Ethylene oxide (EO)

HOUSTON (ICIS)–The US is taking steps that could lead to tariffs on imports of up to 50 critical minerals, many of which are used to make catalysts for key processes used by refiners and chemical producers. If the US ends up imposing the tariffs on the critical minerals, then they would take the place of the reciprocal tariffs. REFINING CATALYSTS AND AROMATICS MARKETSFluorspar is used to make hydrofluoric acid, a catalyst used in alkylation units. These units convert isobutane and propylene into alkylate, a high-octane blendstock. Cerium and lanthanum are used to make catalysts for fluid catalytic cracking (FCC) units. These units convert gas oils into gasoline and refinery grade propylene (RGP). If the US imposes tariffs on these catalysts and if the tariffs cause large enough price increases, then refiners could alter their operations to reduce their costs. If refiners lower alkylation operating rates, they may rely on other high-octane blendstock such as toluene or mixed xylenes (MX). Changes in alkylation and FCC rates would concurrently affect supply and demand for RGP. ANTIMONY AND PETChinese restrictions on antimony already have led producers to propose price increases for polyethylene terephthalate (PET), which relies on the mineral as a catalyst. If the US imposes tariffs on antimony, then it would further increase prices from the other countries that export the mineral to the US. BISMUTH AND POLYURETHANESBismuth is used as a catalyst for making polyurethanes. One such bismuth-based catalyst won an innovation award. OTHER CATALYSTSIridium, neodymium, rhodium, ruthenium, ytterbium and yttrium are all used to make catalysts, according to the US Geological Survey (USGS). Palladium and platinum are used in catalytic converters in automobiles. TIO2 AND PAINTS MARKETSThe US also considers titanium and zirconium as critical minerals. It is unclear if the US would impose tariffs on titanium metal or titanium oxide. However, the US list of critical minerals implies that the tariffs could include titanium oxide. Titanium oxide is the feedstock that is used to make titanium dioxide (TiO2), a white pigment that is used to make paints opaque. Producers of paints and coatings are already facing higher costs from US tariffs on steel. In 2023, Sherwin-Williams estimates that plastic and metal containers made up 15% of its product's costs. A tariff on titanium oxide would further increase costs for paints and coatings producers. Zirconium is a byproduct of processing mineral sands that contain titanium. TiO2 producers Tronox and Chemours operate such mines. Tronox's are in Australia and South Africa, and Chemours has mines in the US states of Florida and Georgia. FLUORSPAR AND FLUOROMATERIALSFluorspar is also the upstream feedstock for fluorochemicals and fluoropolymers. Polyurethane foams use fluorochemicals as blowing agents. Fluoropolymers include Teflon. These are becoming increasingly important in 5G equipment, semiconductor fabrication plants and lithium-ion batteries. Fluoropolymers are also used as membranes in hydrogen fuel cells and chlor-alkali plants. BARITE, CESIUM USED IN OIL PRODUCTIONBarite is used to make drilling mud. Cesium is used to make cesium formate drilling fluids, which are used by oil and gas producers. FLAME RETARDANTSAluminum and antimony are used to make flame retardants. INVESTIGATION TO PRECEDE ANY TARIFFSBefore the US imposes any tariffs on critical minerals, it will conduct an investigation under section 232 of the Trade Expansion Act of 1962. The US has used that section to impose tariffs on other products such as steel and aluminium. The scope of the investigation will include the 50 minerals deemed critical by the USGS, processed critical minerals and derivative products. Derivative products include semi-finished goods and final products "such as permanent magnets, motors, electric vehicles, batteries, smartphones, microprocessors, radar systems, wind turbines and their components and advanced optical devices", according to the order. The secretary of commerce will have 180 days to submit a final report of the investigation to the president. Recommendations will include tariffs and policies the US could adopt that would promote more production of critical minerals. LIST OF CRITICAL MINERALSThe following table shows the minerals that the US considers critical. Aluminium Magnesium Antimony Manganese Arsenic Neodymium Barite Nickel Beryllium Niobium Bismuth Palladium Cerium Platinum Cesium Praseodymium Chromium Rhodium Cobalt Rubidium Dysprosium Ruthenium Erbium Samarium Europium Scandium Fluorspar Tantalum Gadolinium Tellurium Gallium Terbium Germanium Thulium Graphite Tin Hafnium Titanium Holmium Tungsten Indium Vanadium Iridium Ytterbium Lanthanum Yttrium Lithium Zinc Lutetium Zirconium Source: USGS Insight article by Al Greenwood (Thumbnail shows a fuel pump that dispenses gasoline, which relies on critical minerals for production. Image by Shutterstock.)

