LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the long-term decline in the global smartphone market, and how Apple has now lost its top five position in China – despite offering $300 discounts. 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.

LONDON (ICIS)–Chemical stocks in Europe slumped in early trading on Monday after a market rout in Asia following bearish US economic data at the end of last week prompted fears of a slowdown. US recession fears grew after spate of weak economic data on 2 August, showing a sputtering jobs market, an accelerating decline in manufactured goods demand and higher unemployment. The US added 114,000 new jobs in July, significantly below market expectations, while unemployment rose 0.2 percentage points the same month to 4.3%. “The bottom line is that the labor market, and by extension the economy, is slowing,” said ICIS senior economist Kevin Swift, commenting on Friday. On Friday, US Census Bureau data also showed that new US manufacturing sector orders had fallen in June for the second consecutive month, dropping 3.3% after a 0.5% decline in May. US manufacturing orders have declined since returning to growth in February, with growth falling from 1.4% that month to 0.7% in March and 0.4% in April, before dropping back into contraction territory in May. Signs of slowing US growth as well as escalating tensions in the Middle East after the death of a Hamas leader in Iran and missile fire between Israel and Lebanon, stoked economic anxiety and led to a slump of 12.4% for Japan’s benchmark Nikkei 225 index at close. Crude benchmarks Brent and WTI were also down over $1/bbl in early trading in Europe on Monday. “Everything is about to break to pieces… except maybe gold,” said a styrene distributor on Monday. The sell-off was less dramatic in Europe, with most key bourses shedding 2% of more of their value as of 12:24 BST. The UK’s FTSE 250 index and Italy’s FTSE MIB saw the sharpest falls, dropping 3.22% and 3.04% respectively in noon trading, and the STOXX Europe 50 index and Germany’s DAX suffering similar declines. US technology stocks in particular have been punished amid growing Wall Street skepticism about profitability in the growing artificial intelligence (AI) space, with Amazon closing down 8.78% on Friday and Microsoft shares down 2.07%. Markets, already volatile in the wake of Middle East tensions, a slowing eurozone recovery and the aftermath of Hurricane Beryl in the US, took fright at below-forecast employment data, but the response so far has been dramatic, according to Deutsche Bank. “Weak payrolls [have] really escalated a profound move across the globe. However the reality is that although payrolls was disappointing it’s hard to know how disappointing given the distortions from Hurricane Beryl. It’s like the market has added up 2+2 and made nine,” said Jim Reid, Deutche Bank’s global head of economic research. “It’s easily possible we’ll get the additional three and two to make up the total but we’re certainly not there yet. It’s hard to believe such market moves would have occurred in any other month,” he added. US GDP jumped higher than expected in Q2, increasing 2.8% compared to 1.4% in the first three months of the year, but recessionary fears loom, employment and productivity figures can be a bellwether of trouble to come. “True recessions start when “reflexivity” in the jobs market kicks in: weaker demand leads to less hiring and more firing, which feeds back into weaker demand, creating a vicious cycle that is only broken with policy support,” said analysts at Capital Dynamics in an investor note. The STOXX 600 chemicals index was trading down 1.89% as of 12:24 BST, with OCI the biggest loser with a 9.34% decline compared to Friday’s close. Arkema and LANXESS also saw substantial declines, with shares falling 4.53% and 4.56% respectively. Focus article by Tom Brown. Thumbnail photo: Outside the New York Stock Exchange. Source: Erik Pendzich/Shutterstock

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 2 August. Freight headache distracts from Europe’s PE, PP existential crisis Europe may be insulated from ballooning global supply of polyethylene (PE) and polypropylene (PP) in the second half of 2024, as spiking Asian freight costs are the latest pain point to disrupt trade flows. Balanced to tight conditions could persist for Europe BD in H2 2024 European butadiene (BD) market fundamentals are likely to remain in a balanced to tight position for much of the remainder of 2024. Europe base oils Group II/Group III expectations heavily dependent on import logistics for H2 The European Group II and Group III outlooks for the second half of 2024 center strongly on imports, with several logistical issues across the globe throwing some uncertainty onto the markets. Europe H2 ethylene, propylene won’t be a repeat of H2 2023, may be better than expected The second half of 2024 is looking brighter for Europe olefins markets compared to the same periods in 2022 and 2023. No demand crashes are expected, and there are several supportive factors that could make H2 2024 better than initially anticipated. Europe PVC uncertainty continues on weak demand, new antidumping charges on imports The European polyvinyl chloride (PVC) market faces a period of uncertainty in H2 2024, compounding the difficulties in long-term outlook since the coronavirus pandemic began in 2020, and only slightly mitigated by antidumping charges for US and Egyptian imports.

