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Ethylene28-Oct-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 25 October.
Earlier unplanned outages contributing
to tight US MEG, DEG supply in
Q4
US monoethylene glycol (MEG) and diethylene
glycol (DEG) spot availability is expected to
remain snug through Q4, while concerns are
growing for triethylene glycol (TEG) supply as
peak season begins.
US Sherwin-Williams expects choppy H1,
sees signs of consumer
weakness
Sherwin-Williams expects demand during the
first half of 2025 will remain choppy while the
company waits for what it expects will be an
inevitable inflexion point for demand for its
products, the US-based paints and coatings
producer said on Tuesday.
Mexico’s Orbia lowers 2024 guidance,
PVC group reports flat Q3
income
Orbia’s vinyls business reported on Wednesday
that Q3 operating income was flat year on year
amid lower costs for ethylene and electricity
as well lower volumes and prices.
Styrolution to permanently shutter
Sarnia styrene plant next
year
INEOS Styrolution has decided not to restart
its 445,000 tonnes/year styrene production
plant in Sarnia, Ontario, Canada, and will
permanently shut it down by early Q4 2025, the
company announced Thursday.
Chlor-alkali demand benefited from
hurricanes, new pulp plants –
OlinDemand
for chlorine derivatives and caustic soda
benefited from US hurricanes and two new pulp
and paper plants that opened in South America,
which provided some bright spots in what has
otherwise been a challenging market due to the
slowdown in home building and durable goods,
US-based Olin said on Friday.
Petrochemicals28-Oct-2024
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which highlights how NVIDIA is effectively
carrying US stock markets.
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 Chemicals28-Oct-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 25 October.
Sentiment in Europe jet
fuel market dented by crude instability and
soaring stocks
Bearing the brunt of low demand and a supply
overhang, sentiment in the European jet
kerosene spot market has been further dulled by
upstream Brent crude fluctuations and soaring
regional stock levels hitting their highest
since August 2021.
Eni to close Versalis crackers, PE plant as it
pivots to low carbon, specialty production with
€2 billion investment
Italy’s Eni plans to close its Versalis
crackers at Brindisi and Priolo, plus a
polyethylene (PE) site at Ragusa as it
refocuses on low carbon and specialty chemical
production through a €2 billion investment over
the next five years.
Dow to review Europe polyurethanes amid
‘increasing challenges’ of regulation
Dow is set to review the competitiveness of
several assets in Europe, particularly around
its polyurethanes operations, amid “increasing
challenges” presented by the region’s
regulatory environment, CEO Jim Fitterling said
in a Q3 results statement.
Europe ECH prices dip for first time since
January as raw material costs ease
Europe epichlorohydrin (ECH) freely negotiated
contract prices have softened in October for
the first time since January 2024 as propylene
feedstocks costs ease in a muted and well
supplied ECH market.
INSIGHT: ‘Bridge’ countries bring new
opportunities as global trade flows fragment –
Bertschi
Changing trade flows driven by increasing
friction between China, the US and their allies
mean there will be demand for new chemical
logistics routes and infrastructure, according
to the executive chairman of chemical logistics
group Bertschi.
Europe PE/PP October contracts down on monomer
and stagnant demand
European polyethylene (PE) and polypropylene
(PP) contracts have been agreed down slightly
beyond the monomer drop for October.
Global News + ICIS Chemical Business (ICB)
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Crude Oil28-Oct-2024
SINGAPORE (ICIS)–Oil prices tumbled by more
than $4/barrel on Monday morning as fears over
potential supply disruptions in the Middle East
eased, with sentiment weighed down by a sharp
contraction in China’s September industrial
profits.
Israel airstrikes miss Iran’s oil
facilities
China Sept industrial profits contract 27%
year on year
China nine-month oil refining losses at
CNY32 billion
Product (at 04:00 GMT)
Latest ($/barrel)
Previous ($/barrel)
Change ($/barrel)
Brent December
72.61
76.05
-3.44
WTI December
68.45
71.78
-3.33
Israel’s retaliatory strikes on Iran over the
weekend did not hit Tehran’s oil and nuclear
facilities.
