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11-17 April 2016 | ICIS Chemical Business | 11www.icis.com

THINK TANK

MARKET INTELLIGENCE

EU DI-ETHANOLAMINES

tonnes

Imports Exports

0

1,000

2,000

3,000

4,000

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20162015Source: Eurostat

concern for chemical producers. China now accounts for about half of global chemicals production and sales. The growth of its markets and production capac-ity over the past 10 year has been spectacular.

A 31 March post on the ICIS Chemicals & the Econo-my blog by International eChem chairman Paul Hodg-es considers the potential consequences of China’s cot-ton auction later in April.

The auction is seen as a key pointer for the global economy – not just for producers and consumers of the commodity worldwide and all producers in the poly-ester chain.

“A lot is hanging on this auction, which will also tell us whether President Xi Jinping has now taken full charge of economic policy,” Hodges said.

Di-ethanolamines (DEA) players are mull-ing the possibility that EU authorisation for the herbicide glyphosate may not be renewed. Glyphosate is one of the down-stream uses of DEA.

Members of the European Parliament (MEPs) in the Environment Public Health and Food Safety Committee (ENVI) are lobbying against the renewal of the glyphosate licence in the EU. Glyphosate is “probably carcinogenic” according to the World Health Organisation (WHO) and parliament is concerned it may also have endocrine disrupting properties.

“The European Commission should not renew the approval of the herbicide substance glyphosate on the EU market for another 15 years, until 2031, without any restrictions as proposed,” said the Environment Committee in a resolution.

The EU is a net exporter of DEA and one ethanolamine buyer suggested that a glyphosate ban would push these DEA exports higher. EU DEA exports rose elev-en-fold in January year-on-year, although this was mainly attributed to the strength of the US dollar against the euro.

A few ethanolamine sellers described the glyphosate discussion as long stand-ing and complicated, and suggested that a 100% EU ban would be unlikely.

They pointed to the fact, also, that if there were to be any ban on glyphosate in the EU, there would be a phasing out pe-riod. While some sources said the pos-sible ban of glyphosate usage in the EU would impact demand for DEA in Europe,

there are some mitigating options includ-ing output cuts and converting DEA into other homologues.

One ethanolamines producer, however, said that converting DEA to other homo-logues can only be done to a limited ex-tent. It would depend on technology and require investment and higher costs.

Some players maintain that DEA de-mand into glyphosates in the EU is rela-tively small when compared to the larger glyphosate market in other regions, par-ticularly the US and South America.

The impact of a ban on ethanolamines, therefore, might be relatively limited. And there are other end-use markets for DEA such as industrial surfactants and polyu-rethanes where demand is steady.

There is some talk that if the EU were to ban glyphosate use, other regions may take a similar approach, with potentially longer term and more sizeable effects on global DEA demand.

But at least one main European etha-nolamines producer remains unfazed. “The effects on DEA are long term,” it said. “Glyphosate will take 10-20 years to be forbidden or phased out, if it is at all.”

If the EU were to ban glyphosate, other regions may take a similar approach

HEIDI FINCH LONDON

EU DI-ETHANOLAMINES EXPORTS SOAR

The problem for the eurozone, currently, is the weak manufacturing performance of Germany, which more or less stagnated for the second successive month, and that of France, which fell back

China has enough cotton stocks to make three pairs of jeans for everyone on the planet.

It has enough polyester capacity now to supply total world demand so lower prices for cotton would put in-tense pressure on polyester and across the textile chain.

EUROZONE TICKS HIGHERMarch and first quarter manufacturing PMIs for the eu-rozone, published by research company Markit, did not deliver good news.

The eurozone manufacturing sector expanded slightly in the first quarter and the monthly PMIs showed steady gains.

“Although the PMI ticked higher, March still saw the second weakest improvement in manufacturing conditions seen for just over a year,” said Markit chief economist Chris Williamson.

“The data suggest manufacturing grew by only around 0.2% in the first quarter, acting as a drag on the wider economy.

“Policymakers will also be worried by the further intensification of deflationary pressures in manufac-turing supply chains, with prices charged at the facto-ry gate falling at the steepest rate since late-2009. Dis-counting was widespread as firms competed on price amid weak demand.”

The problem for the eurozone, currently, is the weak manufacturing performance of Germany, which more or less stagnated for the second successive month, and that of France, which fell back.

“Both Germany and France also saw especially dis-appointing export trends, exacerbating weak domestic demand in the case of France,” Williamson said. ■Nurluqman Suratman and Joseph Chang contributed to this article

PRICE & MARKET TRENDS

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NORTH AMERICAJESSIE WALDHEIM HOUSTON

US April benzene surges Demand for benzene during first quarter has been healthy in all derivatives, especially for styrene production. The sharp move in contract prices is in line with expectations

The US April benzene contract price settled at $2.17-2.19/gal on 31 March, up 41 cents/gal from March levels, according to mar-ket sources.

The sharp increase for the April contract comes in the wake of significantly higher spot prices during the previous week than during the week prior to the March contract.

US benzene contract prices are typically settled on the last day of the prior month and are heavily influenced by prices in the spot market.

Spot prices prior to the April contract settlement ranged $2.14-2.18/gal DDP (delivered, duty paid), compared with $1.74-1.80/gal DDP prior to the March contract.

The April settlement also is in line with market expectations

for a sharp increase to contract prices, although one source in the styrene market noted the set-tlement had not yet been accept-ed by all buyers.

The March contract had set-tled at multi-year lows amid benzene spot prices under pres-sure from high levels of US ben-zene imports in January and February, as well as from a turn-around in downstream styrene in February.

US benzene imports for Janu-ary had been slightly higher than the prior month, according to data released by the US Interna-tional Trade Commission.

However, benzene values dropped drastically in January, partly because of a nearly five-times increase in volumes from South Korea from the prior month.

Venezuela’s polyethylene (PE) production is working well, a source familiar with the PE mar-ket said on 30 March.

The country’s only low density polyethylene (LDPE) plant was said to resumed operations after shutting down as part as a follow-up to a previous stoppage.

In recent months, LDPE produc-tion at Polinter was “intermittent” because of a technical problem. Polinter is controlled by Pequiven, which also supplies the feedstock ethylene for the PE production. Ethylene supply continues at its normal levels, the source said.

Some PE resins are used to produce food-related packaging. End users have complained about the lack of packaging for the food industry.

Finding foreign suppliers has been difficult because of long de-lays and a complex process needed to obtain US dollars. The govern-ment controls access to foreign cur-rency necessary to buy imports through the Comision de Adminis-tracion de Divisas (Cadivi).

In addition, raw material and resin prices formerly traded using the SICAD exchange are now at the Marginal System of Foreign Ex-change, or SIMADI

In February, prices for Vene-zuela’s domestically produced polyethylene (PE), jumped six- to eight-fold to bolivares (Bs) 245,000-285,000/tonne for PE, another source said.

Venezuela has numerous ex-change rates, making conversions difficult. Using an exchange rate of Bs200 to the US dollar, domestic prices for PE would be $1,225-1,425/tonne.

