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Polyols23-Jul-2024
SINGAPORE (ICIS)–India will cut import duties
for methylene diphenyl diisocycanate (MDI) by
2.5 percentage points to 5.0% effective 24
July, the country’s finance minister Nirmala
Sitharaman announced on Tuesday.
MDI was among the raw materials identified by
the Indian government on which custom duties
will be reduced.
Sitharaman announced the changes to the
country’s Basic Customs Duty (BCD) – a tax
levied on imported goods at the time of their
entry into the country – in her presentation
before parliament of India’s national budget
for the fiscal year ending March 2025.
Polyethylene23-Jul-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
Conventional wisdom suggests that the
petrochemicals cycle may have bottomed out as
the prospects of interest rate cuts increase.
There are signs of recovery in the Europe. And
even in a high inflationary environment, the US
consumer kept on spending with unemployment at
record lows.
This, in my view, is a misreading of the data.
Because of the disproportionate influence of
China, what happens elsewhere doesn’t really
matter in the short- to medium-term.
China had a 22% share of the global population
in 1992 and a 9% share of global polymers
demand. By the end of this year, ICIS forecasts
that China’s share of the global population
will have slipped to 18%, but its share of
global polymers demand will have risen to 40%.
Too much global capacity was planned on the
basis of China’s petrochemicals demand growth
being at 6-8% per annum over the long term,
whereas 1-4% now appears to be more likely.
China’s petrochemicals capacity growth was
underestimated because of cost-per-tonne
economics used to assess projects. History
teaches us is that national strategic objective
also come into play.
One can argue, as the Rhodium Group does in an
18 July 2024 research paper, that China’s
economic growth may never return to previous
levels. This would mean no return to the
double-digit annual growth rates we saw in
petrochemicals demand during the Petrochemicals
Supercycle.
In today’s main chart, I kept to our base case
assumptions on global polypropylene (PP) virgin
production growth between 2024 and 2030, which
is almost the same as demand growth. I then
manually reduced capacity growth until I got
back to the historically very healthy operating
rate of 87% (operating rates being production
divided by capacity).
(What applies to PP applies to other
petrochemicals and polymers. The ICIS data for
other products suggest similar steep reductions
in capacity growth versus our base to get back
to the long-term history of operating rates).
This led me to the conclusion that global PP
capacity growth would need to be just 1.6m
tonnes a year versus 5m tonnes a year under our
base case. Under our base case, we see global
operating rates averaging just 76% in
2024-2030.
Capacity growth of just 1.6m tonnes a year
versus our base case would require substantial
capacity closures in some regions. Closures are
never easy and take considerable time because
links with upstream refineries, environmental
clean-up and redundancy costs – and the
reluctance to be the “first plant out” in case
markets suddenly recover.
The sale of rationalisation suggested by just
1.6m tonnes a year of capacity growth therefore
suggests no full recovery in PP and in other
petrochemicals until, I am guessing, 2026.
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.
Potassium Chloride (MOP)22-Jul-2024
HOUSTON (ICIS)–Railroad Canadian Pacific
Kansas City (CPKC) confirmed it had a
derailment incident involving a train carrying
potash volumes on the evening of 21 July, but
there were no injuries and no public safety
threat.
The company said multiple cars of a train
carrying potash derailed around 5pm CST near
Gull Lake, Saskatchewan, which is about 175
miles from Regina.
CPKC through a spokesperson that there were
approximately 18 cars involved which were
carrying unknown quantities of potash.
CPKC crews remain at the site working on the
clean-up with the cause of the derailment
currently under investigation.
The accident had blocked access in and out of
Gull Lake from the highway, but the company did
say that the railroad crossing on Provincial
Highway 37 was now open.
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Speciality Chemicals22-Jul-2024
HOUSTON (ICIS)–The US election could see
Donald Trump return as president with
majorities in both legislative chambers, which
could bring a reduction in excessive red tape,
weaker support for electric vehicles (EVs) and
impose even more ponderous tariffs and trade
restrictions.
Incumbent President Joe Biden has dropped
out of the race, and current
polls show Trump ahead in the election
The House of Representatives and the Senate
are closely split between the nation’s two
major parties, so the Republican party could
obtain majorities in both legislative chambers
Regardless of who wins the presidential
election on 5 November, the outlook remains
pessimistic for tariff relief and trade deals
in the US
US TRADE POLICY WILL REMAIN
RESTRICTIVERegardless of who
wins the presidential election, US trade policy
will remain restrictive, which could leave the
nation’s chemical exports vulnerable to
retaliatory tariffs imposed during a trade
dispute. Also, tariffs could increase the cost
of imports of critical chemical intermediates.
Biden’s campaign website did not discuss trade
policy, and he recently dropped out of the
race. But he maintained many of the tariffs
that Trump introduced during his presidency in
2016-2020. In addition, Biden
raised tariffs on EVs from China.
He signed bills passed by Congress that
required local content rules for government
programs.
Trump’s platform proposed a baseline tariff,
with the candidate mentioning 10%
for most imports. For China, he mentioned
tariffs of more than 60% during
an interview on the television program Fox
News.
