HOUSTON (ICIS)–Nearly 3.4 million outages have been reported in Florida in the aftermath of Hurricane Milton, which made landfall as a powerful Category 3 hurricane near Sarasota, Florida, south of the important fertilizer hub of Tampa. Milton may have caused more damage had it passed over Tampa, according to CoreLogic, an insurance data company. RAIL UPDATERailroad company CSX said it has relocated all of its locomotives and cars from low-lying areas in Tampa and rerouted them. CSX operations will continue in and out of Waycross from the north, east and west directions. It will continue operating into and out of the intermodal ramps at Jacksonville, Florida. On 8 October, CSX said it had taken the following steps. Closed the Central Florida ILC intermodal gate. Closed the Tampa, FL intermodal gate. Closed the TRANSFLO terminals at Tampa, Tampa Port and Sanford. Another railroad company, Norfolk Southern, has not updated its notice from 7 October, when it said it was monitoring and preparing for Hurricane Milton. FLORIDA PORTS REMAIN CLOSEDMany ports in Florida have maintained their Zulu port conditions, which means they are closed to inbound and outbound vessels. The following table summarizes the conditions among the major ports in Florida. Port Status Condition Port of Pensacola Open Normal Port Panama City Open Draft restrictions Port St Joe Open Normal Port Tampa Bay Closed Zulu SeaPort Manatee Closed Zulu PortMiami Open Yankee Port Everglades Open Yankee Port of Palm Beach Closed Zulu Fort Pierce Closed Zulu Port Canaveral Closed Zulu Jaxport Closed Zulu Port of Fernandina Closed Zulu Source: US Coast Guard. IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin (UPR) production in Lakeland and Kathleen, Florida. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. Near Tampa is Florida’s phosphate mining operations in Bone Valley, which covers parts of Hardee, Hillsborough, Manatee and Polk counties. In all, Florida has 27 phosphate mines, of which nine are active, according to the Florida Department of Environmental Protection. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida’s Big Bend region. On 30 September, Mosaic said its Riverview operations were off line following water intrusion from a storm surge caused by Hurricane Helene. POSSIBLE DAMAGEHurricane Milton could be extremely destructive because of its winds, rainfall and storm surge. It will pass over the following metropolitan statistical areas. Region Population Tampa 3,342,963 Orlando 2,817,933 Jacksonville 1,713,240 Sarasota 910,108 Source: US Census Bureau CoreLogic, the insurance data company, said Milton’s shift to the south of Tampa could limit the magnitude of insured losses. CHEMS AND RECONSTRUCTIONFor hurricanes in general, reconstruction can translate into increased demand for many chemicals and polymers. The white pigment titanium dioxide (TiO2) is used in paints. Solvents used in paints and coatings include butyl acetate (butac), butyl acrylate (butyl-A), ethyl acetate (etac), glycol ethers, methyl ethyl ketone (MEK) and isopropanol (IPA). Blends of aliphatic and aromatic solvents are also used to make paints and coatings. For polymers, expandable polystyrene (EPS) and polyurethane (PU) foam are used in insulation. PUs are made of methylene diphenyl diisocyanate (MDI), toluene diisocyanate (TDI) and polyols. High-density polyethylene (HDPE) is used in pipes. Polyvinyl chloride (PVC) is used to make cladding, window frames, wires and cables, flooring and roofing membranes. Unsaturated polyester resins (UPRs) are used to make coatings and composites. Vinyl acetate monomer (VAM) is used to make paints and adhesives.

