CSX forecasts softer 4Q rail demand

: Agriculture, Biofuels, Chemicals, Coal, Coking coal, Crude oil, Electricity, Fertilizers, Freight, LPG, Metals, Oil products, Petrochemicals, Petroleum coke
24/10/17

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

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24/10/25

Pennsylvania drilling drops to 17-year low

New York, 25 October (Argus) — Pennsylvania oil and natural gas drilling this week fell to the lowest in 17 years, signaling dimming producer sentiment in the second-largest US gas producing state. The number of rigs drilling for oil and gas in Pennsylvania this week fell to 12, the lowest since July 2007, as the state's rig count lost one from a week earlier and fell by 10 from a year earlier, according to oil field services company Baker Hughes. There were 101 gas-directed rigs in the US this week, down by 16 from a year earlier, implying that the majority of the gas-rig decline was due to the drop in Pennsylvania, where wells produce plentiful dry gas but little crude and natural gas liquids (NGLs). The 17-year-low rig count in the regional gas-producing powerhouse, home to the prolific Marcellus shale, is due to three factors: expectations of lower US gas prices after the 2024-25 winter heating season, a lower share of currently more profitable crude and NGLs in Pennsylvania's output compared to nearby West Virginia and Ohio, and the June start-up of a new gas pipeline in West Virginia , where some Pennsylvania production may have shifted. Rig counts reflect expected prices roughly six months in the future, accounting for the lag between when the drilling of a well begins and when its production is sold. The April 2025-March 2026 strip price at the Leidy Line trading hub, a bellwether for Marcellus shale output in northeast Pennsylvania, was $2.63/mmBtu, according to Argus forward curves. Prices for crude and NGLs in 2024 have been more resilient than US gas prices, which have languished after a warmer-than-normal 2023-24 winter left the US gas market oversupplied. This price dynamic may be why the other two main Appalachian gas producing states have not mirrored Pennsylvania's drilling slowdown. The Ohio rig count rose by one this week to 10, the same number as a year earlier, while the West Virginia rig count was unchanged at 10, up by three from a year earlier. Drilling productivity has also improved dramatically in the past 17 years, surging to 21 Bcf/d (595mn m³/d) in July from 471mn cf/d in July 2007, according to the US Energy Information Administration. Above-average temperatures were expected to blanket the US from November to January, according to the National Weather Service, portending another winter with lower gas demand. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico’s opportunity to clear energy transition woes

24/10/25

Mexico’s opportunity to clear energy transition woes

New York, 25 October (Argus) — Mexico's new President Claudia Sheinbaum has a chance at the UN's Cop 29 climate conference next month to show that the country wants to catch up to the cleaner energy transition, despite her recent constitutional reforms seen as delaying the shift. With less than a month until the conference starts, it is not clear yet if Sheinbaum will attend the summit or who will be part of the Mexican delegation in Baku, Azerbaijan. The previous administration, that ended on 30 September, had planned to send the former foreign minister alongside a group of youth ambassadors for climate in Mexico. The energy ministry, led by Luz Elena Gonzalez, did not reply to Argus ' requests for information about Mexico's plans for Cop 29. Mexico's participation in previous climate summits during the administration of former President Andres Manuel Lopez Obrador had been minimal as the previous government put little effort into being well represented. Sheinbaum promised to lead the country into a fast and just energy transition. During her inauguration speech, Sheinbaum promised the country will reach 45pc renewable electricity generation by 2030 and implement an ambitious energy transition plan but she did not provide a timeline. In contrast, Sheinbaum has sent more worrying signals to private investors than positive ones because of her decision to move forward with controversial constitutional amendments that show a different picture regarding energy transition and climate. Mexico committed to reducing greenhouse gas emissions by 35pc by 2030 at Cop 27 in Egypt but energy and climate analysts say there has not been any updated information to track the advances on this pledge. "If we look at her agenda, one of Sheinbaum's priorities is the transition to clean energy before 2030," said researcher Ana Lilia Moreno at think tank Mexico Evalua. "But Sheinbaum's energy strategy proposes a centralization of the electricity sector, creating great uncertainty about the rules for the investments coming from the private sector." Private-sector renewable companies appear willing to finally put an end to the impasse experienced during the previous administration. But the energy reform approved by congress, which puts state-owned Pemex and CFE at the center of the energy sector, alongside with the amendments that will overhaul the judicial branch, create an upsetting business environment in Mexico, they say. Investors remain worried that Sheinbaum will continue with her predecessor's energy policies. But the government is committed to not destroy the private energy sector with the reform, but to complement it, said Altagracia Gomez, head of the government's business advisory council. "The priority is to strengthen Pemex and CFE but not at the expense of private companies," said Gomez. The government is now working on legal modifications to implement the reform. These changes will clarify how the government plans to ensure CFE generates 54pc of Mexico's electricity, leaving 46pc to the private sector. But investors hope to see something far away from the energy reform passed in 2021, which was defeated in the supreme court. Slow progress The share of clean electricity in Mexico's power mix was 24.3pc in 2023, according to energy ministry data. Mexico's nationally determined contribution (NDC) includes a target to increase renewables capacity to 40GW by 2030, but development of new clean energy capacity since former President Andres Manuel Lopez Obrador took office in 2018 has been limited. Mexico's total renewable capacity is around 20GW, which it will need to triple over the next six years to reach its target of 43pc of renewable energy in its generation mix by 2030. By Edgar Sigler By Mexico installed power capacity GW Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Seca no Brasil: Níveis dos rios voltam a subir

