Pricing

LONDON (ICIS)–In this latest podcast, markets editor Nazif Nazmul interviews Paddy Lowe, CEO and founder of the synthetic fuels producing company Zero Petroleum. Synthetic fuels can play a vital role in slashing emissions across the transport sector in the coming years, although the road to scaling up is fraught with obstacles, as well as opportunities. Synthetic fuels, also known as e-fuels, are derived from renewable electricity, air and water. The power-to-liquid process entails chemical conversion of energy. Energy density of synthetic fuels and compatibility with international combustion engine (ICE) vehicles could provide a long-term decarbonisation alternative to electric vehicles (EVs) and biofuels Rail, marine, aviation, agricultural sectors can utilise synthetic fuels alongside road transport Synthetic fuels gaining traction in the aviation industry in the form of e-SAF Achieving cost parity with fossil-based gasoline will still take approximately 10 more years Legislative support likely to expedite time needed to achieve economies of scale Production process reliant on sourcing vast amount of renewable energy Click here to open in a new window.

08-May-2024

LONDON (ICIS)–German industrial production fell 0.4% in March month on month, but output from the chemical-pharmaceuticals sector rose slightly according to statistical data released on Wednesday. Bundesbank, chem-pharma production order volume index (2021=100): March 2024 February 2024 March 2023 Q1 2024 Q4 2023 Q1 2023 92.6 91.6 85.7 90.1 84.6 86.3 Production in the energy-intensive industries, which includes chemicals, remained flat month on month in March but rose 4.8% in Q1 2024 from Q4 2023. In the automotive industry, which is an important end market for chemicals, March production rose 0.6% from February. March 2024 production +/- change from February Total output from industry, construction and energy -0.4% Industrial production -0.4% -Intermediate goods -0.6% -Capital goods 0.1% -Consumer goods -1.4% Energy -4.2% Construction 1.0% (source: Statistisches Bundesamt, Wiesbaden) Industrial production was down 3.4% from March 2023 while total production from industry, construction and energy was down 3.3%. LACK OF ORDERSAccording to a survey by the Munich-based research group ifo on Wednesday, a shortage of new manufacturing orders worsened in April, slowing the overall economy. In manufacturing, 39.5% of companies reported a lack of orders, up from 36.9% in ifo’s January survey. In the chemical industry the share of companies reporting a lack of orders was 46.6% in April. In related news, a labor union has threatened “massive” strikes in the building and construction sectors after a failure to reach a new collective agreement with their employers. Along with the auto sector, building and construction are important end markets for the chemicals industry.

08-May-2024

BARCELONA (ICIS)–Europe’s chemical industry stands to benefit in the long-term from the expansion of wind, solar and other low carbon methods of producing energy. – Growth in renewables means spot electricity prices can turn negative if demand dips – Europe electricity prices higher than pre-war as tied to price of natural gas, now mainly liquefied natural gas (LNG) –  Europe sees significant growth in solar, while wind faces delays due to supply chain issues – Decarbonizing includes reducing emissions from gas plants via carbon capture and storage (CCS) and other technologies – Challenges include grid infrastructure to transport electricity across regions with varying renewable output – Despite regulatory hurdles, there is political will for grid investment as part of the energy transition In this Think Tank podcast, Will Beacham interviews ICIS power markets editor Andrea Battaglia, ICIS head of power analysis Matthew Jones, ICIS senior consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. 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.

08-May-2024

SINGAPORE (ICIS)–Asia's polyvinyl chloride (PVC) markets are expected to see some uncertainty in the coming months, with factors like China’s domestic demand, the impact of India’s monsoon and some policy changes expected to shape the landscape. June offers from Asian producers awaited next week SE Asian economies see healthy growth in Q1, expected to support PVC demand Low domestic demand in China encourages exports, especially to India In this chemical podcast, ICIS editors Jonathan Chou, Damini Dabholkar and analyst Lina Xu discuss recent market conditions with an outlook ahead in Asia. Visit us at Booth 13 at the Grand Ballroom Foyer at the Grand InterContinental Seoul Parnas! Book a meeting with ICIS here.

08-May-2024

SHANGHAI (ICIS)–Asia’s 1,4-butanediol (BDO) market continues to be pressured by oversupply amid slowing demand. With the first peak season in March to April ending, demand in some sectors has started to slow. In this chemical podcast, ICIS markets reporter Corey Chew reports from China on market expectations before Enmore’s 14th BDO and Derivatives Development Forum.

08-May-2024

SINGAPORE (ICIS)–Japanese majors Asahi Kasei, Mitsui Chemicals and Mitsubishi Chemical on Wednesday said they have agreed to perform a joint feasibility study on feedstock and fuel conversion at their ethylene production facilities in western Japan to accelerate their carbon neutrality targets. "The joint feasibility study is expected to raise the speed and efficiency of the transition to carbon neutrality of the companies’ ethylene production facilities and each company’s petrochemical products," they said in a joint statement. The three companies will study "concrete measures" to drive their move towards carbon neutrality such as replacing petroleum-derived resources with biomass feedstock and conversion to low-carbon fuel, while also studying optimal future production arrangements. In order to achieve carbon neutrality by 2050 in accordance with the target set by the Japanese government, the three chemical giants have each adopted policies to become carbon neutral by reducing greenhouse gas (GHG) emission targets to effectively zero. "However, if initiatives are taken by each company individually, the speed of implementation and efficiency of GHG reduction are limited," they said. "This makes it increasingly necessary for multiple petrochemical manufacturers located nearby to cooperate with one another through mutual provision of technology and joint implementation of measures that contribute to carbon neutrality."

