Synthetic rubbers

HOUSTON (ICIS)–Chemical plants and refineries along the Gulf Coast of the US will likely face another winter that will be warmer than usual but punctuated with brief periods of freezing temperatures, which could disrupt operations. Meteorologists expect winter temperatures in the US will be colder than the previous year but still warmer than average. A meteorologist in Texas warned that the state could face another brief spell of freezing temperatures similar to past winters, such as the devastating Winter Storm Uri in 2021. Chemical plants in the Gulf Coast still have trouble operating in freezing temperatures despite improvements made since Uri. COLD SPELLS CONTINUE TO DISRUPT GULF COAST CHEM PLANTSBrief spells of freezing temperatures are becoming an annual feature of winters in the Gulf Coast, even as the overall season becomes warmer, according to a presentation made earlier this year by Chris Coleman, the supervisor of operational forecasting at Electric Reliability Council of Texas (ERCOT), which manages the flow of electricity in most of the state. This upcoming winter could continue the trend. Coleman warned that the state has a greater than average chance of suffering from freezing temperatures – even though the season as a whole will be warmer than usual. Meteorology firm AccuWeather also warned that the US will be vulnerable to a blast of cold temperatures despite the forecast for a warm winter. Such blasts are caused by polar vortexes, and February is the most probable month when one will move across the eastern US. AccuWeather did not say whether such a polar vortex could hit Texas. CHANCES OF CHEM OUTAGESFor chemical plants, freezing temperatures can cause outages by disrupting operations or by blackouts caused by excessive electricity demand. Such a demand spike caused the widespread plant outages during winter storm Uri in 2021. Since then, Texas has avoided state-wide outages despite continued cold spells and growing demand for electricity. The state's power grid is more reliable, and it has conducted more weatherization inspections, ERCOT said. If the power grid in Texas holds up this winter, then chemical disruptions would be caused by freezing temperatures shutting down operations at specific plants. Even after Uri, steps taken by some companies still did not prevent cold temperatures from disrupting their operations. During the freeze of December 2022, TotalEnergies shut down its polypropylene (PP) units at La Porte, Texas, even though the company said it took all precautions possible through freeze protection and heat tracing. US WINTER COOLER THAN 2023-2024Meteorologists at the National Oceanic and Atmospheric Administration (NOAA) expect winter temperatures will be warmer than average for the southern and eastern US. That said, they will still be cooler than the previous year, according to the Energy Information Administration (EIA). Those cooler temperatures have led the EIA to expect average prices for natural gas to reach $3.00/million Btu in 2025, up from $2.20/million Btu in 2024. Natural gas is important to the chemical industry because they use it as fuel and because it influences prices for ethane, the predominant feedstock that US crackers use to make ethylene. MORE LNG TERMINALS WILL START UPA growing source of gas demand is made up of terminals that export liquefied natural gas (LNG). The following table lists the terminals that should start up in 2025 and later. Capacity figures are listed in millions of tonnes/year. Project Developer Capacity Estimates Start Up Corpus Christi Stage 3 Cheniere 10 2025 Plaquemines LNG Venture Global 20 2025 Golden Pass LNG ExxonMobil/QatarEnergy 15.6 2027 Port Arthur LNG Sempra 13 2027 Rio Grande LNG Phase 1 NextDecade 17.6 2027 Insight article by Al Greenwood Thumbnail shows ice. Image by David J Phillip/AP/Shutterstock

