Fertilizers

HOUSTON (ICIS)–Canadian fertilizer major Nutrien has announced a decision to halt three fertilizer blending plants in Brazil as it undergoes a reorganization of their operations for improved efficiency within the country. The plants are in Alfenas, Minas Gerais and Morrinhos and Cristalina, Goias, and comes amid what the producer is describing as tougher market conditions with Nutrien saying it will continue to be able to meet the needs of their farmer customers. The current strategy is to continue to provide fertilizers via its other two blenders in Brazil and through their local partners and if necessary restart these three outlets. There are also plans advancing to shutter an older facility in the state of Sao Paulo. “Nutrien is committed to serving our farmer customers in Brazil with the solutions they need and fertilizer is an important component of our overall portfolio. At the same time, we are reviewing our operating model to find efficiencies and as a result we are assessing future options for our three blenders located in the cities of Alfenas, Morrinhos and Cristalina,” said Nutrien spokesperson. “The decision allows Nutrien to restart these assets in a short time period if needed. We are well positioned to serve our customer with the same technical quality, volume and breadth of the fertilizer portfolio, through strategic partnerships and other blenders that remain in operation.”

29-May-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 24 May. NEWS Brazil’s Triunfo petchems restart odd one out as wider industry still disrupted – consultant Most of Rio Grande do Sul’s industrial plants remain shut or operating at very low rates as the Brazilian state reels from the floods, with the restart at the Triunfo petrochemicals hub an exception rather than the norm, a chemicals consultant at MaxiQuim said to ICIS. Mexico’s Orbia/Vestolit's Altamira plant ceases operations due to water scarcity Orbia/Vestolit ceased operations at its Altamira, Tampico facilities in Mexico on 21 May due to water scarcity. The company operates there a polyvinyl chloride (PVC) facility with a production capacity of 690,000 tonnes/year. The company estimates it could resume activity on 19 June. SABIC declares force majeure at Tampico Mexico ABS plant SABIC Innovative Plastics Mexico (SABIC) declared force majeure at its Tampico, Mexico acrylonitrile butadiene styrene (ABS) plant on 23 May. The products affected include CYCOLAC ABS.  This facility has a capacity of 30,000 tonnes. Mexico’s Q1 GDP grows 0.3%, economic activity remains healthy in MarchMexico’s GDP rose by 0.3% in Q1, an acceleration from Q4’s 0.1% quarterly growth, the country’s statistic office Inegi said on Thursday. Brazil’s antitrust authority paves way for Petrobras to shed refinery sales Brazilian state-owned energy major Petrobras has been allowed by the country’s antitrust authority CADE to backtrack on planned refinery sales. Argentina’s manufacturing down nearly 20% in March Argentina’s petrochemicals-intensive manufacturing output fell in March by 19.6% year on year, the country’s statistics office, Indec, said this week. Brazil’s Unigel creditors mull fertilizers divestment The debt restructuring agreement at Unigel, under which the Brazilian chemicals producer’s creditors are to take a 50% equity stake, could result in a divestment of the company's beleaguered fertilizers division. Brazil’s Unigel to give creditors 50% equity stake in debt restructuring Unigel has obtained the support of enough creditors for a debt restructuring plan although it comes at a price as they will be getting a 50% equity stake in the Brazilian chemical and fertilizer producer. Brazil's Braskem restart at Triunfo to kick off petchem hub normalization Braskem has restarted operations at its Triunfo facility in the flood-hit state of Rio Grande do Sul, which will allow other players in the petrochemicals hub to start up their plants as many depend on input from the Brazilian polymers major to operate. INEOS Styrolution declares force majeure at Altamira Mexico facility INEOS Styrolution declared force majeure at its facility in Altamira, Mexico, on 20 May. The products affected include Teluran ABS, Novodur High Heat ABS and Luran ASA. This facility has a capacity of 113,000 tonnes. Chile’s Q1 GDP up 2.3% on strong consumption, manufacturing up 1.1% The Chilean economy started 2024 on a strong footing with GDP growth in the first quarter at 2.3%, year on year, the country’s central bank said on Monday. Volkswagen, Stellantis idle car plants in Brazil, Argentina after floods 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. PRICING LatAm PP international prices stable to up on higher Asian freights International polypropylene (PP) prices were assessed as steady to higher across Latin American countries due to the surge in freight rates from Asia to the region. LatAm PE domestic, international prices steady on sufficient supply, stable demand Domestic and international polyethylene (PE) prices were assessed unchanged this week across Latin American countries on the back of sufficient supply and stable demand.