17-Apr-2025

HOUSTON (ICIS)–The tariffs imposed by the US and the uncertainty of what will follow has caused a crash in oil prices and is one of the main factors behind a global decline in chemical prices in the days after the country's April announcement of its reciprocal tariffs. The following chart shows the sharp declines among the seven building-block chemicals. Notably, the declines continued even after the US paused the implementation of the higher reciprocal tariffs and settled for the relatively lower 10% rate against most countries. The exception is China, which has been responding to US tariffs with matching rates. The two countries are now imposing triple-digit tariffs on each others' imports. While the US has made exceptions for critical minerals, pharmaceuticals and electronics, China has made none. China's tariffs include the large amounts of natural gas liquids (NGLs) that it imports as feedstock for its propane dehydrogenation (PDH) units and its ethane crackers. LOWER OIL PRICESPrices for plastics and petrochemicals tend to rise and fall with those for oil. Oil prices have been falling since the start of the year, but the decline accelerated rapidly following the April tariff announcements by the US, as shown in the following table. Figures are in dollars per barrel. 2-Jan 1-Apr 14-Apr Brent 75.93 74.49 64.88 WTI 73.13 71.20 61.53 The decline was remarkable because it happened despite the weakening of the US dollar. The US dollar index has fallen by 8% as of 14 April since the start of the year. Oil prices tend to rise when the dollar weakens. This relationship has broken down in part because of plans by OPEC and its allies (OPEC+) to increase May production by an amount much higher than anticipated. But another reason is lower demand. Following the reciprocal tariff announcement by the US, ICIS lowered its forecast for global oil demand by 10%. ICIS also lowered its forecast for Brent oil prices for the rest of the year. Lower oil prices are manifesting themselves in aromatics markets, which are closely tied to crude. Export declined month on month for toluene and other aromatics from South Korea to the US for gasoline blending for March loading. Prices of toluene in India tumbled to fresh three-year lows. FALLING CHEM DEMANDDemand for plastics and chemicals also tends to rise and fall with the economy. Economists have started lowering their forecasts for growth, according to a periodic survey conducted by The Wall Street Journal. Survey participants also increased the chances of a recession. Tariffs will act like a sales tax. Companies and consumers will treat the tax like any other – they will take steps to avoid it by purchasing fewer goods. If one applied the US baseline tariff of 10% to the $3.3 trillion of goods the US imported in 2024, that comes to $3.3 billion in taxes. That represents a lot of potential purchases that US companies and consumers could defer or abandon. RPM International, a US producer of coatings, adhesives and sealants, expects that the slow- to no-growth environment of the past 18 months will persist. RPM's comments are notable because they were made on 8 April, after the US announced its reciprocal tariffs. UNCERTAINTYUncertainty is starting to paralyze some key chemical end markets. The auto industry in the US is already showing signs of this, RPM said. In European polyethylene (PE) markets, buyers are retreating to the side lines rather than committing to volumes in the current climate. “All in all, people are being careful, and that's not just converters that also consumers. People are worried about the future, and it's probably affecting demand further down chain as well," said ICIS markets editor Ben Monroe-Lake. “All in all, people are being careful, and that's not just converters that also consumers. People are worried about the future, and it's probably affecting demand further down chain as well.” REDIRECTED TRADE FLOWSBy imposing such broad tariffs, the US has erected a formidable trade barrier around its economy, which has caused exporters to redirect their shipments to other markets. This is especially true of Chinese exports. The US has created an effective embargo of Chinese imports by increasing its tariffs by 145% in 2025. Even with the recent exemptions adopted by the US, a large portion of Chinese imports will need to find new markets. The following table shows 2024 US general imports from China. Figures are in US dollars. Chapter Description Value 29 Organic chemicals 8,519,224,570 39 Plastics and plastic products 19,290,918,758 All Chapters Total 438,947,386,145 Source: US International Trade Commission (ITC) Similarly, China's 125% tariffs on shipments from the US would cause a large amount of products to be redirected, as shown in the following table. Figures are in US dollars. Chapter Description Value 27 Coal; mineral fuels, oils and products 14,727,138,106 29 Organic chemicals 3,980,594,815 39 Plastics and plastic products 7,452,840,887 All Chapters Total 143,545,739,507 Source: US ITC Given the tariff rates, it's likely that direct trade between the US and China will crater, said Lynn Song, chief economist, Greater China, at ING. Re-arranging global trade flows on such a scale will affect local chemical markets directly and indirectly through the influx of end products made with plastics and chemicals. The world was already contending with an oversupply of chemicals. This will aggravate it Such concerns have already appeared in east Chinese markets for certain grades of linear low density polyethylene (LLDPE) and high density polyethylene (HDPE), which reached multi-year lows. Market players are worried that US tariffs will cause a decline in demand for Chinese products that use these plastic grades. Similar concerns are arising in the Middle East among buyers and sellers of polymeric methylene diphenyl diisocyanate (PMDI) US auto tariffs could cause producers in the rest of the world to reduce output of vehicles and parts. These auto tariffs are global, and they are separate from the reciprocal tariffs. As such, the US auto tariffs are still in effect. If auto producers lower output, that will reduce demand for plastics and chemicals used in auto production, such as polypropylene (PP), nylon, butadiene (BD), and styrene butadiene rubber (SBR) “I may have to tweak my operations if I lose access to the US market, and if so, certainly I would be prudent now not to overcommit on forward deliveries of raw materials including EPDM,” said an auto parts maker in southeast Asia. Ethylene Propylene Diene Monomer (EPDM) refers to a synthetic rubber. DEFLATIONARY SPIRALIf companies expect declines to continue, then they may postpone purchases, setting off a deflationary spiral, in which sellers lower prices each time buyers defer purchases. Such a dynamic could emerge in European ethylene market and its PP market. US TARIFFS COULD MAKE THE COUNTRY THE EXCEPTIONAlthough US prices for building blocks have fallen since the April tariff announcement, many have still raised their expectations for inflation. RPM said on 8 April that the tariffs announced at that time would raise its raw material costs for its US operations by 4.3%. RPM's forecast did not take into account the 90-day pause on tariffs that the US announced on 9 April. That said, others are expecting prices in general to increase. Seasonally adjusted, a net 30% of US small business owners planned price hikes in March, up one point from February and the highest reading since March 2024. CHINA'S NGL TARIFFS MAY CREATE US GLUTChina's tariffs of 125% do not carve out any exemptions for ethane, liquefied petroleum gas (LPG) or other natural gas liquids (NGLs). China imports large amounts of these feedstocks from the US If China maintains the tariffs on NGLs, it could cause a supply glut of these primary chemical feedstocks in the US. The country does not have the chemical capacity to absorb the shipments that would normally go to China, and it is unlikely that the rest of the world can fully offset the loss of China as an export destination. If China maintains its tariffs on US NGLs, ICIS expects that US ethane and propane prices will decline. Insight article by Al Greenwood Additional reporting by Vicky Ellis, Ajay Parmar, Nurluqman Suratman, Isaac Tan, Nel Weddle, Melanie Wee, Kojo Orgle and Jonathan Yee Infographics by Yashas Mudumbai (Thumbnail shows a flask, which commonly holds chemicals. Image by Fotohunter.)

