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Ammonia09-Aug-2024
TORONTO (ICIS)–The Canada Industrial Relations
Board (CIRB) on Friday ruled that no rail
activities need to be maintained in case of a
strike or lockout at rail carriers Canadian
National (CN) and Canadian Pacific Kansas City
(CPKC).
However, the quasi-judicial tribunal ordered a
13-day cooling-off period before a legal rail
strike or lockout can begin.
The CIRB’s long-awaited ruling does not remove
the rail strike threat that has been looming
over Canada’s energy, chemicals and other
industries for months.
A strike by the more than 9,000 CN and CPKC
unionized conductors, train operators and
engineers could now start towards the end of
the month if collective bargaining fails.
The railroads and labor union Teamsters Canada
Rail Conference (TCRC) resumed negotiations on
Wednesday, 7 August.
Federal labor minister Steve MacKinnon on
Friday urged the parties to continue
negotiating. MacKinnon became labor minister
last month after his predecessor resigned
suddenly.
The former labor minister, Seamus O’Regan, in
May referred the industrial dispute to the CIRB
for a decision about a strike’s impacts on
public safety and health after the rail workers
voted for a strike as early as 22 May.
The referral suspended
the workers’ right to strike because under law
a legal strike or lockout could not occur until
the board made its decision.
The ongoing uncertainties around rail
disruptions have affected Canadian chemical,
fertilizer and other manufacturers, as they
need to make preparations.
In recent earnings calls, midstream energy
firms Pembina and Keyera, as well as
fertilizer major Nutrien and others
raised the looming rail strike as a concern,
and CN reduced its 2024 earnings guidance,
citing the impacts of the labor uncertainty.
Canadian chemical producers rely on rail to
ship more than 70% of their products, with some
exclusively using rail, while in the fertilizer
industry about 75% of all fertilizers produced
and used in Canada is moved by rail.
Thumbnail photo source: CN
Recycled Polyethylene Terephthalate09-Aug-2024
HOUSTON (ICIS)–Recycled Plastics analyst
Corbin Olson and US Recycled Plastics senior
editor Emily Friedman discuss the main
takeaways from the latest round of corporate
quarterly earnings calls, as they relate to the
US recycled plastics industry.
Key takeaways included:
Consumer Packaged Goods (CPG) companies
largely showed positive North American sales
volumes, though some continue to see negative
volumes due to the current inflationary
environment.
Durables markets, such as pipe and
composite decking which use recycled plastic
as a raw material, showed moderate progress,
with weakness in agricultural and residential
end markets. Broader economic softness in
construction, automotive and housing
continues to exert downwards pressure.
Waste management companies largely saw
strong earnings, with several investing in
recycling collection and sortation
infrastructure, but also in downstream in
plastics recycling capacity. Republic
Services notes progress on their Polymer
Centers.
Virgin petrochemical players continue to
integrate with recycling operations
Dow acquires Circulus
LyondellBasell pending FID on Houston
chemical recycling unit
ExxonMobil pledges increased chemical
recycling capacity in 2025
Eastman shows progress on operation
of Kingsport methanolysis facility,
lowers earnings guidance
PET sales volumes increase, amid weaker
market pricing; R-PET forecasts remain strong
for future demand
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Power09-Aug-2024
Baltic countries notify Russia and Belarus
of intention to unplug from BRELL area
ENTSO-E synchronization scheduled for early
2025 to link Baltic countries to continental
Europe
Poland, Baltic countries working on backup
line
BUCHAREST (ICIS)–The three Baltic countries
Estonia, Latvia and Lithuania, are preparing to
synchronize with the European Network of
Transmission System Operators for Electricity
(ENTSO-E) system early next year as they are
taking the final steps to decouple from the
Russian and Belarusian grids.
Their electricity transmission system operators
Elering, AST and Litgrid, have already notified
Moscow and Minsk of their intention to unplug
from the BRELL area (Belarus, Russia, Estonia,
Latvia and Lithuania). The deadline to send the
notification was August 7.
The BRELL agreement under which they had been
connected with Belarus, the Russian exclave of
Kaliningrad and Russia itself since Soviet days
is due to expire on February 7 2025 and the
three Baltic operators are planning to
disconnect from it altogether the following
day.
