Polyethylene (PE)

SINGAPORE (ICIS)–Malaysia's revised sales and services tax (SST) framework officially takes effect on 1 July, with the expanded scope now set to include a 5% tax on an extensive range of petrochemical products, including polyethylene (PE) and polypropylene (PP). Critical raw materials for downstream industries affected Capital expenditure items like machinery now taxed Malaysian industry body calls for further delay in implementation The government had first announced the revision of items subject to the sales tax on 18 October 2024, as part of its fiscal consolidation strategy under the 2025 budget. Under the updated framework, more than 4,800 harmonized system (HS) codes will now fall under the 5% sales tax bracket. Goods exempted from the updated sales tax include specific petroleum gases and other gaseous hydrocarbons that are currently under HS code 27.11. These include liquefied propane, butanes, ethylene, propylene, butylene, and butadiene. In their gaseous state, the list includes natural gas used as motor fuel. The measure, aimed at broadening the country's tax base and increasing revenue, was originally slated to begin on 1 May, but was delayed for two months after manufacturers urged policymakers to refrain from adding to their financial burden. The July revision of Malaysia's sales tax and the expansion of the service tax scope involve several key changes. The sales tax rate for essential goods consumed by the public will remain unchanged, while a 5% or 10% sales tax will be applied to discretionary and non-essential goods. The scope of the service tax will be broadened to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services. This includes critical raw materials for various downstream industries, from plastics and packaging to automotive manufacturing. Previously, many of these materials were zero-rated under the SST. The Federation of Malaysian Manufacturers (FMM) has publicly criticized the decision, calling it "highly damaging to industries” in a statement released on 12 June. According to estimates by the Ministry of Finance, the SST expansion is expected to generate around ringgit (M$) 5 billion in additional government revenue in 2025. “Although this may support the government’s fiscal objectives, the additional tax burden will be largely borne by businesses and has serious implications for operating costs, investment decisions, and long-term business sustainability,” FMM president Soh Thian Lai said in a statement. Soh highlighted that with this expansion, around 97% of goods in Malaysia's tariff system will now be subject to sales tax, representing a significant departure from a previously narrower tax base, to one where nearly all categories including industrial and commercial inputs are now taxable. Under the new sales tax order, 4,806 tariff lines are now subject to 5% tax, covering a wide range of previously exempt goods, according to the FMM. These include high-value food items, as well as a broad spectrum of industrial goods, such as industrial machinery and mechanical appliances, electrical equipment, pumps, compressors, boilers, conveyors, and furnaces used in manufacturing processes, it said. The 5% rate also applies to tools and apparatus for chemical, electrical, and technical operations, significantly broadening the range of taxable inputs used in production and operations. “The expanded scope now places a direct tax burden on machinery and equipment typically classified as capital expenditure. This includes items critical to upgrading production lines, automating processes, and scaling operations,” Soh said. The FMM "strongly urges the government to further delay the enforcement of the expanded SST scope beyond the scheduled date of 1 July", until the review is complete, and industries are ready. They also calling for a broader exemption list, especially for capital expenditure items like machinery and equipment, and a re-evaluation of including construction, leasing, and rental services, which they warn will "increase operational expenses and are expected to cascade through supply chains." “We are deeply concerned and caution that the untimely implementation of the expanded scope of taxes will exert inflationary pressure, as businesses already grappling with rising costs … may have no choice but to pass these additional burdens on to consumers,” the FMM added. The FMM has urged the government to postpone the implementation, citing insufficient lead time for businesses to adapt and calling for a comprehensive economic impact assessment. Malaysia’s manufacturing purchasing managers’ index (PMI) continued to contract in May, with a reading of 48.8, according to financial services provider S&P Global. Beyond the direct sales tax on goods, the revised SST also introduces an 8% service tax on leasing and rental services for commercial or business goods and premises. This could further compound cost burdens for capital-intensive sectors, including parts of the petrochemical industry that rely on leased machinery and industrial facilities. Focus article by Nurluqman Suratman Thumbnail image: PETRONAS Towers, Kuala Lumpur (Sunbird Images/imageBROKER/Shutterstock)

