Pricing

HOUSTON (ICIS)–Asia-US rates for shipping containers rose this week, leading ocean carriers to rush to ramp up capacity to handle an expected surge in bookings. Rates from online freight shipping marketplace and platform provider Freightos rose by 3% to both US coasts, while rates from supply chain advisors Drewry showed a 2% increase on rates from Shanghai to Los Angeles and a 4% rise in rates from Shanghai to New York, as shown in the following chart. Following the latest US-China trade developments, Drewry expects an increase in spot rates in the coming week as carriers are reorganizing their capacity to accommodate a higher volume of cargo bookings from China. Kyle Beaulieu senior director, head of ocean Americas at Flexport, said during a webinar this week that carriers who initiated blank sailings and discontinued services to the US are now resuming services. Beaulieu said there were 10 China-US services that were halted, and as of today, six are planning to resume from Week 22 to Week 24. Beaulieu said ports in the Pacific Northwest have been the biggest beneficiaries so far as that is the shortest route to the US. Alan Murphy, CEO, Sea-Intelligence, said carriers who were reducing transpacific capacity due to the decrease in bookings from China amid 145% tariffs are now working to ramp up capacity prior to the 14 August deadline. This means that typical peak season volumes now must be shipped no later than mid-July. Judah Levine, head of research at Freightos, said there is still confusion on whether July and August deadlines mean goods need to be loaded at origins by those dates – as was the case with the 9 April tariff deadline – or that goods must arrive in the US by then. “The latter would significantly shorten these lower-tariff windows,” Levine said. “Ocean shipments from Asia would have to move in the next week or two to arrive before 9 July.” Levine noted that carriers have separately come out with mid-month general rate increases (GRIs) from $1,000-3,000/FEU (40-foot equivalent unit) and have similar GRIs planned for 1 June and 15 June with aims to get rates up to $8,000/FEU. “If successful, rate levels would be about on par with the Asia – US West Coast 2024 high reached last July,” Levine said. “Daily transpacific rates as of Monday have already increased about $1,000/FEU to the East Coast and $400/FEU to the West Coast to about $4,400/FEU and $2,800/FEU, respectively.” 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. LIQUID TANKER RATES HOLD STEADY US liquid chemical tanker freight rates as assessed by ICIS held steady this week despite upward pressure for several trade lanes. There is upward pressure on rates along the US Gulf-Asia trade lane as charterers are seeking to send cargos to the region following the pause on tariffs. The announcement caused a significant uptick in spot activity. The increase in interest should be significant but almost certainly short lived as cargoes rush to arrive prior to the 90-day expiration date. Several parcels of monoethylene glycol (MEG) and methanol were seen quoted in the market. Similarly, rates from the USG to Rotterdam were steady this week, even as space among the regular carriers remains limited. Contract tonnage continues to prevail and given the limited available space; spot demand remains relatively good. Several larger sized cargos of styrene, methanol, MTBE and ethanol were seen in the market. Several outsiders have come on berth for both May and June, adding to the available tonnage for completion cargos. Easing demand for clean tankers has attracted those vessels to enter the chemical sector. For the USG to South America trade lane, rates remain steady with a few inquiries for methanol and ethanol widely viewed in the market. Overall, the market was relatively quiet with fewer contract of affreightment (COA) nominations, putting downward pressure on rates as more space has become available. On the bunker side, fuel prices have declined as well, on the back of lower energy prices, as a result week over week were softer. 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

