Ethylene

MADRID (ICIS)–Supply of ethane from Pemex to polyethylene (PE) producer Braskem Idesa is now more stable after a renegotiation of the contract – but the global PE market remains in the doldrums, according to an executive at the Mexican firm. Sergio Plata, head of institutional relations and communications at Braskem Idesa, said a recovery in global PE prices could start in the second half of 2025 as the market is expected to remain oversupplied in the coming quarters. Plata explained how Braskem Idesa had to renegotiate the terms of an agreement with Pemex, Mexico’s state-owned crude oil major, for the supply of natural gas-based ethane, one of the routes to produce PE, to its facilities in Coatzacoalcos. Supply is now more stable and in the quantities agreed, he said. Braskem Idesa operates the Ethylene XXI complex in Coatzacoalcos, south of the industrial state of Veracruz, which has capacity to produce 1.05 million tonnes/year of ethylene and downstream capacities of 750,000 tonnes/year for high-density polyethylene (HDPE) and 300,000 tonnes/year for low-density polyethylene (LDPE). Braskem Idesa is a joint venture made up of Brazil’s polymers major Braskem (75%) and Mexican chemical producer Grupo Idesa (25%). ETHANE FLOWING, TERMINAL IN Q1 2025 Pemex agreed with Braskem Idesa to supply the PE producer with a minimum volume of 30,000 barrels/day of ethane until the beginning of 2025, when Braskem Idesa plans to start up an import terminal in Coatzacoalcos to allow it to tap into exports out of the US Gulf Coast. However, both parties sat to renegotiate that agreement after Pemex’s supply proved to be unstable, with credit rating agencies such as Fitch warning in 2023 of the “operational risk” such a deal with the state-owned major represented for Braskem Idesa. The outcome of the renegotiation is starting to bear fruit, explained Plata diplomatically, without providing any details. He conceded, however, that to outsiders, Pemex’s businesses could look rather odd. “We understand the positions of a public entity such as Pemex, and we understand its methods could look questionable to eyes outside our relationship,” said Plata. “However, at Braskem Idesa we were confident that if we sat down with them to renegotiate, clearly stating what we require from each other, we could reach a point in the renegotiation which worked for us as a company and for the Mexican petrochemicals sector as a whole.” Together with more stable supply from Pemex, Braskem Idesa also adopted the so-called Fast Track to import ethane while its own import terminal starts up. The terminal, known as Terminal Quimica Puerto Mexico (TQPM), closed the last financing details at the end of 2023. Plata said the terminal would start up “without a doubt” by the beginning of 2025, adding that construction was 70% complete by the beginning of July. According to Plata, with Pemex’s more stable ethane supply and the Fast Track system, Braskem Idesa is operating at 70-75% capacity utilization. PE MARKET WOES As a PE producer, Braskem Idesa remains exposed to the global downturn in polymers prices due to oversupplies. Plata said the downturn has been a “very hard” period for polymers producers, who may still face 12 more months of downturn. In its latest financial statement for the first quarter, Braskem Idesa’s sales fell by 2%, year on year, and the company posted a net loss. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose. Braskem Idesa (in $ million) Q1 2024 Q1 2023 Change Q4 2023 Change Q1 2024 vs Q4 2024 Sales 229 234 -2% 199 15% Net profit/loss -85 1 N/A -101 -16% EBITDA 36 26 36% 26 39% PE sales volumes (in tonnes) 205,500 195,100 5.4% 174,500 17.8% “We have had a very complex environment, with increased capacities in the US or China and with the war in Ukraine raising our production costs. We are undoubtedly in a down cycle and as a company we have tried to take care of our margins by controlling our costs and look closely at our investments,” said Plata. He said he “would not have the answer” about what to do with China’s dumping of product around the world, a fact that in Brazil, the largest Latin American economy, has prompted chemicals trade group Abiquim to lobby hard for higher import tariffs in polymers, as well as dozens of other chemicals. “Market analysts predict the current cycle may come to an end in the second half of 2025. Let’s hope so… This has been such a long crisis, aggravated by external factors such as wars and global convulsions, which undoubtedly also affect the industry, and the environment remains very uncertain.” Front page picture: Braskem Idesa’s facilities in Coatzacoalcos Source: Braskem Idesa Interview article by Jonathan Lopez Next week, ICIS will publish the second part of the interview with Plata, with his views on the challenges and opportunities for the chemicals and manufacturing sectors under the upcoming Administration led by President-Elect Claudia Sheinbaum amid the nearshoring trend