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 2 August 2024. OUTLOOK: NE Asia propylene to see limited volatility despite historic capacity additions By Julia Tan 01-Aug-24 11:12 SINGAPORE (ICIS)–The northeast Asian propylene (C3) market is poised for a relatively stable second half of 2024, despite China’s capacity additions, as sustained demand from key sectors and flexible propane dehydrogenation (PDH) units counterbalance growing supply. INSIGHT: The impact of China end-market demand on Asia’s aromatics market By Jimmy Zhang 31-Jul-24 13:00 SINGAPORE (ICIS)–China’s government recently released the latest end-consumption sales statistics for the first six months of 2024. In this bulletin, we found four items which are highly related to Asia aromatics market – catering services, the beverage sector, clothes and textiles, and home appliances. PODCAST: China’s steam crackers favoring ethane on cost advantage By Lillian Ren 31-Jul-24 11:14 SINGAPORE (ICIS)–Ethane is gaining favor as the feedstock for steam crackers in China, as its competitive prices make ethane-cracking the most profitable route for ethylene production compared to other options. OUTLOOK: High costs, peak season and global trade barriers in China PP market for H2 2024 By Zhibo Xiao 30-Jul-24 13:00 SINGAPORE (ICIS)–As the peak season around September and November is coming for China PP, the cost and demand sides are expected to give the market strong support, while the challenges faced with the export of China electric vehicles could potentially hinder the demand for PP copolymer. INSIGHT: China focuses on technological innovation, low-carbon industries in latest govt summit By Amy Yu 29-Jul-24 17:21 SINGAPORE (ICIS)–We expect that there will be two significant developmental directions worth focusing on for China’s petrochemical industry in the medium to long -term view, following the main outcomes of the 20th Third Plenum.

HOUSTON (ICIS)–OCI said after facing difficult fertilizer market conditions in 2023 it is having a much better performance through Q2 of this year. The producer said they continue to see progress in efficiency gains as it remains focused on its global decarbonization strategy. In addition, over the past quarter OCI said it has taken significant steps towards advancing its strategic aims, which include accelerating expansion plans fueled by green methanol adoption and further diversification their European nitrates portfolio. “Following extremely challenging market conditions in 2023, conflated with prolonged turnarounds at some of OCI’s assets, OCI benefited in the second quarter of 2024 from sustained improved asset reliability across the business,” said Ahmed El-Hoshy, OCI Global CEO. “OCI’s manufacturing excellence program and investments to improve reliability continue to drive productivity gains, with asset utilization rates surpassing historical levels across both the nitrogen and methanol complex.” The producer said OCI Beaumont achieved a 96% rate through Q2, while OCI Nitrogen saw both ammonia lines running at approximately 90% level during the quarter. “The OCI team continues to do an outstanding job driving forward our operational excellence program, focused on reliability and process safety fundamentals,” El-Hoshy said. The producer also said their Texas Blue Clean Ammonia facility in Beaumont is on track to commence production in 2025.

LONDON (ICIS)–Senior editor for recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Italian bale prices drop month on month Blue bale prices rise in eastern Europe Downward pressure on UK colourless flake More demand emerging for food-grade pellets in H2

LONDON (ICIS)–Maritime security issues along the Red Sea and geopolitics-led macroeconomic challenges dominated supply-demand dynamics within the European acrylonitrile-butadiene-styrene (ABS) and acrylonitrile (ACN) markets in the first half of 2024. In this latest podcast, Europe ABS report editor Stephanie Wix and her counterpart on the Europe ACN report, Nazif Nazmul, share the latest developments and expectations for what lies ahead. Macroeconomic challenges continue to constrain ABS and ACN demand Europe-origin ABS partly supported by imports suffering from logistical issues Cautious optimism surrounds 2025 demand outlook despite geopolitical uncertainty ABS is the largest-volume engineering thermoplastic resin and is used in automobiles, electronics and recreational products. ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers. Click here to open in a new window

