Mixed plastic waste and pyrolysis oil

TORONTO (ICIS)–Canada’s central bank will work to ensure that US tariffs, and Canada’s reciprocal duties, will not turn into an inflation problem, the bank’s governor said during a webcast event on Thursday afternoon. Monetary policy cannot solve a trade conflict Tariffs to impact oil, farming, manufacturing Tariffs are a structural change that needs a structural response While the tariffs will slow Canada’s GDP growth and raise prices, the tariff-induced direct price increases must not be allowed to spread into “ongoing generalized inflation”, Tiff Macklem, governor of the Bank of Canada, said in a speech to the Calgary economic development agency in Alberta. US tariffs on Canadian exports will be paid by the US company buying those goods, and the company will pass at least some of the cost onto the US consumer, Macklem said. However, the same goes for the retaliatory tariffs Canada imposes on goods imported from the US, he said. As such, higher tariffs will raise prices, causing inflation to rise for a period as the upward pressure on prices from higher costs will outweigh the downward pressure from a weaker economy, he said. Businesses have already lowered their sales outlooks, notably in manufacturing and sectors that depend on consumer spending, he said. Companies are also holding back on investment plans. “Businesses are telling us they are delaying or cancelling investments and scaling back on hiring,” Macklem said. However, as Canadians worry about trade uncertainty, “we don’t want them to have to worry about inflation as well”, he said. What the bank can and must do is ensure that higher prices from a trade conflict do not become ongoing inflation, he said. “We are committed to maintaining price stability over time,” he said, adding: “There should be no uncertainty about that.” The tariffs and resulting uncertainties will – if maintained – particularly hurt certain sectors and regions in Canada, he said. ENERGY For oil-rich Alberta province, the impact on the energy industry from a 10% US tariff is “a major concern”. At the same time, however, the tariffs are also “a big issue” for US Midwest refineries that have invested in equipment to refine heavy Canadian oil, he said. About 94% of Canadian crude oil exports go to the US, mostly through north-south pipelines, he said. The launch of the Trans Mountain oil pipeline expansion last year increased access to overseas markets for Canadian oil, and new export capacity for liquefied natural gas (LNG) is due to come online, he noted. These capacities would help to diversify markets for Canadian energy exports, he said, but also pointed out that these investments are designed to increase Canada’s export capacity – not replace US demand, he said. FERTILIZERS Although the US has temporarily exempted fertilizers, including potash, from tariffs, “uncertainty remains,” he said. With spring seeding to begin soon, farmers on both sides of the border are already feeling pressure from low grain prices, he said. US farmers import potash from Saskatchewan to add potassium to their soil, while Canadian farmers often need US phosphate to fertilize their crops, he said. Canadian farmers also buy machinery and equipment from the US, he said. He also noted that China has imposed a 100% tariff on Canadian canola, effective 20 March, in retaliation for the 100% tariff Canada placed on electric vehicles (EVs) from China. China is the top market for Canadian canola, with an export value of close to Canadian dollars (C$) 5 billion ($3.5 billion), he said. ALUMINUM, STEEL Industries in other parts of Canada, particularly in Ontario and Quebec, will be disrupted by the 25% US tariffs on steel and aluminum. In 2024, the US imported about one-quarter of its steel and 40% of its aluminum from Canada, and Canada imported one-quarter of its steel and one-fifth of its aluminum from the US, he said. Those cross-border flows mean these sectors will be hit by both US tariffs and counter-tariffs, he said, adding: “It’s going to hurt output and increase prices.” Monetary policy could not target specific industries or regions, he said. “We have one monetary policy for the whole country,” he said. A challenge for the Bank of Canada will be trying to assess by how much tariffs will dent demand, how much of the tariff burden will be passed on to consumer prices, and how quickly the burden will be passed on, he said. A faster pass-through means inflation will rise faster, but it will also come down faster, “provided monetary policy does its job”. “So, we’re watching closely how the costs of tariffs and uncertainty pass through to consumer prices,” he said. “Our mandate is price stability, and low inflation is the best way we can support the economic and financial well-being of Canadians in good times and bad,” he said. While monetary policy “cannot solve a trade war”, the bank could help avoid adding damage to the economy by ensuring that inflation remains anchored at the bank's 2% inflation target, he said. Helping the Bank of Canada will be its co-operation with central banks around the world, he said. Central bank governors meet regularly to exchange information and consult each other, he said. “As central banks, we are all in this together,” Macklem said. STRUCTURAL CHANGE If not resolved, Canada’s tariff conflict with its largest trading partner by far would become a “structural change” that requires a structural solution, Macklem said. High tariffs would put Canada on a permanently lower growth path, he said. “We are going to earn less, we are going to consume less, because we are going to have less income,” he said. One way to at least partially offset the negative structural change caused by the tariff conflict would be “positive structural reform”, he said. Such a reform would include removing the barriers to the country’s interprovincial trade, he said. Despite many attempts over the years, Canada never agreed on interprovincial free trade as in many cases it is easier to trade north to south, rather than across Canada. The barriers between the country's 10 provinces and three territories include actual trade restrictions, as well as different provincial regulations for the accreditation of professionals, Macklem said. With the tariff conflict, Canada may now finally remove its interprovincial barriers, which would increase commerce east-west across the country, he said. This positive structural reform could offset “at least some of the consequences of this very negative structural shock we are facing with the US,” he said. It would, however, be difficult and take time for Canada to try to replace the millions of US consumers it may be losing, he said. While hoping for the best, Macklem did not seem too optimistic about the chances of resolving the tariff conflict with the administration of US President Donald Trump. “There is a certain level of trust that has been broken,” he said, and he noted that “Trump has threatened our sovereignty, repeatedly referring to Canada as the 51st state.” Regarding Canada's upcoming federal election, Macklem said the bank's commitment to low inflation was independent of which political party is in government. Canada’s new prime minister, Mark Carney, is expected to call an election on Sunday (23 March), which will likely be held on 28 April or 5 May, public broadcaster CBC reported on Thursday, citing unnamed government sources. Carney, who took over from Justin Trudeau on 14 March, is a former governor of the Bank of Canada and of the Bank of England. CHEMICAL INDUSTRY Trade group the Chemistry Industry Association of Canada (CIAC) has said that to cope with the tariff challenge, Canada needs a competitiveness framework to attract investment and stimulate economic growth. CIAC wants the government to implement pro-growth tax and regulatory policies; strengthen the country’s infrastructure; improve labor relations to avoid supply chain disruptions; and help diversify and expand Canada’s trade into new markets beyond North America. In chemicals and plastics, the tariff conflict affects about C$115 billion in US-Canada chemicals and plastics trade, according to CIAC. Focus article by Stefan Baumgarten $1 = C$1.43 Please visit US tariffs, policy – impact on chemicals and energy Tumbnail photo of Tiff Macklem, governor of the Bank of Canada; photo source: Bank of Canada

