Ethylene

HOUSTON (ICIS)–Costs for ethane, the predominate feedstock for US ethylene plants, could face upward pressure with the startup of the first train of the Golden Pass liquefied natural gas (LNG) project, which has reached a new milestone following setbacks earlier this year. The project's owner, Golden Pass LNG Terminal, had reached an agreement with the contractor in regards to the commercial terms for the completion of the full scope of the first train of the project, according to a statement published on Monday by Chiyoda International, a contractor. Chiyoda and CB&I are partners in the joint venture that is building the terminal. Another joint venture is the owner of the terminal. That joint venture is made up of QatarEnergy (70%) and ExxonMobil (30%). Earlier in November, ExxonMobil said the first train of Golden Pass should start up at the end of 2025. The joint venture and the contractors are in talks to amend the contract to complete the second and third train of the LNG terminal, Chiyoda said. The second train could start up six months after the first one, ExxonMobil had said earlier in November. The third train could take another six months to start up. The three trains at Golden Pass will have the capacity to export 15.6 million tonnes/year. GOLDEN PASS SOURCE OF UPWARD PRESSURE ON CHEM COSTSLNG terminals such as Golden Pass increase demand for natural gas, which can cause prices for the fuel to rise. That, in turn, can affect costs for ethane, the main feedstock used to make ethylene in the US. When natural gas prices are high relative to ethane prices, ethane rejection becomes more attractive, said Kojo Orgle, feedstock analyst for ICIS. Orgle monitors the US markets for ethane and other petrochemical feedstock. Increased ethane rejection, in turn, tightens supply fundamentals and puts upward pressure on ethane prices, Orgle said. Rising natural gas demand for LNG exports could effectively elevate ethane prices. One LNG project should start up by the end of 2024, when Cheniere begins operations at stage three of its 10 million tonne/year LNG project in Corpus Christi, Texas. Another source of cost pressure on ethane is growing capacity to export ethane. Midstream companies are expanding ethane terminals. On the other hand, US supplies of ethane should continue growing because of rising production of oil and natural gas. LIMITED DEMAND GROWTH FROM US CRACKERSDomestic demand for ethane should see limited growth because few companies are building new crackers in the US. The only confirmed US project is a joint-venture cracker that Chevron Phillips Chemical and QatarEnergy should start up in late 2026 in Texas. Shintech could build a cracker in Louisiana, but the company has yet to announce a final investment decision (FID). DETAILS OF GOLDEN PASS PROJECTThe Golden Pass terminal is being developed at Sabine Pass, Texas, next to Louisiana. The project has faced delays following the bankruptcy of its former lead contractor, Zachry Industrial. Earlier in October, Golden Pass LNG was granted an additional three years to finish construction of the plant, extending the deadline to 30 November 2029. The Texas project had also requested to the Department of Energy that its deadline for the start of commercial operations be extended to 2027. Additional reporting by Lars Kjoellesdal Thumbnail shows natural gas. Image by Shutterstock

