Epoxy
March 16, 2021
Winter Storm Update
Winter Storm Uri Update: US Oil and Gas Production All but Recovered While Refining and Petrochemicals Sectors Remain a “Mixed Bag” in Return to Normalcy
Winter Storm Uri Update: US Oil and Gas Production All but Recovered While Refining and Petrochemicals Sectors Remain a ‘Mixed Bag’ in Return to Normalcy
March 12, 2021
IHS Markit, (NYSE: INFO), a world leader in critical information, analytics and solutions is providing periodic updates on the state of U.S. crude, refining and chemical operations following the impacts of Winter Storm Uri.
To request a media copy of the full report (including detailed sector-by-sector updates) or to speak with an IHS Markit expert, contact: Jeff Marn / jeff.marn@ihsmarkit.com or email press@ihsmarkit.com
A summary of the key conclusions follows here:
‘While U.S. crude production has mostly returned to normal, refining and petrochemical facilities are still more of a mixed bag in terms of recovery. The coming days should see significant progress but a return to pre-storm levels across all sectors is unlikely until the second half of March. The worst of the storm is definitely behind us, but we are still in the middle act when it comes to a holistic recovery.’ – Bill Hyde, executive director, IHS Markit
Chemicals
Total petrochemical production is on track to begin approaching normal around mid-March, though some units will take longer. Nitrogen remains a limitation to an efficient startup with some facilities having to prioritize restarts based on limited supply. The overall nitrogen supply infrastructure does not appear to have been designed to handle the extraordinary event of starting up most of the Texas plants at the same time. This week should see significant progress in restarting production capacity.
https://www.publicnow.com/view/FBDE28F3F6520D88D45B0635FB080D3403D72A45
March 16, 2021
Winter Storm Update
Winter Storm Uri Update: US Oil and Gas Production All but Recovered While Refining and Petrochemicals Sectors Remain a “Mixed Bag” in Return to Normalcy
Winter Storm Uri Update: US Oil and Gas Production All but Recovered While Refining and Petrochemicals Sectors Remain a ‘Mixed Bag’ in Return to Normalcy
March 12, 2021
IHS Markit, (NYSE: INFO), a world leader in critical information, analytics and solutions is providing periodic updates on the state of U.S. crude, refining and chemical operations following the impacts of Winter Storm Uri.
To request a media copy of the full report (including detailed sector-by-sector updates) or to speak with an IHS Markit expert, contact: Jeff Marn / jeff.marn@ihsmarkit.com or email press@ihsmarkit.com
A summary of the key conclusions follows here:
‘While U.S. crude production has mostly returned to normal, refining and petrochemical facilities are still more of a mixed bag in terms of recovery. The coming days should see significant progress but a return to pre-storm levels across all sectors is unlikely until the second half of March. The worst of the storm is definitely behind us, but we are still in the middle act when it comes to a holistic recovery.’ – Bill Hyde, executive director, IHS Markit
Chemicals
Total petrochemical production is on track to begin approaching normal around mid-March, though some units will take longer. Nitrogen remains a limitation to an efficient startup with some facilities having to prioritize restarts based on limited supply. The overall nitrogen supply infrastructure does not appear to have been designed to handle the extraordinary event of starting up most of the Texas plants at the same time. This week should see significant progress in restarting production capacity.
https://www.publicnow.com/view/FBDE28F3F6520D88D45B0635FB080D3403D72A45
March 16, 2021
German Chemical Update
Germany’s chems Q4 production jumps 9.2% but Q1 more challenging – VCI
Author: Tom Brown
2021/03/16
LONDON (ICIS)—German chemicals production excluding the pharmaceutical sector jumped 9.2% in the fourth quarter, compared to the third, on the back of customer restocking but industry body VCI said conditions at the start of 2021 have been more challenging.
Customers looking to replenish empty warehouses toward the end of the year helped to galvanise the pace of recovery for chemicals, with production also substantially higher compared to the closing months of 2019.
