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Polyethylene Terephthalate (PET) Industry Outlook Amidst COVID-19
12-09-2020

Polyethylene Terepht...

The polyethylene terephthalate industry accounted for a significant proportion of the overall petrochemical industry and is projected to observe steady growth during the COVID-19 pandemic. With scenarios like newly generated applications or changing taxes, both upstream and downstream demands have increased. However, the COVID-19 pandemic has caused many disruptions in production lines and more.   Current Market Status   The PET suppliers and manufacturers have shown reasons to believe in upcoming opportunities to grow despite the challenging economy and growing environmental concerns. Within the Asia Pacific region, India, China, Japan, and Indonesia are the largest markets for polyethylene terephthalate. The COVID-19 outbreak has, however, disturbed the trade and numerous economic activities during the first quarter of 2020.   The National Bureau of Statistics of China states that China’s industrial output dropped by 14% in the first couple of months as compared to the previous year. The chemical production in China has also slumped by 21% than last year. However, with the government lifting restrictions in countries like China and India, things are coming back on track with cautiously relaxing measures.   Europe is also a significant market for polyethylene terephthalate. The region includes Germany, Russia, the United Kingdom, and Italy as its major consumers. However, the lockdown procedures and constantly rising cases disrupted the supply chains of PET. Europe’s PET market is expected to gain benefits from changing consumer behaviour, such as increasing the downstream demand for products like bottled water and packaged food. Impact of COVID-19   The outbreak of the COVID-19 pandemic around the world has jolted the operations across the value chain of the polymer industry. Further, the COVID-19 pandemic had caused a severe impact on the petrochemical industry, changing the downstream demand, hindering the global supply, and reducing long-term investments. Furthermore, the demand and supply for crude oil plunged, leading towards the instability in crude oil prices. This has resulted in severe impacts on the prices of virgin plastics, which pose as a stiff competition to the polyethylene terephthalate.   Since governments across the world are focusing on a circular economy, the demand for recycled PET has also increased significantly. The demand for recycled PET is expected to decrease for the non-food grade applications but increase for packaged food and water applications amidst the COVID-19 pandemic. Changing dynamics in paraxylene (PX) and monoethylene glycol (MEG) are impacting the downstream demand for polyethylene terephthalate (PET). Meanwhile, countries like Germany have lost 20% with its new-car registrations and 35% on domestic auto production, which have decreased the demand for polyethylene terephthalate in the global automotive market.   Future Aspects of the Global PET Market   The COVID-19 pandemic has pushed governments across the globe to shift from a linear to a circular economy. Thus, the demand for recycled PET has increased during the COVID-19 pandemic period. Europe’s new plastic packaging taxes are likely to facilitate the polyethylene terephthalate industry growth over other polymers, like polypropylene, for some food and drink applications due to a greater ease in sourcing another secondary material. This might result in an increased demand for PET. Thereby aiding the market growth. Similar plastic taxes are being introduced by countries, such as Italy and the United Kingdom, among others, that focus on recycled content. These new taxes are likely to drive many plastic consumers in the packaging sector towards PET due to the present mature market for non-virgin PET. Meanwhile, a peace agreement between the state of Israel and the United Arab Emirates could open up new business opportunities for polymers trade in the Middle East.   Meanwhile, South Africa’s GDP contracted by 51% in the second quarter of the year as compared to the first quarter. It was caused by the lockdown enforced by the governments to contain the spread of the coronavirus pandemic. The key petrochemical sectors, like construction and manufacturing, fell over 70%. The prices of polyester yarn have increased in the north-east regions of Asia on the back of greater feedstock cost and better offtake amid seasonally strong demand. In India, ‘rules of origin’ norms will be issued in late September, which will help to reduce the dumping of goods and stops the import of low-quality products. This step is also focused on building a circular economy, which will further facilitate the demand for recycled polymers, further supporting the growth of the PET industry.   Related Links:-  https://www.procurementresource.com/production-cost-report-store/polyethylene-terephthalate-pet https://www.procurementresource.com/resource-center/polyethylene-terephthalate-pet-price-trends ;
Navigating Corn Imports in China as Three Typhoons Hit the Main North Eastern Grain Region
11-09-2020

Navigating Corn Impo...

As the Chinese economy was already facing a tight balance between the supply and demand for corn, the industry witnessed an increasing tilt towards a supply shortage following the massive typhoons, which came unexpectedly in August this year. Three typhoons have hit the country’s main corn growing region in quick succession, resulting in flattening of crops and a surge in corn prices, which reached their highest level in five years. It is estimated that the natural disasters like typhoon, which hit the North Eastern region, could lead to a drop in corn output in Heilongjang and Jilin. These two areas are the major corn producing provinces in China.   In the past few years, the corn industry has sharply risen in China and corn serves as a key ingredient in the region’s animal feed industry. Amidst the trade war between the United States and China, which stared in July 2018, the Chinese government is encouraging  the farmers to cultivate soybean in order to reduce the nation’s dependence on imported US crops. The local governments are even offering subsidies to encourage farmers to shift their crops from corn to soybeans. In China, corn is one of the major crops, with Chinese farmers paying agricultural taxes to farm these crops for nearly thousands of years.   Corn prices jumped by almost 30% from the start of the year to 2,355 yuan (USD 345) per tonne at the beginning of August, before falling slightly to 2,274 yuan per tonne at the end of the month. The surging corn prices are driven by the rising demand from pig farms, which are reviving from last year’s African swine fever outbreak, that devastated the nation’s pig herd. China’s inventory of breeding sows has grown considerably from June to July this year, registering an increase for the sixth straight month, according to the Ministry of Agriculture and Rural Affairs.   Further, the rise in wheat prices came as a fallout of inflation in corn prices. Wheat is another key grain in the region and animal-feed producers are trying to replace corn with wheat as raw material. To tackle the situation, the central government stepped up its auction for state corn reserves. In order to quell the corn prices increase, there have been 15 rounds of auctions. This step was taken as the stockpile of corn was shrinking rapidly this year. Up until the end of August 2020, the government had sold nearly 54 million tonnes of reserves, with a remaining reserve balance of a little over 2 million tonnes.  After the government’s move, a slight drop in corn prices could be seen mainly because most of the corn that the government auctioned has been sold to the market.   Moreover, the government is focusing on importing plenty of corn this year to narrow the demand-supply gap, and, thus, corn prices are falling slowly in the region. Although, the prices can go up again due to the loss of harvest and reduction in output because of the typhoons.   In comparison to domestic corn prices, imported corn is 2% cheaper in 2020, at around USD 222 per tonne. Therefore, the difference between delivered and local prices also favours imports.   In 2019, China witnessed a corn supply deficit of 17 million tonnes that could reach up to 25 million tonnes between 2020 and 2021 if proper action is not taken. Thus, there is an immediate need to fulfill the demand-supply gap either by imports or by enhancing the domestic produce and stocks.   In late August, Chinese importers signed a deal according to which they will buy 400,000 tonnes of corn from the United States. This deal took place when China had already imported 2 million tonnes of corn from the United States in July. Currently, there are 30 million tonnes of corn in the government reserve, meaning, there is still plenty of supply for the market to utilise. Thus, this year’s corn shortage may not be a big issue as China is poised to meet the rising demand for corn as well as other agricultural goods and achieve agricultural targets set in the countries’ first-phase trade accord. ;
Sinochem and ChemChina Megamerger to be Back on Track
10-09-2020

Sinochem and ChemChi...

The efforts which were prolonged by three years to combine China’s two biggest state-owned chemical companies, Sinochem Group Co. and China National Chemical Corp./ChemChina, may finally be back on track. A merger discussion that started years ago is back in progress. On 23rd January 2020, the companies announced the further reconstruction of their agrochemical sectors. The giants are expected to merge their agricultural assets under the umbrella of Syngenta Group, which will be based in Shanghai, China. Such a deal is expected to create an enormous company with an even bigger revenue. However, the deal kept getting delayed due to various problems faced by ChemChina.   Sinochem and ChemChina Agrochem Merger: On 23rd January 2020, the two Chinese state-owned giants announced plans for strategic reconstruction. The reorganisation involved the merger of their agrochemical sectors to create a behemoth entity. The restructuring involves Syngenta, a Swiss agrochemical producer, which was acquired by ChemChina in 2017, and a crop protection company called Adama from Israel, wholly owned by ChemChina since 2016. According to the terms of this merger, ChemChina will surrender it’s 100% ownership to Syngenta Group with 74.02% shares of Adama, and Sinochem will give up its primary agricultural assets.    Ning Gaoning, who is currently the chairman of both, Sinochem and ChemChina, is expected to chair the Syngenta Group, while Adama’s current CEO, Chen Lichtenstein will become the chief financial officer (CFO) and relocate to Basel, Switzerland. The merger further aims to deepen the reform of state-owned enterprises and optimize resource allocation and for Sinochem and ChemChina to further strengthen cooperation.   Cause of Delay: There were potential talks of this merger since 2016, when Ning Gaoning, who helped grow China Oil and Foodstuffs, was appointed as the chairman of the then-struggling Sinochem. The Chinese government is expected to merge Sinochem with ChemChina in order to make an even bigger competing entity. However, ChemChina’s overseas subsidiaries stood in the way of the full merger.   The debts taken with the acquisition of Syngenta by ChemChina became the starting of ChemChina’s borrowing spree. Since the USD 43 billion takeover of the Swiss crop-science giant at the height of the company’s acquisitions spree in 2017, the company’s borrowing has only increased in size. This is due to the ongoing capital spending getting far in excess of the operating cash flow. ChemChina’s nearly thin or negative operating cash flow has been proven insufficient to cover its vast investment spending. The USD 20 billion funded for the Syngenta deal looks modest in front of the net debt of USD 63.6 billion on ChemChina until June 2020.   Why this Merger?   Multiple news agencies reported that ChemChina approached a number of Chinese state-backed investors in the month of December 2019 for USD 10 billion in order to reorganise its agrochemical business ahead of a stock market listing in 2020. This fundraising initiative was aimed towards reducing ChemChina’s debt by raising a similar amount from smaller shareholders while holding onto majority stakes in its listed Agri-Tech business. Also, due to China’s equity market being in a frothy state right now, it will be a good opportunity for ChemChina to get that long awaited initial public offering done.   Meanwhile, with the addition of Adama, the newly formed group becomes the world’s largest agricultural inputs company, including crop protection, fertilizers, seeds, additional agricultural and digital technologies, and distribution networks inside of China. Thus, the Syngenta group will reportedly have an annual agrochemical sales revenue of nearly USD 15 billion.   Another reason for this merger was to list the resulting company in China’s technology-focused STAR market by mid-2020. The listing of the company is further expected to result in a market capitalisation of 777 billion yuan on the current 0.75 times price-sales multiple, typical of large chemical businesses, which would make the company roughly the size of BASF SE, Dow Inc., and Nutrien Ltd. combined.   However, a major drawback, which the merger might face, is the backlash from the United States. This can be attributed to the consideration of these companies as “Communist Chinese military company” by the U.S. Department of Defence. This allows the White House to impose heavy sanctions on any company doing business with them, thus, creating a certain amount of risk for an already in-debt company and as 90% of Syngenta’s business takes place outside of China. ;
Erratic Deals by Oil Giants Obscures Green Makeover
09-09-2020

Erratic Deals by Oil...

As the oil companies plan to spend their fortune on a new, reliable, and sustainable energy source in order to leave behind lesser carbon footprint, the industry’s erratic deals have hoisted red flags for their investors. In the past decade, oil giants had invested in major oil and gas sources to increase their production which has led to a financial dent in their investment every time. From the year 2014, when the oil prices stooped their lowest till the market collapse due to the pandemic, stakeholders have taken a step back.   These deals made by the oil giants have led to massive expenditures, which has further proven unsatisfactory to the stakeholders. When Shell, a British-Dutch multinational oil company, bought BG Group in a deal worth USD 54 billion in 2016, the prices were crashing down and the stakeholders were convinced that the deal would support Shell’s dividend under any imaginable oil price scenario. A few years after that, when the world is suffering now through a pandemic, the British-Dutch company have slashed their dividend for the first time since the early twentieth century and had to suspend what was the world’s biggest share buyback programme. The deal brought nearly a decade of disappointing takeovers, from Repsol’s USD 8.3 billion takeover of Canada’s Talisman Energy, just months before the 2014 oil price crash to Occidental Petroleum’s mis-timed USD 38 billion take on shale producer Anadko last year. Now, the Shell policymakers are looking forward to rise by developing themselves as a low-carbon power supplier in order to flourish in the future of clean energy, while the stakeholders are worried about history repeating itself.   Companies like BP and TOTAL are expected to showcase their details about their strategies to their stakeholders in the month of September, while Repsol is planning to propose its strategies in the month of November. Shell is preparing its strategies and will give out its details in the month of February, next year.   Repetitive Mistakes   The collapse of the oil market due to the pandemic has caused many companies to either liquify or cut-off their assets, and it has also led to a decreased revenue generation to a point where the companies have taken more debt to keep up with the payments to stakeholders.   Shell itself has cut-off assets worth USD 16.8 billion, which included one of their flagship plants in Australia. In total, the global energy-producing companies have cut down by USD 60 billion, in terms of assets, followed by a falling graph of oil price and demand during the pandemic.   Since the year 2005, oil companies, namely Shell, BP, and Total have developed a combined debt of USD 370 billion, which will not be recovered with the amount of revenue being generated. This means that all the revenue generated is getting used to cut debts. With such massive debts, the uncertainty of oil prices, and a weak deal making record, the oil giants are now facing problems on getting stakeholders on board.   In order to correct their wrong, oil companies are now running towards renewable assets such as solar, wind, and hydro energy, even though they have lesser returns than oil and gas. The companies’ investments towards renewable projects might be of value as they will start from a high leverage point due to their pre-established market presence.   Lower Returns May Cause a Problem As companies lure stakeholders towards the new renewable projects, the lower return might come as a head-scratching factor to the stakeholders. Over the course of the past five years, Shell’s shareholder return has been at minus 2.9%, and the picture is similar to BP, ExxonMobil, and Total. Chevron, on the other hand, had the strongest return at 5.9%. The constant drop in the oil prices has led to a fold for BP’s market value over the past couple of years to about USD 75 billion, which will further hinder them in acquiring large renewable assets or power companies. While shares in the Danish renewables power firm, Orsted has doubled over the past two years, developing a market capitalisation of USD 45 billion. Similarly, Spanish utility Iberdrola’s shares have jumped by 180% in the last couple of years, developing a market value of around USD 80 billion. Such a positive return has encouraged oil and gas companies to shift their agenda towards the new renewable energy assets. However, they might attract different kind of stakeholders who are more interested in long-term stability as traditional stakeholders are more inclined towards high returns. ;
Iraq and Italy’s ENI to Build Oil Refinery Near Zubair Field
09-09-2020

Iraq and Italy’s ENI...

The oil minister of Iraq has given a statement about being in talks with Italy’s multinational oil and gas company, ENI, to build an oil refinery in the Zubair oil fields, which is to be operated by the Italian company.   The refinery is estimated to produce nearly 300,00 b/d and the project would cost approximately USD 4 billion. The initial phase of this project is set to include the commissioning of 150,000 b/d by the year 2025.   ENI, a multinational oil and gas company, currently operates in the southern parts of Zubair oil field, with nearly 41.56% of shares. The other shareholders include South Korea with 23.75%, state-owned Basra Oil Co. with 29.69%, and another state partner with about 5% shares. According to the estimates, while considering the current project, the Zubair oil fields are set to produce 700,000 b/d by the year 2027.   Iraq’s Investment Due to the recession caused by the COVID-19 pandemic, the governments around the world have been facing economic troubles. Iraq’s government is, thus, seeking to involve the private sector into the Zubair field project. The government expects the private sector to own about 20% of the project because they do not have the resources to finance the project.   The government is ready to have off-take agreements which will guarantee the sale of products domestically. These products include gasoline, gas oil, and lubricants, which are set to be consumed locally. The by-products created from the refinery are expected to be shipped outside the country. Meanwhile, OPEC’s second-largest oil producer is importing gasoline and diesel into the country to meet its rising needs. However, OPEC’s refineries are considerably old, dilapidated, and damaged due to the 2013-2017 war against the Islamic State.   Refinery Expansions Meanwhile, the refineries already present in the Zubair oil fields are planning to expand their production facilities. North Refineries Co. is preparing to increase its processing capacity to 120,000 b/d by the end of this year, which is at 75,000 b/d at present.   The government also plans to expand the capacity of the Sumood Refinery in Baiji, north of Baghdad, to produce 280,000 b/d. The capacity is expected to reach 140,000 b/d in the upcoming months, which was earlier at 75,000 b/d.   The Baiji Complex, which involves the Sumood Refinery, was extensively damaged due to the bombardments, siege, and intense fighting between the Islamic State and federal security forces during mid-2014 and the end of 2016.   The Iraqi government has also approved the contract with Japan’s JGC Corp to upgrade the Basrah refinery. The contract is estimated to be around USD 4 billion. The Basrah refinery has the capacity to produce 210,000 b/d, and the work is expected to be in progress by next year and terminates in the next four. The deal was announced on 29th July 2020.   Japan’s EPC and O&M service provider, on August 3rd 2020, issued a statement regarding the construction at the Basrah refinery. The upgrades being made include a vacuum distillation unit, a fluid catalytic cracking unit, and a diesel desulfurization unit, among others. The project is likely to increase the production capacity of gasoline to 19,000 b/d and diesel to 36,000 b/d. ;
Reformulating Germany’s Energy Market
08-09-2020

Reformulating German...

