SAO PAULO (ICIS)–Brazil’s manufacturing PMI index for August sharply slowed down from July on the back of output falling for the first time in several months due to subdued sales, and elevated cost pressures, analysts at S&P Global said on Monday. At 50.4 points in August, the manufacturing PMI stood just above the 50.0 point mark which separates expansion from contraction. It also represented a sharp slowdown from July’s 54.0 points. Brazil manufacturing August July June May April March February January December 2023 November October September PMI index 50.4 54.0 52.5 52.1 55.9 53.6 54.1 52.8 48.4 49.4 48.6 49.0 Source: S&P Global While the fall in production was described as slight, it marks a reversal from the growth trend seen earlier in the year. New business growth slowed to a multi-month low, though some firms noted a shift from imported to domestic goods due to high shipping fees, suggesting a complex demand environment where domestic producers may be benefiting from import challenges, but overall demand remains subdued. Export sales growth also softened, with improved demand from Asia and the Middle East offset by lower orders from the US and Mercosur countries. Cost pressures intensified significantly, reaching a multi-year high. Companies reported increased prices for chemicals, fabrics, foodstuffs, packaging, plastics and transportation, often attributing these rises to currency depreciation. Despite these challenges, manufacturers showed increased optimism about the year-ahead outlook. This positive sentiment was attributed to plant expansion plans, product diversification efforts, investment intentions, and forecasts of a potential pick-up in demand. Employment continued to rise, albeit at a slower pace than earlier in the year. The moderation in job creation was linked to shortages of skilled job seekers and cost-cutting measures at some units. Nevertheless, the continued growth in employment allowed firms to reduce their backlogs of work. “The Brazilian manufacturing sector suffered a loss of momentum in August, with surging cost pressures hampering firms’ ability to secure new business. Manufacturers even took the step of scaling back production and softened the pace of hiring in a bid to limit costs,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence. “Firms will be hoping for an improvement in the real exchange rate soon to help relieve some of the pressure on costs and lead to a revitalization of growth in the months ahead.” Front page picture: Facilities operated by Brazilian polymers major Braskem in the state of Sao Paulo Source: Braskem

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 30 August. ICIS Economic Summary: US economy slowing, not falling off a cliff August started with reports of high weekly initial unemployment claims, a weak manufacturing PMI reading and a lackluster payroll report. Equity markets did not react well to this as evidenced by a three-day sell off. But the panic ended, a rebound ensued and we are back to where we were on 31 July as the underlying economic fundamentals of a late-phase business cycle remain. The economy is slowing, not falling off a cliff. IPEX: Global spot index slips on lower prices in northeast Asia, US Gulf The global spot ICIS Petrochemical Index (IPEX) slipped by nearly one-percentage point in the week ending 23 August, on the back of price falls in northeast Asia and the US Gulf. Outages, demand supporting US ethylene prices at two-year highs US ethylene spot prices have begun to decline but remain at two-year highs in both Texas and Louisiana after a series of cracker outages and improvement in derivative demand. Argentina petchems to take time to feel benefits from cut to import tariffs Argentina’s petrochemicals players are in a wait-and-see mode about the effects a cut to import tariffs announced this week could have in the market and whether it will lower prices which, for many materials, remain higher than global prices. RAIL: US rail companies strike deals with unions months ahead of next bargaining round US railroads Norfolk Southern (NS) and BNSF have reached tentative, five-year collective bargaining agreements with several labor unions four months ahead of the opening of the next collective bargaining round, the companies announced on Friday.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the major changes underway in the auto market and how they are set to transform the chemicals business. 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. Paul Hodges is the chairman of consultants New Normal Consulting.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 30 August. Europe OX post-summer restocking intentions unclear as weak demand lingers Restocking operations after the summer were once common practice in the European orthoxylene (OX) market, but this year could be different. BASF to shut down adipic acid production at Ludwigshafen next year BASF is to end production of adipic acid and several downstream units at Ludwigshafen, Germany, as part of structural changes underway at the site, the company said on Thursday. Rising costs, outages fail to rattle sluggish propylene oxide market in Europe Outages at domestic suppliers, a local unit being flagged for a potential sale and rising production costs have failed to rattle a sluggish European propylene oxide (PO) market. Europe August nylon 6,6 contract prices soften in a slow market European nylon 6,6 contract prices for August softened from July levels, posting highly varied monthly deltas. Global spot index slips on lower prices in northeast Asia, US Gulf The global spot ICIS Petrochemical Index (IPEX) slipped by nearly one-percentage point in the week ending 23 August, on the back of price falls in northeast Asia and the US Gulf.

MUMBAI (ICIS)–India’s economic growth slowed down to 6.7% in the April-June 2024 on reduced government capital expenditure during the national elections and an uneven monsoon season, official data showed. The fiscal Q1 growth was the lowest GDP growth in 15 months, according to the Ministry of Statistics and Programme Implementation (MoSPI) on 30 August. The country’s fiscal year ends in March. The number was lower than the 7.8% growth posted in the previous quarter and the 8.2% pace set in April-June 2023. The growth was also lower than the Reserve Bank of India’s (RBI) forecast of 7.2% for the quarter. For current fiscal year ending March 2025, the central bank is projecting a GDP growth of 7.2%, with Q2 at 7.2%, Q3 at 7.3% and Q4 at 7.2%. The slowdown in GDP growth occurred due to reduced government spending during the election period, RBI governor Shaktikanta Das said at a press conference on 31 August. India’s general elections were held from 19 April to 1 June 2024. “Domestic economic activity continues to be resilient on positive trends in agriculture, and an anticipated increase in government expenditure. Manufacturing activity continues to gain ground on the back of improving domestic demand,” he added. An anticipated increase in government expenditure over the next few months would provide the required support to economic growth, Das said. India’s economic growth has been robust, with an average growth rate of 8.3% over the last three years, he added.

