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Gas07-Oct-2024
SINGAPORE (ICIS)–Here are the top stories from
ICIS News Asia and the Middle East for the week
ended 4 October.
INSIGHT: Bold policy
moves might not arrest China economic
slowdown
By Nurluqman Suratman 30-Sep-24 13:51 SINGAPORE
(ICIS)–In a bold move to revitalize its
economy and restore investor confidence, China
unveiled a comprehensive package of monetary
and fiscal measures less than a week before the
country goes on a week-long holiday.
Focus: China urea to stay
weak on ample supply and low demand
By Rita Wang 30-Sep-24 18:14 SINGAPORE
(ICIS)–China’s urea market rebounded slightly
recently, but the outlook for the spot market
remains weak due to high inventories,
restricted exports and the upcoming lull
season.
Asia
EDC spot demand likely to taper; regional
supply to improve in end-2024
By Jonathan Chou 01-Oct-24 18:15 SINGAPORE
(ICIS)–Asia’s spot EDC demand may be capped in
the near term with buyers adequately stocked.
Market players are watching out for ripple
effects from China’s recent blitz of stimulus
measures that may impact conditions for main
derivative polyvinyl chloride (PVC).
Asia
PVC conditions may see limited impact from
China stimulus measures
By Jonathan Chou 02-Oct-24 13:48 SINGAPORE
(ICIS)–Some bullishness was observed recently
in China’s domestic market, in part due to its
government’s stimulus measures.
India
faces BOPP film overcapacity on start-ups in
next two years
By Aswin Kondapally 02-Oct-24 22:11 MUMBAI
(ICIS)–India is facing an oversupply of
biaxially oriented polypropylene (BOPP) film,
with nine new domestic production lines set to
come on stream, which will exert heavy pressure
on the market over the next two years.
Asia
MMA prices see first sharp fall in 2024 on
bearish market conditions
By Jasmine Khoo 03-Oct-24 10:06 SINGAPORE
(ICIS)–Asia methyl methacrylate (MMA) spot
import prices were assessed significantly
softer in the week ended 27 September,
reflecting significant price falls for the
first time in 2024.
INSIGHT: China Sept
small-to-medium factories’ output shrinks on
poor demand
By Jonathan Yee 04-Oct-24 11:00 SINGAPORE
(ICIS)–Manufacturing output of China’s small
to medium enterprises went back to into
contraction mode in September, underscoring
continued and widespread weakness in the
world’s second-biggest economy.
Ammonia04-Oct-2024
HOUSTON (ICIS)–Woodside Energy has confirmed
that it experienced an incident on 3 October at
the Beaumont Clean Ammonia site in Texas, which
resulted in the death of an employee of one of
fertilizer producer OCI’s construction
contractors.
In a statement, Woodside said that the incident
occurred at approximately 8:30 am US central
time at the Texas facility it recently acquired
with construction efforts being managed by OCI.
The company did not provide further details of
the event other than to say the incident
occurred during work activity being carried out
at the site. It added that no one else was
harmed.
Woodside said that senior management was headed
to the ammonia site and that a full
investigation will be initiated.
Currently a stand down of all work at the site
is now in place.
“This is a very sad day, and I offer my deepest
sympathy to our colleague’s family, friends and
workmates. The safety of our workforce is
always our top priority, and we are providing
full support to OCI and its contracting
company,” said Meg O’Neill Woodside Energy CEO.
“We are taking steps to understand the
circumstances around this tragic event and are
working closely with relevant authorities and
regulators, OCI and the contractor company.”
For its part, OCI responded by saying “we don’t
provide details or commentary on start/stops at
our production sites.”
Potassium Chloride (MOP)04-Oct-2024
HOUSTON (ICIS)–US fertilizer producer Intrepid
Potash announced that Bob Jornayvaz has stepped
down as Chief Executive Officer and as a
director of the board following his extended
medical leave of absence.
