Ethylene vinyl acetate (EVA)

SINGAPORE (ICIS)–S-Oil's Shaheen crude-to-chemical project in Ulsan, South Korea is now 55% complete and is expected to start commercial operations in the second half 2026, the producer said on Monday. Construction of the $7bn project at the Onsan Industrial Complex of Ulsan City started in March 2023, with mechanical completion targeted by the first half of 2026. South Korean refiner S-Oil is 63%-owned by Saudi Aramco, the world's largest crude exporter. The Shaheen project – named after the Arabic word for “falcon” – will have a 1.8 million tonne/year mixed-feed cracking facility; an 880,000 tonne/year linear low density polyethylene (LLDPE) unit; and a 440,000 tonne/year high density PE (HDPE) plant. The site will have a thermal crude-to-chemical (TC2C) facility, which will convert crude directly into petrochemical feedstocks such as liquefied petroleum gas (LPG) and naphtha, and the cracker is expected to recycle waste heat for power generation in the refinery. The company currently produces a range of petrochemicals and fuels including benzene, mixed xylenes, ethylene, methyl tertiary butyl ether (MTBE), paraxylene, polypropylene, propylene, propylene oxide, biodiesel, and potentially bio-based aviation and other bio-derived products at its Onsan site. S-Oil plans to supply feedstock to domestic petrochemical downstream companies mainly through pipelines. "To this end, the construction of logistics-related infrastructure, such as a new pipeline network, is being carried out at the same time," it said. Long-term agreements for stable supply of raw materials are being signed between S-Oil and petrochemical companies located at the two industrial complexes in Ulsan, which would boost competitiveness of domestic value chain, the company said.

17-Feb-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 14 February. SE Asia PE plant shutdowns deemed necessary for rebalancing By Izham Ahmad 10-Feb-25 10:57 SINGAPORE (ICIS)–A recent wave of plant shutdowns among polyethylene (PE) producers across southeast Asia has been seen by some as a reflection of how dire the situation in the market is. Malaysia's Lotte Chemical Titan incurs record Q4 loss; '25 outlook downbeat By Nurluqman Suratman 10-Feb-25 14:44 SINGAPORE (ICIS)–Lotte Chemical Titan (LCT) incurred its largest-ever quarterly loss, with analysts expecting the Malaysian producer to remain in the red in 2025 amid weak economic conditions and an oversupply of petrochemical products. INSIGHT: Strong hydrogen push in China to reshape global industry amid US pullback By Patricia Tao 10-Feb-25 18:23 SINGAPORE (ICIS)–The US has suspended financial support for its own hydrogen sector, while China is ramping up efforts to expand its hydrogen industry. The sharp policy divergence between the two countries could accelerate the global hydrogen market’s shift and reshape the industry landscape over the next three to five years. Asia polyester tracks rising costs despite weak post-holiday demand By Judith Wang 11-Feb-25 12:57 SINGAPORE (ICIS)–Asia’s polyester export discussions edged up in line with the higher cost pressure after the Lunar New Year holiday, while buying activities were limited as end-user demand remained weak. SE Asia VAM market rallies on crimped supply, demand surge By Hwee Hwee Tan 12-Feb-25 12:43 SINGAPORE (ICIS)–The southeast Asia vinyl acetate monomer (VAM) import market is being buoyed by resurgent restocking demand and supply disruptions into February. INSIGHT: US policy shift raises concerns on future of CCS, blue ammonia value chain By Bee Lin Chow 12-Feb-25 13:04 SINGAPORE (ICIS)–The unfolding political battle in the US over national economic interest and energy security has raised concerns about potential implications for its emerging carbon capture and storage (CCS) and blue ammonia sectors, and the potential spillover impact on Asia. PODCAST: US hydrogen subsidy halt vs China’s expansion – what’s next for the global market? By Anita Yang 12-Feb-25 15:45 SINGAPORE (ICIS)–The Trump administration swiftly withdrew financial support for its hydrogen sector, while China is accelerating hydrogen expansion with strong policy backing. INSIGHT: India may offer tariff concessions to US as PM Modi meets Trump By Priya Jestin 13-Feb-25 14:18 MUMBAI (ICIS)–India may offer the US tariff cuts on various products, including electronics and automobiles – major downstream sectors of petrochemicals – to avoid US President Donald Trump’s “reciprocal duties”, which may deal a big blow to the south Asian nation’s exports. Vietnam to raise 2025 GDP growth target to 8% to fuel socioeconomic growth By Jonathan Yee 13-Feb-25 16:08 SINGAPORE (ICIS)–Vietnam announced on 12 February it would raise its GDP growth target for 2025 to 8.0% from 6.5-7.0%, with industrial manufacturing and foreign investment expected to drive growth. Singapore 2024 petrochemical exports grow 4.6%; trade risks stay high By Nurluqman Suratman 14-Feb-25 14:00 SINGAPORE (ICIS)–Singapore’s petrochemical exports in 2024 rose by 4.6%, supporting the overall growth in non-oil shipments abroad which is being threatened by ongoing trade frictions among major economies.

