Xylenes

UPDATED: On 27 June 2024, ICIS updated this analysis to include a review of the impact that manifesto pledges could have on UK power prices On 24 June 2024, ICIS updated this analysis to include a review of the renewable capacity pledges from manifestos and their likelihood of being met On 21 June 2024, ICIS updated this analysis to include a breakdown of the impact of new gas licenses on British gas supply On 20 June 2024, ICIS updated this analysis to include the Scottish National Party's manifesto plans for energy. The manifesto table now includes these details Initial analysis published with detailed table reviewing energy policies from announced manifesto pledges, original analyses covering nuclear power and gas-fired power generation, a UK election special episode of the ICIS Hydrogen Insights podcast LONDON (ICIS) — On 4 July 2024 the UK public will elect a new government, but what do the different parties have in store for energy? The following analysis reflect core pledges from manifestos and reviews those pledges in detail using ICIS data and insights. This analysis of UK political pledges and announcements will be continuously updated by the ICIS energy editorial team. Lead authors include: UK power reporter Anna Coulson, British gas reporter Matthew Farmer. UK ELECTION PLEDGES UNLIKELY TO IMPACT POWER PRICES UK power prices out to 2030 could remain relatively unchanged regardless of which party wins the UK election ICIS analytics forecasts UK power prices to range between £46-85/MWh in 2030 LONDON (ICIS)–UK power prices could remain relatively unchanged to 2030 regardless of which political party wins in the UK’s general election on 4 July, ICIS analysis shows. The development of the power market and new capacity faces continued hurdles, despite numerous parties intending to rein in energy prices according to their manifestos. An analysis of the Conservative, Labour, Liberal Democrat, Green Party, Reform UK, Scottish National Party (SNP) and Plaid Cymru manifestos shows that all parties present different policies aimed at helping manage energy bills. Some policies presented by the main parties suggest direct consumer initiatives, such as Labour’s plan to issue grants and loans for insulation, or the Green Party policy pledge to develop an insulation scheme, or the SNP’s financial relief for consumers in the Highlands and Islands of Scotland. However, some policies seek to address the wholesale power market through measures such as new licenses for gas-fired power generation or the build-out of renewable capacity. Renewables, volatility and risk Broadly speaking, energy policies proposed by UK parties present three different paths. Firstly, there are policies focused primarily on expanding renewable capacity as ageing gas-fired and nuclear power plants are decommissioned. Such policies would lead to periods of lower power prices, but balancing this would drive more volatility across short-term power prices. This pathway is most closely resembled by the Green Party, which has ambitious targets for renewable deployment by 2035. As the party plans to phase out existing nuclear power and stop the development of new plants, this would increase price volatility as nuclear would no longer operate as a baseload source of generation. The Green Party’s manifesto did not specify a timeline for the nuclear plans; therefore, it is difficult to determine when this could affect UK power prices. However, the party states it would rapidly expand energy storage capacity, which would balance renewable energy intermittency, although more detailed plans are not specified in the party’s manifesto. The SNP also intends to develop renewable energy, outlining “significant growth” in renewables alongside expansion in storage for energy. The Liberal Democrats also lean towards renewable development but present a decentralized approach when considering solar. The party would seek to build solar panels on new homes, therefore reducing power demand for residential offtake. A more central approach can be seen from both the Conservative and Labour parties, which both present clear plans for renewable growth, but also consider building new nuclear capacity or, in the case of Labour, also extending the life of the existing nuclear fleet. Furthermore, the Labour party intends to maintain a strategic reserve of gas-fired power plant which could limit price volatility but would result in higher power prices linked to natural gas prices. The Conservatives plan to build new gas power stations which would also reduce price volatility but would create an even stronger link to gas prices. However, the party’s manifesto did not state how much capacity would be added and when, therefore it is hard to determine when this could impact prices. Finally, the third pathway is presented by Reform UK, which presents plans to fast-track small-modular reactor (SMR) build out for nuclear capacity while reviewing the potential for tidal power, both baseload generation-supporting activities. Further, with the party’s intention to explore new UK gas field licenses, gas-fired power supply could remain in the mix into the future. ICIS analyst view Despite multiple power market pledges, the potential for manifesto points to translate into price movements appears limited, according to ICIS analyst Robbie Jackson-Stroud. Jackson-Stroud notes that the development and construction of new capacity, such as gas-fired power plants, requires time to agree upon at a policy level, plan and then construction. Adding to this, “cost constraints in the current climate are the driver of investment in renewable capacity, and a change of party does not shift that,” he added. Regardless of the party to come out as winner of the 4 July elections, there may simply not be enough time to deploy new capacity for wholesale power prices to ease, be that renewables or fossil-fuel based generation. Considering the challenges facing parties in delivering power-market change ahead of 2030, it is unlikely that they would present notable shifts to forecasted power prices before the next decade. ICIS long-term power data indicates that in 2030, depending on the development of the carbon price, UK power prices are expected to range between £46-85/MWh. In comparison, ICIS price assessments show