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US Sept auto sales rise, but headwinds persist from higher
      interest rates, economic slowdown
US Sept auto sales rise, but headwinds persist from higher interest rates, economic slowdown
HOUSTON (ICIS)–US September sales of new light vehicles rose from the previous month and are up by double digits year on year, but higher interest rates and waning economic fundamentals are eroding consumer purchasing plans. ICIS senior economist Kevin Swift said the increase is likely because of improved semiconductor supply and easing of other supply-chain challenges but noted that rising interest rates following the US Federal Reserve’s tightening of monetary policy amid efforts to stem inflation will continue to create headwinds for the industry. SEPTEMBER SALES September data from the Bureau of Economic Analysis (BEA) showed sales up by 2.9% from the previous month and by almost 14% from the same month a year ago. US automaker General Motors (GM) said on Monday that the increase was because of continued strong consumer demand and improved availability. The company reported its sales in the third quarter surged by 24% compared with the same quarter a year ago. GM said it sold 14,709 units of its electric vehicles (EVs) in the quarter and plans to increase its calendar-year production for global markets from about 44,000 vehicles in 2022 to more than 70,000 in 2023. The automaker said it also saw significant improvement in inventories on dealer lots, rising by almost 45% from the previous quarter and by almost three times the inventory available at the end of Q3 2021, when COVID-19-related supply chain issues were weighing heavily on production. Low inventory levels have been one of the main factors in reduced sales, according to the National Automobile Dealers Association (NADA). MICROCHIPS The global shortage of semiconductors has been one of the main impediments to the industry and has lingered much longer than industry executives and analysts anticipated. Semiconductor chips are vital to production of modern vehicles as they control everything from the engine, antilock brakes, power steering, fuel monitoring system and heating and air conditioning. While industry participants have said they are seeing better availability of the chips, the Semiconductor Industry Association (SIA) said on Monday that global sales in August rose by 0.1% from the same month a year ago but were down by 3.4% from the previous month. Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represent a three-month moving average. “Global semiconductor sales growth has stalled in recent months, and month-to-month sales decreased in August by the largest percentage since February 2019,” said John Neuffer, SIA president and CEO. “Sales into Europe paced all regional markets, while sales into China saw the sharpest declines.” Regionally, month-to-month sales increased in Europe (1.5%), but decreased in Japan (-1.4%), the Americas (-2.8%), Asia-Pacific/All Other (-4.3%) and China (-4.9%). Year-to-year sales increased in Europe (14.9%), the Americas (11.5%), Japan (7.8%), but decreased in Asia-Pacific/All Other (-2.9%) and China (-10.0%). However, the WSTS is expecting sales to improve moving forward, projecting growth of 4.6% in 2023, driven by mid-single digit growth in nearly all categories. The US government passed the $52bn CHIPS and Science Act of 2022 in July to help boost domestic production. US chipmaker Micron Technology announced on Tuesday plans to invest up to $100bn over the next 20 years to build the largest semiconductor fabrication facility in the US in upstate New York. AUTO INDUSTRY AND CHEMICALSThis sector is important to the chemical industry because a typical vehicle contains nearly $3,950 of chemistry (chemical products and chemical processing). Included, for example, are antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tires and hoses, upholstery fibers, coatings and adhesives. Virtually every component of a light vehicle, from the front bumper to the rear taillights features some chemistry. The latest data indicate that polymer use is about 437 pounds per vehicle. Polymers used in automobiles include polypropylene (PP), polyurethanes, nylon, acrylonitrile-butadiene-styrene (ABS), styrene acrylonitrile (SAN), polycarbonate (PC) and styrene butadiene rubber (SBR). Focus article by Adam Yanelli Visit the ICIS automotive topic page. Thumbnail shows an automobile. Image by Shutterstock.
