Ethylene glycol

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

HOUSTON (ICIS)–US-listed shares of chemical companies surged on Monday after the US and China agreed to a 90-day pause on the tariffs they imposed on each other since 2 April. The lower rates take effect on 14 May. For the US, it will lower its 2025 tariffs on Chinese imports to 30% from 145%. The 30% tariff is made up of the 20% fentanyl tariffs that the US adopted earlier in 2025 as well as the 10% baseline tariff that the US has imposed on most of the world. For China, it will cut its 2025 tariffs on US imports to 10% from 125%. The 10% tariff matches the baseline rate that the US has imposed on Chinese imports. China also suspended the non-tariff measures that it has taken since 2 April. The agreement does not mention the tariffs that China had imposed in February on a limited number of US imports, including liquefied natural gas (LNG). Nor does the agreement mention the restrictions on antimony and other minerals that China announced in December 2024 as well as those on bismuth and other minerals announced in February 2025. Monday's pause does not change the tariffs that the two countries adopted during the first term of US President Donald Trump. Still, the agreement removes a substantial amount of tariffs that had brought trade between the two countries to a standstill. The following table shows the major indices followed by ICIS. Index 12-May Change % Dow Jones Industrial Average 42,132.68 883.30 2.14% S&P 500 5,805.53 145.62 2.57% Dow Jones US Chemicals Index 820.86 15.57 1.93% S&P 500 Chemicals Industry Index 876.52 13.94 1.62% PAUSE WILL RESTORE TRADE BETWEEN US AND CHINAPrior to Monday's announcement, trade between the US and China had nearly halted. The US exported large amounts of polyethylene (PE) and monoethylene glycol (MEG) to China. China, in turn, exported large amounts of methylene diphenyl diisocyanate (MDI), polyether polyols and polyester fibre to the US. The following charts show the chemical trade between the two countries. China imported large amounts of chemical feedstock from the US to supply its ethane crackers and propane dehydrogenation (PDH) units. China had supposedly waived its tariffs on US imports of ethane but maintained those on liquefied petroleum gas (LPG). The US imported large amounts of auto parts and other goods that incorporated large amounts of plastics and chemicals. The high US tariffs on Chinese goods caused China to divert shipments to southeast Asia and other parts of the world. Those increased shipments from China displaced locally manufactured goods, leading to a chain reaction that lowered demand for the plastics and chemicals that those local manufacturers used to make those products that were now being supplied by China. US CONTINUES TO ROLL BACK TARIFFSMonday's announcement is the most recent example of the US pausing its tariffs. These started with the pause that the US adopted on the 25% tariffs it imposed on imports from Canada and Mexico. Later, it paused the reciprocal tariffs that it imposed on most of the world on 2 April. The US maintained the 10% baseline tariffs that it announced that same day. The US later announced exemptions on semiconductors and electronics. Recently it reached an agreement with the UK that lowered the sectoral tariffs that the US imposed on automobile and other specific goods. PERFORMANCE OF US CHEM STOCKSThe following table shows the performance of the US-listed shares followed by ICIS. Name $ Current Price $ Change % Change AdvanSix 24.21 1.10 4.8% Avient 38.82 2.02 5.5% Axalta Coating Systems 32.73 1.63 5.2% Braskem 3.77 0.15 4.1% Chemours 11.88 0.82 7.4% Celanese 55.30 4.09 8.0% DuPont 71.17 4.40 6.6% Dow 31.34 1.86 6.3% Eastman 82.06 4.56 5.9% HB Fuller 56.59 2.06 3.8% Huntsman 12.96 0.91 7.6% Kronos Worldwide 7.63 0.35 4.8% LyondellBasell 60.80 3.87 6.8% Methanex 34.61 2.17 6.7% NewMarket 639.35 4.87 0.8% Ingevity 41.95 1.48 3.7% Olin 22.99 1.66 7.8% PPG 113.84 5.08 4.7% RPM International 114.26 3.73 3.4% Stepan 55.99 2.09 3.9% Sherwin-Williams 357.86 6.00 1.7% Tronox 5.78 0.53 10.1% Trinseo 2.62 0.10 4.0% Westlake 86.18 6.18 7.7% Thumbnail shows stock charts. Image by Shutterstock

