Singapore's ChemOne expects Pengerang Energy Complex to start by end-2027

Singapore's Chemone Group said on Wednesday its Pengerang Energy Complex (PEC) project is likely to start up by 2027-end and had awarded its operations and maintenance contract to a subsidiary of GS Engineering & Construction Corp, said Reuters.

Engineering is "progressing well for the aromatics project in Johor, Malaysia", the company added. This start-up timeline is a further delay from the 2026 earlier announced. The $5 billion project's construction was initially slated to be completed by 2024 when first announced in 2020.

Zeit Operation & Maintenance Co, a subsidiary of GS Engineering, has been selected to handle the operations and maintenance for the PEC project, ChemOne said.

"During the operations phase, Zeit will supervise and analyse the operations, monitor and advise on start-up and troubleshooting, as well as perform process optimisation."

The project includes a 150,000-barrels per day (bpd) condensate splitter, which subsequently can produce oil products including jet fuel.

The company also plans to produce up to 2.3 million metric tons per year of aromatics such as paraxylene, a petrochemical feedstock for synthetic fibres and plastic bottles.

We remind, Pengerang Energy Complex Sdn Bhd has signed key agreements with several blue-chip partners for the upcoming Pengerang Energy Complex (PEC), located within the dedicated Pengerang Integrated Petroleum Complex (PIPC) in Johor, Malaysia. The strategic feedstock supply and product off-take agreement signings with leading energy majors Chevron and Equinor, Thai national oil company PTT, and trading house Mitsui & Co. Ltd are worth a combined total of USD102 billion and together will support the full needs of PEC for its initial 12 years of operation.

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The European Chemical Industry Council (Cefic) said it sees the European Commission’s Strategy on Advanced Materials for Industrial Leadership as a pivotal step toward addressing the challenges posed by the green and digital transition, adding that the chemical industry has an important role to play as the primary source of advanced materials’ value chains, said Chemweek.

The commission’s strategy aims to speed up research and technology in advanced materials, boost innovation and manufacturing capacities, and accelerate the industrial uptake of these materials, Cefic said. Advanced materials are essential for providing solutions to today’s societal challenges, including the crucial reduction of greenhouse gas emissions, Cefic added.

“The chemical industry’s capacity for innovation is instrumental in designing advanced materials with new functionalities. This leads to the development of new products, applications, and even value chains,” said Daniel Witthaut, executive director/innovation at Cefic.

Cefic, however, said the strategy’s funding target of €500 million for advanced materials during 2025–27 falls short of what is necessary to significantly speed up the development of advanced materials for the green and digital transition.

We remind, the European Chemical Industry Council (Cefic) carefully projects a possible 1.0% growth in EU27 chemical output for 2024. This flat to small growth comes after a challenging period marked by a decline of production by 7.6 % in 2023 and 6.3% decrease in 2022.

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During the first half of February 2024, Low-Density Polyethylene (LDPE) saw an increase in prices across Europe and the United States, primarily due to supply shortages and heightened market demand. In Europe, the price hike was mainly caused by limited supplies worsened by delays in cargo arrivals, said Chemanalyst.

Similarly, in the US, LDPE prices surged because of increased demand from sectors like construction and packaging. Furthermore, the rising costs of feedstock Ethylene, and upstream Naphtha, and Crude oil have significantly impacted LDPE production expenses in both regions, adding to the upward pressure on prices. Moreover, disruptions in critical transportation routes like the Panama Canal and the Red Sea have also contributed to market volatility during this period, further influencing pricing dynamics.

During this period, the demand for LDPE in the US market showed strong upward momentum, leading to continued price increases with a rise of 2% for Film grade FOB Texas (USA). Trading remained active, with participants actively involved in spot market transactions due to limited availability. The rising LDPE prices were driven by increased costs of Ethylene and Naphtha, which put additional pressure on product costs. Further, heightened export demand, fueled by ongoing logistical challenges, allowed producers to sell their products at higher prices. This surge in export activity helped reduce excess resin in the domestic market, tightening domestic supplies and pushing domestic LDPE prices higher. These price increases align with expected trends, as international LDPE prices rose alongside increasing freight costs. The recent rise in LDPE spot prices has encouraged producers to push for another price hike in February, following a successful increase implemented in January.

In Europe, the LDPE market experienced a significant price elevation of 4% for Film grade FD Hamburg(Germany), driven primarily by limited supplies caused by delays in cargo arrivals from the Middle East and restricted material quantities from the US. This upward trend was further exacerbated by decreased output rates and regional shutdowns. Despite this, overall demand remained relatively steady, characterized by subdued activity in end-user industries. Furthermore, market participants in the European region faced price escalation in February offers from domestic producers, despite only a slight increase in feedstock Ethylene prices. The scarcity of import options and reduced allocations compelled suppliers to prioritize expanding margins, especially after enduring negative margins for several months. With the February ethylene settlement showing a modest increase due to sluggish demand in January, the substantial price hikes sought by LDPE suppliers in February will significantly help them regain lost margins over the past few months. Meanwhile, market players are shifting their focus to March, engaging primarily in discussions regarding potential Ethylene contract price settlements for the upcoming month.

We remind, Polymer LLC has marked a significant milestone with the launch of large-format polyethylene film production in the Smolensk region. This accomplishment signifies the completion of an ambitious investment project aimed at establishing the Polymer-2 production complex in the region.

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In a continuation of the stable trend observed over the past three weeks, the US Polypropylene (PP) market has maintained unwavering stability, with prices remaining unchanged during the last week of February 2024, said Chemanalyst.

