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Speciality Chemicals25-Jul-2024
BARCELONA (ICIS)–European petrochemical
leaders should take inspiration from Japan,
which is further ahead in reducing base
chemicals while expanding in specialties and
low carbon technologies.
Japan hit by with high naphtha feedstock
costs, growing global overcapacity
70% of crackers are more than 50 years old
More than 10% of Japan’s crackers could
close
Downstream production also closing such as
polyethylene terephthalate (PET) and paraxylene
(PX)
Japan basic chemicals losing ground, new
focus on specialties
Pushing materials for semiconductors,
electronics
Also expanding into bio-naphtha and
pyrolysis oil
Japanese companies want to licence their
chemicals technologies
Using ammonia and hydrogen to reduce
dependence on LNG
South Korea chemicals face existential
crisis
In this Think Tank podcast, Will
Beacham interviews ICIS senior market
development manager Itaru
Kudose, ICIS senior consultant Asia
John Richardson and
Paul Hodges, chairman of
New Normal Consulting.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here .
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges and John Richardson’s
ICIS
blogs.
Liquefied Petroleum Gas25-Jul-2024
SINGAPORE (ICIS)–Typhoon Gaemi will test the
resilience of the liquefied petroleum gas (LPG)
supply chain, causing temporary shipment delays
and port closures, but market prices and
arrival schedules are expected to remain stable
and manageable.
Join ICIS LPG analysts Shihao Zhou and Yan Wang
as they discuss the impact of Typhoon Gaemi on
China’s imported propane and butane arrivals.
Typhoon Gaemi will delay propane and butane
shipments, causing temporary logistical issues/
Seven Very Large Gas Carriers (VLGCs)
carrying LPG will be affected by Typhoon Gaemi,
with key ports in East China and Fuzhou closing
until the end of July.
Despite the typhoon, the arrival schedule
remains manageable, with 4-5 VLGS expected to
arrive in east China next week.
Ethylene25-Jul-2024
SINGAPORE (ICIS)–LG Chem’s second-quarter net
income plunged year on year to won (W) 60
billion ($43m), weighed down by poor earnings
at its battery unit LG Energy Solution, the
South Korean producer said on Thursday.
Group results
in Korean won (W)
billion
Q2 2024
Q2 2023
% Change
Sales
12,300
14,336
-14.2
Operating profit
406
618
-34.3
EBITDA
1,562
1,595
-2.1
Net income
60
671
-91.1
Q2 sales at company’s petrochemicals unit rose
by 8.9% year on year to W4.97 billion.
LG Chem’s petrochemicals unit swung to a Q2
operating profit of W32 billion, reversing the
W13 billion loss in the same period of 2023.
A gradual recovery in the supply/demand balance
for LG Chem’s petrochemical products is
expected in Q3, but “profitability improvement
is expected to be limited due to the delay in
global demand recovery and rising freight
rate”.
LG Energy Solution’s Q2 operating profit fell
by 57.7% year on year to W195 billion, with
sales down 29.8% at W6.16 trillion.
LG Chem holds a controlling 81.8% stake in LG
Energy Solution, the leading car battery maker
in the country in terms of sales.
($1 = W1,386)
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Crude Oil25-Jul-2024
SINGAPORE (ICIS)–South Korea’s economy posted
a slower second-quarter annualized growth of
2.3% compared with the 3.3% pace set in the
preceding quarter amid sluggish domestic
consumption, preliminary central bank data
showed on Thursday.
Q2 private consumption rose by 0.9% year on
year, slowing from the 1.0% expansion in the
first three months of 2024, the Bank of Korea
(BoK) said in a statement.
Manufacturing for the period rose by 4.5%,
slowing from the 6.5% growth registered in
January-March; while exports grew at a slower
pace of 8.7% compared with the 9.1% expansion
in the first three months of the year.
On a quarter-on-quarter seasonally adjusted
basis, the South Korean economy unexpectedly
shrank by 0.2% in April-June, reversing the
1.3% growth posted in the first three months of
this year.
“We had expected South Korea’s GDP to slow
sharply, but not to the point of falling into
contraction territory,” Dutch banking and
financial information services provider ING
said in a note.
Q2 domestic growth components were weak except
for government spending, which rose by 0.7%
quarter on quarter, it said.
Private consumption, construction, and facility
investment dropped by 0.2%, 1.1% and 2.1%,
respectively,
The downside surprise came mainly from trade,
as imports grew faster than exports, ING said.
Q2 export growth moderated to 0.9% quarter on
quarter, just half the 1.8% increase posted in
Q1. Exports in Q2 were supported by higher
shipments of chemicals and motor vehicles.
Meanwhile, import growth rebounded to 1.2%,
compared with a contraction of 0.4% in Q1,
mainly buoyed by higher imports of crude oil
and petroleum products.
“Given the weaker-than-expected second quarter
2024 GDP, we have revised the annual GDP
outlook downwards from 2.6% year-on-year to
2.3%,” ING said.
“We recently warned that the BOK would face
challenges in its monetary policy decision as
inflation cools towards 2% and sluggish
domestic growth supports a rate cut, but at the
same time, concerns about rising household debt
are growing.”
