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Latin America stories: weekly summary
SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 23 February. NEWS Argentina manufacturing output falls 12% in December Argentina’s recession is hitting the petrochemicals-intensive manufacturing sectors hard, with output down 11.9% in December, year on year, the country’s statistics body Indec said late on Thursday. Mexico’s secondary activities output up 1.2% year on year in December Output in Mexico’s petrochemicals-intensive secondary activities rose in December by 1.2%, year on year, the country’s statistics office Inegi said this week. Pause in PVC projects ‘prudent’ until prices rise to $1,200/tonne – Orbia CEO Depressed global polyvinyl chloride (PVC) prices prompted Orbia to take the “prudent” decision to put new projects on hold, the CEO of the Mexican chemical producer said on Thursday. Petrochemicals margins could worsen in 2024 – Mexico’s Alpek Mexican chemicals producer Alpek’s stock was falling more than 3% on Wednesday afternoon after the company issued a downbeat guidance for 2024 in which petrochemicals margins could worsen from the already weak 2023 averages. Brazil's Braskem Q4 main chemicals, resins sales fall on lower demand Braskem’s main chemicals and resins sales in its domestic market fell by 15% and 9%, respectively, in the fourth quarter, year on year, on the back of persistent poor demand, the Brazilian petrochemicals major said this week. Brazil’s Unigel gets green light from creditors for debt restructuring Unigel has agreed a Brazilian reais (R) 3.9 billion ($791 million) debt restructuring with its creditors, which has saved the beleaguered styrenics, acrylics and fertilizer producer from filing for bankruptcy for the time being. US Stepan recovering LatAm surfactants market share, margins – CEO Stepan is recovering its share in the Latin American surfactants market following supply chain disruptions in the second half of 2022, Scott Behrens, CEO of the US-based company, said on Tuesday. PRICINGLat Am PP domestic prices fall in Colombia on cheaper imports Domestic polypropylene (PP) prices were down in Colombia due to more competitive prices for imported products. In other Latin American countries, prices were steady. Lat Am PE buyers on the sidelines waiting for March prices Domestic, international polyethylene (PE) prices were assessed unchanged this week across Latin American countries. Mexico PET industry expecting stable sales during the upcoming peak bottle season Polyethylene terephthalate (PET) prices in Mexico held steady this week, with weak demand and ample supply in February. Brazil ethanol sales continue to face positive results in 2024 According to Unica, Brazil's ethanol sales grew by 38.22% in January over the same time frame in 2023. With this achievement, sales volume has surpassed its highest point since October 2020.
Americas top stories: weekly summary
HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 23 February. LyondellBasell to lease California plant to produce recycled resins from waste LyondellBasell has acquired a recycling plant in California from PreZero in which it plans to produce post-consumer recycled resins from plastic waste, the US chemicals major said on Tuesday. Brazil’s Unigel gets green light from creditors for debt restructuring Unigel has agreed a Brazilian reais (R) 3.9 billion ($791 million) debt restructuring with its creditors, which has saved the beleaguered styrenics, acrylics and fertilizer producer from filing for bankruptcy for the time being. Mexico's Orbia to pause PVC investments after weak Q4 results Orbia will be pausing polyvinyl chloride (PVC) capacity expansion due to weak market economics which weighed on its 2023 earnings, the Mexico-based producer said. US Huntsman expects gradual recovery, seeks to boost prices and volume Huntsman expects a gradual recovery to take hold in 2024, in which the company will attempt to pursue higher prices and recover share, the CEO said on Thursday. Pembina to supply Dow Canada net-zero petchem project with ethane Canadian midstream energy firm Pembina Pipeline has entered into long-term agreements to supply Dow’s upcoming net-zero petrochemicals project at Fort Saskatchewan in Alberta province with 50,000 bbl/day of ethane.
BLOG: Thinking ‘out of the box’ will deliver major revenue and profit growth in the New Normal world
LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which highlights the need for new thinking in today’s changing markets. 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.
