LONDON (ICIS)–The UK economy grew at a slower rate than initially thought in the second quarter, according to revised GDP figures from the Office for National Statistics (ONS) on Monday. The official statistics agency revised down quarterly GDP growth to 0.5% from 0.6% in its first estimate in August. Compared to the same quarter in 2023, GDP growth was up by 0.7%, revised down from an initial estimate of 0.9%. “The quarterly path of real GDP at an aggregate level is largely unchanged,” the ONS said in a statement.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which suggests Saudi’s decision to focus on market share may turn out to be the catalyst for deflation. 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. Paul Hodges is the chairman of consultants New Normal Consulting.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 27 September. Intensifying seller competition pushes Europe plasticizer DOTP spot prices to nine-month low Intensifying competition between Turkish, northeast Asian and local sellers pushed down dioctyl terephthalate (DOTP) prices in the European plasticizers spot market. BASF sets new corporate strategy, mulls ag solutions IPO, to exit Brazil coatings BASF is planning an overhaul of its structure, marking a clearer delineation between businesses it considers core and “standalone” units serving specific industries, and is readying the separation of its agricultural solutions operations. Europe PX imports down more than a third in H1 amid softer demand, freight costs Imports of paraxylene (PX) into the EU and the UK fell by 35.6% in the first half of 2024 year on year because of weaker downstream demand and higher freight costs, according to new data from the ICIS Supply and Demand database. Europe PP September contract prices soften on underwhelming demand European polypropylene (PP) contract prices have softened for September, despite initial offers of increases. September flash PMIs show eurozone economy stagnating, UK still growing Initial purchasing manager index (PMI) figures for the eurozone reveal that the region’s economy is contracting, with the previously resilient services sector weakening and the manufacturing recession deepening.

