Ethanol

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 11 April. UPDATE: Oil, Asia chemical shares extend rout on recession fears By Nurluqman Suratman 07-Apr-25 16:52 SINGAPORE (ICIS)–Oil prices tumbled by more than $2/barrel on Monday, with shares of petrochemical firms in the region falling on heightened concerns that a brewing global trade war could lead to an economic recession. Vietnam Q1 GDP growth slows to 6.98% ahead of Trump's tariffs By Jonathan Yee 07-Apr-25 17:24 SINGAPORE (ICIS)–Vietnam’s economy expanded by 6.93% year on year in the first quarter of 2025 but looming reciprocal tariffs has dampened its growth outlook for the rest of the year. Asia petrochemical market players pause discussions amid Trump tariff uncertainties By Jonathan Yee 07-Apr-25 16:59 SINGAPORE (ICIS)–Market players across petrochemical markets are pausing discussions as they await clarity on the US' ‘reciprocal’ tariff enforcement and potential retaliatory measures from affected countries. Hefty tariffs to slow China’s chemical capacity expansion By Fanny Zhang 07-Apr-25 17:26 SINGAPORE (ICIS)–The trade war between the world’s two biggest economies is expected to exacerbate China’s chemical overcapacity as demand could weaken further, while higher costs stemming from tit-for-tat tariffs would slow down capacity expansion in the country. PODCAST: Impact of US tariffs on aromatics trade flows from Asia By Damini Dabholkar 07-Apr-25 19:31 SINGAPORE (ICIS)–The announcement of import tariffs by the Trump administration is likely to see a shift in aromatics trade flows from Asia, especially given the disparity in tariff rates on different countries. China petrochemical futures extend losses on latest US tariff threats By Fanny Zhang 08-Apr-25 13:01 SINGAPORE (ICIS)–China’s petrochemical futures markets were mostly lower on Tuesday morning, extending their losses from previous session amid worries over an escalating trade war with the US. INSIGHT: China expands carbon market; hydrogen key to decarbonize steel sector By Patricia Tao 08-Apr-25 16:11 SINGAPORE (ICIS)–China has officially included its steel sector in the national carbon emissions trading system, a major step toward greening one of its most carbon-intensive industries. Asia glycerine supply ample as US-bound exports to decline amid trade war By Helen Yan 08-Apr-25 15:14 SINGAPORE (ICIS)–Asia's glycerine market is facing more supply than expected, with regional suppliers seeking other outlets outside of the US, following the tariffs launched by the US on imports from southeast Asia. INSIGHT: Trade war may affect China PP demand more than supply By Lucy Shuai 08-Apr-25 18:06 SINGAPORE (ICIS)–With the escalation of the US-China trade war, it is expected that the impact on demand for China's polypropylene (PP) will be greater than on supply. South Korea ups emergency funding support for embattled auto sector By Nurluqman Suratman 09-Apr-25 12:40 SINGAPORE (ICIS)–South Korea on Wednesday announced emergency measures to support its export-reliant automotive industry in response to a 25% US tariff on vehicles and parts which will take effect on 10 April. INSIGHT: Confusion and anxiety hit Asia oleochemicals market amid US tariffs By Helen Yan 09-Apr-25 16:10 SINGAPORE (ICIS)–Asia’s oleochemicals market is characterized by confusion and anxiety following the steeper-than-expected tariffs launched by the US Trump administration on oleochemicals imports into the US. Asia benzene sinks to lowest daily price in over four years By Angeline Soh 09-Apr-25 19:30 SINGAPORE (ICIS)–Asia benzene import prices on a free on board (FOB) South Korea basis fell to their daily lowest in more than four years. ICIS China March petrochemical index falls; hefty tariffs to hit demand hard By Yvonne Shi 10-Apr-25 13:54 SINGAPORE (ICIS)–The ICIS China Petrochemical Price Index in end-March fell to 1,121.73, down by 3.1% from end-February, with the US-China trade war likely to weigh heavily on overall demand in both the domestic and export markets. INSIGHT: New China PE capacity may cover US supply loss amid trade tensions By Joanne Wang 10-Apr-25 14:16 SINGAPORE (ICIS)–China’s polyethylene (PE) market demand faces significant challenges following the US’ continued imposition of tariffs, with domestic prices of linear low-density polyethylene (LLDPE) down by 4% so far this week on expectations of new capacity coming online. US ethanol exports to Philippines expected to remain duty free; tariff on Brazil increased By Evangeline Chueng 10-Apr-25 17:44 SINGAPORE (ICIS)–US ethanol exports to the Philippines are expected to remain unaffected by the recent tariff changes, as the country has maintained duty-free access since 2016. INSIGHT: China-US tariffs altering Asia olefins supply and demand balance By Joey Zhou 10-Apr-25 18:52 SINGAPORE (ICIS)–Market dynamics for Asia propylene prices in Q2 2025, originally trending bearish amid long supply from China, are shifting on the back of US tariff policy and its impact. Uncertainty remains the watch-word in this market. Asia petrochemical shares drop as US tariffs on imports from China hit 145% By Jonathan Yee 11-Apr-25 10:38 SINGAPORE (ICIS)–Asian chemical shares fell on Friday amid deepening concerns over a global trade war after the White House clarified that the US' tariffs on China has risen to 145%. INSIGHT: India anchors PVC future amid global market re-alignment By Aswin Kondapally 11-Apr-25 15:00 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.

