Venator launches three new products at Chinaplas – Venator launches three new products at Chinaplas

Venator launches three new products at Chinaplas

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15 June 2018

14:10

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15 June 2018

14:10

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Europe PET drama 2019 contract negotiations

INTERACTIVE: Europe PET drama subsides but could still sway 2019 contract negotiations  Europe PET drama 2019 contract negotiations  

 Source:ICIS News

LONDON (ICIS)–Polyethylene terephthalate (PET) in Europe has been in such disarray that recent events could impact discussions concerning 2019 contract negotiations, even at this early stage.Europe PET drama 2019 contract negotiations

Europe PET drama 2019 contract negotiations “Customers will push for contracts and producers will try to avoid contracts or increase the spread on contract if it is linked to raw materials, that’s for sure.

“There will be a huge impact on 2019 negotiations. Producers will definitely increase their spread. It is the same situation as the end of 2017. Maybe 2019 you will buy better on spot! The spread for 2019 contracts will be much higher [than in 2018],” a reseller said.Europe PET drama 2019 contract negotiations

As an industry, PET rarely fails to surprise. Last year and the first half of 2018 were no exception. Both periods heralded a series of unpredictable incidents that proved harmful to both sellers and buyers.

Globally, financial difficulties, bankruptcy, environmental and antidumping decrees, even a hurricane formed, the essence of 2017.

This resulted in a heavily contracted European market in 2018, as both sides were keen not to fall into similar traps, and to secure volumes for the year ahead.

This year began on a tense note, within a finely balanced market. Having eventually secured material, including scarce imports, many customers began to feel more comfortable with their volumes by the end of the first quarter.

Demand looked disappointing and March hosted several planned shutdowns.

Availability worsened when BP’s upstream purified terephthalic acid (PTA) plant in Geel, Belgium, failed to resume production after maintenance, and declared force majeure.Europe PET drama 2019 contract negotiations

The domino effect included a force majeure on PET, other producers exiting the lucrative spot market and reducing output to a technical minimum, the combination of which was disastrous on supply.Europe PET drama 2019 contract negotiations

“Right now there is no choice of when it will go back to normal. There is no piece of news that tells me when it will normalise. Nobody has a clue,” a buyer said.

Prices climbed 30% from January to June, peaking at €1,350-1,400/tonne FD (free delivered) and soaring over €250/tonne in the second quarter alone.

Europe PET drama 2019 contract negotiations

Peaking being the operative word, as while the market is still tight and there is a possibility for further increases, from June there has been a change of mood.

Production output looks better in June, as PTA becomes more available and PET production begins to ramp up.

There is no doubt material will be short, snug at the very least, through June and July, but come August, September or even as late as October, depending on what imports arrive and on how demand fairs, the market should balance out.

A typical cycle for PET is five years, and there is unlikely to be a general excess of product much before 2020.

“The Corpus Christi (M&G) start up would make [the market] non deficit, probably the problems at JBF will be resolved and there may be product from the Middle East, then we will see the opposite situation. But it won’t happen in the next six months, and the question is if it happens in one or one and a half years,” a second buyer said.

The surprisingly short 2017 market sparked a change in 2018 contract strategies, whereby accounts became largely contractual and more dependent on raw material movements.

This lack of flexibility coupled with the awkward supply situation has resulted in significant discrepancies between high spot and relatively low contract prices so far this year. The gap has been quoted as ranging between €200-300/tonne for raw material plus models.

Europe PET drama 2019 contract negotiations

The industry is now wondering how this will impact 2019 negotiations.

“It is early days…We still have a high percentage of cost-plus models based on raw materials. The question is…do we want still this high cost-plus models in our portfolio? The ones on raw materials or with floors and caps will be reconsidered,” a seller said.

It may be that sellers continue pushing for more contracts based on raw materials as opposed to market- or index-based, but with higher conversion fees over feedstocks.

“…Europeans increased the conversion fee over raw material formula from 2017 to 2018, and I am sure in 2019 they will increase again,” a third buyer said, echoing comments from others.

Nothing is clear at the moment, and much depends on the situation at the time of negotiation.

“When closing 2018 deals I thought this is a one year exception and we will probably switch back to index-based contracts in 2019. Now I am not sure anymore. I think we will need another couple of months to get the mood and to some degree it will be difficult. If you want to go stronger on indices there will be resistance from suppliers,” a fourth buyer said.

