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Impact of COVID-19 on Global Travel and Tourism Industry
25-08-2021

Impact of COVID-19 o...

The COVID-19 pandemic has caused abrupt changes in people's lives in a very short period of time, affecting the global economy and causing widespread panic. The global tourism industry has been among the most severely hit industries by the COVID-19 pandemic, affecting various sectors such as hospitality, travel agencies, and tour operators, and all types of transportation services. Flights were grounded, cities came to a halt, trains ceased operations, and almost all public transportation ceased operations; while hotels, cafes, pubs, and restaurants were simply shut down, especially towards the end of 2020. According to the United Nations World Tourism Barometer (UNWTB), international tourist arrivals fell by 72% between January and October 2020 due to slow virus containment, low traveller confidence, and significant travel restrictions that remain in place. The decline in international tourist arrivals in the first ten months of 2020 was 900 million fewer than in the same period in 2019, resulting in a loss of USD 935 billion in export revenues from international tourism, more than ten times the loss in 2009 as a result of the global economic crisis. The global tourism industry is expected to lose nearly 50 million jobs as a result of the COVID-19 pandemic, which is expected to cost nearly USD 22 billion. Significant loss in international tourism also led to severe loss to the global economy and GDP, especially in 2020 and the beginning of 2021. The affects were felt across most of the regions and the regions which witnessed the highest drop in the number of tourists included Asia Pacific and Middle East and Africa. Europe, North America, and Latin America also witnessed the impacts of the pandemic as the governments imposed stringent regulations on the tourism industry to curb the transmission of the virus any further. In India, a significant part of the population was employed in the travel and tourism industry. With the onset of the COVID-19 pandemic, large number of people lost their jobs. Foreign Exchange Earnings (FEE) fell by more than 75% between January and December 2020 in comparison to the same period in 2019. With business almost at a halt, players in the travel and tourism industry want the government to provide targeted assistance to the sector until vaccine-based confidence is restored, to help them meet operating costs and retain jobs. The tourism industry in some countries, however, is showing gradual signs of recovery. Spain, the world's second-most visited country, received 3.2 million tourists from January to May in 2021 which is a tenth of the amount in the same period of 2019. But visits surged in June with 2.3 million arrivals, the best monthly figure since the onset of the pandemic, although still only 75% of the figure from two years ago. Some countries caused chaos by making last-minute changes to entry rules. For instance- Denmark's decision to add Britain to its "red" list of countries with stricter travel restrictions threw London residents' vacation plans into disarray. The international tourism industry now expects a rebound by the third quarter of 2021 and a return to pre-pandemic 2019 levels not before 2023, based on the assumption of a gradual reversal of the pandemic, the rollout of a COVID-19 vaccine, significant improvement in traveller confidence, and a significant lifting of travel restrictions by the middle of the year. After months of closed borders and travel bans, the expected rebound is also a result of large pent-up demand. The pandemic has also had a significant impact on tourist attitudes. Personal sanitation and hygiene are now prioritised both by the travellers and the authority. Tourists are also avoiding crowded areas in favour of visiting more remote locations as the travel patterns have also shifted drastically. Some of the new trends emerging in the sector include the importance of nearby places and short travel and the importance of local food. Sanitation, access to quality health care, and health and safety information will be major deciding factors for future travellers. In the future, the announcement and roll-out of a vaccine in various countries is expected to gradually boost consumer confidence and contribute to the relaxation of travel restrictions. ;
Impact of COVID-19 on Technology and Media
24-08-2021

Impact of COVID-19 o...

The COVID-19 pandemic has impacted the technology, media, and telecommunications industries in both positive and negative ways. With a global economic slowdown and sports cancellations, traditional television advertising experienced steep declines in 2020. Meanwhile, the COVID-19 pandemic has accelerated other trends such as digital transformation, OTT video consumption, and even the development of new telehealth applications. As a result, digital adoption has skyrocketed at both the organisational and industry levels. Lockdowns and stay-at-home orders have had a particularly significant impact on businesses that rely on physical spaces to generate revenue, such as theme parks, cinemas, theatres, cruise ships, hotels, and sports venues. Companies that do not have a physical location have also suffered as a result of falling advertising revenues. Expenditure on both digital advertisement and traditional media ad was on the decline. Live sports are on pause, as is the ad revenue that typically accompanies them. The COVID-19 pandemic led to delays and reduction in the United States presidential campaign spending, which usually drives revenue for all platforms or more modest campaign spending placed pressure on advertising revenue for media companies. Supply chain issues have plagued technology companies, particularly those reliant on China. Nonetheless, technology devices such as phones, tablets, computers, and gaming consoles are in high demand at a time when the majority of people are confined to their homes. More importantly, technological services, software, and platforms are lifelines for the majority of businesses that have had to adapt to remote work quickly. Online platforms that hire workers on short-term and mostly informal basis drive the gig economy. Uber and Airbnb are two well-known examples, as are Ola and Swiggy in India. These platforms have gained in popularity since the widespread availability of smartphones. During the lockdown, workers employed by these platforms suffered heavily, as the demand for their services, taxi rides, rentals, or skill work disappeared. Further, since these workers h+ad no guaranteed salaries, their incomes dropped dramatically. The pandemic has brought the world to a point where those who are not connected digitally face total exclusion, thereby widening the digital divide. With strict social and physical distancing measures in place, new routines require accessing the internet for most services and those with no access to information, communication, and technology may suffer from societal inequalities. Even before the onset of COVID-19, there was already high growth and adoption in education technology, with global EdTech making significant investments in 2019, the overall market for online education is projected to witness higher market value by 2025, driven by the new study methods triggered by the pandemic. Since COVID-19, there has been a significant increase in usage of language apps, virtual tutoring, video conferencing tools, and online learning software. In response to significant demand, many online learning platforms started offering free access to their services, including platforms like BYJU’S, a Bangalore-based educational technology and online tutoring firm founded in 2011, which is now the world’s most highly valued EdTech company. Since announcing free live classes on its Think and Learn app, BYJU’s has seen a 200% increase in the number of new students using its services. Companies such as Zoom, Webex, and Microsoft Teams are well positioned to capitalise on the opportunities created by increased remote work and a high reliance on technology to enable it. Zoom, for example, reached 200 million daily users on average in March 2020 as employers shifted to work-from-home models. With back-end dark fibre and spectrum holdings, Verizon, for example, acquired core assets to strengthen its telematics capabilities and its wireless network offering. AT&T bought DirecTV and Time Warner to bolster media creation and distribution, and Comcast bought Sky to bolster international content creation and distribution. In the healthcare domain, the most prominent technology is the video-based communication platforms, such as Zoom, Facetime, and WhatsApp. Other remote services, such as computer or mobile applications, information and dataset, social media, email, and chest X-ray, could be used to provide synchronous and asynchronous support for both COVID-19 patients and those requiring other routine clinical services. Zoom, WebEx, Facebook Messenger, and Google Hangouts, for example, either became the “teaching and working assistant” to prompt digitally safe and effective conferencing or built bridges to keep social interaction for daily life in this special time. Besides email, online surveys, Google Sheets, and more, telework technologies utilise digital information to exchange virtual services at work. Moreover, social media including Twitter, Instagram, Facebook, and YouTube; systems and applications such as Google Trends, and Geographic Information Systems, helped to track, locate, and analyse outbreaks in daily life. Artificial Intelligence (AI) is assisting businesses in understanding economic trends and their competitors and customers as we begin to emerge from the lockdown. During the peak time of COVID-19 pandemic, AI assisted public health officials in predicting infection rates and ICU demand and capacity.  SummarizeBot, a blockchain- and AI-powered bot, condenses all types of information into a concise summary of the key points, keywords, and most important parts of the content. Natural language processing AI is used by Alibaba, the world's largest e-commerce platform, to automatically generate product descriptions. While many people were forced to work from home during the pandemic, many businesses saw positive results, and even as the world is still recovering from the COVID-19 pandemic, stable wireless networking will be required. The number of devices that need to be wirelessly connected will continue to rise, as will the variety of data streams. The fifth generation of the internet, that is, 5G will transform things and it will be so much faster than 4G. Because of 5G's speed and reliability, more technologies will be adopted by a wider range of organisations and industries. 5G enables the connection required for mobile internet. The services will be able to expand with 5G capabilities, opening the door to new use cases such as entertainment and gaming. An increase in digitalisation is leading firms and educational institutions to shift to work-from-home (WFH) and in some organisations it is becoming a permanent phenomenon. Blockchain technology will become important, necessitating design and regulatory research. The number of gig workers and the gig economy is expected to grow, raising issues of work allocation, collaboration, motivation, and aspects of work overload and presenteeism. With an increase in digital presence, workplace monitoring and techno stress issues will become more prominent. Online fraud is likely to increase, as will research into security management. The regulation of the internet, a critical resource, will be critical following the pandemic. Cloud, Internet-of-Things (IoT), Blockchain (BC), Artificial Intelligence (AI), and Machine Learning (ML) are among the digital transformation technologies being adopted by organisations as part of their transformation efforts. Yet issues of surveillance and privacy are gaining prominence with digital usage during lockdowns. As many governments started using apps on smartphones to monitor infected persons and trace their contacts, issue of privacy and state surveillance have gained momentum. Following the pandemic, these digital methods of monitoring populations for epidemiological reasons are likely to continue gaining demand and become more popular. ;
COVID-19 Impact on the Global Shipping Industry
23-08-2021

COVID-19 Impact on t...

Human, economic, and social costs have been enormous as the world continues to grapple with the COVID-19 pandemic. The threat of a major recession still hangs over the international economy, affecting almost every industry and sector. The COVID-19 pandemic has been severely affecting the globalisation process ever since its onset. The maritime domain, which is among the primary enablers of globalisation and transports 90% of global trade, has been experiencing significant consequences. The industry faced extreme difficulties, especially in 2020, when the border restrictions increased, countries imposed varying measures to contain the transmission of the virus and mitigate its impact, travel being curtailed, ports had been being closed, and ship entries being restricted. The United Nations Conference on Trade and Development (UNCTAD) had already predicted a decline in international maritime trade due to the increasing trends of protectionism, trade tension, geopolitics and sanctions, increased rift between China and the United States, and the increased environmental concerns in 2019. A report by the UNCTAD estimate published in November 2020 predicted significant decline in the global maritime trade due to the unprecedented disruption caused by COVID-19. Global container shipping volumes fell by more than 5% in the first quarter of 2020 compared with the first quarter of last year. The report also warned that new waves of the pandemic could worsen the situation by disrupting supply chains and economies which it did during the second wave of the COVID-19 in 2021. The COVID-19 pandemic, since the beginning has sent shockwaves through supply chains, shipping networks, and ports, causing cargo volumes to plummet, and growth prospects to be shattered. The entire maritime industry had been impacted, from shipyards to bulk cargo carriers. Reduced labour costs and lower demand had pushed freight rates lower, while additional restrictions imposed by countries at ports, such as a ban on crew changes, are still causing global supply chains to be disrupted. Containment and goods in transit were delayed, rerouted, or discharged before reaching their destination. Moreover, the ports were shut down. For example, certain countries had prohibited the entry of marine vessels in 2020, requiring such vessels to be on the water and without a destination port. The entry of vessels by certain countries had been restricted or prohibited, thus, causing chaos amongst the marine transportation facilities globally. The situation, however, is gradually becoming better, as the world is fighting against the pandemic with the increased vaccination drives across the globe. The issue of port congestion with cargo and containers lying unattended had surfaced again in 2021 as different countries are in various stages of lockdowns due to the second wave of the pandemic. The crisis also hampered offshore drilling in a number of countries, especially in 2020. Fisheries and seafood industries, for example, had also suffered major loss. There has been a supply and demand shock in the industry. Supply had been impacted as exports from Chinese ports was severely disrupted since January 2020 due to a production shortage in the country. The shipping companies are still witnessing significant drop in demand as the Delta variant of the virus is spreading to other parts of the world. One of the consequences of the crisis has been a greater emphasis in some countries on self-sufficiency and diversification in trade relations in the post-pandemic world, with the crisis highlighting the world's reliance on China. As the epicentre of the coronavirus, moved from China to Europe and to the United States and Asia in 2020, impact was felt on transatlantic ports. Although ports in Europe and the United States are mostly automated and require little manpower, but related industries were in jeopardy. According to Panjiva, a trade data company based in New York, overall seaborne imports into the United States fell in the first two weeks of March, with imports from China falling by more than 40% and goods from Europe falling by more than 6%. In March, the Ports of Seattle and Houston temporarily closed some terminals; the Port of Los Angeles had also reduced its operating hours. The industry dealt with crew shortage as a result of lockdowns since a large number of crew members were stranded on ships in various parts of the world. Nearly 40,000 Indian crew members working on merchant and cruise ships were stranded around the world in 2020. The shipbuilding and ship repair industries have been hit hard. As the pandemic is spreading with newer variants, shipbuilding facilities in China are getting impacted. In Singapore, two major shipyards, Sembawang Shipyard and Keppel, which remained open as essential services, felt the impact as several labourers tested positive, raising concerns about worker safety in these settings. SEA Europe, which represents Europe's maritime civil and naval industries, warned that Europe risked losing its global leadership in complex shipbuilding and technologically advanced maritime equipment manufacturing as the pandemic hit the capital-intensive and export-oriented sector, which was already dealing with rising competitiveness and trade protectionism. Important shipping ports reported year-on-year drops in cargo between 10% and 20% in February 2020. Over 50 countries had modified port protocols, ranging from port closures and quarantine measures to additional documentation and examination. Every country's competent health authorities are avoiding the risk of transmission of COVID-19 by vaccinating more and more people. All the goods that were previously carried conveniently on a ship or any other marine vehicle must follow a set standard of rules and procedure which has limited the demand for cargos. The delay in such transportation as a result of the added complications of quarantine periods has resulted in a further decrease in demand for cargos. Due to the 14-day waiting period or the waiting period prescribed by the competent authorities in each country, perishable goods cannot be transported. Many small companies in the maritime and shipping industries had gone bankrupt in 2020 and 2021 as a result of low demand and an inability to manage the company's finances during this period of low cargo and shipping demand. This has had a significant impact on small businesses, and several companies in this industry have closed as a result. Changes in consumption and shopping patterns triggered by the pandemic, including a surge in electronic commerce and lockdown measures, led to increased import demand for manufactured consumer goods, a large part of which is moved in shipping containers. Maritime trade flows increased further as some governments eased lockdowns and approved national stimulus packages, and businesses stocked up in anticipation for new pandemic waves. The most significant impact on freight rates has been on trade routes to developing countries, where consumers and businesses can least afford it. Rates to South America and Western Africa are currently higher than rates to any other major trade region. Yet the global shipping industry is expecting a sustainable recovery, as a vital enabler of the smooth functioning of international supply chains. UNCTAD forecasts that maritime trade will return to positive territory and grow by 4.8% in 2021, assuming that global economic output recovers in late 2021. Players in the maritime sector must adjust their operations, finances, sanitary and safety protocols, as well as working practises and procedures, to cope with pandemic-related disruptions. Several governments are also reforming their border agencies, port authorities, and customs administrations to keep trade flowing while keeping people safe. An example of such cooperation is the United Nations rapid response project on ‘Transport and trade connectivity in the age pf pandemic: Contactless, seamless and collaborative UN solutions’ which brings together United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), United Nations Conference on Trade and Development (UNCTAD), and four other regional UN commissions. Ports are now becoming more interested in strengthening connections with the hinterland in order to be closer to shippers and ‘anchor' cargo volumes, in line with the recent push for port-centric solutions. ;
Impact of COVID-19 on the Semiconductor Industry
20-08-2021

Impact of COVID-19 o...

As COVID-19 shrinks economies and transforms the way businesses operate, the semiconductor industry is among the most severely impacted industries, with factories forced to shut down operations as supply chains were disrupted due to the restriction imposed by the governments to inhibit the transmission of the virus. With the onset of COVID-19 in China, which is home to many chip manufacturers, supply chains were severely disrupted. Production fell sharply in January and February as the whole country was impacted by the virus, but it is now gradually returning to normal levels. The production of electronic products was halted as the virus spread to other countries, including South Korea, Japan, Italy, Germany, France, and the United States, and the countries imposed severe lockdown restrictions to curb the transmission.   According to a McKinsey report, the semiconductor market was estimated to decline between 5-20% in 2020. However, this impact varies across segments. While automotive saw a steep decline as users stayed and worked at home during the lockdown, the decline in consumer electronics was just moderate as the demand for smartphones and laptops increased with the significant reliance on online platforms for both office work and classes. On the other hand, the demand for data centres and automated systems soared high. 5G infrastructure, Industry 4.0, and AI created more demand for semiconductors, which is all the more reason to focus on the semiconductor supply chains. Global semiconductor industry sales were USD 40 billion for January 2021 an increase of 13.2% year over year, according to the Semiconductor Industry Association. One of the many ramifications of the COVID-19 pandemic has been an increase in sales of consumer electronics at the same time as chip production has slowed, particularly in Asia, where the industry has witnessed rapid changes in the recent years. Instead of manufacturing these critical components in-house, many American companies now outsource them to partners across the Pacific. The semiconductor supply chain, worth half a trillion dollars, is one of the most complex in the world. A single chip may require more multiple steps and 70 or more crossings of international borders before reaching an end customer. Policies that affect even a single company or process can have far-reaching global consequences. The order issued by the Biden administration establishes a 100-day government-wide supply chain review focused on semiconductor manufacturing and advanced packaging, critical minerals, medical supplies, and high-capacity batteries. Meanwhile, Asian manufacturers are seeking growth opportunities in the United States. Samsung Electronics recently announced plans to construct a cutting-edge semiconductor facility in the United States. The project which is worth USD 17 billion, dubbed Project Silicon Silver, is expected to generate approximately 1,800 jobs over the next ten years. The United States continues to dominate microprocessor research and development, but it lacks firms in key subsectors, particularly photolithography tools (the most expensive and complex type of semiconductor manufacturing equipment) and the most advanced chip factories (especially foundries, which manufacture chips for third parties). Taiwan, on the other hand, is dominant in advanced manufacturing, while South Korea produces significant amount of materials and some manufacturing equipment. Leading industry players are now concentrating more on their production and delivery strategies. For example, Intel Corporation, the world's largest chipmaker, intends to maintain more than 90% on-time delivery of its products from its factories around the world. Besides that, Qualcomm Technologies, Inc., a subsidiary owned by the Qualcomm Incorporated, anticipates overall market share gains in the second half of 2020, owing to an increase in shipments from leading Android OEMs as 5G technology providers during the virus recovery period. One of the largest chipmakers in the world, Taiwan Semiconductor Manufacturing Corporation (TSMC), recently announced setting up a semiconductor plant in Arizona, United States, which is worth USD 12 billion. Countries like India and Vietnam also provide attractive alternatives. Several semiconductor and electronics companies see this crisis as a new opportunity to rethink and restructure their existing strategies, as well as an opportunity for semiconductor manufacturers and suppliers to collaborate and establish more agile semiconductor supply networks, which can help create a more flexible future. Companies are now refocusing their efforts away from China and towards India and other developing nations. According to a report published on April 27, 2020, by The Economic Times, approximately 200 companies in the United States plan to relocate their manufacturing base from China to India following the general elections. Many of these reforms are expected to occur in the coming years. In recent years, India has developed capabilities in smartphone assembly and is now the world's second largest handset market. Foxconn, an Apple supplier, has several factories in India. Consumer durables conglomerate Haier is expanding its manufacturing base in India, and South Korean company Samsung has recently opened a large handset manufacturing facility in India. This, combined with rising local consumption, creates an ideal environment for chip manufacturers to set up businesses in India. Despite supply constraints caused by the pandemic, the global semiconductor market is expected to reach a value of USD 522 billion in 2021, representing a 12.5% year-over-year increase, according to International Data Corporation (IDC). The demand for consumer, computing, 5G, and automotive semiconductors will continue to grow rapidly, however the supply constraints may persist until till 2022.   The industry is expected to continue to struggle to keep a balance across different industry segments, while investment in capacity would improve the industry's resiliency in a few years. Looking forward to 2021, IDC forecasts continued strong growth in global semiconductor sales as cloud technology adoption and demand for data and services remain unchanged. According to International Data Corporation, worldwide semiconductor revenue grew to USD 464 billion in 2020, an increase of 10.8 % compared to 2019. Overall, the semiconductor industry is on track to deliver another strong year of growth this year as the super cycle that began at the end of 2019 strengthens. The market for semiconductors in computing systems, such as PCs and servers, grew 17.3 percent year on year to USD 160 billion in 2020, outpacing the overall semiconductor market. The IDC also forecasts that computing systems revenues will grow 7.7% to USD 173 billion in 2021 while the mobile phone semiconductor revenues will grow by 23.3% in 2021 to USD 147 billion. Automotive sales recovered in the second half of 2020, but supply constraints in the automotive semiconductor market will last until 2021 for some products. In 2021, the automotive segment is expected to grow by 28-36% year on year.   People all over the world have been experimenting with new ways of working, studying, and communicating via videoconferencing and other technologies in recent months. Such trends may have a long-term impact on semiconductor demand and open new avenues for existing products and services. For example, demand could increase for semiconductors that enable servers, connectivity, and cloud usage as online collaboration grows. ;
Impact of COVID-19 on Global Pharmaceutical Industry
16-08-2021

Impact of COVID-19 o...

The global pharmaceutical market has been growing rapidly due to the increasing prevalence of chronic disease and the increasing adoption of modern technologies, which is driving the evolving pharmaceuticals sector in the face of COVID-19 globally. The COVID-19 outbreak has caused stock market volatility, strict border controls, and nationwide lockdowns, all of which are putting a strain on the pharmaceutical industry and forcing industry and governments to reconsider drug supply chains.   Since the pharmaceutical industry operates on a global scale, the pharmaceutical industry has a higher reliance on logistics than many other industries. The current pandemic's logistical challenges have resulted in a number of unintended consequences. As warehouse and fulfilment centre staffing continues to be cut, shipping delays have become the norm. Workers in drug or supply manufacturing facilities have also been unable to do their jobs at full capacity, or even at reduced capacity, depending on local social regulations, further squeezing the supply pipeline. The impact and the lockdown in India, United States, China, and other countries, further increases the chances of shoot up in the cost of raw materials and drugs. 13% of the brand and generic manufacturers are based out of China and according to the Food and Drug Administration (FDA), as of 2018, 24% of medicines and 31% of medical ingredients were imported from India. The cost of Paracetamol in India has gone up to Indian Rupees 400-450 per kilogram from Rupees 250-300 per kilogram. The profit for generic drugs is very marginal and the supply chain is lean. The active pharmaceutical ingredient (API) plant for these is often overseas with India and China, leading the API market. The API may be manufactured in a single plant and each stage holds very little inventory.   The Indian pharmaceutical industry is the world's third largest by volume, and the country's market produces 60% of all vaccines produced worldwide. The impact of the coronavirus outbreak in India has highlighted the Indian pharmaceutical sector's reliance on China for API procurement. Manpower shortage in China's manufacturing plants caused supply chain disruptions and product export restrictions from India. This was caused by quarantine policies developed and implemented by various provincial governments in China in response to the virus. The disruption of logistical and transportation systems, which restricted access and movement of products to and from ports, worsened the impact on supplies.   The COVID-19 pandemic caused shortage and increase in demands of certain medications such as Hydroxychloroquine and Chloroquine, which were the most talked about during the pandemic. It is expected that the shortage might not occur for now as companies have stocks at least for the next 5 months. The demand for medical ventilators during COVID-19 pandemic has forced the producers to boost the production to meet the booming demand at the global level. In order to meet the increasing demand, producers had also cooperated with automakers. In order to address the consumer demands of medications, vaccines, diagnostics, and medical equipment such as ventilators, the leading personals are involved in research and development operations, strategic alliances and partnerships, and innovative product releases.   This situation gave rise to digital health as telemedicine/video consultations, health-related videos and apps are gained popularity. Investment in online portals that help doctor-patient interaction increased in 2020-2021. For instance, Wellmind Health, which provides online courses for mindfulness-based cognitive therapy has seen a recent uptrend in the purchase and enquires. Meditation apps Calm and Headspace have also released free digital offerings to help people cope up with panic and anxiety. Due to the current pandemic situation, hospitals in the United Kingdom were also instructed by NHS England to increase telemedicine/video consultations. E-commerce is a thriving industry, and its presence in the pharmaceutical industry is generating a sizable revenue stream. In this current pandemic, e-pharmacy has received a lot of motivation, as it has ensured that patients received their medication despite the lockdown. The rapid adoption of the internet has resulted in increased awareness of health programmes and services, as well as an online registration process that covers functional areas such as patient care, laboratory services, work-based documentation and information exchange, medical records, online registrations and appointments, and payment, diagnostic reports, online blood availability, tracking, and approval processing for drugs, clinical trials, medical devices, vaccines, and other products are all on the rise, putting the e-commerce sector on edge. Big pharmaceutical companies are teaming up in a race to develop the COVID-19 vaccine faster. For example, companies such as AstraZeneca support Oxford University, Pfizer works with BioNTech, and Merck/MSD acquired Themis in 2020.   Pfizer issued a 5-point plan to combat COVID-19 and entered into a global collaboration agreement with BioNTech SE to work on the vaccine. In July, the vaccine showed positive results. Pfizer also announced that it is investing USD 500 million for collaboration with potential biotechnology partners. However, Pfizer's stock price and trading volume increased not only as a result of its current efforts, but also as a result of partnerships with other companies, such as Corning, for the production of Corning Valor glass, which could be used in its packaging. On the other hand, AstraZeneca showed promising results in a 2-Dose animal trial of the COVID-19 vaccine, and its adjusted closing price increased from USD 52.66 to USD 54.25.  In June 2020, Cipla also expanded its partnership with Roche Pharma India. The Jubilant Generics Ltd entered into a non-exclusive licensing agreement with Gilead Sciences Inc for the manufacture and sale of Remdesivir, which has been one of the potential drugs against the fatality of coronavirus in 127 countries, including India. India also unveiled plans to collaborate with Netherlands with an aim to provide digital health facilities. The government launched a PLI scheme for the pharmaceutical industry worth Rs. 15,000 crores. By 2023, India intends to establish a fund worth rupees lakh crores to propel the pharma sector and enable it to manufacture pharmaceutical ingredients domestically. The pandemic has ushered in a revolutionary shift in the healthcare industry, with people becoming extremely cautious about health and wellness, life science organisations involving end-users in trials and drug designs, companies inevitably relying on the latest pharmaceutical innovations to create new digitally driven medical solutions, and rehabilitation centres and yoga as a matter of fact. The new developments in healthcare are embracing personalised focus while reforming and reshaping the industry to a new beginning entirely. Nutritional supplements are on the rise to compensate for an individual's hectic lifestyle, rising public awareness, a focus on preventive healthcare, and the outflow of internet penetration. By 2022, the nutraceutical market in India is expected to be worth USD 8.5 billion and accounting for 3% of the global market share, fuelling it to be a lucrative market to tap in now and in future. The race to develop antiviral therapeutics and a vaccine has fuelled intense global research efforts, which has had a number of short and long-term consequences for the pharmaceutical industry. In many ways, the pandemic has given big pharma a positive image, demonstrating its importance and utility in times of healthcare crisis. Existing drug development and research endeavours have seen the short-term impact of COVID-19. Many logistical issues affecting auditing activities, such as stay-at-home orders, travel bans, social distancing requirements, and a shortage of personal protective equipment (PPE) pose short-term challenges. Clinical trial implementation requires the lab staff interaction with patients, and drug development/bench research necessitates that certain task are done by actual humans in the lab setting. Clinical trial personnel and research teams are devising workarounds based on their specific needs, such as using remote monitoring techniques, developing drive-up patient testing, conducting patient home visits, or, in the case of drug development, staffing only those “essential” employees required to perform non-automated tasks. Larger organisations have implemented front-door temperature checks for all employees entering a facility, and some have employees working in separate shifts. Increased healthcare spending and the growing focus on finding a cure for the pandemic are expected to bode well for the market in the near future. Patients around the world are expected to demand advanced pharmaceuticals as the prevalence of chronic diseases rises. Consequently, the advancement of technology has resulted in the increased adoption of innovative digital technologies to provide better diagnosis and treatment services. These factors are likely to drive growth in the global pharmaceuticals market in the coming years. Manufacturers may begin to diversify raw material sourcing or invest in spreading production across multiple markets rather than in concentrated geographic areas such as China and India. ;
Impact of COVID-19 on the Entertainment Industry
12-08-2021

Impact of COVID-19 o...

