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Liquefied Natural Gas09-Jan-2025
East Asian spot LNG and European gas
strengthen pricing relationship in 2024
Shift towards LNG as a form of baseload
supply has consolidated the correlation between
Europe and Asia
In the absence of regional supply shocks,
correlation should at least sustain in 2025
LONDON (ICIS)–Throughout 2024 the daily price
correlation between European TTF and Asian spot
LNG markets held above 90%, with the close
connection likely to continue in 2025.
The correlation between both markets remained
steady at 94% from the first to the third
quarters, then falling a little to 91% in the
fourth quarter.
This is based on the simultaneous ICIS TTF
Early Day and ICIS East Asian Index assessments
that close at 16:30 Singapore time.
The correlation reflects ongoing competition
for volumes between the two regions, in
addition to a number of Asian market
participants using early-day swings in the TTF
to provide guidance for outright Asian spot LNG
prices.
The correlation is also obvious in daily market
feedback where traders frequently cite
fundamentals in the other region as influencing
sentiment in their home market.
The recent near-perfect correlation between the
two markets confirms the globalized nature of
the gas market, and how each basin can at times
influence sentiment in the other amid Europe’s
greater dependency on LNG.
The correlation is expected to remain strong as
Europe’s reliance on LNG will continue, and
with market prices key in directing
destination-free US LNG cargoes that can move
to the highest-priced market, in turn flatting
price differences between markets.
There are times when regional fundamentals lead
to a disconnect between prices between the
regions but these were short lived in 2024.
Without previous baseload Russian pipeline gas
in Europe, the TTF is increasingly influenced
by wider gas fundamentals, and can react
quickly to issues outside Europe.
US LNG volumes continue to grow, now firmly
over a fifth of the total global LNG market,
with more new supply to come from Venture
Global’s Plaquemines LNG and Cheniere’s Corpus
Christi expansion in 2025.
have also helped to narrow the price
differential between the two markets.
Crude Oil09-Jan-2025
HOUSTON (ICIS)–Union dockworkers and US Gulf
and East Coast port operators tentatively
agreed to a new six-year contract Wednesday,
averting a strike that was about a week away.
The International Longshoremen’s Association
(ILA) and United States Maritime Alliance
(USMX) will work under the existing agreement
until the union can meet with its full wage
scale committee and schedule a ratification
vote, and USMX members can ratify the terms of
the final contract.
The two sides agreed on the financial portion
of the contract in October, ending a three-day
strike and postponing the work stoppage until
15 January.
A stalemate developed
over automation at the ports, which port
operators said was needed to remain competitive
globally and which the union said would
threaten human jobs.
“This agreement protects current ILA jobs and
establishes a framework for implementing
technologies that will create more jobs while
modernizing East and Gulf coast ports – making
them safer and more efficient and creating the
capacity they need to keep our supply chains
strong,” the parties said in a joint statement.
Details of the new tentative agreement will not
be released to allow ILA rank-and-file-members
and USMX members to review and approve the
final document.
The October strike and the threat of next
week’s work stoppage had some impact on market
participants.
Many importers
pulled forward volumes because of the
possibility of a strike, pushing
rates for shipping containers higher.
To mitigate risks, some buyers and suppliers
took a wait-and-see approach, while others
scheduled shipments with maximum deadline until
the first week of January to ensure supply
chain continuity and safeguard against
potential disruptions that could affect pricing
and availability.
Container and vessel availability was a
challenge for exports following the impacts in
ocean logistics from the three-day strike in
October, with lead times to secure available
space on a vessel being cited at four to six
weeks.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and are shipped in tankers, container
ships transport polymers, such as polyethylene
(PE) and polypropylene (PP), which are shipped
in pellets.
They also transport liquid chemicals in
isotanks.
(adds details in paragraphs 7-12)
Speciality Chemicals09-Jan-2025
HOUSTON (ICIS)–Union dockworkers and US Gulf
and East Coast port operators tentatively
agreed to a new six-year contract Wednesday,
averting a strike that was about a week away.
The International Longshoremen’s Association
(ILA) and United States Maritime Alliance
(USMX) will work under the existing agreement
until the union can meet with its full wage
scale committee and schedule a ratification
vote, and USMX members can ratify the terms of
the final contract.
The two sides agreed on the financial portion
of the contract in October, ending a three-day
strike and postponing the work stoppage until
15 January.
A stalemate developed
over automation at the ports, which port
operators said was needed to remain competitive
globally and which the union said would
threaten human jobs.