“The more targeted response from Israel leaves
the door open for de-escalation and clearly the
price action in oil this morning suggests the
market is of the same view,” Dutch bank ING
said in a macro note on Monday.
“Clearly, if we do see some de-escalation, it
would allow fundamentals once again to dictate
price direction,” it said.
Iran, which is a member of oil cartel OPEC, has
the world’s fourth largest proven oil reserves.
“And with a surplus market over 2025, this
would mean that oil prices are likely to
remain under pressure,” ING added.
CHINA DATA IN FOCUS
China’s September industrial profits fell by
27.1% year on year, while average earnings in
the first nine months dropped by 3.5% year on
year, according to the country’s National
Bureau of Statistics (NBS).
Lower production, especially in the motor
vehicles sector amid a sharp rise in new energy
vehicles weighed on demand.
Car production in September fell by 8.1% year
on year, while new energy vehicles rose by
48.5% year on year.
China, the world’s second-biggest economy, is
also its largest crude importer.
Its
crude oil imports in September reached 45.5
million tonnes, down by 0.6% year on year,
according to China Customs data.
Crude processing capacity also fell by 5.4%,
while capacity in the first nine months of 2024
fell by 1.6% year on year.
Meanwhile, the oil refining sector posted
losses of yuan (CNY) 32 billion ($4.5 billion)
in the first nine months of 2024.
The fall was attributed to insufficient market
demand, a drop in industrial product prices and
a significantly higher base since August, NBS
statistician Yu Weining said in a statement on
Monday.
Investors will be watching a highly anticipated
meeting between China’s leaders on 4-8 November
in Beijing for potential further stimulus
policies to aid growth.
On 12 October, China’s finance minister Lan
Fo’an had said that the central government
might
raise debt to arrest economic headwinds.
Focus article by Jonathan Yee
($1 = CNY7.13)
Thumbnail image: Iran’s capital city of
Tehran on 26 October 2024. (By ABEDIN
TAHERKENAREH/EPA-EFE/Shutterstock)
Polyethylene28-Oct-2024
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson: Turkey, the subject of
today’s post, is booming. So are Vietnam,
Mexico, India, Brazil and Indonesia as the
Developing World ex-China region gradually
(gradually being the operative word) takes over
from China as the No 1 global chemicals and
polymers demand driver in volume terms.
So, today’s post launches a new series of posts
that will take a deep dive into the Developing
World ex-China mega region.
But please do not get carried away in thinking
that developing countries outside China will
bring the global chemicals industry back into
healthy balance anytime soon. During meetings
at this year’s EPCA, senior executives forecast
that the recovery would take anywhere between
another three-to-nine-years.
Also bear in mind that even when markets do
come back into better balance, we will never
entirely return to conditions during the
1992-2021 Chemicals Supercycle because of
long-term economic problems in China,
increasing global trade tensions, climate
change and sustainability pressures.
But volatility and change always create
opportunities. A major aspect of increasing
global trade tensions is of course China’s
split with the West. This is one of the reasons
why I believe we will see chemicals demand
growth in countries such as Turkey being above
consensus expectations.
Turkey has long been the manufacturing
outsourcing destination of choice for the EU.
Plus, of course, there’s Turkey’s great
strategic location. The country acts as a
bridge between Europe, the Middle East, North
Africa, and Central Asia, offering exporters
access to all these different markets, some of
which are booming.
Demographics, at least for the next 20 years or
so, are still on Turkey’s side as it remains a
youthful country
Then there are the growing trade tensions with
China. But the reality is that the West will
still have to do business with China in the
many manufacturing value chains where it is
dominant such as electric vehicles and solar
panels.
The “window dressing” of appearing to take
reshoring seriously will be to increasingly do
business through third-party countries such as
Turkey, Mexico and Vietnam. This process is
already well underway.
It seems probable that more and more Chinese
investment will move to these third-party
countries to get around higher import tariffs
and antidumping duties etc, a case in point
being BYD’s plans to build a factory in Turkey.