18-Jul-2024

SINGAPORE (ICIS)–In this podcast, Asia ethylene editor Josh Quah and analyst Aliena Huang discuss the factors impacting arbitrage flows of ethylene from the US to Asia. Spot arbitrage window between US and Asia closed but term arrivals for July remain healthy Storm Beryl, low affordability in Asia, may keep spot arbitrage trades closed into Aug Panama Canal traffic levels expected to return to pre-congestion levels by Oct

18-Jul-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 12 July. Europe ethylene spot prices turn firmer on demand, feedstock, looming cracker turnarounds European ethylene spot prices have firmed week on week on the back of better-than-expected demand amid higher feedstock values and an increasing focus on upcoming planned cracker maintenance outages. Global crude demand slows in Q2, China consumption contracts – IEA Global crude oil demand slumped to 710,000 bbl/day in Q2 2024 as China’s post-pandemic economic rebound ran its course, the International Energy Agency (IEA) said on Thursday. Storm Beryl damage, economic loss to US estimated at $28-32 billion Total damage and economic loss in the US from Storm Beryl amounted to $28-32 billion, according to meteorology firm AccuWeather. Europe chemicals players expect construction demand to remain sluggish until H1 2025 Chemicals players in Europe do not expect any substantial recovery from the building and construction industry until the first half of 2025 at least. Flooding to continue across central US as Beryl moves inland Flash flooding is expected as Storm Beryl continues to progress across the central US, with blackouts and logistic shutdowns seen in parts of Texas. ‘Life-threatening’ storm surge in Texas as Hurricane Beryl makes US landfall Hurricane Beryl has made landfall in eastern Texas and looks set to batter parts of the state’s key petrochemicals production hubs, with the US National Hurricane Center (NHC) warning of a life-threatening storm surge on Monday.

15-Jul-2024

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

15-Jul-2024

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

12-Jul-2024

BARCELONA (ICIS)–Climate change and warming oceans mean that the US Gulf Coast chemical sector will have to adapt to more frequent weather events such as Hurricane Beryl. Gulf Coast area where Hurricane Beryl made landfall houses 13m tonnes, 29% of US ethylene production capacity Beryl is earliest Category five hurricane on record; busy season forecast Warming oceans mean there may be double the number of severe hurricanes Energy, chemical industries must adapt to cope with more weather events Move towards net zero carbon gives opportunity to relocate plants, infrastructure In this Think Tank podcast, Will Beacham interviews ICIS Business Solutions Group senior executive Nigel Davis and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

09-Jul-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 5 July 2024. OUTLOOK: Snug import supply supports Asia MEG amid slowing demand By Judith Wang 03-Jul-24 11:52 SINGAPORE (ICIS)–Monoethylene glycol (MEG) import supply in Asia for July is expected to stay snug in the near term, while demand looks set to slow down. INSIGHT: Methanol or ethylene, that is the question for China By Doris He 02-Jul-24 17:00 SINGAPORE (ICIS)–China’s methanol-to-olefins (MTO) industry has always been a focus of attention among methanol market players, as it accounts for half of overall demand. More attention has recently been shifted to ethylene, from the overall margins of a typical MTO plant in coastal regions. OUTLOOK: Asia nylon markets may slow down in H2 2024 on lengthened supply By Charmaine Lim 01-Jul-24 14:40 SINGAPORE (ICIS)–Nylon markets in Asia are expected to slow in H2 2024 compared to the first half of the year as the upcoming seasonal lull in Q3 approaches, with new capacities planned to start up in China this year. S Korea antidumping probe on China SM extends to Sept, discussions and hearings ongoing By Luffy Wu 01-Jul-24 15:22 SINGAPORE (ICIS)–The Korea Trade Commission is continuing with its anti-dumping probe against styrene monomer (SM) imports from China, with some discussions and hearings between the government and market players heard ongoing. PODCAST: China oxo-alcohols to face supply-demand pressure, new capacity to be a focus By Claire Gao 01-Jul-24 19:24 SINGAPORE (ICIS)–In this podcast, ICIS analyst Claire Gao explores the oxo-alcohols market overview and outlook. OUTLOOK: Persistent economic woes dampen Asia chemical freight demand By Hwee Hwee Tan 02-Jul-24 12:03 SINGAPORE (ICIS)–Asia’s chemical freight demand is dampened as macroeconomic doldrums were pulling back spot trades well into the third quarter despite reducing plant capacity losses for key liquid bulk products.

