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Ammonia29-Aug-2024
HOUSTON (ICIS)–Fertilizer producer OCI Global
announced it has successfully completed the
sale of its equity interests in Iowa Fertilizer
Company (IFCO) for $3.6 billion to Koch Ag
& Energy Solutions.
The producer said the closing of the deal
involving the large-scale US greenfield
nitrogen fertilizer facility marks a
significant milestone in OCI’s strategy to
unlock value for shareholders
Located in Wever, Iowa the plant was the first
greenfield nitrogen fertilizer plant built in
the US in over 25 years, and the largest
private construction project in Iowa’s history,
adding more than 3,500 jobs during the
construction period.
The facility opened in 2017 and has the
capacity to produce 3.5 million tonnes of
nitrogen fertilizers and diesel exhaust fluid
annually.
“This acquisition marks another significant
investment in the growth of our fertilizer
business,” said Mark Luetters, Koch Ag &
Energy Solutions president.
“In the past 15 years, we have invested $2
billion in our North American production
facilities to enhance reliability, expand
production and improve logistics for our
customers. This investment enhances our ability
to serve customers long-term by providing
additional flexibility to adapt to their
nitrogen preferences.”
The Wever facility adds to the Koch
Fertilizer holdings, which includes four
nitrogen production facilities in the US and
one in Canada plus an extensive terminal
network.
The company and its affiliates also have
partial ownership of three nitrogen facilities
in Trinidad and Tobago, as well as a phosphate
production facility in Morocco.
The sale was first announced last December and
OCI said it is confident that under Koch’s
stewardship, IFCO will be well positioned for
its next phase of growth.
“This milestone further reinforces OCI’s
standing and record as a successful developer,
operator and investor. Looking ahead, we will
continue to deploy our distinctive knowledge,
management expertise and entrepreneurial spirt
into further value accretive ventures,” said
Nassef Sawiris, OCI executive chairman.
Adipic Acid29-Aug-2024
LONDON (ICIS)–BASF is to end production of
adipic acid and several downstream units at
Ludwigshafen, Germany, as part of structural
changes underway at the site, the company said
on Thursday.
Production of adipic acid will conclude at the
site over the course of 2025, while units to
manufacture cyclododecanone (CDon) and
cyclopentanone (CPon), which utilize adipic
acid as a raw material, will cease in the first
half of the year.
The company is planning to cut around €1
billion in costs from the site, with new CEO
Markus Kamieth expected to fully set out what
steps will be taken at the company’s capital
markets day in September this year.
The company had already cut back adipic acid
production capacity at the site in
2023, but had kept a some capacity onstream
to feed into those downstream units.
BASF expects to cease deliveries of CDon and
CPon, which are used in nylon 12 and
pharmaceuticals production respectively, and is
in talks with customers, the company added.
It will continue to produce adipic acid in
Onsan, South Korea, and Chalampe, France, BASF
added.
The decision was taken as part of the ongoing
strategic review of site operations to “ensure
competitiveness under changing market
conditions”, the company said in a statement.
Around 180 workers will be affected by the
closures, with BASF planning to explore the
possibility of employment positions elsewhere
within the group.
“These closures are part of the development of
a long-term target picture for the
transformation of the Ludwigshafen site,” said
BASF industrial relations director Katja
Schwarpwinkel.
Thumbnail photo: BASF’s Ludwigshafen,
Germany production complex. Picture source:
BASF
Updates throughout
Adipic Acid29-Aug-2024
LONDON (ICIS)–BASF is to end production of
adipic acid and several downstream units at
Ludwigshafen, Germany, as part of structural
changes underway at the site, the company said
on Thursday.
Production of adipic acid will conclude at the
site over the course of 2025, while units to
manufacture cyclododecanone (CDon) and
cyclopentanone (CPon), which utilize adipic
acid as a raw material, will cease in the first
half of the year.
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Speciality Chemicals29-Aug-2024
LONDON (ICIS)–A “worrying” future lies ahead
for the UK chemicals industry because there is
no concrete roadmap in place to eliminate
fossil fuels, the think tank Green Alliance
said on Thursday.
Researchers at the organization warned that up
to 140,000 jobs in the industry are at risk in
the long term if policymakers fail to plan for
its decarbonization.
The figure is far greater than the 33,700
workers currently employed by the steel
industry, the most recent subject of talk
about job losses and decarbonization.
The UK chemicals industry accounts for 19% of
the UK’s industrial emissions and is heavily
dependent on fossil fuels for energy and
feedstocks.
It will also, however, play an important role
in providing vital components for net-zero
technologies, including batteries and wind
turbines, the Green Alliance noted.
Despite the chemical industry’s strategic
value, government support has been minimal so
far because of its focus on carbon capture and
storage (CCS) and hydrogen fuel.
As a result, more important areas such as
electrification and the substitution of fossil
fuel feedstocks are in danger of being left
behind, Green Alliance said.
