Polypropylene (PP)

COATZACOALCOS, Mexico (ICIS)–Mexico’s new ethane import terminal in the state of Veracruz is poised to transform the country's struggling petrochemical sector by alleviating critical raw material shortages, according to the chief at the facility. Cleantho de Paiva, CEO at the Terminal Quimica Puerto Mexico (TQPM) in Veracruz’s municipality of Coatzacoalcos, said the terminal should start up in May and be able to import 80,000 barrels of ethane, mostly from the US. Natural gas derivative ethane has become the prime choice to produce polymers in North America after the US’s shale gas boom in the 2010s. The ethane will be primarily delivered to polyethylene (PE) major Braskem Idesa, a joint venture between the Brazilian and Mexican chemicals producers of the same name. TQPM is, at the same time, a joint venture between Braskem Idesa and Dutch company Advario. ICIS visited TQPM on 15 March – a few pictures shown at the bottom. FINALLY, START-UP PLANNED FOR MAYThe terminal’s years-long construction is a key project of Braskem Idesa, which until now has been dependent on supply of inputs mostly from Mexico’s crude oil major Pemex, supply which at a time was unstable and below what had been agreed. The situation became so critical that Braskem Idesa, which operates one of Latin America's newest PE complexes, was forced to seek alternative supply arrangements. Industry analysts have pointed to Pemex's supply shortfalls as a major constraint on Mexico's petrochemical sector growth. The terminal’s financing was at some point in doubt, although the parties agreed to inject further cash last year so it could be finalized in 2025. TQPM will make it easier for Braskem Idesa to secure inputs necessary to produce PE, without depending on Pemex, whom at the same time would be able to redirect the inputs it was delivering to the PE producer to other petrochemicals companies. A common theme for Mexican chemicals companies is the lack of raw materials, so any additional supply is always welcome news, said de Paiva. "This project has a very important impact on the development of the national petrochemical industry, because it's precisely to complement access to raw materials that we lack today. With a capacity to import up to 80,000 barrels per day of ethane, this will significantly exceed the 63,000 barrels Braskem Idesa currently requires for its operations,” said de Paiva. “The issue of the lack of ethane in the country is structural. Since the US is the largest producer and exporter of petrochemical ethane, building this terminal gives us access to import sufficient raw material. "When the terminal comes into operation, Pemex, which currently has an obligation to supply a certain amount to Braskem Idesa, will no longer have it and will be able to direct this raw material to its own petrochemical complexes and also resume its operating capacity," he added. This cascading effect could benefit Mexico's broader petrochemical industry, potentially allowing Pemex to better serve other domestic manufacturers once relieved of its Braskem Idesa commitments. De Paiva described this as a “structuring” event for Mexico’s manufacturing industry as it could allow the country's petrochemical industry to return to operating its plants at higher capacities. The executive offered a segment-by-segment assessment of Mexico's chemical industry, noting varying conditions across different product categories. He said polypropylene (PP) production, led by Indelpro – a joint venture between Mexico’s Alpek and the US’s LyondellBasell – as well as production of polyethylene terephthalate (PET) are performing quite well. It is the PE market which faces significant shortages, said de Paiva. PEMEX ASSETSAddressing questions about the state of Pemex's aging petrochemical assets, de Paiva suggested that proper maintenance and technological upgrades could extend the operational life of even decades-old facilities. Some players in Mexico’s chemicals industry think there is room for joint ventures with the private sector to revive some of Pemex’s assets. That was the opinion of Martin Toscano, director for Mexican operations at Germany’s chemicals major Evonik, in an interview with ICIS. Other players, however, think the only way forward would be privatization so Pemex, which recurrently needs bailing out from the Mexican Treasury, would stop being a burden for the taxpayer, according to Javier Soriano, director at chemicals distributor Quimisor. De Paiva said he could not opine about Pemex’s assets, but did say that if plants are properly maintained they should be able to run for decades after start-up. "Petrochemical plants must operate for 30, 40, even 50 years, but they must maintain a continuous maintenance and technological upgrade program. Braskem's experience in Brazil offers a glimpse of this: the company successfully operates plants of similar age, but with consistent investments in modernization,” said de Paiva. Before being appointed CEO at TQPM – a position he will keep for some time after the start-up in May, he said – de Paiva spent decades working for Braskem in Brazil, his country of origin. The terminal's completion comes at a critical time for Mexico's manufacturing sector, which has been looking to capitalize on nearshoring opportunities as global companies seek to reduce dependence on Asian supply chains. Industry experts suggest that resolving raw material constraints could position Mexico's petrochemical sector for significant growth, particularly given its proximity to the US market and competitive labor costs. De Paiva concluded saying that once TQPM is up and running, that will create room for Braskem Idesa to think about potential expansions. The terminal’s storage tanks, being painted The dock where two Braskem Idesa-owned vessels will unload the ethane, to come mostly from the US Work was energetic even on a Saturday (15 March) as TQPM’s two partners want to inaugurate the facility in less than two months Miniature TQPM; right bottom, detail of area’s map and the pipelines (yellow line) connecting the terminal with Braskem Idesa’s facilities, some 10km away Pictures source: ICIS  Interview article by Jonathan Lopez