14-Apr-2025

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US reversed direction and edged slightly higher this week as US tariffs went into effect and as capacity tightened. The increases are in line with global average rates, which ticked higher by 3% this week, according to supply chain advisors Drewry and as shown in the following chart. Rates from Shanghai to Los Angeles rose by 3% and rates from Shanghai to New York rose by 2%, as shown in the following chart. Drewry expects rates to increase in the coming weeks due to tariffs and reduced capacity. Rates from online freight shipping marketplace and platform provider Freightos also rose over the week, with Asia-USWC rates up by 3% and Asia-USEC rates up by 5%. Judah Levine, head of research at Freightos, said many shippers rushed to get cargo loaded in the small window before tariffs went into effect, but noted that there are concerns that the sudden policy changes could also mean delays at US customs for arriving shipments. Levine said he expects to see a drop in demand for containers into the US as shippers wait for the situation to stabilize. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said global maritime supply chains have become more complex amid the trade war between the US and China. “Shippers will be monitoring freight costs across the major and secondary trades,” Sand said. “Japan, for example, is one the key trade partners with the US, so a rush to frontload goods could put upward pressure on spot rates on this trade.” Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES HOLD STEADY US liquid chemical tanker freight rates as assessed by ICIS held steady this week despite downward pressure for several trade lanes. There is downward pressure on rates along the USG-Asia trade lane as charterers are seeking to divert cargoes to other regions. Overall, most market participants continue to struggle with tariff uncertainties and other alternatives. As a result of the limited cargo activity, spot rates appear to be softening. However, methanol requirements from the region remain active to Asia. Similarly, rates from the USG to Rotterdam were steady this week, even as space among the regular carriers remains limited. However, several larger size cargos of caustic soda, methanol, MTBE, ethanol and styrene were seen in the market. Several outsiders have come on berth for both April and May, adding to the available tonnage for completion cargos. Easing demand for clean tankers has attracted those vessels to enter the chemical sector. Contract tonnage continues to prevail, with interest in styrene, methyl tertiary butyl ether (MTBE), methanol and ethanol. For the USG to South America trade lane, rates remain steady with a few inquiries for methanol and ethanol widely viewed in the market. Overall, the market was relatively quiet with fewer COA nominations, putting downward pressure on rates as more space has become available. On the bunker side, fuel prices have declined as well, on the back of plummeting energy prices, as a result week over week were softer. Additional reporting by Kevin Callahan Thumbnail image shows a stack of shipping containers. Image by Shutterstock

