Polyvinyl chloride (PVC)

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Construction, electronics, and healthcare are just a few of the industries that rely on this flexible material. Polyvinyl chloride (PVC) is indispensable to modern day life in uses such as pipes and window profiles and other building materials. Global production volume amounted to 44.3 million metric tons in 2018. Understanding and engaging with such a significant market requires relevant and trusted data and insight.

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Polyvinyl chloride (PVC) news

Mexico's Orbia lowers 2024 guidance, PVC group reports flat Q3 income

HOUSTON (ICIS)–Orbia's vinyls business reported on Wednesday that Q3 operating income was flat year on year amid lower costs for ethylene and electricity as well lower volumes and prices. The following shows the financial performance of the company's Polymer Solutions segment, which includes the Vestolit and Alphagary businesses. Figures are in millions of dollars. Q3 24 Q3 23 % Change total sales 634 677 -6% Operating income 23 23 0 EBITDA 90 86 5% Source: Orbia Orbia attributed the rise in the segment's EBITDA to lower costs as well as the company's efforts to optimize production and fixed costs. Orbia attributed the declines in volumes to challenging business conditions. COMPANY LOWERS GUIDANCEFor Orbia as a whole, the company expects to report $1.10 billion to $1.15 billion in earnings before interest, tax, depreciation and amortization (EBITDA), down from its earlier guidance of $1.30 billion. Orbia lowered its guidance because the market had not recovered as the company had expected. The company's other segments include the following: Building & Infrastructure, which includes the Wavin business. It makes pipes and fittings. Connectivity Solutions, which includes the Dura-Line business. It makes telecommunications conduit, cable-in conduit and similar products. Precision Agriculture, which includes the Netafim business. It makes irrigation systems. Fluor & Energy, which includes the Koura business. It mines fluorspar and makes fluorine derivatives. Thumbnail shows PVC pipe. Image by Shutterstock.

23-Oct-2024

PODCAST: Players face up to reinvention of chems sector post-EPCA

LONDON (ICIS)–Chemicals sector executives are increasingly facing up to the idea that the sector is going through a process of reinvention, with no big recovery on the horizon and a return to pre-crisis normalcy less likely. Executives are now looking at next steps for the sector. In this Think Tank podcast, Tom Brown interviews Paul Hodges, chairman of New Normal Consulting, Katherine Sale,  ICIS head of editorial strategy, and Chris Barker, senior editor covering PVC and caustic soda, on impressions from the EPCA assembly. Growing acceptance of no big demand recovery, while demographic shifts to an ageing population reduce potential future demand growth Consolidation trend likely to continue, but environmentally sustainable products offer a growing opportunity Mood at EPCA less muted than previous two annual meetings, but far from positive Energy pricing less of an issue in 2024 so far but worries remain for 2025, with the specter of high costs likely to speed closures Caustic soda, chlorvinyls markets continue to suffer amid low demand, with substantial closures seen as necessary to balance the market Upcoming EU clean industrial deal likely to be a benefit, but will not be the end of regulatory conversation in Europe Tariffs continuing to proliferate in Europe against lower-cost imports, but do not address underlying competitiveness issue Click here to watch ICIS' analyst podcast on future chemical and recycling market trends from EPCA. 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.

