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Ammonia08-Aug-2024
HOUSTON (ICIS)–Nutrien said global potash
demand during H1 2024 has been supported by
favorable consumption and low channel
inventories in North America and southeast
Asia, with global nitrogen being boosted by
steady demand and continued supply challenges
in key producing regions.
In its Q2 earnings release the Canadian
fertilizer major said it is also seeing that
there are expectations which have been created
for record US corn and soybean yields, that
have pressured crop prices.
For the potash segment Nutrien said the
settlement of contracts with China and India in
July is expected to support demand in standard
grade markets in the second half of this year.
The producer said that the uptake on the summer
fill program it offered in North America has
been strong, and as such it has raised
full-year global potash shipment forecast from
69 million tonnes to 72 million tonnes.
It further said it expects a relatively
balanced market in H2 2024.
The company showed that potash sales volume
guidance has been increased from 13.2 million
tonnes to 13.8 million tonnes due to
expectations for higher global demand in 2024.
It noted that the range does reflects the
potential for Canadian rail strike in the
second half which would have a relatively short
duration.
Looking at the situation with global nitrogen,
Nutrien said Chinese urea export restrictions
have been extended into the second half and
natural gas-related supply reductions could
continue to impact nitrogen operating rates in
Egypt and Trinidad.
The company said US nitrogen inventories were
estimated to be below average levels entering
H2 2024, contributing to strong engagement the
summer fill programs.
Nitrogen sales volume guidance has been
narrowed from 10.7 million tonnes to 11.1
million tonnes as Nutrien continues to expect
higher operating rates at their North American
and Trinidad plants,
It is also counting on a growth in sales of
upgraded products such as urea and nitrogen
solutions.
While end user demand has taken its typical
summer slump, Nutrien said they expect buying
for crop inputs in North America to remain
strong in Q3 as growers aim to maintain optimal
plant health and yield potential.
With that view it noted that good affordability
for potash and nitrogen will be supportive of
the upcoming fall application rates
“Crop input demand remains strong, and we
raised our full-year outlook for global potash
demand due to healthy engagement in all key
markets,” said Ken Seitz, Nutrien president and
CEO.
“Our upstream production assets and downstream
retail businesses in North America and
Australia have performed well in 2024.”
Caustic Soda08-Aug-2024
HOUSTON (ICIS)–The 2024 Atlantic hurricane
season is likely to remain extremely active,
the National Oceanic and Atmospheric
Administration (NOAA) said on Thursday in an
update to its previous forecast.
The only change to the previous forecast,
which predicted the greatest number of
hurricanes in the agency’s history, was a
slight reduction in the number of named storms,
from 17-25 to 17-24.
A storm is named once it has sustained winds of
39 miles/h (63 km/h).
“The hurricane season got off to an early and
violent start with Hurricane Beryl, the
earliest category-5 Atlantic hurricane on
record,” NOAA Administrator Rick Spinrad said.
“NOAA’s update to the hurricane seasonal
outlook is an important reminder that the peak
of hurricane season is right around the corner,
when historically the most significant impacts
from hurricanes and tropical storms tend to
occur.”
Atmospheric and oceanic conditions continue to
support an above-normal 2024 Atlantic hurricane
season, with a 90% probability of this result,
NOAA said.
There is only a 10% chance of a near-normal
season in 2024 and a negligible chance of a
below-normal season.
Forecasters said the Atlantic Ocean basin is
expected to be remarkably active due to several
factors:
Warmer-than-average sea surface
temperatures in the tropical Atlantic Ocean and
Caribbean Sea.
Reduced vertical wind shear.
Weaker tropical Atlantic trade winds.
An enhanced west African monsoon.
These conditions are expected to continue into
the fall, NOAA said.
Of note, the dry Saharan air that prevented
tropical storm development during portions of
the middle of the summer is expected to subside
in August.
Another factor this year is the possibility of
La Nina developing in the coming months.
Hurricanes and tropical storms can disrupt the
North American petrochemical industry because
many of the nation’s plants and refineries are
along the US Gulf Coast in the states of Texas
and Louisiana.
