Polyethylene (PE)

HOUSTON (ICIS)–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. While the investigations take place, the US can use the threat of possible tariffs to negotiate agreements. If the negotiations fail, the US would have taken the steps necessary to respond with tariffs. Trump did indicate that he is considering imposing tariffs on Canada and Mexico as early as 1 February. This could rely on using existing laws in unprecedented ways. The US chemical industry is vulnerable to tariffs because it has deficits in commodities such as benzene, melamine and methyl ethyl ketone (MEK). Its large exports of plastics make it vulnerable to retaliatory tariffs. TRUMP LAYS FOUNDATION FOR TARIFFSAmong the investigations that will be launched by Trump's executive order, those into national security could lead to Section 232 tariffs, which Trump imposed on steel during his first term. Discriminatory trade practices would open the door to Section 201 tariffs, which were imposed on washing machines and solar panels. Unfair trade practices could lead to Section 301 tariffs. The US imposed these against numerous Chinese imports. That unleashed a trade war, with China imposing retaliatory tariffs, many of which targeted US exports of plastics and chemicals. POSSIBLE NEW TARIFFSTrump's first-day order pointed to other reviews that his administration could complete faster and lead to new tariffs imposed under different sections of the law. These could fall under the International Emergency Economic Powers Act of 1977 (IEEPA), Section 338 and Section 122. Trump's first-day order did not mention these specific laws, but it did mention national security, discriminatory actions against US products and balance of payment deficits – all issues that these laws were designed to address. These laws could allow Trump to impose tariffs on a faster schedule. The IEEPA only requires consultation with Congress, and Section 1222 can apparently be imposed unilaterally, according to the American Action Forum (AAF), a think tank. THREAT OF CANADIAN, MEXICAN TARIFFS ON 1 FEBRUARYTrump would need such speed if he were to impose 25% tariffs on Canada and Mexico goods on 1 February, a possibility that he mentioned on Monday, according to CNBC and other publications. Drug trafficking and immigration could provide the national security basis needed under these laws. REVISITING THE PHASE 1 AGREEMENT WITH CHINATrump's first-day order called for a review of the Economic and Trade Agreement to determine if China is living up to its end of the deal. The agreement is more commonly known as the phase one deal, and the two countries signed it in January 2020. It included commitments by China to purchase more goods from the US; to adopt policies that will protect intellectual property; and to reduce pressure on companies to transfer technology. China has not fulfilled its import commitments under the agreement, and Trump's order said the country could impose additional tariffs in response. US CHEMS VULNERABLE TO TARIFFSUnless Trump carves out exceptions, his proposed tariffs on China and Mexico could raise costs for US chemical producers. Canada provides US refiners with heavier grades of oil that are not produced in sufficient quantities domestically for the nation's refineries. Canadian oil complements the light grades of oil that the US produces in abundance from its shale fields. Regional US markets may rely on Canadian imports because they are closer than the more distant sources along the US Gulf. Those customers will have to reroute their supply chains if they want to avoid tariffs. For the broader tariffs that Trump proposed in his campaign, they could prompt countries to impose retaliatory duties on US shipments of plastics and chemicals. The US is vulnerable to such tariffs because it has large surpluses of many plastics and chemicals, such as vinyl acetate monomer (VAM), methanol, ethylene glycols (EG), polyethylene (PE) and polyvinyl chloride (PVC). Tariffs on Chinese imports of rare earth materials would increase production costs for catalysts. Tariffs on fluorspar and hydrofluoric acid (HF) could increase costs for US producers of fluorochemicals and fluoropolymers. Insight article by Al Greenwood (Thumbnail shows cranes and containers, which make up important infrastructure used in international trade. Image by Costfoto/NurPhoto/Shutterstock)