19-Dec-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Lots of focus has been on the Trump effect on the US trading relationship with China. But we need to think more broadly than this. I see a significant risk that next year we will see trade tensions also increasing between other countries and China for the reasons described in today's post. See today’s, main slide, showing China’s percentage shares of global capacities for some polymers in 2009 (the beginning of China's giant economic stimulus programme) versus 2021 (the Evergrande Turning Point) and 2025. Producers elsewhere, seeing charts such as this one, could be anxious to protect market share and avoid commoditisation for polymers such as acrylonitrile butadiene styrene (ABS) and ethylene vinyl acetate (EVA) which can be higher value in some end-use applications. In polypropylene (PP), China’s share of global capacities was just 15% in 2009 and 26% in 2021. ICIS forecasts this will next year jump to 45%. We have already seen an uptick in protectionist measures against Chinese PP. More broadly, China's investment in export-based manufacturing capacity has accelerated since late 2021 to compensate for the end of the property bubble. China has dominated exports of finished goods for 20-odd years. But ICIS data, such as today's first chart, and other data show that this has gone to a different level since the end of 2021. International trade used to be a win/win game, but the data suggest that China has recently gained stronger positions in low, medium and high-value manufacturing. What form will any increase in protectionism take in 2025? To what extent could it be short-term our "knee jerk" versus further strategic initiatives to reshore manufacturing? To what degree is it too late for strategies in some countries and regions? I've been recently polling people on the German auto industry. It is too late to turn around the decline in the industry, was the majority view. If true, this would obviously have huge implications for Germany’s chemicals companies. If "protectionism" and "China" are the words of the year in 2025, expect chemicals trade flows and pricing patterns to be significantly reshaped by announcements of investigations into new duties and the imposition of duties. Keeping on top of news on trade protectionism, especially if you can get the news before your competitors, will be a significant competitive advantage. And every action can promote a reaction. We must consider how China might respond to more duties. Its responses will of course also affect chemicals trade flows, pricing patterns and demand in different regions. Good luck out there. Next year is going to be very, very challenging for reasons beyond just protectionism. 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-Dec-2024

SINGAPORE (ICIS)–Asia's oxo-alcohols market continues to face challenges amid capacity expansions in China. Weak demand from downstream plasticizers sector Upstream support from propylene unlikely Demand recovery to take some time In this latest podcast, ICIS senior editor Julia Tan speaks with ICIS analyst Lina Xu on the latest developments and expectations for what lies ahead in 2025.

17-Dec-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 December. Dow’s $2.4-3.0 billion infrastructure deal larger than expected Dow signed a deal to sell a minority stake in its US Gulf Coast infrastructure assets to a fund managed by Macquarie Asset Management for up to $3.0 billion – larger than expected, according to UBS. PCC's proposed USG chlor-alkali unit to add caustic length in unique development US caustic soda supplies will continue to grow in the coming years following an announcement by PCC Group that it intends to invest in a new 340,000 tons/year chlor-alkali plant at DeLisle, Mississippi. The new capacity will be built on Chemours site at DeLisle Mississippi with the intent to provide Chemours with reliable access to chlorine. The company intends to sell its caustic soda to strategic partners and into the open market. Construction on the unit is expected to begin in early-2026 and conclude in 2028. INSIGHT: New gas pipeline to provide support for ethane prices for US chems A new gas pipeline set to be built by Energy Transfer should provide support for natural gas and ethane prices in the Permian producing basin, lowering the likelihood that US chemical producers see another period of ultra-low costs for the main feedstock used to make ethylene. Olin to shut diaphragm chloralkali capacity that serves Dow's Freeport PO unit Olin plans to shut down its diaphragm-grade chloralkali capacity in Freeport, Texas, that provides feedstock to Dow's propylene oxide (PO) unit, the US-based chloralkali producer said on Thursday. ACC expects modest US chemicals volume recovery in 2025 – economist The American Chemistry Council (ACC) expects a 1.9% rebound in chemical volumes in 2025 after two consecutive years of declines as the US economy undergoes a soft landing and the housing market improves in the second half of the year, its chief economist said.

