Synthetic rubbers

HOUSTON (ICIS)–Asia-US container rates surged this week as trade between the US and China is expected to surge amid the 90-pause on reciprocal tariffs between the two nations. Rates from online freight shipping marketplace and platform provider Freightos showed minimal increases in the low-single digits, but rates from supply chain advisors Drewry showed significant increases of 19% from Shanghai to New York and 16% from Shanghai to Los Angeles, as shown in the following chart. Following the latest US–China trade developments, Drewry expects an increase in Transpacific spot rates in the coming week due to shortage in capacity. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said the 90-day pause is expected to lead to a surge of activity, where spot rates will peak and then flatten as carriers redeploy capacity to match demand over the next two to four weeks. “The US-China announcement on the temporary lowering of tariffs fired the starting gun for shippers to rush as many imports as they can during the 90-day window of opportunity,” Sand said. “There is no time to waste for these shippers and the rush of cargo will put upward pressure on spot rates on Transpacific trades.” But Sand said that a deeper dive into data shows shippers paying prices towards the market mid-high for rates agreed post the US-China announcement, while legacy agreements struck before 12 May will continue to keep a lid on the bubbling market averages for a short time. The following chart shows Xeneta’s rates from North China to the US Gulf. Judah Levine, head of research at Freightos, also expects to see a surge in imports. “We are likely to see a significant demand rebound in the near term as shippers replenish inventories that may have started to run down in the past month and as many Chinese manufacturers have high levels of finished goods already ready to ship,” Levine said. With an August deadline for the possible return of higher tariff levels, it is also likely that the near-term ocean demand rebound will mark the start of more frontloading, Levine said. “If so, it would also mark the early start of this year’s peak season, which could end earlier than usual as well for the same reasons,” Levine said. TANKER RATES STABLE TO LOWER US chemical tanker freight rates assessed by ICIS were stable to lower this week with rates for parcels from the US Gulf (USG) to Asia dropping once again. Rates from the USG to Asia ticked lower both for smaller parcels and larger parcels. Overall, market activity is weaker for most destinations to Asian ports, prompting owners to reposition tonnage to bridge the gap between southeast Asia and northern destinations. Overall, along this route there is very little quoted, aside from the usual contract of affreightment (COA) volumes there has not been much activity, besides the usual methanol and monoethylene glycol (MEG) cargoes. From the USG to Brazil, the market COA volumes remain steady as there were some inquiries and much less space is available for May for part cargoes, as COA nominations appear completed for the month. According to one ship broker, “owners are reporting very limited parcel space available”. The usual mix of caustic soda and methanol seems to be most visibly seen quoted in the market. For the USG to Rotterdam, there are some bits of cargo space still available for May. Most of the outsider vessels that were on berth have already sailed, and only the regulars remain at this time as they push tonnage availability which is all but full. However, there were steadier quotes styrene, methanol and caustic seen in the market this week for June loadings. Freight rates are now expected to remain steady for the time being. With additional reporting by Kevin Callahan Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

16-May-2025

BANGKOK (ICIS)–Over the past week, Asia ethylene players arrived in Bangkok, Thailand, to reflect on the industry’s drift towards oversupply, and probe opportunities for continued survival as supply-demand balance changes enter the horizon. Feedstock cost competitiveness, ethane conversion considerations on the table Consolidation a complex question, but looking more necessary for survival New SE Asia supply may cause supply-demand balance changes for Indonesia In this chemical podcast, ICIS editor Josh Quah discusses some insights gleaned from the Asia Petrochemical Industry Conference (APIC) 2025, held in Bangkok, Thailand.

16-May-2025

BANGKOK (ICIS)–Northeast Asia ethylene and polyvinyl chloride (PVC) markets have seen a slower-than-expected tempo of spot talks for June cargoes, with the main driver of uncertainty being unclear start-up timelines from new ethylene derivative expansions, particularly from Chinese PVC. Around 1.5 million tonnes/year of new PVC supply may face start-up postponements Import discussions on ethylene slow pending clearer demand picture PVC demand clouded by India-Pakistan tensions amid pre-monsoon season In this chemical podcast, ICIS editors Jonathan Chou and Josh Quah discuss their findings from the Asia Petrochemical Industry Conference (APIC) 2025, held in Bangkok, Thailand.

