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Crude Oil02-Sep-2024
SINGAPORE (ICIS)–China’s August official
manufacturing purchasing manager index (PMI)
dropped to a six-month low of 49.1, while a
private survey by Caixin gives an expansion
print of 50.4 from 49.8 in July.
The official PMI published by the National
Bureau of Statistics (NBS) had been in
contraction territory for four consecutive
months, pointing to persisting weakness in
factory activity.
The sub production index fell to 49.8 in August
from 50.1 in July, while new order index
declined to 48.9 in August from 49.3 in the
previous month, NBS said.
High temperatures, intensive rain and seasonal
lull in combine dragged the PMI figures,
according to NBS.
For Caixin, the private firm said there was a
slight uptick in production index and strong
rebounding in new order index, which is mainly
driven by improving basic demands and all types
of promotions.
Gas02-Sep-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 30 August 2024.
Asia EDC demand suppressed while deep-sea
availability improves
By Jonathan Chou 30-Aug-24 12:19 SINGAPORE
(ICIS)–Soft downstream conditions are weighing
on demand for ethylene dichloride (EDC) in
Asia. Margins of some downstream polvinyl
chloride (PVC) producers are being depressed by
an influx of imports in the key markets of
India and southeast Asia.
SE Asia regional ethylene tightness sees more
arbitrage opportunities
By Josh Quah 28-Aug-24 18:07 SINGAPORE
(ICIS)–The market thus far is on track to end
the third quarter as anticipated in the ICIS
outlook for second-half 2024. The two main
regions in Asia’s ethylene markets – northeast
Asia and southeast Asia – have diverged in
terms of demand-supply fundamentals.
INSIGHT: China PP exports to seek other outlets
amid intense competition in southeast
Asia
By Lucy Shuai 27-Aug-24 17:34 SINGAPORE
(ICIS)–As China’s polypropylene (PP) capacity
increases and a weak economy drags down demand,
the imbalance between supply and demand has
intensified and China’s PP exports have surged.
NE Asia ACN at the lowest point in a year,
market players await seasonal demand
By Corey Chew 27-Aug-24 11:11 SINGAPORE
(ICIS)–The acrylonitrile (ACN) market saw
prices fall significantly last week in the
northeast Asia market, while the India market
saw a smaller decrease.
India’s BPA price falls; sellers may face more
pressure
By Li Peng Seng 26-Aug-24 13:59 SINGAPORE
(ICIS)–The average bisphenol A (BPA) spot
price in India has fallen to a 2.5-month low
recently on easing freight rates, and buyers
may now hold back spot purchases if they could
as they expect freight rates to undergo further
downward correction.
INSIGHT: China PP exports to seek other outlets
amid intense competition in southeast
Asia
By Lucy Shuai 27-Aug-24 17:34 SINGAPORE
(ICIS)–As China’s polypropylene (PP) capacity
increases and a weak economy drags down demand,
the imbalance between supply and demand has
intensified and China’s PP exports have surged.
Ethanol30-Aug-2024
HOUSTON (ICIS)–US railroads Norfolk Southern
(NS) and BNSF have reached tentative, five-year
collective bargaining agreements with several
labor unions four months ahead of the opening
of the next collective bargaining round, the
companies announced on Friday.
The agreements cover about 30% of the unionized
NS workforce and about 15% of BNSF union
workers.
The agreements are still subject to
ratification by union membership.
BNSF and NS reached agreements with the
International Brotherhood of Boilermakers and
Blacksmiths (IBBB) and the National Conference
of Firemen and Oilers (NCFO).
NS also separately reached tentative agreements
with the American Train Dispatchers Association
(ATDA), the Brotherhood of Maintenance of Way
Employes Division (BMWED) and the International
Association of Sheet Metal, Air, Rail and
Transportation Workers – Transportation
Division Yardmasters (SMART-TD Yardmasters).
The tentative agreements provide a 3.5% average
wage hike annually over the next five years and
offer railroaders more vacation earlier in
their career and make meaningful enhancements
to an already robust suite of health care
benefits.
Over the past two weeks, NS has reached
tentative agreements with nine of its 13
unions.
BNSF reached tentative agreements with four
other unions last week – the ATDA, the
Brotherhood of Railway Carmen Division/TCU
(BRC), International Association of Sheet
Metal, Air, Rail and Transportation Workers –
Mechanical Department (SMART-MD) and the
Transportation Communications Union/IAM (TCU).
