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Ammonia20-Aug-2024
HOUSTON (ICIS)–Fertilizer Canada said
disruptions to rail services across the country
will cost the fertilizer industry an estimated
C$55-63 ($40.3-46.2) million per day in lost
sales revenue.
Facing a potential strike, the industry group
is urgently calling on the federal government
to take immediate action to prevent a work
stoppage on both railways.
It wants to see binding arbitration that
prohibits Teamsters Canada Rail Conference
(TCRC) from undertaking strike action and CN
Railway and Canadian Pacific Kansas City (CPKC)
from lockout action.
Both railways have served lockout notices to
TCRC beginning 22 August and TCRC has served a
strike notice to CPKC also beginning 22 August.
“The time for action is now. We can no longer
patiently wait for a resolution. The federal
government must protect Canada’s economy and
food security by ordering binding arbitration,”
said Karen Proud, Fertilizer Canada president
and CEO.
The group noted that the railways move an
average of 69,000 tonnes of fertilizer product
per day, which is equivalent to four to five
trains.
The fertilizer industry is among the first to
experience slowdowns. As on 12 August, the
movement of some ammonia products were halted
when they were embargoed.
Since that action the railways have issued
further embargoes, including US railways
halting shipments to Canada.
Currently 75% of all fertilizer produced and
used in Canada is moved by rail, with minimal
transportation alternatives, with 90% of those
volumes which are destined for the US market
delivered by rail.
“In the last seven years, Canadian supply chain
labour disruptions have cost the fertilizer
industry nearly a billion dollars,” Proud said.
“These stoppages are doing immense damage to
our reputation as a reliable trading partner.”
“Our customers, who rely on Canadian fertilizer
products, are being forced to turn to our
competitors in Russia, Belarus and China. We
can’t afford for our railways to shut down, and
we can’t afford a passive approach to our
supply chains any longer. We need long-term
solutions.”
Fertilizer Canada represents producers,
manufacturers, wholesale and retail
distributors of nitrogen, phosphate, potash and
sulphur fertilizers.
$1.00=C1.36
Crude Oil20-Aug-2024
LONDON (ICIS)–Crude benchmarks are likely to
be subject to bearish pressure in week 34 as
Chinese oil demand concerns take centre stage.
However, European and US economic data released
later this week may provide clues to future
monetary policy decisions and provide hope for
upcoming interest rate cuts.
ICIS experts look at factors that are forecast
to drive oil prices in Week 34.
Speciality Chemicals20-Aug-2024
LONDON (ICIS)–Construction output in the
eurozone rebounded in June after declining for
three months, official data showed on Tuesday.
Seasonally adjusted production in construction
rose by 1.7% from May and was also higher, by
1.4%, in the EU.
Eurozone output had been on a downward trend
since March, with the EU following a similar
track, though with a marginal, near flat 0.1%
rise in April.
Building construction, civil engineering and
specialized construction activities all
increased in June from the previous month in
both the eurozone and EU, according to
statistics agency Eurostat.
On a year-on-year basis, June construction
output in the eurozone was 1.0% higher in the
eurozone and 0.1% lower in the EU.
Numerous petrochemicals and specialty chemicals
are key ingredients in products used
for modern
construction, including adhesives,
ad-mixtures, sealants, coatings, paints,
flooring, insulation and water proofing.
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Petrochemicals20-Aug-2024
MUMBAI (ICIS)–India’s state-owned Bharat
Petroleum Corp Ltd (BPCL) plans to invest rupee
(Rs) 1.7 trillion ($20.3 billion) over the next
five years to grow its refining and fuel
marketing business, as well as expand its
petrochemicals and green energy businesses.
44% of total earmarked for refinery,
petrochemical capacity growth
Bina refinery/petrochemical project due for
commissioning in FY2028-29
New refinery project being mulled
As part of the investment initiative named
‘Project Aspire’, some Rs750 billion will go to
increasing capacity at BPCL’s refineries and
expand its petrochemical portfolio, company
chairman G Krishnakumar said in the company’s
annual report for the fiscal year ending March
2024.
