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

  • Spanish Market: Oil products, Petrochemicals
  • 02/01/25

North American benzene (BZ) and derivative styrene monomer (SM) production and operating rates may decline in 2025 as production costs climb.

SM and derivative output will likely see a drop due to the permanent closure of a SM plant in Sarnia and an acrylonitrile butadiene styrene (ABS) plant in Ohio.

In 2024, SM operating rates averaged about 71-72pc of capacity, up by 1-2 percentage points from the year prior, according to Argus data. In 2025, operating rates are expected to pull back closer to 70pc due to lackluster underlying demand, offsetting the impact of the two plant closures.

Many SM producers on the US Gulf coast are entering 2025 at reduced rates due to high variable production cash costs against the SM spot price. The BZ contract price and higher ethylene prices recently pushed up production costs for SM producers.

A heavy upstream ethylene cracker turnaround season in early 2025 will keep derivative SM production costs elevated in Louisiana, stifling motivation for some downstream SM operators to run at normal rates.

Gulf coast BZ prices typically fall when SM demand is weak. But imports from Asia are projected to decline, leading to tighter supply in North America that could keep BZ prices elevated.

BZ imports from Asia are expected to decline in 2025 because of fewer arbitrage opportunities, as Asia and US BZ prices are expected to remain near parity in the first half of the year. The import arbitrage from South Korea to the Gulf coast was closed for much of the fourth quarter of 2024. Prices in Asia have garnered support because of demand from China for BZ and derivatives, as well as from aromatics production costs in the region that have increased alongside higher naphtha prices.

In January-October 2024, over 60pc of US BZ imports originated from northeast Asia, according to Global Trade Tracker data. Losing any portion of those imports typically tightens the US market and drives up domestic demand for BZ.

But tighter BZ supply due to lower imports may be mitigated by SM producers, if they continue to run at reduced rates in 2025. The US Gulf coast is around 100,000 metric tonnes (t) net short monthly on BZ, but market sources say the soft SM demand outlook for 2025 will cut US BZ import needs almost in half.

Despite fewer BZ imports to North America, reduced SM consumption could hamper run rates for BZ production from selective toluene disproportionation (STDP) unit operators.

The biggest obstacle for STDP operators in 2025 will like be paraxylene (PX) demand. Since STDP units produce BZ alongside PX, there needs to be domestic demand for PX. But demand has been weak due to PX imports and derivative polyethylene terephthalate (PET).

STDP operations increased at the end 2025 after running at at minimum rates or being idled since 2022. This came as BZ prices consistently eclipsed feedstock toluene prices.

The BZ to feedstock nitration-grade toluene spread averaged 30.5¢/USG in 2024 and the BZ to feedstock commercial-grade toluene (CGT) spread averaged 49.25¢/USG, according to Argus data. This means that for much of the year STDP operators could justify running units at higher rates to produce more BZ and PX.

But another challenge to consider on STDP run rates in 2025 is the value of toluene for gasoline blending compared to its value for chemical production. In 2022 and 2023, the toluene value into octanes was higher than going into an STDP for BZ and PX production. Feedstock toluene imports are poised to fall in 2025, a factor that would narrow STDP margins and further hamper on-purpose benzene production in the US in 2025.


