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Liquefied Petroleum Gas25-Jul-2024
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.
Join ICIS LPG analysts Shihao Zhou and Yan Wang
as they discuss the impact of Typhoon Gaemi on
China’s imported propane and butane arrivals.
Typhoon Gaemi will delay propane and butane
shipments, causing temporary logistical issues/
Seven Very Large Gas Carriers (VLGCs)
carrying LPG will be affected by Typhoon Gaemi,
with key ports in East China and Fuzhou closing
until the end of July.
Despite the typhoon, the arrival schedule
remains manageable, with 4-5 VLGS expected to
arrive in east China next week.
Ethylene25-Jul-2024
SINGAPORE (ICIS)–LG Chem’s second-quarter net
income plunged year on year to won (W) 60
billion ($43m), weighed down by poor earnings
at its battery unit LG Energy Solution, the
South Korean producer said on Thursday.
Group results
in Korean won (W)
billion
Q2 2024
Q2 2023
% Change
Sales
12,300
14,336
-14.2
Operating profit
406
618
-34.3
EBITDA
1,562
1,595
-2.1
Net income
60
671
-91.1
Q2 sales at company’s petrochemicals unit rose
by 8.9% year on year to W4.97 billion.
LG Chem’s petrochemicals unit swung to a Q2
operating profit of W32 billion, reversing the
W13 billion loss in the same period of 2023.
A gradual recovery in the supply/demand balance
for LG Chem’s petrochemical products is
expected in Q3, but “profitability improvement
is expected to be limited due to the delay in
global demand recovery and rising freight
rate”.
LG Energy Solution’s Q2 operating profit fell
by 57.7% year on year to W195 billion, with
sales down 29.8% at W6.16 trillion.
LG Chem holds a controlling 81.8% stake in LG
Energy Solution, the leading car battery maker
in the country in terms of sales.
($1 = W1,386)
Crude Oil25-Jul-2024
SINGAPORE (ICIS)–South Korea’s economy posted
a slower second-quarter annualized growth of
2.3% compared with the 3.3% pace set in the
preceding quarter amid sluggish domestic
consumption, preliminary central bank data
showed on Thursday.
Q2 private consumption rose by 0.9% year on
year, slowing from the 1.0% expansion in the
first three months of 2024, the Bank of Korea
(BoK) said in a statement.
Manufacturing for the period rose by 4.5%,
slowing from the 6.5% growth registered in
January-March; while exports grew at a slower
pace of 8.7% compared with the 9.1% expansion
in the first three months of the year.
On a quarter-on-quarter seasonally adjusted
basis, the South Korean economy unexpectedly
shrank by 0.2% in April-June, reversing the
1.3% growth posted in the first three months of
this year.
“We had expected South Korea’s GDP to slow
sharply, but not to the point of falling into
contraction territory,” Dutch banking and
financial information services provider ING
said in a note.
Q2 domestic growth components were weak except
for government spending, which rose by 0.7%
quarter on quarter, it said.
Private consumption, construction, and facility
investment dropped by 0.2%, 1.1% and 2.1%,
respectively,
The downside surprise came mainly from trade,
as imports grew faster than exports, ING said.
Q2 export growth moderated to 0.9% quarter on
quarter, just half the 1.8% increase posted in
Q1. Exports in Q2 were supported by higher
shipments of chemicals and motor vehicles.
Meanwhile, import growth rebounded to 1.2%,
compared with a contraction of 0.4% in Q1,
mainly buoyed by higher imports of crude oil
and petroleum products.
“Given the weaker-than-expected second quarter
2024 GDP, we have revised the annual GDP
outlook downwards from 2.6% year-on-year to
2.3%,” ING said.
“We recently warned that the BOK would face
challenges in its monetary policy decision as
inflation cools towards 2% and sluggish
domestic growth supports a rate cut, but at the
same time, concerns about rising household debt
are growing.”
In its latest forecast in May, the BoK raised
its 2024 GDP growth forecast to 2.5% from 2.1%
previously amid strong exports driven by robust
chip demand.
For inflation, the forecast average was
unchanged at 2.6% for this year.
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Crude Oil25-Jul-2024
SINGAPORE (ICIS)–Typhoon Gaemi made landfall
on Taiwan’s eastern coast shortly before
midnight on 24 July, bringing fierce winds and
heavy rains to vast swathes of the island, with
the Mailiao port remaining closed on Thursday.
Financial markets and workplaces are also
closed for a second consecutive day.
Operations at the Mailiao port are expected to
resume on 26 July after a three-day shutdown,
according to market sources with direct
knowledge of the matter.
The port is operated by Taiwanese major Formosa
Petrochemical Corp (FPCC) which primarily
serves the company’s Mailiao refinery and
petrochemical complex.
