Epoxy resins

SAO PAULO (ICIS)–Braskem swung to a net profit in the first quarter, year on year, but sales and earnings fell slightly as the global petrochemicals downturn continues, management at the Brazilian polymers major said on Monday. Speaking to reporters from Sao Paulo, the company’s CEO and CFO described the operating environment as persistently challenging on the back of excess capacity and emerging international trade conflicts. The company’s net profit stood in Q1 at $113 million, up from a net loss of $273 million in the same quarter of 2024, while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) stood 2% lower, however, at $224 million. Braskem produces mostly polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), some of the most widely used polymers and which remain under intense pressure due to global overcapacities. Braskem (in $ million) Q1 2025 Q1 2024 Change Q4 2024 Q1 2025 vs Q4 2024 Sales 3,331 3,618 -8% 3,285 1% Net profit/loss 113 -273 N/A -967 N/A Recurring EBITDA 224 230 -2% 102 121% Brazilian operations achieved 74% utilization rates, up 4% from the previous quarter, while US and European facilities operated at 80% capacity, a 13% improvement, and Mexican operations reached 79% utilization (up 2%). The improved performance was primarily driven by better spreads and increased sales volumes, particularly in Brazil, Europe and the US. CHINA PP COMPETITION: ADDs?Much of the earnings call with reporters on Monday focused on the global trade tensions and competition from Chinese producers, particularly in the Brazilian market. "The question of tariffs generated much instability and many doubts in this first quarter," said CEO Roberto Ramos, who noted how negotiations over the weekend between China and the US in Switzerland could potentially alter the tariffs war. "This discussion between the two countries should move toward some kind of normality. Therefore, I think when all is said and done, after all this commotion, very little will remain,” he said. He highlighted a few aspects which have affected petrochemicals in the trade war so far, such as China's decision not to impose retaliatory tariffs on US natural gas-based ethane imports, which he said stand at approximately 18 million tonnes annually. That was a positive, he said, because ethane from the US to China would continue uninterrupted, preventing a scenario where excess ethane in the US would have driven down prices and potentially created advantages for ethane-based producers. Braskem operates most of its plants in Brazil on crude-derived naphtha. However, Chinese authorities did maintain tariffs on propane imports from the US, which affects Chinese PP producers and that did affect Braskem, said the CEO. “China has a surplus in PP, so it is a net exporter, and the main destination of this excess PP production has been precisely Brazil, which has greatly affected us here in the Brazilian market,” said Ramos. "They wanted to become self-sufficient regarding both resins [PP and PE], had a project to become self-sufficient in PP by 2030, but achieved this much earlier, by 2024. Therefore, as there isn't enough consumption for the resin, they're forced to sell, and they sell here at a price we can't compete with." In response to this competitive pressure, Ramos confirmed Braskem is actively pursuing trade remedies in talks with the authorities, which could, among others, include instruments like antidumping duties (ADDs) against China but also against the US, also a big producer with excess product in some materials. "Yes, we are studying trade protection measures in relation to China, as, moreover, we are also doing in relation to US PE producers, who also place resin here at a lower price than they sell in their respective countries," he said. Management said they continue to pursue the "switch to gas" strategy, which involves systematically reducing dependence on naphtha as feedstock, particularly in Brazilian operations, in favor of more competitive ethane-based production. Despite recent decreases in oil prices and consequently naphtha prices, executives said the price differential between naphtha and ethane remains substantial at approximately $350-370/tonne, sometimes even higher. RECOVERY STILL WAITINGAlthough some of Braskem’s margin spreads posted improvements during Q1, the CEO was not too optimistic about a strong recovery anytime soon. “I do not imagine that spreads will recover further in the short term, because there is still an excess supply of ethylene but also of propylene, and therefore the plants are operating at lower capacity. Apart from the US producers who are processing at over 90% of their capacity utilization, we here have around 70%, and the Europeans have even less than that,” said the CEO. “As long as this excess installed capacity still exists, as long as the pace of construction of new plants in the US and China continues, there is no reason to imagine that spreads will react, because the supply and demand situation continues to be an excess of supply in relation to demand. “If you have an excess installed capacity of 30 million tonnes of ethylene, for example, therefore of PE, and if the market increases its consumption volume by 5 million tonnes per year, you will need at least six years to be able to clear this excess supply. Therefore, there is no structural reason to think about an increase in spreads."