LONDON (ICIS)–Glycolysis-based chemical recycling technology company Ioniqa has filed for bankruptcy protection, the company announced in press release on Thursday. The company is headquartered in the Netherlands. It is concentrated on chemically recycling polyethylene terephthalate (R-PET). In the press release, the company stated that it has determined that “achieving a positive cash flow from its advanced polyester recycling technology will take too long.” Advanced recycling is a term that is often used as an alternative description for chemical recycling (although mechanical recyclers also use the term advanced recycling to refer to some mechanical recycling processes). It attributed this to the comparatively low price of traditional virgin PET and the supply chain for chemically recycled PET still being in development. It also attributed some of the blame to “the implementation of regulated mandatory standards for meaningful recycling levels… [being] too far out into the future.”  It stated that this meant that large-scale deployment of its technology was not economically feasible at this time. Ioniqa has a glycolysis-based chemical recycling demonstration plant in Geleen, The Netherlands, which has been operational since 2019 and has an estimated output of 8,000 tonnes/year according the ICIS Recycling Supply Tracker – Chemical. Investors in the site include The Coca Cola Company, Unilever, Indorama Ventures, Koch Technology Solutions, and Infinity Recycling’s Circular Plastics Fund. Chemical recycling is an umbrella term for a variety of methods that use different production routes and feedstocks to create new material from waste. This means that each process (and each technology and individual player) has vastly different cost-structures and the economics of each chemical recycling method vary substantially.  Coupled with this, achievable prices for chemically recycled products vary significantly between grade and polymer type. Common chemical recycling methods include pyrolysis, gasification, glycolysis, hydrolysis, methanolysis, and enzymatic hydrolysis. In chemical recycling, chemical processes are used to revert waste back to an earlier molecular state. Waste can be reverted back to monomer, building block chemicals, or all the way back to crude oil/energy. Chemical recycling alters the fundamental chemical properties of the material. In glycolysis, a transesterification catalyst is used to break the ester linkages, which are replaced by hydroxyl terminals. This produces bisterephthalate (BHET) and PET glycozates. These can be reacted with aliphatic diacids to make: polyester polyols, which are in turn used in polyurethane (PU) foams; co-polyesters; unsaturated resins; and hydrophobic dyes. If combined with virgin BHET, the process produces chemically recycled PET via dimethyl terephthalate (DMT) or purified terephthalic acid (PTA) glycolysis. Typical catalysts include monoethylene glycol (MEG), diethylene glycol (DEG), propylene glycol (PG) or dipropylene glycol (DPG). Transesterification does not work on polymers such as polyolefins due to a lack of cutting points. As a result, glycolysis is predominantly focussed on PET, and this means that it typically uses sorted and separated monomaterial as a feedstock, which can add additional cost. The most common form of chemical recycling in Europe is pyrolysis-based. This is in large part being driven by demand from ambitious brand sustainability targets in the packaging sector. Many fast-moving consumer goods (FMCG) brands see chemical recycling as the only viable way to reach large scale food-grade packaging suitable recycled polyolefins given current EFSA requirements that 95% of input waste must be former food-contact to gain food-contact approval. Most PET input waste is sourced from used plastic drinks bottles, making it easier for R-PET producers to meet this 95% requirement than other polymers, and there is a well established R-PET food-grade pellet sector – using traditional recycling methods – across Europe. R-PET is also the only mechanical recycling technology recognised as suitable for producing food-contact material under European Commission regulation (EU) 2022/1616 on ‘recycled plastic materials and articles intended to come into contact with foods’. Pyrolysis-based chemical recycling uses heat and pressure – typically in the absence of oxygen, although it is sometimes present in controlled volumes – to transform waste feedstocks (most commonly plastic waste or end-of-life tyres) into an earlier molecular state. Pyrolysis-based plants targeting mixed plastic waste as feedstock – with a focus on polyolefins – currently account for more than 60% of all operating chemical recycling capacity in Europe according to ICIS Recycling Supply Tracker – Chemical. PET, however, does not pyrolyse. Highlighting just how variable achievable prices for chemically recycled materials can be, pyrolysis oil prices in Europe are currently regularly trading on the spot market anywhere from €800-2,200/tonne ex-works Europe depending on grade. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