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15/02/25

EU may trigger clause to boost defense spending

EU may trigger clause to boost defense spending

Munich, 15 February (Argus) — European Commission president Ursula von der Leyen wants to trigger an emergency clause that would allow member EU countries to significantly increase their spending on defense. She also warned that "unjust" tariffs on the EU will not go unanswered. Speaking at the Munich Security Conference on Friday, Von der Leyen said she "will propose to activate the escape clause for defense investments". Such a move would "allow member states to substantially increase their defense expenditure", she said. Von der Leyen's proposal would exempt defense from EU limits on government spending. Highly indebted EU members such as Italy and Greece have voiced support for the move, arguing that activating the escape clause would enable them to increase defense spending while avoiding other budget cuts. Fiscally conservative EU countries, including Germany, could push back against the idea. Von der Leyen's proposal comes at a sensitive time for the EU, with US president Donald Trump pressuring Europe to finance more of its own defense. Trump wants EU members of Nato to more than double military expenditure to protect themselves from potential aggression rather than leaning on Washington's support. Trump is also pushing to end the conflict between Russia and Ukraine. "Let there be no room for any doubt. I believe when it comes to European security, Europe has to do more. Europe must bring more to the table," Von der Leyen said, adding that the EU needs to increase its military spending from just below 2pc of GDP to above 3pc. The increase "will mean hundreds of billions of euros of more investment every year", she said. Tariffs will be answered Von der Leyen also reemphasized the EU's position on the recent US tariff decision, noting that tariffs act like a tax and drive inflation. "But as I've already made clear, unjustified tariffs on the European Union will not go unanswered," she said. "And let me speak plainly, we are one of the world's largest markets. We will use our tools to safeguard our economic security and interests, and we will protect our workers, our businesses and consumers at every turn," she added. Trump on 11 February imposed a 25pc tariff on all US imports of steel and aluminum effective on 12 March, although he said he would consider making an exemption for imports from Australia. US 25pc tariffs on steel and aluminum imports could result in a 3.7mn t/yr decrease in European steel exports, as the US is the second-largest export market for the bloc, European steel association Eurofer said. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Lack of tariff details worry US energy markets


14/02/25
14/02/25

Lack of tariff details worry US energy markets

Washington, 14 February (Argus) — Uncertainty over potential tariffs on US imports from Canada and Mexico is already roiling North American energy trade, as trading desks struggle to understand how tariffs would be assessed and some buyers are unwilling to commit to taking March cargoes without more details. US president Donald Trump's planned 10pc tariff on energy commodity imports from Canada and a 25pc import tax on Mexican energy was originally set for 4 February but he postponed implementation until 4 March. The three governments are negotiating to avert a full-blown trade war, and many market participants are hoping that Trump would again delay their implementation after winning some concessions, as he did earlier this month. But even without tariffs in place, vast segments of the energy industry — oil and gas producers, refiners, pipeline operators, traders — are bracing for them. Energy trade across North America has been tariff-free for decades. Trump during his first term terminated the 1994 North America Free Trade Agreement, but replaced it with the US-Mexico-Canada trade agreement in 2020 that kept the energy trade terms unchanged. The sudden imposition of tariffs after decades of free trade could create legal uncertainty in contractual obligations related to the payment of tariffs and reporting requirements, law firm Vinson & Elkins partner Jason Fleischer told Argus . "It's been a long time since oil and gas pipelines have really had to deal with anything quite like this." At least one large Canadian refiner attempted to pass along the tariff to gasoline cargo buyers in the US ahead of the original 4 February start date, leading a few buyers to threaten to pull out of their contracts, market sources told Argus . Complicating the matter is the approach taken by the Trump administration to impose import taxes differs greatly from current trade terms. The regular US customs duties on crude, for example, are currently set in volumetric terms, at 5.25¢/bl and 10.5¢/bl depending on crude quality. In practice, nearly every source of US crude imports is exempt from tariffs at present. But the import tax set out in Trump's executive orders is to be imposed on the value of the commodity — without specifying how that will be calculated and at what specific point during the transportation process. Likewise, guidance on the new tariffs from the US Customs and Border Patrol (CBP), given just before the original 4 February deadline, did not address the specific issues relating to the energy commodities. CBP and the Treasury Department will have to issue regulations spelling out specific details on how tariffs are to be assessed and collected, Vinson & Elkins partner Jeff Jakubiak said. "The advice we're giving to companies is to collect information and get ready to provide it to the government at some point in the future," Jakubiak said. If tariffs go into effect, "there is likely to be a combination of reporting obligations by the transporter as well as the owner of the commodity. And in both cases, my advice is, figure out how you can accurately count and assign volumes that are moving across the border and figure out how you would price those." Market effects also uncertain The uncertainty over the timing and details of implementation of tariffs have left the affected market participants having to guess who will carry the burden of new taxes. The discount for Western Canadian Select (WCS) crude at Hardisty, Alberta, to the CMA Nymex WTI contract widened on the eve of the initial 4 February deadline of tariffs, suggesting that market participants expected Canadian producers to bear the brunt of tariffs. But over time, that burden likely will shift depending on individual market power of buyers and sellers. This could hit refiners in the US midcontinent that currently rely on WCS and have few alternatives to taking Canadian crude. They could, in turn, pass on the additional costs to consumers at the pump. US independent refiner PBF Energy said this week that tariffs would likely cut US midcon refinery runs , even if those refiners could find alternatives to Canadian crudes. Most Mexico-sourced crude markets are seaborne, giving producers in that country an alternative to US markets. "For this scenario, we anticipate [US Gulf coast] refiners will reduce consumption to the lower limit of their contractual obligations but will continue to purchase Mexican crude and pay the tariff via reduced refining margins," investment bank Macquarie said in a recent note to clients. Canadian producers also expressed concern about the uncertain impact of tariffs on crude volumes trans-shipped through the US, either for exports to third country destinations from Gulf coast ports or transported on US pipelines to destinations in eastern Canada. Without guidance from the US customs authorities, it is not clear if such flows would be subject to new US tariffs. Integrated oil sands producer Suncor's refineries on the Canadian east coast rely on crude flows from Enbridge's 540,000 b/d Line 5 or 500,000 b/d Line 78 that cross into the US in Michigan before crossing back into Canada. "I would say that I don't know that anyone on the planet knows exactly what's going to happen on tariffs," chief executive Rich Kruger said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Biomethanol-methanol diff widens, UK demand ticks up


