HOUSTON (ICIS)–As the US recycled polyethylene terephthalate (R-PET) market continues to develop and new players establish supply relationships across members in the value chain, pricing mechanisms have shifted significantly over the course of the last 5+ years. Historically, R-PET pricing was linked to virgin pricing, but at a deficit, meaning recycled resins were expected to be cheaper than virgin. Now, the tables have turned, particularly for sought after “sustainability-driven” grades of recycled resin which typically command a premium to virgin due to the tight supply and high demand of these higher quality, clear resins. Pricing for these grades of recycled resins has shifted within the R-PET industry, such that pellet prices are largely based on their own feedstock and production costs. While spot pellet pricing is subjected to the additional lens of local supply and demand, including substitution with imports or cheap virgin, contract pellet pricing is now largely based off of bale feedstock formulas, with some contracts specifying individual step inputs, and others specifying the bale index and then an adder to represent the processing cost. Eventually, the market may move to a uniform indexed pellet price, settled on a routine frequency by the market, similar to how R-PET pricing is established in Europe, or how other commodity resin prices are established in the US, such as polyethylene (PE). Within the ICIS US R-PET commodity services, two new price series have been introduced which represent food grade pellet pricing calculated via a formula, starting with bale feedstock costs. While each contract will have unique formula inputs which are largely kept private, the following prices are meant as an indicator of average pellet pricing based on formula, as this can vary significantly from active spot market transactions – depending on the current market supply and demand. There is one assessment for the East Coast and one for the West Coast based on various bale feedstocks. The formula is listed below: [([(Bale price indicator + bale freight ) ÷ bale yield] + bale to flake processing costs) ÷ flake yield] + flake to pellet processing costs = pellet price Formula input descriptors: Bale price indicator: What quality (curbside or deposit) and region (East Coast vs West Coast) descriptors are used for selecting base pricing for bale feedstock costs in relation to the type most often used by local recyclers. Bale freight: Cost to transport material from bale producer (typically material recovery facility (MRF)) to bale buyer (typically the recycler/reclaimer). Bale yield: Factor to account for loss of material due to contamination within the bale; Curbside bales have higher contamination levels and thus lower yields. Bale to flake processing costs: Associated production costs from sorting, washing, grinding processes, including but not limited to facilities costs, utilities, labor, etc. Flake yield: Factor to account for loss of material due to contamination from flake to pellet stage. Flake to pellet processing costs: Associated production costs from pelletization, including but not limited to facilities costs, utilities, labor, etc. The numeric input values were gathered from market participants, with median values used among responses. The inputs are subject to change pending further feedback or market cost changes, such as the recent inflation of production costs within the last ~2-4 years. This price excludes delivery costs of the final pellet. This price also excludes explicit margin adders, though some processing costs may include inherit margin depending on the processing yield fluctuation. For more information on these new series, or to share feedback, please contact Emily Friedman at Emily.friedman@icis.com.

HOUSTON (ICIS)–Even with recent poor weather at hand, the US harvest continues to advance with 9% of corn completed and 6% of soybean acreage finished, according to the latest US Department of Agriculture (USDA) weekly crop progress report. The weekly update showed there is 9% of the corn crop harvested, which is above the 8% rate from last year and the five-year average of 6%. Texas is the leading state with 80% of their crop done with North Carolina next at 47%. There is currently 85% of corn at the dented stage, which is behind the 88% achieved in 2023 but it is ahead of the five-year average of 84%. 45% of the crop is rated mature, which trails the 48% mark from last year, but the current pace is above the five-year average of 38%. For corn conditions, there is still 4% rated very poor and 8% as poor with 23% now as fair. There is 49% listed as good with 16% remaining as excellent. Soybeans dropping leaves is now at 44% of the crop, which trails the 2023 level of 47% but is higher than the five-year average of 37%. In the first update on soybean harvesting, the USDA said there is 6% of the crop completed, which is ahead of the 4% level from last year and the five-year average of 3%. Louisiana is the leading state with 46% completed followed by Mississippi at 44%. For soybean conditions, there is still 3% listed as very poor with 8% now as poor. 25% remains as fair and 52% as good, with there now 12% rated as excellent. In other harvesting updates, there is 10% of the cotton acreage completed with sorghum harvest having reached 24%.