16-May-2025

LONDON (ICIS)–European acrylonitrile butadiene styrene (ABS) and acrylonitrile (ACN) markets are facing ongoing demand weakness in 2025, as well as uncertainty in global supply and the potential impact expected from US tariffs. In this latest podcast, Europe ABS market editor Stephanie Wix and markets editor for the Europe ACN report, Nazif Nazmul, share the latest developments and expectations ahead. Demand expected to remain stable at a weak level through 2025 Macroeconomic challenges persist, players monitor US tariff situation Impact of ongoing antidumping investigation on ABS imports from South Korea, Taiwan ABS is the largest-volume engineering thermoplastic resin and is used in automobiles, electronics and recreational products. ACN is used in the production of synthetic fibers for clothing and home furnishings, engineering plastics and elastomers.

16-May-2025

BANGKOK (ICIS)–Asia's petrochemical industry leaders are navigating a complex global landscape marked by unprecedented challenges, with a renewed focus on sustainability, innovation, and regional collaboration, industry leaders said on Friday. Oversupply, sluggish demand, trade conflicts weigh on industry Challenges open doors for transformation through digital innovation, efficiency Protectionist trade policies cast shadow over global economic activity Facing economic volatility, supply chain disruptions, and increasing environmental demands, top executives from across the region attending the Asia Petrochemical Industry Conference (APIC) in Bangkok emphasized that the industry must adapt to ensure continued prosperity. APIC 2025 with the theme “Ensuring a Transformed World Prosperity” runs on 15-16 May. "We are now standing at a defining crossroads," Federation of Thai Industries, Petrochemical Industry Club (FTIPC) chairman Apichai Chareonsuk said, acknowledging formidable pressures on the industry. He cited “economic volatility, supply chain uncertainties, and rising expectations for environmental responsibility" among the list of complex challenges facing the petrochemical industry. However, he viewed these challenges as opportunities for progress. "These challenges are also opening doors to transformation- through digital innovation, resource efficiency, and sustainable development," Chareonsuk said. INDIA AS BEACON OF GROWTH India, a giant emerging market in Asia, nonetheless, is a "beacon of growth” fueled by burgeoning end-use sectors, according to the country’s Chemicals and Petrochemical Manufacturers’ Association (CPMA) secretary general Shekhar Balakrishnan. The south Asian country is emerging as one of the fastest-growing economies in the world, he noted. This growth, he explained, is underpinned by a robust rise in end-use sectors, including automobiles, infrastructure, construction, among others. These sectors, he added, have propelled the petrochemical industry to new heights, adding that "the Indian petrochemical industry has entered a new phase of growth". "As I speak, a new world-scale cracker is in its last stage of commissioning," Balakrishnan said. Hindustan Petroleum Corp Ltd (HPCL) is slated to begin commercial operations at its refinery and petrochemical complex at Barmer in India's western Rajasthan state this year. The complex can produce 820,000 tonnes/year of ethylene and 400,000 tonnes/year of propylene. Furthermore, he noted that across the country, "new investments covering a broad spectrum of petrochemicals are materializing to augment India’s production capabilities further and make the petrochemical industry in this part of the world even more robust". Balakrishnan also drew attention to the widespread commitment to environmental responsibility in the region. "I will be failing in my duty if I do not highlight the tremendous efforts that organizations in India and the Asian region are making towards sustainability," he remarked. He stressed the balance between the industry's essential role and the need for responsible practices. "Petrochemicals are essential enablers of modern life … However, the collective challenge