Polyethylene (PE)

Understanding the world’s most widely used plastic

Discover the factors influencing polyethylene (PE) markets

From the packaging on our food to the paints in our homes, polyethylene (PE) surrounds us as by far the largest commodity plastic by overall volume. It is essential to our daily lives. With countless applications in everyday materials, it is crucial for anyone with an active interest in the market to understand what is driving PE markets. Adapting efficiently to the significant changes in how it is being produced and consumed around the world is key.

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Polyethylene (PE) news

PODCAST: Trump 2.0 trade war will destabilise chemical value chains, boost reshoring

BARCELONA (ICIS)–As US president Donald Trump revives his trade war, business leaders may seek certainty by switching to local and regional supply chains. Businesses need stability, certainty to make investment decisions Trade war could drive more national/regional industrial and chemical supply chains But reshoring can be very expensive and time-consuming New technologies such as 3-D printing and AI support local production Export-dependent US chemicals have a lot to lose from a trade war US exported more than 10 million tonnes of polyethylene (PE) to Europe in 2023 In this Think Tank podcast, Will Beacham interviews Nigel Davis from the ICIS market development team and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

04-Feb-2025

CORRECTED: INSIGHT: US tariffs unleash higher costs to nation's chem industry

Correction: In the ICIS story headlined “INSIGHT: US tariffs unleash higher costs to nation's chem industry” dated 3 February 2025, the wrong volumes were used for the following imports: Canadian ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94; Canadian polyethylene having a specific gravity of 0.94 or more, in primary forms; Canadian polyethylene having a specific gravity of less than 0.94, in primary forms; Canadian polypropylene, in primary forms; Canadian mixed xylene isomers; Mexican polypropylene, in primary forms; and Mexican cyclohexane. The US did not import cyclohexane from Mexico in 2023. A corrected story follows. HOUSTON (ICIS)–The tariffs that the US will impose on all imports from Canada, Mexico and China will unleash higher costs for the nation's chemical industry, create supply-chain snarls and open it to retaliation. For Canada, the US will impose 10% tariffs on imports of energy and 25% tariffs on all other imports. For Mexico, the US imposed 25% tariffs on all imports but the countries' presidents said on Monday the tariffs are being paused for a month. For China, the US will impose 10% tariffs on all imports. US IMPORTS LARGE AMOUNTS OF PE FROM CANADAUS petrochemical production is concentrated along its Gulf Coast, which is far from many of its manufacturing hubs in the northeastern and midwestern parts of the country. As a result, individual states import large amounts of polyethylene (PE) from Canada – even though the nation as a whole has a large surplus of the material. Even Texas imports large amounts of PE from Canada – despite its abundance of plants that produce the polymer. In addition, polyester plants in North and South Carolina import large amounts of the feedstocks monoethylene glycol (MEG) and purified terephthalic acid (PTA) from Canada. The US as a whole imports significant amounts of polypropylene (PP) and polyvinyl chloride (PVC) from Canada – again, despite its surplus of these plastics. The following table lists some of the main plastics and chemicals that the US imported from Canada in 2023. The products are organized by their harmonized tariff schedule (HTS) code. HTS PRODUCT MEASUREMENT VOLUMES 3901.40.00 Ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94 kilograms 1,319,817,405 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 1,088,071,523 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 420,561,390 2917.36.00 Terephthalic acid and its salts kilograms 407,710,439 2905.31.00 Ethylene Glycol kilograms 329,542,378 3902.10.00 Polypropylene, in primary forms kilograms 271,201,880 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 188,800,413 2902.44.00 Mixed xylene isomers liters 746,072 2905.12.00 Propan-1-ol (Propyl alcohol) and Propan-2-ol (isopropyl alcohol) kilograms 87,805,095 3901.30.60 Ethylene-vinyl acetate copolymers kilograms 71,372,396 Source: US International Trade Commission (ITC) IMPORTS FROM MEXICOMexico is not as large of a source of US petrochemical imports as Canada, but shipments from the country are still noteworthy. The following table lists some of the main plastics and chemicals that the US imported from Mexico in 2023. HTS PRODUCT MEASUREMENT VOLUMES 2917.36.00 Terephthalic acid and its salts kilograms 69,230,708 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 34,674,435 2915.24.00 Acetic anhydride kilograms 25,294,318 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 24,005,371 2915.31.00 Ethyl acetate kilograms 18,855,544 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 14,469,582 3902.10.00 Polypropylene, in primary forms kilograms 8,849,478 Source: US International Trade Commission (ITC) IMPORTS FROM CHINAChina remains a significant source for a couple of noteworthy chemicals despite the effects of the tariffs that US President Donald Trump imposed during his first term in office. The following table shows 2023 US imports from China. HTS PRODUCT MEASUREMENT VOLUMES 29152100 Acetic acid kilograms 21,095,566 39093100 Poly(methylene phenyl isocyanate) (crude MDI, polymeric MDI) kilograms 206,642,886 Source: US International Trade Commission (ITC) China's shipments of plastics goods are more significant. OIL TARIFFS WILL HIT US REFINERSCanada and Mexico are the largest sources of imported crude oil in the US, and the heavier grades from these countries complement the lighter grades that the US produces in abundance. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units. Refiners cannot swap out heavier Canadian and Mexican grades with lighter US grades. Instead, they will need to pay the tariffs or find another supplier of heavier grades, possibly at a higher cost. The following table shows the largest sources of imported crude in 2023. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 Source: Energy Information Administration (EIA) US refiners could take another hit from higher catalyst costs. These are made from rare earth elements, and China remains a key source. TARIFFS TO RAISE COSTS FOR FERTILIZERCanada is the world's largest producer of potash, and it exports massive amounts to the US. It is unclear how the US could find another source. Russia and Belarus are the world's second and third largest potash producers. Together, the three accounted for 65.9% of global potash production in 2023, according to the Canadian government. Canada accounts for significant shares of other US imports of fertilizers. The following table lists some of Canada's fertilizer shipments to the US in 2023 and shows its share of total US imports. Figures are from 2023. HTS PRODUCT MEASUREMENT VOLUME % 31042000 Potassium chloride metric tonne 11850925 88.8 31023000 Ammonium nitrate, whether or not in aqueous solution metric tonne 295438 76.6 31024000 Mixtures of ammonium nitrate with calcium carbonate or other inorganic nonfertilizing substances metric tonne 29203 75.7 31055100 Mineral or chemical fertilizers, containing nitrates and phosphates metric tonne 1580 66.1 31022100 Ammonium sulfate metric tonne 947140 49.6 31052000 Mineral or chemical fertilizers, containing the three fertilizing elements nitrogen, phosphorus and potassium metric tonne 147850 41.4 Source: US ITC SUPPLY CHAIN SNARLSIf US companies choose to avoid the tariffs and seek other suppliers, they could be exposed to delays and supply chain constraints. Other companies outside of the petrochemical, plastic and fertilizer industries will also be seeking new suppliers. The scale of these disruptions could be significant because Canada, Mexico and China are the largest trading partners in the US. The following table lists the top 10 US trading partners in 2023 based on combined imports and exports. Country Total Exports ($) General Imports ($) TOTAL Mexico 322,742,472,406 475,215,965,697 797,958,438,103 Canada 354,355,997,349 418,618,659,183 772,974,656,532 China 147,777,767,493 426,885,009,750 574,662,777,243 Germany 76,697,761,127 159,272,068,221 235,969,829,348 Japan 75,683,130,214 147,238,042,342 222,921,172,556 South Korea 65,056,093,590 116,154,470,335 181,210,563,925 UK 74,315,228,810 64,217,031,774 138,532,260,584 Taiwan 39,956,725,574 87,767,403,487 127,724,129,061 Vietnam 9,842,922,146 114,426,076,081 124,268,998,227 Source: US ITC RETALIATIONUS petrochemical exports would be tempting targets for retaliation because of their magnitude and the global capacity glut. China, in particular, could impose tariffs on US chemical imports and offset the disruptions by increasing rates at under-utilized plants. So far, none announced plans to target chemicals on Sunday. Canada's plans to impose 25% tariffs on $30 billion in US goods does not include oil, refined products, chemicals or plastics. That batch of tariffs will take place on February 4. Canada will impose 25% tariffs on an additional $125 billion worth of US goods following a 21-day comment period, it said. The government did not highlight plastics or chemicals in this second batch of tariffs. Instead, it said the tariffs will cover passenger vehicles and trucks, including electric vehicles, steel and aluminium products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles and recreational boats. In a statement issued on Sunday, Mexico's president made no mention of retaliatory tariffs. Instead, she said she will provide more details about Mexico's response on Monday. China said it will start legal proceedings through the World Trade Organization (WTO) and take corresponding countermeasures. RATIONALE BEHIND THE TARIFFSThe US imposed the tariffs under the nation's International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat. In a fact sheet, Trump cited illegal immigration and illicit drugs. Saturday's executive order is the first time that a US president imposed tariffs under IEEPA. Prior IEEPA actions lasted an average of nine years. They can be terminated by a vote in Congress. Insight article by Al Greenwood (Thumbnail shows containers, in which goods are commonly shipped. Image by Shutterstock)

