Xylenes

CHARLOTTE, North Carolina (ICIS)–The US remains an outlier among advanced nations and continues to power forward. Inflation has moderated and central banks are eyeing rate cuts later this year. Global manufacturing has stabilized and is recovering in most major economies. Output is strongest in emerging economies. There are signs that China’s recovery has re-engaged and that Europe’s economy may be stabilizing, with recovery later this year. The US economy is outperforming most other developed countries, keeping the dollar strong. Based on a string of hotter-than-expected readings on inflation, it appears that interest rates will be higher for longer. The headline March Consumer Price Index (CPI) was up 3.5% year on year and core CPI (excluding food and energy) was up 3.8% year on year. Progress on disinflation appears to be stabilizing. Economists expect inflation to average 3.1% this year, down from 4.1% in 2023 and 8.0% in 2022. This is above the US Federal Reserve’s target of 2%. Inflation is forecast to soften to 2.3% in 2025. As a result, interest rate futures are now moving towards fewer cuts. The case is even being made for no cuts. US MANUFACTURING FINALLY IN EXPANSIONTurning to the production side of the economy, the March ISM US Manufacturing PMI came in at 50.3, up 2.5 points from February and above expectations. This expansionary reading ends 16 months of contraction in US manufacturing. Production moved back into expansion, as did new orders. Order backlogs contracted at the same pace. Inventories contracted at a slower pace, which could provide a floor for output. The long and deep destocking cycle could be ending, with the possibility for restocking later this year. Nine of the 18 industries expanded and demand remains in the initial stages of recovery, with obvious signs of improving conditions. The ISM US Services PMI fell 1.2 points to 51.4, a reading indicating slower expansion. The Manufacturing PMI for Canada remained in contraction during March while that for Mexico expanded for the sixth month. Brazil’s manufacturing PMI expanded for a third month. Eurozone manufacturing has been in contraction for 21 months. However, the region appears to be skirting recession. China’s manufacturing PMI was above breakeven levels for the fifth month. Other Asian PMIs were mixed. AUTOMOTIVE AND HOUSING HOLDING UPTurning to the demand side of the economy, light vehicle sales eased in March, and although inventories have moved up, they still remain low. Economists see light vehicle sales of 15.8 million this year, before improving to 16.3 million in 2025. The latest cyclical peak was 17.2 million in 2018. Pent-up demand continues to provide support for this market. Homebuilder confidence is guardedly optimistic. Housing activity peaked in spring 2022 before sharply falling by July 2022. From then and into mid-2023, housing reports were mixed. ICIS expects that housing starts will average 1.45 million in 2024 and 1.50 million in 2025. We are above the consensus among economists. Demographic factors are supporting housing activity during this cycle. There is significant pent-up demand for housing and a shortage of inventory. But mortgage interest rates have moved back up in recent weeks and will hinder affordability and, thus, demand. US RETAIL SALES, EMPLOYMENT STRONGNominal retail sales made another solid gain in March. Sales growth was marked across most segments. Sales at food services and drinking establishments also advanced. Spending for services is holding up, but the overall pace may be slowing. Job creation continues at a solid pace, and the unemployment rate is still at low levels. There are 1.4 vacancies per unemployed worker, off from a year ago but at a historically elevated level. This is still fostering wage pressures in services. Incomes are still holding up for consumers. Our ICIS leading barometer of the US business cycle has been providing signals that the “rolling recession” scenario in manufacturing and transportation may be ending. The services sector continues to expand, albeit at a slower pace. Real GDP rose 5.8% in 2021 and then slowed to a 2.5% gain in 2022. The much-anticipated recession failed to emerge and in 2023, the economy expanded by 2.5% again. US economic growth is slowing from the rapid pace in the third and fourth quarters, but those gains will aid 2024 performance of an expected  2.4% increase. The slowdown in quarterly economic activity suggests that in 2025, the economy should rise by 1.8% over average 2024 levels.