12-May-2025

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the fortnight ended on 2 May. NEWSBrazil chems production still impacted by imports despite protectionist measures – Abiquim Brazil’s chemicals production structural woes, such as high production costs, remain while imports continue making their way unabated, despite protectionist measures deployed by the government, according to the director general at producers’ trade group Abiquim. INSIGHT: Mexico’s chemicals revive as tariffs woes ease (part 1)When Donald Trump won the US election with a larger-than-expected majority, Mexican chemicals players started making plans for their businesses under what promised to be a disruptive second term for trade relations between the two countries. Argentina savoring economic spring but recovery for all biggest task still pending – Evonik execAfter years in the doldrums, Argentina's economy is finally going through some sort of “spring” thanks to sectors such as agricultural, mining and energy – but the country, however, is yet to achieve a recovery which works for all Argentinians, an executive at Germany’s chemicals major Evonik said. Mexico’s improved fortunes on US tariffs propping up petchems demand – Entec execMexico’s chemicals fortunes seem to be turning for the better after the country was spared from the most punitive US’ import taxes, according to an executive at chemicals distributor major Ravago’s Mexican subsidiary. INSIGHT: Argentina faces up to rising inflation after currency controls liftedArgentina’s decision to end foreign currency restrictions is set to devalue the peso’s official exchange rate and increase inflation but it was a vital step to normalizing a dysfunctional exchange rate system. Mexico launches antidumping investigation into US PVC importsThe Mexican government officially launched an antidumping investigation into imports of suspension polyvinyl chloride (PVC) resin from the US, following allegations of unfair trade practices that have impacted domestic industry at the end of April. Brazil's Braskem Q1 higher priced PE, PP sales in Q1 cannot offset lower PVC volumesBraskem resin sales in its domestic market dropped by 4% in Q1, year on year, due to lower polyethylene (PE) and polypropylene (PP) sales volumes as the producer prioritized sales with higher added value, the Brazilian polymers major said. Mexico’s Orbia earnings fall again while ‘trying’ to guess potential green shoots – CEOOrbia’s Q1 sales and earnings fell again, year on year, with the Mexican chemicals producer already writing off any significant recovery in 2025 and “trying to figure out” potential green shoots for 2026, its CEO said on Friday. PRICINGLatAm PE international prices steady to lower on competitive US export pricesInternational polyethylene (PE) prices were assessed as steady to lower as US export prices remain competitive. LatAm PP domestic, international prices fall in Colombia, Mexico on cheaper feedstocksDomestic and international polypropylene (PP) prices fell in Colombia and Mexico tracking lower US propylene costs. In other Latin American (LatAm) countries, prices were unchanged. LatAm – Argentina PP domestic price range narrows as distributors try to compete with cheaper imports Domestic polypropylene (PP) price range was assessed as narrower in Argentina. Distributors' prices have fallen to compete with cheaper imports.

05-May-2025

LONDON (ICIS)–Demand in the EU and US epoxy markets remains muted and sentiment has become even more cautious, as players navigate the changing and complex tariff landscape. In this podcast, Heidi Finch – who covers the Europe epoxy market – and fellow senior editor Tarun Raizada – who covers the US epoxy market – share insights on key topics including tariffs, effects on sentiment, demand and profitability struggles. Europe epoxy sentiment diluted in April; as US President Donald Trump's tariffs add to demand caution; competition from South Korea and within Europe US epoxy price momentum slowed in April as players scrambled to assess impact on supply chain of duty/tariff fallout Profitability still a challenge; but benzene drop in Europe provides some relief Sentiment cautious in US moving forward as demand outlook far less favorable amid extended tariff uncertainty Trump tariffs cast a cloud over the downstream outlook, EU players hope trade deals will be reached Podcast editing by Nick Cleeve