There will many opportunities, some temporary
and some permanent, as the Developing World
ex-China in general overtakes China as the No1
driver of global polymers demand.
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.
Gas28-Oct-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 25 October.
Asia’s naphtha market eyes demand
uptick
By Li Peng Seng 21-Oct-24 11:38 SINGAPORE
(ICIS)–Asia’s naphtha intermonth spread was
near a two-month high recently and it may be
able to hold firm in the near term on reduced
arbitrage volumes in November and anticipated
demand growth ahead.
Energy transition plan reset needed with
renewed focus on Asia – Aramco
President
By Jonathan Yee 21-Oct-24 14:22 SINGAPORE
(ICIS)–Saudi Aramco chief Amin Nasser on
Monday called for a new energy transition plan
that considers the needs of all countries,
specifically those in Asia and the broader
Global South, amid growing oil demand.
Asia ACN regional producers bullish on tighter
supply; India’s BIS deadline nears
By Corey Chew 22-Oct-24 11:07 SINGAPORE
(ICIS)–Asia acrylonitrile (ACN) prices saw a
recent uptrend the past two weeks, with plants
of key regional producers in Taiwan and South
Korea under planned maintenance.
PODCAST: Macroeconomic pressure continues to
weigh on Asia recycling sentiment
By Damini Dabholkar 22-Oct-24 17:13 SINGAPORE
(ICIS)–The short-term demand outlook for
recycled polymers from Asia remains sluggish
especially for low-value grades, mainly due to
poor economics and brand users’ preference of
cheaper virgin plastics.
Emerging Asian economies’ strong growth to
subside amid China slowdown – IMF
By Nurluqman Suratman 23-Oct-24 12:07 SINGAPORE
(ICIS)–Emerging Asian economies are expected
to see strong economic growth subside, partly
due to a sustained slowdown in China, the
International Monetary Fund (IMF) said on
Tuesday.
PODCAST: Asia methanol impacted by geopolitical
uncertainty, supply cuts expected in
Q4
By Damini Dabholkar 24-Oct-24 23:00 SINGAPORE
(ICIS)–Asian methanol markets in recent weeks
were driven more by sentiment than changes in
fundamentals as participants respond to an
escalation of the conflict in the Middle East.
However, some supply changes in coming months
are expected to alter the landscape in Q1 2025.
Supply glut casts shadow over Asia PC market
recovery
By Li Peng Seng 25-Oct-24 13:08 SINGAPORE
(ICIS)–China’s polycarbonates (PC) spot demand
has remained sluggish as ample supplies have
kept purchases on a need-to basis, and this
trend will persist through yearend.
Caustic Soda25-Oct-2024
HOUSTON (ICIS)–Demand for chlorine derivatives
and caustic soda benefited from US hurricanes
and two new pulp and paper plants that opened
in South America, which provided some bright
spots in what has otherwise been a challenging
market due to the slowdown in home building and
durable goods, US-based Olin said on Friday.
Bleach and hydrochloric acid are used in water
treatment and cleaning.
For caustic soda, demand continued to be strong
because of demand from alumina and from the
pulp and paper industry, said Ken Lane, CEO. He
made his comments during an earnings conference
call.
Demand from South America has been the most
robust, with two recent pulp and paper plant
startups, he said.
Lane did not specify the plants.
However, Brazilian producer Suzano
started up the largest single pulp production
line in the world in Ribas do Rio Pardo,
Mato Grosso do Sul state, Brazil.
CHLORINE REMAINS IN
TROUGHDespite the temporary
boost from hurricanes, demand for chlorine
remains in a trough, with demand below
pre-COVID levels, according to Olin.
Looking ahead, the uncertainty that the
chemical industry experienced in the second
half of 2024 should continue into 2025, Lane
said.
Such uncertainty will persist until interest
rates fall further.
Higher interest rates have weakened demand for
PVC in several key end markets such as housing,
automobiles and durables.
In addition, chlorine is used to make titanium
dioxide (TiO2), a white pigment that is used to
make paints opaque.
