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.”

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%.

HOUSTON (ICIS)–Canada plans to impose a 100% tariff on all electric vehicles (EVs) made in China, effective on 1 October, and on top of the 6.1% tariff it already imposes on such automobiles, the government said on Monday. The tariff includes electric and certain hybrid passenger automobiles, trucks, buses and delivery vans, the government said. In addition, the government plans to impose a 25% tariff on imports of steel and aluminum products from China, effective on 15 October. The tariffs will not apply to Chinese goods in transit on the day that the duties come into force. Canada could impose more tariffs against other Chinese imports following a 30-day review, it said. Those imports could include batteries and battery parts, semiconductors, solar products and critical minerals. For other countries, Canada plans to limit which ones are eligible to participate in its Incentives for Zero-Emission Vehicles (iZEV), Incentives for Medium and Heavy Duty Zero Emission Vehicles (iMHZEV) and Zero Emission Vehicle Infrastructure Program (ZEVIP). Eligibility would be limited to products made in countries with which Canada has negotiated free trade agreements. CANADA’S EV DUTIES FOLLOW THOSE BY US AND EUEVs made in China have become the target of punitive duties by a growing number of regulators. Earlier in the month, the European Commission announced plans to impose up to 36% countervailing duties on EVs from China. US tariffs on Chinese EVs were scheduled to reach 100% on 1 August. EVs typically consume more plastics on a per unit basis than automobiles powered by internal combustion engines (ICEs). EVs also pose different material challenges, which is increasing demand for different plastics and compounds. Policies that prolong the use of ICE-based vehicles could extend the operating life of the nation’s refineries. Companies could be more willing to invest in maintenance and repairs if they are confident that they could recoup their investments. Refineries produce many building block chemicals, such as propylene, benzene, toluene and mixed xylenes (MX). Thumbnail shows an EV charging station. Image by Xinhua/Shutterstock

CHARLOTTE, North Carolina (ICIS)–August started with reports of high weekly initial unemployment claims, a weak manufacturing PMI reading and a lackluster payroll report. Equity markets did not react well to this as evidenced by a three-day sell off. But the panic ended, a rebound ensued and we are back to where we were on 31 July as the underlying economic fundamentals of a late-phase business cycle remain. The economy is slowing, not falling off a cliff. Job creation continues, even after the softer showing in July and the unemployment rate ticking up to 4.3%, largely the result of Hurricane Beryl. In the latest JOLTS (Job Openings and Labor Turnover) report, there are 1.2 job openings per unemployed, which is down from a year ago. Overall labor market supply and demand relationships appear to be moving back towards pre-pandemic levels. With a still positive labor market, incomes are holding up for consumers and providing support for the US economy. The headline July Consumer Price Index (CPI) was up 2.9% year on year, the lowest comparison since March 2021. Progress on disinflation continues and inflation is heading back towards the Fed’s target. Economists expect inflation to average 3.1% this year, down from 4.1% in 2023 and 8.0% in 2022. This is still above the Fed’s target. Inflation should soften to 2.4% in 2025 and 2026. As a result, interest rate futures overwhelmingly expect the Fed to cut rates in September. Turning to the production side of the economy, the July ISM US Manufacturing Purchasing Managers’ Index (PMI) registered 46.8, down 1.7 points from June and a reading that was below expectations. A March expansionary reading had ended 16 months of contraction in manufacturing, but since then the readings have been contractionary. Overall manufacturing production contraction deepened. New orders slipped further into contraction, and order backlogs and inventories contracted at a faster pace. Only five of the 18 industries expanded. The ISM Services PMI rebounded 2.6 points to 51.4, a slightly expansionary reading. The Manufacturing PMI for Canada remained in contraction (15 months and counting) during July while that for Mexico contracted slightly after nine months of expanding. Brazil’s manufacturing PMI expanded for a seventh month. Euro Area manufacturing has been in contraction for 24 months. The UK PMI, however, expanded for a third month. China’s manufacturing PMI retreated below breakeven levels, ending eight months of positive readings. This is indicative of a stalling recovery. Turning to the demand side of the economy, light vehicle sales rose in July and although inventories have moved up in recent months, they still remain low. We expect light vehicle sales of 15.7 million this year before improving to 16.2 million in 2025. We expect sales of 17.2 million in 2026. This would bring activity back to the last cyclical peak in 2018. Housing activity continues to be tepid amid affordability issues and low builder confidence. We expect that housing starts will average 1.39 million in 2024 and 1.45 million in 2025. We expect housing activity to improve to 1.50 million in 2026. Demographic factors will support housing activity during the next five or more years. There is significant pent-up demand for housing and a shortage of inventory. Affordability continues to be an issue. Retail sales have been lackluster so far this year, but the July results were positive, aiding to the strength in equity markets. Sales at food services and drinking places remain positive. Consumers are taking on more debt. Overall consumer spending may be slowing but remains positive. Business fixed investment, led by a need to boost productivity and reshoring initiatives, will take over from consumer spending as a driver of the US economy. This is typical of a late-stage business cycle. Taking all of these demand and supply considerations together, it appears that downstream activity is improving and that the severe destocking cycle is ending. A restocking cycle for major resins is emerging. US real GDP rose 5.8% in 2021 and then slowed to a 2.5% gain in 2022. The much-anticipated recession failed to emerge for a variety of reasons, and in 2023 the economy expanded 2.5% again. US economic growth in H1 2024 has been strong but is likely to slow, and when it is all said and done, 2024 growth will likely be another 2.5% gain. This pace is well above long-term growth potential. The slowdown in quarterly economic activity suggests that in 2025, the economy should rise 1.8% over average 2024 levels, followed by a modest 2.0% gain in 2026. The US is once again outpacing the other advanced nations. Led by the UK and the Mediterranean nations, Europe’s economic prospects appear to be improving. China struggles with soft economic activity and appears to be exporting its way out of its stalled recovery.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 23 August. SHIPPING: Panama Canal adds additional transit slot, raises maximum draft allowance As the water level in the freshwater lake that feeds the Panama Canal’s locks continues to rise, the Panama Canal Authority (PCA) has increased the maximum allowable draft to 50ft (15.25m), effective immediately, and will add an additional transit slot beginning 1 September. Canada needs to act on rail stoppage, now – chem group CIAC Canada’s federal government needs to exercise its authority and act quickly on the complete freight rail stoppage, set to start midnight at 00:01 Eastern Time, trade group Chemistry Industry Association of Canada (CIAC) said. Canada government reluctant to intervene as freight rail shutdown begins As the unprecedented work stoppage at both of Canada’s freight railroads began on Thursday at 00:01 Eastern Time, it remains unclear how or when it may end as the government is reluctant to intervene. LyondellBasell declares FM on rail shipments to Canada amid CPKC, CN work stoppage Global chemicals major LyondellBasell has declared force majeure on all rail shipments to Canada after that country’s two largest railroads shut down operations after negotiations for a new collective bargaining agreement stalled. Canadian freight railroads prepare to resume operations after brief shutdown Freight railroads Canadian National (CN) and Canadian Pacific Kansas City (CPKC) are preparing to restart operations after the federal government stepped in to end a labor dispute with workers – although it remains unclear on Friday when exactly a full freight rail service will resume. Canada rail dispute: Union issues fresh strike notice, despite government order for binding arbitration -Labor union Teamsters Canada Rail Conference (TCRC) on Friday issued a strike notice for Monday, 26 August, against railroad Canadian National (CN).

