Energy and chemicals consulting

HOUSTON (ICIS)–Huntsman is seeing early signs of a possible recovery in the market for methylene diphenyl diisocyanate (MDI), the CEO of the US-based polyurethanes producer said on Tuesday. "I believe that we're seeing some early signs of recovery in pricing and margins return," said Peter Huntsman, CEO. He made his comments during an earnings conference call. "As we sit here today, it is fair to say that there are more positive than negative movement in the MDI industry." MDI was among the first major chemicals to experience declines in demand and margin, the consequence of a confluence of factors, according to Huntsman. Interest rates rose, which slowed down North American construction, an important end market for polyurethanes. In China the housing market collapsed, and Europe experienced industrial decline. At the same time, projects that were announced before the COVID-19 pandemic started coming online, which created excess capacity. What followed was what Huntsman has described as the worst destocking cycle ever. Destocking has finally ended, and Huntsman's volumes have increased during the past few quarters. In China, publicly reported prices for polymeric methylene diphenyl diisocyanate (PMDI) have reached three-year highs, he said. Moreover, those prices have been remarkably stable. China's recovery should continue through the decade and remain very gradual, he said. In the US, multiple companies have publicly announced price increases in multiple segments, Huntsman said. It is the first time that has happened in two years, and it is another sign that destocking has ended. Europe remains a struggle, and the region has yet to decide whether it will change energy policy or adopt protectionist measures, Huntsman said. Globally, utilization rates are likely in the upper 80% range, Huntsman said. Europe has the loosest market conditions and the US has the tightest. HUNTSMAN EXPECTS SLIGHTLY LOWER Q1 EARNINGSFor the first quarter, Huntsman expects adjusted earnings to decline slightly year on year, as shown in the following table. Figures are in millions of dollars, and they show adjusted earnings before interest, tax, depreciation and amortization (EBITDA). $millions Q1 25 Q1 24 Polyurethanes 45-60 39 Performance Products 25-35 42 Advanced Materials 40-45 43 Corporate -40 -43 Total 70-100 81 Source: Huntsman Overall, Huntsman expects its maleic anhydride (MA) business to benefit from a recovery in the construction market. MA is used to make unsaturated polyester resin (UPR). Huntsman should receive an earnings boost from a polyurethane catalyst project, which is advancing towards completion, commissioning and commercialization. That project should contribute $5 million in EBITDA in the second half of 2025 and another $10 million in 2026. The company also completed an investment in a performance amines product line that serves the semiconductor market. It is now qualifying those products with its downstream electronic customers. The project should contribute $5 million to $7 million in EBITDA in 2025 and a similar amount in 2026. Thumbnail shows polyurethane foam. Image by Shutterstock.

18-Feb-2025

LONDON (ICIS)–In episode 20 of the ICIS Hydrogen Insights podcast, ICIS hydrogen editor Jake Stones is joined by two experts from the energy storage industry to discuss the topic of storing hydrogen to support the future energy system. Jake is joined by Daniel Mercer, managing director Storengy Deutschland and Florent Lejette, director of strategy and business development Storengy. The group discuss key topics from the hydrogen storage world, such as developing hydrogen storage, how much using storage can save participants on a €/kg basis, what storage costs could be and, importantly, how much hydrogen storage will Europe need by 2030. As well as this, the trio discuss the multiple projects and learnings from Storengy’s activities in the hydrogen storage sector.

