Upstream stages and ports are reshaping the buying agenda

Upstream stages and ports are reshaping the buying agenda. Notes from this week in my Asia coaching.

I am Siggi. I know the chemistry in Asia.

In my Asia coaching I look every day at what is changing in markets, regulation and supply chains, and at what follows from that for buying into Europe. This week the topics were far apart and still came back to the same question, who holds the upstream stage.

There is an anti-dumping case running on certain alkylphosphonic acids from China, products the trade usually calls phosphonates. The provisional rates are in three digits and a final decision is due by mid-November. Anyone buying and reselling until then should have it in the contract who carries a retroactive duty assessment. A customs question turns into a contract question.

With 1,4-butanediol the mechanism is easiest to see. Europe has been charging duty on the base material since 22 June on goods from China, Saudi Arabia and the United States, and on Wednesday Washington issues a preliminary determination on a downstream product of the same chain. A duty only ever hits the goods named in the regulation. Whoever processes one stage further ships free of it, and that is where the margin moves. You can read it in your own incoming offers, as soon as Asian producers start offering the downstream stage instead of the base material.

On the plant side the week went in two directions. In Leuna the operator of the chain from phenol and cyclohexanone through to caprolactam stops production at the end of September, and the neighbours on the same site lose their supplier over the fence. In China the world’s largest propane dehydrogenation unit has been awarded, 1.2 million tonnes of propylene a year, and with the catalyst the most expensive part is already on order.

Two disruptions came out of the physical chain. Sadara has suspended production with no restart date, the announcement names no products and the company’s own overview lists propylene glycol among them. And the thirteen day stoppage at the empty container depots in Mundra ended on 10 September. Notices like that read as an all clear, when in fact they mark the start of the backlog running into the October shipments.

The last item is the one I keep thinking about. Evonik is closing Bitterfeld at the end of April 2027 and gives rising supply from Asia as one of the reasons, while in the same week Beijing imposes provisional duties on Japanese dichlorosilane. Europe gives up an upstream stage, China secures its own.

That is what the coaching is for. The news item itself is rarely the news. The stage it happens on is.

That's the chemistry.
Siggi