15-Apr-2025

NEW YORK (ICIS)–It is now a full-blown trade war between the US and China with the launch of massive salvos of tariffs and retaliatory tariffs, far exceeding levels during the first US-China trade war which started in 2018. Trade flows are set to be disrupted in a big way, resulting in a seismic shift in the global chemical industry. The US implemented additional 84% tariffs on imports from China on 9 April – a 34% reciprocal tariff announced on 2 April, and another 50% in response to China’s initial planned retaliation of 34% tariffs on imports from the US. With the earlier 20% tariffs on China implemented in February (+10%) and March (+10%), the additional US tariffs on imports from China jump to 104%. The US escalation against China brings the US effective tariff rate to 29.4%, the highest level since 1890 during the McKinley administration, pointed out Kevin Swift, ICIS senior economist. Since 2 April, dubbed ‘Liberation Day’ by US President Trump, the US claims over 50 countries have reached out for negotiations. “It’s been a week, and this is causing real damage to the economy. Credit markets starting to show signs of stress,” said Swift. “We are increasingly concerned as this continues to play out with no sign of resolution.” The ICIS economist sees a 34% probability of a recession in the US economy in the next 12 months but adds that “the risk of recession is rising every day this goes on”. US PE, EG EXPORTS TO CHINAChina plans to retaliate against the retaliation, upping the tariff ante by another 50% and bringing tariffs on US imports to 84% if implemented on 10 April. US exports of polyethylene (PE) and ethylene glycol (EG) to China can fully be expected to grind to a halt. Since 2018, the start of the first US-China trade war, US ethylene, PE and EG exports to China have exploded more than four times to over 3.5 million tonnes in 2024, with PE at around 2.4 million tonnes – more than three times the volumes in 2018, according to the ICIS Supply and Demand Database. US PE exports to China accounted for between 15-20% of total US PE exports, depending on grade. US EG exports accounted for over 30% of total US EG exports. "There is no other market that can absorb as much EG as China. There could be some reshuffling, but not complete substitution," said Antulio Borneo,  vice president and Americas olefins lead analyst at ICIS. Even with China’s initial planned retaliatory tariffs of 34%, “US PE margins go negative at current production costs,” said Harrison Jacoby, director of PE at ICIS, who noted that US PE exports overall have been down 8.1% year to date. While US PE exports could shift to Europe, the EU is planning retaliatory tariffs against the US, with PE initially among the targets. In retaliation for US 25% tariffs on steel and aluminium imports that took effect on 12 March, the EU approved a new round of tariffs on imports from the US on 9 April. The initial list of proposed tariffs released in March included high density PE (HDPE), linear low density PE (LLDPE) and low density PE (LDPE), along with a range of plastics and rubber products. The EU tariff levels percentage levels reportedly range from 10-25%, with one set of tariffs to go into effect on 15 April and another on 15 May, according to media reports. On 9 April the US implemented 20% tariffs on imports from the EU as part of its broad reciprocal tariffs. The US is also a major exporter of PE to Europe. In 2024, the US exported nearly 1.5 million tonnes of LLDPE, over 500,000 tonnes of HDPE, and around 150,000 tonnes of LDPE to the EU; representing around 19% of total LLDPE exports, 11% of total HDPE exports and 8% of total LDPE exports, according to the ICIS Supply and Demand Database. US PE exports to the EU in 2024 were almost 1.5 times higher than in 2018. Total US PE exports to China and Europe comprised 32% of total US PE exports in 2024. The US is a major importer of methylene diphenyl diisocyanate (MDI) with China and the EU as major suppliers. With 104% tariffs on China, the US will not see anything close to the 229,000 tonnes of MDI imported from China in 2024, which accounted for 57% of total US MDI imports, according to the ICIS Supply and Demand Database. CHINA EXPOSUREUBS analyst Joshua Spector on 9 April highlighted publicly traded US chemical companies’ exposure to China. Those with a meaningful percentage of sales from China include Methanex (22%), Celanese (19%), DuPont (19%), Huntsman (18%), Eastman, Axalta Coating Systems, PPG (all at 11%), and Celanese and Dow (both 10%). “Chemical demand in China is typically about equal to US and Europe combined. China is overall a net importer of petrochemicals but an exporter of several coal and mineral-based chemicals (including caustic soda and titanium dioxide), and often several niche chems (rare earth chemicals, pesticide ingredients, etc) that are small but critical to many chemicals,” said Spector. Visit the US tariffs, policy – impact on chemicals and energy topic page Infographics by Yashas Mudumbai Insight article by Joseph Chang