21-Mar-2025

HOUSTON (ICIS)–As both regulatory and economic landscapes continue to change, production and commercialization progress among pyrolysis based plastic recyclers continues to be mixed heading into this year’s Plastics Recycling Conference (PRC). Pyrolysis, a thermal depolymerization/conversion technology which targets polyolefin-heavy mixed plastic waste, or tires, is expected to become the dominant form of chemical recycling over the next decade. This comes at a time when sought after food grade, natural colored mechanically recycled polyethylene (R-PE) and recycled polypropylene (R-PP) resins continue to be in tight supply and chemically recycled resin could help to close the gap. However, all types of recycled resin face rising premiums compared to softening virgin markets. REGULATION: FEDERAL AND STATEChemical recycling technologies, such as pyrolysis, have previously been under scrutiny at the federal level through Environmental Protection Agency (EPA) regulation. The latest 2023 stance, officials asked for more time to review the full life cycle and environmental impact of chemical recycling facilities before deregulating permit processes. Counter to this stance and while not explicitly stated, it is assumed the Trump administration would likely be supportive of chemical recycling, due to the underlying petrochemical industry involvement and pro-business fundamentals. At a state level, 25 states have passed bills classifying chemical recycling technologies as recycling technologies rather than waste management processes. This potentially opens the door for pyrolysis facilities in those states to qualify for state grants and tax incentives that are available to manufacturing operations as well as supports the case for recycled resin from chemical recycling processes to count towards post-consumer recycled (PCR) content minimums. However, there is a catch: 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 notes, "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 these specific situations, pyrolysis may still not be counted as a form of recycling. Similarly, there are several states which have passed or proposed passing laws which prohibit processes such as pyrolysis to count as recycling. PYROLYSIS HURDLES FROM PCR/EPR MANDATESStates with plastic recycled content requirements have mixed views on acceptance of recycled content from chemical recycling, including pyrolysis. Currently, five states – California, Maine, Connecticut, Washington and New Jersey – have passed PCR laws, through of which are currently active. 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. In some cases, clarity is brought informally through "Frequently Asked Questions (FAQ)" documents, such as in New Jersey. 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. This mirrors uncertainty in extended producer responsibility (EPR) policies which are currently implemented on a state-by-state basis. At present, five states have passed plastic packaging related EPR – Oregon, Colorado, California, Minnesota and Maine. 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. Pyrolysis is one of the recycling processes that produce multiple outputs, meaning that it will likely suffer from this definition. INVESTMENT, PROGRESS MIRRORS FRAGMENTATIONAs a result of these legislative hurdles, as well as financial burdens, lack of commercial success in the face of premiums, and public pushback on the environmental consequences of these processes, there have been project cancellations for chemical recycling in 2024. Two notable pyrolysis cancellations are Regenyx and Encina. Announced this week, another US pyrolysis player, Brightmark, has filed for chapter 11 bankruptcy, thus placing their existing Ashley, Indiana plant in jeopardy, though with the hope that both existing and planned facilities will be able to continue operations in the future. Per the bankruptcy filing, the Ashley facility, with an installed capacity of 100,000 tonnes, had been operating at less than 5% capacity. Progress on the Thomaston, Georgia facility announced last year is on going. Brightmark had previously cancelled plans for a separate Georgia facility. Moreover, several facilities continue to see operational challenges and are also heard to be producing a minimal amount of material. Despite these setbacks, pyrolysis is projected to have the most growth based on announced plants. According to data gather from the ICIS Chemical Recycling Supply Tracker – which tracks these facility announcements – the chemical recycling capacity could potentially grow 10 times by 2030, with a majority of that growth expected to come from pyrolysis. Reasons for this include synergies with mechanical recycling by targeting different feedstock and the ability to handle a wider range of feedstock, reducing the degree of sorting needed. Notable expected facilities include ExxonMobil's expansion plans, Braven Environmental's recently announced plans, and LyondellBasell's future plans for the Houston refinery. The chemical recycling industry is nascent as well as controversial. As such, there is a considerable amount of both optimism and challenges. Despite all of the challenges on the horizon, the chemical recycling industry and pyrolysis continue to push forward. Hosted by Resource Recycling Inc, the PRC takes place on 24-26 March in National Harbor, Maryland. ICIS will be presenting "Shaping the Future of Recycled Plastics: Trends and Forecasts" on Monday, March 24th at 11:15AM in room Potomac D. As well as attending our session, we would love to connect with you at the show- please stop by our booth, #308. 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 Focus article by Joshua Dill Additional reporting by Emily Friedman

