BUENOS AIRES (ICIS)–For years, Latin American petrochemicals companies have been trying to increase diversity within to better represent the consumers they want to sell their products to – without much success. Company boards and middle management levels continue to be mostly populated by men, and most of them tend to be white, in a region where ethnic minorities are sometimes the majorities. The environmental, social, and governance (ESG) mantra has been used so many times that it has become a bit futile. A few statistics to show off positive trends are one thing – real change is another. Companies need to go the extra mile to be as plural as society. And in some Latin American countries like Brazil, that mostly means one thing: blackness, in the country outside Africa with the largest black population. They will need to hire and promote people who will not conform to the norm; visionary people who will be wise enough to know a company will not reach its sales potential until they try, at least, to resemble the society they operate in. Brazil’s polymers major Braskem – the largest petrochemicals producer in Latin America – seems to have found one of those people: meet Debora Ferraz, global senior HR manager at the company and specialist in diversity, equity, and inclusion (DE&I) issues. “My job is not only about gender inequality, although that is still a big part of it, of course. My job goes much further than that and it involves making Braskem more like the country: in Brazil, 50% of the population are black or have black roots,” said Ferraz. “We have now established a system in which the HR person looking to hire will not see in what university the candidate coursed his or her studies. Before, we always ended up hiring people who were anything but plural: they all spoke English, they all came from the same universities. Behavior is now the key element in our hiring processes.” Ferraz went on to say that in Braskem’s Mexican operations, a country with painful statistics showing sexism is women’s everyday life, a hiring process will not go ahead if there is not at least one woman shortlisted. In Europe, where nationality is probably the biggest factor determining discrimination, Braskem pays more attention to that factor, said Ferraz. In the US, it is veterans of war, many of whom find themselves lost in a competitive labor market after 20 or 30 years of service. Ferraz was speaking to delegates at an event about sustainability organized by the Latin American Petrochemical and Chemical Association (APLA). Her talk captivated the audience, and it was recurrently referred to thereafter. RACISM: LONG SHADOWBrazil is Latin America’s largest economy, with 220 million consumers, and it is a case increasingly studied when it comes to racism and discrimination. The shadow of four centuries of Portuguese Empire rule, where enslaved black Africans composed the bread and butter of the workforce, have left a mark present still today, in all aspects of life. “The black and brown [Brazilians with black roots] populations represent 9.1% and 47% of the Brazilian population, respectively. Yet, the share of these population is lower in the indicators that reflect higher levels of life conditions,” said a report by Brazil’s statistics office IBGE in 2022. “This indicator already shows a disadvantage of those populations when inserting in the labor market. The proportions of the black and brown populations among those unemployed and underutilized are higher than what they represent in the labor force,” it added. Racism is so ingrained in Brazil that when the country officially abolished slavery in 1888, the last nation in the western hemisphere to do so, it gave no rights worth the name to its black population and even decided to go as far as Italy or Japan to look for the workers it needed to feed its nascent industrial sectors. Hence the large Japanese or Italian minorities present in the country, who were allowed to integrate fairly well and some of whom went on to build business empires, quickly becoming part of the economic fabric. Meanwhile, blacks remained at the favelas, Brazil’s famous shanty towns, only mixing with the non-black population when they went to do the badly paid jobs, many times in the informal economy. Brazil’s Fernando Henrique Cardoso, the center-right president who stabilized the economy in the 1990s and gave way to the successes of President Luiz Inacio Lula da Silva in his first and second terms (2001-2011), has become a reference in racism studies. A quote by Cardoso lies in one of the walls of Sao Paulo’s Museu Afro-Brasil, which only opened its doors in 2004 and is painful journey through Brazil’s most shameful past, a quote which sums up why the integration of all Brazilians will be a long-term and laborious enterprise. “An economic system which was based in slavery and violence for four centuries creates a deformed society,” said Cardoso. And a deformed society will invariably take many decades – hopefully not centuries – to be fixed. Companies