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Speciality Chemicals28-Aug-2024
LONDON (ICIS)–Germany’s chemical industry
trade group, VCI, has nominated Covestro CEO
Markus Steilemann for a second term as its
president.
Steilemann has been VCI president since
September 2022, succeeding Evonik chief
Christian Kullmann.
He originally took on the role during what he
described
at the time as a “serious and challenging”
period for Germany’s chemical industry, which
has been struggling with energy costs.
The election is scheduled for the Chemistry
& Pharma Summit in Berlin on 12 September
2024. Steilemann has worked in the industry for
many years, starting his career at Bayer in
1999.
Crude Oil28-Aug-2024
MUMBAI (ICIS)–Indian port workers have called
off their
indefinite strike scheduled to begin on
Wednesday following an agreement with the
Indian Ports Association (IPA) and the Ministry
of Ports, Shipping and Waterways on 27 August.
The agreement has averted a strike by around
20,000 port and dock workers at India’s 12
major ports.
The workers have agreed to a settlement which
would give them a fitment benefit of 8.5% on
the aggregate pay as of 31 December 2021 and a
30% variable dearness allowance as of 1 January
2022, an official in the shipping ministry
said.
The settlement will last for five years
beginning January 2022, he said, adding that a
drafting committee constituting all the
stakeholders is expected to finalize the terms
of the settlement within ten days.
The strike would have created problems for
exporters who have been struggling with high
freight costs and could have led to further
congestion at the private and minor ports
across India.
Fearing disruptions, exporters had also asked
the government to resolve the issue at the
earliest, the shipping ministry official said.
“There is already a shortage of ships and
containers, and a disruption at this point
could hit the domestic industry as well as
international trade,” Ajay Sahai, director
general and CEO of the Federation of Indian
Export Organisations (FEIO) said.
Exporters are currently gearing up to cater to
Christmas orders from western markets and the
strike would have delayed exports indefinitely,
he said, adding that the imports of raw
materials and fuel would also be hampered.
Polyethylene28-Aug-2024
SINGAPORE (ICIS)–Click here to
see the latest blog post on Asian Chemical
Connections by John Richardson.
So, you want to just sit back and wait for
global chemicals and polymer markets to correct
themselves, for the Old Normal to come back?
As today’s post on styrene suggests, even
assuming thins do eventually return to normal,
you will be on for an awful long wait:
I estimate that global styrene capacity
would have to shrink by an average 174,000
tonnes a year between 2024 and 2030 for
operating rates to reach their historic and
very healthy long-term average of 88%. The ICIS
base case assumes an average 2024-2030
operating rate of 75% as capacity expands by
811,000 tonnes a year.
Clearly, and this is same across many other
products, the commercial decisions necessary
for a turnaround on this scale would take
several years.
But I anyway see hanging around and waiting for
a return to the Old Normal as a waste of
precious time, as the global chemicals
landscape will never return to the way it was
during the 1992-2021 Chemicals Supercycle.
The data on styrene underlines the direction of
travel including, as mentioned, the scale of
global overcapacity and the collapse of
Northeast Asian margins since the late 2021
“Evergrande Moment”.
Also note the distorting impact of China
dominance of global styrene demand. In 1992,
China accounted for just 2% of global demand
and 22% of the global population, but by the
end of this year ICIS expects China to account
for 46% of global demand from just 18% of the
world’s population.
And crucially, China’s demand growth is
shrinking as its share of global capacity
increase – again just 2% in 1992 rising to a
forecast 53% in 2030.
The numbers are similar across many other
products.
It is time for chemicals companies to think
long and hard about where their future
competitive advantages lie in the light of the
ten interconnected forces that I believe are
reshaping the global landscape.
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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Potassium Chloride (MOP)27-Aug-2024
HOUSTON (ICIS)–Mining major BHP said after a
rough stretch for the global potash segment, it
appears it is heading now towards finding
renewed balance with improvements in both
demand and supply.
The company said it has also continued to
advance its construction efforts at the Jansen
potash project in Saskatchewan, Canada, with
stage one currently ahead of schedule.
In its economic and commodity outlook, BHP said
potash prices have been on a downward trend
over the last 18 months as the industry has
been resetting after dealing with stark price
movement and severe supply disruptions of
recent years.
The producer said one indicator that the market
was returning to normal pace was that the
magnitude of price movements in the first half
of 2024 was less pronounced compared to a year
ago.
