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US winter weather to drag RPM’s earnings in current quarter
HOUSTON (ICIS)–RPM International warned on Tuesday that the winter weather will drag down its earnings during the current quarter, the CEO of the US-based coatings, sealants and adhesives producer said on Tuesday. A lot of RPM’s products are used in construction, so cold weather delays these projects. Moreover, the company serves as a bellwether for chemicals used to make coatings, adhesives, sealants and other building materials. The recent cold spell marks the return to normal winter weather after two previous seasons of above normal temperatures, said Frank Sullivan, CEO. He made his comments during an earnings conference call. “We are facing a real winter compared to mild conditions in the prior year,” he said. “This is putting pressure on some of our businesses, particularly in the consumer segment.” The return of winter interrupted the return to volume growth for RPM’s segments, Sullivan said. When temperatures rise in the spring, he expects strong growth will return to those segments. RPM MAINTAINS SALES GUIDANCE FOR FISCAL YEARDespite the delays caused by colder temperatures, RPM maintained its sales guidance for its fiscal year, which runs through July. Sales should rise by the low single digits. Adjusted earnings before interest and tax (EBIT) should rise 6-10%. That compares with an earlier guidance of growth in the mid-single digits to the low double digits. RPM shares were up by more than 2% in midday trading. COLD WEATHER MAY DELAY OTHER BUILDING MATERIALSCold weather could delay purchases for other building materials such as paints, coatings, adhesives and sealants as well as pipes and siding made of polyvinyl chloride (PVC). Paints and coatings are important end markets for many petrochemicals and resins. Titanium dioxide (TiO2) is used as a white pigment and to make paints opaque. Solvents used in paints and coatings include ethyl acetate (etac), butyl acetate (butac) and methyl ethyl ketone (MEK). Polyurethane coatings are made with polyols and isocyanates such as methyl diphenyl diisocyanate (MDI). Acrylic based coatings are made with methyl methacrylate (MMA), and epoxy coatings are made with epoxy resins. Other chemicals used in paints and coatings include isopropanol (IPA) and vinyl acetate monomer (VAM). NO CHEM DISRUPTIONS ON US GULFSo far, there have been no reports of cold weather causing disruptions to chemical plants. Temperatures in Houston had briefly fell to freezing during the night, but the region has yet to suffer from prolonged low temperatures that have typically led to plant shutdowns or power outages. Also, many producers made their plants more resilient to cold weather following winter storm Uri in 2021. EARLIER FORECASTS CALLED FOR WARM WINTER PUNCTUATED WITH COLD SPELLSMeteorologists had forecast that the upcoming winter season will be warmer than normal, with spells of especially frigid weather. Such forecasts held true in the US Gulf Coast during the past two winter seasons. Each winter had a brief spell of freezing temperatures that caused some chemical plants to shut down. Focus article by Al Greenwood Thumbnail shows construction. Image by Costfoto/NurPhoto/Shutterstock
ICIS EXPLAINS: Halt to Russian-sourced gas flows via Ukraine
Additional reporting by Aura Sabadus LONDON (ICIS) — On 1 January 2025, Russian gas transit flows via Ukraine stopped amid the expiry of a five-year agreement between the two countries which have been in conflict since February 2022. The transit stop has been the base case view of the majority of market participants and it was priced in well before 1 January 2025. Therefore it had little impact on European gas and power prices in recent sessions. Despite the expectation that flows would cease to transit Ukraine, the end of the agreement resulted in an immediate supply drop to the Czech Republic and Austria. However, the scrapping of the German storage levy from 1 January 2025 incentivized flows from Germany to the region, partly offsetting the supply drop via Ukraine. The below infographic shows the shift in flows to the region after the transit halt on 1 January, drawing a comparison between flows on 31 December 2024 and on 3 January 2025 across the key interconnection points. In particular, the halt to the Russian gas transit through Ukraine halted flows to Slovakia and Moldova, and therefore from Slovakia to the rest of the region. Conversely, German gas exports to Czech Republic and to Austria increased to offset the drop in Russian gas flows reaching the region via Ukraine. Romanian exports also increased to support Moldova’s gas supply, as flows from Ukraine ceased. Nevertheless, ICIS data also indicates that since 2022 a strong LNG supply intake has rapidly replaced the drop in Russian gas flows to Europe, with flows via Sudzha remaining among the latest available Russian volumes via pipeline reaching Europe until 31 December 2024. Currently the only remaining source of Russian gas supply via pipeline is the TurkStream2 gas corridor, transiting via Turkey and delivering gas to Europe through the Bulgarian and Serbian infrastructure up to Hungary. Europe still receives Russian gas in the form of LNG supplies. ICIS ANALYSTS VIEWS “We expect gas storage withdrawals to be strong in the first quarter of 2025 and we will have a close look at them. ICIS Gas Foresight expects Austrian storage to deplete from current 80% levels towards 63% in April 2025 in the new base case absent Ukrainian