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Robust China’s Demand Drives ABS Plastic Exports from South Korea

abs copolymers

Robust China’s Demand Drives ABS Plastic Exports from South Korea

IndexBox has just published a new report: ‘Republic of Korea – Acrylonitrile-Butadiene-Styrene (ABS) Copolymers In Primary Forms – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

South Korea remains the world’s largest supplier of primary ABS copolymers, accounting for 46% of global exports. Robust demand from China propels the growth of South Korea’s shipments. In the first seven months of 2021, the export value increased by +60% against the same period of 2020. Last year, ABS copolymer exports from Korea reached $2.1B. China, Hong Kong SAR and Turkey constitute the leading importers of Korean ABS plastics. In 2020, the average ABS copolymer export price country’s amounted to $1,521 per tonne, down by -7.9% against the previous year.

South Korea’s ABS Copolymer Exports by Country

South Korea is the world’s largest supplier of primary ABS copolymers, accounting for 46% of global exports. In the first seven months of 2021, South Korea exported 759K tonnes of primary ABS copolymers worth $1.76B, a 60%-increase in value terms against the same period of 2020.

In 2020, ABS copolymer exports from South Korea declined to 1.3M tonnes, approximately mirroring 2019 figures. In value terms, ABS copolymer exports dropped from $2.2B in 2019 to $2.1B (IndexBox estimates) in 2020.

China (499K tonnes) was the leading destination for ABS copolymer exports from South Korea, accounting for 37% of total exports. Moreover, ABS copolymer exports to China exceeded the volume sent to the second major destination, Hong Kong SAR (120K tonnes), fourfold. Turkey (80K tonnes) ranked third in terms of total exports with a 6% share. In value terms, China ($725M) remains the key foreign market for ABS copolymer exports from South Korea, comprising 35% of total exports. Hong Kong SAR ($178M) occupied the second position in the ranking, with an 8.7% share of total exports. It was followed by Turkey, with a 5.9% share.

In 2020, the average annual growth rate of exports value sent to China totalled +5.2%. Exports to the other significant destinations recorded the following average annual rates of export growth: Hong Kong SAR (-20.4% per year) and Turkey (+3.2% per year).

In 2020, the average ABS copolymer export price amounted to $1,521 per tonne, falling by -7.9% against the previous year. Average prices varied noticeably for the major overseas markets. In 2020, the countries with the highest prices were Mexico ($1,721 per tonne) and the U.S. ($1,663 per tonne), while the average price for exports to China ($1,452 per tonne) and Malaysia ($1,460 per tonne) were amongst the lowest. In 2020, the most notable growth rate in terms of prices was recorded for supplies to Hong Kong SAR, while the prices for the other significant destinations declined.

Source: IndexBox Platform

green

Accepting Gas as Sustainable Will Hurt Korea’s Green Finance Credentials

After six months of resisting industry calls to add liquefied natural gas (LNG) to its green taxonomy, the South Korean government this week finally succumbed to gas lobbyists. 

This is surprising as, only 2 weeks ago, President Moon Jae-in made a well-received, new emissions pledge—cutting the country’s greenhouse gas emissions to 40% by 2030.

The obvious dichotomy here is that recognizing gas and LNG as an environmentally sustainable “transition” fuel will likely lock South Korea into a high-emitting future, which directly contradicts the policy and market incentives created by President Moon’s new emissions reduction targets.

Released last week, the draft green taxonomy, known locally as the K-Taxonomy, prescribes an end-use emission technical screening criteria of 320g of carbon dioxide (CO2) per kilowatt-hour (kWh). A life-cycle emission standard is also expected, but it will only apply from 2025.

This means that new unabated LNG-power projects, of which around 10 gigawatts are expected to flood South Korea’s energy market by 2025, would qualify for green bond and loan financing if the draft K-Taxonomy is finalized without changes.

Emissions-wary ESG investors should be on alert

South Korean green debt amounted to US$42.8 billion on 30 September 2021, according to Bloomberg New Energy Finance. A third of it, around US$14.22 billion, funded power and energy companies.

If the current draft of the K-Taxonomy proceeds as is, ESG investors may find themselves inadvertently backing gas.

