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Tropical Storm Alberto floods beaches amid storm surge, high tide, but plant ops unaffected so far

HOUSTON (ICIS)–Tropical Storm Alberto, the first named storm of the 2024 Atlantic hurricane season, continues to push toward the Mexico coast and a combination of storm surge and high tides are already flooding some Texas coastal communities. But so far, ICIS has not heard of any instances of plants located along the US Gulf Coast ceasing operations. Alberto was about 295 miles (475 km) south southeast of Brownsville as of 18:00 GMT with maximum sustained winds of 40 miles/hour, as shown in the following image. Source: National Hurricane Center A tropical storm warning remains in effect for the Texas coast from San Luis Pass southward to the mouth of the Rio Grande River. Tropical storm warnings mean that tropical storm conditions are expected somewhere within the warning area. The highest rainfall totals on Wednesday were just more than an inch south of Houston, with a total of 1.36 inches in La Porte, Texas, and 1.23 inches in Galveston. Storm chasers shared videos of inundated coastal communities on social media, including Surfside Beach, that were created by the storm surge ahead of Alberto and coinciding with high tides. Tides will be at the lowest this evening and at the highest early on Thursday morning, as shown in the following chart. Source: Tideschart.com Alberto is moving toward the west at 9 miles/hour. A westward motion with an increase in forward speed is expected through Thursday. The center of Alberto is forecast to reach the coast of northeastern Mexico early Thursday morning, as shown in the following map. Source: National Hurricane Center Some slight strengthening is forecast today or tonight before the center of Alberto reaches land. Rapid weakening is expected once the center moves inland, and Alberto is likely to dissipate over Mexico Thursday or Thursday night. Flash flood warnings are in effect for south and central Texas, as shown in the following map. Source: National Hurricane Center So far it does not appear that offshore oil and gas operations are being impacted. The Bureau of Safety and Environmental Enforcement (BSEE) provides daily updates when storms lead to the evacuation of offshore production platforms. There was no update on Wednesday from BSEE. Production platforms are the offshore structures from which oil and natural gas are produced. Unlike drilling rigs, which can be moved, production facilities remain in the same location throughout a project’s duration. Another disturbance in the southwest Atlantic has a 20% chance of becoming a cyclone in the next 48 hours, and only a 20% chance of formation in the next seven days. There is likely to be increased focus on US Gulf petchem production this summer as the US National Oceanic and Atmospheric Administration (NOAA) is predicting the greatest number of hurricanes in the agency’s history. NOAA forecasters with the Climate Prediction Center said that the hurricane season – which started on 1 June and runs through 30 November – has an 85% chance to be above normal, a 10% chance of being near normal and only a 5% chance of being below normal. The prediction of 17-25 named storms is the highest ever, topping the 14-23 predicted in 2010. A storm is named once it has sustained winds of 39 miles/hour. Damage from hurricanes can lead to increased demand for chemicals, but hurricanes and tropical storms can also disrupt the North American petrochemical industry because many of the nation's plants and refineries are along the US Gulf Coast in the states of Texas and Louisiana. In 2022, oil and natural gas production in the Gulf of Mexico accounted for about 15% of total US crude oil production and about 2% of total US dry natural gas production, according to the US Energy Information Administration (EIA). Even the threat of a major storm can disrupt oil and natural gas supplies because companies often evacuate US Gulf platforms as a precaution. Thumbnail image shows a map with Tropical Storm Alberto approaching the Mexico coast. Source: NHC

19-Jun-2024

Colombia plastic industry still skeptical on single-use plastic tax – trade group