25-Nov-2024

CARTAGENA, Colombia (ICIS)–Latin American chemicals producers should be prepared to face a prolonged downturn which could extend to 2030 as newer capacities globally keep coming online, according to the director general at the Latin American Petrochemical and Chemical Association (APLA). Manuel Diaz said global manufacturing is not recovering at the speed the chemicals industry would need for supply and demand to rebalance anytime soon, and Latin America – the quintessential ‘price taker’ region as its trade deficit makes it dependent on imports from other regions – must prepare for the most prolonged downturn in chemicals in living memory. Diaz spoke to ICIS ahead of the APLA annual meeting which kicked off on Monday. “This is pretty much what we are going to be talking about in the 2024 annual meeting: oversupply of products and raw materials, of ethylene. There are still many plants being announced, so it seems that at least until 2027, I would say 2030, the pressure on profitability is going to be very strong,” said Diaz. “Companies in Latin America should be prepared because, while new plants are still being started up, there is no sign of a world recovery strong enough to get there. A silver lining could be found in the fact that there is still considerable population growth: from now until 2050, we will have a growth in the world population like what would be, so to speak, adding a new India [the most populous country with 1.45 billion people].” Diaz, an Argentinian national, said he expects more plants will shut down in his home country as the national chemicals industry adapts to a more liberalized market under Javier Milei’s administration. In October, US chemicals major Dow said it would stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics caused by global oversupply, while Argentina’s Petroquimica Rio Tercero shut its toluene diisocyanate (TDI) plant in Cordoba arguing the same reason. “I think we will see a reorganization in the sector, especially in Argentina. There will be some plants that are no longer sufficiently attractive from a profitable or product point of view – there will be a trend to concentrate on more profitable products,” said Diaz. “In the case of Dow, for instance, the plant they shut in Argentina was not the only plant of that type that it shuts down globally, that is why I think this is not a problem only in Argentina or Brazil – it is a global problem, a problem of competitiveness.” Diaz said we must think about China’s “differently” in order to understand the current downcycle, much of it related to that country’s overcapacities as its economy is not growing at the expected, pre-pandemic-like rates. “From our place in the world, we see everything as an economic curve and a capital curve, but the Chinese sees it from the point of view of a work curve. So, it is not a case that they are subsidizing the product itself for an easier sale,” said Diaz. “What they are doing, in my opinion, is subsidizing companies so job creation does not slow down – economic growth there is the priority.” He went on to reflect on how the globalization rates up to 2020 may have gone too far, adding the pandemic showed us how it was a mistake to focus on just a few countries – or just China, in many cases – as the main source for manufactured goods. – So, is the world coming back to a protectionist wave, like that of the 1930s? – “Now we see countries around the world thinking about how to protect their manufacturing sectors from China’s oversupplies, so maybe that globalizing cycle [up to 2020] has ended, the trend of setting up plants in the cheapest place and so on. I think the pandemic left us messages,” said Diaz. “Messages around the fact that we can't have a dependency on a single place from where all the electronic chips come from, for instance. So, I think it's not going to be just Brazil [where protectionist measures are enacted] but in many other Latin American countries – it is a contingency measure.” Finally, about the potential the new US administration under Donald Trump may impose import tariffs on Mexico, Diaz said “reality may end up surpassing” ideology, referring to the high dependance US manufacturers also have from Mexico’s manufacturers. The two countries’ economies became highly linked from the 1990s, when the first North American free trade deal, NAFTA, was signed. The situation did not change much after the first Donald Trump administration renegotiated NAFTA to give way to the current USMCA trade deal. “We have two new administrations in the US and Mexico. We will see what they end up doing, but what is clear is that there will be alternatives [to import tariffs being imposed]. Trump also knows that US companies buy a lot from Mexico, and in a protectionist spiral Mexico could also impose tariffs, so US companies would end up being affected as well,” said Diaz. “That is the reality that applies to everything, and that is why I say that reality normally surpasses your ideological vision: One thing is what I can say in the campaign, a different one may be what you implemented once you are in office.” Thumbnail shows money from Latin America. Image by ICIS. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Interview article by Jonathan Lopez