Gas is a fossil fuel that contributes carbon and methane to the atmosphere through its combustion, with lifecycle emissions that are dangerous and significant. Moreover, methane from gas has a warming effect up to 80 or 90 times more powerful than carbon over a 20-year period, making gas worse for the climate than coal in the short term.

The tension around the limited role for gas in energy transition is evident in the taxonomy work playing out in all global markets.

After much controversy, the European Union (EU) accepted gas-powered generation as a ‘transitional’ asset class under its Sustainable Finance Taxonomy, provided that a project’s lifecycle carbon emissions are limited to 100g CO2 per kWh.

At this specification, gas-powered projects in the EU will likely require the use of carbon capture technology (CCS), which is yet to be proven economically or technically viable at scale anywhere in the world. Under these conditions, gas is unlikely to be funded in the short to medium, or even the long term, under the EU’s taxonomy.

The K-Taxonomy is expected to be finalized by the end of 2021, and with its current draft not consistent with the gold-standard EU Taxonomy, investors are right to be wary.

The Moon administration risks missing out on new pools of global capital

With the inclusion of gas in the K-Taxonomy, Korean policymakers have effectively signaled they aren’t up to the task of leading market development with a green taxonomy.

Instead, they are showing a preference for remaining in lock-step with emerging market Southeast Asian counterparts who have flagged their intention to recognize gas-powered generation as “green”.

This puts South Korea at risk of deterring serious ESG investors who typically prefer “dark green” assets—solar, wind and geothermal for example.

The United Kingdom’s (UK) inaugural sovereign green bond issued in September 2021 demonstrated that risk when it provided a mixed portfolio of green and controversial assets like “blue hydrogen”, which uses methane gas in its production. Several leading debt investors immediately expressed criticism over the sovereign’s opportunistic ‘green’ bond and avoided it entirely.

China is working with the EU to harmonize their respective taxonomies

By contrast, China—the largest green debt market in the region—took a different and much more strategic approach, learning from market trends and adapting.

Its first green taxonomy in 2015 categorized “clean coal” as a green project that qualified for the issuance of green bonds, drawing widespread criticism, particularly from foreign investors.

Recognizing the significance of a truly green taxonomy, in mid-2021, China removed fossil fuel-related projects and the new Green Bond Endorsed Project Catalogue—its equivalent green taxonomy—now excludes gas, LNG and coal-fired power activities.

Like South Korea, China relies on burning fossil fuels to power the country. However, President Xi Jinping’s pledge to accelerate the country’s transformation to a green and low carbon economy, and to achieve carbon neutrality before 2060, has opened the door to a much more strategic view on how China’s green finance market should develop, and which technologies should be incentivized.

China is also working with the EU to harmonize their respective taxonomies by the end of 2021. This is a positive initiative between jurisdictions in response to investor requests for a common standard on green or sustainable projects. The move also indicates that the Asian giant is ready to compete for global green capital.

China understands that ESG-focussed investors have become more forensic in their research and decision-making on what the different taxonomies recognize.

More notably, China’s mindset for justifying green energy activities appears to be unfazed, at least for now, by its need to finance new coal and gas-related projects, said to be required to see them through the energy transition phase—reasoning that its Asian counterparts, including South Korea, have defended and used to classify their own gas-powered projects as green.

But fossil fuel projects have a long history of being successfully financed. The existence of a green or sustainable finance taxonomy does not prevent assets or projects that the taxonomy excludes from being funded through conventional sources of finance. As in the past, fossil fuel power projects will continue to raise funds through traditional non-labeled debt market instruments.

Investors want green taxonomies

Meanwhile, investors around the world are urging governments to step up and commit to clear, strong and investable policies that will unlock the capital needed to transition to a net-zero economy.

Despite its now hollow new emissions pledge, the Moon administration appears unprepared to rise to the occasion. It risks missing out on new pools of global capital if it does not get the policy settings right, and instead chooses to pander to the fossil fuel industry.

_____________________________________________________________________

Christina Ng is a Research and Stakeholder Engagement Leader – Fixed Income, Institute for Energy Economics and Financial Analysis (IEEFA).

animal food

USA Animal Food Market: Key Insights

IndexBox has just published a new report, the U.S. Animal Food (Except Dog And Cat) Market. Analysis And Forecast to 2025. Here is a summary of the report’s key findings.

