Mixed plastic waste and pyrolysis oil

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 19 July. Europe PX to face weaker downstream demand, support from higher freight costs The European paraxylene (PX) industry is heading towards the second half of the year sandwiched between the news of structural downstream production cuts and the temporary support from high freight rates from Asia, which is making domestic production of PX derivatives more appealing than imports. Ursula von der Leyen wins second term for top EU job, stresses need for EU competitiveness Ursula von der Leyen on Thursday secured her re-election to a second five-year term as President of the European Commission, and identified competitiveness as the most pressing issue facing the EU. Europe BDO demand recovery in 2024 unlikely, logistics disruptions in focus After the uptick in domestic consumption during H1 2024 compared to prior expectations, the European butanediol (BDO) market is expecting a return to lacklustre demand trends with trade flow challenges still a key factor in dynamics. Europe MX H2 demand remains mired in deep waters Demand for mixed xylenes (MX) in the European market was subdued in the first half of the year, with the outlook remaining bearish for the rest of 2024. Europe shows shoots of recovery as market bottoms out – IMF Strong service sector performance and robust exports through 2024 amid cooling inflation points to the eurozone economy bottoming out following the emergence of tentative green shoots during the first quarter of the year, the IMF said. Freight chaos, trade dispute could support EU epoxy in H2, rebound unlikely Deep-sea freight and logistical challenges, along with the EU antidumping probe on several Asian epoxy imports could trigger shifts in favour of local sourcing in the second half of the year, although optimism remains low regarding any recovery in a still difficult climate.

22-Jul-2024

SINGAPORE (ICIS)–Reliance Industries Ltd’s (RIL) oil-to-chemicals (O2C) business posted a 14.3% year-on-year drop in earnings in its fiscal first quarter ending June 2024 on poor chemicals margins, the Indian conglomerate said. O2C results in 10 million rupees (Rs) Apr-June 2024 Apr-June 2023 % Change Revenue 157,133 133,031 18.1 EBITDA 13,093 15,286 -14.3 Exports 71,463 69,006 3.6 – Revenue for the period rose primarily on the back of higher product prices in line with Brent crude price gains, and increased volumes due to strong domestic demand, the company said on 19 July. – Fiscal Q1 overall earnings before interest, tax, depreciation and amortisation (EBITDA) margin dropped to 8.3% from 11.5% in the same period of last year. – On a year-on-year basis, April-June domestic polymer and polyester demand increased by 8% and 5%, respectively. – RIL's consolidated group profit after tax fell by 4% year on year to Rp175 billion ($2.09 billion) in April-June 2024. Polymers- Fiscal Q1 polymer margins were down by 0.5% to 16.9% year on year due to firm naphtha prices. Product margin over naphtha April-June 2024 ($/tonne) April-June 2023 ($/tonne) % Change Polyethylene (PE) 330 397 -16.9% Polypropylene (PP) 318 381 -16.5% Polyvinyl chloride (PVC) 371 373 -0.5% Polyester – Paraxylene (PX) and monoethylene glycol (MEG) margins over naphtha decreased year on year due to higher naphtha prices. – "PTA [purified terephthalic acid] margins were impacted adversely due to high inventory with Chinese producers and increased competition," the company said. – On a year-on-year basis, domestic polyester demand in fiscal Q1 increased by 5%, driven by strong growth in PET, which was up 27% due to "higher demand from the beverage segment on account of summer season and elections". ($1 = Rs83.7)