gas transit” ICIS gas analyst Andreas Schroeder said. ICIS data showed that EU gas storages were 66% full as of 6 January. “LNG imports to Europe should increase again after a relatively weak 2024. Austrian OMV has secured capacity at LNG terminals to provide Austria with gas via Germany” Schroeder added. Security of supply in Europe is guaranteed and ICIS Gas Foresight estimates that LNG imports into the eleven EU countries considered in the model (Austria, Belgium, Czechia, France, Germany, Hungary, Italy, Netherlands, Poland, Slovakia and Spain) plus Great Britain will increase year on year by 232TWh (15 million tonnes of LNG or 21bcm) in 2025. In January, LNG imports are set to increase 7% year on year. ICIS Gas Foresight forecasts the fullness level for the EU11+GB region to fall by 12 percentage points month-on-month by the end of January. On European power markets, increases in the gas price will likely be reflected in increased power prices, particularly in those countries where gas-fired generation is still a large component of the power supply mix. “For the February ‘25 contract across pretty much all European power markets we saw prices higher on 21 November 2024 than they were on 2 January 2025. The primary reason for this is that coal prices have fallen since that point” ICIS power analyst Matthew Jones said. “Electricity flows from Slovakia to Ukraine continued on 2 January, which is relevant as Slovakia’s PM Fico had threated to stop flowing power to Ukraine in the event of no new gas deal. Slovakia tends to export to Ukraine, so stopping those flows would have been bearish for Slovakian power prices” Jones added.
Mitsubishi Chem cancels plans for US MMA project
HOUSTON (ICIS)–Mitsubishi Chemical Corp (MCC) said on Tuesday it has decided not to proceed with its planned 350,000 tonne/year methyl methacrylate (MMA) project at Geismar, Louisiana. The company failed in negotiations with customers “to obtain long-term commitments on transactions,” it said. MCC expects to be able to meet immediate demand with existing MMA monomer manufacturing facilities in Tennessee and elsewhere, it said. “Global demand for MMA monomer exceeds three million tonnes annually, and stable market growth is expected to continue,” it added. The Geismar project, announced in December 2020, would have used ethylene derived from US shale gas. MCC had acquired a construction site at Geismar and was working on the project’s engineering design and on obtaining permits and approvals. The company expects to record a loss of about Japanese yen (Y) 20 billion (US$127 million) in connection with the decision not to proceed with the project, it said. Meanwhile, MCC would continue to optimize its global production system by establishing new business locations and consolidating existing ones to boost the competitiveness of its MMA business, it said. (US$1=Y158) MMA is used in the manufacture of polymethyl methacrylate (PMMA), acrylic sheets, surface coatings, emulsion polymers and adhesives. Photo by Rudi Sebastian/imageBROKER/REX/Shutterstock

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BLOG: China’s C2 and C3 capacity in 2025 forecast to be 121% and 179% more than local demand
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. One of the arguments still doing the rounds out there is that this year will mark the turning point as global petrochemicals operating rates, margins and spreads recover. As they say, good luck with that idea. As today’s blog discusses in detail: In 2024 over 2023, China’s ethylene capacity exceeding local demand is estimated to have fallen by 1.6m tonnes. But in 2025 compared with 2024, it is forecast to increase by 6.3m tonnes to an all-time high of 11.5m tonnes. This would represent a year-on-year increase of 121%. Actual capacity is due to increase by 9m tonnes in 2025 over 2024, the biggest annual increase on record. Propylene oversupply is far worse reflecting the several routes to make propylene other than just the steam cracker – the only major route to produce ethylene. In 2024 over 2023, propylene capacity exceeding demand was at 2.7m tonnes. This year compared with 2024 oversupply is expected to reach 7.4m tonnes. Capacity exceeding demand is forecast to total 20.3m tonnes in 2025, 179% higher than in 2024. Annual capacity is due to increase by 9.6m tonnes in 2025 or 2024, which would again by the biggest annual increase on record. China’s global shares of capacity exceeding demand are also forecast to jump in 2025 as it overtakes all the other regions. One saving grace might be that increased trade protectionism prevents China from exporting its surplus ethylene and propylene molecules, either directly as derivatives or indirectly as packaging for or components of finished goods. This might create more regional markets and force China to delay start-ups. But it seems more likely to me that there will just be a shuffling of the pack as more Chinese manufacturing moves offshore to bypass tariffs. You might think that the other “get out of jail for free” card will be a rebound in Chinese domestic demand. Again, good luck with that idea because of the end of the real estate bubble and China’s demographics crisis. So, here is another prediction for 2025: Global petrochemicals operating rates, spreads and margins will decline versus last year because for the scale of China’s capacity additions and the country’s continued ability to export its excess molecules, either directly or indirectly. 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.
