LONDON (ICIS)–Phosphates prices have been under pressure in India recently, while demand is expected to revive soon. Meanwhile, a lack of ammonia spot demand globally is weighing on the market. Phosphates editor Chris Vlachopoulos talks to senior editor Sylvia Traganida about the state of the phosphates market ahead of the International Fertilizer Association (IFA) annual conference (20-22 May).

SINGAPORE (ICIS)–US President Joe Biden is ramping up tariffs on $18 billion worth of imports from China, including electric vehicles (EVs), semiconductors, batteries and other goods, in a move that the White House said was a response to unfair trade practices and intended to protect US jobs. US tariffs on Chinese EVs to quadruple to 100% Targeted China products account for 4.2% of total US imports Near-term impact on China’s EV exports likely limited “Following an in-depth review by the United States Trade Representative, President Biden is taking action to protect American workers and American companies from China’s unfair trade practices,” the White House said in a statement on 14 May. In response, China’s Ministry of Commerce said that it “will take resolute measures to safeguards its own right and interests”. “The US should immediately correct its wrong actions and cancel the additional tariff measures against China,” the ministry said in a statement. There is growing concern over a potential “vicious cycle of tit-for-tat retaliatory actions” between the world’s two biggest economies ahead of the US presidential elections on 5 November, Japan’s Nomura Global Markets Research said in a note. EVs and associated battery markets are an important growth opportunity for the chemical industry, with chemical producers separately developing battery materials, as well as specialty polymers and adhesives for the environment-friendly vehicles. “With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of electric vehicles (EVs) grew by 70% from 2022 to 2023—jeopardizing productive investments elsewhere,” the US said. “A 100% tariff rate on EVs will protect American manufacturers from China’s unfair trade practices,” it added. The new rate represented a quadruple increase from 25% previously. However, the impact on China’s EV exports may be limited in the near term, as the US constitutes a small portion of the Asian giant’s total EV shipments. According to Nomura, the US imported in 2023 $400m worth of Chinese EVs, accounting for 1% of China’s total shipments to the world’s biggest economy. “We expect limited near-term impact, as the targeted $18bn worth of products account for only 4.2% of total US imports from China and less than 1% of China’s total exports,” the Japanese brokerage said. US-CHINA TRADE WAR ADDS TO GLOBAL JITTERS The US and China have been embroiled in a trade war since 2018, when then US President Donald Trump imposed tariffs on around two-thirds of goods imported from China valued at an estimated $360 billion at the time. China has recently faced criticism from major trade partners for operating at “overcapacity,” dumping cheap products, and deepening trade relations with Russia, Nomura said. This leads to growing concerns that China may face similar trade-restrictive measures from other regions. With the EU and UK accounting for about 40% of China’s EV exports in 2023, the EV sector could face increased pressure if Europe follows the US’ lead. Although China’s export growth has been strong this year due to the global tech upswing, resilient external demand, and competitive prices, rising trade tensions may hinder the export sector and prompt more supply chain relocations away from China in the long term. Late last year, the European Commission initiated an anti-subsidy investigation into China’s EVs. Europe’s open approach and ambitious decarbonization goals have made it the main target market for Chinese-made EVs in 2023. The EU accounted for 30% of China’s total EV export volumes last year, down from 36% in 2022, while the UK accounted for 8%, down from 10% in 2022, according to Nomura. Focus article by Nurluqman Suratman Thumbnail image: Aerial photo shows over 2,000 BYD Song Plus new energy vehicles to be exported at Lianyungang Port in east China’s Jiangsu Province, 25 April 2024. (Shutterstock)