27-May-2024

HOUSTON (ICIS)–Rates for shipping containers continued to surge, liquid chemical tanker rates were flat to softer, and a possible freight rail strike in Canada is unlikely before mid-July, highlighting this week’s logistics roundup. CONTAINER RATES The global average for shipping containers has surged past the level seen in late January because of unseasonal increases in demand for ocean freight ex-Asia, as shown in the following chart. Rates are being pressured higher because of possible start of a restocking cycle in Europe and as US importers pull forward some peak-season demand on concerns of pending labor issues or additional Red Sea disruptions later in the year, according to Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos. Rates for containers ex-Asia to both US coasts and to Europe are also nearing multimonth highs, as shown in the following chart. Drewry expects the spike in spot freight rates to lessen in the next few months. But Levine pointed to general rate increase (GRI) announcements for June, which he said indicate that carriers are not expecting demand to ease or conditions to improve in the short term. CMA CGM is setting Asia – north Europe rates at $6,000/FEU (40-foot equivalent unit) starting 1 June, and Hapag-Lloyd has announced an Asia – North America Peak Season Surcharge of $600/FEU to start June that will climb to $2,000/FEU mid-month. 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 Rates for liquid chemical tankers ex-US Gulf were flat to lower this week. US chemical tanker freight rates assessed by ICIS were mostly steady to lower as rates fell from the US Gulf (USG) to both Asia and India while also edging lower from the USG to Rotterdam. However, were unchanged from the USG to Caribbean and South America. Overall, the market was subdued entering the long holiday weekend. From the USG to Asia, this market has remained overall soft despite a few larger monoethylene glycol (MEG) parcels being seen in the market. From the USG to Rotterdam, it has remained quiet again this week, with available space for part cargo still open amid a lack of inquiries or interest from charterers. CANADA FREIGHT RAIL LABOR ISSUES A possible freight rail strike in Canada is not likely to begin before mid-July, according to rail carrier Canadian Pacific Kansas City (CPKC). The ongoing uncertainties over the looming strike make it hard for Canadian chemical, fertilizer and other industrial producers, in particular exporters, to prepare for a work stoppage. After about 9,300 unionized conductors, train operators and engineers at freight rail carriers CPKC and Canadian National (CN) earlier this month voted for a strike as early as 22 May. Canada’s federal labor minister referred the matter to the Canada Industrial Relations Board (CIRB), a quasi-judicial tribunal charged with keeping industrial peace in Canada. PORT OF BALTIMORE The full reopening of the Port of Baltimore is closer after the Key Bridge Response Unified Command (UC) refloated the container ship Dali on Monday morning and moved it away from the scene of the collision. The Dali struck the Francis Scott Key bridge on 26 March, causing its collapse, and essentially closing the port. 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). PANAMA CANAL Wait times for non-booked southbound vessels ready for transit fell this week for traffic in both directions, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 3.6 days for northbound vessels and 13.9 days for southbound vessels. With additional reporting by Kevin Callahan and Stefan Baumgarten

24-May-2024

TORONTO (ICIS)–A possible freight rail strike in Canada is not likely to begin before mid-July, according to rail carrier Canadian Pacific Kansas City (CPKC). The ongoing uncertainties over the looming strike make it hard for Canadian chemical, fertilizer and other industrial producers, in particular exporters, to prepare for a work stoppage. After about 9,300 unionized conductors, train operators and engineers at freight rail carriers CPKC and Canadian National (CN) earlier this month voted for a strike as early as 22 May, Canada’s federal labor minister referred the matter to the Canada Industrial Relations Board (CIRB), a quasi-judicial tribunal charged with keeping industrial peace in Canada. The minister wants the CIRB to investigate if disruptions to the supply of certain products (heavy fuel, propane, food, chlorine and other water treatment chemicals) could pose safety and health issues. A legal strike or lockout cannot occur until the CIRB makes a decision. In a statement, CPKC said that while it remains unclear how long it will take for the CIRB to issue a decision, “based on precedent, it is unlikely the parties will be in a position to initiate a legal strike or lockout before mid-July or later”. Labor union Teamsters Canada Rail Conference (TCRC) said that it would have to give 72-hour notice before starting a strike, meaning that the earliest date for a strike to begin is at least 72 hours after the CIRB makes its decision. After TCRC and the rail carriers made no progress in the latest collective bargaining talks ended 21 May, the parties are scheduled to meet again next week to continue negotiations with the assistance of federal mediators. IMPACTS ON CHEMICALS AND FERTILIZERS Freight rail work stoppages can quickly affect logistics in the chemical, fertilizer and other industries, and a simultaneous stoppage at CPKC and CN, which are Canada’s biggest rail carriers by far, would magnify impacts. The uncertainties about the exact timing of strike actions has already created difficulties in planning for sulfur importers and exporters in North America. “We are just waiting to see what will happen. We did quite a bit of sulfur business before the situation about the strike happened, but it is very difficult to know what to do next”, a source at a major exporter of sulfur told ICIS earlier this week. In the fertilizer industry, about 75% of all fertilizer produced and used in Canada is moved by rail and the industry depends on rail to move product across the country and into international markets. In the chemical industry, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail. In the run-up to potential strikes, producers need to prepare, longer strikes can force them to curtail production or shut down plants, and after a strike ends it can take weeks for normal operations to resume. Canada freight rail traffic, ended 18 May: Source: Association of American Railroads With additional reporting by Julia MeehanPlease also visit Logistics: Impact on chemicals and energy Thumbnail photo source: Canadian Pacific Kansas City