PODCAST: Moldova considers response to end of Russian transit
LONDON (ICIS)–On 1 January 2025, Russia stopped gas supplies to Transnistria after failing to make alternative arrangements to deliver gas to the province on the left bank of the river Nistru. Although Moldova, on the right bank, has diversified its gas portfolio away from Russian imports, it still depends on electricity produced in Transnistria using gas from Russia, resulting in a shift to the supply-demand balance of the area, while risking further power and gas shortages across the region. ICIS energy market expert Aura Sabadus speaks with Sergiu Lica and Eugeniu Bot, heads of natural gas and electricity departments respectively at the Moldovan state wholesaler Energocom, to discuss the options that are available to stave off tightness in supply over winter and beyond.
Americas top stories: weekly summary
HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 3 January. OUTLOOK ’25: US acetic acid, VAM exports expected stronger, domestic demand could rise US acetic acid and vinyl acetate monomer (VAM) supply heading into 2025 is improving after production outages resolved, while tight global supply is expected to boost export demand and lower inflation may lead to stronger domestic demand. OUTLOOK ’25: US EG/EO demand expected higher in 2025; turnarounds to tighten Q1 supply Demand for US ethylene glycol (EG) and ethylene oxide (EO) should increase in 2025 on restocking and if lower inflation drives consumption, but this may be met with tight supply in Q1 due to plant maintenance. OUTLOOK ’25: US President Trump could move quickly on tariffs, deregulation As US president, Donald Trump could quickly proceed on campaign promises to impose tariffs and cut regulations after taking office on 20 January. SHIPPING: Union dockworkers, ports to resume negotiations ahead of 15 Jan deadline Union dockworkers and representatives for US Gulf and East Coast ports are expected to resume negotiations on a new master contract on 7 January, just more than a week ahead of the 15 January deadline. OUTLOOK ’25: US methanol supply expected tight in Q1, demand may pick up mid-year US methanol supply is tight heading into the new year, a situation that has been offset by lackluster demand, but demand is expected to pick up farther into 2025 if more controlled inflation and lower interest rates fuel consumer spending and the housing market.
