Methanol

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

12-Mar-2025

SINGAPORE (ICIS)–Sentiment in Asia’s petrochemical markets remains cautious with prices of some products – particularly in the southeastern region – were rising on tight supply, amid escalating trade tensions between the US and its major trading partners, including China. China’s oversupply-driven exports weigh on markets; post-Lunar New Year demand weaker than expected US tariff fears cause jitters across downstream industries Methanol supply constraints persist TRADES REMAIN SUBDUED Market activity in key chemical segments remains muted as buyers were staying on the sidelines, waiting for clarity on US trade policies and overall demand recovery. In the benzene market, South Korea’s January exports to the US slumped by 81% year on year to 15,000 tonnes, according to ICIS data. The decline was attributed to increased European supply to the US. “The market is cautious as everyone is waiting for more clarity on US tariff policies,” a trader said. South Korea faces potential hefty tariffs under the US’ plan to impose reciprocal tariffs from 2 April, even though the two countries have an existing free trade agreement. In the caprolactam (capro) market, producers are grappling with poor margins while supply within China continues to grow. “Capro margins have been bad for six months now, and demand didn’t pick up post-Lunar New Year,” said a Chinese producer. Chinese producers were exporting more to southeast Asia and Europe, in view of a general oversupply of petrochemicals and muted demand in the domestic market and following the US’ new 20% tariffs on all Chinese goods. For polypropylene (PP), China has ramped up exports to Vietnam and other southeast Asian nations which were exerting downward pressure on prices. With more Chinese capacity coming online, this trade flow is likely to continue. Chinese producers are increasingly willing to accept lower margins to capture market share in the polyolefin markets, creating ripple effects across Asia and beyond, forcing regional producers to adjust pricing strategies to remain competitive. However, these actions could be met with antidumping duties (ADD) as southeast Asian governments act to protect domestic producers. SHIPPING SECTOR WARY OF US POLICIES US protectionism is on the rise again under President Donald Trump’s administration, with an ongoing probe being conducted on China’s shipbuilding industry, which may be slapped with potential duties of up to $1.5 million per vessel. This move aims to deter reliance on Chinese-built ships and, instead, encourage investment in the US shipbuilding sector. China dominates the global shipbuilding industry, with over 81% of new tankers being built in the country, according to shipbroker Xclusiv in a November report. The fear is that if these tariffs come through, immediate cost impacts will be felt, especially on long-haul trades. Meanwhile, weaker freight demand post-Lunar New Year has also softened freight rates. Most downstream producers in China resumed operations in H2 February, after an extended holiday break. China was on official holiday from 28 January to 4 February. The northeast Asia winter was milder than expected, which reduced seasonal trade flows. DISRUPTIONS TIGHTEN SUPPLY While some chemical markets struggle with oversupply, others are experiencing tight supply due to plant outages. For methanol, supply is constrained in Malaysia, with Petronas’ unit experiencing operational issues, and Sarawak Petchem’s unit shut from late January. Iranian methanol plants have also been offline due to winter gas shortages, pushing Indian import prices up by $60/tonne within a week. Meanwhile, Russian supply disruptions due to drone attacks have tightened naphtha availability, strengthening prices. On the acetic acid front, plant turnarounds in China, Malaysia, and Japan initially tightened supply, but these units have since restarted, thereby improving availability of the material. OUTLOOK MIXED Market players remain wary of near-term price movements as supply and demand fundamentals shift across regions. March shipments for PE and PP in southeast Asia have largely been sold out, while Indonesian buyers are reluctant to commit to April purchases amid the Muslim fasting month of Ramadan, which started 1 March. Ramadan is observed in most parts of southeast Asia including Indonesia, southeast Asia’s biggest economy with a predominantly Muslim population. With uncertainties surrounding US’ trade policies, Chinese exports, and geopolitical risks, market sentiment remains mixed. Players are closely monitoring tariff developments and the potential impacts of further supply disruptions in key markets. Focus article by Jonathan Yee Additional reporting from Seng Li Peng, Isaac Tan, Tan Hwee Hwee, Angeline Soh, Jasmine Khoo, Julia Tan, Josh Quah, Damini Dabholkar, Doris He, Jackie Wong Thumbnail image: At Qingdao Port in Shandong province, China on 6 March 2025. (Costfoto/NurPhoto/Shutterstock)

