Synthetic rubbers

HOUSTON (ICIS)–The US Environmental Protection Agency (EPA) could make a decision any day that would allow California to adopt an aggressive electric vehicle program, triggering similar programs in 12 other states and territories that will likely become the target for repeal under President-Elect Donald Trump. During his campaign, Trump has expressed opposition to policies that favor one drive-train technology over another, saying that he would  "cancel the electric vehicle mandate and cut costly and burdensome regulations". California's EV program is called Advanced Clean Cars II (ACC II), and it works by requiring EVs, fuel cells and plug-in hybrids to make up an ever-increasing share of the state's auto sales. Other programs that encourage the adoption of EVs could be more vulnerable to repeal and rollbacks under Trump ACC II COULD BOOST EV DEMAND IN 13 STATESBefore California can adopt its ACC II program for EVs, it needs the EPA to grant it a waiver from the US Clean Air Act.  The California Air Resources Board (CARB) said it is expecting a decision from the EPA at any time. If the EPA receives the waiver, then it will trigger the adoption of similar ACC II programs the following states and territories. The figures in parentheses represent each state's share of light-vehicle registrations. California (11.6%) New York (5.6%) Colorado (1.8%) Oregon (1.0%) Delaware (0.3%) Rhode Island (0.3%) Maryland (1.8%) Vermont (0.3%) Massachusetts (2.1%) Washington (1.9%) New Jersey (3.4%) Washington DC (not available) New Mexico (0.5) Source: CARB In total, the 13 states and territories represent at least 30.6% of US light-vehicle registrations, according to CARB. HOW THE ACCII SUPPORTS EV DEMANDThe following chart shows the share of electric-based vehicles that would need to be sold in California by model year under the state's ACC II regulations. Programs in other states and territories have similar targets. ZEV stands for zero-emission vehicle and includes EVs and vehicles with fuel cells Source: California Air Resources Board REPEALING THE ACC IIThe key to California's ACC II programs is the EPA's decision to grant it a waiver to the Clean Air Act. Trump will likely revoke that waiver if it is granted before he takes office, according to the law firm Gibson Dunn. It expects that California will respond by threatening to retroactively enforce the ACC II program once a friendlier president takes office after Trump's term ends in four years. Auto makers could choose to take California's threat seriously and reach an agreement with the state. A similar scenario unfolded during Trump's first term of office in 2016-2020 that involved California's earlier Advanced Clean Cars (ACC) program, according to Gibson Dunn. That program also required a waiver from the EPA, and the dispute was resolved only after Joe Biden restored the waiver after becoming president in 2021. For the possible dispute over the ACC II program, it could take the courts determine whether California can retroactively enforce the program. FEDERAL PROGRAMS ARE MORE VULNERABLE TO REPEALThe following federal programs could be more vulnerable to roll backs under Trump. The Environmental Protection Agency's (EPA) recent tailpipe rule, which gradually restricts emissions of carbon dioxide (CO2) from light vehicles. The Department of Transportation's (DoT) Corporate Average Fuel Economy (CAFE) program, which mandates fuel-efficiency standards. These standards became stricter in 2024. A tax credit worth up to $7,500 for buyers of EVs under the Inflation Reduction Act (IRA). Trade groups have argued that the CAFE standards and the tailpipe rules are so strict, they function as effective EV programs. They allege that automobile producers can only meet them by making more EVs. The following table shows the current tailpipe rule. Figures are listed in grams of CO2 emitted per mile driven. 2026 2027 2028 2029 2030 2031 2032 Cars 131 139 125 112 99 86 73 Trucks 184 184 165 146 128 109 90 Total Fleet 168 170 153 136 119 102 85 Source: EPA The following table shows the fuel efficiency standards under the current CAFE program. Figures are in miles/gallon. 2022 2027 2028 2029 2030 2031 Passenger cars 44.1 60.0 61.2 62.5 63.7 65.1 Light trucks 32.1 42.6 42.6 43.5 44.3 45.2 Light vehicles 35.8 47.3 47.4 48.4 49.4 50.4 Source: DOT Gibson Dunn expect Trump's administration will rescind the tailpipe rule and roll back the CAFE standards to levels for model year 2020 vehicles. That would lower the CAFE standards for light vehicles to 35 miles/gal. EVS AND CHEMICALSEVs represent a small but growing market for the chemical industry, because they consume a lot more plastics and chemicals than automobiles powered by ICEs. A mid-size EV contains 45% more plastics and polymer composites and 52% more synthetic rubber and elastomers, according to a May 2024 report by the American Chemistry Council (ACC). EVs also contain higher value materials such as carbon fiber composites and semiconductors, making the total value of chemistry in the automobiles up to 85% higher than in a comparable ICE, according to the ACC. The following chart compares material consumptions in EVs and ICEs. Source: ACC EVs have material challenges that go beyond making them lighter and more energy efficient, such as managing heat from their batteries and tolerating high voltages. Major chemical and material producer are eager to develop materials that can meet these challenges and command the price premiums offered by EVs. Most have EV portfolios and prominently feature them at trade shows A rollback of US incentives for EVs could slow their adoption and weaken demand for these materials. Materials most vulnerable to these rollbacks would include heat management fluids and chemicals used to make electrolytes for lithium-ion batteries, such as dimethyl carbonate (DMC) and ethyl methyl carbonate (EMC). Other materials used in batteries include polyvinylidene fluoride (PVDF) and ultra high molecular weight polyethylene (UHMW-PE). Insight by Al Greenwood Thumbnail shows an EV. Image by Michael Nigro/Pacific Press/Shutterstock