12-May-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 9 May. S Arabia's SABIC swings to Q1 net loss amid higher operating costs By Jonathan Yee 05-May-25 11:36 SINGAPORE (ICIS)–SABIC swung to a net loss of Saudi riyal (SR) 1.21 billion ($323 million) in the first quarter on the back of higher feedstock prices and operating costs, the Saudi Arabian chemicals giant said on 4 May. Ethane fuss cools for NE Asia C2, positions reassessed over Labor Day break By Josh Quah 05-May-25 20:24 SINGAPORE (ICIS)–The early May holidays probably could not have come at a more appropriate time for Asia ethylene players, with players noting that the pause in spot discussions was a good time to take stock of positions going into June shipment talks. Malaysia's Lotte Chemical Titan narrows Q1 net loss on improved margins By Nurluqman Suratman 06-May-25 14:46 SINGAPORE (ICIS)–LOTTE Chemical Titan (LCT) narrowed its first quarter (Q1) net loss to ringgit (M$) 125.7 million ($29.7 million) amid improved margins, the Malaysian producer said on 5 May. Singapore's Aster acquires CPSC at undisclosed fee By Nurluqman Suratman 07-May-25 12:33 SINGAPORE (ICIS)–Aster Chemicals and Energy has reached a sales and purchase agreement to acquire Chevron Phillips Singapore Chemicals (CPSC) through its affiliate, Chandra Asri Capital, at an undisclosed fee, the Singapore-based producer said on Wednesday. Vietnam’s economy to slow despite exports jump, lower inflation – Moody's By Jonathan Yee 07-May-25 16:16 SINGAPORE (ICIS)–Escalating trade tensions with the US are casting a shadow over Vietnam’s growth trajectory in 2025, despite continued growth in exports as well as lower inflation. China SM plagued by weak fundamentals and falling feedstock By Aviva Zhang 07-May-25 16:44 SINGAPORE (ICIS)–China’s styrene monomer (SM) prices fell sharply in April, as a result of decreasing crude oil prices and weak end-user demand expectations caused by the China-US tariff conflicts. The domestic market is likely to face headwinds from supply, feedstock and downstream sectors in May. Asia refined glycerine trades to Europe to be spurred by weak Chinese demand By Helen Yan 08-May-25 14:43 SINGAPORE (ICIS)–European demand for refined glycerine may lend support to regional glycerine producers in southeast Asia, who have been faced with persistently sluggish Chinese demand. Asia VAM plant margins to get a lift from westbound trades By Hwee Hwee Tan 09-May-25 13:08 SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) producers are eyeing improved netbacks from expansion in westbound shipments as regional trade margins narrow into the second quarter. Asia capro remains pressured by weak benzene, cautious demand outlook By Isaac Tan 09-May-25 13:11 SINGAPORE (ICIS)–Spot prices for caprolactam (capro) in Asia continued to soften in the week ending 7 May, weighed down by persistent losses in the upstream benzene market and a lack of recovery in downstream demand. China Apr export growth slows to 8.1% amid tariff uncertainty By Nurluqman Suratman 09-May-25 16:03 SINGAPORE (ICIS)–China's export growth slowed to 8.1% year on year in April from 12.4% in March in US dollar terms, underscoring the increasing impact of US tariffs amid ongoing uncertainty surrounding a potential trade agreement.

