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OUTLOOK
2 17
Key markets covered:
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AROMATICS
BENZENE, TOLUENE AND XYLENE
EUROPE AROMATICS FACE GAME- the impact of the spike in oil prices by late The spectre of crude oil volatility as well
CHANGING 2017 November pushing the market higher. as the wider political uncertainties are still
By Truong Mellor hanging over the petrochemical industry,
This has opened up the arbitrage window but European players believe that the
The aromatics market in Europe is into Asia from both Europe and the US as shape of the benzene market in 2017 will
facing some potential game-changing 2016 draws to a close. With spot numbers very much depend on how any import
developments in 2017, combined with wider in Europe chasing the higher Chinese volumes will be absorbed.
political and economic uncertainties on the market, domestic prices hit a yearly high in
global stage. early December. Some aromatics players expect to see a lot
of import material being fixed directly with
European benzene prices were volatile over Looking ahead to 2017, players anticipate benzene consumers in Europe, thus limiting
the course of 2016, with the region proving that the European benzene market will see activity in the spot market as needs are met
to be the highest-priced market for much considerable impact from new production with contractual volumes.
of the first six months of the year. Limited capacities in both India and the Middle East.
demand and a build-up in supply saw the However, a regional dependence on
US market struggle with low pricing. This will help rebalance the European imports will always led to a degree of
benzene market, which has struggled with uncertainty in the market due to delayed
As a result, Europe saw a sharp increase availability in recent years due to the gradual vessels and production outages. One trader
in benzene imports arriving during the first move towards lighter cracker feedstocks earlier this year said that while it expects
half of 2016. Eurostat data showed Indian and the impact this has on regional to see benzene importers target European
benzene imports up from the same period feedstock pyrolysis gasoline (pygas) supply. consumers, this may not necessarily lead to
in 2015, while Saudi import volumes of a complete slowdown in spot trading.
benzene had doubled over the same period. With more of Europes benzene supply
coming from abroad, it remains unclear We could see waves of spot trading next
Spot prices in Europe subsequently eased what impact this will have on liquidity and year, the trader said. Indian vessels could
by May 2016, but have since seen spurts of pricing in the region. get delayed or re-routed to the Middle East,
bullishness due to availability constraints. then consumers will step into the market
The exit of key aromatics traders such as to cover themselves. Once those vessels
In a reversal of the usual global dynamic, Vitol and Trammo from the stage in 2016 has arrive, there could then be a surplus of
benzene prices have been taking cues from already curtailed the liquidity of the European material, so those same spot volumes end
Asia towards the end of the year, with some market, which has shrunk in recent times up back in the market.
regional tightness in China combined with due to production rationalisation.
Meanwhile, toluene and mixed xylenes
(MX) activity in 2017 is likely to remain
linked with the fortunes of the gasoline
market, with the gasoline blending sector
still the driving force in terms of European
pricing and consumption.
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BASE OILS
BASE OILS
EUROPE BASE OILS MARKET TO unclear whether this will be the case during You can rely on ICIS
BE DRIVEN BY SUPPLY, CRUDE OIL 2017 as a lot hinges on whether markets
such as Nigeria, become viable for exports
for all your market
By Sarah Trinder
again. intelligence needs
Solvent neutrals availability and crude oil
prices look likely to be the main drivers in Solvent neutral supply in the Baltic and PRICING INFORMATION
the European base oils market during 2017. Black Sea were also tight towards the end
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A number of Group I capacity closures potentially improving. The winter holiday countries such as India, Northeast and southeast
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in 2015 left some players expecting period and first half of January tend to be
provide price histories and expert commentary
brightstock supply to tighten during 2016, fairly quiet for these markets and it remains to help you understand the key price drivers and
but this was not the case. to be seen whether this will bring any market conditions and settle your contract prices
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balance to market conditions. bids and price movements
The scenario expected for 2016 had
been that Group I capacity closures in Fundamentals aside, crude oil values and
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2015 - amounting to around 1.5m tonnes, their impact on downstream vacuum gasoil
according to some sources - would leave (VGO) prices could also influence the base
availability of brightstock in Europe tight, oils market in Europe during 2017. NEWS INFORMATION
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production of heavier grades in Europe and depending on whether fundamentals
supply of SN150 and SN500 tightening. outweigh this influence, so rises in VGO Request a free trial of ICIS news
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Limited supply of SN150 and SN500 has seen in base oils values.
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INTERMEDIATES
ACETIC ACID/VAM
EUROPEAN ACETIC ACID MARKET This is where change is now in the offing, Without looking further ahead, producers
TO LIVEN UP AFTER PERIOD OF with methanol tracking upward in the short. state that they are confronted with an
STABILITY It had been expected that contract prices immediate need to implement this increase
By Peter Gerrard in the first quarter would reflect higher or there will be no commercial sense in
numbers already seen in the spot market. In continuing to make the material and ship it
Last years Outlook for the European acetic the event, the announcement of a triple digit across the Atlantic to Europe.
acid market was headlined No big game hike on 15 December meant an effective
changes on the horizon for acetic acid. increase of 60/tonne in the cost of acetic of There is some scepticism from other
Until 15 December this year, much the acetic acid from raw materials alone. players that a major rise will be necessary
same could probably have been said because, they say, acetic acid producers
for 2017. Caution should be used in any prediction have benefited from relative movements
about what the evolution of methanol in methanol and acetic acid values.
The market, as broadly predicted for 2016, numbers will be over the year. But, given Nevertheless, the near term prospect is a
has proved to be reasonably stable and the balance of the acetic market, any rise likely significant upward price push.
balanced for most of the year, following in the feedstock cost now, or later on, will
some early softness, mainly arising from the probably be limited to no more than its This probable price increase in the opening
upstream methanol market. impact on acetic acid producer costs and weeks and months of 2017 will also be
therefore have negligible impact on the fuelled by rise in the value of the dollar
The European market is fundamentally spread between the two. against sterling and the euro, another cost
well supplied. This does not appear likely factor, which sellers will be looking to factor
to change during the course of the coming In the short-term, producers are adamant into their prices. As with the methanol price,
year, which removes the main driver for that the hefty upturn in their production costs it is not necessarily prudent to build forecast
meaningful price increase over the period must be met by a sharp rise in the acetic models on the basis of unpredictable
as a whole. The chief determinant of any acid price, with steep increments already developments on the foreign exchange
price movement therefore seems to be in announced in the US being matched by markets.
raw material cost, deriving from methanol corresponding increases in Europe. Several
values mainly in Europe and North America. suppliers are active in both regions.
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Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
understand the key price drivers and market conditions and settle your contract production and product trade flows from 1978 up to 2030.
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updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
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INTERMEDIATES
ACRYLATE ESTERS/ACRYLIC ACID
EUROPE AA, ACRYLATES WAIT will return in a more progressive manner, a The market might start okay but by mid Jan
ANXIOUSLY FOR BASF RETURN, supplier said. things will be very short; if someone does
GAZPROMS PLANT not have contractual business, then there
By Vasiliki Parapouli For me it will be interesting to see if BASF will be problems, the buyer added.
will take a more relaxed stance, at least for
The European acrylic acid (AA) and the first months of the year, another source In terms of raw material prices, sources said
acrylate esters markets have entered said. that propylene is very likely to move up in
2017 amid lingering supply uncertainty the first and second quarter of the year and
caused by the explosion and consequent For others, what happened at Ludwigshafen this will probably be reflected into AA and
fire at BASFs Ludwigshafen site in is a lesson that has to be learned from the acrylate esters prices.
mid-October. market in order to move forward in 2017.
After climbing on very high levels, some
The incident has been monopolising the I hope that after that, all the suppliers, we sources expect spot prices to remain flat
markets attention for the past couple of will come to our senses and start supplying from December into January:
months as supply has turned significantly product at realistic market prices; prices are
tight, especially when it comes to butyl- not sustainable and we have to come back However, come mid-January they will
acrylate (butyl-A), 2-ethylhexyl acrylate to realistic margins, a supplier said. probably spike again. Generally speaking, a
(2-EHA) and AA. lot will depend on naphtha and propylene,
According to this source, demand will be a a buyer said.
A few days after the incident, German bit higher than normal at the beginning of
chemical major BASF declared force the year: Customers are looking for reliable It remains to be seen if producers will be
majeure on deliveries of acrylic monomers partners; they appreciate when they see successful to keep the momentum they had
which is still is in place, while it is unclear flexibility and reliability from the suppliers in October and November into next year
when the company will be able to lift it and side, it said. in terms of pricing, according to another
fully come back to normal production. source.
There has definitely been a shift in the
The big question, at least for the beginning thinking of the market. Other players were wondering when
of 2017, will be when and how is BASF Gazprom Neftekhim Salavat will bring back
going to return into the market, according Most players agree that the market will online its AA plant in Russia, although this
to a source. remain tight, at least for the beginning of the probably will not happen until March or
year, with a buyer stating that January will April.
For some players, it will be interesting to still be tight but adding things would start
see the approach that BASF will take once relaxing from the end of January onwards. Originally, the plant was expected to begin
it will be ready to come back. production in October 2016, but due to
Another buyer said that there was not sufficient winter conditions, this has been postponed
I am wondering if they are going to be amount of product in the last quarter of 2016 to for some point during the first quarter of
more aggressive; but I suspect that they allow people to have full inventories. 2017, according to market estimates.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for ICIS Chemical Business (ICB) e-magazine is the No.1 source of market
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price movements
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INTERMEDIATES
BUTANEDIOL (BDO)
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INTERMEDIATES
CYCLOHEXANE (CX)
EUROPE CX MARKET TO BECOME At the start of 2016 CEPSA announced it You can rely on ICIS
MORE RELIANT ON IMPORTS would be reducing operating rates, reducing
output by 50,000 tonnes as its Huelva,
for all your market
AFTER SABIC PLANT CLOSURE intelligence needs
By Katherine Sale Spain facility.
The European cyclohexane (CX) market Although there has been no confirmation PRICING INFORMATION
will become more reliant on imports in from the producer, once SABIC exits the
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2017, with the chemicals major SABIC European market there is expectation for reliable price assessments for key Asian
closing its Wilton, UK, facility any day now, production to be ramped back up. countries such as India, Northeast and southeast
Asia for over 180 commodities. Our reports also
leaving supply balance as the key talking provide price histories and expert commentary
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SABIC is expected to close its 330,000 to increase utilisation rates in Europe. bids and price movements
tonne/year CX plant at the end of 2016, with However, additional incremental supply
material being taken from stock until they would have to be imported, ICIS consultant
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are empty for the first part of 2017. Rob Peacock said on the topic.
The company has the largest nameplate The closure of Invistas adipic acid plant NEWS INFORMATION
capacity of any producer in Europe, but in Orange, Texas this year has also made Be the first to find out about breaking news
actual operating rates are expected to be substantial amount of CX available. and analysis across the global petrochemical
markets. Our market-moving news articles cover
much lower than full capacity. production updates, plant capacities, output and
At full capacity the facility produced 200,000 shutdowns, plus so much more.
There is no confirmation from the producer tonnes/year of adipic acid, which required
on this, or on the exact date that production 140,000 tonnes of CX. Request a free trial of ICIS news
with cease.
However, plants closing in Europe is not a
SUPPLY AND DEMAND DATA
Once production comes to an end at Wilton, new occurrence in a market that has seen
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Despite this, demand outlooks from buyers export volumes, consumption, plant capacities,
The looming closure has resulted in a large production and product trade flows from 1978
amount of trading activity in 2016. Imports for 2017 are positive, with some seeing up to 2030.
increased, and there was talk of spot being possible growth between 2-4%.
offered with a very high discount level in the Enquire about our supply and demand data
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year, until an equilibrium is reached and the current transactions, as well as short term and
However, a large chunk of the deficit is long term planning.
expected to come from overseas, especially market adjusts to having one less player in
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INTERMEDIATES
ETHANOLAMINES
EUROPE ETHANOLAMINE trial production in Asia and Brazil, based There are also other measures which could
SOURCES UNFAZED BY on increasing demand in Asia and South help to counter any possible adverse effects
GLYPHOSATE UNCERTAINTY, America. on DEA demand into glyphosate, were it not
to be re-approved in Europe, post ECHA
MIDEAST OPS
One ethanolamines manufacturer said it assessment. This includes options such as
By Heidi Finch
does not expect a fundamental change converting DEA into TEA, where flexibility
European ethanolamine demand is unlikely in ethanolamine demand in Europe next allows.
to be adversely affected by the uncertainty year, although it does anticipate a possible
about the future of downstream glyphosate increase in demand for MEA for a certain One supplier talked of good demand for
usage in the EU, which is an outlet for di- fungicide application in Brazil, following its DEA into the downstream adhesives and
ethanolamines (DEA), according to market approval there. coatings sector, which it suggested could
players. help to lessen the impact to some extent of
MEA demand into derivative triazine is any possible loss in demand for European
Neither do they believe that demand will be typically strongly linked to upstream crude DEA into the glyphosate sector, post the
negatively affected by the expected start-up oil and shale gas developments and the ECHA assessment.
of new Sadara ethanolamine capacity in the volatility in upstream markets. There is
Middle East in 1H 2017, taking into account some talk that if crude oil prices were to Some selling sources are also as equally
structural trade flows and growth potential move up over a sustained period, this is unfazed by the new joint venture Dow/Saudi
outside the region. likely to support a pick-up in MEA demand Aramco Sadara ethanolamines facility in the
and prices, although this remains to be Middle East and any possible effect on the
Some players expect that demand for seen. European ethanolamines market next year.
ethanolamines is likely to be comparable
to 2016, with some talk that it could move The future of DEA demand into glyphosate One supplier suggested that any effect from
closely in line with GDP, or even slightly in the EU also remains uncertain. This is the new Sadara capacity is likely to only
above, depending on the homologue. because the European Chemical Agency be felt in 2018 rather than 2017. This is
(ECHA) has yet to issue an opinion on taking into the account the expectation that
One supplier suggested that mono- glyphosate usage amid concerns over the remaining derivative production at the
ethanolamines (MEA) demand is likely to possible health related risks and whether it Sadara complex is likely to come onstream
grow in line with GDP but tri-ethanolamines should or should not be approved in the EU in mid-2017.
99% (TEA 99%) is likely to rise slightly more beyond 2017.
than GDP this year if demand continues There is some feeling among players that
to hold up well into the main downstream Despite this, ethanolamine players the new Sadara volumes in the Middle
construction and esterquat sectors and if remain unfazed by this uncertainty, as East are unlikely to have any real effect
material was not to be readily available. they maintain that the DEA market into on physical availability in the European
glyphosate in Europe is a small market ethanolamines market next year, as the
There was also some talk that not only TEA, relative to the other regions and because main Sadara volumes are expected to
but also DEA may move slightly above GDP DEA is structurally a net export product supply the Asian and Middle East markets
in 2017 in Europe, provided that the GDP in Europe. rather than the European market anyway.
growth is quite modest.
Therefore, players are only concerned This is taking into account larger growth
This is because ethanolamine run rates are if the ECHAs assessment were to ban potential in the emerging markets compared
normally determined by MEA demand and glyphosate usage in Europe and if this were to the mature European market. However,
therefore if DEA and TEA demand were to to lead to other regions to re-consider their this has not been officially confirmed.
fare better than MEA, this could mean less options regarding glyphosate usage and
availability for DEA and TEA. However, the turn against it. There is some talk that the new Sadara
latter remains to be seen. facility is more likely to help to increase
However, players said that it still remains supply flexibility for Dow in Europe, as it
One buyer expects ethanolamine demand unclear what the outcome of the ECHA allows Dow to supply ethanolamines to
in Europe to grow modestly because it is assessment will be and when it will actually Europe either from the US or Middle East.
a mature market. However, it said that it be known. One ethanolamine supplier
expects the real growth potential to come said it did not anticipate any effect on DEA Exchange rate factors are also likely to
from emerging markets outside of Europe. demand into glyphosate in 2017, possibly have a bearing on the flow of imports into
only in 2018, if at all, as the ECHA is not Europe from US dollar regions in 2017,
It referred to some new downstream expected to make an assessment until the where flexibility allows.
esterquat operations which have started end of 2017 at the latest.
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A few suppliers from outside Europe, have The European ethanolamines market is this will depend on how demand pans out in
already reduced their exports to Europe expected to be balanced to well-supplied Europe and how the Sadara volumes, once
during the fourth quarter of 2016, due during 2017 provided that there are no available, are allocated among the regions.
to lacking profitability from a price and unexpected plant reliability issues, although
exchange rate perspective and it remains to
be seen if this continues.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
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understand the key price drivers and market conditions and settle your contract production and product trade flows from 1978 up to 2030.
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Be the first to find out about breaking news and ICIS publishes monthly forecast reports for ICIS Chemical Business (ICB) e-magazine is the
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Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
in the short to mid-term. current transactions, as well as short term and long
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INTERMEDIATES
MALEIC ANHYDRIDE (MA)/PHTHALIC ANHYDRIDE (PA)
EUROPE MA MARGINS AT CRUNCH at year-end and reduce the amount offered While BASF may be experiencing longer
POINT AND PA STILL RESTRICTED to the spot market. term implications, other producers are in the
INTO 2017 process of building stock.
By Jane Massingham There are some customers that talk of
healthy growth into 2017 and 2018, but it is These issues led to a rather tight market
Maleic anhydride (MA) margins in Europe thought the European capacity should be and higher spot prices in Q4 and some
have reached the crunch point, able to cover the increased volumes. say this will continue at least in the early
producers say. part of Q1. However, PA contracts are
Imports are expected to remain at a low integrally tied into the orthoxylene (OX)
Looking into 2017, manufacturers state level in the first half of the year given that price movement and here there have been
that plants cannot continue to operate with other regions are more attractive. smaller movements.
the current margins and stress it is just not
feasible. Another aspect that could change the The outlook for PA in Europe 2017 will as
product flow in 2017 is the anticipated usual largely depend on availability of both
2016 has ended with firm spot prices for Polynt and Reichhold merger that is PA and OX past Q1 and the price of OX.
both flake and liquid and some say that this expected to be finalised in Q1. This is
is an attempt by customers to build stocks pending approval from the European There are a couple of scheduled outages
ahead of the hefty price increases proposed Commission. planned for OX in Q1, so this could help to
for Q1. support the PA market.
The phthalic anhydride (PA) market is also
Producers are struggling to absorb the expected to remain firm in the first part of There is some geographical growth for PA
higher feedstock prices of butane and, 2017, though this is driven more by supply in Europe, namely for polyester products
given that contract prices largely rolled over issues through Q4 2016. as the resins and plasticizers are now more
for Q3 and Q4 in 2016, margins have been mature markets.
eroded. There was a force majeure in place in
November from LANXESS 115,000- There are some estimations of growth for
As a result, producers are seeking 120,000 tonne/year plant following poylester polyols markets of between 15-
increases of between 50-100/tonne, problems starting up after its scheduled 20% in 2017.
depending on the source, region and outage in October.
starting point. While a significant proportion of the
Deza also had extremely low output through market is liquid, there are cost implications
Some customers have agreed an increase November after planned maintenance to transport material due to the high
of some magnitude could be possible, but at its 35,000 tonne/year site and normal temperatures that it needs to be stored at.
feel a 30-50/tonne move is more realistic rates were not expected until the end of
given the balance in the market. December/early January. As a result, some see increasing interest
for flake spot business. Liquid has typically
Availability can cover all contractual BASF too, although mainly for captive use, been dictating a premium price to flake, but
commitments. However, some speculated was running at very low rates following the flake prices are now in line with liquid and
there were production issues at two sites, fire at its Ludwigshafen site in October. some expect these could continue to move
but it would appear these suppliers have Proviron also underwent routine maintenance further, especially if there is no short-term
taken a strategic move to control volumes in the second half of November. improvement to the supply balance.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
INTERMEDIATES
METHYL METHACRYLATE (MMA)
FATE OF EUROPE MMA SUPPLY peaking in November when some buyers Production is expected to reach normal
UNCLEAR WITH NEW MIDEAST were concerned they would have to stop levels for Dow in the first quarter, with some
CAPACITY ON HORIZON production due to a lack of material. buyers seeing this has the key factor that is
By Katherine Sale tightening global MMA supply.