HOUSTON (ICIS)–US plastic scrap trade continues to show robust import activity amid flat export volumes in the first quarter. Polyethylene terephthalate (PET) plastic scrap in particular continues to see strong growth in import and export volumes despite domestic recyclers citing only moderate-to-weak demand. This is likely due to the wide window of arbitrage for recycled flake and pellet resin into the US. On the other hand, US PET bale prices have minimally improved following last year’s market crash, creating export opportunities to other global destinations. US remains a net importer of plastic scrap US PET scrap imported increased 88% Q1 2024 vs Q1 2023 US PET scrap exported increased 33% Q1 2024 vs Q4 2023 Q1 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915 – remain strong, having dropped only 2% quarter on quarter, but having jumped 38% year on year when comparing with Q1 2023. Exports on the other hand were nearly identical quarter on quarter, having leveled off over the last several quarters around 100,000 tonnes. US plastic scrap imports totaled 127,176 tonnes in Q1 2024, marking it the strongest first quarter in the last 10 years, and only the second strongest quarter ever, following Q4 of last year. Plastic scrap imports include items such as used bottles, but also other forms of recycled feedstock such as purge, leftover pairings and now also flake material. PET SCRAP IMPORTS CONTINUE RECORD PACEPET in particular continued to see growth in imported scrap volumes, increasing 88% year on year. PET scrap now constitutes nearly 50% of all US imported plastic scrap, followed by the “other” plastic scrap category at 29% and polyethylene (PE) scrap at 14%. Overall plastic scrap imports from Mexico continued to drop, down both year on year and quarter on quarter, largely driven by declines in PET scrap imports. Canada on the other hand increased year on year but declined quarter on quarter with the broader volume trend. Together, plastic scrap coming from Canada and Mexico continues to constitute nearly half (46%) of US plastic scrap imports. Material from Thailand comes in as the third largest region for US plastic scrap imports at 7% of the total volume. When considering just PET scrap, Thailand continued their strong growth trajectory with nearly identical volumes to Q4 2023. US PET scrap imports from Thailand in Q1 2024 increased 82% year on year. Despite this growth, Canada still sends the largest volume of PET scrap to the US at 11,960 tonnes in Q1 2024. When considering other countries, PET imports from Asian-based countries now makes up over 40% of the total PET scrap import volume, passing up Canada and Mexico at a combined 21%. Market participants confirm they have seen a notable rise in imported recycled polyethylene terephthalate (R-PET) activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor and facility costs in light of cheaper ocean freight rates. Though, other regions may not always be in a cost-competitive position, as most recently seen in South American countries like Peru and Colombia, where local bale prices have increased significantly, while US feedstock prices remain relatively stable. Supporting the increase in imported scrap plastic, US recyclers who continue to have strong order volumes were heard to be supplementing their operations with imported feedstock. Several recyclers now purchase low-cost spot or imported R-PET flake to process into their food-grade pellet product and redirect their internally produced flake from high-cost domestic bale feedstock to sell directly to customers. This in turn has alleviated pressure from US PET bales, thus enabling price stability for pellet material which is formulated to US bale feedstock costs. In the long term, the US will seek imports of bale or flake feedstock not just due to the cost driver but to feed growing plastic recycling capacities amid stagnant plastic collection rates domestically. PET SCRAP EXPORTS TO MEXICO ACCELERATEUnlike many other polymer types which continue to see declining volumes following the Chinese National Sword and Basel Convention adoption several years ago, exports of PET scrap have increased, as many global regions with growing R-PET capacities see a cost-play opportunity. PET scrap exports, which could include PET bales, rose 33% quarter on quarter and 21% year on year, coming in at 21,662 tonnes in Q1 2024. Specifically, exported PET scrap to Mexico increased 38% year on year, making up 61% of all US PET scrap exports. At present, aggressive buying activity from Mexican recyclers continues to drive up West Coast PET bale prices. Exports to Mexico have always made up a small portion of US PET bale sales from southern California or states like Texas, though the current activity has been notably strong. PE SCRAP TRADE REMAINS ROBUSTPE continues to be a leading polymer type for US plastic scrap exports, coming in at 35,359 tonnes in Q1 2024. Of that volume, India is the largest destination at 25%, followed by Malaysia and Canada tied at 16%. On the other hand, PE scrap imports show mixed trends. While Canada and Mexico continue to make up nearly 75% of imported PE scrap volumes, US imports from Mexico increased 24% quarter on quarter. On the other hand, imports from Canada decreased 40% quarter on quarter. This time last year, India did not export any PE scrap to the US, and now is the third largest per Q1 data.