In 2020, the COVID-19 pandemic impacted the global theatrical and home/mobile entertainment, as movie theatres and production studios were temporarily closed. As millions quarantined, viewers were forced to stay home for their video entertainment. According to the Motion Pictures Association (MPA), in 2020 the entire global theatrical and home/mobile entertainment market attained a value of USD 80.8 billion, the lowest figure since 2016 and a decline of 18% from 2019. The sharpest decline was in theatrical revenue which dropped from USD 42.3 billion in 2019 to USD 12 billion in 2020. Theatrical entertainment accounted for only 15% of total global entertainment revenue in 2018, compared to 43% in 2019. With global shutdowns, consumers relied on digital (video-on-demand, streaming video, and electronic sell through) for entertainment. Concurrent with the pandemic was the launch of new streaming video services from major studios such as Disney, Universal, and Warner Bros., who joined forces to compete with Netflix, Hulu, and Amazon. As a result, stay-at-home viewers could watch premium TV and movies across multiple screens and providers. While industry analysts had noted that this trend was already underway, many agree that the pandemic has accelerated the rate of adoption. As Per MPA, the trend towards digital entertainment in United States was accelerated in 2020 as revenue climbed to USD 61.8 billion, an increase of 31%. Over three-quarters of total theatrical, home/mobile entertainment revenue had been accounted for by digital media. Globally, there are now 1.1 billion online video subscribers, a 26 percent increase from 2019. In the United States, the theatrical, home/mobile entertainment market in 2020 reached a value of USD 32.2 billion, down 11% from USD 36.1 billion in 2019. Theatrical entertainment dropped to USD 2.2 billion accounting for 7% of the revenue. In 2019, the revenue for theatrical entertainment was USD 11.4 billion. Despite their continued decline as an entertainment source, in 2020, even physical entertainment generated more revenue than theatrical. For the year, physical entertainment revenue totalled USD 3.5 billion, a decline of 26% from 2019. In 2020 physical entertainment accounted for 11% of total revenue. With production studios temporarily closed in 2020, the number of original scripted TV shows across broadcast, cable, premium pay, and streaming fell for the first time in over a decade. There were 493 scripted programmes in the United States in 2020, down from a record high of 532 in 2019. Due to production delays, many television shows were rescheduled for the 2021-2022 television season. Furthermore, it has been reported that the production slowdown has impacted streaming video. In the first few months of 2021, the number of original shows on Netflix fell by 12% year on year.   The number of movies released in the United States in 2020 decreased as studios pushed release dates into 2021 (and beyond). The impact of this worldwide film and TV production shutdown was perhaps felt nowhere more than in India, where the world's most prolific film industry was forced to go on a hiatus. According to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young (EY), the industry fell 24% in the pandemic. Television channels saw a spike in viewership, as people were primarily at their home and television sets or mobile phones was the only way to connect with the outer world. But this did not result in a similar increase in revenue.   Every segment had witnessed a decline in revenue except digital and online gaming. According to an EY study, digital media has surpassed print, and online gaming has surpassed the film entertainment segment in 2020. Last year, a few films were forced to withdraw from theatres and were eventually released on India's OTT platform. However, many big-ticket films from mainstream and regional languages had also been delayed because various state governments ordered to close the cinema halls. OTT platforms have seen a rise in consumption in duration, and across demographics and devices. In 2019, the industry had revenues of Rs 173 billion in India as per the KPMG report. To keep up with demand, major players such as Amazon Prime Video and Netflix switched from HD to standard definition to reduce the strain on bandwidth. Moreover, with the launch of Disney+Hotstar, the audience was spoiled for choice.   Due to the consumer behaviour rapidly evolving, there is an ever-increasing demand for the OTT platform, which is expanding to new demographics and locations. It coupled with the continued proliferation of internet users with cheap data and smartphones led to a rise in subscriptions. Subscriptions for top OTTs grew by 55-60%. As a consequence of the lockdown revenue from this industry was hit big time. The annual box office earnings of Bollywood stand at a little over Rs 3,000 crore, but in the year 2020, it was around Rs 500-600 crore only.   The pandemic's restrictions also impacted various private events, movie promotions, movie shootings, and celebrity appearances. Not only the film industry, but also the event industry, suffered greatly as a result of the crisis, which affected approximately 10 million people. In India, when COVID-19’s first impact was witnessed, multiple production houses indefinitely postponed various films including Sooryavanshi and 83, among others. Many of the postponed films eventually released on OTT platform Disney+Hotstar. Similarly, a lot of big-ticket releases in regional languages had been delayed in 2020. The news segment, on the other hand, has been a notable exception. The lockdown benefitted news channels because more and more people turned to them for updates on the coronavirus and lockdown measures. Television remained the largest segment, while the digital media had overtaken print, and online gaming had overtaken film entertainment. With lockdown now easing, content supply appears to be restarting, albeit with baby steps. Cinemas and events, however, continue to be shut and face significant uncertainty regarding return to normalcy in the near-term. Advertisement spending appears to be recovering, and with a strong festive quarter expected in Q3 FY21, marketing budgets are likely to recover faster. As a result, the overall reduction in advertising expenditures may be less than the contraction in economic activity. Due to this situations, industry players have no choice but to experiment with digital and virtual spaces in order to gain new exposure, which is expected to grow significantly due to the lockdown restrictions along with the increasing comfort and confidence of the existing digital citizenry. Online gaming consumption is expected to become even more popular with younger populations, while older people will favour traditional TV content delivered through a digital ecosystem. Innovation and the ability to leverage technology to reduce lead times will be critical here, as the focus on new content may result in working capital being locked up across the value chain, leading to higher cash flow requirements. ;
Impact of COVID-19 on Global Crude Oil Market
08-08-2021

Impact of COVID-19 o...

The crude oil market experienced an unprecedented overreaction in the first half of the pandemic year 2020, and the global crude oil dynamic has shifted significantly over the last decade. The COVID-19 pandemic has disrupted the global supply chain, and the contraction of energy demand has caused global crude oil to fall to historically low levels. Countries which are net exporters of oil are experiencing an unprecedented double blow a global economic contraction driven by the COVID-19 pandemic and an oil market collapse with the benchmark price for United States crude oil, the West Texas Intermediate, briefly underwent negative for the first time in history in April 2020. On the basis of an oil price of USD 30 per barrel, the International Energy Agency projected that oil and gas revenues for a number of key producers will fall by between 50% to 85% in 2020, compared to 2019, yet the losses could be larger depending on future market developments.   The interruption in negotiations amid the Organization of the Petroleum Exporting Countries (OPEC) and its partners led to what will likely be a tenacious downfall in oil prices. Brent oil prices have collapsed by about 60% since the start of the year 2020, while crude futures in the United States had fallen around 130% to levels well below; this has led to drilling breaks and extreme expenditure cuts.   As the COVID-19 pandemic spread, Saudi Arabia, the world's second-largest oil producer after the United States, urged fellow Organization of Petroleum Exporting Countries (OPEC) members and Russia to cut production. After forming an alliance with OPEC in 2016 to control the price of oil through production cuts, Russia, the world's third-largest oil producer, resisted the call for further cuts in response to the pandemic and sought to gain market share in anticipation that the profitability and output of the United States' major assets would fall in the face of lower prices.   Saudi Arabia, along with OPEC members- Iraq and the United Arab Emirates, had begun to reverse production cuts. By the beginning of April 2020, Saudi Arabia alone reached a record production of 12.3 million barrels per day, an output exceeding the pre-pandemic consumption levels of Japan, Germany, France, the United Kingdom, Italy, and Spain combined. The production surge coincided with an International Energy Agency (IEA) estimate that global demand for oil was down by nearly 30 million barrels per day due to the COVID-19 pandemic-related shutdowns. With demand down, adding petroleum to an already saturated market resulted in a near-record level of 535.2 million barrels of crude petroleum stockpiles in the United States in May 2020. Following a sharp drop in the early months of the pandemic, crude petroleum prices began to rise at the end of April 2020. Producer prices for crude petroleum recovered partially from April to June, and import prices recovered similarly from April to July. The price rise began with a decrease in supply, with a positive shock to demand eventually contributing as well.   World petroleum demand is expected to fall from 2019 levels in both 2020 and 2021. One factor boosting demand expectations is China's commitment to increase petroleum imports from the United States as part of a trade agreement—a sign of continued demand recovery in the Asian country. The industry's major drivers, such as rising population, expanding automobile industry, rising demand from Asia Pacific, and rising number of oil reserves, are expected to aid market growth. The resurgent rate of virus spread appears to have dampened optimism about the mass rollout of coronavirus vaccines in recent weeks. It has resulted in oil producers trying to orchestrate a delicate balancing act between supply and demand as factors including the pace of the pandemic response continue to cloud the outlook. The 13-member group estimated that global oil demand would rise by 5.9 million barrels per day in 2021 to average 95.9 million barrels per day.   China, the world's largest crude importer, has seen an increase in COVID-19 cases as well. Furthermore, despite an expected rise in refining rates in the second half, Beijing's crackdown on the misuse of import quotas, combined with the impact of high crude prices, could cause China's oil import growth to be the slowest in two decades this year.   Despite a decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to increase production for the rest of the year, global oil markets are expected to remain insufficient. To create fiscal space in oil-exporting developing countries, reduce the risks of unsustainable debt, corruption, and illicit financial flows (IFFs), and catalyse a transition to a cleaner and more sustainable future, a timely and coherent response involving both concessional lenders and private financiers is required.   Related Links:- Production Cost Report Store Price Trends ;
Impact of COVID-19 on Global Hand Sanitiser Market
04-08-2021

Impact of COVID-19 o...

The global hand sanitiser market reached USD 9712 million in 2020 while growing at a CAGR of 82.4% during the historical period of 2016-2020. With the increasing vaccination drives and an expected decline in the number of cases globally in the coming years, it is predicted that the demand for hand sanitisers will reduce.   Due to the increased awareness amongst consumers about hygiene, various regulatory authorities-initiated awareness campaigns to encourage the increasing usage of hand sanitisers in the North American region. The Canadian Patient Safety Institute (CPSI) introduced the Canada Hand Hygiene Campaign, which has been conducted consistently with several themes promoting optimal hand hygiene practices.   Giant manufacturers in the United States have been branching out to launch production lines for hand sanitisers, especially in 2020, in order to supplement their segments' sales. The local players in the country are also introducing new products to fulfil the growing current demand due to the aggressive spread of COVID-19 throughout the region. For example, in March 2020, the vegan beauty brand, Sparitual, pledged to produce 75% alcohol-based hand sanitisers from its Los Angeles-based factory to help fight the transmission of COVID-19. Owing to high price sensitivity, a large number of private-label players are introducing hand sanitisers at lower prices, thus gaining considerable market shares. Purell is among the leading brands holding a significant amount of market share across the country. An increase in health expenditure, improved living standards, rising awareness regarding hand hygiene, and supportive policies of government organisations such as the FDA (Food & Drug Administration) and WHO (World Health Organization) towards the need for sanitation are predicted to increase the demand for hand sanitisers, which will ultimately lead to foster the growth of global hand sanitiser market, during the forecast period. For instance, in June 2020, Procter & Gamble (P&G), a United States-based multinational consumer goods corporation, made an announcement to donate USD 10 million as well as to launch a new ‘safeguard sanitiser’ to fight against the COVID-19 pandemic. With the upsurge in need for hand hygiene products worldwide, P&G estimated to raise production capacity to 45,000 litres of the hand sanitiser per week in 2020. These factors have been bolstering the growth of the global hand sanitiser market during the pandemic period and are likely to continue augmenting the demand for the product in the coming years as well. With higher hygiene expectations from customers and public health authorities, Skin health and surface hygiene expert GOJO Industries –which has factories in Ohio and across North America, as well as in Latin America, South America, Europe, and Asia, also made substantial investments to increase its capacity and meet the rising demands. GOJO has been running its manufacturing and distribution facilities 24*7 in order to increase the production of PURELL hand sanitisers while also working with existing suppliers to dramatically increase raw materials and packaging. Moreover, GOJO is also forging creative partnerships with a new organisation for sourcing additional components such as bottles, pumps, and caps. Despite several brands making a way into the hand sanitiser market, PURELL remains dominant in the hand sanitiser market.   Vi-Jon Inc., a manufacturer, known for its flagship brand, Germ-X hand sanitisers invested USD 70 million to expand its capacity at Smyrna, Tennessee, and St. Louis facilities. Witnessing a “step change” in hygiene practices, Vi-Jon is planning to expand its manufacturing facility to facilitate the exponential demand for hand sanitisers, which is not expected to cease any time sooner.   The region has been witnessing growth in demand for hand sanitisers owing to the COVID-19 pandemic, and this peak is likely to continue for the next two years and would start to normalise after 2022, thereby expecting an absolute growth in revenue and volume, respectively, between 2019 and 2026.   Dove, a Unilever-owned brand, made a debut in hand sanitisers, rolling out two varieties- Dove Deep Moisture Hand Sanitiser and Dove Shea Butter Hand Sanitiser. Introducing moisturising sanitisers that claim to be 99.99% effective against germs and viruses, Dove ensures that their hand sanitiser formula maintains the quality of the skin and keeps hands protected from germs. The hand sanitiser market has been witnessing robust growth in demand, which is providing impetus to its production as well. The year-on-year increase in hand sanitiser demand in the United Kingdom was estimated to be the highest, followed by Italy, while the United States also witnessed increased production in2020-2021 owing to the rising cases of coronavirus and the Indian manufacturers saw a ten-fold increase in demand as of February 2020. Emami, too, expanded its flagship brand Boroplus into the hand sanitiser segment with the introduction of BoroPlus Advanced anti-germ hand sanitiser. Nivea India also started utilising this factor in India for producing hand sanitisers to fight against COVID-19.   During the COVID-19 outbreak, even alcoholic beverage manufacturers, such as Bacardi, have become sanitiser producers owing to the growth potential and significant profit margins. Due to the lockdown and prohibition on the sale of liquor in many areas, liquor companies with unused facilities are looking to hand sanitisers as a source of revenue. ITC Ltd too has launched a hand sanitising liquid under the Savlon brand named Savlon Hexa. The Department of Food and Public Distribution (DFPD) in India collaborated with industry and state governments to encourage sugar mills and ethanol producers to produce more sanitisers. As a result, over 900 distilleries and independent units were granted permission in January 2021 to manufacture hand sanitisers considering the booming demand, resulting in the country developing an installed capacity of 30 lakh litres per day in a relatively short period of time. Previously, India produced only 10 lakh litres of hand sanitisers per year, which was primarily used in hospitals. However, given the critical role of sanitiser in the fight against COVID-19 with the rising cases of COVID-19 and the approval of the World Health Organisation (WHO) for using alcohol-based sanitisers to curb the transmission of the virus, the demand has increased tremendously. This year, until May 31, the country produced approximately 3.9 crore litres of hand sanitiser. Dalmia Bharat Sugars & Industries (DBSIL) was among those firms that sprung to action on sanitiser front. The New Delhi-headquartered firm, with four sugar mills in Uttar Pradesh and Maharashtra, set up sanitiser manufacturing plants in three facilities at Sitapur (Uttar Pradesh), Shahjahanpur (Uttar Pradesh) and Kolhapur (Maharashtra). These three units have a combined capacity of 45,000 litres per day. Additionally, to attract end-users, major market players have also started developing several variants of sanitisers. This has led to the introduction of fragrances or scents in hand sanitisers. These innovations to add fragrances have offered positive dividends, thereby augmenting the market growth. The market is also witnessing an influx of bio or organic-based hand sanitisers in many countries. As people are getting aware of the adverse effects of chemicals present in hand sanitisers, they are more inclined to purchase organic hand sanitisers. Natural hand sanitisers are the best suitable for people that are prone to suffer from skin problems such as eczema or psoriasis. Dr. Bronner's, for example, introduced the Peppermint-scented Organic Hand Sanitiser, a certified fair-trade and organic product containing organic glycerine, as there were increasing cases of dry hands and flaky skin owing to the rising use of alcohol-based sanitisers. The rise in demand can be gauged from the fact that the hand sanitiser market saw a growth of 53% in February 2020 during the early days of the COVID-19 pandemic in India. The personal hygiene market is set to cross USD 15 billion by 2023, and the hand sanitisers segment alone will be worth more than Rs 2000 crore by the year 2025.   This surge in demand has prompted some third-party sellers to inflate their prices on platforms including Amazon and eBay. For instance, Defendol hand gel marketed in the United Kingdom, which is sold at 3.49 Euros in retails stores, is being sold for 109.99 Euros on Amazon by an online vendor. The online platforms help purchasers become acquainted with a wide range of hygiene and personal care products that are typically not readily available in retail stores, which is a key factor that will increase segment share. Consumers can place orders from the comfort of their own homes, and product manufacturers and vendors can reach audiences in remote locations with the presence of online retail platforms.    The coronavirus outbreak has been a significant driver of the sanitisers market's growth. People understand that hygiene is an essential component of safety in order to be healthy. As a result, the outbreak, combined with hygiene concerns, is expected to increase demand for sanitisers in the coming years. Once offices, schools, colleges, and public spaces reopen fully, the demands for hand sanitisers will grow as nobody will be willing to come in direct contact with people in public spaces. ;
Piramal Pharma Completes the Acquisition of Hemmo Pharmaceuticals
23-06-2021

Piramal Pharma Compl...

Piramal Enterprises is a globally leading business conglomerate which operates in the Pharma, Financial, and Real Estate industries. Piramal Enterprises invested heavily in its domestic formulation business in order to expand its pharma business. Piramal Pharma Limited is a subsidiary of Piramal Enterprises and offers a huge portfolio of pharmaceutical products and services across the globe. The company operates through its end-to-end manufacturing capabilities, which are spread out across 14 global facilities, and its global distribution network of over 100 countries. Piramal Pharma Limited has three sectors, namely, Pharma Solutions, Critical Care, and the Consumer Healthcare business. Pharma Solutions is an integrated contract development and manufacturing business, which Critical Care is a hospital generics business. The Consumer Healthcare business deals with the sale of over-the-counter products in India.   Hemmo Pharmaceuticals is India’s first and biggest manufacturer of synthetic peptides. The company has been operating in the peptides industry for over 38 years and caters to the pharmaceuticals, research and veterinary industries, both domestically and globally. With over 38 years of experience, heavy investment in R&D, well-equipped infrastructure and international regulatory approvals, Hemmo Pharmaceuticals is on track to become a leading company on the global scale. With a workforce of over 250 employees and a world class manufacturing facility, Hemmo Pharmaceuticals is able to meet the needs of its consumers regularly and satisfactorily.   Piramal Pharma entered into an agreement to acquire a 100% stake of Hemmo Pharmaceuticals. Piramal Enterprises announced that the agreement has been successful and the acquisition has been completed. The value of the agreement was speculated to be an upfront amount of rupees 775 crores along with additional earn-outs based on the achievement of milestones. This deal is expected to be a major boost for Piramal Pharma, allowing it to enter into the rapidly emerging peptide industry. Hemmo Pharmaceuticals is one of the few companies that manufacture pure synthetic peptide API around the world. This capability will help Piramal Pharma immensely, enhancing its ability to offer integrated services globally.   The Executive Director of Piramal Pharma Limited, Nandini Piramal, stated that the excellence and quality track record of Hemmo Pharmaceuticals led to the decision to acquire the company. She went on to say that the work of Hemmo Pharmaceuticals was of a very high standard and difficult to replicate, and offering this to their consumers was very exciting and delightful. According to her, this deal is one of the many examples of their profitable growth strategy. The CEO of Pharma Solutions, Peter DeYoung, spoke about the increased use of peptide drugs in oncology, treatment of obesity and diabetes. He also mentioned that the increasing need for therapies of rare diseases and orphan drugs has led to the subsequent rise in the need for peptides, and that the acquisition will help to meet this need and provide innovative solutions, which will reduce the burden of diseases on patients.   The Promoter and Managing Director of Hemmo Pharmaceuticals, Madhu Utamsingh, expressed his excitement about the transaction, stating that Piramal Pharma Solutions was the perfect partner to take their business to the next level. He believes that the deal will also benefit the employees of Hemmo, giving them the opportunity and necessary expertise to provide integrated services worldwide.  The acquisition is expected to involve the addition of more than 250 employees to Piramal Pharma Solutions, including numerous PhD scientists and a team of more than 60 industry experts. The deal was taken forward after a lot of consideration and discussions by both the companies, and is expected to bolster their growth immensely. ;
Yamaha Motors Plans to Double its Local Market Shares by Launching Multiple Products
21-06-2021

Yamaha Motors Plans ...

Japanese automobile company Yamaha Motor is working on doubling their local market share by the next five years by deploying a number of products in their premium motorcycle and scooter segments. As of now, the company boasts a 3.7% market share and is considering having a tighter hold on their 125cc scooter and 150 and 250cc motorcycle segments to attract the newer generation of customers. Overall, their goal is to grow their market share to 8.7% by 2025.   According to Shibamoto Fumi, the Yamaha Motor Group Chairman of India, the new generation aims to own exciting, stylish, and sporty products, and therefore to achieve their goal of reaching 8.7% market share by 2025, they'll need to strengthen their hold on the 125cc scooter and 150cc and 250cc motorcycle because that segment majorly comprises of the newer and younger customers. The company has 1.55 million units of installed capacity and has spent Rs.1600 crores in India since 2015. Yamaha Motor, which sold 524,186 motorcycles, down 9.35% last year, already boasts a 19% market share in the 149-250cc motorcycle segment. The company has launched the latest products in this area. On Friday, the Yamaha FZ-X was priced at nearly Rs 1.17 lakh. Overall, sales of motorcycles, scooters, and mopeds were down 13% to 15.1 million units. Even though motorcycle sales have been on the decline for the past two years, the president of Yamaha motors feels that the future of the Indian motorcycle industry is "strong and secure". According to him, the pandemic has dramatically changed consumer purchasing behaviour. It has influenced how people prefer to travel as more and more people are shifting to personal travel rather than sharing and public transport. The above factor makes the industry optimistic about its future.   To take full advantage of the next holiday season, auto retailers are also reinventing their consumer reach and engagement tools and depending on a variety of digital activities, which is critical to attaining this year's industry goals. The company is working on vaccinating most of its workforce as soon as possible so as to increase production since they are operating in a single shift at both plants. They have dealers working in the green zone with a limited staff to maintain the covid guidelines and focus on inventory optimisation before resuming the entire operation. According to Sitara, they are expecting quick market recovery and stability since the state government ordered the blockage in a clear time frame; hence, the companies could plan their economic activities efficiently and have not been hit as badly as they used to be. Yamaha motors have also employed a dedicated team at its Japanese headquarters to work on a new electric vehicle platform for India and other worldwide markets. They have been working with Gogoro, especially for electric vehicles. According to Sitara, they already have the required technology and skill to manufacture electric vehicle models. Still, they are looking into factors such as pricing, performance, and infrastructure before giving this project a green flag. ;
Rising Overseas Demand Gives a Ray of Hope to Jewellers
20-06-2021

Rising Overseas Dema...

India's jewellery manufacturers and diamond polishing units are seeing a ray of hope from the recently opened international markets post the COVID-19 lockdown restrictions. Several of these businesses have witnessed a significant increase in orders from retailers in China, the Gulf countries, and certain Western countries in the last three months. According to the Gems and Jewellery Export Promotion Council (GJEPC) data, the gems and jewellery sector shipped consignments worth Rupees 25,266 crore in April and Rupees 21,188 crore in May. This compares to April 2019 exports of Rupees 19,597 crores and May 2019 exports of Rupees 22,151 crores. Colin Shah, the chairman of the GJEPC, said that last month's (May) results would have been better if the airports had not been closed, and local industrial units and supply lines hadn't been interrupted by mounting COVID-19 cases. He added that the situation has improved; the entire world is now opening up. The United States and China markets are performing well, while Europe and the Gulf countries are catching up. During Valentine's Day and Mother's Day, there was an increase in demand from the Western markets. India is the largest centre for polishing 'roughs' (rough diamonds) into fine diamonds, in addition to jewellery production. Indian diamantaires imported rough diamonds worth Rs 21,853 crore in April and May of this year. The industry acquired roughs worth USD 9,214 crore in May, compared to USD 6,978 crore in May 2019. Richa Singh, managing director (India), Natural Diamond Council (NDC), a body representing top miners, said that they would be more stable in the coming months, and the industry will do well across domestic and export markets. She added that e-commerce had advanced significantly during this time, and the usage of websites and social media for research and discovery has increased. In B2B export, the use of digital interfaces will become more common. India is the most popular country for sourcing gems and jewellery, according to NDC. In FY20, the country exported USD 18.66 billion in cut and polished diamonds, accounting for roughly 64% of total gems and jewellery exports. The United States contributes for approximately a quarter of the country's total gem and jewellery exports, with Europe, Japan, and China making the top five importers. Export growth is encouraging for the industry, which is dealing with a significant drop in domestic demand. According to industry sources, retail sales have dropped by 60 percent to 80 percent since the pandemic began last year. Between September and February of last fiscal year, when COVID-19 cases were down across the country, the industry saw meagre sales. Joy Alukkas, CMD of Joy Alukkas Jewellery, a prominent Indian retailer, said that there were no sales in April and May due to lockdowns across states in India. The coronavirus outbreak crippled India's economy. The jewellery industry, like many others, was hit hard by a long list of cancelled or postponed events, shows, exhibitions, and weddings. A few years ago, the industry's surge projected that 2020 would open up a plethora of new business opportunities. To meet the required goals, production, export, and supply were all aligned. The spread of coronavirus took everyone by shock. The business suffered a dramatic decline as six to ten-carat diamond pieces and high-end chunky jewellery suffered a significant downfall. The COVID-19 disruption has led jewellery retailers in India to reassess their current business models, with online retail adoption accelerating across all categories during COVID-19. Somasundaram PR, WGC Managing Director, India, said that the online gold market in India is seeing a massive push from both digital firms, who see this as an opportunity, and huge jewellers, who view this as a vital addition to their brick-and-mortar model, even though it is still a relatively small percentage. ;
Eisai and Bristol-Myers form a Global Strategic Partnership to Develop a Cancer Drug Candidate
18-06-2021

Eisai and Bristol-My...

