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aromatics TDI prices spike europe sbr

mixed fortunes Toluene diisocyanate EU S-SBR imports rose


as some contend prices surge over by around 75% in the
with oversupply $1,000/tonne in Asia first half of 2016 versus
outlook p30 and the Middle East 12 the year-ago period 47
31 October-13 November 2016

Chemical Business
 Making sense of chemical prices

earnings

COATINGS SECTOR
LOSES ITS SHINE
Sherwin-Williams disappoints in Q3, following PPGs
shortfall. Could more weakness be ahead for the group?
Can a chemical filtering technology
really help feed a nation
of 252,000,000 people?
ASK YOUR
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Fertilizer is crucial to the lives of more than Its just one of countless challenges
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Chemical Business
volume 290 number 15 31 October-13 November 2016

aromatics tdi prices spike europe sbr


mixed fortunes Toluene diisocyanate EU S-SBR imports rose
as some contend prices surge over by around 75% in the
with oversupply $1,000/tonne in Asia first half of 2016 versus
outlook p30 and the Middle East 12 the year-ago period 47
31 October-13 November 2016

Chemical Business
Making sense of cheMical prices

earnings

coatings sector
loses its shine
Sherwin-Williams disappoints in Q3, following PPGs
shortfall. Could more weakness be ahead for the group?
Alamy

Cover story
Earnings shortfalls in the
coatings sector are taking
the shine off this once
favoured group. Is more
weakness ahead?
For the full story see P9

imageBROKER/WestEnd61/Design Pics Inc/REX/Shutterstock


The world is still awash with oil despite attempts to curb
Giving support to newcomers on chemical output P11. US new single-family home sales were up 3.1%
clusters ensures better profitability all around P36 from August and up 29.8% from a year ago P8

news 15 PE market outlook uncertain on November


cargoes.
market outlook
30 Mixed fortunes for aromatics
BRIEFING C2 steady on healthy demand in China
32 Multiple scenarios for China growth
6 Cosan, Shell discuss terms of Raizen JV 17 UK PE, PP buyers are under pressure.
7 Pipeline was cut prior to BASF blast and
Acrylates turning bullish on BASF plant Chemical profile
explosion 46 The Asian PX spot market is mainly a trading
fire
18 October butac price efforts gain traction. market, with sentiment often the key driver
focus Oct acrylates settle higher.
47 Europe SBR spot prices for 1500 grade
9 The coatings sector loses its shine Stable EPS leads to Nov rollover talk
material rose at the beginning of October
19 Limited credit access hampers polymer
trends buyers.
Butadiene uptrend may lose steam regulars
market intelligence 21 Borouge runs at full operating rate. 5 Commentary
10 SoFTer for Celanese PTA market in war of attrition 43 Whats on
22 Spot ethanolamines firm on BASF fire.
11 Global oil glut set to continue 44 Conferences & Events
India PVC importers grapple with increased
offers 45 Marketplace
prices & markets
12 TDI prices spike amid panic buying 23 China spot acetone upside may be limited.
13 Spot propylene down on ample supply.
SBR spot expected to rise on supply special reports
MMA hits 17-month high on tightness plants & projects 26 Value chain Ethylene
14 PMMA market reaches turning point. 25 New projects and permanent plant 35 Accenture
Oct polyols pricing assessed at rollover shutdowns, 17-23 October 35 Global chemical sites

Independent pricing information, news and


analysis for more than 120 global commodities
Sign up for free market updates at www.icis.com/keep-in-touch

ICIS-pricing_ad_173x25_v2.indd 1 03/09/2012 13:24


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4 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


commentary

joseph chang new york

Coatings lose lustre


After years of posting robust sales and earnings growth, the paints and coatings could be
entering a slower growth period. Is the home improvement cycle peaking?

S
ales and earnings momentum in the
once booming coatings sector is coming
to a screeching halt, taking the gloss off
of one of the most favoured groups in the
chemical industry.
Earning shortfalls and weak guidance
from US-based coatings giants Sherwin-Williams and
PPG Industries slammed their stock prices, and Wall
Street analysts moved to slash profit estimates for 2017
(see story on page 9).
So what is going on? Why is the quarter-after-quarter
string of strong profits now tapering off?
Global GDP has been in low growth mode for some
time. Yet coatings companies have consistently out-
performed for years.

The overlaying of the stock


prices of PPG and Home Depot

Alamy
paints an intriguing picture Financial results have taken the shine off coatings sector

more stringent lending conditions. US housing starts


The automotive cycle may finally be peaking after a in September fell 9.0% from August and 11.9% year
long expansion from the financial crisis of 2008-2009 on year, according to the US Census Bureau in its lat-
not just in the US as widely anticipated, but globally est report released on 19 October, marking the second
as well, impacting automobile original equipment straight month of declining figures.
manufacturer (OEM) coatings the paint that comes The chart below overlays the percentage changes in
with new cars. US auto sales are projected to drop over the stock prices of PPG and US-based home improve-
7% year on year in October, according to consultan- ment retailer Home Depot in the past year. While PPG is
cies J.D. Power and LMC Automotive, while publica- more than just architectural coatings serving the auto-
tion WardsAuto anticipates a 6% drop when auto motive, industrial, aerospace, marine and food packaging
companies report on 1 November. end markets as well directionally its stock price has
On the architectural coatings side, could it also be largely moved in tandem with Home Depot. Prolonged
that the multiyear home improvement cycle is peaking declines in both stock prices could be signaling an end to
in the US? Since the financial crisis, US consumers robust demand on the US home improvement front.
have consistently put more money into improving Ultimately it may just come down to growth in the
their homes, which includes buying paint. coatings sector reverting to GDP rates. In the long run,
Meanwhile, new housing starts have struggled to re- there may be little reason for this sector to consistently
cover to pre-crisis levels as banks have implemented grow well above GDP on an organic basis.

PPG VS HOME DEPOT STOCK PRICE


% Change
0.15
PPG Home Depot
0.12
0.09
0.06
0.03
0.00
-0.03
-0.06
-0.09
-0.12
-0.15
02 Nov 01 Dec 04 Jan 01 Feb 01 Mar 01 Apr 02 May 01 Jun 01 Jul 01 Aug 01 Sep 25 Oct
Do you agree? 2015 2015 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016
Email joseph.chang@icis.com

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 5


news For real-time news and analysis
from our global team of reporters, visit:
icis.com/about/news

briefing
americas though Beaumont City Manager

Hans Blossey/imageBROKER/REX/Shutterstock
Kyle Hayes said ExxonMobil has
DOW Q3 PROFITS UP 7.6% made no final decision yet.
ON 6% HIGHER VOLUMES
Dow Chemicals underlying Q3 US DISTRIBUTOR RIBELIN
net income rose 7.6% year on SETS NEW SAFETY RECORD
year to $1.03bn on 3.7% higher US-based chemical distributor
sales of $12.48bn. Underlying Ribelin has completed 10 years
volumes gained 6% on broad- without a lost day at its Ribelin
based consumer-driven demand Distribution Centers. In those 10
across all regions, it said. Dow years, Ribelin has shipped mil-
CEO Andrew Liveris pointed out lions of pounds of product. The
the company has achieved 16 guys in the Distribution Centers
consecutive quarters of year-over- have done an amazing job at pay-
year operating earnings growth ing attention to the little things
and margin expansion in the face that make a record like this possi-
of a persistently slow-growth ble. It is a great example of our
global economic environment. commitment to the NACD RDP
and our accountability to each
LYONDELLBASELL US GULF other promotes a safe work envi-
DRAWS BIDS, DENIAL pic of the week ronment, said Andy Lovenduski,
Saudi Aramco is denying media
reports that it bid $1.5bn on a Ly-
Ludwigshafen restart confirmed Ribelins Distribution Manager.
Ribelin is part of Azelis Americas.
ondellBasell refinery in Houston, BASF on 27 October confirmed that its two steam crackers at
Texas, US. The Saudi Arabia state Ludwigshafen in Germany have resumed production after the fire and europe
oil giant issued a news release in explosion at the site on 17 October, which killed three people.
response to a wire services story BASF suffers steep falls
posted on 21 October that said Ar- in Q3 chemicals earnings
amco, US-based Valero and Cana- of. The company will keep the He added he would not comment BASFs Chemicals suffered falls in
da-based Suncor were all bidding market informed of any develop- on market rumours about which sales and earnings before interest,
on the Texas refinery. A Lyondell- ments regarding this matter, businesses may potentially be di- taxes, depreciation and amortisa-
Basell spokesperson said the com- Cosan said in a statement to the vested or what other remedies tion (EBITDA) during the third
pany is continuing to explore all Securities and Exchange Com- Dow and DuPont may provide. quarter of 7% and 10% year on
options for the refinery but would mission of Brazil. Raizen produc- year, respectively, to 3.4bn and
not comment on speculation. es approximately 2.1bn litres/ SHERWIN-WILLIAMS 776m as the segment continued
year of ethanol. The joint venture ANTICIPATES HEADWINDS suffering from less pricing power
Belgium cant yet support was launched in 2011. Despite third-quarter growth, due to lower raw materials costs,
EU-Canada trade deal US-based Sherwin-Williams an- especially in the Petrochemicals
The Prime Minister of Belgium, DOW CONDUCTS ticipates seasonal headwinds and Intermediaries subdivisions.
Charles Michel, said his country MAINTENANCE ON PIPELINE through the end of the year, the For the group, third-quarter net
could not support, at this time, the Dow Chemical is conducting paint maker said. The compa- profit declined 27% year on year
pending EU-Canada Comprehen- maintenance on a propane pipe- nys outlook for residential coat- to 888m, largely on account of
sive Economic and Trade Agree- line at its Freeport 8 cracker in ings remains positive in the ap- the divestment of its gas trading
ment (CETA) in the European Texas, according to a 24 October proaching quarters, but demand and storage business, the German
Council. CETA, which would re- filing with the Texas Commis- has diminished sequentially. company said on 27 October.
move nearly all tariffs in the EUs sion on Environmental Quality Sherwin-Williams outlook for Sales for the three months to Sep-
trade with Canada, was due to be (TCEQ). Emissions are expected residential markets remains tember fell 20% to 14.0bn, with
signed 27 October, at an EU-Cana- during the maintenance, the positive, CEO John Morikis said operating income down 22%.
da summit. Michels announce- filing said. Operations and pro- in a call with analysts.
ment came as efforts to address duction within the unit will con- BASF FORCE MAJEURE
concerns by Belgiums Wallonia tinue as normal. TEXAS CITY PLANS FOR PE REMAINS ON OXO-ALCOHOLS
region about CETA failed. PLANT EXPANSION BASFs force majeure on oxo-al-
DOW, DUPONT DEEP INTO A zoning change in Beaumont, cohols supply from its Ludwig-
COSAN, SHELL DISCUSS REMEDIES FOR APPROVALS Texas, regarding a possible Exx- shafen, Germany, site is still in
TERMS OF RAIZEN JV DuPont and Dow Chemical are onMobil polyethylene (PE) plant place, a company spokesperson
Brazil-based Cosan said it and preparing to move really quick- has gone forward, city officials confirmed on 25 October. The
Shell are discussing the terms of ly to provide remedies likely to said. Beaumont City Council ap- force majeure was declared on 20
their ethanol joint venture, Rai- be required by regulators to ap- proved a Specific Use Permit October and covers butanol
zen. Those discussions are yet to prove the proposed $130bn merg- (SUP) on 26 October to allow for (NBA) and isobutanol (IBA) sup-
be concluded as of the date here- er, DuPont CEO Ed Breen said. the expansion of the plant, ply. I can confirm that BASF SE

6 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


news
The coatings sector
loses its shine
news focus p9

heat exchanger on 24 October


forced an unplanned outage and
a force majeure declaration on
voices from the web
the same day. The start-up is A few weeks ago I argued that Brexit would have very little
preliminary planned on 8 No- impact on the energy sector in the UK or Europe. Energy
vember, PKN said. prices are decided by the international market, the energy mix
has always been dictated by national governments and there
AKZONOBELS swedish is no apparent appetite for Britain to diverge from the climate
facility running again
policies and emissions targets set by the EU with its full
AkzoNobels ethylene amine and
ethanolamine operations in support. All that remains true, but circumstances have
Stenungsund, Sweden are run- changed. A new factor has emerged in the Brexit debate that
ning again, following the success- could do great damage to the countrys sector.
ful completion of recent mainte- Financial Times Nick Butler on Brexit and the energy
nance work, a company source sector the risks of Little Britain.
DuPont

said on 26 October. The mainte- www.ft.com/nick-butler


Breen to move quickly on merger nance went according to plan,
said the source. It went on to say This fading oil town has an eerie glow at night, illuminated by
has declared force majeure on the the maintenance turnaround took dozens of oil wells burning off precious oil and gas for lack of
supply of higher alcohols (Isotri- place during the second half of functioning equipment to process it.
decanol N, Propylheptanol) and September and the ethylene
Wall Street Journal Business on Venezuelan oil largely
butanols from Ludwigshafen, amine and ethanolamine opera-
staying in ground or going up in smoke.
the spokesperson said. A force tions restarted around the first
www.wsj.com/news/business
majeure on the companys plasti- week of October. The Swedish
cizers supply is also in place, the facility has the capacity to pro-
spokesperson said. duce around 100,000 tonnes/year Pedro Parente, chief executive of Petrobras, says the Brazilian
of ethanolamines. oil giant will return to its best days in five years time - once he
PIPELINE WAS CUT PRIOR TO implements new governance and business measures.
BASF BLAST AND FIRE CHEMCHINAS SYNGENTA BBC News World Latin America on Petrobras boss
A pipeline carrying flammable PURCHASE DELAYED says oil firm can find its best days again.
raffinate had been cut prior to the Switzerland-based Syngenta ex- www.bbc.co.uk/news/world/latin_america
explosion and fire at BASFs Lud- pects the completion of its
wigshafen site, BASF said in a $43bn takeover by state-owned India and other emerging countries well understood that they
statement on 26 October. The China National Chemical Corp would suffer many more days of intense heat if the growth in
pipeline in question was not part (ChemChina) to be delayed to
the use of HFCs hadnt been controlled.
of maintenance work being car- next year as all regulatory ap-
John Richardson on stunning agreement on HFCs offers
ried out on a neighbouring pipe- provals have yet to be secured, it
line at the time, according to the said on 25 October. Syngenta was huge opportunities.
www.icis.com/blogs/asian-chemical-connections
statement, which was based on initially expecting the takeover
information released by the public by ChemChina to be concluded
prosecutors office in Frankenthal/ by year-end. In a context of in-
Check out the ICIS blogs at icis.com/blogs
Pfalz and the police headquarters dustry consolidation, regulators
at Rheinpfalz. During intensive in the EU and elsewhere have re-
investigations at the scene of the cently requested a large amount most-read
incident it was ascertained that of additional information, and we The top five stories for the week just gone:
there was a cut in the pipeline. now expect the regulatory pro- 1 BASF Ludwigshafen fire extinguished; crackers still shut
This was apparently caused by a cess to extend into the first quar- SINGAPORE -- The fire at BASFs Ludwigshafen site in Germany has
circular saw, the statement said. ter of 2017, Syngenta CEO Erik been extinguished but the crackers there are still shut.
Fyrwald said. 2 BASF to restart Germany crackers in coming days
PKN FORCE MAJEURE ON LONDON -- BASF said that within days it will begin restarting its
PTA DISRUPTS PET MARKET CEPSA TO REPAIR BASE OIL steam crackers at the Ludwigshafen petrochemicals hub.
PKN Orlens purified terephthalic PLANT IN EARLY 2017 3 BASF Ludwigshafen naphtha demand hinges on cracker restart
acid (PTA) plant in Wloclawek, Spains Cepsa will shut down its LONDON -- Any potential reduction in naphtha sales to BASF
Poland, is on force majeure, base oil production in Algeciras Ludwigshafen is contingent on when the crackers restart.
which is affecting the state of the early next year, probably in Feb- 4 BASFs Ludwigshafen fire to hit earnings
downstream polyethylene tere- ruary, for a short maintenance LONDON -- German chemical major BASFs full-year earnings may
phthalate (PET) market, sources turnaround in order to fix a fault be reduced by as much as 3%.
said on 26 October. We are af- with its vacuum unit, a compa- 5 BASF gives all-clear on latest Ludwigshafen mishap
fected of course... [However] we ny source said on 25 October. LONDON --BASF said that on-site firefighters and experts managed
are expecting to cover customers The fault is currently reducing to avoid a possible container reaction.
need for product from various lo- base oil output by around 20%,
cations securing supply, a the source said, and the shut- These are the most read stories taken from ICIS news last week.
downstream producer said. A down will be for around 10 To find out more visit: icis.com/about/news
technical problem relating to a days. The units nameplate ca-