21-Nov-2024

CARTAGENA, Colombia (ICIS)–Mexico’s nearshoring trend will continue, even with the prospect of changes with the incoming US Trump administration as the US and Mexico economies are growing more and more interconnected, said the head of Evonik’s Mexico business. “Mexico is the 14th largest global economy, and an economy geared for exports – not only to North America but other regions,” said Martin Toscano, president of Evonik Mexico, at the Latin American Petrochemical and Chemical Association (APLA) Annual Meeting. Mexico is the 9th largest exporter globally and becoming one step closer to the 3rd largest auto parts manufacturer. It is also the leading business partner to the US, he pointed out. Currently over 80% of Mexico’s exports are to the US, totaling $455 billion in 2023. The US now imports more from Mexico than from China. The US in turn exported $324 billion of goods to Mexico, he noted. Key Mexico exports to the US include transport equipment (including autos and parts), medical and scientific instruments, electronics, machinery, and rubber and plastic. TRUMP IMPACT ON NEARSHORING “Trump 47 (referring to the upcoming 47th US President) is not going to be that different from 45 (last Trump administration). US and Mexico interests go beyond rhetoric,” said Toscano. “No region is an island – they rely on net inflows. The world is too interconnected to just switch off. Economies depend on exports but also imports,” he added, pointing out that the US is unlikely to reshore everything. Nearshoring is natural for Mexico because of its proximity to the US and the USMCA (US-Mexico-Canada Agreement) free trade agreement (FTA). But nearshoring is also distributed across Latin America, with other countries such as Brazil and Argentina ready to play greater roles, he pointed out. US President-Elect Trump has threatened companies – both in the US and abroad – that move production to Mexico to export to the US, with tariffs. However, the US holds over 40% of total foreign direct investment (FDI) in Mexico, making it a major stakeholder in Mexico exports, he noted. “The US has a very important role… but there is also a significant European presence. There is a continuing diversification of the investment base,” said Toscano. Mexico also has FTAs with 23 countries – the 7th most of any country in the world – with access to over 60% of global GDP. This as well as increasing government investment in infrastructure and a growing middle class make it an attractive market for investment, he pointed out. “All this investment in Mexico has generated greater well-being – better jobs and income. This means people start consuming more for basic needs – food, protein, personal care products, cleaning products and household items,” said Toscano. The executive also sees a boost for US economy with the incoming Trump administration. “Simplifying regulations can be good. It can turn to a negotiation point when USMCA sunsets [in 2026]. This can make Mexico adopt certain [simplified] regulatory elements,” said Toscano. “With the Trump administration, Mexico has to take some topics seriously. Nearshoring is a window of opportunity, and if we don’t know how to do it, we will lose,” he added. RULES OF ORIGIN, DEAL-BASED WORLD At the APLA Annua Meeting, former head of Argentina’s central bank and current director of the Asia School of Business, Martin Redrado, said Mexico should be prepared for the US being much stricter on its “rules of origin”. Under the USMCA rules of origin, exporters must show that a product has a certain minimum percentage of components from the region (US, Mexico, Canada) to avoid import duties. Redrado said Latin American countries should now follow a transactional policy as we move from a “rule-based world to deal-based world”. This requires a transactional approach to negotiations. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Focus article by Joseph Chang Thumbnail shows the flag of Mexico. Image by Shutterstock.

