Mixed plastic waste and pyrolysis oil

TORONTO (ICIS)–US President-elect Donald Trump is expected to quickly move forward with his proposed 25% tariff on all imports, including oil and energy, from Canada and Mexico after taking office on Monday 20 January. Tariffs to hurt US industry and consumers US refiners rely on Canadian crude Canada oil embargo could jeopardize national unity So far, Trump has given no indication that he may exempt Canada’s oil from the tariffs. Canada supplies more than 4 million barrels per day of oil to the US, accounting for the majority of US oil imports. The oil goes mainly to US Midwest refineries, such as BP’s Whiting plant in Indiana, that are configured to process heavy Canadian crude. The move could be felt in the US as well as Canada. IMPACTS ON US The US Midwest refiners buy the Canadian oil at a discount, a price advantage they would lose with the tariffs. The refiners will not be able to quickly secure alternative sources of heavy crude, and neither will they be able to quickly reconfigure their processing units to lighter oil. The tariffs will raise US domestic energy prices, in particular gasoline prices – running counter to Trump’s campaign promises to address inflation and reduce costs for consumers. US inflation expectations have already been rising, partly because of the planned tariffs. Higher inflation expectations could prompt the US Federal Reserve to delay further rate cuts and possibly even raise rates, slowing the economy. The imported cheap Canadian crude frees up higher-priced US oil for export to other nations, allowing the US to run a trade surplus in oil with those countries, an advantage that may be lost if tariffs are imposed. ICIS feedstocks and fuels analyst Barin Wise said that it was hard to believe that Trump would place tariffs on Canadian oil as this would cause a big problem for US refiners processing the oil, with very limited alternatives to run in their plants. "This would cause prices to rise, which is the last thing Trump would want to see," Wise said. "I suppose we will know for sure shortly." IMPACTS OF OIL EMBARGO ON CANADA There was much discussion this week in Canada about responding to the US tariffs by imposing an oil embargo or putting an export tax on oil. However, analysts noted that those counter-measures would have self-defeating impacts on Canada: Producers in oil-rich Alberta province ship oil to eastern Canada on a pipeline system that passes through Wisconsin and Michigan (Enbridge’s Line 5) before re-entering Canada near the Sarnia refining and petrochemicals production hub in Ontario. In case of a Canadian oil embargo, Trump would likely stop the flow of Canadian oil on Line 5 to destinations in eastern Canada. As a result, an embargo would not just hit the US but cause a supply squeeze and higher energy prices in Ontario and Quebec, which are home to much of Canada’s auto, aerospace and other manufacturing. An oil embargo could also give new life to the Michigan state government’s efforts to shut down Line 5, because of environmental concerns. Canada could use rail to ship oil from Alberta to eastern Canada, but this would be expensive and there is not enough railcar capacity to replace the lost pipeline volumes. Canada could import oil through Montreal and other Canadian East Coast ports to replace the Alberta oil, but that would also be expensive. Furthermore, the flow of a pipeline (Enbridge’s Line 9) supplying refineries in Ontario and Quebec goes from west to east, and not from east to west. A flow reversal would be a costly undertaking. Once the US Midwest refiners have reconfigured their refineries to lighter oil or found alternative sources of heavy crude, they may not want to go back to Canadian crude if the tariffs are lifted later. Alberta, as well as Saskatchewan, would lose substantial revenues from their oil exports to the US. Both provinces have said they oppose an embargo. CANADA MUST AVOID UNITY CRISIS However, there is much more at stake for Canada. The premier (governor) of Alberta, Danielle Smith, has warned that the country’s national unity would be jeopardized if the federal government imposes an embargo. She refused to endorse a joint statement by the federal government and 12 of Canadas 13 provincial premiers at a summit this week, on Canada’s position in facing the US tariff threat. The statement is broad and does not even mention