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HOUSTON (ICIS)–US fertilizer producer Mosaic has announced that it has temporarily curtailed production at its Colonsay potash mine in Saskatchewan as it has sufficient supply amid the current slow demand within the market. The producer said prior to this action that Colonsay had been operating at an annual run rate of 1.3m tonnes with plans to expand annual output to 1.8m-2m tonnes by late 2023 following the restart of mine’s second mill. Mosaic said with demand returning slower than it had expected in the second half of 2022 their  inventory levels are enough to cover near-term demand. It added that underground development work will continue in anticipation of the restart of both mills in early 2023. “Our decision to temporarily curtail Colonsay reflects near-term dynamics and not long-term agricultural market fundamentals. Crop prices remain strong and continue to support healthy grower economics,” said Joc O’Rourke, president and CEO. “After a year of reduced applications, we believe farmers are incentivised to maximise yields, which should drive significant recovery in fertilizer demand in 2023.” In the US, post-harvest applications of potash have been diminished so far with harvesting running later in some areas, which has lessened demand to this point. In addition there is significant carryover inventory in some areas, while others are facing the ongoing issue of slow barge transportation due to low river levels, which is keeping prices high. In Nola, potash barge movement has been increasingly thin through the fall season with values coming under pressure until recently as the lack of new business has now provided some price stability.

HOUSTON (ICIS)–Taiwan Semiconductor Manufacturing (TSMC) has begun construction on a second semiconductor fabrication plant in Arizona, the company announced on Tuesday. Known in the industry as a fab, the new plant will produce 3nm process technology when it begins operations in 2026. The company’s first plant at the site will produce N4 process technology when it starts up in 2024. The overall investment for the two fabs is $40bn, the company said. When complete, TSMC’s two fabs in Arizona will manufacture more than 600,000 wafers per year, with estimated end-product value of more than $40bn. A global shortage of semiconductors has been the biggest impediment to the automobile industry, which is a major end market for chemicals. The tight market led to discussions of improving domestic production of microchips, which are used to control the engine, antilock brakes, power steering, fuel-monitoring system and heating and air conditioning in modern vehicles. The Semiconductor Industry Association (SIA) said the US had 37% of global semiconductor manufacturing capacity in 1990, but only 12% of global capacity in 2022. US President Joe Biden signed the Chips and Science Act of 2022 in August. Part of the law is designed to bolster domestic production of semiconductors, as well as fund research and development, workforce development, international information and communications technology security and semiconductor supply chain activities, and advanced wireless communication technologies. It also established a 25% investment tax credit for investments in semiconductor manufacturing, including the manufacturing of specialised equipment required for microchip production, and authorises funding for research and innovation programs. US semiconductor producer Intel announced earlier this year plans to invest $20bn to build two new fabs in Ohio. The company began construction in September with production expected to come online in 2025.

RIYADH (ICIS)–The US’ recently passed clean energy funding and subsidy plan is likely to create a more productive climate for investment than the European Green Deal, which takes a more punitive stance for business on how to develop the sector, BASF CEO Martin Brudermuller said on Tuesday. Speaking at the GPCA annual forum taking place in Riyadh, Saudi Arabia, this week, Brudermuller welcomed the approach taken by the US government in implementing the Inflation Reduction Act (IRA), despite criticism this week from European Commission Ursula von der Leyen. Representing an answer to the European Green Deal, the $369bn policy framework includes tax breaks for projects and a more generous subsidy framework than in the European Commission plan. The approach is likely to be more conducive to encouraging new clean energy investment projects, Brudermuller said, contrasting it with a European approach he claimed is more focused on enforcing than encouraging business transformations. “The European Green Deal… is not encouraging to generate these business cases, while the IRA in the US is the opposite, it is creating a business case to facilitate transformation, whereas in Europe you generate regulation to enforce transformation,” Brudermuller said. “I think it is no surprise that most probably the American way will be the more successful,” he added. Other players at the event also endorsed the US policy framework. “What the US has done with IRA is really good, other countries can look to that,” said Al Muthir Al Kharusi, CEO for strategy & transformation at OQ. Ursula von der Leyen criticised the IRA framework in a speech delivered in Bruges, Belgium, on 4 December, stating that the measures are “raising