LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 13 September. Customers more willing to pay green premium as net zero transition gathers pace Chemical companies will find it easier to charge a green premium as the cost of carbon increases, fossil feedstock availability declines and customers realize the true value of the products they are buying. Global oil demand growth lowest since 2020 on China slowdown Global crude oil demand continued to decelerate in the first half of the year, the International Energy Agency (IEA) said on Thursday, with consumption growth of 800,000 bbl/day year on year the weakest since 2020. IPEX: Index falls in August as weak demand, softer crude put downward pressure on chemical prices in Asia The ICIS Petrochemical Index (IPEX) was down 1.3% in August month on month as weak downstream demand and softer upstream crude oil costs continued to exert downward pressure on chemical prices in northeast Asia. Europe PX, OX spot prices tumble on softer Asian market, lower contract values Europe paraxylene (PX) and orthoxylene (OX) spot prices plummeted week on week in the week ending 6 September, on the back of softer values in the influential Asian market and lower domestic contract prices, respectively. Demographic drag on chemicals to deepen A continuing flow of poor economic data caused further stock market jitters in September, and as the prospect of a meaningful recovery in the global economy recedes into next year, new analysis suggests that the demographic drag on growth may be stronger than previously thought.

SINGAPORE (ICIS)–China’s value-added industrial output growth in August slowed down to 4.5% year on year from the previous month’s 5.1%, official data showed. In August, equipment manufacturing contributed 47.9% of the total growth in industrial output, China’s National Bureau of Statistics (NBS) said on 14 September. Value-added industrial output consists of manufacturing, mining, as well as industrial enterprises. Almost 80% of industries and over 50% of products had year-on-year growth in August, according to Liu. Meanwhile, August retail sales increased by 2.1%, down compared with a 2.7% growth in July. Unemployment in urban areas grew to 5.3% in August from 5.2% in the previous month. In the first eight months of 2024, the unemployment rate averaged 5.2%. “Adverse impacts” from changes in the external environment are increasing, despite the economy’s general stability, the NBS said. Domestic demand has been insufficient, it added, noting reforms and policy measures need to be sped up to address growth and recovery.

SINGAPORE (ICIS)–Typhoon Bebinca made landfall early Monday in China’s financial hub of Shanghai, bringing strong winds and torrential areas to the region. The storm made landfall at around 07:30 local time (11:30 GMT) on Monday in the coastal area of Lingang New City in Shanghai’s Pudong region, the China Meteorological Administration said. The typhoon was packing maximum winds of around 151 kilometers/hour near its center. Following its landfall, Bebinca is expected to lose strength and become a tropical storm as it moves northwestward across southern Jiangsu province on Monday. It will further weaken into a tropical depression and eventually dissipate as it passes over Anhui province by the afternoon of 17 September. Bebinca is the strongest storm to hit Shanghai since Typhoon Gloria in 1949, according to state news media. Shanghai, a city with a population of 25 million, activated its highest level of emergency response on Sunday. This included halting railway services, closing ports, bridges, and highways, and cancelling all flights at its two airports. These disruptions are occurring during China’s three-day Mid-Autumn Festival public holiday which began on Sunday. China’s State Flood Control and Drought Relief Headquarters on 15 September activated the Level IV emergency response for east China’s Anhui Province and raised the response in Shanghai and Zhejiang to Level III. Level IV is the lowest emergency response level, indicating a potential threat but not an immediate crisis. Typhoon Bebinca was on the heels of Super Typhoon Yagi, which recently devastated Hainan Island in southern China, resulting in extensive damage. Yagi then continued its destructive path into northern Vietnam and Thailand, causing floods and damaging infrastructure. Thumbnail image: A man walks a street during heavy rain amid Typhoon Bebinca in Shanghai, China on 16 September 2024. Shanghai has closed its seaports and canceled over 600 flights in preparation for Typhoon Bebinca. (ALEX PLAVEVSKI/EPA-EFE/Shutterstock)