The Denver-based producer had previously
announced Jornayvaz was injured in an accident
while playing in the US Open Polo Championship
in April and was on extended medical leave of
absence.
“We are thankful to Bob for his immeasurable
contributions to the company over the last two
decades,” said Barth Whitham, Chair of the
Board.
“Bob led numerous initiatives that strengthened
our customer relationships, modernized our
operations, and capitalized on our unique
position as the only domestic producer of
potash. He took great pride in the company and
its contributions to the domestic and global
agriculture industry. Bob and his family remain
in our thoughts, and we continue to wish him
well in his recovery.”
Intrepid said their Chief Financial Officer
Matt Preston will continue to serve as acting
principal executive officer as the Board of
Directors’ search to identify and select a new
CEO.
“The board’s search for a CEO is well underway.
In the interim, we are pleased to continue to
have Matt and the rest of the management team
lead the execution of Intrepid’s strategic
plan,” Whitham said.
Intrepid is the only US producer of muriate of
potash and also delivers volumes of magnesium,
sulfur, salt and water products for use in not
only agriculture and for animal feed, but also
within the oil and gas industry.
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Speciality Chemicals04-Oct-2024
HOUSTON (ICIS)–With the suspension of the
strike at US Gulf and East Coast ports until 15
January, carriers are urging customers to use
extended gate times being offered by some ports
to collect or deliver any urgent containers to
terminals.
The International Longshoremen’s Association
(ILA) and the United States Maritime Alliance
(USMX) reached a tentative agreement on wages
late Thursday and will extend the current
contract while they continue to negotiate other
outstanding issues.
Analysts at freight forwarder Flexport said the
relatively short duration of the ILA strike
means that the impact on the broader US economy
has been limited.
“If the strike had continued into next week,
the ripple effects could have been massive,”
Flexport said. “While the broader economic
impact has been averted, the strike has made an
immediate impact on the ocean and air markets.”
The company said that during the strike,
bookings to the US East Coast remained open,
and they expect them to stay open. The only
limitations were rail routings to the East
Coast via Los Angeles, but Flexport expects
they will soon resume operations as well.
“Early reports indicated that each day of the
strike would have added five to 10 days of port
congestion,” Flexport said. “If you have urgent
cargo, routing via the West Coast on rail or
transloading in Los Angeles remains your best
option to avoid potential congestion on the
East Coast.”
CONTAINER RATES FALL FURTHER, PACE
SLOWS
Global average rates for shipping containers
fell by 5% this week, according to supply chain
advisors Drewry and as shown in the following
chart.
But rates from east Asia and China to the US
fell at a slower rate, as shown in the
following chart.
Rates to the West Coast fell by 4.23% while
rates to the East Coast fell by 1.76%.
Drewry was anticipating rates to the US would
because of the strike.
But with the strike paused, and because peak
season demand was largely pulled forward, it is
likely that rates will continue to see downward
pressure.
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 RATES STABLE TO
SOFTER
The US chemical tanker market was largely
stable week over week, with slight decreases
seen from the US Gulf to Asia for smaller
parcels.
Most market participants were preparing to
attend the European Petrochemical Association
(EPCA) conference in Berlin, so the market was
quiet.
According to a ship owner that will be
attending the conference, the market is weak
across all trade lanes and will remain soft for
the short term.
The ship owner said that the current trend will
not change anytime soon as the heightened
tension in the Middle East provides a lot of
uncertainty.
USG-Asia rates were also pressured lower by the
increasing availability of space from outside
tonnage entering the market to move larger
cargoes. The trade lane is expected to remain
weak through November.
Rates on the USG/ARA trade lane have been
driven largely by a weaker CPP market which
allows that available tonnage capable of
offering on the chemical market, thus adding to
the availability of spot tonnage.
