Ethylene

SINGAPORE (ICIS)–Weak downstream demand, exacerbated by economic and geopolitical uncertainties, keeps sentiment bearish and buyers cautious across petrochemical markets in Asia. Sluggish demand to continue into Q2 amid oversupply China’s surging exports a concern among Asia producers China, South Korea prepare stimulus measures amid US tariffs REGIONAL PRODUCERS FEEL STRAIN China’s aggressive capacity expansion which led to increased exports has been exerting pressure on other Asian producers. For caprolactam (capro), the country turned into a net exporter in 2024, with shipments doubling from two years ago. This flood of Chinese exports has intensified regional competition, forcing capro plant closures in Japan and Thailand due to unsustainable margins. In the ethylene vinyl acetate (EVA) market, massive capacity expansions in the next three years are projected to push China’s production capacity to 63% of the global total by 2027. As a result, the country’s EVA imports are likely to decline further, while exports are projected to continue increasing. In the naphtha market, supply constraints due to limited arbitrage cargoes and higher demand from new cracker start-ups in China and Indonesia have driven intermonth spreads to the highest levels seen in a year on 11 March. Refinery maintenance in China has also further restricted domestic naphtha supply, tightening overall availability in Asia. For aromatics such as benzene, toluene, xylene, paraxylene (PX), and mixed xylene (MX), prices fell in the week ended 14 March, weighed down by ample inventories and subdued demand. For acetone, prices have risen on tight supply because of plant maintenance, squeezing the margins of downstream isopropanol (IPA) producers, with LG Chem planning to shut its plant for a month from end-March. Meanwhile, palm oil prices in southeast Asia remain elevated due to lower production and stock levels, prompting a shift to cheaper alternatives like soybean oil in key markets such as India. Meanwhile, palm oil prices in southeast Asia remain elevated due to lower production and stock levels, prompting a shift to cheaper alternatives like soybean oil in key markets such as India. Consequently, downstream fatty alcohols prices increased. Although plants in Malaysia and Indonesia have expanded capacities, these will be offset by expected turnarounds during March to May. BEARISH SENTIMENT AMID TRADE WARS Industry players are navigating highly volatile markets amid the revival of the US-China trade war, with fears of a more widespread trade disruption amid the US’ protectionist measures under President Donald Trump. Buyers are generally cautious about building too much inventory amid continued weakness in demand. In the MX market, buyers in southeast Asia are maintaining sufficient inventories and avoiding additional spot purchases. For methyl methacrylate (MMA), domestic market in China remains sluggish due to high stocks and lackluster demand, while a strong US dollar was further dampening export demand. Similarly, the vinyl acetate monomer (VAM) market is also facing weak demand in China, with traders struggling to offload high inventories due to slow spot trade activity. US’ tariffs on all steel and aluminum imports which took effect on 12 March are adding to regional economic concern, particularly for South Korea, which is as major steel exporter to the world’s biggest economy. China, whose economy has been slowing down, plans “promote reasonable wage growth by strengthening employment support in response to economic conditions”, to boost domestic consumption, its State Council said on 16 March. Among the new economic stimulus measures are implementing paid annual leaves for workers, expanding property income channels and accelerating development in new technologies. Focus article by Jonathan Yee Additional reporting by Jasmine Khoo, Angeline Soh, Samuel Wong, Isaac Tan, Chris Qi, Helen Yan, Rita Wang, Elaine Zhang, Yvonne Shi, Li Peng Seng and Joanne Wang Thumbnail image: Qingdao Port Trade, China – 13 March 2025 (Costfoto/NurPhoto/Shutterstock)

17-Mar-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 14 March. Asia petrochemicals under pressure from China oversupply, US trade risks By Jonathan Yee 10-Mar-25 12:42 SINGAPORE (ICIS)–Sentiment in Asia’s petrochemical markets remains cautious with prices of some products – particularly in the southeastern region – were rising on tight supply, amid escalating trade tensions between the US and its major trading partners, including China. Asia petrochemical shares track Wall Street rout on US tariff, recession worries By Jonathan Yee 11-Mar-25 11:30 SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Tuesday, tracking Wall Street’s rout overnight on fears of a US recession caused by tariffs. Asia naphtha bull-run intensifies; potential risks ahead By Li Peng Seng 12-Mar-25 13:21 SINGAPORE (ICIS)–Tight supplies and stronger-than-usual demand have driven Asia’s naphtha intermonth spread to nearly a year's high on 11 March, but upcoming cracker maintenance and rebounding arbitrage volumes could derail the current bull-run. Asia caprolactam spot prices decline, China plant operating rates reduce By Isaac Tan 12-Mar-25 20:32 SINGAPORE (ICIS)–Caprolactam (capro) spot prices in Asia-Pacific declined in the week ended 12 March 2025, driven by weak benzene costs and sluggish downstream demand. China EVA industry: navigating capacity expansion amid demand uncertainty By Chris Qi 13-Mar-25 11:27 SINGAPORE (ICIS)–China's ethylene vinyl acetate (EVA) industry is expected to brace for a second wave of capacity expansion during 2025-2027. The country is now the world's largest EVA producer following intensive plant start-ups during 2021-2023. BLOG: A Different Kind of Downturn: Why This Cycle Won’t Simply “Right Itself” By John Richardson 13-Mar-25 11:55 SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. INSIGHT: Poor demand dominates Asian isocyanates markets, oversupply caps Mideast gains By Shannen Ng 13-Mar-25 13:00 SINGAPORE (ICIS)–Soft demand for key isocyanates polymeric methylene diphenyl diisocyanate (PMDI) and toluene diisocyanate (TDI) in Asia and the Middle East is expected to persist throughout March, with lengthy supply also likely to weigh on sentiment. South Korea prepares full emergency response as US tariffs take effect By Nurluqman Suratman 14-Mar-25 12:51 SINGAPORE (ICIS)–South Korea is initiating full emergency response measures as US steel and aluminum tariffs take effect, aiming to mitigate the impact on its economy, which is already grappling with weak exports and domestic consumption.

