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)

HOUSTON (ICIS)–As summer draws to a close, the US harvesting efforts are beginning to ramp, but with crop prices still less favorable and farmer economics now back in question, the short-term fertilizer demand prospects continue to be unclear. The sights of combines rolling across fields collecting up the various acres is usually a sign that a return of applications is coming soon as it is typical after crops are completed for some growers to place another layer of nutrients, especially for those who use nitrogen products. Yet the level of engagement in further commitments over the next few weeks is not certain, according to market sources. What is more apparent is that increased demand faces the obstacle of unfavorable crop prices for farmers, projections of less income and a potentially longer stretch of harvest because of the challenging weather at spring interrupting planting schedules. As an industry participant said it really is simply about price direction at this time and how people are viewing market direction and that “lower prices will stimulate demand. Higher prices will lower demand.” Currently US corn is at 84% of the reported acreage in the dough stage with soybeans setting pods having reached 89%. Both crops are overall being reported as mostly fair to excellent condition. Recent crop tours have highlighted the potential for there to be really strong yields upcoming, especially for corn in certain states, which would normally be a positive aspect for farmers, but the projections of a larger harvest this year has also added extra weight upon corn prices. Farmer economics have recently come under the spotlight with US Department of Agriculture having forecast a drop of net farm income for 2024 of $43 billion year on year with a total income estimate of $116.1 billion. In 2023, net farm income figure had a 16% drop from 2022, so farmers are set to potentially experience the most significant two-year farm income decline in recent history. That is one of the troubling factors for those who are looking ahead at the domestic path forward for fertilizer buying and values, with a market participant saying, “I think overall, demand will be low due to farmer economics and poor sentiment in agriculture as a whole.” Demand is also lagging because there were good refilling efforts over the summer for many products. Although likely sitting in tanks on farms, or in retail warehouse right now, there should be a good portion of those volumes which will go out over the next three to four weeks, or longer if weather holds favorably. As a market source said optimism for an uptick is running very thin at the moment “so far it continues to be dead on UAN, and nitrogen demand in general. Maybe pre-river close demand kicks in, but I’m not too hopeful for any rally.”

HOUSTON (ICIS)–Crop maturity continues to make steady strides with there now 84% of corn in the dough stage with soybeans setting pods having reached 89% according to the latest US Department of Agriculture (USDA) weekly crop progress report. The current pace of corn into the dough phase is slightly behind the 85% achieved last year but is just above the five-year average of 83%. Corn acreage within the dented stage is now at 46%, which is equal to the 46% in 2023 and is ahead of the five-year average of 42%. Corn reaching maturity has reached 11% of the crop, which is above the 8% from last year as well as the five-year average of 6%. For corn conditions there is 5% rated very poor,  8% as poor and 22% still listed as fair. There is 49% deemed as good and 16% remaining as excellent. The amount of soybean acreage setting pods has climbed to 89% but trails the 90% mark from last year but is above the five-year average of 88%. In the first update on soybeans dropping leaves, the weekly update shows there is 6% of the crop at this stage, which is ahead of both the 4% level from 2023 and the five-year average of 4%. For soybean conditions there continues to be 2% listed as very poor with 7% now as poor and 24% continuing to be fair. There is still 54% seen as good with there now being 13% as excellent. In harvesting updates spring wheat harvest has reached 51% completed, which ahead of the 50% achieved last year but is behind the five-year average of 53%. In the first update on sorghum harvest there is 18% of the crop now completed, which is ahead of the 2023 level of 16% but equal to the five-year average of 18%.

HOUSTON (ICIS)–Canada plans to impose a 100% tariff on all electric vehicles (EVs) made in China, effective on 1 October, and on top of the 6.1% tariff it already imposes on such automobiles, the government said on Monday. The tariff includes electric and certain hybrid passenger automobiles, trucks, buses and delivery vans, the government said. In addition, the government plans to impose a 25% tariff on imports of steel and aluminum products from China, effective on 15 October. The tariffs will not apply to Chinese goods in transit on the day that the duties come into force. Canada could impose more tariffs against other Chinese imports following a 30-day review, it said. Those imports could include batteries and battery parts, semiconductors, solar products and critical minerals. For other countries, Canada plans to limit which ones are eligible to participate in its Incentives for Zero-Emission Vehicles (iZEV), Incentives for Medium and Heavy Duty Zero Emission Vehicles (iMHZEV) and Zero Emission Vehicle Infrastructure Program (ZEVIP). Eligibility would be limited to products made in countries with which Canada has negotiated free trade agreements. CANADA’S EV DUTIES FOLLOW THOSE BY US AND EUEVs made in China have become the target of punitive duties by a growing number of regulators. Earlier in the month, the European Commission announced plans to impose up to 36% countervailing duties on EVs from China. US tariffs on Chinese EVs were scheduled to reach 100% on 1 August. EVs typically consume more plastics on a per unit basis than automobiles powered by internal combustion engines (ICEs). EVs also pose different material challenges, which is increasing demand for different plastics and compounds. Policies that prolong the use of ICE-based vehicles could extend the operating life of the nation’s refineries. Companies could be more willing to invest in maintenance and repairs if they are confident that they could recoup their investments. Refineries produce many building block chemicals, such as propylene, benzene, toluene and mixed xylenes (MX). Thumbnail shows an EV charging station. Image by Xinhua/Shutterstock

