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Polypropylene02-Oct-2024
LONDON (ICIS)–Underlying demand for European
recycled agglomerates has increased throughout
2024, and is expected to rise sharply as
pyrolysis-based chemical recycling scales.
The majority of recycled polyolefin
agglomerates are currently used by mechanical
recyclers. Nevertheless, pyrolysis based
chemical recyclers are increasingly targeting
agglomerates as a feedstock.
While chemical recycling can process waste
types that it would be difficult or impossible
for mechanical recyclers to use, though, it is
a myth that there is no link between the input
waste quality and output quality of chemical
recyclers, and that chemical recyclers can use
any form of waste.
Take pyrolysis-based chemical recycling as an
example. Pyrolysis-based plants targeting mixed
plastic waste as feedstock – with a focus on
polyolefins – currently account for ~60% of all
operating chemical recycling capacity in Europe
according to ICIS Recycling Supply Tracker –
Chemical.
Typically, pyrolysis-based processes aim to
limit chlorine content in bales- due to
corrosion risks – polyethylene
terephthalate (PET) content in bales – because
it doesn’t pyrolyse and it creates oxygenation
– nylon and flame retardants – which also
oxygenates the process.
They also typically aim to minimise moisture
content, because loose water molecules in the
reactor can cause changes to pressure values.
The production of pyrolysis oil requires an
inert atmosphere (i.e. heating in the absence
of oxygen).
The quality of input waste is one of the
largest dictators of output quality across
pyrolysis oil grades, dictating the type of
impurities and boiling point. Boiling point,
chlorine, sulphur, fluorine, nitrogen and
oxygen contents are among the key determiners
of pyrolysis oil prices – with an average
spread of €1,150/tonne currently being seen
between the lowest value (tyre-derived) and
highest value (naphtha substitute) grades of
pyrolysis oil that ICIS prices.
Any sorting that needs to be done to remove the
presence of these materials in the input bale
adds additional cost and slows throughput.
Pyrolysis oil can be – and often is – run
through an upgrader or purifier to enhance its
properties, but the quality of input waste has
an impact both on yield and quality – and,
therefore, profitability. This is one of the
reasons the environmental impact of pyrolysis
oil remains unclear and varies from producer to
producer.
While pyrolysis oil producers continue to test
with a wide-range of waste input qualities,
many producers are turning to agglomerations of
polyolefins, and it is expected to become a
leading feedstock for pyrolysis-based chemical
recycling in the mid-term.
This is in response to some of the challenges
chemical recyclers have found with
pre-treatment and sorting on site. This is
particularly connected to the need to adapt
processes continuously to account for
continually shifting feedstock mixes.
Pre-treating and sorting at waste manager level
creates economies of scale and prevents the
slowdown in throughput sometimes associated
with chemical recyclers sorting on site.
The use of agglomerates helps pyrolysis oil
producers:
Limit impurities such as sulphur, fluoride,
oxygen, chlorine and nitrogen in finished
pyrolysis oil – which typically results in a
higher realizable price for that pyrolysis oil,
and greater feasibility for use in a cracker
Enable placing feedstock straight into the
reactor and thereby save on capital expenditure
Ensure a more consistent feedstock, with
pre-treatment handled at waste managers which
benefit from economies of scale and
long-standing technical know-how
Avoid slowing throughput and the expense of
onsite sorting
Avoid degradation and allow players to
stockpile material ahead of plant scale-ups
Target specific waste input mixed (although
this can result in additional cost premiums)
In response to the growing interest in recycled
polyolefin agglomerates, ICIS has launched a
new recycled agglomerates price index as part
of its mixed plastic waste and pyrolysis oil
(Europe) pricing service.
The new index is for spot prices of
agglomerated forms of mixed polyolefin material
containing at least 95% polyolefin content and
a maximum moisture content of 3%. It is
assessed weekly on an ex-works Europe basis.
The mixed plastic waste and pyrolysis oil
(Europe) pricing service also offers pricing
for mixed polyolefin bales, high plastic
content refuse derived fuel (RDF) bales, reject
unsorted plastic waste bales from municipal
recover facilities (MRFs), and 3 spot price
series for pyrolysis oil (tyre derived,
non-upgraded, and naphtha substitute).
For more information on these new series, or to
share feedback, please contact Mark Victory at
mark.victory@icis.com.
Crude Oil02-Oct-2024
SINGAPORE (ICIS)–South Korea’s overall export
growth slowed in September, as petrochemical
exports dipped 0.6% year on year to $3.84
billion, fueling expectations of a potential
monetary policy easing next week.
