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

  • Spanish Market: Petrochemicals
  • 24/12/24

US demand for butadiene (BD) is expected to increase in January, but buyer sentiment for the remainder of the first quarter remains uncertain.

Inventory restocking in January is expected to draw down excess supply and provide near-term price support, according to market participants. Derivative manufacturers aim to rebuild inventories following earlier-than-normal destocking initiatives this year. Many buyers employ standard inventory control management strategies to avoid paying higher end-of-year inventory taxes, particularly in Texas. Others cut costs to improve year-end financial statements.

Domestic demand in February and March is less clear, as market participants question whether the market will rebound from persistently low demand at the end of 2024.

US BD prices on a contract basis fell by 12pc duringthe fourth quarter, owing to weak demand and oversupply. Demand was depressed by BD consumer turnarounds in October, seasonal slowdowns between November-December and trade pressures tied to derivative imports.

US tire shipments this year are expected to rise by 2.1pc to 338.9mn units, surpassing the record set in 2021, according to the US Tire Manufacturers Association. However, market participants along with US trade data reference a jump in tire imports from Asia-Pacific. Both Bridgestone and Goodyear have said low-cost tire imports and structural changes in segment profitability across the Americas are eroding their market share, fueling capacity rationalization, asset sell-offs and plant closures in the region.

Acrylonitrile butadiene styrene (ABS) is another segment at risk of stronger competition from low-cost, Asia-origin imports. Ineos Styrolution plans to permanently shut down its ABS plant in Addyston, Ohio, in 2025 because the facility cannot compete with imported material.

"Over the past few years, we have seen the ABS market become increasingly competitive, particularly with growing competition from overseas imports," Ineos Styrolution chief executive Steve Harrington said in late October.

Protectionist trade policies are likely to be a feature of president-elect Donald Trump's second administration, potentially altering business investment decisions and durable goods trade flows.

Even if demand does not improve, planned maintenancein the first half of 2025 is expected to tighten BD supplies. A heavy turnaround cycle for steam crackers will concentrate in the first and second quarters, constraining availability of feedstock crude C4.

One integrated US Gulf coast producer plans to enforce BD allocations while its assets are offline for planned maintenance.

A separate, non-integrated producer has not announced BD sales controls, based on feedback from its customers. This same BD supplier was short on feedstock supplies for parts of this year, with the crude C4 merchant market illiquid in North America. A third producer has scheduled a cracker turnaround starting in January, but no indications emerged that would limit term volumes from its BD unit.

Reduced BD supply during cracker maintenance is likely to pull volumes away from the export market until the second half of 2025.

Export spot cargoes in the fourth quarter more than doubled from the third quarter, serving as a critical outlet to clear the domestic market of surplus BD supplies, even as lower export prices pressured US margins.


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06/02/25

BP puts Gelsenkirchen refinery in Germany up for sale

BP puts Gelsenkirchen refinery in Germany up for sale

Hamburg, 6 February (Argus) — BP said today it will begin seeking buyers for its Ruhr Oel business, which includes the 257,800 b/d Gelsenkirchen refinery and an associated petrochemicals plant in western Germany. The UK company hopes to reach a sales agreement in 2025, although the exact timing will depend on approval of local competition authorities, it said. The sale should have no affect on short-term supply of oil products in western Germany as the refinery will keep up normal production in the interim, the company said in a press release. BP had said it planned to downsize Gelsenkirchen , shutting four unitsand reducing its crude capacity by a third. The shutdown of the affected units is scheduled for the end of the 2025 and will go ahead, BP told Argus . Potential buyers are not yet known. BP is the latest in a series of companies looking to sell or reduce their refinery shares in Germany. Shell is still searching for a buyer for its 37.5pc stake in the PCK consortium's 226,000 b/d Schwedt refinery, in eastern Germany, after a sale to UK energy firm Prax fell through in late December. Shell was also in discussions to sell its 32.25pc stake in the Miro's consortium's 310,000 b/d Karlsruhe refinery to czech company MERO CR in 2024, which did not result in a sales agreement. Shell is further on track to shut down the Wesseling plant at its 334,000 b/d Rhineland refinery complex. Russian state-controlled Rosneft intends to sell its German subsidiaries, Rosneft Deutschland and RN Refining & Marketing, which are held under the trusteeship of the Federal Network Agency. These assets include a controlling stake in the PCK joint venture, a 24pc share in the Miro's consortium and a 28.6pc share in the Bayernoil joint venture, operator of the 207,000 b/d Neustadt-Vohburg refinery in Bavaria. ExxonMobil announced its intention to sell its 25pc stake in the Karlsruhe refinery to Austria's Alcmene, a subsidiary of Estonia's Liwathon, in 2023. The sale fell through in July 2024 after a German court upheld a ruling banning the company from selling its stakes in the Miro consortium following an injunction filed by Shell. BP also operates the 95,000 b/d Lingen refinery in western Germany. This is unaffected by the sale plan for Gelsenkirchen. By Natalie Müller Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