“This agreement protects current ILA jobs and
establishes a framework for implementing
technologies that will create more jobs while
modernizing East and Gulf coast ports – making
them safer and more efficient and creating the
capacity they need to keep our supply chains
strong,” the parties said in a joint statement.
Details of the new tentative agreement will not
be released to allow ILA rank-and-file-members
and USMX members to review and approve the
final document.
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Petrochemicals08-Jan-2025
NEW YORK (ICIS)–On Wall Street, hope springs
eternal at the beginning of a new year, and
especially for sectors that have underperformed
in the past year. But for chemicals, analysts
are kicking off the year with cuts to their
2025 profit forecasts as a recovery in housing,
automotive and consumer durables appears to be
further off in the horizon.
At least the bar is set low.
In terms of stock market performance, in a year
when the benchmark S&P 500 returned 25%,
the S&P Materials Index was one of the
worst sector performers, falling around 2%.
Chemicals certainly played their part, with
most companies underperforming the Materials
Index.
H.B. Fuller’s 2 January preannouncement of
disappointing fiscal Q4 (ended November)
results citing weaker-than-expected conditions
in consumer product goods, packaging-related
end markets and durable goods sparked a series
of earnings estimate cuts across the chemicals
group.
JEFFERIES CITES WEAKNESS IN KEY END
MARKETS
Jefferies slashed 2025 and 2026 profit
forecasts for Huntsman on a likely delay in the
durable goods upcycle until 2026-2027.
Jefferies analyst Laurence Alexander lowered
estimates on Celanese again (after its initial
shock preannouncement on Q4 results on 4
November), cutting his 2025 earnings per share
(EPS) forecast by 8% to $8.70 and 2026 EPS by
3% to $10.45, along with reducing his Q4 2024
EPS estimate by 4% to $1.20.
“We are lowering estimates again to reflect,
primarily, choppy order patterns flagged by
peers for packaging and durable goods this
winter, as well as a more muted recovery cycle
in construction and automotive end-markets in
H2 2025-2026,” said Alexander in a research
note.
The analyst also cut his 2025 EPS estimate on
Eastman by 11% to $8.60 and his 2026 forecast
by 5% to $10.50.
“We are trimming estimates to better reflect
likely incremental headwinds from cyclical
end-markets over the next few quarters, as well
as modest adverse foreign currency [impact],”
said Alexander.
“The cyclical recovery we had baked into 2025
and 2026 appears likely to be both delayed at
least a couple of quarters and less robust, at
least initially,” he added, citing chemical
peer comments on weakness in durables,
electronics and transportation markets, coupled
with choppy trends in construction.
MIZUHO CUTS ESTIMATES, AVOIDS BASIC
CHEMICALS
Mizuho analyst John Roberts modestly cut 2025
earnings estimates by 1-6% on a wide range of
chemicals, coatings and packaging companies,
including Sherwin-Williams, PPG, Axalta, FMC,
Corteva, Entegris, Element Solutions and Berry
Global.
“The March 2025 quarter appears set to begin as
weak as the December 2024 quarter ended for
most stocks. We reduce estimates and price
targets for several stocks (no increases), and
see no catalyst yet to change our relatively
defensive positioning,” said Roberts in a
research note.
Downstream customers may have modestly rebuilt
inventories early in in Q4 2024 in advance of
potential new or increased tariffs, which could
slow demand in 2025, the analyst pointed out.
“Unfavorable currencies are the latest
headwinds to earnings, as most of our companies
derive 50%+ of sales ex-US,” he added.
A stronger US dollar makes exports less
competitive, and sales and earnings abroad are
translated back into fewer dollars.
Roberts characterizes Mizuho’s top picks in the
sector as “relatively defensive”. They are
specialties producer DuPont in advance of
splitting into three companies, industrial
gases producer Linde, and coatings company PPG.
He is not recommending any asset-heavy,
upstream basic chemical stocks, with the
exception of Westlake.
“Global operating rates are low for almost all
basic chemicals since the consumer-spending
switch to services. Destocking appears over,
but with demand remaining near trough,
expansions in recent years in China and the US
have left markets oversupplied,” said Roberts.
“China continues to expand to improve
self-sufficiency, and shift refinery output to
chemicals as gasoline demand is expected to
peak early from China’s accelerated adoption of
EVs,” he added.
While new China capacity additions slowed in
2024, a consequence of fewer projects starting
construction early in the pandemic, they are
poised to ramp back up in 2025-2027, he pointed
out.
UBS SEES MORE UNCERTAINTY FOR EUROPE
CHEMICALS
For European chemical companies, UBS Europe
chemicals analyst Geoff Haire sees more
uncertainty in 2025 versus 2024.