Europe is a net importer of MMA, but with
The European methyl methacrylate (MMA) supply problems in other regions, firming The supply shortness came to a head in
market is questioning what will the fate prices and a weakened euro against the the fourth-quarter of the year, with Lucite
of European supply be in 2017 with new dollar exchange rate the imports dried up. International implementing sales control on
Middle Eastern capacity on the horizon, in a European contracts on 18 October.
market that has been plagued by tightness Although some material continued to flow
for much of 2016. from Brazil, overall imports were down and The sales control was in place until the
spot prices rose. start of December, with a number of buyers
In mid-2016 everyone thought it was turning to the spot market during this period
going to be a bloodbath for producers next Dow Chemical has an ongoing issue at its for the additional volumes required.
year, but now it seems the sentiment has 360,000 tonne/year Deer Park facility, which
changed. said one buyer. started in the middle of 2016 after force Quarterly and monthly contract prices have
majeure was declared by its acrylonitrile increased since April this year, with the
Even up to last years European (ACN) supplier. upward pressure continuing into the new
Petrochemical Association annual meeting year amid solid demand and tight supply.
in Budapest in October, buyers were INEOS declared force majeure at its Green
confident that the only consequence of the Lake, Texas, facility on 15 July after it was At this stage, new Middle Eastern supply is
new supply coming onstream in the Middle discovered that the main feedstock propylene very much welcomed by buyers to loosen
East was a long European supply balance pipeline had been compromised by flooding. the tightness in Europe, but the question is
next year. when will it come?
With Dow Chemical running at a reduced
However, especially in the second half rate for the second half of the year and also Mitsubishi Rayon Co, parent company
of 2016 supply month-by-month has buying material to meet its own demand, of MMA major Lucite International, is
become tighter and tighter, with constraints this added a further strain on global supply. scheduled to come on stream in a joint
venture with SABIC with a 250,000 tonne/
year MMA facility in the middle of 2017.
MMA regional operating capacity (tonnes/year)
Petro Rabigh, a joint venture between
Japans Sumitomo Chemical and state-
owned energy firm Saudi Aramco, is also
scheduled to have a new 90,000 tonne/year
MMA plant next year.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
At this stage players think exports from the
Middle East to Europe are unlikely before
the last quarter of 2017.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
INTERMEDIATES
PROPYLENE OXIDE (PO)/MONOPROPYLENE GLYCOL (MPG)
EUROPE PO/MPG DEMAND LIKELY to growing demand into the flavours and There is also some talk that the new PO
TO BE CLOSELY TIED TO GDP fragrances sector and reformulation for and MPG Sadara capacities are unlikely
By Heidi Finch detergents in certain cases. to affect the European market, because
the Sadara PO and MPG volumes are
European propylene oxide (PO) and mono One MPG supplier said that players expected to be used in the emerging
propylene glycol (MPG) demand is likely to who buy both MPGI and DPG are more markets such as Asia, the Middle East and
move closely around GDP in 2017 and no concerned to secure their volumes for DPG Africa rather than the mature European PO
significant change in availability is expected in rather than MPGI in 2017. and MPG markets. However, the latter was
2017 despite the start-up of the new Sadara not officially confirmed.
capacity in the Middle East. This is based on expectation that the
tightness in DPG supply in Europe during It also understood that PO in Sadara will be
European PO consumption is estimated to 2016 could continue into 2017, because mainly used captively anyway and therefore
move slightly above GDP, driven by polyols, while DPG is co-produced with MPGI, the that any effect is likely to be felt on PO
according to some PO suppliers. yield of DPG is structurally limited relative to derivative exports from Europe, such as for
MPGI and the growth potential for 2017 is polyols and possibly for mono propylene
However, the latter will also depend on how greater for DPG than for MPGI. glycol rather than for PO directly. However,
polyols demand pans out and on availability this was not officially confirmed.
for toluene di-isocyanate (TDI), which has In addition, MPG rates are typically driven
been very tight over recent months. TDI is by demand for MPGI and not DPG and However, there is some expectation that
used in combination with polyols to make there is no real flexibility to adjust ratios, exports of MPG from Europe may be less
polyurethanes. according to recent producer feedback. affected by the new Sadara capacity when
compared to polyols exports.
Overall demand for MPG in Europe is There is some talk, however, that a
estimated to be flat or move in line with few players can feed MPG back into This is because the Sadara capacity is
GDP in 2017, according to several buying the process in order to generate some relatively small in size for MPG when
and selling sources, amid mature market additional DPG, but this is unlikely to make compared to polyols and structurally more
conditions. any significant difference as these recycled volumes are exported from the EU outside
volumes are believed to be very small the region for polyols rather than MPG,
However, some manufacturers maintain anyway. according to recent Eurostat data.
that mono propylene glycol industrial
grade (MPGI) demand could be boosted One PO/MPG supplier remains optimistic Overall, PO and MPGI players do not
seasonally, if there is a harsh winter in about export opportunities for PO and expect to see any significant changes in
2016/2017 and there is a strong demand derivatives, if the US dollar were to remain supply and demand in Europe in 2017,
for MPGI into the main downstream de-icer strong against the euro, but this will also despite the new Sadara capacity, because
sector over this period. depend on price developments globally. of greater growth potential outside Europe.
There is some talk that any growth potential European PO and MPG players do not DPG availability in Europe is still likely to
for MPG in Europe is likely to be driven by expect to see any real effect of the new PO be challenging in 2017, despite the new
MPG US pharmaceutical (MPG USP) USP and MPG joint venture Dow/Saudi Aramco Sadara MPG capacity, as structurally limited
and di-propylene glycol (DPG) rather than Sadara capacity in the wider global market DPG yields relative to MPGI are likely to
for MPGI. until 2018, because the remaining Sadara be further compounded by DPG growth
derivative operations are not expected to expectations in excess of GDP. However,
DPG is estimated to grow in excess of GDP start-up until the 1H of 2017, albeit in a the latter will also depend on how MPG run
next year, which believed to be mainly due staggered way. rates pan out too.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
INTERMEDIATES
PHENOL/ACETONE
PETRO RABIGH A QUESTION MARK Before 2016, the last time acetone spot and acetone capacity online in mid-
FOR PHENOL AND ACETONE IN 2017 prices were above propylene contract price 2017. However, some European market
By Luke Milner levels was February 2013, according to participants remain sceptical and expect
ICIS data. further delays, which could mean no impact
The question of when Petro Rabighs phenol on the European market until 2018.
and acetone production capacities will come December 2016 saw what for some was a
on line is perhaps the greatest unknown for surprise upturn in acetone spot prices as It remains to been seen just when the
the European phenol and acetone sector demand remained strong, when compared new capacity in the Middle East will be
in 2017. to supply and export opportunities remained operational and just how the European
in place. Demand for phenol was also market will react. The difficulties of shipping
Nevertheless, as market participants considered relatively strong for December phenol and questions over storage
contemplate the opening months of 2017 many during the last month of 2016, placing capacities for additional phenol in Europe
expect little change when compared to 2016. producers and sellers in a good position have been raised by market participants as
moving into the new year. possible barriers to increased imports, and
One producer said: [Im] not expecting any while acetone is easier to transport, Petro
change in early 2017. Meanwhile early 2017 adder agreements Rabigh is also expected to begin production
have seen mixed results, with limited of MMA at the site.
Meanwhile another producer said of 2017: increases and decreases as well as
To be honest, at least in the first three rollovers, with geographical location, adder Back in Europe, the phenol market is
quarters I dont see the market different to level starting points and different company expected to continue to be predominantly
this year. strategies all contributing to the differing contract based in 2017, with prices moving
picture emerging across the market. in relation to the benzene contract price
In 2016 the European phenol markets with an adder on top, while movements in
supply and demand dynamics remained In 2016 structural overcapacity did not result propylene will continue to play a key role
relatively well balanced throughout the year, in actual oversupply in the European phenol in acetone contract price negotiations.
while a rapid rise in acetone spot prices and acetone markets, however, in 2017 Movements in upstream prices will help to
in the second quarter of 2016 followed by supply and demand dynamics could be determine both whether European material
a long period of limited softening that saw impacted by new capacity in Saudi Arabia. is competitive when compared to prices in
spot prices remaining above acetone methyl export markets and whether the European
methacrylate (MMA) contract price levels Petro Rabigh, a joint venture between market becomes attractive to sellers from
until the end of the year and above propylene Saudi Aramco and Japans Sumitomo outside of Europe, all of which remains to
contract levels from May until September. Chemical, is expected to bring new phenol be seen as the year unfolds.
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Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
INTERMEDIATES
PLASTICIZERS/OXO-ALCOHOLS
OXO-ALCOHOLS AND latter part of 2016, as it was not impacted water levels on the River Rhine.
PLASTICIZERS MARKET SET as much by the production problems.
TO HOLD FIRM ON SUPPLY Upstream, orthoxylene (OX) pricing is
However, it is still considered a balanced expected to remain tight for the short term,
LIMITATIONS
to firm market, with targets in place for Q1 with jumps expected for January prices of
By Jane Massingham
and an expected healthy level of demand between 40-70/tonne.
The outlook for the oxo-alcohols and moving into its traditionally strong period of
plasticizer markets remains firm into 2017 consumption in Q2. Additional upward pressure is likely to come
on the back of supply restrictions, buyers from propylene in the first half of 2017 as
and sellers concur. Downstream acrylate esters are expected the market remains snug in Europe on the
to remain firm and tight into 2017. Glycol back of planned turnarounds.
For oxo-alcohols, a force majeure ethers were also said to be starting the year
declaration remains in place at BASFs on a strong note, with higher targets posted Turkey launched an anti-dumping duty
nbutanol (NBA) and isobutanol (IBA) site in and possible export opportunities in place. (ADD) investigation against South Korean
Ludwigshafen, Germany. DOTP. The intention to investigate Korean
On plasticizers, given that DOP is such DOTP imports was published on 23
The unit has a nameplate capacity of a small percentage of the European November.
450,000 tonnes/year of NBA and 50,000 plasticizer market and used mainly in niche
tonnes/year of IBA and, given reports that areas in medical sector, there appears Exports from Korea to Turkey have risen
the propylene pipeline will not be fully to be greater stability moving forward, a lot, said a producer in the region, so we
functional until mid-2017, supply constraints and customers have not been faced with are going to the government for protection.
for NBA and to a lesser extent IBA are the same surging prices felt for other
expected to remain. plasticizers in Q4. The announcement of the investigation
could lead to less Korean material being
Perstorp will no longer produce NBA from Due to legislative issues, many have moved imported to Turkey, as importers could face
its Stenungsund, Sweden, site in 2017 as away from traditional phthalate plasticizer DOP. higher duties.
it no longer produces the plasticizer dioctyl
phthalate (DOP). Dioctyl terephthalate (DOTP), diisononyl Although there is no formal timeframe
phthalate (DINP) and di-propyl heptyl for this, news is expected around March/
Along with the supply issues, there are phthalate (DPHP) have all seen significant April 2017. This latest investigation into
also upstream constraints expected from increases in Q4 on the back of the plasticizer imports follows one already
propylene in Europe due to a number of supply issues arising from a combination started in June, on Korean imports of
planned turnarounds and higher prices of unexpected production issues for phthalate DOP. An outcome to this has not
are expected for contracts on propylene. both plasticizers and upstream phthalic yet been reached.
However, US and Asia availability is said anhydride (PA) in Europe.
to have better supplies and there was talk There were also reports that US producer,
therefore that globally propylene should be Into 2017, DINP, DPHP and DOTP are all Eastman, has filed an extra petition in the
balanced. expected to remain tight for at least the US with the aim of imposing duties on
first quarter. While BASF remains on force DOTP imports, a distributor said.
Indeed, the January settlement for majeure there are small volumes of DINP
propylene in Europe at plus 45/tonne being produced and delivered to customers. In addition, potential news on environmental
resulted in NBA and IBA price increase issues with regards to the usage of
targets of between 30-40/tonne, However, there are other producers phthalate plasticizers in certain applications
depending on the player. still building stocks following unplanned could see further switches in the future.
production issues, which were a result of However, most sources feel the changes
2-ethyl hexanol (2EH) has not seen the unexpected issues at upstream phthalic that need to occur in the short-term have
same amount of upward pressure in the anhydride (PA) plants. Added to this are already done so within Europe, with further
logistical issues with deliveries due to low shifts unlikely in 2017.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OLEFINS
BUTADIENE (BD)
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
steps to counter expected supply shorts so producers can concentrate on export this year and its impact on naphtha, still
through securing mini supply contracts. opportunities. Europes primary feedstock.
Asian buyers reactivity is unpredictable, but Producers were open-armed at the start of Our biggest fear is that ethylene wont be
we prefer to be safe than at risk potentially, the year, now its please take a ticket and as good as it has been so ethane crackers
a consumer said. wait in line, everyone is now more focused will continue to run flat out [being a low
on Asian business, a source said. cost producer and their ethane is fixed take
While producers limited spot exposure in or pay] - and the naphtha crackers will be
2016 through flexible and competitive terms Despite the strong competition for volumes, forced to reduce, a third source said.
and conditions for contractual consumers increasing freight rates and other shipping
for 2016 contracts, the reverse appears to challenges, traders see good opportunities So far the 2017 focus is on supply and
be true for 2017. during the first half of the year, providing producers are hoping to reap the benefits
they can find the necessary volumes. from the spot market of course this could
It was a buyers market last year, now come back to bite should bullish demand
its the turn of the sellers, a second Afterwards its a big question, a second expectations for 2017 not follow through.
consumer said. source said, much of course still is
depending on ethylene and propylene Maintenance turnarounds in the first half
There is talk that contract rebates have market developments. would insure against that, but come the
shrunk, that there have been offers at second half of the year things could still
contract price flat even, but perhaps this is There are some bullish expectations be very different.
more to do with helping buyers turn away regarding crude oil price development
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Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
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in the short to mid-term. current transactions, as well as short term and long
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OLEFINS
ETHYLENE/ PROPYLENE
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Increased flexibility on contract volumes and demand balances are expected to be You can rely on ICIS
reflects the uncertainties on the second half- lengthier because of new capacity start ups
year outlook for both ethylene and propylene. which could in theory help to correct any
for all your market
Europe imbalances. intelligence needs
Ethylene, because of the raft of new
crackers due to start up in the US In Europe itself, the return to service of the PRICING INFORMATION
throughout 2017, and particularly in the Karlsruhe-Ludwigshafen propylene pipeline
ICIS is the benchmark for independent and
second half of the year. destroyed in the fatal explosion at BASFs reliable price assessments for key Asian
Ludwigshafen, Germany, site in October countries such as India, Northeast and southeast
Asia for over 180 commodities. Our reports also
New derivative output notably is expected around mid-year, which could
provide price histories and expert commentary
polyethylene (PE) is also due; with this take some of the pressure off sellers in the to help you understand the key price drivers and
in mind, European PE players are only inland market. market conditions and settle your contract prices
confidently with access to time-sensitive offers,
confident of conditions during the first half. bids and price movements
Some are not so convinced that the impact [There is] no reason to believe that
will be seen in 2017. the first six months of 2017 will be any
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different to the first six months of 2016
While on paper there is new capacity, it supply tightened and spot prices rose to
could be a re-run of several years ago, a premiums, a second producer said. NEWS INFORMATION
second producer said. Be the first to find out about breaking news
The producer conceded however that and analysis across the global petrochemical
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Much was made of the tsunami of ethylene propylene had the added impact of the
production updates, plant capacities, output and
and polymers coming from the Mideast strikes at several French refinery and shutdowns, plus so much more.
[Middle East] but we saw delays and the petrochemical sites in the May-June period.
impact was much more moderate than Request a free trial of ICIS news
expected, the producer added. [The markets will be on the] tighter side for
the first half largely down to the turnarounds,
SUPPLY AND DEMAND DATA
In Asia, ethylene producers are bullish but focusing further forward, it is much more
despite a lighter turnaround season uncertain, the first producer said. Receive an end-to-end perspective across the
global petrochemical supply chain, enabling
and some capacity growth on the back you to grasp the local or regional scenario in
of increased demand due to some 2017 will be a good year but there are a global context. Data includes import and
downstream expansion plans. challenges to come. In 2018, there could be export volumes, consumption, plant capacities,
production and product trade flows from 1978
a wall of ethylene, it added. up to 2030.
However, prospects again grow dimmer
as year-end 2017 approaches, because of The table below shows 2017 planned Enquire about our supply and demand data
fears over the new US capacities. cracker maintenances heard so far. None
Propylene is even more unclear. While have been confirmed by the companies in
FORECAST REPORTS
Europe should at best be balanced, if not question, as most have a non-disclosure
tight at times, both the Asian and US supply policy regarding the status of their assets. ICIS publishes monthly forecast reports for
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Company Location Timing
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Total NC3, Antwerp, Belgium March-May
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
PLASTICS/POLYMERS
AFRICAN POLYMERS
AFRICAN POLYMERS GATHER Egypt, North Africa LDPE CFR prices vs China CFR LDPE prices
INTEREST BUT STILL HAVE A LONG
WAY TO GO
By Matt Tudball
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Chinese levels by mid-January. However, Nigeria is also facing the issue of currency to the region have already proved to be
significantly cheaper freight rates from the shortage, which impacted the market aggressive with prices, undercutting Middle
Middle East to China will keep the arbitrage throughout 2016, and is showing no real Eastern prices by up to $40-50/tonne.
window open unless producers are able to sign of improvement. The lack of hard
push African prices higher in the coming currency has led to increasingly long delays East Africa, and more specifically Kenya
months. in payments and a growing reluctance from and Ethiopia, is likely to be on many
traders and distributors to do business with producers radars in 2017 due to strong
Several key markets in Africa Nigeria, buyers who do not have international bank demand and the growth potential in both
Egypt, South Africa and Kenya are accounts. markets. Kenya leads the region in terms
currently experiencing varying degrees of of market size, but Ethiopia is quickly
financial and economic problems, which Nigeria is not looking good at all, an attracting supplier attention with several
have affected demand in one way or international distributor said. existing and up-and-coming industries such
another. as caps and closures and cement.
Right now there isnt too much demand,
For both Egypt and Nigeria, a lack of and even if there is, I dont know how to The opening of the Chinese-built Addis
foreign exchange was a major hindrance sell to that market. You cant keep doing AbabaDjibouti Railway, which was
to trade in 2016, and there are few signs of [business] on open credit, as even the inaugurated on 10 January 2017, will
improvement. In November, the Egyptian customers now dont want to do it as greatly improve the ease of getting imports
government floated the pound, which the rate of forex from banks is too high into land-locked Ethiopia, although poor
caused a massive drop in the currency compared to letters of credit, the distributor logistics and transportation links in the
against the US dollar, and increased said. region, such as from the Kenyan port
running costs for converters as well as of Mombasa to Nairobi, need to see
raising import prices into the country. With close to 170 million inhabitants, a significant improvement to ease the
Nigeria is still a key market for polymers, movement of goods.
