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Americas top stories: weekly summary
Americas top stories: weekly summary
HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 1 July. US urea imports from Russia down 42% in January-April US imports of urea from Russia were down 42% at 302,666 tonnes in January-April, according to the ICIS Supply and Demand Database. Weekly spot IPEX shows prices down by 2.6% on declines across all regions Spot chemical prices dropped by 2.6% on the back of declines across every region, according to latest figures from the weekly ICIS Petrochemical Index (IPEX). INEOS to expand high viscosity PAO capacity at Texas site INEOS is to expand production capacity of high viscosity polyalphaolefins (HV PAO) at its Chocolate Bayou, Texas, site by 2025, the producer said on Tuesday. INTERVIEW: Univar Solutions aims to provide carbon footprints for distributed products – exec US-based chemicals distributor Univar Solutions is working towards providing carbon footprints for the products it distributes to provide transparency to customers and enable them to meet sustainability goals, an executive said. INSIGHT: West Coast US port, dockworkers to miss deadline for labour contract Ports and dockworkers on the western coast of the US said they will miss a 1 July deadline to sign a labour agreement, leaving chemical companies at risk for more supply chain problems. US June PP contracts settle lower on reduced demand, weaker feedstock costs US June polypropylene (PP) contracts settled 10 cents/lb ($220/tonne) lower from May on slower demand and reduced feedstock costs.
Japan's AGC completes integration of Thailand, Vietnam
      chlor-alkali ops
Japan’s AGC completes integration of Thailand, Vietnam chlor-alkali ops
SINGAPORE (ICIS)–AGC has completed the consolidation of its chlor-alkali operations in Thailand and Vietnam under a new company called AGC Vinythai Public Co, the Japanese glass, chemicals and high-tech materials producer said on Monday. Placed under AGC Vinythai are two subsidiaries in Thailand, namely, a 58.78%-owned Vinythai Public Co (VNT) and a fully-owned AGC Chemicals (Thailand) Co; and a 78.11%-owned Vietnamese subsidiary AGC Chemicals Vietnam Co (ACVN). AGC has a 70.22% stake in the newly formed company, with Thailand’s PTT Global Chemical (PTTGC) holding a 27.32% stake. AGC and PTTGC are now “in the consideration process” to increase the Thai producer’s ownership in AGC Vinythai to as much as 35%, while the Japanese group’s stake in the new company will not fall below 65%. “The final shareholding ratio of the two companies will be disclosed as soon as it is determined,” AGC said, adding that the impact on its consolidated business results will be minimal since the re-organisation is taking place among its consolidated subsidiaries. Japan’s AGC Inc had said in May this year that it will invest more than yen (Y) 100bn ($739m) to raise its chlor-alkali production capacity in Thailand by the first quarter of 2025. ($1 = Y135.4)
BLOG: Policymakers grapple to understand inflation - Fed's
BLOG: Policymakers grapple to understand inflation – Fed’s Powell
LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the Fed’s sudden realisation that its models for inflation are wrong. 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.
Eurozone inflation yet to peak on higher energy, food prices
      - ICIS economist
Eurozone inflation yet to peak on higher energy, food prices – ICIS economist
MADRID (ICIS)–Inflation in the eurozone has yet to peak as energy and food prices are expected to go even higher in coming months, an ICIS economist said. Kevin Swift, senior economist for global chemicals at ICIS, said the 19-country currency union’s June inflation rate was 8.6%, up from 8.1% in May. He added that a “silver lining” was an easing in the rate of inflation in the services sectors, which eased slightly year on year. However, any positive is likely to continue being eroded by rising energy and food prices, said Swift. “Given recent restrictions on natural gas deliveries, [energy prices] will likely get worse. Food prices accelerated to an 8.9% year-on-year pace in June, up from 7.5% year-on-year [in May],” said Swift. “Given disruptions in food supply, these gains will likely be elevated in the months to come.” Eurozone inflation has caught up to the US rate of inflation and it is likely it has not yet reached a peak, said Swift.
