ICIS Supply and Demand Database

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.

27-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.

27-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.

27-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

27-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

27-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.”

26-Sep-2024

HOUSTON (ICIS)–A quarter of US oil production in the Gulf of Mexico remains shut in as Helene becomes close to becoming a major hurricane. 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 Hurricane Helene has maximum sustained wind speeds of nearly 110 miles/hour (175 km/hour), which is 1 mile/hour below becoming a major hurricane. It is on track to make landfall in the Big Bend, a sparsely populated region of northwestern Florida. The following map shows the forecasted path of Helene. Source: National Hurricane Center FLORIDA CHEMS AT RISKHelene could threaten Panama City, Florida, where Kraton operates a crude sulphate turpentine refinery and a crude tall oil (CTO) refinery. Tall oil is a feedstock for the production of fatty acids, renewable diesel and sustainable aviation fuel (SAF). Helene's path is too far east to threaten Pensacola, which is home to some nylon and thermoset resin plants. Helene is moving on the opposite side of Texas and Louisiana in the Gulf of Mexico. Those two states are home to most of the refineries, petrochemical plants and LNG capacity of the US. Operations at those plants will not be threatened by Helene. Helene will not make landfall near Tampa Bay, an important hub for the US fertilizer industry. Tampa hosts corporate offices, trading, product storage, shipping and other logistical operations. Nonetheless, Helene will disrupt operations at the port of Tampa Bay. PORTS CLOSED TO TRAFFIC ALONG EASTERN GULF COASTInbound and outbound traffic has ceased among numerous ports along Florida's Gulf Coast, including Port Tampa Bay, an important entrepot. Tampa is in the region that could see a peak storm surge of 5-8 feet (1.5-2.4 meters), as shown in the following map. Source: National Hurricane Center The following table shows some of the other ports in Florida that are closed. Panama City, Florida Port St Joe, Florida St Petersburg, Florida Manatee, Florida Source: US Coast Guard The following ports are open with restrictions. Pensacola, Florida Mobile, Alabama Source: US Coast Guard RAIL DISRUPTIONS Railroad company CSX plans 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 photo: Helene. (By the National Hurricane Center) (adds missing world "Gulf" in headline)

