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Speciality Chemicals01-Oct-2024
HOUSTON (ICIS)–Participants in the US chemical
industry worry that a prolonged strike by US
Gulf and East Coast dock workers will hurt
exporters and lead to supply surpluses, and
some carriers are already initiating port
congestion surcharges that will add increased
costs on top of delays to both imports and
exports.
As expected, dockworkers on the US East and
Gulf Coasts went
on strike early on Tuesday after labor
union International Longshoremen’s Association
(ILA) rejected the latest wage offer by
employers’ group United States Maritime
Alliance (USMX).
While the US government has said it will not
intervene, some analysts, including Peter Sand,
chief analyst at ocean and freight rate
analytics firm Xeneta, think government
intervention will be required to bring the
dispute to an end.
“The latest statement by the ILA suggests there
is very little prospect of the two sides
reaching a mutually agreeable resolution,” Sand
said. “To stop trade from entering the US on
such a scale for a prolonged period of time is
unthinkable so the Government will need to step
in for the good of its people and economy.”
Kevin Swift, ICIS Senior Economist for Global
Chemicals, said the strike could cost the US
economy up to $5 billion/day.
“This will affect imports from Germany, the
Netherlands and other European nations,” Swift
said. “I think the effect is more on specialty
chemicals than resins.
Swift said the ultimate disruption and cost to
the economy depends on how long the strike
lasts.
IMPACT TO CHEM
MARKETSThe strike is already
impacting US polyethylene (PE) exports.
Container ships also transport polymers, such
as PE and polypropylene (PP), which are shipped
in pellets.
A PE trader in South America told ICIS that
they are halting sales of US material destined
for Brazil until additional information is
available since they are unable to inform
clients of the estimated departure date.
According to the trader, some cargoes could be
delayed by 30 days.
The US is the main origin of PE imports into
Brazil.
The polyvinyl chloride (PVC) Industry is
concerned as all US Gulf PVC exports move out
of one of the impacted East Coast ports.
This could result in a long inventory situation
and an increase in days of supply if producers
and traders are unable to execute on export
transactions due to the port strike.
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.
But this places extra pressure on the rail and
trucking industries which will need to move
that material to destinations that were
previously reached from the US Gulf or the East
Coast.
Imports of purified terephthalic acid (PTA),
used to make PET, that typically come from
South Korea and Mexico, could be affected by
the strike.
Even if some PTA gets delivered on the West
Coast, it will still need to be transported to
the East Coast where most PET plants are
located.
CARRIER SURCHARGES
Market sources are telling ICIS they are seeing
congestion surcharges between $1,000-3,000/FEU
(40-foot equivalent unit), with some citing
even higher surcharges.
Sand said that extreme increases in container
costs cited by ILA president Harold Daggett
have not been seen yet.
In a statement on 30 September, Daggett said
carriers are charging $30,000/container.
Sand cited Xeneta data, which is based on more
than 450 million crowdsourced datapoints,
showing average spot rates on the major
fronthaul from Asia to US East Coast were at
around $7,000/FEU on 1 October.
“While average spot rates from north Europe to
the US East Coast have increased 50% since the
end of August, they are still only $2,800/FEU,”
Sand said.
Supply chain advisors Drewry also show rates
from Asia to the USEC at $6,000/FEU, and rates
from Asia to the USWC are at $5,500, although
the rate of decline has slowed with more
traffic heading that way because of the strike.
Liquid chemicals that are largely transported
by tankers are unlikely to be affected.
But more liquid chemicals are being moved on
container ships in isotanks.
Focus story by Adam Yanelli
Additional reporting by Stefan Baumgarten,
Emily Friedman, Bruno Menini, Antulio Borneo
and Kelly Coutu
Visit the ICIS Logistics – impact on
chemicals and energy topic
page
Thumbnail image shows a
container ship carrying cargo
on its way to Antwerp
Harbour. (OLIVIER
HOSLET/EPA-EFE/Shutterstock).
Ammonia01-Oct-2024
HOUSTON (ICIS)–As port operations along the
East Coast and Gulf Coast came to a halt amid a
union strike underway, the US fertilizer
industry was carefully watching the labor
developments but is not overly concerned about
the situation having an immediate impact on
activities or price direction.
Part of this outlook on the port problem comes
from a perspective of fertilizer participants
that the work stoppage will be short in
duration as the economic consequences will be
severe if protracted.
