massive US retail inventory pile-up a big warning for chems
NEW YORK (ICIS)–A massive pile-up in inventories at key US big-box retailers may be a warning sign for chemicals demand, which has partly been propped up by the overbooking of orders. Walmart and Target disappointing Q1 results show huge inventory builds Retailers to start unwinding stocks through next couple quarters Retail destocking to trickle down to chemicals demand The Q1 downside earnings shocker at No 1 US retailer Walmart on 17 May was followed up by much of the same at Target on 18 May. The main culprit? A huge inventory build-up, as the companies misjudged consumer demand for certain products. Inflation was also a factor in the higher inventory numbers. Logistics tangles didn’t help either, as some products arrived too early and others too late. Walmart’s Q1 inventories rose 8.3% from Q4 2021 and a stunning 32.0% year on year to $61.2bn. Target’s Q1 inventories were up 8.5% quarter on quarter and 43.1% year on year. The magnitude of the retail earnings misses and huge inventory builds were a key factor in the collapse of the US stock market on 18 May. Chemical equities were also hit hard but suffered less than the overall market. For Walmart, inventories ballooned to 43% of total Q1 sales versus 34% in the year-ago period. Walmart saw US consumer spending shifting away from discretionary items such as apparel, patio furniture and landscaping supplies and more towards food and consumables. “Most of the increased inventory and related costs were related to buying over the past several quarters with a keen focus on in-stock, and now we’re in a short period of rightsizing it,” said Walmart chief financial officer Brett Biggs on the company’s Q1 earnings conference call. INVENTORY UNWIND ON ITS WAYThe period of “aggressive inventory buys” through the past several quarters is now over, and a big inventory unwind is on its way. Target’s inventories stood at 61% of Q1 sales versus 44% from a year ago. It underestimated the magnitude of the consumer shift away from certain goods and towards services, leading to burgeoning inventories in “bulky categories” such as kitchen appliances, TVs and outdoor furniture. These bulkier items tend to have a high chemicals component. Home and kitchen appliances use plastics such as polypropylene (PP), polystyrene (PS) and acrylonitrile butadiene styrene (ABS), which have largely replaced metals, ceramics and glass for electrical appliances such as food blenders, according to website Kitchen Buds. TVs likewise use ABS and high impact PS (HIPS), along with polycarbonate (PC) and polymethyl methacrylate (PMMA). Outdoor furniture such as tables, chairs, benches and table lamps contain a good amount of high density polyethylene (HDPE) as well as PMMA. Target sees consumer spending instead shifting to categories such as food and beverage, beauty and personal care, and household essentials. “Our team is focused on doing everything necessary to ensure we enter the fall season with an appropriate level of inventory by category,” said Michael Fiddelke, chief financial officer of Target. It will likely take several quarters for the big inventory builds to normalise (Walmart also estimates a couple of quarters), and impairments are also probable, especially for seasonal items. GOODS INFLATION MAY EASEOn the bright side, bloated inventories will likely lead to price markdowns as retailers look to move excess stock. Walmart estimates it took a $100m hit to gross profit in Q1 from higher-than-normal markdowns. Management would not quantify potential gross margin impact in the coming quarters. Target likewise marked down items to move inventory in Q1. CONSUMER SPENDING STILL HEALTHYOn a macro level, US retail sales overall rose 0.9% in April from March and was up 8.2% year on year – not surprising given the level of inflation. “A good leading indicator is combined sales for furniture and furnishings (0.7% gain month on month), and electronics and appliances (1.0% gain month on month), and it was a good showing here. Consumers are still in the game,” said ICIS senior economist Kevin Swift. “However, the inventory figures for those companies (Walmart, Target) are worrisome, and could result in destocking,” he added. The US consumer is clearly still spending, and the year-on-year gains in overall sales for both Walmart and Target bear that out. But what is just as clear is that retailers severely overestimated the