20-Nov-2024

CARTAGENA, Colombia (ICIS)–Latin American chemicals producers should be prepared to face a prolonged downturn which could extend to 2030 as newer capacities globally keep coming online, according to the director general at the Latin American Petrochemical and Chemical Association (APLA). Manuel Diaz said global manufacturing is not recovering at the speed the chemicals industry would need for supply and demand to rebalance anytime soon, and Latin America – the quintessential ‘price taker’ region as its trade deficit makes it dependent on imports from other regions – must prepare for the most prolonged downturn in chemicals in living memory. Diaz spoke to ICIS ahead of the APLA annual meeting which kicked off on Monday. “This is pretty much what we are going to be talking about in the 2024 annual meeting: oversupply of products and raw materials, of ethylene. There are still many plants being announced, so it seems that at least until 2027, I would say 2030, the pressure on profitability is going to be very strong,” said Diaz. “Companies in Latin America should be prepared because, while new plants are still being started up, there is no sign of a world recovery strong enough to get there. A silver lining could be found in the fact that there is still considerable population growth: from now until 2050, we will have a growth in the world population like what would be, so to speak, adding a new India [the most populous country with 1.45 billion people].” Diaz, an Argentinian national, said he expects more plants will shut down in his home country as the national chemicals industry adapts to a more liberalized market under Javier Milei’s administration. In October, US chemicals major Dow said it would stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics caused by global oversupply, while Argentina’s Petroquimica Rio Tercero shut its toluene diisocyanate (TDI) plant in Cordoba arguing the same reason. “I think we will see a reorganization in the sector, especially in Argentina. There will be some plants that are no longer sufficiently attractive from a profitable or product point of view – there will be a trend to concentrate on more profitable products,” said Diaz. “In the case of Dow, for instance, the plant they shut in Argentina was not the only plant of that type that it shuts down globally, that is why I think this is not a problem only in Argentina or Brazil – it is a global problem, a problem of competitiveness.” Diaz said we must think about China’s “differently” in order to understand the current downcycle, much of it related to that country’s overcapacities as its economy is not growing at the expected, pre-pandemic-like rates. “From our place in the world, we see everything as an economic curve and a capital curve, but the Chinese sees it from the point of view of a work curve. So, it is not a case that they are subsidizing the product itself for an easier sale,” said Diaz. “What they are doing, in my opinion, is subsidizing companies so job creation does not slow down – economic growth there is the priority.” He went on to reflect on how the globalization rates up to 2020 may have gone too far, adding the pandemic showed us how it was a mistake to focus on just a few countries – or just China, in many cases – as the main source for manufactured goods. – So, is the world coming back to a protectionist wave, like that of the 1930s? – “Now we see countries around the world thinking about how to protect their manufacturing sectors from China’s oversupplies, so maybe that globalizing cycle [up to 2020] has ended, the trend of setting up plants in the cheapest place and so on. I think the pandemic left us messages,” said Diaz. “Messages around the fact that we can't have a dependency on a single place from where all the electronic chips come from, for instance. So, I think it's not going to be just Brazil [where protectionist measures are enacted] but in many other Latin American countries – it is a contingency measure.” Finally, about the potential the new US administration under Donald Trump may impose import tariffs on Mexico, Diaz said “reality may end up surpassing” ideology, referring to the high dependance US manufacturers also have from Mexico’s manufacturers. The two countries’ economies became highly linked from the 1990s, when the first North American free trade deal, NAFTA, was signed. The situation did not change much after the first Donald Trump administration renegotiated NAFTA to give way to the current USMCA trade deal. “We have two new administrations in the US and Mexico. We will see what they end up doing, but what is clear is that there will be alternatives [to import tariffs being imposed]. Trump also knows that US companies buy a lot from Mexico, and in a protectionist spiral Mexico could also impose tariffs, so US companies would end up being affected as well,” said Diaz. “That is the reality that applies to everything, and that is why I say that reality normally surpasses your ideological vision: One thing is what I can say in the campaign, a different one may be what you implemented once you are in office.” Thumbnail shows money from Latin America. Image by ICIS. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Interview article by Jonathan Lopez

