Naphtha

SINGAPORE (ICIS)–Reliance Industries Ltd’s (RIL) oil-to-chemicals (O2C) business posted a 14.3% year-on-year drop in earnings in its fiscal first quarter ending June 2024 on poor chemicals margins, the Indian conglomerate said. O2C results in 10 million rupees (Rs) Apr-June 2024 Apr-June 2023 % Change Revenue 157,133 133,031 18.1 EBITDA 13,093 15,286 -14.3 Exports 71,463 69,006 3.6 – Revenue for the period rose primarily on the back of higher product prices in line with Brent crude price gains, and increased volumes due to strong domestic demand, the company said on 19 July. – Fiscal Q1 overall earnings before interest, tax, depreciation and amortisation (EBITDA) margin dropped to 8.3% from 11.5% in the same period of last year. – On a year-on-year basis, April-June domestic polymer and polyester demand increased by 8% and 5%, respectively. – RIL's consolidated group profit after tax fell by 4% year on year to Rp175 billion ($2.09 billion) in April-June 2024. Polymers- Fiscal Q1 polymer margins were down by 0.5% to 16.9% year on year due to firm naphtha prices. Product margin over naphtha April-June 2024 ($/tonne) April-June 2023 ($/tonne) % Change Polyethylene (PE) 330 397 -16.9% Polypropylene (PP) 318 381 -16.5% Polyvinyl chloride (PVC) 371 373 -0.5% Polyester – Paraxylene (PX) and monoethylene glycol (MEG) margins over naphtha decreased year on year due to higher naphtha prices. – "PTA [purified terephthalic acid] margins were impacted adversely due to high inventory with Chinese producers and increased competition," the company said. – On a year-on-year basis, domestic polyester demand in fiscal Q1 increased by 5%, driven by strong growth in PET, which was up 27% due to "higher demand from the beverage segment on account of summer season and elections". ($1 = Rs83.7)

22-Jul-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 12 July 2024. OUTLOOK: Asia naphtha market braces for supply uncertainties By Li Peng Seng 12-Jul-24 12:00 SINGAPORE (ICIS)–Asia’s naphtha market sentiment is expected to be choppy in the short term due to a lack of clarity on arbitrage supplies against volatile demand. OUTLOOK: Asia EVA market loses shine as demand from PV sector lags By Helen Lee 11-Jul-24 11:25 SINGAPORE (ICIS)–Demand for ethylene vinyl acetate (EVA) from China’s photovoltaic (PV) industry is likely to remain lackluster amid an oversupply in the entire industry chain. PODCAST: China to accelerate hydrogen development via energy law By Patricia Tao 10-Jul-24 11:25 SINGAPORE (ICIS)–China's recent decision to include hydrogen in its draft national energy law signals a transformative shift in the country's energy landscape. China EV giant BYD to invest $1 billion in Turkey production plant By Nurluqman Suratman 09-Jul-24 15:24 SINGAPORE (ICIS)–Chinese electric vehicle (EV) giant BYD has agreed to invest $1 billion to set up a manufacturing plant in Turkey which will produce up to 150,000 vehicles per year. PODCAST: Asia recycling market sees increased interest in pyrolysis By Damini Dabholkar 09-Jul-24 11:17 SINGAPORE (ICIS)–Market players in Asia are increasingly becoming more interested in the use of pyrolysis oil as fuel. OUTLOOK: SE Asia PE to see some demand recovery in H2, challenges persist By Izham Ahmad 09-Jul-24 15:07 SINGAPORE (ICIS)–The southeast Asian polyethylene (PE) market is expected to face modest demand recovery in the second half (H2) of the year, but this is likely to be negated by increased supply and the threat of high freight costs affecting import shipments.

