LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Rises on the low end of colourless flake narrows UK, eastern Europe ranges Colourless, blue bale prices rise in Italian monthly auctions Increased bale supply, tighter PET, cheaper R-PET imports

SINGAPORE (ICIS)–Energy major Shell on Friday said that it expects to book $2 billion in post-tax impairments following the sale of its Singapore assets and the suspension of construction at its biofuels plant in the Netherlands. The sale of the company’s Singapore Energy and Chemicals Park announced in May will result in a non-cash, post-tax impairment of $600 million to $800 million when it publishes its second-quarter results on 1 August, the company said in a statement. Shell reached an agreement to sell the assets on Singapore’s Pulau Bukom and Jurong Island to CAPGC, a joint venture between Indonesia’s Chandra Asri Capital and global commodities trader Glencore. The sale is expected to be finalized by the end of 2024. Meanwhile, the temporarily paused on-site construction work at its 820,000 tonne/year biofuels facility at the Shell Energy and Chemicals Park Rotterdam will result in an impairment of between $600 million and $1 billion. The facility is designed to produce sustainable aviation fuel (SAF) and renewable diesel made from waste. Separately, the company said that it expects adjusted earnings at its chemicals unit “to be close to break-even” in the second quarter after posting negative adjusted earnings of $113 million in the first quarter. The company expects an indicative chemicals margin of $155/tonne for the second quarter, up from $150/tonne in the first quarter and $153/tonne in the same period of last year. Chemicals utilization for the second quarter is expected to be at 78% to 82%, up from 73% in the first three months of 2024. Thumbnail photo source: Shell

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: China’s polypropylene (PP) exports in 2024, based on the January-May trends, could reach 2.6m tonnes. That would be double the level of 2023. And as exports surge, China’s self-sufficiency in PP looks set to see a similar dramatic increase. As recently as 2019, China’s PP net imports (imports minus exports) totalled 4.8m tonnes. If the January-May 2024 again continued, we would see full-year net imports of just 900,000 tonnes. Don’t say I didn’t warn you. In September 2021, the blog started to flag up the declines in Chinese PP demand growth combined with the surge in local capacity that created the very real prospect of China becoming a net exporter. And don’t assume that if China’s exports won’t remain in lower value homopolymer grades. China is said to be tripling its number of grades as it broadens its licensing of technologies. But in this ever-more muddle world, now that the Petrochemicals Supercycle is over, what is described above is just one scenario. In the short term, rising container freight rates might limit Chinese exports over the next few months. Or at the very least, we could see China’s exports focused more on southeast Asia because of higher freight rates to other destinations such as south Asia, South America and Africa. Another feature of a PP world turned upside down is that since 2020, China’s PP exports have been sent to a far wider range of destinations. We must also consider the impact of rising protectionism on China’s exports both in the short -and long-term. Confused? You should be, as this is the only sensible response. How do we see through the muddle? What recent history teaches us is that to understand petrochemicals markets, you must follow debts, demographics and geopolitics. Equally important, now that the Petrochemical Supercycle is over, are the effects of sustainability and climate change on demand and trade flows. The old ways of looking at markets no longer work. In the absence of a 100% accurate crystal ball, and with all these variables in play, the only sensible approach is broader and deeper scenario planning. 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.

SAO PAULO (ICIS)–The UK’s public broadcaster BBC was predicting a landslide victory for the center-left Labour Party after polling stations closed at 22.00 local time in London. According to the BBC exit poll, Labour would have won around 410 members of parliament (MPs) in the 650-strong House of Commons, with its leader Keir Starmer set to be the UK’s next Prime Minister. Incumbent Prime Minister Rishi Sunak’s Conservative party lost the overall majority won in 2019, suffering a severe defeat after losing more than 200 MPs. If the BBC exit poll is confirmed, the new House of Commons would be a more plural parliament, with the centrist Liberal-Democrats recovering much ground and the far-left Green Party and the far-right Reform party having achieved some meaningful representation. Earlier in 2024, the UK’s chemicals trade group the CIA said the upcoming cabinet must do more to encourage investment in manufacturing value chains, arguing the country is losing out in the battle to attract investment against competitors such as the EU, the US and China. 14 YEARS LATERLabour last occupied office in 2010 under the premiership of Gordon Brown, who succeeded Tony Blair in 2007. From 2010 on, Conservative leaders David Cameron, Theresa May, Boris Johnson, Liz Truss and Rishi Sunak have been the residents of Number 10 Downing Street, the official residence of the Prime Minister in central London. Behind them, a convulse decade-and-a-half in UK politics when voters decided by a small margin to withdraw from the EU in 2016, a process which was not concluded until 2021. From 2020 on, pandemic-related mismanagement and the energy crisis have kept the governing party trailing in opinion polls. On Thursday’s election, several ministers and key Conservatives figures would have lost their seat in parliament, according to the BBC’s exit poll. UK House of Commons Projections 2024 – BBC Election 2019 Change Conservative Party 131 365 -234 Labour Party 410 203 +207 Scottish National Party 10 48 -38 Liberal-Democrats 61 11 +50 Others 38 23 +15