17-Mar-2025

HOUSTON (ICIS)–The threat of additional US tariffs, retaliatory tariffs from trading partners, and their potential impact is fostering a heightened level of uncertainty, dampening consumer, business and investor sentiment, along with clouding the 2025 outlook for chemicals and economies. The US chemical industry, a massive net exporter of chemicals and plastics to the tune of over $30 billion annually, is particularly exposed to retaliatory tariffs. Chemical company earnings guidance for Q1 and all of 2025 is already subdued, with the one common theme from the investor calls being little-to-no help expected from macroeconomic factors this year. Tariffs only cloud the outlook further. Tariffs have long been a feature of US economic and fiscal policy. In the period to the 1940s, tariffs were used as a major revenue source to fund the federal government before the introduction of the income tax and were also used to protect domestic industries. After 1945, a neo-liberal world order arose, which resulted in a lowering of tariffs and other trade barriers and the rise of globalization. With the collapse of the Doha Round of trade negotiations in 2008, this drive stalled and began to reverse. Heading into this year’s International Petrochemical Conference (IPC) hosted by the American Fuel & Petrochemical Manufacturers (AFPM), it is clear that the neo-liberal world order has ended. Rising geopolitical tensions and logistics issues from COVID led many firms to diversify supply chains, leading to reshoring benefiting India, Southeast Asia, Mexico and others, and to the rise of a multi-polar world. It is also resulting in the rise of tariffs and other trade barriers around the world, most notably as US trade policy. FLUID US TRADE POLICYThe US administration’s policy stance on tariffs has been very fluid, changing from day to day. It is implementing 25% tariffs on steel and aluminium imports on 12 March and has already placed additional tariffs of 20% on all imports from China as of 4 March (10% on 4 February, plus 10% on 4 March). On 11 March, the US announced steel and aluminium tariffs on Canada would be ramped up to 50% in retaliation for Canadian province Ontario placing 25% tariffs on electricity exports to the US. Later, Ontario suspended the US electricity surcharge, and the US did not impose the 50% steel and aluminium tariff. The US had placed 25% tariffs on imports from Canada (10% on energy) and Mexico on 4 March but then on 5 March exempted automotive and then on 6 March announced a pause until 2 April. China retaliated by implementing 15% tariffs on US imports of meat, fish and various crops, along with liquefied natural gas (LNG) and coal. Canada retaliated with 25% tariffs on C$30 billion worth of goods on 4 March and then with the US pause, is delaying a second round of tariffs on C$125 billion of US imports until 2 April. Mexico planned to retaliate on 9 March but has not following the US pause. US President Trump has also threatened the EU with 25% tariffs. We have a trade war and as 1960s Motown artist Edwin Starr sang, “War, huh, yeah… What is it good for?… Absolutely nothing.” Canada, Mexico and China are the top three trading partners of the US, collectively making up over 40% of US imports and exports. The three North American economies, until recently, had low or non-existent tariffs on almost all of the goods they trade. This dates back to the 1994 NAFTA free trade agreement, which was renegotiated in 2020 as the USMCA (US-Mexico-Canada Agreement). A reasoning behind the tariff threats on Canada and Mexico is to force Canada and Mexico to stop illegal drugs and undocumented migrants from crossing into the US. These tariffs were first postponed in early February after both countries promised measures on border security, but apparently more is desired. But the US also runs big trade deficits with both countries. Here, tariffs are seen by the administration as the best way to force companies that want US market access to invest in US production. IMPACT ON AUTOMOTIVEUS automakers are the most exposed end market to US tariffs and potential retaliatory tariffs, as their supply chains are even more highly integrated with Mexico and Canada following the USMCA free trade deal in 2020. The USMCA established Rules of Origin which require a certain amount of content in a vehicle produced within the North America trading partners to avoid duties. For example, at least 75% of a vehicle’s Regional Value Content must come from within the USMCA partners – up from 62.5% under the previous NAFTA deal. Supply chains are deeply intertwined. In the North American light vehicle industry, materials, parts and components can cross borders – and now potential tariff regimes – more than six times before a finished vehicle is delivered to the dealer’s lot. US prices for those goods will likely rise. The degree to which they rise (extent to which tariffs costs will pass through) depends upon availability of alternatives, structure of the domestic industry and pricing power, and currency movements. In addition, some of the Administration’s polices dealing with deregulation, energy, and tax will have a mitigating effect on the negative impact of tariffs for the US. The 25% steel and aluminium tariffs will add nearly $1,500 to the cost of a light vehicle and will result in lower sales for the automotive industry which has been plagued in recent years by affordability issues. If it had been implemented, the 50% tariff on steel and aluminium imports from Canada would only compound the pricing impact. All things being equal, 25% tariffs on the metals would push down sales by about 525,000 units but some of the favorable factors cited above as well as not all costs being passed through to consumers will partially offset the effects of higher metal prices. Partially is the key word. Since so many parts, components, and finished vehicles are produced in Canada and Mexico, US 25% tariffs on all imports from Canada and Mexico would add further to the price effects. The economic law of demand holds that as prices of a good rise, demand for the good will fall. ECONOMIC IMPACTTariffs will dampen demand across myriad industries and markets, and could add to inflation. By demand, we mean the aggregate demand of economists as measured by GDP. Aggregate demand primarily consists of consumer spending, business fixed investment, housing investment, and government purchases of goods and services. Tariffs would likely add to inflation but the effects would begin to dissipate after a year or so. By themselves, the current round of tariffs on steel and aluminium and on goods from Canada, Mexico and China will dampen demand due to higher prices. Plus, as trading partners retaliate, US exports would be at risk. Preliminary estimates suggest the annual impact from these tariffs – in isolation – on US GDP during the next three years could average 1.4 percentage points from baseline GDP growth. Keep in mind that there are many moving parts to the economy and that the more favorable policies could offset some of this and, as a result, the average drag on GDP could be limited to a 0.5 percentage point reduction from the baseline. POTENTIAL GDP IMPACT OF US TARIFFS – 20% ON CHINA, 25% ON MEXICO AND CANADA Real GDP is a good proxy for what could happen in the various end-use markets for plastic resins and the reduction of US economic growth. In outlying years, however, tariffs could support reshoring and business fixed investment. The hits on Mexico and Canada would be particularly. China’s economic growth would be affected as well. But China can shift exports to other markets. Mexico and Canada have fewer options. Resilience will be key to growing uncertainty and will lead to shifting trade patterns and new market opportunities. This is where scenarios, sound planning and strategies, and leadership come into play. US EXPORTS AT RISK, SUPPLY CHAINS TO SHIFTUS PE exports are particularly vulnerable to retaliatory tariffs. The US is specifically targeting tariffs on countries and regions that absorb around 52% of US PE exports – China, the EU, Mexico and Canada, according to an ICIS analysis. Aside from PE, the US exports major volumes of PP, ethylene glycol (EG), methanol, PVC, styrene and vinyl chloride monomer (VCM), along with base oils to countries and regions targeted with tariffs. The US exports nearly 50% of PE production with China and Mexico being major outlets. China has only a 6.5% duty on imports of US PE, having provided its importers with waivers in February 2020 that took rates to pre-US-China trade war levels. The US-China trade war under the first US Trump administration started in 2018 with escalating tariffs on both sides, before a phase 1 deal was struck in December 2019 that removed some tariffs and reduced others. After the waivers offered by China to importers in February 2020, US exports of PE and other ethylene derivatives surged before falling back in 2021 from the COVID impact. They then rocketed higher through 2023 and remained at high levels in 2024. Since 2017, the year before the first US-China trade war, US ethylene and derivative exports to China are up more than 4 times, leaving them more exposed than ever to China. With tariff escalation, chemical trade flows would shift dramatically. Just one example is in isopropanol (IPA). Shell in Sarnia, Ontario, Canada, produces IPA, of which over 85% is shipped to the US, mainly to the northeast customers, said ICIS senior market analyst Manny Borges. “It is a better supply chain for the customers instead of shipping product from the US Gulf,” said Borges. “With the increase in tariffs, we will see several customers shifting volumes to domestic producers or countries where the tariffs are not applied,” he added. US IPA producers are running their plants at around 67% of capacity on average and have sufficient capacity to supply the entire domestic market, the analyst pointed out. This dynamic, where US producers supply more of the local market versus imports, would likely play out across multiple product chains as well, especially in olefins where the US is more than self-sufficient. Even as the US is more than self-sufficient in, and a big net exporter of PE, ethylene glycols, polypropylene (PP) and polyvinyl chloride (PVC), it imports significant quantities from Canada. In the event of a 25% tariff on imports from Canada, US producers could easily fill the gap, although logistics would have to be reworked. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Insight article by Kevin Swift and Joseph Chang

