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Speciality Chemicals15-Jul-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 12 July.
Europe ethylene spot
prices turn firmer on demand, feedstock,
looming cracker turnarounds
European ethylene spot prices have firmed week
on week on the back of better-than-expected
demand amid higher feedstock values and an
increasing focus on upcoming planned cracker
maintenance outages.
Global crude demand slows
in Q2, China consumption contracts –
IEA
Global crude oil demand slumped to 710,000
bbl/day in Q2 2024 as China’s post-pandemic
economic rebound ran its course, the
International Energy Agency (IEA) said on
Thursday.
Storm
Beryl damage, economic loss to US estimated at
$28-32 billion
Total damage and economic loss in the US from
Storm Beryl amounted to $28-32 billion,
according to meteorology firm AccuWeather.
Europe chemicals players
expect construction demand to remain sluggish
until H1 2025
Chemicals players in Europe do not expect any
substantial recovery from the building and
construction industry until the first half of
2025 at least.
Flooding to continue
across central US as Beryl moves
inland
Flash flooding is expected as Storm Beryl
continues to progress across the central US,
with blackouts and logistic shutdowns seen in
parts of Texas.
‘Life-threatening’ storm
surge in Texas as Hurricane Beryl makes US
landfall
Hurricane Beryl has made landfall in eastern
Texas and looks set to batter parts of the
state’s key petrochemicals production hubs,
with the US National Hurricane Center (NHC)
warning of a life-threatening storm surge on
Monday.
Crude Oil15-Jul-2024
SINGAPORE (ICIS)–China kicked off a major
meeting in Beijing on Monday to map out the
economic future of the world’s second-biggest
economy, whose recovery is being hindered by a
property slump now on its third year, and a
manufacturing overcapacity.
Q2 GDP growth slows to 4.7%
Fiscal reforms, US/EU protectionism,
private sector promotion to be discussed
Government may push for more affordable
housing measures
The Communist Party of China (CPC) is holding a
third plenary session or plenum since the
members were elected in October 2022, in the
Chinese capital from 15-18 July.
The pivotal meeting began just as China
reported a slowdown in annualized GDP growth in
the second quarter at 4.7% from a 5.3% pace in
the January-March 2024.
The world awaits policy announcements from the
closed-door meeting, in which Chinese leaders
are expected to discuss fiscal and tax reforms,
strategies to counter protectionism from the US
and EU, promotion of domestic private sector,
and address the country’s ailing real estate
market.
The third plenum typically sets China’s
economic agenda over the medium term, with Xi
Jinping serving his third term as Chinese
president.
The CPC’s Central Committee typically holds
seven plenary sessions during its five-year
term, with the third plenum typically garnering
significant international interest.
China is currently on its 14th Five-Year Plan,
which covers 2021 to 2025.
“The third plenum is in the middle of the
five-year plan of the Chinese Communist Party
and therefore is unlikely to witness major
policies,” Alex Ng, founder and head of
research at Hong Kong-based Fortress Hill
Advisors, said in a note for investment
research and analysis firm Smartkarma.
“Rather, there will be fine-tuning of existing
policy direction and some sector-specific
measures.”
The third plenum was delayed from late-2023 as
Chinese leaders have had to grapple with a
multitude of domestic and external headwinds.
First-quarter annualized economic growth was
robust at 5.3%, driven by strong manufacturing
and industrial output, despite patchy consumer
spending.
However, second-quarter GDP growth has slowed
to 4.7% as consumption weakened, official data
showed on Monday.
China’s government has already taken measures
to stabilize growth further this year.
In March, the country’s State Council issued an
action plan to promote large-scale equipment
renewals and trade-ins of consumer goods.
This was followed by the latest property rescue
package in mid-May, comprising of both supply
and demand side measures.
KEY AREAS TO WATCH
A resolution will be presented at third plenum
focused on “comprehensively deepening reform
and advancing Chinese modernization”, aiming to
establish a “high-level socialist market
economy” by 2035, according to an official CPC
document.
“This indicates that the focus of the reforms
will be on promoting long-term high quality
economic development that centers on
innovation, technology, green transition and
the people,” said Ho Woei Chen, economist at
Singapore-based UOB Global Economics &
Markets Research.
“The youth unemployment, ageing population,
hukou system and promotion of domestic
consumption may also come into the picture.”
FISCAL AND TAX
REFORMWith local government’s
revenue from land sales drying up and a high
debt overhang, the central government will need
to transfer more resources to the local
governments and broaden their income sources,
Ho said.
This would help to sustain the economic
recovery as the local governments oversee
stimulating their own regional growth, leading
to more equitable development, she said.
“Reforms to the consumption tax and a
broad-based property tax to provide steady
income streams for local governments could be
considered,” Ho said.
China’s central government collects the
majority of the country’s revenue but allocates
most of it to provincial and local governments,
which are responsible for the majority of
government expenditures.
This leaves local governments strapped for
cash, especially with the struggling property
market. As a result, many local governments are
now facing a serious debt crisis.
EYES ON PROPERTY
MEASURESWhile the continuing
property market downturn requires further
attention from the government, new stimulus
measures are unlikely to be unveiled at the
third plenum.