China’s PDH plants prepare for trade disruption


04/02/25
04/02/25

China’s PDH plants prepare for trade disruption

Concern over a potential resumption of the US-China trade war and shifting US-Iran relations has led Chinese plants to lift rates and increase feedstock purchases Shanghai, 4 February (Argus) — China's propane dehydrogenation (PDH) plants ramped up operating rates and increased their purchasing of propane for inventories as they prepared to face new obstacles to trade from a potential resumption of the US-China trade war and changing US-Iran relations. But two new PDH projects have delayed start-up amid the uncertainty. China's PDH plant operators are concerned about a potential sharp increase in import costs should Beijing remove waivers on a 25pc tariff for US propane and butane arrivals that was introduced in 2020. Tightening US sanctions on Iran could also affect China's ability to take increasing volumes from the country. US and Iranian propane accounts for 59pc and 22pc, respectively, of China's total propane imports of 29.3mn t in 2024, GTT data show. China's PDH run rates climbed to a six-month high of 74pc in January, Argus data show, despite weak demand downstream given the lunar new year holiday from 28 January to 4 February. "It's not clear what is going to happen in the coming months, so it's better to keep production now," an east China-based PDH plant operator says. Prices of propylene and polypropylene are also expected to climb from February onwards as any US sanctions placed on Russian tankers could increase costs for petrochemical integrated refineries in China, according to some market participants. China's LPG importers, including PDH plants, tend to stockbuild in January. The country's LPG imports increased by 25pc on the month to 2.8mn t in December, and were forecast to have reached 3mn t in January, Kpler data show. Weak production margins and concerns over US-China trade relations have coincided with two PDH projects being delayed. Wanhua's 900,000 t/yr Yantai plant that was due to start up in late 2024 is now possibly opening this month, while Fujian Zhongjing's new 1mn t/yr PDH plant in Fujian may be postponed until the second half of 2025, according to market participants. China PDH operating rates % Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US Mexico-Canada tariffs to disrupt polymers markets


31/01/25
31/01/25

US Mexico-Canada tariffs to disrupt polymers markets

Houston, 31 January (Argus) — Planned US tariffs on Canadian and Mexican imports will disrupt years of free flowing polyethylene (PE) and polypropylene (PP) trade between the three countries, market sources say, which could lead to higher prices and less spot market trading. US President Donald Trump repeated on Thursday plans to impose 25pc tariffs on all Canadian and Mexican imports as soon as 1 February. The US and Canadian petrochemical markets in particular operate like one market, with buyers purchasing resin from producers on both sides of the border. Canadian producers are embedded in US buyers' supply strategies, but if Canadian resin is suddenly 25pc more expensive, buyers may need to reconsider other alternatives within the US. Canadian producers may feel obliged to swallow the costs to keep market share, while others may back away from spot trading in the US market, where margins for generic prime, offgrade and widespec material are already lower. "It's about to get pretty crazy," said one US polymer distributor, active in both the US and Canada markets. Canadian producer footprint significant There is approximately 4.6mn t/yr of PE capacity in Canada operated by three major producers, Nova Chemicals, Dow and ExxonMobil, representing around 16.3pc of total US/Canada capacity. Dow is in the planning stage of a $6.5mn net zero CO2 emissions project planned in Alberta, Canada, that will include an additional 2mn t/yr of PE capacity. Heartland Polymers, the only PP producer in Canada, has 525,000 t/yr of PP capacity, representing approximately 4.9pc of total US/Canada PP capacity. Canadian producers are still figuring out how to respond, not wanting to lose market share to US competitors. In a 23 January statement to customers, Nova Chemicals attempted to reassure its US customers. "We understand the importance of remaining competitively priced to retain your business," the communication said. "As stated previously, Nova chemicals is the importer of record, and will be responsible for paying the tariff." Buyers have taken that statement to mean that Nova will not pass the cost of the tariff on to US customers, but other market participants said that is less clear. A Nova spokesman said only that "US customers will not need to manage the customs process associated with their order from Nova" but did not comment on whether the cost would be passed along to buyers. A spokesman from Heartland Polymers declined to comment, saying they do not comment on "political matters." Dow and ExxonMobil did not immediately respond to requests for comment. Sources said the tariffs could fundamentally shift the way the markets operate. "Tariffs will change the way they do business," said one buyer active in both the US and Canadian markets, speaking of Canadian PE and PP producers. One trader said it believes that even if Canadian producers remain competitive for contract business, they are unlikely to participate in the spot market in the US, which typically has lower margins. "If they don't have to sell it in the US, they won't do it," the trader said. Canadian customers could also feel the impact if Canada responds with its own tariffs, sources said. "Canadian customers might feel out of harms way, but if the US tariffs them, they will tariff the US," said one PP distributor. "I think both sides are going to be looking for a solution." Mexico flow largely one-way The situation in Mexico is slightly different, with most resin flowing one way — from the US into Mexico — where local production is not enough to meet Mexican demand. Sources there said the big impact will come when or if Mexico responds with retaliatory tariffs on US resin. "A tariff is going to be like a gunshot in the leg for the Mexican economy," said one Mexican polymer producer. The initial concern for most customers in the three countries is existing contracts with resin producers, but later there will be concerns about demand, with the potential for manufacturing to shift back to the US from Canada and Mexico. "Some people are thinking some production may come back to the US with tariffs, so you could see a slight demand boost," said one US-based PE distributor. For now, Canadian producers are believed to have shipped large quantities of resin over the border to the US in recent weeks, believing that if it is already across the border it is not subject to any new tariff. Sources said they are hopeful those volumes will buy them some time until the governments in both countries can come to an agreement. By Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US PVC producers weigh cutbacks on lower margins