10-Mar-2025

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

07-Mar-2025

HOUSTON (ICIS)–Navigating the complex maze of US recycling laws is no small feat, especially as state regulations vary significantly. With chemical recycling at the forefront of innovation, understanding how these laws impact the industry's growth is crucial for shaping a sustainable future. INTRODUCTIONThe legislative landscape in the US is highly fragmented, largely due to the wide range of legislative enactments passed across the different states. Three major categories of recycling laws affect chemical recycling: chemical recycling acceptance laws, post-consumer (PCR) content laws and extended producer responsibility (EPR) laws. Each of these legislative frameworks will influence the development of the chemical recycling industry in their unique way, highlighting the complexity of navigating this evolving regulatory environment. Chemical recycling is an umbrella term that encompasses a variety of different processes designed to break down plastic at a molecular level. These processes reverse-engineer plastics, breaking them down into their original building blocks, which can then be reused to create new materials. There are two primary categories of chemical recycling: thermal depolymerization and chemical depolymerization. While both methods target plastics at a molecular level, their approaches differ fundamentally. Thermal depolymerization relies on high heat to break down plastics, whereas chemical depolymerization employs specialized agents to achieve the same outcome. Each category includes specific processes: Thermal Depolymerization (TD): Includes pyrolysis (breaking down plastics into oil and gas through high heat and low oxygen) and gasification (converting plastics into syngas through higher temperatures and oxygen or steam). These processes typically favor polyolefins as feedstock – mainly polyethylene (PE) and polypropylene (PP). Chemical Depolymerization (CD): Includes glycolysis, methanolysis and hydrolysis, which involve chemical reactions with agents like glycol, methanol, or water to depolymerize plastics. These processes typically favor polyethylene terephthalate (PET) as feedstock. CHEMICAL RECYCLING ACCEPTANCE LAWSThe acceptance of chemical recycling in state legislation typically involves defining chemical recycling as a manufacturing process, rather than categorizing it as waste management. This means that chemical recycling plants in the state will not have to adhere to the same strict environmental guidelines as waste management facilities, incentivizing the construction of more facilities. It also potentially opens the door for chemical recyclers to access government resources – eg, grants, tax benefits – allocated for manufacturing in those states. Which states have accepted it?As of late 2024, exactly half of the US states have recognized chemical recycling as a manufacturing process. Source: ICIS This gradual legislative acceptance reflects growing awareness of the potential for chemical recycling to address plastic waste challenges. What are the effects of state-by-state acceptance?The acceptance of chemical recycling on a state-by-state basis, rather than at a federal level, is a double-edged sword. On one hand, when a state legitimizes chemical recycling, it strengthens industry sentiment, while on the other, it further fragments the chemical recycling industry. The incorporation of chemical recycling into legislation began in Florida in 2017, paving the way for other states to follow. The first significant wave of legislative approvals occurred in 2019, leading to a surge in chemical recycling facility start-ups the following year. This pattern repeated with another wave of legislative acceptances in 2021 and 2022, followed by a spike in facility start-ups in 2023. The chart below provides a detailed visualization of this trend. This trend signals that the acceptance of chemical recycling has positive effects on the industry, serving to drive growth and incite innovation. The acceptance of chemical recycling also presents the challenge of varying perspectives across states. Firstly, there is a divide between the states that have accepted chemical recycling as a manufacturing process and those that have not. Secondly, among the states that have accepted chemical recycling, there are a few states that explicitly exclude certain processes. For example, states such as Kentucky and Kansas are