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ICIS Supply and Demand Database

Identify opportunities, mitigate risk and validate your growth strategies

An end-to-end view of supply and demand across multiple markets

Optimise sales planning, production and investment with a transparent view of the Chemicals supply chain showing capacity, balanced and integrated between upstream and downstream, as far ahead as 2050. Access supply, demand and trade flow data updated daily, with monthly and quarterly round-ups, for over 100 commodities in 175 countries.

Gain a clear understanding of the competitive landscape, with current and planned production capability segmented by plant, company, country or region. Import, export and consumption volumes are combined with short-term forecasts, margin analytics, pricing, plant cost evaluations and disruption tracking to help you stay one step ahead.

Identify new business opportunities with up-to-date information on plant ownership and technology, on a subsidiary and affiliate basis, from ICIS’ unrivalled network of chemicals experts embedded in key global markets.

Why use ICIS Supply and Demand Database?

Increase profitability and maximise ROI

Safeguard or increase margins and make better-informed purchasing decisions, with accurate and complete data on market dynamics and competitor behaviour.

Plan ahead with confidence

Discern long-term trends built on historical trade flow  data going back to 1978, and respond swiftly to market conditions if they change in unforeseen ways.

Optimise new business

Understand demand for your product, with a clear picture of competitors’ current and planned production capacity.

Validate targets with independent data

Support your investment decisions with ICIS’ reliable market data and insight.

Create agile purchasing strategies

Track changes in capacity, production and trade flows to keep ahead of market trends, and revise purchasing strategy accordingly.

Maximise efficiency

Save time strategy planning with all your market drivers, built on the latest outlook for supply and demand, visible in one place.

Quantify value

Understand value chain dynamics, with integrated analysis of upstream / downstream supply and demand.

Mitigate risk

Anticipate and minimise exposure to changes in imports, exports, supply and demand with forecasts and independent analysis.

ICIS News

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 14 June 2024. INSIGHT: Asia petrochemical markets grapple with surging shipping costs By Nurluqman Suratman 14-Jun-24 13:54 SINGAPORE (ICIS)–Spot prices of most petrochemicals in Asia have spiked on the back of surging freight and container costs, as logistics challenges which continue to dampen global commodities trades coincide with a seasonal uptick in demand. INSIGHT: China slams EU over EV tariffs; trade war brewing By Nurluqman Suratman 13-Jun-24 15:01 SINGAPORE (ICIS)–China has slammed EU’s proposal to impose provisional tariffs on imports of Chinese electric vehicles (EVs), denouncing it as a "blatant act of protectionism”, raising concerns that a trade war between Asia’s biggest economy and a new western front is brewing. India Q3 fatty acids demand grows amid freight spikes, logistics woes By Helen Yan 12-Jun-24 13:54 SINGAPORE (ICIS)–India’s import demand for fatty acids has picked up, with buyers seeking to lock in third-quarter shipments amid soaring freight costs and logistics issues that have disrupted global trade flows. Asia naphtha could still be lifted by supply challenges By Li Peng Seng 10-Jun-24 09:55 SINGAPORE (ICIS)–Asia’s naphtha intermonth spread has lost 42% of its value compared to a month ago as weak petrochemical margins weighed, but lingering concerns over arbitrage supplies coming to Asia could help limit the downside. INSIGHT: Asian petrochemical industry at crossroads amid supply glut – APIC By Nurluqman Suratman 10-Jun-24 16:54 SINGAPORE (ICIS)–The Asian petrochemical industry is grappling with a multifaceted transition, marked by a persistent oversupply of petrochemicals, the urgent need to decarbonize, and the growing momentum of the circular economy. China price pressures to remain weak on persistent weak demand By Nurluqman Suratman 13-Jun-24 11:08 SINGAPORE (ICIS)–China's consumer inflation rate is expected to remain weak in the near future on persistently weak domestic demand, raising worries about the risk of deflation as the nation's economic recovery struggles to gain traction.