12-Mar-2025

HOUSTON (ICIS)–Whether it is dealing with on-again, off-again tariffs, new charges at US ports for carriers with China-flagged vessels in their fleets, or booking passage through the Panama Canal, participants at this year's International Petrochemical Conference (IPC) have plenty to talk about. Last year, shippers were dealing with tight global capacity after carriers began avoiding the Suez Canal because of attacks on commercial vessels by Houthi rebels, the possibility of labor issues at US Gulf and East Coast ports, and fewer slots for passage through the Panama Canal as that region dealt with a severe drought. But 2025 has brought a new series of challenges that will keep logistics and supply chain professionals busy. TARIFFS The US has imposed tariffs of 25% on most imports from Canada and Mexico, effective 4 March, but US President Donald Trump said last week that tariffs on goods from Mexico and Canada that are compliant with the USMCA free trade agreement will be exempt until 2 April. It is unclear what shifts in trade flows will be seen once tariffs are fully implemented, but analysts at Dutch banking and financial services corporation ING still expect global trade to see solid growth amid trade tensions, geopolitical risks and economic nationalism. ING expects trade in goods to grow by 2.5% year on year in 2025, driven by heavy front-loading in the first quarter and increased intra-continental trade throughout the year. “While it is true that some countries heavily depend on the US market, such as Canada and Mexico, global trade is far more diverse and does not solely revolve around the United States,” ING said. According to the World Integrated Trade Solution (WITS) data, which contains trade data among 122 countries, the US accounts for 13.6% of total global exports. Additionally, the reliance on raw materials and critical intermediate products that cannot be substituted, as well as new alliances and potential trade deals speak for continued trade in goods. STRATEGIES FOR ADAPTATION Chemical distributor GreenChem Industries offered suggestions that chemical companies could implement to mitigate the effects of tariffs. These include finding new sources for raw materials in regions with favorable trade agreements, modifying transportation routes and methods to lower costs and enhance efficiency, discovering more affordable chemical alternatives that maintain quality, reevaluating trade agreements to secure more competitive pricing, and investigating the potential for manufacturing within strategic markets to avoid extra costs. USTR HEARING ON NEW PORT CHARGES The office of the US Trade Representative (USTR) is accepting public comment on proposed actions against Chinese-owned ships after a Section 301 investigation determined China’s acts, policies and practices to be unreasonable and to burden or restrict US commerce. The proposal includes proposed service fees of up to $1.5 million per US port call for vessels built in China, and up to $1 million per port call for China-based operators. USTR is now accepting public comment and will hold a public hearing on the proposed actions on 24 March. Some market players feel the proposal is aimed at container ships, but a broker in the liquid chemical tanker space said that if the text of the prosed action remains unchanged, the China-built tankers comprising the fleets of shipping majors Stolt and Odjfell could be targeted. As of now, the proposal would include all commercial vessels calling on US ports. The West Gulf Maritime Association (WGMA) said that currently, there is not enough US inventory to meet the demand for maritime transport nor has the USTR suggested plans for meeting the projected demands. There is also not enough shipbuilding capacity within the US to construct the required hulls. Based on the draft executive order, the USTR will have no more than 180 days to implement the port fee collection program. The WGMA intends to individually and collectively submit comments against the proposed policy as written with recommendations, and they strongly encourage all shipping companies and vessel operators do the same through any means available to them. LIQUID CHEMICAL TANKERS Trade data from 2024 shows that about 25% of US liquid bulk exports and 21% of imports were carried on Chinese-built vessels, which will particularly impact the specialty chemical, vegetable oils and renewable fuels sectors. The fees would mean increasing the number of exports on US-flagged vessels and, given the limited existing US-flagged chemical tanker fleet, this will make any shortfall difficult to make up. Typically, it will take 24-36 months for construction of these type of specialized vessels, therefore the industry will face significant challenges in the meantime. These significant increases would most likely lead to a few different scenarios such as substantial rate increases, fewer port calls and potential supply chain disruptions for US manufacturers relying on specialty chemical imports. As a result, most owners and charterers are taking a wait and see approach while looking for longer term solutions. Liquid tanker spot rates hit their highest over the past decade in 2025 but have fallen from the peaks, according to ICIS pricing history. The following chart shows rates over the past year on the US Gulf-Asia trade route. CONTAINER RATES Rates for shipping containers from east Asia and China to the US have fallen considerable this year as capacity adjusted to diversions away from the Suez Canal and as newly built vessels entered the market. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said that the combination of a seasonal slump in demand and the possible end of frontloading ahead of tariffs likely drove the sharp fall in transpacific ocean rates recently. 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. PANAMA CANAL Because of a severe drought that lowered levels in the freshwater lake that serves the Panama Canal, the Panama Canal Authority (PCA) was forced to limit daily crossings for the first time in its history. The drought was in part brought about because of the El Nino weather phenomenon, which contributes to less rainfall, especially during what is the typical rainy season. But weather patterns have shifted to La Nina, which brings increased rains and have helped levels at Gatun Lake approach capacity. Gabriel Mariscal, agency business manager at port service provider CB Fenton & Co, said the situation at the Panama Canal is completely different from a year ago. “We are not expecting to have any restrictions this year in regard to transit,” Mariscal told ICIS. “In fact, during a normal summer season, perhaps there could be a draft restriction at the Neopanamax locks, but I think that this year that will not be the case.” Mariscal said the PCA is updating regulations for customer rankings. Customer rankings consider the volumes a shipper moved through the canal over the previous 12 months, as well as the number of tolls they have paid. For example, if there are 10 slots for passage on a given day, and the PCA receives 20 requests for those slots, the higher-ranking customers will get priority. If a shipper is unable to book a slot in the first period (90 days before passage) or the second booking period (14 days before passage) then they go to the auction, where the highest bidder wins. Container shipping companies Maersk and MSC are the highest two ranked customers at present. Mariscal said Maersk has at least three vessels that transit the canal each day. PANAMA TENSIONS WITH US Mariscal said that the new presidential administration under Trump has caused some stress for the central American country. Because of this, he expects extreme care to be taken by the PCA when announcing new rules or regulations so as not to increase tensions. Trump surprised some shortly after his inauguration when he said that the US should reclaim the Panama Canal. A US congressman has since introduced a bill that would authorize the purchase of the Panama Canal. Trump threatened to reclaim the canal if Panama did not take immediate steps to curb what Trump called China’s influence and control over the vital waterway. Panama’s president said in early February the country will not renew its agreement with China’s Belt and Road Initiative (BRI) after a visit from US Secretary of State Marco Rubio. Then, last week a consortium led by private equity firm BlackRock agreed to pay $22.8 billion for port terminal operations from Hutchison Port Holdings (HPH), which includes terminals in Panama. It was Hong Kong-listed CK Hutchison’s ownership of the ports at both entrances to the canal that likely concerned Trump. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Visit the Logistics: Impact on chemicals and energy topic page Focus article by Adam Yanelli Additional reporting by Kevin Callahan Thumbnail image shows a container ship passing through the Panama Canal. Courtesy the Panama Canal Authority