Bristol-Myers Squibb Co and Eisai Co have announced a USD 3.10 billion agreement to jointly develop and market an experimental cancer drug. According to the companies, Bristol-Myers will pay Eisai USD 650 million, covering research and development costs, and the company will be eligible for up to USD 2.45 billion in milestone payments. MORAb-202 would be developed and marketed jointly across Asia, Europe, the United States, and Canada. In May, Bristol-Myers had a USD 1.56 billion deal with Agenus Inc to develop and market an experimental drug for immuno-oncology treatments, including non-small-cell lung cancer. In a market currently dominated by Keytruda, Merck & Co's rival treatment, the drug-maker has been counting on sales of its Opdivo drug to treat similar cancers. MORAb-202, Eisai's drug, is in the early stages of development and is being developed to treat solid tumours such as ovarian, lung, and breast cancers. According to the companies, Bristol-Myers will pay Eisai a royalty on sales outside of the collaboration territories. Outside the collaboration territories, Bristol Myers will be entirely responsible for developing and commercialising the medicine. MORAb-202 will continue to be manufactured and distributed globally by Eisai. MORAb-202 is Eisai's first ADC, and it uses an enzyme cleavable linker to join Eisai's in-house developed anti-folate receptor alpha antibody and Eisai's anticancer agent eribulin. It's a potential best-in-class folate receptor alpha ADC with a favourable pharmacological profile and single-agent activity in advanced solid tumour patients. The companies intend to move this asset into the registrational stage of development as early as next year. Haruo Naito, Chief Executive Officer at Eisai, said that MORAb-202 combines Eisai's in-house discovered antibody and payload using the company's advanced chemistry capabilities. He added that their collaboration with Bristol Myers would accelerate the development of MORAb-202 to bring an impactful treatment option to patients globally. Giovanni Caforio, M.D and chief executive officer, Bristol Myers Squibb, said that this global strategic collaboration with Eisai is an important fit for Bristol Myers as it extends their leading position in oncology with an asset that complements their broad, solid tumour portfolio and leverages their deep internal development expertise. With over 10,000 workers globally, Eisai is a leading global research and development-based pharmaceutical firm headquartered in Japan. The company's human health care (hhc) philosophy defines its corporate mission as "giving first thought to patients and their families and to increasing the benefits health care provides." The company aspires to live up to its hhc philosophy by developing innovative products in therapeutic areas with many unmet medical needs, such as oncology and neurology. In the spirit of hhc, Eisai goes even further by combining scientific knowledge, clinical capabilities, and patient insights to develop innovative solutions that address society's most pressing unmet needs, such as neglected tropical diseases and sustainable development goals. Bristol-Myers is a global biopharmaceutical company whose mission is to discover, develop, and deliver innovative medicines that help patients prevail over serious diseases. MORAb-202, which targets FRα-positive solid tumours, is now undergoing a Phase 1 clinical study in Japan and a Phase 1/2 clinical study in the United States. The linker is enzymatically cleaved after MORAb-202 enters the target FRα-positive cancer cells, releasing eribulin, Eisai's anticancer agent, from the antibody and resulting in its antitumour activity. MORAb-202 also showed a bystander effect in non-clinical studies, with antitumour action on the FRα-negative cancer cells that surround the FRα-positive cancer cells. Eribulin is currently approved in over seventy-five countries throughout the world to treat breast cancer, including Japan, Europe, the United States, China, and other countries. ;
Tesco’s Sales in the United Kingdom Decline as Pandemic Restrictions Ease
18-06-2021

Tesco’s Sales in the...

Tesco is one of the largest retailers for consumer goods in the world. They provide a vast range of goods from food to fashion. The company has grown immensely since its foundation in 1919, with a current workforce of over 400,000 employees globally. The company was founded in the United Kingdom and now has its stores in 11 countries worldwide. Tesco is the largest retailer in the United Kingdom, with over 2,200 stores in this region.   The COVID-19 pandemic had an impact on the sales of Tesco, but surprisingly, it was a positive one. With lockdowns implemented all over the world and no access to supermarkets, delivery of groceries and other essentials to houses was the need of the hour. Tesco capitalised on this opportunity and increased its home delivery services to meet this essential need. In the United Kingdom, Tesco mobilised its logistic network to meet the increasing demand of online groceries. The sudden drastic effects of the pandemic resulted in stockpiling of essentials by the public, which increased the sales of Tesco tremendously. Data shows that the sales of Tesco have increased by 9.2% in the year 2020 as compared to 2019.   Following this growth at the start of the pandemic, the past few months, with the ease of the lockdowns in the United Kingdom, have not been so friendly to Tesco. With people flocking to the reopened pubs and restaurants, the sales of supermarkets reduced significantly. The CEO of Tesco, Ken Murphy, stated that the profits from people eating at home slowly started to decline as the lockdown was eased. Data shows that retail sales in the region fell drastically in the last month, leading to the fall of Tesco’s share price by 2.6%. The extra costs due to the pandemic also affected the company significantly. The need to hire temporary staff to cover for workers was a huge expense for Tesco. Also, ensuring its stores are safe with timely sanitation and other methods added to the expenses.   The CEO, Ken Murphy, also said that the shopping habits of people were changing with the ease of restrictions. It was observed that people were visiting shops more frequently now, unlike the trend of shopping weekly once during the lockdown. There were also changes in the products people were buying. With people wanting to socialize and go out again, the sales of general merchandise and clothing increased by 10.3% and 52.1% respectively.   Tesco focused on its retail operations in the fiscal year 2021-2022 to ensure a better recovery for the company. The CEO, Ken Murphy, believes that the strong start the company got off to is a good sign despite the uncertainty of the market. Overall, with the situation slowly returning to normalcy and the costs due to the pandemic gradually reducing, the company expects profits to increase soon. Tesco’s competitors, namely Sainsbury’s and Morrisons, also expect positive outcomes to follow given the ease of the pandemic restrictions. Thus, the competition in the supermarket space will be intense in the coming months. ;
Petronet to Invest 2.6 Billion Dollars on Local Expansion of Liquified Natural Gas (LNG) Infrastructure Over the Next 5 Years
09-06-2021

Petronet to Invest 2...

Petronet LNG is an oil and gas company set up by the Government of India. It was established with the purpose of importing liquified natural gas (LNG) and setting up LNG terminals throughout the country. The company was formed as a joint venture by the Government of India and involves the leading oil and gas players in the country. It is promoted by the Gas Authority of India Limited (GAIL), Oil & Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOCL) and Bharat Petroleum Corporation Limited (BPCL). Petronet LNG offers various services including storage, reloading, regasification, bunkering, gassing up and cooling down, and truck loading facilities as well. The first LNG terminal set up by the company was located in Dahej, Gujarat, with a capacity of 15 million metric tons per annum. More projects are being planned and will get underway in the near future.   Entering into the overseas market and investing in it heavily to ensure success is considered a fundamental step by many. However, in Petronet, this is not the case. The company announced that it is planning to invest USD 2.6 billion over the next five years to expand local infrastructure. The head of Finance of the company, Vinod K Mishra, said that this option is far better than investing in overseas projects, which is “not lucrative” in the present liquified natural gas surplus market. He went on to say that foreign investment in LNG is not profitable as the prices of LNG are very low. While the company was planning to invest in projects in countries like Bangladesh, Sri Lanka, and Qatar earlier, they declared there was no financial incentive anymore to go forward with these projects.   Another reason behind heavy investment in local infrastructure is to increase the share of gas in the energy mix. India wants to increase the current share of 6.2% to 15% by the year 2030. Vinod K Mishra specified that while higher domestic supplies could affect the short term by impacting costly spot LNG imports, imports in the long term would not be affected as the gas consumption of the country is expected to rise.    Petronet is planning several projects in the coming years. The company wants to increase the capacity of the Dahej terminal in the West Coast from 17.5 million tonnes per annum to 22.5 million tonnes per annum. New LNG tanks are being built at the Dahej and Kochi terminals. Added to this, the company is planning to build a new terminal in the East Coast as well. Petronet is undertaking these projects in phases, and these details were given by Vinod K Mishra. In the first phase, the expansion of Dahej Terminal to 20 metric tonnes per annum is being undertaken and the goal is to complete it by mid-2023. Also, a new terminal in the East Coast with a capacity of 5 metric tonnes per annum is being constructed and is expected to be completed by 2025. The company is keen to set up their own LNG fuel stations and is planning to invest 80 billion rupees on this project. A 40-billion-rupee investment to set up 100 compressed bio gas generation plants is also being undertaken by the company.   In this way, Petronet is on track with India’s goal to increase its share in the global LNG market and is taking the necessary steps to help India achieve its goal. The successful completion of the projects would profit the company immensely and increase the economy of the country, leading to more jobs and employment in this sector. This is a promising sign for the citizens of the country. ;
Japan’s Wholesale Prices Rise at Fastest Pace After Thirteen Years
09-06-2021

Japan’s Wholesale Pr...

Wholesale prices in Japan increased at their fastest annual pace in thirteen years, owing to higher commodity costs, indicating that global inflationary pressures are affecting businesses already struggling due to the coronavirus pandemic. The price of goods traded between companies increased for the third month in a row, boosted by the launch of the COVID-19 vaccination in several nations, raising global economic recovery hopes. Amid the coronavirus pandemic, Japan's core consumer price index, an indication of inflation, has been hovering around zero. The increase in wholesale inflation is unlikely to prompt the Bank of Japan to withdraw its massive stimulus any time soon, analysts say, because companies are hesitant to pass on higher costs to consumers. Mari Iwashita, the chief market economist at Daiwa Securities, said that cost-push inflation is beginning to show up. If this is not accompanied by pay rises, Japanese consumers' purchasing power may decline. According to Bank of Japan data, the corporate goods price index (CGPI), which measures the prices firms charge each other for their goods, grew 4.9 percent in May from a year earlier, exceeding the median market forecast of 4.5 percent. It was the highest annual increase since September 2008, when a worldwide spike in food and raw material costs pushed up several prices in Japan. China's factory-gate prices rose at their quickest annual pace in over a decade, highlighting the difficult balancing act that governments must strike to sustain their economies while avoiding undesired inflationary pressures. The rise in raw material costs is especially detrimental for Japan, where pandemic-related state-of-emergency restrictions are cooling consumption and making it harder for retailers to increase prices for consumers. Core consumer prices, the fundamental metric used by the Bank of Japan to determine monetary policy, decreased 0.1 percent in April from a year, marking the ninth straight month of decline. Rising commodity prices, reflecting the global economic recovery, are pushing up wholesale prices for a wide range of items, according to Shigeru Shimizu, head of the BOJ's price statistics division. He went on to say that the data shows businesses are beginning to pass on higher expenses; however, the increase in wholesale pricing is due to external factors rather than domestic demand. Oil and coal prices rose 53.5 percent in May, while nonferrous metals prices rose 41.6 percent, according to BOJ data, as solid demand from the United States and China pushed up raw material costs. Wood and timber prices were also up 9.7 percent, Shimizu added, owing to a global lack of raw materials and increased demand. Scrap prices increased by 91.6 percent. Electricity, city gas, and water prices dropped 3.9 percent among decliners, according to the data. Investors are growing concerned that pandemic-related stimulus measures may push up inflation and force central banks to tighten policy, potentially stalling the recovery. The rollout of COVID-19 vaccines has increased prospects for a global economic recovery, but the pandemic's impacts are still being felt. Japan has fallen behind other major economies in inoculating its population, such as the United States and the United Kingdom, and is now attempting to accelerate vaccinations ahead of the Tokyo Olympics and Paralympics this summer. With weak domestic demand, the world's third-largest economy is anticipated to decline again in the April-June quarter. Import prices increased at their quickest pace since August 2008 in May, rising 25.4 percent from a year earlier, while export prices increased 11.0 percent. ;
Renault to Increase Market Share in the Electric Vehicle Industry, Combining Three French Plants for Electric Vehicles Hub
04-06-2021

Renault to Increase ...

French car manufacturing company, Renault (PA:RENA), is taking significant steps towards creating an electric vehicle (EV) manufacturing hub in the region of northern France to cash in on the rapidly growing electric vehicle market in Europe. The company is expected to announce its plan of combining operations at three existing sites, Douai, Maubeuge and Ruitz, into a fully owned single entity known as Renault ElectriCity. Sources familiar with the matter have said talks with labour representatives regarding the working and pay conditions would be carried out in the near future.   The Chief Executive Officer of Renault, Luca De Meo, has stated that the electric vehicle hub, which could generate more than 400,000 vehicles, is a vital part of their strategy to boost the output of electric and hybrid vehicles. He also believes that this step will be very beneficial to the state of France in terms of jobs and electric vehicle technology. De Meo laid out certain measures the company would have to take to profit from the electric vehicle segment. He declared that the development of an electric vehicle which costs less than 20,000 euros is crucial for the company’s success. While Renault’s ageing Zoe model was their top-selling electric car in Europe last year, De Mayo felt that this model would not be able to compete with the Teslas and Volkswagens.   In the month of January, De Meo formulated a plan to revive the popular Renault 5 as an affordable electric vehicle but was aware of the fact that a few complications would have to be addressed before going forward in this route. The assembly of the Renault 5 in France would require bringing on board several unions and suppliers, which is a significant challenge in itself. Added to this, the year 2020 was a disaster for Renault. The company suffered an estimated net loss of 8 billion euros owing to factors like the COVID-19 pandemic and worldwide lockdowns and was forced to cut down on its workforce and other operating costs. In order to get through this dire situation, Renault borrowed a sum of 5 billion euros from the state which added to the intense pressure they were already facing. The President of France, Emmanuel Macron, questioned the company about the situation of jobs and the factories in Northern France, forcing the company to come up recovery measures quickly.   Renault has acknowledged that the past year has been very tough and stated that the recovery in 2021 would only get tougher. The company is dealing with several issues such as production halts due to shortage of semiconductors, layoffs, and rising competition from other famous carmakers. However, Renault has been showing signs of progress. The CEO, De Meo, unveiled the future Renault Megane electric lineup and will soon add the Megane E-Tech Electric to its Electric Vehicle Roster. The Maubeuge plant is already manufacturing battery-powered versions of the Renault Kangoo delivery van. These are good signs for the company, and it is expected that Renault would gradually recover from the losses and be back on top soon. ;
DuPont-IFF Merger Will Lead to More Deals in the Flavour and Ingredient Sector
03-06-2021

DuPont-IFF Merger Wi...

The merger of International Flavors & Fragrances Inc (IFF) and DuPont's Nutrition & Biosciences (N&B) company is predicted to have a bright future, according to equity analysts. They also expect further mergers and acquisitions in the fragmented but well-funded flavour and ingredient sector. With an estimated revenue in 2020 of more than USD 11 billion and EBITDA of around USD 2.5 billion, the combination of DuPont's Denmark-based N&B division and IFF creates a global leader in high-value ingredients and solutions for the home and personal care, food and beverage, and health and wellness markets. IFF will continue to be the name of the combined company. According to the analysts at the Swiss bank UBS, this practically doubles the scale of the old IFF, giving it a scale advantage of over 50% over its direct competitor and R&D spending almost double that of its peers. With the completion of the USD 26.2 billion merger with DuPont's N&B division and the USD 7 billion purchase of Israeli flavour and fragrance company Frutarom in 2018, IFF will have completed the two largest mergers in the global consumer chemicals sector in the last five years. The DuPont deal was announced on December 15, 2019 and received shareholder approval on August 27, 2020. The company's complementary portfolios position it as a leader in the ingredient categories of taste, scent, texture, nutrition, cultures, enzymes, soy proteins, and probiotics. The New York-based company said that it is entering a new phase guided by a proper customer-centric strategy and commitment to execution, extensive R&D and innovation capabilities, a historical tradition of creativity, and a passion to be an essential partner for its clients throughout the world. Andreas Fibig, Chairman and Chief Executive Officer of IFF, said that they were ecstatic to officially join IFF and N&B, forming a global consumer goods and commercial products value chain leader that will redefine the industry and create a leading ingredients and solutions provider for the customers across a wide range of end-markets. IFF has unveiled a new tagline, brand commitments, purpose, and cultural attributes and values as part of its new brand identity. These brand components, according to the firm, will support the four divisions that now make up the new IFF succeed. The combined taste, food and beverage division of IFF will now be known as Nourish. According to the company, the new identity better aligns the division with the combined company's enhanced capabilities, purpose, and vision. Customers across the consumer goods, industrial, and agricultural sectors will continue to use IFF's Health & Bioscience (H&B) platform as an innovation partner. Fibig added that IFF will be a new company for a new era. Furthermore, he said that through the pandemic, they had seen an acceleration and evolution of consumer trends with long-term consequences. He said that customers in various end markets expect more from their value chain partners, and the new IFF is well-positioned to meet those expectations. Gunther Zechmann, a Bernstein equity analyst, reported considerable demand for the combined company's stock. The number of IFF shares offered to DuPont stockholders was nearly doubled. According to him, this demand shows the faith of investors in the new company. UBS analysts named IFF as one of their top picks for 2021. Due to the benefits of faster innovation from the combined R&D groups, they predict new IFF sales to be roughly 50% greater than its nearest competitor and R&D expenditures to be nearly twice that of most of its rivals. According to the UBS team, new IFF sales are about 75% exposed to the food ingredients sector, which will benefit from the growth they expect. The UBS team anticipates more collaborations this year in the ingredients sector.   Related Link:- Flavors & Fragrances ;
NatureWorks constructing new biopolymer production facility in Thailand
03-06-2021

NatureWorks construc...

NatureWorks LLC, a biopolymer manufacturer, has announced plans to build a completely integrated polylactic acid (PLA) resin plant in Thailand. Officials from NatureWorks, based in Minnetonka, Minnesota, said in a news release that the Thailand Board of Investment approved the project last month. The PLA production plant in Thailand is expected to open in 2024. When fully operational, the new factory will have a capacity of 75,000 tons of Ingeo biopolymer per year and will be capable of producing the whole Ingeo grade portfolio. NatureWorks recently completed the Front-end engineering design work with Jacobs. IAG provided front-end project management and project controls, and Jacobs was selected and managed in collaboration with them. According to the company, the new manufacturing complex will produce lactic acid, lactide, and polymer, making it the world's first fully integrated polylactide factory. Furthermore, the company will construct and operate all three facilities with process and energy integration to improve the efficiency of the Ingeo biopolymer manufacturing operation. NatureWorks is an innovative materials firm that offers a diverse range of biodegradable polymers and chemicals. Natural advanced Ingeo biomaterials are recognised for their unique functional qualities and used in goods ranging from coffee capsules and appliances to tea bags and 3D printing filament, with performance and economics that compete with oil-based materials. NatureWorks now operates in North America, Europe, Japan, and the Asia Pacific, with representatives in over ten countries. The company continues to collaborate with converters, brand owners, and retailers worldwide to help introduce naturally advanced products in a variety of industries. NatureWorks is a joint venture of PTT Global Chemical, Thailand's largest ASEAN integrated petrochemical and refining company, and Cargill, a global food, agriculture, finance, and industrial products and services provider. NatureWorks was the first company to produce PLA biopolymers in 2002 commercially.  NatureWorks expanded their flagship Blair, Nebraska facility in 2013 to a total annual capacity of 150,000 metric tons, making it the world's largest PLA manufacturing plant. NatureWorks also completed a series of upgrades at the Blair facility, allowing the factory to set a new production record in 2019. Since 2015, NatureWorks has offered a variant of their Ingeo biopolymer (Ingeo 3D860) suited for 3D printing. Ingeo is made from biowaste from plants such as corn and sugarcane, milled to extract the starch, and then broken down into lactic acid by microorganisms. Lactic acid is transformed into lactide rings, which are then opened and connected to form the long Ingeo polymer. Ingeo, which is shipped as pellets and then transformed into filaments, accounts for a major fraction of the PLA used in 3D printing worldwide. In NatureWorks' new Thailand plant, the company will be able to complete all the steps in the PLA production process in one facility. NatureWorks' President and CEO, Rich Altice, expressed his delight at sharing these significant achievements as part of the company's next phase of global industrial expansion. He went on to say that the Thailand Board of Investment's permission and assistance was a crucial step in their plans to open the new facility in Thailand and that they would be able to meet the global market demand for sustainable materials and continue to lead the development of high-performance applications, that capitalize on Ingeo's unique material properties, thanks to the capacity expansion at the facility in Blair, Nebraska and the new manufacturing complex. ;
Construction of Chip Factory in Arizona Is ‘Well Underway’, Says TSMC
02-06-2021

Construction of Chip...

The chief executive of Taiwan Semiconductor Manufacturing Co Ltd (TSMC) on Tuesday said that the construction of a USD 12 billion computer chip factory in Arizona had begun. CEO C.C. Wei said the planned factory remains on track to start volume production of chips using the company's 5-nanometer production technology which is planned to start in 2024, at the company's annual technology presentation to clients and investors, which was held online for the second year in a row due to the pandemic. TSMC intends to build up to six factories at the Arizona location over a 10-to-15-year period. With customers including Apple Inc., Nvidia Corp., and Qualcomm Inc, TSMC is the world's most advanced chips manufacturer. As a result of this year's semiconductor shortages, governments around the world are attempting to expand domestic chip production to solidify their supplies. The Biden administration is working with Taipei and TSMC to alleviate the chip shortage and intends to spend billions of dollars to assist domestic chip manufacturers. According to government and industry authorities, a solid domestic chip manufacturing sector is vital for the economy and national security. Even though American chip companies like Qualcomm Inc and Nvidia Corp dominate their industries globally, most of their chips are made in Asia. TSMC is anticipated to be one of several businesses vying for a share of the USD 54 billion in chip industry subsidies approved by the United States Senate last week, including Intel Corp and Samsung Electronics Co Ltd. Samsung is developing a USD 17 billion factory adjacent to an existing facility in Austin, Texas. At the same time, Intel has committed to two more major fabrication factories in Arizona. Some of the government officials are concerned that TSMC subsidies will benefit Taiwan more than the United States, where the business will most likely continue to undertake research and development. However, international companies are not excluded from the United States subsidy package. TSMC, the world's largest semiconductor manufacturer on contract, has risen to the forefront of the global supply chain equation due to a worldwide chip shortage that is affecting industries ranging from consumer electronics to automobiles. Since the COVID-19 pandemic began, its stock has surged, making it the most valuable manufacturing business in Asia. TSMC has a market capitalisation of USD 563 billion, more than double than that of Intel's, another leading semiconductor manufacturer. In April, TSMC unveiled a USD 100 billion investment plan to expand capacity at its factories over the next three years. This figure includes USD 30 billion in expenditures this year. Wei also stated that the company has developed a version of its 5-nanometer chipmaking process that has been certified for use by automakers for advanced applications such as artificial intelligence, though the new offering is unlikely to alleviate current chip shortages due to the scarcity being of less advanced chips. He stated that the volume production of TSMC's next generation of 3-nanometer chipmaking technology would begin in the 2nd half of next year at the company's Fab 18 unit in Tainan, Taiwan. According to Taiwan's investment commission of the ministry of economic affairs, TSMC is building a 12-inch wafer fabrication unit in Phoenix, which is slated to commence volume production in 2024. The majority of TSMC's chips are made in Taiwan, but it also has older chip manufacturing facilities in Washington in the United States and China. TSMC is the world's most sophisticated chip manufacturer. Its investment plans are being intensively scrutinised in the face of a global chip scarcity and new government attempts in the United States and Europe to subsidise semiconductor output. Officials from Europe, Japan, and Korea have also asked Taiwan to assist them in addressing potential economic risks caused by chip shortages in automobiles. Because of the chip shortage, the automobile industry is expected to lose USD 110 billion in sales this year. ;
Nexeo Plastics Acquires Italian Thermoplastic Distributor and Compounder Nevicolor
02-06-2021

Nexeo Plastics Acqui...

Nexeo Plastics, a global thermoplastics resin distributor and an affiliate of GPD, has acquired Italian company Nevicolor, a thermoplastic distributor and compounder. The CEO of GPD, Paul Tayler, believes that this acquisition would help Nexeo Plastics immensely, giving it access to Nevicolor’s Technical and analytical specialisation. He also states that the acquisition will increase GPD’s scale. No financial details regarding the transaction have been disclosed. This acquisition was followed by a statement by the Business Director of Nevicolor, Alessandro Negri, who stated that joining Nexeo Plastics would help streamline and enhance their operations in Europe.   Nexeo Plastics, a United States based company led by CEO Paul Tayler, is a leading global thermoplastic resin distributor, serving customers across North America, Latin America, Europe, Asia, and the Middle East and Africa. They provide a range of value-added services from assistance in material selection to identifying supply chain and inventory solutions. The automotive, healthcare, packaging, 3D printing, cable industries use the services of Nexeo Plastics.  GPD Companies is a holding company formed by One Rock Capital Partners. Their main intent is to form a leading group of global, value added distributors.   Nevicolor, a family-founded business in Italy, provides value-added thermoplastic resins, compounds, and application development services since the past 57 years. The products produced by this company serve a large variety of customers and suppliers in the healthcare, automotive, industrial, electrical, and agriculture sectors. Nevicolor serves over eight hundred customers worldwide and has a portfolio of over three thousand grades of high-quality polymers, which includes recycled materials as well.   Paul Tayler, CEO of Nexeo Plastics, has also stated that the reliable network of international suppliers built by Nevicolor is very impressive and that Nexeo Plastics will put in all their efforts to reach the expectations of the customers and serve them with customised solutions. The Vice President of EMEA at Nexeo Plastics, Joost d’Hooghe, added that with this acquisition, their customers in Europe will have access to a vast offering of tailor-made compounds, lab services, speciality polymers, and recycled material.   In the past year, the deadly COVID-19 pandemic has impacted the plastic industry majorly. The industry is doing well to overcome the repercussions of the past year and Nexeo Plastics has been doing an excellent job. They have taken sufficient measures during the past year itself to ensure that the pandemic does not severely affect their business operations. While the distribution segment has taken a slight hit in the previous year, the compounding sector has continued to operate in full flow.  Overall, the acquisition is expected to be highly beneficial for both the companies involved in terms of revenue and other environmental and social factors as well. It is anticipated that this acquisition will increase the reach of Nexeo Plastics in the European market and increase the overall productivity as well. ;
Effects of COVID-19 on the Global Polypropylene Market
02-06-2021

Effects of COVID-19 ...

Polypropylene, a thermoplastic polymer, is used in various applications such as packaging, healthcare, electronics, and automobiles. It is made by combining propylene monomer and catalysts. With the introduction of technical improvements, new use cases, and growing demand in the Asia Pacific region, the global industry is witnessing expansion. In H2, the Asian polypropylene market is projected to be mixed, as solid demand may be countered by increased supply, fresh COVID-19 outbreaks, and ongoing challenges in the container transport sector. There are concerns about the actual pace of several developments, which could cause delays and lead to spillage into 2022. In Asia and the Middle East, a total of 7.04 million mt/year of polypropylene capacity is expected to come online or restart in H2 2021. This comprises a capacity of 4.3 million mt/year in China and 2.74 million mt/year from other countries. Demand will be aided by continued demand for medical, hygiene, and packaging-related applications, as well as increased vaccinations and economic recovery, but there is demand uncertainty due to a new wave of COVID-19 infections in Asia, particularly in India, the continent's second-largest demand centre. Just like the Asian market, the United States polypropylene market is likely to see strong demand, restricted supply, and the effects of the upcoming hurricane season. Market participants must contend with supplier price increases of 8 cents per pound planned for June, as well as the possibility of higher pricing due to a comeback in feedstock monomer pricing. With significant domestic demand for the resin, a supply surge is anticipated. The market expects prices to fall once operating rates return to normal, but this expectation has been fading since market prices rose in the second quarter. Platts FAS Houston marker had gained 53% since January 4, when it was assessed at USD 1,466/mt, as the region's winter freeze shut many production plants leading to aggravation of an already tight supply. As per the Platts data, the market reached an all-time high of USD 2,734/mt on March 10. While the market recovers from the two storms that hit the United States in August and October 2020, market participants are keeping an eye on the USGC and managing inventory to avoid further damage as the hurricane season in the United States approaches, which runs from June 1 to November 30. Coming to Europe, the polypropylene supply is projected to be constrained due to the global scarcity of containers; new demand is likely to rise as vaccines are successfully implemented across the continent. Healthy orders for polypropylene in the first half of 2021 sent prices to record highs, with the polypropylene homopolymer NWE spot price gaining 83% to peak at Eur1,960/mt in April amid a supply shortage. Market participants agree that polypropylene prices may have hit the ceiling in H1 and could correct downwards going forward. According to one producer, the market has hit its high, but he does not anticipate a significant drop in demand or prices, preferring instead for it to be more controlled as it declines. In terms of the rest of the year, Europe's polypropylene will need to recover from the worldwide container constraint, which caused supply chain delays and higher costs in H1 to bring the market back into equilibrium. Producers and converters alike will look forward to taking advantage of the traditional summer lull and pile up their stock levels in anticipation of an expected boost in demand later in H2. Following the relaxation of lockdown restrictions in Europe, the services sector is likely to see a boost in new demand. Still, the demand trend for automobiles is unclear because of the uncertainty surrounding the recovery of European vehicle sales.   Related Links:-  Polypropylene Price Trends Polypropylene Production Cost Report   ;
Palm Oil Futures Fall for a Second Straight Day
01-06-2021

Palm Oil Futures Fal...

