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Chemicals news

Polystyrene foam ban comes into effect in Oregon, US

HOUSTON (ICIS)–Senate Bill 543 was passed in 2023, but it was not until 1 January 2025 that the ban on polystyrene foam was implemented. According to The Oregon Department of Environmental Quality (DEQ), “[The] 2023 Senate Bill 543 (ORS 459.465 to 459.477) prohibits food vendors from using polystyrene foam containers for prepared food, prohibits the sale of polystyrene foam containers or polystyrene foam packing peanuts, and prohibits the sale of foodware containers with added perfluoroalkyl or polyfluoroalkyl substances (PFAS)." “PFAS are a group of chemicals that are considered “emerging environmental contaminants” because public knowledge about their harmful effects and how they are regulated are relatively new or undeveloped. PFAS are water soluble and highly mobile, and can accumulate in living organisms. Many newer PFAS transform into highly persistent perfluorinated chemicals in the environment, and can last for hundreds to thousands of years, depending on the PFAS compound,” according to The Oregon DEQ. What does this mean for polystyrene in Oregon? Well, the bill states that food vendors must not use polystyrene foam containers when selling, offering for sale, serving or dispensing prepared food to a consumer. Examples of this include to-go containers that many use to take home leftovers or to pick up food-orders. This also applies to polystyrene foam plates and cups. Although food vendors must not use polystyrene foam, the bill also states that a person may not sell, offer for sale or distribute in or into the state polystyrene foam containers or polystyrene foam packaging peanuts. Also, a person may not sell, offer for sale or distribute in or into the state a foodware container containing intentionally-added PFAS. The Oregon DEQ noted that businesses with existing inventory of the examples above may not use or sell the material after 1 January 2025.

05-Feb-2025

PODCAST: Look ahead to ICIS PET Value Chain Conference

LONDON (ICIS)–Senior editor, recycling Matt Tudball talks to Helen McGeough, global recycling analytics team lead about some of the key topics that will be discussed at the upcoming ICIS PET Value Chain Conference on 6-7 March in Amsterdam. Topics include: Improving the supply chain for recycled PET Getting access to good-quality feedstocks Deposit return schemes (DRS) growing in Europe Impact of high feedstocks on R-PET prices Spreads between virgin PET and R-PET

05-Feb-2025

Brazil chemicals deficit hits $49 billion in 2024 despite higher tariffs by year-end

SAO PAULO (ICIS)–Brazil's chemical industry posted a $48.7 billion trade deficit in 2024 as imports surged to $63.9 billion, driven by “predatory pricing” from US and Asian suppliers, the country’s chemicals trade group Abiquim said. Asian suppliers, moreover, benefited from discounted Russian raw materials and, in China’s case, from heavy subsidies from the state, the trade group added. The overall deficit, while substantial, remained below the 2022 record of $63 billion, though Abiquim noted this was primarily due what it described as “predatory import pricing” which cushioned the “real imbalance” in the trade balance." Import volumes rose 11.5% to 65.3 million tonnes of chemicals, with fertilizer intermediates accounting for 41.1 million tonnes, up 7.4% from 2023. This marked the highest import volume since records began in 1989, as Asian suppliers leveraged cheaper Russian materials amid the war in Ukraine. Abiquim’s CEO said 2024 had been challenging for Brazil’s chemicals producers, although the year was also marked by the higher import tariffs approved for 30 chemical products, which gave the sector a boost in November and December, said Andre Passos. Following October's tariff implementation, domestic production rose 6.35% in the final two months, he added. The trade group’s CEO said higher tariffs were a welcome step but much more needed to be done to protect Brazil’s chemicals producers’ operations and their transition to the green economy. “We know that this [higher tariffs] is just the first step and it is essential to keep facing up to the extremely adverse international scenario, with excess production capacity for chemical products in the world and heavy subsidy programs in the world’s main chemical producers,” said Passos. “We are crossing the gateway to the low-carbon economy and the chemical industry is ready to lead this transition. Low-carbon chemistry is related to the use of technologies that reduce or neutralize greenhouse gas emissions. “Renewable chemistry, carbon capture and storage, and chemical recycling are some examples of this leadership that can be exercised by the Brazilian chemical industry,” he concluded. ASIA DOMINATES Asian suppliers, excluding the Middle East, dominated imports with a 31% share worth $19.6 billion, creating an $18 billion regional trade gap. The deficit with Asia has steadily worsened from $10bn in 2020 to $16.2bn in 2023, said Abiquim, reflecting China’s overcapacities and the country’s switch from net importer to next exporter for most chemicals. Domestic manufacturers faced increased competition across all segments, with imports of resins and elastomers jumping 32.4%, organic chemicals 14.3%, inorganics 9.1%, and other industrial chemicals 9.3%. Import prices averaged 6.3% lower than 2023, leading to domestic plant closures, said Abiquim. Brazilian chemical exports rose 4.3% to $15.2 billion, though volumes dipped 0.2%. The sector maintained its position as the country's third-largest manufacturing exporter, behind food products at $66.5 billion and base metals at $23.2 billion, said Abiquim.

