Polyethylene (PE)

LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Colourless (C), blue flake ranges narrow in eastern Europe Contradictory C bale prices heard in parts of the east as well Wider R-PET market still impacted by summer holiday slowdown

30-Aug-2024

LONDON (ICIS)–An unexpectedly active August for European polyethylene (PE) and polypropylene (PP) was rounded off by surprising news of an unexploded WW2 bomb and more details of which LyondellBasell sites might be sold or rationalised. Senior editors Vicky Ellis, Ben Lake and Samantha Wright look at what else made August unusual, and look ahead to September in this latest podcast on Europe, Africa and Turkey markets. Articles they refer to include: Joe Chang’s Insight article, A new kind of low-carbon PE, PP is coming in 2025, and low density polyethylene (LDPE), linear low density polyethylene (LLDPE) and PP multi-month spot price highs.

30-Aug-2024

SAO PAULO (ICIS)–Argentina’s petrochemicals players are in a wait-and-see mode about the effects a cut to import tariffs announced this week could have in the market and whether it will lower prices which, for many materials, remain higher than global prices. Earlier this week, the Argentinian cabinet said it would cut the so-called PAIS tax from 17.5% to 7.5% from 2 September. Introduced in 2012, the PAIS acronym responds to the name Tax for an Inclusive and Solidary Argentina (Impuesto Para una Argentina Inclusiva y Solidaria) and was presented by the at the time left-leaning administration as a tax on purchases of foreign currency. In practice, given that most imports are priced in dollars, the tax ended being practically an import tariff and contributed to Argentina becoming one of the most closed economies to trade in the world. President Javier Milei, in office since December 2023, has promised to turn the system upside down and make the Argentinian economy a bastion of liberalism. The cabinet’s intention is to end import tariffs altogether. The minister for the economy, Luis Caputo, has been quoted in the Argentinian press as saying the country should be “moving forward in the elimination of all export duties, a perverse tax that we do not like and hinders” Argentina’s economic progress. PETROCHEMICALS MUST WAITThis week, sources in Argentina, who have been reporting higher prices for several materials compared to the rest of the world for months, were sceptical of any quick effect from the cut to the PAIS tax. Some estimated, however, that the lower rates could slash petrochemicals import prices, on average, by $200/tonne. Most sources also mentioned the example of Dow, which is the sole polyethylene (PE) producer in Argentina and has greatly benefited from the closed economy up to now. Petrochemicals and the wider industrial sectors, including construction, remain the hardest hit industries amid the country’s recession, which is trying to digest the ‘shock therapy’ being implemented by the government. Consumers are squeezed and few can afford the luxury of even thinking about purchasing the higher-priced, petrochemicals-intensive durable goods, which are the ones which could revive the beleaguered chemicals industry. Moreover, those with stocks of materials purchased in imports under the previous PAIS rates are unlikely to lower their prices until they sell them – that period could be a few weeks or a few months. “Plastic sales remain weak because people think prices will go down with the tax reduction. But I am not convinced the reduction will be immediate and all at once. Prices could only come down once the new imports under the new regime come into force,” said one source at a large distributor. “It will be slow process, over one or two months – we will have to see how petrochemicals producers react and whether they start lowering prices straight away or do it in phases.” This source and others said Dow announced to its customers in Latin America prices increases of around $100/tonne for most materials, although that increase was not applied in Argentina, said the distribution source. Dow is Argentina’s sole producer of polyethylene. It operates facilities at the Bahia Blanca petrochemicals hub, south of Buenos Aires. According to ICIS Supply & Demand, it has the capacity to produce 730,000 tonnes/year of ethylene, 307,000 tonnes/year of high density polyethylene (HDPE), 329,000 tonnes/year of linear low density polyethylene (LLDPE), and 40,000 tonnes/year propylene. As the sole PE producer in a country locked up to external trade, Dow has greatly benefited in the past two months. Sources reported earlier in the year the company was selling PE at $2,400/tonne, when global prices stood at around $1,200/tonne. The price increase announced earlier in the year added more doubts to the company pricing strategy. Dow had not responded to a request for comment at the time of writing. The source at the large distributor added, “Dow’s $100/tonne increase was not implemented it in Argentina as prices remain higher than global prices. “If the reduction in the PAIS tax brings a reduction of $200/tonne, for example, perhaps Dow first decides to raise prices by $100/tonne and then take the $200/tonne hit and see what the market’s reaction is. Right now, we do not know how it will play out.” STAYING PUTAnother source at a petrochemicals distributor, with decades of experience behind him, described the largest recession it has seen in its career. In such an environment, he went on to say, prices should go down to prop up demand, at least, according to economy theory. But Argentina, it added, has escaped economy theory often in past decades so nothing can be taken for granted. The source even added that it was mulling whether to attend an industry event next week in Buenos Aires, just in case a business opportunity is lost while it attends the conference. On 4 September, the Latin American Petrochemical and Chemical Association (APLA) is holding its annual conference on sustainability, which together with its logistics event and the annual event are the three highlights in the Latin American petrochemicals markets. “There is a strong, very strong recession, and we have to be very attentive to each business that emerges in order to be on the edge of not losing the opportunity or do a bad sale,” said the source. Font page picture source: Shutterstock Focus article by Jonathan Lopez