Trump’s campaign website
proposes a reciprocal trade act, under
which the US could match tariffs that another
country imposes on its exports. Although the
platform concedes that reductions are possible,
the proposal focuses on the potential of higher
tariffs.
TRUMP TO ROLL BACK BIDEN’S EV
POLICIESBiden did not mention
EVs on his campaign website. But during his
presidential term, the federal government used
multiple laws and regulatory statutes to
promote EV adoption.
If Trump becomes president, he has pledged to
cancel what he
calls the electric vehicle mandate. He
specified many of Biden’s policies that
encouraged the adoption of EVs.
EVs typically consume more plastics on a per
unit basis than automobiles powered by internal
combustion engines (ICEs). EVs also pose
different material challenges, which is
increasing demand for different plastics and
compounds.
Policies that prolong the use of ICE-based
vehicles could extend the operating life of the
nation’s refineries. Companies could be more
willing to invest in maintenance and repairs if
they are confident that they could recoup their
investments.
Refineries produce many building block
chemicals, such as propylene, benzene, toluene
and mixed xylenes (MX).
BIDEN, TRUMP PRESENT EXTREMES ON CHEM
REGULATIONSBiden and Trump lay
on opposite extremes of regulations and policy.
Under Biden, the federal government has adopted
numerous regulations, many of which the
chemical industry has said provided them with
little benefit given the time and expense of
compliance.
The past six months has been described as
the worst regulatory environment that the
chemical industry has ever seen.
That burdensome regulatory climate could
persist if a Democrat wins the election, since
personnel from the Biden administration could
remain in place.
The following lists
some of the regulatory policies that could
either persist under a Democratic
administration or weaken under a Trump
administration:
The Environmental Protection Agency (EPA)
has adopted a whole chemical approach in
determining whether a substance poses an
unreasonable risk under the nation’s main
chemical-safety program, known as the Toxic
Substances Control Act (TSCA). The regulator
is currently reviewing vinyl chloride monomer
(VCM), acrylonitrile (ACN) and aniline, a
feedstock used to make methylene diphenyl
diisocyanate (MDI).
Changes to the Clean Waters Act, the Risk
Management Program (RMP) and the Hazard
Communication Standard that were made by Biden.
Biden has promoted environmental justice
throughout the federal government.
Environmental justice
could make it harder for chemical
companies to expand existing plants or build
new ones.
Because these are federal policies, a different
president could reverse them.
Trump could try to unravel some of Biden’s
rules to the degree possible under executive
authority. However, some of the rules will
persist because of entrenched bureaucracy or
because they are final.
The pace of new regulations would likely slow
under a Trump presidency.
He has pledged to restore his order that
for every new regulation introduced by the
federal government, two existing ones must be
eliminated.
OTHER POLICY
DIFFERENCESSuperfund
tax: If Trump wins the presidency and
Republicans win the legislative branch, that
could set up
a repeal of the Superfund tax, which
imposes taxes on several building-block
chemicals and their derivatives. Republican
legislators have already
introduced bills to repeal the tax.
Trump tax cuts:
Trump has pledged that he would make his
2017 tax cuts permanent. These are set to
expire at the end of 2025 from his previous
term in 2016-2020.
Oil production: Biden has
imposed several restrictions on oil and gas
production on federal land and on offshore
leases, although this did not stop production
from surging in the Permian Basin, much of
which is outside of government control. Trump
has pledged
to remove those restrictions.
Insight by Al Greenwood
Thumbnail shows US capitol. Image by
Lucky-photographer
Potassium Chloride (MOP)22-Jul-2024
HOUSTON (ICIS)–Offshore potash marketing group
Canpotex announced it is fully committed on
volumes for potash sales through 30 September.
The group said this commitment comes amid
continued strong demand for potash and
widespread engagement in all major offshore
markets.
Canpotex said this level of demand is being
supported by solid fundamentals for
agricultural commodities, as well as
recognition of the clear value and
affordability of potash in key growing regions.
In addition, it has seen that the focus on food
security and food quality continues in many of
their markets.
Canpotex is the offshore marketing company for
Saskatchewan potash producers Nutrien and
Mosaic and has been operating since 1972.
Ethylene22-Jul-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 19 July.
Westlake appoints
Jean-Marc Gilson as new CEO, effective
today
US-based chemical and building materials
producer Westlake Corp has appointed Jean-Marc
Gilson as president and CEO, effective 15 July.
He succeeds Albert Chao, who becomes executive
chairman of the Westlake board of directors.
SW ’24: US
fertilizer demand lacking as farm economics
unsupportive
Unfavorable farming fundamentals, including
weaker grain prices, high cost of credit, and
weather issues will continue to hit demand for
fertilizers, said market participants on the
sidelines of the Southwestern fertilizer
conference (14-18 July).
SHIPPING:
USG-Asia liquid chem tanker rates plunge on
ample space availability after
Beryl
Liquid chemical tanker rates from the US Gulf
to Asia are plunging this week as plant
shutdowns and delays in the aftermath of
Hurricane Beryl have led to “gaping large holes
of space”, shipping brokers said on Wednesday.