08-May-2024

HOUSTON (ICIS)–Following a better-than-expected 2024 first quarter, US compounder and formulator Avient raised its full-year guidance for adjusted earnings before interest, tax, depreciation and amortization (EBITDA) by $5 million at the low end. Sales into the defense market, along with raw material deflation, were the key earnings drivers in Q1 and Avent expects both to support earnings through 2024, CEO Ashish Khandpur and CFO Jamie Beggs told analysts during the company’s Q1 earnings call on Tuesday. New 2024 guidance Previous 2024 guidance Pro forma 2023 adjusted EBITDA $505 to $535 million $510 to $535 million $501.8 million SALES IMPROVING IN MOST END MARKETSAvient sees demand conditions “generally improving across all regions”, with improved momentum in consumer, packaging, healthcare, defense and industrial end markets, the executives said. After a 35% year-on-year increase in Q1, defense sales amid the ongoing geopolitical tensions, Avient expects those sales to continue growing through 2024, albeit not at the first quarter’s hot pace, they said. Avient’s Dyneema-brand fiber technology is used in the personal protection of soldiers and law enforcement and border control officers. While Avient’s utilization rates in defense are high, the company is able to meet forecast demand growth and expects no capacity limitations this year. However, it may add capacities in the future, depending on demand, which can be “lumpy” in that market, they said. Defense accounted for 7% of Avient’s total 2023 sales of $3.14 billion, with more than half of those sales in the US. Avient acquired the Dyneema business from DSM in 2022. Telecommunications and energy, however, are among the weaker end markets, with first-quarter sales down double-digit and weakness continuing into the second quarter. Destocking in the capital-intensive telecommunications market continued in Q1, with no meaningful rebound in that market expected until 2025, the executives said. Telecommunications accounted for 4% of Avient’s 2023 sales. BY REGION Regionally, Avient sees good momentum in the US in markets such as consumer packaging, defense, building and construction, industrial and infrastructure. “Destocking in those markets is over”, Khandpur said. With the exception of telecommunications and energy, overall demand in North America is “coming back quite well”, he said. However, persistent inflation is delaying the timing of interest rate cuts, which could weigh on sales in end markets such as building and construction, transportation and industrial, the executives said. In China, about 70% of Avient’s sales go into the local market, putting the company into a good position as that country’s economic policies transition to focus on the domestic market, the executives said. In Europe, demand in packaging and healthcare is improving, but Avient expects the region’s overall year-on-year sales growth to be soft. Consumer confidence in Europe is weak and eurozone manufacturing continues to signal contraction, they noted. Meanwhile, the stronger US dollar has become a headwind, they added. Sales by region in 2023: RAW MATERIAL DEFLATION Raw material deflation will continue to support margin expansion in the second quarter, albeit to a lesser extent than in the first quarter, the executives said. In the first quarter, Avient saw better-than-expected pricing for non hydrocarbon-based raw materials such as pigments and certain performance additives. Primary raw materials used in Avient’s manufacturing operations include polyolefin and other thermoplastic resins, titanium oxide (TiO2), inorganic and organic pigments, specialty additives and ethylene. Pricing, net of raw materials, should help drive year-on-year earnings growth in 2024, the executives said. Also, the company expects additional margin expansion due synergies and plant closures related to its acquisition of Clariant’s masterbatch business back in 2020, Beggs noted. M&A NOT A PRIORITY In the near-term, Avient will focus on organic growth and margin expansion whereas growth through mergers and acquisitions (M&A) is not a priority. While Avient is not ruling out M&A, any deals would be “small and bolt-on in nature”, in areas like healthcare, sustainable solutions or composites, with focus on Asia and Latin America, Khandpur said. “Premiums are pretty high” in M&A, he added. Thumbnail photo of Ashish Khandpur, who took over as Avient's CEO and president on 1 December 2023; photo source: Avient

07-May-2024

SINGAPORE (ICIS)–Asia's olefins brace for headwinds amid sustained weak demand in May, although some support is expected from curtailed supply in China. Lengthening supply from South Korea could continue to weigh on the market's outlook as it navigates upstream volatility amid tensions in the Middle East. Asia's olefins market to see increasing supply from South Korea in May Relatively low PDH run rates could lend support to NE Asia C3 Poor demand weighing on Asia C2 amid multiple supply options for June arrivals In this chemical podcast, ICIS editors Julia Tan and Josh Quah discuss recent market conditions with an outlook ahead in Asia.

