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More US Gulf oil platforms shut-in, Port of Tampa closed as Hurricane Ian targets Florida

HOUSTON (ICIS)–Hurricane Ian gained strength during the day on Tuesday, leading more oil and gas producers to evacuate offshore drilling platforms in the US Gulf as the storm maintained its path toward Tampa, Florida. The Bureau of Safety and Environmental Enforcement (BSEE) said that as of mid-day personnel have been evacuated from 12 production platforms, which represent about 2.3% of the 521 manned platforms in the Gulf. BSEE said personnel have been removed from two non-dynamically positioned (non-DP) rigs, and that four DP rigs have moved off location and out of the storm’s path as a precaution. The non-DP rig evacuations equal 15.4% of the 13 rigs in the Gulf, and the DP rig represent about 21% of the 19 rigs that operate in the Gulf. From operator reports, BSEE estimates that about 11% of the current oil production and 8.56% of the natural gas production in the US Gulf has been shut in. The Port of Tampa closed on Tuesday morning, according to GAC Hot Port News. As of mid-afternoon on Tuesday, Ian was about 265 miles (430km) south of Sarasota, Florida, with maximum sustained winds of 120 miles/hour, making it a Category 3 storm based on the Saffir-Simpson scale. Saffir-Simpson Hurricane Wind Scale Category Wind speed 1 74-95 miles/hour 2 96-110 miles/hour 3 111-129 miles/hour 4 130-156 miles/hour 5 157+ miles/hour The US fertilizer industry is watching the tropical threats closely as Tampa is a key centre with both trading, shipping and production operations in the area. Major domestic producers, including both Yara and Mosaic, have facilities in the surrounding region. Mosaic said its North America Incident Command Team started coordinating with operating sites last week in advance of Hurricane Ian. "We continue monitoring weather updates while completing preparations at our phosphate mining and production facilities in Florida as well as sites in Louisiana," a Mosaic spokesperson said. "Employees at our headquarters in downtown Tampa and at other locations in Florida are working remotely so they can be safe and focus on their own personal preparation. We’re also communicating with our customers globally so they’re aware of any impact to services." Ascend Performance Materials has a plant in Pensacola, Florida, that produces nylon 6,6 as well as feedstocks hexamethylene diamine (HMD) and adipic acid, according to the ICIS Supply and Demand Database. Pensacola is located on the far western edge of the state and is not within the projected path of the storm. Huntsman International produces maleic anhydride in Pensacola, and Reichhold Chemicals has production sites in Pensacola and in Jacksonville, Florida. "Our Pensacola site is operating normally at the current time, but we are watching the storm and are prepared to take necessary precautions if it approaches the site," according to a Huntsman company statement. Jacksonville is on the Atlantic Coast side of Florida and is within the projected path. However, the storm could lose intensity once it makes landfall. Hexion produces epoxy resins and phenolic resins in Lakeland, Florida, according to the database. Lakeland is about 35 miles east of Tampa. Railroads CSX and Florida East Coast Railway (FECR) operate in the region, but as of mid-afternoon neither had announced any service updates. The railroads did not immediately respond to requests for comments. Additional reporting by Al Greenwood, JT Strasner, Tarun Raizada and Sylvia Tranganida

