China PET prices fell in early September, hitting a new low in 2024

The price of PET water bottles continued to decline this week. As of September 9th, the average market price has been adjusted to 6,362 RMB/ton, according to the Commodity Market Analysis System of SunSirs.

In terms of the raw material market, a series of core economic data released last week appear quite bleak, triggering deep concerns among investors about the weakening of the growth momentum of US consumer spending, and subsequently leading to a pessimistic attitude towards the growth prospects of US oil consumption demand. At the same time, there are multiple negative news coming from the market: the possibility of Libyan crude oil supply returning to the international stage, as well as expectations that OPEC+ organizations may start increasing oil production, these factors are intertwined, exacerbating the unfavorable macro atmosphere. Affected by the continuous negative macro news, international crude oil prices experienced a sharp decline this week, which directly put heavy pressure on the polyester sector and led to its overall weak performance. As of September 8th, the average price of PTA in China was 5,012 RMB/ton, a decrease of more than 800 RMB/ton from the average price of 5,830 RMB/ton in the East China market on August 1st, which failed to provide effective cost support for the PET market. The cost support of PET is average, market demand is weak, and trading activity has significantly decreased, which in turn has led to a further decline in the focus of PET futures and spot prices.

On the supply side, on the one hand, there are significant expectations for the expansion of new production capacity, including the upcoming production of the 750,000 ton/year project of Xingye Plastics and the 500,000 ton/year project of Yizheng Petrochemical. In addition, three sets of equipment that were originally under maintenance are expected to restart, and it is expected that PET supply will increase significantly in September. On the other hand, with the high temperatures in summer and the end of student holidays, people's travel activities have significantly decreased, directly affecting the consumption of terminal soft drinks and catering industries, thereby reducing the demand for PET materials. The pessimistic market atmosphere has further intensified the downward pressure on the polyester bottle chip market, with prices frequently falling. Under the risk of continuously shrinking inventory value, industry participants generally adopt more conservative strategies and are more cautious in placing orders, resulting in a significant slowdown in order volume growth. At the same time, the increasing number of trade barriers worldwide has also set new obstacles for the export of polyester bottle flakes, making it difficult to reach new highs.

In summary, the current PET market has a sharp supply-demand contradiction, with increased supply and weak demand, coupled with export obstacles, putting heavy upward pressure on the absolute price of the PET market. The market trend tends to be cautious and unstable.

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PJSC Tatneft plans to implement technology for cleaning oil from hydrogen sulfide during transportation in pipelines in 2026, the company's in-house publication, Neftyanye Vesti, said Interfax.

Tatneft produces oil in conditions of constant growth in the share of heavy high-sulfur oil with increased viscosity. Since government standard (GOST) 2002 limits the mass share of hydrogen sulfide in commercial oil, the company is interested in creating new methods for removing H2S at minimal cost. Existing technologies for cleaning oil from hydrogen sulfide require expensive equipment, namely a special reactor, separation units, and reagents.

Specialists at Tatneft's petroleum research and development institute have developed a technology by which the cleaning process occurs directly in the oil pipeline that acts as a reactor. High-concentration oxygen and a catalyst based on a derivative of cobalt phthalocyanine in a 25% ammonia solution are utilized. The method's particular feature is that oxygen, rather than air, is fed into the oil, after which the raw material purified from hydrogen sulfide goes directly to the metering and delivery unit.

A pilot project was launched at Nurlatneft's Kamenka ultra-viscous oil treatment plant after conducting laboratory experiments in 2023. The test results showed that it is possible to clean oil from hydrogen sulfide at over 90% when implementing the process.

"Compared to the expensive oil cleaning unit for hydrogen sulfide currently operating at the Kutema high-sulfur oil treatment plant, the net discounted income from the scientists' development is 120 million rubles per year. The technology should pay for itself in fewer than two-and-a-half-months at this comparison," according to the article in Neftyanye Vesti.

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Biobased chemicals companies Lygos (Hayward, CA) and CJ BIO (Fort Dodge, IA) have signed a memorandum of understanding (MOU) for CJ BIO to build a commercial-scale biorefinery complex in Fort Dodge, coo,oftn Chemweek.

The facility will combine CJ BIO’s expertise in fermentation and biotechnology with Lygos’ biology, chemistry, and application development expertise.