“We expect the primary focus for 2025 in the
chemicals sector will once again be on the
prospects for volume recovery, but investors
will also need to focus on geopolitics (US,
Germany and France) and the outcome of several
conflicts around the world,” said Haire in a
research note.
“With global GDP growth expected to be slower
in 2025 and 2026 versus 2024, particularly in
the US and China, we see limited prospect of a
significant year on year volume recovery in
2025,” he added.
With resulting continued pressure on prices and
margins, companies will likely react with
further cost savings initiatives or portfolio
reshaping, the analyst pointed out.
Even with the challenging backdrop, UBS sees
2025 gains in earnings before interest, tax,
depreciation and amortization (EBITDA) to the
tune of around 8% for European diversified
chemical companies, and 9% for specialties.
Insight article by Joseph
Chang
Thumbnail shows stock prices. Image
by BIANCA DE
MARCHI/EPA-EFE/Shutterstock
Speciality Chemicals08-Jan-2025
HOUSTON (ICIS)–Global container shipping major
Mediterranean Shipping Co (MSC) will increase
its emergency operation surcharge (EOS) by
$1,000/FEU (40-foot equivalent unit) effective
27 January on the North Europe to the US,
Puerto Rico, and the Bahamas route.
In a customer advisory on 8 January, the
company said it is taking the action
considering significant changes in the
alliances network.
“We foresee general operational disruption
during the first months of next year, the
company said.
Shipping alliances are agreements between
carriers to collaborate globally on specific
trade routes.
Several major carriers are restructuring
alliances in 2025, the most significant shift
in alliances since 2017, according to analysts
at freight forwarder Flexport.
The previous EOS surcharge was $1,000/FEU,
bringing the new surcharge to $2,000/FEO.
The company will increase the EOS surcharge by
$800/TEU (20-foot equivalent unit), bringing it
to $1,300/TEU.
GUIDANCE AHEAD OF POSSIBLE PORT
STRIKE
The company also offered operational guidance
to US customers ahead of the possible ILA
strike at US Gulf and
East Coast ports should the work stoppage
occur.
For export booking from affected ports, the
company will continue to accept bookings for
dry cargo based on vessel availability and will
reserve the right to not accept new
refrigerated bookings via these ports where
there is a risk to the refrigeration services
due to the port strike for vessels departing on
or after 16 January.
MSC is urging customers to move equipment
before 16 January as many terminals will likely
offering extended gate hours.
On demurrage and detention (port storage and
container use inside the terminal), the company
will follow terminal policy and only pass
through at cost any demurrage charges imposed
by terminals during the strike.
MSC will stop the clock on detention charges
during the strike and once the strike has ended
will resume billing following its tariffs.
MSC will align its policy to that of the rail
ramp operators, the company said. If, the rail
ramp operators cease to accept containers at
origin ramps for US East and Gulf Coast bound
ports, MSC will do the same.
For North America import cargoes via US East
and Gulf Coast ports, MSC will adjust bookings
– including rolls to other vessels or
cancellations – as needed.
For new bookings, MSC will follow the same plan
as for imports.
The company will refuse any liability arising
from the strike due to reefer containers left
uncollected at terminals.
MSC urges customers to pick up their import
cargo before 16 January.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and are shipped in tankers, container
ships transport polymers, such as polyethylene
(PE) and polypropylene (PP), which are shipped
in pellets.
They also transport liquid chemicals in
isotanks.
Thumbnail image shows a container ship.
Photo by Shutterstock
Ethylene08-Jan-2025
SINGAPORE (ICIS)–Asia ethylene editor Josh
Quah and analyst Aliena Huang talk about the
Asia outlook for ethylene arbitrage cargoes for
2025 with markets editor Damini Dabholkar.
Ethylene loadings from US in December
continue to favor southeast Asia destinations
More intra-Asia tradeflows between
northeast and southeast Asia expected for H1
2025
Increasing ethane competitivity and demand
may curtail US ethylene exports to Asia
Polyethylene Terephthalate08-Jan-2025
SINGAPORE (ICIS)–Malaysia has imposed
provisional antidumping duties (ADDs) on
polyethylene terephthalate (PET) imports from
China and Indonesia,
effective 7 January.
The duties range from 6.33% to 37.44% “to
prevent further injury to the domestic
industry”, Malaysia’s Ministry of Investment,
Trade and Industry (MITI) said.
Chinese exporters affected include Jiangsu
Hailun Petrochemical, Far Eastern Industries
(Shanghai), and Jiangsu Xingye Plastic, with
duties set at between 6.33% to 11.74%.
All PET imports from Indonesia, meanwhile, will
be levied a higher ADD rate of 37.44%.
