Polyethylene (PE)

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US surged this week as importers pulled volumes forward ahead of the possible restart of the US Gulf and East Coast port strike and anticipated tariff hikes under the incoming Trump Administration. Rates from Asia to both US coasts had been trending steadily lower since July. Rates from Shanghai to New York began stabilizing in October before surging by almost 17% this week, according to data from supply chain advisors Drewry. Rates from Shanghai to Los Angeles were falling steadily before jumping by almost 26% this week, as shown in the following chart from Drewry. Drewry has global average rates up by 8% this week, as shown in its World Container Index. Drewry expects an increase in rates on the transpacific trade in the coming week, driven by front-loading ahead of the looming port strike and possible tariffs. Rates at online freight shipping marketplace and platform provider Freightos also showed significant increases to both coasts. Judah Levine, head of research at Freightos, suggested that the pull-forward for the pending strike is largely over as the pre-15 January arrival window has closed. Levine thinks a strike – or at least a prolonged one – is unlikely now that President-elect Trump has backed the union in the dispute. But the anticipation of increased tariffs is still driving some unseasonal volume strength, Levine said. 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 STABLE Overall, US chemical tanker freight rates were unchanged this week for most trade lanes ex-USG. For the USG to ARA, both spot cargoes and contract of affreightment (COA) nominations to northwest Europe took a slight dip this week, with minimal opportunities quoted but remained relatively flat week over week. COA volumes for January are still pending so it is not clear how much space will be available, but sentiment is that contract business will be strong, making spot space harder to find. Along the USG to Asia route, there was a bit more activity this week with January base oils, ethanol and vegoil requirements being quoted out in the market. The January chemical COAs are showing healthy levels, and most regulars are reporting that space is currently tight on paper. Most market participants expect rates to remain steady for the balance of the year. COA nominations are strong on the USG-Brazil trade lane with still some space available for the end of December. However, several traders were in the market with 10,000 tonnes of caustic soda ex-Point Comfort to Santos for loading on prompt dates. So far, no fixture has been reported yet, leaving this market overall quiet. Additionally, ethanol, glycols and caustic soda were seen in the market to various regions. Additional reporting by Kevin Callahan Thumbnail image shows a container ship. Photo by Shutterstock

20-Dec-2024

HOUSTON (ICIS)–With the 15 January target date for a new master agreement between union dock workers and US Gulf and East Coast ports rapidly approaching, the Alliance for Chemical Distribution (ACD) is urging both sides to push back the deadline. Negotiations between the dockworkers, represented by the International Longshoremen’s Association (ILA), and the ports, represented by the United States Maritime Alliance (USMX), have been stalled as each side is unwilling to budge on issues surrounding automation of ports. 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. ACD President and CEO Eric Byer outlined the challenges hindering negotiations and emphasized the significant economic and public consequences of a contract lapse in a letter to both parties. Byer also highlighted the economic impacts the previous three-day strike caused to various industries and the challenges the chemical distribution industry would face if another strike were to occur. Other challenges are the 29 January start of the Lunar New Year, and the upcoming inauguration and transition to the new presidential administration. “In early October, during the three-day lapse in the master contract between the ILA and USMX, there was a substantial economic impact, weeks of supply chain disruptions, and challenges in getting necessary supplies to communities in the wake of the Hurricane Helene disaster,” Byer said in the letter. “Additionally, had the lapse continued for just a few more days, it would have resulted in ACD members losing stock of chemicals used for critical processes, such as water treatment.” In a 12 December post on social media, President-elect Donald Trump expressed his support for the dockworkers in the labor dispute. A strike would not have an impact on liquid chemical tankers, which transport most chems. For most traders and brokers who export polyvinyl chloride (PVC), much of their warehouse space is full and they are unable to book vessels until after the 15 January deadline because of the uncertainty. “This could make for a very challenging first quarter,” ICIS Senior Analyst Kelly Coutu said.

19-Dec-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. To paraphrase William Shakespeare, I see last week’s fuss about China’s new economic stimulus as being full of sound and fury, signifying hardly anything. The hard reality is that China is undergoing a period of a much lower GDP and therefore chemicals demand growth. Nothing can change this trajectory, for reasons I discuss in detail in today’s post. During 2025, the problem will remain far too much global capacity chasing much weaker-than-expected demand up and down all the chemicals value chains because the consensus on China was wrong. So, to add to my five forecasts for 2025 which I published last week, here is a sixth: There will be no significant improvements during next year in China’s CFR polyethylene (PE) and polypropylene (PP) price spreads over CFR Japan naphtha costs. The 2024 final numbers are almost in. We can see that the downturn in spreads that followed the Evergrande Turning Point continues. Let’s start with PE where 2022-2024 average spread for the three grades was just $300/tonne. This compares with a spread in 1993-2021 – during the Chemicals Supercycle – that averaged $532/tonne. The average 2022-2024 PP spread was $240/tonne as against $562/tonne during the Supercycle. Please don’t be distracted by unhelpful noise. Instead, place all your focus on retooling your tactics and strategies to deal with the post-Supercycle chemicals world. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

