Thomas Gangl, CEO of Borealis, explains how partnerships, innovation and a supportive regulatory framework can help boost plastics recycling.Conferences LIVE

In an interview with Ian Young, executive editor of Chemical Week, EQUATE CEO Nasir Aldousari outlines how the company has improved resiliency through challenges such as COVID and tough marker conditions. The company takes a disciplined approach across all operations to maintain agility and commitments to all stakeholders across the cycle.Learn more at the World Petrochemical Conference 2024 | Houston | March 18-22 2024Conferences LIVE

Customers are demanding more and more sustainable products from petrochemical producers. Mohd Yusri Mohamed Yusof, CEO of Petronas Chemicals, talks about how his company is advancing its sustainable portfolio by working with various stakeholders and not only looking at the company’s carbon footprint, but also its consumption of natural resources such as water.Conferences LIVE

Many of the developments in bio-based or lower carbon, more sustainable chemicals rely on bio-feedstocks. Mark discusses how the bio-feedstocks landscape is changing and what may be the potential risks to food security. Learn more at WPC 2024 | Houston | March 18-24, 2024

Houston | March 2024

New York | September 2023

Singapore | November 2023

London | November 2023

In a generally difficult second quarter for chemical makers, earnings for paints and coatings firms were a bright spot, largely due to significant relief from raw material cost inflation. PPG Industries, Inc. and The Sherwin-Williams Company (SW) beat analyst expectations, and AkzoNobel NV upgraded its full-year guidance. Nippon Paint Holdings Co., Ltd., Kansai Paint Co., Ltd. and Asian Paints Ltd. also reported solid results.Raw materials were a major tailwind for PPG and SW — one that is expected to continue in the second half. SW expects raw material costs to be down by a mid- to high single-digit percentage year over year, according to chairman and CEO John Morikis. "Compared to the guidance we laid out in January, full-year sales growth and raw material costs are trending better than we anticipated," Morikis said. "With this first half outperformance, we expect considerable year-over-year operating margin expansion and earnings growth for the year."SW has increased its earnings guidance for the year. The company now expects full-year 2023 net sales to be up by a low single-digit percentage from 2022. They were expected to be flat to down by a mid-single-digit percentage previously. SW also now expects full-year adjusted earnings to total $9.30-$9.70/share, compared with $7.95-$8.65/share previously and $8.73/share in 2022.AkzoNobel also upgraded its earnings outlook and now anticipates adjusted EBITDA to be between €1.40 billion and €1.55 billion. The company’s previously communicated guidance was €1.20 billion-€1.50 billion. It expects declining raw material costs to have a favorable impact on profitability for the rest of 2023. "We have seen raw material deflation in some of our businesses and we expect increasing raw material deflation in the second half of the year," said Greg Poux-Guillaume, CEO of AkzoNobel, during a July 25 earnings call.However, some of the cost inflation seen since 2021 will stick. "What we're seeing today…[is] mid- to high single-digit and maybe in some cases low double-digit deflation on certain raw materials," said Vincent Morales, senior vice president and CFO of PPG, during the company’s earnings call last month. "I would remind everybody, these raw materials went up 20%, 30%, 40%. So, when you do it on a multiyear stack, we're still much higher."PPG is also drawing down its raw material inventories, which were built up during the surging demand and supply chain crises in 2021 and early 2022. "Our raw material inventories remain elevated, and we are executing various action plans to further reduce these inventory levels over the next several quarters as commodity supply availability has improved significantly this year," PPG president and CEO Tim Knavish said.Axalta Coating Systems Ltd. also expects to see margins improving as the year progresses. The company "expects mid- to high single-digit variable cost deflation for the second half of the year to mitigate higher operating expenses," it said.Demand trendsMeanwhile, demand is soft in some coatings end markets but has held up surprisingly well in others. Demand for architectural coatings has softened as interest rates have hit the construction market, but it appears to be stabilizing in much of the world. "In our architectural businesses, we expect demand conditions to be mixed by geography," PPG’s Knavish said. "In Europe, we anticipate demand will stabilize at current levels, resulting in year-over-year sales volume being much closer to the prior year. In the US, we anticipate DIY [do-it-yourself] demand to remain at lower levels and pro-contractor residential repaint activity to begin to modestly decline sequentially with the backdrop of lower existing home sales."Automotive OEM demand remains solid as vehicle builds continue to recover from the pandemic and semiconductor chip shortages. Axalta’s mobility coatings business saw a 13% year-over-year increase in volumes, with broad growth and especially strong gains in China and EMEA light vehicles, CEO Chris Villavarayan said.The picture is more mixed for industrial coatings, as weaker industrial activity generally is a drag. Protective and marine coatings were a bright spot for many firms, including Sherwin-Williams and AkzoNobel, but general industrial demand is weak. "Overall global industrial production is challenging, including in a number of industrial end-use markets that are already in recessionary tight demand conditions," Knavish said.

