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

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 1 November. Europe post-industrial bale price rises further squeeze R-PP margins Europe recycled polypropylene feedstock post-industrial bale values rose by €50/tonne in October, further squeezing already narrow margins in the downstream flake and pellet sector. Europe isocyanates consumption remains constrained Consumption for different isocyanates in the European market continues to be constrained with no major uptick forecast for the near term. Versalis’ moves show how Europe petrochemicals has reached tipping point Europe’s petrochemical industry has reached a tipping point. Supply glut gives Europe PO buyers “good power to negotiate” annual contracts Propylene oxide (PO) contract negotiations for 2025 are progressing slowly as buyers forecast good supply and are keen to secure more favorable terms. Europe MMA braced for sluggish and slowing Q4 Players in Europe’s methyl methacrylate (MMA) market are bracing themselves for sluggish demand in Q4, and a picture that is set to slow further as the year end approaches.

SINGAPORE (ICIS)–Oversupply and higher freight costs are driving down petrochemicals demand in India, with trades likely to remain subdued after the Diwali holidays. Prolonged monsoon season hurt pre-Diwali demand Seasonal demand lull begins mid-November US election worries weigh on Indian rupee Demand traditionally picks up post-Diwali but a prolonged monsoon season, coupled with ample inventories, has led to a lack of import demand which is unlikely to change for the rest of the year. India was on holiday on 31 October to 1 November for Diwali or the Hindu festival of lights. Sentiment among market players was mixed, with some hopeful that post-holiday demand will pick up in certain products like polyvinyl chloride (PVC) ahead of implementation of import certification deadline under the Bureau of Indian Standards on 24 December. Demand lull typically sets in after the holiday, particularly for the pharmaceutical and manufacturing sectors, until end-November, when operations are ramped up in preparation for the summer holidays – between May and August. Overall production in the south Asian country typically increases along with demand in the January-March period – India’s fiscal Q4. For isopropanol (IPA), India’s import demand will be dented by antidumping duties (ADDs) imposed on Chinese cargoes. In the ethanolamines and acrylonitrile butadiene styrene (ABS) markets, domestic supplies remains ample, with post-Diwali demand likely to remain soft. India is a major importer of Chinese petrochemicals. It has been adopting protectionist measures against Chinese exports amid an oversupply in the world’s second-largest economy, whose own domestic demand is weak. US ELECTIONS A CONCERN India’s economy is slowing down, causing the rupee (Rs) to depreciate, with petrochemical import discussions scant amid ample inventories. A weaker currency makes imports expensive. The rupee plummeted to a near-record low of Rs84.075 against the US dollar on 31 October, partly on uncertainties over the US elections results. The Reserve Bank of India (RBI) had intervened to limit the rupee’s fall, selling US dollars to stem the loss and allowing it to climb back from a record low of Rs83.79, according to newswire agency Reuters. At 05:08 GMT, the rupee was trading at Rs84.03 against the US dollar. There are concerns that intra-Asian exports by China would increase on the possibility of further US punitive tariffs on Chinese products if Donald Trump was elected a second time as US president. His administration in 2017-2021 kicked off the US-China trade war in 2018. Trump is running under the Republican ticket against Democrat Kamala Harris in the US elections, which will be held on 5 November 2024. Focus article by Jonathan Yee Additional reporting by Veena Pathare, Clive Ong, Angeline Soh, Aswin Kondapally, Hwee Hwee Tan and Pearl Bantillo

SINGAPORE (ICIS)–Oil prices rose by more than $1/barrel on Monday as oil cartel OPEC and its allies (OPEC+) delayed a planned December production increase by a month, and amid fears of an escalating conflict between Iran and Israel. China slowdown behind OPEC+ decision to delay output hike China Jan-Sept crude imports down 2.8% on year Mideast geopolitical tensions support market At midday, Brent crude rose by $1.12/barrel to $74.22/barrel, while US crude was up by $1.14/barrel at $70.63/barrel. Eight OPEC+ countries, led by Saudi Arabia and Russia, had intended to begin returning to producing 180,000 barrel/day from December. Instead, the group decided on 3 November to extend a plan for a 2.2 million barrel/day cut until at least the end of 2024. OPEC+ had previously delayed increasing production in October on weak demand from China’s faltering economy. China is the world’s second-biggest economy and the biggest importer of crude. Its crude imports on a year-on-year basis have been shrinking for five consecutive months, with September volume down 0.6% at 45.5 million tonnes. For the first nine months of 2024, China’s total crude imports declined by 2.8% year on year to 412.4 million tonnes, official data showed. China’s industrial profits in September, meanwhile, slumped by more than 27% year on year. “While the [output hike] delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+,” Dutch bank ING said in a note on Monday. “However, our balance continues to show that the market will be in surplus through 2025 unless OPEC+ continues with cuts through next year,” ING added. OPEC+ will next meet on 1 December. MIDEAST TENSIONS RISE Fears of growing unrest in the Middle East were also behind Monday’s crude gains on a potential retaliatory strike by Iran on Israel. Iran’s Supreme Leader Ayatollah Ali Khamenei promised retaliation against Israel on 2 November, following an attack by Israel that missed Iran’s energy and oil supplies on 26 October. The US and Israel has warned Iran against any retaliatory attack. Focus article by Jonathan Yee Thumbnail image: At the Qinzhou Port in in south China’s Guangxi Zhuang Autonomous Region – 22 October 2024. (Xinhua/Shutterstock)

