Mixed plastic waste and pyrolysis oil

SAO PAULO (ICIS)–Brazilian President Luiz Inacio Lula da Silva had already got several investment deals in the bag midway through his five-day state visit to China – among others, Envision Group has committed $1.0 billion in Latin America’s largest economy to produce sugar-based sustainable aviation fuel (SAF). Green hydrogen, ammonia also within Envision plans for its ‘Net-Zero Industrial Park Energy production, energy storage on focus in Brazil, China firms talks, deals China’s insatiable hunger for grain sees Brazil as the counterweight to US supply SAF: LARGE SCALEWhile Envision Group’s announcement did not disclose any financial details about its Brazilian SAF plans, Brazil’s Planalto Presidential Palace press services said in a separate statement the firm’s investment would stand at around $1.0 billion. The announcement came soon after Lula met Envision’s management in Beijing. “Envision will develop Latin America's first Net-Zero Industrial Park in Brazil. Anchored by the production of SAF, the park will establish a complete green fuel value chain while advancing the development of green hydrogen and green ammonia,” said the company. “We will build Latin America’s first Net Zero Industrial Park in Brazil, creating a green ecosystem centered on SAF, green hydrogen, green ammonia, and renewable energy systems,” said Envision on a post on social media network LinkedIn. “By leveraging Brazil’s abundant renewable resources to drive sustainable growth and continuously innovating to lower the cost of green fuels, this collaboration [is to] contribute positively to Brazil's green transition and reindustrialization.” IT’S ALL (MOSTLY) ABOUT ENERGY The Brazilian president is due to meet “several companies” this week while in his visit to China, eyeing not only investments in Brazil but also partnerships with Brazilian institutions and the creation of research centers. The main objective for the latter would be to generate “technological development” in the energy sector, said the cabinet’s chief of staff, Rui Costa, who is travelling with the President. According to the Brazilian government, agreements with Chinese companies will involve projects in renewable energy – wind and solar energy but also some hybrid projects which will focus primarily on energy storage in Brazilian territory. “Brazil is one of the countries that has invested the most in wind and solar energy, but today it lacks the ability to store this energy,” said Costa. Apart from Envision, CGN Power also said it would invest Brazilian reais (R) 3.0 billion ($535 million) in a wind, solar, and energy storage hub. Lula also met the chairmen of automotive group GAC and the chairman of Windey Energy Technology Group. Within automotive, electric vehicles (EVs) major Great Motor Wall (GMW) said it would invest R6.0 billion in car manufacturing facilities in Brazil. Finally, another deal to highlight would be China’s semiconductor company Longsys commitment to invest R650 million to expand capacity at its Brazilian subsidiary Zilia, potentially helping avoid US tariffs on China-made chips. Meanwhile, Lula also found time in his first two days of state visit to meet with the CEO of Norinco, a conglomerate in the defense sector but whose reach expands also to infrastructure projects such highways, railways, hydroelectric plants, and water treatment plants. On May 13, Lula and China’s President Xi Jinping also had a one-on-one, although the pair had already met a few days earlier in Moscow. RELENTLESS GROWTH IN BILATERAL TRADE According to figures by the Brazilian cabinet, China has since 2009 been Brazil’s largest trading partner. Bilateral trade stood in 2023 at $157.5 billion, with Brazil exporting to China goods worth $104.3 billion and importing goods worth $53.1 billion from China. The growth in bilateral trade continued up to the first quarter of this year. According to the same information by Brazil’s cabinet, between January and March trade between Brazil and China stood at $38.8 billion – Brazil exported $19.8 billion and imported $19 billion. Among the main products exported by Brazil are crude petroleum oils, soybeans, and iron ore and concentrates. Brazil, in turn, mainly imports from China vessels, telecommunications equipment, electrical machinery and appliances, valves and thermionic tubes (valves). MOSCOW STOPOVER CRITICISMBefore landing in China over the weekend, Lula had visited Russia and took part on 10 May in Moscow’s Red Square military parade in which the country remembers the victory of the Soviet Union against Germany. Lula defended his presence in Red Square and argued that did not disqualify him as a potential peace mediator between Russia and Ukraine, the latter suffering a full-scale invasion by the former since 2022. Lula has always sought to develop Brazil’s soft power influence and as a global mediator. Since Russia invaded Ukraine in 2022, however, he has at times stated that Moscow and Kyiv bear equal responsibility for the war, calling them both to settle their differences through dialogue. Front page picture: Lula (left) meeting with Chinese officials in Beijing  Picture source: Brazil's Planalto presidential palace press services Insight by Jonathan Lopez ($1=R5.61)

