Pricing

HOUSTON (ICIS)–The US Department of Energy (DOE) has announced a conditional commitment for up to $1.559 billion to Wabash Valley Resources to help finance a commercial-scale waste-to-ammonia production facility using carbon capture and sequestration (CCS) technology. The government funding would be part of a total investment of $2.4 billion that Wabash Valley Resources would secure for the project through private investment. Located in West Terre Haute, Indiana, the project is being planned to produce 500,000 tonnes of anhydrous ammonia annually and permanently sequestering 1.6 million tonnes of carbon dioxide annually. Officials said it will have the potential to be the world’s first, carbon-negative ammonia production facility and that the company would be repurposing an industrial gasifier to utilize petroleum coke. This will be the US’ first efforts to utilize petroleum coke to produce ammonia and store the associated emissions via permanent geologic sequestration. Wabash Valley Resources said it is their intention to demonstrate a commercially and environmentally viable end-use alternative for petroleum coke, which is a waste product generated during the oil refining process. Officials said this project would play a critical role in securing domestic fertilizer supply for the region commonly known as the Corn Belt, contributing to both food security and climate goals. This low-carbon ammonia would be cost-competitive compared to existing ammonia imports, helping to drive down costs for local businesses and consumers. It was noted that while ammonia fertilizer is a crucial element of the US agricultural system, its production is a significant contributor to climate change. Globally, the manufacturing of the nutrient accounts for 1% to 2% of all carbon dioxide emissions. Through this project, Wabash Valley Resources is striving to reduce the agricultural industry’s emissions. In addition to its environmental benefits, the project is expected to create 500 construction jobs and 125 operations jobs.

17-Sep-2024

HOUSTON (ICIS)–Expected to make landfall late Monday in South Carolina but not develop further, the next round of tropical weather is already delivering wind and rains to the region but for the fertilizer industry, it was not seen as being the type of threat that Hurricane Francine was last week. While South Carolina and North Carolina have significant agriculture activities and infrastructure along with crop nutrient operations and distribution, fertilizer manufacturing is less prevalent than in other parts of the US. The storm was being classified as a tropical rainstorm with potential to produce several inches of rain per hour with it expected to trek northward once it makes landfall. There have been tropical storm-force winds seen from this event but there has not been a defined center of circulation. In terms of major fertilizer activity, Canadian producer Nutrien has the Aurora Phosphate plant in Aurora, North Carolina, with the city located near the coast. The company said it is keeping aware and taking necessary steps. “We are actively monitoring the tropical storm system and have comprehensive emergency response plans in place to ensure the safety of our people and operational integrity of our facilities,” said a Nutrien spokesperson. Like the previous tropical weather that has struck the US, this storm’s wrath will bring the most damage to crops. Harvesting of corn and soybeans are underway, with cotton and other crops now maturing also in jeopardy, with the heavy rainfall likely causing some localized flooding. Harvesting campaigns in both South Carolina and North Carolina have been halted, with this trend possibly carrying into the surrounding states. If the rain is extensive the delay could be several days, if not longer depending on rainfall amounts. The concern is with a delay in these activities it creates an additional lag for starting post-harvest field activities like end-of-the-year fertilizing. The US Department of Agriculture (USDA) reported that 47% of the corn crop had been completed with only 1% of soybeans having been harvested in North Carolina. There were no results provided for South Carolina. As with Hurricane Francine which hit both Louisiana and Mississippi much more severely, the true impact of this latest tropical system will be felt in crop damage rather than damaged fertilizer plants or retail operations. There is concern that any loss of yields will mean less income for farmers which then could cause a sizeable decrease in buying for further volumes.

