Pricing

HOUSTON (ICIS)–Australian global miner Rio Tinto has announced it will develop Pongamia seed farms in Australia as part of a new biofuels pilot and explore the potential of Pongamia seed oil as a feedstock for renewable diesel, a cleaner alternative to traditional fossil fuels. The company also wants to determine if it can contribute to Rio Tinto's renewable diesel needs while potentially contributing to the growth of a new biofuel sector in Australia. Pongamia is a legume tree native to Australia which is fast-growing, resilient and produces oil-rich seeds that can be processed into renewable diesel with the seed able to be harvested annually, leaving the trees and soil intact to store carbon dioxide. ​ Rio Tinto said it is in the final stages of acquiring approximately 3,000 hectares of cleared land near Townsville in north Queensland to establish farms to study growth conditions and measure seed oil yields. It has partnered with Midway Limited, to oversee the planting and management of the Pongamia seed farms and who will also engage with nurseries, agricultural experts and research organizations throughout the pilot. As part of its ongoing efforts to achieve net-zero Scope 1 and 2 carbon emissions by 2050, Rio Tinto is actively exploring the potential of biofuels in the low-carbon energy mix. The company said it sees biofuels as an avenue to reduce reliance on fossil diesel, while fleet electrification technologies mature. It is also investigating how biofuels could be used in scenarios where electrification may face practical limitations. “Diesel accounts for around 10 percent of our emissions footprint in Australia. While we continue to pursue electrification as the long-term solution for displacing the majority of our diesel use, the Pongamia seed pilot is an important parallel pathway that could reduce our reliance on diesel in the mid-term,” said Jonathon McCarthy, Rio Tinto Chief Decarbonisation Officer. “Australia does not yet have a biofuel feedstock industry sufficient to meet domestic demand. A sustainable biofuels industry here could enhance the region’s fuel security, create local economic opportunities and contribute to emissions reductions targets.” The company said this pilot follows a smaller-scale trial at Rio Tinto Gove operations in the Northern Territory where Pongamia saplings were planted to learn more about their response to low soil quality, heat and other climatic conditions in northern Australia.​

20-Sep-2024

HOUSTON (ICIS)–Rates for shipping containers from Asia to the US fell again this week, but carriers are warning customers that they will stop accepting export bookings from unionized US Gulf and East Coast ports ahead of a looming 1 October strike deadline. Earlier this week the International Longshoremen’s Association (ILA), which represents about 25,000 port workers employed in container and roll-on/roll-off operations at ports on the US East and Gulf coasts, reiterated that it will strike without a new collective master contract agreement. At the same time, unions in the Netherlands and Bermuda – as well as other worldwide unions – have pledged solidarity with the ILA. The United States Maritime Alliance (USMX) is representing the ports and is urging the ILA to resume negotiations. A market participant told ICIS this week that it anticipates a work stoppage. Robert Khachatryan, founder and CEO of Freight Right Logistics said the strike looks like a certainty. “Even if the president gets involved, the ILA president said they will do slowdowns (an action where employees intentionally reduce their productivity to show dissatisfaction with their employer and gain leverage),” Khachatryan said. Khachatryan said cargoes are already being diverted to the US West Coast, which is likely to contribute to longer delivery times and could create congestion and backlogs at the West Coast ports. “If a strike was to stretch into weeks, that would certainly be enough time to overwhelm other ports,” Khachatryan said. Khachatryan said the fact that much of the typical peak season cargo has been pulled forward amid efforts to beat the work stoppage may ease some of the strain on supply chains. “Product for Black Friday and Cyber Monday (two of the busiest shopping days ahead of the Christmas holidays) should already be in the country now,” he said, adding that volumes have been tame this year compared with busier years. “The big retailers are not expecting a massive season, and the orders reflect that,” he said. CONTAINER RATES Global average rates for shipping containers fell by 5% this week, according to supply chain advisors Drewry and as shown in the following chart. Rates from Asia to both US coasts fell at a slower rate, with Shanghai to New York down by 4.5% and rates from Shanghai to Los Angeles down by less than 1%, as shown in the following chart. Drewry said that while the looming port strike casts a shadow, weak demand is expected to drive further decreases in east-west spot rates in the coming weeks. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, thinks the federal government will act before a strike stretched into a second week. “Especially in an election year, the vocally pro-labor administration may be hesitant to end a strike via the Taft-Hartley Act,” Levine said. “But the economic impact of a prolonged shutdown is something the White House likely also wants to avoid, leading many to imagine that an ILA strike would, one way or another, not be allowed to last more than a week.” Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES STEADY US chemical tanker rates held steady this week. Most trade lanes had limited activity due to lack of interest for spot tonnage. On the transatlantic route things were steady this week. An outsider is going on berth for end of September dates. However, contract volumes have been steady with regular owners. Space for this trade lane does seem to remain available among the regulars. Otherwise, this route has been mostly quiet, and most owners still have pockets of space left on their vessels for October. While rates for chemical tankers ex-USG remain firm this week, as the USG to Mediterranean, and EC Mexico are steady. The firming is due to a lack of available tonnage amid more inquiries and fixtures in this trade lanes. However, rates to both Asia and India have been soft, especially for stainless steel vessels. It is very possible there is another rate decrease next week should this trend continue. Overall, throughout the month the spot market should remain soft as there is open partial space in the US Gulf and as most owners continue to depend on contract tonnage. Focus article by Adam Yanelli Additional reporting by Stefan Baumgarten, Kevin Callahan Thumbnail image shows a container ship carrying cargo on its way to Antwerp Harbour. (OLIVIER HOSLET/EPA-EFE/Shutterstock).