17-Mar-2025

HOUSTON (ICIS)–Conflict has caused nations to adopt energy policies that favor security, affordability and reliability over sustainability as they seek to meet rising energy demand for artificial intelligence (AI) among developed countries and rising populations among developing ones. Energy security was brought to the fore by the war between Russia and Ukraine and the subsequent shock to EU industry, according to comments made at the CERAWeek by S&P Global energy conference. Executives at CERAWeek were exuberant about the prospects of rising demand for energy, particularly natural gas. Global demand for oil could reach a plateau by the middle of the next decade, although it could continue to rise as populations grow in emerging economies. RISING ENERGY DEMANDFollowing demand shocks such as war and COVID, governments want  sources of energy that are secure, reliable and affordable. "Energy realism is taking center stage," said Sultan Ahmed Al Jabr, CEO of the Abu Dhabi National Oil Co. (ADNOC). He made his comments at CERAWeek. "Sustainable progress is not possible without access to reliable, affordable and secure sources of energy." Murray Auchincloss, the CEO of BP, noted that every government to which he spoke after his appointment stressed the need for affordable and reliable energy. At the same time, the world will need more energy because of population growth, adoption of middle-class habits in emerging economies and AI. Applications like ChatGPT use up to 10 times the energy of a simple web search, Al Jabr said. By 2030, demand for power from data centers in the US will triple, accounting for 10% of consumption. ADNOC is putting money behind its predictions by establishing XRG, an energy investment company with an enterprise value of more than $80 billion. ADNOC and others expect LNG will play a large role in meeting growing demand for reliable and affordable power. Between now and 2050, LNG demand should rise by 65%, according to XRG. In fact, international gas is one of XRG's three platforms. US energy producer ConocoPhillips is also optimistic about the prospects for LNG, said Ryan Lance, CEO. He sees a growing market shipping low-cost natural gas from North America to higher cost regions in Europe and Asia. OIL HITS PLATEAUUnder current trends, global demand should continue growing slowly until reaching a plateau in the mid-2030s, said Helen Currie, chief economist of ConocoPhillips. In the industrialized world, oil demand is declining, said Eirik Warness, chief economist of Equinor. He expects oil demand to reach a plateau by the end of the decade. One factor behind tapering oil demand is China. It is weaning itself off of petroleum-based fuels in favor of nuclear and renewables for security reasons, said Jeff Currie, chief strategy officer for Carlyle. While these sources of energy have higher upfront costs, they have much lower operational costs when compared with fossil fuels, and they provide a secure source of energy. PROSPECT FOR US OIL PRODUCTIONCEOs at ConocoPhillips and Occidental Petroleum expect US oil production to reach a plateau later in the decade. After that, it should slowly taper using current technology. But energy companies have demonstrated a track record for innovation. If successful, they could extend the production life of US oilfields. Occidental is conducting pilot tests to determine whether it can use carbon dioxide (CO2) in unconventional oil fields like shale, said Vicki Hollub, CEO. The goal is to double oil recovery rates to 20% from 10%. Using CO2 in enhanced oil recovery is already an established technique in conventional fields, and Occidental is building a business around it using direct air capture (DAC). IMPLICATIONS FOR US CHEMSUS ethylene plants rely predominantly on ethane as a feedstock, and its cost tends to rise and fall with that for natural gas. At the least, rising gas demand could establish a floor on prices for the fuel and potentially lead to spikes as supply struggles to keep up with demand. At the same time, prices for petrochemicals tend to rise and fall with those for crude oil. Flat or falling demand for oil could set a ceiling on prices for petrochemicals. CERAWeek by S&P Global runs through Friday. Insight article by Al Greenwood (Thumbnail shows an LNG tanker. Image by Xinhua/Shutterstock)