China announced its latest rescue package for
the property market in May.
The measures to-date have relaxed buying
restrictions and downpayment requirements,
reduced the borrowing costs and established a
yuan (CNY) 300 billion ($41 billion) re-lending
program for social housing.
Nonetheless, the government could reiterate the
direction towards affordable housing market,
including the conversion of unsold homes into
affordable housing.
As of end-2023, the housing ministry has
achieved two thirds of its target to provide
8.7 million units of government-subsidized
rental housing in the 14th five-year plan for
2021-2025.
NEW FORCES FOR
PRODUCTIVITYDuring a visit to
Heilongjiang province in September 2023, China
President Xi urged the nation to mobilize “new
quality productive forces” to stimulate
economic growth.
This refers to the promotion of new growth
drivers for the economy, specifically
innovation in advanced sectors and industrial
system modernization, alongside the upgrading
of traditional sectors such as property and
lower value-added manufacturing and assembly to
enhance efficiency and sustainability.
Xi emphasized that China wants quality growth
and not just high growth for its economy.
This was clearly the CPC’s top priorities at
this year’s National People’s Congress (NPC) in
March, critical for its economic
sustainability, stability, and security.
CPC officials have also emphasized education,
the development of science and technology in
its efforts to build a modern industrial
system.
Insight article by Nurluqman
Suratman
($1 = CNY7.26)
Thumbnail image: Large machinery loading
containers onto the China-Europe freight train
in Lianyungang, China, on 14 July
2024.
(Costfoto/NurPhoto/Shutterstock)
Propylene15-Jul-2024
SINGAPORE (ICIS)–Asia’s propylene (C3) market
will continue to see new capacities coming from
China in H2 2024, while demand is also likely
to improve as new derivative projects come up.
Margin challenges may continue to impact the
market by altering the operations for C3 and
its derivatives.
As China is the largest producer and consumer
globally, dynamics in the country will impact
the wider Asia C3 market.
In this podcast, ICIS senior analyst Joey Zhou
discusses with ICIS analyst Seymour Chenxia the
trends and outlook for Asia’s C3 market in
2024.
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Crude Oil15-Jul-2024
SINGAPORE (ICIS)–China’s economy posted a
second-quarter growth of 4.7% year on year,
decelerating from the 5.3% pace registered in
the previous quarter, official data showed on
Monday.
On a quarter-on-quarter basis, the economy
posted a 0.7% growth in Q2, less than half the
1.6% expansion rate posted in Q1, according to
the National Bureau of Statistics (NBS).
In the first half of 2024, China’s GDP growth
averaged 5%, which was in line with the
government’s full-year target.
Persisting property slump, inadequate demand
and overcapacity remain big challenges for the
world’s second-biggest economy, analysts said.
Thumbnail image: Qianwan container terminal
in Qingdao, Shandong province in China – 12
July 2024 (Shutterstock)
Gas15-Jul-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 12 July 2024.
OUTLOOK: Asia naphtha market braces for supply
uncertainties
By Li Peng Seng 12-Jul-24 12:00 SINGAPORE
(ICIS)–Asia’s naphtha market sentiment is
expected to be choppy in the short term due to
a lack of clarity on arbitrage supplies against
volatile demand.
OUTLOOK: Asia EVA market loses shine as demand
from PV sector lags
By Helen Lee 11-Jul-24 11:25 SINGAPORE
(ICIS)–Demand for ethylene vinyl acetate (EVA)
from China’s photovoltaic (PV) industry is
likely to remain lackluster amid an oversupply
in the entire industry chain.
PODCAST: China to accelerate hydrogen
development via energy law
By Patricia Tao 10-Jul-24 11:25 SINGAPORE
(ICIS)–China’s recent decision to include
hydrogen in its draft national energy law
signals a transformative shift in the country’s
energy landscape.
China EV giant BYD to invest $1 billion in
Turkey production plant
By Nurluqman Suratman 09-Jul-24 15:24 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.
PODCAST: Asia recycling market sees increased
interest in pyrolysis
By Damini Dabholkar 09-Jul-24 11:17 SINGAPORE
(ICIS)–Market players in Asia are increasingly
becoming more interested in the use of
pyrolysis oil as fuel.
OUTLOOK: SE Asia PE to see some demand recovery
in H2, challenges persist
By Izham Ahmad 09-Jul-24 15:07 SINGAPORE
(ICIS)–The southeast Asian polyethylene (PE)
market is expected to face modest demand
recovery in the second half (H2) of the year,
but this is likely to be negated by increased
supply and the threat of high freight costs
affecting import shipments.
Speciality Chemicals12-Jul-2024
HOUSTON (ICIS)–Average global rates for
shipping containers moderated this week, and
market players in Latin America have even seen
decreases in costs from Asia, but rates to the
US East Coast are likely to remain elevated as
deployed capacity remains tight.
Rates on the World Container Index (WCI) from
supply chain advisors Drewry edged higher by 1%
over the week, as shown in the following chart.
Rates from Shanghai to the US East Coast rose
by 2.5% over the week while rates from China to
the US West Coast rose by less than 1%, as
shown in the following chart.