magnitude of consumer demand for goods – the so-called bulkier goods in particular. It’s shocking to see some of the largest US big box retailers caught so flat-footed on inventory management when you’d expect this to be a core capability. Perhaps it would be slightly less shocking if one paid more attention to ecommerce retailer Amazon’s Q1 earnings results on 28 April where it saw inventories rise 7% from Q4, and 47% year on year to $35.0bn. Shares of Walmart fell 11.4% when it announced earnings on 17 May, and declined a further 6.8% on 18 May. Target’s stock plunged almost 25% on its earnings announcement on 18 May, underscoring the market’s surprise. CHEMICALS TO FEEL DESTOCKING IMPACTUS chemicals companies mostly reported solid Q1 earnings, with essentially no signs of demand destruction even in the face of continuing price hikes. This could be due to customers overbooking orders and continuing to build inventory given the dismal state of the supply chain. Panellists at the 12th ICIS World Surfactants Conference on 10 May indicated that the trend of buyers overbooking to ensure sufficient supply is unlikely to end anytime soon as logistics constraints persist. However, the burgeoning inventories at big box retailers may be the canary in the coal mine. As retailers wind down inventories in the quarters ahead, this impact should start to be felt down the supply chain, all the way down to chemicals and plastics. Insight article by Joseph Chang Thumbnail shows a store. Image by Andy Wong/AP/REX/Shutterstock
US chem shares plunge after retailers warn of costs
US chem shares plunge after retailers warn of costs
HOUSTON (ICIS)–US-listed shares of chemical companies fell on Wednesday as the general stock market posted steep declines after retailers complained about rising costs. The table shows the major indices followed by ICIS. 18-May Change % Dow Jones Industrial Average 31,490.07 -1,164.52 -3.57% S&P 500 3,923.77 -165.08 -4.04% Dow Jones US Chemicals Index 837.06 -24.01 -2.79% S&P 500 Chemicals Industry Index 838.59 -23.77 -2.76% Stocks fell after major US retailer Target reported its Q1 earnings. Its operating margin rate was 5.3%, well below expectations because of the company’s efforts to reduce excess inventory as well as higher costs for freight and transportation, the company said. For the second quarter, the operating margin should remain low, varying  widely from 5.3%, the company said. For all of 2022, the operating income margin rate should be 6%. For comparison, Target expects its long-term margin to be at least 8%. Shares of Target fell by nearly 25%. On Tuesday, US retailer Walmart said in its Q1 earnings report that inflation in the US, especially for food and fuel, put more pressure on the company’s margin mix and operating costs than it expected. For the first quarter, operating expenses as a percentage of net sales rose by 45 basis points, mainly because of higher wages in Walmart’s US operations. Walmart lowered its earnings guidance for the second quarter and for the full year. Walmart shares have fallen by more than 17% in the past five days. Rising costs and excess inventory could slow down demand for goods – although most chemical companies had not noted any demand destruction when they discussed their first-quarter earnings. Attempts to lower inflation by the Federal Reserve could slow down the economy as well. It raised its benchmark interest rate by half a point at its last meeting in May, and similar hikes are expected for the rest of the year. The following table shows the US-listed shares of chemical companies followed by ICIS. Name $ Current Price $ Change % Change AdvanSix 45.97 -1.24 -2.62 Avient 47.09 -1.15 -2.37 Axalta Coating Systems 25.47 -1.00 -3.78 Braskem 17.09 -0.83 -4.63 Celanese 150.85 -4.66 -3.00 Dow 68.74 -1.23 -1.76 DuPont 64.29 -2.12 -3.19 Eastman 103.84 -3.07 -2.87 HB Fuller 66.91 -0.12 -0.19 Huntsman 35.57 -0.95 -2.60 Ingevity 67.48 -0.23 -0.34 Kronos Worldwide 16.43 0.00 0.00 LyondellBasell 110.20 -1.20 -1.08 Methanex 49.78 -1.28 -2.50 NewMarket 336.04 -3.79 -1.12 Olin 62.89 -2.34 -3.59 PPG 119.40 -4.93 -3.97 RPM International 84.22 -2.66 -3.06 Sherwin-Williams 258.51 -10.75 -3.99 Stepan 107.67 -0.63 -0.58 Chemours 41.39 -1.43 -3.34 Trinseo 45.44 -0.64 -1.39 Tronox 17.66 -0.70 -3.81 Univar Solutions 28.38 -0.66 -2.26 Venator Materials 1.76 -0.11 -5.88 Westlake 130.95 -5.34 -3.92 Thumbnail shows a stock-market chart. Image by Shutterstock. 