HOUSTON (ICIS)–The container ship that essentially closed the Port of Baltimore on 26 March after it struck the Francis Scott Key Bridge, causing its collapse, is set to be moved now that the mangled remnants of the span was removed from the ship’s bow with controlled blasts on 13 May. The Key Bridge Response Unified Command (UC) used precision cuts made with small charges to remove a large section of the bridge from the Dali, which will now be refloated and moved to another part of the port. While not a big hub for chemical imports/exports, the closure of the port had some ripple effects for logistics in the region. US-based catalyst producer WR Grace said operations at its Curtis Bay Manufacturing site, located to the northwest of the collapsed bridge, have been unaffected despite its proximity to the accident site. Chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore. But Baltimore is the largest US port for handling exports and imports of vehicles and farm equipment. Since opening a fourth temporary channel into the port earlier this month, 171 commercial vessels have transited the waterway, including five of the vessels that were trapped inside the port. The MSC Passion III entered the port on 29 April, according to vesselfinder.com, making it the first container ship to enter the port since the accident. There are two container ships and a roll-on, roll-off (RoRo) vessel – designed to carry wheeled cargo – in the port on 14 May, according to vesselfinder.com. The US Army Corps of Engineers (USACE) is aiming to reopen the permanent, 700-foot-wide by 50-foot-deep federal navigation channel by the end of May, restoring port access to normal capacity. Container ships have been rerouting to other East Coast ports.

SAO PAULO (ICIS)–Plastics producers in Rio Grande do Sul remain shut following the floods but are working under the “hypothesis” operations could normalize by the end of May, a full month after the floods hit the Brazilian state, trade group Abiplast said. As such, they have made calculations for losses in revenue during a month, since 29 April when the floods started until the end of May. According to the trade group, the estimated impact on plastics producers in the state could come up to Brazilian reais (R) 680 million ($132 million), or an estimated daily impact of R$23 million since the floods started on 29 April. Rio Grande do Sul and its petrochemicals hub in Triunfo, near the city of Porto Alegre, is home to 40% of Brazil’s polyethylene (PE) and polypropylene (PP) production capacities. Despite the end of May hypothesis, a spokesperson for the trade group conceded that as things stand – with hundreds of roads still blocked and workers unable to turn up for duty – to set a date for restart of operations would be premature, however. “Plastics transformers’ plant have stopped …The [estimated costs would include the] costs of potential renovations and recovery of assets in the areas degraded,” said Abiplast. “The main plastic products could also suffer price increases if there is an increase [in selling prices] by manufacturers.” Several petrochemicals companies based at the Triunfo production hub, near the state’s largest city of Porto Alegre, declared force majeure last week, including Brazil’s polymers major Braskem, Innova and Arlanxeo. Thai major Indorama’s subsidiary in Brazil said to ICIS it had suspended operations. Meanwhile, fertilizers players have said to ICIS demand could be hit considering the state’s prowess within Brazil’s large agricultural sector. Analysts at S&P Global have also said fertilizers could be greatly hit, although they said petrochemicals could be spare from a large impact if the situation normalizes in coming days or weeks, at most. TRIUNFO: KEY TO PLASTICSAccording to figures by Abiplast, Triunfo has production capacities of 740,000 tonnes/year for PP, and of 1.2 million tonnes/year for PE, with a large chunk of that belonging to Braskem, for whom the Triunfo facilities represent 30% of its production capacity in Brazil. Braskem is the sole manufacturer of polyethylene (PE) and polypropylene (PP). Its market shares in 2023 were about 56% and 70%, respectively, according to figures from the ICIS Supply and Demand Database. Brazil’s PP capacity is nearly 2 million tonnes/year, while PE capacity is about 3 million tonnes/year, of which 41% is high density polyethylene (HDPE), 33% is linear low density polyethylene (LLDPE) and 26% is low density polyethylene (LDPE). The Triunfo complex can produce 740,000 tonnes/year of PP, 550,000 tonnes/year of HDPE, 385,000 tonnes/year of LDPE and 300,000 tonnes/year of LLDPE. The company said last week it was confident it will be able to deliver material from its other sites in the country, but sources have pointed out some of the specialized PE grades are only produced at Triunfo, and feared a hit to supply and increasing prices if the disruption in Rio Grande do Sul prolongs. According to Abiplast, there are 1,428 plastic processing and recycling companies in Rio Grande do Sul, the second largest state in Brazil in number of plastic processing companies, behind Sao Paulo’s 5,200 companies. The state’s plastics sector employs 33,100, added the trade group. Their sales in 2023 stood at R8.2 billion, or 7.1% of the total revenue posted by Brazilian plastics processing industry of R117 billion. The tragedy has consumed the Brazilian government since the second week of the floods – after a rather slow response during the first days. Some analysts have described this as Brazilian President Luiz Inacio Lula da Silva’s ‘Katrina moment’ as a reference to the poor handling of the Hurricane Katrina in the US in 2005 by former President George W Bush. Additional reporting by Bruno Menini Front page picture: A sign in Sao Paulo calling residents to collaborate in the floods relief effort Source: Jonathan Lopez/ICIS 