03-Feb-2025

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 31 January. Colombia accepts US terms for migrants’ deportations, fends off 25% tariff threat Colombia became over the weekend the first Latin American country to get a taste of President Donald Trump’s immigration policy mixed with unconventional diplomacy after the country refused landing to two flights with repatriated Colombian migrants. INSIGHT: US tariffs of 25% on Mexico and Canada would cause massive hit to GDP – ICIS analysis Proposed US tariffs of 25% on all imports from Mexico and Canada would have a massive negative impact to the GDP of the exporting countries and slow US GDP growth as well, according to the ICIS economist. Brazil’s chemicals to slow in 2025 amid currency, fiscal deficit woes – Activas CEO Brazil’s chemicals distribution sector posted healthy activity in 2024 as manufacturing finally gained traction, but conditions are set to worsen in 2025 amid high inflation, high borrowing costs, and a government too prone to spend, according to the CEO at Brazilian chemicals distributor Activas. Dow to face margin pressure in Q1 with no help from macros – execs Dow expects to face sales and margin pressures in Q1 2025 with no improvement in the macro outlook following a difficult Q4, senior executives said. LyondellBasell confident on Q1 PE price gains on cracker downtime, lack of new capacity – execs LyondellBasell expects to see price improvement in North America polyethylene (PE) in Q1 on industry cracker outages and lack of new local capacity starting up, along with higher demand through 2025.

03-Feb-2025

SHIPPING: Asia-US container rates edge lower on LNY slowdown, roll out of new alliances

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US ticked slightly lower this week, while global average rates dropped by 2% as the Lunar New Year holiday began in China. This period usually sees a significant reduction in shipping volumes as factories shut down or cut production in anticipation of the holiday, leading to lower demand for shipping services. Rates to both US coasts fell by 1%, according to supply chain advisors Drewry and as shown in the following chart. Drewry expects spot rates to decrease slightly in the coming week due to the increase in capacity created by the LNY slowdown. The following chart from Drewry shows the decrease in global average rates. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said transpacific rates should continue to face downward pressure before likely rebounding in mid-February. Transpacific rates to the West Coast have dipped by 17% since mid-January, according to Freightos data, but are still more than double levels seen in 2019. Continued diversions away from the Red Sea and the Suez Canal continue to absorb capacity across the market. Even as progress is being made with a ceasefire in the Israel-Hamas conflict, shipping companies are still avoiding the shorter route. Global shipping major Maersk said this week that it will continue to avoid the Suez Canal and Red Sea until safe passage through the area is ensured for the longer term to optimize stability and certainty across supply chains. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. TARIFFS Frontloading of volumes to get ahead of proposed tariff hikes is likely over as US President Donald Trump said on Friday that tariffs will begin on 1 February for Canada, Mexico and China. “This will keep ocean volumes and rates to the US higher than they otherwise would be in Q1 and possibly into Q2 depending on the timing of the increases,” Levine said. “This pull-forward could also be felt in lower volumes and rates after tariffs are introduced.” LIQUID TANKER SPOT RATES STEADY Rates for liquid chemical tankers ex-US Gulf held steady this week. The transatlantic eastbound route saw some activity with monoethylene glycol (MEG) and caustic soda fixed to the Mediterranean, and urea ammonium nitrate (UAN) and ammonia to the UK. There are a few smaller parcels moving on the route, brokers said, but nothing significant as it appears some trader volumes are still being affected in the aftermath of the recent winter storm. On the USG-Asia route, part cargo space has tightened across the regular players, a broker said, with Odfjell showing only 1,000-2,000 tonnes of available space for February. The USG to South America trade lane was quiet this week, brokers said, with contract of affreightment (COA) nominations steady.