18-Nov-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 15 November. Europe PET hit by multiple factors pulling market in different directions Polyethylene terephthalate (PET) sources in Europe are faced with a plethora of circumstances trying to shape the market, which in the end may result in a degree of stability. Crude markets face substantial 2025 surplus as China demand falters – IEA Global crude supply growth is likely to outstrip demand by over a million barrels/day in 2025, the International Energy Agency (IEA) said on Thursday, with the “marked” slowdown in China consumption the main drag on consumption this year. INSIGHT: European cracker shutdowns could open market to US ethylene exports European ethylene producers could be planning more cracker shutdowns, with the lost capacity being replaced by imports from the US. Shell wins appeal in Dutch emissions caseThe Netherlands court ruling mandating that Shell cut its total carbon emissions by 45% by 2030 has been thrown out, the oil and gas major said on Tuesday. Europe PE, PP adapt value proposition in face of evolving market European polyethylene (PE) and polypropylene (PP) are evolving as the world they occupy steadily changes.

18-Nov-2024

SINGAPORE (ICIS)–South Korean refiner S-Oil's new petrochemical complex in Ulsan is now 42% complete as of end-October and is on track for completion in 2026. Shaheen accounts for about 87% of full-year 2024 capex Project progress slightly ahead of schedule S-Oil swung to Q3 net loss on poor refining, petrochemical margins Construction of the $7bn project called Shaheen – Arabic word for falcon – at the Onsan Industrial Complex of Ulsan City started in March 2023. Its mechanical completion is targeted by the first half of 2026. Total capital expenditure (capex) for the Shaheen project is projected at W2,716 billion ($1.95 billion) in 2024, up 85% year on year, and accounts for about 87% of S-Oil's overall capex this year. The company’s full-year capex at W3,136 billion, which includes costs of upgrade and maintenance works as well as marketing-related expenses, represents a 54% increase from 2023 levels. The Shaheen project will have a 1.8m tonne/year mixed-feed cracking facility; an 880,000 tonne/year linear low density polyethylene (LLDPE) unit; and a 440,000 tonne/year high density polyethylene (HDPE) plant. The site will have a thermal crude-to-chemical (TC2C) facility, which will convert crude directly into petrochemical feedstocks such as liquefied petroleum gas (LPG) and naphtha, and the cracker is expected to recycle waste heat for power generation in the refinery. Saudi Aramco, the world’s biggest crude exporter, owns more than 63% of S-Oil. The project update was included in S-Oil’s presentation slides on its Q3 financial results released on 4 November. The company swung to a Q3 net loss of W206 billion amid a sharp decline in refining and petrochemical earnings. in South Korean won (W) billion Q3 2024 Q3 2023 % Change Jan-Sept 2024 Jan-Sept 2023 % Change Revenue 8,841 9,000 -1.8 27,720 25,897 7.0 Operating income -415 859 200 1,411 -85.8 Net income -206 545 -61 788 The petrochemicals unit of S-OIL posted an operating income of W5.0 billion in the third quarter, an 89% year-on-year drop. Paraxylene (PX) and benzene markets weakened in Q3 due to increased supply amid reduced gasoline blending demand and restarts of production facilities after turnarounds. The company's PX spread to naphtha weakened to $271/tonne in Q3 from $425/tonne in the same period last year, while the benzene-naphtha spread rose to $315/tonne from $251/tonne in the same period a year earlier. In the downstream olefin market, polypropylene (PP) was bearish in the third quarter due to "abundant regional supply amid weak downstream demand". The refining unit posted an operating loss of W573.7 billion in the third quarter, swinging from the W666.2 billion profit in the same period a year earlier. The loss in the refining segment was mostly due to the one-off impact from the decline in oil prices and foreign exchange rates. On market conditions, the company said that the supply-demand environment and margins for refiners in Asia is expected to "gradually improve due to reduced operating rate from low margin condition and heavier maintenances year over year, amid continued stockpiling if winter heating oil". For Q4, the company expected the PX and benzene markets to be supported by fresh demand from new downstream capacities while gasoline demand stays slow. For downstream olefin markets, S-Oil said that PP and propylene oxide (PO) markets may show modest recovery "depending on the impact of China's economic stimulus measures amid ongoing capacity additions". Focus article by Nurluqman Suratman ($1 = W1,395)

