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Ethylene22-Jul-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 19 July.
Westlake appoints
Jean-Marc Gilson as new CEO, effective
today
US-based chemical and building materials
producer Westlake Corp has appointed Jean-Marc
Gilson as president and CEO, effective 15 July.
He succeeds Albert Chao, who becomes executive
chairman of the Westlake board of directors.
SW ’24: US
fertilizer demand lacking as farm economics
unsupportive
Unfavorable farming fundamentals, including
weaker grain prices, high cost of credit, and
weather issues will continue to hit demand for
fertilizers, said market participants on the
sidelines of the Southwestern fertilizer
conference (14-18 July).
SHIPPING:
USG-Asia liquid chem tanker rates plunge on
ample space availability after
Beryl
Liquid chemical tanker rates from the US Gulf
to Asia are plunging this week as plant
shutdowns and delays in the aftermath of
Hurricane Beryl have led to “gaping large holes
of space”, shipping brokers said on Wednesday.
INSIGHT: OUTLOOK:
US chems may see revival of programs, UN
plastic treaty
The US chemical industry could see the return
of some popular trade and chemical-safety
programs later this year, and customers of the
major railroads could get their first chance to
switch carriers if they get bad service.
Global IT issues
impact energy trading; Trayport services
return
IT issues that impacted energy trading systems
on Friday morning were gradually being
resolved, with market participants regaining
access to critical applications.
ICIS Economic
Summary: US eyes coming interest rate cuts as
consumer spending, inflation
eases
With solid progress on disinflation and the
labor market easing, financial markets are
sharpening their focus on the coming interest
rate cut cycle, with the first move expected in
September. Ten-year Treasury yields are
collapsing and economically sensitive stocks
surging, as consensus moves to as much as three
cuts of 25 basis points by the Federal Reserve
in 2024 and further easing next year.
Speciality Chemicals22-Jul-2024
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on
19 July.
NEWS
Braskem Idesa
ethane supply more stable, PE prices to recover
in H2 2025 – exec
Supply of ethane from Pemex to polyethylene
(PE) producer Braskem Idesa is now more stable
after a renegotiation of the contract – but the
global PE market remains in the doldrums,
according to an executive at the Mexican firm.
INSIGHT:
Colombia’s wide single-use plastics ban kicks
off amid industry reluctance
Colombia’s single-use plastic ban, which
affects a wide range of products, kicks off
amid some industry reluctance after a hurried
implementation, and with provisions to revise
the legislation after a one year trial period.
Brazil’s
chemicals capacity utilization falls to record
low in May at 58%
The utilization rate at Brazil’s chemical
plants fell to 58% in May, the lowest level
since records began in 1990, the country’s
chemicals trade group Abiquim said on
Wednesday.
Brazil’s floods
hit GDP growth in 2024 but strong recovery in
2025 – IMF
The IMF has revised Brazil’s economic outlook
for 2024, with GDP growth now forecast at 2.1%,
down from an earlier projection of 2.2%,
because of the floods in Rio Grande do Sul.
Mota-Engil, PEMEX
agree to build new ammonia, urea and AdBlue
plant in Mexico
Mota-Engil, through its subsidiary MOTA-ENGIL
MEXICO, has signed an agreement with Pemex
Transformación Industrial, a subsidiary of
state-owned energy major Petróleos Mexicanos
(“PEMEX”), to construct a fertilizer plant in
Escolin in the state of Vera Cruz.
Harvest Minerals
undertakes rare earth elements exploration at
Brazil fertilizer project
Fertilizer producer Harvest Minerals announced
a two-phase rare earth elements exploration
program has commenced at its Arapua project in
Brazil.
Stolthaven
Terminals chosen as potential operator for
Brazil green ammonia export
terminal
Logistics firm Stolthaven Terminals announced
that in cooperation with Global Energy Storage
(GES), it has been selected as the only
potential operator to design, build and operate
a green ammonia terminal in Brazil to be
located within the industrial export zone at
Pecem in the state of Ceara.
Silver Valley
Metals selling Idaho project to refocus on
Mexico lithium and SOP
project
Brownfield exploration company Silver Valley
Metals announced it has signed an asset
purchase agreement for the Ranger-Page project
in Idaho which will allow it to refocus efforts
at its lithium and potash project in central
Mexico.
BHP enters into
further agreement with Vale over 2015 Brazil
dam failure
BHP announced it has entered into an agreement
with Vale regarding group action proceedings in
the UK in respect of the Fundao Dam failure in
Brazil which occurred in 2015.
PRICING
Lat Am PE
international prices stable to up on higher US
export offers
International polyethylene (PE) prices were
assessed as steady to higher across Latin
American countries on the back of higher US
export offers.