17-Dec-2024

HOUSTON (ICIS)–Two world-scale joint venture projects being developed by Chevron Phillips Chemical and QatarEnergy remain on track to start operations in 2026, Phillips 66 said on Monday. Phillips 66 and Chevron hold equal stakes in Chevron Phillips Chemical (CP Chem). The US project is Golden Triangle Polymers, an integrated polyethylene (PE) complex in Orange, Texas. Chevron Phillips holds a 51% stake, and construction started in 2023. The Qatari project in Ras Laffan is another integrated PE project. It is a 70:30 joint venture between QatarEnergy and CP Chem. Construction on this project started in 2024. PHILLIPS 66 CAPEX BUDGETPhillips 66 provided the updates on the two petrochemical projects when it revealed its 2025 capital budget, as shown in the following table. Figures are in millions of dollars. Sustaining Growth TOTAL Midstream 429 546 975 Refining 414 408 822 Marketing & Specialties 63 91 154 Renewable Fuels 18 56 74 Corporate and other 74 1 75 TOTAL 998 1,102 2,100 Source: Phillips 66 Phillips 66's proportionate share of capital spending in its CP Chem and WRB Refining joint ventures is $877 million, and its inclusion would bring Phillips 66's total 2025 capital spending to $3 billion. The joint ventures' spending will be self funded, Phillips 66 said. WRB Refining is a 50:50 joint venture made up of Phillips 66 and Cenovus Energy. The joint venture owns the Wood River refinery in Illinois and the Borger refinery in Texas. WRB's capital spending will direct its capital spending on sustaining projects, Phillips 66 said. PHILLIPS TO SELL STAKE IN OIL PIPELINEA subsidiary of Phillips 66 has agreed to sell its 25% non-operated stake in the Gulf Coast Express Pipeline to an affiliate of ArcLight Capital Partners. Pre-tax proceeds from the sale should total $865 million. The sale should close in January 2025. Thumbnail shows PE. Image by ICIS.

16-Dec-2024

HOUSTON (ICIS)–In a late-Thursday post on social media, President-elect Donald Trump expressed his support for dockworkers in the labor dispute between US Gulf and East Coast ports and the International Longshoremen’s Association (ILA). The ILA and the ports, represented in the negotiations by the US Maritime Alliance (USMX), are facing a 15 January deadline to complete a new master agreement. The union has vowed to strike if its demands on limiting automation are not met. In a post on Truth Social after meeting with union president Harold Daggett, Trump said “the amount of money saved [by automation] is nowhere near the distress, hurt, and harm it causes for American workers”. Trump said he would rather see the ports spend money on labor instead of “machinery, which is expensive, and which will constantly have to be replaced”. “For the great privilege of accessing our markets, these foreign companies should hire our incredible American workers, instead of laying them off, and sending those profits back to foreign countries,” Trump said. The USMX responded in a post to its website. “We appreciate and value President-elect Trump’s statement on the importance of American ports,” the USMX said. “But this contract goes beyond our ports – it is about supporting American consumers and giving American businesses access to the global marketplace – from farmers, to manufacturers, to small businesses, and innovative start-ups looking for new markets to sell their products.” The USMX contends that to achieve this, there is a need for modern technology that is proven to improve worker safety, boost port efficiency, increase port capacity, and strengthen supply chains. “ILA members’ compensation increases with the more goods they move – the greater capacity the ports have and goods that are moved means more money in their pockets,” the USMX said. “We look forward to working with the President-elect and the incoming administration on how our members are working to support the strength and resilience of the US supply chain and making crucial investments that support ILA members and millions of workers and businesses across the entire domestic supply chain, improving efficiency and creating even more high-paying jobs for ILA members,” the USMX said. A strike would not have an impact on liquid chemical tankers, which transport most chems. But 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. No negotiations are currently underway with slightly less than five weeks left before the deadline.