17-Oct-2024

Argentina’s Rio Tercero shuts TDI plant on global oversupply

SAO PAULO (ICIS)–Petroquimica Rio Tercero has shut its toluene di-isocyanate (TDI) plant in Cordoba on the back of global oversupply, a spokesperson for the Argentinian producer confirmed to ICIS on Tuesday. The plant had a production capacity of 28,000 tonnes/year of TDI, which is a key feedstock to produce polyurethane foam. Production there stopped on 14 October. Rio Tercero said it would dismiss 1,250 employees. “This decision [to shut the TDI plant] is mainly due to the transformation the sector has undergone worldwide, with the emergence of large-scale plants, especially in Asia, which are producing an oversupply of TDI which caused global prices to fall abruptly in recent years,” said the company. “Another determining factor is the limited production capacity of our Rio Tercero plant, which makes it impossible to compete with larger global companies.” The spokesperson said Rio Tercero would now “become a TDI trader” to ensure the continuity of the company, given that it will still need the product to produce polyaluminum chloride (PAC), an inorganic coagulant used in water purification. The company's PAC production capacity stands at 58,000 tonnes/year, according to the spokesperson. As well as PAC, Rio Tercero also produces sodium hypochlorite, with a production capacity of 97,500 tonnes/year, and sodium hydroxide, with a production capacity of 11,000 tonnes/year. All the remaining production plants are operating normally, the spokesperson said. The company is a subsidiary of Buenos Aires-based Grupo Piero. According to local media reports, the provincial government has contacted the union to express its support to the plant’s workers, but it remains unclear whether the government could make any significant intervention to avoid the closure. EASIER TO SHUT PLANTSUnder the new Administration of Javier Milei which took office in December 2023, labor laws have been eased and firing employees has now become easier for companies. Earlier in October, US chemicals major Dow also said it would stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics. The company had already tried to close that plant earlier, but pressure from the trade unions and tighter labor regulations at the time made the company backtrack in its plans. According to the ICIS Supply & Demand Database (ISDD), with Rio Tercero’s TDI Plant now shut and Dow’s in the process of shutting its polyols facility, no company in Argentina will produce any isocyanates or polyether polyols. Consequently, companies producing polyurethane (PU) will have to import all their inputs, among other examples. Rigid PU foams are used mainly in insulation, refrigeration, packaging and construction, while flexible PU foams have applications such as upholstery, mattresses and seats. Polyols can also be used in elastomers, adhesives, coatings and fibers. Front page picture: Petroquimica Rio Tercero’s facilities south of Cordoba city, Argentina Source: Petroquimica Rio Tercero Additional reporting by Al Greenwood

15-Oct-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 11 October. NEWS Dow shuts Argentina polyols plant on global oversupplyDow has decided to stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics, the US chemicals major confirmed to ICIS on Wednesday. Brazil growth story props up chloralkali sector; Argentina still distant from being out of woods – CloroSurBrazil’s healthier than expected growth in 2024 has greatly propped up the chloralkali sectors, while Argentina's woes, although improving, will take some time to be fixed, said the director general at Brazil’s trade group Abiclor. Brazil’s September inflation ticks up to 4.4% on drought-induced higher electricity, food costsThe drought affecting Brazil filtered through consumers prices with higher energy bills and foods prices, pushing the annual rate of inflation to 4.4%, up from 4.14% in August, the country’s statistics office IBGE said on Wednesday. Argentina’s chemicals output down 3.5% in August, manufacturing down 6.9%Argentina’s chemicals and some petrochemicals-intensive sectors such as manufacturing and construction continue to bear the brunt of the recession, with output falling again in August, the country’s statistics office Indec said on Tuesday. Chile’s September inflation down to 4.1%, central bank expected to cut rates furtherChile’s annual rate of inflation fell in September to 4.1%, down from July’s 4.7%, reinforcing analysts’ expectation the central bank is to cut interest rates further later this month. Brazil’s Q3 automotive output highest since 2019Brazil’s petrochemicals-intensive automotive output posted in Q3 its best quarter since 2019 and fully recovered its pre-pandemic levels, trade group Anfavea said. Lula signs law to promote cleaner energy in BrazilOn Tuesday, President Luiz Inacio Lula da Silva officially signed into law the Combustivel do Futuro (PL 528/2020), a significant legislative step aimed at promoting cleaner energy in Brazil. Mexico's Alfa completes key step towards Alpek spinoffThe proposed spinoff of Mexican polyester producer Alpek has reached a key milestone, with corporate parent Alfa saying on Tuesday that it has solicited consents from more than 90% of the holders of a batch of senior notes. Argentina’s inflation falls to 209%; monthly price rises finally below 4% markArgentina's annual rate of inflation fell in September to 209%, down from 237% in August, the country’s statistics office Indec said on Thursday. Brazil’s Grupo Potencial to expand soybean oil-based biodiesel plant in ParanaBiodiesel and glycerine producer Grupo Potencial is to invest Brazilian real (R) 600 million ($107 million) to expand its facility in Lapa, in Parana state’s region of Curitiba, to up its capacity to 1.62 billion liters/year (1.42 million tonnes/year) of biodiesel, the government of Parana said this week. PRICING LatAm PP international prices increase in Chile, Peru on higher Chinese offersInternational polypropylene (PP) prices increased in Chile and Peru on the back of higher offers from China, while in Argentina and Brazil, prices dropped tracking competitive offers from abroad. LatAm PE international prices fall on competitive US export offersInternational polyethylene (PE) prices fell across Latin American (LatAm) countries on competitive offers from the US. Brazil expanding sectors drive PVC import surgeBrazil's polyvinyl chloride (PVC) imports emerged in 2024, driven by the improved demand from the construction and automotive sectors.

