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Gas26-Aug-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 23 August 2024.
INSIGHT: Asia BD capacity growth to accelerate
to 10% in 2025
By Ann Sun 23-Aug-24 10:35 SINGAPORE
(ICIS)–The Asian butadiene (BD) market is
anticipated to experience large-scale capacity
expansion between Q4 this year and end-2025,
with nine projects scheduled to begin
operations.
Asia BDO market demand unable to reduce
inventories, oversupply persists
By Corey Chew 22-Aug-24 11:16 SINGAPORE
(ICIS)–The Asian 1,4-butanediol (BDO) market
has been going through a downtrend that started
about a month ago, mainly due to the falling
domestic China market.
INSIGHT: China’s EVA capacity expected to
exceed 2.6 million tonnes in 2024
By Amy Yu 20-Aug-24 17:12 SINGAPORE
(ICIS)–China’s EVA capacity is forecast to
exceed 2.6 million tonnes in 2024, a
year-on-year growth rate of 17%, considering
Jiangsu Hongjing New Material a new plant with
200,000 tonnes/year is scheduled to come on
stream in Q4.
INSIGHT: China plasticizer alcohols’ supply
growth accelerating
By Lina Xu 19-Aug-24 17:08 SINGAPORE
(ICIS)–China’s plasticizer market is
diversifying, leading the supply expansion of
feedstock alcohols amid high requirements for
end-products and growing emphasis on
sustainability in operations in recent years.
Asia naphtha back in the black within a day;
volatility to stay
By Li Peng Seng 19-Aug-24 11:06 SINGAPORE
(ICIS)–Asia’s naphtha intermonth spread
returned to the positive zone on 16 August,
after slipping into the red the day before for
the first time this year, with volatile trades
expected to persist amid uncertainties over
supply balances.
INSIGHT: China’s MEG export market changes amid
volatile global fundamentals
By Cindy Qiu 22-Aug-24 14:00 SINGAPORE
(ICIS)–China’s monoethylene glycol (MEG)
exports have been on an uptrend in recent years
due to the rapid expansion of domestic
capacity. MEG exports totalled around 93,000
tonnes in January-June 2024 and are expected to
exceed 150,000 tonnes for the year as a whole.
India’s BPCL to invest Rs1.7 trillion on
capacity growth over five years
By Priya Jestin 20-Aug-24 12:58 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.
Ammonia23-Aug-2024
HOUSTON (ICIS)–Although the Canadian railroad
labor strife is poised to carry on further, US
fertilizer participants are not growing overly
concern as this action comes at a slower time
of the year for domestic applications and fresh
buying.
With it being late August most of the attention
of domestic growers are either on advancing
harvesting campaigns or commencing those
efforts soon, with some locations still tending
to mature crops.
There were also strong summer refilling
efforts, which together is overall keeping the
pull for nutrients light for most products
although volume of nitrogen, phosphate and
potash have continued to move over August on
barges and terminals.
As a source said they had zero concerns so far
and not hearing that the situation is
concerning customers either, “I assume if it
persists there will be. It’s just happening at
a time of year that it isn’t impactful enough
to our industry.”
The railroad strike appeared to have been
resolved on 22 August when the government
directed the matter to the Canada Industrial
Relations Board (CIRB) for binding arbitration,
with Canadian National (CN) and Canadian
Pacific Kansas City (CPKC) having said they
were preparing to begin running.
Then on Friday labor union Teamsters Canada
Rail Conference (TCRC) issued a strike notice
for 26 August, against railroad Canadian
National (CN) with approximately 6,500
unionized employees set to withdraw their
service starting Monday.
As there was prior to the start of this strike
activity, there is also optimism from some that
this will not be a protracted dispute.
The US is about to enter a period of what has
been anticipated to be good post-harvest
demand, with a source saying a work stoppage
“could be an issue then but generally these
things resolve quickly.”
Earlier this week industry group Fertilizer
Canada said disruptions to rail services across
the country will cost the fertilizer industry
millions per day in lost sales revenue, with an
average of 69,000 tonnes of fertilizer product
transported per day.
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.
