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Ethylene09-Jul-2024
SAO PAULO (ICIS)–Colombia’s annual rate of
inflation stood in June at 7.18%, up very
slightly from 7.16% in May, and the first
increase in 15 months, according to the
country’s statistical office DANE.
Monthly inflation stood in June at 0.32%, also
a slight increase from May’s 0.30%.
Prices for the subgroup for utilities water,
electricity, and gas as well as accommodation
rose over the average (up 0.58%) as did health
services (up 0.49%), in a country where private
healthcare is the norm.
Restaurant and hotel prices also rose over the
average, up 0.39% in June compared with May.
Prices for transport rose well below the
monthly average with an increase of 0.19%
compared with May, as some sub-components of
that index such as gas fuel prices posted falls
in prices.
Earlier in July, the central bank lowered rates
for the fifth time since it started easing
monetary policy in December, leaving the main
rate at 11.25%, and said indicators were
pointing to a stronger performance in coming
month.
The petrochemicals-intensive manufacturing
sectors, however, were in contraction in the
second quarter and companies continue pointing
to still-high interest rates as a drag for
their growth as consumers stay away from
big-ticket durable goods.
UPTICK, BUT FALLS TO
CONTINUEDespite June’s small
uptick, analysts and Colombia’s central bank
still expect inflation to continue falling
towards the 3% target by 2025.
Gray columns: forecast according to
analysts’ consensus
Source: DANE via Trading
Economics.
Colombia’s annual rate of inflation stayed
stubbornly high for much of 2023, despite
mediocre economic performance, and only started
coming down in earnest this year; the country
was well behind other Latin American economies
in bringing down its rate of inflation.
In June 2023, the annual rate of inflation
stood at 12.13%.
Due to the slower progress fighting off the
inflation crisis caused by the post-pandemic
logistical woes and the global energy crisis
caused by Russia’s invasion of Ukraine, the
country’s Banco de la Republica started easing
monetary policy later than most peers in Latin
America.
Since December, it has lowered interest rates
five times; the current 11.25% rate compared to
the peak at 13.25% for much of 2023.
Gray line:
forecast
Source: Banco de la Republica de Colombia
via Trading Economics
Industrialists and manufacturing companies
point to high interest rates to the sector’s
poor performance. Apart from a bright spell in
the first quarter of this year, manufacturing
has been in contraction for much of 2023 and
the second quarter, as confirmed by the
PMI index earlier in July.
Corporate Colombia also blames the
left-leaning government of Gustavo Petro for
some of the troubles, which include higher
taxation to expand public spending in areas
such public healthcare.
The cabinet has also tried to increase tax
receipts from the polymers sector, implementing
a Europe-type plastic tax which companies and
trade groups representing them have
vehemently opposed.
Financial analysts also think the government is
too optimistic in its growth assumptions – and
therefore those for tax receipts. Last week, US
credit rating agency and analysts at Capital
Economics both
doubted the plans presented by the cabinet
on fiscal consolidation were reachable.
In its last statement following its monetary
policy committee meeting on 4 July, the central
bank said second quarter’s indicators pointed
to a potential stronger performance in coming
months.
“The 0.9% annual GDP growth experienced in the
first quarter exceeded the technical staff’s
more conservative 0.3% forecast. During this
period, net external demand was the primary
driver of annual GDP growth due to the annual
fall in imports and growth in exports. Second
quarter results appear to point towards a
recovery path for the economy,” said the bank.
“The country’s risk premium and the peso to US
dollar exchange rate remained high over the
past weeks mainly as a result of uncertainty
regarding the inflation behavior in the US and
[its central bank] the Federal Reserve’s
management of the interest rate, placing
pressure on international financial markets and
contributing to the strengthening of the US
dollar worldwide.”
On Petro’s cabinet fiscal consolidation plans,
the central bank said it was pleased to see a
“welcome public spending adjustment and
commitment” to comply with the fiscal rules.
Focus article by Jonathan
Lopez
Speciality Chemicals09-Jul-2024
SINGAPORE (ICIS)–Chinese electric vehicle (EV)
giant BYD has agreed to invest $1 billion to
set up a manufacturing plant in Turkey which
will produce up to 150,000 vehicles per year.
BYD is expected to begin production at the new
factory at the end of 2026, Turkey’s vice
President Cevdet Yılmaz said in a post on
social media platform X on Tuesday.
“We expect this investment to make significant
contributions to our exports in the medium term
and to further reduce our already falling
current account deficit,” Yilmaz said.
BYD declined to comment on the deal when
contacted by ICIS. The company has not issued a
official statement on the investment.
The Chinese company is the world’s leading EV
producer, with annual sales of around 3 million
units.
The automotive industry is a major global
consumer of petrochemicals, which account for
more than a third of the raw material costs of
an average vehicle.
EVs and associated battery markets provide
growth opportunity for the chemical industry,
with chemical producers separately developing
battery materials, as well as specialty
polymers and adhesives for the
environment-friendly vehicles.
Turkey’s announcement of BYD’s investment comes
amid a backdrop of heightened scrutiny of
Chinese EV manufacturers within the EU and the
US.