12-May-2025

HOUSTON (ICIS)–Rates for shipping containers were stable to higher this week as carriers have reduced capacity by 4-5% along the trade route amid efforts to stop the slide in prices, but capacity could surge and put downward pressure on rates if the Red Sea ceasefire holds. On 6 May, US president Donald Trump announced that a peace deal had been struck between the US and Houthi rebels, which would bring attacks against shipping to an end in the Red Sea. Since the start of 2024, traffic through the Suez Canal has collapsed and remains at roughly half pre-Gaza conflict levels. CONTAINER RATES Rates from online freight shipping marketplace and platform provider Freightos were flat week on week, and supply chain advisors Drewry showed a 4% increase in rates from Shanghai to New York and a 5% increase from Shanghai to Los Angeles, as shown in the following chart. Drewry expects rates to be less volatile in the coming week as carriers are reorganizing their capacity to reflect a lower volume of cargo bookings from China. Judah Levine, head of research at Freightos, said many US importers have paused orders out of China, but shippers (as well as manufacturers) can hold out only so long before consumers will start to see empty shelves or higher prices. Import cargo at the nation’s major container ports is expected to see its first year-on-year decline in over a year and a half this month as the effect of tariffs increases, according to the Global Port Tracker report released today by the National Retail Federation and Hackett Associates as shown in the following chart. Alan Murphy, CEO, Sea-Intelligence, said carriers have reduced capacity by 4-5% in April and May on the transpacific trade lane. “When we look across what was deployed in April and what is scheduled for May combined, blanked capacity accounts for 19% of the total Asia to North America West Coast (NAWC) planned capacity, and 17% of the total Asia to North America East Coast (NAEC) planned capacity, across those two months,” Murphy said. “But a high level of blank sailings does not automatically translate into a large reduction of capacity year on year, if the originally planned level of capacity, without blank sailings, constituted a large increase in capacity deployment on a year-on-year basis,” Murphy said. Kip Louttit, executive director of the Marine Exchange of Southern California (MESC), said the ports of Los Angeles and Long Beach are seeing fewer arrivals than normal. “For example, only 22 arrived the first five days of May, whereas 28.5 arrivals would be normal,” Louttit said. “Only nine are scheduled to arrive in the next three days, whereas 17 in three days would be normal.” 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 UNCHANGED US chemical tanker freight rates assessed by ICIS were steady this week with rates remaining unchanged week on week despite continuing to see downward pressure for several trade lanes. For yet another week, there is downward pressure on rates along the USG-Asia trade lane as charterers are still in wait-and-see mode. Besides contract of affreightment (COA) cargoes, there is very little seen in the market. The tariffs and uncertainty continue to dampen the spot market, pressuring rates. As a result, owners are sending fewer vessels and therefore keeping rates stable for now due to the lack of available tonnage. Similarly, rates from the USG to ARA and all other trade lanes also held steady. Although COA volumes are lower there are also fewer spot inquiries available. Despite the lack of interest, rates remain unchanged as the clean petroleum products (CPP) market continues to remain soft leaving those vessels to participate in the chemical sector and pressuring chemical rates lower. However, several cargoes of styrene, methanol and caustic soda continue to be seen in the market. From the USG to Brazil, this trade lane had seen more inquiries, but there is plenty of available space for the balance of May lending downward pressure to spot rates. This is leaving most owners still trying to fill up prompt partial space to WCSAM and to ECSAM for 2H May. Rates are soft and have lost some ground. During the past week large parcels of MEG and caustic soda were seen in the market and as well as a CPP cargo further demonstrating the length in the market and weighing down on rates. Along the USG to India route the spot market is stable and with its usual slow pace. No new cargoes have been heard from the US. With additional reporting by Will Beacham and Kevin Callahan Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