that the UK power front-month baseload price averaged £66.62/MWh between January to June this year, which is £49.34/MWh lower than the same period last year. The drop in price is due to more stable market conditions this year in the UK and on the continent. UK PARTIES COULD STRUGGLE TO MEET RENEWABLE CAPACITY ELECTION PLEDGES – Added to analysis 24 June 2024 UK parties unlikely to meet capacity targets Key to onshore wind would be change to regulation Offshore wind could struggle following recent CfD round LONDON (ICIS)–For the UK general election, Labour, the Conservatives and the Green Party are the only three of the main parties to present outright capacity targets for renewable energy deployment across their manifestos. However, ICIS data and analyst insight suggests that meeting such targets could face difficulties due to recent setbacks in the UK’s Contracts for Difference (CfD) bidding process and restrictive regulation for onshore wind. The Labour party manifesto states it will double onshore wind, triple solar power, and quadruple offshore wind by 2030. To present an idea of this, ICIS has multiplied its forecasted capacity for these technologies in the UK by the end of 2024 by their respective factors according to Labour’s pledges. Actual intended capacity may vary. ICIS had contacted the Labour party for comment but received no response by the time of publication. Onshore wind Labour plans to double onshore wind capacity by 2030, while the Green Party would deploy 53GW of capacity by 2035. The Liberal Democrats would ‘remove the Conservative’s unnecessary restrictions on new wind power’, likely referring to the requirements the current government introduced in 2015 and changes to the law in 2016. Planning policies were updated in September 2023 to allow locations suitable for new wind farms to be identified in several ways, rather than only in the area’s development plan. However, decisions continue to be made by local planning authorities which differs to the process for other infrastructure projects where decisions on major projects are made by the Secretary of State. The current government does not have an onshore wind capacity target and the Conservative’s manifesto has no mention of one however, it does state that the party will ensure democratic consent for onshore wind. ICIS analytics forecasts 25.85GW of onshore wind capacity in 2030 and in 2035, under a base case scenario, which is below Labour and the Green Party’s targets. ICIS analyst, Robbie Jackson-Stroud, stated that planning permission is one of the main challenges onshore wind projects face. “Costs for turbines have also risen and so they are then squeezed into a CfD funding pot where they have to compete with solar”, he added. Jackson-Stroud noted that onshore wind could be a key component to the development of renewable capacity in the UK, changes to regulation permitting. “One aspect that is likely to change is regulation and approval of onshore wind projects, which require less budget and time to build. However, it is difficult to envisage a new government being timely enough to sufficiently improve the approval process and have enough projects apply to shift onshore capacity before 2030. It should be noted, however, how much potential a change to regulation would have to long term capacities, and you can expect more capacity in the 2030s”, Jackson-Stroud said. Offshore wind The Conservatives, Labour and the Green party all position offshore wind as a key technology to support the decarbonization of the UK’s power system. However, achieving such targets appears difficult following an unsuccessful fifth auction of the CfD scheme in 2023, in which there were no bids for offshore wind amid a low strike price. The current government increased the strike price for the upcoming sixth auction round, raising the maximum strike price from £44/MWh to £73/MWh. Jackson-Stroud highlighted the difficulty facing the next wave of auctions when considering 2030 targets. “Both parties [Labour and the Conservatives] have pledged unachievable targets without a huge budget increase for the CfD. Taking into account the time it takes to build offshore wind sites (that are getting increasingly larger on average) there are only two CfD auctions at most that can fund capacity to come online by 2030. “There is roughly 27GW of offshore wind already under CfD, under construction or operational, suggesting the need for a further 23GW across two auctions, which would be a record at a time where costs are higher than they have ever been. While the budget for the latest round has been raised to an all-time high of £800m for offshore and £1.2bn total, this would still procure only 12GW of wind in even the most conservative estimates. "This means regardless of Labour increasing 2030 targets for offshore, even the 50GW already in place will not be met, and a change of party doesn’t change the blockers to this," Jackson-Stroud said. ICIS analytics forecasts that offshore wind capacity will be 39GW in 2030 under a base case scenario, therefore falling short of the Conservative and Labour party targets. Similarly, offshore wind capacity is forecast to be 48.04GW in 2035 under a base case scenario, well below the Green Party’s target. Solar Labour plan to triple solar capacity by 2030, while the Green Party and Conservatives have set targets for 2035, 100GW and 70GW respectively based on manifesto and recent policy announcements. However, reaching such targets may prove challenging based on recent CfD results. ICIS analyst Matthew Jones previously noted that for the UK to meet its 70GW by 2035 target, CfD capacity awards would need to average 4.5GW/year. However, over the last two CfD rounds, just 2.2GW was awarded in each. Further, ICIS analytics forecasts 42.97GW of solar capacity by 2030, and 48.54GW by 2035, under a base case scenario, therefore missing the Labour, Conservative and Green Party targets. Since the closure of the renewable obligation and feed-in tariff schemes, the CfD scheme is the only subsidized route to market for solar. The forecast models cited in this story are available as part of ICIS Power Foresight. If you would like to learn more about ICIS Power Foresight, please contact head of power analytics Matthew Jones at Matthew.Jones@icis.com UKCS LICENSING – Added to analysis 21 June 2024 Several parties have committed to end the issuing of new licenses for extraction of oil and gas on the UK continental shelf (UKCS), however ICIS analysis shows the inclusion of new licenses may have a minimal impact in mitigating output decline. Gas production on the UKCS started declining in 2000, but held steady during the 2010s. It currently accounts for approximately 40% of Britain’s gas supply mix, with the bulk of remaining volumes coming through Norwegian imports and LNG. From the late 2020s, UKCS production is expected to decline by approximately 6% per year. Licenses on new discoveries would not reverse the decline in British production expected in coming years. However, they would have accounted for another 0.80 billion cubic meters (bcm) of British gas production in 2030, increasing to 1.5bcm in 2035. In contrast to the other parties, the Conservatives and Reform UK have committed to annual licensing rounds and “fast-track” licenses, respectively. Both have done so with a justification of maintaining British energy independence, citing the rising price of energy caused by the full-scale Russian invasion of Ukraine. GAS-FIRED POWER DEMAND LIKELY UNMOVED Both the Conservatives and the Labour party show support for the continued use of gas for power generation, bolstering a key area of demand for British gas market participants. However, of the two parties, the Conservatives presented a more bullish mentality by noting intensions for new gas plants, aligning with previous announcements to support new capacity. Labour meanwhile take a muted approach, noting the need for a strategic reserve of gas for power generation. Both Labour and the Conservatives have therefore presented policy that could reduce power-market price volatility as renewable capacity grows, with gas offering baseload generation at periods of low renewable output. Gas demand for power to remain From a gas-market perspective, the use of gas for power amounts to a large share of overall demand. In 2023, gas offtake for power accounted for 26% of total gas demand. The UK is heavily reliant on gas-fired power generation, with it contributing 26% of the UK’s electricity mix in the period 1 January to 31 May 2024, according to data from National Grid. Similarly, gas-fired generation provided an average 36.3% of the mix over the 2019-23 period, therefore making a significant contribution to the UK’s electricity stack. While the capacity of new gas generation is not mentioned in the Conservative party’s manifesto, ICIS analytics forecast data indicates that gas capacity is set to increase through to 2026, under a base case scenario. This would suggest that offtake for power generation could well remain a key share of overall gas demand under either a Conversative or a Labour government. Further, ICIS data shows that there will be 7.92GW of gas capacity in 2050 under a base case scenario, which itself raises uncertainty around the prospect of pledges to decarbonize power grids by around the 2030s. NUCLEAR Nuclear power represented a large focus for the Labour, Conservative and Reform UK parties, which each announced plans to increase nuclear capacity through a mix of measures, such as plant life extensions, new large-scale projects, or Small Modular Reactors (SMRs). Despite this, the overall pledges presented for the election suggests need for further capacity build-out in the run up to 2050 in order to meet the government's target. While the Conservative’s manifesto did not mention a specific nuclear capacity target, the current government has a target to reach 24GW of nuclear capacity by 2050. ICIS analytics forecasts that, under a base case scenario, nuclear capacity will be 12.76GW by 2050. Plant life extensions Although Labour’s manifesto did not provide details on which nuclear plants it intended to focus on for life extensions, or for how long, the intension is in line with former market announcements from EDF, which stated plans in January 2024 to extend the lives of five UK nuclear plants. EDF plans to invest an additional £1.3bn in these power stations over 2024-26, with the aim to maintain output from the four advanced gas-cooled reactors (AGR) for as long as possible, and for the Sizewell B plant to operate for an additional 20 years. The lifetimes of the four AGR stations would be reviewed by the end of 2024. New capacity From a new capacity perspective Labour pledged to get the 3.2GW Hinkley Point C project over the line and that new nuclear power stations, such as the 3.2GW Sizewell C project, will play a key role in helping the UK to achieve energy security and clean power. In January, the Conservatives announced plans for a new large-scale nuclear power plant, which would be as large as Hinkley Point C or Sizewell C, which are both 3.2GW in capacity. The current government announced in May that Wylfa would be the preferred site for this new plant however, a commissioning date is still to be confirmed. This aligns with the party’s manifesto pledge to deliver a new gigawatt power plant at the same location. The new plant in Wales could well boost UK nuclear capacity, but it would still present a capacity gap between the current ICIS forecast for 2050 and the government’s target of 24GW. Small modular reactors Labour, the Conservatives, and Reform UK all mention SMRs in their manifestos however, the Conservatives will approve two new fleets of SMRs within the first 100 days of the next parliament. This is likely through the competitive process that Great British Nuclear (GBN) launched in 2023 to select SMR technologies best placed to be operational by the mid-2030s. GBN plans to announce successful bidders for the competition by the end of 2024 and to take two SMR projects to a final investment decision by 2029. However, it must be noted that SMRs are a new technology, and none are commissioned yet in Europe.    HYDROGEN In this UK general election special, ICIS hydrogen editor speaks with Rob Dale, founder and director of UK consultancy Beyond2050, which aims at supporting market participants in achieving their energy and sustainability goals. Over the course of the episode, Jake and Rob review which parties have committed to hydrogen for the election and what makes this election the biggest for hydrogen so far.