15-Jul-2024

LONDON (ICIS)–European ethylene spot prices have firmed week on week on the back of better-than-expected demand amid higher feedstock values and an increasing focus on upcoming planned cracker maintenance outages. Spot deals this week have been reported at discounts of 32-35% on the pipeline, prior deals had been at discounts of around 38-39%. Producers say they have received several requests for additional volume offtakes in July. This is being attributed to a combination of factors: Improved sentiment from domestic PVC players following the imposition of tariffs on imports ex-Egypt and the US Continued high container freight rates which are restricting some derivative imports Recent hurricane-related production and logistics disruptions ex-US Firmer month-on-month naphtha values which is likely to drive discussions for the August contract reference price settlement Planned cracker maintenance due to get underway from September particularly that due in Germany with alternative supply flexibility likely to be limited at that time due to pressure issues on the ARG pipeline. With crackers having been run at rates closely aligned with contractual demand – still very much below normal albeit better than in 2023 – there is not too much flexibility for additional volumes at short notice. “Many will have assumed that ethylene supply would always be plentiful,” a source said, “and now they find that it is not the case.” Cracker operators have avoided as far as possible marginal tonne production as spot appetite has been extremely low unless at deep discounts to the prevailing contract price. Crackers are underutilised, so in theory, there is space to ramp up. But with August around the corner and few indications at this stage how long this better-than-expected demand will be sustained, sources assume producers will be reluctant to ramp up production in July. Thumbnail photo: Flooding in Houston, Texas, in the wake of Hurricane Beryl on 8 July 2024, one of the causes of firming ethylene prices. Source: Carlos Ramirez/EPA-EFE/Shutterstock

12-Jul-2024

LONDON (ICIS)–Global crude oil demand slumped to 710,000 bbl/day in Q2 2024 as China’s post-pandemic economic rebound ran its course, the International Energy Agency (IEA) said on Thursday. Representing the slowest quarterly increase since the closing months of 2022, the period saw Chinese demand decline in April and May, the agency said in its July monthly oil market report. Global oil demand gains are expected to hover below one million barrels/day in 2024 and 2025 as tepid consumption growth, vehicle electrification and energy efficiency measures weigh on purchasing. Total supply increased by 150,000 barrels/day to 102.9 million barrels in June as easing maintenance levels and increasing biofuels output offset a fall in Saudi production, the IEA added. Saudi Arabia output fell to 8.85 million barrels in June from 9.03 million barrels the previous month, according to IEA data, leaving the Kingdom’s total excess capacity at 3.26 million barrels/day. Despite weak demand growth, pricing firmed slightly in June, with Brent crude futures priced around $86/barrel at the end of the month, and remaining around the $85/barrel mark in trading this week. This increase was driven in part by OPEC+ coalition signals that the schedule for unwinding production cuts would depend on market conditions, easing fears of a sudden surge in supply. Petrochemical sector demand for oil was sluggish during the quarter, the IEA added, but other signs point to potential early improvements for manufacturing in Europe. “Demand for industrial fuels and petrochemical feedstocks was particularly weak. By contrast, Q2 delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signalling a budding recovery in Europe’s ailing manufacturing sector,” the IEA said. Despite the industrial input uptick, overall demand continues to trend slower, the agency added. “For next year, the call on OPEC+ crude tumbles… as demand growth continues to slow and non-OPEC+ output continues to expand. After the hot summer, cooler trends are set to prevail.” Thumbnail photo: An oil rig off the coast of China's Hebei province. Source: Xinhua/Shutterstock

11-Jul-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 5 July. Shell to post up to $2 billion in impairments in Q2 results Energy major Shell on Friday said that it expects to book $2 billion in post-tax impairments following the sale of its Singapore assets and the suspension of construction at its biofuels plant in the Netherlands. European Commission imposes China EV tariffs citing ‘unfair’ subsidies The European Commission is to move forward with proposed plans to impose tariffs of nearly 40% in some cases to China-manufactured battery electric vehicles (BEVs), citing a level of state subsidy it terms as “unfair”. Global phenol demand expected to rise, driven by downstream growth Global phenol demand is expected to increase by about 1.9% in 2024 after a weak 2023, supported by growth in the key downstream bisphenol A (BPA) market. Europe cracker margins down on firmer naphtha, LPG costs Europe cracker margins went down week on week on the back of firmer feedstock costs, ICIS margin analysis showed on Tuesday. Eurozone manufacturing momentum ebbs in June as demand deteriorates Eurozone manufacturing sector activity slipped further into contraction in June as demand slowed in most of the bloc’s largest economies, while conditions improved in the UK.

