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04-Jul-2024
One US judge states that LNG project pause should be pushed
aside
Ruling may have limited impact but has gained significant
attention
Focus shifting to later in the year as election countdown
continues
HOUSTON (ICIS)–A US federal judge attempted to disrupt the
pause on federal US LNG export licenses this week, but his
decision may not accelerate project permitting or investment
decisions.
The Department of Energy should begin approving licenses for
LNG plants to export to countries outside the US Free Trade
Agreement, Judge James Cain of the Western District of
Louisiana decided on 1 July.
Cain’s decision was the result of a lawsuit filed in March by
16 Republican-controlled US states, including Texas and
Louisiana, whose attorneys general argued that the LNG
permitting pause would impact their economies.
President Joe Biden’s administration placed what it calls a
pause on approving the key LNG permits, which are issued by
the Department of Energy, in January, saying the department
required time to update its analysis of whether additional
LNG exports fall within the public interest.
The decision borrowed language from Biden’s opponents, who
call the situation an export ban.
In a memorandum, Cain agreed with the plaintiffs’ argument
that the DOE did not provide an adequate reason to halt new
approvals while updating the analysis.
The 8.4 mtpa Commonwealth LNG in Louisiana; Venture Global’s
CP2 LNG, also in Louisiana; and the second phase of Sempra
Infrastructure’s Port Arthur LNG in Texas, adding 13.5mtpa in
capacity, are considered the most advanced export projects
requiring DOE approval.
While some of these companies applauded the apparent
regulatory victory, the direct impact of Cain’s decision is
uncertain, as the DOE falls directly under Biden’s purview.
In the days following the 1 July decision – which was given
the week of a US federal holiday – the DOE did not specify
whether or how it would re-start non-FTA license approvals.
If the DOE holds true to the remarks of Secretary Jennifer
Granholm in March, the LNG permitting pause could already be
near the halfway point: Granholm said then that she expects
the review process to wrap up entirely by March 2025.
As Biden considers the votes of vocal environmentalists in
the November election, even without an explicit pause, it was
unlikely that regulators would move quickly on pending
projects in 2024, executives said in January.
If Republican opponent Donald Trump wins the election,
non-FTA license approvals would likely re-start soon after
his January inauguration.
During the DOE pause, the Federal Energy Regulatory
Commission (FERC) has continued to approve another key
federal LNG permit.
The long-pending application by Venture Global’s CP2 LNG was
approved by FERC in late June.
No US LNG export projects have announced final investment
decisions so far in 2024, with Canada’s Cedar LNG being the
only project to secure adequate commercial support and
financing to move ahead.
Terephthalic Acid04-Jul-2024
SINGAPORE (ICIS)–A consortium consisting of
four Asian petrochemical producers have agreed
to establish a sustainable polyester fiber
supply chain.
Japan’s Mitsubishi Corp, South Korea’s SK geo
centric, Thailand’s Indorama Ventures Ltd
(IVL), and India Glycols along with three other
companies are part of the consortium, the
companies said in a joint statement on
Thursday.
Japanese sports apparel firm Goldwin is the
project owner of the initiative, while Finnish
refiner Neste is also part of the consortium
alongside Japan-based engineering firm Chiyoda
Corp.
Financial details of the project were not
disclosed.
The project aims to utilize renewable and
bio-based materials as well as materials
produced via carbon capture and utilization
(CCU) to manufacture polyester fibers for THE
NORTH FACE brand in Japan.
Outdoor apparel and equipment brand THE NORTH
FACE is operated by Goldwin in Japan.
“After that, the launch of further products and
brands of Goldwin will be considered,” Chiyoda
said in the statement.
The polyester fiber produced from the project
is planned to be used by Goldwin for a part of
THE NORTH FACE products, including sports
uniforms in July this year.
Chiyoda will supply CCU-based paraxylene (PX)
to the supply chain, while Thai polyester
producer IVL will contribute renewable
CCU-based purified terephthalic acid (PTA).
In March 2022, Chiyoda started producing carbon
dioxide (CO2)-based PX at its pilot plant at
the company’s Koyasu Research Park in Kanagawa
prefecture as part of a project linked with
Japan’s New Energy and Industrial Technology
Development Organization (NED).
