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Petrochemicals29-Jul-2024
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which looks at warning signs around the oil
market.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author and do not necessarily represent those
of ICIS. Paul Hodges is the chairman of
consultants New
Normal Consulting.
Speciality Chemicals29-Jul-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 26 July.
BASF
sees slowing electric vehicle sector, pauses
Tarragona refinery plans
BASF is moving to “de-risk” its exposure to the
electric vehicles sector in response to slowing
market dynamics, CEO Markus Kamieth said on
Friday, pausing or deciding against several
investments connected to the industry.
Dow
sees B&C, consumer durables weakness
persisting through 2024, rate cuts needed –
CFO
Weakness in building and construction, and
consumer durables demand is expected to persist
through 2024, likely pushing out a meaningful
earnings recovery to 2025, Dow’s chief
financial officer said on Thursday.
Eurozone private sector
momentum slows further in July
Eurozone private sector momentum almost slowed
to a standstill in July, dropping to a
five-month low as new orders fell and business
confidence ebbed.
Africa PE/PP demand to
remain flat, supply picture difficult to
predict
Little is certain when it comes to African
economics but it appears a fairly safe bet that
underlying demand in the polymer markets will
remain subdued for the second half of the year
across the continent.
EU
announces provisional ADDs on biodiesel imports
from China
The EU has implemented provisional antidumping
duties (ADDs) on biodiesel from China after
deciding that a recent surge in imports has
harmed the competitiveness of Europe-based
operations. The European Commission has
suggested a provisional tariff between 12.8% to
36.4% starting in mid-August.
Gas29-Jul-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 26 July 2024.
Typhoon Gaemi makes landfall in southern China;
hits port operations
By Nurluqman Suratman 26-Jul-24 10:36 SINGAPORE
(ICIS)–Typhoon Gaemi slammed into Fujian
province in southern China on the evening of 25
July, bringing heavy rains as it continues to
move inland on Friday, with the strong downpour
expected to last three days.
PODCAST: Typhoon Gaemi to delay propane, butane
cargo arrivals in China
By Zhou Shihao 25-Jul-24 14:49 SINGAPORE
(ICIS)–Typhoon Gaemi will test the resilience
of the liquefied petroleum gas (LPG) supply
chain, causing temporary shipment delays and
port closures, but market prices and arrival
schedules are expected to remain stable and
manageable.
PODCAST: Hydrogen – the critical blend for
decarbonizing gas power in China
By Yu Yunfeng 25-Jul-24 09:47 SINGAPORE
(ICIS)–China’s installed capacity of gas power
generation is projected to surpass 150 GW by
2025, representing roughly 6% of the country’s
total installed power generation capacity.
VIDEO: China’s LDPE market weakens as supply
tightness eases
By Joanne Wang 24-Jul-24 14:35 SINGAPORE
(ICIS)–Watch ICIS senior industry analyst
Joanne Wang discuss the driving factors behind
the China’s low density polyethylene (LDPE)
price fluctuations this year and briefly
discuss prospects for the second half of this
year.
India cuts MDI import duty; plans six-month
review of overall tariff structure
By Nurluqman Suratman 23-Jul-24 18:04 SINGAPORE
(ICIS)–India will cut import duties for
methylene diphenyl diisocyanate (MDI) by 2.5
percentage points to 5.0% effective 24 July,
with plans to review the country’s overall
tariff structure in the next six months.
OUTLOOK: China’s H2 refinery throughput to be
weighed by economic slowdown, fuel
substitution
By Patricia Tao 23-Jul-24 11:21 SINGAPORE
(ICIS)–China’s crude throughput is forecast to
edge lower to 15.05 million barrels/day in the
second half of 2024, about 0.4% lower year on
year amid continued sluggishness of the
domestic economy and the growing competition
from alternative fuels.
INSIGHT: China PE demand growth for 2024 to be
slowed by weak consumer confidence
By Amy Yu 22-Jul-24 17:41 SINGAPORE
(ICIS)–China polyethylene (PE) demand is
expected to shift to the traditional off-season
in July, due to the impact of high temperatures
and flood season.
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Potassium Sulphate (SOP)26-Jul-2024
HOUSTON (ICIS)– Producer Agrimin Limited said
their Mackay Potash project in Western
Australia is now advancing towards a final
investment decision.
In an update on quarterly activities the
company said it continues to focus on their
project which is planned to be able to
manufacture standard and granular sulphate of
potash (SOP) products.
Current activities include efforts towards
project funding and strategic partnerships,
design works, environmental approvals as well
as product marketing.
The Mackay project is set to undertake
sustainable extraction of brine from Lake
Mackay using a network of shallow trenches,
which will be transferred along trenches into a
series of solar evaporation ponds.