02-May-2025

SAO PAULO (ICIS)–Brazil’s chemicals production structural woes, such as high production costs, remain while imports continue making their way unabated, despite protectionist measures deployed by the government, according to the director general at producers’ trade group Abiquim. Andre Passos said chemicals plant capacity utilization remains at lows hovering around 60%, an unsustainable rate for the long term which requires Brazil focuses more on the feedstocks available for  its chemicals industry, and increasing natural gas production remains Brazil’s pending task, said the Abiquim head. While Brazil’s state-owned energy major has become a key global crude oil producer, successive governments in Latin America’s largest economy have sidelined natural gas production despite the country’s large reserves of it. As US natural gas production boomed in the 2010s, the petrochemicals industry went through a revival thanks to the abundant and cheap supply of ethane or propane – one of the routes for chemicals production – for decades to come. As the US’ ethane-based production boomed, production via crude oil’s naphtha route – predominant still in Latin America, as well as Europe and Asia – became less competitive: that is the crossroads the industry must face in coming years. STILL STRUGGLING, DESPITE STATE HELPAbiquim successfully lobbied in 2024 for the Brazilian government to increase import tariffs on dozens of chemicals, aiming to slow down the entry of cheaper material from abroad – some of it, dumped by large producers such as China and the US. Other market players, big importers such as plastics transformers – represented by trade group Abiplast – or importers of industrial chemicals – represented by trade group Associquim – have said the higher import tariffs have been passed onto customers already. That has been one of the reasons why Brazil's inflation rates are creeping up, the head of Associquim, Rubens Medrano, said in an interview with ICIS,  but Abiquim's Passos said this has not been the case, citing an Abiquim-funded study showing his side of the argument. The cabinet has also implemented or is mulling anti-dumping duties (ADDs) in materials from both the US and China and, on top of that, a tax break for chemicals producers called REIQ was reintroduced by the current administration of Luiz Inacio Lula da Silva. The government has also taken initial steps to expand the natural gas market, easing regulations and mandating Petrobras to step up its game in the sector. Equally, deals to bring more gas from Bolivia’s dwindling reserves were signed in 2024, and chemicals producers are also putting hopes in Argentina’s Vaca Muerta fields. Most of these actions would show results in the medium and long terms. In the here and now, none of them have helped ease chemicals producers’ challenging operating conditions, said Passos. "Nothing has fundamentally changed in our situation in the past few months. The scenario remains the same, perhaps even worsening with [US President Donald] Trump's trade measures, and we continue suffering with low capacity utilization rates: Brazil's chemical production has been on a downward trajectory since 2016,” said Passos. “Up to that point, both chemical production and imports grew in tandem with overall consumption. But a structural shift occurred in 2016: imports continued to increase, capturing more market share, while domestic production began to decline. And so here we are, nine years later, and the clearest indicator is the capacity utilization level of our plants, which has been falling sequentially. From above 80% before 2016, it dropped to 70% and now even below that at around 60%." There are two root causes for this downturn, said Passos, one created abroad and over which Brazil cannot do very little part from imposing hefty import tariffs – US and China overproduction which makes imports into Latin America more likely – and the other, equally hard to crack, is Brazil’s lack of natural gas and, more widely, feedstocks for chemicals production. IT IS (ALMOST) ALL ABOUT GASBrazil's chemical industry's competitiveness problem is directly linked to feedstock costs: 80% of production costs for fertilizers and 50-60% for polymers come from raw materials, Passos explained, and despite some regulatory changes, gas prices remain stubbornly high, around four or five times higher than in the US. And the fundamental issue is, of course, price. US gas prices stand at around $3.30/MMBtu. In Brazil, they are around $15/MMBtu. Passos and Petrobras established a working group in 2023 to study potential chemicals sector-specific programs the energy major could develop, mostly related to natural gas. However, a nearly two-year long silence followed, but Passos said there should be news from Petrobras on this front in a few weeks’ time. "The gas market in Brazil has seen marginal movement. There's been the creation of a free gas market, which was important. But what we see is that gas supply in Brazil remains constant [at not high enough levels]. This price level puts Brazilian producers at a significant disadvantage compared to US competitors – and this gap has existed for years and remains painfully constant,” said Passos. "We've presented [to Petrobras] all the information about the chemical industry, consumption profiles, volumes that could be involved in a natural gas contract, etc. Now, we're waiting for Petrobras's response regarding the product they will offer to the chemical sector as a bloc – our expectation is that Petrobras will present a proposal as soon as this month.” However, Passos acknowledged progress has been slow, adding that no measure by itself is to be a miracle for chemicals production in Brazil as the sector carries on its back decades of its global competitiveness being dented, as other countries’ production rose sharply, gaining market share. Abiquim’s head provided a historical perspective for this. Brazil built its petrochemical industry in earnest from the 1960s on, a model which lasted until the 1980s and based on a partnership between private actors and the Brazilian state through Petrobras. This "Chinese model," as he described it, changed in the mid-2000s, when Braskem – of which Petrobras is the second largest shareholder, with nearly 40% ownership – was formed. But Braskem remains, to this day, fundamentally a polymers producer, a sub-sector in which the global overcapacities are hitting especially hard. "A private company became the majority owner in petrochemical centers and in the manufacture of thermoplastic resins. Petrobras remained a strategic partner, but not the controlling partner. This shift created problems in negotiating raw material prices and availability of ethane and natural gas – there is a dynamic of trying to maximize margins at each stage of the production chain, and this strains the model," said Passos. AND THEN IT IS ALSO ABOUT CHINAChina continues to place competitive pressure on Brazil's chemical industry through what Passos describes as persistent dumping practices, adding that even after import tariffs were hiked, Chinese imports into Brazil have continued as their prices continued to fall, offsetting the higher import tariffs. “And then, due to the tariff war between the US and China currently brewing, freight rates have also plummeted as the reduction in goods trade between the two countries have made more ships available. So, at least in the short term it looks like there will be greater availability of freight in various routes, so shipping prices may fall further. “So, Chinese or US product is expected to continue coming into the Brazilian market, deepening the troubling trends: producers int hose countries will now have cheaper freight rates and cheap product to be exported: this remains the big risk for Brazilian producers." However, trying to see a silver lining in a rather downbeat assessment, Passos said that, if US-China trade tensions escalate, there could be knock-on effects that benefit certain segments, because China has reduced imports of US ethane and propane, the latter also a natural gas-based feedstock used in the petrochemicals industry. “If this scenario continues to worsen, there will also be excess ethane and propane in the US market, therefore the price will fall and that could make more feedstock available for us here in Brazil,” he said. THE NEW HOPE: PRESIQIn April, Brazil’s parliament passed a bill called Special Program for Sustainability of the Chemical Industry (Presiq in its Portuguese acronym) which resembles the US Inflation Reduction Act (IRA) or the EU’s Green Deal plans announced in or after the pandemic – public support in the billions of dollars for companies to set up greener production facilities. Faced with the structural challenges explained, Abiquim lobbied for the bill as it sees it an opportunity for Brazilian chemicals production to jump into the greener future – perhaps its last chance to be a global player the sector, he said. Starting in 2027, after the tax break REIQ expires in 2026, Presiq has budgeted up to nearly reais (R) 4.0 billion/year ($704 million/year) for financial credits, the main target being the acquisition of feedstocks by chemicals producers. It also contemplates up to R1.0 billion for investment credits, which also applies to fertilizer projects, a sector in which Brazil’s trade deficit has only deepened as the country became one of the world’s breadbaskets – around a quarter of its GDP now comes from the agribusiness. Within the nearly R4.0 billion Presiq is to offer in credit lines for chemicals producers to purchase natural gas-based feedstocks, the funding will be distributed between the purchase of ethane, propane and butane (R2.0 billion/year), plus another R1.9 billion/year for the acquisition of ethylene, propylene, and butene, among others, according to figures compiled by Brazil’s gas trade group Abegas. The bill will also offer up to 3% of the value of the investment in expansion of installed capacity, or projects which meet other program guidelines. “The Brazilian chemical sector is facing a delicate moment, aggravated by the trade war between the US and China. The government’s measures to strengthen the national chemical industry such as tariffs and others have helped to slow down the downward trend chemicals production is suffering, and if these measures hadn't been taken, more chemicals plants would have had to shut down,” said Passos. “But Brazil also needed an incentive program mirroring those of our global competitors such as the US or the EU. Of course, China's incentives go further and are basically subsidies unprofitable plants to keep people employed, but that another matter. "More in line with the US or the EU, Presiq will help reduce the deficit in the chemical industry, and it could become an important source of revenue. It will also add value to the country through the sustainable use of natural resources. Presiq could be the chemicals industry’s savior,” concluded Passos. ($1 = R5.67) Front page picture: Chemicals facilities in Brazil Source: Abiquim Interview article by Jonathan Lopez