20-Mar-2025

HOUSTON (ICIS)–US sustainability companies are starting to buckle, with a chemical recycling plant and a bioplastic producer both going bankrupt. Brightmark's Indiana operations filed for bankruptcy protection under Chapter 11, a move that will protect it from creditors while it tries to sell its underutilized chemical recycling plant. The bankruptcy will not affect the other operations of the parent company or its plans to build another chemical recycling plant in Georgia. Danimer Scientific is winding down operations at its plants in Bainbridge, Georgia, and Winchester, Kentucky. Danimer makes polyhydroxyalkanoates (PHA) and formulates polylactic acid (PLA). DANIMER GOES BANKRUPT AFTER ANNOUNCING PLANT CLOSUREDanimer had bet big on PHA, a renewable polyester made by fermenting natural oils. It became the owner of the world's first commercial scale PHA plant in 2022 after it expanded capacity at its site in Winchester, Kentucky, to 55 million lb/year (25,000 tonnes/year), said Frank Pometti, a partner of AlixPartners, the proposed financial advisor for the company. He made his comments in a court filing. By then, Danimer had already broken ground on another plant in Bainbridge that would have produced another 125 million lb/year of PHA. However, Danimer was increasing capacity faster than its customers were enacting sustainability initiatives. Since 2020, Danimer's operating rates never exceeded 15% of capacity. Moreover, Danimer was expanding capacity right when inflation was taking off. Companies like Phillips 66 were revising cost estimates for capital projects by 50%. Danimer would later suspend work on the new PHA plant after a prospective customer indicated that it wasn't ready to switch to the company's bioplastics. To date, Danimer has sunk nearly $190 million into the project. For years, Danimer had courted what it described as a new and significant customer that would have purchased the company's bioplastic to supply an internationally recognized quick-service restaurant with cutlery for all of its locations in North America. By 2025, securing a firm commitment from that customer became critical. Danimer was facing liquidity challenges, and its shares were taken off the New York Stock Exchange (NYSE) in January 2025. A firm volume commitment from that customer could allow Danimer to attract fresh capital from a potential investor, from which the company received a non-binding indication of interest. The customer would not provide the commitment. In March, Danimer reached out to its lenders and another customer in a last-ditch effort to secure a deal to keep the business running. That effort also failed. In mid-March, Danimer announced the shutdown of its operations in Bainbridge, home to the company's corporate headquarters, its PHA demonstration plant and its PLA reactive extrusion plant. It also plans to wind down operations at its plant in Kentucky. Days later, Danimer filed for bankruptcy protection in Delaware Bankruptcy Court. It plans to sell its plants and liquidate the uncompleted project in Bainbridge. The case number is 25-10518. BRIGHTMARK'S CHEM RECYCLING PLANT RUNS AT 5%Brightmark's chemical recycling plant in Indiana has required substantial re-engineering and re-design after starting up in 2023, said Craig Jalbert, chief restructuring officer. He made his comments in court filings. The plant needs $800,000/week just to maintain operations and fund improvement projects – all while working under $172 million of senior debt. To date, the plant's upgrade system has not worked, according to Jalbert. That system was made up of a hydrotreater that cleaned the pyrolysis oil (pyoil) and a fractionator that separated the cleaned oil. After starting up in 2023, the plant only managed to produce 10 million lb (4,500 tonnes ) of pyoil, or 5% of its 100,000 tonne/year capacity. So far, three petrochemical producers have bought its pyoil, which it sold under the brand name PyBright. Pybright did command a premium, but it was not high enough to offset the low run rates and the capital needs of the company. That plant will need more than $100 million in capital investments before it can operate at a high enough rate to be profitable, Jalbert said. Brightmark's parent company had been funding the plants operations and capital expenditures through equity contributions. These have totalled more than $210 million. By February, the parent company determined that it could no longer make the contributions. A $12.9 million payment was due on 1 March. The recycling company defaulted on the payment and filled for Chapter 11 bankruptcy protection on 14 March. Brightmark will continue to operate the Indiana plant while it tries to sell it. If necessary, Brightmark will hold an auction on 7 May. Meanwhile, Brightmark continues to work on its second chemical recycling plant that it is developing in Thomaston, Georgia. The next step is to file for air permits, the company said. The Georgia plant will have a capacity of 400,000 tonnes/year. Brightmark has not said when operations will start. Brightmark filed bankruptcy in Delaware. The case number is 25-10472. Insight article by Al Greenwood