SAO PAULO (ICISI)–Fears that Hurricane Beryl could cause widespread disruption to petrochemicals production in the Altamira hub, in the Mexican state of Tamaulipas, have now subsided as the hurricane weakens on its path through the Caribbean. Beryl was a powerful Category 5 hurricane until a few hours ago but has quickly weakened to a Category 3 as it heads towards the Mexican peninsula of Yucatan. After that, it is expected to weaken further and reach Tamaulipas and the US state of Texas a storm, much less destructive and not a cause of concern for industrial assets in those regions. A spokesperson for Alpek, one of Mexico’s main chemicals producers, said Beryl is now expected to only cause manageable rainfall in Altamira; that rainfall will be very much welcome after the area suffered a severe drought for months. “At the moment, the prediction is that it will only rain in Altamira [when Beryl passes through] and we do not expect it to have an impact in our operations,” said a spokesperson for Alpek. The petrochemicals hub in Altamira also hosts companies such Orbia, Dynasol, Cabot, or Chemours, among many others. None of the producers mentioned had responded to a request for comment at the time of writing. FROM DROUGHT TO RAINY SEASONAltamira’s petrochemicals players had been struggling with water restrictions for industrial players since May, when a severe drought in Tamaulipas prompted the authorities to restrict water supplies. The situation caused widespread disruption to chemicals production; in mid-June, it started improving as water supplies to households, first, and to industrial players later were re-established. The fact that Beryl is expected to cause only rainfall, without risk of flooding, will also be welcome. In an interview with ICIS in mid-June, an expert from supply chain consultancy Everstreams said that, while much awaited, rainfall in the form of storms or hurricanes could cause as much havoc as the drought had caused. “With flooding, there is potential for things like landslides and run-offs, which can block roads and highways, So, companies are hoping that it will be some kind of happy middle ground, where the rain is not too extreme as to present added challenges and issues,” said Everstreams’ Jena Santoro. Earlier on Thursday, the US’ National Hurricane Center (NHC) said Beryl should hit northern Mexico and southern US as a storm, which would spare industrial assets in those regions – including several petrochemicals hubs as well as refineries – from a big hit to operations. BUSY HURRICANE SEASONMeteorologists have warned that this year’s hurricane season could be the most active ever, with 17-25 named storms. Out of those, between eight and 13 are expected to be hurricanes; between four and seven should be major hurricanes. Major hurricanes are Category 3-5 storms with wind speeds of at least 111 miles/hour. Beryl’s unprecedented early development into a Category 5 hurricane has been attributed to unusually warm sea temperatures, a consequence of global heating. Source: US National Hurricane Center