before us is to adopt smart, sustainable processes and technologies,” the CPMA secretary-general said. "The industry is actively embracing the circular economy, especially in polymers, creating huge opportunities for reuse and recycling while addressing the global crisis of material waste," he added. Balakrishnan highlighted the success of the Extended Producer Responsibility (EPR) framework in India. "This is already yielding significant societal benefits and setting the stage for sustainable industrial growth." "For instance, India today recycles over 90% of polyethylene terephthalate (PET) bottles into value-added articles." PROTECTIONIST POLICIES PROLIFERATE Japan Petrochemical Industry Association (JPCA) chairman Koshiro Kudo said that "protectionist trade policies around the world" are casting a shadow over global economic activity. He also pointed to the disruptive influence on the industry of "growing geopolitical risks, fluctuations in tariff policies, economic security issues, problems in China’s real estate market, and the increasing frequency of natural disasters caused by climate change". In Japan, the operating rate of ethylene plants “has remained below 90% since May 2022, and has recently dropped to around 80%, continuing in a very challenging situation." Kudo also emphasized the industry's environmental obligations, stating that it "is also expected to play a role in maintaining the balance of the ecosystem by recycling CO2 [carbon dioxide], as well as supplying materials”. Achieving sustainability necessitates that "international cooperation and technological innovation in the petrochemical industry are essential, and it is necessary to fully leverage the power of chemistry", he said. JPCA's two-phase approach to structural reform is to focus first on applying available technologies to reduce greenhouse gas emissions and developing innovative technologies for further emission reductions, and then on applying new technologies to achieve sustainable development goals, Kudo said. He emphasized the need to transform petrochemical complexes into "environmentally friendly 'sustainable complexes' through technological innovation" to function as environmental and energy infrastructure hubs. Kudo also drew attention to the demographic challenge of declining birth rates across Asia. He stressed the need to utilize technologies such as digital transformation, "green" transformation, and artificial intelligence to improve plant operation efficiency, facilitate technology transfer, accelerate R&D, and improve safety. Korea Chemical Industry Association (KCIA) chairman Hak-Cheol Shin described the current market as an "unprecedented crisis marked by global oversupply, sluggish demand, and full-scale trade conflicts" which calls for regional unity. "Amidst growing uncertainties in the global trading order, closer solidarity and cooperation among us are more crucial than ever to ensure the sustainable growth of our industry." "The external environment surrounding the petrochemical industry this year is more complex and challenging than ever before," he said. Shin warned that “the implementation of US tariff policies is expected to bring about cataclysmic changes in global trade". Exacerbating business challenges were "persistent oversupply centered around China" and "instability in raw material procurement stemming from the reorganization of global supply chains", he said. If downstream industries weaken due to tariff shocks, the petrochemical industry's growth momentum may also diminish, the KCIA chief said. Shin urged a proactive response to both market dynamics and increasing environmental demands. REGIONAL UNITY IS KEY "At this critical juncture, APIC members must demonstrate stronger solidarity and leadership than ever before," KPIA's Shin said. "While addressing internal and external risks such as trade conflicts and global oversupply, we must also remain fully responsive to the growing societal demands for enhanced environmental regulations, including carbon neutrality and key elements of the UN Plastics Treaty." Shin