23-May-2025

SAO PAULO (ICIS)–Braskem’s stock rose sharply in Friday trading after reports citing unnamed sources said Brazilian entrepreneur Nelson Tanure would be seeking to acquire Novonor’s controlling stake at the petrochemicals major. At some point, Braskem’s share rose nearly 10% on Friday, taking the whole Ibovespa stock index in Sao Paulo higher. By afternoon trading, however, the stock had moderated the gain although it was still rising nearly 6%, compared with the previous close on 22 May. The offer was first reported by Brazilian daily O Globo, with financial daily Valor Economico and news agency Reuters subsequently also publishing reports confirming the bid, citing also unnamed sources. According to those sources, Tanure would be intending to indirectly assume control previously held by Novonor (called formerly Odebrecht) through one of his investment funds. The proposal includes maintaining Novonor in the shareholding structure with a minority stake of 3%-5%, signaling a gradual transition strategy. Novonor currently holds 50.1% of Braskem's voting shares, while Brazil’s state-owned energy major Petrobras controls 47%. However, the transaction depends on negotiations with Novonor’s creditor banks – Bradesco, Itaú, Banco do Brasil, Santander, and Brazil’s investment bank BNDES – which hold Braskem shares as collateral for debt estimated at Brazilian reais (R) 15 billion ($2.65 billion). These banks currently control 50.1% of Braskem's common shares, representing 38.3% of total capital. Any control change must also consider Petrobras' position as the second-largest shareholder with significant strategic influence. In a written response to ICIS, Braskem said it would not comment. Novonor and Petrobras had not responded to a request for comment at the time of writing. Braskem's financial metrics have been suffering for several quarter due to the global petrochemicals oversupply and low prices, which have hit hard some of the company's key products such polyethylene (PE), polypropylene (PP), or polyvinyl chloride (PVC). Earlier in May, however, it said it had swung to a net profit during Q1 2025, compared to a net loss in the same quarter a year earlier. Its sales and earnings, however, continued shrinking during Q1 in the year-on-year comparison. 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% WHO IS TANURE While it has been elusive for most media outlets to put a figure on Nelson Tanure’s fortune – even the well-known Forbes magazine has not put a figure on it and has not included him in its Rich List – the entrepreneur is considered one of Brazil’s richest men. His businesses span in a wide range of sectors such energy (mostly electric utilities), civil construction through its firm Gafisa; oil and gas through PetroRio and investments in the exploration of natural resources; telecommunications, with participations in operators Oi and TIM Brasil; and healthcare, with Alliance Health and diagnostic laboratories, among others. UNSUCCESSFUL DISPOSAL SO FARNovonor has attempted to sell its Braskem stake for years without conclusion. Previous interested parties included Abu Dhabi’s energy major Adnoc, Saudi Arabia’s SABIC – now part of oil major Aramco – and Brazilian conglomerate J&F, owned by the Batista brothers. J&F reportedly offered R10 billion for Novonor's stake, but neither this nor the other transactions materialized. Novonor suffers from high leverage since the 2010s, when the company was at the center of the large, Latin America-wide corruption scandal known as Lava Jato in the mid-2010s. The scandal also engulfed personalities from the first administration of the Workers Party (PT), the party of President Luiz Inacio Lula da Silva, now back in power again and at the time led by him and his successor Dilma Rousseff. ($1 = R5.67)

23-May-2025

LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: High bale costs across Europe still major concern for recyclers Margins are squeezed as flake, pellet price talks continue Cost-conscious buyers battle with high R-PET costs compared to PET Cheaper R-PET imports also still offered into Europe

23-May-2025

LONDON (ICIS)–US President Donald Trump has warned of plans to impose a  50% tariff on imports from the EU starting on 1 June. In a post on the Truth Social platform, which is owned by Trump, on Friday, the US President said negotiations with the EU “were going nowhere” and said the bloc “has been very difficult to deal with”. “Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the US of more than $250,000,000 a year, a number which is totally unacceptable,” the post on social media read. Trump went on to stipulate that no tariff would be applied if the product was built or manufactured in the US, but did not clarify how this would pertain to raw materials higher up the value chain. As a net importer, the repercussions for the European chemicals industry may be cushioned from direct tariffs, although this could have more of an impact for certain products like benzene or paraxylene (PX). The EU has declined to respond to the latest announcement. On 9 May, the EU launched a public consultation to determine which US products should be subject to levies, including many chemicals and plastics. The consultation is scheduled to remain open until 10 June, as the EU Commission also consults on restricting certain EU steel scrap and chemical products worth €4.4bn to the US. A 50% duty is an escalation from the previous 20% tariff announced by President Trump on 2 April, when levies of varying degrees were applied to most international trading partners, including a 10% baseline rate for the majority of countries. Tensions between the US and EU eased after a 90-day pause was agreed in early April to allow time for discussions to pave the way for a deal palatable to both parties. Since the initial announcement, the US secured a deal with the UK, with a 10% tariff for auto parts (down from 27.5%), keeping the previously announced baseline 10% rate in place. In exchange, the US will have increased access to UK chemicals, ethanol, and beef markets. The US also agreed a 90-day pause with China on 12 May, allowing Chinese imports to the US to be subject to a 30% tax instead of the 145% tariff, with US goods to China held at a 10% rate instead of 125%. thumbnail photo source: Shutterstock