Europe top stories: weekly summary
Europe top stories: weekly summary
LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 1 July. Fright rates could fall in face of tricky headwinds Shipping rates have been a key cost pressure for the chemicals industry in the wake of the pandemic, but fundamentals – and therefore prices – may be set to change course due to persistent geopolitical pressures. Europe PET, PTA decouple from Asia amid potential spikes upstram The Europe polyethylene terephthalate (PET) value chain has delinked from a bearish Asia, forced up by hypothetical record jumps in upstream paraxylene (PX). Eurozone manufacturing output falls for first time since 2020 lockdowns Manufacturing sector growth in the eurozone fell for the first time since the initial spate of lockdowns in the region at the start of the COVID-19 pandemic. Germany’s SKW Piesteritz mulls force majeure in event of gas shortages, price hikes Ammonia and urea producer SKW Piesteritz will consider implementing a force majeure if natural gas supplies are cut and prices increased as Germany grapples with plunging availability from Russia, the company confirmed to ICIS. EU, eurozone economic sentiment and employment expectations fall in June Economic sentiment and employment expectations contracted in June across both the EU and eurozone, according to the latest data from the European Commission on Wednesday. BASF’s Antwerp, US ammonia output could offset potential shutdown in Germany – bank A possible shutdown of ammonia production at BASF’s Ludwigshafen flagship site could be compensated by the German chemicals major’s facilities in Antwerp and the US, investment bank Baader Bank said on Tuesday. Weekly spot IPEX shows prices down by 2.6% on declines across all regions Spot chemical prices dropped by 2.6% on the back of declines across every region, according to latest figures from the weekly ICIS Petrochemical Index (IPEX).
UAE, Indonesia eye strong boost in trade, investments via new
UAE, Indonesia eye strong boost in trade, investments via new pact
SINGAPORE (ICIS)–The UAE and Indonesia on 1 July signed a free trade pact which will remove or sharply cut duties on most goods traded between the two countries. The deal is expected to “increase bilateral trade to beyond $10bn within five years”, UAE President Mohamed bin Zayed Al Nahyan said in post on Twitter on 1 July. Total trade between the two countries was valued at $4bn in 2021, according to the Indonesian Ministry of Trade. The UAE’s main exports to Indonesia are non-crude oils, petroleum gases and iron or non-alloy steel, while Indonesia’s key shipments to the UAE are palm oil, precious metals and jewelry, according to trade data platform the Observatory of Economic Complexity. UAE’s total exports to Indonesia last year stood at $1.9bn, while imports from the UAE amounted to $2.1bn, Indonesia’s trade ministry stated. In the first four months of 2022, total trade between the two countries were up 15% year on year at $1.5bn, with exports from Indonesia at $714m and imports at $831m, it said. Indonesia hopes that the trade pact will attract more investment from the UAE, the ministry said. In 2021, the total investment by the UAE in Indonesia totaled $16.1m (double checking – just in millions? – yes ), it said, adding that the potential of higher trade and investment within the framework of the free trade deal was massive. The UAE Ministry of Economy expects the trade pact with Indonesia to increase the value of trade in services between the two countries to $630m by 2030 and create 50,000 jobs for skilled workers in the UAE within the same time frame. The Indonesia-UAE Comprehensive Economic Partnership Agreement was signed during Indonesian President Joko Widodo’s visit to Abu Dhabi. The full text of the trade agreement has not been released and the pact still needs to be ratified by both countries. Focus article by Nurluqman Suratman
USDA estimates that farmers planted slightly more corn than
      soybeans this spring
USDA estimates that farmers planted slightly more corn than soybeans this spring
HOUSTON (ICIS)–During the spring 2022 season US farmers planted slightly more corn than soybeans but both crops did not match the March estimates according to the US Department of Agriculture (USDA) in the acreage estimate report. Although growers are calculated to have sowed 89.9m acres of corn in recent weeks the overall amount of corn planted acreage is down by 4% year on year. While this is 3.44m acres less than the 2021 crop had planted, the total was higher than the agency had earlier estimated the crop would be in its acreage tally. The USDA said compared with last year, planted acreage is expected to be down or unchanged in 35 of the 48 estimating states. Area harvested for grain is at 81.9m acres which is also down by 4% from last year. For soybeans, the report showed that soybean planted area for 2022 is estimated at 88.3m acres, up 1% year on year but this amount is lower than the USDA had previously projected would be sowed. Compared with last year, planted acreage is up or unchanged in 24 of the 29 estimating states. The USDA said all wheat planted area for this spring is estimated at 47.1m acres, which is up 1% from 2021. If realized, this would represent the fifth lowest all wheat planted area since records began in 1919. For cotton the agency is calculating that all cotton planted area this year will be at 12.5m acres, up 11% year on year. Upland area is estimated at 12.3m acres, a rise of 11% from 2021, while American Pima area is forecasted at 156,000 acres, up 23% year on year.