InterPipeline's CEO, Todd Karran, discusses how the design of the company's new polyethylene (PE) plant Northern Alberta uses hydrogen internally, giving it a lower carbon footprint. Additionally, the new PE capacity is far away from the hurrican threats and suited to export to towards the east and west coasts, reaching more markets.Learn more about how the chemical industry forges a path to carbon neutrality at the World Petrochemical Conference 2024

Major chemical producers, including LyondellBasell, Air Products, Eastman Chemical, and Covestro, have issued green bonds to help fund projects relate to net-zero and decarbonization initiatives. These can include projects related to circular economy, advanced recycling, hydrogen production, and battery materials – key areas of interest as the chemical industry looks to ramp up its net-zero efforts.A green bond is "any type of bond instrument where the proceeds or an equivalent amount will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible green projects," according to the International Capital Market Association’s (ICMA) statement of green bond principles, which were last updated in 2021. An "eligible green project" could include investments in areas such as energy efficiency, renewable energy, pollution prevention and control, circular economy products, and sustainable water management, among other areas, according to ICMA.Circular EconomyCircular economy is a major investment theme for the green bonds issued so far by chemical companies. LyondellBasell, which completed a $500 million green bond offering last month, highlights circular economy projects in the company’s Green Bond Framework, which was published along with the bond offering. "We are taking steps to increase our plastics recycling capacity to tackle the challenge of plastic waste and make progress on our goal to produce and market two million metric tons of polymers from recycled or renewable-based sources annually by 2030," LyondellBasell said in the framework. The company highlighted a line of products made via mechanical or advanced recycling, as well as the launch of its circular and low carbon solutions business.Green bonds provided a logical way align financing with the company’s sustainability goals, LyondellBasell told CW. "LyondellBasell has clear ambitions in the circular and low carbon solutions space," the company said. "We view this as a key growth driver of our business." The circular and low carbon solutions business will account for about 15% of LyondellBasell’s capital expenditures through 2030, the company added. "We expect LyondellBasell’s capital expenditures will average $2 billion annually from 2023 through 2025 and remain within historical ranges through 2027."Covestro and Eastman Chemical also plan to use capital raised from green bonds to fund circular economy projects. "Covestro can leverage procurement on the one hand and the development of our own innovative process technologies for CO2 use, biotechnology, and plastics recycling using chemical means, on the other hand," the company said in its green financing framework last year.New EnergyAir Products, which raised more than $1.3 billion in a multi-currency green bond offering in March, has emphasized its role in the hydrogen economy. The green bond offering "makes us the first US chemical company to issue with green and blue hydrogen as an eligible expenditure category, further reinforcing our leading position advancing the energy transition through hydrogen for zero-emission transportation and industrial decarbonization," Air Products CEO Seifi Ghasemi said.Air Products plans to spend $15 billion in capex on energy transition projects through 2027, including major investments in green and blue hydrogen production, as well as carbon capture and storage (CCS). Projects are underway in Saudi Arabia, Canada, and at three locations in the US.LG Chem, meanwhile, plans to invest the $300 million it raised in a green bond offering in July 2022 in areas related to electric vehicle (EV) battery materials, such as cathode materials and separators. The offering came on the heels of a $1 billion green bond issue in mid-2021. The company is targeting over $22 billion in battery materials sales by 2030, a roughly six-fold increase from 2022.LG Chem’s green bond proceeds have helped fund a capacity expansion for cathode materials at a plant in Cheongju, South Korea, among other projects, the company said in its last green bond impact report in September.For more chemical industry insight and news visit www.chemweek.com