Imports usually fill in any gaps in supply, but exchange rates have not been favourable for euro-based buyers. So, although the lack of availability has made for an interesting and dynamic market, other macroeconomic parameters can influence matters from one day to the next.

“Asia has not been competitive for Europe this year. If the exchange rate hits 1.40 by the end of the year [euro to dollar], then everything can change,” a trader said.

A priority for buyers will surely be reliability of supply. So, while the element of surprise in terms of availability provides some certainty that the trend of contracts will continue, there may be a shift in who goes where for volumes.

Contracts based on raw materials have been favourable to clients who could try to extend them into next year. Suppliers are likely to attempt to increase margins for cost-plus models, and this will put some customers off.

Once normality returns to supply/demand, perhaps buyers will notch the first half of 2018 up as a bad experience, and if/when the bubble bursts, it may not actually have much of an impact on future pricing negotiations.

“Now we are seeing a balloon. There is tightness in the market but…it’s an exaggeration. Every year there is a new story or new sensation,” a buyer said.

For now, the market remains tight, the mood feels like it’s lightening on both sides, and 2019 negotiations are far from being finalised.

PET is used in fibres for clothing, containers and bottles for liquids and foods, thermoforming for manufacturing, and in combination with glass fibre for engineering resins.

Picture source: imageBROKER/REX/Shutterstock

By Caroline Murray
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US China trade war begins tariffs goods take effect

US-China trade war begins; tariffs on $34bn goods take effect   US China trade war begins tariffs goods take effect

Source:ICIS News
US China trade war begins tariffs goods take effect

SINGAPORE (ICIS)–US tariffs on $34bn on Chinese goods took effect on Friday, prompting China to respond with the same scale and intensity, effectively triggering a trade war between the world’s two biggest economies.

China’s Ministry of Commerce (MOC) said the US has launched the “largest trade war in economic history”, and violated World Trade Organisation (WTO) rules.

The US 25% tariffs on 818 Chinese products were implemented from 00:01 Washington time (04:01 GMT) on Friday, which was midday in Asia.

China’s retaliatory tariffs cover 545 US products, which will include agricultural products such as corn and soybeans.

The US move is expected to be the first of a series as it hopes to bring down its huge trade deficit with the Asian giant.

US President Donald Trump was quoted late on Thursday by news agency Reuters that the second set of tariffs, involving $16bn of Chinese goods, is expected to take effect in two weeks.US China trade war begins tariffs goods take effect

Products under consideration for the second set include polyethylene (PE), polyvinyl chloride (PVC), polycarbonate, and polyamide alongside propane, LPG and hydrocarbon gases, naphtha, crude benzene, toluene and xylenes, and crude oil.

Further tariffs could be imposed on up to $500bn more Chinese goods in subsequent rounds, he said.US China trade war begins tariffs goods take effect

China has vowed on a tit-for-tat strategy on the US plan to put up trade barriers against the country.

“China promised not to shoot the first shot, but in order to safeguard the core interests of the state and the interests of the masses, it had to be forced to make the necessary counter attack,” the MOC said in a statement released minutes after the first wave of US tariffs took effect.US China trade war begins tariffs goods take effect

“We will inform the WTO in a timely manner about the relevant circumstances and work together with other countries to safeguard free trade and multilateral institutions,” it said.

China’s export-oriented economy is expected to take a major hit if the trade row with the US escalates further.

In June, manufacturing activities in China showed signs of weakening, logging a Purchasing Managers’ Index (PMI) reading of 51.5 points from 51.9 in May, as export orders slipped into a contraction mode.

A PMI reading of 50 and above indicates expansion, while a number below 50 denotes contraction.

Concerns about the trade war had also sent the yuan tumbling by more than 3% in June. While good for exports, a weak currency dampens domestic consumption.

By Pearl Bantillo

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US ethylene market length continue 2018

US ethylene length to continue through 2018   US ethylene market length continue 2018

Source:ICIS News

HOUSTON (ICIS)–Length in the US ethylene market is likely to continue through the second half of 2018 as more crackers start up, but increasing costs for feedstocks may provide pricing support.US ethylene market length continue 2018

Ethylene production has outpaced ethylene consumption in the first half of 2018 amid the start-up of new crackers and new derivative units. About 3m tonnes/year of new ethylene capacity and about 3.5m tonnes/year of new PE capacity have started up since late 2017. The new crackers ramped up quickly, but several of the new PE plants have struggled to reach full operating rates.US ethylene market length continue 2018

The imbalance allowed ethylene supply to build and pushed down prices. Ethylene spot prices bottomed out at 12.0-12.5 cents/lb ($265-276/tonne) in mid-May, their lowest point since January 1999. Ethylene contract prices fell to 26.0 cents/lb in May, their lowest since 25.75 cents/lb in February 2016.US ethylene market length continue 2018

US ethylene spot, contract prices

US ethylene market length continue 2018

Ethylene has rebound slightly, supported by higher feedstock ethane costs and a slightly more balanced market.