EPCA ’22: EU energy crisis points to ‘major’ role for fossil
      fuels, need for staggered regulations - EPCA pres
EPCA ’22: EU energy crisis points to ‘major’ role for fossil fuels, need for staggered regulations – EPCA pres
BERLIN (ICIS)–The reinvention of the EU’s energy mix in the wake of the Russia-Ukraine war is likely to keep fossil fuels as a key energy source and raw materials until the late 2030s and should prompt a re-examination of new chemicals legislation, according to the president of the European Petrochemicals Association (EPCA). For years, the EU has been overwhelmingly dependent on natural gas supplies from Russia, catalysed by the shift away from higher-carbon power sources and Germany’s phase out of nuclear power at the start of the 2010s. Just as nobody would have predicted the onset of a land war in Europe in 2022, the odds of having to phase out stocks from Europe’s main supplier in the space of less than a year was not on many economists’ forecast lists at the end of 2021, but it does underline how exposed the region has been to any fluctuation in Russian deliveries. The total reinvention of energy policy for the region in such a compressed timeframe is likely to be a painful process for all energy consumers. It is also likely to mean a more prominent role for other fossil fuels in the energy mix for the foreseeable future, according to EPCA President Hartwig Michels. “Besides significantly accelerating the path to renewable energy generation, Europe needs to build new international energy partnerships to overcome this dependency and to keep cost burdens as low as possible,” he said. FOSSIL FUELS NEEDED FOR 15 YEARS “This includes partnerships on fossil feedstocks because no matter how greatly we increase our ambitions to speed up the transition to renewable energy systems, they will remain a major part of our energy systems and the raw material basis for our industry for the next 15 years roughly,” he added. “And there should be no illusion about the fact that these partnerships will come at significant additional costs.” The growing maturity of bio-based and recycled feedstocks for petrochemicals production could stand to mitigate the climate impact from industry output, but more regulatory clarity is needed on those technologies, as well as on the status of content in products when both recycled and conventional feedstocks have been used. REGULATION “Our industry certainly can mitigate some of this risk, for example by speeding up the transition away from fossil feedstocks, using more biobased and recycled feedstocks. However, it is crucial that policy makers finally agree to regulatory acceptance of chemical recycling and the mass balance approach,” Michels said. The chemicals sector is facing a tripartite challenge at present, with the need to cut emissions coinciding with the most substantial reform of production processes since the invention of the cracker, balanced against the challenges of the post-pandemic operating environment and rising energy costs. The escalating scale of those challenges since the onset of the war should prompt more measured expectations of the pace of regulatory reform in what is already an extremely tightly regulated market, according to Michels. “We – industry and legislators – are well advised to start thinking about a more staggered approach in this journey,” he said. “One example is the question of when to tackle ‘Chemicals Strategy for Sustainability’, which sets out to tighten the existing chemicals legislation in the EU, which is already one of the strictest policy frameworks in the world.” CARBON BORDER LAWS, EMISSIONS TRADING The decision to phase out free carbon dioxide (CO2) allowances from the European Commission’s Emissions Trading System (ETS) and implement the Carbon Border Adjustment Mechanism (CBAM) in June this year should also be re-examined in light of the current crisis, according to Michels. Intended to level the playing field between Europe and other regions by placing an import price on certain products, including many chemicals, the CBAM is still awaiting final approval in European Parliament, and should be watered down or paused to take account of the impact on global value chains, Michels said. “Before further steps are taken for the chemical industry with CBAM, climate diplomacy must focus on broad global participation in transformation costs and on harmonizing global regulations,” he said. “The envisaged CBAM does not provide solutions for exports and long value chains. Until an environment has been created in which a CBAM can have the desired effect without serious negative side effects, it should be suspended, or at least limited in scope,” he added. New EU legislation for the sector should set clear and consistent goals for the sector to use as a predictable weathervane for the future evolution of the sector, according to Michels. “Let me be clear: I don’t think we should aim for a moratorium of EU legislation,” he said. Since companies indeed need predictability to invest in Europe to achieve climate-neutrality. “Therefore, what we need is a clear path, a ‘Chemicals Transition Pathway’ which prioritises and sequences all the Green Deal measures, in a way that allows for a successful transformation while preserving our industry’s competitiveness,” he added. Europe has maintained competitiveness despite high employment and energy costs, and the ever-tightening regulatory framework. But an iceberg on the horizon is Europe’s own demographics, with chronic labour shortages already beginning to be felt in sectors such as road transport. The issue is likely to continue to grow unless measures are taken to future-proof Europe’s workforce, Michels added. “I see the need for policy makers to start addressing a simple, yet crucial hurdle: there will likely be a lack of skilled workforce to implement the heavy transformation agenda. We will require more planners, engineers, skilled workers, etc. than ever before against the backdrop of an aging European population,” he said. Interview article by Tom Brown The conversation with the EPCA president took place in the run-up to the event