Railroad CSX last week announced agreements
with TCU, BRC, SMART-TD, BMWED, the
International Association of Machinists &
Aerospace Workers (IAM), the American Railway
and Airway Supervisors Association (ARASA) and
the B&O Joint Council (BOJC).
CSX has now reached a total of 12 separate
tentative agreements, covering more than 50% of
its union employees.
The progress on labor negotiations should offer
some relief to chemicals markets in the US
considering the recent four-day shutdown in
Canada because of labor strife.
Freight rail service at railroads Canadian
National (CN) and Canadian Pacific Kansas City
(CPKC) resumed on 26 August
following an
order by a labor tribunal that ended a
complete shutdown that started on 22 August.
Canada-based chemical producers rely on rail to
ship more than 70% of their products, with some
exclusively using rail.
About 80% of Canada’s chemical production goes
into export, with about 80% of those exports
going to the US.
Railroads are vital to the chemicals industry
as chemical railcar loadings represent about
20% of chemical transportation by tonnage in
the US, with trucks, barges and pipelines
carrying the rest.
With additional reporting by Stefan
Baumgarten
Thumbnail shows railway tank cars. Image by
Sergei Ilnitsky/EPA-EFE/Shutterstock
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Recycled Polyethylene Terephthalate30-Aug-2024
LONDON (ICIS)–Senior editor for recycling Matt
Tudball discusses the latest developments in
the European recycled polyethylene
terephthalate (R-PET) market, including:
Colourless (C), blue flake ranges narrow in
eastern Europe
Contradictory C bale prices heard in parts
of the east as well
Wider R-PET market still impacted by summer
holiday slowdown
Polypropylene30-Aug-2024
LONDON (ICIS)–An unexpectedly active August
for European polyethylene (PE) and
polypropylene (PP) was rounded off by
surprising news of an unexploded WW2 bomb and more details
of which LyondellBasell sites might be sold or
rationalised.
Senior editors Vicky Ellis, Ben Lake and
Samantha Wright look at what else made August
unusual, and look ahead to September in this
latest podcast on Europe, Africa and Turkey
markets.
Articles they refer to include: Joe Chang’s
Insight article, A new
kind of low-carbon PE, PP is coming in
2025, and low density polyethylene
(LDPE), linear low
density polyethylene (LLDPE) and PP multi-month spot
price highs.
Polyethylene30-Aug-2024
SINGAPORE (ICIS)–Click here to
see the latest blog post on Asian Chemical
Connections by John Richardson.
Chemical companies, as my ICIS colleague Kevin
Swift and I write in today’s blog, need “to
write their own story”.
This can only come from a much more rigorous
approach to scenario planning from the C-Suite
level down that needs to then permeate to every
decision at every level of an organisation,
from long-term investment planning right down
to even month-by-month pricing and production-
volume decisions.
And key to building proper scenarios, now that
the Chemicals Supercycle, is understanding
demographics as demographics are chemicals
demand destiny.
Chemicals demand is of course the number of
people multiplied by per capita consumption.
Because of the increasing uncertainty about the
rate at which most of the world’s population is
going to age and shrink, one set of scenarios
on future population levels makes no sense at
all.
Front and centre of the global demographics
crisis is China given that in 2024, ICIS
expects China to drive 40% of the world’s
polymers demand from just 18% of the global
population.
There is a huge variance in estimates of
China’s population decline that you simply must
factor in. For example, China’s population may
decline to 767 million by 2100 or just 373
million!
Kevin’s scenario modelling on China’s
demographics and its polymers demand is an
important starting point for your boardroom
discussions:
Under the ICIS Base Case, major resins
demand rises from 103.1 million tonnes in 2020
and starts to mature in the 2030s, reaching
188.6 million tonnes in 2050. After 2050, a
falling population and evolving market/economic
dynamics adversely affect demand, which falls
to 89.3 million tonnes in 2100. This is a level
consistent with pre-2020 demand.
With a more pessimistic outlook on
population and reduced economic dynamism under
the Dire Demographics scenario, major resins
demand rises from 103.1 million tonnes in 2020
and starts to mature in the 2030s, reaching
116.2 million tonnes in 2050.
With a falling population and adverse
economic dynamics, demand falls to 38.7 million
tonnes in 2100, a level consistent with
pre-2010 demand.
