HOUSTON (ICIS)–Global rates for shipping containers are surging, liquid chemical tanker rates were mixed, and wait times at the Panama Canal have eased, highlighting this week’s logistics roundup. CONTAINER RATES Container rates surged this week after rising last week for the first time since January amid general rate increases (GRIs) implemented because of rising demand and as continued Red Sea diversions have overall capacity fully deployed. Maersk CEO Vincent Clerc said during a Q1 earnings conference call that demand is trending toward the higher end of its guidance. Average global rates surged by 16% over the week, according to supply chain advisors Drewry and as shown in the following chart. Meanwhile, rates from Shanghai to the US West Coast jumped by 18%, and rates from Shanghai to the East Coast soared by 16%, as shown in the following chart. Drewry expects freight rates ex-China to continue increasing in the upcoming week amid a huge demand spike and tight capacity. Capacity is growing from newly built ships, according to international freight platform ShipHub, who said that 2.83m 20-foot equivalent units (TEUs) of container ship capacity is on order for 2024, after 2.34m TEUs were ordered in 2023. That is almost double the capacity added in 2021 and 2022, which were both around 1.1m TEUs. Shipping analysts Linerlytica said that over-capacity concerns are on the backburner with containership diversions to the Cape route effectively removing more than 7% of the total fleet. Rates from North China to the US Gulf were flat this week after spiking the previous week, as shown in the following chart from ocean and freight rate analytics firm Xeneta. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID CHEM TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged but fell from the US Gulf (USG) to ARA. From the USG to Rotterdam, there are bits of part cargo space still available for April. This trade lane has been mostly quiet over the last few weeks. If this trend continues, this route could face further downward pressure. On the other hand, from the USG to the Caribbean, rates have risen slightly since last week leaving the market overall mixed. Methanol continues to be active out of this market to various destinations. From the USG to Brazil, space remains tight despite the slow market as only a handful of indications being seen in the market.  Space is available for H1 May out of Columbia and H2 May out of the USG. Although ICIS does not assess spot rates from the USG to the Mediterranean, this trade lane has continued to tighten up, with several cargoes of Glycols, Caustic and Veg Oil fixed. There is limited space for May which may likely cause rates to further tighten, although there could be some working space for June. PANAMA CANAL Wait times for non-booked vessels ready for transit fell for both northbound and southbound transits this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 4.4 days for northbound traffic and 6.5 days for southbound vessels. The PCA will increase the number of slots available for Panamax vessels to transit the waterway beginning 16 May and will add another slot for Neopanamax vessels on 1 June based on the present and projected water levels in Gatun Lake. PORT OF BALTIMORE The Key Bridge Response Unified Command (UC) is scheduled to use precision cuts made with small charges to remove a large section of the Francis Scott Key Bridge wreckage from on top of the container ship Dali, which struck the bridge on 26 March and caused its collapse. Source: Key Bridge Response 2024 The exact time of the precision cuts will depend on multiple environmental and operational factors. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. Additional reporting by Kevin Callahan

SAO PAULO (ICIS)–Brazil’s state of Rio Grande do Sul remains at a standstill from the floods, with Thai petrochemicals major Indorama’s subsidiary in the country also suspending operations at its Triunfo facilities, a spokesperson confirmed to ICIS. Two main ports in Brazil’s southernmost state remain closed, while fertilizers players have said demand is likely to be hit on the back of a reduced planting season. A spokesperson for Indorama said the company had suspended operations at Triunfo on 3 May until further notice. Indorama’s operations in Brazil are the result from its acquisition of Oxiteno and operates at Triunfo a methyl ethyl ketone (MEK) plant with a production capacity of 42,000 tonnes/year and a butene-2 plant with capacity at 42,000 tonnes/year, according to ICIS Supply & Demand. “Initially, we ensured that the emergency shutdown was carried out safely. Currently, we are carefully assessing the weather and logistical conditions, as