INEOS Styrolution, the world’s leading supplier of styrene products, has recently announced that it has obtained the approval of relevant regulatory and legal bodies to complete the acquisition of Doodle polystyrene production base. The acquisition was agreed on August 31, 2018, including the acquisition of Foshan Production Base in South China and Ningbo Production Base in Zhejiang Province in East China, as well as the acquisition of two sales offices in Guangzhou and Shanghai. The annual production capacity of each production base is as high as 200,000 tons.

The acquisition follows INEOS Styrolution’s “triple transfer” development strategy, which not only allows us to increase production plants in key Asian markets, but also to enter the domestic market through localized production.

“We will continue to implement our development strategy.” Kevin McQuade, chief executive of INEOS Styrolution, said. “This is the second successful acquisition in the Asia-Pacific region after K-Resin business acquisition and integration. We also define the Asia-Pacific region as the business focus growth area of INEOS Styrolution.

Steve Harrington, president of INEOS Styrolution Asia Pacific, was heartened by the new opportunities offered by the acquisition: “This acquisition not only enables us to better serve existing customers in the Asia Pacific region, especially the household appliances and electronics industries, but also provides us with opportunities to explore the Chinese market.”

INEOS Styrolution

INEOS Styrolution is a leading global supplier of styrene products, focusing on styrene monomers, polystyrene, ABS general materials and styrene special materials. With excellent production equipment and over 85 years of rich experience, INEOS Styrolution can provide the best quality solutions to help customers win competitive advantage in the market and achieve success. The company provides styrene products for many industries, including automotive, electronic, household appliances, construction, health care, toys/sports/leisure and packaging. In 2018, the company’s sales reached 5.4 billion euros. INEOS Styrolution has about 3,500 employees and 20 production bases in 10 countries.

Data released by the General Administration of Customs on Saturday showed that China’s imports of scrap metals fell 32.7% to 330,000 tons in January from a year earlier.

Among them, the import of copper scrap decreased by 11.5% to 180,000 tons, and the import of aluminium scrap decreased by 34.4% to 120,000 tons.

In January, the import of alumina increased by 5.4% to 80,000 tons, while the export of alumina increased by 142,864 tons.

Due to the slow recovery of terminal demand of ethylene glycol, the imbalance between supply and demand of ethylene glycol is difficult to change in a short time. In this case, supply pressure is still the dominant factor in the ethylene glycol market, and ethylene glycol will continue to find the bottom.

Obvious supply pressure

Oversupply is the main reason why the price of ethylene glycol has continued to weaken since the fourth quarter of last year. At present, the problem of oversupply still exists.

First, in terms of domestic supply, as of February 15, the start-up rate of ethylene-based ethylene glycol production in China was 83.5%, up 3.3 percentage points from the previous week; the start-up rate of coal-based ethylene glycol production was 84.6%, up 16.3 percentage points from the previous week. The overall starting load of ethylene glycol in China is 85%, which is 8.4 percentage points higher than the previous week. With the increasing start-up load of ethylene glycol, domestic market supply will further increase, and the problem of oversupply will further aggravate.

Secondly, on the import side, due to the abundant supply of domestic ethylene glycol, the price has always been at a low level, and the arbitrage window for ethylene glycol imports has always been closed. Up to now, the price of Imported Ethylene Glycol discounted RMB has risen to about 200 yuan/ton of spot price in East China. Demand for high-priced imports has declined, and imports of ethylene glycol have declined since the fourth quarter of last year. Looking ahead, the ethylene glycol plants in India and Thailand will be overhauled, the international supply will be tightened, and the price gap between internal and external markets is expected to expand, thus further restraining imports.

Third, due to poor downstream consumption, ethylene glycol port inventory is high, creating a new high in recent five years. As of February 14, the inventory of ethylene glycol ports in East China was 1.066 million tons, up by 460,000 tons, or 75.91%, from the peak of ethylene glycol at the beginning of October last year. Among them, Zhangjiagang’s ethylene glycol inventory was 751,000 tons, up 438,000 tons from the beginning of October last year, up by 139.94%; Taicang’s ethylene glycol inventory was 115,000 tons, up by 67,000 tons from the beginning of October last year, up by 6.48%; Ningbo’s ethylene glycol inventory was 93,000 tons, down by 44,000 tons from the beginning of October last year, down by 4.12%.