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 September 2024. Asia LAB struggles amid crude oil weakness; Q4 supply to tighten By Clive Ong 13-Sep-24 13:40 SINGAPORE (ICIS)–Asia’s linear alkylbenzene (LAB) market remains in the doldrums with sentiment staying cautious following recent slippages in crude oil prices, while supply could tighten in the fourth quarter. INSIGHT: China-US trade tensions build as anti-dumping cases increase By Fanny Zhang 12-Sep-24 18:35 SINGAPORE (ICIS)–The US has become the top target of China’s anti-dumping cases for chemical imports, underscoring growing trade barriers between the world’s two biggest economies. Saudi Arabia fosters closer ties with China; Aramco, Chinese firms sign fresh deals By Nurluqman Suratman 12-Sep-24 12:39 SINGAPORE (ICIS)–Energy giant Saudi Aramco has signed new agreements to advance separate expansion plans with Chinese petrochemical producers Rongsheng and Hengli. China Aug petrochemical markets tumble; weak demand persists By Yvonne Shi 11-Sep-24 16:38 SINGAPORE (ICIS)–Domestic prices of most petrochemicals in China declined in August due to weak demand and new capacity, with not much improvement in market conditions expected throughout September. Asia solvent MX facing headwinds in Sept amid various bearish factors By Jasmine Khoo 10-Sep-24 12:13 SINGAPORE (ICIS)–Within Asia, trading activity for solvent grade mixed xylenes (MX) in certain import markets like southeast Asia is poised to take a hit going forward into the later part of September. Heavy rains, floodings continue in north Vietnam in Yagi’s wake By Nurluqman Suratman 09-Sep-24 16:42 SINGAPORE (ICIS)–Heavy rains and floodings continued in northern Vietnam on Monday, two days since Super Typhoon Yagi made landfall in the region and killed more than 20 people. UPDATE: Sumitomo Chemical to close two Singapore MMA/PMMA lines by end-Sept By Nurluqman Suratman 11-Sep-24 12:48 SINGAPORE (ICIS)–Sumitomo Chemical will close two of its three production lines for methyl methacrylate (MMA) monomer and polymethyl methacrylate (PMMA) in Singapore by the end of September this year, the Japanese producer said on Wednesday. PODCAST: Weak fuel LPG demand to weigh on China 2024 propane/butane imports By Lillian Ren 11-Sep-24 10:50 SINGAPORE (ICIS)–ICIS has revised down its forecast for China’s combined imports of propane and butane for 2024 because of weaker-than-expected demand in fuel applications. Wang Yen, Senior Analyst speaks with Lillian Ren, analyst on the China propane, butane and LPG markets. UPDATE: Indonesia starts ‘safeguard measures’ probe into LLDPE imports By Izham Ahmad 10-Sep-24 18:09 SINGAPORE (ICIS)–Indonesia has initiated an investigation as to whether “safeguard measures” would be needed in response to a sharp increase in imports of linear low density polyethylene (LLDPE), its trade ministry said.

HOUSTON (ICIS)–Fertilizer developer Genesis Fertilizers announced it has partnered with technology provider CARBONCO and has agreed to negotiate formal licensing and process design package services for a carbon capture and storage (CCS) project. Genesis said this collaboration marks a significant step toward the potential production of sustainable, low-carbon ammonia and urea nitrogen fertilizer for their farming partners and the broader fertilizer industry in North America. Under the terms CARBONCO would be responsible for implementing a solution capable of capturing approximately 1 million tonnes of carbon dioxide annually, which would then be transported directly to a sequestration hub. If implemented, the CCS project would be built at the proposed Genesis Fertilizers production complex to be constructed in Belle Plaine, Saskatchewan, Canada. The company said both parties are confident that this first-of-its-kind CCS project would play a pivotal role in supplying exceptionally clean grain to the market. “In line with our ultimate low carbon intensity fertilizer goal, Genesis Fertilizers has been working with CARBONCO and is pleased to welcome them as our technology provider to explore an exciting opportunity to implement their carbon capture solution,” said Jason Mann, Genesis Fertilizers CEO. “We believe that CARBONCO is the most suitable partner for our project, offering a robust solution that meets our technical and commercial needs.” The front-end engineering design (FEED) phase for Genesis Fertilizers project is expected to begin within the next few months. The company said the final investment decision will be made based on the results of the FEED work and other critical steps, but it is aiming to commence commercial operations by 2029. As proposed there would eventually be both ammonia and urea production with plans to have 75% of output locked into farmer commitments with the balance sold on the open market. Genesis has previously said the goal of this development is to help farmers have access to a vertically integrate fertilizer supply and enable the production of low carbon grain.

HOUSTON (ICIS)–As the remnants of what was Hurricane Francine continues to inundate and bring severe weather threats to parts of the southern US, the fertilizer industry in Louisiana was back in action on Friday having emerged mostly unscathed by the storm. Having escaped any confirmed property damage, with the largest obstacle the loss of power, plant facilities were said to be back online, with fertilizer producers including Nutrien having confirmed the lack of impact from Francine which made landfall on 11 September. Most of the problems faced in the last few days have been delayed and halted logistics given the fierce winds and heavy rains along with the brief stoppage of railroad and port operations. A common refrain was echoed by a producer source who said, “we had some logistical issues but no physical damage”. In Donaldsonville fertilizer producer CF Industries was heard to be back in production and loading supply as the storm brought some disruption to their transportation schedule. The company has not commented during this event but as a trader said, “CF now back running. Barges likely to get sorted over the weekend and river likely to be back open”. With the port in New Orleans (Nola) back in operation there was also further urea barges business done with expectations of a significant period of post-harvest application over the upcoming weeks not washed away by the recent weather. Harvesting campaigns have taken a hit and will be delayed for several days, possibly even longer depending on rainfall amounts. The concern is with a delay in these activities it creates an additional lag for starting post-harvest field activities like end of the year fertilizing. The real impact of this storm and its subsequent sway on domestic fertilizer direction likely comes once the extent of crop damage is understood, with the storm having arrived as there was considerable acreage nearing maturity or being harvested across several states. Lost of yields causing a reduction in income could mean a decrease in buying for immediate supply or reduced interest in pre-pay commitments.

