N. America chemical rail continued to rise

The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending February 24, 2024, according to the Association of American Railroads.

For this week, total U.S. weekly rail traffic was 483,656 carloads and intermodal units, up 7.7 percent compared with the same week last year.

Total carloads for the week ending February 24 were 224,251 carloads, up 2.6 percent compared with the same week in 2023, while U.S. weekly intermodal volume was 259,405 containers and trailers, up 12.6 percent compared to 2023.

Seven of the 10 carload commodity groups posted an increase compared with the same week in 2023. They included chemicals, up 2,776 carloads, to 33,454; grain, up 2,470 carloads, to 21,698; and motor vehicles and parts, up 2,196 carloads, to 15,931. Commodity groups that posted decreases compared with the same week in 2023 were coal, down 2,561 carloads, to 61,556; nonmetallic minerals, down 1,968 carloads, to 27,533; and forest products, down 150 carloads, to 8,460.

For the first eight weeks of 2024, U.S. railroads reported cumulative volume of 1,690,310 carloads, down 4.6 percent from the same point last year; and 1,983,594 intermodal units, up 7.4 percent from last year. Total combined U.S. traffic for the first eight weeks of 2024 was 3,673,904 carloads and intermodal units, an increase of 1.5 percent compared to last year.

North American rail volume for the week ending February 24, 2024, on 12 reporting U.S., Canadian and Mexican railroads totaled 336,833 carloads, up 3.5 percent compared with the same week last year, and 341,906 intermodal units, up 10.8 percent compared with last year. Total combined weekly rail traffic in North America was 678,739 carloads and intermodal units, up 7.1 percent. North American rail volume for the first eight weeks of 2024 was 5,122,636 carloads and intermodal units, up 0.7 percent compared with 2023.

Canadian railroads reported 94,066 carloads for the week, up 5.8 percent, and 69,511 intermodal units, up 4.3 percent compared with the same week in 2023. For the first eight weeks of 2024, Canadian railroads reported cumulative rail traffic volume of 1,233,049 carloads, containers and trailers, down 2.8 percent.

Mexican railroads reported 18,516 carloads for the week, up 3.2 percent compared with the same week last year, and 12,990 intermodal units, up 14.0 percent. Cumulative volume on Mexican railroads for the first eight weeks of 2024 was 215,683 carloads and intermodal containers and trailers, up 6.8 percent from the same point last year.

We remind, North American chemical rail traffic rose for an eighth consecutive week, with railcar loadings for the last week of 2023 rising 24.3% year on year to 44,162, according to the Association of American Railroads. Loadings rose in all three countries: the US, Canada and Mexico. For the full year, chemical railcar loadings were up 1.0% from 2022 to 2,364,975 in 2023 as increases in Canada and Mexico more than offset an 0.3% decline in the US.

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Evonik Industries AG has announced up to 2,000 job cuts worldwide as a response to the challenges posed by the anticipated continuation of the economic downturn this year, said the company.

The planned cuts include a “disproportionate” number of management positions, while around 1,500 of the affected jobs will be in Germany, the company said, adding that it expects cost reductions of around €400 million per year after the program’s completion in 2026. Around 80% of these savings will be personnel reductions, the rest will come from lower non-personnel costs, it said.

Thomas Wessel, chief human resources officer and labor director of Evonik, said during a press conference earlier today that around 20,000, of the company’s 33,000 employees worldwide, are based in Germany, meaning that there is a disproportionate representation of support and control functions in the country. That is why Germany is the focus of the program, he said. The spread of the job cuts among the different locations and group of employees will be clarified in the future, he added.

The planned job cuts form part of the “Evonik Tailor Made” program that was launched in October 2023 and aims to design and establish a new organizational structure by the end of 2026 that will “significantly” reduce all administrative activities that do not directly support the company’s operating businesses. The number of hierarchical levels below Evonik’s board will be reduced to a maximum of six, from ten, the company said. First effects of the program should materialize in the current year, Evonik said.

"We must not delude ourselves, even if there are slight signs of a recovery, what we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment. We are addressing this challenge with the 'Evonik Tailor Made' program which will change our organizational structure for good," said Christian Kullmann, chairman of Evonik.

In addition, Kullmann said during the press conference today that the program is also the result of Evonik’s structure becoming “too complex” in the past few years. The first phase of the program that started in October 2023, analyzed “extensively” all company’s structures and processes, Evonik said.

