Cemex expects coke prices to continue to fall

Spanish Market: Petroleum coke
28/10/24

Mexico-based multinational cement maker Cemex expects its energy costs, including for fuel like petroleum coke, will continue to decrease in the fourth quarter, in line with a trend of decreasing prices since the third quarter of 2023.

The cement maker's fuel costs declined by 23pc during the January-September period compared to the same period last year on a per tonne of cement basis, the company said today. Less volatile and relatively low prices for coke compared with recent years were a major underlying factor, with Argus' 6.5pc sulphur fob US Gulf coast coke assessment averaging $63.72/t during the January-September period, down by 37pc from the same nine months in 2023. The company also attributed the decline in fuel costs to "the increased use of lower cost and lower carbon fuels" and a "continued reduction in clinker factor."

"We have seen this cost trending down since the third quarter of 2023 and expect this to continue through year-end," Cemex chief financial officer Maher Al-Haffar said.

Cemex maintained its full-year 2024 guidance for a high single-digit percentage decrease in the energy cost per tonne of cement produced compared with 2023.

But the cement maker adjusted its guidance for full-year cement sales volumes downward from its second quarter projections. Cemex now anticipates a low single-digit percentage decrease on the year in full-year 2024 cement volumes instead of the flat to low single-digit increase it guided for in the second quarter.

Cemex's cement sales volumes decreased by 4pc to 11.25mn t in the third quarter compared with the same period last year. Inclement weather in the US and in Mexico disrupted the cement maker's sales volumes, with precipitation totals in parts of both markets rising by more than half from the third quarter of 2023. Cemex estimates that 50pc of the third-quarter decrease in cement volumes in the US and 40pc of the drop in cement volumes in Mexico was related to poor weather.

In Europe, third-quarter cement sales volumes increased by 2pc on the year after nine quarters of consecutive decline, as lower interest rates and improved economic activity drove more demand for construction.

The company's revenue totaled $4.09bn in the third quarter, down by 6pc from the same quarter in 2023.

Investment in growth focused on US

Cemex is increasing its investments in developed markets, particularly in the US and in Mexico, with plans to make bolt-on and margin enhancement investments in addition to small and mid-sized mergers and acquisitions.

Part of the funding for the investments comes from the company's plans to sell some plants, with $2.2bn worth of divestments expected to close before the end of the year.

Cemex completed the sale of its Guatemala plant in September, boosting the company's earnings in the third quarter.

Even so, the cement maker's profit totaled $1.34bn in the third quarter, down by 10pc from the same period last year.

The company's narrower focus on the US comes as multinational cement maker Holcim is preparing to spin off and list its North American business in the US in 2025. But when asked about the possibility of listing its North American business in the US, Cemex said it "would prefer not to speculate on whether we're looking at a particular strategy versus another at this point in time."

By Delaney Ramirez

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11/11/24

Lower Mississippi draft restrictions lifted

Houston, 11 November (Argus) — The US Coast Guard (USGC) removed draught restrictions from the lower Mississippi River on 8 November, after several rain washed across much of the Midwestern US. Draft restrictions were completely lifted for north and southbound barges on the lower Mississippi River between Tiptonville, Tennessee, to Tunica, Louisiana. Approximately 2-8 inches of rain were reported in Illinois and Missouri in the last seven days, adding around 14 inches to the lower Mississippi River, according to the National Weather Service (NWS). St Louis, Missiouri was at a high of 11.5 inches above baseline on 11 November, up from a low of -1.5ft on 1 November. The USGC has had draft restrictions in place since August, with the river system receiving a short reprieve in early October after rain from Hurricane Helene poured into the US river system. But low water levels and restrictions returned about two weeks later. Prior to recent precipitation, drafts were restricted to 10-10.5ft for southbound barges and tows could not not be greater than 6-7 barges wide. Northbound barges could not draft greater than 9.5ft, tows could not be more than six barges wide, and only four barges could be loaded. High water levels are expected to remain through November, according to NWS but barge carriers have said that water levels will slip quickly if no additional rain falls along the upper Mississippi River. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US railroad-labor contract talks heat up

04/11/24

US railroad-labor contract talks heat up

Washington, 4 November (Argus) — Negotiations to amend US rail labor contracts are becoming increasingly complicated as railroads split on negotiating tactics, potentially stalling operations at some carriers. The multiple negotiating pathways are reigniting fears of 2022, when some unions agreed to new contracts and others were on the verge of striking before President Joe Biden ordered them back to work . Shippers feared freight delays if strikes occurred. This round, two railroads are independently negotiating with unions. Most of the Class I railroads have traditionally used the National Carriers' Conference Committee to jointly negotiate contracts with the nation's largest labor unions. Eastern railroad CSX has already reached agreements with labor unions representing 17 job categories, which combined represent nearly 60pc of its unionized workforce. "This is the right approach for CSX," chief executive Joe Hinrichs said last month. Getting the national agreements on wages and benefits done will then let CSX work with employees on efficiency, safety and other issues, he said. Western carrier Union Pacific is taking a similar path. "We look forward to negotiating a deal that improves operating efficiency, helps provide the service we sold to our customers" and enables the railroad to thrive, it said. Some talks may be tough. The Brotherhood of Locomotive Engineers and Trainmen (BLET) and Union Pacific are in court over their most recent agreement. But BLET is meeting with Union Pacific chief executive Jim Vena next week, and with CSX officials the following week. Traditional group negotiation is also proceeding. BNSF, Norfolk Southern and the US arm of Canadian National last week initiated talks under the National Carriers' Conference Committee to amend existing contracts with 12 unions. Under the Railway Labor Act, rail labor contracts do not expire, a regulation designed to keep freight moving. But if railroads and unions again go months without reaching agreements, freight movements will again be at risk. By Abby Caplan 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.

