Braskem, Encina to collaborate on circular propylene feedstock supply from new recycling plant

MOSCOW (MRC) -- Braskem and Encina Development Group (Encina; The Woodlands, Texas) have agreed to develop a long-term relationship aimed at establishing a supply of circular propylene feedstock from Encina’s planned new post-consumer plastics recycling plant in the US, reported Chemweek.

Encina plans to break ground on the facility in the second half of 2021, although the location has not yet been given. Once completed, the plant will process 175,000 metric tons/year of waste plastic into over 90,000 metric tons/year of recycled chemicals, the companies say in a joint statement. The facility will be designed to have its capacity expanded to 350,000 metric tons/year of waste plastic in future phases, they say. It will leverage Encina’s proprietary technology that converts mixed plastics to chemicals via catalytic pyrolysis.

Braskem will work with Encina to develop the necessary logistics, product quality, and certifications for the recycled propylene feedstock that Braskem will then use in the production of recycled polypropylene (PP) materials in applications such as food packaging, consumer, and hygiene products, according to the companies. Braskem and Encina intend to develop a formal supply agreement prior to the project’s financing approval in 2021, they say.

Encina said in July it was planning to build a USD255-million facility for the conversion of waste plastic to benzene, toluene, and xylene (BTX), with other additional plants in the pipeline, and a possible IPO within the next two years.

“Encina’s technology and this important project will divert thousands of tons of hard-to-recycle plastic from landfills. As the North American leader in polypropylene, Braskem is actively looking to purchase sustainable propylene feedstock that will allow us to increase both recycled and renewable-sourced products in our portfolio,” says Braskem Americas CEO Mark Nikolich. The agreement will help Braskem’s clients to meet their aggressive recycled content goals in the years ahead, he says.

Braskem, a founding member of the Polypropylene Recycling Coalition formed earlier this year, recently announced sales targets for growing its recycled products portfolio to 300,000 metric tons/year by 2025 and 1 million metric tons/year by 2030. It is also a founding member of the Alliance to End Plastic Waste.

As MRC reported previously, Brazilian petrochemical producer Braskem's 450,000 mt/year PP plant in LaPorte, Texas, along the Houston Ship Channel completed its initial commercial production, as per the company's statement as of Sept. 10. "The launch of commercial production at our new world-class PP production line in La Porte clearly affirms Braskem's position as the North American polypropylene market leader," Braskem America CEO Mark Nikolich said in a statement. With a USD750 million investment, the new PP plant's construction started in October 2017 and was completed in June, 2020.

We remind that production at Braskem's new PP plant in the US was at 36,000 tonnes in October, close to the monthly production capacity of the plant of around 38,000 tonnes.

Braskem operates five other US PP plants in Texas, Pennsylvania, and West Virginia, with a cumulative capacity of 1.57 million mt/year that the company acquired. The new plant in La Porte, Texas, is Braskem America's first PP new build.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).


VCI sees return to growth in Germany next year

MOSCOW (MRC) -- Production of chemicals, including pharmaceuticals, will increase 1.5% in Germany in 2021, and sales generated by the German chemical-pharmaceutical industry will rise 2.5%, according to industry association VCI (Frankfurt), said Chemweek.

Demand for chemical products is largely stable at the end of 2020, it says. "Business sentiment is now confident in most of our companies,” says VCI president and Evonik Industries CEO Christian Kullmann. "More than half of them expect sales to go up next year both in Germany and abroad."

The industry in Germany has had a “difficult year” in 2020 due to COVID-19, VCI says. The period has been “characterized by marked ups and downs in the four quarters,” it says. Due to weaker demand, chemical production including pharmaceuticals has decreased by 3% overall in 2020, with all sectors recording losses, VCI says. The decline is in line with VCI’s latest forecast. Losses by sector ranged from a minor slip in the output of pharmaceuticals of 0.5% to a slump of 6.5% in polymers production. Total output of chemicals excluding pharmaceuticals has decreased 4% in Germany this year, VCI says.

VCI says that a “corona-related lack of orders” has caused sales by Germany's chemical-pharmaceutical industry to fall 6.0% in 2020, to EUR186.4 billion (USD227.4 billion), with domestic sales down 5.5% and export sales lower by 6.5%. A 2% fall in producer prices helped drive the decline. "The strain on our member companies is considerable," says Kullmann. "However, our industry as a whole has been hit less hard than other sectors of the economy."

VCI projects a slight drop in employment of 1% in Germany’s chemical industry in 2021, due to the “structural change in the industry which is being accelerated by the corona crisis.” Employment in the industry is currently stable at 464,000 compared with a year ago, “irrespective of the weak chemicals business," VCI says.

The latest VCI members’ survey shows that many chemical companies operating in Germany will need some time to overcome the crisis. Only 17% of member companies participating in the survey believe they will return to pre-crisis levels in 2020 and about 25% expect to be able to make up for the decline by the end of 2021. The largest number of businesses surveyed, 47%, think they will have overcome the crisis in 2022 at the earliest.