SK geo centric and Neste will be supplying
renewable PX and renewable naphtha,
respectively.
India Glycols, which produces monoethylene
glycol (MEG), will supply bio-ethylene glycol
made mainly from sugarcane.
Toyobo MC Corporation (TMC) – a joint venture
between Toyobo Co and Mitsubishi Corp – will be
supplying renewable bio-CCU polyethylene
terephthalate (PET).
Details on supply volumes from each of the
consortium partners were not disclosed.
Thumbnail photo: A generic polyester
clothing label
(Sandvik/imageBROKER/Shutterstock)
Ethylene03-Jul-2024
HOUSTON (ICIS)–Hurricane Beryl is on track to
make landfall on Monday near the border of
Mexico and the US on the Gulf Coast, although
the path could change in the next few days.
If Beryl holds to its forecasted path, it would
spare the major refining and petrochemical hubs
in the US and Mexico. In addition, few if any
energy companies may choose to shut in US oil
and gas wells in the Gulf of Mexico.
Major US oil and LNG ports would escape the
worst of the storm.
The following map shows the forecasts path of
Hurricane Beryl as of midday on Wednesday.
The forecasted path puts Hurricane Beryl
between the Mexican petrochemical hub of
Altamira, Tamaulipas state and the US hub of
Corpus Christi, Texas state.
IF BERYL CHANGES COURSE, IT COULD
THREATEN CORPUS CHRISTIIn
addition to being a refining and petrochemical
hub, Corpus Christi is a major oil-exporting
port and hosts a terminal that exports
liquefied natural gas (LNG).
Were a storm to disrupt US LNG exports, it
would have a knock-on effect on petrochemical
prices by shutting down one of the eight LNG
export terminals in the country. If the
disruption lasted long enough, prices for
natural gas would fall.
Lower gas prices would drag down those for
ethane, the main feedstock that US crackers use
to produce ethylene. Petrochemical producers
could benefit from lower feedstock costs.
UPDATE ON HURRICANE
BERYLHurricane Beryl is the
first Category 5 hurricane to form so early in
the season. Category 5 hurricanes have the
strongest winds under the Saffir-Simpson
Hurricane Wind Scale, with speeds exceeding 157
miles/hour (253 km/hour).
Beryl is near Jamaica and it should weaken as
it approaches the Yucatan peninsula in Mexico,
where it should make landfall on Friday. It
will cross the peninsula, enter the Bay of
Campeche and remain north of the Mexican state
of Veracruz, which is home to the petrochemical
hub of Coatzacoalcos and the Ethylene XXI
integrated polyethylene (PE) complex.
It will swing north before making another
landfall near Brownsville, Texas state and
Matamoros, Tamaulipas state.
BUSY HURRICANE
SEASONMeteorologists have warned
that this year’s hurricane season
could be the most active ever, with 17-25
named storms. Out of those, 8-13 should be
hurricanes and 4-7 should be major hurricanes.
Major hurricanes are Category 3-5 storms with
wind speeds of at least 111 miles/hour.
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Polypropylene03-Jul-2024
RIO DE JANEIRO (ICIS)–Brazil’s polymers major
Braskem is still facing some logistical
challenges at its facilities in Triunfo, in the
floods-hit state of Rio Grande do Sul,
according to a letter to customers seen by
ICIS.
Braskem was forced to shut down its Triunfo
facilities after the severe flooding which
affected the state in May.
By the beginning of June, the producer said it
hoped its operations would return to normality
in a few days, according to a spokesperson in a
written response to
ICIS.
However, according to the letter to customers,
dated 28 June, Braskem’s operations at Triunfo
are yet to return to normality, mostly due to
logistical woes as many roads and key port
operations at the Brazilian state were hit by
the aftermath of the floods.
“Specific challenges resulting from force
majeure still persist in some logistics modes,
leading to the partial receipt of inputs for
the production of products derived from ethanol
and green ethylene,” said the letter.
“At the moment, there is no risk of
interruption in the supply of these products,
and we are implementing alternatives to return
availability to normal levels.”
At the end of June, an analyst said
to ICIS most of the roads in Rio do Grande
do Sul had reopened, although some of them were
operating at reduced capacity.