The revenue of the animal food market in the U.S. amounted to $30.5B in 2018, falling by -2.1% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). Over the period under review, animal food consumption, however, continues to indicate a measured reduction.

The most prominent rate of growth was recorded in 2015, with an increase of 2.7% year-to-year. Over the period under review, the animal food market reached its peak figure level at $34.8B in 2013; however, from 2014 to 2018, consumption stood at a somewhat lower figure.

Animal Food Production in the USA

In value terms, animal food production totaled $30.8B in 2018. Over the last decade, animal food production, however, continues to indicate a measured curtailment. The most prominent rate of growth was recorded in 2015, with an increase of 2.4% year-to-year.

Exports from the USA

In 2018, animal food exports from the U.S. stood at 864K tonnes, standing approx. at the previous year. The total export volume increased at an average annual rate of +3.0% over the period from 2013 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations over the period under review.

In value terms, animal food exports totaled $506M (IndexBox estimates) in 2018.

Exports by Country

China (163K tonnes), Japan (137K tonnes) and South Korea (110K tonnes) were the main destinations of animal food exports from the U.S., together accounting for 47% of total exports. These countries were followed by Indonesia, Trinidad and Tobago, Vietnam, the Philippines, Colombia and Taiwan, Chinese, which together accounted for a further 37%.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Colombia, while the other leaders experienced more modest paces of growth.

In value terms, China ($115M) remains the key foreign market for animal food exports from the U.S., comprising 23% of total animal food exports. The second position in the ranking was occupied by Japan ($48M), with a 9.5% share of total exports. It was followed by Indonesia, with a 9.4% share.

Export Prices by Country

In 2018, the average animal food export price amounted to $586 per tonne, dropping by -2.3% against the previous year. Over the period under review, the animal food export price continues to indicate a slight decrease.

Export prices varied noticeably by the country of destination; the country with the highest export price was Taiwan, Chinese ($850 per tonne), while the average price for exports to South Korea ($306 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of export prices was recorded for supplies to Taiwan, Chinese, while the export prices for the other major destinations experienced mixed trend patterns.

Imports into the USA

In 2018, the amount of animal food (except dog and cat) imported into the U.S. amounted to 291K tonnes, growing by 7.4% against the previous year. Over the last decade, the total imports indicated a prominent increase from 2013 to 2018: its volume increased at an average annual rate of +10.2% over the last five year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, the animal food imports decreased by -1.8% against 2016 indices. The growth pace was the most rapid in 2014, when the imports increased by 27% against the previous year. Over the period under review, animal food imports attained their maximum at 296K tonnes in 2016; however, from 2017 to 2018, imports stood at a somewhat lower figure.

In value terms, animal food imports amounted to $428M (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +4.3% from 2013 to 2018; however, the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed over the period under review. Over the period under review, animal food imports attained their peak figure in 2018, and are likely to continue its growth in the near future.

Imports by Country

In 2018, Malaysia (87K tonnes) constituted the largest supplier of animal food to the U.S., with a 30% share of total imports. Moreover, animal food imports from Malaysia exceeded the figures recorded by the second largest supplier, China (38K tonnes), twofold. The third position in this ranking was occupied by India (34K tonnes), with a 12% share.

From 2013 to 2018, the average annual growth rate of volume from Malaysia totaled +20.6%. The remaining supplying countries recorded the following average annual rates of imports growth: China (-1.2% per year) and India (+137.4% per year).

In value terms, France ($69M), China ($64M) and Malaysia ($58M) appeared to be the largest animal food suppliers to the U.S., with a combined 45% share of total imports. These countries were followed by Germany, India, the Netherlands, Norway, Belgium, Italy, Indonesia, Ireland and South Korea, which together accounted for a further 30%.

Import Prices by Country

The average animal food import price stood at $1.5 per kg in 2018, coming down by -5.7% against the previous year. Over the last decade, the animal food import price continues to indicate a deep shrinkage.

There were significant differences in the average import prices amongst the major supplying countries. In 2018, the country with the highest import price was France ($7,787 per tonne), while the price for South Korea ($132 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of import prices was attained by Germany, while the import prices for the other major suppliers experienced mixed trend patterns.

