The Urethane Blog
March 22, 2023
Pearl Polyurethane Systems announces major
new Saudi Arabian production facility in Jeddah
Pearl Polyurethane Systems, the award-winning PU system house, has announced the commissioning
of a major new production facility in Jeddah, Saudi Arabia, further reinforcing the company’s industry-
leading position as the largest supplier of polyurethane formulations in the Middle East and Africa
region. Creating new job opportunities in Jeddah, the dedicated plant and office will accommodate
the company’s growing team while further expanding its presence in the Kingdom. With this new
facility, Pearl is accelerating the implementation of its PearlX2 growth plan set to double the
company’s size over the coming five-year period.
Jeddah was chosen as the site for the new Pearl production plant due to its proximity to the city’s
major international port, access to top talent, and excellent transport connections across the
Kingdom.
The new facility will contribute to strengthening Saudi Arabia’s position as a growing manufacturing
hub, with Pearl’s new plant producing polyurethane formulations and high-performance
polyurethane foams widely used in building insulation products, manufacturing processes, and a
range of other everyday applications. Furthermore, the new production facility will leverage Jeddah’s
strong position as an export hub catering to further demand from across the wider region.
Investment into Pearl’s new Jeddah production plant also marks a significant step for the company in
reaffirming its commitment to its existing Saudi-based clients and their vision for the Kingdom to
become a world-class business and tourism destination. Through its clients, Pearl has been working
on multiple projects in Saudi Arabia over the recent years in various fields, including infrastructure,
retail, hospitality, architecture, and the built environment.
Pearl’s expansion in Saudi Arabia is also closely aligned with Vision 2030 national transformation
program objectives, which aim to diversify the Kingdom’s economy and promote private sector
growth. Considering the superior insulation capabilities of rigid polyurethane foams, Pearl’s local
production plant in Jeddah will strongly support the objectives of becoming CO2-neutral by 2060.
“Our roots in Saudi Arabia run deep. Pearl has been servicing clients in the Kingdom for decades and
we are excited about this new production facility commissioning dedicated to providing our Saudi-
based clients with the very best delivery options possible and industry-leading innovation, while
ensuring supply chain resilience. The new Jeddah facility, coupled with investment and growth in our
other offices and facilities across the MENA region, will enable Pearl to maintain world-class service
delivery standards and respond to evolving customer demands across several product areas,” said
Martin Kruczinna, CEO of Pearl Polyurethane Systems. “We are thrilled to offer our Saudi clients the
benefit of dedicated production and warehousing facilities in the Kingdom as well as the type of
personalised, customer-centric service that our international clients have become accustomed to over
the past 35 years.
“This investment represents another tremendous show of confidence in the growing strength and
significance of the Saudi Arabian economy and our company’s close alignment with Vision 2030 goals.
Focusing on building and infrastructure insulation solutions, as well as consumer goods such as
appliances and footwear together with a range of other products, our new production facility ensures
that we continue to offer best-in-class PU solutions to our current and new Saudi-based clients,
supporting further manufacturing sector growth in the Kingdom,” concluded Kruczinna.
Pearl’s R&D team won the Innovative Insulation Project of the Year 2021 award for the first R&D
initiative of its type launched in the Middle East, and again in 2022 for launching its new, more
sustainable low lambda insulation product as part of its EcoPearl range, achieving an overall
improvement of up to 20 per cent in insulation performance over comparable products.
Operating since 1989, the company has supplied polyurethane insulation foam systems for several
trailblazing projects in the Gulf region, including Palm Jumeirah, Downtown Dubai, Ski Dubai, and,
more recently, the Germany Pavilion at Dubai Expo 2020 Bustanica, the world’s largest vertical farm
for Emirates Airlines flight catering in Dubai, and Noon’s fulfilment center in Saudi Arabia.
Pearl Polyurethane offers a comprehensive range of polyurethane formulations and prepolymers for
the production of high-performance polyurethane foams and elastomers.
March 21, 2023
Wanhua Chemical posts 34% profits drop in 2022
MOSCOW (MRC) — China’s Wanhua Chemical reported a 34.1% decrease in net profits in 2022, as steep increases in raw materials and energy prices significantly squeezed its margin, the company said.