CHARLOTTE, North Carolina (ICIS)–August started with reports of high weekly initial unemployment claims, a weak manufacturing PMI reading and a lackluster payroll report. Equity markets did not react well to this as evidenced by a three-day sell off. But the panic ended, a rebound ensued and we are back to where we were on 31 July as the underlying economic fundamentals of a late-phase business cycle remain. The economy is slowing, not falling off a cliff. Job creation continues, even after the softer showing in July and the unemployment rate ticking up to 4.3%, largely the result of Hurricane Beryl. In the latest JOLTS (Job Openings and Labor Turnover) report, there are 1.2 job openings per unemployed, which is down from a year ago. Overall labor market supply and demand relationships appear to be moving back towards pre-pandemic levels. With a still positive labor market, incomes are holding up for consumers and providing support for the US economy. The headline July Consumer Price Index (CPI) was up 2.9% year on year, the lowest comparison since March 2021. Progress on disinflation continues and inflation is heading back towards the Fed’s target. Economists expect inflation to average 3.1% this year, down from 4.1% in 2023 and 8.0% in 2022. This is still above the Fed’s target. Inflation should soften to 2.4% in 2025 and 2026. As a result, interest rate futures overwhelmingly expect the Fed to cut rates in September. Turning to the production side of the economy, the July ISM US Manufacturing Purchasing Managers’ Index (PMI) registered 46.8, down 1.7 points from June and a reading that was below expectations. A March expansionary reading had ended 16 months of contraction in manufacturing, but since then the readings have been contractionary. Overall manufacturing production contraction deepened. New orders slipped further into contraction, and order backlogs and inventories contracted at a faster pace. Only five of the 18 industries expanded. The ISM Services PMI rebounded 2.6 points to 51.4, a slightly expansionary reading. The Manufacturing PMI for Canada remained in contraction (15 months and counting) during July while that for Mexico contracted slightly after nine months of expanding. Brazil’s manufacturing PMI expanded for a seventh month. Euro Area manufacturing has been in contraction for 24 months. The UK PMI, however, expanded for a third month. China’s manufacturing PMI retreated below breakeven levels, ending eight months of positive readings. This is indicative of a stalling recovery. Turning to the demand side of the economy, light vehicle sales rose in July and although inventories have moved up in recent months, they still remain low. We expect light vehicle sales of 15.7 million this year before improving to 16.2 million in 2025. We expect sales of 17.2 million in 2026. This would bring activity back to the last cyclical peak in 2018. Housing activity continues to be tepid amid affordability issues and low builder confidence. We expect that housing starts will average 1.39 million in 2024 and 1.45 million in 2025. We expect housing activity to improve to 1.50 million in 2026. Demographic factors will support housing activity during the next five or more years. There is significant pent-up demand for housing and a shortage of inventory. Affordability continues to be an issue. Retail sales have been lackluster so far this year, but the July results were positive, aiding to the strength in equity markets. Sales at food services and drinking places remain positive. Consumers are taking on more debt. Overall consumer spending may be slowing but remains positive. Business fixed investment, led by a need to boost productivity and reshoring initiatives, will take over from consumer spending as a driver of the US economy. This is typical of a late-stage business cycle. Taking all of these demand and supply considerations together, it appears that downstream activity is improving and that the severe destocking cycle is ending. A restocking cycle for major resins is emerging. US real GDP rose 5.8% in 2021 and then slowed to a 2.5% gain in 2022. The much-anticipated recession failed to emerge for a variety of reasons, and in 2023 the economy expanded 2.5% again. US economic growth in H1 2024 has been strong but is likely to slow, and when it is all said and done, 2024 growth will likely be another 2.5% gain. This pace is well above long-term growth potential. The slowdown in quarterly economic activity suggests that in 2025, the economy should rise 1.8% over average 2024 levels, followed by a modest 2.0% gain in 2026. The US is once again outpacing the other advanced nations. Led by the UK and the Mediterranean nations, Europe’s economic prospects appear to be improving. China struggles with soft economic activity and appears to be exporting its way out of its stalled recovery.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 23 August. SHIPPING: Panama Canal adds additional transit slot, raises maximum draft allowance 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. Canada needs to act on rail stoppage, now – chem group CIAC Canada’s federal government needs to exercise its authority and act quickly on the complete freight rail stoppage, set to start midnight at 00:01 Eastern Time, trade group Chemistry Industry Association of Canada (CIAC) said. Canada government reluctant to intervene as freight rail shutdown begins As the unprecedented work stoppage at both of Canada’s freight railroads began on Thursday at 00:01 Eastern Time, it remains unclear how or when it may end as the government is reluctant to intervene. LyondellBasell declares FM on rail shipments to Canada amid CPKC, CN work stoppage Global chemicals major LyondellBasell has declared force majeure on all rail shipments to Canada after that country’s two largest railroads shut down operations after negotiations for a new collective bargaining agreement stalled. Canadian freight railroads prepare to resume operations after brief shutdown Freight railroads Canadian National (CN) and Canadian Pacific Kansas City (CPKC) are preparing to restart operations after the federal government stepped in to end a labor dispute with workers – although it remains unclear on Friday when exactly a full freight rail service will resume. Canada rail dispute: Union issues fresh strike notice, despite government order for binding arbitration -Labor union Teamsters Canada Rail Conference (TCRC) on Friday issued a strike notice for Monday, 26 August, against railroad Canadian National (CN).