Ammonia23-Aug-2024
TORONTO (ICIS)–Labor union Teamsters Canada
Rail Conference (TCRC) on Friday issued a
strike notice for Monday, 26 August, against
railroad Canadian National (CN).
The move surprises as railroads CN and Canadian
Pacific Kansas City (CPKC) said earlier they
were preparing to resume
operations after a government order on
Thursday that referred the labor dispute
between TCRC and the railroads to the Canada
Industrial Relations Board (CIRB) for binding arbitration.
The country’s labor minister issued the order
after the railroads locked out about 9,300
workers and shut
down operations on Thursday, 22 August,
00:01 Eastern Time.
In Friday’s strike notice, TCRC
said that about 6,500 unionized CN workers
would withdraw their service starting Monday,
26 August, 10:00 Eastern Time.
However, it added that its differences with CN
were not “insurmountable” and that it remained
available for discussions to avoid a further
work stoppage at CN.
TCRC’s strike notice also surprises because the
union said earlier that
it took down picked lines again CN and that
unionized CN workers would start returning to
work on Friday. Picket lines at CPKC, however,
would remain in place, the union said.
Teamsters president Francois Laporte said in
remarks to public broadcaster CBC/RDI on Friday
that the union was looking at its legal options
and would “use our constitutional rights” to
“fight” for workers’ interests.
He also confirmed that despite the referral to
the CIRB, the industrial action at CPKC was
continuing.
Political commentators said that the union may
seek to challenge the constitutionality of the
minister’s referral of the dispute to the CIRB
for binding legislation.
There is legal precedent that deems the right
to strike and to collective bargaining as a
constitutional right.
Bottomline: Despite earlier
hopes that binding arbitration would end the
dispute and trains would run again soon,
freight rail service remains disrupted and it
is unclear when it will resume.
CHEMICALS AND RAIL
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, according to CIAC.
Chlorine plants in Canada may
have to shut down if reliable rail service
does not resume soon, CIAC CEO Bob Masterson
said.
(Map by Miguel Rodriguez Fernandez)
Meanwhile, LyondellBasell on
Thursday declared force majeure on all rail
shipments to Canada and industrial chemical
producer Chemtrade Logistics
warned about the impact of the rail disruption
on its financial results.
The following table by the American Association
of Railroads (AAR) shows Canadian freight rail
traffic, including chemicals, for the week
ended 17 August and the first 33 weeks of
2024:
With additional reporting by Adam Yanelli
and Nurluqman Suratman
Thumbnail photo source: CN
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Ammonia23-Aug-2024
TORONTO (ICIS)–Freight railroads Canadian
National (CN) and Canadian Pacific Kansas City
(CPKC) are preparing to restart operations
after the federal government stepped in to end
a labor dispute with workers – although it
remains unclear on Friday when exactly a full
freight rail service will resume.
Following the lockout of about 9,300 rail
workers and the shutdown of operations at both
railroads effective Thursday,
22 August, 00:01 Eastern Time, Canada’s federal
labor minister ordered binding
arbitration to settle the dispute between
the railroads and labor union Teamsters Canada
Rail Conference (TCRC).
The arbitration process will be conducted by
the Canada Industrial Relations Board (CIRB),
an independent, quasi-judicial labor tribunal.
The CIRB is expected to act quickly, and trains
should be running again “within days”, labor
minister Steven MacKinnon said.
CN said it was “satisfied” that the labor
conflict has ended
CPKC said it remains prepared to resume
service as soon as it is ordered to do so by
the CIRB
TCRC said it has taken down picket lines at
CN and workers would return on Friday, but at
CPKC the work stoppage “remains ongoing”,
pending an order from the CIRB
In the chemical industry, trade group Chemistry
Industry Association of Canada (CIAC) said that
going by past experience, for each day of a
rail disruption it could take three days or
more to return to service once labor issues are
resolved.
“Things will continue to be tight and will need
monitoring” going forward, said CIAC president
Bob Masterson.
The trade group is particularly concerned about
the supply of chlorine and derivatives for
drinking water treatment.
For safety reasons, chlorine can only be
shipped by rail. Although the rail
shutdown lasted less than a day, the railroads
had stopped accepting chlorine and other
hazardous materials for shipment before 22
August as they prepared for the shutdown.