Verde AgriTech announces results of pre-feasibility study for
      Brazil project
Verde AgriTech announces results of pre-feasibility study for Brazil project
HOUSTON (ICIS)–Verde AgriTech has released the results of its pre-feasibility study for the Cerrado Verde project in Brazil, which outlines plans for a third plant at the site and replaces the prior study completed in December 2017. Currently Verde operates Plant 1 with a capacity of 600,000 tonnes per year with Plant 2 on track for commissioning in Q3 with an additional annual capacity of 2.4m tonnes. Plant 3 is expected to add 10m tonnes/year at a cost of $52.77m with construction currently planned to begin in 2023. Verde said the cost of Plant 3 is expected to be covered by accumulated cashflow generated by sales up to Q2 2023, without need for equity or debt financing. The study presented Verde with three distinct production scenarios with the first being annual production of 10m tonnes/year, which would represent 13.51% of the Brazilian potash market demand projected for 2025. The second case was for output of 23m tonnes, which would be an estimated 31.07% of the Brazilian demand projected for 2025. The last scenario would see there be annual production of 50m tonnes, which would be approximately 54.97% of the estimated market demand for 2030. The mineral resource from this study remains unchanged from the 2017 version with there being a combined measured and indicated mineral resource of 1.47bn tonnes at 9.28% potash grade and an inferred mineral resource of 1.85bn tonnes at 8.60% potash grade. Currently Brazil ranks second in the world for potash consumption but is first in terms of imports as the country relies on inbound shipments for more than 96% of its potash needs.
US chem shares fall amid stock market fears of inflation
US chem shares fall amid stock market fears of inflation
HOUSTON (ICIS)–US-listed shares of chemical companies were trading down sharply midday on Wednesday as the general stock market posted even steeper declines as retailers complained about rising costs. The table shows the major indices followed by ICIS. 18-May Change % Dow Jones Industrial Average 31,591.66 -1,062.93 -3.26% S&P 500 3,938.06 -150.79 -3.69% Dow Jones US Chemicals Index 840.87 -20.2 -2.35% S&P 500 Chemicals Industry Index 842.11 -20.25 -2.35% Stocks fell after major US retailer Target reported its Q1 earnings. Its operating margin rate was 5.3%, well below expectations because of the company’s efforts to reduce excess inventory as well as higher costs for freight and transportation, the company said. “Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations and well below where we expect to operate over time,” said CEO Brian Cornell. For the second quarter, the operating margin should remain low, varying  widely from 5.3%, the company said. For all of 2022, the operating income margin rate should be 6%. For comparison, Target expects its long-term margin to be at least 8%. Rising costs and excess inventory could slow down demand for goods – although most chemical companies had not noted any demand destruction when they discussed their first-quarter earnings. Attempts to lower inflation by the Federal Reserve could slow down the economy as well. It raised its benchmark interest rate by half a point at its last meeting in May, and similar hikes are expected for the rest of the year. The following table shows the US-listed shares of chemical companies followed by ICIS. Name $ Current Price $ Change % Change AdvanSix 46.16 -1.05 -2.21 Avient 47.55 -0.68 -1.41 Axalta Coating Systems 25.56 -0.91 -3.44 Braskem 17.05 -0.88 -4.88 Celanese 151.98 -3.54 -2.27 Dow 68.91 -1.06 -1.51 DuPont 64.61 -1.8 -2.71 Eastman 104.57 -2.33 -2.18 HB Fuller 66.96 -0.07 -0.1 Huntsman 35.76 -0.76 -2.08 Ingevity 68.26 0.55 0.81 Kronos Worldwide 16.33 -0.10 -0.61 LyondellBasell 111.18 -0.22 -0.2 Methanex 50.07 -0.98 -1.92 NewMarket 338.07 -1.77 -0.52 Olin 63.25 -1.98 -3.04 PPG 119.84 -4.49 -3.61 RPM International 84.63 -2.25 -2.59 Sherwin-Williams 259.57 -9.69 -3.6 Stepan 108.48 0.18 0.17 Chemours 41.63 -1.19 -2.78 Trinseo 46.28 0.2 0.43 Tronox 17.67 -0.69 -3.76 Univar Solutions 28.56 -0.47 -1.62 Venator Materials 1.76 -0.11 -5.88 Westlake 131.72 -4.58 -3.36 Thumbnail shows a stock-market chart. Image by Shutterstock. 
New Hope Energy, TotalEnergies partner on Texas chemical
      recycling facility