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 7


news For real-time news and analysis
from our global team of reporters, visit:
icis.com/about/news

pacity is 200,000 tonnes/year of asia SIAMS Q3 PROFIT GROWS AS year line resumed operations on
Group I base oils. CHEM EARNINGS SURGE 74% 24 October, while another 30,000
CNOOC OIL & GAS TO START Thailand-based Siam Cement tonne/year line and a bigger line
BONANZA CAN ONLY HOLD UP AROMATICS UNIT Groups (SCG) Q3 net profit in- with a 40,000 tonne/year capaci-
WITH EU-WIDE SOLUTIONS Chinas CNOOC Oil & Gas creased by 57% year on year to ty have yet to restart.
While Spanish chemicals are (Taizhou) Petrochemical is plan- Thai baht (Bt) 14.1bn ($404m),
going through a bonanza as the ning to start up an aromatics unit supported by strong performance HANWHA CHEM TO RESTART
countrys economy recovers from at Taizhou in Jiangsu province in in its core chemicals business. YEOSU PLANT IN OCT/NOV
the crisis started in 2008, EU-wide November, a company source Revenue fell by 5% year on year South Koreas Hanwha Chemical
solutions are needed to increase said on 26 October. Construction to Bt105bn, but earnings before is planning to restart two of its
competitiveness and secure a fu- of the unit has been completed, interest, tax, depreciation and three 50,000 tonne/year each
ture for the industry in the region, and output is expected in the sec- amortisation (EBITDA) rose by toluene di-isocyanate (TDI) lines
the president of Spains chemical ond half of November, the source 8% at Bt20.6bn. in Yeosu on 27 October, a com-
trade group FEIQUE, Anton Vale- said. However, the nameplate ca- pany source said. The compa-
ro, said. He added Spain needs to pacity of the new unit was not SHANDONG HAITIAN TO nys third 50,000 tonne/year TDI
update its infrastructure in order being disclosed. The company EXPAND SODA ASH CAPACITY will be restarted on 1 November,
to continue receiving investments has 1m tonnes/year of reforming Chinas Shandong Haitian Bio- the source said.
in manufacturing, and demanded and 400,000 tonnes/year of aro- Chemical plans to shut in early
measures from EU policymakers matics extraction capacities November its 1.2m tonne/year HANWHA CHEMICAL PLANS
to bring the cost of energy down in soda ash plant for capacity ex- TO RESTART EVA PLANTS
order to keep European chemicals SHELL SINGAPORE TO pansion works, a company offi- South Koreas Hanwha Chemical
competitive when compared to RESUME ETHYLENE SUPPLY cial said on 26 October. The plans to resume operations at its
their peers in the US or Asia. Shell is planning to resume domes- plant in Weifang, Shandong ethylene vinyl acetate (EVA)/low
tic ethylene supply in Singapore province, would be taken off density polyethylene (LDPE)
GERMANY BUSINESS by 30 October, market sources said line for a few days, to raise its plants at Ulsan on 5 November
CLIMATE IMPROVEs IN OCT on 25 October. The producer will soda ash capacity to 1.35m after the completion of mainte-
Germanys business climate contin- feed naphtha into its cracker at tonnes/year. nance works, a company official
ued to improve in October with Pulau Bukom in Singapore by 26 said. The EVA/LDPE plants
companies being more satisfied October, according to sources. It SHANDONG SHUNTIAN which have a combined annual
with their current business situa- will likely take one to two days RESTARTS UNIT production capacity of 120,000
tion and expressing greater opti- for Shell to produce on-spec eth- Chinas Shandong Shuntian has tonnes/year were taken off line
mism about the months ahead than ylene, sources said, adding that restarted one of the three mela- as scheduled on 24 October for
in September, the countrys Ifo eco- supply to domestic customers mine lines at its 100,000 tonne/ the overhaul.
nomic research group said on 25 could resume by 30 October, fac- year plant after a planned mainte-
October. Ifo said that its business toring in a few days for the sup- nance, a company source said on MIDDLE EAST/AFRICA
climate index for Europes largest plier to build up its inventory. 26 October. The 30,000 tonne/
economy rose from 109.5 points in SABIC/EXXONMOBIL JV
Design Pics Inc/REX/Shutterstock

September to 110.5 in October. The STARTS UP PBR PLANT


index is based on about 7,000 SABIC started commercial opera-
monthly survey responses from tions at its joint venture polybuta-
firms in manufacturing, construc- diene rubber (PBR) plant at Jubail
tion, wholesaling and retailing. in Saudi Arabia on 22 October. The
The upturn in the German econo- plant is operated by Al-Jubail Pet-
my is gathering impetus, it said. rochemical Company (KEMYA),
an equal joint venture with a unit
COVESTRO DISPOSALS NOT of ExxonMobil. KEMYAs $3.4bn
NEEDED TO FUND TAKEOVER elastomers project at Jubail is ex-
Flotation of additional stakes in pected to produce more than
Covestro are not necessary for Ger- 400,000 tonnes/year of rubber
manys Bayer to fund the acquisi- [butyl, styrene butadiene rubber
tion of US-based Monsanto, a (SBR), butadiene rubber (BR) and
spokesperson for Bayer said on 26 ethylene-propylene-diene mono-
October. Bayer still owns a stake of mer (EPDM)], thermoplastic spe-
around 64% in polymers and cialty polymers and carbon black.
chemicals company Covestro.
While Covestros share price has CORRECTION
doubled since its listing in October In the story Belgium to steer
2015, European chemical analysts macroeconomics clear of E10 pain in the Think
have warned the companys first-
year positive performance as a
US sales of new homes rise 3.1% Tank section of the 24 October
2016 issue, the correct figure for
public company may be drawing US sales of new single-family houses in September were at a sea- projected ethanol usage should
to a close as tailwinds coming from sonally adjusted annual rate of 593,000 up 3.1% from August and be 160,000 cubic metres (cbm)
foreign exchange and low raw ma- up 29.8% from a year ago, according to the US Census Bureau. rather than the incorrect figure of
terials costs come to an end. 1.6m cbm listed.

8 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


news focus
Global oil glut
set to continue
Think Tank 11

earnings joseph chang new york

The coatings sector loses its shine


Q3 earnings whiffs from Sherwin-Williams and PPG put a spotlight on slowing growth in the once outperforming sector

The robust earnings growth in He expects Q4 sales to increase 1.7% to $3.79bn, aided by 2.0%
the coatings sector over the past by a low single digit percentage growth related to acquisitions.
several years is flattening out. year on year. PPGs industrial coatings seg-
Third-quarter results for the Shares of Sherwin-Williams ment performed well with a
major producers along with weak plunged $30.27, or 10.9%, to 6.1% sales gain while its perfor-
forward guidance shocked the in- $247.61 by the close of trading on mance coatings group lagged
vestment community, causing 25 October. Shares are down with sales down 0.8%.
share prices to tumble further 21% from their 52-week high of PPG earnings remain highly

Image Source/REX/Shutterstock
from their summer highs. $312.48, reached in July. levered to macroeconomic growth
The latest came from US-based It is worth noting that while as seen in the Q3 earnings warn-
Sherwin-Williams on 25 October, coming up short of expectations, ing due to F/X (foreign exchange)
where adjusted third-quarter the companys Q3 earnings actu- pressures and a slowdown in Eu-
earnings per share (EPS) of $4.23 ally grew, with adjusted EPS ris- rope where the company has its
came in shy of Wall Street con- ing 6.5% and adjusted net income highest margin leverage, said Coatings are running on empty
sensus estimates of $4.32. up 7.2% year on year to $401m. Susquehanna analyst Don Carson
Meanwhile, sales were up in a 24 October research note. PPG works off of easier comps ver-
Its clear that Q3 will 4.0% to $3.28bn. Q4 sales and European growth was weaker sus a weak 2016, takes cost-cutting
earnings are also expected to than expected in both architectur- actions and puts its cash hoard of
NOT be a standalone grow year on year just not as al coatings and PPGs industrial $2bn ($1bn on the books, and $1bn
disappointment as the much as analysts expected. segment where European auto on its way from glass divestments)
first quarter in 12 The pace of Sherwin-Williams OEM production for the quarter to work in the form of share buy-
earnings growth for all of 2016 is was flat, he added. And PPGs backs and bolt-on acquisitions.
failing to reach double expected to slow markedly from outlook for Q4 was disappointing,
digit EPS growth past years. From 2013-2014, EPS with chairman and CEO Michael THE 9TH INNING
frank mitsch gained 20.8%, followed by a McGarry expecting a continua- Laurence Alexander, analyst at Jef-
Analyst, Wells Fargo 27.1% jump from 2014-2015. tion of only modest improvements feries, is taking a cautious outlook
Based on management guidance, in global demand, leading to on PPG. While end-markets are
expected EPS in 2016 of $12.30 earnings growth comparable to or not falling off the table, the US is
The Paint Stores Group was (midpoint of its range of $12.25- slightly higher than Q3 results. in the 9th inning with architectur-
the strongest segment, posting a $12.35) shows 10.2% growth The company is reviewing various al demand growing 2%-4%. EMEA
6.7% gain in sales, while there from 2015. restructuring plans to reduce costs. (Europe, Middle East and Africa)
was weakness in the Consumer Shares of PPG at $91.22 at the growth has decelerated [0.2-0.4 per-
Group (-2.1%), Global Finishes WEAK CONDITIONS close of 25 October are down centage points], and weakness per-
Group (-1.1%) and Latin America The weakness from Sherwin-Wil- 22% from their 52-week high, sists in the emerging markets, he
Coatings Group (-0.4%). liams is not unique to the compa- reached in April. said in a 24 October note.
The real disappointment was ny but indicative of conditions Investor attention is on this The analyst cut his 2016 EPS es-
the forward guidance for Q4 EPS across the entire coatings sector. being a prolonged trend com- timate by $0.05, to $5.90, his 2017
of $1.45-$1.55, including around US-based PPG Industries pre- pared to a moderate hiccup. After forecast by $0.25, to $6.40 and his
$0.71 in costs related to the announced a Q3 earnings shortfall all, its clear that Q3 will NOT be 2018 number by $0.55, to $6.85 to
planned Valspar acquisition offset on 7 October its first such an- a standalone disappointment as shift to a flat outlook for PPGs
by about $0.03 in gains related to a nouncement since 2008. On 20 Oc- the first quarter in 12 failing to end-markets. Netherlands-based
decrease in its income tax provi- tober it reported adjusted Q3 EPS reach double digit EPS growth coatings giant AkzoNobel had
sion. Adding back the net impact of $1.56, showing modest growth Q4 is on track to continue this similarly uninspiring Q3 results,
of $0.68 takes us to a range of from $1.54 in the year-ago period. disappointing pattern, said with flat earnings and a modest
$2.13-$2.23 per share for Q4, fall- Without the benefit from share Wells Fargo analyst Frank Mitsch decline in sales. It characterised
ing well short of Wall Street esti- buybacks reflected in the EPS in a 21 October research note. the outlook as uncertain with
mates of $2.44. The company numbers, net income actually fell However, the analyst has a more challenging conditions in several
posted EPS of $2.12 in Q4 2015. 1.4% to $415m while sales rose positive view on 2017 prospects, as countries and segments.
Over the balance of the year,
the input cost tailwinds are likely coatings growth slows in q3 2016; mILLIONS, except for eps (earnings per share)
to turn to headwinds and the slow-
Company EPS % Change Net income % Change Sales % Change
er pace of sales growth is unlikely
to fully offset our investments in PPG Industries $1.56 1.3% $415 -1.4% 3,789 1.7%
new stores, territories and retail Sherwin-Williams $4.23 6.5% $401 7.2% 3,279 4.0%
programs already in place, said AkzoNobel 1.20 -3.2% 285 0.0% 3,600 -4.2%
Sherwin-Williams president and NOTE: all figures adjusted for charges; net income from continuing operations
Source: Companies, compiled by ICIS
CEO John Morikis in a statement.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 9


Market intelligence For real-time news and analysis
from our global team of reporters, visit:
icis.com/about/news

SoFTer for Celanese


An acquisition of the Italian compounder will further increase Celaneses exposure
in engineered materials, with an eye on the end-market automotive sector

al greenwood houston try Councils (ACC) annual meeting in June. There is

C
a shift to producing better quality products in ap-
elaneses pending acquisition of the Ital- pearance, lighter weight and temperature resistance.
ian compounder SoFTer Group will fur- Everyone is constantly upgrading physical qualities,
ther increase the companys exposure in and there is much more attention to that kind of de-
engineered materials. tail, Rohr told ICIS.
The deal will not change Celaneses Growth for these products grows even as overall de-
place as one of the largest producers of mand weakens, as you cant make a me-too product and
acetyls in the world. be successful in a low-demand world, he added.
This will remain, and Celanese will continue making This is exemplified in the lower tiers of the automo-
acetate flake, acetate film and acetate tow under its Con- bile industry, where these companies have to compete
sumer Specialties unit as well as ethylene vinyl ace- with top-tiered producers on quality and appearance,
tate (EVA) under Industrial Specialties and acetic acid, Rohr said.
vinyl acetate monomer (VAM) and acetate esters under Automobiles are already an important end market for
Acetyl Intermediates. Celaneses resins. To increase its exposure to this mar-
But the contribution from the companys advanced ket, Celanese recently added a nylon platform to its
engineered materials has been growing. In Q3 2016, ad- portfolio of engineering plastics.
justed earnings before interest and tax (EBIT) from this The SoFTer acquisition will increase this exposure
segment rose 20% year on year to $127m. further. It will nearly double the number of Celaneses
product platforms for engineered materials, bringing it
There is a shift to producing from nine to 17.
Because SoFTer is based in Italy, its products were
better quality products already qualified for European vehicles.
in appearance, lighter weight The companys plants include one in Silao de la
Victoria, Guanajuato state in Mexico.
and temperature resistance This had has good access to Mexicos major manu-
mark rohr facturing hubs in Queretaro, Guanajuato and San Luis
CEO, Celanese Potosi. As of March 2016, the Silao plant had six lines,
and it can add three more.
In 2014, at its plant in Rio Grande do Sul state in Bra-
Celanese has been talking about expanding its en- zil, the company began making polypropylene (PP)
gineered-materials business for much of this year, compounds, polyamide (PA) compounds and polybu-
with an eye on the automotive sector. CEO Mark Rohr tylene terephthalate (PBT) compounds as well as engi-
explained why automobiles are an attractive end- neered thermoplastics. That same year, the company
market during an interview at the American Chemis- started making engineering plastics at its new plant in

celanese - advanced engineered materials plant locations

Auburn Hills, Michigan, US Automotive Development Centre


Bishop, Texas, US POM, UHMW-PE, Compounding
Florence, Kentucky, US Compounding
Shelby, North Carolina, US LCP, Compounding
Wilmington, North Carolina, US Polyphenylene sulfide (PPS)
Winona, Minnesota, US Long-fibre reinforced thermoplastics (LFRT)
Suzano, Brazil Compounding
Frankfurt am Main, Germany POM, Compounding
Kaiserslautern, Germany LFRT
Oberhausen, Germany UHMW-PE
Fuji City, Japan POM, PBT, Liquid crystal polymers (LCP), Compounding
Kuantan, Malaysia POM, Compounding
Nanjing, China LFRT, UHMW-PE, Compounding
Do you agree or not? Ulsan, South Korea POM
We want your feedback.
Source: Celanese
Email joseph.chang@icis.com

10 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


market intelligence

Lebanon, Tennessee in the US. SoFTers other plants are


in Italy. It has a sales office in Germany.
For all of its sites, SoFTer ultimately plans to provide
a full product line at each.
think tank
julien mathonniere london

Automobiles are already an Global oil glut set to continue


important end market for
Celaneses resins. To increase As of OPECs Algiers agreement on 28 tion record was established at 11.1m
its exposure to this market, September, crude oil futures registered bbl/day in September, partly on a weak
an uptick in prices. But while Brent rouble and hence reduced costs of pro-
Celanese recently added a Futures broke above the $50 psychologi- duction and taxes. The world keeps pro-
nylon platform to its portfolio cal level over the next 48 hours and ducing more oil and gas than it needs, a
stayed there, it took another four days to fact recently acknowledged by the Energy
of engineering plastics WTI Futures to break through that thresh- Information Administration (EIA), which
old, from where they have since tracked a reduced its Brent crude oil forecast from
weak-kneed, sub-level pattern. $58 to $55/bbl in its latest Short Term
SoFTers footprint complements Celaneses. While Overall, crude futures are likely to remain Economic Outlook release.
SoFTer has one plant in the US, Celaneses advanced weakly buoyant over the next three months,
engineered-materials has several. with the oil price rally seeming as if it may Oil still is in the early
The Celanese business unit has one Brazilian plant run out of steam on the loose consensus
near Sao Paulo and none in Mexico. Its European plants among market participants that the supply stages of moving
are in Germany. It has several in Asia-Pacific, while
SoFTer has none.
glut will probably last into 2017.
Increasingly, the Algiers deal is being seen
from a demand to
The table shows the plants in Celaneses advanced as an attempt to send bullish ripples supply-led market
engineered-materials segment. It is based on informa- through the crude markets without the hur-
tion from Celaneses 2015 annual report, so it does not dle of an actual implementation, mostly in
include information about its new nylon platform. reaction to significant supply additions. Both Brent and WTI futures are trading
For products, there is some overlap, since both com- In September Vitol Group CEO Ian within a rather tight range, somewhat redo-
panies supply nylon and PBT products. However, Taylor said that an OPEC freeze at the cur- lent of the 19832003 period, as oil still is
SoFTer does not specify any polyoxymethylene (POM rent levels would doubtfully be enough to in the early stages of moving from a de-
or polyacetal) products or ultra-high molecular-weight mop up the excess supply. On Thursday 8 mand-led market to a supply-led one.
polyethylene (UHMW-PE). October, Goldman Sachs head of com- Although a weaker dollar may spur de-
Meanwhile, SoFTer offers several thermoplastic elas- modity research spoke of a wall of sup- mand, this may not be enough to offset the
tomers (TPEs) as well as polycarbonate (PC), acryloni- ply to describe the large-scale, long return of marginal producers on the market,
trile-butadiene-styrene (ABS) high-impact polystyrene lead-time projects that a number of inter- in particular US shale where longer laterals
(HIPS) and polyphylene oxide (PPE) compounds national oil companies (IOCs) are cur- have spectacularly reduced drilling costs
among others. rently bringing on stream after 510 years and increased profitability. Virtually all wells
The acquisitions should provide Celanese with larger of development to regain market share. are now horizontal in the United States.
positions with its customers as well as quite a number Bearish pressure is building up on the There is now a broader consensus
of manufacturing and supply-chain improvements, said combined supply additions from coun- that oil above $100/bbl may not be de-
Scott Sutton, Celanese executive vice president and tries like Libya and Nigeria, where civil sirable for OPEC, as it would bring too
president of materials solutions. unrest seems to abate, and strong pro- much competition from elsewhere back
He made his comments during an earnings confer- duction levels from low-cost players like to the market, Bloomberg oil analyst
ence call. Russia, where a new post-Soviet produc- Julian Lee said on Friday 21 October.
There will be very good integration of customers
and channels as well as we get those additional selling
opportunities, Sutton said.
During the same call, Rohr said, This is a natural
and thoughtful step forward in the evolution of our en-
gineering-materials business.
The deal should close in the fourth quarter. Celanese
did not disclose the terms of the acquisition, but it did
provide some details about SoFTers performance dur-
ing the earnings conference call.
Its margins are lower than Celaneses but there is a lot
WestEnd61/REX/Shutterstock

of opportunity for synergies, Sutton said. Annual reve-


nue is about $300m.
Additional reporting by Joseph Chang
ICIS produces a monthly Global Automotive report covering
the major automotive chemicals markets, the auto-industry,
the ICIS Basket of Automotive Petrochemicals and The world is still awash with oil despite attempts to curb output
macroeconomic trends. tinyurl.com/hzreach