05-Feb-2025

Japan's Asahi Kasei 9-month income surges; basic materials swing to profit

SINGAPORE (ICIS)–Asahi Kasei's net income surged by 68.1% year on year in the nine months to December 2024, supported by improved petrochemical prices and lower fixed costs, the Japanese chemicals major said on Wednesday. in Japanese yen (Y) billions Apr-Dec 2024 Apr-Dec 2023 % Change Sales 2,259.3 2,064.1 9.5 Operating income 164.4 98.5 66.9 EBITDA 299.8 233.4 28.4 Net income 98.5 58.6 68.1 Basic Materials (Core Petrochemicals) Business in Japanese yen (Y) billions Apr-Dec 2024 Apr-Dec 2023 % Change Sales 241.7 219.2 10.3 Operating income 12 -8.4  – The company's basic materials unit swung to an operating profit of Y12 billion ($78.2 millon) in April-December 2024 on the back of higher sales revenues, the company said in a statement. Asahi Kasei has revised its year to March 2025 forecasts for sales and operating income reflect an seasonal dip in demand and increased fixed costs in the final quarter of the fiscal year. Overall sales are now expected to reach Y3.04 trillion, a 9.3% increase from the previous fiscal year. However, this new projection represents a 0.9% decrease from the company's November estimate. Full-year operating income is now projected to reach Y200 billion, up 42.1% from actual 2023 figures, and up by 2.6% from the company’s previous forecast. Asahi Kasei expects its net income for the full year to surge to ¥110 billion, more than double the ¥43.8 billion recorded in the previous fiscal year. The company aims continue to "advance its business portfolio transformation; accelerating studies on structural transformation of petrochemical chain-related businesses centered on basic materials while advancing investment in growth businesses", it added. In January this year, Asahi Kasei ceased operations at its Thailand-based joint venture PTT Asahi Chemical. ($1 = Y153.43) Thumbnail image: At a port in Tokyo, Japan 9 December 2024. (FRANCK ROBICHON/EPA-EFE/Shutterstock)