HOUSTON (ICIS)–Warmer waters in the Atlantic Basin could make record-setting hurricanes like Milton and Beryl more common, which strengthened rapidly to become major storms that caused significant damage. Most of the petrochemical and refining capacity of the US is along the Gulf of Mexico, making the plants vulnerable to the disruptions caused by more powerful hurricanes that could become more common in the future. Rising exports of energy, chemical feedstock and plastics from the US Gulf Coast have caused local hurricanes to have global consequences. If wind shear becomes more common, then it could offset some of the strengthening effects that warmer water will have on hurricane development. RECORD-SETTING HURRICANE SEASONWarm water is like rocket fuel for tropical storms and hurricanes, and that led to the rapid intensification of Milton, which strengthened from a tropical storm into a Category 5 hurricane in less than two days. By midday on Monday, the rapid strengthening of Milton placed it among the top three Atlantic hurricanes, behind only 2005’s Hurricane Wilma and 2007’s Hurricane Felix, said Alex DaSilva, lead hurricane expert at the meteorology company AccuWeather. Milton had set another record as the strongest hurricane to occur in the Gulf of Mexico, according to Levi Silvers, research scientist at the Department of Atmospheric Sciences at Colorado State University, which publishes regular hurricane forecasts. Milton was also the Gulf’s strongest hurricane since Rita in 2005, Silvers said. Milton would weaken to a Category 3 hurricane before making landfall on Wednesday night. AccuWeather estimates that Milton could cause more than $200 billion in damage and economic loss. Earlier on July 2, Beryl set its own record by becoming the earliest Category 5 hurricane to form in the Atlantic basin, beating the previous record holder by an astounding two weeks, DaSilva said. According to Silvers, Beryl also accumulated more cyclone energy than any other storm occurring before August. “Basically, it was the strongest early storm we have had by several measures.” After forming in the Atlantic Beryl weakened after passing over Mexico’s Yucatan peninsula before making landfall in Texas and disrupting operations at several petrochemical plants. AccuWeather estimated that total damage and economic loss caused by Beryl was $28 billion to $32 billion. Hurricane Helene set a record for the amount of available atmospheric moisture, also known as precipitable rain, according to AccuWeather. Such extreme amounts of moisture allowed Helene to carry it far inland, leading to rapidly rising river levels and flash flooding. AccuWeather estimates that Helene caused $225 billion to $250 billion in damage and economic loss in Florida, Georgia and the Carolinas. WARM WATER THREATSIf the planet continues to warm, one of the consequences would be elevated water temperatures. Warmer waters contributed to the strength and rapid intensification of these three hurricanes, DaSilva said. The danger is not just the surface temperature of the Atlantic but also something that meteorologists call ocean heat content, DaSilva said. Ocean heat content reflects water temperatures below the surface. A warmer planet will also heat up the atmosphere, allowing the air to hold more moisture. That would lead to more rainfall and greater risks of floods. “I am concerned that we are going to be seeing more episodes of rapid intensification,” DaSilva said. “The tie between sea surface temperatures and rapid intensification – we are pretty confident about that.” Silvers also expressed concern about the threat posed by elevated water temperatures. WIND SHEAR REMAINS UNKNOWN VARIABLEMeteorologists are less sure if wind shear could become more common in a warmer planet, DaSilva said. Wind shear usually discourages the formation of tropical weather. If wind shear does become more common, it could partially offset the effects of warmer water. In a world with more wind shear, it might not generate more hurricanes, but those that do form will strengthen rapidly into more powerful storms, DaSilva said. The length of the Atlantic hurricane season could also expand by starting sooner than the current June 1 date, DaSilva said. DaSilva doubts that the Atlantic season would last beyond its November 30 end date, because wind shear becomes more common during the final months of the year. Silvers, though, said it is difficult to determine if the timing of Atlantic storms will change in