The features of pyrolysis that are most attractive to the plastics industry have made it a bogeyman within the environmental community.Environmental Protection Agency’s (EPA) "Draft National Strategy to Prevent Plastic Pollution," released in April, includes an ambiguous discussion of pyrolysis-based plastics recycling. Read in isolation, it could be taken as a restatement of existing practice for the regulation of chemical production processes. Considered alongside the intensifying campaign against plastics, it might suggest EPA intends to create new regulations that could hobble implementation of pyrolysis-based advanced recycling. Indeed, the discussion refers specifically to the issues most commonly used by nongovernmental organizations (NGOs) to argue against the implementation of pyrolysis-based recycling; but it also reaffirms the legitimate potential of pyrolysis as a recycling technology.The situation is an ironic consequence of the environmental movement’s success in drawing attention to the problem of plastics pollution and the need to reduce plastic waste and increase recycling. The movement has not only gotten governments around the world to take action, it has also spurred the plastics sector to regard the problem as an existential threat and its solution as a strategic imperative. The recent rapid development of pyrolysis-based recycling is a direct result.Pyrolysis is just one of a wide range of advanced recycling technologies, but it stands out for being a particularly robust, well understood process that can be adapted to diverse waste streams and integrated relatively easily into existing petrochemical infrastructure. The product, pyrolysis oil, is a naphtha-like material that can be cracked in conventional steam crackers to produce the same monomers already used to make plastics.Pyrolysis has accordingly generated broad enthusiasm and enormous investment from the plastics industry, which regards it as an essential component of any realistic path toward circularity. However, these same characteristics have made pyrolysis a bogeyman within the environmental community, where prominent groups such as Greenpeace and the Natural Resources Defense Council increasingly cast doubt on the viability of plastics recycling while calling for the elimination of plastics altogether.More questions than answersThe draft pollution strategy, which describes itself as a companion to the National Recycling Strategy issued in November 2021, touches only briefly on the issue of pyrolysis-based recycling. Most of the document is focused on identifying opportunities for voluntary collaboration between EPA and US stakeholders to prevent plastic pollution. In a section titled "Goal and Scope of the Strategy," it states: "The proposed actions under each objective create opportunities to shift from a linear approach in plastic materials management to a circular system that is restorative or regenerative by design, enables resources to maintain their highest value for as long as possible, and aims for the elimination of waste."It is here that the draft suddenly brings up pyrolysis. "EPA’s National Recycling Strategy primarily focused on mechanical recycling of municipal solid waste but welcomed further discussion on technologies often referred to as ‘chemical recycling,’ such as pyrolysis," it says. "EPA now understands that some of these technologies produce fuels and/or intermediate materials used in the manufacturing or processing of fuel or fuel substitutes. EPA reaffirms that the Agency does not consider activities that convert non-hazardous solid waste to fuels or fuel substitutes (‘plastics-to-fuel’) or for energy production to be ‘recycling’ activities."UP AND RUNNING: ExxonMobil’s first 30,000–metric tons per year pyrolysis unit in Baytown, Texas, went online in December.EPA’s position on recycling and fuel is nothing new, and it does not conflict with the industry’s plans to use pyrolysis oil as a feedstock for the production of plastics — indeed, it is potentially supportive. Many environmental NGOs argue that pyrolysis should not be considered a recycling technology, claiming that it is used to produce fuel, even when companies use it explicitly to produce monomers for the production of plastic. The draft undercuts this tactic by affirming an explicit distinction between plastics-to-fuel and plastics-to-plastics processing.The next statement might be more worrisome, as it echoes arguments employed by organizations attempting to block new petrochemical projects in the US: "EPA also aims to ensure that a US circular economy approach for plastic products reduces greenhouse gas emissions and protects overburdened communities from facilities that can increase the generation of hazardous waste and other forms of pollution."By contrast, the draft’s final comments on pyrolysis discuss it specifically as a matter of concern subject to potential regulatory action. "Additionally, EPA is aware of concerns about the potential health and environmental risks posed by impurities that may be present in pyrolysis oils generated from plastic waste," says the draft. "Accordingly, EPA intends to require companies submitting new pyrolysis oil chemicals to the Agency for review under TSCA to conduct testing for impurities that could be present in the new chemical substance prior to approval, and ongoing testing to ensure there is no variability in the plastic waste stream that is used to generate the pyrolysis oil."How should these comments