Europe top stories: weekly summary
LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 23 February. Europe PE/PP contract prices reach three figure hikes for February Contract prices for European polyethylene (PE) and polypropylene (PP) have settled upwards from initial moves earlier in February, in the pivotal third week of the month. Chemical firms back call for stronger business environment in EU The chief executives of BASF, INEOS, Covestro, Clariant and Dow Europe among others on Tuesday backed a new declaration calling for stronger European Commission prioritisation of business, calling for an industrial deal to be placed at the core of the new Parliament. Europe propylene limitations raise concerns down value chain The European propylene (C3) supply and demand balance is in a tighter than expected position due to a combination of healthy demand and planned and unplanned production constraints. BASF navigates low-growth environment as China Verbund spending continues As BASF prepares to provide more detail on its 2023 financial performance, the Germany-based chemicals major is to navigate the still-chilly waters of 2024 as spending on its flagship China Verbund site in Zhanjiang continues and project pipelines face ever-tougher scrutiny. INSIGHT: EU chemicals plead for help while production sinks to 1999 levels As chemical production in Europe plunges to levels last seen during the 2008/9 financial crisis and back in 1999, industry leaders are urging the EU to improve the regulatory framework and do more to protect them from unfair competition. But with the fundamentals of supply and demand so out of balance globally, there are limits to how much politicians can achieve in Europe.
TOPIC PAGE: Sustainability in the fertilizers industry
Updated on 26 February. On this topic page, we gather the latest news, analysis and resources, to help you to keep track of developments in the area of sustainability in the fertilizers industry. LATEST NEWS HEADLINES Germany’s Heraeus invests in Japanese ammonia tech company By Stefan Baumgarten 22-Feb-24 LONDON (ICIS)–German technology group Heraeus has invested an undisclosed amount in Tsubame BHB, a Japanese company that has developed a precious metal-based technology for decentralized ammonia production. Malaysia’s PCG, Sarawak Petchem agree to study low-carbon ammonia and urea plant By Nurluqman Suratman 21-Feb-24 SINGAPORE (ICIS)–Malaysia’s PETRONAS Chemicals Group (PCG) and methanol producer Sarawak Petchem on Wednesday signed an agreement for a joint feasibility study aimed at establishing a low-carbon ammonia and urea production facility in Bintulu, Sarawak. Egypt’s Helwan signs agreement to produce black urea By Deepika Thapliyal 20-Feb-24 LONDON (ICIS)–In Egypt, Helwan has signed an agreement with SML-INNO UK Ltd to set up the world's first vertical integrated unit to produce black urea, with a capacity of 130,000 tonnes annually, the company said today. EU eases climate proposals after widespread farmer protests By Chris Vlachopoulos 07-Feb-24 LONDON (ICIS)–European Commission President Ursula von der Leyen announced on Tuesday that the EU has agreed to ease key demands in its climate proposal plans, following intense protests from farmers. Tecnimont awarded engineering contract for Portugal green hydrogen, ammonia plant By Graeme Paterson 05-Feb-24 LONDON (ICIS)–Tecnimont has been awarded an engineering contract to develop an integrated green hydrogen and green ammonia plant at Sines, Portugal, its parent company Maire said on Monday. EU proposes relaxation in policy following farmer protests By Deepika Thapliyal 31-Jan-24 LONDON (ICIS)–The European Commission Wednesday proposed relaxing green farming requirements under the Common Agricultural Policy (CAP), in its first attempt to quell farmer protests across Europe as the sector struggles to stay economically viable. Biden Administration invests $207m in domestic fertilizer and clean energy endeavours By Chris Vlachopoulos 23-Jan-24 LONDON (ICIS)–The Biden Administration is investing $207m in domestic fertilizer and renewable energy projects, the US Department of Agriculture (USDA) Secretary Tom Vilsack announced on Monday, 22 January. Brazil’s