HOUSTON (ICIS)–Global rates for shipping containers continue to surge, liquid chemical tanker rates were flat to lower, and the Panama Canal Authority (PCA) is increasing the maximum allowable draft to transit the Neopanamax locks, all highlighting this week’s logistics roundup. CONTAINER RATES Global rates for shipping containers continue to surge, although the rate may be slowing. Global average rates from supply chain advisors Drewry rose by 4% this week, a slower pace from the double-digit increases over the previous two weeks. The following chart shows that average rates are approaching $4,250/FEU (40-foot equivalent unit). Rates from Asia to the US are also at new highs for the year, as shown in the following chart. Rates continue to be pressured higher because of unrest in the Middle East, specifically attacks on commercial vessels by Yemen-backed Houthi rebels. Houthis even claimed responsibility for an attack on the USS Dwight D Eisenhower, an aircraft carrier stationed in the Red Sea. US and UK responded by sending fighter jets to strike Houthi targets in Yemen. Rates are likely to continue rising, according to ocean and freight rate analytics firm Xeneta. “The ocean freight container shipping market has seen rapid and dramatic increases during May and that is set to continue with further growth in spot rates,” Peter Sand, Xeneta chief analyst, said. “On 1 June, spot rates will reach a level we have not seen since 2022 when the COVID-19 pandemic was still wreaking chaos across ocean freight supply chains.” From the Asia-Pacific to US West Coast, market average spot rates are expected to reach $5,170/FEU on 1 June, which would surpass the Red Sea crisis peak of $4,820/FEU seen on 1 February, Xeneta said. This is an increase of 57% during May and the highest spot rates have been on this trade for 640 days. From the Asia-Pacific to US East Coast, spot rates are expected to reach $6,250/FEU on 1 June, only slightly shy of the Red Sea crisis peak of $6,260/FEU and an increase of 50% since 29 April. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates increased from Brazil to the US Gulf (USG) and fell slightly from the USG to Asia and from the USG to Brazil. From the USG to Brazil, there continues to be plenty of contractual volumes for both caustic soda and monoethylene glycol (MEG). All the regulars are open and have a lot of tanks to fill. This route has experienced significant downward pressure due to market dynamics and because activity here has been limited. The USG to Brazil trade lane is expected to remain at a standstill which could add further pressure. From the USG to Asia, freight rates declined due to lack of interest. PORT OF BALTIMORE The Unified Command (UC) continues to clear wreckage from the bottom of the Patapsco river, projecting to fully restore the Fort McHenry Federal Channel to its original 700-foot width and 50-foot depth by 8-10 June. The UC cleared a 400-foot-wide swath of the federal channel on 20 May, permitting all pre-collapse, deep-draft commercial vessels to transit the port. Source: Maryland State Police Aviation Command PANAMA CANAL The Panama Canal Authority (PCA) is increasing the maximum allowable draft to transit the Neopanamax locks, effective immediately. The PCA said the arrival of the rainy season in the Canal watershed prompted the action. Wait times for non-booked southbound vessels ready for transit held steady this week for northbound traffic and fell for southbound vessels, according to the PCA vessel tracker and as shown in the following image. Wait times a week ago were 1.5 days for northbound vessels and 3.6 days for southbound vessels. Additional reporting by Kevin Callahan