In 2022, oil and natural gas production in the
Gulf of Mexico accounted for about 15% of total
US crude oil production and about 2% of total
US dry natural gas production, according to the
US Energy Information Administration (EIA).
Even the threat of a major storm can disrupt
oil and natural gas supplies because companies
often evacuate US Gulf platforms as a
precaution.
The updated hurricane forecast from
Colorado State University’s (CSU’s) Weather and
Climate Research department also predicted an
extremely active season, expecting 23 named
storms, 12 hurricanes and six major hurricanes.
The Atlantic hurricane season runs through 30
November.
See the Beryl and Gaemi: Impact on
Chemicals topic
page
Ethylene08-Aug-2024
HOUSTON (ICIS)–Chemical companies are
expecting a lacklustre second half of the year,
but, so far, they will unlikely suffer through
a recession, despite the spate of pessimistic
economic data and the worst stock-market
selloff in more than a year.
The financial press has said that much of
the selloff was caused by investors abandoning
the Japanese carry-over trade.
Chemical executives have not warned of a
possible recession during their earnings calls.
It is unclear if recent events will
increase the likelihood of larger and more
frequent rate cuts by the Federal Reserve.
SO FAR, STATISTICS DO NOT INDICATE
RECESSIONThe recent selloff in
the stock market was enough to give anyone a
jolt.
The major US indices had three consecutive
trading days of selloffs, with the last one on
Monday causing declines that exceeded 2%. It
was the worst day in more than a year.
The weakness of the subsequent relief rally is
also concerning, with the declines resuming on
Wednesday.
But the stock market is not the economy, and,
so far, the four key statistics used to measure
its health do not point to a recession.
One of those statistics,
non-farm payrolls, grew by 114,000 in July,
a pace below the expectations of most
economists. While the US had a bad month, it is
still adding jobs, said Kevin Swift, ICIS
senior economist for global chemicals.
Moreover, the payroll statistics indicate that
some of the weakness in the data was caused by
the effects of Hurricane Beryl, Swift said.
Two other key statistics are still expanding,
he said. Those are industrial production and
real personal income less transfer payments.
Only real business sales have shown softness,
Swift said.
PROSPECTS STILL WEAKThe
unlikely risk of a recession provides cold
comfort to the chemical industry, which has
spent months waiting for a recovery after what
many described as the worst destocking cycle
ever.
Almost universally, companies have given up on
the prospects of a second half recovery.
Improvements in profit will have to come
internally from cost-cutting or efficiency
measures. The market will not help.
Consumers have largely spent the excess savings
that they pocketed from government stimulus and
support that followed the pandemic, Swift said.
The lower quintile of consumers is under
pressure.
Chemical companies noted stress among consumers
who are more sensitive to costs, such as those
who buy paints and coatings for do-it-yourself
(DIY) projects.
They are buckling under the weight of elevated
interest rates, which have made housing and
consumer durables less affordable.
Before the markets for such items improve, Dow
said that mortgage rates
need to fall towards 5%.
The prospect of declines will depend on
expectations for the benchmark federal funds
rate, which the Federal Reserve will likely
decide to lower at its next meeting on
September 18.
Even then, it will take time for those rate
cuts to trickle down to chemical markets.
Huntsman said the
lag is typically about two quarters.
Insight article by Al
Greenwood
Thumbnail shows an indicator board for a
stock exchange. Image by BIANCA DE
MARCHI/EPA-EFE/Shutterstock
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Hydrogen08-Aug-2024
LONDON (ICIS)–India’s Hygenco Green Energies
has signed a memorandum of understanding (MoU)
with Mitsubishi Power to explore delivering
green hydrogen and ammonia-fired gas turbine
combined cycle (GTCC) power plants.
The agreement includes supplying green fuel for
Mitsubishi Power’s GTCC technology and
developing commercially viable green hydrogen
and ammonia production assets on a
‘build-own-operate’ or ‘gas-as-a-service’
basis.
“We are excited to leverage our expertise in
green hydrogen and ammonia to support the
decarbonization of power generation and
contribute to a sustainable energy future, ”
said Hygenco CEO Amit Bansal.