Equally important is consideration of what
these demand outcomes could mean for China’s
polymers trade flows:
The Base Case suggests China remains a net
importer of major resins, but its net import
position falls from 27.4 million tonnes in 2020
to 4.7 million tonnes in 2050. We only focus on
the period to 2050.
Under the Dire Demographics scenario,
production is more than sufficient and by
early-2030s China attains self-sufficiency in
these resins and emerges as a net exporter of
3.6 million tonnes in 2035, 7.1 million tonnes
in 2040, 9.7 million tonnes in 2045 and 11.6
million tonnes in 2050.
Please write your own story by conducting the
right kind of planning for a far more nuanced
and uncertain chemicals world.
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.
Speciality Chemicals30-Aug-2024
SINGAPORE (ICIS)–Saudi Arabian producer
Methanol Chemicals Co’s (Chemanol) specialty
chemicals subsidiary Madarat Al-Dhara Chemicals
Co has signed an agreement to secure a
long-term supply of ethylene oxide (EO) from
Sadara Chemical Company.
The EO supply is intended for Madarat
Al-Dhara’s methyl diethanolamine (MDEA) and
choline chloride projects, Chemanol said in a
filing to the Saudi bourse, Tadawul, on 29
August.
Details on cost and volume of the EO supply
deal were not disclosed.
“Chemanol aims to become one of the largest
producers of specialty petrochemicals in the
region given that all targeted products would
be the first of their kind in the region,” the
company said.
Financial and capacity details of the MDEA and
chlorine chloride projects were not disclosed.
“Such products would be used in many vital and
strategic industries such as oil and gas
Industry, nutrition additives industry,
extraction of environmental harmful gases,
carbon capture and storage technologies and
others.”
MDEA is crucial for gas purification, while
choline chloride plays roles in animal
nutrition, chemical processes, and industrial
applications.
In May, Chemanol completed its Saudi riyal (SR)
80 million ($21 million) acquisition of an
80%
stake in Global Company for Chemical Industries
(GCI), a specialty and fine chemicals
manufacturer.
The company is aiming to expand its specialty
chemicals market share and diversify its
product offerings.
Ethylene29-Aug-2024
SAO PAULO (ICIS)–Argentina’s petrochemicals
players are in a wait-and-see mode about the
effects a cut to import tariffs announced this
week could have in the market and whether it
will lower prices which, for many materials,
remain higher than global prices.
Earlier this week, the Argentinian cabinet said
it would cut the so-called PAIS tax from 17.5%
to 7.5% from 2 September.
Introduced in 2012, the PAIS acronym responds
to the name Tax for an Inclusive and Solidary
Argentina (Impuesto Para una Argentina
Inclusiva y Solidaria) and was presented by the
at the time left-leaning administration as a
tax on purchases of foreign currency.
In practice, given that most imports are priced
in dollars, the tax ended being practically an
import tariff and contributed to Argentina
becoming one of the most closed economies to
trade in the world.
President Javier Milei, in office since
December 2023, has promised to turn the system
upside down and make the Argentinian economy a
bastion of liberalism.
The cabinet’s intention is to end import
tariffs altogether. The minister for the
economy, Luis Caputo, has been quoted in the
Argentinian press as saying the country should
be “moving forward in the elimination of all
export duties, a perverse tax that we do not
like and hinders” Argentina’s economic
progress.
PETROCHEMICALS MUST
WAITThis week, sources in
Argentina, who have been reporting higher
prices for several materials compared to the
rest of the world for months, were sceptical of
any quick effect from the cut to the PAIS tax.
Some estimated, however, that the lower rates
could slash petrochemicals import prices, on
average, by $200/tonne.
Most sources also mentioned the example of Dow,
which is the sole polyethylene (PE) producer in
Argentina and has greatly benefited from the
closed economy up to now.
Petrochemicals and the wider industrial
sectors, including construction, remain the
hardest hit industries amid the country’s
recession, which is trying to digest the ‘shock
therapy’ being implemented by the government.
Consumers are squeezed and few can afford the
luxury of even thinking about purchasing the
higher-priced, petrochemicals-intensive durable
goods, which are the ones which could revive
the beleaguered chemicals industry.
Moreover, those with stocks of materials
purchased in imports under the previous PAIS
rates are unlikely to lower their prices until
they sell them – that period could be a few
weeks or a few months.
