HOUSTON (ICIS)–Participants in the US chemical industry worry that a prolonged strike by US Gulf and East Coast dock workers will hurt exporters and lead to supply surpluses, and some carriers are already initiating port congestion surcharges that will add increased costs on top of delays to both imports and exports. As expected, dockworkers on the US East and Gulf Coasts went on strike early on Tuesday after labor union International Longshoremen’s Association (ILA) rejected the latest wage offer by employers’ group United States Maritime Alliance (USMX). While the US government has said it will not intervene, some analysts, including Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, think government intervention will be required to bring the dispute to an end. “The latest statement by the ILA suggests there is very little prospect of the two sides reaching a mutually agreeable resolution,” Sand said. “To stop trade from entering the US on such a scale for a prolonged period of time is unthinkable so the Government will need to step in for the good of its people and economy.” Kevin Swift, ICIS Senior Economist for Global Chemicals, said the strike could cost the US economy up to $5 billion/day. “This will affect imports from Germany, the Netherlands and other European nations,” Swift said. “I think the effect is more on specialty chemicals than resins. Swift said the ultimate disruption and cost to the economy depends on how long the strike lasts. IMPACT TO CHEM MARKETSThe strike is already impacting US polyethylene (PE) exports. Container ships also transport polymers, such as PE and polypropylene (PP), which are shipped in pellets. A PE trader in South America told ICIS that they are halting sales of US material destined for Brazil until additional information is available since they are unable to inform clients of the estimated departure date. According to the trader, some cargoes could be delayed by 30 days. The US is the main origin of PE imports into Brazil. The polyvinyl chloride (PVC) Industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports. This could result in a long inventory situation and an increase in days of supply if producers and traders are unable to execute on export transactions due to the port strike. In the polyethylene terephthalate (PET) market, imports of PET resins have already been diverted to the US West Coast in anticipation of the work stoppage. But this places extra pressure on the rail and trucking industries which will need to move that material to destinations that were previously reached from the US Gulf or the East Coast. Imports of purified terephthalic acid (PTA), used to make PET, that typically come from South Korea and Mexico, could be affected by the strike. Even if some PTA gets delivered on the West Coast, it will still need to be transported to the East Coast where most PET plants are located. CARRIER SURCHARGES Market sources are telling ICIS they are seeing congestion surcharges between $1,000-3,000/FEU (40-foot equivalent unit), with some citing even higher surcharges. Sand said that extreme increases in container costs cited by ILA president Harold Daggett have not been seen yet. In a statement on 30 September, Daggett said carriers are charging $30,000/container. Sand cited Xeneta data, which is based on more than 450 million crowdsourced datapoints, showing average spot rates on the major fronthaul from Asia to US East Coast were at around $7,000/FEU on 1 October. “While average spot rates from north Europe to the US East Coast have increased 50% since the end of August, they are still only $2,800/FEU,” Sand said. Supply chain advisors Drewry also show rates from Asia to the USEC at $6,000/FEU, and rates from Asia to the USWC are at $5,500, although the rate of decline has slowed with more traffic heading that way because of the strike. Liquid chemicals that are largely transported by tankers are unlikely to be affected. But more liquid chemicals are being moved on container ships in isotanks. Focus story by Adam Yanelli Additional reporting by Stefan Baumgarten, Emily Friedman, Bruno Menini, Antulio Borneo and Kelly Coutu Visit the ICIS Logistics – impact on chemicals and energy topic page Thumbnail image shows a container ship carrying cargo on its way to Antwerp Harbour. (OLIVIER HOSLET/EPA-EFE/Shutterstock).

