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VIDEO: China PE pipe grade demand to stay weak on tepid
      piping works
VIDEO: China PE pipe grade demand to stay weak on tepid piping works
SINGAPORE (ICIS)–Watch ICIS senior editor Hazel Goh discuss current developments in China’s polyethylene (PE) pipe grade black 100 market. Weak China demand dampens hopes of market recovery Implementation of government infrastructure projects slow Weak global economic outlook weighs on sentiment Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.
Indian Oil commissions first 2G ethanol plant in Panipat
Indian Oil commissions first 2G ethanol plant in Panipat
MUMBAI (ICIS)–Indian Oil Corp (IOC) began operations at its 100 kilolitres/day (Kl/day) second generation (2G) ethanol plant at Panipat in the northern Haryana state on 10 August. Built at a cost of over Indian rupee (Rs) 9bn ($113.4m), the ethanol plant is located near IOC’s Panipat refinery complex. Once fully operational, the plant is expected to produce around 30m litres of ethanol using 200,000 tonnes/year of paddy straw as feedstock. Commercial production at the plant is expected by December, and this should help India achieve its target of blending 20% ethanol with auto fuel by 2025. “Biofuel is the need of the hour as it will help reduce our dependency for fuel and energy on other countries,” Indian Prime Minister Narendra Modi said at the inauguration of IOC’s 2G plant. Twelve centres will be set up to collect feedstock paddy straws from fields in the vicinity of the plant site. This is also expected help address pollution being caused by the burning of these materials in northern India. “This is just the beginning as ethanol plants will be set up in different parts of the country. Pollution-causing stubble will be used to produce ethanol,” PM Modi said. State-run oil companies such as IOC, Bharat Petroleum Corp Ltd (BPCL), Hindustan Petroleum Corp Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL) have announced plans to invest Rs100bn to set up a total of 12 2G ethanol plants across the country. HPCL is expected to set up four 2G ethanol plants, IOC and BPCL will set up three plants each, while MRPL and Numaligarh Refinery in Assam will set up one each. ($1 = Rs79.34)
Storage analysis: How much spot LNG will Japan and South
      Korea need this winter?
Storage analysis: How much spot LNG will Japan and South Korea need this winter?
The crucial pre-winter shoulder months of August, September and October will determine the level of storage fullness at which countries start the winter. ICIS estimates that Japan and South Korea bought a combined 5.5million tonnes of spot LNG during this period last year. China alone also bought 1.5 times that combined amount in 2021. However, China is unlikely to be vying for much spot in the coming months due to the high prices and slowing economy. ICIS Analytics forecast that Japan and South Korea combined are looking to secure slightly more than 5.0m tonnes of spot in August, September and October this year – assuming that there is not much flexibility or uplift available from their long-term contract suppliers. The spot amount is less than what was bought last year, but it is still nearly 80 cargoes of spot LNG just before winter. To secure these cargoes during the current gas shortage happening in Europe, the North Asia spot price – the ICIS EAX – will need to close the gap with the ICIS TTF European gas price. KOGAS will buy more spot pre-winter this year, compared to 2021, due to much higher summer storage withdrawal and a 90% storage requirement At the time of writing, Korean energy statistics provider KESIS has confirmed that South Korea’s storage inventory is around 1.8m tonnes. This is 0.9m tonnes lower than ICIS has modelled, which is estimated to be the ‘normal’ level of inventory for previous early Augusts. Also, the mandated 90% storage fullness by the end of October will mean that an additional 0.5m tonnes will be required to fill the gap compared to the ICIS base case at the same month. Consequently, using these numbers, ICIS Analytics predict that the country will seek to purchase 2.4m tonnes of spot this year, 0.3m tonnes more than the same period in 2021. Japan is expected to buy less spot LNG pre-winter this year compared to 2021, but the tight power grid may be a concern ICIS estimate that Japan’s storage inventory level should be at 4.9m tonnes at the time of writing. This is 26% higher than the past five-years average, just slightly below the record high for the same month in previous years. In fact, there are signs that a few storages could be hitting tank-top soon, creating logistical and storage management problem going into the winter. This is likely due to several factors, such as over-stocking the summer demand and the general sentiment to maintain a high level of storage, especially when transitioning into the 2H of the year. We expect companies to draw down another 0.6m tonnes in August as the