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Speciality Chemicals23-Oct-2024
LONDON (ICIS)–The overall winner of this
year’s ICIS Innovation Awards – BASF, Linde and
SABIC’s electrically heated steam cracker
furnace – could have a massive impact on
overall chemical industry emissions if the
technology is widely adopted.
World’s first electrically heated steam
cracker at demonstration stage
Cuts CO2 emissions by up to 95% compared
with natural gas-fired crackers
Tripartite win shows strength of
partnerships
Challenges include obtaining sufficient
renewable energy, financing for scale up
Financial risks can be reduced by
converting one furnace at a time
In this Think Tank podcast, Will
Beacham
interviews Michael Reitz,
technology manager for BASF and Martin
Hofstaetter, process engineer for
furnace technology at Linde.
Register your
interest to enter the 2025 ICIS Innovation
Awards.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here .
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges and John Richardson’s
ICIS
blogs.
Crude Oil23-Oct-2024
SINGAPORE (ICIS)–Emerging Asian economies are
expected to see strong economic growth subside,
partly due to a sustained slowdown in China,
the International Monetary Fund (IMF) said on
Tuesday.
China’s 2024 growth forecast lowered to
4.8%
Downside risks dominate global outlook
China property risks may trigger global
impact
The IMF trimmed its forecast for emerging and
developing Asian economies by 0.1 percentage
points to 5.3% and 5.0% for this year and 2025,
respectively, slowing from the 5.7% expansion
in 2023.
In India, the outlook on a fiscal year basis is
for GDP growth to moderate from 8.2% in 2023 to
7% in 2024 and 6.5% in 2025, “because pent-up
demand accumulated during the pandemic has been
exhausted, as the economy reconnects with its
potential”, the IMF said.
For China, the IMF downgraded its projection
for this year by two-tenths of a percentage to
4.8% from its 5% estimate in July. This is
lower than China’s official growth target of
around 5% for this year.
The IMF’s China growth forecast for 2025 was
unchanged at 4.5%.
However, the slowdown in China is projected to
be more gradual despite persisting weakness in
the real estate sector and low consumer
confidence, it said, largely thanks to
better-than-expected net exports.
The IMF’s chief economist Pierre-Olivier
Gourinchas at a press conference on Tuesday
said in its latest forecasts that China’s
fiscal stimulus measures so far lacked detail
and therefore were not included in the China
growth outlook.
China’s central bank stimulus measures,
unveiled last month to spur lending, “would do
little to materially lift growth”, Gourinchas
was quoted by news agency Reuters as saying.
China’s economic
forecast remains bleak, despite the
government’s stimulus measures announced in
late September, which briefly boosted market
sentiment.
China on 18 October reported year-on-year
GDP growth of 4.6% in the second quarter,
the slowest pace since early 2023, while
overall growth in the first nine months of 2024
stood at 4.8%.
China’s latest measures are insufficient to
address its economic woes, economists have
warned, and the IMF notes that significant
risks remain, particularly in the troubled
property sector.
“Conditions for the real estate market could
worsen, with further price corrections taking
place amid a contraction in sales and
investment,” the IMF said.
“The experiences of Japan in the 1990s and the
United States in 2008 suggest that a further
price correction is a plausible downside risk
if the crisis is not adequately addressed.”
GLOBAL REPERCUSSIONS OF CHINA’S
SLOWDOWN
A prolonged or severe downturn in China’s
property market, especially one that triggers
financial instability, could dampen consumer
confidence and negatively impact the global
economy due to China’s significant role in
international trade, the IMF warned.
With China’s economy softening, global growth
is expected to be a lackluster 3.1% in five
years – a notch down from the pre-pandemic
average, it said.
Growth is projected to hold steady at 3.2% in
2024 and 2025, but some low-income and
developing economies have seen sizable downside
growth revisions, often tied to intensifying
conflicts.
The IMF’s Gourinchas in a separate blog post
said that downside risks are increasing and now
dominate the global economic outlook.
“An escalation in regional conflicts,
especially in the Middle East, could pose
serious risks for commodity markets,” he said.
Global output could be significantly lower than
the IMF’s baseline forecast due to shifts
toward undesirable trade and industrial
policies, overly tight monetary policy, or an
abrupt tightening of global financial
conditions, Gourinchas added.
Focus article by Nurluqman
Suratman
Ethylene22-Oct-2024
LIMA (ICIS)–Brazil’s GDP is expected to grow
by 3% in 2024, up sharply from prior forecasts
of 2.1% growth published in July,
the IMF said this week.
