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Polyethylene30-Sep-2024
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson: Last week’s launch of a new
“stimulus bazooka” by the Chinese government
might lead to a rally in chemicals and polymer
pricing.
But so what if prices go up over the next few
weeks? The price rises will be of little
long-term consequence unless we see big shifts
in spreads and margins in the key polyethylene
(PE) market.
Between January 2014 and December 2021,
northeast Asia integrated variable cost
naphtha-based PE margins averaged $451/tonne;
from January 2022 until the third week of
September, they averaged just $2/tonne.
In late 2019/early 2020, northeast Asia PE
margins briefly turned negative as oversupply
increased. But the full downturn was delayed by
reduced feedstock availability and a surge in
PE demand resulting from the pandemic. Then
came the Evergrande Moment
Average CFR China PE price spreads over CFR
Japan naphtha costs are at just $280/tonne so
far this year, the lowest since our price
assessments began in 1993. We have seen three
consecutive years of new record-low spreads. It
is of course no coincidence that the three
years have followed the Evergrande Moment.
HDPE spreads would have to rebound by 129%,
LDPE spreads by 48% and LLDPE spreads by 88% to
see a return to the old market conditions.
Average PE spreads would thus have to rise by
80%.
Follow the ICIS PE spread and margin data every
week to discover whether a recovery is really
happening in China.
My view, as you know, is that China’s economy
faces deep long-term challenges resulting from
the end of the real-estate bubble and an ageing
population. The extent to which it can maintain
its dominant role in global exports is also in
question because of a much more difficult
geopolitical environment.
I don’t believe that any amount of likely
economic stimulus in China (there are political
and economic limitations on stimulus) can fully
address these challenges. It is what it is. We
need to get used to a Chinese chemicals market
where demand growth for some products might
even go negative.
You may disagree. But what we can and should
agree on is the story that’s been consistently
told by PE spreads and margins since January
2022.
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.
Gas30-Sep-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 27 September.
Asia
BD market sentiment to be driven by domestic
China fluctuations
By Ai Teng Lim 24-Sep-24 13:05 SINGAPORE
(ICIS)–Asian spot prices for butadiene (BD)
imports made sizeable gains this month,
alongside a bullish domestic yuan-denominated
market in China.
China
petrochemical futures rally on fresh economic
measures
By Fanny Zhang 24-Sep-24 16:42 SINGAPORE
(ICIS)–China’s petrochemical futures markets
surged on Tuesday following announcement of
fresh measures to rev up activity in the
world’s second-biggest economy.
India
to be among global oil demand growth drivers in
2023-2050 – OPEC
By Nurluqman Suratman 25-Sep-24 13:09 SINGAPORE
(ICIS)–India is expected be a major driver of
global long-term oil demand growth through to
2050, alongside the Middle East and Africa,
OPEC said in a report.
Market diversification
key to weather challenges in Asia
recycling
By Arianne Perez 23-Sep-24 12:46 SINGAPORE
(ICIS)–Asian producers of recycled polyolefins
have been struggling to stay afloat since 2023
amid a general slump in trade of fast-moving
consumer goods (FMCGs).
Slow
recovery in Asia petrochemical markets; Q4
sentiment bearish
By Jonathan Yee 25-Sep-24 14:26 SINGAPORE
(ICIS)–Macroeconomic challenges in China have
kept overall sentiment bearish in Asia’s
petrochemical markets, but there was a late
pick-up in demand for some products just days
before a week-long holiday in the country in
October.
Intra-Asia VAM spot
trades may contract amid downstream
woes
By Hwee Hwee Tan 26-Sep-24 10:46 SINGAPORE
(ICIS)–Asia’s import demand for vinyl acetate
monomer (VAM) is being dampened by slower
demand and macroeconomic woes persisting into
the fourth quarter of 2024.
INSIGHT: China 2024 crude
imports, throughput to fall on economic
headwinds
By Patricia Tao 27-Sep-24 14:27 SINGAPORE
(ICIS)–China is expected to record lower crude
oil imports and refinery throughput this year
on weaker-than-expected distillates demand
during the typical peak consumption season amid
economic headwinds and increased market
penetration of alternative fuels.
PODCAST: Asia fatty
alcohol market uptrend may prompt switch to
LAB
By Damini Dabholkar 24-Sep-24 14:24 SINGAPORE
(ICIS)–Prices of Asia’s fatty alcohol midcuts
may be nearing a ceiling as demand from Europe
is expected to wane after October, given the
looming EU Deforestation Regulation (EUDR)
which starts on 30 December.
Ethylene27-Sep-2024
HOUSTON (ICIS)–Nearly a quarter of US oil
production in the Gulf of Mexico remains shut
in following Hurricane Helene, a government
agency said on Friday.
The following table shows the disruptions to US
Gulf production that were caused by Helene,
according to the Bureau of Safety and
Environmental Enforcement (BSEE).