13-Dec-2024

BARCELONA (ICIS)–European polyethylene (PE) markets face growing pressure from cheaper imports, highlighting the impact of rising overcapacity driven by China and the US. Plants in Europe operating at technical minimum levels Minimal stocks held amid plentiful supply Demand poor across most end uses, packaging stronger Europe will see more PE imports as global overcapacity grows More polymer plant closures are likely in Europe and other high-cost regions US has more to lose from trade war as it is a major exporter of PE to China Trade flows could change dramatically if tariff walls go up Supply/demand imbalance may take up to nine years to correct In this Think Tank podcast, Will Beacham interviews ICIS markets editors Vicky Ellis and Ben Monroe-Lake plus ICIS market development executives Nigel Davis and John Richardson. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

12-Dec-2024

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US were flat to softer this week while global average rates rose by 6%, but the looming strike at US Gulf and East Coast ports could put upward pressure on rates in the coming week. Rates from supply chain advisors Drewry showed Shanghai-New York rates fell slightly to $5,160 from $5,182, while rates from Shanghai to Los Angeles plunged by more than 12%, as shown in the following chart. The previous chart also shows the sharp increases in rates from Shanghai to Rotterdam and Genoa, which contributed to the global average increase as shown in the following chart. Drewry expects an increase in rates on the Transpacific trade in the coming week due to the looming ILA (International Longshoremen’s Association) port strike in January 2025 and the anticipated rush to ship goods before the strike begins. The 15 January deadline for finalizing a new labor agreement between unionized dock workers at US Gulf and East Coast ports and the negotiating entity for the ports is nearing with no clear progress on a key remaining issue – automation. Rates at online freight shipping marketplace and platform provider Freightos showed a sharp increase on the Asia-NY trade lane and a 4% decrease from Asia-LA. Rates at Freightos are higher than rates at Drewry. Judah Levine, head of research at Freightos, said the increases on Asia-NY are because of importers again frontloading shipments ahead of a possible strike and to beat tariffs proposed by the incoming Trump administration. Some carriers have already begun introducing general rate increases (GRIs) to try and push rates higher. Levine said the window to move shipments from the East Coast to the West Coast ahead of a possible strike is closing, but many retailers are sitting on significant inventories from pulling forward shipments ahead of the original 1 October strike deadline. “These factors may make early December rate increases difficult to sustain, though prices could increase later in the month or early in January ahead of Lunar New Year,” Levine said. 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 Overall, the US chemical tanker freight rates were unchanged this week for several trade lanes, except for the USG-Asia trade lane as spot tonnage remains tight. This all-basis limited spot activity to most regions and as COA nominations are taking longer than usual for the regular vessel owners. They have tried to delay the sailings but there has been very little spot space in the market leaving no other options for full cargoes and in turn impacting spot rates. MEG, ethanol and styrene still are being seen quoted in the market from various traders, for early January loadings to Asia. Eastbound space had not yet been fully absorbed despite the few fresh inquiries for small specialty parcels stemming from USG bound for Antwerp, most owners waiting for full contract nominations. Various glycol, ethanol, methyl tertiary butyl ether (MTBE) and methanol parcels were seen quoted to ARA and the Mediterranean as methanol prices in the region remain higher. Additionally, ethanol, glycols and caustic soda were seen in the market to various regions. PANAMA CANAL Fiscal Year 2024 revenue rose from 2023, the Panama Canal Authority said this week even after having to reduce crossings for part of the year because of a severe drought. The Authority said a noticeable impact from the drought was a decrease in deep draft transits, which fell by 21%. Despite the arrival of the rainy season, the challenge of water for Panama and the Panama Canal remains and serves as a reminder that climate change and its effects are a reality requiring immediate attention and concrete action. Potential solutions include the identification of alternative sources of water from the 51 watersheds and lakes in Panama, along with projects that can increase storage capacity to ensure water availability for the entire Panamanian population and the Canal’s operation, thereby ensuring its long-term sustainability. At the same time, the Panama Canal is exploring additional short- and long-term solutions that can optimize the use and storage of water at the Canal for the benefit of both the local population and its operations. Additional reporting by Kevin Callahan Thumbnail image shows a container ship. Photo by Shutterstock

06-Dec-2024

LONDON (ICIS)–Senior Editor for Recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Different views on colourless (C) flake prices in northwest Europe (NWE) Higher bale prices heard but not confirmed in eastern Europe and Poland Outlook for 2025 still a big question mark

