LONDON (ICIS)–The US Department of Agriculture (USDA) has published the July World Agricultural Supply and Demand Estimate (WASDE) report, which shows that corn production is forecast to increase by 240m bushels while for soybeans the outlook is for a decrease of 15m bushels. Senior editor Mark Milam talks to Sylvia Traganida about the report and the latest developments in the US market.

SINGAPORE (ICIS)–Ocean container freight rates in Asia are expected to remain high in the near term amid persistent congestion at key ports in the region, particularly Singapore. Peak demand season, capacity issues continue to push up rates Singapore port wait times reduced, but challenges remain ASEAN Express offers faster rail alternative to sea freight The Drewry World Container Index (WCI) edged up 1% to $5,901 per forty-foot equivalent unit (FEU) for the week ending 11 July, with the rate of increase easing from a double-digit pace se in recent weeks. The Shanghai Containerized Freight Index (SCFI), which measures spot rates for shipping containers from Shanghai to major global ports, meanwhile, dipped 1% week on week to 3,674.86 points in the week ending 12 July. The convergence of seasonal peak demand and strained capacity as commercial vessels continued to avoid the Red Sea and Suez Cana, are expected to keep shipping costs firm in the near term for container routes globally, said Judah Levine, the head of research at online freight shipping marketplace and platform provider Freightos. According to supply chain advisors Drewry, ocean freight rates are expected to remain high until the end of the peak season, which typically falls between August to October each year. SINGAPORE CONGESTION EASING In Singapore, the world’s second-largest port and the largest transshipment hub connecting Asia and the west, the average wait time to berth has been “reduced to two days or under”, port operator PSA Singapore said in a statement on 10 July. This compares to waiting times up to seven days for a berth in the port of Singapore in late May this year, according to logistics data group Linerlytica. Singapore has experienced high berth demand and unscheduled vessel arrivals since the start of 2024, leading to increased waiting times despite utilizing all available berths, PSA said. PSA has since “significantly ramped up its capabilities to support increased activity and mitigate the impact of global supply chain disruptions since the beginning of 2024”. However, the PSA warned that “the Red Sea crisis has significantly disrupted global shipping and trade and we anticipate this challenging situation to persist for a prolonged period, potentially extending port congestion from Asia to Europe”. For chemical tankers, shipping brokers have reported varying degrees of congestion and delays at Singapore ports. A broker involved in bio-chemicals and clean petroleum product (CPP) trades noted congestion at all terminals with delays of at least one week. A tanker carrying methyl acetate (MEAC) was facing a two-week delay in discharging cargoes at a key terminal in Jurong Island, another broker said. Jurong Island is Singapore’s petrochemical hub. A third broker indicated that delays in unloading and loading of cargoes at Singapore ports were generally measured in days rather than weeks. A Singapore-based acrylates producer was having difficulties securing vessel space, as shipping companies were bypassing the congested port. This congestion has also spilled over into Malaysia, impacting customers in both countries which are now experiencing delays of up to a week for July shipments. Overall port congestion levels in Malaysia have been reduced, but berthing delays remain at five days at Port Klang, while Tanjung Pelepas has limited delays, Linerlytica said in an update on 10 July. In India, heavy congestion is also reported at Colombo port, resulting in backlogs and delays, with adverse weather conditions around the Cape of Good Hope compounding the situation, causing further delays, according to global digital freight forwarder Zencargo in a note on 15 July. Vessels are increasingly navigating around the Cape of Good Hope to avoid the heightened risks in the Red Sea and Suez Canal due to escalating Houthi attacks since November 2023, opting for a longer-but-safer route despite the added time and costs. “The market from the Indian subcontinent to Europe is experiencing significant disruptions,” it said. “Carriers have stopped accepting bookings from South India for Europe due to heavy congestion in Colombo, causing a minimum delay of three weeks in transshipment. Carriers are only quoting on spot rates due to the tight space situation​.” Historically, Colombo has handled a substantial portion of India’s containerized exports and imports due to insufficient direct line-haul connections from the country’s east coast ports, according to Zencargo. However, recent months have seen an unusual surge in volumes, exacerbated by vessel diversions linked to Red Sea shipping disruptions, with ships languishing for over five days before securing a berth, it said. In China, port delays have worsened in the week to 10 July after recent improvements due to bunching of vessel arrivals, with wait times of up to four days in Shanghai and up to two days in Ningbo, Linerlytica added. China is also set to continue grappling with rising container prices and leasing rates in July, according to Haoze Lou, a member of the broker team at online shipping container leasing firm Container xChange. Scarcity of available slots for China-Europe and China-US routes has intensified, prompting offline suppliers to offer competitive prices to attract customers, Lou said. “In June, we’ve observed a continued rise in container prices in China, impacting both trading and leasing activities,” he said, adding that a rebound is expected over the next month as slot availability tightens again. CONTAINER RATES HINGES ON CONSUMER DEMAND The outlook for the container trading and leasing market in the second half of 2024 hinges on a revival in consumer demand but faces uncertainties due to geopolitical disruptions and potential labor