Global LNG market intelligence, real-time analysis and supply-demand forecasts

MOSCOW (MRC)–Imports of polypropylene (PP) into Belarus increased to about 106,400 tonnes in first eleven months of this year, up 1.5% year on year, with the greatest increase in homopolymer PP, according to MRC DataScope. November PP imports into Belarus dropped to 9,000 tonnes from 9,100 tonnes a month earlier, with local companies increased their purchases of injection moulding propylene copolymers in Russia, while homopolymers flows were steady over the same period at a little under 6,800 tonnes November imports of propylene copolymers to Belarus were about  2,200 tonnes versus 2,300 tonnes a month earlier, as local companies decreased significantly their procurement of injection moulding block-copolymers of propylene (PP block copolymer) from Russian producers. Type January – November 2021* January – November 2020* Change PP-homo 78.8 76.6 2.9% PP copolymers 27.6 28.3 -2.4% Total 106.4 104.9 1.5% *Numbers in thousands MRC, a partner of ICIS, produces polymers news and pricing reports from Russia, Ukraine, Belarus, Uzbekistan and Kazakhstan.

25-Jan-2022

MOSCOW (MRC)–Imports of polypropylene (PP) in Kazakhstan grew to 39,700 tonnes in first eleven months of this year, up 8% compared to the same period of 2020. PP exports increased more significantly by 24%, reported MRC analysts. November PP shipments to Kazakhstan grew to 2,400 tonnes from 3,600 tonnes a month earlier, local converters decreased their purchasing of homopolymer PP in Russia and Azerbaijan. The stable work of the local producer over the first eleven months of the year allowed increasing the export sales of polypropylene by almost a quarter. November imports of homopolymer PP and propylene copolymers increased to 2,100 tonnes and 300 tonnes, respectively, versus over 2,300 tonnes and 1,300 tonnes a month earlier, local companies reduced purchases pipe PP in Russia and PP-homo in Azerbaijan. Overall imports of homopolymer PP and propylene copolymers reached 28,600 tonnes and 11,200 tons, respectively, in January-November 2021, compared to 28,600 tonnes and 8,100 tonnes a year earlier. November exports of PP from Kazakhstan increased to 1,600 tonnes against 800 tonnes in October. Kazakhstan’s PP exports over the first eleven months dropped to 28,000 tonnes, whereas this figure was 22,700 tonnes a year earlier. About 92% of total exports accounted for Russia. Type January – November 2021 January – November 2020 Change PP homo 28.6 28.6 0% PP copo 11.2 8.1 39% Total import 39.7 36.6 8% Total export 28 22.7 24% MRC, a partner of ICIS, produces polymers news and pricing reports from Russia, Ukraine, Belarus, Uzbekistan and Kazakhstan.

25-Jan-2022

MOSCOW (MRC)–Polyethylene (PE) imports into Ukraine rose by 4% in 2021 from the previous year, according to MRC’s DataScope report. Only high-density polyethylene (HDPE) imports decreased, with all other main grades increasing. Imports of ‘others’ PE grades, including ethylene-vinyl-acetate (EVA), rose sharply from 2020. ‘000s tonnes Type 2021 2020 Change HDPE 90.7 97.3 -7% LDPE 86.3 79.4 9% LLDPE 81.8 75.9 8% others 18.5 13.4 38% Total 277.3 266 4% MRC, a partner of ICIS, produces polymers news and pricing reports from Russia, Ukraine, Belarus, Uzbekistan and Kazakhstan.

25-Jan-2022

MOSCOW (MRC)–Polyethylene (PE) imports into Kazakhstan fell in the first 11 months of 2021 by 9% year on year, with high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) accounting for the decrease, said MRC analysts. November PE imports to Kazakhstan reached 15,900 tonnes versus 14,000 tonnes a month earlier, with Russian producers and the Uzbek manufacturer increasing their footprint in the local market after scheduled shutdowns for maintenance. In January-November, purchases of low density polyethylene (LDPE) grew significantly, whereas HDPE and LLDPE imports decreased. ‘000s tonnes Type January – November 2021 January – November 2020 Change HDPE 115.6 134.2 -14% LDPE 21.4 16.7 28% LLDPE 10.4 11.4 -9% Total 147.4 162.4 -9% MRC, a partner of ICIS, produces polymers news and pricing reports from Russia, Ukraine, Belarus, Uzbekistan and Kazakhstan.

