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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

HOUSTON (ICIS)–US ammonia-to-power solutions provider Amogy has announced a partnership with HD Korea Shipbuilding & Offshore Engineering, POSCO Holdings, Seoul National University and the American Bureau of Shipping to explore the feasibility of an innovative offshore ammonia cracking solution to deliver low-cost, accessible clean hydrogen fuel. Amogy said under this partnership, HD Korea Shipbuilding will design the ammonia supply system and integrate it into the overall system, and it will provide its ammonia-cracking technology. Seoul National University will contribute expertise in process design and simulation, while POSCO Holdings intends to harness its proprietary cracking process design technology to optimize the systems needed for ship application. The American Bureau of Shipping will oversee certification of the design as the class society. Amogy said ammonia, a hydrogen carrier, offers a more cost-effective and convenient alternative to liquefied hydrogen due to its established storage and transport infrastructure. Additionally, with energy density 2.7 times greater than hydrogen, ammonia is emerging as an optimal carbon-free fuel for the maritime industry. Further, the company said their technology unlocks the potential of ammonia as a hydrogen carrier by leveraging state-of-the-art catalyst materials to crack ammonia into hydrogen and nitrogen at lower reaction temperatures with high durability thereby reducing heating and maintenance requirements. “We are excited to join forces with this esteemed consortium to develop an innovative offshore ammonia cracking solution,” said Seonghoon Woo, Amogy CEO. “This partnership marks a pivotal advancement in leveraging ammonia to achieve net-zero emissions.”

17-Sep-2024

SAO PAULO (ICIS)–The likely increase in Brazil’s import tariffs for dozens of chemicals will start improving beleaguered domestic producers’ poor margins even though petrochemicals prices remain low, according to an analyst at US credit rating Fitch. Marcelo Pappiani, credit analyst for Brazilian chemicals producers, added that imports into Brazil and the wider Latin America remain high and are likely to continue that way as China and the US work through their overcapacities. Despite that, prices have stabilized, albeit at low levels, and “the worst of this downturn” seems to have subsided, said Pappiani. The two largest chemicals producers in Brazil, polymers major Braskem and chlor-alkali and polyvinyl chloride (PVC) producer Unipar, are covered by Fitch. The two companies have posted several quarters of poor financial results on the back of low prices and competition from overseas producers. TARIFFS UPBrazil’s chemicals producers – represented by trade group Abiquim, in which Braskem has a commanding voice – were hoping the Brazilian cabinet would increase import tariffs on dozens of chemicals in September. However, there have been contradictory reports on this, with some expecting the hike to be approved as soon as Wednesday (18 September), while other reports citing government sources have said the decision would be pushed back to December. The increases would follow a public consultation earlier this year in which Abiquim as well as individual companies proposed increasing tariffs in more than 100 products, most of them from 12.6% to 20%. Braskem is, at the same time, partly owned by the country’s state-owned energy major Petrobras, so the Abiquim/Braskem lobbying tandem tends to find open ears in the corridors of power in Brasilia under the current government, which has committed to expand the industrial sector. Pressure not to increase import tariffs has also been strong from other sectors, not least plastic transformers represented by Abiplast, but the producers’ proposals are expected to have won the day. “Petrochemicals prices in Brazil and the wider Latin America seem to have reached the bottom and we are seeing slightly less pressure on companies, despite of course still imports coming into the region in big numbers, from China, the wider Asia and the US,” said Pappiani. “Companies have lobbied the government strongly for an increase in import tariffs as well as other measures to prop up the chemicals industry. Import tariffs seem set to increase and that should soon make Brazilian producers more competitive.” Pappiani is in no doubt higher import tariffs in several chemicals – when around half of the Brazilian industry’s demand is covered imports – are likely to translate into higher prices for consumers, precisely the reasoning used by those who oppose the hike. “President Lula has said he wants to foster the chemicals sector and has met on several occasions with CEOs from the industry as well Abiquim,” said Pappiani. “But, of course, consumers will end up paying for higher import tariffs – this happens in all economic sectors, not just petrochemicals, of course.” COMPETITIVENESS THROUGH TARIFFSAs well as higher prices for consumers, those opposing the hike in import tariffs argue that Brazilian petrochemicals producers should speed up their modernization and diversification, so they are not as dependent on government policy for their profitability. Pappiani said Braskem is a well-managed company with international assets which would make it a profitable enterprise even without government measures which prop up its competitiveness in its domestic market. However, critics of protectionist measures continue their campaign against the increase in import tariffs, although according to most analysts the dice has been cast. On Tuesday, the president of Abiplast published a charged article in Brazil’s daily Estadao in which he wondered if Braskem would always need state indirect help to keep afloat, even if its second largest shareholder is Petrobras, which in theory should make accessing cheaper raw materials easier. “Why are foreign suppliers of petrochemical products able to be more competitive in their exports to Brazil, even bearing the costs of transportation, logistics and exposure to exchange rate variations? Over the past 40 years, we have exported many of these products to China; if the Chinese (and other countries) become competitive by importing Brazilian oil, why can't Brazilian [petrochemicals] producers become competitive?” said Jose Ricardo Roriz Coelho. “The exaggerated protection of the few petrochemical companies in Brazil results in them directing investments to countries where they face greater competition in order not to lose market share. Europe, which is not competitive due to its lack of raw materials for petrochemicals, has chosen to add value further down the production chain by importing resins from countries that are more efficient in production. “Structural problems, such as insufficient supply of inputs, cannot be solved with short-term remedies. The debate on new tariffs and the production chain is crucial,” concluded Roriz. Indeed, the prospect of high import tariffs being approved as soon as this week has already propped up Braskem’s market capitalization in the past few weeks. On 13 September, for instance, the company’s stock rose by nearly 8% as investors expect an imminent decision on the increase in import tariffs, according to a report by InfoMoney. The increase in import tariffs could automatically translate into higher earnings before interest, taxes, depreciation, and amortization (EBITDA) for Braskem, to the tune of $300 million/year, according to some analysts. Under current business conditions, that would be roughly the same EBITDA amount the producer posted in the second quarter of this year. “In our view, this additional tariff would help contain Braskem’s cash burn in recent quarters. The company would then be better positioned to capture a future cycle of increases in petrochemical spreads,” said analysts at XP cited by InfoMoney. Front page picture: Facilities operated by Brazilian polymers major Braskem in the state of Sao Paulo Source: Braskem Interview article by Jonathan Lopez 

17-Sep-2024