02-Jul-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended Friday 28 July. Soft MA demand pressures prices lower, Red Sea tensions cap supply European maleic anhydride (MA) spot prices have softened as availability improved while poor demand slowed orders for July deliveries. Europe capro supply could be more balanced in July Following the severe shortages the European caprolactam (capro) market has struggled with over the past few months, supply is expected to be more balanced with demand in July. Europe orthoxylene sentiment for July stable-to-soft as feedstock costs show a mixed trend Europe orthoxylene (OX) contract price discussions for July are due to start next week amid persistently weak demand and mixed feedstock xylenes movements. Covestro to save €400m/year by 2028 through focus on digitalization, AI Covestro will save €400 million annually in material and personnel costs by the end of 2028 through a transformation programme focused on digitalization and artificial intelligence, it said on Tuesday. ADNOC and Covestro in concrete negotiations following €11.7bn offer Covestro and ADNOC have begun concrete negotiations on a possible investment by the Abu Dhabi oil company that would value the German chemical producer’s equity at €11.7bn, Covestro said on Monday.

01-Jul-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 28 June 2024. Asia melamine sees uptick on tighter supply; demand recovery uncertain By Joy Foo 28-Jun-24 12:54 SINGAPORE (ICIS)–Asia’s melamine spot market for China-origin product faced some pressure from early June due to lagging demand. China MEG market supported by limited import arrivals By Cindy Qiu 26-Jun-24 12:20 SINGAPORE (ICIS)–China’s monoethylene glycol (MEG) prices rose after falling in June, reflecting supply-demand dynamics, but the price growth may be capped by increasing domestic supply and curtailed downstream polyester production, despite limited import arrivals expected in July. India’s BPA import price surges; freight continues to exert pressure By Li Peng Seng 24-Jun-24 11:53 SINGAPORE (ICIS)–India’s bisphenol A (BPA) average import price hit its highest level in nearly 20 months recently due to firm ocean freight rates, a phenomenon that is expected to persist in the short term as vessel space is likely to stay tight. PODCAST: Asia base oils supply, demand to gradually rise in H2 By Damini Dabholkar 26-Jun-24 18:13 SINGAPORE (ICIS)–Asia’s base oils supply is expected to improve slightly in H2 2024, while a seasonal peak in overall demand is due to kick off in the later part of Q3. INSIGHT: Asia isocyanates H1 performance mixed, poor expectations for Q3 By Shannen Ng 26-Jun-24 14:30 SINGAPORE (ICIS)–Demand in Asia’s import markets for polymeric methylene diphenyl diisocyanate (PMDI) and toluene diisocyanate (TDI) is likely to remain limited in the upcoming summer months of July and August, and the outlook for late Q3 is uncertain. Chemanol to supply methanol to Saudi Amiral project over 20 years By Pearl Bantillo 25-Jun-24 12:52 SINGAPORE (ICIS)–Saudi Arabia's Methanol Chemicals Co (Chemanol) has signed a 20-year deal to supply methanol to the Amiral petrochemical project of Saudi Aramco Total Refining and Petrochemical Co (SATORP).