25-Jan-2022

SINGAPORE (ICIS)–ENEOS Corp is planning to cease operations at its 127,500 bbl/day Wakayama refinery in October 2023, the Japanese producer said on Tuesday. "The rapid reduction in demand due to the recent spread of COVID-19 besides structural domestic demand decline for petroleum products and severe international competition mainly in Asia—were considered comprehensively [for the closure]," the company said in a statement. "There was a pressing need to optimise the manufacturing of refineries and plants as well as the supply network for petroleum products. ENEOS therefore decided to terminate all functions of the Wakayama refinery," it said. ENEOS produces close to 355,000 tonnes/year of Group I base oils in Wakayama, according to the ICIS Supply & Demand Database. The company also produces benzene, toluene and mixed xylenes (MX) at the site. ENEOS currently operates 10 refineries in Japan, with an overall 1.87m bbl/day of crude processing capacity.

25-Jan-2022

SINGAPORE (ICIS)–ICIS analyst Jady Ma and Claire Gao discuss the current state and outlook of China's 2-ethylhexanol (2-EH) market. 2-EH prices rise on plasticisers’ active pre-holiday buying Domestic and overseas plants post more stable operation Downstream demand changes become the hotspot

25-Jan-2022

SINGAPORE (ICIS)–South Korea's economy expanded by 4.1% year on year in the fourth quarter of last year, supported by strong exports as well as expansions in the manufacturing and services sector, official data showed on Tuesday. Manufacturing expanded by 3.6% year on year in the fourth quarter, slowing down from the 5.7% growth  in the third quarter of 2021, the Bank of Korea said in a statement. The services sector grew by 4.8% year on year in the fourth quarter of 2021, accelerating from the 3.9% expansion in the third quarter. Exports rose by 6.1% year on year in the fourth quarter, slowing down from the 7.2% expansion in the third quarter of 2021. Imports were up by 9.7% year on year in the fourth quarter. For the full year of 2021, South Korea's GDP expanded by 4.0% year on year, reversing the 0.9% contraction in 2020. Manufacturing expanded by 6.6% year on year in 2021 and services grew by 3.7%. Construction contracted by 2.2% year on year in 2021. Exports expanded by 9.7% year on year in 2021 while imports were up by 8.4%.

25-Jan-2022

SINGAPORE (ICIS)–Sumitomo Chemical is building additional production lines for its liquid crystal polymer (LCP) super engineering plastic at the company's site in Ehime, the Japanese producer said on Tuesday. This expansion will increase the group’s production capacity of LCP by around 30%, it said in a statement. The new production lines are scheduled to be completed in the summer of 2023. LCP has been used for a broad range of applications, including electronic components for PCs and smartphones. "Demand for LCP is continuing to grow strongly as the rollout of 5G data communications systems is progressing at scale, while electric vehicles are becoming more popular on the back of accelerated efforts to mitigate environmental impact," the company said. Investment and capacity details of the new production lines were not disclosed.