like Braskem should make more efforts to bring people like Ferraz in but, most importantly, listen to what they have to say and follow their advice – Ferraz is black herself, and without doubt she will have suffered racism. “We need to aim to have a good representation of society within the company. To get serious with this, we must have quantitative targets: we can do continuous training with employees, but if we don’t set clear targets, nothing will be achieved,” said Ferraz, who has been in her current post since 2022. “Up to that year, 30% of our workforce was black but that figure had not changed in the preceding 15 years, no matter how many trainings we did. Since 2022, that figure has increased to 37%. What has changed? That we set clear targets, and we are fighting hard to achieve them. I speak monthly with the CEO and with other board members, because they are the first ones who must believe in this.” Speaking at the same panel, Paola Argento, head of diversity at Argentina’s energy and petrochemicals major YPF, corroborated that until a company does not employ a plurality of workers – each of them feeling free enough to bring its own singularity to the workplace – a company will not reach its potential. “If we all come from the same universities, the final product we offer will not be innovative. Plurality allows us to produce better products and services. These days, most consumers do care about these issues, so the lack of plurality and innovation will end up negatively affecting sales,” said Argento. “But to achieve this true plurality of thinking, the highest executives at a company have to understand it and be fully behind it.” The APLA sustainability event runs in Buenos Aires on 4 September. Front page picture source: Brazil’s statistics office IBGE Insight by Jonathan Lopez

LONDON (ICIS)–Europe chemicals shares and public markets slumped on Wednesday in the wake of sell-offs in Asia and the US on the back of growth fears and a crude oil sell-off. Stock exchanges in Asia and the US crashed on Tuesday night and Wednesday morning for the second time in less than a month after another market rout, with weak economic data from the US and China once more ringing alarm bells. BEARISH US INDICATORS As was the case during the early August rout, bearish economic data from the US stoked market fears of a slowdown in the country, which has proven the most resilient large mature economy during the slump of the last few years. The US manufacturing sector contraction deepened in August, according to purchasing managers’ index (PMI) data collected by S&P Global, showing a drop from 49.6 in July to 47.9, with future indicators pointing to potential further deterioration ahead. “There is a worrying narrowing of the pockets of strength,” said ING chief international economist James Knightley, commenting o the numbers. “Just 22% of industry is experiencing rising orders and just 17% are seeing rising production. Historically, this weakness in output and orders points to a sharp slowing in GDP growth,” he added. The August figures are the latest warning signal on economic momentum in the country, following an unexpected decline in manufactured goods orders in June, according to the US Census Bureau in early August, the most recent data available. As was the case in last month’s market crash, tech stock slumps led the US declines on Tuesday.  While sector declines last month had been driven by growing scepticism over the potential of artificial intelligence, Nvidia saw one of the sharpest falls declines this month. The chipmaker reportedly received a government subpoena as part of an antitrust investigation wiped over 9% off its market value, a loss estimated at $279 billion. ASIA SLUMPS With global microchip supply chains strongly connected to Asia, the Nvidia sell-off also ripple through the region’s technology stocks, with core players including Samsung, Tokyo Electro and Taiwan Semiconductor suffering sharp losses by Tuesday’s close. Economic data for China released late last week showed the first decline in export orders in eight months, while the manufacturing sector I the country remained in contraction for the fourth consecutive month in August, and house prices seeing the slowest pace of growth in 2024 so far. Industrial indicators for Europe, where manufacturing has been on recessionary footing for over two years, new order volumes are continuing to decline, potentially signalling a period in autumn where manufacturing demand is shrinking in US, China and the eurozone. OIL SUPPLY LENGTHENSCrude oil prices also slumped, falling to the lowest level in  to the lowest levels of the year, on the back of expectations that the OPEC+ coalition will begin to unwind their 2.2 million bbl/day production cuts next month. Expectations that Libya will begin to restart crude production and exports after a political agreement was reached. These two factors point to a substantial increase in supply despite ongoing sluggish demand, driving Brent and WTI futures