Methylene chloride

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 28 June 2024. Asia melamine sees uptick on tighter supply; demand recovery uncertain By Joy Foo 28-Jun-24 12:54 SINGAPORE (ICIS)–Asia’s melamine spot market for China-origin product faced some pressure from early June due to lagging demand. China MEG market supported by limited import arrivals By Cindy Qiu 26-Jun-24 12:20 SINGAPORE (ICIS)–China’s monoethylene glycol (MEG) prices rose after falling in June, reflecting supply-demand dynamics, but the price growth may be capped by increasing domestic supply and curtailed downstream polyester production, despite limited import arrivals expected in July. India’s BPA import price surges; freight continues to exert pressure By Li Peng Seng 24-Jun-24 11:53 SINGAPORE (ICIS)–India’s bisphenol A (BPA) average import price hit its highest level in nearly 20 months recently due to firm ocean freight rates, a phenomenon that is expected to persist in the short term as vessel space is likely to stay tight. PODCAST: Asia base oils supply, demand to gradually rise in H2 By Damini Dabholkar 26-Jun-24 18:13 SINGAPORE (ICIS)–Asia’s base oils supply is expected to improve slightly in H2 2024, while a seasonal peak in overall demand is due to kick off in the later part of Q3. INSIGHT: Asia isocyanates H1 performance mixed, poor expectations for Q3 By Shannen Ng 26-Jun-24 14:30 SINGAPORE (ICIS)–Demand in Asia’s import markets for polymeric methylene diphenyl diisocyanate (PMDI) and toluene diisocyanate (TDI) is likely to remain limited in the upcoming summer months of July and August, and the outlook for late Q3 is uncertain. Chemanol to supply methanol to Saudi Amiral project over 20 years By Pearl Bantillo 25-Jun-24 12:52 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).

01-Jul-2024

SAO PAULO (ICIS)–Rains this week in the area where the Altamira petrochemicals hub is located, in Mexico’s state of Tamaulipas, could start fixing the weeks-long drought which has hit companies in the area hard, according to an analyst at supply chain consultancy Everstream. Jena Santoro added that, while force majeures by industrial players across the board remain in place, companies are privately saying this week's rain could be the beginning of the end in the drought crisis which has forced many of them to reduce or shut operations. The analyst added, however, that extremely dry land after months of practically no rain could cause other problems: if rainfall is heavy, the water may not perforate the land, causing landslides or floods which could add up logistical problems. In mid-May, the government in Tamaulipas halved water supplies to industrial players on the back of the drought. Soon after, petrochemicals companies operating in Altamira started declaring force majeures for several products. Last week, sources said to ICIS that supply was not yet affected by the operational hurdles related to the drought, although adding that industrial players were fearful that a prolonged drought could have a meaningful impact on both US and Mexico’s petrochemicals. On Tuesday, a spokesperson for Mexico’s petrochemicals major Orbia said to ICIS the company’s polyvinyl chloride (PVC) production out of Altamira remains affected, where the company has the capacity to produce 690,000 tonnes/year, according to the ICIS Supply & Demand Database (ISDD). RAINY SEASONMany parts in the Gulf of Mexico are expected to receive considerable rainfall from Wednesday (19 June) onwards, including Mexico’s state of Tamaulipas, one of the most affected in a nation-wide crisis which has jeopardized water supply to households and companies in several regions. “We have a tropical system that just happens to be moving this week toward Tamaulipas state. So, I think in the next 24 to 48 hours, the situation will look very different than what we're seeing. That heavily impacted area is also one of the areas expected to receive heavy rainfall,” said Santoro. “The state of Tamaulipas and the Altamira area in particular are supposed to receive a lot of rain between June and July, according to our meteorological department: this week’s storm system is the beginning of that.” Companies have been, on average, around four weeks out of operations or with reduced rates. That period should be manageable as companies can work through stocks or bring in product from other facilities. However, longer shutdowns could really start affecting supply and, ultimately, cause a hit to companies’ financials. “Nobody has come out publicly saying any specific timeline or duration [for the current disruption to end] but, at least from what our sources are saying and what we are seeing by monitoring this closely hour by hour, this could be the beginning of the end of the crisis,” said Santoro. “Obviously, in private companies are already saying this rain is very welcome,” the analyst went on to say. FLOODS, LANDSLIDESHowever, the situation will not be fully normalized until the rainy season in June-July concludes, pretty much because companies will need to be alert for potential flooding caused by the heavy rains coming up in the traditionally storm, hurricane-prone season in the Gulf of Mexico. After months of little or non-existent rainfall, the ground is extremely dry and, when it rains, the water can run off and cause flash flooding. Dry land is usually hard-packed, dense, and the pores in the surface can be too small to absorb water quickly. “Indeed, we may go from one extreme to the next: with a lot of rain, there is potential for flooding in the Altamira area and in Tamaulipas. On one hand, rains could refill water reservoirs and ease the drought but in the same very week they could end up having different logistical and production challenges if there is flooding,” said Santoro. “With flooding, there is potential for things like landslides and run-offs, which can block roads and highways, So, companies are hoping that it will be some kind of happy middle ground, where the rain is not too extreme as to present added challenges and issues.” Front page picture: The Port of Altamira, Mexico's state of Tamaulipas Source: Altamira Municipality Interview article by Jonathan Lopez  