11-Mar-2025

SINGAPORE (ICIS)–Sentiment in Asia’s petrochemical markets remains cautious with prices of some products – particularly in the southeastern region – were rising on tight supply, amid escalating trade tensions between the US and its major trading partners, including China. China’s oversupply-driven exports weigh on markets; post-Lunar New Year demand weaker than expected US tariff fears cause jitters across downstream industries Methanol supply constraints persist TRADES REMAIN SUBDUED Market activity in key chemical segments remains muted as buyers were staying on the sidelines, waiting for clarity on US trade policies and overall demand recovery. In the benzene market, South Korea’s January exports to the US slumped by 81% year on year to 15,000 tonnes, according to ICIS data. The decline was attributed to increased European supply to the US. “The market is cautious as everyone is waiting for more clarity on US tariff policies,” a trader said. South Korea faces potential hefty tariffs under the US’ plan to impose reciprocal tariffs from 2 April, even though the two countries have an existing free trade agreement. In the caprolactam (capro) market, producers are grappling with poor margins while supply within China continues to grow. “Capro margins have been bad for six months now, and demand didn’t pick up post-Lunar New Year,” said a Chinese producer. Chinese producers were exporting more to southeast Asia and Europe, in view of a general oversupply of petrochemicals and muted demand in the domestic market and following the US’ new 20% tariffs on all Chinese goods. For polypropylene (PP), China has ramped up exports to Vietnam and other southeast Asian nations which were exerting downward pressure on prices. With more Chinese capacity coming online, this trade flow is likely to continue. Chinese producers are increasingly willing to accept lower margins to capture market share in the polyolefin markets, creating ripple effects across Asia and beyond, forcing regional producers to adjust pricing strategies to remain competitive. However, these actions could be met with antidumping duties (ADD) as southeast Asian governments act to protect domestic producers. SHIPPING SECTOR WARY OF US POLICIES US protectionism is on the rise again under President Donald Trump’s administration, with an ongoing probe being conducted on China’s shipbuilding industry, which may be slapped with potential duties of up to $1.5 million per vessel. This move aims to deter reliance on Chinese-built ships and, instead, encourage investment in the US shipbuilding sector. China dominates the global shipbuilding industry, with over 81% of new tankers being built in the country, according to shipbroker Xclusiv in a November report. The fear is that if these tariffs come through, immediate cost impacts will be felt, especially on long-haul trades. Meanwhile, weaker freight demand post-Lunar New Year has also softened freight rates. Most downstream producers in China resumed operations in H2 February, after an extended holiday break. China was on official holiday from 28 January to 4 February. The northeast Asia winter was milder than expected, which reduced seasonal trade flows. DISRUPTIONS TIGHTEN SUPPLY While some chemical markets struggle with oversupply, others are experiencing tight supply due to plant outages. For methanol, supply is constrained in Malaysia, with Petronas’ unit experiencing operational issues, and Sarawak Petchem’s unit shut from late January. Iranian methanol plants have also been offline due to winter gas shortages, pushing Indian import prices up by $60/tonne within a week. Meanwhile, Russian supply disruptions due to drone attacks have tightened naphtha availability, strengthening prices. On the acetic acid front, plant turnarounds in China, Malaysia, and Japan initially tightened supply, but these units have since restarted, thereby improving availability of the material. OUTLOOK MIXED Market players remain wary of near-term price movements as supply and demand fundamentals shift across regions. March shipments for PE and PP in southeast Asia have largely been sold out, while Indonesian buyers are reluctant to commit to April purchases amid the Muslim fasting month of Ramadan, which started 1 March. Ramadan is observed in most parts of southeast Asia including Indonesia, southeast Asia’s biggest economy with a predominantly Muslim population. With uncertainties surrounding US’ trade policies, Chinese exports, and geopolitical risks, market sentiment remains mixed. Players are closely monitoring tariff developments and the potential impacts of further supply disruptions in key markets. Focus article by Jonathan Yee Additional reporting from Seng Li Peng, Isaac Tan, Tan Hwee Hwee, Angeline Soh, Jasmine Khoo, Julia Tan, Josh Quah, Damini Dabholkar, Doris He, Jackie Wong Thumbnail image: At Qingdao Port in Shandong province, China on 6 March 2025. (Costfoto/NurPhoto/Shutterstock)

