Expandable polystyrene (EPS) and polystyrene (PS)

HOUSTON (ICIS)–Conflict has caused nations to adopt energy policies that favor security, affordability and reliability over sustainability as they seek to meet rising energy demand for artificial intelligence (AI) among developed countries and rising populations among developing ones. Energy security was brought to the fore by the war between Russia and Ukraine and the subsequent shock to EU industry, according to comments made at the CERAWeek by S&P Global energy conference. Executives at CERAWeek were exuberant about the prospects of rising demand for energy, particularly natural gas. Global demand for oil could reach a plateau by the middle of the next decade, although it could continue to rise as populations grow in emerging economies. RISING ENERGY DEMANDFollowing demand shocks such as war and COVID, governments want  sources of energy that are secure, reliable and affordable. "Energy realism is taking center stage," said Sultan Ahmed Al Jabr, CEO of the Abu Dhabi National Oil Co. (ADNOC). He made his comments at CERAWeek. "Sustainable progress is not possible without access to reliable, affordable and secure sources of energy." Murray Auchincloss, the CEO of BP, noted that every government to which he spoke after his appointment stressed the need for affordable and reliable energy. At the same time, the world will need more energy because of population growth, adoption of middle-class habits in emerging economies and AI. Applications like ChatGPT use up to 10 times the energy of a simple web search, Al Jabr said. By 2030, demand for power from data centers in the US will triple, accounting for 10% of consumption. ADNOC is putting money behind its predictions by establishing XRG, an energy investment company with an enterprise value of more than $80 billion. ADNOC and others expect LNG will play a large role in meeting growing demand for reliable and affordable power. Between now and 2050, LNG demand should rise by 65%, according to XRG. In fact, international gas is one of XRG's three platforms. US energy producer ConocoPhillips is also optimistic about the prospects for LNG, said Ryan Lance, CEO. He sees a growing market shipping low-cost natural gas from North America to higher cost regions in Europe and Asia. OIL HITS PLATEAUUnder current trends, global demand should continue growing slowly until reaching a plateau in the mid-2030s, said Helen Currie, chief economist of ConocoPhillips. In the industrialized world, oil demand is declining, said Eirik Warness, chief economist of Equinor. He expects oil demand to reach a plateau by the end of the decade. One factor behind tapering oil demand is China. It is weaning itself off of petroleum-based fuels in favor of nuclear and renewables for security reasons, said Jeff Currie, chief strategy officer for Carlyle. While these sources of energy have higher upfront costs, they have much lower operational costs when compared with fossil fuels, and they provide a secure source of energy. PROSPECT FOR US OIL PRODUCTIONCEOs at ConocoPhillips and Occidental Petroleum expect US oil production to reach a plateau later in the decade. After that, it should slowly taper using current technology. But energy companies have demonstrated a track record for innovation. If successful, they could extend the production life of US oilfields. Occidental is conducting pilot tests to determine whether it can use carbon dioxide (CO2) in unconventional oil fields like shale, said Vicki Hollub, CEO. The goal is to double oil recovery rates to 20% from 10%. Using CO2 in enhanced oil recovery is already an established technique in conventional fields, and Occidental is building a business around it using direct air capture (DAC). IMPLICATIONS FOR US CHEMSUS ethylene plants rely predominantly on ethane as a feedstock, and its cost tends to rise and fall with that for natural gas. At the least, rising gas demand could establish a floor on prices for the fuel and potentially lead to spikes as supply struggles to keep up with demand. At the same time, prices for petrochemicals tend to rise and fall with those for crude oil. Flat or falling demand for oil could set a ceiling on prices for petrochemicals. CERAWeek by S&P Global runs through Friday. Insight article by Al Greenwood (Thumbnail shows an LNG tanker. Image by Xinhua/Shutterstock)