18-Jun-2024

SAO PAULO (ICIS)–Petrochemicals producers in the production hub of Altamira, in the Mexican state of Tamaulipas, keep declaring force majeure as a severe drought halved water supplies to industrial players. On Thursday, a spokesperson for Cabot said to ICIS the company has also declared force majeure for carbon black from its Altamira facilities, which adds to several force majeure declarations in the past two weeks. The drought affecting Tamaulipas has its epicenter in the south of the state, where Altamira is located, and recent minimal rainfall has not helped much to fill up the state’s water reservoirs. The drought, which the state government says has lasted already eight years, has reached a critical point in 2024, prompting authorities to arrange water deliveries in tanker trucks from other state municipalities as well as other Mexican states. The crisis could end up hitting US petrochemicals, as the state is a key supplier to that market. Earlier this week, M&G Polimeros declared force majeure on one of its two polyethylene terephthalate (PET) lines from Altamira. The line has a production capacity of 420,000 tonnes/year, which has prompted fears the US’ PET supply could be hit. PETROCHEMICALS HIT HARDCabot’s force majeure from Altamira on carbon black – a material used as a colorant and reinforcing filler in tires and other rubber products, as well as a pigment and wear protection additive in plastics and paints – follows a string of declarations from other producers. “Over the past weeks, the water supply to our Altamira plant has deteriorated in both quantity and quality. Consequently, our plant is currently unable to operate all production units and is running limited production, along with warehouse, packing, and shipping operations,” Cabot’s spokesperson said. “Due to this situation beyond our control, Cabot has declared a force majeure for carbon black from this facility.” Apart from M&G Polimeros’ force majeure on PET, several other producers in Altamira have also issued force majeure declarations or have sharply reduced operating rates. Mexico’s chemicals producer Orbia/Vestolit, a large polyvinyl chloride (PVC) player, was one of the first companies to declare a force majeures out of its facilities in Altamira in mid-May. This week, a spokesperson for the company said to ICIS the force majeure remained in place, with no expected date for return to operations as the water situation has not improved, rather the opposite. Saudi petrochemicals major SABIC declared force majeure on acrylonitrile butadiene styrene (ABS). European major INEOS Styrolution also declared force majeure on ABS from Altamira, as well as on general purpose polystyrene (GPPS). US chemicals producer Chemours also said it has halted titanium dioxide (TiO2) operations in Altamira. Germany’s major BASF, also with facilities in Altamira, had not responded to a request for comment at the time of writing. Trade group the Association of Industrial Companies of Southern Tamaulipas (AISTAC), which represents many of the producers listed above, had not responded to a request for comment at the time of writing. WATER TANKERS, DRY LAGOONSThe governor of Tamaulipas, Americo Villarreal, ordered this week to send tanker trucks to the south of the state from other municipalities not affected as harshly by the drought, as well as from other Mexican states. The trucks will not sort out the dire situation at industrial parks, however, as the water will be deployed to households, which are also suffering water restrictions. “With the arrival of these units, support to the southern area of ​​Tamaulipas is reinforced, adding to those that the Secretariat [agency for hydraulic resources] had previously sent, as well as those that have arrived from other entities, with 50 units distributing water,” said the state’s government. “[This] coupled with the installation of 25 isotanks with a capacity of 24,000 liters in strategic points, sent previously by the agency.” As if it was not enough for tamaulipecos to suffer water restrictions in their own homes, natural spaces they hold dear are also showing the scars of more severe droughts as climate change advances unabated. This week, local media reported how Champayan lagoon, a large water natural reservoir west of Altamira, dried up practically from one day to the other. Front page picture: Tanker trucks heading to the Altamira area for emergency water supplies for households Source: Government of Tamaulipas Clarification: Re-casts paragraph 15