HOUSTON (ICIS)–Gevo has received a patent for its process that converts ethanol into olefins in a single step, providing another way to make propylene from renewable feedstock, the US-based renewable chemicals producer said on Monday. The patent, No 12,043,587 B2, addresses the company’s process that relies on catalyst combinations for the process, which can make propylene and butylenes, which are also known as butenes. Gevo had licensed the technology to LG Chem. Chemical companies have had limited ways to produce propylene or butylenes from renewable feedstock. Technology already exists to dehydrate ethanol to produce ethylene. Companies could then convert the ethylene to propylene through a metathesis unit, but that would require an additional step and another plant, which would increase costs. Another route is to hydrotreat natural oils and used cooking grease to produce renewable naphtha. That naphtha could then be cracked in traditional ethylene plants to produce olefins and aromatics. This process faces possible feedstock constraints if companies wish to use nonfood feedstocks. Already, oleochemical producers that rely on tall oil have had to compete with renewable diesel producers for feedstock. Gevo did not compare the costs of its process to these existing ways to make propylene and butylenes from renewable sources.

NEW YORK (ICIS)–It has been a long time coming and there is plenty more time before the chemical industry finally sees a meaningful upturn in the durable goods cycle, in turn giving a much-needed boost to commodity chemicals, according to Jefferies. “We expect demand stabilization in 2025, with a restock cycle and a rate-driven durables goods cycle in 2026-2027 to set the stage for the next period of tight commodity chemical supply/demand balances – MDI (methylene diphenyl diisocyanate) and methanol first, in our view, then acetyls, then olefins,” said Laurence Alexander, analyst at Jefferies, in a research note. In his base case scenario, the analyst sees US durable goods demand flat to down 3% in 2025 and up around 10% in 2026. The anticipated turn in the cycle for housing and durable goods would be a strong catalyst for shares of Eastman, Huntsman, Avient and DuPont, he pointed out. For chemicals in the near term, Alexander expects Q3 2024 to show a return to “normal seasonality” and Q4 volume outlooks to be trimmed 1-2% on more caution on the Christmas spending season – especially in Europe – as well as automotive production this winter. TRIMMING OUTLOOK FOR CELANESEGiven the softer near-term outlook, the Jefferies analyst also trimmed his earnings per share (EPS) estimates on Celanese for Q3 (by $0.06 to $2.84), Q4 (by $0.05 to $3.09) and for 2025 (by $0.10 to $10.40). “Credit easing is likely needed to trigger a demand rebound, and any tailwind from an improved credit environment will likely not be evident until mid-2025 at the earliest,” said Alexander. “Although destocking has faded, demand trends remain broadly sluggish with few signs of a recovery. European demand has yet to trough, North America is flattish and the recovery in Asia has been muted,” he added. By end-market, he sees electronics likely rebounding but at a slower pace until consumer confidence improves and automotive production accelerates. Consumer durables and construction demand is likely to remain soft into next summer. And automotive demand is muted overall, with headwinds to production schedules likely in the near term. Longer term, he expects better momentum in electric vehicle (EV) sales in China. Focus article by Joseph Chang