SAO PAULO (ICIS)–Despite Colombia’s Supreme Court ruling correcting some aspects of the tax on single-use plastics approved by Congress, the industry is still largely skeptical about the tax’s principle or about a smooth implementation, according to the president at plastics trade group Acoplasticos. Daniel Mitchell added that the regulations put a burden on companies’ finances and may, in the medium and long run, affect their ability to invest in new technologies and processes to make the circular economy a reality. Since President Gustavo Petro took office, Colombia has passed two significant regulations affecting the plastic chain: the tax on plastics, and the progressive elimination in the market of single-use plastics. The first law, the tax on plastics came into effect at the end of 2022 but legislators left some open questions as to who would pay the tax. So much so that Colombia’s Supreme Court ruled in November correcting some aspects of the law, although it did not question the principle of the tax. In August 2023, the head of chemicals at Colombia’s industrial trade group Andi, Daniela Sotello, had already said in an interview with ICIS that the tax’s implementation had proved troublesome and explained how, at the time, many players in the chain were still uncertain of who would pay the tax. SUPREME COURT RULINGIt is good there is more clarity now, not least because the first phase of the tax on single-use plastics is coming into force on 7 July, as planned in the original regulation’s text. A second phase in the mid-2022s will start implementing recycling targets and the regulation should be fully implemented by 2030. “Thankfully, there is more clarity now on who should pay the tax, with the Supreme Court ruling it must be absorbed by producers and not users of the plastics. However, this brings yet another confusion to the table: is it the producers of plastics, the polymers producers, or the producers of the products packed in those plastics?” said Mitchell. “We lived with the initial confusion [producers paying or users paying] for 11 months, until November 2023 ruling. The first payment of the tax was done at the end of the fiscal year in February 2024, as planned.” In the end, players managed to muddle through the confusion and managed to pay the tax, although Mitchell says it did cause a slight uptick in prices which, he concedes, is obviously the purpose of the tax so consumption is reduced. But then, some particularities in the Colombian law are striking. For instance, the prices of soft drinks in plastic bottles are not included in the tax: according to the law, Coca-Cola and others are included in the so-called "basic family basket". According to Acoplasticos, prices for the final products with plastics which were included in the regulation have increased between 0.5% and 4% due to the plastic tax. “In sophisticated packaging, cosmetics and the likes, prices of the final product have risen around 4%, although in that chain the impact can go up to 6% in some cases. In most cases, the increases in prices have been between 1% and 2%,” said Mitchell. “For the consumers, the price rises have not been as noticeable as some feared. To give you an idea, the tax collected in its first year Colombian pesos (Ps) 70 billion ($17m). I imagine that amount, when divided by the 45 million Colombian consumers, was not that noticeable in their pockets, but the tax has put a burden on plastics producers and its customers, not least for the chaotic implementation.” THE PLASTIC PROBLEMClarified the first hurdles, the more meaningful debate. A trade group representing plastics producers will invariably oppose a tax on their operations, but the plastics industry remains on the eye of the storm in the debate about sustainability. Plastics producers have for decades operated with healthy profits most years. Meanwhile, plastics pollution has grown in little more than half a century into a problem which is causing most humans, according to several studies, to carry plastics in them: homo plastic so to speak. While no producer will accept direct responsibility in the pollution problem, some sources within the chain in Latin America say the industry could have at least done one thing better. According to the CEO of Chile’s plastics trade group Asipla, Magdalena Balcellsdo, producers knew a long time ago the plastic pollution problem was becoming serious, and either were late to talk about it and alert the authorities, or ignored it completely. “Obviously, a company producing plastics has no competencies about the plastic waste, which falls on the authorities. Plastics have a big demand and are indispensable in so many applications. The debate has really taken off, rightly so, in the past 15 years – before that, the talk was mostly about how plastics were so useful and almost a win-win for all elements in the chain,” said Mitchell. “Things have changed, and I really think the circular economy is taking off. This is due to a combination of regulation, private sector initiatives, and more engagement from consumers. We need to reach a system where there is not waste, full stop.” – But in such a scenario, plastic producers of today would effectively run out of a business? If everything is recycled, there would not be a need to produce virgin material? – You will always have a small number of applications in which, at least for now, you cannot use recycled materials. Also, I think that while we may aim to recycle all plastics, the demand for plastics will always be larger than that supply of recyclable material. ($1 = Ps4,172) Interview article by Jonathan Lopez Front page picture: Plastic bottles and plastic rubbish are shredded and pressed; archive image Source Jochen Tack/imageBROKER/Shutterstock

19-Jun-2024

PODCAST: UK election impact for hydrogen

LONDON (ICIS)–In this UK general election special, ICIS hydrogen editor speaks with Rob Dale, founder and director of UK consultancy Beyond2050, which aims at supporting market participants in achieving their energy and sustainability goals. Over the course of the episode, Jake and Rob review which parties have committed to hydrogen for the election and what makes this election the biggest for hydrogen so far.

