HOUSTON (ICIS)–The largest US chemical trade association will urge federal regulators to reject the announced merger between US Class 1 railroads Union Pacific (UP) and Norfolk Southern (NS) unless it clearly enhances competition and improves service. Chris Jahn, president and CEO of the American Chemistry Council (ACC), told ICIS on Wednesday that it will oppose the merger once it comes before the Surface Transportation Board (STB), the federal agency that regulates the US railroad industry. “This is a big deal to our industry, a big deal to our customers,” Jahn said. “We are going to urge federal regulators to reject this deal unless it clearly enhances freight rail competition and improves service. Period. End of story. That is the legal standard that they have to meet.” Jahn said the chemical industry is one of the top three rail customers in terms of volume and revenue, and the industry hopes through growth that it could even increase its standing. “The chemical industry would love to give railroads more business going forward, and with the expected growth that we hope happens over the next decade in the industry, we anticipate by the mid-2030s there could be another 100,000 rail cars from the chemical industry in the system going forward,” Jahn said. “So, we want rail to be successful, we need rail to be successful, but it has got to be all about more rail competition, not less.” Executives from UP and NS said when announcing the merger that it was designed to enhance competition and create a more reliable and efficient transcontinental service option. Railroad executives said the merger will improve single-line service, address underserved areas like the Ohio Valley and the Mississippi River watershed, and enhance competition. Customers of the combined railroad will benefit from faster transit times, increased reliability and improved customer asset utilization, the executives said. But trade groups like the ACC and the Alliance for Chemical Distribution (ACD) disagree. Jahn said that currently four major railroads control 90% of rail traffic. “This deal alone will control half of the rail traffic in the United States, and what we have seen as we have consolidated in the last 40 years, from 23 railroads to six, is that shippers are the ones that pay the price,” Jahn said. “And what that means, ultimately, is we all know how inflation works. That is American consumers who end up paying the price, and so we are really very worried about that going forward.” Jahn noted that this will be the biggest merger STB has ever reviewed, and the first under new rules that created a higher bar to clear. “One, it has got to enhance competition. Two, you have had to consider all the other options and alternatives to a merger, which, frankly, they have not done,” Jahn said. Jahn said the ACC does support a recent announcement from Class 1 railroads BNSF and CSX for new intermodal services designed to offer seamless, efficient connections from coast to coast. “We are very supportive of that,” Jahn said. “We would like to participate – in that we would like to help them identify, one, where their bottlenecks are, and two, where there might be opportunities because of that, if they were addressed for us as an industry, to give them more business, to earn more of our business going forward.” Jahn said the industry has also seen rates increase over the years as the rail industry contracted from 23 railroads to six. He added that 75% of ACC members are captive, meaning they have only one choice for rail service. “Even if the network were more fluid, the concern about rates would more than offset that. As we have gone to fewer and fewer and fewer regular railroads, our rates have skyrocketed,” Jahn said. “So, if we are going to regulate them like a monopoly, which they effectively are, then that would be one thing. If we are going to let them operate as if they are in a free market when they are not, that raises grave concerns.” Jahn spoke about the recent action by US President Donald Trump to remove Robert Primus, a sitting member of the STB board, who was the lone vote against the 2023 merger of Canadian Pacific and Kansas City Southern railroads. “Mr Primus was a steadfast champion for strengthening America’s freight rail network, protecting supply chains,” Jahn said. “He served years on the STB. He pushed them to act faster, to address service breakdowns. I mean, he fought for rules that gave shippers real choices in the face of these growing freight rail monopolies that I have been talking to you about, and so we will miss his dedication to solving these issues.” Jahn said he hopes the president will fill vacancies on the board with candidates who are committed to fulfilling the board’s congressional mandate. “Again, that is providing access to greater competition and reliable rail service,” Jahn said. “That is the STP’s mandate, to whomever the president appoints, we would want them to make sure that they are trying to fulfill that mission.” Jahn said new rules from the STB on reciprocal switching, which is when a railroad that has physical access to a specific shipper facility switches rail traffic to the facility for another railroad that does not have physical access, were a step in the right direction but did not go far enough. In July, a federal appeals court vacated the reciprocal switching rule, saying the agency exceeded its authority. “We [the ACC] think reciprocal switching would be an important tool in the toolkit to address rail competition,” Jahn said. “It would enhance rail competition. It is not going to solve all of our problems, but it would help address them, and we should encourage the railroads to pursue those rather than mega mergers that make Wall Street happy.” Railroads are vital to the chemicals industry as chemical railcar loadings represent about 20% of chemical transportation by tonnage in the US, with trucks, barges and pipelines carrying the rest. Interview article by Adam Yanelli Thumbnail shows a railroad. Image by Shutterstock. 