oil, but Smith said she could not endorse it as it did not rule out an embargo or an oil export tax. “Alberta will simply not agree to export tariffs on our energy or other products, nor do we support a ban on exports of these same products,” she said on social media. Smith added that an oil embargo was also unacceptable as politicians in eastern Canada, she claimed, had blocked the Energy East oil pipeline project to ship oil from Alberta to Ontario and Quebec and to export markets. The cancellation of Energy East deprived Alberta of an important opportunity to reduce its dependence on the US market, she argued. She failed to mention, however, the Trans Mountain oil pipeline. The Liberal government under Prime Minister Justin Trudeau bought and expanded Tans Mountain by nearly 600,000 bbl/day, enabling oil shipments from Alberta to an export terminal near Vancouver. Trudeau noted this week that the government did this to the benefit of Alberta’s oil industry, with funding from all of Canada’s taxpayers. Smith has often disagreed with the federal government over oil and environmental issues. In 2022 she put in place an “Alberta Sovereignty Act” to challenge federal laws. The act has not yet been reviewed by Canada’s Supreme Court. Canada’s Globe and Mail newspaper, siding with Smith, warned against imposing an oil embargo or other oil export restrictions. Such measures would incite renewed separatist sentiment in Alberta, the paper said in an editorial on Thursday and reminded readers of the alienation caused in Alberta by former Prime Minister Pierre Trudeau’s National Energy Program (NEP) in the early 1980s. (Pierre was the father of Justin Trudeau). The NEP was seen by Alberta as an unfair attempt to redistribute its oil wealth to Ontario, Quebec and other eastern provinces. Instead of an embargo, Canada needed to use targeted tariffs that “inflict the greatest possible political damage on Mr Trump”, and it should particularly target exports from US swing states, the paper said. Longer-term, Canada needed to have a fresh look at projects such as Energy East to reduce its dependence on the US market, it added. However, Trudeau and Ontario premier Doug Ford insisted that Alberta put Canada first, ahead of its own needs. All options must be on the table, including an embargo, in case the trade conflict escalates, they said. Commentators said that even if Trump exempts Canadian oil, Canada should consider an oil export tax as it could not allow a large part of its economy being devastated by the US tariffs while Alberta does business as usual with the US. Pierre Poilievre, leader of Canada’s opposition Conservatives, has yet to state whether he would use an oil embargo as a weapon in a trade dispute. The issue of Canada’s response to the US tariff challenge is expected to be at the center of the upcoming election campaign. Elections that must be held before October but will likely be called earlier. The Conservatives are far ahead of Trudeau’s Liberals in opinion polls on the elections. Furthermore, the Liberals are in disarray. Trudeau last week announced his resignation, and the Liberals have opened the process of selecting a new leader who will then also take over as the new prime minister until the elections. Meanwhile, the federal government has prepared a list of US products to be targeted with potential retaliatory tariffs. Details will be released only after Trump moves ahead with the tariffs, officials said. According to public broadcaster CBC the list includes certain US-made plastics products. In Canada’s chemical industry, trade group Chemistry Industry Association of Canada (CIAC) this week joined the Canadian Association of Petroleum Producers (CAPP) and others in forming a new group to jointly confront the imminent US tariff threat. Canada’s chemicals and plastics industry accounts for more than Canadian dollar (C$) $100 billion (US$69 billion) in annual shipments. Nearly two-thirds of those shipments are exported to the US, with a reciprocal value returning to Canada from the US, according to Ottawa-based CIAC, which speaks for Canada’s chemical and plastics industry (US$1=C$1.44) Insight by Stefan Baumgarten Thumbnail photo of Imperial Oil’s Cold Lake oil sands site in Alberta; the Toronto-listed ExxonMobil affiliate is one of Canada’s largest oil companies, and it also produces petrochemicals. Photo source: Imperial Oil.