The partnership, backed by financial support
from the Japan International Cooperation Agency
(JICA), will provide its integrated solutions
in India and globally, Hygenco added in a
statement.
Ammonia07-Aug-2024
HOUSTON (ICIS)–CF Industries said in its
latest nitrogen fertilizer market outlook that
in the near-term it expects the global
supply-demand balance to remain constructive,
led by nitrogen import requirements through
year-end for Brazil and India.
The producer also anticipates there will be
continued wide energy spreads between North
America and high-cost production in Europe.
The fertilizer producer said from the end of
the second quarter of 2024 into the third
quarter of this year this segment of
fertilizers has faced challenges which include
gas curtailments in Egypt and Trinidad, along
with scheduled outages and a lack of
substantial urea export availability from
China.
These factors the producer said have actually
been beneficial for supporting global nitrogen
pricing during a period of year that typically
sees lower prices and low global shipments as
demand shifts from the northern hemisphere to
the southern hemisphere.
“Over the medium-term, significant energy cost
differentials between North American producers
and high-cost producers in Europe and Asia are
expected to persist. As a result, the Company
believes the global nitrogen cost curve will
remain supportive of strong margin
opportunities for low-cost North American
producers,” said CF Industries.
“Longer-term, management expects the global
nitrogen supply-demand balance to tighten as
global nitrogen capacity growth over the next
four years is not projected to keep pace with
expected global nitrogen demand growth of
approximately 1.5% per year for traditional
applications and new demand growth for clean
energy applications.”
It further said that global production is
expected to remain constrained by the ongoing
challenges related to cost and availability of
natural gas.
Looking specifically at North America the
producer said it believes nitrogen channel
inventories in the region for all products are
below average based on strong demand for urea
and UAN during the spring application season
and higher-than-expected planted corn acres.
CF added that reported UAN and ammonia fill
programs achieved prices above 2023 levels
despite softening farm economics in the region
as corn and soybean prices have fallen due to
higher forecasted production in 2024 in the US
and Brazil.
For Brazil urea consumption is forecasted to
increase 3% year over year to more than 8
million tonnes, supported by improved supply
availability and lower global urea prices.
Urea imports to Brazil in 2024 are expected to
be in the range of 7 million to 8 million
tonnes as domestic production remains limited.
Regarding India CF said the country is expected
to be active importing urea through the second
half as the country secured lower-than-expected
volumes in its two most recent tenders.
In addition, urea consumption is expected to
rise to support rice, wheat and other crop
sowings.
Currently CF expects urea imports to India in
2024, including volumes supplied on a
contractual basis, to be in a range of 5
million to 6 million tonnes as there are
recently revitalized plants and new facilities
operating at higher rates.
For Europe, the producer said there was
approximately 25% of ammonia and 30% of urea
capacity reported in shutdown or curtailment
mode in early July.
CF said because of this situation it
anticipates ammonia operating rates and overall
domestic nitrogen product output in Europe will
remain below historical averages over the
long-term, especially given the region’s status
as the global marginal producer.
As a result, the company does expect imports of
ammonia and upgraded products to the region to
be higher than historical averages.
Looking at China, CF said the ongoing urea
export policy continues to cause limited urea
export availability from the country.
For the first six months of 2024, China
exported 140,000 tonnes of urea, which is 86%
lower year-on-year.
For Russia, the producer said their view is
that urea exports will increase this year due
to the start-up of new urea granulation
capacity and the willingness of certain
countries to purchase those volumes, including
the US and Brazil,
Russian ammonia exports are projected to rise
with the completion of the country’s Taman
ammonia terminal in the second half, though
annual ammonia export volumes are projected to
remain below pre-war levels.
Speciality Chemicals07-Aug-2024
HOUSTON (ICIS)–The Panama Canal Authority
(PCA) is immediately increasing the maximum
authorized draft for vessels transiting the
waterway to 49ft (14.94m) as water levels have
improved in Gatun Lake.
The increase in draft restrictions will allow
vessels to carry more cargo per trip as many
had to carry less than a full load to meet the
previous draft restrictions.