02-May-2025

HOUSTON (ICIS)–US based paints and coatings producer PPG has so far seen no changes in order patterns from its customers, and it has maintained its full-year guidance despite the tariffs imposed by the US. PPG's customers did not pull orders forward to the first quarter, and outside of Mexico, PPG did not see any significant changes in demand in the first quarter or in the first four months of the second quarter, said Tim Knavish, PPG CEO. He made his comments during an earnings conference call. "We have not seen evidence of any curtailment of customer orders in our business," he said. While PPG makes paints and coatings, it sells products to many end markets that are key for many chemical products, such as automotive, marine and aerospace. PPG's Q1 organic sales rose by 1% year on year, volumes and pricing rose, and the company gained market share from competitors. PPG shares rose by more than 4% while overall US stock markets fell. LIMITED EXPOSURE TO TARIFFSMost of PPG's operations buy raw materials locally at a rate of more than 95%, Knavish said. This limits their exposure to tariffs. The company has yet to see any significant changes to prices for its raw materials, he added. For two commodity feedstocks, epoxy resins and titanium dioxide (TiO2), PPG already withstood disruptions because these raw materials have been subject to anti-dumping and countervailing duties. Other upstream chemical products have excess supplies, Knavish said. For now, PPG's suppliers are favoring volumes over pricing. If suppliers begin raising prices because of tariffs, PPG will work with customers to reformulate products, substitute costly feedstock and pass through costs through surcharges and other measures. In regards to the threat posed to sales by tariffs, PPG's customers are spread around the world, and it is not heavily reliant on one country or region, Knavish said. Unlike commodity chemical producers, PPG does not rely on a continuous manufacturing process to make its products. It is a batch manufacturer, which makes it easier to adjust production to meet demand. PPG does not expect it will have to idle any of its lines, Knavish said. PROPOSED US TARIFFS HIT PPG MEXICAN BUSINESSIn Mexico, while PPG's store retail sales were solid, its project business weakened because of uncertainty about US trade policy. In February, the US proposed 25% tariffs on imports from Mexico, and the threat caused a slowdown in projects from companies and government, said Tim Knavish. He made his comments during an earnings conference call. That side of the Mexican business should remain soft in the second quarter, but PPG expects a recovery during the rest of the year. Many of the projects in question were already in flight, and PPG has not seen any cancellations. Moreover, the US is limiting the 25% tariffs to imports that do not comply with the trade agreement with its North American neighbors, the US-Mexico-Canada Agreement (USMCA). "We still believe Mexico remains a strong growth country for PPG," Knavish said. AEROSPACE YEARS-LONG BACKLOGPPG's sales to the aerospace industry are benefiting from a years-long backlog in orders caused by the COVID pandemic. This has been a long-term trend, and in addition to coatings, aerospace consumes several plastics and chemicals including synthetic hydraulic fluids and their additives, polycarbonate (PC), fibres in seating, resins in wire and cable, adhesives and electronic chemicals used in avionics. They also use composites made with epoxy resins and polyurethanes for seat cushions. PPG's aerospace backlogs extend to commercial, general aviation, after market and military, Knavish said. Vince Morales, chief financial officer, added that geopolitical turmoil is also increasing demand from the military. EUROPE BEGINS STABILIZINGFor the first time in several months, PPG is seeing some momentum in Europe, Knavish said. Industrial production is stabilizing and better order patterns are emerging in western Europe. Governments could increase spending, and Scandinavia is showing signs of recovery after two difficult years. Even the automobile sector is stabilizing. If the stabilization trend continues and if volumes increase slightly, then the improvement should provide a meaningful boost to PPG's earnings due to past cost cutting in Europe, Knavish said. That said, Knavish stressed that PPG is not expecting a sharp recovery in Europe. PAVEMENT COATINGS SUPPORTED BY INFRASTRUCTURE SPENDINGPPG sees no stop to government infrastructure projects, which are supporting demand for pavement coatings. Also, road crews have a backlog of projects because 2024 had a lot of rain and bad weather. Demand should remain strong through the year, Knavish said. Pavement coatings are made with methyl methacrylate (MMA). AUTOSPPG has gained market share among original equipment manufacturers in the automobile industry, and those share gains should allow the company to outperform the market, for which demand forecast are slightly down, Knavish said. PPG auto refinish business is focusing on the entire system of applying the paints and coatings, which allows it to weather inherent bumpiness in the market. Focus article by Al Greenwood Thumbnail shows paint, one of the products made by PPG. Image by Shutterstock.