Palm oil is one of the most widely used edible oils in the world. It is used to cook food products, manufacture beauty products, animal feed, biofuel, and in numerous other industries such as pharmaceutical industries. Malaysia and Indonesia are among the top producers of palm oil, contributing to more than 75% of the global palm oil production. However, as coronavirus rages on, stringent lockdown procedures have been brought about to slow the spread of this disease. As a result, several industries have been affected adversely, and consumption of the products has dropped. The palm oil industry is one such industry that is facing the full brunt of the pandemic.   COVID-19 has affected a huge section of the Malaysian populace, with a grand total of 579,000 active covid cases being reported as of now. As a result, the government of Malaysia has decided to impose a two-week nationwide lockdown, which begins on Tuesday. Even though the essential manufacturing and service sectors, including the palm oil industry, are allowed to operate, the local businesses, fearful of the virus, will not be functional in these testing times. Large losses are imminent and, therefore, Malaysian palm oil futures and options have fallen for a second straight day.   Exports of Malaysian palm oil products had increased by 1.5% from April to May, as the covid wave had curved down, and production was in full force. Consequently, the Bursa Malaysia Derivatives Exchange, which is the benchmark for palm oil contracts, had shown a rise of 1.3% in the past month. With a noticeable rise in covid cases, the speed of export went down considerably from the first half of May.  As the curfew news broke out, a lot of brokers were left worried. Estimations suggest that by August, the contract will close at 30 ringgits, which is 0.77% of 3889 ringgits a ton, showing a sharp decline.   However, losses have been limited, as low production was expected during this time. Multiple researchers feel end-May palm oil products in the inventories can be guided only if production is estimated. Predictions made by Southern Peninsula Palm Oil Board suggested a decline of 3.7% from the previous month of May. The volatility of the futures market is sure to increase, as the Malaysian Palm Oil Board preview May’s supply and demand numbers, while estimating the production of palm oil and its derivatives in the same month. As corona virus keeps on terrorising the world, lockdowns and curfews are imminent, and the palm oil industry was bound to get hit. Markets are sure to look glum as the war against COVID-19 continues, with such curfews in place. Brokers striving to find perfect estimates for production and consumption will be expecting a low percentage in the future and option contracts, and exports are sure to remain on the low. However, once this covid wave dies down, and normalcy is restored, businesses will reopen, and local production will bloom, bringing back the stability that everyone yearns for. ;
The Severe Impact of COVID-19 on Global Supply Chains
01-06-2021

The Severe Impact of...

Supply chain management is the management of goods and services that transform raw materials into final products. It involves a business's supply-side activities to maximise customer value and gain a competitive advantage in the marketplace. SCM represents techniques by suppliers to develop and implement solutions that are as efficient and economical as possible. Supply chains management cover everything from production to product development to the information systems needed to deliver the product.   The lack of visibility and transparency is the most significant task for a firm to survive. Most organisations lack transparency in supply chain processes and the analytical tools needed to predict better and prevent disturbances in the supply. This essentially is caused due to the inability to hold the overwhelming amount of data scattered across different processes, sources, and channels. Supply chain organisations face difficulties to keep pace with technological advances and changes that the digital age is bringing to industries and markets.    The coronavirus pandemic has challenged the global supply chain market drastically. COVID-19 has been having a global impact, where many supply chains firms have faced multiple losses- at component suppliers, at manufacturing sites, and logistics, among others. It is difficult but not impossible for firms to have efficiency across all those operations and still survive in the market.  The COVID-19 pandemic has a severe impact on the supply chains of almost all the European manufacturers. Most of them are experiencing a negative impact due to the pandemic. COVID-19 has compelled many companies and industries to rethink and transform their global supply chain management technique. According to a report by the EIU, over-reliance on Asian, and especially Chinese suppliers and clients was already a significant concern for SCM firms before the COVID-19 disruption in 2020. After the outbreak, businesses are planning to diversify supply chains and refocus on local produce where possible.     The COVID-19 pandemic has resulted in an exponential increase in demand for anything on the internet. Companies are investing in tools such as AI and Machine Learning (ML) to successfully operate during the pandemic, which has further fuelled the increase in the adoption of cloud based SCM solutions across SMEs. The IoT revolutionises supply chains by increasing visibility and real-time tracking for raw materials and final products- not to mention life-saving vaccines. Cheap and reliable are making networks more responsive and competitive. Affordable and reliable sensors that provide large amounts of data will be essential.    Over the past year, optimising supply chains was focused primarily on cost efficiency and producing commercially best outcomes. However, recent years has demonstrated that supply chains will need to begin factoring resilience and adaptability into their calculations. Before the COVID-19 pandemic, some companies started anticipating this next evolution, but this crisis has exposed those weaknesses in the supply chain, such that many are looking at what to do next. Such decisions should, of course, focus on the supply side patterns and consider that demand patterns can be unpredictable going forward – the key here is to have a broader approach and ensure that many different perspectives are considered.    Real-time supply chain visibility becomes essential for successful FMCG supply chain execution and unplanned cost avoidance. Additionally, this industry needs inventory management solutions to help end-users keep inventory controlled and move on time. Without careful warehouse control and inventory management, FMCG distributors risk damage to products that can put consumers at risk, open their business to liability, and violate stringent safety laws. SCM services provide FMCG companies with real-time supply chain visibility, business intelligence, and cost-reducing operations. ;
Daimler India Halts Manufacturing at Tamil Nadu Plant for Three Days
01-06-2021

Daimler India Halts ...

Daimler India Commercial Vehicles (DICV) has paused production at its Oragadam facility near Chennai for three days until June 3 due to a temporary shortage of spare parts caused by the COVID-19-induced lockdown in the country. However, a small team is working at the factory to keep essential operations running. DICV is a subsidiary of Daimler AG, a German auto major. DICV added in the statement that due to a shortage of temporary parts caused by lockdown restrictions across the country, non-production day was declared from June 1 to June 3. Line workers will be paid in full during this time of non-production. All office workers, including those in regional and area offices, are working from home, according to the report. DICV will provide comprehensive health and hygiene benefits to its employees, including free medical services like counselling and on-site vaccines, according to the statement. The 400-acre facility in Oragadam produces and sells trucks ranging from nine to 55 tons, as well as BharatBenz buses, Mercedes-Benz coaches, and bus chassis. It also manufactures Daimler Trucks' FUSO and Freightliner brands, among others. This facility's products and parts are exported to more than 50 countries in Africa, Latin America, Asia, and the Middle East. Earlier, on May 26, M K Stalin, the Chief Minister of Tamil Nadu, inaugurated a new vaccination centre at the Daimler India Commercial Vehicles (DICV) manufacturing plant in Oragadam. A business spokesperson stated that Daimler India Commercial Vehicles began inoculating personnel above the age of 18 at its vaccination centre in the manufacturing plant in Chennai. According to a statement released earlier in May by Daimler, the business expects to provide injections free of charge to truck drivers of all brands. Daimler has immunised 95% of its employees over the age of 45 and is enforcing social distance policies at its factory and office, as well as providing shuttle bus services and setting up quarantine centres. While DICV has already vaccinated almost all personnel over the age of 45, the new facility will allow the vaccination drive to be extended to the entire local community, including those under the age of 45. The facility can take care of up to 250 individuals every day thanks to its sophisticated equipment, which includes five vaccination booths. A refreshments area, a post-vaccination lounge, and seating for up to 300 people are also available at the facility. According to the press release, the company will continue to use the facility as a vaccination centre for as long as needed. Satyakam Arya, MD and CEO of DICV, said that accelerating immunisation efforts is vital to defend the community. He said that DICV would continue to scale up steps to support the nation in its fight against COVID-19 as a people-first organisation. Vaccination will be done at the DICV Centre by private hospitals and government health workers, depending on the availability of vaccines. BharatBenz, owned by Daimler India, and Motherson Group had previously established a collaboration to provide logistics for COVID-19 vaccines in January 2021. DICV has already launched the B+Safe Express, a specialised reefer truck for transporting COVID-19 vaccines across India, in January 2021. In addition to Daimler India, several other OEMs (Original Equipment Manufacturers) have announced relief measures to aid in the fight against the coronavirus's second wave. Companies such as Bajaj Auto, Hyundai, Honda, and TVS, among others, have also contributed significant sums to help fight the pandemic. Major companies such as Mahindra, Maruti Suzuki, and Ashok Leyland, have aided in addressing the country's oxygen shortage. ;
Fuel Crisis in the United States Eases as Pipeline Returns to Normal After Hack
16-05-2021

Fuel Crisis in the U...

The United States was facing a widespread shortage of gasoline across the East Coast region for nearly six days. The situation, however, eased a bit this Saturday, 15th May 2021, when the operators of the country’s leading pipeline, Colonial Pipeline, were back in their capacity of delivering about millions of gallons per hour after the cyberattack last week. DarkSide, the hacking group, which was responsible for the attack, claimed to have infiltrated four other businesses, including a Toshiba subsidiary in Germany. A Colonial Pipeline representative said that the company has not decided how the initial violation occurred. Every day, the 5,500-mile (8,900-km) pipeline transports 100 million gallons of gasoline, diesel, and jet fuel from Texas pipelines to East Coast markets. Due to the cyberattack, the ships and trucks in the region were deployed for filling up the storage tanks post the shutdown of the Colonial pipeline for almost a week, which means a massive loss for the company. This cyberattack was one of the most disruptive ones as it led to panic among the consumers and resulted in panic buying leading to further shortages in the gas stations of the product across the Southeast region in the United States. Gas stations across the east and south region were surveyed through the GasBuddy app, which is a fuel tracking app. As per the survey, there was a shortage of fuel across more than 13,400 gas stations on Saturday, which was much less than the survey of 16,200 on the previous day. On Saturday, the crisis eased a bit as the percentage of gas stations in Washington D.C. without fuel on Saturday was about 75%, less than the shortage of 88% on Friday. The situation improved in other regions as well, including North Carolina and Virginia. The demand for gasoline in the United States witnessed a drop of about 12.6% from the previous week, when the shortage accelerated, owing to panic buying when the pipeline shut down. According to the statistics of AAA, a leading federation of motor clubs, the average for a gallon of regular unleaded in the nation was USD 3.04 on Saturday, from USD 2.96 in the previous week. This shortage also led to the increased price of gasoline, which was already witnessing inflation due to the higher prices of crude as well as the robust demand before Memorial Day, which augmented the summer driving season in the United States.   Inflation in gasoline prices was also seen across Georgia and the Carolinas, where the places served by this pipeline, saw massive jumps in prices this week. Georgia and the Carolinas witnessed a price hike of more than 20 cents per gallon. Florence, South Carolina, witnessed the highest price hike at 30 cents, whereas Washington D.C. witnessed a price hike of 9 cents. The prices, however, are likely to decline once the supply improves. The ships under the emergency waivers were also deployed and were moving from the Coast refiners to the Northeast of the region, whereas 18-wheel tanker trunks were also moving between Alabama to Virginia in order to be able to meet the dearth of the product in the region. ;
ExxonMobil to Play a Crucial Role in India’s Energy Transition Journey
11-05-2021

ExxonMobil to Play a...

ExxonMobil is one of the leading global hydrogen manufacturers. The company is likely to play a vital role in India’s journey towards clean energy. The company aims to strengthen its position in India by exploring and utilising the hydrocarbon potential of India and then developing technologies that can make refining less energy-intensive. Moreover, the company plans to optimise hydrogen's role in hard-to-decarbonise sectors, like the transportation sector. ExxonMobil is looking forward to pursuing a series of initiatives ranging from speeding up the country’s gas access to unlocking the potential hydrocarbons in the country. India is going through a difficult phase due to another strong wave of COVID-19. In its upcoming recovery phase towards energy security, the country is expected to witness a higher demand for lower emission and affordable energy. Still, the country must have hydrocarbon resourced domestically for future needs, which will undoubtedly increase due to the expected rise in population. ExxonMobil is working with various organisations in the government and the industry to implement their aspirations in the country, according to Bill Davis, the CEO and the lead country manager of ExxonMobil. He further talked about how the changing lifestyles of the people in India, together with the increasing population, will lead to the deployment of every available and accessible energy source in the country. Davis also talks about the need to have advanced and more innovative technologies and reduce emissions to lower carbon future. ExxonMobil is working on technologies to make refining less energy-intensive and explore breakthroughs to create potential solutions such as carbon capture more cost-effective for a wide range of applications. The company is emphasising making these solutions affordable for widespread adoption, especially in emerging markets like India. With India progressively planning to boost the share of natural gas in its energy mix (which is currently less than 7%), ExxonMobil is eager to actively unlocking its gas potential. That is why, in collaboration with Indian Oil Corp. and Chart Industries, the company is building virtual gas pipelines to resolve the last-mile connectivity problem and meet the increasing demands for lower-emission, gas-based electricity. ExxonMobil is among the world's biggest hydrogen manufacturers. As the potential for this and the shift to a lower-carbon future emerges in India, ExxonMobil is well placed to contribute with its expertise, size, and technology. ExxonMobil has formed a new company to commercialise its vast portfolio of low-carbon technologies. ExxonMobil Low Carbon Solutions, the new company, will initially concentrate on CCS. This venture will also draw on ExxonMobil's expertise in hydrogen production, which, when combined with CCS, is expected to play a critical role in a lower-carbon energy system. Davis adds that another significant benefit of virtual pipelines is that the company can utilise India's strong technical capabilities to push a new 'Made-in-India' manufacturing sector to supply the required tanks and equipment. Another benefit for ExxonMobil is transportation, which is a critical component of India's shift to a gas-based economy. According to Davis, ExxonMobil is partnering with GAIL to create promising prospects that will add momentum to India's plans in this sector. India has been steadily developing its gas infrastructure, enacting gas-market reforms and assisting industry efforts to get natural gas up to par with other fuels. Natural gas would help boost economic development in the aftermath of the pandemic while also raising living standards and lowering emissions. ExxonMobil is collaborating with leading Indian energy companies to improve gas access for industries, transportation, and other uses. ;
Factory Activity Growth in China Struggles on Supply Bottlenecks and Weak Demand Across the World
30-04-2021

Factory Activity Gro...

Factories across the globe, especially China, which is one of the top industrial hubs, are facing slow growth as supply bottlenecks arise due to the rising prices of the commodities. The inflated cost of production took a toll on the factory growth in China, and companies missed their forecasts in April due to the crisis. The demand for various products across the globe has decreased, and that has affected the industrial hub. China’s official manufacturing purchasing managers' index (PMI) witnessed a decline to 51.1 in April from 51.9 in March, according to the statistics from the National Bureau of Statistics (NBS). However, the production levels remained above the 50-point mark that separates growth from contraction every month but were below the 51.7 marks that was expected. Chip shortage has become a massive issue throughout the world as the production/supply is not able to meet the robust demand for gadgets and devices that have been aggravated by the pandemic. Moreover, the market restriction and the restrictions on trade between countries to curb the spread of COVID-19 has significantly affected the factory activity in China as well, causing chip shortages, logistical disruptions, container shortages, and a spike in freight rates. These statistics, however, differed from the private-sector survey, which released a report on the same day and reported that factory activity in April expanded at the fastest pace in four months, although businesses in that release also reported inflation in production costs. Analysts from Capital Economics said in a note on the PMI said that economy is returning to its pre-virus trend, and the policy stance is becoming less supportive, which might lead to a lower growth momentum in the coming year. The country, however, is likely to witness rapid economic recovery by outpacing rebounds seen among the other competitors in the industry, including the competitors in India, where the second wave of the coronavirus is causing huge losses. Policymakers in China are avoiding any sudden changes in their already existing policies that could risk the recovery the industry is witnessing. The growth in demand is also expected in various regions where the spread of COVID-19 has been controlled to some extent, like the United States and Europe, where the cases have not been rising at such an alarming rate as in India. The demand for electronic devices is also increasing at a rapid pace due to the pandemic, which is likely to boost production in factories in the coming years. The companies are expected to work diligently to try and mitigate the global crisis of semiconductors. Owing to the economic recovery in the region, booming demand for raw materials fuelled robust profit growth in Chinese industrial firms in March, as profits upstream outperformed those in downstream sectors. The recovering phase in the region is likely to bring the market status back to normal and even witness profits in the coming years. ;
Global Shortage of Semiconductors Likely to Persist Due to Excessive Demand
29-04-2021

Global Shortage of S...

The world has been facing a shortage of semiconductors ever since the first lockdown was imposed across the world due to the rising cases of coronavirus. The problem of shortage of semiconductors was initially thought to be temporary as there was a shortage due to disruption in the production process when the companies/industries were shut down for a while in order to curb the spread of the COVID-19 pandemic. The problem, however, persisted even after the production resumed and reached its usual levels post-lockdown, which could be attributed to the excessive demand for semiconductors or the chips, the “brain” within every electronic device in the world. This demand is reportedly extremely high due to the surging demand for electronic devices, especially televisions, smartphones, and laptops, among other products. The demand for these electronic devices has been triggered by the pandemic as well as the rising practice of ‘work from home’ culture, which has accelerated the demand for these devices as everything is now online, be it work or classes, for which these electronic devices are indispensable. Moreover, the excessive demand for semiconductors has also been on the rise due to the rising demand from the automobile industry. Car manufacturers' rising investments in tech-heavy electric cars and the release of new game consoles and 5G-enabled cell phones have been propelling the market demand for the past few years. The demand for semiconductors, which is an essential part of every electronic device, has been so high lately that the manufacturers have been unable to keep up with the demand, and that has resulted in a global crisis. Many leading tech companies had to delay their product launch due to the shortage of this tiny yet mighty product. Manufacturers of computers, smartphones, gaming consoles, vehicles, networking devices, and industrial machines have been struggling to buy enough chips to use in their products to meet the rapidly increasing demand for the products. The leading electronic devices companies have been facing the consequences of this issue. Apple was compelled to delay the launch of its much-awaited iPhone 12 by two months last year due to this shortage. Samsung, which is the second-largest buyer of chips globally for its products following Apple, might also have to shift the launch of its high-end smartphone to a later date due to the shortage. This was despite Samsung also being the second-largest producer of chips globally. The automobile companies are also facing the brunt of the shortage of semiconductors. Ford, an American multinational automaker, recently cancelled shifts at two car plants and said it could face a loss of up to USD 2.5 billion in 2021 due to chip shortages, while Nissan, a Japanese multinational automobile manufacturer, is registering no outputs at plants in Mexico and the United States. General Motors said it could also face a loss of about USD 2 billion. Sony, together with other console makers, has struggled with stock shortages over the last year. The company will also not be able to make up to its target sales due to this shortage. Microsoft’s Xbox is also facing a shortage and the consequent loss. The company forecast that the supply issue might hinder the market growth until the second half of the year. The crisis of shortage of semiconductors and the imbalance in the demand and supply chain will affect the prices of the commodities, and the consumers will have to face inflation in the prices in cars and phones with supply taking time to catch up with the demand. The crisis of semiconductors or chip shortage is likely to persist for quite some time until the supply reaches the levels of market demand, which is exceptionally high. It is estimated that it will take nearly two years to set up complex semiconductor production factories and to get them working smoothly, and manufacturers are in the process of significantly raising prices for the second time in less than a year due to the huge loss they are facing since last year due to this dearth. ;
Onnit, Holistic Wellness and Lifestyle Company, to be Acquired by Unilever
26-04-2021

Onnit, Holistic Well...

Unilever confirmed today that it has signed an agreement with Onnit, a Texas-based holistic wellness and lifestyle company. Aubrey Marcus founded Onnit in 2010, intending to inspire a journey toward 'total human optimisation,' which is a 360-degree philosophy for achieving optimal health and wellbeing through physical fitness, mental performance, and emotional wellness. Since 2010, Onnit has been setting the standard for thoughtful, high-quality, and effective multifunctional stacking supplements in the health and wellness sector. Onnit is a lifestyle brand that caters to clients' supplement, functional nutrition, physical, mental, and emotional wellbeing needs. Onnit's website is a prominent destination for motivating, educational, and inspirational health and wellness lifestyle digital content, with over one million monthly visitors. Onnit products can be purchased at shops and online merchants across the country, including Whole Foods Market, Amazon, CVS, Sprouts, Vitamin Shoppe, and many others. Onnit's supplements are the brand's base, and they are manufactured with scientifically proven and high-quality ingredients to help with cognitive function, mood and relaxation, gut health, and immunity. Alpha BRAIN®, Onnit's flagship product, is a brain supplement (nootropic) that improves memory, focus, and mental processing. The brand also offers fitness essentials, functional nutrition, and a digital content platform that provides instructive and inspiring articles, interviews, advice, and workout programs for its dedicated and enthusiastic customer base. With sales in over 190 countries and goods used by 2.5 billion people every day, Unilever is one of the world's top suppliers of beauty and personal care, home care, and food and Refreshment products. In 2020, they also had 149,000 workers and sales of EUR 50.7 billion. They have a strong presence in developing and emerging economies, accounting for more than half of their total footprint. Around 400 different brands can be found in people's homes all around the world. Dove, Knorr, Hellmann's, Lipton, Magnum, Axe, Ben & Jerry's, Degree, Dollar Shave Club, Q-tips, Seventh Generation, St. Ives, Suave, TRESemmé, and Vaseline are among the renowned brands in the company portfolio in the United States and Canada. Peter ter Kulve, President of Unilever's home care and health and wellbeing, said that Onnit is a significant brand in the fast-growing nootropics segment, and it complements their expanding portfolio of innovative wellness and supplement brands, including OLLY, Equilibra, Liquid I.V., and SmartyPants Vitamins, with its holistic health offering and digital-first model. Fabian Garcia, President of Unilever North America, said they were happy to welcome Onnit to the Unilever family. As a dynamic and purpose-driven company, he added that Unilever shares Onnit's aim of improving customer health and wellness through scientifically proven solutions. Unilever aims to be a world leader in sustainable business, demonstrating how its purpose-driven, future-fit business strategy leads to superior results. They have a long history of being a forward-thinking, responsible company. It dates back to William Lever's founding of the world's first purposeful brand, Sunlight Soap, more than a century ago, and it's still at the heart of how they operate today. Aubrey Marcus, the founder of Onnit, said that since day one, his ambition has been for Onnit to become a global movement, empowering individuals with the tools and information to attain their fullest physical and mental potential. He added that he was so pleased with what they had accomplished, and now, thanks to Unilever's size and reach, they would be one step closer to encouraging millions of more people to take command of their wellbeing and health. Onnit will remain based in Austin, Texas, under the leadership of CEO Jason Havey. Aubrey Marcus, the company's founder, will continue to serve as a brand ambassador. ;
Demand for Gasoline to Decline in India with the Massive Surge in COVID-19 Cases
20-04-2021

Demand for Gasoline ...

The gasoline industry in India is again witnessing a major setback with another wave of the COVID-19 pandemic after having not recovered from the first wave of coronavirus. With the second wave having an even bigger and worse effect throughout the country, lockdowns have been imposed across various states, especially Maharashtra and Delhi, which have become the most severely affected states in the past month with the huge rise in the number of positive cases as well as resulting death toll. Lockdown restrictions have been placed in Maharashtra from 14th April to 1st May as a measure to curb the COVID-19 cases in the region. With the rapid rise in cases in Delhi, Chief Minister Arvind Kejriwal has also imposed a lockdown in Delhi since 17th April since the COVID-19 cases in the region reached their peak. India reported about 273,810 new cases of COVID-19 on 19th April 2021, a record high, and the number has been constantly rising. Maharashtra, which is a severely affected state, has also been a centre for gasoline demand and witnessed the demand for the product plummet to 70% below baseline levels as of 10th April 2021, which is the lowest since July 2020 and witnessed a sharp decline than the 40% above baseline levels that was seen in early February 2021. Delhi, where the cases are rising at a rapid rate every day, the gasoline driving activity is recorded at 10% above baseline levels as of 10th April, which although higher than the 20% below baseline levels recorded in early April, still represented an overall fall in demand from February's level of 70% above baseline levels, as per Apple mobility data. The reducing gasoline activity in India has led to reduced gasoline demand, which is estimated to fall to 701,000 barrels per day in April, down around 11.51% from the previous month and is likely to witness recovery only from June onwards. The situation has severely impacted the industry as various industries are shutting down again as a part of lockdown, along with the shortage of labour across the country. The industry, which had already not recovered from the first wave, has been hit by another stronger wave of the coronavirus this year.   Related Links:- https://www.procurementresource.com/production-cost-report-store/gasoline https://www.procurementresource.com/resource-center/gasoline-price-trends ;
SK Innovation and LG Energy Solution Discover New Growth Aspects in the United States after Burying the Hatchet of Long-Term Rivalry
12-04-2021

SK Innovation and LG...

SK Innovation Co Ltd, an auto battery maker company based in South Korea, witnessed a robust growth in shares in the United States after it entered into a settlement with its long-term rival LG Energy Solution. Both the companies are now open to growth opportunities in the United States since there is a higher demand for electric cars ever since Joe Biden formed the government in the country. The Biden administration has prioritised administration policies to benefit the environment by helping curb further climate change by using electric vehicles and minimising the pollution level.   The two companies agreed to enter into a settlement if the following two conditions are met. The settlement was agreed upon only after SK Innovation Co Ltd agreed to pay LG Energy Solution a sum of USD 1.8 billion to drop all the all litigation related to trade secrets dispute together with a running royalty. The second condition was to drop their legal disputes related to electric vehicles batteries in the United States and Korea and agree to a ten-year non-assertion. SK Innovation Co Ltd is one of the leading global producers of batteries. At InterBattery 2020 hosted by South Korea's Ministry of Trade, Industry and Energy, the company presented its capacity as the "best and most well-prepared partner" to create an ecosystem for battery-related industries. It also aimed to make its name a byword of battery safety with no history of battery fire incident in the 10 years of supplying batteries. SK Innovation has been leading the development of long-life batteries enabling long-range driving based on its technological capacity. It successfully test-drove an electric vehicle with their batteries, which ran for about 1,000 km. The dispute between the two companies where LG Energy Solutions accused SK Innovation Co Ltd of misappropriating trade secrets related to EV battery technology led to risking a USD 2.6 billion plant in Georgia that the latter is building to supply batteries to Ford Motor Co and Volkswagen AG. On being accused, SK Innovation had threatened to walk away from the project if the decision by the United States International Trade Commission decision in favour of LG Chem was not overturned. The present agreement to withdraw the legal disputes is expected help both these companies flourish in the United States. The CEO of SK Innovation Kim Jun, in his message to the employees, also said that this settlement will “enable us to accelerate the construction of the Georgia, U.S. plant and actively promote additional investment and cooperation in line with the development of the U.S. and global electric vehicle (EV) industry.”   The agreement was readily welcomed by the President of the United States, Joe Biden as well as Ford and Volkswagen as it would lead to further growth in the sector of electric vehicle batteries, as the rise of electric vehicles directly impacts and benefits the idea of sustainable growth and reduction of environmental damage. The United States has been witnessing increased demand for electric vehicles in the past few years, especially with the rising demand for Tesla models. The country has one of the highest numbers of electric vehicles on road already. ;
Suez Canal Likely to Continue Facing Trade Loss for Months Despite the Removal of Ship Blocking the Way
01-04-2021

Suez Canal Likely to...