stressed the need to "enhance operational efficiency, optimize energy utilization, and shift toward high-value-added products through the adoption of cutting-edge technologies" to minimize environmental impacts and reinforce competitiveness. "As we navigate global challenges – from climate change to economic volatility – our industry stands at the forefront of delivering solutions that balance growth, sustainability, and societal progress," Malaysian Petrochemicals Association (MPA) president Bahrin Asmawi  said. Various initiatives are underway in line with Malaysia's National Energy Transition Roadmap (NETR) and New Industrial Master Plan 2030 (NIMP 2030). These include investments in carbon capture, utilization, and storage (CCU), green hydrogen, and utilizing bio-based feedstocks, as well as accelerating adoption of renewable energy in production and chemical recycling. Asmawi stressed the indispensable nature of collaboration, saying: "No single entity can drive transformation alone." MPA is committed to fostering partnerships with the government, investors, technology providers, and communities, he said. Asmawi also proposed a united front among APIC members to address trade policy challenges, particularly suggesting that regional cooperation could lead to "better effective negotiating deals" in the context of recent US tariff announcements. Petrochemical Industry Association of Taiwan (PIAT) chairman Mihn Tsao emphasized in his key address at APIC 2025 "both the urgency and the opportunity of our time." The industry is "called upon to deliver not only economic value but also social and environmental responsibility," he said. "Innovation, sustainability, and partnership are no longer optional – they are essential to our continued development." Despite facing significant global headwinds in 2024, including geopolitical tensions, supply chain disruptions, inflation, and climate change, Tsao noted the Taiwanese industry's resilience and "steadfast commitment to transformation". This transformation, he explained, included intensified investments in green innovation, AI-driven process optimization, and sustainable material development. Taiwan has a formal commitment to net-zero emissions by 2050 through its "Climate Change Response Act" and the introduction of carbon fee regulations in 2024 as a "critical turning point", he said. Future focus areas must include developing high-value, low-carbon production, driving technological innovation through AI, and deepening international cooperation to secure competitiveness. "Collaboration across borders and industries is essential in addressing the global challenges we face: decarbonization, overcapacity, shifting geopolitical dynamics, and the fragmentation of the multilateral trading system." For Singapore, efforts to transform its industry in line with national sustainability goals, include the Singapore Green Plan 2030 and the national net-zero ambition by 2050, Singapore Chemical Industry Council (SCIC) chairman Henri Nejade said. This transformation includes the development of Jurong Island into a Sustainable Energy & Chemicals Park focusing on sustainable products, sustainable production, and Carbon Capture and Utilization (CCU). Government initiatives like the establishment of a Future Energy Fund also support low-carbon and next-generation energy solutions. Nejade also emphasized the importance of regional cooperation in navigating regulatory landscapes through initiatives like the ASEAN Regulatory Co-operation Platform (ARCP). The ARCP is an industry-led initiative to drive greater engagements and capacity building involving all the regulators and industry representatives from all the 10 ASEAN member states. Such cooperation helps "address non-tariff barriers, thus helping to create conducive business environments." Insight article by Nurluqman Suratman Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Thumbnail image: Leaders of the Asia Petrochemical Industry Conference (APIC) member countries. The event runs on 15-16 May in Bangkok, Thailand. (Nurluqman Suratman)

