LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Italian monthly bales prices drop in latest auctions Colourless flake prices fall in Italy in October Cheaper PET puts pressure on R-PET sellers No signs of demand improvement in October

SINGAPORE (ICIS)–Manufacturing output of China’s small to medium enterprises went back to into contraction mode in September, underscoring continued and widespread weakness in the world’s second-biggest economy. Caixin’s China Sept PMI falls to 49.3 from 50.4 in August More fiscal measures may be required Three big cities ease home-buying restrictions amid property slump No immediate turnaround of the country’s weak economic conditions can be expected notwithstanding the slew of economic measures recently announced. China’s manufacturing purchasing managers’ index (PMI) last month declined to 49.3, from 50.4 in August, according to a private survey conducted by Chinese private media group Caixin. A PMI number below 50 indicates contraction. The Caixin PMI surveys small and medium-sized enterprises (SMEs) and export-oriented enterprises located in eastern coastal regions, while the official PMI is tilted toward larger state-owned enterprises (SOEs). The small and medium manufacturers are worse off since Caixin’s September PMI reading was below the official number of 49.8, which was an improvement from August’s 49.1. In Caixin’s survey, the China’s September PMI reversed the expansion recorded in August. For two months in the third quarter, factory output shrank, after managing to stay in expansionary mode since November 2023. Production at big factories, on the other hand, has been indicating contraction for five straight months, based on official PMI reading. “The market [in September] was characterized by diminished demand coupled with fierce competition,” Caixin Insight Group senior economist Wang Zhe said. Delays in supplier logistics, low demand for manufacturer purchases, and increased inventories of both raw materials and finished goods affected overall production in September, Wang said. “Across the board, the latest macroeconomic data have fallen short of market expectations,” the Caixin economist said. Falling underlying demand, heightening competition and subdued market conditions were cited as reasons for the decline in incoming new orders for Chinese manufactured goods, according to Caixin. “Softening economic conditions” overseas also negatively affected export orders, it added. A good number of petrochemical producers and their downstream end-users fall under the SME category. Reeling from continued demand weakness, some of these producers which have already been running at reduced capacity may have to cut output further. Pre-holiday restocking turned out weaker than expected, with market outlook post-holiday remaining largely bearish. Poor demand has kept China’s overall producers’ price index (PPI) in deflation territory for nearly two years STIMULUS MEASURES BOOST SENTIMENT Days before China went into a week-long National Day celebration, the People’s Bank of China (PBoC) announced a raft of measures, including lowering of interest rates on existing mortgages, to boost consumption. On 26 September, the Politburo of the Communist Party of China pledged fiscal measures to complement the effective monetary policy easing by the central bank amid growing concerns that the country will fail to achieve its 5% GDP growth target this year. The International Monetary Fund (IMF) revised up its growth forecast for the country in line with the government’s target in May, from 4.6% previously. It, however, warned of slower growth ahead considering China’s ageing population and slowed productivity expansion. Although the financial and commodities markets in China surged after the measures were announced, consumer confidence is still weak, which will affect their spending power, analysts said. A stimulus program, even if seemingly large, could have “a limited impact on growth”, according to analysts at Japanese brokerage Nomura. More durable and impactful measures, including increased fiscal spending, are needed to boost China’s growth and address weak consumer and business spending. Spending during the week-long holidays from 1 October will thus be a gauge as to how the economic measures will impact consumer spending, Singapore’s UOB Global Economics & Markets Research said in a note on 30 September. In the same period in 2023, domestic tourism revenues totaled yuan (CNY) 753 billion ($107 billion), according to state news agency Xinhua. PROPERTY MEASURES MAY BE INSUFFICIENT Three large Chinese cities – Guangzhou, Shenzhen and Shanghai – eased house-buying restrictions on 29 September, according to Xinhua. Guangzhou completely removed restrictions on home purchases, while non-Shanghai residents will be allowed to purchase suburban homes if they have paid social insurance or individual income tax in the city for at least a year, instead of three years. Shenzhen also announced reduction in downpayment ratio and optimized district-specific home purchase restrictions. China’s government hopes to tackle its years-long housing crisis via the fresh measures. But China’s economic worries may not be solved with these measures alone, ICIS senior consultant John Richardson said. Long-term challenges such as the end of the real-estate bubble and an ageing population will not be easily fixed with economic stimulus, he said in a blog post on 30 September. “The extent to which [China] can maintain its dominant role in global exports is also in question because of a much more difficult geopolitical environment,” he said. Insight article by Jonathan Yee and Pearl Bantillo ($1 = CNY7.02) Thumbnail image: At a port in Lianyungang, Jiangsu Province, China, on 2 October 2024. (Costfoto/NurPhoto/Shutterstock)