Currency is still a problem. After the with the majority of demand coming from
devaluation, the dollar became very high, the detergent and liquid packaging sectors. Upcoming elections in Kenya in the middle
so costs have become very high, and this is In addition, local manufacturing industries, of the year may cause some disruption
a problem for the buyers, an Egyptian PP such as cement, will help polymer demand around summer, although some sources
producer said in January. for storage and transportation, although the say this will be minimal as they believe
Dangote refinery and petrochemical project the result is a foregone conclusion, and
However, there is still demand in the in Lekki, Nigeria, is due to come online the market will soon return to business as
Egyptian market, a PE producer in the sometime in the next year or two, and may usual.
country said, even though imports have cover a large part of that demand.
decreased. Politics and finance will also have a large
With domestic production still limited, the part to play in the outlook for South Africa
The Egyptian market will be focusing country relies heavily on imports, and its in 2017. While the rand has strengthened
on exports of both polymers from local geographic location makes it open to an against the dollar over the last 12 months, it
producers EPPC (Egyptian Propylene increasing volume of US material as well as remains extremely volatile and at the mercy
& Polypropylene Company), Oriental cargoes from the Middle East and India. of political events in the country.
Petrochemicals and newcomer Ethydco, all
of which will be exporting material to help US cargoes could factor significantly A South Africa-based polymer producer
facilitate the inflow of much needed foreign in 2017 due to an increase in US PE said the actions of President Zuma and
exchange into the Egyptian economy. capacity, and traders shipping US material the ruling African National Congress (ANC)
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
in the run-up to elections at the end of the last of his troubles there is speculation driven by events in other regions the
the year will have a major impact on the in South Africa that he could still be increasing self-sufficiency of China and
countrys financial situation. removed. growing production capacity in the US are
just two examples.
The rand fluctuated during 2016 alongside Should this happen, I have no doubt
political turmoil, which saw Finance Minister that we will see the rand fall sharply with Whether it is growth and investment
Pravin Gordhan under threat of arrest immediate effect and will precipitate huge opportunities in the African markets that
from his political opponents. There is also uncertainty within the economic and attracts producers (despite the considerable
the possibility of a credit downgrade by investment space. A ratings downgrade challenges that come with them), or
the international credit ratings agencies. is quite clearly confirmed then in this changes in other markets that diverts focus
However, compared to other currencies, it scenario, the producer said. onto the region, the continent is certain to
has fared reasonably well. be of increasing interest to global suppliers
2017 will be an interesting time for the throughout the rest of the year.
However, Mr Gordhan may not have seen African polymers market, with change
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
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Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
understand the key price drivers and market conditions and settle your contract production and product trade flows from 1978 up to 2030.
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Request your free sample report Enquire about our supply and demand data
Be the first to find out about breaking news and ICIS publishes monthly forecast reports for ICIS Chemical Business (ICB) e-magazine is the
analysis across the global petrochemical markets. selected commodities showing a 12-month rolling No.1 source of market intelligence and analysis
Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
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PLASTICS/POLYMERS
CHLOROVINYLS
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
European PVC export prices 2016 with plants at Martorell, Spolana and
Ercros Spanish sites expected to close
due to the phasing out of mercury
chlorine cells in Europe from December
2017 onwards.
Export spot prices also rebounded in the PVC feedstocks ethylene dichloride (EDC) In addition, European EDC capacity is quite
second half of the year, although this was and vinyl chloride monomer (VCM) are well utilized compared to chloralkali, which
partially as a result of limited availability likely to become a significant bottleneck could lead to a bottleneck in production and
from European producers due to feedstock for the market from late 2017 onwards, an increase in imports from, for example,
issues. the US or the Middle East to fill the gap.
Dollar vs Euro 2016
In the long term, the recent victories by
government forces in Iraq and Syria may
lead to a more stable situation in Turkeys
bordering export markets. Market players
expect any return to stability in the market
to take between 18 months to three years,
and the overall outcome of both civil wars is
still in doubt, so this is unlikely to have any
immediate impact in 2017.
Source: Xe.com
affected by structural changes in the global
supply and demand situation.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
MARGINS
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PLASTICS/POLYMERS
POLYETHYLENE (PE)
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Imports were no longer possible as stronger compared to European spot price minus With imports limited and planned shutdowns
netbacks elsewhere led to trades moving to 50/tonne for costs and 6.5% import duty. maintaining a balance, sources said the
regions with better netbacks than Europe, main disturbance would come from imports
where prices are low in global terms. While January buyers expect to be paying from North America, while all the while
an increase - it will be hard to avoid if the admitting that these are likely to be delayed.
The above chart shows ICIS mid-point January ethylene contract goes up - they
Asian high density polyethylene (HDPE) generally did not expect to be paying any
blowmoulding CFR (cost & freight) price more than the monomer.
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PLASTICS/POLYMERS
POLYPROPYLENE (PP)
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
New PP capacity in China this year and
next, is expected to be absorbed by local
consumption, said sources, but it would
also mean fewer imports, from Europe and
elsewhere.
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PLASTICS/POLYMERS
POLYSTYRENE (PS) AND EXPANDABLE POLYSTYRENE (EPS)
EUROPE PS, EPS PLAYERS FOCUS Another talking point of the EPS market in 2017 is happening in politics and economy, a PS
ON MARKET FUNDAMENTALS will be the new capacities that are expected in buyer said.
By Vasiliki Parapouli the Middle East and especially in Iran.
However, he added, most of the main
The European polystyrene (PS) and EPS capacity there has been increased by styrene actors react in a very emotional
expandable polystyrene (EPS) markets 250,000 tonnes/year in 2016, with a further and irrational way. As a consequence, the
have kicked off the new year focused 120,000 tonnes/year expected in the next styrene price - as well as other aromatics -
again on styrene, having gone through couple of years, according to ICIS Analytics. is very volatile and it is nearly impossible to
very difficult discussions for the December be able to predict it, he added.
contract prices following the significant Meanwhile, PS players said that
unexpected price hike for the feedstock. consumption will probably remain flat The significant increase in the December
throughout next year, except months like styrene barge contract brought up again the
An EPS producer said that everything from August or the holiday season, while demand lingering discussion about the substitution
January onwards will still be related to in Europe is not expected to change much. of PS to other polymers:
styrene and the weather conditions:
PS demand is very price sensitive because If styrene continues to be that volatile, then
An increase in January styrene will slow of competition with other polymers such as this might speed up substitution decisions
down EPS business; also bad weather, polypropylene for high impact polystyrene in the packaging business from PS to other
especially in eastern Europe, will impact or polyethylene terephthalate for general alternatives, like PP or PET that are stable
demand as well, he said. purpose polystyrene, a source said. and less costly products, a buyer said.
Other EPS sources expect growth to be Styrenics players said that the European There might be still some volume that
around 2% in the next five years, mainly in styrene market should become more flexible could shift from PS to PP; but thats going
the CEE building and construction sectors, in order to deal with growing political and to take investment and a real belief in the
while the market will face strong competition economic uncertainty, as well as other factors fundamentals of PP, another source said.
versus mineral wool. that could possibly impact its fundamentals.
However, other players said that a lot of
Other EPS sources said that they expect The election of Donald Trump as US transition to other products that could have
higher pricing in 2017 than the previous year. President and the recent Brexit vote make happened, has happened.
flexibility key for styrenes outlook.
For southern Europe weather will not be a PP is going to see some ups and downs
problem; but for countries like Italy, it is the Flexibility could be key to understand but there is no return to the early days of
political and economic uncertainty that are and also shape the market, to react in a this decade, one of them said.
not helping the market, a buyer said. positive and suitable way to everything that
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PLASTICS/POLYMERS
POLYETHYLENE TEREPHTHALATE (PET)
EUROPE PET STILL IN THE DARK My feeling is that prices are for sure Yet the same statistics show that even though
WITH UNCLEAR FUTURE not going to go down for December and the markets capacity utilisation rate rose by
By Pavle Popovic January. Maybe at least for the first quarter, 3% from 2015 to 2016, it is well below 2011
one buyer said. levels which were more than 80%.
One year on and the polyethylene
terephthalate (PET) market is still A producer said: I think certainly there will To add to this, elections in 2017 for France
reflecting on the same factors that shook be a surge again in January on the back of and Germany threaten any price calculations.
it throughout 2015 - geopolitical increased raw materials. We expect to see
turbulence, volatile crude oil values and prices up to 950/tonne in January. If populist parties succeed in both votes,
erratic economic conditions. the macro-economic instability that followed
Imports, which have failed to influence Brexit could be replicated.
At the time of last years Outlook, however, the market towards the end of 2016,
the world was yet to face Brexit and the are, according to sources, set to remain Nobody can say what can happen next
fall of the British pound. It had not uncompetitive. week. Somebody else might exit the
experienced Donald Trumps electoral European Union, one buyer said.
victory and the rise of the US dollar, nor Purchases of PET from outside of the EU
was it influenced by OPECs production have been impeded by the stronger US If the EU does stay intact, market participants
cut and oils price rally. dollar and players see no end to this in the believe there is a potential anti-dumping duty
near future. (ADD) against PET imports from South Korea.
What did these events mean for PET in
2016? Firstly, 2015s domestic spot price This does, however, depend on a consistent With upstream purified terephthalic acids
highs of 1,110-1,150/tonne FD (free foreign exchange, which was generally not (PTAs) anti-dumping investigation due to be
delivered) in May were unobtainable for the case in 2016. settled by 3 May 2017, some are expecting
market participants in 2016. April 2016 hit the process to spread to PET.
an annual peak of 920-980/tonne. Look at the currency, I am having to
gamble on the currency. That will determine A South Korean ADD investigation for PET
Secondly, PET rates have been whether I lose or gain on my PET deal, is nevertheless unconfirmed officially and,
unpredictable. By the end of November said one trader. as with anything in the market, players are
2016, domestic spot PET values over 900/ waiting to see what happens.
tonne were described by one source as a Regarding longer term developments,
psychological barrier. That barrier was then players have different views. This is, after all, what they have come to
broken the following week. expect from European PET - a product that
One market participant noted that growing did its best in 2016 to leave many feeling
So expectations for the product in 2017 are PET consumption globally should swing helpless to global trends.
at least mixed if not unsure. prices back up.
2017 promises to be no different.
In the short term, several players say that Indeed, the ICIS Supply and Demand
prices will not go down. Margins have been database shows that European You are 10% of the consumption, one
low for producers and the settlement of consumption increased by 4.4% between trader told its customers. You follow the
feedstock paraxylenes (PXs) December 2014 and 2015. While preliminary data for ways, nothing much or less.
contract at a 20/tonne increase will only 2016 also shows a rise of about 4% in the
intensify upward pressure on PET. year since 2015. Additional reporting by Caroline Murray
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PLASTICS/POLYMERS
POLYMETHYL METHACRYLATE (PMMA)
EUROPE PMMA LIGHTING Although PMMAs strengths are clear, so Estimates of those who are able to do this
APPLICATIONS TO SHINE IN 2017 are its weaknesses namely it is more vary between 10-20% of PMMA buyers.
By Katherine Sale fragile than the unbreakable PC alternative
. It is not a quick process with some saying
The outlook for 2017 in the European Producers are looking into developing it can take up to six months to convert
polymethyl methacrylate (PMMA) market PMMA with a higher breaking point to production.
is looking bright, with players expecting increase its use in cars. This would
the lighting applications sector to shine represent a breakthrough for PMMA, which Although it does not apply to the majority
next year. will not only have the possibility of replacing in the market, for some buyers in the roof
glass but also other plastics, for example lighting sector, for example, a rise in PMMA
Expectations at this stage are for continued in dashboards, while also retaining its prices coupled with a fall in PC prices, could
growth in the European market, at levels aesthetic qualities. result in some players assessing their options.
above GDP for some applications.
A solid performance from the construction Overall, with inventories low, demand robust
Lighting applications are used in the derivative sector is also expected, in particular in and upstream supply shortening weekly, the
automotive and construction sectors, with the replacement lighting sector. A number majority of PMMA sellers do not currently
growth expected for both in 2017. of buildings are updating their lighting see this as a serious threat.
requirements to use LED bulbs, and this is
Although growth expectations for the expected to result in an increase in demand The European styrene acrylonitrile (SAN)
automotive sector are cooling, a year-on- for PMMA, which is used to cover lights. market has, at times, also faced strong
year increase is still expected. competition from PMMA. Most of the time,
There has also been an increase in PMMA this has resulted in weak SAN demand and
The amount of PMMA used in vehicle use in facade applications, with continued a rather dull market situation.
production is increasing because of new growth in this sector seen in recent years.
uses and the pursuit of lighter materials to The fact that SAN is a very niche business
replace glass and metals. Another benefit of PMMA is its ability to has also made the situation more difficult.
disperse light, which ensures uniformity However, during the past few months, the
PMMA can be used for frontal lighting in without hot spots, and means that the increase in PMMA prices due to the global
cars which use LED lights, because LED LED bulb is not visible. This is particularly tightening of methyl methacrylate (MMA)
lights operate at a lower temperature than important for signs in commercial use, and PMMA supply, has resulted in some
traditional lighting making PMMA more and combined with its weather-resistant room for improvement for SAN volumes.
suitable. properties, PMMA is ideal. Again, this is Producers admit that they had to make an
seen as an area of strength for 2017. additional effort to get some positive results.
Unlike conventional front-lighting, larger
more complex lights are used in SUV Some players estimate that the construction The tight upstream MMA supply situation
vehicles, with one supplier saying that this sector accounts for 30% of European is expected to continue until the end of the
means a double-layer of PMMA is used in PMMA demand the highest percentage of first quarter of 2017.
some cars. demand in the region.
Whether this supply level will be mirrored
The hot topic in the automotive sector is Growth in both the construction and downstream for PMMA is in part dependant
the continuing pursuit of light-weighting automotive sectors are largely driven on the supply balance in Asia. Material
vehicles, and here there are some bright by microeconomics, but the increase in coming into Europe from Asia traditionally
possibilities for PMMA. applications is also exciting some PMMA increases after the Lunar New Year period,
participants. which falls on 28 January 2017.
Manufacturers continue to replace glass
and metals in cars with lighter plastics. PMMA does compete with other plastics in Due to the tightness in global MMA supply,
Comparing the weight of traditional glass some applications. The increase in PMMA less MMA has been polymerised, and at
with a highly-transparent PMMA alternative, prices in Q4 2016 combined with the fall this stage, it is unclear if the traditional
manufacturers will be able to reduce the in PC prices this year, could cause some pattern will occur.
weight by half. competition in 2017.
90,000 tonnes of new PMMA capacity is
Unlike other plastics, for example Traditionally, PC is priced above PMMA, due to come on stream in the Middle East
polycarbonate (PC), PMMA does not and some buyers have the flexibility to in the second half of 2017, with the potential
yellow over time from exposure to ultra- switch between the two. to impact on global trade flows.
violet (UV) rays.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Some market participants say Asian some players believe the new supply may advances in lighting applications the future
material could be displaced in places such be needed to meet continued growth in the is looking bright.
as Europe and Turkey, with this new wave market.
of Middle Eastern material. Additional reporting by Vasiliki Parapouli
Although the future of the global supply
Given the current snugness in supply and balance is not clear, demand for PMMA
the demand growth estimated for this year, in 2017 is expected to be strong, and with
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PLASTICS/POLYMERS
RECYCLED POLYETHYLENE TEREPHTHALATE (R-PET)
VIRGIN PET OFFERS HOPE TO post-consumer PET bottle prices would help You can rely on ICIS
RECYCLERS AS THE R-PET to reduce pressure on recyclers margins.
for all your market
MARKET LOOKS TO 2017 intelligence needs
By Luke Milner R-PET flake prices were broadly stable
in the latter part of 2016 and the closing
The European recycled polyethylene stages of the year saw less price pressure PRICING INFORMATION
terephthalate (R-PET) market is looking on R-PET flakes as virgin PET prices rose
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prices and recyclers margins under balanced.
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While increasing virgin PET prices in late market conditions and settle your contract prices
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Looking to 2017, the latter stages of 2016 2016 helped to increase the gap between bids and price movements
have given recyclers some hope that the virgin PET and R-PET to what market
pressure placed on prices by low virgin participants consider to be healthier levels,
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much of 2016 will subside. flake prices in the closing stages of 2016.
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positive sign for 2017; if this trend continues
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PLASTICS/POLYMERS
ACRYLONITRILE-BUTADIENE-STYRENE (ABS) AND
STYRENE-ACRYLONITRILE (SAN)
STYRENE PRICES TO REMAIN The election of Donald Trump as US President fourth quarter of each year, which is usually
DEFINING FACTOR FOR EUROPE and the recent Brexit vote make flexibility key slower in activity, he said.
ABS, SAN MARKETS for styrenes outlook, they said.
By Vasiliki Parapouli According to this source, customers will
However, flexibility seems not to have the restock in January; for February, some
European acrylonitrile-butadiene-styrene same importance in a market like SAN. years it has been a very strong month,
(ABS) and styrene-acrylonitrile (SAN) market other years not so much.
players forecast that feedstock styrene prices Flexibility is not key for SAN as the product
will again monopolise the attention of both is mainly sold by price; if you hit the right In terms of prices, this producer expects
markets in 2017. price you get the deal. No matter if you are ABS to continue to move up, at least for the
flexible or not, a producer said. first few months of the year.
We expect styrene monomer prices to
keep increasing, at least for the first quarter Europe ABS players expect no big changes Looking at previous years, we expect a pretty
of 2017, and SAN prices will follow the for 2017, while the average growth rate similar pricing pattern for Q1, he added.
same direction, a SAN producer said. for the EMEA region during the year is
expected to be around by 3- 4%. A source on the buy side said that its demand
Another SAN producer said that the general is looking already strong for Q1 2017:
price pressure increased during 2016, For the first half of 2016, the growth rate
coming from both other European suppliers of the EMEA countries has been at 9%, We are already getting big inquiries from
but also from Asian players. according to a supplier, who added that the Russia, Poland and Czech Republic, we see
biggest competitor for European ABS has a very busy first quarter coming, he said.
Players forecast that SAN compounding always been imports.
demand will increase, as it is linked to ABS, With regards to the gap between Asian and
while household demand could remain Chinese plants are participating more in European prices, a producer said that it
stable or decrease slightly. the export business towards Europe and reduced quite a bit in 2016:
that raises concerns for European players,
Styrene industry players at the ICIS he added. We will be in a better position against the
aromatics conference in Vienna, Austria, in Asian competition in 2017; of course, the
November, claimed that the market should Another producer said that next year will be best scenario for the end of 2016 would
become more flexible in order to deal with quite similar to 2016: have been for raw materials to increase
growing political and economic uncertainty, both in Europe and in Asia; but that did not
as well as other factors that could possibly We expect the first quarter of the year to be happen and we were forced to increase our
impact its fundamentals. the strongest; it is the exact opposite to the prices. Still, the difference is not that big.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
PLASTICS/POLYMERS
TURKEY PE
SUPPLY COULD BE MAJOR Turkish LDPE, HDPE film CFR prices vs Chinese LDPE, HDPE film CFR prices
INFLUENCING FACTOR FOR
TURKISH PE
By Matt Tudball
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
oversupplied, and HDPE film prices have problems in Turkey mean demand levels the weak currency as an excuse to defer
been much slower to move compared with remain lower compared to Europe. payments. This has a knock-on effect up
prices for LDPE. the polymer chain, and many sources in
Some Egyptian HDPE material has been Turkey now say payment collection is one
Unlike Chinese LDPE, the average price seen in Turkey, and some sources in the of the major problems facing the market.
of HDPE film CFR China is just over $10/ Turkish market expect imports from Egypt to
tonne higher than in Turkey, meaning increase going forward, adding extra length Potential political change could also have
Turkish prices face less upward pressure to the market. But as Iranian suppliers focus an impact on the market later in the year
from Asia. And with a potential new supply on better Asian netbacks for the time being, as buyers and sellers wait to see what
of HDPE expected from Egypt in 2017, that any new HDPE imports could be used to fill will happen if a proposed referendum on
pressure will diminish further. up any gap left by the lack of Iranian imports. constitutional change gets the go-ahead in
the first half of the year. The referendum will
HDPE supply increased in 2016, with ETHYDCO has been exporting LLDPE to decide whether current president Recep
regular monthly volumes of up to 10,000 Turkey, along with Qatar and Saudi, but in Tayyip Erdogan will be granted executive
tonnes per month entering Turkey from small volumes. These exports to Turkey are powers to rule Turkey as president.
