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Reuters
3 days ago
- Business
- Reuters
Chemicals industry struggles to kick its fossil fuel habit
June 10 - In May, Europe passed a milestone in its drive to decarbonise: the opening of the world's first commercial scale e-methanol plant, at Kasso in Denmark. European Energy's facility will produce 42,000 metric tonnes of the liquid fuel for the shipping industry, cutting emissions by as much as 95%, as well as low-carbon plastics for drugmaker Novo Nordisk and toymaker Lego to use in their products. Instead of using hydrogen derived from natural gas, three Siemens electrolysers convert renewable energy from Europe's largest solar park into green hydrogen, which is combined with CO2 captured from the local biogas plant to create the synthetic fuel. Excess heat generated from the plant will be used to warm 3,300 households in the local area. But Kasso, and a smattering of other e-methanol plants around the world, are rare examples of disruptive green innovation in an industry that remains heavily reliant on fossil fuels. The $3.5 trillion industry produces primary chemicals such as ammonia, methanol and ethylene, which are omnipresent in our daily lives: they are in 96% of manufactured goods in sectors ranging across healthcare and agriculture to construction, transportation and textiles. The sector accounts for 5-6% of global greenhouse gas emissions – running a close third behind steel and cement – but could steam ahead of them, as its emissions are on track to more than double by 2050 with no intervention, according to an analysis by the Rocky Mountain Institute. A 2022 report by green systems change firm Systemiq and the Center for Global Commons says the fact that the industry also supplies building blocks for the energy transition means the chemicals sector has the potential to reinvent itself as a climate solution, even to go carbon negative, if it can substitute fossil-fuels feedstocks with sustainable sources and ramp up the use of carbon capture and storage. Circular approaches such as reusing and recycling chemicals, meanwhile, could reduce total demand for chemicals by up to 31% by 2050, the report argues. Indeed, more than 70% of the world's top 100 chemicals producers have committed to carbon neutrality by 2050, and even more have set interim targets through the Science Based Targets initiative, according to S&P Commodity Insights. But a new report from Planet Tracker, which benchmarks the climate transition performance of eight of the world's top chemical companies, finds that only two: French industrial gases firm Air Liquide and Australia's Incitec Pivot, have credible targets. Brianne Cangelose, a manager in Rocky Mountain Institute's climate-aligned industries programme, says the industry's complexity and ubiquity means decarbonisation pathways aren't straightforward. 'There's no silver bullet for chemicals – we need a myriad of solutions to effectively reduce emissions from the sector,' she says. Most impactful, however, will be scaling up the development of cleaner sources of hydrogen, which is a core building block of many chemicals and is already widely used in the chemicals industry as a reagent in chemical reactions. It could also provide an alternative process heat source to natural gas. Hydrogen is colour-coded depending on how it is made. Today, that is primarily from steam reforming of natural gas (grey) and gasification of coal (brown). There is also blue hydrogen, where the CO2 from grey hydrogen is captured and stored, and pink hydrogen, made using nuclear energy to power electrolysers, which split water molecules into hydrogen and oxygen. Only when electrolysers are powered by renewable energy such as solar and wind can hydrogen be considered green. The problem is that less than 1% of all hydrogen produced today is green, due to the high relative cost of renewable energy. Those costs will only increase in the near term, with the Trump administration vowing to cut $15 billion in renewable energy funding, and threatening trade tariffs on China and countries in South-east Asia, where 80% of U.S. solar module imports came from in 2023. Under the Biden administration's Inflation Reduction Act, $7 billion in funding was allocated to establish seven regional hubs to speed development of cleaner production of hydrogen in the U.S. But while the first tranche of funding was delivered before Biden left office in January, Politico reported in March that four, in primarily Democratic-learning states, are slated to be axed by the Department of Energy under the new Trump administration. However, among those whose funding is expected to be safe is the HyVelocity Hub on the Gulf coast in Texas, where one-third of U.S. hydrogen production capacity is located. Although most of the technology focus will be on blue hydrogen production through CCS, the hub includes Orsted Energy's planned e-methanol facility, which will be powered by onshore wind and solar projects, and uses captured CO2 to create a liquid fuel for marine and aviation applications. In Europe, one startup that claims to have made a breakthrough in affordable clean hydrogen production is U.K.