country goes through its summer peak, followed by three months of gas input into the storage, well into November. ICIS Analytics forecast Japan to buy nearly 2.7m tonnes of spot LNG in the coming three months, 20% less than was bought in the same period last year. This will lead the country to a decent level of 4.9m tonnes by the end of October and 5.4m tonnes by November, just before the winter withdrawal season begins. Overall, we believe that the North Asia spot market will be tight in the coming pre-winter months, as South Korea and Japan will be looking for around 80 spot cargoes to reach these storage levels, competing with Europe. However, competition would have been even stronger if China was buying more LNG, but it is currently less active and being priced out of the spot market. ICIS LNG Edge market intelligence The ICIS LNG Edge market intelligence platform tracks cargoes in real-time around the world and uses satellite data to monitor the imports and exports of global consumers and producers. A dedicated team of analysts supplement this physical data with commercial information from customs agencies and other sources to add in-depth price and volume data to voyage records. The ICIS LNG Supply and Demand Forecast provides a rolling 24-month forward forecast of global trade, drawing on our historic data and analysis of future trends. ICIS LNG Edge also provides a database of global LNG contracts, an infrastructure database, news and alert services and more. The ICIS publication LNG Markets Daily contains the latest news as well as a full range of price assessments. Contact us: For more information on our ICIS LNG Edge data: https://www.icis.com/explore/contact/
Storage analysis: How much spot LNG will Japan and South
      Korea need this winter?
Storage analysis: How much spot LNG will Japan and South Korea need this winter?
The crucial pre-winter shoulder months of August, September and October will determine the level of storage fullness at which countries start the winter. ICIS estimates that Japan and South Korea bought a combined 5.5million tonnes of spot LNG during this period last year. China alone also bought 1.5 times that combined amount in 2021. However, China is unlikely to be vying for much spot in the coming months due to the high prices and slowing economy. ICIS Analytics forecast that Japan and South Korea combined are looking to secure slightly more than 5.0m tonnes of spot in August, September and October this year – assuming that there is not much flexibility or uplift available from their long-term contract suppliers. The spot amount is less than what was bought last year, but it is still nearly 80 cargoes of spot LNG just before winter. To secure these cargoes during the current gas shortage happening in Europe, the North Asia spot price – the ICIS EAX – will need to close the gap with the ICIS TTF European gas price. KOGAS will buy more spot pre-winter this year, compared to 2021, due to much higher summer storage withdrawal and a 90% storage requirement At the time of writing, Korean energy statistics provider KESIS has confirmed that South Korea’s storage inventory is around 1.8m tonnes. This is 0.9m tonnes lower than ICIS has modelled, which is estimated to be the ‘normal’ level of inventory for previous early Augusts. Also, the mandated 90% storage fullness by the end of October will mean that an additional 0.5m tonnes will be required to fill the gap compared to the ICIS base case at the same month. Consequently, using these numbers, ICIS Analytics predict that the country will seek to purchase 2.4m tonnes of spot this year, 0.3m tonnes more than the same period in 2021. Japan is expected to buy less spot LNG pre-winter this year compared to 2021, but the tight power grid may be a concern ICIS estimate that Japan’s storage inventory level should be at 4.9m tonnes at the time of writing. This is 26% higher than the past five-years average, just slightly below the record high for the same month in previous years. In fact, there are signs that a few storages could be hitting tank-top soon, creating logistical and storage management problem going into the winter. This is likely due to several factors, such as over-stocking the summer demand and the general sentiment to maintain a high level of storage, especially when transitioning into the 2H of the year. We expect companies to draw down another 0.6m tonnes in August as the country goes through its summer peak, followed by three months of gas input into the storage, well into November. ICIS Analytics forecast Japan to buy nearly 2.7m tonnes of spot LNG in the coming three months, 20% less than was bought in the same period last year. This will lead the country to a decent level of 4.9m tonnes by the end of October and 5.4m tonnes by November, just before the winter withdrawal season begins. Overall, we believe that the North Asia spot market will be tight in the coming pre-winter months, as South Korea and Japan will be looking for