LONDON (ICIS)–Shell has scrapped plans to complete an 820,000 tonne/year biofuels complex in Rotterdam, the Netherlands, after deeming the project “insufficiently competitive”, the company said on Wednesday. The UK-headquartered oil and gas major suspended work on the flagship project in mid-2024, not long before the expected completion period for the facility, after making a final investment decision to develop the plant in 2021. The company estimated it would book an impairment of $600 million to $1 billion in its second-quarter 2024 results due to the move to suspend work on the Rotterdam project. The decision not to move forward with the project, which would have been among the largest biofuels facilities in Europe, was driven by the projected economics of the completed plant, according to the company. “As we evaluated  market dynamics and the cost of completion, it became clear that the project would be insufficiently competitive to meet our customers’ need for affordable, low carbon products,” said Machteld de Haan, Shell’s president for downstream, renewables and energy solutions. The cancellation of the project comes despite the introduction of the European Commission’s sustainable aviation fuels (SAF) mandate, which mandates a floor for the amount of bio-based content in fuels at EU airports from this year. Under the mandate, minimum SAF content in airport fuels is expected to tick up from 2% in 2025 to 6% in 2030,ratcheting up to 20% by 2035. Spain-based player Cepsa is currently constructing a 500,000 tonne/year biofuels plant in Huelva in the country, with the €1.2 billion project expected to be completed by next year. Thumbnail image shows Shell building in Rotterdam, the Netherlands. Image credit: Shutterstock

SINGAPORE (ICIS)–Mura Technology will develop a 50,000 tonne/year advanced recycling facility on Singapore’s Jurong Island, the UK recycled plastics producer announced on 28 August. Mura’s plant will be located within the Singapore Essential Chemicals Complex (SECC) on Jurong Island, on a site leased from Singapore’s PCS. The plant, which can increase its capacity up to 100,000 tonnes/year, will utilize Mura’s Hydro-PRT technology that converts plastic waste into circular hydrocarbon products, which can then be used to create virgin-quality recycled plastic materials, the company said. Mura aims to process over 60,000 tonnes/year of plastic waste, supporting Singapore’s ambitions of increasing the country’s overall recycling rate to 70% by 2030. “As the region’s premier hub for trade, innovation, and circular economy leadership, Singapore provides the ideal platform for Mura’s new facility to recycle both local and regional plastic waste into premium, circular feedstocks,” Mura said in a statement. Financial details were not disclosed. The facility is part of a growing investment in circular plastics across southeast Asia, amid “tightening plastics circularity rules, growing brand commitments and consumer pressure”, said Bala Ramani, director of sustainability consulting and Asia strategy advisor at ICIS. With integrated petrochemical infrastructure and proximity to multinational firms targeting “ambitious sustainability agendas”, the project also reflects Singapore’s strategic advantages in the field, said Ramani. “The outlook for this investment will be influenced by the consistency of plastic waste feedstock, not only in terms of sufficient volumes but also the quality required for stable plant operations,” Ramani added.

HOUSTON (ICIS)–The US corn crop has reached a maturity rate of 15% with 11% of the soybean crop having dropped their leaves according to the latest crop progress report from the US Department of Agriculture (USDA). The amount of crop maturity more than doubled week on week but trails the 18% level from 2024 and is ahead of the five-year average of 14%. Corn at the dough stage is now at 90%, which is above the 89% from last season but is behind the five-year average of 91%. Corn that is now dented climbed to 58%, which is equal to the 58% level in 2024 but trails the five-year average of 60%. For corn conditions the acreage rated as very poor is up to 3% with 6% still listed as poor. The crop seen as fair has increased to 22% with the level as good down to 50% and excellent decreased at 19%. The first update on the US corn harvest will be released by the USDA next week. The soybean crop now setting pods has lifted to 94%, which is ahead of the 93% mark in 2024 and matches the five-year average of 94%. The amount of the crop dropping leaves is up to 11%, which lags the 12% achieved last season but is ahead of the five-year average of 10%. For soybean conditions the crop viewed as very poor is up to 3% with very poor increased to 7% and fair having lifted to 25%. The acreage listed as good declined to 51% with the level of excellent down to 14%. Spring wheat harvest is now 72% completed with sorghum harvest at 17%.