Companies Mentioned in the Report

Southern States Cooperative, Jbs United, Inc., Valley Proteins, Furst-Mcness Company, Hi-Pro Feeds, H.J. Baker & Bro., Milk Specialties Company, Stillwater Milling Company, Cooperative Producers, Kent Nutrition Group, Provimi North America, Purina Mills, Reconserve, ADM Alliance Nutrition, American Proteins, Goldsboro Milling Company, Farmers Union Industries, O.K. Industries, Vp Holdings Corporation, Equity Group – Kentucky Division LLC, Heartland Pet Foods Manufacturing, Blue Buffalo Pet Products, Inc.

Source: IndexBox AI Platform

Calls Growing to Ease Ban on US Petroleum Exports

Washington, DC – International pressure is growing on Washington from several major trading partners to ease, or end, the long-standing ban on US crude oil exports.

Mexico said recently that it could enter an agreements with the US on crude oil swaps or on direct imports, while one of South Korea’s leading refiners has opened discussions with the government in Seoul over how to encourage Washington to end the ban on ‘ultra-light sweet crude,’ and the European Union wants US oil and natural gas exports covered by the proposed Transatlantic Trade and Investment Partnership.

 

According to Petroleos Mexicanos (PEMEX), Mexico’s state-owned oil company, the country is seeking US-sourced oil because of a sharp decline in its own reserves.

 

South Korea, which relies on imports to cover more than 95 percent of its energy needs, has had to curb oil imports from major supplier Iran, due to US and EU sanctions introduced in 2012, and the EU is eagerly looking for an alternative to petroleum supplies from Russia.

 

Japan, while not pushing for an ease on the current ban, has said it’s interested in importing more of what can be pumped out of gushers in such states as Texas, Alaska and North Dakota, but only “if the supplies are economically feasible.”

 

While fully overturning the ban would require Congressional action that most consider unlikely in the near-term, many argue that the White House could gradually allow for more oil to flow abroad through existing means.

 

Due in large part to the increase in shale oil production, the US is soon expected to surpass both Russia and Saudi Arabia as the world’s largest oil producer.

 

In March, the US Department of Commerce approved the export of 500,000 barrels of lightly processed condensate exports to South Korea from two domestic companies. Three additional applications have been put on hold as the White House reviews its policies on the ban.

 

09/11/2014

 

Investigation of Steel Pipe Imports from Korea Urged

Washington, DC – More than 150 members of the House of Representatives have signed a letter to US Commerce Secretary Penny Pritzker urging a “thorough investigation of the dumping of Oil Country Tubular Goods (OCTG) steel pipe in the US market by South Korea.”

The bipartisan group behind the letter was jointly organized by Reps. Tim Murphy (R-Pennsylvania) and Pete Visclosky (D-Indiana). The correspondence comes a month after a similar letter was sent to the Commerce Secretary by a majority of members of the US Senate.

The same month, a preliminary ruling was issued by the Commerce Department (DOC) charging that eight countries are dumping OCTG pipe in the US at below fair-market value in response to a filing by US Steel and several other US-based steel makers and manufacturers.

“Notably absent, however, in the Commerce Department determination was any finding of wrongdoing by South Korea, the primary source of imported OCTG products,” the latest letter read. “With no market of its own, South Korea exports nearly all of its OCTG production – often at well-below market prices – to the United States.”

With a final decision set for July, the House letter is urging Pritzger “to fully investigate concerns regarding the accuracy of data submitted by South Korean steel companies.”

“As the surge continues, domestic steelmakers’ production, capacity utilization, shipments, and sales all fell in the first quarter of 2013, with operating income slashed by nearly $191 million,” the letter read.

Last week, the U.S. Steel Corp. announced it would “indefinitely” shutter its seamless tubular manufacturing facilities in McKeesport, Pennsylvania, and Bellville, Texas, as “unfairly traded tubular products imported into the US has affected business conditions.”

The company said it “remains committed to the tubular products business and to serving its tubular customers and has taken this decision so that the company can return to sustainable profitability.”

According to industry sources, OCTG imports from South Korea and the eight other countries targeted in the DOC determination more than doubled since 2008 and have grown by 61 percent thus far in 2014 compared to 2013.

Seamless OCTG pipes are primarily used for domestic oil exploration, including shale development.

06/24/2014