This latest labor disruption began when union
International Longshoremen’s Association (ILA)
rejected the latest wage offer by employers’
group United States Maritime Alliance (USMX).
This commenced a strike at 36 ports stretching
from Maine to Texas, and although the labor
talks were said to be continuing there was no
further progress reported as of late on 1
October.
Also, the US fertilizer sector recently
experienced the Canadian rail strike, which did
provoke some steep concerns before it was
quickly resolved so there is thought this
situation could follow a similar course and end
with a quick resolution.
There are some thoughts this strike could be
settled within a few days, although the
government has indicated that it will not
intervene in the situation.
An industry participant echoed the overall
outlook in saying “if the short term is like
that, I do not expect any fertilizer related
issues.”
Domestic fertilizer prices should not see any
immediate escalation because of this strike
activity because demand is still fairly limited
following the recent hurricanes and with the
ongoing harvest progress.
In addition, most of those volumes to be used
in the coming weeks for end of the year
applications, or stockpiled for next spring,
saw the majority of movement over the last part
of summer and now are mostly in place already.
US producers did not immediately respond to a
request for comment but Canadian fertilizer
major Nutrien said that while the strike might
not have any consequences directly for their
operations, there is concern over the larger
repercussion if this stoppage turns lengthy.
“As the world’s largest supplier of crop inputs
and services, Nutrien depends on reliable
supply chains to serve North American and
offshore customers,” said a Nutrien
spokesperson.
“While the East Coast port strike is not
expected to materially impact our shipments,
any extended disruption will be felt more
broadly in the supply chain, and we urge
parties to dispute to achieve a timely
resolution.”
Ammonia01-Oct-2024
HOUSTON (ICIS)–Canadian fertilizer major
Nutrien confirmed it is in the process of
restarting its Augusta, Georgia, facility.
The operation which produces several products
including ammonia and urea was shut down after
Hurricane Helene made landfall under safety
protocols during storm induced power failures.
“I can confirm that Augusta is in start-up and
expected to be back online later in the week,”
said a Nutrien spokesperson.
The plant’s annual production capacity is
listed at 765,000 tonnes of ammonia, 415,000 of
ammonia nitrate, 400,000 tonnes of UAN and
260,000 tonnes of urea.
The producer had said on 30 September all their
colleagues were safe at their locations but
that in many areas, the roads had remained
closed due to downed power lines and flooding.
Further Nutrien did expect that it could take
several days before their full post storm
assessment was completed.
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Speciality Chemicals01-Oct-2024
BARCELONA (ICIS)–ADNOC’s agreement to buy
Covestro ahead of next week’s European
Petrochemical Association (EPCA) annual meeting
highlights the challenges and opportunities
facing Europe’s beleaguered chemical industry.
Abu Dhabi National Oil Co (ADNOC)
to
acquire Covestro for equity value of
€11.7 billion
ADNOC diversifies downstream from oil and
gas
Covestro global leader in polycarbonate
(PC) and polyurethanes (PU)
PC and PU struggle with poor demand from
automotive, construction
Covestro operating profit slumped from
around €3bn in 2021 to near €1bn in 2023
Covestro boasts strong
sustainability-related product portfolio
More M&A likely in Europe
petrochemicals thanks to cheap bottom-of-cycle
valuations
Oil prices may collapse to $30/bbl if OPEC
goes for market share
In this Think Tank podcast, Will
Beacham interviews Nigel
Davis and John
Richardson from the ICIS market
development team and Paul
Hodges, chairman of New Normal
Consulting.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here .
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges and John Richardson’s
ICIS
blogs.
Speciality Chemicals01-Oct-2024
LONDON (ICIS)–Abu Dhabi state oil and
petrochemicals player ADNOC has launched a
public takeover offer for Germany-based
producer isocyanates, polycarbonates and
adhesives specialist Covestro, representing an
equity value of €11.7 billion.
After over a year of reports of a possible deal
between the players and concrete negotiations
that have been underway since June this year,
the Emirati company made a concrete public
takeover offer of €62 per share.
The price represents a 21% premium to
Covestro’s per-share value at the close on 23
June, when the company announced the beginning
of due diligence procedures between the two
companies.
ADNOC estimates the enterprise value of the
deal, which also includes net debt and pension
obligations that would be taken on as a result
of a purchase, at €14.7 billion.
The company will also subscribe to new shares
representing a 10% increase of Covestro’s share
capital at the offer price, which will result
in proceeds of €1.17 billion to be used to
further the Leverkusen-based producer’s growth
strategy.