12-Mar-2025

HOUSTON (ICIS)–The threat of additional US tariffs, retaliatory tariffs from trading partners, and their potential impact is fostering a heightened level of uncertainty, dampening consumer, business and investor sentiment, along with clouding the 2025 outlook for chemicals and economies. The US chemical industry, a massive net exporter of chemicals and plastics to the tune of over $30 billion annually, is particularly exposed to retaliatory tariffs. Chemical company earnings guidance for Q1 and all of 2025 is already subdued, with the one common theme from the investor calls being little-to-no help expected from macroeconomic factors this year. Tariffs only cloud the outlook further. Tariffs have long been a feature of US economic and fiscal policy. In the period to the 1940s, tariffs were used as a major revenue source to fund the federal government before the introduction of the income tax and were also used to protect domestic industries. After 1945, a neo-liberal world order arose, which resulted in a lowering of tariffs and other trade barriers and the rise of globalization. With the collapse of the Doha Round of trade negotiations in 2008, this drive stalled and began to reverse. Heading into this year’s International Petrochemical Conference (IPC) hosted by the American Fuel & Petrochemical Manufacturers (AFPM), it is clear that the neo-liberal world order has ended. Rising geopolitical tensions and logistics issues from COVID led many firms to diversify supply chains, leading to reshoring benefiting India, Southeast Asia, Mexico and others, and to the rise of a multi-polar world. It is also resulting in the rise of tariffs and other trade barriers around the world, most notably as US trade policy. FLUID US TRADE POLICYThe US administration’s policy stance on tariffs has been very fluid, changing from day to day. It is implementing 25% tariffs on steel and aluminium imports on 12 March and has already placed additional tariffs of 20% on all imports from China as of 4 March (10% on 4 February, plus 10% on 4 March). On 11 March, the US announced steel and aluminium tariffs on Canada would be ramped up to 50% in retaliation for Canadian province Ontario placing 25% tariffs on electricity exports to the US. Later, Ontario suspended the US electricity surcharge, and the US did not impose the 50% steel and aluminium tariff. The US had placed 25% tariffs on imports from Canada (10% on energy) and Mexico on 4 March but then on 5 March exempted automotive and then on 6 March announced a pause until 2 April. China retaliated by implementing 15% tariffs on US imports of meat, fish and various crops, along with liquefied natural gas (LNG) and coal. Canada retaliated with 25% tariffs on C$30 billion worth of goods on 4 March and then with the US pause, is delaying a second round of tariffs on C$125 billion of US imports until 2 April. Mexico planned to retaliate on 9 March but has not following the US pause. US President Trump has also threatened the EU with 25% tariffs. We have a trade war and as 1960s Motown artist Edwin Starr sang, “War, huh, yeah… What is it good for?… Absolutely nothing.” Canada, Mexico and China are the top three trading partners of the US, collectively making up over 40% of US imports and exports. The three North American economies, until recently, had low or non-existent tariffs on almost all of the goods they trade. This dates back to the 1994 NAFTA free trade agreement, which was renegotiated in 2020 as the USMCA (US-Mexico-Canada Agreement). A reasoning behind the tariff threats on Canada and Mexico is to force Canada and Mexico to stop illegal drugs and undocumented migrants from crossing into the US. These tariffs were first postponed in early February after both countries promised measures on border security, but apparently more is desired. But the US also runs big trade deficits with both countries. Here, tariffs are seen by the administration as the best way to force companies that want US market access to invest in US production. IMPACT ON AUTOMOTIVEUS automakers are the most exposed end market to US tariffs and potential retaliatory tariffs, as their supply chains are even more highly integrated with Mexico and Canada following the USMCA free trade deal in 2020. The USMCA established Rules of Origin which require a certain amount of content in a vehicle produced within the North America trading partners to avoid duties. For example, at least 75% of a vehicle’s Regional Value Content must come from within the USMCA partners – up from 62.5% under the previous NAFTA deal. Supply chains are deeply intertwined. In the North American light vehicle industry, materials, parts and components can cross borders – and now potential tariff regimes – more than six times before a finished vehicle is delivered to the dealer’s lot. US prices for those goods will likely rise. The degree to which they rise (extent to which tariffs costs will pass through) depends upon availability of alternatives, structure of the domestic industry and pricing power, and currency movements. In addition, some of the Administration’s polices dealing with deregulation, energy, and tax will have a mitigating effect on the negative impact of tariffs for the US. The 25% steel and aluminium tariffs will add nearly $1,500 to the cost of a light vehicle and will result in lower sales for the automotive industry which has been plagued in recent years by affordability issues. If it had been implemented, the 50% tariff on steel and aluminium imports from Canada would only compound the pricing impact. All things being equal, 25% tariffs on the metals would push down sales by about 525,000 units but some of the favorable factors cited above as well as not all costs being passed through to consumers will partially offset the effects of higher metal prices. Partially is the key word. Since so many parts, components, and finished vehicles are produced in Canada and Mexico, US 25% tariffs on all imports from Canada and Mexico would add further to the price effects. The economic law of demand holds that as prices of a good rise, demand for the good will fall. ECONOMIC IMPACTTariffs will dampen demand across myriad industries and markets, and could add to inflation. By demand, we mean the aggregate demand of economists as measured by GDP. Aggregate demand primarily consists of consumer spending, business fixed investment, housing investment, and government purchases of goods and services. Tariffs would likely add to inflation but the effects would begin to dissipate after a year or so. By themselves, the current round of tariffs on steel and aluminium and on goods from Canada, Mexico and China will dampen demand due to higher prices. Plus, as trading partners retaliate, US exports would be at risk. Preliminary estimates suggest the annual impact from these tariffs – in isolation – on US GDP during the next three years could average 1.4 percentage points from baseline GDP growth. Keep in mind that there are many moving parts to the economy and that the more favorable policies could offset some of this and, as a result, the average drag on GDP could be limited to a 0.5 percentage point reduction from the baseline. POTENTIAL GDP IMPACT OF US TARIFFS – 20% ON CHINA, 25% ON MEXICO AND CANADA Real GDP is a good proxy for what could happen in the various end-use markets for plastic resins and the reduction of US economic growth. In outlying years, however, tariffs could support reshoring and business fixed investment. The hits on Mexico and Canada would be particularly. China’s economic growth would be affected as well. But China can shift exports to other markets. Mexico and Canada have fewer options. Resilience will be key to growing uncertainty and will lead to shifting trade patterns and new market opportunities. This is where scenarios, sound planning and strategies, and leadership come into play. US EXPORTS AT RISK, SUPPLY CHAINS TO SHIFTUS PE exports are particularly vulnerable to retaliatory tariffs. The US is specifically targeting tariffs on countries and regions that absorb around 52% of US PE exports – China, the EU, Mexico and Canada, according to an ICIS analysis. Aside from PE, the US exports major volumes of PP, ethylene glycol (EG), methanol, PVC, styrene and vinyl chloride monomer (VCM), along with base oils to countries and regions targeted with tariffs. The US exports nearly 50% of PE production with China and Mexico being major outlets. China has only a 6.5% duty on imports of US PE, having provided its importers with waivers in February 2020 that took rates to pre-US-China trade war levels. The US-China trade war under the first US Trump administration started in 2018 with escalating tariffs on both sides, before a phase 1 deal was struck in December 2019 that removed some tariffs and reduced others. After the waivers offered by China to importers in February 2020, US exports of PE and other ethylene derivatives surged before falling back in 2021 from the COVID impact. They then rocketed higher through 2023 and remained at high levels in 2024. Since 2017, the year before the first US-China trade war, US ethylene and derivative exports to China are up more than 4 times, leaving them more exposed than ever to China. With tariff escalation, chemical trade flows would shift dramatically. Just one example is in isopropanol (IPA). Shell in Sarnia, Ontario, Canada, produces IPA, of which over 85% is shipped to the US, mainly to the northeast customers, said ICIS senior market analyst Manny Borges. “It is a better supply chain for the customers instead of shipping product from the US Gulf,” said Borges. “With the increase in tariffs, we will see several customers shifting volumes to domestic producers or countries where the tariffs are not applied,” he added. US IPA producers are running their plants at around 67% of capacity on average and have sufficient capacity to supply the entire domestic market, the analyst pointed out. This dynamic, where US producers supply more of the local market versus imports, would likely play out across multiple product chains as well, especially in olefins where the US is more than self-sufficient. Even as the US is more than self-sufficient in, and a big net exporter of PE, ethylene glycols, polypropylene (PP) and polyvinyl chloride (PVC), it imports significant quantities from Canada. In the event of a 25% tariff on imports from Canada, US producers could easily fill the gap, although logistics would have to be reworked. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Insight article by Kevin Swift and Joseph Chang