The closure of Mailiao port is a precautionary
measure taken for operational safety, according
to a Formosa Plastics Corp (FPC) source, adding
that operations at the company’s ethylene vinyl
acetate (EVA) plant in Mailiao were normal.
Taiwan’s major petrochemical complexes are in
Toufen and Mailiao in the northwest; and
Ta-sheh and Linyuan in Kaohsiung City in the
south.
Authorities in Taiwan have reported two
weather-related fatalities and more than 200
others injured as the storm approached.
Officials have evacuated more than 8,000 people
across at-risk areas of the country.
Prior to making landfall near Hualien County,
Taiwanese authorities categorized Gaemi as a
“severe typhoon,” the highest level on their
three-tier scale. This marked the first severe
typhoon to hit the island since 2016.
The storm has since weakened as it moved
inland.
At 08:30 local time (00:30 GMT), Gaemi was 80
kilometres northwest of Hsinchu, packing
maximum winds of 90 kiometres/hour, Taiwan’s
Central Weather Administration (CWA) said in
its latest update.
A typhoon warning is in effect for Nantou,
Chiayi, Chiayi City, Keelung City, Yilan,
Changhua, New Taipei City, Hsinchu, Hsinchu
City, Taoyuan City, Penghu, Taichung City,
Taipei City, Tainan City, Taitung, Hualien,
Miaoli, Kinmen, Yunlin, Lienchiang and
Kaohsiung City, the CWA said.
Over 4,000 people living in in northern
regions, especially Hualien, were evacuated due
to the storm. Hualien, a mountainous area prone
to landslides, was also severely affected by a
7.2-magnitude earthquake earlier this year.
Gaemi is expected to make its way across
the Taiwan Strait towards Fujian and Zhejiang
later on Thursday, with a red storm alert
currently in place in both these provinces in
southern China.
The China Meteorological Administration (CMA)
has issued a red typhoon warning, the highest
level of alert, for strong winds expected in
seas off the southeastern coast and coastal
areas of Fujian and southern Zhejiang
provinces.
The Fujian Maritime Safety Administration has
launched a Level I emergency response, the
highest alert, in anticipation of Gaemi’s
arrival, according to crisis management firm
Crisis24.
Ports have been closed and vessels have been
ordered to return to shore, it said.
Thumbnail photo shows the location of Typhoon
Gaemi at 04:30 GMT on 25 July (Source:
zoom.earth)
Additional reporting by Angeline Soh, Helen
Lee and Samuel Wong
Hydrogen25-Jul-2024
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.
This presents substantial investment prospects
within China and aligns with the nation’s
ambition to achieve carbon neutrality by 2060.
Hydrogen, often regarded as a potential fuel
for blending with natural gas, offers a
promising avenue for reducing emissions from
power generation.
In this podcast, ICIS senior LNG analyst Xu Fei
will delve into the mechanics of
hydrogen-fueled gas turbines and their
potential to significantly cut carbon
emissions.
Ammonia24-Jul-2024
LONDON (ICIS)–ICIS Hydrogen Foresight data
shows that over the period October 2023-April
2024, the Dutch hydrogen market saw growth
across planned low-carbon hydrogen supply and
demand. However, despite progression across
future buyers and sellers, project progression
has remained muted, with no projects
progressing to final investment decision (FID).
To review the findings of this update, please
see the complete analysis below.
24-Jul-2024
EGPC seeks another five LNG cargoes
Local industry restarts, power cuts suspended
Egypt to bring in up to 26 cargoes over summer
LONDON (ICIS)–Egypt is in the market for another five LNG
cargoes as the country continues to address declining
domestic gas production and soaring summer demand.
Egyptian General Petroleum Corporation (EGPC) has issued a
TTF-linked DES tender covering 13-14 and 25-26 August and
3-4, 12-13 and 21-22 September delivery windows, traders said
on Wednesday.
The two cargoes for delivery in August and the middle cargo
in September would be delivered to Egypt’s Ain Sukhna
terminal, while the first and third September cargoes would
be sent to Jordan’s Aqaba terminal for further pipeline
delivery.
The tender closes on 29 July at 12:00 noon Cairo time and is
valid to 18:00 on the same day.
This is the fourth LNG tender round Egypt has issued covering
the summer period this year, as the country has been forced
to turn from LNG exports to imports.
EGPC has previously been in the market seeking a total of 22
cargoes in three separate rounds.
All cargoes were reported to have been awarded, expect for
the 1-2 September cargo in a two-cargo tender that closed on
22 July, one trader said.
If the latest tender is fully awarded, this could bring a
total of 26 spot cargoes into Egypt from mid-June to
mid-September.
UREA PRODUCERS RESTART
Latest data from association JODI shows a continued decline
in domestic gas production.
