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Ethylene27-Dec-2024
SAO PAULO (ICIS)–The Colombian economy picked
up strength at the end of 2024, and higher
spending on gross capital formation such as
petrochemical-intensive public works and
machinery could see “close to 3%” growth in
2025, according to the country’s central bank.
The Banco de la Republica published this week
minutes of its monetary policy committee
meeting earlier in December which resulted in
an interest rate cut of
25-basis points to 9.5%.
In its final assessment of the economy’s
performance in 2024, the central bank said
inflation was converging towards its target of
3%, but said it will do so “more slowly than
projected” on due to a weaker Colombian peso
and higher for longer US interest rates.
The rate of inflation in Colombia stood at 5.2%
in November, down from 5.41% in October, the
fifth month of decline.
The central bank also called on Gustavo Petro’s
cabinet to be realistic about public finances
and fiscal discipline, and questioned whether
fiscal parameters the government had set itself
for 2025 will be met.
TO-PREPANDEMIC
LEVELSHowever, overwhelming
sentiment in the minutes was one of optimism
about an economy which has a more secure
footing in healthier growth, with an increase
in gross capital formation a key part of that.
In fact, after sluggish growth posted since the
pandemic, next year the Colombian economy could
hit some of the indicators in line with those
pre-2020.
Economic growth reached 2.0% in Q3, said the
bank, driven by a 20.3% jump in gross capital
formation. The Economic Tracking Indicator
showed 3.1% growth in October.
Gross capital formation measures economy-wide
investment in fixed assets plus inventory
changes. Fixed assets include infrastructure
improvements, machinery and equipment
purchases, and construction of buildings like
schools, homes, offices, and industrial
facilities.
“They [board members] consider there is room to
further propel the rebound in gross capital
formation enjoyed during the third quarter to
ensure greater economic dynamism that will
bring the Colombian economy closer to the
growth rates observed before the pandemic. In
this regard, they note that the 1.8% GDP growth
projected for Colombia in 2024 is lower than
the average GDP expansion recently estimated
for Latin America (2.1%),” said the minutes.
“They stress that the recent recovery in
specific components of gross fixed capital
formation, such as civil works and machinery
and equipment, which contribute more than 50%
to fixed investment, suggests that an
improvement of close to 3.0% could be reached
in 2025 for Colombia, which is higher than the
forecast for Latin America (2.3%), and will
help it recover the position it held for almost
a decade before 2020.”
Healthy economic indicators can also lead to
higher prices on the back of strong demand, so
the central bank also adopted a cautious stance
on monetary easing.
The bank projects slower inflation convergence
to target in 2025, citing currency depreciation
pressures and their impact on prices, adding
that additional inflationary pressures are
expected from minimum wage increases and
regulated price adjustments.
Market volatility has increased due to concerns
over 2025 budget financing gaps and recent
reforms to regional funding transfers, while
external pressures have increased due to
tighter global financial conditions, a slower
pace of US interest rates cuts and falling
commodity prices which have affected Colombia’s
terms of trade.
Colombia’s state-owned energy major Ecopetrol
is a key income generator for the Treasury.
“They [board members] agreed that 2025 may
bring a challenging macroeconomic scenario that
requires vigilance and harmonization in both
monetary and fiscal policy design,” the bank
said.
Earlier in December, Colombia’s statistical
office DANE said industrial production expanded 1.1% in
October year on year, while the nation’s
leading economic indicator showed broad-based
growth acceleration across major sectors.
The reading was in line with the manufacturing PMI index
for November, which showed broad-based
improvement on better demand.
Meanwhile, DANE’s main economic indicator for
activity across the economy, also published
earlier in December, rose 2.94% in October,
year on year, an improvement from September’s
downwardly revised 1.07% increase.
Within petrochemicals, however, the story may
be more mixed as domestic producers will
continue to face stiff competition from
competitive imports.