It pointed out that a new industrial strategy
will provide an opportunity to secure the
future of the industry and safeguard the
resilience of the UK economy.
“The government needs to develop a coherent
vision for what a successful green chemical
industry looks like,” said Liam Hardy, senior
policy analyst at Green Alliance.
Crude Oil29-Aug-2024
LONDON (ICIS)–The economic outlook in the EU
and eurozone improved in August on stronger
industry confidence and brighter employment
expectations.
The European Commission’s Economic Sentiment
Indicator (ESI) rose in both the EU (+0.4
points to 96.9) and eurozone (+0.6 points to
96.6), according to official data on Thursday.
This reflected improved confidence in industry,
services and retail trade, while confidence
among consumers and in construction remained
broadly stable.
Employment prospects rose more significantly in
both blocs following several months of decline,
with the Employment Expectations Indicator
(EEI) up 0.9 points to 99.6 in the EU and
higher by 1.3 points to 99.2 in the eurozone.
For the largest EU economies, the ESI improved
in France (+4.3); Spain (+1.3); the Netherlands
(+0.9); and Poland (+0.3). It declined in
Germany (-1.7); and Italy (-1.2).
The sharp uptick in France was likely due to
the Olympics being hosted in Paris, analysis
from Oxford Economics suggested.
Ammonia28-Aug-2024
HOUSTON (ICIS)–The US Department of
Agriculture (USDA) announced it is partnering
with business owners to expand innovative
fertilizer production, create more rural jobs
and strengthen local economies by awarding $35
million through the Fertilizer Production
Expansion Program (FPEP).
Appearing at the annual Farm Progress Show in
Boone, Iowa, USDA Secretary Tom Vilsack
revealed the agency is granting funds for seven
projects in seven states through the FPEP,
which is funded by the Commodity Credit
Corporation.
This program provides grants to independent
business owners to help them undertake such
efforts as modernize equipment, adopt new
technologies and build production plants.
“The investments announced today will increase
domestic fertilizer production and strengthen
our supply chain, while creating good-paying
jobs to benefit all Americans,” said Vilsack.
USDA has invested $286.6 million in 64 projects
across 32 states through FPEP. These projects
have created 768 new jobs and will help
increase domestic fertilizer production by over
5.6 million short tons.
The FPEP was created with a commitment of up to
$900 million in funding to address issues
facing farmers due to rising fertilizer prices
due to a variety of factors including the
Ukraine conflict and a lack of industry
competition.
Citing examples of the investments, the agency
highlighted that in Virginia ammonium sulfate
producer AdvanSix will expand a facility
utilizing an almost $12 million grant.
The company currently provides 31,400
agricultural producers with ammonium sulfate on
the East Coast and in the Midwest.
Through this project, AdvanSix will expand
their operational capacity by 195,000 short
tons/year and increase their total output to
more than 36,000 agricultural producers.
Speciality Chemicals28-Aug-2024
LONDON (ICIS)–Germany’s chemical industry
trade group, VCI, has nominated Covestro CEO
Markus Steilemann for a second term as its
president.
Steilemann has been VCI president since
September 2022, succeeding Evonik chief
Christian Kullmann.
He originally took on the role during what he
described
at the time as a “serious and challenging”
period for Germany’s chemical industry, which
has been struggling with energy costs.
The election is scheduled for the Chemistry
& Pharma Summit in Berlin on 12 September
2024. Steilemann has worked in the industry for
many years, starting his career at Bayer in
1999.
Ethylene28-Aug-2024
SAO PAULO (ICIS)–Brazil’s analysts and
economists are increasingly thinking inflation
will continue to rise in 2024 but remain upbeat
about GDP growth this year, the Banco Central
do Brasil (BCB) said in its weekly Focus
Survey.
Rates to stay higher for longer on
inflation uptick
Currency to remain weak to year end
GDP growth robust this year, mixed opinions
on 2025
The survey, on the prospects for the largest
Latin American economy, revised upward
projections for inflation, GDP growth, and the
exchange rate of the real in 2024.
Meanwhile, the recent uptick in inflation may
not be enough for the central bank to raise
interest rates, but the consensus among
analysts is now that the main interest rate
benchmark, the Selic, could rise in 2026.
INFLATION
According to the survey, economists now expect
the 2024 IPCA consumer price index to end the
year at 4.25%, up from the 4.22% projection in
the previous week and the sixth consecutive
weekly increase.
The 2025 inflation outlook edged up to 3.93%
from 3.91%, while projections for 2026 and 2027
remained steady at 3.60% and 3.50%,
respectively.
The latest inflation figures for July showed
prices had risen for a fourth consecutive
month, with the
annual rate of inflation at 4.50%, well
above the April low of 3.69%.
However, official data this week for the
so-called IPCA-15 – which measures the month’s
first fortnight’s price rises – showed a small
decrease from 4.50% to 4.35%.
