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Potassium Chloride (MOP)31-Oct-2024
HOUSTON (ICIS)–Australian Kore Potash
announced it has finalised the agreement on the
engineering, procurement and construction (EPC)
contract for the Kola project with PowerChina
International Group Limited (PowerChina) on 28
October.
Kore Potash and PowerChina are now working
towards convening a date which is currently set
for 19 November for the signing ceremony with
the Minister of Mines and other officials in
the Republic of Congo-Brazzaville.
In an update on financing, the company said it
continues to work with the Summit Consortium to
provide for the construction cost and is
intended to be based on royalty and debt
finance.
Kore Potash added that the financing parties
have confirmed their ongoing strong interest
and has advised that the term sheet will be
provided within three months of the execution
of the EPC contract.
The company does plan to conduct a small
capital fund raise in November to finance
working capital.
Kola is expected to be designed with the
capability to produce 2.2 million tonnes/year
of granular muriate of potash (MOP) over an
initial 31-year life.
Speciality Chemicals31-Oct-2024
BARCELONA (ICIS)–More chemical industry
leaders are making bold strategic decisions to
combat a multi-year downturn, driving their
companies to focus on areas where they can
seize a competitive advantage.
China-driven overcapacity could imbalance
global supply/demand until 2030
Need for large-scale capacity closures to
balance market
Industry has reached turning point
Companies can choose to focus on
commodities or become specialty/low carbon
players
CEOs waking up to the need for a radical
examination of their assets and strategies
A trickle of announcements about closures
and restructurings turning into a flood
leaders such as BASF, Dow, LyondellBasell,
Versalis take bold steps to reduce their
commodity footprint in Europe
In this Think Tank podcast, Will
Beacham interviews ICIS Insight
Editor Nigel Davis, ICIS
Senior Consultant Asia John
Richardson and Paul
Hodges, chairman of New Normal
Consulting.
This is the audio version of a special ICIS
Think Tank Live webinar (see below) recorded on
30 October.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organizing regular updates to help
the industry understand current market trends.
Register here.
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges and John Richardson’s
ICIS
blogs.
Ethylene31-Oct-2024
SINGAPORE (ICIS)–Thailand’s Siam Cement Group
(SCG) will invest $700 million to pave the way
for Vietnam’s first integrated petrochemical
complex to use US ethane as feedstock for
production.
Project completion slated in
end-2027
Ethane to account for as much as
two-thirds of LSP cracker feedstock
Bulk of investments go toward
handling/storage of ethane
The project, which will mean increased
feedstock diversification for its wholly owned
Vietnamese subsidiary Long Son Petrochemicals
(LSP), is expected to be completed by the end
of 2027, SCG said in a bourse filing on 30
October.
LSP is currently working with Vietnamese
authorities to acquire necessary certificates
and permits to build storage and supporting
facilities at the complex in Bah Ria-Vung Tao
province in southeastern Vietnam.
The cracker at the site can produce 950,000
tonnes/year of ethylene, 400,000 tonnes/year of
propylene, and 100,000 tonnes/year of butadiene
(BD).
Once the ethane enhancement project is
completed, LSP will be able to utilize ethane
for as much as two thirds of its total
feedstock, in addition to propane and naphtha.
By utilizing imported ethane from the US as raw
material, “LSP can significantly enhance its
competitiveness through lower feedstock cost
and flexibility, while also lowering carbon
emissions”, SCG said.
Majority of the investment will go toward
handling and storage of the ethane feedstock,
which requires temperature as low as minus
90-degree Celsius, it said.
LSP was completed at a cost of $5.2 billion
whose commercial operations began on 30
September 2024 “following a comprehensive test
period”, SCG said.
The Thai conglomerate first announced the plan
to use US ethane as feedstock for LSP in
September, noting that over the past three
years, its average price has been lowered by
around 40% compared with those of naphtha and
propane.
Most crackers in Asia use naphtha as feedstock
whose prices track highly volatile upstream
crude movement.
“In light of the existing petrochemical trough
with historical low margin, and current
volatile global economic environment, LSP is
closely monitoring the market situation and
will adjust the run rate of its operation
during this challenging period for
petrochemical business,” SCG said.
