Hydrochloric acid

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: It is that time of the year again when analysts need to put their reputations on the line and make forecasts for the following year. So, see below five forecasts for 2025 with detailed descriptions as follows: There will be enough new capacity coming onstream next year to push China closer to self-sufficiency in some chemicals and polymers such as polypropylene (PP). The boat has already sailed on products such as purified terephthalic acid (PTA) and styrene where China has, in recent years, swung into net export positions. What will further bolster China’s self-sufficiency will be China’s long-term decline in demand growth. China’s operating rates will be higher than sometimes assumed, as it will prioritize self-sufficiency, and potentially more exports (see point 3) over individual plant economics. We are seeing a long-term shift in global growth momentum to the much more populous and much more youthful mega region of the Developing World ex-China. Part of this process involves relocation of manufacturing capacity from China to countries such as Turkey, Mexico, Vietnam and India for cost and geopolitical reasons, and this will continue in 2025. Deals will be done by the Trump administration on tariffs as competitively priced imports will have to come from somewhere – and because of the intricate and complex integration of manufacturing supply chains. Since 2021 and the Evergrande Turning Point, China had doubled down on exports up and down manufacturing chains, reducing the room for competitors in low, medium and high-value industries. This includes its switch to net export positions in products such as PTA and styrene, and the potential for this to happen in products such as PP,  acrylonitrile butadiene styrene (ABS) and polycarbonate (PC). I, therefore, believe that antidumping, tariff and other protectionist measures against China will accelerate in 2025. China will respond in kind. First came the pandemic-related disruptions to global container shipping and, since February of this year, we’ve had to contend with the Houthi attacks on shipping that have disrupted access to the Suez Canal via the Red Sea. Access to cost-efficient and prompt logistics will remain a key competitive advantage in 2025 for chemicals companies as global trade flows will remain disrupted for whatever reasons. The ICIS numbers tell us that because of disappointing Chinese demand, and the scale of global capacity closures required to bring markets back into balance, a new upcycle in 2025 is a very remote possibility. Expect no upswing for at least the next three years because of the scale of the shutdowns necessary. I could be wrong, of course. I’ve been advised not to keep saying this, but I disagree as nobody likes somebody who never concedes when they are wrong, moves on from the history of where and when they have been wrong, and assumes that they will always be right in the future. 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.