state of Ceara, Bp sign MoU for green hydrogen site By Jonathan Lopez 18-Jan-24 SAO PAULO (ICIS)–The government of the Brazilian state of Ceara and UK-headquartered energy major Bp signed this week a Memorandum of Understanding (MoU) to build a green hydrogen site. Atome Energy in talks with buyers for green fertilizer from Paraguay unit By Manuja Pandey 17-Jan-24 LONDON (ICIS)–UK's Atome Energy Plc is in advanced negotiations with leading international players for the offtake of green calcium ammonium nitrate (CAN) fertiliser from its production facility in Villeta, Paraguay. Sweden's Cinis targets Asia potash market with Itochu partnership By Andy Hemphill 16-Jan-24 LONDON (ICIS)–Swedish green-tech start-up Cinis Fertilizer has signed a letter of intent (LOI) with Japan-headquartered trading house Itochu to launch its environmentally-friendly mineral fertilizer in the Asian market. Helwan selects Eurotecnica's Euromel G5 technology for new melamine facility in Egypt By Melissa Hurley 15-Jan-24 LONDON (ICIS)–Eurotecnica has been selected by Helwan Fertilizers Company (HFC) for the implementation of a world-scale melamine plant based on proprietary Euromel G5 melamine technology, the technology arm of Switzerland's Proman said on Monday. India’s Adani Group plans $24bn green energy park; RIL to commission giga complex By Priya Jestin 12-Jan-24 MUMBAI (ICIS)–India’s western Gujarat state is set to become the domestic hub of green energy projects following an announcement by the Adani Group to set up a large green energy park and Reliance Industries Ltd (RIL) set to commission its giga complex in the state soon. INPEX and LSB pick technology for US ammonia project By Stefan Baumgarten 10-Jan-24 HOUSTON (ICIS)–INPEX Corp and LSB Industries have chosen KBR’s blue ammonia technology for a planned 1.1m tonne/year low-carbon ammonia project on the US Gulf Coast, KBR said on Wednesday. Bayer partners with energy firms on hydrogen cluster in Germany By Stefan Baumgarten 09-Jan-24 LONDON (ICIS)–Pharmaceuticals and agrochemicals company Bayer has signed a memorandum of understanding (MoU) with three energy firms – E.ON, Iqony and Westenergie – to establish a hydrogen cluster at its Bergkamen production site near Dortmund, at the eastern edge of Germany's Ruhr industrial region. At the core of the project will be the production of green hydrogen from imported ammonia. S Korean group picks KBR tech for Malaysian green ammonia project By Al Greenwood 08-Jan-24 HOUSTON (ICIS)–A South Korean consortium has chosen KBR's K-GreeN process technology for a green ammonia project that it will develop in Sarawak, Malaysia, the US-based engineering company said on Monday. Abu Qir signs MoU for green ammonia project in Egypt By Sylvia Traganida 03-Jan-24 LONDON (ICIS)–North Abu Qir for Agricultural Nutrients has signed a memorandum of understanding (MoU) with ABB International Group, MPS Infrastructure Company, and Petrojet for the supply of green hydrogen and renewable electricity. EU CARBON BORDER ADJUSTMENT MECHANISM (CBAM) EXPLAINED What is it? The risk of carbon leakage frustrates the EU’s efforts to meet climate objectives. It occurs when companies transfer production to countries that are less strict on emissions, or when EU products are replaced by more carbon-intensive imports. This new mechanism would counteract this risk by putting a carbon price on imports of certain goods from outside of the EU. How will it work? EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules. Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods, the corresponding cost can be fully deducted for the EU importer. This will help reduce the risk of carbon leakage by encouraging producers in non-EU countries to make their production processes greener. A reporting system will apply from 2023 with the objective of facilitating a smooth roll out and to facilitate dialogue with non-EU countries. Importers will start paying a financial adjustment in 2026. How is the fertilizer industry affected? The fertilizer industry is one of the sectors to fall under the CBAM. The more energy-intensive nitrogen fertilizers will be affected most in the sector by the mechanism. DEFRA CONSULTATIONS