20-Mar-2025

LONDON (ICIS)–Concerns in the European base oils market about the imminent US-EU trade dispute are limited to the wider economic impact long term, but participants dismissed an immediate effect given an exclusion for oil and oil products. In 2024, base oils were US’s third most exported chemicals into Europe and mostly concentrated on Group II material. According to ICIS Supply and Demand Database, about 800,000 tonnes of Group II volumes were imported  into Europe from the US last year. Existing European domestic supply also comes from the Exxon Mobil-owned base oils plant in Rotterdam established in 2019, which adds about 1 million tonnes of capacity per year. “For the moment I don’t see any impact [from the tariffs], just a lot of tensions and talks and at the end you have to wait and see,” said one market participant. Current market sentiment is focused on the broader effects of the tariffs and retaliatory action from the EU on the wider economy. Any economic impact may also feed into the US dollar exchange rate and therefore may send some ripples into the base oils market. “Anything damaging to the broader economy will hurt base oils demand,” agreed Michael Connolly, principal refining analyst at ICIS. While the tariffs were not perceived as an “an immediate challenge”, some risk remains, market participants told ICIS. “We see the risk in the supply chain is bigger than the tariff itself,” said one source. Some other individual producers may face issues should tariffs be applied on base oils or related commodities, like crude oil, in the future. Base oils hold the top spot for US chemical exports, with flows largely heading to Mexico, the rest of the world and thirdly the EU, closely followed by Canada – also targeted by tariffs this year. Meanwhile, EU exports of base oils to the US  were lower in 2024 than in 2020. Looking at the top chemicals imported from the EU into the US, base oils are ranked seventh. More information on the US tariffs and impact on chemical markets is available on the ICIS topic page. AFPM ‘25: US tariffs, retaliation risk heightens uncertainty for chemicals, economies | ICIS Base oils are used to produce finished lubes and greases for automobiles and other machinery. Graphs by Yashas Mudumbai. Thumbnail shows aerial view of oil refinery or petroleum refinery in the industrial factory of heavy industry zone (image credit: AU USAnakul/Shutterstock)

20-Mar-2025

SINGAPORE (ICIS)–ICIS analyst Aviva Zhang analyzes the recent sharp fall in China's domestic styrene prices in March, and the potential impact of tight supply due to extensive plant maintenance. Lower costs driven by declining crude oil and benzene prices; market closely monitors crude fluctuations. East China styrene inventories transition from accumulation to drawdown; plant turnarounds expected to increase in March and April. Expanded polystyrene (EPS) producers maintain need-to-basis purchasing due to slow destocking and reduced operating rates. ICN