Additional reporting by Kevin Callahan
Thumbnail shows a containership. Image by
Noushad Thekkayil/EPA/Shutterstock
Polyethylene Terephthalate04-Oct-2024
LONDON (ICIS)–Global Service International
(GSI) CEO Francesco Zanchi discusses
polyethylene terephthalate (PET) industry
challenges and opportunities with ICIS PET
editor Caroline Murray.
Europe will combat overcapacity and rising
imports with trade barriers
Buyers delay switch to recycled PET (R-PET)
due to price delta with virgin PET
Supply and demand trends favor buyers
Caroline interviewed Francesco on the sidelines
of the GSI customer day PET Day at Artimino,
Italy.
Video interview by Caroline
Murray
Edited by Will Beacham
Recycled Polyethylene Terephthalate04-Oct-2024
LONDON (ICIS)–Senior Editor for Recycling,
Matt Tudball, discusses the latest developments
in the European recycled polyethylene
terephthalate (R-PET) market, including:
Italian monthly bales prices drop in latest
auctions
Colourless flake prices fall in Italy in
October
Cheaper PET puts pressure on R-PET sellers
No signs of demand improvement in October
Crude Oil04-Oct-2024
SINGAPORE (ICIS)–Manufacturing output of
China’s small to medium enterprises went back
to into contraction mode in September,
underscoring continued and widespread weakness
in the world’s second-biggest economy.
Caixin’s China Sept PMI falls to 49.3 from
50.4 in August
More fiscal measures may be required
Three big cities ease home-buying
restrictions amid property slump
No
immediate turnaround of the country’s weak
economic conditions can be expected
notwithstanding the slew of economic measures
recently announced.
China’s manufacturing purchasing managers’
index (PMI) last month declined to 49.3, from
50.4 in August, according to a private survey
conducted by Chinese private media group
Caixin.
A PMI number below 50 indicates contraction.
The Caixin PMI surveys small and medium-sized
enterprises (SMEs) and export-oriented
enterprises located in eastern coastal regions,
while the official PMI is tilted toward larger
state-owned enterprises (SOEs).
The small and medium manufacturers are worse
off since Caixin’s September PMI reading was
below the official number of
49.8, which was an improvement from
August’s 49.1.
In Caixin’s survey, the China’s September PMI
reversed the expansion recorded in August.
For two months in the third quarter, factory
output shrank, after managing to stay in
expansionary mode since November 2023.
Production at big factories, on the other hand,
has been indicating contraction for five
straight months, based on official PMI reading.
“The market [in September] was characterized by
diminished demand coupled with fierce
competition,” Caixin Insight Group senior
economist Wang Zhe said.
Delays in supplier logistics, low demand for
manufacturer purchases, and increased
inventories of both raw materials and finished
goods affected overall production in September,
Wang said.
“Across the board, the latest macroeconomic
data have fallen short of market expectations,”
the Caixin economist said.
Falling underlying demand, heightening
competition and subdued market conditions were
cited as reasons for the decline in incoming
new orders for Chinese manufactured goods,
according to Caixin.
“Softening economic conditions” overseas also
negatively affected export orders, it added.
A good number of petrochemical producers and
their downstream end-users fall under the SME
category.
Reeling from continued demand weakness, some of
these producers which have already been running
at reduced capacity may have to cut output
further.
Pre-holiday restocking turned out weaker than expected,
with market outlook
post-holiday remaining largely bearish.
Poor demand has kept China’s overall producers’
price index (PPI) in deflation territory for
nearly two years
STIMULUS MEASURES BOOST
SENTIMENT
Days before China went into a week-long
National Day celebration, the People’s Bank of
China (PBoC) announced a raft of measures,
including lowering of interest rates on
existing mortgages, to boost consumption.
On 26 September, the Politburo of
the Communist Party of China pledged
fiscal measures to complement the effective
monetary policy easing by the central bank amid
growing concerns that the country will fail to
achieve its 5% GDP growth target this year.
The International Monetary Fund (IMF) revised
up its growth forecast for the country in line
with the government’s target in May, from 4.6%
previously. It, however, warned of slower
growth ahead considering China’s ageing
population and slowed productivity expansion.