For the full year 2024, Evonik expects an increase in adjusted EBITDA to a range between €1.7 billion and €2.0 billion, compared with €1.66 billion in 2023. Sales are forecast to be between €15 billion and €17 billion, compared with €15.3 billion the previous year. Capital expenditures will be limited to around €750 million.

Kullmann added that the company will focus on improving its efficiencies and effectiveness in 2024. “We will actually focus on strict cost management,” he said. Evonik also expects its methionine business to perform better this year, and this will make “the difference,” Kullmann added.

Evonik’s net loss narrowed in the fourth quarter of 2023, to €146 million, from €284 million in the same period of 2022, on sales 17% down year over year, to €3.60 billion, due to lower volumes and prices, the company said.

Evonik’s adjusted EBITDA declined 24% year over year, to €312 million, missing analysts’ consensus estimate of €317 million provided by S&P Capital IQ, as it was negatively impacted by exceptional headwinds of approximately €50 million, related to Argentinian Peso devaluation and hyperinflation accounting as well as inventory devaluation in the company’s performance materials business, Evonik said. Adjusted EBIT was €32 million, down 60% year over year, missing a consensus of €40 million.

The company’s specialty additives business posted a 10% year-over-year decline in sales, to €811 million, while the business’ adjusted EBITDA was €134 million, 29% down compared with fourth quarter of 2023.

The nutrition and care business of the company saw sales drop 18%, to €908 million. The business’ adjusted EBITDA was 6% lower year over year, at €115 million.

Evonik’s smart materials business reported a 16% decrease in sales, to €1.05 billion, while its adjusted EBITDA was €119 million, 4% down year over year.

The company’s performance materials business recorded a 20% drop in sales, to €532 million. The business recorded a negative adjusted EBITDA of €4 million, compared with a positive adjusted EBITDA of €63 million, the prior-year period.

Evonik’s technology and infrastructure business reported a decrease in sales of 26%, to €286 million. The business’ adjusted EBITDA was €42 million, 91% higher than the €22 million in the fourth quarter of 2022.

We remind, Evonik Industries AG, headquartered in Essen, Germany, has entered into a significant license agreement with the University of Mainz, which is paving the way for the commercialization of a groundbreaking class of polyethylene glycols (PEGs) known as randomized polyethylene glycols (rPEGs). This collaboration signifies Evonik's commitment to expanding its platform of specialized lipids by incorporating rPEGs, with a focus on meeting the evolving needs of customers and the broader market. The company aims to leverage this innovative development to enhance its excipients, ultimately bringing technical grade rPEG-lipids to market by the second half of 2024.

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Indorama Ventures Public Company Limited, a global sustainable chemical producer, unveiled a significant evolution in its business strategy and outlined how major structural shifts are re-shaping the chemical industry, creating opportunities for the company to emerge stronger from the current downturn and benefit from its unique global model in the longer term, said the company.

Ahead of the company’s annual Capital Markets Day (CMD) in Bangkok on 5 March, Mr Aloke Lohia, Group CEO of Indorama Ventures, pointed to industry mega-trends that are forging fundamental long-term changes in global chemical markets, prompting a significant review of the company’s strategy. He described how subdued local demand in China is driving overcapacity and fueling cheap exports, while low feedstock prices in North America are adding to supply due to increased competitiveness. At the same time, unprecedented macroeconomic and geopolitical headwinds are weighing on global consumption, impacting Indorama Ventures’ margins and volumes in FY23, and leading to a 53% decline in earnings. Mr Lohia said feedstock prices in Western markets will increase over time as peak oil demand draws closer and refineries shut down, while the reverse will occur in emerging Asian markets as capacity rises, driving feedstock costs lower. Indorama Ventures’ unique integrated manufacturing model allows it to benefit from lower feedstock prices through ‘make or buy’ strategies that reduce working capital and interest costs.

At its CMD, the company will outline details of its new IVL 2.0 strategy to adapt to the unprecedented industry conditions. It will deleverage its business in a prolonged environment of higher interest rates, while right sizing its operations and optimizing competitiveness to improve shareholder returns over the next three years and emerge stronger as demand normalizes in the longer term. Indorama Ventures is accelerating the transformation programs it started in 2021, including implementing new data management tools and intelligent dashboards that allow its experienced managers to predict market changes in real time and respond to shifts more effectively.