As the world is accelerating towards sustainable development goals, Germany, which is Europe’s largest economy, is seeking to blaze a trail in the renewable energy industry. Germany is a country that is home to one of the world’s most liberalised electricity sectors. The cost of getting rid of fossil fuels and nuclear power has financially hindered the utilities at a time when deep-pocketed Tesla, an American-based electric car manufacturer, appears to be involved in the scenario.   ELIGIBILITY TO ENTER THE MARKET   Any new player who wants to enter the market must guarantee a stable supply of energy for end customers that also meets the operational conditions and notifies the regulator. These bars have been set by Germany’s Bundesnetzagentur, which is the country’s energy regulator. The new firms are eligible to enter the market only if these conditions are fulfilled. According to Barbara Lempp, the Managing Director of EFET, in order to trade wholesale energy, licenses, and hardware can be acquired.    STATUS OF RENEWABLE ENERGY IN THE COUNTRY Presently, Germany has 218 gigawatts of installed generation capacity, of which 53% comes from renewable sources. If weather-driven, the yield from these assets generates 40% to 60% of the power output for over 12 months. For private customers, there is a choice from among 1,350 suppliers.   TRADING OF THE ELECTRICITY Within the region, wholesale trading of electricity is carried out either over-the-counter or through exchanges like the EEX bourse by professionals. For fossil fuel power, the prices may fluctuate, subject to the free market, and fixed feed in tariffs for green power operation. So, for that, there is a two-tier system for those fluctuating prices. Currently, the system is shifting rapidly away from subsidies, as 20-year payment guarantees start expiring from 2021 for thousands of installations. HEFTY AND SMALL PLAYERS OF GERMANY The biggest energy generator of Germany, RWE, is all set to speed-up its renewable projects and it is foreseen that the company will build businesses in Europe and North America.   E.ON is into an ambiguous situation as it retains some nuclear generation assets and also has 40% share in regulated German power distribution after it swapped renewable production with RWE in return for a grid and services firm, Innogy, which focuses on storage, electro-mobility and energy efficiency. Because of this deal, it can earn profits from 55 million customer accounts in Europe.   FINAL CALL FROM GERMANY? Following the Fukushima nuclear disaster in Japan that took place in 2011, Germany has decided to speed-up and execute the already planned exit from nuclear power. The country will close all its reactors by 2022. The move of Germany is appreciated by many countries. Germany has scheduled to withdraw from coal burning in order to achieve the target of procuring 65% of power from renewable assets by 2030. The majority of voters are in favour of both the schemes.   MEGA TRENDS Production is likely to become 80% green till 2050, and gas transport grids will be driven by green hydrogen, made from renewable power via hydrolysis. This is done specially for consumers in order to free themselves from gas and oil for transport, heating, and industrial processes. Steelmakers Thyssenkrupp  and Salzgitter are among those firms which are making plans to reduce their massive emissions.   LOOPHOLES The renewable roll-out is stalling because of the scepticism of the investors as they largely depend on the weather patterns and on political support. Therefore, they expect lucrative returns on the new green assets.    Opposition by residents and red tape seems to be an obstacle as due to this resistance, the network expansion, which aimed at ensuring an unhindered distribution of green power, has fallen far behind schedule.   CHALLENGES FOR THE NEW MARKET ENTRANTS The entry of any kind in the market is always a risk for the newcomers. One of the risks is the immobility of assets caused by poor IT and lack of grid space. The second risk for the newcomers will be the lack of customers’ trust. It might be difficult for customers to switch to new products or brands. Also, the established players would not give up their shares in the market without a fight, making it difficult for the new entrants to sustain in the market. ;
Chinese Export Performance Surpassing the Expectations as Economies Reopen After the Shutdown
07-09-2020

Chinese Export Perfo...

China’s export rose for the third consecutive month in August, meanwhile, the imports plummeted. There is an estimated extended fall in imports and a rise in exports as more of its trading partners lifted the lockdown, which was implemented to curb the spread of the novel coronavirus. This pattern is expected to favour the export performance of China, which is likely to enhance the economic growth of the country.   Customs data showed that exports in August rose by 9.5% from a year earlier, marking the strongest gain since March 2019. This growth has beaten the expectations of many analysts, who were anticipating a 7.1% growth and compared with a 7.2% increase in July. Imports, on the other hand, slumped 2.1% compared with market expectations for a 0.1% increase and extended a 1.4% fall in July. The strong exports are likely to upsurge the Chinese economy. It can result in a faster and more balanced recovery of the Chinese economy, which is rebounding from a record first-quarter slump.   Chinese exports continue to defy expectations and is growing faster than global trade, thus regaining global market share. Whereas, there was a need for caution pertaining to the import data, which was disappointing as the growth of China’s domestic demand was assessed. According to a survey based on manufacturing activity, the overseas demand for various products slowly revived, and Chinese firms reported the first increase in new export orders this year in August. The expansion of production was bolstered by the pick-up in business, marking the sharpest gain in almost a decade. Some analysts feared that the global slowdown might affect the Chinese export performance, but instead, the performance was boosted by record shipments of medical supplies and remarkable demand for electronic products.   But, at the same time, the region is witnessing an unexpected drop in imports, suggesting softer domestic demand. In August, copper imports eased from the previous month’s all-time high, due to the falling demand from the key consumption sectors and the disruption in supply chain, which adversely affected the transportation of overseas metal. Further, coal imports dropped 20.8% in comparison to the previous month. Having said that, the imports were largely stable in terms of volume. It is expected that with credit growth still accelerating, and infrastructure led stimulus still ramping up, import volumes will remain strong in the coming months. In August, China issued a trade surplus of USD 58.93 billion, compared with the earlier forecast for a USD 50.50 billion surplus and USD 62.33 billion surplus in July. However, the outlook is still far from rosy due to the volatile conditions, as external demand could still suffer if the virus control measures are reimposed by trade partners later this year due to the resurgence of the pandemic. China is also looking for ways to reduce its dependence on overseas markets for its development, as the U.S. hostility and the pandemic may increase external risks that could impede the country’s economic growth. In February, China, under an agreement, pledged to boost purchases of U.S. goods, but the region is well behind its plan. However, in August, China’s trade surplus with the United States expanded to USD 34.24 billion from a value of USD 32.46 billion in July.   In August, trade officials of the U.S. and China reaffirmed their commitment over the phone to a phase 1 trade deal. Both the regions seek progress, and thus, are determined to take the necessary actions to ensure the success of the agreement. Last week, the U.S. Trade Representative’s office extended the tariff exclusions for a wide range of Chinese goods, including smartwatches and some medical masks, but only through the end of 2020. This move may increase uncertainty for businesses, but may create some leverage for the United States in bilateral trade negotiations. ;
Merger of Schlumberger’s North American Fracking Unit with Liberty Oilfield Services
03-09-2020

Merger of Schlumberg...

Schlumberger Ltd. (NYSE: SLB), the world's leading oilfield services provider, announced that it is merging its hydraulic fracturing arm with Liberty Oilfield Services Inc. (NYSE: LBRT), an innovative service company based in Denver, United States. According to this merger, Schlumberger will contribute its onshore hydraulic fracturing business in the United States and Canada (OneStim), including its pressure pumping, pump-down perforating, and Permian frac sand business to Liberty, in exchange for a 37% equity interest in the combined company. The deal is estimated at a whopping USD 448 million. The transaction is expected to be completed by the fourth quarter of 2020. Liberty Oilfield Services Inc. specialises in hydraulic fracturing and engineering services and provides efficient and high quality solutions to onshore oil and natural gas E&P companies in North America. It mainly serves in the Permian Basin, Williston Basin, DJ Basin, Powder River Basin, and Eagle Ford Shale, which are among the most active basins in the region. It has clients throughout the United States. The company mainly focuses on offering safe and innovative solutions to deal with clients’ problems. These solutions include custom fluid systems, innovative perforating strategies, unique purpose-built equipment, and integrated engineering, and “big data” approach.   The divestiture of OneStim by Schlumberger Ltd. to Liberty is the result of the plummeting oilfield sector amidst the COVID-19 pandemic. It is aimed towards expanding technology and operating capabilities, which will further enhance E&P operator efficiencies, improve shale asset economics, and raise the bar for sustainable and environmentally conscious frac operations. There are numerous oil and gas companies in the United States, but the volatility and fluctuations in the market are forcing those numbers to shrink. This is due to the halt in production operations caused by the mass shutdown amidst the pandemic, which is adversely affecting the oil and gas industry. For both Liberty and Schlumberger, this merger is one such step to cope with the increasing difficulties and sustain their business during the tough time. The consolidation between the two major companies will help the oilfield sector to recover. This merger will be financially compelling for both the companies’ stakeholders. It will allow combined pro-forma market capitalisation of USD 1.2 billion. It will also provide an alliance agreement for future collaborations and give access to the companies’ technological portfolios beyond the scope of this transaction, such as Schlumberger’s digital platform, subsurface expertise, downhole completions equipment, frac trees, and flowback technology. The deal is expected to double the available service horsepower of Liberty, further adding maintenance support horsepower and sand mine capacity. It will also increase Liberty’s intellectual property patents to around 500.   The collaboration of Liberty Oilfield Services, one of the most innovative and efficient frac company, with the technologies and scale of Schlumberger’s OneStim, they are expected to form a significant division in the world’s leading oilfield services companies. This acquisition will make Liberty the third-largest oilfield services firm by North American revenue with the company's executive team leading the combined business. ;
Unilever to Work Towards “Clean Future” by Eliminating Oil-Based Ingredients from its Cleaning Products
02-09-2020

Unilever to Work Tow...

How and in what direction do the modern influential firms work in order to achieve the sustainable development goals is a major factor on which the future of this world depends. Various firms have planned to initiate projects that are targeted towards achieving sustainable development goals. One such project is the Unilever’s “Clean Future” initiative, which will receive an investment of €1 billion by the owner of Persil, Domestos, and Cif, in a bid to eliminate fossil fuel-based ingredients from its products by 2030.  Unilever’s “Clean Future” initiative aims to develop renewable and recycled alternatives to chemicals derived from the oil industry as a part of the company’s pledge to eliminate carbon emissions from its products by 2039. Unilever has realised the urgent need of saving the nature, and the efforts are being made to promote the same. Therefore, the company has been committed over the next decade to environmental projects that will improve the health of the planet. As nearly half of the carbon footprint is generated by the company’s cleaning products prepared from oil-based ingredients, the eco-friendly alternatives are expected to reduce one-fifth of the negative environmental impact caused by these products. Also, there are some products that generate a huge amount of plastic waste, and Unilever has pledged to reduce the same as plastic is one of the most harmful non-biodegradable wastes that can cause harm to plants and wildlife. The eco-friendly alternatives, varying from palm oil-based chemicals to those derived from algae, plastic waste, and carbon captured form energy production, is being investigated as it is essential to develop a diverse range of alternatives to grow within the limits of the planet. This clearly resonates the company’s motto of making a better world for the generations to come. As the world is already suffering from various causes of environmental degradation like global warming and the depletion of non-renewable resources due to an increase in the population globally, this step can prove to be a huge success towards achieving the sustainable development goals of the company.  Based on research activities, the different alternatives for sourcing fossil fuel-based ingredients are being developed, and this is expected to shape a new bio-economy, rising from the ashes of fossil fuels. As the science and technology has buttressed the various possibilities for producing more promising products that meet the needs and desires of people, Unilever is aiming to provide affordable and sustainable products with new exciting benefits to people who use their products, from ultra-mild cleaning ingredients to self-cleaning clothes and surfaces.  In September 2020, one of the first fossil fuel-free innovations is expected to hit the market of the United Kingdom. The product is a Persil washing liquid, along with a stain remover, which is derived from sugar cane. As a part of the company’s sustainable development goals, the Persil bottles are also now expected to be comprised of 50% recycled plastic. The bottle has been redesigned to utilize less plastic, thus, substantially reducing the total virgin plastic used in the bottles by 1,000 tonnes per year. Cif is also on the road of recycling and sustainable future as the brand has reformulated its cleaning liquid with a cleaning agent recycled from plastic bottles. In India, too, the company has implemented its sustainable development goals as it sources soda ash produced via a pioneering method that captures the carbon from energy production. Thus, the company is aiming to bring lower carbon alternatives into the mainstream. In order to fend off the coronavirus, the company has been witnessing a rise in demand for its cleaning products as people are much more concerned about maintaining the hygiene and sanitation. Maintaining hygiene and proper sanitisation is expected to remain the priority for people in the coming years, keeping up the demand for Unilever’s cleaning products in the coming years, even as the company takes stepss to tackle the looming climate crisis. ;
Post-COVID Recovery of the United States Manufacturing Sector
01-09-2020

Post-COVID Recovery ...

The unique nature of the COVID-19 crisis presented a new set of challenges to various sectors of the economy, including the manufacturing sector. The US manufacturing sector, which forms a total of 11% of the United States’ GDP, faced a downfall in its production lines caused by factors like absence of labour, lack of raw materials, operational challenges, and muted demand. However, with the lockdown getting lifted, paired with government regulations being made significantly easier, the manufacturing sector has caught up with a pace on the road to recovery. The sector is now looking forward to making a full recovery in the upcoming years.   Problems Caused by COVID-19 to the United States Manufacturing Sector   United States’ economy slipped into recession in the month of February and suffered its deepest contraction within the last 73 years. This largely affected the manufacturing sector due to two major factors: First, many manufacturing jobs, being on-site, cannot be accessed remotely, and, second, slowed economic activity resulting in reduced demand for industrial products in the United States.   The adoption of new methods to avoid the damage in the manufacturing sector was uneven due to the downfall in the demand caused by shifts in spending away from equipment used in offices, restaurants, cafes, and bars to the purchases of goods like home electronics.   The resulting weak demand, supply chain disruptions, historically low oil prices, and high levels of uncertainty is bound to affect business investments, which will further halt manufacturing chains. Due to the fall in the manufacturing sector, the GDP collapsed with its sharpest contraction in output in the last quarter.   Initial Recovery from the Pandemic   With government restrictions getting lifted and production regulations being comparatively easy, the manufacturing sector in the United States has a bundle of opportunities to thrive. The adoption of new methods in manufacturing reported by the commerce department was caused by the pent-up demand following the reopening of the businesses. Orders in the month of June were boosted by the demand for machinery, fabricated metals, primary metals, and electrical equipment. Orders for durable goods was driven by the robust demand for motor vehicles, which accelerated further after increasing in May.   Manufacturing orders for non-defence capital goods jumped 3.3% in the month of April, followed by a rise in the month of May. That was the biggest increase since July 2018 in the category of capital goods. A significant improvement in the orders for core capital goods was observed with easing restrictions. However, orders still remained 3.2% below their pre-pandemic level. The increase in core capital and the durable goods’ order in the month of June mirrored recent improvements in the regional factory activity across the United States. The appliances and components also increased slightly than before, which was caused likely by the workers setting up home offices. The United States’ manufacturing activity increased more than what was expected in the month of August as the new manufacturing orders surged to their highest level in sixteen and a half years, but the employment numbers at the factory outlets continued to lag amid safety restrictions intended towards slowing the spread of COVID-19. The Future of the United States’ Manufacturing Sector With the manufacturing outlets reopening and resuming their production, the recovery is expected to pace up in the third quarter of the year. However, the recovery is expected to be slow and disturbed due to a sudden increase in COVID-19 cases. This budding recovery, which is threatened by the resurging new cases of coronavirus, has forced some authorities in the hard-hit South and West regions of the United States to either close their businesses again or halt re-openings, which will further decrease the demand for goods, hence bringing more disruptions in the production lines. Meanwhile, the full or partial closures of manufacturing plants could continue to be necessary, especially for the manufacturers of hard-hit regions for a prolonged period. For the companies which are vulnerable to the virus outbreak within their ranks, this could act as a valuable opportunity to explore a proactive deployment of automation technologies, such as autonomous materials movement, industrial internet, collaborative robotics, and more to decrease the worker density throughout their operations. Until the pandemic is fully controlled, the United States’ manufacturing sector will remain exposed to weak demands, which will further impact investment and hiring decisions going forward. ;
India-China Relation Affecting Steel Business for India
29-08-2020

India-China Relation...