06-Jun-2024

SINGAPORE/SEOUL (ICIS)–Cracker operations in Japan will remain “challenging” this year amid soft demand while capacity expansion in China continues, according to the Japan Petrochemical Industry Association (JPCA). C2 output falls to record low in 2023 Production of five major plastics shrink by around 5% Capacity optimization among industry main tasks “With new cracker capacities being planned in China almost every year at a pace far exceeding demand, the operation rates of domestic crackers are expected to remain challenging,” said a JPCA report prepared for the Asia Petrochemical Industry Conference (APIC) being held in Seoul. The two-day conference ends on 31 May. In 2023, Japan’s ethylene (C2) production shrank 2.3% to a record low of 5.32 million tonnes, as domestic crackers ran below full capacity, JPCA data showed. “The operation rates of domestic crackers have remained below 90% (this rate is said to be the criterion for judging the economic situation) since August 2022 and the monthly operation rate dropped below 80% four times in 2023,” JPCA said. Japan, which was dislodged by Germany as the world’s third-biggest economy in 2023, is projected to post a 2024 GDP growth of around 1.3%, down from last year’s 1.9% pace. In Q1 2024, the economy shrank at an annualised rate of 2.0% as both consumption and capital spending weakened. For the whole of 2023, the country’s total production of five major plastics – namely, linear density polyethylene (PE), high density PE (HDPE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) – declined by an average of 4.7% to 6.02 million tonnes. Japan production of major petrochemicals (in thousand tonnes) Product 2023 2022 % change Ethylene 5,324 5,449 -2.3 LDPE 1,223 1,347 -9.2 HDPE 661 714 -7.4 PP 2,075 2,120 -2.1 PS 564 654 -13.8 PVC 1,496 1,483 0.9 Styrene monomer (SM) 1,428 1,542 -7.4 Ethylene glycol (EG) 264 351 -24.8 Acrylonitrile (ACN) 341 422 -19.2 Sources: JPCA, Japan's Ministry of Economy, Trade and Industry (METI), Japan Styrene Industry Association (PS, SM) and Vinyl Environmental Council (PVC) Domestic demand as ethylene equivalent for the year declined by 11.9% to 3.87 million tonnes, according to JPCA data. “In 2024, there is a risk of a decline in demand due to the deterioration of the global economy, such as price hikes of raw commodities due to supply disruptions caused by several problems,” JPCA said, citing Russia’s prolonged invasion of Ukraine, the Israel-Hamas war, and attacks on commercial ships in the Red Sea. “But a certain amount of demand growth is expected due to the resilience of the US and some developing countries’ economy, and the global economy would have a possibility to make a ‘soft landing’,” JPCA stated. Economists are growing more confident that the US – the world’s biggest economy – will be able to post a 2024 growth rate of 2.4%, easing from the actual GDP growth of 2.5% in 2023. China, although beset by a slumping property sector, should be able to post a 5.0% GDP growth, according to the revised forecast by the International Monetary Fund (IMF). In the report, JPCA also emphasized the petrochemical industry’s tasks to engage in “green” or environmental-friendly transformation toward carbon neutrality by 2050; to enhance and optimize excess production capacity amid a declining population; to push for digital transformation; and contribute to a recycling-oriented society. “In Japan, demonstration experiments using new process technologies and raw materials that contribute to green activities have begun, such as biomass-based fuel, bio-material-based olefins, ammonia synthesis, and hydrocarbon synthesis,” it said. Focus article by Pearl Bantillo