18-Nov-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 15 November. INSIGHT: India’s ADD findings on PVC have potential to reshape regional flows in wider Asia By Jonathan Chou 11-Nov-24 11:00 SINGAPORE (ICIS)–Asia's polyvinyl chloride (PVC) market players are assessing the potential ramifications following preliminary findings on India's PVC imports released by the country's Directorate General of Trade Remedies (DGTR). Asia petrochemical shares tumble as China stimulus disappoints By Jonathan Yee 11-Nov-24 15:04 SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Monday as China’s much-awaited stimulus measures failed to impress markets, while the US is likely to put up more trade barriers against the Asian giant following the re-election of Donald Trump as president. Asia toluene markets slump on waning regional demand By Melanie Wee 12-Nov-24 11:47 SINGAPORE (ICIS)–Asia’s toluene spot markets are being weighed down by a combination of burgeoning supply and lacklustre demand, at a time when arbitrage economics to divert material to the US were unviable. Asia petrochemical shares fall on strong US dollar, uncertain trade policies By Nurluqman Suratman 13-Nov-24 14:07 SINGAPORE (ICIS)–Shares of petrochemical companies in Asia extended losses on Wednesday, tracking weakness in regional bourses, amid a strong US dollar and uncertainty over trade policies of US President-elect Donald Trump which could fuel inflation. Shell Singapore site divestment deal to be completed in Q1 2025 By Nurluqman Suratman 14-Nov-24 11:41 SINGAPORE (ICIS)–Shell expects the deal to sell its energy and chemicals park in Singapore to Chandra Asri and Glencore will be completed by the first quarter of 2025, a company spokesperson said on Thursday. INSIGHT: China may accelerate PP exports amid intensified supply and demand imbalance By Lucy Shuai 14-Nov-24 13:00 SINGAPORE (ICIS)–China may accelerate PP exports in 2025 amid an intensified imbalance between supply and demand as a large number of new plants are expected to start up. PODCAST: SE Asia propylene to face additional supply, freight challenges in 2025 By Damini Dabholkar 15-Nov-24 11:28 SINGAPORE (ICIS)–Southeast Asia's propylene market faces significant challenges in 2025, with additional supply expected and freight rates continuing to impact downstream demand. Crimped supplies ease pressure on Asia VAM prices By Hwee Hwee Tan 15-Nov-24 14:36 SINGAPORE (ICIS)–Sporadic plant disruptions and crimped supplies in China are fuelling expectations of price competition easing across vinyl acetate monomer (VAM) import markets in Asia.

18-Nov-2024

SINGAPORE (ICIS)–PTT Asahi Chemical will cease operations from 1 January 2025, according to the company's parent firms – Thailand's PTT Global Chemical (PTTGC) and Japan’s Asahi Kasei on Friday. It operates a 200,000 tonne/year propane-based acrylonitrile (ACN) plant; a 70,000 tonne/year methyl methacrylate (MMA) plant; and a 60,000 tonne/year acetone cyanohydrin unit in Map Ta Phut, Thailand, according to ICIS data. A business withdrawal plan for the 50:50 joint venture company was approved by shareholders on Friday, PTTGC said in a bourse filing.

15-Nov-2024

SINGAPORE (ICIS)–Southeast Asia's propylene market faces significant challenges in 2025, with additional supply expected and freight rates continuing to impact downstream demand. In this latest podcast, ICIS senior editor Julia Tan speaks with senior analyst Shariene Goh to share the latest developments and expectations for what lies ahead next year. High freight rates likely to remain key challenge to PP exports, which could weigh on propylene demand Southeast Asia to take price direction from northeast Asia Net deficit for Indonesia despite Indonesia's LINE project