09-Apr-2025

NEW YORK (ICIS)–2 April 2025 – dubbed ‘Liberation Day’ by US President Trump – saw a sweeping and substantial salvo of reciprocal tariffs, with a baseline tariff set at 10% but for many countries, much higher customized levels. The higher reciprocal tariffs are scheduled to come into effect on 9 April, with the baseline 10% tariff imposed on 5 April. However, as of 8 April, there is emerging optimism on the potential for trade deals following comments from US President Trump that South Korea and China want to make a deal, and from administration officials that the US is in discussions with a number of countries. The reciprocal tariff levels – which include 34% on China, 20% on the EU, 46% on Vietnam, 32% on Taiwan, 26% on India, 25% on South Korea and 24% on Japan – were very much higher than anticipated. For China, 34% in reciprocal tariffs to come into effect on 9 April would be on top of the previous 20% tariffs the US implemented in February (10%) and March (10%), catapulting additional US tariffs on China this year to 54%. Products that fall under US sectoral tariffs, such as 25% on autos and auto parts, in effect since 5 April, will be exempt from the reciprocal tariffs. Products flagged for upcoming sectoral tariffs – pharmaceuticals, semiconductors, lumber and copper – will also be exempt from reciprocal tariffs. For Canada and Mexico, the US 25% tariff will remain in place, but only for non-USMCA (US-Mexico-Canada Agreement) compliant imports. DIRECT IMPACT ON US CHEMICAL MARKETSTariffs will undoubtedly raise costs for the US chemical industry and its customers, in the form of logistics, feedstocks and components such as additives and catalysts. For certain product chains where the US is self-sufficient, the direct impact should be somewhat limited. For example, Canada is the dominant exporter of chemicals and plastics to the US, but these are primarily in the olefins chain – polyethylene (PE), polypropylene (PP), propylene and ethylene glycol (EG) – where the US is more than self-sufficient and a big net exporter. These should also be USMCA compliant and thus exempt from tariffs. Even if there was a disruption, US producers in the US Gulf Coast could ship more volumes of ethylene and propylene derivatives domestically, replacing imports from Canada – although at higher logistics costs to some locations. The aromatics chain is more complicated. The US is a large net importer of benzene, toluene, xylenes and paraxylene (PX) – the bulk of which comes from South Korea, which is being hit with a 25% reciprocal tariff. The EU also exports aromatics to the US and will be subject to a 20% tariff. The US is a major importer of methylene diphenyl diisocyanate (MDI) with China and the EU as major suppliers. With 20% in additional tariffs imposed on all China exports in two stages – February (10%) and March (10%) – on top of the existing 25% tariff on China MDI, the US tariff on MDI from China is 45%. Adding the 34% reciprocal tariff brings this to a whopping 79% tariff level by 9 April. US EXPORTS IN CROSSHAIRS FOR RETALIATIONThe bigger risk to the US is for chemical and plastics exports. The US runs a chemical trade surplus of over $30 billion, according to the American Chemistry Council. Already China has announced a 34% tariff on all US imports to go into effect 10 April, while the EU prepares €18 billion in tariffs that would go into effect 15 April. The latter, which is in retaliation for US steel and aluminium tariffs, includes US PE and other polymers and chemicals. Even as the US is a much larger goods importer than exporter, particularly with China, it is the reverse for the US chemical industry, which will bear the brunt of the impact. “US goods exports to China in 2024 were $143.55 billion. The US imports far more – $462.64 billion – but this will have an impact on the US chemical industry as we compete against producers in the Middle East and elsewhere in Asia,” said Kevin Swift, ICIS senior economist for global chemicals. “This is the first large retaliatory challenge. Let’s hope it doesn’t devolve into a swirling beggar-thy-neighbor trade war,” he added. The new China 34% tariff on imports from the US could result in a $34 billion falloff in US exports of all goods to the nation – about a 24% decline, according to an analysis by Swift. Since 2018, the year that the first US-China trade war kicked off by the first Trump administration, US commodity chemical net exports have surged 88% to 2024, and are thus far more exposed to retaliatory tariffs than ever before. During this period, US exports of commodity chemicals and polymers to the world have increased 28% while imports declined 5%, according to the ICIS Supply and Demand Database. Top US chemical and polymers exports are linear low density PE (LLDPE), high density PE (HDPE), EG, polyvinyl chloride (PVC), caustic soda, methanol, low density PE (LDPE), vinyl chloride monomer (VCM), polypropylene (PP) and styrene. If China puts an additional 34% import tariff on US PE, the economics for exports do not work, even with the substantial US cost advantage. “With a 34% tariff on top of the current 6.5% tariff, US PE margins go negative at current production costs. US PE demand has been weak so far this year, particularly exports, down 8.1% year on year,” said Harrison Jacoby, director of PE at ICIS. “We see rebalancing of trade – less US PE into China, more to Europe. The industry already saw the start of this trend in 2024, with more US PE shifting from China to Europe. Now we need to see how Europe reacts on 13 April with its proposed retaliation targeting US PE, if they will increase their current 6.5% duty,” he added. In retaliation for US 25% tariffs on steel and aluminium imports that took effect on 12 March, the EU plans a new round of tariffs on around €18 billion of imports from the US, which includes high density PE (HDPE), linear low density PE (LLDPE) and low density PE (LDPE) along with a range of plastics and rubber products. This would be implemented in mid-April following a consultation period. The US is also a major exporter of PE to Europe. Total US PE exports to China and Europe were 32% of total US PE exports in 2024, according to the ICIS Supply and Demand Database. “The big picture is there are two low-cost PE regions that are the only net exporters – the US and Canada and the Middle East. These regions will continue to fill global production shortfalls, optimizing to mitigate the impact of tariffs,” said Jacoby. However, demand growth is likely to fall as a trade war will only further weaken demand for all goods and services, he added. Retaliatory tariffs on key US chemical exports could also have ripple effects throughout the chain. For example, retaliatory tariffs on US PE could lower cracker operating rates, in turn reducing crude C4 (CC4) feedstock coming out of those crackers for butadiene (BD) production. “I am concerned about impacts on our suppliers and customers. If there’s an impact on the ethylene industry which causes rate reductions because exports [of derivatives such as PE] get tougher, that would have an indirect effect on our supply of CC4s,” said Ed Dineen, CEO of BD producer TPC Group, in an interview with ICIS at the International Petrochemical Conference (IPC), hosted by the American Fuel and Petrochemical Manufacturers (AFPM). HIT TO KEY END MARKETSKey chemical end markets such as housing, automotive and durable goods will be burdened with higher costs with these reciprocal tariffs. Demand in these sectors has already been struggling for more than two years. “The economic law of demand holds that as prices of a good rise, demand for the good will fall,” said Kevin Swift, ICIS senior economist for global chemicals. US sectoral tariffs of 25% on steel and aluminium, in effect since March, will add nearly $1,500 to the cost of a light vehicle and result in lower sales for the automotive industry, he estimated. This would push down sales by about 525,000 units if the cost is fully pushed through, said Swift. In addition, 25% sectoral tariffs on autos and auto parts will put further upward pressure on pricing, in turn lowering demand further. The ultimate price impact, and not just for automotive, will also depend on consumer demand. It is likely the higher costs from tariffs will be shared by producers, suppliers and consumers. Housing costs are also poised to rise, with sectoral tariffs on steel and aluminum, and signaled tariffs on lumber and copper, along with reciprocal tariffs that will cover other imported goods such as vinyl floors, furniture, carpets and appliances. Consumer confidence is unlikely to improve anytime soon. The Conference Board’s consumer confidence reading in March for future expectations plunged 9.6 points, to 65.2, the lowest in 12 years. Inflation expectations for the next 12 months rose from 5.8% in February to 6.2% in March as consumers were concerned about high prices and the impact of tariffs. One silver lining is that other countries may lower their tariffs and trade barriers in response to US reciprocal tariffs, opening markets for US exports and in turn leading to the US lowering its reciprocal tariff levels. WALL STREET CUTS EARNINGS ESTIMATESIn the meantime, Wall Street is making sizeable cuts to US chemical company profit forecasts, with tariffs expected to squeeze margins in the form of higher costs as well as lower demand. “Uncertainty over tariffs has weakened US PE/PP trading volumes and we expect shifts in trade flows to create near-term negative supply chain/production impacts, which could be negative for Q1,” said UBS analyst Joshua Spector in a 7 April research note. “We are lowering estimates and price targets to better reflect a global [slowdown] that spills into 2026 and 2027,” said Jefferies analyst Laurence Alexander in a 7 April research note. “While we could easily be proven wrong by a couple of tweets (either escalating further or shifting from dramatic action to symbolism, bluff and rhetoric), we are adjusting our framework to reflect the current state of policy,” said Alexander. THE BIG PICTUREUltimately, US President Trump aims to engineer a “once in a hundred year pendulum shift” in the global economy and geopolitical order, said Rana Foroohar, global business columnist at the Financial Times, at the IPC hosted by the AFPM. “Tariffs are for real. Tariffs are here to stay…Trump sees the global economy as a giant gaming table, with the US consumer market as the biggest chip to put down. And he is going to use it in ways we haven’t seen in half a century, if not more,” said Foroohar. “This imbalance between Wall Street and Main Street – between the asset growth economy and the income-led economy – is really at the heart of what’s going on today…Cheaper is going away [and] place matters,” Foroohar added. Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy Infographics by Yashas Mudumbai Insight article by Joseph Chang and Yashas Mudumbai

