Issue 10/2022 - Global Chemicals Quick Review

The German chemical and pharmaceutical industry will face difficulties

On May 4, European Commission President Ursula von der Leyen proposed a total EU ban on all imports of offshore and pipeline crude and refined products from Russia as part of a new package of
sanctions imposed on Russia.
It is understood that Russia provides 26% of the EU's oil imports
.
The German Chemical Industry Association (VCI) expressed support for the plan but also warned that
the country's chemical and pharmaceutical industries would face difficulties.
The VCI is primarily concerned about further increases in crude and naphtha prices, rather than the supply
of crude oil and naphtha feedstocks.
In terms of raw materials, the ban on oil imports poses no challenge to the German chemical/pharmaceutical industry as it is a possible disruption of gas supplies
, VCI said.
Crude oil and naphtha can be obtained on the world market from different regions and then transported by pipeline or tanker, but the logistical problems within Germany remain to be resolved
.

The UK chemical industry remains relatively optimistic in the short term

According to the British Chemical Industry Association (CIA), the UK chemical industry is expected to continue to grow in sales in the second quarter of this year, but margins are under pressure
, after seven consecutive quarters of expansion.
The latest findings from a regular business survey highlight the resilience of the sector, with most respondents seeing first-quarter sales revenue growth and strong growth in exports and domestic markets driving production
, the CIA said.
However, more than 90 percent of respondents complained about rising raw material and energy prices, and more than 85 percent reported rising
import and export costs.
The CIA added that while the degree of cost transfer was high, margins continued to decline
.
CIA CEO Steve Elliott said: "With energy prices and raw material costs rising sharply and showing little sign of easing, our industry has once again demonstrated extraordinary performance
.
But we are facing increasing resource and capacity challenges
.
”

U.
S.
base oil production jumps 34% year-on-year in February

U.
S.
base oil production remained unchanged from January at 4.
6 million barrels in February, up 34% from 3.
4 million barrels in the same period last year and up 25%
from 3.
7 million barrels in February 2020, according to the latest data from the U.
S.
Energy Information Administration.

Compared to past years, US base oil production hit a new high since 2018 in February, which was 5.
2 million mt
.
U.
S.
paraffin-based base oil production was 3.
9 million barrels in February, up 38% from 2.
8 million barrels in the same period last year and 33% from 2.
9 million barrels in February 2020; Naphthenic base oil production was 724,000 barrels, up 19% from 608,000 barrels in the same period last year and down 5%
from 759,000 barrels in February 2020.

Global energy spending will exceed $2 trillion in 2022

The latest research from Norway's company Resta Energy shows that soaring oil, gas and electricity prices, combined with the EU's goal of reducing its dependence on supply, and post-pandemic inflation, will soar global energy spending to $2.
1 trillion
this year.
Upstream oil and gas spending is expected to rise 16 percent year-on-year to $142 billion
as global oil and gas producers increase their investment budgets to increase production.
In terms of green energy in 2022, global wind and solar power capacity will grow by 250 GW based on ongoing projects and drive a 24% increase in green energy spending to $125 billion
.
Compared with the level of 2020, the cost of oil and gas projects increased by 10%~20%, mainly due to rising steel prices and tightening
supplier markets.
In the field of renewable energy, lithium, nickel, copper and polysilicon and other important materials for solar photovoltaic manufacturing have increased the cost of renewable energy projects by 10%~35%.