LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 17 May. Europe PET/PTA industry on high alert as freight costs soar Another shock to the logistics system is rippling through the European polyethylene terephthalate (PET) value chain but the impact is only so far just touching the surface. Europe oxo-alcohol spot prices face pressure from growing supply Prices in the European oxo-alcohols spot market were stable to lower this week as there is now plenty supply of all grades. IEA cuts 2024 crude forecast as OECD Q1 demand slips into contraction The International Energy Agency (IEA) on Wednesday cut its expectations for global crude oil demand growth as demand from the OECD shifted into contraction territory in Q1 and as refinery margins continued to slump into the spring period. Non-OPEC+ crude supply growth to slip in 2025, Latin America to drive non-OECD output – OPEC Increases in crude oil supplies from outside the OPEC+ bloc of countries is expected to decline slightly year on year in 2025, with the US and Canada expected to remain the backbone of OECD production increases and Latin America driving the rest of the world, according to OPEC. IPEX: Global spot IPEX slips as decline in Asia offsets gains in other regions, crude The global spot ICIS Petrochemical Index (IPEX) slipped 0.1%, as a fall in the northeast Asia index failed to offset gains in other regions and a rise in crude oil prices.

SINGAPORE (ICIS)–Thailand’s economy grew by 1.5% year on year in the first quarter, slowing from the 1.7% expansion in the preceding quarter, as private consumption continued to remain robust. On a quarter-on-quarter seasonally adjusted basis, the Thai economy – southeast Asia’s second largest – expanded by 1.1% in the first three months of 2024, the National Economic and Social Development Council (NESDC) said in a statement. The quarterly growth prevented the economy from entering a technical recession, following a revised 0.4% contraction in the final quarter of 2023. Thailand’s economy expanded by 1.9% year on year in 2023. Private consumption rose by 6.9% year on year in the first quarter, continuing the 7.4% expansion in the previous quarter, and offsetting a 2.1% decline in government spending. Exports by value fell by 1.0% year on year in the first quarter, weighed by lower volumes, while imports were up 3.2%. Manufacturing declined by 3.0% year on year on in the first quarter, extending the 2.4% decline in the previous quarter. The manufacturing sector in Thailand is dominated by older industries with declining global demand and lags in sectors where global demand is increasing, Nomura Global Markets Research said in a report released on 17 May. This reflects Thailand’s failure to move up the supply chain and add value to its export products, a trend that has become increasingly evident in its post-pandemic export structure, it said. Of the ten largest export products, Thailand has gained an increasing share in the global exports of air-conditioners, hard disk drives, and rubber tires. However, the global export share of these products has been declining, with hard disk drives, the largest export product, experiencing a significant drop in global market share. Meanwhile, Thailand’s global export share in integrated circuits has declined slightly, even as the segment has seen substantial growth in the global market. “This implies the current global tech turnaround will result in the export underperformance of the country,” Nomura added. 2024 FORECAST LOWEREDThe NESDC now expects the Thai economy to expand by 2-3% year on year in 2024, down from the previous range of 2.2-3.2%. The Thai economy still faces downside risks and limitations, particularly from high household and corporate debt levels, the risk of floods affecting agricultural production, and the uncertain and volatile global financial market, it said. As for trade, a downward revision in exports for 2024 was mainly attributed to a decline in export volume during the first quarter of the year and a lowered forecast for global trade volume growth. Initially, export value was anticipated to grow by 2.9%, but this has been revised down to 2.0%, while export volume growth was adjusted from 2.4% to 1.5%. “On the external front, while exports of goods may not benefit from the global tech turnaround, given structural constraints, the slow economic recovery in China should continue to limit the pace of the tourism recovery [in Thailand],” Nomura said. Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 17 May 2024. Asia melamine makers grapple with increased costs, slowing demand By Joy Foo 17-May-24 11:53 SINGAPORE (ICIS)–Asia’s melamine spot market for China-origin product was largely stable in the first half of May, even though feedstock urea prices continued to rise, but demand may weaken for the rest of the month. Singapore’s April petrochemical exports rise 26.5%; NODX down 9.3% By Nurluqman Suratman 17-May-24 10:45 SINGAPORE (ICIS)–Singapore’s petrochemical shipments rose by 26.5% year on year in April to Singapore dollar (S$) 1.34 billion, reversing the 3.6% decline in the previous month, official data showed on Friday. PODCAST: China PP exports to weigh on SE Asia on ample propylene supply By Damini Dabholkar 16-May-24 21:55 SINGAPORE (ICIS)–The ample supply of propylene in Asia and new polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Tanker incident triggers rate hike on South Korea-Japan trades By Hwee Hwee Tan 16-May-24 11:28 SINGAPORE (ICIS)–The intra northeast Asia tanker market is expected to remain stable despite recent volatility in South Korea-Japan chemical freight rates, following a fatal tanker incident off Japan’s west coast. US hikes tariffs on $18bn worth of China imports, including EVs By Nurluqman Suratma 15-May-24 12:20 SINGAPORE (ICIS)–US President Joe Biden is ramping up tariffs on $18 billion worth of imports from China, including electric vehicles (EVs), semiconductors, batteries and other goods, in a move that the White House said was a response to unfair trade practices and intended to protect US jobs. Asia polyester discussions stable amid reduced supply, lower feedstock prices By Judith Wang 14-May-24 14:55 SINGAPORE (ICIS)–Asia’s polyester export discussions were little changed as the pressure of reduced supply in China was balanced out by weaker feedstock prices.