be read? On the one hand, they only describe the TSCA process, an ordinary function of the EPA. On the other hand, they directly follow what might seem to be a nod to the anti-petrochemical lobby. There is also EPA’s silence on whether to regulate pyrolysis-based recycling as manufacturing or waste treatment. EPA issued an advance notice of proposed rulemaking on the matter in 2021, but 18 months after the public comment period ended, the agency has not issued a decision, and doing so is not on the agency’s latest regulatory agenda. That the draft’s discussion of pyrolysis appears in the manner of an aside further encourages speculation as to its purpose.Not what might be hoped for"ACC appreciates the EPA’s continued interest in pyrolysis-based recycling," the American Chemistry Council (ACC) said in a statement to Chemical Week. However, the discussion of pyrolysis presented in the draft falls short of what the industry group expects from EPA."The draft strategy provides no scientific basis or identifiable source for the alleged health and safety risks. Merely indicating that ‘EPA is aware of concerns,’ we believe, fails to provide sufficient clarity for interested stakeholders to provide informed comments on whether EPA’s intended approach is justified," said ACC. "In addition, Section 301 of the Save Ours Seas 2.0 Act, which serves as the purported basis for the draft strategy, directs EPA to focus on improving the management and infrastructure of post-use materials in waterways and oceans. ACC questions whether the intended testing requirements for pyrolysis activities fall within that intended Congressional direction."Susan Bell, research and analysis director/Process Economics Program at S&P Global Commodity Insights, does not believe the comments indicate a change in the EPA’s treatment of pyrolysis. "I basically think it is overblown," she said. "Looking at the history of it, there were concerns raised by certain NGOs about advanced recycling and the possibility of toxic components such as dioxins, benzene and related polycyclic aromatic hydrocarbons (PAHs), polychlorinated biphenyls (PCBs), and heavy metals such as lead, cadmium and chromium."Straightforward solutions to such problems based on operating conditions and supply chain management are well within the capabilities of the petrochemical industry, Bell noted. "First of all, dioxin formation is greatly reduced in the oxygen-free atmosphere of pyrolysis," she said. "The formation of benzene, PAHs, PCBs, and heavy metals [stems from] using poorly sorted plastic waste feedstock such as PVC and waste electrical and electronic equipment."Bell pointed to the "holistic" approach being taken by Exxon Mobil Corp. and LyondellBasell Industries NV, which have partnered with Cyclyx International to build a $100 million facility in Houston, Texas, for the sorting and processing of plastic waste for both advanced and mechanical recycling. "Instead of just focusing on the pyrolysis process and use of pyrolysis oil in their crackers, they are investing in the plastic [waste] supply chain, including the plastic recycle sorting facilities," she said. "With the investment in plastic sorting technology including newer optical sorting equipment, they should be able to obtain consistent plastic recycle feedstock meeting their specification for advanced recycling, removing unwanted polystyrene, PVC, waste electrical and electronic equipment, and so on."Bell is sanguine about the prospects for pyrolysis. "Based on the current implementation of large-scale pyrolysis units such as the one ExxonMobil just started up in Baytown, I think a TSCA review of pyrolysis oil will not impede the project," she said.Asked to clarify the draft’s comments, EPA did not respond before Chemical Week’s deadline, but a recent letter from EPA assistant administrator Michal Freedhoff to Senator Jeffrey Merkley provides an additional look at the agency’s current take on the health and environmental risks associated with the pyrolysis of waste plastic. Dated April 28, the letter responds to concerns expressed by Merkley, chairman of the Appropriations Committee’s Subcommittee on Chemical Safety, Waste Management, Environmental Justice, and Regulatory Oversight, "that fuels derived from plastic waste reviewed under the program may present significant toxic chemical exposure to communities living near a refinery."According to the letter, EPA in 2015 and 2019 approved "plastic-based feedstocks (or precursors)" submitted for TSCA review under premanufacturing notices, although the materials, which were to be blended with petroleum-based fuels, have not been commercialized. Data submitted by the applicant showed "there were no impurities of concern, and in one case the Agency required some additional testing to prove no dioxins were being formed as a result of the pyrolysis process," the letter states.The letter explains in detail that the associated risk assessments were based on "very conservative" assumptions. It also debunks a news report by ProPublica that claimed communities near the production site would see a dramatic increase in cancer risk. Going forward, however, EPA will apply greater scrutiny, Freedhoff’s letter states, explaining that data previously considered sufficient "might not reflect as complete an understanding of the potential range of impurities that the Agency now knows to be potentially present in plastics."For more insight and news on chemical feedstocks visit check www.chemweek.com