Iron and steel exports from India has increased since last year. This can be attributed to the lower steel demand domestically as compared to the international demand. Also, cost-cutting by India’s steel manufacturers to generate a much-needed income at the time of the pandemic is also contributing to the change in the steel trade equation. Countries like China and Vietnam have snapped at this opportunity and continue to buy steel from India. Some rising tension between India and China has also resulted in a trade imbalance between the two nations. India’s urge to boycott Chinese goods, fuelled by the recent military clash at Dokhlam, has further resulted in an unspoken trade war between the neighbouring countries. Ongoing feuds between the two nations since their altercation is affecting both sides economically. India is finding itself at a disadvantage due to these new emerging tensions. India’s Steel Production and Export    India is the second-largest steel producer across the globe, which exports to countries like China, Vietnam, the United States, and more. In the recent years, India has been a net exporter of steel.   Exports still manage to become an area of focus as India’s steel production declined due to the lockdown. JSPL, India’s largest steel manufacturer, recorded sales at a record low, with a 29% decrease. JSW, the second-largest steel producer in the country, has its plants working only at 38% working capacity.   In the first two months of this fiscal year, SAIL has boosted its exports and are looking forward to making new customer relationships abroad. Due to this step by SAIL, steel export was substantially high this year in May and June. Meanwhile, the logistical challenges in India, such as the government’s strict regulation policies, shortage of labour, economic downfall, disturbance in production chains, and more, still continue to cause trouble in steel export.   India-China Trade Relations   India exports as well as imports numerous goods to and from China. Due to India's rapid expansion, China’s bilateral trade has propelled to new heights making China as India’s largest trading partner in 2008, a position which China holds to this date. From the beginning of the previous decade, the bilateral trade between the two nations recorded an exponential growth. However, this bilateral trade has been drastically affected over the past two months due to both the pandemic and the rising tensions between the nations.   Some of the goods that India export to China are chemical ores, slag and ash, mineral oils, mineral fuels, and other industry products.   India-China Trade Relations Affecting Steel Exports   While countries around the globe are recovering from the stringent lockdown and the problems followed by it, China has been slowly returning to a full-scale production of crude steel. In China, there has been a significant boost in semi-finished products, while markets like Europe, where the entire steel industry has stopped functioning, demand fully finished products.   China’s domestic demand for steel has grown significantly amidst the pandemic. To meet with this increasing demand, China has imported rolled coils from India at a low price. Rolled coils are used to make automobiles, pipes, military equipment, and more.   Flourishing trade with China has brought numerous advantages with it, such as the availability of low-priced items in India, but it has also led to the biggest single trade deficit India is running with any country. The clash of military troops in various regions of Ladakh and Arunachal Pradesh has further fuelled the trade war between the two nations. The resulting tensions in the Ladakh region have escalated the trade imbalance between the two countries, resulting in India’s steel production chain to be disturbed. However, a number of government officials have claimed that the increasing tension with the neighbouring country will not affect the trading sector. Still, the common population has already developed a resilient behaviour towards Chinese goods, another factor resulting in trading imbalance. ;
Sodium Hypochlorite: Market Overview and COVID-19 Impact
28-08-2020

Sodium Hypochlorite:...

With the outbreak of the COVID-19 pandemic, the demand for sodium hypochlorite has witnessed a substantial increase as the chemical is widely adopted by governments across the globe to disinfect streets, residential areas, and other public areas. Sodium Hypochlorite (NaOCl) is used as a disinfectant, oxidizer, or a bleaching agent. Also known as bleach, sodium hypochlorite has a pale greenish yellow colour and a pungent odour. It is a highly unstable and highly corrosive solution. Sodium hypochlorite is mostly used for water treatment purpose or as a disinfectant.  Uses of Sodium Hypochlorite  As a Water Disinfectant:   Sodium hypochlorite is used in swimming pools, municipal water, or sewage for water disinfection and oxidation.  As a Bleaching Agent:   Sodium hypochlorite is also known as soda bleach. It is a bleaching agent for rayon, pulp, paper, cotton, linen, and jute.   Domestic Use:  On a domestic level, sodium hypochlorite is used for household and laundry cleaning, sanitation, deodorising, disinfection, and surface purification.   Food Industry:   It is used in the food industry in order to control the bacteria and odours.   Market Outlook The sodium hypochlorite market has been growing at a healthy pace as it is very cost-effective as a bleaching agent and water disinfectant. Due to the growing risk of water borne diseases, there has been a tremendous demand of sodium hypochlorite in the market. Rapid urbanisation is another aspect that has been propelling the market growth. As urbanisation increases, industrialisation also increases proportionally, which further increases the wastewater production and water contamination, contributing to the rising need for sodium hypochlorite. Market Overview Post-COVID The coronavirus outbreak is likely to buttress the sodium hypochlorite market growth as the demand for household cleansing and sanitation products witnesses a substantial increase. As sodium hypochlorite is an excellent water disinfectant, the demand for the chemical is expected grow in order to prevent the world from water borne diseases and to provide the growing population with clean and hygienic water, especially for the duration of the COVID-19 pandemic. Governments across the world are also significantly contributing to the demand for the chemical during the ongoing pandemic as sodium hypochlorite-based disinfectants are being widely used to disinfect commercial and public spaces. Therefore, the growth of sodium hypochlorite industry is quite promising in the year 2020. In India, the consumption of sodium hypochlorite has increased by nearly 100 tonnes per month after the COVID crisis. The chemical is mostly used in the textile and hotel industry, where sanitization is of grave importance. In cities like Kanpur, where there are abundant factories, the Kanpur Municipal Corporation is consuming sodium hypochlorite to its maximum capacity for sanitization purposes. Large scale sanitisation of roads, residential areas, and public spaces in many cities is being carried out at full pace. This sudden surge in demand may, however, create a shortage of the chemical supply. In Egypt, the demand for sodium hypochlorite witnessed an increase of 800% in order to counter the spread of COVID-19. In China and Europe too, a significant increase in the demand for the chemical has been witnessed. At the time when the whole world is struggling with the fight against COVID-19, the governments across the globe have taken measures to fight the pandemic. The sanitization of roads, buildings, societies, hospitals, hotels, and other common spaces has made a room for a significant growth in the demand for disinfectants. Therefore, the demand for sodium hypochlorite is likely to witness a substantial increase in 2020 and is expected to witness a healthy growth in the coming few years.   Related Links:- https://www.procurementresource.com/production-cost-report-store/sodium-hypochlorite https://www.procurementresource.com/resource-center/sodium-hypochlorite-price-trends ;
Post-COVID Impact of the Automotive Industry on the Chemical Sector
25-08-2020

Post-COVID Impact of...

The automotive industry has served as a critical component of economic growth with extensive interconnections to both upstream (e.g., steel, chemical, textiles) and downstream (e.g., repair, mobility services) industries. However, due to the COVID-19 pandemic, it has suffered a huge decline in demand. The vehicle manufacturers have been affected by the low availability of raw materials, labour, travel restrictions, and more. The ripple created by the decreasing demand has significantly affected the co-related chemical industry. Since the growth of the automotive industry has become slower due to disturbed assembly chains, it has created lower demand for raw materials, thus, affecting the chemical industry. The impact on the chemical industry has been widespread. The automotive industry has been witnessing reduced demand for chemicals such as butanediol (BDO), polyol, epoxy resins, oxo-alcohols, acrylic acid, acrylonitrile butadiene rubber (NBR), PMMA, and plasticizers. These problems created by the pandemic will create major differences in post-COVID recovery for both the automotive and chemical industries    . Post-COVID Effects on Automotive Industry   The supply chains are witnessing a significant number of shutdowns due to factors like lack of labour, travel restrictions, and existing panic of the pandemic. The production lines which were shut initially are also expected to face problems like a disrupted production line, shortage of required parts, shortage of raw materials, and more. Due to the resulting problems, automotive sales are projected to drop globally with knock-on effects for chemicals demand in many value chains. Low economy rate and long-term panic will also cause lower vehicle sales as consumers are more focused on day-to-day purchases.   In the European Union, the strong fall in the demand for vehicles has been stabilized.  Although the demand brings chronic overcapacity and high prices, resulting in brands like Mitsubishi announcing their exit from the European market. North American manufacturers will also slowly progress in the market. However, much of their supply is expected to remain in inventory as demand is estimated to be lower than the pre-COVID period.   China, on the other hand, has planned to cut the costs of its automotive products to boost sales, with the government subsidising the purchase of electronic vehicles. India will also face a slow growth due to the expected longer lockdown restrictions.    Post-COVID Effects of the Automotive Industry on the Chemical Sector   The automotive industry relies on the chemical industry for numerous things like raw materials, vehicle parts, cleaning solutions, glass formation, protection against corrosion, and others. With such extensive applications in the automotive industry, it is likely that the chemical industry will also be affected by the ripples created by the automotive industry.   With disturbed supply chains, the automotive industry is expected to witness a lower demand for chemicals such as nylon 6-6, polyol, and epoxy resin, among others. Since the production lines will face shortages in vehicle parts due to lower demand, the chemicals required to make these parts will also face a dampened demand.  In May 2020, the European soda ash markets have been showing negative effects caused by the lower automotive demand, with slowed flat glass production for vehicles. Even though the automotive industry has experienced a slowdown due to the pandemic, it is still identified as a growth area for many of the chemical companies as they focus on sustainability and opportunities in lightweight vehicles, which need polymers. The future of the chemical industry’s demand will be the provision of materials for electric vehicles such as lightweight polymers/composites and components for batteries. However, the switch to electric vehicles from internal-combustion engine may lead to the decline of the demand growth for high heat-resistant materials such as nylon 6,6. But the increased need for fuel efficiency will drive demand for materials used in lightweight vehicles which are made from a combination of polymers. Since many of the car companies are suffering from widespread overcapacity, they feel the need to heavily invest in the electrical vehicle technology. Regulators across the globe are trying to push the target for adopting electric vehicle and are aiming to restrict or even ban the use of diesel and petrol-powered cars from city streets. Thus, the automotive sector is investing heavily in electric vehicles.   In May 2020, Volvo, a leading multinational automotive company, signed a multi-billion-dollar deal with two Asian companies to supply batteries until 2028. Volvo aims to garner half its sales through electric vehicles by 2025. Volkswagen, a German automotive company, also aims to sell nearly 3 million electric vehicles annually by 2025 and is spending € 50 billion to secure access to batteries, thus, creating more potential demand for the chemical sector.   As vehicles are becoming modern, the companies are digitising them for a better user experience. This, too, provides an opportunity for those in the chemical sector as it will require computers, which are further made with the help of polymers and other chemicals. While the chemical industry has witnessed a lower demand from the automotive industry during the ongoing pandemic, with the growing applications of chemicals in the automotive industry, the post-COVID time will see a growth in demand for the essential chemicals used in the automotive production. Also, due to the pandemic slowing down and decreasing restrictions, the chemical demand in the automotive sector is likely to grow at a steady pace soon. Depending upon the current trajectory, a full post-COVID recovery is, however, expected to be attained only in the next 1-3 years. ;
Tropical Storms Approaching the US Gulf Coast, Affecting the Oil and Gas Production
25-08-2020

Tropical Storms Appr...

The production of oil and gas in the Gulf of Mexico slowed down on Sunday, 23rd August, by the approach of the two storms that led to the evacuation of 114 platforms. The two storms are known as Tropical Marcos and Tropical Laura. These platforms account for 18% of the Gulf staffed platforms, but they account for 58% of Gulf oil production and 45% of Gulf natural gas output. Over the past few days, Chevron, Exxon, BP, and Shell also began evacuating some platforms and drilling rigs. Strict measures will be taken, and the workers are supposed to be screened for COVID-19 before returning to offshore facilities. Both the storms have already wreaked havoc in the Caribbean, destroying homes and killing at least 12 people. Storms Marco and Laura were both predicted to strike the southern state and stir along the coast as hurricanes within a span of 48 hours this week. Had that happened, it would have been the first time in recorded history that the state had been hit by two hurricanes back-to-back. Laura is expected to be stronger than Marco, with current forecasts implying that it will create landfall in south-west Louisiana as a Category 2 hurricane. The National Hurricane Center said that Laura was reported to be 280km (175 miles) east of western Cuba, with maximum sustained winds of 60mph (95km/h), in its latest advisory.   As an old saying goes, ‘never trust a storm that goes into the Gulf’, especially if it is large. A rapid intensification of two deadly Tropical storms, namely Marco and Laura, rushing towards the Gulf is on the table, and this may result in the transition of these storms into hurricanes on Tuesday, 1st of September. The people of Texas have become pretty anxious since the news announcement.  “Laura has the potential to be the first hurricane of 2020 and my guess is that Texas will be the last destination of it”, said Todd Crawford, Chief meteorologist at the Weather Company, an IBM business. After raking the Dominican Republic, Cuba, and Haiti, Tropical Storm Laura arrived at the Gulf of Mexico late Monday evening, where it is poised to strengthen to the level of a hurricane by Tuesday and then signal a serious threat to the coasts of Louisiana and Texas by midweek. US styrene butadiene (SBR) rubber producers Goodyear, Lion Elastomers, and Arlanxeo have shut down their sites in Southeast Texas, according to the market sources. Oil prices have continued to rise in response to shut-ins. However, US future prices for natural gas fell slightly amid long supply. Laura could cause demand to fall from shutdowns at plants, refineries, and liquefied natural gas (LNG) terminals. The energy platform in the Gulf of Mexico accounts for almost 18% of America’s oil production and 5% of gas output and is devised to withstand storms of the magnitude as high as that of Laura. They shut and restart as systems pass through. But these two hurricanes are oblivious in nature and threaten to keep organisations shut for longer and cut the power supplies more than usual. Laura is likely to cause problems to refineries and fuel-distribution hubs from Houston to Louisiana, whereas Marco’s energy impact is circumscribed to offshore installations. In anticipation of the storms, ports in Louisiana are constraining operations or evacuating, and ship movements have been confined in some areas. If the storms hit rural areas of Louisiana, the damage might be limited to about USD 1 billion. But if Laura shifts closer to Houston, that price tag could rise to USD 5 billion. Similarly, if the storms hit New Orleans, damages could range from USD 2 billion to USD 3 billion. ;
Coal Import Trend in India (2019-2020)
25-08-2020

Coal Import Trend in...

India is one of the leading importers of coal in the world and is closely followed by Japan. The country has been importing coal since the era of steam engines. India is also one of the biggest consumers and producers of coal in the world. The key usage of coal in India is in the energy and utility sector and in industries like steel, copper, electronic, chemical, and others. More than 70% of the country’s electricity is produced using coal. The coal is also imported due to its usage in washery industries and cement making in the region. On an average, the country imports 235.24 million tonnes of coal worth INR 170,880 crore annually, with Indonesia accounting for nearly 60% of India’s thermal coal imports, followed by South Africa, Australia, and Russia. The import of thermal coal, which is mainly done for power generation, jumped 12.6% to 197.84 million tonnes in 2019. However, imports of coking coal fell marginally following two straight years of increase. Coking coal, which is used to make coke, is being imported by Steel Authority of India (SAIL) and other steel manufacturing units into the country to bridge the gap between the requirement and domestic availability and to improve the quality. Coal-based power plants, captive power plants, industrial consumers, cement plants, sponge iron plants, and coal traders import non-coking coal while coking coal is mainly imported by pig-iron manufacturers and iron and steel sector consumers utilising mini-blast furnace. India has spent USD 21.28 billion on importing 247 million tonnes of coal, which also includes 197 million tonnes of thermal grade, in the last fiscal year to March 2020. Decline in India’s Coal Import There has been a significant drop in India’s supply and demand chain of coal during 2019-2020 due to the side, such as offtake, consumption, logistics, and despatches. India’s demand for thermal coal has fallen due to the economic contractions triggered by the nationwide shutdown to slow the spread of the COVID-19 pandemic. The demand also plummeted due to the US-China trade war. In addition to this, the global economic downfall resulted in the availability of fewer exporters of coal, thus, worsening the situation.   In July 2020, Coal India Limited (CIL) announced that coal production in some of the major mines across the country has got affected due to high stockpiling and less offtake, which has resulted in fewer demands for coal imports. Coking coal imports went down to 10.67 metric tonnes during the April-July time period. Further, the pithead stock of CIL has also reduced to half. The coal traders of India evaluated that import of coal grew largely in 2019 due to the lower production of coal by CIL, whose output fell due to heavy rainfall and frequent outrages, including strikes by workers and locals last year. Further, the decrease in local output is attributed to land and clearance related challenges, mainly in the states of Odisha and Chhattisgarh, coupled with extreme rainfall last year. In 2020, India’s coal import went down by 43.2% to reach 11.13 million tonnes in the month of July, owing to the high stockpile of the dry fuel at ports, pitheads, and plants. If the demand and supply gap narrows further, it will be a cause of concern for the coal sector. India is Reducing Imports for Coal Since the coal market participants have adopted a wait and watch approach amidst the pandemic and are currently looking for a direction to deal with the same, the sector is unlikely to see any significant variation in import volumes in the short-term. Thus, the government of India has decided to use domestically produced coal instead of importing it from foreign countries, which will help reduce the coal inventory in India. The central government has asked major power generating companies, including NTPC, Reliance Power, and Tata Power, to reduce the usage of imported coal for blending purposes and instead use domestically produced coal. To boost local coal production, India in June organised an auction of 41 coal blocks with an annual production capacity of about one-third of total national output, which will further attract foreign investments to a sector dominated by state-run Coal India Ltd (CIL). Prime Minister Narendra Modi had also given instructions to CIL to find an alternative to thermal coal imports, particularly when huge coal stock inventory is available in the country this year.   Despite several factors resulting in decreased imports of coal in India, the country’s coal imports increased marginally by 3.2% to 242.97 metric tonnes in 2019-20. Coal continues to be an important commodity in the country’s energy sector and is expected to remain equally important in the coming years. With CIL planning to open 55 new coal mines in the next five years, it is further going to lessen the import of coal for India and increase the demand for domestically mined coal.   Related Links:- https://www.procurementresource.com/resource-center/coal-price-trends https://www.procurementresource.com/production-cost-report-store/coal-liquefication ;
Kazatomprom Production Cuts to be Extended till 2022
20-08-2020

Kazatomprom Producti...

