Ethylene vinyl acetate (EVA)

SINGAPORE (ICIS)–US “reciprocal” tariffs are prompting a shift of trade flows and supply chains as market players in Asia seek alternative export outlets for some chemicals, while overall demand remains tepid amid growing fears of a global recession. US-China trade war 2.0 keeps market players on edge Regional traders wary amid US’ 90-day tariff suspension SE Asia prepares for US trade talks as China president visits Vietnam, Malaysia, Cambodia Trades across the equities and commodities markets last week have been highly volatile since the start of April in the wake of US President Donald Trump’s reciprocal tariffs, the highest of which was imposed on China. The higher-than-expected tariffs sparked concerns over a possible global recession that sent crude prices slumping last week, dragging down downstream aromatics products such as benzene and toluene. Trump had raised the reciprocal tariffs for China three times in as many days – from 34%, to 84% and to 125% on 9-11 April – with China responding in kind. Including the combined 20% tariffs imposed in the past two months, the US’ effective additional tariffs for China stand at 145%. In the polyethylene (PE) market, prices are softening as US-bound export orders shrink, while polypropylene (PP) exports from China to southeast Asia look set to decline. Most polyolefin players in Asia and beyond are currently attending the 37th International Exhibition on Plastics and Rubber Industries (Chinaplas) in Shenzhen, China, which will run up to 18 April. Some China-based market players said the event could provide them an opportunity to explore alternative markets by deepening their relationships with buyers in southeast Asia. Exports of chemicals and plastics used in automobiles to the US, meanwhile, are likely to shrink as well amid auto tariffs from the world’s biggest economy. Apart from PP, exports nylon, butadiene (BD), and styrene butadiene rubber (SBR) to the US are expected to decline. Trump, on 14 April, said he is considering possible exemptions to his 25% tariffs on imported automobiles and parts. His tariffs on all car imports took effect on 3 April, while those on automotive parts will take place no later than 3 May. The automotive sector is a major downstream industry for petrochemicals. China’s PE imports from the US spiked in early 2025 but this is expected to reverse sharply because of the trade war between the two countries. However, China has a substantial number of naphtha and coal-based PE plants starting up in 2025 with a combined PE capacity of more than 8 million tonnes, which should reduce the country’s dependence on imports. The US will also need to redirect surplus PE to alternative markets amid dwindling Chinese demand. Market players expect demand in the second quarter to be worse than the first three months of 2025 amid hefty US reciprocal tariffs hanging over countries in Asia when Trump’s three-month pause lapses. Implementation of the US’ reciprocal tariffs were suspended on 9 April, for 90 days, providing some reprieve to about 60 countries, except China. Freight rates between China and the US have already decreased due to the trade war as demand evaporates. However, vinyl acetate monomer (VAM) prices in India are bucking the general downtrend and have firmed up as the chemical is not directly subjected to US tariffs. VAM is primarily used in the production of adhesives, textiles, paints and coatings. SE ASIA PREPARE TRADE TALKS The 10-member ASEAN group pledged that they will not impose retaliatory tariffs on the US following an emergency meeting, opting to negotiate with the US. Among the nations scheduled for talks with the US are Vietnam, Thailand and Indonesia – all of which were slapped with high tariffs of up to 46%. Thailand intends to scrutinize imports more thoroughly to prevent cheap imports from China entering the country, as the US has warned against such “third-country” methods of evading tariffs. Anti-dumping duties are also being considered by Malaysia and Indonesia against China to counter an expected rise in cheap imports to their countries. Trade flows are still expected to change as China steps up talks and partnerships with the EU, as well as with southeast Asian countries such as Malaysia, Vietnam and Cambodia. While several Asian nations are lining up for discussions with the US government, China and the US have yet to schedule a meeting, heightening concerns of economic headwinds in the coming year. Singapore has revised down its GDP growth forecast for 2025 to between 0-2% on account of the US-China trade war, and other countries are expected to follow suit. Before the pause on reciprocal tariffs, the World Trade Organization (WTO) had forecast trade growth to contract by 1.0% in 2025, from 3.0% previously. Meanwhile, China President Xi Jinping is currently in southeast Asia – with state visits to Vietnam, Malaysia and Cambodia – up to 18 April, to forge stronger economic ties with its Asian neighbors amid an escalating trade war with the US. China posted an annualized Q1 GDP growth of 5.4%, unchanged form the previous quarter, while there is a consensus that the Asian economic giant would weaken from Q2 onward. Focus article by Jonathan Yee Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Additional reporting by Samuel Wong, Izham Ahamd, Jackie Wong, Hwee Hwee Tan, Joanne Wang, Lucy Shuai, Jonathan Chou, Angeline Soh, Melanie Wee, Shannen Ng and Josh Quah

16-Apr-2025

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

15-Apr-2025

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

14-Apr-2025

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

11-Apr-2025

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

11-Apr-2025

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

09-Apr-2025

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

08-Apr-2025

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

31-Mar-2025

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

27-Mar-2025

SAN ANTONIO (ICIS)–Uncertainty about the US economy is delaying what could be a further rebound in housing activity, the CEO of Huntsman said. "It's not that we are seeing seasonal demand recovering. We are," said Peter Huntsman, CEO of Huntsman. He made his comments in an interview with ICIS on the sidelines of the International Petrochemical Conference (IPC), held by the American Fuel & Petrochemical Manufacturers (AFPM). But a larger recovery will require more certainty, he said. Consumers will be more reluctant to buy a house during volatility in the stock market. Possible tariffs and changes in the outlook for monetary policy are also contributing to the uncertainty. Additional uncertainty surrounds mortgage rates. Although rates for 30-year home loans have declined from earlier in the year, they are still well above levels seen in the previous decade. Some may be delaying purchases in the hope that mortgage rates return to those lower levels. Meanwhile, existing homeowners who bought their houses with low-interest mortgages are reluctant to sell because they will have to finance their purchase with a loan bearing a much higher rate. Overall, uncertainty will delay a further rebound in housing activity, Huntsman said. "I think we're going to see a late start." That said, the conditions exist for a housing recovery. Huntsman said the US has a large backlog in housing because of population growth and years of under-construction. New housing is a key end-use market for chemistry in the form of paints, wire insulation, house-wrap, sealants, roofing materials, resilient flooring, vinyl siding, and related products. New housing also generates sales of appliances, furniture, carpet, fixtures, and window treatments. In total, each start engenders on average over $13,000 worth of chemistry. Existing home sales generate sales of chemistry through purchases of paints and coatings, new furniture, carpet, resilient flooring, window treatments, appliances, and fixtures. In architectural coatings, about 80% of sales are tied to existing home sales. Huntsman makes polyurethanes, epoxy resins and maleic anhydride (MA), a key feedstock in unsaturated polyester resins (UPR). Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Interview article by Al Greenwood Thumbnail photo source: Shutterstock Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Visit the Logistics: Impact on chemicals and energy topic page

25-Mar-2025