HOUSTON (ICIS)–Recycled Plastics analyst Corbin Olson and US Recycled Plastics senior editor Emily Friedman discuss the main takeaways from the latest round of corporate quarterly earnings calls, as they relate to the US recycled plastics industry. Key takeaways included: Consumer Packaged Goods (CPG) companies largely showed positive North American sales volumes, though some continue to see negative volumes due to the current inflationary environment. Durables markets, such as pipe and composite decking which use recycled plastic as a raw material, showed moderate progress, with weakness in agricultural and residential end markets. Broader economic softness in construction, automotive and housing continues to exert downwards pressure. Waste management companies largely saw strong earnings, with several investing in recycling collection and sortation infrastructure, but also in downstream in plastics recycling capacity. Republic Services notes progress on their Polymer Centers. Virgin petrochemical players continue to integrate with recycling operations Dow acquires Circulus LyondellBasell pending FID on Houston chemical recycling unit ExxonMobil pledges increased chemical recycling capacity in 2025 Eastman shows progress on operation of Kingsport methanolysis facility, lowers earnings guidance PET sales volumes increase, amid weaker market pricing; R-PET forecasts remain strong for future demand Additional questions or concerns? Please contact us.

Baltic countries notify Russia and Belarus of intention to unplug from BRELL area ENTSO-E synchronization scheduled for early 2025 to link Baltic countries to continental Europe Poland, Baltic countries working on backup line BUCHAREST (ICIS)–The three Baltic countries Estonia, Latvia and Lithuania, are preparing to synchronize with the European Network of Transmission System Operators for Electricity (ENTSO-E) system early next year as they are taking the final steps to decouple from the Russian and Belarusian grids. Their electricity transmission system operators Elering, AST and Litgrid, have already notified Moscow and Minsk of their intention to unplug from the BRELL area (Belarus, Russia, Estonia, Latvia and Lithuania). The deadline to send the notification was August 7. The BRELL agreement under which they had been connected with Belarus, the Russian exclave of Kaliningrad and Russia itself since Soviet days is due to expire on February 7 2025 and the three Baltic operators are planning to disconnect from it altogether the following day. The interconnection with the Continental Europe Synchronous Area has been scheduled for February 9. The interconnection with the continental grid operating under the umbrella of the ENTSO-E is considered of strategic importance for the three countries and will be carried out through the 400kV LitPol link, connecting Lithuania and Poland. The line is currently operational and has a bidirectional transfer capacity of 500MW. However, once the synchronization is completed, fully aligning the three Baltic countries with the European grid, the capacity is expected to increase. The capacity that could be made available for commercial exchanges is yet to be decided. SYNCHRONIZATION TESTS Lithuania is connected with Latvia, which is in turn connected with Estonia. The three Baltic countries are expected to carry out preliminary tests before completing the synchronization. Lithuania and Estonia are connected via back-to-back lines with Sweden and Finland respectively. The aggregated capacity of the two lines to Finland and one line to Sweden is 1.7GW. Synchronization is to take place via the LitPol line, with other countries synchronizing through the Lithuanian system to which they are connected. Susanne Nies, energy expert at Helmholtz Zentrum Berlin, a Germany-based think tank, told ICIS that the test would involve decoupling from the grids of Belarus, Kaliningrad and Russia itself and operating in full isolation for a period of time. The island mode test is required to ensure the countries can operate at a stable frequency of 50Hz in conditions of peak winter demand. The three Baltic countries’ aggregated peakload capacity is around 4.5GW and their baseload capacity is around 1.68GW. Lithuania, Latvia and Estonia were fully prepared for the island mode test, according to Nies, having deployed all the necessary infrastructure and IT systems needed to strengthen and stabilize the grids ahead of the synchronization. She added that Kaliningrad, which becomes an island after synchronization, has passed two tests successfully and can be fully self-sufficient, providing electricity supplies to its one million people from two combined cycle gas turbine power plants. Nies, who has been following the Baltic project since it was launched in 2015, said the purpose of the synchronization with ENTSO-E was primarily to guarantee security of supply rather than commercial exchanges. For now, the existing line will be exempt from the EU’s 70% rule, she added, which enters in force in 2025 and requires electricity grid operators to make available 70% of the transmission capacity for cross-border trading. BACKUP There is also a need to build an additional line to ensure that in case of risks to the existing connecting infrastructure or generating capacity in the Baltic area, the additional line would provide backup, Nies added. The Baltic operators and their Polish counterpart, PSE, are now considering whether the backup line should be built along railroad or motorway connections, both of which are being developed between Poland and Lithuania. Nies said plans to build the Harmony Link, a subsea cable connecting Lithuania to Poland, were no longer being considered amid security fears following suspected attacks on subsea energy infrastructure in the Baltic Sea in recent years. High-voltage line solutions have also become more expensive. Baltic synchronization has been supported by the EU, with funding from the Connecting Europe Facility amounting to €1.2 billion and covering around 75% of the project’s eligible costs.

LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: 3rd ICIS Recycled Polymers Conference 7 November in Berlin, Germany Colourless (C) R-PET UK flake price range narrows Turkish bales, flake prices rising in August Market participants looking ahead to September and end of holiday period

HOUSTON (ICIS)–Celanese has lifted the force majeure it declared on acetic acid and vinyl acetate monomer (VAM) sold in the western Hemisphere, the US-based acetyls producer said on Thursday. Celanese had declared force majeure earlier in the year after two feedstock suppliers suffered from disruptions. During an earnings call, Celanese said the effect of the force majeure was limited because of soft overall demand amid a difficult macro-economic environment. Thumbnail shows adhesive, which is typically made with VAM. (Image by Shutterstock)

HOUSTON (ICIS)–Navigator Holdings, the largest fleet owner of handysize liquefied gas carriers, announced it is undertaking a co-investment with Attis Clean Energy into Ten08 Energy, which is creating a production export facility in Texas. Revealed this past May, clean ammonia developer Ten08 is planning an industrial-scale hybrid blue and green ammonia production export facility to be located on the Texas Gulf Coast. The goal is to produce the most competitively priced ammonia molecule to help decarbonize the power, shipping, fertilizer and chemicals industries. The first phase, comprising 1.4 million tonnes/year of ultra-low carbon ammonia production, is expected to commence operations in late 2029 or early 2030. Navigator said its financial commitment is currently $2.5 million and complements the development capital from lead investor Attis who made its initial investment to fund development until a final investment decision is concluded. The company also received an option to make a larger investment once the investment decision is made of up to $100 million of preferred equity towards construction of the terminal and export infrastructure of the project, with potential further investments in subsequent expansions. The parties intend to offer an integrated service of US-based clean ammonia production combined with international seaborne transportation of the ammonia on ammonia-powered gas carriers to customers in Europe and Asia. “This investment is yet another example of our commitment to growth through energy infrastructure projects and meaningfully supports our existing ammonia shipping business,” said Navigator Holdings CEO Mads Peter Zacho. “Clean ammonia is crucial to the success of the energy transition for both power generation and carbon free shipping, and the Ten08 project will play a critical role in further developing the clean ammonia industry.”

HOUSTON (ICIS)–Nutrien said global potash demand during H1 2024 has been supported by favorable consumption and low channel inventories in North America and southeast Asia, with global nitrogen being boosted by steady demand and continued supply challenges in key producing regions. In its Q2 earnings release the Canadian fertilizer major said it is also seeing that there are expectations which have been created for record US corn and soybean yields, that have pressured crop prices. For the potash segment Nutrien said the settlement of contracts with China and India in July is expected to support demand in standard grade markets in the second half of this year. The producer said that the uptake on the summer fill program it offered in North America has been strong, and as such it has raised full-year global potash shipment forecast from 69 million tonnes to 72 million tonnes. It further said it expects a relatively balanced market in H2 2024. The company showed that potash sales volume guidance has been increased from 13.2 million tonnes to 13.8 million tonnes due to expectations for higher global demand in 2024. It noted that the range does reflects the potential for Canadian rail strike in the second half which would have a relatively short duration. Looking at the situation with global nitrogen, Nutrien said Chinese urea export restrictions have been extended into the second half and natural gas-related supply reductions could continue to impact nitrogen operating rates in Egypt and Trinidad. The company said US nitrogen inventories were estimated to be below average levels entering H2 2024, contributing to strong engagement the summer fill programs. Nitrogen sales volume guidance has been narrowed from 10.7 million tonnes to 11.1 million tonnes as Nutrien continues to expect higher operating rates at their North American and Trinidad plants, It is also counting on a growth in sales of upgraded products such as urea and nitrogen solutions. While end user demand has taken its typical summer slump, Nutrien said they expect buying for crop inputs in North America to remain strong in Q3 as growers aim to maintain optimal plant health and yield potential. With that view it noted that good affordability for potash and nitrogen will be supportive of the upcoming fall application rates “Crop input demand remains strong, and we raised our full-year outlook for global potash demand due to healthy engagement in all key markets,” said Ken Seitz, Nutrien president and CEO. “Our upstream production assets and downstream retail businesses in North America and Australia have performed well in 2024.”