19-Jun-2024

ICIS EXPLAINS: UK election impact on energy

Understand what the parties are planning for hydrogen with our latest podcast Conversative party focus on gas-fired power generation could increase gas demand Labour, Conservative parties make key pledges for nuclear, with Conservatives considering  plant in north Wales LONDON (ICIS) — On 4 July 2024 the UK public will elect a new government, but what do the different parties have in store for energy? The following analysis reflect core pledges from manifestos and reviews those pledges in detail using ICIS data and insights. This analysis of UK political pledges and announcements will be continuously updated by the ICIS energy editorial team. Lead authors include: UK power reporter Anna Coulson, British gas reporter Matthew Farmer. ICIS will update this analysis with Scottish National Party (SNP) plans following the release of its manifesto. GAS-FIRED POWER DEMAND LIKELY UNMOVED Both the Conservatives and the Labour party show support for the continued use of gas for power generation, bolstering a key area of demand for British gas market participants. However, of the two parties, the Conservatives presented a more bullish mentality by noting intensions for new gas plants, aligning with previous announcements to support new capacity. Labour meanwhile take a muted approach, noting the need for a strategic reserve of gas for power generation. Both Labour and the Conservatives have therefore presented policy that could reduce power-market price volatility as renewable capacity grows, with gas offering baseload generation at periods of low renewable output. Gas demand for power to remain From a gas-market perspective, the use of gas for power amounts to a large share of overall demand. In 2023, gas offtake for power accounted for 26% of total gas demand. The UK is heavily reliant on gas-fired power generation, with it contributing 26% of the UK’s electricity mix in the period 1 January to 31 May 2024, according to data from National Grid. Similarly, gas-fired generation provided an average 36.3% of the mix over the 2019-23 period, therefore making a significant contribution to the UK’s electricity stack. While the capacity of new gas generation is not mentioned in the Conservative party’s manifesto, ICIS analytics forecast data indicates that gas capacity is set to increase through to 2026, under a base case scenario. This would suggest that offtake for power generation could well remain a key share of overall gas demand under either a Conversative or a Labour government. Further, ICIS data shows that there will be 7.92GW of gas capacity in 2050 under a base case scenario, which itself raises uncertainty around the prospect of pledges to decarbonize power grids by around the 2030s. NUCLEAR Nuclear power represented a large focus for the Labour, Conservative and Reform UK parties, which each announced plans to increase nuclear capacity through a mix of measures, such as plant life extensions, new large-scale projects, or Small Modular Reactors (SMRs). Despite this, the overall pledges presented for the election suggests need for further capacity build-out in the run up to 2050 in order to meet the government's target. While the Conservative’s manifesto did not mention a specific nuclear capacity target, the current government has a target to reach 24GW of nuclear capacity by 2050. ICIS analytics forecasts that, under a base case scenario, nuclear capacity will be 12.76GW by 2050. Plant life extensions Although Labour’s manifesto did not provide details on which nuclear plants it intended to focus on for life extensions, or for how long, the intension is in line with former market announcements from EDF, which stated plans in January 2024 to extend the lives of five UK nuclear plants. EDF plans to invest an additional £1.3bn in these power stations over 2024-26, with the aim to maintain output from the four advanced gas-cooled reactors (AGR) for as long as possible, and for the Sizewell B plant to operate for an additional 20 years. The lifetimes of the four AGR stations would be reviewed by the end of 2024. New capacity From a new capacity perspective Labour pledged to get the 3.2GW Hinkley Point C project over the line and that new nuclear power stations, such as the 3.2GW Sizewell C project, will play a key role in helping the UK to achieve energy security and clean power. In January, the Conservatives announced plans for a new large-scale nuclear power plant, which would be as large as Hinkley Point C or Sizewell C, which are both 3.2GW in capacity. The current government announced in May that Wylfa would be the preferred site for this new plant however, a commissioning date is still to be confirmed. This aligns with the party’s manifesto pledge to deliver a new gigawatt power plant at the same location. The new plant in Wales could well boost UK nuclear capacity, but it would still present a capacity gap between the current ICIS forecast for 2050 and the government’s target of 24GW. Small modular reactors Labour, the Conservatives, and Reform UK all mention SMRs in their manifestos however, the Conservatives will approve two new fleets of SMRs within the first 100 days of the next parliament. This is likely through the competitive process that Great British Nuclear (GBN) launched in 2023 to select SMR technologies best placed to be operational by the mid-2030s. GBN plans to announce successful bidders for the competition by the end of 2024 and to take two SMR projects to a final investment decision by 2029. However, it must be noted that SMRs are a new technology, and none are commissioned yet in Europe.    HYDROGEN In this UK general election special, ICIS hydrogen editor speaks with Rob Dale, founder and director of UK consultancy Beyond2050, which aims at supporting market participants in achieving their energy and sustainability goals. Over the course of the episode, Jake and Rob review which parties have committed to hydrogen for the election and what makes this election the biggest for hydrogen so far.