06-Dec-2024

HOUSTON (ICIS)–The 15 January deadline for finalizing a new labor agreement between unionized dock workers at US Gulf and East Coast ports and the negotiating entity for the ports is nearing with no clear progress on a key remaining issue – automation. This week, a union vice president criticized semi-automated rail-mounted gantry cranes (RMGs) for eliminating jobs and posing national security risks in a post on the International Longshoremen’s Association (ILA) website. In response, the United States Maritime Alliance (USMX), the group representing the ports, defended automation as essential for port modernization and addressing land constraints. The ILA paused a three-day strike on 3 October after agreeing on a wage increase, with a commitment to negotiate the remaining issues by 15 January. Top among the remaining issues is the automation or semi-automation at the ports, which the ILA is adamantly against because they think it will take jobs typically done by humans and which the USMX says is needed for the US to remain competitive. ILA Vice President Dennis A Daggett said in his post on the union’s website that the ILA is not against progress, innovation, or modernization – “but we cannot support technology that jeopardizes jobs, threatens national security, and puts the future of the workforce at risk”. Daggett explained that in the early-2000s, employers introduced semi-automated RMGs at a greenfield terminal on the East Coast, saying the move would create thousands of jobs. “What seemed like a win for one port turned out to be the project that is becoming the model for automation that could potentially chip away at many jobs at almost every other terminal along the East and Gulf coasts,” Daggett said. Daggett said 95% of work performed by RMGs is fully automated. “From the moment a container is dropped off by a shuttle carrier, the RMG operates on its own – lifting, stacking, and moving containers, including gantry and hoisting, without any human intervention,” Daggett said. “This includes the auto-stacking of containers in the container stack, which is also fully automated. Only in the last six feet of the container’s journey on the landside, when it is placed on a truck chassis, does an operator step in. But how long until employers automate those final six feet as well?” The USMX, in a response, said modernization and investment in new technology are core priorities required to successfully bargain a new master contract with the ILA – they are essential to building a sustainable and greener future for the US maritime industry. “Port operations must evolve, and embracing modern technology is critical to this evolution,” the USMX said. “It means improving performance to move more cargo more efficiently through existing facilities – advancements that are crucial for US workers, consumers, and companies,” the USMX said. “Due to the lack of available new land in most ports, the only way for US East and Gulf Coast ports to handle more volume is to densify terminals – enabling the movement of more cargo through their existing footprints. It has been proven this can be accomplished while delivering benefits to both USMX members and to the ILA.” The USMX stressed that it is not, nor has it ever been, seeking to eliminate jobs, but to simply implement and maintain the use of equipment and technology already allowed under the current contract agreements and already widely in use, including at some USMX ports. As an example, the USMX pointed to a terminal where modern crane technology was implemented more than a decade ago, which was previously limited to a 775,000-container capacity using traditional equipment. That same terminal nearly doubled its volume after incorporating the use of modern rail-mounted gantry cranes into its daily operations. “The added capacity delivered an equal increase in hours worked, leading to more union jobs, as the terminal went from employing approximately 600 workers a day to nearly 1,200,” the USMX said. “Moving more containers through the existing terminal footprints also means higher wages from the increased cargo, bringing in more money for volume/tonnage bonuses.” 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. No negotiations are currently underway with just about five weeks left before the deadline. Focus article by Adam Yanelli

05-Dec-2024

HOUSTON (ICIS)–Global average container rates ticked lower last week, along with rates from Shanghai to the US West Coast, but rates from Asia-New York held steady during what is typically the slow season for transpacific ocean freight. Shipping analysts said rates remain elevated for several reasons, most significantly the frontloading of imports ahead of possible renewed labor strife at US Gulf and East Coast ports. The possible implementation of new tariffs proposed by the incoming Trump administration is also keeping upward pressure on rates. Global average rates fell by 2% for the week ended 29 November, as shown in the following chart from supply chain advisors Drewry. The following chart from Drewry shows the rates from Asia to both US coasts. Drewry expects spot rates to be relatively stable this week. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said inland truck and rail rates could also face upward pressure as tariffs aimed specifically at Canada and Mexico could lead to increased cross-border volumes. Levine said congestion remains minimal at US ports, including the main West Coast port of Los Angeles/Long Beach. Kip Louttit, executive director of the Marine Exchange of Southern California (MESC), said container ship traffic through the port continues to be steady with 67 container ships enroute and 12 scheduled to arrive in the next three days. 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 RATES STEADY Overall, US chemical tanker freight rates were largely stable this week for several trade lanes, with the exception being the USG-to-Brazil trade lane, as that market picked up this week following activity during the APLA conference in Colombia. Part space has limited availability as most owners are awaiting contract of affreightment (COA) nominations. The USG-Asia trade lane remains steady as spot tonnage remains readily available and multiple cargoes of glycol and styrene are interested in December and January loadings, supporting the market. Similarly, on the transatlantic front, the eastbound leg remains steady as there was limited space available which readily absorbed the few fresh enquiries for small specialty parcels stemming from the USG bound for Antwerp. Various glycol, ethanol, methyl tertiary butyl ether (MTBE) and methanol parcels were seen quoted to ARA and the Mediterranean as methanol prices in the region remain higher. Additionally, ethanol, glycols and caustic soda were seen in the market to various regions. However, it is also clear that space is becoming very tight until the end of the year, keeping rates firm. The CPP market firmed, limiting the number of tankers offering into the chemical market, thus keeping rates stable. Additional reporting by Kevin Callahan

02-Dec-2024