20-Sep-2024

HOUSTON (ICIS)–US subsea mineral exploration company Odyssey Marine Exploration announced it has been awarded $37.1 million in its arbitration with Mexico under Chapter Eleven of the North American Free Trade Agreement (NAFTA). Odyssey said it has received notification from the International Centre for Settlement of Investment Disputes (ICSID) of the arbitral award on the claims involving Odyssey and its subsidiary, Exploraciones Oceanicas (ExO) related to a planned offshore phosphate project. The company took legal action in 2018 over the rejection of an environmental permit in 2016. Finding it difficult to resolve, Odyssey said it took the NAFTA action after it determined it needed to commence the arbitration to protect its shareholders’ investment. The award orders Mexico to pay the fine for breaching its obligations under NAFTA, plus interest at the one-year Mexico Treasury bond rate, compounded annually, from 12 October 2018, until paid in full as well as the arbitrators’ fees and ICSID administrative costs. The company said the amounts awarded are net of Mexican taxes and Mexico may not tax the award and that it expects most, or all will be used to satisfy its litigation financing obligations. Odyssey said ExO is also once again challenging the decision of the environmental agency before Mexico's highest federal administrative court, the Tribunal Federal de Justicia Administrativa. It did not reveal when it expects a decision. Company officials said the ruling validates their position that the environmental agency wrongfully denied the permit despite it having received extensive input to determine not only an economically feasible development plan but one which is environmentally responsible. “The project remains strategically significant and commercially viable,” said Mark Gordon, Odyssey Marine Exploration CEO. “We are poised to continue advancing our projects globally, while also collaborating with nations interested in exploring their underwater mineral resources to meet the escalating demand for critical minerals. “ “Our focus remains on minerals that offer solutions to pressing global challenges, such as mitigating carbon emissions through renewable energy adoption and enhancing fertilizer accessibility to support an ever-growing global population.”