15-Nov-2024

SINGAPORE (ICIS)–Shell expects the deal to sell its energy and chemicals park in Singapore to Chandra Asri and Glencore will be completed by the first quarter of 2025, a company spokesperson said on Thursday. Shell assets will be key to Chandra Asri’s growth strategy Chandra Asri plans for second petrochemical complex still unclear Closing of deal originally scheduled for end-2024 The energy major on 8 May announced the sale, which includes the physical assets and commercial contracts in Singapore, to CAPGC – a joint venture majority-owned by Chandra Asri with Glencore holding a minority stake – for an undisclosed fee. The transaction was initially scheduled to be completed by the end of 2024. “The divestment is subject to regulatory clearance and other customary closing conditions,” the spokesperson said. “Subject to regulatory approval, the transaction is expected to complete by the first quarter of next year.” Shell and CAPGC have also signed crude supply and product offtake agreements that will come into effect following completion. A new entity under CAPGC called Aster Chemicals and Energy will operate the facilities and handle its crude oil purchases and fuel sales, newswire agency Reuters said in a 13 November report, citing unnamed sources. The Shell Energy and Chemicals Park (SECP) in Singapore comprises its integrated refining and chemicals assets on Pulau Bukom and Jurong Island. The Pulau Bukom assets include a 237,000 barrel/day refinery and a 1.1 million tonne/year ethylene cracker. It was Singapore’s first refinery in 1961. SECP KEY TO CHANDRA ASRI'S GROWTH PLANSChandra Asri in a 4 October statement said that its move to acquire the SECP assets aligns with its growth strategy of “going global” as it seeks to expand in the energy, chemical and infrastructure sector not only in Indonesia but also abroad. “Through SECP, which is one of the largest oil refineries and trading hubs in the world, Chandra Asri Group will source petroleum products, including gasoline, jet fuel, gas oil, and bitumen to support various industries in Indonesia,” the company said. “Additionally, Chandra Asri Group will help fill gaps in the supply of chemical products, such as monoethylene glycol (MEG), polyols, and ethylene, propylene, and styrene monomers, to support manufacturing processes in the country,” it said. “This will ensure that the country’s energy supply is secured as well as reducing dependencies on foreign entities.” In a presentation to investors in early August, Chandra Asri said that it will establish offtake agreements for both fuel and chemical products, utilizing Glencore's extensive trading network to “secure beneficial arrangements”. Chandra Asri currently operates Indonesia's sole naphtha cracker in Cilegon, which can produce 900,000 tonnes/year of ethylene and 490,000 tonnes/year of propylene. The new assets in Singapore will boost Chandra Asri’s overall production capacity from around 4.2 million tonnes/year currently to more than 18 million tonnes/year by 2026. The company is also the sole domestic producer of styrene monomer, ethylene, butadiene (BD), MTBE, and butene-1, with a new world-scale chlor-alkali ethylene dichloride (EDC) plant development on the horizon. The company’s planned second petrochemical complex, dubbed CAP2, in Cilegon includes a chlor-alkali plant that is expected to produce 420,000 tonnes/year of caustic soda and 500,000 tonnes/year of EDC. The chlor-alkali plant is expected to be completed by the end of 2026 but Chandra Asri has not yet provided a firm timeline of the other proposed plants previously announced for CAP2. Focus article by Nurluqman Suratman Thumbnail image: Chandra Asri’s olefins plant in Cilegon, Banten province (Source: Chandra Asri official website)