27-Sep-2022

INSIGHT: ‘King Dollar’ poses growing threat to US chems, global economy

NEW YORK (ICIS)–The relentless surge in the US dollar to record or multi-decade highs against European and Asian currencies will be a greater headwind for US-based chemical company earnings going forward. This is especially the case as major US chemical companies have meaningful exposure to global markets, not only through exports but production assets on the ground. The latest spike in the US Dollar Index, which measures the dollar versus a basket of currencies, brings it up a stunning 22% from a year ago and up 19% just this year – a gargantuan move in the usually pedestrian foreign exchange (FX) market. On 25 September, the US dollar hit a record high against the British pound and a more than 20-year high against the euro. Key Asian currencies – the Chinese yuan, Japanese yen and South Korean won – have also weakened significantly. The direct impact of a super strong US dollar is twofold. First, it makes US exports more expensive (less competitive) in global markets. Second, for any sales and profits in foreign markets – whether from exports or production in those markets – they are translated back into fewer dollars. Plus, there are indirect impacts. US manufactured goods exports – think motor vehicles and parts, machinery, electronic and computer products, medical equipment and aircraft and components – likewise become less competitive. This means lower US production and thus less demand for chemicals and resins that go into these goods. US-based companies' global sales exposure Based on 2021 sales Europe Asia Latin America Tronox 39%* 33% 7%*** Dow 36%** 18% 10% LyondellBasell 20% 8% 3% Trinseo 57% 22% NA Eastman 26%* 24% 6% Westlake 7% 3% NA Chemours 22%* 29% 12% Huntsman 27% 30% NA Celanese 36% 33% 4% Olin 19% NA NA PPG 32%* 18% 10% DuPont 20% 49% 4% Avient 25% 16% 9% * EMEA (Europe, Middle East & Africa) / ** EMEAI (Europe, Middle East, Africa & India) / *** South and Central America / NOTE: Some companies disclose sales in regions/countries along with an 'Other' or 'Rest of World' category / Source: Companies, US SEC “The high dollar makes US-produced goods more expensive in foreign markets, so exports would tend to fall below where they would have been otherwise,” said Kevin Swift, ICIS senior economist for global chemicals. “However, helping US chemical producers is that oil and feedstocks are usually priced in dollars, which boosts the raw material costs of foreign producers,” he added. US manufacturing will also likely feel more pressure in the domestic market from cheaper imports. “The higher dollar makes foreign-produced goods less expensive delivered into the US, so imports will tend to go up,” said Swift. Exporting chemicals and plastics from the US into much weaker economies in Europe and Asia is challenging enough. A strong US dollar compounds the impact. US chemical industry exports surged 22% to $153.1bn in 2021 and were projected to rise another 13% to $173.5bn in 2022, according to the American Chemistry Council (ACC) in its mid-year outlook. Polyethylene (PE) is a key US export, with major destinations in Asia, Europe and Latin America. The US also imported $128.3bn in chemicals in 2021 and this was expected to rise 20% to $153.6bn in 2022, according to the ACC. PARADE OF EARNINGS WARNINGSUS-based Eastman Chemical in its 13 September earnings warning for Q3 specifically cited the stronger US dollar versus a number of currencies, including the euro and Japanese yen, as one of the many culprits. Eastman in 2021 derived around 26% of sales from Europe, Middle East and Africa (EMEA), along with 24% from Asia. More recently on 27 September, US-based plastics compounder Avient warned on lower-than-expected Q3 earnings based on eroding consumer sentiment and demand in Europe, the lack of recovery in Asia and weakening demand trends in the US from higher interest rates, along with global customer destocking. Avient also highlighted foreign-exchange headwinds, which accounted for about a third of the downward