24-May-2024

HOUSTON (ICIS)–Canadian fertilizer major Nutrien temporarily suspended operations at its Rocanville, Saskatchewan, mine after a fatality at the railcar loading facility this past weekend. The producer is investigating the 19 May incident and cooperating with the review being undertaken by Saskatchewan Ministry of Labour Relations and Workplace Safety. It expects to recommence the potash mine facility, located approximately 250 kilometres east of Regina, on 22 May. “Following the tragic fatality of one of our colleagues at our Rocanville mine on Sunday, 19 May, authorities have conducted investigations at the site. Nutrien is carrying out its own investigations. We continue to provide support to all those affected by this tragic event,” said Nutrien spokesperson. The United Steelworkers union (USW) did announce that it was one of their members who was involved but the name has not been released. “Our community is in mourning over this tragic incident at our mine site and our thoughts go out to the family, friends and our union family who are deeply impacted,” said Derek Palmer, USW Local 7916 president.

21-May-2024

SAO PAULO (ICIS)–Braskem has restarted operations at its Triunfo facility in the flood-hit state of Rio Grande do Sul, which will allow other players in the petrochemicals hub to start up their plants as many depend on input from the Brazilian polymers major to operate. On Monday (20 May), Braskem said it would restart its units at Triunfo – where the producer has around one-third of its Brazilian production capacity – with the expected process to take around two weeks. A spokesperson for Innova told ICIS that the styrenics producer’s plants at Triunfo were ready to begin operations as soon as Braskem, which supplies Innova with key feedstock benzene, had started up. The spokesperson did not respond to questions about the financial hit Innova would suffer from the Triunfo outage, but said it had been able to its supply customers with material from its other units in Brazil. “For polystyrene [PS], for instance, our Manaus production unit was able to absorb the tonnage previously allocated to Triunfo, so that we could avoid any negative impact on our customers," said the spokesperson. Meanwhile, a source at Innova told ICIS late on Monday that it aims to restart its PS, styrene, and ethyl benzene (EB) plants on 22-23 May. However, due to low production volumes, it would be prioritizing customers in Brazil rather than exporting any material. The restart process, however, may not be without hiccups. A source in Brazil's petrochemicals industry said on Tuesday that highway BR-386, a 525-kilometer road linking Porto Alegre with the interior of the state as well as the south of Santa Catarina state, remains partially blocked. "Drainage is still a problem. The blockage of the BR-386 and the lack of trucks are making distribution very difficult," said the source. "Yesterday [Monday], they managed to dispatch 15 trucks out of Triunfo, while the daily average on normal days stands at around 400 trucks." THE BEGINNING OF THE ENDIn what has become one of Brazil’s worst flooding disasters, the state of Rio Grande do Sul came to a standstill on 29 April with hundreds of roads blocked, widespread landslides and a dam collapse. As of Monday, the floods had caused 157 deaths while another 88 people are unaccounted for, according to Rio Grande do Sul’s emergency services. Over 76,000 people are still taking refuge in shelters, while nearly 600,000 have been displaced from their homes. In the 12-million people state, nearly 2.5 million have been affected by the floods which have badly hurt its economy. Although  petrochemicals plants at Triunfo have not been damaged by the flooding, access to them became almost impossible at the peak of the crisis. This forced companies in the hub to declare force majeure, including Braskem, Innova, and styrene butadiene rubber (SBR) producer Arlanxeo. As of Tuesday, none of the force majeures had officially been lifted. Indorama’s subsidiary in Brazil said it was idling its plants, although it has yet to declare force majeure. A spokesperson for Indorama told ICIS that the situation at its plants remains unchanged from last week. Arlanxeo had not responded to a request for comment at the time of writing. Although petrochemical facilities at Triunfo are restarting, other industrial players are still reeling from the floods with widespread stoppages. Earlier this week, automotive global majors Volkswagen (VW) and Stellantis said they were stopping production at some Brazilian and Argentinian plants due to a lack of input from automotive parts producers in Rio Grande do Sul. Meanwhile, fertilizers players have said to ICIS that demand could be hit, potentially resulting in lower prices as Rio Grande do Sul is also a major agricultural state in Brazil. Analysts at S&P Global said that while petrochemicals producers in the state may be spared from a large financial hit, fertilizers players are likely to be more negatively affected. Front page picture: Braskem's facilities at the Triunfo petrochemicals hub in Rio Grande do Sul Source: Braskem Additional reporting by Bruno Menini

