Polypropylene (PP)

Versatility shaping the plastics industry 

Discover the factors influencing polypropylene (PP) markets

With its unique properties and versatility, polypropylene (PP) is an invaluable global commodity, influencing key industries from packaging and automotive to electrical and household. Its ability to be manufactured into various end-uses such as plastic car parts and textiles has made PP an essential market to understand and navigate. Even the slightest change can have the most significant impact. This is why our experts are embedded in markets across the globe, monitoring, tracking and understanding developments affecting PP so you can make the best decisions with the right information.

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Polypropylene (PP) news

Freight rates on China exports soar amid Red Sea crisis

SINGAPORE (ICIS)–Freight rates for China's exports, including petrochemicals, have been spiking in recent weeks and are expected to remain firm in the next three to six months on the back of improving overseas demand and amid continued logistics disruptions in the Middle East. Geopolitical tensions translate to higher shipping cost, longer delivery time Container shortages intensifying in China Freight rates to remain firm on strong western demand Most ocean carriers have halted transits in the Red Sea, which is the fastest shipping route between Europe and Asia, fearing missile attacks by Yemen’s Houthi rebels. They have opted to take the longer route via the Cape of Good Hope, resulting in much longer time and costs for moving cargoes to their destinations. The Red Sea crisis is showing no signs of de-escalation, with the latest casualty being the Panama-flagged oil tanker M/T Wind bound for China, which was struck by a Houthi-launched ballistic missile on 18 May. Logistics and supply chain disruptions are expected to continue. Dutch shipping giant Maersk had said on 6 May that its vessels have been forced to lengthen their journey further because of the expanded risk zone and attacks reaching further offshore in the Rea Sea. “The knock-on effects of the situation have included bottlenecks and vessel bunching, as well as delays and equipment and capacity shortages,” the company had said, estimating an industrywide capacity loss of 15-20% on the Far East-to-North Europe and Mediterranean market during the second quarter. CONTAINERS/VESSEL SPACE IN SEVERE SHORTAGE As carriers now need longer time to come back from destinations, the resulting severe shortage of containers and vessel space was triggering sharp spikes in freight rates. From Shanghai to the US west coast and the US east coast, freight rates on 17 May jumped to $5,025/forty-foot equivalent unit (FEU), and $6,026/FEU, respectively, up by 14.4% and 8.3% week on week, according to the Shanghai Shipping Exchange. To South America from China’s financial capital, the shipping cost increased at a sharper rate of 22.4%, while to Europe, freight rates rose by 6.3%, the data showed. A shipping broker said that China-to-Europe freights have been soaring by $500-$800/FEU each week since late April, while a polypropylene (PP) trader noted that the rates to West Africa more than tripled to $8,000/FEU, more than a fourfold increase from $1,500-$2,000/FEU rates in early April. “We now need to wait 10-15 days for booking containers. We face severe stockpiling and warehouses are flooded with cargoes waiting for shipment,” said a marketing manager of a Shenzhen-based logistics company. A plastic bag factory in east China is currently stuck with high inventories and risk suspending production, a source from the company said For vinyl acetate producers, a shortage of shipping tanks prevents them from exporting more cargoes, providing them with the less-efficient means of bulk shipments with other products as the only alternative. ROBUST WESTERN DEMAND SUPPORTS FIRM RATES The recent spike in freight rates came as a surprise to players in the petrochemical industry as the May-June period is normally a lull season for Chinese exports. Besides the Red Sea crisis, strong demand coming from the west underlies the recent surge in freight rates. “July-September is the peak season for China-to-West shipping. With [the] destocking last year, Europe and US markets demand are expected to rise substantially before the Christmas [season in December],” said Wang Guowen, director of Shenzhen Logistics and Supply Chain Management Research. “Plus, Europe and UK central banks are expected to cut interest rates, which will further stimulate consumptions there,” he added, noting that demand from both Europe and the US will remain strong rest of the year. This will continue to buoy up shipping rates, which are projected to hover at high rates over the next three to six months, industry sources said. On 16 May, Maersk announced a hike in peak season surcharge (PSS) for major east-to-west shipping lanes, including the China-to-Dar es Salaam, Tanzania route, PPS for which increased to $1,500/FEU since 20 May. Meanwhile, French shipping and logistics major CMA CGM plan to hike its Asia-to-northern Europe freights to $6,000/FEU, effective 1 June. Current container production in China could not catch up with strong demand. New China-manufactured containers to be delivered before late June have been sold out, a source at domestic logistics company said. Wang of Shenzhen Logistics and Supply Chain Management Research, however, noted that the present container shortage is not about undersupply but more about the sharp slowdown in turnover amid the global logistics disruptions. Tight shipping conditions are expected to prevail in the third quarter as demand is expected to peak, with a gradual easing of freight rates likely in the fourth quarter, he said. Focus article by Fanny Zhang Additional reporting by Joanne Wang and Lucy Shuai Thumbnail image: At the container terminal of Yantian Port in Shenzhen City, Guangdong Province in south China, 16 May 2024 (Shutterstock)

