Recycled PET (R-PET)

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the fortnight ended on 16 May. NEWS Brazil’s Braskem swings to profit in Q1 but global petchems issues remainBraskem 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. Braskem-Idesa launches its ethane import terminal in MexicoBraskem-Idesa (BI) officially launched the Terminal Quimica Puerto Mexico (TQPM) on Wednesday, according to a notice from the company. Brazil's Unipar Q1 metrics show start of recovery, but further protectionism needed – execsUnipar’s Q1 sales and earnings rose strongly, year on year, despite the prolonged global petrochemicals downturn, weather-related disruptions at its Argentine operations, and lower self-generated energy availability in Brazil due to grid operator restrictions, executives the Brazilian chemicals producer said on Friday. Brazil’s Unigel small earnings save day in Q1; deal with Petrobras imminent ‘at no cost’ Unigel’s Q1 low earnings at Brazilian reais (R) 23 million ($4.0 million) represented, however, a recovery from negative earnings of R29 million in the same quarter of 2024, the Brazilian styrenics and acrylics producer said on Friday. Brazil’s Unigel still planning exit from fertilizers but may mull Petrobras plans for northern facilitiesUnigel could evaluate plans set out by Petrobras for the fertilizers plants in the northern states of Bahia and Sergipe which were leased to the Brazilian chemicals producer until this month, a spokesperson for Unigel said to ICIS. INSIGHT: Mexico’s automotive tariffs raise specter of recession, rest of LatAm more resilientMexico remains the potential largest victim of the change in US trade policy, but practically no country in the world would be spared from an impact, analysts said this week. INSIGHT: Brazil’s Lula visit to China bears fruit with multi-billion dealsBrazilian President Luiz Inacio Lula da Silva had already got several investment deals in the bag midway through his five-day state visit to China – among others, Envision Group has committed $1.0 billion in Latin America’s largest economy to produce sugarcane-based sustainable aviation fuel (SAF). MOVES: Mexico’s trade group ANIQ appoints Jose Carlos Pons as presidentMexico's chemicals trade group ANIQ has appointed Jose Carlos Pons as president for the 2025-2027 term amid intensifying pressures from trade disputes with the US and broader regional challenges. Mexico’s chemicals Q1 output down 1.4% amid wider industrial fallsMexico’s chemicals output fell by 1.4% in the first quarter (Q1), year on year, but production of plastics and rubbers rose healthily, the country’s statistical office Inegi said. Argentina’s fall in inflation further boosts Milei’s cause, but sustained success harder to come byArgentina’s annual rate of inflation fell further in April to 47.3%, down from 56% in March, according to the country’s statistical office Indec, in another boost to President Javier Milei drastic economic measures. IFA '25: Brazil Potash pushes to 'lock-in funding this year'Muriate of potash (MOP) mine developer Brazil Potash continues its pursuit of investors at the International Fertilizer Association (IFA) annual conference in Monte Carlo. Colombia’s fiscal woes to grow on lower crude prices, hit Petro’s pre-election spending plansPotentially lower crude oil prices in coming months will dent Colombia’s Treasury ability to collect proceeds from the key income-generator sector, which is dominated by state-owned Ecopetrol.  PRICINGLatAm PP domestic, international prices unchanged on sufficient supply, stable to soft demandDomestic and international polypropylene (PP) prices were unchanged this week across Latin American countries. LatAm PE domestic, international prices steady on stable demand, ample supplyDomestic and international polyethylene (PE) prices were assessed as steady this week across the region. LatAm PE domestic prices fall on the back of competitive imports from the USDomestic polyethylene (PE) prices fell across Latin American countries on the back of competitive offers from the US. LatAm PP domestic prices steady to lower on cheaper imports and feedstocksDomestic polypropylene (PP) prices were assessed as steady to lower across Latin American countries on the back of lower feedstock costs and competitive offers from abroad.