The Port of Porto Alegre, the largest city in
the state and close to the Triunfo
petrochemicals hub, only reopened in mid-June.
TRIUNFO KEY FOR PLASTICS
Braskem is Brazil’s sole manufacturer of
polyethylene (PE) and polypropylene (PP), the
most widely used polymers. Its market share in
2023 for PE stood at 56% and for PP at 70%,
according to figures from the ICIS Supply &
Demand database.
The Triunfo complex, meanwhile, is key for the
country’s polymers supply chain, accounting for
nearly 37% of Brazil’s PP capacity and 40% of
PE capacity.
Brazil’s total PP production capacity is nearly
2 million tonnes/year. PE capacity is about 3
million tonnes/year, with 41% being
high-density polyethylene (HDPE), 33% being
linear low-density polyethylene (LLDPE) and 26%
being low-density polyethylene (LDPE).
Braskem’s Triunfo complex can produce 740,000
tonnes/year of PP, 550,000 tonnes/year of HDPE,
385,000 tonnes/year of LDPE and 300,000
tonnes/year of LLDPE.
Additional reporting by Jonathan
Lopez
Speciality Chemicals03-Jul-2024
HOUSTON (ICIS)–US June sales of new light
vehicles fell from May, but total sales in the
second quarter showed a modest improvement over
Q1, according to data from the US Bureau of
Economic Analysis (BEA).
While the June sales figures represented a sour
end to the quarter, Kevin Swift, senior
economist for global chemicals at ICIS, said he
anticipates seeing modest sales growth through
the rest of the year and into 2025 and 2026.
June sales fell by 4% to a 15.29-million-unit
pace, well below the forecast of 15.9 million
for the full year from the National Automobile
Dealers Association (NADA).
Sales faced headwinds from the usual
impediments – higher prices for new vehicles
and higher interest rates – which may have
prevented some from entering the market for new
light vehicles.
But a cyber-attack against software maker CDK
Global that disrupted operations during the
month may be the main reason sales fell as the
higher costs and interest rates have been the
norm so far this year.
Software from CDK Global is widely used in US
auto dealerships to process sales and other
transactions.
Declines were seen across all auto segments
except for foreign light truck sales.
Sales were flat when comparing the first six
months of the year with the first six months of
2023, Swift said.
Still, Jincy Varghese, ICIS demand
analyst, expects sales to rise over the
rest of the year.
While protectionist trade policy and potential
regulatory measures could affect auto sales,
performance in all regions except Europe are
likely to be better than expected in the second
half of 2024.
Global automotive value-added output in 2024 is
expected to grow by 0.4% compared with 2023,
Varghese said, with the third quarter of 2024
forecast to remain relatively flat compared
with the third quarter of 2023, according to
Oxford Economics.
US auto sales in 2024 are expected to grow 6.4%
compared with 2023, Varghese said.
The third quarter of 2024 is forecast to grow
by 2.6% year on year, according to Oxford
Economics.
US President Biden, in a statement released
last month, directed his trade representative
to increase tariffs on $18 billion of imports
from China to protect American workers and
businesses.
The tariff rate on electric vehicles (EVs)
under Section 301 will increase from 25% to
100% in 2024.
According to the US Census Bureau, US light
vehicle sales rose 0.8% month on month in May
with total sales of 15.9 million units (up 2.5%
year on year and 8.9% down from 2019).
CHEMS USED IN AUTOS
Demand for chemicals in auto production come
from, for example, antifreeze and other fluids,
catalysts, plastic dashboards and other
components, rubber tires and hoses, upholstery
fibers, coatings and adhesives, Swift said.
Virtually every component of a light vehicle,
from the front bumper to the rear taillights,
features some chemistry.
The latest data indicate that polymer use is
about 423 pounds (192kg) per vehicle.
Meanwhile, electric vehicles (EVs) and
associated battery markets are an important
growth opportunity for the chemical industry,
with chemical producers separately developing
battery materials, as well as specialty
polymers and adhesives for EVs.