Raw potash salts will crystallize on the floor
of the ponds and be collected by wet harvesters
and pumped as a slurry to the processing plant
that will refine harvested salts into high
quality finished SOP ready for direct use by
customers.
SOP volumes will be hauled by a dedicated fleet
of road trains to a purpose-built storage
facility at Wyndham Port. At the port it will
be loaded via an integrated barge loading
facility for shipment to customers.
The project’s definitive feasibility study
(DFS) was completed in July 2020 and
demonstrated that once in operation it could be
the world’s lowest cost source of seaborne SOP.
The independent technical review of the DFS was
completed in April 2021.
The company has signed three binding offtake
agreements with Sinochem Fertilizer Macao
Limited for the supply of 150,000 tonnes/year,
Nitron Group for 115,000 tonnes/year and with
MacroSource for 50,000 tonnes/year.
Agrimin has already completed site-based
testing for the salt harvesters, geotechnical
sampling and for the sealed haul road.
Additionally, the company has worked with its
proposed power contractor to refine the
project’s site power station design which has
resulted in a hybrid diesel, solar, wind and
battery solution.
Regarding environmental clearance the company
said the project is being assessed by the
Western Australian Environmental Protection
Authority (EPA) and during the quarter it
resubmitted the environmental impact assessment
response, which included revised management and
monitoring plans.
It is still expected that the EPA approval will
come during the second half of 2024.
Agrimin said it is also progressing other
secondary approvals, licenses and agreements
which included coverage for mining operations
project safety and water regulations.
Ammonia26-Jul-2024
The infographic for this story was
initially developed by ICIS hydrogen policy and
regulation analyst Aayesha Pathan
LONDON (ICIS)–On 17 July the government of the
Czech Republic approved an update to its
hydrogen strategy. The update follows a wide
array of European policy developments such as
targets for the use of renewable hydrogen in
transport and industry, as well as alternative
fuels infrastructure regulation on hydrogen
refuelling stations.
The strategy indicates a three phased-approach
to the development of the market, focusing
initially on localized production and offtake
through hydrogen valleys, moving towards
large-scale hydrogen imports towards the end of
the decade and into the 2030s.
ICIS has produced the following infogram to
reflect some of the core principles of the
strategy update.
Recycled Polyethylene Terephthalate26-Jul-2024
LONDON (ICIS)–Senior Editor for Recycling Matt
Tudball discusses the latest developments in
the European recycled polyethylene
terephthalate (R-PET) market, including:
Eastern Europe bale bullishness eases
Some northwest Europe flake sellers’ views
on August offers vary
Swedish deposit return scheme (DRS)
introduces R-PET cap from May 2025
Ethylene26-Jul-2024
LONDON (ICIS)–Venezuelans go to the polls on
Sunday with the hope of a free and fair
election, in which case President Nicolas
Maduro is widely expected to lose office in a
country where the economy has been battered by
years of mismanagement, corruption, and US
sanctions.
In the crude oil-rich country – Venezuela holds
the world’s largest reserves – petrochemicals
could naturally develop given the raw materials
advantage. Back in the 1990s, with crude oil
output at highs, petrochemicals were tilted as
a growing sector in the country.
The industry never took off.
Since 2001, Venezuela has been run by the
socialist PSUV party, first under the late
President Hugo Chavez, who died in 2013, and
later under his appointee successor, Nicolas
Maduro, who won an election in 2018 widely seen
as not free: the PSUV-led coalition won 256 out
of 277 seats in the National Assembly.
Venezuela’s demise has been rapid and deep:
practically no institution in the country has
been spared from the PSUV taking over it, and
the election on Sunday has several times been
postponed as Maduro tries to cling onto power
for as long as he can.
The powerful military are still for the most
part rallying behind him. A state of terror has
been the norm in the past few years, and the
economy took a turn for the worse in the late
2010s and pushed around 7.5 million Venezuelans
to flee, mostly to neighboring countries or,
those with the means, to countries such as the
US or Spain.
Sunday’s election is momentous because it has
been tilted as one in which Maduro could allow
a free vote – but many still fear that is not
his nature.
But independent opinion polls have consistently
showed him trailing behind the unity opposition
candidate, Edmundo Gonzalez, a 74-year-old
diplomat who managed to avoid, like other
opposition candidates before him, being banned
from running.
PETROCHEMICALSBefore
North America renewed its status as a global
energy power with the advent of the shale gas
boom, crude oil derivatives were – and continue
to be in most Latin American countries – the
only game in town when it comes to
petrochemicals raw materials.
In the past 30 years, crude oil output peaked
in 2000 at slightly more than 3 million
barrels/day, stayed mostly stable under
Chavez’s rule at around 2.5 million
barrels/day, but has been on a downward trend
since, according to data from the US Energy
Information Administration (EIA).