On 4 July, the EU increased tariffs on
Chinese EVs in an effort to safeguard the
bloc’s automotive industry.
As a result, BYD now faces an additional 17.4%
tariff on top of existing 10% import duty on
its vehicles shipped to the EU.
However, Turkey, being part of the EU’s Customs
Union, is exempt from this extra tariff,
providing an advantage for vehicles
manufactured there and exported to the bloc.
Separately, Turkish state news agency Anadolu
said that SWM, another Chinese automaker, also
announced it was applying to build a factory in
Turkey on 8 July, but no details were provided.
The Chinese automaker opened a new factory in
eastern Thailand’s Rayong district on 4 July
which can produce 150,000 vehicles per year –
the automaker’s first factory in southeast
Asia.
Focus article by Nurluqman
Suratman
Initial reporting by Fanny Zhang
Thumbnail photo: BYD’s first car carrier
”BYD Explorer 1” is loading cars for export
at Yantai Port in Yantai, Shandong province,
China, on 5 July 2024. (Source:
Costfoto/NurPhoto/Shutterstock)
Polyvinyl Chloride09-Jul-2024
SINGAPORE (ICIS)–Market players in Asia are
increasingly becoming more interested in the
use of pyrolysis oil as fuel.
This was one of the critical insights gained by
the ICIS recycling analyst team when they were
at the Asia Petrochemical Industry Conference
(APIC) 2024 in Seoul, South Korea, in May and
the 2024 China Plastics Circularity Economy CEO
Roundtable in Beijing, China, in June.
Join recycling analysts Joshua Tan and Chua Xin
Nee in this podcast as they discuss their key
takeaways from both events and take a deeper
dive into the recycling landscape in China.
For more information about Asia’s recycling
market, please contact joshua.tan@icis.com and xinnee.chua@icis.com.
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Petrochemicals08-Jul-2024
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which looks at the rising impact from Houthi
attacks in the Red Sea and this year’s
hurricane season.
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.
Ethylene08-Jul-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 5 July.
Hurricane Beryl
strengthens and shifts path, expected to hit
Texas’ Corpus Christi
Hurricane Beryl is expected to post a “slow
re-intensification” as it heads towards the
north and could potentially hit Texas’
industrial hub of Corpus Christi by Monday.
Mexico’s Altamira
petrochemicals players breathe sigh of relief
as Beryl weakens
Fears that Hurricane Beryl could cause
widespread disruption to petrochemicals
production in the Altamira hub, in the Mexican
state of Tamaulipas, have now subsided as the
hurricane weakens on its path through the
Caribbean.
Hurricane Beryl
expected to weaken after hitting Mexico’s
Yucatan peninsula
Hurricane Beryl, which until 3 July was a
powerful Category 5 hurricane, weakened to
Category 3 by Thursday morning as it headed
towards the Mexican peninsula of Yucatan.
INSIGHT: Chem
shipping to get break from Panama Canal, tariff
front-loading
The Panama Canal Authority (PCA) is allowing
more traffic to pass through the waterway,
while the rush to ship goods before the start
of tariffs should end soon – all of which
should give chemical shippers some relief from
elevated freight costs.
US June auto
sales fall from May on high prices, interest
rates, cyber-attack, but could grow in
H2
US June sales of new light vehicles fell from
May, but total sales in the second quarter
showed a modest improvement over Q1, according
to data from the US Bureau of Economic Analysis
(BEA).
Rethinking
business models for resilience in a fragile
world to drive M&A – DC
Advisory
Chemical companies are in many ways rethinking
their business models to become more resilient
in a fragile and volatile operating
environment, potentially leading to more
mergers and acquisitions (M&A) activity, an
investment banker said.
US manufacturing
remains in contraction but chemicals
healthy
US manufacturing activity remained in
contraction territory in June but output in the
chemicals sector was healthy on the back of
healthy new orders, the Institute of Supply
Management’s (ISM’s) purchasing managers’ index
(PMI) survey showed on Monday.
Speciality Chemicals08-Jul-2024
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on 5
July.
NEWS
Mexico’s Altamira
petrochemicals players breathe sigh of relief
as Beryl weakens
Fears that Hurricane Beryl could cause
widespread disruption to petrochemicals
production in the Altamira hub, in the Mexican
state of Tamaulipas, have now subsided as the
hurricane weakens on its path through the
Caribbean.
Brazil’s Braskem
still facing logistical woes at Triunfo
facilities
Brazil’s polymers major Braskem is still facing
some logistical challenges at its facilities in
Triunfo, in the floods-hit state of Rio Grande
do Sul, according to a letter to customers seen
by ICIS.
Brazil’s
automotive 2024 output expected lower as
‘uncontrolled’ imports keep
rising
Brazil’s automotive trade group Anfavea this
week downgraded its forecasts for production in
2024 due to ever-rising vehicle imports –
mostly from China, with several producers
signing a letter to the government asking for
higher import tariffs on cars.
US dominates base
oils exports to Brazil with around 75% market
share
The US remains the largest exporter to the
Brazilian base oils market, with the country’s
lead widening in 2024, according to an expert
on Tuesday.