On August 19, Kazatomprom, a Kazakh based multinational resource extraction company, which is the world’s largest producer and seller of natural uranium, announced that it will produce uranium in 2021 and 2022 at levels 20% below the maximum amounts permitted in the country’s subsoil use contracts. The production, which was expected to be between 27,500 and 28,000 mtU by 2022, is now reduced to 22,000 and 22,500 mtU for 2022. A similar amount is expected to be produced in 2021, as previously announced.   According to Galymzhan Pirmatov, (The CEO of Kazatomprom), the market signals and fundamental support is not visible in order to ramp-up mine development in 2021 and take the centres back to full capacity in 2022. In response to the COVID-19 pandemic, the number of employees in the mines were reduced between April and July 2020, and Kazatomprom had announced earlier this month that it had planned to return staffing levels at its uranium mines back to normal by around the end of August. Kazatomprom producers have given a hint that the company will soon start working with joint venture partners to gauge the impact and implement the plan across all of Kazakhstan’s uranium mines. According to the producers, the loss of production through 2022 represents over 50 million lb, which has a direct, although not immediate effect, on the spot market, since a lot of Kazakh material finishes on the market, and there is really no substitute.  This could affect the stability of price in the long term.   Due to the unforeseen circumstances in the year 2020, no decision has been taken regarding production levels beyond 2022. “We cannot rule out the possibility of further disruptions due to COVID-19 and safety of our employees remains our top priority” said the producers. The surplus supply of uranium in 2020 is one of the vital causes of the un-stabilized market scenario. According to the World Nuclear Association, Kazakhstan has 11% of the world's uranium resources and, in 2019, produced about 22,808 tU. It has been the world's leading uranium producer since 2009, with a 43% share of world production in 2019. Kazatomprom's 2019 production of 13,291 tU was 25% of world production. ;
India-Malaysia Palm Oil Trade: Towards the Path of Reconciliation
17-08-2020

India-Malaysia Palm ...

Months after the palm oil trade stand-off between India and Malaysia resulting from the then-Malaysian Prime Minister Tun Dr Mahathir Mohammad’s controversial remarks over India’s move to abrogate Article 370, which provides special status to Kashmir, things seem to be moving towards a path of reconciliation. The former Malaysian prime minister’s statement portraying India as illegal occupants of Kashmir did not go down well in Delhi, and India’s top vegetable oil trade body called on its members to avoid buying Malaysian palm oil, with the government of India issuing a boycott order on Malaysian palm oil in January 2020.  However, an all out trade war between the two countries seems to have been narrowly avoided with the change in the political administration in Malaysia, supplemented by the relaxation of export tariffs by the country and the low domestic stock in India.   India’s decision hit the Malaysian palm oil market adversely as palm oil is Malaysia’s biggest agricultural export and a substantial economic asset. From cooking oil to biofuels, instant noodles, and even pizza dough and lipsticks, Malaysian palm oil is used extensively around the world, with India being one of its significant consumers. India, being home to 1.3 billion people, is the biggest importer of edible oils and buys more than 9 million tonnes of palm oil annually from Malaysia and Indonesia. In the first and second quarter of 2019, India was the biggest importer of palm oil from Malaysia. Palm oil is manufactured as an edible oil and is considered a renewable raw material for the new industrial and pharmaceutical products synthesis. It is extracted from the mesocarp of the fruit of an oil palm species called Elaeis guineensis. The high yielding tenera, which is a cross between dura and pisifera species, is the most commonly cultivated palm tree in Malaysia. India, being the world’s largest importer of palm oil has had close diplomatic relations with Malaysia. The bilateral trade between the two countries was poised to expand at a substantial rate in the years to come. India is one of the fastest growing economies in the world, which has resulted in the increase in disposable income of its citizens. Awareness about the luxury brands of shampoos or cosmetics which enhance the quality of living has too increased among Indian consumers, paving the way for the growth of the palm oil industry.    After India’s decision to boycott Malaysian palm oil, coupled with the hike in import tax from India, the two sovereign nations are seen to be finally moving towards the process of reconciliation. Prime Minister Tun Mahathir was ousted by Prime Minister Muhyiddin Yasin in March 2020 and since then both the countries have been trying to repair ties, although the progress has been slow. Between January to July 2020, India’s palm oil purchase from Malaysia saw a nearly 85% fall year-on-year as compared to the same period last year. The significant drop in purchase can be attributed to not just the trade tensions between the countries but also the temporary shutdown of hotels, restaurants, and cafes due to the COVID-19 pandemic. However, the demand for palm oil seems to be on a rise in India as the domestic stocks have started to run low, with the oil still contributing to a significant proportion towards India’s food security. Thus, in a move reflecting the countries’ intention of repairing their trade ties, India put forward a contract for 200,000 tonnes of Malaysian crude palm oil (CPO) in reciprocation to Malaysia’s decision to purchase 100,000 tonnes of Indian rice earlier this year. The trade recovery was aided by the lower prices of Malaysian palm oil as compared to Indonesian palm oil and Malaysia’s decision to relax its export duties on CPO. India had tried to compensate its lower imports from Malaysia by buying more palm oil from competitors like Indonesia. However, this decision turned out to be comparatively more expensive for India, with the country once again increasing its exports from Malaysia. In June, the price of Malaysian palm oil was USD 501.42 per tonne leading to the imposition of 0% export duty. The export duties on palm oil from Malaysia is expected to be waived under the country’s Pelan Jana Semula Ekonomi Negara (PENJANA) scheme till the end of 2020, thus, further driving India’s purchase of Malaysian palm oil. However, the overall recovery of the export rates back to previous levels is expected to take some time as post-lockdown normalcy estimated to return to India by only December 2020, with the HORECA sector witnessing reduced demand till that time.   Related Links:- https://www.procurementresource.com/resource-center/crude-palm-oil-price-trends ;
Fertilizer Industry- Market Overview and COVID-19 Impact
13-08-2020

Fertilizer Industry-...

While previously, the total fertilizer demand was estimated to witness a healthy growth rate between 2020 and 2025, post-COVID-19, the fertilizer market is still estimated to grow, but at a slower pace. Owing to the favourable weather conditions following an exceptionally strong El-Nino event and the prospects for improving returns from farming in countries with supportive exchange rates, the world fertilizer demand has grown firmly in the past few years. The technological progress worldwide has given a substantial room for the growth of the fertilizer market. The consumption of fertilizers has grown almost six-fold between 1961 to 2019. Today, fertilizers feed about 50% of the world’s populations that amounts to around 20 billion meals per day, according to the International Fertilizer Organization, IFA, a non-profit organization that represents the global fertilizer industry. The fertilizer industry, in the case of both developed and developing countries, is all set to grow at a slower but steady pace even amidst the lockdown. In India, the exemption of agricultural activities resulted in the record sales of fertilizers in the month of April during the lockdown. The Russian fertilizer industry also seems to be blooming in the first quarter of 2020, with the fertilizer sales increasing by 10% year-on-year. Types of Fertilizers The fertilizer industry is primarily driven by three types of chemical fertilizers, namely, nitrogenous fertilizers, having China and India as some of its largest producers, phosphatic fertilizer, with Russia as one of its leading producers, and potash fertilizer, with Canada as its significant producer. Factors Controlling the Growth of the Fertilizer Industry: Brent crude oil price is a leading factor influencing a nitrogenous fertilizer firm’s revenues. When the price of Brent oil rises, it is generally followed by the rise in ammonia prices, which is a basic nitrogenous fertilizer, approximately three months later. Since ammonia is an inelastic good, higher ammonia prices are positives for fertilizer manufactures., resulting in higher revenues. Technological and scientific advancements have paved the way for the fertilizer industry. Technological and scientific advances have made the application of fertilizers more efficient in the recent years and have helped farmers maximize fertilizer benefits while reducing risks of their overuse, underuse, or misuse.  Innovations in recent years, buttressed by impeccable fertilization management, has proved to be a substantial reason for the upsurge of the industry. Source, rate, time, and place properly being managed by effective fertilization management practices has shown tremendous results in terms of yields and limited environmental impact. Precision agriculture is bolstering the new emerging technologies that are catalysing agricultural systems towards high efficiency, sustainable, energy-friendly, and input optimised model, and, thus, is helping to meet the food grain requirement of about 480 million tonnes by 2050. Precision agriculture includes soil analysis technologies, soil testing technologies, soil mapping through GPS, and decision support tools, among others.  Market Overview Post-COVID With the exception of China, where the pandemic first broke, the market scenario post-COVID-19 is surprisingly quite promising. In China, a significant producer and consumer of phosphate, sulphur, and sulphuric acid, there is a tighter supply of phosphates due to the production constraints in the country in the first quarter of 2020. Meanwhile, the prices of sulphuric acid, already weak, has all but collapsed.    India, on the other hand, has less impacted rural areas as compared to the densely-populated urban counterparts. According to the August report by The Economic Times, a good monsoon season has helped boost the demand for fertilizers and agri-input stocks. Monsoon rainfall has been 19% higher than before, and 83% of areas of India have seen better rains this year. Fertilizer stocks such as Nagarjuna Fertilizers and Chemicals, Khaitan Chemicals & Fertilizers, Basant Agro Tech (India), Coromandel International, Shiva Global Agro Industries, and Fertilizers & Chemicals Travancore scaled a year high this June.  Russia-based, PhosAgro, one of the world’s leading phosphate-based fertilizer producers, announced that its fertilizer sales in the first quarter of 2020 increased by 10% to 2.8 million tonnes. The total fertilizer production of Russia expanded by 8.6% due to upgrades to production capacities and efficiency gains achieved during the previous year.  Developed Countries V/S Developing Countries   The food grain production is required to increase from the current capacity of about 2 billion tonnes per year to over 3 billion tonnes to feed the rapidly expanding population of the world. To achieve this level of crop output, the amount of fertilizer used will need to increase from 123 million tonnes to 300 million tonnes by 2020. This demands a remarkable increase in fertilizer production capacity, which will only occur if relatively stable agricultural markets are established in the countries with growing populations, whether developed or developing. The situation in poor countries is particularly difficult, with poor input and output markets, declining yield levels due to lack of nutrients, and continued population growth. CONCLUSION: Even as most industries were adversely affected by the COVID-19 pandemic induced shutdown, the fertilizer industry has come out comparatively unscathed primarily due to the exemption for most food and agricultural activities during the lockdown. While China, the epicentre of the pandemic, has witnessed a tightened supply of major upstream chemicals, other major markets for fertilizer like Russia and India have witnessed an increase in their fertilizer stocks, forecasting a brighter future.     As the technological era is growing at a rapid pace, the future of the fertilizer industry is quite promising. The optimization of resources, especially technological resources such as global positioning system (GPS), geographic information system (GIS), and remote sensors in drones, satellites, and airplanes, can pave the path of accelerated pace towards the growth of this industry.   Facilitation of discussion between regulators, government, suppliers, customers, civil society groups, educators, scientists or adjacent industries may prove to be a boon for the growth of the fertilizer industry. Respective ministries of the sovereign nations should form a team to prepare a road map for reforms and achieve higher growth in the fertilizer sector, especially when long term period is pondered.   Related Links:- https://www.procurementresource.com/industries https://www.procurementresource.com/production-cost-report-store/dap https://www.procurementresource.com/resource-center/dap-price-trends ;
MMAtwo Recycling Project Continues Despite Recession Woes
11-08-2020

MMAtwo Recycling Pro...

The European Union has given the go-ahead to the researchers of the MMAtwo recycling project, to move ahead and continue their research in order to find a suitable way to recycle PMMA (poly(methyl methacrylate)), despite the world’s economy having taken a dip amidst the COVID-19 pandemic. PMMA is a chain of an organic compound known as MMA (methyl methacrylate). It is a widely used compound in various industries. It is used to make products, such as automobile tail light lens, tableware, lighting plate, aquarium plate, contact lens, and others. Such an extensive usage of PMMA lead to a concern about its recycling process; thus, there was a need to innovate a new recycling process, which will make the PMMA recycling significantly easier. However, PMMA is very difficult to recycle. Earlier, the only known method to recycle such a compound was twin-screw depolymerisation, which only synthesized the highest quality of PMMA, but, with the introduction of the MMAtwo project, the researchers now have a possible way to recycle this polymer more efficiently. Only recently, the scientists from the European Union have successfully commenced their first two days of pilot tests on June 16th, 2020, at Japan Steel Works with their partners from Heathland, Arkema, and Process Design Center. The leading scientists and research institutes have worked around the clock on this project and have established a depolymerisation unit, including a first in the field, pre-treatment plant.   The MMAtwo project was first introduced on October 1st, 2018, with an aim to develop a new and innovative way of recycling by the depolymerisation of PMMA and to allow the creation of the first commercial unit soon after the end of the project, i.e., by 2022. Previously, a process named ‘Twin-Screw Polymerisation’ was being used, but it could only depolymerise high-quality MMA and, thus, there was a need of a new recycling process, which will be able to depolymerise every kind of MMA and produce high-quality R-MMA (recycled-MMA) for industrial usage.   The main objectives of this project are:   To build a new recycling value chain of PMMA in Europe, which includes the production waste and end of life waste, thus, covering the whole PMMA lifecycle. To use reactive recycling(depolymerisation), in order to produce high-grade PMMA and avoid downcycling. To innovate a lead-free technology which enables the recycling of lower quality waste. This project was funded partially by the European Union, which gave EUR 6.6 million, and an additional EUR 2.9 million was invested by the other business partners. While the project aimed to build a recycling process, the European Union wanted to build a circular economy through the means of recycling the end life waste and industrial waste of PMMA, which explains as to why they want to keep continuing the project even during the pandemic.   The main motive behind this project was to provide an easier way to recycle PMMA, which will not only build an economy but also keep the environment safe, as R-MMA is considered to be environmentally-friendly. By making the recycling easier, it will also be beneficial to the industries because virgin MMA is volatile in nature. The initial cost evaluation was also estimated to be 10-15% cheaper for recycled MMA as compared to virgin MMA. This is expected to make the R-MMA the preferred choice for a majority of the industries as it is cleaner and safer than virgin MMA, hence building a much larger industrial requirement. MMAtwo aims to secure the supply of commercial plant recycling units with at least 27000 tons feedstock PMMA scraps and end-of-life products, and, so far, they have managed to gather 12250 tonnes. Through thorough evaluation before starting the project, these were the expected impacts: Expected to increase public awareness of PMMA recyclability and increase waste collection. Expected to recycle PMMA in Europe, including co-products fully. Expected to recycle waste into a high-end product. Expected to reduce energy consumption and CO2 emissions. Expected to build a positive economic business model. Expected to support recycling technology in order to impact people positively. Expected to gain knowledge on the subject. The European Union believes that through this new and innovative recycling process, they will be able to make the recycling process of PMMA much easier for the industries. The new recycling process will also be more cost-efficient and will also produce high-quality MMA for industrial use. ;
Petrochemicals Industry Amidst COVID-19
10-08-2020

Petrochemicals Indus...

The petrochemicals industry accounts for a significant proportion of the overall chemical industry and was projected to witness a healthy growth in the coming year pre-COVID. However, the estimated graph went significantly down as the world was struck by the COVID-19 pandemic late last-year. Several industries, including the petrochemical industry, saw adverse impacts on its supply and demand due to the pandemic. The increasing number of cases led to countries imposing restrictions related to travel and trade, which furthermore made it difficult to create a downstream demand.   The petrochemical industry is an integral part of the chemical industry and is considered to be the most competitive one. Its products have been evolved out of oil and gas processing. The industry is responsible for the production of a range of useful products, including synthetic rubber, solvents, plastics, pharmaceuticals, fertilisers, explosives, and other essential products. The petrochemical industry acts as a raw material supplier to manufacture products used in cards, household goods, packaging, paints, medical equipment, building material, clothing, and many more products of daily use.   As China became the first nation to be afflicted by the pandemic, the virus severely impacted its supply chain cycle,  causing several disruptions. This, in turn, affected the global market as China is one of the important players in the petrochemical industry. With governments trying to control the spread of the virus, the petrochemical industry was impeded by issues, such as shortage of staff, logistics issues, and rising inventory, which forced them to cut their production. The COVID-19 pandemic is expected to decline a year worth’s demand, which makes up about 10% of the global market, depending upon the applications. The global chemical production index had witnessed an approximate drop of 7% by April 2020. The situation is still dynamic as most countries move from the ‘flatten’ phase to the ‘fight’ phase. India, which is one of the major manufacturers and suppliers of petrochemicals, is still going through its ‘fight’ phase, which brings problems like shortage of manpower, shortage of demand, global oversupply, and more.  This has led the Indian companies to slash capital and operational spending. The demand growth of the key polymers produced in India is evaluated to decrease by 4% in 2020.   The lockdowns imposed by many countries have led to delays in product launches, temporary stoppage of construction activities, and a decreased demand for electrical products. These drastic changes in the demand and supply chains have affected the petrochemical’s applicant industries as well. China has faced a decrease in car sales by 80% while, in Europe, there was a 50% decline on an average. Moreover, the production loss of PVC in the month of February 2020, was estimated to be 140,000 – 200,000 metric tons. The sharp decline in the price of crude oil has also affected the ethylene cost curve but, has been beneficial for naphtha/LPG-based crackers. Due to panic buying and changing consumption patterns with the increasing focus on hygiene and disinfection standards, some industries like packaging, nutrition, and personal care have thrived in March 2020. With pesticides getting placed in the essential commodities list, their industry has been working close to usual.   With the changing scenarios of the petrochemical industry throughout the globe, the possible solution for the key players in the industry is to adapt to the change, which means that the industry is planning a strategic analysis of the market in order to adapt accordingly. There are many countries that are still not running at their usual capacity because of challenges, such as tentative restrictions in movements and smaller workforces, which aim to promote social distancing to prevent the spread of COVID-19 until a vaccine is created. Since the confirmed COVID-19 cases are still increasing in many countries, it is hard to firmly evaluate the number of possible disruptions in the supply chain, but, as the global situation of the pandemic is recovering, it has led to a slow boost for the petrochemical industry. Manufacturers throughout the countries are now evaluating their disruptions in the supply chains, coupled with the delays of their upstream and downstream products. The recovery of the petrochemical industry largely depends upon how quickly the virus can be controlled. Depending upon the current trajectory, a recovery is expected in the upcoming year (during the ‘fight’ phase), with the demand slowly returning to its pre-COVID level. A full post-COVID recovery is, however, expected to be attained only in the next 1-3 years. ;
China Leading the Path for Recovery in the Asia Manufacturing Hub Post COVID-19
07-08-2020

China Leading the Pa...

