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Crude Oil15-Jul-2024
SINGAPORE (ICIS)–China’s economy posted a
second-quarter growth of 4.7% year on year,
decelerating from the 5.3% pace registered in
the previous quarter, official data showed on
Monday.
On a quarter-on-quarter basis, the economy
posted a 0.7% growth in Q2, less than half the
1.6% expansion rate posted in Q1, according to
the National Bureau of Statistics (NBS).
In the first half of 2024, China’s GDP growth
averaged 5%, which was in line with the
government’s full-year target.
Persisting property slump, inadequate demand
and overcapacity remain big challenges for the
world’s second-biggest economy, analysts said.
Gas15-Jul-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 12 July 2024.
OUTLOOK: Asia naphtha market braces for supply
uncertainties
By Li Peng Seng 12-Jul-24 12:00 SINGAPORE
(ICIS)–Asia’s naphtha market sentiment is
expected to be choppy in the short term due to
a lack of clarity on arbitrage supplies against
volatile demand.
OUTLOOK: Asia EVA market loses shine as demand
from PV sector lags
By Helen Lee 11-Jul-24 11:25 SINGAPORE
(ICIS)–Demand for ethylene vinyl acetate (EVA)
from China’s photovoltaic (PV) industry is
likely to remain lackluster amid an oversupply
in the entire industry chain.
PODCAST: China to accelerate hydrogen
development via energy law
By Patricia Tao 10-Jul-24 11:25 SINGAPORE
(ICIS)–China’s recent decision to include
hydrogen in its draft national energy law
signals a transformative shift in the country’s
energy landscape.
China EV giant BYD to invest $1 billion in
Turkey production plant
By Nurluqman Suratman 09-Jul-24 15:24 SINGAPORE
(ICIS)–Chinese electric vehicle (EV) giant BYD
has agreed to invest $1 billion to set up a
manufacturing plant in Turkey which will
produce up to 150,000 vehicles per year.
PODCAST: Asia recycling market sees increased
interest in pyrolysis
By Damini Dabholkar 09-Jul-24 11:17 SINGAPORE
(ICIS)–Market players in Asia are increasingly
becoming more interested in the use of
pyrolysis oil as fuel.
OUTLOOK: SE Asia PE to see some demand recovery
in H2, challenges persist
By Izham Ahmad 09-Jul-24 15:07 SINGAPORE
(ICIS)–The southeast Asian polyethylene (PE)
market is expected to face modest demand
recovery in the second half (H2) of the year,
but this is likely to be negated by increased
supply and the threat of high freight costs
affecting import shipments.
Speciality Chemicals12-Jul-2024
HOUSTON (ICIS)–Average global rates for
shipping containers moderated this week, and
market players in Latin America have even seen
decreases in costs from Asia, but rates to the
US East Coast are likely to remain elevated as
deployed capacity remains tight.
Rates on the World Container Index (WCI) from
supply chain advisors Drewry edged higher by 1%
over the week, as shown in the following chart.
Rates from Shanghai to the US East Coast rose
by 2.5% over the week while rates from China to
the US West Coast rose by less than 1%, as
shown in the following chart.
Drewry expects freight rates to remain high
until the end of the peak season.
Rates from online freight shipping marketplace
and platform provider Freightos are slightly
higher to the West Coast and slightly lower to
the East Coast when compared with Drewry’s
assessments.
Judah Levine, head of research at Freightos,
said the convergence of peak season demand,
strained capacity on continued diversions away
from the Red Sea and Suez Canal, and congestion
at Asia ports are keeping upward pressure on
rates.
Kyle Beaulieu, senior director and head of
ocean Americas at Flexport, said in a webinar
this week that congestion has eased a bit over
the last month at key Asian ports, especially
Singapore.
But still, Beaulieu said deployed capacity was
91% in June and 94% so far in July.
