South Korea to aid petchem producers after Iran setback
South Korea's government plans to introduce new support measures, possibly including tax breaks or infrastructure upgrades, to help the country's petrochemical producers cope with the loss of condensate imports from Iran and a demand slump brought on by the US-China trade war.
Investment difficulties faced by the petrochemical industry will be reflected in economic stimulus measures at the end of this month, South Korean finance minister Hong Nam-ki said yesterday. Petrochemical producers are seeking support such as help in securing land for expansion, upgrading water infrastructure and providing more tax incentives for investment in facilities and research and development.
The petrochemical initiative is part of a broader effort by the government to increase the competitiveness of South Korea's export industries amid slumping economic growth. Seoul late last year temporarily reduced import taxes on key materials, such as LPG and oil used to make naphtha, to help boost the industry.
But petrochemical profit margins have been squeezed this year by US sanctions against Iran, which cut off South Korea's Iranian condensate imports last month, and by slowing economic growth in China. Iranian condensate not only was cheaper than competing supplies for South Korean companies, but also was relatively high in naphtha content, making it more profitable as a feedstock for petrochemicals. South Korean producers have turned to alternative supplies to fill the supply void.
By helping petrochemical producers cope with recent setbacks, South Korea's government is trying to ensure that the industry goes through with 14.5 trillion won ($12.2bn) in investments that are planned to be made by 2023. The country's refiners and petrochemical companies are building a wave of new steam crackers, several of which will be fed by naphtha or mixed feedstocks. The country's ethylene production capacity is projected to increase by more than half, to almost 14mn t/yr, by 2023.
The government has urged companies to diversify their feedstocks, reducing reliance on naphtha, to help weather volatile market conditions. The industry also needs to stay the course with investment programmes to boost competitiveness after exports rose to a record above $50bn in 2018, the administration said in April.
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Norwegian Cruise swings to 1Q profit
Norwegian Cruise swings to 1Q profit
New York, 1 May (Argus) — US-based cruise ship operator Norwegian Cruise Line's (NCL) swung to a profit in the first quarter on record bookings. The company posted a $69.5mn profit in the first quarter, compared with a $127.7mn loss during the same period of 2023. Revenue rose by 20pc to $2.19bn in the quarter from a year earlier as the cruise operator reported record quarterly bookings. Cruise operating expenses were up by 8pc at $1.39bn in the quarter from a year earlier. Norwegian rerouted some of its voyages that were previously expected to sail through the Red Sea. But demand from other regions offset the effect of the redeployed voyages. The company spent $197.7mn on marine fuel in the first quarter, 1pc up from $194.9mn in the first quarter of 2023. The company burned 269,000t of marine fuel and did not disclose its fuel consumption for the first quarter of 2023. It expects to burn about 245,000t in the second quarter and 995,000t for full 2024, split evenly between residual fuel oil and marine gasoil. Currently, it has hedged about 35pc of its fuel oil consumption at $395/t and 75pc of its marine gasoil consumption at $746/t for the entire 2024. Starting this year, Norwegian had been applying to the EU innovation fund with the goal of accelerating the transition of six of its vessels from being methanol ready to being fully methanol capable. Biomethanol was pegged at $2,223/t very low-sulphur fuel oil equivalent (VLSFOe) or 3.7 times the price of VLSFO average in April in the Amsterdam-Rotterdam-Antwerp bunkering hub, Argus assessments showed. Methanol was assessed at $699/t VLSFOe or 1.2 times the price of VLSFO. The company also has half of its fleet equipped with shoreside technology allowing it to use port electricity and minimize emissions during port stays. Norwegian has ordered eight new vessels for delivery from 2025-2036. Separately, its subsidiaries Oceania Cruises and Regent Seven Seas will take delivery of three new vessels from 2025-2029 and two new vessels from 2026-2029, respectively. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
New US rule may let some shippers swap railroads
New US rule may let some shippers swap railroads
Washington, 30 April (Argus) — US rail regulators today issued a final rule designed to help customers switch railroads in cases of poor rail service, but it is already drawing mixed reviews. Reciprocal switching, which allows freight shippers or receivers captive to a single railroad to access to an alternate carrier, has been allowed under US Surface Transportation Board (STB) rules. But shippers had not used existing STB rules to petition for reciprocal switching in 35 years, prompting regulators to revise rules to encourage shippers to pursue switching while helping resolve service problems. "The rule adopted today has broken new ground in the effort to provide competitive options in an extraordinarily consolidated rail industry," said outgoing STB chairman Martin Oberman. The five-person board unanimously approved a rule that would allow the board to order a reciprocal switching agreement if a facility's rail service falls below specified levels. Orders would be for 3-5 years. "Given the repeated episodes of severe service deterioration in recent years, and the continuing impediments to robust and consistent rail service despite the recent improvements accomplished by Class I carriers, the board has chosen to focus on making reciprocal switching available to shippers who have suffered service problems over an extended period of time," Oberman said today. STB commissioner Robert Primus voted to approve the rule, but also said it did not go far enough. The rule adopted today is "unlikely to accomplish what the board set out to do" since it does not cover freight moving under contract, he said. "I am voting for the final rule because something is better than nothing," Primus said. But he said the rule also does nothing to address competition in the rail industry. The Association of American Railroads (AAR) is reviewing the 154-page final rule, but carriers have been historically opposed to reciprocal switching proposals. "Railroads have been clear about the risks of expanded switching and the resulting slippery slope toward unjustified market intervention," AAR said. But the trade group was pleased that STB rejected "previous proposals that amounted to