With the rapid spread of the COVID-19 pandemic, which has claimed the lives of millions of people, countries across the globe have been forced to go under lockdown. The world economic outlook is grim, and many countries have fallen into recession. Spending has also fallen. The lower demand for certain products like electronics, automobiles, metals, and chemicals directly affect the manufacturing industry. While small and big scale manufacturing and exports have taken a huge hit due to this pandemic, signs of improvement are showing. China can be called the world’s manufacturing hub. China had imposed a lockdown of 13 cities in the central Hubei Province in January to contain the virus. This had severely affected the conduction of business, especially the manufacturing industry. China’s exports to the European Union was down by 24% and with the U.S., down by 21% compared to last year. China’s auto sales were down by 92% in February. As China is the world’s largest manufacturer of automobiles by a large margin, this had also adversely affected the global industry. A majority of the world’s electronics are either entirely or in part manufactured in China. With factories struggling to get up and running, it is unlikely that they will be able to meet the demand. However, manufacturing activities in China are picking up pace fuelled by the rising domestic demand. China was able to successfully act on and contain the virus in the early stages. As a result, 98.9% of China’s major industrial enterprise has already begun production as of March 28. Out of 66 factories polled by management consulting firm Kearney, all had resumed operation with 80% capacity and are expected to be back to normal in early April. In June, China’s General Manufacturing Purchasing Manager’s Index (PMI) rose to 52.8 in July from 51.2 in June. This is the highest jump since January 2011. A number above 50 signals an expansion in activity. This fast recovery can be traced back to the gradual lifting of restrictions on business and transportation, starting in late January. This PMI figure tells us that China is on its path of recovery, and it may continue in the upcoming quarters also. China saw a 3.2% year-on-year growth in GDP in the second quarter. From a contraction of 6.8% in the first quarter to a 3.2% growth in the next shows the strength of China’s industries. Falling export orders and employment have, however, been dragging the recovery down. Trade wars with the U.S. and other countries are also affecting China’s manufacturing hubs.   Asia has become a manufacturing hub through protectionism, investment, and support. But the recovery in the other hubs has not been as positive as China’s.   Factory activity is very low in Vietnam, another manufacturing hub for the world. Though they have outperformed the pandemic and have opened their domestic economy, consumption is far from pre-COVID level growth trajectory. Manufacturing is a crucial part of Vietnam’s economy, and it has one of the highest trade-over-GDP ratios in Southeast Asia. It is waiting for global consumption to rise. As China went into lockdown, their supply lines were disrupted, and exports declined due to falling demand. As near term recovery is uncertain, investments have been pulled back. There has been a 21% drop in foreign direct investment commitments just in Q1. The government is taking steps to revive this sector by ramping up the production of protective equipment (PPE) for workers. As China was moving away from labour markets and global economies were looking for substitutes, Vietnam was an ideal choice. With the global economy reopening, its manufacturing sector is expected to recover and grow. It can fill up the gap left by China, leading to higher growth figures. Japan, another Asian manufacturing hub, will also have a gradual recovery. However, the recovery has been slow; therefore, exports have been affected. Japan had been seeing negative growth in factory activity since the pandemic started. In July, the factory index did not decline further. This shows that manufacturers were gaining confidence and opening up their factories. Output has been slow due to the contracting orders. Consumer goods production had stabilised in July due to recovering demand. Capital goods suffered from a lack of export sales. Lack of demand for Japanese vehicles has caused output cuts and closures of steel mills and metals fabricators. This is due to reduced global investment spending and constrained trade flows. Manufacturing is picking up. Manufacturing indices are slowly churning positive growth numbers or are reporting slowing down of negative growth. All of these indicate the industry’s expectation of business picking up pace soon. Indices have been at a decade low, but recovery will be fuelled by pent up demand, bringing in significant spurts in their growth. The domestic market has improved due to the need for essentials, but manufacturing needs international trade to support it. This depends on whether the pandemic has a second wave and the countries’ ability to tackle the same. Governments now know how to have their economy running in the face of a virus; thus, manufacturing is poised to have a steady positive growth in the future. ;
Global Crude Oil Market Amidst COVID-19
07-07-2020

Global Crude Oil Mar...

Crude oil is one of the most essential commodities across the globe. It is the starting substance for petroleum products that serve as an essential raw material for several crucial goods. Crude oil is an indispensable facet for most of the world’s population who use it directly or indirectly as automotive fuel, as petroleum jelly in cosmetics, and in other every-day products. Thus, even slight changes in the crude oil production against its demand will be reflected on the prices of these products. A number of variables affect the prices of crude oil, although supply and demand are the foremost factors informing the price fluctuations of the product. Currently, the global economy has been virtually at a standstill due to the catastrophic COVID-19 pandemic, leading most countries to impose strict lockdown measures. This has drastically reduced the oil demand around the world due to industries working at limited capacity and stringent travel restrictions. Thus, with a significantly lower demand, the prices of crude oil are also witnessing a drop, reaching a record low in decades. The law of supply and demand states that if the demand goes up, the prices will also go up, whereas, if the quantity supplied is more than the demand, prices will go down.  World’s crude oil production is primarily controlled by some of the major players operating in the OPEC, including 14 Middle East nations, the United States, and Russia. Thus, any significant supply and production fluctuations among the countries reflect on the global crude oil prices. The disagreement between the OPEC and Russia in March 2020 has given birth to one of the most ruthless price wars. The price war was the result of the fallout between OPEC and Russia, with Russia refusing to slash its production during the pandemic to stabilize the falling oil prices. In response to this, Saudi Arabia announced that it would produce 12.3 million barrels per day, even though the region had not produced over 10.5 million barrels per day till that point. Russia, too announced an increase in its oil production. Thus, with this huge surge in supply alongside declining demand, the prices of oil went plunging down. From USD 65 per barrel in December 2019, it dropped to USD 35 a barrel by March second week this year. By April third week, it was hovering around USD 20 a barrel. It was suggested that oil prices would further dip as the chances of demand going up amidst the global lockdown is slim, with the added fact that the storage capacities are continuously running out.   Due to the outbreak of COVID-19  in almost every part around the world, the decline in global oil consumption over the month of April 2020 was estimated to be nearly seven times higher than the quarterly fall experienced by the world after the financial crisis of 2008. The global demand for oil came down to 29 million barrels a day from about 100 million a year ago. But the real issue is that the production had not shrunk, leaving a massive surplus in the market without buyers. In order to maintain an equilibrium and close the gap between supply and demand, the major exporters, OPEC and Russia, finally decided to cut down the production on April 9th after witnessing the inevitable repercussions of such a brutal price war.   After the agreement of the major players to cut down the production, there have been signs of oil price picking up through mid-May with a slight increase in demand. By May 15th, West Texas Intermediate (WTI) oil was trading at USD 28.75, its highest since early April. Brent crude was trading at USD 32.50, the highest level since April 13th. Thus, while earlier in April, EIA had predicted that the Brent crude prices will average USD 32/barrel in the second half of the year, it has since revised its estimates. According to the revised estimates released in July, Brent crude prices are now expected to averaged USD 41/b in the second half of the year and is expected to reach USD 53/b by the end of 2021. However, these forecast averages are contingent upon the global consumption of oil reaching 96 million b/d in the latter half of 2020 and the strict compliance of the production cuts announced by OPEC+, with both of these scenarios being plagued with uncertainties. Currently, the demand for crude oil has been showing signs of improvement with the curb of the pandemic in some parts of the globe and the loosening of certain travel restrictions as people are starting to venture out and travel again. However, a second wave of the virus, if realized, could once again weigh on the oil demand. The steadily increasing prices are the early signs of improving demand, but they have been mainly improving because of the production cuts and general optimism among manufacturers. There are still millions of crude oil barrels sitting in storage. Around ten years ago, oil was one of the first industries to emerge relatively unscathed from the economic crisis, with strong demand. It is now likely to be among the last to recover from the double blow of the pandemic’s destruction of demand and the oversupply of crude oil resulting from excessive production. Thus, the crude oil industry is expected to take a while to fully recover and return to pre-COVID-19 days.   Related Links:- https://www.procurementresource.com/industries/chemicals https://www.procurementresource.com/resource-center/crude-oil-price-trends ;
Indian Sugar Mills Demand Export of Molasses to Blend in Glut Season while Focusing on Ethanol Production
03-07-2020

Indian Sugar Mills D...

With plenty of sugarcane harvest, sugar mills are expected to do reasonably good in the next crushing season. It is projected that sugar output will attain a volume of 30.5 million tonnes during the same period, and mills are aiming to tap molasses export in order to enhance cash flow and ensure additional stability for the sugar sector amid demand-supply fluctuations. Molasses refers to a cane by-product obtained during sugar production. Its recovery is estimated at 4.75% of crushed cane. It is processed to make ethyl alcohol, commonly known as ethanol, and methyl alcohol. In India, ethanol is mainly obtained from sugarcane molasses via fermentation, and it can be further mixed with a fuel such as gasoline to form different blends.   The Indian Sugar Mills Association (ISMA), in the wake of the expected glut in molasses next year, has requested the Centre to allow C-heavy molasses export in the 2020-21 sugar season (October-September) or till excessive sugarcane is produced. It is observed that exports could take place without creating a financial burden on the government, further facilitating the utilisation of more B-molasses and cane juice for ethanol, instead of for sugar production. As molasses is demand-supply sensitive, the sugar producers are demanding its free movement, which makes commercial sense in the present scenario as they are expected to witness another excess season of sugar output owing to higher yield estimates. And the free movement of molasses would directly translate into enhanced cash flow for mills. In India, molasses is a state subject, and respective governments enjoy jurisdiction on its interstate and international movement. In UP, which is the country’s top sugar and ethanol producer, the controlled price of molasses has reached Rs 120 per quintal, registering an increase of 50% as compared to Rs 80 per quintal last year, and this is expected to benefit the industry significantly. Further, the molasses production in UP has reached a volume of over 5 million tonnes in the current sugar season. The demand for molasses is increasing as it is utilised in various industrial applications such as cattle feed, inflammable products, and others. It is supplied to several regions with a robust export demand for the commodity, which includes countries like South Korea, Vietnam, Europe, and West Asia.    Acknowledging the industrial demand, the Maharashtra government lifted the ban on the export of molasses from the region to other states and countries. The ban was imposed till September 30, but the state issued a government order lifting the ban in the last week of June itself.   In the current season, different states, viz. Uttar Pradesh (UP), Punjab, Karnataka, and Haryana have together contributed to the export of nearly 300,000 tonnes of molasses. With Maharashtra jumping on the bandwagon, it is expected to contribute to 250,000 tonnes of exports in the next few months.   In June 2020, ISMA announced that 1,700 million litres (ml) of supply contracts had taken place between ethanol manufacturers/mills and oil-marketing companies (OMCs) for the 2019-20 ethanol supply year (December-November). Further, 925 ml of ethanol has already been supplied to OMCs between December 2019 and June 22, 2020, registering an average all-India blending of more than 5%. However, in the current cycle, ethanol offers have plummeted, and ethanol supply contracts have dropped to about 1,700 ml from 1,900 ml in 2018-19 owing to drought in Maharashtra and Karnataka and other southern states, consequently lowering cane and sugar production, and availability of molasses.   It has been observed that ethanol production capacity in the country has increased to more than 3,750-4,000 ml as a result of which the Centre is aiming ethanol production and supply target of 3,000-3,500 ml in 2020-21, further reaching  7.5-8% ethanol blending with petrol. According to the National Biofuels Policy, 2018, the central government has envisioned to attain 10% and 20% ethanol blending by 2022 and 2030, respectively. To realize this goal, ISMA has urged the Centre to further ease the rules governing and regulating supply and transport of ethanol between various states, coupled with the provision of time-bound bank credit for setting up ethanol projects by sugar mills for ideal utilisation of the sugarcane value chain, constituting both molasses and ethanol. ;
EU Prices for Bulk Alloys Continue to Decline Amidst Low Demand from Steel Industry
01-07-2020

EU Prices for Bulk A...

European bulk alloy prices have been continuously falling since May 2020, due to the steel industry 's low spot demand, following lockdowns in key producing countries disrupting the supply. The demand for bulk alloys in the steel industry is not expected to recover until the fourth quarter of 2020 or early 2021, with many market participants anticipating no substantial improvement owing to lockdown and halted operations in steel-consuming sectors.   In May, prices for high carbon ferromanganese reached a three-month low of €940-980/t ($1,065-1,110/t) ddp, registering a fall of 8%, and the prices have been steadily falling since then, finally dropping to €940-970/t in June. The prices for ferrosilicon have been depicting a similar trend as they plummeted to €895-935/t ddp in June from €1,050-1,130/t ddp at the start of May, which is their lowest since November 2019. Meanwhile, silico-manganese prices reached €940-975/t ddp in June, down from €990-1,070/t at the beginning of May. It has been estimated that the global demand for steel will reduce by 6.4% in 2020, while steel consumption in developed economies is expected to fall by 17.1% amidst the pandemic.   The EU steel industry has witnessed far more dramatic falls in steel production and consumption with the outbreak of the pandemic, which was further followed by the mass shutdown. In the EU, steel production attained a value of 10.7mn t in April 2020, registering a fall of 22.9% in comparison to April 2019. It is anticipated that the decline in May could be even larger as the steel industry in the region is operating at much lower utilisation rates than its actual capacity amidst the stringent government regulations to control the spread of COVID-19. It is observed that these rates are even lower than those recorded during the financial crisis of 2008-09. Moreover, owing to weak demand from consumers and threats from fragile economies looming large, it would be difficult for the steel sector to rebound before the first quarter of 2021.   The European steel sector was already in shackles since the last year. According to estimates, the steel consumption in the region slumped by 5.3% in 2019, while the domestic steel deliveries in the region plummeted in all four quarters of 2019, falling by 2.8% and 4% in the third and fourth quarter, respectively. The automotive sector in the region also took a blow because of the global pandemic. The sector is the second-largest downstream consumer of steel, and its stagnant growth has impacted the steel industry as well. In the region, the operations of most large carmakers remained shut during the month of April-May, with production losses standing at almost 2.44mn vehicles between the start of lockdown and 1 June. In April, the registrations for new passenger cars dropped by 76.8%. Moreover, the demand for new cars is expected to remain very weak until the instability of the macroeconomic picture and precarious situation of the consumers with stagnant disposable income in the region.   Amidst all these, the use of steel in the construction sector represents a more mixed picture. As some of the nations in the EU are exempting the construction sector from lockdowns, the civil engineering projects are anticipated to drive the demand for steel in the coming months with government stimulus packages coming in effect. Although, residential construction has been severely affected due to the pandemic.   The prices of these alloys have also been affected due to its continued export from international suppliers. Some global suppliers continued to export ferrosilicon amidst lockdowns in Europe, which has significantly contributed to the steep decline in prices. According to estimates and trade data, while Norway exported 19,538t of ferrosilicon in April 2020, up from 18,177t in April last year, Iceland also increased its exports to 6,748t from 5,205t to EU countries over the same period.  Meanwhile, ferromanganese exports have been disrupted with South Africa's lockdown and shipments getting reduced to 6,632t in March from 15,169t in February, with the numbers getting even lower for April. Although the period witnessed the lower exports from the major international suppliers, ferromanganese prices continued to decline, showing a tangible reduction in demand over the past few months. It is observed that while European ferro-alloy manufacturers have made some adjustments, other market participants are demanding further output cuts to rebalance the situation and improve the market condition. For instance, Eramet, a France based company, lowered its domestic operations to almost 65% of capacity in March, while Madrid-based Ferroglobe, which is Europe's largest ferro-alloys producer, announced a significant reduction in its first-quarter sales but the company has not made any production cuts since the end of 2019. ;
Braskem Eyes Major PP Export Opportunities with the Development of New US Delta Plant
29-06-2020

Braskem Eyes Major P...