PP domestic
prices fall in Argentina on sluggish demand,
ample supply
Domestic polypropylene (PP) prices were
assessed lower in Argentina on the back of
sluggish demand and ample supply. In other
Latin American countries, prices were
unchanged.
US Gulf sees PVC
price decline, Latin America stays
stable
Polyvinyl chloride (PVC) demand in Brazil has
shown fluctuations from weak-to-stable this
July, accompanied by sufficient supply.
Although market prices have stabilized, local
prices continue to face pressure following a
recent price drop in the US Gulf market.
Petrochemicals22-Jul-2024
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which looks at Europe’s political centre.
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.
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Polyethylene Terephthalate22-Jul-2024
LONDON (ICIS)–Senior editor for polyethylene
terephthalate (PET), Caroline Murray, and
senior editor for Recycling, Matt Tudball,
discuss the current state of the PET and
recycled PET (R-PET) markets and the
uncertainties that both face for the rest of
the year, including:
Lower-than-expected PET demand
PET exports head out of Europe
High freight costs hit imports
Upcoming recycled content targets for R-PET
Lack of clarity about recycling legislation
Limited availability of food-grade R-PET
pellets
Speciality Chemicals22-Jul-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 19 July.
Europe PX to face weaker
downstream demand, support from higher freight
costs
The European paraxylene (PX) industry is
heading towards the second half of the year
sandwiched between the news of structural
downstream production cuts and the temporary
support from high freight rates from Asia,
which is making domestic production of PX
derivatives more appealing than imports.
Ursula von der Leyen wins
second term for top EU job, stresses need for
EU competitiveness
Ursula von der Leyen on Thursday secured her
re-election to a second five-year term as
President of the European Commission, and
identified competitiveness as the most pressing
issue facing the EU.
Europe BDO demand
recovery in 2024 unlikely, logistics
disruptions in focus
After the uptick in domestic consumption during
H1 2024 compared to prior expectations, the
European butanediol (BDO) market is expecting a
return to lacklustre demand trends with trade
flow challenges still a key factor in dynamics.
Europe MX H2 demand
remains mired in deep waters
Demand for mixed xylenes (MX) in the European
market was subdued in the first half of the
year, with the outlook remaining bearish for
the rest of 2024.
Europe shows shoots of
recovery as market bottoms out – IMF
Strong service sector performance and robust
exports through 2024 amid cooling inflation
points to the eurozone economy bottoming out
following the emergence of tentative green
shoots during the first quarter of the year,
the IMF said.
Freight chaos, trade
dispute could support EU epoxy in H2, rebound
unlikely
Deep-sea freight and logistical challenges,
along with the EU antidumping probe on several
Asian epoxy imports could trigger shifts in
favour of local sourcing in the second half of
the year, although optimism remains low
regarding any recovery in a still difficult
climate.
Polyester Staple Fibres22-Jul-2024
SINGAPORE (ICIS)–Reliance Industries Ltd’s
(RIL) oil-to-chemicals (O2C) business posted a
14.3% year-on-year drop in earnings in its
fiscal first quarter ending June 2024 on poor
chemicals margins, the Indian conglomerate
said.
O2C results
in 10 million rupees
(Rs)
Apr-June 2024
Apr-June 2023
% Change
Revenue
157,133
133,031
18.1
EBITDA
13,093
15,286
-14.3
Exports
71,463
69,006
3.6
– Revenue for the period rose primarily on the
back of higher product prices in line with
Brent crude price gains, and increased volumes
due to strong domestic demand, the company said
on 19 July.
– Fiscal Q1 overall earnings before interest,
tax, depreciation and amortisation (EBITDA)
margin dropped to 8.3% from 11.5% in the same
period of last year.
– On a year-on-year basis, April-June domestic
polymer and polyester demand increased by 8%
and 5%, respectively.
– RIL’s consolidated group profit after tax
fell by 4% year on year to Rp175 billion ($2.09
billion) in April-June 2024.
Polymers- Fiscal Q1
polymer margins were down by 0.5% to 16.9% year
on year due to firm naphtha prices.
Product margin over
naphtha
April-June 2024
($/tonne)
April-June 2023
($/tonne)
% Change
Polyethylene (PE)
330
397
-16.9%
Polypropylene (PP)
318
381
-16.5%
Polyvinyl chloride (PVC)
371
373
-0.5%
Polyester
– Paraxylene (PX) and monoethylene glycol (MEG)
margins over naphtha decreased year on year due
to higher naphtha prices.
– “PTA [purified terephthalic acid] margins
were impacted adversely due to high inventory
with Chinese producers and increased
competition,” the company said.
– On a year-on-year basis, domestic polyester
demand in fiscal Q1 increased by 5%, driven by
strong growth in PET, which was up 27% due to
“higher demand from the beverage segment on
account of summer season and elections”.
