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EU diplomats endorse PPWR deal

  • : Petrochemicals
  • 24/03/15

EU diplomats today endorsed the EU parliament and council of EU member states' compromise agreement on the Packaging and Packaging Waste Regulation (PPWR), which will — among other things — implement mandatory requirements for recycled content across almost all plastic packaging in the single market.

Parliament and member states provisionally agreed to the compromise on 5 March, but it was not agreed at the time by the European Commission. A particular sticking point centred around whether and how imported recyclates would be allowed to count towards the recycled content requirements, with the compromise saying that imports should be "subject to equivalent conditions with regard to emissions and separate collection and sustainability criteria for recycling technologies".

The commission said today it would not stand in the way of an agreement, an unnamed official told Argus. Some EU member states also expressed concerns, but none opposed and only two expressed reservation or had not reached an official position.

European recycling industry association Euric called the outcome of discussions a "significant milestone for the European recycling industry and circular value chains".

"Setting equivalent conditions that guarantee that imported recycled plastics meet equivalent standards to those set in the EU is vital for ensuring European industrial sovereignty and competitiveness", Euric president Olivier Francois said.

But it raised concerns about a clause granting member states freedom to prioritise access to recycled plastics "for use in applications where the distinct quality of the recycled material is preserved or recovered in such a way that it can be recycled further and used in the same way and for a similar application". This "risks disrupting the well-functioning internal market", Euric said.

It said that the focus should instead be on improving recyclability and collection rates to ensure access to recycled plastics. A similar debate has occurred with respect to the Single Use Plastics Directive which mandates recycled content in PET bottles in the EU from next year.

Concerns have also been raised about bans focussing primarily on plastic packaging, with exemptions for other packaging materials. German plastic packaging association IK's director-general Martin Engelmann highlighted single-use packaging for fresh fruit and vegetables. The commission initially proposed a material-neutral ban on these products, but the provisional compromise proposal narrows the ban to only plastic packaging, he said.

Special rules for plastic packaging, for instance, could be challenged as discriminatory in the European Court of Justice, he told Argus last week.

Engelmann also raised concerns this week about 100pc reuse requirement for industrial packaging used to transport goods between one company's sites within the EU, and 40pc reuse requirement for all other industrial packaging. Such a high level of reuse is "impossible to achieve for many packaging formats because, for example, it is not technically possible to reuse stretch film for pallet wrapping", he said.

Following today's meeting of EU diplomats, the provisional deal will be formally adopted first by parliament's environment committee and then the whole parliament. Following formal approval by EU ministers, the text could be on the EU statute books in the summer.


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24/12/27

Viewpoint: Consolidation looms in US methanol

Viewpoint: Consolidation looms in US methanol

Houston, 27 December (Argus) — The sale of Netherlands-based OCI's methanol production assets to rival producer Methanex is set to shift the market, with US methanol production most affected by the move. Methanex in the third quarter of 2024 announced the $2bn acquisition, which is expected to close in the first half of 2025. The boards of directors of both companies and OCI's shareholders approved the transaction, but it is subject to regulatory approvals. OCI operates the 1mn t/yr OCI Beaumont plant and is a 50:50 partner in Natgasoline, a 1.7mn t/yr joint-venture plant between OCI and Proman. Methanex operates three plants in the US, all in Geismar, Louisiana. These plants carry a collective 4mn t/yr capacity and represent one-third of total US methanol capacity. At front and center of the acquisition is the Natgasoline plant in Beaumont. Natgasoline, when operational, represents 14pc of domestic production. The plant opened in 2018, and throughout those six years, the plant has seen its share of operational issues. The most recent was a fire at the reformer unit in early October, resulting in a complete shutdown lasting nearly three months. When the deal was announced, Methanex made it clear that the transaction was subject to approvals by OCI shareholders, as well as a pending legal decision between OCI and Proman. "If it is not settled within a certain period, Methanex has the option to carve out the purchase of the Natgasoline joint venture and close only on the remainder of the transaction," the company said in September. Methanex and OCI declined to give further details, as the deal is still pending. Proman did not respond to a request for comment. If it goes through, the acquisition would result in the exodus of OCI from the US methanol market. But the issue of liquidity in the US spot barge market is also looming. Market participants said OCI is a frequent buyer when the Natgasoline plant goes down. In October, when Natgasoline was completely shut down, 340,000 bl of methanol moved for delivery at ITC, the terminal on the Houston Ship Channel where methanol is exchanged, according to Argus data. Market participants expect liquidity to be about the same until some time after the deal closes. When a plant goes down, a producer will emerge in the spot market for purchases. In the longer term, there are some questions around international distribution and where US methanol exports find a home. Methanex is a major exporter to Asia, whereas OCI sells into the European market. The low-carbon methanol sector will also experience some shakeup. OCI is a major participant in the bio-methanol space, selling volume into Europe. Methanex produces carbon-captured methanol, also known as blue methanol, which has not penetrated the EU market. By Steven McGinn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: PVC expansions loom over US market in 2025


