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November 26 2018

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26 The Journal of Commerce | November 26 2018 US Gulf Report Special Report APPROVAL TO DEEPEN the 258-mile Mississippi River ship channel to Panama Canal depth, a push to better integrate the port's public belt rail and six Class I railroads, and resin ex- ports current and pending are poised to galvanize the Port of New Orleans. The US Army Corps of Engineers has approved a project to deepen the ship channel to 50 feet, the same depth as the expanded Panama Canal. The timeline isn't clear, "but we are ahead in terms of approvals," said Robert Landry, the port's vice president and chief operating officer. The deepened channel will extend from the Gulf of Mexico 256 miles upriver to the Port of Greater Baton Rouge. The federal share of costs will be approximately $118.1 million, the non-federal share about $39.4 mil- lion. The ship channel, home to four key US ports by tonnage — New Orleans, South Louisiana, Greater Baton Rouge, and Plaquemines — is currently maintained at 45 feet. The Port of New Orleans and the New Orleans Public Belt Railroad became partners in early 2018, when the port acquired the city-owned short-line railroad in exchange for two Mississippi River wharves, Espla- nade and Governor Nicholls. These wharves now will extend the city's riverfront park. The 26-mile short line provides switching service for the port's six Class I railroads: Kansas City Southern (KCS), Canadian National, Union Pacific, Norfolk Southern, CSX Transportation, and BNSF. Despite this plethora of rail, only 11 percent of the port's container- ized cargo is handled by intermodal rail; the rest is trucked. The port plans to better integrate with the public belt system and the six railroads to increase that intermodal percentage, Landry told The Journal of Commerce. Resins poised for growth Further, there are good reasons to expect New Orleans' resin exports to grow exponentially over the next few years. In April, Taiwan-based Formosa Petrochemical announced plans for a $9.4 billion chemical manufactur- ing complex in St. James Parish, on the Mississippi River between New Orleans and Baton Rouge. This will be Formosa's fourth, and largest, manu- facturing plant in the state. The industrial complex will produce ethylene, propylene, polymer, and ethylene glycol. Permit applications have been filed and are under review. A final investment decision hasn't been taken, but once made, construction is expected to take 10 years. A Chinese company, Yuhuang Chemical, is developing a $1.85 bil- lion methanol complex in St. James Parish. A site has been purchased, and Yuhuang has signed a 20-year agreement for gas deliveries, reports say. Wanhua, a Chinese chemicals company, has been negotiating to build a $1.12 billion chemical manufacturing plant in Louisiana for several years. A site hasn't been chosen, but news reports suggest a Mississippi River site. Like the other gas-related megaprojects in Louisiana and along the US Gulf, these investment decisions are driven by access to inexpensive shale gas as a feed- stock and business plans that often include China as a target market for final products. Could an escalating trade war with China, or US steel tariffs, put any of these projects at risk? Wanhua's $1.12 billion investment could be re-thought if sharply rising construction costs can't be con- trolled, according to a report in The Advocate. Wanhua expects to build steel modules for its new plant in China and ship them to Louisiana as project cargo. Steel tariffs, if applied as threatened, would add millions of dollars to their cost, however. Containers vs. supersacks Containers continue to be the mode of the choice for resin exports. Resin buyers prefer to receive resin New Orleans hardly taking it easy The port is bullish on pending channel dredging, rail integration, and resin volumes By Janet Nodar The deepened channel will extend from the Gulf of Mexico 256 miles upriver to the Port of Greater Baton Rouge.

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