11-Dec-2024

SINGAPORE (ICIS)–China is expected to implement a “more proactive fiscal policy” and a “moderately loose” monetary policy for next year, according to the country’s top officials, amid economic headwinds and looming heavy tariffs from the US. Central bank likely to cut key interest rates, banks’ reserve requirements China 2025 GDP growth forecast to slow to 4.3% in 2025 – UOB New US-China trade war in the offing The policy shift was announced following a meeting by the Political Bureau of the Communist Party of China (Politburo) and was meant to boost overall consumption in the world’s second-biggest economy. The change in monetary policy stance was the first since 2011 amid flagging economic growth and the prospect of high tariffs that will be imposed on Chinese goods by the US next year, with Donald Trump coming back to assume control of the White House for the next four years from 20 January 2025. The policy shift was announced ahead of the annual Central Economic Work Conference (CEWC), which kicked off on Wednesday. China’s growth targets and stimulus plans for 2025 will be hammered out at the meeting which will then be released at the National People's Congress (NPC) in March 2025. “The Politburo signalled that China’s growth target of ‘around 5%’ this year will be met and the ‘main objectives and tasks for the year's economic and social development will be successfully accomplished’,” UOB Global Economics & Markets Research economists said in a note on 10 December. “We think the focus will be on releasing long-term liquidity via reserve requirement ratio (RRR) reductions,” said the economists. MORE STIMULUS REQUIRED China had set a target of 5.0% GDP growth for 2024 but has struggled to hit that benchmark all year as high youth unemployment and weaker demand hit production levels. Fiscal stimulus measures were introduced around end-September, but were deemed insufficient for China to achieve its GDP growth target of around 5% in 2024. “Stimulus directed at promoting consumption would likely have a larger impact than investments or big infrastructure projects,” the UOB note added. November economic data suggest a slow recovery in demand, but it appears unlikely that it will recover sufficiently to achieve the growth target next year if additional US tariffs were imposed in 2025. Official data showed that China’s consumer price index (CPI) increased by 0.2% year on year, a five-month low. Meanwhile, China's exports in November grew at a slower year-on-year rate of 6.7% to $312.3 billion, while imports fell 3.9% year on year on weaker domestic demand. Amid flagging Chinese demand, Saudi Arabia, the world’s largest crude exporter, cut its January Official Selling Price (OSP) for its benchmark Arab Light crude to the lowest level in four years. The January OSP for Arab Light was cut by 80 cents/barrel to Oman/Dubai average plus 90 cents/barrel, the lowest level for buyers in Asia since January 2021. US-CHINA TRADE WAR 2.0 LOOMS As China struggles to turn its economic fortunes around, it faces a difficult 2025 and a hostile US administration under Trump. Trump’s first term as US president in 2017-2021 was characterized by a trade war launched against China. UOB Global Economics & Markets Research economists are projecting China’s GDP growth to slow to 4.3% in 2025 from 4.9% this year, “with potentially more punitive US tariffs posing downside risks next year”. A consequential weakness of the Chinese yuan from a looser monetary policy, meanwhile, makes the country’s exports more competitive. Like most Asian economies, China is export-oriented and counts the US as a major market. For the first 11 months of 2024, China’s total exports increased by 5.4% year on year to $3.2 trillion amid a global economic slowdown, while imports rose at a slower pace of 1.2% over the same period to $2.4 trillion. China remains a major importer of petrochemicals, but heavy capacity expansions accompanied with weak domestic demand in recent years has turned it into a net exporter of selected products, including purified terephthalic acid (PTA). Focus article by Jonathan Yee

11-Dec-2024

MUSCAT (ICIS)–Thailand’s PTT Global Chemical (PTTGC) is expected to begin producing sustainable aviation fuel (SAF) at its refinery in Map Ta Phut early next year, the company’s CEO Narongsak Jivakanun said. “We are commissioning, although it is on a small scale, but it is an important step – SAF [production] in Q1 next year using our existing oil refinery but blended with non-fossil fuel based raw material,” Jivakanun told ICIS on the sidelines of the 18th Annual Gulf Petrochemicals and Chemicals (GPCA) Forum in Muscat, Oman. The company plans to produce 500,000 liters of SAF per month, using up to 1,700 tonnes of used cooking oil per month as feedstock. SAF is used as a direct replacement for traditional fossil-based jet fuel to power aircraft. Moreover, by leveraging the mass balance approach, the change in how the refinery accommodates use of alternative feedstock in the production of SAF enables it to claim a portion of its downstream aromatics, polymers, and olefins output as non-fossil chemical products, he said. PTTGC is the first Thai company to upgrade its refinery with advanced technology to accommodate used cooking oil as feedstock. The company’s biorefinery project is a component of the company's three-pronged growth strategy – “Step Change, Step Out and Step Up” – which, in part, prioritizes business sustainability through decarbonization efforts, according to Jivakanun. PTTGC is also on track to fully start up a new fully integrated polylactic acid (PLA) unit at the Nakhon Sawan Biocomplex (NBC) by the end of next year, he said. The PLA project is being carried out by NatureWorks, the equal joint venture firm between the US’ Cargill and PTTGC and will use sugarcane sourced locally as feedstock. THAI SPECIALTIES HUB AMBITIONS  Allnex, a global specialty chemicals subsidiary of PTTGC, is currently planning to expand its specialty resins production in Map Ta Phut with an aim to develop the site to become a hub for selected coating resins serving the southeast Asia region, according to Jivakanun. “The plan is to develop a hub in Map Ta Phut so that they can share the infrastructure that [PTT]GC already has, utilities, the engineering and operational support," he said. "Expertise sharing between GC and allnex will enhance potential of value engineering resulted in cost savings into the project." The project is in the stage of finalizing the scope with an aim to produce specialty resins that most fit customer demands and requirements Allnex specializes in the production of industrial coating resins and additives. “We will go through the feasibility study as usual and we aim to confirm the investment for allnex Map Ta Phut hub within next year," Jivakanun added. Interview article by Nurluqman Suratman