14-May-2025

BANGKOK (ICIS)–Tough times lie ahead for the Asia’s petrochemical industry amid continued oversupply and a global economic downturn because of US tariffs, but a pivot to sustainable products can help. US-China trade war threatens industries Oversupply, weak demand signal prolonged downturn; plant closures loom Energy transition offers feedstock opportunities Global megatrends, including geopolitics, energy transition, and sustainability are fundamentally reshaping petrochemical demand patterns and the entire industry. The US-China trade war de-escalated this week as both sides agreed to bring down tariffs on each other significantly by 14 May. An all-out trade war between the US and China, the world’s two-biggest economies, could trigger a global recession. There is also a possibility that amid high trade tensions with the US, China could flood the global market with excess products, which may prompt building of trade barriers by other countries After striking an initial agreement to bring down tariffs from more than 100%, the US and China are expected to continue with trade negotiations. In the meantime, uncertainty is dominating markets, leading to soft demand. DIFFICULTIES The petrochemical industry is facing significant challenges, including oversupply, cost volatility, and regulatory shifts, ICIS Chemical Analytics vice president Alexander Lidback said. Amid persistently low demand, firms are shutting plants around the world, notably in Europe, and without significant shutdowns, polyolefin oversupply could persist into the mid-2030s, forcing companies into survival mode. The industry will need to "go through worse to get better", with 2027/2028 being a potential turning point for survival, Lidback said. China's increased capacity, which was "underestimated", is also a contributing factor to oversupply, and global polyolefins capacity significantly exceeds demand currently, ICIS senior consultant John Richardson said. Adaptation through plastics circularity and innovation could be a way for companies to survive, although this also presents its own difficulties, said Bala Ramani, director of sustainability consulting and Asia strategy advisor at ICIS. All three will be speaking at the Asia Petrochemical Industry Conference (APIC) in Bangkok, Thailand on 15-16 May, discussing market challenges and opportunities in the sector. The theme for APIC 2025 is "Ensuring a Transformed World Prosperity”, with a particular focus on “Action for Planet with Innovation and Collaboration”. CIRCULARITY There is a need amid the current demand downturn to adapt to the changing landscape -one of which is by exploring plastics circularity and alternative feedstocks. Sustainable polyolefins present as “interesting opportunity”, especially for integrated polyolefins producers to leverage existing assets for driving incremental value, Ramani said. “By embracing a multi-faceted production model, the polyolefins industry can reduce its environmental footprint, meet evolving regulatory demands, and unlock new value streams in a resource-constrained world,” said Ramani. The path towards circularity sustainability for polyolefins involves several approaches: mechanical recycling, circular polyolefins derived from pyrolysis oil, and bio-circular polyolefins derived from bio-naphtha or other hydrogenated bio-derived oil. Pyrolysis is expected to become a complementary solution alongside mechanical recycling in tackling plastic pollution. In turn, polyolefins producers can maximize the value of pyrolysis oil integration by strategically aligning feedstock procurement, technology, and processing configurations, Ramani said. Europe leads with robust regulations and collaboration, eyeing over 13 million tonnes of sustainable polyolefins by 2040. Asia, however, lags, stymied by fragmented policies despite interest for sustainable polyolefins from markets such as India, Japan and South Korea. “In Asia, early adoption by a few markets and global brands, combined with evolving yet fragmented policies, is building momentum and opportunities, with future growth hinging on regulatory alignment and infrastructure development,” Ramani said. Regulatory fragmentation among Asian countries compared with EU regulatory mandates makes sustainable polyolefins market tricky to scale. South Korea and Japan are paving the way for sustainable polyolefins demand, although Asian investments are likely to target developed markets such as the EU, before pivoting to local and regional markets in the long term. Were EU recycled content targets to be adopted in Asia, the region could unlock over 18 million tonnes of sustainable polyolefins demand by 2040. But while alternative feedstocks and sustainable polyolefins offer opportunities for producers, their widespread adoption faces other hurdles including regulatory uncertainty, high costs, technology scalability and insufficient waste infrastructure. “Amid ongoing industry challenges, sustainable polyolefins are set to drive resilience through resource efficiency, regulatory compliance, and new value creation enabled by circular production models,” Ramani said. Insight article by Jonathan Yee Click here to view the ICIS Recycled Plastics Focus topic page.  Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Thumbnail image: Panorama from Golden Mount, skyline of Bangkok, Thailand, (By Walter G Allgöwer/imageBROKER/Shutterstock)