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 11


price & market trends For up-to-date information on more
than 120 global commodities, visit:
icis.com/about/price-reports

Middle East/Asia
izham ahmad and matthew chong singapore

TDI prices spike amid panic buying


With the market already reeling from supply shortages and the previous weeks price hikes, panic ensued with buyers
Prices of toluene di-isocyanate Asian manufacturers. With the weakening late in the week end- increases to the end-user side,
(TDI) in Asia and the Middle market already reeling from sup- ing 19 October due to waning the source added. What is hap-
East spiked for the second week ply shortages and the previous buying appetite for excessively pening is not representative of the
in a row, jumping by at least weeks price hikes, panic buying priced cargoes, according to market, said another Middle
$1,000/tonne as worried custom- ensued with buyers heard scram- market sources. Eastern source. This situation is
ers scrambled for limited car- bling to secure what little cargoes Exorbitant deals as high as not sustainable.
goes, while sellers rode the fren- that were left. CNY60,000/tonne DEL China People are scared right now.
zy by jacking up prices. Right now whoever has stock were heard concluded in the But really I would say anything
On 19 October, spot prices on the ground, ready for delivery past couple of weeks, albeit very more than $4,000/tonne is just
surged $1,400/tonne, or around immediately, will command the limited quantities, according to not valid as reflection of the mar-
46%, from the previous week to prices, said one trader. suppliers in China. ket, according to the Middle
$4,400-4,500/tonne CFR (cost & If I had any TDI right now Sellers were also being con- Eastern source.
freight) China/Hong Kong; and and if I wanted to sell it at strained by a lack of available
were up $1,000/tonne, or around $3,500-$4,000/tonne, people stocks and so focused their sales ef- NOVEMBER RELIEF EXPECTED
33%, to $4,000-4,100/tonne CFR would still buy from me no forts on preferred customers or Sources said the supply shortage
SE (southeast) Asia/GCC (Gulf question about it. buyers willing to pay higher prices. is expected to improve starting
Cooperation Council)/East Medi- At $4,100/tonne I still think in November when some of the
terranean/Iran, and CIF (cost, in- $2,000 jump in two weeks thats not an accurate reflection of South Korean producers resume
surance and freight) India. A jump of almost $2,000/tonne the current conditions. I think it production after maintenance.
The surge can be traced back within two weeks was unheard should be more like $5,000/ Hanwha Chemical was due to
to 7 October when Germanys of even during the 2007/2008 tonne, said one Asian producer. restart its 150,000 tonne/year
Covestro announced a force ma- peak just before the global finan- TDI unit in Yeosu on 27 October.
jeure on its TDI and MDI sup- cial crisis, market sources said. MIDDLE EAST ACTIVITY OCI Corp is due to shut its
plies in Europe due to a shortage This is a panic. Ive never Buyers in the Middle East ap- 50,000 tonne/year TDI unit from
of nitric acid supply to its plant. seen this kind of move in all my peared to be reluctantly conced- mid-November for regular main-
Europe had already been fac- years in the TDI industry, the ing, highlighting the lack of do- tenance but the shutdown is ex-
ing supply shortages by then. same trader said. These kind of mestic producers to supplement pected to last for only about 10
Less than a week after, TDI prices prices are ludicrous! the shortfall in TDI imports. days, a company source said.
in Asia and the Middle East I was making some inquiries Germanys Covestro, mean-
jumped by about $500/tonne. Sellers were also to buy but I was really surprised while, has said its nitric acid
that the price has gone up by so plant supply is expected to be
BASF CAUSES CONCERN
being constrained much, said one buyer in the restored in the week of 11 De-
The week ended 21 October, by a lack of available Middle East. But if we really had cember and market sources esti-
sentiment worsened after the ex- stocks and so to buy, what choices would we mate TDI production could re-
plosion and fire at Germany- have? We have to keep our plants sume around mid-December.
based BASFs Ludwigshafen site focused their running, we have orders to fill, Saudi Arabias Sadara is
on 17 October. sales efforts customers, delivery drivers. scheduled to start up all its
While the incident caused I dont think the prices will downstream derivative plants by
concern among TDI players, a come down so soon. Maybe by the Q2 2017. Its polyurethane (PU)
BASF spokesperson said on 20 A China-based producer said: year-end. Right now, all we can do chain facilities include a
October its TDI operations were The peak in 2008 was driven by is perhaps pass on some the prices 200,000 tonne/year TDI unit.
unaffected. All production high crude oil prices and the eco-
steps of the TDI complex are run- nomic boom in China. The price MIDDLE EAST AND ASIA TDI
ning and we are producing TDI, surge this time round is for en- $/tonne, film, spot
said the spokesperson, adding tirely different reasons. 5,000
that volumes are being delivered On 19 October, Chinas week- CFR SE Asia CFR GCC CIF India
to customers and operations at ly domestic drummed prices CFR China and Hong Kong Main Ports
4,000
the new TDI complex are being skyrocketed to an all-time aver-
gradually increased. age high of yuan (CNY) 49,500/ 3,000
This would probably ease tonne DEL (delivered) south
some of the immediate concerns. China. Domestic prices have 2,000
Longer-term, however, predic- multiplied nearly threefold after
tions are that the TDI market will successive sharp increases 1,000

return to being a largely oversup- since 21 September, when pric-


0
plied market. These disruptions es were at CNY17,350/tonne Oct Oct
also coincided with some turna- DEL south China. However, 2015 2016

rounds among key northeast prices started showing signs of

12 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


price & market trends

asia
judith wang singapore

Spot propylene down on ample regional supply


Spot propylene (C3) prices in and freight) NE (northeast) Asia the previous week, when Chinese A major Taiwanese producer
Asia headed south as post-holi- against bids at $830-840/tonne. On players returned from their week- had sold out its October cargoes
day restocking activities of Chi- 20 October, daily propylene prices long National Day holiday (1-7 Oc- and has yet to start discussions for
nese buyers have fizzled out closed at $845-855/tonne CFR NE tober), but restocking activities November shipments.
amid ample regional supply, Asia, down by an average of $20/ have since dwindled. From South Korea, propylene
market sources said. tonne from the start of the week. I But the latest price decline seen exports are available for Novem-
Sellers and traders have low- am not rushing to buy as I expect- will likely be capped by healthy ber amid shutdowns of several
ered their prices to entice buyers. ed prices to drop further. So I bet- downstream derivative markets, downstream units in the country.
Offers for end-October/November ter wait and see at this moment, a with further support possible fol- In China, domestic propylene
cargoes were heard late in the major end-user in northeast Asia lowing the shutdown of BASFs availability will increase gradu-
week at $850-860/tonne CFR (cost said. Propylene prices increased in crackers in Germany, some mar- ally with the expected restart of a
ket sources said. major propane dehydrogenation
ASIA PROPYLENE The 17 October incident at (PDH) plant in Shandong and the
$/tonne, CFR NE Asia BASFs flagship Ludwigshafen site start-up a new unit in Zhejiang.
900
will probably lead to some exports Wanhua Chemicals PDH unit
of Chinese downstream products with a 750,000 tonne/year pro-
to Europe, and may lend some sup- pylene capacity in Shandong is
800
port to Asias propylene market. in the process of restarting, al-
Regional propylene supply is though on-spec product has not
700 considered long for November, been achieved, according to mar-
while buyers and end-users have ket sources.
600
adopted a wait-and-see stance on Meanwhile, Ningbo Fuji Petro-
the market as they expect prices to chemicals propane dehydroge-
fall further in the near term. At least nation plant, which can produce
500 10,000 tonnes of propylene cargoes 600,000 tonnes/year of propyl-
Oct Oct
2015 2016 will be available from Taiwan in ene, in Zhejiang is due to start up
November, market sources said. by end-October.

asia
melanie wee singapore

MMA hits 17-month high on tightness


A firmer import buying appetite, with suppliers citing increased spot enquiries for emulsion resins, boosts market sentiment

Asia-Pacific spot prices of methyl of increasing spot enquiries from spread between MMA and down- cific in recent weeks, both planned
methacrylate (MMA) have extend- southeast Asian outlets. stream PMMA squeezing mar- and unplanned have cut into MMA
ed gains for two straight weeks on Firmer import buying appetite, gins for sellers of the latter product production, exacerbating the sup-
the back of tight supply fuelling with suppliers citing increased it was unclear whether MMA ply shortfall. The tight supply sce-
import demand, industry sources spot enquiries for emulsion resins prices have truly reached their nario spilled over to China, fuelling
said. On 14 October, spot prices of applications helped to boost mar- peak.Plant shutdowns in Asia-Pa- domestic MMA prices there.
MMA in 20-300 tonnes rose to an ket sentiment, coinciding with
average of $1,875/tonne CFR (cost cargo supply constraints faced by ASIA MMA
and freight) southeast Asia, up by several major regional producers. $/tonne, < 500mt, spot CFR SE Asia
$20/tonne from the preceding By and large, the current mar- 2,000
week. Current spot prices are at ket climate was characterised as
their highest since mid-May 2015, one skewed towards sellers,
1,800
according to ICIS data. leaving little room for negotia-
Workable levels on the buying tion on the buying side.
side were viewed by market sourc- Escalating MMA prices have, in 1,600
es at around $1,850/tonne CFR turn, compelled downstream poly-
southeast Asia. Selling indications methyl methacrylate (PMMA) 1,400
were placed at $1,900/tonne CFR makers to raise their asking levels
southeast Asia and above. even as overall demand was just
1,200
Negotiations were ongoing for moderate, according to regional Oct Oct
October, with some market players sources. While there was market 2015 2016

near sold-out positions on the back concern on the fast diminishing

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 13


price & market trends For up-to-date information on more
than 120 global commodities, visit:
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Europe
Katherine Sale dusseldorf

PMMA market reaches turning point


Planned and unplanned outages at upstream MMA facilities have tightened supply while PMMA demand remains solid

The European polymethyl meth- EUROPE PMMA strain on supply, with one Europe-
acrylate (PMMA) market has an MMA producer already imple-
reached a turning point with prices /tonne FD NWE menting sales control.
increasing on the back of tight up- 2.10 One factor that could impact
stream methyl methacrylate the situation is the fall polycar-
(MMA) supply, with this being a 2.05 bonate (PC) prices. Traditionally
key talking point for sources at the PC is priced above PMMA with
K Fair plastics trade show. 2.00
some buyers having the flexibili-
Q4 contract talks for PMMA ty of switching between the two.
were expected to end that week, Estimates of those who are
with prices settling between a 30- 1.95 able to do this vary between 10-
70/tonne increase on global tight- 20% of PMMA buyers.
ening of MMA supply, which 1.90 It is also not a quick process
Oct Oct
started initially in Asia in April. 2015 2016 with some saying it could take six
Solid demand combined with months to convert production to
planned and unplanned produc- the use of PC. Although it does
tion stoppages has had a contin- ised, with MMA prices so attrac- One European producer last not apply to the majority of the
ued squeeze on MMA supply. tive. European players have been week said it is struggling to obtain market, for some buyers in the
The pressure on supply was not expecting a fall in imports for enough MMA to meet its current roof lighting sector for example,
felt as quickly in the European months. This is not being reflected PMMA demand. Demand remains rising PMMA prices and a fall in
PMMA market. Prices started to in statistics, with the August Euro- solid, with continued growth being PC prices may result in some
increase for material heading to stat figures showing a year-on-year seen in key derivative sectors such players looking at their options.
the Middle East, but as of Q3, increase, sources have seen a drop as automotive. Linked with the With inventories low, demand
price increases were yet to materi- recently. One PMMA distributor, solid performance for PMMA, one robust and upstream supply short-
alise. The Q3 Europe PMMA con- which buys Asian product, said MMA producer said it had seen a ening weekly the majority of
tract rolled over, which marked a that with Asian prices above Euro- 3% increase in demand so far this PMMA sellers do not see this as a
shift in the market and previous pean it is currently not buying ma- year. Although demand may deflate serious threat at this time.
consecutive quarterly decreases. terial from its supplier. This has later because of the slowdown near European fourth-quarter con-
With prices firming rapidly in been the case upstream with Christmas, for October and Novem- tracts will settle this week, with
Asia, there was an expectation Asian MMA spot prices consider- ber it is expected to remain strong. supply expected to remain snug
that less MMA would be polymer- ably above European prices. This is likely to put continued for the rest of the year.

Europe EUROPE POLYOLS


Truong Mellor london

October polyols pricing


$/tonne, flexible slabstock conventional, contract FD NWE
1,600

assessed at rollover 1,550

1,500
October pricing in the European that the polyols market in Eu-
polyols market were assessed at a rope is currently facing severe
rollover, sources confirmed. margin compression, as prices 1,450
Despite some upward pres- have not moved up with feed-
sure from raw material costs this stock propylene costs. 1,400
month, healthy availability One source said that propylene Nov Oct
2015 2016
meant that buyers were able to has moved up by 170/tonne
resist any upward pressure. since March 2016, while polyols
There were reports of some prices have struggled to match market due to various production ing output problems due to some
minor increases in the market, this. As a result, suppliers are like- outages. Covestro declared force feedstock sourcing issues this
with some players keen to keep ly to push for an increase on pric- majeure on TDI and intermediate month. Sources in the market also
pace with the higher propylene ing in November to restore mar- products earlier in October. said that Dow was currently un-
costs in October. However, the gins. The key factor behind the The company has a 300,000 dergoing a short three day shut-
majority of sources said that ample supply in Europe currently tonne/year TDI plant in Dorma- down at its polyols unit in
prices were steady overall this was the limited availability of tol- gen, Germany. There is another Terneuzen, the Netherlands for
month.Players have also said uene di-isocyanate (TDI) in the TDI producer also said to be fac- safety-related purposes.

14 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


price & market trends

Asia
Felita Widjaja Singapore

PE market outlook uncertain on November cargoes


The Asia polyethylene (PE) LLDPE film and high density China market. Most players are sentiment and curbed buying in-
market outlook is uncertain, polyethylene (HDPE) film were still cautious as they are con- terest for import cargoes further.
with regional participants an- stable at $1,160-1,220/tonne cerned prices might only be tem- Resin buyers in Asia are un-
ticipating new offers for No- CFR SE Asia and $1,090-1,160/ porarily supported, as the real willing to purchase longer ship-
vember shipment cargoes to be tonne CFR SE Asia, respectively. end-product demand has not ment import cargoes as they are
announced towards the end of There were some restocking picked up yet.Furthermore, local concerned prices might soften
the month and waiting for a activities in China as it reopened Asian currency depreciation upon arrival, according to mar-
clearer price direction. after the Golden Week holiday against the US dollar dampened ket sources.
In the key China market, im- on 1-7 October. However, the
ported polyethylene prices rose southeast Asia market remained ASIA PE
the week ended 14 October in relatively quiet with limited $/tonne, spot
tandem with increased domestic buying interest. 1,300
LDPE film, CFR China all origins LLDPE film, CFR SE Asia dutiable
market prices while prices in A few suppliers who had
LLDPE film, CFR China all origins HDPE film, CFR SE Asia all origins
southeast (SE) Asia were assessed some balance for their October 1,250
as largely stable. shipment cargoes lowered their 1,200
In China, prices of low density offers for certain grades to move
PE (LDPE) film increased by as their cargoes but no one [was] in- 1,150
much as $80/tonne to reach terested to buy, said an Indone-
1,100
$1,200-1,290/tonne CFR (cost & sia-based trader.
freight) China while linear low However, some regional trad- 1,050
density PE (LLDPE) film prices ers opted to maintain their offers
1,000
increased by $20/tonne to and quoted higher selling indica- Oct Oct
$1,100-1,180/tonne CFR China. tions, particularly into the Viet- 2015 2016

On the other hand, prices of nam market, in view of the strong

asia
yeow pei lin singapore

C2 steady on healthy demand in China


Buying activity is being driven by the strong performance of certain derivative sectors and a stable ethylene price outlook

Northeast Asia ethylene import capacity. Chinese buyers see lim- vember-arrival cargoes. Regional (YNCC) is increasing ethylene ex-
prices are broadly stable, as the im- ited pricing risks for forward pur- supply is lifted by higher produc- ports in October and November
pact of rising regional supply is chases on expectations that region- tion rates after summer and as the on the back of turnarounds at its
counterbalanced by healthy de- al demand and supply will be cracker turnaround season in affiliates downstream plants.
mand from the key China market. balanced until the end of the year. northeast Asia draws to a close. Most of the supplies will be put
Spot requirements for Novem- They said prices are unlikely to Shipments from South Korea into the producers term export
ber-arrival cargoes to China have see significant fluctuations. and Taiwan in Q4 will be boosted contract with a regional trader.
been healthy and a similar picture Buyers have had no difficulty by reduced domestic consump- Taiwans supplies will likely
is emerging for December-delivery fulfilling requirements for No- tion. South Koreas Yeochun NCC go up in the second half of No-
shipments. Some Chinese end- vember and December, when
users intend to stockpile ahead of ASIA ETHYLENE downstream activity in Kaohsi-
the 2017 term import discussions $/tonne, spot CFR NE Asia ung slows down due to the clo-
and the Lunar New Year holiday. 1,300 sure of a major ethylene pipeline.
Buying activity is also driven CPC Corp is shutting its pipe-
by the strong performance of cer- 1,200 line from 25 or 26 November 2016
tain derivative sectors and a until 12 January 2017 to relocate
broadly stable ethylene price out- 1,100 the infrastructure to make way for
look for November and December, underground rail lines.
according to Chinese sources. 1,000 Downstream, the Asia polyvi-
nyl chloride (PVC) market is
TAIWAN TO STOCK UP 900 drawing support from higher
CPC Corp will shut its No 6 crack- post-monsoon Indian demand
800
er in Linyuan February-April 2017 Oct Oct and tight Chinese domestic sup-
for maintenance. The cracker has 2015 2016 ply on the back of environmental
720,000 tonnes/year of ethylene inspections in Shandong.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 15