09-May-2025

SAO PAULO (ICIS)–Braskem-Idesa (BI) officially launched the Terminal Quimica Puerto Mexico (TQPM) on Wednesday, according to a notice from the company. After many years in the making, and at some points, serious doubts about the companies involved managing to put together the necessary capital expenditure (capex) for the terminal, in March ICIS could visit the almost-finished facilities. Braskem Idesa’s executives were relieved to finally see the long-running construction almost finished. Up to now, Braskem Idesa has been importing ethane by ship, a system called Fast Track. Before and during that, Braskem also depended on Mexico’s state-owned energy major Pemex for supply of ethane. However, beleaguered Pemex, after years of falling output, rising debts, and mismanagement, did not follow the agreement on several occasions and its ethane supply would fall short of what it had been agreed, leading to Braskem Idesa not having the feedstock needed to produce PE. Sources close to the situation reported to ICIS last year that Pemex only got serious about the ethane supply when threatened with being taken to arbitrage international court – because it is state-owned, that would have been the necessary course of action. As the ribbon was cut on Wednesday, most executives present could now focus on the future – undoubtedly more promising having its own terminal to import the feedstocks needed. Braskem Idesa holds a 50% stake in the terminal with Advario, the Netherlands-based engineering services provider. The terminal will allow BI to import 80,000 barrels/day, enabling the company to operate at 100% of its capacity at its integrated polyethylene (PE) Ethylene XXI complex in Coatzacoalcos, Mexico. The Braskem Idesa cracker in Coatzacoalcos has 1.05m tonnes/year of ethylene capacity and downstream capacities of 750,000 tonnes/year of high-density polyethylene (HDPE) and 300,000 tonnes/year of low-density polyethylene (LDPE). In an interview with ICIS in March, the CEO at TQPM, Cleantho de Paiva, said the terminal would benefit Mexican petrochemicals at large, not just Braskem Idesa, by allowing the feedstocks it was consuming up to now to be released to other producers. "This project has a very important impact on the development of the national petrochemical industry, because it's precisely to complement access to raw materials that we lack today. With a capacity to import up to 80,000 barrels per day of ethane, this will significantly exceed the 63,000 barrels Braskem Idesa currently requires for its operations,” said Cleantho de Paiva. “The issue of the lack of ethane in the country is structural. Since the US is the largest producer and exporter of petrochemical ethane, building this terminal gives us access to import sufficient raw material." "When the terminal comes into operation, Pemex, which currently has an obligation to supply a certain amount to Braskem Idesa, will no longer have it and will be able to direct this raw material to its own petrochemical complexes and resume its operating capacity," he added. Braskem Idesa is a joint venture made up of Braskem (75%) and Mexican chemical producer Grupo Idesa (25%). PE is the most widely used plastic in the world, primarily found in packaging including plastic bags, plastic films and geomembranes. Article thumbnail: The terminal as seen in March Source: ICIS Additional reporting by Johnathan Lopez

07-May-2025

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China is in the process of drafting its 15th Five-Year Plan (2026–2030) in a geopolitical and economic environment that suggests the need for greater self-reliance. It might be fair to assume this will include a continued push toward petrochemical self-sufficiency. But China is to cap refinery capacity from 2027 onwards due to the rise of electric vehicles. This reduced need for gasoline could mean not enough new naphtha, LPG or other refinery feedstocks to support further petrochemical plant construction. China might instead import more feedstocks from the Middle East or continue to repurpose existing refineries to make more petrochemical feedstock. This is already the direction of travel through Saudi Aramco investments in China. Add rumours of coal-to-chemicals rationalisation and closures of older plants, and the picture gets even murkier. Conflicting reports say either China is slowing petrochemical construction following the trade war —or pressing ahead and raising operating rates to the mid-80% range (up from high-70s post-Evergrande Turning Point). Demand is another major variable. Growth was already slowing before the trade war and could now turn negative in 2025. A document from China Customs (25 April) pointed to possible waivers for US polyethylene and ethane imports—but not for ethylene glycol or propane. Nearly 60% of China’s propane imports came from the US in 2024. With a 125% tariff still in place, China would be unable to replace those volumes quickly, putting PDH propylene production under pressure. This matters: 32% of China’s propylene capacity is now PDH-based, and 70% of propylene is used to make PP. ICIS expects PDH operating rates to fall to below 59% in 2025 (from 70% in 2024). Could this mean a propylene shortage? Not necessarily. Output from crackers, refineries and coal could increase—especially if, as one Middle East source suggests, China pursues greater PP self-sufficiency. Taking into account all these variables, and the extent to which China can export PP based on the level of trade tensions, consider these scenarios for China’s PP net imports in 2025–2028: The ICIS Base Case: They average 3m tonnes/year. Alternative 1: 600,000 tonnes/year with some years of net exports Alternative 2: 1.4m tonnes/year, with again some years of net exports My gut feel is that China will do its best to boost petrochemicals self-sufficiency. But you cannot take my always fallible words as the final words. You must extend and deepen your scenario planning in this ever-murkier environment. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

