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Fertilizer Canada estimates rail strike will cost industry millions per day in lost revenue
HOUSTON (ICIS)–Fertilizer Canada said disruptions to rail services across the country will cost the fertilizer industry an estimated C$55-63 ($40.3-46.2) million per day in lost sales revenue. Facing a potential strike, the industry group is urgently calling on the federal government to take immediate action to prevent a work stoppage on both railways. It wants to see binding arbitration that prohibits Teamsters Canada Rail Conference (TCRC) from undertaking strike action and CN Railway and Canadian Pacific Kansas City (CPKC) from lockout action. Both railways have served lockout notices to TCRC beginning 22 August and TCRC has served a strike notice to CPKC also beginning 22 August. “The time for action is now. We can no longer patiently wait for a resolution. The federal government must protect Canada’s economy and food security by ordering binding arbitration,” said Karen Proud, Fertilizer Canada president and CEO. The group noted that the railways move an average of 69,000 tonnes of fertilizer product per day, which is equivalent to four to five trains. The fertilizer industry is among the first to experience slowdowns. As on 12 August, the movement of some ammonia products were halted when they were embargoed. Since that action the railways have issued further embargoes, including US railways halting shipments to Canada. Currently 75% of all fertilizer produced and used in Canada is moved by rail, with minimal transportation alternatives, with 90% of those volumes which are destined for the US market delivered by rail. “In the last seven years, Canadian supply chain labour disruptions have cost the fertilizer industry nearly a billion dollars,” Proud said. “These stoppages are doing immense damage to our reputation as a reliable trading partner.” “Our customers, who rely on Canadian fertilizer products, are being forced to turn to our competitors in Russia, Belarus and China. We can’t afford for our railways to shut down, and we can’t afford a passive approach to our supply chains any longer. We need long-term solutions.” Fertilizer Canada represents producers, manufacturers, wholesale and retail distributors of nitrogen, phosphate, potash and sulphur fertilizers. $1.00=C1.36
VIDEO: Global oil outlook – five factors to watch in week 34
LONDON (ICIS)–Crude benchmarks are likely to be subject to bearish pressure in week 34 as Chinese oil demand concerns take centre stage. However, European and US economic data released later this week may provide clues to future monetary policy decisions and provide hope for upcoming interest rate cuts. ICIS experts look at factors that are forecast to drive oil prices in Week 34.
Eurozone construction output rebounds in June after three-month decline
LONDON (ICIS)–Construction output in the eurozone rebounded in June after declining for three months, official data showed on Tuesday. Seasonally adjusted production in construction rose by 1.7% from May and was also higher, by 1.4%, in the EU. Eurozone output had been on a downward trend since March, with the EU following a similar track, though with a marginal, near flat 0.1% rise in April. Building construction, civil engineering and specialized construction activities all increased in June from the previous month in both the eurozone and EU, according to statistics agency Eurostat. On a year-on-year basis, June construction output in the eurozone was 1.0% higher in the eurozone and 0.1% lower in the EU. Numerous petrochemicals and specialty chemicals are key ingredients in products used for modern construction, including adhesives, ad-mixtures, sealants, coatings, paints, flooring, insulation and water proofing.