17-Jan-2025

HOUSTON (ICIS)–Global commodities group Trafigura, in collaboration with US fertilizer producer CF Industries, announced the completion of the first co-loaded ammonia and propane shipment operation of its kind. In early January, the Green Power medium gas carrier completed a single voyage from the US to Europe loaded with ammonia from CF Industries and with liquefied petroleum gas (LPG) in separate tanks. The co-loaded vessel project was intended in part as a demonstration of capabilities needed for the efficient and economic transport of low-carbon ammonia to supply ports that may not require a full vessel of ammonia. The companies said the ability to co-load low-carbon ammonia with LPG is one pathway to supporting the scale up in availability of low emission fuels. It was noted that low-carbon ammonia continuing to be a leading alternative fuel candidate for applications such as coal co-firing as well as supporting the marine shipping industry transition from heavy fuel oil to alternatives with a lower-carbon intensity. “We transport LPG and ammonia from the US to Europe on similar ships on a regular basis,” said Patricio Norris, Trafigura global head of ammonia and LPG. “We can improve the economics for our customers and reduce emissions with fewer voyages by safely co-loading ammonia and LPG in the same vessel.” The ammonia was loaded onto the Green Power at CF Industries Donaldsonville, Louisiana, complex and LPG was loaded into separate tanks of the vessel in Corpus Christi, Texas. CF Industries said strict segregation requirements ensured that any crossover of liquid, condensate or vapor was prevented. After crossing the LPG was discharged via a ship-to-ship operation in the Mediterranean for use in domestic heating and the ammonia was discharged at Tees Port for CF Fertilisers UK. “We appreciate the partnership we have with Trafigura as we take steps together to help prepare for demand growth of low-carbon ammonia and the expected transition of the marine shipping industry to low-carbon ammonia as a fuel,” said Bert Frost, CF Industries executive vice president. “Ammonia is safely transported around the world by vessels daily, and this voyage reinforces the flexibility we have to serve emerging low-carbon ammonia demand as we innovate shipping methods with industry-leaders such as Trafigura.” This shipment follows Trafigura’s first ship-to-ship transfer of ammonia in July 2024 for CF Industries. The fertilizer producer is currently progressing a carbon capture and sequestration (CCS) project at Donaldsonville which will enable it to produce substantial volumes of low-carbon ammonia. The CCS project is expected to start-up during 2025.