30/01/25
30/01/25

US PVC producers weigh cutbacks on lower margins

Houston, 30 January (Argus) — US polyvinyl chloride (PVC) producers are weighing operation cutbacks in February after grappling with deteriorating sales margins underpinned by elevated feedstock costs and stagnant end-product values. PVC producer profitability eroded in January as prices for key feedstock ethylene leapt to four-month highs by mid-January, various sources said. Ethylene is a main component in ethylene dichloride (EDC) manufacturing, which is then cracked into vinyl chloride monomer (VCM) before being converted into PVC. Some domestic PVC production is fully integrated and feature ethylene crackers, but many producers still purchase spot or contract ethylene and remain exposed to price fluctuations in the spot market. Spot US ethylene prices to-date in January have averaged 18pc higher than in December and 66pc higher than in January 2024, according to Argus data. Meanwhile, PVC spot values in Houston appreciated at a much slower rate between December and January, climbing by 1pc. Elevated ethylene spot prices are expected to persist in the near-term, maintaining pressure on PVC margins, due to planned maintenance and recovery from unplanned shutdowns in mid-January stemming from sub-freezing temperatures that gripped the US Gulf coast. The expectation for ethylene values to persist at current levels is anticipated to result in PVC production cutbacks, according to several exporters. Some producers, though, remain incentivized to maintain operating rates after bringing online expanded capacity last year. Formosa and Shintech collectively brought more than 500,000 metric tonne (t)/year of new PVC capacity on line during the second half of 2024. The ramp up in added capacity coincided with increasing trade barriers into key offshore destinations, which is expected to keep more volumes within the US while consumer demand outlooks this year remain cautiously optimistic . US buyers are unsure if domestic demand will be strong enough in 2025 to absorb additional volume, placing a ceiling on upward price direction. Exporters are even less optimistic operating in a global market increasingly defined by anti-dumping duties and plentiful Chinese supply. Domestic contract negotiations have highlighted the contrast between higher operating costs and a well-supplied PVC market. Producers cited higher operating costs to argue against lower contract negotiations in January, especially after prices fell in October and November. Several producers announced increases for February volumes, with some rising as high as 5¢/lb. But buyers said current demand does not support increases and instead view price hikes as to recapture lost margin. While producers sought price stability for January monthly contracts, they are also competing to lock in volume commitments through 2025 with aggressive annual contract discussions. Producers are trying to establish a price floor domestically by limiting price erosion among already-low-priced customers, but the additional capacity has made steeper price concessions difficult to avoid in other instances. One evolving upstream market variable is a firmer US Gulf coast spot export caustic soda market, which could encourage producers to maintain current rates and delay any cuts. Integrated PVC producers also manufacture chlorine and caustic soda through chlor-alkali units. Caustic soda is a co-product of chlorine — the latter a key feedstock in EDC production — and price swings in chlorine or caustic soda values can influence production decisions for PVC manufacturers. Caustic soda export prices from the US Gulf coast this week rose by $10/dry metric tonne (dmt) from the prior week and remains 8pc higher than the same week last year, according to Argus data. Tightened spot supply availability is a tailwind for spot values in the near-term, but values remain 24pc lower than peak levels in September when caustic soda prices last offset tighter PVC margins. By Aaron May and Connor Hyde Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US polystyrene recycling initiative launches


28/01/25
28/01/25

US polystyrene recycling initiative launches

Houston, 28 January (Argus) — The Plastics Industry Association is forming a group to expand US polystyrene recycling as states increasingly ban expanded polystyrene (EPS) foam because of low recycling rates. The group, called the Polystyrene Recycling Alliance, aims to improve consumer access to polystyrene recycling and to increase the number of applications for which recycled polystyrene can be used. The group plans to establish an investment fund to expand polystyrene recycling across the US. EPS food packaging, one of polystyrene's primary end uses, is difficult to collect, bulky and often contaminated with food, which has hampered recycling investment for the material. End uses for recycled polystyrene have also remained limited. As a result, polystyrene recycling has struggled to gain momentum in the US, which has led to state EPS bans . California this month banned EPS foam in food service under the state's extended producer responsibility law after the recycling rate failed to reach 25pc by 2025. AmSty and Agilyx's polystyrene recycling joint venture Regenyx, one of the few polystyrene-exclusive recycling companies, closed in March after five years of operation. The Oregon-based company lost $1.1mn in the first half of 2023 . By Zach Kluver Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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