News and analysis

LONDON (ICIS)–Chemicals production growth in France could be limited to 1% in 2024 as many companies prepare to implement structural cost saving measures and limit investments for growth, the trade group France Chimie said on Tuesday. The industry in France is weakened by an “unprecedented crisis” as is the sector across Europe, it suggested, with basic chemicals, including petrochemicals and polymers, under intense pressure. The basic chemicals sector in France was dealt a blow last week with the ExxonMobil Chemical France decision to close its steam cracker and polymer units at its Gravenchon site in Port-Jerome-sur-Seine, in Normandy. The closures – following €500m of losses from the site since 2018 – will result in the loss of 677 jobs, ExxonMobil France said on 11 April. Chemicals production in France fell by 1% last year compared with a drop of 8% in Europe, France Chimie said. The number excludes pharmaceuticals and fine chemicals. France is a leader in industrial exports, fourth in terms of patent filings in Europe and has a growing workforce, the trade group added. The headline figure, however, does not reflect the deeper contraction in parts of the sector. Perfumes and cosmetics chemicals have grown 15% since 2021 while specialty chemicals output has contracted 4% compared to a -13% in Germany, France Chimie noted. Basic chemicals in France, on the other hand, are contracting at a similar rate to their counterparts in the rest of Europe. “These activities are suffering from a loss of competitiveness aggravated by the pressure from international competition that is not always subject to the same regulatory requirements, “ it said in a statement translated from French. France Chimie expects growth investments in chemicals in France to fall by 40% this year in favor of what it calls regulatory and maintenance investments growth of around 20%. The sector needs an ambitious EU industrial policy that is in line with the Green Deal objectives to restore industrial sovereignty and preserve high quality employment, it said. In France, France Chimie is pressing for the next regulation of nuclear power to preserve the attractiveness of competitive electricity prices. It wants to see the France 2030 plan allowing competition on equal terms with the Inflation Reduction Act (IRA) support in the US. It calls for the use of trade defence mechanisms to restore fair international competition; simplified and stabilized regulations adapted to merging sectors of the economy; and support for research competitiveness, particularly through France’s Research Tax Credit. "The chemical industry is waiting for strong measures from the European and French public authorities to restore its development momentum,” France Chimie president Frederic Gauchet said. “The objective is not only to contribute to the development of European sectors (battery, hydrogen, health, bio-based products, recycling, etc), but also to support our existing sites so that chemistry continues to contribute fully to a sovereign and decarbonized economy and preserves quality employment in France.” Focus article by Nigel Davis. Thumbnail photo: A plant operated by France's TotalEnergies in Antwerp, Belgium (Source: TotalEnergies)

16-Apr-2024

South Korea LNG storage levels healthy Official data from January ICIS estimates for March SINGAPORE (ICIS)–South Korea LNG inventories were estimated at 5.1m tonnes in March 2024, according to ICIS data, a healthy level that has benefited from weak LNG consumption, rising power generation from alternative fuels and renewables and a mild winter. The estimates also align with the KESIS monthly energy statistics released this week that showed January at 4.5m tonnes, 16% higher than the same month last year, and 50% above the five-years-average. For the March estimate by ICIS, 19% of LNG imports were stored in the tank for winter gas supply security purposes. In November 2023, state-run KOGAS and private LNG importers vowed to actively cooperate and ensure no disruption of LNG-to-power generation until the end of winter in March 2024.