16-Jan-2025

SINGAPORE (ICIS)–The Indonesian rupiah fell to its weakest level in more than six months on Thursday following an unexpected loosening of monetary policy on 15 January to spur growth in southeast Asia's largest economy. Rupiah weakened due to US policy uncertainty under Trump 2025 GDP growth forecast trimmed to 4.7-5.5% Inflation to remain within 1.5-3.5% target in 2025 The rupiah (Rp) was extending losses on Thursday, falling to as low as Rp16,383 against the US dollar in early trade. At 07:41 GMT, the rupiah was trading at Rp16,376 to the US dollar. In a surprise move, Bank Indonesia (BI) lowered its benchmark seven-day reverse repurchase rate by 25 basis points (bps) to 5.75% on 15 January. BI also reduced its deposit facility rate by 25bps to 5.00% and lending facility rate to 6.50%. "The decision is consistent with low projected inflation in 2025 and 2026…maintaining the rupiah exchange rate in line with economic fundamentals to control inflation within the target range and the need to bolster economic growth," BI said in a statement. BI last slashed interest rates in September last year for the first time in over three years. However, it subsequently maintained a steady policy stance at later meetings to stabilize the rupiah, which had come under pressure due to uncertainty surrounding US policy under Donald Trump. "The rate cut was unexpected as BI previously emphasized that its near-term policy stance is aimed at rupiah stability amid strong US Dollar," Malaysia-based equity research firm Kenanga said in a note on Thursday. "The shift reflects a focus on boosting growth amid slowing domestic expansion, low inflation, and rising global uncertainties, including geopolitical tensions, China's weak recovery, and policy changes in the US," it said. BI is expected to maintain an easing stance to bolster economic growth, Kenanga said, but concerns regarding rupiah stability may prompt a gradual and cautious approach, particularly as the US Federal Reserve may slow its rate cuts due to the resilience of the US economy. "We expect the rupiah to gradually strengthen by the end of 2025 on the expectations of lower US policy rate and an improving domestic economy, it said. "Nonetheless, we expect two more cuts, bringing BI’s policy rate to reach 5.25% in 2025." SLOWER GROWTH PROJECTED BI on 15 January revised its 2025 GDP growth forecast to 4.7-5.5%, slightly lower than its previous projection of 4.8-5.6%. This downward revision is attributed to weaker exports, subdued household demand, and lower private investment. Indonesia is a net importer of several petrochemicals, including polyethylene (PE) and polypropylene (PP), as well as the world's largest crude palm oil (CPO) producer – a key oleochemicals feedstock. Like most in Asia, Indonesia is export-oriented economy. Its full-year exports rose by 2.3% year on year to $264.7 billion, while imports increased by 5.3% to $233.66 billion, resulting in a trade surplus of around $31 billion, official data showed. For the month of December alone, the country’s trade surplus narrowed to $2.24 billion, marking the lowest surplus since July, as exports to key markets, including China, India, and Taiwan declined. Total exports for the month were up by 4.8% year on year at $23.46bn, while imports grew at a faster rate of 11.1% to $21.22 billion. For 2024, growth is expected to settle slightly below the midpoint of the 4.7-5.5% range, reflecting softer domestic demand. Indonesia's GDP grew by 5.05% in 2023, slowing from the 5.31% expansion the previous year due to sluggish exports. BI in its statement highlighted that the global economy is experiencing growth divergence, with the US exceeding projections due to fiscal stimuli and technological investments, while Europe, China, Japan, and India face sluggish growth. The global economic growth for 2025 is expected to reach 3.2%, driven by the strong US economy, it noted. However, US policy and inward-looking trade policies are prolonging disinflation and strengthening expectations of dovish monetary policy, leading to increased global financial market uncertainty, BI said. "Global economic developments require a strong policy response, therefore, to mitigate the adverse impacts of global spillovers, maintain stability and drive domestic economic growth," it added. In terms of inflation, CPI inflation averaged 2.3% in 2024, well within BI's target range of 1.5-3.5%. Inflation is expected to remain within this target in 2025, supported by ample domestic capacity to meet demand. Focus article by Nurluqman Suratman