14/02/25
14/02/25

Biomethanol-methanol diff widens, UK demand ticks up

London, 14 February (Argus) — The spread between biomethanol and conventional methanol is the highest in more than nine months, at $734/t. This is partly driven by falling European methanol prices, with the methanol fob Rotterdam barge quote hitting $348.97/t on 12 February, the lowest since 7 August. Increased imports from the US, and the restart of a 900,000 t/yr capacity European plant have put downward pressure on prices. Biomethanol values ticked higher in recent sessions, tracking gains in the wider biofuels complex after record low values for renewable fuel tickets — tradeable credits generated primarily by the sale of biofuel-blended fuels — in major European demand centres in 2024. European demand for biofuels in 2025 could be supported by a combination of higher mandates for the use of renewables in transport, and by changes to regulations on the carryover of renewable fuels tickets in Germany and in the Netherlands . UK biomethanol prices and demand rise In the UK, the Argus cif biomethanol price has averaged $1,110/t so far in February, a $22/t increase from January and a $60/t rise from the September 2024 average, when prices hit a record low. The price averaged around $1,094/t in February last year. Prices have been in part supported by stronger renewable fuel ticket prices (RTFCs) in the UK recently, according to market participants. UK 2025 non-crop RTFCs averaged 25.45p in the first quarter of 2025 so far, an increase of 1.88p when compared with the previous quarter. Demand picked up in the UK and the wider European market, including from voluntary sectors, at the beginning of the year, participants said. Biomethanol is used as a gasoline blending component in the UK. Consumption in the country in 2024 rose by 45pc on the year but was lower by 7.9pc than in 2022 at 58mn litres, according to the third provisional release of the 2024 Renewable Transport Fuel Obligation statistics. The Argus biomethanol fob Amsterdam-Rotterdam-Antwerp (ARA) netback quote was $1,083/t on 12 February. FuelEU fuels demand The January rollout of the FuelEU Maritime regulations could increase demand for biomethanol in shipping. Ship operators traveling in to, out of and within EU territorial waters must reduce their greenhouse gas (GHG) intensity on a lifecycle basis by 2pc. The reduction rises to 6pc from 2030 and gradually reaches 80pc by 2050. Shipping companies can choose from a range of alternative marine fuels to reduce their emissions. Only dedicated ships can run on methanol alone, but many companies, including Maersk , have ordered dual-fuel vessels that can run on methanol and traditional bunker fuels, along with biofuel blends like B24 — a mix of very-low sulphur fuel oil (VLSFO) and used cooking oil methyl ester (Ucome) biodiesel. International offtake agreements for renewable methanol are also on the rise. Maersk has signed several letters of intent for procurement of biomethanol and e-methanol from producers including Equinor , Proman and OCI Global , and has an agreement with Danish shipping and logistics company Goldwind for 500,000 t/yr from 2024. Biomethanol and e-methanol are likely to be the most competitive and scalable pathways to decarbonisation this decade, Maersk said . While relatively small, Maersk's 'green marine' fuel consumption, which includes biomethanol, increased by 38pc in 2024 to 3,034 GWh. Singaporean container shipping group X-Press Feeders said it will buy biomethanol from OCI's Texas plant starting from 2024. Biomethanol bunker sales in the port of Rotterdam dropped by more than half in the fourth quarter of 2024 compared with the third quarter, to 930t, but sales were 86pc higher than those in the fourth quarter of 2023, according to Port of Rotterdam data . UDB risk to biomethanol imports The European Commission's proposal to exclude automatic certification of biomethane and biomethane-based fuels from the Union Database for Biofuels, if relying on natural gas that has been transported through grids outside the EU, has been slowing some negotiations for 2025 biomethanol imports — particularly from the US — according to market participants. Industry bodies have expressed concerns about implementation of the database, particularly that it will impede the bloc's biomethane development. Burdensome fees, overly strict deadlines, risk of double counting, and a significantly increased number of participants required to enter data will slow market growth, said the European Compost Network and the European Waste Management Association. They recommend mandatory use of the UDB be postponed until 1 January 2026 "at the earliest". By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Republic Services finishes Indiana sorting center build