19-Apr-2024

SAO PAULO (ICIS)–Amid Europe’s industrial crisis, green shots have started to appear in eastern countries, giving hopes the downturn in the region has bottomed out, the CEO at US paints and coatings major PPG said on Friday. Tim Knavish added after PPG announced it was seeking to divest its US and Canada architectural operations, it has recorded more interest from potential buyers than expected, but “no numbers have hit our desk yet". Late on Thursday, PPG said its sales fell in the first quarter as European demand continued to be in the doldrums, but its earnings surged as input costs had fallen considerably. The company expects an overall improvement in industrial production globally in the second half of 2024. “We just have to get through the second quarter,” the CEO said, speaking to reporters and chemical equity analysts on Friday. As a paints and coatings producer, PPG's operations are petrochemicals-intensive. Among many others, one of its key raw materials is titanium dioxide (TiO2). COMING OUT OF THE DOWNTURNWhile Europe’s industrial downturn has been the steepest as the region took the largest hit from sharply higher natural gas prices after the Russian invasion of Ukraine, the US performance has been lacklustre. Amid overall economic growth, manufacturing has been the sick man of the mix for many months. That may have started to turn in March, with official and private bodies’ statistics showing growth in US manufacturing at last, and manufacturers optimistic for the months ahead. “We expect our sales volumes to continue recovering for the remainder of 2024…. We are only 19 days into the month, that’s only a sixth of the second quarter, but we are comfortable with the order book and shipments so far this quarter,” said Knavish. “We have been speaking to our key end-users in the past weeks and they are all saying the same thing about Q1 and Q2, but we are all expecting a return to more normal growth rates in H2 – we just have to get through Q2.” In Europe, however, some key markets such as France and the Nordics have yet to start any meaningful recovery, with sales there slower than the company was expecting, the CEO said. Despite this, in the eastern economies – with more emerging markets characteristics than the European western economies – there has been a notable improvement. “We are seeing green shoots in the east, where we have a strong position, so that gives optimism. We are also seeing that the deco [decorating] segment in those hard-hit countries [in Europe] is also bouncing back from the bottom, so we don’t expect it to get worse,” said Knavish. “The recoveries in the east, they are not the largest individually but when you add them together, they are an important part of our portfolio, countries such as Poland, Romania, Hungary or Czechia: we do see some green shots there.” However, he added that they were not “naive enough” to believe there will be a V shape recovery in Europe. ARCHITECTURAL DIVESTMENTAt the end of February, PPG announced it was seeking alternatives for its US and Canada architectural coatings business, which has been a drag on profits and sales volumes. The company said at the time it would study whether the division could be divested, be set as a standalone entity, or be part of a joint venture. The CEO did not give much away on Friday, saying it was early on, but the company was positively surprised with the level of interest, adding there had been “minimal if any” disruption to the daily operations of the division since the announcement. “There is a lot of chatter [about this]. But we are engaging key customers, employees, and engaging our owners. We expected strong interest, because of the strength of the brands and assets … The interest has been even higher than what we expected. We feel good right now,” said Knavish. “Until the numbers start coming in, and we can look at what is best for shareholder value creation, it is difficult to say [what the likely outcome will be]. We’ll have a much better view in another quarter or so.” INDIA TAKING OFFKnavish ended with an interesting reflection about India. Indians are about to start what is famously the largest democratic process in the world, which will end in June. Current Prime Minister Narendra Modi is widely expected to win a resounding third term in the general election, despite many analysts warning about increasing tensions between Hindus and Muslims, who are India’s largest minority, with 175 million people. But the key to Modi’s expected victory may well be all about the economy. “I have been going to India for 25 years. There has always been the talk of higher civil engineering works, higher industrial production [but it never seemed to come to fruition],” said the CEO. “Now, all that is happening, and the development is very noticeable for someone who has been going there regularly.” Additional reporting by Deniz Koray