Kullmann, meanwhile, has called for the European Green Deal to be better balanced to maintain the competitiveness of European industry. "This is not only about driving forward environmental protection but also about economic growth and social aspects as the necessary three pillars,” he says. “We need to spur innovation and investment, otherwise Europe will not be able to hold its own in a changing world order."

The recent tightening of the EU emission-cut target from 40% to 55%, “must come with flanking measures to ensure that energy-intensive products can continue to be manufactured competitively in Europe,” Kullmann says. VCI warns against the introduction of climate tariffs by the European Commission for imports of CO2-intensive basic materials into the EU. “Apart from a lack of controllability and trade conflicts, there is also a risk of a loss in competitiveness at downstream stages of value chains,” Kullmann says. “Only more complex compensation models can be helpful to the chemical industry in Europe. Above all, climate tariffs cannot substitute existing compensation measures for rising climate protection costs of European companies."

Establishing a global price for CO2 would create more of a level playing field, VCI says. The outcome of the US presidential election, China's new climate ambitions, and the commitment of Canada to climate neutrality by 2050 increase the chances of reaching this goal, it says. “A door has opened to advance climate protection jointly, globally, and with agreed rules in a political setting,” says Kullmann. “This opportunity must not be missed."

Kullmann also calls for a resumption of talks with the Biden administration on transatlantic free trade. "It is not necessarily an all-encompassing TTIP 2.0,” he says. “But talks between the EU and the US on a free trade agreement for industrial goods are in the best interests of both partners."

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.

COVID-19 - News digest as of 16.12.2020

1. Phillips 66 lowers 2021 spending budget after pandemic hit

MOSCOW (MRC) -- US oil refiner Phillips 66 on Monday set its 2021 capital budget at USD1.7 billion, around 43% lower than forecast for the previous year, as the energy industry struggles to recover from the blow of the COVID-19 pandemic, reported Reuters. The coronavirus crisis and resulting lockdowns upended global travel and fuel demand, creating a supply glut that pushed US crude oil prices briefly into negative territory in April. West Texas Intermediate crude futures have recovered much of those losses on the back of COVID-19 vaccine progress, although they have shed about 23% of their value so far this year.


December prices of European PP rise significantly for CIS markets

MOSCOW (MRC) -- The December contract price of propylene was settled in Europe down by EUR15/tonne from the previous month. However, all European producers announced a greater increase in export prices of polypropylene (PP) to be shipped to the CIS markets in December, than the rise of monomer prices, according to ICIS-MRC Price report.

Negotiations over December prices of European PP began in the first days of the month. All market participants said European producers raised their export prices of propylene polymers, and in some cases, the price increase was EUR90/tonne. There were also cases when the price growth was more modest and amounted to EUR20/tonne.

Deals for December shipments of homopolymer propylene (homopolymer PP) were done in the range of EUR940-980/tonne FCA, whereas last month's deals were done in the range of EUR850-960/tonne FCA. Deals for block copolymers of propylene (PP block copolymers) were done in the range of EUR970-1,030/tonne FCA versus EUR920-990/tonne FCA.

Many producers virtually contracted all their December quantities in the first week of the month because of strong demand from the domestic and export markets. Some producers also had significant restrictions on PP shipments to the CIS markets.

PP imports in Russia grew by 21% in January-November

MOSCOW (MRC) -- Polypropylene (PP) imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports, according to MRC's DataScope report.

Russian companies increased external purchases of polypropylene in November, imports reached 20,400 tonnes against 17,900 tonnes a month earlier. Thus, overall PP imports into Russia reached 202,000 tonnes in January-November 2020, compared to 167,400 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.

Overall, the structure of PP imports by grades looked the following way over the stated period.

November imports of homopolymer PP were about 8,600 tonnes versus 6,000 tonnes a month earlier, homopolymer PP shipments from Turkmenistan increased significantly. Thus, overall imports of homopolymer PP totalled 82,900 tonnes in the first eleven months of 2020, compared to 54,100 tonnes a year earlier.

November imports of PP block copolymers in Russia were about 4,900 tonnes against 4,100 tonnes in October on increased demand for pipe PP from Russian companies. Imports of PP block copolymers into Russia reached 52,400 tonnes in January-November 2020, compared to 50,700 tonnes a year earlier.

November imports of statistical copolymers of propylene (PP random copolymer) dropped to 1,600 tonnes from 3,200 tonnes a month earlier, with pipes producers accounting for the main reduction in shipments due to an increase in the supply of domestic raw materials. Total imports of PP random copolymers in Russia were 32,600 tonnes in January - November 2020, compared with 30,100 tonnes year on year.

Russia's imports of other polymers of propylene for the period were about 34,100 tonnes in the first eleven months of the year, compared with 32,500 tonnes year on year.