16-Sep-2024

HOUSTON (ICIS)–As the US recycled polyethylene terephthalate (R-PET) market continues to develop and new players establish supply relationships across members in the value chain, pricing mechanisms have shifted significantly over the course of the last 5+ years. Historically, R-PET pricing was linked to virgin pricing, but at a deficit, meaning recycled resins were expected to be cheaper than virgin. Now, the tables have turned, particularly for sought after "sustainability-driven" grades of recycled resin which typically command a premium to virgin due to the tight supply and high demand of these higher quality, clear resins. Pricing for these grades of recycled resins has shifted within the R-PET industry, such that pellet prices are largely based on their own feedstock and production costs. While spot pellet pricing is subjected to the additional lens of local supply and demand, including substitution with imports or cheap virgin, contract pellet pricing is now largely based off of bale feedstock formulas, with some contracts specifying individual step inputs, and others specifying the bale index and then an adder to represent the processing cost. Eventually, the market may move to a uniform indexed pellet price, settled on a routine frequency by the market, similar to how R-PET pricing is established in Europe, or how other commodity resin prices are established in the US, such as polyethylene (PE). Within the ICIS US R-PET commodity services, two new price series have been introduced which represent food grade pellet pricing calculated via a formula, starting with bale feedstock costs. While each contract will have unique formula inputs which are largely kept private, the following prices are meant as an indicator of average pellet pricing based on formula, as this can vary significantly from active spot market transactions – depending on the current market supply and demand. There is one assessment for the East Coast and one for the West Coast based on various bale feedstocks. The formula is listed below: [([(Bale price indicator + bale freight ) ÷ bale yield] + bale to flake processing costs) ÷ flake yield] + flake to pellet processing costs = pellet price Formula input descriptors: Bale price indicator: What quality (curbside or deposit) and region (East Coast vs West Coast) descriptors are used for selecting base pricing for bale feedstock costs in relation to the type most often used by local recyclers. Bale freight: Cost to transport material from bale producer (typically material recovery facility (MRF)) to bale buyer (typically the recycler/reclaimer). Bale yield: Factor to account for loss of material due to contamination within the bale; Curbside bales have higher contamination levels and thus lower yields. Bale to flake processing costs: Associated production costs from sorting, washing, grinding processes, including but not limited to facilities costs, utilities, labor, etc. Flake yield: Factor to account for loss of material due to contamination from flake to pellet stage. Flake to pellet processing costs: Associated production costs from pelletization, including but not limited to facilities costs, utilities, labor, etc. The numeric input values were gathered from market participants, with median values used among responses. The inputs are subject to change pending further feedback or market cost changes, such as the recent inflation of production costs within the last ~2-4 years. This price excludes delivery costs of the final pellet. This price also excludes explicit margin adders, though some processing costs may include inherit margin depending on the processing yield fluctuation. For more information on these new series, or to share feedback, please contact Emily Friedman at Emily.friedman@icis.com.

16-Sep-2024

HOUSTON (ICIS)–Gevo has received a patent for its process that converts ethanol into olefins in a single step, providing another way to make propylene from renewable feedstock, the US-based renewable chemicals producer said on Monday. The patent, No 12,043,587 B2, addresses the company's process that relies on catalyst combinations for the process, which can make propylene and butylenes, which are also known as butenes. Gevo had licensed the technology to LG Chem. Chemical companies have had limited ways to produce propylene or butylenes from renewable feedstock. Technology already exists to dehydrate ethanol to produce ethylene. Companies could then convert the ethylene to propylene through a metathesis unit, but that would require an additional step and another plant, which would increase costs. Another route is to hydrotreat natural oils and used cooking grease to produce renewable naphtha. That naphtha could then be cracked in traditional ethylene plants to produce olefins and aromatics. This process faces possible feedstock constraints if companies wish to use nonfood feedstocks. Already, oleochemical producers that rely on tall oil have had to compete with renewable diesel producers for feedstock. Gevo did not compare the costs of its process to these existing ways to make propylene and butylenes from renewable sources.