Mexico’s growth, however, is expected to slow
down to 1.5%, down sharply from the previous
2.2% forecast.
For the Latin America and the Caribbean region
as a whole, growth is projected at 2.1% in
2024, slightly up from the 1.9% forecast
published in July, said the IMF.
“[Brazil’s GDP growth forecast] is an upward
revision … owing to stronger private
consumption and investment in the first half of
the year from a tight labor market, government
transfers and smaller-than-anticipated
disruptions from floods,” said the IMF.
“However, with the still-restrictive monetary
policy and the expected cooling of the labor
market, growth is expected to moderate in
2025.”
The more conservative forecast for the Mexican
economy reflects weakening domestic demand on
the back of monetary policy tightening, said
the IMF, who projected the country’s growth
would continue slowing down in 2025.
The Fund expects Argentina’s GDP to fall by
3.5% this year, a forecast considerably
more
optimistic than most economists.
For detailed country-by-country figures see
bottom table.
INFLATION BATTLE WON –
MOSTLYThe IMF celebrated how for
most countries in Latin America and the
Caribbean inflation rates have dropped
significantly from their peaks and continue to
be on a downward trend.
The Washington-based body highlighted, however,
how in some countries inflation is ticking up
on the back of, among other factors, weather
events, which can suddenly push prices for
agricultural products.
“Large countries in the region have experienced
upward revisions since the April 2024 World
Economic Outlook that reflect a mix of 1)
robust wage growth preventing faster
disinflation in the services sector (Brazil,
Mexico); 2) weather events (Colombia); and 3)
hikes in regulated electricity tariffs
(Chile),” said the IMF.
“[For example] Coffee prices rallied, rising by
33.8%, following weather-related supply
concerns in key producers Brazil and Vietnam.”
Despite adverse weather
events, Brazil’s national supply
corporation Conab said earlier in October that
the 2024-2025 fertilizers-intensive
agricultural season is set
to reach a record high.
Conab is forecasting grain production to reach
322.47 million tonnes in the 2024-2025 harvest,
up 8.3% compared with the previous harvest.
IMF forecasts (in %
change)
GDP growth 2023
GDP growth forecast 2024
GDP 2025 growth forecast
Inflation 2023
Inflation forecast 2024
Inflation forecast 2025
Brazil
2.9
3.0
2.2
4.6
4.3
3.6
Mexico
3.2
1.5
1.3
5.5
4.7
3.8
Argentina
-1.6
-3.5
5.0
133.5
229.8
62.7
Colombia
0.6
1.6
2.5
11.7
6.7
4.5
Chile
0.2
2.5
2.4
7.6
3.9
4.2
Peru
-0.6
3.0
2.6
6.3
2.5
1.9
Ecuador
2.4
0.3
1.2
2.2
1.9
2.2
Venezuela
4.0
3.0
3.0
337.5
59.6
71.7
Bolivia
3.1
1.6
2.2
2.6
4.3
4.2
Paraguay
4.7
3.8
3.8
4.6
3.8
4.0
Uruguay
0.4
3.2
3.0
5.9
4.9
5.4
Latin America and the
Caribbean
2.2
2.1
2.5
14.8
16.8
8.5
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Ethyl Acetate22-Oct-2024
HOUSTON (ICIS)–Sherwin-Williams expects demand
during the first half of 2025 will remain
choppy while the company waits for what it
expects will be an inevitable inflexion point
for demand for its products, the US-based
paints and coatings producer said on Tuesday.
“The single largest variable heading into next
year is the timing and pacing of a true
inflexion in the demand environment,” said
Heidi Petz, CEO. She made her comments during
an earnings conference call. “It is only a
question of when, not if.”
Until that inflexion comes, Sherwin-Williams
expects demand will remain choppy.
During the third quarter, demand from consumers
undertaking do-it-yourself (DIY) improvement
projects remained soft,
a trend also noted by RPM International, a
company that makes coatings, adhesives and
sealants.
Sherwin-Williams attributed the softness for
its DIY products to weaken existing home sales
and inflation.
For auto refinish products, insurance claims
have fallen because consumers are reluctant to
pay deductibles to get their vehicles repaired
after accidents, Petz said.
PPG also
noted a decline in insurance claims.
Near term, Sherwin-Williams warned about the
possibility that its industrial customers could
undergo extend holiday shutdowns.
The company did not provide more details.
However, US-based paints and coatings producer
PPG did note that automobile original equipment
manufacturers (OEMs)
started taking unscheduled and prolonged
downtime in the third quarter, and the
trend should continue in the fourth quarter.