25-Jan-2022

NEW YORK (ICIS)–The Omicron wave is pressuring supply chains with staffing shortages. Along with higher raw material costs, this is leading to downward earnings revisions among US chemicals companies for Q4 and Q1 2022 as well. Late last week, US-based coatings producer PPG reported Q4 earnings and guidance for Q1 that both fell short of Wall Street expectations – the latest in a string of disappointing announcements from coatings companies. “Omicron-related staffing shortages at chemical firms, their suppliers and customers have created expected, but hard to quantify, reductions to near-term earnings,” said UBS analyst John Roberts in a research note. “Before Omicron, there were already reports of improving supply chains. Reports indicate that Covid will likely continue to mutate, so this may not be the last supply chain disruption firms face. But reports also indicate the rapid spread of Omicron may also lead to a rapid recovery, so that supply chain issues could begin to ease again shortly,” he added. The uncertainty around Omicron, plus more vocal warnings in the scientific community about the potential for another mutation, is roiling financial markets worldwide. Shares of chemicals companies, which had held up relatively well amid rising interest rates ahead of expected rate hikes by the US Federal Reserve, have lately been selling off along with the broader market. Q4 2021 EBITDA shortfall $m Company Consensus Actual/pre-announce % Miss Axalta $220 $186 -15% Ashland $124 $106 -15% Ecolab $760 $720 -5% PPG $499 $452 -9% Sherwin-Williams $733 $601 -18% RPM* $197 $195 -1% Q1 2022 EBITDA shortfall $m Company Consensus Guidance % Miss PPG $629 $486 -23% RPM $117 $110 -6% Source: UBS, company reports, FactSet *RPM's fiscal Q2 ends on 30 November, roughly corresponding to a calendar Q4, which ends on 31 December. PLANT MANAGER THE 'TOUGEST JOB'For now, companies are grappling with the immediate impacts of Omicron, as vividly described by PPG CEO Michael McGarry on the company’s Q4 earnings conference call. “The toughest job at PPG right now is a plant manager. They wake up in the morning, check their phone to see how many people called off sick. And then they get to work… and go to the dock area and see how many trucks didn’t get picked up, and then they go to the receiving area and find out what didn’t come in that was supposed to,” said McGarry. “And then they move into the plant, and the supply chain people are telling them that they’re going to have to make smaller batches because of a lack of raw materials. And then the sales team is telling them that if we don’t get paint out the door, here’s how many customers we’re going to impact,” he continued. Wells Fargo analyst Michael Sison cited lingering labour cost inflation and availability issues as headwinds in Q1 for PPG, and downgraded his rating on the company to “equal weight” from “overweight”. Such challenges, along with raw material cost inflation on the order of 25-30% year on year, will dent Q1 earnings for PPG, and likely those of other coatings and specialty chemicals companies. Raw materials for coatings include titanium dioxide (TiO2), acrylates, isocyanates and epoxy resins, along with a wide range of solvents. “Raw material availability remains a headwind, specifically for key materials such as emulsions and isocyanates. Availability issues impacted Q4 2021 sales by $150m, and PPG anticipates sales volumes in Q1 seeing further impact from raw material availability issues, especially in Performance Coatings,” said Sison. While higher raw materials costs are generally good for chemicals companies, that’s only when they are relatively stable at high levels, or rising steadily, giving producers a chance to raise their own prices. In contrast, spiking raw material costs typically lead to a quarter or two of lower margins as price hikes lag. “There is always a lag between cost changes and prices, and the transient penalty to earnings is a function of the rate of change of raws – not just the amount of change,” Roberts at UBS pointed out. “Recent raw material cost increases have been among the most rapid in the history of the chemical industry. Volatile oil prices globally, gas prices in Europe and coal prices in China have made it challenging to forecast chemical raw material costs,” he added. PPG, along with other coatings companies, is aggressively raising prices to pass along not only higher raw materials but logistics costs. SPECIALTIES, COATINGS MOST VULNERABLESpecialty chemicals and coatings producers are more vulnerable to labour disruptions and raw material shortages, and this has been evidenced by the earnings shortfalls thus far. “These are all specialty chemical firms who purchase many chemical ingredients, create formulated products in small batch operations and have significant technical service and sales organisations that interact closely with customers,” said Roberts. “When one raw material is missing due to a supply chain issue, the formulation can’t be completed. The plants and customer interactions are much more people intensive. And pricing lags raw material cost increases by longer than for basic chemicals,” he added. US-based coatings producer Sherwin-Williams recently noted the Omicron variant’s spread among the company’s store managers, field sales representatives and drivers in December. At some locations, the company cut store hours and reduced staff. Many of Sherwin-Williams’ suppliers and customers suffered similar problems from Omicron, the company said. PROSPECTS FOR IMPROVEMENT IN H2While Q1 is set to be a challenging time for many chemicals producers, business could start to improve in Q2 and through the rest of the year if Omicron peaks and wanes as expected in many regions, and semiconductor shortages and other supply constraints ease. “I see automotive OEM definitely improving. The chip shortage is going to continue to get marginally better,” said McGarry. ICIS projects 2022 US light vehicle sales to rebound to 16.0m from 15.0m in 2021 as chip constraints ease later in the year. However, this would still be below the pre-pandemic 2019 level of 17.0m, according to ICIS senior economist Kevin Swift. The PPG CEO also sees higher auto refinish paint demand from a harsher winter in the US, greater aerospace coatings demand from recovering air travel and China eventually approving the Boeing 737 MAX aircraft, and more demand from new metal packaging plants opening up to replace plastics packaging. “Every quarter from this point out we should start to see improvement in margins,” said McGarry. Raw material costs should flatten out, price increases will be implemented, manufacturing issues resolved, and cost savings and acquisition synergies realised. Plus, volumes should bounce back, led by auto and aerospace, he noted. CHINA ZERO-COVID POLICY AND POTENTIAL FOR MORE DISRUPTIONSHowever, China’s zero-Covid policy, where it shuts down cities and large sections of the country in the event of even limited COVID-19 infections, could prove to be severely disruptive if such a policy is maintained amid higher infections from Omicron. “What we are really worried about is, if Omicron gets to China,” said McGarry, noting China’s zero-Covid policy. PPG’s largest plant in China is in Tianjin, where a recent small COVID-19 outbreak prompted authorities to test 14m people within two days, he said. “So, if Omicron were to get to China, and they continue with their zero-Covid policy, that could have a pretty disruptive effect” on PPG’s business in China, McGarry noted. A major Omicron spread in China met with stringent lockdowns and restrictions would obviously have a disruptive impact not just on coatings, but the entire global manufacturing and chemicals chain. Additional reporting by Stefan Baumgarten and Al Greenwood Insight article by Joseph Chang Thumbnail shows paint. Image by imageBROKER/Shutterstock