20-Mar-2025

SINGAPORE (ICIS)–Indonesia’s central bank kept its policy rate unchanged at 5.75% on Wednesday, a day after local stocks closed nearly 4% lower, on concerns over the country’s economic growth prospects and government finances. Jakarta composite index shed 3.8% on 18 March Rupiah remains under control, central bank says Economy projected to grow by 4.7-5.5% in 2025 Bank Indonesia (BI) kept the benchmark seven-day reverse repurchase rate steady at 5.75% and left its overnight deposit facility and lending facility rates unchanged at 5.00% and 6.50%, respectively. The rupiah (Rp), which initially fell in early trade, stabilized after BI’s announcement at Rp16,515 per US dollar, near its lowest level in five years. The BI’s move to keep rates stable was “consistent with efforts to keep the 2025 and 2026 inflation forecasts” within the target of 2.5% plus or minus one percentage point; “maintain rupiah exchange rate stability in line with fundamentals amidst persistent high global uncertainty, and contribute to economic growth”, the central bank said in a statement. BI also said that the rupiah exchange rate remains under control, supported by stabilization policies. The rupiah strengthened by 0.94% against the US dollar in March after weakening by 1.69% in February 2025, “influenced by reduced foreign capital inflows into regional stocks, including Indonesia, in line with global uncertainty”, BI said. “Bank Indonesia is looking for opportunities to lower rates, but a rate cut this month may come too soon following the policy easing in January. We look for the next policy rate cut in Q2,” said Lloyd Chan, senior currency analyst at Japan-based MUFG Global Markets Research Asi, in a note. In January, the central bank issued a surprise rate interest rate cut to support economic growth amid expectations of continued low inflation in 2025 and 2026. The move had sent the rupiah tumbling to a six-month low against the US dollar. BI’s decision comes after its benchmark Jakarta Composite Index (JCI) had slumped by 5%, triggering a temporary trading halt, and fell by as much as 7% at one point upon resuming trade, partly fueled by speculations that finance minister Sri Mulyani Indrawati is resigning. Sri Mulyani late on 18 March dispelled the resignation rumors, according to media reports, saying she will stay on as the finance chief, emphasizing that Indonesia’s fiscal health remains sound and the budget deficit for 2025 will stay at 2.5% of GDP. A budget deficit is a shortfall that occurs when government expenditures exceed revenues. The JCI was volatile in early Wednesday trade, initially tumbling by more than 1%, before rebounding to trade 1.42% higher at 6,311.66 as of 09:00 GMT. Indonesia’s sole cracker operator Chandra Asri's shares were up by 13.4% on Wednesday. Indonesia is a net importer of several petrochemicals, including polyethylene (PE) and polypropylene (PP); while it is a major exporter of crude palm oil (CPO) and its downstream oleochemicals. ELEVATED FISCAL RISKS Japan’s Nomura Global Markets Research in a note said that it continues to see elevated fiscal risks and forecast a widening of the fiscal deficit to 2.9% of GDP in 2025, from 2.3% last year and versus the government's target of 2.5%. “Recent changes pushed by President [Subianto] Prabowo, including an expansion of his priority programs, will cost an additional 0.9% of GDP, by our estimate,” Nomura said. The Indonesian government has not introduced any new revenue-generating measures, instead relying on enhanced tax administration efforts, which are expected to have a limited impact, it said. “President Prabowo’s instruction to perform budget cuts worth 1.3% of GDP could provide some offset, but this will likely be very difficult to achieve, given public pushback, in our view, and would weigh on domestic demand,” Nomura said. “Local sentiment, in our view, has dropped significantly, as these domestic policy concerns are exacerbating external risks.” 2025 GROWTH Indonesia's economic growth is projected to remain strong in the range of 4.7-5.5% in 2025, despite persistent global uncertainties, BI said. Southeast Asia’s largest economy expanded by 5.03% in 2024, slowing from the 5.05% growth in 2023. Prabowo’s government aims to increase the real GDP growth rate to 8% within two to three years, from the 5% average over the past 10 years (excluding the Covid pandemic years of 2020-2021). This optimistic outlook is supported by robust household consumption, bolstered by consumer confidence, government spending and seasonal demand, BI said. Increased private investment, driven by positive producer sentiment and expanding order volumes, is expected to contribute significantly to this growth, it said. While external factors present challenges, particularly in mining and processing, growth in non-oil and gas exports and the agricultural sector are anticipated to offset these effects. Focus article by Nurluqman Suratman