Braskem, a leading thermoplastics resins producer, announced on 25th June 2020 that it is planning on exporting a significant amount of the polypropylene (PP) from its new facility, Delta, which is located next to Braskem's existing production facilities in La Porte, Texas, US The plant has a production capacity of 450,000 tonnes/year and is the latest major milestone in company's global growth strategy. The company has PP production facility in the US and Brazil, as well as Europe, centred in the Netherlands.   Within the US, Braskem currently operates through five PP plants, situated in Texas, West Virginia, and Pennsylvania, having a combined capacity of 1.59m tonnes/year. The company will line load around its assets in the US, aiming to find the best efficiency for the exports and deliver from the plant that can make the product available to the export client at the right time, at the right cost.   For polypropylene exports from the US, the company is targeting central Europe and the west coast of South America. As shipping from Brazil to Chile and Peru in South America is very challenging and expensive, the new North American facility will provide an edge to the company by significantly reducing the shipping cost and efficiently meeting the growing demand of clients. This would allow the company to optimize operations in all three production regions.   The company's Delta project in La Porte is expected to start in the third quarter of 2020. Currently, the company is engaged in designing a business plan to supply 50% or more of its polypropylene production in Delta plant to Braskem affiliates in other parts of the world. The company is working to develop the infrastructure to achieve this goal efficiently and has partnered with the Port of Charleston, which has a capacity of up to 450m lb (204,000 tonnes) of exports. For this, the company is designing and developing an export hub, which is expected to be completed by Q3. Strategically, the company is also focusing on Asian markets for PP exports from the US. The company has some commitments to export to Asia, and India presents a good opportunity in the context of Asia. Braskem has been planning to foray into Asian markets and has been looking at it for the last six years, following which the company has recently opened its office in Mumbai, India. India has limited ability to produce PP, and the demand for the product in the region is considerably growing. The country imports most of these products, and thus, the region is expected to provide a significant opportunity to Braskem to expand its business and fulfill its strategy of efficiently participating in other markets.   Although some of Braskem's PP is also exported to China, the region is not as strategic a market as India. China is capable of producing its own propylene chain, and thus, the market in the region does not provide ample growth opportunities to aid Delta project and its expansion across North America.   As polypropylene (PP) is used in a variety of applications, including packaging for consumer goods, plastic parts for several sectors such as the automotive industry, textiles, and so on, its demand is increasing across the globe. It is one of the most widely produced plastics in the world and has positively influenced people's lives in sectors like food, housing, as well as mobility.    Braskem, a Brazilian petrochemical company, is currently the largest manufacturer of thermoplastic resins in the Americas as well as the leading producer of polypropylene in the United States. It produces polyethylene (PE), polypropylene (PP), and polyvinylchloride (PVC) resins, along with other basic chemical inputs. The company has one of the most comprehensive portfolios in the industry, which also includes the green polyethylene prepared from the sugarcane, a 100% renewable resource. Related Links:- https://www.procurementresource.com/industries/chemicals https://www.procurementresource.com/production-cost-report-store/polypropylene https://www.procurementresource.com/resource-center/polypropylene-pp-price-trends ;
Smartphone Production to Fall by 16.5% Globally in June Quarter
26-05-2020

Smartphone Productio...

The smartphone industry is experiencing a severe hit ever since the lockdown started. Mass shutdowns, which have been imposed by the governments across the world to prevent the spread of COVID-19, has resulted in the lowering of productions in almost every sector worldwide. This has significantly halted all the crucial operations in the smart phone industry as well, which include production and supply chain disruptions.   Despite several measures adopted by the top smartphone manufacturers, lockdown has changed and altered the entire market scenario, further leading to a drop in the market value of the global smartphone industry. It has been estimated that the shipments in the smartphone market have fallen below 300 million units for the first time since 2014. It can be seen as the worst smartphone market contraction in history.   The production rate in the industry is expected to fall by 16.5% to 287 million smartphones in the June quarter in the comparison to the last year. Chances are, it will take several months to get back on the track even if the supply chain resumes post-shutdown.   Some of the biggest and most prominent brands in the global smartphone market, that is, Samsung Electronics and Apple Inc are also expected to experience the repercussions of the pandemic, although they will continue to retain their positions in the global market. These two players hold the first and third positions respectively in the market, yet both the companies might lose their market share to the Chinese smartphone manufacturers. During the March quarter, a further 10% drop in the global production was recorded as the pandemic spread and peaked in China before entering the regions like the United States and Europe.   The outbreak, which began with the worries of keeping up with the production and procure raw materials to meet the growing demand for smartphones, has culminated into a much vulnerable situation, that is, the disruption from supply to demand. The outbreak, which started from China, has now reached almost every part of the world, thus, making its effects felt on the demand side of the smartphone market. It has tanked major economies worldwide, which has led to the reduction in demand for smart phone and disruption in supply chains as almost half of the world enters lockdown. Now, even if the production reaches a stable point, it would be difficult for smartphone manufacturers to sell the products with reduced demand and disrupted supply chains.   In a bid to tackle the situation and maintain its position, Apple, not only reduced the prices of iPhone 11 in China but also launched a $399 iPhone variant. The company targeted the Chinese market with the aim to find some buyers in the frugal economy since it is the only major market where Apple stores are still running.    Despite their efforts, iPhone production fell almost 9% to approximately 38 million units in the quarter of March, and after this, it is expected to fall by another 2 million units. Apple’s market share is anticipated to fall to 12.6% by this quarter as compared to the last quarter when it held a share of about 13.5%. On the other hand, Samsung’s market share is expected to ease 3% points to 20.3% in the June quarter. As the major smartphone market like India enters mass shutdown to curb the spread of the pandemic, the overall smartphone industry is expected to experience a significant downfall in product demand.   Some of the brands with a larger share in China, like Huawei, are going to be in a better position as compared to the other brands like Samsung, for which almost all its major markets are closed following the lockdown. China’s smartphone brand Huawei saw slow revenue growth in the first quarter of the year 2020, but currently, it is expected to manufacture approximately 48 million smartphones in the June quarter in order to meet the steadily growing domestic demands, up 2 million from the March quarter. Following the same pattern, almost all the Chinese smartphone brands such as Xiaomi, Oppo, and Vivo are expected to grow further and gain market share in the June quarter. Even after being the prominent leaders in the global smartphone market, Apple and Samsung could not tackle the downfall brought on by the Covid-19 pandemic. But as China was the first region to witness and experience this pandemic, it has not only started recovering from it but is also expected to dominate the global smartphone market. On the supply side, China being an OEM was in the worst state during the Q1 of the year 2020. However, in the second quarter, as the region’s manufacturing conditions recover, the market scenario is expected to change for China. On the other hand, other manufacturing centres will still struggle to find the consumer base and return to their normal production state while being closed under lockdown.   The worst scenario of the pandemic is yet to be seen. Most smartphone brands are expecting second quarter of the year to show the actual peak of the coronavirus’s impact on the smartphone market. If the situation does not improve, some companies, such as the entry-level segments and the offline retailers, are expected to collapse without the help of government. The governments across the nation must offer some kind of support to these small retailers in order to help them sustain during this pandemic. ;
Plastics Demand in Asia Seems Largely Disrupted Amid COVID-19
02-05-2020

Plastics Demand in A...

The novel coronavirus has led to a complete lockdown in many countries across the globe because of which economies are almost at a standstill and largely non-thriving unlike the pre-coronavirus days. The plastics and many other industries are facing a crisis, which is expected to be worse than 2008, with major bankruptcies likely.   The lockdowns have made actual demand in key sectors, such as automotive industry, etc., to slump except for the essential commodities and products. The automotive industry experienced a heavy downfall, which was evident from the reduced vehicle sales in comparison to year-ago levels. Within China and India, major markets saw the decline in sales by more than 40% year on year owing to the weakening demand for automobiles amid the coronavirus pandemic. The sales of vehicles in China slumped 43.3% on an annualised basis to a volume of 1.43m units in March. China, which represents the world’s largest car market, witnessed a decline in sales and production in March as the country’s economy witnessed a drop, recording a negative growth of 6.8% in the first quarter. The weakened economy is the result of the restrictive containment measures that led to a halt of all the economic activities in the region in the month of February. While in India, sales of vehicle dropped 45% year on year to 1.05m units in the same month. In the country, tyre and automotive makers had to close their plants amidst the crippling demand, and on the other hand, import cargoes got stuck at the ports due to the transport restrictions. The economic turmoil, particularly in the wake of crude oil prices that had reached a negative territory during the initial days of April amid the pandemic has also affected several sectors. It is anticipated that for the next two years the global economy will be much weaker than the pre-coronavirus days.   The weakening automotive industry has resulted in the reduced prices of the raw materials used in cars. The sluggish growth of the automotive sector has widened the gap between spot-supply and demand for butadiene (BD), where the supply has outstripped the product demand.  Spot interest for BD has fallen as the downstream synthetic rubber (SR) producers have decided to reduce their operating rates owing to the fall in the automotive sector. Buyers are wary of the situation and are unwilling to make any further spot purchases due to looming threat of global recession and uncertain market outlook. The butadiene and synthetic rubber producers are being affected as the major tyre and auto makers suspended their operations or closed their facilities worldwide owing to the mass shutdown, travel bans, and restriction on transportation imposed by authorities and governments worldwide to prevent the spread of the pandemic. The weakening demand for downstream synthetic rubber had also curbed the demand for butadiene, with major downstream synthetic rubber producers fulfilling their May requirements and not appearing in any rush to start discussions or operations for June and July shipments. The Asian polybutadiene rubber (PBR) market witnessed a stagnation as its demand slumped amid the coronavirus pandemic. The market was largely impacted by a sharp decrease in BD feedstock prices, which have reduced by nearly 55% since late January due to oversupply and weakened demand. Extended lockdown has severely hit the April business in Asia. In the monoethylene glycol (MEG) market, China witnessed flow of additional cargoes from the US and India owing to the steadily emerging local demand. However, in the second quarter, several integrated MEG units in China will undergo maintenance process, leading to their shutdown, thus offsetting the lengthened imports due to the reduction of supply in the local China market.  Further, the sales of polyester slipped in China as the export of textile products witnessed a downfall owing to the dwindling textiles sector amid the coronavirus pandemic. Although several sectors are witnessing a downfall, the massive increase in demand for protective items including facial masks and gears is propelling the demand for polypropylene (PP) fibre grade material. Owing to this reason, many manufacturers have even switched to producing this grade. Moreover, the Chinese central bank’s plans to invest yuan (CNY) 550bn of liquidity to boost the economy, which is expected to aid the polyethylene market in the country. The domestic consumption of polyethylene in China accounts for 80% of the total product demand and this will further drive the China’s polyethylene (PE) market in 2020. China, being a major PE consumer, is expected to aid the overall polyethylene market in Asia as well. In addition to this, the demand for paraxylene (PX) in China remains healthy, and the operating rates for downstream purified terephthalic acid (PTA) applications are also high with no plans for scheduled maintenance in the coming period. For propylene market, a U-shaped recovery can be observed with the global economy and chemicals demand taking longer to rebound. Though it is anticipated that pre-coronavirus volumes may not return until 2022, it is not all doom across the plastics industry in the Asian region as well as globally. ;
India Exports About 50 Million Hydroxychloroquine Tablets to the U.S Amidst COVID-19 Pandemic
30-04-2020

India Exports About ...

Hydroxychloroquine tablets or HCQ tablets, which are primarily used in the treatment of malaria, witnessed a surge in demand over the past few months as these formulations currently appears as the only viable solution for treating COVID-19. In the absence of any dedicated vaccine or drug for treating this respiratory disease, HCQ is seen as the only possible treatment for COVID-19. India shipped 50 million tablets of hydroxychloroquine to the US, following the request by the US President, Donald Trump to release the supply of hydroxychloroquine. These tablets are anti-malarial drugs and have been in use for decades for treating mosquito-borne diseases. Recently, an increased demand for these tablets was observed and different countries including the US, rely on nations like China and India for the supply of generic drugs. Fear of drug shortages surfaced as India, world's biggest supplier of generic drugs, restricted exports of 26 ingredients as well as the medicines formulated from them after the outbreak of the pandemic.    India’s drug makers rely on China for around 70% of the active ingredients in their medicines and thus, the halted production in China can directly affect the drug manufacturing capacity of India. The decision regarding the restriction was taken by the government of India as the drug manufacturers in China has also cut their output or will remain shut following the mass lockdown in the region. The industry experts have warned that different regions are likely to face shortages if the epidemic continues and there could be a global shortage if China and India both get hit. Although the US Food and Drug Administration and other authorities like the Canadian Health Department have issued warnings about the harmful side-effects of anti-malarial drug in the treatment of COVID-19 (like rapid heart-beat and trouble in breathing), but these tablets are still being considered as one of the most effective solutions to combat this deadly pandemic in the absence of any vaccine. In fact, some of the US doctors continued prescribing HCQ tablets to the patients for the treatment of COVID-19.   As the death rate in the US from COVID-19 reached almost 60,000 by the end of April, which is the highest in the world, there is no doubt that the doctors in the US would do their best to save as much lives as possible. For that, they are looking for solutions that could change the course of COVID-19, which not only attacks the lungs but also shuts down other body organs as observed in some cases.   These tablets are being considered as the game changer in the treatment of COVID-19 and the US president has requested India to send in more supplies of hydroxychloroquine tablets. The cases and death rates in the region continue to grow and the pandemic has affected the nation severely.   Meanwhile in India, government issued 68 new licences to the drug manufacturers in Gujarat to produce more units of hydroxychloroquine formulations. The majority of these licences were for the exports. Some pharmaceutical companies in Gujarat continued to produce and export HCQ tablets in large quantities. Teva Pharmaceutical Industries, IPCA Laboratories, and Cadila Healthcare are some of the leading suppliers of HCQ tablets in India. Cadila Healthcare estimated that, they could possibly boost their production and manufacturing capacity and can produce up to 30 metric tonnes of the formulations per month.   India is now supplying HCQ tablets not only to the U.S but to the other countries as well on grounds of humanitarian and commercial level. Acting on the US’s request, India has shipped about 50 lakhs HCQ tablets to Canada as well and showed the world its capabilities and strength. India and Canada have been old strategic partners and very good friends. Even during the COVID-19 crisis, both the countries agreed to cooperate on all fronts. India and Canada have decided to share and exchange information regarding the treatment of COVID-19 and protection of the supply chain. By exporting huge amounts of HCQ tablets to the developed nations such as the US and Canada, and to other countries as well, India showed the world its strength and versatility. It showed how India, as a nation is self-sufficient and fully capable of helping itself as well as others amidst the pandemic. This step of India, assisting the US and Canada on such a huge level not only benefitted the drug industry in the region but also helped the nation achieve huge value in the international market. ;
Rising Southeast Asia Polyols Market to Stay Soft in May Amidst the Pandemic
25-04-2020

Rising Southeast Asi...

Extending global lockdown across the world to curb the coronavirus pandemic is affecting the trade of polyols, resulting in the reduction in its sales volume as well as the spot demand for polyether polyols in Southeast Asia. Polymeric polyols, upon its reaction with isocyanates, are used in the production of polyurethanes, which are further used to prepare mattresses, home and automotive seats, foam insulation for refrigerators and freezers, fibres like spandex, elastomeric shoe soles, and adhesives. The trade of polyols, which was expected to remain high prior to COVID outbreak, was significantly affected in the Southeast Asian countries in the month of May due to several factors.  The seven day-long celebration on the occasion of the Labour Day in China is one of the major reasons responsible for the disrupted trade. Sudden fluctuations in upstream crude futures that were seen in the months of March and April also contributed to the disrupted market of polyether polyols. Apart from that, legal issues have been impacting the trade as well. Petitions from the U.S. mattress makers against the mattress of other countries including Cambodia, Indonesia, Malaysia, Serbia, Thailand, and Vietnam, on the grounds that these polyol products are being sold at un-fair industrial values also created a hindrance, leading to the disruption in the product sales; thus, the case of antidumping (AD) and countervailing duty (CVD) filed by the US based mattress makers on 31 March this year is under investigation, and is also affecting the business and the product demand.  Bedding and furnishing shops and automotive plants are closed across several regions, thereby making flexible foam producers and their facilities to remain shut. Several cancellations and postponements of orders have been observed due to these closures. Moreover, since some consumers filled their stocks in March owing to the fear of the pandemic, it contributed to a decrease in the product sales for the following months. It has been observed that the demand for finished goods is quite stagnant in the U.S and Europe and because of this, most buyers from these regions are not interested in committing to spot sales for certain polyol grades like the flexible foam polyols. Further, due to limited demand and enquiries, China-based polyols producers are focusing more on the Chinese local market as the domestic demand in the region remains stronger than the demand from regions like the US and Europe, which appears to be sluggish, and thus, these producers are holding back on offers for May shipment products.    The scheduled shutdown maintenance projects carried out for the maintenance of upstream products such as propylene oxide (PO) and propylene, which are used in the production of polyols, also got affected and postponed. The reason for the postponement of this project was the lack of human resources, which makes it impossible to carry out the maintenance process post shutdown  in the region of Southeast Asia. Thus, on the supply front, the available volume of polyols is likely to stay high.   Low molecular weight polyols, which function as crosslinking agents, find wide applications in polymer chemistry. For instance, alkyd resins are used in paints and in moulds for casting. Alkyd resins serve as the significant resin or "binder" in most commercial oil-based coatings. Commercial alkyd resins are produced using the polyols like glycerol, trimethylolpropane, and pentaerythritol. It was estimated that nearly 200,000 tons of alkyd resins are produced each year but this volume might drop this year due to the outbreak of the pandemic and resulting downfall in the demand for polyols and its end use products. It has been estimated that there was a downfall in the prices of polyols between 4th March and 22nd April with an average of $1,430/tonne CFR SouthEast Asia to $1,300/tonne CFR SouthEast Asia.   Polyol industry is looking at the latest updates related to lockdown and hoping it to be lifted soon. But since the number of cases of the novel coronavirus are continually increasing, chances are that the lockdown would not get lifted anytime soon. Hence, the demand for polyols is expected to remain low for the month of May. A downward pressure might continue in the polyol market since the supply of polyol from the manufacturers has been slowly decreasing, and the demand is also low. The volatile oil prices of the crude oil is another reason creating a  downward pressure in the polyol market. Any business engaged with polyol industry must have knowledge about the ongoing polyol market conditions. An in-depth market research and real-time data can prove to be beneficial while understanding the market trends and the prevalent conditions in the global polyol industry.    Procurement Resource ensures that our clients remain at the vanguard of their industries by providing actional procurement intelligence with the help of our expert analysts, researchers, and domain experts. Our team of highly-seasoned analysts undertakes extensive research to provide our customers with the latest and up-to-date market reports, cost-models, price analysis, benchmarking, and category insights, which aid in simplifying the procurement process for our clientele. We work with a diverse range of procurement teams across industries to get real-time data and insights that can be effectively implemented by our customers. We also track the prices of an extensive range of goods and commodities, thus, providing you with updated and reliable data. We, at Procurement Resource, with the help of the latest and cutting-edge techniques in the industry, help our clients understand the supply chain, procurement, and industry climate so that they can form strategies that ensure their optimum growth. ;
Europe PTA and PET Market Flourishes Amidst Lockdowns but Future Seems Unstable Owing to Fragile Economies
15-04-2020

Europe PTA and PET M...

