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Used in a wide variety of ways, sulphur has a part to play in the manufacture of many high-volume products, including car batteries and fertilizers. To correctly anticipate and maximise sulphur market opportunities, commodity traders must scrutinise downstream activity and international trade flows. Refinery output rates determine availability, and it is essential to monitor freight rates.

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Proman Stena Bulk launches methanol-fueled chemical tanker in Singapore

SINGAPORE (ICIS)–Proman Stena Bulk, a joint venture between Sweden-based tanker firm Stena Bulk and Swiss methanol producer Proman, on Thursday officially launched its sixth methanol-fueled joint venture chemical tanker in Singapore. The 49,900-deadweight tonnage (DWT) vessel called Stena Prosperous will be bunkered with a 20:80 green methanol and conventional methanol blend, they said in a joint statement. The fuel blend used by the vessel delivers carbon dioxide equivalent (CO2e) savings of 31% compared with a ship that runs on Very Low Sulphur Fuel Oil (VLSFO), with lower emissions of particulate matter (PM), sulphur oxides (SOx), and nitrogen oxides (NOx). Stena Prosperous is the last of six vessels in Proman Stena Bulk’s joint venture fleet of methanol-fueled tankers order placed in 2019, with the first ship delivered in June 2022. “With its cleaner burning qualities, methanol delivers immediate air quality benefits today, and the pathway demonstrated by our 20/80 blending strategy here in Singapore means that ship owners are also increasingly seeing it as a viable marine fuel for the future,” Proman CEO David Cassidy said. All six vessels running on methanol are now in commercial operation, with two on long-term time-charter. The fleet is currently crewed and operated by Stena Sphere company Northern Marine Group, which has highlighted that technical similarities of the tankers to conventionally fueled vessels mean they do not require a completely new set of operating procedures. Using methanol instead of conventional marine fuels virtually eliminates particulate matter and SOx, and cuts NOx by up to 80% during combustion. Technologies such as carbon capture, storage and utilization used in the production process cut emissions further, and green methanol produced from biogas can bring more than 90% greenhouse gas (GHG) emissions savings. Additional reporting by Keven Zhang


PODCAST: Europe sulphur, sulphuric acid tightness key concerns for H2 2024

LONDON (ICIS)–It is rare to see sulphur or sulphuric acid take center stage in Europe when discussing a lack of feedstock for downstream petrochemicals – but the tight supply of both have been key talking points in Q1 and Q2. Senior editor for sulphuric acid, Andy Hemphill, and Julia Meehan, managing editor of ICIS Fertilizers, take a look at the origins of this current tightness and explore any options the industry has to counter it.


Canadian labor union seeks rail strike mandates, causing concerns in chemical industry

TORONTO (ICIS)–The Teamsters Canada Rail Conference (TCRC) labor union is seeking to obtain strike mandates at rail carriers Canadian National (CN) and Canadian Pacific Kansas City (CPKC). TCRC, which represents about 9,000 CN and CPKC engineers and conductors, plans to hold votes to grant strike mandates to the union from 8 April to 1 May. A source at a major sulphur supplier in Canada told ICIS on Wednesday that a looming rail strike was a “real and serious worry” for the industry. "The Teamsters have consolidated several unions at both CPKC and CN," the source said. "On top of that, union contract dates are no longer staggered. So this has been set up for a showdown," it added. The two railroads account for the bulk of freight rail traffic in Canada. In Canada’s chemical industry, producers rely on rail to ship more than 70% of their products, with some exclusively using rail. In the run-up of strikes, producers have to make preparations. Longer strikes can force plant shutdowns and after a strike ends it can take weeks for normal operations to resume. TCRC said that a strike mandate would allow it to call a strike in the event it cannot reach new collective agreements with the rail carriers. The agreements expired on 31 December 2023. The union said that CPKC rejected the majority of its demands for improved pay and working conditions and that CN was refusing to discuss the demands of the union members. Officials at CN and CPKC could not immediately be reached for additional comment. In an update last month, CN said it was in negotiations with TCRC, with the support of federal conciliators. Additional reporting by Julia Meehan Thumbnail photo source: CN


