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Crude Oil16-Jan-2025
SINGAPORE (ICIS)–The Indonesian rupiah fell to
its weakest level in more than six months on
Thursday following an unexpected loosening of
monetary policy on 15 January to spur growth in
southeast Asia’s largest economy.
Rupiah weakened due to US policy
uncertainty under Trump
2025 GDP growth forecast trimmed to
4.7-5.5%
Inflation to remain within 1.5-3.5% target
in 2025
The rupiah (Rp) was extending losses on
Thursday, falling to as low as Rp16,383 against
the US dollar in early trade.
At 07:41 GMT, the rupiah was trading at
Rp16,376 to the US dollar.
In a surprise move, Bank Indonesia (BI) lowered
its benchmark seven-day reverse repurchase rate
by 25 basis points (bps) to 5.75% on 15
January.
BI also reduced its deposit facility rate by
25bps to 5.00% and lending facility rate to
6.50%.
“The decision is consistent with low projected
inflation in 2025 and 2026…maintaining the
rupiah exchange rate in line with economic
fundamentals to control inflation within the
target range and the need to bolster economic
growth,” BI said in a statement.
BI last slashed interest rates in September
last year for the first time in over three
years.
However, it subsequently maintained a steady
policy stance at later meetings to stabilize
the rupiah, which had come under pressure due
to uncertainty surrounding US policy under
Donald Trump.
“The rate cut was unexpected as BI previously
emphasized that its near-term policy stance is
aimed at rupiah stability amid strong US
Dollar,” Malaysia-based equity research firm
Kenanga said in a note on Thursday.
“The shift reflects a focus on boosting growth
amid slowing domestic expansion, low inflation,
and rising global uncertainties, including
geopolitical tensions, China’s weak recovery,
and policy changes in the US,” it said.
BI is expected to maintain an easing stance to
bolster economic growth, Kenanga said, but
concerns regarding rupiah stability may prompt
a gradual and cautious approach, particularly
as the US Federal Reserve may slow its rate
cuts due to the resilience of the US economy.
“We expect the rupiah to gradually strengthen
by the end of 2025 on the expectations of lower
US policy rate and an improving domestic
economy, it said.
“Nonetheless, we expect two more cuts, bringing
BI’s policy rate to reach 5.25% in 2025.”
SLOWER GROWTH PROJECTED
BI on 15 January revised its 2025 GDP growth
forecast to 4.7-5.5%, slightly lower than its
previous projection of 4.8-5.6%.
This downward revision is attributed to weaker
exports, subdued household demand, and lower
private investment.
Indonesia is a net importer of several
petrochemicals, including polyethylene (PE) and
polypropylene (PP), as well as the world’s
largest crude palm oil (CPO) producer – a key
oleochemicals feedstock.
Like most in Asia, Indonesia is export-oriented
economy. Its full-year exports rose by 2.3%
year on year to $264.7 billion, while imports
increased by 5.3% to $233.66 billion, resulting
in a trade surplus of around $31 billion,
official data showed.
For the month of December alone, the country’s
trade surplus narrowed to $2.24 billion,
marking the lowest surplus since July, as
exports to key markets, including China, India,
and Taiwan declined.
Total exports for the month were up by 4.8%
year on year at $23.46bn, while imports grew at
a faster rate of 11.1% to $21.22 billion.
For 2024, growth is expected to settle slightly
below the midpoint of the 4.7-5.5% range,
reflecting softer domestic demand.
Indonesia’s GDP grew by 5.05% in 2023, slowing
from the 5.31% expansion the previous year due
to sluggish exports.
BI in its statement highlighted that the global
economy is experiencing growth divergence, with
the US exceeding projections due to fiscal
stimuli and technological investments, while
Europe, China, Japan, and India face sluggish
growth.
The global economic growth for 2025 is expected
to reach 3.2%, driven by the strong US economy,
it noted.
However, US policy and inward-looking trade
policies are prolonging disinflation and
strengthening expectations of dovish monetary
policy, leading to increased global financial
market uncertainty, BI said.
“Global economic developments require a strong
policy response, therefore, to mitigate the
adverse impacts of global spillovers, maintain
stability and drive domestic economic growth,”
it added.
In terms of inflation, CPI inflation averaged
2.3% in 2024, well within BI’s target range of
1.5-3.5%.
Inflation is expected to remain within this
target in 2025, supported by ample domestic
capacity to meet demand.
Focus article by Nurluqman
Suratman
Crude Oil16-Jan-2025
SINGAPORE (ICIS)–India’s currency – the rupee
– slumped to a record low in the week, pushing
up both domestic and import prices of some
petrochemicals in the south Asian country amid
stable demand.
Strong US dollar sends Indian rupee
tumbling
Acetone, EVA import prices jump
India inflation within central bank target
range
The Indian rupee (Rs) is currently trading at
above Rs86 against the US dollar, having shed
more than 3% since the early November, when
Donald Trump won the US election.