21-May-2024

TORONTO (ICIS)–A potential freight rail strike in Canada has been delayed because the matter has been referred to the Canada Industrial Relations Board (CIRB) and collective bargaining resumes today, Friday 17 May. Strike averted, for the time being Industrial board investigates potential strike impacts Rail strike would hit chemical and fertilizer logistics After about 9,300 unionized conductors, train operators and engineers and other workers at freight rail carriers Canadian Pacific Kansas City (CPKC) and Canadian National (CN) earlier this month voted for a strike, federal labor minister Seamus O’Regan referred the matter to the CIRB, a quasi-judicial tribunal charged with keeping industrial peace in Canada. The minister wants the board to investigate if disruptions to the supply of products such as heavy fuel, propane, food, and chlorine and other water treatment chemicals could pose safety and health issues, in particular in remote communities. The board could decide that rail shipments of certain goods need to be continued during a strike. The board has called on affected groups and organizations to make submissions on the matter by no later than 21 May. Trade group Chemistry Industry Association of Canada (CIAC) said it will make a submission about impacts on its industry. It remains unclear how long it will take for the CIRB to reach a decision. After a decision, the union would have to give 72 hours of notice before starting a strike. 22 MAY STRIKE DEADLINE OFF THE TABLE Labor union Teamsters Canada Rail Conference (TCRC), which previously said that a work stoppage could start as early as 22 May, has acknowledged that during the CIRB process there will be no strike. Confusingly, the union on Friday still posted a notice on its website about a possible 22 May work stoppage as an “upcoming event”. A union official did not respond to an ICIS request for comment. Rail carrier CPKC said in a statement that neither a legal strike nor a lockout can occur until the CIRB makes its decision. It added that the referral to the board has created uncertainty about the timing of a potential work stoppage and interruptions of rail service. CPKC, for its part, has proposed to the TCRC a “maintenance of services agreement” under which both parties agree on services that should be maintained in the event of a strike or lockout, it said. “We believe this would eliminate the need for the CIRB referral process and bring much needed clarity regarding the timing of any potential strike or lockout,” it said. If no such agreement is reached, it is unlikely the parties will be in a position to initiate a legal strike or lockout within the next 60 days, CPKC said. A source at a major sulfur exporter told ICIS the referral to the CIRB was a “stall tactic” by the government that delays the risk of a strike, likely until the end of May. IMPACTS ON CHEMICALS AND FERTILIZERS Freight rail work stoppages can quickly affect logistics in the chemical, fertilizer and other industries, and a simultaneous stoppage at Canada’s biggest rail carriers would worsen impacts by far. In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail. In the fertilizer industry, about 75% of all fertilizer produced and used in Canada is moved by rail and the industry depends on rail to move product across the country and into international markets. In the run-up to potential strikes, producers need to prepare, longer strikes can force them to shut down plants, and after a strike ends it can take weeks for normal operations to resume. Beyond chemicals and fertilizers, rail strikes affect the overall Canadian manufacturing sector. Trade group Canadian Manufacturers and Exporters (CME) has warned that companies could not afford to have their businesses and workers threatened by “a critical supply chain labor disruption”. “More than any other industry, we rely on railways to access critical inputs and bring goods to customers,” CME said in a statement. According to the April purchasing managers’ index (PMI) survey by S&P Global, Canadian manufacturing has been weak for the past 12 months. FREIGHT RAIL DATA For the first 19 weeks of 2024, ended 11 May, Canadian chemical railcar loadings rose 3.9% year on year to 262,089, the American Association of Railroads (AAR) reported this week. Total freight rail traffic – comprising railcar loadings and intermodal units – was at 3,064,779 for the first 19 weeks, up 0.9% from the same period in 2023. Focus article by Stefan Baumgarten Additional reporting by Julia Meehan Please also visit Logistics: Impact on chemicals and energy Thumbnail photo source: Canadian National