-based HiiROC, which has developed a thermal plasma electrolysis technology to convert methane into hydrogen, without CO2 emissions. The company says its process is as cheap as steam methane reforming (SMR) and can produce hydrogen using a fraction of the energy required by water electrolysis. It also creates a valuable by-product, carbon black, which can be used in commercial applications such as tyres, rubbers, plastics and inks, as well as in the construction industry. HiiROC has raised more than 40 million pounds from investors including Melrose, Wintershall Dea, Centrica, HydrogenOne, Hyundai, Kia and Cemex, which announced late last year that it would deploy HiiROC's low-carbon hydrogen solution at scale at its cement plant at Rugby in the UK. Another technology option for the chemicals industry is to electrify energy-intensive processes, such as steam cracking. Electrification has the potential to reduce CO2 emissions by at least 90% compared with using fossil fuels, according to BASF. Last year BASF, SABIC and Linde inaugurated the world's first large-scale demonstration plant to use electricity for its steam cracking furnaces that produce ethylene and propylene. Three years in the making, the demonstration plant at BASF's Verbund site in Ludwigshafen, Germany, is powered by 6 megawatts (MW) of renewable energy and will test two different heating concepts. Dow has also been investigating the viability of e-cracking, along with Shell. In June 2022, it began operations at an experimental e-cracking furnace in Amsterdam, aiming to test equipment that could be retrofitted to existing gas-fired steam cracker furnaces. It was planning to install a multi-megawatt pilot plant this year. In the U.S., meanwhile, Dow and advanced nuclear reactor developer X-energy have applied to build a grid-scale nuclear installation in Texas to produce clean power and industrial steam to decarbonise manufacturing at Dow's 1,900-hectare Seadrift site. However, Bernd Elser, global chemicals lead at Accenture, points out that the potential for renewable energy to decarbonise chemicals production will be restricted by the sheer amount of energy needed. Analysis carried out by the consultancy in 2022 found that the European chemicals industry alone would need additional renewable energy installation of 3.2 petawatt-hours, some five times that energy generated in the EU today, at a cost of around 1 trillion euros. 'This translates into wind turbines covering the whole of Spain, or solar panels on the full land area of Ireland,' he says. The electricity produced also needs to be sold at a competitive price, he adds. The European Chemical Industry Council has warned that the industry is 'at breaking point', facing energy prices five times that of the U.S. and substantial costs of meeting EU green regulations, including phasing out of restricted chemicals. Firms including Dow and LyondellBasell are reported to be reassessing their European footprint, including shutting down some facilities, as a result. They are urging the Commission to expedite the rollout of the affordable energy component of its recently announced Clean Industrial Deal. RMI's Cangelose acknowledges that the cost of more innovative decarbonisation technologies is challenging for the chemicals industry. 'It's a very capitally intensive, somewhat risk-averse industry, with really slim margins, so it's a challenging place to rapidly adopt innovation,' she says. 'It's really going to be a question of how much money we can funnel towards research and development to get these earlier stage technologies off the ground.' There is certainly growing demand for greener chemicals, according to Accenture, whose research found that more than half of consumers are motivated to purchase eco-friendly products, and often willing to pay a premium price for them. One example is in the home and personal care sector, where products with bio-based or sustainable ingredients grew at a rate more than double that of overall growth. Accenture predicts that demand for bio-based chemical products will increase by around 70% through to 2028, rising from $340 billion in 2023 to $570 billion - a rate 4.5 times greater than conventional products. Desire to capture this growth, along with the regulatory push provided by the EU Green Deal and the bloc's Emissions Trading Scheme, will push the European industry along a more sustainable path, Elser says.