17-Jun-2025

HOUSTON (ICIS)–Arrivals of container ships at the busy US West Coast ports of Los Angeles and Long Beach (LA/LB) are slowly returning to normal after the trade war between the US and China slowed cargo movement between the two nations, according to the Marine Exchange of Southern California (MESC). Kip Louttit, MESC executive director, said the registration process for vessels bound for LA/LB projects a slight uptick in the coming two weeks. Container ships on the way to LA/LB averaged 58.9/day in January, which fell to 47.2/day in May amid trade tensions between the US and China. The average has climbed to 51.8/day over the first 14 days of June, and 52.1/day over the past 17 days. “This is an indicator of a slight increase in ship arrivals over next 1-2 weeks,” Louttit said. Louttit said there are 17 container ships scheduled to arrive at the twin ports over the next three days, which is normal. Container ships at berth at the ports of LA/LB dipped from an average of 19.4/day in April to 15.6/day in May. The average was 12.3/day over the first six days of June but jumped to 15.1/day for all 14 days in June, with 21 at berth on Friday and 14 at berth on Saturday. Maritime information specialists at MESC said there are 49 container ships “blank sailing” that will skip Los Angeles or Long Beach through 1 August, which is two more than the previous week. Blank sailings are when an ocean carrier cancels or skips a scheduled port call or region in the middle of a fixed rotation, typically to control capacity. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said capacity is returning to the transpacific trade – up 28% since mid-May – as carriers react to shippers rushing cargo during the 90-day window of lower tariffs. “This increased capacity and a slowing in the cargo rush should see a return of the downward pressure on spot rates we saw during Q1 prior to the ‘Liberation Day’ tariff announcement,” Sand said. Rates for shipping containers from east Asia and China to the US are at 10-month highs. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks.

16-Jun-2025

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The global petrochemical industry is already battling a deep, structural downturn. While we've seen no impact on already dire polyethylene (PE) and polypropylene (PP) margins in northeast and southeast Asia from the trade war, the Israel-Iran crisis presents a new set of risks for polyolefins and all the other products. Today, I want to share a first pass at three headline scenarios for how this latest crisis could impact the global economy, and by extension, petrochemicals – Scenario 1: The Best-Case – De-escalation and Containment. International mediation leads to a swift reduction in direct confrontation. Retaliatory actions are limited, avoiding critical infrastructure. Diplomatic channels resume, potentially reigniting broader regional security talks. Oil Prices: Rapid return to pre-crisis levels; spikes short-lived. Inflation: Minimal sustained impact; stable energy costs. Supply Chains: Minor, localised disruptions; vital Strait of Hormuz remains secure. Investment: Quick rebound in confidence; risk assets recover. Scenario 2: The Medium-Case – Protracted Tensions and Proxy Conflicts Averted full-scale direct war, but high tensions persist. The region sees intensified "shadow wars" and proxy conflicts. Occasional targeted strikes or cyberattacks, but no full escalation. Diplomatic efforts are slow and largely ineffective. Oil Prices: Elevated and volatile due to persistent geopolitical risk. Inflation: Sustained upward pressure as higher energy costs feed into all sectors. Supply Chains: Increased shipping insurance, minor rerouting; higher logistics costs. Investment: Increased risk aversion; volatile equity markets; flight to safe havens. Scenario 3: The Worst-Case – Full-Scale Regional War & Strait of Hormuz Closure Direct military conflict spirals out of control, potentially drawing in other global powers. Iran close or severely disrupts the Strait of Hormuz. Oil Prices: Big surge to long-term historic highs. Inflation: Hyperinflationary pressures globally; severe cost-of-living crisis. Supply Chains: Widespread and severe paralysis of global trade; blockades, severe shortages. Global Recession/Depression: High probability of a severe global economic downturn. Financial Markets: Extreme volatility; sharp declines; systemic crisis risk. Conclusion: Understanding scenarios is crucial for strategic planning. Even "medium" level tensions will have significant, widespread consequences. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