22-May-2024

Brazil’s Braskem restarts Triunfo facilities after flooding

SAO PAULO (ICIS)–Braskem has restarted its facilities at the Triunfo petrochemicals hub in the floods-hit state of Rio Grande do Sul, a spokesperson for the Brazilian polymers major said to ICIS on Monday. Braskem said it hopes to have all facilities up and running normally in 15 days. Triunfo represents around 30% of Braskem’s production capacities in Brazil. The company said the restart will be undertaken by phases, as long as weather and access to the site allows. While most petrochemicals plants at Triunfo were not damaged by the flooding, access of workers as well as inputs into the plants was very difficult as the floods blocked several roads in the state. Braskem and other chemical companies at Triunfo declared force majeure at the beginning of May. “In recent days, our teams have been focused on seeking safe conditions to resume production and, thus, contribute more actively to the supply of raw materials for the production of important items for this time of need,” said Braskem’s industrial director, Nelzo da Silva. “To start up the plants, it will be necessary to activate the flare, a standard safety device used by the chemical and petrochemical industries. As part of this process… in the coming days, residents in the area may notice a different light than usual coming from our factories.” Braskem is Brazil’s sole manufacturer of polyethylene (PE) and polypropylene (PP), the most widely used polymers. Its market share in 2023 for PE stood at 56% and for PP at 70%, according to figures from the ICIS Supply and Demand Database. The Triunfo complex, meanwhile, is key for the country’s polymers supply chain, accounting for nearly 37% of Brazil’s PP capacity and 40% of PE capacity. Brazil’s PP production capacity is nearly 2 million tonnes/year. PE capacity is about 3 million tonnes/year, with 41% being high density polyethylene (HDPE), 33% being linear low density polyethylene (LLDPE) and 26% being low density polyethylene (LDPE). Braskem’s Triunfo complex can produce 740,000 tonnes/year of PP, 550,000 tonnes/year of HDPE, 385,000 tonnes/year of LDPE and 300,000 tonnes/year of LLDPE. Front page picture: Braskem's facilities in Triunfo Source: Braskem Additional reporting by Bruno Menini