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India’s BPCL to invest Rs1.7 trillion on capacity growth over five years
MUMBAI (ICIS)–India’s state-owned Bharat Petroleum Corp Ltd (BPCL) plans to invest rupee (Rs) 1.7 trillion ($20.3 billion) over the next five years to grow its refining and fuel marketing business, as well as expand its petrochemicals and green energy businesses. 44% of total earmarked for refinery, petrochemical capacity growth Bina refinery/petrochemical project due for commissioning in FY2028-29 New refinery project being mulled As part of the investment initiative named ‘Project Aspire’, some Rs750 billion will go to increasing capacity at BPCL’s refineries and expand its petrochemical portfolio, company chairman G Krishnakumar said in the company’s annual report for the fiscal year ending March 2024. “The demand for major petrochemical products is expected to rise by 7-8% annually. This presents a strategic opportunity to expand refining capacity alongside the development of integrated petrochemical complexes,” Krishnakumar said. BPCL’s planned petrochemical expansions include the new petrochemical projects at its Bina refinery in the central Madhya Pradesh state, and the Kochi refinery in the southern Kerala state. The Bina project is a brownfield expansion that will raise the refinery’s capacity by 41% to 11m tonnes/year, to cater to the requirements of upcoming petrochemical plants, which include a 1.2m tonnes/year ethylene cracker and downstream units. The site is expected to produce 1.15m tonnes/year of polyethylene (PE), including high density PE (HDPE) and linear low density PE (LLDPE); 550,000 tonnes/year of polypropylene (PP); and 50,000 tonnes/year of butene-1 The complex will also produce chemicals such as benzene, toluene, xylene, the annual report said. “Technology licensors for all critical packages, and project management consultants for refinery expansion and downstream units have been onboarded and work at the site commenced in the first week of July 2024,” Krishnakumar said. BPCL has chosen US-based Lummus to provide technologies for the new ethylene plant and downstream units at the complex. The refinery will be ready for commissioning by May 2028, while petrochemical operations will begin in the financial year ending March 2029. At Kochi, BPCL’s 400,000 tonne/year PP project is progressing as per schedule and is on track for commissioning in October 2027. It plans to raise its Kochi refinery capacity by 16% over the next five years to 18m tonnes/year, based on data from the company’s latest annual report. https://subscriber.icis.com/news/petchem/news-article-00110958286 The company also plans to set up additional petrochemical capacities over the next few years. “To meet the anticipated demand beyond our planned expansions in Bina and Kochi, we are actively evaluating options for setting up additional integrated refining and petrochemical capacities within the next 5-7 years,” Krishnakumar said BPCL has begun evaluating options to set up a new refinery with a planned capacity of around 9 million to 12 million tonnes/year, a company official said, adding, “we are exploring a new refinery either on the east coast or at other locations”. In Mumbai, the company also plans to expand its refinery capacity by a third to 16m tonnes/year in the next five years, according to its annual report. In the eastern Odisha state, BPCL expects to begin operations at its 200 kilolitre/day ethanol plant at Bargarh by October 2024. Once operational, the integrated refinery is expected to produce both first generation (1G) as well as second generation (2G) ethanol using rice grain and paddy straw as feedstock. Focus article by Priya Jestin ($1 = Rs83.85) Thumbnail image: The Bharat Petroleum import terminal at Haldia in West Bengal on 13 March 2021. (Debajyoti Chakraborty/NurPhoto/Shutterstock)
US corn now 97% silking with soybean blooming at 95%
HOUSTON (ICIS)–The US corn crop is now at 97% silking with soybean blooming having reached 95%, according to the latest US Department of Agriculture (USDA) weekly crop progress report. For corn, the current rate of the crop silking is just slightly trailing both the 98% achieved last year and the five-year average of 98%. The amount of crop now at the dough stage is 74%, which equals the 74% rate from 2023 and is above the five-year average of 71%. Corn which has reached the dented phase is at 30%, which matches the 30% level from last year and is ahead of the five-year average of 26%. In the first update on corn reaching maturity, the report showed there is 5% of the crop at this stage, which is above the 3% from 2023 as well as the five-year average of 3%. For corn conditions, there is now 4% rated very poor with 7% still listed as poor and 22% as fair. There remains 51% as good and 16% as excellent. The soybean crop is now 95% blooming, which is equal to the 95% rate achieved in 2023 as well as the five-year average of 95%. The amount of acreage setting pods has risen to 81%; this trails the 84% mark from last year, but is above the five-year average of 80%. For soybean conditions, there continues to be 2% listed as very poor, 6% as poor and 24% as fair. There is now 54% seen as good with 14% as excellent. In harvesting updates, winter wheat is now at 96% completed which is slightly ahead of the 95% level from 2023 as well as the five-year average of 95%. Spring wheat harvest has reached 31% completed, which is behind the 35% mark from last year and the five-year average of 36%.