among those that exclude processes that turn plastic to fuel. One example of this can be seen in the State of Kentucky’s HB 45, which states, "'Advanced recycling' does not include energy recovery or the conversion of post-use polymers into fuel." Similar language can be found in the State of Kansas’ SB 114, "'Advanced recycling' does not include incineration of plastics or waste-to-energy processes, and products sold as fuel are not recycled products." In effect, wording such as this essentially excludes thermal depolymerization process as being considered a type of recycling while recognizing chemical depolymerization process, creating a further divide even among those states that have chosen to accept chemical recycling. The lack of uniformity in how chemical recycling is addressed adds confusion to the legislative landscape. POST-CONSUMER RECYCLING CONTENT LAWSIn addition to chemical recycling-specific legislation, other laws, such as PCR content mandates, indirectly influence the industry. PCR laws require that a minimum percentage of recycled material be included in certain types of packaging sold within a state. How many states and what are the effects on chemical recycling?Currently, five states – California, Maine, Connecticut, Washington and New Jersey – have enacted PCR laws. However, none of these states are among the 25 mentioned above that have formally accepted chemical recycling into legislation. This fact means that it is often unclear if outputs from chemical recycling are ineligible to count toward PCR requirements, undermining the industry's potential impact and growth. A notable exception exists in Washington, where its PCR law explicitly states: “Both mechanical and chemical recycling methods are acceptable.” This language demonstrates a more inclusive approach, contrasting with states like California and Maine, which remain cautious about embracing chemical recycling. The contrasting viewpoints held by states that have PCR content mandates is another example of lack of uniformity in chemical recycling-related legislation. EXTENDED PRODUCER RESPONSIBILITYEPR is another regulatory framework gaining traction in the US. EPR shifts the responsibility for managing a product's entire lifecycle from consumers to producers, with a particular focus on end-of-life management. Under EPR laws, producers that meet a certain requirement – usually large producers that put considerable amount of plastic onto the market – are obligated to join a producer responsibility organization (PRO) to help finance the collection, recycling, or disposal of their products. How many states and what are the effects on chemical recycling?EPR policies are currently implemented on a state-by-state basis, with Oregon leading the way by releasing a detailed plan. However, the relationship between EPR and chemical recycling remains complex. A key issue lies in how EPR laws define acceptable "end markets" for collected plastics. Oregon’s definition of responsible end markets appears tailored to traditional mechanical recycling, inadvertently excluding many chemical recycling technologies. This exclusion stems from the varied outputs of chemical recycling, which can range from plastics to fuels or chemical precursors, complicating their classification as traditional recycling. Without clearer language recognizing the potential of chemical recycling as an end market, EPR laws add another layer of ambiguity to chemical recycling. CONCLUSIONThe regulatory landscape surrounding chemical recycling remains highly fragmented, with varying degrees of acceptance and restrictions across states. While the recognition of chemical recycling in state legislation correlates with industry growth, inconsistencies in how it is defined and regulated create challenges for accelerated growth. Further complicating the landscape, PCR content mandates and EPR laws introduce additional uncertainties, as their definitions often exclude or fail to clarify the role of chemical recycling. This uncertainty can manifest as a lack of investment, both from chemical recyclers who will be hesitant to commit capital to new plants, and from investors wary of funding projects without clear long-term policy support. As the industry continues to develop, greater legislative uniformity and clearer regulatory frameworks will be necessary to unlock the full potential of chemical recycling as a viable solution to plastic waste management. Insight article by Joshua Dill