Latin America stories: weekly summary
SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 3 January. NEWSBrazil’s manufacturing loses steam as new orders slow at home and abroadGrowth in Brazil’s petrochemicals-intensive manufacturing sectors slowed down considerably in December on the back of lower new orders and households’ squeezed budgets on rising inflation and high borrowing costs, analysts at S&P Global said on Thursday. Brazil economists expect weaker real, higher interest rates in 2025Brazilian economists surveyed by the central bank do not expect the depreciation in the real in past weeks to stay for much of 2025, with interest rates consequently expected at nearly 15%. Mexico manufacturing sector ends 2024 in contraction on domestic, overseas woesMexico’s petrochemicals-intensive manufacturing sector concluded 2024 in contraction on the back of lower new orders and acute woes in the export-intensive automotive sector, analysts at S&P Global said on Thursday. Colombia manufacturing falls into contraction on China competition, squeezed consumersColombia’s petrochemicals-intensive manufacturing sector fell into contraction at the end of 2024 as consumers’ squeezed pockets put a dent in demand and competition from Chinese products increased, analysts at S&P Global said on Thursday. Chile’s manufacturing up 1.9% in November, industrial output 1.7% higherChile’s petrochemicals-intensive manufacturing sectors posted output growth of 1.9% in November, year on year, the country’s statistical office INE said on Tuesday. Argentina’s YPF high crude production costs offset by stable operations, growing output – Fitch YPF remains one of the country’s economic hopes for coming years, with output and exports expected to grow, but Argentina’s state-owned energy major’s production costs remain higher than regional peers, US credit rating Fitch said on Friday. Argentina’s YPF divests lubricants subsidiary in Brazil to UsiquimicaArgentina’s state-owned oil and gas major YPF has signed an agreement to sell its Brazilian lubricants subsidiary to local chemicals producer Usiquimica. PRICINGLatAm PE prices unchanged on weak market activityDomestic and international polyethylene (PE) prices were assessed as unchanged across Latin American countries. LatAm PP prices stable on muted market activityDomestic and international polypropylene (PP) prices were assessed unchanged across Latin American countries. Unigel seeks January PS price increase in BrazilUnigel has announced a 15% price increase, excluding local taxes, on all grades of polystyrene (PS) sold in Brazil, as of 2 January 2025, according to a customer letter. Innova announces January PS price increase in BrazilInnova has announced a 15% price increase, excluding local taxes, on all grades of polystyrene (PS) sold in Brazil, effective 1 January 2025, according to a customer letter.
Eurozone economy continues to stagnate, with PMI showing bullish services offset by soft manufacturing
BARCELONA (ICIS)–The Eurozone economy continues to be troubled, with new purchasing manager indices (PMIs) showing a slight overall deterioration as a strong services performance was offset by poor manufacturing at the end of the year. The HCOB Eurozone Composite PMI for December 2024 indicated a marginal decline in the eurozone economy, with the Output Index at 49.6, up from November’s 48.3 but still below the 50 mark which separates expansion from contraction. ​ The Services PMI Business Activity Index rose to 51.6 from 49.5, showing a modest recovery in the sector, while manufacturing continued to decline sharply. ​ The eurozone faced sustained declines in new business and employment, with inflationary pressures intensifying. ​ Despite this, business confidence improved to a three-month high. ​ Germany, France and Italy all saw reductions in business activity, with France performing the worst. ​ However, Spain and Ireland expanded, with Spain’s private sector output growing at the fastest pace since March 2023. ​ New orders in the eurozone fell for a seventh consecutive month, driven by a significant drop in factory sales, while services saw a slight increase in new business. ​ Export demand also decreased, continuing a near three-year decline. ​ Employment fell in December, with the manufacturing sector driving job losses, while services saw a fractional increase in headcount. ​ Despite lower staffing, companies reduced their work-in-hand volumes. ​Price pressures accelerated with input costs rising at the fastest pace since July, particularly in the services sector, leading to higher output charge inflation. ​ Business sentiment improved, with growth expectations for the coming year reaching a three-month high, although it is still below the historical average. ​ Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, noted that services inflation remains high, likely due to rising wages, and suggested cautious monetary policy with small interest rate cuts in early 2025. ​ He highlighted that while the service sector showed resilience, the overall economic outlook remains fragile, with industrial weakness posing a risk. ​ The economist added, “Service providers have maintained their confidence, with future business prospects largely positive and even improving in December, despite the index measuring sentiment being below the long-term average.”
Europe top stories: weekly summary
LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 3 January. Europe PX demand to remain downbeat in H1 2025 amid downstream rationalizations, imports Paraxylene (PX) demand pessimism in Europe is expected to continue in the first half of 2025 due to the rationalization of downstream purified terephthalic acid (PTA) plants in the region. Europe PMMA hoping for demand growth, but bracing for stagnant market The Europe polymethyl methacrylate (PMMA) market is bracing for 2025 to be “more of the same” with the challenges of 2024 continuing. Europe BDO demand pessimism to continue under the gloom of rising capacities in China There is a growing sense of apathy among players in the European butanediol (BDO) market when it comes to discussing demand hopes for 2025 as there are no expectations of an uptick and there is a prevalence of worry ahead of growing capacity in China in an already oversupplied market. Europe PP players eye pain points from old plants, tariff threats and limp manufacturing 2024 was dominated by supply-driven dynamics and 2025 looks unlikely to be much different for Europe’s polypropylene (PP) market.
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