the future. “This season is a perfect example, with record breaking storms before and after the peak of the season, but almost nothing during the historical peak,” Silvers said. MORE DISRUPTIONS FOR US, GLOBAL CHEMICALSMost of the petrochemical plants and refineries in the US are on the Gulf Coast, so more powerful hurricanes would leave them more vulnerable to damage and shutdowns. The US now exports significant amounts of polyethylene (PE), polyvinyl chloride (PVC), vinyl chloride monomer (VCM) and other chemicals. Hurricanes disrupt port operations, so those exports could be delayed, increasing the risk of global shortages. DISRUPTIONS TO WORLD’S CHEMICAL FEEDSTOCKSIn addition, the US is increasingly relying on exports to take away excess ethane and liquefied petroleum gas (LPG) produced from its oil fields. These petrochemical feedstocks are being imported by an increasing number of crackers and propane dehydrogenation (PDH) units, with GAIL (India) became the latest to announce plans to build an ethane cracker. Nearly all of the terminals that handle these exports of ethane and LPG are on the Gulf Coast, and all of the expansion projects are in the region. Hurricanes could disrupt operations at these terminals and interrupt the supply of these feedstocks to crackers and PDH units throughout the world. HURRICANES DISRUPT US LNG TERMINALSThe majority of US LNG capacity is on the Gulf Coast and its preponderance will only increase as the country starts up more terminals. This will have effects on US and global energy prices. Disruptions in global shipments could raise LNG costs. In the US, extended shutdowns of LNG terminals would increase supplies of natural gas, pushing prices lower for it and ethane. Lower ethane prices in the US could increase margins for ethylene derivatives. DISRUPTIONS TO US OIL EXPORTSThe Gulf Coast is a large exporter of oil, with major terminals in Corpus Christi, Houston and Nederland in Texas. In addition, the Gulf Coast is home to the Louisiana Offshore Oil Port (LOOP), the only deepwater crude port in the US. Companies are planning more offshore ports. Enterprise Products received a deepwater port license for its Sea Port Oil Terminal (SPOT), which could load 2 million bbl/day of crude oil. If built, it would be built 30 nautical miles off the Texas coast. In 2020, Phillips 66 and Trafigura Group announced that they created a 50/50 joint venture called Bluewater Texas Terminal to develop an offshore deepwater oil port 21 nautical miles east of the port of Corpus Christi. Energy Transfer is proposing its Blue Marlin Offshore Port, which could load up to one very large crude carrier (VLCC) per day. Texas GulfLink, a subsidiary of Sentinal Midstream, is developing a deepwater oil terminal off the Gulf Coast. If built, these offshore oil ports would be vulnerable to hurricanes, along with the onshore terminals on the Gulf Coast. That could restrict global oil supplies and push prices higher. Higher prices would increase costs for crackers that use naphtha as a feedstock. Insight article by Al Greenwood Thumbnail shows damage caused by Hurricane Milton. Image by Chris Urso/Tampa Bay Times/ZUMA Press Wire/Shutterstock

SAO PAULO (ICIS)–Dow has decided to stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics, the US chemicals major confirmed to ICIS on Wednesday. Dow said global oversupply for polyols had caused the San Lorenzo plant to persistently operate at low rates. The company had already intended to halt polyurethane (PU) production there in 2021, but pressure from trade unions and the national government at the time stopped it from taking the decision. According to Dow, 40 employees at the plant will be affected by the closure, although trade unions say the figure is 120. The United Petrochemical Workers and Employees Union representing the plant’s employees said the company took the decision to shut the plant without notifying workers representatives, according to reports by local media in Santa Fe. Dow said, however, employees had been “notified in accordance” with Argentine labor laws. “The business driver for this final decision is aligned with the company’s strategy to optimize its asset footprint. The San Lorenzo production unit has been operating at low utilization rates, while there is an excess of installed capacity in polyol plants all over the world,” said the company. “Dow has worked to minimize any potential impact and is well positioned to meet customer demands and deliver the product mix needed to serve them. These customers may also acquire products from other suppliers at competitive prices, as they currently do.” The chemicals major said it would continue to “work closely with all stakeholders” of the San Lorenzo site to ensure an “orderly and smooth” transition. The PU plant had a production capacity of 50,000 tonnes/year, according to the ICIS Supply and Demand Database. Dow keeps a large presence in Argentina, where it is the sole producer of polyethylene (PE). Its main operating facilities are in Bahia Blanca, south of Buenos Aires, where it employs 3,000 workers in 12 production plants. Additional reporting by Bruno Menini