well as the guidance from the relevant authorities, to determine the short, medium and long-term impacts [of the suspension],” said the Indorama spokesperson. Earlier in the week, Brazil’s polymers producer Braskem and styrenics producer Innova declared force majeure from its operations in Triunfo, as did styrene butadiene rubber (SBR) producer Arlanxeo. Official figures on Friday put the dead toll at 116, with more than 130 people still unaccounted for, while more than 100,000 remain displaced from their homes and nearly two million people in the 12-million-strong state are being affected by Brazil’s worst floods in nearly a century. To make matters worse, rains returned to Rio Grande do Sul by the latter part of the week, forcing authorities to suspend some rescue operations. Brazilians this week have kicked off a remarkable national mobilization to help alleviate the disruption gauchos – as citizens from Rio do Grande do Sul are known in Portuguese – are going through. From workplaces to residential buildings, from civil associations to companies, there is practically no place in the country where an effort to collect goods, food and money is not being deployed. PORTS CLOSED, AGRICULTURE HITThe Port Authority for Rio Grande do Sul, called Portos RS and which oversees operations at the Port of Rio Grande, Port of Pelotas and Port of Porto Alegre, said operations at the two latter facilities remain shut to traffic. The Port of Rio Grande is operating normally, it added. “[Portos RS] maintains operations at the Port of Porto Alegre suspended, due to the maintenance of the level of Lake Guaiba above the so-called flood level. At the Port of Pelotas, in the south of the state, the shipment of wood logs remains suspended and activities are paralyzed at the terminal,” the Authority said. “Regarding the crossing to Sao Jose do Norte [a city north of Porto Alegre], the vehicle and passenger transport service is suspended due to the high level of Laguna dos Patos.” This week, several fertilizers players said to ICIS demand is likely to be hit as planting for some crops which had just started is likely to be delayed, postpone, or cancelled. Moreover, seeds recently planted could also get damaged by high levels of moisture, potentially ruining their harvest. “There has been great damage to infrastructure in the state, with fertilizers mixers underwater and authorities still calculating the impacts,” said an urea trader. “The rice harvest is almost done, but wheat planting is in its early days and producers of urea believe demand destruction can happen due to the circumstances.” Another fertilizers source added that around 70% of soybeans in Rio Grande do Sul had already been harvested, but there is still 30% to be harvested which would now be at risk. It added that 30% would represent approximately 6.5 million tonnes of soybeans, or 5% of Brazil’s total production. Rio Grande do Sul is the main rice producer in Brazil, and the source said the harvest for that crop was already behind schedule when the rains started, with 78% harvested. “We estimate that the unharvested volume should significantly affect the supply of rice in Brazil, increasing the upward pressure on prices, “the source said. “Corn was also in the process of being harvested, with an estimated 83% harvested by the time the rains started. It is not possible yet to estimate precisely how much of this amount at risk has been lost.” Front page picture: Voluntaries working in Rio Grande do Sul organizing donations Source: Government of Rio Grande do Sul Additional reporting by Bruno Menini, Deepika Thapliyal and Chris Vlachopoulos

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: FD NWE Colourless flake market entering more stable period during May UK flake prices still under upward pressure Demand outlook still hard to predict

SINGAPORE (ICIS)–Sustainable finance is a key interest for companies seeking to enter the recycled plastics market in Asia or to expand their current capacities. Despite the various financial instruments available, the absence of a clear entry point often results in uncertainty for firms. In this podcast, ICIS analysts Chua Xin Nee and Joshua Tan explore the different types of sustainability-related loans available and their successful use cases. Tan will be speaking at the Asia Petrochemical Industry Conference (APIC) 2024 in Seoul, South Korea, on 31 May. His presentation is on “Asian recycled polymers – short-term hiccups to long-term optimism”, as part of the sustainability and circular economy panel. Visit ICIS during APIC ’24 on 30-31 May at Booth 13 in the Grand Ballroom Foyer in the Grand InterContinental Seoul Parnas. Book a meeting with ICIS here.