DEMAND FROM HURRICANE
REPAIRSHurricanes initially
lower demand because they shut down paint
stores and customers cannot immediately return
to work.
Ultimately, demand does rise after customers
assess damage and pursue insurance claims.
After about four weeks, demand for primers
increases, Sherwin-Williams said. Sundries and
paint then follow.
Forecasting the effects of Hurricanes Helene
and Milton are difficult because they hit weeks
apart in the third and fourth quarters.
TALK OF RENOVATION
RESURGENCELonger term, the US
could see a resurgence of home renovation
projects, said Jim Jaye, senior vice president
of investor relations.
One of the economic indicators tracked by
Sherwin-Williams is
the Leading Indicator of Remodeling
Activity (LIRA), which is published by the
Joint Center for Housing Studies of Harvard
University.
According to LIRA, spending for improvements
and repairs on homes should expand once again
by the middle of 2025.
Economic growth, expected declines in inflation
and higher home equity could encourage
homeowners to undertake repairs and remodeling,
he said.
Paints and coatings are important end markets
for many petrochemicals and resins.
Titanium dioxide (TiO2) is used as a white
pigment and to make paints opaque.
Solvents used in paints and coatings include
ethyl acetate (etac), butyl acetate (butac) and
methyl ethyl ketone (MEK).
Polyurethane coatings are made with polyols and
isocyanates such as methyl diphenyl
diisocyanate (MDI). Acrylic based coatings are
made with methyl methacrylate (MMA), and epoxy
coatings are made with epoxy resins.
Other chemicals used in paints and coatings
include isopropanol (IPA) and vinyl acetate
monomer (VAM).
Thumbnail shows paint, one of the products
made by Sherwin-Williams. Image by Oleksandr
Latkun/imageBROKER/Shutterstock.
Acrylonitrile Butadiene Styrene22-Oct-2024
LONDON (ICIS)–Markets Editor Stephanie Wix is
joined by Senior Editor Manager Vicky Ellis,
markets reporter Meeta Ramnani, and Senior
Analyst Jincy Varghese, as they discuss the key
trends from the 29th Fakuma plastics processing
trade fair in Friedrichshafen, Germany, in this
latest ICIS podcast.
They explore discussion topics heard at the
event last week, from the highest concerns to
the lowest expectations. They also explain the
clash of pessimism and optimism between markets
including acrylonitrile butadiene styrene
(ABS), polycarbonate (PC), polyethylene (PE)
and polypropylene (PP), and also engineering
plastics polyacetal (POM) and polybutylene
terephthalate (PBT).
Gas22-Oct-2024
EU energy policy must be less ideological
in next five years, GIE conference hears
Lowering high energy prices, which harm
industry, a key goal for incoming Commission
Commissioner confirmation hearings to take
place 4-12 November
MUNICH (ICIS)–The incoming European Commission
must move away from ideological energy policy
if it hopes to stabilize prices and keep
industry competitive, delegates heard at the
Gas Infrastructure Europe (GIE) conference in
Munich on 17-18 October.
However, despite an announced focus on a ‘clean
industrial deal’, doubts remain that Europe can
apply the lessons learned from the energy
crisis.
Speaking to ICIS on the sidelines, Tsvetelina
Penkova, vice-chair of the European
Parliament’s energy and industry committee said
the thought the upcoming commissioner hearings
would be “dynamic”, though she hoped the
meetings would be constructive rather than
unpleasant.
Nominated commissioners must be confirmed by
the European Parliament before they can take up
their roles. Hearings are scheduled for 4-12
November.
“The problem is quite a lot of topics are
overlapping [in commissioners’ portfolios], so
it’s very difficult to distinguish exactly the
area of expertise,” she said, citing concerns
over who would ultimately be responsible for
decisions and the time involved if multiple
people sign off policies.
Penkova told delegates that fluctuations in
energy prices between different regions harmed
competitiveness and energy security.
The discrepancy “really depends on the energy
source that’s being used at the moment,” she
said, as a lack of proper grid interconnections
created bottlenecks, and without fixing this
Europe’s energy landscape would remain
dominated by local, regional or national
solutions.
The topic of surging heatwave-driven power
prices experienced in central and southeastern
Europe also dominated a meeting of EU
energy ministers in Luxembourg on 15
October.
Penkova called for energy resilience as well as
a diversity of sources, including renewables,
hydrogen, ammonia and other carriers, alongside
storage and flexibility solutions.
