U.S. manufacturing slowdown fails to rebuild diesel stocks

U.S. manufacturing slowdown fails to rebuild diesel stocks

MOSCOW (MRC) -- U.S. manufacturers reported another decline in activity in July 2023, but industrial electricity and especially diesel consumption have declined less than expected in recent months, explaining why prices remain relatively firm, said Reuters.

The Institute for Supply Management’s purchasing managers index increased slightly to 46.4 (13th percentile for all months since 1980) in July from 46.0 (11th percentile) in June but down from 52.8 (51st percentile) a year ago.

Despite the improvement, the manufacturing index has been below the 50-point threshold dividing expanding activity from a contraction for nine months since November 2022.

The length of the downturn already puts it somewhere between a mid-cycle slowdown (generally eight months or fewer) and a full cycle-ending recession (generally 11 months or more).

If the slowdown proves to be a “soft landing”, it is already the second longest mid-cycle slowdown after the Second World War, exceeded in duration only by the slowdown in 1995/96, which lasted a total of 10 months.

The forward-looking new orders component remained weak, indicating the downturn is likely to last for several months more, which is likely to make it the longest on record.

The new orders index was stuck at 47.3 (13th percentile) in July up from 45.6 (9th percentile) in June but still down from 48.0 (16th percentile) a year earlier.

Industrial electricity use and distillate fuel oil consumption are both correlated with the manufacturing and freight cycle and therefore with the purchasing managers index.

But both have fallen much less than expected given the length and apparent depth of the downturn in industrial activity, especially in the case of diesel and other distillate fuel oils.

Based on the most recent data available, industrial electricity consumption was down by only -1.3% in the three months from February to April compared with the same period a year earlier.

The change in electricity use was in the 19th percentile for all overlapping three-month periods since 1980 (“Monthly energy review”, U.S. Energy Information Administration, July 26, 2023).

Distillate fuel oil consumption actually rose by almost +0.8% in the three months from March to May compared with a year earlier.

The change in apparent distillate consumption was in the 44th percentile for all three-month periods since 1980 which is not consistent with an industrial recession.

The strength of domestic distillate consumption helps explain why fuel oil inventories have remained well below the prior ten-year seasonal average.

We remind, North American chemical railcar traffic rose for a second week, with loadings for the week ended 29 July up 3.1% year on year to 48,009, according to the freight rail data of Association of American Railroads. For the first 30 weeks of 2023 ended 29 July, North American chemical rail traffic was down 2.6% year on year to 1,355,556 - with the US down 3.8% to 934,382 loadings.

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Toray to move into battery separator business

Toray to move into battery separator business

MOSCOW (MRC) -- Toray Advanced Materials Korea Inc., a South Korea-based producer of chemical materials and technology products, is entering the battery separator film business through the acquisition of Toray Battery Separator Film Korea (Toray BSF Korea), said Kedglobal.

The company announced on Thursday that it has reached an agreement to acquire a 70% stake of Toray BSF Korea, which is currently owned by Toray Industries of Japan.

Located in Gumi, North Gyeongsang Province, Toray BSF Korea is a specialized manufacturer of separators, one of the four key materials for batteries, and a core production base for Japan's Toray.

The company has a diverse product portfolio for electric vehicles, electronic devices, industrial components and energy storage, supplying separators to battery manufacturers both domestically and internationally.

Toray Advanced Materials has a range of advanced materials businesses related to electric vehicles and next-generation mobility, including specialty films for multilayer ceramic capacitors (MLCCs) in electric vehicles, aramid for motor insulation and nonwoven fabrics for electric vehicle sound absorption.

We remind, Toray Advanced Materials Korea (TAK) has announced plans to increase its annual production capacity of polyphenylene sulfide (PPS) resin by 5,000 tons. The expansion will take place at the Gunsan plant located in Saemangeum Industrial Complex and is set to be completed by 2024, bringing TAK's total annual capacity to 13,600 tons, the largest in South Korea. TAK will also raise its capacity for sodium sulfide, the main raw material for PPS resin, to 4,800 tons per year.

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Chemours Completes Sale of Glycolic Acid Business

Chemours Completes Sale of Glycolic Acid Business

MOSOCW (MRC) -- The Chemours Company, a global chemistry company with leading market positions in Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials, announced it completed the sale of its Glycolic Acid Business to PureTech Scientific, LLC, a company founded and backed by Iron Path Capital, a private equity firm focused on lower-middle market investments across the specialty healthcare sectors, said the company.