He said general rate increases (GRIs) were
largely successful for 15 June and 1 July, but
that GRIs set to take effect on 15 July have
been cancelled.
He said there are no real signs of relief for
the Asia-USEC trade lane as capacity is
expected to remain tight.
For the near term, he expects the Red Sea
diversions to support higher rates, and those
higher rates to continue being spread across
all trade lanes.
A trader told ICIS this week that it is seeing
softer rates from Asia to South America.
Rates from Asia to South America were flat to
lower this week according to ocean freight
rates analytics firm Xeneta and as shown in the
following charts.
Additional reporting by Bruno Menini
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Ammonia12-Jul-2024
HOUSTON (ICIS)–The US Department of
Agriculture (USDA) is projecting higher corn
production but a decrease in soybean output
according to the July World Agricultural Supply
and Demand Estimate (WASDE) report.
In the monthly update corn production for
2024-2025 is forecast up by 240 million bushels
on greater planted and harvested area from the
June Acreage report, with yield unchanged at
181.0 bushels per acre.
The current outlook is also calling for larger
supplies, greater domestic use and exports, and
slightly lower ending stocks.
Corn beginning stocks are lowered 145 million
bushels, mostly reflecting a greater use
forecast with exports raised by 75 million
bushels based on current outstanding sales and
shipments to date.
Feed and residual use is up 75 million bushels
based on indicated disappearance in the June
Grain Stocks report. Total use has also been
lifted 100 million bushels with increases to
both feed and residual use and exports based on
larger supplies and lower expected prices.
With use rising slightly more than supply,
ending stocks are now being projected down by 5
million bushels.
The July WASDE revealed that the season-average
farm price received by producers is lowered by
10 cents to stand at $4.30 per bushel.
For soybeans production is projected at 4.4
billion bushels, which is a decrease of 15
million bushels based on expected lower
harvested area.
Harvested area, forecast at 85.3 million acres
in the June Acreage report, is now down 300,000
acres from last month with the yield forecast
unchanged at 52.0 bushels per acre.
With slightly lower beginning stocks, reduced
production and unchanged use, ending stocks for
2024-2025 are projected at 435 million bushels,
which is a decrease of 20 million bushels from
the June WASDE.
The update showed that the season-average
soybean price is forecast at $11.10 per bushel,
down 10 cents from last month.
The next WASDE report will be released on 12
August.
Ethylene12-Jul-2024
LONDON (ICIS)–European ethylene spot prices
have firmed week on week on the back of
better-than-expected demand amid higher
feedstock values and an increasing focus on
upcoming planned cracker maintenance outages.
Spot deals this week have been reported at
discounts of 32-35% on the pipeline, prior
deals had been at discounts of around 38-39%.
Producers say they have received several
requests for additional volume offtakes in
July. This is being attributed to a combination
of factors:
Improved sentiment from domestic PVC
players following the imposition of tariffs on
imports ex-Egypt and the US
Continued high container freight rates
which are restricting some derivative imports
Recent hurricane-related production and
logistics disruptions ex-US
Firmer month-on-month naphtha values which
is likely to drive discussions for the August
contract reference price settlement
Planned cracker maintenance due to get
underway from September particularly that due
in Germany with alternative supply flexibility
likely to be limited at that time due to
pressure issues on the ARG pipeline.
With crackers having been run at rates closely
aligned with contractual demand – still very
much below normal albeit better than in 2023 –
there is not too much flexibility for
additional volumes at short notice.
“Many will have assumed that ethylene supply
would always be plentiful,” a source said, “and
now they find that it is not the case.”
Cracker operators have avoided as far as
possible marginal tonne production as spot
appetite has been extremely low unless at deep
discounts to the prevailing contract price.
Crackers are underutilised, so in theory, there
is space to ramp up. But with August around the
corner and few indications at this stage how
long this better-than-expected demand will be
sustained, sources assume producers will be
reluctant to ramp up production in July.