Al Etihad
5 days ago
- Business
- Al Etihad
Iran-Israel tensions: Analysts optimistic about stability of oil supplies
15 June 2025 16:56 A. SREENIVASA REDDY (ABU DHABI)Most analysts remain optimistic about the stability of crude prices and the continuity of global oil shipments, especially through the Strait of Hormuz, despite escalating tensions between Iran and the conflict has fuelled market speculation, most industry analysts and trade experts continue to express confidence in the resilience of global energy trade. Their view is anchored in historical precedent, economic pragmatism, and the deeply interwoven trade relationships that characterise the Arabian Gulf Strait of Hormuz — a narrow but critical maritime corridor at the mouth of the Arabian Gulf — handles close to 30% of the world's crude and refined petroleum exports and around 20% of global LNG flows. A complete closure would undoubtedly shake global energy markets. However, most observers consider such an outcome unlikely. "While we don't yet foresee a war escalating to a Hormuz blockade, its closure would severely impact global energy flows," a Chinese oil trader told S&P Global. But despite rising tensions and military strikes between Israel and Iran, there has been no significant disruption to commercial shipping so far. Historical confrontations between the two countries have also avoided this red a note issued on June 13, JP Morgan analysts assessed the risk of Iran closing the Strait as 'very low', citing Iran's reluctance to damage its economic lifeline — especially its vital trade relationship with to S&P Global Commodity Insights, Iran pumped 3.24 million barrels per day (b/d) in May, most of which is exported to China. Any move to restrict traffic through Hormuz would not only sever this economic artery but also affect its ability to send supplies to initially reacted with concern. ICE Brent crude futures spiked 8.97% on June 13 — the sharpest single-day gain in five years. But analysts at S&P Global and Goldman Sachs expect such price volatility to be temporary, barring direct attacks on energy infrastructure. 'We've seen these spikes before. Prices jump, then retreat when it's clear that oil flows are not actually impacted,' said Richard Joswick, Head of Near-Term Oil Analysis at S&P this outlook is the presence of alternative logistics. The UAE's Habshan–Fujairah pipeline, for instance, enables crude to bypass Hormuz altogether. Long-term LNG supply contracts between China and exporters like Qatar and the UAE also offer stability and reduce reliance on spot risk insurance premiums in the Arabian Gulf, which cover ships navigating high-risk zones, remain steady at 0.05%–0.07% of vessel hull value — unchanged for 18 months. Though freight charges could rise if hostilities deepen, there is no current indication of a shipping refiners are the largest buyers of Gulf crude. 'Extreme actions could provoke responses from Asian military powers. So both Iran and Israel are likely to exercise caution,' said a Tokyo-based feedstock manager. Refiners in South Korea, Japan, and Thailand have echoed similar sentiments, underscoring confidence that the Strait of Hormuz will stay Goldman Sachs, while adjusting its geopolitical risk premium, predicts Brent crude to fall back to the $60s in 2026, assuming no long-term infrastructure damage and a compensatory output from OPEC+.In a potential escalation scenario, Goldman estimates a temporary loss of 1.75 million b/d from Iran if its export infrastructure is damaged — but believes this shortfall could be partially offset by OPEC+ spare capacity. Under such conditions, Brent could peak over $90/b, before normalising as supply recovers.S&P Global concurs that the real inflection point would be a direct disruption to exports. 'Unless exports are impacted, the price upside will fade,' its analysts noted. Joswick reinforced this by citing 2024, when similar flare-ups triggered short-term price movements that quickly reversed once it became clear supply was Pollack, vice president for policy at the Middle East Institute, noted: 'If Iran closed the Strait of Hormuz, the US would come in with all guns blazing.' Analysts warn that such a move would not only provoke military responses but would be viewed by Gulf neighbours as a direct economic threat.'There is no doubt the situation in the Arabian Gulf is very tense. We have reports that more shipowners are now exercising extra caution and are opting to stay away from the Red Sea and the Arabian Gulf,' said Jakob P Larsen, Chief Safety & Security Officer at BIMCO, the world's largest international shipping association.'There is currently no indication that Iran will seek to disrupt shipping in the Gulf, and no indication at this point that the Houthis will seek to disrupt shipping in the Red Sea. The tripwire will be the perception of the US' involvement. If the US is suddenly perceived to be involved in attacks, the risk of escalation increases significantly,' Larsen told Aletihad.'BIMCO encourages shipowners to follow developments closely and implement ship defence measures according to the industry guidance document,' he added. Meanwhile, broader OPEC+ dynamics are also at play. Eight OPEC+ member states are moving to restore 2.2 million b/d of curtailed output to regain their market share. 'We'll likely see more unwinding of voluntary cuts,' said Harry Tchiliguirian, Head of Research at Onyx Capital Advisory. This will likely have a mitigating impact on oil prices.
