Braskem eyes PE, PP gains from tariff hike

Spanish Market: Petrochemicals
07/11/24

Brazilian petrochemical giant Braskem expects to increase its domestic share of polyethylene (PE) and polypropylene (PP) markets because of higher import tariffs that took effect last month.

The Brazilian government's decision to increase import tariffs to 20pc, up from 12.6pc, effective from 15 October and valid for one year, is also expected to boost first-quarter sales by $30mn, the company said Thursday.

Additionally, Braskem's operating rates for plastic resins, including polyvinyl chloride (PVC), are expected to rise in the first quarter from 64pc currently, following the seasonally weak fourth quarter.

Braskem acknowledged that the higher import tariffs are a temporary government measure. The company is working to boost competitiveness in the petrochemical industry through conversion to renewables, improved technology and greater tax incentives for the industry, among other structural measures, Braskem chief financial officer Pedro Freitas said during the company's earnings call.

To bolster the competitiveness of plastic resins made in Brazil, Braskem and fellow PVC producer Unipar Carbocloro have jointly requested the Brazilian government to increase the anti-dumping tariffs already imposed on PVC produced in the US, currently at 8.2pc. Both companies are also monitoring other polymers produced abroad for potential anti-dumping tariff requests.

On the investment side, Freitas said Braskem may as much as double capacity at its petrochemical complex in Rio de Janeiro, where the company's cracker operates 100pc on ethane feedstock, and also increase capacity at its petrochemical complex in Bahia, which partially uses ethane. The company is monitoring the regulation of natural gas in Brazil to ensure greater availability of ethane present in the natural gas extracted from Petrobras' offshore operations in the country. The use of this ethane is in the company's plans, according to Freitas.

Braskem also stated that it will invest around $60mn in a 30-40 day scheduled maintenance shutdown at its Mexican joint venture Braskem Idesa. The company's cracker in Duque de Caxias, Rio de Janeiro, also is expected to be shut for scheduled maintenance down next year.

In the US, Braskem said it is studying potential investments to produce green PP.

Looking ahead to next year, Braskem said Donald Trump's victory this week in the US presidential election could lead to greater protectionism in the US, which would be beneficial for Braskem's US operations, or it could lead to weakened domestic demand in Brazil if overseas products that would typically have gone to the US instead shift to Brazil.

Freitas said that even with the better outlook for next year coming from the tariff hike on polymers in Brazil, the Trump factor and other global issues such as the currently low petrochemical cycle are causing Braskem to consider possible capacity rationalization, with a possibly decision next year.

3Q production and sales

Braskem's domestic resin sales fell by 2pc in the third quarter from a year prior, with volumes also falling in the US, Europe and Mexico.

Domestic sales declined mostly because of higher levels of PE and PVC inventories in the transformation chain, Braskem said.

Domestic resin sales reached 869,000 metric tonnes (t) in the third quarter, down from 884,000t a year earlier. Compared to the second quarter, the company's Brazil resin sales were up by 6pc on higher volumes of PP after operations at the Rio Grande do Sul petrochemical complex resumed after severe flooding, and greater demand from the hygiene and cleaning sectors. PVC volumes were supported by greater commercial opportunities in the civil construction and sanitation sectors.

In Mexico, PE sales through the Braskem Idesa joint venture fell by 3pc on the year to 208,000t because of lower demand. Sales declined by 17pc from the second quarter mainly on inventory management and the expectation of a reduction in PE prices in the international market in the following periods.

Third-quarter PP sales were 501,000t, according to consolidated numbers for the US and Europe, down by 8pc from a year earlier and little changed from the previous quarter. The declines were mainly because of lower availability of products for sale in both regions.

Braskem narrowed its third-quarter loss to $106mn from a $497mn loss in the same period last year. The loss was largely attributed to a negative exchange rate variation of R$1.2bn ($211mn).

