Caustic soda

HOUSTON (ICIS)–Hurricane Beryl, already a major Category 4 storm, is making its way toward Mexico, but it remains too early to tell where it will ultimately make landfall. Beryl is now the earliest Category 4 storm on record in the Atlantic. The previous earliest was Hurricane Dennis on 8 July 2005. The US National Hurricane Center (NHC) said as of 1900 GMT Beryl was about 60 miles (100km) west northwest of Carriacou Island with maximum sustained winds of 150 miles/h and moving west-northwest at 20 miles/h. Source: National Hurricane Center (NHC) Late-cycle track guidance from the Tropical Cyclone Guidance Project (TCGP) shows the different tracks based on various models in the image below. Source: Tropical Cyclone Guidance Project (TCGP) If the storm continues to move to the west, it could threaten Mexican facilities in Veracruz state, which is in the south of the Bay of Campeche. Also in the region are the major port city of Coatzacoalcos and Braskem Idesa’s integrated polyethylene (PE) Ethylene XXI complex. Beryl could also make landfall near Altamira, which has been experiencing a drought and could provide the area with much-needed rain but could also impact operations at the multitude of chemical facilities in the area. Another scenario would be if the storm swings to the north, which could threaten oil and gas production in the US Gulf as well as Gulf Coast petchem operations. Beryl is expected to pass near Jamaica on Wednesday but the storm is unlikely to affect the chlor-alkali chain. Jamaica is home to a number of large alumina refineries that consume significant volumes of US caustic soda, used to refine alumina from bauxite, or aluminium ore. ACTIVE HURRICANE SEASON The early activity in the Atlantic Ocean is in line with forecasts calling for a busier-than-usual hurricane season. The US National Oceanic and Atmospheric Administration (NOAA) is predicting the greatest number of hurricanes in the agency’s history. NOAA forecasters with the Climate Prediction Center said that the hurricane season – which started on 1 June and runs through 30 November – has an 85% chance to be above normal, a 10% chance of being near normal and only a 5% chance of being below normal. The prediction of 17-25 named storms is the highest ever, topping the 14-23 predicted in 2010. A storm is named once it has sustained winds of 39 miles/h. Saffir-Simpson Hurricane Wind Scale Category Wind speed 1 74-95 miles/h 2 96-110 miles/h 3 111-129 miles/h 4 130-156 miles/h 5 157+ miles/h Damage from hurricanes can lead to increased demand for chemicals, but hurricanes and tropical storms can also disrupt the North American petrochemical industry because many of the nation's plants and refineries are along the US Gulf Coast in the states of Texas and Louisiana. In 2022, oil and natural gas production in the Gulf of Mexico accounted for about 15% of total US crude oil production and about 2% of total US dry natural gas production, according to the US Energy Information Administration (EIA). Even the threat of a major storm can disrupt oil and natural gas supplies because companies often evacuate US Gulf platforms as a precaution. Additional reporting by Al Greenwood, Kelly Coutu, Bill Bowen

01-Jul-2024

HOUSTON (ICIS)–Global rates for shipping containers continue to surge, liquid chemical tanker rates were flat to lower, and the Panama Canal Authority (PCA) is increasing the maximum allowable draft to transit the Neopanamax locks, all highlighting this week’s logistics roundup. CONTAINER RATES Global rates for shipping containers continue to surge, although the rate may be slowing. Global average rates from supply chain advisors Drewry rose by 4% this week, a slower pace from the double-digit increases over the previous two weeks. The following chart shows that average rates are approaching $4,250/FEU (40-foot equivalent unit). Rates from Asia to the US are also at new highs for the year, as shown in the following chart. Rates continue to be pressured higher because of unrest in the Middle East, specifically attacks on commercial vessels by Yemen-backed Houthi rebels. Houthis even claimed responsibility for an attack on the USS Dwight D Eisenhower, an aircraft carrier stationed in the Red Sea. US and UK responded by sending fighter jets to strike Houthi targets in Yemen. Rates are likely to continue rising, according to ocean and freight rate analytics firm Xeneta. “The ocean freight container shipping market has seen rapid and dramatic increases during May and that is set to continue with further growth in spot rates,” Peter Sand, Xeneta chief analyst, said. “On 1 June, spot rates will reach a level we have not seen since 2022 when the COVID-19 pandemic was still wreaking chaos across ocean freight supply chains.” From the Asia-Pacific to US West Coast, market average spot rates are expected to reach $5,170/FEU on 1 June, which would surpass the Red Sea crisis peak of $4,820/FEU seen on 1 February, Xeneta said. This is an increase of 57% during May and the highest spot rates have been on this trade for 640 days. From the Asia-Pacific to US East Coast, spot rates are expected to reach $6,250/FEU on 1 June, only slightly shy of the Red Sea crisis peak of $6,260/FEU and an increase of 50% since 29 April. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates increased from Brazil to the US Gulf (USG) and fell slightly from the USG to Asia and from the USG to Brazil. From the USG to Brazil, there continues to be plenty of contractual volumes for both caustic soda and monoethylene glycol (MEG). All the regulars are open and have a lot of tanks to fill. This route has experienced significant downward pressure due to market dynamics and because activity here has been limited. The USG to Brazil trade lane is expected to remain at a standstill which could add further pressure. From the USG to Asia, freight rates declined due to lack of interest. PORT OF BALTIMORE The Unified Command (UC) continues to clear wreckage from the bottom of the Patapsco river, projecting to fully restore the Fort McHenry Federal Channel to its original 700-foot width and 50-foot depth by 8-10 June. The UC cleared a 400-foot-wide swath of the federal channel on 20 May, permitting all pre-collapse, deep-draft commercial vessels to transit the port. Source: Maryland State Police Aviation Command PANAMA CANAL The Panama Canal Authority (PCA) is increasing the maximum allowable draft to transit the Neopanamax locks, effective immediately. The PCA said the arrival of the rainy season in the Canal watershed prompted the action. Wait times for non-booked southbound vessels ready for transit held steady this week for northbound traffic and fell for southbound vessels, according to the PCA vessel tracker and as shown in the following image. Wait times a week ago were 1.5 days for northbound vessels and 3.6 days for southbound vessels. Additional reporting by Kevin Callahan