11-Apr-2025

SINGAPORE (ICIS)–Vietnam will cut import tariffs by at least half on US products such as ethanol, liquefied natural gas (LNG) and automobiles, while bringing the levy on ethane down to zero, by the end of the month. Tariffs on ethanol will be cut to 5% from 10%; while those for LNG will be reduced to 2% from 5%; and those on cars will be shaved to 32%, half of the high-end of the 45% to 64% tariff range currently in effect, Vietnam’s Ministry of Finance stated on 25 March. The announcement was made by tax policy department head Nguyen Quoc Hung. Vietnam, which is a major manufacturing hub in Asia, has the third-biggest trade surplus with the US after China and Mexico. US President Donald Trump has imposed tariffs on China and Mexico in February and March, respectively, a few months after taking office. The US is Vietnam's largest export market. Data from the US Trade Representative (USTR) showed that the US’ trade deficit in goods with export-reliant Vietnam last year reached $123.5 billion, up by more than 18% from 2023. US' imports from Vietnam totaled $136.6 billion against its exports of $13.1 billion to the southeast Asian country, according to USTR data. Vietnam’s tariff cuts are aimed at "improving trade balances with [its] trade partners", Hung said, adding that despite the Comprehensive Strategic Partnership between the US and Vietnam, the two nations have not yet established a free-trade agreement (FTA). Hung said the decree on the tariff cuts will be ready by the end of March and will take effect right after. Cuts on import tariffs will also apply on goods such as chicken thighs, almonds, apples, cherries, and wooden product. Trump is scheduled to apply reciprocal tariffs on multiple nations from 2 April, with some possible exceptions. Vietnamese-US cooperation, procurement, and trade agreements were signed during the US work trip by Vietnam trade and industry minister Nguyen Hong Dien in mid-March, according to Vietnam state media. PetroVietnam Gas Corp (PVGas) has signed a memoranda of understanding (MoUs) on long-term LNG supply with US energy majors ConocoPhillips and Excelerate. Meanwhile, Vietnam's Binh Son Refining and Petrochemical Company (BSR) has partnered with US engineering and construction solutions firm Kellogg Brown & Root (KBR) for a sustainable aviation fuel (SAF) pre-feasibility study. Starting in 2025, Vietnamese and US business cooperation agreements are anticipated to reach $90.3 billion, according to the Vietnam News Agency (VNA). This includes $4.15 billion in agreements already signed; $50.15 billion for aviation and energy sector deals; and $36 billion in agreements expected to be finalized soon. Thailand’s Siam Cement Group (SCG) is currently paving the way for Vietnam’s first integrated petrochemical complex to use US ethane as feedstock for production. The project, which will mean increased feedstock diversification for its wholly owned Vietnamese subsidiary Long Son Petrochemicals (LSP), is expected to be completed by the end of 2027. Operations at the LSP complex in Ba Ria-Vung Tao province in southeastern Vietnam remains shut after it was halted indefinitely from mid-October 2024 amid poor production economics. (adds details throughout) Visit the US tariffs, policy – impact on chemicals and energy topic page Thumbnail image: At the Hai Phong Port in Hai Phong Vietnam on 25 May 2015 (Minh Hoang/EPA/Shutterstock)

26-Mar-2025

SINGAPORE (ICIS)–Vietnam will cut tariffs on imports of several US products including ethane, liquefied natural gas (LNG) and automobiles. The southeast Asian country will be reducing tariffs on cars to 32% from previous rates of 45% to 64%, lowering ethanol tariffs to 5% from 10%, cutting liquefied natural gas (LNG) tariffs to 2% from 5%, and eliminating tariffs on ethane, Nguyen Quoc Hung, the head of the finance ministry's tax policy department, said in a statement posted on the ministry's website late on Tuesday. Vietnam has the third-biggest trade surplus with the US after China and Mexico. (Recasts headline and first paragraph for clarity)