19-Sep-2024

SINGAPORE (ICIS)–Thai conglomerate Siam Cement Group (SCG) plans to use ethane imported from the US as feedstock for its Long Son Petrochemical (LSP) complex in Vietnam to boost the project’s long-term competitiveness. Storage, supporting facilities for ethane to be built on site Ethane targeted as major feedstock for LSP cracker; C2 market “turbulence” expected LSP commercial operations start October SCG is in talks with a contractor for the new ethane storage project, with construction of the facilities expected to take about three years to complete, the company said in roadshow presentation on 16 September. “The site is equipped with a central utility system, ready for the installation of ethane gas storage tanks and pipelines,” the company said in a separate statement on 16 September. SCG has yet to finalize the capital expenditure for the project, and the prospective US ethane supplier for LSP was not disclosed. The $5.4bn LSP project in Ba Ria-Vung Tao province is Vietnam’s first integrated petrochemical complex and is 100%-owned by Thai conglomerate SCG. The mixed-feed cracker at the site currently uses propane and naphtha feedstocks imported from Qatar under a long-term supply deal. The cracker can produce 950,000 tonnes/year of ethylene; 400,000 tonnes/year of propylene; and 100,000 tonnes/year of butadiene (BD). SCG said that LSP is already operating flexible gas cracker which can use a variety of feedstocks, including ethane, propane, and naphtha. Ethane imported from the US is currently cheaper by $200-400/tonne than existing feedstock, SCG said, noting that the average price of ethane has been around 40% lower than that of naphtha and propane over the past three years. The feedstock derived from shale gas also provides greater price stability as it is linked to US natural gas prices, unlike naphtha, which is influenced by oil price fluctuations. FEEDSTOCK DIVERSIFICATION The enhancement to LSP's feedstock flexibility is part of SCG's efforts to bolster its chemicals business in the face of global oversupply, low demand and oil price volatility, SCG said. For ethylene (C2), the company expects "future turbulence" in the market, especially in 2027-2028 amid a wave of new global cracker additions, especially in China. Global ethylene supply is projected by SCG to grow at a slower average rate of around 3-4% in 2025-2030, compared with 5% in 2019-2024. China will comprise around 53% of new ethylene supply additions in 2025-2030, it noted. SCG expects an "extended chemicals trough with low margin" in 2025-2030 amid continued naphtha price volatility. “The current global situation and the future outlook over the next 2-5 years will be marked by increased volatility,” SCG CEO and president Thammasak Sethaudom said on 16 September. “All SCG businesses are moving forward with strategies that align with these dynamics while also reducing carbon dioxide emissions…to ensure long-term competitiveness.” LSP COMMERCIAL OPERATIONS START OCTOBER The LSP complex has completed performance test runs in September and is on track to start commercial operations next month, according to SCG. Its utilization rate following start-up will be "determined by global demand dynamics", it said. LSP’s downstream plants include a 500,000 tonne/year high density polyethylene (HDPE) unit; a linear low density PE (LLDPE) unit of the same capacity; and a 400,000 tonne/year polypropylene (PP) unit. The cracker had an outage in February due to a technical issue and resumed normal operations in August. It had declared a force majeure in February due to issues at the cracker that also shut its downstream PE and PP units. Credit ratings agency Fitch Ratings in a note on 17 September said that it expects LSP to ramp up its utilization rate to 70-80% in 2025, “supported by its cost competitiveness versus imports and the flexibility to use both propane and naphtha as feedstock”. Imports currently fulfil nearly all of Vietnam's petrochemical requirements. Focus article by Nurluqman Suratman Thumbnail photo: Aerial view of SCG's Long Son Petrochemical Complex in Vietnam (Source: SCG)

19-Sep-2024

HOUSTON (ICIS)–RWE Supply & Trading announced it has signed a memorandum of understanding (MoU) with AM Green Ammonia (AMG) for the long-term supply of green ammonia from its plants based in India. The terms outline the supply of up to 250,000 tonnes/year of green ammonia to be sourced from AMG's production sites in Kakinada and Tuticorin, India. Deliveries from AMG’s sites are expected to start by 2027 with a subsequent offtake agreement between RWE and AMG forthcoming which will detail the contractual provisions. The plan is that initially there will be 50,000 tonnes coming from the Kakinada site, with the remaining volume of up to 200,000 tonnes to be sourced from the Tuticorin facility. AMG's ammonia manufacturing facilities will be powered entirely by carbon-free energy sources such as solar, wind, and hydroelectric power and the produced ammonia will meet standards for Renewable Fuels of Non-Biological Origin (RFNBO). AMG’s facility in Kakinada has already been pre-certified for RFNBO compliance. Pre-certification for other facilities is underway. “RWE is committed to investing in hydrogen and its low-carbon derivatives to help industries achieve their climate goals. For this end, we are building strong supply chains with partners globally. Partnering with AMG allows us to secure green ammonia capacities at an early stage,” said Costas Papamantellos, RWE Supply & Trading Head of International Hydrogen Investments.

