Viewpoint: US maintenance to limit EO, derivatives

: Petrochemicals
24/12/31

Multiple ethylene oxide (EO) and derivative turnarounds may limit US supply in the first half of 2025.

At least six producers of EO and derivatives are expected to be down for maintenance in February-June. Some are just two weeks while others are 30-45 days.

Most US EO producers are integrated to produce derivatives such as monoethylene glycol (MEG), diethylene glycol (DEG) and triethylene glycol (TEG). This dynamic has market participants anticipating the derivatives will feel the supply squeeze in the first half of the year.

The producers with planned maintenance have the capacity to produce over 3mn metric tonnes (t) of ethylene glycol during the five months of turnarounds, according to Argus data. These supply limitations are expected to tighten the spot market more than the contracted volumes, as the US is a typically a net exporter of MEG, DEG and TEG. Any delays in restarts or unplanned outages could quickly change the US ethylene glycol supply picture.

Additionally, multiple steam-cracker maintenance projects are planned for the first quarter of 2025, which will limit supply of feedstock ethylene and likely raise feedstock costs in the short term.

Some market participants see the US entering the heavy turnaround season at minimum inventories. The US is still rebuilding stocks of EO derivatives such as MEG, DEG and TEG after constraints in September and October tightened supply.

Some planned and several unplanned outages occurred in September that were not resolved until mid-October. During this time, spot supply was harder to find but seasonal demand was starting to slow, according to market participants.

Despite these supply constraints, exports of MEG rose by 32pc to 312,800t in September compared to a year earlier. The US exported 317,900t of MEG in October, a 53pc increase on the year.

Overlapping turnarounds in the first half of 2025 could slow exports as the US is typically a net exporter of MEG, DEG and TEG. Market participants anticipate first-quarter demand to be similar to the last three months of the year with the addition of some restocking activity.

By Catherine Rabe

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25/01/02

Viewpoint: North American BZ, SM output to dip in 2025

Houston, 2 January (Argus) — North American benzene (BZ) and derivative styrene monomer (SM) production and operating rates may decline in 2025 as production costs climb. SM and derivative output will likely see a drop due to the permanent closure of a SM plant in Sarnia and an acrylonitrile butadiene styrene (ABS) plant in Ohio. In 2024, SM operating rates averaged about 71-72pc of capacity, up by 1-2 percentage points from the year prior, according to Argus data. In 2025, operating rates are expected to pull back closer to 70pc due to lackluster underlying demand, offsetting the impact of the two plant closures. Many SM producers on the US Gulf coast are entering 2025 at reduced rates due to high variable production cash costs against the SM spot price. The BZ contract price and higher ethylene prices recently pushed up production costs for SM producers. A heavy upstream ethylene cracker turnaround season in early 2025 will keep derivative SM production costs elevated in Louisiana, stifling motivation for some downstream SM operators to run at normal rates. Gulf coast BZ prices typically fall when SM demand is weak. But imports from Asia are projected to decline, leading to tighter supply in North America that could keep BZ prices elevated. BZ imports from Asia are expected to decline in 2025 because of fewer arbitrage opportunities, as Asia and US BZ prices are expected to remain near parity in the first half of the year. The import arbitrage from South Korea to the Gulf coast was closed for much of the fourth quarter of 2024. Prices in Asia have garnered support because of demand from China for BZ and derivatives, as well as from aromatics production costs in the region that have increased alongside higher naphtha prices. In January-October 2024, over 60pc of US BZ imports originated from northeast Asia, according to Global Trade Tracker data. Losing any portion of those imports typically tightens the US market and drives up domestic demand for BZ. But tighter BZ supply due to lower imports may be mitigated by SM producers, if they continue to run at reduced rates in 2025. The US Gulf coast is around 100,000 metric tonnes (t) net short monthly on BZ, but market sources say the soft SM demand outlook for 2025 will cut US BZ import needs almost in half. Despite fewer BZ imports to North America, reduced SM consumption could hamper run rates for BZ production from selective toluene disproportionation (STDP) unit operators. The biggest obstacle for STDP operators in 2025 will like be paraxylene (PX) demand. Since STDP units produce BZ alongside PX, there needs to be domestic demand for PX. But demand has been weak due to PX imports and derivative polyethylene terephthalate (PET). STDP operations increased at the end 2025 after running at at minimum rates or being idled since 2022. This came as BZ prices consistently eclipsed feedstock toluene prices. The BZ to feedstock nitration-grade toluene spread averaged 30.5¢/USG in 2024 and the BZ to feedstock commercial-grade toluene (CGT) spread averaged 49.25¢/USG, according to Argus data. This means that for much of the year STDP operators could justify running units at higher rates to produce more BZ and PX. But another challenge to consider on STDP run rates in 2025 is the value of toluene for gasoline blending compared to its value for chemical production. In 2022 and 2023, the toluene value into octanes was higher than going into an STDP for BZ and PX production. Feedstock toluene imports are poised to fall in 2025, a factor that would narrow STDP margins and further hamper on-purpose benzene production in the US in 2025. By Jake Caldwell Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: European BD to face tighter supply in 2025