HOUSTON (ICIS)–Global base oils markets face regionally unique pricing dynamics but largely stagnant underlying demand and sufficient supply amid still challenging macroeconomic conditions. Crude oil price volatility and its effect on refining economics will be a key driver going forward this year. Tighter European spot availability of Group I Ample supply, demand weakness drives unprecedented low Group III in US Chinese prices weaken versus import US Group II fills regional supply gaps in Middle East, Asia during H1 ASIATight supply of Group II will likely be alleviated to some extent in May and June. Significant volume upwards of 10,000 tonnes of US-origin Group II lots comprising 70N, 110N, 220N and 600N grades landed on Indian shores in the first-half of April, and a second shipment of a similar size was also heard to have arrived in India in late April. The below graph compares CFR 150N India prices with FOB Asia NE and FOB USG export prices for the same grade. This is likely to more than offset the reduced supply of South Korean and Taiwanese cargoes, especially that of heavy grade 500/600N, in recent months. Demand for South Korea-origin Group II cargoes was relatively strong in April in regions such as India and the UAE, while demand in other parts of Asia such as China and southeast Asia was subdued. May to June is typically a lull season for base oils from the key downstream lubricants sector. ICIS analysts forecast Asia Group II prices to dip slightly in May before recovering in June. As for Group I, spot availability of southeast Asian material continued to be in short supply, with sporadic offers of Thai-origin brightstock cargoes heard. With few alternatives of Group I imports from other sources such as Europe or the Middle East, the tight supply situation is expected to persist in the coming months. CHINAMost downstream lubricant producers in China are expected to maintain steady purchasing pace in May, and the unusual weakness in March and April trade sentiment may sustain, too. Trades were far weaker than expected in these two months, the traditional peak demand season for base oil. Group II price gains in Asia were noticeable through March and April, compared with small increases in China. Such a price divergence is expected to widen in May partly as Asian refiners may further hike their export prices in view of expected supply shortage caused by robust demand in southeast Asia. However, slow growth in China’s real economy such as the automobile and industrial sectors may lead to flat buying demand for lubricant oils, hence domestic lubricant oils producers may continue to buy base oils on a need-to basis, according to many producers. The average import costs of contractual Group II base oils are expected to be higher than their sale prices in China during April, said key importers, citing increasing export prices from Asian refiners and depreciating Chinese yuan against the US dollar. This, combined with ample supply of domestic Group II materials amid limited routine maintenance, may cause significant price spreads between domestic and imported Group II base oils. Therefore, downstream producers are expected to cut the usage of imported cargoes. The lubricant oil producers and importers in China may have little import interest as a result. USGroup II and Group III prices have diverged, with Group II spot rising on tighter availability following a slew of exports in Q1 and two price increases this spring up to 55 cents/gal on 100N. The price increases were implemented on the back of higher costs for crude and VGO and affected term contract customers to a greater degree, but spot prices have been pressured upward in tandem to a lesser extent. The availability issue may be temporary as it is due to unconfirmed work by one refiner, other refiners being sold out and production of Group III cutting into Group II yields. Group III suppliers have not raised prices in 2024. Rather SK Enmove’s 4cSt posted price is down by 50 cents/gal over two separate decreases this year. Separately, Motiva has reduced its 4cSt posted price by a cumulative 65 cents/gal. ICIS spot 4cSt has fallen by 15%, while spot 100N has risen by 8.2%. The US 4cSt price decline has been unprecedented, bringing US Group III lower than Asia. The graph shows the US 4cSt price as it compares with the Asia 4cSt price and the US 100N price. US EIA data show: Production up 5.5% YTD compared to 2023 Consumption down 29.5% YTD compared to 2023 (-27.2% in January and -32.2% in February) Demand data are worse than 2023 so far this year, which explains the heavy export months of Q1 and potentially why Group II supplies are more balanced domestically in early May. ICIS analysts forecast a general downtrend to flat pricing for the remainder of the year. EUROPEEuropean domestic Group I base oils spot supply limitations, a key driver of spot price increases in the last month, are expected to continue in May and early June. SN150 remains the tightest grade, closely followed by SN500. Domestic brighstock supply