Looking at regional demand performance, it said
a broad recovery has continued from the lows of
2022 with total muriate of potash (MOP)
deliveries expected to reach, or exceed, the
pre-Ukraine conflict levels during this year.
Supply also increased further with export
volumes from Russia and Belarus edging closer
to their 2021 peak with Laos adding 2-3 million
tonnes of capacity over the last few years.
BHP said Canadian volumes this year point to an
improved production level.
“Balanced though does not mean that the market
is at rest. The industry remains in the midst
of a significant disequilibrium, slowly
adjusting from the major shocks of recent
years,” said BHP.
“The compelling demand picture, rising
geopolitical uncertainty and the maturity of
the existing asset base collectively provide an
attractive, accelerated entry opportunity in a
lower–risk supply jurisdiction such as
Saskatchewan, Canada.”
It was also revealed that construction at the
Saskatchewan potash project is ahead of the
original schedule with Jansen stage 1 now 52%
completed.
The first production is targeted for late 2026
with this phasing having an annual output
projected around 4.15 million tonnes.
Jansen stage 2 is 2% complete with first
production from this segment anticipated in
2029.
Back in July the company had said Jansen had
reached a pivotal milestone with construction
having surpassed the 50% completion mark for
stage 1 and stage 2 underway.
Ammonia27-Aug-2024
TORONTO (ICIS)–Canada’s chemical industry is
relieved that freight trains are running again
following a four-day shutdown, officials said
on Tuesday.
Freight rail service at railroads Canadian
National (CN) and Canadian Pacific Kansas City
(CPKC) resumed on Monday, 26 August, following
an
order by a labor tribunal that ended a
complete shutdown that started on 22 August.
A prolonged rail disruption would have had
“devastating impacts
on Canadians and the broader economy,” said
Greg Moffatt, executive vice president of trade
group Chemistry Industry Association of Canada
(CIAC).
Canada’s chemical industry moves more than 500
railcars of product each day, he noted.
CIAC’s immediate concern was for the rail
shipment of chlorine to municipalities, for the
treatment of drinking water. Both railroads had
stopped accepting chlorine and other hazardous
materials before the 22 August shutdown.
Meanwhile, other chemicals manufactured in
Canada are “essential building blocks” for the
agriculture, agri-food, pharmaceuticals,
manufacturing, construction, automotive, mining
and forestry sectors in both Canada and the US,
Moffatt said.
COULD TAKE WEEKS FOR SUPPLY CHAINS TO
NORMALIZE
John Corey, president of the Freight Management
Association of Canada, said it could take
four weeks or more before supply chains get
back to normal.
The government should have intervened much
earlier to prevent the shutdown, as the parties
had been negotiating new collective deals since
November last year, without success, he said.
Although some commentators have suggested that
freight rail was an essential service and the
best way to prevent future shutdowns was to
nationalize the railroads, Corey said that was
not a solution.
North American railroads used to be
government-controlled or owned in the last
century, but they became inefficient
“dinosaurs” and had to be deregulated, Corey
said.
He pointed to the 1980 Staggers Act in the US
and the 1995 privatization of CN in Canada.
“Nationalization is the worst possible
solution” to prevent future labor-related
disruptions, he said, adding, “The government
does not run many things well, as we know.”
He noted that Canada was facing a further
threat to its supply chains because of new
labor issues at its ports. Last year, a
13-day strike shut
down Canada’s West Coast ports.
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)
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:
Thumbnail photo source: CN
Ammonia27-Aug-2024
LONDON (ICIS) –On 30 July 2024, MITECO (the
Spanish Ministry for the Ecological Transition
and the Demographic Challenge) published the
regulatory basis for allocating €1.2
billion to large renewable hydrogen valleys,
also known as hydrogen clusters. A competitive
bidding process will launch later this year,
with winners to be announced in 2025 and 2026.
The form of support comes as capital grants
awarded to hydrogen producers. ICIS has
produced the following infographic to explain
the core principles of the support scheme.
Petrochemicals27-Aug-2024
MUMBAI (ICIS)–India’s JPFL Films Pvt Ltd plans
to set up a new 60,000 tonne/year biaxially
oriented polypropylene (BOPP) film unit in the
western Maharashtra state, at a cost of rupee
(Rs) 2.5 billion ($30 million).