22-Jul-2024

Seeks optimization opportunities Saudi Aramco also said interested in Tellurian Woodside has busy development plans SINGAPORE (ICIS)–Australian producer Woodside Energy said it would buy all outstanding shares of US LNG developer Tellurian and Driftwood LNG for approximately $900 million at $1.00 per share in an all-cash deal for a transaction valued at $1.2 billion, according to a 22 July news release . “It adds a scalable US LNG development opportunity to our existing approximately 10mtpa of equity LNG in Australia. Having a complementary US position would allow us to better serve customers globally and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins,” Woodside CEO Meg O’Neill said in the release. “The Driftwood LNG development opportunity is competitively advantaged. Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel, which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 project in Australia.” Tellurian’s board recommended shareholders approve the transaction and provided further details in a news release. As reported, ICIS noted that Tellurian was in play in late June, and  Woodside was said to be vying with Saudi Aramco for the project. Tellurian has struggled for years with the proposed 27.6mtpa Driftwood project, going through management and financial changes that included cancellation of LNG supply deals. But Driftwood, near Lake Charles, Louisiana, is a fully permitted, pre-final investment decision (FID) prospect, that includes Phase 1 (11mtpa) and Phase 2 (5.5mtpa). Woodside is likely targeting FID readiness for Phase 1 from the first quarter of 2025. O'Neill repeated to an investor briefing on 22 July that the transaction positions Woodside to be a "global LNG powerhouse". The company aims to use a mix of offtake from Driftwood into its own marketing portfolio and retain tolling volumes while it works on selecting "high-quality partners" to scale up initial operations and eventually sell down its stake to around 50%, O'Neill told investors on a call. Sources said Saudi Aramco could be among possible investors. Woodside reports second quarter earnings on 23 July. BUSY WOODSIDE Last week, Woodside said that talks with Timor Leste (East Timor) on developing a “mutually beneficial and commercially viable “Greater Sunrise field has made progress with finer details to be unveiled in a concept Study being undertaken by Wood PL due “no later than the fourth quarter of this year.” The Democratic Republic of Timor-Leste and the Commonwealth of Australia, along with the Sunrise Joint Venture (comprising TimorGAP (56.56%), Woodside (33.44% and Operator), and Osaka Gas (10%)) are pleased to provide an update on Greater Sunrise negotiations. Offshore natural gas and condensate resources were first discovered in 1974, and located near a feed gas source to Australia at Bayu-Undan, which faces declining supply. Yet, the fields remain undeveloped as the stakeholders differ on the fiscal terms and the location of the downstream operations. According to a report released in May 2018 by the Permanent Court of Arbitration, the pipeline from the fields would either go to the existing 3.7mtpa Darwin LNG export project in Australia or to a greenfield 5mtpa Timor LNG project at Beaco on the south coast of Timor-Leste. The failure in reaching an agreement ended up having global portfolio major Shell and US supplier ConocoPhillips selling their shares to Timor Gas & Petroleo (Timor Gap) in late 2018. Timor Gap senior officials have expressed their determination regarding getting gas pumped to their island as it is “essential to Timor-Leste’s future economic growth and development”. In June, Woodside announced a revised leadership structure aiming for a simplified operating model to aggregate project execution, integrate traditional and new energy growth and opportunity, streamline corporate strategy activities, and establish a dedicated senior team for human resources, legal and external affairs. In May, the Japan Bank for International Cooperation (JBIC) signed a $1 billion loan agreement with a unit of Woodside that along with loans from private financial institutions raises $1.45 billion to assist Woodside in developing the Scarborough Energy Project , according to a statement from JBIC. The 8mtpa Scarborough energy project has targeted the first LNG cargo in 2026, according to Woodside. (Adds further O'Neill comments)