Australia Centrex Limited executes trial shipment agreement
      with Ameropa
Australia Centrex Limited executes trial shipment agreement with Ameropa
HOUSTON (ICIS)–Australian fertilizer developer Centrex Limited announced that its Agriflex has executed an agreement for a trial shipment of beneficiated phosphate rock with Ameropa Australia. The company said the terms are for the sale of a 5,000 wet tonnes beneficiated phosphate rock shipment to Ameropa and includes a first right of refusal to purchase 10% of the Ardmore mine’s annual production for the first three years. The trial shipment has been sold on a FOB basis with it set to be loaded in November 2022 with pricing to be finalised 6 weeks prior. If Ameropa does not elect to exercise the first right within the timeframe, then it will lapse for the available production and Ameropa will have no further obligation to Agriflex under the agreement. Centrex said the trial shipment is conditional upon upgrades to the processing plant being completed by Agriflex to its satisfaction to sufficiently produce the product. It is also conditional upon receiving all necessary approvals for the performance of the company’s delivery obligations. Last month the company said mining operations are achieving the scheduled rate of 27,000 tonnes of ore per month and that the crushing contractor had commenced efforts to create both direct application product and feed for the Ardmore beneficiation plant. The production rate is expected to progressively ramp-up over the next six months as crushing and the beneficiation plant are optimised. “Agriflex is proud to be entering into this agreement with Ameropa, a well respected and world class company, at the same time helping to improve Australia’s supply security of phosphate rock,” said Robert Mencel, Centrex Limited managing director. “With the signing of this agreement, the Ardmore Project has 100% of its first three years of production allocated to major customers in Australia, New Zealand and Asia.”
US Superfund taxes take effect on chemicals
US Superfund taxes take effect on chemicals
HOUSTON (ICIS)–On Friday, the US will revive Superfund taxes on 42 building-block chemicals as well as imports of several substances made from those chemicals. The two Superfund taxes were allowed to end in the mid-1990s. The US is reviving them as part of the $1trn Infrastructure Investment and Jobs Act that President Joe Biden signed into law in November. The proceeds raised by the taxes will help replenish the government’s Superfund programme, which pays for the clean-up of waste sites. The US is reviving two different Superfund taxes. The first one is levied on the sale or use of 42 chemicals. These taxes are imposed on companies that make or import the 42 chemicals. The following table shows 42 chemicals and their tax rate. Taxable Chemical Alias $/Short Ton Cent/lb Acetylene 9.74 0.487 Ammonia 5.28 0.264 Antimony Trioxide 7.40 0.370 Arsenic Trioxide 6.82 0.341 Barium sulphide 4.60 0.230 Benzene 9.74 0.487 Bromine 8.90 0.445 Butadiene BD 9.74 0.487 Butane 9.74 0.487 Butylene 9.74 0.487 Chlorine 5.40 0.270 Chromite 3.04 0.152 Cupric oxide 7.18 0.359 Cupric sulphate 3.74 0.187 Cuprous oxide 7.94 0.397 Ethylene 9.74 0.487 Hydrochloric acid HCl 0.58 0.029 Hydrogen fluoride hydrofluoric acid (HF) 8.46 0.423 Lead oxide 8.28 0.414 Methane 6.88 0.344 Naphthalene 9.74 0.487 Nitric acid 0.48 0.024 Phosphorus 8.90 0.445 Potassium dichromate 3.38 0.169 Potassium hydroxide Caustic potash 0.44 0.022 Propylene 9.74 0.487 Sodium dichromate 3.74 0.187 Sodium hydroxide Caustic soda 0.56 0.028 Stannic chloride 