26-Mar-2025

SAO PAULO (ICIS)–Brazil’s higher import tariffs for dozens of chemicals in place since October have already pushed up costs for industrial players, who are already passing those higher costs onto customers, according to the head at the trade group of industrial chemicals importers Associquim. Rubens Medrano, president of the Brazilian Association of Distributors of Chemical and Petrochemical Products (Associquim), which represents companies employing around 7,000 people across Brazil, would not make a prediction about whether tariffs will be lowered again in October – when the current 12-month measure is due to expire. But he did say manufacturing is feeling the pinch, adding that the international and domestic economic scenarios are worsening, and higher tariffs are not making life easier for the many companies in Brazil which import chemicals and petrochemicals – half of the large country’s demand for chemicals is covered by imports. Brazil’s several changes to chemicals imports over the years, depending on who is in government and whose lobbying policymakers listen to the most, has become a recurrent saga, and one that is certain to provide a few more acts. PRODUCERS GOT THEIR WAY ON TARIFFS – IS IT PAYING OFF?The current situation was meant to benefit domestic producers – of which there are not many, with the market being controlled by a few large players, most prominently polymers producer Braskem, Latin America’s largest petrochemicals producer. Higher tariffs, the narrative went, should encourage domestic purchases of chemicals, with the narrative quickly turning to protecting Brazilian jobs, one narrative the current government is very sensitive to. But Brazil’s 220-million person market requires many more chemicals than it produces domestically, making imports indispensable for many manufacturing firms to operate. This has been a constant feature over the decades as producers never got to specialize but stayed in the commodity – and prone to be hit by global downturns – chemicals market. In the current act in the tariffs saga, Braskem and its lobbying arm Abiquim have been the main characters, with their months-long lobbying paying off last year when tariffs were sharply increased. Or, at least, that was the thinking when the measure was implemented. The reality is proving stickier though: Braskem’s poor financial results in the fourth quarter, meant to be the first one to show positive effects from tariffs, called that theory into question. Unipar, the other large chemicals producer who lobbied via Abiquim for higher tariffs for the main chemicals it produces, is due to release its financial results later this week. Unigel, embroiled in its own financial woes as it restructures its debt aiming to keep afloat, has not published financial results since 2023. Associquim – and the trade group representing plastics transformers Abiplast – fell on the losing side of the last tariffs act. But as Abiplast’s president Jose Ricardo Roriz said in October, they will “continue to fight” to reverse the higher tariffs. A Brazilian senator has also started a campaign against the tariffs, with heated words towards Braskem and what he considered the firm’s market dominance. LET’S START 2025, THENOne of Brazil’s funniest and probably truthful sayings goes: “The year only starts in truth after Carnival” – which this year fell very late, with the last Carnival events only taken place last weekend. The economy does function in January and February, but at a slower pace. A summer pace: for most Brazilians, the saying is just part of the idiosyncrasy and responds to the sort of seasons: the summer is slightly hotter than other seasons. Kids are off school in January and those families who can afford it will holiday away. Lobbyists are already gearing up for their work as the year starts. A key date for them will be the revision of the tariffs in October, so expect to hear from them more in coming months as they lobby to reverse course. This interview with Associquim being an example of it. “Distributors do not import just for the sake of importing. We usually have the criterion that we import products that are not produced domestically. However, the increase in import tariffs, increasing input costs, ends up harming several end consumer companies,” said Associquim’s Medrano. “I don’t think that’s the solution… The companies in our association are already paying more and passing this on to the consumer, of course. We don’t work with thermoplastics – we represent players in the industrial products category, and electrochemical distributors. Any increase in import costs will represent an increase in the final cost. The Brazilian consumer will be the one to pay for this.” Medrano said Abiquim’s intense lobbying running up to October was healthy and legitimate action in a market democratic economy, where companies and their funded trade groups “try to show” to the government their side of the argument. Medrano declined to comment on whether Braskem’s Q4 results indicated that the tariffs had not had the desired impact. ‘DIFFICULT TIMES’ GLOBALLY – AND LOCALLYAs 2025 is about to enter is second quarter, a common consensus is forming: the global economy and the largest economy in Latin America are showing signs of fatigue, with manufacturing especially feeling the heat. The slowdown was taken for granted by most economists even without considering the US’ President Donald Trump proposed tariffs after storming into the White House in January. Trump’s trade policies could hit Brazil in many fronts. Trump views steel as the true sign of industrial prowess, and his proposed tariffs on that product could directly hurt Brazil, which keeps a healthy steel production which makes it a net exporter, with more than 3.5 million tonnes/year sold to the US. Another sector which could be hit is one of the country’s own success stories: ethanol, as Brazil overtakes the US as a global producer thanks to lower costs, hot weather, abundant water, and previous trade wars, which made the largest grain consumer China turn away from US farmers' output. Contributing to the doom and gloom, US credit rating agency Moody’s said in February the potential tariff-induced economic hit to Latin America’s economy would only be recouped by 2028, with lower output and lower employment on the cards. However, the expected economic slowdown could play in favor of those who are lobbying for lower tariffs. Despite the healthier-than-expected manufacturing performance in February, Brazil’s manufacturing has been on a slowing trend for months, and this does not play well with the music the government wants to sell to voters. A fall in jobs in manufacturing could greatly harm President Luiz Inacio Lula da Silva's Workers’ Party (PT) chances of re-election in 2026, as that constituency forms the backbone of the party’s electorate. Amid yet another crisis in the many he has experienced, Associquim’s Medrano preferred to end on an optimistic note. “The global petrochemical industry is in trouble. Let’s see where we are in October, but a decrease in tariffs could take place – it will all depend on how the Brazilian economy behaves in the coming months. If the economy grows, there will be a shortage of products, making imports important in addition to the usual supply and demand patterns,” said Medrano. “Usually, at the beginning of the year, we see a replenishment of stocks as companies reduced their operations ahead of the summer break. This year, however, this replenishment of stocks has been lower and slower than normal. “We are living in difficult times. Not only nationally, but internationally. Adding to that, international trade is very disrupted and could even be more disrupted in coming quarters. Things are not normal, or at least not the normal we became accustomed to in past decades. “However, we have been through worse times and, for sure, we will get through them. I don’t want to be too pessimistic.” Finally, a quick note to readers in Brazil: happy new year. Front page picture: Port of Santos in Sao Paulo, Latin America’s largestSource: Port of Santos Authority Insight by Jonathan Lopez