17-Jun-2024

LOGISTICS: Container rates rise on peak season surcharges, but rate of growth slowing

HOUSTON (ICIS)–Rates for shipping containers continue to surge as carriers are implementing peak season surcharges while capacity remains tight from Red Sea diversions, but some shipping analysts think there are signs that the dramatic rate of growth may be slowing, which leads off this week’s logistics roundup. CONTAINERS Shipping container rates continued to rise this week, but the rate of increase slowed, according to data from supply chain advisors Drewry and as shown in the following chart. Ocean freight rates analytics firm Xeneta said its data indicates spot rates on major trades out of Asia will increase again on 15 June, but to a less dramatic extent than witnessed in May and early June. Average spot rates from Asia to US West Coast are set to increase by 4.8% on 15 June to stand at $6,178/FEU (40-foot equivalent unit). However, on 1 June, rates on this trade increased by 20%. From Asia into the US East Coast, rates are set to increase by 3.9% on 15 June to stand at $7,114/FEU. Again, this is a far less dramatic jump than when rates increased by 15% on 1 June. Rates from north China to the US Gulf are at the highest this year but leveled off this week, as shown in the following chart. “Any sign of a slowing in the growth of spot rates will be welcomed by shippers, but this is an extremely challenging situation, and it is likely to remain so,” Xeneta chief analyst Peter Sand said. “The market is still rising, and some shippers are still facing the prospect of not being able to ship containers on existing long-term contracts and having their cargo rolled.” 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 RATESUS chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates were lower from the US Gulf (USG) to India and unchanged from the USG to the Caribbean. From the USG to Asia, the market has gone overall quiet after a few busy weeks in the month of May. The spot market faces headwinds as activity has been slow, causing spot space to pile up for July, placing downward pressure on spot rates. Recent force majeures in the USG have caused some COA vessels to look for additional cargoes, adding pressure to rates. Market participants are optimistic that freight rates for larger parcels will stabilize in the near term. US PORT OPERATIONS Operations at US ports are stable even as import volumes are at the highest since 2022, and railroad performance has improved over the past month, according to analysts at freight forwarder Flexport. Nathan Strang, director of ocean freight, US Southwest for Flexport, said that apart from the Port of Charleston, South Carolina, volumes are moving really well through the East Coast ports with rail dwell averaging about two days. Charleston is undergoing an infrastructure project on its Wando Welch Terminal to expand the docks. Dock construction at Wando Welch terminal started on 11 March, reducing berth space from three to two berths for one year, with berths given on first come, first serve basis. Strang said some vessels are discharging at the Port of Savannah, Georgia, and then moving material to Wando Welch via trucks, or using other terminals within the Port of Charleston as space becomes available. Overall port omissions from all carriers are starting to reduce the extent of the delays, with six to nine days delay expected in week 24, according to a port update from Hapag-Lloyd. RAILROADS Strang said Flexport customers are seeing lower dwell times for rail cars at ports over the past month. “I have been talking about how rail performance to and through the West Coast has been suffering a little bit,” Strang said, describing his point of view in past webinars. “I will say that we have seen real improvement.” Strang said West Coast port operations have remained stable, with local pick-up dwell at six days for Los Angeles/Long Beach, at five days in Seattle/Tacoma (SeaTac) and at four days in Oakland. For the first 23 weeks of 2024, ended 8 June, North American chemical railcar loadings rose 3.8% to 1,082,614 – with the US up 3.9% to 745,780. In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. PORT OF BALTIMORE OPENS The Fort McHenry Federal Channel – the entrance to the Port of Baltimore – is fully reopened just 11 weeks after a container ship lost power and struck the Francis Scott Key Bridge, causing its collapse and essentially shutting the port. The Unified Command (UC) said salvage crews successfully removed the final large steel truss segment blocking the 700-foot-wide Fort McHenry Federal Channel on 3-4 June. Deep-draft commercial vessels have been able to transit the port since 20 May when the UC cleared the channel to a width of 400ft and depth of 50ft. Following the removal of wreckage at the 50-foot mud-line, the UC performed a survey of the channel on 10 June, certifying the riverbed as safe for transit. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). PANAMA CANAL The Panama Canal Authority (PCA) is offering an additional booking slot for the Neopanamax locks as of 11 June, increasing the total number of daily canal transits to 33, and is also raising the maximum authorized draft based on the current and projected level of Gatun Lake. The PCA will open an additional slot on 8 July, which will bring the total number of daily transits to 34. Because of the improved water levels now that the rainy season has arrived, the PCA is also increasing the maximum authorized draft for vessels to 14.02 meters (46.0 feet). This is the second increase in draft restrictions over the past few weeks. Wait times for non-booked southbound vessels ready for transit have been relatively steady at less than two days, according to the PCA vessel tracker. The tracker is only for non-booked vessels in the queue and shippers should consider two additional days as a minimum to estimate transit times for unscheduled vessels, the PCA said. Focus article by Adam Yanelli Additional reporting by Kevin Callahan