At 07:10 GMT, the rupee was trading at Rs86.49.
A strong US dollar and heavy outflows of
short-term investments sent the currency
tumbled to a record low of Rs86.9964 on 14
January, according to foreign exchange platform
xe.com.
India’s demand for overseas goods will likely
be dented as a weaker currency makes imports
more expensive.
PETROCHEMICAL BUYERS TURN
CAUTIOUS
With import prices of several products on
uptrend amid the rupee weakness, some buyers
have adopted a wait-and-see attitude on
markets.
India is a major importer of petrochemicals
including polymers.
Rupee’s tumble has notably adversely affected
PE Black 100 pipe import offers from Gulf
Cooperation Council (GCC) and Asian sellers as
buyers switch to domestic PE Natural.
PE Black 100 and PE Natural are specific grades
of high-density polyethylene (HDPE) used
primarily for high pressure water pipes.
In the recycled polyethylene (rPE) and recycled
polypropylene (rPP) markets, downstream
converters in India that import cargoes from
northeast Asia are feeling the pinch.
Fewer India-bound rPE and rPP cargoes are
expected in the coming weeks, compounded by
high intra-Asia freight rates.
For exporters of recycled polyethylene
terephthalate (rPET), meanwhile, there was no
upsurge in shipments despite the rupee’s
weakness.
India continues to position itself as net
exporter of rPET cargoes, mainly bound to
long-haul buyers in the Americas and in Europe.
India’s aggressive expansion of rPET materials
have posed competition to other Asian
producers, particularly those in southeast
Asia.
In the toluene di-isocyanate (TDI) and
ethanolamines markets, market sentiment is
mixed.
“Import and domestic prices for India TDI are
unchanged from last week, but sentiment is
mixed due to positive demand versus the weak
rupee/US dollar rate,” a market player said.
TDI is primarily used in the production of
flexible polyurethane foams, which are widely
used in furniture, bedding, and automotive
seating.
Meanwhile, after several months of decline,
ethanolamines’ domestic prices moved higher,
with players attributing the sudden rebound on
the steep devaluation of the rupee, while
demand was stable.
For ethylene vinyl acetate (EVA) and acetone,
import and domestic prices have spiked while
demand was stable.
EVA restocking momentum and discussions have
been weighed down by the falling rupee due to
higher cost of imports, market players said.
“I have not booked yet because of the currency
depreciation; import costs have gone up so it
has really impacted importers… we’ll wait for
negotiations with suppliers,” said a
distributor.
For acetone, fresh import demand is being
hampered by the weak rupee amid a prevailing
supply surplus in the Indian domestic market.
US DOLLAR TO REMAIN
STRONG
The US dollar remains strong on
better-than-expected job growth in the world’s
largest economy, while the unemployment rate
fell to 4.1%, reducing the chances of interest
rate cuts by the Federal Reserve in February.
A weaker currency fuels inflation as it raises
the cost of imported goods.
“The RBI intervened extensively in the FX
market last year but the appointment of a new
central bank governor last month has raised
market expectations of a less active
intervention approach to smooth the rupee’s
volatility,” Netherlands-based banking and
financial service firm ING said in a note on 13
January.
“The recent equity market correction, foreign
institutional investor (FII) outflows and
overvaluation of the Indian rupee suggest that
the rupee will continue to face downward
pressure in the near term,” ING added.
DEC INFLATION EASES; NOV INDUSTRIAL
OUTPUT UP 5%
India’s inflation rate eased to a four-month
low of 5.22% in December from 5.48% in the
previous month, continuing its decline from
6.21% recorded in October, official data
showed.
The December figure was within the 2.0% to 6.0%
tolerance band set by the Reserve Bank of India
(RBI).
Easing food prices had some analysts predicting
a possible cut in RBI’s repurchase rate as
early as February, but the weakness of the
rupee could delay adoption of a looser monetary
policy.
“We maintain our base case for RBI to begin
monetary policy easing via a 25 bps points
reduction to the repo rate in the upcoming Feb
2025 … meeting,” Singapore-based UOB Global
Economics & Markets Research analysts said
in a 14 January macro note.
Meanwhile, India’s factory output in November,
as measured through the Index of Industrial
Production (IIP), rose 5.2% year on year driven
by growth in manufacturing activity and power
generation.
Manufacturing output growth in November
accelerated to 5.8% year on year from 1.3% in
the same period last year.
In April to November 2025, industrial output
posted a slower year-on-year growth of 4.1%
from 6.5% in the previous corresponding period.
India, which is a giant emerging market in
Asia, is expected to post a slower GDP growth
of 6.6% in the fiscal year ending March 2024,
down from 7.2% in the previous year, based on
RBI’s projections.