down to $74.19/bbl and $70.79/bbl respectively in midday trading on 4 September. The US Dow, S&P 500 and NASDAQ indices closed down 1.51%, 2.12% and 3.26% respectively on Tuesday evening, while Japan’s Nikkei 224 and Hong Kong’s Hang Seng bourses concluded trading down 4.24% and 1.10% on Wednesday. In Europe, Germany’s DAX index was down 0.84% in midday Wednesday trading, while France’s CAC 40 and the STOXX Europe 50 index had lost 0.97% and 1.19% respectively. Aggregate chemicals sector losses were more modest, with the STOXX 600 index for the sector down 0.15% as of 13:29 BST. EMS-Chemie and Umicore had suffered the sharpest declines as of that time, dropping 1.49% and 1.31%. Linde and Yara shares both dropped 0.97% compared to Tuesday’s close, while Brenntag, Bayer and OCI saw falls of over 0.50%. Focus article by Tom Brown. Thumbnail photo: Traders in Seoul, South Korea, on 4 September, The South Korea Composite Stock Price Index (KOSPI) closed down 3.15% on the day. Source: Jeon Heon-Kyun/EPA-EFE/Shutterstock

SINGAPORE (ICIS)–Asian petrochemical shares slumped on Wednesday as regional bourses tracked Wall Street’s rout overnight on poor data from both the US and China, with crude prices shedding more than $1/bbl in late Asian trade. Major US equity indexes suffer worst session since 5 August China August export orders decline for first time in eight months US crude trades below $70/bbl At the close of trade in Tokyo, Mitsui Chemicals fell 3.07% and Sumitomo Chemical tumbled by more than 4%, with the Nikkei 225 index down 4.24% at 37,047.61. It was the second sharpest decline in Japan’s benchmark stock index since the 12% plunge on 5 August due to US recession fears and a stronger yen. In Seoul, LG Chem ended down 2.06%, with South Korea’s KOSPI Index down 3.15% to close at 2,580.80. In Hong Kong, PetroChina slumped by more than 6% at the close of trade, with the Hang Seng Index down by 1.10% at 17,457.34. In Kuala Lumpur, PETRONAS Chemicals Group (PCG) slipped by 0.36% with the stock market index dipping by 0.43% to close 1,670.88. Major US equity indexes overnight posted their worst session since the global sell-off on 5 August this year, as financial markets evaluated economic data from the US and China. The Dow Jones Industrial Average tumbled overnight by 1.51%, the S&P 500 fell by 2.12%, and the Nasdaq Composite closed 3.26% lower. US, CHINA DATA STOKE SLOWDOWN WORRIES  In the US, the Institute for Supply Management (ISM) monthly survey of purchasing managers showed a reading of 47.2, below the 50 breakeven point for expansion of activity for the fifth straight month. Separately, the final S&P Global US manufacturing PMI reading for August was at 47.9, down from 49.6 in July. The latest reading was the lowest since last December and signaled a second consecutive month of deteriorating manufacturing conditions. Meanwhile, China released economic data on 31 August indicating a decline in export orders, the first such decrease in eight months. China’s factories remained in contraction mode, with August official manufacturing PMI posting a reading of below 50 for the fourth consecutive month. Additionally, data on 1 September showed that China’s new home prices increased at their slowest pace of the year during August. The average price for new homes across 100 cities in the country edged up 0.11% from July, slowing from the 0.13% rise in June this year, according to data from property researcher China Index Academy. OIL PRICES CONTINUE LOWER Oil prices fell by more than $1/bbl in late Asian trade on Wednesday, extending their losses after plunging by more than 4% the previous day and hovering at their lowest since December 2023 on concerns about sluggish global demand. Also exerting downward pressure on the market are expectations that a political dispute halting Libyan exports could be resolved. Libya’s move to appoint a new central bank governor signals progress in resolving recent challenges, but this development, coupled with the resumption of Libyan oil production and OPEC+’s planned output increase, could lead to an oversupply of oil, putting downward pressure on crude prices. “The market is also bracing itself for the gradual return of OPEC+ [OPEC and its allies] supply from October, at a time when there is plenty of concern over demand weakness,” Dutch banking and financial information services provider ING said in a note. “The further pressure we see on prices the more likely that OPEC+ will be forced to scrap plans to bring supply back onto the market,” it said. “However, with the balance looking soft through 2025, the question is when the group will eventually be able to bring supply back onto the market without putting significant pressure on prices,” ING added. Focus article by Nurluqman Suratman (Updates stocks, oil prices; adds ING comments) Thumbnail image: At Yantai Port in China on 2 September 2024. (Source: Costfoto/NurPhoto/Shutterstock)