EXPLAINED The UK’s Department for Environment, Food & Rural Affairs (DEFRA) launched a consultation at the beginning of November 2020 on reducing ammonia emissions from urea fertilizers. The consultation ran until 26 January 2021. It set out three options for tackling ammonia emissions: A total ban on solid urea fertilizers A requirement to stabilise solid urea fertilizers with the addition of a urease inhibitor. A requirement to restrict the spreading of solid urea fertilizers to between 15 January and 31 March of a given year. Liquid urea is excluded from any new rules or restrictions. DEFRA is currently analysing the feedback received. In March 2022, DEFRA announced that it had delayed introducing restrictions on the use of urea by at least a year to support farmers with fertilizer availability and keep their costs down Should DEFRA decide to restrict the use of urea in the future, growers would be left with just ammonium nitrate-based fertilizers. PREVIOUS NEWS HEADLINES Yara aims to launch first container ship to run off clean ammonia India’s Odisha state approves green hydrogen, ammonia, methanol projects ADM announces launch of regenerative agriculture program in Brazil Fertiglobe completes first renewable ammonia shipment with carbon certification Allied Green Ammonia picks Topsoe’s tech for Australia project Germany’s VNG looks to secure offtake from Norwegian low carbon ammonia plant Gentari enters into agreement with AM Green to invest into a green ammonia delivery platform ITOCHU Corporation, Orascom Construction sign MOU for development of ammonia bunkering in Suez Canal India developing port infrastructure for green hydrogen exports S Korea, Saudi Arabia firms sign 46 pacts, includes blue ammonia project INSIGHT: CBAM reporting begins, fertilizer exporters to EU challenged to account for carbon KBR to supply green ammonia tech to Madoqua Power2X site in Portugal Germany’s SOM to build green hydrogen, ammonia facility in Brazil’s Piaui state US ADM and Syngenta sign MoU to collaborate on low carbon oilseeds to meet biofuel demand Tecnicas Reunidas, Allied Green Ammonia to build green hydrogen and green ammonia plant in Australia Australian fertilizer producer Orica accelerates climate change targets Nestle, Cargill and CCm Technologies launch joint UK trial on sustainable fertilizer EnBW acquires stake in planned Norwegian ammonia plant Yara Germany signs agreement for decarbonisation of cereal cultivation using green fertilizers Hyphen, ITOCHU ink MoU to explore potential Namibia hydrogen collaboration INSIGHT: BASF grapples with demand trough, slow road back SABIC AN ships low-carbon urea to New Zealand US Cargill and John Deere collaborate to enable revenue for farmers adopting sustainability Canada’s Lucent Bio announces approval of biodegradable nutrient delivery patent Aker, Statkraft’s 10-year PPA to spur European renewable ammonia push further BASF, Yara Clean Ammonia to evaluate low-carbon blue ammonia production facility in US Gulf Coast Yara Clean Ammonia, Cepsa to launch clean hydrogen maritime corridor EU details CBAM reporting obligations Saudi Arabia’s Ma’aden exports its first low-carbon blue ammonia shipments to China US Bunge and Nutrien Ag announce alliance to support sustainable farming practices Maire subsidiary Stamicarbon wins US green ammonia engineering contract India’s IFFCO launches liquid nano-DAP fertilizer EU Parliament backs CBAM, emissions trading measures OCP granted €100m green loan to build solar plants at Morocco facilities EU unveils plans to tackle greenwashing India’s IFFCO and CIL to manufacture nano DAP for three years USDA awards Ostara funds to boost sustainable phosphate fertilizer output Canadian prime minister confirms fertilizer emission goal is voluntary US fertilizers industry increases carbon capture in 2021 – TFI Indian president calls for reduction in chemical fertilizer use IFFCO plans to export nano urea to 25 countries Amman selects Elessent Clean Technologies for Indonesia sulphuric acid plant Lotte Chemical forms clean ammonia consultative body with RWE and Mitsubishi Corporation Global 2020-2021 specialty fertilizer demand growth led by north America, Asia BASF and Cargill extend