31-May-2024

SINGAPORE (ICIS)–A severe shortage of containers and vessel space as commercial ships take a much longer route to avoid the Red Sea has sent freight rates skyrocketing in recent weeks, artificially propping up petrochemical prices even as demand remained generally weak. Some sellers offer on free on board (FOB) basis but no takers Freight costs for Chinese exports more than double India may suffer near-term shortage of select petrochemicals Across markets in Asia in recent weeks, industry players’ lament boils down to this exasperated hyperbole: “The freight rates are killing us!” It takes the fun out of witnessing some initial signs of recovery in external demand for global manufacturing giant China. Whatever export competitiveness Asia gained from having weaker currencies against the US dollar is being undermined by the high cost of shipping out of the region. The Chinese yuan recently fell to a six-month low, while the Japanese yen continues to trade at multi-year lows against the US dollar, which is firmly supported by higher-for-longer interest rates. Overseas demand for Chinese products, including petrochemicals, seems to be improving, but actual trades are being hampered by logistics woes stemming from the Red Sea crisis in the Middle East. Attacks on commercial ships have continued in the key shipping lane that connects Asia to Europe, the latest being on an oil tanker bound for China. Rerouting of ships to the Cape of Good Hope meant longer voyage times and much slower turnover of vessels and containers, thereby, creating a strong pressure on freight rates, which may persist for most of the year. “The race for capacity appears to have started, with shippers showing strong demand due to shippers moving significant cargo in the first four months of 2024 to avoid potential Q3 constraints​​,” Richard Fattal, chief commercial officer of London-based freight forwarder Zencargo said in a note on 20 May. “Combined with an average of 5% ongoing blanked sailings, there is a looming future of tighter capacity, higher rates and sellers’ market swings ahead,” he said. “With capacity shrinking in the face of resurgent port congestion, driven by equipment shortages in China and longer routes around the Cape of Good Hope,” Fattal said. For Q2, Zencargo is projecting more than a 13% contraction shipping capacity on the Asia-Europe routes compared with Q3 2023, “with alliances cancelling 5% of sailings between weeks 20 and 24 [H2 May to H1 June]”. “The effective capacity to Northern Europe, based on actual vessel departures from Asia, has decreased by 5.1% compared to a year ago,” it said, citing “the longer route taken by the majority of vessels via the Cape of Good Hope, despite a 17.8% increase in vessel capacity on the Asia-North Europe route”. For the Asia-Mediterranean route, however, the overall capacity has “increased by 10.5%, even with the diversions via the Cape” due to a 49.1% increase in total deployed capacity on this route compared to a year ago”, Zencargo said. WEST BUILDING WALLS AGAINST CHINA TRADES The July-September period is the peak season for Chinese shipments to the west, ahead of the Christmas season in December, according to Wang Guowen, director at Shenzen Logistics and Supply Chain Management Research. Possibly driving up US’ overall demand for Chinese goods, which exerts upward pressure on shipping costs, is the impending tariff hike on imports of selected products from China, including electric vehicles (EVs) and battery materials. For Chinese EVs, the US import tariffs would quadruple to 100% from 1 August, which is tantamount to a ban. European countries appear to be considering similar protectionist measures against China, whose overcapacity is deemed to be killing domestic industries in the west. “Western countries' implementation of tariffs and tax structures on Chinese-manufactured automotive and EV exports is anticipated to significantly impact the shipping sector by potentially reducing vessel demand,” online container and leasing platform Container xChange said in a recent note. To bypass these trade barriers, Chinese automotive and EV makers “are accelerating efforts to internationalize their manufacturing, assembly, and distribution processes”, it said, adding that “immediate effects are already evident, as manufacturers are hastening to ship EVs to avoid impending tariffs and uncertainties”. In the global petrochemical scene, manufacturing facilities in the US and Europe, as well as in parts of northeast Asia are shutting down amid China’s overcapacity. Technically, reduced production elsewhere would open up new markets for China’s excess capacity, if not for the surging freight rates, which further deter trades while demand recovery remains fragile. China’s overall exports have remained soft, posting