This trend is particularly evident in the PP Copolymer Grade DEL Houston segment, emphasizing a sustained period of equilibrium and pricing steadiness. The average price for this grade over the week was recorded at USD 1106/MT, indicating a balanced market where the interplay of supply and demand has led to minimal fluctuations in Polypropylene prices.

Contrary to the global stability, the European region experienced a notable 3% increase in PP prices this week. The driving force behind this upward trend was the adjustment in production costs, notably the rise in the price of feedstock Propylene by approximately 2% since the commencement of the new year. Despite stable demand within the region, the supply remained categorized as low to moderate. The effects of the Red Sea crisis diminished during this period, yet a scarcity of the product persisted, leading to an average price of USD 1310/MT for PP Injection Moulding FD Hamburg over the week.

In the Chinese market, even though Chinese industry participants have not fully resumed their work routines following an extended holiday, the PP markets have officially reopened, showcasing new cost-driven price increases domestically. Elevated energy prices provide a solid cost foundation, enabling sellers to increase their offers compared to the pre-holiday period. Simultaneously, the trading atmosphere remains cautious due to a slower-than-anticipated demand recovery and prevailing supply pressures domestically, adding pressure to market sentiment and constraining potential PP price increases.

Despite the stable trend in the Asian PP market, a notable 1% increase in PP prices were observed in the Singapore market as traders strategically adjusted prices to optimize margins, responding to the steady pricing observed over the last three weeks. The decreasing impact of the Red Sea crisis on freight rates across the Asian trade route has created a good trading atmosphere further led to improved demand from overseas markets, contributing to this upward trend. The average price for PP Block Copolymer CFR Jurong settled at USD 980/MT over the week.

As per ChemAnalyst's analysis, the price of PP is anticipated to either decrease or remain stable in the initial half of March 2024. This expectation is based on the improvement in product supply following the resolution of the Red Sea crisis, coupled with a decline in global freight costs. The demand for the product is expected to maintain stability in the upcoming weeks, with the price trend of PP continuing to be influenced by supply chain dynamics.

We remind, Sinopec Yangzi Petrochemical, a subsidiary of the globally renowned energy and chemical giant Sinopec, recently marked a significant development in its operations. On February 19, the company successfully resumed production at the No. 2 polypropylene (PP) production plant located in Nanjing, China, following a scheduled maintenance period. The maintenance activities, which commenced on January 30, were focused on enhancing the efficiency and reliability of the production line with an annual capacity of 80 thousand tons of polypropylene.

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Epsilyte, a prominent manufacturer of Expandable Polystyrene (EPS) in North America, has recently disclosed its decision to modify the previously announced price increase for all grades of EPS, said the company.

The initial plan was to implement a $0.05/lb. hike, but the company has now revised it to an increase of $0.07/lb. This adjustment is scheduled to take effect from March 1, 2024, or as contracts permit.

In addition to this revision, Epsilyte is set to enforce another price increase for all grades of EPS, amounting to $0.05/lb. This subsequent adjustment is slated to be effective from March 15, 2024, or as contracts permit.

These alterations in pricing strategy are deemed necessary by Epsilyte due to the rapidly changing dynamics of feedstock costs. The unexpected pace of evolution in these costs is attributed to ongoing unplanned events that have significantly impacted the industry's operational landscape.

The decision to modify the previously communicated price increase reflects the company's commitment to adapt to the prevailing market conditions. The unpredictable nature of feedstock costs has necessitated a more immediate response from Epsilyte, prompting the adjustment to the planned price hike.

The revised increase of $0.07/lb. for all grades of EPS from March 1, 2024, aims to better align with the current feedstock cost dynamics. By staying attuned to the evolving market conditions, Epsilyte aims to ensure a fair and sustainable pricing structure that considers the challenges posed by unforeseen events impacting the supply chain.

Furthermore, the additional price hike of $0.05/lb. from March 15, 2024, underscores the company's commitment to addressing the challenges posed by the swiftly changing feedstock cost landscape. These adjustments are not only responsive but also proactive, allowing Epsilyte to navigate the uncertainties posed by unplanned events that have exerted pressure on the cost structure of feedstock.

Epsilyte acknowledges the significance of effective communication with its stakeholders, including customers and partners. Therefore, the company is committed to working closely with its clients to ensure a smooth transition during these price adjustments. The goal is to minimize any potential disruptions to existing contracts while facilitating transparency and understanding regarding the market-driven need for these changes.

The decision-making process behind these adjustments involves a comprehensive analysis of the feedstock cost dynamics, considering factors such as market trends, supply chain disruptions, and the impact of unforeseen events. Epsilyte recognizes the importance of maintaining a competitive edge in the market while balancing the need for a sustainable business model in the face of evolving challenges.

We remind, Epsilyte, The Woodlands, Texas, has partnered with Italy-based equipment provider Fimic SRL to broaden its expanded polystyrene (EPS) recycling operations, said the company. Epsilyte says it will leverage Fimic’s melt filtration equipment to address physical contamination in recycled EPS. The company says Fimic’s technology demonstrates versatility in its ability to handle different types of physical contamination and minimizes the risk of damage to recycling equipment. Epsilyte also cites Fimic’s reliable delivery schedule as a factor in its partnership decision.

As Epsilyte implements these price adjustments, it aims to provide its customers with a clear understanding of the rationale behind the changes. The company remains committed to delivering high-quality EPS products and services while navigating the complex and dynamic landscape of feedstock costs.
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