29-Aug-2024

MUMBAI (ICIS)–India’s JPFL Films Pvt Ltd plans to set up a new 60,000 tonne/year biaxially oriented polypropylene (BOPP) film unit in the western Maharashtra state, at a cost of rupee (Rs) 2.5 billion ($30 million). The company expects to begin operations at the new unit to be built at its Nashik complex in October 2025, its parent firm Jindal Poly Films said in a filing to the Bombay Stock Exchange (BSE) on 16 August. “The new line will help the company strengthen its market position and market share,” Jindal Poly Films said, adding that funding for the plant will be through internal accruals and bank financing. JPFL Films currently has a production capacity of 294,200 tonnes/year of BOPP and 170,000 tonnes/year of biaxially oriented polyethylene terephthalate (BOPET) at its Nashik facility. ($1 = Rs83.93)

27-Aug-2024

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Blue flake prices rise at the low end in eastern Europe Wide range of views on eastern Europe bale prices Mixed coloured flake demand remains poor September price talks getting underway

23-Aug-2024

HOUSTON (ICIS)–In light of the recent surge of ocean freight rates, US plastic scrap trade has slowed some to overseas destinations, but still remains robust within North American borders. Albeit lower this quarter, polyethylene terephthalate (PET) plastic scrap in particular continues to be strong in import and export volumes amid a moderate domestic market. US remains a net importer of plastic scrap US PET scrap imported decreased 11% Q2 2024 vs Q1 2024 US PET scrap exported increased 62% Q2 2024 vs Q2 2023 IMPORTS SLOW ON GLOBAL FREIGHT, PET REMAINS STRONG Q2 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915 – have fallen 10% quarter on quarter, but still having increased 7% year on year when comparing with Q2 2023. Plastic scrap imports include items such as used bottles, but also other forms of recycled feedstock such as purge, leftover pairings and now also flake material. Imports totaled 114,969 tonnes in Q2 with drops seen across the major polymer groups for US scrap import. Polyethylene (PE) scrap was down 13%, while polyethylene terephthalate (PET) scrap was down 11% quarter on quarter. Based on volume alone, the drop in PET imports by 6,857 tonnes is the largest contributing factor to the overall decrease. While imports from Canada and Mexico still dominate total volumes, when looking at PET specifically, imports from Mexico have dropped off significantly. Top sending countries for PET scrap are Canada, followed by Thailand, Ecuador, Japan, Indonesia and Honduras as of the 1H2024 data. This means less than 25% of US PET scrap imports came from North America, while over 43% of PET imports originated from Asian countries, a reversal of the statistics seen just two years prior. While down quarter on quarter, PET scrap imports are still elevated in comparison to previous years, up as much as 24% year on year. As of Q2 2024, PET makes up 50% of all US imported plastic scrap, followed by the "other" plastic scrap category at 29% and PE scrap at 13%. US recycled polyethylene terephthalate (R-PET) market participants confirm they have seen a notable rise in imported R-PET activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor and facility costs. Though towards the back half of Q2, ocean freight rates did substantially rise, likely curtailing the window of cost competitiveness for many. Typically, imports from these overseas locations must be ordered weeks, if not months, in advance, and so Q2 import volumes largely represent demand from one to two months prior. Even with higher ocean freight rates today, US converters and recyclers continue to buy imported flake and pellet to supplement operations, as it remains cost-competitive in most cases. R-PET demand on the East Coast has continued to strengthen during the summer months and is now looking solid through the end of the year, a deviation from the typical seasonal demand pattern. Though imports come with additional transportation and cost risk, players accept that international supply is now woven into the fabric of the market, much like with virgin PET. PET EXPORTS SURGING, OTHER PLASTICS SEE WEAK GLOBAL MARKETS Despite the desire for a growing domestic recycled plastics market, feedstock material continues to bleed out of the country, specifically PET bales. US exports of plastic scrap have increased 5% quarter on quarter to a total of 112,385 tonnes, while PET scrap exports have increased 18% quarter on quarter, and a whopping 62% year on year. Though the US has always exported a portion of domestic bale material to other countries, including Mexico and some in Asia,  exports to Mexico have surged in the last 10 months. This growing trade relationship is largely attributed to new capacity in Mexico, paired with strong local demand which has elevated local bale prices. As a result, Mexican recyclers have been purchasing US PET bales as a lower cost option with high availability. Overall, exports of other types of plastic scrap continue to slow, following the Chinese National Sword and Basel Convention adoption several years ago. PE continues to be a leading polymer type for US plastic scrap exports, coming in at 33,556 tonnes in Q2 2024. According to 1H24 total PE imports, India is the largest destination at 25%, followed by Indonesia at 15% Canada at 14%, and Malaysia and Vietnam tied at 13%. As of this past quarter, the US remains a net importer of plastic scrap.