At the Singapore Maritime Week held in April, the Maritime and Port Authority of Singapore (MPA) provided further clarity on its green shipping ambitions to advance decarbonization in the world’s largest bunkering port, with several industry sources pointing to bullish prospects for marine biofuels in 2023. Article included in Commodity Insights Magazine. View full issue

The seasonal rebound in global ethylene derivative demand forecast for the second quarter failed to materialize, and market participants now expect sluggish demand and oversupply to persist through the end of 2023.China, in particular, has disappointed expectations. Producers had hoped a recovery in Chinese domestic demand would absorb local supply, reducing exports and tightening the international market, but that has not occurred. Worse, new ethylene capacities continue to come online."So far the recovery is much slower than what we expected," a Northeast Asia trader told S&P Global Commodity Insights. "It seems like there are not many bullish factors even in the second half of this year."The 45 million metric tons per year of ethylene capacity slated for startup during 2020-2024 – 25 million tons in China alone – are expected to exceed demand by more than 9%, according to Paul Joo, director/olefin and olefin derivatives, APAC at Commodity Insights.Europe remains challenged by volatile upstream energy and utility costs, and despite the fall in headline inflation, the Russia-Ukraine conflict is expected to remain a drag on the economy. Conditions in the ethylene did not improve as anticipated during the first half of 2023, and market participants now expect continued weak demand and oversupply during the second half.European prices for derivative ethylene glycol (EG) have lingered at historic lows and, in most cases, at levels below cash cost. Demand for downstream polymer polyethylene terephthalate (PET) has also been historically weak, with consumers economizing in the face of rising food prices and interest rates."I’m not optimistic," a European trader said. "The low volumes, the naphtha price and these imports flowing in, and producers [are still] in expensive mode."US adding ethylene export capacityEuropean suppliers also expect more import pressure from cost-advantaged ethane-based producers in the US.Reduced derivative rates in the US have freed ethylene for export, such that Enterprise Products Partners’ 1 million metric ton per year ethylene export terminal in Texas operated at 120% to 125% of capacity through much of 2022. The company is expanding the terminal’s capacity by 50% in 2H 2023, and will add another 50% by 2026.The ethane advantage is also expected to support strong downstream EG production despite weak demand for PET bottling.China, the largest global consumer of EG, has dramatically increased its domestic production capacity, but poor margins in Asia have discouraged production, while imports from the US have increased, sources said. EG exports to Europe are expected to continue at subdued levels amid antidumping duties ranging from 3% to 60%, depending on the company.Oversupply is expected to linger, barring a significant disruption such as a hurricane striking the US Gulf Coast, where EG production is centered. Even then, because EG production outstripped demand during the second quarter, stocks should be sufficient to offset outages, sources told Commodity Insights.Asian EG suppliers said reduced production rates in the regions will continue until margins strengthen, and they expect output to remain low for the next few years. Downstream textile and bottle-grade PET demand has lagged EG supply, a source said.EG plants could transition from economic run cuts to permanent capacity shutdowns of older, inefficient plants where possible, sources noted. Capacity additions slated for 2023 would offset such rationalizations, but startups could be delayed given a shaky economic outlook, traders said.For more chemical industry insight and news visit www.chemweek.com