Consumption has improved as most of the recently built PE capacity is at-or-near full production rates. Production was curtailed by turnarounds and an idled cracker.

US June contract prices settled 0.5 cent/lb higher than May, and spot prices closed June at slightly above the mid-May 2018 low point.

However, market sentiment is softening again as participants anticipate the start-up of two more crackers.US ethylene market length continue 2018

US ethylene market length continue 2018
ExxonMobil is building an ethane cracker with a capacity of 1.5m tonnes/year of ethylene at its Baytown site, Texas. (Photo courtesy of ExxonMobil)

ExxonMobil’s new 1.5m cracker in Baytown, Texas is in commissioning and expected to begin production this summer.

An Indorama project, which expanded a previously idled cracker to 440,000 tonnes/year capacity, is expected to start up in July and reach full production rates in the third quarter.

With most of the new PE capacity already at-or-near full production rates, there is little room for increased consumption to fully absorb the incoming capacity.

As ethylene supply remains long, spot prices are expected to remain near production costs, and contract prices should track a combination of spot prices and production costs.

“Looks to me to be the case until some derivatives come up late ’18 or early ’19, or until enough crackers get dialled back to rebalance,” a market source said.

Scheduled to come online in late 2018 or early 2019 is about 3.6m tonnes/year of new downstream capacity in the PE, polyvinyl chloride (PVC) and  ethylene glycol (EG) chains.

But ethylene could remain long as four new crackers also are scheduled to come online in late 2018 and early 2019. The units have a combined capacity of 4.25m tonnes/year.

As increased supply from the new capacity keeps pressure on ethylene prices, the increased feedstock demand also is expected to push prices higher for upstream ethane. The price of ethane has nearly doubled over the last year, rising from around 17 cents/gal to about 34 cents/gal.

US ethane prices

US ethylene market length continue 2018

The resulting tight margins for ethylene may result in a reduction in cracker operating rates or a move to heavier feedstocks, which produce less ethylene and more co-products like propylene and butadiene (BD).

“Everyone is now making run/don’t-run decisions based on variable production costs,” another market source said.

Major US ethylene producers include Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.

By Jessie Waldheim
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Asia petchem shares fall US China tariff impositions

Asia petchem shares fall ahead of US, China tariff   Asia petchem shares fall US China tariff impositions

Source:ICIS News

Asia petchem shares fall US China tariff impositionsSINGAPORE (ICIS)–Shares of major petrochemical companies in Asia were mostly trading lower on Friday on investors’ concerns that an outright trade war between the US and China will soon begin.

The US from 00:01 Washington time (04:01 GMT) on Friday will impose tariffs on $34bn of Chinese good and Beijing has vowed to respond by an equal amount of tariffs of its own against US products.Asia petchem shares fall US China tariff impositions

Another round of US tariffs on additional $16bn worth of goods are expected to go into effect in two weeks, US President Donald Trump said late on Thursday.

At 03:00 GMT, South Korea’s Lotte Chemical was down by 1.98%, while LG Chem fell by 1.25% as the key Korea Stock Exchange KOSPI Index slipped by 0.30% to 2,250.85.

In Hong Kong, Chinese state-owned refining and chemicals giant Sinopec Shanghai Petrochemicals was 1.71% lower, while PetroChina fell by 0.70%.

In Taiwan, Formosa Petrochemical Corp (FPCC) was 1.26% lower, while Nan Ya Plastics was down by 0.80%.Asia petchem shares fall US China tariff impositions

In southeast Asia, PETRONAS Chemicals Group (PCG) slipped by 0.12% in Malaysia, while oleochemicals producer Olam International was down by 0.47% in Singapore.

In Japan, shares of chemical firms were bucking the trend, with Asahi Kasei up 1.38% and Mitsubishi Chemical up 2.28% as the Nikkei 225 benchmark was up by 0.67% at 21,691.89.Asia petchem shares fall US China tariff impositions

China’s Ministry of Commerce (MOC) had said on Thursday that the US will only be hurting itself as the world by imposing more tariffs.