4.24 0.212 Stannous chloride 5.70 0.285 Sulphuric acid 0.52 0.026 Toluene 9.74 0.487 Xylene 9.74 0.487 Zinc chloride 4.44 0.222 Zinc sulphate 3.80 0.190 Antimony 8.90 0.445 Arsenic 8.90 0.445 Cadmium 8.90 0.445 Chromium 8.90 0.445 Cobalt 8.90 0.445 Mercury 8.90 0.445 Nickel 8.90 0.445 The chemical tax does include some exceptions. Exporters can apply for a refund, according to Deloitte, a consultancy. Companies that use the chemicals to make fuel, fertilizer or animal feed are exempt. Based on those exemptions, hydrofluoric acid or propylene used in the alkylation units of refineries could be exempt, because those chemicals would be used to make gasoline. Butane could avoid the tax if it is blended in gasoline. Ammonia used to make nitrogen fertilizers could also avoid the tax. Methane could escape the taxes if it is burned as a fuel in power plants or used to make hydrogen for feedstock in refineries. However, if the methane is used to make methanol for downstream chemical production, it could be taxed. The tax also exempts coal derivatives and sulphuric acid that is a by-product of air-pollution control. TAXABLE SUBSTANCESThe second tax covers substances sold or used by importers. The government has published three lists of substances that could fall under the tax. The most recent list was published earlier in June, and it includes 121 substances and their tax rates. The following table shows the full list of the 121 substances that the International Revenue Service (IRS) says could fall under the Superfund tax. The list includes the tax rates for each of the substances. Substance Alias $/Short Ton Cent/lb 1,3-butylene glycol BG 7.28 0.33 1,4 butanediol BDO 4.68 0.21 1,5,9-cyclododecatriene 9.74 0.44 2-ethyl hexanol 2-EH 7.16 0.32 2-ethylhexyl acrylate 7.34 0.33 acetone 20.06 0.91 acetylene black 10.52 0.48 acrylic acid resins 5.65 0.26 methacrylic acid resins 14.94 0.68 acrylonitrile ACN 9.38 0.43 adipic acid 6.13 0.28 adiponitrile ADP 8.57 0.39 allyl chloride 10.38 0.47 alpha-methylstyrene 9.93 0.45 ammonium nitrate AN 1.49 0.07 aniline 9.4 0.43 benzaldehyde 8.47 0.38 benzoic acid 7.31 0.33 bisphenol-A BPA 10.23 0.46 butanol butyl alcohol 6.31 0.29 butyl acrylate butyl-A 6.84 0.31 butyl benzyl phthalate 12.15 0.55 carbon tetrachloride 10.62 0.48 chlorinated polyethylene 10.25 0.46 chloroform 10.51 0.48 chromic acid 4.37 0.20 cumene 9.74 0.44 cyclododecanol 9.05 0.41 cyclohexane CX 10.02 0.45 decabromodiphenyl oxide 17.99 0.82 di-2 ethyl hexyl phthalate 7.37 0.33 diethanolamine DEA 6.01 0.27 diglycidyl ether of bisphenol-A 13.86 0.63 diisopropanolamine 12.76 0.58 dimethyl terephthalate DMT 5.91 0.27 dimethyl-2, 6-naphthalene dicarboxylate 6.81 0.31 di-n-hexyl adipate 8.23 0.37 diphenyl oxide 13.73 0.62 diphenylamine 10.28 0.47 epichlorohydrin EPC 12.89 0.58 ethyl acrylate ethyl-A 4.09 0.19 ethyl alcohol for nonbeverage use ethanol 5.94 0.27 ethyl chloride 4.52 0.21 ethyl methyl ketone methyl ethyl ketone (MEK) 7.6 0.34 ethyl benzene ethylbenzene (EB) 9.74 0.44 ethylene dibromide 9.03 0.41 ethylene dichloride EDC 6.62 0.30 ethylene glycol monoethylene glycol (MEG) 4.38 0.20 ethylene oxide EO 6.23 0.28 ferrochrome ov 3 pct. carbon 4.83 0.22 ferrochromium nov 3 pct 4.83 0.22 hexabromocyclododecane 9.11 0.41 hexamethylenediamine 8.93 0.41 isobutyl acetate 4.47 0.20 Isophthalic acid 6.23 0.28 isopropyl acetate 4.54 0.21 Isopropyl alcohol isopropanol (IPA) 6.82 0.31 linear alpha olefins LAO or normal alpha olefins (NAO) 9.74 0.44 maleic anhydride MA 5.75 0.26 melamine 4.28 0.19 methyl acrylate methyl-A 5.39 0.24 methyl chloroform 6.37 0.29 methyl isobutyl ketone MIBK 