unrest, according to Container xChange. Continued Houthi attacks threaten supply chains, while potential labor issues in US ports could further disrupt operations, it said. “However, if the current market conditions persist without major changes, we expect container rates to ease,” Container xChange noted. “This reduction in rates could trigger an uptick in container buyer activity, as the buyer side is currently waiting for prices to decline before resuming trading and leasing activities.” RAIL OPTIONS OPEN UP FOR CHINA-SE ASIA ROUTE The successful inaugural trips of the ASEAN Express – a new cargo rail service connecting Malaysia, Thailand, Laos, and China – highlight its potential as a faster and more efficient alternative to traditional ocean freight as it connects new trade routes and inland ports across Asia. This includes the Kontena Nasional Inland Clearance Depot in Selangor, Malaysia; Latkrabang Inland Port in Thailand; and the Thanaleng Dry Port in Laos, which connects to a railway terminal in Chongqing, southwest China. The first ASEAN Express cargo train successfully completed a round trip between Malaysia and China on 11 July, carrying electronic appliances and agricultural products, marking a milestone in regional trade connectivity which could boost trade of petrochemical end-products. The recently launched cargo rail service has been met with optimism by Asian recyclers, though immediate impact is expected to be limited. While the service directly benefits buyers and sellers in China, Malaysia, Thailand, and Laos, recyclers in Taiwan, Indonesia, and Vietnam anticipate primarily using ships, potentially freeing up shipping capacity and alleviating tightness in vessel and container space. This new service significantly reduces transit time compared to sea freight, taking just under 14 days compared with up to three weeks by sea. “This service will provide smoother and more efficient goods flow throughout the region as well as enhance rail cargo transport capacity while reducing logistics costs by an estimated 20% from current market rates,” Malaysian transport minister Loke Siew Fook said in a speech at the flag-off ceremony for the new rail service on 27 June. “The shorter transport times are also expected to open up new markets, with the agricultural sector in particular to benefit by allowing perishable products to be transported more quickly by rail,” he added. Insight article by Nurluqman Suratman Additional reporting by Hwee Hwee Tan, Corey Chew, Arianne Perez and Ai Teng Lim Thumbnail image: At the Keppel and Brani port terminals in Singapore, 15 June 2024 (By Joseph Nair/NurPhoto/Shutterstock)

SINGAPORE (ICIS)–The International Monetary Fund (IMF) late on Tuesday revised upwards its economic growth projections for China and India, with Asia’s emerging market economies set to remain as the main engine for the global economy. However, prospects for the region over the next five years remain weak, largely because of waning momentum in emerging Asian economies, the IMF said in its World Economic Outlook report. China’s economic growth projection was upgraded to 5% for 2024, up 0.4 percentage points from previous estimate made in April, while India is now expected to expand by 7%, up by 0.2 percentage points. By 2029, however, growth in China is projected to moderate to 3.3%, well below its current pace, the IMF warned. China’s growth forecast for 2024 was revised higher mainly due to a resurgence in private consumption and robust exports in the first quarter. “Resurgent domestic consumption [in China] propelled the positive upside in the first quarter, aided by what looked to be a temporary surge in exports belatedly reconnecting with last year’s rise in global demand,” the IMF said. “These developments have narrowed the output divergences somewhat across economies, as cyclical factors wane and activity becomes better aligned with its potential.” However, China’s GDP growth is expected to moderate to 4.5% in 2025 and further decelerate by 2029, primarily due to challenges from an aging population and diminishing productivity growth. India’s growth estimate for this year was revised upward due to the carryover effect from increased growth in 2023 and a positive outlook for private consumption, particularly in rural regions. In Japan, despite the expectation of increased private consumption in the latter half of 2024 due to strong wage settlements, the overall growth forecast for 2024 has been revised down by 0.2 percentage points to 0.7%. This adjustment is primarily attributed to temporary disruptions in supply chains and sluggish private investment during the first quarter. Global growth is projected to be in line with the IMF’s April forecast, at 3.2% in 2024 and 3.3% in 2025. Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Aramco has signed definitive agreements to acquire 50% of Saudi Arabia-based Blue Hydrogen Industrial Gases (BHIG), a wholly owned subsidiary of Air Products Qudra (APQ), for an undisclosed fee, the energy giant said late on Tuesday. The transaction will also include options for Aramco to offtake hydrogen and nitrogen, it said in a statement. APQ is a joint venture between Saudi-based Qudra Energy and US industrial gases firm Air Products. Upon completion of the transaction, Aramco and APQ are expected to each own a 50% stake in BHIG, which focuses on producing lower-carbon hydrogen through a process known as steam methane reforming (SMR). Saudi Aramco expects its investment to contribute to creation of a lower-carbon hydrogen network in the Eastern Province, catering to both domestic and regional markets. “This investment highlights Aramco’s ambition to expand its new energies portfolio and grow its lower-carbon hydrogen business,” Aramco executive vice president for strategy & corporate development Ashraf Al Ghazzawi said. “We intend to leverage our growing capabilities in carbon capture and storage (CCS), as well as our technical expertise in hydrogen, with the ambition to support the establishment of a vibrant marketplace for lower-carbon hydrogen – helping lay the foundations of a future energy system.”