enzymes business and distribution to US Saudi Aramco awards sulphur facilities overhaul contract to Technip India sets green hydrogen targets for shipping, oil & gas, fertilizer sectors Germany misses climate target despite lower energy consumption TFI reacts to US Congress passing the Water Resources Development ActHelm becomes a shareholder in UK bio-fertilizer company Unium Bioscience Yara inks deal to deliver fossil-free green fertilizers to Argentina Canadian firms plan fuel cell generator pilot using green ammonia Deepak Fertilizers awards contract to reduce emissions, increase productivity Saudi Aramco launches $1.5bn sustainability fund to support net zero ambition CF Industries and ExxonMobil plan CCS project in Louisiana Canada’s plan to cut fertilizer emissions is voluntary – minister Canada’s fertilizer emission goal raises food production concerns Uniper, Vesta to cooperate on renewable ammonia site in the Netherlands German Uniper to work with Japan’s JERA on US clean ammonia projects ADNOC ships first cargo of low-carbon ammonia to Germany US Mosaic and BioConsortia expand collaboration to microbial biostimulant IMO deems Mediterranean Sea area for sulphur oxides emissions control Canada's Soilgenic launches new enhanced efficiency fertilizers technology for retail Austria's Borealis aims to produce 1.8m tonnes/year of circular products by 2030 European Parliament rejects proposed carbon market reform IFA ’22: southern Africa looks to bio-fertilizer as cheaper, sustainable option IFA '22: Indian farmers will struggle to embrace specialty fertilizers – producer Canadian Nutrien plans to build world’s largest clean ammonia facility in Louisiana Japan's JGC Holdings awards green ammonia plant contract to KBR Bayer to partner with Ginkgo to produce sustainable fertilizers Australia Orica and H2U Group partner on Gladstone green ammonia project Canada sets tax credit of up to 60% for carbon capture projects UK delays urea restrictions to support farmers as fertilizer costs at record high EU states agree to back carbon border tax Yara to develop novel green fertilizer from recycled nutrients USDA announces plans for $250m grant programme to support American-made fertilizer Canada seeks guidance to achieve fertilizer emissions target Fertilizer titan Pupuk Indonesia develops hydrogen/blue ammonia business India launches green hydrogen/ammonia policy, targets exports Canada AmmPower to develop green hydrogen and ammonia facility in Louisiana US DOE awards grant to project to recover rare earth elements from phosphate production Fertiglobe, Masdar, Engie to develop green hydrogen for ammonia production Czech Republic’s Spolana enhances granular AS production India’s Reliance to invest $80bn in green energy projects Yara, Sweden’s Lantmannen aim to commercialise green ammonia by 2023 Novatek and Uniper target Russia to Germany blue-ammonia supply chain Fertz giant Yara goes green with electrification of Norwegian factoryCanada Arianne Phosphate exploring use of phosphate for hydrogen technology FAO and IFA renew MoU to promote sustainable fertilizer use Sumitomo Chemical, Yara to explore clean ammonia collaboration Sri Lanka revokes ban on imports Tokyo scientists convert bioplastic into nitrogen fertilizer Aramco plans Saudi green hydrogen, ammonia project China announces action plan for carbon peaking & neutrality Saudi Aramco targets net zero emissions from operations by 2050 Fertiglobe goes green with Red Sea zero-carbon ammonia pro Australian fertilizer major Incitec Pivot teams up for green ammonia study INTERVIEW: BASF to scale up new decarbonisation tech in second half of decade – CEO India asks fertilizer companies to speed up production of nano DAP Japan's Itochu set to receive first cargo of blue ammonia for fertilizer use Norway's Yara acquires recycled fertilizers maker Ecolan Bayer Funds US start-up aims to cut nitrogen fertilizer use by 30% BP: Green ammonia production in Australia feasible, but needs huge investment Origin and MOL explore shipping green ammonia from Australia India’s IFFCO seeks to export nano urea fertilizer Sri Lanka reinstates ban on import of chemical fertilizers Nutrien to cut greenhouse gas emissions 30% by 2030 RESOURCES IFA – Fertilizers and climate change TFI – Sustainability report