low single-digit annualised growths in three of the first four months of 2024, with one month in contraction. HEADACHE FOR INDIA PETROCHEMICAL IMPORTERS Petrochemical end-users in India are facing long waiting time to get their hands on imports from China. “Now, no shipping lines will confirm fresh Q2 shipment booking, even after dishing out quotes that are three to four times higher than Q1,” an India-based styrene butadiene rubber (SBR) importer said. A phenol trader said: “June vessel arrangements are more troublesome this year because of the Red Sea issues and also China's exports have been weak especially in the past two months, so fewer vessels are being arranged to China.” India is possibly facing a near-term shortage of purified terephthalic acid (PTA), since northeast/southeast Asian suppliers are struggling to export to the south Asian market. Freight rates from both Taiwan and Thailand to India nearly doubled from April, with voyage time for some shipments taking as long as 90 days, up from the usual 30-40 days. For polyethylene (PE) and polypropylene (PP), cargoes from the Middle East heading to the south Asian markets of India and Pakistan are also being delayed, amid congestion at the ports of Salalah in Oman, Dammam in Saudi Arabia and Jebel Ali in the UAE. For polymeric methylene diphenyl diisocyanate (PMDI) of northeast Asian origin, offers to India have spiked amid tightened regional supply, with delays in getting cargoes from South Korea. SURGING SHIPPING COSTS KILLING SPOT TRADESSpot petrochemical trades are being stalled by constantly changing freight rates on a weekly basis. In the polypropylene (PP) market, some Chinese suppliers have stopped offering on a cost, insurance and freight (CIF) basis, and will only offer on FOB basis because of the risks. For the China-to-Vietnam and the Vietnam-to-Indonesia routes, freight rates have nearly tripled, market players said. Buyers are less willing to discuss on an FOB basis, unwilling to shoulder an expected high cost since most of them do not have their own regular shipper. For soda ash, offers of Turkey-origin dense grade cargoes for 1,000-tonne lots to southeast Asia for Q3 shipments rose to around $300/tonne CFR, up by $20-30/tonne compared with May shipments. Importers of the material across Asia were largely staying on the side lines, with some of them experiencing delays in receiving Turkish cargoes. “Discussion levels are firming up due to freight costs,” said an end-user, adding that the “Red Sea issue is getting worse and lots of shipments from Europe and USA are stuck.” The same is true for the southeast Asian PE market given delays in arrivals of Middle East-origin cargoes and amid perceptions of shorter supply. In the oxo-alcohols markets, producers in Asia are under strong pressure to offload cargoes at lower prices given difficulty in moving volumes to their usual export outlets. Freight rates on chemical tankers are also on the rise amid the Red Sea crisis, sources from Asia’s monoethylene glycol market, resulting in postponing of cargo-loading by some producers. “The freight rates are quite high now, and we have to optimize our vessel availability,” a major MEG producer said. FURTHER FREIGHT SPIKES LIKELY IN JUNE H2 is typically “a busier, more competitive, and profitable season for the shipping industry”, with many container sellers are “currently holding onto their inventory” in anticipation of better demand, said Christian Roeloffs, co-founder and CEO of Container xChange, in a note in May. "In an environment of heightened market volatility and encouraging demand recovery for global trade, container traders are gearing up for the second half of 2024, where we expect a cyclical rise in demand,” he said. “This combination of heavier-than-expected demand for freight and anticipation of further demand surges in the second half of 2024 is driving up container trading prices in China,” Roeloffs added. In a recently conducted survey of container traders and leasing companies by Container xChange, it noted that a majority of the respondents reported “extremely high prices for 40 ft high cube containers in China”. On 21 May, the average one-way leasing rates quoted in the market rose to as high as $2,480 for 40 HC in China for US-bound shipments, more than double the rate at the start of the month at around $950, it said. With ceasefire between Israel and Palestinian militant Hamas in Gaza proving elusive and the threat of a wider Middle East conflict still hanging, it looks like high freight rates are here to stay for an extended period. Insight article by Pearl Bantillo With contributions from Nurluqman Suratman, Fanny Zhang, Nadim Salamoun, Judith Wang, Helen Lee, Ai Teng Lim, Samuel Wong, Julia Tan, Izham Ahmad, Jackie Wong, Shannen Ng, Helen Yan and Clive Ong