14-May-2025

TORONTO (ICIS)–The government of Canada’s oil-rich Alberta is freezing the province's industrial carbon price at Canadian dollar (C$) 95/tonne ($68/tonne). The decision to freeze the price indefinitely was in response to the US tariffs, which were increasing costs, disrupting supply chains and creating uncertainty for industry, making it challenging to operate efficiently and stay globally competitive, the government said. The freeze would provide certainty and economic relief to companies in oil and gas, electricity, petrochemical, manufacturing, cement, pulp and paper, mining, and forestry, Premier (Governor) Danielle Smith and environment minister Rebecca Schulz said in a webcast press conference on Monday. Smith said that Canada could not get too far ahead of the US in terms of climate policies, otherwise “billions of dollars of investments” would go to the US, instead of Canada. Schulz added that a price above C$100/tonne would make Alberta “wildly uncompetitive.” The price had been scheduled to rise to C$110/tonne in 2026 and continue increasing to C$170/tonne by 2030 – in line with Canada’s federal industrial carbon pricing system, which sets minimum standards. Smith and Schulz said that the government would talk to companies that have been making investments in Alberta, based on industrial carbon pricing. Schulz added that she had already reached out to Dow, NOVA Chemicals and others to “signal” the government’s new direction, given that “it is a very different time that we are in right now.” “It is unfair to artificially increase a carbon tax to benefit a small amount of projects and then leave the entire rest of industry in a position where they are uncompetitive,” she said. “We can’t make the entirety of industry uncompetitive to save one specific project,” she added. Dow announced last month that it is delaying its flagship Canada Path2Zero net zero carbon cracker and downstream polyethylene (PE) project at Fort Saskatchewan, Alberta, until market conditions improve and would not likely revisit it until the end of this year. Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing as a tool to encourage companies to reduce emissions in a cost-effective way. However, the trade group has suggested that in light of the ongoing trade and tariff tensions, Canada may want to review its industrial carbon pricing rules. In related news, Alberta's neighboring Saskatchewan province paused its industrial pricing system, effective 1 April. ($1 = C$1.40) Additional reporting by Joseph Chang Please also visit US tariffs, policy – impact on chemicals and energy Thumbnail photo source: Dow