11-Mar-2025

HOUSTON (ICIS)–Shipping container rates from Asia to both US coasts fell again this week as capacity has grown and as volumes have fallen after frontloading to beat tariffs, and liquid tanker rates rose on the transatlantic eastbound route and fell on the US Gulf to Asia trade lane. CONTAINER RATES Rates from Shanghai to Los Angeles fell by 9% this week, according to supply chain advisors Drewry, while rates from Shanghai to New York fell by 6%, as shown in the following chart. Rates to both US coasts are now at their lowest of the year, according to Drewry data. Global average rates in Drewry’s World Container Index fell by 3% and are also at their lowest over the past year, as shown in the following chart. Drewry expects rates to continue to decrease next week due to increased shipping capacity. Rates from online freight shipping marketplace and platform provider Freightos showed significant decreases this week, although their rates are slightly higher than Drewry’s. Judah Levine, head of research at Freightos, said that tariffs – or the threat of tariffs – led to many importers frontloading volumes to beat the announced levies. “The president’s proposed 60% tariffs on Chinese goods could go into effect as soon as April – as could a wider application of reciprocal tariffs on numerous countries – meaning the window to receive goods before then is about closed,” Levine said. Levine said that the combination of a seasonal slump in demand and the possible end of frontloading likely drove the sharp fall in transpacific ocean rates last week. “If frontloading of the past few months was significant enough, we could also expect to see subdued peak season demand and rates as a result,” Levine said. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES MIXED US chemical tanker freight rates assessed by ICIS were mixed week on week. Trade routes from the US remain mixed with several trade lanes slightly higher and others lower. Cargo moving into Asia weakens following the recent tariff announcements and this route has recently seen a decrease of cargoes, as the tariffs have all but halted any spot activity for this trade lane. As a result, rates have dipped from the previous week. On the other hand, the rates from USG to Rotterdam experienced upward pressure. For this trade lane freight rates for March have strengthened, given the amount of space left. A shipowner said it is expecting the trend to continue throughout March, with higher contract of affreightment (COA) utilization leaving very little available space. From the USG to Brazil, this market has remained relatively unchanged but is experiencing some downward pressure. While the market continues to be active it is further influenced by freight availability and a swing in trade lane dynamics. Demand remains soft particularly for larger parcels further pressuring some downward movement. On the USG to India trade lane, the market remains extremely soft with plenty of space available as outsiders have entered the market. As a result, this has placed downward pressure, and rates could fall further on the route if this persists. Several inquiries were seen for monoethylene glycol (MEG), methanol, ethanol, and vinyl acetate monomer (VAM), but few fixtures were seen in the market. With additional reporting by Kevin Callahan