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, according to CIAC.
(Map by Miguel Rodriguez Fernandez)
Meanwhile, LyondellBasell on
Thursday declared force majeure on all rail
shipments to Canada and industrial chemical
producer Chemtrade Logistics
warned about the impact of the rail disruption
on its financial results.
The following table by the American Association
of Railroads (AAR) shows Canadian freight rail
traffic, including chemicals, for the week
ended 17 August and the first 33 weeks of
2024:
With additional reporting by Adam Yanelli
and Nurluqman Suratman
Thumbnail photo source: CN
Gas23-Aug-2024
Additional reporting by Anna Coulson
UK energy price cap for October-December set at £1,717
Q4 cap is £149 higher than the Q3 cap, but has fallen
£117 year on year
Higher wholesale energy prices for Q1 2025 suggest a
price cap rise compared to Q4 2024
LONDON (ICIS)–The UK energy price cap for October-December
will increase compared to the previous quarter, energy
regulator Ofgem said on 23 August, but remains lower than
in the same period one year ago.
Introduced in January 2019, the price cap sets the maximum
price that energy suppliers can charge end-users for each
unit of energy. Ofgem sets the cap based on supplier
operating costs, including ICIS wholesale energy price
assessments, as well as VAT and network costs.
Looking ahead, if forward prices for delivery in the first
quarter of 2025 continue at current levels, the wholesale
component of the cap for the period January-March is
expected to be higher than for the preceding three months.
FALLING PRICES
ICIS assessed the British NBP gas Q4 ’24 contract at an
average 97.069p/th from 20 May to 15 August – the period
used by Ofgem to calculate wholesale energy costs for the
upcoming cap.
This is 17.026p/th lower than the Q4 ’23 contract average
over equivalent dates.
The year-on-year difference comes as a result of several
factors, including a gradual fall from a peak in prices
after the Russian invasion of Ukraine and the trade
sanctions which followed.
Fears of strikes at Australian LNG refineries also pushed
up gas prices during 2023, whereas LNG markets were
generally more settled in 2024.
Due to its significant role in power
generation, gas is a key price driver for the UK power
market. This means that UK power prices have moved with a
similar bearish trend to NBP Q4 ’24 prices, at a discount
to Q4 ’23 prices.
ICIS assessed the UK power Baseload Q4 ’24 contract at an
average £85.65/MWh between 20 May and 15 August, 28% lower
than the Q4 ’23 over equivalent dates.
The Q4 ’24 power contract is at a premium to its European
counterparts which indicates that the UK is likely to
import power from neighbouring countries, including France,
through the front-quarter.
Data from French utility EDF shows that nuclear output is
set to average 48.1GW in the period 1 October to 31
December, 7.1GW above the 2019-23 average.
Both gas and power Q1 ‘25 prices are currently at a premium
to Q4 ’24 prices, which will likely result in a larger
wholesale component of the cap for the first quarter of
2025 than for October-December.
CAP OUTLOOK
On 22 August, ICIS assessed the NBP Q1 ‘25 contract at
7.025p/th above the Q4 ’24 contract and the UK power
Baseload Q1 ‘25 contract was £7.10/MWh above the Q4 ’24
contract.
Yearly energy prices generally peak around February, when
the coldest months of the year increase energy demand for
heating. In these months, gas storage facilities start to
deplete and disruptions to supply cause larger price rises
than at other times of the year.
Given the increasing European reliance on LNG, higher
prices also attract LNG shipments to Britain ensuring
stability of supply.
On the power side, French nuclear availability is another
key driver for UK power prices through the first quarter.
The UK power Q1 ‘25 Baseload contract was €109.47/MWh on 22
August, which is €5.22/MWh above its French counterpart,
indicating that the UK is likely to import power from
France through the first quarter of 2025.
ICIS Power Foresight indicates that French nuclear
generation could total 98.6TWh in the period 1 January to
31 March.
However, unplanned outages, downward revisions in nuclear
availability, and cold weather through the first quarter of
2025 would be potential bullish drivers for French and UK
power prices.