19-Jun-2024

Thai bio-ethylene plant key to growing SCG Chemicals' green plastics portfolio

SINGAPORE (ICIS)–Thailand's SCG Chemicals (SCGC) has obtained government approval for its 200,000 tonne/year joint venture bio-ethylene plant in Map Ta Phut, paving the way for the company to reach its target of producing 1m tonnes/year of green polymers by 2030. SCGC, Braskem joint venture firm eyes green downstream PE output Final investment decision on bio-ethylene project likely by Q4 SCGC focusing on increasing recycled plastic production and use The Thai baht (Bt) 19.3 billion ($526 million) bio-ethylene plant will use agricultural products such as sugarcane, cassava and corn as feedstock, the Thailand Board of Investment (BOI) in a statement issued on 14 June. The project will be operated by Braskem Siam Co, a 51:49 joint venture between Brazilian producer Braskem and SCGC. The plant, which will built in Rayong province, will enable production of bio-based polyethylene (PE) in Thailand which will be the first of its kind outside Brazil. SCGC’s parent firm Siam Cement Group (SCG), in a 11 June slide presentation posted on its website, said that it will likely make a final investment decision (FID) on the bio-ethylene project by the fourth quarter of this year, the company said in presentation slides posted on 11 June. The chemicals arm of the Thai conglomerate has set a target of production 1 million tonnes/year of green polymers by 2030, by leveraging strategic partnerships and innovative technologies to drive its expansion, it said. As of end-2023, the company was producing around 218,000 tonnes/year of environment-friendly plastics. SCGC Green Polymers Growth Plans Source: SCGC As part of its green polymer expansion plans, SCG in February this year announced a Bt173 million investment to hold a 3% stake in Netherlands-based renewable chemicals technology firm Avantium. Avantium‘s proprietary technology can be used to produce a variety of sustainable chemicals, including bio-based polyethylene (PE) and bio-based polyamide (PA). SCGC and Avantium last year agreed to develop polymers based on sustainable carbon feedstocks such as those from biomass or carbon from air, and scale up a pilot plant in the next two years to produce 10 tonnes/year of the material. On the recycling front, SCGC is aiming to increase its sales volumes of green polymers from odorless post-consumer recycled resin (PCR) high density polyethylene (HDPE) via its partnership with Portugal-based recycled plastic producer Sirplaste. The Thai producer owns 70% of Sirplaste. In September 2023, SCGC achieved a fivefold increase in production capacity for odorless HDPE PCR resin to 45,000 tonnes/year following installation of new machinery at Sirplaste's plant, based on SCG’s June 11 slides. SCGC has also invested in Kras, a Dutch company that specializes in managing waste materials, to develop a comprehensive recycled plastic production system that meets global demand, especially in Europe, "where the need for environmentally friendly packaging is continuously growing". In May, SCGC and Dow signed a Memorandum of Understanding (MOU) to transform 200,00 tonnes/year plastic waste into circular products by 2030. The initial phases of the partnership will concentrate on building a robust materials ecosystem in Southeast Asia. This will involve establishing partnerships with existing suppliers for PCR and developing advanced technological solutions for waste sorting, mechanical recycling (MR), and advanced recycling (AR) in Thailand. Separately, SCGC parent firm SCG has also received approval to invest Bt6 billion in a co-generation power plant within the Map Ta Phut Industrial Estate in Rayong province. This plant will have a production capacity of 130 megawatts (MW) of power and 160 tonnes of steam per hour and will primarily supply electricity to factories within the industrial estate. Focus article by Nurluqman Suratman ($1 = Bt36.72) Thumbnail image: At the Laem Chabang Port in Chonburi Province, Thailand, 24 January 2022. (Xinhua/Shutterstock)