08-Jul-2024

SINGAPORE (ICIS)–A consortium consisting of four Asian petrochemical producers have agreed to establish a sustainable polyester fiber supply chain. Japan's Mitsubishi Corp, South Korea’s SK geo centric, Thailand’s Indorama Ventures Ltd (IVL), and India Glycols along with three other companies are part of the consortium, the companies said in a joint statement on Thursday. Japanese sports apparel firm Goldwin is the project owner of the initiative, while Finnish refiner Neste is also part of the consortium alongside Japan-based engineering firm Chiyoda Corp. Financial details of the project were not disclosed. The project aims to utilize renewable and bio-based materials as well as materials produced via carbon capture and utilization (CCU) to manufacture polyester fibers for THE NORTH FACE brand in Japan. Outdoor apparel and equipment brand THE NORTH FACE is operated by Goldwin in Japan. "After that, the launch of further products and brands of Goldwin will be considered," Chiyoda said in the statement. The polyester fiber produced from the project is planned to be used by Goldwin for a part of THE NORTH FACE products, including sports uniforms in July this year. Chiyoda will supply CCU-based paraxylene (PX) to the supply chain, while Thai polyester producer IVL will contribute renewable CCU-based purified terephthalic acid (PTA). In March 2022, Chiyoda started producing carbon dioxide (CO2)-based PX at its pilot plant at the company's Koyasu Research Park in Kanagawa prefecture as part of a project linked with Japan's New Energy and Industrial Technology Development Organization (NED). SK geo centric and Neste will be supplying renewable PX and renewable naphtha, respectively. India Glycols, which produces monoethylene glycol (MEG), will supply bio-ethylene glycol made mainly from sugarcane. Toyobo MC Corporation (TMC) – a joint venture between Toyobo Co and Mitsubishi Corp – will be supplying renewable bio-CCU polyethylene terephthalate (PET). Details on supply volumes from each of the consortium partners were not disclosed. Thumbnail photo: A generic polyester clothing label (Sandvik/imageBROKER/Shutterstock)

04-Jul-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China’s petrochemical markets might well respond positively to any new economic stimulus measures announced during the delayed Third Plenum government meeting that takes place on 15-18 July. But the scale of economic reforms required are such that I believe the more likely outcome is China remaining stuck with lower growth than during the 1992-2021 Petrochemicals Supercycle. Sourabh Gupta – Senior Fellow at the Institute for China-America Studies in Washington, DC – wrote in an article for the East Asia Forum that reforms needed include: Progressively lifting Hukou restrictions to make public services more equitable. Building a unified and portable social security net more in line with advanced economies. A shift from indirect to direct taxes. Individual income tax revenues comprised 33% of total revenues in OECD countries compared to 9% in China. The tax base must expand as four out of five Chinese households do not pay personal income tax. He cautioned that reform would not be easy in a country that preferred top-down capital-intensive approaches and was disdainful of high welfare spending. China appears to have doubled-down on its capital-intensive approach since the end of the property bubble through investing in export-focused manufacturing. This raises the issue of geopolitical threats to its GDP growth, such as the US and the EU recently raising tariffs on Chinese electric vehicles and batteries. “If China is to maintain growth rates of 4-5% per year, it can only do so if the rest of the world agrees to reduce its own investment and manufacturing levels to less than half the Chinese level” wrote Michael Pettis, Professor of Finance at Peking University, in an article for the Carnegie Endowment for International Peace. The Economist reported that as reshoring accelerated, governments had adopted over 1,500 policies to promote specific industries in both 2021 and 2022. This compared with almost none in the early 2010s. But this latest Third Plenum could be as significant as the ones cited by Reuters in 1978 and 1993. The 1978 Plenum opened China up to foreign investment. In 1993, the Plenum liberalised trading in the Yuan and launched “socialist market” reforms following Deng Xiaoping’s Southern Tour a year earlier. How will we know the outcomes? If China’s polyethylene (PE) and polypropylene (PP) price spreads return to their Supercycle levels over the six-to-12-months.  If this doesn’t happen, more reforms will be needed as too much supply will continue to chase too little demand. Despite recent rebounds in spreads, China CFR high-density PE (HDPE) spreads over CFR Japan naphtha costs remain 116% lower than during the Supercycle with low-density (LDPE) spreads 46% lower and linear-low density (LLDPE) spreads 80% lower. The story is very similar in China PP spreads over naphtha. 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.