TOPIC PAGE: Sustainability in the fertilizers industry

On this topic page, we gather the latest news, analysis and resources, to help you to keep track of developments in the area of sustainability in the fertilizers industry. LATEST NEWS HEADLINES New urea application rules to be implemented in England from 1 April By Deepika Thapliyal 27-Mar-24 LONDON (ICIS)–In England, famers will only be able to apply solid or liquid urea that is treated with an inhibitor from 1 April, according to new regulations from the Department for Environment, Food & Rural Affairs (Defra) that come into force next month. UPM Biochemicals launches new range of bio-based plant stimulants By Sylvia Traganida 27-Mar-24 LONDON (ICIS)–UPM Biochemicals has launched a new range of bio-based plant stimulants which is an alternative to fossil raw materials-based products, the Finnish paper and renewable chemicals firm said on Tuesday. Mabanaft signs letter of intent for supply of green ammonia from Canada By Sylvia Traganida 19-Mar-24 LONDON (ICIS)–Germany-headquartered energy firm Mabanaft has signed a letter of intent (LOI) with US-based Pattern Energy for the supply of green ammonia to Mabanaft. Yara Growth Ventures invests in electrolysis technology for low-cost renewable hydrogen By Sylvia Traganida 08-Mar-24 LONDON (ICIS)–Norwegian fertilizer major Yara has invested in Danish electrolysis technology company Dynelectro through its corporate venture capital team Yara Growth Ventures. Yara signs agreement with Acme Cleantech subsidiary on green ammonia By Sylvia Traganida 01-Mar-24 LONDON (ICIS)–Norwegian fertilizer major Yara has signed an agreement with GHC SAOC for supply of ammonia with reduced carbon emissions from Acme to Yara on a long-term basis. Idemitsu to join US clean ammonia project By Stefan Baumgarten 27-Feb-24 LONDON (ICIS)–Idemitsu Kosan has agreed to join a 1.2 million tonne/year clean ammonia project that Mitsubishi Corp and Proman plan to develop at Lake Charles, Louisiana, US, it said on Tuesday. Germany’s Heraeus invests in Japanese ammonia tech company By Stefan Baumgarten 22-Feb-24 LONDON (ICIS)–German technology group Heraeus has invested an undisclosed amount in Tsubame BHB, a Japanese company that has developed a precious metal-based technology for decentralized ammonia production. Malaysia’s PCG, Sarawak Petchem agree to study low-carbon ammonia and urea plant By Nurluqman Suratman 21-Feb-24 SINGAPORE (ICIS)–Malaysia’s PETRONAS Chemicals Group (PCG) and methanol producer Sarawak Petchem on Wednesday signed an agreement for a joint feasibility study aimed at establishing a low-carbon ammonia and urea production facility in Bintulu, Sarawak. Egypt’s Helwan signs agreement to produce black urea By Deepika Thapliyal 20-Feb-24 LONDON (ICIS)–In Egypt, Helwan has signed an agreement with SML-INNO UK Ltd to set up the world's first vertical integrated unit to produce black urea, with a capacity of 130,000 tonnes annually, the company said today. EU eases climate proposals after widespread farmer protests By Chris Vlachopoulos 07-Feb-24 LONDON (ICIS)–European Commission President Ursula von der Leyen announced on Tuesday that the EU has agreed to ease key demands in its climate proposal plans, following intense protests from farmers. Tecnimont awarded engineering contract for Portugal green hydrogen, ammonia plant By Graeme Paterson 05-Feb-24 LONDON (ICIS)–Tecnimont has been awarded an engineering contract to develop an integrated green hydrogen and green ammonia plant at Sines, Portugal, its parent company Maire said. EU CARBON BORDER ADJUSTMENT MECHANISM (CBAM) EXPLAINED What is it? The risk of carbon leakage frustrates the EU’s efforts to meet climate objectives. It occurs when companies transfer production to countries that are less strict on emissions, or when EU products are replaced by more carbon-intensive imports. This new mechanism would counteract this risk by putting a carbon price on imports of certain goods from outside of the EU. How will it work? EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules. Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods, the corresponding cost can be fully deducted for the EU importer. This will help reduce the risk of carbon leakage by encouraging producers in non-EU countries to make their production processes greener. A reporting system will apply from 2023 with the objective of facilitating a smooth roll out and to facilitate dialogue with non-EU countries. Importers will start paying a financial adjustment in 2026. How is the fertilizer industry affected? The fertilizer industry is one of the sectors to fall under the CBAM. The more energy-intensive nitrogen fertilizers will be affected most in the sector by the mechanism. NEW UREA APPLICATION NORMS IN ENGLAND The UK’s Department for Environment, Food & Rural Affairs (DEFRA) has imposed new regulations on urea application in England. Famers will only be able to apply solid or liquid urea that is treated with an inhibitor from 1 April. The move is aimed to reduce ammonia emissions, and would increase costs for farmers by an estimated £40/tonne. The new rules apply to any fertilizer that contains 1% or more of urea nitrogen, with applications of solid urea or liquid (urea ammonium nitrate) fertilizer from 1 April having to include a urease inhibitor Untreated solid urea or liquid UAN fertilizer can be applied between 15 January to 31 March each year. Untreated liquid UAN fertiliser can be applied after 1 April if agronomic justification is provided by a certified fertilizers advisor, mentioning ammonia losses will be at or below the level of when a urease inhibitor is included. Foliar urea applications targeting the crop, using normal spray nozzles do not require a urease inhibitor. The implementation of the Defra regulations was delayed by two years due to higher fertilizer prices and lack of supply following the covid pandemic and the Ukraine war. PREVIOUS  NEWS HEADLINES EU proposes relaxation in policy following farmer protests Biden Administration invests $207m in domestic fertilizer and clean energy endeavours Brazil’s state of Ceara, Bp sign MoU for green hydrogen site  Atome Energy in talks with buyers for green fertilizer from Paraguay unit Sweden's Cinis targets Asia potash market with Itochu partnership Helwan selects Eurotecnica's Euromel G5 technology for new melamine facility in Egypt India’s Adani Group plans $24bn green energy park; RIL to commission giga complex INPEX and LSB pick technology for US ammonia project Bayer partners with energy firms on hydrogen cluster in Germany S Korean group picks KBR tech for Malaysian green ammonia project Abu Qir signs MoU for green ammonia project in Egypt Yara aims to launch first container ship to run off clean ammonia India’s Odisha state approves green hydrogen, ammonia, methanol projects ADM announces launch of regenerative agriculture program in Brazil Fertiglobe completes first renewable ammonia shipment with carbon certification Allied Green Ammonia picks Topsoe’s tech for Australia project Germany’s VNG looks to secure offtake from Norwegian low carbon ammonia plant Gentari enters into agreement with AM Green to invest into a green ammonia delivery platform ITOCHU Corporation, Orascom Construction sign MOU for development of ammonia bunkering in Suez Canal India developing port infrastructure for green hydrogen exports S Korea, Saudi Arabia firms sign 46 pacts, includes blue ammonia project INSIGHT: CBAM reporting begins, fertilizer exporters to EU challenged to account for carbon KBR to supply green ammonia tech to Madoqua Power2X site in Portugal Germany’s SOM to build green hydrogen, ammonia facility in Brazil’s Piaui state US ADM and Syngenta sign MoU to collaborate on low carbon oilseeds to meet biofuel demand Tecnicas Reunidas, Allied Green Ammonia to build green hydrogen and green ammonia plant in Australia Australian fertilizer producer Orica accelerates climate change targets Nestle, Cargill and CCm Technologies launch joint UK trial on sustainable fertilizer EnBW acquires stake in planned Norwegian ammonia plant  Yara Germany signs agreement for decarbonisation of cereal cultivation using green fertilizers Hyphen, ITOCHU ink MoU to explore potential Namibia hydrogen collaboration  INSIGHT: BASF grapples with demand trough, slow road back SABIC AN ships low-carbon urea to New Zealand US Cargill and John Deere collaborate to enable revenue for farmers adopting sustainability Canada’s Lucent Bio announces approval of biodegradable nutrient delivery patent Aker, Statkraft’s 10-year PPA to spur European renewable ammonia push further BASF, Yara Clean Ammonia to evaluate low-carbon blue ammonia production facility in US Gulf Coast Yara Clean Ammonia, Cepsa to launch clean hydrogen maritime corridor EU details CBAM reporting obligations Saudi Arabia’s Ma’aden exports its first low-carbon blue ammonia shipments to China US Bunge and Nutrien Ag announce alliance to support sustainable farming practices Maire subsidiary Stamicarbon wins US green ammonia engineering contract India’s IFFCO launches liquid nano-DAP fertilizer EU Parliament backs CBAM, emissions trading measures OCP granted €100m green loan to build solar plants at Morocco facilities EU unveils plans to tackle greenwashing India’s IFFCO and CIL to manufacture nano DAP for three years USDA awards Ostara funds to boost sustainable phosphate fertilizer output Canadian prime minister confirms fertilizer emission goal is