Initially, the biorefinery produce up to 40,000 metric tons per year of Lygos’ Soltellus™ biodegradable polymers and Ecoteria™ biobased malonates, with the potential to expand to 100,000 metric tons per year. Soltellus polymers are sustainable, biodegradable, and water-soluble with applications in home care, personal care, agronomy, and water treatment. Capacity to produce biobased aspartic acid and other biobased products is also being considered.

The deal builds on a recently formed precision fermentation contract development & manufacturing (CDMO) partnership between the two firms. The Fort Dodge complex will use infrastructure and capabilities from CJ BIO’s existing site, with the adjacent Cargill (Wayzata, MN) corn mill providing feedstock sugar.

“We’ve identified clear, higher performance value propositions with our customers, launched those products to the market, and are now pleased to be expanding our partnership with CJ to develop a biorefinery complex in Fort Dodge to commercially manufacture our products at a readily expandable facility,” said Eric Steen, Founder and CEO of Lygos. “We’re looking forward to contributing to a community with a rich and growing history in biomanufacturing.”

The complex will be part of Iowa’s Crossroads of Global Innovation, an ag-industrial campus that “fosters collaboration and growth within the biomanufacturing sector.” Lygos anticipates an 18-24 month construction period after groundbreaking.

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Construction of a polyethylene plant has begun in the Atyrau region, west Kazakhstan, National Company KazMunayGas (KMG) said in a press release, said Interfax.

Construction is slated to be completed in 2029. According to earlier reports, the construction was to be finished in 2028.

The ground breaking ceremony was attended by governor of the Atyrau region Serik Shapkenov, KMG CEO Askhat Khasenov, deputy energy minister Yerlan Akkenzhenov, deputy minister of industry and construction Olzhas Saparbekov, executive director Russia's SIBUR Sergey Komyshan and vice president of China's Sinopec Overseas Investment Holding Zhao Tiezhu.

In November 2022, the state fund Samruk-Kazyna, KazMunayGas, SIBUR Holding, and the operators of the polypropylene and polyethylene projects signed key documents to establish joint ventures with Kazakhstan Petrochemical Industries and LLP Sileno. These documents outlined the terms of the partnership, including investment and product commercialization.

In May 2023, China's Sinopec joined the project as a full partner, officially becoming a co-founder in April 2024. By early July 2024, during the 7th Kazakhstan-China Business Council meeting, KMG, SIBUR, and Sinopec signed a protocol to finalize the investment budget.

In early July 2024, within the framework of the 7th meeting of the Kazakh-Chinese Business Council, held on the eve of the summit of the Shanghai Cooperation Organization, KMG, SIBUR and Sinopec signed a protocol on the polyethylene project, confirming their intention to reach agreement on the final investment budget and to ensure a highest possible level of local content in the design work and procurement of equipment and materials.

By mid-July 2024, the polyethylene project had reached the final stage of the front-end engineering design phase.

The project is owned by KazMunayGas - 40%, SIBUR - 30%, and Sinopec - 30%. The estimated cost of the project is USD7.7 billion, the financing is expected to be provided by the stakeholders and to come from funds that will be borrowed from international banks.

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Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel business for the third time this year due to falling prices and also lowered its expected sales volumes, sending the company's share price down 10%, said Hydrocarbonprocessing.

Neste said a drop in the price of regular diesel had affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained high.

A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has created a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to impede the nascent industry.

Neste in a statement slashed the expected average comparable sales margin of its renewables unit to between USD360/metric t–USD480/metric t of biofuel, down from USD480/metric t–USD580/metric t seen in July and well below the USD600/metric t–USD800/metric t seen in February.

The company now also expects renewables-based sales volumes in 2024 to be about 3.9 metric MMt instead of the 4.4 metric MMt it had predicted since the start of the year, it added.

A part of the volume cut came from the production of sustainable aviation fuel, of which it is now expected to sell between 350,000 tonnes–550,000 tonnes this year, down from between 500,000 tonnes and 700,000 tonnes seen previously, Neste said.

"Renewable products' sales prices have been negatively affected by a substantial decrease in (the) diesel price during the third quarter," Neste said in a statement. "At the same time, waste and residue feedstock prices have not decreased and renewable product market price premiums have remained weak," the company added.

Industry executives and analysts have said rapidly expanding Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and bp have announced they are pausing expansion plans in Europe.

While the cut in Neste's guidance on sales volumes of sustainable aviation fuel (SAF) came as a surprise, the negative impact on biodiesel margins from a lower diesel price was to be expected, Inderes analyst Petri Gostowski said.

Neste's share price had reversed some losses by 1037 GMT but remained down 5.8% on the day and 48% lower year-to-date.

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