LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 2 August. Freight headache distracts from Europe’s PE, PP existential crisis Europe may be insulated from ballooning global supply of polyethylene (PE) and polypropylene (PP) in the second half of 2024, as spiking Asian freight costs are the latest pain point to disrupt trade flows. Balanced to tight conditions could persist for Europe BD in H2 2024 European butadiene (BD) market fundamentals are likely to remain in a balanced to tight position for much of the remainder of 2024. Europe base oils Group II/Group III expectations heavily dependent on import logistics for H2 The European Group II and Group III outlooks for the second half of 2024 center strongly on imports, with several logistical issues across the globe throwing some uncertainty onto the markets. Europe H2 ethylene, propylene won’t be a repeat of H2 2023, may be better than expected The second half of 2024 is looking brighter for Europe olefins markets compared to the same periods in 2022 and 2023. No demand crashes are expected, and there are several supportive factors that could make H2 2024 better than initially anticipated. Europe PVC uncertainty continues on weak demand, new antidumping charges on imports The European polyvinyl chloride (PVC) market faces a period of uncertainty in H2 2024, compounding the difficulties in long-term outlook since the coronavirus pandemic began in 2020, and only slightly mitigated by antidumping charges for US and Egyptian imports.

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 2 August 2024. OUTLOOK: NE Asia propylene to see limited volatility despite historic capacity additions By Julia Tan 01-Aug-24 11:12 SINGAPORE (ICIS)–The northeast Asian propylene (C3) market is poised for a relatively stable second half of 2024, despite China’s capacity additions, as sustained demand from key sectors and flexible propane dehydrogenation (PDH) units counterbalance growing supply. INSIGHT: The impact of China end-market demand on Asia’s aromatics market By Jimmy Zhang 31-Jul-24 13:00 SINGAPORE (ICIS)–China’s government recently released the latest end-consumption sales statistics for the first six months of 2024. In this bulletin, we found four items which are highly related to Asia aromatics market – catering services, the beverage sector, clothes and textiles, and home appliances. PODCAST: China’s steam crackers favoring ethane on cost advantage By Lillian Ren 31-Jul-24 11:14 SINGAPORE (ICIS)–Ethane is gaining favor as the feedstock for steam crackers in China, as its competitive prices make ethane-cracking the most profitable route for ethylene production compared to other options. OUTLOOK: High costs, peak season and global trade barriers in China PP market for H2 2024 By Zhibo Xiao 30-Jul-24 13:00 SINGAPORE (ICIS)–As the peak season around September and November is coming for China PP, the cost and demand sides are expected to give the market strong support, while the challenges faced with the export of China electric vehicles could potentially hinder the demand for PP copolymer. INSIGHT: China focuses on technological innovation, low-carbon industries in latest govt summit By Amy Yu 29-Jul-24 17:21 SINGAPORE (ICIS)–We expect that there will be two significant developmental directions worth focusing on for China’s petrochemical industry in the medium to long -term view, following the main outcomes of the 20th Third Plenum.

HOUSTON (ICIS)–OCI said after facing difficult fertilizer market conditions in 2023 it is having a much better performance through Q2 of this year. The producer said they continue to see progress in efficiency gains as it remains focused on its global decarbonization strategy. In addition, over the past quarter OCI said it has taken significant steps towards advancing its strategic aims, which include accelerating expansion plans fueled by green methanol adoption and further diversification their European nitrates portfolio. “Following extremely challenging market conditions in 2023, conflated with prolonged turnarounds at some of OCI’s assets, OCI benefited in the second quarter of 2024 from sustained improved asset reliability across the business,” said Ahmed El-Hoshy, OCI Global CEO. “OCI’s manufacturing excellence program and investments to improve reliability continue to drive productivity gains, with asset utilization rates surpassing historical levels across both the nitrogen and methanol complex.” The producer said OCI Beaumont achieved a 96% rate through Q2, while OCI Nitrogen saw both ammonia lines running at approximately 90% level during the quarter. “The OCI team continues to do an outstanding job driving forward our operational excellence program, focused on reliability and process safety fundamentals,” El-Hoshy said. The producer also said their Texas Blue Clean Ammonia facility in Beaumont is on track to commence production in 2025.