04-Dec-2024

HOUSTON (ICIS)–The tariffs proposed by President-Elect Donald Trump on imports from Mexico, Canada and China would raise costs for the heavier grades of oil needed by US refineries as well as rare-earth elements used to make catalysts for downstream refining units. Trump said he intends to issue an executive order that would impose tariffs of 25% on imports from Mexico and Canada on January 20, his first day of office. He also announced intentions to impose a tariff of 10% on imports from China. This would be on top of the existing duties that the US already imposes on Chinese imports. Trump could decide to modify or even withdraw the proposals – especially if the US can reach a deal that addresses illegal immigration and drugs, the impetus behind the proposed tariffs. However, the tariffs as they are proposed by Trump would raise costs for key inputs used by US refiners. Outside of fuels, it could rise costs for fluoromaterials, since Mexico is the source of most of the imported feedstock. US REFINERIES DESIGNED FOR IMPORTS OF HEAVIER CRUDESUS refineries are generally designed to process grades of crude that are heavier than the oil it produces domestically from shale, said Michael Connolly, principal refining analyst for ICIS. As a result, the US exports its surplus of light oil and imports the heavier grades needed by its refineries. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units, Connolly said. In 2023, the majority of those imports came from Canada and Mexico, as shown in the following table showing the top five sources of foreign crude. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 100 Source: Energy Information Administration (EIA) "If this tariff was to apply to crude, it would be damaging to the US refining industry and thus the US economy," Connolly said. The damage would stem from the nation's position as the world's largest exporter of refined products. In 2023, the US was the world's largest exporter of gasoline, with shipments of 900,000 bbl/day, according to the EIA. More than 500,000 bbl/day of those exports went to Mexico. The US is also a major exporter of distillate fuel oil, with shipments reaching 1.12 million bbl/day in 2023, according to the EIA. For petrochemicals, FCC units are important sources of propylene, so tariffs could have an effect on margins for propylene derivatives. FCC operations could receive another blow from the additional tariffs that the US could impose on imports of rare-earth materials from China. RARE EARTHS AND FCC CATALYSTSFCC catalysts are made with lanthanum and cerium. For most categories, China was the main source of these rare earths in 2023, as shown in the following table. Figures are in kilograms. HTS Code Product Imports from China Total imports  % 2846.10.0050 Cerium compounds other than cerium oxides 1,121,069 1,958,581 57.2 2846.90.2005 Rare-earth oxides except cerium oxides containing lanthanum as the predominant metal 52,045 479,885 10.8 2805.30.0005 Lanthanum, not intermixed or interalloyed 144,182 144,242 100.0 2846.90.8070 Mixtures of rare-earth carbonates containing lanthanum as the predominant metal 102,423 119,626 85.6 2805.30.0010 Cerium, not intermixed or interalloyed 3,262 3,466 94.1 Source: US International Trade Commission (ITC) Lanthanum and cerium are byproducts of the production of neodymium and dysprosium, two rare earth materials that are used to make magnets. TARIFFS ON MEXICAN HYDROFLUORIC ACIDIf the tariffs go through, they could raise costs for US producers of fluoromaterials. Hydrofluoric acid is the feedstock for almost all fluorochemicals and fluoropolymers, and Mexico accounted for nearly all of the 87 million kg of acid that the US imported in 2023, according to the ITC. Fluorochemicals are used to make refrigerants as well as blowing agents used to make polyurethane foams. Another fluorochemical, lithium hexafluorophosphate (LiPF6), is used as an electrolyte in lithium-ion batteries. For fluoropolymers, demand is growing because of their use in semiconductor fabrication plants (fabs), 5G telecommunication equipment and membranes used in fuel cells and green-hydrogen electrolysers. Hydrofluoric acid is also used as a catalyst in many alkylation units at refineries. Insight article by Al Greenwood Thumbnail shows a pump used to dispense fuel produced from refineries. Image by Shutterstock. (recast and adds "nearly", paragraph 17)