21-Jan-2025

HOUSTON (ICIS)–Ports in Houston and New Orleans were closed on Tuesday because of winter weather and are likely to remain closed through Wednesday. Port Houston closed all facilities on Tuesday, and they will remain closed through Wednesday because of a winter storm that brought snow and icy conditions to the region. Container terminal truck gates closed Monday afternoon and vessel operations were suspended later that evening. “We potentially will resume vessel operations at the container terminals on Wednesday evening, if conditions allow,” port officials said around midday on Wednesday. Port Houston has committed to opening gates at 7 am on Saturday to assist customers with ingate closing at 5 pm. At Port NOLA in Louisiana, a freeze plan was enacted on Sunday that halted water flow to terminals, which is expected to resume on Wednesday. The New Orleans terminal said it was closed on Monday for the Martin Luther King Jr holiday. “We will determine opening the gates on Saturday, 25 January once the weather has passed,” terminal operators said. Container and breakbulk operations at Ports America are closed today and on Wednesday. Port Freeport said it expects vessel activity to be limited on Tuesday because of the weather. Port Houston is the busiest port in vessel and barge movements and the largest US port by tonnage, with more than 200 docks and 270 facilities. It is also the top US port for petroleum and the fifth largest container port in terms of TEUs (20-foot equivalent units) in 2022. The port is also home to the largest petrochemical manufacturing complex in the nation. 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.