Total
% of US Gulf
Oil, bbl/day
427,000
24.39%
Gas, million cubic feet/day
343
18.46%
Source: BSEE
Total
% of US Gulf
Platforms evacuated
9
2.43%
Rigs evacuated
0
0%
Source: BSEE
Helene has weakened to a tropical depression
after making landfall on Thursday night as a
powerful Category 4 hurricane on the
northwestern coast of Florida.
Since making landfall, the storm has knocked
out power to millions, caused floods and
produced record storm surges.
It set new all-time tide gauge records in the
Tampa Bay area, a hub for the fertilizer
industry, according to the meteorological firm
AccuWeather.
Overall damage could be in the tens of billions
of dollars, AccuWeather said.
Such widespread power outages and floods will
lower demand for plastics and chemicals.
Afterwards, repairs should boost demand for
paints, coatings and other plastics and
chemicals used in construction.
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Acetone27-Sep-2024
LONDON (ICIS)–Ahead of the approaching
European Petrochemical Conference (EPCA) in
Berlin 7-10 October, ICIS editors discuss
market conditions in a variety of solvent
markets.
Ahead of the approaching European Petrochemical
Conference (EPCA) in Berlin 7-10 October, ICIS
editors discuss market conditions in a variety
of solvent markets.
Market updates on methyl ethyl ketone
(MEK), methyl isobutyl ketone (MIBK),
isopropanol (IPA), phenol, acetone, toluene,
mixed xylenes, glycol ethers and propylene
glycol ethers, butyl acetate and ethyl acetate
Trade flows and impact of freight rate
movements
Overcapacity versus low demand levels
Upcoming maintenance programs
In this episode, Jane Massingham talks to
editors Nick Cleeve, Jane Gibson, Zubair Adam,
Cameron Birch and Marion Boakye.
Ammonia27-Sep-2024
HOUSTON (ICIS)–More than 4 million outages
were reported in the southeastern US on Friday
after Hurricane Helene made landfall as a
powerful Category 4 storm in northwestern
Florida.
The southeastern US does not have a lot of
chemical production. But such widespread power
outages, in addition to disruptions caused by
flooding, will lower demand for plastics and
chemicals more broadly.
The power outages are concentrated in the US
states of South Carolina, Georgia, Florida and
North Carolina, according to the website
poweroutage.us.
Among the few chemical plants near Helene’s
landfall site are a crude sulphate turpentine
refinery and a crude tall oil (CTO) refinery
that Kraton owns in Panama City, Florida. Tall
oil is a feedstock fatty acids, renewable
diesel and sustainable aviation fuel (SAF).
Kraton has not returned requests for comment in
regard to its preparations for Helene.
Since Helene made landfall, it has weakened
into a tropical storm, with maximum sustained
wind speeds of 45 miles/hour (75 km/hour),
according to the National Hurricane Center.
The following map shows its projected path.
Source: National
Hurricane Center
PORT CLOSURESInbound and
outbound traffic at Port Tampa Bay ceased ahead
of the storm, and the port’s shipping channels
were closed.
Tampa is an important hub for the US fertilizer
industry, hosting corporate offices, trading,
product storage, shipping and other logistical
operations.
Other port closures include Panama City, St
Joe, St Petersburg, Manatee and Key West on
Florida’s west coast, as well as Fernandina,
Jacksonville and Canaveral on Florida’s east
coast.
ENERGY DISRUPTIONS
The following table shows the disruptions to US
Gulf production that were caused by Helene,
according to the Bureau of Safety and
Environmental Enforcement (BSEE).
Total
% of US Gulf
Oil, bbl/day
441,923
25.25%
Gas, million cubic feet/day
363.39
19.81%
Source: BSEE
Total
% of US Gulf
Platforms evacuated
27
7.28%
Rigs evacuated
1
20%
Source: BSEE
The Gulf of Mexico accounts for 14% of US
production of crude oil and 5% of total dry gas
production, according
to the Energy Information Administration
(EIA).
RAIL DISRUPTIONS
Railroad company CSX planned to
close its TRANSFLO terminals in Tampa and Tampa
Port on Thursday.
Railroad company Norfolk Southern said that
customers with shipments moving through the
southeast and mid-Atlantic should prepare for
delays.
RECONSTRUCTION AND CHEM
DEMANDHurricane Helene’s current
path could put $5.64 billion worth of housing
at risk to storm surge flooding, an insurance
data company said on Wednesday.
Nearly 25,000 residential properties in the
Tallahassee and Homosassa Springs metropolitan
areas are at risk, said CoreLogic.
“Helene has the potential to become a
once-in-a-generation storm,” said Jon Porter,
chief meteorologist for the meteorology firm
AccuWeather. It estimates that most of Florida
and much of the southeastern US will be exposed
to winds reaching 40-60 miles/hour.
AccuWeather expects that most of Florida and
all of the states of Georgia, South Carolina
and North Carolina are at risk for tornados.
For hurricanes in general, reconstruction can
translate to increased demand for many
chemicals and polymers.
The white pigment titanium dioxide (TiO2) is
used in paints.
Solvents used in paints and coatings include
butyl acetate (butac), butyl acrylate
(butyl-A), ethyl acetate (etac), glycol ethers,
methyl ethyl ketone (MEK) and isopropanol
(IPA).
