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SINGAPORE (ICIS)–Asian propylene (C3) prices have fallen for four consecutive weeks on the back of poor polypropylene (PP) performance. Markets editor Julia Tan speaks with senior editor Jackie Wong on market fundamentals in the Asian C3 and PP markets. Turnarounds provide limited support for C3 on the back of ample Chinese supply Q3 PP market fundamentals likely to remain similar to Q2 Market participants await Chinese demand recovery
SINGAPORE (ICIS)–The US’ House of Representatives has approved a deal to suspend the $31.4tr debt ceiling late on Wednesday, allowing the country to borrow more money and avoid a default. The agreement suspends the debt ceiling until 1 January 2025. Oil prices rose mid-morning following the, reversing earlier losses. Product ($/bbl) Latest (at 02:46 GMT) Previous Change Brent August 73.13 72.60 0.53 WTI July 68.57 68.09 0.48 The US House voted 314-117 to send the legislation to the US Senate, which must vote on the bill later this week before President Joe Biden can sign it into law. It is not yet clear when the Senate will vote. The US government is forecast to hit its borrowing limit on 5 June. A default could cause financial markets to freeze up and ignite an international crisis. US lawmakers have never failed to pass a suspension or increase in the debt ceiling before the Treasury ran out of cash to pay its obligations. On Thursday morning in Asia, oil prices were trading lower, weighed down by data from the American Petroleum Institute (API) which showed a rise in US crude inventories last week, raising oversupply concerns. Both crude benchmarks closed lower overnight on demand concerns following poor economic data from China and a firm US dollar. China’s official Purchasing Managers Index (PMI) showed that manufacturing activity in the world’s second-biggest economy contracted further in May amid dwindling demand. The manufacturing PMI in May fell by more than expected to 48.8 in May, down from 49.2 in April.
SINGAPORE (ICIS)–Caixin’s China manufacturing purchasing managers’ index (PMI) picked up from 49.5 in April to 50.9 in May, marking the first expansion in three months, the Chinese media firm said on Thursday. A PMI reading below 50 indicates contraction in the manufacturing economy, while a higher number denotes expansion. The Caixin PMI figure stood in contrast with China’s official manufacturing PMI for May which fell deeper into contraction mode at 48.8, marking a five-month low. The Caixin PMI surveys small and medium-sized enterprises (SMEs) and export-oriented enterprises located in eastern coastal regions while the official PMI is tilted toward larger state-owned enterprises. Production expanded at the quickest rate in nearly a year, supported by a fresh rise in overall new business amid reports of firmer client demand, Caixin said in a statement. The rate of output growth picked up from April’s three-month low and was the best seen since June 2022. “The subindex for total new orders recorded its second-highest reading since May 2021 as surveyed businesses reported more clients and demand, even though demand remained a bit weaker than supply,” said Wang Zhe, a senior economist at Caixin Insight Group. External demand remained stable, with the gauge for new export orders rising marginally within expansionary territory, Wang said. Overseas shipments of intermediate goods significantly outperformed shipments of consumer and investment products, according to Wang. Average delivery times for inputs at Chinese factories shortened again in May due to increased capacity at suppliers and improved material availability. However, business confidence around the 12-month outlook for output slipped to a seven-month low in May amid concerns over lingering global economic uncertainty, Caixin said. Manufacturing employment continued to deteriorate in May, Wang noted. “In a stark contrast to the improvements in supply and demand, the job market contracted at a faster pace in May, with the employment subindex plumbing the lowest level since February 2020,” Wang said. “Manufacturers remained optimistic, but the reading for expectations for future output worsened in May from the previous six months, though it stayed above 50. In fact, the reading was 2.6 points below the long-term average, as manufacturers showed concern about economic uncertainty,” Wang added. Focus article by Nurluqman Suratman
HOUSTON (ICIS)–LyondellBasell plans to delay the exit from its Houston-based refining business to no later than the end of Q1 2025, the international petrochemicals major said in an update on Wednesday. The company originally planned to end operations at the 268,000 bbl/day Houston refinery by end 2023. “Favourable inspections and consistent performance” have given the company the confidence to continue safe and reliable operations at the Houston site, it said. A moderate maintenance spend would support the extension in 2023 and 2024, it added. The extension will minimise any impact on the workforce as LyondellBasell continues to develop future options for the site. It will also enable a smoother transition between the shutdown and the implementation of the retrofitting and circular projects, it said. Meanwhile, the company is evaluating multiple options for the Houston site, including recycled and renewable-based feedstocks and green and blue hydrogen. These growth projects will connect to existing assets in the Houston area and use existing infrastructure on the refining site, including hydrotreaters, pipelines, tanks, utilities, buildings and laboratories, LyondellBasell noted. “In the future, LyondellBasell expects the 700-acre refining site will be part of a Houston regional hub for its Circular and Low Carbon Solutions business and support the growth of the LyondellBasell Circulen product portfolio,” it said. Additional reporting by Al Greenwood Thumbnail shows a pump that dispenses gasoline, one of the products made at a refinery. Image by Shutterstock.