Demand will not spring back until lower
interest rates lead to a recovery in activity
in housing and other markets that are sensitive
to rates, Lane said.
BLOW FROM HURRICANE
BERYLOlin expects to take a $135
billion hit from damage that Hurricane Beryl
caused to its operations in Freeport, Texas.
During the third quarter, $77 million was
connected to chlor-alkalis and $33 million was
related to epoxy resins, the company said.
During the fourth quarter, $25 million was
related to chlor-alkalis.
Olin had conducted an emergency shutdown, the
company said. The shutdown caused problems that
were not apparent until the company began to
restart its operations.
Olin completed those repairs about a week ago,
it said. The company also built some temporary
infrastructure, which it will continue to
operate until the middle of next year.
Thumbnail shows wood, which is used with
caustic soda to make pulp. Photo by Global
Warming
Speciality Chemicals25-Oct-2024
HOUSTON (ICIS)–Rates for shipping containers
from east Asia and China to the US fell this
week, but carriers have announced an increase
in blank sailings so they can tighten capacity
and maintain a floor on prices.
Rates have been falling steadily since July as
importers pulled forward peak season volumes to
get ahead of the dock workers strike at East
Coast and US Gulf ports.
Judah Levine, head of research at online
freight shipping marketplace and platform
provider Freightos, said some carriers added
blank sailings on Asia-to-US routes.
Last week, Mediterranean Shipping Co (MSC)
announced four blank sailings on its Asia-USEC
2M service, citing ongoing congestion at some
ports related to the brief work stoppage.
Levine said the action could also be to
maintain a floor on rates.
Global average rates fell by 4% and are just
above $3,000/FEU (40-foot equivalent unit),
according to supply chain advisors Drewry and
as shown in the following chart.
Rates to the East Coast fell by 6.1% to around
$5,200/FEU, with rates to the West Coast
falling by 2.6% to around $4,800/FEU, as shown
in the following chart.
Transpacific rates are now about 30% below the
July peak, and Levine expects them to continue
to soften as the market is in a slow period
between the end of the Christmas holiday peak
season and the Lunar New Year.
“As long as Red Sea diversions continue to
absorb capacity on an industry level, prices
may not fall much further than seen back in
April,” Levine said.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and are shipped in tankers, container
ships transport polymers, such as polyethylene
(PE) and polypropylene (PP), are shipped in
pellets.
They also transport liquid chemicals in
isotanks.
LIQUID TANKER RATES FLAT TO
LOWER
Overall, US chemical tanker freight rates were
softer this week for several trade lanes, in
particular the USG-to-Brazil and USG-Asia trade
lanes as spot tonnage remains readily
available.
There has been limited spot activity to both
regions and COA nominations are taking longer
than usual.
The vessel owners have tried to delay the
sailings but there has been very little spot
interest in the market leaving no other options
for full cargoes and in turn impacting spot
rates.
On the transatlantic front, the eastbound leg
remains steady as there was ample space
available, which readily absorbed the few fresh
inquiries for small specialty parcels stemming
from the USG bound for Antwerp.
Various glycol, ethanol,
methyl tertiary butyl ether (MTBE)
and methanol parcels were seen quoted to ARA
and the Med as methanol prices in the region
remain higher.
Additionally, ethanol, glycols and caustic soda
were seen in the market to various regions.
Additional reporting by Kevin Callahan
Ethylene25-Oct-2024
SAO PAULO (ICIS)–The financial week in Latin
America ends with the confirmation that its two
largest economies’ performance is taking
diverging paths as Brazil’s unexpected healthy
growth brings to the fore overheating fears,
while Mexico’s slowdown is proving harsher than
previously thought.
Healthier-than-expected growth in Brazil occurs
against the backdrop of a fast-slowing Mexican
economy, where political woes at home and in
the US, due to the upcoming presidential
election, are taking a toll on output, expected
by the IMF below 2% in both 2024 and 2025.
This week, official figures in Mexico confirmed the
slowdown in August, compared with July,
with output in most subcategories, including
petrochemicals-intensive sectors such
construction, falling. Output was still up on a
year-on-year basis.