29-May-2024

LONDON ICIS (ICIS)–The soda ash market narrative reminds one of Dickens' A tale of two cities: "It was the best of times, it was the worst of times […]we had everything before us, we had nothing before us." From the vertiginous highs of the post-pandemic boom to the slumbers brought in by high borrowing costs, soda ash players are navigating rougher seas with lows elongated compared to typical cyclical troughs and highs that had exhausted anyone involved in selling the molecule for over two years. Likewise, the promises of a boom in consumption via the lithium carbonate to support lithium-ion battery-run electric vehicles is also tempered by the idea that global oversupply could through the molecule back into the depressed mode and low margin era it has known for decades. Demand from the all-important flat glass applications servicing the construction and auto industries have stabilized after a year-long slow decline and is likely to remain slower in H2. Regionalism is at all-time highs, and supply from China is once again in the line of fire. ICIS soda ash editors Anne-Sophie Briant-Vaghela from Europe, Helen Lee from Asia, and Bill Bowen from the US talk about the changing market conditions as China switches from net exporter to net importer in Q1-Q2. Edited by Meeta Ramnani

28-May-2024

HOUSTON (ICIS)–DuPont expects about $60 million in dis-synergies from its break-up into three independent publicly traded companies, CEO Ed Breen and CFO Lori Koch told analysts in a conference call on Thursday. The US specialty chemicals and materials company announced late on Wednesday that it plans to separate its electronics and water businesses into two publicly traded companies while the existing DuPont, dubbed “New DuPont”, will continue as a diversified industrial company. The dis-synergies were largely related to insurance, audit fees, leadership and boards, that is, “public company stand-up costs”, Koch said. The dis-synergies were “not a huge number” and would be across all three companies, she said. As for separation costs, those are estimated at $700 million, with the biggest cost items being IT separation and tax, legal and audit work, she said. DIVESTMENT NOT RULED OUT While DuPont is pursuing spin-offs and is not running a parallel M&A processes for electronics and water, it does not entirely rule out divesting them. “If somebody wants to call and propose something, we are going to listen to it,” Breen said in response to analysts' questions. He also said that the water business, which is relatively smaller, may be spun off before electronics. The timing for the separations is good as markets are coming out of destocking cycles, Breen noted. Especially in semiconductors, “we are going into a real upcycle”, he added. DuPont has been working on the separation for about six months and expects to complete it within the coming 18-24 months, he said. The relatively long completion timeline is mainly due to tax matters as DuPont intends to execute tax-free separations, he said. In some of the countries where DuPont operating, a separated business must be run for a full 12 months before it gets tax-free status, Breen said. New DuPont, with annual sales of $6.6 billion, and the electronic spin-off (sales: $4.0 billion), are expected to have investment-grade balance sheets whereas the smaller water business (sales: $1.5 billion), may not, Koch said. PFAS As for DuPont’s liabilities for poly- and perfluoroalkyl substances (PFAS), those will be allocated between the three companies pro rata, based on their earnings before interest, tax, depreciation and amortization (EBITDA) in the last year before the spin-off, Breen said. The amount of PFAS liabilities may not be that large as DuPont expects to “make great progress” on settling claims by the time the spin-offs will be completed in 18-24 months, he said. BREEN’S NEW ROLE Breen will step down as CEO on 1 June, to be succeeded by Koch. However, he will continue as full-time executive chairman of DuPont’s board of directors, focusing on the separations, including the appointment of the spin-off companies’ boards and the hiring of their management teams. Breen would not rule out that he may join the boards of the electronics and water spin-offs but added that a decision has yet to be made. PROFILES OF THE THREE COMPANIES' MARKETS New DuPont, focused on healthcare, advanced mobility, and safety & protection: Electronics, focused on semi-conductors and interconnect solutions: Raw materials used by the electronic business include, among others, monomers, pigments and dyes, styrenic block copolymers, copper foil, filler alumina, nickel, silver, palladium, photoactive compounds, polyester and other polymer films, polyethylene (PE) resins, polyurethane (PU) resins, polyvinyl chloride (PVC) compounds and silicones, according to DuPont's website. Water, focused on reverse osmosis, ion exchange, and ultra filtration: Raw materials used by the water business include, among others, methyl methacrylate (MMA), styrene, polysulfone, high density polyethylene (HDPE), polyethylene (PE), aniline, calcium chloride, caustic and sulfuric acid, according to DuPont's website. DuPont's shares traded at $78.44/share, down 0.13%, at 11:00 local time on the New York Stock Exchange. With additional reporting by Al Greenwood Thumbnail photo source: DuPont

