NEW YORK (ICIS)–Chemicals distributor Univar Solutions is seeing relatively steady demand this year with greater strength on the specialties side versus industrials. Meanwhile, the North America reshoring trend is set to drive demand in later years as new manufacturing plants are built, its CEO said. “We had a good Q1. We saw modest growth in our industrial business and better growth in our ingredients and specialties business. Our results on [the latter] side would have stood out very favorably against our public peers in that space,” said David Jukes, CEO of Univar Solutions, in an interview with ICIS. Looking ahead, while a number of chemical producers expect a stronger demand pick-up in H2, there is little evidence to point to that at the moment, he pointed out. “Whether there will be a [meaningful] recovery in H2, I don’t see what that’s based on, other than hope. Hope is not a strategy and so we’re managing our business very carefully,” said Jukes. “We have grounds for optimism that we’re going to see some growth, irrespective of what the market does. Whether the market will have a H2 recovery, I have absolutely no idea. I think that’s based on, ‘It’s got to get better some day’. If it does, that’s great but I’m not banking on that. We think our future is very much in our own hands,” he added. Univar has improved its reliable delivery performance and customer NPS (net promoter scores) to record levels, with its digital channels helping to keep customer business “stickier”, as well as attract new customers, the CEO said. Demand for durables continues to lag, and there is no surge of restocking yet. “Consumers don’t think the economy is going very well… That’s [US President Joe] Biden’s problem right now. No matter how much you say it, consumers aren’t seeing it. Airline tickets and hotel rooms may be expensive, but refrigerators and cars are still on discount,” said Jukes. “We’re through all the destocking of last year but you’re not seeing wholesale restocking. You’re seeing people buying for what they need today and what they need for tomorrow [rather than longer term],” he added. Univar’s fast and reliable service model can help customers stock up when they need it, but one consequence is that it does not have solid medium-term visibility since customers are not ordering for six months from now, he pointed out. “We’re seeing steady demand. People are not expecting prices to fall and not expecting them to rise, and are buying things as they need them. If something fundamental changes in demand patterns, it would be nice, but we don’t bank on that,” said Jukes. HEIGHTENED COMPETITION LEADS TO INNOVATIONA more competitive market in chemicals is leading to greater demand for innovation when it comes to formulations, the CEO said. “When markets get highly competitive as they are now, the specialty players look for ways to differentiate their products. Our formulation labs and kitchens, and our applications development people are really busy being innovative,” said Jukes. “People will want to change a formulation, and create something different as a way of getting competitive advantage, particularly as you think about having more sustainable products in those portfolios. We’re seeing a lot of activity and growth in this area,” he added, pointing to more innovation taking place in the specialties and ingredients area. RESHORING/NEARSHORINGMeanwhile, the reshoring/nearshoring trend is pointed to boost demand for chemicals in North America in the coming years, with some impact already kicking in, he said. “This is happening, and macroeconomics and global events are feeding into that, whether it’s Red Sea disruptions, worsening relations with China or [turmoil] in the Middle East. We’re having them all at once at the moment, so there is a heightened trend to that reshoring and nearshoring,” said Jukes. “Some of that we won’t see the full impact of, for a couple of years because it takes time to build the infrastructure. But certainly for our North America business, we are seeing good signs, and that will only pick up over the coming years,” he added. DOMESTIC SOURCING AND TARIFFSFor many years, Univar has deliberately sourced the vast majority of its products domestically. Thus, even being a global distributor, the rising trend of protectionism through tariffs is not a major concern. “It’s been a deliberate strategy for us for a number of years… What it does create are some opportunities for us to move domestically sourced product for people who are being impacted by it. That tends to be some of the smaller companies,” said Jukes. “We source domestically and sometimes that means you perhaps find yourself on the wrong side of a very competitive product that’s coming in, but we’re not running this business for this month. You’ve got to take a longer view on this – you can’t live from transaction to transaction,” he added, noting that Univar is celebrating its 100th year anniversary this year. “We’ve taken a much more longer-term strategic view, and it’s served us well,” said Jukes. North America accounts for 75-80% of Univar’s sales, with Europe at 20-25%. The distributor also has a very small presence in China. Interview article by Joseph Chang

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

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 10 May. NPE ’24: Plastics industry headwinds likely to persist through 2024 Headwinds for the plastics industry including higher cost of capital, weaker household spending momentum and capacity adjustments will likely persist through 2024, according to a presentation by Perc Pineda, Chief Economist at PLASTICS, at this year’s NPE show. IPEX: April index rises for fourth month in a row on firmer pricing in northwest The ICIS Petrochemical Index (IPEX) was up 1.5% in April month on month as production constraints continue to push contract prices up across some commodities, mainly in northwest Europe and northeast Asia. NPE ’24: SABIC eyes growth opportunities in Americas amid era of global overcapacity SABIC is looking for further opportunities for growth in the Americas as part of its strategy to navigate an era of excess capacity around the world, one that has led it and other producers to shutter capacity in high-cost regions, an executive said. Brazil’s Braskem deliveries safe despite Triunfo shutdown taking off third of capacity – CFO 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. Brazil’s Indorama suspends operations at Triunfo, ports still closed, fertilizers demand to be hit 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.