19-Apr-2024

SINGAPORE (ICIS)–Shares of petrochemical companies in Asia slumped on Friday, while oil prices surged amid escalating tensions in the Middle East following reported explosions in Iran, Syria and Iraq. Japan’s Nikkei 225 falls 2.66% at close of trade Brent crude briefly crosses $90/bbl; oil eases off highs Israel behind Iran explosions – reports At 07:24 GMT, Asahi Kasei Corp and Mitsui Chemicals were down by 1.31% and 1.98%, respectively, in Tokyo, as Japan’s benchmark Nikkei 225 shed 2.66% to close at 37,068.35. In Seoul, LG Chem fell 2.11% as South Korea's KOSPI composite fell by 1.63% to 2,591.86. Hong Kong's Hang Seng Index slipped by 0.98% to 16,226.07. In southeast Asia, PETRONAS Chemicals Group (PCG) slipped by 0.44% while Siam Cement Group (SCG) was down 2.69%. High oil prices will continue to squeeze margins of petrochemical producers, which are struggling with poor demand and overcapacity. Middle East markets in Saudi Arabia, Kuwait, Bahrain, and Qatar could mirror the movement in Asia when they open on 21 April. Regional bourses are closed on Fridays and Saturdays. Oil prices pared earlier gains in the afternoon trade in Asia after surging by more than $3/barrel earlier in the session, following reports by various media outlets in the Middle East of explosions in Iran, Syria, and Iraq. "If these reports turn out to be true, fears over further escalation will only grow, as well as concerns that we are potentially moving closer towards a situation where oil supply risks lead to actual supply disruptions," said Dutch banking and financial information services provider ING in a note on Friday. Overnight, oil prices settled mixed following a sell-off early in the week as financial markets discounted fears of a war between Israel and Iran that could disrupt crude supplies. Explosions were heard around the central city of Isfahan early on Friday, Iranian media reported, adding that three drones were destroyed after the country's air defense systems were activated. Isfahan houses a significant military airbase, and the province is host to numerous Iranian nuclear facilities, among them the city of Natanz, which is central to Iran's uranium enrichment efforts. Iran's state-run Press TV in a report said that "important facilities in the Isfahan province, especially nuclear facilities, are completely safe and no accidents have been reported". Iran initially closed its airports in Tehran, Shiraz and Isfahan after the attack but has since re-opened them. "Normal operations have resumed for flights at Iranian airports including Imam Khomeini International Airport and Mehrabad International Airport in Tehran after temporary delays," Press TV said, citing the Iran Airports and Air Navigation Co. Elsewhere, Iran’s official IRNA news agency said a series of explosions in Syria targeted military sites. In Iraq, meanwhile, explosions were reported in the al-Imam area of Babel. The reports have sparked worry that Israel has retaliated against Iran's drone attacks last week. Iran launched the strikes on 13 April in response to a suspected Israeli airstrike on Iran's consulate in Syria at the start of the month. Prior to the news of Friday's attacks, Iran's Foreign Minister Hossein Amir-Abdollahian issued a warning during an interview with US broadcaster CNN on Thursday that Iran would respond "immediately and with maximum intensity" to any Israeli aggression. Focus article by Nurluqman Suratman Additional reporting by Nadim Salamoun

19-Apr-2024

SINGAPORE (ICIS)–Oil prices surged by more than $3/barrel in Asian morning trade on Friday, with Brent crude crossing above $90/barrel before easing midday, amid heightened fears of supply disruption following unofficial reports of explosions in the Middle East. ($/barrel) Contract Low High Open Last (at 03:17 GMT) Previous Settlement Change High Change Brent June 86.85 90.75 87.04 89.42 87.11 2.31 3.64 WTI May 82.47 86.28 82.62 84.76 82.73 2.03 3.55 "If these reports turn out to be true, fears over further escalation will only grow, as well as concerns that we are potentially moving closer towards a situation where oil supply risks lead to actual supply disruptions," said Dutch banking and financial information services provider ING in a note on Friday. Overnight, oil prices settled mixed following a sell-off early in the week as financial markets discounted fears of a war between Israel and Iran that could disrupt crude supplies. On Friday, various media outlets in the Middle East reported explosions occurred in Iran, Syria, and Iraq. Israel has launched a missile attack against a site in Iran, according to US broadcaster ABC News, while Iran’s semi-official Fars news agency has reported explosions in Isfahan province with state television reporting flights in several cities have been suspended. Isfahan houses a significant military airbase, and the province is host to numerous Iranian nuclear facilities, among them the city of Natanz, which is central to Iran's uranium enrichment efforts. Iran’s official IRNA news agency said a series of explosions in Syria targeted military sites. In Iraq, meanwhile, explosions were reported in the al-Imam area of Babel. The reports have sparked worry that Israel has retaliated against Iran's drone attacks last week. Iran launched the strikes on 13 April in response to a suspected Israeli airstrike on Iran's consulate in Syria at the start of the month. Prior to the news of Friday's attacks, Iran's Foreign Minister Hossein Amir-Abdollahian issued a warning during a interview with US broadcaster CNN on Thursday that Iran would respond "immediately and with maximum intensity" to any Israeli aggression.