12-Mar-2025

LONDON (ICIS)–European chemicals stocks firmed in early trading on Wednesday as markets rebounded from the sell off of the last week, despite the onset of US tariffs on aluminium and steel and Europe’s pledge to retaliate. European markets all rallied on Wednesday as companies clawed back some of the losses seen, brought on by growing concerns that global political tensions could spiral into multiple trade wars. Escalating tensions between the US and Canada has driven down markets over the last couple of days, exacerbated by Canada moving to tariff electricity exports and the US doubling steel and aluminium tariffs on the country in response, to 50%. US President Donald Trump reversed the 50% tariffs decision later on Tuesday, but the moved forward with the imposition of 25% global duties on steel and aluminium on Wednesday. European Commission President Ursula von der Leyen said on Wednesday that the bloc would respond proportionately to the measures, but not necessarily at US aluminium and steel. Estimating the value of the tariffs at $28bn, von der Leyen pledged to respond with countermeasures worth €26bn, without setting out what products are expected to be caught in the dragnet. The measures will start on 1 April and expected to enter fully into effect on 13 April, she added. “Over the next two weeks, we will consult with key stakeholders to help us shape this new package,” she said. “The objective is to counterbalance the increased trade value affected by the US tariffs, while minimising the impact on European businesses and consumers. But the disruption caused by tariffs is avoidable if the US Administration accepts our extended hand and works with us to strike a deal,” she added. The tariffs had been clearly signalled ahead of time, giving markets breathing space to price them in, and the EU is a relatively minor exporter of steel and aluminium to the US compared to neighbours Canada and Mexico. Commodity prices also firmed in midday Europe time trading on Wednesday, on the back of the weakening US dollar. The STOXX 600 chemicals index was trading up 1.44% compared to Tuesday’s close, recovering some of the ground lost over the last few days, with Arkema, AkzoNobel, Air Liquide and Fuchs Petrolub among the big gainers. Wider European markets all rallied, with the STOXX Europe 50 index up 1.05%, Germany’s DAX up 1.78% and Italy’s FTSE MIB up 1.43%. US markets tentatively joined the rally in early trading, with the Dow index trading up 0.11%while the S&P 500 firmed 0.85%. The value of the S&P 500 has decline over 8% in the last month. Focus article by Tom Brown

12-Mar-2025

LONDON (ICIS)–The largest propylene oxide/styrene monomer (POSM) production complex in Europe is expected to close in October, union FNV said on Tuesday, after an agreement was reached between operator LyondellBasell and employees at the site. The Maasvlakte, Netherlands, plant, which has been offline for most of the last 12 months, will close on 1 October, according to an FNV representative, after the majority of union members at the site backed a deal on severance pay. “The plant at Maasvlakte will close definitely at October 1st,” the representative said. “A vast majority of our union members at Lyondell has voted in favor of a social plan in which the company and the trade unions have come to an agreement on a severance pay and outplacement,” the representative added. LyondellBasell declined to comment on the plans, with a spokesperson stating that no definitive decisions have been made at any of their operations. Joint venture partner Covestro also declined to comment. The unit was taken down for economic reasons between July and October 2024, before being brought down again in December. With a production capacity of 315,000 tonnes/year of PO and 680,000 tonnes/year of SM, the complex is the largest production facility of its type in Europe, but has faced increasing challenges as global capacities have grown and energy costs increased. The Netherlands site is among six in Europe that LyondellBasell placed under strategic review late last year, with the rest centered in the company’s core olefins and polyolefins (O&P) business. The five O&P sites under scrutiny in Europe are in Berre, France; Muenchmuenster, Germany; Brindisi, Italy; Tarragona, Spain; Carrington, UK; and Maasvlakte, Netherlands. Including Maasvlakte, around 15.1 million tonnes/year of chemicals production capacity is currently being rationalised, with the wave of closures rocking the industry increasingly rippling out to other regions, particularly Asia. Thumbnail photo: The Maasvlakte site (Source: LyondellBasell) Additional reporting by Fergus Jensen

