HOUSTON (ICIS)–The conditions that helped make Beryl become a hurricane before hitting Texas chemical plants will persist through the rest of the season, with meteorologists forecasting 11 more forming in the Atlantic basin. Conditions are already conducive for hurricanes even though the peak of the season does not happen until the late summer. Beryl still disrupted chemical operations even though it was a relatively weak hurricane when it made landfall in Texas. The next hurricane could disrupt global chemical markets if it damages terminals and ports on the Gulf Coast. BERYL’S KNOCKS OUT POWEREven though Beryl was a Category 1 hurricane – the weakest class – it still caused more than 2 million outages in Texas. Many of the disruptions that Beryl caused to the chemical industry were because of power outages. A roughly equal number of disruptions was caused by companies shutting down operations as a precaution. Other disruptions were attributed to bad weather. PORT DISRUPTIONSBeryl’s other major effect was on ports. The ports of Corpus Christi, Freeport, Texas City and Houston had shut down. Beryl caused Freeport LNG Development to shut down its operations. CONDITIONS THAT MADE BERYL SO POWERFUL WILL PERSISTBeryl illustrates the destructive potential of a weak Category 1 hurricane that travels through parts of Texas that host critical powerlines and ports. The meteorology firm AccuWeather estimates that total damage and economic loss caused by Beryl was $28-32 billion. Beryl was remarkable because, prior to making landfall in Texas, it had become a Category 5 hurricane, the most powerful class under the Saffir-Simpson scale. It was the first time that such a powerful hurricane had formed so early in the year, something that US meteorologist attributed to exceptionally warm ocean temperatures. The surface temperatures at sea are already close to what is typical during the mid-September, the peak hurricane season, according to the National Oceanic and Atmospheric Administration (NOAA). After Beryl made landfall in Mexico’s Yucatan peninsula, it weakened into a tropical storm before passing over more warm water in the Gulf of Mexico. There it strengthened rapidly and became a hurricane once more before hitting Texas. The warm waters that contributed to Beryl’s strength will persist and should soon be joined by La Nina, a weather phenomenon that also makes hurricanes more likely. METEOROLOGISTS RAISE HURRICANE FORECASTEarlier this week, the hurricane forecast for this year was raised by meteorologists at Colorado State University’s Tropical Weather & Climate Research. The following compares the center’s latest hurricane forecast to its update in June and to the average for the years 1991-2020. July June Average Named Storms 25 23 14.4 Named Storm Days 120 115 69.4 Hurricanes 12 11 7.2 Hurricane Days 50 45 27.0 Major Hurricanes 6 5 3.2 Major Hurricane Days 16 13 7.4 Source: Colorado State University Like NOAA, Colorado State University (CSU) noted that extremely warm sea surface temperatures and a possible La Nina are making it more likely for hurricanes to form and strengthen. THE NEXT HURRICANE COULD CAUSE MORE DAMAGEThe next hurricane can prove to be a bigger logistical headache for railroad companies. Beryl had caused only brief disruptions at BNSF and Union Pacific (UP). Beryl’s path did not threaten US oil and gas production in the Gulf of Mexico. The next storm could threaten those wells, causing several energy producers to shut in production. Damage to Gulf Coast oil, ethane, LPG and LNG terminals could disrupt energy markets if the outages last long enough. Texas and the neighboring state of Louisiana are home to most of the nation’s LNG export capacity. Prolonged outages at LNG terminals could lead to an oversupply of natural gas in the US because producers could lose an outlet to ship out excess capacity. Prices for natural gas could consequently fall. Prices for ethane tend to follow those for natural gas, so they would also fall in the event of a supply glut. Texas ships ethane and liquefied petroleum gas (LPG) to crackers all over the world. If the next hurricane damages those terminals and leads to a prolonged shutdown, it could have global repercussions by interrupting shipments of feedstock to crackers. In the US, it could cause prices for those products to plummet, especially for propane. US midstream companies are already trying to ship out as much LPG as possible because production has been so prolific. Over the years, US producers have exported increasing amounts of polyethylene (PE) and polyvinyl chloride (PVC). If the next hurricane damages those plants, then it would have a direct effect on global petrochemical markets. Insight by Al Greenwood Thumbnail shows a distribution transformer of a power line knocked down by Beryl. Image by Reginald Mathalone/NurPhoto/Shutterstock