23-May-2024

SAO PAULO (ICIS)–Six years after the disaster at Braskem’s rock salt mines in Brazil’s state of Alagoas, the polymers major could continue facing legal cases which could dent its cash flow, according to analysts at US credit rating agency Fitch. Fitch downgraded the company’s credit rating in December 2023 and placed it on what it called ‘Negative Watch’. This week, following a very damning report issued by Brazil’s Senate following a public enquiry into the Alagoas disaster, the agency’s analysts said that Braskem is likely to face increase costs related to environmental, social, and governance (ESG) challenges. That would add, they said, to the expected poor spreads for global petrochemicals in general, which would be here to stay for at least the remaining of 2024. “Increased ESG risks and potential new claims associated with the geological event in Alagoas could worsen the company’s credit profile,” said Marcelo Pappiani, a Fitch analyst covering Braskem. Fitch said Braskem has since 2019 disbursed approximately Brazilian reais (R) 10.0 billion ($2.0 billion) on relocations, compensation, the closure and monitoring of salt cavities, and environment and other technical matters. A spokesperson for Braskem said to ICIS on Thursday the company would continue collaborating with the authorities in their enquiries about the Alagoas disaster but did not comment on the specifics of the Senate’s report. “Braskem reiterates it was always willing to collaborate with the public enquiry, promptly collaborating providing all the information and measures requested,” said the spokesperson. “The company remains available to collaborate with the authorities, as it has always been.” NEVER-ENDING DISASTERLate on Wednesday, the Brazilian Senate published the final report after its public enquiry into the Alagoas disaster in 2018 which caused thousands to be displaced from their homes in Maceio, the capital’s state. The report is to be voted by the Senate’s plenary on 22 May. Braskem's rock salt mining caused the displacement of the subsoil; the company used the rock salt for production of caustic soda and polyvinyl chloride (PVC), among others. The 765-page report was highly damning for Braskem, with vice president Marcelo Cerqueira and other seven people accused of environmental crimes as the company’s activities resulted in the geological event. Nearly 15,000 households had to be relocated, and some of Maceio’s neighborhoods evacuated in 2018 remain ghost areas to this day. The report was not only damning for Braskem but also for Brazil’s authorities, especially the National Mining Agency (ANM) as well as the Ministry of Mines and Energy for failing to implement the controls which are required. THE GROUND KEEPS MOVINGTo make matters worse for Braskem, just last December there were further movements in the subsoil which made residents and authorities fear another geological event, a prospect which in the end did not materialize. Those recent events, as well as this week’s report, keep bringing back the Alagoas disaster into the spotlight and seem set to keep haunting the company for several quarters to come, said the Fitch analysts. “We believe the environmental and ecological impacts of the salt mine collapse in the context of sinking land in Alagoas could damage Braskem’s financial position … Uncertainty about current and upcoming lawsuits is high, with negative outcomes potentially pressuring cash flow and adversely impacting the company’s financial results,” they said. “The company could also face social impacts from new claims and reparation costs to victims and neighboring communities, in addition to the 14,446 families relocated to other areas.” The Alagoas liabilities are casting such a long shadow for Braskem that Abu Dhabi’s energy major ADNOC, who seemed the strongest candidate to acquire Novonor’s controlling stake in Braskem, walked away earlier in May, reportedly on the back of those liabilities. “We believe the prospect of Novonor selling its stake in Braskem hit an impasse after the December 2023 salt mine collapse, with ongoing uncertainty regarding the repercussions of the geological event,” said Fitch. Neither the Senate report nor Fitch’s credit rating warning seemed to dent investors’ interest on Braskem’s stock on Thursday though, with shares trading nearly 1.45% higher on the Sao Paulo stock exchange Bovespa by midday local time. Following ADNOC's announcement it was throwing the towel on Braskem, Braskem’s shares opened the next trading session down more than 14%.

