HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US continued to fall after a lengthy strike was averted at US Gulf and East Coast ports and as peak season volumes have largely been pulled forward. The International Longshoremen’s Association (ILA) strike lasted just three days, and market analysts expect backlogs created by the work stoppage to be cleared up in two to three weeks, or even less at the Port of New York/New Jersey. Some ports extended gate hours to allow more time for containers to be delivered or picked up. Nathan Strang, the US Southwest director of ocean freight for Flexport, said the company is seeing relatively fluid terminal operations and railroad operations. Strang said all detentions and demurrage rules from the Federal Maritime Commission (FMC) remain in effect but noted that time frames for detention and demurrage restarted on 7 October after the strike ended. CONTAINER RATES FALL Global average rates for shipping containers continued to fall, according to multiple analysts. Supply chain advisors Drewry has its World Container Index (WCI) at $3,349/FEU (40-foot equivalent unit), which is down by 4% and shown in the following chart. Drewry said Shanghai to Los Angeles container rates fell by 5%, and Shanghai to New York rates fell by 3%, as shown in the following chart. Following the tentative deal between the ILA and the ports, Drewry expects rates ex-China to continue to decrease marginally in the coming weeks. Online freight shipping marketplace and platform provider Freightos said rates fell by a larger degree, but its rates had been higher. Judah Levine, head of research at Freightos, said carriers are also planning to reduce deployed capacity on the transatlantic trade lane later in the month in the hope of preventing rates from falling back to the $1,600-1,800/FEU level they had maintained for much of the year. “With the strike over and peak season demand largely behind us from a significant pull forward of volumes in the last couple months, transpacific container rates should continue to ease on the seasonal lull in volumes between peak season and Lunar New Year,” Levine said. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES UNCHANGED US chemical tanker freight rates held steady again this week for most trade lanes, even though vessel demand is growing for some routes. Most rates from the major chemical hubs remain sideways as a good portion of the market were attending the European Petrochemical Association (EPCA) conference in Berlin. The USG to Asia lane was also quiet following holidays. Although it is likely that increased exports ex–USG will be seen going into Europe and Asia, primarily as clean petroleum products (CPP) tonnage continues to focus on alternative cargoes in the petrochemical space, thereby adding to spot availability, which is already well supplied. On the transatlantic front, the eastbound leg is expected to warm up with cargoes being quoted including styrene to ARA from several US Gulf ports. With additional reporting by Kevin Callahan Visit the ICIS Logistics – impact on chemicals and energy topic page

HOUSTON (ICIS)–Some ports in Florida have resumed operations while millions in the US state remain without power after Hurricane Milton made landfall earlier in the week, south of the fertilizer hub of Tampa. A few ports in Florida have maintained Port Condition Zulu, under which they are closed to inbound and outbound vessels. Others have reopened and have set Port Condition IV, which is a hurricane seasonal alert to which ports return after a storm. The following table summarizes the port conditions in Florida. Port Status Condition Port of Pensacola Open Normal Port Panama City Open Draft restrictions Port St Joe Open Normal Port Tampa Bay Closed Zulu SeaPort Manatee Closed Zulu PortMiami Open IV Port Everglades Open IV Port of Palm Beach Open IV Fort Pierce Open with Restrictions IV with restrictions Port Canaveral Open IV Jaxport Open IV Port of Fernandina Closed Zulu Source: US Coast Guard OUTAGESFlorida has more than 2.2 million reported outages, according to the website poweroutage.us. That is down by more than 1 million versus the immediate aftermath of the hurricane. Prolonged outages can disrupt economic activity and slow down demand for plastics and chemicals. CSX WARNS OF RAIL DELAYSThe railroad company CSX warned of delays while it works to clear tracks, install generators and conduct repairs. All routes north of Jacksonville, Florida are open with no anticipated issues, it said. The area south, from Callahan to the north end of Anthony, is also clear. Work continues in central Florida, and CSX is addressing washouts on the Carter and Vitis subdivisions. The CFR line should be open later Friday night, providing a potential route into Winter Haven. CSX is making contingency plans for possible issues with a gas pipe washout near the Miami area. IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin (UPR) production in Lakeland and Kathleen, Florida. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. Near Tampa is Florida’s phosphate mining operations in Bone Valley, which covers parts of Hardee, Hillsborough, Manatee and Polk counties. In all, Florida has 27 phosphate mines, of which nine are active, according to the Florida Department of Environmental Protection. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida’s Big Bend region. On 30 September, Mosaic said its Riverview operations were off line following water intrusion from a storm surge caused by Hurricane Helene. Thumbnail Photo: Hurricane Milton. (By Cira/Noaa/Planet Pix via ZUMA Press Wire/Shutterstock)

