Oversupply amid weakening demand casts a shadow over the global chemical industry

The USD 5.72 trillion global chemical market is currently reeling under a record oversupply due to sustained increases in production and a slowdown in consumption, said Polymerupdate.

On one hand, leading global economies, including China, have infused billions of dollars in capacity additions in recent years with the mushrooming of new production facilities. On the other hand, this new capacity continues to pile up at production units due to diminishing demand from downstream industries.

Reports estimate a global overcapacity of chemical building blocks at a record of over 220 million tonnes in the calendar year 2024, approximately 5 million tonnes more than the 215 million tonnes of overcapacity reported in the previous calendar year. Global overcapacity is expected to worsen further to 225 million tonnes in the calendar year 2025 due to several new units scheduled to commence commercial production next year. Experts fear that the record overcapacity has started marring the employment-intensive global chemical industry. If the current production trend continues and the downstream sector does not improve to support new demand, global producers will require production cuts from next year onwards.

Fitch Ratings estimates weak demand and oversupply will continue to pressure volumes and margins of global chemical producers in the calendar year 2024. The rating agency expects that conditions will not materially improve from the bottom-of-the-cycle levels that prevailed in 2023. Demand for chemical products will remain constrained by the slowdown of major economies affected by inflation and the high interest rates, while China continues to experience a slower-than-expected recovery. Significantly, new global capacity built in recent years has increased competition and put further pressure on the operating rates of chemical producers. This is likely to lead to the closure of uncompetitive assets, especially in regions disadvantaged by higher energy or feedstock costs.

We remind, China’s Ministry of Commerce yesterday announced that polycarbonate imported from Taiwan would be subject to anti-dumping duties starting 20 April for a period of five years. In a statement, the ministry confirmed its final determination on anti-dumping measures for imported polycarbonate originating from Taiwan. Based on its investigation, the ministry concluded that dumping practices were causing harm to China’s polycarbonate industry.

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Exxon Mobil is out front as petrochemical companies push back against plans to cap the production of plastics, as more than 4,000 delegates and observers prepare to meet in Ottawa for United Nations talks on a potential plastics treaty that could end plastic pollution within the next two decades, said The Financial Times.

"The issue is pollution, The issue is not plastics," Exxon's (XOM) head of product solutions Karen McKee told the Financial Times, adding that alternatives to plastic packaging could result in an even higher emissions footprint.

The oil and gas sector is "looking at plastic as being the next opportunity for the industry... That's really problematic," countered John Duncan, co-head of the Business Coalition for a Global Plastics Treaty. Disagreements over how 400M tons of annual plastic waste should be managed have stalled negotiations.

Environmental groups want plastic production to be reduced by 75% from 2019 levels by 2040, and say recycling is not sufficient to reduce plastic waste, since only a small percentage of materials are actually recycled.

Countries such as Saudi Arabia and China, which have large petrochemical industries, and U.S.-led trade groups such as the International Council of Chemical Associations, argue that production caps would lead to higher prices for consumers and that it would be highly energy intensive to create alternatives to plastic.

If a treaty is finalized, it could be one of the most significant global agreements on the environment and emissions since the 2015 Paris Agreement.

We remind, ExxonMobil Chemical France has announced plans to close its chemical production at Gravenchon, in Normandy in France in 2024, subject to the relevant government approvals said the company. According to a press release, the steamcracker and related derivatives units and logistics facilities will be shut down. The company said the site has lost more than EUR500 million since 2018 and despite efforts to improve the site’s economics, it remains uncompetitive.

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Lummus Technology, a global provider of process technologies and value-driven energy solutions, announced IndianOil Corp. Ltd. selected the Lummus/Versalis cumene technology for a 440 KTA unit in Paradip, India, said Hydrocarbonprocessing.

The new cumene unit is part of a grassroots petrochemical and polymers expansion at IndianOil's complex in Paradip.

"Our cumene technology will offer IndianOil lower energy costs, reliability, operational efficiency and exceptional product yield, which will help them optimize their plant economics and support their growth initiatives," said Romain Lemoine, Chief Business Officer for Polymers and Petrochemicals, Lummus Technology. "We look forward to continue working with IndianOil on another successful project and building on our long-time relationship."

Lummus' scope includes the technology license for the cumene technology, basic design engineering, proprietary catalyst, site services, advisory services, and training. IndianOil has licensed multiple Lummus technologies, including naphtha cracker, INDMAX FCC and polypropylene technologies at complexes across India.

Lummus and Versalis have partnered to license cumene technologies since 2007. The cumene process is a liquid-phase alkylation technology using a proprietary zeolite catalyst and is characterized by a very high cumene yield, ultra-high purity cumene product and a long catalyst run length.

We remind, Lummus Technology, a global provider of process technologies and value-driven energy solutions, announced the opening of its cutting-edge research and development facility dedicated to advancing its Zimpro suite of water and wastewater treatment technologies. Officially named the Lummus Green Circle Labs and located in La Porte, Texas, the facility will focus on enhancing commercial value and versatility and accelerating innovation in Lummus' water and wastewater technology.

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Russia's weekly oil refining hit a near 11-month low due to flooding and a slowdown in repairs to plants that were hit by Ukrainian drone attacks, said Hydrocarbonprocessing.

"Russia processed 5.22 million barrels of crude a day April 11-17", the report said, citing a person with knowledge of industry data. It added that was about 10,000 barrels a day, or 0.2%, below the average of the prior seven days.

Russian refineries have suffered from Ukrainian drone attacks and technical outages while Moscow has battered Ukraine's energy system and cities in an airstrike campaign in recent weeks as the more than two-year war drags on.

Ukraine attacked eight Russian regions with dozens of long-range strike drones, setting ablaze a fuel depot and hitting three power substations in a major attack early on Saturday, an intelligence source in Kyiv told Reuters.

We remind, Russia's offline primary oil refining capacity has been revised upwards for April by 107,000 metric tons from previous expectations to 4.430 million tons. The offline capacity has been revised up due to maintenance extensions for some production equipment, including for crude distillation units at Rosneft-owned Komsomolsky refinery in Russia's far east, Ufaneftekhim in the Urals and Krasnodar refinery in south.

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Technip Energies has been awarded a FEED contract by Viridor for the CCS project at one of the United Kingdom’s largest Energy-from-Waste facilities in Runcorn, United Kingdom, as per Hydrocarbonprocessing.

The project aims to capture around 900,000 tons of CO2 each year, half of which will be from biogenic sources, effectively removing 450,000 tons of CO2 annually from the atmosphere.

As part of the FEED study, Technip Energies will deliver a comprehensive design utilizing the Canopy by T.EN™ solution powered by Shell CANSOLV CO2 capture technology. The Canopy offering is part of Capture.Now™, Technip Energies’ strategic Carbon Capture, Utilization and Storage (CCUS) platform of technologies and solutions.

The Runcorn CCS project is in line to be one of the first facilities to receive funding under the UK Government’s Track 1 funding for carbon capture projects, also making it one of the first carbon capture projects on an Energy-from-Waste facility in the world. It marks a significant milestone in the waste sector's contribution to carbon reduction efforts.

The plant will play a crucial role in the regional decarbonization strategy by providing a stable long-term baseload CO2 supply to the HyNet industrial carbon capture cluster in Northwest England.

We remind, Technip Energies and Anellotech, Inc. announced they have signed a global joint development agreement to work cooperatively to further develop and then license Anellotech’s Plas-TCat process, a one-step thermal-catalytic recycling technology that converts mixed plastic wastes back into its constituent basic chemicals, with a specific focus to benzene, toluene, and xylene (BTX) that can be used to make most virgin plastics.

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