01-Jul-2024

SINGAPORE (ICIS)–Saudi Arabia's Methanol Chemicals Co (Chemanol) has signed a 20-year deal to supply methanol to the Amiral petrochemical project of Saudi Aramco Total Refining and Petrochemical Co (SATORP). Under the agreement, Chemanol will supply 100,000 tonnes of methanol to SATORP on an annual basis when the complex starts up in three years' time, Chemanol said in a filing on the Saudi Stock Exchange. “The commercial operation [of Amiral complex] and supply [of methanol] are planned to start by the end of 2027,” Chemanol said. It added that "the financial impact of this agreement is currently indeterminable due to the changes in market conditions and product prices at the time of starting to supply the methanol". SATORP, a joint venture between energy giant Saudi Aramco and French TotalEnergies, is expanding operations via building the $11bn Amiral complex in Jubail. The complex is expected to have a mixed-feed cracker and utilities, with a nameplate capacity of 1.65m tonnes/year of ethylene and related industrial gases. Engineering, procurement, and construction (EPC) contracts for the Amiral project were awarded in June 2023 to South Korea’s Hyundai Engineering & Construction. Aramco owns 62.5% of SATORP, while TotalEnergies holds the remaining stake of 37.5%. The companies made a final investment decision on Amiral in December 2022, to enable SATORP’s Jubail refinery to advance Aramco’s liquids-to-chemicals strategy. Amiral will enable SATORP to convert internally produced refinery off-gases and naphtha, as well as ethane and natural gasoline supplied by Aramco, into higher value chemicals. Thumbnail image: At a port in Jeddah, Saudi Arabia, 15 May 2023. (Ute Grabowsky/imageBROKER/Shutterstock)

