Biden promises to address supply chain issues

Spanish Market: Agriculture, Biofuels, Chemicals, Coal, Crude oil, Fertilizers, Metals, Oil products, Petrochemicals
02/03/22

US president Joe Biden pledged in his first State of the Union address to improve the nation's economy by fixing the strained supply chain, repairing crumbling highways and bridges and increasing domestic manufacturing.

Inflation is robbing families of benefits they might gain from record job growth and higher wages, he said yesterday. "That is why my top priority is getting prices under control," Biden said.

Inflation has worsened in part because of a drop in domestic manufacturing and disrupted supply chains that bring imports to the US at a higher cost. "When factories close, it takes longer to make goods and get them from the warehouse to the store, and prices go up."

Biden plans to control inflation and lower costs by making more goods in the US, including automobiles and semiconductors.

"Instead of relying on foreign supply chains, let us make it in America," Biden said. His said his plan for domestic infrastructure will result in "more goods moving faster and cheaper in America."

Repairing transportation infrastructure is a key part of the plan. Supply chains have been upset for more than a year because of a surge in imports following an initial slow down in the first months of the Covid-19 pandemic.

"We will create good jobs for millions of Americans, modernizing roads, airports, ports and waterways all across America," Biden said. "We will not be able to compete for the jobs of the 21st century if we do not fix that."

Work will begin this year to fix more than 65,000 miles of highway and 1,500 bridges that are in disrepair. Other infrastructure plans include construction of a national network of electric vehicle charging stations, replacement of poisonous lead water pipes and improved availability of affordable high-speed internet.

Biden's comments underscore plans announced last week to fix logistics supply chains by making upgrades to infrastructure, including a $450mn grant program for US ports.

By Abby Caplan

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30/12/24

Viewpoint: Zinc prices to drop in 2025 on higher supply

London, 30 December (Argus) — Zinc prices increased this year as supply was tight, but prices are expected to soften next year because of improved supply and continued weak demand in key consumption markets. Zinc has been one of the best performers of the London Metal Exchange base metals this year, trading above $3,000/t going into December compared with a $2,537/t average in January. This puts this year's average price 6pc higher than the 2023 average. The price strength seen this year can be attributed to supply pressures, including production disruptions at key mines. Global mining group Glencore's McArthur River mine in Australia halted operations in March owing to extreme rainfall, and Chinese mining company MMG's Dugald River mine in China was placed under care and maintenance during the third quarter. The zinc market had a 164,000t deficit in 2024, according to forecasts from the International Lead and Zinc Study Group (ILZSG), additionally driven by reduced mined output from Swedish metals producer Boliden's Tara mine in Ireland, and Portuguese mining company Almina's Aljustrel mines in Portugal. Higher supply forecast Supply is expected to increase in 2025, with ILZSG forecasting a surplus of 148,000t for the year, as new mine supply is scheduled to ramp up. One of the biggest supply-side developments is the reopening of Canadian mining firm Ivanhoe Mines' Kipushi mine in the Democratic Republic of Congo. Kipushi is expected to produce 278,000 t/yr of zinc over its first five years, and will become Africa's largest zinc mine and the fourth-largest globally, according to Ivanhoe. In Europe, higher output from Bosnia and Herzegovina and Portugal, and the reopening of the Tara operations in Ireland, will contribute to the overall increase in supply, according to ILZSG. Russia's production is also expected to rise, supported by the recently opened Ozerneoye plant . Australia, Canada, China, Japan, the Netherlands and Norway will also all see concentrate supply increases next year, particularly in the first quarter, with an expansion at Boliden's Odda smelter due to ramp up output early in the new year. Global mined supply has declined over the past three years, but trading firm Macquarie expects global mine supply to grow by 5.8pc in 2025. Total project approvals this year reached around 570,000 t/yr of zinc, Macquarie said in its 2025 global commodity outlook, published on 5 December. Persistent weak demand But demand growth may be insufficient to absorb this additional output, leading to oversupply in the coming years. Global carbon steel demand has fallen this year, as construction sector demand has generally been weak across most major economies, including China. Construction steel accounts for 55pc of zinc end demand, according to Macquarie. The Argus weekly ex-works northwest Europe assessment for hot-dipped galvanised steel — one of the main products that use zinc — has dropped by nearly 17pc from the start of the year to €665/t ($690/t) on 4 December, reflecting a struggling steel sector in Europe. European manufacturing activity also remains weak, with the automobile sector facing a number of factory closures because of subdued demand. German carmaker Volkswagen announced in late October that it plans to close at least three plants and lay off thousands of employees, as the firm attempts to save money amid falling sales because of an overall decrease in European car demand. And global automaker Stellantis plans to cut its inventories going into the new year. Macquarie predicts that global refined zinc demand will grow by 1.7pc in 2025, which is lower than the previously anticipated 2.5pc growth rate because of uncertainty surrounding potential new US tariffs following the inauguration of president-elect Donald Trump in January. The proposed tariffs could impact the strength of the US dollar and global trade. Zinc premiums in Europe decreased in 2024. The Argus Rotterdam SHG zinc premium dropped by nearly 30pc throughout the year, reflecting weaker consumption from downstream industries, particularly construction and manufacturing. Ongoing uncertainty over global economic conditions, high energy costs and new supply in Europe will likely play a role in keeping premiums subdued. Price outlook 2025 Given the anticipated supply surplus and the ongoing demand lag, analysts are generally bearish on zinc prices in 2025. The 2024 zinc price currently averages at $2,800/t, but the World Bank and ratings agency Fitch both expect this to decline to $2,600/t in 2025, followed by a further drop to $2,500/t in 2026. Similarly, Macquarie forecasts the zinc price to drop to $2,650/t next year and to $2,450/t in 2026, reflecting expectations of a market surplus. By Roxana Lazar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: European BD to face tighter supply in 2025

