Global fertilizer markets are ending the year in a bearish mood

(ICIS) -- Global fertilizer markets are ending the year in a bearish mood on the back of weak demand exacerbated by economic uncertainty, and the outlook for the first quarter of 2012 looks set to remain gloomy. Markets have generally been firm this year, with prices showing their highest levels since the peak of 2008, but this led to some fears that a re-run of the market crashes seen that year could be on the cards again, particularly with rising economic uncertainty.


The worsening eurozone crisis and broader economic slowdowns seen in developed countries worldwide has destroyed some European demand, and also had a knock-on effect on international currencies, decreasing purchasing power for major fertilizer users in markets such as Latin America and southern Asia.


Hesitant buyers, particularly in the US, have adopted conservative purchasing behaviour, more akin to the post-crisis behaviour seen in 2009, opting to buy on a hand-to-mouth basis. Fertilizers demand is expected to return, but buyers are not likely to step back in strongly until February and therefore prices will remain under pressure until then.


According to the International Fertilizer Industry Association (IFA), forecasts for demand levels in 2012/2013 are highly speculative at present due to the depressed economic context in many developed countries. However, global agricultural commodity prices remain attractive, driven by a disappointing US harvest and robust food, fuel and feed demand.


Consequently, global fertilizer demand is still expected to grow by around 2.3% to 182.2m tonnes next year. But IFA notes there is a downside risk as the economic downturn may impact fertilizer demand in the first half of 2012.


The early part of the year saw demand returning to pre-crisis levels. This, along with increased demand expectations from Pakistan which failed to become self sufficient in urea production - contributed to a stark run-up in urea prices during the second quarter. From April-June, Yuzhny prices rose from USD315/tonne FOB (free on board) to USD510/tonne FOB.


MRC

German Reifenhauser posted record sales and earnings in fiscal 2011

(PlastEurope) -- German machinery manufacturer Reifenhauser (Troisdorf) posted record sales and earnings in fiscal 2011 (30 June), its 100th anniversary year. Sales revenue increased by 12% and new order intake surged by more than 50%. Double-digit growth was seen in almost all product groups. While the company did not disclose exact figures, based on the EUR 400m recorded in fiscal 2010, the sales total is likely to exceed EUR 450m. The start to 2011/2012 was also ⌠positive.


CEO Ulrich Reifenhauser described the financial results as ⌠pleasing, especially after the ⌠difficult 2008/2009. ⌠We wanted to emerge from the crisis stronger than before, and there is no doubt that we have accomplished this goal, he said, adding that the machinery group's flexibility to respond to specific market situations and the product-oriented approach of its independent subsidiaries have proven ⌠very successful.


Over the past fiscal year, Reifenhauser said the group has won ⌠numerous contracts in emerging markets, especially in India, where a rapidly growing middle class portends double-digit growth rates for the flexible packaging market. In particular, the country's burgeoning demand for film products has led to a ⌠significant increase in orders for plant and equipment to manufacture barrier films. Cast films are also increasingly in demand, especially as regards PP film of various types.


The German group sees itself as ⌠well positioned to handle a higher volume of orders from the Indian market. It already has a presence in the country with subsidiary India Marketing Ltd, which employs 70 people in Mumbai and at seven additional locations.


MRC

PX and OX supply expected to tighten in Asia

(ICIS) -- Players in the paraxylene (PX) and orthoxylene (OX) markets in Asia are bracing themselves for tight suppy in 2012 amid the bleak economic outlook, as the eurozone continues to struggle with its debt crisis, sources said. A deluge of new purified terephthalic acid (PTA) plants in China is likely to tip the market in favour of sellers, players said. PTA facilities with a combined capacity of over 9m tonnes/year are expected to commence commercial operations in 2012, while 1.45m tonnes/year of fresh PX capacities is expected within the same period. For every tonne of PTA produced, 0.67 tonnes of PX is needed.


The PX supply shortage is expected to spill over into the OX market, as regional makers are likely to tilt production yields in favour of PX. OX is typically a by-product during the PX extraction process and can be re-isomerised to maximise PX yields.


Key OX makers, such as South Korea's KP Chemical and Taiwan's Formosa Chemicals and Fibre Corp (FCFC), kept the operating rates at their OX facilities low in October-December 2011 in favour of PX production.


KP Chemical operates two OX lines at Ulsan with a combined capacity of 230,000 tonnes/year, while FCFC runs three facilities at Mailiao that can produce a total of 475,000 tonnes of OX per annum.


Plans by Iran's Petrochemical Commercial Company (PCC) to cut its OX exports by more than half in 2012 are also expected to exacerbate the supply tightness.


Meanwhile, PX supply for term shipments is already starting to tighten as PTA makers were heard trying to secure sufficient quantities of term shipments for 2012. Term contracts for 2012 delivery were heard concluded at premiums to published prices, underscoring the expected tight supply.


MRC

US butadiene producer nominated a 7 cent/lb increase for January

(ICIS) -- A US butadiene (BD) producer on Thursday nominated a 7 cent/lb (USD154/tonne, EUR119/tonne) increase for January, an initiative that puts its BD contracts at USD1.05/lb next month. The proposed increase comes as BD prices in other regions are showing signs of strengthening. The European BD contract price for January was agreed on Thursday at EUR1,700/tonne (USD2,208/tonne), rising by EUR50/tonne from December.


The increase in Europe followed expectations of improved demand amid supply constraints because of ongoing ethylene-driven cracker reductions. The outcome of the January settlement in the US will depend on nominations by three other producers in the coming days.


The potential increase next month could snap a four-month downtrend in the US BD market, during which contracts fell by 44% because of weaker demand and ample supply.
Most US BD contracts in December settled at 98 cents/lb, down from USD1.75/lb in August.


Despite the sharp decline, market sources have predicted a possible rebound for BD in 2012, citing potential new demand in the tyre sector.


BD prices could also gain support from possible supply constraints, resulting from a series of cracker turnarounds in the US scheduled for the first half of 2012.


US BD producers include ExxonMobil, INEOS, LyondellBasell, Shell and TPC Group.


MRC

Braskem to focus on domestic projects in 2012

(Plastemart) -- Brazil's petrochemical major plans to focus on investments in Brazil in 2012, planning to spend around USD5bln on new production capacities in the country, the CEO told local paper Valor Economico.
Projects include a naphtha-based polypropylene (PP) plant at Camacari; a second ethanol-based polyethylene (PE) plant, the company's first green PP unit; and continued work on the Comperjpetrochemical complex in Rio de Janeiro. Braskem expects to invest a total of around USD4 bln in petrochemical plants at Comperj.


However, Braskem continues to eye opportunities in the US. The acquisition of PP assets in the US in 2010 and 2011, has consolidated its leadership in PP. Now Braskem is looking at business in PE. The firm continues to mull the size of the stake to acquire in PetroquimicaSuape polyester and PET resin project currently being built in the northeast by federal energy company Petrobras.


MRC