16-May-2025

HOUSTON (ICIS)–The tariff deal that the US has reached with China did not eliminate the duties on steel, aluminium and auto parts, all of which could lower automobile production and reduce demand for the plastics and chemicals used to make the vehicles. The US maintained its 25% sectoral tariffs on Chinese imports of steel, aluminium and auto parts. It levies the same tariffs on imports from much of the world. Imports from Canada and Mexico can avoid the tariffs if they comply with the nations' trade agreement, known as the US-Mexico-Canada Agreement. Oxford Economics expects US auto production will fall by -2.0% to -0.9% year on year in 2025. Fitch Ratings, a credit rating agency, lowered its US auto sales forecast by 6.7% and warned of production cuts. WHY ARE AUTOS IMPORTANT TO CHEMSAutomobiles made in North American contain an average of 198 kg of plastic, according to ICIS, making them an important end market for producers. Polypropylene (PP) is the most commonly used resin in North American automobiles followed by polyurethanes and nylon, as shown in the following charts. In addition, automobiles are large end markets for paints and coatings. In all, the typical automobile has nearly $4,000 worth of chemistry WHAT CHEMS SAY ABOUT AUTOSCelanese, whose Engineered Materials segment is heavily dependent on autos, stressed the uncertainty about the effects that tariffs will have on this key end market during the second half of the year. It will prepare by reducing inventory, controlling costs and lowering operating rates if warranted by demand weakness. Polyurethanes producer Huntsman is seeing automobile build rates drop low-single digit percentages. By the time order patterns trickle through original equipment manufacturers (OEMs) and down to chemical companies, Huntsman is seeing double-digit drops in some order patterns. AdvanSix warned that uncertainty surrounding tariffs is affecting the market for nylon and other engineering plastics. Axalta Coating Systems, which makes auto paint, warned of a $50 million gross annualized charge from tariffs. Axalta lowered its 2025 sales guidance to $5,300-5,375 million from $5,350-5,400 million. Earnings guidance remained unchanged. Steps that Axalta could take to offset a portion of that hit include insourcing production capacity to domestic plants; sourcing raw materials locally; reformulating products; managing strategic inventory; and executing pricing actions. TARIFFS RAISE AUTO COSTS, THREATEN OUTPUTTariffs on auto inputs will increase costs for vehicles, and producers will likely pass through a portion of those higher costs to customers. The size of those cost pass throughs will play a large role in the tariffs' effects on chemical demand. Higher prices for automobiles will discourage sales. Lower sales will reduce auto production and cut demand for plastics and chemicals used to make those vehicles. THE EFFECT SO FAR ON AUTO BUILDSPrior to the announcement of the US and China trade deal, Ford estimated that the gross cost impact from the tariffs is $2.5 billion. Among that, half will come from imported and exported parts as well as the effect that steel and aluminium tariffs will have on domestic prices. The rest is from imported vehicles. Already, Stellantis halted production for two weeks at a plant in Windsor, Ontario Province, Canada, because of tariffs. AUTO'S EXPOSURE TO TARIFFSThe US auto industry's exposure to tariffs is not trivial because the country imports enormous amounts of auto parts, steel and aluminium. Many of these products are subject to 25% sectoral tariffs or 10% baseline tariffs. More than 50% of the content of cars assembled in the US is imported, according to a 3 May CNN article, citing US government statistics. AUTO PART TARIFFSThe following chart breaks down 2024 general imports by country for auto parts under the 8708 code of the harmonized tariff schedule (HTS). Figures are in billions of dollars. Source: US International Trade Commission (ITC) Not all auto parts will be hit by the 25% tariffs. Some parts are excluded. Those from Mexico and Canada will escape the levy if they comply with the USMCA. STEEL AND ALUMINIUM TARIFFSThe following chart shows 2024 general imports of iron and steel under the HTS codes 7206-7224. These codes cover iron and nonalloy steel; stainless steel; and other alloy steel. The chart breaks down the imports by country and lists the value in trillions of dollars. Source: ITC Metal imports from the UK will be exempt under a recent trade deal, as indicated by a press conference in that country. Imports from Canada and Mexico would be exempt from these tariffs if they comply with the USMCA. Not all of these steel imports would be used in automobiles But the chart does illustrate that the US imports iron and steel from many countries that will be covered by the 25% tariffs. The following chart provides a similar breakdown for 2024 general imports of articles of iron and steel under Chapter 72. Figures are in trillions of dollars. Source: ITC The following chart provides the country breakdown for 2024 general imports of aluminium and articles thereof under Chapter 76. Figures are in trillions of dollars. Source: ITC OTHER THREATS TO DOMESTIC AUTO PRODUCTIONTariffs are taxes, and taxes reduce economic growth. Slower GDP growth translates to lower sales and production. ICIS expects that US economic growth will slow to 1.5% in 2025 from 2.8% in 2024. Growth in 2026 could be 1.7%. The country has a 34% chance of slipping into a recession in the next 12 months. Many US consumers bought automobiles to avoid paying tariffs. Those purchases made ahead of the tariffs will come at the expense of future sales. US SELF-SUFFICIENT FOR MANY PLASTICS, CHEMS USED IN AUTOSMany of the plastics and chemicals used by the US auto industry are produced in abundance in the country, and that will limit customers' exposure to the nation's tariffs for those products used in automobiles. The US is self-sufficient in polypropylene (PP), polyvinyl chloride (PVC) and polyethylene (PE), a plastic used in packaging and fuel tanks. Nylon is excluded from the tariffs. Polyurethanes, the second most common polymer used in automobiles, are made with methylene diphenyl diisocyanate (MDI), and a substantial amount of US MDI imports comes from China. The US also relies on imports of acrylonitrile butadiene styrene (ABS), much of which comes from Mexico, South Korea and Taiwan. Additional reporting by Stefan Baumgarten, Joseph Chang and Jonathan Lopez Insight article by Al Greenwood (Thumbnail shows automobile. Image by Shutterstock)