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price & market trends

europe
linda naylor london

UK PE, PP buyers are under pressure


The weak pound sterling versus the euro is causing disruption and pain in the market as import prices increase

Polyethylene (PE) and polypro- This is something that is not pletely in line with euro costs, Wilton, INEOS produces PP and
pylene (PP) buyers in the UK are likely to go away, however, said but that it was now hard to get linear low density PE (LLDPE) at
under strong pressure to pay some large packaging buyers. all the product it needed without Grangemouth, and LyondellBa-
more for their product as the You just have to pay the paying more. sell has a PP plant at Carrington.
pound sterling tanks against the price, said one. The UK price is If were prepared to pay more But the UK remains a net import-
euro, sources said. the euro price plus 20 [/tonne]. we will get the material we need, er of plastics goods.
There has been tension on a The UK imports a lot of its according to the buyer. Ian Wright, director general of
public scale in the UK as some packaging, including the contents Some traders were having diffi- the Food and Drink Federation,
brandowners have tried to recover of much of it, said the buyer, and culty getting increases in line with which speaks for manufacturers,
increased prices, said to be down this meant that costs were higher. the new currency rates, and they warned of the potential for more
to the weakness of the pound My costs will have gone up were doubly hit by the fact that similar disputes as Unilever/
which has left import prices high. by around 100 [tonne], said an- many buyers are now looking to Tesco as imported costs rise.
Recently there was public out- other large buyer, I cant take trigger end-year rebates by reach- On a more positive note, the
cry as Unilever sought to in- that hit. This is at a time when ing pre-agreed volumes with their weak pound has been a boon for
crease prices on some its goods European PE prices were largely regular European suppliers. exporters. Business is good,
to supermarket giant Tesco, and a rolling over in euro terms. The UK does have its own PE said another converter. There
private agreement led to a resolu- Yet another buyer said its and PP production. SABIC pro- are no imports and [our] ma-
tion of this issue. costs had not increased com- duces low density PE (LDPE) at chines dont stop running.

asia
paul lim singapore

Acrylates turning bullish on BASF plant explosion


Asia acrylic acid and acrylate ASIA ACRYLATES been up quite sharply this week.
ester prices rose the week ended We will have no choice but to pay
21 October as an explosion at $/tonne, spot higher prices in the coming
1,200
BASFs Ludwigshafen, Germany Acrylic acid, glacial, CIF SE Asia import drummed Butyl acrylate, CIF SE Asia import iso-container weeks if we want to secure spot
site on 17 October made its ef- Acrylic acid, glacial, CIF China Main Ports drummed Butyl acrylate, CIF China Main Ports bulk cargoes, an end-user said.
1,100
fects felt in the market. There were active discussions
In total, 24 plants have been for butyl-acrylate and 2-ethyl
1,000
shut down, including the crack- hexyl acrylate. Buyers are more
ers, due to the fire. Other units 900
inclined towards accepting
were able to continue producing, slightly higher offers.
using existing raw material in- 800
ventory, the company said. FEEDSTOCK INCREASES
The fire damaged various pipe- 700 End-users have been more open
Oct Oct
lines including those for external- 2015 2016 to higher levels this week, com-
ly purchased raw materials, and pared to previous weeks when
BASF therefore declared force sentiments were more bearish, a
majeure (FM) for the purchase of climbed to $1,025/tonne on Oct purchase spot cargoes, causing a seller said. However, there have
naphtha, ethylene and propylene. 19 from $1,000/tonne on Oct 5. price spike in the acrylic acid been no deals concluded yet.
The CIF (cost, insurance & and acrylate esters markets. The price rise is also support-
NO ACTIVE ENQUIRIES freight) CMP (China main port) The effect is especially felt in ed by increases in feedstocks.
Sources said there could be some marker spiked to $930/tonne the glacial acrylic acid market as Propylene prices were higher
diversion of acrylic acid and from $855/tonne. end-users in the superabsorbent due to restocking activity amid
acrylate esters shipments from polymers industries have been firmer domestic prices in China.
Asia to Europe, although there ACRYLIC ACID PRICE SPIKE very active in buying cargoes, a Feedstock N-butanol prices were
had been no active enquiries Butyl acrylate prices were on a source in northeast Asia said. higher as well.
from buyers outside of the region similar trend. The SE Asia marker In southeast Asia, similar ef- Prices in Asia would likely not
yet. The arbitrage window could climbed to $1,025/tonne on Oct fects have also been seen, as pro- subside in the near term and
open if BASFs facility remains 19 from $1,000/tonne on Oct 5. ducers in China abstained from higher prices are expected, even
shut for a longer period, sources The CIF CMP marker jumped to offering to SE Asian buyers. though the peak demand season
added. The Southeast (SE) Asia $1,050/tonne from $982/tonne. Market sources said prices are is already over, according to mar-
marker for glacial acrylic acid In China, buyers are rushing to likely to increase. Prices have ket sources.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 17


price & market trends For up-to-date information on more
than 120 global commodities, visit:
icis.com/about/price-reports

North america europe


larry terry houston vasiliki parapouli london

October butac
price efforts Oct acrylates settle higher
Some sources said BASF has approximately 25% of total European butyl-A capacity
gain traction
The European October acrylate EUROPE ACRYLATES
US October butyl acetate (butac) esters contract price has settled at
free-market contract values con- increases of 20-25/tonne on aver- /tonne, contract FD NWE
2,000
tinued to gain strong traction on age depending on the ester, while 2-ethyl hexyl acrylate Ethyl acrylate
the push from September feed- there were also some rollovers Butyl acrylate Methyl acrylate
1,800
stock propylene, a buyer con- heard, mainly in distribution, due
firmed. Increases so far have been to subdued demand, sources said.
1,600
heard at 3 cents/lb ($66/tonne). Acrylate esters include methyl
Separate October initiatives of acrylate (methyl-A), ethyl acrylate 1,400
3-5 cent/lb surfaced from the (ethyl-A), butyl acrylate (butyl-A)
major domestic suppliers in mid- and 2-ethylhexyl acrylate (2- 1,200
September. The October initia- EHA). Players are in a wait-and-
tives were prompted mostly by see position on the impact the 1,000
Nov Oct
Septembers 6 cent/lb propylene fire at BASFs Ludwigshafen site 2015 2016
increase, but sellers also have could have. Some sources said
been intent on improving their BASF has approximately 25% of
profit margins, buyers said. total European butyl-A capacity some customers might like to se- the spot market, being quoted at
Price gains in September and and, therefore, the impact could cure volumes ahead of uncertain 950-1,050/tonne for methyl-A,
anticipated increases for October prove to be big. Customers that weeks. Normally at this time of 920-1,020/tonne for ethyl-A,
still lag propylene gains of 9.5 have BASF as their only acrylates the year, buyers would take a step 1,010-1,080/tonne for butyl-A
cents/lb during the same period. supplier are said to not be getting back. Although players could get and 1,150-1,225/tonne for
Demand was still described as any material at the moment. the material they need with no 2-EHA. October contract prices
steady, with no discernible sea- A distributor said its Asian major difficulty, the BASF inci- were assessed at 1,305-1,330/
sonal decline yet. suppliers have increased their dent might complicate things. tonne FD (free delivered) NWE
The fourth quarter of each cal- prices by $150/tonne. Another important point (northwest Europe) for methyl-A,
endar year is typically marked by Demand was considered rea- brought up by players is that Lud- 1,465-1,485/tonne FD NEW for
diminished demand and rising sonable, but rather weak in coat- wigshafen is a strategic hub to ethyl-A, 1,535-1,575/tonne FD
inventories as the weather cools ings. However, things could move product in and out of Eu- NWE for butyl-A and 1,640-
and major US holidays approach. change on BASF situation as rope. Prices were moving up in 1,665 FD NWE for 2-EHA.
A buyer said demand is flat year
on year, but has remained steady
since summer demand softened North america
after the spring paint and coat- david love houston

Stable EPS leads to Nov rollover talk


ings season.
The buyer added that it saw a
stronger spring season in 2016
compared with 2015. The US expandable polystyrene EPS prices rolled over in July US EPS
September butac freely negoti- (EPS) market was described as and then again in September
ated contract values are in a stable, leading to the expectation after price increases of 2-5 cents/ Cents/lb, spot DEL
84
range of 58-61 cents/lb DEL (de- that prices will again roll over in lb went into effect during the sec- Block
livered), as assessed by ICIS. November, players said. ond half of August. 82
Packaging
Sources noted that spot feed- US spot styrene prices jumped
US BUTAC stock benzene prices have softened by 6.1% on 13 October from the 80

Cents/lb, contract DEL this month, but that spot feedstock previous day in response to news
78
60 styrene prices jumped higher late on a fire at Westlakes 259,000
the week ended 14 October. tonne/year Lake Charles styrene 76
58 EPS prices typically track ben- plant in Louisiana.
zene prices closely. October ben- It is yet unclear how long the 74
56
zene contracts settled at $2.31/ plant will be down. However,
72
54 gal, which was down by an aver- one source said that it did not ex- Oct Oct
2015 2016
age of 17 cents/gal from the previ- pect the plant to be down longer
52 ous month. Spot benzene prices than two weeks.
this month averaged $2.24/gal One producer said that, as ex- the producer said. One large
50
through 17 October. pected, October demand is defi- moulder described its demand
48 Nov Between June and September, nitely good. However, November this month as OK. It also expects
Sep
2015 2016 benzene contract prices in- demand will probably fall by November prices to be un-
creased by 48 cents/gal. around 20% due to seasonality, changed from October.

18 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


price & market trends

latin america
marianela toledo houston

Limited credit access hampers polymer buyers


Polymer buyers from various could take a drastic turn. against the US dollar, making im- former said that credit loans are
Latin America countries point to The Mexican peso, for exam- ports from the other countries very difficult to obtain, and the
a key problem hampering the ple, had an exchange rate of less expensive. shortages of material [have] not
market limited access to credit Ps18.84 to the US dollar on 9 affected [the market] much be-
and loans. September, but then fell 2.4% to NOT JUST MEXICO cause of the soft demand.
Payments get delayed a lot, a Ps19.31 by 7 October. The currency situation is not ex- A Brazil distributor selling PE,
Mexican distributor said. The dis- US politics also plays a role in clusive to Mexico. In Chile, PP and PS said: There is much
tributor which imports polyeth- the market. We will see how where the currency has been uncertainty with the currency
ylene (PE), polypropylene, (PP) elections go, the source added. mostly steady over the past few People always talk about that.
and polystyrene (PS) from the US On 20 September, the Mexican months, a seller of imported res- But all is not negative. [Get-
and also sells domestically pro- peso reached a historic Ps19.82 ins also complains about collect- ting] credit is very expensive, the
duced material said customer to the US dollar, tracking news of ing unpaid bills. Profitability is, Brazilian distributor said. At the
payments are usually made 45-60 the US Federal Reserve possibly every time, more difficult be- same time, it is not so bad because
days after an order is placed. raising interest rates as well as cause of the [lack of] access to only the robust will remain.
The transactions made today polls showing Republican candi- credit loans, the seller said. Banks and credit companies,
will be paid in January, the date Donald Trump about even The Chilean seller explained seeking to cover possible non-
source said. End-of-year holi- with Democratic candidate that some banks are restricting payment, often impose new re-
days further delay the payment Hillary Clinton. loans, and buyers do not pay on strictions. Looking ahead, some
cycle. We are having problems A US seller, placing PP material time. If the seller does not get help could come from projected
with payments, the distributor into the Mexico market, said it is paid, it has no money to purchase improvements to Latin Ameri-
said. [Customers say] I pay you facing a harsh reality as export vol- more material, and things can un- cas economies. GDP growth in
in US dollars but you have to umes have fallen, mainly tracking ravel very quickly. South America is projected to
give me todays [currency ex- the currency exchange rate. A distributor in Peru agreed: rise from -2.0% in 2016 to 1.1%
change rate]. By the time the The seller stated that it faces There are many delays in pay- in 2017, according to the Inter-
transaction is complete 45-60 increased competition when ing. They [customers] are taking national Monetary Fund (IMF)
days later, the exchange rate other regional currencies fall too long. In Venezuela, a trans- October projection.

ASIA
Helen Yan singapore

Butadiene uptrend may lose steam


Spot prices have spiked as a spate of outages and scheduled turnarounds at regional crackers curtailed cargo availability

Asias butadiene (BD) price up- ASIA BD Ludwigshafen crackers in Ger-


trend may taper off as demand for many this week.
spot material appears to be wan- $/tonne, spot, CFR NE Asia An explosion occurred at
ing, which prompted Indonesian 1,800 BASFs Ludwigshafen site on 17
producer Chandra Asri to with- 1,600 October, killing three employees
draw its sales tender, market and injuring six others.
sources said on 19 October. 1,400 The arbitrage window from
Chandra Asris offer for a 1,200
Europe to Asia may now close as
2,000-tonne BD cargo for late- any surplus BD spot material is
November loading was met with 1,000 likely to stay in Europe following
lower-than-expected bids at the BASF explosion, another
800
below $1,500/tonne FOB (free on trader said.
board) southeast (SE) Asia. 600 Meanwhile, market players are
Oct Oct
On 14 October, spot BD prices 2015 2016 closely monitoring development
averaged $1,625/tonne CFR (cost at Shells cracker complex in
and freight) northeast (NE) Asia, Pulau Bukom, Singapore, that
racking up cumulative gains of cautious stance and have limited ers scrambling for spot material. has been shut since 27 Septem-
$650/tonne or 67% since early spot appetite, a trader said. Some market players expect ber. The cracker, which can pro-
August, according to ICIS data. Butadiene spot prices have prices to remain supported duce 960,000 tonnes/year of eth-
Prices are coming off now as spiked as a spate of outages and above $1,600/tonne CFR NE ylene and 155,000 tonnes of BD,
the withdrawal of the Chandra scheduled turnarounds at re- Asia, as deep-sea supply from is expected to resume production
Asris sales tender is signalling gional crackers had curtailed Europe may start to dwindle fol- by end-October, according to
that traders are now adopting a cargo availability, sending trad- lowing the shutdown of BASFs market sources.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 19


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price & market trends

middle east/global
jonathan lopez london

Borouge runs at full operating rate


Demand for polyolefins is healthy, allowing Borouge to run its massive complex in Abu Dhabi at high operating rates

Healthy global demand for poly- Abu Dhabis International Petrole- could help improve productivity at
ethylene (PE) and propylene (PP) um Investment Company (IPIC),
At Borouge, all the firm and therefore at its 50%-
is helping the UAEs Abu Dhabi with a 64% stake, and Austrian plants are operating owned Borouge, as any improve-
petrochemical complex of Bor- energy major OMV (36% stake). well, running at ment in efficiency is a bonus for
ouge to run at full capacity after Borouges 4.5m tonne/year pro- the companys partners, he said.
all plants within it have started duction capacity is divided into full capacity and
up, the CEO of joint-owner Aus- 2.3m tonnes/year of polyethylene feedstock is TURKEY IMPACT
trian chemical major Borealis (PE), 1.8 tonnes/year of polypro- Following the attempted coup
said on 20 October. pylene (PP) and 350,000 tonnes/
available detat on 15 July in Turkey, Gar-
Borealis CEO Mark Garrett said year of low density polyethylene Mark garrett rett said Borealis operations in
CEO, Borealis
that despite Chinas industrial (LDPE), supporting cross-linked the country continue to be run-
slowdown, demand for polymers polyethylene (XLPE). the performance tests and we have ning normally and said it would
to manufacture wires and cables proven the ability to run a 4.5m be wise for him not to com-
directed to the transportation feedstock ISSUES RESOLVED tonne/year facility like this, he ment on political developments.
and construction industries re- Following the disruption of feed- said. Although Garrett would not The coup was obviously a sur-
mains healthy in the country, a stock deliveries in February to go into detail on where Borouges prise to be honest. But as of now,
market Borealis is tapping into, he Borouge, causing one of the three output is being sold, the compa- Borealis country manager there
said in an interview with ICIS. 1.5m tonne/year steam crackers nys reach is intended to be global. tells me they are managing to do
Due to the start-up of several to be offline for the whole month, He would not comment on business without having noticed
plants at the beginning of this Garrett highlighted that the issues suggestions by sources in the too many changes, said Garrett.
year at the major petrochemical have been resolved. Middle East polymers market The political troubles have
complex of Borouge, which is co- At Borouge, all plants are oper- that Borouge was trying to com- maybe reduced demand a little bit
owned by Abu Dhabi National ating well, running at full capacity pete in east Africa with lower of- but we [Borealis and Borouge] still
Oil Company (ADNOC), full ca- and feedstock is available. The fers than its competitors. view Turkey as a place where we
pacity of 4.5m tonnes/year for system between ADNOC, Gasco He welcomed management want to do business it is a grow-
production of polymers will only and Borouge is now functioning changes at partner ADNOC, in- ing market and there will be grow-
be realised in 2017, said Garrett. and we seeing a good volume per- cluding new CEO Ahmed Al Jaber, ing demand for our products as
Borealis is privately owned by formance. All plants have passed pointing out that the reshuffle standards of living improve.

asia
paul lim singapore

Purified terephthalic acid market in war of attrition


Chinas purified terephthalic acid ble upstream prices in the crude ASIA PTA
(PTA) market is seeing a war of at- oil and feedstock paraxylene (PX)
trition as local producers fiercely markets. Two yarns producers $/tonne, spot CFR China Main Ports
compete with imported material bought up 3,000 tonnes of prompt- 700

to preserve their market share. loading PTA at $603/tonne ex-


Domestically produced PTA is CMP on 17 October, to be deliv- 650
being offered at attractive prices ered from warehouses in Chinese
against import cargoes from Asian main port Dalian. CFR (cost & 600
producers in South Korea or Japan freight) CMP prices have been on a
in Chinese producers bids to pre- gradual upward trend since Sep 1,
vent external-origin cargoes from climbing $10/tonne to $610/tonne 550

eating into their market share. CFR CMP on 14 Oct. This is in line
End-users in the polyester in- with upward climbs in feedstocks 500
Oct Oct
dustries snapped up two ex-Chi- naphtha and paraxylene (PX). 2015 2016
na Main Port (ex-CMP) PTA car- PTA is a key feedstock in the
goes sold by major domestic production of polyester products
producer Yisheng Petrochemical. such as yarns, fibres and bottle pected to continue in the mid- more units to cease production in
The rapid sale on 17 October chips and constitutes close to term, until more plants shut down 2017. This is especially so for units
bucked the recent trend of thin 90% of feedstock costs. in the ongoing industry-wide con- with smaller economies of scale
trades, when end-users were hold- It is in turn produced from aro- solidation of production capacity. that are not integrated into the en-
ing out for better prices on unsta- matic PX. The attrition battle is ex- Already, the market is expecting tire polyester supply chain.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 21


price & market trends For up-to-date information on more
than 120 global commodities, visit:
icis.com/about/price-reports

europe
heidi finch london

Spot ethanolamines firm on BASF fire


Some buyers see higher prices following the fire at BASFs Ludwigshafen site, but others are unsure of the impact