Focus article by Adam Yanelli
Please also visit the ICIS
topic page Automotive: Impact on Chemicals
Thumbnail image is of sports-utility
vehicles at a Colorado dealership. Photo by
David Zalubowski/AP/Shutterstock
Polyethylene03-Jul-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
China’s petrochemical markets might well
respond positively to any new economic stimulus
measures announced during the delayed Third
Plenum government meeting that takes place on
15-18 July.
But the scale of economic reforms required are
such that I believe the more likely outcome is
China remaining stuck with lower growth than
during the 1992-2021 Petrochemicals Supercycle.
Sourabh Gupta – Senior Fellow at the Institute
for China-America Studies in Washington, DC –
wrote in an article for the East Asia
Forum that reforms needed include:
Progressively lifting Hukou restrictions to
make public services more equitable.
Building a unified and portable social
security net more in line with advanced
economies.
A shift from indirect to direct taxes.
Individual income tax revenues comprised 33% of
total revenues in OECD countries compared to 9%
in China.
The tax base must expand as four out of
five Chinese households do not pay personal
income tax.
He cautioned that reform would not be easy in a
country that preferred top-down
capital-intensive approaches and was disdainful
of high welfare spending.
China appears to have doubled-down on its
capital-intensive approach since the end of the
property bubble through investing in
export-focused manufacturing.
This raises the issue of geopolitical threats
to its GDP growth, such as the US and the EU
recently raising tariffs on Chinese electric
vehicles and batteries.
“If China is to maintain growth rates of 4-5%
per year, it can only do so if the rest of the
world agrees to reduce its own investment and
manufacturing levels to less than half the
Chinese level” wrote Michael Pettis, Professor
of Finance at Peking University, in an article
for the Carnegie Endowment for International
Peace.
The Economist reported that as
reshoring accelerated, governments had adopted
over 1,500 policies to promote specific
industries in both 2021 and 2022. This compared
with almost none in the early 2010s.
But this latest Third Plenum could be as
significant as the ones cited by
Reuters in 1978 and 1993. The
1978 Plenum opened China up to foreign
investment. In 1993, the Plenum liberalised
trading in the Yuan and launched “socialist
market” reforms following Deng Xiaoping’s
Southern Tour a year earlier.
How will we know the outcomes? If China’s
polyethylene (PE) and polypropylene (PP) price
spreads return to their Supercycle levels over
the six-to-12-months. If this doesn’t
happen, more reforms will be needed as too much
supply will continue to chase too little
demand.
Despite recent rebounds in spreads, China CFR
high-density PE (HDPE) spreads over CFR Japan
naphtha costs remain 116% lower than during the
Supercycle with low-density (LDPE) spreads 46%
lower and linear-low density (LLDPE) spreads
80% lower. The story is very similar in China
PP spreads over naphtha.
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.
Caustic Soda02-Jul-2024
HOUSTON (ICIS)–Hurricane Beryl continued to make its
way west toward Mexico and the US Gulf on
Tuesday afternoon, with landfall possible some
time on Sunday.
Meteorologists at the National Hurricane Center
(NHC) said Beryl was about 125 miles (205 km)
east southeast of Isla Beata, Dominican
Republic, and moving west northwest at 22
miles/hour.
Source: National Hurricane Center
(NHC)
The storm is going back and forth between a
Category 4 and Category 5 hurricane as maximum
sustained winds are at 155 miles/hour but had
been at 165 mile/hour earlier in the day.
According to the Saffir-Simpson Hurricane Winds
Scale, a storm reaches Category 5 when maximum
sustained winds reach 157 miles/hour.
Saffir-Simpson Hurricane Wind
Scale
Category
Wind speed
1
74-95 miles/hour
2
96-110 miles/hour
3
111-129 miles/hour
4
130-156 miles/hour
5
157+ miles/hour
The most recent forecast indicates Beryl could
miss southern Veracruz state in Mexico, where
Braskem Idesa has its integrated polyethylene
(PE) Ethylene XXI complex and where a lot of
Mexico’s petchem capacity is located.
Altamira is still in the projected path. The
regions have been experiencing a drought and
rainfall from Beryl could provide the area with
much-needed rain but could also impact
operations at the multitude of chemical
facilities in the area.
Another scenario would be if the storm swings
to the north, which could threaten oil and gas
production in the US Gulf as well as Gulf Coast
petchem operations.