Including the pharmaceutical sector, the level total sector productivity moderated slightly to 7.4% quarter on quarter, with pricing firming 0.4% compared to the July-September 2020 quarter.
However, chemicals prices remained in the fourth quarter nearly 2% lower year on year.
LOCKDOWNS COOL DOWN OPERATIONS
Conditions were less unambiguously bullish in the opening months of this year amid lockdown extensions and fears of a fresh wave of infections in parts of Europe, with almost half of VCI members responding to a survey expecting setbacks for the quarter.
Aside from coronavirus fears, the extent that the manufacturing sector has heated up through 2021 so far has led to material shortages for German chemicals producers, exacerbated by the logistics issues brought on by the ongoing shipping sector disruption.
The pace of demand growth has resulted in the second-greatest month on month decline in lead times for eurozone manufacturing in 24 years, according to data from analyst Markit Economics.
“If chemical business continues to develop positively over the year, the signs are good for our industry,” said VCI director general Grosse Entrup. “However, major fluctuations in demand cannot be ruled out.”
Fourth-quarter sales rose 8.1% for the sector, driven by firmer domestic and export demand, although overseas sales remained below late-2019 levels.
Capacity utilisation firmed from 81.6% to 85% quarter on quarter, and employment was stable, a sign that chemicals have managed to weather the lockdowns better than in the first wave of the pandemic.
In the fourth quarter, chemicals was one of the industries with fewer employees in short-time work – or Kurzarbeit in German – by which the state subsidises hours not worked by the employee at times of crisis.
The strong German chemicals industry employed 464,000 workers in the fourth quarter, a figure which remained stable in the first quarter, said VCI.
The extent of the fourth-quarter rally is not likely to be sufficient to hold off a full-year decline in production, VCI said, but pricing and production for 2021 are likely to grow 2% and 3% respectively.
“[Total, including pharma] industry’s sales should improve by 5% to just under €200bn,” said VCI.
In 2020, total sales fell 6% to €186.4bn.
March 16, 2021
German Chemical Update
Germany’s chems Q4 production jumps 9.2% but Q1 more challenging – VCI
Author: Tom Brown
2021/03/16
LONDON (ICIS)—German chemicals production excluding the pharmaceutical sector jumped 9.2% in the fourth quarter, compared to the third, on the back of customer restocking but industry body VCI said conditions at the start of 2021 have been more challenging.
Customers looking to replenish empty warehouses toward the end of the year helped to galvanise the pace of recovery for chemicals, with production also substantially higher compared to the closing months of 2019.
Including the pharmaceutical sector, the level total sector productivity moderated slightly to 7.4% quarter on quarter, with pricing firming 0.4% compared to the July-September 2020 quarter.
However, chemicals prices remained in the fourth quarter nearly 2% lower year on year.
LOCKDOWNS COOL DOWN OPERATIONS
Conditions were less unambiguously bullish in the opening months of this year amid lockdown extensions and fears of a fresh wave of infections in parts of Europe, with almost half of VCI members responding to a survey expecting setbacks for the quarter.
Aside from coronavirus fears, the extent that the manufacturing sector has heated up through 2021 so far has led to material shortages for German chemicals producers, exacerbated by the logistics issues brought on by the ongoing shipping sector disruption.
The pace of demand growth has resulted in the second-greatest month on month decline in lead times for eurozone manufacturing in 24 years, according to data from analyst Markit Economics.
“If chemical business continues to develop positively over the year, the signs are good for our industry,” said VCI director general Grosse Entrup. “However, major fluctuations in demand cannot be ruled out.”
Fourth-quarter sales rose 8.1% for the sector, driven by firmer domestic and export demand, although overseas sales remained below late-2019 levels.
Capacity utilisation firmed from 81.6% to 85% quarter on quarter, and employment was stable, a sign that chemicals have managed to weather the lockdowns better than in the first wave of the pandemic.