24/12/27
24/12/27

Viewpoint: PVC expansions loom over US market in 2025

Houston, 27 December (Argus) — US polyvinyl chloride (PVC) market participants expect some domestic demand growth in 2025, but recent expansions could limit price increases in both the domestic and export markets. Most producers are optimistic PVC demand will grow at a strong rate in 2025, with some expecting growth above 5pc. But producers also caution that greater volume sales may not translate into higher prices because of additional capacity brought on line in the second half of 2024. Formosa added 130,000 metric tonnes (t) of PVC capacity to its Baton Rouge, Louisiana, plant in the third quarter, and Shintech added 380,000t/yr of PVC capacity to its Plaquemine, Louisiana, plant in the fourth quarter. Producers' concerns that higher sales volume would not translate into higher prices have proven true so far. Domestic PVC sales have grown as much as 8pc in the year through November, according to producers, but PVC contract prices in November were unchanged from January at 57.5¢/lb after some fluctuations during the year. Prices fell by 2¢/lb in the months following Formosa's expansion. Contracts for December, which will represent the month following Shintech's expansion, have not yet settled. Buyers have more muted expectations than producers for demand in 2025, further adding to the modest price outlook for the coming year. This is partly because many buyers believe interest rates that recently began to fall will take time to stimulate housing construction, potentially delaying a rise in PVC demand until late 2025 or even 2026. Lower interest rates can reduce homebuilders' borrowing costs and ease mortgage rates for prospective homebuyers. The cautious outlook was already pervasive among PVC buyers and converters before the US Federal Reserve in December reduced its forecast for 2025 interest rate cuts to half a percentage point, down from a full point in the September projections. Reliance on exports US producers may need to rely on exports to absorb the new capacity, a trend that has kept export prices low since August. US PVC export spot prices were at $700/t fas on average in late September after Formosa ramped up its capacity expansion, compared to an average of $750/t fas a year earlier. After Shintech's expansion, export prices fell to $673/t fas on average by late-December, compared to $695/t fas on average during the same time in 2023. While spot export prices initially had a floor of $670/t fas after both expansions, the global environment has become even more competitive at year-end with some overseas producers struggling to move volume, according to traders. A greater reliance on exports at a time when several countries recently implemented anti-dumping duties on US material could make for a difficult market in 2025, with pricing needing to come down to start the year if there is too much volume on hand, traders said. India recently announced preliminary anti-dumping duties on US PVC from 80-150pc, with duties exceeding $300/t for some US producers. Brazil in October raised import taxes on PVC from 12.6pc to 20pc. The European Commission last month confirmed duties on US-origin PVC between 58-71.2pc, and the UK is considering duties from 38.4-56pc. The Indian duties in particular could pose a challenge to US exporters because US producers and traders had become reliant on Indian customers as an outlet for US supply. India is one of the few countries for US exports with steady demand growth. Should US exporters lose market share in India, there are no immediate alternatives to offset that loss. By Aaron May Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US PGP prices set to rise in 2025