18-Feb-2025

The German government confirmed to ICIS it will not impose company-specific RFNBO targets The use of subsidies rather than quotas proves starkly different to Dutch equivalent scheme Germany is to hold a general election on 23 February LONDON (ICIS)–Germany’s federal ministry for economic affairs and climate protection told ICIS on 17 February that the country does not aim to implement company-specific targets or quotas for the use of renewable hydrogen, but instead will aim to achieve the targets via support mechanisms such as climate protection agreements. EU member states are obligated via the renewable energy directive (RED III) to use renewable fuels of non-biological origin (RFNBO) across transport and industry. For transport, 1% of total fuels used by 2030 should be RFNBO, whereas for industry, 42% of hydrogen use should be RFNBO, rising to 60% by 2035. Member states have until May 2025 to reflect their means of implementing these targets, with Finland already publishing its policy on RFNBO in transport towards the end of 2024. GERMAN RFNBO IN INDUSTRY According to a spokesperson from the federal ministry for economic affairs and climate protection, the German government has decided that “industrial targets will not be passed on to companies in the form of a corresponding company obligation or company-specific quota”. Alternatively, the German government noted that it’s “addressing the achievement of targets and the ramp-up of RFNBOs on the demand side with a series of instruments and measures, such as the climate protection agreements, the federal fund for industry and climate protection, the IPCEI steel projects and the H2Global funding program.” This would mean that the German government aims to see its industry RFNBO target met via support mechanisms, rather than the use of company-based penalties for failing to reach a specific quota. The latter method, namely quota-based drivers which imply a penalty should a company miss its target, has been pushed by EU hydrogen market participants, predominantly on the seller side of the market. This is because a penalty mechanism would in theory drive up a would-be hydrogen buyer’s willingness to pay. For example, the ICIS German THE front-month contract was assessed at €51.475/MWh on Friday 14 February, which equals €1.71 per 33.3kWh – the amount of energy in a kilogram of hydrogen. ICIS Hydrogen Foresight data indicates that German willingness to pay for hydrogen is expected to average €2.31/kg in 2025, while RFNBO costs are expected to average €8.10/kg. To bridge this gap, participants have been highlighting the need for a mechanism where parties would pay a penalty should they fail to meet their quota, therefore increasing their implied willingness to pay for RFNBO. Member states have so far released little in the way of industrial RFNBO targets. However, in October 2024 the Dutch government published a consultation for its proposal to implement RED III targets via its HWI scheme, where companies must ensure that by 2030 24% of their hydrogen use is RFNBO. Participants will receive a certificate for each unit of RFNBO used, which can be traded if the obligated party wishes. In essence, the Dutch HWI as it stands would act as a quota-based scheme. Speaking to ICIS in reaction to the proposed RED III mechanism, one market participant said they felt the scheme could face potential changes following the approaching German election on 23 February. Another market participant said that they viewed the potential of a subsidy-only RED III implementation as negative as it showed the country presented less of a push to decarbonize, bringing more uncertainty to developers. They added that the alternative would be a lot of subsidies, which they were sceptical of. COST OF SUPPORTING RFNBO UPTAKE ICIS Hydrogen Foresight data indicates that industrial hydrogen demand in Germany could reach 75TWh by 2030, approximately 85% of total hydrogen demand in Germany by that time. To balance willingness to pay across hydrogen projects in the ICIS Hydrogen Foresight project database with supply-side project costs, ICIS data indicates that accumulative support across capital and operational funding would need to surpass €70 billion. GERMAN GAS DEMAND REDUCTION Should the German government’s approach result in high levels of uptake of RFNBO across industry, reducing overall natural gas demand, this could ease gas and power prices. However, in 2024 industrial natural gas offtake totaled 332TWh, amounting to just under 40% of Germany’s total gas demand for the year. As such, even if all 75TWh of projected hydrogen demand in industry moved from fossil fuel-based supply to RFNBO, this would still leave a substantial level of natural gas demand for industrials intact.

17-Feb-2025

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 14 February. NEWS INSIGHT: US mulls reciprocal tariffs on Brazil ethanol, cabinet hopes steel quota is to be kept Although the new US administration has so far only imposed tariffs on China, President Donald Trump keeps using the tariff threat as a form of negotiation and in the latter part of this week it was the turn of Brazil’s ethanol. Brazil’s Unigel plans listing but location undisclosed, rules out IPO – company Unigel’s restructuring plan includes listing shares on the stock exchange but not an initial public offering (IPO) issuing new shares, a spokesperson for the Brazilian chemicals producer said to ICIS. Brazil’s inflation slows in January but monetary tightening to continue – analysts Brazil’s annual rate of inflation fell in January to 4.56%, down from 4.83% in December, the country’s statistical office, IBGE, said this week. INSIGHT: EU-Chile trade deal could benefit chemicals indirectly via higher minerals supply (part 1) An interim trade accord between Chile and the EU kicked off on 1 February and the 27-country bloc is not shy about its main objective: get preferential access to the Latin American nation’s vast resources of raw materials. Mexico’s inflation falls in January nearing target, automotive exports under pressure Mexico’s annual rate of inflation fell to 3.59% in January, down sharply from December’s 4.2%, the country’s statistics office Inegi said. Brazil’s automotive January production up 15% on healthy demand at home, abroad Brazil's petrochemicals-intensive automotive production rose more than 15%, year on year, to 175,500 units – the highest January output since 2021 – while exports jumped over 50%, the country’s trade group Anfavea said on Monday. PRICING LatAm PE international prices stable to up on higher US export offersInternational polyethylene (PE) prices were assessed as stable to up on higher US export offers. LatAm PP domestic prices up in Mexico on higher feedstock costs Domestic polypropylene (PP) prices increased in Mexico tracking higher propylene costs. In other Latin American countries, prices were unchanged.