“We must understand that dependency only on one
single sector or energy source is naive. That’s
definitely not going to work,” she said.
GIE president-elect Arno Bux stressed to
delegates that gas infrastructure would remain
vital for decades to come, citing nascent
hydrogen, biomethane and carbon dioxide
markets.
“We all know pipelines … are by far the most
efficient way to transport and store energy,”
he said.
But the industry was hindered by 1990s-era
regulation, Bux said, which failed to foresee
the need to maintain and expand infrastructure
under uncertain conditions or the costs
involved.
NUCLEAR SCEPTICISM?
Penkova dismissed concerns over nuclear
skepticism previously voiced by the nominees
for energy commissioner,
Denmark’s Dan Jorgensen, and executive
vice-president Teresa Ribera from Spain, tasked
with delivering the ‘clean, just and
competitive transition’.
Noting that the parliament considered nuclear
generation as strategic and sustainable
technology, Penkova told ICIS she didn’t
foresee any change in Europe’s policy, but
instead hoped for better integration.
“When we’re speaking of nuclear waste, we
shouldn’t be looking only [at] the countries
that are producing nuclear energy, but also at
countries that are consuming [it], because we
are all part of the waste creation,” she said.
CLEAN AND INDUSTRIAL
Ilaria Conti, gas expert and coordinator for
strategy and development at the Florence School
of Regulation, told delegates it was important
the EU had not watered down its commitment to
decarbonize, instead aiming to use
industry as the “engine” of the transition.
The shift followed the results of European
parliamentary elections in June, which saw a
perceived backlash against green policies.
“The election results forced people to realise
that achieving climate neutrality targets on
time but losing the economy and the electorate
along the way was unhelpful, ” said Niko
Bosnjak, head of policy and communication at
the German grid operator OGE.
Bosnjak said he worried that there was less
urgency for policymakers to act since the
pressure had eased, despite net-zero goals
rapidly approaching.
“I’m afraid we’re getting into the regular
slump that we’ve been in before. I’m not saying
I’m all for crises, ok? I think no one wants
that, but we need to do better a better job in
translating the learnings,” he said.
For example, Bosnjak wondered why there was not
middle ground between the 9-month construction
of an LNG-import pipeline during the crisis and
the return to an average of 6-8 years to build
infrastructure.
Conti said she thought plans to make the
Commission more interdependent was “actually in
my opinion a very smart move by Ursula von der
Leyen.”
The overlapping briefs
would hopefully force incoming commissioners to
cooperate, Conti said, breaking down past silos
where each commissioner focused only on their
own portfolio.
Recycled Polyethylene22-Oct-2024
BARCELONA (ICIS)–Changing trade flows driven
by increasing friction between China, the US
and their allies mean there will be demand for
new chemical logistics routes and
infrastructure, according to the executive
chairman of chemical logistics group Bertschi.
As direct chemical exports from China to the US
decline, and more trade barriers go up,
countries in Eastern Europe, southeast Asia
plus Mexico and Turkey are acting as a stopping
off points for indirect exports, while new
chemical manufacturing also springs up in these
areas, said Hans-Jorg Bertschi.
He said: “The geopolitical situation also plays
an important role – there are two blocs now –
western countries and the BRICs (Brazil,
Russia, India, China) led by China where we see
a certain fragmentation of global trade.
Chemical flows between China and the US are
shrinking and we also now see a lot of
triangulation trade where bridge countries in
between take advantage of the situation.”
Speaking on the side lines of the European
Petrochemical Association’s annual conference
in Berlin, he explained that China now
transports a lot more chemicals to Mexico,
where local manufacturers add value and then
export finished goods to the US.
Chemical producers – some from China – are
building plants and businesses in Hungary and
Turkey. There is also a flurry of activity in
Morocco, India and Vietnam, which are all
changing trade patterns around the globe, the
executive believes.
He said: “The reality is that new countries are
emerging, which I call bridge countries between
the blocs – some do not yet have the right
chemicals infrastructure so here I would expect
to see more investment in chemical logistics
and supply chain infrastructure where there is
growing local demand in addition to demand from
regional fragmentation.”
OTHER CHEMICAL TRADE FLOWS
ALTER
Bertschi pointed out that there is a clear
increase of imports from the US to Europe based
on the US feedstock advantage and growth of
new-build facilities which are very efficient.
“This has been going on for 3-4 years and will
develop further. If you look at the average
cracker size in Europe it’s about 350,000
tonnes/year whereas new world scale crackers
are around 1 million tonnes/year. Also the
average age of Europe’s crackers is 40-50… so
I expect to see more closure announcements
here, and more imports from the US, the Middle
East and eventually from China.”