HOUSTON (ICIS)–US agribusiness titan Cargill announced it has surpassed the 50% completion milestone in the construction of its new canola facility located in West Regina, Saskatchewan. Cargill broke ground on the facility in July 2022 and anticipates opening in 2025 with the new facility having the capacity to process 1 million tonnes of canola per year, producing crude canola oil for food and biofuel markets and canola meal for animal feed. “The addition of the Regina facility to the Cargill network will play a critical role connecting the Canadian canola industry to the expanding domestic and global market opportunities for vegetable oil, high quality meal and biofuels,” said Jeff Vassart, Cargill Canada president. “The current construction environment is full of unique challenges and this project has faced many headwinds since we broke ground, but we are committed to becoming a best-in-class option for canola growers in the region, along with helping decarbonize the global food and fuel supply chain.” To support rail and road infrastructure around the new plant, Cargill recently completed the purchase of just over 400 acres near the facility location which it said will allow for better connection to existing rail lines. This will provide the site with additional optionality to bring canola seed to Regina when needed, providing a new destination for farmers in western Canada.

NASHVILLE (ICIS)–Unfavorable farming fundamentals, including weaker grain prices, high cost of credit, and weather issues will continue to hit demand for fertilizers, said market participants on the sidelines of the Southwestern fertilizer conference (14-18 July). Grain prices have slumped to the lowest level since December 2020 as Tropical Storm Beryl was expected to bring rains to the Midwest. This could boost yields at a time when prices are already under downward pressure due to ample availability. “The US farmer is in the worst shape that I have seen in my career, and this is concerning,” said a trader with over 15 years of experience. Urea prices in the US are the cheapest in the world right now, as expected for this time of the year due to it being the offseason. Some market players believe prices are low domestically to discourage more imports. Importers may even look at re-exports to Brazil and Latin America if urea prices in New Orleans decline below $290-295/short ton FOB Nola. The level of $290/short ton FOB Nola is equivalent to $360/tonne CFR (cost & freight). For now, the urea level in Nola is in the mid $300s/short ton FOB Nola for July shipment. The phosphates market is getting more attention than urea in the US given the lack of availability for monoammonium phosphate (MAP) due to countervailing duties (CVD) on product arriving from Russia and Morocco. The lack of MAP availability is seeing prices trade at around $120/tonne premium to diammonium phosphate (DAP), when usually the premium is $20/tonne. There is more demand for triple phosphate (TSP) as some players are forced to switch due to the lack of MAP supply. The CVD rate for Russian producer PhosAgro is currently at 28.50%, while for Morocco the process is under review and could result in an increase in CVDs from 2.12% to 14.21% in October/November. Thumbnail shows crops being grown at a farm. Image by Shutterstock.

BARCELONA (ICIS)–Rampant overcapacity in China may change as limits to refinery expansions and new plants stifle feedstock availability. Big structural reforms needed to improve China’s economy China petrochemical trends become more complicated Country plans to cap refinery capacity at 1 billion tonnes/year from 2027-2040 China forging closer relations with Saudi Arabia Swift rise in China electric vehicles threatens petrochemical feedstocks Zero carbon rules limit future plant construction in China Europe needs to act fast to protect its industry In this Think Tank podcast, Will Beacham interviews ICIS Insight editor Nigel Davis, ICIS senior consultant Asia John Richardson 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.