There are some early signs of an EUROPEAN MONTHLY ETHANOLAMINE CONTRACT PRICES BASFs Antwerp rather than its
increase in spot enquiries in the Ludwigshafen site. Another
European ethanolamines market /tonne, contract FD NWE buyer said it has ordered some tri-
1,400
and a firmer spot tendency amid ethanolamines 85% (TEA 85%)
DEA MEA DEA
reduced supply in the immediate spot at 1,070/tonne FD NWE
aftermath of the fire at BASFs 1,300 from another supplier in the mar-
Ludwigshafen, Germany site, ket, but had agreed the same price
sources said on 19 October. 1,200
compared to its last purchase.
A few suppliers said they have Some players said that it is still
seen some additional demand and too early to assess the extent of
enquiries for prompt delivery, be- 1,100 the impact on the ethanolamines
cause less material is available as a market following the Ludwig-
consequence of the accident. 1,000 shafen accident.
Sep Sep
One buyer acknowledged that 2015 2016 I think the full effects havent
its immediate contractual deliver- been felt yet, it is still early days,
ies from BASF have been affected. said one supplier.
It went on to say that there are ers, albeit at an additional cost of 1,130-1,140/tonne FD net for tri- One trader said it had not yet
some attempts to obtain deliver- 30-50/tonne. Few players were ethanolamines 99% (TEA 99%). seen any concrete additional de-
ies from BASFs other ethanola- prepared to comment on actual A few buyers, however, said mand but just price checking,
mine site in Antwerp, Belgium, spot price levels, although one they had not seen any adverse ef- adding that players were still in a
where possible, but there are also supplier said it is currently dis- fects on supply from BASF and/ wait-and-see mode.
some deliveries from BASF that cussing a plus 10/tonne for spot or they have not been subject to This is because a lot will de-
could not be supplied. BASF was in October. any firmer spot prices. pend on how long the production
not available to comment. It talked of prices around One customer said it is being units which are offline at Lud-
The same buyer said it has 1,100/tonne FD (free delivered) supplied as normal from BASF, wigshafen are likely to be down
managed to source some alterna- NWE (northwest Europe) net for adding it believes that its ethanol- for and how long the logistical ef-
tive volumes from other suppli- mono-ethanolamines (MEA) and amine volumes come from fects will last.

Asia
Jeslyn Lerh Singapore

India PVC importers grapple with increased offers


Indias polyvinyl chloride (PVC) Other suppliers in Asia will availability of supply from China. Demand for the material,
importers will have to grapple likely take the cue from Taiwan- New offers from other regional which is used in pipes, usually
with higher offers from regional ese major Formosa Plastics Corp suppliers were expected to be an- improves during November at
suppliers, at a time when de- (FPC), which announced a sharp nounced by the end of that week, the end of the monsoon season, in
mand typically picks up, indus- $40/tonne hike in its November market sources said. line with increased agricultural
try sources said on 18 October. export prices to Asia, citing lower On 14 October, Indias spot activities, market sources said.
PVC import prices were assessed Buyers in India are expected to
INDIA PVC at $925-950/tonne CFR (cost and pose strong resistance to FPCs
$/tonne, spot CFR India freight), according to ICIS data. sharp increase in November
950 Most industry players were price, as this is the second con-
surprised by FPCs $40/tonne secutive month that it increased
900 price hike for November cargoes, prices by $40/tonne.
particularly for the Indian market. On the other hand, a South Ko-
850 They are crazy, its beyond my rean producer said that buyers
thinking. Its difficult to under- will have no choice but to ac-
800 stand their logic, an Indian trader cept the [higher] prices because
said. India is a major importer of of the tight availability of exports.
750 PVC in Asia. In the fiscal year end- Exports of ethylene-based
ing March 2015, the countrys PVC PVC from China have become
700
Oct Oct consumption stood at around limited amid price spikes in the
2015 2016 2.5m tonnes, while domestic pro- domestic market since July this
duction was at 1.38m tonnes. year, industry sources said.

22 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


price & market trends

asia ASIA ACETONE


trisha huang melbourne

China spot acetone


$/tonne, spot CFR China
800

upside may be limited 700

600
The upside to Chinas spot import Renewed strength in the up-
acetone prices may be limited as stream propylene sector is likely 500
the restart of domestic plants re- to lend additional support. End
stores supply, market participants September/early October meant 400
said. Acetone prices have accu- the restart of some China-based
300
mulated gains of 25.6% since phenol/acetone plants from Oct Oct
early July to close at an average of scheduled maintenance. 2015 2016

$700/tonne CFR (cost & freight) The average phenol/acetone


China on a zero antidumping duty capacity utilisation rate in China
(ADD) basis, subject to import is at around 60% capacity, up the wake of a force majeure de- ers are heard to have sold a com-
duty, the highest since May 2015. from below 50% during Septem- clared by Shell on 29 September. bined 10,000 tonnes of acetone to
The gradual resumption of op- ber, according to players. Three Mitsui Phenols hopes to re- the US for loading in November
erations at China-based phenol/ China-based phenol/acetone store its production level at the at $650/tonne FOB (free on
acetone plants is likely to curb plants remain off line. end of October, with the potential board) NE (northeast) Asia.
further upside to both the yuan- Some importers expectation of end-October restart of Shells China is Asias largest buyer of
denominated domestic and US a near-term domestic market sof- Pulau Bukom cracker, a company acetone. Despite significant do-
dollar-denominated CFR China tening has also curbed their inter- source said. mestic phenol/acetone capacity
acetone prices in the near term, est in booking end-October/No- expansion in 2015, the countrys
according to players. vember supplies. Inventories at ASIA-TO-US ARBITRAGE import demand has remained re-
The possible end-October re- Jiangyin, a key gauge of supply, The continuing Asia-to-US arbi- silient. Utilisation rates estimated
start of Shells Pulau Bukom also registered post-holiday gains. trage is helping to soak up the sur- at no higher than 70% in China
cracker is also expected to restore Stockpiles rose to 26,000 tonnes plus acetone in northeast Asia, even for most of 2016 have sustained
acetone availability from Singa- on 14 October from 19,500 tonnes though some players noted a slack- the import appetite. China import-
pore. At the same time, the con- on 30 September, according to ICIS ening in US demand stemming ed 274,745 tonnes of acetone be-
tinuing Asia-to-US acetone arbi- China inventory data. Mitsui Phe- from buyers reluctance to carry tween January and August 2016,
trage may help to limit the CFR nols Singapore on 1-2 October re- high year-end inventories. To date, according to China Customs.
China acetone price downside. duced its phenol/acetone output in several northeast Asian produc- Additional reporting by Helen Han

europe
melissa hurley london

SBR spot expected to rise on supply


Attention is still centred on butadiene and SBR price hikes in Asia as European spot SBR material is being sent there
Europe styrene butadiene rubber SBR 1700 grade prices were limited, according to a reseller. even lasting until the end of Q4
(SBR) spot prices could rise be- heard largely within the ICIS pub- Another distributor sees availa- 2016. There was also talk about
cause of concerns over supply, lished range, despite one reseller bility drying up and as a result, the fire at BASFs Ludwigshafen
sources said on 19 October. citing both oil-extended and dry expects to see higher SBR prices site but the impact is unclear.
Spot supply is seen as limited grade material as tight. Spot prices
overall because of European ex- for SBR 1723 grade were assessed EUROPE SBR
port opportunities in Asia where stable at 1,145-1,210/tonne FD /tonne, spot FD NWE
prices are more attractive. NWE. Spot prices for SBR 1783 1,400
For dry grade material, prices grade were assessed stable at SBR 1500, Non-Oil Grade SBR 1723 SBR 1783
were largely stable and heard most- 1,145-1,220/tonne FD NWE. 1,300
ly between 1,260-1,330/tonne FD Attention is still centred on BD
(free delivered) NWE (northwest and SBR price hikes in Asia as 1,200
Europe). Spot offers as low as European spot SBR material is
1,240/tonne FD NWE were heard still being sent to Asia where sell- 1,100
in one case but not widely. Anoth- ers can get higher prices.
er source saw prices closer to the However, one source said 1,000
1,300/tonne FD level. As a result, availability is still healthy and a
900
spot prices for SBR 1500 grade seller said stocks are balanced de- Oct Oct
were assessed stable at 1,250- spite other players seeing supply 2015 2016

1,330/tonne FD NWE. as tight. Russian supply is still

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 23


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plants & projects

NEW PROJECTS AND PERMANENT PLANT shutdowns


REPORTED BY ICIS NEWS 17-23 OCTOBER 2016
NEW PROJECTS
Company Location Product Capacity* Process Contractor Cost Start-up Status
A. Schulman Germany sheet-moulding 4,000 - - - end 2017 P
compound (SMC)
Air Products Tennessee, US air separation unit (ASU - - - - Q3 2018 P
Cabot Pepinster, near Liege, plastics formulations (x) - - - - P
Belgium
EQUATE Petrochemical Shuaiba, Kuwait polyethylene (PE) (x) 1mT - - - Oct-16 C
Evonik Jurong Island, Singapore methionine 150,000 - - 500m 2019 P
Hanwha Total Daesan, South Korea ethylene vinyl acetate (x) 40,000 - - - mid Nov P
(EVA) 2016
Hyundai Chemical (jv Daesan, South Korea mixed-xylenes (MX) 1m - - - Oct-16 C
between South Korea's
Lotte Chemical Corp and
Hyundai Oilbank)
LG Chem Daesan, South Korea ethylene (x) 230,000 - - - 2019 P
elastomers (x) 200,000; - - - 2018 P
290,000T
Office Cherifien des Krishnapatnam, India NPK fertilizers 1.2m - - - - P
Phosphates (OCP) /
Kribhco
Polychem Merak, Indonesia No 2 monoethylene (x) 25,000; - - - Oct-16 C
glycol (MEG) 145,000T
PT Australasia LNG East Java, Indonesia liquefied natural gas 3m - KBR - - P
Indonesia's (AALNG) (LNG) regasification
PT Panca Amara Utama Banggai Regency, ammonia 700,000 - - $830m end 2017 P
(PAU) - jv PT Surya Esa Sulawesi Island,
Perkasa and Mitsubishi Gas Indonesia
Chemical (MGC)
Sadara Al Jubail, Saudi Arabia derivative units - - - - mid 2017 D
Shaanxi Ronghe Shaanxi, China 1,4-butanediol (BDO) 60,000 - - - late Oct C
2016
Shell Hamedan, Iran petrochemicals - - - $350m - S

Notes: *Capacity: figures given in tonnes/year; tonnes/day are converted by multiplying by 330. (x) = expansion; T = total capacity including expansion.
Start-up: Dates given are for planned start-up. H1 = 1st half year; H2 = 2nd half year; Q1 = 1st quarter; Q2 = 2nd quarter; Q3 = 3rd quarter; Q4 = 4th quarter.
Status: S = study; P = planned; A = approval; E = engineering; U = under construction; C = completed; D = delayed; CAN = cancelled.

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www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 25


VALUE CHAIN Ethylene Sign up to receive free ICIS updates
by email, tailored to the markets you
are interested in. Visit icis.com/keep-in-touch

59.5%
derivative
polyethylene
FEEDSTOCK
Used in packaging, such as plastic
GLOBAL POLYETHYLENE
$/tonne, HDPE injection, spot
bags, films, containers and bottles.
Europe increasingly reliant on imports
Ethylene
1,700 as older, non-profitable plants close.
CFR SE Asia CFR China CFR India Key derivative is polyethylene, ac-
Europe buyers focus on security of
FOB NWE FOB US Gulf
stock following force majeures of 2015. counts for 59.5% of world demand.
1,500
Turkey market unclear due to political Low oil boosts European demand, and
and economic issues. Relies on imports. cracker margins remain high.
1,300 North America gained 10% PE capacity Europe cracker issues persist, but
in 2016 from roughly 20m tonnes. have been less of a problem in 2016.
1,100 Low oil may delay some 2017 startups. Supply tight in the Americas for much
US election will have direct impact on of 2016 because of turnarounds: at
Mexico as NAFTA agreement could end. least nine planned this year.
900
Sep Sep China and southeast Asia economy and US prices surged in Q3 because of low
2015 2016
currency curbed buying interest in 2016. inventories due to turnarounds and un-
polyethylene projects Asian market uncertain on new addition- planned outages.
al China domestic and global supply. Asia reliant on Middle East, Europe, US
Company, location CAPaCITY* start-up Relatively weak Asia demand thwarted imports amid slowdown in China crack-
OPaL, India 1,060 Q4 2016 efforts to reflect high feedstocks. er expansion and Japan cuts.
Shenhua Coal to Liquid and 280 Q4 2016 Price uncertainty in GCC region amid 2016-2017 supply growth driven by in-
Chemical, China tegrated coal-based projects in China plus
regional competition plus Iraq.
Zhong Tian He Chuang, China 670 Q4 2016 LatAm HDPE supply healthy after cracker projects in India and Mid-East.
NOVA, Canada 454 Q4 2016 startup of Braskem-Idesa Ethylene XXI. Strong PE capacity growth in US/Mid-
Sadara, Saudi Arabia 1,100 Q4 2016/ East may undermine naphtha-based
2017 complexes in Asia from late 2017/2018.
Jiangsu Sailboat 300 End 2016/
Petrochemical, China Q1 2017
Reliance, India
Dow Chemical, US
1,000 Q1 2017
750 2017
14.7%
derivative
Sasol, US 470 2017
Jiutai Energy Inner
Mongolia, China
250 2017 Ethylene Oxide
Uses include monoethylene glycol,
GLOBAL ETHYLENE OXIDE
ethoxylates, ethanolamines, personal
Ethylene

$/tonne, contract care, glycol ethers, polyethylene glycols.


1,500 In Europe EO typically takes 80-85% of
FD NWE FOB US
the ethylene price movement. ICIS uses
an average of 82%. An adder or conver-
1,400
sion fee is included.
Downstream MEG and PET are sea-
1,300 sonal but 2016 has been unusual in
terms of buying patterns.
1,200
MEG and PET producer margins pres-
sured, partly due to macroeconomic envi-
ronment, which has impacted demand.
1,100 Most US EO contracts are formulas
Oct Oct
2015 2016
based on 80% of the change in ethylene
plus adder.
Ethylene Oxide projects US contract prices declined slightly in
Company, location CAPaCITY* start-up
the second quarter, following ethylene, but
Sadara Chemical, 360 Q4 2016/
have risen steadily in the third quarter.
Saudi Arabia 2017 US demand was soft in the second
quarter and into the third quarter,
Jiangsu Sailboat 180 End 2016/
Petrochemical, China Q1 2017 driven by MEG.
Jiangsu Jurong 200 H2 2017
Chemical, China
Sasol, US 300** H2 2018

26 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


VALUE CHAIN Ethylene

6.1%
derivative
GLOBAL ETHYLENE
Styrene
$/tonne, spot
1,400 Feedstock for polystyrene (PS) and ex-
CFR NE Asia FD NWE DEL US GLOBAL STYRENE
pandable polystyrene (EPS), styrene butadi-
1,200
ene rubber (SBR), acrylonitrile-butadiene- $/tonne, spot
1,000 styrene (ABS), styrene acrylonitrile (SAN) 1,300
FOB Rotterdam FOB US CFR China
and unsaturated polyester resins (UPR).
800 1,200
Restart of ELLBA at Moerdijk, the Nether-
600 lands, helped rebalance Europe: imports 1,100
down 55% in H1 2016.
400 Turkey and Norway key importers of EU 1,000

200
styrene. More exports to Asia on arbitrage. 900
Sep Sep US a net exporter of styrene to Asia and
2015 2016
Europe. South Korea is the second-largest 800

Ethylene Projects destination behind Mexico.