05-Feb-2025

Brazil’s Unigel appoints Dario Gaeta as CEO after debt restructuring greenlit

SAO PAULO (ICIS)–Brazilian chemicals producer Unigel has concluded its debt restructuring process worth Brazilian reais (R) 5.1 billion ($885 million) after a Sao Paulo business court greenlit the plans drawn up by creditors. Unigel said it would be able to deleverage its debts by around 50% with the restructuring process’ conversion of R5.1 billion of existing debt into new financial instruments. The restructuring puts an end to the decades-long private ownership of Unigel in the hands of its founder, 88-year-old Henri Armand Szlezynger. “The execution of the RE [restructuring] Plan marks a pivotal transition in Unigel’s governance framework, with Option A [main] Creditors now holding a 50% stake in the company’s equity structure,” said Unigel. The new majority owners headhunted for the CEO position the Brazilian executive Dario Gaeta, with decades of experience at industrial and agricultural companies. Up to 2024, he was chief operating officer at ethanol producer Atvos and, prior to that, he was the CEO at Tiete Agroindustrial, another company in the sugar and ethanol sector, according to Gaeta’s LinkedIn profile. Former CEO Roberto Noronha has been demoted to board member, and the vice president who has overseen the restructuring, Daniel Zilberknop, an old name in Unigel, has been appointed chairman of the board. Unigel’s new board composition Position Name Representative Chairman of the Board Daniel Zilberknop Independent CEO Dario Gaeta Not provided Board Member Marc Buckingham Szlezynger Cigel Board Member Roberto Noronha Santos Cigel Board Member Pedro Wongtschowski Cigel Board Member Fabio de Barros Pinheiro Creditors Board Member Kofi William Bentsi-Enchill Creditors Board Member Gregorio Mario Charnas Creditors The restructuring plan also signals an exit from the fertilizers sector, as already outlined at the beginning of the restructuring process by creditors. High prices for natural gas – fertilizers’ main feedstock – was the main cause for that part of the business to start faltering, dragging the rest behind it in the end. Some plants which were leased to Unigel by Brazil’s state-owned energy major Petrobras are reportedly on course to return under Petrobras’ umbrella, even if Unigel may continue operating them. Unigel, then, is to remain mostly what it was before it ventured into fertilizers and was caught up in a major sector downturn. The company mostly produces styrenics and acrylics. For products and capacities, see bottom table. SULPHURIC ACID PLANTEarlier in January, Unigel presented plans to finish construction of its sulphuric acid plant in the state of Bahia, which had been paused as the company's financial woes increased. Unigel said it would invest $36.8 million to finish up the plant in Camacari, aiming to start it up by September. Production capacities were not disclosed. When fully functioning, the plant will allow Unigel to reduce its acid purchases in the open market. Acid is a key chemical used in many other chemical and industrial processes. Jonathan Szwarc, head of Latin America credit research at data firm specializing in leveraged capital markets Debtwire, who covered Unigel in the past, said by reducing its dependency on imports the sulphuric acid plant was a sound project from which Unigel’s could start building up its recovery. “The numbers for that project are sound. From my time covering Unigel, I remember the return on investment was expected to be very healthy: in up to four years, the company expects to have paid off the investment, such are the large amounts of acid it has to purchase in the open market,” said Szwarc. Earlier this month, Unigel also presented, for the first time in several quarters, a financial forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) up to 2030. The company has not published any financial results since 2023, a provision contemplated under Brazilian corporate law for companies in financial distress. For 2025, Unigel said it expected upsides coming from a 5% increase in Brazil’s styrene import tariff ($4 million positive contribution) and a higher rate in the REIQ tax benefit system for chemicals companies ($14 million). According to Unigel, its EBITDA could rise to $182 million by 2030. Unigel forecasts 2025 2026 2027 2028 2029 2030 EBITDA (in $ million) 49 142 164 176 173 182 Whether Unigel’s medium-term forecasts are realized remains to the seen, as it ultimately is a company in very deep financial distress for the past year and a half, operating in a market – petrochemicals – which is going through one of the longest sector’s downturns. “2030 is indeed quite a long forecast on this occasion. But, of course, for a judge to approve your restructuring plan you must present some sort of credible plan: detailed forecasts on financials, on spreads, on production…” said Szwarc. “Whether those forecasts end up realized, that’s another matter. But as we say in this world – an Excel [spreadsheet] can withstand almost anything,” he concluded, ironically. ($1 = R5.76) Additional information by Yashas Mudumbai Focus article by Jonathan Lopez 

04-Feb-2025

PODCAST: Trump 2.0 trade war will destabilise chemical value chains, boost reshoring

BARCELONA (ICIS)–As US president Donald Trump revives his trade war, business leaders may seek certainty by switching to local and regional supply chains. Businesses need stability, certainty to make investment decisions Trade war could drive more national/regional industrial and chemical supply chains But reshoring can be very expensive and time-consuming New technologies such as 3-D printing and AI support local production Export-dependent US chemicals have a lot to lose from a trade war US exported more than 10 million tonnes of polyethylene (PE) to Europe in 2023 In this Think Tank podcast, Will Beacham interviews Nigel Davis from the ICIS market development team 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.