LONDON (ICIS)–The risks for Germany’s chemical industry keep rising, economists said during a webinar hosted by chemical producers’ trade group VCI, and noted: Weak demand, domestically and abroad Investments stall Geopolitical uncertainty Contrary to hopes at the start of the year, Europe’s largest economy is likely to shrink for a second straight year in 2024, the government said this week in revising its previous 0.3% GDP growth projection to a 0.2% decline. The economy shrank 0.3% in 2023 and has not been able to generate strong growth since 2018. Weak or negative GDP trends translate into lower demand for chemicals. So far this year, demand for chemicals from nearly all domestic key customer industries, except food and paper, has been weak, said VCI economist Christiane Kellermann. Year-on-year % changes in domestic chemical sales, by major customer markets, January-August 2024: Construction: -3.9% Plastics: -4.5% Metal products: -7.4% Autos: -5.8% Food: +1.5% Glass, ceramics: -7.8% Paper: +0.9% Printing products: -7.3% Furniture: -7.3% Machinery: -8.3% Electrical equipment: -16.1% Source: VCI Many of the chemical industry’s customers in manufacturing are curbing their production, and in the important construction end market there is no noticeable recovery. Meanwhile, export sales of German chemicals were weak in most regions, with the exception of Asia, Kellermann said. Year-on-year % changes in chemical exports, by region, January-July: EU: -2.5% Non-EU Europe: -1.1% Asia: +1.8% North America: -3.6% Latin America: -3.4% Source: VCI INVESTMENTSThe low demand translates into low production rates and low capacity utilization. In fact, over the past two-and-half years chemical producers have been running plants at utilization levels that were below profitability thresholds, Kellermann said. As companies suffer low demand in Germany, with little prospect of improvement, and cannot run existing plants and equipment at profitable levels, it does not make sense for them to invest in new plants, she said. In a recent VCI survey, 74% of chemical companies said they were unlikely to invest in expanding production in Germany, she noted. Only 15% said they were likely to invest in expanding production while 9% were undecided, according to the survey. Companies cited the country’s bureaucracy and long project permitting processes, high energy and labor costs, and high and complicated corporate taxes as key obstacles to investing in Germany. Only 13% said that a lack of trained workers deterred them from investing in the country. With little or no new investment, “import pressures” rise and the chemical industry’s export capabilities will decline in coming years, she said. Germany’s chemical industry loses in international competitiveness, in particular in energy-intensive basic chemicals, she added. GEOPOLITICAL RISKS Michael Gromling, an economist from the German Economic Institute in Cologne, who was also presenting at the VCI webinar, estimated that in order to return to a meaningful growth path and achieve a recovery (“Aufschwung”), Germany needed to generate annual average GDP growth of 2.5% from 2025 through 2030. This, however, was “not realistic”, given the weakness across all industries and the geopolitical and structural challenges companies face, he said. The country’s industries were export-dependent and therefore sensitive to geopolitical tensions, trade conflicts and protectionism, he said. Geopolitical tensions were holding back investment decisions, and without a detente it would be very difficult for Germany to achieve its Aufschwung, he said. An end to the Ukraine war and peace in the Middle East would be a “game changer”, creating an opportunity for reviving the global investment cycle, he added. However, rather than relaxing, tensions could further sharpen after the 5 November US presidential election, he said. Gromling did not say which candidate – current Vice President Kamala Harris or former President Donald Trump – he sees as the greater risk. For the time being, VCI maintains its 2024 growth forecast for the country’s chemical-pharmaceutical production unchanged at 3.5% (excluding pharma: +5.0%). If realized, the increase would only partially offset last year’s 7.9% production decline (excluding pharma: -10.4%). However, VCI may cut its 2024 sales forecast of 1.5% as exports were trending weaker than expected, Kellermann indicated. Focus article by Stefan Baumgarten Thumbnail image source: VCI

LONDON (ICIS)–Markets editor Stephanie Wix and reporter Meeta Ramnani join senior editor manager Vicky Ellis to pick out key themes ahead of the 29th Fakuma plastics processing trade fair in Germany, in this latest ICIS podcast. They discuss the clash of pessimism and optimism for acrylonitrile butadiene styrene (ABS), the changing European landscape for polycarbonate (PC) given ADNOC’s recent offer for Covestro, and pressure from cheap imports for PE and PP and engineering plastics polyacetal (POM) and polybutylene terephthalate (PBT). Fakuma runs from 15-19 October.