16-Jun-2025

HOUSTON (ICIS)–Arrivals of container ships fell in May at the US West Coast ports of Los Angeles (LA) and Long Beach (LB) amid a trade war between the US and China but has shown a slight uptick in June while the two nations continue to negotiate a trade deal. Kip Louttit, executive director of the Marine Exchange of Southern California (MESC), said the ports of LA/LB, said May container ship arrivals were at 5.0/day, slightly below the 5.7/day that was the average prior to the pandemic. Through the first five days of June, arrivals are at 5.6/day, which is still slightly below the pre-pandemic norm. Import cargo at the nation’s major container ports is expected to surge in the near term amid a pause in reciprocal tariffs between the US and China, according to the Global Port Tracker report released today by the National Retail Federation (NRF) and Hackett Associates as shown in the following chart. NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said this is the busiest time of the year for US retailers as they enter the back-to-school season and prepare for the fall-winter holiday season. “Retailers had paused their purchases and imports previously because of the significantly high tariffs,” Gold said. “They are now looking to get those orders and cargo moving in order to bring as much merchandise into the country as they can before the reciprocal tariff and additional China tariff pauses end in July and August.” Gold said many retailers suspended or canceled orders after US President Donald Trump announced a 145% tariff on China in April but have resumed imports after tariffs were reduced to 30% and a 90-day pause that will last until 12 August was announced. The higher reciprocal tariffs on other nations have also been paused until 9 July as the administration negotiates with those countries. ASIA-US RATES SURGE Rates for shipping containers from Asia to the US have spiked over the past couple of weeks – and have almost doubled over the past four weeks – as demand has surged ahead of the possible reinstatement of tariffs while capacity remains tight. Rates from supply chain advisors showed drastic increases over the past two weeks, and weekly rates from online freight shipping marketplace and platform provider Freightos came out today with Asia-USWC rates at $5,488/FEU (40-foot equivalent unit) and at $6,410/FEU to the East Coast. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page Thumbnail image shows a container ship. Photo by Shutterstock