Another problem comes from a electrical power shortage. As a re-sult, the government has mandated water and energy rationing throughout the country.

The El Nino weather pattern has also caused droughts in Venezuela, worsening the energy crisis by lim-iting hydroelectric production. ■

LATIN AMERICAMARIANELA TOLEDO HOUSTON

Venezuela PE returns to normal

South Korea is a primary source for US benzene im-ports, and shipments from that country are watched closely, as expected import levels from the region can impact US ben-zene sentiment.

Imports from South Korea for February had been expected to remain at high levels, keeping downward pressure on the US benzene market.

Further downward pressure resulted from a month-long turn-around in downstream styrene.

SOUTH KOREA IMPORTSHowever, that pressure eased in early March.

Imports inbound from South Korea were heard to be much lower than January or February levels. Additionally, the styrene turnaround was completed in early March, allowing full capac-ity for benzene consumption in the styrene sector.

Demand for benzene during first quarter has been healthy in all derivatives, especially for sty-rene production, the largest con-sumer of US benzene.

The US styrene market has re-mained tight after multiple shut-downs in early 2015 and strong export demand that has been persistent since late 2015.

Stronger and less volatile up-stream crude oil futures also of-fered support to benzene prices during March.

However, the spread between US spot benzene prices and NYMEX West Texas Intermedi-ate (WTI) crude oil futures ex-panded to an average for $1.17/gal during March

This is compared with $1.08/gal during February. The spread had averaged $1.21/gal during 2015.

Major US benzene producers include ExxonMobil, Flint Hills Resources, LyondellBasell, Mar-athon Petroleum, Shell and Phillips 66. ■

Millions of litres $/gal

Average monthly spot priceImports from South Korea

US BENZENE SPOT PRICES VS IMPORTS FROM SOUTH KOREA

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US WTI/SPOT BENZENE SPREAD

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Jan2015

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Asia propylene spot prices are poised for a stable-to-soft outlook from April onwards, with both do-mestic and spot supply expected to lengthen as several new capacities come on stream, industry sources said on 4 April.

In April or May, current propyl-ene consumer Haiwei Group which operates a 300,000 tonne/year polypropylene (PP) plant in Hebei, will become a net propyl-ene seller when it starts up its 500,000 tonne/year propane de-hydrogenation (PDH) plant in Hebei, China. Separately, in mid-May, CNOOC Ningbo Daxie Pet-rochemical in Zhejiang is expect-

ed to begin trial operations at its deep catalytic cracking (DCC) unit with a propylene capacity of 420,000 tonnes/year, according to market sources.

One of the region’s most closely-watched development – SK Ad-vanced’s 600,000 tonnes/year PDH plant in Ulsan, South Korea – had also started up in the week ended 11 March. The plant is not integrat-ed with any downstream unit.

These additional capacities are likely to result in a net surplus of propylene supply from Q2 on-wards There are also several new derivative plants in the pipeline.

Fujian Meide Petrochemical is

expected to achieve on-spec pro-duction at its new 350,000 tonne/year PP plant in Fuqing, Fujian by the end of the month.

South Korea’s Kumho P&B Chemical’s new phenol/acetone plant is on track to start up towards the latter part of second quarter, with the capacity to produce 300,000 tonnes/year of phenol and 180,000 tonnes/year of acetone.

With the impending arrival of additional propylene capacities, spot propylene prices in northeast Asia started to show signs of weak-ness in the week ended 25 March.

Spot prices were assessed at $700-720/tonne CFR (cost & freight) NE (northeast) Asia, lower by $15/tonne at the high end from the previous week, according to ICIS data.

Buying interest in northeast Asia turned slightly weaker after SK Advanced begun exports from its new PDH unit, even though market sources were divided on the plant’s operating status. The company could not be reached for comment.

Lengthening propylene sup-ply in southeast Asia has also closed the arbitrage window, with Thai producer IRPC said to

be starting exports from its new DCC unit in Rayong with a pro-pylene capacity of 320,000 tonnes/year by early April.

Propylene prices have yet to suf-fer a steep decline in northeast Asia, partly supported by stable-to-firm domestic prices in China as well as curtailed production and upcoming shutdowns at some quarters.

Wanhua Chemicals in Yantai, Shandong was said to be still main-taining low operating rates of about 65% at its 750,000 tonnes/year PDH unit due to production issues, while Zhangjiagang Yangzijiang Petrochemical may have plans to shut its 450,000 tonne/year PDH plant in Zhejiang for maintenance in early April, according to a com-pany source.

In other parts of northeast Asia, South Korea’s YNCC cracker in Yeosu with an annual propylene capacity of about 280,000 tonnes has shut for turnaround from 10 March till April.

Formosa Petrochemical Corp (FPCC)’s 375,000 tonnes/year re-sidual fluid catalytic cracker (RFCC) unit in Mailiao, Taiwan, is still shut for turnaround from 1 March until 10 April. ■

Asia’s bisphenol-A (BPA) prices rose to an eight-month high and may continue to increase, under-pinned by limited spot cargo avail-ability amid plant turnarounds, and a strong rally in Chinese do-mestic prices, market sources said on 4 April.

On 1 April, spot BPA prices av-eraged $1,085/tonne CFR (cost and freight) China, an 8% increase from the preceding week to levels not seen since July 2015, according to ICIS data.

“April-May… is a peak period [for plant turnarounds] that will

see limited spot supply and re-newed buying to replenish low in-ventories,” a northeast Asia-based source said. Several BPA plants in northeast and southeast Asia are operating at below full capacity or carrying out scheduled mainte-nance at their plants, squeezing availability of spot cargoes.

Major regional producer Kumho P&B Chemicals is carrying out reg-ular maintenance at one of its two 150,000 tonne/year BPA lines in Yeosu, South Korea. The planned shutdown began in early March and is expected to last until mid-

2 COLUMN CHART TO GO HERE


ASIAMICHELLE LIM SINGAPORE

Soft outlook for Asia propylene in Q2Startup of new unintegrated plants will bring large volumes of new supply to the market

April, according to a source close to the company. In Thailand, PTT Phenol has planned turnaround at its 150,000 tonne/year BPA plant in May that is expected to last for

30-40 days. Recent gains in up-stream phenol and escalating Chi-nese domestic BPA prices were also driving up the regional spot prices, industry sources said. ■

ASIAMELANINE WEE SINGAPORE

BPA at high on supply$/tonne, spot CFR China

ASIA BPA

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US butadiene (BD) contracts for April have settled at significant in-creases of 5-6 cents/lb ($110-132/tonne), market sources confirmed on 31 March, on the back of the re-cent uptrend in domestic spot and global prices.

While an overall price hike had been expected, the April settle-ment was said to be an “overkill”, as most market participants had been anticipating an increase of 3-5 cents/lb. The US BD spot market had been trending up as sellers and traders took advantage of the arbi-trage to Asia, where prices had spiked by more than 30% since early February because of tight supply there.

From the US, four cargoes total-ling about 22,000 tonnes of BD were fixed for March and April loadings for export to Asia.