UAE’s ADQ-led consortium to invest $35bn in Egypt
SINGAPORE (ICIS)–A consortium led by UAE’s ADQ, an Abu Dhabi-based investment and holding company, plans to invest $35bn in Egypt, inclusive of the $24bn rights to develop the coastal region of Ras El-Hekma. The remaining $11bn will be invested in other prime real estate projects in the north African country, ADQ said on 23 February. The 170m-square metre Ras El-Hekma in Egypt is envisioned to be a mixture of a holiday destination, financial centre and free zone in the Mediterranean. Work on the project is expected to begin in early 2025, with the Egyptian government retaining a 35% stake in the development, ADQ said. “This investment underscores our commitment to developing Ras El-Hekma into one of Egypt’s most attractive coastal destinations through the enablement of mega-infrastructure and development projects, working with partners such as Modon Properties and Talaat Moustafa Group, which will deliver value across multiple sectors of Egypt’s vibrant economy,” ADQ managing director and CEO Mohamed Hassan Alsuwaidi said. Modon Properties is based in the UAE while Talaat Moustafa is a major property developer in Egypt. Ras El-Hekma is expected to attract more than $150bn in investments over time, ADQ said. The site is designed to “attract foreign direct investment, boost trade, support Egypt’s private sector via an in-country localization program and drive job creation to maximize economic benefits,” ADQ said. Visit the ICIS construction topic page for analysis of the impact on chemical markets and links to latest news
Asian exporters must brace for EU tariffs on high-carbon imports – ADB
SINGAPORE (ICIS)–Asian economies, particularly those in the central and western regions, will face strong hits from the EU's import charges on carbon-intensive products, the Asian Development Bank (ADB) said on Monday. Scheduled to be implemented in 2026, the EU's Carbon Border Adjustment Mechanism (CBAM) will introduce import fees on items such as steel, cement, and electricity, which will be calculated based on the carbon dioxide (CO2) emissions generated during their production. The purpose of these charges is to prevent "carbon leakage," which occurs when companies relocate production from nations with strict environmental regulations or high carbon costs to those with more lenient policies or lower costs. “The fragmented nature of carbon pricing initiatives in terms of sectors and regions covered, including CBAM, can only partially limit carbon leakage,” ADB chief economist Albert Park said. Initially targeting carbon-intensive products, the EU sees CBAM as a tool to align global carbon prices and accelerate emission reductions worldwide. “To significantly reduce carbon emissions globally, while also making sure climate efforts are more effective and sustainable, carbon pricing initiatives need to be extended to other regions outside the EU, especially Asia," Park added. Given the expected distributional impacts, especially on developing economies in Asia, proper incentive mechanisms are necessary to encourage widespread adoption of carbon pricing, according to the ADB. ADB estimates that CBAM might reduce carbon leakage by around half compared with an Emissions Trading System (ETS) scheme with a similar carbon price. CBAM is meant to complement the EU's ETS, with sectors covered by the ETS eventually to be covered by CBAM as well. The CBAM will first be implemented for imports of specific products and their key components that are vulnerable to carbon leakage, including cement, iron and steel, aluminium, fertilizers, electricity, and hydrogen. "While the EU’s ETS and CBAM may have a limited direct impact on emissions – reducing emissions globally by around 1.3% at €100 per metric ton of CO2 and by 2.2% at €200 per metric ton of CO2 – it could significantly affect exports to the EU," the ADB said. "At the same time, reductions in EU production from CBAM could spread to many sectors, such as computer, electric and optical equipment, and motor vehicles and parts within the EU through industrial input–output linkages," it said.