17-Feb-2025

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. At first glance, the latest ICIS ethylene operating rate forecast is alarming. Even by 2035, global operating rates could still be below their long-term average—potentially marking a 14-year downturn since the Evergrande Turning Point in late 2021. But here’s the good news: This is a live situation, and industry adaptation is inevitable. The future is not set in stone—it will be shaped by the decisions we make today. The Data Speaks • ICIS base case projections show an average 6.3 million tonnes per year of new capacity. • However, by reducing this to 2.5 million tonnes per year, operating rates could return to 87%—the long-term norm. • The question is: When and how will the market rebalance? Plant Closures, Project Delays & Cancellations: The Unknowns Balancing the market means making difficult decisions, but shutdowns and project delays are far from straightforward: • Timing uncertainty – Could the upturn come sooner than expected? • High exit costs – Environmental clean-up and pension liabilities complicate shutdowns. • China’s role – Ageing plants, coal-based capacity, refinery feedstock limits, and regulatory shifts could drive rationalisation, but when and to what extent? • Government intervention – Will policy sustain industries in Europe & South Korea, or will we see major consolidations? Your Three-Point Plan for Success 1. Update the data every six months – Ethylene is just the start. Conduct the same detailed analysis for every product, country, and region. 2. Stay ahead of trade policy – As global trade tensions rise, import tariffs will shift market dynamics. Companies that act early will gain an advantage. 3. Leverage AI & analytics – Cost savings and efficiencies from AI-driven tools like Ask ICIS are already transforming decision-making. What This Means for You Yes, the downturn is severe, but opportunities remain. A data-driven approach will enable your business to adapt, optimise, and position itself for the recovery. Are you ready? Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

11-Feb-2025

SINGAPORE (ICIS)–Lotte Chemical Titan (LCT) incurred its largest-ever quarterly loss, with analysts expecting the Malaysian producer to remain in the red in 2025 amid weak economic conditions and an oversupply of petrochemical products. Indonesia LINE project start-up may be delayed 2025 plant utilization rate projected to drop to 50-55% Market volatility continues amid geopolitical uncertainties, US tariffs in Malaysian ringgit (M$) thousands Q4 2024 Q4 2023 % Change 2024 2023 % Change Revenue 1,793,286 1,855,771 -3.4 7,435,031 7,646,170 -2.8 EBITDA -506,605 -84,409 -816,443 -357,098 Net income -510,074 -186,477 -1,183,406 -702,286 On 7 February, LCT shares on Bursa Malaysia had slumped by 7% to close at a record low of ringgit (M$) 0.535, after the company reported a wider Q4 2024 net loss of M$510 million ($114 million). At 06:02 GMT on Monday, its shares recovered slightly, rising by 0.93% to M$0.540. “LCT is expected to remain loss-making in the coming quarters, as product spreads are unlikely to see meaningful improvement due to persistent supply overhang from significant capacity expansions – primarily in China – outpacing demand growth,” Malaysia-based brokerage TA Securities said in a note. While construction of its petrochemical project in Indonesia is expected to be completed in the first half of this year, commercial operations may be deferred as product spreads may remain unfavorable, the brokerage said. The project called LOTTE Chemical Indonesia’s New Ethylene (LINE) project in Merak, Indonesia is nearing completion and is expected to be fully completed by 2025. It is expected to produce 1 million tonnes/year of ethylene and 520,000 tonnes/year of propylene. In Malaysia, LCT shut in December last year its cracker in Pasir Gudang to “mitigate losses by loading down its operations”. In a statement on 6 February, LCT said that it expects ongoing volatility in the global business environment due to geopolitical factors, including the Russia-Ukraine War, Middle East tensions, and US President Donald Trump's policies. “The sluggish economic performance and oversupply of petrochemical products in China have impacted supply and demand balances,” the company said. Malaysia, Indonesia, and the rest of ASEAN region will remain LCT’s key markets in the foreseeable future due to their strong economic growth. For 2025, Indonesia's growth is expected to reach 5.1%, up from 5.0% in 2024, while ASEAN's growth is projected at 4.7%, up from 4.6% in 2024. Malaysia’s GDP growth, however, is forecast to slow to 4.4%, from 4.8% in 2024, LCT said, citing projections from the International Monetary Fund (IMF). LCT’s plant operating rate for the whole of 2025 is expected to range from 50% to 55%, down from 57% in 2024, subject to periodic adjustments. HIGH PRODUCTION COST WEIGHS ON EARNINGS Q4 group revenue fell due to the depreciation of the US dollar against the ringgit, but was partially mitigated by higher sales volumes, Lotte Chemical Titan said in a filing on Bursa Malaysia on 6 February. A stronger ringgit makes Malaysian exports more expensive for international buyers, particularly those paying in US dollars. In 2024, the ringgit had appreciated by 2.7% against the US dollar, supported by a stronger-than-expected economic growth. Olefins and derivative products’ revenue increased by 2.0% to M$373.5 million on higher sales volume, but the segment’s loss before taxation and impairment widened to M$72.1 million from M$49.2 million in the same period of the previous year. In contrast, the polyolefin products’ revenue declined by 4.7% year on year to M$1.42 billion in Q4 2024, but the segment’s loss to narrow to M$74.3 million from M$148.5 million in the same period last year on improved margins and a reversal of an inventory write-down. Focus article by Nurluqman Suratman ($1 = M$4.47)