30/12/24

Viewpoint: European BD to face tighter supply in 2025

Houston, 30 December (Argus) — European butadiene (BD) supply is expected to tighten next year, according to market participants, because of scheduled steam-cracker closures and steady demand. European domestic demand this year helped spot prices maintain a 5-7pc premium to the monthly contract price (MCP) until December, when spot prices fell to parity with the MCP. But the lower BD MCP in December protected Europe's position as the lowest cost region after three consecutive price rollovers, even as US and Asian prices fell. Market sentiment is cautiously optimistic on consumer demand for early 2025. One producer noted that interest for spot volumes remains strong into early next year and export sales should remain resilient, especially once buying interest picks up after the Lunar New Year. European BD exports — which primarily flow to the Asia-Pacific region with one-offs to the US— were stable at nearly one shipment per month from April-December, although they were down from the prior year. Europe's BD exports totaled about 109,700 metric tonnes (t) so far this year, but there are ongoing discussions for one additional long-haul shipment loading in late December. That said, the spread between Europe and the US is forecast to remain closer to parity, narrowing the premium European sellers have obtained from moving shipments eastward. Both planned and unplanned cracker turnarounds in the US may raise prices there and open space for Europe's coastal producers to periodically capture preferred access to Asian buyers, independent of logistical bottlenecks. Currency, crackers may pressure demand Currency fluctuations may dent buyers' confidence in the coming year as a stronger US dollar lifts costs for imports, affecting selling prices of European-origin exports in dollar terms. The outcome of the US presidential election rallied the dollar against the euro and other currencies, as markets price in expected tariffs from the new US administration. The comparative strength of the US economy also drove the rally. Strong European domestic demand could undercut potential BD exports as the region's supplies gradually transition from net-long to more balanced, with ongoing structural changes transforming Europe's chemical business. The closure this year of two steam crackers in France and the Netherlands along with the planned shut down of two more crackers in Italy will reduce regional supply of crude C4, a key BD feedstock. Buyers in Italy will need to rely more heavily on Mediterranean imports of crude C4 in tandem with BD to maintain derivative operations. Cracker operators next year are likely to keep throughput curbed while running lighter feedslates, limiting availability of additional volumes of crude C4 and BD. Rail logistical constraints will linger into 2025 with at least three BD consumers depending more on this mode of transportation. The European market could see additional restructuring next year, with at least one producer weighing a review of its asset portfolio. Market participants also are watchful for announcements of unexpected closures. BD producers in the region are also concerned about price volatility for natural gas, citing weaker margins. Dutch TTF on a day-ahead basis averaged €44.66/MWh month-to-date in December, rising by 27pc from the same period a year earlier at €35.24/MWh. Dutch TTF on a day-ahead basis reached a year-to-date peak on 21 November at €48.58/MWh. Higher natural gas prices are partially due to continued complications in gas transport and supply and to accelerated storage withdrawals. By Joshua Himelfarb Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Braskem eyes Brazil rebound