16-Apr-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 12 April. NEWS Argentina’s inflation up to 288% in March, but central bank cuts rates on ‘pronounced slowdown’Argentina’s annual rate of inflation rose to 287.9% in March, up from 276% in February, the country’s statistical agency Indec said on Friday. Argentina to scrap import duty on urea and UAN fertilizer In Argentina, the government plans to remove import duties on urea and urea ammonium nitrate (UAN), which are currently at 5.4% and 3.6% respectively, said Economy Minister Luis Caputo on X, formerly Twitter. Brazil’s inflation falls below 4% in March Brazil’s annual rate of inflation fell to 3.93% in March, down from 4.50% in February, and its lowest reading since June 2023, the country’s statistical agency IBGE said on Wednesday. Brazil’s Unigel ‘vehemently’ denies irregularities in Petrobras contract Unigel has “vehemently refuted” the existence of any irregularity in its tolling contract with Petrobras for two fertilizers plants, the Brazilian chemicals producer said on Wednesday. Mexico’s inflation down to 4.2% in March Mexico’s annual rate of inflation fell in March to 4.2%, down from 4.40% in February, the country’s statistics agency Inegi said on Tuesday. Argentina PVC sector faces headwinds amid infrastructure investment reductions Argentina polyvinyl chloride (PVC) sector faces challenges as the government reduces infrastructure investments in 2024, with an estimated 7.5% decrease in projects. Chile inflation falls to 3.7% in March Chile’s annual inflation rate fell in March to 3.7%, down from 4.5% in February, according to the country’s statistics office INE. Brazil’s automotive output barely up in Q1, sales rise 9% Brazil’s petrochemicals-intensive automotive output rose by 0.4% in the first quarter, year on year, to just below 550,000 units, the country’s trade group Anfavea said on Monday. PRICING LatAm PP domestic prices fall in Chile, Mexico on competitive offers from abroad, lower US spot PGP prices Domestic prices fell in Chile, Mexico due to competitive offers from abroad and lower US spot propylene costs. In other Latin American (LatAm) countries, prices were unchanged. LatAm PE international prices stable to down on lower US export prices International polyethylene (PE) prices were assessed as stable to down across Latin American (LatAm) countries on the back of lower US export prices. Weather conditions start to slightly shift PET demand in Latin America Polyethylene terephthalate (PET) prices remained stable in Brazil, with a slight softening in consumption coinciding with stabilized temperatures. However, demand continues to exceed expectations when compared with the corresponding period last year.

15-Apr-2024

HOUSTON (ICIS)–The Panama Canal Authority (PCA) said current forecasts indicate that steady rainfall will arrive later this month and continue during the rainy season, which would allow the PCA to gradually ease transit restrictions and traffic could return to normal by 2025. “All modifications to restrictions will be contingent on the forecasts,” the PCA said, meaning that if rainfall is less than what was forecast, restrictions could remain in place or be modified. “Moderate precipitation is expected to arrive later this month and grow in intensity, which would allow the canal to progressively increase daily slots back to the 36 daily transits typically offered during the rainy season,” the PCA said. The PCA began limiting the number of transits in August 2023 because of low water levels in Gatun Lake brought on by a severe drought that made 2023 the second driest year on record for the Panama Canal watershed catchment area. PCA opened two additional slots beginning 18 March, and a third on 25 March, bringing the total to 27/day, after solid rainfall in the region recently, but transits still remain well below 36 under normal conditions. The number of ships transiting the Panama Canal daily, using a seven-day moving average, ticked higher to 27 as of 8 April compared with 37 on the same date a year ago according to the most recent update at IMF PortWatch. Wait times for non-booked northbound vessels edged lower to 1.4 days, and fell to 0.2 days for southbound vessels on 15 April, according to the PCA vessel tracker. The average waiting time for vessels arriving without reservations this year has been just under 2.5 days, far lower than the 3.6 days experienced between January and March last year, and the 3.8 days recorded during the same period in 2022, the PCA said. The PCA said the number of vessels in the queue waiting to transit is on par with the amount expected under the current conditions. “The majority of vessels have reservations and routinely arrive early ahead of their allotted date to transit the Canal. It is common for these vessels to refuel or replenish supplies before they begin their scheduled passage,” the PCA said. The PCA said more than 75% of vessels outside the Panama Canal today have reservations and therefore will transit the Panama Canal on a predetermined date with minimal to no waiting time. Overall transits are at 60% of 2022 levels, the PCA said, and transits of product tankers and container ships have almost fully recovered, nearing 90% of normal activity.

15-Apr-2024

LONDON (ICIS)–Oil prices could come under downward pressure this week after Iran said its retaliation against Israel for the death of top military generals in an embassy bombing in Damascus is over. A weaker demand outlook for crude and worries that US interest rates will be higher-for-longer may add to the weaker picture. ICIS highlights five factors likely to drive benchmark crude prices this week.

15-Apr-2024

LONDON (ICIS)–Energy market reporter Amun Govil Lie sits down with relationship manager Pål Rasmussen from Gassco to discuss gas transport infrastructure on the Norwegian Continental Shelf, what the future holds for Norwegian gas exports to Europe, opportunities for hydrogen transport and the risks of sabotage on critical infrastructure.