10-Feb-2025

HOUSTON (ICIS)–Rates for shipping containers from Asia to the US ticked lower this week, although they could see upward pressure from shippers pulling forward volumes ahead of the 30-day tariff freeze, while rates for liquid chemical tankers held steady. Global average rates fell by 3%, according to supply chain advisors Drewry and as shown in the following chart. Global average rates are down by almost 18% from 1 September, and down by almost 45% from the high of the year in mid-July. Rates from Shanghai to both US coasts fell by 1%, as shown in the following chart. Drewry expects spot rates to decrease slightly in the coming week due to the increase in capacity as container ship order books are at record highs. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said his company is already seeing some upward pressure on prices although some could be because of shippers frontloading volumes to beat the 30-day pause before tariffs are enacted. ‘We could expect frontloading ahead of tariffs – which has been a major factor keeping US ocean import volumes and transpacific container rates elevated since November – to intensify until the new tariffs are introduced or called off,” Levine said. Levine said it is hard to determine the impact from volumes being pulled forward since this has likely been happening for several months, and with the market in the lull surrounding the Lunar New Year (LNY) holiday. “But we could expect demand and rates to increase post-LNY,” Levine said. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES STEADY US chemical tanker freight rates as assessed by ICIS were unchanged this week with contract of affreightment (COA) nominations steady for most trade lanes. For the cargoes in the South American trade lane, COAs remain strong leaving very little spot availability. A large parcel of ethanol fixed USG to San Luis, and several others were quoted for second half of February. Similarly, for the USG to ARA trade lane, it was another off week with only a few reported fixtures. However, there were some unusual cargoes fixed for products like caustic soda and ethanol. Some styrene was reported fixed from Lake Charles to ARA. Overall, rates seem to be maintaining current levels particularly for the 3,000- and 5,000-tonne parcels. There was no difference along the USG to Asia routes, as it was another quiet week on this trade lane. Spot rates remain steady as the H1 February space across the regular carriers is sold out. Some of the larger players should have space in the second half of February depending on COA nominations. The chemical COAs have been steady through H1 March, but still in the tentative phase. Several inquiries were seen for methanol, ethanol, vinyl acetate monomer (VAM), styrene and MEG. On the other hand, bunker prices were unchanged this week but overall remain strong. PANAMA CANAL UPDATE Panama’s president said the country will not renew its agreement with China’s Belt and Road Initiative (BRI) after a visit from US Secretary of State Marco Rubio. President Donald Trump surprised some when he said that the US should reclaim the Panama Canal, and a US congressman has since introduced a bill that would authorize the purchase of the vital waterway. The actions taken by Panama’s president, Jose Raul Molino, may slow action by the Trump administration to take back control of the canal. Additional reporting by Kevin Callahan