Total exports grew for 12th straight month
in September
Economists expect central bank to soon cut
its benchmark interest rate
Overall shipments to China, US surge in
September
The country’s headline export growth slowed to
7.5% year on year in September at $58.8
billion, down from 11.4% in August, data from
the Ministry of Trade, Industry and Energy
(MOTIE) showed on 1 October.
This marks a full year of continuous growth for
South Korean exports, fueled by record-high
semiconductor sales and the strongest September
performance ever for automobile exports.
Exports of chemical, steel, and oil products
weakened in September, with falling oil prices
dragging down the export prices of those
products, according to Japan’s Nomura Global
Markets Research.
The slowdown was mainly attributed to fewer
working days due to a three-day public holiday
on 16 September.
South Korea’s automobile industry saw a
resurgence in September, with auto export
growth rebounding to 4.9% year on year after
contracting by 4.3% in August.
This positive shift followed three consecutive
months of decline and was driven by a recovery
in demand for environmentally friendly cars
like hybrids and electric vehicles, according
to Nomura.
The return to growth also reflects a
normalization of production schedules after
disruptions caused by summer breaks and labor
strikes, which had previously hampered the
industry, it added.
Meanwhile, South Korea’s import growth also
decelerated to 2.2% year on year in September,
down from 6.0% in August due to weaker energy
imports.
This resulted in a wider trade surplus of $6.7
billion, compared with August’s $3.83 billion.
By region, exports to China reached their
highest point this year at $11.7 billion,
marking a 6.3% increase, driven by demand for
semiconductors and wireless communication
devices, according to MOTIE.
This surge also led to a trade surplus of $0.5
billion with China, MOTIE data showed.
Shipments to the US also hit a record high for
September with $10.4 billion in exports, a 3.4%
rise, and extended its 14-month growth streak.
Exports to the EU climbed 5.1% to reach $6
billion, fueled by strong demand for IT goods.
STRONG EXPORTS TO SUPPORT INTEREST RATE
CUT IN OCTOBERWith solid exports
easing recession concerns amid weak
consumption, the Bank of Korea (BOK) is
expected to deliver only a 25-basis point cut
at the upcoming 11 October meeting to ease the
household financial burden and aid consumption
growth, according to Nomura.
“However, although tighter macroprudential
measures are having an impact in slowing
housing price inflation and household debt
growth, we expect the BOK to remain focused on
controlling housing prices and market
expectations about the number of rate cuts in
this easing cycle.”
Separately, data from Wednesday showed that
South Korea’s consumer price index (CPI) slowed
more than expected in September, rising 1.6%
year-on-year, the weakest annual increase since
February 2021.
This brings the inflation rate below the BOK’s
2% target, fueling further expectations of an
interest rate cut.
Core CPI, which excludes volatile food and
energy items, rose by 2.0% year on year, slower
than the 2.1% expansion the previous month and
the weakest since November 2021.
The BOK has held interest rates at a 16-year
high of 3.50% since August, citing financial
stability concerns amid a hot housing market.
The BOK in July slashed its 2024 growth
forecast to 2.4% from 2.5% previously, after
Asia’s fourth-largest economy unexpectedly
contracted in the second quarter.
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.
Focus article by Nurluqman
Suratman
Gas02-Oct-2024
Week-long heatwave in gas production states
Hot summer may intensify export-domestic
supply debate
Darwin and Broome temperatures soar
SINGAPORE (ICIS)–Australian Bureau of
Meteorology (BOM) has issued warnings
for a severe-to-extreme heatwave in parts of
Northern Territory (NT) and Western Australia
(WA) from 30 September, close to LNG production
hubs in Darwin and at the Woodside-operated
North West Shelf.
The extreme heatwave will last for six days
starting 2 October over parts of northern NT,
with a larger range of the region and areas
near North West Shelf experiencing the severe
heatwave from 30 September to 8 October,
according to the BOM forecast.
The weather data monitor said Darwin had the
“hottest September in more than 100 years”.
High temperatures pose risks to cooling
facilities at liquefaction plants, which may
curb LNG output. This has not yet happened to
LNG facilities in the areas, according to
operators.
“We do not expect a significant impact to
Ichthys LNG production as the heatwave is
expected to last approximately 1 week and
peaking today/tomorrow,” an Inpex spokesperson
told ICIS 2 October.
The Chevron-operated Gorgon and Wheatstone gas
facilities are “not subject to a current
heatwave assessment” due to their distance from
the heat center Broome, Chevron’s spokesperson
told ICIS.