16-Sep-2024

NEW YORK (ICIS)–It has been a long time coming and there is plenty more time before the chemical industry finally sees a meaningful upturn in the durable goods cycle, in turn giving a much-needed boost to commodity chemicals, according to Jefferies. “We expect demand stabilization in 2025, with a restock cycle and a rate-driven durables goods cycle in 2026-2027 to set the stage for the next period of tight commodity chemical supply/demand balances – MDI (methylene diphenyl diisocyanate) and methanol first, in our view, then acetyls, then olefins,” said Laurence Alexander, analyst at Jefferies, in a research note. In his base case scenario, the analyst sees US durable goods demand flat to down 3% in 2025 and up around 10% in 2026. The anticipated turn in the cycle for housing and durable goods would be a strong catalyst for shares of Eastman, Huntsman, Avient and DuPont, he pointed out. For chemicals in the near term, Alexander expects Q3 2024 to show a return to “normal seasonality” and Q4 volume outlooks to be trimmed 1-2% on more caution on the Christmas spending season – especially in Europe – as well as automotive production this winter. TRIMMING OUTLOOK FOR CELANESEGiven the softer near-term outlook, the Jefferies analyst also trimmed his earnings per share (EPS) estimates on Celanese for Q3 (by $0.06 to $2.84), Q4 (by $0.05 to $3.09) and for 2025 (by $0.10 to $10.40). “Credit easing is likely needed to trigger a demand rebound, and any tailwind from an improved credit environment will likely not be evident until mid-2025 at the earliest,” said Alexander. “Although destocking has faded, demand trends remain broadly sluggish with few signs of a recovery. European demand has yet to trough, North America is flattish and the recovery in Asia has been muted,” he added. By end-market, he sees electronics likely rebounding but at a slower pace until consumer confidence improves and automotive production accelerates. Consumer durables and construction demand is likely to remain soft into next summer. And automotive demand is muted overall, with headwinds to production schedules likely in the near term. Longer term, he expects better momentum in electric vehicle (EV) sales in China. Focus article by Joseph Chang

16-Sep-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 13 September. NEWS Argentina chemicals, industrial July output falls as industry bears brunt of recession Argentina’s chemicals and manufacturing outputs fell in July by 5.4% and 2.6% year on year, respectively, as the industrial sectors remain the most affected by consumers’ squeezed budgets. Argentina’s progress on fiscal consolidation still challenged by inflation – economist The Argentinian’s government attempt to turn the economy around has had certain successes in the fiscal front, but high inflation is still challenging the outlook as it continues to eat up on gains elsewhere, according to an economist at Buenos Aires-based Fundacion Capital. Brazil's Petrobras launches natural gas processing unit in Rio de Janeiro Petrobras has begun start-up procedures for Brazil's largest natural gas processing unit (UPGN) in Itaborai, near Rio de Janeiro, the state-owned energy major said on Wednesday. Brazil’s inflation breaks upward trend in August, but some subsectors keep rising Brazil’s annual rate of inflation fell to 4.24% in August, down from 4.50% in July, but analysts pointed to how some price rises in certain sectors continue unabated. Mexico inflation falls below 5% in August, paves way for more interest rate cuts Mexico's annual rate of inflation fell quite considerably in August to 4.99%, down from July’s 5.57%, a development which is to reinforce the next cut to interest rates later this month, according to analysts. Argentina’s August inflation falls below 240% but monthly price increases remain over 4% Argentina’s annual rate of inflation fell in August to 237%, down from July’s 263%, but monthly price rises stood over the 4% mark, the country’s statistical office Indec said this week. Dutch Nouryon expands sodium chlorate capacity in Brazil, starts up new site Nouryon has expanded its sodium chlorate capacity in Brazil by starting up a new manufacturing site in Ribas do Rio Pardo, state of Mato Grosso do Sul, the Dutch chemicals producer said on Tuesday. Petrobras, Gerdau sign MoU for decarbonization projects Brazil’s Petrobras and steelmaker Gerdau have signed a non-binding Memorandum of Understanding (MoU) to evaluate commercial opportunities in decarbonization initiatives, the Brazilian energy major said this week. PRICING LatAm PP international prices steady to lower on cheaper imports International polypropylene (PP) prices were assessed as steady to lower across Latin American countries due to competitive offers from abroad and lower US propylene spot prices. LatAm international PE prices steady to lower on cheaper offers from abroad International polyethylene (PE) prices were assessed as steady to lower across Latin American countries due to cheaper offers from abroad. Latin America PVC business monitors potential supply tightening due to maintenance in Q3 Polyvinyl chloride (PVC) prices in Latin America remained steady this week, with the market closely watching US Gulf prices for potential changes in pricing strategies.  

