BARCELONA (ICIS)–Market forces and long-term trends such as global overcapacity and sustainability will have more impact on chemical companies than who wins the US presidential election. Chemical companies driven more by long-term trends than government policy Consumer demand for more sustainable products will drive chemical markets US relies heavily on exports for its low-cost polymers Donald Trump promises to hike tariffs by 10-20% on all imports, 60% on Chinese imports Trump may ease US chemicals regulation, Kamala Harris may tighten Questions over investments in the green transition In this Think Tank podcast, Will Beacham interviews ICIS market development executive, Nigel Davis, 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 organizing 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.

SINGAPORE (ICIS)–Saudi petrochemical giant SABIC has lowered its capital expenditure (capex) guidance for 2024 as it prioritizes investments in higher-margin opportunities to mitigate overcapacity in the face of poor global demand. Full-year capex cut to $3.3 billion to $3.9 billion Future capex to focus on China, low-carbon projects Margins to remain under pressure for rest of 2024 SABIC reduced its full-year capex by about 25% to between $3.3 billion and $3.9 billion, from $4 billion and $5 billion previously, it said in its third-quarter earnings report released on 4 November. The new capex projection comes after SABIC swung to net profit of Saudi riyal (SR) 1 billion ($267 million) in Q3, from a loss of SR2.88 billion in the same period of last year. This turnaround is primarily due to higher operating income, driven by improved gross profit margins and a divestment gain from the firm’s functional forms business. https://subscriber.icis.com/news/petchem/news-article-00110897732 Q3 losses from discontinued operations, mainly related to the Saudi Iron and Steel Co (Hadeed), decreased significantly from the same period last year. On a quarter-on-quarter basis, however, SABIC net profit fell by 54% mostly due to previous Q2 non-cash gains partly resulting from new regulations on Islamic tax. The reversal of zakat provision, which is a mandatory Islamic tax on wealth, resulted in a non-cash benefit of SR545 million in Q2 2024. SABIC registered a Q3 zakat expense of SR397 million. FOCUS ON CHINA Ratings firm Fitch in a note said that it expects SABIC’s capex to grow to an average of SR17 billion ($4.5 billion) in 2024-2025 and around SR14 billion in 2026-2027. “In our view, investments will be driven by expansion of its low carbon product portfolio and a pipeline of opportunities in China and the Middle East,” it said. This includes the recently sanctioned $6.4 billion joint venture petrochemical complex in Fujian, China, as well as the construction of the largest on-purpose single train methyl tertiary butyl ethe (MTBE) plant in the world in Saudi Arabia,” Fitch said. SABIC is exploring options for a petrochemical complex in Oman and an oil-to-chemicals project in Ras Al-Khair in its home country, according to the ratings firm. Fitch also expects acceleration of “green capex” after 2025 as SABIC plans to earmark 10% of its annual expenditures on carbon-neutrality initiatives by 2030. “The key projects will be focused on improved energy efficiencies, increased use of renewable energy in operations, and carbon capture of up to a potential 2 million tonnes, leveraging Saudi Aramco’s carbon capture and storage (CCS) hub in Jubail,” Fitch said. SABIC, which is 70% owned by oil giant Aramco, had stated in August that its long-term focus would remain on optimizing its portfolio and restructuring underperforming assets. PORTFOLIO OPTIMIZATION AMID MARKET CHALLENGES SABIC CEO Abdulrahman Al-Fageeh said on 4 November that overcapacity continues to weigh on the petrochemicals market, with current utilization rates remaining below long-term averages. “Furthermore, PMI [manufacturing purchasing managers’ index] data indicated a decline in global economic conditions,” he added. The company has initiated several portfolio-optimization measures, including discontinuing its naphtha cracker in the Netherlands and disposals of non-core assets such as its steel unit Hadeed in 2023 and a recently announced divestments of 20% shareholding in Aluminium Bahrain (Alba). SABIC’s margins are expected to remain under pressure this year before they gradually recover to mid-cycle levels of around 20% by 2026 on market improvement and portfolio-optimization measures, according to Fitch. ($1 = SR3.75) Focus article by Nurluqman Suratman