A Woodside spokesperson said that, “we are not
experiencing any unusual weather in Karratha,
where our operations are located.”
SUPPLY TENSION
Although the areas affected by the heatwave are
not densely populated, hot weather ahead this
upcoming southern hemisphere summer could lead
to increased electricity use for
air-conditioning and industrial cooling.
Australia’s 2023/24 summer electricity demand
was 776MW more than 2024 winter, according to
Australian Energy Regulator
data.
Should the upcoming summer experience high
temperatures, which is possible according to
the BOM forecast, the summer-winter demand gap
would further widen.
Source: Australia Bureau of Meteorology
Energy resource exports from Australia have
been challenged because domestic electricity
users pay premiums for local coal and gas.
However, WA state recently
eased an onshore gas export ban that had
been in place since 2020.
The government has been urging LNG exporters to
secure domestic supplies in the context of
growing demand in its east coast. Gas supply
would fall short of domestic demand from 2027,
the Australian Competition and Consumer
Commission (ACCC) said in its latest
report.
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Polyethylene02-Oct-2024
SINGAPORE (ICIS)–Click here to
see the latest blog post on Asian Chemical
Connections by John Richardson.
We now have 32 months of trade and pricing data
since the end of the 1992-2021 Chemicals
Supercycle and so it is worth taking stock of
what the numbers are telling us.
And as we have 32 months of information to draw
on since the end of the Supercycle, which is
from January 2022 until August 2024, it is
worth making like-for-like comparisons with the
32-month period immediately before the end of
the Supercycle – May 2019 until December 2021.
Focusing just on polypropylene (PP) with the
story the same in many other products:
South Korea and Taiwan saw declines in PP
sales turnover in China of $1.1 billion and
$694 million respectively when this two 3-month
periods are compared. Despite its feedstock
advantages, Saudi Arabia saw its turnover fall
by $681m followed by Singapore at $633m and
Thailand at $613 million .
Losses across China’s top ten trading
partners totalled $4.6bn. The only winner was,
not surprisingly, the Russian Federation with a
turnover gain of $102 million.
Another symptom of a chronically oversupplied
market has been a collapse in margins as
another chart in today’s post illustrates:
In May 2019-December, the average of both
naphtha and PDH-based PP margins was
$281/tonne, but this fell to just $12/tonne in
January 2022-September 2024. And this latter
period has involved many weeks of negative
margins.
A pivotal turning point in global chemicals
markets, the most important since 1992, was the
Evergrande Moment. And yet far are too few
references to this essential context.
China’s debts and its demographics told us from
as early as 2011 that a steep fall in economic
growth had to happen. We also knew from 2014
onwards, thanks to a shift in government
policy, that much-greater chemicals
self-sufficiency was on the way.
This gave producers plenty of time to build
strategies that reduced their dependence on
China.
But how many companies took note of what the
demographic and debt trends were telling us?
How many took note of the threat to China’s
exports from 2018 onwards as the geopolitical
environment deteriorated?
My suspicion is that far too few companies were
ready for the changes now well underway, which
are reflected in the above demand, supply,
sales turnover and margins data.
This was because people chose to believe
misleading nonsense about the “rise of China’s
middle class” when the numbers on China’s per
capita incomes, the country’s birthrate and the
rise in its debts exposed the myth.
The chemicals industry is science and data
driven except, seemingly, in one critical area:
Macroeconomics.
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.
Speciality Chemicals01-Oct-2024
HOUSTON (ICIS)–Participants in the US chemical
industry worry that a prolonged strike by US
Gulf and East Coast dock workers will hurt
exporters and lead to supply surpluses, and
some carriers are already initiating port
congestion surcharges that will add increased
costs on top of delays to both imports and
exports.
As expected, dockworkers on the US East and
Gulf Coasts went
on strike early on Tuesday after labor
union International Longshoremen’s Association
(ILA) rejected the latest wage offer by
employers’ group United States Maritime
Alliance (USMX).
While the US government has said it will not
intervene, some analysts, including Peter Sand,
chief analyst at ocean and freight rate
analytics firm Xeneta, think government
intervention will be required to bring the
dispute to an end.
“The latest statement by the ILA suggests there
is very little prospect of the two sides
reaching a mutually agreeable resolution,” Sand
said. “To stop trade from entering the US on
such a scale for a prolonged period of time is
unthinkable so the Government will need to step
in for the good of its people and economy.”