19-Jun-2024

Storm system could drop 5-10 inches of rain in NE Mexico, South Texas

HOUSTON (ICIS)–Potential Tropical Cyclone One could drop from six-12 inches of rain over South Texas as it approaches the US Gulf Coast this week, meteorologists at the National Hurricane Center (NHC) said on Tuesday. As of 18:00 GMT the storm remains large but disorganized over the southwestern US Gulf, with heavy rainfall expected along the Gulf Coast over the next day or two, the NHC said and as shown in the following image. Source: National Hurricane Center The storm is about 405 miles (655 km) southeast of Brownsville, Texas, with estimated wind speeds of 40 miles/hour (65 km/hour), as shown in the following image. Source: National Hurricane Center At this time, most US Gulf Coast chem plant operations are expected to run as normal barring any rapid intensification. So far it does not appear that offshore oil and gas operations are being impacted. The Bureau of Safety and Environmental Enforcement (BSEE) provides daily updates when storms lead to the evacuation of offshore production platforms. There was no update on Tuesday from BSEE. Production platforms are the offshore structures from which oil and natural gas are produced. Unlike drilling rigs, which can be moved, production facilities remain in the same location throughout a project’s duration. Another disturbance in the southwest Atlantic has a 10% chance of becoming a cyclone in the next 48 hours, as shown in the following image. Source: National Hurricane Center Environmental conditions are marginally conducive for some gradual development of this system during the next few days while it moves westward or west northwestward. The system is forecast to approach the coast of the southeastern United States on Friday. There is likely to be increased focus on US Gulf petchem production this summer as the US National Oceanic and Atmospheric Administration (NOAA) is predicting the greatest number of hurricanes in the agency’s history. NOAA forecasters with the Climate Prediction Center said that the hurricane season – which started on 1 June and runs through 30 November – has an 85% chance to be above-normal, a 10% chance of being near-normal and only a 5% chance of being below-normal. The prediction of 17-25 named storms is the highest ever, topping the 14-23 predicted in 2010. A storm is named once it has sustained winds of 39 miles/hour (63km/h). Damage from hurricanes can lead to increased demand for chemicals, but hurricanes and tropical storms can also disrupt the North American petrochemical industry because many of the nation's plants and refineries are along the US Gulf Coast in the states of Texas and Louisiana. In 2022, oil and natural gas production in the Gulf of Mexico accounted for about 15% of total US crude oil production and about 2% of total US dry natural gas production, according to the US Energy Information Administration (EIA). Even the threat of a major storm can disrupt oil and natural gas supplies because companies often evacuate US Gulf platforms as a precaution.