03-Mar-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 28 February. Egypt eyes 3.1m tonne/year capacity at proposed $7bn petrochemical complex By Nurluqman Suratman 24-Feb-25 12:58 SINGAPORE (ICIS)–Egypt’s proposed $7 billion petrochemical complex in New Alamein City is slated to produce 3.1 million tonnes/year of "eight specialized" products, according to project leader Shard Capital Partners. INSIGHT: Suez Canal shipping cautiously picks up amid Israel-Hamas ceasefire By Nurluqman Suratman 24-Feb-25 15:12 SINGAPORE (ICIS)–Forty-seven ships have re-routed to the Suez Canal in Egypt since early February, indicating a cautious pick-up of activity in the crucial trade lane – the shortest connection between Asia to Europe – amid a ceasefire between Israel and Palestine militant group Hamas in Gaza. Middle East, Pakistan PP/PE trade activity expected to be slow throughout Ramadan By Nadim Salamoun 24-Feb-25 16:24 DUBAI (ICIS)–Trade activity for polypropylene (PP) and polyethylene (PE) in the East Mediterranean (East Med), Pakistan, and GCC (Gulf Cooperation Council) markets has already slowed down by mid-February ahead of the Ramadan seasonal lull, and is expected to remain slow until the end of Eid al-Fitr during the first week of April. INSIGHT: China PE demand growth to lag capacity growth for 2025 By Amy Yu 25-Feb-25 13:00 SINGAPORE (ICIS)–Inner Mongolia Baofeng’s new 550,000 tonne/year coal-based PE facility is set to start trial runs in late February, marking the third new unit for the company following two similar facilities starting the commercial operation in November 2024 and January 2025. India’s Mar methanol supply to tighten after Qatar Fuel Additives announces FM By Damini Dabholkar 26-Feb-25 13:28 SINGAPORE (ICIS)–Qatar Fuel Additives Co (QFAC) on 25 February announced a force majeure on its methanol supply after shutting down its 1.1 million tonnes/year plant in Mesaieed due to a technical issue. INSIGHT: India petrochemical production pivots to imported ethane feed By Priya Jestin 26-Feb-25 16:00 MUMBAI (ICIS)–A growing number of petrochemical companies in India are looking at using more ethane instead of the more expensive naphtha as feedstock for production, which may help reduce the south Asian country’s trade deficit with the US in the coming years. INSIGHT: China benzene market sees narrow fluctuations on strong cost, snug supply, slow demand recovery By Yoyo Liu 26-Feb-25 19:28 SINGAPORE (ICIS)–Crude-based benzene prices fluctuated moderately at high levels after the Lunar New Year (28 January-4 February) holidays, on elevated crude, ethylbenzene (EB) futures and falling port inventories. Slow demand recovery continues to weigh on the market, with upcoming spring turnarounds and inventory depletion in focus. SE Asia, Mideast petrochemical markets slow ahead of Ramadan By Jonathan Yee 27-Feb-25 12:41 SINGAPORE (ICIS)–Trades in southeast Asian and Middle East petrochemical markets have slowed down ahead of Ramadan, when working hours would be shorter in some markets in March. Asia MMA sentiment dampened by China local price volatility By Jasmine Khoo 27-Feb-25 13:01 SINGAPORE (ICIS)–Asia's methyl methacrylate (MMA) sentiment has been impacted by price volatility observed in the Chinese domestic market in recent weeks, with most market players adopting a cautious stance towards trade. INSIGHT: Asia, Europe could bear brunt of US tariffs on Chinese MDI By Shannen Ng 27-Feb-25 16:37 SINGAPORE (ICIS)–Recent escalations in the US-China tariff war are set to create waves in the Asian and European import markets for methylene diphenyl diisocyanate (MDI). Asia petrochemical shares fall after Trump vows additional 10% tariff on China By Jonathan Yee 28-Feb-25 11:16 SINGAPORE (ICIS)–Asian petrochemical shares fell on Friday after US President Donald Trump said he would impose additional 10% tariffs on Chinese goods from 4 March. Thai SCG Chemicals signs EPC deal for Vietnam ethane storage tanks By Nurluqman Suratman 28-Feb-25 15:01 SINGAPORE (ICIS)–Thai producer Siam Cement Group Chemicals (SCGC) on 27 February said that it has signed the engineering, procurement, and construction (EPC) contract for the construction of ethane storage tanks at the Long Son Petrochemicals Complex (LSP) in Vietnam.