07-Mar-2025

HOUSTON (ICIS)–Rates for shipping containers from Asia to the US fell significantly this week on increased capacity, while spot rates for liquid chemical tankers were stable to softer. CONTAINER RATES Global average container rates continue to fall, dropping by 10% this week, according to supply chain advisors Drewry and as shown in the following chart. Average global rates have fallen by almost 30% from 9 January, according to Drewry data, after rising from late October amid frontloading volumes ahead of a possible union labor strike at US Gulf and East Coast ports. Rates from Shanghai to New York plunged by 13% from the previous week, while rates form Shanghai to Los Angeles plummeted by 11% week on week, according to Drewry data and as shown in the following chart. Rates to Los Angeles are down by 29% from early-January, and rates to New York are down by 27.6% over that time. Drewry expects a slight decrease in spot rates next week as capacity increases. Deliveries of new container ships and a slowdown in recycling older vessels have led to an increase of 2.4 million TEUs (20-foot equivalent units) since the beginning of 2024. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said during a webinar that market players are watching two future dates – 4 March, when the reassessment of the Mexico and Canada 25% tariffs takes place, and the 1 April deadline when investigations should be complete on President Donald Trump’s reciprocal tariffs. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES STEADY-TO-SOFTER Rates for liquid chemical tankers ex-US Gulf were stable to softer this week, with slight decreases seen on the US Gulf-Asia trade lane for small parcels and on the US Gulf to Brazil route. Rates for larger parcels on the US Gulf-Asia trade lane were unchanged amid a slowdown in activity. Shipping brokers are seeing inquiries along this route for ethanol, monoethylene glycols (MEG) and ethylene dichloride (EDC) for March shipping dates. Falling rates on the US Gulf-Brazil trade lane are because there is plenty of open space for the rest of February and into March, brokers said, and limited spot activity. A broker said it is seeing an increase in inquiries for this trade lane which could help steady the market. On the transatlantic eastbound route, a broker said there are plenty of inquiries and that most of the regular contract shipowners have been able to secure smaller parcels to help fill out their vessels. Shipments of styrene monomer (SM) were fixed to Europe, as well as methanol and caustic soda.