SHIPPING: Panama Canal adds additional transit slot, raises maximum draft allowance
HOUSTON (ICIS)–As the water level in the freshwater lake that feeds the Panama Canal’s locks continues to rise, the Panama Canal Authority (PCA) has increased the maximum allowable draft to 50ft (15.25m), effective immediately, and will add an additional transit slot beginning 1 September. The additional slot brings the total number of passages allowed per day to 36, almost at par with the 36-38 transits/day seen before a drought forced the PCA to limit transit for the first time in its history. There are 10 slots for Neopanamax vessels, 20 for supers and six for regular vessels. 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 PCA vessel tracker. As of 19 August, the tracker showed wait times of 3.0 days for northbound traffic and 0.5 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
Americas top stories: weekly summary
HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 16 August. US may consider VCM, EDC expansions amid global PVC oversupply – ICIS US-based polyvinyl chloride (PVC) producers may consider upstream and cost-advantaged vinyl chloride monomer (VCM) and ethylene dichloride (EDC) expansions rather than going all the way to the polymer as global competitive pressures in PVC should remain intense, an ICIS analyst said. Canada railroads may lock out workers starting 22 August Freight railroads Canadian Pacific Kansas City (CPKC) and Canadian National (CN) may start to lock out workers on 22 August. Weak demographics to prolong effects of chem overcapacity Weak growth in the world’s population will slow economic growth, tighten labor markets and likely prolong the global glut in polyolefins, according to ICIS analysts. INSIGHT: US chem feedstock costs hit pandemic lows as midstream buildout continues Prices for ethane, the predominant US feedstock used to make ethylene, have fallen this month to levels not seen since the pandemic, and they will likely remain depressed until colder weather arrives later in the year. Canada rail disruption could shut economy down, harm trade relations with US US and Canadian chemical distributors and other trade groups are warning about potentially “catastrophic” impacts of a rail disruption that could start in Canada next week.
INSIGHT: Larger players hang back as Europe SAF mandates loom
LONDON (ICIS)–Fresh upcoming legislation in the EU and UK from 2025 are set to galvanise the biofuels sector by setting minimum targets for sustainable fuels usage in the aviation sector, but hesitance remains among the larger players. New mandates set to galvanise sector growth Larger incumbents still cautious about big bets Pace of demand growth after SAF mandates remains to be seen The EU sustainable aviation fuels (SAF) mandate will set a minimum floor for fuel at EU airports to contain at least 2% from 2025 and gradually tick up each year, to hit 6% by 2030. These targets ratchet up dramatically from that point, with the 2030-35 period likely to be a transformational period for the aviation sector,  as the SAF mandate to increase from 6% to 20% in just five years. By 2050, SAF is expected to become the dominant form of aviation fuel, with the EU mandating that airport fuels be 70% SAF by the midpoint of the century. Over the next 26 years, aviation firms and fuels producers will need to solve many colossal questions, including the precise composition of the fuels and how those raw materials can be sourced and scaled. Although the European Commission’s ambitions for SAF growth over the next half-decade are a far cry from the step changes required between 2030 and 2050, the introduction of those first minimum targets will be transformational. “I think it’s widely seen as a game-changer in the sector,” said ICIS markets editor for biofuels Nazif Nazmul. SAF currently makes up 0.1% of the global aviation fuel mix and approximately 0.5% in the EU, according to Nazmul, so a 2% target for next year means that airport fuel providers will be under pressure to ramp up capacity quickly. SLOWING AMBITIONS Despite this, the last few months have seen a spate of delays and cancellations from some of the largest entrants to the sector, in Europe and elsewhere. BP announced in June that it is dramatically scaling back its bet on SAF, in the wake of taking full ownership of Brazil-based sugarcane and ethanol major Bunge Bioenergia. The company has paused planning of two projects and continues to assess three others, which it attributed to a desire to simplify its new fuels portfolio. Shell also announced a pause to work on its flagship Rotterdam, Netherlands biofuels plant as part of a bid to control costs, but also “to assess the most commercial way forward for the project,” according to Shell downstream renewables and energy solutions director Huibert Vigeveno. The pause will allow Shell to optimize its project development order and reduce the number of engineers on the ground at the site, but projected savings are counterbalanced by a heavy price. Shell estimates that the write-down from the move will cost the company $600 million to $1 billion. STILL EARLY STAGE Shell has not commented on the capacity for the 2025 EU mandate to improve market conditions, but the impact of the new legislation could take time to trickle through the market. Spain’s Cepsa, on the other hand, is proceeding with its €1.2bn, 500,000 tonnes/year biofuels project, with start-up scheduled for 2026. “There is a huge chunk of the aviation market that biofuels was not a part of previously, when biofuels were previously relegated to road transport,” Nazmul said. “But now it has opened up to aviation and I think this is something that definitely got the oil majors interested in the first place. But I think the scale is something that they’re beginning to question. Is it something that they’re able to pull off right now or should they wait for the market to get a little bit more mature?”, he added. A factor in many green chemicals and green fuels markets is the imminent extent of the scale-up dictated by policymakers at a point where many technologies thought to be necessary for decarbonisation are at the