12-Mar-2025

HOUSTON (ICIS)–The new administration of US President Donald Trump has pivoted wholeheartedly to fossil fuels, with the energy secretary warning on Monday the dangers of focusing solely on climate change while emphasizing the world's continued reliance on oil and natural gas for producing energy. "There is no physical way that wind, solar and batteries can replace natural gas," said Chris Wright, US secretary of energy. He made his comments during the CERAWeek by S&P Global energy conference. At the start of his speech, Wright stressed the ways that fossil fuels dominate the energy industry. Moreover, Wright argued that the world will need more fossil fuels because of rising demand for energy from artificial intelligence (AI) and from consumers in the developing world, who want to adopt middle-class lifestyles. BREAK FROM BIDENWright and Trump mark a sharp break from the previous administration of Joe Biden, which was marked by antipathy towards fossil fuels and incoherence. While Biden was adopting restrictive policies, his energy secretary urged oil producers to make more crude. Such energy contractions are so far lacking in Trump's administration. Wright repeated the president's sentiments and went as far as to pull out a marker and sign an order during a press briefing, something the president has done during the first weeks of his administration. CLIMATE CHANGE TAKES BACK SEATWright said consumers became collateral damage when the previous administration focused on climate change at the expense of promoting reliable and affordable sources of energy. "We will end the quasi-religious policies on climate change that imposed endless sacrifice on citizens," he said. "The Trump administration will treat climate change for what it is," Wright said. It is a global side effect for creating a modern world and the benefits that come with it, and dealing with it is a tradeoff, he said. "Everything in life involves tradeoffs." That said, Wright said he is a climate realist and not a denialist. He highlighted nuclear fission and fusion, both emission-free sources of power. He mentioned advances in geothermal energy and noted the growth in solar power. The administration's policies towards wind energy reflect cost and outrage from people who live near the projects, he said. Wright said the administration does not oppose electric vehicles (EVs), but only the policies that restrict consumer choice and lavish incentives to wealthy people who do not need them. "We need thoughtful, rational policies on energy and honest assessments on climate change," he said. SENTIMENT WILL NOT DIRECTLY BOOST OIL OUTPUTWright's comments went over well with the energy conference, with the audience burst in spontaneous applause. While the US energy industry will welcome a cooperative administration, sentiment alone will not have large or immediate effect on energy production. US oil and gas production grew despite the antipathy and incoherence of the Biden administration because much of it has taken place on the private lands of the Permian basin. Private land is free from federal restrictions and moratoria on leases. Oil and gas producers will gauge demand growth and costs before they increase output. Wright acknowledged that energy companies rely on market signals, and not government decree, to make investment decisions. But the administration can play a role by adopting policies that encourage investment and make it easier for companies to obtain the permits needed to build infrastructure and large-scale projects. TARIFFS VERSUS ENERGYOne contradiction in the administration is its embrace of fossil fuels and tariffs as a central tool in economic and industrial policy. If the US adopts tariffs, they will increase costs of steel and aluminium, key raw materials for oil and gas production. They would also increase costs of imported grades of heavy oil. US refineries are built to process heavier grades of crude. If faced with tariffs, US refiners could pay the tax or find alternative suppliers that could still cost more. Otherwise, refiners would need to underutilize their plants or invest in costly retrofits that would allow them to process larger amounts of domestically produced lighter grades of oil. Wright said the US is still in the early stages of its tariff proposals, but vigorous dialogue about their effect on the economy is taking place behind closed doors. Oil and natural gas are important for the chemical industry because they are the predominant source of feedstock and energy. Chemical prices tend to rise and fall with those for gas. In the US, feedstock costs tend to rise and fall with those for natural gas because ethylene plants predominantly rely on ethane as a raw material. CERAWeek by S&P Global runs through Friday. Insight article by Al Greenwood Thumbnail shows an oil pump jack. Image by Shutterstock.