24/10/25

Seca no Brasil: Níveis dos rios voltam a subir

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B24 bunker demand in Asia, Middle East to rise in 2025

24/10/25

B24 bunker demand in Asia, Middle East to rise in 2025

Singapore, 25 October (Argus) — B24 bunker demand in the key ports of Singapore, Zhoushan and Fujairah will likely rise in 2025, because of increased demand ahead of the implementation of the EU's FuelEU maritime regulation. Regional demand for B24 — which consists of 24pc used cooking oil methy ester (Ucome) and 76pc very low sulphur fuel oil (VLSFO) — is expected to rise as shipowners prepare to meet more stringent mandates set by the EU and the International Maritime Organisation (IMO) from next year, said market participants. FuelEU Maritime aims to raise the share of renewable and low-carbon fuels in the fuel mix of maritime transport within the EU, and will set requirements for greenhouse gas emission reductions against a 2020 baseline level, starting with 2pc in 2025. The use of B24 is a relatively low-cost way to help meet the new mandate and is available at key ports globally. Competition for B24 is rising in Asia and the Middle East as port authorities revisit local rules and permits. The Zhoushan Port Authority will obtain the domestic blend permit by the end of the year, it said recently at a local conference,which will pave the way for key local refiners to blend and sell B24 to local and international shipowners. The quota is likely to be divided among Chinese majors like PetroChina (CNPC), Sinopec, and CNOOC. The port authorities further mentioned that CNPC and Sinopec are expected to each receive a blending quota of 200,000t of B24, while CNOOC will receive a blend quota of 100,000t in 2025. There were no further details available or any other formal announcement. But regional traders and shipowners, which have been waiting for the lifting of restrictions by the Chinese government, expect the move will allow shipowners more options to bunker B24 in this region. European market participants expect this B24 blending permit, if allocated, may pull some marine biodiesel demand towards Zhoushan and away from shipowners operating on east-west routes between Singapore and Europe.B24 blends in Zhoushan could end up pricing very competitively against VLSFO when EU emission trading system (ETS) costs are accounted for, given easing prices for Chinese-origin biodiesel, participants added. And FuelEU Maritime's pooling mechanism, which allows shipowners to pool different vessels together to achieve overall compliance across the pool, will enable shipowners that operate east-west routes to pool those vessels with other vessels that operate only within the EU — opening the door for marine biodiesel bunkered in Zhoushan to help meet FuelEU compliance. Singapore B24 consumption has been on the rise in Singapore, the world's largest bunkering hub, through 2024 because of demand from regional and international shipowners for refuelling of this blended marine fuels. B24 consumption touched 470,300t between January to September, according to data from the Maritime and Port Authority of Singapore (MPA). Demand for B24 is expected to near 800,000t by the end of 2024, up from 518,000t in 2023. Zhoushan remains competitively priced versus Singapore for VLSFO, with Singapore's delivered on board (dob) prices for the past year showing a $3/t premium versus Zhoushan on average, based on Argus data. But Singapore-based traders remain confident that the city-state will continue to lead the region in terms of B24 bunkering demand into 2025. "I think both ports will co-exist and there will be price competition…also it doesn't replace Singapore as the main port, do note," said a key global trader and refiner. Singapore is also the cheapest in terms of B24 pricing, compared with other key ports like Rotterdam and Fujairah. The spread between Singapore versus Rotterdam since 24 April shows a $94/t discount for bunkering in the former port, while the discount for Singapore with Fujairah stood at an average of $39.4/t, based on Argus data. Middle East Bunkering B24 has been picking up in the Middle East since the end of 2023, with sporadic demand trickling in this year. "We receive enquiries for B24 once or twice a month, sometimes even less than that for small volumes of 150-200t," one Fujairah-based trader said. But this could change following the implementation of the EU's FuelEU Maritime regulation from January 2025 . The EU is an important market and a regular destination for much of the maritime traffic passing through Fujairah, so the new regulations are likely to be a trigger for change, market participants said. "Many vessels refuel in Fujairah before calling at EU ports," one trader says. "They already have to comply with the EU ETS, [Carbon Intensity Index], and will need to also comply with FuelEU." By Mahua Chakravarty, Hussein Al-Khalisy and Elshan Aliyev Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Pupuk Indonesia receives final sMOP offers

24/10/25

Pupuk Indonesia receives final sMOP offers

Athens, 25 October (Argus) — State-controlled fertilizer group Pupuk Indonesia has received six offers to supply 220,000t of standard MOP at $310-311/t cfr in its e-auction tender today. The offers were submitted by BPC, Canpotex, APC, K+S, Food Security Solutions/Uralkali and Fertistream/Eurochem. The lowest offers were submitted by BPC and Canpotex. Initial offers under the first round, which closed on 18 October, were submitted in the range of $315-323/t cfr. The tender requests delivery between December 2024 and April 2025. It requested 175,000t to be shipped to Gresik port for Petrokimia Gresik in lots of 25,000t, with the first shipment to arrive in January 2025. Another 10,000t is to be shipped to Cigading port for Pupuk Kujang in a single lot for arrival by 1 December, and another 35,000t to be shipped to Lhokseumawe port for Pupuk Iskanda Muda in lots of 20,000t for arrival by 3 December. By Nykole King Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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