06-May-2025

SINGAPORE (ICIS)–SABIC swung to a net loss of Saudi riyal (SR) 1.21 billion ($323 million) in the first quarter on the back of higher feedstock prices and operating costs, the Saudi Arabian chemicals giant said on 4 May. in Saudi Riyal (SR) billion Q1 2025 Q1 2024 % Change Sales 34.59 32.69 5.8 EBITDA 2.5 4.51 -44.6 Net income -1.21 0.25 The company reported a Q1 revenue increase driven by higher sales volumes, though this gain was partially tempered by lower average selling prices, it said in a filing on the Saudi bourse, Tadawul. Despite this revenue growth, Q1 net profit faced pressure from a rise in other operating expenses, primarily due to a one-time SR 1.07 billion cost associated with a strategic restructuring expected to yield future cost reductions. QUARTER ON QUARTER PERFORMANCESABIC’s sales volume and average selling prices were relatively stable quarter over quarter, supported by higher production volumes in the chemicals and polymers units, although this was offset by lower overall sales volumes. In the first quarter, revenue of the petrochemicals segment was at SR31.5 billion, representing a quarter-over-quarter decrease of 1%, primarily driven by continued oversupply and weaker demand. While methanol prices improved, monoethylene glycol (MEG) prices were flat amid higher supply and weak demand, along with polypropylene (PP). Meanwhile, polyethylene (PE) prices were supported by global demand, but offset by additional supply. Polycarbonate (PC) prices were lower in the first quarter, mainly due to weak demand across major markets and oversupply. OUTLOOK Manufacturing Purchasing Managers Index (PMI) growth remained slow over the quarter, indicating business pessimism, SABIC CEO Abdulrahman Al-Fageeh said. “Our growth projects are progressing according to plan, including the Petrokemya MTBE plant and SABIC Fujian complex,” Al-Fageeh said. “We are focused on driving operational excellence, advancing transformation, and pursuing selective growth, while maintaining financial discipline and delivering long-term value,” added Al-Fageeh. SABIC projects an expenditure range of $3.5-4.0 billion for the year. SABIC is 70%-owned by energy giant Saudi Aramco. Thumbnail shows a SABIC production facility (Source: SABIC) ($1 = SR3.75)