19-Apr-2024

SINGAPORE (ICIS)–Buying activities in the Asia and Middle East polyethylene terephthalate (PET) markets remained relatively need-based, with factors like geopolitical tensions and uncertainties in freight rates clouding sentiment. Asian market sentiment mixed, PET tracks upstream closely Uncertainty around freight rates leads to need-based buying Mideast buyers’ inventories high, but some replenishment expected post-Eid break In this chemical podcast, ICIS editors Damini Dabholkar and Zachary Tia discuss recent market conditions with an outlook ahead in Asia and the Middle East. ICIS will be at the Chinaplas conference in Shanghai from 23-26 April. Please get in touch with our team there for more discussion on the PET market.

18-Apr-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 12 April 2024. China Mar petrochemical markets mixed; Apr demand on seasonal uptick By Yvonne Shi 12-Apr-24 14:19 SINGAPORE (ICIS)–Fluctuations in China’s domestic petrochemical markets were limited in March, yielding a mixed performance during the month, while a seasonal improvement in demand is expected in the near term. Tight intra-Asia container shipping space dampens recycling trades By Arianne Perez 12-Apr-24 13:34 SINGAPORE (ICIS)–Major Asian recyclers are feeling the pinch of continued uptrend in spot container freight costs for trade within Asia since March. Asia naphtha demand slows down; supply stays ample By Li Peng Seng 11-Apr-24 13:00 SINGAPORE (ICIS)–Asia’s naphtha crack, the spread between Brent crude and the chemical feedstock prices, hit a five-month low recently and it will remain under pressure in the weeks ahead as ample supplies, slower demand and firm crude prices limit any improvement in the spread. Asia ADA sees plant shutdowns amid supply overhang By Josh Quah 11-Apr-24 11:25 SINGAPORE (ICIS)–Asia’s adipic acid (ADA) markets have begun to crack under the cost pressure and weak demand from the main polyurethane (PU) downstream sector. Fitch downgrades China rating outlook to ‘negative’ as debts pile up By Pearl Bantillo 10-Apr-24 15:16 SINGAPORE (ICIS)–China’s fiscal challenges amid rising government debt and its prolonged property slump weighing on recovery prospects prompted Fitch to revise down its credit rating outlook for the world’s second-biggest economy to “negative” from “stable”. Korea trade body starts antidumping probe on China SM imports By Luffy Wu 09-Apr-24 14:18 SINGAPORE (ICIS)–The Korea Trade Commission has decided to initiate an anti-dumping investigation on imports of styrene monomer (SM) from China. INSIGHT: Positive China Q1 data overshadowed by property sector gloom By Nurluqman Suratman 09-Apr-24 12:00 SINGAPORE (ICIS)–China's economic narrative in early 2024 reflects a 'tale of two cities', with its ailing property sector once again playing the crucial protagonist against recent data which offered flickers of hope for the country's continued recovery this year. Saudi Arabia hikes benchmark May Arab Light OSP for Asian customers By James Dennis 08-Apr-24 18:15 SINGAPORE (ICIS)–Saudi Arabia, the world’s largest crude exporter, increased its Official Selling Prices (OSP) for its benchmark Arab Light crude for customers in Asia for the second month in succession. Oil slumps by more than $2/bbl on Israel-Hamas ceasefire hopes By Nurluqman Suratman 08-Apr-24 12:23 SINGAPORE (ICIS)–Oil prices fell by more than $2/barrel on Monday amid easing tensions in the Middle East after Israel further withdrew troops from southern Gaza and signalled a willingness to resume ceasefire talks with Palestinian militant group Hamas.