The latest IMF GDP growth forecasts published
this week were another jag of cold water on
Mexico’s new Administration led by Claudia
Sheinbaum, with the Washington-based body
expecting output to expand just by
1.5% in 2024, down from its previous
forecast for 2.2% growth.
The IMF added output would slow further in
2023, growing at 1.3%. See bottom table for
data on the main Latin American economies’ GDP
growth and inflation forecasts.
Meanwhile, Brazil’s economic performance has
outpaced all forecasts in 2024, at home and
abroad, and is likely to end up expanding by 3%
or slightly more this year, which is causing
unexpected price rises and a reversal of the
monetary policy easing started a year ago:
interest rates are due to stay higher for
longer there.
MEXICO WOES INCREASE AS US POLL
NEARSA cynical observer of North
American politics may say that the most
important election for Mexico is not its own,
which was held in June and returned to
Parliament a historic supermajority for the
center-left, statist Morena party of President
Claudia Sheinbaum.
The most important poll for Mexico, the
argument goes, would be that of the US,
Mexico’s main clients for around 80% of goods
the country manufactures.
The statement could ring true from 2025 onwards
if Republican candidate Donald Trump is voted
back into the White House, with promises to
implement sweeping import tariffs hikes,
including for Mexico and Canada, the two
countries sharing the USMCA free trade zone
with the US in North America.
As opinion polls remain tight in the big
Mexican neighbor, uncertainty south of the
border increases, and business expansion plans
are put on a wait-and-see mode.
The peso (Ps) has weakened by nearly 15%
against the dollar year to date, and it would
be expected to take a direct hit on 6 November
if the morning after the election Trump is
voted back into the White House, according to
analysts.
On Friday, the peso was trading at $1:Ps19.90,
a sharp depreciation from the $1:Ps16.97
exchange rate it started the year trading at.
Despite the peso’s depreciating, making
dollar-denominated imports more expensive for
Mexican companies and households, the overall
economic slowdown is continuing to cause a fall
in inflation.
This week, Mexico’s statistics office said the
much-followed inflation figure for the first
fortnight of October had continued falling,
leaving still room for the central bank – known
as Banxico – to lower interest rates in its
upcoming monetary policy committee (MPC)
meeting in November.
The headline annual rate of inflation stood in
the first half of October at 4.7%, practically
flat month on month, with the breakdown of the
data showing non-core inflation fell to 9.7%
year on year, while core inflation – which
excludes more volatile prices for food and
energy – was broadly unchanged at 3.9%, year on
year.
However, 5 November could be a before-and-after
day for Mexico’s economy, with its currency the
first to react to a potential Trump return to
the White House.
“The fall in Mexican core services inflation in
the first half of October in principle gives
Banxico space to press ahead with another 25bp
[basis points] rate cut next month, but much
will hinge on the outcome of the US election,”
said analysts at Capital Economics this week.
Mexico’s main interest rate benchmark was set
in September at
10.50%.
“An abrupt move down in the peso could put the
easing cycle on pause … The outcome of the US
election may well change the outlook for
monetary policy in Mexico, especially if a
Trump victory leads to a sharp sell-off in the
peso. This would probably prompt Banxico
to pause (or even reverse) its easing cycle.”
Adding to the doom and gloom, US credit rating
agency Fitch said on Friday that, as well as
changes to trade policy, a Trump Administration
could also have negative implications for
Mexicans living in the US and the remittances
they send home, which are a key income source
for millions of Mexicans to make ends meet.
“Central American countries in particular will
be highly vulnerable to policy changes as their
economies rely heavily on remittances …
Immigration tightening and a more
confrontational posture from the US towards
Mexico and Central American countries could
emerge should former president Donald Trump be
re-elected,” said Fitch.
“While implementation remains uncertain, his
administration has increasingly indicated a
willingness to significantly restrict border
crossings and materially increase deportations
of undocumented migrants.”
Remittances do matter, especially for smaller
Central American countries. According to
Fitch’s calculations, remittances in El
Salvador and Nicaragua account for more than
30% of their GDP.