The huge container ship called The Ever Given that blocked the Suez Canal since 25th March 2021 was removed from the path after almost a week on 29th March 2021. The Ever Given is operated by the Taiwanese transport company Evergreen Marine and is among the largest container vessels globally. This blocked ship caused massive ruckus and chaos throughout various industries, especially the global shipping industry, as it became a major source of worry and concern. The unfortunate incident led to massive trade loss, costing billions of dollars each day in global trade for about a week. It was estimated that the blockage caused a loss of about USD 400 million per hour throughout the week. Suez Canal is a significant trade route between Asia and Europe for various markets and plays a crucial role in supply chains. It carries about 12% of the world trade, including a massive volume of oil. An estimated 1.74 million barrels per day of crude are transported through the Suez Canal each day. Thus, the blockage of the route saw increases in Brent Crude and West Texas Intermediate crude futures after witnessing a slight decline in prices on 26th March 2021. The electronics industry, which was already witnessing a semiconductor supply crunch, was also estimated to have been affected adversely by the blockage. Although the ship was removed from the path and the blockage was cleared, it is believed that the incident of halted movement of the usual traffic on the canal and is likely to have a negative impact on the market for the coming months. It is anticipated that the countries located near the canal in Europe and Asia are likely to face the brunt of the situation the most. Prices of various commodities can change due to the massive losses faced by the companies, along with the delayed availability and delivery. The Ever Given ship is one of the massive ships that travel on the route and is capable of carrying over 20,000 containers. The disruption in the movement of ships for a week on the Suez Canal caused a halt in the market movement as well. The disruption caused by this includes chaos and congestion at ports. What is more problematic is the situation arising amidst COVID-19, which has already caused a disruption in the market, and this incident further aggravated it by causing a disturbance in the supply chain. Moreover, since the path was blocked, many ships had to go through a longer route, which increased the cost of transportation. Shipping companies like Hapag-Lloyd decided to reroute their vessels around the Cape of Good Hope in South Africa, which added an additional week of sailing time and, thus, higher fuel costs. The blockage, which has now been removed, will impact the market globally for months to come. It will lead to inflation as a disturbance in the supply chains. It has become a huge concern for the shipping industry, and although the cause of the incident was reported as strong winds, the authority has reported that it could not be the sole reason. As much as 80% of the global trade is dependent on water routes and incidents like these are a major cause of stress for the industry, and the officials are working on knowing the cause to look for ways to ensure that situations like these do not arise again in future. ;
Canada’s Quebec to Ban Gasoline Cars, Bets on EVs
17-11-2020

Canada’s Quebec to B...

The government of the Canadian province of Quebec is taking a step towards a greener future as it plans to ban the sale of new gasoline-powered cars starting from the year 2035. With its statement released on 16th November 2020, it has joined California and others in initiating a shift to electric vehicles and curb greenhouse gas emissions. The government plans on constituting 100% sales of motor vehicles to be electrical in 2035.   The second most populated province of Canada has announced this ban as a part of a CAD 6.7 billion (USD 5.1 billion) plan over a span of 5 years in order to help Quebec meet its target of reducing greenhouse gases by 37.5% by 2030, in comparison to its 1990 levels. A major portion of this budget will be directed towards the electrification of transport and EVs (Electric Vehicles). This ban will bring Quebec in line with other regions such as California, the largest auto market, which announced its shift towards EVs in September 2020.   This new target of reducing the greenhouse emissions has come after the province failed to achieve its previous target of a 20% GHG emissions reduction from 1990 levels by the end of 2020. The step was also taken in order to boost the economy and fight climate change, including making the manufacturing of zero-emission vehicles more affordable and investing in charging stations across the nation. Quebec’s plan has also come into motion as the US President Joe Biden has promised an ambitious environmental agenda which favours net-zero emissions of GHGs by 2050 and a speeding up of the adoption of EVs.   Quebec is not the only Canadian province to announce its step towards a cleaner future through its ban on fuel-powered cars. The Canadian province of British Columbia had announced a similar move and has already moved to phase out gasoline-powered cars and trucks, which will happen in a period of two-decades.   While the COVID-19 pandemic has shifted the Canadian government’s focus towards more pressing issues such as the downfall of economy and getting people through the downturn, the government has managed to commit to net-zero emissions by the year 2050, and is expected to begin profitable investments in a fiscal update before Christmas with a separate budget early next year. The global critics have lauded this step taken by the Canadian government to put stress on emissions reduction from transport as it is a sector with a large carbon footprint. However, the leading environmental group, Equiterre, has mentioned that the government funding given for this project will be insufficient to achieve the planned emission reduction. Other critics have stated that this step will prove to be encouraging for other provinces across the country. This ban would also reduce the demand for gasoline and other fossil fuels in Quebec, thus, affecting the refining operations in and around Quebec, which will further aid towards attaining the desired target of reducing emissions.   Among the countries, one country which has joined a similar goal is Israel, which plans to ban the gasoline-powered vehicles a bit early, with a target of 2030 as the jump point for the entire nation. The United Kingdom also announced a similar shift in the year 2017, with a plan to ban sales of new fossil fuel-powered vehicles by 2035. There are several other countries that have taken necessary measures to ban fossil fuel-powered vehicles, with their main objective being a total market shift towards electric-powered vehicles. ;
Pfizer, Moderna COVID-19 Vaccines: The Light at the End of the Tunnel
16-11-2020

Pfizer, Moderna COVI...

With COVID-19 vaccines from Pfizer Inc and Moderna Inc, the U.S.A has become the only country with two vaccines authorised for emergency use in December, with as many as 60 million doses of vaccine available this year. Moderna Inc. became the second U.S based drugmaker to report results pertaining to the prevention of COVID-19. The company has developed an experimental vaccine, which is 94.5% effective in preventing COVID-19, according to the interim data from a late-stage trial. Meanwhile, the vaccine developed by Pfizer Inc is more than 90% effective. Both the vaccines are developed using messenger RNA technology and are likely to militate the effects of COVID-19 that has infected 54 million people and taken 1.3 million lives so far. Both vaccines have proven to be safe and highly effective in fighting the virus.   Storage and Supply The vaccine storage and distribution amid unprecedented global demand are among the major concerns of leading healthcare companies. As the pandemic is once again creating a havoc in the U.S.A and some parts of Europe, pushing the countries back to lockdown, ensuring a critical supply of vaccine and working towards its distribution has become necessary. Among these vaccines, Moderna’s shot is convenient for public as it can be stored in the normal fridge temperatures from 2 to 8 degree Celsius for 30 days, and it can be stored for up to 6 months at -20 degree Celsius, therefore, it will be easier to distribute and has the potential to reach a lot of people. In contrast to Moderna’s vaccine, Pfizer requires a very low temperature, making it less convenient for people to access it. This factor has compelled the U.S. states, cities, and hospitals to buy ultra-cold freezers in order to safely store Pfizer’s vaccine. Meanwhile, Pfizer Inc has also launched a pilot delivery programme for its experimental COVID-19 vaccine to address the distribution challenges owing to its ultra-cold storage requirements. Pfizer’s vaccine has to be stored and shipped at -70 degree Celsius, which is a typical temperature of an Antarctic winter. The vaccine can be stored standard refrigerator temperatures for up to five days at, or for nearly 15 days in a thermal shipping box. Staying Alert and Vigilant During the Pandemic is the Need of the Hour   According to Dr. Anthony Fauci, the top U.S. infectious disease expert, the vaccine is actually the light at the end of the tunnel. He has urged the citizens of America to stay alert and vigilant, continue washing hands, avoid recklessness, and maintain social distancing wherever they go. The vaccine will not come in time for most of the people celebrating Thanksgiving and end-of-year holidays, the time when family get together and friendly reunions are so common across the U.S., the exact same thing the healthcare officials warned the citizens about.   FDA Authorisation is What Moderna is Waiting for Moderna, which is a part of the government’s Operation Wrap Speed programme for COVID-19 vaccines and treatments, has fixed a target of producing 20 million doses of vaccine for the U.S this year. The company has already formulated millions of doses and is all set to complete its target and ship the shots as soon as possible. The only thing obstructing Moderna’s way is the FDA’s authorisation. According to a representative of Operation Wrap Speed, if Moderna gets the emergency use authorisation, the company will be ready to ship through Wrap Speed almost in hours. Therefore, the distribution of vaccine can be started immediately after receiving the approval. The Trump administration showed a strong faith in the development of vaccine, which is anticipated to be the best solution in response to the pandemic. The U.S government has provided USD 1 billion to Moderna as a part of the research and development funding. Further, a deal of USD 1.5 billion for 100 million doses is already in place as declared by the U.S government. The government officials and private companies will soon be distributing the vaccines - both of which were about 95% effective in major trials- to all parts of the country. ;
Japan’s Core Machinery Orders Plummet, Clouding Capital Spending Future
12-11-2020

Japan’s Core Machine...

Japan’s core machinery orders decreased for the first time after three months in the month of September at a pace that was observed to be faster than expected. This sudden decrease has hindered the possible growth of business spending that could have helped the economy to stage a brisk recovery from its COVID-19 crisis.   The surge in the core machinery orders has made it difficult for the corporate sector of Japan to commit to more capital investment, while the increasing number of coronavirus infection cases have darkened the outlook of global demand. The core machinery orders are considered a highly volatile series of data, which is regarded as an indicator of capital spending in the upcoming six to nine months. It decreased by 4.4% in September. The first decrease in orders since the month of June was much larger than 0.7% contraction, as seen by economists in a poll. However, with a recovery of the manufacturing and export sectors pacing up, it is most likely that the corporate earnings will also improve quicker than expected.   Now, with the output dropping significantly in the second quarter of the year, the firms have gotten more cautious about their capital spending, which has led to decreasing core machinery orders. The data released by the Cabinet Office on 12th November 2020 showed that the manufacturers were expecting a decrease of 1.9% in the time period of October-December, after a 0.1% drop in the previous quarter, which was marked as the fifth consecutive quarter of declines. The main reason for core orders to decrease was said to be the lower spending on electrical measuring instruments and information services like communication networks and more.   Japan’s economic state is now recovering at a steady pace from the problems caused by the coronavirus pandemic. This surging demand is the result of exceeding overseas demand in recent months, which has fuelled a pickup in output. This has further inspired the Japanese Prime Minister Yoshihide Suga’s instruction to his cabinet on 10th November 2020 to come up with a series of measures focused on spurring structural change and boosting productivity and digitalisation. However, more chances of cuts in capital expenditure and slow recovery in the capital spending are clouding the outlook of the market.   Sector-wise analysis showed that orders from manufacturing rose by 2.0%, aided by the food and beverages sector and those from non-manufacturers rose by 3.2%. Both the sectors gained this increase due to a seasonal adjustment in the data, as stated by the Japanese government, even though the overall core orders declined. A year ago, the core machinery orders, which do not include those for ships and electricity, slumped 11.5% in the month of September, almost matching with the estimated decline of 11.6% as given by the economists. ;
Need to Bolster the Manufacturing Sector in India
11-11-2020

Need to Bolster the ...

The manufacturing sector of India has a potential to grow at a remarkable rate in the coming years. The manufacturing sector of a country significantly contributes towards its GDP, which, in turn, contributes to the country’s economy. The growing industrialisation and the expanding production capacities across the manufacturing sector are driving India’s economic growth. Not only India, manufacturing has always been the backbone of all developed and developing nations. Manufacturing is where the real R&D starts, new technologies are born, where scientists and engineers and others are challenged to develop new and better processes, products, and technologies. The key to development in the 21st century is technology. The advancements in the field of manufacturing and the rise in production units motivate the masses to adopt enhanced technology. The time and money are thereby saved, and output is enhanced. Therefore, manufacturing is of grave importance in order to bolster development, especially in India, where the economy is in the struggling phase.      In the last decade, India has emerged as one of the fastest-growing economies of the world and is on the road to becoming self-reliant. However, there is a need to understand that innovation and growth in the field of technology and infrastructure are becoming more important for any country as the days pass. With the gradual lifting of COVID-19 induced restrictions, the economy is in the revival mode. The Indian government understands the need to invest, buttress, and uplift the sectors, which include manufacturing, textile, automobile, and construction and building, among others. The government has decided to make major investments with respect to the manufacturing industry and is taking the necessary steps in order to support the sector financially. In November 2020, the Indian cabinet approved the provision of production-linked incentives of nearly INR 2 trillion (USD 27 billion) over five years in order to create jobs and bolster the country’s manufacturing sector. The next five years are crucial for India, and the nation’s struggling economy requires support to revive so that the coming generation is prevented from unemployment, poverty, poor living standard and is motivated towards achieving the developmental goals.   According to the Finance Minister of India, Mrs. Nirmala Sitharaman, the government is taking the necessary steps to attract investment. Ten sectors of India, which include automobile and auto parts, pharmaceuticals, textiles, and food products, will be given healthy incentives. The scheme has been prepared to ensure that critical sunrise sectors get the much-needed attention and financial support from the government so that the country is strong enough to serve the domestic demand and cope-up with the global value chain. The opportunity of investing in the field of manufacturing in India is anticipated to be fruitful in the long run.   Under the proposal, the government will provide incentives worth USD 7.67 billion to auto and auto parts companies and USD 2 billion to the pharmaceutical sector. Each manufacturer of textile and food products is likely to get around USD 1.48 billion. The year 2020 has proven to be cumbersome for almost every sector, with the automobile industry being no exception. And COVID-19 further degraded the industry with supply-chain disruption coupled with a decline in demand. Therefore, India’s incentive scheme for the auto sector is aimed at doubling exports of vehicles and components in the years to come. The incentives will bolster the investments and provide an opportunity for economic growth at a significant pace, as earlier the investments were deterred by the lack of incentives, issues in procuring land, and antique labour policies. ;
India to Revive its Plans of Offering Incentives to 6 Million Tonnes Sugar Exports
11-11-2020

India to Revive its ...

India has recently revised its proposal to get sugar mills to export 6 million tonnes of the sweetener by encouraging sales overseas during the season of 2020/21, which is the third year in a row, as a part of the steps taken in order to reduce surplus stocks and prop up local prices. A few weeks ago, India was considering this proposal but, a last-minute delay was announced before 1st October, in the previous two years. This led the local mill owners and global traders to believe that the world’s largest consumer of the product has dropped the plans to subsidise sugar exports in the year 2020.   The government has again revived its plans to provide incentives to mills in order to export 6 million tonnes of sugar in the year 2020-2021. However, according to government sources, the government is yet to agree on the amount of the subsidy. Even though the government has sought out the views of the sugar industry, it is keen that the cane grower’s payments by sugar mills do not get delayed.   Due to higher production quantities, the prices have significantly dropped, which has affected the mills’ financial health and is making it hard for sugar barons to make timely payments to cane farmers. Thus, just like the previous year, the subsidy is very important in order to export sugar to ascertain that the farmers do not suffer financially. As per the government sources, the subsidy details are still being looked into to find suitable measures.   Even though India is yet to decide an accurate amount of the subsidy, it has been anticipated to be lower than the earlier year, as the global prices for the product have gone up by 13% since the current sugar season, which began on 1st October 2020. In the years 2018 and 2019, India urgently approved sugar export incentives before 1st October because New Delhi was encouraging the mills to sell their sugar in order to clear dues that they owe to the farmers. In the 2019/20 season for the sugar industry, the subsidy amount of INR 10,448 (USD 142) per tonne helped India export its highest 5.7 million tonnes of sugar.   With this proposal given by the government of India and by deciding the subsidy, the farmers will most likely get paid by mills, which will help them produce more raw materials for sugar and subsequently increase the export up to the required mark of 6 million tonnes. Another factor, such as travel restrictions caused by the pandemic is also slowing down the country’s economy leading to delays in the decision-making process. However, once the subsidy gets decided, the sugar industry is likely to flourish both domestically and internationally. ;
COVID Vaccine Breakthrough Brings Forth Logistical Issues of Distribution
10-11-2020

COVID Vaccine Breakt...

The potential breakthrough regarding the development of a COVID-19 vaccination, which was announced on 9th November 2020, has made the governments scratch their heads as they face the logistical issue of distributing millions of doses in order to make it available in the market across the globe. The logistical issue at hand defines the order of distribution and how to distribute the doses in such a large quantity. The vaccine was developed by the American multinational pharmaceutical corporation, Pfizer and a German-based biotechnology company, BioNTech. According to the data gathered during the trial phase of this vaccine, it was determined that the vaccine was 90% effective. With a 90% success rate, which is the highest as compared to other vaccines in the trial period, the vaccine has brought hopes of ending the pandemic, which is responsible for a million deaths and crashing world’s economy. The two manufacturers, namely, Pfizer and BioNTech, are expected to produce around 50 million doses by this year's end and approximately 1.3 billion doses in the next year, with estimated regular approval from the government and health authorities. The European Union and the United States have signed an agreement to secure millions of doses for themselves, but the authorities are facing logistical issues in planning sophisticated distribution channels for effective distribution.   The United States disclosed its deal worth USD 2 billion with Pfizer for 100 million doses of vaccine, which would be delivered by the end of this month on the basis of 20 million doses per month, i.e., if Pfizer moves quickly to secure regulatory approvals.   On behalf of the European countries, the European Union is negotiating a deal with vaccine manufacturers to provide them with 300 million doses of the vaccine. The deal is likely to be signed by 11th November 2020. On the other hand, Britain is expected to receive 10 million doses of vaccine by the end of the year as they have asked the National Health Service to be ready to distribute any COVID-19 vaccine from the month of December. Germany also expects to receive nearly 100 million doses of the vaccine and is most likely to involve the military to help manage the storage. Italy is another country that is most likely to take its army’s help in maintaining the storage and distribution of the vaccine.   The German manufacturer, BioNTech, planned the vaccine’s two-shot regiment below typical market rates and only differentiated the pricing between the regions or countries. However, the storage conditions of the vaccine require the vaccine to be stored at below 70° Celsius, thus, making it nearly impossible to reach to many poor countries in Asia or elsewhere which lack the necessary refrigeration equipment. Some Swiss experts have suggested building centralised vaccination locations in order to store and distribute the medicine directly. With the pressing issue of the vaccine being available in the market and the storage requirements for the vaccine, it was necessary to develop a suitable packaging for the vaccine. Thus, thermal boxes would preserve the ultra-low temperatures for up to 10 days for an ambient temperature of up to 35 degrees Celsius without opening them and up to 15 days if the boxes are opened and then re-iced. This measure can be successfully executed because the vaccine can be stored at fridge temperature for at least five days.   The European logistics experts, however, have stated that they would not face any logistical issue with the storage of the vaccine as they are already talking to various pharmaceutical companies and governments in detail regarding the need for cooling. The European Union is most likely to turn to Deutsche Post, a German-based multinational package delivery and supply chain management company, that has its contract logistics division working in over 180 locations worldwide and is tailored to the needs of the pharmaceutical industry, where sensitive medical products can be packed and stored at varying temperatures. The vaccine, even though it is 90% effective, have brought hope across the world with a possible end to the pandemic. Various countries across the world are securing their doses by either signing deals with pharmaceutical companies or developing their own medicines. It has been estimated that Pfizer and BioNTech are the first to produce an effective vaccine, and many will follow their steps in the upcoming year. The logistical issue related to the distribution of the vaccine has been determined to just be an initial issue that will be resorted once the distribution attains its flow. ;
BASF and Partners to Put Their USD 4 Billion India Chemical Complex on Hold Due to COVID-19
05-11-2020

BASF and Partners to...

BASF, a German-based multinational company and the largest chemical producer in the world, announced that its plans to build a petrochemicals complex in India worth USD 4 billion with its partners had been put on hold because of the rising uncertainty in the country’s economy caused by the pandemic. The company and its partners concur that the shaken economy of India would not be suitable to build a new petrochemical complex as there is less demand in the recovering market. Despite all the efforts by the company to optimise the scope and the configuration, the project has been temporarily suspended.   In October 2019, BASF signed a memorandum of understanding with companies like Borealis AG, Adani Group, and Abu Dhabi National Oil Company (ADNOC) in order to evaluate the collaboration between the companies to build the chemical complex in Mundra, in Gujarat, India. However, not just India, but also the entire global economy has been affected by the COVID-19 pandemic, causing uncertainties in the economy in the coming years, thus, giving the partners time to review the undertaken investment.   BASF has also cut down its investment budget as the COVID-19 hit automakers, who are the chemical company’s biggest clients. The chemical industry profits are affected strongly by a downturn because of the industry exposure to other sectors such as car makers, while massive overheads prevented swift cost-cutting.   The plant in Mundra, Gujarat would have been the first plant in the world, which was to be fully powered by renewable energy. It was also the biggest investment by the German giant BASF in India. Under the company’s India plan, the partners planned to build a plant to produce propylene from propane gas, which was to be supplied by ADNOC.   With investments held back and the market collapsing due to a weakened economy across the globe, the company and its partners are still, however, convinced that the Indian market will act as a significant sector to invest in, in the upcoming years. The company has also decided to keep exploring the Indian market conditions periodically in order to look for opportunities for investment that might arise in the near future. ;
Confectionery Brand Jelimals by ITC Adds Immunity Boosters to their Product Jelly
02-11-2020

Confectionery Brand ...

With the rising COVID-19 cases across the Indian subcontinent, various manufacturers of consumer goods have centred their focus towards immunity-boosting goods in order to generate revenue from the mass panic created by the pandemic. ITC’s confectionery brand named Jelimals is also one such company which has shifted its portfolio to offering jellies with immunity ingredients under the new brand name, Jelimals Immunoz. The main motive behind adding immunity boosters to their product jelly is to strengthen the FMCG conglomerate’s image amongst the consumers.   Jelimals, being a kid-centric brand, is now planning to follow its endeavours in supporting the health of its consumers (primarily children) with their immunity-boosting product jelly, which is dozed with vitamin C and Zinc. While the company plans to make the product more engaging to its younger consumers, they will keep the price points the same across the offerings.   In a recent study commissioned by the brand, Jelimals Immunoz, as a part of the launch of their new immunity-boosting jelly, highlights a few takeaways on the mindsets of children in the new normal. In the study, the results showed that about 94% of children miss going to school, and 95% miss meeting friends in person. Social media and video chat with friends were summed up to be the highlights of the day for children. The study was strategically placed for targeted consumers, hence, the data gathered belonged to the children in between the age group of 8-12 years across cities like Delhi, Mumbai, Bengaluru, and Kolkata. In the month of May, ITC entered into a partnership with a direct selling company named Amway India for distributing its new product, packaged fruit beverage with immunity boosters, in association with its juice brand named B Natural in order to stay relevant and compete with other companies such as Coca Cola, PepsiCo, and Dabur as a breakfast period consumption drink amidst the outbreak.   With the increasing awareness through social media platforms, the health-related panic has increased and become a priority for numerous consumers across the world, including India, which has led to an immense boost in the sales of consumer products belonging to the category of health supplements, health bars, and branded health salt,  among others. Meanwhile, numerous eateries such as Coffee Day Enterprises, Chai Point, Tata Starbucks, Chaayos, and more to ice cream makers such as Cream Bell, Dair Day, Naturals, and more have added immunity-boosting food to their menus such as ajwain sauf chai, chyawanprash ice-cream, haldi-doodh, tulsi milk, buttermilk ragi tacos and more in the post-lockdown period.   ITC’s Jelimals Immunoz, by shifting their portfolio towards making immunity boosting jelly, have not only planned to spread awareness about the pandemic but also help the future generations build a stronger immunity and with the mass panic caused by the pandemic, the company will flourish in the upcoming years with profitable margins. ;
Dubai: A Ray of Hope at the Time of Pandemic
01-11-2020

Dubai: A Ray of Hope...

The ongoing Coronavirus pandemic has caused a havoc across the continents. Disrupted supply chains, slump in demand with respect to certain sectors, such as food and packaging and construction and building, are some of the examples of how hard a time the world is going through. Many countries, whether developed or developing, are trying their level best to overcome the challenges caused by the pandemic. In order to allay the anxious consumers, countries are taking necessary actions so that this turmoil is contained. Some of the countries are even advocating localisation as an antidote.   Cutting-Down Problems Through Technological Advancements    During this time of crisis, there has been a panic caused at a worldwide level. Some countries are trying to placate the consumers in order to win their trust so that the demand is revived. Some of the nations are trying to focus on the economy, seeking refuge in various sectors, which may not be immensely affected amidst the crisis. Then, there are countries that are converting challenges into fresh opportunities. The best example is Dubai’s investment in futuristic technologies.   According to Sanjeev Dutta, who is the Executive Director of commodities and financial services at the Dubai Multi Commodities Centre (DMCC), the virus is and always will be there. Therefore, new ways must be pondered so that businesses are sustained. Approaching digital platforms is one of the perfect examples of the new ways of tackling the pandemic situation. The UAE has always been a technological centric nation and has been working over its infrastructure projects swiftly. The country’s significant investments in multimodal facilities and a good foresight successfully curbed the adverse effects of the COVID-19 pandemic. Which means, the UAE, unlike many countries, did not face large-scale shortages of essential goods due to the supply chain disruptions caused by COVID. Dubai has proved that investing in new technologies add huge value, reduce operational cost, reduce wastage, and help the consumers reach a quality product. Dubai is soon to be the world’s leading logistics hub. Dubai’s e-commerce trade zone works efficiently and ensures the ease of doing business. Because of the swift foresight and technological advancements, Dubai has managed to connect the demand-supply wherever an opportunity arrived. Dubai’s strong fundamentals and great approach towards businesses have been applauded by various business analysts.      Projects Undertaken   At the time of the pandemic, when most of the major economies are anxious, the UAE has managed to stay bullish in terms of economy. Over 800 companies announced new projects pertaining to the infrastructure, logistics, food, and packaging sectors. The country is likely to expand its existing projects.   The packaging and logistics sector is so efficient in Dubai that it ships tea boxes from an African country, packs it, and sends it back faster than they could do it there. Dubai deals with over 50 million kilograms of tea, which is roughly 60% of the total market shares. The packaging and logistics of Dubai are the most reliable and fastest in the world. Infusing newer technologies in the field of food security and logistics has worked wonders for UAE at the time of crisis. Emerging Technologies As Dubai is technology-centric, and the bulk focus of the country goes towards innovation, there are a few examples of recent innovations that came to the limelight. One of the innovations is Agriota, an e-platform, which constructs harmony between farmer and consumer and creates awareness about the prices of commodities. This project was launched by DMCC in August 2020. It was one of the ten main projects shortlisted by the Indian Prime Minister Narendra Modi’s visit to the UAE. Another example is Boxbay, a disruptive technology that enables significant gains in handling speed, energy efficiency, and a significant reduction in operation costs.   The swift advancements and rigorous actions taken by the authorities towards countering supply chain disruptions in Dubai and controlling problems at the time of pandemic are likely to prompt various large organisations and countries towards achieving the much needed stability goals in terms of economy. ;
ADM to Start their Dry US Ethanol Plants in H1 2021
30-10-2020

ADM to Start their D...