voluntary US fertilizers industry increases carbon capture in 2021 – TFI Indian president calls for reduction in chemical fertilizer use IFFCO plans to export nano urea to 25 countries Amman selects Elessent Clean Technologies for Indonesia sulphuric acid plant Lotte Chemical forms clean ammonia consultative body with RWE and Mitsubishi Corporation Global 2020-2021 specialty fertilizer demand growth led by north America, Asia BASF and Cargill extend enzymes business and distribution to US Saudi Aramco awards sulphur facilities overhaul contract to Technip India sets green hydrogen targets for shipping, oil & gas, fertilizer sectors Germany misses climate target despite lower energy consumption TFI reacts to US Congress passing the Water Resources Development ActHelm becomes a shareholder in UK bio-fertilizer company Unium Bioscience Yara inks deal to deliver fossil-free green fertilizers to Argentina Canadian firms plan fuel cell generator pilot using green ammonia Deepak Fertilizers awards contract to reduce emissions, increase productivity Saudi Aramco launches $1.5bn sustainability fund to support net zero ambition CF Industries and ExxonMobil plan CCS project in Louisiana Canada’s plan to cut fertilizer emissions is voluntary – minister Canada’s fertilizer emission goal raises food production concerns Uniper, Vesta to cooperate on renewable ammonia site in the Netherlands German Uniper to work with Japan’s JERA on US clean ammonia projects ADNOC ships first cargo of low-carbon ammonia to Germany US Mosaic and BioConsortia expand collaboration to microbial biostimulant IMO deems Mediterranean Sea area for sulphur oxides emissions control Canada's Soilgenic launches new enhanced efficiency fertilizers technology for retail Austria's Borealis aims to produce 1.8m tonnes/year of circular products by 2030 European Parliament rejects proposed carbon market reform IFA ’22: southern Africa looks to bio-fertilizer as cheaper, sustainable option IFA '22: Indian farmers will struggle to embrace specialty fertilizers – producer Canadian Nutrien plans to build world’s largest clean ammonia facility in Louisiana Japan's JGC Holdings awards green ammonia plant contract to KBR Bayer to partner with Ginkgo to produce sustainable fertilizers Australia Orica and H2U Group partner on Gladstone green ammonia project Canada sets tax credit of up to 60% for carbon capture projects UK delays urea restrictions to support farmers as fertilizer costs at record high EU states agree to back carbon border tax Yara to develop novel green fertilizer from recycled nutrients USDA announces plans for $250m grant programme to support American-made fertilizer Canada seeks guidance to achieve fertilizer emissions target Fertilizer titan Pupuk Indonesia develops hydrogen/blue ammonia business India launches green hydrogen/ammonia policy, targets exports Canada AmmPower to develop green hydrogen and ammonia facility in Louisiana US DOE awards grant to project to recover rare earth elements from phosphate production Fertiglobe, Masdar, Engie to develop green hydrogen for ammonia production Czech Republic’s Spolana enhances granular AS production India’s Reliance to invest $80bn in green energy projects Yara, Sweden’s Lantmannen aim to commercialise green ammonia by 2023 Novatek and Uniper target Russia to Germany blue-ammonia supply chain Fertz giant Yara goes green with electrification of Norwegian factoryCanada Arianne Phosphate exploring use of phosphate for hydrogen technology FAO and IFA renew MoU to promote sustainable fertilizer use Sumitomo Chemical, Yara to explore clean ammonia collaboration Sri Lanka revokes ban on imports Tokyo scientists convert bioplastic into nitrogen fertilizer Aramco plans Saudi green hydrogen, ammonia project China announces action plan for carbon peaking & neutrality Saudi Aramco targets net zero emissions from operations by 2050 Fertiglobe goes green with Red Sea zero-carbon ammonia pro Australian fertilizer major Incitec Pivot teams up for green ammonia study INTERVIEW: BASF to scale up new decarbonisation tech in second half of decade – CEO India asks fertilizer companies to speed up production of nano DAP Japan's Itochu set to receive first cargo of blue ammonia for fertilizer use Norway's Yara acquires recycled fertilizers maker Ecolan Bayer Funds US start-up aims to cut nitrogen fertilizer use by 30% BP: Green ammonia production in Australia feasible, but needs huge investment Origin and MOL explore shipping green ammonia from Australia India’s IFFCO seeks to export nano urea fertilizer Sri Lanka reinstates ban on import of chemical fertilizers Nutrien to cut greenhouse gas emissions 30% by 2030 RESOURCES IFA – Fertilizers and climate change  TFI – Sustainability report 