16-Jan-2025

SINGAPORE (ICIS)–India’s currency – the rupee – slumped to a record low in the week, pushing up both domestic and import prices of some petrochemicals in the south Asian country amid stable demand. Strong US dollar sends Indian rupee tumbling Acetone, EVA import prices jump India inflation within central bank target range The Indian rupee (Rs) is currently trading at above Rs86 against the US dollar, having shed more than 3% since the early November, when Donald Trump won the US election. At 07:10 GMT, the rupee was trading at Rs86.49. A strong US dollar and heavy outflows of short-term investments sent the currency tumbled to a record low of Rs86.9964 on 14 January, according to foreign exchange platform xe.com. India’s demand for overseas goods will likely be dented as a weaker currency makes imports more expensive. PETROCHEMICAL BUYERS TURN CAUTIOUS With import prices of several products on uptrend amid the rupee weakness, some buyers have adopted a wait-and-see attitude on markets. India is a major importer of petrochemicals including polymers. Rupee’s tumble has notably adversely affected PE Black 100 pipe import offers from Gulf Cooperation Council (GCC) and Asian sellers as buyers switch to domestic PE Natural. PE Black 100 and PE Natural are specific grades of high-density polyethylene (HDPE) used primarily for high pressure water pipes. In the recycled polyethylene (rPE) and recycled polypropylene (rPP) markets, downstream converters in India that import cargoes from northeast Asia are feeling the pinch. Fewer India-bound rPE and rPP cargoes are expected in the coming weeks, compounded by high intra-Asia freight rates. For exporters of recycled polyethylene terephthalate (rPET), meanwhile, there was no upsurge in shipments despite the rupee’s weakness. India continues to position itself as net exporter of rPET cargoes,  mainly bound to long-haul buyers in the Americas and in Europe. India’s aggressive expansion of rPET materials have posed competition to other Asian producers, particularly those in southeast Asia. In the toluene di-isocyanate (TDI) and ethanolamines markets, market sentiment is mixed. “Import and domestic prices for India TDI are unchanged from last week, but sentiment is mixed due to positive demand versus the weak rupee/US dollar rate,” a market player said. TDI is primarily used in the production of flexible polyurethane foams, which are widely used in furniture, bedding, and automotive seating. Meanwhile, after several months of decline, ethanolamines’ domestic prices moved higher, with players attributing the sudden rebound on the steep devaluation of the rupee, while demand was stable. For ethylene vinyl acetate (EVA) and acetone, import and domestic prices have spiked while demand was stable. EVA restocking momentum and discussions have been weighed down by the falling rupee due to higher cost of imports, market players said. “I have not booked yet because of the currency depreciation; import costs have gone up so it has really impacted importers… we'll wait for negotiations with suppliers,” said a distributor. For acetone, fresh import demand is being hampered by the weak rupee amid a prevailing supply surplus in the Indian domestic market. US DOLLAR TO REMAIN STRONG The US dollar remains strong on better-than-expected job growth in the world’s largest economy, while the unemployment rate fell to 4.1%, reducing the chances of interest rate cuts by the Federal Reserve in February. A weaker currency fuels inflation as it raises the cost of imported goods. “The RBI intervened extensively in the FX market last year but the appointment of a new central bank governor last month has raised market expectations of a less active intervention approach to smooth the rupee’s volatility,” Netherlands-based banking and financial service firm ING said in a note on 13 January. “The recent equity market correction, foreign institutional investor (FII) outflows and overvaluation of the Indian rupee suggest that the rupee will continue to face downward pressure in the near term,” ING added. DEC INFLATION EASES; NOV INDUSTRIAL OUTPUT UP 5% India’s inflation rate eased to a four-month low of 5.22% in December from 5.48% in the previous month, continuing its decline from 6.21% recorded in October, official data showed. The December figure was within the 2.0% to 6.0% tolerance band set by the Reserve Bank of India (RBI). Easing food prices had some analysts predicting a possible cut in RBI’s repurchase rate as early as February, but the weakness of the rupee could delay adoption of a looser monetary policy. “We maintain our base case for RBI to begin monetary policy easing via a 25 bps points reduction to the repo rate in the upcoming Feb 2025 … meeting,” Singapore-based UOB Global Economics & Markets Research analysts said in a 14 January macro note. Meanwhile, India’s factory output in November, as measured through the Index of Industrial Production (IIP), rose 5.2% year on year driven by growth in manufacturing activity and power generation. Manufacturing output growth in November accelerated to 5.8% year on year from 1.3% in the same period last year. In April to November 2025, industrial output posted a slower year-on-year growth of 4.1% from 6.5% in the previous corresponding period. India, which is a giant emerging market in Asia, is expected to post a slower GDP growth of 6.6% in the fiscal year ending March 2024, down from 7.2% in the previous year, based on RBI’s projections. Nonetheless, India is still predicted to be the fastest-growing country in Asia, according to ING, which forecasts 6.8% growth for India for the current fiscal year. Focus article by Jonathan Yee Additional reporting by Helen Lee, Clive Ong, Shannen Ng, Veena Pathare, Nadim Salamoun and Arianne Perez Thumbnail image: Indian rupee notes – 5 January 2025 (Firdous Nazir/NurPhoto/Shutterstock)