SINGAPORE (ICIS)–On Wednesday, Thailand’s central bank raised its key interest rates by 25 basis points (bps) to 2.0% to tame inflation, while the economy is projected to post a 3.6% growth this year on the back of recovery in tourism and consumption. This is the sixth consecutive rate hike issued by the Bank of Thailand (BoT) since August 2022, bringing the cumulative increase to 150bps. It may be the last in the current monetary tightening cycle as inflation pressures appear to be easing. “Inflation should continue to decline at a gradual pace,” Piti Disyatat, secretary of the BoT monetary policy committee, said in a statement. Headline inflation is projected to be 2.5% in 2023 and 2.4% in 2024 due to easing electricity and oil prices, Disyatat said. “Following another 25bps rate hike today, we think the Bank of Thailand (BoT) has reached the peak of the current rate hiking cycle,” said Sung Eun Jung, lead economist at research firm Oxford Economics in a note on Wednesday. “With the policy rate now above where it was before the pandemic, we think an extended pause is most likely,” Sung said. Thailand’s core inflation, which excludes food and energy, however, will likely remain elevated and is projected to stabilise at 2.0% in 2023 to 2024, the BoT said. GDP growth is projected to accelerate to 3.6% in 2023 and further to 3.8% in 2024, from the 2.6% pace set last year, according to BoT. “A key impetus is the broad-based recovery in tourism, which should promote employment and labour income, in turn sustaining private consumption,” BoT’s Disyatat said. In the first quarter of 2023, the Thai economy expanded at an annualised rate of 2.7%, with the average inflation rate at 3.9%, according to data from the Thai Office of the National Economic and Social Development Council (NESDC). On a seasonally adjusted quarter-on-quarter basis, the economy posted a 1.9% growth. On a year-on-year basis, Q1 manufacturing continued to contract but logged a narrower decline of 3.1% from 5.0% in the previous quarter. Thailand’s January-March 2023 exports, however, fell by 4.6% year on year to $69.8bn, with export volume down 6.4% “in line with the economic slowdown of key trading partners.” “There’s still economic slack and the services sector has room to recover from its pandemic lows,” Sung of Oxford Economics said. “The [Monetary] committee recognises upside risks to domestic growth, in part owing to forthcoming government economic policies. At the same time, there is a need to monitor the uncertain economic and monetary policy outlook of major economies,” BoT’s Disyatat said. Focus article by Pearl Bantillo
SINGAPORE (ICIS)–China’s manufacturing sector lost further momentum in May, heightening concerns that oil consumption in the world’s second-biggest economy could weaken further. Oil prices were trading lower on Wednesday, weighed down by the downbeat data from China and lingering uncertainties over the US debt ceiling pact. Prices at 03:50 GMT ($/bbl) Latest Previous Change Brent July 73.35 73.54 -0.19 WTI July 69.26 69.46 -0.20 China’s official manufacturing purchasing managers’ index (PMI) for May fell deeper into contraction mode at 48.8, which is a five-month low. A PMI reading below 50 indicates contraction, while a higher number denotes expansion. The new orders subindex fell to 48.3 in May, while the new export orders subindex fell to 47.2. China’s official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 54.5 in May from 56.4 in April, marking the slowest pace in four months. In-person services sector staged a strong rebound during the first post-COVID holiday in early May (Labour Day), with domestic tourism trips and revenues both exceeding their 2019 pre-pandemic levels, Japan’s Nomura Global Markets Research said in a note. “We expect [China’s economic] growth momentum to weaken further in May, as property distress worsens, the export slowdown deepens, and because Beijing has still not taken meaningful action,” it said. “Beijing might be more cautious this time around as policymakers are faced with a smaller policy toolkit, a structural collapse in the property sector, and a much more complicated geopolitical situation,” Nomura said. OIL EXTENDS LOSSES Brent crude continued to trade sideways this week as the market awaits a decision from oil cartel OPEC and its allies (OPEC+) on 4 June regarding production. “The warning from the Saudi energy minister over short-selling in oil supported prices last week, however, broader macro-economic concerns, uncertainty around the US debt ceiling agreement and the possibility of a continued rate hike in the US weighed on the sentiment,” Dutch banking and financial services firm ING said in a note. Other demand concerns remain linked to China’s oil consumption growth this year as it is expected to play a major role in driving global oil demand growth this year, Vivek Dhar, director of commodities research at Commonwealth Bank of Australia, said in a note on Wednesday. China is projected to account for nearly 60% of global oil demand growth in 2023, according