24/12/26
24/12/26

Viewpoint: US PGP prices set to rise in 2025

Houston, 26 December (Argus) — US spot polymer-grade propylene (PGP) prices are likely to increase into 2025, driven largely by several planned limitations on supply. By mid-December, the US PGP market had the sharpest contango structure between the prompt month and the forward month since Argus began tracking data over 10 years ago. A contango is when the next month's price is higher than the current month's price. On 12 December, December-delivery PGP at the Enterprise Products Partners (EPC) system at Mont Belvieu, Texas, traded at 35.75¢/lb, while January-delivery PGP traded twice at 38.75¢/lb. Argus ' PGP forward curve shows prices rising to over 40¢/lb by the second quarter of next year. Many factors are behind this record 3¢/lb premium for January PGP and the continued increase into mid-year. The first is that spot prices have dipped to their lowest levels since August 2023 on a rare period of no major supply disruption at propane dehydrogenation (PDH) units, which produce on-purpose propylene. Most propylene production in the US comes as a byproduct from refineries or as a co-product from steam crackers. All four US Gulf coast PDH units have been operating without major incident or extended shutdown since the late summer. Since mid-August, only Enterprise's PDH-1 was shut, for two weeks in mid-October, but this was not enough to stop the downtrend in PGP's spot price. US spot PGP prices declined by 40pc from a 12 August near-term peak of 58¢/lb to a low of 35¢/lb on 9 December. A second major factor behind the market's sharp contango is that PGP supply is set to tighten in 2025. Propylene supply will have a structural reduction when LyondellBasell's 264,000 b/d refinery in Houston begins shutting down units in January and completed closes by the end of the first quarter. The company sought to exit the refining business but could not find a buyer for the refinery, which produces 136,000 metric tonnes (t)/yr of propylene. There are no planned additions to US propylene capacity in 2025, and several US crackers that produce propylene as a co-product are set for turnarounds in the first quarter. Meanwhile, propylene demand is set to structurally rise in the second half of 2025, when Formosa's new 250,000 t/yr polypropylene plant in Point Comfort, Texas, is scheduled to come online. A third major factor indicating that US spot PGP prices in December are the lowest they will be for at least several months is seasonality. One market participant said that spot activity to end 2024 is largely characterized by sellers destocking inventory ahead of the state of Texas' ad valorem taxes on inventories. This tends to cause seasonally lower prices in December and then a rise in prices in January as the market restocks inventory. This trend has persisted for the last four straight years. These three major factors — uninterrupted supply to end 2024, supply tightening in 2025, and seasonal buying patterns — all stand behind the sharpest contango into the next year for propylene in 10 years of record keeping. The forward curve for PGP indicates a rise of 5¢/lb between now and the middle of next year. The forward curve, though, does not account for any unplanned shutdowns of PDH units, which happen frequently as PDH units are operationally less reliable than propylene-producing crackers and refineries. In July, the US had three of its four PDH units shut down, taking 2.9mn t/yr of on-purpose propylene capacity offline. Such incidents could spike prices for PGP above the uptrend expected into next year. By Michael Camarda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US BD demand awaits 1Q rebound as risks loom


24/12/24
24/12/24

Viewpoint: US BD demand awaits 1Q rebound as risks loom

Houston, 24 December (Argus) — US demand for butadiene (BD) is expected to increase in January, but buyer sentiment for the remainder of the first quarter remains uncertain. Inventory restocking in January is expected to draw down excess supply and provide near-term price support, according to market participants. Derivative manufacturers aim to rebuild inventories following earlier-than-normal destocking initiatives this year. Many buyers employ standard inventory control management strategies to avoid paying higher end-of-year inventory taxes, particularly in Texas. Others cut costs to improve year-end financial statements. Domestic demand in February and March is less clear, as market participants question whether the market will rebound from persistently low demand at the end of 2024. US BD prices on a contract basis fell by 12pc during the fourth quarter , owing to weak demand and oversupply. Demand was depressed by BD consumer turnarounds in October, seasonal slowdowns between November-December and trade pressures tied to derivative imports. US tire shipments this year are expected to rise by 2.1pc to 338.9mn units, surpassing the record set in 2021, according to the US Tire Manufacturers Association. However, market participants along with US trade data reference a jump in tire imports from Asia-Pacific. Both Bridgestone and Goodyear have said low-cost tire imports and structural changes in segment profitability across the Americas are eroding their market share, fueling capacity rationalization, asset sell-offs and plant closures in the region. Acrylonitrile butadiene styrene (ABS) is another segment at risk of stronger competition from low-cost, Asia-origin imports. Ineos Styrolution plans to permanently shut down its ABS plant in Addyston, Ohio, in 2025 because the facility cannot compete with imported material. "Over the past few years, we have seen the ABS market become increasingly competitive, particularly with growing competition from overseas imports," Ineos Styrolution chief executive Steve Harrington said in late October. Protectionist trade policies are likely to be a feature of president-elect Donald Trump's second administration, potentially altering business investment decisions and durable goods trade flows. Even if demand does not improve, planned maintenance in the first half of 2025 is expected to tighten BD supplies. A heavy turnaround cycle for steam crackers will concentrate in the first and second quarters, constraining availability of feedstock crude C4. One integrated US Gulf coast producer plans to enforce BD allocations while its assets are offline for planned maintenance. A separate, non-integrated producer has not announced BD sales controls, based on feedback from its customers. This same BD supplier was short on feedstock supplies for parts of this year, with the crude C4 merchant market illiquid in North America. A third producer has scheduled a cracker turnaround starting in January, but no indications emerged that would limit term volumes from its BD unit. Reduced BD supply during cracker maintenance is likely to pull volumes away from the export market until the second half of 2025. Export spot cargoes in the fourth quarter more than doubled from the third quarter, serving as a critical outlet to clear the domestic market of surplus BD supplies, even as lower export prices pressured US margins. By Joshua Himelfarb Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US LPG cargo premiums poised to fall