HOUSTON (ICIS)–Railroad company CSX is suspending operations at several of its intermodal and TRANSFLO terminals in Florida ahead of Milton, which has shifted its path away from Tampa, a major fertilizer hub. If Milton maintains its latest forecasted path, it could spare Tampa of the worst damage, according to CoreLogic, an insurance data company. Milton’s maximum sustained winds are nearly 145 miles/h (230 km/h), making it a Category 4 hurricane, according to the National Hurricane Center (NHC). Milton is expected to weaken to a Category 3 hurricane and make landfall later on Wednesday south of Tampa near Sarasota, Florida, CoreLogic said. Milton will then pass over central Florida. RAIL DISRUPTIONSRail shipments through the Tampa area will likely face delays until Milton passes, CSX said. It expects multiple downed trees and power outages in the Wildwood, Lakeland and surrounding Tampa subdivisions. Lakeland and nearby Kathleen are near Tampa and are home to some thermoset resin plants. CSX has taken the following actions: Closed the Central Florida ILC intermodal gate. Closed the Tampa, FL intermodal gate. Closed the TRANSFLO terminals at Tampa and Tampa Port. Will close the Sanford TRANSFLO terminal midday on Wednesday. Another railroad company, Norfolk Southern, has not updated its notice from 7 October, when it said that it is monitoring and preparing for Hurricane Milton. MORE PORTS CLOSESome of Florida’s ports on the Atlantic coast have set conditions to Zulu, meaning that they are closed to inbound and outbound vessels. The following table summarizes the port conditions along the eastern and western coasts of Florida. Port Status Condition Port of Pensacola Open Port Panama City Open X-Ray Port St Joe Open X-Ray Port Tampa Bay Closed Zulu SeaPort Manatee Closed Zulu PortMiami Open Yankee Port Everglades Open Yankee Port of Palm Beach Closed Zulu Fort Pierce Closed Zulu Port Canaveral Closed Zulu Jaxport Closed Zulu Port of Fernandina Closed Zulu Source: ports, US Coast Guard IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin (UPR) production in Lakeland and Kathleen, Florida. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. Near Tampa is Florida’s phosphate mining operations in Bone Valley, which covers parts of Hardee, Hillsborough, Manatee and Polk counties. In all, Florida has 27 phosphate mines, of which nine are active, according to the Florida Department of Environmental Protection. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida’s Big Bend region. On 30 September, Mosaic said its Riverview operations were offline following water intrusion from a storm surge caused by Hurricane Helene. POSSIBLE DAMAGEHurricane Milton could be extremely destructive because of its winds, rainfall and storm surge. It will pass over the following metropolitan statistical areas. Region Population Tampa 3,342,963 Orlando 2,817,933 Jacksonville 1,713,240 Sarasota 910,108 Source: US Census Bureau The following map shows the expected path of Milton. Source: National Hurricane Center CoreLogic, the insurance data company, said Milton’s shift to the south of Tampa could limit the magnitude of insured losses. The following map compares three insured loss scenarios based on Milton’s path. Source: CoreLogic The following map shows Milton’s expected storm surges. Source: National Hurricane Center. The following map shows three-day rain totals. Source: CoreLogic CHEMS AND RECONSTRUCTIONFor hurricanes in general, reconstruction can translate to increased demand for many chemicals and polymers. The white pigment titanium dioxide (TiO2) is used in paints. Solvents used in paints and coatings include butyl acetate (butac), butyl acrylate (butyl-A), ethyl acetate (etac), glycol ethers, methyl ethyl ketone (MEK) and isopropanol (IPA). Blends of aliphatic and aromatic solvents are also used to make paints and coatings. For polymers, expandable polystyrene (EPS) and polyurethane (PU) foam are used in insulation. Polyurethanes are made of methylene diphenyl diisocyanate (MDI), toluene diisocyanate (TDI) and polyols. High density polyethylene (HDPE) is used in pipe. Polyvinyl chloride (PVC) is used to make cladding, window frames, wires and cables, flooring and roofing membranes. Unsaturated polyester resins (UPR) are used to make coatings and composites. Vinyl acetate monomer (VAM) is used to make paints and adhesives. Thumbnail shows an image of Hurricane Milton. Image by the National Hurricane Center. 