to the International Energy Agency’s (IEA) latest latest Oil Market Report. “With China’s industrial output and fixed asset investment growing more slowly than expected last month, markets are worried that China’s commodity demand is weakening more quickly than anticipated,” Dhar of the Commonwealth Bank of Australia said. “The current pessimism surrounding China’s commodity demand stands in contrast to the optimism at the beginning of this year. Markets were hopeful earlier this year that China’s pent- up demand would hold up strongly following the reopening of China’s economy,” Dhar said. Focus article by Nurluqman Suratman Thumbnail image: At Qinzhou port in south China’s Guangxi Zhuang Autonomous Region on 11 May 2023. (Source: Xinhua/Shutterstock)
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The short-term tactics of China’s polypropylene (PP) producers are clear from the latest export data combined with the ICIS Pricing numbers. China’s total PP exports in January-April 2023 fell to 436,195 tonnes compared with 486,727 tonnes during the same months last year. But the overall decline masked growing pressure from competitively priced Chinese products in the southeast Asian market, particularly in Indonesia, mainly in raffia grade. China’s exports to southeast Asia increased to 163,101 tonnes in January-April this year from 127,042 tonnes in January-April 2022. The main reason was a sharp rise in shipments to Indonesia and the Philippines. Indonesia’s PP raffia grade price premiums over China increased from $59/tonne in December 2022 to a peak so far this year of $151/tonne in February, before declining to $106/tonne in May. The rise in price premiums attracted more shipments from China, probably resulting in the dip in premiums from March until May. We will see this pattern across a wide range of China’s export destinations in south Asia, Turkey, Latin America, etc. We believe that the increased pressure from Chinese exports will result in greater volatility in pricing differentials between regions and countries. The pressure exerted by Chinese PP exports has increased because China’s PP demand could fall by 1% in 2023, as it plans to add 4.6m tonnes/year more capacity. China’s capacity as a percentage of demand could reach 124% this year, having first surpassed 100% in 2021. China’s long-term exports of PP may also include higher value as well as commodity grades of PP. Do not assume that China won’t be able to access or develop the catalysts and technologies to achieve this. 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.
HOUSTON (ICIS)–Australian Trigg Minerals Limited said it has achieved encouraging progress into an alternative processing method for producing potassium-rich feed salts from the Lake Throssell sulphate of potash (SOP) project in Western Australia. Trigg said the ongoing testing has the potential to deliver a simpler and more commercially robust method for processing feed salts which could significantly derisk Lake Throssell. In addition the company said if commercially proven, the technology also has significant positive implications for the broader SOP industry in Western Australia. The testing has also been designed to provide an alternative to the secondary evaporation ponds where the concentrated brine needs to be maintained in an equilibrium to precipitate the complex potassium rich salts. Trigg said maintaining this part of the process in a steady state when open to the atmosphere, with all of the consequent changes in temperature, pressure and humidity, has proven to be problematic for the SOP industry. “This is a pivotal moment in the development of this new technology, which has the potential to improve the processing reliability of the much needed and essential mineral fertilizer required for sustainable food production,” said Keren Paterson, Trigg Minerals managing director. “In addition to its broader industry implications within the SOP sector, it may also have implications for the extraction of other minerals in brine. “We look forward to keeping shareholders updated on our progress as we continue to generate further information and move towards the pivotal pilot scale test work program.” In a market update the company noted global potash markets have continued to ease on weak demand and reduced sentiment. Trigg said the benchmark price is down approximately 40% year on year since sanctions and other trade restrictions pushed potash prices to record highs. It added that values remain above the long-term price assumption used in the Lake Throssell scoping study but the situation highlights the imperative for Trigg to continue to learn from the industry first movers and seek alternative methodologies to mitigate technical and commissioning risks. The project’s scoping study previously indicated the potential for the project to be a top 10 global producer with an initial 21-year mine life with an output estimated at 245,000 tonnes/year of SOP. It also said its possible to expand the project and extend mine life with further exploration.