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 1 November. Oil slumps as Mideast supply disruption concerns ease; China data weighs By Jonathan Yee 28-Oct-24 13:05 SINGAPORE (ICIS)–Oil prices tumbled by more than $4/barrel on Monday morning as fears over potential supply disruptions in the Middle East eased, with sentiment weighed down by a sharp contraction in China’s September industrial profits. Rising China phenol supply to continue to dampen market By Yoyo Liu 29-Oct-24 12:26 SINGAPORE (ICIS)–After hitting a year-to-date high on 10 September, China’s domestic phenol prices fell significantly, especially after the National Day holiday (1-7 October), due to expectations of increasing supply. Long supply, weak demand hound China benzene market By Yoyo Liu 29-Oct-24 15:15 SINGAPORE (ICIS)–China’s domestic benzene prices fell by 15% over a two-month period due to increased supply and a weaker-than-expected demand – market conditions that are likely to persist in November. Asia BDO sees some support from China; long-term outlook uncertain By Corey Chew 30-Oct-24 16:14 SINGAPORE (ICIS)–The Asia 1,4-butanediol (BDO) market recently saw an uptrend in the local China market due to strict production cuts. UPDATE: Japan’s Sumitomo Chemical trims fiscal H1 net loss; eyes LDPE output cut By Pearl Bantillo 30-Oct-24 19:11 SINGAPORE (ICIS)–Sumitomo Chemical trimmed its fiscal H1 to September 2024 net loss to Japanese yen (Y) 6.5 billion ($42 million), aided by sales growth of about 5%, while it seeks to rationalize operations to boost profitability. UPDATE: SCG invests $700 million in Vietnam’s LSP ethane enhancement project By Fanny Zhang 31-Oct-24 15:09 SINGAPORE (ICIS)–Thailand’s Siam Cement Group (SCG) will invest $700 million to pave the way for Vietnam’s first integrated petrochemical complex to use US ethane as feedstock for production. China SM producers regain margins, draw downstream support By Aviva Zhang 01-Nov-24 16:19 SINGAPORE (ICIS)–China’s non-integrated styrene monomer (SM) plants’ margins hit year-to-date highs on 30 October given widened product price spread over feedstock benzene, with expectations that end-user demand will pick up in November.

HOUSTON (ICIS)–Shipping container rates from east Asia and China to the US West Coast rose this week, reversing a trend that saw rates fall by almost 36% from July, as late-season holiday demand emerged. Many importers had pulled holiday volumes early to avoid any problems related to a US East Coast dock workers strike that was set to begin on 1 October. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said front-loading of volumes to the East Coast in September may have been stronger than to the West Coast due to the rush to beat the 1 October strike deadline. Supply chain advisors Drewry has Shanghai-USWC rates edging higher by less than 1% and said of the increase in spot rates ex-China that it expects this trend to continue as the Christmas rush intensifies. Drewry’s World Container Index showed average global rates rising, as shown in the following chart. Rates from Shanghai to Europe rose more dramatically than those from Shanghai to the US, as shown in the following chart from Drewry. Levine said the stronger front loading of volumes to the East Coast could explain the sharper drop of East Coast rates over the last few weeks, as well as the anomaly that saw East Coast rates fall below West Coast rates. Rates to the East Coast are typically about $1,000/FEU (40-foot equivalent units) higher than to the West Coast. Drewry still has East Coast rates about $400/FEU higher than West Coast rates. Levine noted that rates to both coasts are still $1,000-1,500/FEU above their April lows. 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. EAST COAST LABOR UPDATE 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. The International Longshoremen’s Association (ILA), representing the dock workers, and the United States Maritime Alliance (USMX), which represents the ports, reached a tentative agreement on 3 October that ended a three-day strike. The strike was paused until 15 January after parties agreed on the salary portion of the agreement, essentially meeting in the middle. Levine said port automation remains the major sticking point, and if there is no progress in the coming weeks anxious shippers may start increasing orders again ahead of another possible strike. CANADA WEST COAST PORT LABOR UNREST The British Columbia Maritime Employers Association (BCMEA), which represents ports on Canada’s west coast, has issued formal notice of its intention to lock out port workers coastwide, starting Monday, 4 November at 8:00 local time, it said on Friday. On Canada’s east coast, dock workers at the Port of Montreal on Thursday, 31 October, went on an indefinite strike at two of the port’s four container terminals. The labor dispute is about automation at Dubai Ports World (Canada), as well as retirement benefits. The parties have been negotiating a new collective labor deal since the last one expired in March 2023. LIQUID CHEM TANKER RATES STABLE US chemical tanker freight rates were largely unchanged this week for most trade lanes, while vessel demand continues to be soft for various routes. The USG to ARA remains soft and solid for contractual cargoes and any additional available CPP tonnage could continue to pressure the market even further. Similarly, that situation exists for volumes on the USG to the Caribbean and South America trade lanes. From the USG to these regions, space among regular carriers remains available, due to a lack of interest. However, for the USG to Asia spot volumes continues to be weak as there seems to be plenty of prompt space available.  Mainly parcels of methanol to China seems to have provided any support to the weak market. Additionally, ethanol, glycols and caustic soda were seen in the market in various directions. With additional reporting by Stefan Baumgarten and Kevin Callahan Visit the ICIS Logistics – impact on chemicals and energy topic page