“The demand for major petrochemical products is
expected to rise by 7-8% annually. This
presents a strategic opportunity to expand
refining capacity alongside the development of
integrated petrochemical complexes,”
Krishnakumar said.
BPCL’s planned petrochemical expansions include
the new petrochemical projects at its Bina
refinery in the central Madhya Pradesh state,
and the Kochi refinery in the southern Kerala
state.
The Bina
project is a brownfield expansion that will
raise the refinery’s capacity by 41% to 11m
tonnes/year, to cater to the requirements of
upcoming petrochemical plants, which include a
1.2m tonnes/year ethylene cracker and
downstream units.
The site is expected to produce 1.15m
tonnes/year of polyethylene (PE), including
high density PE (HDPE) and linear low density
PE (LLDPE); 550,000 tonnes/year of
polypropylene (PP); and 50,000 tonnes/year of
butene-1
The complex will also produce chemicals such as
benzene, toluene, xylene, the annual report
said.
“Technology licensors for all critical
packages, and project management consultants
for refinery expansion and downstream units
have been onboarded and work at the site
commenced in the first week of July 2024,”
Krishnakumar said.
BPCL has chosen US-based Lummus to
provide technologies for the new ethylene
plant and downstream units at the complex.
The refinery will be ready for commissioning by
May 2028, while petrochemical operations will
begin in the financial year ending March 2029.
At Kochi, BPCL’s 400,000 tonne/year PP project
is progressing as per schedule and is on track
for commissioning in October 2027.
It plans to raise its Kochi refinery capacity
by 16% over the next five years to 18m
tonnes/year, based on data from the company’s
latest annual report.
https://subscriber.icis.com/news/petchem/news-article-00110958286
The company also plans to set up additional
petrochemical capacities over the next few
years.
“To meet the anticipated demand beyond our
planned expansions in Bina and Kochi, we are
actively evaluating options for setting up
additional integrated refining and
petrochemical capacities within the next 5-7
years,” Krishnakumar said
BPCL has begun evaluating options to set up a
new refinery with a planned capacity of around
9 million to 12 million tonnes/year, a company
official said, adding, “we are exploring a new
refinery either on the east coast or at other
locations”.
In Mumbai, the company also plans to expand its
refinery capacity by a third to 16m tonnes/year
in the next five years, according to its annual
report.
In the eastern Odisha state, BPCL expects to
begin operations at its 200 kilolitre/day
ethanol plant at Bargarh by October 2024. Once
operational, the integrated refinery is
expected to produce both first generation (1G)
as well as second generation (2G) ethanol using
rice grain and paddy straw as feedstock.
Focus article by Priya Jestin
($1 = Rs83.85)
Thumbnail image: The Bharat Petroleum
import terminal at Haldia in West Bengal on 13
March 2021. (Debajyoti
Chakraborty/NurPhoto/Shutterstock)
Ammonia19-Aug-2024
HOUSTON (ICIS)–The US corn crop is now at 97%
silking with soybean blooming having reached
95%, according to the latest US Department of
Agriculture (USDA) weekly crop progress report.
For corn, the current rate of the crop silking
is just slightly trailing both the 98% achieved
last year and the five-year average of 98%.
The amount of crop now at the dough stage is
74%, which equals the 74% rate from 2023 and is
above the five-year average of 71%.
Corn which has reached the dented phase is at
30%, which matches the 30% level from last year
and is ahead of the five-year average of 26%.
In the first update on corn reaching maturity,
the report showed there is 5% of the crop at
this stage, which is above the 3% from 2023 as
well as the five-year average of 3%.
For corn conditions, there is now 4% rated very
poor with 7% still listed as poor and 22% as
fair. There remains 51% as good and 16% as
excellent.
The soybean crop is now 95% blooming, which is
equal to the 95% rate achieved in 2023 as well
as the five-year average of 95%.