HOUSTON (ICIS)–The US Department of Agriculture (USDA) has lifted the expectations for corn production slightly while soybean production is being projected to be down marginally according to the September World Agricultural Supply and Demand Estimates (WASDE) report. For corn the monthly update is showing an outlook of increased production but for smaller supplies and a modest decline in ending stocks. Corn production is being forecasted at 15.2 billion bushels, which is an increase of 39 million bushels from last month and is based on a 0.5-bushel increase in yield, which is calculated at 183.6 bushels/acre. The September WASDE said the harvested area is unchanged at 82.7 million acres. Projected beginning stocks for 2024-2025 are reduced by 55 million bushels based on increases in exports and corn used for ethanol during the period of 2023-2024. Total corn use is unchanged at 15 billion bushels. With supply falling and use unchanged, the USDA said ending stocks are reduced by 16 million bushels to stand at 2.1 billion bushels. The September WASDE said the season-average corn price received by producers is lowered by 10 cents to $4.10/bushel. For soybeans, the USDA said supply and use changes include lower production and beginning stocks as well as ending stocks. Without attributing a cause for the dip, the monthly update shows that soybean production is projected down by 3 million bushels for a total estimate of 4.6 billion bushels. The agency said lower beginning stocks reflect a slight increase to crush for 2023-2024. With the 2024-2025 soybean crush and exports unchanged, the September WASDE is projecting ending stocks at 550 million bushels, down 10 million bushels from last month. The season-average soybean price is forecast as unchanged at $10.80/bushel. The next WASDE report will be released on 11 October.

HOUSTON (ICIS)–Average global rates for shipping containers fell significantly this week, including a 21% decrease from Shanghai to New York, as shippers are shifting cargo deliveries to the US West Coast to avoid the planned strike on 1 October. A strike by union dock workers at East Coast and US Gulf ports seems more likely after International Longshoremen’s Association (ILA) Wage Scale Delegates voted unanimously last week to support leadership’s intentions to walk off the job if a new labor deal is not agreed to when the contract expires on 30 September. Supply chain advisors Drewry said the shift has led to a decrease in demand that has pressured prices lower. Average global rates for 40-foot containers fell b y13% as shown in the following chart. As much of the peak-season demand has been pulled forward either to avoid tariffs or the labor issues, Drewry expects east-west rates to fall further in the upcoming weeks. The following chart from Drewry shows the decrease from Shanghai to both US coasts, as well as from Shanghai to Rotterdam and Genoa which have also fallen significantly. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates from Asia to the US West could face upward pressure the deadline to make the decision to shift coasts has about passed. “Transatlantic shippers still have a little time left to move containers, and the approaching cutoff may be supporting the $300/FEU (40-foot equivalent units) increase in daily rates so far this week,” 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 STEADY Rates for liquid chemical tankers ex-US Gulf were unchanged this week. On the transatlantic eastbound trade lane contract cargoes are keeping things steady with owners looking to fill holes of open space. October contract volumes on the transpacific route remain tentative but a shipping broker expects part cargo space to be available across the regular players. The USG-South America east coast trade lane was quiet this week, but the regular owners have space for prompt loading. Thumbnail photo: A container ship carrying cargo on its way to Antwerp Harbour. (By OLIVIER HOSLET/EPA-EFE/Shutterstock)