“The sale of the Glycolic Acid Business is consistent with our focus on sustainable growth for our three principal businesses and creating value for our shareholders,” said Mark Newman, Chemours President and CEO. “This transaction reflects our unwavering commitment to the disciplined execution of our strategy to compete where we are best positioned to win, enhance the quality of our earnings, and make meaningful investments that help solve some of the world’s biggest challenges through the power of our chemistry.”

We remind, Chemours Company has entered into a definitive agreement to sell its Glycolic Acid business for USD137 M in cash to PureTech Scientific, a company founded and backed by Iron Path Capital, a private equity firm focused on lower-middle market investments across the speciality industrial and healthcare sectors. The Chemours Company is a chemistry company with market positions in titanium technologies, thermal & specialized solutions, and advanced performance materials.

The Chemours Company is a global leader in Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials providing its customers with solutions in a wide range of industries with market-defining products, application expertise and chemistry-based innovations.

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OCI to jointly produce polysilicon for chips with Japanese company

OCI to jointly produce polysilicon for chips with Japanese company

MOSCOW (MRC) -- OCI Co., a leading South Korean chemical and green energy company, will team up with chemical giant Tokuyama Corp. of Japan to open a joint venture for polysilicon for semiconductors in Malaysia, said Kedglobal.

OCI on Wednesday said its board of directors decided in a meeting at its Seoul headquarters to sign a memorandum of understanding with Tokuyama to launch the joint venture. Tokuyama is the world's third-largest producer of polysilicon for chips.

Both sides will open the new company in Samalaju, Malaysia, in the first half of next year after signing a binding MOU next month and examining the business. The joint venture's annual capacity will be 11,000 tons of semi-finished polysilicon products for semiconductors.

OCI will import semi-finished polysilicon items for semiconductors produced by the joint venture, post-process them at the company's domestic plant in Gunsan, North Jeolla Province, and sell the finished products to domestic and foreign customers.

The Gunsan plant's annual capacity is 4,700 tons based on finished products. The joint venture will add a post-processing facility for 5,000 tons of OCI's semi-finished products by the end of 2026. In addition, OCI is considering additional investment to expand domestic operations of polysilicon for chips.

This investment is part of a preemptive response to rising demand due to the growth of the global semiconductor market for boosting OCI's standing as a semiconductor materials company.

We remind, Lotte Fine Chemical Co., a subsidiary of Lotte Chemical Corp., and Europe’s No.1 clean ammonia producer OCI N.V., or OCI Global, will collaborate in the clean ammonia value chain from ammonia production to distribution and ammonia bunkering infrastructure.

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Nutrien to pause potash ramp up, ammonia project on falling prices

Nutrien to pause potash ramp up, ammonia project on falling prices

MOSCOW (MRC) -- Nutrien on Wednesday decided to indefinitely pause its ramp-up plans for potash production and halt work on its clean ammonia project at Geismar, Louisiana, as the world's biggest fertilizer producer grapples with falling prices, said Hydrocarbonprocessing.

Its U.S.-listed shares fell 2.6% in extended trading as the company cited market conditions for stopping efforts to bolster potash output to 18 million tons. Potash prices have eased after the resumption of shipments from major supplier Belarus, whose exports were largely frozen last year due to western sanctions after Russia's invasion of Ukraine.

The suspension of work at its 1.2 million ton clean ammonia plant was due to elevated costs and uncertainty on the timing of emerging uses for clean ammonia, it said. Fertilizer companies have been building ammonia plants along the U.S. Gulf of Mexico to take advantage of Inflation Reduction Act subsidies and the existing export infrastructure.

Nutrien also lowered its 2023 adjusted earnings forecast to the range of USD3.85 to USD5.60 from a prior view of USD5.50 per share and USD7.50 per share. It had said in July that it would cut production at its Cory Potash mine and expected its full-year profit to take hit from lower exports due to a strike by Canadian dock workers.

"We expect Canadian potash exports will be constrained by logistical challenges primarily due to the strike at the Port of Vancouver," the company said. The top potash producer said it expects to cut capital expenditure by about $200 million in 2023.

We remind, Clariant announced that the new AmoMax-Casale catalyst, developed in collaboration with Casale, has been successfully utilized in Nutrien's plants in Trinidad and Tobago, Mosaic's plant in Louisiana, USA, and Yara's plant in the Netherlands.

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