Uzbekistan. In July, Egypts ETHYDCO also expected to increase into the year, but Regardless of the outcome, the referendum
started production of HDPE, although it has currently LLDPE is the most balanced of all itself may lead to subdued trading activity
yet to start exporting significant volumes the markets. in the country as was seen around the
to Turkey. Currently, due to Egypts lack elections in June 2015.
of foreign currency, it is likely that exports Domestically, Turkey will continue to face
will be directed to Europe in preference economic problems as the dollar continues With several aspects at play, all of which
to Turkey because of better European to strengthen against the lira and other could all have an influencing factor on the
demand and to facilitate the flow of US emerging markets. The lira dropped to a Turkish market, it is understandable that
dollars into the Egyptian market. While both new record low of 3.72 against the dollar on participants are finding it hard to predict
the EU and Turkey benefit from 0% import Monday 9 January, and buyers in Turkey what lies in store for the market, and the
duty for Egyptian material, the economic have found that their customers are using country as a whole, in 2017.
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PLASTICS/POLYMERS
TURKEY PP
TURKEY PP MARKET FACES Turkish CFR raffia prices vs China CFR flat yarn (raffia) prices
UNCERTAIN START TO THE YEAR
By Matt Tudball
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Producers have almost all increased their if they have kept their stocks limited in as was seen around the elections in June
January offer prices to Turkey because of recent months because of the uncertain 2015.
the rising crude prices following the cutback market outlook.
in oil production by both OPEC and non- However, despite the on-going economic
OPEC oil-producing countries. Players from all sides of the market will also problems and political uncertainty faced in
be watching to see what happens should Turkey, it is still one of the largest importers
This, together with limited supply to a proposed referendum on constitutional of PP in the world, with annual import rates
Turkey because of better arbitrage change get the go-ahead in the first half of continuing to grow, with 2016 volumes
opportunities in China and some planned the year. The referendum will be to decide looking on track to match those of 2015.
maintenance outages in Egypt and India whether current president Recep Tayyip Due to the large volume of imports entering
at the end of last year, will allow producers Erdogan will be granted executive power to the country, producers cannot afford to
to take a more bullish stance with Turkish rule Turkey as President. Regardless of the ignore the market even with the currently
buyers. These buyers may also find outcome, the referendum itself may lead weak demand levels.
themselves in a tough negotiating position to subdued trading activity in the country
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POLYESTER FIBRE CHAIN
CAPROLACTAM
EUROPEAN CAPRO MARKET According to this source, Asian demand Another important point is the new nylon 6
FOCUS TURNS TO BENZENE, looks to be strong and even higher in terms capacity that is expected to come online in
CRUDE OIL of raw material prices. 2017:
By Vasiliki Parapouli
Although this will be a temporary situation, The general tendency, especially for
The European caprolactam (capro) it will surely have an effect in all western integrated players, is to push prices up in
market witnessed a different ending in markets, at least for at the beginning of 2017.advance, while waiting for nylon 6 to flood
2016 to previous years, as a jump in the market due the new capacity, which will
feedstock benzene prices in a seasonally A capro producer said that the stronger dollar appear later in 2017, the buyer said.
quiet month like December made the will give some room for improvement with
contract price negotiations quite a regards to Europes market competitiveness. Players from both sides of the market
challenging task. have pointed out several times that the
We expect the dollar to get stronger versus European capro needs a new approach
However, the strong upward trend of benzene the euro due to the political and economic defined by stability, rationalisation and
spot prices and the improvement of crude oil uncertainty in in Italy and Greece; therefore, more discipline.
prices led to some players restocking rather the general export position of the European
than destocking, keeping December demand market, not only of capro, will be much For suppliers, this new approach is needed
unusually strong, in an attempt to avoid better, he added. in order for margins to be recovered and
paying higher prices in January. the market situation to become sustainable
This source said that the market again.
The market has moved into 2017 with all experienced a similar trend at the end of
eyes turned to raw material prices and 2014, when the dollar was again stronger The whole year has so far been
crude oil movements. and the impact to the overall European disappointing for profits and although
industry was very positive, generating growth looks solid, it was expected to have
What we are forecasting for the first half strong demand from the export business. a faster pace, a buyer said.
of next year is a higher crude oil price
with respect to the average level of the Demand in engineering plastics was 3-5% The opportunistic behaviour of some market
second half 2016. Consequently, there higher in 2016 and this trend seems to be participants has to give its place to a certain
will be support for a price increase in all holding up in Europe; the carpet industry is level of stability where capro can become
downstream petrochemicals, including not doing as well as we would like but it will balanced again and every business in the
capro and nylon 6, a buyer said. come around, the producer said. value chain can survive, sources said.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
PU CHAIN
MDI AND TDI
EUROPE MDI AND TDI PLAYERS levels over the past few years. It expected September 2016. Over this period BASF
HOPE FOR STABILITY IN 2017 prices to remain at these elevated level as a continued to run its 80,000 tonne/year
By Ben Lake result, if supply stability continues. Schwarzheide facility. This has not been
able to fill the supply/demand gap and
After a largely smooth year, the The changing climate could begin to TDI remained structurally short throughout
European crude methyl di-p-phenylene influence spread of demand across the 2016.
isocyanate (MDI) market has ended year. A source highlighted the mild winters
2016 tumultuously, with pricing shooting of the past two years. This allowed the After finally beginning to produce volumes,
up following numerous plant outages. construction industry to work continuously the Ludwigshafen plant was then idled due
Production problems are not expected to throughout the year. In comparison, the to a technical defect. With no indication
last, however, and players anticipate a sudden drop in temperatures over the of a return date, players face continued
return to normality next year. past few weeks has stopped construction shortages in the market.
outside. Cold weather across Europe could
Current production issues at sites run by dent sales in the colder months. If BASF reaches full production capacity
Covestro and Huntsman are not expected in 2017, this will leave the market
to persist. While shortness may last into There remains an oversupply of pure MDI oversupplied, according to sources. While
January, there is little anticipation of issues in Europe. This small market is unlikely to the expectation would be that prices would
over the next year. Few gaps in supply see any major change in demand. It could, fall, after so many hikes, this may not be the
were seen in 2016, and the belief is that this therefore be expected for this market to case, as prices in Europe are still the lowest
trend should continue. remain flat in 2017. globally. Multiple production issues have
also hit other plants around the world and
A source said that there might be a small Toluene di-isocyanate (TDI) players have seen prices climb even higher than Europe.
bump in demand next year but nothing endured months of turmoil in 2016 with the
major, with stability predicted overall. Another view on 2017 conditions remaining uncertain. With the arbitrage window open, the excess
source saw a healthy increase in demand as product may end up exported out of Europe
customers had invested in new lines. Supply issues in 2016 stem from the and price levels could sustain or take longer
delayed start of BASFs new 300,000 tonne/ to decay than expected. This is contingent
While prices have risen to around the year Ludwigshafen plant in Germany. on global TDI prices remaining high and
2,000/tonne level, one producer said that Originally due to come online in late 2015, this again is tied into European production
this is more representative of historical price the plant did not begin production until levels.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
SOLVENTS
ETHYL ACETATE (ETAC)/BUTYL ACETATE (BUTAC)
EUROPE ETAC LOOKS TO Next year could be similar to this autumn, importers away from the European market.
IMPROVED SUPPLY, BUTAC once demand has picked up said a At current prices, imports are making their
EXPECTED TO STABILISE producer. way to Europe but it remains to be seen if
By Ben Lake volumes are enough to fill any capacity gap
There will be more material available in not filled by INEOS.
The profitability of the European ethyl Europe, with INEOS set to complete a
acetate (ETAC) markets future is dependent 100,000 tonnes/ year expansion to its Hull, Butyl acetate (butac) prices are expected to
on an evolving supply situation in 2017. UK plant at some point in 2017. INEOS has return to levels seen before BASF entered
already said that it has intentions to move force majeure following an explosion in
The import market saw significant some of this material abroad turning Europe October.
restrictions over large parts of 2016. This into an export region in the process.
has especially been true of Indian exporters. The lack of this major producer is fuelling
Numerous issues, such as increased Without imports, the market was short in current price hikes but once it returns
shipping and feedstock costs, have 2016, meaning there will be demand to be to market, sources are expecting a
rendered the European market unprofitable. filled in Europe. It is unclear if the expansion reestablishment of the status quo. Butac is
Some of these will drag into 2017. will meet the entirety of demand in Europe. normally structurally oversupplied in Europe
and this keeps prices supressed.
The Indian governments demonetisation We provide, say, 10% of European
policy, which has rendered large swathes of requirement. Might drop to 6-8%. There With no set return date and market talk
physical currency in the country worthless, will be an impact, a player in the Indian suggesting anywhere between weeks and
is due to finish at the end of December market said at the time of the INEOS months for a return to production there is no
but the effects could drag into 2017. While announcement. guarantee of a quick resolution.
players feel its influence easing, the policy
is still having an effect. A trader said it did not believe that 2017 would Once production levels return, a source
be as volatile as 2016, with prices not returning sees no reason that prices would move
If Europe remains unpalatable for imports, to the lows seen for large parts of 2016. again for the rest of the year.
buyers could find themselves running short
of material when demand picks up, as it We see a level maintaining above 900/ Same flat level as for most of 2016. Dont
is expected to do from February onwards. tonne for most of the year, said the source. think there will be any new demand, said
Without the material coming from abroad, the source.
sources expect prices to maintain the higher Prices were driven down as suppliers
levels seen in recent months. competed for market share, this pushed
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SOLVENTS
IPA
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Dollar/euro exchange rate, 2016 following closures over the last ten years.
You can rely on ICIS for all your market intelligence needs
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price movements
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
SOLVENTS
MEK
SUMMARY
The supply and demand outlook for MEK
in 2016 is stable, with no capacity changes
scheduled over the next 12 months.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
countries such as India, Northeast and southeast Asia for over 180 commodities. chain, enabling you to grasp the local or regional scenario in a global context.
Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
SOLVENTS
MIBK
EUROPE MIBK TO REMAIN is expected to return to structurally You can rely on ICIS
STRUCTURALLY LONG, ROCKED BY balanced-to-long once the production
issue is resolved.
for all your market
FEEDSTOCKS intelligence needs
By Chris Barker
However, traders have noted that export
European methyl isobutyl ketone (MIBK) demand has been strong in 2016 and this PRICING INFORMATION
prices are expected to be strongly affected trend is expected to continue into 2017,
ICIS is the benchmark for independent and
by feedstock price trends and the typical although this may be negatively affected by reliable price assessments for key Asian
structural factors impacting the product rising spot prices in Q4. countries such as India, Northeast and southeast
Asia for over 180 commodities. Our reports also
in 2017. provide price histories and expert commentary
The market remains vulnerable to a similar to help you understand the key price drivers and
The limited production base remains a supply shock as in 2014-2015, with only market conditions and settle your contract prices
confidently with access to time-sensitive offers,
concern in Europe and leaves the product two major producers - Arkema and Shell bids and price movements
relatively vulnerable to supply shocks and - remaining in operation, and with Shells
price spikes. plant at Pernis in the Netherlands making
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up 3/4 of remaining capacity.
SUMMARY
European MIBK spot prices have risen The feedstock outlook for 2017 is stable-to- NEWS INFORMATION
strongly in Q4 of 2016 after being stable-to- firm due to the recent OPEC and non- Be the first to find out about breaking news
soft for most of the year. This was a result OPEC agreements to cut oil production, but and analysis across the global petrochemical
markets. Our market-moving news articles cover
of tightness from one of the major European with significant uncertainties depending on
production updates, plant capacities, output and
producers, according to market players, the strategies of major oil producers. This shutdowns, plus so much more.
although this could not be confirmed at the has already boosted WTI crude oil prices by
source. approximately 15% since late November. Request a free trial of ICIS news
Spot demand is expected to remain weak in For the moment, little impact has been seen
SUPPLY AND DEMAND DATA
2017 due to structural factors, with on MIBK pricing but significant pass through
is expected to upstream propylene in 2017, Receive an end-to-end perspective across the
MIBK spot only making up approximately global petrochemical supply chain, enabling
10% of demand in the market. As a result, with market players expecting a double-digit you to grasp the local or regional scenario in
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MIBK spot price 1-year chart up to 2030.
FORECAST REPORTS
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
SURFACTANTS AND
OLEOCHEMICALS
FATTY ACIDS AND ALCOHOLS
EUROPE FATTY ACIDS/ALCOHOLS Feedstock tallow prices have been on There is some market consensus that PKO
ON AN UPWARD PRICING the rise because of competitive demand supply could ease towards the end of the
TRAJECTORY from the energy sector, supply issues from first quarter as crop yields in Indonesia and
By Cuckoo James inefficient production and on the back of a Malaysia are expected to improve after last
spike in alternative feedstock, vegetable years El Nino adversely affected farming.
European palm-based fatty acids and alcohols oils. The tallow market is balanced to tight.
prices were on an upward trajectory last year, However, others disagree as PKO prices
and the outlook for pricing in Q1 remains Feedstock palm kernel oil (PKO) prices have shown no signs of dropping.
bullish due to a rise in feedstock prices. have also been on an upward trajectory,
driven by market shortage. Hotter weather There are other factors that are expected
Palm-based fatty acid and alcohol prices from El Nino this year has adversely to exert upward pressure on fatty acids and
in the first quarter of 2017 are expected to affected PKO production and yields in alcohols, including the euro to US dollar
increase due to a feedstock supply shortage Indonesia and Malaysia. exchange rate.
in Europe, albeit amid minimal purchases
as buyers wait for softer prices. There is stiff competition between tallow The euro weakened versus the dollar in
and palm fatty acids, with some customers 2016, from $1.08 in January 2016, down to
Many Q1 fatty acids and alcohols contracts choosing to buy the cheaper tallow-based $1.03 at the time of writing.
are currently being finalised. Upstream products. This has, in some instances,
prices have been increasing from the offset some of the upward pressure on The rise of the US dollar has typically
beginning of the fourth quarter, primarily on palm-based product, especially on palm pushed up prices for European fatty acids
insufficient production. oleic acid. and alcohols.
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UPSTREAM FEEDSTOCKS
BIOFUELS
BLAND BIODIESEL AND TWO be that sellers will be able to offer greater on 11 May, closing its huge 380,000 tonne/
BRIGHT SPOTS FOR BIOETHANOL GHG savings next year as a result of more year Rotterdam ethanol plant.
IN 2017 efficient processes.
By Vicky Ellis & Sarah Trinder Swooping in to buy the asset, which has
This could counteract the expectation of a pivotal role in Europes market thanks to
As seen in previous years, legislation increased consumption as a result of a its size and location near the Rotterdam
remains at the heart of the biofuels story for higher GHG emissions saving target to pricing hub, came Belgian ethanol producer
2017. Biodiesel is facing uncertainty amid some extent. Alcogroup (in partnership with Vanden
the potential annulment of anti-dumping Avenne Commodities and Vandema).
duties for material from Argentina and An imminent legislative issue on the horizon
Indonesia. for European biodiesel is whether WTO and This is also a source of uncertainty for early
EU court rulings that anti-dumping duties 2017: how quickly and to what level will
For the bioethanol market, booming supply (ADDs) on Argentinean and Indonesian Alcogroup ramp up Rotterdam production?
and shifts in the EUs sugar regime are the biodiesel will result in biodiesel from these
big factors to watch out for in 2017. This countries re-entering the European market While buyers will have been enjoying
follows a rocky 2016 when plants changed in 2017. some periods of softer prices in 2016, a
hands or restarted, while the political pessimistic mood dominated at a November
football of biofuels has continued to receive The ADDs were brought about by the conference of ethanol players, driven by
a kicking. allegation that differential export taxes from expectation of ample supply impacting
the countries were distorting prices but the prices.
BIODIESEL 2017 MORE OF WTO and EU court rulings have said that
THE SAME? this has been difficult to substantiate Two potential bright spots shine for
European sellers.
The European biodiesel market has had In September 2016, the European Biodiesel
yet another sluggish year in terms of Board said it would demonstrate that There is the end of the EUs sugar market
spot activity and the expectations from differential export taxes did distort biodiesel regime on 30 Sept 2017. Received wisdom
sources is that this is largely unlikely prices in the context of an appeal. goes, that beet ethanol producers will pick
to change. sugar over ethanol much higher sugar
EU SUGAR CHANGE MAY BE A prices are attractive.
Discretionary blending outside of mandates SWEETENER FOR BIOETHANOL
in Europe has decreased amid lower crude There is a counter-argument if the overall
oil values and although prices have firmed A key question for the European bioethanol sugar output of such producers increases,
significantly there are no signs yet that they market in 2017 is how it will cope with more ethanol be made as a co-product;
will increase to levels which would prompt overflowing capacity. meanwhile, sugar is not the largest
higher discretionary blending of biodiesel feedstock for European ethanol.
outside of mandates. The year of 2016 was fairly turbulent for
prices: freefall in first quarter, climbing in the Maize was king of the crops in 2014,
German biofuels legislation functions second and a fall in the third. The relative making 42% of all feedstock used by
differently to other EU member states and stability dominating in the fourth quarter was ePURE trade group members. Wheat made
instead of implementing a biofuels blending fairly unexpected. up a third, followed by sugar beet at nearly
mandate, prescribes a greenhouse gas a fifth of feedstock (18%).
(GHG) savings target. Late spring, early summer 2016
developments are set to have long-lasting Beet production is in two main consuming
Through blending biofuels, the GHG ramifications on the market well into 2017 markets, France and Germany, as a trader
content of fossil fuels had to be decreased and beyond. pointed out in December. I would say from
by 3.5% in 2016 and sources said that one day to another, if they all decide to
this resulted in lower levels of biodiesel In July 2016, Germanys agricultural group produce sugar, then we have a problem.
consumption. CropEnergies restarted its mothballed Can they really stop producing, I dont think
400,000 cubic meter (cbm) per year ethanol so.
In 2017 this GHG emissions saving target plant, Ensus, at Wilton in the northeast of
will increase to 4%, which could prompt England. A second bright spot is biofuels mandates
higher consumption of biodiesel. being boosted in countries like Belgium
CropEnergies was striking at a weak (doubling to 8.5% biofuel in transport)
However, one biodiesel market source moment for its rival, Abengoa, whose and Norway (upping its quota, though the
believes that one of the trends next year will Netherlands business filed for bankruptcy increase is for advanced biofuels).