14-Jun-2024

VIDEO: Europe R-PET looks for more market clarity at PRSE

LONDON (ICIS)–Matt Tudball, senior editor for Recycling, takes a look at the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: ICIS at Plastics Recycling Show Europe (PRSE) – email recycling@icis.com for a meeting Mixed views on food-grade pellet demand Better 2024 outlook to emerge at PRSE Prices stable ahead of event

14-Jun-2024

PODCAST: Glimmers of hope for Europe acetone and phenol derivative chain in a difficult climate; freight/logistics key

LONDON(ICIS)–European downstream demand remains low due to inflation and high interest rates. Add logistics issues and a continuous flow of imports to that, and the doom of European petrochemical industry begins. But with the recent reduction in interest rates by ECB and increased tariffs on Asian EVs, there is hope that the acetone and phenol derivative chain might come back to its glory. Europe ICIS editors Jane Gibson (acetone and phenol), Heidi Finch (bisphenol A and epoxy resins), Meeta Ramnani (polycarbonate), Mathew Jolin-Beech (methyl methacrylate) and ICIS senior analyst Michele Bossi (aromatics and derivatives) discuss the latest development in imports, bans and interest rates that are likely to impact the acetone, phenol and derivatives markets. Acetone market balanced to tight on export demand, slim import volumes and curtailed op rates as phenol struggles to find demand Cut of interest rates by ECB and tariffs on Chinese EVs increases hope of recovery of demand Dependency increases on Asian imports for PC BPA and epoxy players keep close eye on upstream, logistics and regulatory factors Challenging global as well as regional logistics impact MMA supply in Europe Podcast edited by Meeta Ramnani

14-Jun-2024

Higher import tariffs one leg of wider plan to save Brazil’s besieged chemicals producers – Abiquim