30/12/24

Viewpoint: Braskem eyes Brazil rebound

Sao Paulo, 30 December (Argus) — Major petrochemical producer Braskem aims to recover market share in Brazil in 2025, aided by higher tariffs and new duties on imports, after nearly two years of losses. Braskem posted $935mn of losses last year, with additional losses of $440mn spread across the first three quarters of 2024. Looking ahead to 2025, Braskem expects to increase its domestic share of polyethylene (PE) and polypropylene (PP) markets in Brazil, in part through higher import tariffs. Brazil raised tariffs on imported polymers to 20pc from 12.6pc effective on 15 October. That has already benefited the company, with sales in the fourth quarter expected to increase by $30mn from the previous quarter, Braskem said in November. Additionally, with fewer imports, Braskem's operating rates for plastic resins are expected to rise in the first quarter from around 64pc during the seasonally weak fourth quarter. In addition to the higher tariffs, Braskem is asking Brazil to apply anti-dumping duties on US- and Canada-produced PE. This could reduce the amount of this material coming into Brazil, which has surged in recent years. The case is being investigated. Braskem has requested duties on PE imports of 21.4pc from the US and 26.9pc from Canada. This would mean a 20pc import tax, plus a 21.4pc provisional dumping duty, totaling a 41.4pc tax on materials purchased from the US, and 46.9pc on Canadian PE. To put the numbers in perspective, Brazil imported 1.82mn metric tonnes (t) of PE in January-November, a 45pc increase from the same period a year before. Of the total figure, 77pc was bought from the US and Canada. Brazil's PE imports in November alone fell to 106,200t, 39pc lower than October and the lowest this year, showing the initial impact of the higher import duties. Still, November PE imports were up by 6pc from the same month in 2023 despite the 20pc import duty as well as the US dollar's appreciation to the Brazilian real since October. The Argentina case Braskem has looked to neighboring Argentina to recapture part of the sales lost to imports in Brazil during the year. Braskem's PE sales to Argentina have increased monthly through October, when the company became the largest PE exporter to Argentina. Argentina PE imports in October increased by 39pc from the same month in 2023, reaching 24,300t, a boost attributed to the reduction in the country's import duty to 7.5pc from 12.6pc in September. Brazil sold 46pc of that total, leading the market. North America lost its first position, falling to 42pc in October from 54pc a year earlier. January-October PE imports into Argentina fell to 226,800t, down by 19pc from the same period in 2023, with North America's share at 44pc and South America — represented solely by Braskem — at 39pc. Executive reshuffle As part of its efforts to become more competitive, Braskem reshuffled its executive board, aiming to improve operational efficiency and cost management. The company's new chief executive, Roberto Ramos, stepped into his role in early December, succeeding Roberto Bischoff. Ramos previously served as Braskem's vice president from 2002-2010. Ramos almost immediately announced changes for the positions of chief financial officer, head of the olefins and polyolefins South America unit, Brazil and global industrial operations, and Mexico and US operations. At the time, Braskem said that changes in the board would not affect plans for a possible sale of infrastructure company Novonor's controlling share in Braskem, Novonor said. Braskem's sale is of extreme importance to Novonor as it plans to use any proceeds to repay R14bn ($2.34bn) in debt to creditors. Braskem is the largest producer of thermoplastic resins in the Americas and a leader in biopolymer production. Fellow conglomerate Novonor holds a 38.3pc stake in Braskem with 50.1pc of voting shares, while Brazilian state-controlled oil company Petrobras holds a 36.1pc share with 47pc of voting capital. The remaining 25.6pc is split among other shareholders. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Ti scrap’s rebound pinned on Boeing, melters