26-Sep-2024

NEW YORK (ICIS)–The lack of a meaningful recovery in volumes amid a weak macroeconomic backdrop along with geopolitical uncertainty are key factors hindering mergers and acquisitions (M&A) activity, panelists said at a recent meeting of the Societe de Chimie Industrielle in New York. “Right now, it’s all about volume in our businesses. That’s the number one issue, because we have operating leverage in our businesses where small increases in volume will lead to meaningful increases in profitability,” said Scott Wolff, managing director at private equity firm American Securities. “Fortunately, our portfolio companies – mostly specialties businesses – have maintained real pricing power during this inflationary period. So, our margins across portfolio companies are really strong,” he added. Wolff is also chairman of US-based specialty chemical companies Hexion, Meridian Adhesives and Vibrantz (combination of former Ferro, Chromaflo and Prince businesses). On the macroeconomic front, “China is struggling and is not going to hit 5% growth while Europe is clearly struggling with Germany potentially in recession. The US has been remarkably resilient,” said Peter Young, CEO of investment bank Young & Partners. Panelists at the Societe de Chimie Industrielle meeting from American Securities, DC Advisory, Young & Partners and ICIS. COMMODITY VS SPECIALTY“Demand is soft but there’s a bit of a split personality. If you talk about specialty chemicals, weaker demand is not helping but at least they’re not facing overcapacity,” said Young. “Commodity chemicals is a very different story. There is a massive increase in capacity in China of commodity chemicals and plastics, coupled with the Middle East trying to add capacity because they want to diversify away from [fuel], he added, pointing out that an “irrational amount of capacity” is coming online. He doesn’t see global capacity utilization improving for commodity chemicals until 2028. “For specialty chemicals businesses, the lower cost in commodities works to our advantage because our companies are buying those raw materials at favorable prices,” said Wolff from American Securities. DEALS PUT ON HOLDThis widespread weakness in volumes has curbed M&A activity as many potential sale processes were delayed or put on hold. “Profits in 2023 dipped for a number of companies, so a number of processes that were started in 2023 got pushed back or put on hold because people were concerned about lower 2023 results and did not have enough visibility on 2024 numbers,” said Federico Mennella, managing director and US head of chemicals at investment bank DC Advisory, a unit of Japan’s Daiwa Securities. Today, in contrast, players are now focused on improved 2024 results and have more confidence in 2025 figures, he noted. “At the beginning of the year, we expected volumes in 2024 to be significantly higher than in 2023. In fact, the M&A market was weaker than expected in H1 2024, although we still expect an increase in transactions in the months ahead and in 2025,” said Mennella. The banker attributes the slowdown to difficult credit conditions, geopolitical factors – including elections in a number of countries, the war in Ukraine and Middle East uncertainty – high energy costs and logistics considerations. Data from Young & Partners show chemical M&A activity market is down significantly, with only 20 deals above $25 million in size closing in H1 2024 versus 75 for all of 2023 and 86 for all of 2022. And among the 20 deals closed in H1 2024, 55% were in Asia – mainly in China with Chinese buyers. “That makes the accessible market even smaller for Western players because private equity firms are not lining up to do LBOs (leveraged buyouts) in China,” said Young. “Chemical deal volume has gone down, mainly because of uncertainty. And Europe volume has just plunged because Europe is in trouble. Their energy sources have changed and are much higher cost, and in general it is a high-cost place to make chemicals,” he added. On a geographic basis, Europe is certainly being eyed more cautiously and critically in terms of investment by private equity firms, Mennella from DC Advisory pointed out. There are less cross-border deals coming from China while the US remains a key area of interest. M&A activity in the US could pick up with interest rates easing, he added. “We are also seeing increased M&A activity in and from Japan, as well as from Southeast Asian and Middle Eastern companies and entities,” said Mennella. Meanwhile, chemical companies themselves are more active in restructuring, repositioning and refocusing their businesses, which in turn drives M&A activity among strategic players as well as private equity groups, he added. PROCESSES TAKING LONGERPrivate equity firms bought “a lot of companies in the 2015-2019 period which they need to sell soon. Other private equity groups are raising funds and want to show good returns on prior investments,” said Mennella. “But processes often take longer because of gaps between sellers and buyers. We expect a catch-up once we have confidence in 2024 earnings and projections for 2025.” he added. “You see that every time we go through a peak and valuations start to come down – volumes start to drop because buyers and sellers can’t agree on price,” said Young from Young & Partners. In 2023, for American Securities, in approximately 75% of the deals evaluated by the investment team, there was no transaction. This compares to around 30% in a typical year, Wolff pointed out. “Broadly speaking, there has been a buyer-seller disconnect, and there are various factors [contributing to this] including interest rates and destocking in 2023. So while we were able to close a number of transactions, there is no question that the pace of dealmaking has been slower for us and the industry at large,” said Wolff. GOOD TIME FOR BOLT-ONSCertain private equity firms are continuing to make bolt-on acquisitions to existing platform companies rather than taking on major new deals on the buy side. “From an M&A perspective, the market is active right now. That’s not necessarily the case for platform investments. But for add-on deals, there