LONDON (ICIS)–Senior editor for recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Italian bale prices drop month on month Blue bale prices rise in eastern Europe Downward pressure on UK colourless flake More demand emerging for food-grade pellets in H2

LONDON (ICIS)–Maritime security issues along the Red Sea and geopolitics-led macroeconomic challenges dominated supply-demand dynamics within the European acrylonitrile-butadiene-styrene (ABS) and acrylonitrile (ACN) markets in the first half of 2024. In this latest podcast, Europe ABS report editor Stephanie Wix and her counterpart on the Europe ACN report, Nazif Nazmul, share the latest developments and expectations for what lies ahead. Macroeconomic challenges continue to constrain ABS and ACN demand Europe-origin ABS partly supported by imports suffering from logistical issues Cautious optimism surrounds 2025 demand outlook despite geopolitical uncertainty ABS is the largest-volume engineering thermoplastic resin and is used in automobiles, electronics and recreational products. ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers. Click here to open in a new window

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Here are my three scenarios for China’s long-term chemicals and polymers demand growth with percentage weighting – i.e. how likely I view each of the scenarios. China chemicals demand grows is in the low single digits – 40%: Demand growth turns negative – 55%: The market returns to previous levels of growth – 5%. And I am becoming more convinced that we are entering a period of declining global chemicals growth as well as in China. It is what it is. This is what the demographics, debt, climate change and geopolitical factors seem to be telling us. This direction of travels appears to be supported by the latest China polypropylene ((PP) data. The 1992-2021 Petrochemicals Supercycle is receding further into the past. Saudi Arabia on a year-on-year basis saw its China PP sales turnover in China fall by an estimated $85m in January-June 2024. This followed $168m tonnes lower turnover in 2023 versus 2022. South Korea’s January-June 2024 turnover fell by $35m following a $377 decline in 2023 versus 2022. Meanwhile, China’s PP exports are in line to reach 2.5m tonnes in 2024, up from 1.3m tonnes in 2023. Companies need to respond to these secular and long-term shifts in markets by deciding whether they can continue to compete in commodity chemicals. 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.

SINGAPORE (ICIS)–SABIC’s net profit surged by 84.7% year on year to Saudi riyal (SR) 2.18 billion in the second quarter, supported by higher margins amid improved average selling prices, the chemicals giant said on Thursday. in Saudi riyal (SR) billions Q2 2024 Q2 2023 % Change H1 2024 H1 2023 % Change Sales 35.72 34.1 4.8 68.4 70.53 -3.0 Operational profit 2.1 1.64 28.0 3.31 3.4 -2.6 Net profit 2.18 1.18 84.7 2.43 1.84 32.1 “The global economy experienced a slight decline in the second quarter of 2024, primarily due to unexpected downturns in the recent economic indicators of major countries,” said Abdulrahman Al-Fageeh, SABIC’s CEO and executive board member. However, PMI data continued to indicate improvement in global economic conditions, while global trade showed signs of recovery, driven by higher exports, inventory restocking and increased financial activities, Al-Fageeh noted. “As inflationary pressures ease, some central banks have begun reducing interest rates, potentially providing additional stimulus to the global economy.” Q2 KEY POINTS – Q2 sales growth primarily attributed to the improvements of the average selling prices and a slight increase in sales volume. – Gross profit rose by SR1.76 billion due to improved profit margins for key products, partially offset by increased operating expenses from non-recurring charges. – A reversal of zakat provision, which is a mandatory Islamic tax on wealth, resulted in a non-cash benefit of SR545 million in Q2 2024, compared to a zakat expense of SR440 million in Q2 2023, due to updated regulations. – The petrochemicals segment’s revenue increased by 10% quarter-over-quarter to SR 33.33 billion in Q2, driven by higher methanol sales volume. – EBITDA rose 37% to SR 4.88 billion in Q2, compared to SR 3.56 billion in Q1, due to higher sales volume and average selling prices. Market trends on quarter-on-quarter basis: – Methyl tertiary butyl ether (MTBE) prices remained stable, supported by summer demand. – Methanol prices held steady, driven by tight supply and low inventories in China, as well as strong demand from Asia. – Monoethylene glycol (MEG) prices were flat, due to higher supply and stable demand. – Polyethylene (PE) prices increased slightly, due to delayed Middle East deliveries and tightened Southeast Asian supplies. – Polypropylene (PP) prices rose, supported by tight container and vessel supply. – Polycarbonate (PC) prices slightly increased, despite global oversupply, with high freight rates adding pressure to subdued demand in automotive and construction sectors. Separately, SABIC has successfully commissioned its new hydrotreater plant in Geleen, the Netherlands.  This facility plays a crucial role in SABIC’s advanced recycling process, transforming pyrolysis oil derived from post-consumer mixed plastic waste into high-quality alternative feedstock. This feedstock is then used to produce the SABIC’s TRUCIRCLE circular polymers. H1 KEY POINTS – The company’s revenue decreased by 3% year on year primarily due to a decline in sales volume. – Net profit rose on the back of an 18% increase in gross profit (SR1.96 billion) due to improved margins, partially offset by increased operating expenses from non-recurring charges. – Earnings were also supported by a SR245 million increase in the share of results from associates and non-integral joint ventures. OUTLOOK”Looking ahead, a global GDP growth of 2.7% is expected in 2024. At SABIC, our long-term focus remains on strategic portfolio optimization, restructuring of underperforming assets, and prioritizing sustainability and innovation,” the company said. “We maintain a disciplined approach in managing our CAPEX, projecting a spending at the lower range of $4.0 to 5.0 billion for 2024.” SABIC is 70%-owned by energy giant Saudi Aramco. Thumbnail shows a SABIC production facility (Source: SABIC)