17-Feb-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 14 February. IPEX: Asia finding a floor, up 1%; PVC and PP drive 1.3% index fall in Europe; USG toluene firms The ICIS Petrochemical Index (IPEX) for January shows that northeast Asian chemical markets may be finding a floor after two consecutive months of declines, with the regional index up 1% – only its second gain in six months, driven by a 14.7% surge in butadiene due to rising crude oil costs. US higher steel tariffs could backfire, reduce capex in chemical, industrial plants – ICIS economist Potential US 25% tariffs on steel and other metals could ultimately reduce capital expenditure (capex) in chemicals and industrial plants as costs rise, according to an economist at ICIS. US’ 25% tariffs on all steel, aluminium imports start 12 March The US will start imposing 25% tariffs on all steel and aluminium imports starting 12 March, under the executive order signed by US President Donald Trump on 11 February. INSIGHT: EU-Chile trade deal could benefit chemicals indirectly via higher minerals supply (part 1) An interim trade accord between Chile and the EU kicked off on 1 February and the 27-country bloc is not shy about its main objective: get preferential access to the Latin American nation’s vast resources of raw materials. INSIGHT: US reciprocal tariffs would have little direct impact on commodity chemicals markets – analysis The threat of US reciprocal tariffs is the latest wrinkle in US trade policy, spurring players to game out potential impacts. For the US chemical industry, there should be little direct impact on commodity markets as imports largely originate from Canada and South Korea – countries that already have free trade agreements with the US. Americas Styrenics sale process delayed as better market conditions expected later in 2025 – Trinseo The potential sale of Americas Styrenics (AmSty) – the 50/50 joint venture between Trinseo and Chevron Phillips Chemical (CP Chem) is being delayed as better market conditions are expected later in 2025, said the CEO of Trinseo. Reciprocal tariffs will match taxes on US goods by other countries; to take effect in April The US plans to impose reciprocal tariffs on all countries as early as 2 April once the required investigations have taken place, President Donald Trump said on Thursday. INSIGHT: US mulls reciprocal tariffs on Brazil ethanol, cabinet hopes steel quota is to be kept Although the new US administration has so far only imposed tariffs on China, President Donald Trump keeps using the tariff threat as a form of negotiation and in the latter part of this week it was the turn of Brazil’s ethanol.

17-Feb-2025

LONDON (ICIS)–BASF is to sell its Brazilian decorative paints business to Sherwin-Williams for $1.15 billion and is set to begin exploring options for other parts of its coatings portfolio, the Germany-headquartered chemicals major said on Monday. The deal, to be structured as a share deal, is expected to close in the second half of 2025, with both companies to act fully independently until the completion of the transaction, the company said. BASF had marked the divestment of the Brazil business as a priority when it unveiled its new corporate strategy in September 2024, with around 1,000 employees and two production sites, in Demarchi and Jaboatao, included in the sale. The business, which also includes paints brands Suvinil and Glasu!, largely operates in Brazil and has “limited synergies” with BASF’s other coatings businesses, the company said in a statement. BASF projects further divestments in the coatings space and will begin exploring options for its other assets in the space in the next few months. “In the second quarter of 2025, BASF intends to approach the market to further explore strategic options for its remaining coatings activities, which include automotive OEM coatings, refinish coatings and surface treatment,” the company said. At its September strategy announcement last year, CEO Markus Kamieth outlined an overhaul of BASF’s structure to mark a clearer line between core operations and “standalone units” serving specific industries. The company identified its chemicals, materials, industrial solutions, and nutrition and care segments as the core businesses, and environmental catalyst and metal solutions, battery materials, coatings, and agricultural solutions categorised as standalone. "In the coming years, BASF will focus on strengthening and profitably growing its core businesses. For the standalone businesses, BASF will pursue active portfolio options where this adds value for BASF and its shareholders," the company said at the time. Thumbnail photo source: Shutterstock