30/12/24

Viewpoint: Ti scrap’s rebound pinned on Boeing, melters

Houston, 30 December (Argus) — Domestic titanium scrap demand and, in turn, prices are expected to increase in the second half of 2025, supported by a recovery in aircraft build rates and expansions in titanium melters' capacity that have boosted sentiment across the supply chain following a disappointing year. Industry expectations of greater scrap requirements in 2024 — predicated on aerospace manufacturers increasing their build rates — failed to materialize after production missteps and supply chain bottlenecks forced Boeing to curb output of its main aircraft programs and Airbus to delay its ramp targets . US prices for aerospace-grade titanium scrap have tumbled this year compared with 2023 averages, with 6-4 turnings off by 25pc and 6-4 bulk weldable down by 13pc through mid-December from the same period the prior year. Titanium melters' efforts to control input costs have had a trickle-down effect across the scrap supply chain, compelling processors and dealers to reduce their bids also to protect margins. Scrap suppliers foresee stronger consumption signals for 2025, pointing to the return of Boeing's 737 MAX production following a seven-week strike and the gradual decline of scrap inventories that have remained elevated relative to demand. Dealer and processors also are looking forward to the return of normalized build rates for Boeing's 787 Dreamliner, its main wide-body model that contains about 15pc titanium compared with around 6pc for the 737. Production of the 787 has been hampered this year because of parts shortages , which the airframer expects to stamp out before year end. Still, those outlooks may be upended depending on whether US president-elect Donald Trump follows through with his plans to impose sweeping tariffs on all imports into the US, and sources told Argus that any recovery likely will not take place until the summer at the earliest, cautioning that it would take months before the scrap industry would benefit from the comeback in aircraft manufacturing. Feeding new furnaces Market participants are banking on additional ingot production capacity that is scheduled to come on line in 2025 to fuel demand for aerospace-grade scrap, saying titanium melters will want to keep their new furnaces running hot. ATI expects to finish product qualifications related to its expansion at its Richland, Washington, operations next year, which should boost its melting capacity by 35pc over 2022 levels. Titanium Metals (TIMET) this summer plans to commission its new plant in Ravenswood, West Virginia, which is expected to turn out 33mn lbs of ingot annually in the project's first phase. Still, lengthy product qualifications may push out any benefit for the scrap supply chain to 2026. Perryman currently is ramping up after expanding its facility in Coal Center, Pennsylvania, that should grow the company's melting capacity by 16mn lbs to 42mn lbs annually. All those additions could lead to a run-up in scrap prices because of greater competition by melters for the same units, while longer lead times to get milled titanium products into machine shops creates a lag effect that leaves downstream generation largely unchanged. Trump-induced uncertainty A major source of uncertainty for next year centers around Trump's tariff policies, which have caused concern in the market. Trump campaigned on vows to levy 60pc duties on shipments from China, and more recently pledged 25pc duties on shipments from Mexico and Canada, and a 20pc duty on all other imports. If those come to fruition, it would increase costs for imports of titanium scrap — currently freely traded for all countries except China. But the tariff threats could also be Trump's way of generating negotiating leverage for his aims. "A duty on scrap from Europe and Japan would be a disaster for the industry," one source said. US titanium scrap imports reached 23,578 metric tonnes (t) through January-October, eclipsing the 22,453t sent in the same period in 2023 — a four-year high — and nearing pre-pandemic levels. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US acid market in west to east split in 2025

30/12/24

Viewpoint: US acid market in west to east split in 2025

Houston, 30 December (Argus) — Vastly different dynamics are expected for the western and eastern US sulphuric acid markets in 2025. Lower output from producers in the western US and Canada will keep supply constrained for much of 2025, likely driving west coast US sulphuric acid imports higher during the year. But balanced dynamics will keep the southeastern US and Gulf coast markets competitive, shielding both regions from the global market dynamics. Deliveries of sulphuric acid to the US west coast from January-October of 2024 climbed by 35pc on the year to 188,700t, according to US Census data, making up for lower-than-expected output from producers, which squeezed availability throughout the region. The closure of Simplot's Lathrop, California, sulphur burner at the beginning of 2024 had already reduced baseline supply on the US west coast. Market sources expect output at Teck's Trail Operations in British Columbia, Canada, to be reduced through at least the first half of 2025 because of technical issues with the facility's electrolytic zinc plant following a fire in late September. Sources said that less volumes were available from the company's western Canadian facility during annual contract negotiations this year as a result. In its third quarter earnings release Teck reduced outlook for 2024 zinc production from its Trail Operations facility by 13.3pc as a result of the fire at the plant, but has not provided guidance for byproduct acid production or zinc production in 2025. In Utah, lower output from Rio Tinto's 1mn t/yr Kennecott smelter is expected to continue into 2025. Reduced copper ore quality has contributed to lower copper concentrate production from the facility. The company is expected to continue to purchase copper concentrate from a third-party supplier to support smelter utilization. Balance rules in the east But in the eastern US, steady output from domestic producers has matched, and sometimes outpaced, demand in the region. This trend has kept prices relatively steady and spot import demand reduced from previous levels. Despite a 6.3pc year to year increase to total US sulphuric acid imports during January-October to 2.9mn t, the bulk of the increase came from higher volumes of spot imports into Houston, Texas, according to US Census data. Deliveries to other major ports in the US Gulf and east coast sank by 28pc. Deliveries of sulphuric acid into the port of Houston from January-October jumped to 264,200t, more than doubling the 115,100t arriving during the same period in 2023. Sulphuric acid imports to other ports in the Gulf coast and east coast fell significantly from January-October, dropping by 28pc to 359,800t compared with 497,900t during the same time in 2023. Spot trade into the US Gulf coast and southeast has been quiet for much of the year, aside from consistent spot shipments into Houston. Market participants expect the balanced nature of the market to continue through much of 2025, reducing the need for imports on contract and spot basis. Prices in a tightly-supplied global merchant market remain largely uneconomic for US-based distributors. The imbalanced relationship of prices in the US and the merchant market has kept bids far from offers, slowing spot trade into the Gulf coast and southeast. By Chris Mullins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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