16-Sep-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 September. INSIGHT: Wall Street reaction to Methanex/OCI deal negative on valuation, leverage Methanex’s announcement that it will acquire OCI Global’s international methanol business for $2.05 billion drew a swift negative initial reaction, with its stock price plunging 7.9% at the close of its first day of trading after the announcement. Storm Francine veers path, could potentially hit petchems hubs in west Louisiana Storm Francine continues strengthening into a hurricane as it approaches the southern costs of the US, but its path could veer slightly west and potentially hit key petrochemicals sites in Louisiana which border with Texas. US chem, oil operations begin shutting ahead of storm Francine Some chemical and upstream oil and gas companies are shutting down operations ahead of Tropical Storm Francine, which is expected to strengthen into a hurricane on Tuesday night and make landfall along the US coast of Louisiana on Wednesday or Wednesday night. Francine strengthens into hurricane, heads for US Gulf Coast Francine has strengthened into a hurricane and is moving northeastward across the Gulf of Mexico, with landfall expected in Louisiana, US, on Wednesday afternoon or evening. Louisiana chemical plants shut down as Hurricane Francine nears landfall, major capacities at risk Several chemical companies are shutting down plants in Louisiana, with others taking other precautionary measures as the eye of Francine – now a Category 2 hurricane – approaches the coast for imminent landfall. Hurricane Francine passes over Louisiana parish with many chem plants Ascension parish, home to Geismar and its many chemical plants, was among the regions hardest hit by Hurricane Francine, which has caused hundreds of thousands of power outages. SHIPPING: Asia-USEC container rates plunge by 20% as shippers avoid possible ILA strike Average global rates for shipping containers fell significantly this week, including a 21% decrease from Shanghai to New York, as shippers are shifting cargo deliveries to the US West Coast to avoid the planned strike on 1 October.

16-Sep-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 13 September. Customers more willing to pay green premium as net zero transition gathers pace Chemical companies will find it easier to charge a green premium as the cost of carbon increases, fossil feedstock availability declines and customers realize the true value of the products they are buying. Global oil demand growth lowest since 2020 on China slowdown Global crude oil demand continued to decelerate in the first half of the year, the International Energy Agency (IEA) said on Thursday, with consumption growth of 800,000 bbl/day year on year the weakest since 2020. IPEX: Index falls in August as weak demand, softer crude put downward pressure on chemical prices in Asia The ICIS Petrochemical Index (IPEX) was down 1.3% in August month on month as weak downstream demand and softer upstream crude oil costs continued to exert downward pressure on chemical prices in northeast Asia. Europe PX, OX spot prices tumble on softer Asian market, lower contract values Europe paraxylene (PX) and orthoxylene (OX) spot prices plummeted week on week in the week ending 6 September, on the back of softer values in the influential Asian market and lower domestic contract prices, respectively. Demographic drag on chemicals to deepen A continuing flow of poor economic data caused further stock market jitters in September, and as the prospect of a meaningful recovery in the global economy recedes into next year, new analysis suggests that the demographic drag on growth may be stronger than previously thought.