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)–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. Shell assets will be key to Chandra Asri’s growth strategy Chandra Asri plans for second petrochemical complex still unclear Closing of deal originally scheduled for end-2024 The energy major on 8 May announced the sale, which includes the physical assets and commercial contracts in Singapore, to CAPGC – a joint venture majority-owned by Chandra Asri with Glencore holding a minority stake – for an undisclosed fee. The transaction was initially scheduled to be completed by the end of 2024. “The divestment is subject to regulatory clearance and other customary closing conditions,” the spokesperson said. “Subject to regulatory approval, the transaction is expected to complete by the first quarter of next year.” Shell and CAPGC have also signed crude supply and product offtake agreements that will come into effect following completion. A new entity under CAPGC called Aster Chemicals and Energy will operate the facilities and handle its crude oil purchases and fuel sales, newswire agency Reuters said in a 13 November report, citing unnamed sources. The Shell Energy and Chemicals Park (SECP) in Singapore comprises its integrated refining and chemicals assets on Pulau Bukom and Jurong Island. The Pulau Bukom assets include a 237,000 barrel/day refinery and a 1.1 million tonne/year ethylene cracker. It was Singapore’s first refinery in 1961. SECP KEY TO CHANDRA ASRI'S GROWTH PLANSChandra Asri in a 4 October statement said that its move to acquire the SECP assets aligns with its growth strategy of “going global” as it seeks to expand in the energy, chemical and infrastructure sector not only in Indonesia but also abroad. “Through SECP, which is one of the largest oil refineries and trading hubs in the world, Chandra Asri Group will source petroleum products, including gasoline, jet fuel, gas oil, and bitumen to support various industries in Indonesia,” the company said. “Additionally, Chandra Asri Group will help fill gaps in the supply of chemical products, such as monoethylene glycol (MEG), polyols, and ethylene, propylene, and styrene monomers, to support manufacturing processes in the country,” it said. “This will ensure that the country’s energy supply is secured as well as reducing dependencies on foreign entities.” In a presentation to investors in early August, Chandra Asri said that it will establish offtake agreements for both fuel and chemical products, utilizing Glencore's extensive trading network to “secure beneficial arrangements”. Chandra Asri currently operates Indonesia's sole naphtha cracker in Cilegon, which can produce 900,000 tonnes/year of ethylene and 490,000 tonnes/year of propylene. The new assets in Singapore will boost Chandra Asri’s overall production capacity from around 4.2 million tonnes/year currently to more than 18 million tonnes/year by 2026. The company is also the sole domestic producer of styrene monomer, ethylene, butadiene (BD), MTBE, and butene-1, with a new world-scale chlor-alkali ethylene dichloride (EDC) plant development on the horizon. The company’s planned second petrochemical complex, dubbed CAP2, in Cilegon includes a chlor-alkali plant that is expected to produce 420,000 tonnes/year of caustic soda and 500,000 tonnes/year of EDC. The chlor-alkali plant is expected to be completed by the end of 2026 but Chandra Asri has not yet provided a firm timeline of the other proposed plants previously announced for CAP2. Focus article by Nurluqman Suratman Thumbnail image: Chandra Asri’s olefins plant in Cilegon, Banten province (Source: Chandra Asri official website)