HOUSTON (ICIS)–Celanese plans to cut its quarterly dividend by 95% in Q1 2025 and idle plants in every region after third-quarter adjusted earnings fell well below guidance, the US-based acetyls and engineered materials producer said on Monday. Q3 adjusted earnings/share were $2.44 versus an earlier guidance of $2.75-3.00. Celanese shares were down by more than 13% in afterhours trading. Celanese is taking the following steps to cut down debt: It will temporarily idle plants in every region to reduce manufacturing costs through the end of 2024 It expects to generate an expected $200 million inventory release in the fourth quarter. The idling includes 10 sites in the company’s Engineered Materials segment. In the first half of the fourth quarter, Celanese has temporarily idled the company’s Singapore production of acetic acid, vinyl acetate monomer (VAM), esters and vinyl acetate emulsions (VAE). In Frankfurt, Germany, the company is idling its VAM plant and plans to use it as swing capacity to meet demand. It will start a program to reduce costs by more than $75 million by the end of 2025. The cost cutting will target selling, general and administrative (SG&A) expenses. It will target $400 million in 2025 capital expenditures, a figure below 2024 levels. It will close on a 364-day delayed draw prepayable term loan for up to $1 billion. It will draw on the term loan in Q1 2025 towards $1.3 billion in maturing debt. TOUGH THIRD QUARTERThe plant shutdowns, dividend reduction and cost cutting follow a third quarter that saw demand degrade rapidly and acutely in automobiles and industrial end markets. “Auto in Europe and North America experienced a shock to the demand patterns that had been relatively steady for the previous several quarters, with swift sales declines in both regions that led to a pullback in auto builds,” said Scott Richardson, chief operating officer. Demand remained slow in Asia but did not show the same trajectory as the Americas. The company noted that prices in China for undifferentiated nylon polymer reflects supply that is growing faster than demand. Demand remained weak in paints, coatings and construction. New capacity for VAM came online and outpaced demand, amplifying the weakness in construction as well as in solar panels. Excess inventories in solar panels is weakening demand for ethylene vinyl acetate (EVA). The weakness more than offset the gains that Celanese made from its synergy projects in its Mobility and Materials (M&M) acquisition and from its acetic acid expansion project in Clear Lake, Texas. WORSE FOURTH QUARTERQ4 destocking in the automotive and industrial end markets should be heavier than normal, and Celanese expects demand to worsen in the fourth quarter. The destocking should be temporary and contained in the quarter. In Engineered Materials, Celanese expects a $40 million hit from the destocking. Another $15 million hit will come from seasonal declines associated with product mix. A further $15 million will come from temporarily idling capacity in the segment. For acetyls, Celanese is not seeing any indications of demand growth in anticipation of the first quarter or as a result of stimulus from China. For the company, Q4 adjusted earnings/share should be $1.25. Q3 FINANCIAL PERFORMANCEThe following table shows the company’s Q3 financial performance. Figures are in millions of dollars. Q3 24 Q3 23 % Change Sales 2,648 2,723 -2.8% Cost of sales 2,026 2,050 -1.2% Gross profit 622 673 -7.6% Net income 116 951 -87.8% Source: Celanese Earnings in Q3 2023 reflect a $503 million one-time gain from the sale of assets. Thumbnail shows adhesive, which is made with VAM. Image by Shutterstock.

HOUSTON (ICIS)–US farmers are on their final stretch of harvesting with 91% of the corn crop completed and soybeans now at 94%, according to the latest US Department of Agriculture (USDA) weekly crop progress report. Continuing the quick pace of field work, the current progress on harvesting corn is ahead of both the 78% rate from 2023 and the five-year average of 75%. Texas is finished with its acreage with North Carolina now at 99% and Tennessee next at 98% of their crop completed. Harvest of soybeans has reached 94% completed, which is above the 89% mark from 2023 as well as the five-year average of 85%. Minnesota has finished their harvest with Louisiana now at 99%, followed by several states which have reached 98% completed. In other harvesting updates, the USDA said there is now 63% of the cotton crop done with sorghum acreage 85% completed.