SAO PAULO (ICIS)–Proposals to sharply increase chemicals import tariffs are only one of the three aspects Brazil’s chemicals producers have proposed to the government to save their "besieged” operations, according to the CEO at trade group Abiquim. Andre Passos added that the industry has also proposed to the government a structural plan to reduce natural gas prices in Brazil as well as a US-style, IRA-type stimulus plan for the chemicals chain, completing a plan to help chemicals producers which remain, he said, operating at historically low rates. Abundant and low-priced chemicals imports have been making their way to Brazil for several months, with domestic producers facing stiff competition and losing market share. China has been the main country of origin, but Passos said also pointed to the US, Russia, or Saudi Arabia. In May, chemicals producers – via Abiquim but also as individual companies – proposed increasing tariffs in more than 100 chemicals, most of them from 12.6% to 20%, in a public consultation held by the Brazil’s government body the Chamber of Foreign Commerce (Camex). A decision is expected in August as the latest. Abiquim represents only chemicals producers, but not distributors; Brazil’s polymers major Braskem, which is 36.1% owned by the state-owned energy major Petrobras, has a commanding voice in the trade group. Other trade groups in the chemicals chain, such as Abiplast, representing plastics transformers, do not support higher tariffs as most of their members import product to meet their demand. Soon after Abiquim met with Brazil’s President Luiz Inacio Lula da Silva in May, as part of their lobbying to prop up chemicals producers’ operations, Abiplast and several other trade groups also demanded a meeting with Lula to lobby for their case of not raising import tariffs. NOT ONLY TARIFFSPassos was keen to stress that higher tariffs were only one part of producers’ proposals to the government and emphasized the measure has been proposed to be in place for one year. In May, a source in Brazil’s chemicals said to ICIS that simply proposing higher tariffs, without addressing other productivity and global competitiveness issues in an industry mostly based in commodity chemicals production, was the result of “business mediocrity”. Passos was not having it. “What is a showing of mediocrity is not to understand this [higher import tariffs] is a proposal to be in place for only one year, in the face of a situation where chemicals producers are operating at rates of 62-64% and where the survival of several chemicals chains is being jeopardized,” he said. “What we have presented to the government is the need to undertake action on three main fronts: in the short term, import tariffs, but in the medium and long term we also need a structural plan to address natural gas prices, which are seven times higher in Brazil than in some other jurisdictions, as well as a stimulus plan covering the whole chemicals production chain.” Brazil’s natural gas prices have hovered around $14/MMBtu during the past months. That compares to a price of around $2.5/MMBtu at times in the US, although this week prices surpassed the $3/MMBtu mark in that country. The chemicals industry can use natural gas-based ethane as one of its building blocks, which has allowed the US’ chemicals industry to thrive after the shale gas boom. In Brazil, most steam crackers run on crude oil-based naphtha. According to Passos, with the adequate regulatory framework and a helping hand from Petrobras, prices could come down considerably in Brazil. To that aim, the energy major and Abiquim signed a memorandum of understanding (MoU) earlier in 2024 to explore potential agreements on natural gas supply to chemicals. Abiquim says the sector is Brazil’s largest consumer of natural gas, coping 25-30% of supply, and therefore government-controlled Petrobras could do more to help. Petrobras has always focused on crude oil production, with most of the natural gas extracted in its operations reinjected back into the system. Passos said Abiquim and Petrobras should be announcing concrete action on natural gas in coming weeks. Moreover, Petrobras said in May it was to restart construction work on its gas processing unit in Itaborai, called Gaslub and also known as Rota 3. The project’s construction, started in the early 2010s, fell victim to the wide-ranging corruption scandal Lava Jato in which Petrobras was a central part. “Currently, Brazil’s crude oil sector is well regulated and is one of the country’s success stories. We need the same for natural gas. When Gaslub is started up, 18 million of cubic meters (cbm)/year will come into the market. We are forecasting there could be gas oversupply within two years, although this of course depends on other variables as well,” said Pasos. “Barring disruption to supply from Bolivia, or a potential severe drought which would lower hydraulic electricity production [having to use natural gas to produce it], we are forecasting that with the adequate regulatory framework and Gaslub functioning, natural gas prices could come down considerably in the medium-term.” Passos was keen to stress how Braskem’s steam cracker in Rio de Janeiro’s Duque de Caxias facilities, which runs on natural gas-based feedstocks, is operating, exceptionally, at an approximately 85% operating rate. This shows, he went on to say, how even with high prices more supply of natural gas is indispensable for chemicals producers to increase their competitiveness. He also said the fiscal burden chemicals procures in Brazil endure stands at 43%, versus 20% in the US, according to Abiquim’s estimations. Work there, he said, could also be done. STIMULUS  Passos said the government must contemplate a plan for the chemicals industry following the example of the US’ Inflation Reduction Act (IRA), which has propelled large investments in green energy projects, propping up the chemicals industry along the way. He conceded the US’ resources are larger than Brazil’s but said that the government has already showed it can design plans to prop up specific economic sectors, and mentioned the example of the Mover program for the automotive industry. Earlier this week, Brazil’s Congress finally approved the plan, proposed in December. In the best Brazilian style, members of parliament (MPs) introduced amendments which graphically are known as “jabuti” (turtle): amendments to a bill which are little related to the spirit of the bill itself. In Brazil’s strong balance of powers, MPs can greatly delay the passing of bills, like Mover. “We have presented to the government the need for an IRA-like, Mover-style plan for the chemicals industry, for all elements in the production chain: basic chemicals as well as chemicals of first, second, and third generation,” said Passos. “Brazil has been able to destine Brazilian reais (R) 19.3 billion [$3.6 billion] for automotive – it can do the same for the important chemicals industry, which creates so many jobs in the country.” Finally, Passos said that before the severe floods affecting Rio Grande do Sul in May – which brought havoc to one of Brazil’s most industrialized states – demand and manufacturing activity was healthier than in 2023, overall, although that improvement had not benefitted any of Abiquim’s members: higher demand for chemicals was being met by imports, he said. On Monday (17 June), the second part of this interview will be published, with Passos' views on Brazil’s response to the floods. Passos is a gaucho himself – as people from Rio Grande do Sul are called – and said the authorities' response to the disaster had been decent, adding he had been humbled by the response of civic society across Brazil. ($1 = R5.36) Front page picture: Braskem's Duque de Caxias facilities in Rio de Janeiro Source: Braskem Interview article by Jonathan Lopez ($1 = R5.36)