07-Feb-2025

SINGAPORE (ICIS)–South Korea is streamlining regulations to make it easier for regions densely populated by petrochemical companies to qualify as "industrial crisis response areas", a designation that unlocks government support and financial assistance to mitigate impact of market downturns. Yeosu, Ulsan, Daesan petrochemical hubs to benefit Focus shifts to manufacturing for crisis designation Voluntary business restructuring encouraged This designation also unlocks access to tailored assistance in areas like employment stability, R&D, commercialization, market access, and consulting, according to a Ministry of Trade, Industry and Energy (MOTIE) administrative notice released on 5 February. The new regulation follows a wide-ranging support package unveiled by the government on 23 December 2024, aimed at bolstering the competitiveness of its domestic petrochemical industry, which is facing a global oversupply driven by expansions in China and the Middle East. This policy shift is expected to benefit major petrochemical hubs such as Yeosu, Ulsan, and Daesan, providing them with greater access to resources designed to mitigate economic downturns and to support continued growth within the sector. Previously, the high proportion of the services sector in cities like Yeosu hindered their ability to be designated as industrial crisis response areas. The revised regulations will now assess "regional stagnation" based solely on the manufacturing sector, excluding service industries. This change will allow regions heavily reliant on manufacturing, particularly petrochemicals, to meet the designation criteria more readily. MULTI-PRONGED STRATEGY A cornerstone of the government's latest plan is encouraging voluntary business restructuring, encompassing facility closures, sales, joint ventures, efficiency improvements, and new business acquisitions. To facilitate these changes, the government will implement legal reforms and offer a range of financial and tax incentives. These include extending the grace period for acquiring 100% of holding company shares from three to five years and streamlining merger reviews with the Korean Fair Trade Commission (FTC), the country's regulatory authority for economic competition. A dedicated consultation channel between MOTIE and the FTC will further expedite reviews and support restructuring efforts. Separately, the government plans to provide up to Korean won (W) 3 trillion ($2.1 billion) in financing packages for petrochemical companies seeking to revamp their business portfolios, including expanded access to a W1 trillion business restructuring fund managed by the Korea Development Bank. For designated Industrial Crisis Response Areas, existing loan maturities from policy financial institutions will be extended, principal repayments deferred; national tax payment deadlines extended; and seizure and sale deferred for up to one year. Beyond restructuring, the government is targeting cost reduction. The duty-free period for crude oil used in naphtha production will be extended by a year until the end of 2025 and import surcharges on liquefied natural gas (LNG) used as industrial raw materials will be refunded. A "fast-track" approval process will be implemented for ethane terminal and storage tank construction to facilitate access to cheaper raw materials. Additional cost-saving measures include expanding electricity rate options through distributed power trading and rationalizing safety regulations. The plan will also support R&D focused on shifting production from general-purpose petrochemicals to specialized, high-value-added products. An "R&D Investment Roadmap for 2025-2030" will be unveiled in the first half of this year, and preliminary feasibility studies for high-value and eco-friendly chemical material technology development will be conducted. The support ratio for regional investment subsidies in Industrial Crisis Response Areas will be increased, national strategic and new growth technologies will be identified, and a W50 billion "High-Value Specialty Fund" will be established to promote production of specialty chemicals. DOMESTIC PRODUCERS STRUGGLE South Korea's four largest petrochemical manufacturers – LG Chem, Lotte Chemical, Kumho Petrochemical and Hanwha Solutions – faced continued challenges in 2024. LG Chem reported a net loss of W899.2 billion in the fourth quarter, reversing the net profit of W128.5 billion a year ago due to decreased demand for both petrochemicals and battery materials. It also reported an operating loss of W252 billion in the same period. The company has revised down its capital expenditure plan for the year to W2 trillion-3 trillion from W4 trillion previously as it navigates the market downturn. Separately, as part of its global expansion strategy, LG Chem has secured a deal to supply cathode materials to Prime Planet Energy and Solutions (PPES) – a joint venture of Japanese carmaker Toyota and appliance maker Panasonic – starting 2026. The company will focus on developing eco-friendly materials and technologies that align with PPES' low-carbon vision. Meanwhile, major ethylene producer Lotte Chemical in Q3 2024 reported a loss of W514 billion, on "delayed demand recovery, lower product spreads due to currency depreciation, one-time costs from maintenance at overseas subsidiaries, and rising shipping costs". The company is now pursuing an asset-light strategy, which involved liquidation of its Malaysian synthetic rubber production subsidiary Lotte Ube Synthetic Rubber (LUSR) – a joint venture with Japan’s Ube Elastomer. Based in Johor, Malaysia, LUSR produces 50,000 tonnes/year of polybutadiene rubber (PBR). Lotte Chemical also plans to generate W1.4 trillion in proceeds from sale of stakes in overseas subsidiaries. Synthetic rubber major Kumho Petrochemical Co reported on 4 February a Q4 net income of W61.3 billion, down 33% year on year, due to weak market demand due to a year-end drop in raw material prices; with operating profit shrinking by about 72% to W10 billion despite a 19% increase in sales to W1.8 trillion. Insight article by Nurluqman Suratman ($1 = W1,446) Thumbnail image shows an aerial view of a container pier in South Korea's southeastern port city of Busan. (YONHAP/EPA-EFE/Shutterstock)