24/12/30

Viewpoint: European BD to face tighter supply in 2025

Houston, 30 December (Argus) — European butadiene (BD) supply is expected to tighten next year, according to market participants, because of scheduled steam-cracker closures and steady demand. European domestic demand this year helped spot prices maintain a 5-7pc premium to the monthly contract price (MCP) until December, when spot prices fell to parity with the MCP. But the lower BD MCP in December protected Europe's position as the lowest cost region after three consecutive price rollovers, even as US and Asian prices fell. Market sentiment is cautiously optimistic on consumer demand for early 2025. One producer noted that interest for spot volumes remains strong into early next year and export sales should remain resilient, especially once buying interest picks up after the Lunar New Year. European BD exports — which primarily flow to the Asia-Pacific region with one-offs to the US— were stable at nearly one shipment per month from April-December, although they were down from the prior year. Europe's BD exports totaled about 109,700 metric tonnes (t) so far this year, but there are ongoing discussions for one additional long-haul shipment loading in late December. That said, the spread between Europe and the US is forecast to remain closer to parity, narrowing the premium European sellers have obtained from moving shipments eastward. Both planned and unplanned cracker turnarounds in the US may raise prices there and open space for Europe's coastal producers to periodically capture preferred access to Asian buyers, independent of logistical bottlenecks. Currency, crackers may pressure demand Currency fluctuations may dent buyers' confidence in the coming year as a stronger US dollar lifts costs for imports, affecting selling prices of European-origin exports in dollar terms. The outcome of the US presidential election rallied the dollar against the euro and other currencies, as markets price in expected tariffs from the new US administration. The comparative strength of the US economy also drove the rally. Strong European domestic demand could undercut potential BD exports as the region's supplies gradually transition from net-long to more balanced, with ongoing structural changes transforming Europe's chemical business. The closure this year of two steam crackers in France and the Netherlands along with the planned shut down of two more crackers in Italy will reduce regional supply of crude C4, a key BD feedstock. Buyers in Italy will need to rely more heavily on Mediterranean imports of crude C4 in tandem with BD to maintain derivative operations. Cracker operators next year are likely to keep throughput curbed while running lighter feedslates, limiting availability of additional volumes of crude C4 and BD. Rail logistical constraints will linger into 2025 with at least three BD consumers depending more on this mode of transportation. The European market could see additional restructuring next year, with at least one producer weighing a review of its asset portfolio. Market participants also are watchful for announcements of unexpected closures. BD producers in the region are also concerned about price volatility for natural gas, citing weaker margins. Dutch TTF on a day-ahead basis averaged €44.66/MWh month-to-date in December, rising by 27pc from the same period a year earlier at €35.24/MWh. Dutch TTF on a day-ahead basis reached a year-to-date peak on 21 November at €48.58/MWh. Higher natural gas prices are partially due to continued complications in gas transport and supply and to accelerated storage withdrawals. By Joshua Himelfarb Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Braskem eyes Brazil rebound