EPCA ’22: European auto output will only recover to
      pre-pandemic levels in 2025 - analyst
EPCA ’22: European auto output will only recover to pre-pandemic levels in 2025 – analyst
BERLIN (ICIS)–Production from the European petrochemicals-intensive automotive sector is unlikely to recover to pre-pandemic levels until 2025 at the earliest, a chemicals analyst at the Boston Consulting Group (BCG) said on Tuesday. Andreas Gocke, global lead for chemicals at BCG, said the war in Ukraine and supply-chain issues have only seen a further deterioration in the outlook for the automotive sector, which was already negative in 2021. Gocke was speaking to delegates at the European Petrochemicals Association (EPCA) annual meeting at a session titled ‘Competitiveness of the European Chemical Industry’. Around 20% of European petrochemicals output is sold to the automotive sector, and a a slowdown such as the one forecast by BCG has major implications for the industry. “The number of produced cars has gone down by 28% from the beginning of 2020 and that is very important for chemicals as a key supplier to the industry. This is not the consequence of inflation or the war in Ukraine – this was driven by previous factors [already taking place in 2021],” said Gocke. “The forecasts [for automotive] continue to be corrected again and again. Planning scenarios become even more difficult for you [petrochemicals companies]. This is even more radical for Europe. The automotive industry is a major global consumer of petrochemical-based materials, which account for more than one-third of the raw material costs of an average vehicle. A typical vehicle contains a wide variety of chemicals, including polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethanes (PUs) and methyl methacrylate (MMA)/polymethyl methacrylate (PMMA), among others. The EPCA annual meeting runs on 4-6 October in Berlin.
EPCA ’22: European shut ammonia production unlikely to return
      - analyst
EPCA ’22: European shut ammonia production unlikely to return – analyst
BERLIN (ICIS)–The 70% of European ammonia production which has been shut down on the back of high natural gas costs is unlikely to return, an analyst at Boston Consulting Group (BCG) said on Tuesday. Andreas Gocke, global lead for chemicals at BCG, said natural gas prices in Europe are also unlikely to return to levels prior to the war in Ukraine, putting a strain on ammonia producers for whom gas is the main feedstock. Gocke was speaking to delegates at the European Petrochemicals Association (EPCA) annual meeting at a session titled ‘Competitiveness of European chemical industry’. “[Before the war] The entire cash cost of ammonia production in Europe was already bad, but [with current gas prices] there is a brutal translation: there is no chance anymore for cost-competitive production of ammonia in Europe,” said Gocke. This will have an impact not only on fertilizers production, he added, but also for downstream products such as polyamide 6 (PA6) or by-products from ammonia production such as carbon dioxide (CO2), which is used in a variety of industrial sectors, not least the food and drinks sector. “We have modelled how the European natural gas price could develop [in coming years and we modelled that] we will not get back to the levels we had in 2019 – this has very strong implications,” concluded Gocke. The EPCA annual meeting runs from 4-6 October in Berlin.
EPCA '22: PODCAST: Europe petrochemicals face ‘winter of
EPCA ’22: PODCAST: Europe petrochemicals face ‘winter of discontent’
BERLIN (ICIS)–Europe’s petrochemical sector faces a ‘winter of discontent’, battered by high energy costs, collapsing downstream demand and increased imports from Asia. Europe petrochemicals face ‘winter of discontent’ High energy prices hurt production economics Downstream demand collapsing in some sectors Demand will be down 3% for Europe polymers in H2, compared with H1 September pick-up in demand has been weak New projects due onstream in Asia will add to global oversupply Global polyethylene (PE) capacity to rise 6% in 2022 and 5% in 2023 China PE demand expected to fall in 2022 China imports less PE, re-exports more to Europe Russia H1 PE exports to Europe rose 20% compared to H2 2021 Chemical company earnings will be squeezed In this Think Tank podcast, Will Beacham interviews ICIS Insight editor Nigel Davis, ICIS senior analyst Lorenzo Meazza, and Paul Hodges, chairman of New Normal Consulting. The European Petrochemicals Association (EPCA) annual meeting runs on 4-6 October in Berlin. 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.
