Chemicals

HOUSTON (ICIS)–Milton strengthened on Monday into a powerful Category 4 hurricane, and it is expected to continue strengthening before making landfall by midweek near Tampa, Florida, a major fertilizer hub that was drenched by an earlier major hurricane. That earlier hurricane, Helene, made landfall on September 26 far to the north of Tampa. However, Tampa still saw storm surges of 6-10 feet (1.8-3.0 meters), according to AccuWeather, a meteorology firm. Tampa and other ports along Florida's Gulf Coast had shut down because of Helene. AccuWeather estimates that Hurricane Helene caused $225 billion to $250 billion of damage and economic loss in Florida and the southeastern US. As of September 30, fertilizer companies were assessing the damage caused by Hurricane Helene. A week later, they will now prepare for another major hurricane that will pose a greater risk. AccuWeather is warning that, due to Milton, the Tampa Bay region could be hit by a storm surge of 10-15 feet, wind gusts of 120-140 miles/hour (193-225 miles/hour) and more than 2 feet (60 cm) of rain. "Milton may be a historic, once-in-a-lifetime storm for Floridians," said Jon Porter, AccuWeather chief meteorologist. "Milton has the potential to become one of Florida's most damaging and costly hurricanes." For Tampa, the magnitude of Milton's storm surge will depend on its path, according to AccuWeather. If it makes landfall south of Tampa, it will cause dangerous, but not extreme, storm surges. If landfall is north of Tampa, parts of the Bay could suffer from storm surges of 20 feet, AccuWeather said. FERTILIZER HUB, PHOSPHATES AT RISKTampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Near Tampa is Florida's phosphate mining operations in Bone Valley, which covers parts of Hardee, Hillsborough, Manatee and Polk counties. In all, Florida has 27 phosphate mines, of which nine are active, according to the Florida Department of Environmental Protection. For chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin production in Lakeland and Kathleen, Florida. Both are near Tampa. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. PORT TAMPA BAY REMAINS OPENPort Tampa Bay remains open to inbound and outbound vessel traffic, but it has set Port Condition X-RAY. That means gale force winds that could disrupt maritime operations could occur in the next 48 hours. SeaPort Manatee, a deepwater port on Tampa Bay, also set Port Condition X-Ray. It handled bulk, breakbulk and container traffic. RAIL STILL RECOVERING FROM HELENEOn October 4, railroad company CSX warned customers to expect delays despite progress in restoring power and clearing trees. Disruptions to operations are concentrated in the Carolinas. Railroad company Norfolk Southern said it has already started monitoring Hurricane Milton, although its lines are operating as scheduled. POTENTIAL FOR DISRUPTION TO GULF OILHurricane Helene disrupted US oil and gas production in the Gulf of Mexico even though it passed through the eastern portion of the body of water. Hurricane Milton could have the same potential as it approaches the US. RECONSTRUCTION DEMAND FOR CHEMSFor hurricanes in general, reconstruction can translate to increased demand for many chemicals and polymers. The white pigment titanium dioxide (TiO2) is used in paints. Solvents used in paints and coatings include butyl acetate (butac), butyl acrylate (butyl-A), ethyl acetate (etac), glycol ethers, methyl ethyl ketone (MEK) and isopropanol (IPA). Blends of aliphatic and aromatic solvents are also used to make paints and coatings. For polymers, expandable polystyrene (EPS) and polyurethane (PU) foam are used in insulation. Polyurethanes are made of methylene diphenyl diisocyanate (MDI), toluene diisocyanate (TDI) and polyols. High density polyethylene (HDPE) is used in pipe. Polyvinyl chloride (PVC) is used to make cladding, window frames, wires and cables, flooring and roofing membranes. Unsaturated polyester resins (UPR) are used to make coatings and composites. Vinyl acetate monomer (VAM) is used to make paints and adhesives. Thumbnail shows the forecasts path of Hurricane Milton. Image by the National Hurricane Center.