The amount of acreage setting pods has risen to
81%; this trails the 84% mark from last year,
but is above the five-year average of 80%.
For soybean conditions, there continues to be
2% listed as very poor, 6% as poor and 24% as
fair. There is now 54% seen as good with 14% as
excellent.
In harvesting updates, winter wheat is now at
96% completed which is slightly ahead of the
95% level from 2023 as well as the five-year
average of 95%.
Spring wheat harvest has reached 31% completed,
which is behind the 35% mark from last year and
the five-year average of 36%.
Speciality Chemicals19-Aug-2024
HOUSTON (ICIS)–As the water level in the
freshwater lake that feeds the Panama Canal’s
locks continues to rise, the Panama Canal
Authority (PCA) has increased the maximum
allowable draft to 50ft (15.25m), effective
immediately, and will add an additional transit
slot beginning 1 September.
The additional slot brings the total number of
passages allowed per day to 36, almost at par
with the 36-38 transits/day seen before a
drought forced the PCA to limit transit for the
first time in its history.
There are 10 slots for Neopanamax vessels, 20
for supers and six for regular vessels.
The region has been through an intense drought
that caused the PCA in 2023 to lower allowable
drafts and to limit the number of vessels
permitted to transit each day, a first since
the canal formally opened in 1914.
Restrictions have gradually eased over the past
few months and are approaching the average
daily transits of 36-38/day seen prior to
impacts from the drought.
The better conditions at the canal are likely
to improve transit times for vessels traveling
between the US Gulf and Asia, as well as
between Europe and countries on the west coast
of Latin America.
This should benefit chemical markets that move
product between regions, as shown in the
following chart.
WAIT TIMES FOR NON-BOOKED
VESSELS
Wait times for non-booked southbound vessels
ready for transit have been relatively steady
at around two days, according to the PCA
vessel tracker.
As of 19 August, the tracker showed wait times
of 3.0 days for northbound traffic and 0.5 days
for southbound traffic.
Visit the ICIS Logistics – impact on
chemicals and energy topic
page
Thumbnail image shows a container ship
passing through the Panama Canal. Courtesy the
Panama Canal Authority
Ethylene19-Aug-2024
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 16 August.
US may consider
VCM, EDC expansions amid global PVC oversupply
– ICIS
US-based polyvinyl chloride (PVC) producers may
consider upstream and cost-advantaged vinyl
chloride monomer (VCM) and ethylene dichloride
(EDC) expansions rather than going all the way
to the polymer as global competitive pressures
in PVC should remain intense, an ICIS analyst
said.
Canada railroads
may lock out workers starting 22
August
Freight railroads Canadian Pacific Kansas City
(CPKC) and Canadian National (CN) may start to
lock out workers on 22 August.
Weak demographics
to prolong effects of chem
overcapacity
Weak growth in the world’s population will slow
economic growth, tighten labor markets and
likely prolong the global glut in polyolefins,
according to ICIS analysts.
INSIGHT: US chem
feedstock costs hit pandemic lows as midstream
buildout continues
Prices for ethane, the predominant US feedstock
used to make ethylene, have fallen this month
to levels not seen since the pandemic, and they
will likely remain depressed until colder
weather arrives later in the year.
Canada rail
disruption could shut economy down, harm trade
relations with US
US and Canadian chemical distributors and other
trade groups are warning about potentially
“catastrophic” impacts of a rail disruption
that could start in Canada next week.
Biodiesel19-Aug-2024
LONDON (ICIS)–Fresh upcoming legislation in
the EU and UK from 2025 are set to galvanise
the biofuels sector by setting minimum targets
for sustainable fuels usage in the aviation
sector, but hesitance remains among the larger
players.
New mandates set to galvanise sector growth
Larger incumbents still cautious about big
bets
Pace of demand growth after SAF mandates
remains to be seen
The EU sustainable aviation fuels (SAF) mandate
will set a minimum floor for fuel at EU
airports to contain at least 2% from 2025 and
gradually tick up each year, to hit 6% by 2030.