All petrochemicals players interviewed by ICIS
at the annual meeting of the Latin American
Petrochemical and Chemical Association (APLA)
held in Colombia’s Cartagena in November, spoke
of challenging market conditions in 2025.
This included Ecopetrol’s
petrochemicals division, its subsidiary
producing polypropylene (PP) Essentia and plastics
distributor Grupo
Almatia.
Prices closed the year with decreases. Latin
American PP values, for instance, fell
in Colombia and Chile on the back of
competitive offers from abroad as well as lower
feedstock costs.
Focus article by Jonathan
Lopez
Ethylene Vinyl Acetate24-Dec-2024
SINGAPORE (ICIS)–ICIS senior analyst Joanne
Wang discusses the recent rebound in China’s
ethylene vinyl acetate (EVA) prices and gives a
brief outlook for 2025.
Some EVA plants switch to low density
polyethylene (LDPE) production in Q4 on profit
considerations
EVA producers’ Q4 inventory low after
destocking in the first three quarters
Photovoltaic industry resumes replenishment
in Q4, boosting demand
ICN
Speciality Chemicals23-Dec-2024
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on
20 December.
NEWS
Brazil’s chemicals likely
to avoid higher tariffs as bilateral trade
favors US – AbiquimBrazil’s
chemicals producers are confident the sector
would be mostly spared from potentially higher
US import tariffs as the latter maintains a
clear trade surplus in bilateral commerce, the
country’s trade group Abiquim said to ICIS.
Argentina’s
manufacturing, construction output falls in
OctoberOutput in Argentina’s
petrochemicals-intensive construction and
manufacturing kept falling in October, year on
year, the country’s statistical office Indec
said on Friday.
Mexico’s central bank
cuts rates by quarter point to 10.0%, signals
further cutsMexico’s central
bank on Thursday cut interest rates by 25 basis
points (bps) to 10.0% and hinted at steeper
cuts ahead.
Colombia’s central bank
lowers rates by quarter of a point to
9.5%Colombia’s central bank
on Friday lowered its benchmark interest rate
by 25 basis points (bps) to 9.5%.
Argentina’s YPF agrees
with Shell to continue building LNG export
projectYPF and global energy
major Shell have signed an agreement to develop
the first phase of a liquefied natural gas
(LNG) export project, the Argentinian
state-owned oil and gas major said.
Brazil’s chemicals output
up 1.6% in OctoberBrazil’s
chemicals output rose by 1.6% in October, year
on year, while plastics and rubber production
increased by 4.9%, according to the country’s
statistical office IBGE.
Brazil central bank steps
up currency defence as real
slidesBrazil’s central bank
has mounted four currency interventions this
week, spending nearly $6 billion to stem the
decline in the Brazilian real (R).
Chile
cuts rates as growth concerns outweigh
inflation risksChile’s
central bank cut its benchmark interest rate
this week by 25 basis points (bps) to 5.0%,
balancing concerns over stubborn inflation with
signs of economic weakness.
Pemex
remains ‘financially vulnerable’ as output
flattens, crude prices fall –
FitchMexico’s state-owned
crude major Pemex “remains financially
vulnerable” as its output is likely to flatten
and crude oil prices are set to fall, US credit
rating agency Fitch said.
MOVES: Brazil Potash
appoints fertilizer industry veteran Schmidt as
board executive
chairmanProducer Brazil
Potash, which is advancing the $2.5 billion
Autazes project within the state of Amazonas,
has appointed fertilizer industry veteran Mayo
Schmidt as the executive chairman of its Board
of Directors effective 6 January.
PRICING
LatAm
PE domestic, international prices stable as
year draws to closeDomestic
and international polyethylene (PE) prices were
assessed as unchanged across Latin American
countries.
LatAm
PP domestic, international prices steady as
2024 endsDomestic and
international polypropylene (PP) prices were
steady across Latin American countries.
Braskem Idesa seeks
January PE price increase in
MexicoBraskem Idesa (BI) is
seeking a price increase of $110/tonne on high
density polyethylene (HDPE) and for low density
polyethylene (LDPE) as of 1 January, according
to a customer letter.