“If the United States starts imposing additional tariffs, it will actually be charging taxes on firms both in China and around the world, as well as American companies,” MOC spokesperson Gao Feng was quoted as saying by the state news agency Xinhua.

Feng said that around 59% of products worth $34bn subject to additional tariffs are made by foreign firms in China, with American firms making up a considerable part, Feng said.

“The US tariff move is in essence a hit to the global industry and value chain,” Gao said. “To put it simply, the United States is firing at the whole world. It is also firing at itself.”

By Nurluqman Suratman
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Innopas SX KHS gives bottlers greater flexibility

Innopas SX from KHS gives bottlers greater flexibility in the pasteurization process  Innopas SX KHS gives bottlers greater flexibility

Innopas SX KHS gives bottlers greater flexibility A high degree of microbiological safety: with the Innopas SX KHS GmbH provides a tunnel pasteurizer which with its modular design meets the growing demands of the beverage industry with its increasingly complex range of products and shorter market shelf lives.

• Tunnel pasteurizer with a high degree of microbiological safety

• New functions retrofitted quickly and easily

• Optimized spare part management

Dortmund

– A high degree of microbiological safety: with the Innopas SX KHS GmbH provides a tunnel pasteurizer which with its modular design meets the growing demands of the beverage industry with its increasingly complex range of products and shorter market shelf lives. The systems supplier from Dortmund has also optimized spare part management for this flexible machine.

The beverage market is facing increasing levels of dynamic competition, with new flavors in new packaging formats hitting supermarket shelves at ever shorter intervals. Flexibility is thus becoming more of an issue when it comes to filling. The necessary pasteurization of filled and sealed beverage containers for longer shelf lives is a decisive factor here. The completely modular KHS Innopas SX tunnel pasteurizer for cans and glass and PET bottles fully satisfies these demands.Innopas SX KHS gives bottlers greater flexibility

Dynamic adaptation to line behavior

The basic functions of the Innopas SX are initially identical to the tried-and-tested tunnel pasteurizer systems provided by KHS. The dynamic pasteurization unit or PU control system reacts variably to changes in conditions.Innopas SX KHS gives bottlers greater flexibility

If, for example, a fault occurs during the pasteurization process, the process temperatures are kept under control in the hot zones of the tunnel pasteurizer to ensure both maximum product safety and flavor stability. New features on the KHS Innopas SX include extended functions in the dynamic PU control system which result in greater flexibility and yield savings in energy and media.Innopas SX KHS gives bottlers greater flexibility

Much of this is attributable to the optional speed regulation function. The individual zone temperatures are automatically raised or lowered depending on the conveyor speed.

“This allows the pasteurizer to dynamically adjust to match the line behavior within a range of 50 to 105% of the nominal capacity for most processes without making any drastic changes to the pasteurization units and maximum product temperature,” states Knut Soltau, product manager for Bottle Washers and Pasteurizers at KHS.

This prevents stops and the corresponding consumption of media and at the same time has a positive impact on the behavior of the entire line.

With dynamic PU control from KHS the process temperatures are regulated within the hot zones of the tunnel pasteurizer to enable maximum product safety and flavor stability. With a new program for PU control the customer can independently adapt the pasteurization unit setpoint for a specific container type. Here, the full functionality of the PU control unit is maintained.Innopas SX KHS gives bottlers greater flexibility

“In this way subsequent product changes or new products can be easily made or introduced at any time,” says Soltau. “Bottlers can thus react quickly to changes on the market and product trends.”

Improved design

KHS has also made several improvements regarding the design of its Innopas SX, with maximum emphasis placed on easy operation. The tunnel pasteurizer is clearly structured and offers optimum access which chiefly simplifies the maintenance and cleaning of the system. For this reason parts of the process engineering, such as the heat exchangers and media supply, have been relocated on the machine as modules in order to further improve servicing and machine safety.

Spare part management for the KHS Innopas SX has also been optimized. The number of components the customer is required to keep in stock has been reduced while the delivery times for spare and wear parts have been shortened. As functions can also be simply retrofitted as an option, this boosts flexibility for the customer and ensures the future viability of filling lines at a low operating cost.

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PLASTICS STRATEGY ROOM IMPROVEMENT

THE PLASTICS STRATEGY STILL HAS ROOM FOR IMPROVEMENT  PLASTICS STRATEGY ROOM IMPROVEMENT

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