earnings revision for Q3. About 25% of the company’s sales in 2021 came from Europe, along with 16% from Asia. On 26 September, US-based titanium dioxide (TiO2) producer Tronox took down its Q3 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance to $240m-255m from prior expectations of $275m-295m on weaker-than-expected volumes in Europe and Asia in particular, as well as increasing energy costs in Europe. The EMEA region accounted for 39% of Tronox’s sales, with Asia accounting for 33% based on 2021 sales. The Tronox warning follows that of US-based Chemours on 21 September which cited a continued deterioration in the demand outlook for TiO2, most notably in Europe and Asia. EMEA accounted for 22% of Chemours’ sales in 2021, with Asia making up 29%. Heavier profit shortfalls for US-based companies are coming – or will come – from companies most exposed to Europe and Asia. While not all companies have cited foreign-exchange specifically in profit warnings, it is most certainly a factor and will only compound the weakness. US-based Huntsman on 16 September slashed its Q3 earnings guidance on high energy costs in Europe, lower-than-expected demand, along with a lagging economy in China. Huntsman had 27% of sales from Europe, along with 30% from Asia based on 2021 figures. Other US-based chemical companies with significant exposure to Europe and Asia include Trinseo and Celanese. One of the least exposed to these regions is Westlake, where Europe accounted for just 7% of 2021 sales and Asia only 3%. However, Westlake has heavy exposure to the interest rate sensitive housing market – even more so after its $2.15bn acquisition of Boral’s North American building products business in October 2021. US DOLLAR OUTLOOK AND IMPLICATIONSAs long as the US Federal Reserve continues to be more aggressive in hiking interest rates to tamp down inflation than other central banks, the US dollar will likely continue strengthening. However, other major central banks are catching up. The European Central Bank (ECB) and the Bank of England are already stepping up rate hikes and signalling they will be more aggressive. Yet the Bank of Japan is holding rates at near zero while the People’s Bank of China continues to cut rates to stimulate its economy. Paul Hodges, chairman of consultancy New Normal, highlighted the strong correlation between the weakness of the euro versus the dollar in terms of European real (inflation adjusted) yields. The lower real yield of euro sovereign debt versus US Treasurys has caused the euro to fall mightily. “In turn, this is forcing the European Central Bank to follow the Fed in raising rates in response to inflation. And other second-order impacts are now underway,” said Hodges in New Normal’s monthly pH report. Key Latin American currencies – the Brazilian real and Mexican peso in particular – have held up relatively well against the US dollar and thus the region will be less of a headwind on the foreign-exchange front. Brazil’s central bank, after having already aggressively raised rates since March 2021 at 12 consecutive policy meetings, is now mulling an end to the rate hike cycle. The huge move in the US dollar could cause further turmoil in financial markets, particularly in emerging markets where governments and companies have taken on US dollar-denominated debt, which must be repaid in dollars. Morgan Stanley chief equity strategist Mike Wilson on 26 September noted that the surging US dollar is creating “an untenable situation for risk assets that historically has ended in a financial or economic crisis, or both”. With a good chunk of sovereign and corporate debt, particularly in emerging markets, denominated in US dollars, the cost of servicing that debt in local currency will go up substantially, noted Swift at ICIS. “It will be much harder for many to service that debt, and the strong dollar could lead to a debt crisis and geopolitical vulnerabilities in much of the emerging world,” said Swift. Insight article by Joseph Chang Thumbnail image shows dollars. Image by Shutterstock.