SINGAPORE (ICIS)–Typhoon Yagi is steadily intensifying and tracking northwestward across the South China Sea on Wednesday, with landfall expected on Guangdong province in southern China on 6 September. The China Meteorological Administration (CMA) issued on Wednesday an orange typhoon warning – the second highest level in a four-tier scale. Strong winds, heavy rainfall and rough seas are forecast over the central and southern coastal areas of Fujian and the central and eastern coastal areas of Guangdong province. Yagi, which intensified into a typhoon early on Wednesday, was centered some 60 kilometers (37.28 miles) east of Wenchang city, Hainan province at 02:00 GMT, according to CMA. It is forecast to move in a west-northwest direction at a speed of about 10 kilometers per hour, and its intensity will gradually increase before making landfall on the coast Wanning, Hainan, and Dianbai in Guangdong on the afternoon of 6 September. Guangdong houses the Shenzhen Special Economic Zone (SEZ), a major hub for industries such as electronics, telecommunications, and logistics. The typhoon will then move into the Gulf of Tonkin in the early morning of 7 September, and then move towards the China-Vietnam border before gradually weakening. Yagi previously made landfall as a tropical storm in the northern Aurora province of the Philippines on 2 September, killing 14 people. It comes in the wake of Typhoon Shanshan, which crossed Japan late last month. Shanshan had brought record-breaking rainfall triggered widespread flooding and landslides in Japan, particularly in the western and eastern regions. Over 1,000 domestic flights and several international flights in Japan have had to be canceled due to Shanshan, affecting thousands of passengers. Rail operators had suspended Shinkansen bullet trains and other services.

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Alice asked the Chesire cat perched in a tree, “what road do I take?” to which the cat asked, “where are you going?” Alice admitted, “I don’t know.” The cat’s response was, “then it doesn’t matter. If you don’t know where you are going, any road will get you there”. Lewis Carroll’s Alice in Wonderland, published in 1865, has always been more than just a fabulous children’s story. Such is the plight of some chemicals companies as they recognize the need for change, but don’t know exactly what change looks like as they struggle to decide which road to take. I see the problem here as being bogged down in the details, getting stuck in the weeds, when the details are simply unknowable right now. But what we do know and must determine at the C-suite level – and this would then trickle down to every level of organization – is the overall direction. The details will sort themselves out later. See today’s blog for a reminder of the ten interconnected reasons why I believe that the Chemicals Supercycle is over. Click on the links in the slide for the relevant background. The first question each commodity chemicals company needs to answer is this: “Can we continue to compete in the global commodity chemicals space, or do we instead need to become a niche, higher-value player?” There will be many, many shades of grey between these two extremes. But C-suites should start with a binary choice as I believe that: The truly global and ever-expanding commodity players are likely to be in the Middle East, the US and Canada only because of feedstock advantages – and connected to feedstocks, the push to convert more oil into chemicals. We don’t know whether China can be a major global export player in commodity chemicals (maybe in some value chains where it is already the dominant player) because of geopolitics. What seems clearer is that by itself, and with its geopolitical partners, it is likely to continue its push to greater commodity chemicals self-sufficiency. This leaves the rest of the world – barring a few state-owned oil-to-gas-and-chemicals majors in regions such as Southeast Asia – facing the challenge of becoming more niche. So, you are Alice.  You have returned to the tree, having decided where you want to go. You ask the Cheshire cat, me, what route to take. All I will say here is “meow”. For more details, contact john.richardson@icis.com. 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)–Asian petrochemical shares tumbled in early trade on Wednesday as regional bourses tracked Wall Street’s rout overnight following lackluster manufacturing data from both the US and China, with crude prices extending declines. Major US equity indexes suffer worst session since 5 August China August export orders decline for first time in eight months Crude benchmarks fall amid easing Libya supply concerns At 03:20 GMT, Mitsui Chemicals was down close to 2% and Sumitomo Chemical tumbled by more than 3% in Tokyo, as the benchmark Nikkei 225 shed 3.83% to 37,405.59. In Seoul, LG Chem fell by more than 2%, with South Korea’s KOSPI Index slumping 2.48%. In Hong Kong, PetroChina was down more than 4% as the Hang Seng Index slipped 0.69%. In Kuala Lumpur, PETRONAS Chemicals Group (PCG) slipped by 0.36% with the