EPCA ’22: Europe highest cost chemicals producing region,
      shutdowns encourage imports - ICIS
EPCA ’22: Europe highest cost chemicals producing region, shutdowns encourage imports – ICIS
BERLIN (ICIS)–Europe is now the highest cost region for producing many chemicals, an ICIS senior analyst said on Monday, as energy costs in the region have skyrocketed. High costs are helping drive operating rates down and making imports more attractive, added James Wilson at a seminar held before the official opening of this year’s European Petrochemical Association (EPCA) annual meeting. Europe’s steam crackers have moved from around the middle of the global ethylene cost curve, which tracks the variable cost of production of ethylene, plant by plant, worldwide, to the far right, highest cost end, Wilson showed. Plants producing more natural gas-intensive chemicals are affected even more by Europe’s energy crisis. Gas prices may have doubled in certain parts of the world but, in Europe, they have risen much higher because of supply restrictions due to Russia’s war in Ukraine, and deep market uncertainty, according to ICIS European spot gas markets editor Alice Casagni. The future is uncertain with year ahead gas prices remaining high. Producing chemicals such as methanol, ammonia, and isocyanates is clearly impacted by high natural gas costs but, for chemicals production units in general, including Europe’s steam crackers, operations are under pressure from the higher cost of feedstocks, electricity, and of raising steam. Europe has the most expensive cost base now for producing polyvinyl chloride (PVC), styrene, monoethylene glycol (MEG), and methanol, for example, said Wilson. Click on image to enlarge Green bars are individual plants in Europe. Highest costs are to the right, lowest to the left   – The chemical industry is further exposed by expected gas rationing by European nations in the coming winter, which could impact chemicals production, alongside production in other industrial sectors. Producers have the option to reduce operating rates but the technical minimum is around 60%, Wilson said, and that would not result in a linear reduction in energy requirements. “While there are some ways for producers to reduce their natural gas usage, the impact of these steps is expected to be limited,” he added. “Reductions in run rates of other industrial sectors will impact on chemicals demand,” said Wilson. “Weakening global demand, combined with recent capacity investments, primarily in the US and Asia, may mean that European producers will face competition from imported material.” The EPCA annual meeting runs on 4-6 October in Berlin. Front page picture source: Jeppe Gustafsson/Shutterstock 
Singapore Sept manufacturing shrinks for first time since
      2020 as outlook dims
Singapore Sept manufacturing shrinks for first time since 2020 as outlook dims
SINGAPORE (ICIS)–Singapore’s factory activity in September contracted for the first time in more than two years, as external demand continued to be weighed down by the impact of high inflation and interest rates hikes. The Singapore purchasing managers’ index (PMI) fell to 49.9 in September from 50.0 in August, falling below the 50.0 threshold for the first time since June 2020, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed late on Monday. A reading above 50.0 indicates overall expansion while a reading below that threshold indicates overall contraction in activity. The decline in overall factory activity was weighed down by the contraction in the electronics sector PMI. The latter fell for the second straight month to 49.4 in September, after dipping into contraction in August for the first time since July 2020. Many of the sub-indices within the PMI report fell below 50.0 in September. The index of new orders came in at 49.9 from 50.1 in August, the first sub-50 print since August 2020, while the production index inched further below 50.0 with a print of 49.8. The new exports index eased to 50.0 from 50.2 in August. The other negatives came from the indices of inventory (49.8, from 49.6 in August), imports (49.6, from 49.8 in August) and notably, order backlog, which came in at 49.7 (from 50.1 in August), the first sub-50 print since June 2020, after more than two years of continuous expansion. UOB Senior Economist Alvin Liew said the latest dip in the September PMI and the back-to-back contraction in the electronics PMI “painted a consistent picture”, based on the latest non-oil domestic exports (NODX) and manufacturing data. Singapore’s latest NODX data rose by 11.4% year on year in August, with petrochemical shipments abroad expanding by 2.0%. Overall factory output expanded by 0.5% year on year in August, down from a 0.8% growth in July. “We see a weaker electronics performance and slowing demand from north Asian economies that could increasingly weigh on NODX momentum and manufacturing activity,” Liew said. Singapore’s overall economic growth would likely slow significantly next year, Liew added, as the US and European economies, which are key end-demand markets for the country, are projected to enter a recession in the next six to 12 months amid aggressive monetary policy tightening. Other external headwinds for Singapore include the ongoing Russia-Ukraine conflict as well as potential new variants of COVID-19, said Liew. “China’s potential rebound from its COVID-19 challenges in 2023 could be a positive factor offsetting some of the downside drivers next year,” he added. Focus article by Nurluqman Suratman Thumbnail image: A shot of the Singapore skyline. Singapore’s factory activity in September contracted for the first time in more than two years, with Singapore’s purchasing managers’ index (PMI) falling to 49.9 in September, from 50.0 in August. (Source: Then Chih Wey/Xinhua)