14-Oct-2024

INSIGHT: Understanding waste is the key to understanding recycling chain volatility

LONDON (ICIS)–Imagine you sold a product with no control over how much of it was produced at any one time; that you had to sell it within weeks of it being produced regardless of what the demand for it was like; and that the demand was constantly changing. For most waste managers, no imagination is required, this is their daily reality. And it’s one of the biggest drivers of volatility throughout the recycling chain globally. Waste originates from both the general public and industry, and as a result, the composition and quantity of waste generated at any one time varies continuously depending on consumer behaviour and industrial production trends. Waste managers typically hold contracts for waste collection with municipalities. They cannot turn material away. Because of variations in consumer and industrial production trends, different countries can have vastly different supply at any one time. The quality of that input waste (how contaminated it is, the tensile strength etc.) depends on a variety of factors including how it's been treated and stored before its entered the chain, the type of additives it contains, what other materials it has come into contact with (because contact with substances such as polyvinyl chloride (PVC) causes contamination), level of discolouration, gel content, and odour. Coupled with this, the more times a polymer has been recycled, the lower its tensile strength, and typically end-use suitability becomes increasingly limited. How many cycles it takes before the waste material becomes unusable varies from polymer-to-polymer, process to process, and level of other degradation. The longer you store waste (this is typically, but not exclusively, in the form of bales) without reprocessing it – or selling it on for reprocessing – the more it degrades. This can be due to a number of things, including the contaminants it contains, thermolytic degradation (from heat – typically the sun), and hydrolytic degradation (from water – common in the case of polyethylene terephthalate (PET). Meanwhile, new (and perhaps more valuable) strains of waste are constantly entering the chain, and warehouse space is limited. If the waste quality is too low, then waste managers either need to dispose of the material, sell it to the burn-for-energy sector, or use it captively for energy creation. Burn-for-energy bales typically sell at negative values, whereby sellers pay for the removal of waste based on cost saving against alternative disposal methods. As a result, most waste managers look to offload bales within a timeframe of around 4-6 weeks (although this varies from market to market). Reprocessed recycled material, meanwhile, serves a huge variety of end-use markets. Major offtake markets include, but aren’t limited to, packaging, construction, automotive, outdoor furniture, refuse bags, strapping, and horticulture. Demand between the end-uses also varies dramatically, and players in each market purchase for differing reasons. Some markets, such as packaging, are heavily driven by brand sustainability targets and regulation, other markets, such as construction, mostly purchase on cost saving against virgin. This has huge impacts on willingness to pay, Intensifying legislative and consumer pressure on sustainability in packaging over the past few years has seen a significant pricing gap develop between display packaging suitable, and non-display packaging suitable grades across most global recycled polymer markets. There is currently, for example, a spread of up to €1,500/tonne between the highest priced grade of Europe recycled polypropylene (R-PP) pellet (which is a post-consumer natural grade predominantly used in domestic goods and cosmetic applications), and the lowest priced grade (which is black injection-moulded pellets, which typically serves non-packaging applications). Ideally (from their point of view) waste managers and recyclers would primarily serve applications driven by sustainability targets where premiums are typically highest. Nevertheless, each downstream market has differing technical requirements  – with display packaging and automotive typically having the strictest technical requirements and construction, bin bags and outdoor furniture the lowest. This means that there is typically a higher volume of material sold into non-packaging applications. While sorting allows waste managers to extract the valuable fractions and, to an extent, control contaminants etc. it doesn’t control the input waste mix. So the type of material suitable to serve each application is changing constantly. There is also a direct correlation between feedstock waste quality and reprocessed output quality for both mechanical and chemical recycling. This creates a continuous supply/demand mismatch that is often underappreciated by players newly entering the market. This mismatch coupled with the need to offload material relatively quickly is the reason, for example, 90% mixed polyolefin bale prices have traded as high as €600/tonne ex-works NWE (northwest Europe) and as low as €0/tonne ex-works NWE since July 2022. Because waste fractions typically produce a variety of different flake and pellet grades depending on what is extractable from individual bales – especially for recycled polyolefins – they typically react to system wide demand in each locality. Individual flake and pellet prices, though, often react to demand from specific end-use markets. This can result in periods where waste bale prices are high but prices for some flake and pellet grades those bales serve are low, resulting in squeezed margins. This is especially true for grades that are purchased for cost-saving reasons, meaning that they need to aggressively compete with virgin and off-spec material. The reverse also regularly occurs, whereby bale prices can be low because demand in key end-uses such as construction is weak and general availability of waste is high, but volumes extracted for packaging suitable grades are limited and demand from that particular sector is firm. It is also increasingly common for material with broadly identical specifications to trade at different price levels depending on which sector it is being sold into. Further distortions in the chain are created because reprocessed material such as flakes and pellets can be stored for long-periods of time, and flake and pellet producers are not forced to offload material as quickly as waste managers. This leads to fragmented and localised downstream markets where spreads against feedstock costs and profitability are constantly shifting. Volatile feedstock costs also results in challenges for investment. This is particularly true for emerging technologies such as chemical recycling and bio-based plastics. Thatis because new producers seeking private investment are often required to project future costs (typically for a period of at least 5 years), with waste feedstock typically their largest variable cost. The unpredictability of waste values make this a herculean task. When players first explore circular plastic markets, they are often surprised by the variability and fragmentation of prices through the chain. In the majority of cases the direct cause can be traced back to the feedstock waste markets. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