30-Apr-2025

SINGAPORE (ICIS)–While the US-led trade war has roiled Asia’s petrochemicals market, sending prices of some on free fall, a selected few products have bucked the trend due to rising feedstock cost and tightening supply, but the support may be temporary amid global economic headwinds. Oxo-alcohols to lead April price gains in April – ICIS forecast Trade war weighs on demand, economic growth China warns countries against striking US trade deals at its expense Spot propylene prices in northeast Asia were tracking gains in feedstock propane as production in China is being curtailed by high cost. About a third of China’s propylene production is produced via the propane dehydrogenation (PDH) route, but imports of feedstock propane from the US are now subject to hefty tariffs amid the renewed US-China trade war. Meanwhile, spot prices of oxo-alcohols such as 2-ethylhexanol (2-EH), dioctyl phthalate (DOP), and n-butanol (NBA) have risen as constrained production tightened supply. Supply-side pressures have allowed them to outperform despite weakness in the broader market. For epichlorohydrin (ECH), prices were largely stable, supported by limited availability, with plants in northeast Asia running at below 50% of capacity. Meanwhile, restocking was taking place in China ahead of the week-long Labor Day holiday in early May. ECH is a chemical intermediate used in the production of synthetic rubbers, resins, and pharmaceuticals, among other industrial uses. Downstream epoxy resins prices are also stable amid restocking following price falls in March. In the fatty alcohol mid-cut market, prices are rising on tightened supply and elevated cost of feedstock palm kernel oil (PKO) in Indonesia. Two regional plants – one in Malaysia and another in Indonesia – are currently shut for scheduled maintenance, while another plant in Malaysia remains shut due to an unplanned outage in early April. The Malaysian plant was shut at the start of the month due to a fire incident. Generally, demand has remained soft as buyers adopt a risk-mitigation strategy to better navigate the uncertain market, ICIS analyst Ann Sun said. The majority of chemical prices are forecast to decline in tandem with falling oil prices, weighed down by recessionary fears, Sun added. Amid uncertainties surrounding markets, traders – notably those in China – are searching for alternative paths away from the US towards regions with lower tariffs such as southeast Asia, Latin America, and Europe. Some US goods bound for China are also being re-routed to other countries like India amid high tariffs. OUTLOOK The volume of world trade is expected to fall by as much as 1.5% if US President Donald Trump’s “reciprocal” tariffs are back on the menu after a 90-day suspension lapses, according to the World Trade Organization (WTO). Meanwhile, the US and China appears to be on an all-out trade war, having imposed tariffs exceeding 100% on each other. Export front-loading is taking place globally as markets seek to avoid further complications wrought by future tariff announcements by the US. But not all countries have posted export growth. South Korean exports fell in the first 20 days of April by 5.2% year on year – the first signs that US tariffs are beginning to hit global trade hard, said Min Joo Kang, senior economist for South Korea and Japan at Dutch financial institution ING. In southeast Asia, Malaysia’s gross exports in March grew by 6.8% year on year, led by front-loading ahead of Eid ul Fitr festival, Singapore-based UOB Global Economics & Markets Research economists said in a note on 21 April. Eid ul Fitr marks the end of Ramadan, the Muslim fasting month. But UOB predicted a dimmer external trade outlook ahead for Malaysia, depending on how tariff negotiations with the US pan out. Malaysia, along with other ASEAN member nations such as Vietnam, Thailand and Indonesia, is sending a trade delegation to the US on 24 April. The southeast Asian country was slapped with 24% tariffs by Trump on 2 April prior to the levies’ 90-day suspension. The country’s gross domestic product (GDP) rose 4.4% year on year between January-March amid worries of lower growth outlook for 2025. Markets in southeast Asia, which were some of the hardest-hit by Trump’s tariffs, are anxiously waiting for the results of trade negotiations with the US before the 90-day suspension is up in July. Chinese President Xi Jinping has urged southeast Asian governments to unite against “unilateralism” during his recent tour of Vietnam, Malaysia and Cambodia. Separately, China warned countries against striking deals with the US at its expense, a spokesperson for the Ministry of Commerce said on 21 April. “Sacrificing others’ interests to obtain so-called exemptions for temporary selfish gains is akin to negotiating with a tiger; it ultimately leads to failure for both parties and harms everyone involved,” it said. Focus article by Jonathan Yee Additional reporting by Matthew Chong, Izham Ahmad, Claire Gao, Helen Yan, Josh Quah, Aswin Kondapally and Julia Tan Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy.