New Hope Energy, TotalEnergies partner on Texas chemical recycling facility
HOUSTON (ICIS)–New Hope Energy has announced plans to build a chemical recycling facility in Texas, in conjunction with a partial offtake agreement with TotalEnergies. Similar to New Hope Energy’s original facility in Tyler, Texas, this new facility will utilise Lummus Technologies pyrolysis process technology and will be able to process 310,000 tonnes/year of mixed plastic waste. New Hope Energy will target mixed plastic waste feedstock from material recovery facility (MRF) mixed plastic bales, among other sources. The plant is expected to be online in 2025. TotalEnergies will receive 100,000 tonnes of pyrolysis oil, with the intention of manufacturing sustainable polymers for food-grade applications. This comes as Missouri is in the final stages of signing into law House Bill 2485, a piece of legislation which supports chemical recycling operations, which they deem “advanced recycling”. Should the bill become law, Missouri would be the 19th state to adopt such legislation, following Mississippi, Kentucky, West Virginia and South Carolina earlier this year. The terminology “advanced recycling” is opposed by many organisations as it can be misleading as to the physical process of recycling and the marketing qualities of the technology. Many chemical recycling technologies have existed for years, though only recently have companies commissioned production units. This bill will amend the legal definitions of chemical recycling processes such as pyrolysis, solvolysis, gasification and depolymerization such that they would no longer be categorised under categories like “solid waste processing” or “incineration”. This would mean the investment, construction and running of chemical recycling facilities covered under these laws could grant them funding, taxation or environmental regulation as a recycling facility rather than as a waste to fuel or disposal facility. Moreover, adopting the legal definition of recycling opens the door for chemically recycled material to be used in future post-consumer recycled content mandates or as marketable recycled material. Despite the legal support chemical recyclers estimate that it will take at least another seven to 10 years to reach true commercial scale, and the bulk of the industry remains at pilot stage. According to the ICIS Chemical Recycling Supply Tracker, based on company announcements, roughly 1 million tons of chemical recycling capacity was expected in the US by the end of 2021. This figure is expected to increase to 5 million tons by the end of 2025, prior to announcement of this facility. The capacity does not reflect the full extent of the future market. As with traditional recycling methods, chemical recyclers see the ability to source sufficient high-enough quality waste volumes and increasing collection and sorting infrastructure as the key challenges to growth. In order to tackle difficult to recycle plastic waste, several recyclers are exploring partnerships with chemical recycling companies. Unusable plastic waste produced or pre-sorted from the mechanical recycling process could be prime feedstock for chemical recycling facilities. As chemical recycling facilities continue to be announced, concerns are growing with respect to future feedstock supply. ICIS has launched a new US recycled polyethylene (R-PE) commodity service covering prices for natural and mixed-coloured post-consumer HDPE bales on the East and West Coasts and bottle-derived or post-industrial recycled HDPE and LDPE resin, including blow molding grade flake and pellet, injection grade flake and film grade pellet. Additionally, this new service covers emerging trends in the mechanical recycling and polyolefin based chemical recycling markets. To subscribe to the new pricing service, or for further information, please contact clientsuccess@icis.com. In November 2021, ICIS launched a mixed plastic waste pricing service covering European prices for mixed-polyolefins waste bales, reject refuse-derived fuel (RDF) bales and reject materials recovery facility (MRF) bales. Along with this, the new service covers emerging trends in the chemical and mechanical recycling markets, as well as the burn-for-energy sector. To subscribe to the new pricing service, or for further information, please contact clientsuccess@icis.com.