14-Nov-2024

HOUSTON (ICIS)–European ethylene producers could be planning more cracker shutdowns, with the lost capacity being replaced by imports from the US. US ethylene export capacity is being expanded. Midstream companies are adding more US capacity to process the feedstock used to make ethylene. Outside of chemical feedstock, midstream companies see potential growth from energy demand from data centers. EUROPE MAY SHUT DOWN MORE CRACKERSUS-based midstream company and ethylene exporter Enterprise Products hinted that more shutdowns were possible beyond the ones announced this year by ExxonMobil, SABIC and Versalis. "We've heard from a lot of the chemical companies that they are doing strategic reviews of their European assets," said Christopher D'Anna, senior vice president, petrochemicals. He made his comments during an earnings conference call. "So, we expect to see some closures, and we expect that to lead to additional ethylene exports going that way," D'Anna said. Among the region's crackers that rely predominantly on naphtha, most produce less than 700,000 tonnes/year of ethylene, which prevents them from benefiting from economies of scale, according to ICIS data. Europe's elevated energy costs pile on the problems faced by these smaller naphtha crackers. US INCREASING ETHYLENE EXPORT CAPACITYUS ethylene exports surged in 2020 after Enterprise Products and Navigator Gas started shipping material out of their joint venture terminal at Morgan's Point, Texas. That terminal can export 1 million tonnes/year of ethylene. By the end of 2024, the two will complete an expansion project that can handle ethane or ethylene. If dedicated to ethylene, the expansion can export up to 500,000 tonnes/year of ethylene, bringing the total to 1.5 million tonnes/year. By the end of 2025, Enterprise and Navigator will complete another expansion at Morgan's Point, which will add even more flexible capacity. If dedicated to ethylene, this expansion could export up to 1.5 million tonnes/year of ethylene. In all, the Morgan's Point terminal could export up to 3 million tonnes/year of ethylene if it chooses to dedicate all of its flexible capacity to ethylene. As new Enterprise ethane capacity comes online during 2025 and 2026, additional flex train capacity can be utilized for ethylene. In addition, Navigator has ordered two carriers that can each carry 48,500 cubic meters of liquid ethylene, with delivery scheduled for March 2027 and July 2027. The carriers have the flexibility to carry ethane, ammonia or liquefied petroleum gas (LPG). EXPORTS AND US ETHYLENE BALANCEIf Enterprise and Navigator decide to maximize ethylene exports at its Morgan's Point terminal, it would likely tighten the US market, since the new crackers being proposed and built are integrated with downstream units. But D'Anna's comments raises an interesting scenario. Europe may be willing to import ethylene to preserve its downstream units and its manufacturing base. In the future, US chemical producers could add ethylene capacity to serve a global ethylene market. Growing supplies of low-cost feedstock ethane in the US could make such a global ethylene market possible. ETHANE SUPPLIES CONTINUE GROWING IN THE USEthane produced from natural gas processing plants should reach 2.74 million bbl/day in 2025, steady from 2024, according to the Short Term Energy Outlook from the Energy Information Administration (EIA). US oil and natural gas production should also continue increasing, with oil reaching 13.54 million bbl/day in 2025, and dry natural gas reaching 104.62 billion cubic feet/day, according to the EIA. As oil and natural gas production is set to rise steadily over the next two years, ethane output from processing plants is also projected to increase, according to Kojo Orgle, feedstock analyst for ICIS. Orgle monitors the US markets for ethane and other petrochemical feedstock. With limited growth in domestic ethane consumption as a petrochemical feedstock, additional supply will need to be directed toward exports. Consequently, the ethane market will rely heavily on expansions in US waterborne NGL export capacity. Ethane supplies hit record highs this year and may continue to grow if new outlets do not keep pace with production. OTHER MIDSTREAM DEVELOPMENTSEnterprise noted future demand for natural gas from data centers being built in Texas and from new power plants being developed under the recent Texas Energy Fund. Energy Transfer Partners is pursuing similar opportunities for power plants and data centers throughout its natural gas network, from Arizona to Florida and from Texas to Michigan. Energy Transfer received requests to connect to about 45 power plants in 11 states that could consume gas loads of up to 6 billion cubic feet/day. For data centers, Energy Transfer received requests from 40 that could consume gas loads of up to 10 billion cubic feet/day. EnLink