Dutch PVC recycler to file for bankruptcy

: Petrochemicals
24/11/14

Dutch PVC recycler Vinylrecycling will file for bankruptcy on 19 November after a legal battle with the Dutch government over clarifications regarding PVC waste exports.

The company recycles 20,000-30,000 t/yr of PVC waste. Vinylrecycling has been in a prolonged legal battle with the Netherlands Human Environment and Transport Inspectorate (ILT) over exports to third countries including Guatemala, India and Algeria of what the ILT described as "PVC waste" but the company declared to be "raw material". The ILT then restricted exports for Vinylrecycling and fined the company. Vinylrecycling has been appealing this decision, with a judgment expected by 1 January, but the company said "some creditors no longer have the patience to wait," and the company will be filing for bankruptcy.

"The Council of State is expected to issue its verdict, hopefully before January 1, but that might be too late for our company. No one will step in to take on the 20,000 to 30,000t of PVC we recycle, so I'm concerned it may all end up in a landfill," chief executive of Vinylrecycling Huib van Gulik told Argus.

"Although rebuilding our company will be a complex task, we will speak with the trustee to explore whether a restart is possible or if we will contest the bankruptcy," the company added.

"Vinylrecycling warmly invites potential investors, strategic partners, and other interested parties to discuss a restart and/or a contestation of the bankruptcy with us or, later, with the trustee," the company said.

Vinylrecycling produces regrind, granulate and micronised powder rPVC.

By George Barsted

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24/12/24

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

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Viewpoint: US LPG cargo premiums poised to fall

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.

Viewpoint: Protectionist policies muddy US PE outlook

24/12/23

Viewpoint: Protectionist policies muddy US PE outlook

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Viewpoint: rHDPE packaging grade demand solid into 2025

24/12/18

Viewpoint: rHDPE packaging grade demand solid into 2025

London, 18 December (Argus) — A number of European recyclers report stronger demand for premium rHDPE BM grades heading into 2025, but prices and margins are likely to remain under pressure. European recyclers have endured well-publicised struggles in the past two years, but demand for rHDPE BM natural and, particularly, white grades has been the brightest spot for those operating in the polyolefin market in 2024. Prices have risen by 7-8pc over the year and — while some recyclers are keen to emphasise that contracting out their 2025 volumes has not been without its difficulties — many report that they have more orders for the coming year than they are able to supply. The closure of UK-based recycler Viridor's Avonmouth recycling plant , an rHDPE natural supplier, pushed some orders to other suppliers at the end of the year. But underlying demand also appears to be rising, and large packaging companies told Argus that they expect — based on forecasts from their customers, and with the caveat that these do not always translate into physical volumes — to be using more rHDPE in 2025 than in 2024. This shows brands are keen to further increase the recycled content of their packaging, and that many see rHDPE as a good category to focus on. But challenges remain, even for recyclers that are seeing a stronger demand outlook. Packaging manufacturers and brand owners have no legal obligation to use rHDPE in 2025, and there will be a limit to what they will pay for sustainable packaging materials. Fast-moving consumer goods (FMCG) brands' sales were hit by inflation in 2022 and 2023, and they remain cognisant of the need to find the right price point with their customers as volumes recover. As a result, decreases in the virgin HDPE market and the consequent widening of the rHDPE BM-virgin HDPE BM premium to its highest since August 2023 may become an obstacle to demand. Barring a sharp rise in crude and naphtha costs that underpin the European petrochemicals chain, Argus does not expects any major increases in HDPE prices in 2025. The potential for virgin prices to cap recyclate prices will remain for the foreseeable future. Some European recyclers are also concerned about import pressure, which is resurfacing after a lull linked to two periods of unusually-higher Asia-Europe freight rates in 2024. Asian rHDPE natural pellets have been offered up to €400-500/t ($419-$524/t) cheaper than the highest-priced European supply in recent weeks. And, although some buyers prefer the optics of supporting their regional recycling industry, or the opportunity to resolve quality issues more easily and avoid traceability concerns by working with local suppliers, this price advantage may encourage more to find import sources they are comfortable with. Recyclers also still need to find an outlet for their lower-value grades, from darker/coloured packaging grades down to grades that mainly sell into "cost-saving" markets such as pipe. A typical colour-sorting recycling process produces a range of grades, reflecting the combined natural, white and mixed-colour composition of standard HDPE packaging bales in northwest Europe. But finding a home for darker pellets can be difficult in the packaging industry, where buyers like to process white or natural grades with masterbatch colourants — concentrated pigments — to preserve the appearance of their products. And construction and industrial markets are depressed by the current economic environment and unlikely to buy large volumes unless recyclers can offer a discount to virgin material. Recyclers making premium HDPE grades may therefore feel more confident than those in other polyolefin markets heading into 2025. But until buyers are more accepting of a wide range of grades, or recently-confirmed legislation mandating the use of recyclates in polyolefin packaging kicks in, they will be under no illusion that the past few years' challenges can be consigned to the rear view mirror just yet. By Will Collins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: EU PVC margins to hold below average in 2025