Although the
financial and commodities markets in China
surged after the measures were announced,
consumer confidence is still weak, which
will affect their spending power, analysts
said.
A stimulus program, even if seemingly large,
could have “a limited impact on growth”,
according to analysts at Japanese brokerage
Nomura.
More durable and impactful measures, including
increased fiscal spending, are needed to boost
China’s growth and address weak consumer and
business spending.
Spending during the week-long holidays from 1
October will thus be a gauge as to how the
economic measures will impact consumer
spending, Singapore’s UOB Global Economics
& Markets Research said in a note on 30
September.
In the same period in 2023, domestic tourism
revenues totaled yuan (CNY) 753 billion ($107
billion), according to state news agency
Xinhua.
PROPERTY MEASURES MAY BE
INSUFFICIENT
Three large Chinese cities – Guangzhou,
Shenzhen and Shanghai – eased house-buying
restrictions on 29 September, according to
Xinhua.
Guangzhou completely removed restrictions on
home purchases, while non-Shanghai residents
will be allowed to purchase suburban homes if
they have paid social insurance or individual
income tax in the city for at least a year,
instead of three years.
Shenzhen also announced reduction in
downpayment ratio and optimized
district-specific home purchase restrictions.
China’s government hopes to tackle its
years-long housing crisis via the fresh
measures.
But China’s economic worries may not be solved
with these measures alone, ICIS senior
consultant John Richardson said.
Long-term challenges such as the end of the
real-estate bubble and an ageing population
will not be easily fixed with economic
stimulus, he said in a
blog post on 30 September.
“The extent to which [China] can maintain its
dominant role in global exports is also in
question because of a much more difficult
geopolitical environment,” he said.
Insight article by Jonathan
Yee and Pearl
Bantillo
($1 = CNY7.02)
Thumbnail image: At a port in Lianyungang,
Jiangsu Province, China, on 2 October 2024.
(Costfoto/NurPhoto/Shutterstock)
Speciality Chemicals03-Oct-2024
HOUSTON (ICIS)–The three-day
strike by US Gulf and East Coast dock
workers has been suspended until 15 January to
allow negotiations to resume, according to a
joint statement from the union and ports.
The International Longshoremen’s Association
(ILA) and the United States Maritime Alliance
(USMX) said they have reached a tentative
agreement on wages and will extend the current
contract while they continue to negotiate other
outstanding issues.
“Effective immediately, all current job actions
will cease, and all work covered by the master
contract will resume,” the statement read.
The union went on strike on 1 October as
negotiations were stalled.
The union was seeking a 77% increase over the
next six years and commitments against any kind
of automation at the ports – full or semi –
that would replace jobs or historical work
functions.
The USMX was offering about a 50% increase.
IMPACTS TO CHEM MARKETS
The strike had already had some impacts on the
US chemicals industry, with polyethylene (PE)
exports to Brazil being put on hold.
The polyvinyl chloride (PVC) industry is
concerned as all US Gulf PVC exports move out
of one of the impacted East Coast ports.
In the polyethylene terephthalate (PET) market,
imports of PET resins have already been
diverted to the US West Coast in anticipation
of the work stoppage.
Thumbnail image shows a container ship.
Photo by Shutterstock
Speciality Chemicals03-Oct-2024
HOUSTON (ICIS)–In only its third day, a
strike by dock
workers at US Gulf and East Coast ports is
leading to idled trucks and growing numbers of
container ships queuing outside of the ports.
TRUCKING
A trucking trade group, the American Trucking
Associations (ATA), said that the strike has
stopped all activity at five of the nation’s
top 10 container ports and estimates that more
than 60 container ships carrying nearly 500,000
containers scheduled for October delivery are
now stuck in limbo.
The ATA said there are 30,000 truckers
registered to work just at the port of New York
and New Jersey, which sees about 12,000 truck
visits in a typical day.
