Some eastern US rail shipments restart after Helene

Spanish Market: Agriculture, Biofuels, Chemicals, Coal, Coking coal, Crude oil, Fertilizers, Freight, LPG, Metals, Oil products, Petrochemicals, Petroleum coke
30/09/24

Some railroad operations in the southeastern US have resumed in the aftermath of Hurricane Helene, but major carriers warn that some freight may be delayed while storm-damaged tracks are repaired.

Rail lines in multiple states were damaged after Hurricane Helene made landfall on the northeastern Florida coast on 26 September as a category 4 storm and traveled northwards as a downgraded but still dangerous storm into Georgia, Tennessee, and the Carolinas. The storm left significant rain and wind damage in its wake, including washed-away roads, flooded lines, downed trees and power outages.

Eastern railroads CSX and Norfolk Southern (NS) said they are working around the clock to restore service to their networks.

Norfolk Southern said it had made "significant progress" towards its recovery with most major routes back in service including its Chattanooga, Tennessee, to Jacksonville, Florida, line as well as its Birmingham, Alabama, to Charlotte, North Carolina route.

Norfolk Southern said freight moving through areas that are out of service could "see delays of 72 hours".

Several of Norfolk Southern's other routes remain out of service, including rail lines east and west of Asheville, North Carolina, because of historic levels of flooding. There are multiple trees to remove along a 70-mile stretch from Macon, Georgia, to Brunswick, Georgia. And downed power lines are keeping the railroad's lines from Augusta, Georgia, to Columbia, South Carolina, and Millen, Georgia, out of service.

CSX said "potential delays remain" but did not provide specifics. However, the railroad said it had made "substantial progress" in clearing and repairing its network.

The railroad's operations in Florida have mostly reopened, as have rail lines in its Charleston subdivision, which crosses South Carolina and Georgia.

But bridge damage and major flooding has kept CSX's Blue Ridge subdivision out of service. A portion of the line running from Erwin, Tennessee, to Spartanburg, South Carolina, has been cleared, but CSX said "a long-term outage" is expected for other parts of the rail line.

By Abby Caplan

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31/12/24

Pupuk Indonesia issues farmers subsidised fertilizers

Singapore, 31 December (Argus) — State-owned fertilizer producer Pupuk Indonesia has distributed about 7.25mn t of subsidised fertilizers to registered domestic farmers as of 23 December, the company said. The distributed volumes have exceeded the government-mandated target by 0.5pc and include about 3.36mn t of urea, 3.49mn t of NPK fertilizers, 42,700t of specialised NPK formulas, and 46,500t of Pupuk's Petroganik organic fertilizers. Pupuk Indonesia's current fertilizer stock availability for the domestic market is around 1.47mn t as of 23 December, comprising of subsidised and non-subsidised products. Subsidised fertilizer stocks amount to 1.04mn t, consisting of 546,700t of urea, 445,500t of NPK, 16,300t of specialised NPK formulas, and 35,600t of organic fertilizers. Non-subsidised fertilizer stocks are at 428,600t, consisting of 357,400t of urea and 71,200t of NPK fertilizers. Around 400,000t of the current fertilizer stock has also been given to distributors and kiosks to ensure smooth delivery to farmers on 1 January 2025, the company said. The current allocation of subsidised fertilizers at the sub-district level has been finalised at 100pc across all regions, Jekvy Hendra, director of fertilizers and pesticides at Indonesia's ministry of agriculture, said. By Dinise Chng Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Crop-based feedstocks face an uphill battle