MADRID (ICIS)–Sentiment among Germany’s petrochemicals-intensive manufacturing sectors worsened in August to its lowest level since February, research institute Ifo said on Monday. Sentiment among construction companies remained stable at low levels, while overall sentiment deteriorated as the German economy is “increasingly” falling into crisis, said the analysts. “In manufacturing, the index fell considerably. Companies were significantly less satisfied with the current business situation. Expectations fell to the lowest level since February,” said Ifo. “[Manufacturing] companies once again reported declining order backlogs. The situation for investment goods manufacturers, in particular, is difficult.” Sentiment among petrochemicals-intensive construction companies remained stable but low due to, on the one hand, companies being slightly more satisfied with the current business situation but, on the other, reporting declining expectations about future business conditions. The overall Ifo’s Business Climate Index fell from 87.0 points in July to 86.6 points in August. “Companies assessed their current situation as worse. In addition, expectations were more pessimistic. The German economy is increasingly falling into crisis,” said Ifo. Earlier in August, Ifo reported that sentiment among chemicals companies is also falling, with operating rates declining further. ‘MARGINALLY’ GOOD NEWSAnalysts at Oxford Economics said the fall in the Ifo Business Climate Index came as no surprise but added it could be seen as a positive after a string of negative indicators in past weeks, not least last week’s flash manufacturing PMI index for August, which showed Germany and eurozone’s manufacturing still in contraction territory. The downturn in Germany’s manufacturing sector, the largest in the eurozone, weighed greatly on the index. “Although this [Ifo Business Climate Index] marks the fourth consecutive decline after the index peaked in April, it is marginally good news as other surveys had pointed to a sharper deterioration,” said Oxford Economics on Monday. “We think it will take Germany’s manufacturing sector until end of this year to emerge from the economic slump but the deterioration in the services sector highlights the broad weakness in the German economy.” The analysts went on to say the road ahead for Germany’s economic recovery will be a “bumpy” one, adding they still expect the economy to expand in the third quarter, although “cannot exclude” a contraction at this point. However, the analysts said they are more upbeat about the coming quarter, with a recovery potentially taking place towards the end of 2024 in Germany’s economy after the shock suffered in the past two years related to the energy crisis and high interest rates. “We maintain that a recovery will ensue towards the end of this year on the back of a turning industrial cycle and easing financial conditions,” concluded Ifo. “Last week’s data on negotiated wage growth and our expectations of falling inflation data for this week, pave the way for the ECB [European Central Bank] to cut rates twice this year followed by a series of cuts next year.” Front page picture: Chemical plants in Moers, Germany Source: Jochen Tack/imageBROKER/Shutterstock