07-May-2024

ORLANDO (ICIS)–SABIC is looking for further opportunities for growth in the Americas as part of its strategy to navigate an era of excess capacity around the world, one that has led it and other producers to shutter capacity in high-cost regions, an executive said. "We are actively looking at our growth opportunities throughout North America as well as South America," said Sami Al-Osaimi, executive vice president, polymers, SABIC. He made his comments during a presentation at this year’s NPE: The Plastics Show. Al-Osaimi said the Americas is a very key strategic market for SABIC. The company has seen good momentum in North America. "We are definitely going to really make sure that we leverage what exactly our customers require," he said. About two years ago, SABIC and ExxonMobil started operations at an integrated polyethylene (PE) and ethylene glycols (EG) complex in Corpus Christi, Texas, US, under the Gulf Coast Growth Ventures (GCGV) joint venture. The startup marks SABIC's first US-based ethylene and PE production, albeit through a joint venture. At the same time, Al-Osaimi acknowledged the challenges facing the industry. The market is contending with the consequences of a surge in new ethylene capacity that has started up in recent years. ICIS estimates that up to 20 million tonnes/year may need to shut down to keep operating rates at healthy levels. High-cost regions are bearing the brunt. Earlier in April, SABIC announced plans to shut down a cracker in Geleen, the Netherlands. ExxonMobil revealed plans to shut down its cracker in France during that same week. Al-Osaimi did not rule out further capacity rationalizations during a question-and-answer session that followed his presentation at NPE. "SABIC always is looking to its operations in Americas, globally, and how to become more efficient and effective to support our customers to really develop the right solutions," he said. "This is going to be an ongoing process." OPPORTUNITIES IN CHEM RECYCLING, E-CRACKINGSABIC is further improving chemical recycling technology to make it more effective and efficient, he said. SABIC and Plastic Energy are developing a chemical recycling plant under a joint venture in Geleen. Completion had been expected in the fourth quarter of 2023. There are still challenges with scaling up the technology, Al-Osaimi said. Still, SABIC is open to expansion, with possible sites including the US, Saudi Arabia and other regions. In addition, SABIC, BASF and Linde recently started up a demonstration unit of an electric cracker (e-cracker). As the group demonstrates the technology, it would explore expanding the site and potentially building new units, Al-Osaimi said. STRATEGY OF COLLABORATION, INNOVATIONIn prepared remarks, Al-Osaimi elaborated on how SABIC was navigating the challenges in the market by stressing its focus on innovation and collaboration with customers. The company is focusing on end markets such as advanced packaging, automotive, transportation, building and construction, consumer goods, electrical components and health and hygiene, he said. Electric vehicles (EVs) have material challenges, that present opportunities for SABIC. The company is developing polymers to prevent thermal runaway – part of its larger BLUEHERO initiative, Al-Osaimi said. Companies that build automobiles powered by internal combustion engines (ICEs) still want to lower their weight to improve their fuel efficiency and reduce their greenhouse gas emissions, he said. That is creating demand for lighter weigh materials. Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida. Focus article by Al Greenwood Thumbnail image shows polyethylene (PE), which is used in plastics bags. (Photo by Elaine Thompson/AP/Shutterstock)

07-May-2024

SINGAPORE (ICIS)–Saudi Aramco's net income fell by 14.4% year on year to Saudi riyal (SR) 102.3 billion in the first quarter amid lower crude oil volumes and weakening downstream margins, the energy giant said on Tuesday. in SR billions Q1 2024 Q1 2023 % Change Sales 402.04 417.46 -3.7 Operational Profit 202.05 222.18 -9.1 Net profit 102.27 119.54 -14.4 Early this year, Saudi Arabia’s government ordered Aramco to halt its oil expansion plan and to target a maximum sustained production capacity of 12m barrels/day, 1m barrels/day below the target announced in 2020. In the first quarter, Aramco's downstream income before interest, income taxes and zakat (annual Islamic tax) slumped by 64% year on year to SR4.62 billion. The drop in downstream earnings reflects weakening refining and chemicals margins, partially offset by inventory valuation movement, it said. The drop in group earnings was partially offset by lower production royalties, an increase in crude oil prices compared to the same period last year and lower income taxes and zakat. Despite having a capacity of 12 million barrels/day, Saudi Arabia currently produces about 9 million barrels/day as part of production cuts initiated by OPEC and its allies in October 2022 and further voluntary cuts by Saudi Arabia and other OPEC+ members in April 2023, all designed to stabilize oil prices. Following an OPEC+ meeting in June 2023, Saudi Arabia – the world's top crude exporter – announced a further oil production cut of 1 million barrels/day. “Looking ahead, I expect our portfolio to continue to evolve as we aim to contribute to an energy transition that offers solutions to climate challenges, but at the same time recognizes the need for affordable, reliable, and flexible energy supplies," added Amin Nasser, Aramco's President and CEO. Aramco's chemicals arm SABIC and China's Fujian Energy and Petrochemical Group Co held a groundbreaking ceremony to mark the start of construction at the SABIC Fujian Petrochemical Complex in China's Fujian province during the first quarter. The project will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products. Thumbnail photo : One of Aramco's US offices (Source: Saudi Aramco)

07-May-2024