HOUSTON (ICIS)–As a fresh labor union strike halted activity at Canadian ports along its west coast on Monday, US fertilizer participants were watching the latest worker strife unfold with only moderate concerns over how this activity might disrupt nutrient flow. Fertilizer sources noted that the sentiment currently is that this work stoppage could be short in duration, as other recent strike actions have turned out with similar results. As a US trader said, the prior halt of the railroads in Canada “didn’t seem to have much effect on the market last time”. If this strike activity were to carry forward, domestic sources highlighted that it would not be a widespread event for fertilizers in the US as it would be felt primarily within the potash segment as well as for sulphur movement. With a domestic participant commenting that for the other nutrients, especially the nitrogen-based offerings, that this latest event “hasn’t yet affected us or any pricing”. This segment of west coast ports is estimated to move over 21,000 tonnes of potash daily for oversea shipment, with Fertilizer Canada calculating this latest shutdown could cost the industry around (C$) 9.7 million ($7.0 million) per day in lost sales revenue. The industry group had cautioned ahead of the strike occurring that another disruption to Canada’s supply chains would further damage the country’s reputation as a dependable trading partner and jeopardizes food security around the world. “We are once again on the brink of losing access to a critical trade corridor, and potash fertilizer will be one of the hardest hit commodities,” said Karen Proud, Fertilizer Canada president and CEO. The group noted that the 2023 labor disruption of west coast ports cost the fertilizer industry over C$126 million and took 13 days to resolve and that Canada lost significant market share to Russia in key markets such as Indonesia and Malaysia afterwards. Fertilizer major Nutrien said its main concern was that the strike action will prevent potash marketing agency Canpotex from exporting volumes out of the Port of Vancouver. “Canpotex is exploring alternatives to mitigate the potential impact to customers, however a prolonged disruption could negatively impact farmers and food security around the globe,” said a Nutrien spokesperson. “We urge the parties to come to an agreement before damage is done to Canada’s reputation as a reliable, global potash supplier.” ($1 = C$1.39)

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 1 November. Brazil’s chemicals trade deficit keeps rising; producers entrust recovery to higher tariffsBrazilian chemicals producers’ market share continued to be threatened in the January-September period, with the industry’s trade deficit rising to $36.2 billion, up 1% year on year, the country’s chemicals producers trade group Abiquim said this week. Brazil’s chemicals output up 2% in September, plastics and rubber up 6.5%Brazil’s chemicals output rose by 2% in September, year on year, although it fell compared with August by 2.7%, the country’s statistics office IBGE said on Friday. Brazil’s manufacturing keeps momentum in October, export orders robustBrazil’s petrochemicals-intensive manufacturing sectors continued expanding in October, the tenth consecutive month of growth, analysts at S&P Global said on Friday. Mexico’s manufacturing recovers slightly in October but poor demand keeps it contractionMexico’s petrochemicals-intensive manufacturing sectors continued to contract in October, although it slightly improved its performance month on month, analysts at S&P Global said on Friday. Colombia’s manufacturing output booms in October, central bank cuts rates to 9.75%Colombia’s petrochemicals-intensive manufacturing sectors made a decisive return to growth in October on the back of a healthy increase in new business, analysts at S&P Global said on Friday. Brazil’s chemical producer prices up nearly 11% in SeptemberBrazil’s chemicals producer prices rose in September by nearly 11%, year on year, as the sector recovers, the country’s statistics office IBGE said this week. Mexico’s GDP recovers strongly in Q3, more rate cuts dependent on US election – analystsMexico’s GDP grew by 1% in Q3, quarter on quarter, confirming the economy “pulled out of the slump” of the first half of the year, analysts said on Wednesday. Brazil’s Braskem Q3 resin sales down 2% due to higher PE and PVC stocksResin sales in Braskem’s domestic market dropped by 2% in Q3 year on year, mainly due to the higher levels of polyethylene (PE) and polyvinyl chloride (PVC) stocks in the transformation chain, the Brazilian petrochemicals major said on Wednesday in its quarterly production and sales report. Brazil Petrobras to continue advancing nitrogen project in Tres LagoasBrazil producer Petrobras announced that its board of directors has decided to continue implementing the nitrogen fertilizer unit (UFN-III), located in Tres Lagoas, Mato Grosso do Sul. PRICINGDomestic, international PE prices steady to lower on falling US export offersDomestic, international polyethylene (PE) prices were assessed as steady to lower across Latin American countries on the back of competitive offers from the US. Domestic PP prices fall in Colombia, Mexico on lower feedstocksDomestic polypropylene (PP) prices fell in Colombia and Mexico tracking lower feedstock costs. US October propylene contracts settled at a decrease on falling spot prices. Brazil hydrous ethanol sees small rise, anhydrous stays steadyPrices for hydrous ethanol saw a slight increase at the lower end of the range, with demand demonstrating stable sales in Q4. Chile and Colombia PET CFR prices decline amid Asia price reductionsChile and Colombia’s CFR prices fell on the lower end of the range reflecting the recent price reduction in Asia.