CHEMICAL RECYCLING WILL DRIVE NEW
LOGISTICS
The chemical recycling sector is growing, with
83 projects in Europe alone recorded in the
ICIS Recycling Supply Tracker – Chemical.
Globally the database records 173 sites
and this nascent part of the chemical industry
will create some completely new logistics
requirements and trade flows according to
Bertschi.
He pointed out that the current linear model
for chemical production just requires oil and
gas to move mainly by pipeline to refinery and
cracker sites. The finished products –
chemicals and polymers – are then
distributed to downstream customers.
The circular economy creates new flows of
material which will require logistics support:
“But now, with renewables, we have new flows of
product which will require inbound logistics to
deliver feedstocks into these plants. Pyrolysis
oil will then be produced across regions which
will require complex inbound logistics to
refineries.”
Bertschi has started placing storage centers
near to crackers, plus heating and testing
facilities for pyrolysis oil, which is a
product of chemical recycling which can be used
as a circular feedstock for chemical
production.
“This is not homogenous – it needs to be
analysed before it is put into a cracker.
Previously just a pipe was needed but now
complex inbound logistics will be required. We
will import pyrolysis oil from across Europe
and the US and some of this is already
happening – this is at the beginning but it is
becoming one of our growth drivers.”
Interview by Will Beacham
Image credit: Georgios
Tsichlis/Shutterstock
Recycled Polyethylene Terephthalate22-Oct-2024
SINGAPORE (ICIS)–The short-term demand outlook
for recycled polymers from Asia remains
sluggish especially for low-value grades,
mainly due to poor economics and brand users’
preference of cheaper virgin plastics.
Upcoming regulation in deep-sea regions
fails to support Asia recycled polyethylene
terephthalate (rPET) exports
Asia recycled polyethylene (rPE), recycled
polypropylene (rPP) remain traded mostly in
domestic markets
Investments into recycling continue across
Asia despite weak demand
In this chemical podcast, ICIS senior editor
Arianne Perez discusses recent market
conditions with an outlook ahead in Asia.
Polyethylene22-Oct-2024
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson: The recent clamor about new
economic stimulus in China didn’t change
anything. After initial stock market rallies,
investors parsed the details and realized that
Beijing was either unable or unwilling (it is
surely a combination of both) to redirect the
economy towards much greater domestic
consumption and away from investment.
It is what it is. The only question now is how
low Chinese chemicals demand growth will go
over the next decade and more. Will we see a
negative growth in some years for some
products, especially those tied to
construction?
Today’s main average polyethylene (PE) margins
in northeast Asia between January 2014 and 18
October this year, weighted according to the
estimated percentage shares of the three grades
out of toral production in each of the 11 years
from 2014 until 2024. As LDPE accounted for an
average of just 16% in 2014-2024 versus 46% for
high density PE (HDPE) and 38% for linear low
density PE (LLDPE), then of course more weight
was given to the margins of the latter two
polymers.
Despite all the sound and fury of the recent
stimulus:
Margins during the Chemicals Supercycle, from
January 2015 until December 2022, averaged a
positive $435/tonne.
From January 2022 until August 2024 (before the
most recent stimulus), they averaged minus
$32/tonne.
From January 2022 until 18 October 2024
(including post-stimulus), they averaged minus
$29/tonne; from 1 September-18 October, the
margins were at a positive $25/tonne.
In other words, the most recent stimulus has
barely moved the needle towards returning the
northeast Asia PE business to a health
condition. Chemicals and polymers are a very
good barometer for broader economies.
A view from this year’s European Petrochemical
Association (EPCA): three to nine years before
a full recovery
This year’s EPCA in Berlin appeared as if it
was attended by more senior executives than is
usually the case.
“Normally, companies send junior- to mid-level
executives to the EPCA, but on this occasion
more senior leaders were present because they
wanted to try and gauge what happens next,”
said one contact.
I got the sense from my conversations at EPCA
that there is recognition at board levels that
the global chemicals industry is it an
inflection point, not just because of events in
China. The last chart in today’s post is a
means of getting the debate going about the
wider transformation taking place.
Back to the downturn and China. Everyone I
spoke to at EPCA recognized that China was
front and center of the downturn, given the
type of data I presented above.
Estimates of when a full recovery might arrive
ranged from a further three years to as many as
nine years. But there was also a recognition,
as the above chart suggests, that we may never
fully return to the old market conditions.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author, and do not necessarily represent those
of ICIS.
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