Talks to restart as port of Vancouver lockout drags

Spanish Market: Biofuels, Biomass, Chemicals, Coal, Crude oil, Fertilizers, Metals
08/11/24

A labour disruption at the port of Vancouver is now into its fifth day, but the employers association and the locked-out union are to meet this weekend to try to strike a deal and get commodities moving again.

Workers belonging to the International Longshore and Warehouse Union (ILWU) Local 514 on Canada's west coast have been locked out by the BC Maritime Employers Association (BCMEA) since 4 November. This came hours after the union implemented an overtime ban for its 730 ship and dock foreman members.

The two sides will meet on 9 November evening with the assistance of the Federal Mediation and Conciliation Service (FMCS) in an effort to end a 19-month long dispute as they negotiate a new collective agreement to replace the one that expired in March 2023. The FMCS was already recruited for meetings in October, but that did not culminate in a deal.

Natural resource-rich Canada is dependent on smooth operations at the port of Vancouver to reach international markets. The port is a major conduit for many dry and liquid bulk cargoes, including lumber, wood pellets and pulp, grains and agriculture products, caustic soda and sodium chlorate, sugar, coal, potash, sulphur, copper concentrates, zinc and lead concentrate, diesel and renewable diesel liquids and petroleum products. These account for about two-thirds of the movements through the port.

Grain operations and the Westshore coal terminal are unaffected while most petroleum products also continue to move, the Port of Vancouver said on 7 November.

As the parties head back to the bargaining table, the ILWU Local 514 meanwhile filed a complaint against the BCMEA on 7 November, alleging bargaining in bad faith, making threats, intimidation and coercion.

"The BCMEA is trying to undermine the union by attempting to turn members against its democratically-elected leadership and bargaining committee, said ILWU Local 514 president Frank Morena on 7 November. "They know their bully tactics won't work with our members but their true goal is to bully the federal government into intervention."

But that is just "another meritless claim," according to the BCMEA, who wants to restore supply chain operations as quickly as possible.

The union said BC ports would still be operating if the BCMEA did not overreact with a lockout.

"They are responsible for goods not being shipped to and from BC ports — not the union," Morena says.

The ILWU Local 514 was found to have bargained in bad faith itself already, according to a decision by the Canada Industrial Relations Board (CIRB) in October.

Billions of dollars of trade are at risk with many goods and commodities at a standstill at Vancouver, which is Canada's busiest port. A 13-day strike by ILWU longshore workers in July 2023 disrupted C$10bn ($7.3bn) worth of goods and commodities, especially those reliant on container ships, before an agreement was met.