In comparison, the US exported only about 6,000-7,000 tonnes/

year to Asia in 2015 and 2014. Still, when the first US April BD contract nomination emerged at an increase of 8 cents/lb, market sources expressed surprise that the targeted hike was “too much – way too much”.

“I anticipated an increase, but I did not expect North America to follow so aggressively,” a buyer said. “Looks like they are trying to capitalise on the bubble in Asia. However, I don’t see that bubble lasting much longer.”

The Asian uptrend began stall-ing in mid-March, and prices there began slipping as buyers retreated to the sidelines, supporting senti-ment that demand is too weak to sustain the recently high levels.

Although some US April con-tract nominations were revised to smaller increases, the overall set-tlement was still “a bit higher” than what most market partici-

pants had been expecting. “As usual, the US guys are aggressively raising prices just as Asia is fall-ing,” another buyer said. “It is quite possible that the arbitrage will not only close but reverse.”

Additionally, European BD con-tracts had settled at increases of €90/tonne ($101/tonne).

“Europe is still well below us so the US closing the gap on Asian prices opened up further arbitrage of European material,” another buyer said. US supply has been

ample as new ethylene capacity, as well as the cracking of heavier feedstocks such as propane and butane, have resulted in more pro-duction of BD.

Supply has lengthened further in 2016 as US BD consumers are buying more contractual volumes from European suppliers.

Looking ahead, market sources are expecting some length in both US and European BD markets in May, which could put some pres-sure on near-term pricing. ■

US acrylic acid and acrylate esters free-market contract prices settled broadly flat for March on 30 March on steady conditions and weaker February upstream propylene – two factors that most buyers said provided no rationale for gains yet.

Despite one producer’s conten-

tion that it had achieved its pro-posed March increases of 4-5 cents/lb ($88-110/tonne) among many of its customers, only one buyer contacted in March said it paid more for its acrylates in March versus February.

Other buyers were adamant that

they took no increases for March, but conceded that they might not be able to avoid higher prices in April given stronger March propyl-ene and the expectation of height-ened demand beginning 1 April, which is the start of the US spring paint and coatings season. In the US acrylates market, the prior month’s propylene price move-ment typically informs the current month’s acrylate prices.

Architectural coatings demand usually peaks in the spring and summer if weather patterns are co-operative. Sources continue to de-scribe current demand as healthy but steady, with no significant up-tick yet in spring buying activity versus the same time a year earlier.

Customers buying on a propyl-ene-formula basis took small de-creases on the 1.5 cent/lb decline in February’s propylene contract

settlement, while the March rollo-vers allowed producers some mar-gin gain from customers buying on a freely negotiated basis.

The March propylene contract increased by 1.5 cents/lb, leading buyers to expect broad price-hike efforts to surface for April, or for some of the March efforts to be pushed forward for April.

So far, however, April price ini-tiatives have surfaced from only one producer.

BASF, which was the only one of the three major domestic pro-ducers that did not seek March increases, had proposed increases of 5 cents/lb for glacial acrylic acid (GAA) and the esters, effec-tive 1 April.

The rollover held GAA contract values steady for March at 74-78 cents/lb FD (free delivered), as as-sessed by ICIS. ■



NORTH AMERICATRACY DANG HOUSTON

April BD up 5-6 cents/lb

NORTH AMERICALARRY TERRY HOUSTON

US acrylates contracts settle flatBuyers concede they may not be able to avoid higher prices in April on higher propylene and seasonal demand

Cents/lb, contract FOB US Gulf

US BUTADIENE

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Cents/lb, glacial, contract FD

US ACRYLIC ACID

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Sentiment in the US ethyl ace-tate (etac) market was mixed on 29 March as to whether or not increases sought separately for 1 April will be accepted.

The current etac distributor price, as assessed by ICIS, is 47-50 cents/lb ($1,036-1,102/tonne) DEL (delivered). The spot price is 44-47 cents/lb.

US producer Eastman Chem-ical announced a 5 cent/lb ($110/tonne) increase, effective on 1 April or as contracts allow, on 14 March, citing elevated operating costs, especially in raw materials.

Celanese separately an-nounced a 5 cent/lb increase, ef-fective on 1 April or as contracts

allow, on 16 March, but did not provide a reason for the increase initiative.

South African producer Sasol

separately announced a 5 cent/lb increase, effective on 1 April or as contracts allow, on 17 March, and said the hike was in re-

sponse to market conditions. A producer said its announcement was an effort to get the increase previously sought late in 2015, which was not fully accepted by the market.

One distributor source said that with prices at historic lows, it could see the full increase being accepted.

A different distributor source suggested that market funda-mentals could lead to only 2-3 cents taking hold.

The distributor price is at its lowest since ICIS began quoting the US Northeast/Midwest (NE/Midwest) delivered (DEL) price in August 2007. The spot price is at its lowest since May 2005. ■

The European polyolefins market is poised to see major price increases in April amid feedstock hikes, strong demand and supply constric-tions from planned outages. Poly-ethylene (PE) sellers have begun to inform their customers of big hikes for April, in spite of the uncertainty in the upstream ethylene market, sources said on 31 March.

“One producer has told me they are looking for 100 [€/tonne in-crease],” said one large buyer. An-other said its producer was talking of the same sort of increase, while another said one of its sellers was looking for whatever the increase in the April ethylene contract turns out to be, plus €25-30/tonne.

The April ethylene contract is not yet clear, and the initial settle-ment done on 30 March, up by €50/tonne, at €860/tonne FD (free delivered) NWE (northwest Eu-rope), has not yet been followed.

Some sources in the European PE industry were wondering if an-other, higher, settlement might yet be done. Spot PE prices have risen sharply in March but monthly pric-

es have mainly rolled over, in spite of the €20/tonne drop in the March ethylene contract. Several buyers said that one producer in particular was still pushing for a €20/tonne hike for March but there was a good deal of resistance to it.

Buyers fear that some increase will have to be paid in April as some PE grades are tight and prices are rising globally.

Polypropylene (PP) buyers in Europe are being informed about substantial prices hikes for April, following the settlement of the April propylene contract at an in-crease of €60/tonne on 31 March, several said on 1 April.

“They [some producers] have told me they want to increase by 80-90 [€/tonne],” said one buyer, “but nothing is firm yet.”

Demand was already turning out to be strong for April and there was concern over supply in the coming weeks as several planned produc-tion outages were expected to tight-en supply. PP producers also say they had a stellar year in 2015 with European demand rising by 6%.

Downstream convertors also claim they had a bumper year in 2015.

Several buyers had been in-formed they could only expect to get arranged contracted volumes and no more during these outages. Producers generally have low stocks, several said.

There has been a good deal of concern among buyers over the new improved spread that produc-ers have managed to secure be-tween propylene and PP, and this new move would increase the

spread further. One seller said its supply was so limited that it need-ed to control buying as it could sim-ply not supply more than normal contractual quantities.

“Some of our grades are very tight, particularly on some grades for seasonal [applica-tions],” said another.