30-May-2024

SEOUL (ICIS)–Thailand's petrochemical industry is expected to recover in 2024 as demand improves following a challenging 2023, which was marked by a global economic slowdown, inflation, and high energy costs that dampened consumption. The Federation of Thai Industries' Petrochemical Industry Club (FTIPC), in a report prepared for the Asia Petrochemical Industry Conference (APIC), noted that uncertainties in the global economy, including the recent Israel-Hamas conflict, China's economic stagnation, and instability in US and European financial markets, have impacted the Thai economy. KEY SEGMENTS IMPACTED This challenging environment has already impacted key petrochemical segments. Ethylene consumption, for example, declined in 2023 due to weaker economic conditions and subdued demand. in '000 tonnes/year 2020 2021 2022 2023 Total Capacity 4,609 5,409 5,409 5,360 Production 4,516 5,045 4,530 4,463 Consumption by derivative products* 4,719 5,040 4,478 4,463 Exports 44 99 63 41 Import 163 43 87 95 *Consumption netbacked from polyethylene (PE), ethylene dichloride/vinyl chloride monomer (EDC/VCM), ethylene glycol (EG), and styrene monomer (SM) production Demand for ethylene is expected to remain under pressure in 2024 due to feedstock volatility, weak derivative demand, and increased competition from new capacities in China, southeast Asia, and the US. Additionally, polymer converters are grappling with major concerns such as geopolitical uncertainties, global recession fears, and high inflation rates, as consumers limit spending and further weaken demand for end-use sectors. OUTLOOK AND CHALLENGES AHEAD Looking ahead, Thailand, southeast Asia's second-largest economy, is projected to grow by 2.2%-3.2% in 2024, fueled partly by a rebound in exports and increased private and public investment. However, the recovery in global demand for petrochemicals is not expected to fully materialize until the second half of 2024, according to the FTIPC. This is due in part to a supply glut in Asian markets caused by increased production capacity in China, Vietnam, Indonesia, and Thailand itself, as well as the Middle East, which has prompted producers to reduce output or maintain inventory levels to preserve profit margins. Volatile economic conditions, geopolitical conflicts, new rules of global trade, and the trend of reducing carbon emissions and greenhouse gases present both opportunities and challenges for the petrochemical sector, the FTIPC said. “Businesses must adapt to this changing landscape by enhancing competitiveness, flexibility, and continuous adaptation amidst external uncertainties,” it said. “Integrating business operations with sustainable development is crucial, with a focus on sustainable business growth that meets the demands of consumers in a low-carbon and net-zero emission society.” Focus article by Nurluqman Suratman