18-Sep-2024

HOUSTON (ICIS)–The Federal Reserve lowered its benchmark interest rate by a half point to 4.75-5.00% on Wednesday, and the central bank could lower it by an additional half point by the end of the year. The following table summarizes the current and past forecasts for rates, inflation and GDP by members of the Federal Reserve. 2024 2025 2026 Fed funds 4.4% 3.4% 2.9% June forecast 5.1% 4.1% 3.1% GDP 2.0% 2.0% 2.0% June forecast 2.1% 2.0% 2.0% Core PCE Inflation 2.6% 2.2% 2.0% June forecast 2.8% 2.3% 2.0% Source: Fed If the forecasts hold true, the US economy will achieve a soft landing, with inflation falling to the Fed's long-term goal of 2% without triggering a recession. FED NOTES WEAKER JOB MARKET, INFLATIONThe Fed said that the job market had slowed since the last time it voted on rates at the end of July. Inflation has moved closer to the Fed's goal but remains somewhat elevated. Unlike its previous statement in July, the Fed said it "has gained greater confidence that inflation is moving sustainably toward 2%". In addition, the Fed stressed its commitment to support maximum employment. Its last statement in July lacked such a statement. CHEMS WILL WAIT BEFORE RATES TRIGGER RECOVERY IN DURABLESChemical producers will have to wait before lower rates cause a recovery for demand in durable goods and housing. Both are key end markets for polymers such as polypropylene (PP), nylon, acrylonitrile butadiene styrene (ABS) as well as chemicals used to make polyurethanes, such as isocyanates, polyols and propylene oxide (PO). Huntsman said the lag is typically about two quarters. Ultimately, mortgage rates will need to approach 5% before markets for homes and durable goods can recover, according to Dow. Higher rates had made housing and durable goods like furniture and appliances less affordable. Because fewer consumers are buying homes and moving, they are purchasing fewer durable goods. LOWER RATES TEND TO BOOST OIL, CHEM PRICESTypically, prices for oil and other dollar-denominated commodities tend to rise as US interest rates fall. A rise in oil prices typically causes those for petrochemicals to increase. Margins for US-based producers benefit from higher oil prices because their plants predominantly rely on gas-based feedstock. By contrast, much of the world relies on oil-based naphtha, giving US producers a cost advantage. FIRST CUT IN MORE THAN FOUR YEARSThe last time the Federal Reserve lowered interest rates was in March 2020, during the COVID-19 pandemic. Lockdowns, government stimulus and recovery caused a surge in inflation, which led the Federal Reserve to begin raising the benchmark rate two years later in what became the most aggressive tightening campaign in more than 40 years. The Fed stopped raising the rate in July 2023. A year later, inflation started showing signs of approaching the Fed's target of 2%. At the same time, the labor market began cooling off and returning to more normal levels. Focus article by Al Greenwood Thumbnail shows money. Image by ICIS.

18-Sep-2024

SINGAPORE (ICIS)–Tropical Storm Pulasan is approaching China’s eastern coast and is expected to make landfall in Zhejiang province in the afternoon of 19 September At 8:00 hours Beijing time (01:00 GMT) on Wednesday, the storm was moving in the northwest Pacific Ocean, about 570 kilometers southeast of Naha City in the Ryukyu Islands of Japan. Pulasan is moving at a speed of 45 kilometers/hour toward the northeast and forecast to enter the East China Sea on Wednesday evening. It is expected to strengthen into a typhoon and make landfall along the Yuhuan and Xiangshan regions in Zhejiang in the afternoon of 19 September, according to China’s National Meteorological administration (NMA). Zhejiang's Ningbo City – which is a petrochemical hub – initiated Level IV typhoon emergency response – the lowest of four levels – at 9:00 hours on Wednesday. Pulasan would be the second storm to hit east China in a week. On 16 September, Typhoon Bebinca made landfall in China’s financial hub of Shanghai, causing severe damage to infrastructure and businesses. It weakened as its moved inland with its remnants still affecting the provinces of Anhui and Henan on Wednesday.

