Chemical industry news from Foodcom S.A. [September 2024]

In August 2024, global chemical and commodity markets experienced significant volatility in key products. Urea prices have varied, rising sharply in Europe due to gas supply disruptions and falling in China due to strong production and weak demand. Meanwhile, Vesmoda’s products, U300E and C20, are gaining ground due to stricter environmental regulations increasing demand for waterborne coatings. Caustic soda remains on a growth trajectory, especially in the Asia-Pacific region, despite market challenges. In addition, growing maize imports in India reflect a shift towards ethanol production, impacting local industries such as poultry. These changes present both challenges and opportunities – companies need to remain flexible and adapt to changing market dynamics to take advantage of emerging trends.

Vesmody U300E

The global market for Vesmody U300E, a popular non-ionic urethane rheology modifier, continued to show strong demand, particularly in the waterborne coatings industry. As environmental regulations tighten, particularly in Europe and North America, waterborne systems are gaining popularity, and the effectiveness of Vesmoda U300E in thickening and increasing the fluidity of architectural and industrial coatings has made it the preferred choice for manufacturers. The product’s noteworthy performance in providing high shear viscosity and excellent water resistance is driving its market growth, with an increasing number of applications in wood finishes and water-based paints.

Vesmody C20

Vesmody C20, a dispersing agent widely used in water-based paints and coatings, has seen an increase in demand, particularly in the Asia-Pacific region. This growth is driven by the increasing use of environmentally friendly water-based systems in industrial coatings and packaging. The product’s high performance in pigment dispersion and stability enhancement has made it a key choice for manufacturers looking to improve the performance of their water-based formulations to comply with more stringent environmental standards around the world.

Caustic soda

The global caustic soda market is poised for significant growth, and is forecast to be worth around US$73.4bn by 2032. This growth is being driven by increased demand across a range of industries, particularly in alumina, pulp and paper and organic chemicals production. The Asia-Pacific region dominates the market, with China and India seeing particularly strong demand due to their growing chemical and industrial sectors. However, challenges such as the corrosive nature of caustic soda and fluctuations in raw material costs could affect market stability. Innovation and cleaner production methods are expected to play a key role in future market growth.

Urea

In August 2024, the urea market saw very different trends depending on the region. In Europe, urea prices increased due to a variety of issues, such as reduced production due to feedstock shortages and gas supply disruptions worsened by geopolitical tensions in Ukraine. Additionally, the summer holidays slowed production and labour availability. At the same time, inconsistent urea demand, particularly in the agricultural sector, was impacted by poor weather conditions such as heavy rains in key countries such as the UK and Germany.

On the other hand, urea prices have fallen in China and parts of Asia. This is mainly due to higher production levels in new factories and weak demand as adverse weather, including tropical storms, slowed down agricultural activity. With higher urea availability but lower demand, prices in the region have fallen, creating a stark contrast with the European market. These differences show how urea prices can be influenced by local factors, from weather to geopolitics.

NEWS

India has become a maize importer for the first time in decades as the government pushes to increase maize-based ethanol production, raising local prices and straining the poultry industry. Demand for maize surged after India raised ethanol purchase prices to reduce reliance on sugarcane, causing exports to plummet and imports to rise to a record 1 million tonnes in 2024, mainly from Myanmar and Ukraine. Poultry producers, facing rising feed costs, are calling on the government to remove import duties and allow the import of GM maize to ease the pressure. India’s target of increasing the proportion of ethanol in petrol to 20% by 2025-26 is expected to further boost demand for maize.

In August, propylene oxide prices in Europe remained stable due to weak propylene prices and plant shutdowns. Despite increases in the upstream market, downstream polyol markets stabilised after weeks of price declines, supported by stable production. Maintenance work at LYB cracking units is expected to affect propylene production, while demand in the construction and cosmetics sectors remained robust. Propylene oxide prices were priced at $1470/MT FOB Hamburg. A slight recovery in prices is expected in September and October, driven by increased trade and inventories ahead of autumn in Europe, as well as improved consumer spending.

The European Commission is introducing stricter rules to ensure that EU funding for hydrogen projects primarily benefits European companies, with the aim of protecting local industry from cheaper imports from China. As it prepares to launch the next round of funding for green hydrogen projects, the EU plans to include new criteria favouring European electrolyser manufacturers, in response to concerns about foreign competition. The move is part of a wider EU strategy to reduce reliance on imports and strengthen the local green hydrogen sector, following similar measures such as tariffs on Chinese electric vehicles.

Oil prices fell almost 5% on Tuesday to their lowest levels in nine months, driven by signs of a potential solution to Libya’s oil production freeze. Libyan oil exports have been disrupted due to political disputes, significantly reducing production. Concerns about weak economic growth in China and a drop in demand, along with the end of the US summer driving season, further contributed to the decline. Despite these demand concerns, OPEC+ is expected to move forward with plans to increase production in October.