03-Mar-2025

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

21-Feb-2025

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

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

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)–Rates for shipping containers from east Asia and China to the US plunged this week, as did global average rates amid the typical slowdown around the Lunar New Year (LNY) holiday. Meanwhile, shipowners are out with surcharges on various trade lanes, which could support rates at current levels even with the slowdown in volumes. Global average rates fell by 11% according to supply chain advisors Drewry and as shown in the following chart. Rates from Shanghai to Los Angeles fell by 8%, while rates from Shanghai to New York fell by 7%, as shown in the following chart. Drewry expects spot rates to decrease slightly in the coming week on the back of the Chinese Lunar New Year holidays. Rates from online freight shipping marketplace and platform provider Freightos also showed decreases, with a 10% fall from Asia to the West Coast and a 3% drop to the East Coast. Judah Levine, head of research at Freightos, said the lull around LNY is pressuring rates lower. CMA CGM has announced a congestion surcharge of $300/FEU originating from Callao and San Antonio to the US East Coast and US Gulf. Global shipping major Maersk announced peak season surcharges of $1,000 for all sizes of containers for shipments from Middle East countries to the US and Canada East Coast, effective 1 February. Hapag-Lloyd has announced peak season surcharges of $600/container from Chile to Asia. 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. RETURN TO SUEZ CANAL NOT IMMINENT While the ceasefire agreement between Israel and Hamas led to some optimism that transits through the Suez Canal could resume, passage of commercial vessels through the waterway are not imminent. Levine said there remains skepticism among shipping analysts that the Houthi rebels will refrain from attacks on commercial vessels in the Red Sea even during the first stage of the ceasefire. Negotiations on the second phase of the agreement are scheduled to begin on 5 February. Levine said ocean carriers do see the ceasefire as a promising first step, but only CMA CGM has said it will increase its use of the Suez Canal. Most carriers will not take the costly and complicated concrete steps to return to the Red Sea until they are confident that the route is and will remain safe. Many shippers and freight forwarded are also hesitant to change course. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said carriers will want assurance they have safe passage for crews and ships in the long term and that the situation will not suddenly deteriorate. PANAMA CANAL President Donald Trump surprised some when he said that the US should reclaim the Panama Canal. A US congressman has since introduced a bill that would authorize the purchase of the Panama Canal. The US is the largest user of the canal, with around 70% of all traffic heading to or coming from US ports. About 40% of US container traffic use the canal. The US relinquished control of the canal on 31 December 1999 in The Panama Canal Treaty, signed by then US President Jimmy Carter. Panamanian President Jose Raul Molino said the treaty, along with The Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, established the permanent neutrality of the Canal, guaranteeing its open and safe operation for all nations. The Panama Canal remains the primary route for trade between Asia and the US Gulf and East Coast. LIQUID TANKER RATES US chemical tanker freight rates assessed by ICIS were largely stable week on week, with just the USG to Brazil trade lane seeing a slight increase on smaller volumes but overall unchanged. The market remained quiet this week, with COA volumes steady. For cargoes moving in and out of South America some space remains available, capping the gains seen on the week. Strong interest that was seen over the past two months is waning, which is likely to put additional pressure on freight rates. Volumes from the US continue to flow, but cargo moving into Asia is slowing because of the Lunar New Year holiday. However, monoethylene glycol (MEG) and ethanol entered the market for February loading. A different scenario is playing out on the transatlantic eastbound route where February loading space is already available for spot but on a limited basis. On the other hand, there seems to be a lot of interest on the USG to India trade lanes as there is a lot of lube oils interest for January with limited spot space remaining as owner await COA nominations. Several inquiries were seen for methanol, ethanol and vinyl acetate monomer (VAM). Additional reporting by Kevin Callahan

24-Jan-2025