stock market index slipped 0.25%. Major US equity indexes overnight posted their worst session since the global sell-off on 5 August this year, as financial markets evaluated economic data from the US and China. The Dow Jones Industrial Average tumbled by 1.51%, the S&P 500 fell by 2.12%, and the Nasdaq Composite closed 3.26% lower. US, CHINA DATA STOKE SLOWDOWN WORRIES  In the US, the Institute for Supply Management (ISM) monthly survey of purchasing managers showed a reading of 47.2, below the 50 breakeven point for expansion of activity for the fifth straight month. Separately, the final S&P Global US manufacturing PMI reading for August was at 47.9, down from 49.6 in July. The latest reading was the lowest since last December and signaled a second consecutive month of deteriorating manufacturing conditions. Meanwhile, China released economic data on 31 August indicating a decline in export orders, the first such decrease in eight months. China’s factories remained in contraction mode, with August official manufacturing PMI posting a reading of below 50 for the fourth consecutive month. Additionally, data on 1 September showed that China’s new home prices increased at their slowest pace of the year during August. The average price for new homes across 100 cities in the country edged up 0.11% from July, slowing from the 0.13% rise in June this year, according to data from property researcher China Index Academy. OIL PRICES CONTINUE LOWER Crude benchmarks continued lower on Wednesday after falling to their lowest this year in the previous session on signs of a deal to resolve a dispute that has stopped Libyan crude production and exports. Libya’s move to appoint a new central bank governor signals progress in resolving recent challenges, but this development, coupled with the resumption of Libyan oil production and OPEC+’s planned output increase, could lead to an oversupply of oil, putting downward pressure on crude prices. Focus article by Nurluqman Suratman Thumbnail image: At Yantai Port in China on 2 September 2024. (Source: Costfoto/NurPhoto/Shutterstock)

SAO PAULO (ICIS)–Brazil’s GDP growth in the second quarter stood at 1.4%, surprising on the upside, in what is starting to become an overheating compounded by rising inflation which could lead to hikes in interest rates, according to analysts. On Tuesday, Brazil’s statistical office IBGE said growth in the second quarter had stood nearly 50% stronger than analysts consensus estimates, which were at 0.9%. In Q1, already a healthy month due to the peak of the agricultural season, GDP growth stood at 1%. Year on year, GDP in the second quarter rose by 3.3%, compared with Q2 2024. GROWTH ACROSS THE BOARD All subsectors posted growth in the second quarter, said IBGE. In the petrochemicals-intensive industrial sectors, the best performer was electricity and gas, water, sewage, and waste management activities (output up 4.2% quarter on quarter), followed by construction (3.5%) and manufacturing industries (1.8%), which offset a fall of 4.4% in extractive industries. Within services, all subcomponents posted growth in the second quarter. Spending by households and public institutions both rose by 1.3%, while gross fixed capital formation rose by a healthier 2.1%, quarter on quarter. Exports rose by 1.4%. but imports rose at a much faster 7.6%, something the chemicals industry is well aware of and thus is demanding hefty import tariff increases to protect domestic producers market share. OVERHEATING Even if the economy slowed down considerably in the second half of 2024, which is a pattern for the agricultural-intensive Brazilian economy when the main harvests take place in H1, GDP would be on course to grow by 3% in 2024. “The flip side is that it will heighten the central bank’s concerns about inflation and the probabilities have probably now tilted towards a 25 basis points hike in the Selic rate at the Copom [monetary policy committee] meeting later this month,” said on Tuesday analysts at London-based Capital Economics. The Selic main interest rate benchmark stands at 10.50% after three consecutive Copom meetings leaving rates unchanged due to a late uptick in inflation. Brazil’s annual rate of inflation stood in July at 4.50% and marked its fourth consecutive increase as the Brazilian real depreciated against major currencies and investors showed skepticism Lula’s cabinet is going to keep fiscal discipline going forward. IBGE is due to publish August inflation figures on 10 September. “Based on the outturns for the first half of the year, the economy looks set to expand by around 3% over this year as a whole. But this is above Brazil’s potential rate and is going to add fuel to the debate about whether Copom will raise interest rates,” concluded Capital Economics. “We’ll firm up our forecast after the release of the August inflation figures. But as things stand, we think the balance of probabilities has now tilted towards a modest increase in the Selic rate, beginning at this month’s Copom meeting.”