Thumbnail photo: Flooding in Houston,
Texas, in the wake of Hurricane Beryl on 8 July
2024, one of the causes of firming ethylene
prices. Source: Carlos
Ramirez/EPA-EFE/Shutterstock
Recycled Polyethylene Terephthalate12-Jul-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including,
Colourless flake prices rise in Italy
Food-grade pellet (FGP) price range narrows
on improved demand
FGP proactive buyers move to secure volumes
ahead of Single Use Plastics Directive (SUPD)
implementation in January
Gas11-Jul-2024
LNG-to-power demand surges in early July
Coal availability improving but remains
lower on year
Temperatures retreat from peak but high
temperatures still expected
SINGAPORE (ICIS)–Record-high temperatures have
pushed up power demand, which could prompt
Japanese power utilities back in the spot
market for additional LNG volumes.
The weather outlook indicates the hottest
temperatures may have passed for now, after
peaking at 36C in Tokyo on 8 July. However,
high probability of above-average temperatures
remains through to the first half of
August.
A sustained heat wave would like drain LNG
storage and trigger restocking demand in the
autumn. Preliminary generation data for the
first ten days of July indicates higher
gas-fired generation compared to last year and
relatively sluggish coal dispatch.
POWER DEMAND
An ongoing heatwave pushed power consumption in
the first week of July up by 5% compared to the
same period last year and 6% from the 2018-22
average.
The increase in demand was even more pronounced
in the first half of the current week, at 10%
above the 2018-22 average. The current weather
forecast shows closer-to-average temperatures
in the next few days before pushing higher
again later in the month.
STORAGE
LNG storage for power generation remains
relatively stable but fell below 2m tonnes for
the first time since April in the week ended 7
July.
At 1.98m tonnes, this is down by 0.1m tonnes
compared to 9 July 2023, and still in average
territory. However, further pressure could
increase the need for replacement volumes in
late summer and autumn.
NUCLEAR
Shikoku Electric’s 890MW Ikata 3 is scheduled
to go offline for maintenance from 19 July to
30 September. Kansai Electric’s 826MW Takahama
1 and Kyushu Electric’s 890MW Sendai 1 are
scheduled to return from maintenance in late
August.
Nuclear availability is forecast 14% lower on
year in August.
COAL
Coal plant availability has been improving
since June but is still likely to fall 1% short
in July compared to the same month last
year.
Tohoku Electric’s 1GW Haramachi 2 is now
scheduled to restart on 24 July, five days
earlier than previous scheduled.
Ethylene11-Jul-2024
SAO PAULO (ICIS)–Earlier this week, the head
of Brazil’s chemical producers’ trade group
Abiquim accompanied President Luiz Inacio Lula
da Silva during his official visit to Bolivia
and returned with deals which could potentially
increase and liberalize natural gas supplies to
Brazil.
The chemicals industry in Brazil consumes
around a third of all-natural gas available,
according to Abiquim. Prices in the largest
Latin American economy, however, are
considerably higher than in the US, the other
large economy in the Americas.
Therefore, natural gas supplies – how to
increase them and how to make them more
affordable – has been on Abiquim lobbying
agenda for some time now.
Nearly a year ago, Brazil’s minister for energy
and mines, Alexandre Silveira, was the star
guest at an Abiquim event presenting a study on
how to increase supplies. At the time, Silveira
thanked them for the kind invitation but he
came to basically say the government had little
to do and it should be the private
sector leading the effort.
Truth be told, Brazil’s cabinet has much to say
and much it could do about energy. The rather
overwhelming and dominant position of Petrobras
– a ministry in all effects, with its CEO
always handpicked by whoever is the president –
gives the energy major a key role in what
Brazil’s energy landscape looks like.
Its interest in natural gas has always been
very limited, injecting the supplies it gets
from crude oil production back into the system.