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Here are my three scenarios for China’s long-term chemicals and polymers demand growth with percentage weighting – i.e. how likely I view each of the scenarios. China chemicals demand grows is in the low single digits – 40%: Demand growth turns negative – 55%: The market returns to previous levels of growth – 5%. And I am becoming more convinced that we are entering a period of declining global chemicals growth as well as in China. It is what it is. This is what the demographics, debt, climate change and geopolitical factors seem to be telling us. This direction of travels appears to be supported by the latest China polypropylene ((PP) data. The 1992-2021 Petrochemicals Supercycle is receding further into the past. Saudi Arabia on a year-on-year basis saw its China PP sales turnover in China fall by an estimated $85m in January-June 2024. This followed $168m tonnes lower turnover in 2023 versus 2022. South Korea’s January-June 2024 turnover fell by $35m following a $377 decline in 2023 versus 2022. Meanwhile, China’s PP exports are in line to reach 2.5m tonnes in 2024, up from 1.3m tonnes in 2023. Companies need to respond to these secular and long-term shifts in markets by deciding whether they can continue to compete in commodity chemicals. 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.

SINGAPORE (ICIS)–SABIC’s net profit surged by 84.7% year on year to Saudi riyal (SR) 2.18 billion in the second quarter, supported by higher margins amid improved average selling prices, the chemicals giant said on Thursday. in Saudi riyal (SR) billions Q2 2024 Q2 2023 % Change H1 2024 H1 2023 % Change Sales 35.72 34.1 4.8 68.4 70.53 -3.0 Operational profit 2.1 1.64 28.0 3.31 3.4 -2.6 Net profit 2.18 1.18 84.7 2.43 1.84 32.1 “The global economy experienced a slight decline in the second quarter of 2024, primarily due to unexpected downturns in the recent economic indicators of major countries,” said Abdulrahman Al-Fageeh, SABIC’s CEO and executive board member. However, PMI data continued to indicate improvement in global economic conditions, while global trade showed signs of recovery, driven by higher exports, inventory restocking and increased financial activities, Al-Fageeh noted. “As inflationary pressures ease, some central banks have begun reducing interest rates, potentially providing additional stimulus to the global economy.” Q2 KEY POINTS – Q2 sales growth primarily attributed to the improvements of the average selling prices and a slight increase in sales volume. – Gross profit rose by SR1.76 billion due to improved profit margins for key products, partially offset by increased operating expenses from non-recurring charges. – A reversal of zakat provision, which is a mandatory Islamic tax on wealth, resulted in a non-cash benefit of SR545 million in Q2 2024, compared to a zakat expense of SR440 million in Q2 2023, due to updated regulations. – The petrochemicals segment’s revenue increased by 10% quarter-over-quarter to SR 33.33 billion in Q2, driven by higher methanol sales volume. – EBITDA rose 37% to SR 4.88 billion in Q2, compared to SR 3.56 billion in Q1, due to higher sales volume and average selling prices. Market trends on quarter-on-quarter basis: – Methyl tertiary butyl ether (MTBE) prices remained stable, supported by summer demand. – Methanol prices held steady, driven by tight supply and low inventories in China, as well as strong demand from Asia. – Monoethylene glycol (MEG) prices were flat, due to higher supply and stable demand. – Polyethylene (PE) prices increased slightly, due to delayed Middle East deliveries and tightened Southeast Asian supplies. – Polypropylene (PP) prices rose, supported by tight container and vessel supply. – Polycarbonate (PC) prices slightly increased, despite global oversupply, with high freight rates adding pressure to subdued demand in automotive and construction sectors. Separately, SABIC has successfully commissioned its new hydrotreater plant in Geleen, the Netherlands.  This facility plays a crucial role in SABIC’s advanced recycling process, transforming pyrolysis oil derived from post-consumer mixed plastic waste into high-quality alternative feedstock. This feedstock is then used to produce the SABIC’s TRUCIRCLE circular polymers. H1 KEY POINTS – The company’s revenue decreased by 3% year on year primarily due to a decline in sales volume. – Net profit rose on the back of an 18% increase in gross profit (SR1.96 billion) due to improved margins, partially offset by increased operating expenses from non-recurring charges. – Earnings were also supported by a SR245 million increase in the share of results from associates and non-integral joint ventures. OUTLOOK”Looking ahead, a global GDP growth of 2.7% is expected in 2024. At SABIC, our long-term focus remains on strategic portfolio optimization, restructuring of underperforming assets, and prioritizing sustainability and innovation,” the company said. “We maintain a disciplined approach in managing our CAPEX, projecting a spending at the lower range of $4.0 to 5.0 billion for 2024.” SABIC is 70%-owned by energy giant Saudi Aramco. Thumbnail shows a SABIC production facility (Source: SABIC)