19-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

BANGKOK (ICIS)–The US tariff policies and other economic headwinds present significant challenges for chemical exporters in the Gulf Cooperation Council (GCC) region. Nevertheless, opportunities and avenues for cooperation exist, especially with Asia, according to the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA). "Navigating the complexities of global trade is a top priority," Abdulwahab Al Sadoun told ICIS on the sidelines of the Asia Petrochemical Industry Conference (APIC) 2025. The GCC region comprises six Middle Eastern countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). The GPCA plays a pivotal role in facilitating partnerships between companies in both the GCC region and China, a strategy that has gained momentum in recent years, Al Sadoun said. "We estimate that GCC chemical producers hold equity in joint ventures processing approximately 2.7 million barrels/day of crude and operating over 23 million tonnes per year of downstream petrochemical capacity across China, South Korea, Malaysia and Singapore," said Al Sadoun. While US tariff policies present significant challenges for GCC chemical exporters, Al Sadoun sees opportunities amid the turbulence. “Even a baseline 10% tariff will raise the price of GCC chemical products in the US market,” Al Sadoun said, citing a paper published by GPCA that highlighted the potential effects of US President Donald Trump’s tariffs. Some products that would be particularly affected are high-volume, price-sensitive exports such as urea, paraxylene (PX) and polyethylene terephthalate (PET). However, Asia’s dominance as a trading partner offers a silver lining. “Asia accounted for over half of our total exports in 2023," Al Sadoun said, with China, India and Turkey among key markets. "If China reduces imports from the US, the GCC can step in to fill that gap, provided we act swiftly to capture market share and diversify our trade partners,” said Al Sadoun. Asia also accounts for well over half of global plastics consumption, with more than 50% of all GCC chemical exports already flowing to Asia, Al Sadoun added. “Recent joint ventures, such as Aramco’s partnerships at Panjin and Gulei in China, both designed around crude‑to‑chemicals schemes that convert more than 50% of each barrel directly into petrochemical feedstock, demonstrate how upstream strength can be paired with local finishing capacity,” Al Sadoun said. GCC CHEM PRODUCERS HAVE COMPETITIVE EDGEAmid falling oil prices in 2025, Al Sadoun believes chemical producers in the Gulf still hold an advantage over competitors reliant on naphtha. “While crude oil prices may be falling, the Arabian Gulf’s gas-based model still gives chemical producers a clear cost edge over their naphtha-reliant competitors.” At the same time, he emphasized the importance of continuing to optimize energy use and focus on higher-value projects. Companies are channeling investments into specialty elastomers, crude-to-chemicals complexes and downstream sectors such as mobility, packaging and electric vehicle (EV) materials, Al Sadoun said. “With plant utilization in the Arabian Gulf running in the 90% range – far above most global peers – the region is well placed to ride out softer oil, provided it keeps lowering variable costs and broadening its product slate. “GPCA’s role is to benchmark those cost and efficiency gains across its membership and ensure best practice spreads quickly from one site to the entire Gulf cluster.” SUPPLY CHAIN RESILIENCE A KEY FOCUSSupply chain resilience has emerged as a critical focus for Arabian Gulf chemical producers. “Recent shocks, such as geopolitical flare-ups, pandemic-era port closures, even weather-driven canal disruptions, have confirmed that leading companies cannot simply react; they must anticipate, adapt and seize the openings that turbulence creates,” Al Sadoun said. Al Sadoun pointed out four lessons: the first, route flexibility; the second, the need for end-to-end visibility; third, the need for regional buffer stocks such as joint warehouses in key import markets; and lastly, digital risk forecasting. The use of tools such as artificial intelligence (AI), blockchain and the Internet of Things (IoT) are moving supply chain management from reactive to predictive, while diversified sourcing and strategic inventories reduce single region dependency, Al Sadoun said. FOCUS ON RENEWABLES Even as the GCC region continues to leverage its cost advantage through gas, its member countries are also committed to energy transition. “GCC nations aim to source 25-50% of their energy mix from renewables by 2030,” Al Sadoun said, adding that the region is also investing heavily in carbon capture, utilization and storage (CCUS), currently capturing 4.4 million tonnes of CO2 annually – 10% of the global CCUS capacity. Hydrogen production is another priority, with Oman, the UAE and Saudi Arabia setting ambitious targets. Oman has committed to producing 1 million tonnes of hydrogen by 2030, the UAE to 1.4 million tonnes of hydrogen by 2031 and Saudi Arabia aims for 4 million tonnes of hydrogen by 2030. "These initiatives are part of our strategy to reduce environmental impact while maintaining our competitive edge," Al Sadoun emphasized. APIC 2025 runs in Bangkok, Thailand, from 15-16 May. Interview article by Jonathan Yee (recasts paragraphs 1 and 7 for clarity)