27-Sep-2022

Germany seeks views on NS2, may plan end to pipeline

LONDON (ICIS)–Germany’s ministry of economy has been polling European countries on their views regarding the certification of Russia’s Nord Stream 2 operations by its company Nord Stream 2 AG, ICIS understands. This comes even though the Gazprom subsidiary had been rejected and replaced by a new entity earlier this year. ICIS understands this to mean the German government may be looking to terminate the pipeline once and for all, with the assessment procedure a necessary legal step towards that. This view is backed by one source who has been close to discussions throughout, as well as an EU-based lawyer with knowledge of the matter. The moves preceded the news of “unprecedented” damage to both the Nord Stream 1 and Nord Stream 2 pipelines late on Monday which drove further price spikes across European gas hubs on Tuesday (see separate story). LEGAL STEP In a letter issued 19 September and seen by ICIS, the energy regulator of an EU country said the German federal ministry of economic affairs and climate action was looking to address the issue of granting certification to operator Nord Stream 2 AG, which is headquartered in Switzerland, a non-EU country. “The new assessment will address whether granting the certification to an applicant controlled by an undertaking from a third country, [such as a subsidiary of Gazprom] will impact the security of energy supply of the member state and the Union,” it said. Stakeholders who had been polled were due to submit their views by 21 September. It is unclear why the German government had triggered the certification assessment process for Nord Stream 2 AG, considering that earlier this year Gazprom set up a new company – Gas for Europe GmbH – to operate the German section of the pipeline. The certification procedure officially started in September 2021, but in mid-November the German energy regulator BNetzA suspended the procedure saying it could only certify a Germany-based entity. Germany suspended the two subsea pipelines which make up Nord Stream 2 and were supposed to supply 55 billion cubic meters of Russian gas annually. The decision was taken following Moscow’s recognition of the self-proclaimed Luhansk and Donetsk republics in eastern Ukraine on 22 February 2022. INSOLVENCY EXTENSION Swiss-based operating company Nord Stream 2 AG was due to file for insolvency following the project’s suspension in February but received a moratorium until the beginning of September from a Swiss court. Earlier this month, it was granted a second extension until 10 January 2023 to repay debt and avoid bankruptcy, according to the Swiss Official Gazette of Commerce (SOGC) of 8 September 2022. An EU-based lawyer commented on Germany’s motivations, particularly given current circumstances where Russia continues to wage war against Ukraine. Germany will know “that central and eastern European countries would oppose” any flow of gas through the pipeline in future, he said, noting he was doubtful German economy minister Robert Habeck would clear the certification. The German economy ministry did not reply to requests for comment by publication time. Nord Stream 2, as well as the older pipeline Nord Stream 1, returned to the headlines on Monday evening following news there had been a sudden drop in pressure along the entire subsea corridor. The pipelines had been partially filled earlier in the year and there were reports that some of the residual gas had leaked in Danish waters.

27-Sep-2022

PODCAST: China polymer markets ‘worst in 25 years’

BARCELONA (ICIS)–China’s polymers are in bad shape as demand collapses amid a big uptick in capacity additions; global markets beware. Common Prosperity reforms slow economy End to debt-fuelled growth Construction sector collapsing Aging population, Zero-Covid policy drag growth Export markets slow down China polymer markets “worst in 25 years” Negative China growth forecast 2022 for high density polyethylene (HDPE), low density PE (LDPE), linear low density polyethylene (LLDPE), polypropylene (PP) Worst contraction since at least 1990 China polymer capacity increases rapidly, leading to oversupply, more exports China exports overcapacity, falling prices around the world In this Think Tank podcast, Will Beacham interviews ICIS senior consultant for Asia, John Richardson. 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.

27-Sep-2022

INSIGHT: High cost threatens Asia petrochemical output as regional currencies tumble