The region has been through an intense drought
that caused the PCA in 2023 to lower allowable
drafts and to limit the number of vessels
permitted to transit each day, a first since
the canal formally opened in 1914.
Restrictions have gradually eased over the past
few months and are approaching the average
daily transits of 36-38/day seen prior to
impacts from the drought.
The better conditions at the canal are likely
to improve transit times for vessels traveling
between the US Gulf and Asia, as well as
between Europe and countries on the west coast
of Latin America.
This should benefit chemical markets that move
product between regions, as shown in the
following chart.
WAIT TIMES FOR NON-BOOKED
VESSELS
Wait times for non-booked southbound vessels
ready for transit have been relatively steady
at around two days, according to the Panama
Canal
Authority (PCA) vessel
tracker.
As of 7 August, the tracker showed wait times
of 0.4 days for northbound traffic and 2.1 days
for southbound traffic.
Visit the ICIS Logistics – impact on
chemicals and energy topic
page
Thumbnail image shows a
container ship passing
through the Panama Canal.
Courtesy the Panama Canal
Authority
Propylene07-Aug-2024
SINGAPORE (ICIS)–The third plenary session of
the Chinese Communist Party (CCP) Central
Committee recently concluded in July, with the
CCP underlining the country’s long-term
economic strategy. This session, a significant
event in China’s economic planning, serves as a
guide for both immediate and long-term
policies.
Market balance healthier than expected on
delays in capacity additions
No specific stimulus policies announced,
market participants eye 5% GDP target
Market sentiment generally supported by
Third Plenum
Senior Editor Julia Tan speaks with Senior
Analyst Joey Zhou on what China’s Third Plenum
could mean for Asia’s propylene markets.
Crude Oil07-Aug-2024
SINGAPORE (ICIS)–China’s exports rose 7.0%
year on year to $300.6 billion in July, a
slowdown from the previous month, adding to
signs that the country’s economic growth is
losing momentum amid the persistent weakness in
manufacturing sector.
Trade surplus narrowed to $85 billion in
July
Further monetary policy easing expected
Weakening domestic demand and trade
tensions persist
The country’s imports, meanwhile, grew by 7.2%
year on year in July, reversing the 2.3%
decline in the previous month, according to
data from China Customs.
The latest July figures resulted in a trade
surplus of close to $85 billion, down from
June’s $99.05 billion.
“The year-on-year numbers will benefit from a
favorable base effect, but overall momentum
looks to be weakening with new export orders in
contraction the last few months even before new
tariffs on
Chinese EVs [electric vehicles] take
effect,” Dutch banking and financial
information services provider ING said in a
note on Wednesday.
China’s total goods imports and exports grew
6.2% year on year in the first seven months,
with exports increasing 6.7% and imports rising
5.4%, separate China Customs data released on
Wednesday showed.
China’s foreign trade in goods reached $3.5
trillion from January to July, with exports
totaling $2.01 trillion and imports amounting
to $1.49 trillion.
The country’s trade surplus expanded by 7.9%
year on year to $518 billion during the same
period.
TRADE TRACKING WEAKER
MANUFACTURING
The July trade figures align with earlier data
showing that both official manufacturing and
non-manufacturing purchasing managers’ indexes
(PMIs) continued to soften in July, pointing to
a slowdown in China’s economic momentum.
China’s official manufacturing PMI remained in
contraction territory for the third month in a
row in July, slipping 0.1 point to a five-month
low of 49.4.
“Weaker external demand and excess capacity in
some sectors could continue to weigh on
manufacturing prices and contribute to the
domestic deflationary pressure,” said Ho Woei
Chen, an economist at Singapore-based UOB
Global Economics & Markets Research.
Meanwhile, the China Federation of Logistics
& Purchasing (CFLP) non-manufacturing PMI
unexpectedly fell to a nine-month low of 50.2
in July, despite still marking its 19th
consecutive month of expansion since January
2023.
Following China’s July Politburo meeting’s
commitment to introduce new economic support
measures and boost consumption to drive
domestic demand, details remain scarce, Ho
said.