BARCELONA (ICIS)–German specialty group Evonik plans to restructure two of its business units, putting non-core assets up for sale, closure or partnerships. The Coating & Adhesive Resins and Health Care businesses will be extensively reorganized, with operations generating sales of €350 million slated for strategic changes, the company said on Friday. In Health Care, production of keto acids for pharmaceutical applications in Hanau, Germany, is to be discontinued at the end of 2025, with the loss of around 260 jobs. For the sites in Ham (France) and Wuming (China) active in the same business, partnerships or divestments are being evaluated. The amino and keto acids business generates sales of around €100 million. In future, the Health Care business line will focus on what Evonik considers to be its growth areas: lipids for mRNA and gene therapies, drug delivery systems, and cell culture ingredients. Caspar Gammelin, head of the Nutrition & Care division, said: “Our amino and keto acids businesses in Ham and Wuming are strong and offer great potential. With investments in these sites, these businesses could reach their full potential and flourish. We are therefore examining options such as partnerships or divestments that would allow the businesses to prosper.” COATINGS RESTRUCTURE Evonik’s Coating & Adhesive Resins business line will focus on two core areas for growth: liquid polybutadienes as additives for adhesives and sealants or tires, and specialty acrylics for medical technology and the packaging industry. The business line’s existing polyolefins business, with sales of around €100 million, will be transferred to the C4 chain business at Evonik. In the future, the business will be sold as part of the C4 chain business. The €150 million turnover polyester business for coating and adhesive applications is to be sold. It has around 330 employees in Germany and China. The largest site, with around 250 employees, is in Witten (Germany). A smaller plant in Shanghai has around 30 employees. Lauren Kjeldsen, head of the responsible division Smart Materials, said: “To be successfully competing in the long term globally and to generate the necessary margins, investments are needed – and other companies for which polyester is a core business can realize these better than we can.” Evonik, like many of its peers in the European chemical sector, is under intense pressure from mainly China-driven global overcapacity, with companies under pressure to take radical action to focus on core assets and close or sell other operations. As well as the ramp-up in global production capacity, the region is being battered by a global slump in demand and a high cost base, which has led to collapsing margins and a wave of capacity closures across Europe. Thumbnail photo: Evonik’s Essen, Germany, campus. Source: Evonik

LONDON (ICIS)–Senior Editor for Recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: UK colourless flake range widens in October Eastern Europe bale, flake price views divided Frustration around single-use plastics directive (SUPD) uncertainty Food-grade pellet demand weak ahead of January SUPD target

LONDON (ICIS)–Imagine you sold a product with no control over how much of it was produced at any one time; that you had to sell it within weeks of it being produced regardless of what the demand for it was like; and that the demand was constantly changing. For most waste managers, no imagination is required, this is their daily reality. And it’s one of the biggest drivers of volatility throughout the recycling chain globally. Waste originates from both the general public and industry, and as a result, the composition and quantity of waste generated at any one time varies continuously depending on consumer behaviour and industrial production trends. Waste managers typically hold contracts for waste collection with municipalities. They cannot turn material away. Because of variations in consumer and industrial production trends, different countries can have vastly different supply at any one time. The quality of that input waste (how contaminated it is, the tensile strength etc.) depends on a variety of factors including how it’s been treated and stored before its entered the chain, the type of additives it contains, what other materials it has come into contact with (because contact with substances such as polyvinyl chloride (PVC) causes contamination), level of discolouration, gel content, and odour. Coupled with this, the more times a polymer has been recycled, the lower its tensile strength, and typically end-use suitability becomes increasingly limited. How many cycles it takes before the waste material becomes unusable varies from polymer-to-polymer, process to process, and level of other degradation. The longer you store waste (this is typically, but not exclusively, in the form of bales) without reprocessing it – or selling it on for reprocessing – the more it degrades. This can be due to a number of things, including the contaminants it contains, thermolytic degradation (from heat – typically the sun), and hydrolytic degradation (from water – common in the case of polyethylene terephthalate (PET). Meanwhile, new (and perhaps more valuable) strains of waste are constantly entering the chain, and warehouse space is limited. If the waste quality is too low, then waste managers either need to dispose of the material, sell it to the burn-for-energy sector, or use it captively for