10-Mar-2025

HOUSTON (ICIS)–The US is still in the early stages of its tariff proposals, which could increase the costs of the steel and aluminium needed for oil and gas production, but vigorous dialogue about their effect on the economy is taking place behind closed doors, the secretary of energy said on Monday. "I think we are early in this," said Chris Wright, secretary of the US Department of Energy. He made his comments during the CERAWeek by S&P Global energy conference. "We have, behind closed doors, vigorous debates on tariffs," Wright said. "It's definitely not a quasi-religious, dogmatic thing. It's a dialogue." While the debate on tariffs is in its early days, Wright said he is optimistic about the outcome of the policies of the new administration because of the business background of the president and the record of his first term of office in 2016-2020. CLASHING POLICIESThe administration has enthusiastically expressed support for oil and gas production in the US with President Donald Trump saying "Drill, baby drill" during his speeches. At the same time, the government has embraced tariffs as a key tool of economic and industrial policy. This includes tariffs on steel and aluminium, key raw materials needed in the oil and gas industry. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. In early April, the US said it would introduce retaliatory tariffs on imports from the rest of the world. These tariffs will consider what the US considers non-tariff trade barriers, such as value added tax (VAT) systems. The US could also go ahead in early April on proposals to impose 25% tariffs on all imports from Mexico, 10% tariffs on all energy imports from Canada and 25% tariffs on most other imports from Canada. The US is also considering imposing 25% tariffs on imports from the EU. These countries are major suppliers of steel and aluminium to the US. Already, higher costs in materials as well as labor have raised costs for several fuel and chemical projects. US-based chemical producer Westlake stressed that it would conduct a cost analysis to take inflation into account before it would consider expanding a joint venture cracker. More companies could give more large-scale projects second thoughts if tariffs cause further inflation in raw materials. Oil and natural gas are important for the chemical industry because they are the predominant source of feedstock and energy. Chemical prices tend to rise and fall with those for gas. In the US, feedstock costs tend to rise and fall with those for natural gas because ethylene plants predominantly rely on ethane as a raw material. CERAWeek by S&P Global runs through Friday. Thumbnail shows Chris Wright, secretary of the US Department of Energy. Image by ICIS.

10-Mar-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 7 March. LyondellBasell to build metathesis unit to make propylene LyondellBasell has approved plans to build a metathesis unit in Channelview, Texas, that will convert ethylene into propylene, the producer said on Monday. INSIGHT: US to export more chem feedstocks amid drought of US cracker projects US production of ethane, propane and other natural gas liquids (NGLs) will continue to grow while domestic demand for these chemical feedstocks will likely remain flat, a trend that is contributing to a surge in new terminal projects that will export these products to growing markets overseas. Chem shares plunge as US proceeds with 25% Canadian, Mexican tariffs US-listed shares of chemical companies fell sharply – many by more than 5% – on Monday as the US proceeds with plans to impose tariffs on Canada, Mexico and China, its three biggest trading partners. INSIGHT: Retaliatory tariffs to compound pain for US chemicals and key end markets The US ramping up additional tariffs on China to 20% and kicking off 25% tariffs on Mexico and Canada (10% on energy) as of 4 March will hit chemical and key end markets and products as players rush to reconfigure supply chains. US to delay automobile tariffs for one month The US will grant a one-month tariff exemption for the nation's automobile industry, the government said on Wednesday. US to delay tariffs on USMCA-compliant goods from Mexico for one month – Trump The US will delay until 2 April imposing tariffs on Mexican goods that fall under the US-Mexico-Canada Agreement (USMCA), President Donald Trump said on Thursday, 6 March in a post on Truth Social. Wall Street turns more bearish on US chemicals on tariff uncertainty Wall Street analysts are turning more negative on the earnings outlook for chemical companies on increasing US tariff uncertainty. Canada delays second phase of retaliatory tariffs, Ontario plans electricity export tax Canada is delaying its second phase of retaliatory tariffs on goods imported from the US to 2 April, a minister announced on Thursday evening. INSIGHT: US tariffs may persist as they become policy pillar The US government is coming to embrace tariffs as a central part of its economic and fiscal policies, a development that could see such measures persist and threaten margins for the nation's chemical producers.