22-Aug-2024

MUMBAI (ICIS)–India’s state-owned Bharat Petroleum Corp Ltd (BPCL) plans to invest rupee (Rs) 1.7 trillion ($20.3 billion) over the next five years to grow its refining and fuel marketing business, as well as expand its petrochemicals and green energy businesses. 44% of total earmarked for refinery, petrochemical capacity growth Bina refinery/petrochemical project due for commissioning in FY2028-29 New refinery project being mulled As part of the investment initiative named ‘Project Aspire’, some Rs750 billion will go to increasing capacity at BPCL’s refineries and expand its petrochemical portfolio, company chairman G Krishnakumar said in the company’s annual report for the fiscal year ending March 2024. “The demand for major petrochemical products is expected to rise by 7-8% annually. This presents a strategic opportunity to expand refining capacity alongside the development of integrated petrochemical complexes,” Krishnakumar said. BPCL’s planned petrochemical expansions include the new petrochemical projects at its Bina refinery in the central Madhya Pradesh state, and the Kochi refinery in the southern Kerala state. The Bina project is a brownfield expansion that will raise the refinery’s capacity by 41% to 11m tonnes/year, to cater to the requirements of upcoming petrochemical plants, which include a 1.2m tonnes/year ethylene cracker and downstream units. The site is expected to produce 1.15m tonnes/year of polyethylene (PE), including high density PE (HDPE) and linear low density PE (LLDPE); 550,000 tonnes/year of polypropylene (PP); and 50,000 tonnes/year of butene-1 The complex will also produce chemicals such as benzene, toluene, xylene, the annual report said. “Technology licensors for all critical packages, and project management consultants for refinery expansion and downstream units have been onboarded and work at the site commenced in the first week of July 2024,” Krishnakumar said. BPCL has chosen US-based Lummus to provide technologies for the new ethylene plant and downstream units at the complex. The refinery will be ready for commissioning by May 2028, while petrochemical operations will begin in the financial year ending March 2029. At Kochi, BPCL’s 400,000 tonne/year PP project is progressing as per schedule and is on track for commissioning in October 2027. It plans to raise its Kochi refinery capacity by 16% over the next five years to 18m tonnes/year, based on data from the company’s latest annual report. https://subscriber.icis.com/news/petchem/news-article-00110958286 The company also plans to set up additional petrochemical capacities over the next few years. “To meet the anticipated demand beyond our planned expansions in Bina and Kochi, we are actively evaluating options for setting up additional integrated refining and petrochemical capacities within the next 5-7 years,” Krishnakumar said BPCL has begun evaluating options to set up a new refinery with a planned capacity of around 9 million to 12 million tonnes/year, a company official said, adding, “we are exploring a new refinery either on the east coast or at other locations”. In Mumbai, the company also plans to expand its refinery capacity by a third to 16m tonnes/year in the next five years, according to its annual report. In the eastern Odisha state, BPCL expects to begin operations at its 200 kilolitre/day ethanol plant at Bargarh by October 2024. Once operational, the integrated refinery is expected to produce both first generation (1G) as well as second generation (2G) ethanol using rice grain and paddy straw as feedstock. Focus article by Priya Jestin ($1 = Rs83.85) Thumbnail image: The Bharat Petroleum import terminal at Haldia in West Bengal on 13 March 2021. (Debajyoti Chakraborty/NurPhoto/Shutterstock)

