US home construction up in Aug, PU steady

Spanish Market: Petrochemicals
18/09/24

The US housing market reported solid gains in permits and starts in August, a surprise uptick that could portend further gains in construction after the Federal Reserve today lowered borrowing costs for the first time in four years.

Housing starts grew solidly in August, with the seasonally adjusted annual rate for privately-owned housing starts reported at 1.356mn units, still marking only a fourth monthly gain so far this year. The figure was 9.6pc higher than July's revised rate and 3.9pc higher than August 2023. Single family housing grew to a rate of 992,000 units in August, 15.8pc higher than July and 5.2pc higher than August last year.

At the same time, permits also grew from July to August, with August's annual rate for privately-owned houses of 1.475mn units representing a 4.9pc increase from the revised July figures. However, they remained 6.5pc below August 2023. Single-family authorizations were at a rate of 967,000 in August, 2.8pc higher than July but 0.5pc below August 2023.

On 18 September, the Federal Reserve cut its target interest rate by 50 basis points, the first rate cut since 2020. Officials signaled the potential for another half point cut by the end of 2024, with another full percentage point cut penciled in for 2025, all cuts in borrowing costs that will continue to help bring 30-year mortgage rates lower from multiyear highs of nearly 7.8pc seen in late 2023. The cut lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, a two-decade high.

PU sentiment

Polyurethane (PU) demand in the construction sector had continued strong but steady demand in August while supply balanced after a period of tightness, according to market participants. The building blocks of polyurethanes, such as isocyanates like polymeric MDI (PMDI), go into insulation, roofing applications and carpet underlay.

After some supply constraints earlier in the summer the market was working towards a balanced state in August with all production issues having been resolved. Some market participants saw a small bump up in demand during August, but for the most part demand was steady.

Price increase announcements were heard for August PMDI contracts due to steady demand and the supply situation. Argus assessed August PMDI prices up by 3¢/lb from July as partial price increases were heard passing through for the month.

By Aaron May and Catherine Rabe

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23/10/24

Range sees 6pc gain in realized 3Q NGL pricing

Houston, 23 October (Argus) — Marcellus gas producer Range Resources received a 6pc higher premium versus Mont Belvieu, Texas, on its natural gas liquids (NGL) production in the third quarter owing to its access to markets in Europe and Asia. The Fort Worth, Texas, based producer received on average $25.96/bl for its NGLs, excluding derivatives, up 6pc versus last year. That exceeded average NGL prices at Mont Belvieu, Texas, by $4.10/bl. "Our ability to market ethane propane and butane into the international markets drove the highest NGL premium in company history, at over $4/bl over the Mont Belvieu index," said chief executive Dennis Degner. Range reported its natural gas liquids (NGL) production rose 5pc year over year to 10.2mn bl, or 111,465 b/d, in the third quarter as its gas production rose by 4pc to 1.5 bcf/d. Range updated its full-year guidance on its NGL pricing to Mont Belvieu plus $2.10-$2.35/bl, up from the 75¢/bl to $1.50/bl estimated in the second quarter, owing to gains in propane and butane prices at Mont Belvieu, Texas and higher spot premiums for exported cargoes out of the US. Range's average NGL estimates assumes 53pc of its production is ethane, 27pc propane, and 8pc normal butane. Mont Belvieu, Texas, LST propane averaged 72.9¢/USG in the third quarter, higher than the average of 68.9¢/USG in the third quarter of 2023. Mont Belvieu butane prices averaged 97.25¢/USG in the third quarter, up versus 83.47¢/USG last year. Range credited its term commitments on Energy Transfer's Mariner East system, which pipes NGLs from Range and other Marcellus producers to its export facility at Marcus Hook, Pennsylvania, with its higher realized prices on NGLs, particularly propane and butane, given higher netbacks from Europe and Asia. "International demand and pricing for NGLs remained robust in the third quarter, leading to near maximum US export capacity utilization," Degner said. "Improving Panama Canal throughput access, and a growing global fleet of LPG ships improved waterborne freight rates, and these factors combined to drive export price premiums to new levels relative to the Mont Belvieu index, and Range's portfolio of transportation and sales contracts provided reliable access to these premium markets." Argus-assessed prices for spot propane cargoes on a fob basis rose above Mont Belvieu +30¢/USG in mid-September, a multi-year high. Degner noted higher premiums on spot cargoes are expected to remain until US Gulf coast terminals expand capacity there in late 2025. By Amy Strahan Netback to Northwest Europe vs Mont Belvieu $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Korea to impose anti-dumping duty on Chinese PET resin