Nonetheless, India is still predicted to be the
fastest-growing country in Asia, according to
ING, which forecasts 6.8% growth for India for
the current fiscal year.
Focus article by Jonathan Yee
Additional reporting by Helen Lee, Clive
Ong, Shannen Ng, Veena Pathare, Nadim Salamoun
and Arianne Perez
Thumbnail image: Indian rupee notes – 5
January 2025 (Firdous
Nazir/NurPhoto/Shutterstock)
Speciality Chemicals15-Jan-2025
HOUSTON (ICIS)–HB Fuller plans to shut down
nearly one-third of its plants globally and
drastically reduce the number of warehouses it
has in North America, the US-based adhesives
producer said on Wednesday.
When HB Fuller completes the shutdowns in its
fiscal year of 2030, it will have 55 plants
globally, down from 82, the company said.
By the end of 2027, HB Fuller will have 10
warehouses in North America, down from 55.
HB Fuller expects to cut annual pre-tax costs
by $75 million/year by the time it completes
the shutdowns. The company expects to spend
$150 million over the next five years to shut
down the sites.
“Our manufacturing footprint consolidation,
coupled with our planning and logistics
reorganization, are important steps in our
strategic plan to achieve an EBITDA margin
consistently greater than 20%,” said Celeste
Mastin, CEO. “These actions will not only
reduce costs through improved capacity
utilization, they will also enable us to better
serve our customers and reduce future capital
expenditure requirements.”
As an adhesives producer, HB Fuller’s raw
materials include tackifying resins, polymers,
synthetic rubber, plasticizers, and vinyl
acetate monomer (VAM).
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Crude Oil15-Jan-2025
HOUSTON (ICIS)–A ceasefire and hostage release
agreement between Israel and Hamas announced on
Wednesday is unlikely to have much of an impact
on crude oil and chemical markets, though it
could lower the geopolitical premium.
The agreement was reached through diplomacy by
the US, Egypt, and Qatar, and will be
implemented for the most part by the incoming
administration of President-elect Donald Trump,
US President Joe Biden said in remarks from the
White House.
ICIS feedstocks analyst Barin Wise said he does
not expect that the deal will have a meaningful
impact on crude oil markets because the
affected region is not oil producing.
“This may trim the geopolitical premium in
crude since it eliminates a hot spot in the
Middle East,” Wise said. “However, if we look
at the market today, crude is up big on other
factors, more than offsetting any effect the
ceasefire may have.”
Crude prices surged on Wednesday largely in
response to fresh US sanctions on Russia,
which the International Energy Agency said
could crimp global supply.
Futures prices for WTI settled on Tuesday at
$77.50/bbl and rose to $79.51/bbl before
midday. WTI settled at $80.04/bbl on Wednesday.
IMPACT ON SUEZ CANAL
TRAFFIC
The agreement could help with capacity
constraints in commercial shipping as container
ships have been avoiding the Suez Canal for
more than a year because of attacks by Houthi
rebels on commercial vessels.
Ships have been forced to use the much longer
route around the Cape of Good Hope, which
tightened shipping capacity and pushed costs
for shipping containers higher.
The reopening of the Suez Canal would have the
greatest impact on normalizing the
Asia-to-Europe container shipping route, but
would also affect Asia-US rates, as shipping
capacity would surge once carriers were able to
access the shorter route.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and shipped in tankers, container ships
transport polymers – such as polyethylene (PE)
and polypropylene (PP) – are shipped in
pellets.
They also transport liquid chemicals in
isotanks.
Thumbnail image shows a crude oil tanker.
Photo by Shutterstock
Recycled Polyethylene Terephthalate15-Jan-2025
LONDON (ICIS)–In December 2024, the European
bioplastics industry met in Berlin at the
European Bioplastics Conference (EBC) to
discuss innovations, barriers to growth and the
future outlook for production capacity, demand
and changes in legislation. ICIS Recycling
Analyst Alexandra Tomczyk attended the
conference and updates us on the current state
of play for the bioplastics market.
Some of the key takeaways included:
Global capacities are set to grow rapidly
in the next 5 years
It’s unclear how the rise of bioplastic
packaging will impact the goals set in
Packaging and Packaging Waste Regulations
Bioplastics are only one of a range of
tools needed to improve the sustainability of
plastics
Crude Oil15-Jan-2025
LONDON (ICIS)–The latest tranche of US
sanctions on Russia’s oil trade could
affect flows from the country, while
weather-related production shut-ins in North
America could also impact global supply, the
International Energy Agency (IEA) said.
Announced on 10 January, the US imposed
aggressive new sanctions on Russia’s oil trade,
naming 183 vessels, including Russia-owned
tankers and the ”shadow vessels” understood to
be utilized to evade trade blockades.
The shadow fleet refers to ships indirectly
owned or controlled by Russia through shell
companies or intermediaries to evade detection
and sanctions.