The interconnection with the Continental Europe
Synchronous Area has been scheduled for
February 9.
The interconnection with the continental grid
operating under the umbrella of the ENTSO-E is
considered of strategic importance for the
three countries and will be carried out through
the 400kV LitPol link, connecting Lithuania and
Poland.
The line is currently operational and has a
bidirectional transfer capacity of 500MW.
However, once the synchronization is completed,
fully aligning the three Baltic countries with
the European grid, the capacity is expected to
increase.
The capacity that could be made available for
commercial exchanges is yet to be decided.
SYNCHRONIZATION TESTS
Lithuania is connected with Latvia, which is in
turn connected with Estonia. The three Baltic
countries are expected to carry out preliminary
tests before completing the synchronization.
Lithuania and Estonia are connected via
back-to-back lines with Sweden and Finland
respectively. The aggregated capacity of the
two lines to Finland and one line to Sweden is
1.7GW. Synchronization is to take place via the
LitPol line, with other countries synchronizing
through the Lithuanian system to which they are
connected.
Susanne Nies, energy expert at Helmholtz
Zentrum Berlin, a Germany-based think tank,
told ICIS that the test would involve
decoupling from the grids of Belarus,
Kaliningrad and Russia itself and operating in
full isolation for a period of time.
The island mode test is required to ensure the
countries can operate at a stable frequency of
50Hz in conditions of peak winter demand. The
three Baltic countries’ aggregated peakload
capacity is around 4.5GW and their baseload
capacity is around 1.68GW.
Lithuania, Latvia and Estonia were fully
prepared for the island mode test, according to
Nies, having deployed all the necessary
infrastructure and IT systems needed to
strengthen and stabilize the grids ahead of the
synchronization.
She added that Kaliningrad, which becomes an
island after synchronization, has passed two
tests successfully and can be fully
self-sufficient, providing electricity supplies
to its one million people from two combined
cycle gas turbine power plants.
Nies, who has been following the Baltic project
since it was launched in 2015, said the purpose
of the synchronization with ENTSO-E was
primarily to guarantee security of supply
rather than commercial exchanges.
For now, the existing line will be exempt from
the EU’s 70% rule, she added, which enters in
force in 2025 and requires electricity grid
operators to make available 70% of the
transmission capacity for cross-border trading.
BACKUP
There is also a need to build an additional
line to ensure that in case of risks to the
existing connecting infrastructure or
generating capacity in the Baltic area, the
additional line would provide backup, Nies
added.
The Baltic operators and their Polish
counterpart, PSE, are now considering whether
the backup line should be built along railroad
or motorway connections, both of which are
being developed between Poland and Lithuania.
Nies said plans to build the Harmony Link, a
subsea cable connecting Lithuania to Poland,
were no longer being considered amid security
fears following suspected attacks on subsea
energy infrastructure in the Baltic Sea in
recent years. High-voltage line solutions have
also become more expensive.
Baltic synchronization has been supported by
the EU, with funding from the Connecting Europe
Facility amounting to €1.2 billion and covering
around 75% of the project’s eligible costs.
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Recycled Polyethylene Terephthalate09-Aug-2024
LONDON (ICIS)–Senior editor for recycling Matt
Tudball discusses the latest developments in
the European recycled polyethylene
terephthalate (R-PET) market, including:
3rd ICIS Recycled Polymers
Conference 7 November in Berlin, Germany
Colourless (C) R-PET UK flake price range
narrows
Turkish bales, flake prices rising in
August
Market participants looking ahead to
September and end of holiday period
Acetic Acid08-Aug-2024
HOUSTON (ICIS)–Celanese has lifted the force
majeure it declared on acetic acid and vinyl
acetate monomer (VAM) sold in the western
Hemisphere, the US-based acetyls producer said
on Thursday.
Celanese had declared force majeure
earlier in the year after two feedstock
suppliers suffered from disruptions.
During an earnings call, Celanese said the
effect of the force majeure was limited because
of soft overall demand amid a difficult
macro-economic environment.
Thumbnail shows adhesive, which is
typically made with VAM. (Image by
Shutterstock)
Ammonia08-Aug-2024
HOUSTON (ICIS)–Navigator Holdings, the largest
fleet owner of handysize liquefied gas
carriers, announced it is undertaking a
co-investment with Attis Clean Energy into
Ten08 Energy, which is creating a production
export facility in Texas.