14-Nov-2024

HOUSTON (ICIS)–European ethylene producers could be planning more cracker shutdowns, with the lost capacity being replaced by imports from the US. US ethylene export capacity is being expanded. Midstream companies are adding more US capacity to process the feedstock used to make ethylene. Outside of chemical feedstock, midstream companies see potential growth from energy demand from data centers. EUROPE MAY SHUT DOWN MORE CRACKERSUS-based midstream company and ethylene exporter Enterprise Products hinted that more shutdowns were possible beyond the ones announced this year by ExxonMobil, SABIC and Versalis. "We've heard from a lot of the chemical companies that they are doing strategic reviews of their European assets," said Christopher D'Anna, senior vice president, petrochemicals. He made his comments during an earnings conference call. "So, we expect to see some closures, and we expect that to lead to additional ethylene exports going that way," D'Anna said. Among the region's crackers that rely predominantly on naphtha, most produce less than 700,000 tonnes/year of ethylene, which prevents them from benefiting from economies of scale, according to ICIS data. Europe's elevated energy costs pile on the problems faced by these smaller naphtha crackers. US INCREASING ETHYLENE EXPORT CAPACITYUS ethylene exports surged in 2020 after Enterprise Products and Navigator Gas started shipping material out of their joint venture terminal at Morgan's Point, Texas. That terminal can export 1 million tonnes/year of ethylene. By the end of 2024, the two will complete an expansion project that can handle ethane or ethylene. If dedicated to ethylene, the expansion can export up to 500,000 tonnes/year of ethylene, bringing the total to 1.5 million tonnes/year. By the end of 2025, Enterprise and Navigator will complete another expansion at Morgan's Point, which will add even more flexible capacity. If dedicated to ethylene, this expansion could export up to 1.5 million tonnes/year of ethylene. In all, the Morgan's Point terminal could export up to 3 million tonnes/year of ethylene if it chooses to dedicate all of its flexible capacity to ethylene. As new Enterprise ethane capacity comes online during 2025 and 2026, additional flex train capacity can be utilized for ethylene. In addition, Navigator has ordered two carriers that can each carry 48,500 cubic meters of liquid ethylene, with delivery scheduled for March 2027 and July 2027. The carriers have the flexibility to carry ethane, ammonia or liquefied petroleum gas (LPG). EXPORTS AND US ETHYLENE BALANCEIf Enterprise and Navigator decide to maximize ethylene exports at its Morgan's Point terminal, it would likely tighten the US market, since the new crackers being proposed and built are integrated with downstream units. But D'Anna's comments raises an interesting scenario. Europe may be willing to import ethylene to preserve its downstream units and its manufacturing base. In the future, US chemical producers could add ethylene capacity to serve a global ethylene market. Growing supplies of low-cost feedstock ethane in the US could make such a global ethylene market possible. ETHANE SUPPLIES CONTINUE GROWING IN THE USEthane produced from natural gas processing plants should reach 2.74 million bbl/day in 2025, steady from 2024, according to the Short Term Energy Outlook from the Energy Information Administration (EIA). US oil and natural gas production should also continue increasing, with oil reaching 13.54 million bbl/day in 2025, and dry natural gas reaching 104.62 billion cubic feet/day, according to the EIA. As oil and natural gas production is set to rise steadily over the next two years, ethane output from processing plants is also projected to increase, according to Kojo Orgle, feedstock analyst for ICIS. Orgle monitors the US markets for ethane and other petrochemical feedstock. With limited growth in domestic ethane consumption as a petrochemical feedstock, additional supply will need to be directed toward exports. Consequently, the ethane market will rely heavily on expansions in US waterborne NGL export capacity. Ethane supplies hit record highs this year and may continue to grow if new outlets do not keep pace with production. OTHER MIDSTREAM DEVELOPMENTSEnterprise noted future demand for natural gas from data centers being built in Texas and from new power plants being developed under the recent Texas Energy Fund. Energy Transfer Partners is pursuing similar opportunities for power plants and data centers throughout its natural gas network, from Arizona to Florida and from Texas to Michigan. Energy Transfer received requests to connect to about 45 power plants in 11 states that could consume gas loads of up to 6 billion cubic feet/day. For data centers, Energy Transfer received requests from 40 that could consume gas loads of up to 10 billion cubic feet/day. EnLink