05-May-2025

SINGAPORE (ICIS)–Asia's petrochemical markets are poised for a resurgence in activity following the May Day holidays, with discussions subdued as buyers await signs of recovery and producers restart plants over the coming months. Producers to restart plants, refill inventories after holidays Delayed purchases until after holidays US has contacted China for trade talks – Chinese state media The May Day or Labor Day holiday is celebrated in China from 1-5 May, and in most other Asian countries on 1 May. Japan and South Korea also observe several days of holiday in May. Feedstock propane supply-demand fundamentals are being weighed on by the ongoing US-China trade war, which is affecting the cost of propane imports and could lead to reduced operating rates for propane dehydrogenation (PDH) units. This may tighten propylene supply in the longer term, potentially supporting prices if demand picks up. Demand has been sluggish in the propylene market, weighing prices down as producers maintain low inventories ahead of 1 May. However, after the Labor Day holiday, there is an expectation of increased supply, which may lead to a more balanced supply-demand scenario as they resume normal operations. Separately, the glycerine market in Asia is expected to see a notable pick-up in restocking activities after the holidays. Chinese buyers, who have been holding back purchases due to a sluggish downstream epichlorohydrin (ECH) market and uncertainties surrounding the US-China trade war, are likely to return to the market. “We will wait until after the Labor Day holidays before we commit to any purchases as we expect the downstream ECH market to slow down after the holidays,” a Chinese buyer said. The ECH market, a key downstream sector for glycerine, is anticipated to experience a price drop after the holidays due to demand remaining weak amid the US-China trade war. Asia's butyl glycol (BG) import prices were assessed as lower this week amid a bearish market sentiment amid unimproved demand conditions. In southeast Asia, the glycol ethers market is undergoing price adjustments as producers lower offers in anticipation of the Labor Day holidays. China's export prices for propylene glycol ether (PGE) also softened as sellers looked to increase sales before the holiday. Meanwhile, propylene glycol prices are expected to remain stable as market participants await the outcomes of the holiday period. In China, domestic prices have held steady, but the overall sentiment remains cautious due to the impact of the holiday on production and logistics. The stability in pricing reflects balanced supply-demand fundamentals, though any unexpected disruptions post-holiday could lead to short-term volatility. PRODUCERS ADJUSTING OUTPUT The acetic acid market is experiencing softening spot prices due to lengthening supply as plants restart operations following maintenance turnarounds. However, the holiday period is likely to further influence supply dynamics, with some producers adjusting output to manage inventory levels. In China, a new plant tied to a downstream ethylene vinyl acetate (EVA) unit has come online. It is among other plants in Asia with a combined capacity of nearly 1.8 million tonnes/year which have either already restarted or are restarting in May, EVA-linked vinyl acetate monomer (VAM) demand is generally expected to slow as June approaches, when a pricing policy in China – which has spurred a rush in solar panel installations across the country – comes into effect. Concerns of slowing demand were kept on the boil in Asia ethyl acetate (etac) markets amid fluid developments surrounding trade tensions between the US and China, and its potential ripple effect on sentiment in the days ahead. Notably, market players were conscious of weakening product spreads or etac production margins. Eroding margins have thus left regional suppliers with little room to scale back asking levels, despite the current market climate that was viewed as largely skewed towards buyers. EYES ON POSSIBLE TRADE TALKSAs the US-China trade war persists, both sides have indicated a willingness to engage with each other on trade talks. On Friday, a spokesperson of China’s Ministry of Commerce said that senior US officials have “repeatedly expressed their willingness” to negotiate with China on tariffs, according to state media outlet CCTV. The spokesperson said that the US has sent requests hoping to talk to China, and the Asian country is currently evaluating them. “China's position is consistent. If we fight, we will fight to the end; if we talk, the door is open,” the spokesperson said. Meanwhile, US President Donald Trump has maintained that trade talks are ongoing between the two largest economies in the world, which Chinese state media denied. Amid US tariffs, manufacturing activity continued to remain sluggish across Asia, including China and Japan. In April, China's manufacturing activity shrank as export orders weakened due to the escalating trade war with the US. The official purchasing managers' index (PMI) dropped to 49.0, indicating contraction, down from 50.5 in March. Japan's manufacturing PMI rose to 48.7 in April from 48.4 in March, marking the tenth consecutive month of contraction. Focus article by Jonathan Yee Additional reporting by Seymour Chenxia, Helen Yan, Julia Tan, Joy Foo and Matthew Chong and Melanie Wee.