($1 = Rs83.7)
Gas22-Jul-2024
Seeks optimization
opportunities
Saudi Aramco also said interested in
Tellurian
Woodside has busy development
plans
SINGAPORE (ICIS)–Australian producer Woodside
Energy said it would buy all outstanding shares
of US LNG developer Tellurian and Driftwood LNG
for approximately $900 million at $1.00 per
share in an all-cash deal for a transaction
valued at $1.2 billion, according to a 22 July
news release .
“It adds a scalable US LNG development
opportunity to our existing approximately
10mtpa of equity LNG in Australia. Having a
complementary US position would allow us to
better serve customers globally and capture
further marketing optimisation opportunities
across both the Atlantic and Pacific Basins,”
Woodside CEO Meg O’Neill said in the release.
“The Driftwood LNG development opportunity is
competitively advantaged. Woodside expects to
leverage its global LNG expertise to unlock
this fully permitted development and expand our
relationship with Bechtel, which is the EPC
contractor for both Driftwood LNG and our Pluto
Train 2 project in Australia.”
Tellurian’s board recommended
shareholders approve the transaction and
provided further details in a news
release.
As reported,
ICIS noted that Tellurian was in play in
late June, and Woodside was said to be
vying with Saudi Aramco for the project.
Tellurian has struggled for years with the
proposed 27.6mtpa Driftwood project, going
through management and financial changes that
included cancellation of LNG supply deals.
But Driftwood, near Lake Charles, Louisiana, is
a fully permitted, pre-final investment
decision (FID) prospect, that includes Phase 1
(11mtpa) and Phase 2 (5.5mtpa). Woodside is
likely targeting FID readiness for Phase 1 from
the first quarter of 2025.
O’Neill repeated to an investor briefing on 22
July that the transaction positions Woodside to
be a “global LNG powerhouse”.
The company aims to use a mix of offtake from
Driftwood into its own marketing portfolio and
retain tolling volumes while it works on
selecting “high-quality partners” to scale up
initial operations and eventually sell down its
stake to around 50%, O’Neill told investors on
a call.
Sources said Saudi Aramco could be among
possible investors.
Woodside reports second quarter earnings on 23
July.
BUSY WOODSIDE
Last week, Woodside
said that talks with Timor Leste (East
Timor) on developing a “mutually beneficial and
commercially viable “Greater Sunrise field has
made progress with finer details to be unveiled
in a concept Study being undertaken by Wood PL
due “no later than the fourth quarter of this
year.”
The Democratic Republic of Timor-Leste and the
Commonwealth of Australia, along with the
Sunrise Joint Venture (comprising TimorGAP
(56.56%), Woodside (33.44% and Operator), and
Osaka Gas (10%)) are pleased to provide an
update on Greater Sunrise negotiations.
Offshore natural gas and condensate resources
were first discovered in 1974, and located near
a feed gas source to Australia at Bayu-Undan,
which faces declining supply.
Yet,
the fields remain undeveloped as the
stakeholders differ on the fiscal terms and the
location of the downstream operations.
According to a report released in May 2018 by
the Permanent Court of Arbitration, the
pipeline from the fields would either go to the
existing 3.7mtpa Darwin LNG export project in
Australia or to a greenfield 5mtpa Timor LNG
project at Beaco on the south coast of
Timor-Leste.
The failure in reaching an agreement ended up
having global portfolio major Shell and US
supplier ConocoPhillips selling their shares to
Timor Gas & Petroleo (Timor Gap) in late
2018.
Timor Gap senior officials have expressed their
determination regarding getting gas pumped to
their island as it is “essential to
Timor-Leste’s future economic growth and
development”.
In June, Woodside
announced a revised leadership structure
aiming for a simplified operating model to
aggregate project execution, integrate
traditional and new energy growth and
opportunity, streamline corporate strategy
activities, and establish a dedicated senior
team for human resources, legal and external
affairs.
In May, the Japan Bank for International
Cooperation (JBIC) signed a $1 billion loan
agreement with a unit of Woodside that along
with loans from private financial institutions
raises $1.45 billion to assist Woodside in
developing the
Scarborough Energy Project , according to a
statement from JBIC.
The 8mtpa Scarborough energy project has
targeted the first LNG cargo in 2026, according
to Woodside.
(Adds further O’Neill comments)
Speciality Chemicals19-Jul-2024
HOUSTON (ICIS)–The US Coast Guard (USCG)
closed the Houston Ship Channel Friday
afternoon after a tow vessel sunk, according to
a notice from Moran Shipping.
It is unclear how long the channel will be
closed as emergency responders are currently
conducting search and rescue efforts, said JJ
Plunkett of the Houston Pilots.