By Brett Holmes

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24/12/24

Viewpoint: US tariffs, new EAFs may alter scrap flows

Pittsburgh, 24 December (Argus) — A wave of new electric arc furnace steel mills coming on line next year could transform scrap flows in North America, while looming US import tariffs could stunt cross-border trade. Six steel mills in the US and Canada, accounting for about 9.9mn short tons (st)/yr of electric arc furnace (EAF) production, are ramping up from late this year or scheduled to start up in 2025. The new EAFs, mostly along the Mississippi River and in Ontario, could be magnets for scrap and reshape flows across the southeast, Midwest and Canada, as scrap-fed EAF steelmakers continue to expand their role in North America, which was historically dominated by coal and iron ore-fed blast furnaces. Although some scrap dealers are optimistic about markets in the new year, market participants are carefully monitoring the effect president-elect Donald Trump's hawkish trade policies could have on scrap trading. Trump has pledged to impose 25pc tariffs on US imports from Canada and Mexico that could further shift North American scrap flows. Canada is the largest shipper of ferrous scrap into the US at an average of 3mn metric tonnes (t)/yr since 2021. Prime scrap imports between January and October this year averaged 47,000t/month, while shred imports averaged 70,000t/month, US customs data shows. The import tax would drive up the cost of Canadian scrap for US buyers and potentially reduce supply available to steel mills in the Midwest. Scrap traders noted that Trump can be unpredictable and may be using the threat of tariffs as leverage. "I'm pretty tepid on the first quarter," one Midwest dealer said. "People are trying to figure out how serious Trump is on tariffs." New EAFs to drive scrap demand The new scrap-fed EAFs in North America include Algoma Steel in Ontario, Hybar in Arkansas, and Nippon Steel's and ArcelorMittal's joint venture in Alabama. US Steel's Big River Steel began melting scrap at its second Arkansas EAF in October. EAF steelmaker Hybar plans to open its 630,000 st/yr reinforcing bar mill in northeast Arkansas in the summer of 2025. Hybar, along with Big River Steel and three Nucor mills already in the region, could further bolster the lower Mississippi River basin as a major scrap market. "I'm looking forward to next year because of the increased competition," a Midwestern scrap dealer said. "It's always good to have options." The new consumption could position northeast Arkansas and Tennessee as perhaps the top scrap consuming region, making it an industry barometer in 2025. Chicago has historically held that position and has been the benchmark region in contracts. Shifting flows in Canada Algoma Steel plans to begin ramping up two new EAFs in Sault Ste Marie, Ontario, in March next year to continue making hot-rolled coil and steel plate. The EAFs could eventually bring that facility's maximum steel production levels to 3.7mn st/yr once they fully replace Algoma's blast furnaces. The steelmaker will likely focus on low-copper shred and prime scrap grades to keep up the iron content in its melt mix as it transitions to EAF steelmaking, one Canadian scrap consumer said. Algoma may also continue to rely on raw inputs like direct reduced iron and hot briquetted iron as it ramps up its scrap buying to feed the EAFs. Market participants in Canada expect the mill to buy scrap from the prairies west of Sault Ste Marie, as well as from the greater Toronto area to the mill's east, though Algoma will face competition to pull scrap from the latter region. Scrap dealers in the upper Midwest are also keen to supply Algoma Steel because buyers in that region are scarce. A Midwest dealer noted that Algoma may ship in scrap from US ports on the Great Lakes. Algoma did not respond to requests for comment on its raw material plans. In 2021, the company set up a joint venture with Triple M Metal, a Canadian scrap dealer with 45 yards, that will likely supply scrap for Algoma Steel in Sault Ste Marie. By James Marshall and Brad MacAulay US steel mill capacity additions Million short tons/yr Company Location Product type Capacity added Start date US Steel/Big River Steel Osceola, AR Sheet 3.00 RAMPING ArcelorMittal/Nippon Steel Calvert, AL Sheet 1.65 2H 2024 Algoma Steel Sault Ste. Marie, ON Sheet 3.70 1Q 2025 Nucor Lexington, NC Bar 0.43 1Q 2025 Hybar Osceola, AR Bar 0.63 2Q 2025 CMC Berkeley, WV Bar 0.50 4Q 2025 Total 9.91 Argus reporting & public statements Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Ethanol producers face higher costs in 2025