23-May-2025

UK energy price cap for July-September set at £1,720 for an average household This has risen £152 year on year, but is £129 lower than the Q2 cap Forward prices for Q4 ‘25 at premium to Q3 ‘25 anticipating higher winter demand By Anna Coulson and Ethan Tillcock LONDON (ICIS) –The UK energy price cap for July-September will be higher than the third quarter of 2024, energy regulator Ofgem said on 23 May, but will fall compared to the price cap in the second quarter of 2025. Ofgem stated that the recent fall in wholesale prices is the main driver of the overall price cap reduction, accounting for around 90% of the fall, with the remainder primarily due to changes to operating cost allowances suppliers can recover. If forward prices for delivery in the fourth quarter of 2025 remain at current levels, the wholesale component of the cap for the period October-December is expected to be higher than the third quarter. RISING PRICES ICIS assessed the British NBP gas Q3 ‘25 contract at an average of 94.400p/th from 18 February to 16 May, which was the period used by Ofgem to calculate wholesale energy costs for the upcoming cap. This is 35% higher than the Q3 ’24 contract average over equivalent dates in the previous year. Several factors are likely to have contributed to elevated wholesale gas prices. The end of Russian gas transit via Ukraine cut around 15.5bcm/year of remaining supply to Europe at the start of the 2025. European gas reserves finished the winter withdrawal season down significantly year on year, increasing forecast summer injection demand annually. This supported British hub prices as higher prices on the continent drive exports via the BBL and Interconnector pipelines. Investment funds amassed large net long positions in European gas futures amid speculation of a tight summer injection market. Hub prices declined towards the end of the period, trading lower on US tariffs driving global demand reduction forecasts, and the EU easing storage regulations, reducing expected summer injection demand. Gas is a key price driver for the UK power market due to its role in power generation, with power prices tracking the upward trend in NBP prices. ICIS assessed the UK power baseload Q3 ‘25 contract at an average £80.64/MWh between 18 February and 16 May, 25% higher than the Q3 ‘24 over equivalent dates. The Q3 ’25 UK power contract is at a premium to the European equivalents, indicating that the UK is likely to import power through the front quarter. Q4 CAP OUTLOOK On 22 May, ICIS assessed the NBP Q4 ‘25 contract at 94.525p/th, 7.950p/th above the Q3 ‘25 contract. On the same day, the UK power baseload Q4 ‘25 contract was £87.00/MWh, £6.85/MWh above the corresponding Q3 ’25 contract. European gas markets continue to exhibit sensitivity to multiple regulatory and geopolitical drivers. US tariffs are likely bearish for global demand due to stifling economic growth; however, de-escalation may continue in the coming months. Reduced gas storage targets at the EU level may push increased risk across the region from the injection season into Winter ’25 delivery. Entering the fourth quarter, cold weather and low wind generation present risks as this would increase heating and gas-for-power demand, with several periods of dunkelflaute in the previous winter causing demand surges. French nuclear availability is another key driver for UK power prices through the fourth quarter. ICIS assessed the UK power baseload Q4 ’25 contract at €102.41/MWh on 22 May, €25.61/MWh above the French contract, indicating that the UK is likely to import power from France. Data from EDF on 22 May shows that French nuclear availability is scheduled to average 57.1GW from 1 October to 31 December, 15.1GW above the 2020-24 average amid the recent commissioning of the 1.6GW Flamanville 3 plant. However, downward revisions in French nuclear availability through the fourth quarter of 2025 would be a bullish driver for French and UK power prices BACKGROUND Introduced in January 2019, the price cap sets the maximum price that energy suppliers can charge end-users for each unit of energy. .