18-Jun-2024

New industrial deal needed to enable energy transition – Europe trade groups

BARCELONA (ICIS)–The EU needs a powerful industrial strategy to deliver the massive expansion in renewable energy required to power energy-intensive sectors which will provide locally made raw materials, according to a coalition of regional trade groups. Europe currently lacks policies to sustain and grow sectors such as chemicals, cement, steel and other metals which have suffered an unprecedented curtailment of production in recent years due to the impact of the energy crisis, the groups said in a joint statement released on Tuesday. Accelerated wind deployment will be central to delivering the decarbonization of Europe’s economy, said the group, adding that wind already delivers 20% of electricity consumption in Europe and is therefore a strategic resource for Europe’s industry. “Chemicals, steel, aluminium, copper and cement are all a vital part of the European wind supply chain. Europe needs strong energy and electricity intensive industries in order to deliver the massive expansion of renewables,” said the group. It calls for locally produced materials and equipment for energy and other low-carbon infrastructure to be made in Europe. That will require globally competitive clean energy and access to raw materials. Energy intensive industries have experienced unprecedented curtailment of production in recent years due to the impact of the energy crisis, said the group. Addressing this challenge must be at the core of a new Industrial Deal for Europe. Faster renewables deployment will help reducing energy bills for consumers. According to Marco Mensink, director general of Europe’s main chemicals trade group Cefic: “We will only make a business case for Europe and be able to implement the Green Deal if Europe creates strong and innovative partnerships, across multiple value chains. The first step is to develop a plan for direct electrification for industry, then we jointly focus to help create the necessary infrastructure and new wind energy capacity.” This joint statement echoes messages in February’s Antwerp Declaration for a European Industrial Deal,  signed by more than 1,200 business leaders. This new statement is signed by trade groups Cefic, WindEurope, CEMBUREAU, the European cement association, steel group EUROFER and Eurometaux, Europe’s Metals Association. Europe’s uncompetitive energy and feedstock cost position has put it at the forefront of a global wave of permanent plant closures and restructuring plans. Click on the image to make it larger. Thumbnail photo: Cefic's headquarters in Brussels, Belgium (Source: Cefic)

18-Jun-2024

Singapore May petrochemical exports rise 6.5%, NODX slips 0.1%

SINGAPORE (ICIS)–Singapore's petrochemical exports rose by 6.5% year on year to Singapore dollar (S$) 1.18 billion in May, while overall non-oil domestic exports (NODX) dipped, official data showed on Tuesday. The country's NODX slipped by 0.1% year on year to S$14.3 billion in May, extending the 9.6% decline in April, Enterprise Singapore data showed. Singapore's NODX highlights differing economic trends between advanced economies and China, Jester Koh, associate economist at Singapore-based UOB Global Economics & Markets Research, said in a note on Tuesday. “Singapore’s NODX by key markets somewhat reflects the asynchronous growth path between advanced economies (namely the US and Eurozone) versus China,” he said. “NODX to China remained resilient… which is consistent with the stronger than expected Q1 2024 GDP although we remain circumspect on the outlook given the weaker than expected industrial production and fixed asset investment data in May while both new and used home prices continued to contract,” he said. NODX to the US and EU experienced significant declines in May, likely due to the impact of higher interest rates on investment and consumer spending, Koh noted. Singapore's non-electronic NODX, which includes pharmaceuticals and petrochemicals, fell by 6.0% year on year to S$10.6 billion in May following the 12.6% contraction in April. Singapore's non-electronic NODX to its top 10 markets were mixed in May, with shipments to China slumping by 24.3%. Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majors ExxonMobil and Shell. The continued growth in petrochemical shipments abroad tracked the improvement in the country's overall factory activity in May. The purchasing managers’ index (PMI) edged up to 50.6, a 0.1 point gain from the previous month, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on 3 June. This was the ninth straight month that it remained in expansionary territory. A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction. The improvements in the new orders (May: 52.0, April: 51.7), new export orders (May: 51.3, April: 51.0) and output (May: 50.9, April: 50.6) sub-indices suggest that underlying end-demand fundamentals remain intact, UOB's Koh said. “The anticipated easing of financial conditions towards the latter half of the year as central banks in major advanced economies begin to reduce policy rates could provide some tailwinds to global investment and consumption activity,” he added. Meanwhile, supplier delivery times likely rose in May after vessels were diverted around the Cape of Good Hope, away from the Red Sea, to avoid ongoing conflicts, according to Koh. This rerouting led to an increase in nautical miles and longer sailing times as corroborated by the decline in the supplier deliveries subindices for May, he said. The overall supplier deliveries PMI sub-index slipped to 50.3 in May from April's 50.4. “The recent port congestion in Singapore may have been further exacerbated by the announced increase in import tariffs by the US to target Chinese exports in strategic sectors such as semiconductors, EVs, batteries and solar cells as exporters scramble to ship goods to the US ahead of the 1 Aug 2024 implementation timeline for some export categories,” Koh added. Separately, Singapore's port authorities are still dealing with an oil spill that occurred after a dredger collided with Singapore-flagged bunker vessel Marine Honour at the Pasir Panjang Terminal on 14 June. In its latest update on 17 June, the Maritime Port Authority (MPA) of Singapore said that oil recovery assets have been deployed today to skim and collect the remaining oil spillage off the water surface to minimise further spread of the oil. Port operations have not been affected by the incident, according to the MPA. Focus article by Nurluqman Suratman