SAO PAULO (ICIS)–The Argentinian’s government attempt to turn the economy around has had certain successes in the fiscal front, but high inflation is still challenging the outlook as it continues to eat up on gains elsewhere, according to an economist at Buenos Aires-based Fundacion Capital. Carlos Perez, director at the consultancy, said metaphorically that the Argentinian economy has been released from the intensive care unit but only to be moved on to the general ward of an imaginary hospital, “The economy remains a patient.” Perez, who was an executive at Argentina’s central bank between 2004 and 2013, said he was impressed with the fiscal consolidation in President Javier Milei’s first nine months in office, but added the challenges ahead remain daunting and a change in society’s mindset – a “regime change”, he said – is needed to make the system functional. While at this stage most economists think Milei could go 50/50 to success or failure, Perez said his opinion now would be tilted towards a 60% chance of success, because of the quick progress done so far. ON THE TIGHTROPEHowever, a 40% chance of failure is still painfully high for a society which has been battered by half a century of economic up and downs – in the past two decades, more downs than ups. Many of Milei’s policies are inspired in center-right former President Mauricio Macri (2015-2019), who tried to liberalize one of the closest economies in the world; the experiment worked for a bit, but the return of the center-left Peronists changed course again. All in all, since former President Nestor Kirchner’s first term (2003-2007), who was then to be succeeded by his wife Cristina Fernandez de Kirchner, the economy in Argentina has lived on steroids, with widespread subsidies which Milei has started to withdraw. Printing money to fund that spending became the norm. The result is Argentina’s stratospherically high inflation, still running at annual rate of 237% and with monthly inflation still running at over 4% – bringing monthly price rises below that threshold was one of Milei’s key targets. “The economy has gone into intermediate care, but it is still early to see the light at the end of the tunnel. But considering the fiscal adjustment in these nine months, with respect to the fiscal results that Argentina had in the last 50 years, one has to say that in fiscal terms the government has done a very good job,” said Perez. “When I say very good, what I mean is that not only you have achieved to cover public spending, but also to cover the payment of the interest on the public debt that you were having because of the recurring fiscal deficits, ie they have achieved a primary surplus.” However, the cabinet has been able to achieve a primary surplus with drastic cuts to public spending – the start of subsidies’ withdrawal or putting on hold all public works, for instance – which are denting consumption at the same time. However, Perez says cutting public spending is in a way the healthiest option to achieve a surplus, the other two being by issuing debt or increasing spending, “Both are a little bit bread for today and hunger for tomorrow,” said Perez. “What happens is that you had hyperinflation on the horizon, and the fiscal imbalance was the implicating variable par excellence. The cabinet chose the healthiest way [to achieve a surplus].” While there have not been yet widespread redundancies among civil servants, Perez expects that process to happen gradually in the coming quarters, with public authorities setting up schemes for leavers in which, for example, they give them a period of 12 months to find another employment in the private sector. “The cabinet wants the private sector to be the motor of the economy. That will imply a change in society’s mindset, which has lived in a subsidized system for more than 20 years, accustomed to Nanny State, with a small break during Macri’s term which never amounted to a proper regime change,” said Perez. “Society is asking for radical change, and the certainty of regime change is not yet installed in the economic agents’ minds. It is very different for the business community to take decisions on investments with an installed, stable regime than to take those decisions under rules which may last as little as one cabinet’s term.” LIQUIDITY IMPROVEMENTS STALLArgentina’s fiscal deficits continuously knocked on the door of the non-independent central bank, who kept printing money and ran out of pretty much all its reserves. During Milei’s first five months in office, up to May, the central bank also overturned that situation and bought approximately $3 billion/month, accumulated reserves. “However, from June to now it bought less than $200 million in the past 100 days – practically nothing. What’s happening? The real exchange rate today is very similar to what it was before the devaluation of December 2023, ie what was devaluated has been eaten up by inflation,” said Perez. “The exchange rate between the peso and the dollar is devaluating at around 2% per month, but monthly inflation remains at 4% per month, approximately. And you keep accumulating distortion.” Many other distortions in Argentina’s economy remain, said Perez, such as currency controls which limit the buying or selling of foreign currency. The government wanted to withdraw those quickly, but it found the treasury’s coffers were very much intertwined with the economy system inherited. Another bailout agreement with the IMF may also be necessary, he added, to give breathing space to the administration to implement its plans, which the IMF has endorsed. Like most other bodies, including the IMF, Fundacion Capital is projecting a fall in Argentina’s GDP of 4-5% this year, with a strong rebound in 2025, which will be led by the commodities exports boom coming from both agro and oil and gas. Petrochemicals-intensive manufacturing sectors, however, may still take a while to feel the recovery in earnest, according to sources, as consumers shy away from big-ticket purchases such durable goods – their pockets are expected to remain squeezed still for a few quarters. “If you had asked me in December about the chances of success, I would have also said 60% chance of failure, and 40% of success. As of now, I think those values have reversed and we are looking better. It’s still little optimism, but at least we can see an open ending,” said Perez. “It will depend on how the government succeeds in implementing the cultural change it wants, showing this is not just like the Macri parenthesis but an actual regime change. It has several weaknesses, not least its minority in both Congress and Senate,” said Perez. “The cultural change must be adopted by society as well, whom I believe this time can clearly see there is not money in the state coffers. Let’s see – but the truth is that society was fed up with the politics of the past years and where they led us.” Interview article by Jonathan Lopez