Core Viewpoint - SABIC remains optimistic about the growth opportunities in sustainable and circular plastic demand in Europe despite current challenges in the petrochemical market [1] Group 1: Market Outlook - SABIC's Polymer Executive Vice President, Sami Osama, highlighted Europe as an innovation center, particularly in sectors like automotive, mobility, and healthcare, where there is significant focus on developing circular solutions [1] - The global chemical industry is currently facing a difficult period with fluctuating demand [1] Group 2: Strategic Actions - To address market downturns and competitiveness issues, SABIC plans to permanently close several petrochemical facilities in Europe over an 18-month period from January 2024 to June 2025 [1] - The company is open to further optimizing its European asset portfolio and will continue to assess operations and business for efficiency improvements [1] Group 3: Recent Developments - In August, SABIC established a joint venture with Plastic Energy in Herne, which has produced its first batch of pyrolysis oil [1] - The facility is designed to process 20,000 tons of mixed waste plastic annually and is expected to begin commercial production by the end of this year, integrating the pyrolysis oil as a substitute for traditional naphtha in polymer production [1]

Core Viewpoint - The uncertainty in EU regulations regarding bio-based naphtha and pyrolysis oil is suppressing demand in the petrochemical industry, hindering investments, and causing price differentiation based on end-use applications [2][6]. Regulatory Impact - The lack of clear and unified regulations from the EU is leading to decreased procurement interest in bio-based naphtha and pyrolysis oil from 2024 to 2025, complicating financing for new projects and infrastructure [2][3]. - The quality balance accounting rules significantly affect the potential profitability of bio-based naphtha and pyrolysis oil, with unclear regulations making investment returns unpredictable [2][4]. Legislative Developments - The EU Commission is required to assess the technological development and environmental performance of bio-based plastic packaging within three years of the PPWR regulation coming into effect, potentially setting usage targets for bio-based materials [3][4]. - The legal positioning of pyrolysis oil remains uncertain due to the Waste Framework Directive, which complicates its classification as a recyclable material [3][4]. Industry Dynamics - There are differing opinions on the recycling content targets, with the EU Council proposing phased targets for new vehicles, while the European Parliament suggests higher initial targets [4]. - The recognition of quality balance accounting is crucial for the chemical recycling sector to be included in recycling content thresholds, impacting the entire industry's profitability and competitiveness [4][5]. Market Outlook - The regulations will be key drivers for the future demand and investment in pyrolysis oil and bio-based naphtha, with earlier clarity from the EU potentially accelerating their scale development [6].