11-Oct-2024

Florida power outages approach 3.4 million after Hurricane Milton

HOUSTON (ICIS)–Nearly 3.4 million outages have been reported in Florida in the aftermath of Hurricane Milton, which made landfall as a powerful Category 3 hurricane near Sarasota, Florida, south of the important fertilizer hub of Tampa. Milton may have caused more damage had it passed over Tampa, according to CoreLogic, an insurance data company. RAIL UPDATERailroad company CSX said it has relocated all of its locomotives and cars from low-lying areas in Tampa and rerouted them. CSX operations will continue in and out of Waycross from the north, east and west directions. It will continue operating into and out of the intermodal ramps at Jacksonville, Florida. On 8 October, CSX said it had taken the following steps. Closed the Central Florida ILC intermodal gate. Closed the Tampa, FL intermodal gate. Closed the TRANSFLO terminals at Tampa, Tampa Port and Sanford. Another railroad company, Norfolk Southern, has not updated its notice from 7 October, when it said it was monitoring and preparing for Hurricane Milton. FLORIDA PORTS REMAIN CLOSEDMany ports in Florida have maintained their Zulu port conditions, which means they are closed to inbound and outbound vessels. The following table summarizes the conditions among the major ports in Florida. Port Status Condition Port of Pensacola Open Normal Port Panama City Open Draft restrictions Port St Joe Open Normal Port Tampa Bay Closed Zulu SeaPort Manatee Closed Zulu PortMiami Open Yankee Port Everglades Open Yankee Port of Palm Beach Closed Zulu Fort Pierce Closed Zulu Port Canaveral Closed Zulu Jaxport Closed Zulu Port of Fernandina Closed Zulu Source: US Coast Guard. IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin (UPR) production in Lakeland and Kathleen, Florida. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. 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. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida’s Big Bend region. On 30 September, Mosaic said its Riverview operations were off line following water intrusion from a storm surge caused by Hurricane Helene. POSSIBLE DAMAGEHurricane Milton could be extremely destructive because of its winds, rainfall and storm surge. It will pass over the following metropolitan statistical areas. Region Population Tampa 3,342,963 Orlando 2,817,933 Jacksonville 1,713,240 Sarasota 910,108 Source: US Census Bureau CoreLogic, the insurance data company, said Milton’s shift to the south of Tampa could limit the magnitude of insured losses. CHEMS AND RECONSTRUCTIONFor hurricanes in general, reconstruction can translate into 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. PUs are made of methylene diphenyl diisocyanate (MDI), toluene diisocyanate (TDI) and polyols. High-density polyethylene (HDPE) is used in pipes. Polyvinyl chloride (PVC) is used to make cladding, window frames, wires and cables, flooring and roofing membranes. Unsaturated polyester resins (UPRs) are used to make coatings and composites. Vinyl acetate monomer (VAM) is used to make paints and adhesives.