LONDON (ICIS)–Global crude oil demand slumped to 710,000 bbl/day in Q2 2024 as China’s post-pandemic economic rebound ran its course, the International Energy Agency (IEA) said on Thursday. Representing the slowest quarterly increase since the closing months of 2022, the period saw Chinese demand decline in April and May, the agency said in its July monthly oil market report. Global oil demand gains are expected to hover below one million barrels/day in 2024 and 2025 as tepid consumption growth, vehicle electrification and energy efficiency measures weigh on purchasing. Total supply increased by 150,000 barrels/day to 102.9 million barrels in June as easing maintenance levels and increasing biofuels output offset a fall in Saudi production, the IEA added. Saudi Arabia output fell to 8.85 million barrels in June from 9.03 million barrels the previous month, according to IEA data, leaving the Kingdom’s total excess capacity at 3.26 million barrels/day. Despite weak demand growth, pricing firmed slightly in June, with Brent crude futures priced around $86/barrel at the end of the month, and remaining around the $85/barrel mark in trading this week. This increase was driven in part by OPEC+ coalition signals that the schedule for unwinding production cuts would depend on market conditions, easing fears of a sudden surge in supply. Petrochemical sector demand for oil was sluggish during the quarter, the IEA added, but other signs point to potential early improvements for manufacturing in Europe. “Demand for industrial fuels and petrochemical feedstocks was particularly weak. By contrast, Q2 delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signalling a budding recovery in Europe’s ailing manufacturing sector,” the IEA said. Despite the industrial input uptick, overall demand continues to trend slower, the agency added. “For next year, the call on OPEC+ crude tumbles… as demand growth continues to slow and non-OPEC+ output continues to expand. After the hot summer, cooler trends are set to prevail.” Thumbnail photo: An oil rig off the coast of China’s Hebei province. Source: Xinhua/Shutterstock

SAO PAULO (ICIS)–Brazil’s annual rate of inflation rose over the 4% mark in June as the Brazilian real depreciated and prices for food and health services rose strongly, the country’s statistics office IBGE said on Wednesday. Brazil’s annual National Consumer Price Index (IPCA in its Portuguese acronym) rose in June to 4.23%, up from May’s 3.93%. In May, inflation had already risen partly after severe flooding in Rio Grande do Sul caused generalized food price rises in the southernmost state. Financial analysts had already warned in May than higher-than-expected price rises could prompt the central bank to halt interest rates cuts for the rest of 2024, hoping to contain the latest upticks in inflation. On Wednesday, June further uptick prompted some of them to suggest there were growing chances there would not be any cuts to interest rates until 2026. THREE MONTHS ON THE MARCHAs well as the increase in the annual rate of inflation to 4.23%, the IPCA also rose month on month, with monthly inflation at 0.21%, down from May’s 0.46%. Prices for food consumed at home rose by 0.47% in June, compared with May, and prices for health service rose by 0.54%. Transportation prices fell 0.19% in June, month on month, airfares posting the sharpest drop, down 9.88%. Fuel prices had mixed changes, with gasoline and ethanol prices rising, while diesel and vehicle gas prices fell. Gray columns: forecast Source: IBGE via Trading Economics At the beginning of 2024, there were expectations that inflation would seasonally rise in the second half of the year, but the increases have materialized sooner and stronger than expected. Petrochemicals-intensive manufacturing companies insist high interest rates continue to be a drag in their sales, as consumers shy away from big ticket purchases of durable goods, posting them until borrowing costs come down. RATES AT 10.5% UNTIL 2026?On Wednesday, financial analysts, most of whom were assuming the central bank would resume its monetary policy easing in early 2025 once the latest upticks in inflation had been contained, have now turned more pessimist. UK-headquartered Capital Economics said it was “hard to see any scope” for cuts to the Selic, the main benchmark, in 2024 but added there was even a “growing risk” there will not be cuts in 2025 either. In June, the central bank’s monetary policy committee (Copom) decided to keep the Selic unchanged at 10.5% after several cuts in a few months since August 2023, when it peaked at 13.75%. SELIC Source: Banco Central do Brazil via Trading Economics In June, investors’ weariness about President Luiz Inacio Lula da Silva intentions to increase public spending, potentially widening the fiscal deficit, spooked currency traders and the real (R) depreciating over the month. It reached a low on 2 July at $1/R5.70, although it has recovered since to around $1/R5.41 on Wednesday afternoon. The current fiscal deficit – and the prospect of it widening – was not helped by public spats, first, between members of Lula’s coalition cabinet nor by the President’s remarks criticizing the central bank and its president, quite outside the norm not to interfere with the institution’s independence. In the end, Lula’s comments and his ministers’ public disagreements on fiscal targets may have caused the cabinet’s main wish – lowering rates to increase consumption and jobs in manufacturing – caused the exact opposite effect. “The recent weakness in the real and mounting fiscal concerns means that there is no chance that Copom will restart its easing cycle at its meeting later this month. Rates are likely to be left unchanged throughout this year and there is a growing risk of no cuts next year either,” said analysts at Capital Economics. “Of some comfort to Copom will be that the strength in core services inflation in May unwound … And more to the point, higher headline inflation will compound concerns at the central bank, particularly given the worsening fiscal position and recent fall in the real.” REAL VERSUS DOLLAR Source: Trading Economics  Earlier in the week, before June inflation figures came out, economists surveyed by the central bank every week had already turned pessimistic as well about inflation falls slowing down and cuts being cut less than previously expected. However, they do still expect cuts in 2025 – on average, they expect the Selic to close 2025 at 9.50%, although that was an increase from their expectations a month ago. They now also expect inflation to end up higher both years – at 4.02% in 2024 and 3.88% in 2025. Expectations for GDP growth remain practically unchanged at 2.10% for 2024 and 1.97% for 2025. Expectations for the dollar/real exchange rate also remain practically unchanged, with the economists surveyed by the central bank expecting the real to close 2024 and 2025 at $1/R5.20. BRAZIL GDP Quarter on quarter Source: IBGE via Trading Economic  Focus article by Jonathan Lopez