07-Feb-2025

BARCELONA (ICIS)–BP plans to sell its to sell its Ruhr Oel refinery, crackers and downstream assets at Gelsenkirchen in Germany. The company will start marketing the assets immediately, with the aim of completing the sale this year, according to a statement published on 6 February by the UK headquartered energy giant. According to the ICIS Supply & Demand Database BP operates a refinery and two crackers with combined capacity of 1.065 million tonnes/year of ethylene, as well as units with 645,000 tonnes/year propylene, 430,000 tonnes/year benzene plus cumene, cyclohexane, methanol, toluene and ammonia facilities. BP said the assets for sale include DHC Solvent Chemie in Mulheim an der Ruhr. All refinery owners in Europe are under pressure to rationalise their portfolios thanks to the shift to vehicle electrification and high cost base. There is also intense competition from new refineries starting up in Asia and the Middle East. BP said the move is in line with its strategic drive to deliver a simpler, more focused, higher value company. The company said that it has implemented numerous projects to modernize the infrastructure of the refinery in Gelsenkirchen in recent years.  This includes renewing the power grid and establishing an independent steam supply. The refinery can process crude oils from around the world, produce fuels and also has the potential to manufacture biofuels and process recycled plastics, said bp. Michael Connolly, ICIS principal refining analyst pointed out that the refinery is configured to give a moderately high yield of gasoline, meaning it is not really suited to the future of the European market, where vehicle electrification is hurting demand. He said BP already had plans to reduce the capacity of the refinery from 260,000 bbl/day to 155,000 bbl/day in 2025. “Undoubtedly it would have used Russian crude, but despite having access to seaborne crude, the loss of Russian crude through sanctions would have impacted financials,” he said. The economics of the facility will also be more challenging, as for all European refiners, because cracks or margins for gasoil production have declined to pre-Ukraine war levels, added Connolly. ICIS expects German crude refining capacity to fall from 2.1 million bbl/day in 2020 to 1.8 million bbl/day by 2026 and well off their peak refining capacity of 2.4 bd in 2007. Emma Delaney, BP executive vice president, customers & products said, “BP needs to continually manage its global portfolio as we position to grow as a simpler, more focused, higher-value company. After a thorough review, we have concluded that a new owner would be better suited for the site to take it forward. We are convinced that the refinery can unlock its full potential under new ownership.” Focus article by Will Beacham Graphics by Miguel Rodriguez-Fernandez Thumbnail photo: bp's refinery site in Gelsenkirchen, Germany (Source: BP) Clarification: recasts to explain BP has two crackers at the site.