16-May-2025

HOUSTON (ICIS)–US importers rushed to book space on container ships out of China after the two countries agreed to a 90-day pause on reciprocal tariffs, according to data from shipping analyst Vizion. Ben Tracy, vice president of strategic business development at Vizion, said in a LinkedIn post that the rolling seven-day average for bookings from China to the US jumped to 21,530 TEUs (20-foot equivalent units) this week from 5,709 TEUs last week, an increase of 277%. “We are definitely starting to see the bookings return now that this temporary pause is in effect,” Tracy said. Ryan Petersen, CEO of US logistics platform provider Flexport, said in a social media post on Tuesday that ocean freight bookings from China to the US jumped by 35% on the first day since the pause. “A big backlog is looming,” Petersen said. “Soon the ships will be sold out.” The surge in traffic along the trade lane immediately contributed to a rise in spot rates, as was expected. Lars Jensen, president of consultant Vespucci Maritime, said this week that many carriers had already announced GRIs (general rate increases) for the Pacific trade before US President Donald Trump announced the ceasefire in the trade war. “This is not because the carriers were able to forecast this exact development, but rather because the carriers are in the habit of pre-emptively announcing GRIs,” Jensen said. “If market conditions are then strong, these might stick, otherwise they go unnoticed.” Rates for shipping containers are already showing increases week on week. Rates from online freight shipping marketplace and platform provider Freightos showed minimal increases earlier this week, but rates from supply chain advisors Drewry on Thursday showed significant increases of 19% from Shanghai to New York and 16% from Shanghai to Los Angeles. Arrivals at the West Coast ports of Los Angeles and Long Beach were slowing while the reciprocal tariffs were in place, but the ports saw record volumes in March and April as importers pulled forward volumes before the tariffs went into effect. May volumes are expected to be down by as much as 10%, according to officials at the Port of Long Beach. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

15-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)–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

BANGKOK (ICIS)–External factors continue to pressure Thailand’s petrochemical industry, driven by new capacity additions from low-cost producers, particularly those in the Middle East, according to a report by the Federation of Thai Industries, Petrochemical Industry Club (FTIPC). Global PE, PP, PX oversupply weigh on Thai industry Trade tensions threaten Thailand export growth Proposed US tariff hikes could disrupt supply chains Despite these obstacles, the industry is on a gradual recovery path, driven by increasing demand in key sectors such as food packaging, pharmaceuticals, and electronics, the FTIPC said in a report released for the Asia Petrochemical Industry Conference (APIC) 2025. The two-day conference in Bangkok, Thailand, ends on 16 May. However, domestic consumption remains under pressure due to high household debt levels, which could impact the demand for durable goods and related petrochemical products. Here is a summary of the FTIPC’s outlook for petrochemical products produced in Thailand this year: Southeast Asia's second-largest economy expanded in 2024 by 2.5%, accelerating from the 2.0% growth in 2023. Household consumption growth over the period slowed to 4.4% from 6.9% in 2023. The Bank of Thailand in March said that it expects Thailand's economy to grow just above 2.5% in 2025, falling short of earlier projections, as high household debt and structural challenges in manufacturing continue to hinder an uneven recovery. While signs of recovery are evident, the industry still grapples with significant challenges, particularly global oversupply in polyethylene (PE), polypropylene (PP), and paraxylene (PX), the FTIPC said. “This oversupply continues to strain profit margins,” it said. Additionally, geopolitical tensions, trade restrictions, and economic slowdowns in major export markets such as China and Europe pose further risks to growth. Thailand is currently facing a 36% tariff on its exports to the US, with a temporary pause on these tariffs set to expire in July. “The United States has raised concerns among Thai industries, particularly those heavily dependent on exports, by proposing tariff increases,” FIPTC said. “If implemented, these tariff hikes could disrupt supply chains, elevate production costs, and pose significant challenges for Thai exporters,” it added. “Higher import duties may reduce competitiveness and profitability, forcing businesses to reassess their market strategies and cost structures,” it said. Looking ahead, Thailand’s petrochemical sector must navigate a volatile global market while capitalizing on domestic demand growth. Strategic investments in feedstock diversification, sustainability, and advanced manufacturing are crucial for the sector’s success. “To remain competitive, industry leaders will need to focus on cost optimization, innovation, and regional collaboration to strengthen their market position and drive long-term growth,” the FTIPC said. Furthermore, Thailand’s PTT Global Chemical (PTTGC) is set to become the country’s first chemical producer to integrate US-imported ethane as an alternative feedstock. Under the agreement, PTTGC will secure an annual supply of 400,000 tons of ethane to meet growing market demand in a highly competitive environment. The company expects to begin receiving imported ethane in 2029. PTTGC has entered into long-term agreements with key partners, including Very Large Ethane Carriers (VLECs) service agreements with parent firm PTT Public Co (PTT) and Malaysia’s liquefied gas transportation firm MISC. Additionally, PTTGC has signed a long-term terminal service agreement with Thai Tank Terminal C (TTT) to facilitate the delivery and storage of ethane at the Map Ta Phut Terminal in Rayong. Meanwhile, the Thai plastics industry is facing growing competition from finished goods imported from China and competitive supplies from the Middle East. This influx of lower-cost products is intensifying market pressure, potentially affecting domestic manufacturers in Thailand. Moreover, China's oversupply across sectors like EVs, electronics, and plastics has impacted manufacturing in Southeast Asia, including Thailand. Thailand’s overall polymer consumption has seen a slight increase last year. However, Thai converters are facing significant challenges from geopolitical uncertainties, a global economic slowdown, and high inflation rates, exacerbated by a rise in major polymer imports from China and the Middle East. Insight article by Nurluqman Suratman Thumbnail image: At the Thai-Chinese Rayong Industrial Zone, located at the east coast of Thailand on 29 December 2021. (Xinhua/Shutterstock)