17-May-2024

LONDON (ICIS)–Phosphates prices have been under pressure in India recently, while demand is expected to revive soon. Meanwhile, a lack of ammonia spot demand globally is weighing on the market. Phosphates editor Chris Vlachopoulos talks to senior editor Sylvia Traganida about the state of the phosphates market ahead of the International Fertilizer Association (IFA) annual conference (20-22 May).

15-May-2024

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

SAO PAULO (ICIS)–Up to 29 April, Brazil’s President Luiz Inacio Lula da Silva may have been feeling optimistic: the economic recovery seems to have now reached all economic sectors, including manufacturing, where he promised to create more and better paid jobs. However, on 27 April heavy rainfall started in Brazil’s Rio Grande do Sul and two days later, large parts of the state were flooded, hundreds of roads blocked, landslides were widespread, and a dam collapsed. More than 150,000 have been displaced. As of Sunday, the death toll stands at 136 and as many remain uncounted for.  In the 12-million-people state, it is estimated two million have been affected by the floods. While the rains have mostly stopped, many cities remain still at risk of flooding as the stream of several overflown rivers advances towards the sea. The state’s economy has come to a standstill. Not many GDP growth forecasts have been updated yet following the floods, but last week a report by bank Bradesco said output could be flat in 2024, compared with 2023. Rio Grande do Sul is the fifth largest economy in Brazil and an agricultural stronghold, concentrating around 70% of the country’s rice output. It is estimated 10% of it could have been lost, and Lula has said imports will be stepped up to cover for any shortfall of the grain, which is on every Brazilian table, every day. Petrochemicals plants at the Triunfo production hub, near the city of Porto Alegre, remain under force majeure, mostly due to the difficulty of bringing workers in, and fertilizers players fear a hit to demand as the planting season for some crops is set to be affected. KATRINA 2005; RIO GRANDE DO SUL 2024As the days went by, the extent of the disaster was becoming clearer, and the scenes broadcast to the world from Rio Grande do Sul were sadly very similar to those seen in 2005 in the US in the aftermath of Hurricane Katrina. Financial newswire Bloomberg quickly came up with the analogy: Brazil’s worst floods in nearly a century were Lula’s ‘Katrina moment’. US former President George W Bush became the quintessential example of lack of leadership skills in a crisis and, many criticized, lack of compassion for the Black residents of poorer areas of New Orleans, which were practically left to fend for their own. “His [Lula’s] advisers say he’s keenly aware this may be his ‘Katrina moment,’ a reference to the 2005 hurricane that caught US President George W Bush off guard and entered the global lexicon as shorthand for the failure of leadership in a crisis,” said Travis Waldron on 9 May on Bloomberg. “The response to the devastation is particularly important for Lula’s leftist presidency, premised on the philosophy that governments should do more to meet the people’s basic needs. The tragedy has consumed Lula’s government.” Hurricane Katrina caused 1,836 fatalities and the economic damage was estimated at between $97 billion and $145.5 billion. LULA AND HIS PLACE IN HISTORYSeventy-eight-year-old Lula is a true post-modern, spinning-expert politician. Brazilian newspapers often report on his inaccuracies in speeches and, just last week, he and his Workers Party (PT) were under scrutiny after Lula took part in a rally which could be in breach of electoral regulations. Under his spinning, Lula wanted his third term – Lula 3, to differentiate it from the first and second terms between 2003 and 2011 – to be remembered as the Administration that “re-built” Brazil after Jair Bolsonaro’s pandemic-hit and rather divisive term (2019-2023). Facing his biggest test yet, Lula’s response during the first week of the disaster was rather slow. However, as the country enters the third week of the calamity, there are indications Lula is getting it, and has now put his government on turbocharge mode and practically all ministers are focused on Rio Grande do Sul. Following months of almost daily public quarrels between ministers in the coalition cabinet – Lula’s PT does not command a majority in parliament – the renewed sense of common purpose can only be a good thing for a country in crisis. Lula’s global commitments in 2024, with Brazil holding the G20 presidency and hosting the annual summit in Rio de Janeiro in November, and in 2025, when the city of Belem will host the COP30 climate summit, have now taken something of a back seat. Perhaps because of the authorities' slow response, the country at large seemed to be on a wait-and-see mode during the first week, hoping for the best but fearing the worst. WAR EFFORT-LIKEBut when the disaster was apparent both government and