Purified terephthalic acid (PTA) market in Europe has been witnessing an increased growth owing to the growing demand for PTA from downstream polyethylene terephthalate (PET) applications. PET, which is a thermoplastic polymer, has emerged as an essential product amid the pandemic as it is being extensively utilised in the preparation of films and sheets for packaging food products and water during lockdowns. But, despite imminent peak in demand, the future for both PTA and PET does not appear stable, and thus, the tide may turn any time owing to the falling economies.   PET is among those plastics which finds use in a wide range of applications and thus, it forms an important part of our everyday life. It is an important commercial polymer resin that can be broadly classified into bottle, fibre or film grade, based on downstream applications. Bottle grade resin is the most traded form of PET resin and it is utilised in bottle and container packaging through blow moulding and thermoforming and also as a food packaging material. The growing dependence on food products and water packaged in PET during lockdown, a precautionary measure to prevent the spread of COVID-19, has placed the product and value chain in one of the essential sectors. Thus, even when other sectors are experiencing a setback, the market for PTA and PET is flourishing amidst lockdown in Europe.  But, crashing upstream prices and economic turmoil in Europe may deny the status of ‘privileged’ to PTA and PET. As there remains uncertainty regarding how this pandemic is going to impact the industry in the medium term, and the economy as a whole, low prices of the product are tempting certain buyers to make purchase while sellers are seeking ways to secure the commitments. It appears that hedging and fixed pricing are back on the agenda, even for 2021, as PET prices have reduced to so low and are likely to remain the same for some time. Some are looking at this scenario as a right time to lock in stocks of PTA and PET for 2021, but there also looms pre-buy concerns about the liquidity of customers. On the other hand, for some companies, purchasing now and keeping the stocks ready for next year is not an appealing proposition for they may not thrive or even survive this crisis owing to limited socialising and no tourism to depend on. Thus, the current outlook in general makes hedging, fixed price buying and general pre-buying a risky affair. Both the buyers and sellers are becoming wary of what demand may look like going forward and as no buyer wants to get caught with stocks at the current situation, the future for the PTA and PET sector looks blurrish.  Buyers are cancelling their orders and some supermarkets are putting the brakes on and have stopped making purchases. Even the world leaders are not sure of how long this lockdown is going to continue and when a sense of normality will return. Although PET has been able to maintain its priority status amidst the pandemic, largely through thermoforming, but there are other PET products that have witnessed a  severe hit and are still suffering, for example, carbonated soft drinks (CSD) and high-end foods. While the sales volume of bottled water has significantly dropped and the product is currently experiencing the effects of mass lock down, the purchase of larger 1 litre and 1.5 litre bottles and their bulk buying by the consumers on the continent is ensuring its sustainability. Further, sharp increase in the production and demand for hand sanitizers has not proved to beneficial for PET products as nowadays hand sanitizer producers are not so concerned about the type of bottles they are using. Moreover, R-PET (recycled PET) users are reverting to a 70:30 purchase power, which is in favour of virgin PET. The reduced demand for R-PET is the result of its high cost, and thus, has created a renaissance in demand for virgin material.   The ones engaged in the business are contemplating different scenarios. While one scenario is anticipated to be the increasing demand and growing market for the product as negative territory on oil has now passed and things will only get better because of the expected ease on the lockdown in the coming months. While the other scenario is expected to be the fall in the market value as after witnessing the extraordinary demand for PTA and PET because of lockdowns and also because people replenished inventories thinking that April would have the lowest price for the product, the next few months shall see the consequences with companies going bust with no events or festivals taking place, resulting in less consumption of the product and downfall in market. In Europe, as domestic producers are focusing on keeping their prices competitive with PET manufacturers from other regions, the import volumes of the PET products are far fewer than what they were at the same time in 2019. Thus, the short to medium term, imports to Europe have reduced drastically in comparison to 2019, which is a good sign for domestic PET producers. Thus, even if PTA and PET are benefitting in Europe amidst the COVID-19 pandemic, the growth of the sector is expected to remain unstable and it is currently under a threat. While the sector has received a chance to flourish in the medium term, its future remains unpredictable owing to the volatile market conditions and weakening economies during the mass lockdown. ;
India's Infrastructure Output Shrinks as the Nationwide Shutdown Hits  Productivity
10-04-2020

India's Infrastructu...

As the nation moves towards mass lockdown to combat the novel coronavirus pandemic, the infrastructure industry in India is experiencing the critical effects on its production level. The nationwide shutdown imposed in India, following the outbreak of novel coronavirus, has directly affected the infrastructure sector in the region, especially in the production areas of steel and cement. It has been over a month since the official lockdown started in the country, and this has led to the closure of various production facilities. All of this has significantly affected the March infrastructure output in the region, which is steadily plunging.   According to the estimates, the annual infrastructure output saw an upward growth of 7.1% in February, which slumped by 6.5% in March, and is expected to witness a further dip in the next month. The annual infrastructure output comprises nearly 40% of the regional industrial output. As the large parts of the manufacturing sector is inactive and is expected to be in the same state for an extended period, the production rate of the materials required in the infrastructure industry is also dipping. The disruption of the supply chains for procuring raw materials and the absence of workforce are the major factors impacting the industry. Cement production decreased by 24.7% in March, while the steel output contracted to 13%, and witnessed a downfall in demand. The various energy sources, which are utilised in the construction sector to operate the heavy machineries, are also experiencing a significant dip. For instance, electricity generation plunged to 7.2% in the month of March. India's loss of economic activity could reach as high as $234 billion under lockdown, which can result in zero percent GDP growth this fiscal year. The world's biggest lockdown might have cost the Indian economy Rs 7-8 lakh crore amidst the period of 21 days. Factors like factories halting production, several flights being suspended, several trains being cancelled contributed to this much amount of money. The lockdown may cost the Indian economy almost USD 4.64 billion (over Rs 35,000 crore) every single day. Since most of the metropolitan cities like Delhi, Mumbai, Ahmedabad, and Pune, which are the hub of construction and infrastructure activities in the region, are still entirely closed and fall in the category of red zone, relaxations offered during the lockdown period may not make any material impression on the slowing infrastructure sector in the region. While lockdown has been imposed to prevent the spread of COVID in the country, it has significantly impacted the region’s infrastructure industry and its output. The scenario might get worse in the months of April and May as the lockdown is expected to extend further with significant parts of the production remaining inactive for a prolonged period., halting almost all the economic activities in the region. In fact, there are chances that the economic growth of the country will be sluggish, even when everything comes back to normal.    Since the imposition of lockdown, which has halted the operations almost completely, the companies who were supposed to work on big projects have cancelled the same, which will directly affect their annual sales and the infrastructure sector. While projects under development have been delayed only by two to three months, it has been estimated that the overall impact of the novel coronavirus on the construction industry in India is INR 30,000 crore per day. Moreover, the investment in construction-related projects is likely to reduce by 13 to 30% owing to the fear of disruption in the supply chain or increased prices of raw material, which will further impact the Gross Value Added and employment in the country. The pandemic has impacted the infrastructure projects to a large extent, which are the driving force for the infrastructure industry. The demand and production of the vital raw materials in the construction sector, that is, cement and steel are further expected to be hit by the current levels of uncertainty, inactivity of business, loss of income and the diversion of government funds towards the management of the pandemic.   Today, India needs to renew its focus on the infrastructure sector in the wake of the damage caused by COVID-19. The government and the nation need to acknowledge the negative impact of the coronavirus on the infrastructure industry and manage the situation accordingly. The development and continuation of the highway construction projects in different phases could help the infrastructure sector get back to normal and sustain during this difficult time, which could further help the migrant labourers, daily wages workers, and the economy to grow. ;
Key Chemical Industry Players to Shift their Focus on Disinfectants
02-04-2020

Key Chemical Industr...

As COVID-19 spread across the globe in the month of February and March, it became abundantly clear to anyone who visited a grocery store that the world was facing a shortage of essential sanitary products. These products included sanitisers, disinfectants, personal protection equipment, and more. The global and governmental organisations across the globe immediately took important measures to ease some of the strict regulatory requirements in order to speed the production and delivery to the healthcare providers, essential businesses, and the common populace. Followed by this decision, the chemical industry stepped up its production exponentially towards key raw materials required to make sanitizers as well as the finished product itself. One such company is Tata Chemicals, which has converted its chemical producing units at Ankleshwar and Akola to produce and supply 75,300 litres of hand sanitisers across multiple states of India. Chinese companies have also established a number of operations in order to increase the production of disinfectants. The European sector of the chemical industry has also been up to speed with the production of hand sanitisers. BASF Corporation, for instance, has decided to shift the usage of isopropanol to make more sanitisers. Another European producer, INEOS, which produces two of the most important chemicals needed to make sanitisers, isopropyl alcohol and ethanol, has announced the estimated production of one million bottles of disinfectants a month. DSM, a Dutch manufacturer, has produced 130,000 litres of disinfectant by following WHO guidelines and distributed the product to healthcare institutions in the Netherlands. Hungarian oil and gas company, MOL Group, meanwhile, has transformed one of its production facilities at Almásfüzito into a sanitiser production plant, with an estimated production capacity of 50,000 litres of two ethanol-based products every day. After the COVID-19 hit the North American region, United States’ Environmental Protection Agency agreed to relax many of its regulatory requirements for the manufacturing of disinfectants in order to speed up their supply to meet the increasing demand. Among these developments, the EPA made its process of registering new pesticide and pesticide device manufacturers easier and added disinfectants that could be used against Covid-19 to the List N.   As of 20th March 2020, The Dow Chemical Company began producing hand sanitisers in its Stade plant and started deliveries from 24th March. The company also worked with officials in Michigan and West Virginia and met with officials from the US Food and Drug Administration, the Alcohol and Tobacco Tax and Trade Bureau, and the Department of Homeland Security in order to meet the regulatory requirements for increasing production.  The Royal Dutch Shell Corporation has also diverted its resources to its manufacturing plants in Sarnia, Canada, in order to produce isopropyl alcohol.   As the chemical companies are increasing their supplies of disinfectants, regulators are easing up their laws to help manufacturers to fast track their production while maintaining a brief safety regulation for the upcoming new manufacturers. In the United States, under the guidelines given by Environmental Protection Agency (EPA), Food and Drug Administration (FDA), and The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the companies entering the disinfectant and sanitiser market must evaluate whether state law, international law, and export/import requirements, or other federal laws are applied to their product.  European Chemicals Agency’s (EPR) Biocidal Products Regulation (BPR) states that a biocidal product cannot be introduced in the market unless the product supplier or the substance is listed in Article 95 list, for which they have eased up the process and claims to process every applicant within a few days.   With global disinfectant manufacturers cooperating with their domestic manufacturers and regulators easing things up for new manufacturers, the production of disinfectants is finally meeting the estimated demand. Also, due to the pandemic situation calming down in the Asia Pacific, the industry is producing enough disinfectants to meet their domestic demand. Travel restrictions imposed by the government are, however, still creating issues in the import and export sector for disinfectants but are expected to be under control soon. ;
Impact of COVID-19 on Global Chemical Supply Chain
15-03-2020

Impact of COVID-19 o...

With China being a significant producer and supplier of most of the raw materials and components to the world, the international supply chain has received more than its fair share of shocks due to the Coronavirus outbreak. COVID-19, which started from Wuhan, and first impacted China has reached almost every part of the world and till now has impacted each and every sector. The global chemical industry is no different and is currently experiencing supply chain disruptions. As China is the major producer for most of the chemicals, which further serve as the raw materials in the manufacture of other products, the supply chain and procurement has taken a severe hit.  Currently, manufacturers in the chemical industry are trying to maintain a high level of operational productivity to stay competitive in the sector. Despite all this, the restrictions on shipping and industrial production have adversely affected the chemical supply chain. Several crucial high-capacity Chinese manufacturing plants have been forced to lower their manufacturing run by 25% to 30%, along with some plants delaying their restart. Thus, the outbreak of the noble Coronavirus pandemic has led numerous firms to reconsider their investments across Asian supply chains. As the governments and different sectors battle to hold the spread of the virus, it has been observed that the factors like logistics issue, shortage of staff, and rising inventories are primarily forcing chemical companies to cut their productions. What has made the condition worse are the factors like the shortage of labourers, lack of drivers, and roadblocks. As now-a-days companies majorly rely on migrant workers to carry out labour intensive operations, this has put production activities in an extremely vulnerable situation. In the chemical industry, weakened demand has also stopped the export of integrated chlor-vinyl manufacturers by South Korea, Japan, as well as by Taiwan into China. Further, the demand for PVC is expected to decrease by a significant value due to a decrease in demand for its end use products. Most lubricant brands, on the demand side, have decided to delay their return to manufacturing until their downstream end users don't return to work. Moreover, the demand from lubricant makers is expected to remain bearish amid the COVID-19 outbreak, and it is unlikely to recover in the short term.  As of February 2020, the other sectors that had received a major blow in the chemical industry were the polymers, benzene and styrene, acrylonitrile butadiene styrene (ABS), polystyrene (PS), naphtha-based PE, and PE and polypropylene. Moreover, the PVC production loss in the same month was estimated at 140,000-200,000 metric tons. Further, other nations, which are dependent on China for various chemicals, are experiencing major drawbacks. For instance, India is dependent on China for various chemical compounds like titanium dioxide, carbon black, acetic acid, citric acid, aniline, and calcium carbide. Moreover, the Indian Drug Manufacturers Association or IDMA, which represents over 900 drug producers, is facing the issue of supply shortages and is experiencing a rise in the prices of raw materials. The prices of some antibiotics, vitamins, and other medicines have gone up by 15%-50% due to the fear of disruption in the supply of ingredients. Along with that, there is a high-risk of supply chain disruptions for fluorine, amines (for APIs and agrochemicals), and domestic ABS in India. In the region, the chemicals whose total imports are quite substantial compared to domestic manufacturing include caustic soda, acetic acid, acetone, phenol, aniline, isopropanol, PVC, nylon, and VAM. Amidst all these, India’s Vinati Organics, among other manufacturers, has reassured customers of adequate inventory with no repercussions on the supply amidst this outbreak. Further, as the production level in China reached its lowest over the past few months, other emerging nations like India have been experiencing a growth in demand for various chemicals from international manufacturers. This current 5% to 10% shift in demand from China to India could be a game-changer for the region’s fine and specialty chemical manufacturers like Aarti Industries, which will look to enhance manufacturing capabilities for API intermediates, among others during the time. Consumer brands in the US are particularly concerned about countries restricting the supply of chemicals, ingredients, and products to the region. For instance, India, a significant drug ingredient supplier, has limited exports of medications like acetaminophen, a common painkiller used to treat flu-like symptoms, while Germany has banned the export of protective equipments like masks, gloves as well as suits manufactured for health care professionals. Even though most factories and production units in China have by now resumed their operations, there are numerous that are not running at their usual capacity due to several challenges, which include smaller workforce and tentative restrictions in movements, aiming to promote social distancing, which seems the most suitable solution to prevent the spread of COVID-19 until the invention of the vaccine. Buyers from Southeast Asia and India are still cautious of the trade developments. With Indian suppliers gaining a temporary shift in demand for chemical imports, their focus might now shift to some country other than China for procuring raw materials.  Even in Europe, the supply-demand situation has got affected; prolonged shutdowns and rapidly increasing cases in the region are impacting trade and imports for European majors. The market balance in Europe is likely to be affected, however, the prices were already quite low for European refiners’ products. The US-listed shares of chemical companies fell on May 12, 2020 despite a rise in oil prices, following the decision of Saudi Arabia to exercise deeper production cuts. In the US, maleic anhydride (MA) is expected to be under pressure amid low feedstock costs and the rising demand. It has been estimated that the average chemicals sector earnings in North America and Europe, and the Middle East and Africa (EMEA) could dip by nearly one-fifth year on year in 2020, following the disruptions caused by coronavirus and expected downturn for May and June. With the US and Europe experiencing the ever-growing impact of  Coronavirus, demand shocks witnessed by the international market in recent times seem more significant than those felt during the recession of 2008-2009.  Since the number of confirmed COVID-19 cases are multiplying each day, international supply chain disruptions are yet to peak. Thus, it is possible that the interruptions experienced by the chemical manufacturers may intensify and get worse in the future. Thus, COVID-19 has created a situation where manufacturers must take a moment to evaluate disruptions in the supply chain coupled with the delays/failures of their upstream and downstream partners. The recovery of chemical and related sectors largely depend upon how fast the virus can be controlled. Even if the threat of Coronavirus may start to recede, it will take several weeks for chemical manufacturers, or drug manufactures to restore their operations and come back to the normal track, including supply chains and logistics. Currently, the required capacity to ship necessary goods would not be available and meeting the international demand in a timely fashion is a difficult task. Thus, the spread of Coronavirus and the mass shutdown, resulting in restrictions on shipping and industrial production, are adversely impacting the chemical industry. The domino effect of coronavirus and imposed lockdown are leading to production disruptions, thus severely impacting the global chemical supply chain. The supply chain issue will affect the overall chemical industry along with pharmaceuticals, which in turn, may affect the associated industries as well. Overall evaluation of the effect of Coronavirus over the global chemical supply chain is quite tricky. Thus, the next few months are critical to deciding where the entire chemical industry will lead. ;
U.S Sanctions on Iran
12-03-2019
Susan

U.S Sanctions on Ira...

