Energy

HOUSTON (ICIS)–The US Environmental Protection Agency (EPA) could make a decision any day that would allow California to adopt an aggressive electric vehicle program, triggering similar programs in 12 other states and territories that will likely become the target for repeal under President-Elect Donald Trump. During his campaign, Trump has expressed opposition to policies that favor one drive-train technology over another, saying that he would  "cancel the electric vehicle mandate and cut costly and burdensome regulations". California's EV program is called Advanced Clean Cars II (ACC II), and it works by requiring EVs, fuel cells and plug-in hybrids to make up an ever-increasing share of the state's auto sales. Other programs that encourage the adoption of EVs could be more vulnerable to repeal and rollbacks under Trump ACC II COULD BOOST EV DEMAND IN 13 STATESBefore California can adopt its ACC II program for EVs, it needs the EPA to grant it a waiver from the US Clean Air Act.  The California Air Resources Board (CARB) said it is expecting a decision from the EPA at any time. If the EPA receives the waiver, then it will trigger the adoption of similar ACC II programs the following states and territories. The figures in parentheses represent each state's share of light-vehicle registrations. California (11.6%) New York (5.6%) Colorado (1.8%) Oregon (1.0%) Delaware (0.3%) Rhode Island (0.3%) Maryland (1.8%) Vermont (0.3%) Massachusetts (2.1%) Washington (1.9%) New Jersey (3.4%) Washington DC (not available) New Mexico (0.5) Source: CARB In total, the 13 states and territories represent at least 30.6% of US light-vehicle registrations, according to CARB. HOW THE ACCII SUPPORTS EV DEMANDThe following chart shows the share of electric-based vehicles that would need to be sold in California by model year under the state's ACC II regulations. Programs in other states and territories have similar targets. ZEV stands for zero-emission vehicle and includes EVs and vehicles with fuel cells Source: California Air Resources Board REPEALING THE ACC IIThe key to California's ACC II programs is the EPA's decision to grant it a waiver to the Clean Air Act. Trump will likely revoke that waiver if it is granted before he takes office, according to the law firm Gibson Dunn. It expects that California will respond by threatening to retroactively enforce the ACC II program once a friendlier president takes office after Trump's term ends in four years. Auto makers could choose to take California's threat seriously and reach an agreement with the state. A similar scenario unfolded during Trump's first term of office in 2016-2020 that involved California's earlier Advanced Clean Cars (ACC) program, according to Gibson Dunn. That program also required a waiver from the EPA, and the dispute was resolved only after Joe Biden restored the waiver after becoming president in 2021. For the possible dispute over the ACC II program, it could take the courts determine whether California can retroactively enforce the program. FEDERAL PROGRAMS ARE MORE VULNERABLE TO REPEALThe following federal programs could be more vulnerable to roll backs under Trump. The Environmental Protection Agency's (EPA) recent tailpipe rule, which gradually restricts emissions of carbon dioxide (CO2) from light vehicles. The Department of Transportation's (DoT) Corporate Average Fuel Economy (CAFE) program, which mandates fuel-efficiency standards. These standards became stricter in 2024. A tax credit worth up to $7,500 for buyers of EVs under the Inflation Reduction Act (IRA). Trade groups have argued that the CAFE standards and the tailpipe rules are so strict, they function as effective EV programs. They allege that automobile producers can only meet them by making more EVs. The following table shows the current tailpipe rule. Figures are listed in grams of CO2 emitted per mile driven. 2026 2027 2028 2029 2030 2031 2032 Cars 131 139 125 112 99 86 73 Trucks 184 184 165 146 128 109 90 Total Fleet 168 170 153 136 119 102 85 Source: EPA The following table shows the fuel efficiency standards under the current CAFE program. Figures are in miles/gallon. 2022 2027 2028 2029 2030 2031 Passenger cars 44.1 60.0 61.2 62.5 63.7 65.1 Light trucks 32.1 42.6 42.6 43.5 44.3 45.2 Light vehicles 35.8 47.3 47.4 48.4 49.4 50.4 Source: DOT Gibson Dunn expect Trump's administration will rescind the tailpipe rule and roll back the CAFE standards to levels for model year 2020 vehicles. That would lower the CAFE standards for light vehicles to 35 miles/gal. EVS AND CHEMICALSEVs represent a small but growing market for the chemical industry, because they consume a lot more plastics and chemicals than automobiles powered by ICEs. A mid-size EV contains 45% more plastics and polymer composites and 52% more synthetic rubber and elastomers, according to a May 2024 report by the American Chemistry Council (ACC). EVs also contain higher value materials such as carbon fiber composites and semiconductors, making the total value of chemistry in the automobiles up to 85% higher than in a comparable ICE, according to the ACC. The following chart compares material consumptions in EVs and ICEs. Source: ACC EVs have material challenges that go beyond making them lighter and more energy efficient, such as managing heat from their batteries and tolerating high voltages. Major chemical and material producer are eager to develop materials that can meet these challenges and command the price premiums offered by EVs. Most have EV portfolios and prominently feature them at trade shows A rollback of US incentives for EVs could slow their adoption and weaken demand for these materials. Materials most vulnerable to these rollbacks would include heat management fluids and chemicals used to make electrolytes for lithium-ion batteries, such as dimethyl carbonate (DMC) and ethyl methyl carbonate (EMC). Other materials used in batteries include polyvinylidene fluoride (PVDF) and ultra high molecular weight polyethylene (UHMW-PE). Insight by Al Greenwood Thumbnail shows an EV. Image by Michael Nigro/Pacific Press/Shutterstock