energy creation. Burn-for-energy bales typically sell at negative values, whereby sellers pay for the removal of waste based on cost saving against alternative disposal methods. As a result, most waste managers look to offload bales within a timeframe of around 4-6 weeks (although this varies from market to market). Reprocessed recycled material, meanwhile, serves a huge variety of end-use markets. Major offtake markets include, but aren’t limited to, packaging, construction, automotive, outdoor furniture, refuse bags, strapping, and horticulture. Demand between the end-uses also varies dramatically, and players in each market purchase for differing reasons. Some markets, such as packaging, are heavily driven by brand sustainability targets and regulation, other markets, such as construction, mostly purchase on cost saving against virgin. This has huge impacts on willingness to pay, Intensifying legislative and consumer pressure on sustainability in packaging over the past few years has seen a significant pricing gap develop between display packaging suitable, and non-display packaging suitable grades across most global recycled polymer markets. There is currently, for example, a spread of up to €1,500/tonne between the highest priced grade of Europe recycled polypropylene (R-PP) pellet (which is a post-consumer natural grade predominantly used in domestic goods and cosmetic applications), and the lowest priced grade (which is black injection-moulded pellets, which typically serves non-packaging applications). Ideally (from their point of view) waste managers and recyclers would primarily serve applications driven by sustainability targets where premiums are typically highest. Nevertheless, each downstream market has differing technical requirements  – with display packaging and automotive typically having the strictest technical requirements and construction, bin bags and outdoor furniture the lowest. This means that there is typically a higher volume of material sold into non-packaging applications. While sorting allows waste managers to extract the valuable fractions and, to an extent, control contaminants etc. it doesn’t control the input waste mix. So the type of material suitable to serve each application is changing constantly. There is also a direct correlation between feedstock waste quality and reprocessed output quality for both mechanical and chemical recycling. This creates a continuous supply/demand mismatch that is often underappreciated by players newly entering the market. This mismatch coupled with the need to offload material relatively quickly is the reason, for example, 90% mixed polyolefin bale prices have traded as high as €600/tonne ex-works NWE (northwest Europe) and as low as €0/tonne ex-works NWE since July 2022. Because waste fractions typically produce a variety of different flake and pellet grades depending on what is extractable from individual bales – especially for recycled polyolefins – they typically react to system wide demand in each locality. Individual flake and pellet prices, though, often react to demand from specific end-use markets. This can result in periods where waste bale prices are high but prices for some flake and pellet grades those bales serve are low, resulting in squeezed margins. This is especially true for grades that are purchased for cost-saving reasons, meaning that they need to aggressively compete with virgin and off-spec material. The reverse also regularly occurs, whereby bale prices can be low because demand in key end-uses such as construction is weak and general availability of waste is high, but volumes extracted for packaging suitable grades are limited and demand from that particular sector is firm. It is also increasingly common for material with broadly identical specifications to trade at different price levels depending on which sector it is being sold into. Further distortions in the chain are created because reprocessed material such as flakes and pellets can be stored for long-periods of time, and flake and pellet producers are not forced to offload material as quickly as waste managers. This leads to fragmented and localised downstream markets where spreads against feedstock costs and profitability are constantly shifting. Volatile feedstock costs also results in challenges for investment. This is particularly true for emerging technologies such as chemical recycling and bio-based plastics. Thatis because new producers seeking private investment are often required to project future costs (typically for a period of at least 5 years), with waste feedstock typically their largest variable cost. The unpredictability of waste values make this a herculean task. When players first explore circular plastic markets, they are often surprised by the variability and fragmentation of prices through the chain. In the majority of cases the direct cause can be traced back to the feedstock waste markets. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

LONDON (ICIS)–The UK’s economy picked up slightly in August following two months of zero growth in June and July, official data showed on Friday. August GDP grew by 0.2%, driven by higher output in services (0.1%), production (0.5%) and construction (0.4%). Real GDP also grew by 0.2% in the three months to August compared with the three months to May, the Office for National Statistics (ONS) said. Second-quarter GDP grew by 0.5% in the UK, while growth in Q1 was 0.7%.