04-Feb-2025

Japan's Sumitomo Chemical cuts stake in Sumitomo Bakelite

SINGAPORE (ICIS)–Japan's Sumitomo Chemical has sold a portion of its stake in specialty chemicals producer Sumitomo Bakelite as part of a broader plan to enhance its financial performance through asset sales. Sumitomo Chemical on 4 February said that it has sold around 5.25 million shares of Sumitomo Bakelite for around yen (Y) 19.1 billion ($123 million), the Japanese producer said on Tuesday. Sumitomo Bakelite produces a range of chemical products, including phenolic, epoxy and polyimide resins, as well as other specialty chemicals. The stake sale reduced Sumitomo Chemical’s stake in the specialty chemicals producer to 10.6% from 15.6% previously. Sumitomo Chemical expects a one-time gain of around Y17.7 billion from the sale in its non-consolidated financial results for the year ending 31 March 2025. "Sumitomo Chemical is implementing its short-term intensive performance improvement measures aimed at ensuring a V-shaped recovery in fiscal 2024 and strengthening its financial position to lay the groundwork for future fundamental structural reforms," the company said. On 3 February, the company announced that it will be divesting 66.6% of its share in wholly-owned subsidiary Sumitomo Chemical Engineering Co (SCEC) by 31 March to Japan's JFE Engineering Corp for an undisclosed fee. Sumitomo Chemical will retain a 33.4% stake in SCEC following the sale. "SCEC will maintain a good relationship with the Sumitomo Chemical Group as it works to maximize its synergies with the JFE Group," the company said. SCEC provides engineering, procurement, construction, operation and maintenance services for environmental facilities, energy facilities, including liquified natural gas stations and renewable energy plants, as well as chemical plants. In the nine months to 31 December 2024, Sumitomo Chemical swung into a net profit on improved selling prices at its core essential and green materials segment, the Japanese producer said on 3 February. in Japanese yen (Y) billions Apr-Dec 2024 Apr-Dec 2023 % Change Sales 1,904.8 1,806.9 5.4 Operating income 145.4 -160.6 Net income 28.6 -109.8 The company's selling prices for synthetic resins, methyl methacrylate, and industrial chemicals rose due to higher raw material costs during the period. However, aluminum shipments declined following the group's exit from the business, resulting in a ¥8.8 billion decrease in essential and green materials sales revenue to Y672.9 billion. Despite this, the segment trimmed its core operating loss by Y16.2 billion to Y44.3 billion, aided by better market conditions, although the financial performance of its 37.5%-owned Saudi chemical producer Petro Rabigh deteriorated. Saudi Aramco owns 62.5% of Petro Rabigh. MANAGEMENT CHANGES Sumitomo Chemical on 3 February announced that Nobuaki Mito, the company's senior managing executive officer, will take over as the company's new president. Mito is expected to be inaugurated as representative director and president of Sumitomo Chemical in June this year, while incumbent president, Keiichi Iwata, will become chairman. ($1 = Y155.20)

04-Feb-2025

BLOG: Tariffs, Trump, US-China LDPE and the role of AI

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. I rest of my case! Just 24 hours ago, I wrote: "WATCH OUT for those who claim they know the final outcomes of President Trump’s latest tariffs on imports from Canada, Mexico, and China." And here we are. Overnight, the Financial Times reports: ➡️ Trump Backs Away from Tariffs (For Now) ➡️ Canada & Mexico Strike a Deal to avoid tariffs by stepping up border security and anti-drug trafficking efforts. ➡️ Canada’s Additional Commitments include C$200M in funding to combat fentanyl trafficking and appointing a "Fentanyl Czar." The US-China trade relationship has seen big swings in recent years, especially in chemicals and polymers. Consider these shifts in HDPE & LLDPE trade: US HDPE exports to China surged 120% (1.8M tonnes in 2022-24 vs. 0.8M tonnes in 2019-21). Meanwhile, Saudi Arabia’s exports fell 40%. US HDPE sales turnover in China rose by nearly one billion dollars. Saudi Arabia’s turnover was down by $2.3bn. Iran was 1.8bn lower and South Korea 0.52bn lower. US LLDPE exports jumped 190% (3.1M tonnes), while Iran and Thailand saw major declines. US LLDPE sales turnover in China increased by $2.3bn while most of China’s other top ten trading partners saw declines in their turnovers. Thailand saw the biggest decline at $519m followed by Iran at $418m and Singapore at $314m. As today I complete my series by taking a deep dive into US-China LDPE trade, the polymer was different. US exports to China still rose 67%, despite lacking the tariff waivers that helped HDPE & LLDPE. US LDPE turnover in China grew by $577m with the UAE $208m higher as Iran and Saudi Arabia declined by $431m and $206m. respectively. What does this tell us? Tariffs are just one piece of the puzzle. Other factors—feedstock advantages, market positioning, and China’s self-sufficiency in commodity grades—are all in play. The bigger question: Where does US-China trade go from here? And how do we build scenarios that factor in Trump’s policies, climate change, and geopolitical shocks? AI presents an opportunity. It arrived at a time when markets are more complex than ever. We don’t yet know how useful it will be in predicting trade flows, but we do know one thing: The only way to find out is to engage with it. Thoughts? Let’s discuss. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