concerns” in Europe, criticising what she characterised as the “America first” slant of the measures. The IRA tax breaks could shift development of raw materials and key components such as electric vehicle batteries to the US, away from transatlantic supply chains she said, while warning that the extent of subsidies could spark an arms race in the funding packages offered by different regions. “There is a risk that the IRA can lead to unfair competition, could close markets, and fragment the very same critical supply chains that have already been tested by COVID-19,” she said. According to Brudermuller, moving toward net zero has become more rather than less difficult for the chemicals sector, he said, in the wake of soaring energy costs in Europe that have prompted widespread production curtailments and shutdowns, and the weakening economic picture. The current environment, characterised by “more headwinds than tailwinds” for the sector, according to Brudermuller, increases the need for clear and coherent regulatory frameworks for companies to work within. “We all have to stand together as a chemicals industry to fight for pragmatic, clear rules that enable economic business cases for us and for our customers,” he said. “Politics often have dreams, but without pragmatic rules, we as an industry cannot deliver on what is intended,” he added. Brudermuller stressed the need for realism among chemicals firms such as Gulf producers that may be at a relatively early stage of looking at clean energy transition targets compared to European players. “You can be carried away from this topic and you are far away from economics,” he said. “You have to make a detailed plan, I think just talking about a target and not having underlying projects to achieve it is not possible,” he added. Front page picture: BASF’s CEO speaking to delegates at the GPCA annual forum on Tuesday Source: GPCA Focus article by Tom Brown

MADRID (ICIS)–Most fertilizers prices are to remain high by historical standards but urea values will end 2022 lower than previously expected on the back of capacity expansions, US credit rating agency Fitch said on Tuesday. Fitch now expects urea prices to average $630/tonne in 2022. ICIS’ latest urea price assessments also showed declining prices on the back of poor demand. “Our reduced 2022 assumption for urea reflects lower year-to-date prices, which we do not expect to recover for the rest of the year,” said Fitch. “We have kept all other assumptions unchanged as we maintain our view that new capacity additions will offset lost exports from China and supply disruptions due to the Russia-Ukraine war.” According to Fitch estimates, 3.8m tonnes/year of new urea production capacity will be added globally, excluding China, in 2022. In 2023, a further 3.2m tonnes/year will come on stream, and 2.2m tonnes/year will follow suit in 2024, said Fitch. LOWER, BUT STILL HIGH The credit rating agency said it still expects most fertilizer prices to fall in 2023, although they are set to remain above mid-cycle levels on the back of high crop price, gas input costs and “still restricted, although improving, supply”. Ammonia prices will ease next year on the back of easing supply constraints as new capacity in the Middle East comes on stream, falling feedstock gas prices, and the restart of some European plants turned idled when gas prices were at highs. Fitch added ammonia demand is set to be supported by improving affordability and strong crop prices. It kept its assumptions for diammonium phosphate (DAP) prices unchanged, although they are set to be lower than in 2022. Fitch said it expects DAP exports out of China to rise in the coming two years but stabilised in 2024 at 2m tonnes lower levels than the average for the 2016-2021 period. “Phosphate demand will partially recover in 2023, returning to the 2021 levels by 2024 as application rates will rise into the next year. European demand is affected by a regional price premium,” said Fitch. “Our assumptions for phosphate rock continue to reflect limited export volumes from Morocco, but other producers, such as Jordan, Syria, Tunisia and South Africa are gradually increasing their market shares.” The agency said it expects about 7m tonnes/year of new capacity to come on stream in 2023, most in Russia, Egypt, China, and the US. Its price assumptions for potash in 2023 also remain unchanged although, once again, they are expected to be sharply lower than in 2022. It said it expects Canadian producer to ramp up idle capacities in coming months, while Russian exports should also help balance the market. “[Potash] Price declines in the medium term will be driven by continued improvements in supply availability. Demand will be constrained by farmers prioritising nitrogen and phosphate applications over potassium,” said Fitch. “This will put pressure on potash prices over the next two years.” Fitch fertilizers prices forecast 2022 2023 2024 2025 2026 Long-term In $/tonne Old forecast New forecast Old New Old New Old New Old New Old New Ammonia (FOB Middle East) 1,000 1,000 750 750 450 450 300 300 280 280 280 280 Urea (FOB Middle East, granular) 650 630 500 500 350 350 270 270 260 260 260 260 Phosphate rock (FOB Morocco) 270 270 160 160 90 90 90 90 90 90 90 90 DAP (FOB US Gulf Export) 900 900 550 550 380 380 360 360 360 360 360 360 Potash (FOB Vancouver) 600 600 460 460 350 350 230 230 230 230 230 230