SINGAPORE (ICIS)–Asia’s petrochemical production is at risk of shrinking further as imported raw materials get more expensive each day that Asian currencies tumble to new lows. The sharp depreciation of regional currencies – including the Chinese yuan, Japanese yen and the South Korean won – translates to surging costs of imports despite recent declines in actual spot US dollar-denominated commodity prices of some products. Buyers are shying away from the market, aggravating an already weakened regional demand. For naphtha, the main feedstock for petrochemical production in Asia, spot requirements are being trimmed by end-users partly due to weakening margins for olefins. Olefins margins had improved in early-September before easing back to unhealthy territory amid a narrower naphtha-ethylene spread, according to ICIS data. “Due to the depreciation of the local currencies against the US dollar, buyers are mostly adopting a cautious stance and buying smaller parcels on a need-to-basis and holding back any large forward spot commitments,” a regional oleochemicals producer said. Traders and distributors may feel the brunt of the ill effects of currency depreciation since most manufacturers keep US dollar-denominated accounts for both imports and exports, another producer said. Importers of petrochemicals have generally adopted a cautious stance, retreating from the spot market, wary of bloating their production cost. “We would rather wait and buy smaller lots due to the uncertainties and strengthening of the US dollar versus the local currency,” said a buyer of fatty alcohols. This means that even when the US dollar-denominated prices of imports remain the same, importers in Asia will have to pay more due to the sharp depreciation in local currencies in the region. “Buyers would be very cautious because now the currency is crazy. We need to pay more money when we import,” she added. With expectations of further monetary tightening in the US, the strength of the US dollar is expected to continue throughout the year, aggravating inflationary pressures among Asian countries. For petrochemical producers, the resulting higher cost could eventually curtail production. “I think the US dollar [is] gonna get stronger, so I don't want to buy a big volume – it will increase our cost,” a market player said. In the butyl acetate (butac) market, importers are cautious as well on account of surplus inventory in parts of southeast Asia, with sentiment further weighed down by weak upstream n-butanol sector. “[There is] no hurry to buy. [The] Thai currency [baht] is now at its weakest in 17 years, while it’s very hard to pass on higher prices, costs and other risk premiums to end-users,” said a regional-based market source. A general demand weakness as the world is staring at another recession amid high inflation is likely to cap any significant upward movement in prices. China – the world’s second-biggest economy and a major import market for most Asian economies – is slowing down, partly self-imposed, as it responds with lockdowns to sporadic COVID-19 outbreaks within the country in line with its strict zero-COVID policy. “Recession [worries], depreciation of foreign exchange rates, global interest rate hikes are affecting business sentiment,” said an etac player. Demand for ethyl acetate (etac) and butac has not improved despite firming prices of substitute product methyl ethyl ketone (MEK), the source said, citing a surplus supply in Thailand. In the phenol market, buying sentiment in China is being dampened by increased import cost amid the weak yuan, arrival of imported cargoes and new capacity coming on stream in October. This negates recent attempts by regional sellers to raise offers in view of recent gains in China’s domestic market. Local prices increased last week mainly due to supply shortfalls due to a plant turnaround in Zhejiang and inclement weather-related slowdown in road transportation of cargoes in coastal areas, particularly Ningbo, Wenzhou and Zhoushan. In early September, local phenol prices “rose due to vessel delay and stock building before [China’s] national holiday [in October], but downstream is not that good as expected,” a buyer said. “We don’t think the current price situation will be sustainable,” the buyer added. Expectations of fresh supply when Wanhua Chemical’s 400,000 tonne/year phenol plant starts up in October, coupled with continued weakness in demand will weigh on the regional market. “In terms of demand, I am worried that plant operating rates will be required to be reduced due to China’s 20th National Congress. So, buyers are very cautious,” a separate buyer said. The Communist Party of China will convene in Beijing on 16 October. The country’s political leaders meet once every five years. In the ethylene vinyl acetate (EVA) resin space, India’s demand is being dampened by weakness in exports of finished goods to Europe and the US, offsetting any benefit of a sharp rupee depreciation. The Indian rupee (Rs) slumped to a new all-time low against the US dollar at above Rs81 on Monday, down by nearly 10% from the start of the year. An India-based distributor characterized the US and Europe are as “totally dead markets” for footwear, a major downstream for EVA. “All our customers are having tough times in exports. Currency depreciation [is] affecting everyone now,” the distributor said. Converters in the downstream footwear industry were earlier procuring raw materials on a need-to basis amid depressed prices of finished products due to stiff competition from the unorganised footwear industry in the local market. “In normal conditions converters usually have two-three months’ of export orders but nowadays, they have not more than 15 days’ orders in hand,” the EVA distributor said. Some of the major converters have resorted to reducing footwear prices drastically to offload stocks. Insight article by Pearl Bantillo With contributions from Helen Yan, Helen Lee and Melanie Wee Thumbnail image: The strong US dollar. (By Pearl Bantillo) Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets.