In its latest forecast in May, the BoK raised
its 2024 GDP growth forecast to 2.5% from 2.1%
previously amid strong exports driven by robust
chip demand.
For inflation, the forecast average was
unchanged at 2.6% for this year.
Crude Oil25-Jul-2024
SINGAPORE (ICIS)–Typhoon Gaemi made landfall
on Taiwan’s eastern coast shortly before
midnight on 24 July, bringing fierce winds and
heavy rains to vast swathes of the island, with
the Mailiao port remaining closed on Thursday.
Financial markets and workplaces are also
closed for a second consecutive day.
Operations at the Mailiao port are expected to
resume on 26 July after a three-day shutdown,
according to market sources with direct
knowledge of the matter.
The port is operated by Taiwanese major Formosa
Petrochemical Corp (FPCC) which primarily
serves the company’s Mailiao refinery and
petrochemical complex.
The closure of Mailiao port is a precautionary
measure taken for operational safety, according
to a Formosa Plastics Corp (FPC) source, adding
that operations at the company’s ethylene vinyl
acetate (EVA) plant in Mailiao were normal.
Taiwan’s major petrochemical complexes are in
Toufen and Mailiao in the northwest; and
Ta-sheh and Linyuan in Kaohsiung City in the
south.
Authorities in Taiwan have reported two
weather-related fatalities and more than 200
others injured as the storm approached.
Officials have evacuated more than 8,000 people
across at-risk areas of the country.
Prior to making landfall near Hualien County,
Taiwanese authorities categorized Gaemi as a
“severe typhoon,” the highest level on their
three-tier scale. This marked the first severe
typhoon to hit the island since 2016.
The storm has since weakened as it moved
inland.
At 08:30 local time (00:30 GMT), Gaemi was 80
kilometres northwest of Hsinchu, packing
maximum winds of 90 kiometres/hour, Taiwan’s
Central Weather Administration (CWA) said in
its latest update.
A typhoon warning is in effect for Nantou,
Chiayi, Chiayi City, Keelung City, Yilan,
Changhua, New Taipei City, Hsinchu, Hsinchu
City, Taoyuan City, Penghu, Taichung City,
Taipei City, Tainan City, Taitung, Hualien,
Miaoli, Kinmen, Yunlin, Lienchiang and
Kaohsiung City, the CWA said.
Over 4,000 people living in in northern
regions, especially Hualien, were evacuated due
to the storm. Hualien, a mountainous area prone
to landslides, was also severely affected by a
7.2-magnitude earthquake earlier this year.
Gaemi is expected to make its way across
the Taiwan Strait towards Fujian and Zhejiang
later on Thursday, with a red storm alert
currently in place in both these provinces in
southern China.
The China Meteorological Administration (CMA)
has issued a red typhoon warning, the highest
level of alert, for strong winds expected in
seas off the southeastern coast and coastal
areas of Fujian and southern Zhejiang
provinces.
The Fujian Maritime Safety Administration has
launched a Level I emergency response, the
highest alert, in anticipation of Gaemi’s
arrival, according to crisis management firm
Crisis24.
Ports have been closed and vessels have been
ordered to return to shore, it said.
Thumbnail photo shows the location of Typhoon
Gaemi at 04:30 GMT on 25 July (Source:
zoom.earth)
Additional reporting by Angeline Soh, Helen
Lee and Samuel Wong
Hydrogen25-Jul-2024
SINGAPORE (ICIS)–China’s installed capacity of
gas power generation is projected to surpass
150 GW by 2025, representing roughly 6% of the
country’s total installed power generation
capacity.
This presents substantial investment prospects
within China and aligns with the nation’s
ambition to achieve carbon neutrality by 2060.
Hydrogen, often regarded as a potential fuel
for blending with natural gas, offers a
promising avenue for reducing emissions from
power generation.
In this podcast, ICIS senior LNG analyst Xu Fei
will delve into the mechanics of
hydrogen-fueled gas turbines and their
potential to significantly cut carbon
emissions.
Gas24-Jul-2024
Trading activity on Romanian exchange
surges year on year
BRM expects further expansion with Trayport
Joule platform launch and NEMO day-ahead market
Bourse eyes Bulgarian market but project
delayed
LONDON (ICIS)–Romanian commodities exchange,
BRM, has laid out internal and regional
expansion plans as trading liquidity on its
platforms has doubled year on year.
The exchange has seen a surge in activity in
the first half of 2024 compared to the same
period last year, with 13.2TWh changing hands
on the spot and forward gas platforms.
The number of
registered participants has also increased from
130 to 150 over the same period and BRM expects
a further rise thanks to ongoing expansion
plans.
Speaking to ICIS, Gabriel Purice, BRM’s
director general, said BRM was completing a
decade-long battle to become a nominated
electricity market operator (NEMO) for the spot
electricity markets.
The company already launched its electricity
intra-day market at the end of May, which means
that under the NEMO designation the outfit is
integrated with similar EU platforms.
The next step is to launch in November the
day-ahead electricity market, which will also
operate under the NEMO designation.