08-Jul-2024

SAO PAULO (ICIS)–Hurricane Beryl is expected to post a “slow re-intensification” as it heads towards the north and could potentially hit Texas’ industrial hub of Corpus Christi by Monday. On 4 July, the US National Hurricane Center had said Beryl had weakened from a category 5 hurricane to a category 3 and was expected to become a storm thereafter. However, on Friday, as the Hurricane brought havoc to Yucatan, the NHC said it could strengthen again once it hits sea waters, making it stronger as it heads to make another landfall in Texas. “Beryl is expected to emerge over the southwestern Gulf of Mexico tonight and then move northwestward toward northeastern Mexico and southern Texas by the end of the weekend,” said the NHC on Friday morning. “Maximum sustained winds have decreased to near 85 mph (140 km/h) with higher gusts. Continued rapid weakening is expected as Beryl moves farther inland and crosses the Yucatan Peninsula today, but slow re-intensification is expected once Beryl moves back over the Gulf of Mexico.” Moreover, the Houston area – an eight-million-strong metropolitan area – could also now be subject to a significant impact, although analysts at Space City Weather said on Friday the impact “will be mostly manageable locally”. PETROCHEMICALS, ENERGYWhile the Altamira petrochemicals hub in the Mexican state of Tamaulipas was spare from the worse, industrial assets in Texas may not have the same luck. The current pathway projected by the NHC implies that Beryl would make landfall in Texas right in the Corpus Christi area, where major refining and petrochemical assets are located. In addition to being a refining and petrochemical hub, Corpus Christi is a major oil-exporting port and hosts a terminal that exports liquefied natural gas (LNG). If Beryl finally disrupts US LNG exports, that could have a knock-on effect on petrochemical prices by shutting down one of the eight LNG export terminals in the country. If the disruption lasted long enough, prices for natural gas would fall. Lower gas prices would drag down those for ethane, the main feedstock that US crackers use to produce ethylene. Petrochemical producers could benefit from lower feedstock costs. Meanwhile, as Beryl strengthens again, energy companies in Texas may choose to shut their plants as a precaution, as well as oil and gas wells in the Gulf of Mexico. Major US oil and liquefied natural gas (LNG) ports could also be touched by Beryl now, which could potentially cause major disruption in supplies. THE WEEKEND IS KEYSpace City Weather said that where Beryl ultimately makes landfall will depend on how far the high-pressure system is over the southern US retreats. The landfall location is “complicated by the contour of the South Texas coastline, which is very nearly north-south relative” to the Gulf of Mexico. “Regarding Houston, I would love to be able to tell you with certainty that Beryl will make landfall near or south of Corpus Christi. I truly think that will be the case. But as Beryl’s track has moved significantly in the last 24 hours that is not something I can guarantee you,” concluded analyst Eric Berger. Source: US National Hurricane Center

05-Jul-2024

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

04-Jul-2024

HOUSTON (ICIS)–Hurricane Beryl is on track to make landfall on Monday near the border of Mexico and the US on the Gulf Coast, although the path could change in the next few days. If Beryl holds to its forecasted path, it would spare the major refining and petrochemical hubs in the US and Mexico. In addition, few if any energy companies may choose to shut in US oil and gas wells in the Gulf of Mexico. Major US oil and LNG ports would escape the worst of the storm. The following map shows the forecasts path of Hurricane Beryl as of midday on Wednesday. The forecasted path puts Hurricane Beryl between the Mexican petrochemical hub of Altamira, Tamaulipas state and the US hub of Corpus Christi, Texas state. IF BERYL CHANGES COURSE, IT COULD THREATEN CORPUS CHRISTIIn addition to being a refining and petrochemical hub, Corpus Christi is a major oil-exporting port and hosts a terminal that exports liquefied natural gas (LNG). Were a storm to disrupt US LNG exports, it would have a knock-on effect on petrochemical prices by shutting down one of the eight LNG export terminals in the country. If the disruption lasted long enough, prices for natural gas would fall. Lower gas prices would drag down those for ethane, the main feedstock that US crackers use to produce ethylene. Petrochemical producers could benefit from lower feedstock costs. UPDATE ON HURRICANE BERYLHurricane Beryl is the first Category 5 hurricane to form so early in the season. Category 5 hurricanes have the strongest winds under the Saffir-Simpson Hurricane Wind Scale, with speeds exceeding 157 miles/hour (253 km/hour). Beryl is near Jamaica and it should weaken as it approaches the Yucatan peninsula in Mexico, where it should make landfall on Friday. It will cross the peninsula, enter the Bay of Campeche and remain north of the Mexican state of Veracruz, which is home to the petrochemical hub of Coatzacoalcos and the Ethylene XXI integrated polyethylene (PE) complex. It will swing north before making another landfall near Brownsville, Texas state and Matamoros, Tamaulipas state. BUSY HURRICANE SEASONMeteorologists have warned that this year's hurricane season could be the most active ever, with 17-25 named storms. Out of those, 8-13 should be hurricanes and 4-7 should be major hurricanes. Major hurricanes are Category 3-5 storms with wind speeds of at least 111 miles/hour.

03-Jul-2024