08-Apr-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 28 March. Japan Mar manufacturing activity deteriorates as output, new orders fall By Nurluqman Suratman 24-Mar-25 12:28 SINGAPORE (ICIS)–Japan's manufacturing purchasing managers' index (PMI) fell to 48.3 in March, marking its lowest point since February 2024 amid a sharp drop in output and new orders, preliminary estimates from au Jibun Bank showed on Monday. INSIGHT: Chandra Asri prioritizes Indonesia chlor-alkali-EDC project By Pearl Bantillo 24-Mar-25 19:42 SINGAPORE (ICIS)–Indonesian producer Chandra Asri Petrochemical is proceeding with its flagship chlor-alkali (CA) ethyl dichloride (EDC) project, taking a bottom-up approach in its planned second petrochemical complex amid a challenging global landscape. Asia MEK faces demand slowdown, mounting cost pressure entering Q2 By Joy Foo 25-Mar-25 13:19 SINGAPORE (ICIS)–Asia’s methyl ethyl ketone (MEK) prices have declined in March due to weakened demand, but Chinese makers’ cost pressure and low inventories may limit further market downside in the near term. INSIGHT: China's solar policy deadlines fuel volatility of EVA market By Joanne Wang 26-Mar-25 12:00 SINGAPORE (ICIS)–The recurring “rush-to-install” phenomenon in China’s photovoltaic (PV) industry- marked by deadlines like April 30 and May 31 – has profound ripple effects on China’s EVA (Ethylene Vinyl Acetate) market, a critical material for PV encapsulation films. INSIGHT: Can Q2 heavy turnarounds pull Asia MEG market out of its malaise? By Judith Wang 26-Mar-25 13:00 SINGAPORE (ICIS)–Asia's monoethylene glycol (MEG) prices had plunged to a six-month low by late March driven by slower-than-expected demand recovery and ample domestic supply in China. Emission regulations, lower cost needed for alternative marine fuels support – IEA By Jonathan Yee 26-Mar-25 17:41 SINGAPORE (ICIS)–Accelerating the transition to cleaner energy in the maritime sector will require emission regulations and financial incentives surrounding alternative fuels such as methanol and ammonia, according to the International Energy Agency (IEA)’s Regional Cooperation Centre. China presses on with PP exports as supply pressure intensifies By Jackie Wong 27-Mar-25 12:18 SINGAPORE (ICIS)–With self-sufficiency on the rise and even more production capacities coming onstream through 2027, China is pressing on with its polypropylene (PP) exports, even as weak economic conditions and slow end-product demand persist. Asia automakers’ shares slump on US’ 25% tariffs on car imports By Jonathan Yee 27-Mar-25 12:14 SINGAPORE (ICIS)–Shares of automotive companies in Asia slumped on Thursday after US President Donald Trump signed an executive order imposing 25% tariffs on all foreign-made cars from 2 April. Asia imports more US ethane feedstock on diversification, trade diplomacy By Jonathan Yee 27-Mar-25 15:30 SINGAPORE (ICIS)–Asian petrochemical firms are expected to import more US ethane feedstock in the coming years as energy diversification efforts grow in the region, alongside southeast Asian leaders looking to improve trade relations with the US amid President Donald Trump’s tariff threats on countries with trade surpluses. S Korea carmakers call for government measures to mitigate US tariff impact By Nurluqman Suratman 28-Mar-25 12:44 SINGAPORE (ICIS)–South Korea’s automotive industry leaders on Friday called on the government to implement measures to soften the expected impact of US tariffs, which will take effect in early April. INSIGHT: Asia adipic acid waits on verdict from Europe ADD investigations By Josh Quah 28-Mar-25 13:00 SINGAPORE (ICIS)–An ongoing anti-dumping duty investigation from the European Commission on adipic acid imports from China have rocked Asia adipic markets in recent weeks.