13-May-2025

SINGAPORE (ICIS)–Asian chemical shares were mostly higher on Tuesday, after the US and China agreed to significantly reduce tariffs on each other for 90 days. At 01:30 GMT on Tuesday, Japan’s Mitsui Chemicals rose by 0.94%, while Asahi Kasei slipped by 0.54% in Tokyo. South Korean producer LG Chem was down 2.38% in Seoul. Malaysia’s PETRONAS Chemicals Group (PCG) was up by 1.71% in Kuala Lumpur, while palm oil and oleochemicals major Wilmar International rose by 0.98% in Singapore. Japan's bellwether Nikkei 225 was up by 1.84% at 38,335.75, while South Korea's KOSPI Composite inched up by 0.30% to 2,615.03. In China, Hong Kong’s Hang Seng index was up 2.98% at 23,549.46, and the Shenzhen Composite bourse rose by 1.70% to 2,004.13. US chemical stocks closed higher overnight following news of the trade deal. In the US-China agreement announced on 12 May, the US will lower tariffs on imports from China to 30% from the previous “unsustainable” 145%, consisting of a baseline 10% tariff on top of the 20% fentanyl-related tariff. China, meanwhile, lowered its tariffs on the US to just 10% from 125%, while also suspending non-tariff countermeasures taken against the US since 2 April. These new measures will take place by 14 May and last for 90 days, according to a joint statement by both parties. The parties will then continue discussions about economic and trade relations, the statement said. However, uncertainty persists as US President Donald Trump seeks talks with China President Xi Jinping. Meanwhile, the US' hefty "reciprocal” tariffs on other major Asian economies such as Japan, South Korea, India and southeast Asian countries – first announced on 2 April and then suspended for 90 days – may be implemented in early July. Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Thumbnail image: At the terminal of Shanghai Port in eastern China on 11 May 2025. (Costfoto/NurPhoto/Shutterstock)

13-May-2025

SAO PAULO (ICIS)–Braskem swung to a net profit in the first quarter, year on year, but sales and earnings fell slightly as the global petrochemicals downturn continues, management at the Brazilian polymers major said on Monday. Speaking to reporters from Sao Paulo, the company’s CEO and CFO described the operating environment as persistently challenging on the back of excess capacity and emerging international trade conflicts. The company’s net profit stood in Q1 at $113 million, up from a net loss of $273 million in the same quarter of 2024, while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) stood 2% lower, however, at $224 million. Braskem produces mostly polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), some of the most widely used polymers and which remain under intense pressure due to global overcapacities. Braskem (in $ million) Q1 2025 Q1 2024 Change Q4 2024 Q1 2025 vs Q4 2024 Sales 3,331 3,618 -8% 3,285 1% Net profit/loss 113 -273 N/A -967 N/A Recurring EBITDA 224 230 -2% 102 121% Brazilian operations achieved 74% utilization rates, up 4% from the previous quarter, while US and European facilities operated at 80% capacity, a 13% improvement, and Mexican operations reached 79% utilization (up 2%). The improved performance was primarily driven by better spreads and increased sales volumes, particularly in Brazil, Europe and the US. CHINA PP COMPETITION: ADDs?Much of the earnings call with reporters on Monday focused on the global trade tensions and competition from Chinese producers, particularly in the Brazilian market. "The question of tariffs generated much instability and many doubts in this first quarter," said CEO Roberto Ramos, who noted how negotiations over the weekend between China and the US in Switzerland could potentially alter the tariffs war. "This discussion between the two countries should move toward some kind of normality. Therefore, I think when all is said and done, after all this commotion, very little will remain,” he said. He highlighted a few aspects which have affected petrochemicals in the trade war so far, such as China's decision not to impose retaliatory tariffs on US natural gas-based ethane imports, which he said stand at approximately 18 million tonnes annually. That was a positive, he said, because ethane from the US to China would continue uninterrupted, preventing a scenario where excess ethane in the US would have driven down prices and potentially created advantages for ethane-based producers. Braskem operates most of its plants in Brazil on crude-derived naphtha. However, Chinese authorities did maintain tariffs on propane imports from the US, which affects Chinese PP producers and that did affect Braskem, said the CEO. “China has a surplus in PP, so it is a net exporter, and the main destination of this excess PP production has been precisely Brazil, which has greatly affected us here in the Brazilian market,” said Ramos. "They wanted to become self-sufficient regarding both resins [PP and PE], had a project to become self-sufficient in PP by 2030, but achieved this much earlier, by 2024. Therefore, as there isn't enough consumption for the resin, they're forced to sell, and they sell here at a price we can't compete with." In response to this competitive pressure, Ramos confirmed Braskem is actively pursuing trade remedies in talks with the authorities, which could, among others, include instruments like antidumping duties (ADDs) against China but also against the US, also a big producer with excess product in some materials. "Yes, we are studying trade protection measures in relation to China, as, moreover, we are also doing in relation to US PE producers, who also place resin here at a lower price than they sell in their respective countries," he said. Management said they continue to pursue the "switch to gas" strategy, which involves systematically reducing dependence on naphtha as feedstock, particularly in Brazilian operations, in favor of more competitive ethane-based production. Despite recent decreases in oil prices and consequently naphtha prices, executives said the price differential between naphtha and ethane remains substantial at approximately $350-370/tonne, sometimes even higher. RECOVERY STILL WAITINGAlthough some of Braskem’s margin spreads posted improvements during Q1, the CEO was not too optimistic about a strong recovery anytime soon. “I do not imagine that spreads will recover further in the short term, because there is still an excess supply of ethylene but also of propylene, and therefore the plants are operating at lower capacity. Apart from the US producers who are processing at over 90% of their capacity utilization, we here have around 70%, and the Europeans have even less than that,” said the CEO. “As long as this excess installed capacity still exists, as long as the pace of construction of new plants in the US and China continues, there is no reason to imagine that spreads will react, because the supply and demand situation continues to be an excess of supply in relation to demand. “If you have an excess installed capacity of 30 million tonnes of ethylene, for example, therefore of PE, and if the market increases its consumption volume by 5 million tonnes per year, you will need at least six years to be able to clear this excess supply. Therefore, there is no structural reason to think about an increase in spreads."