18-Jun-2024

BLOG: China’s ever-more sophisticated chemicals markets could entirely serve itself

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China's chemicals producers are said to be focusing on being “nimble and agile” in response to weaker demand growth, ample local supply of intermediate chemicals and increasingly sophisticated end-use markets. This involves producing everything up and down the value chains only when it makes economic sense and increasing the differentiation of grades for a broader range of more sophisticated applications. Local producers are reported to be tripling their range of polyethylene (PE), polypropylene (PP) and polyurethane (PU) grades as they broaden their licensing of technologies. A lot of this differentiation is aimed at supplying chemicals and polymers for higher-value downstream industries such as electric vehicles and batteries. There are said to be plenty of intermediate chemicals available locally that can compete with opportunistic imports. Local producers of intermediates are also reported to be able to make better domestic netbacks than selling overseas. Customers of the local intermediate producers increasingly value reliable suppliers who can provide a wider range of grades, technical services and local currency deals, I’ve been told. The ability of chemicals importers to compete on price alone seems to be under challenge as a sustainable business model. Future winners in China could be the Tier 1 suppliers. These suppliers would make all the grades necessary to serve ever-more sophisticated local end-use markets, which would require constantly successful R&D and good technical services. This points towards China becoming a vast continent-sized market that largely serves itself in speciality chemicals and composites, as well as commodity chemicals. I earlier discussed how self-sufficiency is increasing in commodity chemicals resulting in a pivot by “overseas-based” producers to specialities and composites. China could become just about entirely self-sufficient in commodity grades of PP, polyethylene (PE) and in paraxylene (PX) and ethylene glycols (EG) by 2030. The latter two chemicals are of course pure commodities. Note the above phrase “overseas-based” rather than overseas, as the foreign investors in China are in strong positions to take advantage of this vas and rapidly maturing market. For reasons discussed today, I don’t believe that the pivot by overseas-based producers to specialities and composites will work if it is based on exporting to China. What should the overseas-based producers do? Pretty much forget China as an opportunity as they focus on the rest of the world. And here's the link: https://www.icis.com/asian-chemical-connections/2024/06/chinas-ever-more-sophisticated-chemicals-markets-could-entirely-serve-itself/ 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.

18-Jun-2024

PPG sees strong sustainability demand pull for coatings, race to adapt to new processes – exec