SINGAPORE (ICIS)–China’s August official manufacturing purchasing manager index (PMI) dropped to a six-month low of 49.1, while a private survey by Caixin gives an expansion print of 50.4 from 49.8 in July. The official PMI published by the National Bureau of Statistics (NBS) had been in contraction territory for four consecutive months, pointing to persisting weakness in factory activity. The sub production index fell to 49.8 in August from 50.1 in July, while new order index declined to 48.9 in August from 49.3 in the previous month, NBS said. High temperatures, intensive rain and seasonal lull in combine dragged the PMI figures, according to NBS. For Caixin, the private firm said there was a slight uptick in production index and strong rebounding in new order index, which is mainly driven by improving basic demands and all types of promotions.

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 30 August 2024. Asia EDC demand suppressed while deep-sea availability improves By Jonathan Chou 30-Aug-24 12:19 SINGAPORE (ICIS)–Soft downstream conditions are weighing on demand for ethylene dichloride (EDC) in Asia. Margins of some downstream polvinyl chloride (PVC) producers are being depressed by an influx of imports in the key markets of India and southeast Asia. SE Asia regional ethylene tightness sees more arbitrage opportunities By Josh Quah 28-Aug-24 18:07 SINGAPORE (ICIS)–The market thus far is on track to end the third quarter as anticipated in the ICIS outlook for second-half 2024. The two main regions in Asia’s ethylene markets – northeast Asia and southeast Asia – have diverged in terms of demand-supply fundamentals. INSIGHT: China PP exports to seek other outlets amid intense competition in southeast Asia By Lucy Shuai 27-Aug-24 17:34 SINGAPORE (ICIS)–As China’s polypropylene (PP) capacity increases and a weak economy drags down demand, the imbalance between supply and demand has intensified and China’s PP exports have surged. NE Asia ACN at the lowest point in a year, market players await seasonal demand By Corey Chew 27-Aug-24 11:11 SINGAPORE (ICIS)–The acrylonitrile (ACN) market saw prices fall significantly last week in the northeast Asia market, while the India market saw a smaller decrease. India’s BPA price falls; sellers may face more pressure By Li Peng Seng 26-Aug-24 13:59 SINGAPORE (ICIS)–The average bisphenol A (BPA) spot price in India has fallen to a 2.5-month low recently on easing freight rates, and buyers may now hold back spot purchases if they could as they expect freight rates to undergo further downward correction. INSIGHT: China PP exports to seek other outlets amid intense competition in southeast Asia By Lucy Shuai 27-Aug-24 17:34 SINGAPORE (ICIS)–As China’s polypropylene (PP) capacity increases and a weak economy drags down demand, the imbalance between supply and demand has intensified and China’s PP exports have surged.

HOUSTON (ICIS)–US railroads Norfolk Southern (NS) and BNSF have reached tentative, five-year collective bargaining agreements with several labor unions four months ahead of the opening of the next collective bargaining round, the companies announced on Friday. The agreements cover about 30% of the unionized NS workforce and about 15% of BNSF union workers. The agreements are still subject to ratification by union membership. BNSF and NS reached agreements with the International Brotherhood of Boilermakers and Blacksmiths (IBBB) and the National Conference of Firemen and Oilers (NCFO). NS also separately reached tentative agreements with the American Train Dispatchers Association (ATDA), the Brotherhood of Maintenance of Way Employes Division (BMWED) and the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division Yardmasters (SMART-TD Yardmasters). The tentative agreements provide a 3.5% average wage hike annually over the next five years and offer railroaders more vacation earlier in their career and make meaningful enhancements to an already robust suite of health care benefits. Over the past two weeks, NS has reached tentative agreements with nine of its 13 unions. BNSF reached tentative agreements with four other unions last week – the ATDA, the Brotherhood of Railway Carmen Division/TCU (BRC), International Association of Sheet Metal, Air, Rail and Transportation Workers – Mechanical Department (SMART-MD) and the Transportation Communications Union/IAM (TCU). Railroad CSX last week announced agreements with TCU, BRC, SMART-TD, BMWED, the International Association of Machinists & Aerospace Workers (IAM), the American Railway and Airway Supervisors Association (ARASA) and the B&O Joint Council (BOJC). CSX has now reached a total of 12 separate tentative agreements, covering more than 50% of its union employees. The progress on labor negotiations should offer some relief to chemicals markets in the US considering the recent four-day shutdown in Canada because of labor strife. Freight rail service at railroads Canadian National (CN) and Canadian Pacific Kansas City (CPKC) resumed on 26 August following an order by a labor tribunal that ended a complete shutdown that started on 22 August. Canada-based chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail. About 80% of Canada’s chemical production goes into export, with about 80% of those exports going to the US. Railroads are vital to the chemicals industry as chemical railcar loadings represent about 20% of chemical transportation by tonnage in the US, with trucks, barges and pipelines carrying the rest. With additional reporting by Stefan Baumgarten Thumbnail shows railway tank cars. Image by Sergei Ilnitsky/EPA-EFE/Shutterstock

LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Colourless (C), blue flake ranges narrow in eastern Europe Contradictory C bale prices heard in parts of the east as well Wider R-PET market still impacted by summer holiday slowdown