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the upcoming US election. 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.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 1 November. SHIPPING: Union, US East Coast ports to resume negotiations in November Union dock workers and US East Coast port operators will resume negotiations on a new master agreement in November, according to a joint statement from both parties. Canada dock workers to launch new strike on Thursday Dock workers at the Port of Montreal in Canada will go on an indefinite strike at two container terminals, starting Thursday, 31 October, 11:00 local time, labor union and industry officials confirmed. INEOS Styrolution announces closure of US Ohio ABS facility In the ICIS news story headlined “INEOS Styrolution announces closure of US Ohio ABS facility” dated 30 October 2024, please see corrected figures in paragraph 8. INSIGHT: Harris v Trump – how the US presidential election could impact chemicals and energy markets Note: This is part two of this article. Click here to read part one. With around a week to go, all eyes are turned to the US presidential elections as the race heats up. LyondellBasell may make 2026 FID on US chemical recycling plant LyondellBasell could make a final investment decision (FID) in 2026 on a second chemical recycling plant, which it may build in the US at its refinery site in Houston, the CEO said on Friday.

BARCELONA (ICIS)—The eurozone manufacturing economy is still contracting, albeit at a slightly slower pace, according to new purchasing manager indices (PMIs) which mark the longest downturn since data collection began in 1997. The HCOB Eurozone Manufacturing PMI for October rose to 46 from 45 the previous month, still well below the 50 threshold which separates expansion from contraction, according to S&P Global which compiles the monthly survey. Production volumes decreased in October for the nineteenth straight month while output was constrained by a further marked decline in new factory orders, leading workforce numbers to be reduced further. On a positive note, contractions in production, sales and employment eased, although business confidence slipped to a one-year low. The contractions remained sharp in Germany and France, the eurozone’s largest economies, weighing down the result. Moderate deterioration was seen in Italy and the Netherlands, although a renewed improvement at Irish factories was recorded. Greece continued to display resilience, with a Manufacturing PMI above the 50.0 mark for a twenty-first month running. The top performer was once again Spain, which posted its fastest improvement in industrial conditions since February 2022. Factory output continued to decrease across the euro area in October. Although the rate of contraction has cooled since September, it was broadly in line with the average seen over the current 19-month sequence of decline. Production lines were once again squeezed by a lack of incoming new work. Total new order inflows shrank at the start of Q4, although the extent of the fall was the softest since June. Eurozone manufacturers once again trimmed purchasing activity, as they have done every month since July 2022. Amid this sustained tapering of input buying, pre-production stocks shrank at a sharp rate. Nevertheless, surveyed firms reported delivery delays from suppliers for a second month running. Employment was cut further at the start of Q4. Despite easing, the rate of job shedding held close to September’s 49-month record. Another marked drop in staffing capacity came amid a further sharp fall in backlogged work and a deterioration in business confidence. Eurozone manufacturers’ growth expectations were at their weakest in a year. Manufacturing costs fell in October, with these being passed on to customers as charges for goods leaving the factory gate were discounted to the greatest extent in six months. Commenting on the PMI data, Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said, “There is one bit of good news in these numbers: the recession in the manufacturing sector did not deepen further in October. Production dropped at a slower pace than in the previous month, and new orders fell less sharply.” He added, “It is not encouraging that inventory drawdowns for purchased materials continue at an unusually high pace. The ongoing reduction in inventories is obviously related to the fact that companies purchased and stockpiled materials and intermediate goods at an unprecedented scale in 2021 and 2022.” The economist pointed out that sluggish global demand gives companies no reason to restock, which in turn weighs on the economy. “The environment in the industry remains deflationary. This is good news for the purchase departments, but it seems companies are forced to pass on the corresponding price reductions in full to their customers. This points to fierce competition… We assume that China plays an important role here.” Thumbnail photo: Shutterstock