24/12/18

Viewpoint: EU PVC margins to hold below average in 2025

London, 18 December (Argus) — European polyvinyl chloride (PVC) margins are likely to remain subdued in 2025, with a repeat of the sluggish demand and rising ethylene costs seen in 2024. Weakening European PVC consumption throughout 2024 was mainly underpinned by lower construction activity, a key demand driver. Construction purchasing managers index (PMI) data, compiled by S&P Global and Hamburg Commercial Bank (HCOB), show the eurozone construction PMI for 2024 peaked in October at 43.0, still way below the 50 mark that separates contraction and expansion. PVC market participants are cautiously optimistic that recent declines in interest rates from the European Central Bank (ECB) may help stimulate demand for home-builds in 2025, and improved PVC demand will follow. The ECB reduced rates three times in 2024, to 3.25pc. Rates may continue to ease in the short term, but as witnessed in 2024 this would take time to filter through to European PVC demand. Because of this, buyers are contemplating either maintaining or reducing contractual PVC volume commitments for 2025, noting struggles with passing raw material costs to customers. Anti-dumping duties (ADDs) on s-PVC imports from the US and Egypt helped to reduce excess supply in 2024, and while this is likely to continue into 2025 there is limited interest from buyers to source additional supply because of lower demand. Asian s-PVC imports remained minimal, with volatility in freight costs and longer lead times likely to suppress buying interest into 2025. Re-balancing act Domestic PVC producers focused on reducing inventories and operating rates for much of 2024 to keep the market balanced, with average operating rates between 60-70pc for s-PVC production and at the higher end of the range for specialty grades. But re-balancing proved to be a slow process in light of weakening demand, forcing European producers to keep operating rates and margins low for much of the year. Argus calculated s-PVC net production margins, based on feedstock ethylene costs in northwest Europe, averaged around €287.04/t between January-November 2024, lower by €109.04/t than during the same period in 2023 and around €73.40/t lower than the Argus 2015-23 average. Easing electricity costs in 2024 helped to suppress further PVC margin loss, but demand weakness throughout the year remained in favour of buyers as contract prices settled predominantly below the implied ethylene cost. With European ethylene prices likely to increase and PVC demand expectations suppressed throughout 2025, there could be another year of below-average margins for PVC producers. Argus assessed the December suspension PVC (s-PVC) preliminary contract marker for northwest Europe at €1,120/t on 20 December, reflective of a preliminary contract delta for December at minus €5/t. This is comparable to an ethylene monthly contract price (MCP) movement of minus €7.50/t for December. This raises the possibility of further supply consolidation in Europe to re-balance the market in the medium term, with smaller producers announcing potential closure of PVC production units in central and eastern Europe in 2025. Others plan to mothball some specialty PVC production lines, while others are seeking import licenses to supply PVC into emerging markets such as India. This is difficult to achieve because of cost-competitiveness. A rise in regional construction activity, and therefore PVC demand, will remain the quickest way to re-balance the market, helping to raise operating rates and margins back to above-average levels as buyers commit to more contractual volumes. By George Barsted and Michael Vitiello Integrated s-PVC NWE net margins €/t Eurozone construction PMI Index Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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