A producer with capacity in the Corpus Christi
area said it was still too early to decide on
operations.
ACTIVE HURRICANE SEASON
The early activity in the Atlantic Ocean is in
line with forecasts calling for a busier than
usual hurricane season.
The US National Oceanic and Atmospheric
Administration (NOAA) is predicting the
greatest number of hurricanes in the agency’s
history.
NOAA forecasters with the Climate Prediction
Center said that the hurricane season – which
started on 1 June and runs through 30 November
– has an 85% chance to be above normal, a 10%
chance of being near normal and only a 5%
chance of being below normal.
Damage from hurricanes can lead to
increased demand for chemicals, but hurricanes
and tropical storms can also disrupt the North
American petrochemical industry because many of
the nation’s plants and refineries are along
the US Gulf Coast in the states of Texas and
Louisiana.
In 2022, oil and natural gas production in the
Gulf of Mexico accounted for about 15% of total
US crude oil production and about 2% of total
US dry natural gas production, according to the
US Energy Information Administration (EIA).
Even the threat of a major storm can disrupt
oil and natural gas supplies because companies
often evacuate US Gulf platforms as a
precaution.
Additional reporting by Mark Milam, Al
Greenwood and Melissa Wheeler
Ammonia02-Jul-2024
HOUSTON (ICIS)–Although Trinidad and Tobago
have seen tremendous rainfall and significant
winds the last two days, the island nation and
its fertilizer operations escaped the heaviest
impacts of Hurricane Beryl.
Rated at a category 4 as of late on Tuesday,
the storm did cause some harm to surrounding
island countries but for most of Trinidad and
Tobago what was felt was an extended stretch of
unfavorable weather, with fertilizers producers
emerging unscathed.
Produces Yara, which manufactures ammonia at
its facilities, said they had been fortunate as
the storm passed by yesterday afternoon with
plants not suffering any damage or having any
production interrupted.
With plant operations also in the same vicinity
on the island producer Nutrien reported similar
positive outcomes with a spokesperson saying,
“Happily, zero impact. All running as usual.”
Going forward Beryl is now expected to be
impacting Jamaica by Wednesday morning.
For now, the domestic fertilizer market is
carefully watching the track as there are
considerable production, storage and
transportation interests which stretch along
the US Gulf Coast.
The current forecast has the storm potentially
downgrading slightly as travels more towards
making an eventual strike in northern Mexico,
or possibly landing further up in southern
Texas by the end of this week.
Base Oils02-Jul-2024
RIO DE JANEIRO (ICIS)–US Group II base oils
spot supply may stay tight through Q3 due to
hurricane stock building, but could lengthen by
year end, an expert at ICIS said on Tuesday.
Amanda Hay, senior analyst for base oils in the
Americas at ICIS, said the US manufacturing
recession and high interest rates are likely to
take their toll in Q4, with supply potentially
lengthening.
Apart from hurricane stock building, high
interest rates in the US and elsewhere are
causing that “no-one is building inventories”
due to the high costs associated to it.
Hay went on to say that only a few months ago
most economists and analysts – including those
at ICIS – were forecasting interest rates cuts
by the US Federal Reserve (Fed) in 2024.
However, that has now shifted to 2025 at the
earliest, as the world’s major central bank
seeks to make sure inflation falls towards its
2% target.
The US’ annual rate of inflation
stood at 3.3% in May.
Hay was speaking to delegates at the 14th
International Summit with the South American
Market 2024 organized by specialized
publication Lubes em Focus, which
focuses on base oils.
ICIS is a partner in the event.
“As the US manufacturing recession continues,
exports from that country continue to be widely
available. Firm crude prices will also be a
factor to keep in mind,” said Hay.
“Meanwhile, major interest rates changes are
not expected in 2024 anymore – as the year went
by, rate cuts have become less and less likely.
That, in turn, causes that no-one is really
interested in building inventories given the
high borrowing costs.”
Base oils, also called lubricants, are used to
produce finished lubes and greases for
automobiles and other machinery.
The 14th International Summit with the South
American Market 2024 runs in Rio de Janeiro on
2-3 July.
Clarification: Re-casts
headline, introduction; adds paragraph 3
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