07-Oct-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 4 October. NEWS Brazil’s manufacturing expands healthily again in September on stronger demandBrazil’s manufacturing sectors posted a significant improvement in September on the back of an increase in production, stronger job creation, and accelerated sales growth, analysts at S&P Global said on Tuesday. Mexico’s manufacturing contraction deepens in September as perfect storm gathers paceMexico’s petrochemicals intensive manufacturing sectors deepened their contraction during September as a perfect storm of lower orders, lower output and lower employment levels is forming, analysts at S&P Global said on Wednesday. Colombia manufacturing falls further into contraction in SeptemberThe manufacturing sector in Colombia fell further into contraction territory in September on the back of weak demand which dented factory output, analysts at S&P Global said. Chile’s manufacturing starts Q4 in good form, central bank forecasts healthier growthChile’s economy has had several ups and downs in the past 12 months, including flirting with a recession, but the petrochemicals-intensive manufacturing sectors and macroeconomics point to healthier growth in Q4 and into 2025. INSIGHT: Brazil’s booming economy creates problems of its own – but chemicals absent from bonanzaBrazil's economy has beaten the odds in 2024, and GDP growth is expected to top 3% for the year, although this success is coming accompanied by a series of challenges – not least inflation and interest rates, which remain high. INSIGHT: Optimism over Mexico’s Sheinbaum tempered by fears of executive over-reachClaudia Sheinbaum’s historic swearing-in this week as the first female Mexican president and the optimism it infused could quickly turn sour if her party Morena continues approving one-party, structural reforms thanks to the ‘supermajority’ of two thirds of seats in parliament. Agribusiness titan Bunge concludes sale of its share in BP Bunge Bioenergia in BrazilGlobal agribusiness titan Bunge announced it has completed the previously announced sale of its 50% share in BP Bunge Bioenergia to BP, which now owns 100% of the business. Verde AgriTech successfully renegotiates loans with their creditors in BrazilFertilizer producer Verde AgriTech has announced a successful renegotiation with the banks holding 73% of its outstanding loans. Brazil’s Innova BOPP capacity to nearly double with Polo Films acquisitionChemicals producer Innova is to increase its production capacities for biaxially oriented polypropylene (BOPP) film by 86% to 130,000 tonnes/year if its planned acquisition of Polo Films goes ahead as planned. Colombia’s central bank cuts rates by 50 basis points to 10.25%Colombia’s Banco de la Republica decided late on Monday to cut its benchmark interest rate by 50 basis points to 10.25% in a split decision among members of its monetary policy committee. PRICING Mexico PP domestic prices fall tracking propyleneDomestic polypropylene (PP) prices dropped in Mexico tracking lower propylene costs. In other Latin American countries prices were assessed unchanged. Mexico domestic PE prices fall on ample supply, soft demandDomestic polyethylene (PE) prices fell in Mexico on ample supply and soft demand while being unchanged in other Latin American countries.

07-Oct-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 4 October. US Tampa port reopens after Helene's hit; US-wide losses could top $160 billion The port at Tampa in the US state of Florida reopened over the weekend, the port’s authorities said on Sunday, after Hurricane Helene's destructive path put the US state of Florida against the ropes. SHIPPING: ILA ports strike to weigh on US PE, PVC exports; carriers set congestion surcharges 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. SHIPPING: Union, US ports remain at impasse as strike enters second day Negotiations have yet to resume between union dock workers and the US Gulf and East Coast ports as a costly strike enters its second day. US demand for ACN, other chems could take a hit as Boeing strike enters fourth week US acrylonitrile (ACN) demand could soften as 33,000 Boeing employees remain on strike in a work stoppage that is entering its fourth week. SHIPPING: Trucks, container ships backing up as US ports strike marks third day In only its third day, a strike by dock workers at US Gulf and East Coast ports is leading to idled trucks and growing numbers of container ships queuing outside of the ports. SHIPPING: Union, US ports reach tentative agreement, dock workers to return to work on Friday The three-day strike by US Gulf and East Coast dock workers has been suspended until 15 January to allow negotiations to resume, according to a joint statement from the union and ports. INSIGHT: No signs of petchems demand recovery from car sector on the horizon, H2 2025 may be a moment of truth After a strong rebound in car sales last year, the European automotive industry is facing a more challenging environment in the second half of 2024, leading to a drop in petrochemical requirements from car manufacturers. Consumer appetite for new vehicles has become more sluggish following a post-Covid catch-up phase in 2023, mainly due to a mixed economic environment and persistently high interest rates, along with uncertainty on both policy and political developments across the continent. SHIPPING: With strike over, some US ports extending gate hours; container rates fall further With the suspension of the strike at US Gulf and East Coast ports until 15 January, carriers are urging customers to use extended gate times being offered by some ports to collect or deliver any urgent containers to terminals.

07-Oct-2024

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which focuses on sector surprises for October. 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. Paul Hodges is the chairman of consultants New Normal Consulting.