SINGAPORE (ICIS)–Volatility marked the first few days of re-opening of China’s financial and commodities markets as investors’ initial hopes of more economic measures were crushed. Implementation plans for pre-holiday measures unclear Infrastructure-focused sovereign bonds to drive growth further China GDP growth to slow to 4.3% in 2025 – World Bank The highly anticipated return of Chinese market players after a week-long absence sparked a surge in the equities markets, with the closely watched CSI 300 – which tracks shares of the top 300 companies trading in Shanghai and Shenzhen, had surged by 11% on 8 October. “Expectations were high after the monetary announcements made [in] the week of 24 September and there were even news reports of up to a [yuan] CNY10 trillion ($1.4 trillion) stimulus,” hedge fund portfolio manager Rikki Malik said in a note issued on Wednesday for investment research and analysis firm Smartkarma. On Wednesday, the CSI300 index fell by 7%, reflecting concerns over the lack of concrete new stimulus measures from Beijing to sustain the rally. Other Asian equity indices tracked the weakness in Chinese bourses amid risk aversion also stoked by geopolitical jitters in the Middle East At 08:53 GMT, Hong Kong’s Hang Seng Index was down by around 1.4% at 20,637.24, continuing from its sharpest single-day decline in 16 years in the previous session. Chemicals giant Sinopec was down by 3.61% and state energy firm PetroChina fell by 3.14% in Hong Kong. Elsewhere in Asia, South Korea’s KOSPI Composite ended 0.61% lower to 2,594.36 while Japan’s key Nikkei 225 closed up by 0.87% at 39,277.96 China’s petrochemical futures tumbled, with polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures leading the slump. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than 4%. POST-HOLIDAY POLICY BRIEFING UNDERWHELMS The National Development and Reform Commission (NDRC) – China’s top economic planner – held a briefing on 8 October in which chairman Zheng Shanjie said that China was “fully confident” of achieving economic targets for 2024. But his failure to detail sufficiently big or new measures rekindled market doubts about Beijing’s commitment to ensuring the economy can climb out of its most serious slump since the global pandemic and achieve a 5% growth. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. Instead, the NDRC emphasized confidence in achieving the “around 5%” growth target for this year based on policy measures announced in late September. Toward this end, issuance of long-term sovereign and local government bonds will be accelerated to fund infrastructure projects well into next year. Additionally, the NDRC announced upcoming investments in key strategic areas totaling yuan (CNY) 100 billion, on top of plans to expedite CNY100 billion in central government investment originally planned for 2025. NO MAJOR NEAR-TERM IMPACT FROM STIMULUS MEASURES During the seven-day China holiday in the first week of October, domestic tourist trips grew 5.9% year on year, with revenues up by 6.3% over the same period. But the per trip spend was near flat at 0.4%, according to data from the Ministry of Culture and Tourism. Week-long holidays in the country, including the Spring Festival/Lunar New Year and Labor Day celebrations in February and May, respectively, typically result in spikes in domestic tourism spending. In October, domestic tourism activities remained positive this year while there were also reports of stronger outbound and inbound travel during the period. The two earlier major holidays in China – the Spring Festival and Labour Day holidays – had recorded stronger improvements across number of trips, total spend and spend per trip, according to Singapore-based UOB Global Economics & Markets Research in a note on Wednesday. “Although the recovery in outbound travel may dilute the demand for domestic tourism, the moderation in spend per trip continue to indicate more cautious spending amongst consumers,” it said. “The initial spillover from recent PBOC [People’s Bank of China]-led stimulus to consumer spending including the rollout of local government vouchers and promotions to boost consumption had been lacking in the National Day holiday statistics,” UOB said. “This further affirms the need for stronger fiscal measures that target consumption and support to the labor market particularly with youth unemployment rate rising to 18.8% in Aug which continues to hamper the recovery in consumer confidence.” Ahead of the National Day holidays, China’s central bank had announced stimulus measures estimated to be worth at least CNY3 trillion, which is equivalent to 2.3% of its GDP. These measures include a 50-basis point cut to banks’ reserve requirement ratio (RRR), injecting CNY1 trillion into the financial system. Further measures include a CNY1 trillion capital injection to state-owned banks, a reduction in interest rates on existing mortgages to release CNY150 billion in funds, and CNY800 billion allocated to swap and re-lending facilities for stock purchases. “Investors were also disappointed that some of the 2025 budget would be pulled forward to this year, implying no new money, but… it is easier to issue special bonds which are off budget, rather than going through the rigmarole of increasing this year’s budget deficit,” said SmartKarma’s Malik. Markets will now be closely watching for further fiscal stimulus to support consumption and investment. “In addition, given the onset of winter, construction projects need to be started quickly. We fully expect there to be further issuance of ultra-long special bonds,” Malik added. Investors watching for signs of China’s next policy