OUTLOOK '24: Europe mixed plastic waste demand weakness to continue

LONDON (ICIS)–Demand for mixed plastic waste in Europe from the mechanical recycling and burn-for-energy sectors is expected to remain weak into 2024 amid ongoing challenging macroeconomic conditions. This has resulted in reduced industrial output which has blunted demand for burn-for-energy volumes, and from key mechanical recycling end-use sectors such as construction. For burn-for-energy markets, only the defence sector has seen robust demand in 2023 owing to ongoing geopolitical tensions. For mechanical recyclers, the low price of mono-material bales and falling prices for most finished recycled polyolefin flake and pellet grades in 2023 have removed the economic incentive to produce from mixed polyolefin bales that had been seen in 2022. This is expected to continue to be the case while bearish conditions persist across mechanical recycling markets. Estimations of how long this will be vary from player to player, although some sources expect that demand will remain limited at least through H1 2024. Buying interest from chemical recyclers has remained firm throughout 2023, but the market remains too small to impact the overall supply/demand balance for mixed plastic waste. Nevertheless, the sector's market share of mixed plastic waste – and mixed polyolefins in particular – is expected to increase in the mid-term as additional capacity comes on stream. While chemical recycling can process waste types that it would be difficult or impossible for mechanical recyclers to use, it is a myth that there is no link between the input waste quality and output quality of chemical recyclers, and that chemical recyclers can use any form of waste. For example, pyrolysis-based processes typically aim to limit chlorine content in bales due to corrosion risks; polyethylene terephthalate (PET) content in bales because it doesn’t pyrolyse and it creates oxygenation; and nylon and flame retardants, which also oxygenate the process. Pyrolysis is the dominant form of chemical recycling in Europe. They also typically aim to minimise moisture content, because loose water molecules in the reactor can cause changes to pressure values. The production of pyrolysis oil requires an inert atmosphere (i.e. heating in the absence of oxygen). Any sorting that needs to be done to remove the presence of these materials in the input bale adds additional cost and slows throughput. As a result, pyrolysis-based chemical recyclers typically opt for mixed polyolefin bales (with a typical minimum 80% polyolefin content, and often a minimum 90% polyolefin content) as an input source. Coupled with this, the quality of the input waste has a direct impact on the quantity and type of impurities present in the pyrolysis oil output and the boiling point of the pyrolysis oil. Boiling point, chlorine content, sulphur, fluorine, nitrogen and oxygen are among the key determiners of pyrolysis oil prices. Pyrolysis oil can be – and often is – run through an upgrader or purifier to enhance its properties, but the quality of input waste has an impact both on yield and quality – and therefore profitability – throughout the pyrolysis chain that is often under-discussed. Because of the link between input and output quality in pyrolysis oil, 2023 had begun to see the emergence of new grades of mixed polyolefins – trading at a premium to standard grades – specifically targeting the needs of pyrolysis-based chemical recyclers. Multiple waste managers have confirmed in Q4 2023 that they are developing projects to provide bespoke mixes. This is in response to some of the challenges chemical recyclers have found with pre-treatment and sorting on site, particularly connected to the need to continuously adapt processes to account for continually shifting feedstock mixes. Pre-treating and sorting at waste manager level creates economies of scale and prevents the slowdown in throughput sometimes associated with chemical recyclers sorting on site. Chemical recycling players continue to explore the use of pellets and agglomerates because they help: Limit the impurities such as sulphur, fluoride, oxygen, chlorine and nitrogen in finished pyrolysis oil Enable placing feedstock straight into the reactor and thereby save on capital expenditure Avoid slowing throughput and the expense of onsite sorting Avoid degradation and allow players to stockpile material ahead of plant scale-ups This is a trend expected to increase in the mid-term, alongside the underlying growth of the chemical recycling sector, and which has the potential to radically reshape the market in the mid-term. Focus article by Mark Victory The introduction of three new pyrolysis oil spot price quotes in to its recently renamed Mixed Plastic Waste Europe and Pyrolysis Oil Europe pricing service has made ICIS the first market information service to price chemical recycling outputs. With our pre-existing mechanical recycling, waste bales, and virgin price coverage, ICIS gives you the complete picture across the value chain. For more information on the new prices please contact Mark Victory at Image credit: Shutterstock


Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 24 November. ExxonMobil to grow petchems by leveraging innovation, integration and scale – president ExxonMobil is committed to growing its global petrochemicals and plastics business as it leverages innovation, integration and scale for lasting competitive advantage, said the head of its chemicals and refining division. Big Three US automakers eye return to full production after union ratifies new contracts The Big Three automakers in the US said they are ready to move forward and reach full production schedules in the coming days now that membership in the United Auto Workers (UAW) union have ratified new contracts and ended a six-week strike. Canada to appeal court ruling that overturned move to list plastics as toxic Canada’s federal government is planning to appeal a court decision that overturned a government measure listing plastic manufactured items (PMIs) as toxic. Freight train derails in Kentucky, spilling molten sulphur and forcing evacuations A CSX freight rail train derailed on Thursday morning near Livingston, south of Lexington, Kentucky, involving 16 railcars, including two molten sulphur railcars that breached and caused a fire, officials said. INSIGHT: Argentina’s petchems brace for deep downturn as Milei delivers shock therapy Argentina’s petrochemicals players are bracing for a severe and potentially year-long economic contraction as President Elect Javier Milei implements his shock recipes for the country’s beleaguered economy.


Freight train derails in Kentucky, spilling molten sulphur and forcing evacuations

HOUSTON (ICIS)–A CSX freight rail train derailed on Thursday morning near Livingston, south of Lexington, Kentucky, involving 16 railcars, including two molten sulphur railcars that breached and caused a fire, officials said. When molten sulphur burns it is known to release sulphur dioxide. The Kentucky government declared an emergency and authorities were encouraging people in Livingston to evacuate. The incident occurred at around 02:23 hours local time and by early Thursday morning about 50% of the fire had been contained. However, residents of the area who had evacuated were not being allowed to return home yet, local media reported. CSX is deploying specialised equipment to conduct air monitoring in the area and is working with emergency teams as they continue to assess the situation, the rail carrier said. CSX has secured lodging at Mt Vernon, Kentucky, for residents in proximity to the incident who are concerned about their safety, it said. In addition, the company is working with local restaurants to provide meals for affected residents. CSX is covering the cost for both lodging and food, it added. Kentucky's governor has activated the state’s price gouging laws to protect families from "grossly overpriced" goods and services during the emergency, the government said. Front page picture: A train operated by CSX; archive image Source: CSX Additional reporting by Tracy Dang 