20-May-2024

Volkswagen, Stellantis idle car plants in Brazil, Argentina after floods

SAO PAULO (ICIS)–Volkswagen (VW) idled its three plants in the Brazilian state of Sao Paulo on Monday, as suppliers in the floods-hit state of Rio Grande do Sul are unable to produce any automotive parts, a spokesperson for the German automotive major told ICIS. At the same time, a spokesperson for Stellantis, another major auto producer, confirmed to ICIS that it had shut down its plant in Ferreyra, in Argentina’s Cordoba province, also due to a lack of input. Rio Grande do Sul is Brazil’s southernmost state and petrochemicals-intensive automotive parts producers there are major suppliers to the rest of Brazil and Argentina. However, the state is still reeling from severe flooding on 29 April which has brought around 90% of industrial activity to a standstill, according to local authorities. VOLKSWAGENVW is using a so-called “collective vacation” clause under Brazilian labor laws to send workers at its plants in Anchieta, Taubate, and Sao Carlos home for at least 10 days. However, a plant operated by VW in Sao Jose dos Pinhais, in the state of Parana, continues to operate normally, VW said. "Volkswagen do Brasil informs that continues with the same preventive vacation position. The situation of parts supply is being monitored minute by minute,” said the spokesperson. The workers at the Anchieta and Taubate plants will start a 10-day collective vacation on Monday, and the workers at the Sao Carlos plant will start an 11-day collective vacation on the same day. 'Collective vacation' is a measure regularly applied by industrial companies to manage production. Brazil’s labor laws normally grant employees around 30 days/year of annual leave. In the industrial sector, as work is a "collective" activity, vacation periods can be organized by the employer for a group of employees, hence the name. STELLANTISIn the meantime, Stellantis – the result of the merger between Fiat Chrysler and PSA Group – told ICIS that it is analyzing whether its other plants in Argentina and Brazil will also need to be shut down. In Cordoba, a province in north Argentina and a major trading partner with Rio Grande do Sul, there are fears that its economy – which is already suffering after the country went into recession – could take a further hit. In Argentina, Stellantis operates another plant in El Palomar, in the Buenos Aires department. In Brazil, its main facilities are in Betim in the state of Minas Gerais. “Stellantis is following with dismay and expresses its solidarity with the victims of the floods in Rio Grande do Sul. The unprecedented impact of the catastrophe has directly affected the logistics system for the transportation and supply of industry components. “The company had to stop production at the Stellantis Automotive Centers in Córdoba, Argentina, and is still analyzing the need for further stoppages at its plants in the region,” said the spokesperson. Both General Motors (GM) and South Korea's Hyundai – who also have production facilities in Brazil – had yet to respond to a request for a comment. A spokesperson for Brazil’s automotive trade group Anfavea did not respond to questions from ICIS about the impact of the floods on the sector's annual output. However, it did say that it would make its first estimates at a press conference on 6 June, when it will publish production, sales and export data for May. Earlier, the trade group said it feared the sector could be hit given Rio Grande do Sul's importance to Brazil's auto industry. INDUSTRY REELS AFTER FLOODSCompanies based in the petrochemicals hub of Triunfo, near Porto Alegre – the biggest city in Rio Grande do Sul – have also shut, mostly as employees are having problems getting to and from work. Companies including Braskem, Innova, and Arlanxeo all declared force majeure from Triunfo in the first week of May. Sources said some of them will try to restart operations this week, although that has not been officially confirmed to ICIS. The automotive industry is a major global consumer of petrochemicals, and chemicals make up more than one-third of the raw material costs for an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA), among others. Front page picture: Volkswagen's plant in Anchieta, state of Sao Paulo Source: Volkswagen

20-May-2024

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 17 May 2024. Asia melamine makers grapple with increased costs, slowing demand By Joy Foo 17-May-24 11:53 SINGAPORE (ICIS)–Asia’s melamine spot market for China-origin product was largely stable in the first half of May, even though feedstock urea prices continued to rise, but demand may weaken for the rest of the month. Singapore's April petrochemical exports rise 26.5%; NODX down 9.3% By Nurluqman Suratman 17-May-24 10:45 SINGAPORE (ICIS)–Singapore's petrochemical shipments rose by 26.5% year on year in April to Singapore dollar (S$) 1.34 billion, reversing the 3.6% decline in the previous month, official data showed on Friday. PODCAST: China PP exports to weigh on SE Asia on ample propylene supply By Damini Dabholkar 16-May-24 21:55 SINGAPORE (ICIS)–The ample supply of propylene in Asia and new polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Tanker incident triggers rate hike on South Korea-Japan trades By Hwee Hwee Tan 16-May-24 11:28 SINGAPORE (ICIS)–The intra northeast Asia tanker market is expected to remain stable despite recent volatility in South Korea-Japan chemical freight rates, following a fatal tanker incident off Japan’s west coast. US hikes tariffs on $18bn worth of China imports, including EVs By Nurluqman Suratma 15-May-24 12:20 SINGAPORE (ICIS)–US President Joe Biden is ramping up tariffs on $18 billion worth of imports from China, including electric vehicles (EVs), semiconductors, batteries and other goods, in a move that the White House said was a response to unfair trade practices and intended to protect US jobs. Asia polyester discussions stable amid reduced supply, lower feedstock prices By Judith Wang 14-May-24 14:55 SINGAPORE (ICIS)–Asia’s polyester export discussions were little changed as the pressure of reduced supply in China was balanced out by weaker feedstock prices.