Midstream said data centers could represent at least 7.5% of US electricity consumption by 2030, up from 2.5%. With rising natural gas demand from data centers and continued capital discipline among producers, natural gas prices are projected to rise in 2025 and in 2026, Orgle said. Such demand growth could provide support for natural gas prices, which could raise prices for ethane. If US ethane export capacity does not grow fast enough to drive substantial ethane disposition, increased ethane rejection may occur as higher natural gas prices boost ethane’s fuel value, Orgle said. MIDSTREAM PROJECTS The following table shows some of the midstream projects being developed in the US. Company Project Type Capacity Units Location Startup Brazos Midstream Sundance I Gas Plant 200 million cubic feet/day Martin County Oct-24 Brazos Midstream Unnamed Gas plant 300 million cubic feet/day – H2 2025 Delek Unnamed Gas Plant 110 million cubic feet/day Delaware H1 2025 Durango Midstream Kings Landing, Phase I Gas Plant 200 million cubic feet/day Eddy County, NM Q4 24 Durango Midstream Kings Landing, Phase II Gas Plant 200 million cubic feet/day Eddy County, NM na Energy Transfer Frac IX Fractionator 165,000 bbl/day Mont Belvieu Q4 26 Energy Transfer Badger Gas Plant 200 million cubic feet/day Delaware mid 25 Energy Transfer Permian processing expansions* Gas Plant 200 million cubic feet/day Permian Energy Transfer Expansion of Nederland NGL terminal Terminal Up to 250,000 bbl/day Nederland, Texas mid 25 Energy Transfer Expansion of Orla East Gas pPlant 50 million cubic feet/day Orla, Texas Q3 24 Entergy Transfer Lonestar Express Expansion Pipeline 90,000 bbl/day 2026 Enterprise Fractionator 14 Fractionator 195,000 bbl/day Mont Belvieu Q3 25 Enterprise Mentone West (Mentone 4) Gas Plant 300 million cubic feet/day Delaware Q3 25 Enterprise Mentone West 2 Gas Plant 300 million cubic feet/day Delaware h1 26 Enterprise Mentone 3 Gas Plant 300 million cubic feet/day Delaware in service Enterprise Leonidas Gas Plant 300 million cubic feet/day Midland In service Enterprise Bahia NGL pipeline Pipeline 600,000 bbl/day Q3 25 Enterprise Neches River Terminal (NRT), phase 1 Terminal 120,000 ethane, 900,000 refrigerated tank Q3 25 Enterprise Neches River Terminal (NRT), phase 2 Terminal add 60,000 ethane to raise total to 180,000, Propane 360,000 H1 26 Enterprise Ethylene Export Expansion* Terminal 550,000-2m tonnes/year Q4 24 & Q4 25 Enterprise Orion Gas Plant 300 million cubic feet/day Midland Q3 25 Enterprise Enterprise Hydrocarbons Terminal (EHT) LPG expansion Terminal 300,000 bl/day Houston Ship Channel end 2026 Gulf Coast Fractionators JV * GCF Fractionator Fractionator 135,000 bbl/day Mont Belvieu 24-Nov Moss Lake Hackberry NGL Project Terminal 315,000 bbl Calcesieu Ship Channel NA Moss Lake Hackberry NGL Project Fractionator 300,000 bbl Calcesieu Ship Channel NA MPLX Preakness II Gas Plant 200 million cubic feet/day Delaware started up MPLX Secretariat Gas Plant 200 million cubic feet/day Delaware H2 25 MPLX Harmon Creek II Gas Plant 200 million cubic feet/day Marcellus started up MPLX Harmon Creek III Gas plant 300 million cubic feet/day Marcellus H2 26 MPLX Harmon Creek III de-ethanizer 40,000 bbl/day Marcellus H2 26 MPLX BANGL pipeline** Pipeline expansion from 125,000 to 250,000 bbl/day Q1 25 ONEOK MB-6 Fractionator Fractionator 125,000 bbl/day Mont Belvieu year end 24 ONEOK West Texas NGL Pipeline Expansion Pipeline increase to 740,000 bbl/day year end 24 ONEOK Elk Creek Pipeline Expansion**** Pipeline increase to 435,000 bbl/day Q1 25 ONEOK Medford Fractionator rebuild Fractionator 210,000 bbl/day Medord, Oklahoma Q4 26, Q1 27 Targa Train 9 Fractionator Fractionator 120,000 bbl/day Mont Belvieu started up Targa Train 10 Fractionator Fractionator 120,000 bbl/day Mont Belvieu started up Targa Train 11 Fractionator Fractionator 150,000 bbl/day Mont Belvieu Q3 26 Targa Greenwood Gas Plant 275 million cubic feet/day Midland Q4 23 Targa Greenwood II Gas Plant 275 million cubic feet/day Midland started up Targa Wildcat II Gas Plant 275 million cubic feet/day Delaware Q2 24 Targa Roadrunner II Gas Plant 230 million cubic feet/day Delaware started up Targa Bull Moose Gas Plant 275 million cubic feet/day Delaware Q2 25 Targa Pembrook II Gas Plant 275 million cubic feet/day Midland Q4 25 Targa Daytona NGL Pipeline Pipeline 400,000 bbl/day Completed Targa LPG Export Expansion Terminal 1m bbl/month Q3 23 Targa Galena Park LPG terminal expansion Terminal 650,000 bbl/month H2 25 Targa Falcon II Gas Plant 275 million cubic feet/day Delaware Q2 26 Targa Bull Moose II Gas Plant 275 million cubic feet/day Delaware Q1 26 Targa East Pembrook Gas Plant 275 million cubic feet/day Midland Q2 26 Targa East Driver Gas Plant 275 million cubic feet/day Delaware Q3 26 Insight article by Al Greenwood Thumbnail photo: Polymer pellets (source: Shutterstock)

