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Updated at 09:30 GMT on 13 May.
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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.
18-May-2022
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.
18-May-2022
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
18-May-2022
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.
18-May-2022
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.
18-May-2022
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
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18-May-2022
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.
18-May-2022
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
18-May-2022
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.
18-May-2022
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)
18-May-2022
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