The company has become the world’s biggest methylene diphenyl diisocyanate (MDI) supplier, with a combined capacity of 3.05m tonne/year as of late 2022.
It is also the world’s third largest toluene diisocyanate (TDI) supplier, with a total compacity of 650,000 tonne/year.
Cost for key raw materials rose heavily. For example, prices of benzene, coal and liquified petroleum gas surged by 14%-21% in 2022.
Its 1m tonne/year ethylene project in Yantai operated at 91% in 2022. Its polyurethane plants’ overall utilisation rate stood at 92% in 2022.
Outlooks: Progress on constructions of its Penglai complex, consisting of a 900,000 tonne/year propane dehydrogenation unit and downstream units. 2023 will be its “project year”. All project investments should follow three rules: in line with the company’s strategy and resources access capacity, having comparatively competitive advantages even in the most extreme competition scenario, with comprehensive considerations of global operating environment.
Wanhua Chemical also plans to increase the capacity of its polycarbonate (PC) plant in Yantai in Shandong province by 140,000 tons per year to 340,000 tons per year. The expansion will be carried out by reengineering the existing 200 ktpa PC production project at the site. The company is currently seeking environmental approval for the plan. The timing of the project is not disclosed.
Wanhua Chemical was founded on December 20, 1998, and is the first listed joint-stock enterprise after reorganization in Shandong Province, China. The company mainly produces diphenylmethane diisocyanate (MDI), including pure MDI and polymerized MDI used in the production of polyurethane (PU).
https://www.mrchub.com/news/406750-wanhua-chemical-posts-34-percent-profits-drop-in-2022
March 21, 2023
Global MDI Demand Growth Slow Down, MDI Facilities in Europe & USA Idled
PUdaily | Updated: March 17, 2023
On March 2, 2023, Covestro released its 2022 group report: “Fiscal 2022 was impacted by global challenges that had significant and perceptible effects on Covestro’s business performance. In particular, the sharp rise in energy and raw material prices during the year, especially in Europe, put a strain on the company. This was compounded by continuing adverse effects caused by the coronavirus pandemic in China, high inflation and an overall slowdown in global economic growth.” And according to Covestro’s report, the global MDI demand in 2022 was 8,250 k tons, increased by 0.2% year on year. The global MDI demand growth was slow down.
MDI Facilities in Europe & USA Idled, Global MDI Operating Rate Down
On February 21, 2023, Huntsman Corporation disclosed on its fourth quarter 2022 earnings call:
“Our Asian markets, primarily China, did experience modest volume growth in the quarter due to slightly improved demand in insulation and automotive when compared to the fourth quarter a year ago. Europe demand remained subdued…In the short-run, we are idling our smaller MDI line in Rotterdam for an extended period until end market demand improves…In the U.S., we’re seeing similar conditions due to rising interest rates…Our Geismar Louisiana MDI plant, we have closed one of our three lines that represents about 30% of our output.” The company’s spokesperson estimated that the operating rates are presently around 70% globally, which is lower than normal levels.
Huntsman’s MDI capacity in the Netherlands and the United States has reached 470 ktpa and 500 ktpa respectively. It means the idling capacity of Huntsman’s MDI facilities in Rotterdam and in Geismar totals about 300 ktpa.
Due to the declining operating rate of MDI facilities in Europe and the United States, as well as the high cost of upstream energy and raw materials, the PMDI market price in Europe is stable. The contract price is €2,400-2,550 /tonne, and the negotiated price is €2,300 /tonne, showing a weak status between supply and demand.
Construction:
Construction is the most important downstream sector for MDI in Europe and the United States. A major MDI supplier saw that two-thirds of their polyurethane Americas business went into construction-related end markets, approximately half into commercial construction, and half into residential, of which 70% was related to new residential builds.
Americas: New housing starts in U.S. totalled 18.67 million in 2022, a year-on-year decrease of 3.1%, according to Federal Reserve Economic Data. From 2020 to 2021, the US housing market revived rapidly amid Covid-19 pandemic and evolved into a real estate boom since the subprime mortgage crisis of 2007. The current housing boom arises from a combined effect of short cycle (post-Covid policy stimulus) and long-term cycle (inventory cycle after the subprime mortgage crisis). Since the Fed tightened monetary policy in 2022, the real estate market has borne the brunt, and drops in indicators such as home sales and market prosperity are comparable to those in the crisis of 2007-2008. Looking ahead to 2023, the U.S. housing market is expected to weaken, while the margin may be small.