23-May-2025

SINGAPORE (ICIS)–Malaysia-based LOTTE Chemical Titan (LCT) has signed a three-year naphtha sales contract with Saudi Aramco, according to the company in a bourse statement. The naphtha, estimated at between 300,000-400,000 tonnes/year, will be supplied by Aramco’s unit in Singapore, said LCT on Friday. “Aramco is a major feedstock supplier of naphtha … and has been our long-term supplier,” the company said. The contract will run from July 2025 to June 2028, while the pricing will be based on the market price. LCT operates 12 plants across two sites in Malaysia and holds a 40% share in LOTTE Chemical USA Corp. It has three polyethylene plants in Indonesia through PT LOTTE Chemical Titan Nusantara. LCT is a subsidiary of South Korean major LOTTE Chemical Corp under the LOTTE Group.

23-May-2025

SAO PAULO (ICIS)–Brazil’s state-owned energy major Petrobras and chemicals producer Unigel have finally signed an agreement to end contractual disputes related to the two fertilizers plants in the country’s north which had been leased to Unigel. Late on 22 May, the companies said the two fertilizers plants in the states of Bahia and Sergipe (northeast) would thus return to Petrobras’ portfolio. The agreement must still be ratified by Brazil’s Arbitral Tribunal. “The agreement provides for the reinstatement of Petrobras' possession of the fertilizer plants (FAFENs) in Bahia and Sergipe, and the resumption of operations by Petrobras through a bidding process for the contracting of operation and maintenance services, in compliance with applicable governance practices and internal procedures,” said Petrobras. “Petrobras aims to resume activities in the fertilizer segment to create value through the production and commercialization of nitrogen-based products, while aligning with the oil and natural gas production chain and the energy transition.” Meanwhile, Unigel said the agreement represented the “definitive resolution of the contractual disputes” and litigation existing between the companies due to disagreements about the lease for the two plants. The deal represents the withdrawal of the company from the fertilizers sector altogether. The Camacari plant in Bahia state can produce 475,000 tonnes/year of ammonia and 475,000 tonnes/year of urea. The plant in Laranjeiras, Sergipe, can produce 650,000 tonnes/year of urea, 450,000 tonnes/year of ammonia and 320,000 tonnes/year of ammonium sulphate (AS). FAILED FERTILIZERS ADVENTURE The agreement puts an end to the 10-year lease for the plants signed by Unigel and Petrobras in 2019. While successful at first, as fertilizers prices shot up immediately after the first wave of the COVID-19 pandemic, prices started to fall in 2022 though while prices for natural gas rose sharply. In 2024, Unigel idled the two plants as high prices for gas and low selling prices made operations unprofitable, it said. Along the way, Petrobras accused Unigel of not fulfilling the terms and conditions of what they had agreed. Moreover, from 2022, woes at Unigel’s petrochemicals divisions – mostly producing styrenics – added to those in fertilizers. By the end of 2023, the company was forced to enter a debt restructuring process from which it only emerged in 2024. Earlier in May, Unigel presented its first comprehensive quarterly financial metrics since 2023, when it entered the restructuring process. Brazil’s financial regulations provide for such a provision for companies in financial distress. While it posted small earnings before interest, taxes, depreciation, and amortization (EBITDA), the producer continued haemorrhaging money in the first quarter, with sales falling year on year and posting a net loss of Brazilian reais (R) 209 million ($37 million). ($1 = R5.71)

23-May-2025

SINGAPORE (ICIS)–Japan's core consumer price index (CPI) rose by 3.5% year on year in April, raising pressure on the central bank to continue raising interest rates, official data showed on Friday. Headline inflation, which includes all items, climbed by 3.6% year on year in April, steadying from a month ago. The Bank of Japan's (BOJ) preferred measure of inflation, which excludes fresh food and fuel, rose 3.0% year on year in April, above the 2.9% gain recorded in March. Japan's inflation has remained above the central bank's 2% target since April 2022, prompting policymakers to gradually increase interest rates. In January, the BOJ raised its short-term interest rate to 0.5% from 0.25%, a sign of growing confidence in achieving its inflation target sustainably. While the BOJ has indicated further rate hikes are likely, it must also weigh external pressures such as potential impacts from US tariffs against ongoing domestic price increases, particularly in food.