HOUSTON (ICIS)–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. “FID, for the final step, I would expect that to happen in 2026,” said Peter Vanacker, LyondellBasell CEO. He made his comments during an earnings conference call. The chemical recycling plant would feature LyondellBasell’s MoReTec process technology. The plant could produce 100,000 tonnes/year of cracker feedstock. If LyondellBasell moves ahead with the MoReTec plant, it could be part of a larger project that would convert the Houston refinery into a sustainability hub. The refinery’s existing hydrotreaters would be retrofitted so they could upgrade the output from the MoReTec unit as well as from third-party recycling plants. Once upgraded, the feedstock could be shipped by pipeline to LyondellBasell’s cracker operations in nearby Channelview, where it will be converted into olefins. Those olefins would be polymerized to produce circular polyolefins, which LyondellBasell would market under its CirculenRevive brand. LyondellBasell could also retrofit other units at the refinery that would convert renewable material into distillates and feedstock that the company could process in its crackers. LyondellBasell could market the resulting polymers under its CirculenRenew brand. LyondellBasell did not provide details about the source of these renewable feedstocks. However, one source could be a storage and logistics hub in Harvey, Louisiana, that is being developed by Kinder Morgan and Finnish refiner Neste. The hub collects used cooking oil and other renewable feedstock, and it could be expanded at Neste’s option. Neste pioneered the production of naphtha from renewable feedstock, and the Houston refinery is a short distance by sea from Harvey. In the future, the hydrogen that LyondellBasell would need for upgrading recycled and renewable feedstock could come from nearby blue and green hydrogen projects. LyondellBasell, Air Liquide, Chevron and Uniper are part of a consortium that is evaluating sites for a hydrogen and ammonia project on the Gulf Coast. The Houston refinery is the top choice for the site. More hydrogen could come from the proposed Houston HyVelocity Hub. It is among the hubs participating in the Department of Energy’s Regional Clean Hydrogen Hubs program. SHUTDOWN OF HOUSTON REFINERY IN Q1In January, LyondellBasell will start shutting down the first crude distillation unit and coker train at the refinery. In February, the company will begin shutting down the second crude distillation unit and coker train, the fluid catalytic cracking (FCC) unit and other ancillary units. The refinery does not have a catalytic reformer. CONSTRUCTION STARTS AT GERMAN RECYCLNG PLANTIn September, LyondellBasell started construction at its MoReTec 1 plant in Wesseling, Germany, which will have a capacity of 50,000 tonnes/year and which should start up in 2026. Vanacker said the plant has a plastic-to-plastic yield of more than 80%. It can use 100% renewable power. Thumbnail photo: Plastic which can be recycled. (By Allison Dinner/EPA-EFE/Shutterstock)

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: FD NWE colourless flake under downward pressure for November Views divided, some see stability, others see softer prices PET tray demand suffering in Q4 Reductions ahead of SUPD paints negative picture for legislation

SINGAPORE (ICIS)–South Korea’s petrochemicals exports in October rose by 10.2% year on year to $4.0 billion, reversing a two-month decline, official data showed on Friday. The country’s overall exports for the month rose by 4.6% year on year to $57.5 billion, growing for the 13th month in a row, while imports were up by 1.7% at $54.4 billion, the Ministry of Trade, Industry and Energy (MOTIE) said in a statement. The trade balance stood at a surplus of $3.17 billion. South Korea’s energy imports decreased 6.7% year on year due to lower international crude prices. Ten out of 15 major export items posted growth in October. Semiconductor exports surged 40.3% year on year to a record high of $12.5 billion last month, while exports of petroleum products decreased 34.9% year on year to $3.4 billion on a decrease in unit price brought about by cooled oil prices. Meanwhile, automobile exports grew 5.5% year on year to $6.2 billion. By region, Korea’s exports to five of its nine major destinations increased in October. Exports to China grew 10.9% year on year to $12.2 billion, the highest in 25 months since September 2022, as demand for semiconductors and petrochemicals surged. US-bound exports hit $10.4 billion, up by 3.4% year on year, while exports to the EU rose by 5.7% to $5.3 billion.