24/12/30

Viewpoint: Braskem eyes Brazil rebound

Sao Paulo, 30 December (Argus) — Major petrochemical producer Braskem aims to recover market share in Brazil in 2025, aided by higher tariffs and new duties on imports, after nearly two years of losses. Braskem posted $935mn of losses last year, with additional losses of $440mn spread across the first three quarters of 2024. Looking ahead to 2025, Braskem expects to increase its domestic share of polyethylene (PE) and polypropylene (PP) markets in Brazil, in part through higher import tariffs. Brazil raised tariffs on imported polymers to 20pc from 12.6pc effective on 15 October. That has already benefited the company, with sales in the fourth quarter expected to increase by $30mn from the previous quarter, Braskem said in November. Additionally, with fewer imports, Braskem's operating rates for plastic resins are expected to rise in the first quarter from around 64pc during the seasonally weak fourth quarter. In addition to the higher tariffs, Braskem is asking Brazil to apply anti-dumping duties on US- and Canada-produced PE. This could reduce the amount of this material coming into Brazil, which has surged in recent years. The case is being investigated. Braskem has requested duties on PE imports of 21.4pc from the US and 26.9pc from Canada. This would mean a 20pc import tax, plus a 21.4pc provisional dumping duty, totaling a 41.4pc tax on materials purchased from the US, and 46.9pc on Canadian PE. To put the numbers in perspective, Brazil imported 1.82mn metric tonnes (t) of PE in January-November, a 45pc increase from the same period a year before. Of the total figure, 77pc was bought from the US and Canada. Brazil's PE imports in November alone fell to 106,200t, 39pc lower than October and the lowest this year, showing the initial impact of the higher import duties. Still, November PE imports were up by 6pc from the same month in 2023 despite the 20pc import duty as well as the US dollar's appreciation to the Brazilian real since October. The Argentina case Braskem has looked to neighboring Argentina to recapture part of the sales lost to imports in Brazil during the year. Braskem's PE sales to Argentina have increased monthly through October, when the company became the largest PE exporter to Argentina. Argentina PE imports in October increased by 39pc from the same month in 2023, reaching 24,300t, a boost attributed to the reduction in the country's import duty to 7.5pc from 12.6pc in September. Brazil sold 46pc of that total, leading the market. North America lost its first position, falling to 42pc in October from 54pc a year earlier. January-October PE imports into Argentina fell to 226,800t, down by 19pc from the same period in 2023, with North America's share at 44pc and South America — represented solely by Braskem — at 39pc. Executive reshuffle As part of its efforts to become more competitive, Braskem reshuffled its executive board, aiming to improve operational efficiency and cost management. The company's new chief executive, Roberto Ramos, stepped into his role in early December, succeeding Roberto Bischoff. Ramos previously served as Braskem's vice president from 2002-2010. Ramos almost immediately announced changes for the positions of chief financial officer, head of the olefins and polyolefins South America unit, Brazil and global industrial operations, and Mexico and US operations. At the time, Braskem said that changes in the board would not affect plans for a possible sale of infrastructure company Novonor's controlling share in Braskem, Novonor said. Braskem's sale is of extreme importance to Novonor as it plans to use any proceeds to repay R14bn ($2.34bn) in debt to creditors. Braskem is the largest producer of thermoplastic resins in the Americas and a leader in biopolymer production. Fellow conglomerate Novonor holds a 38.3pc stake in Braskem with 50.1pc of voting shares, while Brazilian state-controlled oil company Petrobras holds a 36.1pc share with 47pc of voting capital. The remaining 25.6pc is split among other shareholders. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: rPET demand robust but challenges persist

24/12/30

Viewpoint: rPET demand robust but challenges persist

London, 30 December (Argus) — Europe's plastics recycling market will be supported by legislation and voluntary recycled content commitment goals in 2025. But lower costs for virgin polyethylene terephthalate (PET) resin and competitive imports will likely weigh on the sector. Recycled PET (rPET) is a plastic made from recycled bottles, containers and PET waste, and is the material most commonly used by packaging manufacturers to help meet their sustainability goals. New EU legislation should provide a stable level of demand for the recycling industry in 2025, with the Single Use Plastics Directive (SUPD) coming into effect on 1 January. The directive mandates collection and recycling targets for all member states, requiring PET beverage bottles to have a minimum recycled content of 25pc. But there are some uncertainties that undermine the security the legalisation was intended to provide. The SUPD mandates recycled goals at member state level, and so the responsibility to purchase and use rPET at a premium to virgin PET resin has not yet been passed down to individual companies. Some pushback from market participants in the value chain, which will bear the burden of the premium cost for recycled content, is anticipated. Another issue is that the penalties for member states not meeting the set targets have yet to be communicated. The impact of the SUPD will not be fully felt in Europe's rPET market until the consequences for not reaching goals are clarified and systems such as extended producer responsibility schemes are implemented to ensure equal compliance. This is unlikely to be before the second half of 2026 at the earliest. Although many large companies and fast-moving consumer goods (FMCG) brands have already set voluntarily recycled content targets for beverage bottles that go above and beyond the SUPD requirements, the recycling market is under pressure from wider economic concerns. A recovery in consumer packaging demand in 2024 has not been enough to prevent some brands from switching to lower-cost virgin PET resin, a dynamic that is expected to continue throughout 2025. Meanwhile, some brands have omitted 2025 targets from their sustainability reports and have scaled back their ambitions. . Availability of high-quality PET bale, likely to be used in food grade applications, has tightened towards the end of 2024 and could tighten further at the beginning of the new year, supporting prices in the first quarter when collection volumes are seasonally at their lowest. Demand from preform and packaging manufactures should return for the peak season of packaging consumption from March onwards, but market participants expect it to be lower than originally projected for 2025. Recyclers are well stocked and, in some cases, oversupplied with flake and food grade pellet volumes as a result of low demand throughout 2024. There is likely to be some pressure on flake and food grade prices in the first quarter and margins for recyclers may continue to be slim. Converters and packaging companies closely monitored inventory levels throughout 2024, purchasing on a hand-to-mouth basis. If end use consumer demand is stronger than expected over the peak summer season, flake and food grade prices may find support as market participants restock, allowing recyclers to regain some margin. But European recyclers continue to be concerned about competitive imports, with many calling for a level playing field . Market participants are worried that if demand picks up and the market begins to tighten, imports offered at significant discounts to European material will undercut recyclers and again weigh on European prices and recycler margins. Although the outlook for 2025 is uncertain for recyclers, there is some quiet optimism. It will be a year of transition and adjustment as the market adapts to the legislative changes and tries to mitigate the challenges endured over the past few years. By Chloe Kinner Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Consolidation looms in US methanol

24/12/27

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.

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