20-May-2024

LOGISTICS: Container rates continue to surge, liquid chem tanker rates mostly lower

HOUSTON (ICIS)–Average global rates for shipping containers continue to surge, liquid chemical tanker rates ex-US Gulf were mostly softer, and work continues to reopen the Port of Baltimore, highlighting this week’s logistics roundup. CONTAINER RATES Rates for shipping containers surged by double digits again this week on unexpected demand and tight capacity stemming from Red Sea diversions. Average global rates surged by 11% over the week, according to supply chain advisors Drewry and as shown in the following chart. Meanwhile, rates from Shanghai to the US West Coast are up by almost 33% from early-February and rates from Shanghai to the East Coast are more than 30% higher over that period, as shown in the following chart. Drewry expects ex-China freight rates to rise due to increased demand, tight capacity, and the need to reposition empty containers. Emily Stausbøll, senior shipping analyst at ocean and freight rate analytics firm Xeneta, said the speed of the increases is causing nervousness in the market. “Demand reached record levels in Q1 2024, up by 9.2% compared to Q1 2023, and comes at a time when the Red Sea situation is putting increased pressure on shipping capacity,” she said. “But significantly, this is all taking place while the chaos of port congestion and lack of available capacity during the COVID-19 pandemic is still fresh in the memory of shippers.” “Lessons will have been learned from the pandemic. If shippers fear there is going to be a squeeze on capacity during the peak season in Q3 then they are going to start importing more goods now,” Stausbøll said. “If these increased volumes need to be moved on the spot market, then it is going to put upwards pressure on rates." 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 TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly lower as rates fell from the US Gulf (USG) to Asia and from the USG to India. However, rates ticked slightly higher for smaller parcels from the USG to Caribbean and surged from the USG to Brazil. From the USG to Rotterdam, it has remained quiet again this week, with available space for part cargo still open. COA volumes have been heavy for owners; however, spot inquiries have been quiet. Due to the available space and softness, this could place further downward pressure on this trade lane. From the USG to the Caribbean, the market has remained higher with very little prompt space available. Owners have pushed to keep freight rates mostly steady; however, there is currently a lack of activity from out of the USG. From the USG to Asia, this market has remained overall soft after a long holiday week in Japan. BALTIMORE, HOUSTON BRIDGE COLLISIONS Traffic in and out of the Houston Ship Channel was not affected after a barge struck a bridge connecting Galveston and Pelican islands on Wednesday morning. JJ Plunkett of the Houston Pilots said the Intracoastal Waterway (ICW) was closed, which could slow movement of barges moving finished product from plants along the channel. Ships enter the channel by passing between Galveston Island and the Bolivar Peninsula and then move through Galveston Bay before reaching the main section of the channel where refineries, chemical plants and storage facilities are located. The barge collided with a bridge that connects Galveston Island to Pelican Island, located well to the west of where commercial vessels enter and exit Galveston Bay. Meanwhile at the Port of Baltimore, the container ship that essentially closed the port on 26 March after it struck the Francis Scott Key Bridge, causing its collapse, is set to be moved now that the mangled remnants of the span were removed from the ship’s bow with controlled blasts on 13 May. Officials continued to evaluate the situation on Friday in preparation for refloating the vessel and clearing the federal channel. Officials have evaluated sonar and lidar imagery but are awaiting results from a dive survey before proceeding with plans to refloat and move the vessel. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. PANAMA CANAL Wait times for non-booked southbound vessels ready for transit surged this week while wait times for northbound vessels edged higher, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 2.6 days for northbound vessels and 2.4 days for southbound vessels. Additional reporting by Kevin Callahan

17-May-2024

India’s GAIL to set up C2/C3 pipeline for Pata petrochemical complex

MUMBAI (ICIS)–State-owned GAIL (India) Ltd plans to lay an ethylene/propylene (C2/C3) liquid pipeline from its gas processing complex at Vijaipur in the central Madhya Pradesh state to its Pata petrochemical complex at Auraiya in the northern Uttar Pradesh state. “The project will augment feedstock availability with additional polymer production at Pata Petrochemical Complex, reduce energy consumption and carbon footprint,” the company said in the notes accompanying its fiscal Q4 results. GAIL’s financial year ends in March. The proposed project is expected to cost Indian rupees (Rs) 17.9bn ($215m) and will be commissioned within 32 months, it said. Once operational, the pipeline will have the capacity to transport 950,000 tonnes/year of liquid feedstock to the Pata complex, it added. GAIL reported on 16 May a near-fourfold jump in net profit for the fourth quarter ending 31 March 2024 to Rs21.8bn, from Rs6.0bn in the same period last year. For the full fiscal year 2023-24, GAIL’s net profit increased by 67% year on year to Rs88.4bn. “The robust performance during the year was primarily driven by better physical performance across all major segments, despite lower prices in petrochemicals and liquid hydrocarbons,” GAIL managing director and chairman Sandeep Gupta said. GAIL currently operates a 200,000 tonne/year high density polyethylene (HDPE) plant; two linear low density polyethylene (LLDPE)/HDPE swing plants with capacities of 230,000 tonnes/year and 400,000 tonnes/year; and a 10,000 tonne/year butene-1 line at its Pata complex. The company is also setting up a 60,000 tonne/year polypropylene (PP) unit at the complex which is expected to come on stream in the current calendar year 2024. ($1 = Rs83.45)