New Housing Starts & Completions in U.S., 2018-2023
Europe:
Market instability has been exacerbated by the war in Ukraine and high inflations, which has dampened the intention to invest in new construction projects. In December 2022, construction output in the Euro Area fell by 2.5% month-on-month, reaching the largest decline in the past 18 months, according to Eurostat. Euroconstruct forecasts a significant slowdown in the growth rate of residential construction in Europe to 1.3% in 2024. This results from stagnation trends in both new residential construction and renovation (in 2024, growth is 1.5% and 1.2%, respectively).
Automobile:
Automobile is another major downstream industry for MDI in Europe and U.S.
Europe: On January 18, 2023, the European Automobile Manufacturers’ Association released a report showing that in 2022, as a result of component shortages, the European passenger car market contracted by 4.6% to 9.26 million units, the region’s lowest level since 1993, when 9.2 million units were registered. Agence France-Presse claimed that 2022 is the third difficult year for the European automobile industry. Since the Covid outbreak and the ensuing supply shortages, a large number of factories and showrooms were shuttered. The semiconductor shortage had not eased even after the pandemic stabilized. In 2022, Germany was the only country of the European market to have recorded growth in auto sales, with 1.1% increase. Sales in Italy, France and Spain fell by 9.7%, 7.8% and 5.4% respectively.
Americas:
U.S.A: Many automakers slashed production due to soaring feedstock costs and ongoing shortages of semiconductors and other components, according to Cox Automotive. Full-year 2022 U.S. auto sales are expected to be near 13.9 million units, a decrease of nearly 8.0% from 2021 and down 20% from the market peak in 2016.
Brazil: In contrast, the auto industry in Brazil performed better. The components shortage in Brazil’s auto industry had eased markedly in 2022, driving growth in the country’s auto output, according to Brazilian Association of Automotive Vehicle Manufacturers (Anfavea). Moreover, the increase in Brazilian auto exports to Latin American countries also boosted the rise in the country’s auto industry. Anfavea currently expects that Brazil’s 2023 auto output would rise by 2.2% to 2.42 million units.
http://www.pudaily.com/Home/NewsDetails/35233
March 15, 2023
PO Prices Rising in China Dragging Polyol Along for the Ride
Will PO Prices in China Rise to CNY 12,000/tonne in March?
PUdaily | Updated: March 7, 2023
Supply
In February, multiple PO facilities in China experienced overhauls, technical transformation, or output reduction, including Jishen Chemical, Qixiang Tengda, Yida Chemical, Satellite Chemical, Sinopec Tianjin, Sinopec Zhenhai, etc., involving a total capacity of 1.69 mtpa. The capacity utilization was around 60% in February. Moreover, the synchronous maintenance of overseas facilities resulted in a significant shrinkage of imported goods. Therefore, the overall supply of PO in China was tight.
Demand
China’s February manufacturing PMI rose 6.9 percentage points month-over-month to 56.7%, indicating that China’s production activities are accelerating to pick up after getting rid of the impact of Covid-19 pandemic and the Spring Festival factor. Downstream manufacturers gradually recovered operation and saw sales increases in February. Besides, the costs of PO increased as the profit margin of chlorohydrin process further narrowed. As a result, PO prices in China kept moving up since February. On March 6, the prevailing offers of PO in Shandong and North China markets stood at CNY 11,100-11,200/tonne EXW in bulk in cash.
Forecast
In a promising March, polyurethane downstream industries are pinned on new hopes. The market sentiment has grown markedly. Thanks to successively convened exhibitions and consumption-based incentives, the demand is expected to further rise. With the approach of China’s Two Sessions, many local governments have issued control measures for the production and transportation of hazardous chemicals, so that the supply of polyurethane raw materials will be more or less affected. PO prices in China are projected to move around CNY 12,000/tonne.
http://www.pudaily.com/Home/NewsDetails/34965
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