21-Jan-2025

HOUSTON (ICIS)–Cold weather in the US Gulf Coast on Tuesday is expected to disrupt petrochemicals operations in Texas and Louisiana as companies take preventive measures. Temperatures fell sharply overnight from Monday and are expected to stay lower than the average for the time of the year in coming days, with potential rain, sleet and snow. The Houston metropolitan got snow in the early hours of Tuesday. The city is to record freezing temperatures all nights this week to Friday (see bottom table). CHEMICALS PLANTSUS Gulf Coast crude and petrochemicals players’ memories of the last disrupting cold snap in 2024 and winter storm Uri in 2021 are still fresh, with many fearing similar disruption this week as key petrochemicals hubs in the area are set to witness a similar cold snap. In such a scenario, companies have done all they could to minimize the disruption, although some factors could be outside their control despite the preparations. Germany’s chemicals major BASF said in a written response to ICIS late on Monday that its operations in Freeport, Texas, would “continue to run at as much capacity as possible” but conceded that potential snowfall could greatly complicate access to and from the site. As of Monday, BASF said: “[Due to the snow] roads possibly being impassable. As a result, BASF will have ride out crews arriving Monday evening and remaining until conditions improve, which is expected to be on Wednesday late morning,” said a spokesperson for the company. “Non-critical employees will work from home. The BASF site in Vidalia, Louisiana, will idle operations beginning Monday evening with a planned restart of Wednesday at noon.” As Houston recorded heavy snowfall overnight, BASF was enquired again about its impact on Freeport, but the company had not responded to the request at the time of writing. BASF’s spokesperson added the company’s sites in Geismar and North Geismar, in the state of Louisiana, would continue to run as normal. In another written response to ICIS, a spokesperson for Brazil’s polymers major Braskem said the company had activated its severe weather preparedness plan for its assets in La Porte, Seadrift, and Oyster Creek, all in Texas. “We will continue to monitor the severe weather and follow our protocols to ensure our team members and assets are safe during this time. We are working with our clients to minimize the impact of this weather event,” it added. A spokesperson for CPChem also said the company was monitoring the weather and “taking steps to prepare” its plants for any potential impact. A spokesperson for European chemicals major INEOS said the company's olefins, polyethylene (PE) and polypropylene (PP) units "have initiated winter storm" protocols. LyondellBasell would not comment. A spokesperson for the company said to ICIS: “As a matter of practice, we don’t provide specific details about our units, operational status, production figures, or supply for competitive reasons.” Pre-emptive shutdowns and operational disruptions reported so far include: BASF TotalEnergies cracker shuts down due to weather Formosa shuts Louisiana PVC unit ahead of freeze GCGV Portland, Texas, EG site down ahead of freezing temperatures Indorama's Clear Lake, Texas, EG site down for winter weather Indorama Lake Charles cracker shut due to weather Indorama shuts Port Neches, Texas, cracker ahead of winter storm Indorama's Port Neches, Texas, EG unit down ahead of winter weather Ingleside, Texas, cracker shut before winter storm LACC Lotte/Westlake Louisiana cracker and EG unit down ahead of winter weather Lyondell Channelview, Texas, crackers flaring on operations issues Lyondell La Porte, Texas, cracker sees weather-related flaring THREAT OF POWER OUTAGES AND GAS OUTAGESWhile industrial plants can avoid direct damage from cold weather, they can still be subject to power outages or the loss of natural gas supplies. If the forecasts for sleet and snow hold true, then this could cause powerlines to snap. Spikes in demand for heating can overwhelm the power grid in Texas, leading to widespread blackouts. Chemical plants and refineries rely on electricity to power motors and pumps. As of Tuesday, power supply should be sufficient to meet demand through 28 January, according to the Electric Reliability Council of Texas (ERCOT), which manages the flow of electricity in most of the state. The electricity grid in Texas was holding up reasonably well as of Tuesday morning, with nearly 48,000 power outages recorded according to Poweroutage.us. The figure is reasonably low for Texas' grid standards and was much lower than the more than 80,000 outages reported in California, a US state with similar population to Texas which is still reeling from wildfires around Los Angeles. Cold temperatures can also affect the flow of natural gas, potentially causing freeze-offs during which water or hydrates freeze or can create blockages. One such freeze-off caused on Monday a shutdown of a scrubber at an amine treater in Winkler county in west Texas, according to a filing with the Texas Commission on Environmental Quality (TCEQ). Low temperatures could disrupt operations at the plants that process natural gas. Since 2021, cold weather has disrupted US natural gas production during every winter, according to the Energy Information Administration (EIA). PROLONGED STRETCH OF FREEZING TEMPERATURESThe following table shows the weather forecast for the Houston metropolitan area this week, with temperatures listed in Fahrenheit first and, in brackets, in Celsius. Tuesday Wednesday Thursday Friday High 36 (2.2) 42 (5.6) 48 (8.9) 52 (11) Low 22 (-5.6) 29 (-1.7) 29 (-1.7) 37 (2.8) Source: National Weather Service Eric Berger, an analyst at Houston’s weather blog Space City Weather, said on Tuesday that infrastructure disruption should have cleared by Wednesday morning, although in some locations it may last practically all day. “After a cold start, high temperatures on Wednesday are expected to reach 40 degrees [Fahrenheit] or even a little warmer under sunny skies. The combination of mostly sunny skies and sublimation should allow for roads to mostly dry out, but for some locations, this may not happen until after noon,” said Berger. “I realize the uncertainty is no fun, but such snow and ice events are relatively rare in Houston, so we are working on limited data about local roads and their response to icy conditions. Most of Houston will fall into the upper 20s [Fahrenheit] on Wednesday night.” Front page picture: Houston's suburbs after heavy snowfall overnightSource: Adam Yanelli/ICIS Additional reporting by Al Greenwood, John Donnelly and Melissa Wheeler