12-May-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 9 May. Covestro Q1 EBITDA halves, but in line with expectationsCovestro’s Q1 2025 earnings before interest, tax, depreciation and amortization (EBITDA) halved compared to last year, but were at the upper end of its forecast, the German producer announced on Tuesday. European orthoxylene contract price for May falls to six-month lowThe Europe orthoxylene (OX) contract price for May has fallen by €50/tonne to its lowest level in six months, driven by softer feedstock mixed xylenes (MX)  and gas costs in April. European Commission to begin investigation into PET imports from Vietnam, TurkeyThe initiation of an investigation by the European Commission into polyethylene terephthalate (PET) imports into the EU from Vietnam and Turkey is imminent, sources said. LOGISTICS: Red Sea ceasefire could boost Suez Canal, collapse freight rates, heap pressure on Europe chemicalsThe ceasefire between the US and Houthis in Yemen may crash freight rates and increase import pressure on chemical producers in Europe if it is permanent and traffic returns to the Suez Canal.

12-May-2025

Serbian utility EPS inks long-term PPA from 168MW wind farms This could accelerate energy plans, boost PPA plans and have a bearish impact on spot power prices in the region The country plans to have 1.3GW renewable capacity by 2027 WARSAW (ICIS)–The signing of a new power purchase agreement (PPA) is set to support Serbia's energy transition plans by 2027, local traders told ICIS. This comes as state utility Elektroprivreda Srbije (EPS) announced a 15-year PPA from two wind farms (Alibunar 1 and Alibunar 2) with a total 168MW capacity, EPS said on 8 May. “EPS will take over all the produced electricity, and the purchase and balancing price is determined on market principles, which provides an incentive to investors and allows EPS to make additional profits. This energy will also provide significant, additional security for the operation of our electricity system and the supply,” said Dusan Zivkovic, CEO of EPS. “EPS receives cheap green energy, while investors benefit from a guaranteed 15-year PPA and an auction premium. As an association, we advocate for the third round of auctions to take place as soon as possible, alongside the adoption of appropriate regulations and a new three-year auction plan,” said Danijela Isailovic, manager at local renewable group OIE Serbia, in a statement on 8 May. In 2028, this capacity will be increased by 1GW from self-balancing power plants EPS is developing with a strategic partner, and renewable production is expected to reach 50% of EPS's total electricity output, added Zivkovic. MARKET IMPACT “This PPA is a milestone for Serbia as it will be a bearish driver for the local market spot market as renewable capacity takes over a large percentage of the current coal output,” a local trader told ICIS. EPS's PPA will encourage the local industry to forge more PPA deals, added another market participant. “Over the coming years, we expect at least an additional 1GW of auction-winning plants to be built and new PPAs to be signed,” a local developer told ICIS. TRANSITION PLANS The large investors' interest in Serbia's recent second renewable tender is set to support Serbia's energy transition plans by 2027, energy minister Dubravka Dedovic Handanovic said in February. The total capacity awarded was 645MW and the offered prices were "competitive", resulting in €50.9/MWh for solar and €53.5/MWh for wind, "significantly below market levels", said Handanovic. Both auctions are supported through a contract-for-difference (CfD) scheme for 15 years. All renewable plants should be online by 2027 as the country targets at least 1.3GW of new renewable capacity by the same period. Currently, Serbia has 4.4GW of coal-fired power, with coal and gas units representing 75% of the country’s energy mix, grid operator EMS data indicated.