SINGAPORE (ICIS)–South Korea has so far tallied won (W) 3.5tr ($2.6bn) worth of shipments disrupted by an ongoing truckers’ strike now on its second week, prompting output cuts from petrochemical producers. Truckers’ protest running for 13th day Cracker operators cut run rates to 65-85% – sources Government mulls expanding return-to-work order The estimated provisional damage across the steel, petrochemical, oil refining cement and automobile industries was over a 12-day period (24 November-5 December) of the protest, South Korea’s Ministry of Trade, Industry and Energy (MOTIE) said on Tuesday. In the petrochemical industry, several ethylene producers have lowered their cracker run rates to 65-85% of capacity from 75-90% to manage their inventories after logistics issues led to a slowdown in downstream operations, market sources said. “In the case of the steel and petrochemical sectors, due to the lack of storage space inside and outside the factory due to accumulated shipment disruptions, the possibility of damage from production disruptions is increasing, such that some companies have had to consider reducing production as early as this week,” MOTIE said. For the petrochemical industry, about 71m tonnes of shipments worth W923.8bn were disrupted between 24 November to 4 December, MOTIE said, noting that the consequent plant shutdowns would result in a maximum daily average damage of W122.9bn. In the oil refining sector as of Tuesday, 85 gas stations nationwide were confirmed to be out of stock because of the strike. The South Korean government is taking a hardline stance this time against the Cargo Truckers Solidarity Union (CTSU), having issued on 29 November an unprecedented executive order to force truckers working in the cement industry to go back to work, citing a serious threat to the construction industry. On Tuesday, MOTIE said that cement shipments were recovering and were now at “88% of normal level” following the government order. President Yoon Suk-yeol is looking at expanding the coverage of the return-to-work order to include all striking truckers. “We are reviewing whether to issue the order,” MOTIE minister Lee Chang-yang said in a statement. This is the second strike in less than six months launched by the CTSU, which is affiliated with the Korean Confederation of Trade Unions. “We are taking seriously the damage situation in the oil refining, steel, and petrochemical fields…and preemptively start work even during this week before the enormous damage becomes a reality,” Lee said. In June, a similar protest by the group lasted eight days, with the government acceding to extend a “Safe Trucking Freight Rate” system, which guarantees a minimum annual wage for truckers to help them cope with surging fuel costs and to deter dangerous driving. CTSU now demands that the system, which is due to expire by end-December this year, become permanent. The fourth-biggest economy in Asia is expected to shrink in the fourth quarter amid the prolonged truckers’ strike. ($1 = W1,321) Focus article by Pearl Bantillo Additional reporting by Yeow Pei Lin Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets.

RIYADH (ICIS)–The petrochemicals sector is likely to remain a substantial driver of crude oil demand even in a net zero emissions scenario, with a focus on decarbonising building block materials key to meeting carbon-reduction targets, CEO of Saudi Aramco, Amin Nasser, said on Tuesday. Saudi Arabia is planning to channel 4m bbl/day of crude output into chemicals production by 2030, and it is increasingly necessary in the energy transition for the sector to research and develop sustainable advanced materials for industrial-scale use in sectors such as housing and infrastructure. “Global net zero emissions targets will not be met without successful materials transition,” said Nasser, speaking at the GPCA conference in Riyadh. With the global population expected to reach 10bn people by 2060, and 80% of them expected to be living in cities, demand for materials is likely to increase sharply, to around 167 gigatonnes, Nasser said. “With materials already accounting for 25% of global greenhouse gas emissions, decarbonising that space has been an under-discussed facet of the energy transition,” he added. Despite the current global focus on emissions reduction, petrochemicals are expected to be one of the key sectors driving future oil demand growth, with consumption from the sector expected to continue to rise into the future as demand from other sectors starts to taper, according to the International Energy Agency (IEA). Even in the case of a successful net zero energy transition, petrochemicals could represent around half of crude oil demand growth by the middle of the century, according to Nasser. The growing focus by Gulf region oil and gas players to diversify their portfolios downstream into petrochemicals comes at a point where the energy crisis, following the onset of the war in Ukraine, is making basic chemicals production increasingly uncompetitive in Europe, Nasser added. This shift and the uncertainty of future energy pricing in Europe as the region moves to transition away from Russian natural gas makes Saudi Arabia and the wider GCC increasingly attractive for new international chemicals sector investment, he added. “The energy crisis is forcing many chemicals companies to cut operations or shut down, especially in Europe … It has never been more attractive for overseas chemicals companies to invest here,” he said. Front page picture: Saudi Aramco’s CEO Amin Nasser; archive image  Picture source: Jon Gambrell/AP/Shutterstock  Focus article by Tom Brown