15-Apr-2024

SWE volumes flip to surplus on Italian Alps for the first time in two years – CIMA This should support Italy’s hydropower margins and pressure power, gas prices Snowmelt should lift water reservoirs above average, boost hydro and limit gas needs LONDON (ICIS)–Abundant snowfall on the Italian Alps through February and March boosted the snowpack after two years of deficit from severe drought, which has resulted in a confident outlook for hydropower generation this summer and could pressure Italian power and gas prices. For the first time in two years the Italian Alps’ snow water equivalent (SWE) volumes, a measure of the water contained in the snow, flipped above the median over the last 12 years, in particular the Po river basin, Italy’s largest river, shown by data up to 1 April published by the Italian CIMA Research Foundation’s study on 4 April. This was a significant improvement from the first part of the past winter, when CIMA’s data initially indicated a snowpack deficit. The surplus of SWE volumes brings some security of supply as most of Italy’s water reservoirs and hydropower plants are located in proximity to the Alpine region. However, CIMA warned that while the overall SWE volumes for Italy showed a slight surplus, the central and southern basins were recorded at a deficit. Although, the deficit is unlikely to cause a risk for hydropower supply, as most of the capacity is concentrated in the north. “The reason for these differences [between the Alps and the Apennines] is, as always, linked to rainfall and temperatures,” said Francesco Avanzi, hydrologist at the CIMA Foundation, in the report. Avanzi also said that March had more precipitation in the northern and central region of Italy, but on the other hand the Apennines had temperatures that were more than 2.5°C higher compared to the average of the last decade throughout winter, which led to less snowfall and early melting of the snow. The study showed that further snowfalls are very unlikely, while early snowmelt could also represent a risk in the hottest summer months if it leads to a lack of water from the mountains over the third quarter. “For [the SWE surplus] to be truly useful in the periods when we need water most, the snow must remain snow for a few more weeks” Avanzi indicated in the report. IMPACT ON POWER The snow surplus can support the refill of water reservoirs and hydropower supply margins, providing secure supply of power. Additionally, higher SWE levels can reduce heatwave-related risks for the gas-fired generation plants located along the Po river. During past summers, heatwaves and low river levels caused gas plants to curb their power output due to difficulties in cooling their systems. Italy has 22.1GW of hydropower generation capacity, mainly from run-of-river and poundage and pumped hydro storage, according to ENTSO-E data. In 2023 hydropower generation totalled 39.3TWh, accounting for more than 15% of the total generation and representing the country’s top renewable generation source and the second power supply source behind gas, according to grid operator Terna. Wider hydropower supply margins means that cheaper electricity could be available this summer, therefore pressuring Italian power products and narrowing their premium to key European neighbours. IMPACT ON GAS Stronger hydropower output could also reduce the need for gas-fired generation this summer and result in lower gas consumption for producing electricity, which is potentially a bearish factor for PSV prices with delivery this summer. Combined-cycle gas turbines are Italy’s main source of power supply, with a 45.1GW-strong fleet and a total output of almost 134TWh in 2023, accounting for more than 52% of the total power supply mix over the same year. In 2023, Italy consumed 21 billion cubic metres of natural gas for electricity generation, or 35% of the total gas consumption according to gas grid operator SNAM. Improving hydro margins could further pressure Italian gas demand, continuing the declining trend seen in 2023. Note: Snow water volume graphs published with the permission of CIMA Research Foundation