VENEZUELA CRUDE OIL
PRODUCTIONJanuary 2000-July
2023
Million barrels/day
Source:
US’ Energy Information Administration
Currently, Venezuela produces around 700,000
barrels/day. The reserves continue to be there,
underground, but the facilities to extract that
wealth have also been victims mismanagement and
have had little maintenance.
In 2023, as the world’s energy sector reeled
from Russia’s attack against Ukraine, the US
softened some of its sanctions on Venezuela –
its crude oil was now more needed than ever –
and signed the Barbados Accords, which would
imply lifting sanctions in exchange for a free
and fair electoral process.
Maduro backtracked from his word earlier in
2024 – as he kept banning candidates from the
opposition to run in the process – and the US
reimposed the sanctions which, in the abyss the
country is in, are used by the government as
the excuse for Venezuela’s malaise.
Amid this backdrop over the past decades, the
1990s talk about petrochemicals being a sector
which could potentially be a powerful exporter
of downstream materials to the rest of the
world has all but died.
In June, the Venezuelan government said it was
mulling building
production facilities for petrochemicals
and fertilizers together with Turkey’s
industrial conglomerate Yildirim, but without
giving much detail about timelines or budgets.
However, such deals have been signed before and
nothing came to fruition out of them.
Yildrim had not responded to a request for
comment at the time of writing.
Meanwhile, in an interview with ICIS
in May, an executive at chemicals distributor
Manuchar – Belgium-headquartered but focused on
emerging markets, with strong presence in Latin
America – told the sad fate the company was
victim of in the late 2010s.
By then, the economy worsened sharply and, with
it, insecurity created a dangerous country to
live in, from Caracas to the provinces. The
government’s terror state has included
paramilitary groups which have had little
regard for their own people.
Most of Manuchar’s employees fled the country
while they still had the means, and the human
resources problem forced the company to
basically idle all its facilities there, which
remain dormant to this day, said Manuchar’s
head for South America, Stefan Van Loock.
“We still have a legal entity in Venezuela,
although it is dormant, and we do not have any
sales there since the end of the 2010s. During
our last months there, the situation had become
untenable: we could not import materials, there
were hardly any dollars available, so even if
you got the imports, you could not pay for them
most times…,” he said.
“It was also becoming a human resources
problem. I saw many Manuchar colleagues resign:
‘I cannot stay in Venezuela any longer, it has
become too dangerous, and I am leaving’. It was
a combination of all those factors that made us
decide to wind down our operations there. We
can only hope things improve.”
It is interesting to read this piece
published on ICIS in 2013 when Chavez died.
At the time, there were still hopes
petrochemicals could be developed as the
country’s crude oil sector was still worth the
name.
Little we knew how much the country would
quickly deteriorate in the next five years,
although the article already hinted at
constrains which would only become much bigger
later.
“Venezuela potentially could attract
significant petrochemical industry investment
although major industry players have tried and
failed in the past to establish footholds in
the country,” the article’s author, ICIS expert
Nigel Davis, wrote at the time.
“State-controlled producer Pequiven has plans
to nearly triple its plastics production
capacity to 1.86 million tonnes/year in 2016
from 694,000 tonnes/year, although its ability
to do so is questioned against the backdrop of
feedstock, power, and financing constraints.”
And looking further back into the archives,
even with Chavez in power, companies across the
world such as major ExxonMobil wanted to tap
into Venezuela’s petrochemicals.
In this
agreement from 2004, the US energy major
and Pequiven were mulling a 50:50 joint venture
to build a $2.5-3 billion petrochemicals
complex.
Once again, the project never broke ground.
HOPE LAST THING TO
LOSEMillions of Venezuelans
abroad are following the electoral campaign
and, for the most part, are hoping their
compatriots at home go and vote em
masse on Sunday.
The polls have consistently and overwhelmingly
showed Maduro behind, so if a free election is
held, the Chavismo may be coming to
and in a few months.
The structures it leaves behind will take years
to dismantle, anyway, and success in building a
fairer and freer Venezuela is not guaranteed if
the opposition wins on Sunday.
Even this week, as he sees his position
threatened, Maduro rallied supporters with a
violent rhetoric which raised alarms across
Latin America: he said that if his party does
not win the election, there could be a
bloodbath.
Even Brazil’s President Luiz Inacio Lula da
Silva, normally shy in openly criticizing
Maduro as he has a worrying tendency to flirt
with far left and authoritarian leaders in the
region, was blunt about his feelings.
“I was shocked by Maduro’s statement that if he
loses the election, there will be a bloodbath …
Maduro has to learn that when you win, you
stay; when you lose, you leave and prepare to
run again in the next election,” said Lula,
quoted by Brazil’s public news agency
Agencia Brasil.
Lula has sent to Venezuela his personal adviser
on foreign policy, Celso Amorim, as part of
international delegations who are to be
observers in the election.