continues to be an abundance of opportunities. We are really active on that front,” said Wolff. In August 2024, American Securities’ portfolio company Vibrantz acquired US-based Micro Abrasives, a producer of specialty alumina for automotive refinishing, optics polishing and industrial lapping markets. In June 2024, portfolio company Meridian Adhesives acquired specialty adhesives producer Bondloc UK, which makes anaerobic adhesives, cyanoacrylates, epoxies, UV cure adhesives, and structural acrylics. On the sell side for American Securities, Hexion in April 2024 announced the sale of its PVA and EPI Emulsions business to Franklin International, a US-based producers of adhesives, sealants and polymers that supplied that Hexion business for over 40 years. Also in April, Vibrantz sold its Onda, Spain ceramic floor and wall tile manufacturing operations to Xphere Global Specialities, an affiliate of Vidres India Ceramics. TARGETED PROCESSES AND FLEXIBLE DEAL STRUCTURESIn a challenging deal environment, players are engaging in more targeted buy or sell processes rather than putting an asset out for auction. Deal structures are also becoming more flexible to bridge any gaps. “A number of transactions include targeted processes that do not involve a broad auction. In other cases, a strategic or private equity group with sector knowledge targets a specific asset and approaches the owner directly,” said Mennella from DC Advisory. One case in point was Germany-based Henkel proactively approaching Arsenal Capital Partners for the acquisition of US-based protective coatings and sealants producer Seal For Life industries ($250 million in 2023 sales) and closing the deal in April 2024, he noted. “In another situation, instead of a broad auction, we targeted five logical buyers before going through any process. Two of the five submitted bids, and one was accepted. It never went to the broader market,” said Mennella. Earnings growth and macro assumptions are much fuzzier today, often requiring flexible or hybrid M&A models to get deals done. “A lot of the acquisitions made in the past were based on a variety of optimistic assumptions – the EBITDA was going to increase, the exit multiple was going to remain or even increase, interest rates would continue to stay low, and everything was going to be on a consistent and predictable trajectory,” said Mennella. “Given the recent post-pandemic market dynamics, many buyers are more flexible and innovative in structuring and executing their deals,” he added. In certain private equity sell-side deals, the seller is retaining a portion of its stake rather than exiting 100%. In August 2024, H.I.G. Capital announced a deal to sell water treatment solutions company USALCO to private equity firm TJC (formerly The Jordan Company) while retaining a minority stake. “The willingness of private equity and strategics to utilize flexibility and inventiveness helps bridge gaps and gets transactions done,” said Mennella. Or private equity firms could simply stand pat and hold onto their portfolio companies for longer, especially for those firms with longer fund lives. “We’re excited about the investment thesis of our companies and their long-term potential. Fortunately, we can be patient,” said Wolff from American Securities. “We’d rather realize the earnings growth we see in these companies before exit, and if that means holding for longer, that’s fine,” he added. CHALLENGE FOR MANAGEMENTSAmid all the uncertainty and weak demand backdrop, what should other chemical company managements do? “It really depends on who you are and where you are because the nature of the problem and the opportunity and the solution are going to be dramatically different,” said Young of Young & Partners. “First, take a real look at the asset and try to characterize it. And then the solution will be driven by the nature of that asset – in terms of its competitiveness, who and where its customers are, etc.,” he added. Obviously, a commodity chemical producer in the US will have very different options than those in Europe and Asia because of cost competitiveness. “Most CEOs are quite nervous these days because the landscape has changed dramatically and become much more uncertain. In the US presidential election, there is going to be a huge difference in policy depending on who becomes president – on tariffs and so forth,” said Young. “It used to be CEOs could do a base case, have two or three scenarios, and plan around them. Now they don’t know what their base case is, much less what the scenarios are to consider,” he added. The path to zero carbon emissions and greater circularity are additional challenges for managements, as technologies are all over the place and return on investment is far from certain, the banker pointed out. “Most of these CEOs are saying – I’ve got to do it. I may not get a return on capital, but I don’t really have much choice because if I don’t do anything, five years down the road… I’m going to be in trouble,” said Young. LYONDELLBASELL EXAMPLESome companies are taking decisive action. US-based LyondellBasell, for example, is using strong cash flows from its core cost-advantaged commodity businesses to invest in plastics recycling and bio-based chemicals – its Circular and Low Carbon Solutions business – both organically and through M&A. LyondellBasell in August 2024 agreed to acquire full ownership of Germany-based APK which uses solvent-based technology to recycle low density polyethylene (LDPE). Earlier in February, it bought US mechanical recycling operations from PreZero. The company has a goal of producing over 2m tonnes/year of recycled and renewable-based polymers by 2030 and taking 20%+ market share in North America and Europe for these plastics. In the meantime, LyondellBasell is also conducting strategic reviews of six European assets in its Olefins & Polyolefins (O&P) and Intermediates & Derivatives (I&D) segments for potential sale. By the end of the decade, if the company follows through on its strategy, it will look very different from where it is today. Insight article by Joseph Chang Thumbnail photo source: Photo source: Taidgh Barron/ZUMA Press Wire/Shutterstock

