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Warsaw acknowledges the LPG shortage the country faces but has done little to support the domestic sector, writes Waldemar Jaszczyk. The Polish government has woken up to the risks posed by the upcoming EU embargo on Russian LPG, but current measures are falling short of the industry's requests and a significant upcoming shortfall is looking increasingly likely. Warsaw is attempting to get ahead of the curve by analysing the latest information from the domestic LPG market in weekly crisis reporting. The data show a decline in imports from Russia as a direct result of the industry's preparation for the EU's ban from December, the Polish energy ministry says. This is apparently contradicted by Russia increasing its share of Polish LPG imports to 53pc in the first half of from 50pc a year earlier, with Russian prices 25pc lower than northwest European equivalents. But deliveries have slumped this summer for various reasons including payment problems. In the worst-case scenario, state-owned refiner Orlen is prepared to cover the most politically sensitive demand sector — residential heating — with its production, its risk management director Jakub Ruszel recently told lawmakers. Household and commercial heating accounted for around 10pc of the 2. The LPG industry hopes to avoid the logistical issues that haunted the market during the immediate diversification drive in Coal transportation by rail was given priority over other fuels after Poland's Russian coal imports ban. Upgrades to ports that capped rail capacity have also now largely been completed. And although more investment is needed, with only two out of six Polish-German rail crossings electrified, a predicted increase of 1, trains arriving from northwest Europe each year can be accommodated, the infrastructure ministry says. The main logistical problem is likely to be throughput at privately run terminals, according to the government. Most rail terminals are on Poland's eastern border with Belarus, with only two projects planned to raise import capacity in the west. These will help, but they fall well short of adding enough capacity to replace lost Russian supply. But although the government is more aware of the coming shortfall, the domestic sector is largely having to fend for itself. Plans for a state-owned seaborne terminal were rejected on the basis the industry has had little state intervention to date, and a request for lower fuel duty for firms that invest in infrastructure was also denied. Simplifying environmental permitting procedures has received more consideration from Warsaw. Local authorities are required to process applications within three months, but this often extends to a year or more, according to market participants. The environment ministry started talks with regional administrations in July to improve investment conditions, but progress has been hampered by recent government reshuffles. The responsibility for energy resources has been transferred from the environment to the new industry ministry as of 1 August, temporarily halting engagement with the LPG industry. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one. Washington, 17 October Argus — Eastern US railroad said it expects that fourth quarter commodity market conditions will be mixed, limiting some freight demand. 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. 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, carloads compared with the same three months in Automotive volume dropped in the second quarter because of lower North American vehicle production, CSX said. Automotive traffic fell to , railcars loaded, down by 2pc from the third quarter 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, carloads in the third quarter, down by 4pc 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. 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 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 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. 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 But domestic coal deliveries fell to Rail coal volume fell by 2pc from a year earlier, while revenue dropped by 7pc to mn st. By Abby Caplan Send comments and request more information at feedback argusmedia. Argus Media group. All rights reserved. The addition of ethylene crackers will further drive LPG storage capacity expansion following strong growth in recent years Shanghai, 2 October Argus — China's LPG storage capacity is expected to expand again in after it continued to grow in , the latest Global LPG Storage Survey finds. But whereas the expansion of the past five years has been driven by the country's investment in propane dehydrogenation PDH projects, next year's increase is supported by facilities built to serve new ethylene steam crackers. China's PDH capacity reached This has necessitated a significant increase in propane imports as well as domestic refrigerated LPG storage capacity for VLGC deliveries, which rose pc to 5. The number of import terminals that can be served by VLGCs has grown to 41 from 23 since China's PDH expansion is expected to slow next year owing to sustained negative production margins. Yet the country's LPG storage capacity is yet again on course to rise, by ,t to 6. Domestic petrochemical producers believe LPG will be more competitive than naphtha in terms of cost over the long term, and are consequently building crackers designed to use the feedstock, including ExxonMobil's 1. Ethane imported from the US is likely to be even more competitive than LPG or naphtha, resulting in a crop of new ethane-fed cracker projects as well as conversions of existing units, supporting the development of ethane import terminals and storage capacity. China's ethane storage capacity is forecast to rise by ,t to ,t by the end of as a result. Send comments and request more information at feedback argusmedia. Downstream demand is unlikely to pick up, with concerns around an oversupplied market also weighing on sentiment, writes Efcharis Sgourou London, 1 October Argus — Northwest Europe's imports of LPG from the US rose sharply in the third quarter as regional demand unexpectedly firmed during the summer off-season. And arrivals are likely to drop this winter, contrary to typical seasonal patterns. This lifted arrivals to 1. The increase in import demand came as a result of regional supplies falling significantly during maintenance season in the North Sea, in particular at Norway's Karsto, Kollsness and Nyhamna gas processing plants. Some earlier-than-expected demand for stockbuilding prior to winter then led to prompt buyers on the spot market raising