22-Jul-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The slide in today’s post is an updated version of the slide I first published late last year. Note that there is a new scenario added to the original two, A Bi-polar World. I could be wrong, of course. I might have given the wrong weightings to each of the scenarios, or more simply have chosen the wrong scenarios entirely. But today’s events point to very different outcomes than we saw during the 1992-2021 Petrochemicals Supercycle. Supermajors – 25% probabilityA small number of oil-and-gas-to-petrochemicals players dominate the business as they have increasingly turned oil and natural-gas liquids into petrochemicals at competitive costs. This is in response to the decline in crude-oil demand into transportation fuels because of the electrification of vehicles. Non-integrated petrochemical producers in Europe, South Korea, Singapore, Taiwan and Southeast Asia consolidate. Large swathes of capacity closes-down in these countries and regions to balance markets. A Bi-Polar World – 50% probabilityThe split between China and the US, and possibly the EU as well, widens. The rest of the developed world, including major petrochemical players in countries such as South Korea, Singapore and Japan, will need to decide where they stand: With the US and its partners or with China and its partners. They are at risk of losing access to the China market. Petrochemicals trade is largely confined to between China and its partners and between the US and its partners. No one scenario will be completely right. We could end up at any of many points between each of these three extreme outcomes. This is the case with Supermajors and A Bi-polar World. It could be that the closer relationship between Saudi Arabia and China allows Saudi Arabia to supply more of China’s petrochemicals deficits, allowing the Kingdom to perhaps realise some of its crude-oil-to-chemicals ambitions. A De-globalised World – 25% probabilityMarkets are in general much more regional. Instead of just a bi-polar world, we end up with beggar-thy-neighbour trade barriers similar in scale to the ones which led to the Great Depression. Petrochemical companies become much more “local for local”. Governments put up barriers to protect jobs and to ensure refineries don’t shut down along with uncompetitive petrochemical plants, thereby by protecting local supplies of transportation fuels. While extreme outcomes help push people out their comfort zones, supporting local petrochemical companies might instead fit at some mid-way point between all the scenarios. And “local for local” shouldn’t be viewed as automatically a bad thing. One can argue that because of today’s highly uncertain geopolitical world, local supplies of at least some petrochemicals are essential. Calling all senior management teams out there: You need to prepare your teams for the world after the Petrochemicals Supercycle. 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-Jul-2024

HOUSTON (ICIS)–The US chemical industry could see the return of some popular trade and chemical-safety programs later this year, and customers of the major railroads could get their first chance to switch carriers if they get bad service. The year is turning out to be a busy and potentially productive one despite the presidential election Key trade and security bills for the chemical industry could pass during the lame duck session, which falls between the November 5 election day and the January 20 inauguration Globally, the final round of negotiations for the UN plastics treaty should take place near the end of the year UN PLASTICS TREATYThe concern of the chemical industry is that the ratified plastic treaty could include caps or curbs on the production of plastic. Companies such as BASF have advocated that the treaty should focus on curbing pollution instead. Chemical companies have noted a growing consensus around the industry's views, leading them to be optimistic about the upcoming negotiations. The next round of talks is scheduled for November 25 through December 1 in Busan, South Korea. Formal ratification could take place in early 2025. RECRIPROCAL SWITCHING MAY GET FIRST TRIALReciprocal switching in the US will become effective in September, which will allow chemical companies to switch rail carriers if they can demonstrate substandard service. Reciprocal switching will be limited to Class 1 railroad companies, which are the biggest carriers. Redress for bad service is not automatic, and the process will require time, effort and legal fees on the part of chemical companies. "The question is how laborious and costly will that process be when you file a complaint?" said Eric Byer, president of the Alliance for Chemical Distribution (ACD) the new name for the National Association of Chemical Distributors (NACD). Still, it is possible that a chemical company upset with its rail service takes the plunge and files the first request for reciprocal switching. NEW RAIL BILL AND POSSIBLE TANK CAR BANA rail safety bill that passed the Senate shortly after the Norfolk Southern train derailment in Ohio state has recently received momentum that could push it into law. That momentum is coming from HR 8996, a sister bill that was introduced in the House of Representatives by Troy Nehls (Republican-Texas) and Seth Moulton (Democrat-Massachusetts). Related to the bill is a possible ban on DOT 111 tank cars. The ban is also connected to the derailment, since it is part of a settlement agreement between the US and Norfolk Southern. The agreement proposes that Norfolk Southern stop using its own DOT-111 tank cars and that it encourages its customers to do the same. The ACD is concerned that the agreement could be the first step in an outright ban of DOT 111 tank cars. Such a ban could take place before the industry has time to replace the tank cars. Hazardous materials would then be shipped by truck, which is more dangerous. A ban would also disrupt the movement of chemicals if it happens too quickly. REVIVAL OF CHEM SECURITY PROGRAMLegislators could revive the nation's main anti-terrorism program for chemical sites, which is known as the Chemical Facility Anti-Terrorism Standards (CFATS). CFATS has been inactive for about a year, after a bill that would have re-authorized it was blocked by US Senator Rand Paul (Republican-Kentucky). While CFATS has lost its authorization, it has not lost funding. Were Congress to re-authorize CFATS, employees who were associated with the program could be reassigned to it. Senators could attempt to revive CFATS through an amendment to the National Defense Authorization Act (NDAA), Byer said. That could happen later in September or during the lame duck legislative session, Byers said. Another tactic would add an amendment to the appropriations bill, he said. Congress will likely consider the appropriations bill during the lame duck session. REVIVAL OF TRADE PROGRAMSTwo trade programs popular with the chemical industry could also be revived during the lame duck session. The Generalised System of Preferences (GSP) expired at the end of 2020, and it eliminated duties on thousands of products from more than a 100 developing countries. Prior to its expiration, the GSP had existed for decades. Byer said a bill could bring back the GSP program and make it retroactive to January 1, 2021. If such a bill becomes law, companies would receive rebates for the taxes they paid while the GSP program was inactive. The GSP has typically been coupled with another expired trade program, known as the Miscellaneous Tariff Bill (MTB), Byer said. The MTB temporarily reduced or suspended import tariffs on specific products, and it could be packaged with any other legislative action that would revive the GSP. ELECTION SEASON TO LIMIT NEW BILLS, POLICIESOutside of the trade and security bills, Byer does not expect a lot of new legislation because of the elections. Similarly, the pace of new policies and rulemaking at federal agencies should slow down. Any regulatory relief would be a welcomed change because the first half of 2024 was the worst regulatory climate that the chemical industry has ever seen, Byer said. The regulatory climate could change after the elections on November 5. Otherwise, the chemical industry may have to turn to the courts to challenge policies that have a questionable basis and a harmful effect on companies. Insight article by Al Greenwood Thumbnail shows plastic waste. Image by HOTLI SIMANJUNTAK/EPA-EFE/Shutterstock