25-Jun-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 22 June 2024. Malaysia May chemical exports rise 0.8% as overall trade continues recovery By Nurluqman Suratman 21-Jun-24 13:47 SINGAPORE (ICIS)–Malaysia's exports of chemicals and chemical products rose by 0.8% year on year to ringgit (M$) 6.31 billion in May amid signs that its overall trade weakness has bottomed out. Asia ACN sees continuation of tight supply, weak demand By Corey Chew 20-Jun-24 11:52 SINGAPORE (ICIS)–The acrylonitrile (ACN) market recently saw a slight decrease in price for both the northeast Asia and India markets. Thai bio-ethylene plant key to growing SCG Chemicals' green plastics portfolio By Nurluqman Suratman 19-Jun-24 13:15 SINGAPORE (ICIS)–Thailand's SCG Chemicals (SCGC) has obtained government approval for its 200,000 tonne/year joint venture bio-ethylene plant in Map Ta Phut, paving the way for the company to reach its target of producing 1m tonnes/year of green polymers by 2030. INSIGHT: Mixed outlook for Asia chemical prices in June – ICIS analysts By Lina Xu 18-Jun-24 12:00 SINGAPORE (ICIS)–There is a mixed outlook for petrochemical prices in Asia in June. Upward support comes from unplanned shutdowns and policy implications. Downward pressure is largely results from seasonal factors. INSIGHT: Asia petrochemical markets grapple with surging shipping costs By Nurluqman Suratman 14-Jun-24 13:54 SINGAPORE (ICIS)–Spot prices of most petrochemicals in Asia have spiked on the back of surging freight and container costs, as logistics challenges which continue to dampen global commodities trades coincide with a seasonal uptick in demand. PODCAST: Propane import growth to remain strong despite bottled LPG replacement By Lillian Ren 20-Jun-24 12:08 SINGAPORE (ICIS)–China's propane import growth is expected to remain strong this year although local authorities have been encouraging food catering and residential end-users to switch from bottled liquefied petroleum gas (LPG) to piped natural gas (PNG).

24-Jun-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 21 June. Indian phosphates buyers awaiting subsidies clarity from new government The bullish sentiment in the phosphates world continues, as supply in the Americas remains particularly tight, and demand firming. Europe naphtha, gasoline prices push higher despite weak fundamentals Europe naphtha market spot quotations appear to be torn between firming upstream Brent crude values and waning demand-side fundamentals, with weakness in gasoline particularly denting sentiment. New industrial deal needed to enable energy transition – Europe trade groups The EU needs a powerful industrial strategy to deliver the massive expansion in renewable energy required to power energy-intensive sectors which will provide locally made raw materials, according to a coalition of regional trade groups. Europe BDO heading into Q3 with hopes of stability rather than improvement Although the better-than-expected demand during the first half of 2024 would typically give rise to positivity for the European butanediol (BDO) market, players are tempering their predictions to hopes of stability. Downstream restructuring darkens Europe PX outlook despite shipping disruption uplift Paraxylene (PX) demand in Europe is likely to be relatively firm over the summer as seasonal buying appetite couples with stronger offtakes from downstream markets impacted by delayed imports and higher freight costs.