31-Mar-2025

HOUSTON (ICIS)–US petrochemical producers are contending with shrinking margins caused by declining oil prices and rising gas prices – all while dealing with additional tariffs and uncertainty about the nation's economy. Petrochemical prices tend to rise and fall with oil prices. ICIS expects crude prices will fall in 2025. US feedstock costs tend to rise and fall with those for natural gas. ICIS expects US gas prices will remain elevated. Most executives at a major trade conference warned about the potential of tariffs raising their costs and uncertainty delaying spending. OIL, GAS PRICES WILL SQUEEZE US MARGINSICIS publishes forecasts for oil and gas prices, and both could move in ways that would compress margins for US ethylene producers. The following shows the year-on-year changes in US oil and natural gas prices that are forecast by ICIS. Brent Crude Prices ($/b) WTI Crude Prices ($/b) Natural Gas Prices ($/MMBTU) 2025 -6.7% -6.7% 66.8% 2026 -7.4% -7.9% 3.9% Source: ICIS A key driver of higher natural gas prices has been a surge in demand for liquefied natural gas (LNG) from Europe and Asia Pacific, said Kojo Orgle, ICIS analyst who oversees US forecasts for energy and feedstocks. US gas supplies should tighten further because of demand for power generation, particularly from data centers. "In contrast, crude oil prices are projected to decline amid accelerating supply growth from non-OPEC producers such as the US, Brazil and Guyana," Orgel said. OPEC and its allies, collectively known as OPEC+, could choose to increase production. At the same time, oil demand could be constrained by rapid adoption of electric vehicles (EVs) and slower economic growth, especially in China, Orgle said. In 2024, oil's share in total energy demand fell below 30% for the first time ever, according to the International Energy Agency (IEA). So far, US contract ethylene margins have fallen from the start of the year, although they remain above levels in March 2024 and the 10-year average. The rise in oil production will provide chemical producers with one benefit for US producers. Ethane supplies will continue growing, according to ICIS forecasts. Production from natural gas processing plants should rise by nearly 1% in 2025 and by nearly 3% in 2026. HIGHER COSTS FROM TARIFFSFalling prices in oil and rising ones for gas are coming at the wrong time for US petrochemical producers. Tariffs are increasing import costs for raw materials used to make many catalysts and plastic additives. Tariffs on steel and other metals could increase costs during turnarounds. The EU and Canada have proposed retaliatory tariffs on US exports of polyethylene (PE). The prospect of additional tariffs has contributed to economic uncertainty, causing companies and consumers to delay purchases. Because of uncertainty about tariffs and mortgage rates, Huntsman CEO Peter Huntsman expects any rebound in the housing market to be delayed LOWER FORECASTS FOR US GDPJust as costs are rising for US producers, demand is falling. Demand for US petrochemicals tend to rise and fall with GDP, and economists have lowered their forecasts for economic growth. The following table summarizes the changes in forecasts. Latest Previous Fed Reserve 1.7% 2.1% Fitch 1.7% 2.1% OECD 2.2% 2.4% Demand for petrochemicals could fall just as tariffs raise costs and energy prices become less favorable. Insight by Al Greenwood (Thumbnail shows pumpjack. Image by Shutterstock.)