NEW YORK (ICIS)–US-based coatings producer PPG is seeing robust demand for sustainable products from customers, some of which rely on new, more energy efficient processes, said an executive on Monday. “Across the board there is strong pull… because when you look at [our customers’] narrative to the consumer, everybody is using sustainable advantage as a way to move market share,” said Peter Votruba-Drzal, vice president, Global Sustainability at PPG. “The challenge is to move with the speed and agility that’s required from customer industries. Large, mature industries are transforming right in front of us – the powertrain (EV) transformation in automotive, for example. The same holds when you look at how they will ultimately paint cars in the future,” he added. Votruba-Drzal spoke to ICIS at the New York Stock Exchange (NYSE). The time to get new, more sustainable products to market varies by industry, from being relatively quick – a matter of months – on the architectural coatings side, to longer for automotive, marine, aerospace and packaging, he pointed out. MARINE COATINGSIn the marine sector, the International Maritime Organization (IMO) is targeting a 20-30% reduction in greenhouse gas (GHG) emissions by 2030. “Marine coatings have a lot of sustainability benefits that are being pulled by the industry. The introduction of non-toxic anti-fouling technologies plus the benefits of fouling resistance which improves fuel efficiency over time, helps [shippers] meet their carbon emissions goals and reduces their cost of operation,” said Votruba-Drzal. On 5 June, PPG announced a collaboration with digital maritime sustainability platform RightShip to foster the development and adoption of sustainable marine solutions. PPG has a biocide-free silicone hull coating that helps vessels achieve up to 20% power savings and up to 35% lower GHG emissions versus traditional antifouling coatings, according to the company. SUSTAINABILITY + COST BENEFIT = PREMIUMIn most cases, simply introducing a more sustainable product is not enough to warrant a price premium, he pointed out. “Our customer typically requires improved performance – lower operating cost, less waste, energy efficiency – in addition to the sustainable benefit. We can partner with customers and create mutual value so that we both partake in the financial benefits,” said Votruba-Drzal. However, in other areas such as Europe’s architectural coatings market, consumers are willing to pay more for a more sustainable solution with the same performance, he added. Greener specifications, such as from builders of commercial real estate, are also driving demand for more sustainable products with lower carbon footprints, as building owners seek to achieve certain levels of LEED (Leadership in Energy and Environmental Design) certifications, he said. “If we’re working with a coil coatings customer and can provide a low carbon footprint solution, they win market share in the building,” said Votruba-Drzal. Coil coating is a continuous, automated process for coating metals prior to fabrication. TRANSFORMATION IN COIL COATINGS“In the coil industry, a fascinating transformation has been happening”, and only in the past two years or so, the executive said. Coil coatings operations are moving from using football field-length ovens fired by natural gas, to a much more compact electron beam system of around 30 yards in length, he explained. “You eliminate all of the burning of the fossil fuel and carbon emissions, as it runs off electricity which can be renewable power,” said Votruba-Drzal. “Here is a mature industry of 50-plus years that used to be heavily focused on operational throughput costs on the technology side. Now suddenly all these formulations are changing into electron beam curing. And so it resets the opportunity for market share gains,” he added. PROGRESS ON SUSTAINABILITY GOALSPPG in May 2023 introduced 2030 sustainability goals, including a 50% reduction in Scope 1 and 2 GHG emissions (from operations and purchased energy) and a 30% reduction in Scope 3 emissions (mostly from purchased raw materials) from a 2019 base, validated by the Science Based Targets initiative (SBTi). Source: PPG As of its May 2024 update, it has achieved 10% reduction in Scope 1 and 2 emissions, and a 12% reduction in Scope 3 emissions. PPG has also assessed 97% of key suppliers against sustainability and social responsibility criteria. Scope 1 and 2 emissions account for only 4% of PPG’s total carbon footprint. Further reductions to Scope 1 and 2 will primarily come from replacing motors and equipment on mixers, and using more renewable power. The bulk comes from Scope 3 emissions, with the primary components being raw materials, and how paint shops use PPG’s products, said the executive. Often the location of a supplier’s facility plays a key role in the carbon footprint of the products coming out of that site, he pointed out. “You can have a material made by a manufacturer that has operations in Asia as well as in other regions, that tie into very different electrical grids. And how green that grid is, basically impacts the carbon footprint associated with that product,” explained Votruba-Drzal. With global operations, PPG can also provide the same product at different levels of carbon footprint, depending on where it makes it, and ships it from, he added. RECYCLED AND BIO-BASED RAW MATERIALSPPG also uses recycled and bio-based raw materials in certain formulations. Its Mexico coatings company Comex uses recycled tires as a filler for waterproof roof coatings. Recycled polyethylene terephthalate (R-PET), acrylics, elastomers, polyurethanes and polyolefins can all be incorporated into coatings, he noted. “This is an emerging space of circularity where getting the scale matters,” said Votruba-Drzal, who pointed to partnerships between companies to develop new technologies and ecosystems. Interview article by Joseph Chang

17-Jun-2024

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