16-Dec-2024

SINGAPORE (ICIS)–South Korea’s benchmark stock market index was closed lower on Monday, snapping four straight days of gains, after the country’s parliament impeached President Yoon Suk Yeol over the weekend for imposing a short-lived martial law on 3 December. The KOSPI composite index slipped 0.22% to settle at 2,488.97, with shares of major petrochemical companies closing mixed. The Korean won (W) eased against the US dollar at W1,437.68 as of 08:00 GMT, weaker than the previous session’s closing of W1,435.45. The won had plunged to an almost two-year low of above W1,440 to the US dollar when Yoon declared martial law late on 3 December which lasted about six hours. South Korea’s National Assembly on 14 December voted 204-85 to impeach Yoon for imposing martial law, which plunged the country into political instability and economic uncertainty. A two-thirds majority was required to approve the motion, which was the second one filed after the first motion on 7 December failed. Yoon’s political duties have been suspended pending a Constitutional Court decision, which is expected in 180 days, on whether to re-instate or remove him from office. Prime Minister Han Duck-soo became the acting President upon Yoon’s impeachment, stating that his mission is to “swiftly stabilize the confusion in state affairs” during a Cabinet meeting. Han talked to outgoing US President Joe Biden by phone on 15 December, reassuring him that "South Korea will carry out its foreign and security policies without disruption", according to a statement from Han's office. EYES ON 2025 Separately, finance minister Choi Sang-mok on Monday said he has written a letter to financial institutions and world leaders to explain the government’s response to the recent political situation and to request their trust and support in the South Korean economy. During an emergency ministerial meeting on 15 December, strategies were heard for economic stabilization and growth in the short- and long-term. For one, the finance ministry will announce its economic policy direction for 2025 by the end of the year, along with a mid- to long-term strategy to be released in January 2025. Meanwhile, the Ministry of Trade, Industry and Energy (MOTIE) is also drafting support measures for the petrochemical industry in preparation for the Trump-led US government in January 2025, which is threatening to impose tariffs on all imported goods. The US, along with China, is a major trading partner of South Korea. South Korea’s measures are expected to take effect in Q1 2025. The country – which is a major exporter of ethylene and aromatics, such as benzene, toluene and styrene monomer (SM) – is reeling from a combination of weak external demand and overcapacity in China. (updates closing levels for index, share prices; adds details throughout) Thumbnail image: South Korean Prime Minister Han Duck-soo, who assumed office as acting president after the parliamentary impeachment of President Yoon Suk-yeol, speaks to reporters at the government complex in central Seoul, South Korea, 15 December 2024. (YONHAP/EPA-EFE/Shutterstock)

16-Dec-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 December. S Korea bourse extends fall as political woes deepen; petrochemical shares slump By Pearl Bantillo 09-Dec-24 15:36 SINGAPORE (ICIS)–South Korea’s benchmark stock market index continued to bleed on Monday amid political instability wrought by the shock martial law announcement on 3 December, with impeachment motions against President Yoon Suk Yeol dropped over the weekend due to lack of quorum. INSIGHT: India poised to take up growing role in Asia ethylene ecosystem By Josh Quah 09-Dec-24 18:22 SINGAPORE (ICIS)–As far as the numbers on paper go, India may not look like a conspicuous power in the ethylene markets. The south Asian country imported around 76,400 tonnes of ethylene in 2022, a figure that dropped to around 51,800 tonnes in 2023. China Nov export growth slows to 6.7% on year; imports fall 3.9% By Jonathan Yee 10-Dec-24 15:37 SINGAPORE (ICIS)–China's exports in November grew at a slower year-on-year rate of 6.7% to $312.3 billion amid trading headwinds from a potential wave of tariffs to be levied by the incoming US administration. INSIGHT: Key takeaways for 2025 petrochemical market outlook at ICIS China customer day By Jenny Yi 10-Dec-24 19:15 SINGAPORE (ICIS)–A slow projected global recovery, the growing prominence of Africa and southern America for producers, and a bearish outlook for Asia olefins and aromatics prices in 2025 were among the topics discussed at the ICIS China Customer Day event in Shanghai on 21 November. Asian SBR import offers see support from firming upstream markets By Ai Teng Lim 11-Dec-24 13:18 SINGAPORE (ICIS)–Asian styrene-butadiene-rubber (SBR) producers are seeking to sell higher, citing upstream cost push. China to adopt looser monetary policy in 2025 as US tariffs loom By Jonathan Yee 11-Dec-24 15:36 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. UAE to impose 15% minimum top-up tax on large multinationals from Jan ‘25 By Jonathan Yee 12-Dec-24 12:28 SINGAPORE (ICIS)–The UAE will impose a minimum top-up tax (DMTT) on large multinational companies, to align its tax system to global standards. Strong PKO cost supports Asia fatty alcohol mid-cuts C12-14 By Helen Yan 12-Dec-24 13:50 SINGAPORE (ICIS)–Elevated feedstock palm kernel oil (PKO) prices and demand heading into 2025 are supporting Asia’s fatty alcohol mid-cuts C12-14 market. INSIGHT: Shift in rules on China phosphate ferts exports hit market sentiment By Rita Wang 12-Dec-24 19:50 SINGAPORE (ICIS)–A shift in the customs rules in China means that phosphate fertilizers will only be sold on the domestic market for the time being. However, sluggish demand as players work through winter reserves could stand to weigh on pricing. China domestic BD gains boost Asian market discussions By Ai Teng Lim 13-Dec-24 11:54 SINGAPORE (ICIS)–Sentiment is more upbeat this week in Asia’s spot butadiene (BD) import market amid recent strong gains in China’s domestic market.