18-Sep-2024

HOUSTON (ICIS)–Fertilizer producer Harvest Minerals announced it has signed a technical cooperation agreement with PVW Resources Limited, an Australian company specializing in the advancement of rare earth element projects. The company said this collaboration aims to unlock the rare earth element potential at the Arapua project in Brazil, with the intention of progressing on the asset if results of the fully funded work programs continue to be favorable. Under the terms, PVW will provide technical expertise for the evaluation of the rare earth element potential of Arapua including reviewing historical data and identifying new targets for resource potential. Results to date have been positive for Harvest Minerals with the next batch due in October with the data from these results the basis for the next stages. The ongoing rare earth element work program at Arapua includes re-assaying a large set of rock samples and drilling data to further detail the mineralization. Upcoming there will be planning for additional drilling for resource expansion and the evaluating of processing methods and beneficiation processes to substantiate the preliminary findings. The company did say if their fertilizer interests are not impacted by this agreement. At Arapua it has been primarily focused on producing their organic, multi-nutrient fertilizer branded as KP Fertil, which is typically applied in Brazil in lieu of more traditional phosphate fertilizer inputs. “This partnership opens the door to realizing the rare earth element potential of Arapua, adding further value beyond our established low-cost, high-margin fertilizer business,” said Brian McMaster, Harvest Minerals chairman. “Brazil has emerged as a major player in the international rare earth element space and PVW is already making inroads into that space. We are extremely fortunate that they have seen the potential at Arapua and agreed to team with us.”

17-Sep-2024

HOUSTON (ICIS)–Canadian junior explorer Nevada Organic Phosphate (NOP) announced that their subsidiary Nevagro, has been informed by the Bureau of Land Management (BLM) that the agency is authorizing the Murdock Mountain Phosphate Exploration project. British Columbia based NOP said the BLM found no significant impacts and so the preparation of an Environmental Impact Statement (EIS) is not required. This decision approves the exploration plan portion of the prospecting permit application submitted to the BLM with prospecting permit to be issued separately. “The next step in the process will be a request from the BLM to submit a reclamation bond. In accordance with US Federal Regulation 43 CFR § 3504.50, a reclamation bond will be required once the official decision is made to approve the Prospecting Permit Application,” said Robin Dow, Nevada Organic Phosphate CEO. NOP aims to be one of the only certified organic rock phosphate producers with large-scale potential in North America and is currently advancing on the Murdock project, which contains a nearly flat lying sedimentary bed of known phosphate mineralization in northeast Nevada. The company said the increasing interest in organic and sustainable agriculture practices has contributed to the demand for organic fertilizers, including those derived from rock phosphate. Organic rock phosphate is often marketed as a fertilizer that not only provides phosphorus but also contributes to overall soil health.

17-Sep-2024

HOUSTON (ICIS)–The Fertilizer Institute (TFI) told the US Surface Transportation Board (STB) in testimony on Tuesday that there is an ongoing need for the freight rail industry to shift its focus toward customer service and growth. The industry group said the fertilizer segment has long relied on rail service for the efficient and safe transport of its products, but it has struggled with declining service quality, increasing rates and a lack of attention to customer needs. “The fertilizer industry is heavily reliant on rail and cannot afford to see continued stagnation in freight rail service,” said Ryan Bowley, TFI vice president of government affairs. “Unfortunately, we have seen freight volumes plateau, services decline and rates skyrocket.” TFI said that their testimony comes at a pivotal time for the Class I railroads as the STB’s inquiry into the rail industry’s growth potential highlights a disturbing trend, which is that freight rail carloads have been in decline since 2008. Trucking and other transportation sectors have consistently expanded their capacity. At the same time that rail employment has dropped, and carloads have declined, rail rates have surged. TFI said between 2005 and 2017, rates for transporting critical farm inputs like anhydrous ammonia increased by over 200%. It noted that such price hikes, combined with inconsistent service, have made it difficult for fertilizer companies to meet the just-in-time delivery demands of farmers across the country. “These rising costs and service failures are particularly troubling for industries like ours, which depend on rail to move bulk products safely,” Bowley said. “Our members regularly face delays, held shipments and escalating rates, often without any recourse. It is clear that a new approach is needed.” TFI highlighted the need for the rail industry to pivot toward a customer-focused, growth-driven model that balances profitability with service quality as the industry’s adoption of Precision Scheduled Railroading has led to deep cuts in staff and equipment and adding to service issues. The group did praise recent moves by the STB to increase oversight of rail service and pricing, including the implementation of faster emergency service orders. It did stress the importance of additional reforms such as expanding access to reciprocal switching, a policy that would allow shippers to switch between competing rail carriers more easily. “The rail industry should be actively competing for freight, not relying on captive customers to drive revenue. We need a system where railroads are not just collecting more revenue from a shrinking base but are growing their business by serving more customers with better service,” Bowley said.

17-Sep-2024