HOUSTON (ICIS)–National Oceanic and Atmospheric Administration (NOAA) supported scientists announced that this year’s Gulf of Mexico “dead zone” is approximately 6,705 square miles, the 12th largest zone on record in 38 years of measurement. This equates to more than 4 million acres of habitat potentially unavailable to fish and bottom species, an area roughly the size of New Jersey. Scientists at Louisiana State University and the Louisiana Universities Marine Consortium led the annual dead zone survey from 21-26 July. The Gulf’s hypoxic (low oxygen) and anoxic (oxygen-free) zones are caused by excess nutrient pollution, which researchers attribute to being primarily from human activities such as agriculture and wastewater occurring in the watershed. First documented in 1985 off the coast of Louisiana, many researchers have primarily placed blame on farmland fertilizer run-off as being the main culprit of the dead zone. Yet evidence also shows that urban areas, human waste treatment, precipitation and atmospheric dust as well as natural sources also contribute large amounts. With excess nutrients there is an overgrowth of algae, which sinks and decomposes causing low oxygen levels which are insufficient to support most marine life and habitats. The Mississippi River/Gulf of Mexico Hypoxia Task Force, a state and federal partnership, has set a long-term goal of reducing the five-year average extent of the dead zone to fewer than 1,900 square miles by 2035. The five-year average size of the dead zone is now 4,298 square miles, more than two times larger than their target. “It’s critical that we measure this region’s hypoxia as an indicator of ocean health, particularly under a changing climate and potential intensification of storms and increases in precipitation and runoff,” said Nicole LeBoeuf, NOAA’s National Ocean Service assistant administrator. “The benefit of this long-term data set is that it helps decision makers as they adjust their strategies to reduce the dead zone and manage impacts to coastal resources and communities.” In June the agency had predicted an above-average sized dead zone of 5,827 square miles, based primarily on Mississippi River discharge and nutrient runoff data from the US Geological Survey. “The area of bottom-water hypoxia was larger than predicted by the Mississippi River discharge and nitrogen load for 2024, but within the range experienced over the nearly four decades that this research cruise has been conducted,” said Nancy Rabalais, Louisiana State University professor. “We continue to be surprised each summer at the variability in size and distribution.”

LONDON (ICIS)–The Eurozone manufacturing sector remained in deep contraction in July, with a steep decline in new orders leading to further contractions in output, and producers unable to pass on higher costs to customers The purchasing mangers’ index (PMI) for the sector stood at 45.8 in July, unchanged from June, while input prices saw the fastest increase in a year and a half, according to data from S&P Global. New orders are shrinking at the fastest rate in three months, while job shedding has continued for four months, with workforce reductions accelerating to the fastest pace since last December. A PMI above 50.0 indicates growth, while below 50 signals contraction. Hopes for overcoming the production slump have faded, prompting Hamburg Commercial Bank chief economist Cyrus de la Rubia to suggest a likely reduction in the GDP growth forecast from 0.8%. Greece and Spain, previously strong performers, saw growth slow to seven- and six-month lows of 53.2 and 51.0, respectively. Ireland’s manufacturing sector remained broadly in growth territory, at 50.1, while the Netherlands, Italy, France, Germany and Austria were all in contraction territory . However, purchasing activity trimmed more gently in July compared to June, and supplier performance improved. Factory goods prices remain stable, suggesting firms are absorbing costs. This, along with weakening demand, is expected to shrink profit margins and investments, potentially keeping inflationary pressures in check. The manufacturing sector faces challenging months ahead with no signs of improvement.