U.S. refining and chemical companies want more competition in rail; U.S. petrochemical industry supports renewing Section 301 exclusions; Canada´s Ontario province to promote chemistry, CIAC says
U.S. refining and chemical companies want more competition in rail for better rates, service
The American Fuel and Petrochemical Manufacturers (AFPM) association said that more competition is needed to bring more efficiency and value to U.S. rail shipping.
“Freight railroads are failing to deliver reliable service or competitive shipping rates since competition in the industry has all but vanished,” the association said in an April 25 publication. About 90% of U.S. rail traffic is controlled by four rail companies, it added.
Railroad carriers have consolidated in the past four decades from 30 at the time “down to seven (and soon-to-be six),” the association said.
“Because of rail consolidation, 78% of customers who ship products and feedstocks by rail are only served by a single railroad,” it said.
“This also means American consumers are being forced to pay more for everyday necessities like food, electricity, gasoline, automobiles and building materials,” the AFPM blog said.
The U.S. consumer price index for urban consumers rose 1.2% in March, the U.S. Bureau of Labor Statistics reported on April 11. The all-items index increased 8.5% for the 12 months ended March, the largest 12-month gain since Dec. 1981.
Freight rail rates have gained 43% since 2004 compared with an 8% increase in railroad operating costs, the association added.
Petrochemical shippers have asked in past years a special regulatory board that oversees rail services known for its acronym STB (Surface Transportation Board) to take actions related to railway pricing. Rail companies pointed at the time to the chemical industry´s own pricing.
Separately, on May 5 executives from CF Industries, a leading fertilizer producer based in Illinois, said while discussing first quarter earnings and 2022 outlook that some rail shipping disruption became evident in April as fertilizer shipments increased to meet rising demand from farmers.
U.S. petrochemical industry supports renewing Section 301 exclusions
The American Chemistry Council (ACC) said on May 3 it supports keeping exclusions for products that fall under Section 301 of American trade-related statutes as it reiterated its general support for lower tariffs and more trade.
The ACC, which includes petrochemical companies operating in the U.S., said on May 3 it supported bi-partisan initiatives to “reinvigorate an exclusion process for all products subject to additional tariffs under Section 301 of the Trade Act of 1974.”
Section 301 of the U.S. Trade Act of 1974, last amended in 2018, enables a U.S. President to impose tariffs against a foreign nation over violated accords or restricted U.S. commerce.
Former U.S. President Donald Trump (2017-2021) used in recent years Section 301 against China and the European Union.
The action against China started in Aug. 2017 when the U.S. imposed tariffs of up to 25% on $370 billion worth of Chinese imports, according to the Jan. 2022 issue of InFocus, of the Congressional Research Service.
The action against the European Union started in April 2019. The U.S. imposed tariffs of up to 25% on $7.5 billion worth of U.S. imports but then suspended them in March 2021.
A Trade Partnership Worldwide analysis on the impact of Section 301 tariffs on U.S. chemicals trade indicated tariffs didn´t result in a decline of U.S. chemical imports. “Instead, the tariffs largely disrupted the U.S. chemical industry’s supply chains and business operations,” the ACC said.
Canada´s Ontario province to promote chemistry, CIAC says
The Chemistry Industry Association of Canada (CIAC) said on April 29 that it was pleased that the Ontario province´s 2022 budget included items meant to promote chemistry and plastic production.
The CIAC "looks forward to working with the government on its advanced manufacturing strategy and other initiatives to create the conditions that support growth, continued investment, and the renewal of the chemistry and plastics sector in Ontario.”
Ontario’s $25-billion chemistry industry is the third largest manufacturer segment in the province.
Some plastic production areas in the province include Sarnia-Lambton, about an hour driving distance north of Detroit, where NOVA operates polyethylene production assets. The provincial capital of Ontario is Toronto, a two-hour drive from Buffalo, New York.
Besides automotive, other industries supplied by Ontario producers are construction, as well as food and beverage.
Ontario, with a population of 15 million, is located in central eastern Canada, and is also home to Ottawa, the country´s federal capital.
Canada´s leading hydrocarbon and petrochemical production region is Alberta, a province in the western part of the country with a four-million population and with its capital in Edmonton. Alberta accounted for about 80% of Canada´s oil production in 2020.
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