Spot PP prices have firmed sig-nificantly in recent weeks, and this upward move in Europe mirrors the global upward trend currently seen in the PP sector. ■



EUROPELINDA NAYLOR LONDON

PE, PP market poised for big hikesThere is talk of producers seeking a €100/tonne increase for PE and €80-90/tonne for PP

Sentiment mixed on etac hike plansNORTH AMERICAADAM YANELLI HOUSTON

€/tonne, spot FD NWE

Propylene Polymer Grade PP Homopolymer InjectionLDPE GP Film

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US ETAC

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Manufacturing activities in Asia showed signs of improvement in March, with Chinese industries back in expansionary mode for the first time since July last year, based on results of various offi-cial and private surveys of indus-tries in the region.

China, the world’s second larg-est economy, posted a purchas-ing managers’ index (PMI) read-ing above 50, indicating expansion after languishing in contractionary mode for eight consecutive months.

The PMI is a barometer of an economy’s manufacturing activi-ty, with a reading above 50 indi-cating expansion, while a reading below 50 denotes contraction.

China’s official manufacturing PMI rose to 50.2 in March from 49.0 in the previous month, but Chinese media group Caixin had a lower PMI reading for the coun-try at 49.7, an improvement from February’s 48.0.

The Caixin survey is based on smaller private enterprises, while the official data target larg-er state firms.

“All categories of the index showed improvement over the previous month,” said Caixin Insight Group chief economist He Fan.

“The output and new order categories rose above the neutral 50-point level, indicating that the stimulus policies the government has implemented have begun to take hold,” he said.

ASIANURLUQMAN SURATMAN SINGAPORE

China factory activity improvesThe official China manufacturing PMI enters expansion mode for first time in nine months. Other countries also improve

“The output and new order categories rose above the neutral 50-point level, indicating that the stimulus policies... have begun to take hold”HE FANChief economist, Caixin Insight Group

ASIA MANUFACTURING SURGE

Purchasing Managers' Index (PMI) Mar 2016 Feb 2016

China official PMI 50.2 49

Caixin PMI for China 49.7 48

Japan - Nikkei 49.1 50.1

Vietnam - Nikkei 50.7 50.3

Malaysia - Nikkei 48.4 47.8

Indonesia - Nikkei 50.6 48.7

Taiwan - Nikkei 51.1 49.4

South Korea - Nikkei 49.5 48.7Source: Markit, China National Bureau of Statistics

Meanwhile, China’s official services PMI rose to 53.8 in March from 52.7 in February, ac-cording to the National Bureau of Statistics (NBS).

The March PMI data points to a recovery in China’s economy following the recent slowdown.

“We expect China’s economic growth to remain strong at 6% or more annually through at least 2019, corresponding to per capita real GDP growth of above 5.5% each year,” ratings firm Standard & Poor’s said in a note.

“These projections reflect our view that the Chinese govern-ment will seek to boost public investment that are financed by strong credit growth to support the economy… The latest Chi-nese five-year plan calls for av-erage growth of about 6.5% an-nually in the 2016-2020 period,” it said.

OTHER COUNTRIES IMPROVEElsewhere in Asia, South Korea, Taiwan, Vietnam and Malaysia recorded improvement in PMI readings by Japanese media firm Nikkei, in collaboration with market information services pro-vider Markit.

Nikkei’s manufacturing PMI for South Korea rose to 49.5 in March, up from 48.7 in February.

“Production contracted at a slower rate, supported by a stabi-lisation in new orders. This sug-gests that the downturn in official

manufacturing production will ease from January’s six-month low [down by 2.1% year on year],” Markit economist Amy Brownbill said.

South Korea’s exports fell for the 15th consecutive month in March, falling by 8.2% year on year to $43bn, according to the country’s Ministry of Trade, In-dustries and Energy (MOTIE).

The continued contraction in exports has been attributed to the slowdown in China, which takes in about a quarter of South Korea’s overall exports.

For Taiwan, the Nikkei man-ufacturing PMI reading rose to 51.1 in March from 49.4 in Feb-ruary, on the back of higher production and overall new business.

“The PMI pointed to a modest rebound in Taiwan’s manufac-turing sector, with output and new business both rising in March and offsetting declines in February,” said Annabel Fiddes, an economist at Markit.

“Unless global economic con-ditions start to improve and de-mand picks up, it is uncertain whether Taiwan’s manufactur-ing sector can sustain the cur-rent upturn in growth momen-tum into the second quarter,” Fiddes said.

In southeast Asia, Indonesia posted an expansionary PMI of 50.6 in March from February’s 48.7, ending 17 months of con-

traction, based on Nikkei’s read-ing. The increase was driven by the domestic market, as new ex-port orders contracted further, according to Nikkei.

“With the sector having final-ly moved into expansion territo-ry, firms will be looking for signs of a convincing recovery taking hold before hiring additional workers,” said Markit economist Pollyanna De Lima.

“If cost inflation continues to ease, Indonesian manufacturers may look to gain a competitive edge through cutting output prices,” De Lima said.

JAPAN DETERIORATESIn Japan, operating conditions at domestic manufacturers deterio-rated at the end of the first quar-ter of 2016, with a Nikkei PMI reading of 49.1 in March – the lowest in more than three years and down from 50.1 in February.

“This was partly caused by a weaker contraction in total new orders which decreased at the slowest rate in ten months,” said Markit’s Amy Brownbill.

“The latest PMI data suggests that an increase in international demand was the primary factor helping to ease the fall in total new work intakes. An expansion in new exports was attributed by panellists to the weak exchange rate boosting competitiveness,” Brownbill said.

On 30 March, Japan reported a 1.5% year-on-year decline in February industrial output, eas-ing from a 3.8% contraction reg-istered in January.

On a month-on-month basis, the country’s industrial produc-tion fell by 6.2% in February – the most since the March 2011 earth-quake – as exports continued to fall, aggravated by a halt in domes-tic car production at major au-tomaker Toyota Motor following an explosion at the company’s steel mill, according to Singapore-based UOB Global Economics & Markets Research. ■



European fully refined paraffin wax prices have decreased for April amid competition with com-petitively priced Chinese material, sources said on 30 March.

Although the price of Chinese imports has increased slightly in recent weeks to around $1,050/tonne CIF (cost, insurance, freight) NWE (northwest) Europe, and is in solid slab form that requires €50-60/tonne to convert to liquid, these prices still compare favourably with domestic material.

Another factor undermining do-mestic prices is slow demand, con-sumers said, which is normal for this time of year.

The availability of Chinese ma-terial may not benefit all consum-ers, however, according to some.

One noted that smaller consum-

ers may not have the facilities to take shipments, and also that the most of the Chinese material has not arrived in Europe yet.

As such, some smaller players that do not have large inventories may be forced to buy from domes-tic supplier in any case.

The buyer said its domestic sup-plier has not given April pricing indications, and did not rule out a rollover from March on the basis of the reasoning above. In such an event, the buyer said it will simply purchase much less from the sup-plier. Other consumers spoke of decreases between €30-70/tonne, with greater discounts being ap-plied to the lowest melting point grade, 52-54 degrees. It believed this is linked to the fact that this grade was previously tight and saw

greater increases than other grades. A refiner said it faces losing out on sales if prices in April are not re-duced by €40-50/tonne.