22-Jun-2024

CHARLOTTE, North Carolina (ICIS)–It is a choppy outlook for the US economy, but much of the data is pointing to a moderate slowdown in growth, as expected. Job creation continues at an above-trend pace and even after ticking up to 4.0% in May, the unemployment rate is still at low levels. US job openings fell by 296,000 to 8.059 million in April (latest figure). This is equivalent to 1.2 job openings per unemployed. This is off from a year ago when job openings totaled 9.904 million. Overall labor market supply and demand relationships appear to be moving back towards pre-COVID levels. With a still healthy labor market, incomes are holding up for consumers and providing support for the US economy. On the inflation front, the headline May Consumer Price Index (CPI) was up 3.3% year on year and core CPI (excluding food and energy) was up 3.4%. Progress on disinflation has stabilized. Economists expect CPI inflation to average 3.2% this year, down from 4.1% in 2023 and 8.0% in 2022 – still above the Fed’s target. Inflation is expected to soften to 2.4% in 2025 and 2026. As a result, interest rate futures are now for one or two cuts. A case can even be made for no cuts. Turning to the production side of the economy, the May ISM Manufacturing PMI registered 48.7, down 0.5 points from April and a reading that was below expectations. A March expansionary reading had ended 16 months of contraction in manufacturing but May marks a second contractionary reading. One step forward, two steps back. Overall manufacturing production fell back to a barely positive reading. New orders slipped further back into contraction and order backlogs and inventories contracted at a faster pace. Only seven of the 18 industries expanded. Demand was soft again and was elusive, output was stable, and inputs stayed accommodative. Meanwhile the ISM Services PMI rebounded 4.4 points to 53.8, a reading indicating a good pace of expansion. The Manufacturing PMI for Canada remained in contraction during May while that for Mexico expanded for the eighth month. Brazil’s manufacturing PMI expanded for a fifth month. Eurozone manufacturing has been in contraction for 23 months, but the region’s economy appears to be expanding again. China’s manufacturing PMI was above breakeven levels for the seventh month. Other Asian PMIs appear to be improving. Turning to the demand side of the economy, US light vehicle sales rose again in May and although inventories have moved up in recent months, they still remain low. We expect light vehicle sales of 15.8 million this year, before improving to 16.3 million in 2025. We are above consensus among economists and expect sales of 17.3 million in 2026. This would bring activity back to the last cyclical peak of 17.2 million in 2018. Housing activity peaked in Spring 2022 and into mid-2023 with housing reports since being mixed. We expect that housing starts will average 1.44 million in 2024 and 1.50 million in 2025 – also above consensus among economists. We expect housing starts to improve to 1.56 million in 2026. Demographic factors are supporting activity during this cycle. There is significant pent-up demand for housing and a shortage of inventory. Affordability continues to be an issue. Nominal retail sales were weak during May and prior months were revised downward, suggesting consumers are facing inflation fatigue and guarding their purchases. Sales gains were mixed across segments. Sales at restaurants and bars also weakened. Spending may be slowing. Our ICIS leading barometer of the US business cycle has providing signals that the “rolling recession" scenario in manufacturing and transportation may be ending. The services sectors continue to expand, but at a slower pace. Real US GDP rose 5.8% in 2021 and then slowed to a 2.5% gain in 2022. The much-anticipated recession failed to emerge for a variety of reasons and in 2023 the economy expanded 2.5% again. US economic growth in Q1 2024 slowed from the rapid pace of Q3 and Q4 2023, but those gains will aid 2024 performance of an expected 2.3% gain. The slowdown in quarterly economic activity suggests that in GDP growth should be 1.8% in 2025 and 1.9% in 2026. The US once again is serving the critical role of global economic growth engine. The recent rate cut by the European Central Bank (ECB) should provide a small lift to Europe’s economy. China is struggling with soft economic activity and appears to be exporting its way out of the mire. India and to a lesser extent Japan, are showing signs of resilience as the major players in the world economy diverge.

