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Ethylene11-Jul-2024
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
Crude Oil11-Jul-2024
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
Ethylene10-Jul-2024
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
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Ethylene10-Jul-2024
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
Crude Oil10-Jul-2024
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.
Hydrogen10-Jul-2024
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.
Ethylene09-Jul-2024
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
Speciality Chemicals09-Jul-2024
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.
Gas09-Jul-2024
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.
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