10-Mar-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 7 March. China Feb manufacturing activity rebounds on seasonality By Fanny Zhang 03-Mar-25 11:47 SINGAPORE (ICIS)–China's official manufacturing purchasing managers' index (PMI) in February marked a return to expansion territory after a soft January reading as factories resumed operations after the Lunar New Year (LNY) holiday. INSIGHT: China set to maintain "around 5%" growth target By Nurluqman Suratman 04-Mar-25 11:00 SINGAPORE (ICIS)–China's "Two Sessions" this week will be closely watched as the government work report is released, outlining the country's policy priorities for the year amid escalating trade tensions with the US. UPDATE: ADNOC, OMV agree on polyolefins JV worth $60 billion By Jonathan Yee 04-Mar-25 16:45 SINGAPORE (ICIS)–Austria’s OMV and the UAE’s Abu Dhabi National Oil Co (ADNOC) on Tuesday agreed to form a $60 billion joint venture (JV) by combining polyolefins businesses Borouge and Borealis following two-year talks. Asia acetic acid market softens on easing supply, downstream turnarounds By Hwee Hwee Tan 05-Mar-25 14:05 SINGAPORE (ICIS)–Asian spot prices for acetic acid imports and exports are being dampened by lengthening supply and softening demand tied to a downstream sector. China targets record 2025 budget deficit to rev up economy By Fanny Zhang 05-Mar-25 14:50 SINGAPORE (ICIS)–China has set its 2025 fiscal deficit target at a record yuan (CNY) 5.66 trillion ($780 billion), equivalent to around 4% of GDP, to fund the government’s stimulus measures and ensure the world’s second-biggest economy would post a 5% growth. Thai central bank lowers interest on slower economic growth, global trade tensions By Jonathan Yee 05-Mar-25 15:34 SINGAPORE (ICIS)–Slower than expected economic growth and downside risks such as escalating global trade tensions spurred by US trade policy led Thailand’s central bank to cut its key interest rate by 0.25 percentage points to 2.00 on 26 February, the Bank of Thailand (BOT) said. PODCAST: Asia propylene demand curbed by weaker PO margins By Damini Dabholkar 06-Mar-25 00:07 SINGAPORE (ICIS)–The northeast Asian propylene import markets have been weighed down by lengthening supply amid restarts at propane dehydrogenation (PDH) units. However, lower affordability levels from derivatives such as propylene oxide (PO) have also curbed import demand. China PP suppliers persist with export end goal amid margin challenges By Jackie Wong 06-Mar-25 11:08 SINGAPORE (ICIS)–Despite poor margins for polypropylene (PP), suppliers in China are expected to continue to persevere with their plans to expand their export sales network and win market shares in southeast Asia. South Korea Feb inflation eases amid growing economic headwinds By Nurluqman Suratman 06-Mar-25 13:50 SINGAPORE (ICIS)–South Korea's headline inflation eased in February, giving the central bank flexibility to loosen monetary policy to boost economic activity amid a slowdown. Thai PTTGC hopes to snap out of losses; eyes US ethane feed for crackers By Nurluqman Suratman 07-Mar-25 14:46 SINGAPORE (ICIS)–Imports of US ethane feedstock will be a key component of Thai producer PTT Global Chemical's (PTTGC) broader strategy to recover from recent losses, alongside initiatives to enhance competitiveness and expand into high-value businesses.

10-Mar-2025

HOUSTON (ICIS)–Shipping container rates from Asia to both US coasts fell again this week as capacity has grown and as volumes have fallen after frontloading to beat tariffs, and liquid tanker rates rose on the transatlantic eastbound route and fell on the US Gulf to Asia trade lane. CONTAINER RATES Rates from Shanghai to Los Angeles fell by 9% this week, according to supply chain advisors Drewry, while rates from Shanghai to New York fell by 6%, as shown in the following chart. Rates to both US coasts are now at their lowest of the year, according to Drewry data. Global average rates in Drewry’s World Container Index fell by 3% and are also at their lowest over the past year, as shown in the following chart. Drewry expects rates to continue to decrease next week due to increased shipping capacity. Rates from online freight shipping marketplace and platform provider Freightos showed significant decreases this week, although their rates are slightly higher than Drewry’s. Judah Levine, head of research at Freightos, said that tariffs – or the threat of tariffs – led to many importers frontloading volumes to beat the announced levies. “The president’s proposed 60% tariffs on Chinese goods could go into effect as soon as April – as could a wider application of reciprocal tariffs on numerous countries – meaning the window to receive goods before then is about closed,” Levine said. Levine said that the combination of a seasonal slump in demand and the possible end of frontloading likely drove the sharp fall in transpacific ocean rates last week. “If frontloading of the past few months was significant enough, we could also expect to see subdued peak season demand and rates as a result,” Levine said. 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 MIXED US chemical tanker freight rates assessed by ICIS were mixed week on week. Trade routes from the US remain mixed with several trade lanes slightly higher and others lower. Cargo moving into Asia weakens following the recent tariff announcements and this route has recently seen a decrease of cargoes, as the tariffs have all but halted any spot activity for this trade lane. As a result, rates have dipped from the previous week. On the other hand, the rates from USG to Rotterdam experienced upward pressure. For this trade lane freight rates for March have strengthened, given the amount of space left. A shipowner said it is expecting the trend to continue throughout March, with higher contract of affreightment (COA) utilization leaving very little available space. From the USG to Brazil, this market has remained relatively unchanged but is experiencing some downward pressure. While the market continues to be active it is further influenced by freight availability and a swing in trade lane dynamics. Demand remains soft particularly for larger parcels further pressuring some downward movement. On the USG to India trade lane, the market remains extremely soft with plenty of space available as outsiders have entered the market. As a result, this has placed downward pressure, and rates could fall further on the route if this persists. Several inquiries were seen for monoethylene glycol (MEG), methanol, ethanol, and vinyl acetate monomer (VAM), but few fixtures were seen in the market. With additional reporting by Kevin Callahan