Analysts at Capital Economics, who have been
suggesting the central bank could hike the
Selic as soon as this year to contain the
latest rise in inflation, said the IPCA-15 data
published this week was likely to make the
central bank pause for now when it meets again
to set monetary policy in September.
“The breakdown of the data showed that the fall
in inflation was pretty broad based. Housing
and health inflation fell particularly sharply
to 3.6% year on year [in the first fortnight of
August] and 5.8% year on year, respectively,
although this was partly offset by a rise in
transport inflation,” said Capital Economics.
“Developments in underlying inflation were a
bit more concerning. Our estimate of
underlying core services inflation – which
strips out volatile items – edged up in the
first half of August.”
SELIC
The monetary easing cycle that started a year
ago as inflation was coming down is now
considered well and truly over. Most analysts
expect the central bank to keep interest rates
on hold for the rest of this year and
potentially in 2025, with only a few
forecasting a rise.
Earlier in August, the bank left the Selic
unchanged at 10.50%. During the inflation
crisis, the Selic peaked in 2023 at 13.75%.
This week, the Focus Survey showed Brazilian
economists and analysts agree that the Selic
will not be lowered this year – for the 10th
consecutive week, despite the latest
tribulations in the exchange rate and
investors’ doubts about the government’s
commitment to fiscal discipline.
However, the average in this week’s survey
showed they are still forecasting a half a
percentage point fall for 2025 to 10.0%, also
unchanged from the previous survey.
The novelty this week was that, from an earlier
projection for the Selic at 9.0% in 2026,
economists have now upgraded that and expect
interest rates to end that year at 9.5%, the
first change in the forecast in 14 weeks.
The 2027 rate expectation remained at 9.0%.
“Many Copom [monetary policy committee at the
BCB] members have sounded very hawkish in
recent media comments, opening the door to a
rate hike,” said Capital Economics this
week after the IPCA-15 data was published.
“The next meeting in September will be a close
call, but we think that, on balance, the fall
in inflation in the first half of August,
alongside the Fed’s seeming confirmation that
it will kick off its easing cycle in September,
mean that it’s a bit more likely that Copom
will leave rates unchanged at 10.50%.”
GDP
One bright spot in this week’s central bank
survey was that Brazil’s economy is expected to
continue on a strong recovery path, with
analysts now forecasting GDP growth of 2.43% in
2024, up from 2.23% in earlier surveys.
However, the forecast for 2025 was for a minor
dip to 1.86% from 1.89%. Unlike Brazilian
economists, the IMF said it expected Brazil’s
economy to
grow 2.4% in 2025 in July, in part as a
result of the reconstruction efforts at Rio
Grande do Sul.
Brazil’s southernmost state, a key industrial
and agriculture producer in the country, was
hit by the severe floods in May and its economy
came to a standstill for nearly a month.
According to this week’s survey, GDP growth
estimates for 2026 and 2027 remain steady at
2.0%.
REAL EXCHANGE RATE
The median projection for the exchange rate for
the real to the US dollar in 2024 increased
slightly to reais (R) 5.32, from R5.31.
The real has sharply depreciated this year
versus the dollar on the back of higher
inflation and investors’ fears that the cabinet
presided over by Luiz Inacio Lula da Silva
wants to expand public services at the expense
of a larger fiscal deficit.
Lula’s direct attacks on the governor of the
central bank have not helped either.
As such, most economists no longer expect the
exchange rate to hover around R5 to the dollar
as it did at the beginning of the year. For
2024, they are now forecasting a dollar to be
worth R5.32, while in 2025 it would be at R5.30
and in 2026 at R5.25.
Focus article by Jonathan
Lopez
Crude Oil28-Aug-2024
MUMBAI (ICIS)–Indian port workers have called
off their
indefinite strike scheduled to begin on
Wednesday following an agreement with the
Indian Ports Association (IPA) and the Ministry
of Ports, Shipping and Waterways on 27 August.
The agreement has averted a strike by around
20,000 port and dock workers at India’s 12
major ports.
The workers have agreed to a settlement which
would give them a fitment benefit of 8.5% on
the aggregate pay as of 31 December 2021 and a
30% variable dearness allowance as of 1 January
2022, an official in the shipping ministry
said.
The settlement will last for five years
beginning January 2022, he said, adding that a
drafting committee constituting all the
stakeholders is expected to finalize the terms
of the settlement within ten days.
The strike would have created problems for
exporters who have been struggling with high
freight costs and could have led to further
congestion at the private and minor ports
across India.
Fearing disruptions, exporters had also asked
the government to resolve the issue at the
earliest, the shipping ministry official said.
“There is already a shortage of ships and
containers, and a disruption at this point
could hit the domestic industry as well as
international trade,” Ajay Sahai, director
general and CEO of the Federation of Indian
Export Organisations (FEIO) said.
Exporters are currently gearing up to cater to
Christmas orders from western markets and the
strike would have delayed exports indefinitely,
he said, adding that the imports of raw
materials and fuel would also be hampered.
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