06-Feb-2025

Correction: In the ICIS story headlined “INSIGHT: US tariffs unleash higher costs to nation's chem industry” dated 3 February 2025, the wrong volumes were used for the following imports: Canadian ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94; Canadian polyethylene having a specific gravity of 0.94 or more, in primary forms; Canadian polyethylene having a specific gravity of less than 0.94, in primary forms; Canadian polypropylene, in primary forms; Canadian mixed xylene isomers; Mexican polypropylene, in primary forms; and Mexican cyclohexane. The US did not import cyclohexane from Mexico in 2023. A corrected story follows. HOUSTON (ICIS)–The tariffs that the US will impose on all imports from Canada, Mexico and China will unleash higher costs for the nation's chemical industry, create supply-chain snarls and open it to retaliation. For Canada, the US will impose 10% tariffs on imports of energy and 25% tariffs on all other imports. For Mexico, the US imposed 25% tariffs on all imports but the countries' presidents said on Monday the tariffs are being paused for a month. For China, the US will impose 10% tariffs on all imports. US IMPORTS LARGE AMOUNTS OF PE FROM CANADAUS petrochemical production is concentrated along its Gulf Coast, which is far from many of its manufacturing hubs in the northeastern and midwestern parts of the country. As a result, individual states import large amounts of polyethylene (PE) from Canada – even though the nation as a whole has a large surplus of the material. Even Texas imports large amounts of PE from Canada – despite its abundance of plants that produce the polymer. In addition, polyester plants in North and South Carolina import large amounts of the feedstocks monoethylene glycol (MEG) and purified terephthalic acid (PTA) from Canada. The US as a whole imports significant amounts of polypropylene (PP) and polyvinyl chloride (PVC) from Canada – again, despite its surplus of these plastics. The following table lists some of the main plastics and chemicals that the US imported from Canada in 2023. The products are organized by their harmonized tariff schedule (HTS) code. HTS PRODUCT MEASUREMENT VOLUMES 3901.40.00 Ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94 kilograms 1,319,817,405 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 1,088,071,523 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 420,561,390 2917.36.00 Terephthalic acid and its salts kilograms 407,710,439 2905.31.00 Ethylene Glycol kilograms 329,542,378 3902.10.00 Polypropylene, in primary forms kilograms 271,201,880 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 188,800,413 2902.44.00 Mixed xylene isomers liters 746,072 2905.12.00 Propan-1-ol (Propyl alcohol) and Propan-2-ol (isopropyl alcohol) kilograms 87,805,095 3901.30.60 Ethylene-vinyl acetate copolymers kilograms 71,372,396 Source: US International Trade Commission (ITC) IMPORTS FROM MEXICOMexico is not as large of a source of US petrochemical imports as Canada, but shipments from the country are still noteworthy. The following table lists some of the main plastics and chemicals that the US imported from Mexico in 2023. HTS PRODUCT MEASUREMENT VOLUMES 2917.36.00 Terephthalic acid and its salts kilograms 69,230,708 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 34,674,435 2915.24.00 Acetic anhydride kilograms 25,294,318 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 24,005,371 2915.31.00 Ethyl acetate kilograms 18,855,544 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 14,469,582 3902.10.00 Polypropylene, in primary forms kilograms 8,849,478 Source: US International Trade Commission (ITC) IMPORTS FROM CHINAChina remains a significant source for a couple of noteworthy chemicals despite the effects of the tariffs that US President Donald Trump imposed during his first term in office. The following table shows 2023 US imports from China. HTS PRODUCT MEASUREMENT VOLUMES 29152100 Acetic acid kilograms 21,095,566 39093100 Poly(methylene phenyl isocyanate) (crude MDI, polymeric MDI) kilograms 206,642,886 Source: US International Trade Commission (ITC) China's shipments of plastics goods are more significant. OIL TARIFFS WILL HIT US REFINERSCanada and Mexico are the largest sources of imported crude oil in the US, and the heavier grades from these countries complement the lighter grades that the US produces in abundance. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units. Refiners cannot swap out heavier Canadian and Mexican grades with lighter US grades. Instead, they will need to pay the tariffs or find another supplier of heavier grades, possibly at a higher cost. The following table shows the largest sources of imported crude in 2023. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 Source: Energy Information Administration (EIA) US refiners could take another hit from higher catalyst costs. These are made from rare earth elements, and China remains a key source. TARIFFS TO RAISE COSTS FOR FERTILIZERCanada is the world's largest producer of potash, and it exports massive amounts to the US. It is unclear how the US could find another source. Russia and Belarus are the world's second and third largest potash producers. Together, the three accounted for 65.9% of global potash production in 2023, according to the Canadian government. Canada accounts for significant shares of other US imports of fertilizers. The following table lists some of Canada's fertilizer shipments to the US in 2023 and shows its share of total US imports. Figures are from 2023. HTS PRODUCT MEASUREMENT VOLUME % 31042000 Potassium chloride metric tonne 11850925 88.8 31023000 Ammonium nitrate, whether or not in aqueous solution metric tonne 295438 76.6 31024000 Mixtures of ammonium nitrate with calcium carbonate or other inorganic nonfertilizing substances metric tonne 29203 75.7 31055100 Mineral or chemical fertilizers, containing nitrates and phosphates metric tonne 1580 66.1 31022100 Ammonium sulfate metric tonne 947140 49.6 31052000 Mineral or chemical fertilizers, containing the three fertilizing elements nitrogen, phosphorus and potassium metric tonne 147850 41.4 Source: US ITC SUPPLY CHAIN SNARLSIf US companies choose to avoid the tariffs and seek other suppliers, they could be exposed to delays and supply chain constraints. Other companies outside of the petrochemical, plastic and fertilizer industries will also be seeking new suppliers. The scale of these disruptions could be significant because Canada, Mexico and China are the largest trading partners in the US. The following table lists the top 10 US trading partners in 2023 based on combined imports and exports. Country Total Exports ($) General Imports ($) TOTAL Mexico 322,742,472,406 475,215,965,697 797,958,438,103 Canada 354,355,997,349 418,618,659,183 772,974,656,532 China 147,777,767,493 426,885,009,750 574,662,777,243 Germany 76,697,761,127 159,272,068,221 235,969,829,348 Japan 75,683,130,214 147,238,042,342 222,921,172,556 South Korea 65,056,093,590 116,154,470,335 181,210,563,925 UK 74,315,228,810 64,217,031,774 138,532,260,584 Taiwan 39,956,725,574 87,767,403,487 127,724,129,061 Vietnam 9,842,922,146 114,426,076,081 124,268,998,227 Source: US ITC RETALIATIONUS petrochemical exports would be tempting targets for retaliation because of their magnitude and the global capacity glut. China, in particular, could impose tariffs on US chemical imports and offset the disruptions by increasing rates at under-utilized plants. So far, none announced plans to target chemicals on Sunday. Canada's plans to impose 25% tariffs on $30 billion in US goods does not include oil, refined products, chemicals or plastics. That batch of tariffs will take place on February 4. Canada will impose 25% tariffs on an additional $125 billion worth of US goods following a 21-day comment period, it said. The government did not highlight plastics or chemicals in this second batch of tariffs. Instead, it said the tariffs will cover passenger vehicles and trucks, including electric vehicles, steel and aluminium products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles and recreational boats. In a statement issued on Sunday, Mexico's president made no mention of retaliatory tariffs. Instead, she said she will provide more details about Mexico's response on Monday. China said it will start legal proceedings through the World Trade Organization (WTO) and take corresponding countermeasures. RATIONALE BEHIND THE TARIFFSThe US imposed the tariffs under the nation's International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat. In a fact sheet, Trump cited illegal immigration and illicit drugs. Saturday's executive order is the first time that a US president imposed tariffs under IEEPA. Prior IEEPA actions lasted an average of nine years. They can be terminated by a vote in Congress. Insight article by Al Greenwood (Thumbnail shows containers, in which goods are commonly shipped. Image by Shutterstock)