13-Nov-2024

HOUSTON (ICIS)–Oil and gas production, the main source of the feedstock and energy used by the petrochemical industry, should benefit from policies proposed by President-Elect Donald Trump, while hydrogen and renewable fuels could lose some of the support they receive from the federal government. Trump expressed enthusiastic and consistent support for oil and gas production during his campaign. He pledged to remove what he called the electric vehicle (EV) mandate of his predecessor, President Joe Biden. Trump may attempt to eliminate green energy subsidies in Biden's Inflation Reduction Act (IRA) BRIGHTER SENTIMENT ON ENERGYRegardless of who holds the presidency, US oil and gas production has grown because much of it has taken place on the private lands of the Permian basin. Private land is free from federal restrictions and moratoria on leases. That said, the federal government could indirectly restrict energy production, and statements from the president could sour the sentiment in the industry. During his term, US President Joe Biden antagonized the industry by accusing it of price gouging, halting new permits for LNG permits and revoking the permit for the Keystone XL oil pipeline on his first day in office. By contrast, Trump has pledged to remove federal impediments to the industry, such as permits, taxes, leases and restrictions on drilling. WHY ENERGY POLICY MATTERSPrices for plastics and chemicals tend to rise and fall with those for oil. For US producers, feedstock costs for ethylene tend to rise and fall with those for natural gas. Also, most of the feedstock used by chemical producers comes from oil and gas production. Policies that encourage energy production should lower costs for chemical plants. RETREAT FROM RENEWABLES, EVsTrump has pledged to reverse many of the sustainability policies made by Biden. Just as Trump did in his first term, he would withdraw from the Paris Agreement. For electric vehicles (EVs), Trump said he would "cancel the electric vehicle mandate and cut costly and burdensome regulations". He said he would end the following policies: 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 became stricter in 2024. The EPA was expected to decide if California can adopt its Advanced Clean Car II (ACC II) program, which would phase out the sale of combustion-based vehicles by 2035. If the EPA grants California's request, that would trigger similar programs in several other states. Given Trump's opposition to government restrictions on combustion-based automobiles, the EPA would likely reject California's proposal under his presidency or attempt to reverse it if approved before Biden leaves office. According to the Tax Foundation, Trump would try to eliminate the green energy subsidies in the Inflation Reduction Act (IRA). These included tax credits for renewable diesel, sustainable aviation fuel (SAF), blue hydrogen, green hydrogen and carbon capture and storage. In regards to the UN plastic treaty, it is unclear if the US would ratify it, regardless of Trump's position. The treaty could include a cap on plastic production, and such a provision would sink the treaty's chances of passing the US Senate. For renewable plastics, much of the support from the government involves research and development (R&D), so it did little to foster industrial scale production. WHY EVs AND RENEWABLES MATTERPolicies that promote the adoption of EVs would increase demand for materials used to build the vehicles and their batteries. Companies are developing polymers that can meet the heat and electrical challenges of EVs while reducing their weight. Heat management fluids made from base oils could help control the temperature of EV batteries and other components. If such EV policies reduce demand for combustion-based vehicles, then that could threaten margins for refineries. These produce benzene, toluene and xylenes (BTX) in catalytic reformers and propylene in fluid catalytic crackers (FCCs). Lower demand for combustion-based vehicles would also reduce the need for lubricating oil for engines, which would decrease demand for some groups of base oils. Polices that promote renewable power could help companies meet internal sustainability goals and increase demand for epoxy resins used in wind turbines and materials used in solar panels, such as ethylene vinyl acetate (EVA) and polyvinyl butyral (PVB). Insight article by Al Greenwood Thumbnail shows the White House. Image by Lucky-photographer.