Over 100 of the sanctioned tankers had
transported Russian crude to China and/or India
in 2024, according to Matt Wright, lead freight
analyst at data and analytics firm France-based
Kpler.
“When it comes to buyers, China and India, in
general, tend to steer clear of dealing
directly with tankers and entities blacklisted
by the US Treasury,” he said in a note earlier
this week.
US moves “may affect oil supply flows” the IEA
said in its latest oil market report, but
official purchases of Russia crude will still
be possible at certain price points.
“Exports on non-shadow tankers remain viable
for Russian oil purchased below price caps,”
the IEA said.
Further complicating the early 2025 supply
picture is scope for production constraints in
the US in the event of extreme weather, with a
winter freeze last year cutting output in the
US and Canada by over 1.8 million barrels/day.
A smaller drop is expected this year, but there
could still be scope for weather in the region
to tighten supplies, the IEA said.
Potential for additional US sanctions on
Iran-origin oil to be introduced by the new
administration could also hit global supplies,
the agency added, with sentiment already
driving some players to pill back from oil
supplies from Iran and Russia.
“There is heightened speculation that the
incoming US administration will take a tougher
stance on Iran’s oil exports, compounding the
impact of US Treasury sanctions on Tehran,” the
IEA said.
1.5 million barrels day of additional supply is
expected from non-OPEC countries this year ,
and total output growth of 1.8 million/barrel
day against 1.05 million barrels/day demand
growth, according to the agency.
While supply growth is likely is likely to be
sufficient to cover demand, the fresh Russia
sanctions could provide more headroom for OPEC+
signatory countries to release more barrels
into the market after delaying the end dates
for some production cuts.
OPEC, also releasing its latest market
predictions on Wednesday, left 2025 demand
growth forecasts unchanged at 1.4 million
barrels/day, and non-OPEC+ supply growth
projections at 1.1 million barrels/day amid
global GDP expansion of 3.1%.
The cartel projects that demand and non-OPEC
supply growth will remain around 2025 levels
next year.
Focus article by Tom
Brown
Thumbnail photo: An oil pipeline running
through Alaska, US (Source: Shutterstock)
Speciality Chemicals15-Jan-2025
LONDON (ICIS)–Inflation in the UK eased by 0.1
percentage point in December as compared with
the previous month, slightly tapering the
steady upward movement of consumer pricing in
the country in recent months.
UK inflation dipped to 2.5% in December
compared with 2.6% the previous month as upward
movement for transport costs was offset by
lower hotel and restaurant prices, according to
the UK Office for National Statistics (ONS).
Upward price pressure from services, which has
remained stubbornly high, eased slightly to
4.4% compared with 5% in November.
A decline in inflation levels could potentially
reduce pressure on the UK government after a
decline in the value of the sterling and a
surge in borrowing costs amid unease over
public spending cuts, global volatility over
the prospect of fresh US tariffs, and
inflation.
Speciality Chemicals15-Jan-2025
LONDON (ICIS)–The German economy contracted
0.2% in 2024 – the second consecutive year of
economic decline for the eurozone’s biggest
economy – driven by energy costs, increasing
export competition and economic uncertainty,
according to the first calculations from the
Federal Statistical Office (Destatis).
As the country rounds off two years of economic
decline, preliminary data for Q4 2024 points to
a 0.1% decline, the agency added, with a full
announcement incorporating more data scheduled
for 30 January.
Manufacturing output dropped 3% in the year,
according to Destatis, with production in
energy-intensive industries such as chemicals
and metal-working hit particularly hard.
The decline in the construction sector was even
sharper, with output shrinking 3.8% over the
course of the year.
“Cyclical and structural pressures stood in the
way of better economic development in 2024,”
said Destatis president Ruth Brand.
Speciality Chemicals15-Jan-2025
SINGAPORE (ICIS)–Chinese oil company CNOOC and
Anglo-Dutch energy major Shell have taken a
final investment decision (FID) to expand their
joint petrochemical complex in Daya Bay,
Huizhou in southern China.
The expansion by their joint venture firm CNOOC
and Shell Petrochemicals Co (CSPC) is
expected to be completed in 2028, Shell said in
a statement.
Financial details of the investment were not
disclosed.
The expansion will include a third
cracker with a planned capacity of 1.6
million tonne/year of ethylene; as well as
associated downstream derivatives units
producing chemicals including linear alpha
olefins
It will also include a new facility which will
produce 320,000 tonnes/year of high-performance
specialty chemicals such as polycarbonates (PC)
and carbonate solvents.
CSPC is a 50-50 joint venture owned by Shell
Nanhai BV, a subsidiary of Shell, and CNOOC
Petrochemicals Investment Ltd, an affiliate of
CNOOC.
(Recasts first two paragraphs for clarity)
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