19-Mar-2025

SINGAPORE (ICIS)–Japan’s chemical exports rose by 7.5% year on year to yen (Y) 1 trillion in February, supporting the fifth consecutive rise in overall exports abroad, official preliminary data showed on Wednesday. The country’s exports of organic fell by 2.1% year on year to Y180.7 billion in February, while shipments of plastic materials were up by 10.8% at Y282.5 billion, Ministry of Finance (MOF) data showed. By volume, shipments of plastic materials fell by 1.7% year on year to 429,716 tonnes. Japan’s total exports rose by 11.4% year on year to Y9.19 trillion in February, while imports slipped by 0.7% to Y8.61 trillion. This resulted in a trade surplus of around Y584 billion. By destination, Japan's overall exports to China rose by 14.1% year on year in February, reversing the 6.2% decline in January. Total exports to the US rose by 10.5% year on year in February, while overall shipments to the Association of Southeast Asian Nations (ASEAN)  were up by 13.3%.

19-Mar-2025

HOUSTON (ICIS)–As the landmark year, 2025, swiftly passes, many within the US recycled polyethylene terephthalate (R-PET) industry doubt the demand and market growth promised by voluntary brand goals and regulatory post-consumer recycled (PCR) content minimums will come to fruition. Despite this reality, the market has and will continue to see slow progress, with forecast growth even in the face of trade and macroeconomic uncertainties heading into this year’s Plastics Recycling Conference (PRC). MARKET SNAPSHOTOver the course of 2024, average US R-PET market prices saw increases across the board ranging from 2 cents/lb to over 6 cents/lb. More muted growth is expected throughout 2025. At present, East Coast bale, flake and pellet prices remain steady, on sufficient supply and unchanged demand trends despite March typically being a period of transition for the market. On the West Coast, bale prices remain under pressure from Mexican export interest, though domestic players are muted. Flake and pellet prices have shifted in line with bales, but remain under pressure from competitive recycled and virgin imports. Demand expectations across the US for the full spring season are mixed. Historically, demand from thermoformers who cater towards agricultural markets increases in the spring and summer alongside growing season. At the same time, demand from the beverage industry also tends to increase in the spring in preparation for summer bottled beverage consumption. Though, this year, ramp-up timing and intensity remains uncertain due to the impacts of tariffs and inflation on consumer spending. On the fiber side, demand is expected to remain weak and is typically not as seasonally driven. BRAND DEMAND AND SUPPLY LANDSCAPEWhen assessing PCR demand, there are two factors of influence: firstly, the overall product demand as referenced above, but then secondly, the transition from virgin packaging materials to recycled content. Hinging on the same macroeconomic uncertainty, late last year and early this year several brands have publicly stated it is likely they will miss their 2025 sustainability goals. Under this mentality, PCR sellers have noted that many brand and converter customers have downsized PCR growth plans throughout this year as a cost-savings mechanism. This comes as the most recent fast-moving consumer goods (FMCG) data suggests slowing progress, or even in the case of the 2023 Canadian Plastics Pact annual report, negative progress. According to the latest Ellen MacArthur Foundation Global Commitment report, nearly 1.6 million tonnes of additional recycled plastic would be needed for signatories to meet their 2025 targets, as compared to 2023 PCR volumes. On top of the overarching trend, much of the market presently remains in wait-and-see mode due to the whiplash effect of proposed US tariffs, though few players are heard to be operating strongly with consistent year-round demand. The fragmentation of the market persists, as was highlighted during off-peak season last year, and underscores the evolving landscape of polyethylene terephthalate (PET) recycling infrastructure. While some large players who have become entrenched as a premier provider of R-PET see strong order books, other standalone players continue to struggle. Adding to the mixed messaging, several players expect expanded capacity in 2025 such as Republic Services, D6 and Circularix, while another player, Evergreen, has announced a partial facility closure. Future investments in R-PET, whether domestic or international, have largely been paralyzed by the risk that market sentiment and trade policies could shift with each administration, and investments take several years to come to fruition. POLICYWhile not a primary driver of US international trade, plastic scrap and recycled plastic do have strong exposure to international markets, particularly Canada and Mexico as waste is regional and typically market economics hinge on location proximity. To be clear, the proposed 25% tariff on imported goods from Canada and Mexico does include recycled plastic and plastic scrap. When looking at bale and flake supply, tariffs could push US recyclers who are close to Mexico and Canada away from international supply, and towards domestic volumes, thus further straining the limited collection system. The US imported 133 million lbs of PET scrap in 2024, with Canada leading the globe as the US's strongest PET scrap trade partner, followed by Thailand, Ecuador and Japan. Moreover, several US converters and brands have partnered with Canadian and Mexican recyclers over the last several years and now may seek supply relationships with domestic recyclers to avoid additional tariff-related costs. This could be seen as a positive force for the domestic recycling market, though players expect little further support from the current administration, as sustainability and environmental progress has not been identified as a key priority. No federal policies are expected. Despite the ongoing negotiations of the Global Plastics Treaty, based on President Trump's second withdrawal from the Paris Climate Accord, it is unlikely the US will support another global sustainability effort. Instead, state-level legislation is expected to continue carrying PCR momentum, with several proposed extended producer responsibility (EPR) bills as well as some PCR mandates active within various state legislatures. Moreover, as existing policies continue to take shape, such as defining the regulations of California’s Senate Bill 54, or the implementation of Oregon’s EPR program starting this July, the industry hopes that regulation provides a stronger foundation for recycled plastic market growth over voluntary goals which shift with economic sentiment. Hosted by Resource Recycling Inc, the PRC takes place on 24-26 March in National Harbor, Maryland. ICIS will be presenting "Shaping the Future of Recycled Plastics: Trends and Forecasts" on Monday, 24 March at 11:15 local time in room Potomac D. As well as attending our session, we would love to connect with you at the show – please stop by our booth, #308. Visit the Recycled Plastics topic page 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 Focus article by Emily Friedman