30/12/24

Viewpoint: Crop-based feedstocks face an uphill battle

Houston, 30 December (Argus) — US biofuel producers' demand for soybean and canola oil has waned recently, a trend that looks unlikely to reverse in the near term because of domestic policy changes that prioritize lower carbon intensity feedstocks. Expectations that a US renewable diesel boom would drive up demand for vegetable oil led agribusinesses to announce new soybean crush plants and expansions in 2022. Seven new soybean crush plants have come online since then, increasing US nameplate capacity by 10pc to 2.91bn bushels/yr, but new policies have diverged from crop-based feedstocks because of their higher carbon intensity. The California Air Resources Board (CARB) voted to adopt new low-carbon fuel standard (LCFS) targets on 6 November. CARB hiked the carbon-intensity reduction target of California's transportation fuels from 20pc to 30pc by 2030, in hopes of balancing the pool of oversupplied LCFS credits, which alone reduced incentives for crop-based fuels. But more critically, the new rules will impose tighter restrictions for crop-based feedstocks, capping a company's LCFS credit generation from vegetable oil-based biofuel at 20pc/yr, starting in 2028 for existing plants. Apart from that, CARB will require producers to track the point of origin of crop-based feedstocks, adding to costs. Soybean oil-based biofuel already fetches a lower LCFS credit value in California, and the additional traceability requirement could further deter biofuel producers. Soybean oil- and canola oil-based fuel made up approximately 20pc of the biodiesel and renewable diesel traded into California during the second quarter of 2024, according to CARB's most recent quarterly data. While soybean oil is the most used feedstock in US biodiesel production, used cooking oil (UCO) leads US renewable diesel production. Biofuels produced with lower carbon-intensity feedstocks like UCO, tallow and distillers corn oil receive generous LCFS credits compared to soybean oil and canola oil. That credit premium has led to a surge in UCO and tallow imports into the US , weighing on demand for soybean oil and leading to outcry from farm groups to restrict foreign feedstocks from qualifying for the Clean Fuel Production Credit (CFPC). More challenging is the expiration of the blenders tax credit (BTC) by the end of 2024, which offers $1/USG to biomass-based diesel regardless of the carbon intensity of their feedstocks. The CFPC, also known as the 45Z credit under the Inflation Reduction Act, will replace the BTC in 2025. Unlike the BTC, the CFPC will provide a tax credit based on how low the carbon intensity of the fuel is to a baseline level of 50kg of CO equivalent/mmBTU. This means crop-based diesel fuels will receive far less credit value starting next year than they received for years under the BTC. Some renewable diesel and biodiesel producers are set to idle production in January amid a lack of clarity on how the tax credit changes will impact fuel and feedstock demand. Biofuel and agriculture groups are also waiting final guidance for "climate-smart agricultural practices" and how that would factor into the final 45Z credit for vegetable oil-based biofuels. These climate-smart practices might include no-till farming, planting cover crops, efficient fertilizer use, and more. The US Department of Agriculture recently sent guidelines on climate-smart agricultural crops used as biofuel feedstocks to the White House for final review, giving the industry some hope that they will qualify for a bigger federal credit under 45Z. But how much crop feedstocks will be able to close the gap with waste feedstocks is unclear. US soybean oil futures fell to 39.52¢/lb as of 27 December, down by 17pc from the start of 2024, weighed down by the prospects of a large South American soybean crop and lackluster demand from the US biofuel industry. The US Department of Agriculture's December World Agricultural Supply and Demand Estimates report projected Brazil's 2024-25 soybean production at 169mn t, 10pc higher compared to the prior year. Argentina soybean production was forecast at 52mn t, up by 7.9pc from a year earlier. Soybean planting is ongoing in both regions, with Brazil at 98pc completion as of 22 December and Argentina at 85pc as of 26 December. Some relief from falling soybean oil future prices has come from increased US soybean oil exports, driven by palm oil prices hitting their highest level since 2022. US export commitments for soybean oil were at 526,630t as of 19 December, nearly surpassing the US Department of Agriculture's currently projected level for 2024-25 marketing year. Mexico is among the major buyers of US soybean oil, but if president-elect Donald Trump imposes 25pc tariffs on imports from Mexico , retaliatory action could affect soybean oil demand. Despite the support from soybean oil export sales, the vegetable oil industry will still need support from the US biofuel industry for prices to recover. And should palm oil prices fall, US soybean oil producers will not be able to rely as much on international markets, leaving them to lean more heavily on fighting for changes in US biofuels policy. By Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Policy uncertainty dogs battery anode plans