Asia top stories – weekly summary
SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 23 February 2024. Asia BD spot market buoyant with active China exports By Ai Teng Lim 23-Feb-24 10:54 SINGAPORE (ICIS)–Discussions for Asian butadiene (BD) imports picked up this week as China embarked on active export sales. SE Asia PE March offers firmer as tight Middle East supply persists By Izham Ahma 22-Feb-24 10:12 SINGAPORE (ICIS)–Initial spot import offers for March polyethylene (PE) shipments in southeast Asia were announced firmer in the week ending 23 February, with many major Middle Eastern suppliers still showing limited spot volume available. Japan January chemical exports up 11%; overall shipments at record high By Nurluqman Suratman 21-Feb-24 13:20 SINGAPORE (ICIS)–Japan's chemical shipments in January rose by 11.2% year on year to yen (Y) 865.9bn ($5.8bn), with overall exports hitting a record high for the month, thus, easing some concerns over Asia's highly industrialised economy which tipped into a technical recession in the second half of 2023. Asia petchem markets await China's demand signals after holiday By Nurluqman Suratman 19-Feb-24 13:56 SINGAPORE (ICIS)–Asia's petrochemical markets will closely watch China's demand signals after the Lunar New Year holiday amid ongoing concerns about the country’s economic health. PODCAST: Asian olefins to see support amid tighter supply, Panama congestion persists By Julia Tan 21-Feb-24 19:51 SINGAPORE (ICIS)–Asia's ethylene (C2) market saw supply tighten amid fewer volumes from the US in Q1 as a direct result of congestion at the Panama Canal.
CDI Economic Summary: US Fed rate cuts delayed on sticky inflation, economic resilience
CHARLOTTE, North Carolina (ICIS)–With disinflation having stalled above the US Federal Reserve’s targeted rate, Wall Street expectations of six rate cuts this year have evaporated. Interest rate futures are now moving towards fewer cuts and along the lines the latest Fed “dot plots” of three cuts this year. Any cuts that were to emerge will not happen until May or June. Starting with the production side of the economy, the January ISM US Manufacturing PMI registered 49.1, up 2 points from December and the 15th month in contraction. Only four industries out of 18 expanded, and weakness remains broad-based. But production moved back into expansion, as did new orders. The latter featured a 5.5-point gain to a positive 52.5 reading. This is always a good sign. Order backlogs contracted, however, at a faster pace. Both new orders and order backlogs, when combined with the reading on inventories, are good indicators of future activity. Inventories contracted, which could provide a floor for output. The long and deep de-stocking cycle could be ending, with the possibility for restocking this year. Meanwhile, the ISM US Services PMI improved 2.9 points to 53.4, a reading indicating modest expansion. The Manufacturing PMI for Canada remained in contraction during January while Mexico expanded. Brazil’s manufacturing PMI improved into expansion. Euro Area manufacturing has been in contraction for 18 months, and the region continues to skirt recession. China’s manufacturing PMI was slightly above breakeven levels for the third month, as its recovery continues to face headwinds. Other Asian PMIs were mixed. AUTO AND HOUSING OUTLOOKTurning to the demand side of the economy, light vehicle sales slumped in January due to severe winter weather. This allowed inventories to move up, but they still remain low compared to historical norms. Economists see light vehicle sales of 15.9 million this year before improving to 16.3 million in 2025. The latest cyclical peak was 17.2 million in 2018. Pent-up demand continues to provide support for this market. Homebuilder confidence remains in negative territory but is improving. Housing activity peaked in Spring 2022 and into mid-2023, with the latest housing reports being mixed. We expect that housing starts will average 1.42 million in 2024 and 1.48 million in 2025. We are above the consensus among economists. Demographic factors are supporting housing activity during this cycle. There’s