Overall, although the arbitrage window is closed and imports are declining, it is difficult to change the situation of domestic supply pressure. At present, the domestic ethylene glycol start-up load has increased, and the inventory has reached a new high in the stage. The effect of oversupply on the price of ethylene glycol is still obvious, and the market needs time to inventory.

Cost Support Appearance

The rebalancing process of global crude oil supply and demand is expected to accelerate due to the implementation of OPEC output reduction exceeding expectations. Influenced by market factors, international crude oil has been rising recently. In this case, the cost focus of ethylene to ethylene glycol will be shifted upwards, which will provide strong support for ethylene glycol which is currently in a slight profit state.

Slow recovery of demand

After the Spring Festival, the polyester enterprises which had been repaired in the earlier period resumed production one after another. At present, polyester inventory is at a low level, polyester enterprises urgently need to increase production to meet the upcoming peak consumption season. It should be noted that due to the shortage of terminal orders, the process of terminal weaving resumption has slowed down this year, and the willingness of enterprises to take goods is not strong. Therefore, the warming of demand may be less than expected, thus delaying the process of ethylene glycol de-inventory.

Forecast for future market

In summary, due to the slow recovery of demand, the imbalance between supply and demand of ethylene glycol is difficult to change. In this case, excessive supply pressure is still the dominant factor in the price of ethylene glycol. At present, the inventory is high, and the disadvantaged pattern of ethylene glycol is still difficult to change in a short time.

Reporters recently learned from the Ministry of Industry and Information Technology: last year, China’s iron and steel industry continued to promote structural reform on the supply side, industrial structure continued to optimize, market order improved significantly, and the industry’s economic benefits reached the best level in history.

In terms of output, the output of pig iron, crude steel and steel (including duplicate materials) in China last year was 771 million tons, 928 million tons and 1.106 billion tons, respectively, increasing by 3.0%, 6.6% and 8.5% over the same period of last year, with crude steel production reaching a record high. Last year, the apparent consumption of crude steel in China reached 870 million tons, an increase of 14.8% over the same period of last year, and the self-sufficiency rate in China exceeded 98%.

From the price point of view, due to supply side structural adjustment, environmental protection supervision, strong market demand and other factors, China’s steel prices were running at a high level last year. The comprehensive steel price index averaged 115.8 points, an increase of 7.6% over the same period last year, and the industry benefits reached the best level in history. Last year, China’s steel industry realized a profit of 470.4 billion yuan, an increase of 39.3% over the previous year.

According to offshore engineering reports, oil prices, supported by OPEC-led production cuts, are close to a high of nearly $67 per barrel in 2019, although rising oil prices are constrained by concerns that slower economic growth may affect demand.

Oil supply restrictions led by OPEC helped crude oil prices rise by more than 20% this year. U.S. sanctions against OPEC members Iran and Venezuela have also tightened markets.

Brent crude fell 21 cents to $66.29 a barrel at 1249 GMT, not far from Monday’s 2019 high of $66.83. U.S. crude oil prices rose 44 cents to $56.03.

Harry Tchilinguirian, global head of commodity market strategy at BNP Paribas, said: “The market is slowly restoring its bullish base under the influence of economic risks associated with trade negotiations between the United States and China.”

Demand-side concerns remain a major drag on prices. HSBC Holdings warned on Tuesday that the slowdown in China and the UK will create more obstacles this year.

China is preparing to build new LNG import facilities, as well as expanding existing LNG terminals in the Dawan area of Guangdong, Hong Kong and Macao.

The region includes Hong Kong, Macao and nine other cities in Guangdong Province. The government hopes to turn it into an economic center.

China is the second largest importer of liquefied natural gas in the world. In the process of implementing the clean air strategy, China has continued to promote the import of refrigerated fuels and set a new record.

China imported 53.7 million tons of liquefied natural gas in 2018, an increase of nearly 38% compared with 2017, when China overtook South Korea as the world’s second largest importer of liquefied natural gas.

Qatar’s oil and petroleum service companies Schlumberger and Beckhughes signed a preliminary agreement worth more than 9 billion Qatar rials ($2.47 billion) to boost the development of the local energy industry, Reuters reported in Doha.