MADRID (ICIS)–Colombia’s single-use plastic ban, which affects a wide range of products, kicks off amid some industry reluctance after a hurried implementation, and with provisions to revise the legislation after a one year trial period. The law that came into force on 7 July implemented a ban on eight plastics: carrier bags for packing supermarket purchases; bags for fruits and vegetables; plastic packing for magazines and newspapers; bags for storing clothes coming out of the laundry; plastic holders for balloons; cotton swabs; straws; and stirrers. The regulation establishes that those plastic products must be replaced by sustainable alternatives, such as biodegradable and compostable materials or recycled materials, or reusable non-plastic materials. It is a wide-ranging ban approved in parliament in 2022, although the plastics industry has criticized that details about the implementation of the law were only published at the end of June, barely two weeks before the kick-off date. Environmental groups have welcomed the measure, hoping more countries in Latin America will implement similar legislation in a region where plastics are omnipresent. MORE TO COMEApart from the eight plastic products banned from 7 July, the ban has set a transition period ranging from two to eight years, depending on the type of plastic, to allow merchants time to adapt to the new regulations. By 2030, plastics to be eliminated or transformed into reusable materials include containers, packaging, and bags for non pre-packaged liquids; disposable plates, trays, and cutlery; confetti, tablecloths, and streamers; containers, packaging, and bags for deliveries; sheets for serving or packaging foods for immediate consumption; wrappers for fruits and vegetables; stickers for fruits; handles for dental floss; and straws for containers of up to three liters. The law establishes exceptions for single-use plastics in certain cases, including exceptions for plastics used for medical purposes; packaging of biological or chemical waste; food products of animal origin; and those made with 100% recycled plastic raw material sourced from national post-consumer material. The regulation also mandates that public entities cannot acquire prohibited single-use plastics if sustainable alternatives are available, and these entities must implement reduction campaigns. Colombia’s National Environmental Licensing Authority (ANLA in its Spanish acronym) will oversee and enforce these measures. Among the measures included in the law, there is a request from distributors of plastic bags to submit reports on the rational use and recycling of bags in their inventory and must submit an Environmental Management Plan for packaging waste by 31 December. The law clearly will put an administrative burden on companies, not least distributors and the role they have been assigned as guardians of the law. In an interview with ICIS, the CEO of QuimicoPlasticos, a chemicals distributor in Colombia, said he thinks many aspects of the law will have to be reversed, not least points such as the nationally sourced recycled plastics as substitutes, given that recycling is in its infancy in the country and there will not be enough supply for years. QuimicoPlastics is a family-run distributor founded in 1982 and employs 80 people. It imports raw materials which distributes to the plastic packaging sectors (rigid and flexible) with end markets such agriculture, construction, food, and hygiene. The company was founded by the father of the current CEO, Federico Londoño, who has been on the post for 12 years. He has got low opinions about the law. “The law goes much further than a country like Colombia can afford. Moreover, globally and here in Colombia there are investments companies have made which are researching alternatives to, say, trays made of EPS [expandable polystyrene], but with laws like this the burden on companies grows and incentives for investment diminish,” said Londoño. It is a criticism shared across Latin America. In an interview with ICIS in June, the head of Chile’s plastics trade group Asipla also said parliamentarians push for sustainability was at times detached from the country’s reality. Before QuimicoPlasticos’ Londoño, the head of Colombia’s plastics trade group Acoplasticos also showed skepticism in an interview with ICIS about the law banning such wide range of single-use plastics. Before the law on single-use plastics, Colombia had already approved a tax on plastics production, which was marred with confusion in its initial stages of implementation. The moves around plastics have been welcome by environmental groups, some of them with the support of major consumer goods producers such as Washington-based Ocean Conservancy; in its website, it says some of its partners include Coca-Cola, Ikea, or Garnier, among many others. “With over 11 million tonnes of plastics entering the ocean each year, this law [banning single-use plastics] is a huge win for Colombia and the ocean,” said in a statement Edith Cecchini, director of international plastics at Ocean Conservancy. “Single-use plastic bags, straws, and stirrers are among the top ten most commonly found items polluting beaches and waterways worldwide by Ocean Conservancy’s International Coastal Cleanup. Ocean Conservancy applauds Colombia for this important step to prevent plastic pollution and protect marine life, and we hope that other countries will follow suit.” EXPANDING PUBLIC SERVICESThe push for sustainability by the left-leaning cabinet presided over by Gustavo Petro goes hand in hand with plans to increase tax receipts to finance the expansion in the welfare state Petro campaigned for. The cabinet has been under pressure to put the public accounts in order after posting fiscal deficits for most of Petro’s term. In June, the government published its fiscal