moves now have three key dates circled on their calendars. In late October, the Standing Committee of the National People’s Congress (NPC) is scheduled to meet in late October. Meanwhile, China’s Q3 GDP is slated for release on 18 October; while country’s Politburo is due to meet early December, leading to the annual Central Economic Work Conference (CEWC). The CEWC is a pivotal annual meeting in China during which country’s economic agenda is set for the upcoming year. The conference typically takes place over two to three days in December. CHINA 2025 GROWTH TO SLOW DESPITE STIMULUS – WB Economic growth in China is projected to slow to 4.3% next year from 4.8% in 2024 despite economic stimulus measures that China introduced in September, the World Bank warned in a report on 7 October. This is due in part to low consumer and investor confidence, property market weakness, an ageing population and global tensions, the multilateral institution said. “Recently signalled fiscal support may lift short-term growth but longer-term growth will depend on deeper structural reforms,” the World Bank said. “China has led growth in the region for more than three decades, but its relative growth is likely to slow down in future,” it added. Insight article by Nurluqman Suratman With contributions from Jonathan Yee ($1 = CNY7.07)

LONDON (ICIS)–Massive overcapacity along some value chains is likely to drive further fundamental shifts in the global chemicals landscape, with differentiation and innovation key to remaining competitive. Slow demand in lengthy trough cycle conditions and the massive ramp-ups in production capacity seen in China since the start of the 2020s have left economics ”almost unsustainable” in some cases, according to Ketan Joshi, president for intermediates at BASF and member of the European Petrochemicals Association (EPCA)’s board of directors. “In several value chains, the overcapacities built up in China make the situation in China almost unsustainable when it comes to economics, which I assume will trigger some fundamental changes in the markets globally,” he said. “Differentiation and competitive offerings will be imperative for survival.” The radically changed competitive conditions for heavy industry in Europe relative to elsewhere in the world has highlighted the sluggishness of some industrial players to adapt to the new conditions. “I do believe that manufacturing industry in Europe became complacent to a certain extent in the past decade, so it is now really about trying to get back that innovation spirit,” he said. “If you talk about what the industry can do, then this is what the industry has in its own hand to drive, to differentiate and create a compelling value proposition for customers,” he added. BASF has taken a detailed look at its operations, particularly those in its Verbund site in Ludwigshafen, over the course of this year. Following the announcement in August of the closure of its Ludwigshafen adipic acid plant and several units, in the wake of a complete evaluation of the prospects for all units at the complex, further measures could yet be taken. The results of that deep dive were fairly promising, with 78% of Ludwigshafen production plants deemed competitive, while 16% were evaluated as facing short- to mid-term competitive risks and 6% seen as less competitive in the future, according to site director Katja Scharpwinkel. While the bulk of the company’s assets at its home based have been judged to be competitive, the current global market remains a challenging one, with manufacturing productivity continuing bearish and demand upticks still fairly minor. The most recent purchasing managers’ index (PMI) data for the eurozone shows manufacturing hitting a seven-month low in September, with conditions in Germany especially challenging, and the service sector also showing more marked signs of a slowdown. Chemicals demand slightly outpaced the general industrial market in the first half of the year, according to data from industry body Cefic, but remains substantially below recovery levels. BASF itself has guided for a slow recovery, with no big step changes in the subdued upward demand curve, and conditions remain challenging for intermediates. “From an intermediates perspective, it’s been a challenging year, with demand developments remaining uncertain until the end of 2024, and no clear sign of any broad recovery. Customers continue to buy very cautiously, mainly keeping inventories very low, and competitive pressure stays high,” Joshi said. “Geopolitical uncertainties are driving large fluctuations in basic commodities, which I think is a major driver in markets at present, and that poses a major challenge for capex-heavy industries to really make decisions,” he added. While the macroeconomic picture is crucial to allow for a stronger rebound, companies need to adapt and innovate to meet the current challenges, he added. “To galvanize a broad recovery, several factors are necessary:  stable economic conditions play a crucial role in boosting investment, and increasing consumer confidence is necessary to drive consumption and spending,” he said. “But also continued innovation is vital to meet the evolving customer needs, and that is really what is required to stay competitive in the market.” “Traditionally, Europe led the industry in innovation, so it is important to get back the focus,” he added. Decarbonising production and offering a wider range of sustainable solutions will be core differentiators for the manufacturing sector, particularly as consumer tastes continue to evolve, according to Joshi. Strong pushes on research and scaling up production capacities for new