15-Apr-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 12 April. Oil slumps by more than $2/bbl on Israel-Hamas ceasefire hopes Oil prices fell by more than $2/barrel on Monday amid easing tensions in the Middle East after Israel further withdrew troops from southern Gaza and signalled a willingness to resume ceasefire talks with Palestinian militant group Hamas. EPA’s final rule on US chem plant emissions could weigh on EO production – ACC The US Environmental Protection Agency (EPA) finalized a rule on Tuesday aimed at reducing hazardous air pollutants from chemical plants, which some think could weigh on production of key chemistries and could lead to higher costs being passed through to consumers. INVISTA to explore alternatives for nylon fibers business INVISTA plans to explore strategic alternatives for its nylon fibers business and has engaged Barclays as exclusive financial advisor during the exploration process, the US-based manufacturer of chemical intermediates, polymers and fibers said in a statement late on Tuesday. US East Coast PET bale prices steadily rise amid snug supply, rising beverage demand Despite historic patterns, East Coast polyethylene terephthalate (PET) bottle bale prices have risen only slightly and very steadily over the last several weeks. Crude demand expectations fall for 2024 as trends shift back to pre-COVID pattern – IEA The International Energy Agency (IEA) on Friday cut crude oil demand forecasts for the year, with rates expected to fall further next year as consumption returns to the pre-COVID-19 trend, increasing the odds of a peak in oil consumption this decade, the agency said. Argentina’s inflation up to 288% in March, but central bank cuts rates on ‘pronounced slowdown’ Argentina’s annual rate of inflation rose to 287.9% in March, up from 276% in February, the country’s statistical agency Indec said on Friday.

15-Apr-2024

LONDON (ICIS)–Chemical stocks in Europe have firmed in line with the general market in midday trading on Monday, as oil prices subsided and investor unrest eased despite ongoing tensions in the Middle East. Asia-Pacific equities had tumbled in earlier trading on the back of growing hostilities over the weekend after Iran launched ordinance into Israeli airspace late on 13 April. The Israel Defence Force (IDF) confirmed the attack, with Rear Admiral Daniel Hagari stating in a briefing on Sunday that none of the 170 drones launched from Iran had entered Israeli airspace, and fighter jets mobilized to intercept cruise and ballistic missiles had shot almost all of them down. The handful of ballistic missiles that crossed into Israeli territory were intercepted and fell at the Nevatim airbase in the south of the country, but damage to infrastructure was limited and the base is currently operational, he added. Lingering unease from the attack, and the potential for an Israel-Iran conflict to escalate further bled into early Monday trading, with Hong Kong’s Hang Seng index and Japan’s Nikkei 225 index closing down 0.72% and 0.74% respectively. Taiwan and India felt the chill more keenly, with the Taiwan SE and Bombay Sensex bourses closing down 1.38% and 1.14% respectively. European bourses were less unsettled on Monday, with Germany’s DAX and France’s CAC 40 trading up 1.01% and 1.09% respectively, while the UK FTSE 100 was little changed at 13:10 BST. European chemicals stocks moved higher on Monday, with the STOXX 600 chemicals index trading up 0.34% from Friday’s close, with Solvay, Evonik and Arkema among the biggest gainers. The decline in oil prices also deepened from earlier in the day, with the value of Brent crude June futures dropping 87 cents to $89.58/barrel in noon trading. The fall in crude values represents a decline in the overall risk premium priced in at present in response to Middle East tensions, but they are a long way from a more comprehensive rollback. Oil prices have increased by over $8/barrel since mid-March. Crude and downstream pricing as of 12:00 BST Monday Product Latest Previous Change Brent June 89.58 90.45 -0.87 WTI May 84.74 85.66 -0.92 Naphtha 677.00 695.00 -18.00 Benzene 1203.00 1205.00 -2.00 Styrene 1800.00 1815.00 -15.00 An attack from Iran had been threatened for weeks following a strike on its embassy in Damascus, Syria. The fact that the response was telegraphed in advance, consisted largely of slow-moving drones and resulted in little damage and no fatalities, has reassured markets that there is scope for a de-escalation. “The fact that there was limited damage and no loss of life may also provide some comfort to the market, as it may mean a more measured response from Israel,” said ING analysts in an oil market note issued on Monday. Iran said it considers the conflict concluded and US diplomats are reportedly urging restraint in Israel, but further salvos, which will represent Iran’s first direct attack on Israel, means that tensions could rapidly intensify. “The US and allies are pushing for a diplomatic response, while the risk is that hardliners within the Israeli government push for a more aggressive response,” ING added. Multiple western governments have officially condemned Iran for the attack which took place on the same day that Iran’s Revolutionary Guard Corps seized a ship passing along the Strait of Hormuz, according to data provider Xeneta. Any moves to sanction Iran or measures that could restrict the country’s flow of oil into global markets could tighten supplies in the short term, ING added. Focus article by Tom Brown Thumbnail photo: The bell ceremony at the Euronext exchange in Brussels, Belgium. Source: Shutterstock