Calgary Herald
26-05-2025
- Business
- Calgary Herald
Oil price plunge, trade wars drive drilling land sales down in Alberta
A boom in sales of drilling rights in Alberta is fading as U.S. President Donald Trump's trade war and OPEC+ production increases hammer crude prices. Article content The average price paid to lease oilsands lands for development tumbled to C$771 per hectare this year, according to provincial data. That's down 18 per cent from last year's average, which was the highest since 2007. For lands outside of the oilsands, the price has fallen 25 per cent. Article content Article content The slumping land prices are an early sign the Canadian drilling boom spurred by last year's completion of the Trans Mountain pipeline expansion may be coming to an end. With the Trans Mountain project giving producers almost 600,000 barrels of new daily shipping capacity, drillers increased output and snapped up new drilling sites, sending land prices to multidecade highs in 2024. Article content Article content But the twin shocks of Trump's global tariffs and OPEC+'s faster-than-expected production increases have sent oil prices tumbling to four-year lows in recent weeks, sapping drillers' appetite for new production sites. Article content 'Canada is not immune to the world's oil price pains,' said Trevor Rix, head of the Canadian oil and gas research team at Enverus. Article content The softening in Canada's oilpatch mirrors the situation in the U.S., where drillers are retrenching and some executives are saying shale production has likely peaked. Article content Article content But Canada's producers are expected to keep ramping up output in the years ahead. For oilsands producers, lower oil prices can be countered by increased volumes, and a new liquefied natural gas plant in British Columbia will encourage drilling in oil-rich areas of western Canada, Kevin Birn, chief analyst for Canadian oil markets for S&P Global. Article content Not only is Trans Mountain not fully filled, the company is already looking to expand capacity on its system. Enbridge Inc. is also working to add 150,000 barrels of daily capacity on its Main Line in the coming years. Article content Oilsands output will grow by about 500,000 barrels a day to 3.8 million barrels a day by 2030, according to S&P Global Commodity Insights. Much of the new oil is likely to flow through Trans Mountain to the Pacific Rim, and it may be matched by growing volumes of natural gas as Canada's first major LNG terminal is slated to start later this year.
Yahoo
28-04-2025
- Business
- Yahoo
Is ArcelorMittal S.A. (MT) Among the Best Nickel Stocks to Buy According to Hedge Funds?