10-Mar-2025

HOUSTON (ICIS)–US-listed shares of chemical companies fell sharply – many by more than 5% – on Monday as the US proceeds with plans to impose tariffs on Canada, Mexico and China, its three biggest trading partners. The selloff in chemical shares was sharper than that for the general market. The following table shows the stock indices followed by ICIS. Index 3-Mar Change % Dow Jones Industrial Average 43,191.24 -649.67 -1.48% S&P 500 5,849.72 -104.78 -1.76% Dow Jones US Chemicals Index 851.42 -17.99 -2.07% S&P 500 Chemicals Industry Index 901.32 -17.93 -1.95% Shares of every US-listed company followed by ICIS fell. TUESDAY'S TARIFFSUnless the nations reach last-minute deals, the US will impose 25% tariffs on all imports from Mexico, 10% tariffs on all energy imports from Canada and 25% tariffs on all other imports from Canada. The US will also proceed with an additional 10% that it proposed on all imports from China, according to a post from the White House’s Rapid Response account on social media platform X. This is on top of the 10% in new tariffs that the US already imposed earlier in 2025 on imports from China. EFFECT ON US MARKETSWhile the US has large trade surpluses in polyethylene (PE), it still imports large amounts of the plastic from Canada. Many of these imports go to processors in the bordering states of Illinois, Michigan and Ohio. These states are far from most of the plastic plants in the US, which are concentrated in Texas and Louisiana. Processors in these states that border Canada will need to pay the tariffs or pay higher shipping costs to secure material from suppliers farther away. The US also imports notable amounts of purified terephthalic acid (PTA) from Canada and Mexico as well as methylene diphenyl diisocyanate (MDI) from China. The US receives large Canadian shipments of ammonia and potassium chloride, which is also known as muriate of potash (MOP). At least one company, Canada's Chemtrade Logistics, said it expected to pass a larger part of the tariffs to its customers. Chemtrade Logistics exports sodium chlorate, chlorine and sulfuric acid to the US. RETALIATIONChina already has retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles. China has restricted exports of antimony and bismuth. Antimony is used to make catalysts for polyethylene terephthalate (PET), and bismuth is used to make catalysts for polyurethanes. Canada had proposed retaliatory tariffs of 25% on Canadian dollars (C$) 155 billion ($107 billion) worth of US imports. The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others. Canada was preparing a second list, worth C$125 billion. All three countries could impose retaliatory tariffs on the substantial exports of PE, polyvinyl chloride (PVC) and other ethylene derivatives from the US. OTHER POSSIBLE US TARIFFSThe US has threatened to impose tariffs of 25% on imports from the EU. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. In early April, the US said it would introduce retaliatory tariffs on imports from the rest of the world. These tariffs will consider what the US considers non-tariff trade barriers, such as value added tax (VAT) systems. CHEM STOCK PERFORMANCEThe following table shows the performances of US-listed shares followed by ICIS. Symbol Name $ Current Price $ Change % Change ASIX AdvanSix 26.82 -1.10 -3.94% AVNT Avient 41.23 -1.54 -3.60% AXTA Axalta Coating Systems 35.1 -1.11 -3.07% BAK Braskem 3.52 -0.17 -4.61% CC Chemours 13.86 -1.09 -7.29% CE Celanese 47.02 -3.92 -7.70% DD DuPont 78.83 -2.53 -3.11% DOW Dow 36.06 -2.05 -5.38% EMN Eastman 94.46 -3.39 -3.46% FUL HB Fuller 55.73 -1.01 -1.78% HUN Huntsman 16.04 -0.89 -5.26% KRO Kronos Worldwide 8.43 -0.32 -3.66% LYB LyondellBasell 73.41 -3.42 -4.45% MEOH Methanex 41.47 -2.57 -5.84% NEU NewMarket 562.65 -7.46 -1.31% NGVT Ingevity 45.24 -2.42 -5.08% OLN Olin 23.87 -1.52 -5.99% PPG PPG 111.72 -1.50 -1.32% RPM RPM International 123.09 -0.80 -0.65% SCL Stepan 58 -3.375 -5.50% SHW Sherwin-Williams 356.73 -4.75 -1.31% TROX Tronox 7.02 -0.615 -8.06% TSE Trinseo 4.62 -0.30 -6.10% WLK Westlake 108.71 -3.59 -3.20% ($1 = C$1.45) Please also visit the US tariff, policy – impact on chemicals and energy topic page Thumbnail shows money. Image by ICIS.