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Ethylene23-Dec-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 20 December.
CP Chem’s US, Qatar JV projects on
track for 2026 startup – Phillips
66
Two world-scale joint venture projects being
developed by Chevron Phillips Chemical and
QatarEnergy remain on track to start
operations in 2026, Phillips 66 said on
Monday.
Canada in turmoil as finance minister
resigns, CEOs worry about fiscal
policies
Canadian CEOs and business trade groups are
warning about the state of Canada’s fiscal
policies.
US Fed cuts rate by quarter point,
expects fewer cuts in 2025
The Federal Reserve lowered on Wednesday its
benchmark interest rate by a quarter point
while reducing the number of cuts it expects
to make in 2025.
INSIGHT: US Gulf chems face more
freezing spells amid warmer
winters
Chemical plants and refineries along the Gulf
Coast of the US will likely face another
winter that will be warmer than usual but
punctuated with brief periods of freezing
temperatures, which could disrupt operations.
Oil prices fall on stronger US
dollar, looming US government
shutdown
Oil prices fell sharply on Friday on a
stronger US dollar and amid a looming US
government shutdown over the failure to pass
a budget bill in the House of
Representatives.
SHIPPING: Asia-US container rates
surge as volumes pulled forward ahead of
strike, tariffs
Rates for shipping containers from east Asia
and China to the US surged this week as
importers pulled volumes forward ahead of the
possible restart of the US Gulf and East
Coast port strike and anticipated tariff
hikes under the incoming Trump
Administration.
Crude Oil23-Dec-2024
LONDON (ICIS)–The UK economy was weaker than
initially thought in Q3 with GDP showing zero
growth, according to official data on Monday.
There was no growth in the services sector,
while a 0.7% increase in construction was
offset by a 0.4% fall in production.
The Q3 GDP figure was revised down from
a
first estimate of 0.1% growth, the Office
for National Statistics (ONS) said.
Quarterly growth has trended down throughout
2024 with GDP at 0.7% in Q1, 0.4% in Q2 and 0%
in Q3.
On a monthly basis, GDP fell by 0.1% in
September and October, according to the ONS.
Last week, the Bank of England (BoE) held
its key interest rate at 4.75% as inflation
continued to firm despite weakening industrial
activity.
Economic growth in
the eurozone and EU has been more positive
with Q3 GDP rising by 0.4% in both blocs from
the previous quarter.
Speciality Chemicals23-Dec-2024
LONDON (ICIS)–Here are some of the top stories
from ICIS Europe for the week ended 20
December.
Stagnant manufacturing,
overcapacity, looming trade war weigh on Europe
chems in 2025
Europe’s petrochemical sector will be under
even more pressure in 2025 as demand from the
region’s manufacturing sector remains in
contraction, global overcapacity gets worse and
amid the possibility of increased exports from
China and the US.
Europe melamine December
contracts roll over, Q4 contracts rise on
margin pressure
European December melamine contracts were
assessed steady, in line with market feedback.
Europe paraxylene
December contract price up €5/tonne
The Europe paraxylene (PX) December contract
reference price rose €5/tonne from November’s
levels.
German business sentiment
weakest since May 2020
German business sentiment dropped to its lowest
point since May 2020 in December, according to
the latest data from the Ifo Institute on
Tuesday.
Eurozone private sector
closes out 2024 in contraction as manufacturing
slows
The eurozone private sector ended the year on a
bearish note as output contracted driven by a
weakening manufacturing sector, which offset a
return to growth for services.
Gas23-Dec-2024
SINGAPORE (ICIS)–Here are the top stories
from ICIS News Asia and the Middle East for
the week ended 20 December.
Study on Oman’s Duqm
petrochemical complex to be completed in
2025
By Jonathan Yee 16-Dec-24 15:09 SINGAPORE
(ICIS)–A feasibility study for a joint
venture petrochemical complex in the Duqm
Special Economic Zone (SEZ) in Oman will be
completed in 2025, an official from Oman’s
national oil and gas company OQ told ICIS.