16-Dec-2024

SAO PAULO (ICIS)–Brazil’s petrochemicals-intensive automotive output is expected to grow by 6.8% in 2025, compared with 2024, to nearly 2.75 million, the country’s trade group Anfavea said on Thursday. The healthy increase will be supported by higher sales, both at home and abroad as the economies of key Brazilian trade partners such as Argentina improve in 2025. The likely final figures for 2024 published by Anfavea on Thursday sharply improved over those published in July, when the trade group said increasing imports of foreign-made vehicles, mostly Chinese, was jeopardizing domestic producers’ market share. At the time, it said 2024 output should end up being 4.9% higher than in 2023 at 2.44 million units. On Thursday, however, it said output growth in 2024 is likely to be of 10.7%, compared with 2023, to 2.57 million units. Brazil automotive 2024 2025 forecast Change 2024 vs 2025 with current forecast Output 2,574,000 2,749,000 6.8% Sales 2,650,000 2,802,000 5.6% Exports 402,600 428,000 6.2% ABNORMAL 2024“Normally, the second half [of the year] is slower but this year we had a fantastic second half, the best in the last 10 years, after a start to the year with some problems such strikes in government agencies and the floods in Rio Grande do Sul, among others,” said Anfavea’s director general, Marcio de Lima Leite. “As a result, Brazil was the market that grew the most among the main global markets. We hope to start the year at this accelerated pace and make 2025 the last step before returning to the level of 3 million units sold.” Brazil automotive November 2024 November 2023 Change January-November 2024 January-November 2023 Change Production 236,100 202,700 16.5% 2,359,500 2,153,300 9.6% Sales 253,500 212,600 19.2% 2,377,500 2,060,100 15.4% Exports 39,300 24,100 63.4% 366,700 378,200 -3.0% Anfavea said “the best news” for the sector in 2024 was employment, with 10,000 new jobs created during 2024, while employment creation in the automotive chain as a whole stood at 100,000, the trade group said. “In total, our sector is responsible for 1.3 million highly qualified jobs, and we hope that the current investment cycle announced of [Brazilian reais] (R) 130 billion [$21.7 billion] will create even more jobs, not only on the assembly line but also in something strategic for the country, which is research and development,” said Leite. The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA).

13-Dec-2024

HOUSTON (ICIS)–Olin plans to shut down its diaphragm-grade chloralkali capacity in Freeport, Texas, that provides feedstock to Dow's propylene oxide (PO) unit, the US-based chloralkali producer said on Thursday. Dow plans to shut down that PO unit at the end of 2025, and those plans prompted Olin to close the diaphragm-grade chloralkali capacity that serves the Dow facility. Olin's is restricting the shutdown to capacity that relies on asbestos-based technology. US regulators seek to end the use of asbestos in the chloralkali industry. The amount of diaphragm-grade chloralkali capacity that Olin plans to shut down at Freeport amounts to 450,000 electrochemical units (ECUs), according to the company. Olin already has shut down its diaphragm-grade chloralkali capacity in McIntosh, Alabama. It plans to transition its chloralkali capacity in Plaquemine, Louisiana, to non-asbestos-based technology, the company said. Chloralkali units produce caustic soda and chlorine. Thumbnail shows salt, which is used to make caustic soda and chlorine. Image by Alessandra Sarti/imageBROKER/Shutterstock (