Country
Exporter
Rates
China
Far Eastern Industries (Shanghai)
6.33%
Jiangsu Hailun Petrochemical Co
11.74%
Jiangsu Xingye Plastic Co
11.74%
Jiangyin Xingtai New Material Co
11.74%
Others
11.74%
Indonesia
All producers or exporters
37.44%
The duties are not likely to drastically affect
China’s PET exports as Malaysia is not their
major market, an industry source said.
These duties will last “not more than 120 days”
or four months, and a final determination will
be made no later than 6 May, the MITI added.
Malaysia’s investigations into PET imports
from China and Indonesia were initiated on 9
August 2024.
Additional reporting by Judith Wang
Thumbnail image: PET goes into textitles.
At a textile enterprise in Binzhou, China, on
24 September 2024.
(Costfoto/NurPhoto/Shutterstock)
Polyethylene Terephthalate08-Jan-2025
SINGAPORE (ICIS)–Malaysia has imposed
provisional antidumping duties (ADDs) on
polyethylene terephthalate (PET) imports from
China and Indonesia, effective 7 January 2025.
The duties range from 6.33% to 37.44% “to
prevent further injury to the domestic
industry”, Malaysia’s Ministry of Investment,
Trade and Industry (MITI) said.
These duties will last “not more than 120 days”
or four months, and a final determination will
be made no later than 6 May, the MITI added.
Investigations into PET imports from China and
Indonesia were initiated on 9 August 2024.
Speciality Chemicals07-Jan-2025
HOUSTON (ICIS)–RPM International warned on
Tuesday that the winter weather will drag down
its earnings during the current quarter, the
CEO of the US-based coatings, sealants and
adhesives producer said on Tuesday.
A lot of RPM’s products are used in
construction, so cold weather delays these
projects. Moreover, the company serves as a
bellwether for chemicals used to make coatings,
adhesives, sealants and other building
materials.
The recent cold spell marks the return to
normal winter weather after two previous
seasons of above normal temperatures, said
Frank Sullivan, CEO. He made his comments
during an earnings conference call.
“We are facing a real winter compared to mild
conditions in the prior year,” he said. “This
is putting pressure on some of our businesses,
particularly in the consumer segment.”
The return of winter interrupted the return to
volume growth for RPM’s segments, Sullivan
said. When temperatures rise in the spring, he
expects strong growth will return to those
segments.
RPM MAINTAINS SALES GUIDANCE FOR FISCAL
YEARDespite the delays caused by
colder temperatures, RPM maintained its sales
guidance for its fiscal year, which runs
through July.
Sales should rise by the low single digits.
Adjusted earnings before interest and tax
(EBIT) should rise 6-10%. That compares with an
earlier guidance of growth in the mid-single
digits to the low double digits.
RPM shares were up by more than 2% in midday
trading.
COLD WEATHER MAY DELAY OTHER BUILDING
MATERIALSCold weather could
delay purchases for other building materials
such as paints, coatings, adhesives and
sealants as well as pipes and siding made of
polyvinyl chloride (PVC).
Paints and coatings are important end markets
for many petrochemicals and resins.
Titanium dioxide (TiO2) is used as a white
pigment and to make paints opaque.
Solvents used in paints and coatings include
ethyl acetate (etac), butyl acetate (butac) and
methyl ethyl ketone (MEK).
Polyurethane coatings are made with polyols and
isocyanates such as methyl diphenyl
diisocyanate (MDI). Acrylic based coatings are
made with methyl methacrylate (MMA), and epoxy
coatings are made with epoxy resins.
Other chemicals used in paints and coatings
include isopropanol (IPA) and vinyl acetate
monomer (VAM).
NO CHEM DISRUPTIONS ON US
GULFSo far, there have been no
reports of cold weather causing disruptions to
chemical plants.
Temperatures in Houston had briefly fell to
freezing during the night, but the region has
yet to suffer from prolonged low temperatures
that have typically led to plant shutdowns or
power outages.
Also, many producers made their plants more
resilient to cold weather following winter
storm Uri in 2021.
EARLIER FORECASTS CALLED FOR WARM
WINTER PUNCTUATED WITH COLD
SPELLSMeteorologists
had forecast that the upcoming winter
season will be warmer than normal, with spells
of especially frigid weather.
Such forecasts held true in the US Gulf Coast
during the past two winter seasons. Each winter
had a brief spell of freezing temperatures that
caused some chemical plants to shut down.
Focus article by Al Greenwood
Thumbnail shows construction. Image by
Costfoto/NurPhoto/Shutterstock
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