23-Apr-2025

SAO PAULO (ICIS)–Brazil's chemicals industry is facing its worst performance in 30 years, with the producing companies in the sector operating at just 60% of installed capacity during January and February, the country’s trade group Abiquim said. According to the Abiquim-Fipe Economic Monitoring Report (RAC), all key indicators showed a decline in the two-month period, year on year: production fell by 5.6%, domestic sales dropped 0.8%, and national demand for industrial chemical products decreased by 4.0%. As domestic producers' market share diminishes, imports continue reaching Brazil’s shores at pace, with the country’s chemicals trade deficit continuing to increase. In the 12 months to February 2025, it reached $49.59 billion, up from $48.68 billion in the same 12-month comparable period a year prior. Imports now represent 49% of total domestic demand, with significant increases in thermoplastic resins (28.3%), other inorganic products (26.7%), and organic chemicals (25.1%). IDLENESSChemical plants’ 40% idleness average level in January-February was the worst recorded since data collection began in 1990, said the trade group, which represents mostly chemicals producers. Some product groups posted even higher idleness rates, such intermediates for fertilizers (44%), intermediates for plastics (48%), intermediates for synthetic fibers (41%), and intermediates for plasticizers (61%). February’s results were particularly concerning, with production plummeting 10.1% compared to January, domestic sales decreasing 4.5%, and national apparent consumption dropping 17.1%. Abiquim said companies attributed this poor performance to operational problems, idle units, plants in hibernation, low demand, raw material restrictions, electricity supply variations, and fewer operating days in February. Despite the clouds, prices for chemical products rose 5.1% between January and February 2025, with real prices increasing 3.6% when accounting for inflation. In dollar and euro terms, real prices are 11.3% and 11.2% higher, respectively, compared to 2024. Abiquim’s executive president, Andre Passos, preferred to see the glass half full – despite all evidence pointing to it being half empty – and said two state programs for the chemicals sector had the potential to turn things around by the end of this decade and “save” Brazilian chemicals. Passos said the breaks on some input materials, called REIQ, including provisions linking tax incentives to investments, was a re-implementation linked to investments to create new or expand existing capacities. Passos added that, only in 2025, companies could invest up to Brazilian reais (R) 1 billion thanks to the provisions included in the REIQ bill. ‘SAVE THE SECTOR’This week Abiquim focused on another bill, the Special Program for Sustainability of the Chemical Industry (Presiq). The Presiq acronym may be heard more often from now on if what Abiquim’s Passos said about it comes to pass – if implemented in full and correctly, Presiq could become the savior the struggling chemicals industry has for years been looking for. Earlier in April, Brazil’s parliament passed what could be considered the country’s response to the EU Green Deal or to the US IRA, now in danger of extinction: widespread tax incentives for companies going greener and embracing low-carbon processes and technologies. Presiq itself is an ambitious project which, beyond attracting more low-carbon investments, aims to bring the sector to near full capacity, targeting 95% utilization rates by the end of this decade. Presiq has two financial lines – one aimed at credits for the purchase of less polluting inputs and raw materials, such as natural gas versus other more polluting fossil fuels; secondly, the program will offer investment credits of up to 3% of invested value for petrochemical plants and chemical industries committed to expanding installed capacity. Starting in 2027, Presiq budgeted up to R4 billion for financial credits, and up to R1 billion for investment credits. “The Brazilian chemical sector is facing a delicate moment, aggravated by the trade war between the US and China. The government must take urgent measures to strengthen the national chemical industry, just as its international competitors have done with incentive programs,” said Passos. "The new law [Presiq] will help reduce the deficit in the chemical industry, and it could become an important source of revenue. It will also add value to the country through the sustainable use of natural resources. This plan can save the sector." Front page picture: Chemicals facilities in Brazil Source: Abiquim ($1 = R5.93)