23-May-2025

HOUSTON (ICIS)–US trucking activity edged lower in April as the industry has yet to experience a recovery as it deals with tariff uncertainty and softening economic indicators, according to the American Trucking Associations (ATA) seasonally adjusted For-Hire Truck Tonnage Index. The index fell by 0.3% in April after contracting by 1.5% in March, as shown in the following chart. Source: American Trucking Associations ATA chief economist Bob Costello said the index has fallen for two consecutive months after surging in February to its highest since May 2024. “Unfortunately, a recovery that was expected this year hasn’t transpired as the industry deals with a freight market in flux from tariffs and softening economic indicators,” Costello said. The not seasonally adjusted index, which calculates raw changes in tonnage hauled, equaled 112.0 in April, 2.2% below March’s reading of 114.6. Both indices are dominated by contract freight, as opposed to traditional spot market freight. RATES EDGE HIGHER ON ROADCHECK WEEK Broker-posted spot rates in the FTR Transportation Intelligence Truckstop system for dry van and refrigerated equipment soared during the week ended 16 May (week 19) due to the annual International Roadcheck roadside inspection event, which was held 13-15 May. FTR’s Trucking Conditions Index reading for March improved to a positive 0.28 reading from -0.21 in February, as shown in the following chart. Avery Vise, FTR’s vice president of trucking, said more volatility is expected in the near term. “After a strong first quarter in freight volume – at least partially due to a pull-forward of imports in advance of tariffs – we expect more volatility in the months ahead as shippers respond to US trade policy shifts,” Vise said. “The recent short-term agreement between the US and China greatly reduces the potential near-term hit to freight volumes, but we still expect uncertainty and higher costs for consumers to be drags on the economy and freight,” Vise said. WHITE HOUSE ORDER COULD REDUCE DRIVERS Vise said a wild card that market participants are watching is whether renewed scrutiny concerning truck drivers’ English language skills and non-domicile commercial driver’s licenses (CDLs) will affect the driver supply significantly. US President Donald Trump signed an executive order recently aimed at, “ensuring anyone behind the wheel of a commercial vehicle is properly qualified and proficient in English”. ATA Senior Vice President of Regulatory & Safety Policy Dan Horvath said the executive order responds to its concerns on the uneven application of this existing regulation and looks forward to working with regulators on an enforcement standard. A distributor in the US chemical markets said it has not seen any disruptions in its trucking operations and suggested enforcement could be difficult. Trump’s order reversed a 2016 policy that said commercial vehicle drivers should not be placed out-of-service for English language proficiency (ELP) violations. The Commercial Vehicle Safety Alliance (CVSA), a nonprofit organization comprised of local, state, provincial, territorial and federal commercial motor vehicle safety officials and industry representatives, issued updated guidance this week that ELP violations will be out-of-service offenses again beginning 25 June.