10-Jun-2025

SAO PAULO (ICIS)–Mexico is well-positioned to benefit from the global trade reorganization started by the US as it takes a stronger stance against China and replicate the resounding success of the 1990s, when the first North America free trade agreement (FTA) NAFTA was signed, the president of the country’s chemicals trade group ANIQ said. José Carlos Pons, who is also the CFO at Mexican chemicals producer Alpek, said Mexico, the wider North America and the world at large still face some persistent Chinese overcapacity of industrial goods which are flooding markets, but said North America together would face that threat in a better position. Pons has just started his tenure as ANIQ president at a time when the trade group is navigating shifts in trade policies as well as domestic issues such as the potential for – or lack of – nearshoring as well as policy issues in which companies fully disagree with the left-leaning government of Claudia Sheinbaum. Pons did not want to enter into much detail about the latter, however, because as he explained in the first part of this interview, ANIQ’s lobbying strategy is to now go “hand in hand” with the government. According to him, Sheinbaum is honestly trying to fix the beleaguered, state-owned energy major Pemex, which would at the same time greatly help chemicals raw material supply reliability. NAFTA, USMCA, SOMETHING ELSE? Soon after taking office in January, US President Donald Trump imposed hefty import tariffs on Mexico and Canada because, he said, the two countries should do more on migration and fentanyl trade – a powerful drug which has caused havoc across the US. However, when the tariffs were about to kick off, the US announced it was pausing them for one month. It was a timely decision for Mexico: the country is almost completely dependent on the fate of the US economy, as it exports around 80% of its output north of the border. That dependance is what makes Corporate Mexico wary of even contemplating a break-up of the now called USMCA FTA, the successor to NAFTA which Trump negotiated during his first term. Pons is optimistic in all fronts – home front and external front – as a relatively young executive who arrives to the helm of ANIQ in some of the most challenging times for Mexico in the past three decades. "I do feel on the side of the optimists. All this issue of tariffs and economic reorganization of imports and exports in the world – if the US plays a strong role against Asia, as I believe it will end up playing, then what can happen is that Mexico is super well-positioned for greater investments," said Pons. “Mexico has natural advantages in serving the US market. Today in many of the industries we are a very relevant supplier to the US. We are connected by pipeline, so to speak, to the US. When there is a competitive supply that Mexico has, Mexico remains the most convenient place to source for the US – it is next door.” It has been widely reported that USMCA renegotiations, for which the deadline is 2026, are in full swing and both officials from Mexico and Canada have recently said they are hopeful USMCA will be renegotiated and revived, ultimately making North America stronger versus other big economies. "I think that commercial logic and economic logic will prevail. Trump, if he understands anything very well, it is economic logic and from that point of view I believe that the logic of Canada-US-Mexico integration will stand out. The last renewal of the free trade agreement was positive in general, with no major changes," said Pons. "In fact, I think we put some order on some of the issues, some of them affecting chemicals, so from that point of view it has been favorable for us. We are understandably focused on the short-term news, but if we take a slightly longer-term view, I think it [current renegotiations] can end up benefitting the region.” Following on with the soft lobbying ANIQ is deploying, he praised the cabinet for keeping a cold head before adversity and having gone through momentous crisis points relatively unscathed. Moreover, Sheinbaum’s popularity ratings are almost unheard of in democracies: around 80% of Mexicans have a positive view of her. “I perceive a Mexican government that is calm, serene, looking more at the long term than the short term, not reacting hastily to attacks, as if taking certain pauses. If you remember, after some tariffs were imposed on Mexico in February, Sheinbaum said the Mexican government would 'answer in a week' – they purposefully wanted to give space for conversations to happen,” said Pons. "I think it has been handled well, it has been handled with composure and I think that is just what is needed." When pressed about domestic policy issues including a judicial reform which has sparked fears among most experts in Mexico and abroad, because it could weaken the rule of law rather than strengthen it, Pons was cautious but conceded companies are concerned: without legal certainty, investments come harder. "One of the important work areas is legal certainty and we are worried as an industry about the change that could occur to legal certainty with this change," he said. "I think we have to understand exactly the implications of this judicial reform, of the new judges we are going to have." CHINA FORMIDABLE RISEOn Chinese competition, which has hit chemicals hard as there is oversupply for the main petrochemicals and polymers, Pons did say the scale of overcapacity affecting global markets is huge, unheard of, and conceded there are still many question marks surrounding how this will end – and when. "We have seen that in practically all sectors there is excess capacity. China has been very aggressive. For instance, take polyester textile fibers as an example – if today the whole world closed its production capacity and China maintained its capacity, there would still be 30% excess capacity," said Pons. He mentioned polyethylene terephthalate (PET), which happens to be one of the main products which Alpek manufactures and he oversees as CFO. "It is no surprise that most countries already have trade protections against China. For example, in one of the businesses I participate in at the company, PET has a 105% antidumping duty [ADD] in the US against China. Mexico just decreed an antidumping duty against PET as well. So, it is very clear that all governments understood that there is an intention that is not commercial, not fair trade, which is what we seek as an industry." Pons did not think the West at large – or, more specifically, market, democratic economies – had been caught off-guard by the rapid ascent of China in the industrial goods global league. "In fact, what much of the industry I represent has been doing is improving its competitiveness. There are many investments going on. Mexico's companies are investing $1.5 billion in maintenance and competitiveness. "All those projects and millions of dollars are focused on improving and putting us on par in competitiveness against the Chinese," said Pons. The first part of this interview was published on 6 June on ICIS news, under the headline "Mexico’s Pemex turnaround key to unlock $50 billion chemicals investments – ANIQ". Click here to read it.  Front page picture: Facilities operated by Mexico's polyethylene (PE) producer Braskem Idesa  Source: ICIS Interview article by Jonathan Lopez

09-Jun-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 6 June. Europe HDPE spot dragged sub-€1,000/tonne by US offers as US Q1 imports ride highSpot prices for high-density polyethylene (HDPE) in Europe have fallen below €1,000/tonne as local buyers receive highly discounted US offers against a backdrop of high imports from the US in the first quarter of 2025 and gaping spreads between the regions. Higher tariffs on Russia embolden European producers to lift nitrate pricesEmboldened by the European Parliament’s decision to go ahead with higher import duties on Russian fertilizers, nitrate producers in Europe have raised prices despite strong objections from the farming community. Europe pharmaceutical IPA slightly softer, stable demand despite peak seasonEuropean spot pricing for premium pharmaceutical grade isopropanol (IPA) has softened slightly, while prices for technical and cosmetic grades are stable amid steady conditions. European paraxylene contract price for April, May settles following contentious negotiationsEurope paraxylene (PX) contracts for April and May have been finalized in a double settlement. LyondellBasell enters exclusive talks for Europe asset divestmentsLyondellBasell has entered into exclusive talks with an industrial investor for the sale of four European production sites, slightly over a year after launching a review of its asset base in the region. Asia-Europe shipping prices jump on US-China trading windowContainer prices for Asia cargoes to Europe jumped sharply week on week amid a general surge in freight costs as players look to lock down shipments from China to the US during the pause in reciprocal tariffs between the countries. Limited demand for Europe PET mitigates impact of higher freight ratesDemand for European polyethylene terephthalate (PET) has been blighted by poor weather conditions, economic apathy and significant import arrivals. LyondellBasell Europe divestment assets had lost money for years – CEOThe assets LyondellBasell has entered exclusive talks to sell to private equity investor AEQUITA had been cash negative on average to the company over the last five years, with CEO Peter Vanacker welcoming a “clean exit” from the businesses.