MUMBAI (ICIS)–India will continue imposing antidumping duties (ADDs) on chlorinated polyvinyl chloride (CPVC) imports originating from China and South Korea. The ADDs apply to CPVC resins as well as compounds, with rates ranging from $593/tonne to $792/tonne, depending on origin and producer, according to India’s Ministry of Finance. They are set for five years and can be revoked or amended, if necessary. S.No Country of origin Country of export Producer Type Amount in ($/tonne) 1 China Any country including China Any CPVC resin 790 2 China Any country including China Any CPVC compound 605 3 Any country other than China and Korea China Any CPVC resin 790 4 Any country other than China and Korea China Any CPVC compound 605 5 Korea Any country including Korea Hanwha Solutions Corp CPVC resin 593 6 Korea Any country including Korea Hanwha Solutions Corporation CPVC compound 792 7 Korea Any country including Korea Any producer other than mentioned above CPVC resin 593 8 Korea Any country including Korea Any producer other than mentioned above CPVC compound 792 9 Any country other than China and Korea Korea Any CPVC resin 593 10 Any country other than China and Korea Korea Any CPVC compound 792 Source: India Ministry of Finance India’s anti-dumping duties on CPVC imports from China and South Korea were initially imposed on 26 August 2019 for a period of five years. These measures have been extended following recommendations by the designated authority to protect the domestic industry. It was determined that dumping and injury to Indian manufacturers were likely if the existing measures were not extended.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 23 August. Aviation fuel prices hit new lows amid growing bearishness European spot jet fuel quotations plunged to 14-month lows towards mid-week, bearing the brunt of tepid demand and ongoing upstream softness, with the short-term outlook unclear as the peak travel season winds down. Europe SAN contract prices increase double digits in August August contract prices have increased €70/tonne in the European styrene acrylonitrile (SAN) market, the first price increase since April 2024, mainly driven by composite costs of the €78/tonne contract price increase for upstream styrene, and the €36/tonne contract price increase for secondary feedstock acrylonitrile (ACN). EU plans up to 36.3% definitive tariffs on EV imports from China The European Commission (EC) has announced a draft decision to impose up to 36.3% definitive countervailing duties on imports of battery electric vehicles (EVs) from China. Quantafuel cancels pyrolysis-based chemical recycling project in Sunderland, UK Quantafuel Sunderland Limited, part of UK recycling major Viridor, has halted the development of its planned pyrolysis-based chemical recycling plant in Sunderland, a company spokesperson confirmed late on Monday. IPEX: Global index down on softer prices in NW Europe, NE Asia Lower chemical prices in northwest Europe and northeast Asia drove the global spot ICIS Petrochemical Index (IPEX) down by 0.2% in the week ending 16 August.

TORONTO (ICIS)–Labor tribunal Canada Industrial Relations Board (CIRB) on 24 August ordered Canada’s two freight railroads and about 9,300 unionized workers to resume rail service at 0:01 eastern time on 26 August. Freight rail service on both Canadian National (CN) and Canadian Pacific Kansas City (CPKC) was shut down on Thursday, 22 August amid a protracted labor dispute. With the order, the CIRB follows directions Canada’s federal labor minister issued shortly after the shutdown began. The dispute between railroads and workers would be settled through binding arbitration, in line with the minister’s directions, the CIRB said. The board said that “the current circumstances and impact of work stoppages involving Canada’s two main rail companies” were reasons for its decision. The board will provide detailed reasons later, it said. UNION, RAILROADS WILL COMPLY Labor union Teamsters Canada Rail Conference (TCRC) and the railroads said they would comply with the board’s decision. CPKC asked workers to return to work for the day shift on Sunday, 25 August, in order to restore service as quickly as possible and avoid further disruptions to supply chains. TCRC added that while it would comply with the CIRB’s decision, it would appeal the ruling in court. In Canada’s chemical industry, trade group Chemistry Industry Association of Canada (CIAC) has said that going by past experience, for each day of a rail disruption it could take three days or more to return to service once labor issues are resolved. CIAC is particularly concerned about the supply of chlorine and derivatives for drinking water treatment during rail disruptions. For safety reasons, chlorine can only be shipped by rail. Although the rail shutdown began on 22 August, the railroads stopped accepting chlorine and other hazardous materials for shipment before that date. The disruption in rail service prompted fears that Canadian chlorine plants could be forced to curtail or stop production. Canada-based chemical producers rely on rail to deliver 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) Meanwhile, LyondellBasell declared force majeure on all cargo movements by rail to Canada and industrial chemical producer Chemtrade Logistics warned about the impact of the rail disruption on its financial results. 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: Additional reporting by Adam Yanelli and Nurluqman Suratman