Kevin Swift, ICIS Senior Economist for Global
Chemicals, said the strike could cost the US
economy up to $5 billion/day.
“This will affect imports from Germany, the
Netherlands and other European nations,” Swift
said. “I think the effect is more on specialty
chemicals than resins.
Swift said the ultimate disruption and cost to
the economy depends on how long the strike
lasts.
IMPACT TO CHEM
MARKETSThe strike is already
impacting US polyethylene (PE) exports.
Container ships also transport polymers, such
as PE and polypropylene (PP), which are shipped
in pellets.
A PE trader in South America told ICIS that
they are halting sales of US material destined
for Brazil until additional information is
available since they are unable to inform
clients of the estimated departure date.
According to the trader, some cargoes could be
delayed by 30 days.
The US is the main origin of PE imports into
Brazil.
The polyvinyl chloride (PVC) Industry is
concerned as all US Gulf PVC exports move out
of one of the impacted East Coast ports.
This could result in a long inventory situation
and an increase in days of supply if producers
and traders are unable to execute on export
transactions due to the port strike.
In the polyethylene terephthalate (PET) market,
imports of PET resins have already been
diverted to the US West Coast in anticipation
of the work stoppage.
But this places extra pressure on the rail and
trucking industries which will need to move
that material to destinations that were
previously reached from the US Gulf or the East
Coast.
Imports of purified terephthalic acid (PTA),
used to make PET, that typically come from
South Korea and Mexico, could be affected by
the strike.
Even if some PTA gets delivered on the West
Coast, it will still need to be transported to
the East Coast where most PET plants are
located.
CARRIER SURCHARGES
Market sources are telling ICIS they are seeing
congestion surcharges between $1,000-3,000/FEU
(40-foot equivalent unit), with some citing
even higher surcharges.
Sand said that extreme increases in container
costs cited by ILA president Harold Daggett
have not been seen yet.
In a statement on 30 September, Daggett said
carriers are charging $30,000/container.
Sand cited Xeneta data, which is based on more
than 450 million crowdsourced datapoints,
showing average spot rates on the major
fronthaul from Asia to US East Coast were at
around $7,000/FEU on 1 October.
“While average spot rates from north Europe to
the US East Coast have increased 50% since the
end of August, they are still only $2,800/FEU,”
Sand said.
Supply chain advisors Drewry also show rates
from Asia to the USEC at $6,000/FEU, and rates
from Asia to the USWC are at $5,500, although
the rate of decline has slowed with more
traffic heading that way because of the strike.
Liquid chemicals that are largely transported
by tankers are unlikely to be affected.
But more liquid chemicals are being moved on
container ships in isotanks.
Focus story by Adam Yanelli
Additional reporting by Stefan Baumgarten,
Emily Friedman, Bruno Menini, Antulio Borneo
and Kelly Coutu
Visit the ICIS Logistics – impact on
chemicals and energy topic
page
Thumbnail image shows a
container ship carrying cargo
on its way to Antwerp
Harbour. (OLIVIER
HOSLET/EPA-EFE/Shutterstock).
Ammonia01-Oct-2024
HOUSTON (ICIS)–As port operations along the
East Coast and Gulf Coast came to a halt amid a
union strike underway, the US fertilizer
industry was carefully watching the labor
developments but is not overly concerned about
the situation having an immediate impact on
activities or price direction.
Part of this outlook on the port problem comes
from a perspective of fertilizer participants
that the work stoppage will be short in
duration as the economic consequences will be
severe if protracted.
This latest labor disruption began when union
International Longshoremen’s Association (ILA)
rejected the latest wage offer by employers’
group United States Maritime Alliance (USMX).
This commenced a strike at 36 ports stretching
from Maine to Texas, and although the labor
talks were said to be continuing there was no
further progress reported as of late on 1
October.
Also, the US fertilizer sector recently
experienced the Canadian rail strike, which did
provoke some steep concerns before it was
quickly resolved so there is thought this
situation could follow a similar course and end
with a quick resolution.
There are some thoughts this strike could be
settled within a few days, although the
government has indicated that it will not
intervene in the situation.
An industry participant echoed the overall
outlook in saying “if the short term is like
that, I do not expect any fertilizer related
issues.”
Domestic fertilizer prices should not see any
immediate escalation because of this strike
activity because demand is still fairly limited
following the recent hurricanes and with the
ongoing harvest progress.
In addition, most of those volumes to be used
in the coming weeks for end of the year
applications, or stockpiled for next spring,
saw the majority of movement over the last part
of summer and now are mostly in place already.