15-May-2025

BANGKOK (ICIS)– South Korea’s petrochemical production is projected to decline by 1.4% in 2025, with export volumes expected to contract by 4.2%, while domestic demand is forecast to increase by 2.3%. Industry to remain export-driven Domestic consumption to reverse 6.6% contraction in 2024 Economic recovery likely limited “The operating rate is expected to decline slightly due to continued oversupply and the rapid pace of production expansion from China,” the Korea Petrochemical Industry Association (KPIA) said in a report prepared for the Asia Petrochemical Industry Conference (APIC) 2025. The conference is being held in Bangkok, Thailand on 15-16 May. “[With] trade protectionism spreading worldwide, it is expected that operating rates will be further adjusted due to a decline in [exports],” KPIA said. Full-year petrochemical production for 2025 is expected to shrink to 20.7 million tons, as economic recovery is expected to be limited, amid an oversupply in China. However, purchases are expected to gradually pick up, especially in major demand centers. South Korea’s petrochemical production in 2024 declined by 1.4% to 21.1 million tons. Its petrochemical export volumes in 2025 are projected to decline further to 12.3m tons, after shrinking by 3.1% in 2024. South Korea is a major exporter of synthetic resins, synthetic fiber and synthetic rubber, with overseas sales accounting for a substantial portion of total production of these products. S Korea 2025 Petrochemical Industry Forecasts (in '000 tons) Products Production Exports Exports share to total output (%) 2024 actual export growth (%) 2025 projected export growth (%) Synthetic resins 14,946 9,533 63.8 -1.1 0.3 Synthetic fibre raw materials 5,193 2,401 46.2 -2.6 -6.1 Synthetic rubber 614 387 63.0 0.6 -2.9 Source: KPIA “In 2025, the petrochemical industry is expected to face even more difficult times ahead … Overall, the export-driven growth trend is expected to continue,” the KPIA said. Domestic petrochemical consumption this year is projected to grow by 2.3% to 9.5m tons, reversing a 6.6% contraction in 2024. Due to intensifying competition with low-priced Chinese products, however, the pace of domestic demand recovery is expected to be limited, according to KPIA. Focus article by Jonathan Yee