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
One bogeyman that may prove to be less Europe, (up to 1.2bn litres duty free, claims Canadian infrastructure is not easily geared
frightening this year is the Canada-EU trade ePURE) and fulfil domestic needs with for such an export flow, according to
agreement, CETA. cheap US product. another trader, while long-term deals may
be needed for Canadian players to make
Signed on 30 October, removing trade For now, the view is that CETA will not the effort. And another block seems to be
barriers on ethanol, CETA could risk have a short term impact. CETA relies on weak Europe pricing.
ethanol coming into Europe from Canada, a the European parliament approving the deal
European producer said in November. The (it could come into force provisionally in
theory is that Canada could send ethanol to Spring 2017).
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ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
countries such as India, Northeast and southeast Asia for over 180 commodities. chain, enabling you to grasp the local or regional scenario in a global context.
Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
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Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
in the short to mid-term. current transactions, as well as short term and long
term planning.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
UPSTREAM FEEDSTOCKS
CRUDE
OIL PRICE STICKINESS MAY LAST The combined effects of negative interest UPSTREAM INVESTMENT STAYS WEAK
ON STRONG LIQUIDITY AND WEAK rates and lasting quantitative easing have
FUNDAMENTALS resulted in a liquidity glut, with a lot of sub- At the microeconomic level, the head of the
By Julien Mathonniere optimal investments earning poor returns. EIA, Adam Sieminsky, said that the lack of
While this may be good news for emerging upstream investment over the past couple
Subdued global oil production may keep energy markets offering higher yields, it of years or so might be a problem five years
the oil price above $50/bbl, although also upholds a volatility trap, subjugating from now. This confirms and amplifies the
probably below the $55 mark. The investors decisions to the markets short- findings of a Deloitte study earlier this
final OPEC production-curbing deal, if term movements. year where the accounting powerhouse
implemented and properly verified, will help estimated that the global upstream industry
rebalance the market. However, it may This liquidity has so far defied all the US would need to invest at least $3,000bn
not significantly affect supply and demand Federal Reserves attempts to restore in 201620 to ensure crude oil long-
fundamentals. credit bullishness. Currently, the short-term term sustainability. With an average 6%
interest is the only rate over which the Fed replacement rate and no Ghawar giant oil
Both Saudi Arabia and Russia have kept has kept a modicum of control, and it is field in sight, oil supply might feel the years
producing at record-high levels, and the US negative. As economist Lena Komileva of underinvestment as early as 2025.
will not participate in any collective supply from G+ Economics recently put it, the
agreement. Meanwhile, higher-breakeven risk-free rate has become the rate-free risk: The silver lining is that capital expenditures
shale producers prepare to return to the investors must pay to park government from several exploration and production
market. bonds. companies (E&Ps) increased during
Q2 2016, essentially on higher crude oil
After an inflexion in Q1 2017, world liquids Quantitative easing is generally intended prices and hence, larger cash flows. This
production will resume growth from Q2 as a short-term solution because perfusing suggests that prices now hovering above
2017 on a shallow-rising trend, according to the economy for too long puts downward the $50 mark may help maintain capex
the Energy Information Agency (EIA). pressure on the domestic currency and feeds commitments and mitigate production
inflation. Should the Fed decide to cut it off declines, especially after the big, general
Sustained demand from Brazil, Russia, abruptly, this may cause a taper tantrum, balance sheet clean-up of the beginning
India, and China (the BRIC countries), that is, a mass panic of investors drawing of the year and OPECs return to market
notably on increased power generation and their money rapidly out of a bond market that management.
the mobility revolution in India and China, is already suffering from low yields.
will keep in line with this increased supply. Some oil will also be displaced by the rise
A tightening of US credit seems unlikely of electric vehicles which, according to
World demand for refined products, in 2017, essentially because of the Feds some predictions, may cost the same price
however, may not pick up until the global overall dovish stance and reflationary bias. as their internal combustion counterpart in
economy improves. China, which remains The US federal fund rate is projected to end 2022 . This may entail the displacement of
central to it, currently exhibits a smoothly at 1.1% at end-2017. In a speech at the 2bn bbl/day of oil, which would be enough
decelerating GDP (est. 6.57% in 2017), a Economic Club of New York, the Feds vice- to create another, long-lasting supply glut.
massive debt overhang, and a fading effect chairman Stanley Fischer recognised the
from the past years investment stimulus. possibility that low long-term interest rates However, it is unclear how this may
can be a signal that the economys long-run play with the extra power demand, as
Persistently low interest rates have flooded the growth prospects are dim. the substitution effect from producing
fixed-interest markets with too much liquidity,
resulting in turn in a volatility trap, that is,
a situation where short-term movements on
the markets rule over investors decisions Figure 1 Distribution of participants projections for the change in real GDP in 2017
and jeopardise steady, long-term upstream
investments in hydrocarbons.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Figure 2 Cash flow and capital expenditures for select US oil producers SOME SOFT SPOTS IN FUNDAMENTALS
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
UPSTREAM FEEDSTOCKS
NAPHTHA
EUROPE NAPHTHA, GASOLINE OIL SUPPLY AND DEMAND producing countries that do not participate
FATE HINGES ON TUMULTUOUS in the OPEC-led supply reductions, the
OIL OUTLOOK Crude oil markets are now expected to EIA said.
By Cuckoo James re-balance only in the second half of 2017 if
the futures price curve is to be believed. OIL PRICES
The outlook for European gasoline and
naphtha markets continues to be heavily Brent futures time spreads are atypically Oil prices could easily take any direction in
dependent on oil price forecasts, because wide for the first half of next year, but the new year, and along with fundamentals,
of the price elasticity of gasoline in the tightens for months further out in the curve. traders would be keeping a close eye on
key US export market and the potential A wide spread in a contango market is code the US dollar as it is an influential factor.
impact of sharp shifts in crude oil prices on word for persistent oversupply.
European refiners. A rise in the US dollar typically exerts
OPEC and Russia are pumping oil at record downward pressure on oil prices. The
Prices for both gasoline and naphtha high levels prior to their promised output pricing trajectory of the US dollar in turn is
closely track that of upstream ICE Brent cut, according to surveys. highly dependent on US monetary policy.
crude oil futures.
Experts agree any action to cut supply from In January, oil and US dollar would be
Lower oil prices will help keep the record 1 January as promised at the OPEC summit heavily influenced by the US Federal
high consumption of gasoline in the US in November - if it happens at all - might not Open Market Committee meeting on 13-14
going, while higher oil prices can soon put a be enough in view of this imbalance. December, and traders will be watching out
damper on consumption. for the possibility of accelerated interest rate
Countries represented in the second OPEC hikes in the near future which could push
European refiners are structurally at higher and non-OPEC pact in mid-December the dollar higher.
risk than their US counterparts of suffering account for 60% of the worlds oil output,
a loss when oil prices rise sharply, as they and could be impactful if the terms are If the US economy stays strong through
have done in December 2016. complied with. the next month or two, its also likely that the
chance of another rate hike comes sooner
Refiners will profit from higher prices in the A big risk persists with Nigeria and Libya. than later. Again, stronger USD playing
beginning in case they have bought crude Having been affected by conflicts and against the oil rise, Larry said.
at lower prices but their margins will dip supply outages, these are two countries
once high crude prices start trickling into with significant potential to increase GASOLINE, NAPHTHA SUPPLY AND
their system, said Ehsan Ul-Haq, senior oil production, Natixis Economic Research DEMAND
consultant at KBC. analyst Abhishek Deshpande said in a note.
Depending on the direction oil fundamentals
EU refineries are under pressure as is and Another potentially bearish factor is Irans and prices take, US gasoline demand
they will have even more issues trying to production reference level. This is the level growth in 2017 will either slow or rise above
stay active while prices go against them. from which it will decrease its output. Unlike current estimates, up from a record high
We still havent seen export demand nor for most others, it is not set at October 2016 reached in 2016.
regional demand prop up enough to keep but at 2005, a gloriously productive time in
EU refineries running behind the margins, Irans oil history. The EIA estimates lower oil prices in 2015-
Carl Larry, principal oil and gas consultant 2016 ensured an increase of over 2% or
at Frost and Sullivan said. There are other dangers too. The prominent 400,000 bbl/d in gasoline consumption in
one being a potential increase in US tight oil the US.
However, experts also believe Europe production if prices start edging up.
could exploit potential weaknesses in Latin EIA also estimates US gasoline
American refineries, at least for a while. Some US production companies had consumption will reach a record high of
already increased investment, especially in 9.31m bbl/d in 2016.
Demand for crude from European the Permian Basin, when crude oil prices
refineries should remain elevated into neared $50/bbl, the US Energy Information The organisation is currently forecasting
year-end and early 2017, as weakness in Administration (EIA) said. gasoline consumption growth will slow to
Latin American refining continues to reduce just 60,000 bbl/d in 2017.
the availability of US product for European A price recovery above $50/b could
markets, Olivia Schorah from Energy contribute to supply growth in other U.S. The US is a key export destination for
Aspects said. tight oil regions and in other non-OPEC European gasoline and blendstock naphtha
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
- much of the prospects for the two markets make the largest contributions to global oil West African demand in 2016 received
depend on the direction oil prices and US demand growth. a boost after Nigeria resumed the oil-for-
gasoline demand takes in the new year. products swaps programme, and this could
Asian demand for European naphtha is continue into next year despite the countrys
Europe is structurally long on both gasoline here to stay, although arbitrage economics struggle for foreign reserves.
and naphtha, and has to export product to play a huge role in spot deals.
the US, West Africa and Asia to balance its European petrochemical demand could be
stocks. The International Energy Agency estimates the stable factor next year in supporting
naphtha, LPG and ethane use as naphtha demand, as it has done all through
Both products are well placed to exploit petrochemical feedstocks in non-OECD this year.
global growth in the transport and countries will rise by around 6m bbl/d
petrochemical sectors, which continue to between 2015 and 2040.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
countries such as India, Northeast and southeast Asia for over 180 commodities. chain, enabling you to grasp the local or regional scenario in a global context.
Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
understand the key price drivers and market conditions and settle your contract production and product trade flows from 1978 up to 2030.
prices confidently with access to time-sensitive offers, bids and price movements
Request your free sample report Enquire about our supply and demand data
Be the first to find out about breaking news and ICIS publishes monthly forecast reports for ICIS Chemical Business (ICB) e-magazine is the
analysis across the global petrochemical markets. selected commodities showing a 12-month rolling No.1 source of market intelligence and analysis
Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
in the short to mid-term. current transactions, as well as short term and long
term planning.
Request a free trial of ICIS news Enquire about the price forecast reports Download a free sample now
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OTHER
2016 HIGHLIGHTS
EUROPE HIGHLIGHTS 2016: THE JANUARY banks quantitative easing (QE) programme
YEAR NO-ONE PREDICTED Crude oil markets started 2016 the same was launched in 2015 started to cause
By Johnathan Lopez way they finished it oversupplied. rising prices, with the latest figures showing
Moreover, following the agreement between inflation at 0.6%.
Europe was shaken in 2016 by social and Iran and world powers to curb its military
political earthquakes for which we will only nuclear ambitions, sanctions on the country FEBRUARY
realise the full effects in years, perhaps started to be lifted allowing it to pump from Annual results for European chemicals
decades, as the European chemical its wells enormous amounts of crude, companies released in February and
industry braced for a different world enlarging the global oversupply. thereafter showed an improvement in 2015,
following Donald Trumps victory in the US compared to 2014, but petrochemicals
presidential election. European stock markets reeled from the continued posting contracting output
crude oil market crisis and jitters from volumes.
2016 started with economic predictions China, where even stock trading was
stating the UK vote on EU membership suspended at some point due to heavy Following the diesel scandal involving
planned for June was a geopolitical risk losses, a key market which had been so far Germanys major producer Volkswagen
but neither the countrys government or its resilient in supporting European chemicals in 2015, which uncovered software
corporates had made contingency plans in companies prospects. manipulation in order to pass laboratory
the event of UK citizens voting to leave the tests on CO2 emissions, the European
28-country bloc. The EUs chemical trade group Cefics chemical-intensive automobile industry said
director general, however, said at the time it welcomed new real-conditions tests.
Equally, the idea of Donald Trump that China would continue providing them
becoming President of the US was a distant with growth, although his words were In eastern Europe, fertilizers and chemical
reality for which the countrys media and among his last as the groups president company Grupa Azoty got embroiled in
opinion pollsters were caught off-balance. had already told ICIS it badly needed a a management crisis after the new far-
stronger voice to lobby for its interests in right government in the country dismissed
But December closed with the UK Brussels, the EU capital. That chosen voice without notice the CEO and appointed a
government scrambling around to find a was Marco Mensink, former director general party faithful in the post.
negotiation strategy on how to leave the of the Confederation of European Pulp and
EU as it plans its departure for 2019 and Paper Industries (CEPI). The dismissed CEO had entered just a
Donald Trump planning his arrival to the few months earlier, for the first time, the
White House on 20 January, promising that By mid-January, the woes from China had ICIS Top 40 Power Players 2015 list for the
all Americans will enjoy the effects of a new greatly affected German chemical major way he had placed Azoty at the vanguard
industrial renaissance based on patents BASFs share price as the company had of chemicals in eastern Europe and had
and products. made that market a key battleground for its embarked in an international expansion.
expansion projects. With production plants
This unforgettable year also saw more than ramping up while demand slowed, analysts However, like the best soap operas,
200 countries agree on bringing targets worried the company may not go into a not even before 2016 had ended the
to reduce their CO2 emissions as global supply/demand balance until 2020. government which controls 33% of the
warming continues to threaten agriculture company through the Polish Treasury felt
and lifestyles across the planet. Another sign showing the Chinese El yet a new CEO was needed and, without
Dorado was not proving as buoyant as much fuss, again appointed a new head for
In a year in which post-truth politics also expected came from French chemical major the company.
become a recurrent term, the new US Arkema, announcing it would not exercise
president has publicly questioned the reality an option to increase its stake at the Although operational performance has been
of climate change and has promised to Chinese acrylic acid and butyl acrylate joint holding during 2016, Azotys share price
eliminate all barriers to responsible energy venture Taixing Sunke Chemicals. has not, as investors dont normally like
production to tap into the countrys fossil political interference.
fuels reserves. Inflation in the 19-country eurozone started
the year at 0.3%, far from the European February also unveiled the $43bn offer from
2016 had started, however, with market jitters Central Banks (ECB) target of close to, but ChemChina to acquire the Switzerland-
in China as it seemed at the time the countrys below, 2%. headquartered agrochemicals major
debt was unrepayable. Chinas economic Syngenta, in a move which could facilitate
woes, however, were quickly put aside as its However, the enormous amounts of money food supply to the non-arable China for
central bank continued printing money. pumped into the euro system since the decades to come and left western analysts
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
amused at how state-printed money can do At his first public event since being The EU said later in August that it would
so much. appointed director general, Cefics Mensink review the DowDuPont deal very closely,
said he was actually feeling how EU citing concerns about the agrochemicals
MARCH lawmakers were coming to understand division.
As the effects of the ECBs QE struggled to better the needs of the chemical industry,
filter to the real economy, the bank presided adding the current Commission was Although a smaller deal, Germanys
over by Mario Draghi unleashed in March listening more carefully to its demands. Evonik also went US-bound in May when
an extension of the programme, as well as it announced the $3.8bn acquisition of Air
a move in interest rates to encourage banks However, the relationship between EU Products specialty & coatings additives
to lend to households and businesses. bureaucrats and the chemical industry business, a move viewed as expensive by
has always been complicated. In October, analysts.
However, the real problem of growth in the the executive director at the European
eurozone is unlikely to be fixed by printing Chemical Agency (ECHA) told industry While in May most of the European chemical
money the eurozone needs capital delegates to stop complaining and get industry supported a free trade deal between
investment to spur growth and project it on with the job of registering its chemical the US and the EU, the Transatlantic Trade
into the future, said analysts at the time, products within the Reach regulatory and Investment Partnership (TTIP), a
but also a bunch of German industrialists framework. crack started to appear as social pressure
who think the state needs to spend more mounted the new generation of free trade
on infrastructure and education to keep As a premonitory sign of the mess the deals as defined by the EU Commission
Germany at the forefront of the world country would be left in after the EU was not popular among large swathes of
economy. referendum, the global head of chemicals public opinion.
at auditor KPMG told ICIS in April that UK
March was also the month when companies should be making contingency Within chemicals, Austrias major Borealis
petrochemical major INEOS received at plans in case voters chose to leave the EU. CEO broke the ice saying the Commission
its Norwegian complex of Rafnes the first If only they had listened. was working against the will of the people
US ethane shipment, which the company while Spanish energy major CEPSA said
hopes will keep it competitive as the shale In April we also heard that the UKs TTIP would be a challenge for Spanish and
gas revolution on the other side of the pond chemical industry was overwhelmingly in European chemicals as their competitive
continues pumping inexpensive natural gas. favour of staying within the EU. They were disadvantages would only increase in a free
only two months away from finding out the trade area with US peers.
On the morning of 22 March, a terrorist country they operate in was not of the same
attack struck Brussels airport, in the first of opinion. The European chemical trade group Cefic
a series which would shake Europe in 2016, was always a strong supporter of TTIP,
killed 32 and left hundreds injured. Polands government continued publishing although the complexity of representing
sudden dismissals April also saw the CEO more than 30 countries and hundreds
The attack caused a reduction in air travel at refiner Lotos made redundant, without of companies will always cause dissent
which was reflected in Aprils imports of jet much explanation. Cefic was accused by players in the
kerosene into the EU. industry in May of representing mostly the
MAY interests of large global chemical players
APRIL German chemical major Bayer in May European and from overseas which would
By April, the manufacturing sectors in the unveiled a $62bn offer to acquire US naturally favour a free trade deal like TTIP.
eurozone started seeing a revival in activity agrochemicals major Monsanto. Farmers
which would only grow as the year went around the globe were therefore wondering By July, TTIP was already considered dead
by on the back of recoveries in periphery if their prospects to have some kind of by the German chemical trade group VCI
countries like Spain or Italy. Although the leverage with their suppliers would be and Cefics director general confirmed in
recoveries are nowhere near to providing valid any longer if Bayer was to succeed, September optimism would not be the
enough jobs for the youth and the long-term three large companies would practically right word to use when talking about its
unemployed, the chemical industry has control the market - ChemChina/Syngenta, survival prospects.
benefited from the bonanza as it is in the DowDuPont and its resulting agrochems
front line of the upturn. business and now Bayer/Monsanto. JUNE
On 23 June the stock and currency
The EU came up with yet another plan to Bayer, weary that its shareholders markets, the UK political establishment
stir the green sector within the 28-country had bought stock thinking more about and the countrys pollsters were all betting
bloc with a package about the circular a pharmaceutical company than an voters would follow the expected path of
economy although some chemical trade agrochemicals major, tried to convince them events and vote, albeit tightly, to stay in
groups showed fears that the measures with the narrative that due to the simple the EU. Bourses were up and the pound
would only overregulate. human need of eating, agrochems will sterling was trading at a healthy 1:$1.47.
always be a profitable business to be in and
However, by the end of the month, the would offset risks at pharma. By 09:00 GMT on Friday 24 June, markets
European Commission the EUs executive were in free fall and the UK Prime Minister
body was promising the industry at an Investors are not buying the story, at least David Cameron had addressed the nation
event in Brussels Better Regulation by yet. From more than 110/share in May, to announce his resignation the mess
scrapping duplications and rationalising the Bayers stock traded in December he had helped to create would be left to a
laws which rule the bloc. around 98. successor.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
For the first time in decades, the UK was quickly. On 14 July, Frances National Day, northern hemisphere boosts that products
not following the free market-focused, a terrorist driving a lorry ploughed into prospects.
liberal economics it helped establish in the crowds watching a fireworks display in Nice
80s. From immigration to big corporates by the Mediterranean sea. By December, prices had indeed recovered,
dominating the world, the referendum but probably not by as much as producers
campaign gave wings to those who did He left 86 people dead and 434 injured. would have liked.
not approve of developments in the last 30 France, in the midst of a social, political
years but had never been asked about and economic crisis, extended the state SEPTEMBER
them. of emergency declared in November 2015 Bayers initial $62bn offer to acquire Monsanto
after another terror attack in Paris which left ended up being $66bn by September, when
The country woke up suddenly to a 130 dead and 368 injured. the US firms shareholders agreed to the deal.
reality it had dismissed, or at least failed
to recognise: the north of England, the The Nice attack soon took a back seat in This was also the month when crude
birthplace of the industrial revolution but the media however when the day after, oil producers around the world started
now a post-industrial region where jobs are on 15 July, key EU ally Turkey suffered a recognising that as long as the oversupply
scarce and in many cases too badly paid, coup dtat. In events still unfolding as the stayed put, selling prices would remain low,
had voted overwhelmingly to leave the Turkish president continues a crackdown biting their national budgets in many cases and
EU, as recognised by UKs chemical trade against those he considers responsible, putting pressure on future projects expansions.
group CIA at the time. more than 100,000 civil servants, army
members and intellectuals have been Initial thoughts to start fixing the problem
A committed supporter of free markets and arrested or fired from their posts. of low prices crystallised in November and
globalisation, the UK and the US later in December, when OPEC members agreed
November were, 30 years after Ronald The failed coup attempt shook up the to cut oil output, a deal extended later
Reagan and Margaret Thatcher started their countrys petrochemicals industry. Many on to other 11 non-OPEC countries. The
economic revolution, suffering a backlash companies have struggled to recover from International Energy Agency (IEA) would
against the system which was meant to the events, with both demand and prices pour cold water on this in November.
create wealth at the top that would later on remaining low, and exports to Turkey
trickle down to the rest of society. seeking out better netbacks in Asia and September also saw German chemical firm
other regions. LANXESS placing a $2.5bn offer to acquire
It did not trickle down as expected and US-based Chemtura, a producer of high-
talk of those left behind by globalisation The tumultuous year was completed by quality flame retardants and lubricant additives.
became commonplace after Brexit. a slide in the lira to a record low against
the US dollar, with no immediate signs of That move, among others, gained LANXESS
Although overshadowed by Brexit, there recovery, and the national statistical agency CEO, Matthias Zachert, the top spot in the
was other news in June, such as BASF saying Turkey had entered negative growth ICIS Top 40 Power Players, a list of the most
announcing its intention to acquire specialty territory in the quarter July-September. influential chemical CEOs around the world,
chemicals and surface treatment producer which was published in November.