07-Oct-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 4 October. No signs of petchems demand recovery from car sector on the horizon, H2 2025 may be a moment of truth After a strong rebound in car sales last year, the European automotive industry is facing a more challenging environment in the second half of 2024, leading to a drop in petrochemical requirements from car manufacturers. LANXESS exits polymers via sale of urethane business to Japan’s UBE LANXESS is selling its urethane systems business to Japanese chemicals producer UBE Corp for around €500 million, the German specialty chemicals firm said on Thursday. Europe recycled polyolefin agglomerates prices face downward pressure Europe recycled polyolefin agglomerate prices are facing downward pressure due to weak demand from mechanical recyclers. ADNOC makes public takeover offer for Germany’s Covestro 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. Bold policy moves might not arrest China economic slowdown In a bold move to revitalize its economy and restore investor confidence, China unveiled a comprehensive package of monetary and fiscal measures less than a week before the country goes on a week-long holiday.

07-Oct-2024

HOUSTON (ICIS)–With the suspension of the strike at US Gulf and East Coast ports until 15 January, carriers are urging customers to use extended gate times being offered by some ports to collect or deliver any urgent containers to terminals. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative agreement on wages late Thursday and will extend the current contract while they continue to negotiate other outstanding issues. Analysts at freight forwarder Flexport said the relatively short duration of the ILA strike means that the impact on the broader US economy has been limited. “If the strike had continued into next week, the ripple effects could have been massive,” Flexport said. “While the broader economic impact has been averted, the strike has made an immediate impact on the ocean and air markets.” The company said that during the strike, bookings to the US East Coast remained open, and they expect them to stay open. The only limitations were rail routings to the East Coast via Los Angeles, but Flexport expects they will soon resume operations as well. “Early reports indicated that each day of the strike would have added five to 10 days of port congestion,” Flexport said. “If you have urgent cargo, routing via the West Coast on rail or transloading in Los Angeles remains your best option to avoid potential congestion on the East Coast.” CONTAINER RATES FALL FURTHER, PACE SLOWS Global average rates for shipping containers fell by 5% this week, according to supply chain advisors Drewry and as shown in the following chart. But rates from east Asia and China to the US fell at a slower rate, as shown in the following chart. Rates to the West Coast fell by 4.23% while rates to the East Coast fell by 1.76%. Drewry was anticipating rates to the US would because of the strike. But with the strike paused, and because peak season demand was largely pulled forward, it is likely that rates will continue to see downward pressure. 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), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEM RATES STABLE TO SOFTER The US chemical tanker market was largely stable week over week, with slight decreases seen from the US Gulf to Asia for smaller parcels. Most market participants were preparing to attend the European Petrochemical Association (EPCA) conference in Berlin, so the market was quiet. According to a ship owner that will be attending the conference, the market is weak across all trade lanes and will remain soft for the short term. The ship owner said that the current trend will not change anytime soon as the heightened tension in the Middle East provides a lot of uncertainty. USG-Asia rates were also pressured lower by the increasing availability of space from outside tonnage entering the market to move larger cargoes. The trade lane is expected to remain weak through November. Rates on the USG/ARA trade lane have been driven largely by a weaker CPP market which allows that available tonnage capable of offering on the chemical market, thus adding to the availability of spot tonnage. Additional reporting by Kevin Callahan Thumbnail shows a containership. Image by Noushad Thekkayil/EPA/Shutterstock

04-Oct-2024

HOUSTON (ICIS)–The three-day strike by US Gulf and East Coast dock workers has been suspended until 15 January to allow negotiations to resume, according to a joint statement from the union and ports. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) said they have reached a tentative agreement on wages and will extend the current contract while they continue to negotiate other outstanding issues. “Effective immediately, all current job actions will cease, and all work covered by the master contract will resume,” the statement read. The union went on strike on 1 October as negotiations were stalled. The union was seeking a 77% increase over the next six years and commitments against any kind of automation at the ports – full or semi – that would replace jobs or historical work functions. The USMX was offering about a 50% increase. IMPACTS TO CHEM MARKETS The strike had already had some impacts on the US chemicals industry, with polyethylene (PE) exports to Brazil being put on hold. The polyvinyl chloride (PVC) industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports. 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. Thumbnail image shows a container ship. Photo by Shutterstock