12-Dec-2024

HOUSTON (ICIS)–A new gas pipeline set to be built by Energy Transfer should provide support for natural gas and ethane prices in the Permian producing basin, lowering the likelihood that US chemical producers see another period of ultra-low costs for the main feedstock used to make ethylene. Energy Transfer's new Hugh Brinson pipeline, previously known as Warrior, will ship natural gas from the Waha Hub in West Texas, to Maypearl, Texas, which is south of Dallas. The first phase of the project will ship 1.5 billion cubic feet/day of natural gas. Operations should start by the end of 2026. Depending on demand, Energy Transfer could concurrently start construction on a second phase that will increase the pipeline's capacity to 2.2 billion cubic feet/day. Energy Transfer's pipeline is the second major one announced in the past six months. Earlier, a new joint venture announced Blackcomb, a pipeline that can ship up 2.5 billion cubic feet/day of natural gas from the Permian basin to the Agua Dulce area in south Texas. Blackcomb will be developed by joint venture made up of Targa and WPC, itself a joint venture made up of WhiteWater, MPLX and Enbridge. NEW PIPELINES TO SUPPORT ETHANE BY REDUCING LIKELIHOOD OF NEGATIVE WAHA PRICESThe two new pipelines should provide West Texas with sufficient capacity to take away natural gas from the Waha Hub and prevent regional prices from falling below zero. The Waha Hub is the main pricing point for the natural gas produced by the oil wells in the Permian basin. Prices at the hub spent much of 2024 below zero because existing pipeline capacity was insufficient to take away excess supplies, which were growing because of rising oil production and gas-to-oil ratios across the basin. When gas prices at Waha fall below zero, it creates a powerful incentive for processing plants to recover as much ethane as possible from the gas stream. Any ethane that remains in the gas stream is sold for its fuel value. When gas prices are negative, producers are unable to capture any value for the ethane left behind. By maximizing ethane recovery, processing plants also free up existing pipeline space, allowing more natural gas to be taken out of West Texas. The surge in ethane recovery increased the amount of the feedstock available to the market. At one point in 2024, ethane prices fell below 12 cents/gal, a low not seen since the COVID pandemic. Since that low, the start up of the Matterhorn Express pipeline has increased takeaway capacity in the Permian, which caused Waha gas prices to rise above zero. Colder temperatures also supported prices for natural gas by increasing demand. Ethane prices are now trading above 20 cents/gal. LNG, ETHANE TERMINALS ALSO INFLUENCE COST FOR CHEM FEEDSPricing at the Waha Hub is one of the many factors that can influence the cost of ethane for chemical producers. Maintenance on one or more of the pipelines that takes away gas from the Permian basin can also depress Waha prices and, potentially, those for ethane. The proliferation of liquefied natural gas (LNG) terminals on the Gulf Coast is playing an increasing role in natural gas and ethane prices. These terminals are vulnerable to disruptions caused by hurricanes and tropical storms that pass through the Gulf of Mexico. These storms can disrupt LNG operations and temporarily shut down a large source of gas demand in the US. If the outage lasts long enough, it can cause a meaningful increase in US supplies of natural gas. That can lower prices for gas as well as the recovery cost for ethane. Midstream companies are increasing their capacity to export ethane overseas, which should support prices for the feedstock. Enterprise is adding 120,000 bbl/day of capacity via the first phase of the Neches River Terminal project, scheduled to come online in mid-2025. A second phase, due online in the first half of 2026, will add up to another 180,000 bbl/day of ethane export capacity. Enterprise and Navigator are adding ethane export capabilities as part of the expansion projects at their existing ethylene terminal in Morgan's Point. Energy Transfer is also adding 250,000 barrels/day of flexible export capacity, which is scheduled to start up during the second half of next year. Similarly, new crackers will increase demand for ethane. The only confirmed new US cracker is a joint-venture cracker that Chevron Phillips Chemical and QatarEnergy should start up in late 2026 in Texas. Shintech could build a cracker in Louisiana, but the company has yet to announce a final investment decision (FID). Insight article by Al Greenwood Thumbnail shows natural gas. Image by Hollandse Hoogte/Shutterstock

11-Dec-2024

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