HOUSTON (ICIS)–The three-day strike by US Gulf and East Coast dock workers has been suspended until 15 January to allow negotiations to resume, according to a joint statement from the union and ports. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) said they have reached a tentative agreement on wages and will extend the current contract while they continue to negotiate other outstanding issues. “Effective immediately, all current job actions will cease, and all work covered by the master contract will resume,” the statement read. The union went on strike on 1 October as negotiations were stalled. The union was seeking a 77% increase over the next six years and commitments against any kind of automation at the ports – full or semi – that would replace jobs or historical work functions. The USMX was offering about a 50% increase. IMPACTS TO CHEM MARKETS The strike had already had some impacts on the US chemicals industry, with polyethylene (PE) exports to Brazil being put on hold. The polyvinyl chloride (PVC) industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports. 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. Thumbnail image shows a container ship. Photo by Shutterstock

HOUSTON (ICIS)–In only its third day, a strike by dock workers at US Gulf and East Coast ports is leading to idled trucks and growing numbers of container ships queuing outside of the ports. TRUCKING A trucking trade group, the American Trucking Associations (ATA), said that the strike has stopped all activity at five of the nation’s top 10 container ports and estimates that more than 60 container ships carrying nearly 500,000 containers scheduled for October delivery are now stuck in limbo. The ATA said there are 30,000 truckers registered to work just at the port of New York and New Jersey, which sees about 12,000 truck visits in a typical day. “Tens of thousands of more up and down the coasts are now sidelined by this strike,” the ATA said. The ATA said that the trucking industry is made up of small businesses with more than 95% of carriers operating 10 trucks or fewer. Todd Spencer, president of the Owner-Operator Independent Drivers Association, said American consumers will suffer the longer the strike goes on, but that independent drivers will also feel the pain. “The longer this labor strike drags out, the more harm is done to American consumers who rely on the trucking industry to deliver the goods they depend on,” Spencer said. “We encourage a quick resolution to this latest dispute and emphasize the need for specific discussions about how supply chain deficiencies stifle driver compensation, increase loading and unloading delays, and hurt highway safety.” CONTAINER SHIPS BACKING UP Ships are also backing up outside of the affected ports, according to publicly available ship tracking services. For example, there were about 51 vessels outside the entrance to Port Houston on 2 October, and about 65 vessels in the same area on 3 October. Alan Murphy, CEO, Sea-Intelligence, said a prolonged strike will have an impact on global capacity as carriers currently have 62 deep sea services that call on East Coast and US Gulf ports. Those vessels will have to wait at anchorage at the first port of call on their discharge schedule, Murphy said. “In addition to that there are vessels which have already commenced their discharge rotation and will have to wait at their second, third, or even fourth port of call, depending on how much of their schedule they have already completed prior to the strike taking place,” Murphy said. If the strike were to last four weeks, Murphy said that almost 7% of the global fleet will be tied up along the US East Coast, and the overall impact on the supply and demand equation will be very significant. EXCESSIVE SURCHARGES A chemical industry trade group, the Alliance for Chemical Distribution (ACD), sent a letter to US President Joe Biden criticizing excessive surcharges imposed by the carriers. In the letter, ACD President and CEO Eric Byer highlighted the excessive surcharges imposed – and profits made – by ocean shippers who strangely had direct involvement in the failed negotiations. “Neither side negotiated in good faith, effectively inviting a strike to take place,” Byer said. “For the ocean carriers, this is not surprising given the extreme profits they have been able to collect over recent years, putting them in a position to contentedly wait out a strike while the American economy loses billions of dollars a day.” Byer said that the ocean carrier member companies of the United States Maritime Alliance (USMX) are levying a myriad of surcharges on shippers, ranging from hundreds of dollars to $3,000/container, citing labor disruptions as the cause. “Through these surcharges, the ocean carriers are profiting from a crisis they played a direct role in creating,” Byer said. STALLED NEGOTIATIONSMeanwhile, the two sides are not currently negotiating. The International Longshoremen’s Association (ILA) is representing the dock workers, and USMX is representing the ports. USMX directors include representatives of major shipping lines, including Evergreen Shipping, Maersk, Hapag-Lloyd, Ocean Network Express, CMA/CGM, COSCO Shipping Lines, and Mediterranean Shipping Company (MSC). USMX said it continues to focus on ratifying a new master contract. “Reaching an agreement will require negotiating – and our full focus is on how to return to the table to further discuss these vital components, many of which are intertwined,” USMX said. “We cannot agree to preconditions to return to bargaining – but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns.” IMPACTS TO CHEM MARKETS The strike is already affecting the US chemicals industry, with PE exports to Brazil being put on hold. The polyvinyl chloride (PVC) Industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports. 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. Focus story by Adam Yanelli Visit the ICIS Logistics – impact on chemicals and energy topic page