By Fred Fernandes

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05/11/24

India proposes provisional s-PVC anti-dumping duties

Singapore, 5 November (Argus) — India is proposing to implement anti-dumping duties (ADDs) on suspension polyvinyl chloride (s-PVC) imports originating from China, Indonesia, Japan, South Korea, Taiwan, Thailand and the US. These will apply to s-PVC imports with a k-value of between 55 and 77, excluding cross-linked PVC, chlorinated PVC, paste PVC, mass PVC, co-polymer PVC and blending resins. Indian authorities are inviting interested parties to submit comments on the proposal within 30 days of publication in the Indian Gazette, which happened on 30 October. It is unclear when the ADDs will be implemented, with participants anticipating potential introduction towards the end of the fourth quarter for now. These preliminary findings come after an initial anti-dumping investigation on s-PVC imports was initiated by three out of five Indian s-PVC producers on 26 March. Current findings show there is a significant disparity between domestic and import s-PVC prices in India, with margins by the investigated countries forming the basis of the proposed ADDs. The investigation suggests these duties would provide a future level playing field between s-PVC exporters into India and local s-PVC producers, with the former having increased market share in India over recent years while the latter faced elevated inventories and poor margins. ADDs on paste PVC and chlorinated PVC imports to India are already in place. India set to become self-sufficient on supply The Indian market is, and will likely remain, one of the largest PVC demand drivers globally for years to come. Indian demand for PVC is set to grow to 5mn t/yr by 2027, with imports surpassing 3.2mn t in 2023 and likely to replicate that this year. The global market is long on PVC supply, and with Indian output at 1.6mn t/yr, local producers are willing to increase capacity and regain market share from imports. Argus estimates India will increase domestic PVC capacity across various grades by 3.8mn t/yr by 2028, which would surpass current annual imports and provide additional selling opportunities for future demand growth. ADDs on s-PVC imports are one way for this new PVC capacity to easily find a home among Indian plastic converters, many of which now import large amounts of more competitively priced s-PVC from northeast Asia and north America to fulfill their requirements. Lower PVC production cash costs in these regions allowed exporters to gain favourable market share in India over recent years, but proposed ADDs will probably limit this growth in the long-term. Upcoming BIS quality restrictions will also contribute to a drop in imports, albeit to a lesser extent presuming regular exporters to India are certified by the date of implementation, since this would mainly target PVC grades produced from the carbide-route, which are already being imported less into India due to quality concerns. All these factors are likely to create renewed import competition into the Indian market over the coming years, leading global participants to consider potential rationalisation of some PVC capacity, delays to new capacity projects and new demand outlets, should global supply remain above overall consumption. By Michael Vitiello India s-PVC ADD list $/t Country of origin Country of export Producer Duty China China Chiping Xinfa Polyvinyl Chloride 125.0 China China Chiping Xinfa Huaxing Chemical 125.0 China China Tianjin Bohua Chemical 82.0 China China Qingdao Haiwan Chemical 92.0 China China Non-sampled producers 97.0 Any China Any 167.0 Indonesia Indonesia PT Asahimas Chemical 73.0 Indonesia Indonesia PT TPC Indo Plastic & Chemical 61.0 Indonesia Any Any 200.0 Any Indonesia Any 200.0 Japan Japan Kaneka Corporation 54.0 Japan Japan Shin-Etsu Chemical 73.0 Japan Japan Non-sampled producers 66.0 Japan Any Any 147.0 Any Japan Any 147.0 Korea PR Korea PR LG Chem 51.0 Korea PR Korea PR Hanwha Solutions Corporation 0.0 Korea PR Any Any 161.0 Any Korea PR Any 161.0 Taiwan Taiwan China General Plastics Corporation 25.0 Taiwan Taiwan CGPC Polymer Corporation 25.0 Taiwan Taiwan Ocean Plastics Co. 40.0 Taiwan Taiwan Formosa Plastics Corporation 74.0 Taiwan Any Any 163.0 Any Taiwan Any 163.0 Thailand Thailand Thai Plastics and Chemicals 53.0 Thailand Thailand AGC Vinythai Public Company 80.0 Thailand Any Any 184.0 Any Thailand Any 184.0 US US Westlake Chemicals & Vinyls 164.0 US US Westlake Vinyls 164.0 US US Westlake Vinyls Company 164.0 US US Shintech Incorporated 104.0 US Any Any 339.0 Any US Any 339.0 Source: Ministry of Commerce and Industry Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US railroad-labor contract talks heat up

04/11/24

US railroad-labor contract talks heat up

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Canada advances oil and gas GHG cap