Fully refined wax with a melt-ing point of 52-54 degrees has been

assessed at €1,070-1,130/tonne FD (free delivered) NWE, down €60/tonne, while that with a melting point of 56-58 degree is at €1,100-1,150/tonne FD NWE, down €30-50/tonne. ■


European isopropanol (IPA) and methyl isobutyl ketone (MIBK) players expected feedstock pro-pylene prices to rise in April with trickle down effects on solvents markets, according to sources on 29 March.

By 31 March, the European propylene monthly contract price for April has fully settled at €620/tonne, up by €60/tonne from March, as confirmed by two buyers and two sellers.

The initial settlement, which was agreed on an FD (free deliv-ered) NWE (northwest Europe) basis, was reached between one buyer and one seller.

This was then followed short-ly after by a second buyer and second seller.

The contract settlement is fully confirmed when there is the 2+2 buyer and seller support.

The plus €60/tonne is linked

to a feedstock increase over the past month, along with market factors, according to some of the settling parties.

“The supply and demand bal-ance justifies slightly more than the feedstock increase,” said the initial settling buyer.

The initial settling seller said the propylene market is much better than it was, noting it was much more balanced. In addi-tion, demand is also good, said some of the settling parties.

IPA typically sees a cost pass-through of 77% of the propylene price change every month. Pro-pylene is also the major feed-stock for acetone, which in turn is used to produce MIBK.

One producer said that it has already announced a spot price increase of €50/tonne for IPA in April, although this has not yet been accepted by the buyers’

side of the market. Another pro-ducer is said to have increased prices slightly, although this could not be confirmed to have been passed through to the buy-ers’ side.

The IPA market is considered balanced, while MIBK is regard-ed as more balanced-to-long. However, demand has picked up somewhat towards the end of the month as players have aimed to secure material before possi-ble price increases in April.

Downstream sales are also ex-pected to rise in April due to the

better season for the downstream coatings industry. “[We are] hopeful for April. [It is] better for construction and coatings, April-June are the better months of the year,” a trader said.

It added: “To be honest so far this year March [was] by far the best… Jan and Feb [were] slight-ly disappointing.”

IPA technical grade spot pric-es were assessed at €650-700/tonne free delivered (FD), while MIBK spot was assessed at €830-880/tonne FD, both rollovers from the previous week. ■


EUROPECHRIS BARKER & HEIDI FINCH LONDON

Propylene rise to pressure solvents

EUROPEROSS YEO LONDON

Paraffin wax falls on China importsFully refined wax with a melting point of 52-54 degrees has been assessed down €60/tonne

€/tonne, technical, spot FD NWE truck

EUROPE IPA

500

600

700

800

900

1,000

1,100

Mar2016

Apr2015

€/tonne

MP 60-62°C FD NWE DomesticMP 52-54°C FD NWE DomesticSpot Chinese Origin CIF NWE

EUROPE P-WAX

900

1,000

1,100

1,200

1,300

Mar2016

Apr2015




Beverage ethanol prices are under significant pressure in Germany thanks to boosted competition from new market players, according to sources on 30 March.

Buyers have won rollovers and even decreases ranging from €1/hl up to €2.5/hl as increased production capacity in the coun-try saw sellers fight it out for market share.

Several market players are still to finalise agreements. As such, the ICIS quarterly price

range remains unchanged pend-ing further market feedback.

It seems two new players in Saxony Anhalt, a region to the west of Germany, are offering competition to the existing suppliers.

Cargill’s Barby plant has final-ly begun offering product to the market earlier this year, after a delayed start-up, while CropEn-ergies has recently converted 60,000cbm at its Zeitz fuel etha-nol site.

One seller said: “We felt the

competition of course of Barby, Cargill and also Zeitz had enough volumes. Everybody has enough volume. Because of new capacity we had a lot of volumes available and we didn’t succeed with a rollover.”

The buy-side has been win-ning the argument against flat prices in some cases.

Another seller said: “There’s no story to tell about the market right now which means a lot of buyers are trying of course to re-sist and reverse the trend. In some areas… Germany for ex-ample, the impact of new plants is a little bit stronger than I would have expected… Some price reductions are already in the [pipeline].”

Traders have been calling around to offer material, while product from Eastern Europe could also be making itself felt in Germany, suggested one of the sources.

One European producer which was in the midst of negotiations said it was overall anticipating a rollover across Europe. ■

Price increases in the US truck and rail markets for aromatic solvents appeared as values rose for tolu-ene. Truck and rail toluene deliv-ered to the US Gulf and Midwest rose by 1.5 cents/lb ($33/tonne) to 32-33 cents/lb and 34-36 cents/lb, respectively. Xylene prices held steady at 30.50-31.50 USG and 34.50-36.50 Midwest.

Truck and rail toluene and xy-lene sell at a premium to the barge markets, and price movements can lag by two to three weeks. Differ-ences in freight costs also impact

values. Sources said an increase for xylene in the same amount has been announced for 1 April.

Truck and rail toluene and xy-lene have been priced at parity for several months, but a distributor source said it could see xylene prices climbing above toluene val-ues in the near term.

Assessed values for ARO 100 and ARO 150 held steady. Ali-phatic solvent prices were flat, al-beit at the high end of the range for mineral spirits high and min-eral spirits low. ■

Pricing in the European mixed xy-lenes (MX) market continues to fol-low Eurobob gasoline movements, sources said on 31 March, with the switch to summer grade specifica-tions pushing numbers above $450/tonne.

Availability for MX outside of contractual business remains lim-ited, with extraction rates low due to the shrinking chemical demand within Europe. One buyer in the distribution sector said that tolu-ene has historically been the more liquid product in comparison to MX, and that any additional vol-umes needed could always be found in the spot market.

Additional requirements for MX have to be sourced directly from producers in most cases, or from traders in the market with these volumes. However, premiums for toluene over Eurobob gasoline have edged slightly higher than those of MX. Several traders quot-ed premiums for MX over April gasoline at $110-115/tonne, while toluene premiums were valued around $120/tonne.

Looking ahead into Q2, players expect the MX market to follow gasoline in terms of FOB pricing as long as crude oil prices remain low.

Higher fuel consumption and the growth of automotive use in Asia and Africa will support de-mand for exports out of Europe, as aromatics remains a cost effective option for gasoline blending. ■


EUROPETRUONG MELLOR LONDON

MX market to follow gasoline in Q2 2016

NORTH AMERICAADAM YANELLI HOUSTON

US truck, rail toluene up 1.5 cents/lb

EUROPEVICKY ELLIS LONDON

Germany ethanol market feels the competitionThe buy-side has been winning the argument against flat prices in some cases

$/lb, rail and truck, domestic spot DEL US Gulf

US TOLUENE

0.30

0.35

0.40

0.45

0.50

Mar2016

Mar2015

€/hl

Fuel ethanol, FOB Rotterdam Germany 96% beverage ethanol FD

EUROPE ETHANOL

40

45

50

55

60

65

70

Mar2016

Apr2015

$/tonne, solvent-grade, spot FOB Rotterdam

EUROPE XYLENES

400

500

600

700

800

900

Apr2016

Apr2015



The mood of the sulphur sector, particularly in China, has been lifted by the return of specula-tors to the market, with further support coming from a large vol-ume phosphates tenders in India, sources said on 1 April.