The NEMO electricity day-ahead and intra-day
markets are supported by BRM partner, Nord
Pool.
Purice said the infrastructure is ready for
launch but added that additional preliminary
checks would need to be carried out in line
with NEMO requirements.
“The intra-day platform already has 30
registered participants but we expect more
people to join once we are in a position to
offer the full day-ahead and intra-day
package,” he said.
BRM first applied to become a NEMO spot
electricity market operator in 2013 but had
faced numerous internal challenges, including
restrictive domestic regulations which required
all electricity transactions to be carried on
the state-owned platform OPCOM.
The restrictions were eventually lifted,
following a number of court cases
mounted by BRM and subsequent legal changes
at domestic and EU level.
In a separate move, BRM is now preparing to
offer from September access to the Trayport
Joule platform, which provides integrated
solutions for traders active on multiple
markets.
He said the Joule platform would run alongside
the supporting infrastructure already operated
by BRM and would include standardised products
for electricity and natural gas contracts.
REGIONAL EXPANSION
Purice said BRM is also active regionally,
having launched BRM East Energy, now
renamed BRM East, a subsidiary, in Moldova in
April.
Since then, 29GWh have changed hands and there
are 13 registered participants, according to
BRM data.
Traded volumes are expected to rise from 2025
as Moldova has introduced an obligation for gas
suppliers to secure volumes on the open market.
The director general said the exchange is
looking to launch a day-ahead gas trading
platform but the project depends on Moldova
setting up a balancing market first. Balancing
markets are a critical component of the spot
market which facilitate accurate settlements.
BRM also eyes Bulgaria where it applied for a
licence earlier in March, hoping to offer
clearing services, which the country is yet to
implement.
However, Purice said the application is being
held up, noting the regulator DKER has recently
asked BRM to provide proof of a signed
agreement with the Bulgarian gas grid operator
Bulgartransgaz to access their nominations
platform.
Purice said the agreement should be submitted
after the licence is granted.
DKER did not reply to questions by publication
time.
Bulgaria’s local Balkan Gas Hub exchange is
actively used by regional traders, particularly
for volumes entering the market from Turkey and
sold locally.
At the end of June it said it had partnered up
with Hungary-based clearing house Keler CCP to
offer central counterparty clearing services.
Ammonia24-Jul-2024
LONDON (ICIS)–ICIS Hydrogen Foresight data
shows that over the period October 2023-April
2024, the Dutch hydrogen market saw growth
across planned low-carbon hydrogen supply and
demand. However, despite progression across
future buyers and sellers, project progression
has remained muted, with no projects
progressing to final investment decision (FID).
To review the findings of this update, please
see the complete analysis below.
24-Jul-2024
EGPC seeks another five LNG cargoes
Local industry restarts, power cuts suspended
Egypt to bring in up to 26 cargoes over summer
LONDON (ICIS)–Egypt is in the market for another five LNG
cargoes as the country continues to address declining
domestic gas production and soaring summer demand.
Egyptian General Petroleum Corporation (EGPC) has issued a
TTF-linked DES tender covering 13-14 and 25-26 August and
3-4, 12-13 and 21-22 September delivery windows, traders said
on Wednesday.
The two cargoes for delivery in August and the middle cargo
in September would be delivered to Egypt’s Ain Sukhna
terminal, while the first and third September cargoes would
be sent to Jordan’s Aqaba terminal for further pipeline
delivery.
The tender closes on 29 July at 12:00 noon Cairo time and is
valid to 18:00 on the same day.
This is the fourth LNG tender round Egypt has issued covering
the summer period this year, as the country has been forced
to turn from LNG exports to imports.
EGPC has previously been in the market seeking a total of 22
cargoes in three separate rounds.
All cargoes were reported to have been awarded, expect for
the 1-2 September cargo in a two-cargo tender that closed on
22 July, one trader said.
If the latest tender is fully awarded, this could bring a
total of 26 spot cargoes into Egypt from mid-June to
mid-September.
UREA PRODUCERS RESTART
Latest data from association JODI shows a continued decline
in domestic gas production.
Average May production was around 138 million cubic meters
(mcm)/day, down from 142mcm/day in April and 163mcm/day in
May 2023.
However, the flow of LNG seems to have brought some relief to
local industry.
Some Egyptian urea producers shut down for a day last week
but then restarted, sources said, with one source attributing
the ramp up to LNG imports.
Five cargoes have been delivered since the start of July,
according to ICIS data.
As of this week, urea plants in Egypt are running at around
80% capacity on average.
“I believe this will [be sustained] till the end of summer
period,” a urea source said.
“Heard also that old electricity stations have started to
work with fuel oil as an alternative [for] gas,” they added.
Only one of Abu Qir’s prilled urea lines is down, while its
other two lines are running as normal.
The government has also suspended its electricity
load-shedding program from 21 July until mid-September, as
recently announced by Prime Minister Mostafa Madbouly.
The Prime Minister said the power cuts halted after the
arrival of some LNG cargoes.
The cuts were introduced last summer and resulted in daily
two-to-three hour power cuts across most of the country.
Additional reporting by Deepika Thapliyal.
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