24/12/24

Viewpoint: Ethanol producers face higher costs in 2025

London, 24 December (Argus) — European ethanol producers may face rising output costs in 2025 as a poorer harvest season will push feedstock prices up, while other factors such as greenhouse gas (GHG) emission values could affect the price of finished products. Unfavourable weather conditions have led to a poor 2024-25 harvest, particularly for wheat. In Ukraine, Europe's largest wheat exporter excluding Russia, Argus forecasts wheat production will drop to 22.3mn t during 2024-25 , down from a five-year average of 24.7mn t. Corn supply from the country for 2024-25 is projected to fall to 22.9mn t, down from 31.5mn t in the previous season, according to Argus data. France — Europe's largest producer of ethanol — has cut its wheat production outlook for 2024-25 because of wet weather. And rainfall in other parts of Europe has affected corn toxin levels, potentially leading to poorer quality ethanol. This will likely weigh on ethanol output in 2025 as it will strain feedstock supplies, push production costs up and squeeze margins for producers. Nuts 2 It comes as markets are still waiting for an update on level 2 in the nomenclature of territorial units for statistics greenhouse gas (GHG) emission values — the so called Nuts 2 values. To determine the GHG emissions from growing crops in the EU, the bloc's Renewable Energy Directive (RED) allows the use of typical units that represent the average GHG value in a specific area. On the back of the implementation of the recast of RED (RED II), the European Commission requested an update of the Nuts 2 GHG values. Member states have to prepare new crop reports to be assessed by the commission. But reports have been slow to emerge, while those that have been submitted face a lengthy review. Producers rely on GHG values to calculate the GHG savings of end-products, but default RED values currently in place are significantly lower than the typical GHG values from Nuts 2. While this is unlikely to have long-term effects beyond 2025, in the current context finding values that meet market participants' criteria has been difficult for some, which may support prices. Rising demand Demand for waste-based and ethanol with higher GHG savings should increase in 2025 as a result of policy changes, after lower renewable fuel ticket prices in key European markets kept buying interest in check in 2024. Tickets are generated by companies supplying biofuels for transport. They are tradeable and can help obligated parties meet renewables mandates. The decline in prices for GHG tickets in Germany — the main demand centre for minimum 90pc GHG savings ethanol — weighed on ethanol consumption in 2024, squeezing the differential to product with lower GHG savings. The premium averaged around €17/m³ ($17.7/m³) from 1 January-1 December 2024, down from around €43/m³ during the same period in 2023. But an increase in Germany's GHG quota in 2025, coupled with Germany's decision to pause the use of GHG certificates carried forward from previous compliance years towards the 2025 and 2026 blending mandate, should increase physical blending and lift premiums for ethanol with high GHG savings, according to market participants. Meanwhile, the Netherlands' ministry of infrastructure and water management's plan to reduce the amount of Dutch tickets that obligated companies will be able to carry forward to 2025 to 10pc from 25pc may have little effect on Dutch double-counting ethanol premiums in 2025. Participants expect steady premiums, despite slightly higher overall blending targets. The Argus double-counting ethanol fob ARA premium to crop-based ethanol fob ARA averaged €193/m³ from 1 February-1 December 2024. Biomethanol slows Lower ticket prices in the UK have kept a lid on demand for alternative waste-based gasoline blendstock biomethanol. The Argus cif UK biomethanol price averaged $1,089/t from 1 Jauary-1 December, compared with $1,229/t during the same period of 2023. The European Commission's proposal to exclude automatic certification of biomethane and biomethane-based fuels, if relying on gas that has been transported through grids outside the EU, continues to slow negotiations for 2025 imports of biomethanol of US origin into the EU. But demand for biomethanol and e-methanol could be supported by growing interest from the maritime sector as shipowners seek to reduce emissions after the EU's FuelEU maritime regulation comes into effect. Shipping giant Maersk has signed several letters of intent for the procurement of biomethanol and e-methanol from producers such as Equinor , Proman and OCI Global . By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: FeV demand may grow next year