HOUSTON (ICIS)–The biggest plastics trade show in the Western Hemisphere returned last week after a six-year hiatus. Delegates returned to consider an industry that is increasingly being shaped by government policy which is favoring sustainability and electric vehicles (EVs) while restricting the use of some classes of chemicals that are used in processing aids. SUSTAINABLE CONTENTThe regulatory outlook is influencing companies’ sustainability goals, and that is influencing which plastics they buy and which ones are made by producers. Sustainability was the most prominent theme at the show. The title of the keynote address given by BASF Corp CEO Mike Heinz was “Our Plastics Journey: The Road to Shaping a Sustainable Future”. Other examples of sustainability at the show include the following: Executives from SABIC and NOVA Chemicals talked at lengths about what their companies are doing to incorporate more recycled content into their materials. Renewable plastics producers CJ CheilJedang and Danimer Scientific had booths showcasing their grades of polyhydroxyalkanoate (PHA), a renewable polyester. GREENMANTRA showcased its chemical recycling technology, which breaks down plastics to produce waxes, which are then then uses to make additives that make it easier to incorporate waste plastic into finished products. If the exhibitor booths and keynote address weren’t enough to drive home the prominence of sustainability, delegates only had to consider the recent round of talks for the UN plastic waste treaty. It was held just days before NPE. While the plastics industry is advocating curbs on pollution, several groups at the talks were pushing for curbs on production. US lawmakers have repeatedly introduced bills that would impose moratoria on new plants. A small number of US states are adopting mandates that require minimum amounts of recycled content. A few states are also adopting policies calling for extended producer responsibility (EPR). The outlook of regulations is causing consumer goods producers and other plastic consumers to start seeking out sustainable materials now, so they have time to rearrange their supply chains and so prepare for the anticipated regulations. POLICIES PROMOTING EVS, LIGHTWEIGHTINGGovernment support should rekindle sales of EV and pull them out of what could be a temporary lull, according to BASF. The world will need more EVs if it wants to achieve its carbon-cutting goals. In the US, the federal government and individual states are adopting and proposing policies that will promote EV adoption. The Environmental Protection Agency (EPA) introduced a new tailpipe rule that will require the US light vehicle fleet to emit progressively smaller amounts of carbon dioxide (CO2). The EPA is expected to decide if California can adopt its Advanced Clean Car II (ACC II), which would phase out the sale of ICE-based vehicles by 2035. If the EPA grants California’s request, that would trigger similar programs in several other states. The US Department of Transportation (DOT) is proposing stricter efficiency standards under its Corporate Average Fuel Economy (CAFE) program. EVs have material challenges that are different from automobiles powered by internal combustion engines (ICEs), and these are increasing demand for new grades of plastics. Some plastics will need to tolerate higher voltage environments, while others will need good thermal management properties. BASF and other companies at NPE showcased how several of their materials were meeting these challenges. At the same time, auto companies will want materials that will lighten their vehicles so they can travel farther on a battery charge. ICE automakers also want to lighten their vehicles, in part to comply with stricter emission requirements. Longer term, Dow highlighted the revolutionary ramifications that autonomous vehicles will have on the plastic industry. Such vehicles are driven almost entirely by machines, which should greatly reduce crashes and accidents. Dow said automakers could replace nearly all steel and aluminum paneling used in automobiles with plastic alternatives. SUBSTANCES OF CONCERNDow and Clariant highlighted the ramifications of substances of concern, so called because regulators are concerned about their effects on safety. The latest such substance include per- and poly fluorinated alkyl substances (PFAS), which are used in many polymer processing aids (PPAs). Clariant has recently introduced a hydrocarbon-based processing aid. Longer term are the possible ramifications of the prioritization process that the EPA has started on five chemicals. The regulator would like to start the prioritization process on five additional chemicals each year. The prioritization process is the first step in determining whether a chemical poses an unreasonable risk. If the EPA makes such a finding, then it will proceed with the risk management phase, in which it will propose ways to manage the unreasonable risks. If the chemicals are used in plastics, then any subsequent restrictions could cause companies to find alternative materials. EXCESS PLASTICS CAPACITYExcess plastic capacity will likely persist even as destocking ends and demand recovers. NOVA Chemicals expects future expansion will be on pause until later in the decade. Lost cost regions like North America should suffer less than higher cost regions like Europe. SABIC recently started up its first ethylene and PE production in the US through its joint venture with ExxonMobil, while announcing plans to shut down a cracker in Europe. The company did not rule out further capacity rationalizations Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show took place 6-10 May in Orlando, Florida. Insight by Al Greenwood Thumbnail shows cups made out of plastic. Image by Shutterstock.