14/02/25
14/02/25

Republic Services finishes Indiana sorting center build

Houston, 13 February (Argus) — US-based materials recovery facility operator and hauler Republic Services has finished construction on its second polymer center in Indianapolis, with initial income from the plant expected in the second half of the year, the company said in its earnings call. Republic Service's polymer centers are secondary sorting facilities that produce recycled polyethylene terephthalate flake and color sort high-density polyethylene and polypropylene waste to sell to reprocessors. Republic Services faced some challenges in the third quarter and fourth quarter of 2024 with startup costs for equipment and getting specifications correct for customers at its operational polymer center in Las Vegas, but after those initial hurdles, the company was "feeling good" about them, chief executive John Vander Ark said. The company's prior assumptions about production in Las Vegas in terms of selling price, costs, volume sold, and the willingness of customers to pay were really "strong" and "positive," he added. Republic Services finished construction on its Las Vegas polymer center in December 2023. The polymer centers are strategically located next to joint venture Blue Polymers' facilities. Republic Services plans to provide feedstocks to Blue Polymers in order to produce pelletized and compounded recycled resin. Blue Polymers is expected to finish construction on its first plant in Indianapolis in mid-2025, Republic Services said. Republic Services aims to spend $75mn on new polymer centers in 2025. By Zach Kluver Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Upper Mississippi River ice tops 5-year average


13/02/25
13/02/25

Upper Mississippi River ice tops 5-year average

Houston, 13 February (Argus) — Ice measurements taken Wednesday to gauge when barges can transit the upper Mississippi River exceeded the five-year average, according to the US Army Corps of Engineers (Corps). The annual Lake Pepin ice reports — taken by the Corps in February and March at Lake Pepin south of Minneapolis — are a bellwether for when barge transit can resume on the upper Mississippi River. This year's first report found ice at the lake was 19in thick on 12 February, 8in thicker than last year's measurement and 3in above the five-year average. The Corps' initial report last year found only 11in of ice at the lake, thin enough for waterborne traffic to break through. Subsequent reports were cancelled after the Corps said it would be too hazardous for crews and equipment to take additional measurements. Locks along the upper Mississippi River are anticipated to remain closed through 3 March, the Rock Island Corps district in Illinois said on 5 February. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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