Blends of aliphatic and aromatic solvents are
also used to make paints and coatings.
For polymers, expandable polystyrene (EPS) and
polyurethane (PU) foam are used in insulation.
Polyurethanes are made of methylene diphenyl
diisocyanate (MDI), toluene diisocyanate (TDI)
and polyols.
High density polyethylene (HDPE) is used in
pipe. Polyvinyl chloride (PVC) is used to make
cladding, window frames, wires and cables,
flooring and roofing membranes.
Unsaturated polyester resins (UPR) are used to
make coatings and composites.
Vinyl acetate monomer (VAM) is used to make
paints and adhesives.
Thumbnail shows Helene before it made
landfall. Image by National Hurricane
Center.
Recycled Polyethylene Terephthalate27-Sep-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including:
October price talks underway, but some
different views emerging
Flake and food-grade pellet demand still
flat ahead of October
Market divided over views for Q4 and Q1
demand
Crude Oil27-Sep-2024
LONDON (ICIS)–The economic outlook in the EU
and eurozone was stable in September, as higher
construction and consumer confidence was offset
by a decrease in industry.
The European Commission’s Economic Sentiment
Indicator (ESI) was flat in the EU at 96.7
points and fell by 0.3 points in the eurozone
to 96.2, according to official data on Friday.
“The steadiness of the ESI in the EU resulted
from improved confidence in construction and
among consumers, offset by a decrease in
industry confidence. Confidence in services and
retail trade remained broadly stable,” the
Commission said in a statement.
For the largest EU economies, the ESI worsened
in France (-1.4) and Germany (-1.2), while it
improved in Poland (+2.0), Spain (+1.9), Italy
(+1.2) and the Netherlands (+0.5).
Employment prospects for September were also
broadly unchanged, with the Commission’s
Employment Expectations Indicator (EEI) up 0.3
points to 100.0 in the EU and higher by 0.1
points to 99.5 in the eurozone.
Ethylene27-Sep-2024
HOUSTON (ICIS)–Hurricane Helene made landfall
Thursday night as a Category 4 storm in the
northwestern part of the US state of Florida.
The storm made landfall in the Big Bend region
just east of the mouth of the Aucilla River,
according to the National Hurricane Center at
23:20 Eastern time (3:20 GMT Friday). Maximum
sustained winds were around 140 miles/hour.
Helene was moving north-northeast, with a
hurricane warning in effect for Anclote River
to Mexico Beach.
Big Bend is a sparsely populated region of
Florida.
However, a storm surge warning includes Tampa
Bay, an important hub for the US fertilizer
industry.
Nearly 1 million customers in Florida were
without power, according to tracker
PowerOutage.us.
PORT CLOSURESInbound and
outbound traffic to Port Tampa Bay ceased ahead
of the storm, and the port’s shipping channels
were closed.
Port Tampa Bay is an energy products gateway
for oil and gas, jet fuel and petroleum
products, as well as fertilizers. It is also a
gateway for construction and building
materials.
Other port closures include Panama City, St
Joe, St Petersburg, Manatee and Key West on
Florida’s west coast, as well as Fernandina,
Jacksonville and Canaveral on Florida’s east
coast.
RAIL DISRUPTIONS
Railroad company CSX planned to close its
TRANSFLO terminals in Tampa and Tampa Port on
Thursday.
Railroad company Norfolk Southern said that
customers with shipments moving through the
southeast and mid-Atlantic should prepare for
delays.
RECONSTRUCTION AND CHEM
DEMANDHurricane Helene’s current
path could
put $5.64 billion worth of housing at risk
to storm surge flooding, insurance data company
CoreLogic said on Wednesday.
Reconstruction following hurricanes can
increase demand for many chemicals and
polymers.
Additional reporting by Al Greenwood
Potassium Sulphate (SOP)26-Sep-2024
HOUSTON (ICIS)–Australian BCI Minerals
announced it has commenced operations at its
Mardie salt and potash project after receiving
all necessary Western Australian and
Commonwealth government environmental
approvals.
It has begun filling evaporation ponds 1, 2,
and 3 with BCI Minerals set to update and
resubmit its groundwater monitoring and
management plan (GMMP) for further approval
before filling evaporations ponds 4 through 9.
Construction of the salt-first component of the
project is over halfway completed with it
expected the company will achieve first salt on
ship in Q2 2027.
Located 80km south of Karratha, in the Pilbara
region, Mardie is anticipated to produce 5.35
million tonnes/year of high-quality industrial
salt for export and 140,000 tonnes/year of
sulphate of potash (SOP). It has an operating
life expected to exceed 60 years.
“Australia hasn’t developed a salt project of
this significance in 25 years, and the Mardie
Project will be Australia’s largest solar salt
project and the third largest globally,” said
David Boshoff, BCI Minerals managing director.
“With the projected growth in demand for high
grade industrial salt in our target Asian
markets, BCI Minerals is strongly positioned to
supply global markets with Mardie salt for
generations.”
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