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 September. INSIGHT: Wall Street reaction to Methanex/OCI deal negative on valuation, leverage Methanex’s announcement that it will acquire OCI Global’s international methanol business for $2.05 billion drew a swift negative initial reaction, with its stock price plunging 7.9% at the close of its first day of trading after the announcement. Storm Francine veers path, could potentially hit petchems hubs in west Louisiana Storm Francine continues strengthening into a hurricane as it approaches the southern costs of the US, but its path could veer slightly west and potentially hit key petrochemicals sites in Louisiana which border with Texas. US chem, oil operations begin shutting ahead of storm Francine Some chemical and upstream oil and gas companies are shutting down operations ahead of Tropical Storm Francine, which is expected to strengthen into a hurricane on Tuesday night and make landfall along the US coast of Louisiana on Wednesday or Wednesday night. Francine strengthens into hurricane, heads for US Gulf Coast Francine has strengthened into a hurricane and is moving northeastward across the Gulf of Mexico, with landfall expected in Louisiana, US, on Wednesday afternoon or evening. Louisiana chemical plants shut down as Hurricane Francine nears landfall, major capacities at risk Several chemical companies are shutting down plants in Louisiana, with others taking other precautionary measures as the eye of Francine – now a Category 2 hurricane – approaches the coast for imminent landfall. Hurricane Francine passes over Louisiana parish with many chem plants Ascension parish, home to Geismar and its many chemical plants, was among the regions hardest hit by Hurricane Francine, which has caused hundreds of thousands of power outages. SHIPPING: Asia-USEC container rates plunge by 20% as shippers avoid possible ILA strike Average global rates for shipping containers fell significantly this week, including a 21% decrease from Shanghai to New York, as shippers are shifting cargo deliveries to the US West Coast to avoid the planned strike on 1 October.

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 13 September. NEWS Argentina chemicals, industrial July output falls as industry bears brunt of recession Argentina’s chemicals and manufacturing outputs fell in July by 5.4% and 2.6% year on year, respectively, as the industrial sectors remain the most affected by consumers’ squeezed budgets. Argentina’s progress on fiscal consolidation still challenged by inflation – economist The Argentinian’s government attempt to turn the economy around has had certain successes in the fiscal front, but high inflation is still challenging the outlook as it continues to eat up on gains elsewhere, according to an economist at Buenos Aires-based Fundacion Capital. Brazil’s Petrobras launches natural gas processing unit in Rio de Janeiro Petrobras has begun start-up procedures for Brazil’s largest natural gas processing unit (UPGN) in Itaborai, near Rio de Janeiro, the state-owned energy major said on Wednesday. Brazil’s inflation breaks upward trend in August, but some subsectors keep rising Brazil’s annual rate of inflation fell to 4.24% in August, down from 4.50% in July, but analysts pointed to how some price rises in certain sectors continue unabated. Mexico inflation falls below 5% in August, paves way for more interest rate cuts Mexico’s annual rate of inflation fell quite considerably in August to 4.99%, down from July’s 5.57%, a development which is to reinforce the next cut to interest rates later this month, according to analysts. Argentina’s August inflation falls below 240% but monthly price increases remain over 4% Argentina’s annual rate of inflation fell in August to 237%, down from July’s 263%, but monthly price rises stood over the 4% mark, the country’s statistical office Indec said this week. Dutch Nouryon expands sodium chlorate capacity in Brazil, starts up new site Nouryon has expanded its sodium chlorate capacity in Brazil by starting up a new manufacturing site in Ribas do Rio Pardo, state of Mato Grosso do Sul, the Dutch chemicals producer said on Tuesday. Petrobras, Gerdau sign MoU for decarbonization projects Brazil’s Petrobras and steelmaker Gerdau have signed a non-binding Memorandum of Understanding (MoU) to evaluate commercial opportunities in decarbonization initiatives, the Brazilian energy major said this week. PRICING LatAm PP international prices steady to lower on cheaper imports International polypropylene (PP) prices were assessed as steady to lower across Latin American countries due to competitive offers from abroad and lower US propylene spot prices. LatAm international PE prices steady to lower on cheaper offers from abroad International polyethylene (PE) prices were assessed as steady to lower across Latin American countries due to cheaper offers from abroad. Latin America PVC business monitors potential supply tightening due to maintenance in Q3 Polyvinyl chloride (PVC) prices in Latin America remained steady this week, with the market closely watching US Gulf prices for potential changes in pricing strategies.  