Recycled Polyethylene Terephthalate23-Aug-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including:
Blue flake prices rise at the low end in
eastern Europe
Wide range of views on eastern Europe bale
prices
Mixed coloured flake demand remains poor
September price talks getting underway
Crude Oil23-Aug-2024
LONDON (ICIS)–Business activity in the
eurozone rose in August, driven by the services
sector, which grew at the fastest pace in four
months.
Growth in services was largely due to the
strongest expansion in France since May 2022 as
the Olympics took place in Paris, according to
S&P Global’s latest Purchasing Managers
Index (PMI) data.
This drove the flash services August PMI index
to 53.3, up from 51.9 in July, which in turn
helped push the HCOB (Hamburg Commercial Bank)
composite PMI index to a three-month high of
51.2.
Cyrus de la Rubia, chief economist at Hamburg
Commercial Bank, warned, however, that the
uplift could be temporary.
“The boost largely comes from a surge in
services activity in France, with the Business
Activity Index jumping by almost five points,
likely linked to the buzz surrounding the
Olympic Games in Paris,” he said.
“It’s doubtful this momentum will carry over
into the coming months, however. Meanwhile, the
overall pace of growth in the services sector
has slowed down in Germany, and the eurozone’s
manufacturing sector remains in rapid decline.”
S&P’s August eurozone manufacturing PMI was
at an eight-month low of 45.6, down slightly
from July. An index figure above 50 indicates
expansion and below 50 contraction.
Elsewhere, the latest PMI data for the UK
showed a significant increase in private sector
business activity, with the composite index
rising to a four-month high of 53.4.
“August is witnessing a welcome combination of
stronger economic growth, improved job creation
and lower inflation, according to provisional
PMI survey data,” said Chris Williamson, chief
business economist at S&P Global Market
Intelligence.
Ammonia22-Aug-2024
TORONTO (ICIS)–Canada’s federal labor minister
has decided to refer the labor dispute between
the country’s two freight railroads and labor
union Teamsters Canada Rail Conference (TCRC)
to the Canada Industrial Relations Board (CIRB)
for binding arbitration, he said in a webcast
media briefing on Thursday.
Steven MacKinnon expects the CIRB to act “with
dispatch” and rail services at railroads
Canadian National (CN) and Canadian Pacific
Kansas City (CPKC), which shut
down effective Thursday morning, 00:01
eastern time, should resume within a couple of
days, he said.
With the decision, the minister reversed his
previous position.
Just hours before the shutdown took effect, he
had said the government would not intervene but
leave it to the parties to settle the dispute
through the collectives bargaining process, and
last week he rejected CN’s call for binding
arbitration.
However, in Thursday’s press briefing MacKinnon
said that he came to the conclusion that the
negotiations between the railroads and the
union were at an impasse and that collective
bargaining was not working to settle the
dispute.
He therefore decided to direct the CIRB
to settle the dispute through final binding
arbitration;
to extend the terms of the existing
collective agreements until new agreements are
signed.
The CIRB process was “generally a process that
does not take longer than two days”, he said.
However, he conceded that it was not yet quite
clear when exactly rail service will resume,
adding that the CIRB was an independent body
that follows its own procedures.
The CIRB is a quasi-judicial tribunal charged
with keeping the industrial peace in Canada.
The government has come under intense pressure
from trade
groups in Canada and the
US and from Canadian provincial premiers
(governors) to take quick action to end the
shutdown, which threatened the economy and
trade relations with the US.
MacKinnon acknowledged the concerns raised by
the chemical and fertilizer industries about
supplies of chlorine to treat drinking water
and the supply of potash fertilizer to farmers.
It was up to the government to ensure that
shipment of chlorine and fertilizer were not
disrupted, the minister said.
The railroads had stopped accepting shipments
of chlorine and other hazardous materials well
ahead of the 22 August shutdown.
Meanwhile, LyondellBasell on
Thursday declared force majeure on all rail
shipments to Canada and industrial chemical
producer Chemtrade Logistics
warned about impacts from the rail disruption
on its financial results.
With additional reporting by Adam
Yanelli
Thumbnail photo source: CN
Recycled Polyethylene Terephthalate22-Aug-2024
HOUSTON (ICIS)–In light of the recent surge of
ocean freight rates, US plastic scrap trade has
slowed some to overseas destinations, but still
remains robust within North American borders.