24/12/23
24/12/23

Viewpoint: US LPG cargo premiums poised to fall

Houston, 23 December (Argus) — The booming US LPG export market has fueled record spot fees this year for terminal operators that send those cargoes abroad, but those fees are poised to fall next year as additional export capacity comes online. US propane exports surged over the past two years, hitting an all-time high of 1.85mn b/d in the first quarter of this year, according to data from the US Energy Information Administration (EIA). Terminal fees for spot propane cargoes out of the US Gulf coast hit an all-time high of Mont Belvieu +32.5¢/USG (+$169.325/t) in mid-September. US propane production is expected to grow by another 80,000 b/d in 2025 to 2.22mn b/d while the outlook for domestic consumption is fairly steady, at 820,000 b/d next year — meaning even more propane will be pushed into the waterborne market. But that is dependent on US infrastructure keeping up with the pace of production. US export terminals in Houston, Nederland and Freeport, Texas, have run at or above capacity for the last two years given the thirst for cheaper US feedstock, largely from propane dehydrogenation (PDH) plant operators in China. This demand has created bottlenecks at US docks, and midstream operators like Enterprise, Energy Transfer, and Targa have rushed to ramp up spending on both pipelines and additional refrigeration to stay ahead of the wave of additional production. US gas output spurs LPG exports As upstream producers have ramped up natural gas production ahead of new LNG projects, most producers are counting on LPG demand from international outlets in Asia to offload the ethane and propane the US cannot consume. For the past four years, Asian buyers have been more than happy to oblige. US propane exports to China rose from zero in 2019, when China imposed tariffs on US imports, to an average of 1.36mn metric tonnes (t) per month in January-November 2024, according to data from analytics firm Kpler, making China the largest offtaker of US shipments. US exports to Japan averaged 480,000t per month throughout most of 2024, and exports to Korea averaged 460,000t per month in the first 11 months of 2024. China, Korea, and Japan received 52pc of US propane exports in 2024, up from 49pc in 2020, according to data from Vortexa. Strong demand in Asia has kept delivered prices in Japan high enough to sustain an open arbitrage between the US and the Argus Far East Index (AFEI). Forward-month in-well propane prices at Mont Belvieu, Texas, have remained well below delivered propane on the AFEI. In 2020, Mont Belvieu Enterprise (EPC) propane averaged a $143/t discount to delivered AFEI — a spread that has only widened as additional PDH units in Asia have come online. During the first 11 months of 2024, the Mont Belvieu to AFEI spread averaged a hefty $219/t, leaving plenty of room for wider netbacks in the form of higher terminal fees for US sellers, especially as a wave of new VLGCs entering the global market has left shipowners with less leverage to take advantage of the wider arbitrage. The resulting wider arbitrage to Asia has kept US export terminals running full for the last two years. So when a series of weather-related events and maintenance in May-September limited the number of spot cargoes operators could sell and delayed scheduled shipments, term buyers willing to resell any of their loadings could effectively name their price. This spurred the record-high premiums for spot propane cargoes in September. New projects may narrow premium An increase in US midstream firm investments in additional dock capacity and added refrigeration in the years ahead could narrow those terminal fees, however. Announced projects from Enterprise and Energy Transfer, in particular, will add a combined 550,000 b/d of LPG export capacity out of Houston and Nederland, Texas by the end of 2026. Enterprise's new Neches River terminal project near Beaumont, Texas, will add another 360,000 b/d of either ethane or propane export capacity in the same timeframe. These additions are poised to limit premiums for spot cargoes by the end of 2025. Already, it appears the spike in spot cargo premiums to Mont Belvieu has abated for the rest of 2024. Spot terminal fees for propane sank to Mont Belvieu +14¢/USG by the end of November. The lower premiums come not only as terminals resume a more normal loading schedule, but at the same time a surplus of tons into Asia ahead of winter heating demand has narrowed the arbitrage. The spread between in-well EPC propane at Mont Belvieu fell from $214.66/t to $194.45/t during November. A backwardated market for AFEI paper into the second quarter of 2025 means US prices are poised to fall more in order to keep the spread from narrowing further. By Amy Strahan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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