07-Mar-2025

HOUSTON (ICIS)–US recycled polypropylene (R-PP) players are currently watching polypropylene (PP) bale price movement as recent increases have put pressure on finished recycled resin margins. As R-PP pellet prices are already established close to or over 2x virgin PP costs, recent increases in bale feedstock costs can be difficult to pass through, though recent increases in virgin PP prices have somewhat softened the blow. Bales East Coast PP bale prices have nearly doubled since last fall, on strong demand from several existing players who have increased processing capacity over the last year, PureCycle in particular. With the recent start-up of PureCycle's plastics recovery facility (PRF), bale markets have seen surprising upwards movement on tight supply as players are having to compete for the same pool of available bales. Bale supply could further tighten as the 25% tariffs on imports from Canada and Mexico take effect this week. Some recyclers who are located near border regions have historically purchased bale feedstock from neighboring countries. The proposed tariffs could render imported bales from Canada and Mexico uneconomic, thus further limiting supply, or lending support to higher domestic pricing. Post-consumer resin On the finished resin side, demand remains mixed, as recyclers and converters continue to field increased customer inquiries but have struggled to transition these to sales volumes. Target end markets include consumer goods/packaging, automotive and fiber applications, though most end markets are currently grappling with the challenging macroeconomic outlook. The latest quarterly earnings results suggest most global brands saw single digit volume growth at the end of last year, though it remains to be seen how consumers react as inflation remains persistent Moreover, as bottom line pressure grows, those considering higher cost sustainable materials may shift back to lower cost virgin resins. Prices for natural post-consumer R-PP material were heard as high as $1.30/lb. This was considered to be an outlier. Prices for PureCycle’s dissolution based material, PureFive, were quoted at $1.36/lb, according to company representatives during their latest earnings call. Moreover, it was noted PureCycle has inventoried 7.2 million lbs of resin, awaiting third party certification. This compares to the Q4 production volume of 3.6 million lbs and uptime of 67% in December. Despite the small initial supply from PureCycle and other PP mechanical recyclers, the ability to compound should increase potential volumes. PureCycle noted typical fiber applications of their resin are a 50/50 blend, where as film applications are centered around a 30/70 blend of recycled/virgin material. Pricing for a 50/50 blend of natural mechanically recycled R-PP and virgin PP material was heard in the range of $1.20-1.30/lb. Moreover, compounding is relatively popular with the PP space, as many PP applications require specific materials properties which can only be achieved through a blend of materials. Though as the recycled plastic space remains nascent, many worry initial failures will deter future interest. One producer noted customers might trial one source of R-PP, and if the resin does not perform as expected, they abandon plans for R-PP integration without trialing other types of R-PP from other providers which can vary significantly in quality and technical support. ICIS is currently developing US R-PP market coverage. Monthly, free prototyped reports target those involved in the processing and purchasing of PP bales as well as mechanically recycled post-consumer and post-industrial PP resin within the US. These reports have market discussion on pricing, supply, demand and current news, split by post-consumer vs post-industrial market categories. If you are interested in learning more about this coverage and or receiving these prototype reports, please reach out to Emily.Friedman@icis.com.

06-Mar-2025

LONDON (ICIS)–Fresh US tariffs posing a big risk for polyethylene (PE), a chemical industry under threat of “extinction”, more Q4 results to pore over from EU polyolefins. There’s yet again plenty to digest for Europe polyethylene (PE) and polypropylene (PP) senior editors. Vicky Ellis and Ben Lake are joined by senior analysts Lorenzo Meazza (PE) and Emiliano Basualto (PP) to consider February trends, what to expect in March and the rest of 2025. Last but not least, they look at different scenarios that US tariffs will affect PE and PP. They touch on articles including US PE exports most vulnerable to retaliatory tariffs, Saudi plans for a new Sipchem/LyondellBasell mixed feed cracker and Orlen’s Q4 petchem operating loss improving. Podcast edited by Nick Cleeve ICIS senior analysts, editors and managers will be at the Hyatt Regency Hotel in Cologne, Germany on the 8-9 April for the 11th ICIS World Polyolefins Conference. You’ll also get to hear from industry leaders like Borealis, LyondellBasell and Covestro, as they share their insights. Discover more:

06-Mar-2025

LONDON (ICIS)–Driven by legislation, European packaging-suitable grades of recycled material are increasingly acting like specialty rather than commodity grades. Regulation has disconnected prices of packaging suitable grades of recycled material from: virgin values grades primarily serving other end-uses feedstock costs. This a pattern repeatedly shown through analysis of the yearly average price spreads against virgin and feedstocks across recycled polyethylene terephthalate (R-PET), recycled high density polyethylene (R-HDPE) and recycled polypropylene (R-PP) markets. These are the types of spreads featured in ICIS’ new Circular Plastics supply, demand and pricing beta (alongside long-term supply & demand data and forecasts). The beta is accessible via a short questionnaire here. There are two key events that show the impact most clearly: The 2019 entry into force of the EU’s Single Use Plastics Directive (SUPD) This included mandatory 25% recycled content targets for polyethylene terephthalate (PET) bottles by 2025, and 30% recycled content targets in all plastic bottles by 2030 Individual countries then had until 2021 to fully translate the SUPD into national law The 2022 publication of the draft Packaging and Packaging Waste Regulation (PPWR) This entered into force in January 2025 and included mandatory recycled content targets across most plastic packaging It replaced the previous Packaging and Packaging Waste Directive (PPWD) Recycled polyethylene terephthalate (R-PET) food-grade pellets (which predominantly serve the bottle-to-bottle market) have traded at a premium to virgin PET bottle grade spot prices on average yearly basis since 2011. The variation in the average yearly spread has intensified in recent years, suggesting increased decoupling between the two markets. Nevertheless, since the entry in to force of the SUPD in 2019 there has been a marked increase in the spread compared with all prior years, as shown in the below bar-chart. A similar – but less pronounced trend can be seen in the premium between R-PET food-grade pellets and feedstock colourless post-consumer PET bales, whereby the spread in each year from 2019 onwards remains higher than any year prior to 2019. Source: Circular Plastics Supply & Demand Beta Meanwhile, yearly average prices for R-PET food-grade pellets in each year since 2021 (the deadline for fully translating the SUPD into national law) have been consistently above any year prior to 2021. 2011 was the only prior year that saw higher average yearly prices than 2019 and 2020. 2011 saw what were record high prices at the time throughout the R-PET chain, in part attributable to a swathe of sustainability initiatives from brand owners. While 2023 and 2024 saw challenging macroeconomic conditions, yearly average R-PET prices remained consistent with their 2021 level (coming back from 2022 record highs driven by bale shortages and voluntary sustainability targets). Spreads with feedstock meanwhile in both 2023 and 2024 were above any year prior to 2022 (although production costs were also higher as a result of the energy cost crisis), and spreads with virgin higher than any year prior to 2020. Turning to recycled high density polyethylene (R-HDPE) and similar trends can be seen in the wake of the publishing of the first draft of the PPWR by the EU Commission in 2022. This was the first point where the general market became aware of the scope of the minimum recycled content targets. The average yearly spread between blow-moulding R-HDPE pellets (which predominantly serves packaging) and virgin blow-moulding spot prices has been at least €347/tonne higher than the years prior to 2022 in every year from 2022 onwards. Source: Circular Plastics Supply & Demand Beta For natural post-consumer R-PP pellets each year from 2022 onwards has seen the spread with virgin at least €567/tonne above 2021 levels. Source: Circular Plastics Supply & Demand Beta The average yearly spread between R-HDPE blow-moulding pellets and feedstock mixed-coloured bales, meanwhile, has been at least €263/tonne higher in each year from 2022 than the years preceding it. R-PP natural post-consumer pellets have seen a spread with feedstock mixed-coloured bales of at least €190/tonne higher than 2021 in each year from 2022 onwards. Taken together, the ‘break points’ that legislation creates in the market are clear. Comparing the trends in non-packaging grades makes this even starker. R-HDPE pipe-grade pellets provides the clearest example, but the trends are similar across other non-packaging grades in Europe. As the name suggests R-HDPE pipe-grade pellets serve the pipe industry rather than packaging. Players in this sector typically purchase based on cost-saving against virgin, and the pipe sector is heavily linked to construction demand where there are no current regulatory targets on recycled content that have been proposed in the EU. The yearly average spread between pipe-grade black and feedstock bale costs reached fresh record lows in both 2023 and 2024. Meanwhile, the yearly average spread with virgin shows that black pipe-grade pellets have become progressively cheaper compared with virgin injection moulding spot prices in both 2023 and 2024. The lack of regulation has meant that pipe-grade black pellets have been more exposed by the negative impact of the cost of living and energy cost crises on the construction sector, while regulation on packaging has acted as a bulwark, comparatively. The change in the spread with feedstock comes at a time when production costs have increased. For recycled polyolefins the conversion cost between bale to pellets is currently estimated at €400-500/tonne, up from an estimated €300/tonne before the current inflationary cycle. This has meant that in 2023 and 2024 many players have struggled with margins, and in some cases players have been selling at a loss. Technical limitations mean that the bulk of material across recycled polyolefins serves non-packaging rather than packaging markets – and the majority of producers serving packaging sectors also serve non-packaging sectors. So while on the face of it margins on packaging grades may seem high, it does not demonstrate the health of the overall industry. Consolidation risk in the market was high in both 2023 and 2024, and remains so in 2025. Squeezed margins on non-packaging grades are also limiting recyclers and waste managers’ ability to invest in additional sorting, infrastructure and production capacity necessary to meet EU recycled content target. The data clearly shows that regulation does have an impact. It also shows that when unevenly applied it can add market fragmentation, distortion and complexity that can harm the achievability of its goals. ICIS is developing a CIRCULAR PLASTICS product that enables you to compare Circular Plastics supply, demand and pricing. Please complete this questionnaire for early access. Access Data ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com