markets and new products are difficult when producers are moving to aggressively cut costs and financing costs remain high. Many European countries, including Germany, have slipped down the international rankings of research and development spending and innovation, and the prospect of making big financial bets when markets are still forming remains a daunting prospect. “Without a doubt, moving towards more sustainability requires additional effort across the board. As I said, it cannot be an individual thing,” Joshi said. The European Parliament seems at present to be attempting to adapt to that challenge, without committing to the kinds of green subsidy frameworks seen in the US. Re-elected president of the European Commission, Ursula von der Leyen, has promised a clean industrial deal, and to cut red tape around permitting, although the pushback faced by BASF for its proposed cathode active materials plant in Finland and INEOS’ new cracker in Antwerp shows the continuing difficulty of building new production in the EU. While the policy specifics are still to be unveiled, the pronouncements by the new parliament are promising, according to Joshi, but permitting remains a real issue in Europe. “Right now, over 80 gigawatt of forthcoming wind capacity is stuck in lengthy permitting process in Europe, and eight times more that of solar energy capacity is in the permitting process compared to what is under construction,” he said. The ambition of the Commission’s targets, both for carbon reduction and for the use of non-fossil fuels and feedstocks, has been stymied to an extent by the continual revision of those goals, making it difficult for companies to commit to specific plans. The chemicals sector has one investment cycle left before the 2030 decarbonisation targets of a 55% reduction in carbon emissions compared to 1990 come into effect. The fact that new large-scale revisions to green industrial policy are still being drafted makes deploying that capital a challenge. “When ambitious targets regarding plastic recycling and accepted recycling technologies are reviewed again and again by governments, parliaments and regulatory authorities, it creates huge uncertainty in the chemical industry and delays investments,” he said. “We need a consistent policy, and we need those policies to stick to what the industry has already embarked into, so that the investments can happen,” he added. The roadmap for the evolution of the circular economy is also yet to be written for the chemicals sector. Companies looking at new markets often use acquisitions as a way in, but owning waste recycling infrastructure does not necessarily make sense for a chemical producer. Greater collaboration along these new value chains is necessary, and not all early steps may prove in hindsight to have been the best-optimised choices. The important thing is to start to make those steps, according to Joshi. “We cannot just aim for perfect solutions from the outset. We need to start implementing things and then improve as we go forward,” he said. “Partnership with waste suppliers, brand owners, technology leaders, will be required, because not everything can be done by a single player in the industry,” he added. The EPCA assembly runs until 10 October. Interview article by Tom Brown Thumbnail image source: Shutterstock

SINGAPORE (ICIS)–Japanese producers Idemitsu Kosan and Mitsui Chemicals on Wednesday said that they are moving to the front-end engineering and design (FEED) stage of a plan to consolidate their ethylene facilities in Chiba into a single unit. The two companies have completed the feasibility study for the project announced in late March, they said in a statement. Under the plan, Idemitsu’s 413,000 tonne/year ethylene facility in Chiba will be closed, with operations to be combined with Mitsui’s plant. Mitsui Chemicals has a bigger cracker with an ethylene capacity of 612,000 tonnes/year at the site. The two companies plan to complete the consolidation project by fiscal year 2027, which ends on 31 March 2028. The two plants are operated by their 50:50 joint venture company Chiba Chemicals, which was established in 2010. “The feasibility study examined the impact of consolidating the ethylene facilities on feedstock procurement, as well as on the production and supply setup for the products involved,” they said. “As the two companies reached the conclusion that consolidation will be feasible, they have agreed to move on to the FEED phase.” The FEED phase typically involves scrutinizing a project’s challenges, risks, costs and the like in greater detail, and determining the basic specifications of the plant.

SINGAPORE (ICIS)–China’s petrochemical futures tumbled on Wednesday morning as a lack of further economic stimulus measures from the government left investors worrying about demand. At the end of the morning session, polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures led the slump, with losses ranging from 2.4-3.5%. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than $3/bbl. In physical markets, spot transactions were sluggish at most petrochemicals, including acetone, butadiene, acrylonitrile, propylene oxide, upon resumption of trade due to weak demand. China had a week-long National Day holiday on 1-7 October. Futures market gains in the previous session lost steam as market hopes for additional economic measures did not materialize. In a briefing on 8 October, the National Development and Reform Commission (NDRC) – China’s top economic planner – provided no details on how to execute the aggressive measures announced in late September. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. ($1 = CNY7.07)