21-Nov-2024

LONDON (ICIS)–UK inflation rose in October to its highest level in six months, driven up by rising energy prices, according to official data on Wednesday. The consumer prices index (CPI) increased by 2.3% in the 12 months to October, up from 1.7% in September. Housing and household services, mainly electricity and gas prices, were the biggest factors pushing inflation higher, the Office for National Statistics (ONS) said. The UK’s inflation rate has trended down since October 2022, when it hit 11.1% in the wake of surging energy prices following Russia’s invasion of Ukraine. The Bank of England (BoE) cut its key interest rate twice this year as inflation eased, heading below its target of close to but not exceeding 2% in September. Eurozone inflation also increased in October, rising to 2% from 1.7% in September.

20-Nov-2024

CARTAGENA, Colombia (ICIS)–Latin America stands at a crucial turning point as global economic and political dynamics shift, with significant opportunities in energy, food security and technological advancement, an economist said on Tuesday. Martin Redrado, director at the Buenos Aires-based Fundacion Capital, said Latin America is uniquely positioned to benefit from changing global trade patterns, particularly as the world moves from a rules-based system to a more transactional approach. The economist was speaking to delegates at the annual meeting of the Latin American Petrochemical and Chemical Association (APLA). Mexico has emerged as a primary beneficiary of nearshoring initiatives, while South American nations including Colombia, Brazil, Argentina and Chile are increasingly attracting international attention. The region's energy sector is projected to play a vital role in global security, with forecasts indicating Latin America will produce 11 million barrels of oil daily by 2030, representing 25% of global production, said Redrado. Brazil is expected to double its offshore pre-salt oil production, while Argentina's Vaca Muerta development promises significant gas production potential. The economist said regarding food security, Latin America's position appeared equally strong, with the region already controlling half of global corn exports and 60% of soybean exports, with Brazil leading as a major meat exporter. “Latin American will have a central role to play in food security. Today the world has 8 billion inhabitants, and it is estimated that by 2030 around 2.3 billion of those 8 billion will become middle class,” said Redrado. “The middle class consumes more protein, and clearly Latin American, with half of the total corn exports in the world and 60% of soybean exports, is well placed to cater for that demand.” Technological integration, particularly artificial intelligence, is reshaping traditional industries, said Redrado, noting AI applications in agricultural soil analysis, weather forecasting, and pest control are enhancing productivity. Similar advances, he concluded are being made in energy sector efficiency and construction monitoring. INFRASTRUCTURE STILL BEHINDHowever, infrastructure remains a significant challenge, and Redrado said Latin America must improve both physical and digital connectivity, including enhanced petrochemical infrastructure and better regional integration. The push for private sector participation in infrastructure development is growing, with negotiations ongoing for increased US involvement under the Trump administration. Summing up, Redrado said that as global tensions persist in Europe and the Middle East, Latin America's relative stability and strategic distance from these conflicts, combined with existing free trade agreements with the US, position the region favorably for sustainable economic growth and development. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Front page picture source: Shutterstock

19-Nov-2024

BARCELONA (ICIS)–European chemical producers may have to keep paying high energy prices as geopolitical instability impacts sentiment more than the fundamentals of supply and demand. Europe spot electricity prices up 76% this year, ICIS TTF gas price up 40% Fear drives markets more than fundamentals which remain bearish Demand is reduced compared to five-year average, supply plentiful Above average temperatures forecast into December in Europe Gas storage around 90%, well above 5-year average New sources of US, Qatari liquefied natural gas (LNG) due onstream in 2025 Renewable energy will ramp up quickly in Europe Donald Trump may increase LNG supply by unfreezing projects In this Think Tank podcast, Will Beacham interviews ICIS gas and cross-commodity expert, Aura Sabadus, and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