Archer Daniels Midland, commonly known as ADM, an American multinational food processing and commodities trading corporation, on 29th October 2020, revealed their decision about keeping two of their dry ethanol mills idle for the time being and revive them online in the first half of 2021. The said mills are situated in Iowa and Nebraska. This decision was followed by a low ethanol demand in the North American sector of the global ethanol market. However, the decision to reopen these plants will depend upon the recovery of the US economy and how driving miles are going to recover seasonally.    Archer Daniels Midland temporarily idled its two dry ethanol-producing mills situated in Cedar Rapids, Iowa and Columbus, Nebraska, during the peak of COVID-19 outbreak in America when the ethanol demand dropped by a large proportion and the manufacturing units were working at reduced capacities. The shutdown took place in the month of April 2020, when United States’ ethanol production fell to its lowest in 12 years to 600 million barrels per day, led by a sharp decline in gasoline demand, which was caused by the lockdown. The two dry mills of ADM had a total annual producing capacity of 575 million gallons. The low season of gasoline, which, in turn, is generating low ethanol demand across North America, has been stated as the primary reason by the company behind the temporary shutdown. However, other factors involved are lower industry utilisation rate for ethanol and the 10th Circuit Court ruling on refinery exemptions. The company also stated that the recovery of the US economy in the year 2021 would play a vital role in reopening the two mills. The increasing inquiries from China about US ethanol, as the country is looking for potential imports, will also be a factor involved in reopening the mills.   On a remark made on whether the Argentinian currency devaluation will trigger aggressive selling of soybeans by farmers, the ADM CEO Juan Luciano stated that there is an ample demand from China. If the farmers in Argentina decided to sell as incentives arise, the company might only supply 5 million metric tonnes of beans, which the market will consume very quickly.   Meanwhile, China has been rebuilding its hog herd after the African Swine Fever wiped out nearly 50% of the pig population in the nation. As China rebuilds the hog herd, the farmers are focused on more professional animal production, which has led to increased consumption of corn and soybean as feedstock, besides being the reason behind the pull from China for imported corn.   China’s corn imports have increased this year, with its purchase increasing to 6.7 million metric tonnes in the initial nine months of the year, which was 72.5% higher year on year as confirmed by the data given from a Beijing-based analytical firm Cofeed showed. Since the US exported only 1.5 million metric tonnes, most of China’s corn was imported from Ukraine, at 4.9 million metric tonnes. As China’s economy is coming back to normal and Brazilian suppliers have sold their pipeline of beans, after a very long time, the global market needs US supply for both beans and corn. Despite the temporary shutdowns caused by the COVID-19 pandemic, the company’s adjusted operating profit for its Ag Services and Oilseeds segment in the third quarter increased by 4.6% year-on-year to USD 436 million. Strong industry export margins and volumes acted as the major market drivers, and the company reported a net earning in the third quarter to be at USD 225 million.   Related Links:- https://www.procurementresource.com/production-cost-report-store/ethanol https://www.procurementresource.com/resource-center/ethanol-price-trends ;
European Titanium Dioxide (TiO2) Industry Outlook
26-10-2020

European Titanium Di...

The Europe titanium dioxide (TiO2) industry is anticipated to change swiftly in the year 2021, which is a fallout of Europe’s declining GDP in 2020. The GDP of Europe is likely to fall by 10.2% in the year 2020, followed by the expected improvement of the Eurozone to 6.0% in 2021, according to the data collected by IMF in mid-2020. Therefore, the situation of the Eurozone, which is likely to be ameliorated, has made the European GDP optimistic. This optimism is likely to be a boon for the TiO2 industry as TiO2 is strongly tied to GDP. TiO2 is used as a white powder pigment in products such as paints, coatings, paper, plastics, inks, fibres, and cosmetics. Second Wave of the Pandemic There is a growing anxiety among the Europeans as the second wave of the COVID-19 pandemic has the potential to hinder the recovery of GDP. This could happen if the lockdowns are to be implemented again. However, this anxiety might be mitigated by the localised measures favoured by the governments and the citizens. Meanwhile, the bearing of market sentiments and activity will depend on the approval of the corona vaccine, which is anticipated to get approval in 2021. For now, a substantial EU recovery package has been issued by the governments to tackle the market conditions amidst the coronavirus pandemic. The recovery package of worth Euro 750 billion is aimed towards supporting demands for certain segments such as “green” construction projects and electric vehicles. The demand for TiO2 is likely to be bolstered because of this much needed financial aid given to these segments.   Slow Recovery in the Construction Sector   The construction activity in Europe is unlikely to return to pre-pandemic levels until Q3 2021. In addition, the downturn is more severe in Western and Southern Europe. Concerns remain about investments in construction projects, especially in the commercial building sector, because of the growing adoption of the work-from-home model to curb the pandemic. Due to the pandemic-induced recession, the European building material and construction industries will probably suffer. This is not good news for the European GDP. However, one sigh of relief that can be considered is that the construction industry is likely to recover in 2021-2022. Once the vaccine is approved, or lockdowns are lifted, and localised measures are taken, then the building and construction industry is likely to rebound in the next few years, aiding the growth of the Europe titanium dioxide (TiO2) industry.   Robust Demand from the Do-It-Yourself Sector   Apart from the pharmaceutical sector, other sectors have not been very productive in the year 2020. However, the do-it-yourself sector is one of the few sectors which has benefitted from the coronavirus-induced circumstances. This happened because of the prolonged stay-at-home measures, which encouraged consumers to carry out more home renovation projects. The activities related to DIY have been higher than expected, especially during the peak season, for paint applications. This has provided further growth opportunities for the Europe TiO2 industry.   Recovery Packages   Since TiO2 industry is strongly dependant on the GDP of Europe, the recovery packages to sustain the volatile market conditions are of grave importance. These recovery packages and various government incentives are likely to propel the demand for TiO2 in the auto, paints, textile, and construction sectors. As of mid-September, dwindling hopes of a trade agreement being reached between the UK and the EU is unsettling the industry players, especially as there are two TiO2 production sites in the UK. The UK is the net exporter of TiO2. If there is a no-Brexit deal in 2020, then a tariff rate of 6% would get implemented.   Supply Scenario The supply of TiO2 has faced a crunch in the European market due to the permanent closure of Venator’s TiO2 Pori plant in Finland. But the supply shortage is likely to be mitigated by the factors such as the availability of alternative supply options and Venator shifting around 45,000 tons of its previous Pori specialty TiO2 production sites within its network.   Related Links:- https://www.procurementresource.com/production-cost-report-store/titanium-dioxide https://www.procurementresource.com/resource-center/titanium-dioxide-price-trends ;
Coca-Cola Sees Surges in Out-of-Home Demand Post-Lockdown
22-10-2020

Coca-Cola Sees Surge...

Coca-Cola, the American multinational beverage corporation, has emerged from the lockdown period due to an increase in its beverage demand across the global market. The rising demand is a result of entertainment units, such as gaming parlours, cinema halls, restaurants, and more, reopening across the world. This demand was required after the shattering second quarter and has helped the world’s largest soda maker bounce back in the market. The increased demand is expected to return Coca-Cola to its pre-COVID revenue generation in the span of a year. The American beverage producing giant generates half of its revenue by selling its soft drinks to public venues such as restaurants, cinema theatres, and more, and due to their closure caused by the COVID-19 pandemic, Coca-Cola’s revenue took a massive hit. The company also laid off about 4,000 workers in the United States. At the height of lockdown, in the month of April, the beverage company faced a 50% decline in away-from-home sales. However, the international sales eased up in the third quarter of the year, with the slump getting over due to sales of its trademark Coca-Cola and Coca-Cola zero sugar beverages.   The company currently fears the rising numbers of COVID-19 cases in the winter season, which might lead to regional lockdowns across the world, leading to a disturbance in the recovery of away-from-home sales. Even though the company is not expecting the peak levels of global lockdowns to return due to the rise in COVID-19 cases domestically, it is prepared for future setbacks caused by the local spike in cases and domestic restrictions and closures.    The company’s research during the lockdown periods showed the consumers buying more sparkling soft drinks and juices from the grocery stores and online. This has helped create a demand for Coca-Cola’s product despite the lockdowns across the world. Thus, the company believes that the sales will be steadily increasing, even if coronavirus’ effects linger for another quarter. Due to the increasing disturbances caused by the pandemic, Coca-Cola has decided to discontinue numerous of its beverages such as ZICO coconut water and TaB sodas in order to implement on its strategy to streamline its beverage portfolio and focus more on its products that are generating more sales in the international market.   In stocks, on per share basis, the Atlanta-based company generated 9 cents above the estimated amount and further generated a net revenue of USD 8.7 billion globally, which was also higher than the estimates.   Meanwhile, the rival beverage company PepsiCo Inc. too survived the slump caused by the lockdowns with more sales generating from convenience stores and gas stations as well as a good demand for snacks.   The Coca-Cola company, with lesser restrictions in the post-lockdown period, is expected to flourish and is projected to generate pre-COVID level revenue with its strategical focus on its best-selling products. The American beverage giant is expected to boost its international sales by selling its best-product on an area-specific basis. The company’s sales through its other beverages than the Coca-Cola trademark, such as Coke-Zero and Diet-Coke, are also estimated to further boost the away-from-home sales and generate more revenue. Also, as the lockdown scenarios ease-up across the world, more and more public venues are expected to reopen, which is forecast to increase the global demand even further. ;
Amazon Makes a USD 100 Million Logistics Investment in Mexico
22-10-2020

Amazon Makes a USD 1...

Amazon, an American-based multinational technology company, has invested USD 100 million in opening new warehouses in Mexico. This step is taken by the multinational company as an attempt to establish its first shipping centres outside the populous capital area in order to facilitate faster deliveries. These warehouses will enable the multinational company to make their deliveries faster, which will lead to a faster growing business, producing more revenue for the company.   The new facilities include two fulfilment centres, out of which one is near the northern city of Monterrey and the other one near the central city of Guadalajara. It also includes a support building in the State of Mexico, in the suburbs of Mexico City. In addition to these facilities, Amazon has also opened 12 more delivery stations, bringing a total of 27 delivery stations in the country.   The establishment of solid infrastructures across the country allows the company to reduce the proximity of the company’s product to its consumers, which allows for much faster deliveries. Since Monterrey and Guadalajara are the two major metropolitan areas in the country of Mexico after the sprawling Mexico City, where Amazon already have delivery centres, the deliveries are expanding rapidly as the country passes the COVID-19 wave. In order to battle the increasing deliveries and faster response, the decision to establish a solid infrastructure as delivery centres was taken. The new facilities are said to offer 1,500 direct and indirect jobs to the domestic population while covering an area of 69,000 square metres. The new and local warehouses being built in the metropolitan cities are likely to help the small and medium sized domestic businesses to ship their products at a lower cost and at a much faster pace.   Amazon, with its new investment, now runs a total of five fulfilment centres, two support buildings, and two classification centres across the country of Mexico, where the company established its marketplace in the year 2015.   Not just Mexico, the American multinational company is also striving to make inroads in the country of Brazil. Recently, Amazon has opened its fifth fulfilment centre in the country with an area of 100,000 square metres. Although, both the countries have the biggest economies in Latin America, Amazon is competing with the domestically known retailers for shopper’s loyalty, despite its ranking as the world’s largest online retailer.   With increasing infrastructure across the world, it has become easy for the multinational company to deliver the goods faster and at much cheaper rates as they save money from not using third party delivery companies. The infrastructure also boosts local businesses by giving them a platform and expanding their reach of consumers from a domestic to national and international platform. It even helps the consumers to receive goods at a faster and cheaper price, which benefits the online retail market, which, in turn, benefits Amazon in its revenue. ;
Liberty Steel’s Non-Binding Offer to ThyssenKrupp Steel Unit
16-10-2020

Liberty Steel’s Non-...

In an announcement made on 16th October 2020, Liberty Steel proposed a non-binding offer to ThyssenKrupp for its steel unit in Europe. Privately owned Liberty Steel believes that the merger with ThyssenKrupp Steel Europe will prove profitable on the economic, social, and environmental front for both the companies. However, no financial details have been disclosed. The big step by Liberty Steel was followed by Sanjeev Gupta, executive chairman and CEO of Liberty Steel, who announced his keen interest in acquiring and investing more into stressed assets in the metals and mining space across the globe as well as in India.   Liberty Steel Group, a privately owned international company, led by Sanjeev Gupta in an announcement on 16th October 2020, has made a non-binding indicative offer to acquire the steel units of Thyssenkrupp, a German multinational conglomerate based in Europe. The combination of Liberty Steel and ThyssenKrupp Steel would provide a transformation experience and entrepreneurial approach, which will give both the companies a strong and steady position to tackle the challenges faced by the European Steel Industry and accelerate the transformation to GREENSTEEL. Liberty Steel is a major global steel and mining business that generates annual revenue of USD 15 billion, with a total steelmaking capacity of 16.6 million tonnes. On the other hand, ThyssenKrupp has around 11 million tonnes of capacity and works internationally for a wide range of industries, including engineering, special vehicle, household appliances, energy, packaging, auto, and construction sectors.   ThyssenKrupp Steel, after ArcelorMittal, is Europe’s second-largest steelmaker that was looking for a bail-out, including financial aid from the German State. Liberty Steel’s current proposal is a non-binding indicative offer being conducted on a non-exclusive basis. However, the proposal is in an early stage in order to determine if there’s a certainty that the discussions will lead to a successful agreement and transaction.   The non-binding offer is believed to be followed by Tata Steel’s proposal, a year earlier, for a joint venture with ThyssenKrupp, which was blocked by the competitive watchdog, European Commission. The non-binding indicative offer is supported by various financial institutions, and Liberty Steel also seems open to intensifying the dialogue with ThyssenKrupp and is willing to engage in further due diligence to present a potential binding offer.   From an economic standpoint, there is potential for a compelling industrial concept which says that the businesses are facilitating one another with respect to their assets, product lines, customers, and geographic footprint, as claimed by Liberty Steel in its announcement. Liberty Steel recently also acquired the Hayange business in France, which was previously owned by British Steel. In a recent interaction session, Sajeev Gupta also mentioned his keenness in investing and acquiring more stressed assets in the metals and mining space across the globe as well as in India. The Liberty group entered India earlier this year with the aim of acquiring bankrupting steelmakers like Adhunik Metaliks and Zion Steel for INR 425 crore in a cash deal. Shortly after, Sajeev Gupta showed interest in acquiring the UK-based Port Talbot plant from Tata Steel.   The non-binding indicative offer given by Liberty Steel is yet to be reviewed by ThyssenKrupp, and any financial details are yet to be disclosed by both the companies. The offer is estimated to be beneficial for both the companies economically, socially, and environmentally. The assets being merged by the companies will act complementary to each other, bringing more revenue in the European market and increase productivity. ;
OPEC+ Fears for COVID-19’s Second Wave
16-10-2020

OPEC+ Fears for COVI...

With a recent spike in COVID-19 cases in the United States and Europe, companies across the world fear that this second wave will lead to an oil surplus. The concerns peaked further when oil prices dropped due to this fear on 16th October 2020, with Europe and the United States continuing to drag the demand as two of the world’s biggest fuel-consuming regions. Entities like OPEC also fear that the second wave of COVID-19 cases, as well as a push from the Libyan output, can push the market into surplus by next year. A panel of OPEC+ producers, in a Joint Technical Committee, has considered the worst-case scenario during their monthly gathering on 15th October 2020. The panel, in October, stated that the earlier signs of economic recovery in some parts of the world are overshadowed by growing scepticism and fragile conditions about the intensity of the recovery. In September, the committee did not see a surplus in any scenarios it considered. This surplus, which may arise due to COVID-19’s second wave, is also threatening the plans of OPEC, Russia, and allies, together known as OPEC+, by tapering record output cuts made in this year by increasing 2 million BPD of oil in the market by the year 2021. Meanwhile, there has been no indication about any plan in order to scrap the supply boost by the Organisation of Petroleum Exporting Countries.   The panel’s main agenda of discussion was, in particular, a resurgence of COVID-19 cases across the world and prospects of partial lockdowns in the upcoming winter, which can become a compound risk to economic and oil demand recovery. The document presented by the OPEC+ panel presented scenarios that included a base case in which it still showed a deficit in the year 2021 of 1.9 million bpd on an average, albeit less than the deficit of the estimated 2.7 million BPD as previous month’s base case. But under its worst-case scenario, the document stated that the global market might fall into a 200, 000 BPD surplus by the year 2021.   Earlier this year, the OPEC+ decided to make a record output cut in order to support the plummeting prices as oil demand decreased. The company has cut 9.7 million BPD since May 2020, tapering that to 7.7 million BPD from the month of August. Meanwhile, from January, the cuts are going to ease up to 5.7 million BPD.   Since the Joint Technical Committee met in September, the Libyan output has significantly increased and a global rise in COVID-19 cases has led to renewed travel restrictions in various countries, weakening demand for crude. Since Libya is an OPEC-member, it has been exempted from any production cuts.   Under the worst-case scenario estimated by the OPEC+ panel, OECD commercial oil inventories- a benchmark OPEC+ uses to gauge the market – will be high in the year 2021 compared to the five-year average rather than decreasing below that mark.   The scenario also deals with a stronger and more prolonged second wave of coronavirus in the second half of 2020 and the first quarter to 2021 in Europe, the United States, and India, which will lead to a lower economic recovery, and thus weakening oil demand. Under the document given by the OPEC+ panel’s base case, OECD oil stocks are estimated to reach a bit above the five-year average in the Q1 of 2021, before falling lower than the estimated level for post-the first quarter.   While OPEC+ takes their necessary measures in order to deal with the plunging demand in oil prices due to the fear of second wave of COVID-19 outbreak, the European and the United States’ markets are also preparing for a significant downfall in the oil and gas demand.   Meanwhile, a ministerial OPEC+ panel, known as Joint Ministerial Monitoring Committee (JMMC), will be considering the entire outlook of the scenario in which they will determine the worst-case scenarios as well as the measures to deal with those scenarios on 19th October 2020 and again on 30th November 2020 and 1st December 2020. The committee is allowed to make policy recommendations. ;
India Sees a Pre-Festive Rise in Demand for Styrene Butadiene Rubber
15-10-2020

India Sees a Pre-Fes...

Styrene butadiene rubber (SBR) has increased in demand in the subcontinent of India ahead of the festive season in November, encouraging higher offers with limited spot availability and rising feedstock cost pressure. The demand is surging as consumers are likely to buy several goods in the festive season, which increases the demand in every sector, including styrene butadiene rubber.   Spot offers for non-oil grade 1502 styrene butadiene rubber has increased by USD 50-100 per tonne on the ongoing and strengthened demand, limited supply, and rise in feedstock butadiene (BD) prices. Also, spot offers for non-oil grade 1592 styrene butadiene rubber have increased by USD 50-100 per tonne for new spot shipments as the demand in India has surged due to the upcoming festive season. On October 7th, the spot prices for non-oil grade 1502 styrene butadiene rubber stood at an average of USD 1,370 per tonne CFR (cost and freight) India, approximately USD 20 per tonne higher for week-on-week and up about 27% since early August.   Another factor that facilitates the demands for styrene butadiene rubber in the subcontinent of India is its automotive industry. Topping the list of petrochemicals that requires further hammering are synthetic rubbers such as styrene butadiene rubber (SBR), which is majorly used in the production of tyres in the automotive industry and is further used to make grommets, seals, transmission belts, and gaskets. India’s pre-festive season surge would not have taken a lift without the automotive industry’s demand for styrene butadiene rubber.   The demand for small and compact cars has surged significantly before the festive season in November in India, even with rising public health concerns due to the resurgence of the COVID-19 in the country. Even though there have been localised lockdowns throughout the nation, in order to contain the resurgence of the coronavirus, the tyre producing factories, and the automotive sector have been running at higher capacities to meet the surging demand.   Since styrene butadiene rubber acts as the key material in manufacturing tyres for the automotive industry, it further adds up to the upward pressure in the limited styrene butadiene rubber demand in India. Apart from automotive applications, styrene butadiene rubber also has industrial applications such as insulation for wires and cabling, belting, haul-off pads, roll coverings, gaskets, hoses, seals, and coated fabrics, among others. All these industrial applications will help in boosting various industries to achieve the required consumer-end demand.  The rising demand caused by the festive season will further facilitate the growth in production for Indian styrene butadiene manufacturers as well as other manufacturers. It will not only help in the production but also help in boosting the nation’s economy. ;
U.S. Energy Companies to Restore Oil and Gas Production Post-Hurricane
14-10-2020

U.S. Energy Companie...

The Atlantic hurricane season proved fatal to the U.S. soil, both physically as well as economically. Due to the rising wind speed and high waves, many oil fields were emptied. The continuous approaching storms forced many oil companies to shut down operations in the U.S. Gulf Coast. These continuous storms were declared the biggest threat in the Atlantic Ocean in the last 15 years. However, with storms long gone, the production of oil and gas in the U.S.-regulated northern Gulf of Mexico is set to make its recovery with energy companies resuming their operations and increasing the intensity of the projects. Energy companies in the United States moved ahead in restoring the production of oil and gas in the regulated northern Gulf of Mexico on 12th October, three days after Hurricane Delta made landfall. With the damage caused by the storms while operations were inactive, shut offshore crude oil, production dropped to 69.4% or 1.28 million barrels per day, on 12th October from 91% or 1.68 million barrels per day, a day earlier (11th October). Bureau of Safety and Environmental Enforcement announced that a total of 47% or 1.28 billion cubic feet per day, in offshore natural gas production was shut as of midday on 12th October. On 11th October, around 62% or 1.68 billion cubic feet per day, was shut. Companies like Royal Dutch Shell Plc, Chevron Corp, and BP Plc are also sending their workers offshore to their offshore platforms with the aim of restarting production. The Louisiana Offshore Oil (LOOP), on 12th October, also resumed offloading its tankers at the terminal in the Gulf, south of the Louisiana port. Since the LOOP is the only U.S port where larger tankers can be docked, it will facilitate the growth of oil and natural gas production in the region. Total SA restarted its unit at its 225,500 barrel-per-day refinery in Port Arthur, Texas, on 12th October. The refinery was earlier closed on 9th October due to a power outage caused by Hurricane Delta. ExxonMobil also made sure that its 500,000 barrels-per-day refinery in Baton Rouge, Louisiana, has also begun working normally. However, Phillips 66 did not experience any amount of disruption in the power supply by the Hurricane Delta in its manufacturing complex at Lake Charles, Louisiana, because the 260,000 barrels-per-day producing refinery was shut since 25th August due to extensive damage caused to the electrical power infrastructure by Hurricane Laura. Phillips 66 now plans to restart its operations in its manufacturing unit at Lake Charles by 18th October.    Colonial Pipeline, whose 5,500-mile pipeline system moves products from the Gulf coasts to the terminal up till the New York Harbour market, has also resumed its operations on Line-1 on the evening of 10th October but did shut down Line-2 on the same day. From 6th October till 13th October, an aggregated total of 10.9 million barrels of crude oil production and 10.4 billion cubic feet of natural gas output from the Gulf manufacturers has been shut due to the Hurricane Delta. The energy companies faced a significant loss due to the repeated encounters with storms, leading to halted operations and disturbance in the supply and demand chains as well as the production lines. The storms caused physical damage with high waves and wind speed to several manufacturing complexes and refineries, leading to massive power disruptions and property damage. However, with the clearing of the storm, the energy companies are recovering their lost revenues by sending workers offshore and increasing their productivity. The production of oil and gas in the Gulf is estimated to fully recover from the storms by the next year. However, it will take some time for them to recover from the adverse impacts of the COVID-19 pandemic. ;
Biggest Surge in China’s Imports Since the Outbreak of the Pandemic as Economy Rebounds
13-10-2020

Biggest Surge in Chi...

All industrial sectors were majorly impacted due to the coronavirus pandemic, which led to halted operations and disturbed production lines, creating an imbalance between the supply-demand chain. The shortage of manpower caused by the travel restrictions delayed the operations to another extent, which caused an increase in the prices of various goods. However, with COVID-19 cases being contained, the global economy is set to make a come-back, and China, as a nation with minimal imports during the lockdown phase, has now increased its imports significantly as the rising economy facilitates this growth.   China’s trade economy grew significantly throughout the month of September, with the    Chinese customs bureau announcing its strongest increase in imports since December last year. This has made monthly inbound shipments reach an all-time high of USD 203 billion.   Imports were increased by 13.2% in the last month as compared to a year earlier and have been estimated to grow at a constant rate of 0.4%. This was above the 2.1% contraction faced in the month of August and was a surprising turnaround.   Not just imports but exports also grew by 9.9%  in the month of September as compared to a year before. It was slightly up from August’s 9.5% growth. This was the fourth successive expansion but it was considered to be lower than the expected growth at 10%. This growth in the exports sector is the strongest that has been recorded since March 2019, when exports expanded by 14.2%.   Such an increase in imports and exports has come amid rising consumption abroad, as the markets reopened from the COVID-19 lockdowns, boosting China’s shipments.   The biggest trade relation between the United States and China shot straight up in the month of September, with China’s American import rising 24% from a year earlier to USD 13.2 billion. The surge in imports was slightly facilitated by the food shipments as China’s grain imports rose 35% from a year earlier, while China’s inbound meat compound rose 17.6% as compared with September 2019 to USD 3.7 billion. This year, China’s domestic food supply has received a major blow due to flooding and inclement weather, which has resulted in increased imports of American farm goods since the past few months, further focusing on meeting import targets laid out in the phase one trade deal.   As import prices are still lower in comparison to the last year, this implies that there has been a robust year on year import volume growth in September, which is expected to be around 20%. With the increasing domestic demand, China is expected to witness a robust growth in the coming years as well.    The number of shipments to the ASEAN group of nations also increased by 14.4% from a year before.   Currently, while China is slowly improving its imports, parts of Europe and the United States are facing renewed surges in cases of the virus, with lockdown measures and social distancing being reintroduced in various degrees. This change in the European and the United States’ economy might or might not affect the Chinese economy. However, in the second and third quarters, China seems to have benefited from the lockdowns around the globe. Some benefits included increased sales of electronics as people started working from home and exporting 43.8% of all the personal protective equipment sold in the middle of 2020.   Meanwhile, with the government easing lockdown restrictions, China imported more soybeans, semiconductors, copper, and steel products in the month of September.   According to the statistics, the demand for inspections and audits is expected to grow in the third quarter by 43% in the electricity and the electrical sectors and by 56% in house appliances compared to the previous year. However, the demand from the US and European buyers increased by 15% in the third quarter from a year ago. This reflects a pan-Asian manufacturing recovery. China’s imports have been significantly driven by such factors; thus, the changes made in the world economy will affect China’s imports by fluctuating their domestic demand. ;
U.S. Ethanol Manufacturers to Shift Their Focus Towards Sanitizer
12-10-2020

U.S. Ethanol Manufac...