around 80 spot cargoes to reach these storage levels, competing with Europe. However, competition would have been even stronger if China was buying more LNG, but it is currently less active and being priced out of the spot market. ICIS LNG Edge market intelligence The ICIS LNG Edge market intelligence platform tracks cargoes in real-time around the world and uses satellite data to monitor the imports and exports of global consumers and producers. A dedicated team of analysts supplement this physical data with commercial information from customs agencies and other sources to add in-depth price and volume data to voyage records. The ICIS LNG Supply and Demand Forecast provides a rolling 24-month forward forecast of global trade, drawing on our historic data and analysis of future trends. ICIS LNG Edge also provides a database of global LNG contracts, an infrastructure database, news and alert services and more. The ICIS publication LNG Markets Daily contains the latest news as well as a full range of price assessments. Contact us: For more information on our ICIS LNG Edge data: https://www.icis.com/explore/contact/
Singapore trims 2022 GDP growth forecast to 3-4% on global
      headwinds
Singapore trims 2022 GDP growth forecast to 3-4% on global headwinds
SINGAPORE (ICIS)–Singapore on Thursday trimmed its 2022 GDP growth forecast to 3-4%, from the previous estimate of 3-5%, due to the deteriorating global economic environment. “Since May, the global economic environment has deteriorated further,” the Ministry of Trade and Industry (MTI) said in a statement. “Stronger-than-expected inflationary pressures and the more aggressive tightening of monetary policy in response are expected to weigh on growth in major advanced economies such as the US and Eurozone.” Singapore’s economy grew by 4.4% year on year in the second quarter, faster than the 3.8% expansion recorded in the preceding quarter, according to the MTI. The final reading on Thursday was lower than the 4.8% GDP advance growth estimate for the second quarter published in July. On a quarter-on-quarter seasonally adjusted basis, the economy contracted slightly by 0.2%, a reversal from the 0.8% expansion in the first quarter. MTI data showed that the manufacturing sector expanded by 5.7% year on year in the second quarter, extending the 5.5% growth in the previous quarter, while the construction sector grew by 3.3% from the 2.4% it registered in January to March. “Singapore’s final Q2 GDP figures came in under their initial estimates. This is the first negative quarter-on-quarter print since Q2 2021,” Singapore-based UOB Global Economics & Markets Research said in a note on Thursday. Singapore’s official GDP growth forecast range for 2022 was narrowed even as the growth forecast for non-oil domestic exports (NODX) was raised to 5-6%, from the previous forecast of 3-5% issued in May, it added. Weakening external demand outlook Further escalations of the Russia-Ukraine conflict could worsen global supply disruptions and exacerbate inflationary pressures through higher food and energy prices, the MTI said. More persistent and higher-than-expected inflation would dampen global growth further, including through even more aggressive monetary policy tightening in many advanced economies, it said. The outlook for some outward-oriented sectors in the Singapore economy has also weakened. “For instance, as China is a key market for petroleum and chemicals products from Singapore, the weakness in its economic outlook has adversely affected the growth prospects of Singapore’s chemicals cluster and the fuels & chemicals segment of the wholesale trade sector,” the MTI said. On the other hand, the outlook for several sectors in the Singapore economy has improved, with strong recovery in in air passengers and international visitor arrivals is expected to benefit aviation- and tourism-related sectors, it said. Focus article by Nurluqman Suratman
PODCAST: Global chemical prices collapse, Europe prepares for
      dry summer, tough winter
PODCAST: Global chemical prices collapse, Europe prepares for dry summer, tough winter
BARCELONA (ICIS)–Global chemical prices are falling just as Europe braces itself for more summer heatwaves, drought and a winter of gas rationing. Steep fall in chemical, polymer prices continues into August Indicates falling downstream demand Autumn monitored for demand pick up All Asia prices fell in July’s ICIS Petrochemical Index (IPEX) Prices in Europe move down towards Asia Spreads at historical lows for Asian polyethylene (PE) High inflation fuels demand destruction European chemical companies face drought, high temperatures and gas rationing Evonik to boost use of liquefied petroleum gas (LPG), cut natural gas Large switch to LPG could distort trade flows Industry must prepare for possible shut downs in winter In this Think Tank podcast, Will Beacham interviews ICIS Insight Editor Nigel Davis, ICIS senior consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.