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 13 September. Customers more willing to pay green premium as net zero transition gathers pace Chemical companies will find it easier to charge a green premium as the cost of carbon increases, fossil feedstock availability declines and customers realize the true value of the products they are buying. Global oil demand growth lowest since 2020 on China slowdown Global crude oil demand continued to decelerate in the first half of the year, the International Energy Agency (IEA) said on Thursday, with consumption growth of 800,000 bbl/day year on year the weakest since 2020. IPEX: Index falls in August as weak demand, softer crude put downward pressure on chemical prices in Asia The ICIS Petrochemical Index (IPEX) was down 1.3% in August month on month as weak downstream demand and softer upstream crude oil costs continued to exert downward pressure on chemical prices in northeast Asia. Europe PX, OX spot prices tumble on softer Asian market, lower contract values Europe paraxylene (PX) and orthoxylene (OX) spot prices plummeted week on week in the week ending 6 September, on the back of softer values in the influential Asian market and lower domestic contract prices, respectively. Demographic drag on chemicals to deepen A continuing flow of poor economic data caused further stock market jitters in September, and as the prospect of a meaningful recovery in the global economy recedes into next year, new analysis suggests that the demographic drag on growth may be stronger than previously thought.

SINGAPORE (ICIS)–China’s value-added industrial output growth in August slowed down to 4.5% year on year from the previous month’s 5.1%, official data showed. In August, equipment manufacturing contributed 47.9% of the total growth in industrial output, China’s National Bureau of Statistics (NBS) said on 14 September. Value-added industrial output consists of manufacturing, mining, as well as industrial enterprises. Almost 80% of industries and over 50% of products had year-on-year growth in August, according to NBS spokesperson Liu Aihua. Meanwhile, August retail sales increased by 2.1%, down compared with a 2.7% growth in July. Unemployment in urban areas grew to 5.3% in August from 5.2% in the previous month. In the first eight months of 2024, the unemployment rate averaged 5.2%. “Adverse impacts” from changes in the external environment are increasing, despite the economy’s general stability, the NBS said. Domestic demand has been insufficient, it added, noting reforms and policy measures need to be sped up to address growth and recovery.

SINGAPORE (ICIS)–Typhoon Bebinca made landfall early Monday in China’s financial hub of Shanghai, bringing strong winds and torrential areas to the region. The storm made landfall at around 07:30 local time (11:30 GMT) on Monday in the coastal area of Lingang New City in Shanghai’s Pudong region, the China Meteorological Administration said. The typhoon was packing maximum winds of around 151 kilometers/hour near its center. Following its landfall, Bebinca is expected to lose strength and become a tropical storm as it moves northwestward across southern Jiangsu province on Monday. It will further weaken into a tropical depression and eventually dissipate as it passes over Anhui province by the afternoon of 17 September. Bebinca is the strongest storm to hit Shanghai since Typhoon Gloria in 1949, according to state news media. Shanghai, a city with a population of 25 million, activated its highest level of emergency response on Sunday. This included halting railway services, closing ports, bridges, and highways, and cancelling all flights at its two airports. These disruptions are occurring during China’s three-day Mid-Autumn Festival public holiday which began on Sunday. China’s State Flood Control and Drought Relief Headquarters on 15 September activated the Level IV emergency response for east China’s Anhui Province and raised the response in Shanghai and Zhejiang to Level III. Level IV is the lowest emergency response level, indicating a potential threat but not an immediate crisis. Typhoon Bebinca was on the heels of Super Typhoon Yagi, which recently devastated Hainan Island in southern China, resulting in extensive damage. Yagi then continued its destructive path into northern Vietnam and Thailand, causing floods and damaging infrastructure. Thumbnail image: A man walks a street during heavy rain amid Typhoon Bebinca in Shanghai, China on 16 September 2024. Shanghai has closed its seaports and canceled over 600 flights in preparation for Typhoon Bebinca. (ALEX PLAVEVSKI/EPA-EFE/Shutterstock)