Higher coal may drive mid-sulphur coke demand

15/10/24

Higher coal may drive mid-sulphur coke demand

London, 15 October (Argus) — The premium for mid-sulphur petroleum coke on an fob US Gulf basis may widen again as higher coal prices push Turkish cement makers to this grade in order to remain within overall sulphur limits. Mid-sulphur coke could begin to be more actively traded in Turkey as buyers there seek to reduce the amount of coal in their fuel mix, with coke becoming much more price competitive, a cement producer said. Most Turkish cement plants can now use higher sulphur coke, but in order to do so, they must use a higher proportion of coal to meet emissions limits. And the number of coal trades has fallen sharply in the second half of the year. Coke's discount to coal on a delivered basis has widened as coke prices have steadily fell and coal prices rose. Cfr Turkey 5.5pc sulphur dry basis coke reached a 38pc discount to coal on a heat-adjusted basis as of Argus ' last weekly fuel-grade coke assessment, compared with a 31pc discount a month before and a 10pc discount during the same week last year. Both mid- and high-sulphur coke in Turkey are now at their widest discount to coal since 16 March 2022. Cement plants were already starting to prefer mid-sulphur over higher-sulphur material because the premium has narrowed to a multi-month low. Since the start of October, mid-sulphur coke's premium to high-sulphur coke has remained at $2.50/t in Turkey, the lowest since 27 March. The 5.5pc sulphur coke's average premium to 6.5pc sulphur on a cfr Turkey basis declined by 65pc on the year from January-September, to $4.98/t. This is slightly narrower than the premium for 4.5pc as received coke on an fob US Gulf basis, but this has also traded at a historically narrow premium to high-sulphur coke so far this year . The fob Gulf premium averaged $5.47/t year-to-date through September, falling by more than half from the same nine-month period last year. And last week it narrowed to its lowest since late August, after the 4.5pc sulphur assessment fell by $1.50/t on the week while 6.5pc sulphur prices held steady for the first week since 21 August, as spot demand emerged. The lower premium is a result of weak demand for mid-sulphur coke outside of the Mediterranean as well as higher supply of 4.5pc sulphur Venezuelan coke over the past two years. This coke still attracts demand in Turkey, India and China despite US sanctions on Venezuela's oil industry. But Chinese demand for mid-sulphur fuel coke has sputtered since last year as stocks there have climbed, leading Mediterranean buyers to lower bids, feeling that suppliers have limited options elsewhere. Some cement plants in Turkey have been lowering bids for 5.5pc sulphur coke even further to below $80/t cfr, basically in line with high-sulphur prices, which were assessed at $77.50/t last week. Two cement plants already achieved this price level for 5.8pc sulphur max coke earlier this month, purchasing a joint cargo at about $77-78/t cfr. It remains to be seen if the stronger interest in mid-sulphur coke from Turkish buyers reverses the trend of a falling spread between the two grades of coke. At least two firms this week are seeking seaborne mid-sulphur coke cargoes for November-December loading. By Alexander Makhlay Mid- to high-sulphur coke premiums $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

USWC coke qualities shift on TMX

09/10/24

USWC coke qualities shift on TMX

Houston, 9 October (Argus) — The quality of some California-origin petroleum cokes has shifted in recent months as an influx of Canadian crude shipping via the TMX pipeline has adjusted refiner's crude slates and displaced imports from Latin America and the Middle East. Coke output at PBF Energy's 156,400 b/d Martinez, California, refinery has risen in sulphur content over recent months as the refinery has tripled imports of heavy Canadian crude, reportedly replacing some domestic crude that produces lower sulphur coke. This California crude is heard to now be moving to other refineries, including Phillips 66's 139,000 b/d Carson, California, refinery — typically a 4.5pc sulphur coke producer — where coke output has been trending lower in sulphur content. California's Canadian crude imports from January-July totalled 16.9mn bl, more than double the level imported in the same period last year, according to the latest US Energy Information Administration (EIA) data. Canadian crude accounted for 9pc of California's crude imports in the first seven months, up from 4pc in the same period the year prior. The state's imports of Canadian crude in June and July, the first two months of full TMX operations, were up nearly fivefold on the year. PBF's Martinez imported 676,000 bl of Canadian crude from June-July, more than quadruple the amount in the same two months of of 2023. Additionally, the sulphur content of Martinez's Canadian crude imports was significantly higher on the year, averaging 1.4pc compared with 0.6pc in June-July 2023. At the same time, the refiner also increased sour Ecuadorian crude imports by 95pc on the year. Martinez's crude imports had an average sulphur content of 1.3pc in June-July, up from 0.9pc a year prior. The refinery's coke was recently heard to be reaching more than 2.5pc sulphur compared with less than 2pc previously. On the other hand, Phillips 66's Carson refinery's coke quality was recently heard to be around or even below 3pc sulphur, down from its typical 4.5pc, even as it increased its Canadian crude imports to over 1mn bl in June-July, up from none in the same period last year. Carson's Canadian crude imports' sulphur content in June-July averaged 2.6pc, with the refinery's overall crude imports reaching an average of 1.4pc sulphur, down from 1.7pc in the same two months in 2023. Carson also did not import any sour Saudi Arabian crude in June-July, compared with 2.4mn bl in the same period last year, and it dropped sour Mexican-origin crude imports in the same two months by 26pc on the year. At the same time, Carson increased purchases of sweet Guyanese crude to 1.5mn bl — reaching a third of the refinery's crude imports — compared with none in June-July 2023. But Carson and Martinez's coke sulphur content may soon increase as TMX crude becomes more common on the US west coast, market participants said. This could leave Asian buyers searching for 2pc and 4.5pc sulphur cokes to substitute the material they had previously sourced from the US west coast. By Delaney Ramirez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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