25-Sep-2024

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. China fresh economic measures stimulate buying in glycerine market Pre-holiday restocking not as strong as expected Outlook bearish for aromatics Initial excitement over China's new set of economic stimulus appears to be fizzling out based on crude price movement. At midday, Brent crude was down 21 cents at $74.96/bbl, while US crude was down 26 cents at $71.30/bbl, after gaining by more than $1/bbl overnight. China’s measures amid doubts about the world's second-biggest economy's ability to achieve its 5% GDP growth target followed the US Federal Reserve’s jumbo 50-basis point (bps) cut in interest rates on 18 September. People's Bank of China (PBoC) measures announced on 24 September Source: Oxford Economics/China State Council "We believe the recent rapid development in both domestic and external conditions were the major driving forces behind the PBoC's latest move," Oxford Economics' lead economist Betty Wang said in a research note. "Domestically, the weaker-than-expected August economic data suggest that the risk of missing this year's growth target has grown," she said. "Externally, the Fed's outsized rate cuts last week, along with other major central banks' entering easing mode, has eased the depreciation pressure on the Chinese Yuan and provided the PBoC more room to ease monetary policy," Wang added. Concerns about the economic health of the world’s two biggest economies have been weighing down on sentiment across the equities and commodities markets. For petrochemicals, a slower-than-expected demand pick-up ahead of China’s October national holidays have further dimmed prospects of market recovery. Petrochemical demand is typically seasonally strong in September, but pre-holiday restocking in China failed to gain momentum during the month until the government announced on 24 September a basket of measures to boost economic activity. In Asia’s refined glycerine market, buyers in China were making enquiries for spot cargoes. Mid-Autumn holidays early last week in China, Taiwan, Japan, and South Korea had also caused temporary pause in market activities. China’s economy is sputtering amid a property downturn. The sector remained on a slump, with total investments in the industry registering a 10.2% year-on-year decline in January-August 2024, which also weighs down on the construction industry. Property and construction are main downstream industries for petrochemicals. Chinese factories were also in contraction mode for the fourth straight month in August, registering official purchasing managers’ index (PMI) readings of below the expansion treshold of 50. In the polyethylene (PE) pipe market, major suppliers have maintained firm offers to China on recent gains in upstream crude market, while most downstream converters have completed September procurement and were waiting for October offers. Poor demand had recently sent toluene prices in Asia tumbling to year-to-date lows, while prices of solvents such as ethyl acetate (etac) and butyl acetate (butac) have slumped to multi-year lows. ICIS analyst Jimmy Zhang expects most petrochemical products to post price declines in September, extending the weakness in August, amid declines in upstream crude prices and the overall bearish sentiment. ICIS forecasts that 26 out of the 31 products it tracks to post lower average prices this month, led by paraxylene (PX) and purified terephthalic acid (PTA). Focus article by Jonathan Yee and Pearl Bantillo Additional reporting from Judith Wang, Melanie Wee and Helen Yan Thumbnail image: Lianyungang Port in east China's Jiangsu Province on 18 September 2024 (Shuttertock)

25-Sep-2024

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. Global oil demand to reach 120.1 million barrels/day in 2050 Petrochemical, road transportation sectors to be key demand drivers Annual average world GDP growth of 2.9% projected for 2023-2050 These regions were identified as the “key sources of incremental [oil] demand in the coming years”, OPEC said in its 2024 World Oil Outlook report released on 24 September. “India alone will add 8 million barrels/day to its oil demand during the forecast period [2023-2050].” OPEC comprises 13 oil producing countries led by Saudi Arabia, which is the world’s biggest crude oil exporter. Global oil demand is expected to increase by almost 18 million barrels/day, or by 17.5%, from 102.2 million barrels/day in 2023 to 120.1 million barrels/day in 2050. While non-Organisation for Economic Co-operation and Development (OECD) demand is projected to increase by 28 million barrels/day between 2023 and 2050, OECD demand is set to witness a decline. OECD refers to a group of 38 highly industrialized economies. The strong projected demand growth in the petrochemical sector, especially in Asia, will raise oil demand from naphtha production by 2.8 million barrels/day by 2050. The largest incremental demand during the forecast period is projected for the petrochemicals, road transportation and aviation sectors. Oil demand in these sectors in the long term is set to increase by 4.9 million barrels/day; 4.6 million barrels/day; and 4.2 million barrels/day, respectively. “Demand projections in the road transportation sector indicate strong growth over the current decade before stabilizing at levels above 50 million barrels/day for the rest of the forecast period,” OPEC said. “By then, the penetration of EVs [electric vehicles] is set to increasingly play a role.” The global vehicle fleet is projected to surge by about 71% from 1.7 billion in 2023 to 2.9 billion in 2050 with the fastest growth expected in the EVs segment. As for refined products, strong long-term demand growth is expected for ethane/liquefied petroleum gas (LPG). “The larger part of this demand growth relates to the use of ethane as a petrochemical feedstock, mainly in OECD Americas and the Middle East,” OPEC added. GLOBAL ECONOMIC GROWTH REMAINS ROBUST Global GDP is projected by OPEC to grow at an average rate of 2.9% per year between 2023 and 2050. Non-OECD countries are set to lead this growth, expanding at an annual rate of 3.7%, while OECD nations will experience more modest annual growth at 1.6%. As a result, in absolute terms the global economy is expected to more than double in size from $165 trillion in 2023 to $358 trillion in 2050. Focus article by Nurluqman Suratman Thumbnail image: Crude oil tanker Njord DF, 250m length, 44m height, flag Greece, Baltic Sea, 31 August 2024 (Olaf Krüger/imageBROKER/Shutterstock)

25-Sep-2024