03-Jul-2024

SINGAPORE (ICIS)–Saudi Arabia's Methanol Chemicals Co (Chemanol) has signed a 20-year deal to supply methanol to the Amiral petrochemical project of Saudi Aramco Total Refining and Petrochemical Co (SATORP). Under the agreement, Chemanol will supply 100,000 tonnes of methanol to SATORP on an annual basis when the complex starts up in three years' time, Chemanol said in a filing on the Saudi Stock Exchange. “The commercial operation [of Amiral complex] and supply [of methanol] are planned to start by the end of 2027,” Chemanol said. It added that "the financial impact of this agreement is currently indeterminable due to the changes in market conditions and product prices at the time of starting to supply the methanol". SATORP, a joint venture between energy giant Saudi Aramco and French TotalEnergies, is expanding operations via building the $11bn Amiral complex in Jubail. The complex is expected to have a mixed-feed cracker and utilities, with a nameplate capacity of 1.65m tonnes/year of ethylene and related industrial gases. Engineering, procurement, and construction (EPC) contracts for the Amiral project were awarded in June 2023 to South Korea’s Hyundai Engineering & Construction. Aramco owns 62.5% of SATORP, while TotalEnergies holds the remaining stake of 37.5%. The companies made a final investment decision on Amiral in December 2022, to enable SATORP’s Jubail refinery to advance Aramco’s liquids-to-chemicals strategy. Amiral will enable SATORP to convert internally produced refinery off-gases and naphtha, as well as ethane and natural gasoline supplied by Aramco, into higher value chemicals. Thumbnail image: At a port in Jeddah, Saudi Arabia, 15 May 2023. (Ute Grabowsky/imageBROKER/Shutterstock)

25-Jun-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 21 June. Indian phosphates buyers awaiting subsidies clarity from new government The bullish sentiment in the phosphates world continues, as supply in the Americas remains particularly tight, and demand firming. Europe naphtha, gasoline prices push higher despite weak fundamentals Europe naphtha market spot quotations appear to be torn between firming upstream Brent crude values and waning demand-side fundamentals, with weakness in gasoline particularly denting sentiment. New industrial deal needed to enable energy transition – Europe trade groups 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 BDO heading into Q3 with hopes of stability rather than improvement Although the better-than-expected demand during the first half of 2024 would typically give rise to positivity for the European butanediol (BDO) market, players are tempering their predictions to hopes of stability. Downstream restructuring darkens Europe PX outlook despite shipping disruption uplift Paraxylene (PX) demand in Europe is likely to be relatively firm over the summer as seasonal buying appetite couples with stronger offtakes from downstream markets impacted by delayed imports and higher freight costs.

22-Jun-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 14 June. Steady demand keeps Europe butadiene prices firm, improved output but ongoing limitations European butadiene (BD) output may have improved with the resolution of a couple of unplanned outages in May but an ongoing turnaround in the Netherlands and some unplanned downtime in France, amid talk of other issues, is keeping spot availability constrained and spot pricing firm. ESA ’24: No easy fix for European spot sulphuric acid shortfall European sulphuric acid buyers are somewhat resigned as an ongoing shortage of spot acid continues – with little evidence in sight for any improvement in availability. Europe naphtha, Eurobob crack spreads suffer demand slump Northwest European open-specification naphtha (OSN) spot values recovered from losses sustained last week as upstream Brent crude prices rose. IPEX: Global spot index edges down on lower values across all regions The global spot ICIS Petrochemical Index (IPEX) fell by 0.7% in the week ending 7 June on losses across all regions, not least northwest Europe. Europe chems stocks, markets slump in wake of election upheaval Stocks markets in Europe slumped on Monday after EU parliamentary results pointed to a rise in prominence for Eurosceptic parties, with the announcement of a snap election in France and the resignation of the Belgian Prime Minister.

17-Jun-2024