700
US production in H1 2016 was up by Sep Sep
Company, location CAPaCITY *
start-up 2015 2016
12% with a boost to exports during the first
Sadara, Saudi Arabia 1,500 Aug 2016 eight months of 2016. Styrene Projects
LyondellBasell, US 363 Q3 2016 Capacity increases are in Asia, mostly in
ONGC, India 1,100 Oct 2016 China. None planned in the US or Europe. Company, location CAPaCITY* start-up
Reliance, India 1,500 End 2016/ China largest importer with nearly 4m Tianjin Zhongsha, China 350 2016
Q1 2017 tonnes imported annually. Dohow Chemical, China 300 2016
Shenhua Coal to Liquid 300 Q4 2016 Demand growth in China will slow over Ningbo Daxie, China 280 2016
and Chemical, China
next decade as the market matures. Abel Chemical, China 250 2016
Zhong Tian He Chuang 670 Q4 2016
Energy, China Lihuayi Chemical, China 80 2016
Qinghai Salt Lake 160 End 2016 Qingdao Hailan, China 500 2017
Industry, China Jiujiang Chemical, China 80 2017
Jiangsu Sailboat
Petrochemical, China
370 End 2016/
Q1 2017
9.7% Jingmen Chemical, China
CSPC, China
80
700
2017
2019
derivative
Ethylene Dichloride
Hanwha Total 600 2019
Petrochemical, Korea

Most consumed in production of polyvi-


GLOBAL ETHYLENE DICHLORIDE
nyl chloride (PVC) and as a solvent. EDC is
converted to vinyl chloride monomer. $/tonne, spot
(VCM), which is polymerised to PVC. Also 350
CFR Asia NE Asia FOB US Gulf
used as solvent in the chemical industry.
FOB W Europe
Europe subdued in 2016, with little spot 300
business in the domestic market.
Most Europe production integrated into 250

PVC systems so little merchant business


200
except for production issues.
Availability in Europe has likely in-
150
creased due to closure of the INEOS PVC
plant at Sckopau, Germany in 2015.
100
Most US EDC consumed internally for Sep Sep
2015 2016
PVC though some used as fuel additive.
US exports a lot to Asia. Ethylene Dichloride PROJECTS
Asia remains a net importer from the
Company, location CAPaCITY* start-up
US and the Middle East. COORDINATED By:
Asia has not been competitive in most Hanwha Chemical, +200 to 630 March 2017 Polyethylene
South Korea Felita Widjaja Singapore
of 2016 due to high local ethylene prices.
VCM, EDC
Kite Chong Singapore
Styrene
Clive Ong Singapore
Ethylene
Yeow Pei Lin Singapore

*
Capacity 000 tonnes/year
**
EO/EG

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 27


VALUE CHAIN Ethylene Sign up to receive free ICIS updates
by email, tailored to the markets you
are interested in. Visit icis.com/keep-in-touch

Ethylene value chain - regional prices


ETHYLENE VALUE CHAIN - AMERICAS

1,600
EO, contract FOB US EDC, spot FOB US Gulf Ethylene, spot DEL US
HDPE injection, spot FOB US Gulf Styrene, spot FOB US
1,400

$884
1,200

1,000

800
Ethylene peak in Sept
600
2016, rocketing from
400 lows of only $372
200

0
Sep Sep
2015 2016

ETHYLENE VALUE CHAIN - ASIA

$/tonne
1,500
EDC, spot CFR Asia NE Asia Ethylene, spot CFR NE Asia
HDPE injection, spot CFR SE Asia Styrene, spot CFR China

30%
1,200

900
Hike in Asia ethylene
prices from low of 600
$865/tonne to peak
of $1,215/tonne 300

0
Sep Sep
2015 2016
NOTE: ICIS does not publish an Asia EO price

ETHYLENE VALUE CHAIN - EUROPE


$/tonne
2,000
Styrene, spot FOB Rotterdam HDPE injection, spot FOB NWE Ethylene, spot FD NWE

EO, contract FD NWE EDC, spot FOB W Europe

$1,490
1,500

1,000
Peak price for Europe
HDPE before an uneven
500 decline to $1,280 in
September 2016
0
Sep Sep
2015 2016

28 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


VALUE CHAIN Ethylene

EThylene value chain - ICIS supply & demand forecast


GLOBAL ETHYLENE SUPPLY & DEMAND FORECAST GLOBAL HDPE SUPPLY AND DEMAND OUTLOOK

'000 tonnes/year Percentage '000 tonnes/year Percentage


250,000 100 75,000 100
Total Production ('000 tonnes/year) Capacity Utilisation Rate (%) Total Production ('000 tonnes/year) Capacity Utilisation Rate (%)
Total Capacity ('000 tonnes/year) Total Capacity ('000 tonnes/year)

200,000 94 60,000 94

150,000 88 45,000 88

100,000 82 30,000 82

50,000 76 15,000 76

0 70 0 70
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
SOURCE: ICIS supply & demand window, ICIS dashboard SOURCE: ICIS Supply & Demand window, ICIS Dashboard

31.3% 3.8%
Production rises steadily from 127.8m Operating rate peaks at 93% in 2020,
tonnes to reach 173.3m tonnes having risen steadily from 87% in 2017
Capacity utilisation peaks at 90% in 2015 Capacity rises from 41.1m tonnes in
Increase in capacity from before plateauing at 89% in 2020-2021 Average annual increase in 2011 to reach 54.9m tonnes in 2021
2011 to 2021 as US ethane global HDPE production
thanks mainly to US shale gas additions
additions come on stream from 2011 to 2021

GLOBAL STYRENE SUPPLY & DEMAND FORECAST GLOBAL ETHYLENE OXIDE SUPPLY & DEMAND FORECAST

'000 tonnes/year Percentage '000 tonnes/year Percentage


50,000 100 50,000 100
Total Production ('000 tonnes/year) Capacity Utilisation Rate (%) Total Production ('000 tonnes/year) Capacity Utilisation Rate (%)
Total Capacity ('000 tonnes/year) Total Capacity ('000 tonnes/year)

40,000 94 40,000 94

30,000 88 30,000 88

20,000 82 20,000 82

10,000 76 10,000 76

0 70 0 70
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
SOURCE: ICIS supply & demand window, ICIS dashboard SOURCE: ICIS supply & demand window, ICIS dashboard

17.5% 79%
Operating rates hover around 88% from 37% hike in global capacity from 2011 to
2015-2017 before recovering to 91% in 2021 reach 36.9m tonnes/year in 2021
Production peaks at 34m tonnes/year in Production rises steadily from 22.8m
Boost to global styrene 2021 following a steady increase from a Low point in operating tonnes/year in 2011 to reach 30.8m
capacity during the period rates during 2017. tonnes/year in 2021
trough of 27.9m tonnes/year in 2014
2011 to 2021 Recovery to 83% by 2021

ICIS SUPPLY AND DEMAND DATABASE


The ICIS Supply and Demand database provides a comprehensive picture of global supply and demand for the full spectrum of products from oil to
chemical intermediates. Its range of product selection options help explain historical price movements, changes in company ownership and illustrates
changing supply patterns in the future. It allows you to refine, sort, slice and export data, or create graphs and charts to illustrate your findings more
easily and support your strategic planning. For more information or to request more information, please visit www.icis.com/supplydemand

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 29


market outlook aromatics Sign up to receive free ICIS updates
by email, tailored to the markets you are
interested in. Visit icis.com/keep-in-touch

Mixed fortunes
for aromatics
ICIS gives its outlook ahead of the 15th World Aromatics & Derivatives Conference
in Vienna, Austria, which will examine key trends in this essential value chain

Rhian oconnor & Rob Peacock ICIS liance and OPaL in India and Hyundai in es spiked in the spring, caused by tightness in

T
South Korea from Q4 2016. The Reliance ca- the global markets earlier in the year. These
he global markets for aromatics have pacity is as a by-product from its new 2.25m pressures have now given way to increasing
seen mixed fortunes during 2016, tonne/year paraxylene unit, whereas OPaLs length in the global market.
with some markets faring better than capacity is linked to its new cracker. Hyun- A large portion of the speeches at the ICIS
others. Many markets continue to dai Chemicals new benzene capacity is part 15th World Aromatics & Derivatives confer-
contend with oversupply, with others man- of its integrated condensate splitter to mixed ence focus on the styrenics chain. After years
aging to see improved margins this year. xylenes production. of low growth and oversupply, things seem
These capacities should be joining the re- to be looking up for the chain. Aggressive
Benzene started Jurong Aromatics in the market by the consolidation and falling raw material costs
During 2016, benzene has seen length in the end of 2016. In 2017, alongside the captive have helped to boost profitability.
US and lack of liquidity in Europe, on top of capacities at Sadara and the delayed Petro Ra- But how long will this last? At the confer-
soft demand in Asia. The lack of liquidity in bigh units, there will be additional capacity in ence, Tim Stedman from Trinseo will ask if
Europe has been partly behind some of the China to meet growing derivative demand. the tipping point has now been reached.
spikes seen in prices this year, as market Certainly for styrene the return of Ellbas
players had to cover short positions quickly Benzene Derivatives Moerdijk unit in 2016 has improved Euro-
when little material was available. Thank- Demand for benzene is dependent on the for- pean supply.
fully, such occasions seem to have been rare, tunes of four main derivatives styrene, As the Singapore unit also ramps up and a
but have occurred just before contract settle- cumene, cyclohexane and nitrobenzene number of new styrene monomer plants
ments in Europe. which account for around 93% of global ben- come on stream in China, we forecast con-
The increase in global benzene supply an- zene consumption. Styrene production siderable length for 2017. Inevitably this will
ticipated for 2017 is not expected to really alone accounts for around 50% of global have some impact on pricing, and spreads
help this liquidity, even if the volumes of benzene demand. over benzene.
benzene coming into Europe increase. During 2016, styrene production levels Oil, naphtha and benzene pricing is forecast
Most material from any new source is ex- have been strong in Europe and the US, on the to be fairly constant over the next 12 months,
pected to be moved on a contractual basis. back of some demand recovery in these re- and this could provide an opportunity for sty-
Although this could theoretically free up gions and stronger demand in Asia. Addition- renics consumers to pressurise pricing.
some capacity in Europe, this may not actu- al Asian demand has come from prolonged In the next few years, ICIS expects capaci-
ally be the case. outages in the region. Price levels have also ty in Asia to continue to increase, with a
New benzene supply is expected from Re- supported production levels. In Europe, pric- forecast increase of over 2.5m tonnes/year by
the end of 2020. Again, the majority of this is
GLOBAL BENZENE CAPACITY (000 TONNES) expected in China, but new world-scale
plants are also expected in South Korea and
80,000 Southeast Asia.
Americas Europe & CIS Middle East & Africa Northeast Asia South & Southeast Asia This new capacity will be partly offset by
70,000
the expected closure of over 700,000 tonnes/
60,000 year in Japan during 2016-2018.
Demand is also looking a little shaky. Ap-
50,000
parent polystyrene (PS) demand in China is
40,000 down sharply, with some evidence of both
domestic production and imports declining.
30,000 Given the size of China, and the significance
20,000 of PS for the global styrene chain, this could
further lengthen the market.
10,000 Over the next few years, we will also see
0 an increase in capacity through the styrene
2016 2017 2018 2019 chain in the Middle East and Egypt.
SOURCE: ICIS Supply & Demand Database
In Egypt the reopening of E-styrenics

30 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


market outlook Aromatics

could be helped by the planned construction GLOBAL PARAXYLENE CAPACITY (000 TONNES)
of a styrene unit by Carbon Holdings, due to
be completed in 2020. 70,000
In Iran the focus is on expandable polysty- North America Europe & CIS Middle East & Africa Northeast Asia South & Southeast Asia
rene (EPS), with a number of new units com- 60,000
ing on over the next few years. In Saudi, a
50,000
new acrylonitrile butadiene styrene (ABS)
unit should start up at any time. These ex- 40,000
pansions could in turn put further pressure
on European and Asian supply. 30,000
Demand for cumene is essentially de-
pendent on the production of phenol and 20,000

acetone. The global phenol market has been


10,000
struggling with overcapacity for some years
now, as new capacities have come on stream 0
and downstream markets, such as bisphenol 2016 2017 2018 2019

A, have slowed down. Although there has SOURCE: ICIS Supply & Demand Database

been some rationalisation, with new capaci-


ties on stream in Asia this year and more to has led to a bout of recent rationalisations in structurally long in 2016, but strong demand
come in 2017 this situation is expected to Europe, the US and Japan. Global growth in in Q2 saw prices pick up, and producers re-
continue for the next couple of years. cyclohexane demand is forecast in the low gained some margin.
The acetone market is a little different. Al- single-digit range for the next five years and it Looking at 2017, we expect that markets
though dependent on some of the same end- is likely to be some years before global average will remain oversupplied even with relative-
use markets as phenol, its other uses in sol- operating rates recover to sustainable levels. ly healthy downstream demand. One thing
vents and acrylates mean that some markets Nitrobenzene is mainly used as the feed- that is not expected to change in 2017 or
have been a little tight during the last 12 stock for methylene diphenyl diisocyanate soon after is the level of imports needed to
months. For acetone (and phenol to some ex- (MDI), a product that has seen relatively high supply the PTA market in China.
tent), much depends on when the Petro Rab- growth globally compared to other aromatics In 2015, imports of paraxylene into China
igh plant comes onstream and to which re- derivatives, at least in percentage terms. This were estimated at well over 11m tonnes, or
gions the product will head. has led to a raft of new investments that have over 50% of Chinese demand.
In addition, on the demand side, Sabic and either come onstream in recent years or are The doubling of imports since 2010 has
Mitsubishi Rayon are expected soon. mirrored the doubling of demand for PX in
building a new methyl Although growth in demand is expected China over the same period, as terephthalic
metha-crylate (MMA) to absorb this new capacity in the next few acid (PTA) production has grown to meet de-
plant in Saudi Arabia, years, average global operating rates have al- mand. Over the same period, paraxylene ca-
which will use ethyl- ready taken a hit. pacity has almost doubled as well, with over
ene feedstock This has seen some mooted projects either 4.5m tonnes of new capacity.
rather than acetone. delayed or cancelled in what is a tighter con- However, in contrast to PTA, investments
This is due in trolled market than the nylon chain. in PX production in the past few years have
mid-2017. The other main aromatic isocyanate is tol- not been sufficient to reduce the reliance on
uene diisocyanate (TDI). This market is the imports.
After years of low growth largest merchant consumer of toluene and In 2015, PTA production reached a level
has also seen a recent glut of new capacity. such that China is no longer a net importer of
and oversupply, things seem This has also coincided with a number of PTA. Going back to PX, there are a few issues
to be looking up for the older units closing down around the world, with new capacity in China, but also with
styrenics chain but lower theoretical operating rates were new PX capacity elsewhere in the world,
still expected to have a downwards effect on such that we do not expect China to become
Rhian oconnor
Consultant, ICIS pricing in 2016. self-sufficient in PX anytime soon.
However, delays in new start-ups and re- What does this mean for the global PX
stricted supply from existing plants along market? Well, it will take some time for all
This could well reduce acetone demand with plant closures has meant the TDI mar- the additional capacity built in the past few
in Europe, but may just displace imports ket has been very tight during the second half years, as well as that expected to start soon,
into Europe from other regions. Either way, of 2016, and prices have skyrocketed. This to be absorbed. Europe and the US should
if acetone demand decreases, this could help situation is expected to abate during 2017, as be stable on local PET demand, but there
balance phenol. the Sadara and BASF units run up to speed. may well be further rationalisation of older,
The other two main derivatives- cyclohex- smaller units. It is more likely that there
ane and nitrobenzene are dependent on the Paraxylene will need to be reorganisation in the global
fortunes of the nylon and polyurethane mar- The other major market for aromatics is the PTA markets.
kets. Over the past few years, polyurethane polyester business which starts with para- Rob Peacock and Rhian OConnor are
markets have fared better than the nylon xylene (PX). This is yet another market that ICIS consultants specialising in global
chain in terms of growth and profitability. has seen large amounts of recent new capac- aromatics markets. Meet them at the
Cyclohexane and its derivatives caprolac- ity built to meet previous strong growth pro- ICIS/International eChem 15th World
tam and adipic acid have been affected by jections and good returns. Aromatics & Derivatives Conference in
global overcapacity in recent years, which The global paraxylene market remained Vienna on 22-23 November.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 31


market outlook CHINA Sign up to receive free ICIS updates
by email, tailored to the markets you are
interested in. Visit icis.com/keep-in-touch
Imaginechina/REX/Shutterstock

Even if China avoids a real-estate led crisis, the country must move its economy from an investment to a consumption-led growth model

Multiple scenarios
for China growth
The real estate bubble and growing debt levels could derail the possibility of perpetual
growth. Chemical companies must consider different paths to stay viable in the country

john richardson perth Now, though, there are no guarantees that able to tackle its current problems. This means

J
China can firstly avoid a real estate-led finan- you need multiple scenarios for growth in any
ust a few years ago, it did not really mat- cial crisis. manufacturing or service sector, he added.
ter if you only had one scenario for Even if it does avoid such a crisis, it faces
growth in any chemicals or polymer the challenge of successfully moving its econ- Credit-Driven Consumption Leap
market in China. omy from an investment to a consumption- Lets think this through just for one product
If your growth forecasts for China were a led growth model. high-density polyethylene (HDPE). HDPEs
little optimistic over, say, a two-year period, I think Chinas old investment-led eco- wide range of end-use applications includes
this did not matter at all because over the nomic growth model is running out of the humble supermarket shopping bag
longer term, the economy was so robust that steam, and whether or not it can make the where the value addition is very low all the
you would quickly recover lost ground. transition to consumer-led growth is very way up to extremely high value plastic pipes
And quite often the reverse happened, with much in the balance, said a Hong Kong- that transport natural gas.
growth being better than you anticipated. As based investment banker. The ICIS Supply & Demand database
every mid-level petrochemicals company ex- If anyone tells you not to be worried that shows just how fantastically strong HDPE de-
ecutive knows, it is better to under-promise the only way is up I believe they are being in- mand growth has been in China, particularly
and over-deliver to your board of directors tellectually dishonest. The honest answer is that since 2008:
than the other way around. nobody knows whether or not China will be In 2008, consumption was around 5.5m