HOUSTON (ICIS)–As port operations along the East Coast and Gulf Coast came to a halt amid a union strike underway, the US fertilizer industry was carefully watching the labor developments but is not overly concerned about the situation having an immediate impact on activities or price direction. Part of this outlook on the port problem comes from a perspective of fertilizer participants that the work stoppage will be short in duration as the economic consequences will be severe if protracted. This latest labor disruption began when union International Longshoremen’s Association (ILA) rejected the latest wage offer by employers’ group United States Maritime Alliance (USMX). This commenced a strike at 36 ports stretching from Maine to Texas, and although the labor talks were said to be continuing there was no further progress reported as of late on 1 October. Also, the US fertilizer sector recently experienced the Canadian rail strike, which did provoke some steep concerns before it was quickly resolved so there is thought this situation could follow a similar course and end with a quick resolution. There are some thoughts this strike could be settled within a few days, although the government has indicated that it will not intervene in the situation. An industry participant echoed the overall outlook in saying “if the short term is like that, I do not expect any fertilizer related issues.” Domestic fertilizer prices should not see any immediate escalation because of this strike activity because demand is still fairly limited following the recent hurricanes and with the ongoing harvest progress. In addition, most of those volumes to be used in the coming weeks for end of the year applications, or stockpiled for next spring, saw the majority of movement over the last part of summer and now are mostly in place already. US producers did not immediately respond to a request for comment but Canadian fertilizer major Nutrien said that while the strike might not have any consequences directly for their operations, there is concern over the larger repercussion if this stoppage turns lengthy. “As the world’s largest supplier of crop inputs and services, Nutrien depends on reliable supply chains to serve North American and offshore customers,” said a Nutrien spokesperson. “While the East Coast port strike is not expected to materially impact our shipments, any extended disruption will be felt more broadly in the supply chain, and we urge parties to dispute to achieve a timely resolution.”

HOUSTON (ICIS)–Canadian fertilizer major Nutrien confirmed it is in the process of restarting its Augusta, Georgia, facility. The operation which produces several products including ammonia and urea was shut down after Hurricane Helene made landfall under safety protocols during storm induced power failures. “I can confirm that Augusta is in start-up and expected to be back online later in the week,” said a Nutrien spokesperson. The plant’s annual production capacity is listed at 765,000 tonnes of ammonia, 415,000 of ammonia nitrate, 400,000 tonnes of UAN and 260,000 tonnes of urea. The producer had said on 30 September all their colleagues were safe at their locations but that in many areas, the roads had remained closed due to downed power lines and flooding. Further Nutrien did expect that it could take several days before their full post storm assessment was completed.

BARCELONA (ICIS)–ADNOC’s agreement to buy Covestro ahead of next week’s European Petrochemical Association (EPCA) annual meeting highlights the challenges and opportunities facing Europe’s beleaguered chemical industry. Abu Dhabi National Oil Co (ADNOC) to acquire Covestro for equity value of €11.7 billion ADNOC diversifies downstream from oil and gas Covestro global leader in polycarbonate (PC) and polyurethanes (PU) PC and PU struggle with poor demand from automotive, construction Covestro operating profit slumped from around €3bn in 2021 to near €1bn in 2023 Covestro boasts strong sustainability-related product portfolio More M&A likely in Europe petrochemicals thanks to cheap bottom-of-cycle valuations Oil prices may collapse to $30/bbl if OPEC goes for market share In this Think Tank podcast, Will Beacham interviews Nigel Davis and John Richardson from the ICIS market development team 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. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.