Thailand’s Indorama Q2 earnings almost double on higher
      sales, improved margins
Thailand’s Indorama Q2 earnings almost double on higher sales, improved margins
MADRID (ICIS)–Indorama Ventures Limited (IVL)’s second-quarter sales and earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose sharply, year on year, on the back of strong sales volumes and improved profit margins, the Thai chemicals major said on Wednesday. Net profit, which the company reports in its home currency, more than doubled during the quarter to baht (Bt) 20.3bn ($571m). IVL (in millions) Q2 2022 Q2 2021 Change Sales $5,451 $3,559 53% EBITDA $1,010 $552 83% Net profit Bt20,300 Bt8,340 143% KEY POINTSIVL said it had managed to offset high energy prices in Europe and the US thanks to the “combination of strong sales and improved margins”. By division, the company said its largest unit producing polyethylene terephthalate (PET) and derivatives had posted 35% higher earnings during Q2, year on year, though they fell by 1% quarter on quarter. “[The division, called Combined PET] delivered strong EBITDA … on high margins driven by seasonally strong demand, supply chain constraints and overall market tightness,” said IVL. IVL’s Integrated Oxides and Derivatives (IOD) division also posted higher earnings, both year on year and quarter on quarter. “[Within IOD] The Integrated Intermediates vertical was hindered by low ethylene crack margins, historically low integrated MEG [monoethylene glycol] margins, and the planned turnaround of two EO [ethylene oxide] units,” the company said. However, sales and earnings fell year on year and quarter on quarter in the Fibers division as it took a hit from China’s lockdowns to contain the pandemic as well as disruption in Russia. “The segment was impacted by lower demand in the Lifestyle vertical amid the China lockdown while higher freight rates restricted exports,” it sad. “The Hygiene vertical was impacted by volumes at Avgol’s Russia site along with increased polypropylene [PP] prices, while strength in the replacement tyres market partially offset the ongoing semiconductor shortage, resulting in a stable performance for Mobility.” ($1 = Bt35.57) Front page picture: An Indorama logo display at its headquarters in Bangkok, Thailand Source: Sakchai Lalit/AP/Shutterstock 
VIDEO: China’s BDO prices halve on weak demand
VIDEO: China’s BDO prices halve on weak demand
SINGAPORE (ICIS)–Watch industry analyst Jady Ma share about the China BDO market, which has seen a slump on weak demand. BDO prices down in past two months on weak demand Cost side may support BDO market Uncertainties in supply amid turnarounds and start-ups
BLOG: Global chemicals: What I believe our industry must do
      in response to a deep and complex crisis
BLOG: Global chemicals: What I believe our industry must do in response to a deep and complex crisis
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The blog worries that we face a crisis deeper and more complex than any of us have seen before because of a combination of geopolitics, demographics, the changing nature of the Chinese economy as its “Common Prosperity” reforms accelerate, China’s rising petrochemicals and polymers self-sufficiency, the high levels of global inflation with all its causes, and, last, but certainly not least, climate change. Today’s post provides an executive summary of each of these challenges, with further in-depth posts to follow. What should we do next? Here are our suggestions: Innovation must accelerate in developing low or zero-carbon chemicals production processes. Companies must help fund collection, sorting, storage and recycling systems in the developing world. Companies must work more closely with converters, brand owners and retailers to reduce the need for virgin plastics in single-use applications. New chemicals and polymer