31-Jan-2025

VIDEO: Europe R-PET higher February offers for colourless, mixed coloured NWE flake

LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Colourless, mixed coloured flake sellers raise offers for February Italian bale prices rise again European Commission members may face grilling on regulation at Petcore Annual Conference in Brussels on 4-5 February

31-Jan-2025

INSIGHT: US states near Canada face massive tariff bill on plastics imports

HOUSTON (ICIS)–Customers in several US states closer to Canada than its Gulf Coast petrochemical hubs import large amounts of plastics and chemicals from the country, including materials that the US produces in abundance, and these shipments could soon become subject to tariffs totalling hundreds of millions of dollars. US President Donald Trump has said he could announce on February 1 tariffs of up to 25% on imports from Canada and Mexico. Even though the US has large surpluses of many plastics and chemicals, domestic companies still import large amounts of these materials from Canada. These customers face the prospects of higher tariffs from Canadian imports or potentially higher shipping costs from suppliers that are farther away. CANADIAN EXPORTS TO NORTHERN STATESUS plastics and chemicals production is concentrated on the Gulf Coast in the south, which is far from the manufacturing and plastic processing hubs in Michigan, Illinois and Ohio in the north. These and other northern US states are much closer to Canada's petrochemical plants in Sarnia, Ontario province, than they are to the Gulf Coast. The following table shows various plastics and chemicals that Canadian exported in 2023 to Michigan, Illinois and Ohio. The bottom row shows how much customers from each state would pay if a 25% tariff was levied on the total value of these 2023 exports. Export figures are in tonnes. HTS Code Description Michigan (tonnes) Illinois (tonnes) Ohio (tonnes) 3901.10.00 PE having a specific gravity of less than 0.94 30,403 41,967 59,908 3901.20.00 PE having a specific gravity of 0.94 or more 125,693 66,493 85,328 3901.40.00 Ethylene-alpha-olefin copolymers 163,543 155,042 88,793 3902.10.00 Polypropylene 6,232 122,970 20,694 3901.30.00 Ethyl vinyl acetate copolymer 55 55,012 2,526 2905.31.00 Ethylene glycol 5 152,746 8,634 Total tariff bill $119,027,186 $243,701,358 $103,054,090 Source: Statistics Canada CANADIAN IMPORTS FROM THE CAROLINASNorth and South Carolina are also large destinations for Canadian exports. These states are home to auto plants as well as facilities that make polyethylene terephthalate (PET), which uses monoethylene glycol (MEG) and purified terephthalic acid (PTA) as feedstocks. The following table shows 2023 shipments made to these states. The bottom row shows how much customers would pay if a 25% tariff was levied on the total value of these exports. Export figures are in tonnes. HTS Code Description South Carolina (tonnes) North Carolina (tonnes) 3904.10.00 PVC, not mixed with any other substances 428 134,433 2905.31.00 Ethylene glycol 66,973 2,731 2917.36.00 Terephthalic acid and its salts 102,162 162,505 3901.10.00 PE having a specific gravity of less than 0.94 25,379 13,076 3901.20.00 PE having a specific gravity of 0.94 or more 79,301 30,278 3901.40.00 Ethylene-alpha-olefin copolymers 98,070 40,879 3902.10.00 Polypropylene 38,763 1,033 Total tariff bill $168,380,231 $166,512,281 Source: Statistics Canada Even though Texas is home to many plastics and chemical plants, it is still a destination for a large amount of plastic exports from Canada. The following table shows 2023 shipments made to Texas. The