10-Oct-2024

INSIGHT: After Milton, global chems face future of rapidly intensifying hurricanes

HOUSTON (ICIS)–Warmer waters in the Atlantic Basin could make record-setting hurricanes like Milton and Beryl more common, which strengthened rapidly to become major storms that caused significant damage. Most of the petrochemical and refining capacity of the US is along the Gulf of Mexico, making the plants vulnerable to the disruptions caused by more powerful hurricanes that could become more common in the future. Rising exports of energy, chemical feedstock and plastics from the US Gulf Coast have caused local hurricanes to have global consequences. If wind shear becomes more common, then it could offset some of the strengthening effects that warmer water will have on hurricane development. RECORD-SETTING HURRICANE SEASONWarm water is like rocket fuel for tropical storms and hurricanes, and that led to the rapid intensification of Milton, which strengthened from a tropical storm into a Category 5 hurricane in less than two days. By midday on Monday, the rapid strengthening of Milton placed it among the top three Atlantic hurricanes, behind only 2005's Hurricane Wilma and 2007's Hurricane Felix, said Alex DaSilva, lead hurricane expert at the meteorology company AccuWeather. Milton had set another record as the strongest hurricane to occur in the Gulf of Mexico, according to Levi Silvers, research scientist at the Department of Atmospheric Sciences at Colorado State University, which publishes regular hurricane forecasts. Milton was also the Gulf's strongest hurricane since Rita in 2005, Silvers said. Milton would weaken to a Category 3 hurricane before making landfall on Wednesday night. AccuWeather estimates that Milton could cause more than $200 billion in damage and economic loss. Earlier on July 2, Beryl set its own record by becoming the earliest Category 5 hurricane to form in the Atlantic basin, beating the previous record holder by an astounding two weeks, DaSilva said. According to Silvers, Beryl also accumulated more cyclone energy than any other storm occurring before August. "Basically, it was the strongest early storm we have had by several measures." After forming in the Atlantic Beryl weakened after passing over Mexico's Yucatan peninsula before making landfall in Texas and disrupting operations at several petrochemical plants. AccuWeather estimated that total damage and economic loss caused by Beryl was $28 billion to $32 billion. Hurricane Helene set a record for the amount of available atmospheric moisture, also known as precipitable rain, according to AccuWeather. Such extreme amounts of moisture allowed Helene to carry it far inland, leading to rapidly rising river levels and flash flooding. AccuWeather estimates that Helene caused $225 billion to $250 billion in damage and economic loss in Florida, Georgia and the Carolinas. WARM WATER THREATSIf the planet continues to warm, one of the consequences would be elevated water temperatures. Warmer waters contributed to the strength and rapid intensification of these three hurricanes, DaSilva said. The danger is not just the surface temperature of the Atlantic but also something that meteorologists call ocean heat content, DaSilva said. Ocean heat content reflects water temperatures below the surface. A warmer planet will also heat up the atmosphere, allowing the air to hold more moisture. That would lead to more rainfall and greater risks of floods. "I am concerned that we are going to be seeing more episodes of rapid intensification," DaSilva said. "The tie between sea surface temperatures and rapid intensification – we are pretty confident about that." Silvers also expressed concern about the threat posed by elevated water temperatures. WIND SHEAR REMAINS UNKNOWN VARIABLEMeteorologists are less sure if wind shear could become more common in a warmer planet, DaSilva said. Wind shear usually discourages the formation of tropical weather. If wind shear does become more common, it could partially offset the effects of warmer water. In a world with more wind shear, it might not generate more hurricanes, but those that do form will strengthen rapidly into more powerful storms, DaSilva said. The length of the Atlantic hurricane season could also expand by starting sooner than the current June 1 date, DaSilva said. DaSilva doubts that the Atlantic season would last beyond its November 30 end date, because wind shear becomes more common during the final months of the year. Silvers, though, said it is difficult to determine if the timing of Atlantic storms will change in the future. "This season is a perfect example, with record breaking storms before and after the peak of the season, but almost nothing during the historical peak," Silvers said. MORE DISRUPTIONS FOR US, GLOBAL CHEMICALSMost of the petrochemical plants and refineries in the US are on the Gulf Coast, so more powerful hurricanes would leave them more vulnerable to damage and shutdowns. The US now exports significant amounts of polyethylene (PE), polyvinyl chloride (PVC), vinyl chloride monomer (VCM) and other chemicals. Hurricanes disrupt port operations, so those exports could be delayed, increasing the risk of global shortages. DISRUPTIONS TO WORLD'S CHEMICAL FEEDSTOCKSIn addition, the US is increasingly relying on exports to take away excess ethane and liquefied petroleum gas (LPG) produced from its oil fields. These petrochemical feedstocks are being imported by an increasing number of crackers and propane dehydrogenation (PDH) units, with GAIL (India) became the latest to announce plans to build an ethane cracker. Nearly all of the terminals that handle these exports of ethane and LPG are on the Gulf Coast, and all of the expansion projects are in the region. Hurricanes could disrupt operations at these terminals and interrupt the supply of these feedstocks to crackers and PDH units throughout the world. HURRICANES DISRUPT US LNG TERMINALSThe majority of US LNG capacity is on the Gulf Coast and its preponderance will only increase as the country starts up more terminals. This will have effects on US and global energy prices. Disruptions in global shipments could raise LNG costs. In the US, extended shutdowns of LNG terminals would increase supplies of natural gas, pushing prices lower for it and ethane. Lower ethane prices in the US could increase margins for ethylene derivatives. DISRUPTIONS TO US OIL EXPORTSThe Gulf Coast is a large exporter of oil, with major terminals in Corpus Christi, Houston and Nederland in Texas. In addition, the Gulf Coast is home to the Louisiana Offshore Oil Port (LOOP), the only deepwater crude port in the US. Companies are planning more offshore ports. Enterprise Products received a deepwater port license for its Sea Port Oil Terminal (SPOT), which could load 2 million bbl/day of crude oil. If built, it would be built 30 nautical miles off the Texas coast. In 2020, Phillips 66 and Trafigura Group announced that they created a 50/50 joint venture called Bluewater Texas Terminal to develop an offshore deepwater oil port 21 nautical miles east of the port of Corpus Christi. Energy Transfer is proposing its Blue Marlin Offshore Port, which could load up to one very large crude carrier (VLCC) per day. Texas GulfLink, a subsidiary of Sentinal Midstream, is developing a deepwater oil terminal off the Gulf Coast. If built, these offshore oil ports would be vulnerable to hurricanes, along with the onshore terminals on the Gulf Coast. That could restrict global oil supplies and push prices higher. Higher prices would increase costs for crackers that use naphtha as a feedstock. Insight article by Al Greenwood Thumbnail shows damage caused by Hurricane Milton. Image by Chris Urso/Tampa Bay Times/ZUMA Press Wire/Shutterstock