16-May-2024

HOUSTON (ICIS)–Global rates for shipping containers are surging, liquid chemical tanker rates were mixed, and wait times at the Panama Canal have eased, highlighting this week’s logistics roundup. CONTAINER RATES Container rates surged this week after rising last week for the first time since January amid general rate increases (GRIs) implemented because of rising demand and as continued Red Sea diversions have overall capacity fully deployed. Maersk CEO Vincent Clerc said during a Q1 earnings conference call that demand is trending toward the higher end of its guidance. Average global rates surged by 16% over the week, according to supply chain advisors Drewry and as shown in the following chart. Meanwhile, rates from Shanghai to the US West Coast jumped by 18%, and rates from Shanghai to the East Coast soared by 16%, as shown in the following chart. Drewry expects freight rates ex-China to continue increasing in the upcoming week amid a huge demand spike and tight capacity. Capacity is growing from newly built ships, according to international freight platform ShipHub, who said that 2.83m 20-foot equivalent units (TEUs) of container ship capacity is on order for 2024, after 2.34m TEUs were ordered in 2023. That is almost double the capacity added in 2021 and 2022, which were both around 1.1m TEUs. Shipping analysts Linerlytica said that over-capacity concerns are on the backburner with containership diversions to the Cape route effectively removing more than 7% of the total fleet. Rates from North China to the US Gulf were flat this week after spiking the previous week, as shown in the following chart from ocean and freight rate analytics firm Xeneta. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEM TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged but fell from the US Gulf (USG) to ARA. From the USG to Rotterdam, there are bits of part cargo space still available for April. This trade lane has been mostly quiet over the last few weeks. If this trend continues, this route could face further downward pressure. On the other hand, from the USG to the Caribbean, rates have risen slightly since last week leaving the market overall mixed. Methanol continues to be active out of this market to various destinations. From the USG to Brazil, space remains tight despite the slow market as only a handful of indications being seen in the market.  Space is available for H1 May out of Columbia and H2 May out of the USG. Although ICIS does not assess spot rates from the USG to the Mediterranean, this trade lane has continued to tighten up, with several cargoes of Glycols, Caustic and Veg Oil fixed. There is limited space for May which may likely cause rates to further tighten, although there could be some working space for June. PANAMA CANAL Wait times for non-booked vessels ready for transit fell for both northbound and southbound transits this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 4.4 days for northbound traffic and 6.5 days for southbound vessels. The PCA will increase the number of slots available for Panamax vessels to transit the waterway beginning 16 May and will add another slot for Neopanamax vessels on 1 June based on the present and projected water levels in Gatun Lake. PORT OF BALTIMORE The Key Bridge Response Unified Command (UC) is scheduled to use precision cuts made with small charges to remove a large section of the Francis Scott Key Bridge wreckage from on top of the container ship Dali, which struck the bridge on 26 March and caused its collapse. Source: Key Bridge Response 2024 The exact time of the precision cuts will depend on multiple environmental and operational factors. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. Additional reporting by Kevin Callahan

10-May-2024

MUMBAI (ICIS)–Indian producer Mundra Petrochemicals Ltd has awarded engineering services company Nuberg EPC a contract to build its new 2,200 tonne/day chlor-alkali project in the western Gujarat state. “The project entails construction of the caustic soda plant within the 1m tonnes/year green polyvinyl chloride (PVC) project in Mundra, Gujarat,” Nuberg said in a statement on 11 April. Nuberg expects to complete the project within 15 months, without disclosing financial details of the contract. Nuberg EPC is a global engineering and turnkey project management company based in Noida in the northern Uttar Pradesh state. Mundra Petrochemical is a subsidiary of Adani Enterprises Ltd, which is owned by major Indian conglomerate Adani Group. The caustic soda project forms part of the Adani Group’s 2m tonne/year greenfield PVC project in Mundra. In March 2023, the company halted construction of the PVC project as it worked to secure project funding. A consortium of banks led by state-owned State Bank of India had agreed in July last year to finance a significant part of the company’s PVC project, according to media reports. The project involves setting up a 2m tonnes/year PVC plant in two phases with the first phase expected to be commissioned in the fiscal year ending March 2026.