03-Feb-2025

SINGAPORE (ICIS)–Abu Dhabi Chemicals Derivatives Co (TA’ZIZ) said on Monday it has awarded South Korea’s engineering firm Samsung E&A a $1.7 billion contract to build the first methanol plant in the UAE, which is slated to be completed in 2028. The plant, to be built in Al Ruwais Industrial City in western Abu Dhabi, will have a capacity of 1.8 million tonnes/year, TA’ZIZ said in a statement posted on the website of its parent firm Abu Dhabi National Oil Co (ADNOC). TA’ZIZ is a joint venture (JV) between ADNOC and sovereign wealth fund ADQ. Samsung A&E was formerly known as Samsung Engineering. “The [methanol] plant will enhance the UAE’s position as a leader in sustainable chemicals production and strengthen TA’ZIZ’s role in enabling ADNOC’s global ambition to lead the chemicals sector,” TA’ZIZ CEO Mashal Saoud Al Kindi said. The company said that the plant will be "powered by clean energy from the grid, making it one of the world’s most energy-efficient methanol plants". Set up in 2020 to develop industrial projects and diversify the economy away from oil in the UAE, TA'ZIZ is expected to produce 4.7 million tonnes/year of chemicals by 2028 in its initial phase, including methanol, low-carbon ammonia, polyvinyl chloride (PVC), ethylene dichloride (EDC), vinyl chloride monomer (VCM), and caustic soda. Several of these chemicals will be produced for the first time in the UAE. ADNOC is moving in the specialty chemical space as part of its growth. On 1 February, ADNOC announced that it is in talks with Austrian petrochemical firm OMV to acquire Canada's Nova Chemicals from Mubadala, another Abu Dhabi sovereign wealth fund. If the acquisition goes through, a new global polyolefins group combining Nova Chemicals, Borealis, and Borouge will be formed, it said. Borealis is a 75:25 joint venture between OMV and ADNOC, while Borouge is jointly owned by ADNOC (54%) and Borealis (36%).