Fertilizer producers Nutrien and Yara escape Hurricane Ian
Fertilizer producers Nutrien and Yara escape Hurricane Ian damages
HOUSTON (ICIS)–Fertilizer producers Nutrien and Yara said they both weathered the strike of Hurricane Ian in Florida and along the US southeast coast without sustaining damages to facilities or any harm to any of their employees. Nutrien said despite the intensity of the storm and the heavy winds and rains, that facilities and operations were not damaged or shut down in Florida or Louisiana by Hurricane Ian mid-week and that over the weekend, they were equally as fortunate to miss second landfall with their sites in Georgia and North Carolina. The company had announced on Friday it has put storm-preparedness plans in action in Georgia at their nitrogen facility in Augusta and the phosphate facility in Aurora, North Carolina, but it had not ceased operations at either. Nutrien also operates a phosphate plant at White Springs, Florida, and has operations at Geismar, Louisiana, which makes ammonia, nitric acid and urea ammonium nitrate solution (UAN), but was eventually well out of the storm‘s track. “We dodged Ian. Despite some heavy rain and winds, we had no closures or significant interruptions to production from the hurricane at White Springs, Augusta, or Aurora,” said a Nutrien spokesperson. For producer Yara, who has both fertilizer operations – including ammonia storage – and offices in Tampa, Florida, their facilities escaped undamaged and their workforce is safe. “Our terminals are back in operations now, both for liquid fertilizers and also ammonia, following the strict protocols for safety and security that we put in place last week,” said a Yara spokesperson. “Our thoughts are with our neighbours south of us and we have reached out to the local Red Cross to support.” Yara said their terminal in Savannah, Georgia, has no damage and is in operation.
Danakali Limited selling stake in Colluli SOP project in east
      Africa to SRBG
Danakali Limited selling stake in Colluli SOP project in east Africa to SRBG
HOUSTON (ICIS)–Australian fertilizer developer Danakali Limited has announced it is selling its stake in the Colluli sulphate of potash (SOP) project in Eritrea, east Africa. The company said it has executed a term sheet with Sichuan Road and Bridge Group (SRBG) for $166m in upfront cash and deferred payments for its 50% of the potash project, which has been in development for a number of years. The other partner in the project is Eritrean National Mining Corporation (ENAMCO), who must give their consent to SRBG purchasing the other half. After all considerations and government taxes, Danakali said it expects to receive approximately $121m. It then plans to distribute 90% of the net proceeds to shareholders and will continue as a listed company to identify new projects and potential new alternative growth opportunities. The transaction is expected to be completed between 31 March and 31 May 2023 and is subject to the purchaser’s satisfactory completion of due diligence and the parties entering into definitive agreements. It will also need Danakali shareholder and Eritrean government approval, as well as clearance from the purchaser by Chinese regulatory authorities. SRBG is owned by parent company Shudao Investment Group, which is active in transportation infrastructure design and construction markets, but its diversified business covers other areas like minerals and new materials and clean energy investments. In commenting on its decision to move on from the project, Danakali said their board was of the view that the sale provides their shareholders with an attractive post-tax value outcome in the absence of a full equity funded solution for the project.
KBR awarded tech contract for US low-carbon blue ammonia
KBR awarded tech contract for US low-carbon blue ammonia project
HOUSTON (ICIS)–Global engineering firm KBR announced it has been awarded a technology contract by Tecnimont SpA for OCI NV’s low-carbon blue ammonia project in the US. The firm said that under the terms of the contract, KBR will supply the technology licence, basic engineering design, proprietary equipment and catalyst for the 1.1m short ton per annum blue ammonia plant. At this time, the targeted completion date would be 2025. KBR said the project will be designed to transition from blue to green ammonia production as green hydrogen becomes available at larger scale in the future. “We are excited to continue to build on our strong relationship with OCI NV and Maire Tecnimont to deliver our market-leading and proven ammonia technology for this energy transition project,” said Doug Kelly, KBR President, Technology. “This award is a further testament to KBR’s leadership in helping its clients implement effective decarbonisation technologies today on a path to achieving their future ESG objectives.” Since 1944, KBR said it has licensed and designed 252 grassroots ammonia plants and that around half of global licensed ammonia capacity uses their designed plants because they combine lowest capital and operating costs with the highest reliability.
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