INSIGHT: OUTLOOK:
US chems may see revival of programs, UN
plastic treaty
The US chemical industry could see the return
of some popular trade and chemical-safety
programs later this year, and customers of the
major railroads could get their first chance to
switch carriers if they get bad service.
Global IT issues
impact energy trading; Trayport services
return
IT issues that impacted energy trading systems
on Friday morning were gradually being
resolved, with market participants regaining
access to critical applications.
ICIS Economic
Summary: US eyes coming interest rate cuts as
consumer spending, inflation
eases
With solid progress on disinflation and the
labor market easing, financial markets are
sharpening their focus on the coming interest
rate cut cycle, with the first move expected in
September. Ten-year Treasury yields are
collapsing and economically sensitive stocks
surging, as consensus moves to as much as three
cuts of 25 basis points by the Federal Reserve
in 2024 and further easing next year.
Speciality Chemicals22-Jul-2024
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on
19 July.
NEWS
Braskem Idesa
ethane supply more stable, PE prices to recover
in H2 2025 – exec
Supply of ethane from Pemex to polyethylene
(PE) producer Braskem Idesa is now more stable
after a renegotiation of the contract – but the
global PE market remains in the doldrums,
according to an executive at the Mexican firm.
INSIGHT:
Colombia’s wide single-use plastics ban kicks
off amid industry reluctance
Colombia’s single-use plastic ban, which
affects a wide range of products, kicks off
amid some industry reluctance after a hurried
implementation, and with provisions to revise
the legislation after a one year trial period.
Brazil’s
chemicals capacity utilization falls to record
low in May at 58%
The utilization rate at Brazil’s chemical
plants fell to 58% in May, the lowest level
since records began in 1990, the country’s
chemicals trade group Abiquim said on
Wednesday.
Brazil’s floods
hit GDP growth in 2024 but strong recovery in
2025 – IMF
The IMF has revised Brazil’s economic outlook
for 2024, with GDP growth now forecast at 2.1%,
down from an earlier projection of 2.2%,
because of the floods in Rio Grande do Sul.
Mota-Engil, PEMEX
agree to build new ammonia, urea and AdBlue
plant in Mexico
Mota-Engil, through its subsidiary MOTA-ENGIL
MEXICO, has signed an agreement with Pemex
Transformación Industrial, a subsidiary of
state-owned energy major Petróleos Mexicanos
(“PEMEX”), to construct a fertilizer plant in
Escolin in the state of Vera Cruz.
Harvest Minerals
undertakes rare earth elements exploration at
Brazil fertilizer project
Fertilizer producer Harvest Minerals announced
a two-phase rare earth elements exploration
program has commenced at its Arapua project in
Brazil.
Stolthaven
Terminals chosen as potential operator for
Brazil green ammonia export
terminal
Logistics firm Stolthaven Terminals announced
that in cooperation with Global Energy Storage
(GES), it has been selected as the only
potential operator to design, build and operate
a green ammonia terminal in Brazil to be
located within the industrial export zone at
Pecem in the state of Ceara.
Silver Valley
Metals selling Idaho project to refocus on
Mexico lithium and SOP
project
Brownfield exploration company Silver Valley
Metals announced it has signed an asset
purchase agreement for the Ranger-Page project
in Idaho which will allow it to refocus efforts
at its lithium and potash project in central
Mexico.
BHP enters into
further agreement with Vale over 2015 Brazil
dam failure
BHP announced it has entered into an agreement
with Vale regarding group action proceedings in
the UK in respect of the Fundao Dam failure in
Brazil which occurred in 2015.
PRICING
Lat Am PE
international prices stable to up on higher US
export offers
International polyethylene (PE) prices were
assessed as steady to higher across Latin
American countries on the back of higher US
export offers.
PP domestic
prices fall in Argentina on sluggish demand,
ample supply
Domestic polypropylene (PP) prices were
assessed lower in Argentina on the back of
sluggish demand and ample supply. In other
Latin American countries, prices were
unchanged.
US Gulf sees PVC
price decline, Latin America stays
stable
Polyvinyl chloride (PVC) demand in Brazil has
shown fluctuations from weak-to-stable this
July, accompanied by sufficient supply.
Although market prices have stabilized, local
prices continue to face pressure following a
recent price drop in the US Gulf market.
Petrochemicals22-Jul-2024
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which looks at Europe’s political centre.
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. Paul Hodges is the chairman of
consultants New
Normal Consulting.
Polyethylene Terephthalate22-Jul-2024
LONDON (ICIS)–Senior editor for polyethylene
terephthalate (PET), Caroline Murray, and
senior editor for Recycling, Matt Tudball,
discuss the current state of the PET and
recycled PET (R-PET) markets and the
uncertainties that both face for the rest of
the year, including:
Lower-than-expected PET demand
PET exports head out of Europe
High freight costs hit imports
Upcoming recycled content targets for R-PET
Lack of clarity about recycling legislation
Limited availability of food-grade R-PET
pellets
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