12-Apr-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 5 April. NEWS Mexico’s automotive output falls nearly 13% in March Mexico’s automotive sector output fell by 12.75% in March, month on month, to just over 300,000 units, the country’s statistical office Inegi said on Wednesday. Sanitation framework, nascent LatAm lithium industry keeping Brazil’s chloralkali afloat – Abiclor Brazil’s chlorine and caustic soda sectors have kept afloat in better health than the wider chemicals industry as sanitation plans and new lithium exploitations across Latin America keep demand high, according to the director general at the country’s trade group Abiclor. Brazil’s chemicals, industrial output falls in February Brazil’s chemicals output fell in February by 3.5%, month on month, one of the largest falls among the subsectors measured, the country’s statistical office IBGE said on Wednesday. Petrobras ‘proactively’ engaging with Federal auditor about tolling contract with Unigel Petrobras continues to “clarify in a timely manner” all the information requested by the Federal auditor regarding its tolling contract with Unigel, a spokesperson for the Brazilian energy major said to ICIS on Tuesday. Brazil’s Unigel postpones Q4 results amid debt restructuring Unigel has postponed the publication of its Q4 and 2023 financial results as its debt restructuring is ongoing, the Brazilian chemicals and fertilizers producer said on Tuesday. MOVES: Brazil’s Unipar appoints Alexandre Jerussalmy as CFO Unipar has appointed Alexandre Jerussalmy as CFO and investor relations officer, effective immediately, the Brazilian chemicals producer said on Tuesday. Colombia’s manufacturing slows down in March on lower sales Colombia’s manufacturing output growth slowed down in March on the back of lower sales, although it marked its third month in expansion territory, analysts at S&P Global said on Monday. Brazil's manufacturing March output healthy on new orders, fueling job creation Brazil’s manufacturing continued expanding at pace in March on the back of a healthy new order book, prompting firms to increase workforces, S&P Global said on Monday. Mexico’s manufacturing steady in March but subdued US demand causes concern Mexico’s manufacturing output stayed stable in March but firms are getting increasingly worried about lower demand from the US, the key market for the country’s export-intensive manufacturers, analysts at S&P Global said on Monday. PRICING Lat Am PP domestic prices down in Argentina, Mexico on lower US PGP spot prices, weak demand Domestic polypropylene (PP) prices dropped in Argentina and Mexico on the back of lower US spot propylene prices and weak demand. In other Latin American countries, prices remained steady. LatAm PE international prices steady to lower on lower US export offers International polyethylene (PE) prices were assessed as steady to lower on the back of lower US export offers. Ethanol prices in Brazil experiencing surges during April The prices of hydrous ethanol surged during the initial week of April, propelled by consistent strong sales in Brazil. Unigel to raise PS April prices in Brazil Unigel is seeking an 11% price increase on all grades of polystyrene (PS) sold in Brazil starting on 1 April, according to a customer letter. Innova seeks April PS price increase in Brazil Innova is seeking a real (R) 1,000/tonne ($200/tonne) price increase, excluding local taxes, on all grades of polystyrene (PS) sold in Brazil starting on 1 April, according to a customer letter.