03-Feb-2025

HOUSTON (ICIS)–Customers in several US states closer to Canada than its Gulf Coast petrochemical hubs import large amounts of plastics and chemicals from the country, including materials that the US produces in abundance, and these shipments could soon become subject to tariffs totalling hundreds of millions of dollars. US President Donald Trump has said he could announce on February 1 tariffs of up to 25% on imports from Canada and Mexico. Even though the US has large surpluses of many plastics and chemicals, domestic companies still import large amounts of these materials from Canada. These customers face the prospects of higher tariffs from Canadian imports or potentially higher shipping costs from suppliers that are farther away. CANADIAN EXPORTS TO NORTHERN STATESUS plastics and chemicals production is concentrated on the Gulf Coast in the south, which is far from the manufacturing and plastic processing hubs in Michigan, Illinois and Ohio in the north. These and other northern US states are much closer to Canada's petrochemical plants in Sarnia, Ontario province, than they are to the Gulf Coast. The following table shows various plastics and chemicals that Canadian exported in 2023 to Michigan, Illinois and Ohio. The bottom row shows how much customers from each state would pay if a 25% tariff was levied on the total value of these 2023 exports. Export figures are in tonnes. HTS Code Description Michigan (tonnes) Illinois (tonnes) Ohio (tonnes) 3901.10.00 PE having a specific gravity of less than 0.94 30,403 41,967 59,908 3901.20.00 PE having a specific gravity of 0.94 or more 125,693 66,493 85,328 3901.40.00 Ethylene-alpha-olefin copolymers 163,543 155,042 88,793 3902.10.00 Polypropylene 6,232 122,970 20,694 3901.30.00 Ethyl vinyl acetate copolymer 55 55,012 2,526 2905.31.00 Ethylene glycol 5 152,746 8,634 Total tariff bill $119,027,186 $243,701,358 $103,054,090 Source: Statistics Canada CANADIAN IMPORTS FROM THE CAROLINASNorth and South Carolina are also large destinations for Canadian exports. These states are home to auto plants as well as facilities that make polyethylene terephthalate (PET), which uses monoethylene glycol (MEG) and purified terephthalic acid (PTA) as feedstocks. The following table shows 2023 shipments made to these states. The bottom row shows how much customers would pay if a 25% tariff was levied on the total value of these exports. Export figures are in tonnes. HTS Code Description South Carolina (tonnes) North Carolina (tonnes) 3904.10.00 PVC, not mixed with any other substances 428 134,433 2905.31.00 Ethylene glycol 66,973 2,731 2917.36.00 Terephthalic acid and its salts 102,162 162,505 3901.10.00 PE having a specific gravity of less than 0.94 25,379 13,076 3901.20.00 PE having a specific gravity of 0.94 or more 79,301 30,278 3901.40.00 Ethylene-alpha-olefin copolymers 98,070 40,879 3902.10.00 Polypropylene 38,763 1,033 Total tariff bill $168,380,231 $166,512,281 Source: Statistics Canada Even though Texas is home to many plastics and chemical plants, it is still a destination for a large amount of plastic exports from Canada. The following table shows 2023 shipments made to Texas. The bottom row shows how much customers would pay if a 25% tariff was levied on the total value of these exports. Export figures are in tonnes. HTS Code Description Texas (tonnes) 3901.10.00 PE having a specific gravity of less than 0.94 62,300 3901.20.00 PE having a specific gravity of 0.94 or more 189,247 3901.40.00 Ethylene-alpha-olefin copolymers 185,610 3902.10.00 Polypropylene 21,315 Total tariff bill $145,297,714 Source: Statistics Canada CONSEQUENCES OF TARIFFSWhether the US proposes the tariffs on February 1 is still up in the air. Trump has used the threat of tariffs as a negotiating tool in the past, as he did against Mexico during his first term and against Colombia earlier this month. In both cases, the US reached agreements with the countries without imposing the tariffs. If the US does impose the tariffs, customers could pay the additional tax, or they could find another supplier. For states closer to Canada, new suppliers could increase shipping times and costs. If the tariffs are broad enough, customers will be competing for cargo space with other companies that are also procuring supplies from new suppliers. The tariffs could make the US plastic and chemical markets more vulnerable to weather disruptions because most of its production is concentrated along the Gulf Coast. This region of the US is vulnerable to hurricanes and, increasingly, to sub-freezing temperatures. Since 2021, the Gulf Coast has had spells of sub-freezing temperature every winter season. The region's plants were not designed to operate in such low temperatures, so they typically suffer from unplanned outages during the winter. Canadian material made US chemical and plastic supply chains more resilient by offering an alternative to Gulf Coast material. HOW CANADIAN TARIFFS COULD UNFOLDIf the US does pursue tariffs against Canada, it will likely do so under the International Emergency Economic Powers Act (IEEPA) of 1977, said Jacob Jensen, a data analyst for the American Action Forum (AAF), a think tank. The IEEPA allows the president to propose actions to address a severe national security threat. In the case of tariffs, immigration, fentanyl or both would be declared as national emergencies, and that would trigger IEEPA. Once the president notifies Congress through a letter or a speech, the tariffs could be imposed. Imposing tariffs under IEEPA would be a first for the US, Jensen said. It could also be long term. The average duration of an IEEPA order is nine years. They can be terminated by a vote in Congress. The US can impose tariffs under other laws, but the ones that Trump proposed for Canada do not meet the parameters under those regulations. Tariffs under Section 301 address unfair trade practices and require investigations. The US has not started such an investigation on Canadian trade practices. Tariffs under Section 232 cover specific products and are not broad-based like the ones Trump proposed against Canada. Tariffs under Section 201 are intended to provide temporary relief for a group of products or an industry. They are not broad-based. Tariffs under Section 122 have a limit of 15%. Tariffs under Section 338 have no precedence and could face court challenges. OTHER POTENTIAL TARIFFSSince winning the election, Trump also proposed tariffs of 25% on imports from Mexico and 10% on imports from China. During his campaign, Trump proposed the following tariffs: Baseline tariffs of 10-20% on all imports. Tariffs of 60% on imports from China. A reciprocal trade act, under which the US would match tariffs that other countries impose on its exports. Insight by Al Greenwood

30-Jan-2025