The People’s Bank of China (PBOC) took concrete
steps in July, cutting interest rates and
spurring commercial banks to lower loan prime
rates.
The PBOC reduced the seven-day reverse repo
rate by 10 basis points (bps) and the one-year
Medium-term Lending Facility (MLF) rate by 20
bps.
Consequently, the 1-year and 5-year loan prime
rates (LPR) decreased to 3.35% and 3.85%,
respectively.
The PBOC’s adjustments to MLF and LPR impact
borrowing costs in China, influencing bank
lending rates and the overall cost of credit.
With the US Federal Reserve poised to cut
interest rates in September, further monetary
policy easing is anticipated in China, UOB’s Ho
said.
“We predict an additional 15 bps rate cut by
the end of 2024, bringing the 1-year LPR down
to 3.20%. Moreover, a near-term cut of 50 bps
to the reserve requirement ratio (RRR) is also
possible,” she added.
GROWTH OUTLOOK REMAINS
WEAKManufacturers’ sentiment
remains bleak as China’s economy faces twin
challenges: weakening domestic demand and
escalating external trade tensions, which
contributed to a slower-than-expected growth in
the second quarter.
China’s GDP growth slowed to 4.7% year-on-year
in the second quarter, pulling the year-to-date
growth down to 5.0% for the first half.
“The two big drags on GDP growth continued to
be the property sector and consumption,” said
Lynn Song, ING’s chief economist for Greater
China.
“Despite GDP growth remaining on pace to
achieve the 5% growth target for now, there
will be less supportive base effects in H2
2024, making the road to 5% challenging,” Song
said.
“We will likely need to see further policy
support in the coming months if this goal is to
be reached.”
Although some easing measures were introduced
in mid-May, the property sector remains under
pressure, weighing on domestic consumption and
investment, and increasing deflation risks,
analysts at Japan’s Nomura Global Markets
Research said.
However, exports are expected to stay strong,
supported by low inflation, a weak yuan, and a
rebound in the global goods cycle, Nomura said.
“We still hold the view that the policy pivot
in the property sector is real, although its
planning and execution was slowed by
policymakers at
the third plenum,” it added.
Focus article by Nurluqman
Suratman
Potassium Chloride (MOP)06-Aug-2024
HOUSTON (ICIS)–US fertilizer producer Mosaic
said there are factors which suggest the global
potash market is balanced while the phosphate
market will remain tight not only for 2024 but
beyond.
In its Q2 earnings statement, which had a
second quarter net loss of $162 million, the
producer said its market outlook is that North
American demand remains robust as it sees there
are still buyers who continue to seek out and
secure summer fill volumes.
It is their view that part of this is a result
of farmers and retailers having emptied their
bins this spring with substantial crop
fertilizing.
Yet challenging weather has been present all
summer and there is growing concern from
end-users that yields could be impacted with a
dip in income likely to result in less
post-harvest demand.
Looking at Brazil briefly the producer feels
that the level of in-season demand present
could be described as solid and comes primarily
from concerns of low stocks.
For the global potash segment Mosaic said
supply constraints are likely to continue to
abate this year amid expectations of seeing
higher exports from Belarus and Russia.
It also noted though that the recent contract
settlements in China and India should help
further stimulate buying activities further in
both southeast Asia and into India.
In terms of Chinese phosphate exports the
producer said that rate has declined 27% year
on year, during the first six months of 2024,
which equates to over 1 million tonnes.
Mosaic said in its view the long-term outlook
remains favorable as domestic and industrial
needs will continue to be prioritized over
fertilizer exports in the long term.
Looking at grains and oilseeds it is their
expectations that stock-to-use ratios will
remain low and constructive agriculture
fundamentals and economics are expected to
continue to incentivize growers to maximize
yields.
Mosaic said while corn and soybean fundamentals
as well as prices have softened recently when
viewing nutrients, they overall remain
affordable and that bodes well for future
demand.
It noted that during this year the El Nino
weather pattern is expected to shift to a La
Nina classification which holds the potential
for creating a favorable backdrop in southeast
Asia, India and Brazil.
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