However, Abiquim and Petrobras earlier this
year signed an agreement to explore joint
projects on natural gas supplies. In June,
Abiquim said in an interview with ICIS
there would be news on that front within weeks,
but nothing has been announced yet.
One year on since Silveira attend that event in
Sao Paulo, it seems industrial trade groups
come and go in Brasilia’s corridors of power as
they please.
The current left-leaning administration and
manufacturing companies have a common goal,
expressed in different wishes: the former, more
and better paid manufacturing jobs to please
Lula’s Workers Party (PT) core constituency;
the latter, higher sales and profits, and
improving their competitiveness can be an
important part of that.
Thus, this week Lula invited to go to Bolivia
with him trade groups or associations
representing sectors directly affected by
Brazil’s high natural gas prices.
Among them, Abiquim’s head, Andre Passos, with
whom ICIS will publish an interview next week.
Never shy in using strong words, Abiquim said
the week’s agreements in Bolivia represented a
“historic step” for Brazilian chemicals which
could come to partly fix its competitiveness
problem.
“The visit to Bolivia is in line with the
objectives of the Gas Para Empregar
[Gas for Jobs] program and could represent an
immense short-, medium- and long-term
opportunity for the natural gas market, with
the possibility of even using gas from
Argentina through Gasbol [pipeline connecting
Bolivia’s fields with Brazil’s south and most
industrialized states],” said Abiquim.
“Based on the conversations held, it will now
be possible to start rounds of negotiations for
the contracting of Bolivian and Argentine gas
without the participation of Petrobras, which
will be essential to increase competition in
the gas market, enabling greater liquidity, and
even helping to make natural gas from the
pre-salt viable.”
Abiquim added that Brazil’s Ministry of Mines
and Energy was “essential in making this moment
a reality” and in helping private players to
make progress on being able to directly
contract gas in Bolivia.
In Brazil, the Ministry for Energy and
Petrobras are the two decisive voices in energy
policy. Abiquim’s diplomatic words thanking the
ministry is just another way of saying they are
pleased to see Petrobras losing the nearly full
control it has had in issues related to the
natural gas supply from Bolivia.
This, of course, occurs as Abiquim’s largest
member and commanding voice is Brazilian
polymers major Braskem, of which Petrobras owns
36.1%.
A GIANT SEEKING
GASBrazil has for several years
been importing natural gas from Bolivia, via
the pipeline Gasbol, which links the producer’s
fields with Brazil’s southern and more
industrialized states. Gasbol is the longest
natural gas pipeline in South America with
3,150 kilometers (1,960 miles).
According to Brazil’s Ministry of Energy and
Mines, Bolivia is Brazil’s main supplier of
natural gas supplying two thirds of its
imports. Meanwhile, natural gas represents 86%
of Bolivia’s exports to Brazil.
Regarding natural gas, the trip this week aimed
at easing access to that gas for Brazilian
private sector players, until now quite
constrained in what they could purchase given
that natural gas bilateral trade has
practically been a state-controlled affair via
Petrobras.
That was one of Brazil’s delegation legs, led
by trade groups such Abiquim, Abrace Energia
representing energy consumers, trade group for
industrialists in Sao Paulo state FIESP,
Abvidro representing the glass sector, and
Aspacer and Anfacer, both representing the
ceramics industry.
Brazil’s minister for energy and mines,
Alexandre Silveira, and Petrobras’ new CEO,
Magda Chambriad, were also part of the
delegation.
While the company she now presides over may
lose the upper hand in natural gas trade with
Bolivia, Chambriad said – according to the
Ministry of Energy and Mines’ press office –
that the new natural gas production areas in
Bolivia are going through the environmental
licensing phase and could start up as soon as
2025.
“The increase in gas supply to Brazil
translates into lower prices in the country,”
concluded the ministry.
As it normally happens, many of the deals
signed this week will be worth only the paper
they are written in in some years’ time.