The president of the United States , Donald Trump, had pledged to be tough on Iran during his presidential campaign. Since the time he became the President, Trump has stayed true to his words by reinstating the sanctions on Iran in 2018, making it an unfortunate year for the country.   In May 2018, under the instructions of the President, the U.S. pulled out of the Joint Comprehensive Plan of Action which was signed with Iran and announced that the sanctions would return in two phases. The sanction related to the crude oil, which serves as Iran’s economic lifeline, was reintroduced towards the end of 2018. It is widely believed that the sanction could have been worse for business in Iran had the U.S. not granted waivers to eight significant importers like China, India and Japan, who account for the highest amount of Iranian crude oil.   As the U.S. and Iran remain embroiled in controversies, economists, politicians and analysts are awaiting the latest developments before making critical business decisions. The oil market in the recent history had proved to be somewhat conservative which was evident when the world markets factored in sharp declines in the oil production of Iran after Donald Trump had aggressively threatened sanctions on Iran. Post the threats, the markets were forced to recalculate once generous waivers were handed out to some of the biggest oil customers of Iran. Experts believe that the oil market has the potential of being extremely volatile throughout 2019 owing to the sanctions. Many even think that there is a strong possibility that some of the waivers that are applicable now, may not be available to Iran sometime in the future.   The sanctions have already proved to be harmful to the economy of Iran and their effect could be even more damaging in the future. A state of economic shock has engulfed the country as several foreign companies have withheld new investments or hinting that they may be exiting soon. Numerous companies are also worried that their continued association with Iran may put them in a position where they may no longer have access to the U.S. market or they will be excluded from the dollar-based financial system.   The Iranian oil market had already witnessed a decline of over 1 million barrels per day between June to September. It fell from 2.7 million barrels per day in June to approximately 1.7 or 1.9 million barrels per day in September. In addition to this, there has been a marked increase in unemployment in the region coupled with the issue of rapid inflation. It is therefore understandable that the Iranian Rial has slumped in the recent months.   Different affected countries have looked to find measures and counter this problem. India adopted a unique strategy of using escrow accounts in banks of Iran for the payment of Iranian crude oil. Further, the payments were made in Indian Rupees, thereby avoiding punitive action from the U.S. In addition to this, it was ensured that the payment was spread across five banks to reduce the risk of adding sanctions by the U.S on any one of the banks.   Meanwhile, the European Union too has shown interest in continuing business with Iran and are considering creating a mechanism for the purpose. The Government will soon generate a new payment system so that it will continue the business relations with Iran without punitive measures from the U.S. This move has however been criticized by the U.S. and has been labeled as a counterproductive measure for global peace and security.   Related Links:   https://www.procurementresource.com/industries/chemicals https://www.procurementresource.com/resource-center/crude-oil ;
Malaysian Palm Oil Prices to Recover in 2019
11-03-2019
Kanika Sharma

Malaysian Palm Oil P...

Palm oil is primarily a variant of vegetable oil that is derived from the mesocarp of the fruit of the oil palms. Being a saturated type, this oil provides several advantages that makes it one of the most preferred vegetable oils among consumers. Multiple studies have confirmed that palm oil has the power to reduce stress, boost brain health, fight heart diseases, improve skin health and increase Vitamin A in the body. Hence, palm oil undoubtedly enjoys a high position among health-conscious people around the globe. The countries situated in the tropical belt are the primary producers of palm oil. However, not all countries are able to produce it as the plantation of the same requires certain specifications regarding climate conditions. Malaysia and Indonesia are the two major producers of palm oil in the eastern part of the world. The production scores so high that both countries have the capacity to export to the other parts of the world.The determinants of the price componentThe price of palm oil has a direct connection with the economic and trade dimension of the world. Some of the vital factors that decide the price of palm oil are - productions with respect to supplies, the exchange rate movements, the number of exports and the volume of business in a year. According to the statistics, the last three years have seen a steady pace in palm oil prices. However, the forecasts say that the prices are expected to show a better and moderate pace during the year 2019. The lower production levels, uncongenial weather conditions and withering plantations have been the primary reasons for the low palm oil prices in the Malaysian market. Contrary to this, the Indonesian palm oil prices have managed to maintain a steady pace so far. Positive aspects that are expected to stabilize the pricesIt has been firmly stated in many market predictions that as India is suffering from a lowered level of oilseed production, the demand for importing the seeds will be higher in the coming years. This will surely help in pegging up the prices of palm oil. India is one of the major importers of palm oil from Malaysia and the demand is anticipated to inevitably increase in the year 2019. India, with an expectation to increase its oilseed import by 15.15 million tons in 2019, will account for 10 million tons for palm oil only.Though the demand has already been assured, the supply chain needs confirmation as well. Malaysia is expected to register a growth in the production level of palm oil. Since the new plants are maturing, the overall production is sure to experience a boost. Though there is always a bunch of old and withering plants involved that eats up the bandwidth of production potential nonetheless, the net production is still expected to rise. Accounts show that the output is expected to rise by approximately 2 million tons, thereby increasing the export volume by 0.5 million tons. Although the prices of palm oil has been wavering in the last three years, with a favorable weather condition and fast maturing plantations, they are expected to show a recovery in the year 2019.Related links:https://www.procurementresource.com/industries/agriculture-farming-and-commodityhttps://www.procurementresource.com/resource-center/crude-palm-oil;
Commencement of Sasol’s First Polyethylene Production Plant Under LCCP Project
06-03-2019
Abhishek Singh

Commencement of Saso...

Sasol is a much-recognized chemical company all over the world in the field of polymer production. As the global demand for plastics has increased rapidly, Sasol has become a major contributor to the industry of polymers with their quality products and state-of-the-art technologies. Recently, the Company has proclaimed that the first of their seven production facilities under the LCCP project has attained beneficial operations. According to Mike Thomas, Senior Vice President of the North American wing operation at Sasol, the initiation of a fresh project for manufacturing low-density PE is going to be a fundamental movement in the work history of Sasol.Beneficial Prospects of the ProjectThe establishment of the new plant will enhance the turnover of the company. The reasons why the top management is looking forward to the potential success of this project is that the company already enjoys a cost-competitive position in the market that can be further capitalized to make a fortune for the new venture. The new facility is expected to support the pre-existing pool of production of polymers in order to meet the global demand. In the long term, the company is expected to show promising results with its state-of-art assets, world-scale and advantageous logistics location. The first unit (470ktpa LLDPE) that is about to start its production line up will be using Univation Technologies’ UNIPOL PE process. Whereas, the next round (420ktpa LLDPE) that is scheduled to start the production later this year will use ExxonMobil technology. With two running production units, Sasol is sure to set a new benchmark for itself by the end of the next year in terms of volumes generated in the polyethylene industry. Profitable Outlook As far as the market speculations and the management forecasting are concerned, Sasol is expected to grow with its recent launch of the LCCP unit project worth $11 Billion. Along with the pre-existing line of production of high-density PE, this LDPE will also catch hold of the market soon as Sasol is one of the primary suppliers in this domain with global recognition. According to the officials, the project will start operating in the year 2019 and the entire process of the project launch will be over by early 2020. Hence, the company is looking forward to serve the market immediately after they start the new stream of production. With updated technologies, talented pool of employees and excellent management, Sasol is all set to make history for them.Related Links:https://www.procurementresource.com/industries/packaginghttps://www.procurementresource.com/resource-center/highdensity-polyethylene-hdpe;
04-03-2019
Carol Smith

Asia Propylene Marke...

Several developments in the Asian propylene market in the last quarter of 2018 meant that its effects were expected to spiral into the early part of 2019. Towards the end of the calendar year, many top companies in north-eastern Asia completed their individual turnarounds, which resulted in a gradual lengthening during the Q4 of 2018. The most obvious example of such an occurrence was in Japan where JXTG Nippon Oil and Energy restarted the Fluid Catalytic Cracking (FCC) unit on December 20th post the planned maintenance process. Prior to this, the unit remained shut towards the end of October for a similar maintenance drive. Another major region for propylene market is China, where the demand remained on-need basis only during the final three months of 2018. This period was heavily impacted by the losses suffered by spot prices which saw most buyers either opting to purchase from domestic suppliers or adopting a wait and watch policy if they could afford to so. Apart from the Chinese market, the market in Taiwan too ended the year on a not so positive note as they witnessed a sharp fall in demand for cargoes. The domestic supply was plenty till CPC suffered a sudden outage at the Residue Catalytic Cracker (RFCC) at Dalin, two weeks before the year ended. Many experts opined that these accidents would have a significant impact on the initial trends of the market in 2019, whereas, many remained hopeful, that some of the markets will witness a quick turnaround, ensuring that business continues as usual. One of the main reasons for optimism among the market players is that it is expected that there will be significant supply during the first three months in 2019 in Japan and South Kore, despite there being a chance of shortening length owing to the planned maintenance work at Hyosung’s 350,000 tonnes per year propane dehydrogenation unit in South Korea. This, along with other factors will ensure stable demand for propylene in Asia towards the beginning of the year with cautious trading happening with expectations of re-stocking activities to commence by Lunar New Year. However, the Lunar New Year could also hamper the business in the region, as many believe that post the Lunar New Year celebrations and the holiday season, it could take about 15 to 30 days for several downstream units in China to restart.  Scheduled new plant start-ups during the initial period of 2019 provide further assurance that supply will be able to meet the demands. These start-ups will ensure that the supply is not hampered by the seasonal cracker turnarounds in several Asian regions. The Zhejiang Satellite Petrochemical Company Limited’s 450,000 metric tons per year PDH (Propane Dehydrogenation) plant, and Fujian Meide Petrochemical Company Limited’s 660,000 metric tons per year PDH plant in China will start-up in early 2019, promising a steady supply throughout the year. Over in the Southeast Asian country, Malaysia, the Petronas Aramco RAPID project is also due to commence a brand-new petrochemical refinery plant this year. It is anticipated that this RFCC will be able to produce propylene of about 600,000 metric tons every year and it should be operational within 2019 Q1. Further, its cracker is expected to start later in the year and should have capacity produce of 600,000 metric tons per year. The market, however, still remains at risk of being hampered by the US-China trade war developments. To the relief of many, both the parties have announced a truce for 90 days. During this period no additional tariffs would be introduced. The 90-day period ends on the 1st of March, 2019, following which changes could be made that could have some effect on the propylene market. Related Links:https://www.procurementresource.com/industries/chemicals;
P&G to launch new waterless and plastic-free brand DS3
25-02-2019
Jessica

P&G to launch new wa...

US-based Fast-Moving Consumer Goods (FMCG) giant, Procter & Gamble, has planned to launch a unique waterless and plastic-free beauty brand DS3 in 2019. It is a tremendous achievement for the research and development team of the company as it has introduced a proprietary technology to the segment.DS3 will include a whole range of sustainable-oriented, plastic-free and waterless home and personal care products like cleansing bars that are specially designed for the body, face and hair. These products are convenient as well as environment-friendly due to their proprietary manufacturing process. The procedure ensures that water is completely eliminated from the end product. In addition to this, the packaging of the product will be biodegradable and recyclable as it will be created explicitly by formulators without using any harsh chemicals.As the consumers are now becoming more conscious about the environment, this launch is envisaged to gain traction rapidly in the near future. The rising demand for natural products and avoidance of plastic use have necessitated this type of change in the market. Depleting resources are also contributing to the demand for biodegradable products for instance, bamboo is substituting plastic containers in this line of products. It is expected that 8 sustainable and plastic-free products will be launched in the second half of the year. The line of products will include hand soap, shampoo, body wash, face wash, laundry detergent, conditioner, toilet cleaner and surface cleaner. The entire product range boast of 30 or more patents. These products will be sold in a solid state in the form of swatches which will be activated by the use of water. The removal of water from the products also provide an added advantage of reducing the total weight by 80%, net space by 70% and emissions by 75%. This technology also aims to remove preservatives and stabilizers which are present in almost all the products in this segment currently available in the market. As the format of the product size is expected to be small, it will be more convenient for the consumers to carry them during tours and travels. From a business perspective too, these products will prove to be beneficial as they will be cheaper and easier to ship to the respective retailers and consumers. The initial feedback from the select users have been overwhelmingly positive which augurs well for the creators and alike consumers. Overall, this technology promises to bring better, safer and more convenient personal care products to the market, which could prove to be highly beneficial for both the manufacturers and consumers, while being environment-friendly at the same time.Related Links:https://www.procurementresource.com/resource-center/betainehttps://www.procurementresource.com/industries/chemicals;
BASF cleared by EU to acquire Solvay’s Integrated Polyamide Business in Europe
08-02-2019
Andrew Smith

BASF cleared by EU t...

BASF has recently been cleared by the European commission to acquire Solvay’s integrated polyamide business. The acquisition is expected to be finalised by the latter half of 2019 with both Solvay and BASF agreeing to address the commission’s anti-trust concerns. BASF had been seeking to buy Solvay’s integrated polyamide business assets in Asia, South America and Europe since 2017 for €1.6 billion. However, the deal had been stalled in Europe amidst the EU commission's concerns about fair competition.BASF had been asked by the EU anti-trust authorities to divest the various assets which form a part of the acquisition deal to prevent the German company from monopolising the EU market. The authorities were afraid that BASF’s acquisition of Solvay’s polyamide business will lead to a hike in nylon prices in the EU markets due to the reduction in the number of suppliers. The divestments of manufacturing and innovation assets required by the EU authorities was started by late 2018.According to the agreement signed by the two parties with the commission, BASF and Solvay will divest their production facilities across three European countries to a ‘single suitable’ buyer as required by the EU authorities. These production facilities include the polyamide 6,6/nylon 6,6 producing plants in Valence, France and Blanes, Spain as well as the plant in Gorzow, Poland which produces specialised polyamides. Hexamethylenediamine (HDM), hexamethylenediamine adipate salt (AH-salt), nylon 6,6 base polymer, nylon 6,6 engineering plastics and nylon 6 3D printing powder are also produced at these plants. Solvay and BASF have further committed to make the facilities in Chalampe, France a joint venture between the future buyer of the divested facilities and the BASF controlled merged entity that will emerge as result of the acquisition.The Chalampe production plant produces adipic acid, which is an upstream product required for the production of nylon 6,6. The EU commission also asked for long-term agreements for the supply of adiponitrile (ADN), which is another upstream product for nylon. This was a necessity in order to maintain the supply of raw materials required by the divested facilities.The EU authorities want to avoid a single entity from dominating the entire EU nylon market, especially with nylon finding its applications in multiple industries like textile and automobile industries. The remedy package that has been set by the EU will allow the creation of at least another large market player, and thus, giving the consumers more options.The German chemical manufacturer, BASF, has been reportedly looking to sell its debt as well as its plastics assets for €450 million with the help of Lazard investment bank to raise the capital for the intended acquisition. South Korea’s SK Innovation, China’s KingFa, and the owner of Ascend, a chemical producer, SK Capital are the potential buyers of these assets.Related links: https://www.procurementresource.com/industries/chemicals;
Global Coal Outlook
09-01-2019
Bhawna M

Global Coal Outlook

Global Coal Outlook The global coal industry is surrounded by a large number of active suppliers trading a variety of qualities and creating new price indices. The demand and prices of coal keep fluctuating depending upon the need from different industries in both the developed and developing nations. Over the past few years, the industry has been witnessing a rough time with constant changes in the demand, supply and prices. Since the year 2014, the global demand for coal has dropped by 4.2%, nearly approaching the largest decline record of 1990-1992. This is largely a result of growing environmental concerns which have led to a significant shift towards cleaner fossil fuels like natural gas, particularly in the developed countries. Additionally, the confluence of lower gas prices and a surge in renewable as well as efficient energy sources dampened the consumption of coal. However, the prices of coal witnessed a surge in 2016 owing to the constant demand from Asian countries. China, which represents both the largest consumer and producer of coal, leads the market on prices. The continued economic reforms and energy transition in the country have been the key factors for the evolution in coal prices. Lately, China has implemented policies that aim at reducing harmful emissions; not only did it reduce the own-grown coal production but also decreased the imports. The consequent decline in the availability of coal resulted in an upsurge in the prices, not merely in China but worldwide with the coal prices rising from US$ 81.9/ton in Q3 to US$ 92/ton in Q4. Although China witnessed a rise in the coal demand in 2017, the uptick was still below the 2013 peak in coal consumption. However, this slight rise is not anticipated to prevail for long, thereby trivialising the chances for sustained growth. On the basis of exports, Indonesia has been one of the leading producers and exporters of coal. In the recent years, there has been a surge in the domestic consumption of coal owing to the Government’s initiatives for constructing various coal-fired power plants. In 2017, the prices of coal hiked from US$76/ton in Q1 to US$ 93/ton in Q4. This can be attributed to numerous factors including recovering crude oil prices, constant demand from China and India, and adverse weather in the region which hampered coal mining and shipping in the country.   The future of coal is not promising as its consumption is projected to fall with the world moving towards greener energy sources, with the developed nations already reducing their dependence on coal. However, the market will be experiencing high growth in the developing nations owing to the augmented demand for electricity and industrialization. Nevertheless, if emerging countries slow their usage of coal-generated electricity for environmental and ethical reasons, this could put downward pressure on coal prices, thereby leading to the industry’s loss.  ;