16-Jan-2025

HOUSTON (ICIS)–A ceasefire and hostage release agreement between Israel and Hamas announced on Wednesday is unlikely to have much of an impact on crude oil and chemical markets, though it could lower the geopolitical premium. The agreement was reached through diplomacy by the US, Egypt, and Qatar, and will be implemented for the most part by the incoming administration of President-elect Donald Trump, US President Joe Biden said in remarks from the White House. ICIS feedstocks analyst Barin Wise said he does not expect that the deal will have a meaningful impact on crude oil markets because the affected region is not oil producing. “This may trim the geopolitical premium in crude since it eliminates a hot spot in the Middle East,” Wise said. “However, if we look at the market today, crude is up big on other factors, more than offsetting any effect the ceasefire may have.” Crude prices surged on Wednesday largely in response to fresh US sanctions on Russia, which the International Energy Agency said could crimp global supply. Futures prices for WTI settled on Tuesday at $77.50/bbl and rose to $79.51/bbl before midday. WTI settled at $80.04/bbl on Wednesday. IMPACT ON SUEZ CANAL TRAFFIC The agreement could help with capacity constraints in commercial shipping as container ships have been avoiding the Suez Canal for more than a year because of attacks by Houthi rebels on commercial vessels. Ships have been forced to use the much longer route around the Cape of Good Hope, which tightened shipping capacity and pushed costs for shipping containers higher. The reopening of the Suez Canal would have the greatest impact on normalizing the Asia-to-Europe container shipping route, but would also affect Asia-US rates, as shipping capacity would surge once carriers were able to access the shorter route. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and 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. Thumbnail image shows a crude oil tanker. Photo by Shutterstock

15-Jan-2025

LONDON (ICIS)–In December 2024, the European bioplastics industry met in Berlin at the European Bioplastics Conference (EBC) to discuss innovations, barriers to growth and the future outlook for production capacity, demand and changes in legislation. ICIS Recycling Analyst Alexandra Tomczyk attended the conference and updates us on the current state of play for the bioplastics market. Some of the key takeaways included: Global capacities are set to grow rapidly in the next 5 years It’s unclear how the rise of bioplastic packaging will impact the goals set in Packaging and Packaging Waste Regulations Bioplastics are only one of a range of tools needed to improve the sustainability of plastics

15-Jan-2025

LONDON (ICIS)–The latest tranche of US sanctions on Russia’s oil trade could affect flows from the country, while weather-related production shut-ins in North America could also impact global supply, the International Energy Agency (IEA) said. Announced on 10 January, the US imposed aggressive new sanctions on Russia’s oil trade, naming 183 vessels, including Russia-owned tankers and the ”shadow vessels” understood to be utilized to evade trade blockades. The shadow fleet refers to ships indirectly owned or controlled by Russia through shell companies or intermediaries to evade detection and sanctions. Over 100 of the sanctioned tankers had transported Russian crude to China and/or India in 2024, according to Matt Wright, lead freight analyst at data and analytics firm France-based Kpler. "When it comes to buyers, China and India, in general, tend to steer clear of dealing directly with tankers and entities blacklisted by the US Treasury," he said in a note earlier this week. US moves “may affect oil supply flows” the IEA said in its latest oil market report, but official purchases of Russia crude will still be possible at certain price points. “Exports on non-shadow tankers remain viable for Russian oil purchased below price caps,” the IEA said. Further complicating the early 2025 supply picture is scope for production constraints in the US in the event of extreme weather, with a winter freeze last year cutting output in the US and Canada by over 1.8 million barrels/day. A smaller drop is expected this year, but there could still be scope for weather in the region to tighten supplies, the IEA said. Potential for additional US sanctions on Iran-origin oil to be introduced by the new administration could also hit global supplies, the agency added, with sentiment already driving some players to pill back from oil supplies from Iran and Russia. “There is heightened speculation that the incoming US administration will take a tougher stance on Iran's oil exports, compounding the impact of US Treasury sanctions on Tehran,” the IEA said. 1.5 million barrels day of additional supply is expected from non-OPEC countries this year , and total output growth of 1.8 million/barrel day against 1.05 million barrels/day demand growth, according to the agency. While supply growth is likely is likely to be sufficient to cover demand, the fresh Russia sanctions could provide more headroom for OPEC+ signatory countries to release more barrels into the market after delaying the end dates for some production cuts. OPEC, also releasing its latest market predictions on Wednesday, left 2025 demand growth forecasts unchanged at 1.4 million barrels/day, and non-OPEC+ supply growth projections at 1.1 million barrels/day amid global GDP expansion of 3.1%. The cartel projects that demand and non-OPEC supply growth will remain around 2025 levels next year. Focus article by Tom Brown Thumbnail photo: An oil pipeline running through Alaska, US (Source: Shutterstock)