These targets ratchet up dramatically from that
point, with the 2030-35 period likely to be a
transformational period for the aviation
sector, as the SAF mandate to increase
from 6% to 20% in just five years.
By 2050, SAF is expected to become the dominant
form of aviation fuel, with the EU mandating
that airport fuels be 70% SAF by the midpoint
of the century.
Over the next 26 years, aviation firms and
fuels producers will need to solve many
colossal questions, including the precise
composition of the fuels and how those raw
materials can be sourced and scaled.
Although the European Commission’s ambitions
for SAF growth over the next half-decade are a
far cry from the step changes required between
2030 and 2050, the introduction of those first
minimum targets will be transformational.
“I think it’s widely seen as a game-changer in
the sector,” said ICIS markets editor for
biofuels Nazif Nazmul.
SAF currently makes up 0.1% of the global
aviation fuel mix and approximately 0.5% in the
EU, according to Nazmul, so a 2% target for
next year means that airport fuel providers
will be under pressure to ramp up capacity
quickly.
SLOWING AMBITIONS
Despite this, the last few months have seen a
spate of delays and cancellations from some of
the largest entrants to the sector, in Europe
and elsewhere.
BP announced in June that it is dramatically
scaling back its bet on SAF, in the wake of
taking full ownership of Brazil-based sugarcane
and ethanol major Bunge Bioenergia.
The company has paused planning of two projects
and continues to assess three others, which it
attributed to a desire to simplify its new
fuels portfolio.
Shell also announced a pause to work on its
flagship Rotterdam, Netherlands biofuels plant
as part of a bid to control costs, but also “to
assess the most commercial way forward for the
project,” according to Shell downstream
renewables and energy solutions director
Huibert Vigeveno.
The pause will allow Shell to optimize its
project development order and reduce the number
of engineers on the ground at the site, but
projected savings are counterbalanced by a
heavy price. Shell estimates that the
write-down from the move will cost the company
$600 million to $1 billion.
STILL EARLY STAGE
Shell has not commented on the capacity for the
2025 EU mandate to improve market conditions,
but the impact of the new legislation could
take time to trickle through the market.
Spain’s Cepsa, on the other hand, is proceeding
with its €1.2bn, 500,000 tonnes/year biofuels
project, with start-up scheduled for 2026.
“There is a huge chunk of the aviation market
that biofuels was not a part of previously,
when biofuels were previously relegated to road
transport,” Nazmul said.
“But now it has opened up to aviation and I
think this is something that definitely got the
oil majors interested in the first place. But I
think the scale is something that they’re
beginning to question. Is it something that
they’re able to pull off right now or should
they wait for the market to get a little bit
more mature?”, he added.
A factor in many green chemicals and green
fuels markets is the imminent extent of the
scale-up dictated by policymakers at a point
where many technologies thought to be necessary
for decarbonisation are at the pre-commercial
or pilot stage.
As with chemical recycling, which has seen
players try to step up quickly from pilot to
small scale to commercial scale plants,
biofuels players need to move fast to meet
targets.
But the economics of the sector remain
challenging for now, and future prospects
opaque, meaning that slower-moving fuel sector
incumbents may hang back and let more
specialized firms take the first larger steps.
“The pace of market growth following the
rollout of the mandates remains to be seen,
which is why some larger players are opting to
hold back for the time being,” Nazmul said.
FEEDSTOCK, TECHNOLOGY
QUESTIONS
Like the rest of the bio-based materials
sectors, the question of what feedstocks and
technologies will be viable as the market grows
remains unclear, with players betting on
different routes.
“That’s the question no one knows for sure,”
Nazmul said. Currently there are seven
different routes to produce SAF, and it’s kind
of a gamble.”
“Will there be enough feedstock? Will there be
enough capacity? Will we be importing for
example SAF from the US? Doesn’t that defeat
the entire purpose of slashing emissions when
you’re shipping these biofuels long
distances?”, he added.
