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.

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.

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

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.

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.

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.

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

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.

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)