Revealed this past May, clean ammonia developer
Ten08 is planning an industrial-scale hybrid
blue and green ammonia production export
facility to be located on the Texas Gulf Coast.
The goal is to produce the most competitively
priced ammonia molecule to help decarbonize the
power, shipping, fertilizer and chemicals
industries.
The first phase, comprising 1.4 million
tonnes/year of ultra-low carbon ammonia
production, is expected to commence operations
in late 2029 or early 2030.
Navigator said its financial commitment is
currently $2.5 million and complements the
development capital from lead investor Attis
who made its initial investment to fund
development until a final investment decision
is concluded.
The company also received an option to make a
larger investment once the investment decision
is made of up to $100 million of preferred
equity towards construction of the terminal and
export infrastructure of the project, with
potential further investments in subsequent
expansions.
The parties intend to offer an integrated
service of US-based clean ammonia production
combined with international seaborne
transportation of the ammonia on
ammonia-powered gas carriers to customers in
Europe and Asia.
“This investment is yet another example of our
commitment to growth through energy
infrastructure projects and meaningfully
supports our existing ammonia shipping
business,” said Navigator Holdings CEO Mads
Peter Zacho.
“Clean ammonia is crucial to the success of the
energy transition for both power generation and
carbon free shipping, and the Ten08 project
will play a critical role in further developing
the clean ammonia industry.”
Ammonia08-Aug-2024
HOUSTON (ICIS)–Nutrien said global potash
demand during H1 2024 has been supported by
favorable consumption and low channel
inventories in North America and southeast
Asia, with global nitrogen being boosted by
steady demand and continued supply challenges
in key producing regions.
In its Q2 earnings release the Canadian
fertilizer major said it is also seeing that
there are expectations which have been created
for record US corn and soybean yields, that
have pressured crop prices.
For the potash segment Nutrien said the
settlement of contracts with China and India in
July is expected to support demand in standard
grade markets in the second half of this year.
The producer said that the uptake on the summer
fill program it offered in North America has
been strong, and as such it has raised
full-year global potash shipment forecast from
69 million tonnes to 72 million tonnes.
It further said it expects a relatively
balanced market in H2 2024.
The company showed that potash sales volume
guidance has been increased from 13.2 million
tonnes to 13.8 million tonnes due to
expectations for higher global demand in 2024.
It noted that the range does reflects the
potential for Canadian rail strike in the
second half which would have a relatively short
duration.
Looking at the situation with global nitrogen,
Nutrien said Chinese urea export restrictions
have been extended into the second half and
natural gas-related supply reductions could
continue to impact nitrogen operating rates in
Egypt and Trinidad.
The company said US nitrogen inventories were
estimated to be below average levels entering
H2 2024, contributing to strong engagement the
summer fill programs.
Nitrogen sales volume guidance has been
narrowed from 10.7 million tonnes to 11.1
million tonnes as Nutrien continues to expect
higher operating rates at their North American
and Trinidad plants,
It is also counting on a growth in sales of
upgraded products such as urea and nitrogen
solutions.
While end user demand has taken its typical
summer slump, Nutrien said they expect buying
for crop inputs in North America to remain
strong in Q3 as growers aim to maintain optimal
plant health and yield potential.
With that view it noted that good affordability
for potash and nitrogen will be supportive of
the upcoming fall application rates
“Crop input demand remains strong, and we
raised our full-year outlook for global potash
demand due to healthy engagement in all key
markets,” said Ken Seitz, Nutrien president and
CEO.
“Our upstream production assets and downstream
retail businesses in North America and
Australia have performed well in 2024.”
Caustic Soda08-Aug-2024
HOUSTON (ICIS)–The 2024 Atlantic hurricane
season is likely to remain extremely active,
the National Oceanic and Atmospheric
Administration (NOAA) said on Thursday in an
update to its previous forecast.
The only change to the previous forecast,
which predicted the greatest number of
hurricanes in the agency’s history, was a
slight reduction in the number of named storms,
from 17-25 to 17-24.
A storm is named once it has sustained winds of
39 miles/h (63 km/h).