bottom row shows how much customers would pay if a 25% tariff was levied on the total value of these exports. Export figures are in tonnes. HTS Code Description Texas (tonnes) 3901.10.00 PE having a specific gravity of less than 0.94 62,300 3901.20.00 PE having a specific gravity of 0.94 or more 189,247 3901.40.00 Ethylene-alpha-olefin copolymers 185,610 3902.10.00 Polypropylene 21,315 Total tariff bill $145,297,714 Source: Statistics Canada CONSEQUENCES OF TARIFFSWhether the US proposes the tariffs on February 1 is still up in the air. Trump has used the threat of tariffs as a negotiating tool in the past, as he did against Mexico during his first term and against Colombia earlier this month. In both cases, the US reached agreements with the countries without imposing the tariffs. If the US does impose the tariffs, customers could pay the additional tax, or they could find another supplier. For states closer to Canada, new suppliers could increase shipping times and costs. If the tariffs are broad enough, customers will be competing for cargo space with other companies that are also procuring supplies from new suppliers. The tariffs could make the US plastic and chemical markets more vulnerable to weather disruptions because most of its production is concentrated along the Gulf Coast. This region of the US is vulnerable to hurricanes and, increasingly, to sub-freezing temperatures. Since 2021, the Gulf Coast has had spells of sub-freezing temperature every winter season. The region's plants were not designed to operate in such low temperatures, so they typically suffer from unplanned outages during the winter. Canadian material made US chemical and plastic supply chains more resilient by offering an alternative to Gulf Coast material. HOW CANADIAN TARIFFS COULD UNFOLDIf the US does pursue tariffs against Canada, it will likely do so under the International Emergency Economic Powers Act (IEEPA) of 1977, said Jacob Jensen, a data analyst for the American Action Forum (AAF), a think tank. The IEEPA allows the president to propose actions to address a severe national security threat. In the case of tariffs, immigration, fentanyl or both would be declared as national emergencies, and that would trigger IEEPA. Once the president notifies Congress through a letter or a speech, the tariffs could be imposed. Imposing tariffs under IEEPA would be a first for the US, Jensen said. It could also be long term. The average duration of an IEEPA order is nine years. They can be terminated by a vote in Congress. The US can impose tariffs under other laws, but the ones that Trump proposed for Canada do not meet the parameters under those regulations. Tariffs under Section 301 address unfair trade practices and require investigations. The US has not started such an investigation on Canadian trade practices. Tariffs under Section 232 cover specific products and are not broad-based like the ones Trump proposed against Canada. Tariffs under Section 201 are intended to provide temporary relief for a group of products or an industry. They are not broad-based. Tariffs under Section 122 have a limit of 15%. Tariffs under Section 338 have no precedence and could face court challenges. OTHER POTENTIAL TARIFFSSince winning the election, Trump also proposed tariffs of 25% on imports from Mexico and 10% on imports from China. During his campaign, Trump proposed the following tariffs: Baseline tariffs of 10-20% on all imports. Tariffs of 60% on imports from China. A reciprocal trade act, under which the US would match tariffs that other countries impose on its exports. Insight by Al Greenwood