09-Jun-2025

SINGAPORE (ICIS)–Tariff concerns and ample supply continue to exert pressure on petrochemical markets in both Asia and the Middle East, with regional demand staying weak, with consumption in India unlikely to pick up until September. Aromatics trade flows shift amid tariff uncertainty Monsoon season weighs on India demand GCC producers upbeat on Syria AROMATICS UNDER PRESSURE AMID TARIFFS In the aromatics market, supply is expected to be tight as increased tariff uncertainties continue `to disrupt traditional trade flows. Mixed xylene (MX) and downstream paraxylene (PX) were in steep backwardation, where in spot prices are higher than futures prices, amid freight constraints and high US demand. Benzene, which closely tracks falling crude prices, continued to underperform its aromatics peers. Benzene from South Korea has not been flowing into the US and were mostly going into China, market sources said. South Korea is a major exporter of aromatics products. Its overall petrochemical shipments in May declined by 20.8% year on year, weighed down by sharp falls in upstream crude prices. For solvent grade mixed xylenes, South Korea exported last month an estimated 50,696 tonnes, of which around 27% was destined for the US, according to ICIS data on 2 June. Strong exports to the US coincide with the start of the summer driving season in the northern hemisphere, when demand for octane boosters like MX and toluene, which goes into gasoline blending, picks up. This strong US gasoline demand expectation is supporting the supply tightness, despite weaker downstream activity in China. Asia’s aromatics tightness is likely to persist through June-August, as market participants adapt to tariff policies and freight cost pressures from front-loading following a trade war truce between the US and China. The US’ 90-day suspension on “reciprocal” tariffs on most countries except China ends on 9 July. A potential escalation of the US-China trade war after the 90-day truce could intensify uncertainties, though a resolution might stabilize flows by late Q3. For shipping, market players are expecting freight rates to start to drop again in July-August. MONSOON ONSET DEPRESSES INDIA PLASTICS DEMAND Prices for plastics in India are under pressure from the monsoon season, as well as more supply coming from China, market sources said. This year’s monsoon season, which typically runs from June-September, arrived eight days early and is projected to bring above-average rainfall, said the India Meteorological Department (IMD) on 24 May. During India’s monsoon period, manufacturing activity tends to moderate, especially the packaging sector as well as the food and beverage sector, weakening end-product demand. Concurrently, domestic supply is ample, pushing down prices for Indian polyethylene (PE), polypropylene (PP), high-density polyethylene (HDPE) and low-density polyethylene (LDPE). But post-monsoon season from September, demand is likely to pick up as agriculture and construction sector activity rises and the harvesting season commences. The festive season, which includes the Diwali (Hindu Festival of Lights) running from 18-23 October, is likely to increase demand for end-products such as plastics, hence, boost production leading to the holiday. Demand for chemicals such as PE, PP and PVC and synthetic rubbers is expected to improve after September. India’s strong domestic consumption would shield it from the US-China tariff war, whose impact on the south Asian nation’s petrochemical trades is mostly on sentiment and not on actual demand. China, however, has tried to push more material to India with cut prices amid the US-China trade war, as domestic demand in the world’s second-largest economy remained weak. The country is already redirecting PE and PP to Africa and India to offset reduced US access. But this offsetting has eased temporarily due to freight costs more than doubling in recent weeks. GCC SEES RENEWED OPPORTUNITY IN SYRIA In the Middle East, Syria is opening up following a regime change and the consequent lifting of sanctions by both the US and EU. A cargo of wheat arrived at the Syrian port of Tartous for the first time in around 11 years, according to news reports. The opening of Syria’s market – after years of civil war and international sanctions – bodes well for GCC petrochemical producers. The GCC bloc consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Suppliers are looking to increase their trades with Syria, as converters in the country begin running their plants at higher rates, with the possibility of new plants to be built. On 29 May, the Syrian government inked a $7 billion strategic Memorandum of Understanding (MoU) with a consortium of companies led by Qatar’s UCC Holding to develop power generation projects. More such agreements, particularly as trade increases, could pave the way for increased demand in the country for chemicals and chemical products, after civil war disrupted life in Syria since 2011. Focus article by Jonathan Yee Additional reporting by Aswin Kondapally, Nadim Salamoun, Jasmine Khoo, Samuel Wong, Melanie Wee, and Angeline Soh. Thumbnail image: At Qingdao Port in east China's Shandong Province, 4 June 2025. (Shutterstock)