LONDON (ICIS)–Abu Dhabi state oil and petrochemicals player ADNOC has launched a public takeover offer for Germany-based producer isocyanates, polycarbonates and adhesives specialist Covestro, representing an equity value of €11.7 billion. After over a year of reports of a possible deal between the players and concrete negotiations that have been underway since June this year, the Emirati company made a concrete public takeover offer of €62 per share. The price represents a 21% premium to Covestro’s per-share value at the close on 23 June, when the company announced the beginning of due diligence procedures between the two companies. ADNOC estimates the enterprise value of the deal, which also includes net debt and pension obligations that would be taken on as a result of a purchase, at €14.7 billion. The company will also subscribe to new shares representing a 10% increase of Covestro’s share capital at the offer price, which will result in proceeds of €1.17 billion to be used to further the Leverkusen-based producer’s growth strategy. The company had not responded for requests for comment on whether that sum is part of the offer price or in addition to it at the time of publication. The deal is subject to a minimum acceptance threshold of 50% of Covestro’s issued share capital plus one share, with Covestro’s management and supervisory boards backing the deal. The joint investment agreement, which would stand until the end of 2028 if the deal goes through, ADNOC has committed not to sell, close, or significantly reduce Covestro’s business activities, and to abide by existing works agreements. “We are convinced that the agreement reached today with ADNOC International is in the best interest of Covestro, our employees, our shareholders, and all other stakeholders,” said Covestro CEO Markus Steilemann. The deal will play into ADNOC’s plan to diversify and build out its chemicals platform, according to CEO Sultan Adhem Al-Jaber. “This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top five global chemicals company,” he said. If the takeover deal closes, Covestro will continue to be managed as a stock corporation, the company added. (Update re-leads, adds detail throughout) Thumbnail photo source: Covestro

LONDON (ICIS)–Manufacturing output in the eurozone fell at its steepest rate this year in September to hit a nine-month low. Key measures of factory strength such as production, new orders, employment and procurement activity all declined at quicker rates, according to purchasing managers’ index (PMI) data on Tuesday. The HCOB (Hamburg Commercial Bank) eurozone manufacturing PMI fell to 45.0 in September from 45.8 in August, while manufacturing output declined to 44.9, also from 45.8 in the previous month. Both were at a nine-month low, said S&P Global which compiles the indexes. A figure above 50 indicates growth, and below 50 contraction. “Lower output volumes were a response to the prevailing demand environment, which deteriorated further during September,” the market intelligence group said in a statement. Growth in Spain and Greece was offset by weakness elsewhere, particularly in the eurozone’s largest manufacturing sector Germany, which recorded its most pronounced worsening of factory conditions for 12 months. Countries ranked by PMI: September Spain 53.0 4-month high Greece 50.3 12-month low Ireland 49.4 3-month low Italy 48.3 2-month low Netherlands 48.2 2-month high France 44.6 3-month high Austria 42.8 6-month low Germany 40.6 12-month low “While handling the global manufacturing downturn surprisingly well, Spain just does not have enough weight to lift the rest of the eurozone with it,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “The worsening industrial slump in Germany, for example, is too big for Spain’s momentum in September to make much of a difference.” In the UK, the picture was brighter as solid expansion in the sector continued in September. Although the manufacturing PMI declined to 51.5 from August’s 26-month high of 52.5, it has remained above 50 for five successive months. The main drivers of September expansion were the consumer and intermediate goods sectors, both of which recorded stronger increases in output and new business.

SINGAPORE (ICIS)–Denmark’s AP Moller Holding, the parent company of shipping company Maersk, plans to invest €1.5 billion to build a “fossil-free” plastics production plant in Antwerp, Belgium, via a new venture called Vioneo. “The Antwerp plant will benefit from the region’s expertise in the chemicals industry, strong export facilities and access to renewable energy,” AP Moller said in a statement on 30 September. The Vioneo plant is expected to use green methanol as feedstock to produce polypropylene (PP) and polyethylene (PE), with commercial operations slated to begin in 2028, the investment company said. “Fully operational, the plant will be able to produce … 300,000 tonnes of fossil-free plastics annually, corresponding to a reduction of 1.5 million tons of CO2 [carbon dioxide] emissions,” it said. The plant will be located within the Antwerp energy park of Dutch logistics firm Vopak, with support from Vopak Belgium and the Port of Antwerp-Bruges. Project plans will take place in phases, with front-end engineering design (FEED) to begin in Q4 2024, and with the final investment decision (FID) expected in 2025. In a separate statement, the Port of Antwerp-Bruges said that the project is expected to generate “significant job opportunities” during the construction phase and around 250 permanent positions when the plant is fully operational. ($1 = €0.90)