US producers did not immediately respond to a
request for comment but Canadian fertilizer
major Nutrien said that while the strike might
not have any consequences directly for their
operations, there is concern over the larger
repercussion if this stoppage turns lengthy.
“As the world’s largest supplier of crop inputs
and services, Nutrien depends on reliable
supply chains to serve North American and
offshore customers,” said a Nutrien
spokesperson.
“While the East Coast port strike is not
expected to materially impact our shipments,
any extended disruption will be felt more
broadly in the supply chain, and we urge
parties to dispute to achieve a timely
resolution.”
Ammonia01-Oct-2024
HOUSTON (ICIS)–Canadian fertilizer major
Nutrien confirmed it is in the process of
restarting its Augusta, Georgia, facility.
The operation which produces several products
including ammonia and urea was shut down after
Hurricane Helene made landfall under safety
protocols during storm induced power failures.
“I can confirm that Augusta is in start-up and
expected to be back online later in the week,”
said a Nutrien spokesperson.
The plant’s annual production capacity is
listed at 765,000 tonnes of ammonia, 415,000 of
ammonia nitrate, 400,000 tonnes of UAN and
260,000 tonnes of urea.
The producer had said on 30 September all their
colleagues were safe at their locations but
that in many areas, the roads had remained
closed due to downed power lines and flooding.
Further Nutrien did expect that it could take
several days before their full post storm
assessment was completed.
Speciality Chemicals01-Oct-2024
BARCELONA (ICIS)–ADNOC’s agreement to buy
Covestro ahead of next week’s European
Petrochemical Association (EPCA) annual meeting
highlights the challenges and opportunities
facing Europe’s beleaguered chemical industry.
Abu Dhabi National Oil Co (ADNOC)
to
acquire Covestro for equity value of
€11.7 billion
ADNOC diversifies downstream from oil and
gas
Covestro global leader in polycarbonate
(PC) and polyurethanes (PU)
PC and PU struggle with poor demand from
automotive, construction
Covestro operating profit slumped from
around €3bn in 2021 to near €1bn in 2023
Covestro boasts strong
sustainability-related product portfolio
More M&A likely in Europe
petrochemicals thanks to cheap bottom-of-cycle
valuations
Oil prices may collapse to $30/bbl if OPEC
goes for market share
In this Think Tank podcast, Will
Beacham interviews Nigel
Davis and John
Richardson from the ICIS market
development team 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.
Speciality Chemicals01-Oct-2024
LONDON (ICIS)–Abu Dhabi state oil and
petrochemicals player ADNOC has launched a
public takeover offer for Germany-based
producer isocyanates, polycarbonates and
adhesives specialist Covestro, representing an
equity value of €11.7 billion.
After over a year of reports of a possible deal
between the players and concrete negotiations
that have been underway since June this year,
the Emirati company made a concrete public
takeover offer of €62 per share.
The price represents a 21% premium to
Covestro’s per-share value at the close on 23
June, when the company announced the beginning
of due diligence procedures between the two
companies.
ADNOC estimates the enterprise value of the
deal, which also includes net debt and pension
obligations that would be taken on as a result
of a purchase, at €14.7 billion.
The company will also subscribe to new shares
representing a 10% increase of Covestro’s share
capital at the offer price, which will result
in proceeds of €1.17 billion to be used to
further the Leverkusen-based producer’s growth
strategy.
The company had not responded for requests for
comment on whether that sum is part of the
offer price or in addition to it at the time of
publication.
The deal is subject to a minimum acceptance
threshold of 50% of Covestro’s issued share
capital plus one share, with Covestro’s
management and supervisory boards backing the
deal.
The joint investment agreement, which would
stand until the end of 2028 if the deal goes
through, ADNOC has committed not to sell,
close, or significantly reduce Covestro’s
business activities, and to abide by existing
works agreements.
“We are convinced that the agreement reached
today with ADNOC International is in the best
interest of Covestro, our employees, our
shareholders, and all other stakeholders,” said
Covestro CEO Markus Steilemann.
The deal will play into ADNOC’s plan to
diversify and build out its chemicals platform,
according to CEO Sultan Adhem Al-Jaber.
“This strategic partnership is a natural fit
and aligns seamlessly with ADNOC’s ongoing
smart growth and future proofing strategy and
our vision to become a top five global
chemicals company,” he said.
If the takeover deal closes, Covestro will
continue to be managed as a stock corporation,
the company added.
(Update re-leads, adds detail throughout)
Thumbnail photo source: Covestro
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