SAO PAULO (ICIS)–Stellantis’ facilities in Argentina remain shut and its plant in Goiana, northeast Brazil, has also partially stopped, a spokesperson for the global automotive major said to ICIS on Friday. In Argentina, Stellantis operates production facilities in Ferreyra, in the Cordoba province in the north, where trade with Rio do Grande do Sul is commonplace. The company said in mid-May those facilities had to shut due to the lack of inputs. On Friday, it added Goiana has now been affected too and it is partially out of operations. “Both plants in Argentina are still out of production. In Brazil, Goiana facilities has partially stopped,” the spokesperson said. Stellantis is the result of the merger between Fiat Chrysler and PSA Group. Germany’s automotive major Volkswagen stopped production at three plants in the state of Sao Paulo in mid-May due to the lack of inputs. The company had not responded to a request for comment at the time of writing. Rio Grande do Sul is Brazil’s southernmost state and petrochemicals-intensive automotive parts producers there are major suppliers to the rest of Brazil and Argentina. As of Friday, the emergency services in Rio Grande do Sul said 169 had died due to the floods, while 44 remains unaccounted for. Nearly 40,000 people are still taking refuge in shelters, while 580,000 remain displaced from their homes. Nearly 2.4 million have been affected by the floods. Earlier in May, a spokesperson for Brazil’s automotive trade group Anfavea did not respond to questions from ICIS about the impact of the floods on the sector’s annual output. However, it said the trade group would publish its first estimates at a press conference on 6 June, when it will publish production, sales and export data for May. In early May, at the press conference presenting April data, the trade group said it feared the sector could be hit given Rio Grande do Sul’s importance to Brazil’s auto industry. The petrochemicals hub of Triunfo, near Porto Alegre, returned to operations on 20 May, led by Brazil’s polymers major Braskem, but a consultant in Porto Alegre said to ICIS the reopening there was the odd one out amid widespread disruption for most industrial sectors. As of Friday, the Port of Porto Alegre, the state’s largest city, remained shut, although Rio Grande and Pelotas ports were operating normally. The emergency services in Rio Grande do Sul said 169 had died due to the floods, while 44 remains unaccounted for. Nearly 40,000 people are still taking refuge in shelters, while 580,000 remain displaced from their homes. Nearly 2.4 million have been affected by the floods in the 12-million people state of Rio Grande do Sul. The automotive industry is a major global consumer of petrochemicals, and chemicals make up more than one-third of the raw material costs for an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA), among others. Front page picture: Stellantis’ facilities in Ferreyra, province of Cordoba, Argentina; archive image Source: Stellantis 

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: June prices stable Italian bale prices rise in latest round of auctions Demand uneventful but some pockets of improvement

LONDON (ICIS)–Freepoint Eco-Systems Belgium NV is planning to build an 80,000 tonne/year pyrolysis-based chemical recycling plant in Ghent, Belgium, the company announced in a press release. The plant will use mixed plastic waste diverted from incineration as an input, although there were no further details of the grade of mixed plastic waste that will be used. It will be situated at North Sea Port’s Kluizendok site, following the signing of a long-term concession agreement between the two companies for the development. Construction on the site will not begin until the permitting process is completed, which is expected in 2025. Freepoint Eco-Systems is currently engaged in feedstock sourcing and financial planning for the site. The plot at North Sea Port is large enough to potentially expand the capacity to 160,000 tonnes/year. Freepoint Eco-Systems has several ongoing pyrolysis-based chemical recycling projects at various stages of development in the US, where it has also recently signed an offtake agreement with Dow.  This is its first project announced in Europe, but according to the press release, the company is currently developing several European projects. In Europe, pyrolysis oil prices have remained largely stable across much of 2024 due to ongoing legislative and macroeconomic uncertainty, following a period of high volatility in Q4 2023. Across the past seven months, prices for naphtha substitute pyrolysis oil have traded as low as €1,700/tonne ex-works Europe and as high as €2,200/tonne ex-works Europe on the spot market. Non-upgraded pyrolysis oil, meanwhile has traded as low as €1,200/tonne ex-works Europe and as high as €1,700/tonne ex-works Europe. Throughout, pyrolysis oil prices have remained disconnected from movements in virgin naphtha. Similar to trends in pyrolysis oil prices themselves, the spread between virgin naphtha and naphtha substitute and non-upgraded pyrolysis oil prices (the amount by which these grades of pyrolysis oil are trading above virgin naphtha) has broadly increased since October, while the spread between virgin naphtha and tyre-derived pyrolysis oil has broadly decreased. The same trend is also seen in the spread between feedstock mixed polyolefin bale prices and high plastic content RDF bale prices. Nevertheless, the spread between standard mixed polyolefin bales (which have not been pre-treated) and pyrolysis oil prices has been broadly falling in 2024, following a recovery in demand from the mechanical recycling sector (albeit from a low base), which pushed mixed polyolefin bale prices higher during a period of stability in pyrolysis oil values. While the spread between mixed polyolefin bales and pyrolysis oil remains wide, these mixed polyolefin bales typically require additional sorting and processing. The challenges involved in sorting and pre-treating material have seen pyrolysis oil producers increasingly target pre-treated forms of mixed polyolefins, such as agglomerates, which trade at higher prices. Uncertainty over the legal status of pyrolysis oil, and in particular, uncertainty over mass-balance accounting rules, continues to push buyers to the sidelines of the market and limit activity. Spot prices across all grades remained stable this week as a result. The EU’s Technical Advisory Committee (TAC) had been due to take a decision on mass-balance accounting rules under the Single-Use Plastics Directive (SUPD) at the end of March. It was understood from players familiar with the matter that the TAC decision has been delayed due to ongoing discussions with regulators, but this is yet to be officially confirmed. A final vote on mass balance accounting under the SUPD continues to be expected before the end of the year, but a firm timetable has not been announced. Tight supply of plastic-derived pyrolysis oil, though, continues to mean there is currently little downward pressure on prices, but this tight supply was largely priced-in during Q4 2023, when testing cycles were at their peak. ICIS covers 3 grades of pyrolysis oil in its Mixed Plastic Waste and Pyrolysis Oil Europe pricing service. ICIS also offers mechanical recycling, waste bale, biodiesel, hydrogen, and virgin price coverage, giving you the complete picture across the sustainability value chain. For more information, please contact Mark Victory at mark.victory@icis.com.