SINGAPORE (ICIS)–The Arabian Gulf’s chemical industry will need to leverage on its unique strengths to counter short-term cyclical macroeconomic headwinds impacting its profitability, the acting CEO of SABIC said on Tuesday. “Concerns over an upcoming recession are already impacting demand for chemicals. These concerns come from…volatility in commodity prices, worries over the security of energy and food supplies,” Abdulrahman Al-Fageeh, who is also the chairman of the Gulf Petrochemicals and Chemicals Association (GPCA), told delegates at the 16th Annual GPCA Forum in Riyadh, Saudi Arabia. “These macroeconomic trends have led to a sharp decline in in the profitability of the chemical industry [but] I’m not surprised by this. It just reflects the cyclical nature of our industry but we at GPCA should note that our regional chemicals industry is more volatile than that of our global peers and requires some strategic actions,” he said. The chemical industry is going through “uncyclical” changes that are fundamentally affecting its value chains, including the decline in globalisation which has resulted in fewer exports and changes in national policies, Al-Fageeh said. “The situation is only worsened by a changing world order and geopolitical tensions,” he said. “I believe that the chemical industry needs to address both the cylical and non-cyclical challenges affecting our value chain,” Al-Fageeh said. This includes further integration to capitalise on the synergies between upstream and downstream sectors in the Gulf Cooperation Council (GCC), enhancing collaboration within the industry and furthering decarbonisation efforts, he said. More than half of the total production capacity in the GCC is run as a partnership, Al-Fageeh noted. In terms of decarbonisation efforts, the chemical industry can reduce carbon emissions through efficiency improvements, electrification, and production of clean hydrogen, he said. As for developing clean hydrogen projects, Al-Fageeh added that the GCC countries are “well-positioned to take the lead as they have the methane and underground storage facilities”. The 16th Annual GPCA Forum runs on 6-8 December. Front page picture: GPCA’s chairman Abdulrahman Al-Fageeh during his opening remarks on Tuesday Source: GPCA Focus article by Nurluqman Suratman

HOUSTON (ICIS)–Australian phosphate producer Fertoz Limited announced it has orders for 18,000 tonnes of its new phosphate fertilizer pellet product Fertify for delivery by April 2023. Production is set to commence in January on Fertify volumes, which contain 40% rock phosphate, under a joint venture agreement at a facility in Montana. In June, the company formed a joint venture with Montana-based Excel Industries to develop a fertilizer pelleting plant capable of manufacturing 80,000 tonnes of pellets/year. Fertoz said it had invested $1.28m towards the plant. With Fertify, the producer is targeting customers within the organic and regenerative agriculture market in North America and said it will accept more orders once further production capacity becomes available. “We are extremely pleased with the response by the market to Fertify which has quickly exceeded production capacity in the first four months of planned operations,” said Daniel Gleeson, Fertoz CEO. “This early demand reflects need for the high-quality, value-added product we had envisioned for the market and look forward to making this available more broadly as the demand continues to grow.” In addition, the company has signed a 10-year rock phosphate offtake agreement under which it intends to deliver 120,000 tonnes in the first half of the deal to an unnamed fertilizer manufacturer in North America. Fertoz said it is seeing stronger demand overall for its rock phosphate volumes, with it on track to deliver 40,000 tonnes in 2023.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 2 December. US rail worker strike averted as president signs legislation US President Joe Biden signed legislation early Friday that averts a potential strike of rail workers that could have begun as early as 9 December. US Senate adopts resolution to avert strike from rail workers The US Senate voted on Thursday to adopt a resolution that averts a potential railroad strike. INSIGHT: Chlorum sees US as next market for its small chlor-alkali plants The chlor-alkali firm Chlorum Solutions sees the US as the next market where it can bring its model of developing small regional chlor-alkali plants to serve customers eager to avoid the trouble and expense of shipping chlorine over long distances. US House adopts resolution to avert rail strike The US House of Representatives adopted on Wednesday a resolution that would avert a railroad strike, trade groups said. INSIGHT: Brenntag/Univar mega merger viable in fragmented market but NA share may attract scrutiny A mega merger in global chemical distribution between #1 player Germany-based Brenntag and #2 US-based Univar Solutions appears viable from an antitrust standpoint in a highly fragmented market, although North America could be an area of scrutiny and trigger divestitures.