However, they could be meaningful if just a few
of them were to be implemented: the Bolivian
Ministry for Hydrocarbons and Energy, in charge
of all areas mentioned so far, published this
week as many as 12 press releases on as many
agreements.
For example, and again related to Brazil’s
thirst for natural gas, private companies had
conversations about potential imports from
Argentina but via the Bolivian Gasbol.
MERCOSUR – AND MILEILula
went to Bolivia after having visited Paraguay
for a summit of Mercosur, the trade bloc formed
by Argentina, Brazil, Paraguay, and Uruguay and
which this year welcomed Bolivia as a member.
However, Argentina’s Javier Milei refused to
participate in the summit, perhaps for the
best. He has insulted Lula so many times and in
so colorful manners that it may be hard to try
and establish any personal relationship – the
two have never met face to face.
To make his preferences clear, instead of
attending the Mercosur summit, Milei went to
Brazil’s state of Santa Catarina for an
international event of right-wing and far-right
figures.
“No political rift will prevent dialogue with
our Argentine brothers and sisters,” said
Silveira before travelling to the summit,
quoted by the public news agency Agencia
Brasil.
But increasingly more people are wondering what
Mercosur’s future will look like. Despite Lula
and his Spanish counterpart Pedro Sanchez good
intentions when Spain was the holder of the
EU’s rotatory presidency in 2023, both leaders
were unable to push their sides to conclude the
free trade deal between the two blocs, which
has been in the making more than 20 years.
The financial weekly The Economist also
wondered this week about the bloc’s importance,
highlighting Milei’s absence. In an opinion-ed
article – those without byline which would
represent the publication’s view – it said that
the host’s rebuffs to Mile for not attending
may well fall in deaf ears.
“It was an especially pointed snub.
Skipping the twice-yearly get-together of the
presidents of Mercosur, Milei chose instead to
speak to the hard right at a Conservative
Political Action Conference in Brazil … The
reality is that Mercosur is no longer so
important. Even the host, Santiago Peña of
Paraguay, admitted that ‘Mercosur is clearly
not going through its best moment’,” said the
article.
“Milei has never formally met Luiz Inácio Lula
da Silva, Brazil’s president, whom he slags off
as ‘corrupt’ and a ‘communist’ (Brazil’s
supreme court quashed Lula’s conviction – and
he is a socialist). But political
incompatibilities go back further: Jair
Bolsonaro, Brazil’s former leader, and Alberto
Fernández, Milei’s Peronist predecessor,
similarly shunned each other.”
THE FIGURES
In 2023, trade flows between Brazil and Bolivia
totaled $3.31 billion, with a surplus of $278
million for Brazil, according to official
figures.
Bolivia was the 35th main destination for
exports and the 30th country of origin for
Brazilian imports. Brazil was the main
destination for Bolivian exports and the second
country of origin for its imports.
The main products exported by Brazil to Bolivia
were those from the steel sector (iron and
steel, bars, angles, and profiles, 6.1% of the
total), and passenger cars (3.8%).
The main products imported by Brazil from
Bolivia were natural gas (86%) and chemical
fertilizers (4.8%).
Insight by Jonathan Lopez
Ethylene11-Jul-2024
HOUSTON (ICIS)–The conditions that helped make
Beryl become a hurricane before hitting Texas
chemical plants will persist through the rest
of the season, with meteorologists forecasting
11 more forming in the Atlantic basin.
Conditions are already conducive for
hurricanes even though the peak of the season
does not happen until the late summer.
Beryl still disrupted chemical operations
even though it was a relatively weak hurricane
when it made landfall in Texas.
The next hurricane could disrupt global
chemical markets if it damages terminals and
ports on the Gulf Coast.
BERYL’S KNOCKS OUT
POWEREven though Beryl was a
Category 1 hurricane – the weakest class – it
still caused more than 2 million outages in
Texas.