The wider world is observing the steps taken in
Europe and the US to develop a viable
commercial market for SAF, but few moves have
been made outside those regions so far.
The same may be the case for large energy
sector incumbents, who have the financial
flexibility to wait for the market to mature a
little before going all in. 2025 may prove to
be the starting gun for the sector to develop
in earnest, but the real rewards may be further
down the line.
“Asian countries are really interested in SAF,
we’re seeing some investments in Japan, but
countries like India and China are yet to
really commit. It’s a matter of time and I’m
sure those companies and those countries are
assessing the best possible options out there,”
Nazmul added.
SECTOR BACKGROUND
Biofuels are liquid fuels derived from
biomass, such as biodegradable agricultural,
forestry or fishery products, municipal waste,
or biodegradable industrial waste.
Biofuels can be categorized into four
generations:
First-generation: Produced
from food crops like corn and sugarcane using
conventional technology. These biofuels have
moderate costs, as they depend heavily on
crop prices.
Second-generation: Made from
non-food biomass like agricultural residues,
wood, and waste. These are more expensive due
to the advanced technology required.
Third-generation: Derived
from algae and other fast-growing biomass,
but have high costs that are expected to
decrease with technological advances.
Fourth-generation: Involve
biofuels that capture and store carbon during
production, often using genetically modified
organisms. These also have high costs but may
become more affordable as technology
improves.
Biofuels are increasingly popular across many
industries but especially in the transportation
sector. This is due to concerns over the impact
and supply of fossil fuels, and the fact that
many of these fuels are compatible with
existing systems.
Supply and demand have been bolstered by
legislative mandates and corporate climate
commitments aimed at promoting sustainability
and the environmental benefits of biofuels.
This has led to a significant increase in
demand in recent years.
While first-generation biofuels once dominated
the market, there has been a significant shift
towards second-generation biofuels.
Despite incentives, the global transition to
biofuels faces challenges. High costs and
uncertainty about profitability hinder vital
investments. Long-term take-up goals have also
increased concerns over supply capabilities.
Insight by Tom Brown and
Zara Najimi
Click
here to visit the ICIS biofuels topic
page
Polyethylene19-Aug-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
STILL WAITING FOR the end of the chemicals
downturn? If so, I believe you are wasting
precious time. Read in detail in today’s blog
and see my ten summarised reasons below. Print
this off and pin it on your boardroom wall:
Most of the G20 countries, which account
for more than 70% of global polyethylene demand
(chemicals and polymers are equivalent to
economic activity) is ageing.
Immigration is of course the answer to some
extent, but this is politically very difficult
in the West.
In the regions and countries where
populations are youthful, not enough people –
because of politics in the West – are likely to
be able to move to the rich world for better
economic opportunities, and to escape conflicts
and the effects of climate change.
Climate change will more likely be
successfully mitigated in the rich world. But
the risk is that the Developing World ex-China
does not get the financing and technologies it
needs to mitigate the impact of climate change.
China is the immediate centre of the crisis
for the global chemicals industry because
global capacity was added on wrong growth
assumptions. China’s chemicals demand growth
could turn negative because of an ageing
population, the end of the real-estate bubble
and geopolitics.
Geopolitics mean that we are likely to see
a change in chemicals trade flows. A bipolar
world – one centred on China and its allies and
the other on the US and its allies – is one
outcome
The oil and gas majors could end up
dominating chemicals to compensate for
declining oil demand due to electric vehicles
and fuel efficiency, as China moves to
chemicals self-sufficiency by itself and/or
with imports largely from its geopolitical
partners in the Middle East
We are in the early stages of a new
industrial revolution driven by sustainability
As was the case with the start of the first
industrial revolution, it is impossible to say
what will be the winning and losing
technologies.
For chemical companies without strong
feedstock advantages, without the right
geopolitical locations- and which have too much
exposure to the diminishing China import
markets – it is success in sustainability that
is the route to new competitive advantage.
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.
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