18-Jul-2024

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)–SK Innovation, the parent company of battery maker SK On and petrochemicals producer SK Geo Centric, has agreed to merge with its energy affiliate SK E&S in an overhaul to improve its profitability. The two companies are merging in a proactive effort to navigate the challenging external business landscape, characterized by a prolonged global economic downturn, increased volatility in the energy and chemical industries, and a slowdown in the electric vehicle (EV) market, SK Innovation said in a statement on 17 July. "By integrating assets and capabilities across both energy and electrification sectors, the merged company will bolster its core competitiveness and profitability," it said. Additionally, the merger aims to secure competitiveness in future energy business areas. Upon merging, the combined entity will transform into an energy firm with assets totaling Korean won (W) 100 trillion ($72.4 billion) and revenues of W88 trillion, "positioning itself as the largest private energy company in the Asia-Pacific region", SK Innovation said. The merged firm will also increase earnings before interest, taxes, depreciation and amortization (EBITDA) to W5.8 trillion, up from pre-merger levels of W1.9 trillion, it said. The two companies expect that by 2030, the synergies from the integration alone will add over W2.1 trillion to EBITDA, which is targeted to hit W20 trillion by the end of the decade. "Notably, the merged company will be able to mitigate the high profit volatility of the petrochemical business, which has served as a reliable cash cow, with the stable profit generation capabilities of the LNG [liquefied natural gas], power, and city gas businesses," SK Innovation said. The management boards of both SK Innovation and SK E&S approved the proposed merger on 17 July, subject to shareholders’ approval on 27 August. The merged corporation is expected to be officially launched on 1 November. "The merged company will develop a comprehensive portfolio that spans all areas, including energy sources (such as oil, chemicals, LNG, city gas, power, renewable energy, batteries, ESS [energy storage system] hydrogen, SMR, ammonia, and immersion cooling), energy carriers, and energy solutions," SK Innovation said. "Currently, global oil majors are also currently pursuing balanced portfolios across the energy sector through various mergers and acquisitions." SK Innovations' business portfolio includes petrochemicals, lubricants, and oil exploration. It is now diversifying into future energy sectors such as electric vehicle batteries, small modular reactors (SMR), ammonia, and immersion cooling. SK E&S was spun off from SK Innovation in 1999 as a city gas holding company and is transitioning into a green portfolio that organically integrates its four core businesses – city gas, low-carbon LNG value chain, renewable energy, and hydrogen and energy solutions, to create synergies. Separately, SK On's board has approved a merger with sister companies – crude oil and petroleum products trading firm SK Trading International and energy logistics firm SK Enterm to improve raw material purchasing efficiency and expand trading, helping improve SK On's profit structure. "Through the merger of these three companies, SK On will be able to further strengthen its competitiveness in securing raw materials ($1 = W1,380)