23.65 1.07 methyl methacrylate MMA 14.75 0.67 methylene chloride 10.33 0.47 monochlorobenzene 10.12 0.46 monoethanolamine MEA 5.96 0.27 monoisopropanolamine 11.74 0.53 nickel oxide 7.03 0.32 normal butyl acetate butac 4.47 0.20 normal propyl acetate 3.73 0.17 nylon 6/6 nylon 6,6 8.67 0.39 ortho-dichlorobenzene 10.35 0.47 ortho-nitrochlorobenzene 7.49 0.34 para-dichlorobenzene 10.35 0.47 para-nitrochlorobenzene 7.49 0.34 para-nitrophenol 8.59 0.39 pentaerythritol 3.86 0.18 perchloroethylene PCE 10.89 0.49 phenol 12.47 0.57 phenolic resins 9.86 0.45 phosphorous pentasulfide 2.49 0.11 phosphorous trichloride 6.21 0.28 phthalic anhydride PA 7.01 0.32 poly 1,4 butyleneterephthalate polybutylene terephthalate (PBT) 7.21 0.33 poly(propylene)glycol 10.38 0.47 poly(propylene/ethylene)glycol 8.84 0.40 poly(propyleneoxy)sucrose 2.04 0.09 poly(propyleneoxy/ethyleneoxy)sucrose 2.57 0.12 polyalphaolefins PAO 11.37 0.52 polybutadiene polybutadiene rubber (PBR) 9.74 0.44 polybutene 9.74 0.44 polybutylene PB 9.74 0.44 polybutylene/ethylene 9.74 0.44 polycarbonate PC 10.84 0.49 polyethylene resins, total PE 9.74 0.44 polyethylene terephthalate pellets PET 6.82 0.31 polypropylene PP 9.74 0.44 polypropylene resins PP 9.74 0.44 polystyrene homopolymer resins PS 9.93 0.45 polyvinylchloride resins PVC 7.46 0.34 propanol 5.47 0.25 propylene glycol PG 10.38 0.47 propylene oxide PO 13.6 0.62 styrene 9.93 0.45 styrene-butadiene, latex 9.84 0.45 synthetic linear fatty alcohol ethoxylates 7.12 0.32 synthetic linear fatty alcohols 9.29 0.42 terephthalic acid purified terephthalic acid (PTA) 6.23 0.28 tetrabromobisphenol-A 14.79 0.67 tetrachlorophthalic anhydride 8.95 0.41 tetrahydrofuran THF 5.78 0.26 toluene diisocyanate TDI 10.85 0.49 toluenediamine 9.18 0.42 trichloroethylene TCE 10.79 0.49 triethanolamine TEA 6.04 0.27 triisopropanolamine 12.84 0.58 trimethylolpropane 4.63 0.21 urea 3.01 0.14 vinyl acetate vinyl acetate monomer (VAM) 3.83 0.17 vinyl chloride vinyl chloride monomer (VCM) 7.46 0.34 Prior to the June list, the Internal Revenue Service (IRS) had published two earlier lists that contained a total of 151 taxable substances that, if imported, could be subject to the Superfund tax. Unlike the more recent list that was published in June. these two earlier lists do not include tax rates. Some of the substances in the two earlier lists are included in the more recent June list. Others substances in the earlier lists are not in the June list. In addition, some substances in the June list are not included in the earlier lists. The following table shows the 151 taxable substances that were in the two lists. Chemical Alias 1,4 butanediol BDO 1,3-butylene glycol BG 1,5,9- cyclododecatriene 2-ethyl hexanol 2-EH 2-ethylhexyl acrylate 2,2,4-trimethyl- 1,3-pentanediol diisobutyrate 2,2,4-trimethyl- 1,3-pentanediol monoisobutyrate acetic acid acetylene black adipic acid adiponitrile ADN allyl chloride alpha- methylstyrene aniline benzaldehyde benzoic acid bisphenol-A BPA butanol normal butanol or NBA butyl acrylate butyl-a butyl benzyl phthalate chlorinated polyethylene cyclododecanol decabromodiphenyl oxide di-2 ethyl hexyl phthalate di-n-hexyl adipate diethanolamine DEA diglycidyl ether of bisphenol-A diisopropano- lamine dimethyl terephthalate DMT dimethyl-2, 6-naphthalene dicarboxylate diphenyl oxide diphenylamine epichlorohydrin EPC ethyl acetate etac ethyl acrylate ethyl-A ethyl chloride ethylene dibromide ethylenebistetra- bromo- phthalimide formic acid glycerine hexabromocyclod odecane hexamethylenedia mine isobutyl acetate isopropyl acetate linear alpha olefins LAOs or normal alpha olefins (NAOs) methyl acrylate methyl-A methyl chloroform methyl isobutyl ketone MIBK methyl methacrylate MMA monochloro- benzene monoethanolamine MEA monoisopro- panolamine normal butyl acetate butac normal propyl acetate nylon 6/6 nylon 6,6 ortho- dichlorobenzene ortho-nitrochloro- benzene paraformaldehyde para- dichlorobenzene para-nitrochloro- benzene para-nitrophenol pentaerythritol perchloroethylene PCE phenol phosphorous pentasulfide phosphorous trichloride poly 1,4 butylenetere-phthalate polybutylene terephthalate (PBT) poly (69/31 ethylene/ cyclohexylene- dimethylene terephthalate) poly (96.5/3.5 ethylene/ cyclohexylene-dimethylene terephthalate) poly (98.5/1.5 ethylene/ cyclohexylene-dimethylene terephthalate) poly(ethyleneoxy) glycerol poly(propylene) glycol poly(propylene/ ethylene) glycol poly(propyleneoxy) glycerol poly(propyleneoxy)s ucrose poly(propyleneoxy/ ethyleneoxy) benzenediamine poly(propyleneoxy/ ethyleneoxy)diamine poly(propyleneoxy/ ethyleneoxy)glycerol poly(propyleneoxy/ ethyleneoxy)sucrose polyalphaolefins PAOs polybutene polybutylene PB polybutylene/ ethylene polycarbonate PC polyethylene terephthalate pellets PET propanol n-propanol sodium nitriolotriacetate monohydrate synthetic linear fatty alcohols synthetic linear fatty alcohol ethoxylates terephthalic acid purified terephthalic acid (PTA) tetrabromo- bisphenol-A tetrachloro-phthalic anhydride tetrahydrofuran THF texanol benzyl phthalate toluene diisocyanate TDI toluenediamine trichloroethylene TCE triethanolamine TEA triisopropanolamine trimethylolpropane vinyl acetate vinyl acetate monomer (VAM) acetone acrylic and methacrylic acid resins acrylonitrile ACN ammonium nitrate AN carbon tetrachloride chloroform chromic acid cumene cyclohexane CX ethyl alcohol for nonbeverage use ethanol ethylbenzene EB ethylene dichloride EDC ethylene glycol EG ethylene oxide EO ethyl methyl ketone methyl ethyl ketone (MEK) ferrochrome ov 3 pct. carbon ferrochromium nov 3 pct ferronickel formaldehyde hydrogen peroxide isophtalic acid isopropyl alcohol isopropanol (IPA) maleic anhydride MA melamine methanol methylene chloride nickel oxide nickel powders nickel waste and scrap phenolic resins phthalic anhydride PA polybutadiene polybutadiene rubber (PBR) polypropylene resins PP polystyrene homopolymer resins PS polyethylene resins, total PE polypropylene PP polystyrene resins and copolymers PS polyvinylchloride resins PVC propylene glycol PG propylene oxide PO styrene styrene-butadiene, latex styrene-butadiene, snpf synthetic rubber, not containing fillers unwrought nickel urea vinyl chloride VCM vinyl resins vinyl resins, nspf wrought nickel rods and wire The government could add or remove substances from this list. Companies can also request that the IRS add or remove substances from the list. Substances could be added to the taxable list if they contain at least 20% of the 42 taxable chemicals. The tax rate would depend on the percent of the taxable chemicals contained by the substance, either by weight or by value, according to the IRS. For example, a short ton of a substance that contains 20% propylene would be added to the list. If an imported substance contains more than 20% of two or more of the 42 taxable chemicals, then it could fall under the tax. For example, an import that contains 10% benzene and 10% ethylene could be added because it contains 20% of the taxable chemicals. If companies do not comply with the substance tax, then they will pay a default rate of 10% of the value of the substance, the IRS said. The IRS published a list of frequently asked questions (FAQs) that can be found here.