18-Mar-2025

HOUSTON (ICIS)–The US polyvinyl chloride (PVC) market is facing continued headwinds as tariff-related uncertainties persist heading into this year's International Petrochemical Conference (IPC). The domestic PVC market is expected to grow between 1-3% in 2025 but continues to face challenges in housing and construction. Meanwhile, export markets continue to wrestle with the threat of protectionist policies and tariffs at home and abroad. The domestic PVC market has been healthy to start the year but has been saddled with excess supply following capacity additions in late Q4. The new capacity, coupled with strong run rates, resulted in high levels of inventory to start the year. This added supply comes in contrast to a US housing market plagued by high prices and high borrowing costs. The pressure of these variables, coupled with exceptionally cold weather, was evident in January housing statistics, where housing starts slumped 9.8% to a 1.366-million-unit pace led by a steep 13.5% decline in the multifamily segment. Despite this, production and sales remained firm in February. Production was expected to decline in March due to turnarounds by two US producers. There was some positive economic news with 30-year mortgage rates easing in March and falling to their lowest levels of 2025 at 6.63% in early March before inching to 6.65% in mid-March. Still, current levels were well above levels considered necessary to spur demand, generally considered to be around 5.0-5.5%. Additionally, inflation appeared to stabilize in February, coming in at 2.8%, lower than the forecast 2.9% and below January levels of 3%. Despite these developments, consumer confidence remains weak. The US PVC export market will also face its share of challenges coming primarily via protectionist policies. Potential 25% tariffs on Mexico and Canada could present challenges as the US exports significant volumes of PVC to each country and then brings back the converted goods for use in medical, building and construction, auto and industrial applications. Reciprocal tariffs could increase the cost of these imports and dent US PVC demand. Additionally, US PVC exports face existing and potential tariff threats from a number of other trading partners including India, Canada, Mexico, Brazil and the EU. Given the challenges in the domestic market and current growth levels, US producers will need to export more than one-third of their production to maintain operating rates in the mid-80s% range, a tall task considering adequate supply and the proliferation of tariffs and antidumping duties (ADDs). To the south, the Latin America PVC market also faces significant challenges, with demand trends differing across key regional markets. A combination of economic pressures and the potential of US tariffs is reshaping the landscape, influencing both supply and demand dynamics. In Brazil, PVC demand remains weak, largely due to persistently high interest rates and ongoing economic uncertainty. These factors have led to buyer hesitancy, reducing the country's dependence on US PVC imports. The outlook for Brazil’s construction sector in 2025 presents a mixed scenario that could influence PVC market dynamics in different ways. The Brazilian Chamber of the Construction Industry (CBIC) projects a 2.3% growth in the sector’s GDP. At the same time, Sinduscon-SP and Fundacao Getulio Vargas (FGV) have a slightly more optimistic forecast, expecting a 3.0% expansion. This growth is primarily driven by ongoing projects and newly contracted developments set to begin in the coming months, particularly in infrastructure and real estate. However, broader macroeconomic factors may temper this momentum. The expectation of slower economic growth, higher inflation exceeding the target ceiling and rising interest rates could cool investment and business activity. If these conditions lead to tighter credit and reduced consumer confidence, demand for new real estate developments could soften, impacting the need for PVC-based materials used in construction applications like pipes, fittings and profiles. Colombia is also experiencing economic difficulties, though the exact demand trends remain unclear. The overall sentiment is cautious, with expectations for stable-to-weak demand in the near term. Meanwhile, Argentina faces persistent investment shortfalls in critical sectors, which continue to hinder PVC demand. This adds to the difficulties for US exporters separately aiming to maintain market share in the country. Mexico, as a key importer of US PVC, brings in around 350,000 tonnes annually. However, the introduction of new tariffs is expected to raise costs for downstream segments that export goods to the US, which reduces the competitiveness of US exports and demand could soften. Pricing dynamics are also likely to shift, if the additional tariff scenario among Mexico, Canada and the US changes in April, as the US Gulf PVC producers could face lower operational rates if demand from their primary export destinations declines. This could lead to production cutbacks, raising per-unit production costs. For the Americas as a whole, uncertainty remains a prevalent theme. 2025 looks to be a challenging year and the effect of proposed tariffs from the Trump administration and retaliatory tariffs on PVC demand is unclear, with economic and inflationary factors adding further uncertainty to the 2025 outlook. Policy and economic health will continue to drive demand in 2025 and producers will need to manage production and inventories closely, control costs and target alternative outlets for exports to mitigate the risks that lie ahead. 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 Visit the Logistics: Impact on chemicals and energy topic page Focus article by Kevin Allen and Daniel Lopes Thumbnail source: Shutterstock