15-May-2025

BANGKOK (ICIS)–Sluggish domestic demand weighed on Japan’s petrochemical industry, resulting in reduced production volumes in 2024 compared with previous years, according to the Japan Petrochemical Industry Association (JPCA). 2024 ethylene output falls 6.3% Production of five major plastics shrink by 5% Japan economy forecast to grow by 1.2% in 2025 “Although some crackers in Southeast Asia and East Asia are reducing production, there are plans for capacity increases in crackers that significantly exceed demand in China,” JPCA said in a report prepared for the Asia Petrochemical Industry Conference (APIC) 2025. The conference is being held in Bangkok, Thailand from 15-16 May. Operating rates of crackers in Japan are expected to remain lowered, as with previous years, JPCA said. Japan's ethylene production in 2024 fell 6.3% year on year to 4.99 million tonnes, as domestic crackers have operated at below 90% of capacity since August 2022, with the monthly average run rate falling below 80% five times in 2024. Japan’s real GDP growth rate in 2024 was 0.1% amid weak exports, neutral growth in private consumption, and a slight increase in government consumption. For the whole of 2024, the country’s total production of five major plastics – namely, linear density polyethylene (PE), high density PE (HDPE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) – declined to 5.7 million tonnes, lower by 5.2% from 2023. Production (in thousand tonnes) Product 2024 2023 % change Ethylene 4,989 5,324 -6.3 LDPE 1,160 1,219 -4.8 HDPE 656 665 -1.4 PP 1,935 2,075 -6.8 PS 549 564 -2.7 PVC 1,406 1,496 -6.0 Styrene monomer (SM) 1,297 1,428 -9.2 Ethylene glycol (EG) 276 264 4.6 Acrylonitrile (ACN) 303 341 -11.2 Sources: METI, Japan Styrene Industry Association (PS, SM) and Vinyl Environmental Council (PVC) Domestic demand as ethylene equivalent in 2024  inched up by 1.4% to 3.92 million tonnes, according to JPCA data. While the global economy is expected to grow steadily in 2025, there is a risk of deterioration in the global economy and a corresponding decline in demand due to geopolitical issues, JPCA said, citing Russia's invasion of Ukraine, the Israel-Hamas war, as well as the tariff policy of the US Trump administration. The latter has caused costs of raw material prices to soar, JPCA said. Meanwhile, Japan's real GDP growth rate for 2025 is projected to accelerate to 1.2%, supported by increased exports, sustained growth in personal consumption, and increases in capital investment, said JPCA. Higher wage hikes in 2025 should help boost domestic consumption, it said. In the report, JPCA called on the petrochemical industry to adopt new roles and responsibilities in achieving carbon neutrality and advancing a recycling-oriented society. The report outlined a two-stage timeline: first, to reduce greenhouse gas emissions from existing facilities by immediately deploying currently available technologies; and second, to establish sustainable development goals by gradually introducing new technologies into society. “Not only corporate efforts but … collaboration and system design throughout the supply chain are required,” JPCA said. Focus article by Jonathan Yee

15-May-2025

SINGAPORE (ICIS)–Japanese automaker Nissan Motor Corp announced on Tuesday a slate of new cost-saving measures, including job cuts of 11,000, after swinging to a net loss of yen (Y) 670.9 billion ($4.5 billion) in the fiscal year ending 31 March 2025. in Japanese yen (Y) billion 1 April 2024-31 March 2025 (FY 2024) 1 April 2023-31 March 2024 (FY 2023) % Change Net Revenue 12,633.20 12,685.70 -0.4 Operating Profit 69.8 568.7 -87.7 Net Income -670.9 426.6 Global sales stood at 3.346 million units, impacted by intensified sales competition. The latest results come after the collapse of multi-billion-dollar merger talks with rival Honda in February 2025 and follows a November 2024 announcement of 9,000 job cuts. The latest reductions will bring the total job losses at Japan's third-largest carmaker to around 20,000 in the last fiscal year. Nissan also plans to streamline its production by reducing its global plant count from 17 to 10 by 2027. Petrochemicals make up roughly a third of an average vehicle's raw material costs. The automotive industry is a crucial driver of demand for chemicals such as polypropylene (PP), nylon, polystyrene (PS), and styrene butadiene rubber (SBR). Nissan said that it expects business to "continue be challenging with intense competition, forex and inflationary pressure". "Yet, our efforts related [to] U.S. Tariff policy under our mitigation strategy, we are prioritizing US-built products, optimizing local capacity, reallocating tariff-exposed production, and working closely with suppliers to localize and adapt swiftly to market demands," the company said. "Given the uncertainty related to tariff environment, the guidance for operating profit, net income and auto free cash flow for the fiscal year are currently to be determined," it added. ($1 = Y147.9)