21-Jan-2025

SINGAPORE (ICIS)–Shares of petrochemical firms in Asia and China’s commodity futures markets closed mixed on Tuesday, with no immediate announcement of new tariffs from the US on the first day of Donald Trump’s second term as president. South Korea’s LG Chem closed 4.75% lower in Seoul , while Japan’s Mitsubishi Chemical finished 1.85% higher in Tokyo. China’s state oil and gas firm PetroChina was down 1.40%, while chemicals major Sinopec ended down 1.62% in Hong Kong. The CSI 300 Index, a benchmark for Chinese mainland shares, edged up 0.08% to close at 3,832.61. Japan's benchmark Nikkei 225 rose by 0.32% to settle at 39,027.98, while South Korea's KOSPI Composite Index ended 0.08% lower at 2,518.03. Hong Kong's Hang Seng Index finished the session 0.91% higher at 20,106.55. Singapore's Straits Times Index (STI) was trading 0.27% lower at 3,797.61 at 08:44 GMT. Analysts said that markets have already pre-digested the “Trump effect”. In his presidential campaign, Trump had threatened to impose tariffs on all US imports. His first four-year term as US president in 2017-2021 sparked the US-China trade war. In China, six out of nine petrochemical futures markets posted declines on Tuesday.   CNY/tonne 21-Jan % change from previous session Linear low density polyethylene (LLDPE)                                   7,808 -0.3% Polyvinyl chloride (PVC)                                   5,304 0.6% Ethylene glycol (EG)                                   4,753 -0.2% Polypropylene (PP)                                   7,400 -0.7% Styrene monomer (SM)                                   8,520 0.0% Paraxylene *                                   7,420 -0.1% Purified terephthalic acid (PTA)*                                   5,192 -0.2% Methanol*                                   2,591 0.6% Polyethylene terephthalate  (PET)*                                   6,388 -0.2% Sources: Dalian Commodity Exchange, *Zhengzhou Commodity Exchange Overall trading activity in China’s petrochemical markets is waning as many players have suspended trading to prepare for the upcoming Lunar new year holiday, which will last eight days from 28 January. ($1 = CNY7.28) Additional reporting by Nurluqman Suratman

21-Jan-2025

MUMBAI (ICIS)–State-run Bharat Petroleum Corp Ltd (BPCL) has secured loans worth Indian rupee (Rs) 318.0 billion ($3.7 billion) for its refinery expansion and petrochemical project at its Bina site in the central Madhya Pradesh state. The company signed an agreement with a consortium of six lenders led by state-owned State Bank of India (SBI) for the loan, it said in a bourse filing on 17 January. In addition to SBI, the consortium of lenders includes Punjab National Bank, Union Bank of India, Canara Bank, Bank of India, and Export-Import Bank of India. The loan amount accounted for about 65% of the total project cost of Rs489.3 billion. The project will increase the refinery’s capacity by more than 41% to 11 million tonnes/year. It will also include a petrochemical complex comprising a 1.2 million tonnes/year ethylene cracker unit and will have units to produce downstream petrochemical products including linear low density polyethylene (LLDPE), high density PE (HDPE), polypropylene (PP), bitumen, benzene as well as gasoline, diesel and aviation turbine fuel. The company expects to commission the project by the fiscal year ending March 2028. Once operational, the new complex will significantly reduce India’s dependence on petrochemical imports, BPCL chairman and managing director G Krishnakumar said. In August 2024, BPCL chose US-based Lummus to provide technologies for the ethylene cracker and downstream units at the Bina complex. ($1 = Rs86.52)

21-Jan-2025

HOUSTON (ICIS)–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. The absence of any tariff proposal marks a contrast to his campaign platform and his subsequent threats after winning the election. Tariffs would expose the US chemical industry to disruptions in trade flows, increased costs for chemicals in which the nation has deficits and the threat of retaliatory tariffs on its  exports of polyethylene (PE), polyvinyl chloride (PVC) and other plastics and chemicals. Instead of proposing tariffs, Trump issued a memorandum that called for the following: The Secretary of Commerce to investigate the nation's deficit and its consequences to the economy and to national security. The Secretary of the Treasury to investigate the creation of an External Revenue Service to collect tariffs and duties. The US Trade Representative to investigate any unfair trade practices. The US Trade Representative to prepare for the July 2026 review of the United States-Mexico-Canada Agreement (USMCA), which is the name of the countries' trade agreement that replaced NAFTA. The US Secretary of the Treasury to investigate exchange rates. The US Trade Representative to review and recommend revisions to existing trade agreements. The US Trade Representative to negotiate bilateral or sector-specific agreements to open markets. The Secretary of Commerce to review policies and regulations regarding antidumping and countervailing duty laws. A review of several trade issues with China, including the Economic and Trade Agreement. This is also known as the phase one agreement, under which China failed to fulfil its import commitments. The absence of first-day tariff proposals does not mean that Trump will not make any later in his presidency. In some cases, the US president has the authority to propose them even without investigations. For example, the International Emergency Economic Powers Act (IEEPA) of 1977 allows the president to propose tariffs that would address a severe national security threat. It requires only a consultation with Congress. During Trump's presidential campaign, he 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. After winning office, he threatened to impose tariffs of up to 25% on imports from Canada and Mexico and up to 10% on imports from China. Thumbnail image: Inauguration Ceremony for President Donald Trump in Washington, District of Columbia, United States – 20 January 2025 (By Chip Somodevilla/UPI/Shutterstock)