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)–China's tariffs on US shipments of liquefied petroleum gas (LPG) have yet to disrupt exports, and the companies that supply the material expect that will remain the case – even if prices fall. China has imposed additional 125% tariffs on US shipments of LPG, which it uses as feedstock for its on-purpose propylene plants. LPG is a by-product of oil and gas production, and the US will make the material regardless of the price of the material. The US market has limited capacity to absorb its LPG output, so prices for the material will fall until they are low enough to clear the international market. CHINA'S PDH UNITS RELY ON LPG FOR FEEDSTOCKPropane dehydrogenation (PDH) has become the largest route to produce propylene in China, taking up around 32% of the total based on effective capacity, according to ICIS Supply and Demand Database. Nearly all of the feedstock for these PDH units is imported with the exception of a few producers that obtain propane from their refineries. China has imported 29.24 million tonnes of propane in 2024, with 17.32 million tonnes or 59% from the US, according to customs data. US LPG EXPORTS UNCHANGEDEnterprise Products, the largest US exporter of LPG, said nominations at its docks for May indicate that its customers are not changing their order patterns from prior months. "We have not seen a disruption on exports of ethane or LPG," said Tug Hanley, Enterprise senior vice president, pipelines & terminals. He made his comments during an earnings conference call. Enterprise does not have any contracts with Chinese entities, he said. Instead, its counterparties are international companies that are experienced with handling trade disruptions such as tariffs. Jim Teague, co-CEO of Enterprise, said the market is already rerouting LPG between among the biggest suppliers in the US and the Middle East and the biggest importers in China and India. US CANNOT CEASE LPG PRODUCTIONLPG is a by-product of oil and gas production, and, so far, crude prices support output. The biggest contributor to new oil production in the US is the Permian basin, and production will remain in maintenance mode if WTI crude futures remain at $55-60/barrel, according to Enterprise. WTI remains within that range. Even if US oil production remains flat between now and 2027, production of natural gas and natural gas liquids (NGLs) like LPG and ethane will continue growing. As oil wells age, they produce larger shares of gases. In Enterprise's scenario for flat oil production, US NGL production will increase by 200,000 barrels/day. US propane consumption is not keeping up with production. In 2025 it should rise to 810,000 barrels/day from 2024's 750,000 barrels/day, according to the short term energy outlook from the Energy Information Administration (EIA). It will remain at 810,000 barrels/day in 2026. The US does have capacity to store LPG, but it cannot do so indefinitely, said Hanley of Enterprise. "Price will solve that." If tariffs, weaker demand growth or a combination of the two pressure LPG prices lower, then it could increase petrochemical margins among crackers that import the feedstock from the US. Several do so in Europe. In the US, propane's attractiveness as a raw material for ethylene production would depend on prices for ethane, the nation's predominate feedstock for crackers. Cracking propane produces larger shares of propylene, so its sales price would have to be considered. US Gulf propane-based ethylene contract margins have occasionally exceeded those for ethane-based production, as shown in the following chart. US COMPANIES PLAN MORE LPG EXPORTSEnterprise and ONEOK have made no changes to their plans to expand LPG export capacity. Enterprise is building the Neches River Terminal in Orange County, that can export 360,000 barrels/day of propane when completed in the first half of 2026 Enterprise is expanding the Enterprise Hydrocarbons Terminal (EHT) on the Houston Ship Channel that will increase LPG export capacity by 300,000 barrels/day by the end of 2026. ONEOK and MPLX are building an LPG terminal in Texas City, Texas under the Texas City Logistics joint venture. When completed in early 2028, it can export 400,000 barrels/day of LPG. Energy Transfer is expanding its Nederland NGL terminal that will increase export capacity by up to 250,000 barrels/day in mid 2025. It did not specify the NGLs. Targa is pursuing a two-phase LPG expansion project at it terminal in Galena Park, Texas, that will increase total LPG export capacity to 19 million barrels/month when completed in Q3 2027. Insight by Al Greenwood Additional reporting by Seymour Chenxia (Thumbnail shows a PDH unit, which converts propane into propylene. Image by Enterprise Products)

01-May-2025