SAO PAULO (ICIS)–Hurricane Beryl, which until 3 July was a powerful Category 5 hurricane, weakened to Category 3 by Thursday morning as it headed towards the Mexican peninsula of Yucatan. When it hits Yucatan, Beryl is expected to weaken into a storm, the US National Hurricane Center (NHC) said on Thursday morning. Therefore, industrial assets in northern Mexico and Texas – including several petrochemicals hubs as well as refineries – could be spared from a big impact if the forecasted path holds. In addition, few if any energy companies may choose to shut in US oil and gas wells in the Gulf of Mexico. Major US oil and LNG ports are also expected to avoid the worst of the storm. According to the current forecast, the hurricane will make landfall between the Mexican petrochemical hub of Altamira, Tamaulipas, and the US hub of Corpus Christi, Texas. “A westward to west-northwestward motion is expected during the next day or two, taking the core of Beryl away from the Cayman Islands through this afternoon and over the Yucatan Peninsula early Friday. Beryl is expected to emerge over the southwestern Gulf of Mexico Friday night and move northwestward across the southwestern Gulf of Mexico on Saturday,” said the NHC. “Reports from Air Force Reserve and NOAA [National Oceanic and Atmospheric Administration] Hurricane Hunter aircraft indicate that maximum sustained winds are now near 115 mph (185 km/h) with higher gusts.  Beryl is a category 3 hurricane on the Saffir-Simpson Hurricane Wind Scale.  Weakening is forecast during the next day or two, though Beryl is forecast to remain a hurricane until it makes landfall on the Yucatan Peninsula.” BUSY HURRICANE SEASON Meteorologists have warned that this year’s hurricane season could be the most active ever, with 17-25 named storms. Out of those, eight-13 should be hurricanes and four-seven should be major hurricanes. Major hurricanes are Category 3-5 storms with wind speeds of at least 111 miles/hour. Beryl’s unprecedented early development into a Category 5 hurricane has been attributed to unusually warm sea temperatures, a consequence of global heating. Source: US’ National Hurricane Center 

LONDON (ICIS)–The surge of populist far-right movements in recent EU and national elections are raising questions about the bloc’s ability to retain its role as the world’s climate policy pioneer. Many consumers are demanding a focus shift from climate targets to competitiveness and security. While these goals may gather momentum, Europe’s ambition to phase out fossil fuels to achieve climate neutrality will remain firmly on the political agenda. Nevertheless, the speed of implementing legislation or reaching stringent targets will depend on four key factors. Read the full ICIS white paper here .

LONDON (ICIS)–Gas In Focus deputy editor Marta Del Buono and Global Hydrogen Editor Jake Stones discuss UK parties’ pledges for the general elections and what do they mean for the energy market. Labour and the Greens and Conservatives favor renewables while Reform UK is going as far as scrapping Net Zero policies, fast tracking North Sea licenses and embracing fracking. Click here to watch

LONDON (ICIS)–The European Commission is to move forward with proposed plans to impose tariffs of nearly 40% in some cases to China-manufactured battery electric vehicles (BEVs), citing a level of state subsidy it terms as “unfair”. Following an investigation launched in October 2023, the Commission determined that the level of support provided for electric vehicle production in China was substantial enough to pose a “threat of economic injury” to EU producers. Discussions between Commission and China government representatives have “intensified” in recent weeks, and discussions continue around reaching a solution compatible with World Trade Organization (WTO) rules, the EU executive body added. Those talks have resulted in a slight reduction in overall tariffs being levied on some of China’s largest electric vehicle manufacturers compared to the rates set out in a 12 June pre-disclosure. Manufacturer BYD will face fresh tariffs of 17.4%, Geely 19.9% compared to earlier plans for 20%, and SAIC 37.6% compared to earlier plans for 38.1%. Other China BEV producers that co-operated with the investigation are subject to weighted duties of 20.8%, while the duties for non-co-operating companies will be set at 37.6%. The duties apply from 5 July for a minimum of four months, with a decision to be taken on whether to implement the levies long-term. If a final decision is taken to impose definitive duties, the tariffs will remain in place for five years, the Commission added. “Based on the investigation, the Commission has concluded that the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers,” the European Commission said in a statement. “The investigation has also examined the likely consequences and impact of these measures on importers, users and consumers of BEVs in the EU.” The French government has backed the move to investigate the impact of China subsidies on European BEV markets, while German Chancellor Olaf Scholz has warned against the move. Germany is one of Europe’s key auto manufacturers, with large global players in the sector such as BMW and Audi deriving a substantial portion of their international business from China. The German Association of the Automotive Industry (VDA) on Wednesday issued fresh public criticism for the plans, claiming that the tariffs will slow the growth of the electromobility sector and slow carbon reduction target progress. “The anti-subsidy tariffs would make electric vehicles more expensive on the European market or prevent them from being offered on the market at all,” the trade group said. Thumbnail photo: A dealership operated in Moscow, Russia, by Geely, one of the producers facing intensified sanctions. Source: Maxim Shipenkov/EPA-EFE/Shutterstock