Light olefins
Overview
The global light olefins market is made up of ethylene and propylene monomers. These product markets can be affected by a great many factors.
Ethylene is the most widely used commodity chemical and is produced globally in all major regions. It is converted into many products used in daily life like plastic packaging, durable goods, hygiene products and other consumer items. The ethylene market is driven primarily by regions of low production cost and regions of high demand growth. Polyethylene, ethylene’s largest derivative, represents about 65pc of global ethylene demand. Anyone involved in the ethylene industry – directly or indirectly – needs market and pricing insight to anticipate supply shortages and potential swings in pricing.
Propylene is the second most widely used commodity chemical and is produced globally in all major regions. Propylene is a volatile commodity because of its predominantly co-product nature and unpredictable supply, but recently the industry has been trending to more on-purpose production. It is converted into many products used in daily life like plastic packaging, durable goods, automotive products, and woven fabrics. Polypropylene, propylene ’s largest derivative, represents about 70pc of global propylene demand. Anyone involved in the propylene industry – directly or indirectly – needs market and pricing insight to anticipate supply shortages and potential swings in pricing.
Our light olefins experts will help you determine what trends to track and how to stay competitive in today’s ever-changing global market.
Latest light olefins news
Browse the latest market moving news on the global light olefins industry.
Stellantis cuts 2024 US forecast
Stellantis cuts 2024 US forecast
Houston, 2 October (Argus) — Global automaker Stellantis has cut its 2024 guidance for its US operations. The company plans to accelerate its inventory drawdown strategy, aiming to reduce dealer inventory to 330,000 units by the end of 2024, from a previous goal of the first quarter of 2025. So far in the second half of 2024, Stellantis has reduced its US inventories by 40,000 vehicles, Ed Ditmire, head of investor relations, said on 30 September. To achieve this, Stellantis is reducing North American shipments by more than 200,000 vehicles in the second half of 2024, up from a previous goal of a 100,000-vehicle cut. Stellanties released the new guidance after it made changes to its production schedules, Ditmire said. Ditmire added that Chinese competition in Europe is challenging Stellantis' operations, and he estimated that in 2024 over 10pc of electric vehicle (EV) volumes and over 20pc of total vehicle sales in Europe will be from Chinese car companies. By Rye Druzchetta Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US port strikes threaten polymers trade
US port strikes threaten polymers trade
Houston, 27 September (Argus) — US traders and importers for various polymers are concerned that looming strikes at key US ports could upend trade flows and prices. Ports and railroads servicing the US east and Gulf coasts are making preparations for the potential strikes by the International Longshoreman's Association. Some operations could halt as soon as 30 September at ports in New York, New Jersey and Virginia, as well as in Houston, Texas, and New Orleans, Louisiana, if a new labor agreement is not reached. The strike is expected to cause the most challenges for products moved by container, including polyvinyl chloride (PVC), polyethylene (PE), and polypropylene (PP). The end of a given month is typically when producers and traders in the US agree to volume and pricing for PVC trade for the month ahead. But PVC exporters said this week that fewer traders are closing deals with producers for October shipments out of fear that lengthy strikes in Texas and Louisiana could leave volume trapped at ports or in warehouses. Some traders are even avoiding replenishing inventories that have gotten too low. Traders are also saying that the strike could produce higher logistical costs and prevent export prices from rising. Some container ship companies are warning customers that surcharges for port disruptions could be implemented after a strike begins. Surcharges could reach as high as $3,000 per forty-foot container unit. That is challenging efforts by PVC producers trying to secure higher prices for offers to traders in October. Export availability is being tightened by planned maintenance at Formosa's Point Comfort, Texas, plant and an unplanned outage reducing rates at Westlake's Plaquemine, Louisiana, facility. But weak demand overseas has made traders risk averse to holding more expensive volume for too long, especially after some were caught with higher priced volume during the summer when export prices fell on average by $145/t in just two months. Emulsion-grade PVC (E-PVC) buyers are worried about the impacts of a strike as flooring and automotive buyers in the eastern US have become more dependent on imports from Europe. Cheaper European imports of E-PVC have served US buyers as a check on domestic pricing and plentiful volume has compensated for a dwindling pool of domestic producers. But both those attributes could be made void by a lengthy strike, and buyers currently have little recourse to remedy the situation quickly or on a consistent basis. The threat of more expensive imports from Europe could disrupt what has otherwise been a stable price base for many E-PVC customers in recent months. PE producers reliant on exports With US polyethylene producers exporting 46pc of production in January-August this year, a potential port strike could leave US producers with few options to export their goods, and not enough demand in North America to absorb excess volume. Exports to Mexico and Canada would remain an option, as exports to those countries move by rail, but those countries can only absorb so much volume. Of the portion of US PE exports that move by container ship, 96pc of it moves through Gulf coast and east coast ports, with only around 3pc of it shipped from west coast ports, according to data from Global Trade Tracker. The most likely result of an extended port strike would be production cuts by US producers. "If it lasts more than a few days, we are going to have to adjust our operating rates to manage," said one US PE producer. Polypropylene market participants said the biggest impact is likely to be on logistics, as PP exports have been limited for much of the year due to high prices. "It makes sense that warehouses could get backed up really quickly if stuff is not going out and resin continues to come in," said one PP trader. "Maybe rail could be impacted too." In Mexico, PE and PP market participants are bracing for an influx of US resin, as US producers look for alternative ways to move product. If resin inventories grow in Mexico, it is likely that prices in the region will fall. By Aaron May and Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil hikes import tax on polymers, chemicals
Brazil hikes import tax on polymers, chemicals