12-May-2025

SINGAPORE (ICIS)–Saudi Aramco's first-quarter net income fell by 4.6% year on year to Saudi riyal (SR) 97.5 billion ($26 billion), weighed down by a combination of higher cost and lower oil prices. in SR billions Q1 2025 Q1 2024 % Change Sales 405.65 402.04 0.9 Operating profit 191.36 202.05 -5.3 Net Profit 97.54 102.27 -4.6 Its total revenue in the first three months of 2025 increased by 0.9% year on year on higher sales volumes for gas and refined and chemical products, as well as higher traded volumes of crude oil, the company said in a filing on the Saudi bourse on 11 May. Aramco’s average realized crude oil prices in Q1 2025 stood at $76.3/bbl, down from $83.0/bbl in the same period last year. “Global trade dynamics affected energy markets in the first quarter of 2025, with economic uncertainty impacting oil prices,” Aramco president & CEO Amin Nasser said in a statement. Saudi Aramco’s Q1 capital expenditures of $12.5 billion “support long-term strategic growth”. New oil and gas discoveries in Saudi Arabia, which is the world’s biggest exporter of crude oil, “reflects sustained advantage in exploration”, the company said. In February 2025, Aramco entered a definitive to acquire 25% equity stake in Unioil Petroleum Philippines to support strategic growth in downstream value chain. In the following month, Aramco completed acquisition of 50% equity interest in Blue Hydrogen Industrial Gases Co aims to capitalize on emerging opportunities for lower-carbon energy. ($1 = SR3.75) Thumbnail image: A view of Shaybah oilfield in Rub Al-Khali, Saudi Arabia – 17 December 2018 (By VALDRIN XHEMAJ/EPA-EFE/Shutterstock)