In Mexico, remittances’ weight has risen from
2% in 2014 to the current 3.5%. Due to its
large economy, the size of Mexicans’
remittances stood in 2023 at just over $63
billion – a figure larger than several smaller
Latin American countries’ annual output.
Fitch added that a Democratic victory in the
election would mean policy continuity, not
least because candidate Kamala Harris and Vice
President has overseen immigration policy in
the past four years.
However, Democratic proposals show how the
immigration debate has tilted towards the
right, with some proposed restrictions
unthinkable just a few years back.
“The administration has voiced the
intention to push for a bipartisan law that
failed to pass in 2024 after Republican
objection. The bill aims to close loopholes in
the asylum process, give the president greater
authority to shut the border when crossings are
high, and limit immigration parole, which
allows migrants to temporarily enter the US,”
said Fitch.
BRAZIL BOOM HAS UNWANTED SIDE
EFFECTSAs previously analyzed in
this
article earlier in October, Brazil’s
economy has beaten the odds in 2024, with its
GDP expected to expand by more than 50% than
most forecasts said at the beginning of the
year – from below 2% to potentially slightly
above 3%.
This success is coming accompanied by a series
of challenges, not least inflation and interest
rates, which remain high. That fact has made
Latin America’s largest economy to reverse
course on easing monetary policy, on fears that
lower borrowing costs would be set to spur
already healthy consumption and feed inflation
higher.
The president of the Banco Central do Brasil
(BCB), Roberto Campos Neto, said earlier this
week inflation risks remained skewed to the
upside.
His colleague at the central bank’s board in
charge of international affairs, Paulo
Picchetti, reiterated the bank’s commitment to
continue bringing inflation down, even if that
implied making consumption more expensive via
higher borrowing costs.
“We chose to be completely data-dependent [on
next moves], with a clear commitment to do what
is necessary in terms of monetary policy to
make inflation converge to the target,” said
Piccheti, quoted by news agency Reuters.
Brazil’s central bank has the mandate to keep
price rises at around 3%.
Brazil’s data for the H1 October inflation
continued showing price rises widening,
compared with September, with the annualized
rate at 4.5%, up from 4.1%.
“A lot of the rise can be pinned on a further
rebound in food and electricity inflation
[caused mostly by extreme weather events, with
a severe drought hitting the country in August
and September]. Core services inflation dropped
which, on the face of it, is encouraging,” said
Capital Economics.
“But that was driven by volatile items, such as
airfares. We estimate that the central bank’s
measure of underlying core services inflation,
which strips out such items, ticked up last
month. Taken together with comments from
BCB policymakers warning about strong services
inflation and unanchored inflation
expectations, a step up in the pace of rate
hikes from 25bp to 50bp is looking increasing
likely.”
Brazil’s main interest rate benchmark, the
Selic, currently stands at 10.75%.
IMF forecasts (in %
change)
GDP growth 2023
GDP growth forecast 2024
GDP 2025 growth forecast
Inflation 2023
Inflation forecast 2024
Inflation forecast 2025
Brazil
2.9
3.0
2.2
4.6
4.3
3.6
Mexico
3.2
1.5
1.3
5.5
4.7
3.8
Argentina
-1.6
-3.5
5.0
133.5
229.8
62.7
Colombia
0.6
1.6
2.5
11.7
6.7
4.5
Chile
0.2
2.5
2.4
7.6
3.9
4.2
Peru
-0.6
3.0
2.6
6.3
2.5
1.9
Ecuador
2.4
0.3
1.2
2.2
1.9
2.2
Venezuela
4.0
3.0
3.0
337.5
59.6
71.7
Bolivia
3.1
1.6
2.2
2.6
4.3
4.2
Paraguay
4.7
3.8
3.8
4.6
3.8
4.0
Uruguay
0.4
3.2
3.0
5.9
4.9
5.4
Latin America and the
Caribbean
2.2
2.1
2.5
14.8
16.8
8.5
Focus article by Jonathan
Lopez
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