19-Nov-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 16 November. NEWS Brazil to investigate alleged US, Canada PE dumpingBrazil is to start an investigation into polyethylene (PE) arriving on its shores from the US and Canada and whether the material constituted dumping, the government said. Unipar sees light at tunnel end as prices rise, Argentina revivesManagement at Brazil’s chloralkali chain producer Unipar this week held onto improved financial results in Q3, quarter on quarter, to assert the industry may be finally going through the beginning of the end of the downturn. Mexico confident US will realize tariff-free trade benefits both – SheinbaumRenegotiation in 2026 will be key for Mexico to show the US how the United States–Mexico–Canada Agreement (USMCA) is equally beneficial for both countries, the Mexican president said this week. Pemex targets petrochemicals, fertilizers expansion, $2.4-billion savings in 2025Pemex is to overhaul its La Cangrejera and Morelos petrochemicals complex in Mexico’s southern state of Veracruz to sharply increase production, the state-owned energy major said this week. INSIGHT: Mexico’s manufacturers hopeful USMCA renegotiation could spare them from tariffsPolicymakers and companies in Mexico are coming to terms with a potential shift in trade policies in the US after Donald Trump’s decisive victory in the presidential election last week. Mexico in strong position to renegotiate USMCA, tariff panic premature – Braskem Idesa execA potential US import tariff of 10% on Mexican goods is looming large on the country's export and petrochemicals-intensive manufacturing sectors, but it is early days and the worries are premature, according to the head of institutional relations at polyethylene (PE) producer Braskem Idesa. Brazil's Petrobras begins commercial operations at gas processing unit in RioPetrobras has begun commercial operations at its Natural Gas Processing Unit (UPGN) at the Boaventura Energy Complex in Itaboraí, Rio de Janeiro state, the Brazilian state-owned energy major said on Monday. PRICING LatAm PP domestic, international prices stable on sufficient supply, soft demandDomestic and international polypropylene (PP) prices were assessed unchanged this week across Latin American countries. LatAm PE domestic prices steady to lower on weak demand, sufficient supplyDomestic polyethylene (PE) prices were assessed as steady to lower across Latin American (LatAm) countries while international prices were unchanged this week.

18-Nov-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 15 November. Europe PET hit by multiple factors pulling market in different directions Polyethylene terephthalate (PET) sources in Europe are faced with a plethora of circumstances trying to shape the market, which in the end may result in a degree of stability. Crude markets face substantial 2025 surplus as China demand falters – IEA Global crude supply growth is likely to outstrip demand by over a million barrels/day in 2025, the International Energy Agency (IEA) said on Thursday, with the “marked” slowdown in China consumption the main drag on consumption this year. INSIGHT: European cracker shutdowns could open market to US ethylene exports European ethylene producers could be planning more cracker shutdowns, with the lost capacity being replaced by imports from the US. Shell wins appeal in Dutch emissions caseThe Netherlands court ruling mandating that Shell cut its total carbon emissions by 45% by 2030 has been thrown out, the oil and gas major said on Tuesday. Europe PE, PP adapt value proposition in face of evolving market European polyethylene (PE) and polypropylene (PP) are evolving as the world they occupy steadily changes.

18-Nov-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 15 November. INSIGHT: India’s ADD findings on PVC have potential to reshape regional flows in wider Asia By Jonathan Chou 11-Nov-24 11:00 SINGAPORE (ICIS)–Asia's polyvinyl chloride (PVC) market players are assessing the potential ramifications following preliminary findings on India's PVC imports released by the country's Directorate General of Trade Remedies (DGTR). Asia petrochemical shares tumble as China stimulus disappoints By Jonathan Yee 11-Nov-24 15:04 SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Monday as China’s much-awaited stimulus measures failed to impress markets, while the US is likely to put up more trade barriers against the Asian giant following the re-election of Donald Trump as president. Asia toluene markets slump on waning regional demand By Melanie Wee 12-Nov-24 11:47 SINGAPORE (ICIS)–Asia’s toluene spot markets are being weighed down by a combination of burgeoning supply and lacklustre demand, at a time when arbitrage economics to divert material to the US were unviable. Asia petrochemical shares fall on strong US dollar, uncertain trade policies By Nurluqman Suratman 13-Nov-24 14:07 SINGAPORE (ICIS)–Shares of petrochemical companies in Asia extended losses on Wednesday, tracking weakness in regional bourses, amid a strong US dollar and uncertainty over trade policies of US President-elect Donald Trump which could fuel inflation. Shell Singapore site divestment deal to be completed in Q1 2025 By Nurluqman Suratman 14-Nov-24 11:41 SINGAPORE (ICIS)–Shell expects the deal to sell its energy and chemicals park in Singapore to Chandra Asri and Glencore will be completed by the first quarter of 2025, a company spokesperson said on Thursday. INSIGHT: China may accelerate PP exports amid intensified supply and demand imbalance By Lucy Shuai 14-Nov-24 13:00 SINGAPORE (ICIS)–China may accelerate PP exports in 2025 amid an intensified imbalance between supply and demand as a large number of new plants are expected to start up. PODCAST: SE Asia propylene to face additional supply, freight challenges in 2025 By Damini Dabholkar 15-Nov-24 11:28 SINGAPORE (ICIS)–Southeast Asia's propylene market faces significant challenges in 2025, with additional supply expected and freight rates continuing to impact downstream demand. Crimped supplies ease pressure on Asia VAM prices By Hwee Hwee Tan 15-Nov-24 14:36 SINGAPORE (ICIS)–Sporadic plant disruptions and crimped supplies in China are fuelling expectations of price competition easing across vinyl acetate monomer (VAM) import markets in Asia.