15-Jan-2025

SINGAPORE (ICIS)–Chinese oil company CNOOC and Anglo-Dutch energy major Shell have taken a final investment decision (FID) to expand their joint petrochemical complex in Daya Bay, Huizhou in southern China. The expansion by their joint venture firm CNOOC and Shell Petrochemicals Co (CSPC)  is expected to be completed in 2028, Shell said in a statement. Financial details of the investment were not disclosed. The expansion will include a third cracker with a planned capacity of 1.6 million tonne/year of ethylene; as well as associated downstream derivatives units producing chemicals including linear alpha olefins It will also include a new facility which will produce 320,000 tonnes/year of high-performance specialty chemicals such as polycarbonates (PC) and carbonate solvents. CSPC is a 50-50 joint venture owned by Shell Nanhai BV, a subsidiary of Shell, and CNOOC Petrochemicals Investment Ltd, an affiliate of CNOOC. (Recasts first two paragraphs for clarity)

15-Jan-2025

HOUSTON (ICIS)–The rally in crude markets could get continued support from cold weather, sanctions and a recovery in demand from China, the CEO of US crude producer Hess said on Tuesday. Oil markets are important to the US chemical industry because prices for crude influence prices for several commodity petrochemicals. Since the first day of trading in 2025, front-month Brent crude futures have risen by nearly 7%. Oil demand could be several hundreds of thousands of barrels of oil a day higher because of the cold winter, said John Hess CEO of Hess and chairman of the American Petroleum Institute (API), an oil trade group. He made his comments during API's State of American Energy presentation. A further rise in oil demand could come from continued economic growth in the US and a recovery in China. "They are going to do everything they can to stimulate their economy," he said "I would not bet against China for two years in a row." During the end of 2024, Hess suspects that oil demand shrank in China because of the slowdown in the nation's economy. The third leg of support for oil markets will come from geopolitical tensions, Hess said. On 10 January, the US Department of the Treasury introduced more sanctions on vessels that carry Russian oil. "The initial numbers that are out there are up to a million barrels a day of impact of supply that might have trouble getting into the market for Russia," Hess said. "There could be another 1 million barrels a day from Iran." If sanctions and other factors cause a large enough spike in oil prices, Saudi Arabia and other members of OPEC have spare capacity that they can use to stabilize the oil market, he said. PROSPECTS FOR PERMIT REFORM, EXTENDING TAX CUTSSenator John Thune (Republican, South Dakota) said Congress may opt to address energy, military spending and border security in one bill and extending tax cuts in a second bill. The tax bill will make permanent nearly all of the 2017 Tax Cuts and Jobs Act (TCJA). This was a campaign promise made by Donald Trump, who will be sworn into office on 20 January. WAYS TO ROLL BACK EV PERKSThune said Congress could use the Congressional Review Act (CRA) to repeal a waiver that California needed to adopt its Advanced Clean Car II (ACC II) program, which gradually phased out sales of vehicles powered by internal combustion engines. The California program is a lynchpin for similar programs adopted by 12 other states and territories. If California loses its waiver, then those other states and territories cannot adopt their programs. The fate of the ACC II program could become a legal dispute over state versus federal power that would need to be settled in court. Trump's predecessor, President Joe Biden, introduced two other auto programs that critics say are so strict, they act as effective bans on ICE vehicles. The Environmental Protection Agency's (EPA's) recent tailpipe rule, which gradually restricts emissions of carbon dioxide (CO2) from light vehicles. The Department of Transportation's (DoT's) Corporate Average Fuel Economy (CAFE) program, which mandates stricter fuel-efficiency standards. Thune doubts that Congress can use the CRA to roll back the tailpipe rule. Nonetheless, Trump may find other ways to scale back or repeal the tailpipe rule and the stricter CAFE standards during his first days in office. Even though EVs make up a small share of overall US auto sales, they are important to the chemical industry because they consume more plastics than their counterparts that are powered by internal combustion engines. EVs are also creating demand for new polymers and fluids that can meet their unique material challenges. Thumbnail shows snow. Image by Xinhua/Shutterstock