30/12/24

Viewpoint: Policy uncertainty dogs battery anode plans

Washington, 30 December (Argus) — Former president Donald Trump's re-election is sparking uncertainty in the US' synthetic graphite battery sector, with companies worried about a possible halt to government finance and a weaker outlook for domestic demand. "With Trump being elected president, everything's up in the air," one industry source said. Battery materials companies expecting to receive government funding to build plants in the US could see their prospects dim with Trump coming into office , since these companies need the federal grants to compete with China, a second source said. Trump on the campaign trail said he would rescind all unspent funds in President Joe Biden's Inflation Reduction Act (IRA) and scrap Environmental Protection Agency tailpipe standards, which he called an electric vehicle (EV) "mandate". The Biden administration is racing to try and secure projects set to be funded by the IRA. On 16 December, US battery materials producer Novonix received a conditional loan for up to $754mn for a new synthetic graphite plant from the US Department of Energy (DOE). If finalised, the loan would be used to build a new 31,500 t/yr synthetic graphite plant in Tennessee by the end of 2028. DOE previously awarded Novonix a $100mn grant and a $103mn tax credit to expand capacity at its Tennessee plant to 40,000 t/yr by 2025 and 150,000 t/yr by 2030. DOE on 16 December also closed on its up to $9.6bn loan to South Korean battery manufacturer SK On for the construction of three battery plants in the US, the largest loan ever awarded under its Advanced Technology Vehicles Manufacturing Program. DOE also in September selected SKI US , part of India-based Birla Carbon, to receive $150mn build a 25,000 t/yr synthetic graphite production plant in South Carolina. Some in Trump's orbit have warned they will review contracts they view as hastily pushed out before the former president takes office . But some Republicans are likely to oppose full repeal of the IRA, since the bill funds projects in their districts. And Republicans will hold a razor-thin majority in the House of Representatives. Even if Republicans do not repeal the IRA or other EV subsidies like tax credits, the uncertainty surrounding the new administration's support could be a stumbling block. "Who's going to put half a billion dollars into a battery plant right now when you don't have certainty on the push for EVs?" the first source said. Battery projects require huge amounts of investment. Swedish battery maker Northvolt obtained record venture capital investment for a European start-up at $15bn. But on 21 November, the company filed for Chapter 11 bankruptcy protection in the US , in part because of difficulties "bridging financing between different stakeholders", outgoing chief executive Peter Carlsson said. The company had already closed down its R&D facility in the US and put plans for factories in Canada, Germany and Sweden on hold. Its financial woes intensified after the Swedish government declined to invest. Other European governments have already reduced financial support for EVs, more for spending reasons than policy, which has softened demand in the region. France recently changed eligibility requirements for subsidies , and Germany ended its subsidy late last year. Some companies, like Norwegian battery materials company Vianode, have been planning multi-billion dollar investment programmes to expand their reach in the automotive industry throughout North America and Europe. It is not clear if Trump's election will have an effect on these plans. Vianode opened its first anode graphite production plant, Via One, in Herøya, Norway, in October. The plant will have a capacity of 2,000 t/yr, enough to supply 30,000 EVs annually, according to Vianode. Chinese firms have scaled up production of key battery materials at all stages of the supply chain, creating more competition for European and US producers. Chinese producers dominate the global EV market with about 70pc of market share, even as the EU and US have put policies in place to try to support their domestic industry. China's lithium-ion battery exports to the US jumped in November as suppliers looked to get ahead of potential new tariffs. The Trump administration is likely to increase tariffs on Chinese lithium-ion batteries to as much as 60pc in the coming few months after Biden earlier this year lifted them to 25pc from 7.5pc. This could help support US-based battery plants. But tariffs on Chinese goods could also present additional challenges, as the raw materials for synthetic graphite often have some Chinese components. Needle coke, traditionally the main raw material for synthetic graphite used in battery anodes, is not widely produced outside of China. And while companies in China have been researching options for using a wider range of petroleum coke qualities , specifications are still relatively narrow, with battery companies in China absorbing most of the world's suitable coke . One graphite anode plant in Europe has been struggling to procure petroleum coke, according to a market participant. Sourcing coke for synthetic graphite in Europe and other ex-China locations is likely challenging, as most of these refineries and calciners have tied up their supply in long-term commitments, one producer said. Refineries are also reducing coke production, as the required feedstocks have become more costly. By Lauren Masterson and Hadley Medlock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: China to keep dragging on shipping rates