their bids in order to attract US LPG cargoes, in turn bolstering the price of cif Amsterdam-Rotterdam-Antwerp ARA propane large cargoes, which rose to their highest against front-month Ice Brent crude in more than a year. And although the transatlantic arbitrage was largely shut from July onwards, a few narrow periodic openings allowed European buyers to compete with Asia for US cargoes. Looking to the fourth quarter, spot buying interest for large cargo deliveries in the first half of October looks relatively firm but downstream demand is likely to remain static rather than picking up as temperatures fall. European ethylene steam cracker demand is also unlikely to grow as although run rates improved over the past few months, they are yet to fully recover from recent lows. The spread could widen marginally in the final quarter but it may not be able to incentivise more demand. The Karsto processing plant's return to full operations from late September and most other North Sea works coming to a close, as well as an anticipated light turnaround schedule for the region's refineries, will increase northwest European supply in the fourth quarter and decrease the dependency on imports of US LPG. The backwardation — prompt prices at a premium to later ones — is less indicative of prompt market bullishness and more a reflection of weak sentiment towards the end of the year. This is largely a result of heavy stockpiling in Asia during the third quarter that has weighed on paper prices. Meanwhile, front-month US prices at the US Gulf coast hub of Mont Belvieu have traded at discounts to December prices given concerns over exports during the fourth quarter. Planned expansions of some of the key terminals are not due to start up until and LPG storage capacity continues to expand as the latest LPG World survey grows to more than 1, facilities across the world London, 1 October Argus — China's petrochemical expansion continues to be at the forefront of global investments in new LPG storage capacity, although a shifting focus away from propane dehydrogenation PDH to cracking and more interest in exploiting ethane is altering the make-up of such projects. The number of Chinese storage facilities in the latest Global LPG Storage Survey rises to from in , while capacity reaches about 6. The two most significant contributions come from new terminals in east and northeast China. Both are capable of storing ,t of LPG — 80,t of propane and butane apiece — and will be used to support their petrochemical units, as well as providing them with more opportunity to sell domestically. The refreshed storage survey exclusive to LPG World is the first to include ethane-specific terminals — as well as breaking down the large North American natural gas liquid NGL storage caverns into approximate capacities for LPG and ethane based on regional upstream yields. China is again playing the most prominent part in trying to seize growing volumes of cheap US ethane for its petrochemical sector through the development of new infrastructure across the supply chain, including ships. As a result, the survey includes Satellite Chemical's Lianyungang terminal in Jiangsu, which can store ,t of ethane, as well as Huatai Shengfu's facility in Ningbo, Zhejiang, which can accommodate 80,t — both can also accept newly built very large ethane carriers VLECs. And China is also dominant in the survey's first ever devoted section to the most significant storage projects, being home to five of the 10 developments included. A trio of new LPG terminals in Guangdong province in south China will each add ,t of capacity, while a new 50,t unit will open in Qingdao, Shandong, all of which are due to open next year see table. With this in mind, those collecting and verifying the data have again expanded its scope, this time to more than 1, units with a combined capacity of The latest survey also captures three new Indian facilities, one of which opened in and the other two are expected to open over the next few years. The first, now established, storage capacity is found at LPG trading firm Petredec's new 1. The terminal has two storage tanks that can store about 17,t and 18,t of propane and butane, respectively. The terminal will be able to store 62,t of LPG and discharge VLGCs when it opens, and while the project is still in its early stages, a prospective start-up of has been given. This project includes 60,t of storage capacity to service the new plant, which is due to start up in Brazil's LPG imports are also on an upward trajectory, prompting it to invest in new terminal capacity. Should its Suape project see the light of day, another 71,t of storage will be added. London, 1 October Argus — The eurozone manufacturing sector slid further into contraction in September, when strength in Spain and Greece was unable to outweigh underperformance from other, larger, economies including France and Germany. It was the first fall after three months of stability at A PMI reading of below 50 indicates a deterioration. HCOB chief economist Cyrus de la Rubia noted a combination of falling demand and supply-chain constraints that were last seen during the Covid pandemic. Readings fell for production, new orders, employment and procurement, and producers depleted inventories. One bright spot for producers was the first fall in input costs since May, although selling prices also dropped. Output, new orders and suppliers' delivery times were 'consistent with improved manufacturing operating conditions', while levels of employment and stocks of purchases declined. Input cost inflation was at a month high, and the survey noted some caution ahead of the new government setting out its fiscal priorities on 30 October. By Ben Winkley Send comments and request more information at feedback argusmedia. Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. Warsaw acknowledges the LPG shortage the country faces but has done little to support the domestic sector, writes Waldemar Jaszczyk The Polish government has woken up to the risks posed by the upcoming EU embargo on Russian LPG, but current measures are falling short of the industry's requests and a significant upcoming shortfall is looking increasingly likely. Private matters But although the government is more aware of the coming shortfall, the domestic sector is largely having to fend for itself. Poland sea LPG imports by origin. Poland LPG infrastructure. Related news posts Argus illuminates the markets by putting a lens on the areas that matter most to you. Business intelligence reports Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. Learn more.
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