SAO PAULO (ICIS)–A fall of nearly 6.5% in Brazil’s fertilizers producer prices in April, month on month, dragged down overall chemicals prices, the country’s statistics body IBGE said on Tuesday. Overall chemicals prices fell 2.61% in April, compared with March, as all subcategories posted falls. It is the 10th consecutive monthly fall in chemicals producer prices, said IBGE. Moreover, chemicals was the largest contributor to the overall fall in industrial producer prices, down 0.35% month on month. “The three groups [for which prices are] released – manufacture of inorganic chemicals, manufacture of resins and elastomers, and manufacture of pesticides – dropped,” said Murilo Lemos, analyst at IBGE. “However, manufacture of inorganic chemicals, which includes fertilizers, stood out. That group registered a drop of 6.39% in the comparison between April and March.” According to IBGE, the cumulative rate in overall industrial producer prices for the past 12 months fell 4.63%, the biggest drop in the time series for this indicator, started in 2014. Producer prices fell in 12 out of 24 industrial activities surveyed in April. The falls in producer prices go in tandem with Brazil’s slowing rate of inflation, which in April stood at 4.18%, down from 4.65% in March. BELEAGUERED FERTILIZERSBrazil’s key agricultural sector is a large global consumer of fertilizers; the industry has been in the doldrums for months, in Brazil and practically everywhere else as high stocks and poor demand has caused sharp price falls. “The supply of fertilizers in the world market had been impacted by the restrictions of the pandemic and became even more scarce with the war in Ukraine. Brazilian producers managed to reinforce the stocks to avoid a shortage at harvesting time,” said IBGE’s Lemos. “Prices rose in that period, though fewer pandemic-related restrictions and the return of exports from European countries increased the supply in the second semester last year, though not followed by the demand. This impacted the chemical sector as a whole.” The outlook for the fertilizers sector remains woeful; in this podcast, the ICIS fertilizers team analyses the outlook for the sector for the remaining of 2023. DIESEL, JET PRICES FALLProducer prices for petroleum refining also fell notably, and the sector was the second largest contributor to the monthly fall after chemicals. According to Lemos, some derivatives, such as diesel fuel and jet kerosene, posted sharp falls. “Usually not a highlight, biodiesel stood out this month with a reduction due to the drop in the prices of soybean oil, its major raw material,” said Lemos. “On the other hand, ethyl alcohol rose due to the increase in the prices of sugarcane, whose supply reduced due to weather issues.” AUTO: HEADING TO THREE YEARS OF RISESOne of the sectors to post higher producer prices in April was the petrochemicals-intensive automotive, up 0.16% compared with March. The sector’s producer prices have posted 34 consecutive months of increases, said IGBE. The cumulative rate for the past 12 months in automotive producer prices rose 6.08%. “It rose for nearly three years in a row, which can be justified by an increase of costs. They have been facing a crisis in the semiconductors since the beginning of the pandemic, which impacts on the acquisition of inputs for cars,” said Lemos. “Yet, the change is not so high in absolute terms and compared with other activities surveyed.” To compile the IPP index, IGBE surveys around 2,100 enterprises about the prices received by producers, free from tax, tariffs and freight; it collects nearly 6,000 prices.
HOUSTON (ICIS)–A US bill that would raise the nation’s debt ceiling includes provisions that would reform the nation’s permitting regime, which should make it easier to develop infrastructure that would provide the chemical industry with feedstock as well as speed up renewable energy projects. The Fiscal Responsibility Act of 2023, known as HR 3746, still needs to pass the House Rules Committee before the full chamber of the House of Representatives can vote on it. Some of the permit-reform proposals were included in earlier bills. One of those will establish a single lead agency for individual projects that require reviews under the National Environmental Policy Act (NEPA). The lead agency has a two-year deadline to study and develop an environmental impact statement for projects deemed environmentally complex. For projects that are not deemed environmentally complex, the lead agency will have a one-year deadline to study and develop environmental assessments. Companies applying for the permits can sue the government if it misses the deadline. The debt-ceiling bill calls for the government to spend a year studying the creation of an online permitting portal for permits that require NEPA review. The bill will speed up the development of the Mountain Valley Pipeline, which will ship natural gas from the Marcellus shale in the Appalachian region to the southern part of the state of Virginia. CHEMS HAVE LONG CALLED FOR PERMIT REFORMThe chemical industry has long called for the US to make it easier to build pipelines and other energy infrastructure. Chemical plants in the US rely on natural gas as a feedstock and fuel. In addition, they overwhelmingly rely on gas-based feedstock such as ethane and propane. Permit reform would make it easier to build the infrastructure needed to deliver fuel and feedstock to chemical plants. Increasingly, chemical companies are relying on renewable power to lower their carbon emissions. Permit reform will make it easier to build the transmission lines that will give chemical plants access to renewable power produced by solar panels, wind turbines and other zero-carbon sources of electricity. During a briefing held on 28 May, White House officials acknowledged that the proposed permit reforms should make it easier to build more solar and wind projects as well as transmission lines and electric-vehicle (EV) chargers. EVs and renewable power projects consume various plastics and chemicals. Permit reform could stimulate chemical demand for these end markets. In a statement, the American Chemistry Council (ACC) said, “We applaud Congress and the Biden administration for reaching a bipartisan agreement that achieves progress on permitting reform.” The ACC encouraged Congress and the administration to continue working on ways to improve the nation’s permitting process. Thumbnail shows a pipeline. Image by Global Warming Images/REX Shutterstock
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