10-Oct-2024

Railroad shuts many Florida terminals ahead of Hurricane Milton

HOUSTON (ICIS)–Railroad company CSX is suspending operations at several of its intermodal and TRANSFLO terminals in Florida ahead of Milton, which has shifted its path away from Tampa, a major fertilizer hub. If Milton maintains its latest forecasted path, it could spare Tampa of the worst damage, according to CoreLogic, an insurance data company. Milton's maximum sustained winds are nearly 145 miles/h (230 km/h), making it a Category 4 hurricane, according to the National Hurricane Center (NHC). Milton is expected to weaken to a Category 3 hurricane and make landfall later on Wednesday south of Tampa near Sarasota, Florida, CoreLogic said. Milton will then pass over central Florida. RAIL DISRUPTIONSRail shipments through the Tampa area will likely face delays until Milton passes, CSX said. It expects multiple downed trees and power outages in the Wildwood, Lakeland and surrounding Tampa subdivisions. Lakeland and nearby Kathleen are near Tampa and are home to some thermoset resin plants. CSX has taken the following actions: Closed the Central Florida ILC intermodal gate. Closed the Tampa, FL intermodal gate. Closed the TRANSFLO terminals at Tampa and Tampa Port. Will close the Sanford TRANSFLO terminal midday on Wednesday. Another railroad company, Norfolk Southern, has not updated its notice from 7 October, when it said that it is monitoring and preparing for Hurricane Milton. MORE PORTS CLOSESome of Florida's ports on the Atlantic coast have set conditions to Zulu, meaning that they are closed to inbound and outbound vessels. The following table summarizes the port conditions along the eastern and western coasts of Florida. Port Status Condition Port of Pensacola Open Port Panama City Open X-Ray Port St Joe Open X-Ray Port Tampa Bay Closed Zulu SeaPort Manatee Closed Zulu PortMiami Open Yankee Port Everglades Open Yankee Port of Palm Beach Closed Zulu Fort Pierce Closed Zulu Port Canaveral Closed Zulu Jaxport Closed Zulu Port of Fernandina Closed Zulu Source: ports, US Coast Guard IMPACT ON FERTILIZERS, PHOSPHATES, CHEMSFor chemicals, there is some epoxy resin, phenolic resin and unsaturated polyester resin (UPR) production in Lakeland and Kathleen, Florida. Milton will make landfall far from Pensacola, Florida, which has plants that make nylon and thermoset resins. Tampa is an important hub for the US fertilizer industry, hosting corporate offices, trading, product storage, shipping and other logistical operations. Fertilizer producer Mosaic has its headquarters in Tampa. The company has not issued any statements regarding its corporate operations. A source at the fertilizer company Yara said it was shutting down its Tampa offices to comply with the evacuation orders. 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. Canadian fertilizer producer Nutrien has yet to restart its White Springs phosphate operations following Helene, an earlier hurricane that made landfall farther north in Florida's Big Bend region. On 30 September, Mosaic said its Riverview operations were offline following water intrusion from a storm surge caused by Hurricane Helene. POSSIBLE DAMAGEHurricane Milton could be extremely destructive because of its winds, rainfall and storm surge. It will pass over the following metropolitan statistical areas. Region Population Tampa 3,342,963 Orlando 2,817,933 Jacksonville 1,713,240 Sarasota 910,108 Source: US Census Bureau The following map shows the expected path of Milton. Source: National Hurricane Center CoreLogic, the insurance data company, said Milton's shift to the south of Tampa could limit the magnitude of insured losses. The following map compares three insured loss scenarios based on Milton's path. Source: CoreLogic The following map shows Milton's expected storm surges. Source: National Hurricane Center. The following map shows three-day rain totals. Source: CoreLogic CHEMS AND RECONSTRUCTIONFor 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 an image of Hurricane Milton. Image by the National Hurricane Center. 