18-Jul-2024

HOUSTON (ICIS)–US agribusiness titan Cargill announced it has surpassed the 50% completion milestone in the construction of its new canola facility located in West Regina, Saskatchewan. Cargill broke ground on the facility in July 2022 and anticipates opening in 2025 with the new facility having the capacity to process 1 million tonnes of canola per year, producing crude canola oil for food and biofuel markets and canola meal for animal feed. “The addition of the Regina facility to the Cargill network will play a critical role connecting the Canadian canola industry to the expanding domestic and global market opportunities for vegetable oil, high quality meal and biofuels,” said Jeff Vassart, Cargill Canada president. “The current construction environment is full of unique challenges and this project has faced many headwinds since we broke ground, but we are committed to becoming a best-in-class option for canola growers in the region, along with helping decarbonize the global food and fuel supply chain.” To support rail and road infrastructure around the new plant, Cargill recently completed the purchase of just over 400 acres near the facility location which it said will allow for better connection to existing rail lines. This will provide the site with additional optionality to bring canola seed to Regina when needed, providing a new destination for farmers in western Canada.

16-Jul-2024

MADRID (ICIS)–Colombia’s single-use plastic ban, which affects a wide range of products, kicks off amid some industry reluctance after a hurried implementation, and with provisions to revise the legislation after a one year trial period. The law that came into force on 7 July implemented a ban on eight plastics: carrier bags for packing supermarket purchases; bags for fruits and vegetables; plastic packing for magazines and newspapers; bags for storing clothes coming out of the laundry; plastic holders for balloons; cotton swabs; straws; and stirrers. The regulation establishes that those plastic products must be replaced by sustainable alternatives, such as biodegradable and compostable materials or recycled materials, or reusable non-plastic materials. It is a wide-ranging ban approved in parliament in 2022, although the plastics industry has criticized that details about the implementation of the law were only published at the end of June, barely two weeks before the kick-off date. Environmental groups have welcomed the measure, hoping more countries in Latin America will implement similar legislation in a region where plastics are omnipresent. MORE TO COMEApart from the eight plastic products banned from 7 July, the ban has set a transition period ranging from two to eight years, depending on the type of plastic, to allow merchants time to adapt to the new regulations. By 2030, plastics to be eliminated or transformed into reusable materials include containers, packaging, and bags for non pre-packaged liquids; disposable plates, trays, and cutlery; confetti, tablecloths, and streamers; containers, packaging, and bags for deliveries; sheets for serving or packaging foods for immediate consumption; wrappers for fruits and vegetables; stickers for fruits; handles for dental floss; and straws for containers of up to three liters. The law establishes exceptions for single-use plastics in certain cases, including exceptions for plastics used for medical purposes; packaging of biological or chemical waste; food products of animal origin; and those made with 100% recycled plastic raw material sourced from national post-consumer material. The regulation also mandates that public entities cannot acquire prohibited single-use plastics if sustainable alternatives are available, and these entities must implement reduction campaigns. Colombia’s National Environmental Licensing Authority (ANLA in its Spanish acronym) will oversee and enforce these measures. Among the measures included in the law, there is a request from distributors of plastic bags to submit reports on the rational use and recycling of bags in their inventory and must submit an Environmental Management Plan for packaging waste by 31 December. The law clearly will put an administrative burden on companies, not least distributors and the role they have been assigned as guardians of the law. In an interview with ICIS, the CEO of QuimicoPlasticos, a chemicals distributor in Colombia, said he thinks many aspects of the law will have to be reversed, not least points such as the nationally sourced recycled plastics as substitutes, given that