04-Mar-2025

HOUSTON (ICIS)–US production of ethane, propane and other natural gas liquids (NGLs) will continue to grow while domestic demand for these chemical feedstocks will likely remain flat, a trend that is contributing to a surge in new terminal projects that will export these products to growing markets overseas. Targa is expanding its terminal at Galena Park, Texas, so it could export a total of 19 million bbl/month of liquefied petroleum gas (LPG). MPLX and ONEOK plan to develop a terminal in Texas City, Texas, that can export 400,000 bbl/day of LPG. Chemical companies have announced no final investment decisions on any crackers or propane dehydrogenation (PDH) units in the US that would consume the nation's growing supplies of NGLs. Crackers can use NGLs to produce ethylene. PDH units use propane to make propylene. US ETHANE, PROPANE PRODUCTION TO CONTINUE RISINGMidstream companies continue to announce new projects, which would increase US production of ethane and LPG. These projects are on top of the ones that are already under construction and that will start up in the upcoming months. Targa alone is starting up four natural gas processing plants in west Texas in 2026, and it has picked out multiple sites for future processing plants in the region's Delaware and Midland basins. The following table shows the ICIS forecast for US NGL supplies in the next couple of years. Figures are in millions of bbl/day, and they include imports as well as production from gas processing plants and refineries. million bbl/day 2024 2025 2026 Ethane 2.821 2.874 3.099 Propane 2.526 2.619 2.684 Butanes 1.235 1.292 1.347 Source: ICIS US supplies of NGLs are rising because of increased production of crude oil and natural gas. The following table shows forecasts for US production of oil and dry natural gas from the short term energy outlook of the Energy Information Administration (EIA). Oil figures are in millions of barrels/day. Gas production is in billion of cubic feet/day. 2023 2024 2025 2026 Crude oil 12.93 13.21 13.59 13.73 Dry natgas 103.57 103.08 104.60 107.29 Source: EIA As shale reservoirs mature and reservoir pressures decline, the ratio of gas to oil increases. This raises gas production and further increases NGL supplies. NO NEW CRACKER OR PDH CAPACITYThe US has had a drought of new cracker announcements, with 2025 being the first year since 2010 that the country will add no new ethylene capacity. Chevron Phillips Chemical and QatarEnergy will break the drought in 2026 when their Golden Polymer joint venture project starts up. But that's it. ExxonMobil Chemical and Shintech have early plans for crackers, but neither have announced final investment decisions (FID). Westlake has expressed openness into possibly expanding the joint venture cracker that it owns with Lotte Chemical in Louisiana. But any decision would have to follow a review of costs. FG LA LLC, a subsidiary of Formosa Plastics Group, has said little about a two-phased proposed project called Sunshine that would produce ethylene and downstream derivatives. Thailand's PTT Global Chemical (PTTGC) has been considering a cracker in Ohio that would supply ethylene for new PE capacity. The project hit a snag in July 2020, when the company's joint venture partner left. Meanwhile, no company has announced plans to consider any propane dehydrogenation (PDH) units in the US, which convert propane into propylene. Rising costs for labor and material have made capacity expansions less attractive. In addition, the world has an oversupply of many plastics and chemicals, which is providing producers with another reason to forego capacity expansions. Because of the dearth in new chemical projects, demand for NGLs will remain steady in the next couple of years, according to the latest short term energy outlook from the EIA, as shown in the following table. Figures are in millions of barrels per day. million bbl/day 2023 2024 2025 2026 Ethane 2.16 2.30 2.27 2.35 Propane 0.78 0.74 0.78 0.76 Butanes 0.30 0.30 0.27 0.27 US NGLS BOUND FOR OVERSEA MARKETSOutside of the US, companies continue to add capacity despite the supply glut. By 2029, capacity in northeastern Asia will be nearly 43% larger than in 2024 according to the ICIS Supply & Demand Database. For Asia and Pacific, capacity will grow by more than 10% over the same period. In India, GAIL (India) and Nayara Energy have each proposed building 1.5 million tonne/year ethane crackers. In Vietnam, Siam Cement Group (SCG) plans to build Vietnam's first integrated petrochemical complex that will use ethane from the US as a feedstock. For propylene, capacity in northeastern Asia will be nearly 28% larger in 2029 versus 2024. For Asia and Pacific, capacity will be grow by nearly 25% over the same period. In addition, demand for LPG continues to grow because consumers are using it to replace wood and other sources biomass-based fuel. Rising supplies of chemical feedstock in the US and rising demand in the rest of the world are creating an opportunity for midstream companies to connect the producers with the customers by expanding export capacity. DETAILS ON TERMINAL PROJECTS MPLX and ONEOK created the Texas City Logistics joint venture to develop their LPG terminal. Operations should start in early 2028. ONEOK and MPLX are each reserving 200,000 bbl/day for their customers. Targa should complete its 650,000 bbl/month expansion project at its LPG terminal in Galena Park, Texas, in Q4 2025. Another expansion project by Targa should start operations in the third quarter of 2027. The company did not disclose the size of this subsequent. However, it will raise the total LPG export capacity at Galena Park to 19 million bbl/month Enterprise Products is proceeding with its previously announced ethane and propane Neches River Terminal. Phase 1 should start in Q3 2025 and Phase 2 should start in the first half of 2026. Enterprise is expanding LPG loading capacity under a previously announced project at its Enterprise Hydrocarbons