05-Apr-2024

SINGAPORE (ICIS)–China’s petrochemical futures markets were tracking gains in crude prices on Monday, with Brent trading at above $87/bbl, on bullish sentiment following a return of the world’s second-biggest economy into manufacturing expansion mode. Official, Caixin March manufacturing PMIs at above 50 China methanol, SM futures prices lead gains External demand picking up for selected goods At the close of morning trade, futures prices of major petrochemicals in Chinese commodity exchanges were up by 0.2% to 1.7%. China petrochemical futures markets Prices as of 03:30 GMT (CNY/tonne) % change vs 29 March Linear low density polyethylene (LLDPE) 8,279 0.60% Polyvinyl chloride (PVC) 5,803 0.20% Ethylene glycol (EG) 4,499 0.50% Polypropylene (PP) 7,542 0.80% Styrene monomer (SM) 9,451 1.40% Paraxylene* 8,534 0.70% Purified terephthalic acid (PTA) * 6,016 1.30% Methanol* 2,518 1.70% Sources: Dalian Commodity Exchange, *Zhengzhou Commodity Exchange At midday, Brent crude was up 30 cents at $87.30/bbl, while US crude gained 31 cents at $83.48/bbl. Crude futures were also supported by expectations of tighter supply amid output cuts by OPEC and its allies, which include Russia. Manufacturing activity in China expanded for the first time in six months, based on official data in March, generating a purchasing managers’ index (PMI) reading of 50.8, as companies accelerated production following the Lunar New Year holiday in the previous month. A separate reading by Chinese media group Caixin was more upbeat, with a higher March PMI reading of 51.1, the highest recorded since February 2023. In Caixin’s data, factory output continued to expand for the fifth straight month. The Caixin PMI surveys small and medium-sized enterprises (SMEs) and export-oriented enterprises located in eastern coastal regions, while the official PMI is tilted toward larger state-owned enterprises. A reading above 50 indicates expansion, while a reading below denotes contraction. “Both supply and demand expanded at a faster pace amid the market upturn. In March, growth in manufacturers’ output and total new orders accelerated, with the former hitting a 10-month high,” Caixin Insight Group senior economist Wang Zhe said. “External demand also picked up pace thanks to the recovery in the global economy, pushing the gauge for new export orders to its highest level since February 2023,” the economist added. “Overall, the manufacturing sector continued to improve in March, with expansion in supply and demand accelerating, and overseas demand picking up,” Wang said. “Manufacturers increased purchases and raw material inventories amid continued improvement in business optimism. However, employment remained in contraction and a depressed price level worsened,” Wang added Besides the seasonal effect, firming overseas demand also helped to push up Chinese factory activities, local brokerage Haitong Securities wrote in a note, citing that furniture, transportation equipment and electronics were enjoying strong demand. China is projected to post around a 5% GDP growth this year, slower than the 5.2% pace recorded in 2023, with a slumping property sector posing a major drag on overall economic prospects. Property and other related sectors account for about a fifth of China’s GDP. While the property slump may persist, other sectors such as electric vehicles, new energy and digital economy are posting healthy growth, said Zhang Junfeng, senior analyst at Shenzhen-based brokerage China Merchant Securities. Focus article by Fanny Zhang ($1 = CNY7.23) Additional reporting by Nurluqman Suratman Thumbnail image: At Lianyungang Port in east China's Jiangsu Province, 26 March 2024. (Shutterstock)

01-Apr-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 28 March 2024. Asia PX supply to decrease; demand outlook uncertain By Samuel Wong 28-Mar-24 13:08 SINGAPORE (ICIS)–Supply for paraxylene (PX) in Asia is expected to gradually decrease heading into the second quarter of 2024 as a result of several planned maintenance shutdowns. INSIGHT: GCC signs deal with Turkey to start FTA talks as part of diversification plans By Nurluqman Suratman 28-Mar-24 00:54 SINGAPORE (ICIS)–The Gulf Cooperation Council's (GCC) recent deal with Turkey to launch negotiations for a free trade agreement (FTA) further signals the bloc's commitment to diversify away from oil revenues. PODCAST: A tale of two olefins – diverging trends in Asia's olefins markets By Julia Tan 27-Mar-24 19:11 SINGAPORE (ICIS)–Asia's ethylene (C2) market will see northeast Asia supply in Q2 remain ample on the back of relatively high run rates at northeast Asian crackers. Saudi Aramco eyes further chemical investments in China with local partners By Nurluqman Suratman 26-Mar-24 12:03 SINGAPORE (ICIS)–China has a "vitally important" place in Saudi Aramco's global investment strategy, with the energy giant actively developing additional investment opportunities with its Chinese partners in the chemicals sector, Aramco president and CEO Amin Nasser said. China’s Sinopec 2023 profit falls 13% as chemicals incur loss for second year By Fanny Zhang 25-Mar-24 15:14 SINGAPORE (ICIS)–Chinese producer Sinopec posted a 12.9% decrease in full-year 2023 net profit as product prices fell across the board, dragged down by operating losses in chemicals. Asia PC makers grapple with poor Chinese demand By Li Peng Seng 25-Mar-24 10:57 SINGAPORE (ICIS)–Asia’s polycarbonate (PC) makers have been struggling to raise prices in China recently due to slow demand, while production costs continue to rise.