30-May-2024

SINGAPORE (ICIS)–A severe shortage of containers and vessel space as commercial ships take a much longer route to avoid the Red Sea has sent freight rates skyrocketing in recent weeks, artificially propping up petrochemical prices even as demand remained generally weak. Some sellers offer on free on board (FOB) basis but no takers Freight costs for Chinese exports more than double India may suffer near-term shortage of select petrochemicals Across markets in Asia in recent weeks, industry players’ lament boils down to this exasperated hyperbole: “The freight rates are killing us!” It takes the fun out of witnessing some initial signs of recovery in external demand for global manufacturing giant China. Whatever export competitiveness Asia gained from having weaker currencies against the US dollar is being undermined by the high cost of shipping out of the region. The Chinese yuan recently fell to a six-month low, while the Japanese yen continues to trade at multi-year lows against the US dollar, which is firmly supported by higher-for-longer interest rates. Overseas demand for Chinese products, including petrochemicals, seems to be improving, but actual trades are being hampered by logistics woes stemming from the Red Sea crisis in the Middle East. Attacks on commercial ships have continued in the key shipping lane that connects Asia to Europe, the latest being on an oil tanker bound for China. Rerouting of ships to the Cape of Good Hope meant longer voyage times and much slower turnover of vessels and containers, thereby, creating a strong pressure on freight rates, which may persist for most of the year. “The race for capacity appears to have started, with shippers showing strong demand due to shippers moving significant cargo in the first four months of 2024 to avoid potential Q3 constraints​​,” Richard Fattal, chief commercial officer of London-based freight forwarder Zencargo said in a note on 20 May. “Combined with an average of 5% ongoing blanked sailings, there is a looming future of tighter capacity, higher rates and sellers’ market swings ahead,” he said. “With capacity shrinking in the face of resurgent port congestion, driven by equipment shortages in China and longer routes around the Cape of Good Hope,” Fattal said. For Q2, Zencargo is projecting more than a 13% contraction shipping capacity on the Asia-Europe routes compared with Q3 2023, “with alliances cancelling 5% of sailings between weeks 20 and 24 [H2 May to H1 June]”. “The effective capacity to Northern Europe, based on actual vessel departures from Asia, has decreased by 5.1% compared to a year ago,” it said, citing “the longer route taken by the majority of vessels via the Cape of Good Hope, despite a 17.8% increase in vessel capacity on the Asia-North Europe route”. For the Asia-Mediterranean route, however, the overall capacity has “increased by 10.5%, even with the diversions via the Cape” due to a 49.1% increase in total deployed capacity on this route compared to a year ago”, Zencargo said. WEST BUILDING WALLS AGAINST CHINA TRADES The July-September period is the peak season for Chinese shipments to the west, ahead of the Christmas season in December, according to Wang Guowen, director at Shenzen Logistics and Supply Chain Management Research. Possibly driving up US’ overall demand for Chinese goods, which exerts upward pressure on shipping costs, is the impending tariff hike on imports of selected products from China, including electric vehicles (EVs) and battery materials. For Chinese EVs, the US import tariffs would quadruple to 100% from 1 August, which is tantamount to a ban. European countries appear to be considering similar protectionist measures against China, whose overcapacity is deemed to be killing domestic industries in the west. “Western countries' implementation of tariffs and tax structures on Chinese-manufactured automotive and EV exports is anticipated to significantly impact the shipping sector by potentially reducing vessel demand,” online container and leasing platform Container xChange said in a recent note. To bypass these trade barriers, Chinese automotive and EV makers “are accelerating efforts to internationalize their manufacturing, assembly, and distribution processes”, it said, adding that “immediate effects are already evident, as manufacturers are hastening to ship EVs to avoid impending tariffs and uncertainties”. In the global petrochemical scene, manufacturing facilities in the US and Europe, as well as in parts of northeast Asia are shutting down amid China’s overcapacity. Technically, reduced production elsewhere would open up new markets for China’s excess capacity, if not for the surging freight rates, which further deter trades while demand recovery remains fragile. China’s overall exports have remained soft, posting low single-digit annualised growths in three of the first four months of 2024, with one month in contraction. HEADACHE FOR INDIA PETROCHEMICAL IMPORTERS Petrochemical end-users in India are facing long waiting time to get their hands on imports from China. “Now, no shipping lines will confirm fresh Q2 shipment booking, even after dishing out quotes that are three to four times higher than Q1,” an India-based styrene butadiene rubber (SBR) importer said. A phenol trader said: “June vessel arrangements are more troublesome this year because of the Red Sea issues and also China's exports have been weak especially in the past two months, so fewer vessels are being arranged to China.” India is possibly facing a near-term shortage of purified terephthalic acid (PTA), since northeast/southeast Asian suppliers are struggling to export to the south Asian market. Freight rates from both Taiwan and Thailand to India nearly doubled from April, with voyage time for some shipments taking as long as 90 days, up from the usual 30-40 days. For polyethylene (PE) and polypropylene (PP), cargoes from the Middle East heading to the south Asian markets of India and Pakistan are also being delayed, amid congestion at the ports of Salalah in Oman, Dammam in Saudi Arabia and Jebel Ali in the UAE. For polymeric methylene diphenyl diisocyanate (PMDI) of northeast Asian origin, offers to India have spiked amid tightened regional supply, with delays in getting cargoes from South Korea. SURGING SHIPPING COSTS KILLING SPOT TRADESSpot petrochemical trades are being stalled by constantly changing freight rates on a weekly basis. In the polypropylene (PP) market, some Chinese suppliers have stopped offering on a cost, insurance and freight (CIF) basis, and will only offer on FOB basis because of the risks. For the China-to-Vietnam and the Vietnam-to-Indonesia routes, freight rates have nearly tripled, market players said. Buyers are less willing to discuss on an FOB basis, unwilling to shoulder an expected high cost since most of them do not have their own regular shipper. For soda ash, offers of Turkey-origin dense grade cargoes for 1,000-tonne lots to southeast Asia for Q3 shipments rose to around $300/tonne CFR, up by $20-30/tonne compared with May shipments. Importers of the material across Asia were largely staying on the side lines, with some of them experiencing delays in receiving Turkish cargoes. “Discussion levels are firming up due to freight costs,” said an end-user, adding that the “Red Sea issue is getting worse and lots of shipments from Europe and USA are stuck.” The same is true for the southeast Asian PE market given delays in arrivals of Middle East-origin cargoes and amid perceptions of shorter supply. In the oxo-alcohols markets, producers in Asia are under strong pressure to offload cargoes at lower prices given difficulty in moving volumes to their usual export outlets. Freight rates on chemical tankers are also on the rise amid the Red Sea crisis, sources from Asia’s monoethylene glycol market, resulting in postponing of cargo-loading by some producers. “The freight rates are quite high now, and we have to optimize our vessel availability,” a major MEG producer said. FURTHER FREIGHT SPIKES LIKELY IN JUNE H2 is typically “a busier, more competitive, and profitable season for the shipping industry”, with many container sellers are “currently holding onto their inventory” in anticipation of better demand, said Christian Roeloffs, co-founder and CEO of Container xChange, in a note in May. "In an environment of heightened market volatility and encouraging demand recovery for global trade, container traders are gearing up for the second half of 2024, where we expect a cyclical rise in demand,” he said. “This combination of heavier-than-expected demand for freight and anticipation of further demand surges in the second half of 2024 is driving up container trading prices in China,” Roeloffs added. In a recently conducted survey of container traders and leasing companies by Container xChange, it noted that a majority of the respondents reported “extremely high prices for 40 ft high cube containers in China”. On 21 May, the average one-way leasing rates quoted in the market rose to as high as $2,480 for 40 HC in China for US-bound shipments, more than double the rate at the start of the month at around $950, it said. With ceasefire between Israel and Palestinian militant Hamas in Gaza proving elusive and the threat of a wider Middle East conflict still hanging, it looks like high freight rates are here to stay for an extended period. Insight article by Pearl Bantillo With contributions from Nurluqman Suratman, Fanny Zhang, Nadim Salamoun, Judith Wang, Helen Lee, Ai Teng Lim, Samuel Wong, Julia Tan, Izham Ahmad, Jackie Wong, Shannen Ng, Helen Yan and Clive Ong