07-Nov-2024

HOUSTON (ICIS)–Celanese plans to cut its quarterly dividend by 95% in Q1 2025 and idle plants in every region after third-quarter adjusted earnings fell well below guidance, the US-based acetyls and engineered materials producer said on Monday. Q3 adjusted earnings/share were $2.44 versus an earlier guidance of $2.75-3.00. Celanese shares were down by more than 13% in afterhours trading. Celanese is taking the following steps to cut down debt: It will temporarily idle plants in every region to reduce manufacturing costs through the end of 2024 It expects to generate an expected $200 million inventory release in the fourth quarter. The idling includes 10 sites in the company's Engineered Materials segment. In the first half of the fourth quarter, Celanese has temporarily idled the company's Singapore production of acetic acid, vinyl acetate monomer (VAM), esters and vinyl acetate emulsions (VAE). In Frankfurt, Germany, the company is idling its VAM plant and plans to use it as swing capacity to meet demand. It will start a program to reduce costs by more than $75 million by the end of 2025. The cost cutting will target selling, general and administrative (SG&A) expenses. It will target $400 million in 2025 capital expenditures, a figure below 2024 levels. It will close on a 364-day delayed draw prepayable term loan for up to $1 billion. It will draw on the term loan in Q1 2025 towards $1.3 billion in maturing debt. TOUGH THIRD QUARTERThe plant shutdowns, dividend reduction and cost cutting follow a third quarter that saw demand degrade rapidly and acutely in automobiles and industrial end markets. "Auto in Europe and North America experienced a shock to the demand patterns that had been relatively steady for the previous several quarters, with swift sales declines in both regions that led to a pullback in auto builds," said Scott Richardson, chief operating officer. Demand remained slow in Asia but did not show the same trajectory as the Americas. The company noted that prices in China for undifferentiated nylon polymer reflects supply that is growing faster than demand. Demand remained weak in paints, coatings and construction. New capacity for VAM came online and outpaced demand, amplifying the weakness in construction as well as in solar panels. Excess inventories in solar panels is weakening demand for ethylene vinyl acetate (EVA). The weakness more than offset the gains that Celanese made from its synergy projects in its Mobility and Materials (M&M) acquisition and from its acetic acid expansion project in Clear Lake, Texas. WORSE FOURTH QUARTERQ4 destocking in the automotive and industrial end markets should be heavier than normal, and Celanese expects demand to worsen in the fourth quarter. The destocking should be temporary and contained in the quarter. In Engineered Materials, Celanese expects a $40 million hit from the destocking. Another $15 million hit will come from seasonal declines associated with product mix. A further $15 million will come from temporarily idling capacity in the segment. For acetyls, Celanese is not seeing any indications of demand growth in anticipation of the first quarter or as a result of stimulus from China. For the company, Q4 adjusted earnings/share should be $1.25. Q3 FINANCIAL PERFORMANCEThe following table shows the company's Q3 financial performance. Figures are in millions of dollars. Q3 24 Q3 23 % Change Sales 2,648 2,723 -2.8% Cost of sales 2,026 2,050 -1.2% Gross profit 622 673 -7.6% Net income 116 951 -87.8% Source: Celanese Earnings in Q3 2023 reflect a $503 million one-time gain from the sale of assets. Thumbnail shows adhesive, which is made with VAM. Image by Shutterstock.

04-Nov-2024

SINGAPORE (ICIS)–Thailand’s Siam Cement Group (SCG) will invest $700 million to pave the way for Vietnam’s first integrated petrochemical complex to use US ethane as feedstock for production. Project completion slated in end-2027 Ethane to account for as much as two-thirds of LSP cracker feedstock Bulk of investments go toward handling/storage of ethane The project, which will mean increased feedstock diversification for its wholly owned Vietnamese subsidiary Long Son Petrochemicals (LSP), is expected to be completed by the end of 2027, SCG said in a bourse filing on 30 October. LSP is currently working with Vietnamese authorities to acquire necessary certificates and permits to build storage and supporting facilities at the complex in Bah Ria-Vung Tao province in southeastern Vietnam. The cracker at the site can produce 950,000 tonnes/year of ethylene, 400,000 tonnes/year of propylene, and 100,000 tonnes/year of butadiene (BD). Once the ethane enhancement project is completed, LSP will be able to utilize ethane for as much as two thirds of its total feedstock, in addition to propane and naphtha. By utilizing imported ethane from the US as raw material, “LSP can significantly enhance its competitiveness through lower feedstock cost and flexibility, while also lowering carbon emissions”, SCG said. Majority of the investment will go toward handling and storage of the ethane feedstock, which requires temperature as low as minus 90-degree Celsius, it said. LSP was completed at a cost of $5.2 billion whose commercial operations began on 30 September 2024 "following a comprehensive test period", SCG said. The Thai conglomerate first announced the plan to use US ethane as feedstock for LSP in September, noting that over the past three years, its average price has been lowered by around 40% compared with those of naphtha and propane. Most crackers in Asia use naphtha as feedstock whose prices track highly volatile upstream crude movement. “In light of the existing petrochemical trough with historical low margin, and current volatile global economic environment, LSP is closely monitoring the market situation and will adjust the run rate of its operation during this challenging period for petrochemical business,” SCG said. Focus article by Pearl Bantillo (adds details throughout) Initial reporting by Fanny Zhang Thumbnail image: Container cargo ships unload at a port in Hai Phong, Vietnam on 25 May 2015. (Minh Hoang/EPA/Shutterstock)