14-Jun-2024

Europe's energy market needs more trade and integration – CEO

Trading association celebrates anniversary, outlines future challenges Integration with emerging markets in Ukraine, Moldova, West Balkans and consolidation of institutions key to success Gains for populist parties in EU elections will not change outlook for energy transition LONDON (ICIS)–Europe’s single energy market needs more integration and free trade to live up to ongoing challenges, Mark Copley, CEO of Energy Traders Europe told ICIS in an interview. Marking the 25th anniversary of Europe’s foremost energy trading association, previously known as EFET, Copley said the EU had created the largest and best functioning gas and power markets anywhere in the world. He said the proof of this achievement came in the last three years, when the single market showed its extreme resilience. It went from the lowest demand in living memory during the COVID-19 pandemic to keeping Europe’s supplies secure in the face of Russia’s war in Ukraine and an unprecedented energy crisis. In the last 25 years, Energy Traders Europe has witnessed the single energy market develop from a dozen core countries to include 27 EU member states as well as neighbors such as Ukraine or Moldova. The challenges experienced by the electricity and gas sectors are reemerging in new markets for hydrogen, biomethane or guarantees or origin. “In a way everything’s changed and nothing’s changed,” Copley said, adding that the need to attract investors and global competitiveness remained as pertinent as ever. To meet ongoing challenges, the single market would have to work towards even greater integration, stronger institutions and a more flexible regulatory framework. CLOSER TOGETHER Integration would translate not only into bringing EU and neighboring countries closer but also integrating short and long-term markets, harmonizing subsidies and establishing more standardization to ensure all members work along similar principles. “If the discussion is going to be around competitiveness, let’s expand it,” he said. “Let’s become even more competitive by taking it into the UK, the Western Balkans, into Ukraine, into Moldova, into North Africa, because the structure we’ve created is replicable and extendable. And the more you extend it, the bigger the benefits to everyone,” he said. Mirroring the growth of the market itself, Energy Traders Europe’s membership has grown from seven to 165, including two that joined this month. Members come from 30 countries, including Azerbaijan, Kosovo and Ukraine. COMMON LANGUAGE Copley said he is particularly proud of some of the association’s achievements, such as establishing standard EFET contracts. These helped streamline over-the-counter trading in energy and energy-related instruments. “Can you imagine a trading system where every person you trade with has to be assessed on a bespoke basis and everybody you trade with, every trade you do has to be confirmed by fax, because that’s where we came from?” Copley, who joined the association in February 2021 after spells with the British government and the energy regulator Ofgem, said the integration of markets should go hand in hand with the consolidation of institutions tasked to drive policies. This may include giving greater powers to the EU Agency for the Cooperation of Energy Regulators (ACER) and consolidating the independence of national watchdogs to ensure rules are enforced effectively. Although the merits of an integrated, functional market were proven in times of extreme stress, they are still not fully recognized across the political spectrum, he said. POLITICS Geopolitical uncertainty may be prompting policymakers to take a more interventionist stance, as they fear security of supply risks. “Energy’s got more political. I’m not going to say energy was ever boring but people have become more acutely aware that energy is key to economic growth, to inflation, to everybody’s lives. “Now there’s more fragmentation in thinking and there’s a job for us to explain why this thing we’ve created is genuinely good for customers across Europe,” he said, adding that more free trading will be critical in ensuring a successful energy transition. Although far-right populist parties gained ground in recent EU elections, the bloc’s energy transition ambitions may not be diluted. “I think there’s going to be a conversation about the speed of decarbonization, but fundamentally, we’re working to a legally binding target and if you add up [centre-right group] EPP, Renew and the Socialists & Democrats you’ve got 400 members and you need 361 [out of 720 seats]. So, for all the talk of the right-wing parties, there is a fairly large centrist group, and I would like to think we should be able to agree [on energy transition policies],” he said.