Chemetall, part of US Albemarle, for Meanwhile in Syria, Russias military helped
$3.2bn, which was ultimately completed in the countrys president regain formerly OCTOBER
December. lost areas, with Aleppo finally falling into BASFs Ludwigshafen plant in Germany
government hands by December. suffered the most serious accident in
Italys energy major Eni said it would decades on 17 October, which left three
keep under its umbrella the petrochemical AUGUST dead and several injured. As the accident
arm Versalis, after talks for a potential The UKs Bank of England (BoE) unleashed caused by an explosion only affected the
divestment with investment fund SK Capital on 4 August a 170bn stimulus package sites port overlooking the River Rhine,
collapsed in June. to try to fend off the expected downturn logistical operations were affected at first
after Brexit, although those supporting but the company managed to keep the
JULY departure from the EU continued to accuse disruption to a minimum.
Another eventful month, which started the bank of scaremongering and of creating
however with stock markets in Europe a negative vicious cycle which feeds The most serious accident in the chemical
recovering part of the losses posted after pessimism in the economy. industry in years, the incident left questions
the Brexit vote, emboldening those in the still unanswered about how it could have
UK who had supported the departure. In August we also heard German industrial happened, considering the supposedly tight
gases major Linde was in talks with US health and safety tests the site has to pass
However, voices across Europe started peer Praxair over a potential merger. every year.
unveiling the conditions required for the UK Although it took a few months and a CEO,
to continue having access to the European Linde finally said in December it had agreed
At the time, chemical analysts were divided
single market, where most of its exports are terms for a merger with the US firm.
about the potential implication of the
directed. The French chemical trade group, accident on the companys financials, with
for instance, told ICIS the UK should apply During the month, observers of some suggesting it could bite as much as
Reach if it wanted to trade chemicals with polyethylene terephthalate (PET) said the between 1% and 3% from BASF fourth-
the EU. low prices the product had had to endure quarter earnings before interest, taxes,
during the course of the year might have depreciation and amortisation (EBITDA),
But July will not be remembered by the bottomed out, after June saw low prices although others were more circumspect,
aftermath of Brexit as the news cycle shifted when traditionally the summer season in the arguing production would not be affected.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
How the accident affected fourth-quarter November was also the month when more You can rely on ICIS
financial will be unveiled on 24 February 2017, than 200 countries agreed on terms to
when the company presents its annual results. implement the Paris Accord from 2015 to
for all your market
curb CO2 emissions to stop the planets intelligence needs
NOVEMBER temperature rising.
The month European chemicals said PRICING INFORMATION
they were bracing for a different world While delegates gathered in Marrakech
ICIS is the benchmark for independent and
after outsider Donald Trump won the US to finalise details, however, there were reliable price assessments for key Asian
presidential elections. widespread fears the new president in countries such as India, Northeast and southeast
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the US would overturn the accords as
provide price histories and expert commentary
Following the same pattern as Brexit, large he intends to exploit fossil fuels to make to help you understand the key price drivers and
swathes of voters in industrial regions possible his promised industrial revolution. market conditions and settle your contract prices
confidently with access to time-sensitive offers,
decided to abandon their traditional house bids and price movements
the Democratic Party and opted for a Perhaps a sign of how climate change
billionaire who was promising to overhaul is already with us is the River Rhine in
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laws and ways of approaching business Germany, a key petrochemical transport
culture in order to Make America great route in Europe. Although normally at low
again by producing and hiring American water levels in the autumn, by 21 December NEWS INFORMATION
products and workers as a maximum the federal and local river authorities told Be the first to find out about breaking news
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for the time of the year.
production updates, plant capacities, output and
While the line won approval from a lot of shutdowns, plus so much more.
working class voters, the appointments Trump DECEMBER
has made to his administration have revealed Just one day after a German economic Request a free trial of ICIS news
the greatest number of billionaires and research institute explained how the
bankers a US government has ever seen. economy had ended the year in a festive
SUPPLY AND DEMAND DATA
mood, another lorry was used in a terror
Trump is not yet at the White House and the attack on a Berlin Christmas market, killing Receive an end-to-end perspective across the
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one of the most fascinating aspects of the a global context. Data includes import and
new year. Terrorism has become a recurrent theme export volumes, consumption, plant capacities,
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Chemical companies, the paradigm of an understand the threat is difficult to fend off, it
export-intensive sector, are concerned seems many feel the proposals from far- Enquire about our supply and demand data
the protectionist rhetoric heard during the right groups increasingly anti-Muslim and
campaign will translate into reality. nationalist are the way forward. How Europe
FORECAST REPORTS
deals with this will be a main feature of 2017.
Analysts in Europe have started pointing ICIS publishes monthly forecast reports for
selected commodities showing a 12-month rolling
at the growing wealth gap between those Elsewhere in Italy, a weak prime minister price forecast as well as details of supply and
at the top and those at the bottom as the who had proposed constitutional reforms demand, trade balances, capacity and margins.
fundamental reason for the Brexit and Trump and linked his victory in a nation-wide It is a valuable tool to identify commercial
opportunities in the short to mid-term.
votes, a problem the western establishments referendum to his post, was forced to quit
will need to start looking at if they intend to after losing. Enquire about the price forecast reports
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Markets, however, were unfazed by his
Back at home, European manufacturing resignation, although talk about the troubled DIGITAL CHEMICAL BUSINESS MAGAZINE
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December a sombre picture about stagnant of bad loans, Monte dei Paschi di Siena, providing decision support for executives making
volumes during the course of 2016. was on the brink of a bailout from the Italian current transactions, as well as short term and
long term planning.
Treasury.
In Spain, without a government after two Download a free sample now
inconclusive elections in December 2015 and December also left the EU deciding how its
June 2016, a minority cabinet led by Mariano Emissions Trading System (ETS) will look
Rajoy was finally formed in November, which like from 2020 onwards, with the unusual
pleased the Spanish chemical trade group. feature of the German chemical trade
group VCI and the EU wider group Cefic
However, Spaniards away from the disagreeing on the fundamentals.
booming metropolitan areas as the
country recovers from its worst crisis since The IEA also said in December if crude oil
the 1940s following the Civil War continue producing countries keep their promises for
to see unemployment at record highs and output cuts, the markets might move into
stagnant or decreasing salaries. Social deficit by June 2017.
discontent continues to be on the rise.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OTHER
AUTOMOTIVE OUTLOOK
AUTOMOTIVE INDUSTRY FACES Coupled with this, China continues to have Typical year-end destocking has not been
SERIES OF CHALLENGES IN 2017 rising debt estimated at around 250% as heavy in several individual petrochemical
By Mark Victory of GDP. As senior ICIS consultant John sectors in 2016.
Richardson argues and elaborates on in
The global automotive market looks to 2017 the December issue of the ICIS Global In Asia, this is because of the approach of
with a greater series of potential challenges Automotive Report, current liquidity may the Lunar New Year in late January, while
than in recent memory. be enough to keep the China bubble going in Europe expectations of rising feedstock
through 2017, but at some point an end will costs in the new year are trumping working
Will the recent rally in crude prices have to come. capital arguments in several downstream
continue? Will the spread of populist markets.
politics continue to cause shock geopolitical This will have major consequences for the
results? Will Chinas GDP growth continue, global automotive industry because China is Typically, players destock towards the new
or will its increasing debt levels start to the worlds largest market for automobiles, year to reduce working capital on year-end
weigh on demand? Will a Donald Trump and imports heavily from other regions. balance sheets.
presidency be good or bad for the global
economy? Will protectionism increase? In the past few years, sales growth in China Although US vehicle sales rose in
has been supporting the auto industry November 2016 year-on-year which
All of these issues have the potential elsewhere meaning that this is perhaps was attributed to Black Friday deals
to reshape the sector even without the most serious risk for auto manufacturers passenger car sales continue to fall as the
factoring in the shift to electric vehicles and heading into 2017. market increasingly shifts to larger vehicle
lightweight materials, and the longer-term classes.
sea-change in demographics. Coupled with this, if the crude rally extends,
the industry could be faced with the This leaves the US auto fleet unbalanced,
As always, it will ultimately be undesired twin spectre of rising costs and and could be a problem for the industry
macroeconomic conditions that dictate the falling sales. if a macroeconomic downturn emerges,
strength of 2017 auto demand, which are because, typically, larger vehicle classes
deeply mixed and confused across the While the industry is moving evermore are more heavily affected by declining
globe following a series of shock events in towards globalisation, local issues are economic conditions than smaller classes.
2016. It is remarkable, given the underlying pushing individual regions in opposing
volatility of conditions, that auto sales in directions. Nevertheless, early forecasts for 2017 US
2016 have been so strong. GDP are positive, and petrochemicals markets
This is most clearly shown in the Global are expected to grow, according to ACC
One of the key drivers of this has been ICIS Basket of Automotive Petrochemicals predictions. With senior petrochemical figures
vehicle sales in China, which have been (IBAP), which was broadly stable (albeit at being nominated for key positions in Donald
stimulated throughout the year by vehicle a slight drop compared with the previous Trumps government, the industry could find
tax subsidies and are due to rise from 5% to month) in November as rises in China were itself with powerful government advocates as
7.5% at the start of 2017. outweighed by dollar-term falls in Europe the new president begins his term.
and the US.
One need only look at the pre-tax cut China In Latin America, uncertainty over Trumps
auto sales figures to gauge the impact. This is mirrored in the global market price policies and exchange rates is fuelling
China sales are, therefore, likely to decline. direction expectations from chemical chain volatility, as is continued economic and
players, where views are sharply mixed political instability, particularly in Brazil.
Stripping out China, global auto sales depending on individual market conditions. Nevertheless, Brazils GDP is expected to
in 2016 to November across key auto fall less in 2017 than in 2016.
producing regions would have fallen.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OTHER
CAUSTIC SODA
THE CALM BEFORE THE STORM Caustic soda FOB spot price 2016
FOR EUROPEAN CAUSTIC SODA
By Chris Barker
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Company Plant Location Capacity (KT) Status
INOVYN Tavaux France 396 DMT FM declared on 5 December due to technical problems
KEM ONE Lavera France 341 DMT Offline for mercury conversion until January 2017
TCI Sanmar Port Said Egypt 200 DMT Restarted following shutdown in November-December
Among the major plants scheduled to close and December. This is a possible source Chloralkali run rates are expected to jump
in 2017 is the Spolana, Czech Republic of material to fill any gaps in availability in the first two months of 2017 as capacity
site owned by Unipetrol, which will switch which has been long speculated about by utilisation goes back to normal following
to imported feedstocks to produce polyvinyl market players. lower run rates in the winter season.
chloride (PVC) in June, with Ercros also
closing capacity at two sites in Spain Turkey is a major European import market However, the market is expected to remain
towards the end of the year. This is likely and has suffered from political instability tight in the first quarter of 2017 due to
to lead to local tightness in the central throughout 2016, with an attempted coup in the aforementioned production issues
European and Spanish markets during the the middle of the year exacerbating already and tightness in the Mediterranean, with
time period of the closures. existing economic problems and increasing producers initially separately targeting
uncertainty. However, sources say that the double-digit increases, although some
The market consensus is that demand market has continued to grow at 1-2% prices have yet to be announced and
is likely to be at a similar level to 2016, per year. negotiations have not begun in most cases.
when it was regarded as strong compared
to seasonal trends in the none-Alumina
sectors. Thus, early expectations are for
firm pricing and erratic tightness in the
European market in 2017.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
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CENTRAL AND EASTERN EUROPE OUTLOOK
PETCHEMS FEATURE HEAVILY MOL also hopes that by the end of the this from Austrias OMV. Asked about its plans in
AS BIG CENTRAL AND EASTERN year it will be set to further capitalise on the sphere for 2017, it said it was planning
EUROPEAN GROUPS PURSUE the late 2015 launch of its 130,000 tonne/ no major petrochemical investments or
year butadiene (BD) plant by commencing facilities for the 12 months.
STRATEGIC CHANGE
production at a 60,000 tonne/year synthetic
By Will Conroy
rubber plant, built in Tiszaujvaros in Back in Poland, the largest Polish chemical
Strategic shifts are under way at three partnership with Japans JSR Corporation producer and second largest European
major central and eastern European (CEE) at a cost of forint (Ft) 70bn. fertilizer producer Grupa Azoty has
petrochemical producers as they prepare to announced that it is entering the new year
enter the new year. Analysts have generally praised MOLs following another management reshuffle.
strategic switch as well thought out. The
Polands PKN Orlen and Hungarys MOL idea of polyols looks interesting and MOL New CEO Wojciech Wardacki, who
are busy getting in line with newly released would actually like to develop it alone, which according to a treasury ministry source
several-year strategic plans, while the week is also an interesting development overall, has been appointed to better align the
before Christmas the largest Polish chemical said Tamas Pletser, an analyst at Vienna- companys strategy with the populist
maker Grupa Azoty was coming under the based Erste Investment. right governments policies, arrived at
purview of its third CEO in less than a year. Azoty talking about a revolution, stating:
MOLs big regional rival PKN Orlen has Management [at Grupa Azoty] is not
The new government-blessed company put out a 2017-2021 strategic plan familiar with the concept of revolution. My
chief, sources said, has been tasked with which, while allocating initial capital mission is to complete the integration of the
aligning the firm more closely with state expenditure (capex) of zloty (Zl) 800m for group, comprising of four companies, while
planning. petrochemicals during the first two years, ensuring that they remain independent, and
reveals little in terms of petrochemical to enhance the groups market position.
Of the three companies, it is MOL that has investments that might be ahead.
announced the most radical development An immediate task for Wardacki will be to
plan by far. Its new strategic gearing The company cited the great uncertainty ensure that more delays do not afflict the
towards petrochemicals and chemicals will concerning the paths the oil price and plan to build a world-scale 400,000 tonne/
see the group invest around $1.5bn every economic development would take in the year propane dehydrogenation (PDH) plant
five years until 2030 with the aim of turning near future, saying it had deliberately kept for the production of propylene, valued
the company into a leading European the plan non-committal investment wise so at $700m, at Azoty subsidiary Zaklady
enterprise in these two segments. that it could flexibly adopt capex decisions Chemiczne Police (ZChP). A tender to
as things became clearer. find a turnkey general contractor has been
We are considering a strategic investment announced.
in propylene production and propylene Orlens CFO Slawomir Jedrzejczyk did,
oxide-based polyols, with a final investment however, emphasise that petrochemicals Azoty, which is expected to release a
decision expected in the first half of next is absolutely one of the objectives for our strategy update during the first half of 2017,
year. Furthermore, we will raise our development. is having to fend off scepticism about its
petrochemical feedstock intake to three prospects from analysts who are wary of
million tonnes per year and introduce We will work on new products and on how government interference in its affairs
new product lines, said Miika Eerola, expanding the chain, he added. could throw it off course commercially.
MOL Groups senior vice president for
downstream production. In terms of investments already Nevertheless, Raiffeisen Centrobank
commenced, Orlen underlined that it was analyst Dominik Niszcz said the expected
The company anticipated that in polyols fully committed to the planned $360m scrapping of Polands treasury ministry in
there would continue to be growing demand Polyethylene 3 (PE3) project at Czech favour of a development ministry, which
in parallel with a lack of regional production Republic subsidiary Unipetrol, one of the would take over the states holdings in
capacity. biggest investments in the history of the companies such as Azoty and Orlen from
Czech petrochemical industry. Speculation the treasury, could be good news.
The company aim, according to Eerola, is that Orlen was minded to sell Unipetrol was
to deepen MOLs downstream integration well wide of the mark, it added. The development ministry as a supervising
along the value chain whilst also moving entity may better coordinate the expansion
towards semi-commodity and specialty Perhaps the least action in the field of plans and proposals of the companies
products in the packaging, health and petrochemicals in CEE can be expected that would fit into Polands economic
automotive industries.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
policy. I assume that any large projects to minority shareholders who have turned And second largest European soda ash
be undertaken by the companies will be to the courts in an attempt at getting an producer, Poland-based Ciech, may by the
thoroughly analysed, so that they match the opportunity to explore a move in which theyend of 2017 be preoccupied in assessing
big picture, he said. say they cannot see any business sense. incursions into Europe made by cheap
competition from new trona-based natural
Elsewhere across CEE, observers will Another Czech company, synthetic resins soda ash plants in Turkey. It recently
take stock of Unipetrols attempts to revive maker Spolchemie, will, meanwhile, be announced it was switching to four-year
Czech polyvinyl chloride (PVC) subsidiary hoping for a trouble-free first-year debut fixed-price contracts partly to combat the
Spolana. Burdened by old technology, the from its long-awaited membrane-technology, looming threat.
company was reacquired after a decade by mercury-free chlorine plant, finally
Unipetrol from Orlen unit Anwil, angering constructed after several years of delays.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
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Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
understand the key price drivers and market conditions and settle your contract production and product trade flows from 1978 up to 2030.