HOUSTON (ICIS)–Average global rates for shipping containers continue to surge, liquid chemical tanker rates ex-US Gulf were mostly softer, and work continues to reopen the Port of Baltimore, highlighting this week’s logistics roundup. CONTAINER RATES Rates for shipping containers surged by double digits again this week on unexpected demand and tight capacity stemming from Red Sea diversions. Average global rates surged by 11% 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 are up by almost 33% from early-February and rates from Shanghai to the East Coast are more than 30% higher over that period, as shown in the following chart. Drewry expects ex-China freight rates to rise due to increased demand, tight capacity, and the need to reposition empty containers. Emily Stausbøll, senior shipping analyst at ocean and freight rate analytics firm Xeneta, said the speed of the increases is causing nervousness in the market. “Demand reached record levels in Q1 2024, up by 9.2% compared to Q1 2023, and comes at a time when the Red Sea situation is putting increased pressure on shipping capacity,” she said. “But significantly, this is all taking place while the chaos of port congestion and lack of available capacity during the COVID-19 pandemic is still fresh in the memory of shippers.” “Lessons will have been learned from the pandemic. If shippers fear there is going to be a squeeze on capacity during the peak season in Q3 then they are going to start importing more goods now,” Stausbøll said. “If these increased volumes need to be moved on the spot market, then it is going to put upwards pressure on rates.” 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 lower as rates fell from the US Gulf (USG) to Asia and from the USG to India. However, rates ticked slightly higher for smaller parcels from the USG to Caribbean and surged from the USG to Brazil. From the USG to Rotterdam, it has remained quiet again this week, with available space for part cargo still open. COA volumes have been heavy for owners; however, spot inquiries have been quiet. Due to the available space and softness, this could place further downward pressure on this trade lane. From the USG to the Caribbean, the market has remained higher with very little prompt space available. Owners have pushed to keep freight rates mostly steady; however, there is currently a lack of activity from out of the USG. From the USG to Asia, this market has remained overall soft after a long holiday week in Japan. BALTIMORE, HOUSTON BRIDGE COLLISIONS Traffic in and out of the Houston Ship Channel was not affected after a barge struck a bridge connecting Galveston and Pelican islands on Wednesday morning. JJ Plunkett of the Houston Pilots said the Intracoastal Waterway (ICW) was closed, which could slow movement of barges moving finished product from plants along the channel. Ships enter the channel by passing between Galveston Island and the Bolivar Peninsula and then move through Galveston Bay before reaching the main section of the channel where refineries, chemical plants and storage facilities are located. The barge collided with a bridge that connects Galveston Island to Pelican Island, located well to the west of where commercial vessels enter and exit Galveston Bay. Meanwhile at the Port of Baltimore, the container ship that essentially closed the port on 26 March after it struck the Francis Scott Key Bridge, causing its collapse, is set to be moved now that the mangled remnants of the span were removed from the ship’s bow with controlled blasts on 13 May. Officials continued to evaluate the situation on Friday in preparation for refloating the vessel and clearing the federal channel. Officials have evaluated sonar and lidar imagery but are awaiting results from a dive survey before proceeding with plans to refloat and move the vessel. 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. PANAMA CANAL Wait times for non-booked southbound vessels ready for transit surged this week while wait times for northbound vessels edged higher, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image. Wait times a week ago were 2.6 days for northbound vessels and 2.4 days for southbound vessels. Additional reporting by Kevin Callahan