open access," which is a broad term for proposals that call for railroads to allow other carriers to operate over their tracks. The American Short Line and Regional Railroad Association declined to comment but has indicated it does not expect the rule to have an appreciable impact on shortline traffic, service or operations. Today's rule has drawn mixed reactions from some shipper groups. The National Industrial Transportation League (NITL), which filed its own reciprocal switching proposal in 2011, said it was encouraged by the collection of service metrics required under the rule. But "it is disheartened by its narrow scope as it does not appear to apply to the vast majority of freight rail traffic that moves under contracts or is subject to commodity exemptions," said NITL executive director Nancy O'Liddy, noting it was a departure from the group's original petition which sought switching as a way to facilitate railroad economic competitiveness. The Chlorine Institute said, in its initial analysis, that it does not "see significant benefit for our shipper members since it excludes contract traffic which covers the vast majority of chlorine and other relevant chemical shipments." By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Latest phase of UN plastic treaty negotiations closes
Latest phase of UN plastic treaty negotiations closes
London, 30 April (Argus) — The fourth session of the UN's Intergovernmental Negotiating Committee to develop an international, legally binding instrument to tackle plastic pollution ended on 29 April. But from the updated drafts released at the end of the negotiating session in Ottawa, Canada, it remains unclear what shape the final text will take. The treaty under discussion covers areas including waste management, product design, measurement and reporting of progress, and financing. There are plans for further inter-sessional negotiations on an updated draft text ahead of the fifth session in Busan, South Korea in November. "Much work remains to be done to narrow the gaps in understanding, as well as bridge the divides on the scope and objective of the future treaty," the International Institute for Sustainable Development (IISD) said. "This was evident as meetings to discuss the technical elements of the text diverged on almost all points of discussion, from problematic and avoidable plastics to product design, composition and performance." European plastic industry association PlasticsEurope acknowledged progress during the discussions but said that "the clock is now ticking loudly" and called on "all stakeholders" to redouble their efforts to reach an agreement. It also called for observers to be present at inter-sessional negotiations "to maintain the transparency and technical integrity of the draft agreement". There is "growing recognition" of Extended Producer Responsibility (EPR) schemes — where producers and sellers of plastic products contribute to the cost of managing the resulting waste — as a tool for managing end-of-life plastics, PlasticsEurope added. But the association expressed concern at a lack of progress towards supporting the circular economy by creating more demand for plastic waste and secondary raw materials. "The focus must now shift to policy measures that will increase the value of plastic waste as a circular feedstock by increasing demand for circular plastic raw materials, including the introduction of mandatory recycled content targets for sectors that use plastics at the national level," it said. Mandatory recycled content requirements are one of the topics under discussion, although the updated draft released on 29 April appears less firm on this topic than the draft released following the negotiating committee's third session. The option for unilateral recycled content targets does not appear in the updated draft, and options to encourage national plans for recycled content requirements now include references for consideration to the targets applying "where economically viable" and "where affordable, accessible and available". These were not in the previous draft. "We came to Ottawa to advance the text and with the hope that members would agree on the inter-sessional work required to make even greater progress... We leave Ottawa having achieved both goals and a clear path to landing an ambitious deal in Busan ahead of us," said Inger Andersen, executive director of the UN Environment Programme. By Will Collins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
HSFO demand supports Rotterdam 1Q bunker sales
HSFO demand supports Rotterdam 1Q bunker sales
London, 30 April (Argus) — Total sales of fossil bunker fuels and marine biodiesel blends at the port of Rotterdam were 2.45mn t in the first quarter this year, up by 13pc compared with the final three months of 2023 but 9pc lower year on year, according to official port data. Sales firmed across the board quarter on quarter, even though market participants had described spot bunker fuel demand in the region as "mostly limited" and shipping demand as lacklustre. High-sulphur fuel oil (HSFO) sales rose the most. Disruption in the Red Sea resulted in many vessels re-routing around the southern tip of Africa, increasing the incentive of bunkering with HSFO as opposed to very low-sulphur fuel oil (VLSFO) and marine gasoil (MGO), according to market participants. The longer journeys meant that vessels on the route increased their fuel consumption to reduce delivery delays, supporting conventional bunker fuel sales at Rotterdam. Higher prices for HSFO in Singapore also helped support HSFO demand in Rotterdam. Marine biodiesel sales at Rotterdam increased by 13pc on the quarter and by 76pc on the year in January-March, despite the Dutch government's decision to half the Dutch renewable tickets (HBE-G) multiplier for shipping at the turn of the year. The move has led to a substantial increase in prices for advanced fatty acid methyl ester (Fame) 0 blends in the Amsterdam-Rotterdam-Antwerp (ARA) hub. The inclusion of shipping in the EU's Emissions Trading System (ETS) from January may have lent support to demand for biofuel blends. Marine biodiesel made up 11pc of total bunker fuel sales at Rotterdam in the first quarter, the same share as the previous quarter, which was a record high. LNG bunker sales at Rotterdam in January-March soared by 45pc on the quarter and by 150pc on the year. By Hussein Al-Khalisy Rotterdam bunker sales t Fuel 1Q24 4Q23 1Q23 q-o-q% y-o-y% VLSFO & ULSFO 857,579 847,862 1,205,288 1 -29 HSFO 818,028 643,218 809,871 27 1 MGO/MDO 383,409 361,585 468,373 6 -18 Biofuel blends 262,634 233,108 149,206 13 76 Total 2,453,610 2,177,078 2,685,515 13 -9 LNG (m³) 131,960 91,305 52,777 45 150 Port of Rotterdam Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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