16-Apr-2025

MUMBAI (ICIS)–India’s Deepak Chem Tech Ltd (DCTL) plans to set up a manufacturing complex to produce phenol, acetone and isopropyl alcohol (IPA) at a cost of Indian rupee (Rs) 35 billion ($407 million). The company will build a 300,000 tonne/year phenol unit, a 185,000 tonne/year acetone plant and a 100,000 tonne/year IPA line at Dahej in the western Gujarat state, its parent firm Deepak Nitrite Ltd (DNL) said in a statement to the Bombay Stock Exchange (BSE) on 9 April. It expects to fund the new project through a mix of debt and equity. DCTL is a wholly owned subsidiary of DNL. “The new capacity of phenol and acetone would be integrated to produce polycarbonate (PC) resins,” DNL said. In November 2024, DCTL announced plans to build a new 165,000 tonne/year PC plant in Dahej using technology from US-based engineering materials producer Trinseo. Trinseo sold its PC technology license, as well as all of its proprietary PC equipment at Stade, Germany to DCTL last year. DCTL expects to begin operations at all the new plants in the fiscal year ending March 2028. Once the plants are operational, DCTL “will be one of the most integrated producers of PC,” it said, adding that the complex will help Deepak to meet India's growing market demand for PC-based products. To make its Dahej complex fully integrated, DNL’s wholly owned subsidiary Deepak Phenolics Ltd (DPL) entered into a 15-year agreement with Petronet LNG for the procurement of 250,000 tonne/year of feedstock propylene and 11,000 tonnes/year of hydrogen in October 2024. DPL currently produces 330,000 tonnes/year of phenol, 200,000 tonnes/year of acetone and 80,000 tonnes/year of IPA at its production complex at Dahej. In March, Deepak Advanced Materials Limited (DAML), another wholly owned subsidiary of DNL, began operations at its PC compounds facility at Vadodara in the Gujarat state. This facility produces PC compounds for the electronic and mobility sectors. Separately, DCTL also plans to invest Rs2.20 billion to build a plant that will manufacture specialty fluorochemicals. DNL also plans to commission its greenfield 40,000 tonne/year methyl isobutyl ketone (MIBK) and 8000 tonne/year methyl isobutyl carbinol (MIBC) plants before September 2025. ($1 = Rs86.01)

11-Apr-2025

MUMBAI (ICIS)–India’s vinyl industry is entering a new era of accelerated growth and global relevance as it emerges as the single-largest contributor to global polyvinyl chloride (PVC) demand expansion, even as the broader chemical industry faces overcapacity and trade re-alignments. India leads global PVC demand growth through 2030 Rising imports, Chinese dominance raise trade and dumping concerns Domestic capacity, infrastructure push support long-term market expansion At the Vinyl India 2025 conference held in Mumbai, senior executives and market watchers outlined India’s evolving role in global petrochemical dynamics, particularly as its PVC consumption is projected to double by 2030, fueled by urbanization, infrastructure programs, and a burgeoning middle class. The south Asian country is set to become the world’s second-largest economy by 2050 based on analysts’ projections. Its economic rise is bringing the PVC industry into sharper focus as a key enabler of infrastructure transformation. “PVC is no longer just a material; it’s an infrastructure backbone,” said Unmesh Nayak, polymer chain president at Indian conglomerate Reliance Industries Ltd. From pipes, cables, and fittings to flooring and films, vinyl products are essential to India’s economic growth. STRUCTURAL SHIFT IN GLOBAL CHLOR-ALKALI MARKETS While India’s PVC demand outlook remains bullish, global chlor-alkali players are navigating complex shifts in supply-demand dynamics. A senior industry executive noted that caustic soda demand remains resilient due to its wide industrial use, while chlorine – which is primarily linked to PVC production – faces higher volatility and weaker margins. Following price spikes for caustic soda, chlorine and PVC in 2021–2022, new investments – particularly in Asia – have triggered capacity overbuild, with a long market expected through to 2029. This imbalance is expected to benefit PVC buyers but continue to strain global margins. Meanwhile, India’s energy imports, logistics costs, and new tariff structures are altering traditional trade flows. US Gulf Coast vinyl exports face mounting challenges, even as India steps up to absorb rising global supply. PVC TRADE FLOWS REBALANCE AMID GLOBAL GLUT According to market experts, the global PVC market is set to grow by 16 million tonnes by 2034, a near one-third increase from 2024 levels. However, the center of gravity is shifting. While China remains the largest demand driver, its role in capacity additions is waning. India, southeast Asia, and the Middle East are rising as new hubs. India is expected to post the highest compounded annual growth rate (CAGR) in PVC demand globally, backed by growth in construction, water management, and mobility. However, trade imbalances are creating new risks. Chinese producers are increasingly exporting PVC in the form of finished goods – films, rods, sticks – nearly doubling exports to India since 2019. Today, 95% of India’s PVC product imports come from China, raising concerns over the health of the domestic downstream industry. “China is exporting its overcapacity through products, not resin,” noted the industry analyst. “This is easing domestic supply pressures in China but creating dependency risks for India.” INDIA STRUCTURAL DEMAND OUTLOOK REMAINS ROBUST Despite global headwinds, India’s structural story remains intact. Tricon Energy president & CEO Ignacio Torras outlined how China’s chemical capacity has outpaced demand, with nearly 20% of its PVC capacity idle due to a real estate slowdown. In stark contrast, India’s PVC consumption is on a steep upward curve. “India has electrified every corner, internet access has reached 70% of the population, and 150 million more people will join the middle class within five years,” he said. “These trends will directly translate to PVC demand.” India’s per capita PVC use is expected to rise from 2.6 to 5.0 kilogram (kg) by 2030, still well below China’s 16 kg – indicating significant headroom for growth. Even amid margin pressure, as tracked by Tricon’s internal index, the executive maintained that India offers scale, resilience, and long-term opportunity. GROWTH BUT NOT WITHOUT CHALLENGES While the outlook is positive, challenges loom. Stakeholders repeatedly highlighted the need for: Tariff safeguards to prevent dumping of cheap PVC and derivatives Investment in downstream manufacturing to reduce reliance on finished product imports Policy and institutional reforms to support rapid infrastructure rollout Circularity and ESG (environment, social, governance) compliance, as sustainability becomes central to investment decisions The National Infrastructure Pipeline (NIP) and other public sector initiatives are playing a catalytic role, but speakers emphasized that regulatory consistency and private-public coordination will be key to unlocking India’s full vinyl potential. As the global industry braces for a prolonged phase of overcapacity and price volatility, India offers a unique growth engine – one that could reshape demand dynamics in both resin and downstream vinyl markets. Insight article by Aswin Kondapally Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy.