21/10/24

Korea to impose anti-dumping duty on Chinese PET resin

Shanghai, 21 October (Argus) — The Korea Trade Commission (KTC) has recommended that the Ministry of Economy and Finance (Moef) impose anti-dumping duties on polyethylene terephthalate (PET) resin from China, with an implementation period of five years. The affected products are classified under South Korea's tariff code 3907.61.0000. KTC recommended a rate ranging from 7-7.98pc, with this decision in line with market expectations. Chinese producer Jiangsu Ceville applied for the exclusion of recycled PET from the scope of the investigation, but the South Korean government ultimately denied this request. Moef in July announced the decision to impose provisional anti-dumping duties on the affected products for a period of four months, effective until 29 November. This came after KTC issued a positive preliminary ruling that recommended the imposition of provisional anti-dumping duties on the involved enterprises. KTC had started an anti-dumping investigation into the PET resin produced in China on 12 January. South Korean company TK Chemical had filed an anti-dumping investigation request with KTC in November 2023, citing losses to the relevant domestic industry because of the dumping of Chinese PET resin. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Housing construction falls in Sept, PVC demand mixed

18/10/24

Housing construction falls in Sept, PVC demand mixed

Houston, 18 October (Argus) — Housing permits and starts fell in September according to the latest figures from the US Census Bureau due to volatility in multi-family construction, but single-family construction has grown more steadily throughout the peak building season. Permits for privately-owned homes were at a seasonally adjusted annual rate of 1.428mn units in September, according to the US Census Bureau and the US Department of Housing and Urban Development (HUD). That is 2.9pc below the revised August rate of 1.47mn units and 5.7pc below the September 2023 rate. Housing starts were at a rate of 1.354mn units in September, 0.5pc below the revised August rate of 1.361mn units and 0.7pc below September 2023. Permits have risen and fallen every other month since April of this year. During that time permits for buildings of five or more units trended in the exact same way: rising in one month only to fall the very next. Housing starts have followed a similar track as well, only the month-to-month volatility has endured for the entire year. Once again, multi-family housing units have driven the inconsistency. More recently, multi-family homes have declined for two straight months. Single-family construction Stripping away the multi-family construction figures reveals that single-family construction has not only been more stable but has been growing consistently in recent months. That growth has been limited in some instances and any rebound has still been evidence of a construction market restrained by weaker buying sentiment fueled by high home prices as well as higher borrowing costs. Single-family housing permits were at a rate of 970,000 units in September, 0.3pc higher than August's revised rate. That is the highest rate in five months and the fourth-straight month of growth. Permits had fallen each month from January to June, though, and permits in September 2024 were still down 1.2pc compared with the prior year. Housing starts for single-family units were at a rate of 1.027mn units in September, 2.7pc higher than August and 5.5pc higher than the previous year. Housing starts have only grown for three consecutive months, reflecting the delayed impact of permitting on actual housing construction. The year-to-year comparisons reflect a housing construction market that is recovering from a weak 2023. But softer permit numbers compared with last year still indicate some hesitation in future demand expectations and the likelihood of a continued gradual and uneven recovery into next year. Builder confidence rose to 43 points in October compared with 41 in September, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released on 17 October. That reflects some improving sentiment despite affordability concerns in the market, but any mark below 50 points is still indicative of a weak market. PVC demand varies by end use The housing market picture has been mixed for polyvinyl chloride (PVC) all year. Demand peaked for some buyers and converters back in May or June, with demand only slowly declining since. But some end use segments like pipe or exterior profiles have reported stable and solid demand even into October. Pipe production has been buoyed by public investments in infrastructure, such as spending to replace lead pipes used in the US' water infrastructure as part of a recent finalization of an Environmental Protection Agency (EPA) rule requiring all lead pipes be replaced within 10 years. But for exterior profiles, which covers siding, windows, and doors, the market has also been fairly strong as of late. Resin suppliers to these customers have reported strong ordering patterns, seemingly without concern about inventory buildup before the end of the year. Stronger single-family construction activity, which would use more siding for example, combined with recent storms in the Southeast US requiring home rebuilding and repair could explain some of this better demand sentiment compared to other PVC end uses. However, PVC contract pricing has been under pressure due to larger PVC inventories among producers and competition for market share. Argus assessed September PVC contracts as stable from the previous month at 59.5¢/lb, but some customers reported getting modest price decreases in limited instances. By Aaron May Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CSX forecasts softer 4Q rail demand