BARCELONA (ICIS)–The closure of chemical plants in Europe and elsewhere could remove essential raw material supplies, threatening the future of downstream industrial value chains. Global oversupply, driven by China, forecast to reach over 200 million tonnes/year by 2028 Interconnected value chains threatened if important raw materials cease production Globally 20 million tonnes of ethylene capacity may need to shut down to keep operating rates healthy In Europe 5.6 million tonnes/year of polypropylene (PP) capacity may need to close Integrated chemicals sites under threat if parts shut down Industry associations could help plan to maintain critical raw materials supplies Anti-dumping measures could protect exposed markets China polyvinyl chloride (PVC) overcapacity may increase exports globally In this Think Tank podcast, Will Beacham interviews ICIS Insight Editor Nigel Davis, ICIS Senior Consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.

LONDON (ICIS)–Increases in crude oil supplies from outside the OPEC+ bloc of countries is expected to decline slightly year on year in 2025, with the US and Canada expected to remain the backbone of OECD production increases and Latin America driving the rest of the world, according to OPEC. The group projects that crude supply growth from countries that are not signed up to the declaration of cooperation (DoC)– encompassing OPEC member states and ally nations that have agreed to coordinated production cuts – will stand at 1.1 million barrels/day next year. Representing a modest decline from the 1.2 million barrel/day production growth OPEC projects for non-DoC nations this year, the 2025 increase is expected to drive total output from the region to 54.1 million barrels/day. The US is expected to drive a substantial proportion of the total production growth expected from non-DoC nations, representing nearly half of the total projected growth at 0.5 million barrels/day, while Canada is expected to increase output by an average of 0.2 million barrels/day. Latin America is expected to be the key source of non-OECD growth excluding OPEC+ countries, with output expected to grow 0.3 million barrels/day next year on average, a slight decline from the 0.4 million barrels/day projected for this year. Interest rates, inflation, geopolitics and reduced investment in exploration and production by oil majors as players seek to clip costs are all serving to cloud the picture on future demand and output, OPEC added. “The anticipated trajectory and pace of inflation’s decline, particularly within the services sector, are poised to influence crude oil production costs going forward,” OPEC said in its monthly oil report. “The potential influence of the present limited investment commitment in upstream E&P projected for 2024 and 2025 on production levels remains uncertain amid an ongoing drive for efficiency and enhanced productivity throughout the industry,” the cartel added. The organization left its 2024 non-DoC oil supply, global demand and GDP forecasts unchanged from its April report, at 1.2 million barrels/day, 2.2 million barrels/day and 2.8% respectively. Thumbnail photo: An oil well in Jebel Dukhan, Bahrain. Source: Jakub Porzycki/NurPhoto/Shutterstock

LONDON (ICIS)–German economic sentiment improved further in May from the previous month following stronger-than-expected growth in the first quarter, research institute ZEW said on Tuesday. Its sentiment indicator increased by 4.2 points from April to 47.1, the highest level since March 2022. Source: ZEW The Mannheim-based group’s assessment of the current economic situation in Germany was also higher, by 6.9 points to -72.3. Source: ZEW In the wider eurozone, ZEW’s economic sentiment indicator and current assessment were also up from April. “The confidence increases. Following the stronger-than-expected growth of the German economy in the first quarter of 2024, both the assessment of the current situation and economic expectations have become more favourable,” ZEW President Achim Wambach said. Signs of an economic recovery are growing, bolstered by better assessments of the overall eurozone and of China as a key export market. “The increased optimism is reflected in particular in the sharp rise in expectations for domestic consumption, followed by the construction and machinery sectors,” Wambach added.