09-Jun-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 6 June. China factory output contracts anew despite US-China tariff pause By Jonathan Yee 02-Jun-25 14:34 SINGAPORE (ICIS)–China’s official manufacturing purchasing managers’ index (PMI) in May remained below the expansion threshold of 50.0 but was up from the previous month amid a pause in the US-China tariff war. INSIGHT: Will feedstock optimization be enough to survive Asia C2 oversupply? By Josh Quah 03-Jun-25 12:00 SINGAPORE (ICIS)–Investing into feedstock slate projects is one survival strategy gaining steam among players – and was still very much in the conversations on the side lines of the APIC 2025 conference. S Korea faces economic crossroads as it heads to polls amid political turmoil, tariffs By Jonathan Yee 03-Jun-25 15:25 SINGAPORE (ICIS)–South Korea is at a crossroads as it heads to the polls on Tuesday, six months after ex-President Yoon Suk Yeol’s martial law declaration led to his removal from office, resulting in political turmoil that has been compounded by trade uncertainties and the tariffs imposed by the US on most of the world. INSIGHT: Asian manufacturing stutters in May as tariff headwinds continue By Nurluqman Suratman 04-Jun-25 11:00 SINGAPORE (ICIS)–Asia's factories largely remained under pressure in May, as subdued global demand and persistent uncertainty surrounding US trade policies continued to bite, according to the latest purchasing managers' index (PMI) data. S Korea final Q1 GDP shrinks 0.2% on quarter amid US tariffs By Jonathan Yee 05-Jun-25 12:40 SINGAPORE (ICIS)–South Korea’s revised real GDP shrank by 0.2% on-quarter, unchanged from advanced estimates in April, the first on-quarter contraction in nine months, central bank data showed on Thursday. China ethane crackers face feedstock challenge as US restricts supply By Fanny Zhang 05-Jun-25 16:43 SINGAPORE (ICIS)–Operations at China’s ethane crackers that rely solely on US supply will likely be disrupted, at least in the short term, as the US restricts exports of the feedstock gas. INSIGHT: Faced with intensifying ADDs, Asia’s PET producers mull options to stay in the industry By Judith Wang 06-Jun-25 10:00 SINGAPORE (ICIS)–Facing intensifying anti-dumping duties (ADDs) in key markets, Asian polyethylene terephthalate (PET) producers are having to find ways beyond simply slashing offers to stay in the business. Malaysia's PETRONAS to cut 5,000 jobs by yearend By Nurluqman Suratman 06-Jun-25 11:10 SINGAPORE (ICIS)–Malaysian state energy giant PETRONAS is shedding 10% of its workforce by the end of the year to navigate challenging operating conditions, primarily driven by falling crude prices. Mideast polyols to face pressure post-Eid amid softer costs, demand By Isaac Tan 06-Jun-25 14:52 SINGAPORE (ICIS)–Middle Eastern import prices for polyether polyols are likely to remain under pressure after the Muslim festival of Eid ul-Adha, weighed down by weaker feedstock costs in China and seasonally subdued downstream demand.