05-Mar-2025

HOUSTON (ICIS)–Navigating the complex maze of US recycling laws is no small feat, especially as state regulations vary significantly. With chemical recycling at the forefront of innovation, understanding how these laws impact the industry's growth is crucial for shaping a sustainable future. INTRODUCTIONThe legislative landscape in the US is highly fragmented, largely due to the wide range of legislative enactments passed across the different states. Three major categories of recycling laws affect chemical recycling: chemical recycling acceptance laws, post-consumer (PCR) content laws and extended producer responsibility (EPR) laws. Each of these legislative frameworks will influence the development of the chemical recycling industry in their unique way, highlighting the complexity of navigating this evolving regulatory environment. Chemical recycling is an umbrella term that encompasses a variety of different processes designed to break down plastic at a molecular level. These processes reverse-engineer plastics, breaking them down into their original building blocks, which can then be reused to create new materials. There are two primary categories of chemical recycling: thermal depolymerization and chemical depolymerization. While both methods target plastics at a molecular level, their approaches differ fundamentally. Thermal depolymerization relies on high heat to break down plastics, whereas chemical depolymerization employs specialized agents to achieve the same outcome. Each category includes specific processes: Thermal Depolymerization (TD): Includes pyrolysis (breaking down plastics into oil and gas through high heat and low oxygen) and gasification (converting plastics into syngas through higher temperatures and oxygen or steam). These processes typically favor polyolefins as feedstock – mainly polyethylene (PE) and polypropylene (PP). Chemical Depolymerization (CD): Includes glycolysis, methanolysis and hydrolysis, which involve chemical reactions with agents like glycol, methanol, or water to depolymerize plastics. These processes typically favor polyethylene terephthalate (PET) as feedstock. CHEMICAL RECYCLING ACCEPTANCE LAWSThe acceptance of chemical recycling in state legislation typically involves defining chemical recycling as a manufacturing process, rather than categorizing it as waste management. This means that chemical recycling plants in the state will not have to adhere to the same strict environmental guidelines as waste management facilities, incentivizing the construction of more facilities. It also potentially opens the door for chemical recyclers to access government resources – eg, grants, tax benefits – allocated for manufacturing in those states. Which states have accepted it?As of late 2024, exactly half of the US states have recognized chemical recycling as a manufacturing process. Source: ICIS This gradual legislative acceptance reflects growing awareness of the potential for chemical recycling to address plastic waste challenges. What are the effects of state-by-state acceptance?The acceptance of chemical recycling on a state-by-state basis, rather than at a federal level, is a double-edged sword. On one hand, when a state legitimizes chemical recycling, it strengthens industry sentiment, while on the other, it further fragments the chemical recycling industry. The incorporation of chemical recycling into legislation began in Florida in 2017, paving the way for other states to follow. The first significant wave of legislative approvals occurred in 2019, leading to a surge in chemical recycling facility start-ups the following year. This pattern repeated with another wave of legislative acceptances in 2021 and 2022, followed by a spike in facility start-ups in 2023. The chart below provides a detailed visualization of this trend. This trend signals that the acceptance of chemical recycling has positive effects on the industry, serving to drive growth and incite innovation. The acceptance of chemical recycling also presents the challenge of varying perspectives across states. Firstly, there is a divide between the states that have accepted chemical recycling as a manufacturing process and those that have not. Secondly, among the states that have accepted chemical recycling, there are a few states that explicitly exclude certain processes. For example, states such as Kentucky and Kansas are among those that exclude processes that turn plastic to fuel. One example of this can be seen in the State of Kentucky’s HB 45, which states, "'Advanced recycling' does not include energy recovery or the conversion of post-use polymers into fuel." Similar language can be found in the State of Kansas’ SB 114, "'Advanced recycling' does not include incineration of plastics or waste-to-energy processes, and products sold as fuel are not recycled products." In effect, wording such as this essentially excludes thermal depolymerization process as being considered a type of recycling while recognizing chemical depolymerization process, creating a further divide even among those states that have chosen to accept chemical recycling. The lack of uniformity in how chemical recycling is addressed adds confusion to the legislative landscape. POST-CONSUMER RECYCLING CONTENT LAWSIn addition to chemical recycling-specific legislation, other laws, such as PCR content mandates, indirectly influence the industry. PCR laws require that a minimum percentage of recycled material be included in certain types of packaging sold within a state. How many states and what are the effects on chemical recycling?Currently, five states – California, Maine, Connecticut, Washington and New Jersey – have enacted PCR laws. However, none of these states are among the 25 mentioned above that have formally accepted chemical recycling into legislation. This fact means that it is often unclear if outputs from chemical recycling are ineligible to count toward PCR requirements, undermining the industry's potential impact and growth. A notable exception exists in Washington, where its PCR law explicitly states: “Both mechanical and chemical recycling methods are acceptable.” This language demonstrates a more inclusive approach, contrasting with states like California and Maine, which remain cautious about embracing chemical recycling. The contrasting viewpoints held by states that have PCR content mandates is another example of lack of uniformity in chemical recycling-related legislation. EXTENDED PRODUCER RESPONSIBILITYEPR is another regulatory framework gaining traction in the US. EPR shifts the responsibility for managing a product's entire lifecycle from consumers to producers, with a particular focus on end-of-life management. Under EPR laws, producers that meet a certain requirement – usually large producers that put considerable amount of plastic onto the market – are obligated to join a producer responsibility organization (PRO) to help finance the collection, recycling, or disposal of their products. How many states and what are the effects on chemical recycling?EPR policies are currently implemented on a state-by-state basis, with Oregon leading the way by releasing a detailed plan. However, the relationship between EPR and chemical recycling remains complex. A key issue lies in how EPR laws define acceptable "end markets" for collected plastics. Oregon’s definition of responsible end markets appears tailored to traditional mechanical recycling, inadvertently excluding many chemical recycling technologies. This exclusion stems from the varied outputs of chemical recycling, which can range from plastics to fuels or chemical precursors, complicating their classification as traditional recycling. Without clearer language recognizing the potential of chemical recycling as an end market, EPR laws add another layer of ambiguity to chemical recycling. CONCLUSIONThe regulatory landscape surrounding chemical recycling remains highly fragmented, with varying degrees of acceptance and restrictions across states. While the recognition of chemical recycling in state legislation correlates with industry growth, inconsistencies in how it is defined and regulated create challenges for accelerated growth. Further complicating the landscape, PCR content mandates and EPR laws introduce additional uncertainties, as their definitions often exclude or fail to clarify the role of chemical recycling. This uncertainty can manifest as a lack of investment, both from chemical recyclers who will be hesitant to commit capital to new plants, and from investors wary of funding projects without clear long-term policy support. As the industry continues to develop, greater legislative uniformity and clearer regulatory frameworks will be necessary to unlock the full potential of chemical recycling as a viable solution to plastic waste management. Insight article by Joshua Dill

03-Mar-2025