The unique nature of the COVID-19 crisis proposed a new set of challenges and opportunities to various sectors of the U.S. economy and, most significantly, to the ethanol manufacturing sector. Earlier this year, in the months of April and May, ethanol manufacturers in the United States faced difficulty with their supply and demand chains. With lower demand and supply in abundance, the ethanol manufacturers now plan to shift their focus on manufacturing high-grade alcohol for the purpose of making sanitizers. Red River, Pacific Ethanol PEIX.O, Green Plains GPRE.O, and Highwater Ethanol HEOL.PK are some companies that are planning to manufacture high-grade alcohol in the long run in order to generate revenue.   In the month of April 2020, a refinery in Grand Forks, North Dakota named Red River Biorefinery, an ethanol manufacturer, resumed its operations, arguably the worst time to begin operating as the COVID-19 pandemic worsened the demand for fuel. However, by observing the massive demand for sanitizers, the company switched its focus from producing fuel ethanol to producing high-grade alcohol for hand-sanitizers. This massive demand was created due to the panic caused by the COVID-19 outbreak about sanitation requirements among the U.S. citizens.   Since April 2020, Red River Biorefinery and many other U.S ethanol manufacturers are focusing their yield on high-grade alcohol instead of using ethanol for fuel by making permanent investments. The U.S.-based companies like Pacific Ethanol PEIX.O, Green Plains GPRE.O, and Highwater Ethanol HEOL.PK have said that they plan to boost their capacity for high-grade alcohol. The reason given by the majority of the companies, who were purely inclined towards the fuel sector in the pre-COVID era, to shift their focus from fuel-grade ethanol to high-grade alcohol is the sudden shift in supply and demand and a promising case margin comparatively between fuel-grade ethanol and high-grade alcohol. The sudden shift of focus indicates that ethanol manufacturers see more profitability in hand hygiene because of the COVID-19 outbreak than in the production and transportation of fuels.   As of January 2020, the United States’ fuel ethanol production capacity has been estimated to go up to 17.4 billion gallons per year, which was higher than 2019’s 16.9 billion gallons per year. The fuel ethanol production nationwide has risen after plummeting from 537,000 barrels per day in April 2020 to 923,000 barrels per day.   The shift of focus from fuel ethanol to high-grade alcohol has brought some positive changes for the ethanol manufacturers. Red River, with its expansion in its output for USP-grade alcohol used for sanitizers, has added loadout equipment and a tank farm in order to facilitate the increasing output, which was just under a million gallons per month. Additionally, the U.S. Corn Belt ethanol margins ETH-CB-REF have also recovered to 9 cents per gallon from April’s low of -22 cents, but they remain half of the previous year’s levels.   Pacific Ethanol Inc., a Sacramento-based producer and marketer of low-carbon renewable fuels, also reported positive and strong second-quarter results in August 2020 due to favourable margins being created by high-grade alcohol. Aemetis Inc, an advanced renewable fuels and biochemicals company, has also recently announced its recent commencement of the production of hand sanitizer under its subsidiary named Aemetis Health Products. In late August 2020, an ethanol-producing plant, Global Impact Innovation, Galva, IL, also shifted its production solely towards hand-sanitizer, with a goal of making 60,000 gallons per week.   With an increasing demand for sanitisation products such as hand sanitizers, alcohol-containing tissues, disinfectant rubs, and more, the companies shifting from fuel-grade ethanol to high-grade alcohol for a longer haul has proven to be positively impactful till now. This massive shift has brought positive feedbacks such as increased revenue generation, usage of pre-stocked chemical (ethanol), and increased shares. With no future estimates of COVID-19’s presence across the nation and a mass panic among the U.S citizens, the demand for hand sanitizer will remain promising.   Related Links:- https://www.procurementresource.com/production-cost-report-store/ethanol https://www.procurementresource.com/resource-center/ethanol-price-trends ;
Growth in Electric Vehicle (EV) Market Boosts Nickel Mining in Indonesia
10-10-2020

Growth in Electric V...

In the twenty first century, both younger and older demographics are becoming attracted towards the comfort and efficiency of electric vehicles. Also, there has been a growing concern worldwide towards the conservation of non-renewable resources and the cutting down of vehicle emissions. These factors have led to a surge in the demand for electric vehicles, thus, leading to the rising investments by companies towards securing lithium, cobalt, and graphite to produce batteries for electric vehicles. Among these, nickel is the most important metal for the American electric vehicle giant, Tesla. Elon Musk, the CEO of Tesla, has spoken out and pleaded to mining companies to expand their production capacity and increase nickel production. “To all the mining companies out there in the world, please mine more nickel wherever you are, and Tesla will give you giant contracts.” said Elon Musk.   Apart from Tesla, global automakers such as Hyundai, LG Chem Ltd, and others are also looking forward to secure raw materials to produce batteries as there has been a rise in the sales of electric vehicle (EV), attributed to government subsidies and quotas, which have been implemented to cut carbon emissions and encourage the utilisation of renewable resources. For these major automakers, one of the main destinations for securing high-quality material is Indonesia, which is the largest producer of nickel across the globe.    Tesla’s Approach to the Indonesian Government   Indonesia is the world’s largest producer of nickel and registered a production volume of 800,000 tonnes in 2019. This year, the country is focusing on increasing its nickel capacity by 46% y-o-y. It is evident that Indonesia is a crucial asset for Tesla. Therefore, Tesla has approached the Indonesian government for investing in the country’s nickel resources.  In order to process nickel locally and put more emphasis on its domestic production, the Indonesian government has put a ban on export of nickel. So, if Tesla wants to secure nickel from Indonesia, it would have to invest in the country’s nickel resources, processing nickel in the region itself.   Tesla’s Concern With Nickel   The reason for Tesla’s growing concern with nickel is the ambitious approach of Elon Musk as he focuses on gathering fresh talents from all around the world. It is clear that Musk is trying his best to expand the EV business and there is a need for high-purity material to be used for electric cars. This need is leading to an increased demand for nickel. Tesla is also looking forward to build a new venture and enter the mining and processing industry in order to produce its own battery cells, thus, making nickel an important commodity for the company. South Korea’s Venture With Indonesia The popular Hyundai Motor Group and LG Chem Ltd, which are based out of South Korea, are focusing on establishing an electric vehicle (EV) battery manufacturing joint venture in Indonesia. The major aspects of the deal, such as investment size and production capacity, have not been decided yet, but once the discussion takes place, the deal is likely to come to fruition soon.   According to Hyundai Motor Group, the company is aiming to collaborate with a number of LG Chem’s projects in Indonesia. However, no concrete or detailed discussions have taken place. Though the planned projects are void of details, according to sources, there are strong chances of a battery joint venture taking place between Hyundai and LG Chem in Indonesia. Hyundai, being one of the most popular petrol or diesel-based car manufacturer, is viewed as a relative late comer in the EV market. This deal, if it happens, is going to be the first joint venture of Hyundai in the field of EV. The Hyundai Motor Group has shown faith in Indonesia, as the country is committed to promoting the EV industry. Thus, the entry of established and new players in the electric vehicles industry into the Indonesian market is expected to provide further growth opportunities for the nickel industry in Indonesia. ;
Mondelez International Opens State-of-the-Art Cocoa Technical Centre in Indonesia
08-10-2020

Mondelez Internation...

Mondelez International, an American multinational confectionery, food and beverage, and snack food company, has opened its new ‘state-of-the-art’ cocoa crop science technical centre in Pasuruan, Indonesia. Mondelez states that the new Pasuruan Cocoa Technical Centre will entirely focus on crop science and technological solutions, which will facilitate the development of resilient and sustainable high-yielding farming practices. The centre will allow a collaboration between scientists and local farmers and suppliers in order to develop and implement sustainable farming practices within the cocoa-farming areas, such as Sumatra, East Java, and Sulawesi.   The company, with its new establishment, focuses on helping to secure a sustainable future for high-quality cocoa, and it will also aid the company’s commitment to sourcing its entire cocoa used for its chocolate through the Cocoa Life, a global cocoa sustainability programme, by the year 2025. Currently, only 63% of cocoa used by the company’s chocolate brand Cadbury, is sourced through the Cocoa Life programme. By the end of the last fiscal year, Cocoa Life had reached 175,017 cocoa farmers globally, including 43,000 Indonesian cocoa farmers.   Global Market Outlook The global cocoa market has witnessed flourishing results in the past few years with year-on-year growth. In the last fiscal year, approximately 4.85 metric tonnes of cocoa was produced and is expected to grow further in the coming years. As of 2019, the World Cocoa Foundation stated the cocoa consumption stood at 3 million tonnes annually.   However, as a result of the COVID-19 outbreak in the initial months of 2020, the production significantly plummeted. This was followed by a pinch as the global cocoa prices increased due to the inadequate supply. According to the International Cocoa Organisation, the cocoa prices stood at USD 2687.24 per tonne at the starting of this year, which was estimated as a 20% increase year-on-year. Also, the difficult weather and production cap by the West African nations, which are the largest producers of cocoa, also limited the global cocoa supply.   More concerns for the production of cocoa arises with the increase in the prices of vegetable oil that is used as a substitute for cocoa fat. Its prices have gone up by 30%, followed by doubling milk powder prices, making it harder to create a demand for cocoa. However, the major players in the global cocoa industry, such as Mondelez International Inc (owner of Cadbury), The Hershey Company (Hershey Trust Company), and Mar Inc, are still set to increase their production as the governments across the globe are easing restrictions regarding manufacturing and operations.   Mondelez International’s New Cocoa Technical Centre to Meet the Rising Demand from the Asia Pacific Market The reason behind the opening of Mondelez’s new state-of-the-art facility in Indonesia is the increasing demand in the Asia Pacific sector of the global cocoa market, which is set to become the second largest consumer of cocoa ingredients. Mondelez is determined to establish its crucial business in this sector to meet the demand immediately when it is created.   The company, through its facility, seeks to secure a sustainable future for high-quality cocoa, including other raw materials used to make food and beverages. Their aim is to drive a positive change by developing a future of sustainable snacking, which includes using the company’s global scale to create a meaningful and lasting impact.   The Pasuruan Cocoa Technical Centre will become the centre of the company’s cocoa crop science initiatives. It will bring international and local cocoa crop science experts together with suppliers and farmers in the cocoa-farming area such as Sumatra, Sulawesi, and East Java. The facility will also make it easy for the scientists to go from the labs at the centre to field sites where the company has research collaborations and on-farm activities through Cocoa Life. With this new establishment and encouraging conditions throughout the globe, the global cocoa market is set to thrive in the post-COVID time period, with increasing demand and full-scale running operations. ;
India’s Gas Imports Expected to Rise as Demand Increases
05-10-2020

India’s Gas Imports ...

India’s gas imports are expected to rise after months of rigorous lockdowns, despite various disturbances caused by the COVID-19 outbreak. While the recent monsoon season had proven to be problematic for India’s gas import, with the lifting of lockdown measures, the imports increased as well, and the demand was observed to almost reach the pre-pandemic level. Companies like GAIL have also resumed theri operations throughout the nation, which were previously either shut or were working at fewer capacities. India’s city gas distribution companies tend to supply liquified natural gas for transport, domestic households, and small industries. However, the distribution was disturbed due to the COVID-19 outbreak, leading to months of shutdowns in production chains, operations, distribution chains, and various other projects. The decrease in domestic demand for liquified natural gas was also one of the many reasons leading to a significant decrease in imports. The travel restrictions imposed by governments across the globe made it further difficult for companies to ship their cargos to different countries. The monsoon season in India also caused various transportation-related problems, which further slowed down the import activities.   Spot LNG imports by gas-based power plants reached a new benchmark in March 2020, which was recorded to be the highest for 2019-20. This sudden rise in spot LNG import was observed due to the decline in the domestic natural gas production in the last two quarters.   The liquified natural gas imports reached the lowest when the COVID-19 lockdowns hit industrial activities and mobility. In the month of April 2020, the demand was recorded to be the lowest since March 2015, according to the government data. The demand for gas only started to increase after the restrictions were eased from the month of May 2020. The domestic demand for natural gas increased and lead to a significant jump of 18% in the overall financial year of 2019-20, which was facilitated by the weaker global prices of LNG, prompting the local industry to consume more.   The City Gas Distribution companies also increased their imports in the fiscal year 2019-20. Similarly, the petrochemical industry also observed an increase in the demand for LNG imports. The LNG imports by refiners also jumped by 13.40 % in the same fiscal year. Further, all the major industries across the nation, which consume liquified natural gas, observed a significant jump in demand last fiscal year. The data released by the government show a 26% increase in the LNG imports by the power sector. Since India meets almost half of its daily gas demand via imports, it is set to increase its imports even further in the near future.   India’s gas imports are likely to increase, with GAIL, the largest state-owned natural gas processing, and distribution company, looking forward to reopening its western India imports facility, after months of lockdowns during the monsoon, due to the sudden increase in local demand, which reached pre-pandemic levels. GAIL earlier had to stop its imports of liquified natural gas cargoes at its Ratnagiri terminal in the month of May, as the monsoon season made the operations tougher due to a lack of breakwater to protect the harbour from giant waves.   With such import activity imbalance, India remained one of the few countries to develop LNG demands in Asia up to March 2020. The lockdown measures, which were meant to significantly control the outbreak of COVID-19 severely impacted the nationwide LNG demand from refineries, power plants, city gas distribution companies, as well as the petrochemical sector. In order to tackle these imbalanced equations of import activities, India is planning to add more stations to provide gas to the automobile sector and build import facilities, and pipelines as Prime Minister Narendra Modi is keen to boost the dominance of cleaner fuel in the energy mix from 6.2% to 15% by the year 2030. ;
Recovery in India’s Manufacturing Activities Amidst the COVID-19 Pandemic
03-10-2020

Recovery in India’s ...

India’s manufacturing activities flourished for a month at the beginning of the year 2020 , but with the outbreak of the COVID-19 pandemic, the situation started worsening. From the month of February till July, the manufacturing of goods faced impediments, such as the government-imposed lockdowns, disturbance in the production lines and operations, labour shortage, shortage of raw material, and more. However, in the month of August and September, the manufacturing activities started its recovery due to the easing restrictions and government allowances. The Indian manufacturing sector remained relatively secured from the disturbances caused by the COVID-19 outbreak until the month of March. The decline in manufacturing activities reflected in the Purchasing Managers’ Index (PMI), which slumped from 54.5 in the month of February to 51.8 in the month of March. The reading was accounted to be the slowest since November 2019. The decline was the result of  a slow increase in output and new businesses, together with a steep decrease in exports followed by the outbreak of the COVID-19 pandemic, which brought down the Indian manufacturing activities to a four-month low. The decrease in new export orders was the result of a faltering international demand and rapid increase in the number of COVID-19 cases worldwide, which significantly contributed to the slowdown.   In the month of May and June, when the Indian government classified food and pharmaceuticals as essential services for the common consumers, some companies like Brenntag India, which is in the chemical the chemical distribution business and caters to a wide array of companies in the food, pharmaceutical, home-care, coatings, animal nutrition, lubricants, agro, and electronics sectors, decided to concentrate its energy on getting its essential supply chains running.   LANXESS, a German speciality chemicals company that supplies to many industries such as agrochemical, pharmaceutical, refinery, FMCG, food, and more and also has manufacturing units at Jhagadia in Gujarat and Nagda in Madhya Pradesh, was also given permission to run its facilities at a lower capacity utilisation but with restrictions.    Meanwhile, companies like Panasonic Life Solutions, which has a revenue turnover of INR 4000 crores revealed that this manufacturing slowdown had no impact on its business until the month of June, although, it lost out majority of its revenue during March sales, which are considered to be the highest.   By the end of July, many manufacturing sites were operational at significantly lower capacity utilisations and output due to the restrictions in place. However, for manufacturing firms who were producing non-essential goods, there developed other challenges such as sudden shutdowns and absence of maintenance staff that would help the plant run, with the government allowing only 1-3% of the staff to maintain the plants.   In the month of August, the factory activities grew for the first time in five months, but the bounce was unlikely to signal a quick turnaround in the Indian economy, which contracted at its steepest pace on record of 23.9% annually, last quarter, while it was expected to be under recession throughout the year. The August data highlighted the upscaling developments of the Indian manufacturing sector, signalling towards a slow recovery from the second quarter. Overall the demand and output for goods reached a new height since the month of February and increased for the first time in five months, although foreign demand contracted for the sixth time in a row.   India’s factory activities increased at its fastest pace in over eight years in the month of September as relaxation in the government restrictions due to the COVID-19 pandemic drove a surge in output and demand. The manufacturers across the nation increased their outputs for the second straight month in September amid loosened restrictions, such as the unlocking of state borders, lesser travel restrictions and others, and a significantly larger demand. The increase was deemed as sharp. Although, the input prices followed a slower increase in September, manufacturers raised their selling prices after having cut them since the month of March in order to secure sales. Back-to-back increase in new business inflows was observed, and the rate of expansion was the fastest since early 2012. Moreover, the exports bounced back following six successive months of contraction, while inputs were sold at a sharper rate and the business confidence also strengthened. The September increase in input was considered to be the strongest in over eight-and-a-half years.   As the manufacturing sector is increasing at a steady speed, about one-third of the manufacturers expect to turn this steady growth into a faster pace in the upcoming 12 months, against 8% that foresee a contraction in the sector, resulting in the strongest degree of overall optimism in over four years. ;
The Rise of the Indian Steel Sector
01-10-2020

The Rise of the Indi...

India is the world’s second largest steel producer, and the growth of the Indian steel industry has been aided by the easy domestic availability of raw materials, like iron ore and cost-effective labour. Therefore, the steel sector is a major contributor to India’s manufacturing output. India’s steel production reached 111.2 million tons in the year 2019, and in the next few years, the steel industry is likely to ameliorate. The Indian steel industry has always strived towards continuous modernisation, upgrading older plants to modern facilities in order to achieve higher efficiency levels. Most of the companies in the industry are focusing on modernisation and expansion of plants, adding state-of-art facilities. As India is a developing country and one of the fastest growing economies of the world, the demand for steel is likely to upsurge in the region owing to the growing focus to scale-up the infrastructure and construction processes across the country. Major Investments in the Steel Sector   The steel industry associated with the mining and metallurgy sectors has seen major investments and developments in 2019 and 2020. In December 2019, Arcelor Mittal acquired Essar steel at INR 42,000 crore and formed a joint venture with Nippon Steel Corporation. In February 2020, GFG Alliance acquired Adhunik Metaliks and its arm Zion Steel for INR 425 crores, making its entry into the steel market of India. Apart from these investments, the production capacities too saw an upsurge over a period of time. For example, the production capacity of SAIL is anticipated to hike from 13 MTPA to 50 MTPA by 2025, with an estimated total investment of USD 24.88 billion.   JSPL Production Increase The steel production capacity of JSPL is estimated to increase by 19% in the year 2020 to March 2021. The firm has been witnessing a steady rise in the demand for steel and is expecting an eight-fold increase in the export orders. The company is estimated to export 2.5 million tons of steel in 2020/21, up from 300,000 tons the previous year. Meanwhile, JSPL has already shipped more than half of its exporting target for this year. This was made possible due to the higher orders from the world’s top consumers, such as China, Vietnam, Europe, and Saudi Arabia. Due to the further boosting of steel demand in China, Indian steel mills more than doubled their exports in April-July. The deals pertaining to the sales of steel took place amidst the rising tension between New Delhi and Beijing over the LAC.   Demand in the Defence Sector   The demand for steel in the defence sector has been driving the Indian steel market. This demand is further accelerated by the need for alloys in order to carry out the shipbuilding projects and other activities. India is the sixth biggest defence spender in the world and is focussing on indigenous manufacturing. This encouragement is further boosted by the rising tensions between Indo-China border disputes.   There has been an unexpected increase in the demand for steel in the defence sector. India’s rising focus on domestic manufacturing in the defence sector has further aided the steel sector as the Ministry of Defence has unveiled several products manufactured in India over the last two years like the composites Sonar dome, a Portable Telemedicine System (PDF) for Armed Forces, HAL Tejas Light Combat Aircraft, Penetration-cum-Blast (PCB), and Thermobaric (TB) ammunition specially designed for Arjun tanks, a heavyweight torpedo, Varunastra, manufactured with 95% locally sourced parts, and medium range surface to air missiles (MSRAM). India is accelerating towards massive defence modernisation, under which ships, armoured vehicles and helicopters are to be built in the country, as opposed to being imported. Therefore, the domestic market seems very promising and the demand for steel is likely to upsurge after October 2020, with 80% of the overall steel sales taking place within India. ;
Devon Energy Acquires WPX Energy for USD 2.56 Billion
29-09-2020

Devon Energy Acquire...

Devon Energy Corporation, a United States based oil and gas producing company, on 28th September 2020, announced the acquisition of its shale-oil producing rival WPX Energy, in a deal worth USD 2.56 billion to establish its dominance in the United States’ oilfields. The deal covers all the stocks of WPX Energy and was a result of the United States shale companies generating a weak revenue, which was caused by the weakening of crude prices amid the COVID-19 outbreak and, thus, have struggled to raise new capital to restructure its debt. As the oil and gas producing companies are seeking and adopting new methods to survive the COVID-19-created slump in demand, the little or no progressions in deals are becoming the norm. Devon Energy Corporation believes that the acquisition of WPX Energy will provide the combination with capabilities to withstand any future problems. Investors facilitated the deal, and WPX Energy shares closed up 16.4% at USD 5.17 while Devon’s rose by 11.1% to USD 9.80. EnCap Investments, WPX Energy’s largest shareholder, has backed this deal and voted its 27.3% stake against any proposals that might be presented to WPX Energy. Since the prices for crude oil dropped in April, Devon’s deal has become the second-largest deal after Chevron Corps acquisition deal with Nobel Energy in July for USD 5 billion in stock and assumption of debt. The deal is meant to drive significant cost synergies.  According to Devon, the deal is expected to be fully closed in early 2021, with cost cuttings and increased cash flow by USD 575 million by the end of the next year. The transaction is likely to create the United States’ largest unconventional oil producers. This combination of the two oil and gas producing companies will allow Devon to own 57% stakes, it will hold 400,000 net acres in the Delaware Basin of West Texas and Southern New Mexico, and can produce about 277,000 barrels of oil per day. The companies have decided to pay dividends using a “fixed plus variable” strategy, thus, issuing a set 11 cents per share each quarter, along with up to 50% of the remaining cash flow. This pay-out model is being viewed as a new model for the industry that has fallen out of favour with investors after prolonged revenue generation failure. As a part of the deal, the shareholders of WPX Energy will receive a 0.5165 share of Devon’s common stock in exchange for each share of WPX common stock owned. The merger will result in Devon’s transition to a business model, prioritising free cash flow generation over production growth. The free cash flow will then be deployed towards the higher dividends, debt reduction, and opportunistic share repurchases. Since Devon and WPX share similar working values, the combination will optimise the strength of both companies’ operating philosophies in order to grow and form a successful business. ;
ArcelorMittal to Sell Steel Assets in the United States to Cleveland Cliffs
28-09-2020

ArcelorMittal to Sel...

ArcelorMittal S.A, a Luxembourg-based multinational steel manufacturing corporation, has planned to sell its plants in the United States to an Ohio-based mining company, Cleveland Cliffs Inc. The deal is worth USD 1.4 billion and will grant ownership of more than a dozen plants and mines to Cleveland Cliffs Inc., which will further elevate their status as a steel producer.   This deal will further diminish ArcelorMittal’s position as one of the world’s leading steel makers as it makes efforts to tackle the problems caused by COVID-19 pandemic. China’s Baowa Steel group Corp. is more likely to succeed ArcelorMittal in the upcoming years as the industry’s biggest competitor because of the continued Chinese production despite the halts in production across the globe. The COVID-19 pandemic has significantly affected the steel manufacturing industry across the globe as the demand and production fell after the automotive sector and some factories were left idle this spring. As compared to the last year, the United States’ steel production was also 20% lower than expected, as multiple plants were operating at only two-thirds of their capacity. In Europe, which is also ArcelorMittal’s biggest market, the production fell by a significant percentage, which included a 31% decline in France. Meanwhile, the production in China has increased up to 8.4% this year, which has allowed its steelmakers to significantly increase the production of steel to be exported from China to other nations.   Although ArcelorMittal entered the United States steel market in the 1990s, it became a major competitor only in 2004 by acquiring International Steel Group in a USD 4.5 billion deal, which comprised of several steel companies acquired by Wilbur Ross in the early 2000s. The plants that are being acquired in the deal are decades old and operated by unionized workforces in steelmaking hubs of Indiana, Ohio, and Pennsylvania. They majorly supplied their manufactured steel to the appliance and auto manufacturers in the mid-west, but now the manufacturing and steelmaking have steadily shifted towards the Sun Belt states.   Other steelmakers have also emerged in the market, such as Nucor Corp. and others who could produce steel more inexpensively than ArcelorMittal and other legacy steelmakers. They are now responsible for the majority of the steel produced in the United States. The Luxembourg-based steel maker, ArcelorMittal, was the second largest steel manufacturer in the United States until last year, with Nucor leading the market. Last year, 14% on ArcelorMittal’s global steel output was only dedicated to the United States’ market, which generated a revenue worth USD 9.9 billion. However, after the current deal, ArcelorMittal will only be operating one steel-finishing plant in Mobile, Alabama, with plans of upgrading the plant into a steel manufacturing plant. Cleveland Cliffs has been a constant supplier of iron ore to ArcelorMittal and other steelmakers. The company even acquired steelmaker AK Steel in Ohio last year in order to preserve a significant consumer of iron ore, who was struggling to make profits.   Cleveland Cliff’s acquisition of ArcelorMittal’s plants in the United States will act as a major shifting point of the focus towards steel production. The company will acquire 14 plants that produce steel or roll and coat it; two iron-ore mining operations; and three coal-coking plants. The deal would allow Cliffs to merge its large inventories filled with iron ore with ArcelorMittal’s steel production plants, which would employ about 25,000 workers and make Cleveland Cliffs into a fully integrated, high value steel enterprise. The deal has also reflected towards the stock market as the shares of Cleveland Cliffs were up by 10% at USD 6.48 on Monday afternoon.   Cleveland Cliffs will complete this deal by paying one-third of the USD 1.4 billion purchase in cash up front and the remaining two-thirds in Cliffs stock. Post-deal, ArcelorMittal will hold 16% stakes in Cliffs. ArcelorMittal even referred to a hand over USD 500 million back to the investors in share buybacks.   ArcelorMittal refers to the deal as a strategic repositioning of assets and will continue to provide steel to the United States market through its plants in Canada, Mexico, and Alabama. The transaction of the deal with Cleveland Cliffs is expected to be completed by the fourth quarter of this year, subject to customary closing conditions and regulatory approvals. ;
Total to Establish a New Sustainable Plant for PLA Production
24-09-2020

Total to Establish a...