30-Jan-2025

SHIPPING: Maersk will continue diversions away from Suez Canal

HOUSTON (ICIS)–Global container shipping major Maersk said it will continue to avoid the Suez Canal and Red Sea until safe passage through the area is ensured for the longer term to optimize stability and certainty across supply chains. In an advisory to customers, Maersk said the ceasefire agreement between Hamas and Israel and the announcement from Houthi rebels that they will only attack Israel-linked vessels is a “welcome step in the right direction towards stability and eventual normality for the global shipping industry." “The process to bring the current conflict between Israel and Hamas to an end is dependent on a multi-phased roadmap continuing to be met, and as such the predictability of the situation remains a complex challenge,” Maersk said. “Furthermore, due to the continued tensions in the region, the security risk of commercial vessels transiting the Red Sea and Bab-el-Mandeb strait remains high.” Global shipping capacity tightened at the onset of the attacks as commercial vessels had to reroute around the Cape of Good Hope, which pushed shipping costs 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. One reason shipping companies are hesitant to alter routes is because it typically takes three to four months to create new schedules, including all complementary services. Maersk also said its Gemini Cooperation with Hapag-Lloyd will be phasing in routes via the Cape of Good Hope on 1 February, as previously planned. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks.

28-Jan-2025

Brazil’s chemicals to slow in 2025 amid currency, fiscal deficit woes – Activas CEO

SAO PAULO (ICIS)–Brazil’s chemicals distribution sector posted healthy activity in 2024 as manufacturing finally gained traction, but conditions are set to worsen in 2025 amid high inflation, high borrowing costs, and a government too prone to spend, according to the CEO at Brazilian chemicals distributor Activas. Laercio Goncalves added that he was not too concerned about the prospect of US tariffs on Brazilian goods – credit ratings agency Moody’s forecasts by mid-2025 the US will impose a 5% general tariff on them – although he lamented “the world is becoming more closed” and protectionist. Activas employs 150 workers at eight Brazilian sites. In 2024, it posted sales of Brazilian reais (R) 700 million ($118 million), flat year on year. Goncalves said the company is looking to expand by starting up a ninth distribution facility in Brazil’s south, where it already has a considerable presence with six out of its eight distribution facilities. Headquartered in Sao Paulo, Activas operates in that state its main facility in Maua and a smaller one in Sao Bernardo do Campo. Four more distribution facilities are in the country’s southern industrious states: Duque de Caxias (main petrochemicals hub in Rio de Janeiro state), Joinville (Santa Catarina), Caxias do Sul (Rio Grande do Sul), and Ibipora (Parana). In the country’s north, Activas operates two facilities in Cabo de Santo (Pernambuco) and Maceio (Alagoas). Activas sales 2024 2023 2022 2021 In million R 700 700 750 1,000 ‘REALISTIC TARGET’Goncalves remains committed to bringing Activas back to the R1.0 billion sales mark it posted in 2021, when chemicals prices shot up in the aftermath of the pandemic-induced lockdowns. He said he is confident the company can achieve that within a few year, but the CEO recognized that the 2021 sales figure was much about inflated prices and not much about actual larger volumes. “We already reached that level of sales [R1.0 billion] during the pandemic, so this is a realistic goal. For 2024, we had made a conservative business plan and indeed Q1 2024 was a very complicated quarter. At the time, a year ago or so, we were quite pessimistic: economic policy changes at home, wars abroad… everything was skewing the risks downside,” said the CEO. “So, after drawing up that rather conservative forecast for 2024, we started working internally on how to increase profitability. Sometimes it was reducing volumes of certain products while focusing on the most profitable lines, and by working operationally like that we managed to turn the year around – the second and third quarters were very good.” Activas, like other Brazilian distributors such as Quimica Anastacio, were able to ride on the manufacturing bonanza in Brazil in 2024, which together with booming agriculture and healthy services propelled GDP growth to around 3.5%. In 2023, GDP had grown by 3.2%. For 2025, Activas expects its sales could grow above the average growth of 2% expected by the Brazilian chemicals industry overall. BRAZIL: WRONG WAYWhile admitting that Activas and the industry’s performance in general sharply improved in the past two years, which coincided with the first two years of President Luiz Inacio Lula da Silva’s term, Goncalvez leaves no doubt he is not keen on a government he perceives as high spending and too interventionist. "A left-wing government… overtaxes. It puts the businessman against the wall all the time," he said, adding