01-Apr-2024

HOUSTON (ICIS)–The collapse of the Francis Scott Key Bridge in Baltimore is wreaking havoc on logistics and freight movements in the immediate region, but the incident has yet to have any impact on shipping rates, and costs for shipping containers from Asia to the US continue to fall, highlighting this week’s logistics roundup. PORT OF BALTIMORE The Port of Baltimore remains closed to all vessel traffic following the bridge collapse early Tuesday morning. The unified command (UC) said on-scene crews continue to assess and monitor for spilled oils and hazardous substances to prevent further discharge or release into the marine environment as 14 containers on the Dali that were holding hazardous materials were impacted during the collision. The chemical components assessed were soap products, perfume products, or not otherwise specified resins, the UC said. Salvage efforts have begun but will take some time and according to the local US Coast Guard authorities the port is officially closed for the near future. Some of the chemical products most likely impacted are caustic soda, veg oil, base oils, ethanol, biodiesel and a variety of others. South African producer Sasol told ICIS that a terminal inside the port with the company’s name has not been used by the company since it opened its major facility in Lake Charles, Louisiana. Specialty chemical producer WR Grace has a terminal in the port, according to a map of the port on the Maryland state government’s website. The company did not immediately respond on Friday to questions about the terminal. The port is one of the largest in the US for auto imports and exports. Global shipping major MSC is advising customers that passage to and from the port will not be established “for weeks if not months”. Containers already on the water will be rerouted and discharged at an alternate port where they will be made available for pick-up upon completion of the usual import documentary procedure, MSC said. Customers with containers at the origin, whether gated in or booked but not yet gated, need to contact the origin booking office immediately to decide whether they wish for the cargo to be carried to the alternate ports in the US. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said more vessels arriving at alternative ports, or longer port calls as vessels offload more containers, could cause some congestion at those ports, meaning delays for shippers. “But ocean freight is now in its slow season between Lunar New Year and peak season that typically starts in June or July,” Levine said. “And at the moment there is no significant congestion at any of the major East Coast ports.” CONTAINER RATES FALL FURTHER Average global rates for shipping containers continue to fall after surging in December when Houthi rebels began attacks on commercial vessels in the Red Sea. Shippers began to divert away from the Suez Canal because of the attacks, which added days and sometimes weeks to traditional trade routes and tightened available capacity. Shippers brought all floating capacity online, increased sailing speeds and brought into service newbuilds to help alleviate the situation. Softer overall demand also helped ease stressed supply chains. Average rates and rates from Shanghai to the US and Europe have fallen steadily since the first of the year according to supply chain advisors Drewry and as shown in the following charts. Levine said the Baltimore closure could put some upward pressure on rates but that he expects it would be temporary. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES STEADY While many tanker shipping routes from the Americas remained subdued with no significant price changes, the Transatlantic eastbound route remains firm as there continues to be a lot of interest seen in the market this week, although space remains tight. On the bunker side, fuel prices have been steadily decreasing as well on the back of softer energy prices; however, week over week remain relatively mixed. PANAMA CANAL Wait times for non-booked vessels ready for transit edged higher this week, according to the PCA's vessel tracker and as shown in the following image. Wait times last week were 1.2 days for northbound traffic and 1.4 days for southbound traffic. Additional reporting by Kevin Callahan Thumbnail image shows the Dali and the collapsed Francis Scott Key Bridge in Baltimore, Maryland, from www.keybridgeresponse2024.com

29-Mar-2024