15-May-2025

BANGKOK (ICIS)–Tough times lie ahead for the Asia’s petrochemical industry amid continued oversupply and a global economic downturn because of US tariffs, but a pivot to sustainable products can help. US-China trade war threatens industries Oversupply, weak demand signal prolonged downturn; plant closures loom Energy transition offers feedstock opportunities Global megatrends, including geopolitics, energy transition, and sustainability are fundamentally reshaping petrochemical demand patterns and the entire industry. The US-China trade war de-escalated this week as both sides agreed to bring down tariffs on each other significantly by 14 May. An all-out trade war between the US and China, the world’s two-biggest economies, could trigger a global recession. There is also a possibility that amid high trade tensions with the US, China could flood the global market with excess products, which may prompt building of trade barriers by other countries After striking an initial agreement to bring down tariffs from more than 100%, the US and China are expected to continue with trade negotiations. In the meantime, uncertainty is dominating markets, leading to soft demand. DIFFICULTIES The petrochemical industry is facing significant challenges, including oversupply, cost volatility, and regulatory shifts, ICIS Chemical Analytics vice president Alexander Lidback said. Amid persistently low demand, firms are shutting plants around the world, notably in Europe, and without significant shutdowns, polyolefin oversupply could persist into the mid-2030s, forcing companies into survival mode. The industry will need to "go through worse to get better", with 2027/2028 being a potential turning point for survival, Lidback said. China's increased capacity, which was "underestimated", is also a contributing factor to oversupply, and global polyolefins capacity significantly exceeds demand currently, ICIS senior consultant John Richardson said. Adaptation through plastics circularity and innovation could be a way for companies to survive, although this also presents its own difficulties, said Bala Ramani, director of sustainability consulting and Asia strategy advisor at ICIS. All three will be speaking at the Asia Petrochemical Industry Conference (APIC) in Bangkok, Thailand on 15-16 May, discussing market challenges and opportunities in the sector. The theme for APIC 2025 is "Ensuring a Transformed World Prosperity”, with a particular focus on “Action for Planet with Innovation and Collaboration”. CIRCULARITY There is a need amid the current demand downturn to adapt to the changing landscape -one of which is by exploring plastics circularity and alternative feedstocks. Sustainable polyolefins present as “interesting opportunity”, especially for integrated polyolefins producers to leverage existing assets for driving incremental value, Ramani said. “By embracing a multi-faceted production model, the polyolefins industry can reduce its environmental footprint, meet evolving regulatory demands, and unlock new value streams in a resource-constrained world,” said Ramani. The path towards circularity sustainability for polyolefins involves several approaches: mechanical recycling, circular polyolefins derived from pyrolysis oil, and bio-circular polyolefins derived from bio-naphtha or other hydrogenated bio-derived oil. Pyrolysis is expected to become a complementary solution alongside mechanical recycling in tackling plastic pollution. In turn, polyolefins producers can maximize the value of pyrolysis oil integration by strategically aligning feedstock procurement, technology, and processing configurations, Ramani said. Europe leads with robust regulations and collaboration, eyeing over 13 million tonnes of sustainable polyolefins by 2040. Asia, however, lags, stymied by fragmented policies despite interest for sustainable polyolefins from markets such as India, Japan and South Korea. “In Asia, early adoption by a few markets and global brands, combined with evolving yet fragmented policies, is building momentum and opportunities, with future growth hinging on regulatory alignment and infrastructure development,” Ramani said. Regulatory fragmentation among Asian countries compared with EU regulatory mandates makes sustainable polyolefins market tricky to scale. South Korea and Japan are paving the way for sustainable polyolefins demand, although Asian investments are likely to target developed markets such as the EU, before pivoting to local and regional markets in the long term. Were EU recycled content targets to be adopted in Asia, the region could unlock over 18 million tonnes of sustainable polyolefins demand by 2040. But while alternative feedstocks and sustainable polyolefins offer opportunities for producers, their widespread adoption faces other hurdles including regulatory uncertainty, high costs, technology scalability and insufficient waste infrastructure. “Amid ongoing industry challenges, sustainable polyolefins are set to drive resilience through resource efficiency, regulatory compliance, and new value creation enabled by circular production models,” Ramani said. Insight article by Jonathan Yee Click here to view the ICIS Recycled Plastics Focus topic page.  Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Thumbnail image: Panorama from Golden Mount, skyline of Bangkok, Thailand, (By Walter G Allgöwer/imageBROKER/Shutterstock)