citizens alike started a remarkable, war-like almost effort to alleviate the pain of gauchos, as citizens of the state are called in Portuguese. The President finally proposed the declaration of state of emergency, which can speed up the release of funds and the state’s wider machinery to assist in the aftermath of the floods, on 5 May: a week after the floods started. Parliament greenlit the proposal on 7 May, a quick turnaround considering Brazil’s standards. Finance and Treasury ministers have announced special credit lines for citizens and companies, and low paid workers will have access to special subsidies, while payments for other benefits they are entitled to will be brought forward. Lula has visited the state three times. Lula’s left-leaning cabinet does not hide its intention to increase public spending although, as long as taxation remains unchanged, higher proceeds can only come from higher debt, which has slightly increased under Lula 3. That’s another debate for another day. However, in what concerns the current crisis, further increasing the debt burden to speed up Rio Grande do Sul’s recovery will be good debt in any case, the state being one of the most prosperous in the country. As we enter the third week of the floods, for any of the 215 million residents in this subcontinent-like country the disaster is now inescapable and calls for action are everywhere. From workplaces to residential buildings, from schools to universities, from civil associations to companies, there is practically no place where an effort to collect goods, food, and money is not being deployed. And, in a country where poverty levels are still very high, it is humbling to see that some of those who have very little are giving a little bit, something. When tragedy strikes next door, it is hard not to be moved. Some personal thoughts to wrap up. Living in Brazil and wishing this rich country could deliver more of its wealth to many more of its people, one can only hope Lula does not repeat a ‘Bush moment’, not for his own sake or his place in History books, but for the sake of gauchos and Brazilians at large. Hurricane Katrina and, mostly and foremost, the poor way its aftermath was handled left deep scars which are still evident. In 2019, a long 14 years after the Hurricane, this correspondent visited outer areas of New Orleans and, indeed, they were in stark contrast with the quickly refurbished, fancy-again, and tourism-heavy city center. For many residents of the suburbs, most of them Black, President Barack Obama’s promises of reconstruction never materialized, while his successor Donald Trump seemed to ignore the issue altogether, they said. The same cannot happen to the dynamic and prosperous Rio Grande do Sul, an export-intensive and diversified economy accustomed to trade with the rest of the world as much as with other Brazilian states. The state has an edge in several economic sectors, not only in agriculture but also in industry and services. Its GDP per capita stood at Brazilian reais (R) 50,700 ($9,830), versus a national average of R42,250, according to the country’s statistics office IBGE. The poorest state in Brazil, Maranhao in the north, had a GDP per capita of R17,500. Rio Grande do Sul’s ambitions go as far as having some wineries, a rarity in what is considered a Tropical country. It is the only state to produce wine because, given its southernmost latitude, it has an actual winter – of sorts – and wine connoisseurs will know grapes can only thrive with cold in winter months and decent heat in the summer. Brazil needs more states like Rio Grande do Sul, so any setback to its economic development must be averted. Brazilian politicians, often more focused on themselves than in those they are meant to serve, have a golden opportunity to show to the world that this is the new Brazil they have been promising for decades. The steps announced in the second week of the disaster go in the right direction. Brazil’s economy and its macro stability leave room for the state to step in and support citizens and companies in Rio Grande do Sul at their time of most need. The political tits-for-tats of the first week, with exchange of futile accusations between the conservative-led state and the left-led Federal Administration, while on the ground the disaster was exploding, cannot be repeated. “Public anger over the handling of the COVID-19 pandemic by his predecessor, Jair Bolsonaro, helped propel Lula to a narrow victory in Brazil’s 2022 presidential contest. Now he faces a calamity of his own,” concluded Bloomberg’s Waldron. “Lula’s response could help him regain public approval of his leadership — or propel his presidency into a downward spiral that he can’t escape.” ($1 = R5.16) The second part of this article, to be published on Wednesday 15 May, will look at Brazil’s climate change-related challenges; whether extreme and rare events like the floods in Rio Grande do Sul could become more common; and the country’s preparedness for such scenario Insight by Jonathan Lopez

13-May-2024