29-May-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 24 May. NEWS Brazil’s Triunfo petchems restart odd one out as wider industry still disrupted – consultant Most of Rio Grande do Sul’s industrial plants remain shut or operating at very low rates as the Brazilian state reels from the floods, with the restart at the Triunfo petrochemicals hub an exception rather than the norm, a chemicals consultant at MaxiQuim said to ICIS. Mexico’s Orbia/Vestolit's Altamira plant ceases operations due to water scarcity Orbia/Vestolit ceased operations at its Altamira, Tampico facilities in Mexico on 21 May due to water scarcity. The company operates there a polyvinyl chloride (PVC) facility with a production capacity of 690,000 tonnes/year. The company estimates it could resume activity on 19 June. SABIC declares force majeure at Tampico Mexico ABS plant SABIC Innovative Plastics Mexico (SABIC) declared force majeure at its Tampico, Mexico acrylonitrile butadiene styrene (ABS) plant on 23 May. The products affected include CYCOLAC ABS.  This facility has a capacity of 30,000 tonnes. Mexico’s Q1 GDP grows 0.3%, economic activity remains healthy in MarchMexico’s GDP rose by 0.3% in Q1, an acceleration from Q4’s 0.1% quarterly growth, the country’s statistic office Inegi said on Thursday. Brazil’s antitrust authority paves way for Petrobras to shed refinery sales Brazilian state-owned energy major Petrobras has been allowed by the country’s antitrust authority CADE to backtrack on planned refinery sales. Argentina’s manufacturing down nearly 20% in March Argentina’s petrochemicals-intensive manufacturing output fell in March by 19.6% year on year, the country’s statistics office, Indec, said this week. Brazil’s Unigel creditors mull fertilizers divestment The debt restructuring agreement at Unigel, under which the Brazilian chemicals producer’s creditors are to take a 50% equity stake, could result in a divestment of the company's beleaguered fertilizers division. Brazil’s Unigel to give creditors 50% equity stake in debt restructuring Unigel has obtained the support of enough creditors for a debt restructuring plan although it comes at a price as they will be getting a 50% equity stake in the Brazilian chemical and fertilizer producer. Brazil's Braskem restart at Triunfo to kick off petchem hub normalization Braskem has restarted operations at its Triunfo facility in the flood-hit state of Rio Grande do Sul, which will allow other players in the petrochemicals hub to start up their plants as many depend on input from the Brazilian polymers major to operate. INEOS Styrolution declares force majeure at Altamira Mexico facility INEOS Styrolution declared force majeure at its facility in Altamira, Mexico, on 20 May. The products affected include Teluran ABS, Novodur High Heat ABS and Luran ASA. This facility has a capacity of 113,000 tonnes. Chile’s Q1 GDP up 2.3% on strong consumption, manufacturing up 1.1% The Chilean economy started 2024 on a strong footing with GDP growth in the first quarter at 2.3%, year on year, the country’s central bank said on Monday. Volkswagen, Stellantis idle car plants in Brazil, Argentina after floods Volkswagen (VW) idled its three plants in the Brazilian state of Sao Paulo on Monday, as suppliers in the floods-hit state of Rio Grande do Sul are unable to produce any automotive parts, a spokesperson for the German automotive major told ICIS. PRICING LatAm PP international prices stable to up on higher Asian freights International polypropylene (PP) prices were assessed as steady to higher across Latin American countries due to the surge in freight rates from Asia to the region. LatAm PE domestic, international prices steady on sufficient supply, stable demand Domestic and international polyethylene (PE) prices were assessed unchanged this week across Latin American countries on the back of sufficient supply and stable demand.