14-Jan-2025

HOUSTON (ICIS)–On his first day in office as president, Donald Trump could repeal the pause on permits for new liquefied natural gas (LNG) terminals and automobile policies that are so restrictive, critics say they favor electric vehicles (EVs) over those powered by internal combustion engines (ICE), an oil and gas trade group said. Repealing those polices are among the goals of the American Petroleum Institute (API), and they would have indirect effects on the US chemical industry. LNG exports affect US chemical markets because they support prices for natural gas by providing another source of demand. Natural gas prices influence those for ethane, the main feedstock that US crackers use to make ethylene. EVs consume more plastics than their counterparts that are powered by internal combustion engines. EVs are also creating demand for new polymers and fluids that can meet their unique material challenges. REMOVING THE HALT ON NEW LNG PERMITSThe US has effectively frozen the issuance of new LNG permits since January 2024, when President Joe Biden issued the order. The freeze applies to terminals that will export LNG to countries that lack free trade agreements with the US. "I think the LNG pause is something that they can address on day one," said Mike Sommers, API president. He made his comments in a briefing earlier in the week. Trump takes office on 20 January. If Trump removes the freeze, it would not automatically lead to a flood of new permits for LNG terminals. US companies may be reluctant to build more terminals when global LNG capacity is expected to increase. Rising US costs for material and labor have made LNG projects less attractive. Legal challenges could arise during the permitting process. REMOVING EFFECTIVE RESTRICTIONS ON ICE VEHICLESTrump could ax two Biden automobile policies his first day in office, Sommers said. The Environmental Protection Agency's (EPA's) recent tailpipe rule, which gradually restricts emissions of carbon dioxide (CO2) from light vehicles. The Department of Transportation's (DoT's) Corporate Average Fuel Economy (CAFE) program, which mandates fuel-efficiency standards. The group also wants Trump to withdraw a waiver that the federal government granted to California, which allowed the state to adopt a program that will gradually phase out ICE vehicles. California's program, called Advanced Clean Cars II (ACC II), is the lynchpin for similar programs adopted by 12 other US states and territories. If Trump can successfully withdraw the waiver, then it would prevent California and the 12 other states and territories from adopting ACC II style programs. The fate of the ACC II program could become a legal dispute over state versus federal power that would need to be settled in court. OTHER POLICY GOALS OF THE APIEVs and LNG permits make up two of the five policies that the API will promote to the new administration. The other three include permitting reform, tax policy and issuing a new five-year offshore leasing program. Under these five policy goals, the API has outlined more than 70 actions that the administration could take, many of them possible on Trump's first day in office. Others may require acts from Congress. This could be challenging because Trump's party holds a two-seat majority in the lower legislative chamber of the US. API TO DISCOURAGE TARIFFS ON CANADIAN CRUDEPrior to taking office, Trump had threatened to impose tariffs of 25% on imports from Canada. Trump did not indicate that he would exclude Canada's sizeable shipments of crude oil. In 2023, Canadian oil made up nearly 60% of all crude imported by the US, according to the Energy Information Administration (EIA). Canadian oil is heavier than that produced in the US, so the two grades complement each other in the nation's refineries. "40% of the American refinery kit is not tooled to refine the kind of oil that is found in the US," Sommers said. "We're confident that the Trump administration understands the importance of that kind of trade, and we're going to work with them as they consider their trade policy over time," he said. PIECEMEAL PRESERVATION OF IRAThe API would like the government to preserve some of the tax credits created by the Inflation Reduction Act (IRA). Those include the carbon capture tax credits under Section 45Q and the hydrogen production tax credits under Section 45V. Many API members are developing carbon capture and hydrogen projects. Meanwhile, it would like the government to repeal the IRA's methane fee.

14-Jan-2025