14-Jun-2024

BLOG: China could still become entirely petrochemicals self-sufficient despite EVs impact on refineries

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: China has set itself a target that 40% of all the vehicles on its roads will be electric by 2030. And by that year, the aim is that all new-vehicle sales will be electric vehicles (EVs). The country wants to reach peak carbon emissions before 2030 and carbon neutrality before 2060. “After 2030, it is going to be pretty much impossible to get approval for a heavy industry project because of the emissions targets,” said a petrochemicals industry source. This has led to suggestions that the resulting lower availability of feedstocks from local refineries will slow China’s push towards complete petrochemicals self-sufficiency. I disagree for the following reasons. Despite a cap on local refinery capacity, I’ve been told that local supply of naphtha, etc shouldn’t be a problem until up to a least 2030, because refineries will be increasingly turned in petrochemicals feedstock centers. More naphtha and gasoil crackers are expected to be added to refineries ahead of the 2030 cut-off point. Other heavier fractions from refineries are also forecast to be increasingly used as petrochemicals feedstocks. And even if local feedstock supply does become constrained after 2030, we shouldn’t assume that this will restrict domestic production because of the weaker-tonne economics of importing raw materials. China’s closer geopolitical relationships with the Middle East, along with increased availability of natural-gas liquids in the Middle East, suggest that imports of feedstocks will be available at the right costs. My view is that China’s economic challenges will result in annual average petrochemicals consumption growth of 1-3% per year up until 2030. Beyond 2030 I see growth falling to around 1%. Weaker demand growth will of course make it easier to increase petrochemicals self-sufficiency. Because recycling is mainly a “local for local” business due to the restrictions on moving plastic waste across borders growth of recycling in China will, in my view again, increase the country’s self-sufficiency in polymers. Recycling is exactly the type of higher-value industry China needs to nurture as it attempts to escape a middle-income trap made very deep by its demographic challenges. Security of local supplies of raw materials in an ever-more uncertain geopolitical world will add further momentum to the growth of recycling in China. Local virgin polymer and petrochemical plants will run at high operating rates, supported by maximising supply of feedstocks from local refineries and by competitive imports of feedstocks from China’s geopolitical partners. This will further boost supply security. Don’t be therefore distracted by suggestions that the growth of EVs in China and the country’s emissions targets will be good news for petrochemical exporters to China. China will become a vast continent-sized market that will be just about entirely self-sufficient. As I shall explore in a later post, this will apply to specialty as well as commodity grades of petrochemicals. Overseas producers most focus on markets elsewhere. As the chart below shows using high-density polyethylene (HDPE) as an example, the opportunities in other countries and regions are big. China lifted all petrochemicals boats during the 1992-2021 Supercycle, making even the least-competitive companies successful. This is no longer the case. 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.

14-Jun-2024

June WASDE has unchanged outlook for corn while projecting higher soybean stocks

HOUSTON (ICIS)–The US Department of Agriculture (USDA) outlook for the corn crop is unchanged relative to last month while for soybeans, it is projecting there will be higher beginning and ending stocks, according to the June World Agricultural Supply and Demand Estimate (WASDE) report. For corn, the monthly update said along with no adjustments to its corn forecast from May that the season average price received by producers remains at $4.40 per bushel. The USDA did reveal it will release its acreage report on 28 June, which will provide survey-based indications of planted and harvested area. For soybeans, the WASDE said higher beginning stocks reflect reduced crush for 2023-2024, with it expected to be down by 10 million bushels on lower soybean meal domestic use that is partly offset by higher exports. With increased supplies and no use changes, the USDA said soybean ending stocks are projected at 455 million bushels, up 10 million bushels. The soybean price is forecast at $11.20 per bushel, unchanged from last month. The next WASDE report will be released on 12 July.