NEW YORK (ICIS)–Global chemical supply/demand fundamentals could “tighten materially” if meaningful plant shutdowns take place, said a Wall Street analyst. “After three consecutive years of earnings compression, fatigue has certainly set in with many global companies taking the bold step of permanently shuttering capacity,” said Hassan Ahmed, analyst at Alembic Global Advisors, in a research note. “Our analysis suggests that if all these capacity shutdown announcements do actually materialize, we could get to peak global utilization rates as early as 2028 (stress on the word ‘if’),” he added. The analyst pegs all announced ethylene capacity shutdowns at 7.8 million tonnes/year between 2025 and 2028, including South Korea’s recent announcement that its petrochemical company’s plant to shut down 2.7-3.7 million tonnes/year of ethylene capacity. “Beyond already announced shutdowns, we see around 10.5 million tonnes of planned capacity addition projects as being ‘at risk’ of cancellations,” said Ahmed. China has four ethane-based crackers accounting for 3.7 million tonnes/year of ethylene capacity that could be shut down in an “aggressive tariff environment” as they are entirely dependent on US ethane, he pointed out. China also has 11 million tonnes/year of mixed feed ethylene capacity which could switch to naphtha feedstock in the absence of cheap propane imports. This could result in another 1.7 million tonnes/year of lost ethylene production, the analyst said. “Finally, there is increased speculation that China may rationalize old and subscale ethylene facilities – we peg this shutdown figure at around 6.1 million tonnes,” said Ahmed. “If all these shutdowns were to materialize (29.8 million tonnes) the 2024-2029 global ethylene supply growth CAGR (compounded annual growth rate) would be a meager 0.8% and global utilization rates could exceed tightness levels of 90% as early as 2028,” he added. However, in the meantime, the Alembic Global Advisors analyst slashed 2025 and 2026 earnings per share (EPS) estimates on ethylene-exposed producers Dow, LyondellBasell and Westlake. Ahmed took down his 2025 EPS estimate on Dow to -$0.90 from $0.10 and his 2026 forecast to $0.60 from $1.45. For LyondellBasell, he pared his 2025 EPS estimate to $2.70 from $3.35 and his 2026 forecast to $4.75 from $5.40. The analyst cut his 2025 EPS estimate on Westlake to $0.15 from $0.35 and his 2026 forecast to $3.40 from $3.60. Thumbnail photo of polyethylene (PE) pellets by Shutterstock

LONDON (ICIS)–The phosphates market has seen some activity recently, with China resuming phosphates exports and import demand from Ethiopia and Bangladesh. However, affordability remains an issue for the market, especially in India. Meanwhile, ammonia availability remains tight globally, with planned and unplanned shutdowns. Senior editors Chris Vlachopoulos and Sylvia Traganida discuss the latest developments in the markets and the short-term outlook.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 29 August. Some lubricating oil codes fall under US steel tariffs Base oils are exempt from US tariffs, but some lubricant products will be affected. Some trade codes that include lubricating oils and preparations are included in the 50% tariffs on steel, aluminum and derivatives imposed under Section 232, as published in the Federal Register last week. ICIS Economic Summary: US set for moderate growth as trade deals offer some certainty The last month has seen more “deals” made with additional major US trading partners. Deals have yet to be made with China, Canada, Mexico and India, but those made cover roughly three-fourths of US trade. Progress thus far has brought some certainty back to markets and decision-makers, but our base case is for a slowdown in the US economy. UPDATE: RAIL: New service from US railroads BNSF, CSX could be a better option than merger – ACD US railroads BNSF and CSX are offering several new intermodal services designed to offer seamless, efficient connections from coast to coast, an alliance that is supported by the head of the chemical distributors association. INSIGHT: Proposed US biofuel mandate to raise costs for fuel, oleo markets The new biofuel mandate proposed by the US calls for larger amounts of renewable fuel to be blended into gasoline and diesel, all while penalizing companies that import biofuels or the feedstock needed to make them domestically. EU proposes to cut US import duties to zero on plastics, rubber, fertilizers The European Commission has set out its first detailed proposals to cut tariffs on US products flowing to Europe as negotiators continue to flesh out the terms of the US-EU trade deal agreed last month. INSIGHT: Chemical companies seek liquidity with infrastructure assets, but it will not be easy Monetizing ‘hidden’ assets such as infrastructure for chemical producers appears to be an increasingly attractive option, especially amid the prolonged industry downturn and depressed valuations for publicly traded companies.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at key challenges for the autumn. 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 29 August. EU proposes to cut US import duties to zero on plastics, rubber, fertilizers The European Commission has set out its first detailed proposals to cut tariffs on US products flowing to Europe as negotiators continue to flesh out the terms of the US-EU trade deal agreed last month. Germany’s Evonik spins out infrastructure activities in Marl and Wesseling into new firmEvonik is spinning out its infrastructure activities in Marl and Wesseling chemicals parks to become new companies, the German firm said on Thursday in a statement. INSIGHT: How the shift to EVs and lightweighting are impacting automotive plastic useThe shift towards electric vehicles (EVs) currently taking place in Europe should ostensibly mean a boon for plastic markets serving the sector. EVs use significantly more plastic than cars run on internal combustion engines (ICEs). However, a trend towards lightweighting, and cost-saving measures, mean that some plastics may not see as large a growth in use as others. INSIGHT: Softer crude oil, seasonal low demand to drive Europe chemical prices down in August The majority of European petrochemical prices are expected to fall in August, driven by lower crude oil values and persistently subdued downstream demand. India’s Paradeep Phosphates secures 1.6 million-tonne agreement with Morocco’s OCP India’s Paradeep Phosphates Ltd (PPL) has announced a significant long-term supply agreement with Morocco’s OCP, securing 1.6 million tonnes of phosphate rock.