HOUSTON (ICIS)–Powerful thunderstorms in Houston and the Gulf Coast disrupted operations at chemical plants while leaving more than 700,000 without power as of Friday. The storms hit Houston on Thursday evening. TPC Group reported that severe weather caused a power outage, which led to flaring at its butadiene (BD) operations in Houston. Power was restored, and operations returned to the site, TPC said in a filing with the Texas Commission on Environmental Quality (TCEQ). Lotte Chemical has delayed the restart of its cracker and downstream ethylene glycol (EG) unit in Lake Charles, Louisiana, to next week because of bad weather, according to market sources. Lotte did not immediately respond to a request for comment. The storm created winds of 40-78 miles/hour (64-126 km/hour), according to the National Weather Service. Such strong winds created widespread power outages throughout the region. In the late morning, more than 700,000 customers were without power in the Houston area, according to CenterPoint Energy, a power company that is the main transmission company. Overall, more than 777,000 outages were reported in Texas, according to PowerOutage.us. Another 90,000 outages were reported in Louisiana, another state that is home to several petrochemical plants and refineries. The winds reached hurricane force in downtown Houston, where many petrochemical companies have corporate offices. “This was an incredibly dangerous and destructive storm, impacting one of the largest cities and busiest travel hubs in America,” said AccuWeather Chief Meteorologist Jonathan Porter. “Downtown Houston has not seen wind damage like this since Hurricane Ike in 2008 and Hurricane Alicia in 1983. The winds were even stronger at greater heights because they experienced less friction from low-lying buildings and trees, according to AccuWeather. Wind gusts of 33 miles/hour near ground level would equate to 80 miles/hour at six stories and 90 miles/hour at 10 stories. The wind strength at those elevated stories would be the equivalent of a Category 1 hurricane on the Saffir-Simpson wind scale. Preliminary damage estimates from AccuWeather point to $5 billion to $7 billion in total damage and economic loss from the storm in southeast Texas, it said. So far, major railroad companies have not issued any alerts about disruptions to their lines. Port Houston said its terminals are operating as usual. Additional reporting by Adam Yanelli and Melissa Wheeler  (adds paragraphs 3, 5-6, 9-13) Photo shows aftermath of the storms that hit Houston. Image by ICIS.