27-Sep-2022

Global economies urgently 'need clean hydrogen' – Hydrogen Council

LONDON (ICIS)–Due to a combination of several different factors, global economies now require investment and development of hydrogen more than at any other time, the Hydrogen Council's Hydrogen Insights 2022 publication, released late 20 September, said. "The urgency to invest in mature hydrogen projects today is greater than ever. The rebound of carbon emissions to above pre-COVID levels, the invasion of Ukraine, and the growing concerns around energy security resulting from the war in Europe make one thing clear: our economies need clean [renewable] hydrogen, and action is needed to convert proposals into actual deployment," the report said. The report also stated that although hydrogen project investment was continuing to grow at a faster rate than in previous years, deployment was behind, and more was required in order to meet the net zero emissions target by 2050. HYDROGEN PROJECTS The report said that "the pipeline of hydrogen projects is continuing to grow, but actual deployment is lagging." In 2022, some 680 large-scale project proposals worth $240bn that have been put forward, 50% up from November last year, however, only $22bn have reached financial investment decision stage. 30% of thee investments are in Europe, with China slightly ahead on actual deployment of electrolyzers (200MW) with Japan and South Korea accounting for more than half the 11GW global fuel cell production capacity. The report said that an additional $700bn investment in hydrogen would be required by 2030, with today's figure at just 3% if that number. "Both governments and industry needs to act to implement immediate actions for 2022 to 2023," the report said. Nonetheless, announced renewable hydrogen production capacity is set to nudge 14.4m tonnes/year by 2030, with low-carbon hydrogen at 11.8m tonnes/year. PRIORITY ACTIONS For policy, the report cited three key actions required by the end of 2023. Enable demand visibility and regulatory certainty by adopting legally binding measures * Fast-track access to public funding for hydrogen projects * Ensure international coordination and support credible common standards and robust tradeable certification systems For industry, the report cited three key actions required by the end of 2023. Advance project proposals to FiD by committing to funding and resource deployment * Scale up hydrogen supply chain capability and capacity * Build infrastructure for cross-border trade

26-Sep-2022

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 23 September. US base oils market sees first posted price declines since April 2020 The US base oils industry saw its first posted price reductions this month since the early days of the pandemic. Olin cuts Q3 guidance amid worsening global conditions Olin has cut its Q3 earnings guidance as global economic conditions have worsened faster than expected, the US-based chlor-alkali and epoxy producer said in an update on Tuesday. US inland truck capacity increases as demand remains firm Spot and contract rates for inland truck deliveries have fallen from record-highs as capacity has increased and demand has remained strong, according to panelists on a webinar hosted by supply chain market intelligence provider Freightwaves. Chemours cuts 2022 outlook on weak TiO2 demand Chemours has cut its full-year 2022 earnings guidance because of a continued decline in the demand outlook for titanium dioxide (TiO2) throughout Q3, most notably in Europe and Asia. US HB Fuller sees rebound in Asia, slowdown in Europe HB Fuller began to see a rebound in Asian demand during its fiscal third quarter because China is reopening from its COVID-19 lockdowns, the US-based adhesives producer said on Thursday, a trend that other chemical producers have yet to see. Asia-US container rates plunge as inflation, recession fears stunt demand Rates for shipping containers from east Asia and China to both US coasts continued to plummet this week as softening demand amid persistent inflation, fears of a recession and an extremely early peak season have opened up capacity, which is weighing on rates.

26-Sep-2022

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 23 September 2022. Japan bucks global monetary tightening trend; yen slumps to new 24-year low By Nurluqman Suratman 22-Sep-22 17:54 Japan’s central bank decided on Thursday to keep its ultra-low interest rates unchanged, bucking the global monetary policy tightening trend in the fight against rising inflation, causing the yen to slump to a fresh 24-year low. Asian petrochemicals shares tumble after US Fed interest rate hike By Nurluqman Suratman 22-Sep-22 11:36 Asian petrochemical shares fell on Thursday as fears of a global recession grew after the US Federal Reserve (Fed) raised interest rates by 75 basis points (bps) to the highest level since early 2008. VIDEO: China’s phenol spikes on tight supply, increasing demand By Yoyo Liu 22-Sep-22 16:47 Watch ICIS senior industry analyst Yoyo Liu discuss the recent rise China’s domestic phenol prices amid improving demand and falling supply. SE Asian EPDM languishing with lacklustre demand, outlook dull By Ai Teng Lim 21-Sep-22 11:08 Weak demand is stifling spot trade for ethylene propylene diene-monomer (EPDM) in southeast Asia. End-users continue to shy away from fresh spot EPDM procurement, wary of holding on to raw material when offtake rate of finished products remains slow. Asia polyester sees weaker-than-expected buying despite peak season By Judith Wang 20-Sep-22 13:09 SINGAPORE (ICIS)–Spot polyester discussions in Asia were stable to soft as buying appetite was weaker than expected despite it being the peak manufacturing season in September and October. INSIGHT: Changes on China polyolefins trade flows By Joey Zhou 19-Sep-22 18:49 SINGAPORE (ICIS)–China polyolefins continue to see decreasing imports and increasing exports in 2022 amid its fundamental changes.