27-Nov-2024

LONDON (ICIS)–Europe adipic acid and downstream nylon 6,6 markets face bleak prospects for demand in December, followed by a broadly flat outlook in 2025, with overall weak consumption from key derivative markets. Over the past few months, very slow demand and ample supply have continued to dominate European markets alongside rising costs of production. In this latest podcast, ICIS editors Meeta Ramnani and Marta Fern share the latest developments and expectations for what lies ahead. Seasonal destocking to weaken buying interest further in December Demand could stay low in 2025; recovery depends on macroeconomic factors Q1 2025 could bring restocking; its magnitude unclear Asian adipic acid import volumes likely to increase in Q1

21-Nov-2024

SINGAPORE (ICIS)–Avantium has signed a multi-year collaboration agreement to pilot the production of polylactic-co-glycolic acid (PLGA) from carbon dioxide (CO2), with Thai producer SCG Chemicals (SCGC), the Netherlands-based circular polymer materials firm said on Wednesday. PLGA is a biodegradable, recyclable polyester which is an alternative for conventional fossil-based polyesters. "Under this agreement, SCGC will provide support for all stages of technology development," Avantium said in a statement. Financial details of the deal were not disclosed. "Additionally, SCGC will work with Avantium on developing various PLGA applications, aiming to bring these sustainable solutions to market." Avantium and SCGC have spent the past year exploring the properties of PLGA to perfect its formulation for large-scale polymer applications, with a focus on barrier properties, recyclability, and environmental impact. As part of the collaboration, Avantium grants SCGC an option to negotiate license deal to utilize its Volta technology, including PLGA production, within southeast Asia. Avantium’s Volta technology uses electrochemistry to convert CO2 to high-value products and chemical building blocks including glycolic acid. Glycolic acid, combined with lactic acid, can be used to produce PLGA polyester in existing manufacturing assets.

20-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

HOUSTON (ICIS)–US LSB Industries said it was able to complete a successful turnaround of their Pryor, Oklahoma, fertilizer facility. The company said in a third quarter update that the investments at Pryor were focused not only on improving its reliability and daily ammonia production volume, but also included the debottlenecking of the facility's urea plant. LSB expects this effort will result in an incremental of 75,000 short tons annually of UAN output. At the El Dorado, Arkansas, facility the producer said it completed the construction of an additional 5,000 short tons of nitric acid storage which is providing the ability to capitalize on incremental sales opportunities not previously available. A turnaround at the Cherokee, Alabama, facility will take place this November and a turnaround at El Dorado is scheduled for the third quarter of 2025, with the primary goal being increased volumes. LSB said it continues to make progress on its two energy transition projects and is expecting to start producing low carbon products at El Dorado beginning in 2026 pending regulatory approval. Regarding the Houston Ship Channel project, the company said it has completed the pre-front end engineering design and is working through the results as well as engaging with potential customers and preparing to select an engineering contractor for the final study. It expects to start that effort during the first half of 2025 with completion by mid-2026. Looking at fertilizer market conditions the producer said the ammonia market is healthy, and pricing has been strong driven by many factors including tight US supply dynamics along with geopolitical concerns and extended turnarounds and outages reducing global inventories LSB also cited the delayed start-up of new production capacity in the US Gulf and an export terminal in Russia For UAN the producer said pricing remains solid due to low inventories in the distribution channel following both spring applications and summer fill program with there being historically low imports and strong exports As it looks ahead it feels there is potential pent-up demand at the retailer and producer level which could lead to favorable order volumes and pricing in the first half of 2025.