Focus article by Pearl
Bantillo
(adds details throughout)
Initial reporting by Fanny Zhang
Thumbnail image: Container cargo ships
unload at a port in Hai Phong, Vietnam on 25
May 2015. (Minh Hoang/EPA/Shutterstock)
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Crude Oil31-Oct-2024
SINGAPORE (ICIS)–State-owned energy companies
Saudi Aramco and Vietnam Oil and Gas Group
(Petrovietnam) will explore opportunities in
storage, supply and trading of energy and
petrochemical products.
The two companies signed a collaboration
framework agreement during a state visit of
Vietnam Prime Minister Pham Minh Chinh to Saudi
Arabia on 30 October, Aramco said in a
statement.
“This agreement lays the foundation for
potential collaboration across the hydrocarbon
value chain,” Aramco downstream president
Mohammed Al Qahtani said.
“We look forward to exploring
multiple opportunities with Petrovietnam that
complement Aramco’s global downstream
ambitions, contribute to Petrovietnam’s own
strategy, and reinforce Asia’s importance in
global energy and petrochemicals markets,” he
said.
Saudi Aramco, which is the world’s biggest
crude exporter, has been diversifying its
business by heavily investing in
petrochemicals.
Vietnam is one of the fast-growing emerging
economies in southeast Asia. It recently
started up its first integrated petrochemical
complex, which is operated by Long Son
Petrochemical – a wholly owned subsidiary of
SCG (Siam Cement Group) Chemicals.
Ammonia30-Oct-2024
HOUSTON (ICIS)–CF Industries said in its
latest nitrogen fertilizer market outlook
global pricing was supported in the third
quarter of 2024 by strong global demand, lower
supply availability due to natural gas
shortages, China’s absence in urea exports and
planned maintenance activities in the Middle
East.
The US fertilizer producer said that in the
near-term their management expects the global
supply-demand balance to remain constructive,
as inventories globally are believed to be
below average and energy spreads continue to be
significant between North America and high-cost
production in Europe.
CF said for North America that while grains
prices are under pressure from expected high
crop production it is their belief that the
fall ammonia application season for the US and
Canada will be positive if weather is
favorable.
US crop returns for 2025 are forecast at
similar levels to 2024, which is expected to
support stable planted corn acres year on year.
The producer said over the medium-term,
significant energy cost differentials between
North American producers and high-cost
producers in Europe and Asia are expected to
persist.
As a result, CF believes the global nitrogen
cost structure will remain supportive of strong
margin opportunities for low-cost North
American producers.
Looking at Brazil the producer said through
September 2024 that urea imports to the country
were 5.4 million tonnes, 13% higher than
through the same period in 2023.
CF said Brazil is expected to import 2.0-2.5
million tonnes of urea in the fourth quarter
due to forecast higher planted corn acres and
nominal domestic production.
For India the company feels there is
significant urea import requirements remaining
through March 2025 due to favorable weather for
rice, wheat and other crop production as well
as lower-than-targeted domestic urea production
driving greater import need.
Regarding Europe CF said there is approximately
20% of ammonia and urea capacity which was
reported in shutdown or curtailment modes as of
September 2024.
The company said management believes that
ammonia operating rates and overall domestic
nitrogen product output in Europe will remain
below historical averages over the long-term
given the region’s status as the global
marginal producer.
For China the producer noted that the ongoing
urea export controls by the government
continues to limit urea export availability
from the country. Through September 2024, China
has exported 254,000 tonnes of urea, 91% lower
than the same period in 2023.
In Russia the company said the urea exports
have increased by 5% this year due to the
start-up of new urea granulation capacity and
the willingness of certain countries to
purchase Russian fertilizer, including Brazil
and the US.
Exports of ammonia are expected to rise with
the completion of the country’s Taman port
ammonia terminal though CF noted that annual
ammonia export volumes are projected to remain
below pre-war levels.
Looking at the longer-term view of nitrogen the
producer is expecting the global supply-demand
balance to tighten as global capacity growth
over the next four years is not projected to
keep pace with expected global lift in demand
of approximately 1.5% per year.
As far as global production CF said it is
expected to remain constrained by continued
challenges related to cost and availability of
natural gas.
Speciality Chemicals30-Oct-2024
HOUSTON (ICIS)–SI Group completed another debt
exchange, which led Fitch Ratings to determine
that the company defaulted again, the ratings
agency said on Wednesday.
Fitch considered SI Group’s offering a
distressed debt exchange and found that
the company was once more in restricted
default. Fitch has since rated SI Group CCC,
which is four notches above default.