27-May-2024

SINGAPORE (ICIS)–Asia's polyvinyl chloride (PVC) markets are expected to see some uncertainty in the coming months, with factors like China’s domestic demand, the impact of India’s monsoon and some policy changes likely to shape the landscape. June offers from Asian producers awaited Healthy SE Asian Q1 GDP growth to support PVC demand Low domestic demand in China encourages exports, especially to India In this chemical podcast, ICIS editors Jonathan Chou, Damini Dabholkar and analyst Lina Xu discuss recent market conditions with an outlook ahead in Asia. (This podcast first ran on 8 May.) Visit us at Booth 13, Grand Ballroom Foyer, Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.

27-May-2024

HOUSTON (ICIS)–DuPont expects about $60 million in dis-synergies from its break-up into three independent publicly traded companies, CEO Ed Breen and CFO Lori Koch told analysts in a conference call on Thursday. The US specialty chemicals and materials company announced late on Wednesday that it plans to separate its electronics and water businesses into two publicly traded companies while the existing DuPont, dubbed “New DuPont”, will continue as a diversified industrial company. The dis-synergies were largely related to insurance, audit fees, leadership and boards, that is, “public company stand-up costs”, Koch said. The dis-synergies were “not a huge number” and would be across all three companies, she said. As for separation costs, those are estimated at $700 million, with the biggest cost items being IT separation and tax, legal and audit work, she said. DIVESTMENT NOT RULED OUT While DuPont is pursuing spin-offs and is not running a parallel M&A processes for electronics and water, it does not entirely rule out divesting them. “If somebody wants to call and propose something, we are going to listen to it,” Breen said in response to analysts' questions. He also said that the water business, which is relatively smaller, may be spun off before electronics. The timing for the separations is good as markets are coming out of destocking cycles, Breen noted. Especially in semiconductors, “we are going into a real upcycle”, he added. DuPont has been working on the separation for about six months and expects to complete it within the coming 18-24 months, he said. The relatively long completion timeline is mainly due to tax matters as DuPont intends to execute tax-free separations, he said. In some of the countries where DuPont operating, a separated business must be run for a full 12 months before it gets tax-free status, Breen said. New DuPont, with annual sales of $6.6 billion, and the electronic spin-off (sales: $4.0 billion), are expected to have investment-grade balance sheets whereas the smaller water business (sales: $1.5 billion), may not, Koch said. PFAS As for DuPont’s liabilities for poly- and perfluoroalkyl substances (PFAS), those will be allocated between the three companies pro rata, based on their earnings before interest, tax, depreciation and amortization (EBITDA) in the last year before the spin-off, Breen said. The amount of PFAS liabilities may not be that large as DuPont expects to “make great progress” on settling claims by the time the spin-offs will be completed in 18-24 months, he said. BREEN’S NEW ROLE Breen will step down as CEO on 1 June, to be succeeded by Koch. However, he will continue as full-time executive chairman of DuPont’s board of directors, focusing on the separations, including the appointment of the spin-off companies’ boards and the hiring of their management teams. Breen would not rule out that he may join the boards of the electronics and water spin-offs but added that a decision has yet to be made. PROFILES OF THE THREE COMPANIES' MARKETS New DuPont, focused on healthcare, advanced mobility, and safety & protection: Electronics, focused on semi-conductors and interconnect solutions: Raw materials used by the electronic business include, among others, monomers, pigments and dyes, styrenic block copolymers, copper foil, filler alumina, nickel, silver, palladium, photoactive compounds, polyester and other polymer films, polyethylene (PE) resins, polyurethane (PU) resins, polyvinyl chloride (PVC) compounds and silicones, according to DuPont's website. Water, focused on reverse osmosis, ion exchange, and ultra filtration: Raw materials used by the water business include, among others, methyl methacrylate (MMA), styrene, polysulfone, high density polyethylene (HDPE), polyethylene (PE), aniline, calcium chloride, caustic and sulfuric acid, according to DuPont's website. DuPont's shares traded at $78.44/share, down 0.13%, at 11:00 local time on the New York Stock Exchange. With additional reporting by Al Greenwood Thumbnail photo source: DuPont