16-Sep-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 September 2024. Asia LAB struggles amid crude oil weakness; Q4 supply to tighten By Clive Ong 13-Sep-24 13:40 SINGAPORE (ICIS)–Asia’s linear alkylbenzene (LAB) market remains in the doldrums with sentiment staying cautious following recent slippages in crude oil prices, while supply could tighten in the fourth quarter. INSIGHT: China-US trade tensions build as anti-dumping cases increase By Fanny Zhang 12-Sep-24 18:35 SINGAPORE (ICIS)–The US has become the top target of China’s anti-dumping cases for chemical imports, underscoring growing trade barriers between the world's two biggest economies. Saudi Arabia fosters closer ties with China; Aramco, Chinese firms sign fresh deals By Nurluqman Suratman 12-Sep-24 12:39 SINGAPORE (ICIS)–Energy giant Saudi Aramco has signed new agreements to advance separate expansion plans with Chinese petrochemical producers Rongsheng and Hengli. China Aug petrochemical markets tumble; weak demand persists By Yvonne Shi 11-Sep-24 16:38 SINGAPORE (ICIS)–Domestic prices of most petrochemicals in China declined in August due to weak demand and new capacity, with not much improvement in market conditions expected throughout September. Asia solvent MX facing headwinds in Sept amid various bearish factors By Jasmine Khoo 10-Sep-24 12:13 SINGAPORE (ICIS)–Within Asia, trading activity for solvent grade mixed xylenes (MX) in certain import markets like southeast Asia is poised to take a hit going forward into the later part of September. Heavy rains, floodings continue in north Vietnam in Yagi’s wake By Nurluqman Suratman 09-Sep-24 16:42 SINGAPORE (ICIS)–Heavy rains and floodings continued in northern Vietnam on Monday, two days since Super Typhoon Yagi made landfall in the region and killed more than 20 people. UPDATE: Sumitomo Chemical to close two Singapore MMA/PMMA lines by end-Sept By Nurluqman Suratman 11-Sep-24 12:48 SINGAPORE (ICIS)–Sumitomo Chemical will close two of its three production lines for methyl methacrylate (MMA) monomer and polymethyl methacrylate (PMMA) in Singapore by the end of September this year, the Japanese producer said on Wednesday. PODCAST: Weak fuel LPG demand to weigh on China 2024 propane/butane imports By Lillian Ren 11-Sep-24 10:50 SINGAPORE (ICIS)–ICIS has revised down its forecast for China’s combined imports of propane and butane for 2024 because of weaker-than-expected demand in fuel applications. Wang Yen, Senior Analyst speaks with Lillian Ren, analyst on the China propane, butane and LPG markets. UPDATE: Indonesia starts ‘safeguard measures’ probe into LLDPE imports By Izham Ahmad 10-Sep-24 18:09 SINGAPORE (ICIS)–Indonesia has initiated an investigation as to whether “safeguard measures” would be needed in response to a sharp increase in imports of linear low density polyethylene (LLDPE), its trade ministry said.

16-Sep-2024

HOUSTON (ICIS)–Fertilizer developer Genesis Fertilizers announced it has partnered with technology provider CARBONCO and has agreed to negotiate formal licensing and process design package services for a carbon capture and storage (CCS) project. Genesis said this collaboration marks a significant step toward the potential production of sustainable, low-carbon ammonia and urea nitrogen fertilizer for their farming partners and the broader fertilizer industry in North America. Under the terms CARBONCO would be responsible for implementing a solution capable of capturing approximately 1 million tonnes of carbon dioxide annually, which would then be transported directly to a sequestration hub. If implemented, the CCS project would be built at the proposed Genesis Fertilizers production complex to be constructed in Belle Plaine, Saskatchewan, Canada. The company said both parties are confident that this first-of-its-kind CCS project would play a pivotal role in supplying exceptionally clean grain to the market. “In line with our ultimate low carbon intensity fertilizer goal, Genesis Fertilizers has been working with CARBONCO and is pleased to welcome them as our technology provider to explore an exciting opportunity to implement their carbon capture solution,” said Jason Mann, Genesis Fertilizers CEO. “We believe that CARBONCO is the most suitable partner for our project, offering a robust solution that meets our technical and commercial needs.” The front-end engineering design (FEED) phase for Genesis Fertilizers project is expected to begin within the next few months. The company said the final investment decision will be made based on the results of the FEED work and other critical steps, but it is aiming to commence commercial operations by 2029. As proposed there would eventually be both ammonia and urea production with plans to have 75% of output locked into farmer commitments with the balance sold on the open market. Genesis has previously said the goal of this development is to help farmers have access to a vertically integrate fertilizer supply and enable the production of low carbon grain.

13-Sep-2024