CropEnergies warns Germany on plans to reduce biofuels
      production
CropEnergies warns Germany on plans to reduce biofuels production
LONDON (ICIS)–Germany must not reduce the use of biofuels from arable crops, the CEO of biofuels producer CropEnergies said on Wednesday, adding his voice to the country’s latest “fuel-versus-food” debate. The debate has been sparked by the surge in food prices in the wake of the Ukraine war. Federal environment minister Steffi Lemke wants to reduce production of biofuels from edible crops – thus freeing up more agricultural land for food production, which should help dampen the rise in food prices. “This discussion completely misses the point,” said Stephan Meeder, CEO of CropEnergies. Modern ethanol biorefineries process less than 4% and thus only a small proportion of the grain grown in the EU, he said. Furthermore, the grain they use was unsuitable for food, due to its low quality, he said. “It has been proven that the blending of renewable ethanol in Germany and Europe has no relevant impact on international grain prices,” he said. Moreover, fuel ethanol is only one part of the total production of a biorefinery, he said. One tonne of grain yields 300kg of ethanol, along with 400kg of animal feed and 300kg of biogenic carbon dioxide (CO2), he said. As such, biofuels production helps reduce imports of oil, and it provides protein feed for animals, replacing soy imports, he said. Furthermore, a move away from the use of biofuels would have a serious impact on the achievement of climate targets in the transport sector, in particular, he said. “In 2020, all biofuels placed on the market saved 13m tonnes of CO2 in Germany alone,” he said. “It is absurd that a green environment minister, of all people, is now putting this essential contribution to climate protection up for discussion,” Meeder said. Minister Lemke is a member of the Green Party. CYNICAL AND ABSURD Elmar Baumann, director general of German biofuels industry trade group VDB, said that Lemke’s proposals were “cynical”. The minister seemed to be using the Ukraine war and the high food prices as a pretext to please “a misguided clientele” that has been politicising the use of biofuels for many years, he said. He noted that biodiesel production also yields glycerine as a co-product, which is needed in many applications in the food, pharmaceutical and cosmetics sectors. A reduction of biodiesel production would imply a reduction in the availability of glycerine. The industry would then have to go back to producing fossil-based glycerine, which was an“absurd idea” in terms on climate and environmental policies, he added. The CEO of another German biofuels producer, Verbio, also criticised the minister’s plans. Without biofuels, Germany could not achieve its goal of becoming independent from Russian oil and gas, Claus Sauter said in a statement on Tuesday. He noted that biofuels were important in ensuring the future of the PCK Schwedt refining complex in eastern Germany, where Verbio has an ethanol plant. The Schwedt refining site will be immediately affected as Germany moves to ban imports of Russian oil. According to an internal environment ministry paper, Germany could phase out the use of biofuels, produced from food crops, by 2030, German news media reported on Wednesday. A European non-government organisation, Transport & Environment (T&E), said in a recent study, “Food not fuel: Why biofuels are a risk to food security”, that despite the Ukraine war impact on food prices, Europe turns 10,000 tonnes/day of wheat – the equivalent of 15m loaves of bread based on a typical 750g loaf – into ethanol for use in cars. Front page picture: Field of rapeseed – which can be used as feedstock for biofuels – in Germany; archive image Source: Guenter Fischer/imageBROKER/Shutterstock Please visit the ICIS Ukraine topic page