26-Sep-2022

Asia-US container rates plunge as inflation, recession fears stunt demand

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to both US coasts continued to plummet this week as softening demand amid persistent inflation, fears of a recession and an extremely early peak season have opened up capacity, which is weighing on rates. Rates to the Pacific Coast fell by 17% and are now 80% lower than at the same time a year ago, while rates to the Atlantic Coast plunged by 14% and are 61% lower than last year, according to data from online freight shipping marketplace and platform provider Freightos. China’s Golden Week, a week-long National Day celebration that begins on 1 October, will pause a majority of the country's manufacturing, further weighing on rates as there will be less product available for export. The lead up to Golden Week typically sees a boost in rates, but Judah Levine, head of research at Freightos, said the holiday is unlikely to offer any support to rates this year because of the other dynamics in play. Levine said carriers have again starting to cancel sailings to try and keep vessels full in an attempt to stop the slide, but to little-to-no avail. A NEW FLOOR Levine said with the typical ocean peak season now clearly over, he expects the market to search for a new floor, with shipowners hoping to support values with capacity management. Lingering port congestion and volumes – which, while slowing, are still likely to remain above 2019 levels – will also provide support. Levine noted that ocean charter rates – the price carriers pay to lease a vessel – are also falling. “Falling spot rates could put pressure on some smaller carriers who are now stuck with expensive charter rates taken on to offer new transpacific services back when spot rates were sky high,” Levine said. Levine said ongoing labour negotiations between the ports and dock workers have stalled, raising concern that a work stoppage would lead to further congestion at Pacific Coast ports. CONGESTION Congestion at West Coast ports continues to ease, largely from the softening demand but also because shippers chose to send volumes to East Coast ports to avoid the widely publicised backups at the twin ports of Los Angeles (LA) and Long Beach (LB). Backups at LA/LB hit a new record low on Thursday, according to the Marine Exchange of Southern California (MESC) when there were only six container ships in the queue. The record high was on 9 January when there are 109 container ships waiting to offload. German container shipping major Hapag-Lloyd said in an operational update that the backlogs on the East Coast persist. The Port of Savannah continues to have the largest backlog of container ships waiting to unload, with 42 ships at anchor, which is one fewer than the previous week. Wait times are 12 days for Class 1 vessels, and 17-20 days for Class 2 vessels. The backlog at Port Houston was 18 ships, which is down by three from the previous week. At the Port of New York/New Jersey, there were 19 container vessels at anchor at the start of the week, up from 15 vessels the previous week, with waiting times for berths running upwards of 32 days. The number fell to 12 vessels by 16 September. 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. Visit the ICIS Supply Chain topic page Thumbnail shows shipping containers. Image by Shutterstock.

23-Sep-2022

Knowledge is knowing what’s happening now. Wisdom is knowing what’s going to happen next

As markets have evolved, so has ICIS: expanding the breadth of our coverage, developing cutting-edge digital intelligence and connecting powerful datasets.

With a network of expert analysts across global markets, we bring everything together in our critical hub, ICIS Digital, providing data, news, forecasting and intelligence across the value chain. Armed with actionable insights, our partners can navigate mature and emerging markets and confidently make the best business decisions, now and into the future.