is balanced, contrasting with the export market, where shortages drove price hikes from March through April. In the European export market, availability is likely to remain limited through the rest of Q2. Players are expected to continue prioritising domestic supply, and very few offers are anticipated for the export market. Brightstock is expected to be tight for export now that Eni has stopped production at Livorno. A limited number of producers offer brightstock in sufficient volumes for export requirements, and the removal of Eni from the market means there will be significantly less availability. While lower demand at the beginning of Q2 offset the limited availability, buying interest looks set to increase further into the quarter and as a result there could be supply shortages. Buying interest has been increasing from west Africa, north Africa and east Africa in early May, and this is likely to continue throughout Q2. Demand from west Africa will then drop off in Q3 amid rainy season. ICIS analysts forecast European Group I prices to rise through August. MIDDLE EASTGroup II remains oversupplied in the UAE following bulk arrival of volumes from Asia and the US in late April and H1 May, and the trend is likely to persist into late May and early June. Import volumes from the US and northeast Asia upwards of a combined volume 25,000 tonnes of 110N, 150N, 220N and 500N/600N have dampened fresh imports’ interest from Asia. The recent firmness in offers and selling indications for northeast Asian 150N and 500N/600N exports have thus resulted in weak response from regional importers. The UAE market in the Middle East continues to rely on sourcing low viscosity index (VI) Group I base oils from Iran in the absence of spot high VI availability from Asia, Europe and from within the region. Spot Group I supply from Asia and from within the region is likely to remain curtailed as major producers in these markets opt to focus on contractual commitments. This is expected to sustain demand and prices for Group I Iranian product in the near term. The Eid ul Adha holidays in mid-June may temper imports’ and ex-tank offtake in H2 June before recovering in July. ANALYSTS’ VIEWWith ICIS crude forecast currently expecting crude to hover around the $90/barrel mark for most of the remainder of the year, this could keep some pressure on base oils pricing. With VGO, while slightly elevated vs typical spreads with crude, gas oil and fuel oil, moving broadly in line with crude, higher crude prices flow through to lower base oils margins for producers. We have seen European prices rise on the recent crude rise, where cash margins are close to their sustainable minimum, while other regions have held stable. Upward pressure may come in Asia where gas oil price rises over the summer might have the most significant effect on the base oil market, resulting in upward pressure there due to competition from fuels producing units. In the US, where margins are highest currently, there is expectation of a flat to declining market on sufficient length in supply. Base oils are used to produce finished lubricants and greases for automobiles and other machinery. Focus article by Amanda Hay, Eashani Chavda, Samantha Wright, Matthew Chong, Whitney Shi, Veena Pathare and Michael Connolly

HOUSTON (ICIS)–The entire Americas Styrenics (AmSty) joint venture (JV) is for sale, and not just Trinseo’s 50% stake, Trinseo CEO Frank Bozich said on Thursday. The company announced in March it started the process to sell its 50% in the styrene and polystyrene (PS) JV with Chevron Phillips Chemical (CPChem). During Trinseo’s Q1 earnings call on Thursday, Bozich clarified that the entire AmSty was for sale, not just Trinseo’s stake. He added that since the March announcement, Trinseo has seen indications of interest from a number of potential strategic and financial buyers. He did not name potential buyers or say how much money Trinseo expects from the sale. The process of “actively” marketing the JV has not yet started, he said. The JV agreement between Trinseo and CPChem includes a number “prescriptive elements” that need to be completed before a joint marketing of the JV begins, he said. Trinseo expects a deal with a buyer to be signed by early 2025 and will use the proceeds from its share from the sale of AmSty to pay down debt, he added. Trinseo is also trying to sell its wholly owned styrenics assets. The company’s other businesses include Latex Binders, Base Plastics and Engineered Materials. Additional reporting by Al Greenwood Thumbnail shows a cup made of polystyrene. (Image by ICIS)