significant pent-up demand for housing and a shortage of inventory. Falling mortgage interest rates will also support affordability and thus demand. RETAIL SALES FALLWith severe winter weather in much of the nation, nominal retail sales fell back in January. Sales were weak across most segments, but sales at restaurants and bars advanced. Spending for services is holding up, but the overall pace is slowing. Job creation continues at a good pace, and the unemployment rate is still at low levels. There are 1.4 vacancies per unemployed worker. This is off from a year ago but at a historically elevated level, which is still fostering wage pressures in services. Incomes are still holding up for consumers. INFLATION STILL HIGH BUT WILL EASEThe headline January Consumer Price Index (CPI) was up 3.1% year on year and core CPI (excluding food and energy) was up 3.9%. Progress on disinflation has been made but appears to be stabilizing. Economists expect inflation to average 2.7% this year, down from 4.1% in 2023 and 8.0% in 2022. Inflation is expected to soften further to 2.3% in 2025. Our ICIS leading barometer of the US business cycle has provided a signal consistent with the “rolling recession” scenario in manufacturing and transportation. The services sectors, however, continue to expand but are slowing. Recent readings show stabilization in this leading index, which is encouraging. US GDP FORECAST POINTS TO SOFT LANDINGAfter real GDP rose 5.8% in 2021 and then slowed to a 2.5% gain in 2022, the much-anticipated recession failed to materialize. In 2023, the economy expanded by 2.5% again. US economic growth is slowing from the rapid pace of Q3 and Q4, but those gains will aid 2024 performance which is showing a 2.1% gain. A cyclical slowdown in economic activity is occurring in 2025, economic growth should average 1.7% for the year. WEAKER OUTLOOK FOR EUROPE, CHINALooking overseas, recent global indicators show slow economic growth and soft commodity prices. Europe is skirting a shallow recession. The conflict affecting Red Sea seaborne trade adds to supply chain disruptions, costs and uncertainty for the region. Within the context of demographic headwinds, continued property sector woes and soft export markets, China’s economy has lost momentum. The government and Bank of China are responding with stimulus measures. For more updates and interactive charts, visit our ICIS Topic Page – Macroeconomic Outlook: Impact on Chemicals
Equinor's H2H Saltend hydrogen project granted planning permission
600MW low carbon plant located in Northeast England Potential application for Cluster Sequencing Track-1 Expansion Site due to be operational by the end of the decade LONDON (ICIS)–Equinor's H2H Saltend low carbon hydrogen project has been granted planning permission by East Riding of Yorkshire Council, the company said in a press release 20 February. The plant is due to have a capacity of 600MW with carbon capture technology applied and is slated to begin commercial operations by the end of the decade. Equinor said that this was a major step forward for the project, with a potential application being prepared into the UK government's upcoming Cluster Sequencing Track-1 Expansion process which is due to launch later this year as part of the East Coast Cluster. The hydrogen set to be produced is expected to be used in chemical processes by nearby companies, as well as being blended with natural gas at the Triton power station, with 900,000 tonnes/year of CO2 expected to be stored in sub-sea aquifers. The H2H Saltend project is part of Equinor's Hydrogen to Humber ambition, which is forecast to produce 1.8GW of low carbon hydrogen within the region by 2030. The UK has ambitions to have 10GW of hydrogen capacity up and running by 2030, of which a maximum of 5GW will be low carbon hydrogen with the remainder being electrolytic hydrogen. Data from ICIS Analytics showed that UK hydrogen demand is due to increase from 21TWh this year to 72TWh by 2030, of which the chemicals sector is forecast to account for 20TWh (28%) of total UK hydrogen demand.
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