17-May-2024

PODCAST: China PP exports to weigh on SE Asia on ample propylene supply

SINGAPORE (ICIS)–The ample supply of propylene in Asia and new polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Asia C3 to lengthen after PDH restarts in China, SE Asia volumes China PP exports to weigh on SE Asia discussions Asia PP prices to come under pressure in June-July In this podcast, ICIS editors Julia Tan, Jackie Wong and Lucy Shuai discuss current trends in Asia's propylene and PP markets, and what we can expect going forward. Visit us at Booth 13 at the Grand Ballroom Foyer at the Grand InterContinental Seoul Parnas! Book a meeting with ICIS here.

16-May-2024

Brazil’s floods-hit state plastics sector under ‘hypothesis’ operations could normalize end May – trade group

SAO PAULO (ICIS)–Plastics producers in Rio Grande do Sul remain shut following the floods but are working under the “hypothesis” operations could normalize by the end of May, a full month after the floods hit the Brazilian state, trade group Abiplast said. As such, they have made calculations for losses in revenue during a month, since 29 April when the floods started until the end of May. According to the trade group, the estimated impact on plastics producers in the state could come up to Brazilian reais (R) 680 million ($132 million), or an estimated daily impact of R$23 million since the floods started on 29 April. Rio Grande do Sul and its petrochemicals hub in Triunfo, near the city of Porto Alegre, is home to 40% of Brazil’s polyethylene (PE) and polypropylene (PP) production capacities. Despite the end of May hypothesis, a spokesperson for the trade group conceded that as things stand – with hundreds of roads still blocked and workers unable to turn up for duty – to set a date for restart of operations would be premature, however. “Plastics transformers’ plant have stopped …The [estimated costs would include the] costs of potential renovations and recovery of assets in the areas degraded,” said Abiplast. “The main plastic products could also suffer price increases if there is an increase [in selling prices] by manufacturers.” Several petrochemicals companies based at the Triunfo production hub, near the state’s largest city of Porto Alegre, declared force majeure last week, including Brazil’s polymers major Braskem, Innova and Arlanxeo. Thai major Indorama’s subsidiary in Brazil said to ICIS it had suspended operations. Meanwhile, fertilizers players have said to ICIS demand could be hit considering the state’s prowess within Brazil’s large agricultural sector. Analysts at S&P Global have also said fertilizers could be greatly hit, although they said petrochemicals could be spare from a large impact if the situation normalizes in coming days or weeks, at most. TRIUNFO: KEY TO PLASTICSAccording to figures by Abiplast, Triunfo has production capacities of 740,000 tonnes/year for PP, and of 1.2 million tonnes/year for PE, with a large chunk of that belonging to Braskem, for whom the Triunfo facilities represent 30% of its production capacity in Brazil. Braskem is the sole manufacturer of polyethylene (PE) and polypropylene (PP). Its market shares in 2023 were about 56% and 70%, respectively, according to figures from the ICIS Supply and Demand Database. Brazil’s PP capacity is nearly 2 million tonnes/year, while PE capacity is about 3 million tonnes/year, of which 41% is high density polyethylene (HDPE), 33% is linear low density polyethylene (LLDPE) and 26% is low density polyethylene (LDPE). The Triunfo complex can produce 740,000 tonnes/year of PP, 550,000 tonnes/year of HDPE, 385,000 tonnes/year of LDPE and 300,000 tonnes/year of LLDPE. The company said last week it was confident it will be able to deliver material from its other sites in the country, but sources have pointed out some of the specialized PE grades are only produced at Triunfo, and feared a hit to supply and increasing prices if the disruption in Rio Grande do Sul prolongs. According to Abiplast, there are 1,428 plastic processing and recycling companies in Rio Grande do Sul, the second largest state in Brazil in number of plastic processing companies, behind Sao Paulo’s 5,200 companies. The state’s plastics sector employs 33,100, added the trade group. Their sales in 2023 stood at R8.2 billion, or 7.1% of the total revenue posted by Brazilian plastics processing industry of R117 billion. The tragedy has consumed the Brazilian government since the second week of the floods – after a rather slow response during the first days. Some analysts have described this as Brazilian President Luiz Inacio Lula da Silva’s ‘Katrina moment’ as a reference to the poor handling of the Hurricane Katrina in the US in 2005 by former President George W Bush. Additional reporting by Bruno Menini Front page picture: A sign in Sao Paulo calling residents to collaborate in the floods relief effort Source: Jonathan Lopez/ICIS 