03-Oct-2024

HOUSTON (ICIS)–In only its third day, a strike by dock workers at US Gulf and East Coast ports is leading to idled trucks and growing numbers of container ships queuing outside of the ports. TRUCKING A trucking trade group, the American Trucking Associations (ATA), said that the strike has stopped all activity at five of the nation’s top 10 container ports and estimates that more than 60 container ships carrying nearly 500,000 containers scheduled for October delivery are now stuck in limbo. The ATA said there are 30,000 truckers registered to work just at the port of New York and New Jersey, which sees about 12,000 truck visits in a typical day. “Tens of thousands of more up and down the coasts are now sidelined by this strike,” the ATA said. The ATA said that the trucking industry is made up of small businesses with more than 95% of carriers operating 10 trucks or fewer. Todd Spencer, president of the Owner-Operator Independent Drivers Association, said American consumers will suffer the longer the strike goes on, but that independent drivers will also feel the pain. "The longer this labor strike drags out, the more harm is done to American consumers who rely on the trucking industry to deliver the goods they depend on,” Spencer said. “We encourage a quick resolution to this latest dispute and emphasize the need for specific discussions about how supply chain deficiencies stifle driver compensation, increase loading and unloading delays, and hurt highway safety.” CONTAINER SHIPS BACKING UP Ships are also backing up outside of the affected ports, according to publicly available ship tracking services. For example, there were about 51 vessels outside the entrance to Port Houston on 2 October, and about 65 vessels in the same area on 3 October. Alan Murphy, CEO, Sea-Intelligence, said a prolonged strike will have an impact on global capacity as carriers currently have 62 deep sea services that call on East Coast and US Gulf ports. Those vessels will have to wait at anchorage at the first port of call on their discharge schedule, Murphy said. “In addition to that there are vessels which have already commenced their discharge rotation and will have to wait at their second, third, or even fourth port of call, depending on how much of their schedule they have already completed prior to the strike taking place,” Murphy said. If the strike were to last four weeks, Murphy said that almost 7% of the global fleet will be tied up along the US East Coast, and the overall impact on the supply and demand equation will be very significant. EXCESSIVE SURCHARGES A chemical industry trade group, the Alliance for Chemical Distribution (ACD), sent a letter to US President Joe Biden criticizing excessive surcharges imposed by the carriers. In the letter, ACD President and CEO Eric Byer highlighted the excessive surcharges imposed – and profits made – by ocean shippers who strangely had direct involvement in the failed negotiations. “Neither side negotiated in good faith, effectively inviting a strike to take place,” Byer said. “For the ocean carriers, this is not surprising given the extreme profits they have been able to collect over recent years, putting them in a position to contentedly wait out a strike while the American economy loses billions of dollars a day.” Byer said that the ocean carrier member companies of the United States Maritime Alliance (USMX) are levying a myriad of surcharges on shippers, ranging from hundreds of dollars to $3,000/container, citing labor disruptions as the cause. “Through these surcharges, the ocean carriers are profiting from a crisis they played a direct role in creating,” Byer said. STALLED NEGOTIATIONSMeanwhile, the two sides are not currently negotiating. The International Longshoremen's Association (ILA) is representing the dock workers, and USMX is representing the ports. USMX directors include representatives of major shipping lines, including Evergreen Shipping, Maersk, Hapag-Lloyd, Ocean Network Express, CMA/CGM, COSCO Shipping Lines, and Mediterranean Shipping Company (MSC). USMX said it continues to focus on ratifying a new master contract. “Reaching an agreement will require negotiating – and our full focus is on how to return to the table to further discuss these vital components, many of which are intertwined,” USMX said. “We cannot agree to preconditions to return to bargaining – but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns.” IMPACTS TO CHEM MARKETS The strike is already affecting the US chemicals industry, with PE exports to Brazil being put on hold. The polyvinyl chloride (PVC) Industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports. 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. Focus story by Adam Yanelli Visit the ICIS Logistics – impact on chemicals and energy topic page

03-Oct-2024

SINGAPORE (ICIS)–LANXESS is selling its urethane systems business to Japanese chemicals producer UBE Corp for around €500 million, the German specialty chemicals firm said on Thursday. "With this transaction LANXESS exits the last remaining polymer business," the company said in a statement. The enterprise value of the deal amounts to €460 million, with expected proceeds of around €500 million, it said. The urethane systems business comprises five manufacturing sites globally as well as application laboratories in the US, Europe and China. UBE will take over the business, which has around 400 employees and generated sales of around €250 million in the year to June 2024. LANXESS expects the transaction to close in the first half of 2025. "The sale of Urethane Systems marks another milestone in our fast transformation into a pure-play specialty chemicals company, as we are divesting the last remaining polymer business in our portfolio," said Matthias Zacher, chairman of the board of management of LANXESS. "At the same time, we are using the proceeds from the transaction to strengthen our balance sheet by further reducing our net debt," he added. (Updates throughout) Thumbnail photo: LANXESS' Cologne, Germany headquarters (Source: LANXESS)

03-Oct-2024

SINGAPORE (ICIS)–LANXESS is selling its urethane systems business to Japanese firm UBE Corp in a deal worth around €500 million, the German specialty chemicals firm said on Thursday. "With this transaction LANXESS exits the last remaining polymer business." The enterprise value of the deal amounts to €460 million with expected proceeds of around €500 million, the company said in a statement. LANXESS expects the transaction to close in the first half of 2025.

03-Oct-2024