The company had not responded for requests for
comment on whether that sum is part of the
offer price or in addition to it at the time of
publication.
The deal is subject to a minimum acceptance
threshold of 50% of Covestro’s issued share
capital plus one share, with Covestro’s
management and supervisory boards backing the
deal.
The joint investment agreement, which would
stand until the end of 2028 if the deal goes
through, ADNOC has committed not to sell,
close, or significantly reduce Covestro’s
business activities, and to abide by existing
works agreements.
“We are convinced that the agreement reached
today with ADNOC International is in the best
interest of Covestro, our employees, our
shareholders, and all other stakeholders,” said
Covestro CEO Markus Steilemann.
The deal will play into ADNOC’s plan to
diversify and build out its chemicals platform,
according to CEO Sultan Adhem Al-Jaber.
“This strategic partnership is a natural fit
and aligns seamlessly with ADNOC’s ongoing
smart growth and future proofing strategy and
our vision to become a top five global
chemicals company,” he said.
If the takeover deal closes, Covestro will
continue to be managed as a stock corporation,
the company added.
(Update re-leads, adds detail throughout)
Thumbnail photo source: Covestro
Crude Oil01-Oct-2024
LONDON (ICIS)–Manufacturing output in the
eurozone fell at its steepest rate this year in
September to hit a nine-month low.
Key measures of factory strength such as
production, new orders, employment and
procurement activity all declined at quicker
rates, according to purchasing managers’ index
(PMI) data on Tuesday.
The HCOB (Hamburg Commercial Bank) eurozone
manufacturing PMI fell to 45.0 in September
from 45.8 in August, while manufacturing output
declined to 44.9, also from 45.8 in the
previous month.
Both were at a nine-month low, said S&P
Global which compiles the indexes. A figure
above 50 indicates growth, and below 50
contraction.
“Lower output volumes were a response to the
prevailing demand environment, which
deteriorated further during September,” the
market intelligence group said in a statement.
Growth in Spain and Greece was offset by
weakness elsewhere, particularly in the
eurozone’s largest manufacturing sector
Germany, which recorded its most pronounced
worsening of factory conditions for 12 months.
Countries ranked by PMI:
September
Spain
53.0
4-month high
Greece
50.3
12-month low
Ireland
49.4
3-month low
Italy
48.3
2-month low
Netherlands
48.2
2-month high
France
44.6
3-month high
Austria
42.8
6-month low
Germany
40.6
12-month low
“While handling the global manufacturing
downturn surprisingly well, Spain just does not
have enough weight to lift the rest of the
eurozone with it,” said Cyrus de la Rubia,
chief economist at Hamburg Commercial Bank.
“The worsening industrial slump in Germany, for
example, is too big for Spain’s momentum in
September to make much of a difference.”
In the UK, the picture was brighter as solid
expansion in the sector continued in September.
Although the manufacturing PMI declined to 51.5
from August’s 26-month high of 52.5, it has
remained above 50 for five successive months.
The main drivers of September expansion were
the consumer and intermediate goods sectors,
both of which recorded stronger increases in
output and new business.
Polypropylene01-Oct-2024
SINGAPORE (ICIS)–Denmark’s AP Moller Holding,
the parent company of shipping company Maersk,
plans to invest €1.5 billion to build a
“fossil-free” plastics production plant in
Antwerp, Belgium, via a new venture called
Vioneo.
“The Antwerp plant will benefit from the
region’s expertise in the chemicals industry,
strong export facilities and access to
renewable energy,” AP Moller said in a
statement on 30 September.
The Vioneo plant is expected to use green
methanol as feedstock to produce polypropylene
(PP) and polyethylene (PE), with commercial
operations slated to begin in 2028, the
investment company said.
“Fully operational, the plant will be able to
produce … 300,000 tonnes of fossil-free
plastics annually, corresponding to a reduction
of 1.5 million tons of CO2 [carbon dioxide]
emissions,” it said.
The plant will be located within the Antwerp
energy park of Dutch logistics firm Vopak, with
support from Vopak Belgium and the Port of
Antwerp-Bruges.
Project plans will take place in phases, with
front-end engineering design (FEED) to begin in
Q4 2024, and with the final investment decision
(FID) expected in 2025.
In a separate statement, the Port of
Antwerp-Bruges said that the project is
expected to generate “significant job
opportunities” during the construction phase
and around 250 permanent positions when the
plant is fully operational.