13-May-2025

SAO PAULO (ICIS)–Braskem swung to a net profit in the first quarter, year on year, but sales and earnings fell slightly as the global petrochemicals downturn continues, management at the Brazilian polymers major said on Monday. Speaking to reporters from Sao Paulo, the company’s CEO and CFO described the operating environment as persistently challenging on the back of excess capacity and emerging international trade conflicts. The company’s net profit stood in Q1 at $113 million, up from a net loss of $273 million in the same quarter of 2024, while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) stood 2% lower, however, at $224 million. Braskem produces mostly polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), some of the most widely used polymers and which remain under intense pressure due to global overcapacities. Braskem (in $ million) Q1 2025 Q1 2024 Change Q4 2024 Q1 2025 vs Q4 2024 Sales 3,331 3,618 -8% 3,285 1% Net profit/loss 113 -273 N/A -967 N/A Recurring EBITDA 224 230 -2% 102 121% Brazilian operations achieved 74% utilization rates, up 4% from the previous quarter, while US and European facilities operated at 80% capacity, a 13% improvement, and Mexican operations reached 79% utilization (up 2%). The improved performance was primarily driven by better spreads and increased sales volumes, particularly in Brazil, Europe and the US. CHINA PP COMPETITION: ADDs?Much of the earnings call with reporters on Monday focused on the global trade tensions and competition from Chinese producers, particularly in the Brazilian market. "The question of tariffs generated much instability and many doubts in this first quarter," said CEO Roberto Ramos, who noted how negotiations over the weekend between China and the US in Switzerland could potentially alter the tariffs war. "This discussion between the two countries should move toward some kind of normality. Therefore, I think when all is said and done, after all this commotion, very little will remain,” he said. He highlighted a few aspects which have affected petrochemicals in the trade war so far, such as China's decision not to impose retaliatory tariffs on US natural gas-based ethane imports, which he said stand at approximately 18 million tonnes annually. That was a positive, he said, because ethane from the US to China would continue uninterrupted, preventing a scenario where excess ethane in the US would have driven down prices and potentially created advantages for ethane-based producers. Braskem operates most of its plants in Brazil on crude-derived naphtha. However, Chinese authorities did maintain tariffs on propane imports from the US, which affects Chinese PP producers and that did affect Braskem, said the CEO. “China has a surplus in PP, so it is a net exporter, and the main destination of this excess PP production has been precisely Brazil, which has greatly affected us here in the Brazilian market,” said Ramos. "They wanted to become self-sufficient regarding both resins [PP and PE], had a project to become self-sufficient in PP by 2030, but achieved this much earlier, by 2024. Therefore, as there isn't enough consumption for the resin, they're forced to sell, and they sell here at a price we can't compete with." In response to this competitive pressure, Ramos confirmed Braskem is actively pursuing trade remedies in talks with the authorities, which could, among others, include instruments like antidumping duties (ADDs) against China but also against the US, also a big producer with excess product in some materials. "Yes, we are studying trade protection measures in relation to China, as, moreover, we are also doing in relation to US PE producers, who also place resin here at a lower price than they sell in their respective countries," he said. Management said they continue to pursue the "switch to gas" strategy, which involves systematically reducing dependence on naphtha as feedstock, particularly in Brazilian operations, in favor of more competitive ethane-based production. Despite recent decreases in oil prices and consequently naphtha prices, executives said the price differential between naphtha and ethane remains substantial at approximately $350-370/tonne, sometimes even higher. RECOVERY STILL WAITINGAlthough some of Braskem’s margin spreads posted improvements during Q1, the CEO was not too optimistic about a strong recovery anytime soon. “I do not imagine that spreads will recover further in the short term, because there is still an excess supply of ethylene but also of propylene, and therefore the plants are operating at lower capacity. Apart from the US producers who are processing at over 90% of their capacity utilization, we here have around 70%, and the Europeans have even less than that,” said the CEO. “As long as this excess installed capacity still exists, as long as the pace of construction of new plants in the US and China continues, there is no reason to imagine that spreads will react, because the supply and demand situation continues to be an excess of supply in relation to demand. “If you have an excess installed capacity of 30 million tonnes of ethylene, for example, therefore of PE, and if the market increases its consumption volume by 5 million tonnes per year, you will need at least six years to be able to clear this excess supply. Therefore, there is no structural reason to think about an increase in spreads."

12-May-2025