SINGAPORE (ICIS)–In a bold move to revitalize its economy and restore investor confidence, China unveiled a comprehensive package of monetary and fiscal measures less than a week before the country goes on a week-long holiday. Concerns about fundamental weakness in the world’s second-biggest economy, however, temper optimism on the positive near-term impact of the measures. Government efforts to boost economy positive but overdue – economists Financial markets euphoria may be short-lived August data show further economic deterioration The People’s Bank of China (PBOC) on 24 September unveiled a package of stimulus measures, featuring cuts to a crucial interest rate and reduced reserve requirements for banks. Two days before October, the central bank said that commercial banks will be asked to lower their interest rates on existing mortgages to ease burden on households, which could translate to an overall boost in consumption. (adding this bit as this happened over the weekend) China has plans to issue yuan (CNY) 2 trillion in sovereign bonds this year, according to newswire agency Reuters, citing unnamed sources. The measures are a step in the right direction, especially as multiple measures have been announced together rather than spacing out individual piecemeal measures to a more limited effect, said Lynn Song, chief economist for Greater China at Dutch banking and financial information services provider ING. “We continue to believe that there is still room for further easing in the months ahead as most global central banks are now on a rate-cut trajectory. If we see a large fiscal policy push as well, momentum could recover heading into the fourth quarter.” Following a series of gradual moves to boost growth, economists had been expecting more significant easing measures, which are now seen as overdue. “The sheer scope and urgency of introducing measures across multiple domains simultaneously underscores the government’s determination to place growth on a firmer footing to meet this year’s 5% growth target”, economists at Singapore bank DBS said in a note. On 26 September, the Politburo of the Communist Party of China held an unscheduled meeting to announce additional fiscal and consumer-focused support measures. According to a meeting memo, Beijing aims to boost spending and cut interest rates, increase income for low- and middle-income groups and revitalize capital markets. The Politburo also pledged to stabilize the country’s property market, preventing further decline, and for the first time, has vowed to strictly limit new commodity residential construction and optimize existing housing inventory. “We continue to believe that securing the delivery of pre-sold but unfinished homes with direct funding from the central government is the only possible way to revive the country’s declining property sector,” Japan’s Nomura Global Markets Research said in a note. To boost the capital market, China’s political leaders pledged vigorously guide medium- and long-term funds to enter the market, and clear the bottlenecks of social security funds, insurance, wealth management and other funds entering the market. FINANCIAL MARKETS CHEER ECON MEASURES The multifaceted plan has yielded immediate results, with the China’s benchmark CSI 300 benchmark surging by more than 15% in the week ended 27 September, its biggest weekly gain since 2008. The index tracks the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. At the close of trade on 27 September, the Shanghai Composite Index settled at 3,087.53, up by 2.88% from the previous session, while the Shenzhen Composite jumped 6.05% to close at 1,737.56. Shares of major chemical producers such as Hengli Petrochemical, Satellite Chemical, and Rongsheng Petrochemical have rallied with double-digit gains over the past four sessions, mirroring the broader market rally. Analysts, however, cautioned that the market euphoria may be short-lived as longstanding investor worries over China’s structural and balance sheet challenges, including a heavy local debt burden, an aging population, deflation, and eroding confidence, will not be easily reversed. “After years of stimulus cries, this week actually matters to equities – as evidenced by the initial boost to Chinese stocks, which should continue into Q4,” said Shehzad Qazi, managing director of research firm China Beige Book International. “Beijing has strongly implied it’s establishing a short-term put, though the mechanisms mentioned this week (borrowing facilities for stocks, market stabilization fund, etc) are not yet operational, and some may never be.” While the slew of new measures will boost confidence to some extent, these monetary and financial policies alone are enough to arrest the worsening economic slowdown, according to Nomura analysts. “In our view, the size of incremental stimulus might be less than 3% GDP per year, and markets should place more emphasis on the specifics of any stimulus package,” they said. “If not designed well, a stimulus program, even if seemingly large, could have a slow and limited impact on growth.” AUGUST DATA DOWNBEAT The latest set of stimulus measures are likely in response to further deterioration in China’s macroeconomic data in August, but these may not be sufficient to reverse the downturn in China’s property market, according to Singapore’s UOB Global Economics & Markets Research. Industrial growth in the country slowed in August to 4.5% year on year compared with a 5.1% pace set in July, due to contraction in heavy industries such as steel and cement. Robust electronics production and a surge in exports offer a short-term boost, although protectionist measures from other countries threaten future growth. Industrial profits swung back to a sharp contraction in August, slumping by 17.8% year on year, marking the first contraction since March. In the services sector, which depends largely on domestic demand, activity also lost momentum, with growth slowing to 4.6% year on year in August, bringing the eight-month average expansion to 4.9%. Household consumption and private investment remain depressed. The crisis in the property sector continues, and the support measures implemented last spring (around March-May 2023) have failed to stimulate housing demand. Most property developers are still facing major solvency or liquidity problems. ” While market sentiment was lifted by the stronger-than-expected measures, skepticism has remained on any lasting impact on China’s growth or the property market,” UOB economist Ho Woei Chen said. “PBoC’s re-lending programme has faced a slow take-up due to the poor potential returns and weak buying sentiment while developers continue to face funding risks,” Ho said. “It is thus important for authorities to implement stronger measures to accelerate the reduction of supply glut,” she added. Deteriorating conditions on the labour market are adding to the property crisis, which is significantly impacting household morale and spending, said Christine Peltier, economist at French bank BNP Paribas. Growth in retail sales slowed again in August to just a 2.1% year-on-year increase. “Deflationary pressures are also persisting due to weak domestic demand and production overcapacities, falling property prices, slower wage growth and declining global commodity prices,” Peltier said. In August, China’s consumer price index rose by 0.6% year on year, but core inflation hit a low of 0.3%, and the production price index fell for the 23rd consecutive month. China’s official manufacturing purchasing managers’ index (PMI) remained in contraction mode for the fifth month in September, although the number inched up to 49.8 from 49.1 in August. Insight article by Nurluqman Suratman Thumbnail photo shows a container terminal in Taicang, Suzhou Port in China (Source: Costfoto/NurPhoto/Shutterstock)

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.

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.

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.

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. 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.

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.