The company expects to begin operations at the
new unit to be built at its Nashik complex in
October 2025, its parent firm Jindal Poly Films
said in a filing to the Bombay Stock Exchange
(BSE) on 16 August.
“The new line will help the company strengthen
its market position and market share,” Jindal
Poly Films said, adding that funding for the
plant will be through internal accruals and
bank financing.
JPFL Films currently has a production capacity
of 294,200 tonnes/year of BOPP and 170,000
tonnes/year of biaxially oriented polyethylene
terephthalate (BOPET) at its Nashik facility.
($1 = Rs83.93)
Ammonia26-Aug-2024
HOUSTON (ICIS)–As summer draws to a close, the
US harvesting efforts are beginning to ramp,
but with crop prices still less favorable and
farmer economics now back in question, the
short-term fertilizer demand prospects continue
to be unclear.
The sights of combines rolling across fields
collecting up the various acres is usually a
sign that a return of applications is coming
soon as it is typical after crops are completed
for some growers to place another layer of
nutrients, especially for those who use
nitrogen products.
Yet the level of engagement in further
commitments over the next few weeks is not
certain, according to market sources.
What is more apparent is that increased demand
faces the obstacle of unfavorable crop prices
for farmers, projections of less income and a
potentially longer stretch of harvest because
of the challenging weather at spring
interrupting planting schedules.
As an industry participant said it really is
simply about price direction at this time and
how people are viewing market direction and
that “lower prices will stimulate demand.
Higher prices will lower demand.”
Currently US corn is at 84% of the reported
acreage in the dough stage with soybeans
setting pods having reached 89%. Both crops are
overall being reported as mostly fair to
excellent condition.
Recent crop tours have highlighted the
potential for there to be really strong yields
upcoming, especially for corn in certain
states, which would normally be a positive
aspect for farmers, but the projections of a
larger harvest this year has also added extra
weight upon corn prices.
Farmer economics have recently come under the
spotlight with US Department of Agriculture
having forecast a drop of net farm income for
2024 of $43 billion year on year with a total
income estimate of $116.1 billion.
In 2023, net farm income figure had a 16% drop
from 2022, so farmers are set to potentially
experience the most significant two-year farm
income decline in recent history.
That is one of the troubling factors for those
who are looking ahead at the domestic path
forward for fertilizer buying and values, with
a market participant saying, “I think overall,
demand will be low due to farmer economics and
poor sentiment in agriculture as a whole.”
Demand is also lagging because there were good
refilling efforts over the summer for many
products.
Although likely sitting in tanks on farms, or
in retail warehouse right now, there should be
a good portion of those volumes which will go
out over the next three to four weeks, or
longer if weather holds favorably.
As a market source said optimism for an uptick
is running very thin at the moment “so far it
continues to be dead on UAN, and nitrogen
demand in general. Maybe pre-river close demand
kicks in, but I’m not too hopeful for any
rally.”
Ammonia26-Aug-2024
HOUSTON (ICIS)–Crop maturity continues to make
steady strides with there now 84% of corn in
the dough stage with soybeans setting pods
having reached 89% according to the latest US
Department of Agriculture (USDA) weekly crop
progress report.
The current pace of corn into the dough phase
is slightly behind the 85% achieved last year
but is just above the five-year average of 83%.
Corn acreage within the dented stage is now at
46%, which is equal to the 46% in 2023 and is
ahead of the five-year average of 42%.
Corn reaching maturity has reached 11% of the
crop, which is above the 8% from last year as
well as the five-year average of 6%.
For corn conditions there is 5% rated very
poor, 8% as poor and 22% still listed as
fair. There is 49% deemed as good and 16%
remaining as excellent.
The amount of soybean acreage setting pods has
climbed to 89% but trails the 90% mark from
last year but is above the five-year average of
88%.
In the first update on soybeans dropping
leaves, the weekly update shows there is 6% of
the crop at this stage, which is ahead of both
the 4% level from 2023 and the five-year
average of 4%.
For soybean conditions there continues to be 2%
listed as very poor with 7% now as poor and 24%
continuing to be fair. There is still 54% seen
as good with there now being 13% as excellent.
In harvesting updates spring wheat harvest has
reached 51% completed, which ahead of the 50%
achieved last year but is behind the five-year
average of 53%.
In the first update on sorghum harvest there is
18% of the crop now completed, which is ahead
of the 2023 level of 16% but equal to the
five-year average of 18%.
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