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Be the first to find out about breaking news and ICIS publishes monthly forecast reports for ICIS Chemical Business (ICB) e-magazine is the
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Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
in the short to mid-term. current transactions, as well as short term and long
term planning.
Request a free trial of ICIS news Enquire about the price forecast reports Download a free sample now
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
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CHEMICAL MERGERS AND ACQUISITIONS
While genetically modified organisms In the wider chemical industry, cheap financing Having said that, they are still growing at
(GMOs) used in agriculture have been an on the back of record-low interest rates in a faster pace than developed economies,
important source of revenue for Monsanto, the eurozone continued to allow companies so they will remain attractive in chemicals
Hall does not think the technology will to achieve the external growth they cannot companies long-term perspectives, given
take hold in Europe once the company is achieve organically in their home markets will that many of them in the west continue to
acquired by German chemical major Bayer continue to be subdued in 2017, according to have a large exposure to the more mature
as the eating healthy trends are only figures from the EUs trade group Cefic. markets of Europe for historical reasons.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
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CHEMICALS OUTLOOK
CHEMS STRUGGLE WITH WEAK EU same time, year on year comparisons with a consumer chemicals and personal care
ECONOMIES, COSTS AND SLOWER stronger part of 2015 were more apparent. products sales volumes. Indeed weaker
EXPORT MARKET GROWTH export markets have hit the performance of
By Nigel Davis The trade federation Cefic reported in EU companies large and small.
December that its economists expect a
Third quarter results season highlighted the small uptick in EU chemicals production of Fertilizer production in Europe was down
nervousness in the European chemical sector about 0.5% in 2017. Growth last year was sharply in 2016 as North African producers
running through the latter part of the year. The completely flat. in particular lifted output. A bright spot
outlook has worsened since with geopolitics was polymers where growth was driven
adding the most significant layer of uncertainty That overarching figure conceals very by automotive demand and demand in
and a period of will he wont he speculation different trends within the sector, however. packaging and electronics.
following the election in November of Donald
Trump to the US presidency. Petrochemicals production was up in Polymers demand in automotive is
2016 after several years of sharp declines. expected to moderate in 2017 but growth
The new presidents first 100 days will set Producers have benefited from the low oil price could be buoyed further by the other major
the tone for the year at least and is likely to and lower operating costs even though their end-use sectors.
encourage and concern business in equal competitive disadvantage remains. Naphtha
measure. costs in 2016 were down about 17% year For 2017, Cefic expects overall moderate
on year on an average oil price of $44/bbl, growth in a volatile and challenging
Chemical producers have a lot to lose if the Germanys chemicals trade group said earlier. environment, the trade group said of the
tide turns still further against global trade. overall chemicals outlook.
Tariff barriers would hit players in this sector Cefic notes that ethylene cash costs in the
hard. The UKs Brexit debate has highlighted EU are about double those in the US. That Growth for the sector in 2016 was not as
particularly the connectedness of chemical differential has reduced markedly since the high as expected a year ago. Industrial
markets and chemical companies. oil price fell sharply but remains significant. production has slowed in major global
Producing petrochemicals in the EU is markets and, with it, demand for chemicals.
No matter whether a producer is big expensive although relatively sophisticated
or small, barriers to trade or to the free end-use markets ensure a degree of Uncertainty and economic risks have
movement of people are bound to be underlying demand. intensified over the past few months VCI
a cause for concern. A return to more president and BASF CEO said earlier this
restrictive operating and marketing The EU chemical industry continues to month.
conditions would not be welcomed. weather the impact of globalisation as well
as competitiveness challenges associated This applies particularly to the EU, our
On European minds are the EU policies that with the cost of doing business in the EU, home market, he added.
will impact business in 2017, primarily the Cefic said.
ongoing energy debate. The Reach burden For example, the result of the Brexit
increasingly bears down on producers of all While demand for chemicals globally is referendum has adversely affected the
sizes. increasing year on year, the EU chemical investment and consumption climate in
industrys share of that continues to decline Great Britain, he said. Moreover, the
Attention is very much drawn to the next and it now stands third behind Asia and the EU is burdened with a long list of further
registration deadline in 2018 but Reach US in terms of worldwide sales. Despite problems: the refugee crisis, the unstable
evaluation costs and authorisation issues investment leakage, the industry is holding banking sector, the difficult government
are important across the sector with some its own to keep manufacturing in Europe, formation in Spain, the latent inability to pay
important chemical intermediates such as the trade group added. of Greece, the constitutional referendum
bisphenol A being added to the Candidate and the government crisis in Italy.
List of products that are likely to have to be Chemicals demand has been constrained
authorised in use. in the weak EU environment while Chinas The VCIs president also spoke about
slower growth and the lacklustre economic the controversial debate about trade
Petrochemical producers enjoyed performance in the US pressured export and investment agreements like the EU-
another good year in 2016 with margins volumes. Returns from exports have been Canadas CETA or the EU-US TTIP.
underpinned by still low oil-based costs and higher, however, as the euro has lost value
still high product prices. against the US dollar. At the moment, hardly anything speaks for
the economy picking up in Europe, he added.
Margins were squeezed towards the end Cefic noted that stronger competition and
of the year as the crude price rose. At the weak global growth had taken its toll on
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
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COMPANY PERFORMANCE
UNCERTAINTY PREVAILS IN THE petrochemicals, saw its net profit fall by interest and tax of $78m, over double the
EUROPEAN PETCHEMS INDUSTRY 27% year on year in the third quarter of $37m posted the previous year, while Shells
By Niall Swan 2016 with sales also down by 20%. chemical operations posted a 2% year-on-
year increase in Q3 earnings to $542m.
It is beyond a doubt that 2016 will go In its Q3 statement, the German company
down as one of the most turbulent but also said that it expects full-year sales to decline [It is] hard to be very optimistic about
most important years in modern times, due to the divestment of its gas trading the outlook. The first half of the year
not only in broad global terms but in the business, with operating profit before disappointed, said Paul Hodges, chairman
petrochemicals business too. special items seen slightly lower compared of consultants International eChem, in a
with 2015. recent blog post.
On 23 June, the UK voted in favour of
leaving the EU, a decision which, despite Covestro - which will shortly publish its first Then Q3 saw major volatility as the hedge
repeated warnings, was one that very few full-year results as an independent entity funds and high frequency traders played
believed would transpire. - saw a surge in third-quarter net profit, up their games in the oil market - prices
61.9% year on year to 259m, analysts weakened as demand slowed, but then
Fast-forward to 8 November, and the US questioned the resilience of the company in the story about another effort at an OPEC-
presidential election managed to trump tougher conditions. Russia quota deal pushed oil prices back
the UK in terms of unexpected votes as up again.
real-estate developer and reality television After Covestro experienced strong
star Donald Trump was elected ahead of tailwinds in 2016 [brought about] by lower This led to companies doing some out-
Senator Hilllary Clinton. raw material costs and the delayed start- of-the-ordinary stock-building during the
ups of competitor capacities, raw material summer months, said Hodges, but a lack
The impact of these two seismic events on costs are rising significantly since mid-2016 of demand from the downstream end of the
the chemicals industry has yet to be felt and the delayed capacity additions are value chain took its toll.
with Trump awaiting his inauguration on 20 finally coming. Consequently, we expect
January, while Article 50, which allows the that Covestro might see pricing power Of course, some companies still did
UK to leave the EU, will be triggered by the headwinds in 2017, said Baaders chemical relatively well - either because of luck, in
end of March, with two years of negotiations analyst Markus Mayer. being at the right place at the right time, or
expected. because they have a very robust strategy,
Specialty chemicals producer AkzoNobel he added.
MERGERS & ACQUISITIONS was another company whose Q3 results,
Elsewhere, there are major changes despite being moderately positive, failed to CAPACITY UTILISATION
afoot in the chemicals industry, with three inspire. Net profit was unchanged year on Less-than-impressive financial results were
major mergers or acquisitions - worth an year at 285m despite a 4% drop in sales. coupled with faltering capacity utilisation,
estimated $200bn cumulatively - in the which dropped to the lowest level for the
process of being completed. The Dutch companys results were roughly sector globally since the height of the
in line with consensus according to recession in early 2009, according to the
German agrochemicals major Bayers analysts at Sanford Bernstein. Baader Bank American Chemistry Council (ACC).
acquisition of US company Monsanto, was less kind, saying: Our conclusion
Swiss-based Syngentas sale to Chinese [is that a] 2% price decline in Q3 2016 Global capacity utilisation in October of last
state-owned chems company ChemChina, underpins our fear that Akzo has not the year fell to 78.4%, which is just above the
and the long-awaited merger of Dow and pricing power to surpass rising raw material lowest reading ever seen of 77%, according
DuPont are all expected to be completed in costs. to the ACC. Whats possibly more worrying,
2017, leaving an entirely different industry however, is that it says capacity utilisation
landscape. In a year that saw weak oil prices on the has been in constant decline since the end
back of over-production, a problem which of 2015, when it stood at 80.7%.
FINANCIAL PERFORMANCES 2016 OPEC is hoping to counteract with a
Looking back at Q3 results across the production cut, major oil companies such as However, according to the latest European
industry does little to reassure that things Shell and BP relied on their petrochemical Chemical Industry Council (Cefic) Chemical
will improve in the coming year. segments to produce strong results. Trends Report, capacity utilisation in the EU
reached 81.9% in Q3 2016, which is a slight
BASF, the worlds biggest chemical BPs petrochemicals business posted a Q3 quarter-on-quarter increase suggesting that
company and one of the largest in underlying replacement cost profit before there is some light at the end of the tunnel.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
FALLING CHEMICAL PRICES When taking all of the above into There was enough to be positive about in
Cefic also recorded that petrochemical consideration, its likely that the most the second half of 2016 to suggest that the
prices in the EU were 8.5% lower in Q3 prevalent word analysts will be using for industry is heading in the right direction, but
2016 than in the same period of 2015, while the European chemicals industry for the rising costs coupled with the disconcerting
in the wider EU chemical sector, prices foreseeable future is uncertainty. potential effects of both Brexit in the UK and
were down 4.6% year on year in the first Donald Trumps policies leaves a sour taste
nine months of 2016. as we enter into the new year.
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OTHER
EPOXY/EPICHLOROHYDRIN (ECH)
EUROPE EPOXY RESINS Speaking in December, one distributor said: The development of epoxy resins demand
MARKET LOOKS TO At the moment there is material coming will also be key to the development of
DEVELOPMENTS IN ASIA from Asia but I dont know what the situation demand in the European epichlorohydrin
By Luke Milner will be like in January or February. (ECH) market, as epoxy resins are the
largest downstream application of ECH.
The rising price of feedstock bisphenol A reduction in imports would help to
A (BPA) in Asia in December and the rebalance the European market at a time The ECH market, just like the epoxy resins
subsequent pressure placed on Asian epoxy when market participants are closely market, is watching developments in Asia
resins prices, as well as the strength of the watching developments in upstream pricing. as in 2016 some in the market saw ECH
US dollar against the euro, have become key imports affecting the supply and demand
talking points in the European epoxy resins However, it remains to be seen whether balance in Europe.
market as 2017 gets underway. this will lead to a change in direction in the
European epoxy resins market and price Although the ECH market in Europe was
The market has been particularly increases. Some in the market continue to generally considered balanced throughout
competitive in 2016 as sellers looked to doubt whether price increases would be early 2016, by the end of the year opinion
secure market share and imports helped to possible in early 2017. was divided, with two producers separately
keep the supply and demand balance tipped mentioning tighter supplies but other market
in the favour of buyers throughout the year. In mid-December, another distributor said: participants seeing a balanced-to-long
The epoxy market is a summer market. market.
Competition among sellers and market
length combined to maintain pressure on With the civil engineering and construction Mixed market views also led to mixed
epoxy resins prices throughout 2016 but sectors influencing demand in the epoxy contract price results in late 2016 and this
with signs of rising prices in Asia and some resins market winter is traditionally a quieter lack of concord provides the starting point
European market participants already time for epoxy resins, particularly when for 2017.
receiving offers from Asian suppliers at the weather is coldest or if the winter is
raised prices in December, several European prolonged. Propylene contract prices will continue to
players expect a reduction in Asian imports influence ECH contract price movements in
during the early months of 2017. The development of the markets supply 2017. However, with demand levels closely
and demand balance in early 2017 will in connected to developments in the epoxy
One European producer, speaking about part also be dependent on how quickly resins market both markets are likely to be
developments in the Asian market, said: demand from these sectors, amongst influenced by any fluctuation in import levels
Competitors from Asia Pacific will see others, picks up. and pricing.
additional costs and start increasing prices.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
countries such as India, Northeast and southeast Asia for over 180 commodities. chain, enabling you to grasp the local or regional scenario in a global context.
Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
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updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OTHER
FERTILIZERS
FERTILIZER FIRMS FACE tender held in mid-November following At present, Turkish companies are
POLITICAL, ECONOMIC slow domestic sales, high stocks and the exporting CAN but are not allowed to sell it
UNCERTAINTY demonetisation of the currency. domestically. The ban on AN is expected to
By Richard Ewing stay permanently in Turkey.
At the same time, China is not exporting at
Like other commodities, fertilizers face present due to better domestic prices on For the phosphates market in 2017, India
an uncertain 2017 due to political and limited availability, higher feedstock coal demand for diammonium phosphate (DAP)
economic uncertainty on both sides of the prices and transportation issues. Operating remains lacklustre and buyers are expected
Atlantic, with consolidation expected by rates are now heard down to around 50% to return to the market in Q2. Business
players looking to follow in the footsteps of of capacity and there is talk they could is very thin in India due to high stocks
Canadian giants PotashCorp and Agrium drop further given stringent environmental and requirements covered by previous
who should receive regulatory approval for checks on coal-based producers. purchases under MOUs.
their mega-merger in the summer.
The Chinese export tax policy for 2017 In April-December 4.59m tonnes of DAP
The global urea market is firm as the year has now been announced and the tax arrived at Indian ports and there are
draws to a close and looks set to remain on urea has been cancelled in line with expectations that around 5m tonnes will be
firm through January amid expectations expectations. Given that exports are limited imported in 2017.
that demand in Europe, the US and Latin by the reduced operating rates and the
America will pick up again in the new year domestic market giving a better net back Phosphoric acid negotiations for Q1
as well as India returning to the market. to producers, it appears the government is contract deliveries to India are underway,
no longer concerned about exports being with expectations heard of a $20-30/tonne
Prices have moved up in latest business, preferred over supplying the domestic reduction from the current Q4 price of $580/
with Egyptian tonnes trading at $255-261/ market. tonne CFR (cost and freight) with 30 days
tonne FOB (free on board) and Arabian credit.
Gulf urea at $250-255/tonne FOB. Egyptian There is even talk of the potential need for
numbers are in line with this time last year, imports during Q1 2017 to satisfy domestic The reduction or rollover is expected to be
while Arabian Gulf prices are $15/tonne demand given that the domestic market is in line with global DAP prices which have
higher. looking short for the spring season. been under pressure. It remains to be seen
whether the new price for Q1 will make it
The US market is looking short moving into The ammonium nitrate (AN) market is cheaper to import DAP or produce it locally
Q1 2017 and ahead of the spring season, ending the year on a firm footing, with in India.
with some estimations that the market supply limited as producers in Russia focus
is short by 400,000-600,000 tonnes at on the domestic market. The new price is expected in the coming
present. Imports are expected to be needed weeks and it will most likely determine the
even if awaited new domestic capacity While supply remains limited, demand is amount of DAP demand for Q1 and will give
starts up early in the new year. also restricted mainly within Russia. There some price direction to the market.
are some enquiries from Brazil but these
However, the US is undervalued compared are yet to translate into deals. The Chinese market will be the focus
to the international market and will have of Q1 for the phosphates industry. The
to increase price levels to attract import Compared to last year, AN prices in the government scrapped the export tax for
tonnes. Black Sea and Baltic are around 12% lower, DAP and monoammonium (MAP) and
at $185-190/tonne FOB versus $210-215/ reduced the tax for nitrogen, phosphate,
European demand is also expected to tonne FOB in end-December 2015. potash (NPK) from 30% to 20% for 2017
pick up in January/February for the spring effective from 1 January.
application season, with talk that 400,000 The major news moving into the New Year
tonnes are still needed. Meanwhile, there is expected to be the removal on the ban of Moreover, the government has been
are estimates that Brazil still needs to calcium ammonium nitrate (CAN) sales and cracking down on pollution from plants and
purchase 300,000-350,000 tonnes before distribution into Turkey. producers are heard to be cutting down
the end of January and will likely to have to production by 20-30% early next year.
pay higher to secure tonnes. The ban is expected to be lifted by February
2017. With the Turkish market being short This will have an effect on DAP prices
There are also expectations that major of CAN, the lifting of the ban could lead to which have been rising lately on increased
buyer India will return to the market in significant imports. domestic prices despite a lack of
January/February after scrapping its last international demand
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Ammonia producers are in a more upbeat North America benchmark prices have Potash prices found some stability in
mood heading into 2017 after a recent gained ground from multi-year lows earlier the second half of 2016 with numerous
rebound in prices west of Suez, although in 2016. Since August, prices in Canada cutbacks in output from all producers
new capacity planned for 2017 will create have risen from an average of $70.5/ combining with an uptick in demand
challenges for suppliers and traders, while tonne FOB Vancouver to $86.5/tonne FOB following the settlement of Chinese and
buyers in most regions will be spoilt for Vancouver. Indian contracts mid-year.
choice.
Some of this is connected with stronger The 2016 year finished on a firmer note,
The outlook for Q1 remains relatively prices in China starting in October, which with increases in demand in China as well
bullish, with no word from Russian came as somewhat of a surprise to the as spot demand noted in India and Taiwan.
manufacturing giant Togliatti on greater global market. Middle East sulphur prices The purchase tender season in southeast
export availability for January and February moved up during the fourth quarter lending Asia during the third-quarter put pressure
loading, and the future of Ukrainian further support to benchmark sulphur on producers, but few sales dipped below
producer Odessa Port Plant (OPZ) unclear prices. the levels established in Chinese contracts.
after failed privatisation attempts.
However, not all of the gains in Vancouver Negotiations for Chinese and Indian
The outlook for Q1 in Asia Pacific looks were led by the international market. contracts are expected to get underway in
better for buyers than east of Suez with spot a timelier fashion in 2017, with the 2016
offers already heard for February, albeit at Vancouver and the US West Coast have agreements marred by long delays owing to
undisclosed prices. spent the much of 2016 extremely tight falling prices and high stocks in China and
in supply, first from the Fort MacMurray India.
Demand for material in India is expected to wildfires in April, then from flooding and a
remain strong and until the phosphates slow ramp-up from both to solid production. However, global prices will be tested when
units of the $8bn Waad al Shamal project This supported higher prices toward the end capacity from the K+S Legacy mine in
start to consume feedstock Saudi of the year. Canada and EuroChems Russian mines
Arabian Mining Company (Maaden) should start producing in the second-half of 2017.
continue to offer spot tonnes on a regular Potash producers will be looking to make
basis. hay while the sun shines with the current Additional contributions from Rebecca
Sulphur prices in North America moving stability in prices not expected to last Clarke, Julia Meehan, Sylvia Traganida,
into the New Year are somewhat uncertain, through 2017 owing to new capacity coming Deepika Thapliyal, Mark Milam, Annalise
as weak phosphates markets and a recent on-stream in the latter half. Little and Kate Wilcock.
spike in sulphur prices battle against
one another.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
countries such as India, Northeast and southeast Asia for over 180 commodities. chain, enabling you to grasp the local or regional scenario in a global context.
Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
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updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
in the short to mid-term. current transactions, as well as short term and long
term planning.
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OTHER
MELAMINE
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
The trend for imports was not as clear with
imports rising for the first four months of
2016, however imports fell year on year for
the data available from August onwards.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Players are also concerned about the Prices were stable in 2016, but with 2017 starts with some upward pricing
impact of the UK leaving the EU and the demand for European product high at the pressure, good demand, European
election of Donald Trump as US President. end of the year this spurred European production running well, and players looking
producers to separately target price outside of the region for any factor that
However, at the start of the year strength increases between 50-100/tonne. could tip the current market balance.
and stability are the main messages for
demand, with supply and factors outside At this stage the market is divided, with (*Chart based on December Eurostat data
of the region being the main area of buyers seeing little justification for a high as of 16 December, Eurostat import/export
discussion for the ongoing first-quarter increase, with targets on the buying side data is subject to revision as more detailed
contract negotiations. between a rollover to a small double-digit information becomes available. EU figures
increase. comprise the aggregate of member states
data published by Eurostat.)
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updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
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OTHER
MTBE/EBTE
GASOLINE, CRUDE PRICE WAITING slightly increase following a 50% capacity Scandinavian growth may also be on the
GAME TO LEAD MTBE, ETBE expansion at the Ravenna MTBE/ETBE cards, suggested one market source, which
By Vicky Ellis plant at the end of 2016. The Italy-headed may be linked to greater focus on biofuels
energy firm Eni is understood to have in the region.
The industry is in wait and see mode, one begun this work in August.
MTBE and ETBE maker said at the end of However a recent change in focus of the EU
2016, thanks to the turbulent year for the The Ravenna site on the Adriatic coast, under its recent proposals for an updated
energy complex, with gasoline led around between Venice and San Marino, can Renewable Energy Directive (RED) have
by crude oil. produce either MTBE or ETBE and was caused some concern in the first generation
geared to make the former earlier in the biofuels market, for a change in emphasis
Fundamentally, changes in the oil market year. towards second generation biofuels.
will of course influence the absolute price of
the ethers, MTBE and ETBE. Ravenna has a capacity of 140,000 tonnes, In terms of external ETBE supply factors,
according to the ICIS Plants and Projects imports have been weak in 2016. Lower
To give the chemicals their full names, database, and so a 50% increase would lift Brazilian supply of ETBE to Europe is a
methyl tertiary butyl ether and ethyl tertiary this to around 210,000 tonnes. likely to be the key reason for this.
butyl ether, they are closely linked in price
and fortune to Eurobob gasoline, which ETBE Partly, South American governments
rises and falls based on supply/demand For the outlook of the market for ETBE, have been motivating consumers to take
dynamics and the price of oil. which is partly derived from ethanol, ethanol, according to industry feedback,
European biofuels legislation will be of which means more ethanol could stay in
Both are blended into gasoline to make the interest. the region, reducing exports to places like
products which end up at the petrol pump, Europe.
so gasoline consumption is key. Europes Increased biofuel needs in some countries
gasoline use has broadly flattened in the such as Belgium are anticipated, which will As things stand, this could imply that the
past couple of years in Europes major double its ethanol consumption thanks to a producer Braskem, which has three ether
consuming nations (see charts) and this higher biofuels mandate. The country has plants in Brazil, is unlikely to return its
trend looks set to continue based on what mandated E10, meaning ethanol in petrol exports to Europe to levels seen before
2016 data there is. should effectively double to 8.5%. 2016.
MTBE
At the end of 2016, European demand for
MTBE looked to be healthy in the first half
of 2017, according to another producer,
though it was too early to tell how this
demand would be the second half of the
year.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OTHER
RUSSIA OUTLOOK
RUSSIA PETCHEM SECTOR RELIES The government pledged to grant direct The plants PET capacity is expected to
ON STATE SUPPORT, MOVES financial support to infrastructure projects reach 500,000 tonnes/year in 2018, 1m
TOWARDS CONSOLIDATION needed to build the major plant of the tonnes/year in 2019, and 1.5m tonnes/year
By Sergei Blagov Eastern Petrochemical Company in in 2020.
Nakhodka port on Russias Pacific coast.
Russian petrochemical producers kept The funding is expected to be disbursed In recent years, Russias new petchem
pursuing major projects this year despite from 2018 on. The Eastern Petrochemical projects were implemented with the officially
the countrys continued economic Company is controlled by Russias oil giant stated goal of import substitution.
uncertainty, with many relying on direct Rosneft.
government support. Meanwhile, the In 2013, Russias petrochemical holding
sector continued moving towards further Plans to build the major petrochemical SIBUR started operation of its new 500,000
consolidation around the nexus of state-run plant in Nakhodka were first floated back tonne/year PP facility in Tobolsk, while
energy giants. in 1974. Rosneft started considering this Russias Titan group also started operation
project in 2007 and formed the Eastern of a new 180,000 tonnes/year PP plant in
In June, the Russian authorities moved Petrochemical Company in 2011. By late Omsk, western Siberia.
to revise the rules of the government loan 2016, Rosneft was understood to continue
interest rate subsidies to be offered to new project development of the Nakhodka plant. In 2014, Russia started operation of
chemical projects in coming years. RusVinyl, a new 330,000 tonnes/year PVC
The plant, to be based in Nakhodka, production facility at Kstovo. The launch
The move was aimed to encourage Primorie region in the Far East, is expected of Tobolsk-Polymer turned Russia from a
development of new projects and limit onstream in 2020-2021. It will have the net importer into a net exporter of basic PP
the countrys dependence on imports of capacity to produce 2m tonnes/year or grades.
chemical and petrochemical products. urea, 1.1m tonnes/year of ammonia and 1m
tonnes/year of methanol. The new plant is Last year, one more major production
According to the governments decree, expected to cost more than $5bn to be built. facility was launched in Russia. In February
investment projects to build new production 2016, the ammonia and fertilizer plant in
facilities to produce cords and yarns; Russias leading petrochemical producer Mendeleyevsk started operation at full rates.
speciality chemicals; oxides, peroxides Nizhnekamskneftekhim (NKNKh) also aims
and hydrooxides used as pigments and to build new major polymer facilities with The new production units have the capacity
isocyanates become eligible to receive the governments support. NKNKh plans to to produce more than 700,000 tonnes/year
government subsidies. finish construction of its new units to produce of urea, 480,000 tonnes/year of ammonia
600,000 tonnes/year of ethylene (C2) in and 230,000 tonnes/year of methanol.
Russias authorities have approved 2019, and a second-stage C2 unit, also
government funding amounting to $1.75bn 600,000 tonnes/year, by 2025 at an estimated The plant cost $1.5bn to build and was
to support a project of Russias leading cost of $7.8bn, according to the company. subject to delays. The regional government
petrochemical holding SIBUR to build the Nizhnekamskneftekhim has disclosed plans had earlier pledged to finish construction of
West Siberian petrochemical plant, also to cut dividend payments in 2017 to increase the project in the town of Mendeleyevsk in
known as ZapSibNefthekhim. investment in its C2 projects. the Russian internal republic of Tatarstan in
2012, and then in 2014.
By late 2016, the ZapSibNefthekhim The Russian authorities are backing a new
construction site employed nearly 13,000 project to produce bottle-grade polyethylene In the meantime, the Russian petrochemical
workers. terephthalate (PET) though this lagged sector continued moving towards further
behind the original schedule. consolidation around the nexus of state-run
The West Siberian petrochemical plant energy giants.
located in Tyumen region, western Siberia, The plants PET capacity was previously
is due onstream in 2020. expected to reach 486,000 tonnes/year In March 2016, the Russian oil company
in 2017. However, this project remained Bashneft finalised a deal to take over the
The projects total cost is expected to reach slow to be implemented, apparently due to countrys major petrochemical producer
$9.5bn, while the plants total capacity is funding problems. Ufaorgsintez.
due to reach 1.5m tonnes/year of ethylene,
500,000 tonnes/year of propylene, 1.5m In November 2016, the authorities of Bashnefts interest in Ufaorgsintez was
tonnes/year of polyethylene (PE) and Kabardino-Balkariya region signed an increased up to 100%. Ufaorgsintez, the
500,000 tonnes/year of polypropylene (PP). agreement with subsidiaries of China countrys leading producer of polymers,
This project is supported by the government National Petroleum Corporation (CNPC) to acetone and phenol, is based in Russias
despite signs of domestic PP overproduction. build the new PET plant. internal republic of Bashkortostan.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
In mid-October, Rosneft moved to take These transactions were seen as a move Therefore, the countrys petrochemical
over Bashneft and the transaction valued towards further consolidation of the Russian production facilities are becoming
at $5.2bn was approved by the Russian petrochemical sector, because Rosneft increasingly dominated by a small number
Federal Antimonopoly Service in late already controls a number of petchem of state-run energy companies.
November. assets, including Angarsk Petrochemical
Company and SANORS.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
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Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
OTHER
SHIPPING
EUROPE SHIPPING MARKET shipowners, and some sources suggest that There were hints of consolidation in
FACING UNCERTAINTY IN 2017 rates could increase as a consequence. the market last year, with Stolt-Nielsen
By Melissa Bartlett and Sarah Trinder There are some saying that higher rates acquiring Jo Tankers in November.
could prove difficult to achieve though.
At the beginning of 2016 there was hope The positives to this deal were that this
in the European shipping market that lower If there are many ships around, rates will meant Stolt-Nielsen acquired new vessels
bunker fuel costs would translate into a go down, even if bunker fuel prices are without ordering more into the market.
positive year for ship owners. high, one ship operator said. However, a spokesperson at the company
said at the time that this would in no way
However, despite comparatively lower and The contracts for 2017 that were prompt Stolt-Nielsen to start recycling
less volatile crude oil price movements renegotiated at the end of this year are vessels.
versus recent years, shipping movement already fixed with bunker escalation
has slowed noticeably, with routes inside clauses in most of them. Owners will try Sources expect the trend for consolidation
and outside of Europe proving sluggish and to get higher rates but it will be difficult, a to continue in the coming years, with
rates on the decline for a large part of the shipbroker added. players thought to be racking up losses
year. behind closed doors.
A bunker escalation clause is a device
For the most part chemical tanker shipping in contracts which allows companies to There are a lot of deals being done
has been considered one of the more cover their costs should bunker fuel costs people are selling vessels. Theyre losing
stable markets across the industry in 2016. increase at any point. assets and making cash for short-term
Results in the 8th Maritime Employee expenses. Eventually they will struggle
Survey, conducted by maritime jobs Not only are shipowners covering financially. You hear rumours about that
specialist Halcyon Recruitment and online themselves against the prospect of rising big owners are talking consolidation, one
training provider Coracle, suggest that fuel costs, they are also said to be locking source said.
working conditions were best for tanker themselves into contracts for longer in an
sector employees. attempt to keep vessels employed. Meanwhile players in the market expect
demand for vessel space to be largely
Those in the tanker segments fared best Owners are locking in contracts for longer stable going into 2017.
with 56% receiving a bonus and 42% a pay periods, one broker said, adding that one
increase, the survey said. player in particular was offering low rates Volumes [shipped] next year will be a
and long contract terms in order to lock in rollover or slight increase. Some new trade
However, this is not to say that the market volumes. routes are going to appear. Trade routes
has survived a long summer of discontent which were coming into the market this year
unscathed. With rates and vessel employment having like methanol flows from the US Gulf to
faced a tough year, it is not really surprising Asia. That should increase further, but I still
As Basil Karatzas, founder and CEO of to see players being forced to be more think overall volumes will be more or less
Karatzas Marine Advisors & Co, highlighted competitive. the same, within a half percent up or down,
recently: The four major market segments one source said.
(dry bulk, tankers, containerships and Throughout 2016 European ship-owners
offshore) have not been moving in unison, have been faced with deciding whether to Were not going to see a big increase in
but, for the most part, all four have been accept continuing erosion of rates to keep volumes on the short as political change
bleeding cash for the best part of the last vessels on the move or to keep vessels puts uncertainty into the market, it added.
five years. When the whole industry is in port to wait for better offers, incurring
losing money (and not just a few ship significant costs which may not be possible The whole industry has faced a summer of
owners or market segments), concerns to recover considering the weak market uncertainty, and it is yet unclear whether a
naturally arise about structural problems conditions. One source suggested that it recovery is imminent.
within the whole shipping market. costs about $8,000 a day to have a ship
waiting in port in Europe. As Karatzas pointed out: It is possible
There are no significant signs on the that the current pessimism is not fully
horizon that the current situation will change Although newbuilding activity decreased justified. After all, the maritime industry has
in 2017. in the first eight months of 2016, there are unconsciously become an integral part of
still new vessels due to enter the market in our daily lives, with more and more people
A recent upswing in crude oil prices amid the coming months, and with no significant worldwide used to a middle-class lifestyle
an OPEC deal to cut production in 2017 increase in enquiries on the horizon, the and accustomed to products (including
could result in firmer bunker fuel costs for pressure is building on some players. food) from a global distribution list.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
Although there are no clear drivers for there is no evidence to suggest any notable that still nothing is certain.
an imminent market recovery, one can change on the horizon in the next 12
discern trends that will shape the shipping months. Many industry experts expect it to We are cautiously optimistic for year
industry in the next decade. Larger and be several years before any sustainable end and [the first quarter of 2017], said a
better capitalised ship owners with cost improvements materialise, noted the source.
efficient operations and a dependence on Halcyon Recruitment and Coracle survey.
technology seem to have a comparative [It is] still hard to say if its sustainable, [the
advantage, he added. Among a market that has underperformed market has been] very volatile, it added.
almost every expectation last year it seems
Save for some short term improvements, the only thing players are confident of is, is
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
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Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
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updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
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OTHER
TITATNIUM DIOXIDE (TIO2)
EUROPE TIO2 DEMAND TO HOLD the end of 2016, beyond low seasonality, In the paper laminate sector, there is talk
STABLE, OTHER CONSIDERATIONS which it attributed to economic and of similar healthy demand for 2017 to that
REMAIN political uncertainty in Europe. It therefore seen in 2016, if not higher, depending on its
By Heidi Finch considered there to be no justification for downstream portfolio.
any upward price movement in Q1 2017,
Underlying titanium dioxide (TiO2) demand in despite the proposed three-digit price hikes. In terms of TiO2 supply in Europe,
mainland Europe is likely to remain relatively producers have cut back capacity globally
steady in 2017, taking into account market Separately, some producers have and they been stricter on inventory levels
maturity, but this will also depend on how the announced their intention to raise prices by during 2015/2016, which has helped to
economy and prices pan out in view of further 150/tonne or 200/tonne from 1 January remove the excess in the market and
proposed price rises. 2017. This was believed to be due to rising support an upward price movement during
upstream costs and the need to improve the second half of 2016.
However, the TiO2 producer landscape is profitability in the industry, combined with
likely to look slightly different in 2017, in view low inventory levels. There is some expectation that European
of Huntsmans proposed tax free spin-off TiO2 producers will continue to keep their
of its TiO2 Pigment, Additives and Textile Some buyers conceded that an upward production closely aligned to demand in
Effects businesses in the first half of the year. price movement may be likely in Q1 2017 2017 for the same reasons.
for feedstock, profitability and supply related On top of this, Huntsmans TiO2 facility
European TiO2 consumption into the main reasons, but some suggest that any price in South Africa will be closed by 2017 for
paints and coatings sectors is expected to rises will be moderated by low seasonality restructuring and cost cutting reasons.
be fairly steady, albeit with the possibility of and the sizeable price rises implemented
some slight movement in either direction, over the past few quarters. Despite this, European buyers and resellers
depending on economic conditions and part remain unfazed by Huntsmans closure
of Europe. There is also some talk that if sizeable price of its TiO2 plant in South Africa during
rises are likely to continue during 2017, the fourth quarter of 2016, even though
One TiO2 buyer from the paints and there is a possible risk that downstream volumes from Europe are expected to fill the
coatings sector said its target is to demand could be jeopardised, particularly gap, post South African plant closure. This
grow above the market in 2017, but it into the downstream decorative paints is because the South African TiO2 plant is
acknowledges that this is likely to be sector, which is typically price sensitive. relatively small in size anyway.
challenging, taking into account fragile
economic conditions over recent months. However, one downstream plastics player Players are eagerly awaiting Huntsmans
said its demand has not been adversely spin-off of its TiO2 Pigments, Additives
However, it remains hopeful that some pick- affected by recent price rises, although it and Textile businesses and how this will
up in activity will be possible, stating that suggests that if this were to continue over shape up. It remains to be seen if this will
it does not expect the downstream paints a sustained period during 2017, then it said only mean the formation of a new business
demand in 2017 to be worse than 2016, some demand destruction could occur. under a new company name or if this could
which it said has been a bad year. also lead to TiO2 capacity changes as well,
Nevertheless, the TiO2 demand outlook for according to market players.
Another player suggests that the demand 2017 from the downstream plastics and paper
outlook for paints and coatings demand in laminate sectors remains rather promising. A Huntsman company spokesperson,
Europe in 2017 is likely to vary, depending however, recently said Nothing has been
on the part of Europe. There was talk of stable to slightly rising published with regards to any business
demand from the downstream plastics changes other than the separation out of
It went on to say there is some additional sector in northwest Europe, in particular in Huntsman.
paints and coatings demand in the UK from Germany in 2017. This is based on what
mainland Europe, because of currency some consider to be favourable employment Overall, players do not expect to see any
related cost benefits, which it suggests conditions, which is likely to help support significant change in TiO2 supply and
could continue, if exchange rate factors investment in construction activity. demand in Europe. However, sources are
were to support this. keen to see how Huntsmans expected
One TiO2 buyer in the downstream plastics spin-off will play out and how demand will
It added that paints and coatings demand in sector is hopeful that some uncertainty fare, as political and economic uncertainty
mainland Europe is likely to be stable, if not regarding the effect of Brexit on plastics in parts Europe and the possibility of further
slightly lower in 2017 for economic reasons. demand is the UK is likely to be offset TiO2 price rises over a sustained period
One TiO2 buyer in the Mediterranean talked by expected healthy plastics demand in remain considerations.
of a weak paints and coatings demand at Germany in 2017.
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
You can rely on ICIS for all your market intelligence needs
ICIS is the benchmark for independent and reliable price assessments for key Asian Receive an end-to-end perspective across the global petrochemical supply
countries such as India, Northeast and southeast Asia for over 180 commodities. chain, enabling you to grasp the local or regional scenario in a global context.
Our reports also provide price histories and expert commentary to help you Data includes import and export volumes, consumption, plant capacities,
understand the key price drivers and market conditions and settle your contract production and product trade flows from 1978 up to 2030.
prices confidently with access to time-sensitive offers, bids and price movements
Request your free sample report Enquire about our supply and demand data
Be the first to find out about breaking news and ICIS publishes monthly forecast reports for ICIS Chemical Business (ICB) e-magazine is the
analysis across the global petrochemical markets. selected commodities showing a 12-month rolling No.1 source of market intelligence and analysis
Our market-moving news articles cover production price forecast as well as details of supply and of the global chemical markets. It is the essential
updates, plant capacities, output and shutdowns, demand, trade balances, capacity and margins. It is reading for global chemical industry players,
plus so much more. a valuable tool to identify commercial opportunities providing decision support for executives making
in the short to mid-term. current transactions, as well as short term and long
term planning.
Request a free trial of ICIS news Enquire about the price forecast reports Download a free sample now
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for commercial decisions based on the content of this report. Content published between December 2016 and January 2017.
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