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.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the latest demand shifts in the smartphone market. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author and do not necessarily represent those of ICIS. Paul Hodges is the chairman of consultants New Normal Consulting.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 10 May. Europe propylene supply rebalancing on derivative restart, cracker issues Propylene spot supply is returning to a more balanced position with a key derivative unit now back on stream and a couple of cracker issues disrupting output. Europe businesses face tough market and regulatory hurdles in long term – LyondellBasell Market conditions in Europe are likely to remain challenging in the long term while changing regulations are increasing costs for businesses, LyondellBasell Industries said on Thursday, after announcing a strategic review for most of its operations in the region. LyondellBasell launches review of European assets LyondellBasell has launched a strategic review of the bulk of its operations in Europe, the producer said on Wednesday, based on its strategy to focus on assets perceived to have long-lasting competitive advantage Chandra Asri aspires to become regional player with Shell Singapore purchase Chandra Asri is looking to develop its presence in southeast Asia and become a key regional player with its purchase of Shell’s refining and petrochemicals assets in Singapore alongside commodities major Glencore, the Indonesia-based firm said on Wednesday. IPEX: April index rises for fourth month in a row on firmer pricing in northwest Europe, northeast Asia The ICIS Petrochemical Index (IPEX) was up 1.5% in April month on month as production constraints continue to push contract prices up across some commodities, mainly in northwest Europe and northeast Asia. BASF puts ammonia, methanol, melamine plants up for sale at Ludwigshafen BASF has engaged plant sale specialists International Process Plants (IPP) to sell idled ammonia, methanol and melamine units located at its loss-making Ludwigshafen site in Germany.

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 10 May 2024. PODCAST: APIC ‘24: Asia recycled plastics sees sustainable finance focus By Damini Dabholkar 10-May-24 12:22 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. China-SE Asia arbitrage flow for MTBE unworkable on oil price falls By Keven Zhang 10-May-24 11:50 SINGAPORE (ICIS)–The arbitrage of methyl tertiary butyl ether (MTBE) from China to southeast Asia can be reopened, after blenders in southeast Asia finish consuming their existing inventory. PODCAST: Weak demand expected for Asia propylene and downstream PO By Damini Dabholkar 09-May-24 15:02 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. China exports return to growth in April amid signs of improving demand By Nurluqman Suratman 09-May-24 14:31 SINGAPORE (ICIS)–China’s April exports rose by 1.5% year on year to $292.5 billion in April, reversing the 7.5% contraction in March supported by signs of improved global demand, customs data showed on Thursday. China petrochemical market edges up in Apr, demand outlook remains weak By Yvonne Shi 08-May-24 13:20 SINGAPORE (ICIS)–China’s petrochemical market edged up in April, with the ICIS China Petrochemical Index – which tracks 17 key products in the domestic market – rising slightly by 1.60% to 1267.60 by the end of the month as compared with March. Singapore April manufacturing slows amid persistent external headwinds By Nurluqman Suratman 07-May-24 11:59 SINGAPORE (ICIS)–Singapore’s manufacturing activity fell in April as a result of decreased export orders triggered by external demand headwinds and high global interest rates. NE Asia C3 talks to kick off, but supply concerns weigh on buyers By Julia Tan 06-May-24 12:02 SINGAPORE (ICIS)–Discussions for June arrivals will kick off as China returns from the Labour Day holidays, even with the potential headwinds of poor downstream demand and ample supply from Southeast Asia.

HOUSTON (ICIS)–The US Department of Agriculture (USDA) is anticipating larger corn and soybean supplies and ending stocks according to the May World Agricultural Supply and Demand Estimate (WASDE) report. For corn, the outlook is for not only increased supply and stockpiles, but also greater domestic use and exports with the current corn crop being projected at 14.9 billion bushels. This is a dip of 3% from last year’s record as a decline in area is partially offset by an increase in yield. Right now, the yield projection is at 181.0 bushels per acre and is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2023 period. With higher beginning stocks, total corn supplies are forecasted to be at 16.9 billion bushels, the highest since 2017-2018. Total US corn use is forecast to rise just under 1% relative to a year ago on higher domestic use and exports. Food, seed and industrial use is forecast at 6.9 billion bushels. Corn used for ethanol is unchanged relative to a year ago, based on expectations of flat motor gasoline consumption. Feed and residual use is projected higher on larger supplies and lower expected prices. Corn exports are forecasted to rise by 50 million bushels to 2.2 billion bushels, supported by a reduction in exports for Argentina, Brazil, Russia and Ukraine with the US projected to be the world’s largest exporter for the second consecutive year, with an expected increase in global market share. With total US corn supply rising more than use, ending stocks are up 80 million bushels from last year, and if realized, would be the highest in absolute terms since 2018-2019. The season-average farm price for corn is now being projected at $4.40 per bushel. For soybeans, the monthly update is calling for not only higher supplies and ending stockpiles but also upticks in exports. Currently the soybean crop is being projected at 4.45 billion bushels, up 285 million bushels on higher area and trend yield. With higher beginning stocks and production, soybean supplies are forecast at 4.8 billion bushels, up 8% from 2023-2024. Soybean exports are forecasted to come in at 1.83 billion bushels, which would be up by 125 million bushels from 2023-2024 with higher exports this fall due to a lower Brazilian 2024 harvest. With strong seasonal exports after harvest followed by pressure from larger South American production in 2025, the US. share of global exports is forecast at 28%, down from the prior five-year average of 32%. Ending stocks are projected at 445 million bushels, up 105 million bushels from last year. The current season-average soybean price is forecasted at $11.20 per bushel compared with $12.55 per bushel in 2023-2024. The next WASDE report will be released on 12 June,

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