Crude pricing could jump further in H2, demand growth to slow in 2024 – IEA

LONDON (ICIS)–Crude pricing could rise further into autumn as deeper OPEC+ production cuts coincide with consumption highs and a slight uptick to macroeconomic conditions, but demand growth could slow dramatically next year, according to the International Energy Agency (IEA). Global oil demand is at all-time highs at present on the back of summer air travel, increasing China petrochemicals production activity and a higher proportion of oil in the power generation fuel mix, the IEA said. Consumption is expected to have increased by 2.2m bbl/day this year to record demand of 102.2m bbl/day, with China accounting for 70% of that growth, according to the IEA. Demand averaged 103m bbl/day in July and August could see further highs, the agency added. The picture could be different for 2024 as the post-pandemic economic rebound momentum slows, exacerbating ongoing macroeconomic torpor. The growth of the electric vehicle market and stricter energy efficiency standards are also expected to slow the rate of crude demand growth, according to the IEA, forecasting demand growth of around 1m bbl/day next year. “With the post-pandemic recovery having largely run its course and as the energy transition gathers pace, growth will slow to 1m bbl/day in 2024,” the IEA said in its monthly oil market report. Despite cooler conditions in the mid-term, the heat of growth at present, combined with outages and reduced capacity on the back of extreme weather has left refiners struggling to keep up demand. “While naphtha remains under pressure, due to competition from cheap LPG and weak petrochemical activity outside of China, high-sulphur fuel oil has tightened significantly as refiners replace lost OPEC+ crude with lighter and sweeter grades,” the IEA said. Brent crude pricing is trading close to the highest levels of the year at around $87/bbl, with futures values increasing $11/bbl over the course of July. OPEC+ supplies fell to the lowest level in two years as voluntary additional cuts by Saudi Arabia came into play, with bloc production down 2m bbl/day from the start of the year, partially balanced by 1.6m bbl/day in new non-OPEC supplies but limited additional gains expected the rest of 2023. Crude inventories have fallen sharply as a result of tighter supply and demand highs, with OECD stocks currently over 100m barrels below five-year average levels.  Expectations that Russia and Saudi Arabia cuts will continue through September expected to tighten balances further. The OPEC bloc has substantial capacity to increase supplies but, if current production targets are kept to, drawdowns on inventories could continue through the rest of the year, tightening supplies and raising prices. “An ample OPEC+ spare capacity cushion of 5.7m bbl/day means there is significant scope for the alliance to raise output later in the year,” the IEA said “But if the bloc’s current targets are maintained, oil inventories could draw by 2.2m bbl/day in 3Q23 and 1.2m bbl/day in the fourth quarter, with a risk of driving prices still higher.,” the agency added. Thumbnail picture source: Jose Bula Urrutia/Eyepix Group/Shutterstock


Dow US Louisiana EO unit fire could cause significant shortages of MEA, DEA, TEA

HOUSTON (ICIS)–As a result of the recent fire at Dow’s Plaquemine, Louisiana, ethylene oxide (EO) unit, and subsequent force majeure on EO, significant shortages for EO derivatives could occur. According to market participants, repairs on the EO unit could take as long as six months to finish. As a result of this, EO derivative supply shortages could be significant, specifically for ethanolamines. The EO unit transports EO via pipeline to an ethanolamines producer. This ethanolamines capacity accounts for roughly 25% of monoethanolamines, (MEA), diethanolamines (DEA) and triethanolamines (TEA) capacity in the US, according to the ICIS Supply & Demand Database. With demand solid for fracking and MEA triazine for sulphur scavengers, supply shortages could be imminent for the market. However, downstream surfactants supply is not expected to be negatively impacted by this fire and subsequent production disruption. Surfactants demand is down 10-20% year over year, according to market participants. The majority of EO contracts are formula-based, and price movement comprises 80% of the change in the ethylene price and an additional conversion fee, or adder. Like ethylene, EO contracts are settled at the beginning of the month for the previous month’s price. EO is largely used to make monoethylene glycol (MEG), a key feedstock for polyethylene terephthalate (PET). EO’s secondary outlet is in surfactants. Other EO derivatives include glycol ethers, polyols for polyurethane systems, polyethylene glycols and polyalkylene glycols. EO producers in the US include BASF, Dow, Eastman Chemical, Formosa, Indorama Ventures, Lotte Chemical, LyondellBasell, Sasol and Shell Chemical.