17-Feb-2025

UPDATE: China retaliates with 15% tariff on US LNG SINGAPORE (ICIS)–China has announced a 15% tariff to be imposed on coal and LNG imports from the United States as a retaliation to US trade tariffs, the country’s Ministry of Commerce said in a statement. “In accordance with the Tariff Law of the People’s Republic of China, the Customs Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China and other laws and regulations and the basic principles of international law, and with the approval of the State Council, additional tariffs will be imposed on some imported goods originating from the United States starting from 10 February 2025.” A 10% tariff will also be imposed on crude oil, agricultural machinery, and a score of other products. US president Donald Trump and Chinese President Xi Jinping are expected to talk this week on trade and other issues. The US has imposed 10% tariffs on Chinese goods starting 4 February. “This will drive even more US volumes into Europe, and leave portfolio players with suboptimal logistical flows,” said Saul Kavonic, oil and gas analyst with research firm MST Marquee. “Chinese buyers will pay the tariffs, so will be trying to minimize the US volumes they take contractually, and swap that out for non-US volumes. This benefits other regional producers such as Australia, who will be seen as relatively more reliable after this. “The negative impact on US LNG from these tariffs will only partly offset the strong appetite from other buyers to procure more US LNG under pressure from Trump to rebalance trade deficits. The tariffs will create material market inefficiencies, which will benefit some LNG traders in the regions. It may push prices higher everywhere on the margin, as flows become suboptimal.” CHINA IMPORTS China imported 4.4 million tonnes of LNG from the United States in 2024, ICIS data shows, out of a total of 79.24 million tonnes. If the tariff is enforced and stays beyond the upcoming negotiations expected this week between US President Donald Trump and Chinese President Xi Jinping, importers could optimize the US-based positions by diverting them elsewhere. However, the imposition of tariffs on energy by the Chinese government fundamentally means higher energy costs for the country, which increases the cost of industrial production and inflationary pressure. The growing tensions in the commercial relationship between the countries could also equate to reluctance by Chinese buyers to commit to new long-term positions with US-based suppliers. Political tensions with the US could turn Chinese buyers to alternative sources of LNG and pipeline gas, including Russia. The move is the latest in a series of tariff exchanges that so far have involved Canada and Mexico in addition to China. The market anticipates that the next wave of tariffs could target members of the European Union. EU states are unlikely to impose retaliatory tariffs on imported energy, as the cost of gas is already growing following the halt of Russian pipeline gas supplies to the region. Roman Kazmin

17-Feb-2025

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which gives an update on the collapse underway in China’s property market. 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. Paul Hodges is the chairman of consultants New Normal Consulting.

17-Feb-2025

SINGAPORE (ICIS)–S-Oil's Shaheen crude-to-chemical project in Ulsan, South Korea is now 55% complete and is expected to start commercial operations in the second half 2026, the producer said on Monday. Construction of the $7bn project at the Onsan Industrial Complex of Ulsan City started in March 2023, with mechanical completion targeted by the first half of 2026. South Korean refiner S-Oil is 63%-owned by Saudi Aramco, the world's largest crude exporter. The Shaheen project – named after the Arabic word for “falcon” – will have a 1.8 million tonne/year mixed-feed cracking facility; an 880,000 tonne/year linear low density polyethylene (LLDPE) unit; and a 440,000 tonne/year high density PE (HDPE) plant. The site will have a thermal crude-to-chemical (TC2C) facility, which will convert crude directly into petrochemical feedstocks such as liquefied petroleum gas (LPG) and naphtha, and the cracker is expected to recycle waste heat for power generation in the refinery. The company currently produces a range of petrochemicals and fuels including benzene, mixed xylenes, ethylene, methyl tertiary butyl ether (MTBE), paraxylene, polypropylene, propylene, propylene oxide, biodiesel, and potentially bio-based aviation and other bio-derived products at its Onsan site. S-Oil plans to supply feedstock to domestic petrochemical downstream companies mainly through pipelines. "To this end, the construction of logistics-related infrastructure, such as a new pipeline network, is being carried out at the same time," it said. Long-term agreements for stable supply of raw materials are being signed between S-Oil and petrochemical companies located at the two industrial complexes in Ulsan, which would boost competitiveness of domestic value chain, the company said.

17-Feb-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 14 February. Europe MX and PX chemical value chain braces for headwinds amid downstream closures and tariff threats Downstream demand for mixed xylenes (MX) and paraxylene (PX) in Europe has been limited at the start of 2025, with permanent shutdowns and the threat of tariffs among the hurdles to a meaningful recovery. Germany's battered chemical industry holds its breath ahead of general election Germany is set to head to the polls on 23 February amid one of the most challenging economic scenarios the country has faced in post-war times. EU gas price cap proposals would drive shipments to other regions – ICIS expert Proposals under consideration in the European Commission to temporarily cap natural gas pricing would likely result in the diversion of supplies away from Europe and tighten supply in the region, an ICIS analyst said on Wednesday. EU promises plan to save chemicals as Clean Industrial Deal approaches The European Commission has promised to address the plight of the region’s energy-intensive petrochemical sector later this year as it gears up for the publication of the Clean Industrial Deal on 26 February. IPEX: Asia finding a floor, up 1%; PVC and PP drive 1.3% index fall in Europe; USG toluene firms The ICIS Petrochemical Index (IPEX) for January shows that northeast Asian chemical markets may be finding a floor after two consecutive months of declines, with the regional index up 1% – only its second gain in six months, driven by a 14.7% surge in butadiene due to rising crude oil costs.

17-Feb-2025