Midstream said data centers could represent at least 7.5% of US electricity consumption by 2030, up from 2.5%. With rising natural gas demand from data centers and continued capital discipline among producers, natural gas prices are projected to rise in 2025 and in 2026, Orgle said. Such demand growth could provide support for natural gas prices, which could raise prices for ethane. If US ethane export capacity does not grow fast enough to drive substantial ethane disposition, increased ethane rejection may occur as higher natural gas prices boost ethane’s fuel value, Orgle said. MIDSTREAM PROJECTS The following table shows some of the midstream projects being developed in the US. Company Project Type Capacity Units Location Startup Brazos Midstream Sundance I Gas Plant 200 million cubic feet/day Martin County Oct-24 Brazos Midstream Unnamed Gas plant 300 million cubic feet/day – H2 2025 Delek Unnamed Gas Plant 110 million cubic feet/day Delaware H1 2025 Durango Midstream Kings Landing, Phase I Gas Plant 200 million cubic feet/day Eddy County, NM Q4 24 Durango Midstream Kings Landing, Phase II Gas Plant 200 million cubic feet/day Eddy County, NM na Energy Transfer Frac IX Fractionator 165,000 bbl/day Mont Belvieu Q4 26 Energy Transfer Badger Gas Plant 200 million cubic feet/day Delaware mid 25 Energy Transfer Permian processing expansions* Gas Plant 200 million cubic feet/day Permian Energy Transfer Expansion of Nederland NGL terminal Terminal Up to 250,000 bbl/day Nederland, Texas mid 25 Energy Transfer Expansion of Orla East Gas pPlant 50 million cubic feet/day Orla, Texas Q3 24 Entergy Transfer Lonestar Express Expansion Pipeline 90,000 bbl/day 2026 Enterprise Fractionator 14 Fractionator 195,000 bbl/day Mont Belvieu Q3 25 Enterprise Mentone West (Mentone 4) Gas Plant 300 million cubic feet/day Delaware Q3 25 Enterprise Mentone West 2 Gas Plant 300 million cubic feet/day Delaware h1 26 Enterprise Mentone 3 Gas Plant 300 million cubic feet/day Delaware in service Enterprise Leonidas Gas Plant 300 million cubic feet/day Midland In service Enterprise Bahia NGL pipeline Pipeline 600,000 bbl/day Q3 25 Enterprise Neches River Terminal (NRT), phase 1 Terminal 120,000 ethane, 900,000 refrigerated tank Q3 25 Enterprise Neches River Terminal (NRT), phase 2 Terminal add 60,000 ethane to raise total to 180,000, Propane 360,000 H1 26 Enterprise Ethylene Export Expansion* Terminal 550,000-2m tonnes/year Q4 24 & Q4 25 Enterprise Orion Gas Plant 300 million cubic feet/day Midland Q3 25 Enterprise Enterprise Hydrocarbons Terminal (EHT) LPG expansion Terminal 300,000 bl/day Houston Ship Channel end 2026 Gulf Coast Fractionators JV * GCF Fractionator Fractionator 135,000 bbl/day Mont Belvieu 24-Nov Moss Lake Hackberry NGL Project Terminal 315,000 bbl Calcesieu Ship Channel NA Moss Lake Hackberry NGL Project Fractionator 300,000 bbl Calcesieu Ship Channel NA MPLX Preakness II Gas Plant 200 million cubic feet/day Delaware started up MPLX Secretariat Gas Plant 200 million cubic feet/day Delaware H2 25 MPLX Harmon Creek II Gas Plant 200 million cubic feet/day Marcellus started up MPLX Harmon Creek III Gas plant 300 million cubic feet/day Marcellus H2 26 MPLX Harmon Creek III de-ethanizer 40,000 bbl/day Marcellus H2 26 MPLX BANGL pipeline** Pipeline expansion from 125,000 to 250,000 bbl/day Q1 25 ONEOK MB-6 Fractionator Fractionator 125,000 bbl/day Mont Belvieu year end 24 ONEOK West Texas NGL Pipeline Expansion Pipeline increase to 740,000 bbl/day year end 24 ONEOK Elk Creek Pipeline Expansion**** Pipeline increase to 435,000 bbl/day Q1 25 ONEOK Medford Fractionator rebuild Fractionator 210,000 bbl/day Medord, Oklahoma Q4 26, Q1 27 Targa Train 9 Fractionator Fractionator 120,000 bbl/day Mont Belvieu started up Targa Train 10 Fractionator Fractionator 120,000 bbl/day Mont Belvieu started up Targa Train 11 Fractionator Fractionator 150,000 bbl/day Mont Belvieu Q3 26 Targa Greenwood Gas Plant 275 million cubic feet/day Midland Q4 23 Targa Greenwood II Gas Plant 275 million cubic feet/day Midland started up Targa Wildcat II Gas Plant 275 million cubic feet/day Delaware Q2 24 Targa Roadrunner II Gas Plant 230 million cubic feet/day Delaware started up Targa Bull Moose Gas Plant 275 million cubic feet/day Delaware Q2 25 Targa Pembrook II Gas Plant 275 million cubic feet/day Midland Q4 25 Targa Daytona NGL Pipeline Pipeline 400,000 bbl/day Completed Targa LPG Export Expansion Terminal 1m bbl/month Q3 23 Targa Galena Park LPG terminal expansion Terminal 650,000 bbl/month H2 25 Targa Falcon II Gas Plant 275 million cubic feet/day Delaware Q2 26 Targa Bull Moose II Gas Plant 275 million cubic feet/day Delaware Q1 26 Targa East Pembrook Gas Plant 275 million cubic feet/day Midland Q2 26 Targa East Driver Gas Plant 275 million cubic feet/day Delaware Q3 26 Insight article by Al Greenwood Thumbnail photo: Polymer pellets (source: Shutterstock)

13-Nov-2024