UPDATE: South Korea
bourse closes lower, won softer after Yoon’s
impeachment
By Jonathan Yee 16-Dec-24 16:52 SINGAPORE
(ICIS)–South Korea’s benchmark stock market
index was closed lower on Monday, snapping
four straight days of gains, after the
country’s parliament impeached President Yoon
Suk Yeol over the weekend for imposing a
short-lived martial law on 3 December.
UPDATE: ChemOne’s
Malaysia $5.3bn complex start-up delayed to
Q4 2028
By Nurluqman Suratman 16-Dec-24 21:21
SINGAPORE (ICIS)–ChemOne Group has delayed
the start-up of its $5.3 billion Pengerang
Energy Complex (PEC) in Johor, Malaysia to Q4
2028, after facing “complex financing”
issues, the CEO of the project’s operator
said on Monday.
Malaysia Lotte Chemical
Titan to shut some PE, PP units in line with
cracker shutdown
By Izham Ahmad 17-Dec-24 12:30 SINGAPORE
(ICIS)–Malaysia’s Lotte Chemical Titan will
shut some of its downstream polyethylene (PE)
and polypropylene (PP) plants to account for
a reduction in feedstock after it shuts down
one of its crackers in Pasir Gudang,
according to market sources.
INSIGHT: China economy
ends 2024 on mixed note amid Trump 2.0
concerns
By Nurluqman Suratman 18-Dec-24 13:07
SINGAPORE (ICIS)–China’s economic data in
November were mixed, with weaker retail sales
growth offset by some signs of stability in
property prices and a slightly quicker
industrial output growth, as policymakers
brace for more US trade tariffs once
President-elect Donald Trump takes office for
a second time.
INSIGHT: China oil
demand to peak in 2026 as transportation fuel
drags
By Fanny Zhang 19-Dec-24 14:00 SINGAPORE
(ICIS)–China is expected to see its overall
oil demand peaking in 2026 amid ongoing
changes in the key transportation market,
analysts said.
Oil
prices fall on stronger US dollar, looming US
government shutdown
By Jonathan Yee 20-Dec-24 11:55 SINGAPORE
(ICIS)–Oil prices fell sharply on Friday on
a stronger US dollar and amid a looming US
government shutdown over the failure to pass
a budget bill in the House of
Representatives.
Asia BD imports stay
supported by China domestic market bull
run
By Ai Teng Lim 20-Dec-24 14:31 SINGAPORE
(ICIS)–Sentiment is buoyant in Asia’s
butadiene (BD) import market as sellers chase
higher selling targets, emboldened by what
they perceive as strong buying power in
China.
Bank of Japan maintains
interest rates as Nov core inflation
surges
By Jonathan Yee 20-Dec-24 14:50 SINGAPORE
(ICIS)–The Bank of Japan (BOJ) has kept its
interest rates unchanged as inflation levels
rose to 2.7% year on year in November,
raising analyst expectations of a rate hike
in Q1 2025.
Ammonia20-Dec-2024
HOUSTON (ICIS)–The Fertilizer Institute (TFI)
has announced the launch of the Verified
Ammonia Carbon Intensity (VACI) program, which
is a voluntary certification of the carbon
footprint of ammonia production at a specific
facility.
The VACI is the first program of its kind with
the industry group saying it is designed to
provide ammonia consumers seeking to reduce
emissions across their supply chains with an
independent and certifiable carbon intensity
score.
TFI said the VACI certification framework will
standardize the approach for calculating the
carbon intensity of ammonia encompassing all
aspects of ammonia manufacturing from feedstock
production through the finished product at the
plant gate.
Producers will use the VACI standard to
calculate the carbon intensity of ammonia
produced at their facilities then an
independent, third-party auditor will then
verify or validate that the carbon intensity
score is accurate.
TFI president and CEO Corey Rosenbusch said
ammonia is a critical input for both
agriculture, emissions control and many
commercial products including fabric and
pharmaceuticals.