27-Mar-2025

LONDON  (ICIS)–European propylene oxide (PO) and styrene monomer (SM) will remain oversupplied following the closure of LyondellBasell and Covestro’s flagship complex in the Netherlands, but the erosion of local capacity is leaving markets increasingly fragile. In this podcast, ICIS Insight editor Tom Brown speaks to Nicole Simpson, ICIS markets editor for PO, and Fergus Jensen, senior editor for styrene, about the likely fallout from the planned shutdown. Europe PO market chronically oversupplied, operating rates remain low Further shutdowns needed for PO market to come back into balance LyondellBasell may be able to meet demand from Europe, US plants Styrene market also looks to more shutdowns, but closure further reduces Europe capacity Domestic market increasingly dependent on imports, making the market increasingly fragile Shipping delays and plant outages having a more dramatic impact Still over 700,000 tonnes excess capacity in Europe PO market Imports of PO to Europe limited by infrastructure requirements, transport regulation Players starting to invest in import facilities, but remain in early stages POSM capacity continues to exceed demand, but PO a more of a driver than styrene Three other POSM units remain in Europe Click here to listen to the podcast.

27-Mar-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 21 March. Europe spot PE prices freeze mid-March on tariffs, no sign of panic Polyethylene (PE) spot prices in Europe are flat in mid-March after news of the EU-US tariffs brought trading activity to a halt, although little "panic" was seen in the week to 14 March. German economic sentiment rallies to pre-war levels on government spending plans Business sentiment in Germany jumped this month to the highest level since the onset of the Russia-Ukraine war, driven by expectations of higher government spending and the recent interest rate cut from the European Central Bank (ECB). LyondellBasell, Covestro confirm closure of Maasvlakte, Netherlands POSM site LyondellBasell and Covestro have confirmed the shutdown of the joint venture propylene oxide/styrene monomer (POSM) plant, the companies announced on Tuesday. INSIGHT: Major macro reversal as Europe and China prepare to ramp up stimulus while US aims to cut spending In the global chemical and economic landscape, the US has for many years been the ‘cleanest shirt in the dirty laundry basket’ with slowing but steady GDP growth, abundant and cheap energy, big government stimulus for infrastructure projects and a tilt towards reshoring. Europe domestic base oils market shrugs off tariffs threat Concerns in the European base oils market about the imminent US-EU trade dispute are limited to the wider economic impact long term, but participants dismissed an immediate effect given an exclusion for oil and oil products. INSIGHT: How short will Europe PE get if tariff war sticks? As the prospect of EU tariffs on US polyethylene sinks in, players in Europe will be gauging how exposed the region is, how short the market could get, and where replacements could come from, if tariffs are prohibitively high.

24-Mar-2025

SINGAPORE (ICIS)–Indonesian producer Chandra Asri is reconfiguring how it develops its second petrochemical complex project (CAP-2), a company spokesperson told ICIS on Monday. The CAP-2 project's commencement will now begin with downstream units, starting with a chlor alkali – ethylene dichloride (CA-EDC) plant in Cilegon, company corporate director Suryandi said. Chandra Asri, whose operations are based in Banten, Cilegon province, is currently Indonesia’s sole cracker operator. Its CA-EDC project, which will be operated by its subsidiary Chandra Asri Alkali, will be able to produce 400,000 tonnes/year of caustic soda and 500,000 tonnes/year of EDC. Construction will begin in the early second half of 2025 and will take around two years to complete, according to Suryandi. Start-up will be pushed back to 2027 from the previous target of end-2026. "We are mindful of the challenges posed by global market volatility and Indonesia's petrochemical industry. As a result, the CAP-2 Project is currently being reconfigured," Suryandi said. The move follows Chandra Asri's tie-up with trading firm Glencore to acquire the Singapore petrochemical assets of Anglo-Dutch energy giant Shell. Suryandi added that the CA-EDC plant will be integrated into Chandra Asri's existing petrochemical complex and will utilize ethylene produced by the facility. "With the establishment of the CA-EDC plant, the company reaffirms its commitment to reducing Indonesia’s dependence on Chlor Alkali imports and contributing to the supply of EDC, which currently faces a regional deficit," he added. Chandra Asri in its initial plans said that the CAP-2 complex will increase the company's annual overall production capacity to more than 8 million tonnes from 4.2 million tonnes. Based on the original plan, the CAP-2 complex would include a new naphtha cracker as well as downstream units including butadiene, an aromatics recovery plant, high density polyethylene (HDPE) plant and a low density polyethylene (LDPE) plant and a polypropylene (PP) plant. The LDPE plant was to be the first in Indonesia. Thumbnail image: Chandra Asri's petrochemical manufacturing site in Cilegon, Banten province, Indonesia (Source: Chandra Asri website)