pre-commercial or pilot stage. As with chemical recycling, which has seen players try to step up quickly from pilot to small scale to commercial scale plants, biofuels players need to move fast to meet targets. But the economics of the sector remain challenging for now, and future prospects opaque, meaning that slower-moving fuel sector incumbents may hang back and let more specialized firms take the first larger steps. “The pace of market growth following the rollout of the mandates remains to be seen, which is why some larger players are opting to hold back for the time being,” Nazmul said. FEEDSTOCK, TECHNOLOGY QUESTIONS Like the rest of the bio-based materials sectors, the question of what feedstocks and technologies will be viable as the market grows remains unclear, with players betting on different routes. “That’s the question no one knows for sure,” Nazmul said. Currently there are seven different routes to produce SAF, and it’s kind of a gamble.” “Will there be enough feedstock? Will there be enough capacity? Will we be importing for example SAF from the US? Doesn’t that defeat the entire purpose of slashing emissions when you’re shipping these biofuels long distances?”, he added. The wider world is observing the steps taken in Europe and the US to develop a viable commercial market for SAF, but few moves have been made outside those regions so far. The same may be the case for large energy sector incumbents, who have the financial flexibility to wait for the market to mature a little before going all in. 2025 may prove to be the starting gun for the sector to develop in earnest, but the real rewards may be further down the line. “Asian countries are really interested in SAF, we’re seeing some investments in Japan, but countries like India and China are yet to really commit. It’s a matter of time and I’m sure those companies and those countries are assessing the best possible options out there,” Nazmul added. SECTOR BACKGROUND Biofuels are liquid fuels derived from biomass, such as biodegradable agricultural, forestry or fishery products, municipal waste, or biodegradable industrial waste. Biofuels can be categorized into four generations: First-generation: Produced from food crops like corn and sugarcane using conventional technology. These biofuels have moderate costs, as they depend heavily on crop prices. Second-generation: Made from non-food biomass like agricultural residues, wood, and waste. These are more expensive due to the advanced technology required. Third-generation: Derived from algae and other fast-growing biomass, but have high costs that are expected to decrease with technological advances. Fourth-generation: Involve biofuels that capture and store carbon during production, often using genetically modified organisms. These also have high costs but may become more affordable as technology improves. Biofuels are increasingly popular across many industries but especially in the transportation sector. This is due to concerns over the impact and supply of fossil fuels, and the fact that many of these fuels are compatible with existing systems. Supply and demand have been bolstered by legislative mandates and corporate climate commitments aimed at promoting sustainability and the environmental benefits of biofuels. This has led to a significant increase in demand in recent years. While first-generation biofuels once dominated the market, there has been a significant shift towards second-generation biofuels. Despite incentives, the global transition to biofuels faces challenges. High costs and uncertainty about profitability hinder vital investments. Long-term take-up goals have also increased concerns over supply capabilities. Insight by Tom Brown and Zara Najimi Click here to visit the ICIS biofuels topic page
BLOG: Stop wasting time waiting for the end of the downcycle
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. STILL WAITING FOR the end of the chemicals downturn? If so, I believe you are wasting precious time. Read in detail in today’s blog and see my ten summarised reasons below. Print this off and pin it on your boardroom wall: Most of the G20 countries, which account for more than 70% of global polyethylene demand (chemicals and polymers are equivalent to economic activity) is ageing. Immigration is of course the answer to some extent, but this is politically very difficult in the West. In the regions and countries where populations are youthful, not enough people – because of politics in the West – are likely to be able to move to the rich world for better economic opportunities, and to escape conflicts and the effects of climate change. Climate change will more likely be successfully mitigated in the rich world. But the risk is that the Developing World ex-China does not get the financing and technologies it needs to mitigate the impact of climate change. China is the immediate centre of the crisis for the global chemicals industry because global capacity was added on wrong growth assumptions. China’s chemicals demand growth could turn negative because of an ageing population, the end of the real-estate bubble and geopolitics. Geopolitics mean that we are likely to see a change in chemicals trade flows. A bipolar world – one centred on China and its allies and the other on the US and its allies – is one outcome The oil and gas majors could end up dominating chemicals to compensate for declining oil demand due to electric vehicles and fuel efficiency, as China moves to chemicals self-sufficiency by itself and/or with imports largely from its geopolitical partners in the Middle East We are in the early stages of a new industrial revolution driven by sustainability As was the case with the start of the first industrial revolution, it is impossible to say what will be the winning and losing technologies. For chemical companies without strong feedstock advantages, without the right geopolitical locations- and which have too much exposure to the diminishing China import markets – it is success in sustainability that is the route to new competitive advantage. 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.
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