14-May-2025

TORONTO (ICIS)–The government of Canada’s oil-rich Alberta is freezing the province's industrial carbon price at Canadian dollar (C$) 95/tonne ($68/tonne). The decision to freeze the price indefinitely was in response to the US tariffs, which were increasing costs, disrupting supply chains and creating uncertainty for industry, making it challenging to operate efficiently and stay globally competitive, the government said. The freeze would provide certainty and economic relief to companies in oil and gas, electricity, petrochemical, manufacturing, cement, pulp and paper, mining, and forestry, Premier (Governor) Danielle Smith and environment minister Rebecca Schulz said in a webcast press conference on Monday. Smith said that Canada could not get too far ahead of the US in terms of climate policies, otherwise “billions of dollars of investments” would go to the US, instead of Canada. Schulz added that a price above C$100/tonne would make Alberta “wildly uncompetitive.” The price had been scheduled to rise to C$110/tonne in 2026 and continue increasing to C$170/tonne by 2030 – in line with Canada’s federal industrial carbon pricing system, which sets minimum standards. Smith and Schulz said that the government would talk to companies that have been making investments in Alberta, based on industrial carbon pricing. Schulz added that she had already reached out to Dow, NOVA Chemicals and others to “signal” the government’s new direction, given that “it is a very different time that we are in right now.” “It is unfair to artificially increase a carbon tax to benefit a small amount of projects and then leave the entire rest of industry in a position where they are uncompetitive,” she said. “We can’t make the entirety of industry uncompetitive to save one specific project,” she added. Dow announced last month that it is delaying its flagship Canada Path2Zero net zero carbon cracker and downstream polyethylene (PE) project at Fort Saskatchewan, Alberta, until market conditions improve and would not likely revisit it until the end of this year. Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing as a tool to encourage companies to reduce emissions in a cost-effective way. However, the trade group has suggested that in light of the ongoing trade and tariff tensions, Canada may want to review its industrial carbon pricing rules. In related news, Alberta's neighboring Saskatchewan province paused its industrial pricing system, effective 1 April. ($1 = C$1.40) Additional reporting by Joseph Chang Please also visit US tariffs, policy – impact on chemicals and energy Thumbnail photo source: Dow

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