09-Jun-2025

SAO PAULO (ICIS)–Mexico’s chemicals sector is ready to potentially invest $50 billion in the next decade if key challenges are addressed, including performance at state-owned energy major Pemex, according to the president of trade group ANIQ. Jose Carlos Pons, who is also the CFO of Mexican chemicals producer Alpek, said ANIQ is in constant contact with the Mexican government about potential projects private companies and Pemex could jointly implement, some of them related Pemex assets in petrochemicals which are idled or running at low capacities. Pons, who was appointed ANIQ's president in May, said that the $50 billion in investments would mean the chemicals industry could double its contribution to GDP from 2% to 4.5%. He said ANIQ is in contact with the ministries of energy and economy (Secretaria de Energia and Secretaria de Economia, respectively) about these plans. The two ministries, as well as Pemex, had not responded to a request for comment at the time of writing. IT IS (ALMOST) ALL ABOUT PEMEX Pemex, which is the largest and key supplier of raw materials to the Mexican chemicals industry, has for years suffered performance problems, with output dwindling below 2 million barrels/day, despite targets to surpass that threshold, and having become the most indebted oil major with obligations of around $100 billion. However, ANIQ puts many hopes in the new administration under Claudia Sheinbaum and in what it sees as an honest intention to turn around Pemex, adding that the trade group wants to go “hand in hand” with the government to spur the investments in petrochemicals. The cabinet has announced plans to cut costs at the major as well as petrochemicals and fertilizers expansions at the company. However, potential and ambitious investment plans – both from Pemex itself and private companies – hinge on several critical factors. “If we were able to turn Pemex around, by improving its supply of key raw materials; if we were able to work on the energy side and achieve competitiveness; if we were able to create the infrastructure so that we wouldn't depend so much on imports; and if we simplified our country's administration, then there could undoubtedly be that potential [of $50 billion chemicals investments],” said Pons. Out of those $50 billion, Pons said that around two-thirds would go primarily to maintenance investments to improve Pemex's petrochemicals operational capacity. "Today, we have a great opportunity for Pemex to operate its plants at greater capacity, and the way to achieve that goal would be to give the plants operational reliability. Ensuring that the different parts of each of the plants have operational reliability will ultimately increase the output of those plants," she said. "Pemex has now an interesting opportunity. Throughout all the areas where it operates, without a doubt, this administration and the previous one have dedicated resources to turning it around. It's very important to us that they're doing this." Efforts to turn around Pemex, however, have so far failed. The previous administration by Andres Manuel Lopez Obrador started its tenure with a target for output to surpass 2 million barrels/day target, which it finally ditched. Some analysts have said Pemex’s woes are too deep and make the company’s survival very difficult. Others, however, think the major is ‘too big to fail’, and therefore will continue to be bailed out by the Treasury as it has been the case for years. "Pemex is very important to us, so we don’t even want to consider a Pemex that fails. Today, it provides us with gas, with many raw materials. The situation is complex, and the fact that it is among the priorities reflects the government's intentions. But these huge titans take time, but with the right investments and decisions [it can happen],” said Pons. “That's why we want to work hand in hand with the government. The project is so large that we all need to get involved. What we want is to tell them and indicate what we think the priorities are and where we want to help them." Pons said ANIQ has established working groups with both the Ministry of Energy and Ministry of Economy to advance these objectives, with regular conversations. "We want to understand in greater detail what the government's expectations are and under what conditions they are expecting them to happen,” said Pons. “Without a doubt, for the private sector to invest, there must be a certain economic logic, whether it's guaranteed supply contracts with priority or a preferential price, so that the investment is paid for." There would also be other, country-wide challenges to be addressed, however. Pons mentioned for the chemicals investment plans to succeed there would be a need to improve other key energy supplies such as electricity, water and natural gas. And yet another added challenge for Mexico: infrastructure. Pons mentioned ANIQ is optimistic about the government’s Plan Mexico, ambitious measures touching nearly all aspects of the economy with the target of putting Mexico among the world’s 10 largest economies. It is now considered to be placed between the 12th and 15th world economic ranking – depending on source and its methodology to calculate GDP. FRIENDLY LOBBYINGPons was pressed about the rather friendly lobbing ANIQ is currently exercising when it comes to the policies of Sheinbaum, who has implemented reforms ‘Corporate Mexico’ is not happy about, such as a judicial reform which has raised alarm bells about the damage it could cause to the state of law, therefore to corporate law. But he would not expand much about those issues, because he said ANIQ is right now focused on helping bring about the abovementioned investment plans, and the trade group has opted for that tone rather the festy lobbying tone other trade groups can use. “What we want most is to work together with the government. What I truly want in my tenure as president is very important to me: for the government to understand that we must work together and that we believe Plan Mexico is truly something important,” said Pons. “So, rather than creating an enemy in the government, what I want to work on is to work hand in hand with them and for them to understand that this won't work if we don't work together. We'll do it when necessary [a more robust lobbying], but right now what I want most is to reach out to the government, for them to understand that we're going to work together.” ICIS will publish on Monday (9 June) the second part of this interview, with ANIQ president's take on the US shift in trade policy and the role of China in the global economy Front page picture: Facilities operated by Mexico's polyethylene (PE) producer Braskem Idesa  Source: ICIS Interview article by Jonathan Lopez