24-Mar-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 21 March. Bearish sentiment prevails in Asia petrochemicals amid oversupply By Jonathan Yee 17-Mar-25 14:39 SINGAPORE (ICIS)–Weak downstream demand, exacerbated by economic and geopolitical uncertainties, keeps sentiment bearish and buyers cautious across petrochemical markets in Asia. China unveils consumption stimulus to safeguard growth By Fanny Zhang 17-Mar-25 16:00 SINGAPORE (ICIS)–China’s State Council announced on Sunday a special action plan to boost consumption, in fresh efforts to help achieve its growth target of around 5% for 2025. Monthly price gaps between Asia rPET, PET remain wide in Q1 By Arianne Perez 17-Mar-25 17:07 SINGAPORE (ICIS)–Average monthly spot prices between bottle-grade recycled polyethylene terephthalate (rPET) and polyethylene terephthalate (PET) pellets were persistently wide amid various factors in the Asian markets. Asia methanol in flux as Iran capacities expected to come onstream By Damini Dabholkar 17-Mar-25 17:26 SINGAPORE (ICIS)–The Asian methanol market has seen some price uncertainty over the last few weeks, with several market participants closely watching developments related to the start-up of methanol plants in Iran. INSIGHT: Asia chemical prices to soften in March amid crude oil losses – ICIS By Ann Sun 18-Mar-25 13:03 SINGAPORE (ICIS)–Asia’s petrochemical prices in March are expected soften due to downward pressure from crude oil losses. This forecast is driven by bearish sentiment caused by concerns over OPEC and its allies’ (OPEC+) planned output increase and the US’ trade policies. China remains net SM importer in 2024, setting stage for active exports in 2025 By Luffy Wu 18-Mar-25 16:04 SINGAPORE (ICIS)–Despite market players' rising focus on China's styrene monomer (SM) export market, the country remained a net SM importer in 2024 with an annual SM trade deficit of 159,719 tonnes. INSIGHT: China PET resin production growth to decelerate in 2025 By Jimmy Zhang 18-Mar-25 17:30 SINGAPORE (ICIS)–On an annual basis, China PET resin (mainly bottle grade) production growth remained quite high in both 2023 and 2024, at around 10% and 15% respectively. ICIS China February petrochemical index dips; March demand soft By Yvonne Shi 19-Mar-25 12:13 SINGAPORE (ICIS)–China’s domestic petrochemical prices weakened in February amid a sluggish market, with downstream factories slow to resume operations after the Lunar New Year holiday. PODCAST: Volatility seen in Asia, Mideast isocyanates amid recent supply changes By Damini Dabholkar 19-Mar-25 13:25 SINGAPORE (ICIS)–Asia and Mideast isocyanates prices climbed rapidly immediately after the Lunar New Year holiday, followed by sharp corrections in mid to end-February. Indonesia central bank keeps policy interest rate at 5.75% after market rout By Nurluqman Suratman 19-Mar-25 17:38 SINGAPORE (ICIS)–Indonesia’s central bank kept its policy rate unchanged at 5.75% on Wednesday, a day after local stocks closed nearly 4% lower, on concerns over the country’s economic growth prospects and government finances. Arbitrage widens for Asia-Europe acetic acid, etac spot trades By Hwee Hwee Tan 20-Mar-25 13:03 SINGAPORE (ICIS)–Traders leveraging on easing freight rates and a stronger euro have fixed several spot cargoes for acetyl products bound for Europe from China, lifting Asia-Atlantic trade volume into March. INSIGHT: Persistent capro oversupply sees plant closures, consolidation in Asia By Isaac Tan 20-Mar-25 14:00 SINGAPORE (ICIS)–The global caprolactam (capro) market is grappling with significant challenges, as oversupply from expanding Chinese production capacities, weak downstream demand, and rising margin pressures combine to create a pessimistic outlook for producers worldwide. Vopak's €1bn investments in energy transition projects underway – exec By Jonathan Yee 20-Mar-25 15:49 SINGAPORE (ICIS)–Dutch storage and infrastructure firm Vopak is doubling down on its energy transition strategy, re-affirming its commitment to invest €1 billion in low-carbon infrastructure through to 2030, the company’s Asia and Middle East chief told ICIS. Japan Feb core inflation at 3.0%; upholds interest rate hike hopes By Nurluqman Suratman 21-Mar-25 12:18 SINGAPORE (ICIS)–Japan's core consumer prices excluding fresh food in February rose by 3% year on year, remaining above the central bank's 2% target, reinforcing market expectations of further interest rate hikes this year. PODCAST: A tale of two olefins; C2, C3 to see diverging demand trends By Damini Dabholkar 21-Mar-25 13:32 SINGAPORE (ICIS)–Asia propylene (C3) editor Julia Tan speaks with Asia ethylene (C2) editor Josh Quah about the impact of recent tariff wars on downstream market sentiment, along with the markets' outlook for the second quarter.

24-Mar-2025