“Plastic sales remain weak because people think
prices will go down with the tax reduction. But
I am not convinced the reduction will be
immediate and all at once. Prices could only
come down once the new imports under the new
regime come into force,” said one source at a
large distributor.
“It will be slow process, over one or two
months – we will have to see how petrochemicals
producers react and whether they start lowering
prices straight away or do it in phases.”
This source and others said Dow announced to
its customers in Latin America prices increases
of around $100/tonne for most materials,
although that increase was not applied in
Argentina, said the distribution source.
Dow is Argentina’s sole producer of
polyethylene. It operates facilities at the
Bahia Blanca petrochemicals hub, south of
Buenos Aires.
According to ICIS Supply & Demand, it has
the capacity to produce 730,000 tonnes/year of
ethylene, 307,000 tonnes/year of high density
polyethylene (HDPE), 329,000 tonnes/year of
linear low density polyethylene (LLDPE), and
40,000 tonnes/year propylene.
As the sole PE producer in a country locked up
to external trade, Dow has greatly benefited in
the past two months. Sources
reported earlier in the year the company
was selling PE at $2,400/tonne, when global
prices stood at around $1,200/tonne.
The price increase announced earlier in the
year added more doubts to the company pricing
strategy.
Dow had not responded to a request for comment
at the time of writing.
The source at the large distributor added,
“Dow’s $100/tonne increase was not implemented
it in Argentina as prices remain higher than
global prices.
“If the reduction in the PAIS tax brings a
reduction of $200/tonne, for example, perhaps
Dow first decides to raise prices by $100/tonne
and then take the $200/tonne hit and see what
the market’s reaction is. Right now, we do not
know how it will play out.”
STAYING PUTAnother
source at a petrochemicals distributor, with
decades of experience behind him, described the
largest recession it has seen in its career. In
such an environment, he went on to say, prices
should go down to prop up demand, at least,
according to economy theory.
But Argentina, it added, has escaped economy
theory often in past decades so nothing can be
taken for granted.
The source even added that it was mulling
whether to attend an industry event next week
in Buenos Aires, just in case a business
opportunity is lost while it attends the
conference.
On 4 September, the Latin American
Petrochemical and Chemical Association (APLA)
is holding its annual conference on
sustainability, which together with its
logistics event and the annual event are the
three highlights in the Latin American
petrochemicals markets.
“There is a strong, very strong recession, and
we have to be very attentive to each business
that emerges in order to be on the edge of not
losing the opportunity or do a bad sale,” said
the source.
Font page picture source: Shutterstock
Focus article by Jonathan
Lopez
Ammonia29-Aug-2024
HOUSTON (ICIS)–Fertilizer producer OCI Global
announced it has successfully completed the
sale of its equity interests in Iowa Fertilizer
Company (IFCO) for $3.6 billion to Koch Ag
& Energy Solutions.
The producer said the closing of the deal
involving the large-scale US greenfield
nitrogen fertilizer facility marks a
significant milestone in OCI’s strategy to
unlock value for shareholders
Located in Wever, Iowa the plant was the first
greenfield nitrogen fertilizer plant built in
the US in over 25 years, and the largest
private construction project in Iowa’s history,
adding more than 3,500 jobs during the
construction period.
The facility opened in 2017 and has the
capacity to produce 3.5 million tonnes of
nitrogen fertilizers and diesel exhaust fluid
annually.
“This acquisition marks another significant
investment in the growth of our fertilizer
business,” said Mark Luetters, Koch Ag &
Energy Solutions president.
“In the past 15 years, we have invested $2
billion in our North American production
facilities to enhance reliability, expand
production and improve logistics for our
customers. This investment enhances our ability
to serve customers long-term by providing
additional flexibility to adapt to their
nitrogen preferences.”
The Wever facility adds to the Koch
Fertilizer holdings, which includes four
nitrogen production facilities in the US and
one in Canada plus an extensive terminal
network.
The company and its affiliates also have
partial ownership of three nitrogen facilities
in Trinidad and Tobago, as well as a phosphate
production facility in Morocco.
The sale was first announced last December and
OCI said it is confident that under Koch’s
stewardship, IFCO will be well positioned for
its next phase of growth.
“This milestone further reinforces OCI’s
standing and record as a successful developer,
operator and investor. Looking ahead, we will
continue to deploy our distinctive knowledge,
management expertise and entrepreneurial spirt
into further value accretive ventures,” said
Nassef Sawiris, OCI executive chairman.
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