LONDON (ICIS)–Versalis is on a journey to marry green chemicals technologies and recycling capabilities with products and markets to further enhance its well-developed presence in renewables, according to its CEO. In a conversation with ICIS before accepting the ICIS Power Players – Emerging Leader Award for 2022, Adriano Alfani stressed the importance of developing the company’s technological, production, and marketing position in green chemistry as its parent company, Italy’s energy major Eni, addresses the energy transition. Versalis started on its green chemicals industrial and business approach more than 10 years ago and is working alongside Eni to create new green feedstock chemicals and recycling capabilities. Alfani strongly believes that, in order to address the challenges of circularity, one technology is no better than another, the CEO said in London. And, as he accepted the ICIS award, he pointed to investments Versalis is making in mechanical and chemical recycling. “One technology is not better than another one, or it is not one or the other: We’re looking at all possible types of technology that enable us to create circularity,” he said. Versalis is well known for its drive into ‘green’ or biotechnologies as it strives to reduce its reliance on hydrocarbon feedstock and build viable, alternative process routes and markets for certain chemicals and polymers. As far as recycling is concerned, Versalis has said it will invest in mechanical recycling at the Eni site in Porto Marghera, on the Venice lagoon. It has also announced it is to build a first pilot chemical recycling plant in Mantua, north Italy. “We ae not looking on mechanical or chemical [recycling] as better, but as fully complementary, because we have to recycle. Circularity is very important for us,” said Aflani. Versalis acquired technology from Ecoplastic to recycle styrenic plastics at the site. Subsequently, phase two of the recycling project is based on the acquisition of Forever Plast. That gives Versalis the capability to recycle waste from rigid and expandable styrenics to polyethylene (PE). Porto Marghera is a key site for Versalis and its parent company Eni, where transformation of the oil refinery into a bio-refinery has been ongoing since 2014. The decision was taken in 2021, however, to make this a more green and sustainable site, Alfani said, by closing the steam cracker and increasing bio-refining capacity, as well as to invest in new technologies, such as one to produce isopropyl alcohol (also known as isopropanol, IPA). The transformation of the refinery means that Versalis’ carbon dioxide (CO2) footprint across all its assets is reduced by 20%. Versalis obtained in 2021 the International Sustainability & Carbon Certification (ISCC) Plus for monomers, intermediates, polymers, and elastomers produced from bionaphtha and chemicals recycling at Porto Marghera and at its Italian plants in Brindisi, Mantua, Ferrara, and Ravenna. The downstream products can be marketed as a ‘bio-attributed’ when made from bionaphtha and ‘circular- attributed’ when made from pyrolysis oil obtained from chemical recycling. Versalis counts a lot on investing in chemicals from renewables, or what some call biobased chemicals, Alfani said. The CEO said the journey started 10 years ago with the decision to transform the company’s production site in Porto Torres in Sardinia into a green chemistry hub. “We have worked very hard over the last 10 years in order to develop this type of technology, but also to develop not only the technology, but the marketing and the product that goes in this specific market. And we’ve been very happy with the success,” Alfani said. There has been investment in alternative technologies to make chemicals from renewables. Versalis was successful in acquiring the Mossi & Ghisolfi Group’s ‘green’ chemicals activities in 2018 and move into second generation bioethanol (ethanol from biomass) to tackle markets like advanced biofuels and also products based on bioethanol and disinfectants that were extremely useful through the pandemic. In March 2022, it increased its stake in Novamont and subsequently its commitment to the Matrica joint venture (JV) in Porto Torres that was established in 2011. “We are extremely happy of where we are in our journey,” he said in his conversation with ICIS. “Of course, the journey is a journey, so it means that we are still not finished.” Watch the ICIS Emerging Leader Award interview with Versalis CEO Adriano Alfani here Interview article by Nigel Davis