that the cabinet should be more focused on propping up industrial investments, rather than tax them. However, Goncalves not only shows disappointment at Lula economic policy, he widens the criticism to the country’s industrial investment strategies over the past 50 years – or, rather, the lack of them. Activas’ CEO, despite all the criticism, also gave overriding support to the key measure affecting Brazilian chemicals in 2024, which came from a protectionist measure: the increase in import tariffs for dozens of chemicals, mostly of them from 12.6% to 20%, in October, which are expected to greatly prop up domestic producers’ earnings. “Import tariffs in Brazil were a highly relevant topic in 2024 and are expected to continue impacting the market in 2025, especially with the application of ADDs [anti-dumping duties] due to oversupply and dumping practices by China. These measures have a positive side, as they protect the national industry, benefiting both producers and local distributors,” said the CEO. “In the case of Activas, higher import tariffs strengthened our positioning in the domestic market. On the other hand, as we also import some product lines, such as ABS [acrylonitrile butadiene styrene] and PET [polyethylene terephthalate], some of these measures may bring specific challenges to our operation.” Goncalves said he had also good eyes to the possibility of Braskem’s Novonor controlling stake to be acquired by a consortium of Brazilian banks, with involvment of the country's state-owned investment bank Bndes, as it would reinforce the Brazilian chemicals industry overall as well as its global footprint. “As direct partners [Activas is one of Braskem’s official distributors in Brazil], we view this change positively, as we believe that the government's presence can bring stability and foster strategic investments in areas such as technology and sustainability, benefiting the entire production chain,” said Goncalves. “In addition, this perspective strengthens the competitiveness of the local industry, creating opportunities for innovation and the development of solutions aligned with the demands of the domestic and foreign markets. We are confident that, with solid governance and a long-term vision, Braskem will continue to play an essential role in the growth of the industry.” PROTECTIONISM ON THE RISEWhile on the one hand Goncalves admitted protectionism is back in the agenda like never before in the past 70 years, he was glad to see public opinion and policy makers delve into “Important discussions” about what industrial fabric countries are willing to have and willing to support in times of global oversupply for many industrial goods. And, once again, the Activas CEO leaves no doubt about his political preferences from the perspective of businesses and who, in his view, would contribute to a more thriving economy. “Current global trade policies reflect a changing scenario. The new wave of protectionism, driven by leaders like Trump, has brought to the fore important discussions about the search for a balance between protecting national interests and maintaining global trade flows,” said Goncalves. “We maintain a positive view of these changes. We are seeing a weakening of the left in many regions, which paves the way for economic policies that are more aligned with growth and competitiveness.” MANAUS: UNRESOLVEDSince ICIS last interviewed Goncalves in 2023, he said nothing has improved regarding Brazilian chemicals companies' complaints about imports entering the country via the Free Economic Zone of Manaus, in the northern state of Amazonas. The concerns are shared by production and distribution sides alike. Manaus, the state’s capital, created a Free Zone in the 1960s to prop up development there, and taking advantage of the region’s waterways. However, many of the imports entering via Manaus are not directed to manufacturing in Amazonas itself but are just re-packaged and sold on. In theory, the tax incentives resulting from the Free Zone would only apply to imports which are later transformed in the region to produce Brazilian goods, creating employment and income for the state coffers. In practice, many of the imports are sent south to the industrial hubs of Sao Paulo, Rio Grande do Sul, or Rio de Janeiro, without paying the due taxes. “The Manaus free trade zone represents an entrenched economic anomaly in Brazil, where decades of improper product imports have become normalized despite repeated political attempts at reform,” said Goncalves. “Previous Federal governments’ attempts at reform were decisively blocked [the state of Amazonas has the exclusive right over the free zone], underscoring the zone's significant political protection. “With tax gains approaching 30%, the economic incentives for maintaining the status quo remain overwhelmingly strong, rendering meaningful reform seemingly impossible despite clear systemic irregularities.” This interview took place at Activas' offices in Sao Paulo last week. Front page picture source: Activas’ facilities around Brazil Picture source: Activas Interview article by Jonathan Lopez