08-Apr-2024

SAO PAULO (ICIS)–Brazil’s chlorine and caustic soda sectors have kept afloat in better health than the wider chemicals industry as sanitation plans and new lithium exploitations across Latin America keep demand high, according to the director general at the country’s trade group Abiclor. Abiclor's Milton Rego added, however, that the competitive challenges the chemicals industry faces in Brazil are common to both the parent industry and its chlorine subsector: high input costs, which make the whole industry suffer, infrastructure challenges and in the past two decades, fierce competition from China, not only in chemicals but for nearly all manufactured goods. However, given chlorine’s specific characteristics and its highly dangerous nature, shipments are more difficult, isolating the sector from the abundant, cheap imports other chemical products have had to face up to. This is well reflected in the operating rates in 2023: caustic soda and chlorine sectors averaged 70%, which is a low rate but higher than the overall chemicals industry’s at around 65%, according to figures from the Brazilian chemicals trade group Abiquim. WATER (FROM THE FAUCET) FOR THE PEOPLEBrazil will need a lot of chlorine in coming years. Despite all its natural wealth and the abundance of fresh water, around 33 million people in the 220-million strong country still do not have access to sanitized water yet. To tackle this, the previous Administration passed in 2020 the Reformulation of the Sanitation Legal Framework – or Novo Marco Legal do Saneamiento in Portuguese. Mostly through public-private partnerships, the plan envisages that by 2033 all Brazilians will be able to open the tap without fear of bacteria – and that means chlorine. Large Brazilian chemicals companies such as Unipar are tapping into the Marco Legal to expand their operations, in this case with a new chlorine plant in the northern state of Bahia. The largely de-industrialized and poorer Brazilian north is where still many cannot open the tap without fear of being infected. “The Marco de Saneamiento has some very clever points. On the one hand, it set the targets while improved the states’ ability to implement public-private projects, improving how they achieve the targets,” said Rego. “On the other, if the states do not achieve the targets, they could be penalized by not receiving the funds set up in the Marco for its development.” While the Marco de Saneamiento is set to place Brazil at the forefront in Latin America when it comes to sanitized water in people’s houses, some of the country’s perennial problems are still casting a shadow, said Rego. Namely, leaks in the water infrastructure as well as theft are still a cause for concern. Those two factors are also the ones that, despite all the sanitation work behind, make sanitized water still not suitable for drinking when it gets to Brazilian households. Even in the well-developed Sao Paulo and Rio de Janeiro, for instance, those who drink water from the faucet do so after filtering it. A far cry from the European systems, where water is safe to drink straight. “There have not been enough investments in keeping the water infrastructure systems up to date. The Marco de Saneamiento touches on the states’ responsibility in keeping the network functioning properly,” said Rego. “But no matter all the good intentions and plans to do so, when you get all those external factors [theft and leaks in the old networks, mostly] denting the quality of the water infrastructure network, it makes achieving the final goal harder.” CAUSTIC SODA: 3 MILLION DEMAND, 1.5 MILLION OUTPUTConsidering how chemicals producer have been besieged for much of the past two years by cheap imports coming into Brazil, the caustic soda situation may look enviable. Operating rates of 70% are not the panacea, Rego concurred, given the enormous spare capacity, but when compared to the wider industry, it is a healthier figure. In fact, Rego said the sector is already at pre-pandemic levels in terms of rates; a far cry from the wider industry, where operating rates continue to fall as global oversupplies for most chemicals keep denting domestic producers’ output. Brazil’s caustic soda output stands at around 1.5 million tonnes/year, but the country’s demand is at around 3 million tonnes/year. However, geography and industrial strengths play a part here. On one hand, most of the caustic soda imported into Brazil comes from the US via the Gulf Coast, and it is shipped to the northern states where aluminum production is strong. On the other hand, most of the 1.5 million tonnes produced domestically are produced in the south and serve the industrious southern states such as Sao Paulo or Rio de Janeiro. “Our caustic soda deficit is mostly covered by the US: from the Gulf Coast to the northern Brazilian ports the freight costs are not too high, and it is perfectly placed to serve the high demand from the aluminum sector,” said Rego. “We have become too accustomed in Brazil to talk about our industrial decadence and how that could be reversed, but the aluminum sector, for instance, remains strong and not only cater for Brazilian demand: it is also a sector managing to export to overseas markets.” Rego said the Brazilian chloralkali sector can also look with optimism and the booming lithium sector in Latin America. As of now, Brazilian producers are exporting to Argentina and Bolivia caustic soda and derivative hydrochloric acid (HCl) for the extraction of lithium, a key component for electric batteries as the world seeks to electrify transport. “We are confident those exports are set to expand to other Latin American markets,” said Rego. THE COUNTRY OF THE FUTURE, STUCK IN THE PRESENTRego’s fascination for how Brazil went from industrial superpower in the 1960s and 1970s to the current nearly-permanent industrial crisis – with agriculture and services coping much of the growth in the past few years – captivates the imagination of the listener. One should not forget the mantra which became a joke: in the 1950s and 1960s Brazil was ‘the country of the future’ and it did show in things like building a new capital from scratch in just 10 years or the fast-paced urbanization in places like Sao Paulo or Rio de Janeiro states, which had a great damaging effect on the environment. As an example: in a tropical paradise like Brazil, water is everywhere. Sao Paulo’s two rivers – Pinheiros and Tiete – are just a fraction of the several waterways that ran through the city before urbanization: they were all channeled and tunneled to make way for roads above them. Back to industry. The Brazil of the future stayed in the past. The 1980s economic crisis put the country on its knees, and China’s renaissance from the 1990s made the rest, according to Rego. “China increases sharply the competitiveness of most of its industrial products. But, as it has been said several times before, the logic in China’s economic system is not a capitalistic logic, and that has reverberations globally,” said Rego. “Globally, and locally in Brazil: China’s ascend meant Brazil’s descent, as much higher production costs here made our industrial goods less competitive. Funnily enough, this is also affecting Europe, especially in the past two years after war in Ukraine broke out and energy prices became very high.” Therefore, the US with its own shale gas revolution, the Middle East, and Asia are now the most competitive industrial regions, said Rego. Brazil’s prowess in agriculture, he added, cannot make the country forget that a healthy economy requires a strong industry, able to cater for domestic demand and also able to export. That is where Brazil’s interesting history stands at the moment. A new industrial plan recently presented by the government could help tackle some issues, said Rego, but there have been many industrial plans before and they failed to lift up industry’s prospects. Regarding chemicals, Abiquim used throughout 2023 an apocalyptic language to describe the state of the industry, warning the survival of several chemicals chains in Brazil was at risk. Rego preferred to describe Abiquim’s “necessary” lobbying as “eloquent” – but at the end of the day, the story is the same: with current high input costs, chemicals in Brazil are set to have a harder time than peers in other major economies. Front page picture: Promotional image of the Marco Legal do Saneamiento Source: Brazilian government Interview article by Jonathan Lopez

04-Apr-2024