UK inflation hits 40-year high in April as energy and fuel
      costs continue to rise
UK inflation hits 40-year high in April as energy and fuel costs continue to rise
LONDON (ICIS)–UK inflation rose to a 40-year-high in April as energy and fuel costs continued to rise, the Office for National Statistics (ONS) said on Wednesday. April’s 9% rise in the Consumer Prices Index (CPI), which excludes housing costs, is the highest level since 1982, based on indicative ONS modelling for earlier periods which pre-date its current CPI series. The rise in April was up from 7% in March. UK households have faced higher energy, food and petrol costs as crude oil and gas prices have continued to rise, partly driven by the war in Ukraine. Also on 1 April, the UK government’s energy regulator Ofgem (Office of Gas and Electricity Markets) raised the price cap which limits the price energy suppliers can charge consumers. In the transport sector, costs rose as petrol prices were driven up by higher crude oil values. “Average petrol prices stood at 161.8 pence per litre in April 2022, compared with 125.5 pence per litre a year earlier. The April 2022 price is the highest recorded,” the ONS said in a statement. The Bank of England raised its key interest rate on 5 May to the highest level in more than a decade in a bid to curb escalating inflation levels. UK Q1 GDP data from the ONS on 12 May showed 0.8% growth for the quarter but contracted in March as consumer spending slowed due to a surge in living costs.
UAE’s Borouge to launch IPO; eyes Abu Dhabi listing in early
      June
UAE’s Borouge to launch IPO; eyes Abu Dhabi listing in early June
SINGAPORE (ICIS)–UAE-based polyolefins producer Borouge on Wednesday said that it is planning to launch an initial public offering (IPO) and list on the Abu Dhabi Securities Exchange (ADX) by early June this year. The IPO will consist of around 3bn ordinary shares, representing 10% of Borouge’s shares held by Abu Dhabi National Oil Company (ADNOC) and Austria-based producer Borealis. The subscription period for the UAE retail offering will be from 23-28 May, while that for qualified investors will be from 23-30 May. The shares are expected to be admitted for trading on the ADX on 3 June. Borouge is a joint venture between ADNOC and Borealis. Post-IPO, ADNOC will have a 54% stake in Borouge, while Borealis’ stake will be 36%. Its production capacity currently stands at around 2.7m tonnes/year of polyethylene (PE) and 2.2m tonnes/year of polypropylene (PP), according to the company. In the first quarter of 2022, the company started up its fifth 480,000 tonne/year PP unit at its Ruwais site. The fifth PP unit boosted Borouge’s overall polyolefins production capacity to 5m tonnes/year. Development of the company’s phase four project at the Ruwais complex is underway. The $6.2bn Borouge 4 project is expected to be completed in 2025 and will boost the site’s polymers capacity to 6.4m tonnes/year. Borouge’s sales volumes from its consumer solutions and infrastructure solutions units totaled 2.5m tonnes/year and 1.7m tonnes/year in 2021. The company’s polymer products were mainly sold in Asia, representing about 59% of total sales volumes, as well as the Middle East and Africa – which, combined, accounted for around 33% of overall sales volumes. “Global polyolefins demand in Borouge’s markets is forecasted to account for approximately 86% of global polyolefin demand growth between 2022 and 2026, resulting in a forecasted 1.2x GDP growth in consumer solutions and approximately 1.4x GDP growth in infrastructure solutions,” the company said. (adds details throughout)
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