12-May-2025

SINGAPORE (ICIS)–China is turning to hydrogen as a potential lever in efforts to decarbonize its aluminium industry, as regulators tighten emissions rules, and global buyers demand greener materials. While still in early stages of deployment, hydrogen is gaining attention for its possible role in high-temperature heating, increasing renewables in grid, and emissions reduction. The move aligns with China’s broader ambition to peak carbon emissions in the aluminium sector by 2025 and support global net-zero targets by 2050, as set by the International Aluminium Institute (IAI). Carbon market expansion enhances hydrogen’s value in aluminium Early adoption may offer global market edge Significant potential, but barriers remain In March 2025, China’s Ministry of Ecology and Environment expanded the national carbon trading market to include aluminium, steel, and cement – raising market coverage from 40% to more than 60% of national emissions. This inclusion means aluminium producers will face growing pressure to curb emissions or bear rising compliance costs. The High-Quality Development Plan for the Aluminium Industry (2025–2027), recently released by the Chinese government, makes clean energy substitution a policy priority. The strategy encourages increased use of renewable electricity and pilot applications of hydrogen in key production processes. EMISSIONS PROFILE HIGHLIGHTS DECARBONIZATION URGENCY China’s aluminium sector is responsible for 85% of emissions in the country’s nonferrous metals industry. In 2023, aluminium-related emissions hit 530 million tonnes, including 420 million tonnes from electrolytic smelting, according to the China Nonferrous Metals Industry Association. In 2024, the country produced roughly 43.7 million tonnes of electrolytic aluminium, around 60% of global output. In 2023, China produced about 41.59 million tonnes of electrolytic aluminium, and the segment consumed over 500 billion kilowatt-hours of electricity, with each tonne of aluminium requiring at least 12,000 kWh and emitting an average of 12.7 tonnes of carbon dioxide (CO2), according to the National Bureau of Statistics, National Energy Agency and Ministry of Ecology and Environment. Most emissions are tied to primary production. Industry estimates suggest over 95% of the aluminium sector’s emissions stem from upstream processes such as mining, refining, and smelting, with energy use (electricity and heat) accounting for three-quarters of the total. Coal remains the dominant power source in China’s aluminium sector. The IAI and International Energy Agency (IEA) outline three primary decarbonization pathways: transitioning to low-carbon electricity, reducing process emissions, and boosting recycling rates. GREEN ELECTRICITY TARGETS DRIVE INFRASTRUCTURE INVESTMENT The IEA estimates the carbon intensity of aluminium’s power supply must fall by 60% by 2030. Globally, about 55% of aluminium smelters rely on captive power. In China, more than 60% of aluminum smelters owned captive coal-fired power generators by September 2023, according to Ministry of Ecology and Environment. Electricity represents 30%-40% of aluminium production costs in China, according to industry sources. With renewable energy uptake still limited and preferential electricity pricing being phased out, aluminium producers are under pressure to diversify power sources and enhance flexibility via storage. The Chinese government requires the sector to raise clean electricity use to above 30% by 2027, up from less than 25% in 2023. This is spurring investment in hydropower, wind, solar, and hydrogen storage. Shanghai Metals Market data show green electricity accounted for over 25% of smelting power in 2024. In provinces such as Yunnan, Qinghai, and Sichuan, the share exceeded 80%, while coal-dominant Xinjiang and Shandong remained low at below 5% in 2023. One pilot example is Dongfang Hope Group’s Xinjiang facility, which uses a wind-solar-hydrogen integrated system to meet 95% of its electricity demand, positioning it as a “zero-carbon aluminium” site. HYDROGEN GAINS TRACTION IN HIGH-TEMPRETURE HEATING Reducing non-electric emissions – especially from alumina refining – presents another challenge. Emerging technologies such as mechanical vapor recompression (MVR), electric calcination, and hydrogen-based burners are being tested, although large-scale deployment remains years away. Hydrogen’s high heat value and clean combustion make it a candidate to replace natural gas or coal in calcination and smelting. The IEA’s Hydrogen Review 2024 highlights multiple global trials: In Australia, Rio Tinto and Sumitomo are piloting hydrogen calcination at the Yarwun refinery with a 2.5 MW electrolyser and a retrofitted calciner with a hydrogen burner. Norway’s Hydro tested aluminum smelting fired by hydrogen and produced 225 tonnes of green aluminium at its Navarra plant in Spain, approved by electric vehicles manufacturer Irizar. Tokyo Gas and LIXIL in Japan tested hydrogen heat treatment for aluminium, finding no impact on product quality. Hydrogen-based aluminium production still carries a steep price tag – up to $5,000 per tonne versus $2,000 using conventional methods. Analysts say the economics could shift if green hydrogen costs fell below $2 per kg. In China, Aluminum Corporation of China Limited (Chalco)’s Qinghai subsidiary launched a 15% hydrogen blend in natural gas for anode calcination, cutting CO2 emissions by 370,000 tonnes annually. CARBON TRADING ADDS FINANCIAL INCENTIVE With the aluminium sector now in China’s emissions trading scheme, carbon becomes a direct item in aluminium companies’ cost structures. The government supports reducing Scope 2 emissions – those from purchased electricity – via renewable energy contracts and green certificate (REC) purchases. These instruments allow companies to offset emissions and potentially trade surplus emissions carbon allowances. China issued 80 million RECs in 2023, but aluminium producers bought less than 5%; with expanded policy incentives, this could rise to 15–20% by 2027, according to industry sources. Green hydrogen, as a quantifiable emissions reducer, may also be monetized through carbon credits. China’s aluminium decarbonization strategy depends on simultaneous progress across power substitution, process innovation, and recycling. Hydrogen is not the only solution, but it is fast becoming part of the mix. Though significant development potential for adopting hydrogen, there are still barriers ahead. High hydrogen production and logistics costs, limited infrastructure with few cost-effective delivery routes to factories, and underdeveloped technologies like hydrogen calcination will continue to limit scale-up. Still, with the carbon market expanding and global demand for green aluminium rising, for China’s aluminium companies, investing early in hydrogen may help secure a greener foothold in an increasingly climate-conscious global supply chain. Analysis by Patricia Tao Visit the Hydrogen Topic Page for more update on hydrogen