14-May-2024

PODCAST: Like blocks pulled out of a Jenga tower, chemicals closures could collapse value chains

BARCELONA (ICIS)–The closure of chemical plants in Europe and elsewhere could remove essential raw material supplies, threatening the future of downstream industrial value chains. Global oversupply, driven by China, forecast to reach over 200 million tonnes/year by 2028 Interconnected value chains threatened if important raw materials cease production Globally 20 million tonnes of ethylene capacity may need to shut down to keep operating rates healthy In Europe 5.6 million tonnes/year of polypropylene (PP) capacity may need to close Integrated chemicals sites under threat if parts shut down Industry associations could help plan to maintain critical raw materials supplies Anti-dumping measures could protect exposed markets China polyvinyl chloride (PVC) overcapacity may increase exports globally In this Think Tank podcast, Will Beacham interviews ICIS Insight Editor Nigel Davis, ICIS Senior Consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

14-May-2024

LOGISTICS: Global container rates surge, chem tanker rates mixed, Panama Canal wait times ease

HOUSTON (ICIS)–Global rates for shipping containers are surging, liquid chemical tanker rates were mixed, and wait times at the Panama Canal have eased, highlighting this week’s logistics roundup. CONTAINER RATES Container rates surged this week after rising last week for the first time since January amid general rate increases (GRIs) implemented because of rising demand and as continued Red Sea diversions have overall capacity fully deployed. Maersk CEO Vincent Clerc said during a Q1 earnings conference call that demand is trending toward the higher end of its guidance. Average global rates surged by 16% over the week, according to supply chain advisors Drewry and as shown in the following chart. Meanwhile, rates from Shanghai to the US West Coast jumped by 18%, and rates from Shanghai to the East Coast soared by 16%, as shown in the following chart. Drewry expects freight rates ex-China to continue increasing in the upcoming week amid a huge demand spike and tight capacity. Capacity is growing from newly built ships, according to international freight platform ShipHub, who said that 2.83m 20-foot equivalent units (TEUs) of container ship capacity is on order for 2024, after 2.34m TEUs were ordered in 2023. That is almost double the capacity added in 2021 and 2022, which were both around 1.1m TEUs. Shipping analysts Linerlytica said that over-capacity concerns are on the backburner with containership diversions to the Cape route effectively removing more than 7% of the total fleet. Rates from North China to the US Gulf were flat this week after spiking the previous week, as shown in the following chart from ocean and freight rate analytics firm Xeneta. 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 TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged but fell from the US Gulf (USG) to ARA. From the USG to Rotterdam, there are bits of part cargo space still available for April. This trade lane has been mostly quiet over the last few weeks. If this trend continues, this route could face further downward pressure. On the other hand, from the USG to the Caribbean, rates have risen slightly since last week leaving the market overall mixed. Methanol continues to be active out of this market to various destinations. From the USG to Brazil, space remains tight despite the slow market as only a handful of indications being seen in the market.  Space is available for H1 May out of Columbia and H2 May out of the USG. Although ICIS does not assess spot rates from the USG to the Mediterranean, this trade lane has continued to tighten up, with several cargoes of Glycols, Caustic and Veg Oil fixed. There is limited space for May which may likely cause rates to further tighten, although there could be some working space for June. PANAMA CANAL Wait times for non-booked vessels ready for transit fell for both northbound and southbound transits this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 4.4 days for northbound traffic and 6.5 days for southbound vessels. The PCA will increase the number of slots available for Panamax vessels to transit the waterway beginning 16 May and will add another slot for Neopanamax vessels on 1 June based on the present and projected water levels in Gatun Lake. PORT OF BALTIMORE The Key Bridge Response Unified Command (UC) is scheduled to use precision cuts made with small charges to remove a large section of the Francis Scott Key Bridge wreckage from on top of the container ship Dali, which struck the bridge on 26 March and caused its collapse. Source: Key Bridge Response 2024 The exact time of the precision cuts will depend on multiple environmental and operational factors. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. Additional reporting by Kevin Callahan

10-May-2024

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