TORONTO (ICIS)–A potential freight rail strike in Canada has been delayed because the matter has been referred to the Canada Industrial Relations Board (CIRB) and collective bargaining resumes today, Friday 17 May. Strike averted, for the time being Industrial board investigates potential strike impacts Rail strike would hit chemical and fertilizer logistics After about 9,300 unionized conductors, train operators and engineers and other workers at freight rail carriers Canadian Pacific Kansas City (CPKC) and Canadian National (CN) earlier this month voted for a strike, federal labor minister Seamus O’Regan referred the matter to the CIRB, a quasi-judicial tribunal charged with keeping industrial peace in Canada. The minister wants the board to investigate if disruptions to the supply of products such as heavy fuel, propane, food, and chlorine and other water treatment chemicals could pose safety and health issues, in particular in remote communities. The board could decide that rail shipments of certain goods need to be continued during a strike. The board has called on affected groups and organizations to make submissions on the matter by no later than 21 May. Trade group Chemistry Industry Association of Canada (CIAC) said it will make a submission about impacts on its industry. It remains unclear how long it will take for the CIRB to reach a decision. After a decision, the union would have to give 72 hours of notice before starting a strike. 22 MAY STRIKE DEADLINE OFF THE TABLE Labor union Teamsters Canada Rail Conference (TCRC), which previously said that a work stoppage could start as early as 22 May, has acknowledged that during the CIRB process there will be no strike. Confusingly, the union on Friday still posted a notice on its website about a possible 22 May work stoppage as an “upcoming event”. A union official did not respond to an ICIS request for comment. Rail carrier CPKC said in a statement that neither a legal strike nor a lockout can occur until the CIRB makes its decision. It added that the referral to the board has created uncertainty about the timing of a potential work stoppage and interruptions of rail service. CPKC, for its part, has proposed to the TCRC a “maintenance of services agreement” under which both parties agree on services that should be maintained in the event of a strike or lockout, it said. “We believe this would eliminate the need for the CIRB referral process and bring much needed clarity regarding the timing of any potential strike or lockout,” it said. If no such agreement is reached, it is unlikely the parties will be in a position to initiate a legal strike or lockout within the next 60 days, CPKC said. A source at a major sulfur exporter told ICIS the referral to the CIRB was a “stall tactic” by the government that delays the risk of a strike, likely until the end of May. IMPACTS ON CHEMICALS AND FERTILIZERS Freight rail work stoppages can quickly affect logistics in the chemical, fertilizer and other industries, and a simultaneous stoppage at Canada’s biggest rail carriers would worsen impacts by far. In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail. In the fertilizer industry, about 75% of all fertilizer produced and used in Canada is moved by rail and the industry depends on rail to move product across the country and into international markets. In the run-up to potential strikes, producers need to prepare, longer strikes can force them to shut down plants, and after a strike ends it can take weeks for normal operations to resume. Beyond chemicals and fertilizers, rail strikes affect the overall Canadian manufacturing sector. Trade group Canadian Manufacturers and Exporters (CME) has warned that companies could not afford to have their businesses and workers threatened by “a critical supply chain labor disruption”. “More than any other industry, we rely on railways to access critical inputs and bring goods to customers,” CME said in a statement. According to the April purchasing managers’ index (PMI) survey by S&P Global, Canadian manufacturing has been weak for the past 12 months. FREIGHT RAIL DATA For the first 19 weeks of 2024, ended 11 May, Canadian chemical railcar loadings rose 3.9% year on year to 262,089, the American Association of Railroads (AAR) reported this week. Total freight rail traffic – comprising railcar loadings and intermodal units – was at 3,064,779 for the first 19 weeks, up 0.9% from the same period in 2023. Focus article by Stefan Baumgarten Additional reporting by Julia Meehan Please also visit Logistics: Impact on chemicals and energy Thumbnail photo source: Canadian National

SINGAPORE (ICIS)–The White House on 14 May announced it would increase tariffs on $18 billion worth of imports from China to protect American workers and businesses. How will this latest development impact China’s LPG supplies from the US. In 2023, the US was the second largest LPG exporter to China, following the Middle East. In 2018, China raised the import tariff on US LPG from 1% to 25% in retaliation to tariffs hikes implemented by the former US president Donald Trump. In this podcast, ICIS Analyst Lillian Ren shares insights on the potential impact on Chinese imports of LPG, including propane and butane.

LONDON (ICIS)–Senior editor for recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: UK colourless flake prices rise for May Eastern Europe blue bale, colourless flake prices down Wider market entering a more stable period for now

MUMBAI (ICIS)–State-owned GAIL (India) Ltd plans to lay an ethylene/propylene (C2/C3) liquid pipeline from its gas processing complex at Vijaipur in the central Madhya Pradesh state to its Pata petrochemical complex at Auraiya in the northern Uttar Pradesh state. “The project will augment feedstock availability with additional polymer production at Pata Petrochemical Complex, reduce energy consumption and carbon footprint,” the company said in the notes accompanying its fiscal Q4 results. GAIL’s financial year ends in March. The proposed project is expected to cost Indian rupees (Rs) 17.9bn ($215m) and will be commissioned within 32 months, it said. Once operational, the pipeline will have the capacity to transport 950,000 tonnes/year of liquid feedstock to the Pata complex, it added. GAIL reported on 16 May a near-fourfold jump in net profit for the fourth quarter ending 31 March 2024 to Rs21.8bn, from Rs6.0bn in the same period last year. For the full fiscal year 2023-24, GAIL’s net profit increased by 67% year on year to Rs88.4bn. “The robust performance during the year was primarily driven by better physical performance across all major segments, despite lower prices in petrochemicals and liquid hydrocarbons,” GAIL managing director and chairman Sandeep Gupta said. GAIL currently operates a 200,000 tonne/year high density polyethylene (HDPE) plant; two linear low density polyethylene (LLDPE)/HDPE swing plants with capacities of 230,000 tonnes/year and 400,000 tonnes/year; and a 10,000 tonne/year butene-1 line at its Pata complex. The company is also setting up a 60,000 tonne/year polypropylene (PP) unit at the complex which is expected to come on stream in the current calendar year 2024. ($1 = Rs83.45)