SEOUL (ICIS)–The global petrochemical supply glut will take some time to run its course and focusing on portfolio optimization and higher value products would be the way forward, LG Chem CEO Hak Cheol Shin said on Friday. “China will continue to build although there is a slowdown in new projects,” said Shin, who is also the chairman of the Korea Petrochemical Industry Association (KPIA). It would take a few years to see a rebalancing in supply, he said on the sidelines of the Asia Petrochemical Industry Conference (APIC). The prospect of further rationalization in the petrochemical industry – a hot topic during APIC – would depend on the type of capacity and location, he said. When asked about the prospect of LG Chem divesting cracker operations, Shin said that the company never had plans to do so. He noted that the focus was on ensuring feedstock competitiveness and being focused on adding value in the right niche market segments where there was willingness to pay. The two-day conference ends Friday.

SEOUL (ICIS)–The European chemical industry is bracing for continued weakness in 2024, with demand remaining soft globally due to sluggish growth in the US and a slowdown in China, an industry official said on Friday. “The European industrial sectors are out of recession but still a long way from any dynamic growth,” European Chemical Industry Council (Cefic) director general Marco Mensink told delegates at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea. Despite the challenges in the region, there are glimmers of optimism as destocking nears completion and business expectations show signs of improvement, Mensink said. However, the surge in Chinese chemical exports to Europe remains a major concern, as it intensifies competition and puts pressure on European producers, he said. GEOPOLITICAL TENSIONS AND EUROPEAN ELECTIONSThe ongoing war in Ukraine exacerbated the challenges facing the industry, Mensink noted. It has triggered a renewed focus on strategic independence, with European policymakers seeking to reduce the region’s reliance on external suppliers for critical raw materials and chemicals, he said. This could lead to increased investment in domestic production and recycling capacity, but it also raises concerns about potential trade barriers and protectionist measures, Mensink said. The upcoming European elections are expected to further solidify this trend, with defense and security likely to dominate the political agenda, he said. “Post the elections, the European Commission will have one priority only and it’s called defense,” Mensink said. “So, the rebuild of the European army knowing the situation in Ukraine … going as it is, will make defense and security the number one, number two and number three topics in the next policy cycle,” the Cefic director general said. This could have a significant impact on the chemical industry, as policymakers grapple with the complex trade-offs between economic competitiveness, environmental sustainability, and national security, he added. INNOVATION AND CIRCULARITY Amid the challenges, the industry is also showing signs of resilience and adaptability with companies investing in innovative technologies, such as chemical recycling and digital product passports, to meet stringent environmental regulations and consumer demands, Mensink said. “Waste-based and bio-based feedstocks are increasingly important for us,” he said, highlighting the growing importance of circular solutions in the chemical sector. The push for greater circularity is not only driven by environmental concerns but also by geopolitical considerations, as it can help reduce Europe’s dependence on imported raw materials, Mensink said. Focus article by Nurluqman Suratman