32 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


market outlook CHINA

tonnes, but by the end of 2013 it had grown to still be big. In 2021, demand is expected to total The negative wealth effect would be signifi-
approximately 10m tonnes an increase of no 14.5m tonnes versus 12m tonnes in 2017. cant if property prices merely stopped rising
less than 81%. These forecasts for HDPE growth are only at todays heady pace.
This was almost double the 41% increase one scenario, and, as we said, one scenario no What could cause the new real estate bub-
during the five years from 2003 until 2008. longer works in todays China. So what might ble to pop? That quite scary number from the
What made 2008-2013 so incredibly good lead to demand growth being lower than we BIS. Few countries with this degree of lever-
for HDPE and for many other chemicals expect? age have in the past avoided a financial crisis.
and polymers was the big growth in credit Real estate is at heart of this risk as total home
during the 2009-2013 economic stimulus the ultimate property bubble loans are expected to be around 30% of GDP
programme. Research analyst Harry Dent quoted the fol- this year versus 20% in 2014.
In the case of HDPE, government spending lowing HSBC data in a 14 October article he Lets say, though, that China once again
on infrastructure resulted in strong growth in wrote for the investment website Seeking proves the sceptics wrong by avoiding a real
demand for natural gas pipes, with the boom Alpha: estate-led financial sector crisis. What are its
in the property sector benefiting consump- Chinas total value of residential housing is chances of creating a new, more sustainable
tion of kitchen containers and utensils made 3.27 times GDP, and is forecast to hit 3.72 growth model?
from HDPE. times by year-end.
China increased lending by no less than Japans great bubble peaked in 1990 at 3.7 Unlocking high rates of savings
$10tr in 2009 alone, when its nominal GDP times GDP. Shortly after, property prices fell While Chinas manufacturing sector is bur-
was only $5tr, with the lending binge continu- through the floor, losing 67%. dened by oversupply and high debt, the coun-
ing until the end of 2013. Hong Kongs 1997 bubble peak was at 3.04 trys personal savings levels are very high. De-
There was then a sharp dip in lending times. spite the boom in consumer spending over the
growth from early 2014 until the end of 2015, The US bubble peak in early 2006 was at last 20 years, there is still a propensity among
but credit growth picked up again in the first 1.75 times. many people to save rather than spend money.
half of this year. Hong Kongs current bubble has left the The key to success is persuading people to
Still, ICIS Analytics & Consulting expects value of residential housing at 5 times GDP. consume even more. The government can
HDPE demand will have risen by a compara- This is expected to rise to 5.5m times by the achieve this by improving healthcare and
tively modest 21% in the five years from 2013 end of this year. pensions provisions. Organisation for Eco-
and 2017 and again by 21% in the five years The fact that Chinese real estate is less nomic Cooperation and Development (OECD)
from 2017 until 2021. frothy than Hong Kongs is no source of com- data show the following:
fort, given that Chinas total debt is now at Chinas basic pension pays just 1% of aver-
Few countries with this 250% of GDP compared with 150% of GDP in age individual/province earnings for each
2008, according to the Bank for International year of coverage, subject to a minimum 15
degree of leverage have Settlements (BIS). years of contributions.
avoided a financial crisis. Real Other alarming data points include a 66% 30 years employment provides a pension of
estate is at heart of this risk increase in land values in Chinas top 100 just 30% of this average wage.
cities over the past 12 months, according to Some employees also pay 8% of their wages
Deutsche Bank. It adds that two-fifths of into a retirement fund and receive top-up an-
This would be the result of a slower, but property developers which have made win- nuities based on individual savings but this
more sustainable expansion in GDP as overin- ning bids for land over the last year will lose only covers 210m urban employees.
vestment in real estate and industrial capacity out, even if cost increases merely level out, Until or unless the government can close
is reduced. never mind decline. this gap, Chinese families will want to save
Volume-wise, however, the Chinese market Then there are the many thousands of Chi- rather than spend money in order to cover
is much bigger than it was back in 2003. This nese families who have used their collective their own retirement and healthcare costs.
means that even with a lower percentage savings to go long in real estate over the last One of the problems that Beijing faces is a
growth rate over the next few years, the rise in 12 months. One-fifth of buyers are estimated rapidly ageing population, thanks to its One
consumption in terms of extra tonnes would to be investors rather than owner occupiers. Child Policy.
Even though that policy has been aban-
CHINA HDPE CONSUMPTION doned, birth rates could take a generation to
improve by enough to reverse the decline in
000 tonnes
the size of the working population. Fewer
15,000 workers means lower tax revenue.
A solution is to transform the Chinese
12,000 economy by moving up the manufacturing
and services value chain. If China can, for ex-
9,000
ample, become a producer of internationally
recognised high-quality automobiles, then
this will boost tax revenues.
6,000
It would also help justify the higher
wages that have resulted from a shrinking
3,000 working population.
Can China square the circle? Come back in
0 10 years and we will give the answer. Thats
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
how long it will take before we know whether
SOURCE: ICIS Supply & Demand database
economic reforms have been successful.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 33


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special report READER RESEARCH IN ASSOCIATION WITH

Getting more from


customer contact
Companies are looking to win greater value from customers with a focus on commercial
excellence, but how well are they doing? A global survey by ICIS and Accenture will
reveal the current thinking and position on digitisation, innovation and selling outcomes

john baker london obsolete. Companies today, it notes, need a enable connected innovation that breaks

B
new model for todays nonstop customer. down internal silos to include more parts of
eset by accelerating commoditisation Business customers continuously evalu- the organisation in the innovation process.
of their products and with margins ate the products, services and brand promises Companies will need to do the same with
squeezed in todays low growth mar- that surround them, says Bjacek. external boundaries, adds Accenture, to cre-
kets, chemical producers are seeking In response, B2B businesses are adopting ate an innovation ecosystem - an extended
to drive more value and growth from their digital technologies to enable them to network that includes alliance partners, uni-
operations. And they are turning their focus offer the seamless, cross- versities, entrepreneurial companies, custom-
to an important part of the business equation channel interactions that ers and customers customers.
the customer, and how best to interact with business customers have Digital technology will play a key role by
them and meet their needs. come to expect as individ- enabling these connections and giving virtual
The buzzword is commercial excellence, ual consumers (although teams the collaboration tools needed to work
and the primary goal is to increase revenue and they are much more com- together seamlessly, says Bjacek. Instead of
margin by meeting customer needs efficiently plex in B2B). R&D being an isolated function, it will be the
and effectively. A broader aim is to improve centre of a web of flexible partnerships that
communication and connectivity, in order to There is tremendous lets companies draw on a range of knowledge
deliver innovative products and solutions. and resources to speed up innovation and
Its something the industry has been getting
potential to improve pivot quickly to exploit new opportunities.
to grips with for some time, but there is performance in the area of
tremendous potential to improve perfor- commercial excellence survey will take snapshot
mance in the area of commercial excellence, But how far has the chemical sector gone in
Paul Bjacek
notes Paul Bjacek, chemical industry research Lead, strategic research chemicals and natural its drive to add value through commercial ex-
lead at Accenture. resources, Accenture cellence? Are any companies near as good as
The growth of digital commerce makes it companies in the B2C world? This week ICIS
feasible not only to improve the customer and Accenture are launching an extensive in-
experience but also to collect and analyse a But more sophisticated and easier custom- dustry survey to gauge the maturity of the sec-
tremendous amount of data about the market er interactions through digitalisation are not tor in terms of its connections with customers
and buying patterns. the only factor in commercial excellence and ability to drive value, profits and growth,
This can, for instance, give great insight into companies are also looking to enhance their from them.
how pricing can be optimised so that value is innovation efforts through improved custom- Questions will include company priorities
not left on the table, as Julian Short, Accen- er understanding and partnerships along the in improving customer interactions, how con-
tures lead for commercial strategy, puts it. value chain, and are even beginning to look at nected they are, and how much they use digi-
ways of selling outcomes that the customer tal content and analytics to improve the cus-
advantages of closer intimacy will value more highly than products. tomer experience and the value they can
The business-to-consumer (B2C) market rec- Early examples of the latter approach, says derive from better performance.
ognised the benefits years ago and is reaping Bjacek, include large automotive paint shops, Also under scrutiny will be companies pri-
the rewards already, Short says. Now busi- where the paint management is the responsi- orities, their approach to innovation and the
ness-to-business (B2B) companies are begin- bility of the coatings supplier, under agreed move to selling outcomes rather than simply
ning to see the advantages of closer customer performance guarantees. Other potential products and solutions.
intimacy and improved sales and market ana- examples given by Bjacek include selling tyre Where does the industry stand on these points?
lytics capabilities. mileage instead of tyres or selling shelf-life Findings from the ICIS/Accenture survey will be
Accenture believes easy digital access to instead of packaging material. published in an issue of ICIS Chemical Business
information, products and channels has made In the innovation space, the digital econo- early next year. ICIS subscribers will receive an
the traditional buying path in which cus- my will enable much closer partnerships be- invitation to take part in the survey, but you can
tomers move from discovery through consid- tween the chemical producer, customers and access the online questionnaire using this link:
eration and evaluation to purchase all but academics. This open innovation model will bit.ly/2dLNPq9. We look forward to your input.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 35


special report CHEMICAL SITES

Living apart, T
Sietse Wiersma ECSPP

he strength of the European chemical


clusters is determined by the way
companies located on them work

but together
together in respect to utilities, raw ma-
terials, by-products, auxiliary materials and
shared mandatory site services, such as safety
and firefighting. Clusters that succeed in find-
ing models to share costs and benefits are cost
efficient in the long run.
Key to cooperation is trust and transpar-
By intelligently sharing and pricing shared materials ency and a focus on the long-term advantag-
es. It is all about incremental cost versus
and utilities, chemical cluster occupants can ensure that integral cost.
the cluster they operate on grows and becomes more Looking at a typical cluster in more detail
reveals the underlying principles. In this arti-
competitive by attracting new investment cle I examine in particular spare capacities,
energy and fixed costs.

Spare capacities
Suppose a chemical company processes a raw
material into an intermediate and subsequently
into a product and has spare capacity of this in-
termediate. This spare capacity can be utilised
by selling the intermediate to one or more com-
petitors. If a competitor needs this intermedi-
ate, then an attractive profit can be enjoyed.
The shareholders in particular will like this
way of doing business. The price of the interme-
diate product should however not be too high.
Competitors in the market must be able to
supply at this price should your company
encounter a problem in the supply of the raw
material or the process equipment fails. In
the market you are not competing with the
product as a compound, but sometimes with
its purity or reliability of delivering the prod-
uct to customers.
The real profit, however, is in the efficiency
of the production process and in smart solu-
tions to lower the cost price. Debottlenecking
and process intensification are keywords.
Lets look at another situation in which the
same company also has by-products. The first
goal of course is to avoid by-products but if
they are unavoidable, then finding a second-
ary use is most advantageous.
Often if alternative uses cannot be found,
the additional costs for disposal of these by-
products can be crippling to a business.
However, they may have some use as fuel for
energy or may be useful as a raw material to
make a new product in a different or emerg-
ing market. This would create additional in-
come and potentially profit from a seemingly
useless by-product.
Now there are several options. This compa-
imageBROKER/REX/Shutterstock

ny could choose to go down the road of diver-


sification alone, expanding its own portfolio
and venturing into a new market. In this case,
the activity in the cluster grows organically.
On the other hand entering new markets can
Giving support to newcomers on chemical clusters can ensure better profitability all around be uncertain and difficult. The company could

36 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


special report CHEMICAL SITES

thus choose to sell the by-product to an inves-


tor, potentially attracting a new company to
start its own business on adjacent land. Now
the cluster grows through introduction of a
new company on site.
Survival of the new company is now the big
question. The by-product, now acting as a raw
material, is rather expensive and entering a
new market takes time and deep pockets.
There is still another option to consider.
Would the company selling the by-product
consider selling this for a reduced fee in the
beginning (at the same time avoiding costs of
disposal), thus enabling a new company a
head start to survive in the new market?
In due time, the price of the by-product
could increase, in line with global market
indicators.

Cultura/REX/Shutterstock
Now again the cluster grows with a new
company, but the odds that the new company
will survive are much better and could possi-
bly result in a sustainable new activity and a
healthy cluster. Based on the expression that Clusters that find ways to share costs and benefits will see sustainable growth
success breeds success it could be an exam-
ple for further growth. In this case the under- equipment, versus contracting the energy utilities need to be introduced from scratch, is
lying principle is to refrain from easy but un- from one or even more third parties. often prohibitively capital intensive.
certain money and to aim for a modest profit Now suppose the third party asks a price For start-up companies looking to locate
in the long run. at or just below the price the new company within a cluster, these infrastructure costs are
would have to pay if it would build its own usually much lower, but these site costs can
Energy energy plant. In this case the new company still be a high hurdle and thus hinder the
Let us look at energy costs. A new company is inclined to build itself to minimise risks of growth of the cluster site as a whole. In the
in a cluster can choose to build its own ener- supply. However, if the third party is offering beginning, a new company encounters a lot of
gy plant just to meet its own demands. In this the energy at an incremental level below, sometimes unexpected costs and the prof-
way it is not dependent on anybody else and then the new company will be tempted to its always lag behind the expectations, mak-
therefore minimises the risk of having to shut use that energy. ing life in the early years difficult.
down operations due to a failure in the energy What then is incremental? The energy sup- What can be done is to formulate a model
supply outside of their control. plying company will need to buy more feed- in which costs are more competitive for the
However, whoever the owner, equipment stock and will need more maintenance for early years, rising with the growth of the new
needs inspection, scheduled equipment being used more intensely. But at company. The reasoning behind this is rather
maintenance and repair in the same time if this company produces more simple: site costs such as security and emer-
the case of failure, so there energy without extensive capital investment, gency services usually remain constant re-
has to be some degree of re- its cost per unit will go down. This saving can gardless of the number of site tenants. A new
dundancy or sufficient back be shared amongst users, providing more cost company locating in the cluster will pay a
up to mitigate inter- efficient energy for both parties. The price of contribution to these costs.
ruptions in the energy will now be substantially beneath the Depending upon the contracts secured, these
energy supply. market price. In this case openness and trans- benefits will either be enjoyed by the existing
parency have been key factors to make it prof- companies, or inflate the profits of the site man-
The underlying principle is itable for all players involved. agement company.
The underlying principle in any case, is to
to refrain from easy but Fixed costs allow new companies to grow, mature and
uncertain money and to aim In chemical clusters, security and emergency survive in the market without being buried
for a modest profit in the response (firefighting) are mandatory and an alive under start-up costs.
integral part of the general site service, infra- Summarising, you could say that Living
long run structure and overhead provision. The costs apart together seems to be a matter of secur-
sietse wiersma for these are shared by all users on site. ing success in the long run by refraining from
President, ECSPP Thus the more companies on site, the short-term profits. Giving support to newcom-
lower the cost of those activities tend to be. It ers can ensure profitability in the long run.
is therefore in the interest of all the existing Sietse Wiersma is president of the European
But suppose a third party in the cluster companies to attract new companies to the Chemical Site Promotion Platform (ECSPP), which
has expertise in supplying energy or has an cluster to potentially lower their own costs. seeks to promote Europes chemical clusters as
overcapacity and is willing to sell that addi- Models for sharing costs are mostly based attractive locations for chemical investment. To
tional energy. on the number of operational personnel and/ contact him, email: sietse-wiersma@planet.nl
The new company now has to weigh up or the manufacturing footprint. Constructing For more information on ECSPP and chemical
the costs and risks of owning and operating on a greenfield site, where infrastructure and clustering, go to: chemicalparks.eu

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 37


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special report CHEMICAL SITES

Spains ChemMed
seeks investors
Spains economy and chemical sector are returning to growth after a prolonged
downturn. However, the recovery has not yet led to projects breaking ground in the
nations chemical clusters, which therefore need to become more attractive to investors

jonathan lopez London unemployment and bleak prospects. Together tract new and better investments, on the one

A
with labour reforms that have given businesses hand, and maintain the current chemical pro-
s Spain emerges from its long econom- more of a leading hand in work relations, duction on the other.
ic crisis, the chemical industry is social unease has grown. In evaluating the impact so far in 2016, both
enjoying a renaissance. Its main end In that complicated picture, however, Spanish have somehow failed. German chemical major
customers in automotive, packaging, chemical flagship sites are booming. Concentrat- Bayers materials division spin-off, Covestro,
the food industry and construction are typically ed in Tarragona in the northeast of the country felt it was time to close its toluene diisocyanate
the first to boom when a recovery looms. (the location of the ChemMed Cluster) and in (TDI) plant in Tarragona with 170,000 tonne/
However, Spains chemical production con- Cadiz and Huelva in the south near the Strait of year capacity citing market fundamentals.
tinues to be focused on commodity chemicals. Gibraltar, Spains commodity chemicals are However, in an unusual acceptance of busi-
Specialty chemicals, with the exception of the booming, as shown by October figures from the ness realpolitik, Covestro CEO Patrick Thomas
countrys pharmaceuticals, are still rare. Despite national chemical trade group FEIQUE. said to ICIS soon after the announcement that
efforts from authorities to attract new areas According to the trade group, the Spanish the closure would have been a huge issue had
of investment, no new projects have been chemical industry is on course to achieve annu- the spin-off not happened. Under Bayers
announced as of late. Facing higher costs than al growth in sales in 2016 of 2.3% to reach umbrella, the Spanish authorities would not
competitors overseas, European producers will 59.4bn, and of 2.5% in 2017, surpassing for the have welcomed the move, as they have the de-
need to produce higher-margin chemicals like first time the 60bn mark. However, the fall in ciding hand on Bayers drugs contracts with the
specialties in order to survive. energy prices, passed on to customers, brought Spanish national health service.
But Spains case is somehow different. Lack- less pricing power for chemical firms. Revenue Maintaining current chemical production is
ing its own currency when the housing bubble lags behind output growth, which is expected to vital for the social stability of Tarragona, too. A
burst in 2008, the country could not become rise by 3.3% in 2016 and 3.0% in 2017. town of 132,000 inhabitants, the regional capital
more competitive by devaluing the old peseta, ChemMed Cluster was not a new creation of a 400,000-strong metropolitan area, the chemi-
but by devaluing itself making its products and when it was announced to the world in 2015. cal park employs directly 10,000 people, with
its workers cheaper. The chemical park in Tarragona was estab- 36,000 further indirect jobs.
Although the countrys GDP is on course to lished decades ago; a quarter of all Spanish Attracting new investments is proving chal-
grow by 3% in 2016, the recovery is still heavi- plastics are produced there. However, by cre- lenging. Although ChemMed president Teresa
ly concentrated in metropolitan areas, while ating the ChemMed Cluster, the local, region- Pallares said in 2015 that one company was look-
some of the provinces continue to suffer high al and national authorities were hoping to at- ing to set up a plant to produce chemicals for the

The ChemMed Cluster chemical


park in Tarragona produces 25%
of the nations plastics
Getty Images

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 39


special report CHEMICAL SITES

food and cleaning industries, nothing has


been set in stone yet. In a written response to
ICIS, Pallares said again the cluster has gath-
ered interest from several producers, but ad-
mitted nothing has been signed yet, adding
that negotiations are confidential.
What we can say is during this time [since the
presentation in 2015], different companies have
shown an interest for ChemMed in different
chemical sectors. However, we cannot confirm
any new projects yet, she said.

