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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
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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.
Polyethylene28-Aug-2024
SINGAPORE (ICIS)–Click here to
see the latest blog post on Asian Chemical
Connections by John Richardson.
So, you want to just sit back and wait for
global chemicals and polymer markets to correct
themselves, for the Old Normal to come back?
As today’s post on styrene suggests, even
assuming thins do eventually return to normal,
you will be on for an awful long wait:
I estimate that global styrene capacity
would have to shrink by an average 174,000
tonnes a year between 2024 and 2030 for
operating rates to reach their historic and
very healthy long-term average of 88%. The ICIS
base case assumes an average 2024-2030
operating rate of 75% as capacity expands by
811,000 tonnes a year.
Clearly, and this is same across many other
products, the commercial decisions necessary
for a turnaround on this scale would take
several years.
But I anyway see hanging around and waiting for
a return to the Old Normal as a waste of
precious time, as the global chemicals
landscape will never return to the way it was
during the 1992-2021 Chemicals Supercycle.
The data on styrene underlines the direction of
travel including, as mentioned, the scale of
global overcapacity and the collapse of
Northeast Asian margins since the late 2021
“Evergrande Moment”.
Also note the distorting impact of China
dominance of global styrene demand. In 1992,
China accounted for just 2% of global demand
and 22% of the global population, but by the
end of this year ICIS expects China to account
for 46% of global demand from just 18% of the
world’s population.
And crucially, China’s demand growth is
shrinking as its share of global capacity
increase – again just 2% in 1992 rising to a
forecast 53% in 2030.
The numbers are similar across many other
products.
It is time for chemicals companies to think
long and hard about where their future
competitive advantages lie in the light of the
ten interconnected forces that I believe are
reshaping the global landscape.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author, and do not necessarily represent those
of ICIS.
Potassium Chloride (MOP)27-Aug-2024
HOUSTON (ICIS)–Mining major BHP said after a
rough stretch for the global potash segment, it
appears it is heading now towards finding
renewed balance with improvements in both
demand and supply.
The company said it has also continued to
advance its construction efforts at the Jansen
potash project in Saskatchewan, Canada, with
stage one currently ahead of schedule.
In its economic and commodity outlook, BHP said
potash prices have been on a downward trend
over the last 18 months as the industry has
been resetting after dealing with stark price
movement and severe supply disruptions of
recent years.
The producer said one indicator that the market
was returning to normal pace was that the
magnitude of price movements in the first half
of 2024 was less pronounced compared to a year
ago.
Looking at regional demand performance, it said
a broad recovery has continued from the lows of
2022 with total muriate of potash (MOP)
deliveries expected to reach, or exceed, the
pre-Ukraine conflict levels during this year.
Supply also increased further with export
volumes from Russia and Belarus edging closer
to their 2021 peak with Laos adding 2-3 million
tonnes of capacity over the last few years.
BHP said Canadian volumes this year point to an
improved production level.
“Balanced though does not mean that the market
is at rest. The industry remains in the midst
of a significant disequilibrium, slowly
adjusting from the major shocks of recent
years,” said BHP.
“The compelling demand picture, rising
geopolitical uncertainty and the maturity of
the existing asset base collectively provide an
attractive, accelerated entry opportunity in a
lower–risk supply jurisdiction such as
Saskatchewan, Canada.”
It was also revealed that construction at the
Saskatchewan potash project is ahead of the
original schedule with Jansen stage 1 now 52%
completed.
The first production is targeted for late 2026
with this phasing having an annual output
projected around 4.15 million tonnes.
Jansen stage 2 is 2% complete with first
production from this segment anticipated in
2029.
Back in July the company had said Jansen had
reached a pivotal milestone with construction
having surpassed the 50% completion mark for
stage 1 and stage 2 underway.
Ammonia27-Aug-2024
TORONTO (ICIS)–Canada’s chemical industry is
relieved that freight trains are running again
following a four-day shutdown, officials said
on Tuesday.
Freight rail service at railroads Canadian
National (CN) and Canadian Pacific Kansas City
(CPKC) resumed on Monday, 26 August, following
an
order by a labor tribunal that ended a
complete shutdown that started on 22 August.
A prolonged rail disruption would have had
“devastating impacts
on Canadians and the broader economy,” said
Greg Moffatt, executive vice president of trade
group Chemistry Industry Association of Canada
(CIAC).
Canada’s chemical industry moves more than 500
railcars of product each day, he noted.
CIAC’s immediate concern was for the rail
shipment of chlorine to municipalities, for the
treatment of drinking water. Both railroads had
stopped accepting chlorine and other hazardous
materials before the 22 August shutdown.
Meanwhile, other chemicals manufactured in
Canada are “essential building blocks” for the
agriculture, agri-food, pharmaceuticals,
manufacturing, construction, automotive, mining
and forestry sectors in both Canada and the US,
Moffatt said.
COULD TAKE WEEKS FOR SUPPLY CHAINS TO
NORMALIZE
John Corey, president of the Freight Management
Association of Canada, said it could take
four weeks or more before supply chains get
back to normal.
The government should have intervened much
earlier to prevent the shutdown, as the parties
had been negotiating new collective deals since
November last year, without success, he said.
Although some commentators have suggested that
freight rail was an essential service and the
best way to prevent future shutdowns was to
nationalize the railroads, Corey said that was
not a solution.
North American railroads used to be
government-controlled or owned in the last
century, but they became inefficient
“dinosaurs” and had to be deregulated, Corey
said.
He pointed to the 1980 Staggers Act in the US
and the 1995 privatization of CN in Canada.
“Nationalization is the worst possible
solution” to prevent future labor-related
disruptions, he said, adding, “The government
does not run many things well, as we know.”
He noted that Canada was facing a further
threat to its supply chains because of new
labor issues at its ports. Last year, a
13-day strike shut
down Canada’s West Coast ports.
Canada-based chemical producers rely on rail to
ship 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)
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:
Thumbnail photo source: CN
Ammonia27-Aug-2024
LONDON (ICIS) –On 30 July 2024, MITECO (the
Spanish Ministry for the Ecological Transition
and the Demographic Challenge) published the
regulatory basis for allocating €1.2
billion to large renewable hydrogen valleys,
also known as hydrogen clusters. A competitive
bidding process will launch later this year,
with winners to be announced in 2025 and 2026.
The form of support comes as capital grants
awarded to hydrogen producers. ICIS has
produced the following infographic to explain
the core principles of the support scheme.
Petrochemicals27-Aug-2024
MUMBAI (ICIS)–India’s JPFL Films Pvt Ltd plans
to set up a new 60,000 tonne/year biaxially
oriented polypropylene (BOPP) film unit in the
western Maharashtra state, at a cost of rupee
(Rs) 2.5 billion ($30 million).
The company expects to begin operations at the
new unit to be built at its Nashik complex in
October 2025, its parent firm Jindal Poly Films
said in a filing to the Bombay Stock Exchange
(BSE) on 16 August.
“The new line will help the company strengthen
its market position and market share,” Jindal
Poly Films said, adding that funding for the
plant will be through internal accruals and
bank financing.
JPFL Films currently has a production capacity
of 294,200 tonnes/year of BOPP and 170,000
tonnes/year of biaxially oriented polyethylene
terephthalate (BOPET) at its Nashik facility.
($1 = Rs83.93)
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