21-Feb-2025

SAO PAULO (ICIS)–Latin American economies face mounting economic pressure as new global trade conflicts emerge and the region’s growth could be 0.3 percentage points lower than expected in 2025 and 0.4 percentage points lower in 2026, analysts at US credit rating agency Moody’s said on Wednesday. Mexican tariffs likely as migrant flows to continue Brazil’s aim to increase non-dollar payments angers Washington Hit to growth due to tariffs and trade conflicts to be felt until 2028 The region, which narrowly avoided a direct impact in previous trade disputes, now confronts a more complex landscape where traditional economic buffers appear increasingly fragile. “The opening salvos of the global trade war have already been exchanged, and while Latin America has narrowly stepped out of the firing line, difficult days are ahead. While we expect Latin America to ultimately avoid recession under our baseline forecast, further tariff escalation could nudge the region into a broader downturn,” said Moody’s. “Using our Global Macroeconomic Model, we simulate the effects of an additional 10-percentage point increase in the US effective tariff rate for Mexico and the rest of Latin America above and beyond what we are anticipating in our baseline. The result is a broad-based downturn in the region, with a contraction in output, elevated unemployment, surging inflation, and a collapse in trade.” The analysts said those decreases in output and employment caused by trade conflicts would only be recouped by 2028. MEXICO ON FIRING LINEMexico stands to bear the brunt of US trade measures, given its deep economic ties to its northern neighbour and heavy reliance on remittances to support consumer spending at home. Moody’s analysts expect the US to implement broad tariffs on Mexican exports, though at rates lower than the 25% initially proposed in early February, proposals which are on hold for a month. The US administration has focused on Latin America since taking office, targeting Mexico, Colombia, and Brazil over trade imbalances, immigration concerns, and efforts to reduce dollar dependence in international trade. While recent tariff threats against Mexico and Colombia have been postponed or retracted, Moody’s expect effective tariff rates on US imports from the region to rise significantly. Core disputes between Washington and Mexico centre on the trade deficit and immigration flows, issues unlikely to be resolved through negotiation alone. “These [migrants’] inflows will remain a focal point of the Trump administration and are a potential wild card in US tariff policy. With inflows of undocumented migrants unlikely to fade as fast as Trump would like, the stage is set for higher tariffs on Mexico,” said Moody’s. “If the tariff spat between the US and Colombia is any guide, any Latin American nation that refuses to cooperate with US deportations could find itself on the receiving end of tariffs regardless of the proximity of diplomatic and economic ties.” Moody’s forecasts US tariffs on Mexican imports will rise to 10% in coming months, with Mexican retaliation expected, and the measures will likely remain in place until early 2026, when mounting economic pressures could force a policy reversal. Moreover, the combined impact of Mexican and Chinese tariffs is expected to also strain the US economy, said Moody’s, which in turn would also affect Latin American economies further. BRAZILIAN CHALLENGESBrazil faces separate challenges, as tensions rise over its attempts to develop alternatives to dollar-based trade within the BRICS group of countries, of which China and Russia are leading members. This week, the Brazilian government said it would be hosting the annual BRICS summit in Rio de Janeiro in July. BRICS founding members were Brazil, Russia, India, China and South Africa; later the group expanded to include Egypt, Ethiopia, Indonesia, Iran, and the UAE. Despite limited progress in establishing alternative payment systems – with the Chinese yuan accounting for a minimal share of global reserves – Brazilian President Luiz Inácio Lula da Silva's promotion of BRICS currencies has drawn criticism from Washington. The China Investment Information Platform, proposed as an alternative to Western-led global payments, still relies heavily on SWIFT infrastructure. Federal Reserve data shows minimal advancement in global yuan usage across trade, debt issuance, international banking claims, and reserves, with most BRICS nations continuing to invoice predominantly in US dollars. Steel and aluminium tariffs, set to take effect in March, present additional risks for Brazil and Mexico, the second and third-largest sources of US steel imports. However, the direct economic impact may be limited, said Moody’s, as steel comprises less than 1% of Mexican exports and under 5% for Brazil. Mexico directs almost 90% of its steel exports to the US, while Brazil sends just under 50%. Last week, the US also said it was mulling increasing tariffs on Brazilian ethanol. “More concerning for the Brazilian economy will be the broader-based slowdown of the Chinese and global economies. Brazil boasts the whole market basket of commodities, from industrial metals to agricultural products and even oil, with iron ore and metals exports accounting for around 15% of Brazil’s total exports alone,” said Moody’s. “While the US is Brazil’s most important export market for steel, most Brazilian steel production is destined for domestic consumption. It is not unreasonable to think that steel exports priced out of the US could find a home elsewhere.” Unlike during the 2018-2019 trade tensions, when Latin American nations offset slower global growth by increasing commodity exports to China and Asia, the region now faces fewer alternatives, said Moody’s. Chinese dietary shifts, which previously drove demand for agricultural products, have largely stabilised, while metals producers Chile and Peru confront weakening Chinese property markets. Brazilian agricultural exports to China surged during previous trade disputes, with soybean exports nearly doubling US levels, even after China lifted retaliatory tariffs following the Phase One trade agreement. However, analysts suggest such trade diversification opportunities may prove more limited in the current climate. SEVERE SCENARIOMoody’s went on to say that in a more severe scenario where US tariffs on Mexican and Brazilian imports reach 20%, and Chinese import tariffs hit 40%, a full-blown recession in Latin America could take place. Mexico would face the heaviest impact due to US exposure, while Brazil would suffer from Chinese economic contraction. Under such conditions, Chile, Peru and Colombia would experience significant downturns, with recovery potentially extending to 2028. Chile's concentrated commodity exposure makes it particularly vulnerable, with projections showing three consecutive quarters of GDP contraction and a recovery period exceeding one year. Focus article by Jonathan Lopez