“Tens of thousands of more up and down the
coasts are now sidelined by this strike,” the
ATA said.
The ATA said that the trucking industry is made
up of small businesses with more than 95% of
carriers operating 10 trucks or fewer.
Todd Spencer, president of the Owner-Operator
Independent Drivers Association, said American
consumers will suffer the longer the strike
goes on, but that independent drivers will also
feel the pain.
“The longer this labor strike drags out, the
more harm is done to American consumers who
rely on the trucking industry to deliver the
goods they depend on,” Spencer said. “We
encourage a quick resolution to this latest
dispute and emphasize the need for specific
discussions about how supply chain deficiencies
stifle driver compensation, increase loading
and unloading delays, and hurt highway safety.”
CONTAINER SHIPS BACKING
UP
Ships are also backing up outside of the
affected ports, according to publicly available
ship tracking services.
For example, there were about 51 vessels
outside the entrance to Port Houston on 2
October, and about 65 vessels in the same area
on 3 October.
Alan Murphy, CEO, Sea-Intelligence, said a
prolonged strike will have an impact on global
capacity as carriers currently have 62 deep sea
services that call on East Coast and US Gulf
ports.
Those vessels will have to wait at anchorage at
the first port of call on their discharge
schedule, Murphy said.
“In addition to that there are vessels which
have already commenced their discharge rotation
and will have to wait at their second, third,
or even fourth port of call, depending on how
much of their schedule they have already
completed prior to the strike taking place,”
Murphy said.
If the strike were to last four weeks, Murphy
said that almost 7% of the global fleet will be
tied up along the US East Coast, and the
overall impact on the supply and demand
equation will be very significant.
EXCESSIVE SURCHARGES
A chemical industry trade group, the Alliance
for Chemical Distribution (ACD), sent a letter
to US President Joe Biden criticizing excessive
surcharges imposed by the carriers.
In the letter, ACD President and CEO Eric Byer
highlighted the excessive surcharges imposed –
and profits made – by ocean shippers who
strangely had direct involvement in the failed
negotiations.
“Neither side negotiated in good faith,
effectively inviting a strike to take place,”
Byer said. “For the ocean carriers, this is not
surprising given the extreme profits they have
been able to collect over recent years, putting
them in a position to contentedly wait out a
strike while the American economy loses
billions of dollars a day.”
Byer said that the ocean carrier member
companies of the United States Maritime
Alliance (USMX) are levying a myriad of
surcharges on shippers, ranging from hundreds
of dollars to $3,000/container, citing labor
disruptions as the cause.
“Through these surcharges, the ocean carriers
are profiting from a crisis they played a
direct role in creating,” Byer said.
STALLED
NEGOTIATIONSMeanwhile, the two
sides are not currently negotiating.
The International Longshoremen’s Association
(ILA) is representing the dock workers, and
USMX is representing the ports.
USMX directors include representatives of major
shipping lines, including Evergreen Shipping,
Maersk, Hapag-Lloyd, Ocean Network Express,
CMA/CGM, COSCO Shipping Lines, and
Mediterranean Shipping Company (MSC).
USMX said it continues to focus on ratifying a
new master contract.
“Reaching an agreement will require negotiating
– and our full focus is on how to return to the
table to further discuss these vital
components, many of which are intertwined,”
USMX said. “We cannot agree to preconditions to
return to bargaining – but we remain committed
to bargaining in good faith to address the
ILA’s demands and USMX’s concerns.”
IMPACTS TO CHEM MARKETS
The strike is already affecting the
US chemicals industry, with PE exports to
Brazil being put on hold.
The polyvinyl chloride (PVC) Industry is
concerned as all US Gulf PVC exports move out
of one of the impacted East Coast ports.
In the polyethylene terephthalate (PET) market,
imports of PET resins have already been
diverted to the US West Coast in anticipation
of the work stoppage.
Focus story by Adam
Yanelli
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chemicals and energy topic
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