Jose Marquez, a Venezuelan journalist exiled in
Buenos Aires, said Sunday’s election could be
the last chance to put Maduro out of office,
calling on his compatriots to vote em
masse against him.
“There are people who emigrated who are right
now traveling to Venezuela just to vote on
Sunday. The fact that there are people in the
country who decide not to vote, perhaps in the
last opportunity to remove Maduro from power,
is disappointing but, above all, very sad,”
said Marquez.
Front page picture: Facilities operated by
PDVSA
Source: PDVSA
Insight by Jonathan Lopez
Speciality Chemicals26-Jul-2024
LONDON (ICIS)–BASF is moving to “de-risk” its
exposure to the electric vehicles sector in
response to slowing market dynamics, CEO Markus
Kamieth said on Friday, pausing or deciding
against several investments connected to the
industry.
Take-up of electric vehicles has slowed in most
markets other than China, Kamieth said,
prompting the company to shift strategy, with
new capacities added only where BASF has
obtained long-term offtake agreements.
“We are confident that the trend toward
electric vehicles will continue and that
battery materials remain a significant growth
opportunity for the chemical industry,” Kamieth
said, speaking at a press conference at BASF’s
Ludgwigshafen, Germany, headquarters.
“However, recent dynamics have changed, and the
market penetration of electric vehicles has
slowed down significantly outside of China, as
shown by a number of announcements by companies
in the e-mobility value chain,” he added.
The company decided against proceeding with a
mooted nickel-cobalt refining complex in
Indonesia last month, on the back of shifting
nickel market dynamics that are likely to make
long-term supply of battery-grade material
easier to source.
“The supply options have evolved and with that
BASF’s access to battery grade nickel. This
decision will significantly lower future
capital requirements,” Kamieth said.
Kamieth, who became CEO of the company in April
this year, also moved to pause work on a
proposed commercial-scale electric vehicle
battery recycling metal refinery at its
Tarragona, Spain, complex.
To be based on technology developed and tested
at BASF’s Schwarzheide, Germany, refinery and
with a potential investment range of €500
million to 700 million, the company announced
that the project was under consideration
in
February.
Uncertainty also continues at BASF’s
Harjavalta, Finland, precursor cathode active
materials (PCAM) plant, which has been locked in a cycle of
granted environmental permits that are then
overturned on appeal.
The company recently obtained fresh operation
permits for the site, but those could also be
overturned, according to Kamieth.
“A few weeks ago, we received the approval to
operate the site as requested,” he said. “The
proviso is that there can be protests against
this approval again.”
The project, which was yet to receive final
investment decision, will remain on hold “until
cell capacity build-up and the [electric
vehicle] adoption rate in Europe regain
momentum,” Kamieth said.
The current shift is “a short-term stretching
of a growth curve that will inevitably be very
large”, he said, due in part to the investment
step-changes required in fast-scaling markets
that regulatory or investment fears can delay.
“We believe that the trend towards
electromobility as the powertrain technology of
the future is still valid. We also believe that
the growth in battery materials is going to be
very substantial, and the biggest growth
opportunity for that probably right now exists
in the chemical industry,” he added.
Thumbnail photo source: Shutterstock
Polyethylene26-Jul-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
Earlier this week I suggested that there would
be no end to the petrochemicals downcycle until
2026.
But what if this isn’t just a normal downcycle?
What if we see no return to the old
petrochemical market conditions because of
long-term shifts in the global economy due to
the end of the China “economic miracle”, ageing
populations in most of the world, the
sustainability push and the impact on economies
of climate change?
Might artificial intelligence lead to such a
large loss of employment that petrochemicals
demand growth takes a further hit?
In as little as three years’ time, in handy
bullet points, this is what the petrochemicals
world could look like:
There is sufficient petrochemical supply
already available to meet demand as global
demand is shrinking.
As China is said to be some 45% of global
petrochemicals and other manufacturing
capacity, and because it is so plugged into
global supply chains, this is one of three
locations where we are seeing some
petrochemicals capacity growth. China is adding
more capacity, where it can find sufficiently
competitive feedstocks, for supply security
reasons.
The other locations are the Middle East
because of its feedstock advantages, now
improving because of more natural-gas liquids
discoveries, and the US where government policy
continues to support manufacturing.
Major consolidation is taking place
elsewhere to accommodate this new supply and
shrinking demand. Petrochemical plant closures
are taking place in Europe, South Korea,
Singapore, Japan, and possibly even Southeast
Asia.
When electrification of vehicles took off,
excitement began over petrochemicals demand
replacing lost oil demand into transportation
fuels. Good look with that idea as
petrochemicals demand is, as mentioned,
actually shrinking.
Can you afford just one scenario, one plan? No,
of course. Everything points to a much more
ambiguous future than the comfortable and
predictable petrochemicals world see enjoyed
during the 1992-2021 Supercycle.
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.
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