Drewry expects freight rates to remain high
until the end of the peak season.
Rates from online freight shipping marketplace
and platform provider Freightos are slightly
higher to the West Coast and slightly lower to
the East Coast when compared with Drewry’s
assessments.
Judah Levine, head of research at Freightos,
said the convergence of peak season demand,
strained capacity on continued diversions away
from the Red Sea and Suez Canal, and congestion
at Asia ports are keeping upward pressure on
rates.
Kyle Beaulieu, senior director and head of
ocean Americas at Flexport, said in a webinar
this week that congestion has eased a bit over
the last month at key Asian ports, especially
Singapore.
But still, Beaulieu said deployed capacity was
91% in June and 94% so far in July.
He said general rate increases (GRIs) were
largely successful for 15 June and 1 July, but
that GRIs set to take effect on 15 July have
been cancelled.
He said there are no real signs of relief for
the Asia-USEC trade lane as capacity is
expected to remain tight.
For the near term, he expects the Red Sea
diversions to support higher rates, and those
higher rates to continue being spread across
all trade lanes.
A trader told ICIS this week that it is seeing
softer rates from Asia to South America.
Rates from Asia to South America were flat to
lower this week according to ocean freight
rates analytics firm Xeneta and as shown in the
following charts.
Additional reporting by Bruno Menini
Ammonia12-Jul-2024
HOUSTON (ICIS)–The US Department of
Agriculture (USDA) is projecting higher corn
production but a decrease in soybean output
according to the July World Agricultural Supply
and Demand Estimate (WASDE) report.
In the monthly update corn production for
2024-2025 is forecast up by 240 million bushels
on greater planted and harvested area from the
June Acreage report, with yield unchanged at
181.0 bushels per acre.
The current outlook is also calling for larger
supplies, greater domestic use and exports, and
slightly lower ending stocks.
Corn beginning stocks are lowered 145 million
bushels, mostly reflecting a greater use
forecast with exports raised by 75 million
bushels based on current outstanding sales and
shipments to date.
Feed and residual use is up 75 million bushels
based on indicated disappearance in the June
Grain Stocks report. Total use has also been
lifted 100 million bushels with increases to
both feed and residual use and exports based on
larger supplies and lower expected prices.
With use rising slightly more than supply,
ending stocks are now being projected down by 5
million bushels.
The July WASDE revealed that the season-average
farm price received by producers is lowered by
10 cents to stand at $4.30 per bushel.
For soybeans production is projected at 4.4
billion bushels, which is a decrease of 15
million bushels based on expected lower
harvested area.
Harvested area, forecast at 85.3 million acres
in the June Acreage report, is now down 300,000
acres from last month with the yield forecast
unchanged at 52.0 bushels per acre.
With slightly lower beginning stocks, reduced
production and unchanged use, ending stocks for
2024-2025 are projected at 435 million bushels,
which is a decrease of 20 million bushels from
the June WASDE.
The update showed that the season-average
soybean price is forecast at $11.10 per bushel,
down 10 cents from last month.
The next WASDE report will be released on 12
August.
Ethylene12-Jul-2024
LONDON (ICIS)–European ethylene spot prices
have firmed week on week on the back of
better-than-expected demand amid higher
feedstock values and an increasing focus on
upcoming planned cracker maintenance outages.
Spot deals this week have been reported at
discounts of 32-35% on the pipeline, prior
deals had been at discounts of around 38-39%.
Producers say they have received several
requests for additional volume offtakes in
July. This is being attributed to a combination
of factors:
Improved sentiment from domestic PVC
players following the imposition of tariffs on
imports ex-Egypt and the US
Continued high container freight rates
which are restricting some derivative imports
Recent hurricane-related production and
logistics disruptions ex-US
Firmer month-on-month naphtha values which
is likely to drive discussions for the August
contract reference price settlement
Planned cracker maintenance due to get
underway from September particularly that due
in Germany with alternative supply flexibility
likely to be limited at that time due to
pressure issues on the ARG pipeline.
With crackers having been run at rates closely
aligned with contractual demand – still very
much below normal albeit better than in 2023 –
there is not too much flexibility for
additional volumes at short notice.
“Many will have assumed that ethylene supply
would always be plentiful,” a source said, “and
now they find that it is not the case.”
Cracker operators have avoided as far as
possible marginal tonne production as spot
appetite has been extremely low unless at deep
discounts to the prevailing contract price.
Crackers are underutilised, so in theory, there
is space to ramp up. But with August around the
corner and few indications at this stage how
long this better-than-expected demand will be
sustained, sources assume producers will be
reluctant to ramp up production in July.
Thumbnail photo: Flooding in Houston,
Texas, in the wake of Hurricane Beryl on 8 July
2024, one of the causes of firming ethylene
prices. Source: Carlos
Ramirez/EPA-EFE/Shutterstock
Recycled Polyethylene Terephthalate12-Jul-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including,
Colourless flake prices rise in Italy
Food-grade pellet (FGP) price range narrows
on improved demand
FGP proactive buyers move to secure volumes
ahead of Single Use Plastics Directive (SUPD)
implementation in January
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