We recently compiled a list of the 12 Best Nickel Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where ArcelorMittal S.A. (NYSE:MT) stands against the other nickel stocks. Nickel is a metal that is used extensively in manufacturing. It is a key component of stainless steel and is valued for its corrosion resistance. It is also among the most abundant resources. According to the International Nickel Study Group, primary nickel production will rise by 4.6% globally in 2024 and then by an additional 3.8% in 2025. About 150,000 tonnes of nickel will be in excess globally in 2025, according to Nornickel, mostly in high-grade nickel segments. The nickel industry is booming. As per Fortune Business Insights, the size of the global nickel market was estimated at $41.61 billion in 2023 and is projected to keep growing at a compound annual growth rate (CAGR) of 7.3%, from $44.59 billion in 2024 to $73.15 billion by 2032. In 2023, Asia Pacific held an 82.62% market share, dominating the nickel market. Furthermore, it is anticipated that the nickel market in the United States will expand to a size of $2.01 billion by 2032, led by the electric vehicle industry, continuous infrastructure projects, and strong demand from the production of stainless steel. However, nickel stock investing might be challenging. Mining businesses are cyclical, and stock prices fluctuate in line with the market price of nickel. Fears of a recession and a decline in industrial demand have caused nickel prices to fluctuate in early 2025, dropping from around $17,000 per metric ton to less than $16,000 in March, according to S&P Global Commodity Insights. Since nickel is necessary for NCM and NCA batteries in electric vehicles, the long-term demand picture is still favorable. Through 2030, the demand for nickel from EV batteries is anticipated to increase by 15% to 20% globally (IRENA). Long-term supply agreements have been negotiated by two major automakers to guarantee access to battery-grade nickel. That said, prices have been under pressure due to the expansion in supply, particularly from Indonesia, which produced over 1.6 million metric tons in 2024 and accounts for about 50% of the global supply. Despite high costs and environmental concerns, Indonesia's export prohibition and the growth of HPAL projects are changing the supply chain landscape. Although environmental and legal barriers exist, the Philippines is also increasing its output. The market is further complicated by geopolitical concerns. Western sanctions are forcing Russian supplies to reroute to China, while the EU looks for alternatives in countries like Canada and Australia. Trump's plans, which include possible tariffs on Chinese nickel, have placed an intense focus on essential resource extraction in the United States. LME 3M nickel prices are expected to average $16,026/t in 2025, according to S&P Global, with supply disruptions and changes in trade policy being the main concerns. According to the latest report by S&P Global, in light of growing uncertainty from tariff-led global trade tensions, the Asian nickel market may continue to face pressure in the months ahead. This will be due to a supply surplus fueled by higher Indonesian production levels and weak demand from key nickel-consuming industries, such as electric vehicles and stainless steel. Jason Sappor, metals and mining research senior analyst at S&P Global Commodity Insights, stated: 'Amid an unstable global macroeconomic backdrop, we expect the global primary nickel market to remain oversupplied in 2025, with production from Indonesia forecast to expand further this year, despite challenges like tight nickel ore availability and a potential royalty rate hike on nickel products by the government,' A close-up of industrial machinery used for steel production, the sparks flying off the sides. For this article, we sifted through the online rankings to form an initial list of the 20 Nickel Stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey's database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock's market cap as of April 25, 2025, as a tie-breaker in case two or more stocks have the same number of hedge funds invested. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here). Number of Hedge Fund Holders: 18 Market cap as of April 25: $22.67 billion ArcelorMittal S.A. (NYSE:MT) is an integrated steel and mining business with operations in the United States, Europe, and across the world. The company uses zinc, tin, and aluminum as base metals for coating, nickel for making stainless or special steels, and aluminum for deoxidizing liquid steel. The company's operating segments are North America, Brazil, Europe, India, JVs, Sustainable Solutions, Mining, and Other. The Europe segment yields the highest revenue. Geographically, the United States accounts for the majority of the company's revenue. The stock surged by more than 29% YTD, making it one of the Best Nickel Stocks. In 2024, ArcelorMittal S.A. (NYSE:MT) showed strong financial performance, generating $7.1 billion in EBITDA, or $130 per ton shipped, which was over twice as much as the previous cycle lows. The firm's $2 billion in investable cash flow for the year and $21 billion since 2021 allowed for strategic reinvestments and steady returns for shareholders. Structural EBITDA is predicted to benefit from $1.9 billion in high-return strategic initiatives, of which $400 million is anticipated in 2025 and $600 million in 2026. Over the last four years, ArcelorMittal S.A. (NYSE:MT) has aggressively repurchased shares, reducing its share count by 37% and increasing its dividend by 10% to $0.55 per share. The company has also made great strides in decarbonization, with substantial investments in low-carbon steel solutions supporting current absolute carbon emissions at almost half of 2018 levels. Overall, MT ranks 8th on our list of the best nickel stocks to buy according to hedge funds. While we acknowledge the potential of MT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MT but that trades at less than 5 times its earnings, check out our report about this . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