06-Jun-2025

HOUSTON (ICIS)–Rates for shipping containers from Asia to the US spiked again this week – and have almost doubled over the past four weeks – as demand has surged ahead of the possible reinstatement of tariffs while capacity remains tight. Supply chain advisors Drewry said the latest sudden, short-term strengthening in supply-demand balance in global container shipping has reversed the trend of declining rates which had started in January. Rates from Shanghai to Los Angeles spiked by 57% this week while rates from Shanghai to New York jumped by 39%, according to Drewry and as shown in the following chart. The drastic increases are seen from other shipping analysts as well. On the Shanghai Containerized Freight Index (SCFI), the Shanghai-USWC rate rose by 58% to $5,172/FEU (40-foot equivalent unit), the largest week-on-week percentage gain since 2016 as strong demand has coincided with tight supply, though capacity is increasing as carriers resume previously suspended services and reinstate blank sailings. Sea-Intelligence CEO Alan Murphy said almost 400,000 TEUs (20-foot equivalent units) are coming back online in the near term. “If we aggregate it across June/July for Asia-USWC, then in June, the lines are increasing capacity 12.8% compared to before the tariff pause, and in July, the capacity injection is increasing to 16.5% compared to the pre-pause situation,” Murphy said. “Capacity has also ramped up sharply compared to just a week ago, with this injection of capacity equaling 397,000 TEU across the two months.” The growth in capacity is shown in the following chart from Sea-Intelligence. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said the spike is likely because shippers are so concerned about getting goods moving during the 90-day window that they are willing to pay more. “Right now, it seems carriers are telling shippers to jump, and some are replying ‘how high?’,” Sand said. “This will not last because capacity is heading back to the transpacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up,” Sand said. “Spot rates are expected to peak in June before downward pressure returns.” Rates from online freight shipping marketplace and platform provider Freightos have yet to capture the dramatic increase, but Judah Levine, head of research at the company, said 1 June general rate increases (GRIs) are starting to push daily prices up sharply. “Rates have spiked 72% to the West Coast since last week to $4,765/FEU and 44% to the East Coast to $5,721/FEU, with more increases likely and additional hikes announced for mid-month,” Levine said. Analysts at US logistics platform provider Flexport said they expect a further rush of cargo from southeast Asia to the US West Coast toward the end of June. Flexport analysts expect carriers to be back to full capacity on the transpacific eastbound trade lane by the end of June, noting that week 23 capacity is 11% below standard levels but is expected to exceed standard levels by 3% by week 25. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES US chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates decreased from the US Gulf to Europe. The USG to Rotterdam route is overall steady as weaker demand is being offset by limited availability, particularly for larger parcels. Larger requirements are well represented, with several larger lots of methanol, methyl tertiary butyl ether (MTBE) and caustic soda fixed or indicated to the ARA. There was also some interest in sending some smaller lots of glycols and styrene. From the USG to Asia, the uptick in interest to rush glycols to beat the deadline to China seems to have all but ended as the market saw only a few new inquiries. On the other hand, several larger parcels of methanol were either fixed or quoted to the region. As contract of affreightment (COA) volumes are being firmed, and due to the absence of market participants, freight rates have eased some, with more downward pressure on smaller parcels. On the USG to Brazil trade lane, the market has been steady, leading rates to remain unchanged week on week. There was a stable level of spot activity with only a handful of new requirements. Overall, the market remains slow despite several cargoes being quoted and fixed. Despite the uptick in inquiries there is not enough significant activity that would suggest any increase in demand, with caustic soda, glycols and styrene the most active. The regular owners have space remaining and are trying to fill space while supporting current freight levels. Activity typically picks up during summer months, but this is not currently being seen. As a result, freight rates are now expected to remain steady for the time being. Focus story by Adam Yanelli Additional reporting by Kevin Callahan Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

05-Jun-2025