15-Apr-2024

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which focuses on how US Trade Secretaries past and present have changed their minds on trade and inflation policy. 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.

15-Apr-2024

SINGAPORE (ICIS)–Oil prices eased on Monday as Iran’s attacks on Israel over the weekend were largely priced in by the market, according to analysts, but Asian equities tumbled amid concerns over recent escalation of geopolitical tensions in the Middle East. Product ($/barrel)  Latest (02:33 GMT) Previous Change Brent June 90.24 90.45 -0.21 WTI May 85.33 85.66 -0.33 Concerns over a wide regional conflict in the Middle East sent Japan's benchmark Nikkei 225 index falling by 1%, South Korea's KOSPI slipping by 1.69% and Hong Kong's Hang Seng index declining by 0.79%, as of 02:45 GMT. "The [oil] market had already priced in some form of attack, while limited damage and no loss of life means the potential for a more measured response from Israel," Dutch banking and financial services provider ING said in a note on Monday. "While Iran considers the altercation 'concluded', markets will have to wait to see how Israel responds." Israel's five-member war cabinet convened on 14 April to deliberate on potential responses, but no decision was reached due to disagreements over the timing and scale of any action, according to news agency Reuters. Iran launched on 13 April missile and drone attack on Israel involving over 300 projectiles. Of the 170 drones and 30 cruise missiles launched by Iran, none entered Israeli territory, while a small number of 110 ballistic missiles reached Israel, Israel military spokesman – rear admiral Daniel Hagari said in a televised statement. Oil benchmarks had climbed on 12 April to their highest levels since October as players were anticipating Iran’s retaliatory strike on Israel, which the Middle East country blames for fatal strikes at its embassy in Damascus, Syria on 1 April. Israel has neither confirmed nor denied involvement in the incident. Worries over tightening global supply, as well as possible supply disruption amid escalation of regional conflict in the Middle East, have been driving up crude prices since late last year. Iran had stated that its actions were in response to an attack on an Iranian diplomatic facility in Damascus which killed a high-ranking member of Iran's Islamic Revolutionary Guards and eight other officers. For the week ended 12 April, however, crude prices shed around 1% after the International Energy Agency (IEA) revised down its global oil demand growth forecast to 1.2 million barrels/day from 1.3 million barrels/day previously. SUPPLY RISKS REMAIN Meanwhile, the US might intensify its sanctions on Iran, potentially leading to a reduction in oil supply ranging from 500,000 to 1 million barrels per day and keep the oil market in a deficit for the rest of the year, according to ING. Iran pumps a little over 3m barrels/day of oil currently and is the fourth largest producer within OPEC. There is also the risk that Israel’s response includes targeting Iranian energy infrastructure, which could translate to even more significant supply losses. "Finally, if we were to see further escalation, there is the risk that Iran would attempt to disrupt or block oil flows through the Strait of Hormuz, through which roughly 20 million barrels per day of oil moves," ING said. Amid potential significant supply disruptions, the US could tap into its strategic petroleum reserves to mitigate any shortfall, according to ING. Additionally, OPEC holds over 5 million barrels/day of unused production capacity, which could be activated if needed, it said. Should oil prices surge due to supply losses, it is expected that OPEC would utilize some of this spare capacity to stabilize the market, ING said. OPEC and its allies (OPEC+) are due to meet on 1 June in Vienna, Austria to discuss output policy. The group has maintained their output cuts up to end-June. "While risks are clearly elevated, which should keep oil prices relatively well supported, oil supply remains intact for now," ING added. Focus article by Nurluqman Suratman Thumbnail image: Flares from explosions in the sky over Jerusalem as Israel's Iron Dome anti-missile system intercepts missiles and drones from Iran on 14 April 2024. (Xinhua/Shutterstock)

15-Apr-2024