During the first half of 2024, SI Group saw
declines in sales and earnings before interest,
tax, depreciation and amortization (EBITDA),
Fitch said. The declines were caused by weak
demand, destocking in 2023 and increased
competition from new plants in China.
Sales volumes should remain low and free cash
flow should remain negative throughout Fitch’s
forecast horizon. SI Group could face a
liquidity crisis, and it may need fresh
third-party support within the next 24 months,
Fitch said.
SI Group makes specialty chemicals used in
coatings, adhesives, sealants and elastomers
(CASE) as well as in lubricants, fuels,
surfactants and polymers.
Other chemical companies
are also coming under increased stress from
low-cost imports.
INEOS Styrolution plans to shut down a plant in
Addyston, Ohio state, US, that makes
acrylonitrile butadiene styrene (ABS) and
styrene acrylonitrile (SAN). Decommissioning
will start in the second quarter of 2025.
INEOS Styrolution is also permanently shutting
down a styrene plant in Sarnia, Ontario
province, Canada. That plant was idled earlier
this year after complaints about benzene
emissions, which led to a dispute with
regulators.
In addition, China, once a key outlet for North
American styrene, has added significant styrene
capacity over the past three years.
Additional reporting by John Donnelly
Ammonia30-Oct-2024
HOUSTON (ICIS)–US LSB Industries said it was
able to complete a successful turnaround of
their Pryor, Oklahoma, fertilizer facility.
The company said in a third quarter update that
the investments at Pryor were focused
not only on improving its reliability and daily
ammonia production volume, but also included
the debottlenecking of the facility’s urea
plant.
LSB expects this effort will result in an
incremental of 75,000 short tons annually of
UAN output.
At the El Dorado, Arkansas, facility the
producer said it completed the construction of
an additional 5,000 short tons of nitric acid
storage which is providing the ability to
capitalize on incremental sales opportunities
not previously available.
A turnaround at the Cherokee, Alabama, facility
will take place this November and a turnaround
at El Dorado is scheduled for the third quarter
of 2025, with the primary goal being increased
volumes.
LSB said it continues to make progress on its
two energy transition projects and is expecting
to start producing low carbon products at El
Dorado beginning in 2026 pending regulatory
approval.
Regarding the Houston Ship Channel project, the
company said it has completed the pre-front end
engineering design and is working through the
results as well as engaging with potential
customers and preparing to select an
engineering contractor for the final study.
It expects to start that effort during the
first half of 2025 with completion by mid-2026.
Looking at fertilizer market conditions the
producer said the ammonia market is healthy,
and pricing has been strong driven by many
factors including tight US supply dynamics
along with geopolitical concerns and extended
turnarounds and outages reducing global
inventories
LSB also cited the delayed start-up of new
production capacity in the US Gulf and an
export terminal in Russia
For UAN the producer said pricing remains solid
due to low inventories in the distribution
channel following both spring applications and
summer fill program with there being
historically low imports and strong exports
As it looks ahead it feels there is potential
pent-up demand at the retailer and producer
level which could lead to favorable order
volumes and pricing in the first half of 2025.
Ammonia30-Oct-2024
HOUSTON (ICIS)–The US Department of
Agriculture (USDA) announced it is awarding
over $120 million today to fund six fertilizer
production projects in Arkansas, California,
Illinois, South Dakota, Washington and
Wisconsin through the Fertilizer Production
Expansion Program (FPEP).
Currently the agency has invested over $368
million in 67 projects through FPEP which has
an allocation of up to $900 million.
Projects receiving this round of funding
include fertilizer producer LSB Industries
which will be provided a $77 million grant to
expand production capacity of its urea and
ammonium nitrate facility in Arkansas to
580,000 tons/year.
The expanded capacity will allow product to be
available to an estimated 450,000 agricultural
producers within a four-state region and is
expected to create 20 full-time positions.
Another project will be at Agtegra Cooperative
in South Dakota, which is receiving a $3
million grant to build a new fertilizer
manufacturing building and install two storage
tanks with a combined capacity of 950,000
gallons.
The USDA also announced $20.2 million in awards
to 26 projects through the Local Meat Capacity
(Local MCap) grant program to expand processing
capacity within the meat and poultry industry
with a goal of lowering food cost for
consumers.
Polyester Staple Fibres30-Oct-2024
LONDON (ICIS)—The UK government will support
the use of mass balance for chemical recycling
under the UK plastic packaging tax using a
fuel-exempt accounting approach at site-level,
it published in a
consultation response late on Wednesday.