04-Feb-2025

US suspends tariffs on Mexico for one month as high-level talks on key issues start

SAO PAULO (ICIS)–The US has agreed to pause for one month its 25% import tariffs on Mexican goods as the two countries agreed setting up working groups on three key issues, the presidents of both countries said on Monday. Over the weekend, the US announced also a 25% tariff on Canadian goods and a 10% tariff on Chinese goods. The move – now suspended regarding Mexico trade – is expected to increase costs for the US’s chemical industry and create supply-chain snarls as well as risking retaliation from countries on which tariffs are imposed. Speaking to reporters, Mexico’s Claudia Sheinbaum said she had agreed with US president Donald Trump during a phone call to set up three bilateral working groups on border security issues, on fentanyl trade – a powerful drug which has caused havoc across the US – and on guns and arms traffic from the US to Mexico. Mexico's main stock exchange, which had opened Monday trading with a fall of nearly 2%, was turning green soon after Sheinbaum spoke to reporters. The Mexican peso was also gaining ground against the dollar. As part of the agreement, Mexico will deploy members of the National Guard to the border with the US. Trump confirmed on a post on social media he had a “friendly conversation” with Sheinbaum, although he only mentioned border security and fentanyl as part of the agreement to pause the tariffs for one month. “She [Sheinbaum] agreed to immediately supply 10,000 Mexican Soldiers on the border separating Mexico and the US. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our country,” said Trump in his owned social media network TruthSocial. “We will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a 'deal' between our two countries.” Sheinbaum confirmed the two presidents will be actively involved in the talks, and it will be them who ultimately assess progress on the talks, although she said there is no date for any physical meeting between them. “The tariffs have been put on hold for a month, which is very important. We will work together on the two issues of security and fentanyl, and he [Trump] will also review the issue of arms trafficking from the US to Mexico,” said Sheinbaum. “I am sure that this month we will be able to give results, good results for the people, good results for the people of Mexico – it was a good conversation within a respectful framework of respect.” Mexican journalists pushed Sheinbaum on the potential deportation of millions of Mexicans who are residing and working in the US illegally, some of them for years. Their remittances sent home are key for many Mexican households to make ends meet. President Trump has said he intends to deport many undocumented migrants. The president did not say whether that was part of the one-month talks coming up. “We have a working group [on this issue already] where we talk about the defense of Mexicans in the US. They will have always have our support, always, above all else, not only because it is the obligation of the president to defend Mexicans anywhere in the world, and particularly in the US, but we do it with conviction, with a lot of solidarity and love,” she said. Sheinbaum added that her success in pausing the tariffs was not hers alone and thanks Mexican businesses and policymakers who all came out against the tariffs, as well as counterparts in the US who did the same. The tariffs, if prolonged in time, would have caused havoc to the already slowing Mexican economy, with manufacturing having greatly felt the pinch during 2024. “When the tariffs were announced, a very large wave of public communications against them came out. I want to thank companies, business chambers, communities that came out to defend Mexico and to support the President and the truth is that this gives a lot of strength when one sits down to talk with a leader from another country, particularly the US,” said Sheinbaum. “Many people in the US came out to say that the tariffs don't make sense and would thank them a lot as well. Politicians, governors, congressmen, but also many companies from the US that came out to say that this is not convenient. That environment led to the agreement that we have today.”