19-Feb-2025

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 14 February. NEWS INSIGHT: US mulls reciprocal tariffs on Brazil ethanol, cabinet hopes steel quota is to be kept Although the new US administration has so far only imposed tariffs on China, President Donald Trump keeps using the tariff threat as a form of negotiation and in the latter part of this week it was the turn of Brazil’s ethanol. Brazil’s Unigel plans listing but location undisclosed, rules out IPO – company Unigel’s restructuring plan includes listing shares on the stock exchange but not an initial public offering (IPO) issuing new shares, a spokesperson for the Brazilian chemicals producer said to ICIS. Brazil’s inflation slows in January but monetary tightening to continue – analysts Brazil’s annual rate of inflation fell in January to 4.56%, down from 4.83% in December, the country’s statistical office, IBGE, said this week. INSIGHT: EU-Chile trade deal could benefit chemicals indirectly via higher minerals supply (part 1) An interim trade accord between Chile and the EU kicked off on 1 February and the 27-country bloc is not shy about its main objective: get preferential access to the Latin American nation’s vast resources of raw materials. Mexico’s inflation falls in January nearing target, automotive exports under pressure Mexico’s annual rate of inflation fell to 3.59% in January, down sharply from December’s 4.2%, the country’s statistics office Inegi said. Brazil’s automotive January production up 15% on healthy demand at home, abroad Brazil's petrochemicals-intensive automotive production rose more than 15%, year on year, to 175,500 units – the highest January output since 2021 – while exports jumped over 50%, the country’s trade group Anfavea said on Monday. PRICING LatAm PE international prices stable to up on higher US export offersInternational polyethylene (PE) prices were assessed as stable to up on higher US export offers. LatAm PP domestic prices up in Mexico on higher feedstock costs Domestic polypropylene (PP) prices increased in Mexico tracking higher propylene costs. In other Latin American countries, prices were unchanged.

17-Feb-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 14 February. IPEX: Asia finding a floor, up 1%; PVC and PP drive 1.3% index fall in Europe; USG toluene firms The ICIS Petrochemical Index (IPEX) for January shows that northeast Asian chemical markets may be finding a floor after two consecutive months of declines, with the regional index up 1% – only its second gain in six months, driven by a 14.7% surge in butadiene due to rising crude oil costs. US higher steel tariffs could backfire, reduce capex in chemical, industrial plants – ICIS economist Potential US 25% tariffs on steel and other metals could ultimately reduce capital expenditure (capex) in chemicals and industrial plants as costs rise, according to an economist at ICIS. US’ 25% tariffs on all steel, aluminium imports start 12 March The US will start imposing 25% tariffs on all steel and aluminium imports starting 12 March, under the executive order signed by US President Donald Trump on 11 February. INSIGHT: EU-Chile trade deal could benefit chemicals indirectly via higher minerals supply (part 1) An interim trade accord between Chile and the EU kicked off on 1 February and the 27-country bloc is not shy about its main objective: get preferential access to the Latin American nation’s vast resources of raw materials. INSIGHT: US reciprocal tariffs would have little direct impact on commodity chemicals markets – analysis The threat of US reciprocal tariffs is the latest wrinkle in US trade policy, spurring players to game out potential impacts. For the US chemical industry, there should be little direct impact on commodity markets as imports largely originate from Canada and South Korea – countries that already have free trade agreements with the US. Americas Styrenics sale process delayed as better market conditions expected later in 2025 – Trinseo The potential sale of Americas Styrenics (AmSty) – the 50/50 joint venture between Trinseo and Chevron Phillips Chemical (CP Chem) is being delayed as better market conditions are expected later in 2025, said the CEO of Trinseo. Reciprocal tariffs will match taxes on US goods by other countries; to take effect in April The US plans to impose reciprocal tariffs on all countries as early as 2 April once the required investigations have taken place, President Donald Trump said on Thursday. INSIGHT: US mulls reciprocal tariffs on Brazil ethanol, cabinet hopes steel quota is to be kept Although the new US administration has so far only imposed tariffs on China, President Donald Trump keeps using the tariff threat as a form of negotiation and in the latter part of this week it was the turn of Brazil’s ethanol.

17-Feb-2025