The closure is at Light 122, near where the
Lynchburg Ferry offers passage from La Porte to
Baytown.
Moran Shipping said efforts are underway to
minimize pollution from fuel leakage and
mitigate impact on channel traffic and that
salvage operations could take at least 48
hours.
The following image from VesselFinder.com shows
many tankers (orange) and cargo vessels
(yellow) in the channel.
Source: VesselFinder.com
Light 122 is on the right side of the image
near the entrance to the channel.
Speciality Chemicals19-Jul-2024
HOUSTON (ICIS)–Global shipping container rates
edged slightly higher this week as they
continue to moderate after more than doubling
from early-May, and rates from Shanghai to the
US West Coast fell, according to supply chain
advisors Drewry.
Drewry’s composite World Container Index (WCI)
rose by just 1% and is up by just 1.2% over the
past two week, as shown in the following chart.
Average rates from China to the US East Coast
have continued to rise and are nearing
$10,000/FEU (40-foot equivalent unit), as shown
in the following chart.
Drewry expects ex-China rates to hold steady
next week and remain high throughout the peak
season.
Rates from online freight shipping marketplace
and platform provider Freightos showed similar
rates of increase.
Judah Levine, head of research at Freightos, in
noting the slower rate of increase also pointed
to signs that prices may have already peaked.
“Daily rates so far this week are ticking lower
and major carriers have not announced surcharge
increases for later this month or August,”
Levine said.
Levine said peak season likely started early
this year as retailers ordered early to beat
possible labor issues at US Gulf and East Coast
ports and as consumers continued to spend on
goods.
Emily Stausboll, senior shipping analyst at
ocean and freight rate analytics firm Xeneta,
said she is seeing some carriers already
lowering spot rates.
“This suggests a growing level of available
capacity in the market and shippers can once
again start to play carriers off against each
other – instead of feeling they need to pay
whatever price they are offered to secure
space. As the balance of negotiating power
starts to swing back towards shippers, we
should see spot rates start to come back down,”
Stausboll 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.
VOLUMES SHIFT TO WEST
COAST
The Port of Los Angeles saw a 10% increase from
the previous month and a slight increase year
on year in volumes, Gene Seroka, executive
director of the Port of Los Angeles said.
Some retailers are rushing to import volumes
ahead of the US presidential election in
November as Republican nominee Donald Trump has
proposed hiking tariffs, especially on goods
from China.
But a persistently strong economy is also
supporting the rise in imports.
“The US economy continues to be the primary
driver of our cargo volume and I expect to see
that continue in the months ahead,” Seroka
said.
Many importers shifted their deliveries to the
US East Coast in 2022 when congestion at West
Coast ports surged amid strong consumer demand
coming out of the pandemic.
The shift in volumes from the East Coast has
not led to any congestions at the West Coast
ports of Los Angeles and Long Beach, according
to the Marine Exchange of Southern California
(MESC).
“Vessels and cargo arriving, departing, and
shifting around the ports of LA and LB and
continue to move normally with no labor delays
and ample labor,” MESC executive director Kip
Louttit said.
Louttit also said the forecast for arriving
container ships over the next two weeks is
trending higher.
LIQUID CHEM TANKER RATES
Rates for liquid chemical tankers ex-US Gulf
were stable to softer this week, with decreases
seen on the USG-Asia and USG-Brazil trade
lanes.
From the USG to Asia, there has still been
interest in large cargoes, but volumes overall
have been slowing down.
The absence of market participants has caused
freight rates to stumble some, with more
downward pressure on smaller parcels due to the
small pockets of space readily available.
From the USG to Brazil, the list of ships open
in the USG continues to grow, with space still
available which could lead to continued
downward pressure and even lower rates.
Activity typically picks up during summer
months, but this is not currently being seen.
PANAMA CANAL
The Panama Canal will limit transits from
3-4 August because of planned maintenance.
The east lane of the Miraflores locks will be
out of service for concrete maintenance on the
east approach wall, the Panama Canal Authority
(PCA) said.
The PCA began limiting transits in July 2023
because of low water levels in Gatun Lake
caused by an extended drought.
Restrictions have gradually eased over the past
few months and are approaching the average
daily transits of 36-38/day seen prior to
impacts from the drought.
The improved conditions at the canal are likely
to improve transit times for vessels traveling
between the US Gulf and Asia, as well as
between Europe and west coast Latin America
countries.
This should benefit chemical markets that move
product between regions.
Wait times for non-booked southbound vessels
ready for transit have been relatively steady
at less than two days, according to the
PCA vessel tracker.
Wait times were less than a day for northbound
vessels and less than two days for southbound
traffic.
Focus article by Adam Yanelli
With additional reporting by Kevin
Callahan
Visit the ICIS Logistics – impact on
chemicals and energy topic
page.
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