03-Feb-2025

CORRECTED: INSIGHT: US tariffs unleash higher costs to nation's chem industry

Correction: In the ICIS story headlined “INSIGHT: US tariffs unleash higher costs to nation's chem industry” dated 3 February 2025, the wrong volumes were used for the following imports: Canadian ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94; Canadian polyethylene having a specific gravity of 0.94 or more, in primary forms; Canadian polyethylene having a specific gravity of less than 0.94, in primary forms; Canadian polypropylene, in primary forms; Canadian mixed xylene isomers; Mexican polypropylene, in primary forms; and Mexican cyclohexane. The US did not import cyclohexane from Mexico in 2023. A corrected story follows. HOUSTON (ICIS)–The tariffs that the US will impose on all imports from Canada, Mexico and China will unleash higher costs for the nation's chemical industry, create supply-chain snarls and open it to retaliation. For Canada, the US will impose 10% tariffs on imports of energy and 25% tariffs on all other imports. For Mexico, the US imposed 25% tariffs on all imports but the countries' presidents said on Monday the tariffs are being paused for a month. For China, the US will impose 10% tariffs on all imports. US IMPORTS LARGE AMOUNTS OF PE FROM CANADAUS petrochemical production is concentrated along its Gulf Coast, which is far from many of its manufacturing hubs in the northeastern and midwestern parts of the country. As a result, individual states import large amounts of polyethylene (PE) from Canada – even though the nation as a whole has a large surplus of the material. Even Texas imports large amounts of PE from Canada – despite its abundance of plants that produce the polymer. In addition, polyester plants in North and South Carolina import large amounts of the feedstocks monoethylene glycol (MEG) and purified terephthalic acid (PTA) from Canada. The US as a whole imports significant amounts of polypropylene (PP) and polyvinyl chloride (PVC) from Canada – again, despite its surplus of these plastics. The following table lists some of the main plastics and chemicals that the US imported from Canada in 2023. The products are organized by their harmonized tariff schedule (HTS) code. HTS PRODUCT MEASUREMENT VOLUMES 3901.40.00 Ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94 kilograms 1,319,817,405 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 1,088,071,523 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 420,561,390 2917.36.00 Terephthalic acid and its salts kilograms 407,710,439 2905.31.00 Ethylene Glycol kilograms 329,542,378 3902.10.00 Polypropylene, in primary forms kilograms 271,201,880 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 188,800,413 2902.44.00 Mixed xylene isomers liters 746,072 2905.12.00 Propan-1-ol (Propyl alcohol) and Propan-2-ol (isopropyl alcohol) kilograms 87,805,095 3901.30.60 Ethylene-vinyl acetate copolymers kilograms 71,372,396 Source: US International Trade Commission (ITC) IMPORTS FROM MEXICOMexico is not as large of a source of US petrochemical imports as Canada, but shipments from the country are still noteworthy. The following table lists some of the main plastics and chemicals that the US imported from Mexico in 2023. HTS PRODUCT MEASUREMENT VOLUMES 2917.36.00 Terephthalic acid and its salts kilograms 69,230,708 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 34,674,435 2915.24.00 Acetic anhydride kilograms 25,294,318 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 24,005,371 2915.31.00 Ethyl acetate kilograms 18,855,544 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 14,469,582 3902.10.00 Polypropylene, in primary forms kilograms 8,849,478 Source: US International Trade Commission (ITC) IMPORTS FROM CHINAChina remains a significant source for a couple of noteworthy chemicals despite the effects of the tariffs that US President Donald Trump imposed during his first term in office. The following table shows 2023 US imports from China. HTS PRODUCT MEASUREMENT VOLUMES 29152100 Acetic acid kilograms 21,095,566 39093100 Poly(methylene phenyl isocyanate) (crude MDI, polymeric MDI) kilograms 206,642,886 Source: US International Trade Commission (ITC) China's shipments of plastics goods are more significant. OIL TARIFFS WILL HIT US REFINERSCanada and Mexico are the largest sources of imported crude oil in the US, and the heavier grades from these countries complement the lighter grades that the US produces in abundance. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units. Refiners cannot swap out heavier Canadian and Mexican grades with lighter US grades. Instead, they will need to pay the tariffs or find another supplier of heavier grades, possibly at a higher cost. The following table shows the largest sources of imported crude in 2023. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 Source: Energy Information Administration (EIA) US refiners could take another hit from higher catalyst costs. These are made from rare earth elements, and China remains a key source. TARIFFS TO RAISE COSTS FOR FERTILIZERCanada is the world's largest producer of potash, and it exports massive amounts to the US. It is unclear how the US could find another source. Russia and Belarus are the world's second and third largest potash producers. Together, the three accounted for 65.9% of global potash production in 2023, according to the Canadian government. Canada accounts for significant shares of other US imports of fertilizers. The following table lists some of Canada's fertilizer shipments to the US in 2023 and shows its share of total US imports. Figures are from 2023. HTS PRODUCT MEASUREMENT VOLUME % 31042000 Potassium chloride metric tonne 11850925 88.8 31023000 Ammonium nitrate, whether or not in aqueous solution metric tonne 295438 76.6 31024000 Mixtures of ammonium nitrate with calcium carbonate or other inorganic nonfertilizing substances metric tonne 29203 75.7 31055100 Mineral or chemical fertilizers, containing nitrates and phosphates metric tonne 1580 66.1 31022100 Ammonium sulfate metric tonne 947140 49.6 31052000 Mineral or chemical fertilizers, containing the three fertilizing elements nitrogen, phosphorus and potassium metric tonne 147850 41.4 Source: US ITC SUPPLY CHAIN SNARLSIf US companies choose to avoid the tariffs and seek other suppliers, they could be exposed to delays and supply chain constraints. Other companies outside of the petrochemical, plastic and fertilizer industries will also be seeking new suppliers. The scale of these disruptions could be significant because Canada, Mexico and China are the largest trading partners in the US. The following table lists the top 10 US trading partners in 2023 based on combined imports and exports. Country Total Exports ($) General Imports ($) TOTAL Mexico 322,742,472,406 475,215,965,697 797,958,438,103 Canada 354,355,997,349 418,618,659,183 772,974,656,532 China 147,777,767,493 426,885,009,750 574,662,777,243 Germany 76,697,761,127 159,272,068,221 235,969,829,348 Japan 75,683,130,214 147,238,042,342 222,921,172,556 South Korea 65,056,093,590 116,154,470,335 181,210,563,925 UK 74,315,228,810 64,217,031,774 138,532,260,584 Taiwan 39,956,725,574 87,767,403,487 127,724,129,061 Vietnam 9,842,922,146 114,426,076,081 124,268,998,227 Source: US ITC RETALIATIONUS petrochemical exports would be tempting targets for retaliation because of their magnitude and the global capacity glut. China, in particular, could impose tariffs on US chemical imports and offset the disruptions by increasing rates at under-utilized plants. So far, none announced plans to target chemicals on Sunday. Canada's plans to impose 25% tariffs on $30 billion in US goods does not include oil, refined products, chemicals or plastics. That batch of tariffs will take place on February 4. Canada will impose 25% tariffs on an additional $125 billion worth of US goods following a 21-day comment period, it said. The government did not highlight plastics or chemicals in this second batch of tariffs. Instead, it said the tariffs will cover passenger vehicles and trucks, including electric vehicles, steel and aluminium products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles and recreational boats. In a statement issued on Sunday, Mexico's president made no mention of retaliatory tariffs. Instead, she said she will provide more details about Mexico's response on Monday. China said it will start legal proceedings through the World Trade Organization (WTO) and take corresponding countermeasures. RATIONALE BEHIND THE TARIFFSThe US imposed the tariffs under the nation's International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat. In a fact sheet, Trump cited illegal immigration and illicit drugs. Saturday's executive order is the first time that a US president imposed tariffs under IEEPA. Prior IEEPA actions lasted an average of nine years. They can be terminated by a vote in Congress. Insight article by Al Greenwood (Thumbnail shows containers, in which goods are commonly shipped. Image by Shutterstock)

03-Feb-2025

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