Sao Paulo, 19 September (Argus) — Brazil's government increased import taxes of 30 polymers and chemicals to 20pc from 12.6pc this week, including polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC). Another 32 chemical products remain under evaluation by Gecex, the Brazilian committee for commercial trade management. With the 18 September decision, most rates will rise and will remain at this level for 12 months. Domestic manufacturers and chemical industries associations welcomed the decision, arguing that the measure will help level the playing field against foreign competitors who benefit from lower production costs. Brazil's chemical industry association Abiquim has been asking the government provide commercial protections for 62 products since May. Supporters of the tax hike, including Abiquim, say it will help create jobs and strengthen Brazil's domestic economy. They also said that the increased revenue from the higher taxes can be reinvested in infrastructure and public services, further benefiting the country. Brazilian petrochemical major Braskem said Thursday that it sees the tax increase as a positive step towards ensuring fair competition and fostering growth within the industry. Braskem produces basic chemicals, PE, PP and PVC. The most important aspect of the tax increase is not the number of products covered, but what it represents in value, said Abiquim's executive president Andre Passos Cordeiro. "These 30 products that were approved represent about 65pc of the import volume of this set of 62 products that we had proposed to the government," he said. "They also represent 75pc of the value of this same set of imports. The decision is welcome, well-founded technically, and brings relief to the chemical industry." The share of chemical imports in the Brazilian market soared in the last 20 years, according to Abiquim, reaching 47pc in 2023 from 21pc in 2000. In the first half of this year, the sector's trade deficit was close to $23bn, while the national industry's idle capacity reached its worst level ever. "We were losing strength with the closure of factories and loss of jobs," Cordeiro said. "I reiterate that the government's decision was essential for us, as an industry and as Brazilians. A strong industry presupposes a strong country." The Brazilian chemical industry is responsible for around 11pc of Brazil's GDP, according to Cordeiro Taxes could up consumer costs Critics of the tax hikes say they will increase costs for consumers and manufacturers who rely on imported polymers and chemicals. Brazil's plastic industry association Abiplast said it was concerned that the higher import taxes will increase production costs for plastic products, which could result in higher prices for end consumers. In a letter to associates, Abiplast said that the measure could hurt small- and medium-sized enterprises that do not have the same capacity as larger companies to absorb the increased costs. The tax hike could also negatively impact the competitiveness of Brazilian products in the global market, Abiplast said. By increasing the cost of raw materials, Brazilian plastic converters may find it more challenging to compete with foreign companies that have access to cheaper inputs. That could lead to a decrease in exports and a potential loss of market share internationally. Furthermore, opponents of the tax increase highlight that the measure could have unintended consequences on the broader economy. Higher production costs could lead to inflationary pressures, affecting the purchasing power of Brazilian consumers. They also point out that the tax increase may not necessarily lead to the desired boost in domestic production, as the domestic industry may not have the capacity to meet the increased demand for polymers and chemicals. The letter, signed by the chairman of the association's board Jose Ricardo Roriz Coelho, also said that despite exhaustive explanations to the government about the taxes' downsides, final approval [of the tax hike] still goes through Brazil's partners in trade bloc Mercosur — Argentina, Uruguay, and Paraguay. If validated, the measure is expected to go into effect in October and last for one year. Abiplast said it will continue battling to reverse the measure, which the association deems unreasonable. Higher domestic prices may follow The market is taking some notice of the new proposed measures. One US polymers exporter to Brazil told Argus that if the tax hike becomes effective, Brazilian polymers manufacturers are expected to immediately raise prices to recover their margins. "The timing for the tax hike announcement was fine-tuned to let local producers secure additional margins in a time that sales are expected to increase in Brazil due to Christmas and New Year celebrations," one market participant told Argus. But any drop in polymer imports into Brazil from the taxes should recover in he beginning of next year, the source said. "Brazil's polymers production is not enough to address local demand, so imports will always be needed," the source said. Brazil's January-August PE imports surged by 45pc from the same period in 2023, reaching almost 1.4mn metric tonnes. North America had a 79pc share, while South America had another 10pc. The country also buys from Asia and the Middle East. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Bridgestone, BB&G, Versalis partner on tire recycling
Bridgestone, BB&G, Versalis partner on tire recycling
Houston, 3 September (Argus) — Tire manufacturer Bridgestone has signed a joint agreement with BB&G and Versalis to develop a closed-loop tire supply chain. The companies agreed to collaborate on research and technical solutions to scale end-of-life tire (ELT) recycling for the production of new tires. In doing so, they aim to advance pyrolysis technology and market circular polymers for tires. This is part of a push to improve sustainability within the synthetic rubber sector. Technology firm BB&G transforms ELTs into renewable raw products using a thermal conversion process of pyrolysis. It inaugurated a commercial tire pyrolysis oil (TPO) unit, located in Fatima, Portugal, in July 2024. Chemical company Versalis will incorporate BB&G's pyrolysis oil over the next few months into expanding its range of products — including elastomers and polymers — derived from chemical recycling and bio-based feedstocks. With that, Bridgestone in Europe, the Middle East and Africa (EMEA) looks to employ these circular elastomers into manufacturing new tires. The first batch of tires is anticipated in early 2025. "At Bridgestone, we have set a goal of working with 100pc sustainable materials by 2050, and recycling and reusing products is an important part of this," said Bridgestone's EMEA president Laurent Dartoux, which also supports initiatives "on co-creating new and environmentally responsible ways to maximize the complete lifecycle of our tires." By Joshua Himelfarb Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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