23-May-2024

SAO PAULO (ICIS)–Six years after the disaster at Braskem’s rock salt mines in Brazil’s state of Alagoas, the polymers major could continue facing legal cases which could dent its cash flow, according to analysts at US credit rating agency Fitch. Fitch downgraded the company’s credit rating in December 2023 and placed it on what it called ‘Negative Watch’. This week, following a very damning report issued by Brazil’s Senate following a public enquiry into the Alagoas disaster, the agency’s analysts said that Braskem is likely to face increase costs related to environmental, social, and governance (ESG) challenges. That would add, they said, to the expected poor spreads for global petrochemicals in general, which would be here to stay for at least the remaining of 2024. “Increased ESG risks and potential new claims associated with the geological event in Alagoas could worsen the company’s credit profile,” said Marcelo Pappiani, a Fitch analyst covering Braskem. Fitch said Braskem has since 2019 disbursed approximately Brazilian reais (R) 10.0 billion ($2.0 billion) on relocations, compensation, the closure and monitoring of salt cavities, and environment and other technical matters. A spokesperson for Braskem said to ICIS on Thursday the company would continue collaborating with the authorities in their enquiries about the Alagoas disaster but did not comment on the specifics of the Senate’s report. “Braskem reiterates it was always willing to collaborate with the public enquiry, promptly collaborating providing all the information and measures requested,” said the spokesperson. “The company remains available to collaborate with the authorities, as it has always been.” NEVER-ENDING DISASTERLate on Wednesday, the Brazilian Senate published the final report after its public enquiry into the Alagoas disaster in 2018 which caused thousands to be displaced from their homes in Maceio, the capital’s state. The report is to be voted by the Senate’s plenary on 22 May. Braskem's rock salt mining caused the displacement of the subsoil; the company used the rock salt for production of caustic soda and polyvinyl chloride (PVC), among others. The 765-page report was highly damning for Braskem, with vice president Marcelo Cerqueira and other seven people accused of environmental crimes as the company’s activities resulted in the geological event. Nearly 15,000 households had to be relocated, and some of Maceio’s neighborhoods evacuated in 2018 remain ghost areas to this day. The report was not only damning for Braskem but also for Brazil’s authorities, especially the National Mining Agency (ANM) as well as the Ministry of Mines and Energy for failing to implement the controls which are required. THE GROUND KEEPS MOVINGTo make matters worse for Braskem, just last December there were further movements in the subsoil which made residents and authorities fear another geological event, a prospect which in the end did not materialize. Those recent events, as well as this week’s report, keep bringing back the Alagoas disaster into the spotlight and seem set to keep haunting the company for several quarters to come, said the Fitch analysts. “We believe the environmental and ecological impacts of the salt mine collapse in the context of sinking land in Alagoas could damage Braskem’s financial position … Uncertainty about current and upcoming lawsuits is high, with negative outcomes potentially pressuring cash flow and adversely impacting the company’s financial results,” they said. “The company could also face social impacts from new claims and reparation costs to victims and neighboring communities, in addition to the 14,446 families relocated to other areas.” The Alagoas liabilities are casting such a long shadow for Braskem that Abu Dhabi’s energy major ADNOC, who seemed the strongest candidate to acquire Novonor’s controlling stake in Braskem, walked away earlier in May, reportedly on the back of those liabilities. “We believe the prospect of Novonor selling its stake in Braskem hit an impasse after the December 2023 salt mine collapse, with ongoing uncertainty regarding the repercussions of the geological event,” said Fitch. Neither the Senate report nor Fitch’s credit rating warning seemed to dent investors’ interest on Braskem’s stock on Thursday though, with shares trading nearly 1.45% higher on the Sao Paulo stock exchange Bovespa by midday local time. Following ADNOC's announcement it was throwing the towel on Braskem, Braskem’s shares opened the next trading session down more than 14%.

16-May-2024