20-Aug-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. STILL WAITING FOR the end of the chemicals downturn? If so, I believe you are wasting precious time. Read in detail in today’s blog and see my ten summarised reasons below. Print this off and pin it on your boardroom wall: Most of the G20 countries, which account for more than 70% of global polyethylene demand (chemicals and polymers are equivalent to economic activity) is ageing. Immigration is of course the answer to some extent, but this is politically very difficult in the West. In the regions and countries where populations are youthful, not enough people – because of politics in the West – are likely to be able to move to the rich world for better economic opportunities, and to escape conflicts and the effects of climate change. Climate change will more likely be successfully mitigated in the rich world. But the risk is that the Developing World ex-China does not get the financing and technologies it needs to mitigate the impact of climate change. China is the immediate centre of the crisis for the global chemicals industry because global capacity was added on wrong growth assumptions. China’s chemicals demand growth could turn negative because of an ageing population, the end of the real-estate bubble and geopolitics. Geopolitics mean that we are likely to see a change in chemicals trade flows. A bipolar world – one centred on China and its allies and the other on the US and its allies – is one outcome The oil and gas majors could end up dominating chemicals to compensate for declining oil demand due to electric vehicles and fuel efficiency, as China moves to chemicals self-sufficiency by itself and/or with imports largely from its geopolitical partners in the Middle East We are in the early stages of a new industrial revolution driven by sustainability As was the case with the start of the first industrial revolution, it is impossible to say what will be the winning and losing technologies. For chemical companies without strong feedstock advantages, without the right geopolitical locations- and which have too much exposure to the diminishing China import markets – it is success in sustainability that is the route to new competitive advantage. 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.

19-Aug-2024

LONDON (ICIS)–Senior editor for recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Growing number of enquiries for food-grade pellets in August Actual confirmed deals remain limited Buyers take various approaches to pellet purchasing Wider R-PET market stable due to holidays

16-Aug-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The world as it stands today tells us that US doing extremely well in the key China HDPE import market. Using trade data and ICIS price benchmarks: In 2023 over 2022, US sales turnover in soared by $500m as its exports in tonnes to China also increased. In January-June 2024 over the same period last year, its turnover was up by another $106m. Meanwhile in 2023 over 2022 as their shipments to China dipped – and because of lower pricing – Iran’s turnover was down by $468m, Saudi Arabia by $449m, the UAE by $412m and South Korea by $176m. But the January-June 2024 data show the UAE and South Korea clawing back some ground. “In H1 2024, US [total] PE exports were 46.5% of total sales and operating rates above 90% – a far cry from 21% in 2017 when operating rates were also much lower in the mid-80% range,” wrote my colleague Joe Chang in a15 August ICIS news article. This suggests that the US, because of its feedstock advantages, gained sales turnover in markets other than just China in H1 2024 – and in the other grades of PE. The comprehensive nature of ICIS price benchmark and trade data means that it is possible to produce charts like the ones in today’s post for other countries and regions such as Europe, Latin America, Africa, Turkey and India. But this familiar world of trade flows driven by feedstock costs is rapidly changing. If the US-China geopolitical split continues, this raises the question of where China will in future source most of its chemicals import volumes. Demographics will also shape demand, and so trade flows, in China and elsewhere. A later blog post will discuss demographic analysis which suggests that China’s population in 2020 could have been 130-250m lower than the 1.42bn official number.  This would obviously have major implications for historic and future chemicals demand in China. But perhaps China’s cap on refinery capacity from 2028 onwards, due to the electrification of vehicles, will limit its capacity growth, thereby creating a bigger opportunity for exporters. Geopolitics, demographics, debts and sustainability will, I believe, be the new defining shapers of chemicals and polymers trade flows. The world as it stands today, represented by most of the analysis in today’s post, is coming to an end. 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.

16-Aug-2024