11-Apr-2025

MUMBAI (ICIS)–India’s vinyl industry leaders voiced optimism about long-term demand growth while raising caution over rising imports and the need for a stable regulatory framework at the 12th Vinyl India Summit held in Mumbai on April 10-11, 2025. The conference brought together domestic producers, global suppliers, and policymakers to chart the future course of one of the fastest-growing vinyl markets in the world. India’s per capita polyvinyl chloride (PVC) consumption remains significantly below global averages, but growth momentum is building rapidly, said Vivek Jain, managing director of DCW Ltd., in his keynote address. Jain projected PVC demand to reach 7 million tonnes by FY2030, growing at a compound annual growth rate (CAGR) of 7.7%, underpinned by robust infrastructure expansion and broadening end-use applications. “PVC and CPVC are finding increased traction in plumbing, fire safety, and commercial construction,” Jain noted, adding that India’s policy environment must continue to support domestic manufacturing to sustain this trajectory. IMPORT SURGE RAISES TRADE CONCERNS While demand prospects are upbeat, rising imports remain a pressing concern for Indian producers. India imported 1.9 million tonnes of PVC in financial year (FY) 2022-23 (April to March), a figure that is expected to surge to 3 million tonnes by FY25, with China accounting for 43% of the inflows, Jain said. Ongoing global tariff disputes and surplus capacities in major exporting countries could make India vulnerable to dumping, he warned, strengthening the case for a re-evaluation of anti-dumping duties (ADDs). “Without adequate trade safeguards, India risks becoming a dumping ground,” he said. “Strategic and timely regulatory action is vital.” GOVERNMENT PROGRAMS DRIVING DOMESTIC DEMANDEchoing the bullish sentiment, Anil Jain, vice chairman and CEO of Jain Irrigation Systems Ltd., pointed to major infrastructure initiatives as the cornerstone of future demand. “With the Jal Jeevan Mission, river-linking projects, and aggressive rural irrigation programs, we are seeing a once-in-a-generation opportunity for PVC applications in water management,” Jain said. He highlighted that India aims to bring 10–20 million hectares of farmland under irrigation, a move that will significantly boost rural infrastructure and drive multi-decade demand for PVC. Jain also emphasized the expansion of chlorinated PVC (CPVC) beyond premium housing into affordable housing, powered by government plans to build 100 million new homes. MARKET OPTIMISM ROOTED IN DOMESTIC RESILIENCEDespite global economic volatility, both executives underscored India’s internal strength as a consumption-driven economy. “India’s growth story is being written at home. Domestic demand is strong, and if PVC price stays around $700/tonne, we’ll remain the fastest-growing market globally,” Anil Jain stated. New resin capacities coming online by 2026–27, combined with a policy environment that encourages investment, are expected to propel India’s PVC sector through what Jain described as a “rocking five years” ahead. The conference also emphasized the importance of ESG compliance, green material innovation, and the circular economy as integral to sustainable growth. “Growth and environmental responsibility must go hand in hand,” Vivek Jain concluded, urging stakeholders to collaborate on a long-term roadmap to 2030. Focus article by Aswin Kondapally

11-Apr-2025