Freight rates could fall in face of tricky headwinds
Freight rates could fall in face of tricky headwinds
LONDON (ICIS)–Shipping rates have been a key cost pressure for the chemicals industry in the wake of the pandemic, but fundamentals – and therefore prices – may be set to change course due to persistent geopolitical pressures. As logistics major Stolt Nielsen posted its highest net profit in 15 years for the second quarter and restated the company’s positive outlook for the rest of 2022, the company was still cautious of the challenges surrounding the market. “Although we are starting to enjoy improving returns on our investments, we cannot ignore the many external challenges that lie ahead. The war in Ukraine is increasingly impacting energy supplies, particularly in Europe,” Stolt-Nielsen said. “We remain cautious when making new investments, ensuring that the return hurdles account for higher inflation and funding costs in the future, and we are maintaining our focus on debt reduction to strengthen the balance sheet and continue to favour fixed rate loans to protect our cash flow against rising interest rates.” MARKET IMPACTSpot tanker shipping remains tight, despite a slight downward trend in fluctuating bunker fuel costs, which has kept freight rates flat for both intra-Europe and shipping outside of the continent, in contrast to the continued upward momentum in prices last week. Deals are shifting from containers of 20-24-feet to break bulk, where goods are stowed on ships in individually counted units, where volumes can be as small as 4,000-5,000 tonnes for some industries, including the polyethylene terephthalate (PET) and purified terephthalic acid (PTA) markets. Depending on regional fundamentals, this is also having an impact, as one trader stated that those bringing material in 5,000-10,000 tonnes in break bulk would see equivalent prices for current container costs. “China PET prices got softer, and containers got cheaper. Shipping costs on a CIF [cost, insurance and freight] basis are below $300/tonne, so the cost is $6000/container,” the trader said. While prices for 40-feet containers prices from Europe to Asia tracked increases in the latter part of June, rates for freight going in the opposite direction have been stable at a significant premium. As bottlenecks persist, transporting smaller volumes – especially for markets where prices are sustained at high levels, such as PET – could keep material flowing to customers, but it is not without risks. Shippers may have to pay demurrage charges if vessels are not unloaded in time and could face further costs if materials are stored in warehouses, depending on where the material is sent to. One trader advised that the key river port in Duisburg, Germany was currently more than 90% full due to “too many empty containers”. Another European polymer distributor had to send a vessel using break bulk to fulfil existing contracts as they have 800 containers sitting in Houston which were scheduled for shipping between January and June. Now ships are forgoing docking in Houston as they are warned that they will have to wait for two weeks and are choosing to go to the next port rather than face the fortnight’s demurrage. “Delays in container shipments are causing all the problems,” the distributor said. “There is a lack of bags to put material in, a lack of drivers in trains, a lack of bagging facilities, a lack of trucks and truck drivers, warehouse space and warehouse people. The whole chain is just a total disaster. “[Break bulk] is not really solving the problem. It is fulfilling existing contracts but costing an absolute fortune, as a temporary bail-out.” The war in Ukraine has been another factor in disrupting the industry, as trade flows have had to redirect to avoid conflict zones, with ships going for long haulage, which is also limiting availability of vessels. Sentiment indicates that supply chains will remain under pressure for the rest of the year, but longer-term fundamentals could balance out as more new capacity becomes available in 2023. There has been an uptick in orders for new container ships, which have also been delayed in the wake of the pandemic but are expected to come into operation next year. Front page picture: Containers are being moved in the Port of Rotterdam; archive image  Source: Peter Dejong/AP/Shutterstock  Focus by Morgan Condon Additional reporting by Vicky Ellis, Marta Fern, Julia Meehan, and Caroline Murray Infographics by Yashas Mudumbai
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