HOUSTON (ICIS)–US fertilizer producer CF Industries confirmed it had an accident on 2 October at their nitrogen fertilizer complex in Donaldsonville, Louisiana, which resulted in an employee being transferred to a local hospital where they later passed away. The company said through a spokesperson that the incident occurred at approximately 13:45 and that the medical personnel onsite did quickly respond and assessed the injuries, with the individual then transported to a nearby hospital. CF is not identifying the worker or providing any additional details surrounding the circumstances of the accident but said it is focused on supporting this individual’s family and fellow employees at the fertilizer complex. “We are deeply saddened to confirm that a CF Industries employee at the Donaldsonville Complex passed away in a local hospital following an accident onsite earlier today. Our thoughts and prayers are with their family at this difficult time. We are committed to supporting the family as well as providing assistance to the Donaldsonville team,” said a CF Industries spokesperson. The producer did add that this was an isolated incident with no related operational issues or offsite impacts. Located on the Mississippi River in Ascension Parish, the Donaldsonville site is the largest production complex in the world producing anhydrous ammonia, urea, and urea ammonium nitrate (UAN) and nitric acid.

SINGAPORE (ICIS)–LANXESS is selling its urethane systems business to Japanese chemicals producer UBE Corp for around €500 million, the German specialty chemicals firm said on Thursday. “With this transaction LANXESS exits the last remaining polymer business,” the company said in a statement. The enterprise value of the deal amounts to €460 million, with expected proceeds of around €500 million, it said. The urethane systems business comprises five manufacturing sites globally as well as application laboratories in the US, Europe and China. UBE will take over the business, which has around 400 employees and generated sales of around €250 million in the year to June 2024. LANXESS expects the transaction to close in the first half of 2025. “The sale of Urethane Systems marks another milestone in our fast transformation into a pure-play specialty chemicals company, as we are divesting the last remaining polymer business in our portfolio,” said Matthias Zacher, chairman of the board of management of LANXESS. “At the same time, we are using the proceeds from the transaction to strengthen our balance sheet by further reducing our net debt,” he added. (Updates throughout) Thumbnail photo: LANXESS’ Cologne, Germany headquarters (Source: LANXESS)

SINGAPORE (ICIS)–LANXESS is selling its urethane systems business to Japanese firm UBE Corp in a deal worth around €500 million, the German specialty chemicals firm said on Thursday. “With this transaction LANXESS exits the last remaining polymer business.” The enterprise value of the deal amounts to €460 million with expected proceeds of around €500 million, the company said in a statement. LANXESS expects the transaction to close in the first half of 2025.