LONDON (ICIS)–Total damage and economic loss in the US from Storm Beryl amounted to $28-32 billion, according to meteorology firm AccuWeather. Beryl hit the Texas coast as a Category 1 hurricane on Monday, with sustained winds around 80 mph (130 km/h), intense rainfall and dangerous storm surges. AccuWeather said its estimate included damage to homes, businesses, infrastructure, facilities, roadways and vehicles as well as power outages which results in food spoilage and interruption to medical care. It reflects damage that has already occurred and expected damage yet to happen as Beryl, now a post-tropical cyclone, continues its path through the Midwest toward northern New England. “The estimate also accounts for the costs of evacuations, relocations, emergency management, and the government expenses for clean-up operations,” AccuWeather said in a statement dated 9 July. “It also includes the long-term effect on business logistics, transportation, tourism as well as the tail health effects and the medical and other expenses of yet unreported deaths and injuries.” Last year’s Hurricane Idalia, which made landfall into the Big Bend of Florida, caused $18-20 billion in total damage and economic loss; damage from Hurricane Ian in 2022 was $180-210 billion; and Hurricane Harvey, which hit a similar area of Texas in 2017, totalled $230 billion, AccuWeather added. Click here to view the ICIS topic page on Storm Beryl news Thumbnail photo: Stranded vehicles in Houston, Texas, on 8 July. Source: CARLOS RAMIREZ/EPA-EFE/Shutterstock

SINGAPORE (ICIS)–South Korea and Thailand are currently holding their first round of negotiations for a bilateral economic partnership agreement (EPA). The three-day talks being held in Bangkok will end on 11 July, South Korea’s Minister of Trade, Industry and Energy (MOTIE) said on 9 July. Delegations from the two countries “are to engage in negotiations on goods, services, investment, digital, government procurement, and intellectual property”, it said. A bilateral EPA will serve as an institutional foundation for upgrading the Korea-Thailand economic cooperation, according to Roh Keon-ki, South Korea’s deputy minister for free trade agreement negotiations. Thailand is an emerging market and the second-biggest economy in southeast Asia after Indonesia, while South Korea is highly industrialized and ranks as the 14th largest economy in the world. “While the two countries have already established trade agreements through the Korea-ASEAN Free Trade Agreement (FTA) and the Regional Comprehensive Economic Partnership (RCEP), the level of their trade and economic cooperation has room for improvement,” MOTIE noted. The 10 ASEAN nations – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam –  are signatories to RCEP, which also includes China, Japan, South Korea, Australia and New Zealand. RCEP is currently the world’s largest FTA, covering about a third of world GDP, population and total trade.

SINGAPORE (ICIS)–China’s recent decision to include hydrogen in its draft national energy law signals a transformative shift in the country’s energy landscape. By positioning hydrogen alongside traditional energy sources, China is unlocking vast investment opportunities and paving the way for robust market growth in the burgeoning hydrogen sector. In this podcast, ICIS analysts Patricia Tao and Yu Yunfeng delve into how this strategic focus on hydrogen will reshape China’s energy sector and foster sustainable industrial growth.