09-Oct-2024

INSIGHT: China stimulus measures take center stage as markets re-open

SINGAPORE (ICIS)–Volatility marked the first few days of re-opening of China’s financial and commodities markets as investors’ initial hopes of more economic measures were crushed. Implementation plans for pre-holiday measures unclear Infrastructure-focused sovereign bonds to drive growth further China GDP growth to slow to 4.3% in 2025 – World Bank The highly anticipated return of Chinese market players after a week-long absence sparked a surge in the equities markets, with the closely watched CSI 300 – which tracks shares of the top 300 companies trading in Shanghai and Shenzhen, had surged by 11% on 8 October. “Expectations were high after the monetary announcements made [in] the week of 24 September and there were even news reports of up to a [yuan] CNY10 trillion ($1.4 trillion) stimulus,” hedge fund portfolio manager Rikki Malik said in a note issued on Wednesday for investment research and analysis firm Smartkarma. On Wednesday, the CSI300 index fell by 7%, reflecting concerns over the lack of concrete new stimulus measures from Beijing to sustain the rally. Other Asian equity indices tracked the weakness in Chinese bourses amid risk aversion also stoked by geopolitical jitters in the Middle East At 08:53 GMT, Hong Kong's Hang Seng Index was down by around 1.4% at 20,637.24, continuing from its sharpest single-day decline in 16 years in the previous session. Chemicals giant Sinopec was down by 3.61% and state energy firm PetroChina fell by 3.14% in Hong Kong. Elsewhere in Asia, South Korea's KOSPI Composite ended 0.61% lower to 2,594.36 while Japan's key Nikkei 225 closed up by 0.87% at 39,277.96 China’s petrochemical futures tumbled, with polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures leading the slump. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than 4%. POST-HOLIDAY POLICY BRIEFING UNDERWHELMS The National Development and Reform Commission (NDRC) – China’s top economic planner – held a briefing on 8 October in which chairman Zheng Shanjie said that China was "fully confident" of achieving economic targets for 2024. But his failure to detail sufficiently big or new measures rekindled market doubts about Beijing's commitment to ensuring the economy can climb out of its most serious slump since the global pandemic and achieve a 5% growth. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. Instead, the NDRC emphasized confidence in achieving the "around 5%" growth target for this year based on policy measures announced in late September. Toward this end, issuance of long-term sovereign and local government bonds will be accelerated to fund infrastructure projects well into next year. Additionally, the NDRC announced upcoming investments in key strategic areas totaling yuan (CNY) 100 billion, on top of plans to expedite CNY100 billion in central government investment originally planned for 2025. NO MAJOR NEAR-TERM IMPACT FROM STIMULUS MEASURES During the seven-day China holiday in the first week of October, domestic tourist trips grew 5.9% year on year, with revenues up by 6.3% over the same period. But the per trip spend was near flat at 0.4%, according to data from the Ministry of Culture and Tourism. Week-long holidays in the country, including the Spring Festival/Lunar New Year and Labor Day celebrations in February and May, respectively, typically result in spikes in domestic tourism spending. In October, domestic tourism activities remained positive this year while there were also reports of stronger outbound and inbound travel during the period. The two earlier major holidays in China – the Spring Festival and Labour Day holidays – had recorded stronger improvements across number of trips, total spend and spend per trip, according to Singapore-based UOB Global Economics & Markets Research in a note on Wednesday. "Although the recovery in outbound travel may dilute the demand for domestic tourism, the moderation in spend per trip continue to indicate more cautious spending amongst consumers," it said. "The initial spillover from recent PBOC [People's Bank of China]-led stimulus to consumer spending including the rollout of local government vouchers