Average May production was around 138 million cubic meters
(mcm)/day, down from 142mcm/day in April and 163mcm/day in
May 2023.
However, the flow of LNG seems to have brought some relief to
local industry.
Some Egyptian urea producers shut down for a day last week
but then restarted, sources said, with one source attributing
the ramp up to LNG imports.
Five cargoes have been delivered since the start of July,
according to ICIS data.
As of this week, urea plants in Egypt are running at around
80% capacity on average.
“I believe this will [be sustained] till the end of summer
period,” a urea source said.
“Heard also that old electricity stations have started to
work with fuel oil as an alternative [for] gas,” they added.
Only one of Abu Qir’s prilled urea lines is down, while its
other two lines are running as normal.
The government has also suspended its electricity
load-shedding program from 21 July until mid-September, as
recently announced by Prime Minister Mostafa Madbouly.
The Prime Minister said the power cuts halted after the
arrival of some LNG cargoes.
The cuts were introduced last summer and resulted in daily
two-to-three hour power cuts across most of the country.
Additional reporting by Deepika Thapliyal.
Speciality Chemicals24-Jul-2024
LONDON (ICIS)–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.
The composite eurozone purchasing managers’
index (PMI) slipped to 50.1 in the month
compared with 50.9 in June, according to
S&P Global, with manufacturing sinking
further into contraction and service sector
growth slowing.
A PMI score of above 50.0 signifies growth.
Output in Germany sank for the first time in
four months in July, while activity in France
ebbed for the third consecutive month. Business
confidence for the bloc as a whole dropped to
its lowest level in six months which arrested
the spell of new hiring.
The rate of input cost inflation accelerated
but low demand meant that companies pushed
through the price increases at a softer pace,
contributing to the slowest pace of change for
inflation since October.
The decline in manufacturing activity was the
largest monthly fall in 2024, with services
slowing but still managing to keep the region
in overall growth. The manufacturing sector PMI
fell to 45.6 in July from 45.8 in June, while
the service sector index fell from 52.8 to 51.9
month on month.
New export orders fell faster than total new
business as players struggled to secure
international sales, representing the 29th
successive month of decline.
“It’s unsettling how steadily companies in the
manufacturing sector are slashing jobs month by
month. The pace has barely changed over the
last ten months,” said Cyrus de la Rubia, chief
economist at Hamburg Commercial Bank, which
helps to produce the data.
Despite the tepid economic data, sticky input
price inflation makes the case for successive
rate cuts more difficult, he added.
“If only growth was considered, you find a
strong argument for a rate cut in September by
the ECB (European Central Bank). However,
prices data did not provide hoped for relief,”
de la Rubia said.
“Our conclusion is that while a September rate
cut will most probably be exercised, it will be
much trickier to follow this path in the months
thereafter, unless the downturn morphs into a
deep recession,” he added.
The unexpected pace of decline for the eurozone
economy may result in economic forecast cuts
down the line, according to Rory Fennessy,
senior economist at Oxford Economics.
“The eurozone’s flash July PMIs corroborate the
message sent by other leading indicators that
the recovery is faltering. If leading
indicators continue to underwhelm, this may
result in a downgrade to our GDP growth
forecasts for H2 2024,” he said.
Momentum for the UK private sector continued to
strengthen despite dynamics seen in the
eurozone, with the composite PMI hitting 52.7
in July compared to 52.3 in June, a two-month
high.
UK manufacturing sector growth outpaced that of
services, reaching a 29-month high of 54.4
compared to 52.4 in the latter industry.
Average prices charged by companies eased but
remain steep due to elevated costs, according
to S&P Global.
Input costs for the service sector eased on the
back of softening wage pressures, but the
manufacturing sector saw the sharpest rise in
costs in a year-and-a-half on the back of Red
Sea logistics disruption.
The slower pace of price increases raises the
odds of a central bank rate cut before autumn,
but the pace of winding down current high
interest levels is likely to be slow, according
to S&P Global Market Intelligence chief
economist Chris Williamson.
“Prices have meanwhile risen at their lowest
rate for three-and-a-half years, further
raising the prospect of a summer rate cut,” he
said.
“However, policymakers will likely take a
cautious approach to loosening policy amid
signs of inflationary pressures pivoting away
from services towards manufacturing, where Red
Sea shipping delays and higher freight prices
are adding to costs again,” he added.
Thumbnail photo: Rotterdam port (Source:
Hollandse Hoogte/Shutterstock)
Polyethylene24-Jul-2024
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.
Q2 LDPE prices rose sharply due to
concentrated maintenance at home and abroad.
Imported shipments arrived in late June,
and coupled with limited domestic demand
growth, prices fell.
New facilities may start up in Q4, leading
to further increases in domestic supply.
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