Following five weeks of price falls, benchmark spot prices in China nudged up on the return of speculators and are now pegged in a $85-96/tonne CFR (cost and freight) China.

“I noticed speculators com-ing back. Retail levels have been pushed higher to $90-92/tonne, but users remain cau-tious as downstream sales are still. We will see how the mar-ket will develop,” said a Chi-nese sulphur trader.

The higher prices in China also helped prop-up export pric-es out of Vancouver, despite at-tempts by some buyers to push them into the low-$70s/tonne FOB (free on board).

A major North American ex-porter said: “Vancouver is high $70s. We were being pressured to the mid-$70s but a price pop in China seems to be giving sell-ers more resolve. Didn’t see that coming at all.”

MARKET FLOOR REACHED? Although higher prices were talked about, particularly in China, the general consensus was the market had simply

reached a floor and this was not the start of a sharp upturn.

Phosphates demand and pric-es were still not strong enough to pull the sulphur market out of the doldrums, sources agreed.

In addition, the metal mar-kets are still not performing well and numerous caprolactam producers are going into spring shutdowns.

The market had been eagerly waiting for Tasweeq to an-nounce its April Qatar Selling Price (QSP) which was made public on 30 March at $78/tonne FOB Ras Laffan, down $9/tonne. The price was deemed re-flective of the current market, especially with freight from the Middle East to China at around $10/tonne.

In Brazil, Anglo American’s tender was heard to have awarded in the low-$80s/tonne CFR Santos for ex-FSU material and Mexico’s Minera y Meta-lurgica del Boleo (MMB) bought a 25,000-tonne cargo in the low-$80s/tonne FOB from the West Coast.

While the market seemed a touch more positive on the sell-ing side, the slide in prices since November 2015 was clearly cre-ating some serious downward pressure for Q2 contract sellers.

Sellers said Office Cherifien des Phosphates (OCP) Morocco was being particularly aggres-

sive and pushing for a significant decrease from Q1 to Q2.

OCP was heard bidding in the $60s/tonne FOB netback equiva-lent, while one Middle East sell-er said its best offer was in the mid-$80s/tonne CFR.

EUROPE LOOKS FOR FALLSIn Europe, too, buyers want in-ternational falls to be reflected in their Q2 contract prices. Negoti-ations are in early stages, but re-ductions of $20-25/tonne from Q1 were frequently mentioned.

“European sulphur is the most expensive in the world,” said a buyer.

“Buyers need to push for a steep reduction this time around. Just look where China is at the moment. Everything is in the $80s/tonne CFR [cost and freight]. Look at Africa and Brazil both in the $80s,” the buyer added.

The European Q1 contract price settled at $132-143/tonne delivered Benelux, down $5/tonne from Q4.

Turning to North America, prices were holding at either side of $80/tonne FOB Vancou-ver despite attempts by sellers to push them to the low/mid-$70s/tonne FOB. On the west coast, inventories were described as comfortable.

For the Q2 US Tampa con-tract, producers are understood to be starting negotiations with a $20-30/long ton price reduction.

The Q1 Tampa contract set-tled at $95/long ton. ■

Domestic supplies of polyethylene (PE) will likely tighten in April due to a shortage of ethane, a source familiar with the matter said on 31 March.

Limited production from Pemex and higher demand is causing the shortage, the source said. As a re-sult, it is expected that production related to ethane, ethylene and PE will be hampered in April.

Low density polyethylene (LDPE) was said to be grade that is affected the most as a train at Pemex’s La Cangrejera site remains down because of maintenance. In addition, ethylene inventories are still recovering after a cracker was shut down for 10 days in March.

Meanwhile, there are problems with resin supplies from Brazil and the US, a PE processor said.

The processor explained that Brazilian material is being sold into the market as part of the mar-keting efforts for Ethylene XXI. However, that material is no longer in stock in the market, the source said. Ethylene XXI, a 75:25 joint venture between Brazil’s Braskem and Mexico’s Idesa, includes a 1.05m tonne/year ethane cracker, a 750,000 tonne/year high density polyethylene (HDPE) unit and a 300,000/year LDPE unit. Recently, Ethylene XXI started receiving ethane from Pemex.

The processor was reluctant to believe that HDPE production will begin in April, but other two market participants, one in Brazil and one in Mexico were more hopeful, saying it is likely to occur. Meantime, supply from the US was also said to be limited, the processor said. ■


“Brazilian material is being sold into the market as part of the marketing efforts for Ethylene XXI”PE PROCESSOR

“Just look where China is at the moment. Everything is in the $80s/tonne CFR. Look at Africa and Brazil both in the $80s”EUROPEAN BUYER

LATIN AMERICAMARIANELA TOLEDO HOUSTON

Mexico PE tightens on feed shortage

GLOBALJULIA MEEHAN LONDON

Global sulphur mood liftsPrices bounce but demand weakness persists, including from caprolactam producers going into spring shutdowns

$/tonne, spot

FOB Middle East CFR China

CHINA VERSUS MIDDLE EAST SULPHUR

60

80

100

120

140

160

180

Mar2016

Apr2015




Asia solvent-grade xylene’s (SX) six consecutive weeks of gains have come to an end with prices likely to remain under pressure as a result of diminishing demand. However, a drastic plunge may be prevented because of tight supply in Korea, sources said.

Free on board (FOB) Korea SX prices peaked at $620/tonne on 18 March 2016, the highest level seen since 13 November 2015 when prices were at $635/tonne, accord-ing to data compiled by ICIS.

Dropping oil prices, fluctuating stock markets and weak curren-cies has led to a slowdown in SX consumption and demand from key buying region, China.

Subsequently, SX prices dropped by 4.4% week on week to $592.50/tonne FOB Korea dur-ing the week ended 25 March.

“With crude prices yo-yoing, a

lot of traders don’t know when is a good time to commit. Most just wait and see first,” said a South Korean producer.

Indian buyers were still seek-ing April cargoes but volumes were smaller than the minimum 1,000 lots South Korean produc-ers were selling – hence the lack of deals concluded. “Indian buy-ers are still asking me for cargoes but they are looking to buy 500-600 tonnes,” said the South Kore-an producer.

Adding to the bearishness, SX inventories along the shore tanks of east China remained at comfort-able levels, reflecting the slow-down in consumption in the do-mestic market.

SX inventories declined by 5.73% to 24,700 tonnes during the week ended 24 March.

“In east China, as long as SX

volumes are at 20,000-30,000 tonnes. We consider that the nor-mal range,” according to a South Korea based trader. However, the persistent tight supply in the northeast Asian region has helped capped the fall.

Two regional plants were un-dergoing maintenance at their aro-matics units while a third, had sold out its cargoes on a floating basis to traders in previous weeks. In South Korea, Yeochun NCC (YNCC) had shut its 40,000 tonnes/year No 2 aromatics unit

for maintenance with restart planned in April.