24/12/24

Viewpoint: FeV demand may grow next year

London, 24 December (Argus) — Ferro-vanadium (FeV) demand, which is closely tied to the carbon steel sector, has the potential to grow next year after a sluggish 2024, but economic and geopolitical uncertainties make conditions difficult to forecast. The outlook suggests FeV consumption will increase, driven by global steel production growth, particularly in countries such as India, as well as a potential rebound in key markets such as the US and Europe. The World Steel Association (Worldsteel) sees 2025 demand rising by 1.2pc to 1.772bn t, after a slight contraction this year. Most of the major economies, including China, are likely to record lower steel demand this year, although India bucks the trend, with robust demand growth expected throughout 2025. In developed economies, steel demand could grow by 1.9pc next year, driven by a recovery in the EU and, to a lesser extent, in the US and Japan. Buyers in Europe have been wary about purchasing large volumes of FeV in recent weeks, with fewer volumes expected in next year's long-term contracts as steel plants are looking for more flexibility and are "afraid of buying material that in the end they might not need", a trading firm said. Construction The construction sector remains a crucial driver of FeV consumption, primarily because of its dependence on steel for infrastructure projects. But the construction industry's challenges, particularly residential construction in developed economies, have dampened overall steel demand. High borrowing costs have stifled housing activity, with interest rate hikes slowing building projects. "A meaningful recovery in residential construction (in the EU, US and South Korea) is expected to begin from 2025 onwards with the expected easing of financing conditions," Worldsteel said. Rebar production also has faced challenges, with Chinese steel mills reducing output on lower demand from the real-estate sector up to September, when new rebar standards were introduced by China's government. The new standards were intended to encourage higher vanadium content in steel, but the anticipated FeV demand boost has not yet materialised because overall appetite for the alloy remains suppressed by ongoing struggles in China's real-estate sector. China's rebar output fell by 1.9pc on the year to 17.7mn t in October , with January-October output showing a 14pc drop from the same period a year earlier, according to data from the National Bureau of Statistics. Without any lift from China, European FeV prices remain driven primarily by weakness in the continent's own construction sector, which continues to limit steel rebar trading volumes. Argus' weekly Italian domestic rebar assessment was at €550/t ex-works on 11 December, marking an 11pc drop from the start of this year. Automotive The automotive sector, particularly the electric vehicles (EV) market, will be a key driver of FeV demand next year. High-strength low-alloy (HSLA) steel — a type of carbon steel known for its superior strength-to-weight ratio — is crucial for light vehicles and EVs. While light vehicles and EV manufacturing has slowed this year, with factory closures and inventory reductions by major carmakers such as Volkswagen and Stellantis , the industry is expected to recover next year as the push towards sustainability continues. The green transition, which includes renewable energy projects and electric grid expansions, will further contribute to the demand for HSLA steel and, by extension, FeV. But EV growth is likely to slow in the short term under the administration of US president-elect Donald Trump, who could prioritise traditional energy sectors, potentially limiting support for renewables, industry participants said. By Roxana Lazar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Crude production resumes at Karoon’s Brazil Bauna field

24/12/24

Crude production resumes at Karoon’s Brazil Bauna field

Sydney, 24 December (Argus) — Australia-listed oil producer Karoon Energy has restarted its Bauna project offshore Brazil, the firm said today. Output resumed late on 22 December local time, Karoon said. This followed the repair of one of two mooring chains tethering its floating production, storage and offloading (FPSO) vessel, which failed on 11 December , leading the company to cut its 2024 guidance to 27,600-28,100 b/d of oil equivalent (boe/d), down from an earlier 28,700-29,500 boe/d. The second mooring chain is expected to be repaired by mid-January, Karoon said. An investigation into the failure will be jointly undertaken with FPSO owner and operator Ocyan, and its joint-venture partner Altera Infrastructure. Bauna production was about 24,500 b/d before the shutdown, with Karoon expecting to reach this level again in the coming days. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump-Panama tiff highlights rising transit cost