30/12/24

Viewpoint: China to keep dragging on shipping rates

New York, 30 December (Argus) — Low appetite for crude oil and dry bulk commodities in China will keep a lid on next year's shipping rates, which are steaming toward their lowest fourth quarter since pandemic-hobbled 2021. China remains the world's top oil importer, receiving about a quarter of what oil tankers carry on a given day, but the country's oil consumption is slowing. China's turn toward electric vehicles, LNG-powered trucks and high-speed rail will continue to eat into the country's oil demand, even as its economy continues to grow. China's economy is expected to expand by 4.7pc in 2025, below this year's 4.9pc, but the country's oil demand is set to rise by only 2pc. In September-November this year, China's waterborne crude imports dropped by the equivalent of 10 2mn bl very large crude carriers (VLCCs) per month. And with the Chinese government's decision to cut rebates for refined product exports to 9pc from 13pc , the country's refiners will be further discouraged from importing crude. The lack of China-bound cargoes has lowered the average VLCC rate on the Mideast Gulf-China route to $1.64/bl so far in the fourth quarter, its lowest fourth quarter level since 2021 and down by 25pc year over year. While longer-haul tanker voyages resulting from Houthi attacks in the Red Sea and sanctions on Russian oil will continue to exert upward pressure on the tanker market into next year, barring any geopolitical breakthroughs, the lack of crude cargoes to the world's top oil importer will keep crude freight rates subdued. VLCC weakness is trickling down Rates for 1mn bl Suezmaxes and 700,000 bl Aframaxes are feeling the pain too as those segments compete with VLCCs in many regions such as the US Gulf coast, west Africa and the Middle East. Like the Mideast Gulf VLCC market, the US Gulf coast-Europe Aframax rate for 90,000t cargoes is on track for its lowest fourth quarter average since 2021 as well, falling by 20pc to $3.47/bl from a year earlier. The weakness will not be confined to the dirty tanker market. Next year, low dirty tanker rates will likely continue to encourage ship operators to move more VLCCs into clean freight service. This typically rare practice has become more common this year and is putting downward pressure on the product tanker market. So far in the fourth quarter, the Mideast Gulf to Asia-Pacific clean long range (LR1) rate is down by 31pc year over year and the US Gulf coast-Chile clean medium range (MR) rate is down by 29pc. With shipyards delivering 2-3pc of existing tanker capacity to the water next year, the tanker fleet is likely to be sufficiently supplied to meet the world's ocean-going oil transportation demands unless tanker scrapping activity accelerates. Demand for older tankers plying sanctioned trades and middling scrap steel prices are keeping mass tanker demolitions in check. Dry bulk operators feel China housing blues In the dry bulk market, fleet growth of around 3pc will be enough to accommodate what is expected to be modestly increased demand for shipping dry commodities such as iron ore, coal, and grains next year. China plays an even more outsized role in the dry bulk market because it receives nearly 45pc of the world's dry bulk cargoes. The country's bearish real estate sector threatens the dry bulk market's largest demand driver, iron ore. A 10pc decline in investment in its real estate sector this year spells weak construction demand in the next and bodes poorly for dry bulk ship operators hoping for a resurgent appetite for iron ore to make steel. Sluggish growth in China-bound iron ore shipments has already helped pull the Brazil-to-China Capesize iron ore freight rate down by 15pc to $21.30/t so far in the fourth quarter from a year prior. Capesize operator earnings have fallen below $10,000/d, near operating expense levels, for the first time since August 2023. By Nicholas Watt Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Zinc prices to drop in 2025 on higher supply

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.

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