plan for the coming years, hoping to quell fears among investors. Most analysts argued that the cabinet’s plans are too optimistic. For instance, it forecasts crude oil prices at around $90/barrel on average for the coming years, as a big chunk of Colombia’s income comes from its state-owned oil major Ecopetrol. To reassure investors, Finance Minister Ricardo Bonilla announced spending cuts worth Colombian pesos (Ps) 20 trillion ($5.1 billion, equivalent to 1.2% of GDP) to meet the target set out by the new fiscal plan 2024. “Even so, there’s reason for concern. For one thing, the government made clear that there would be no cuts to social spending; instead, a lot of the adjustment (around one third) will come in the form of cuts to public investment,” said Capital Economics at the time. Manufacturing, meanwhile, has been in the doldrums for much of 2023 and 2024, except for a positive spell in the first quarter. According to QuimicoPlasticos’ CEO, the government’s economic policy is deterring investments and creating uncertainty. “The economy is not going well. Industrial companies are suffering a high degree of uncertainty, because the fiscal burden on them continues to increase. This is no surprise, of course, when some public official within the cabinet have publicly said companies ‘steal from the people’ and they should be taxed more,” said Londoño. “Treating industrial companies as cash cows is wrong: these are the companies which need large sums in capital investments, and increasing taxes on them only deters that. If we add to that, for example, that the cabinet wants to reduce the role of fossil fuels in the country’s exports due to environmental reasons, you get a worrying picture for the coming years.” ($1 = Ps3,946) Insight by Jonathan Lopez

LONDON (ICIS)–Strong service sector performance and robust exports through 2024 amid cooling inflation points to the eurozone economy bottoming out following the emergence of tentative green shoots during the first quarter of the year, the IMF said. The organisation upped its forecast for eurozone growth to 0.9% for 2024, a 0.1 percentage point increase from the previous forecast in April, on the back of growing evidence that the bloc may have put the low point of the economic cycle behind it. Wage growth is expected to drive consumption, while loosening monetary policy could drive an uptick in investment, the IMF said, although players in sectors such as construction see the impact of rate cuts being slow to ripple through the market. With manufacturing still underperforming compared to services, as highlighted by Eurostat data on Monday showing that EU industrial output shrank month on month in May on the back of productivity declines across all most sub-sectors. Eurozone industrial activity was stagnant in April, with March the only month to see output increase month on month, according to Eurostat data. This slower manufacturing sector recovery is likely to drag on economic escape trajectory in countries like Germany, which the IMF projects will see GDP growth of 0.2% this year. Other member states such as Spain are likely to see considerably stronger growth, the agency added, increasing its 2024 GDP growth forecast for the country by 0.5 percentage points to 2.4%. Investment analysts have projected greater political stability in the UK after a general election delivering a strong mandate to the Labour Party and five years until the next election, and the IMF has upped its forecast for the country. UK GDP is now expected to stand at 0.7% this year a 0.2 percentage point increase from the IMF’s April outlook. The impact of cyclical factors buffeting global markets has receded, despite still-high shipping costs due to the ongoing Red Sea disruption, and overall economic activity is shifting closer to actual potential, according to the IMF. “Despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose,” said IMF chief economist Pierre-Olivier Gourinchas. Global growth is expected to have bottomed out at 2.3% in 2022 following an inflation spike to 9.4% that year, and growth is expected to stand at 3.2% this year and 3.3% in 2025. Inflation has come down since then, allowing for a modest rate cut by the European Central Bank, but the pace of disinflation has slowed, the IMF noted, with the service sector momentum buoying European growth also propping up inflation. The European Central Bank cut rates by 25 basis points in June, but markets are not projecting another when its monetary policy committee convenes on Thursday. The US Federal Reserve is yet to cut rates, with officials guiding for just one reduction this year. US central bank caution is feeding through to emerging market central banks, the IMF noted. “A number of central banks in emerging market economies remain cautious in regard to cutting rates owing to external risks triggered by changes in interest rate differentials and associated depreciation of those economies’ currencies against the dollar,” it said. Europe is showing fewer signs of economic overheating than the US, which is likely to see slightly slower than expected growth this year as the labour market slows and consumption drops. US GDP is expected to be 2.6% this year, according to the IMF. “Unlike in the United States, there is little evidence of overheating [in the eurozone], and the European Central Bank will need to carefully calibrate the pivot toward monetary easing to avoid an inflation undershoot,” Gourinchas said. Economic scarring also remains more apparent in the developing world, with many nations still struggling to turn the page from the aftermath of the pandemic compared to economies like the US, which has already moved past pre-COVID growth levels. Focus article by Tom Brown. Thumbnail photo: Outside the IMF’s Washington, DC headquarters (Source: Gripas Yuri/ABACA/Shutterstock)