solutions are required to make finished goods last longer. The solutions must again be developed through close collaboration with converters, brand owners and retailers. Companies must shift from volume to service models. Instead of success being judged on how many extra tonnes they keep selling, success needs to be measured on the effectiveness of service-based supply models. For instance, a synthetic rubber producer works with a tyre manufacturer to secure a 30-year contract with a car hire company. Fees are based on commonly agreed and shared environmental targets to reduce consumption of new tyres through data analysis of driver behaviour – e.g. the severity of breaking and rates of acceleration over short distances. Car hire customers are incentivised to drive more smoothly. The synthetic rubber producer and tyre manufacturer are incentivised to make their products last longer. The shift to service-base models will enable companies to hit ever-more stringent emissions targets – and will allow them to capture market share as public and legislative pressure to make things last longer increases. Legislators need to get rid of quarterly financial reports to make a service-based model work. This will allow companies to build long-term business plans that may take years to be profitable. We believe that this is the direction in which the chemicals industry must travel. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.
Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under
      pressure
Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under pressure
SINGAPORE (ICIS)–Saudi petrochemicals major SABIC posted a 3.8% year-on-year increase in second-quarter net profit, while it expects margins to remain under pressure in the second half of 2022. Higher average selling prices and sales volumes were recorded in April-June 2022, but these were offset by increased feedstock costs and higher selling and distribution expenses, SABIC said in a filing to the Saudi bourse, Tadawul on 9 August. Saudi Riyals (SR) billion Q2 2022 Q2 2021 % change  H1 2022 H1 2021 % change Sales 56.0 42.4 32.0% 108.6 80 35.9% Gross Profit 16.6 13.7 21.3% 31.3 24.7 26.4% Operational profit 9.8 10.1 -2.5% 19.1 17.0 12.2% Net profit 7.93 7.64 3.8% 14.4 12.5 15.1% Second-quarter EBITDA (earnings before interest, tax, depreciation and amortization) margin fell to 24% from 32% in the same period of 2021, even as selling prices rose by 22% and sales volumes increased by 10% over the same period. Margins are being weighed down by the “slowdown in global GDP growth, lockdowns in China, conflict in Europe and continued supply chain challenges”, SABIC said. The global GDP growth rate is now estimated to be between 2.5% and 2.8%, down from a previous projection of between 3.2% and 3.6%, it said. Q2 EARNINGS WEAKER VERSUS Q1 At SABIC’s petrochemicals and specialties business, Q2 EBITDA slipped by 1% from the previous quarter to Saudi riyal (SR) 9.37bn ($2.5bn) despite a 4% increase in revenue to SR46.2bn. Monoethylene glycol (MEG) and methanol prices both weakened over the period, but methyl tertiary butyl ether (MTBE) prices hit their highest since 2013 on the back of strengthening crude and gasoline prices. For polyethylene (PE), second-quarter prices increased in the US and Europe, primarily driven by higher feedstock costs, but were relatively stable in other markets. In China, PE demand weakened due to COVID-19 restrictions in the second quarter. Polypropylene (PP) prices were also higher quarter on quarter due to higher feedstock cost. Focus article by Nurluqman Suratman ($1 = SR3.75) Thumbnail photo: SABIC headquarters in Riyadh, Saudi Arabia (Hassan Ammar/AP/Shutterstock) Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets. Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.
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