recycling is in its infancy in the country and there will not be enough supply for years. QuimicoPlastics is a family-run distributor founded in 1982 and employs 80 people. It imports raw materials which distributes to the plastic packaging sectors (rigid and flexible) with end markets such agriculture, construction, food, and hygiene. The company was founded by the father of the current CEO, Federico Londoño, who has been on the post for 12 years. He has got low opinions about the law. “The law goes much further than a country like Colombia can afford. Moreover, globally and here in Colombia there are investments companies have made which are researching alternatives to, say, trays made of EPS [expandable polystyrene], but with laws like this the burden on companies grows and incentives for investment diminish,” said Londoño. It is a criticism shared across Latin America. In an interview with ICIS in June, the head of Chile’s plastics trade group Asipla also said parliamentarians push for sustainability was at times detached from the country’s reality. Before QuimicoPlasticos’ Londoño, the head of Colombia’s plastics trade group Acoplasticos also showed skepticism in an interview with ICIS about the law banning such wide range of single-use plastics. Before the law on single-use plastics, Colombia had already approved a tax on plastics production, which was marred with confusion in its initial stages of implementation. The moves around plastics have been welcome by environmental groups, some of them with the support of major consumer goods producers such as Washington-based Ocean Conservancy; in its website, it says some of its partners include Coca-Cola, Ikea, or Garnier, among many others. “With over 11 million tonnes of plastics entering the ocean each year, this law [banning single-use plastics] is a huge win for Colombia and the ocean,” said in a statement Edith Cecchini, director of international plastics at Ocean Conservancy. “Single-use plastic bags, straws, and stirrers are among the top ten most commonly found items polluting beaches and waterways worldwide by Ocean Conservancy’s International Coastal Cleanup. Ocean Conservancy applauds Colombia for this important step to prevent plastic pollution and protect marine life, and we hope that other countries will follow suit.” EXPANDING PUBLIC SERVICESThe push for sustainability by the left-leaning cabinet presided over by Gustavo Petro goes hand in hand with plans to increase tax receipts to finance the expansion in the welfare state Petro campaigned for. The cabinet has been under pressure to put the public accounts in order after posting fiscal deficits for most of Petro’s term. In June, the government published its fiscal plan for the coming years, hoping to quell fears among investors. Most analysts argued that the cabinet’s plans are too optimistic. For instance, it forecasts crude oil prices at around $90/barrel on average for the coming years, as a big chunk of Colombia’s income comes from its state-owned oil major Ecopetrol. To reassure investors, Finance Minister Ricardo Bonilla announced spending cuts worth Colombian pesos (Ps) 20 trillion ($5.1 billion, equivalent to 1.2% of GDP) to meet the target set out by the new fiscal plan 2024. “Even so, there’s reason for concern. For one thing, the government made clear that there would be no cuts to social spending; instead, a lot of the adjustment (around one third) will come in the form of cuts to public investment,” said Capital Economics at the time. Manufacturing, meanwhile, has been in the doldrums for much of 2023 and 2024, except for a positive spell in the first quarter. According to QuimicoPlasticos’ CEO, the government’s economic policy is deterring investments and creating uncertainty. “The economy is not going well. Industrial companies are suffering a high degree of uncertainty, because the fiscal burden on them continues to increase. This is no surprise, of course, when some public official within the cabinet have publicly said companies ‘steal from the people’ and they should be taxed more,” said Londoño. “Treating industrial companies as cash cows is wrong: these are the companies which need large sums in capital investments, and increasing taxes on them only deters that. If we add to that, for example, that the cabinet wants to reduce the role of fossil fuels in the country’s exports due to environmental reasons, you get a worrying picture for the coming years.” ($1 = Ps3,946) Insight by Jonathan Lopez

16-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