Lotte Chemical planned to close its Yeosu aromatics plant in April for about a month due to maintenance works. The plant has the capacity to produce 60,000 tonnes/year of SX.

“Prices haven’t started plung-ing yet because there really [are] no cargoes in South Korea right now. Only a handful of traders have cargoes in hand and they are in no rush to sell,” said a China-based trader. ■

Fatty alcohol consumers are hold-ing off from settling second-quarter contracts in the hope that feedstock palm kernel oil (PKO) prices will decrease, sources said.

PKO prices have increased sub-stantially since late February, post-ing weekly gains totalling $404/tonne, and buyers do not disagree that some degree of increase to fatty alcohol prices are in order.

However, many buyers consider the PKO increases to be largely the result of trader speculation, and not genuine market fundamentals.

As such, consumers do not be-lieve the PKO increases should be fully reflected. Furthermore, they believe that, because the inflated PKO prices have been pushed up by traders, they can also be pushed down again, and so are waiting for a turn in the market before settling

alcohol contracts under lower feedstock costs.

A producer said the high prices are the result of tightness in the PKO market, and near term de-creases are unlikely. It believes that consumers will soon be forced into

action by the need to resupply, but thought it likely that buyers would then only secure volumes for a shorter time period, say one month rather than the whole quarter, un-less of course PKO indeed de-creased by that point.

One buyer conceded that up-coming maintenance turnarounds at European plants may indeed shorten supply, and also that the PKO price may be partly based on supply and demand in Asia. But the buyer remained adamant that alcohol prices offered by sellers are unacceptable.

One producer said current PKO values should, in theory, result in mid-cut fatty alcohol prices of €1,900/tonne, although it accepts that such a drastic increase will not be accepted. Instead it is pro-posing prices in the region €1,770-1,800/tonne.

The producer said a buyer’s sug-gestion of €1,500/tonne would re-sult in its plant being closed down.

Contract prices for the first quar-ter are €1,100-1,250/tonne FD (free delivered) northwest Europe. ■



ASIAHAZEL KUMARI SINGAPORE

Solvent-grade xylene eases on falling demand

EUROPEROSS YEO LONDON

Fatty alcohol talks in stand-offProducers point to tightness in the feedstock palm kernel oil market, but buyers resist planned hikes

$/tonne, Solvent Grade, spot FOB South Korea

ASIA XYLENES

400

500

600

700

800

900

Apr2016

Apr2015

€/tonne, C12-14 Alcohol, contract FD NWE

EUROPE FATTY ALCOHOLS

1,100

1,200

1,300

1,400

1,500

Jan2016

Apr2015

PLANTS & PROJECTS


NEW PROJECTS AND PERMANENT PLANT SHUTDOWNSREPORTED BY ICIS NEWS 28 MARCH - 3 APRIL, 2016NEW PROJECTSCompany Location Product Capacity* Process Contractor Cost Start-up Status

Chanda Asri Cilegon, Banten, Indonesia

solution styrene butadiene rubber (SSBR)

- Michelin’s neodymium catalyst technology

- - early 2018 U

polybutadiene rubber - Michelin’s neodymium catalyst technology

- - early 2018 U

Chevron Phillips Chemical Cedar Bayou, Baytown, US

low viscosity polyalphaolefins

10,000, 20% (x)

- - - mid-2017 U

Integrated Refinery and Petrochemical

Rayong, Thailand propylene 320,000 direct catalytic cracker

- - April 2016 C

Kemira Joutseno, Finland sodium chlorate - - - €50-60m

Q4, 2017 E

Metabolix, CJ Cheiljedang Fort Dodge, Iowa, US polyhydroxyalkanoates (PHA)

10,000 Metabolix PHA

- - - P

ONGC Petro additions Ltd (OPaL)

Dahej, India benzene 150,000 - - - Q2, 2016 U

USI Kaohsiung, Taiwan ethylene vinyl acetate (EVA)/low density polyethylene (LDPE)

45,000 swing - - March 2016

C

Kaohsiung, Taiwan ethylene vinyl acetate (EVA)/low density polyethylene (LDPE)

45,000 swing - - April 2016 C

Saudi Butanol Co (SABUCO)

Jubail, Saudi Arabia butanol 330,000 - - - April 2016 C

Sociedad Quimica y Minera de Chile (SQM), Lithium Americas

Jujuy, Argentina lithium 40,000 - - - - P

Teijin Matsuyama, Japan para-aramid fibre 10% (x) - - Y1.5bn October 2017

E

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.

Supply & Demand service

The ICIS Supply & Demand service can give you an expert view of global petrochemical and energy markets to support your long-term strategic planning. Find out more at: www.icis.com/SupplyDemandService Alternatively email: [email protected]

ICIS-supply_demand_filler_eight_hori_V7.indd 1 08/03/2013 14:05



US CHEMICAL PROFILE

BOBBIE CLARK PROFILE LAST PUBLISHED 2 MAY 2014

USESMethanol is one of the top five chemical commodities shipped around the world and is used mainly to make three derivatives – formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid.

Methanol is also used to produce adhe-sives for the lumber industry, such as ply-wood, particle board and laminates, for res-ins to treat paper and plastic products, and also in paint and varnish removers, solvents for the textile industry and polyester fibres for clothing and carpeting.

Outside of the US, methanol is used as a direct fuel for automobile engines, as a fuel blended with gasoline and as an octane booster in reformulated gasoline.

SUPPLY/DEMANDUS methanol capacity more than doubled in 2015. In Q1 2015, Methanex started up a 1m tonne/year facility in Geismar, Louisiana, and OCI expanded production at its Beau-mont, Texas plant to 912,500 tonnes/year, up from 730,000 tonnes/year.

Then in October, Celanese and Mitsui started up a joint venture 1.3m tonne/year plant in Clear Lake, Texas, that is currently the largest in the US.

Methanex then ended the year with its second 1m tonne/year plant in Geismar, Louisiana.

In 2016, Consolidated Energy Limited (CEL), the owner of Methanol Holdings

Methanol(Trinidad) Limited (MHTL), took a 50% stake in OCI’s 1.75m tonne/year Natgaso-line methanol project in Beaumont, Texas, for $680m.

The investment will go through CEL’s sub-sidiary, G2X Energy. Construction on the project began in 2014.

Once complete, it will be the largest meth-anol plant in the US.

G2X also has its own methanol plant in the works.

The company and its partner the Proman Group have contracted Johnson Matthey to provide process technology and engineering for the 1.4m tonne/year Big Lake Fuels Methanol plant in Lake Charles, Louisiana.

Johnson Matthey will provide the technol-ogy license, basic engineering, catalyst and technical services for the plant.

G2X Energy held a groundbreaking cere-mony on 13 January to commence construc-tion for the plant, which should take about three years to complete.

It will also have the capability to convert methanol into gasoline.

Although there are plans to build several more plants in the US, many of which are backed by Chinese companies, the low price of methanol has made it challenging. In fact, the plans for two plants have al-ready been delayed.

PRICESThe global methanol market flipped in 2016, as the US displaced China as the world’s low-cost producer.