The original consultation on “Plastic Packaging
Tax – chemical recycling and adoption of a mass
balance approach” was conducted from 18 July-10
October 2023.
“Chemical recycling can complement the use of
mechanical recycling technologies by enabling
more types of plastic to be recycled and by
producing a higher grade of recycled plastic,
which can be used in regulated sectors such as
food contact packaging. Chemical recycling
therefore has the potential to help increase
rates of plastic recycling,” the UK government
said in its consultation response.
As part of the consultation response, the
government also announced that it will phase
out the use of pre-consumer material as
contributing towards recycled content
thresholds in tax calculations.
Under the UK Plastic Packaging tax, any
packaging which is predominantly plastic by
weight, and that does not contain at least 30%
recycled material is subject to a charge of
£217.85/tonne on the total weight of the
packaging.
When the tax was introduced, both chemical and
mechanical recycling were accepted as
contributing toward the target, but there was
no decision on the acceptance of mass balance.
In mass-balance, a certified volume of
renewable or recycled material is input across
a production run but may not be evenly
distributed across each individual product.
For example, a plant may use 30% recycled
material overall, but one piece of produced
packaging could contain 100% recycled material,
and the next 100% virgin material, or any mix
between those two extremes.
Via this method, market players are able to
state that they use a certain percentage of
recycled or renewable material in their
products, without having to prove that
percentage in each individual product produced.
Mass-balance is widely used in a number of
industries and is not exclusive to either
mechanical or chemical recycling.
There have been different proposed accounting
rules for mass-balance, all of which alter the
possible recycled polymer output allocations,
and therefore profitability throughout the
chain, pyrolysis oil’s competitive position
against mechanical recycling, and the sector’s
attractiveness to investors.
Under fuel exempt mass balance accounting
rules, volumes used in fuel applications would
not be attributable as recycled material, but
material not ending up in fuels would be freely
attributable across the value chain.
Given that pyrolysis oil – the dominant
form of chemical recycling in Europe – is used
as a naphtha substitute in a cracker, many see
acceptance of mass-balance as an essential
enabler for chemical recycling to
count towards recycling content thresholds.
The UK government will not adopt definitions of
chemical recycling under ISO standard
15270:2008, arguing that definitions of
chemical recycling must be process and
technology neutral.
“The government intends to introduce a
definition of chemical recycling in line with
the proposed definition by the European
Coalition for Chemical Recycling, for the
purpose of the tax. This will enable businesses
to use a mass balance approach to account for
recycled material produced from any technology
or process that meets the definition of
chemical recycling,” the government stated.
The government also said that differing units
of measurement may be used at different parts
of the supply chain. For example, mass being
used at polymer and packaging level, and a
Lower Heating Value approach used at refinery
level.
The government further stated that accredited
certification schemes will be necessary to
audit and certify the mass balance volumes, and
it intends to accredit multiple certification
schemes.
The government also signaled that while it is
not currently making changes to medical
exemptions under the tax at present it intends
to remove this exemption once more chemically
recycled plastic is available.
“Producers and importers of medical packaging
are encouraged to start considering how to
include more recycled plastic in their
packaging as chemical recycling capacity,
feedstock levels, recyclate availability
increase, and advancements in technology are
developed,” it stated.
There was no timeframe announced for when these
changes would take place.
Clarity on the UKs approach to mass balance
will be welcomed by the market. Despite
structural tightness of pyrolysis oil in
Europe, buying interest in 2024 to date has
been lower than that seen in 2023 largely due
to
ongoing legal uncertainty over approaches
to mass balance accounting. Legal
uncertainty was one of the factors cited by
Quantafuel in August for the
cancellation of its 100,000 tonne/year
pyrolysis-based chemical recycling project in
Sunderland.
On 16 July the British Plastics Federation
(BPF) submitted
a joint letter it had coordinated to
the incoming Exchequer Secretary James Murray
MP, calling for an urgent response to the
previous government’s mass balance
consultation.
ICIS covers 3 grades of pyrolysis oil in
its Mixed Plastic Waste and Pyrolysis Oil
Europe pricing service . ICIS also offers
mechanical recycling, waste bale, biodiesel,
hydrogen, and virgin price coverage, giving you
the complete picture across the sustainability
value chain. For more information, please
contact Mark Victory at mark.victory@icis.com.
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