Uncertainty, competition to blame


FEIQUEs president, Anton Valero, said the lack
of new investments in the Spanish and wider
European chemical industries has been felt dur-
ing the past years. He blames the uncertainty on
the regions economy and the competitive disad-
vantages it suffers compared to competitors over-
seas namely, high energy costs and the burden
of the most stringent chemical regulation in the
world, EUs Reach chemical policy.
ImageBROKER/REX/Shutterstock

Moreover, Valero pointed to necessary invest-


ments in infrastructure from the state to better
connect Tarragona by sea and land with the rest
of Europe the Pyrenees continue to be a physi-
cal barrier for trade: We need to have a push to
motivate investments in Tar- Europe has been lagging the US and China in terms of chemical investment

focus on
ragona. That means we
need to have an energy
policy which puts us in a
competitive position com-
pared to other chemical

sites boosts
parks worldwide. The cost
of energy is a key

We need to have an energy


policy which puts us in a

investment
competitive position
compared to other chemical
parks worldwide
anton Valero
President, FEIQUE

Spending has been slowing in Europe but investment in


aspect of this, and then also the infrastructure
side Spain should link Tarragona with France chemical sites and clusters continues to buck the trend
by rail.
Valero went on to say if the EUs single market sean milmo london 95bn in China, according to figures from the

T
is worth its name, the same rules for all its mem- European Chemical Industry Council (Cefic).
bers should apply regarding unified energy costs otal investment in the chemicals sec- Were continuing to see investment going in
and other utilities or equal compensation for car- tor in Europe has continued virtually the direction of the US and Asia rather than
bon dioxide emissions under the EUs Europe- to stagnate while that in the US and Europe, Marco Mensink, Cefics director
an Trading System (ETS). China roars ahead. Over the 10 years general, told the organisations annual assembly
In a sector that already makes up 12% of to 2015, it has risen by a fifth to an annual in Florence, Italy, in October. We have an issue
Spanish industrial GDP, and is already 10% total of 21bn, or an average advance of just in Europe when it comes to having access to
above its pre-crisis levels, unlike many other 2% annually. Some analysts believe that competitive energy and raw materials.
peers within the manufacturing sectors ac- when essential expenditure like maintenance Yet investment trends in many European
cording to FEIQUE, the sustainable growth of is taken into account, this figure is equivalent chemical sites and clusters are contrasting
the chemical industry in the country is key to to only a negligible increase. sharply with the general picture of sluggish
achieve, as the EU has established, 20% of Meanwhile, from 2005-2015 chemicals capital expenditure in Europe as a whole. The
total GDP output coming from manufacturing investment trebled to 32bn annually in the desire among sites to have energy and feed-
by 2030. US, while it went up almost sevenfold to stock sources that are more sustainable in the

40 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


special report CHEMICAL SITES

long term is boosting investment. Money is North Sea gas supplies for the companys Among a number of biorefinery projects at
not only being put into renewables and bi- large mixed-feed cracker at Wilton. SABIC European chemical sites is a planned 1bn
orefineries but also to improve the availabil- claims the project will make it the one of the facility to use wood to make biomass biodies-
ity of oil- and gas-derived feedstocks. Some most flexible feedstock crackers in Europe. el, biogasoline and bionaphtha by Kaidi of
sites have also been trying to integrate more Feedstock-driven investments in the UK China at Kemi in Lapland, northern Finland.
closely feedstocks with downstream chemi- and other European sites diverges from a gen- The project will replace an abandoned biore-
cals production. eral European trend for reductions in up- finery scheme at Kemi by the Finnish energy
In addition, sites are attracting investment stream chemicals investments, especially as a and fuels company Vapo Oy.
as a result of adopting supply chain strategies result of decreasing international competive- Local planners aim to fit the biorefinery into
by improving logistics, particularly in areas ness in petrochemicals. a local industrial cluster in the Kemi-Tornio
like rail and intermodal transportation. On some sites, margin improvements as a re- area of Lapland, where there are already pulp
One of the biggest feedstocks investments sult of low crude oil prices have and paper mills and metals producers.
has been in UK, in which there has been helped investment in the up-
pessimism about the outlook for investment grading of refinery opera- circular economy holds potential
in the countrys chemicals industry because tions, which has raised the Bio-refineries have become a key part of the
of the Brexit vote to leave the EU in a referen- efficiency of feedstock pro- strategies of sites aiming to exploit the trend
dum in June. duction. Another objective to establish localised circular economies,
has been to integrate feed- many of them bio-based.
shale imports secure production stock supplies more closely The circular economy offers a lot of poten-
INEOS, the Anglo-Swiss petrochemicals with downstream pro- tial for the chemical industry more jobs,
giant, is spending a total of around $2bn to duction. new markets, new secondary raw materials,
bring US low-cost shale ethane to its petro- Cefics Mensink told the associations general
chemicals complex at Grangemouth, Scot- The circular economy offers assembly. But Wiersma has suggested that the
land, as well as a smaller site at Rafnes, Nor- moves to bio-based production should be a
way. The project will turn Grangemouth,
a lot of potential for the gradual transition.
which has two crackers with a total ethylene chemical industry more Chemical sites and clusters are in a strong
capacity of 1m tonnes/year, into one of the jobs, new markets, new position to promote the circular economy
most competitive petrochemical sites in because of their ability to bring companies and
Europe only a few years after it was on the secondary raw materials businesses together to form value chains for the
brink of closure because of dwindling gas marco mensink recycling, reuse and remanufacture of products.
supplies in the North Sea. Director general, Cefic The bio and circular economy is a strategic
The site is undergoing a radical transfor- key development area for Kemi [for which] the
mation, with significant investment that will planned biorefinery showcases that the city is
herald a new era in petrochemical manufac- At the Leuna chemicals park in eastern an attractive location, says Tero Nissinen,
turing at Grangemouth, says John McNally, Germany, Total is enriching propylene from Kemis mayor. A similar view is taken at other
chief executive of INEOS Olefins & Polymers gasoline production at its refinery to feed into sites in Finland where wood-based biorefiner-
in the UK. It shows our ongoing commit- the manufacture of nylon and intermediates ies are being planned or constructed.
ment to creating a world-class manufacturing by DOMO Chemicals at the site. Rotterdam port is involved in a 14-strong
site at Grangemouth. This investment ensures our long-term consortium, which has just launched a
The first ethane shipment was docked at access to a strategic feedstock for our integrat- three-year demonstration project on the
Grangemouth in September, and now special- ed polyamide 6 production sequence, says conversion of various wood types like
ly built gas carriers are travelling across the Luc De Raedt, managing director of DOMO spruce, poplar and scrap wood into etha-
Atlantic from Marcus Hook in Philadelphia, Caproleuna. nol, butanol and other chemicals. The
Pennsylvania, which is linked by pipeline to scheme will also provide a number of blue-
the Marcellus shale gas field in the state. Bio-based investments prints for the construction and commercial
Part of the US ethane shipments will be Many sites are also focusing on increasing the operation of a biorefinery that can accom-
piped to a nearby gas cracker joint venture cost effectiveness and sustainability of their en- modate these processes.
between ExxonMobil and Shell at Mossmor- ergy supplies, with some switching to renewa- The port is hoping that the project will
ran under an agreement with INEOS signed bles as a source of both energy and feedstocks. result in one or more biorefineries based on
by the two companies last year. Its future has What stands out is the fact that a lot of the findings of the scheme. It is already the
also been threatened by declining natural gas new investments are based on new types of proposed location of a plant based on a tech-
supplies from the North Sea. (bio) feedstock, says Sietse Wiersma, presi- nology developed by Enerkem of Canada for
At Wilton in the Teesside cluster in north- dent of the European Chemical Site Promo- converting non-recyclable waste into metha-
east England, SABIC has been organising a tion Platform (ECSPP). That fact in itself is a nol and then substances such as acetic acid,
less ambitious scheme for shipping US ethane strange phenomenon. On the one hand there thickening agents and dimethyl ether.
to the site. The objective is also to replace is an urge to use less oil and gas for chemical Enerkem, which operates a facility using
products whilst there is still a low oil price, its technology in Edmonton, Canada, has an
What stands out is the fact resulting in the fact that bio-based chemical alliance with AkzoNobel to explore joint
products cannot compete with these oil development of waste-to-chemical facilities
that a lot of new investments derived products. in Europe.
are based on new types of At Teesside, work has started on the con- Antwerp port has decided to allocate an
(bio) feedstock struction of a 650m, 299MW Tees Renewa- adjacent former General Motors automotive
ble Energy Plant, with biomass for the facility manufacturing site for circular economy
sietse wiersma
President, ECSPP being shipped into the nearby Teesport. projects.

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 41


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www.icis.com 31 October - 13 November 2016, | ICIS Chemical Business | 45


asia chemical profile For up-to-date information on more
than 120 global commodities, visit:
icis.com/about/price-reports

Paraxylene
paul lim profile last published 25 July 2014

Uses by the the start of Q4. Major Asia PX produc- Asia PX capacity
Paraxylene (PX) is predominantly used to ers include SK Global Chemical, S-Oil, JX 000 TONNES/year
produce terephthalic acid. Other outlets in- Nippon Oil & Energy, ExxonMobil and Ide- Company LocationCapacity
clude dimethyl terephthalate (DMT), di-par- mitsu Kosan, who are part of the Asia Con- FCFC Mailiao, Taiwan 1,720
axylene, and herbicides. It is also used in sol- tract Price negotiating circle.
S-Oil Onsan, South Korea 1,700
vents. Both terephthalic acid and DMT are
Hanwha Total Daesan, South Korea 1,700
used to make polyethylene terephthalate Prices
(PET). DMT is also used to manufacture poly- Spot prices in Asia largely track upstream Ningbo Zhongjin Ningbo, China 1,600
butylene terephthalate (PBT) resin. crude oil and naphtha values. Sinopec Hainan Hainan, China 600
Around 97% of PX demand comes from The Asian PX spot market is also mainly a Fujia Dahua Dalian, China 1,400
the polyester chain via one of its intermedi- trading market, with sentiment often the key GS Caltex Yeosu, South Korea 1,350
ates, purified terephthalic acid (PTA) or DMT. driver to price movements. Aromatics Thailand Map Ta Phut, 1,310
Polyester fibres are the main consumer with Prices were commanding good margins (PTT) Thailand
the second largest use in PET resin, followed over feedstock prices in Q2 and Q3, as traders SK Global Incheon, South Korea 1,300
by automotive antifreeze. and producers priced in peak demand. A Chemical*
stoppage at a key east China plant by Ningbo HC Petrochemical Daesan, South Korea 1,180
Supply/demand Zhongjin also meant that a major end-user PetroChina Urumqi, China 1,055
In times of peak demand, especially during had to secure cargoes in the spot market.
Ulsan Aromatics Ulsan, South Korea 1,000
the spring and autumn season, PTA units End-users have consistently tried to settle
tend to run at full rates to feed strong demand more Asia contract prices this year to ensure CNOOC Huizhou, China 900
from polyester plants. However, once the lull more consistent costs, rather than depend Yangzi Nanjing, China 850
season for polyester starts, PTA plants will re- solely on spot prices. Petrochemical
duce run rates and conduct turnarounds, in Towards the end of Q3, supply lengthened Shanghai Shanghai, China 600
Petrochemical
turn reducing the demand for PX. considerably, with open-origin cargoes tar-
This year saw a slightly different scenario, geted to land in Asia from the US, Europe, SK Global Chemical Ulsan, South Korea 850
as polyester units continued to maintain Middle East and India. Singapores Jurong ExxonMobil/ Quanzhou, China 800
strong demand for PTA even through the start Aromatics, which had shut down at the end Sinopec/Saudi
Aramco (FREP)
of the lull season as they stocked up on feed- of 2014, also restarted its 800,000 tonne/year
stock before the stipulated shutdowns during PX unit and sent cargoes to southeast Asia Qingdao Lidong Qingdao, China 800
(GS Caltex)
the G20 meetings in China. and China.
The wide naphtha-PX margins, which The downstream PET market remains over- Lotte Chemical Ulsan, South Korea 775
peaked at $440-460/tonne in Q3, also encour- supplied and is about to enter the year-end NOTE: *Capacity listed is only for one line

aged PX producers to run at high rates for lull season in Asia as soft drink consumption
most of this year. Margins later dipped to the decreases with the onset of winter in north- based Virent, which is being acquired by US-
more conventional figures of $360-370/tonne east Asia. based refiner Tesoro.

ASIA PARAXYLENE Technology Outlook


Conventional technology is based on the isom- PX is expected to continue lengthening. In-
$/tonne, spot CFR China
850
erisation of mixed xylenes from refinery refor- dias Reliance Industries is expected to start
mate streams or from pyrolysis gasoline (pygas). up its new 2.25m tonne/year PX unit in Jam-
High-purity product can be obtained using crys- nagar from end-October/early November. Its
800 tallisation or selective adsorptive separation. start-up is expected to be in two phases, with
Toluene disproportionation (TDP) offers an initial 1m tonne/year output feeding its
an alternative route, with the latest catalysts own PTA units in India and southeast Asia.
750 able to produce a PX-rich stream, but this It will later ramp up to full capacity after se-
route co-produces benzene. curing more term contracts with end-users in
Processes have also been developed using Asia. Petro Rabigh Phase II is expected to start up
700 a zeolite catalyst for the alkylation of toluene a 1.35m tonne/year PX unit in Saudi Arabia in
with methanol to produce PX without ben- Q3 2017, while PetroVietnam is expected to start
zene co-product. The Cyclar process by UOP up its 680,000 tonne/year PX unit in Q3 2017.
650
Oct Oct converts propane and butane to PX and ben- Keep track of price movements for a wide
2015 2016 zene. There has also been development of a range of commodity chemicals by subscribing
bio-based route to making PX, led by US- to ICIS pricing reports at icis.com

46 | ICIS Chemical Business | 31 October-13 November 2016 www.icis.com


europe chemical profile

SBR
Melissa Hurley profile last published 5 october 2013

Uses signs of recovery could indicate a more europe sbr capacity


The main end-use application of styrene buta- promising 2017. 000 TONNES/year
diene rubber (SBR) is in the manufacture of Company LocationCapacity
tyre products. Prices Trinseo Schkopau, Germany 290
Other non-automotive uses include foot- September contract prices settled at rollovers Deutschland
wear, industrial hoses, conveyor belts, gloves, to small increases because of the higher up- Synthos Oswiecim, Poland 270
adhesives and chewing gum. stream BD September contract settlement.
Omsk Kauchuk Omsk, Russia 144
The two main types of SBR include emul- Rollovers were heard on dry grade con-
Dynasol Santander, Spain 120
sion SBR (E-SBR) and solution SBR (S-SBR). tracts because of unchanged market condi-
Elastomeros
There has been a trend towards more use of tions, despite recent supply constraints in the
Versalis Ravenna, Italy 120
S-SBR for higher performance by providing butadiene market.
improved grip on wet roads and a reduced 1700 grade contracts increased by single Voronezhsintez- Voronezh, Russia 107
kauchuk
rolling resistance compared with E-SBR. digits, with a smaller cost pass-through seen
It also complies with stricter tyre labelling when compared to dry grade (1500) material. Synthos Dwory Kralupy, Czech 105
Republic
initiatives. Styrene butadiene rubber is avail- Styrene butadiene rubber spot prices for
able in several grades including 1500, which 1500 grade material rose at the beginning of Sterlitamak Sterlitamak, Russia 70.4
Kauchuk
is a dry grade, and 1723 and 1783, which are October after a few months of stability, on the
oil extended grades. back of tighter supply in the spot market and Togliattikauchuk Togliatti, Russia 60
due to the impact of the higher feedstocks. Versalis Grangemouth, UK 60
Supply/demand In October 2016, attentions focussed on International
Over the first nine months of 2016, the Euro- soaring butadiene prices in Asia and the ef- NOTE: *Top 10 capacities listed
pean passenger car market grew by 8.0%, fect on the downstream rubber market,
reaching 11,243,263 units almost 800,000 along with natural rubber price hikes in covery, and growth in Europe is steady in
units more than in the first three quarters of September 2016. 2016. EU S-SBR imports rose by around 75%
2015, according to the latest data released by in the first half of 2016 compared to the first
the European Automobile Manufacturers As- Technology half of 2015, according to data from statistics
sociation (ACEA). Styrene butadiene rubber is produced by the agency Eurostat. There is an ongoing trend to-
According to data from the European Tyre copolymerisation of butadiene and styrene in wards using more S-SBR compared to E-SBR
and Rubber Manufacturers Association, the the approximate proportion of 3:1 by weight for improved tyre performance, safety and
tyre market was less dynamic in Q2 2016 in a continuous process. fuel efficiency.
compared to the first three months of the In the emulsion process, producing gener- Trinseo announced plans to build a new
year as the sale of consumer tyres decreased al-purpose grades, the feedstocks are sus- pilot S-SBR plant in Schkopau, Germany,
in June by 2%, despite growth in the passen- pended in a large proportion of water in the which will begin operation in Q4 2017. Trin-
ger car market. SBR players are interested in presence of an initiator or a catalyst and a seo is also planning to expand its S-SBR ca-
what the rest of 2016 will bring, and some stabiliser. pacity by 50,000 tonnes at its Schkopau plant
In the solution process, the copolymerisa- in Germany.
EUROPE SBR tion proceeds in a hydrocarbon solution in ARLANXEO a 50/50 joint venture for syn-
the presence of an organometallic complex. thetic rubbers between LANXESS and energy
/tonne, spot FD NWE
1,300
This can be either a continuous or batch major Saudi Aramco also launched back in
SBR 1500, Non-Oil Grade process. Some manufacturing facilities have April 2016.
SBR 1723 swing capacity with polybutadiene rubber. There is a lot of attention centred on activi-
SBR 1783
1,200 In terms of S-SBR, producers are looking at ty in Asia due to the high BD and SBR prices
developing technology used to manufacture in the region, as material could move away
top performance tyres, including green tyre from Europe to Asia and domestic supply
1,100 technology and bio-based chemistry. could tighten.
Earlier in 2016, US renewable technology European sellers still face competition
firm Genomatica and Italy-based Versalis suc- from lower priced imports from Russia.
1,000 cessfully developed an end-to-end process for However, spot prices have been increasing
bio-butadiene production. across Europe recently due to 1500 dry grade
supply limitations.
900
Oct Oct Outlook Subscribe to ICIS pricing reports to keep
2015 2016 Concerns about global overcapacity continue up with a wide range of chemical markets
but in terms of demand there are signs of re- across the globe at icis.com

www.icis.com 31 October-13 November 2016 | ICIS Chemical Business | 47


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