13-Jun-2024

LOGISTICS: US port ops stable amid heavy imports; rail performance improves over last month

HOUSTON (ICIS)–Operations at US ports are stable even as import volumes are at the highest since 2022, and railroad performance has improved over the past month, according to analysts at freight forwarder Flexport. RAILROADS Speaking during a webinar to discuss the state of freight, Nathan Strang, director of ocean freight, US Southwest for Flexport, said its customers are seeing lower dwell times for rail cars at ports over the past month. “I have been talking about how rail performance to and through the West Coast has been suffering a little bit,” Strang said, describing his point of view in past webinars. “I will say that we have seen real improvement.” Strang said West Coast port operations have remained stable, with local pickup dwell at six days for Los Angeles/Long Beach, at five days in Seattle/Tacoma (SeaTac) and at four days in Oakland. “Trucking and transload capacity remain good out of all US West Coast ports,” Strang said. Rail traffic has risen for 19 consecutive weeks, with railcar loadings for the week ended 8 June up 5.7% year on year according to the Association of American Railroads (AAR). For the first 23 weeks of 2024, ended 8 June, North American chemical railcar loadings rose 3.8% to 1,082,614 – with the US up 3.9% to 745,780. In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. PORTS Strang said that apart from the Port of Charleston, South Carolina, volumes are moving really well through the East Coast ports with rail dwell averaging about two days. Charleston is undergoing an infrastructure project on its Wando Welch Terminal to expand the docks. Dock construction at Wando Welch terminal started on 11 March, reducing berth space from three to two berths for one year, with berths given on first come, first serve basis. Strang said some vessels are discharging at the Port of Savannah, Georgia, and then moving material to Wando Welch via trucks, or using other terminals within the Port of Charleston as space becomes available. Overall port omissions from all carriers are starting to reduce the extent of the delays, with six to nine days delay expected in week 24, according to a port update from Hapag-Lloyd. ASIA PORTS CONGESTED Strang said that things are opposite of the conditions seen during the pandemic, when US West Coast ports were dealing with huge backloads and major congestion because of the strong US consumer demand for goods. “Shanghai and Singapore are seeing the most congestion right now, but most ports within Asia are seeing pretty heavy congestion,” Strang said. Carriers are even omitting Singapore on certain services because of the amount of congestion in Singapore, Strang said.