18-Nov-2024

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US were largely stable this week but exporters are being urged to book outgoing shipments 4-6 weeks in advance as labor issues between union dock workers and US Gulf and East Coast ports stalled. For US companies working to export excess volumes to balance year-end inventories, those shipments need to be going out this week. For importers, rates from Asia to the US West Coast fell by 2% and are down by almost 3% over the past two weeks, according to supply chain advisors Drewry and as shown in the following chart. The chart also shows rates from Asia to New York were largely stable, down by 0.20% and by 0.36% over the past two weeks. Global average rates held steady at around $3,440/FEU (40-foot equivalent unit), as shown in the following chart. With the breakdown in negotiations between the US Maritime Alliance (USMX), representing the ports, and the International Longshoremen’s Association (ILA), representing the dock workers, and with the expectation of significant tariff increases under the administration of President-elect Donald Trump, analysts expect a surge of imports over the last few weeks of the year. The National Retail Federation (NRF) has revised its forecast for the rest of the year on the developments. Ports have not yet reported October’s numbers, but the NRF/Hackett Associates Global Port Tracker projected the month at 2.13 million TEU (20-foot equivalent units), up 3.7% year on year. November is forecast at 2.15 million TEU, up 13.6% year on year, and December at 1.99 million TEU, up 6.1%. That would bring 2024 to 25.3 million TEU, up 13.6% from 2023. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. CANADA PORT LABOR ISSUES The Port of Montreal will resume operations on Saturday, 16 November, at 07:00 local time, following labor disruptions that started on 31 October and a subsequent lockout of about 1,200 dock workers. The Port of Vancouver and other Canadian west coast ports resumed operations on Thursday after a strike and lockout of about 730 foremen who supervise more than 7,000 dock workers that began on 4 November. The Port of Vancouver is Canada’s largest port by far. More than Canadian dollar (C$) 22 million ($15.7 million) of chemistry and plastic products was traded through Vancouver and other west coast ports each day in 2023, for a total of C$8 billion for the year, according to the Chemistry Industry Association of Canada (CIAC). LIQUID CHEM TANKER RATES STABLE US chemical tanker spot rates were overall steady this week for most trade lanes, while vessel demand continues to remain soft for various routes. One exception is rates from the USG to the Mediterranean, which surged as interest to this region remains steady. There was an uptick on cargoes from various regions to Montreal as shippers work to deliver and pick up material before the ice season closes for winter transit and soon will require ice class vessels. The US Gulf to ARA remains soft and solid for contractual cargoes and as CPP tonnage continues to participate in the chemical sector. If it persists it could continue to pressure to the market even further. Similarly, that situation exists for volumes on the USG to the Caribbean and South America trade lanes. From the USG to these regions, space among regular carriers remains available, due to a lack of interest. However, for the USG to Asia spot volumes continue to be weak as there seems to be plenty of prompt space available. Mainly parcels of monoethylene glycols (MEG), ethanol and methanol to this region seems to have provided any support to the weak market. Additionally, ethanol, glycols and caustic soda were seen in the market in various directions. Bunker prices remain stable mainly due to the continued the volatility in energy prices week on week. PANAMA CANAL MAINTENANCE The West Lane of Miraflores Locks will be out of service due to concrete maintenance on the West Southend approach wall for about 48 hours from early on 23 November until late on 24 November, according to the Panama Canal Authority (PCA). The number of slots available to super and regular vessels will be reduced because of the maintenance. Once the maintenance is complete, the 20 slots for supers and the six slots for regular vessels will be reinstated for booking dates beginning 25 November, the PCA said. As of September, the PCA has 36 slots per day after limiting transits late in 2023 because of a severe drought in the region. With additional reporting by Kevin Callahan and Stefan Baumgarten