18-Mar-2025

TORONTO (ICIS)–Depending on who wins the next election, Canada may soon be without federal carbon pricing. Opposition Conservatives to scrap carbon pricing Ruling Liberals would retain industrial carbon pricing Industry sees carbon pricing as “backbone” of decarbonization Canada’s opposition Conservatives have finally clarified their position on federal industrial carbon pricing – they would abolish it, if they win the next election, they said, along with the federal consumer carbon tax. This would lower prices in the Canadian steel, aluminum, natural gas, food production, concrete and all other major industries, boost the economy, and allow “our companies to become competitive again with the United States”, the party said on Monday. Canada’s provinces could still address carbon emissions “as they like but will have the freedom to get rid of these industrial taxes that the federal government has forced them to impose”, party leader Pierre Poilievre said. Instead of carbon pricing or a carbon tax, the Conservatives would use technology "to protect our environment” they said. In particular, they would expand the eligibility for certain investment tax credits (ITCs), they said. The Conservatives’ announcement came after Canada’s minority Liberal government, under its new prime minister, Mark Carney, suspended the consumer carbon tax. The suspension was one of Carney’s very first actions after taking over from Justin Trudeau last week. However, Carney said that his government would retain and improve federal industrial carbon pricing as the most effective measure to control emissions. The premier (governor) of oil-rich Alberta province, Danielle Smith, said that she was concerned Carney’s government would “significantly increase the industrial carbon tax”, which would be just as damaging to Alberta’s economy as the consumer carbon tax had been. She suggested that federal industrial carbon pricing was a hidden carbon tax, rather than a transparent one. CHEMICALS Industrial carbon pricing is seen as key in attracting investments in low-carbon projects, such as Dow’s Path2Zero petrochemicals complex under construction in Alberta province. Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing. Carbon pricing and programs offering incentives for low-carbon chemical production plants were needed to get those facilities built in Canada, the group has said. “We support industrial carbon pricing as the backbone of decarbonization across this country,” CIAC and other industrial trade groups said in a joint statement last year. Industrial carbon markets were the most flexible and cost-effective way to incentivize industry to systematically reduce emissions, they said. ENVIRONMENTALIST Environmental Defense said that Canada’s industrial carbon pricing has “effectively driven down pollution levels more than any other measure”. The group also said that federal carbon pricing was needed if Canada is to diversify its exports towards other markets, away from the US. For example, Canada would not be able to access the European market without strong environmental rules like industrial carbon pricing, the group noted. The EU is implementing a Carbon Border Adjustment Mechanism (CBAM) that puts a price on the emissions of carbon-intensive goods imported into the EU. CANADIAN ELECTION Carney, who does not have a seat in parliament, is expected to call an election possibly as early as this week. Once called, the election will likely take place in late April or early May. Following Trudeau’s resignation announcement on 6 January, the tariff threat from the US, and US President Donald Trump's repeated suggesting that Canada should become part of the US, the Liberals have caught up with the opposition Conservatives in opinion polls about the next federal election. By law, the elections must be held before the end of October. Focus article by Stefan Baumgarten Thumbnail photo source: International Energy Agency

18-Mar-2025