“As agriculture and other industries
increasingly look to develop more sustainable
and resilient supply chains, the Verified
Ammonia Carbon Intensity program provides
ammonia consumers with certifiable transparency
that will allow them to quantify the positive
impact using low-carbon ammonia has on their
greenhouse gas emissions footprint,” said
Rosenbusch.
Ammonia production typically uses natural gas
as a feedstock for its hydrogen component and
is an energy-intensive process with substantial
carbon dioxide emissions as a byproduct.
Currently there are US ammonia producers who
are investing in technologies to dramatically
reduce emissions with the VACI enabling them to
document the varying levels of emissions
reduction these technologies provide.
The VACI program was developed by TFI in
collaboration with technical industry experts
from producers CF Industries, LSB, Nutrien, OCI
and Yara with guidance from Hinicio, a
strategic and technical consulting firm
specializing in hydrogen and its derivatives
and industrial decarbonization.
Facilities certified under the program include
Nutrien at Redwater in Canada and CF Industries
in Donaldsonville, Louisiana, with audits that
have been completed.
Audits for LSB Industries in El Dorado,
Arkansas, and CVR Energy in Coffeyville,
Kansas, in progress.
TFI said the VACI is undertaking a 60-day
public consultation period for ammonia
consumers and stakeholders to provide feedback
on the program and its methodology and intends
to refine the program based on comments
received.
Speciality Chemicals20-Dec-2024
HOUSTON (ICIS)–Rates for shipping containers
from east Asia and China to the US surged this
week as importers pulled volumes forward ahead
of the possible restart of the US Gulf and East
Coast port strike and anticipated tariff hikes
under the incoming Trump Administration.
Rates from Asia to both US coasts had been
trending steadily lower since July.
Rates from Shanghai to New York began
stabilizing in October before surging by almost
17% this week, according to data from supply
chain advisors Drewry.
Rates from Shanghai to Los Angeles were falling
steadily before jumping by almost 26% this
week, as shown in the following chart from
Drewry.
Drewry has global average rates up by 8% this
week, as shown in its World Container Index.
Drewry expects an increase in rates on the
transpacific trade in the coming week, driven
by front-loading ahead of the looming port
strike and possible tariffs.
Rates at online freight shipping marketplace
and platform provider Freightos also showed
significant increases to both coasts.
Judah Levine, head of research at Freightos,
suggested that the pull-forward for the pending
strike is largely over as the pre-15 January
arrival window has closed.
Levine thinks a strike – or at least a
prolonged one – is unlikely now that
President-elect Trump has backed the union in
the dispute.
But the anticipation of increased tariffs is
still driving some
unseasonal volume strength, Levine 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.
LIQUID TANKER RATES
STABLE
Overall, US chemical tanker freight rates were
unchanged this week for most trade lanes
ex-USG.
For the USG to ARA, both spot cargoes and
contract of affreightment (COA) nominations to
northwest Europe took a slight dip this week,
with minimal opportunities quoted but remained
relatively flat week over week.
COA volumes for January are still pending so it
is not clear how much space will be available,
but sentiment is that contract business will be
strong, making spot space harder to find.
Along the USG to Asia route, there was a bit
more activity this week with January base oils,
ethanol and vegoil requirements being quoted
out in the market.
The January chemical COAs are showing healthy
levels, and most regulars are reporting that
space is currently tight on paper. Most market
participants expect rates to remain steady for
the balance of the year.
COA nominations are strong on the USG-Brazil
trade lane with still some space available for
the end of December. However, several traders
were in the market with 10,000 tonnes of
caustic soda ex-Point Comfort to Santos for
loading on prompt dates.
So far, no fixture has been reported yet,
leaving this market overall quiet.
Additionally, ethanol, glycols and caustic soda
were seen in the market to various regions.
Additional reporting by Kevin Callahan
Thumbnail image shows a container ship.
Photo by Shutterstock
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