HOUSTON (ICIS)–Australian fertilizer firm Minbos Resources, who is advancing the Cabinda Phosphate project in Angola, announced the $14 million loan facility agreement with the International Development Corporation of South Africa Limited (IDC) has been executed. The company said the loan proposal is awaiting credit committee approval, which it said is proceeding favorably, with the completion of the documentation and the normal legal and regulatory processes expected to take several months. “The company is now in a great funding position with a complementary mix of funding solutions to advance the Cabinda Phosphate project. It is wonderful to have the support of the South African IDC for this important project in Sub-Saharan Africa,” said Lindsay Reed, Minbos Resources managing director. “We are receiving tremendous support from some of Angola’s most important banking and investment institutions, which is a testament to the project’s importance for agriculture in Angola. I would like to thank all parties for their continued support in our endeavors.” The Cabinda project, located in northeast Angola, is being developed based on an initial name plate capacity of 150,000 tonnes/year of enhanced phosphate rock with initial production calculated at 50,000 tonnes/year. Previously Minbos said expansion will come in two stages with it planning to add a second and third granulation circuit to reach a name plate capacity of 450,000 tonnes/year after 8 years of operations.

HOUSTON (ICIS)–Negotiations have yet to resume between union dock workers and the US Gulf and East Coast ports as a costly strike enters its second day. The International Longshoremen’s Association (ILA), representing dock workers at ports from Maine to Texas, and the United States Maritime Alliance (USMX), representing the ports, posted statements to their websites accusing each other of being unwilling to negotiate. “We have demonstrated a commitment to doing our part to end the completely avoidable ILA strike,” USMX said. “Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running. We look forward to hearing from the union about how we can return to the table and actually bargain, which is the only way to reach a resolution.” The ILA responded by saying the USMX offer fails to address the demands of union labor. “They might claim a significant increase, but they conveniently omit that many of our members are operating multi-million-dollar container-handling equipment for a mere $20 an hour,” the ILA said. “In some states, the minimum wage is already $15. Furthermore, our members endure a grueling six-year wage progression before they can even reach the top wage tier, regardless of how many hours they work or the effort they put in.” One of the biggest sticking points remains the union’s steadfast stance against any kind of automation at the ports – full or semi – that would replace jobs or historical work functions. “We will not accept the loss of work and livelihood for our members due to automation,” the ILA said. “Our position is clear: the preservation of jobs and historical work functions is non-negotiable.” FMC OFFERS SERVICES With carriers already announcing congestion surcharges, the US Federal Maritime Commission (FMC) is offering assistance for enforcement and litigation services that individuals and companies could find helpful in seeking relief from current supply chain challenges. FMC regulations require that demurrage and detention fees serve as legitimate financial incentives to encourage cargo movement. Pursuant to these requirements, the FMC will scrutinize any demurrage and detention charges assessed during terminal closures. The FMC advised all regulated entities on 23 September that all statutes and regulations administered by the commission remain in effect during any terminal closures related to the strike. GOVERNMENT INTERVENTION REQUESTED Meanwhile, the American Chemistry Council (ACC) and the Alliance for Chemical Distribution (ACD) continue to request government intervention to end the work stoppage. “We urge the White House to do everything possible to prevent this major shockwave from rippling through the American supply chain and hurting US trade by working with both parties to resume contract negations,” Chris Jahn, ACC president and CEO, said. Jahn noted that about 90% of the waterborne chemical shipments that move in and out of the US flow through the East Coast and US Gulf Coast ports. Eric R Byer, president and CEO of the Alliance for Chemical Distribution (ACD) also urged President Joe Biden to act. “ACD urges the Biden Administration to swiftly intervene to resolve this strike by reopening the ports and getting both sides to reach an agreement to prevent further supply chain disruptions and avoid significant economic consequences,” Byer said. Biden, in a statement released last night, said he supports the collective bargaining process as the best way for workers to get the pay and benefits they deserve and urged USMX to return to the bargaining table with a fair offer. “Ocean carriers have made record profits since the pandemic and in some cases, profits grew in excess of 800% compared to their profits prior to the pandemic,” Biden said. “Executive compensation has grown in line with those profits and profits have been returned to shareholders at record rates. It is only fair that workers, who put themselves at risk during the pandemic to keep ports open, see a meaningful increase in their wages as well.” Biden also said his administration will be watching for any price gouging activity that benefits foreign ocean carriers, including those on the USMX board. IMPACTS TO CHEM MARKETS The strike is already affecting the US chemicals industry, with PE exports to Brazil being put on hold. The polyvinyl chloride (PVC) Industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports. 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. Focus story by Adam Yanelli Visit the ICIS Logistics – impact on chemicals and energy topic page Thumbnail image shows a container ship.