12-May-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 9 May. S Arabia's SABIC swings to Q1 net loss amid higher operating costs By Jonathan Yee 05-May-25 11:36 SINGAPORE (ICIS)–SABIC swung to a net loss of Saudi riyal (SR) 1.21 billion ($323 million) in the first quarter on the back of higher feedstock prices and operating costs, the Saudi Arabian chemicals giant said on 4 May. Ethane fuss cools for NE Asia C2, positions reassessed over Labor Day break By Josh Quah 05-May-25 20:24 SINGAPORE (ICIS)–The early May holidays probably could not have come at a more appropriate time for Asia ethylene players, with players noting that the pause in spot discussions was a good time to take stock of positions going into June shipment talks. Malaysia's Lotte Chemical Titan narrows Q1 net loss on improved margins By Nurluqman Suratman 06-May-25 14:46 SINGAPORE (ICIS)–LOTTE Chemical Titan (LCT) narrowed its first quarter (Q1) net loss to ringgit (M$) 125.7 million ($29.7 million) amid improved margins, the Malaysian producer said on 5 May. Singapore's Aster acquires CPSC at undisclosed fee By Nurluqman Suratman 07-May-25 12:33 SINGAPORE (ICIS)–Aster Chemicals and Energy has reached a sales and purchase agreement to acquire Chevron Phillips Singapore Chemicals (CPSC) through its affiliate, Chandra Asri Capital, at an undisclosed fee, the Singapore-based producer said on Wednesday. Vietnam’s economy to slow despite exports jump, lower inflation – Moody's By Jonathan Yee 07-May-25 16:16 SINGAPORE (ICIS)–Escalating trade tensions with the US are casting a shadow over Vietnam’s growth trajectory in 2025, despite continued growth in exports as well as lower inflation. China SM plagued by weak fundamentals and falling feedstock By Aviva Zhang 07-May-25 16:44 SINGAPORE (ICIS)–China’s styrene monomer (SM) prices fell sharply in April, as a result of decreasing crude oil prices and weak end-user demand expectations caused by the China-US tariff conflicts. The domestic market is likely to face headwinds from supply, feedstock and downstream sectors in May. Asia refined glycerine trades to Europe to be spurred by weak Chinese demand By Helen Yan 08-May-25 14:43 SINGAPORE (ICIS)–European demand for refined glycerine may lend support to regional glycerine producers in southeast Asia, who have been faced with persistently sluggish Chinese demand. Asia VAM plant margins to get a lift from westbound trades By Hwee Hwee Tan 09-May-25 13:08 SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) producers are eyeing improved netbacks from expansion in westbound shipments as regional trade margins narrow into the second quarter. Asia capro remains pressured by weak benzene, cautious demand outlook By Isaac Tan 09-May-25 13:11 SINGAPORE (ICIS)–Spot prices for caprolactam (capro) in Asia continued to soften in the week ending 7 May, weighed down by persistent losses in the upstream benzene market and a lack of recovery in downstream demand. China Apr export growth slows to 8.1% amid tariff uncertainty By Nurluqman Suratman 09-May-25 16:03 SINGAPORE (ICIS)–China's export growth slowed to 8.1% year on year in April from 12.4% in March in US dollar terms, underscoring the increasing impact of US tariffs amid ongoing uncertainty surrounding a potential trade agreement.

12-May-2025