Many of the disruptions that Beryl caused to
the chemical industry were because of power
outages. A roughly equal number of disruptions
was caused by companies shutting down
operations as a precaution. Other disruptions
were attributed to bad weather.
PORT DISRUPTIONSBeryl’s
other major effect was on ports.
The ports of Corpus Christi, Freeport, Texas
City and Houston had shut down.
Beryl caused Freeport LNG Development to shut
down its operations.
CONDITIONS THAT MADE BERYL SO POWERFUL
WILL PERSISTBeryl illustrates
the destructive potential of a weak Category 1
hurricane that travels through parts of Texas
that host critical powerlines and ports.
The meteorology firm AccuWeather estimates
that total damage and economic loss caused
by Beryl was $28-32 billion.
Beryl was remarkable because, prior to making
landfall in Texas, it had become a Category 5
hurricane, the most powerful class under the
Saffir-Simpson scale.
It was the first time that such a powerful
hurricane had formed so early in the year,
something that US meteorologist attributed to
exceptionally warm ocean temperatures. The
surface temperatures at sea are already close
to what is typical during the mid-September,
the peak hurricane season,
according to the National Oceanic and
Atmospheric Administration (NOAA).
After Beryl made landfall in Mexico’s Yucatan
peninsula, it weakened into a tropical storm
before passing over more warm water in the Gulf
of Mexico.
There it strengthened rapidly and became a
hurricane once more before hitting Texas.
The warm waters that contributed to Beryl’s
strength will persist and should soon be joined
by La Nina, a weather phenomenon that also
makes hurricanes more likely.
METEOROLOGISTS RAISE HURRICANE
FORECASTEarlier this week, the
hurricane forecast for this year was raised by
meteorologists at Colorado State University’s
Tropical Weather & Climate Research.
The following compares the center’s latest
hurricane forecast to its update in June and to
the average for the years 1991-2020.
July
June
Average
Named Storms
25
23
14.4
Named Storm Days
120
115
69.4
Hurricanes
12
11
7.2
Hurricane Days
50
45
27.0
Major Hurricanes
6
5
3.2
Major Hurricane Days
16
13
7.4
Source: Colorado State University
Like NOAA, Colorado State University (CSU)
noted that extremely warm sea surface
temperatures and a possible La Nina are making
it more likely for hurricanes to form and
strengthen.
THE NEXT HURRICANE COULD CAUSE MORE
DAMAGEThe next hurricane can
prove to be a bigger logistical headache for
railroad companies. Beryl had caused only brief
disruptions at BNSF and Union Pacific (UP).
Beryl’s path did not threaten US oil and gas
production in the Gulf of Mexico. The next
storm could threaten those wells, causing
several energy producers to shut in production.
Damage to Gulf Coast oil, ethane, LPG and LNG
terminals could disrupt energy markets if the
outages last long enough.
Texas and the neighboring state of Louisiana
are home to most of the nation’s LNG export
capacity. Prolonged outages at LNG terminals
could lead to an oversupply of natural gas in
the US because producers could lose an outlet
to ship out excess capacity.
Prices for natural gas could consequently
fall. Prices for ethane tend to follow
those for natural gas, so they would also fall
in the event of a supply glut.
Texas ships ethane and liquefied petroleum gas
(LPG) to crackers all over the world. If the
next hurricane damages those terminals and
leads to a prolonged shutdown, it could have
global repercussions by interrupting shipments
of feedstock to crackers.
In the US, it could cause prices for those
products to plummet, especially for propane. US
midstream companies are already trying to ship
out as much LPG as possible because production
has been so prolific.
Over the years, US producers have exported
increasing amounts of polyethylene (PE) and
polyvinyl chloride (PVC).
If the next hurricane damages those plants,
then it would have a direct effect on global
petrochemical markets.
Insight by Al Greenwood
Thumbnail shows a distribution transformer
of a power line knocked down by Beryl. Image by
Reginald Mathalone/NurPhoto/Shutterstock
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