In the fourth quarter, chemicals was one of the industries with fewer employees in short-time work – or Kurzarbeit in German – by which the state subsidises hours not worked by the employee at times of crisis.
The strong German chemicals industry employed 464,000 workers in the fourth quarter, a figure which remained stable in the first quarter, said VCI.
The extent of the fourth-quarter rally is not likely to be sufficient to hold off a full-year decline in production, VCI said, but pricing and production for 2021 are likely to grow 2% and 3% respectively.
“[Total, including pharma] industry’s sales should improve by 5% to just under €200bn,” said VCI.
In 2020, total sales fell 6% to €186.4bn.
March 15, 2021
Freight Markets Update
Tender volumes flat week-over-week at very high level
Seth HolmSaturday, March 13, 20210 753 3 minutes read
The freight markets have reentered “chaos is business as usual” territory. There has been very little change to any of the major indices this week as the Outbound Tender Volume and Reject Indices have both moved horizontally for two weeks now. Since the winter blizzard disruption, tender volumes took a leg up and have remained elevated since. The natural peak in tender volumes (and rejections) seems to be in place, but the spring freight season is upon us.
Year-over-year comparisons are becoming increasingly more difficult given the 30% surge in volumes on the back of consumer panic buying and hoarding at the beginning of the pandemic. For this reason, two-year comparisons glean more meaningful insights throughout the rest of 1H21.
After adjusting for rejected tenders, OTVI is up ~25% over 2019 and up ~13% over last year. The lasting impact of the winter storms is being felt in the reefer market. The power outages meant many goods were left without a way to manage their environment, putting many perishables and other goods at risk for spoilage or damage. Demand for reefer trailers exploded in Texas, with the Reefer Outbound Tender Volume Index for the state increasing over 50% in a 10-day stretch, potentially leaving a vacuum in other parts of the country.
Over the past three months, growth in outbound reefer tender volumes (ROTVI.USA) has outpaced dry van growth, with the disparity accelerating during the storms. As a result of the imbalance, major produce regions like California, North Carolina and Florida have all seen severe reefer capacity shortages over the past two weeks.
The significant produce harvests typically don’t occur until April through June, so it’s likely that when domestic produce begins to move in earnest, it could set up for a historic year for reefer carriers.
While it is hard to see how freight demand gets much better from here, it appears distinctly possible. President Biden signed the newest round of fiscal stimulus this week and $1,400 checks will be hitting American pockets as early as next week. Inventories remain decimated, the housing market is on fire, the industrial economy is recovering and the reopening of the economy is inching closer with every passing day. The vaccination efforts are extremely promising — 1-in-4 adult Americans has received at least one dose.
On a positive note, eight of the 15 major freight markets that we monitor as a broad, representative benchmark were positive on a week-over-week basis. This ratio was flat compared to last week and weakened modestly from the stronger levels it has become accustomed to in recent months as the freight market rallies. The markets with the largest gains this week in OTVI.USA were Fresno, California (14.83%), Seattle (9.06%), and Miami (8.24%). The markets with the largest declines this week in OTVI.USA were Laredo, Texas (-4.79%), Newark, New Jersey (-4.45%) and Memphis, Tennessee (-3.54%).
Tender rejections hover near peak
The Outbound Tender Reject Index (OTRI) declined marginally this week to 26.5%. OTRI has ranged up toward 30% four times over the past year, but never quite touched the handle. The natural ceiling for tender rejections appears to be near that level, and this is evidenced by surging spot rates.
From a geographic standpoint, there is simply not much to report this week. Markets around population centers on the West Coast and in the Northeast experienced very little change in tender rejections this week, while southern regions saw tightening capacity.
The market is unlikely to see any material loosening of capacity through the middle of the year. There could be some downward pressure on tender rejections as routing guides are recalibrated and contract rates are revised upward toward spot, but capacity will remain difficult to source.
For more information on Passport Research, please contact sholm@freightwaves.com.
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