15-Nov-2024

SAO PAULO (ICIS)–Brazil is to start an investigation into polyethylene (PE) arriving on its shores from the US and Canada and whether the material constituted dumping, the government said. As previously reported by ICIS, the proposals to investigate came from polymers major Braskem and were backed by Brazil’s chemicals trade group representing producers, Abiquim. Braskem is the dominant PE producers in Brazil, and antidumping duties (ADDS) on US- and Canada-originated PE would considerably prop up its domestic market position. The start of investigation proceedings was published in Brazil’s Diario Oficial da Uniao (Official Gazette). The investigation is to be carried out by the Department of Commercial Defense (Decom), which is part of the Ministry of Industry’s Secretary of Foreign Trade. Braskem filed on July 31 a petition to initiate an investigation into the practice of dumping of PE resins exports to Brazil with US or Canadian origin. The analysis of the evidence of dumping is to consider the period from April 1, 2023 to March 31, 2024, while the period for analyzing potential damage caused to domestic producers is to consider the period from April 1, 2019 to March 31, 2024. “Due to the large number of producers/exporters from the US and Canada identified in the detailed data on Brazilian imports … the producers or exporters responsible for the largest reasonably investigable percentage of the export volume of the exporting country will be selected to send the questionnaire,” said Decom. “The absolute dumping margins determined for the purposes of this document reached $220.95/tonne and $264.99/tonne, and the relative margins were 21.4% and 26.9% for the US and Canada, respectively. It can be inferred that, if such dumping margins did not exist, domestic industry prices could have reached higher levels, reducing or even eliminating the effects of the investigated imports.” Braskem said earlier in November it is lobbying the Brazilian government to extend ADDs on polyvinyl chloride (PVC) beyond 2025 when they are due to expire. In October, the government implemented higher import tariffs on several chemicals, also after heavy pressure by domestic producers and their trade group Abiquim. Additional reporting by Bruno Menini

14-Nov-2024

Traders agree that financial activity exaggerates trends on European gas benchmark TTF The number of individual players from investment funds is nearly the double of energy companies active on ICE TTF as of 8 November Their activity tends to be more frequent despite lower total open positions LONDON (ICIS)–The rising presence of investment funds relative to physical traders on the ICE TTF could exacerbate curve volatility this winter. While it is hard to attribute market movements to these entities alone, many traders agree that financial trading tends to exaggerate trends. What is undeniable is that their presence on the market has grown steeply since Europe lost access to its stable supply of pipeline gas from Russia and became reliant on LNG, a global commodity susceptible to global price drivers and disruptions. ICIS has previously observed that shifts in investment funds’ net long positions have correlated with TTF curve movements since the fourth quarter of 2023, but the causation is hotly debated. Financial players tend to have a higher risk appetite than physical ones, and are useful in providing bids and offers on far-curve contracts where there may not otherwise be any. INDIVIDUAL POSITION HOLDERS The Intercontinental Exchange (ICE) publishes the “number of persons holding a position in each category”in the weekly Commitment of Traders (CoT) table. The presence of investors grew by 1.7 times from January 2023 to January 2024 based on figures from ICE CoT reports collected from the ESMA register. Meanwhile individual energy companies’ presence (“commercial undertakings” per the CoT report) increased just 1.4 times. More recently, the investment fund total has increased from 312 on 30 August to 365 on 8 November, while energy companies grew from 191 to 196. The ratio of funds to energy companies went from 1.6 to 1.9 over that period. “Investment firms or credit institutions”, mostly banks, act on behalf of utilities and financial players alike, and are therefore hard to pin down. Their presence has remained relatively constant around 60-70 individuals throughout 2024. While overall energy companies hold a much larger amount of total positions – 1,900TW compared to funds’ 606TW as of 8 November – the latter comprises nearly double the amount of individual traders. “It depends what you do with the positions you have,” one trader explained. “If I buy 100MW Cal ’26 today and hold it for one year I don’t move the market, but if I trade 500MW front month every hour, day and week… you move the market.” Another trader mentioned hedge funds’ contribution to the current TTF Summer ’25 premium over Winter ’25 : “You know you’ll be full enough by winter, but you don’t know if you can get enough gas in as LNG supply is uncertain. And you know how a bullish market trades, it’s not only utilities and storage players in this market,” the trader said, adding that hedge funds can also move the market. A third concurred, “I would say the front is pushed up by financial players.”

14-Nov-2024