HOUSTON (ICIS)–The ports of Houston and Freeport in Texas remain mostly closed on Tuesday while millions remain without power following Hurricane Beryl’s landfall at the start of the week. Port Houston said all of its terminals will remain closed on Tuesday. Port Freeport said the Freeport Harbor Channel is closed. Gates 4 and 14 are closed, while Gate 8 is opened. Freeport LNG Development had shut down its LNG operations at Freeport on July 7. It can export 15 million tonnes/year. Loadings for LNG tankers slowed considerably on 8 July due to rough seas and suspension of pilot services at Calcasieu Pass and Sabine Pass. Both are in Louisiana. The port of Corpus Christi is scheduled to reopen on Tuesday. It is the third largest oil-exporting port in the world, and it is home to Corpus Christi Liquefaction, a terminal that can export 15 million tonnes/year of liquefied natural gas (LNG). MILLIONS REMAIN WITHOUT POWERBeryl made landfall on Sunday in Matagorda, Texas, as a Category 1 hurricane, with maximum sustained windspeeds of 80 miles/hour (130 km/hour). So far, much of its effect on chemical operations has been by interrupting power. On late Tuesday morning, Texas reported more than 2.82 million outages, according to the website poweroutage.us, which keeps track of power outages in the US. CenterPoint Energy, the main electrical transmission and distribution company in Houston, said more than 1.76 million customers remain affected by outages. Entergy, the main one for eastern Texas, said on Monday evening that 247,000 customers remained without power. Texas-New Mexico Power, which handles the areas around Freeport and Galveston said it 73,220 customers are affected by outages. BERYL CAUSED SOME CHEM SHUTDOWNSElectrical outages and precautions had caused some chemical companies and refiners to shut down units. Enterprise Products said bad weather caused a trip to a propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. Marathon Petroleum reported power loss and multiple unit shutdowns at its Galveston Bay refinery. Dow shut down its operations in Seadrift, Texas, as a precaution. In Baytown, ExxonMobil said it is continuing to assess the site for possible damage as it resumes normal operations. The company anticipated minimal impact to production. Formosa Plastics shut down its Olefins 1 unit at Port Comfort, Texas. Interoceanic Corporation (IOC) said its affiliate, PCI Nitrogen, has halted ammonium sulphate (AS) and sulphuric acid production at its facility in Pasadena, Texas. Phillips 66 reported an upset at its refinery in Sweeney, Texas. The refiner did not say if it shut down any unit. Personnel had returned it to normal operations. CITGO reduced operating rates at its refinery in Corpus Christi, Texas. BASF Total Petrochemical’s cracker in Port Arthur, Texas, produced off-spec material because of a suspected lightning strike. LIMITED RAIL DISRUPTIONSOn Monday, BNSF said its Pearland intermodal facility in Houston remained closed.  WEATHER FORECASTIn the late morning, Beryl had degraded into a post tropical cyclone with maximum sustained winds of 30 miles/hour, according to the National Hurricane Center. It was in the northeastern part of the US state of Arkansas, and meteorologists expected it would continue traveling in that direction towards Canada. Thumbnail shows flooding caused by Beryl. Image by Reginald Mathalone/NurPhoto/Shutterstock

BARCELONA (ICIS)–Climate change and warming oceans mean that the US Gulf Coast chemical sector will have to adapt to more frequent weather events such as Hurricane Beryl. Gulf Coast area where Hurricane Beryl made landfall houses 13m tonnes, 29% of US ethylene production capacity Beryl is earliest Category five hurricane on record; busy season forecast Warming oceans mean there may be double the number of severe hurricanes Energy, chemical industries must adapt to cope with more weather events Move towards net zero carbon gives opportunity to relocate plants, infrastructure In this Think Tank podcast, Will Beacham interviews ICIS Business Solutions Group senior executive Nigel Davis and Paul Hodges, chairman of New Normal Consulting. 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. Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.

LONDON (ICIS)–How long does the world’s current grey hydrogen production fleet have left on average? And why do autothermal reformers with carbon capture and storage appear to be the replacement technology of choice for low-carbon hydrogen producers? In this episode of the ICIS Hydrogen Insights podcast, hydrogen editor Jake Stones discusses these matters and more with Johnson Matthey’s senior vice president of hydrogen and sustainable technologies, Dr Eugene McKenna. Dr McKenna also gives his take on the prospect of retrofitting steam methane reformers with CCS, and the risks facing hydrogen market participants today when developing their projects.