17/10/24

CSX forecasts softer 4Q rail demand

Washington, 17 October (Argus) — Eastern US railroad said it expects that fourth quarter commodity market conditions will be mixed, limiting some freight demand. "Going into the fourth quarter, near-term conditions look modestly more challenging," chief executive Joe Hinrichs said on Wednesday. But the railroad expects "modest volume growth", supported by a few segments including chemicals and agriculture. But lower locomotive fuel prices and the impact of international coking coal prices, which are linked to export rail contracts, could drive a decrease in total revenue during the fourth quarter. He estimated that impact at roughly $200mn compared with last year's fourth quarter revenue of $3.68bn. CSX expects to see a carryover of year-over-year momentum in chemicals, agriculture and food, forest products and minerals, while metals and automotive will continue to be challenged. Demand for metals shipments is predicted to soften through the end of the year. Interest in shipments, particularly steel, is soft because of "sluggish demand, ample supply and low commodity prices", chief commercial officer Kevin Boone said. A weaker-than-anticipated automotive market contributed to the drop in metals demand. Consumer demand for automotive products has been reduced by high retail prices and interest rates, which has led to increased dealer inventories and slower production, Boone said. But CSX expects that an "interest rate easing cycle will help these markets normalize," Boone said. Metals and equipment volume fell in the second quarter, primarily because of lower steel and scrap shipments. Shipments of metals and equipment fell by 9pc to about 64,000 carloads compared with the same three months in 2023. Revenue dropped to $208mn, down by 8pc from a year earlier. Automotive volume dropped in the second quarter because of lower North American vehicle production, CSX said. Automotive traffic fell to 301,000 railcars loaded, down by 2pc from the third quarter 2023. Automotive revenue dropped to $98mn, down by 3pc compared with a year earlier. The outlook for fertilizer shipments is mixed following the third quarter as a decline in long-haul phosphates shipments persisted. Volume was negative, but the railroad was able to haul some profitable spot shipments. Shipments of fertilizer fell to 45,000 carloads in the third quarter, down by 4pc from a year earlier. Fertilizer revenue dropped to $118mn, down by 5pc from a year earlier. CSX expects growth in some market segments. Chemicals freight demand is expected to continue growing following "consistent, broad strength across plastics, industrial chemicals, LPGs, and waste. That demand helped boost chemicals volume by 9pc compared with a year earlier. Chemicals revenue rose to $727mn in the second quarter, up by 13pc compared with a year earlier. Agricultural and food products shipping demand is expected to continue growing, led by demand for grain and feed ingredients from the Midwest for supplies. That follows a third quarter when higher ethanol shipments, as well as increased overall volume helped raise volume by 9pc from the third quarter of 2023. Revenue from shipping agricultural and food products rose to $416mn, up by 11pc from a year earlier. CSX expects intermodal growth to continue with the trucking market falling, which would help drive more container freight to rail. Intermodal shipments are goods shipped in containers and trailers between different modes of transportation. The 1-3 October strike by the International Longshoremen's Association (ILA) did impact intermodal traffic, but the railroad was pleased with the "relatively quick short-term solution", Boone said. International intermodal volume during the third quarter rose because of higher east-coast port traffic. Domestic volume was mostly flat. Overall intermodal volume during the quarter increased by 3pc compared with a year earlier. But lower revenue per container helped reduce total intermodal revenue by 2pc to $509mn. CSX does not expect a major shift in coal volume through the end of the year as coal markets seem relatively stable and utility stockpiles are sufficient, Boone said. Rising natural gas prices are also unlikely to stimulate a "near-term step-up in volumes". Export coal demand has been consistent lately, particularly from buyers in Asia. But revenue per railcar for export coal could make a modest single digit drop, as contracts are tied to international coal benchmarks and prices fell earlier this year. Expport coal voume rose to 11.1mn short tons (10.1mn metric tonnes) in the second quarter on higher demand for thermal and coking coal. But domestic coal deliveries fell to 10.2mn st, down by 12pc from a year earlier, on lower deliveries to power plants and lake and river terminals. Rail coal volume fell by 2pc from a year earlier, while revenue dropped by 7pc to 553mn st. Total CSX profits rose to $894mn, up by 8pc compared with third quarter 2023. Revenue increased to $3.6bn, up by 1pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil polymers, chem import tax hike begins

15/10/24

Brazil polymers, chem import tax hike begins

Sao Paulo, 15 October (Argus) — Brazil's import tax increase on a number of polymers and chemicals to 20pc from 12.6pc, including polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), has gone into effect. The new import tax rate was effective on 15 October and is valid for 12 months, according to Gecex, the Brazilian committee for commercial trade management. A PVC plastic converter with operations across Latin America told Argus that although the tax increase only started today, Brazilian polymers producers already raised prices by 5-6pc since the end of September. PVC import prices into Brazil, with the exception of those originating from the US, also followed suit last week, the source said. Higher prices are expected in Brazil despite stable PVC demand. Furthermore, maritime logistics difficulties at ports in southern Brazil continue and there is concern they will worsen as the end of the year approaches, putting more pressure on plastic resins prices. The major port of Navegantes is currently undergoing an expansion project that has created delays at that port and surrounding ports. US traders said that the increase in Brazilian import taxes is likely to lead to at least a short-term decline in US exports to Brazil. "I think short term, over one to two months, [the higher taxes] will deter imports," said one US trader. "[Brazilian polymers producer] Braskem will take advantage and increase the price… and then customers will buy anyway at the new price level." During that short period, there will be increased availability of US product for other regions, according to another US trader. "Big volumes will need to go elsewhere," said the trader. "Maybe elsewhere in South America, maybe other regions." Domestic manufacturers and chemical industry associations welcomed the decision when it was first announced on 18 September. Brazil's chemical industry association Abiquim has been asking the government to provide commercial protections for 62 products since May. But critics of the tax hikes say they will increase costs for consumers and manufacturers who rely on imported polymers and chemicals. Brazil's plastic industry association Abiplast said in September it was concerned that the higher import taxes will increase production costs for plastic products, which could result in higher prices for end consumers. The Brazilian chemical industry is responsible for around 11pc of Brazil's GDP, according to Abiquim. By Fred Fernandes and Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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