We remind, Ineos revealed the acquisition of LyondellBasell's Ethylene Oxide & Derivatives business, including the production facility in Bayport, Texas, for a sum of $700 million. The deal encompasses a 420kt Ethylene Oxide plant, a 375kt Ethylene Glycols plant, and a 165kt Glycol Ethers plant, along with associated third-party operations at the site. The target completion for this transaction is set for the second quarter of 2024, subject to regulatory and third-party approvals.

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ACME Group, a leading renewable energy company in India, and IHI Corporation, a Japanese integrated heavy industry group, signed an offtake term sheet for supply of green ammonia from Odisha, India to Japan, said Hydrocarbonprocessing.

The term sheet was signed by Shri Manoj Upadhyay, Founder and Chairman of Acme Group and Shri Hiroshi Ide, President and CEO of IHI Corporation, in the presence of Hon’ble Minister Shri RK Singh, Respected Secretary MNRE Shri Bhupinder Singh Bhalla, and H.E. Hon’ble Ambassador of Japan to India Shri Hiroshi Suzuki.

The senior management of both the companies’ earlier visited Bhubaneswar and sought the guidance and support from Hon’ble Chief Minister of Odisha, Shri Naveen Patnaik and other officials of Government of Odisha. The green hydrogen and ammonia project at Gopalpur, Odisha is being developed by ACME with a planned capacity of 1.2 MMTPA to be developed in phases; and the first production likely within 2027. Over its life cycle, the project will help reduce global GHG emissions by 54 million tons of CO2 equivalent.

The term sheet between IHI and Acme covers the supply of 0.4 MMTPA of green ammonia from Phase-1 of Odisha project on a long-term basis. Both companies wish to partner across the value chain, starting from production to logistics, supply to the Japanese customers and to create the market for green ammonia for use in a range of applications in power generation and various industrial uses in Japan to reduce the overall emissions. This strategic alignment represents the dedication of both companies to build upon the existing strong relationship between the two countries and contribute to both India’s National Green Hydrogen mission as well as Japan’s Net Zero commitment, with a shared vision of sustainability and innovation.

Speaking on the occasion, Shri Ashwani Dudeja, President and Director, Acme Group said, “India is well positioned to develop the renewable resources and produce competitive green molecules for export as well as domestic consumption in applications which are otherwise difficult to decarbonize”. He also emphasized the need for support from the Government of India and Government of Odisha in developing the green ammonia project at Gopalpur.

We remind, Chemplast Sanmar expects to commission its Paste PVC expansion project by the fourth quarter of the current financial year (FY). The 41-ktpa project is expected to start commercial production in Q4/FY24.

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Azerbaijani President Ilham Aliyev, whose country is due to host the COP29 summit on climate change in October, said that his country is committed to the green energy transition, but that the world cannot abandon fossil fuels in the near future, said Hydrocarbonprocessing.

In a speech in Baku, Aliyev said: "Azerbaijan, as I said, is in the active phase of green transition, but at the same time, no one can ignore the fact that without fossil fuel, the world cannot develop, at least in the foreseeable future."

In his remarks, he described Azerbaijan's COP29 presidency as an "honor" that showed his country was serious about combating climate change.

He said that Azerbaijan was voluntarily choosing to transition towards renewable energy, even as its proven reserves of oil and gas were enough to last a century.

Azerbaijan is a major oil and gas producer that is key to the European Union's plans to reduce its dependency on Russian energy imports.

Baku's bid received approval in December from nearly 200 countries, including longtime adversary Armenia, with which it is currently engaged in peace talks to end a conflict which has lasted more than three decades.

The United Arab Emirates, the host of last year's COP28 summit, previously came under criticism for its own major oil and gas sector and high carbon emissions.

We remind, SOCAR is shipping Azeri BTC oil to Thailand via Africa's Cape of Good Hope to avoid the Red Sea, according to LSEG and Kpler data and traders. Attacks by Yemen-based Houthi forces on shipping in the Red Sea and Gulf of Aden are driving up freight costs and disrupting global trade. The Tilos I is carrying some one million barrels of Azeri BTC crude oil which was loaded at Turkey's Ceyhan port on January 22, according to LSEG and Kpler consultancy data.
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