31-Oct-2024

SINGAPORE (ICIS)–Sumitomo Chemical trimmed its fiscal H1 to September 2024 net loss to Japanese yen (Y) 6.5 billion ($42 million), aided by sales growth of about 5%, while it seeks to rationalize operations to boost profitability. Return to profit expected for year-to-March 2025 IT-related chemicals' fiscal H1 core operating profit more than doubles Chiba Works LDPE output to fall by 20,000 tonne/year in billion yen (Y) Apr-Sept 2024 Apr-Sept 2023 % change Yr-to-March 2025 (revised forecast) Yr-to-March 2024 (actual) Sales revenue     1,241.4     1,186.9             4.6 2,600.0 2,446.9 Core operating profit           29.5        -96.7 – 100.0 -149.0 Operating income         121.2      -133.7 – 180.0 -488.8 Net income           -6.5         -76.3 – -25.0 -311.8 Revenues for the period increased on higher selling prices of synthetic resins,  methyl methacrylate (MMA) and various industrial chemicals due to higher raw material prices, the company said in a statement. Sumitomo Chemical's Essential Chemicals & Plastics segment posted a lower core operating loss of Y36.7 billion, with sales up by 3.3% year on year to Y403 billion, it said. However, it noted that earnings were weighed down by a deterioration in the financial performance of its 37.5%-owned affiliate Saudi Arabia's Rabigh Refining and Petrochemical Co. Meanwhile, IT-related chemicals posted a 10% increase in sales to Y224.3 billion, with core operating income more than doubling to Y37.5 billion, on the back of strong demand for display-related materials and processing materials for semiconductors, it said. For the whole of fiscal year ending March 2025, Sumitomo Chemical lowered its sales forecast by Y70 billion to Y2.6 trillion, but raised its net profit forecast by Y5 billion to Y25 billion. The forecast marks a return to profitability for Sumitomo Chemicals, which incurred a Y312 billion net loss in the previous fiscal year. LDPE OUTPUT CUT BY END-MARCH 2025In a separate statement on 29 October, the company announced plans to reduce its low density polyethylene (LDPE) production at Chiba Works by 20,000 tonnes/year, citing declining domestic demand. Operations at a portion of the company’s LDPE facilities at the site will be suspended by March 2025 – the end of its current fiscal year. Sumitomo Chemical has an LDPE plant in Chiba prefecture with a 172,000 tonne/year capacity, according to ICIS Supply and Demand Database. “The company expects this measure, combined with the various rationalization efforts that it has implemented thus far, to lead to improving the overall operating rate of the remaining facilities,” Sumitomo Chemical said. Japan’s LDPE demand “is not anticipated to have significant future growth”, it said, citing a declining population and an ageing society with a low birth rate. Sumitomo Chemical said that it is “accelerating business restructuring as part of its short-term intensive performance improvement measures”. Other measures include improving the company’s product portfolio “to cater to high value-added areas”, as well as working on fixed cost reduction at its remaining facilities, including a joint study with Maruzen Petrochemical to optimize operations of their joint venture Keiyo Ethylene. The Japanese producer said that it “will steadily advance these measures to ensure a V-shaped recovery in fiscal 2024, while also carrying out fundamental structural reforms”. Focus article by Pearl Bantillo ($1 = Y153.3) (adds paragraphs 8-15 with recasts throughout)

30-Oct-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 25 October. Earlier unplanned outages contributing to tight US MEG, DEG supply in Q4 US monoethylene glycol (MEG) and diethylene glycol (DEG) spot availability is expected to remain snug through Q4, while concerns are growing for triethylene glycol (TEG) supply as peak season begins. US Sherwin-Williams expects choppy H1, sees signs of consumer weakness Sherwin-Williams expects demand during the first half of 2025 will remain choppy while the company waits for what it expects will be an inevitable inflexion point for demand for its products, the US-based paints and coatings producer said on Tuesday. Mexico's Orbia lowers 2024 guidance, PVC group reports flat Q3 income Orbia's vinyls business reported on Wednesday that Q3 operating income was flat year on year amid lower costs for ethylene and electricity as well lower volumes and prices. Styrolution to permanently shutter Sarnia styrene plant next year INEOS Styrolution has decided not to restart its 445,000 tonnes/year styrene production plant in Sarnia, Ontario, Canada, and will permanently shut it down by early Q4 2025, the company announced Thursday. Chlor-alkali demand benefited from hurricanes, new pulp plants – OlinDemand for chlorine derivatives and caustic soda benefited from US hurricanes and two new pulp and paper plants that opened in South America, which provided some bright spots in what has otherwise been a challenging market due to the slowdown in home building and durable goods, US-based Olin said on Friday.

28-Oct-2024