13-Jun-2024

INSIGHT: Chem M&A outlook brightens amid surge of deal announcements

HOUSTON (ICIS)–Chemical companies have started the first half of 2024 announcing potential sales and separations of several businesses, which could lead up to busy cycle for mergers and acquisitions (M&A). Sustainability continues to influence M&A decisions, although it will unlikely lead to any large acquisitions. Private equity firms could play a larger role in M&A despite higher interest rates because financial investors have plenty of money. Electronic materials could be another M&A trend because of government incentives for the semiconductor industry. CHEMS EXPECT MORE M&AMore than half of the chemical executives who participated in a survey expect M&A activity to increase in the next 12-18 months, according to Kearney, a consulting firm that conducts an annual report about deal-making in the industry. By contrast, 18% expect M&A activity to decrease, and 32% expect activity to be roughly stable. The sentiment is more positive than surveys from the past few years, said Andy Walberer, partner and global chemicals lead at global strategy and management consultancy Kearney. He made his comments while discussing Kearney's recent M&A report. Part of that optimism comes from the divestment plans and strategic reviews recently announced by chemical companies, he said. Also, executives at chemical companies are no longer contending with the COVID-19 pandemic and the subsequent supply-chain disruptions. They have the headspace to think about medium- and long-term strategy, he said. SUSTAINABILITY CONTINUES INFLUENCING DEALSSustainability will unlikely lead to high-dollar deals, but it will still be a noteworthy trend, Walberer said. Chemical companies are scrambling to secure supplies of recycled and renewable feedstock. Chemical executives and Kearney have noted the gap between supply and demand for sustainable feedstock. To secure feedstock, companies have been establishing partnerships or acquiring businesses. Walberer expects that trend to continue. In other cases, chemical companies are making sustainability M&A decisions in response to government incentives and regulations, Walberer said. Kearney has seen some companies divest sections of portfolios because of high carbon emissions, Walberer said. PRIVATE EQUITY HAS PLENTY OF DRY POWDERHigher interest rates have made M&A more challenging for private equity firms because of their traditional reliance on debt-financed acquisitions. That said, private equity firms have built up large stashes of dry powder. They could put that money to work without debt, which has become more expensive because of higher interest rates. At the same time, chemical valuations have fallen. "We see PE very active," Walberer said. Walberer noted that financial investors made up 26% of chemical deals in 2023, up from 7% in 2022 and above the historic range of 15-20%. In particular, private equity firms may acquire some of the infrastructure assets that chemical companies are eager to divest. Dow had expressed interest in selling more of its infrastructure after agreeing to divest its rail assets at six sites in mid-2020. Recent and upcoming carveouts could provide private equity firms with more M&A opportunities. In December 2023, Solvay carved out its specialty business, called Syensqo, from its mostly commodity business. DuPont expects to complete its breakup into three companies in the next 18-24 months. CHANGING OUTLOOK FOR EUROPEEuropean chemical M&A experienced a slowdown because of the spike in energy and feedstock costs that followed the start of the war in Ukraine, according to the Kearney report. It should continue declining in the next 12-18 months before a possible rebound. "Amid ongoing challenges, big chemical players are under stress, prompting them to review their business models and restructure," Kearney said in a report regarding Europe. In some cases, the owner of a business may decide to put it on the market after realizing it is no longer a core part of the company, Walberer said. The corporation concludes that it is no longer the best owner of the business and decides to divest it. "There are a lot of good examples of how new owners have been able to improve the performance of the business," he said. DuPont's performance coatings business would later flourish as Axalta Coatings Systems. which was initially sold to Carlyle for $4.9 billion before becoming a publicly traded company. Another example is Nouryon, the surfactants business that was spun off from AkzoNobel. In other cases, the business's performance has suffered because of structural reasons, such as high costs, Walberer said. GOVERNMENT SEMICONDUCTOR INCENTIVES MAY DRIVE M&AElectronic materials could become another M&A trend because of the incentives being lavished by government, Walberer said. The US, China, the EU, Japan, Germany and South Korea are among the countries that created semiconductor incentive programs worth billions of dollars. DuPont's electronics business is one of the three that will break out of the company. That business itself is the product of acquisitions made by DuPont. CHEM M&A ACTIVITY OVER THE YEARSTypically, the value of chemical M&A is $100 billion to $120 billion per year, a level it reached in 2022 and 2023, Walberer said. The COVID pandemic and its subsequent recovery distorted M&A in 2020 and 2021. Values in 2019 and 2016 spiked because of large deals such as the Dow and DuPont merger and Aramco acquiring a large stake in SABIC. ANNOUNCEMENTS IN 2024The following lists some of the major chemical M&A announcements made so far in 2024. February 26: PPG explores strategic alternatives for its architectural coatings business in the US and Canada. It could reach a decision by the end of the third quarter. March 4: Evonik agrees to sell its superabsorbents business to International Investors Group (ICIG). March 13: Trinseo seeks to sell its stake in Americas Styrenics. It later clarified that the entire joint venture is for sale. May 6: BASF plans to sell its idled ammonia, methanol and melamine units in Ludwigshafen, Germany. May 8: LyondellBasell starts strategic review of the bulk of its operations in Europe. May 8: Shell agrees to sell its refinery and petrochemical assets in Singapore to the CAPGC joint venture. May 22: DuPont plans to break up into three companies, including one focusing on electronics and another on water. Insight article by Al Greenwood Thumbnail image by ICIS.

13-Jun-2024

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