04/11/24

Canada advances oil and gas GHG cap

Houston, 4 November (Argus) — Canada is proposing to use a cap-and-trade system to reduce greenhouse gas (GHG) emissions from its oil and gas sector, a long-promised but politically contentious move. The proposed program aims to reduce emissions from the sector by 35pc, compared to 2019 levels, by 2030-32, according to a draft rule published by Environment and Climate Change Canada (ECCC) on Monday. It would cover upstream production activities, both onshore and offshore, including for oil, natural gas and liquified natural gas. After an initial four-year phase-in over 2026-29, entities would then need to meet their emissions obligations over the first 2030-2032 compliance period. While all operators must report emissions, only those producing more than 365,000 b/yr of oil equivalent, equal roughly to 99pc of upstream emissions, would be covered by the trading program. Covered entities would receive free allowance allocations, which would decline in line with their emissions cap. Companies could also buy allowances on the secondary market if needed, use carbon offsets or contribute funds to a decarbonization program. The first three-year compliance period of 2030-31, would be set at 27pc below emissions reported for 2026, which ECCC said would be equivalent to the 35pc target. The federal program will not link with the California-Quebec joint carbon market, known as the Western Climate Initiative, regulators said. ECCC officials stressed that the resulting program would cap emissions, not production, for Canadian oil producers, pushing back at a common criticism from opponents. The federal move will keep the industry accountable to its own promise of net-zero by 2050 and result in a greener and more competitive industry, said Canada Natural Resources Minister Jonathan Wilkinson. "As the world moves to reduce emissions generated by the production and combustion of fossil fuels, oil and gas extracted with the lowest production of emissions will have value in the world," Wilkinson said. But Alberta premier Danielle Smith claimed on Monday that the proposed program violates Canada's constitution. Provinces have exclusive authority over non-renewable natural resource development and the proposal ignores ongoing projects in the province, such as the Pathways Alliance, she said. Canadian Natural Resources, Cenovus, ConocoPhillips Canada, Imperial, MEG Energy and Suncor Energy are involved in the project. The program is a cap on production and will cost the province "anywhere from C$3bn-$7bn ($2.1-5bn)/yr" in absent royalty payments because of a loss of 1mn b/d in production, Smith said, promising future legal challenges against the federal government. "The only way to achieve these unrealistic targets is to shut in our production, I know it, they know it. We are calling them out on it, and they have to stop it," she said. Canada, a major net exporter of oil, has committed to reducing emissions by 40-45pc, compared to 2005 levels, by 2030 and net-zero by 2050. But emissions from the country's oil and gas sector remain an obstacle to meeting those goals. The sector accounts for 31pc, or 217mn metric tonnes, of the country's emissions in 2022 , according to the most recent federal data. Emissions from this sector increased by 83pc from 1990 to 2022. Over the past year Canada's federal government has focused on competitive climate change-related policies, from rolling out investment tax credits for decarbonization technologies to enforcement of the government's new Clean Fuel Regulations. But the road for the Liberal Party-led government to meet the climate goals remains a rocky one ahead of a federal election that must take place no later than October 2025. In September, the Conservative Party, led by Pierre Poilievre, attempted a no confidence measure on prime minister Justin Trudeau's government, fed by discontent around the federal carbon tax. While the motion failed, it highlights the balancing act for the Liberal Party ahead of the election. Trudeau has resisted calls from within his party to cede the field as his popularity waned, to the benefit of Poilievre. ECCC plans to request public comment on the proposal through 8 January 2025 and estimates it will finalize the regulations next year. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Construction spending up in September, PVC demand mixed

01/11/24

Construction spending up in September, PVC demand mixed

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Lyondell reports PO, co-products slowdown in 3Q

01/11/24

Lyondell reports PO, co-products slowdown in 3Q

Houston, 1 November (Argus) — LyondellBasell reported a slowdown in its propylene oxide (PO) and co-products sales in the third quarter, on modest demand and lower derivatives and export margins. LyondellBasell's intermediates and derivatives segment reported operating income of $210mn in the third quarter, down by 65.5pc from $611mn a year earlier. This segment includes propylene oxide (PO) and derivatives and co-products derived from PO production, including oxyfuels (MTBE/ETBE), styrene monomer (SM) and isobutylenes. The company did not disclose sales volumes for its PO business but did note difficult market conditions during the third quarter, as its PO and derivatives results decreased by $35mn from a year prior. "Our propylene oxide and derivatives business encountered headwinds due to volatile prices for propylene feedstocks and volume impacts from Hurricane Beryl and planned maintenance," said executive vice president Kim Foley in an earnings call on Friday. LydondellBasell's newest 470,000 metric tonnes (t)/yr PO and tertiary butyl alcohol (TBA) plant in Channelview, Texas, operated at nameplate capacity during the third quarter, the company said. The company is continuing to target a 75pc operating rate in the fourth quarter for its intermediates and derivatives assets, as its Bayport, Texas, facility undergoes planned maintenance. LyondellBasell expects softer seasonal demand in the fourth quarter, with second half results lower than the first half of the 2024. The potential for lower borrowing costs may drive recovery and PO demand from durable goods, the company said, but it does not expect markets to materially improve in the last part of the year. The company's total operating income dropped by 23pc to $573mn in the third quarter from a year earlier. By Hadley Medlock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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