22-May-2025

HOUSTON (ICIS)–Chemical plants along the US Gulf Coast will face another active hurricane season, but any potential disruptions will be partially if not entirely offset by excess global capacity and weaker demand growth. Meteorologists expect up to 10 hurricanes in the Atlantic basin during this year's hurricane season, which starts in June and lasts through November The global supply glut of plastics and chemicals will continue in 2025 and beyond Global plastic and chemical demand will weaken because of tariffs and a prolonged manufacturing downturn BUSY HURRICANE SEASONMeteorologists expect a busy hurricane season as shown in the following table: AccuWeather CSU US 30-Year Average Hurricanes 7-10 9 6-10 7 Major hurricanes 3-5 4 3-5 3 TOTAL 13-18 17 13-19 14 *Major hurricanes have wind speeds of at least 111 miles/hour (178 km/hour) Sources: AccuWeather, Colorado State University (CSU), US National Oceanic and Atmospheric Administration (NOAA) Hurricanes directly affect the chemical industry because plants and refineries shut down in preparation for the storms, and they sometimes remain down because of damage. Power outages can last for days or weeks. Hurricanes shut down ports, railroads and highways, which can prevent operating plants from receiving feedstock or shipping out products. Most US petrochemical plants and refineries are on the Gulf Coast states of Texas and Louisiana, making them prone to hurricanes. Other plants and refineries are scattered farther east in the states of Mississippi, Alabama and Florida, a peninsula that is also a hub for phosphate production and fertilizer logistics. Hurricanes can shut down LNG terminals, most of which are concentrated along the Gulf Coast. If the outages last long enough, it can cause a local glut of natural gas and a decline in prices. US prices for ethane tend to rise and fall with those of natural gas, so a prolonged shutdown of LNG terminals would lower feedstock costs – especially if the hurricane also shuts down ethane crackers. Petrochemical plants outside of the US are becoming increasingly reliant on that country's exports of ethane, ethylene and liquefied petroleum gas (LPG), a feedstock for crackers and for propane dehydrogenation (PDH) units. Most of these terminals are on the Gulf Coast, leaving them vulnerable to disruptions caused by hurricanes. HOTTER SUMMER COULD REDUCE THROUGHPUT AT GAS PLANTSExtremely high temperatures can reduce the throughput of Texan natural gas processing plants, which extract ethane and other natural gas liquids (NGLs) from raw natural gas. Such reductions took place in 2024 during the peak summer months of August and September, when temperatures are typically at their highest in many parts of Texas. Texas has natural gas processing plants in the western and fractionation hubs in the eastern parts of the state. For both regions, summer temperatures should be 1-2°F higher than normal, according to AccuWeather, a meteorology firm. That amounts to 0.6-1.0°C higher. CHEM OVERCAPACITY GROWS BIGGERThe effect of any shutdowns of chemical plants will be blunted by excess global capacity. Companies have continued to start up new plants, despite the oversupply of plastics and chemicals. ICIS FORECASTS WEAKER 2025 DEMAND GROWTHAny disruptions to chemical production would take place amid weaker demand growth. ICIS forecasts that 2025 demand growth for most commodity plastics will slow from 2024 and remain well below levels in 2018 and earlier. The following chart ICIS past demand growth rates and forecasts for 2025. Source: ICIS Growth rates are slower in part due to uncertainty caused by US trade policy. ICIS expects global GDP to expand by 2.2% in 2025, down from 2.8% in 2024. Global manufacturing is expected to contract globally. The following breaks down forecasts for national purchasing managers' indices (PMI). Anything below 50 indicates contraction. Sources: Institute for Supply Management, S&P Global and JP Morgan RESUMPTION OF TARIFFS WOULD FURTHER WEAKEN DEMANDIn July, the US could resume imposing its higher reciprocal tariffs against much of the world, including the EU, following a 90-day pause announced in April. The EU is preparing a list of retaliatory tariffs that covers many US imports of commodity chemicals and plastics, including the following: Caustic soda Acetic Acid Vinyl acetate monomer (VAM) Polyethylene (PE) Polypropylene (PP) Polystyrene (PS) Acrylonitrile butadiene styrene (ABS) Polyvinyl chloride (PVC) Polyethylene terephthalate (PET) The US and EU may extend the pause or reach a trade agreement that would do away with the need for retaliatory tariffs. But if the two sides fail to reach an agreement, then the EU's retaliatory would likely reduce demand for US plastics and chemicals. Demand for US plastics and chemicals could take another hit in mid-August if the US and China resume triple-digit tariffs following their 90-day pause. The pause would expire right before hurricane season reaches its peak in the US. Insight article by Al Greenwood Thumbnail shows a hurricane. Image by NOAA.

22-May-2025