25-Jan-2022

LONDON (ICIS)–This short outlook video on the LNG market looks at: – Latest tenders from China and others in Asia – US production news from Calcasieu and Freeport, nuclear shutdowns in South Korea – Africa January exports on the rise

25-Jan-2022

LONDON (ICIS)–With sanctions on Belarusian muriate of potash (MOP) exports beginning to bite, many questions about supply security in the year ahead remain unanswered. Sylvia Traganida, senior editor for phosphates and UAN, and Andy Hemphill, senior editor for potash and sulphuric acid, discuss this week’s market-moving news. Click here to listen in a new window.

25-Jan-2022

LONDON (ICIS)–Trinseo has downgraded its expectations for full-year 2021 earnings and profits on the back of the sharp rise in natural gas pricing late last year and lost styrene production at its Terneuzen site in the Netherlands, the US-headquartered plastics and rubber specialist said on Monday. The company projects that full-year net income for 2021 will stand at $279m-281m, compared to earlier guidance of $336m-376m, while fourth-quarter net income is expected to be as little as $1m. Citing an “unprecedented” rise in European natural gas costs that outpaced the company’s capacity to pass on price increases and production losses at Terneuzen due to an upstream force majeure, Trinseo expects fourth-quarter net income from operations to be $1-3m, compared with $67m during the same period in 2020. Full-year 2021 adjusted earnings before interest, taxes, depreciation and amortisation are expected to be $726m-732m, compared with earlier forecasts of $750m-800m. Since the previous financial guidance was issued, the company has absorbed a hit of around $30m to net income from the sharp increases in natural gas pricing and $20m from Terneuzen. The company halted styrene production at Terneuzen in December 2021 due to feedstock supply constraints arising from a Dow cracker outage, returning to normal output for styrene derivatives before the end of the year. Monomer production remains offline. “While we implemented pricing actions in the fourth quarter, these were unable to keep pace with the unprecedented rise in natural gas prices that occurred late in the quarter,” said Trinseo CEO Frank Bozich. “Despite this and the Terneuzen outage, we were still able to generate significant cash and returns to shareholders during the fourth quarter, while continuing on our path of transformation via the completion of our sale of the synthetic rubber business and the acquisition of plastics recycler Heathland,” he added. Trinseo is projecting 2022 adjusted EBITDA of $700m-750m. Picture source: Xavier Bonilla/NurPhoto/Shutterstock Clarification: Recasts sixth paragraph to reflect that styrene derivatives production has resumed at Terneuzen. Styrene monomer production remains offline.

25-Jan-2022