HOUSTON (ICIS)–Roaring ashore as a Category 3 hurricane late 9 October and bringing fierce winds, heavy rainfall and significant inland storm surge Hurricane Milton inundated the Tamp, Florida area, which is a key hub of the US fertilizer industry. In the aftermath of the storm there were market sources, based in this region, who were reporting being unharmed but that they were now facing considerable flooding, which was causing property damage in places and overall restricting public movement. The section of Florida pounded by Milton is the location of not only production sites but also storage and logistic operations as well as corporate office facilities and the home to the numerous employees of the local fertilizer industry. The Port of Tampa, which handles about 25% of domestic fertilizer exports, said on their website that recovery efforts have begun, and that staff is working with the US Army Corps of Engineers, US Coast Guard and other maritime partners to assess landside and seaside operations. “Our port is currently without power. Some damage was observed to buildings but there has been no significant damage to docks, so far. The port is accessible through main gates, but please be advised there are road closures and flooding concerns in the surrounding roadways to our port,” the Port of Tampa announced. “We are working with our fuel terminal operators to assess their facilities and learn when they will be able to return to service. Individual port tenants will make independent decisions on when to resume their operations.” The extent of impacts to the fertilizer industry were not yet clear but Canadia fertilizer producer Nutrien, who only has the White Springs phosphate facility within Florida, said the company is still dealing with the impacts of the last storm but was able to avoid further issues from this hurricane. “While Nutrien’s White Springs phosphate facility was not impacted by Hurricane Milton, we are continuing to assess the timeline for White Springs’ restart following Hurricane Helene.  Nutrien’s nitrogen facilities were not impacted by Hurricane Milton,” said a Nutrien spokesperson. Fertilizer titan Mosaic, who not only has their headquarters within Tampa but also has numerous assets for production and logistics, said their immediate focus is on their workforce. “As Hurricane Milton has now passed through central Florida, we are working to contact our employees and confirm their safety. When conditions allow, we’ll begin assessing the impacts on our operations,” said Mosaic. There were concerns ahead of the storm over the potential environmental consequences of Milton as Florida has 25 stacks of slightly radioactive phosphogypsum waste that are a by-product of phosphate fertilizer production. The fear that the winds and rains could release the material across the land and water resources that are nearby as has occurred in past hurricane events. There was no immediate report of the conditions of the stacks as of late 10 October but ahead of the storm Florida environmental officials had said they were preparing and would have all resources available to oversee the regulated facilities and operations. Sources said the areas that were more south of Tampa were apparently struck harder but there has not been full confirmation of the damages inflicted with a source saying it is a “different story down there”. There were weather reports of over 18 inches of rain having been received in nearby St Petersburg, Florida. The hurricane also generated several strong tornadoes as it approached which are being blamed for some of the physical damage to structures. A market participants said that with it being less than 24 hours since landfall it was going to take some time for the fertilizer industry to assess the scale of the impacts from Milton, saying it is “too soon for that”. Federal and state officials have not yet projected an estimated amount of damages as assessments were just barely getting underway. It likely did great harm to the Florida citrus industry with orange groves bearing fruit and drawing close to their harvest period. It is feared that it will be determined in the coming days that the storm’s intensity will result in a substantial decline in production this season, with others crops having also been exposed to harm like sugarcane and strawberries.