Asia-US container rates plunge; freight recession persists amid lack of peak season demand bump

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US plunged while spot trucking rates fell again as consumer demand for goods remains weak, and Canadian dock workers voted to strike beginning 1 July, highlighting this week’s logistic roundup. Container rates continue to fall as there has been no significant increase in volumes this month, leading some market analysts to predict there will not be a seasonal demand bump in the short term. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said rates have fallen after attempts by shipowners to boost rates earlier this month via general rate increases (GRIs). Asia-US West Coast rates are 87% lower than the same time last year. Rates to the East Coast are 80% lower than year-ago levels, and are being supported in part by slower transit times through the Panama Canal. But recent rains in the Panama Canal region have allowed the Panama Canal Authority (PCA) to cancel additional draft restrictions meant to go into effect shortly which could have further limited the canal’s capacity, and possibly pushed rates up. Levine said rates for US exports have also fallen recently, both on easing volumes and on competition among carriers to increase export bookings as import rates that typically subsidise backhaul costs lag. US West Coast to Asia rates have fallen more than 20% since March although they remain 6% above 2019. Container ships are relevant to the chemical industry because, while most chemicals are liquids and are shipped in tankers, container ships transport polymers such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. LIQUID CHEMICAL TANKERS Rates for liquid chemical tankers from the US continue to soften after surging in the first quarter of 2022, when Russia invaded Ukraine which led to a shift in global trade. Rates are well off the peaks seen in the first quarter of this year, but they remain higher than they were in late 2021. Ship owners along the Transatlantic route said the market remains quiet for partial cargoes and they have been lowering freight expectations to secure business, or to allow traders an edge to generate some spot transactions. There remains ample space in July to both Europe and the Mediterranean. MORE LABOUR STRIFE About 7,000 port workers at Vancouver and other ports in Canada’s British Columbia province are set to go on strike on 1 July, the International Longshore and Warehouse Union Canada (ILWU) confirmed on Friday. The previous industry wide collective agreement between ILWU and the British Columbia Maritime Employers Association (BCMEA) expired on 31 March. TRUCKING The trucking market remains soft, leading one industry veteran to tell Craig Fuller, founder and CEO of supply chain market intelligence provider Freightwaves that “this is the most difficult market I have ever been in”. During a webinar on the state of freight, Fuller said the present state of the industry is worse than in the financial crisis of 2008. “I know this is all depressing and I wish I had better things to say – I would rather be the bullish person,” Fuller said. “But unfortunately, I do not have good news to share.” Fuller said the market has added 25% capacity since 2019, but that demand has fallen so dramatically that it is more of a volume problem. “Everyone was bullish about the second half,” Fuller said. But he thinks retailers will be hesitant to build up inventories even after destocking. “Right now, we are back to where we were, and they are starting to run a more normalised supply chain and facing these significant headwinds,” Fuller said. “There is nothing to suggest that they are going to be replenishing inventory. So, I think the second half story can be more challenging than the first.” RAILROADS Crews have been working in Montana to remove several rail cars that ended up in the Yellowstone River after a train derailment on 24 June. The derailed cars, part of a Montana Rail Link (MRL) train, were carrying hydrosulfide, asphalt liquefied petroleum, molten sulphur and scrap metal, the US Environmental Protection Agency (EPA) said. As of Friday, seven of the 10 railcars that entered the river have been removed. In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. And while most chemicals are liquids and are moved in tank cars, containers are used to transport polymers such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. Focus article by Adam Yanelli Additional reporting by Stefan Baumgarten


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