Total, the French integrated oil and gas MNC, will quit its processing unit at its Grandpuits’ crude oil processing refinery and convert it into a ‘zero crude platform’. The facility will be converted in order to produce sugar-based polylactic acid (PLA) and biofuels. The total capital expenditure for this project is estimated to be EUR 500 million. Total is also teaming up with Plastic Energy, a global chemical recycling firm, in order to build a chemical recycling unit to recycle plastic waste into polymers feedstock that can be used to make food packaging. Total will become the largest shareholder (60%) of this chemical recycling plant, and Plastic Energy will hold the remaining 40% of the stakes. The facility is said to be operating entirely by solar energy-generated electricity, which will be derived from the two photovoltaic solar plants. These solar plants will be built in the French facility with an output of 52 megawatts. This new PLA unit will be a joint project by Total and Corbion, which will be a follow-up from their last endeavour in Thailand two years ago. The plant, which is to be commissioned to be finished by 2024, will be able to produce 100,000 tons of PLA per year and 400,000 tons of biofuels per year, which includes 170,000 tons of sustainable aviation fuel, in line with the French nation’s targets to make 2% aviation fuel renewable by 2025 and 5% by the year 2030. The rest of the yield from this facility will include renewable naphtha, bioplastics, and renewable diesel. According to Total, the demand for PLAs is increasing at a rate of 15% per year. This upcoming plant will allow Total to meet its targets, which is to produce 30% of its polymers from recycled materials by the year 2030. The plant is being established with an innovative recycling technology, which converts the plastic wastes into a liquid called Tacoil by using a method called the pyrolysis process. This resultant Tacoil can then be used as a feedstock in the process of converting different polymers with identical properties into virgin polymers.   The refinery situated in Grandpuits, southwest of Paris, currently has a capacity of up to 100,000 barrels per day of crude oil. With more push towards renewable sources from around the globe, it is likely to decline the demand for crude oil. Thus, the European Union’s Green Deal is also aiming to entirely terminate the carbon emissions of its 27 members by the year 2050.   The new facility will derive feedstock from animal fats, used cooking oil, as well as vegetable oil. However, the facility will not be using palm oil as it has been blamed by environmental groups for increasing deforestation. In the first quarter of 2021, the crude refinery platform of the facility will be discontinued, and the storage of petroleum products is expected to end by 2023. The total aim for the new facility will be to produce 400,000 tons of biofuels per year, out of which 170,000 will be focused on the aviation industry, 120,000 tonnes will be renewable diesel for the automotive industry, and 50,000 tonnes of renewable naphtha will be used to produce bioplastics. This steady shift will then allow Grandpuits plant’s capacity to reach a 28-megawatt peak and the capacity at Gargenville to a 24-megawatt peak.   Due to the COVID-19 impact on the operations, Total is said to experience an overhaul at Grandpuits, which will be followed by layoffs in employments. Out of 400 existing jobs at the refinery currently, 250 will be kept following the overhaul, and Total will also create 15 new positions in the bioplastics plant. However, the three-year overhaul is expected to create around 1000 more jobs. ;
Investments in Reliance Retail and Reliance Digital Rises up to USD 22.43 Billion
23-09-2020

Investments in Relia...

Reliance Industries have collectively raised INR 1.65 trillion (USD 22.43 billion) in the span of a month through stake sales at its digital unit Jio platforms and its retail arm, Reliance Retail Ventures Limited. The latest investment in Reliance Retail has come after the giant conglomerate has raised INR 1.52 trillion at its digital unit through selling its stakes to 13 global investors.   Investors in Jio include Silver Lake, Facebook, General Atlantic, Vista Equity Partners, KKR & Co, Abu Dhabi Investment Authority, Mubadala, TPG, Public Investment Fund of Saudi Arabia, Qualcomm, L. Catterton, Intel Corp, and Alphabet Inc’s Google.    On Wednesday, KKR & Co. Inc, an American global investment company, invested INR 11,367 crore in JIO platforms for 2.32% stake, followed by another announcement to invest INR 5,500 crore into Reliance Retail Ventures Limited, a Reliance Industries Limited subsidiary. This investment will be translated into a 1.28% stake in the Reliance Retail venture Limited on a fully diluted basis. Over the past few months, the total investment in Jio platforms and Reliance Retail Ventures has raised a total of INR 65 trillion (USD 22.43 million).    Reliance, through its stake sale has now sold 33% of Jio shares, including a massive USD 4.5 billion investment from Google, which has given the digital unit an equity valuation of USD 59.32 billion. Earlier in September, the company also raised USD 1.02 billion from Silver Lake Partners for its retail business.   The stake sales have not only profited the conglomerate in its retail and digital arm but also made it net-debt free in June by raising Reliance’s shares up till 173% in the last three years. This has made the company’s current market capitalisation rise to USD 194.78 billion.   The telecom unit of Reliance had 392.7 million subscribers by the month of May, since its launch in late 2016. This has made Jio, the fastest growing telecom in the world. This has proven that the digital arm of Reliance has the potential to grow in the future, which is the reason behind attracting investors from around the globe.  The sudden shift of interest by Reliance has arrived due to Reliance’s oil and gas refining business underpinned growth as they have taken a sharp hit with oil prices collapsing. The company reported a 44% fall in July for its quarterly revenue as the COVID-19 pandemic destroyed the demand for refined oil products.   In addition to operating the world’s largest refining complex, Reliance also operates supermarkets and TV channels, which it plans to expand over the years in order to compensate for its oil and gas business. ;
Shells to Cut Cost on Oil and Gas Production, Shifting Focus on Renewable Energy
22-09-2020

Shells to Cut Cost o...

Royal Dutch Shell, a multinational British and Dutch oil and energy company, is now slicing up about 40% off the cost of producing oil and gas in a major drive to save its money flow, in order to focus majorly on the renewable energy and power sectors.  Shell’s new project of cost-cutting is internally known as Project Reshape and is expected to be completed by the end of this year. The cost-cutting will affect Shell’s three main divisions, and any savings will come after the USD 4 billion target set in during the COVID-19 crisis.   Reducing costs is also important for Shell as its move to enter the renewable energy and power sector will bring a relatively lower profit margin. The competition with other already existing companies in this sector, such as BP and Total, with a battle for market shares as economies around the world go green, will only intensify the utilities. The company believes that their model to operate so far have been fruitful but not suitable for the future market and hence the big step to cut the cost. The repercussions of this cost-cutting will not just be structural but cultural as well. The previous year, Shell’s overall capital spending accounted for USD 24 billion and the operating cost came near to USD 38 billion. Shell, now, with its cost-cutting measures, is also looking for new methods to reduce its spending on oil and gas production, its most expansive division. The company is looking forward to reducing up to 30%- 40% through cuts made in capital spending and operating costs of new projects.   Besides cost cutting, the company also plans to reduce the number of its oil refineries from 17 units last year to 10 units this year. Shell will be focusing only on its major oil and gas production hubs, such as the Gulf of Mexico, the North Sea, and Nigeria. There have also been deep budget cuts in the integrated gas division of the company, which also runs its liquified natural gas operations and some gas production. For downstream, the company plans to focus on its 45,000 service stations across the globe. It is the world’s biggest services network and is considered as one of its “most high-value activities” and is expected to play a very important role in the transition.   The company is also going through a strategic review of the organisation’s energy transition to ensure a smooth and prospering transition. Shell’s recent drive of cost cuttings has been a followed step of moves recently done by its European rivals ENI and BP, both of which plan to reduce its focus in the oil and gas business in the coming decade and push their resources towards building a new low-carbon business.   In 2016, when Shell acquired BG Group in a USD 54 billion deal, it was followed by a cost cutting drive, which led to a number of lay-offs. Shell’s operating cost, which included sales, manufacturing, distribution, research, production, and administration, fell by 15% or USD 7 billion between the years 2014-2017.  Thus, the step of cost cutting will be facilitated by carefully cutting thousands of jobs and removing management layers in order to save money and to create a nimbler company as it prepares to restructure the business.   However, a sharp global economic slowdown due to the COVID-19 outbreak, coupled with Shell’s plans to curb its carbon emissions to net zero by 2050 and a shift in the energy mix, has only created new opportunities for the company. Shell plans to cut its 2020 expenditure plans by USD 20 billion, which earlier was USD 25 billion, due to the collapse of oil and gas prices globally amid warnings that it could have major impacts on the global energy demand caused by the COVID-19 pandemic. The company still plans to save USD 3 billion to USD 4 billion in cost savings by the month of March 2021. The review of the refining processes of the company is also focused on increasing the production of new low-carbon biofuels, chemicals and lubricants, which is possible by using low-carbon raw materials such as cooking oil. ;
The Unstoppable Pharma Sector of India, Targetting USD 100 Billion
21-09-2020

The Unstoppable Phar...

The Rising Indian Pharmaceutical Industry Supplying over 50% of the global demand for various vaccines, 40% of generic demand in the United States of America, and 25% of all medicines in the United Kingdom, India enjoys an important position in the global pharmaceutical industry. Possessing a large pool of scientists and engineers working on their full potential, India is the largest provider of generic drugs globally. India accounts for 3% of the global pharma sector and currently, the market has reached USD 40 billion. Out of this, around USD 19-20 billion of the country’s pharma output is exported.   The Indian pharma sector is soon estimated to be a USD 100 billion industry. This milestone is likely to be achieved due to the following reasons: Expiry of Patents: Considering the patents that are likely to expire in the next 4 to 5 years, roughly around USD 200 billion of generics are expected to enter the market. During this period, the global generics market is expected to expand from USD 270 billion to USD 450 billion. This can prove to be a boon for the Indian pharma market as the country is one of the leading exporters of generic drugs as well as key starting materials or APIs. If the generics market in India is accelerated to 17% from the current 11%, then India has a significant opportunity to drive the formulation business from USD 30 billion to USD 75 billion owing to the region’s exposure to exports. This formulation business can be bolstered by another USD 10 billion contributed by biosimilars or biologics, while the export of APIs will add another USD 8-10 billion. India’s biotechnology industry, comprising of biopharmaceuticals, bioservices, bioagriculture, bioindustrial, and bioinformatics, is anticipated to grow at an annual growth rate of around 30%. All these factors are expected to drive the market to reach USD 100 billion by 2025.  Need for Advanced Technology   The advancements in technology are significantly contributing to the growth of various sectors. Today, several technologies play a crucial role in buttressing the pharma companies, further allowing them to reach their targets. In today’s era, there is a need to build a platform where technology can be used for consolidating sourcing, supply chain, regulatory, and quality approvals. This would further allow to aggregate all the discreet capacities available from individual companies and establish alliances with large global and domestic pharma companies. Seeking refuge towards the technology will also help the pharma sector revive through the COVID-19 setbacks.     Building a Transparent Fiscal Support Mechanism There is a need to build a transparent fiscal support mechanism, which involves approaching MNC’s like GSK, Pfizer, and Novartis, which have been the global key players in the market for years. The Indian domestic market as of today in terms of exports is worth USD 18 billion, which is likely to reach anywhere between USD 25 billion and USD 30 billion soon. But there lies a larger opportunity in exports, and looking at a larger ecosystem is the need of the hour. A Reformed Strategy In order to reach the goal of USD 100 billion, a new strategy needs to be put into perspective. This perspective is the first part of the strategy and is about encouraging the medium and large pharma companies towards investing more in various platforms like complex drugs, biotechs, and others. The need for reformed strategy is due to India’s excellence in manufacturing low-cost generic drugs. Recently, large Indian pharma companies have been moving into injectables, biosimilars, and other specialty products as well. There are around 3000 pharma companies in India varying from worth INR 10 crore to INR 100 crore. These medium and large pharma companies show a tremendous potential to cater to the demands of the growing Indian population and can help the sector accelerate towards the USD 100 billion mark.   The second part of the strategy includes the need to attract the top 20 global pharma companies in India. The size of the global pharma industry is USD 1.3 trillion. In this USD 1.3 trillion, the top 20 global pharma companies contribute around USD 650 billion. But the presence of these companies is very limited in India. Once these companies set up their businesses in India, the pharma market in the region will accelerate at a faster pace and the dream of achieving USD 100 billion mark will be a step away. ;
Storms in the United States Cause a Stir in the Global Oil Market
17-09-2020

Storms in the United...

The Atlantic hurricane season in the United States has caused major damages, not just physically but economically as well. With storms striking on the eastern coast of North America, many oil fields have been emptied due to the rising wind speed and waves. The continuously approaching storms, such as hurricane Cristobel (June 7th) to hurricane Laura (August 27th) to hurricane Gustav (August 31st), and hurricane Sally (September 17th), posed a massive threat to the United States’ offshore oil rigs in the Atlantic Ocean. This continuous threat has forced many oil companies to shut down their operations temporarily. This halt in operation and the extraction of oil caused severe changes in the United States’ oil industry, leading to a significant change in the global oil industry.   As a precaution for the approaching storms, the United States energy industry prepared itself by cutting crude production at a rate approaching the level of 2005’s Hurricane Katrina and halting oil refining plants along the Texas-Louisiana coast.   Followed by significant warnings of the hurricane Laura, oil producers initially stopped 13% of the crude oil production. Later, due to the fast approaching hurricane Laura, the oil producers evacuated 310 offshore facilities and shut nearly 1.56 million barrels per day of crude output including 84% of the Gulf of Mexico’s offshore production, almost matching the 90% outage during hurricane Katrina 15 years ago. The storm made landfall on 27th August 2020 in an area which accounts for more than 45% of the total United States petroleum refining capacity and 17% of the oil production.   The storm significantly surged through Galveston to the Sabine River, which is the area with some of the region’s largest refineries and, thus, causing significant damage to them.   Refiners, which also produce gasoline and diesel fuel, took some steps to halt a total of 9 facilities that process nearly 2.9 million barrels per day of oil, which constitutes a total of 14.6% of the entire capacity of the United States market. Cheiniere Energy Inc, the largest exporter of liquified gas in the United States, suspended its operations and evacuated staff at its Sabine Pass LNG export terminal at the Texas/Louisiana border.   The impact of these chains of hurricanes is still less than hurricane Harvey, which forced the shutdown of one quarter of the entire United States’ refining capacity, about three years ago. As a result of the continuous shutdown caused by the hurricanes, the United States gasoline futures have jumped by as much as 10%, while crude benchmarks were settled at a five-month high in August.  Total SA, Valero Energy, and Motiva Enterprises also cut their operations at their Port Arthur, Texas refineries. Due to the continuous disturbances in the production lines and operations in the offshore oil rigs of the United States, the country, which is the largest exporter of refined petroleum, was unable to meet the market demand of crude oil.  Exxon Mobil Corp., one of the largest oil producers in the world, also began shutting production at its large Beaumont, Texas refinery. It also reduced the production at Baytown, Texas, plant ahead of an expected shutdown. If the Baytown plant also fully shuts down along with other refineries, the total shutdowns along the coast would hit nearly 2.89 million barrels per day.   People across the oil industry are already under pressure from the slow economic recovery due to the pandemic. Amid these concerns regarding the slow economic progress, the United States’ jobless claims remain high. Due to the continuous surge from the storms and disturbed production chains with the lack of labour and poor weather conditions, the United States’ oil industry was put to a halt, but it soon plans to resume operation after Hurricane Sally in order to maintain a supply-demand balance. This balance is also required to maintain the economic recovery. ;
Copper Prices Rally to Reach a Two-Year High
17-09-2020

Copper Prices Rally ...

Recently, the copper prices have rallied to its all-time highest in over two years, which is a result of low stocks, a weaker dollar, and falling output. Some countries like the United States, India, and the United Kingdom have faced subsequent problems in stock values due to this upsurge. Meanwhile, China benefited from the entire situation by taking advantage of a weaker dollar. As a result, the global copper smelting activities declined to its lowest in more than two years.   Copper has been a major contributor to the metal industry, globally. It easily forms alloys as compared to other metals and with a range of other metals, including tin, nickel, zinc, and more. Copper can provide jobs and promote a higher standard of living. A tonne of copper can power 60,000 mobile phones, bring functionality to 40 cars, enable operations in 400 computers, and distribute electricity to 30 homes. Thus, copper is not only important for the metal industry but also for the economy. Any changes to the copper industry may lead to significant changes in the economies of various countries.   Factors Affecting Copper Prices    Earlier in the month of September 2020, the copper prices were pushed towards a two-year high as inventories in the London Metal Exchange (LME) system dropped to its all-time low in 14 years and stock markets rose. London Metal Exchange registered its copper inventories at little over ninety thousand tonnes in the month of May 2020.   The rebound demand in China has pushed the prices of copper even higher. Copper prices were estimated to be higher after a significantly strong data of manufacturing was issued by China, the biggest consumer of copper, which further boosted the confidence in the demand outlook. China’s domestic consumption of copper has risen by 24.1% YTD through the month of July 2020, and copper prices are steadily soaring near the pre-trade-war levels. A positive aspect ran through the copper markets as yuan jumped to its highest against the dollar in the last 16 months, helping the metals by making them cheaper. The yuan rising to its strongest in the month of January 2020 has led to a cheaper availability of copper in the domestic Chinese market. Meanwhile, ongoing protests at Indonesia’s Grasberg, which is the second-largest copper mine in the whole world, has created disruptions in the production line and operations related to copper.   Market expectations about rising inflation are also proving to be helpful for metals, which can serve as an inflation hedge due to being hard assets. As economies are starting to recover from the recession caused by the COVID-19 outbreak and are working towards normal economic activities, it will reinforce the copper demand growth globally in the upcoming year as well as maintain a supportive and fast-track sentiment in the market. The global companies are also expected to shift their focus towards production ramp up over the upcoming quarter in order to lead to significant growth in copper mine output in the next year. Changes Caused by Copper’s Price Hike   With depleting inventories and decreasing demand, many countries have faced a significant challenge due to the change in copper prices. Benchmark copper on the London Metal Exchange (LME) was 0.2% low at USD 6783 tonne with a little over two years high of USD 6830 on 1st September 2020. Total copper stocks monitored by London Metal Exchange, in their warehouses, were at their lowest since the year 2007. In the month of July 2020, China’s refined copper output decreased by 5.3% from the previous month to 814,000 tonnes, according to the released data. China’s Yangshan copper import also declined to USD 70 from a high of USD 113.50 in the month of May 2020. Meanwhile, the stockpiles in the warehouses and bonded warehouses in Shanghai Futures Exchange have increased since June 2020. Rio Tinto India Pvt. Ltd. has also cut its refined copper outlook for the ongoing year to 135,000 – 175,000 tonnes from 165,000 to 205,000 tonnes. In India, for pick up in spot demand, the prices rose 0.25% to Rs 530.50 per kg in future trade. The cooper contracts for the month of September delivery were traded higher by INR 1.30 or 0.25%, at INR 530.50 per kg, on Multi Commodity Exchange, in a business turnover of 5030 lots. In New York, last December, the copper delivery trading on the Comex market changed for USD 3.065 a pound, which was recorded the highest since June 2018. Fitch Solutions, in its recent forecast about copper prices, anticipates a further increase in the price from USD 5,900 per tonne to USD 6,000 per tonne due to an expected rough trade for the remainder of the year. ;
Decoding the Various Aspects of India’s Onion Export Ban
15-09-2020

Decoding the Various...

Three months after the Narendra Modi led government pulled out the archaic Essential Commodities Act of 1955 to impose a stock limit and movement restrictions on food grains, edible oil seeds, potatoes, onions, and other essential commodities only applicable in extreme conditions like natural calamity or war, the government issued a notice on Monday, that is, 14th September, to prohibit the export of all varieties of onion except those cut, sliced, or in powder form. The ban includes Bangalore rose onions and Krishnapuram onions. These varieties of onions were free for export till now.   The Indian onion export scenario has always been in a good shape, with Bangladesh, Malaysia, the UAE, and Sri Lanka being the largest importers of Indian onions. India exported USD 198 million worth of onions in the April-June period of FY20 and USD 440 million in the entire period of 2019-20. Cause of the Ban   Mainly, there are three triggers for the ban:   Shortage of onions in the domestic market, due to which the country saw a steady increase in the onion prices in the wholesale market. The middle class was most affected by this hike in the onion prices, and the urban onion market was clearly disturbed. The average price of the kitchen staple in Lasalgaon’s wholesale market between March and September rose by almost 100%. In retail markets, the current price trend of onion is Rs. 35-40 per kg as against Rs. 25-30 per kg in June. This hike triggered the concern of the government severely, and the Modi government decided to impose the export ban as soon as possible. The second reason can be found in the numbers of Consumer Food Price Index (CFPI) released by the Ministry of Statistics and Program Implementation (MoSPI) on Monday. The measure gave us a clear picture of inflation, which was 6.69%, a tad bit lesser than the 6.73% of last month. This was well above the RBI’s target of 6%. At the policy level, the high CFPI was again one of the main concerns for the government, which led to the ban on onion export. Costlier onions in the wholesale market because of the heavy rains which lashed out in August and washed-out market-ready crops in regions like Karnataka, which were all set to hit the markets in September. Apart from this, the heavy rains created a turmoil and spoiled the crops in Madhya Pradesh, Gujarat, and some parts of Maharashtra. As this havoc wrecked the domestic onion market, the demand for Indian onion in the international market was increasing at a rapid pace. Therefore, the rains caused an imbalance in the supply-demand chain.  Consequences of the Ban A sharp decline in the prices of onion in the domestic markets is expected once the markets are open for trade on Tuesday. This is a direct fallout of the export ban. However, the traders expect a price rise in a week or two. The demand is expected to upsurge once the Dussehra festival starts.    The Political Angle   There is a political angle or electoral aspect pertaining to the export ban, which has led to the protest that is scheduled to be held since Tuesday. The protest will be carried out by Shetkari Sanghtana, which is a farmer’s union started by legendary all India farmer’s leader, Sharad Joshi. The farmer’s union has called the move of government as “double standard”, as the decision of government came out just after it decided to amend the Essential Commodities Act.  Another aspect of the export ban, which cannot be neglected, is the growing concern of the rising prices of onion at the time when Bihar elections are getting close. Bihar elections are scheduled to be held later this year, and if the kitchen staple is costlier than usual, then the government may lose the elections along with the trust of 1.3 billion Indians. ;
Gilead’s USD 21 Billion Acquisition of Immunomedics
14-09-2020

Gilead’s USD 21 Bill...

Gilead Sciences, an American biopharmaceutical company, which has its headquarter in Foster City, California, will acquire biotech company Immunomedics Inc. in a deal worth USD 21 billion as declared on 13th September. Gilead’s offer is expected to be funded with USD 15 billion with cash-in-hand and the rest USD 6 billion with a newly approved debt. The entire transaction will be completed in the fourth quarter of 2020. The Immunomedics acquisition is one of the many contracts by Gilead this year with an aim to expand its oncology portfolio.   Gilead Sciences is an America-based biopharmaceutical company operating from Foster City, California, which researches, develops, and commercialises drugs across the globe. Over the years, the company has worked on antiviral drugs used in the treatment of hepatitis B, hepatitis C, and influenza. Currently, the company is working on an antiviral drug called Remdesivir for the treatment of patients suffering from coronavirus.   Immunomedics Inc. is also a pharmaceutical company based in New Jersey, United States. The company’s main interests lie in the development of antibody-drug conjugates for the treatment of cancer. The company is better known for its antibody-drug called Trodelvy, a class described by researchers as “guided missile” that zero in on tumours to release cytotoxins that deliver up to 10,000 times the potency of standard chemotherapy while minimizing the damaged tissue to a healthy tissue. Gilead’s acquisition of Immunomedics represents significant progress in Gilead’s strong and diverse oncology portfolio. The deal will allow access to Immunomedics’ breast cancer treatment drug, Trodelvy, to Gilead, which has recently been granted FDA approval in April for a tough and aggressive type of breast cancer. Trodelvy is a transformational drug meant for a challenging cancer, and Gilead plans to explore its potential to treat other forms of cancer.   With the rapid expansion of Trodelvy’s benefits for patients globally, Gilead will add commercial, medical, regulatory, and manufacturing expertise, which will accelerate the demand for Trodelvy through development and reach more patients across the globe.   Gilead will not only help with its expertise but also with its established infrastructure and operations in Japan and Europe in order to facilitate the launch of Trodelvy outside Asia.   With Gilead acquiring Trodelvy with Immunomedics, they will have access to an approved third-line treatment drug for triple-negative breast cancer or TNBC. TNBC represents around 15-20% of all cases of breast cancer and has been considered to be the most aggressive form of breast cancer. Trodelvy was launched in the market in May 2020 and showed significant commercial potential for mTNBC.   In addition to Gilead’s accelerating revenue growth, the acquisition of Immunomedics is expected to be proven accretive to Gilead’s non-GAAP EPS by 2023 and significantly increasing thereafter.   Under the terms of the merger, Gilead will commence a tender offer to acquire Immunomedics’ outstanding shares from their common stock.  This offer was made at USD 88 per share, representing a premium of about 108% per the last closing price, which was at USD 42.25. Gilead will then acquire the remaining not tendered shares in a secondary step. The tender offer, however, is not subjected to a financing condition and will be funded by USD 15 billion with cash-in-hand and the other USD 6 billion with an approved debt.   Followed by this deal, Gilead is expected to obtain an investment-grade credit rating and believes that the deal will not alter its stated capital allocation strategy or its commitment to grow and maintain its dividend over the period of time. Gilead has hired Lazard and Morgan Stanley & Co. LLC as its acting financial advisors while Immunomedics have hired Centerview Partners LLC and BofA Securities.   Gilead’s acquisition of Immunomedics will bring a wider market reach for the breast cancer-treating drug and also increase the oncology portfolio of the company. The deal will also increase the stature of Gilead Sciences further in the North American market. ;
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. ;
Braskem Opens New Polypropylene Facility Amidst the COVID-19 Pandemic
10-09-2020

Braskem Opens New Po...

Braskem, the largest polyolefins manufacturer in North America and the leading producer of biopolymers in the world, has recently announced the successful launch of commercial production at its newest, world class polypropylene (PP) facility in the city of La Porte, Texas. The launch was followed by the recent launch of its new INSPIRE polypropylene (PP) grade designed to replace polyethylene terephthalate (PET) in packaging products such as ready-made meals at grocery stores and restaurants when higher temperature resistance was required.   The construction of this world class facility began in October 2017 with the final phase completing with the last mechanical construction in June 2020. This launch of commercial production has not only successfully completed the commissioning process but has also achieved Braskem’s high-quality assurance protocols.   Braskem’s new line of production has a capacity to manufacture over 450 kilotons or 1 billion pounds per year.  It also has the capacity to produce the entire polypropylene portfolio, which includes a broad range of products such as impact copolymer, random copolymers, and homopolymers. The launch of Braskem’s commercial production at their world class polypropylene production line in La Porte has affirmed Braskem’s position as the leader in the North American polypropylene market. With an investment of USD 750 million in this project, the facility has become the largest polypropylene production line in both North and South America and the first new polypropylene plant in North America since 2008. The facility ensures a long and sufficient supply of polypropylene for its clients.   While constructing the polypropylene facility, Braskem kept its commitment towards sustainability and paid attention towards eco-indicators such as emissions, energy efficiency, and water, as well as waste reduction and recycling.  North American Polypropylene Market Amid COVID-19 Outbreak -  Industry participants from the North American polypropylene market such as Braskem, Asahi Kasei, ASI Gem plastics, Aurora Plastics, Avangard Innovative, ExxonMobil, Formosa, INEOS, LyondellBasell, Pinnacle Polymers, Phillips 66, and Total Petrochemicals, among others, believe that PP could combat challenges currently faced by the industry due to the COVID-19 pandemic. This deduction is due to the rising demand for polypropylene because of its properties like resistance to high temperatures, high tensile strength, and corrosion resistance. The increasing demand for packaging solutions from the food and beverages industry has facilitated the growth of the market during the lockdown period. The growing consumption of packed food, such as snacks, biscuits, and chocolates, has further boosted the growth. The rising application of polypropylene in the automotive industry due to its effective sealing, easy processability, and stiffness properties has also increased its demand in North America.   The manufacturing of fashion apparel, sports equipment, toys, pipes, agricultural tools, electrical appliances, and plastic based products, among others, will also enable a speedy expansion of polypropylene in the North American region.   The start-up of the polypropylene manufacturing facility by Braskem in La Porte, Texas, is significantly going to balance the supply and demand chain of polypropylene in the North American PP market. The disturbance in demand, as well as other operating challenges, are present due to the COVID-19 outbreak. However, the market has now adapted to the COVID-19 pandemic, and demand in North America is recovering fast to pre-COVID levels.   The construction of this facility has also positively facilitated in avoiding the economic crisis caused by the COVID-19 pandemic in the Texas Gulf Coast region by employing over 1000 development and construction workers. In order to support the sustainable use of polypropylene through the development of and investment in the circular economy, Braskem’s new facility will also boost the United States’ polypropylene recovery and reuse. ;
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 component The 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 prices It 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-commodity https://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 Project The 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/packaging https://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/betaine https://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.  ;