30-Oct-2024

HOUSTON (ICIS)–Australian Fertoz Limited said demand for direct application of rock phosphate and their fertilizer pellet product Fertify remained positive in Q3, with significant orders for Fertify starting in September. The company expects this uptick to continue through late 2024 with the phosphate producer saying this positive direction has come forth despite significant losses for farmers in the Alberta region of Canada due to pre-harvest hailstorms. In its quarterly activities report, Fertoz said there were delays in upgrades to granulation processing equipment by key customers, which slowed sales, but the expectations are for completion of these upgrades by year’s end. Fertoz managing director and CEO Daniel Gleeson said the bulk sample permit for 10,000 tonnes in Barnes is in the final stages with submission of a technical assessment review to the Ministry of Energy, Mines and Low Carbon Innovation. This permit is expected to be ready for the start of the 2025 mining season, with the next bulk sample permit at Pump Station, also for 10,000 tonnes, part of their overall advancement towards receiving an industrial minerals permit for up to 250,000 tonnes. The industrial permit is also expected to be completed early next year with Gleeson saying Fertoz continues to assess their Wapiti project for suitability of making phosphoric acid for the lithium iron phosphate (LFP) battery and liquid phosphate fertilizer markets. “Wapiti samples have been received by the testing party, with positive desktop results achieved, and will now process them in the laboratory for final reportable and definitive results. These final testing results are expected in December,” said Gleeson. “Concurrently we continue to engage with relevant parties of the LFP supply chain industry in North America who have expressed interest in our resources.” He said because of the significant direct government investments across North America and substantial future tax credits that overall interest remains elevated in their high quality, low impurity sedimentary rock phosphate deposits.

28-Oct-2024

Correction: In the ICIS news story headlined "Chlor-alkali demand benefited from hurricanes, new pulp plants – Olin" dated 25 October 2024, please read in paragraph 13 …  $135 million … instead of … billion. A corrected story follows. HOUSTON (ICIS)–Demand 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. Bleach and hydrochloric acid are used in water treatment and cleaning. For caustic soda, demand continued to be strong because of demand from alumina and from the pulp and paper industry, said Ken Lane, CEO. He made his comments during an earnings conference call. Demand from South America has been the most robust, with two recent pulp and paper plant startups, he said. Lane did not specify the plants. However, Brazilian producer Suzano started up the largest single pulp production line in the world in Ribas do Rio Pardo, Mato Grosso do Sul state, Brazil. CHLORINE REMAINS IN TROUGHDespite the temporary boost from hurricanes, demand for chlorine remains in a trough, with demand below pre-COVID levels, according to Olin. Looking ahead, the uncertainty that the chemical industry experienced in the second half of 2024 should continue into 2025, Lane said. Such uncertainty will persist until interest rates fall further. Higher interest rates have weakened demand for PVC in several key end markets such as housing, automobiles and durables. In addition, chlorine is used to make titanium dioxide (TiO2), a white pigment that is used to make paints opaque. Demand will not spring back until lower interest rates lead to a recovery in activity in housing and other markets that are sensitive to rates, Lane said. BLOW FROM HURRICANE BERYLOlin expects to take a $135 million hit from damage that Hurricane Beryl caused to its operations in Freeport, Texas. During the third quarter, $77 million was connected to chlor-alkalis and $33 million was related to epoxy resins, the company said. During the fourth quarter, $25 million was related to chlor-alkalis. Olin had conducted an emergency shutdown, the company said. The shutdown caused problems that were not apparent until the company began to restart its operations. Olin completed those repairs about a week ago, it said. The company also built some temporary infrastructure, which it will continue to operate until the middle of next year. Thumbnail shows wood, which is used with caustic soda to make pulp. Photo by Global Warming 

25-Oct-2024