HOUSTON (ICIS)–The 2024 Atlantic hurricane season is likely to remain extremely active, the National Oceanic and Atmospheric Administration (NOAA) said on Thursday in an update to its previous forecast. The only change to the previous forecast, which predicted the greatest number of hurricanes in the agency’s history, was a slight reduction in the number of named storms, from 17-25 to 17-24. A storm is named once it has sustained winds of 39 miles/h (63 km/h). “The hurricane season got off to an early and violent start with Hurricane Beryl, the earliest category-5 Atlantic hurricane on record,” NOAA Administrator Rick Spinrad said. “NOAA’s update to the hurricane seasonal outlook is an important reminder that the peak of hurricane season is right around the corner, when historically the most significant impacts from hurricanes and tropical storms tend to occur.” Atmospheric and oceanic conditions continue to support an above-normal 2024 Atlantic hurricane season, with a 90% probability of this result, NOAA said. There is only a 10% chance of a near-normal season in 2024 and a negligible chance of a below-normal season. Forecasters said the Atlantic Ocean basin is expected to be remarkably active due to several factors: Warmer-than-average sea surface temperatures in the tropical Atlantic Ocean and Caribbean Sea. Reduced vertical wind shear. Weaker tropical Atlantic trade winds. An enhanced west African monsoon. These conditions are expected to continue into the fall, NOAA said. Of note, the dry Saharan air that prevented tropical storm development during portions of the middle of the summer is expected to subside in August. Another factor this year is the possibility of La Nina developing in the coming months. Hurricanes and tropical storms can disrupt the North American petrochemical industry because many of the nation’s plants and refineries are along the US Gulf Coast in the states of Texas and Louisiana. In 2022, oil and natural gas production in the Gulf of Mexico accounted for about 15% of total US crude oil production and about 2% of total US dry natural gas production, according to the US Energy Information Administration (EIA). Even the threat of a major storm can disrupt oil and natural gas supplies because companies often evacuate US Gulf platforms as a precaution. The updated hurricane forecast from Colorado State University’s (CSU’s) Weather and Climate Research department also predicted an extremely active season, expecting 23 named storms, 12 hurricanes and six major hurricanes. The Atlantic hurricane season runs through 30 November. See the Beryl and Gaemi: Impact on Chemicals topic page

HOUSTON (ICIS)–Chemical companies are expecting a lacklustre second half of the year, but, so far, they will unlikely suffer through a recession, despite the spate of pessimistic economic data and the worst stock-market selloff in more than a year. The financial press has said that much of the selloff was caused by investors abandoning the Japanese carry-over trade. Chemical executives have not warned of a possible recession during their earnings calls. It is unclear if recent events will increase the likelihood of larger and more frequent rate cuts by the Federal Reserve. SO FAR, STATISTICS DO NOT INDICATE RECESSIONThe recent selloff in the stock market was enough to give anyone a jolt. The major US indices had three consecutive trading days of selloffs, with the last one on Monday causing declines that exceeded 2%. It was the worst day in more than a year. The weakness of the subsequent relief rally is also concerning, with the declines resuming on Wednesday. But the stock market is not the economy, and, so far, the four key statistics used to measure its health do not point to a recession. One of those statistics, non-farm payrolls, grew by 114,000 in July, a pace below the expectations of most economists. While the US had a bad month, it is still adding jobs, said Kevin Swift, ICIS senior economist for global chemicals. Moreover, the payroll statistics indicate that some of the weakness in the data was caused by the effects of Hurricane Beryl, Swift said. Two other key statistics are still expanding, he said. Those are industrial production and real personal income less transfer payments. Only real business sales have shown softness, Swift said. PROSPECTS STILL WEAKThe unlikely risk of a recession provides cold comfort to the chemical industry, which has spent months waiting for a recovery after what many described as the worst destocking cycle ever. Almost universally, companies have given up on the prospects of a second half recovery. Improvements in profit will have to come internally from cost-cutting or efficiency measures. The market will not help. Consumers have largely spent the excess savings that they pocketed from government stimulus and support that followed the pandemic, Swift said. The lower quintile of consumers is under pressure. Chemical companies noted stress among consumers who are more sensitive to costs, such as those who buy paints and coatings for do-it-yourself (DIY) projects. They are buckling under the weight of elevated interest rates, which have made housing and consumer durables less affordable. Before the markets for such items improve, Dow said that mortgage rates need to fall towards 5%. The prospect of declines will depend on expectations for the benchmark federal funds rate, which the Federal Reserve will likely decide to lower at its next meeting on September 18. Even then, it will take time for those rate cuts to trickle down to chemical markets. Huntsman said the lag is typically about two quarters. Insight article by Al Greenwood Thumbnail shows an indicator board for a stock exchange. Image by BIANCA DE MARCHI/EPA-EFE/Shutterstock

LONDON (ICIS)–India’s Hygenco Green Energies has signed a memorandum of understanding (MoU) with Mitsubishi Power to explore delivering green hydrogen and ammonia-fired gas turbine combined cycle (GTCC) power plants. The agreement includes supplying green fuel for Mitsubishi Power’s GTCC technology and developing commercially viable green hydrogen and ammonia production assets on a ‘build-own-operate’ or ‘gas-as-a-service’ basis. “We are excited to leverage our expertise in green hydrogen and ammonia to support the decarbonization of power generation and contribute to a sustainable energy future, ” said Hygenco CEO Amit Bansal. The partnership, backed by financial support from the Japan International Cooperation Agency (JICA), will provide its integrated solutions in India and globally, Hygenco added in a statement.