28-Jan-2025

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 27 January. NEWS Colombia accepts US terms for migrants’ deportations, fends off 25% tariff threat Colombia became over the weekend the first Latin American country to get a taste of President Donald Trump’s immigration policy mixed with unconventional diplomacy after the country refused landing to two flights with repatriated Colombian migrants. INSIGHT: Trump executive orders to revamp US energy and trade policyBuckle your seatbelts. US President Trump kicked off Day One with a slew of executive orders that will completely revamp energy and trade policy, with major implications for chemicals and plastics. INSIGHT: Argentina’s chemicals, manufacturing could be collateral victims of liberalization pushArgentina’s cabinet drive to shift the economy from staunch protectionism into liberal bastion is increasing fears among chemicals and wider manufacturing players that the country’s beleaguered industrial fabric is yet to suffer further losses in output in coming years. INSIGHT: Brazil’s GDP to be hit by potential US tariffs; COP30 loses significant emitter Brazil could be hit with US import tariffs of 5% by mid-2025, according to credit rating agency Moody’s, while the Brazilian leading role in climate negotiations in November will be diminished as one of the largest carbon emitters, the US, is absent from the talks. Argentina’s manufacturing output still falling but ‘expansionary phase’ starting overallArgentina’s petrochemicals-intensive manufacturing output continued falling in November, down 2.3% year on year, but overall economic output rose while consumer and business confidence is growing. Brazil’s grain harvest expected at record 322 million tonnes, up 8%Brazil’s fertilizers-intensive agricultural sector is expected to produce 322.3 million of grains, pulses, and oilseeds in the 2024-2025 harvest, up 8.2% year on year, according to the National Supply Company (Conab). Mexico’s cabinet wants Pemex to meet 80% of national fertilizers demandThe Mexican government continues putting high hopes on Pemex’s ability to sharply increase its fertilizers output and has suggested the state-owned energy major produce as much as 80% of the country’s demand. Brazil’s Petrobras to start up ANSA fertilizer plant in H2 2025Petrobras will start up its ANSA fertilizers plant in Araucaria, state of Parana, in the second half (H2) 2025, according to a spokesperson for the Brazilian state-owned energy major. German lubes maker Fuchs forms JV with distributor Remsac in PeruFuchs Group has established a joint venture in Peru with local distributor Remsac, the German lubricants producer said on Friday. Austria’s ALPLA to take majority stake in Brazilian recycler Clean BottleAustrian packaging firm ALPLA aims to enter Brazil's recycling market by purchasing a majority stake acquisition in high density polyethylene (HDPE) recycler Clean Bottle, the company said on Wednesday. Brazil’s December lube demand risesBrazil’s lube demand rose in December for a ninth month on the back of a jump in consumption of everything from transformer oils to engine oils. PRICING Braskem-Idesa announces February price increase in MexicoBraskem Idesa is seeking a price increase of $110/tonne on high-density polyethylene (HDPE) and low-density polyethylene (LDPE) as of 1 February, according to a customer letter seen by ICIS. LatAm PP domestic, international prices increase in Mexico on higher spot propylene costsDomestic and international polypropylene (PP) prices increased in Mexico, tracking higher spot propylene costs. In other Latin American countries, domestic prices were unchanged. LatAm international LLDPE, HDPE prices steady to higher on back of expensive US export offersInternational linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) prices were assessed as steady to higher across Latin American countries. Low density polyethylene (LDPE) prices were assessed unchanged.

27-Jan-2025

Americas top stories: weekly summary

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 24 January. Hard freeze to hit chem plants on US Gulf Coast, threatens operations Temperatures along the US Gulf Coast should fall well below freezing later in the week and remain there for a prolonged stretch, threatening operations at chemical plants and refineries. US President Trump proposes no tariffs on first day in office US President Donald Trump proposed no new tariffs on his first day of office, and instead instructed his administration to investigate the nation's trade deficit and other areas of trade policy. INSIGHT: US tariffs slower to materialize as Trump assumes the US Presidency A US Presidential inauguration day packed with fresh legislation saw few of the expected moves on tariffs and trade policy. UPDATE: US Gulf Coast chemical plants reel from cold snap Cold weather in the US Gulf Coast on Tuesday is expected to disrupt petrochemicals operations in Texas and Louisiana as companies take preventive measures. INSIGHT: Trump's first-day orders lay groundwork for future tariffs US President Donald Trump did not propose any new tariffs on his first day in office, but he did issue an executive order that calls for his administration to conduct the investigations needed to impose them under several sections of the law – in many cases, repeating the same playbook Trump used during his first term in office. UPDATE: US freeze shuts numerous chem plants, major ports Winter storm Enzo, which caused a hard freeze along the US Gulf Coast, led to widespread shutdowns among chemical plants and refineries. INSIGHT: Trump's moratorium on federal wind projects may have little effect on epoxy The moratorium on federal permits for wind projects will likely have little effect on the US industry and on the epoxy resins it consumes because most turbines are built on private land. US ExxonMobil may build cracker, PE plant in Texas ExxonMobil may build an ethane cracker and polyethylene (PE) plant near Corpus Christi, Texas, the company said in an application for a tax break.

27-Jan-2025

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