21-Jan-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 17 January. US steadies 2025 growth outlook as Europe struggles – IMF Global economic growth this year is expected to increase modestly compared to 2024, the International Monetary Fund (IMF) said on Friday, as stronger expectations of US growth offset an increasing bearish outlook for Europe. Europe jet fuel prices lift off with Brent surge, but demand fails to take flight Jet fuel spot prices in Europe climbed in the week to 14 January, mirroring a rally in upstream Brent crude and gasoil values. However, activity in the physical market remained sluggish, weighed down by low buying interest and abundant supply. Latest US sanctions could hit Russia oil supply – IEA 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. Europe naphtha climbs on Brent gains amid sluggish buying, weaker margins Open-spec naphtha (OSN) spot quotations in Europe have been on an upward trajectory, rallying on the back of firming Brent crude values. This was despite subdued blending requirements and poor feedstock demand which kept market liquidity low. PP and PE Africa markets rebalance, some price rises emerge amid lacklustre demand Spot prices in the African polypropylene (PP) and polyethylene (PE) markets were mostly stable in the first full week of January, although upward momentum was felt in high density polyethylene (HDPE) and low density polyethylene (LDPE) due to tightening supply.

20-Jan-2025

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US edged lower this week as carriers have reduced short-term rates to both coasts to stimulate demand ahead of Lunar New Year (LNY). Analysts at freight forwarder Flexport said that pre-LNY demand has slowed, resulting in low carrier vessel utilization rates and a softening market. Rates from Shanghai to New York fell by 4% from the previous week and rates from Shanghai to Los Angeles fell by 5%, according to supply chain advisors Drewry and as shown in the following chart. Drewry expects spot rates to decrease slightly in the coming weeks due to increased capacity. Global average rates fell by 3%, as shown in the following chart. Flexport analysts said that space remains constrained following the pre-LNY rush, especially on fixed allocations, but some strings still have open space, especially to the West Coast and, to a lesser extent, the East Coast. Carriers have planned 11% blank sailings during the LNY period, aligning with network adjustments. 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. USG-ASIA CHEM TANKER RATES TICK LOWER US chemical tanker freight rates assessed by ICIS were steady to lower for most trade lanes this week, with slight decreases on the US Gulf (USG) to Asia trade lane. There are bigger gaps of vessel space showing in January. Therefore, there are a backlog of outsiders looking for opportunities, which weighed on spot rates this week, pushing them lower. From the USG to Rotterdam, there has been a lull in activity on this route as contract space for January is soft, leaving players looking for additional cargoes to complete space for a few tanks. Styrene monomer, glycol and methanol has been said to be a popular commodity within this trade lane. As a result, smaller parcel freights have taken a steep drop from January loadings, while larger parcel sizes seem destined for the same and rates decreasing, according to a broker, various glycol and methanol cargos have keen interest along this route. From the USG to Brazil, there are a few outsiders open for the end of January to early February, along with some regulars with some small pocket space. This trade lane is expected to face some downward pressure as the list of fully open vessels presently continues to grow, according to a broker. Meanwhile from the USG to the Mediterranean, there is still a bit of open space, and the market quotes continue to come in for February. This route after a bit of uncertainty is seeing rates steadying for the balance of open space. On the other hand, bunker prices were higher this week following the rise in energy prices. With additional reporting by Kevin Callahan

17-Jan-2025

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Flake sellers see more positive start to 2025 based on January volumes Feedstock bale prices still a key issue Buyers yet to accept higher prices for January February price talks not yet underway

17-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