SAO PAULO (ICIS)–Braskem will be able to deliver material to its customers from its other three sites in Brazil after it declared force majeure at its Triunfo complex following heaving flooding in the area, Brazilian polymers major CFO Pedro Freitas said on Thursday. Freitas did not clarify when the company expects its facilities in Triunfo, state of Rio Grande do Sul, could return to operations as the area reels from floods which started on 29 April. Freitas said Braskem’s facilities there – which account for 30% of its production capacity in Brazil – were not directly affected by the flooding, but the company is founding difficulties in transport to and from the complex. The floods in Rio do Grande do Sul, Brazil’s worst in 80 years, have caused widespread road blockages, landslides and a dam collapse. “The blockages made our operations inviable. Our assets are 100% safe and were not affected, but we are having difficulties with transport: from the coaches transporting our employees to the trucks taking material out,” said Freitas. “We contemplated bringing employees in by helicopter, but that wasn’t viable in for an extended period to keep operations running. In those conditions, we decided to stop operations in a safe and controlled manner.” The CFO was speaking to reporters and chemical equity analysts on Thursday following the publication of Braskem’s Q1 financial results. Despite Freitas’ assurances, the company only produces some polyethylene (PE) grades at its Triunfo facilities, and ⁠sources have said supply of products such as high density polyethylene (HDPE) and low density polyethylene (LDPE) could tighten in the force majeure goes on for an extended period. The same happens for some polypropylene (PP) products. In Brazil, Braskem is the sole manufacturer of PE and PP. Its market shares in 2023 were about 56% and 70%, respectively, according to figures from the ICIS Supply & Demand Database (SNDD). Brazil’s PP capacity is nearly 2 million tonnes/year, while PE capacity is about 3 million tonnes/year, of which 41% is HDPE, 33% is linear low density polyethylene (LLDPE) and 26% is LDPE. The Triunfo complex can produce 740,000 tonnes/year of PP, 550,000 tonnes/year of HDPE, 385,000 tonnes/year of LDPE and 300,000 tonnes/year of LLDPE. Triunfo PP capacity accounts for nearly 37% of Brazil’s PP capacity, while PE capacity accounts for about 40%. Difficulties in transport of employees at the Triunfo petrochemicals hub has also been the main reason for other chemicals companies in the complex such Innova and Arlanxeo to declare force majeure from their facilities. RAINS RETURN Rio Grande do Sul’s floods have brought the state to a standstill and, to make matters worse, rains returned on Wednesday, 8 May and forced some rescue operations for the more than 100,000 residents displaced to be suspended. In those conditions, Freitas would not venture in forecasting when the Triunfo complex could return to operations. “It could be some days still [to return to normal operations], perhaps more than a week. But with the rain back, we cannot really forecast when it will be,” said Freitas. “But we are optimising our sales from our other sites in the states of Sao Paulo, Rio de Janeiro and Bahia.” RECOVERY AT LAST? Braskem’s CEO, Roberto Bischoff, also present at the press conference, concluded saying that Braskem’s improved earnings during Q1 were the sign that things were improving for the company and Brazil’s chemicals producer generally. Earnings before interest, taxes, depreciation, and amortization (EBITDA) improved both year on year and quarter on quarter, although sales posted a more mixed result while the company posted again a net loss for the quarter. Braskem (in $ million) Q1 2024 Q1 2023 Change Q4 2023 Change Q1 vs Q4 Sales 3,618 3,743 -3% 3,369 7% EBITDA 230 205 12% 211 9% Net profit/loss -273 35 N/A -317 -14% “We are seeing better spreads in petrochemicals. After the efforts by the company to improve our financial resilience, we expect the results of that will continue showing for the rest of 2024,” concluded the CEO. Front page picture: Braskem’s facilities in Triunfo, Brazil (Source: Braskem) With additional reporting by Bruno Menini

LONDON (ICIS)–Join European senior editor manager Vicky Ellis, as she talks to European and African PE/PP senior editor Ben Lake and Turkey PE/PP senior editor manager Samantha Wright. The group discuss the coming month, as players see sentiment cool from a hectic first quarter. Senior analyst Lorenzo Meazza also drops in to react to LyondellBasell’s announcement that it plans to “review” all European polymer and olefin assets,  following on from announcements of closures of ExxonMobil and SABIC crackers.

SINGAPORE (ICIS)–Asia’s propylene market will continue to see weak demand, although potential curbs in plant run rates in China amid weak margins could lend support. Downstream, China’s propylene oxide (PO) import demand may continue to be adversely impacted by domestic Chinese start-up capacities, while demand in the main downstream polyols sector is unlikely to recover in the second quarter (Q2). South Korea June-loading propylene volumes likely to increase month on month Domestic Chinese PO start-ups to keep domestic supply lengthy, hampering import demand Global PO supply excluding China remains tight, downstream polyols likely muted in Q2 In this chemical podcast, ICIS editors Julia Tan and Shannen Ng discuss trends in the Asian propylene and PO markets.