and promotions to boost consumption had been lacking in the National Day holiday statistics," UOB said. "This further affirms the need for stronger fiscal measures that target consumption and support to the labor market particularly with youth unemployment rate rising to 18.8% in Aug which continues to hamper the recovery in consumer confidence." Ahead of the National Day holidays, China’s central bank had announced stimulus measures estimated to be worth at least CNY3 trillion, which is equivalent to 2.3% of its GDP. These measures include a 50-basis point cut to banks' reserve requirement ratio (RRR), injecting CNY1 trillion into the financial system. Further measures include a CNY1 trillion capital injection to state-owned banks, a reduction in interest rates on existing mortgages to release CNY150 billion in funds, and CNY800 billion allocated to swap and re-lending facilities for stock purchases. “Investors were also disappointed that some of the 2025 budget would be pulled forward to this year, implying no new money, but… it is easier to issue special bonds which are off budget, rather than going through the rigmarole of increasing this year’s budget deficit,” said SmartKarma’s Malik. Markets will now be closely watching for further fiscal stimulus to support consumption and investment. “In addition, given the onset of winter, construction projects need to be started quickly. We fully expect there to be further issuance of ultra-long special bonds,” Malik added. Investors watching for signs of China's next policy moves now have three key dates circled on their calendars. In late October, the Standing Committee of the National People’s Congress (NPC) is scheduled to meet in late October. Meanwhile, China’s Q3 GDP is slated for release on 18 October; while country’s Politburo is due to meet early December, leading to the annual Central Economic Work Conference (CEWC). The CEWC is a pivotal annual meeting in China during which country's economic agenda is set for the upcoming year. The conference typically takes place over two to three days in December. CHINA 2025 GROWTH TO SLOW DESPITE STIMULUS – WB Economic growth in China is projected to slow to 4.3% next year from 4.8% in 2024 despite economic stimulus measures that China introduced in September, the World Bank warned in a report on 7 October. This is due in part to low consumer and investor confidence, property market weakness, an ageing population and global tensions, the multilateral institution said. “Recently signalled fiscal support may lift short-term growth but longer-term growth will depend on deeper structural reforms,” the World Bank said. “China has led growth in the region for more than three decades, but its relative growth is likely to slow down in future,” it added. Insight article by Nurluqman Suratman With contributions from Jonathan Yee ($1 = CNY7.07)

09-Oct-2024

China petrochemical futures retreat on demand worries

SINGAPORE (ICIS)–China’s petrochemical futures tumbled on Wednesday morning as a lack of further economic stimulus measures from the government left investors worrying about demand. At the end of the morning session, polyvinyl chloride (PVC), purified terephthalic acid (PTA) and paraxylene (PX) futures led the slump, with losses ranging from 2.4-3.5%. Market sentiment was also weighed down by crude oil’s plunge overnight, in which both Brent and WTI benchmarks shed more than $3/bbl. In physical markets, spot transactions were sluggish at most petrochemicals, including acetone, butadiene, acrylonitrile, propylene oxide, upon resumption of trade due to weak demand. China had a week-long National Day holiday on 1-7 October. Futures market gains in the previous session lost steam as market hopes for additional economic measures did not materialize. In a briefing on 8 October, the National Development and Reform Commission (NDRC) – China’s top economic planner – provided no details on how to execute the aggressive measures announced in late September. Market players were initially expecting the government to adopt further fiscal measures to arrest the slowdown of the world’s second-biggest economy. ($1 = CNY7.07)

09-Oct-2024

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