Terminal (EHT). That project should be completed by the end of 2026. Enterprise is enhancing its ethane terminal at Morgan's Point, which should be completed in the fourth quarter of 2025. Energy Transfer is adding up to 250,000 bbl/day of NGL export capacity at its terminal in Nederland, Texas. Initial phases should start up in mid-2025. In Q4 2025, the terminal should start exporting ethylene. Energy Transfer has started work on building a 900,000 bbl ethane storage tank at its export terminal in Marcus Hook, Pennsylvania. It is also adding about 20,000 bbl/day of incremental ethane chilling capacity. MIDSTREAM PROJECTSThe following table lists some of the major midstream projects. Company Project Type Capacity Units Location Startup Brazos Midstream Sundance I Gas Plant 200 million cubic feet/day Martin County 24-Oct Brazos Midstream Unnamed Gas plant 300 million cubic feet/day Martin County H2 2025 Delek Unnamed Gas Plant 110 million cubic feet/day Delaware H1 2025 Durango Midstream Kings Landing, Phase II Gas Plant 200 million cubic feet/day Eddy County, NM na Durango Midstream Kings Landing, Phase I Gas Plant 200 million cubic feet/day Eddy County, NM Q4 24 Energy Transfer Frac IX Fractionator 165,000 bbl/day Mont Belvieu Q4 26 Energy Transfer Red Lake III Gas Plant 200 million cubic feet/day Permian Basin completed Energy Transfer Expansion of Orla East Gas Plant 50 million cubic feet/day Orla, Texas completed Energy Transfer Expansion of Grey Wolf Gas Plant 50 million cubic feet/day west Texas completed Energy Transfer Mustang Draw Gas Plant 275 million cubic feet/day Midland Basin H1 26 Energy Transfer Badger Gas Plant 200 million cubic feet/day Delaware mid 25 Energy Transfer Expansion of Arrowhead II Gas Plant 50 million cubic feet/day west Texas Q1 25 Energy Transfer Expansion of Arrowhead III Gas Plant 50 million cubic feet/day west Texas Q1 25 Energy Transfer Red Lake IV Gas Plant 200 million cubic feet/day Permian Basin Q3 25 Energy Transfer Marcus Hook Optimization Terminal 900,000 bbl ethane storage/20,000 bbl/day ethane chilling capacity Marcus Hook, Pennsylvania Construction Underway Energy Transfer Expansion of Nederland NGL terminal Terminal Up to 250,000 bbl/day Nederland, Texas mid 25 Enterprise Fractionator 14 Fractionator 195,000 bbl/day Mont Belvieu Q3 25 Enterprise Mentone West 2 Gas Plant 300 million cubic feet/day Delaware H1 26 Enterprise Mentone West Gas Plant 300 million cubic feet/day Delaware Q3 25 Enterprise Orion Gas Plant 300 million cubic feet/day Midland Q3 25 Enterprise Neches River Terminal (NRT), phase 2 Terminal add 60,000 ethane to raise total to 180,000, Propane 360,000 H1 26 Enterprise Neches River Terminal (NRT), phase 1 Terminal 120,000 ethane, 900,000 refrigerated tank Q3 25 Enterprise, Navigator Ethylene Export Expansion Terminal 550,000/ 1,500,000 tonnes/year Q4 24 & Q4 25 Enterprise Enterprise Hydrocarbons Terminal (EHT) LPG expansion Terminal 300,000 bl/day Houston Ship Channel end 2026 Gulf Coast Fractionators JV * GCF Fractionator Fractionator 135,000 bbl/day Mont Belvieu 24-Nov Moss Lake Hackberry NGL Project Fractionator 300,000 bbl/day Calcesieu Ship Channel NA Moss Lake Hackberry NGL Project Terminal 315,000 bbl/day Calcesieu Ship Channel NA MPLX Harmon Creek III De-ethanizer 40,000 bbl/day Marcellus H2 26 MPLX na Fractionator 150,000 bbl/day Galveston Bay Refinery 2028 MPLX na Fractionator 150,000 bbl/day Galveston Bay Refinery 2029 MPLX Harmon Creek III Gas plant 300 million cubic feet/day Marcellus H2 26 MPLX Secretariat Gas Plant 200 million cubic feet/day Delaware Q4 25 ONEOK Medford Fractionator rebuild Fractionator 210,000 bbl/day Medord, Oklahoma Q4 26, Q1 27 Phillips 66 EPIC NGL Fractionator 110,000 bbl/day Robbstown, Texas proposed Targa Train 11 Fractionator Fractionator 150,000 bbl/day Mont Belvieu Q3 26 Targa Train 12 Fractionator Fractionator 150,000 bbl/day Mont Belvieu Q1 27 Targa Bull Moose Gas Plant 275 million cubic feet/day Delaware completed Targa Falcon II Gas Plant 275 million cubic feet/day Delaware Q2 26 Targa Greenwood Gas Plant 275 million cubic feet/day Midland Q4 23 Targa Pembrook II Gas Plant 275 million cubic feet/day Midland Q4 25 Targa Bull Moose II Gas Plant 275 million cubic feet/day Delaware Q1 26 Targa East Pembroke Gas Plant 275 million cubic feet/day Midland Q2 26 Targa East Driver Gas Plant 275 million cubic feet/day Delaware Q3 26 Targa Galena Park LPG terminal expansion Terminal 650,000 bbl/month Galena Park, Texas Q4 25 Targa Galena Park LPG terminal expansion Terminal total capacity raised to 19,000,000 bbl/month Galena Park, Texas Q3 27 Targa LPG Export Expansion Terminal 1,000,000 bbl/month Galena Park, Texas started up Texas City Logistics LPG terminal Terminal 400000 LPG bbl/day Texas City early 2028 * GCF is restarting after being idled in January 2021. The JV is made up of Targa, Phillips 66 and Devon Energy Insight article by Al Greenwood (Thumbnail shows an ethane carrier)

03-Mar-2025

HOUSTON (ICIS)–LyondellBasell has approved plans to build a metathesis unit in Channelview, Texas, that will convert ethylene into propylene, the producer said on Monday. Construction should start in the third quarter of 2025, and operations should begin in late 2028, LyondellBasell said. The metathesis unit will produce 400,000 tonnes/year of propylene, the company said. LyondellBasell plans to use the propylene in its internal polypropylene (PP) and propylene oxide (PO) units. The company started up its new PO/tertiary butyl alcohol (PO/TBA) plant in Channelview in 2023. By producing its own propylene, LyondellBasell limits its exposure to volatile feedstock prices, said Kim Foley, executive vice president, Global Olefins & Polyolefins and Refining. “This capacity expansion strengthens our ability to meet increasing customer demand and improve our self-sufficiency as we grow and upgrade a core business line for LyondellBasell.” Thumbnail shows PP, which is made from propylene. Image by Shutterstock.

03-Mar-2025