US methanol prices began 2016 by setting near seven-year lows, as new US capacity, made possible the abundant and cheap natu-ral gas feedstock derived from shale rock for-mations, helped to secure the supply chain, displacing a substantial portion of imports from Trinidad and Venezuela.

Spot and contract markets continued to fall until March, when China began import-ing US methanol at a torrid pace to satisfy the country’s burgeoning methanol-to- olefins (MTO) sector.

This activity has positioned the US to be-come a net exporter of methanol for the first time. All these exports have also bolstered the spot market. However, prices remain sig-nificantly lower than year-ago levels as

lower crude oil dragged petrochemical pric-es down across the board.

TECHNOLOGYThe majority of methanol produced today comes from natural gas, naphtha or refinery light gas used in large-scale, low-pressure processes. This has replaced the older, less efficient method of distilling wood for wood alcohol that was then converted to methanol.

In a typical methanol unit, natural gas and water are converted to synthesis gas (“syn-gas”) which consists of carbon monoxide, carbon dioxide and hydrogen.

The syngas is then converted into metha-nol in a high-pressure process using a cata-lyst made of copper, zinc and aluminium.

OUTLOOKUS spot methanol prices will remain strong as long as exports to China continue. The country has several more MTO plants planned for start-up in 2016.

Additionally, China remains committed to moving away from using coal as a feedstock for methanol production, which heavily pol-lutes the environment.

US demand for methanol remains steady, growing only at a GDP level, as the primary outlets for methanol are the production of formaldehyde, MTBE and acetic acid. ■

Keep track of price movements for a wide range of commodity chemicals by subscribing to ICIS pricing reports at icis.com

Company Location Capacity

Celanese/Mitsui Clear Lake, Texas 1,300

Methanex Geismar, Louisiana 1,000

Methanex Geismar, Louisiana 1,000

OCI North America Beaumont, Texas 913

LyondellBasell Channelview, Texas 780

Millennium Petro-chemicals

LaPorte, Texas 571

Eastman Chemical Kingsport, Tennessee 215

Air Products and Chemicals

Kingsport, Tennessee 96

G2X Energy Pampa, Texas 65

Praxair Geismar, Louisiana 40

US METHANOL CAPACITY ’000 TONNES/YEAR

US METHANOL

0

50

100

150

200

Mar2016

Apr2015

Cents/gal, barges, FOB US Gulf

SpotContract


ASIA CHEMICAL PROFILE

KITE CHONG PROFILE LAST PUBLISHED 26 SEPTEMBER 2014

USESGlobally, the largest end use of caustic soda is in the manufacture of pulp and paper, fol-lowed closely by use in the alumina industry; the production of organic and inorganic chemicals; the textiles industry; and the man-ufacture of soaps and detergents. However, the alumina industry is responsible for almost half of all international caustic soda trade.

This especially holds true for Asia, where China is the largest alumina producing coun-try in the world by far. Australia, India and Vietnam are other notable alumina producing countries in Asia.

SUPPLY/DEMAND Northeast Asia is a net exporter to Australia, India, southeast Asia and the US west coast. However, due to competitive prices from the US Gulf Coast, northeast Asia exports to Aus-tralia have recently declined.

In addition, US caustic soda prices are fore-cast to remain soft for the foreseeable future. Northeast Asia exports to India have declined as well due to the implementation of anti-dumping duties (ADDs) on most Chinese and South Korean origin cargoes in August 2015.

China has the largest caustic soda produc-tion capacity in the world at more than 45% compared to any other country or region.

This looks likely to grow even more over the next few years due to new plants com-ing on line, and closures and consolida-tions in other regions such as Europe and North America.

Caustic sodaCompany Location Capacity

Formosa Plastics Mailiao, Taiwan 1,330

Xinjiang Zhongtai Chemical Industry

Urumqi, China 1,200

Tosoh Nanyo, Japan 1,125

Dongying Jinling Chemical Industry

Dongying, China 800

Ciping Xinfa Huayu Alumina

Shandong , China 800

Beiyuan Chemical Industry

Shenmu, China 800

Dongying Huatai Chemical

Shandong, China 750

Hanwha Chemical Yeosu, South Korea 730

Shanghai Chlor-Alkali Chemical

Caojing, China 720

PT Asahimas Chemical

Cilegon, Indonesia 700

Shandong Haili Chemical

Zibo, China 640

Tianjin Dagu Tianjin, China 600

Befar Group Binzhou, China 600

LG Chem Yeosu, South Korea 500

Wanhua Chemical Ningbo, China 500NOTE: Top 15 plants listed by capacity

ASIA CAUSTIC SODA ’000 DMT/YEAR

PRICES Prices firmed sharply in Q1 2015 due to lim-ited spot availability and the push for better netbacks due to weak chlorine values.

Prices stayed firm but started to soften by Q3 and Q4 of 2015 as the market became oversupplied, and producers aimed to move more cargoes, especially near the end of 2015.

In Q1 2016, prices were stable to slightly firm. While spot supply from Japan and South Korea was extremely tight, this was made up for by additional cargoes from Chi-nese producers who found spot prices attrac-tive enough to export.

TECHNOLOGYNearly all caustic soda is generated by the electrolysis of sodium chloride solution using mercury cells, diaphragm cells or membrane cells. For every tonne of chlorine, 1.1 tonnes of 100% caustic soda is generated.

In Asia, the dominant technology is mem-brane cells, followed by diaphragm cells and lastly mercury cells, unlike other re-gions in the world where diaphragm cells are more prominent.

Membrane cells hold many advantages over the other cells, including being the most cost competitive, one of the most environ-mentally friendly, and being able to produce highly concentrated caustic soda. Future chlor-alkali projects in Asia will most likely be of the membrane cell process.

OUTLOOKGrowth in caustic soda demand and trade flow in Asia would be led by the alumina in-dustry, which is one of the biggest end-users of caustic soda.

Globally, the alumina industry accounts for slightly less than 13% of total demand for caustic soda in 2015, but this figure is expect-ed to rise to approximately 14% by 2020.

However, looking solely at the volume of international caustic soda trade flow, the alu-mina industry is responsible for almost half of it.

This is because, unlike other end-use sectors, alumina production facilities are not integrated with chlor-alkali produc-tion plants.

Presently, the alumina industry in Asia is responsible for 50-60% of total caustic soda

consumption by the global alumina industry. This is followed by the Oceania region at over 18%.

Due to the locations of start-ups and clo-sures of alumina facilities in the next few years, there will be a shift in the internation-al trade flows of caustic soda.

More than 80% of new startups in China will likely depend on domestically supplied caustic soda as they are located inland.

Other new alumina facilities that will start up in Asia will be concentrated in India and certain southeast Asia countries like Indone-sia and Vietnam.

For India, this will result in additional im-ports from the Middle East, northeast Asia, and the US. For southeast Asia alumina pro-ducers, it will come primarily from northeast Asia and within southeast Asia. ■

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ASIA CAUSTIC SODA

270

290

310

330

350

370

390

Mar2016

Mar2015

$/DMT, spot

Northeast Asia FOB exportSoutheast Asia FOB import

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