“The hurricane season got off to an early and
violent start with Hurricane Beryl, the
earliest category-5 Atlantic hurricane on
record,” NOAA Administrator Rick Spinrad said.
“NOAA’s update to the hurricane seasonal
outlook is an important reminder that the peak
of hurricane season is right around the corner,
when historically the most significant impacts
from hurricanes and tropical storms tend to
occur.”
Atmospheric and oceanic conditions continue to
support an above-normal 2024 Atlantic hurricane
season, with a 90% probability of this result,
NOAA said.
There is only a 10% chance of a near-normal
season in 2024 and a negligible chance of a
below-normal season.
Forecasters said the Atlantic Ocean basin is
expected to be remarkably active due to several
factors:
Warmer-than-average sea surface
temperatures in the tropical Atlantic Ocean and
Caribbean Sea.
Reduced vertical wind shear.
Weaker tropical Atlantic trade winds.
An enhanced west African monsoon.
These conditions are expected to continue into
the fall, NOAA said.
Of note, the dry Saharan air that prevented
tropical storm development during portions of
the middle of the summer is expected to subside
in August.
Another factor this year is the possibility of
La Nina developing in the coming months.
Hurricanes and tropical storms can 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.
The updated hurricane forecast from
Colorado State University’s (CSU’s) Weather and
Climate Research department also predicted an
extremely active season, expecting 23 named
storms, 12 hurricanes and six major hurricanes.
The Atlantic hurricane season runs through 30
November.
See the Beryl and Gaemi: Impact on
Chemicals topic
page
Ethylene08-Aug-2024
HOUSTON (ICIS)–Chemical companies are
expecting a lacklustre second half of the year,
but, so far, they will unlikely suffer through
a recession, despite the spate of pessimistic
economic data and the worst stock-market
selloff in more than a year.
The financial press has said that much of
the selloff was caused by investors abandoning
the Japanese carry-over trade.
Chemical executives have not warned of a
possible recession during their earnings calls.
It is unclear if recent events will
increase the likelihood of larger and more
frequent rate cuts by the Federal Reserve.
SO FAR, STATISTICS DO NOT INDICATE
RECESSIONThe recent selloff in
the stock market was enough to give anyone a
jolt.
The major US indices had three consecutive
trading days of selloffs, with the last one on
Monday causing declines that exceeded 2%. It
was the worst day in more than a year.
The weakness of the subsequent relief rally is
also concerning, with the declines resuming on
Wednesday.
But the stock market is not the economy, and,
so far, the four key statistics used to measure
its health do not point to a recession.
One of those statistics,
non-farm payrolls, grew by 114,000 in July,
a pace below the expectations of most
economists. While the US had a bad month, it is
still adding jobs, said Kevin Swift, ICIS
senior economist for global chemicals.
Moreover, the payroll statistics indicate that
some of the weakness in the data was caused by
the effects of Hurricane Beryl, Swift said.
Two other key statistics are still expanding,
he said. Those are industrial production and
real personal income less transfer payments.
Only real business sales have shown softness,
Swift said.
PROSPECTS STILL WEAKThe
unlikely risk of a recession provides cold
comfort to the chemical industry, which has
spent months waiting for a recovery after what
many described as the worst destocking cycle
ever.
Almost universally, companies have given up on
the prospects of a second half recovery.
Improvements in profit will have to come
internally from cost-cutting or efficiency
measures. The market will not help.
Consumers have largely spent the excess savings
that they pocketed from government stimulus and
support that followed the pandemic, Swift said.
The lower quintile of consumers is under
pressure.
Chemical companies noted stress among consumers
who are more sensitive to costs, such as those
who buy paints and coatings for do-it-yourself
(DIY) projects.
They are buckling under the weight of elevated
interest rates, which have made housing and
consumer durables less affordable.
Before the markets for such items improve, Dow
said that mortgage rates
need to fall towards 5%.
The prospect of declines will depend on
expectations for the benchmark federal funds
rate, which the Federal Reserve will likely
decide to lower at its next meeting on
September 18.
Even then, it will take time for those rate
cuts to trickle down to chemical markets.
Huntsman said the
lag is typically about two quarters.
Insight article by Al
Greenwood
Thumbnail shows an indicator board for a
stock exchange. Image by BIANCA DE
MARCHI/EPA-EFE/Shutterstock
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