SAO PAULO (ICIS)–The Brazilian government’s decree changing natural gas regulations could potentially overhaul the market and, along the way, benefit the chemicals industry by providing it with cheaper energy and eventually with ethane-based feedstocks. The job of a lobbyist may be well paid, but it must be a hard one most of the time. For years, Brazil’s chemicals trade group Abiquim had been lobbying for the government to pass regulations which would allow the natural gas which comes as a byproduct from crude oil production to stay within the economy, and not be just reinjected into the ground again. To make common cause on that lobbying, Brazil’s polymers major Braskem has also been saying for years that it stands ready to expand its Duque de Caxias facilities, in the state of Rio de Janeiro, as soon as the necessary gas and derivatives were available. For years, those demands had fallen in deaf ears. Until 26 August, when the cabinet presided by Luiz Inacio Lula da Silva passed a decree contemplating, among other measures, higher powers for the oil and gas regulator ANP to set up the amount of gas which is reinjected into the system, for instance. If fully implemented, the decree could completely change the natural gas market in Brazil, and ultimately benefit the chemicals industry via lower energy costs and, potentially, having more ethane, rather than crude-based naphtha, as a raw material. In a written response to ICIS, Abiquim’s director general Andre Passos celebrated the decree and did not share the fears of some analysts, who see in giving regulators more power than traditional willingness to basically intervene the market. REINJECT OR NOT TO REINJECT – AND WHO PAYS THE BILLActing on natural gas in Brazil had almost become an imperative since the US shale gas revolution changed that country’s energy landscape, making it again a net exporter and reviving the petrochemicals industry to an extent no-one could imagine just two decades ago. In the US and Brazil, the two largest chemicals producers in the Americas, the contrast is stark: natural gas prices in the southern neighbor are around four times higher than in the US. However, some analysts have said they are concerned about the type of action taken, arguing that giving regulators such as the ANP more power could lead to more government interventionism in the oil and gas sector, potentially denting Brazil’s crude sector attractiveness to invest. However, lest not forget that Brazil’s crude sector is mostly dominated by one player, Petrobras, and this player is majority owned by the state: its CEO is appointed or dismissed as the President sees fit, and the crude major is effectively one more arm of the cabinet – a ministry of energy bis, so to speak. Still, Brazil’s crude sector was meant to go towards more liberalization, not less. And this is where the decree on natural gas passed in August overreaches, according to critics, the scope of what a government should do or should not do to encourage certain economic activity. According to the decree, the ANP will be able to mandate to crude oil players the levels of natural gas they can reinject back into the system during their crude oil extraction operations, and how much they should make available for companies and households. In simpler words: crude producers will have to go from reinjecting most of the gas – at a very low cost – to create an infrastructure to transport that gas onshore. For now, crude oil majors operating in Brazil have, for the most part, kept quiet about the decree. In a written response to ICIS on 29 August, Shell said it was “analyzing” the decree, without any further comment, a response it has not updated as of 3 September. Petrobras and Equinor had not responded to a request for comment at the time of writing. Equally, Braskem did not respond either to questions about potential petrochemicals expansions or how the decree could affect investments in crude oil and, ultimately, affect the industrial sectors if that was to happen. Petrobras’ CEO, Magda Chambriard, said, however, the company would do “everything possible” to reinject as much gas as it is able to, but also reminded how this reinjection will only be possible in the production platforms to be started up in the future. “On the platforms that are already there [in operation] and on those that are already being delivered, this [reinjecting more gas] will not be possible,” said Chambriard, quoted by specialized publication Offshore Energy. Abiquim’s Passos is not concerned at all and said that the powers given to ANP is a natural step for “an aspect of oil and gas production” that was not previously covered by the regulators. “The power to regulate will be used considering the interests of producers, consumers, and the state and, obviously, without implying a disincentive or a halt to new investments. In any case, given the magnitude of investments in oil, new investments specifically for gas would not significantly alter the competitiveness of oil exploration and production (E&P) in Brazil,” said Passos. “Abiquim is confident that the costs associated with E&P in Brazil’s oil sector are sufficiently low to cover any additional costs that may arise.” And to the fears about higher intervention from the government, Passos said it was a “global characteristic” of the crude oil and gas sectors to be highly regulated. CHEMICALS CHEERS, FINALLYAbiquim’s Passos is well aware of Petrobras’ CEO warning about the slowness in the natural gas market, and how it may take years for the changes benefiting chemicals to take place. But, after years of unsuccessful lobbying, Passos is a happy man who says the authorities have finally a vision of what chemicals should be and what its problems are. With that, he is ready to wait. “Nothing will be immediate. However, there is a compatibility between the time needed for greater availability of natural gas, improving the competitiveness of this raw material in Brazil, and the time required for petrochemical projects to mature – we should consider that this is a structural action with medium- and long-term impacts,” said Passos. However, after years of lobbying for a decree like the one just passed, the trade group was understandably exultant, not least because this comes just two months after another success. In June, Abiquim and Passos as its representative were part of Lula’s entourage when he went on a state visit to gas-rich Bolivia in June. During the visit, Brazil and Bolivia signed agreements to expand natural gas supplies, in a long-running business relationship which has made Bolivia the key supplier to the Brazil’s most populous, industrious and wealthiest states in the south via the pipeline Gasbol, the longest natural gas pipeline in South America at 3,150 kilometers (1,960 miles). At the time, Abiquim described the agreements inked in Bolivia as a “historic” step for Brazil’s chemicals and which, together with the latest natural gas moves, could pave the way for a truly competitive sector in the global stage, said the trade group. Agreements on fertilizers were also signed as Brazil, already one of the world’s bread baskets, continues to post a large trade deficit in that field. According to Brazil’s government, the deals in Bolivia and the decree on the regulatory environment for natural gas could unleash investments of Brazilian reais (R) 96 billion ($17 billion) in natural gas, biomethane, and fertilizer plants, as cited by Abiquim in its statement following the decree’s passing. SEVERAL DEALS, LITTLE RESULTSAbiquim’s lobbying has been directed where it could make the most difference: the government and Petrobras, admittedly achieving more success with the former than the later. In its quest for expanding natural gas supplies and lower prices, Abiquim knocked on Petrobras’ door in 2023 and formed a working group to explore solutions to the “critical situation” the chemicals industry was in. Nothing was heard about that working group, so this year the two parties gave it another shot and singed a memorandum of understanding (MoU) aiming for the same: to find ways of making the petrochemicals industry more competitive. So far, nothing concrete has been communicated, while chemicals remains with its operating rates at record lows as imports continue flooding Brazil and the wider Latin America, with an increase in import tariffs later this year one of the elements which, according to Abiquim, could start fixing the beleaguered Brazilian domestic chemicals production. “Over the last few months, both teams (Petrobras and Abiquim) have been concerned about handling anonymized data from the sector. Creating a safe environment for members to access competitive natural gas is Abiquim’s focus,” said Passos. “The high volume of natural gas consumption for the sector justifies the continuation of the negotiations. We are very pleased with the technical capacity and fairness of the process and how it has been handled by both parties.” Front page picture: Abiquim’s director general Andre Passos (second from the right) in Brasilia on 26 August, when the new national energy and natural gas policies were signed  Picture source: Brazil’s Ministry of Mines and Energy  ($1 = R5.64) Insight by Jonathan Lopez

BARCELONA (ICIS)–New analysis suggests the chemical industry may face a more rapidly aging and shrinking population in key markets such as China, while the subsequent drag on demand means new business models will be required. China-driven petrochemicals supercycle is over China’s population may be aging and shrinking more quickly than previously thought China may switch to become net exporter of many synthetic resins Demographic shifts will shrink demand for chemicals throughout developed world Developing world faces challenges which may slow growth New business models will be required to create opportunities from these trends In this Think Tank podcast, Will Beacham interviews Nigel Davis and John Richardson from the ICIS market development team and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.