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Ethylene05-Aug-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 2 August.
Massive North America PE growth wave is over
through 2027 – LyondellBasell
The massive shale gas-driven expansion in
polyethylene (PE) and to a more limited extent
in polypropylene (PP) has ended, boding well
for operating rates and profitability moving
forward through 2027, said executives at
LyondellBasell.
INSIGHT: US chems face poor trade prospects
under presidential candidates
Regardless of who wins the next presidential
election, US chemical producers may see little
benefit from the trade policies of either
candidate, with one exposing them to
retaliatory tariffs and the second likely
continuing the policies of the current
administration.
INSIGHT: US Fed moves closer to rate cuts,
paving way for chemicals demand
recovery
The US chemical industry, along with other
interest-rate sensitive sectors, is poised to
get a lift as the US Federal Reserve moves
closer towards its first interest rate cut – a
move increasingly likely in September.
INSIGHT OUTLOOK: LatAm petchems producers hope
protectionism, higher freight costs improve
margins
Latin American petrochemicals prices remain in
the doldrums due to global oversupply, but
domestic producers are hoping a sustained
increase in freight costs and protectionist
measures could start improving their dented
market share.
OUTLOOK: US recycled plastics weather mixed
demand, new capacity as pivotal year, 2025,
approaches
Although the broader US recycled plastics
market has yet to see the full recovery as
hoped by this time, there still remain
opportunities and challenges through year end.
INSIGHT: More US chem firms give up on H2
recovery
So far in the earnings season, US chemical
producers have given up on a second half
recovery and will rely on their own actions to
increase earnings while they wait for interest
rates to fall.
Petrochemicals05-Aug-2024
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.
Speciality Chemicals05-Aug-2024
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
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Speciality Chemicals05-Aug-2024
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.
Gas05-Aug-2024
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.
Ammonia02-Aug-2024
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.
Recycled Polyethylene Terephthalate02-Aug-2024
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
Acrylonitrile02-Aug-2024
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
Polyethylene02-Aug-2024
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.
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