HOUSTON (ICIS)–Even with many states seeing unfavorable weather recently, the pace of the US harvesting continues to be steady with 21% of corn acreage now completed with soybeans at 26% finished, according to the latest US Department of Agriculture (USDA) weekly crop progress report. According to the weekly update, the current rate of corn harvest is even with the 2023 level of 21% and slightly ahead of the five-year average of 18%. Texas continues to be the top state for harvesting progress at 91% of its acreage completed, followed again by North Carolina at 72%. There is 96% of the corn acreage which is dented, which is slightly behind the 97% from 2023 but is above the five-year average of 95%. For corn maturity, there is 75% of the crop at this level, which is below last year’s rate of 79% but is higher than the five-year average of 70%. Looking at corn conditions, there continues to be 4% rated very poor and 8% poor with there being 24% as fair. The amount rated good is at 49% with 15% still listed as excellent. Soybeans dropping leaves has climbed to 81%, and while this is just behind the 82% achieved last season it is above the five-year average of 73%. Harvesting of soybeans is now at 26%, which is ahead of the 20% level from 2023 as well as the five-year average of 18%. Louisiana remains in the lead on harvesting completion with 71% of the state’s acreage now finished, followed by Mississippi at 66%. For soybean conditions, there were no changes once again in the update with it remaining as 3% seen as very poor, with 8% as poor, 25% listed fair with 52% as good and 12% rated as excellent. In other harvesting updates, there is 20% of the cotton crop completed with sorghum at 35% finished.

HOUSTON (ICIS)–The US fertilizer industry along with their agricultural counterparts were trying to assess damages and determine how long activities might be limited or even remain halted as Hurricane Helene delivered a mighty strike with intense winds and tremendous rainfall leading to historic flooding. Across several southeastern states the severity of the impacts affected plant operations and loadings with confirmed issues in Florida, Georgia and North Carolina with some damage reported at the port in Tampa, Florida, which did reopen on 29 September. There was also localized flooding within the city and surrounding communities but the fertilizer hub with its vital production, storage and logistical assets missed the full wrath of the hurricane, which had rapidly intensified before making landfall. Producer Mosaic had earlier informed that it did experience some issues with its operations in Florida as there was water intrusion at its Riverview site, which was caused by storm surge that has left the facility offline. A site cleanup must be undertaken so the operations are not anticipated to see a return to full capacity for about 10 days, but Mosaic did not respond for further comment on whether it had experienced any other impacts to its business activities. Canadian fertilizer major Nutrien said it is still evaluating the total impacts of the hurricane landfall but while its Aurora facility in North Carolina experienced heavy rainfall, the facility did not close during the event and is fully operational. The producer said it did undertake precautionary measures at other sites. “Following Hurricane Helene’s landfall last Friday, Nutrien’s Augusta, Georgia, and White Springs, Florida, facilities were shut down under safety protocols during storm-induced power failures,” said a Nutrien spokesperson. “All our colleagues are safe at these locations, but many area roads remain closed due to downed power lines and flooding. It could be several more days before a post-storm assessment is complete.” For fertilizer interests overall there was optimism that while the storm potentially wiped out what crops had not been finished in some locations, it should not have a lingering sway on upcoming demand or supply availability once flooding recedes and acreage dries as there is still plenty of acreage left to complete. As an industry source said, “I don’t think it matters at all. We just need some more harvesting so farmers can think about application.” Corn harvest is now 21% complete, while soybeans have reached 26%. While September has been treading a tad slower than normal, with repeated tropical weather threats a key factor, there was sentiment that when looking ahead at October there will be more traction forward for some products. As a trader said, “I think prices will move up on UAN [urea ammonium nitrate] because of the supply disruptions but hard to say how much. Phosphate is probably the most bullish out of everything, urea doesn’t really have an impact.” The extent of crop damage will not be clear for at least several days, maybe longer. The concern is still that a reduction in yield means a drop in income back to the grower who then will have more pressure on how to manage upcoming input expense.