Albeit lower this quarter, polyethylene
terephthalate (PET) plastic scrap in particular
continues to be strong in import and export
volumes amid a moderate domestic market.
US remains a net importer of plastic scrap
US PET scrap imported decreased 11% Q2 2024
vs Q1 2024
US PET scrap exported increased 62% Q2 2024
vs Q2 2023
IMPORTS SLOW ON GLOBAL FREIGHT, PET REMAINS
STRONG
Q2 2024 trade data from the US Census Bureau
shows US imports of plastic scrap – noted by
the HS code 3915 – have fallen 10% quarter on
quarter, but still having increased 7% year on
year when comparing with Q2 2023. Plastic scrap
imports include items such as used bottles, but
also other forms of recycled feedstock such as
purge, leftover pairings and now also flake
material.
Imports totaled 114,969 tonnes in Q2 with drops
seen across the major polymer groups for US
scrap import. Polyethylene (PE) scrap was down
13%, while polyethylene terephthalate (PET)
scrap was down 11% quarter on quarter.
Based on volume alone, the drop in PET imports
by 6,857 tonnes is the largest contributing
factor to the overall decrease.
While imports from Canada and Mexico still
dominate total volumes, when looking at PET
specifically, imports from Mexico have dropped
off significantly.
Top sending countries for PET scrap are Canada,
followed by Thailand, Ecuador, Japan, Indonesia
and Honduras as of the 1H2024 data. This means
less than 25% of US PET scrap imports came from
North America, while over 43% of PET imports
originated from Asian countries, a reversal of
the statistics seen just two years prior.
While down quarter on quarter, PET scrap
imports are still elevated in comparison to
previous years, up as much as 24% year on year.
As of Q2 2024, PET makes up 50% of all US
imported plastic scrap, followed by the “other”
plastic scrap category at 29% and PE scrap at
13%.
US recycled polyethylene terephthalate (R-PET)
market participants confirm they have seen a
notable rise in imported R-PET activity from
Asia and Latin America, particularly due to
their cost-competitive position when it comes
to feedstock, labor and facility costs.
Though towards the back half of Q2, ocean
freight rates did substantially rise, likely
curtailing the window of cost competitiveness
for many.
Typically, imports from these overseas
locations must be ordered weeks, if not months,
in advance, and so Q2 import volumes largely
represent demand from one to two months prior.
Even with higher ocean freight rates today, US
converters and recyclers continue to buy
imported flake and pellet to supplement
operations, as it remains cost-competitive in
most cases. R-PET demand on the East Coast has
continued to strengthen during the summer
months and is now looking solid through the end
of the year, a deviation from the typical
seasonal demand pattern.
Though imports come with additional
transportation and cost risk, players accept
that international supply is now woven into the
fabric of the market, much like with virgin
PET.
PET EXPORTS SURGING, OTHER PLASTICS SEE WEAK
GLOBAL MARKETS
Despite the desire for a growing domestic
recycled plastics market, feedstock material
continues to bleed out of the country,
specifically PET bales. US exports of plastic
scrap have increased 5% quarter on quarter to a
total of 112,385 tonnes, while PET scrap
exports have increased 18% quarter on quarter,
and a whopping 62% year on year.
Though the US has always exported a portion of
domestic bale material to other countries,
including Mexico and some in Asia,
exports to Mexico have surged in the last 10
months.
This growing trade relationship is largely
attributed to new capacity in Mexico, paired
with strong local demand which has elevated
local bale prices. As a result, Mexican
recyclers have been purchasing US PET bales as
a lower cost option with high availability.
Overall, exports of other types of plastic
scrap continue to slow, following the Chinese
National Sword and Basel Convention adoption
several years ago.
PE continues to be a leading polymer type for
US plastic scrap exports, coming in at 33,556
tonnes in Q2 2024. According to 1H24 total PE
imports, India is the largest destination at
25%, followed by Indonesia at 15% Canada at
14%, and Malaysia and Vietnam tied at 13%.
As of this past quarter, the US remains a net
importer of plastic scrap.
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