INSIGHT: Chem
shipping to get break from Panama Canal, tariff
front-loading
The Panama Canal Authority (PCA) is allowing
more traffic to pass through the waterway,
while the rush to ship goods before the start
of tariffs should end soon – all of which
should give chemical shippers some relief from
elevated freight costs.
Brazil’s
manufacturing recovers but faces pressure on
currency depreciation
Sales growth in Brazil’s manufacturing is being
dented by challenging economic conditions,
currency depreciation and order postponements
after the floods crisis, analysts at S&P
Global said on Monday.
Mexico’s
manufacturing expands in June but new export
orders, job creation fall
Mexico’s manufacturing expanded in June and
remained practically stable from May on the
back of factory orders rising, which kept
production healthy, analysts at S&P Global
said on Monday.
Colombia’s
manufacturing remains in contraction in
June
Colombia’s manufacturing sectors remained in
contraction territory in June as a further
decline in new orders led to reduced output,
analysts at S&P Global said on Tuesday.
Colombia’s fiscal
plans based on ‘rosy’ growth assumptions –
analysts
Plans presented by the Colombian government to
reduce its fiscal deficit are based on “rosy”
assumptions for growth and are likely to be
missed, according to analysts.
PRICING
Higher hydrous ethanol
prices reflect strong sales
performance
Hydrous ethanol prices rose this week,
reflecting ongoing strong sales performance in
the market.
Surging PET
prices in Brazil and Mexico for
July
Prices for PET in Brazil experienced an upward
trend during the first week of July, driven by
the ongoing rise in international freight
rates. This increase reflects the continued
influence of escalating global shipping costs
on the local market for PET resin.
Innova amends
July PS price increase in
Brazil
Innova amended a price increase to Brazilian
real (R) 1,200/tonne ($218/tonne), excluding
local taxes, on all grades of polystyrene (PS)
sold in Brazil, effective 4 July, up from
previously announced R750, according to a
customer letter.
Liquefied Petroleum Gas08-Jul-2024
SINGAPORE (ICIS)–Squeezed by high propane
costs and weak propylene prices, some Chinese
propane dehydrogenation (PDH) operators are
turning to a potential lifeline:
commercializing hydrogen, a valuable byproduct
of their operations.
Join ICIS LPG analysts Lillian Ren and Shihao
Zhou as they discuss how commercializing
hydrogen could turn the tide for China’s PDH
producers. They’ll delve into current market
challenges, the potential of hydrogen as a
lifeline, and what this shift could mean for
the future of the industry.
Ethylene08-Jul-2024
SINGAPORE (ICIS)–China’s Hengli Group is
planning to invest yuan (CNY) 9.2 billion ($1.3
billion) into its shipbuilding business at
Dalian in Liaoning province, the company said
on Monday.
Its subsidiary Hengli Heavy Industry will build
a shipbuilding capacity of 1.8 million
deadweight tonnes (DWT) each year and 1.8
million tonnes/year of steel processing
capacity at Changxin Island in Dalian City in
northeastern China, the company posted on its
account on WeChat, a Chinese social media
platform.
An agreement was signed on 7 July between
Hengli Group and the local governments of
Dalian City and Changxin Island on the
investment.
The investment will expand the Group’s building
capacity of ultra-large carriers of crude and
liquefied petroleum gas (LPG), container
vessels, offshore floating storage and drilling
facilities.
Separately, Hengli Heavy Industry on 3 July
inked a deal to build six 325,000 DWT ore
tankers for Singapore’s shipping firm Winning
International Group.
The shipping company in September 2023 had
ordered two WinningMax carriers from Hengli.
Hengli Group entered the shipyard business in
2022 through the acquisition of STX (Dalian),
the Chinese unit of South Korea’s STX Group.
Hengli Group is parent of Hengli Petrochemical.
($1 = CNY7.27)
Speciality Chemicals08-Jul-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 5 July.
Shell
to post up to $2 billion in impairments in Q2
results
Energy major Shell on Friday said that it
expects to book $2 billion in post-tax
impairments following the sale of its Singapore
assets and the suspension of construction at
its biofuels plant in the Netherlands.
European Commission
imposes China EV tariffs citing ‘unfair’
subsidies
The European Commission is to move forward with
proposed plans to impose tariffs of nearly 40%
in some cases to China-manufactured battery
electric vehicles (BEVs), citing a level of
state subsidy it terms as “unfair”.
Global phenol demand
expected to rise, driven by downstream
growth
Global phenol demand is expected to increase by
about 1.9% in 2024 after a weak 2023, supported
by growth in the key downstream bisphenol A
(BPA) market.
Europe cracker margins
down on firmer naphtha, LPG costs
Europe cracker margins went down week on week
on the back of firmer feedstock costs, ICIS
margin analysis showed on Tuesday.
Eurozone manufacturing
momentum ebbs in June as demand
deteriorates
Eurozone manufacturing sector activity slipped
further into contraction in June as demand
slowed in most of the bloc’s largest economies,
while conditions improved in the UK.
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