($1 = €0.90)
Ammonia30-Sep-2024
HOUSTON (ICIS)–Even with many states seeing
unfavorable weather recently, the pace of the
US harvesting continues to be steady with 21%
of corn acreage now completed with soybeans at
26% finished, according to the latest US
Department of Agriculture (USDA) weekly crop
progress report.
According to the weekly update, the current
rate of corn harvest is even with the 2023
level of 21% and slightly ahead of the
five-year average of 18%.
Texas continues to be the top state for
harvesting progress at 91% of its acreage
completed, followed again by North Carolina at
72%.
There is 96% of the corn acreage which is
dented, which is slightly behind the 97% from
2023 but is above the five-year average of 95%.
For corn maturity, there is 75% of the crop at
this level, which is below last year’s rate of
79% but is higher than the five-year average of
70%.
Looking at corn conditions, there continues to
be 4% rated very poor and 8% poor with there
being 24% as fair. The amount rated good is at
49% with 15% still listed as excellent.
Soybeans dropping leaves has climbed to 81%,
and while this is just behind the 82% achieved
last season it is above the five-year average
of 73%.
Harvesting of soybeans is now at 26%, which is
ahead of the 20% level from 2023 as well as the
five-year average of 18%.
Louisiana remains in the lead on harvesting
completion with 71% of the state’s acreage now
finished, followed by Mississippi at 66%.
For soybean conditions, there were no changes
once again in the update with it remaining as
3% seen as very poor, with 8% as poor, 25%
listed fair with 52% as good and 12% rated as
excellent.
In other harvesting updates, there is 20% of
the cotton crop completed with sorghum at 35%
finished.
Ammonia30-Sep-2024
HOUSTON (ICIS)–The US fertilizer industry
along with their agricultural counterparts were
trying to assess damages and determine how long
activities might be limited or even remain
halted as Hurricane Helene delivered a mighty
strike with intense winds and tremendous
rainfall leading to historic flooding.
Across several southeastern states the severity
of the impacts affected plant operations and
loadings with confirmed issues in Florida,
Georgia and North Carolina with some damage
reported at the port in Tampa, Florida, which
did reopen on 29 September.
There was also localized flooding within the
city and surrounding communities but the
fertilizer hub with its vital production,
storage and logistical assets missed the full
wrath of the hurricane, which had rapidly
intensified before making landfall.
Producer Mosaic had earlier informed that it
did experience some issues with its operations
in Florida as there was water intrusion at its
Riverview site, which was caused by storm surge
that has left the facility offline.
A site cleanup must be undertaken so the
operations are not anticipated to see a return
to full capacity for about 10 days, but Mosaic
did not respond for further comment on whether
it had experienced any other impacts to its
business activities.
Canadian fertilizer major Nutrien said it is
still evaluating the total impacts of the
hurricane landfall but while its Aurora
facility in North Carolina experienced heavy
rainfall, the facility did not close during the
event and is fully operational.
The producer said it did undertake
precautionary measures at other sites.
“Following Hurricane Helene’s landfall last
Friday, Nutrien’s Augusta, Georgia, and White
Springs, Florida, facilities were shut down
under safety protocols during storm-induced
power failures,” said a Nutrien spokesperson.
“All our colleagues are safe at these
locations, but many area roads remain closed
due to downed power lines and flooding. It
could be several more days before a post-storm
assessment is complete.”
For fertilizer interests overall there was
optimism that while the storm potentially wiped
out what crops had not been finished in some
locations, it should not have a lingering sway
on upcoming demand or supply availability once
flooding recedes and acreage dries as there is
still plenty of acreage left to complete.
As an industry source said, “I don’t think it
matters at all. We just need some more
harvesting so farmers can think about
application.”
Corn harvest is now 21% complete, while
soybeans have reached 26%.
While September has been treading a tad slower
than normal, with repeated tropical weather
threats a key factor, there was sentiment that
when looking ahead at October there will be
more traction forward for some products.
As a trader said, “I think prices will move up
on UAN [urea ammonium nitrate] because of the
supply disruptions but hard to say how much.
Phosphate is probably the most bullish out of
everything, urea doesn’t really have an
impact.”
The extent of crop damage will not be clear for
at least several days, maybe longer. The
concern is still that a reduction in yield
means a drop in income back to the grower who
then will have more pressure on how to manage
upcoming input expense.
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