SEOUL (ICIS)–Singapore is converting its petrochemicals hub of Jurong Island into a sustainable energy and chemical (E&C) park to achieve its emission reduction targets by 2030, the chairman of the Singapore Chemical Industry Council (SCIC) said on Friday. This involves collaborative efforts between the government and industry to expand the production of sustainable products and facilitate sustainable production practices within the E&C sector, Henri Nejade told delegates at the Asia Petrochemical Industry Council (APIC) in Seoul, South Korea. Jurong Island is the 3,000-hectare nucleus of Singapore’s E&C sector, hosting over 100 global companies in refining, olefins production, and chemical manufacturing. “Singapore’s goal for the 2030 Green Plan is for the E&C sector to enhance its production of sustainable goods to four times the levels seen in 2019 and to achieve over six million tonnes of carbon reduction annually through the adoption of low-carbon solutions, targeting net zero emissions by 2050,” Nejade said. To reach these goals, Singapore’s government has recently announced establishment of a Future Energy Fund with an initial investment aimed at accelerating the nation’s transition to cleaner fuels, by investing in critical infrastructure and sustainable energy projects. The fund, announced by the Singapore Economic Development Board (EDB) in the national 2024 budget, is set up with an initial injection of Singapore dollar (S$) 5 billion ($3.7 billion). Driven by climate change concerns, the E&C sector is evolving, with countries prioritizing low-carbon alternatives, Nejade noted. “This evolution is expected to reduce demand for carbon-intensive fossil fuels while promoting cleaner energy sources,” he said. “However, a complete transition to renewables may take some time, with challenges including market imbalance and supply chain disruption in the chemical industry.” ($1 = S$1.35)

SEOUL (ICIS)–Oversupply of petrochemicals in China has not dampened the country’s role as a key demand driver, presenting Taiwan with both challenges and opportunities, the chairman of the Petrochemical Industry of Taiwan (PIAT) said on Friday. “As we all know, many large-scale integrated projects are carried out in various parts of China by these years leading to an oversupply of petrochemicals … [but] China remains the primary driver of demand growth,” Mihn Tsao told delegates at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea. “Taiwan, being an export-oriented economy, cannot ignore China’s vast market,” he added. Last year proved exceptionally challenging for Taiwan’s petrochemical sector, Tsao said, as global economic growth slowed due to inflation, geopolitical tensions, trade disputes, and climate change concerns, Tsao said. The termination of tariff preferences for 12 petrochemical products under the Economic Cooperation Framework Agreement (ECFA) with China added further strain, he said. Weak global demand and inventory pressures resulted in a significant 12.5% year-on-year decline in Taiwan’s overall industrial production index last year, the largest in history, Tsao noted. Taiwan’s petrochemical firms thus experienced reduced operation rates and lower-than-expected profits last year, he said. Going forward, Taiwan’s petrochemical industry is actively pursuing sustainable solutions, leveraging artificial intelligence (AI) to enhance production processes and efficiency, while transitioning towards green energy-related products such as ethylene-vinyl acetate copolymer (EVA), epichlorohydrin (ECH), and carbon fiber, Tsao said. Investments in low-carbon energy transformation, circular economy initiatives, and increased renewable energy adoption are also underway to bolster climate change resilience, Tsao added. The two-day APIC event ends Friday.

SEOUL (ICIS)–Japan’s government aims to marshal $1 trillion in public and private investment over the next decade to fuel economic growth and meet its climate commitments, the chairman of the Japan Petrochemical Industry Association (JPCA) said on Friday. To catalyze this massive investment, the Japanese government has launched issuance of climate transition bonds totaling more than $100 billion, Keiichi Iwata told delegates at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea. These bonds are designed to finance projects that contribute to reducing carbon emissions and facilitating the transition to a low-carbon economy, he said. Additionally, a Green Innovation Fund exceeding $10 billion has been established to support the development of groundbreaking green technologies in Japan, according to Iwata. This initiative is fostering a wave of innovation among companies, particularly those in the JPCA which are accelerating their efforts in sustainable technologies and solutions, like chemical recycling, he noted. “Similar initiatives are underway in other countries as well. We hope that the APIC will provide a springboard for new multinational, cross-border collaborations,” Iwata said. “Implementing new solutions will require additional investments and lead to higher costs. But we should view it positively as an opportunity to add new value to our products through reducing emissions and utilizing bioresources and recycled materials,” he noted. As the petrochemical industry strives to forge a path toward a sustainable future, a two-step approach is crucial, Iwata said. The initial phase, spanning the years leading up to 2050, focuses on maximizing the deployment of currently available technologies to accelerate emissions reduction, he said. “At the same time, we must advance the development of innovative new technologies aimed at making more drastic reductions,” Iwata said. “The second step is a long-term effort to systematically implement these new technologies across society, and ultimately achieve carbon neutrality,” he added. The two-day APIC event ends Friday.