21-Jun-2024

SINGAPORE (ICIS)–Singapore's petrochemical exports rose by 6.5% year on year to Singapore dollar (S$) 1.18 billion in May, while overall non-oil domestic exports (NODX) dipped, official data showed on Tuesday. The country's NODX slipped by 0.1% year on year to S$14.3 billion in May, extending the 9.6% decline in April, Enterprise Singapore data showed. Singapore's NODX highlights differing economic trends between advanced economies and China, Jester Koh, associate economist at Singapore-based UOB Global Economics & Markets Research, said in a note on Tuesday. “Singapore’s NODX by key markets somewhat reflects the asynchronous growth path between advanced economies (namely the US and Eurozone) versus China,” he said. “NODX to China remained resilient… which is consistent with the stronger than expected Q1 2024 GDP although we remain circumspect on the outlook given the weaker than expected industrial production and fixed asset investment data in May while both new and used home prices continued to contract,” he said. NODX to the US and EU experienced significant declines in May, likely due to the impact of higher interest rates on investment and consumer spending, Koh noted. Singapore's non-electronic NODX, which includes pharmaceuticals and petrochemicals, fell by 6.0% year on year to S$10.6 billion in May following the 12.6% contraction in April. Singapore's non-electronic NODX to its top 10 markets were mixed in May, with shipments to China slumping by 24.3%. Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majors ExxonMobil and Shell. The continued growth in petrochemical shipments abroad tracked the improvement in the country's overall factory activity in May. The purchasing managers’ index (PMI) edged up to 50.6, a 0.1 point gain from the previous month, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on 3 June. This was the ninth straight month that it remained in expansionary territory. A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction. The improvements in the new orders (May: 52.0, April: 51.7), new export orders (May: 51.3, April: 51.0) and output (May: 50.9, April: 50.6) sub-indices suggest that underlying end-demand fundamentals remain intact, UOB's Koh said. “The anticipated easing of financial conditions towards the latter half of the year as central banks in major advanced economies begin to reduce policy rates could provide some tailwinds to global investment and consumption activity,” he added. Meanwhile, supplier delivery times likely rose in May after vessels were diverted around the Cape of Good Hope, away from the Red Sea, to avoid ongoing conflicts, according to Koh. This rerouting led to an increase in nautical miles and longer sailing times as corroborated by the decline in the supplier deliveries subindices for May, he said. The overall supplier deliveries PMI sub-index slipped to 50.3 in May from April's 50.4. “The recent port congestion in Singapore may have been further exacerbated by the announced increase in import tariffs by the US to target Chinese exports in strategic sectors such as semiconductors, EVs, batteries and solar cells as exporters scramble to ship goods to the US ahead of the 1 Aug 2024 implementation timeline for some export categories,” Koh added. Separately, Singapore's port authorities are still dealing with an oil spill that occurred after a dredger collided with Singapore-flagged bunker vessel Marine Honour at the Pasir Panjang Terminal on 14 June. In its latest update on 17 June, the Maritime Port Authority (MPA) of Singapore said that oil recovery assets have been deployed today to skim and collect the remaining oil spillage off the water surface to minimise further spread of the oil. Port operations have not been affected by the incident, according to the MPA. Focus article by Nurluqman Suratman

18-Jun-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China's chemicals producers are said to be focusing on being “nimble and agile” in response to weaker demand growth, ample local supply of intermediate chemicals and increasingly sophisticated end-use markets. This involves producing everything up and down the value chains only when it makes economic sense and increasing the differentiation of grades for a broader range of more sophisticated applications. Local producers are reported to be tripling their range of polyethylene (PE), polypropylene (PP) and polyurethane (PU) grades as they broaden their licensing of technologies. A lot of this differentiation is aimed at supplying chemicals and polymers for higher-value downstream industries such as electric vehicles and batteries. There are said to be plenty of intermediate chemicals available locally that can compete with opportunistic imports. Local producers of intermediates are also reported to be able to make better domestic netbacks than selling overseas. Customers of the local intermediate producers increasingly value reliable suppliers who can provide a wider range of grades, technical services and local currency deals, I’ve been told. The ability of chemicals importers to compete on price alone seems to be under challenge as a sustainable business model. Future winners in China could be the Tier 1 suppliers. These suppliers would make all the grades necessary to serve ever-more sophisticated local end-use markets, which would require constantly successful R&D and good technical services. This points towards China becoming a vast continent-sized market that largely serves itself in speciality chemicals and composites, as well as commodity chemicals. I earlier discussed how self-sufficiency is increasing in commodity chemicals resulting in a pivot by “overseas-based” producers to specialities and composites. China could become just about entirely self-sufficient in commodity grades of PP, polyethylene (PE) and in paraxylene (PX) and ethylene glycols (EG) by 2030. The latter two chemicals are of course pure commodities. Note the above phrase “overseas-based” rather than overseas, as the foreign investors in China are in strong positions to take advantage of this vas and rapidly maturing market. For reasons discussed today, I don’t believe that the pivot by overseas-based producers to specialities and composites will work if it is based on exporting to China. What should the overseas-based producers do? Pretty much forget China as an opportunity as they focus on the rest of the world. And here's the link: https://www.icis.com/asian-chemical-connections/2024/06/chinas-ever-more-sophisticated-chemicals-markets-could-entirely-serve-itself/ 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.

18-Jun-2024

LONDON (ICIS)–Matt Tudball, senior editor for Recycling, takes a look at the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: ICIS at Plastics Recycling Show Europe (PRSE) – email recycling@icis.com for a meeting Mixed views on food-grade pellet demand Better 2024 outlook to emerge at PRSE Prices stable ahead of event

14-Jun-2024