24/12/24

Trump-Panama tiff highlights rising transit cost

New York, 23 December (Argus) — US president-elect Donald Trump's threat on Saturday to reclaim the Panama Canal for the US put a spotlight on rising costs this year and additional fees planned by the Panama Canal Authority (ACP) for 2025 in the ongoing fallout of a 2023 drought in Central America. Trump claimed that the US is the "number one user" of the Panama Canal, with "over 70pc of all transits heading to, or from, US ports" on 21 December. ACP data for ships destined for or departing from the US puts this percentage at 73pc in 2023 and 75.5pc in 2024 based on total tonnage of commodities moved through the canal. "This complete ‘rip-off' of our Country will immediately stop…" Trump said. The base transit tolls at the Panama Canal have been on the rise and are largely in line with those at the Suez Canal, but Panama Canal costs can be much higher for vessel operators that compete in auctions to enter the Central American passageway. The operator of a medium range (MR) tanker traveling laden through the Panama Canal would pay $279,564.87 in transit fees, while the operator of a laden very large gas carrier (VLGC) would pay $505,268.24 without accounting for reservation costs, ACP estimates. Suez Canal fees have also been on the rise , with MR tanker at $274,001 throughout 2024, while a VLGC operator would pay $487,562. But after last year's drought caused the ACP to temporarily limit transits, ACP required shippers to book transit reservations. Shippers unable to secure reservations via pre-booking often resort to the transit slot auction, where winning bids vary wildly. Pre-booked transit slots often quickly sell out to the containership and LPG vessel owners that dominate the top spots on the ACP's client list. Auction prices for the Neopanamax locks, which have a starting bid of $100,000 and handle large vessels like VLGCs, are at about $220,000, per Argus assessments. Auction prices for the Panamax locks, which have a starting bid of $55,000 and handle vessels like MR tankers, are around $75,000. The highest Neopanamax auction price was nearly $4mn, with the highest Panamax auction price at about half that level. In December 2023, 30pc of Panamax lock tanker transits were reserved via the auction system , according to ACP. The president-elect's criticism of the ACP's handling of Panama Canal fees comes as the administrators of the waterway bounce back from a severe drought throughout 2023. Freshwater levels in the manmade Gatun Lake that helps to feed the canal have recovered because of the return of the rainy season this year, but ACP has maintained its requirement that shippers wishing to transit have reserved transit slots. Prior to the drought, ACP maintained a first-come, first-serve basis for vessels without reservations. ACP ups reservation costs, adds fees for 2025 Starting in 2025, ACP is maintaining the auction system while also increasing pre-booking costs and adding other fees. ACP will raise transit reservation fees from $41,000 to $50,000 for Panamax lock transits for "Super" category vessels, including MR tankers. Neopanamax lock transit reservation fees will climb from $80,000 to $100,000 on 1 January. ACP announced a third transit option in late 2024 for vessel operators in the form of the "Last Minute Transit Reservation" (LMTR) fee to start 1 January 2025 alongside other new fees and higher existing reservation fees. ACP set the cost of the LMTR fee at about twice the starting bid of an auction , or $100,000 for Supers and $200,000 for Neopanamax, and will likely offer the LMTR fee to vessels that fail to secure a transit slot at auction. Furthermore, vessel operators that cancel within two days of their transit will be charged a fee at 2.5 times the transit reservation fee, described by the ACP as a surcharge to the existing cancellation fee, which ranges up to 100pc of the transit reservation fee depending on how close to the transit date that an operator cancels. This means that a Super vessel that cancels within two days of its transit date will receive the 2.5 times surcharge on top of the 100pc transit reservation cancellation fee and pay a total of $175,000. A Neopanamax vessel will pay a total of $350,000. "Vessels of war" should also vie for slots: ACP Trump also suggested that the ACP was charging the US Navy, alongside US corporations, "exorbitant prices and rates of passage" and that these fees were "unfair and injudicious". In March 2024, the ACP published an update on transit slot assignments for vessels of war, auxiliary vessels and other "government-owned" vessels encouraging their operators to participate in the transit system rather than waiting for the ACP to assign them a slot. "Vessels of war, auxiliary vessels, and other government-owned vessels are encouraged to obtain a booking slot through the available booking mechanisms in order to have their transit date guaranteed and minimize the possibility of delays," the ACP said. The ACP points out that these vessels of war are entitled to "expeditious transits" based on the Treaty Concerning Permanent Neutrality and Operation of the Canal and are technically not required to obtain a reservation to be considered for transit. Panama president Jose Raul Mulino on Sunday rejected Trump's threat to retake the canal , which has been under full control of the Central American country since 1999. The canal's rates are established in a public and transparent manner, taking into account market conditions, Mulino said. "Every square meter of the Panama Canal and its adjacent area is Panama's and will continue to be," Mulino said. "The sovereignty and independence of our country are non-negotiable." By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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