Qatar, the world’s largest exporter of liquefied natural gas, is facing trade boycotts from some Arab countries in the hope of reducing its dependence on imports and increasing domestic production.

“As part of our national obligation to develop Qatar’s industry and promote self-reliance, we believe it is necessary to localize many of the ancillary industries in the energy industry,” Qatar Oil Chief Executive Saad al-Kaabi said in signing memorandums of understanding with Schlumberger and Beckhughes.

Kaabi said the initial agreement would involve investment in production facilities, training and development. McDermott, another oil service company, signed a joint venture agreement with Naqilat to build offshore platforms for offshore and onshore buildings without giving any price.

Qatar expects to save about 9 billion rials a year through import substitution after the establishment of the local energy industry, but Kaabi did not give a target date.

Qatar’s goal is to increase its annual production of liquefied natural gas by 43% by fiscal year 2023-2024, from 77 million tons per year now to 110 million tons per year.

Braskem Idesa, a Mexican polyethylene producer, said on Friday that it was promoting a dedicated ethane import terminal and other projects to address the region’s long-standing shortage of raw materials.

The move comes as state-owned Mexican National Petroleum Corporation (Pemex) continues to tackle production and exploitation problems, which have led to insufficient supply of Braskem Idesa and reduced production at its factories.

“The lack of ethane in Mexico’s petrochemical industry has prevented the immediate solution to the shortage in terms of production.” Cleantho de Paiva Leite Filho, Director of Business Development, said. “So, what can you do in the short term? For example, build or extend the import terminal.”

Leite also mentioned more long-term solutions centered on Mexico’s existing resources, but said these options, such as upstream investment and upgrading of existing gas processing infrastructure, would take longer and could bring higher costs.

Leite said Pemex would be a key player in any future choice, adding that the state-owned energy producer was already taking steps to make up for the ethane shortage in the long run.

Pemex officials did not respond to repeated requests for comment, but Leite said the company had accepted the import terminal project. So Braskem Idesa “is confident that this gap will be solved nationwide,” Leite added.

Despite the ongoing contract negotiations in February by the European MMA, there have been double-digit and triple-digit decreases in relevant agreements so far, marking the 11th consecutive month of decline in monthly contract prices.

Contract negotiations are expected to end this week, and looser supply and demand fundamentals remain the main source of downward market pressure.

Spot prices remained stable this week as buyers sought to bring FD prices in Northwest Europe below 2000 euros per ton, a point traders insisted on.

Supply is still plentiful, but rebalancing is expected in the future, factories will start at a lower speed, and maintenance will continue until spring.

With the start of the traditional paint season, demand is picking up and will continue until March.

In the future, the global start-up rate will remain at a relatively low level. In view of weak demand in Asia and Europe, factories need not increase the start-up rate.

At present, there are many equipment maintenance plans in Asia, and Yingchuang and Lucite also have maintenance plans in Europe in April.

Weak automobile market

The outlook for the plastic industry remains bleak, with demand for automobiles expected to weaken in Europe and Asia in the first half of this year.

Automobile market is the key terminal market of PMMA, and also the main area of future growth.

Application of MMA downstream product PMMA in automobile industry

Manufacturers say their goal is to introduce new applications for scratch resistance and durability of PMMA, which will increase the use of PMMA in automobiles.

Some traders said this week that demand had risen, possibly due to stockpiling before Britain left Europe.

The rise in demand may also be due to other factors, such as the season, the end of market de-inventory, and buyers’increased purchasing power after the recent price decline.

A source from INEOS Nitriles, a European chemical giant, said on February 14 that the announcement of force majeure at the Acrylonitrile (ACN) plant in Seal Sands, UK, had no direct impact on Lucite International’s production of MMA.

In the first quarter, MMA settled at 2,260-2,290 euros per ton of FD in Northwest Europe, down 150 euros per ton at the low end and 200 euros per ton at the high end compared with the fourth quarter of last year.

MMA January FD Northwest Europe contract settlement price was 2,495-2,515 Euro/ton, low-end fell 100 Euro/ton, high-end fell 125 Euro/ton.

Almost all of the MMAs are synthesized by polymerization. The most important application is casting, moulding or extrusion of PMMA or modified polymers.