11-Mar-2025

HOUSTON (ICIS)–The new administration of US President Donald Trump has pivoted wholeheartedly to fossil fuels, with the energy secretary warning on Monday the dangers of focusing solely on climate change while emphasizing the world's continued reliance on oil and natural gas for producing energy. "There is no physical way that wind, solar and batteries can replace natural gas," said Chris Wright, US secretary of energy. He made his comments during the CERAWeek by S&P Global energy conference. At the start of his speech, Wright stressed the ways that fossil fuels dominate the energy industry. Moreover, Wright argued that the world will need more fossil fuels because of rising demand for energy from artificial intelligence (AI) and from consumers in the developing world, who want to adopt middle-class lifestyles. BREAK FROM BIDENWright and Trump mark a sharp break from the previous administration of Joe Biden, which was marked by antipathy towards fossil fuels and incoherence. While Biden was adopting restrictive policies, his energy secretary urged oil producers to make more crude. Such energy contractions are so far lacking in Trump's administration. Wright repeated the president's sentiments and went as far as to pull out a marker and sign an order during a press briefing, something the president has done during the first weeks of his administration. CLIMATE CHANGE TAKES BACK SEATWright said consumers became collateral damage when the previous administration focused on climate change at the expense of promoting reliable and affordable sources of energy. "We will end the quasi-religious policies on climate change that imposed endless sacrifice on citizens," he said. "The Trump administration will treat climate change for what it is," Wright said. It is a global side effect for creating a modern world and the benefits that come with it, and dealing with it is a tradeoff, he said. "Everything in life involves tradeoffs." That said, Wright said he is a climate realist and not a denialist. He highlighted nuclear fission and fusion, both emission-free sources of power. He mentioned advances in geothermal energy and noted the growth in solar power. The administration's policies towards wind energy reflect cost and outrage from people who live near the projects, he said. Wright said the administration does not oppose electric vehicles (EVs), but only the policies that restrict consumer choice and lavish incentives to wealthy people who do not need them. "We need thoughtful, rational policies on energy and honest assessments on climate change," he said. SENTIMENT WILL NOT DIRECTLY BOOST OIL OUTPUTWright's comments went over well with the energy conference, with the audience burst in spontaneous applause. While the US energy industry will welcome a cooperative administration, sentiment alone will not have large or immediate effect on energy production. US oil and gas production grew despite the antipathy and incoherence of the Biden administration because much of it has taken place on the private lands of the Permian basin. Private land is free from federal restrictions and moratoria on leases. Oil and gas producers will gauge demand growth and costs before they increase output. Wright acknowledged that energy companies rely on market signals, and not government decree, to make investment decisions. But the administration can play a role by adopting policies that encourage investment and make it easier for companies to obtain the permits needed to build infrastructure and large-scale projects. TARIFFS VERSUS ENERGYOne contradiction in the administration is its embrace of fossil fuels and tariffs as a central tool in economic and industrial policy. If the US adopts tariffs, they will increase costs of steel and aluminium, key raw materials for oil and gas production. They would also increase costs of imported grades of heavy oil. US refineries are built to process heavier grades of crude. If faced with tariffs, US refiners could pay the tax or find alternative suppliers that could still cost more. Otherwise, refiners would need to underutilize their plants or invest in costly retrofits that would allow them to process larger amounts of domestically produced lighter grades of oil. Wright said the US is still in the early stages of its tariff proposals, but vigorous dialogue about their effect on the economy is taking place behind closed doors. Oil and natural gas are important for the chemical industry because they are the predominant source of feedstock and energy. Chemical prices tend to rise and fall with those for gas. In the US, feedstock costs tend to rise and fall with those for natural gas because ethylene plants predominantly rely on ethane as a raw material. CERAWeek by S&P Global runs through Friday. Insight article by Al Greenwood Thumbnail shows an oil pump jack. Image by Shutterstock.

10-Mar-2025

HOUSTON (ICIS)–The US is still in the early stages of its tariff proposals, which could increase the costs of the steel and aluminium needed for oil and gas production, but vigorous dialogue about their effect on the economy is taking place behind closed doors, the secretary of energy said on Monday. "I think we are early in this," said Chris Wright, secretary of the US Department of Energy. He made his comments during the CERAWeek by S&P Global energy conference. "We have, behind closed doors, vigorous debates on tariffs," Wright said. "It's definitely not a quasi-religious, dogmatic thing. It's a dialogue." While the debate on tariffs is in its early days, Wright said he is optimistic about the outcome of the policies of the new administration because of the business background of the president and the record of his first term of office in 2016-2020. CLASHING POLICIESThe administration has enthusiastically expressed support for oil and gas production in the US with President Donald Trump saying "Drill, baby drill" during his speeches. At the same time, the government has embraced tariffs as a key tool of economic and industrial policy. This includes tariffs on steel and aluminium, key raw materials needed in the oil and gas industry. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. In early April, the US said it would introduce retaliatory tariffs on imports from the rest of the world. These tariffs will consider what the US considers non-tariff trade barriers, such as value added tax (VAT) systems. The US could also go ahead in early April on proposals to impose 25% tariffs on all imports from Mexico, 10% tariffs on all energy imports from Canada and 25% tariffs on most other imports from Canada. The US is also considering imposing 25% tariffs on imports from the EU. These countries are major suppliers of steel and aluminium to the US. Already, higher costs in materials as well as labor have raised costs for several fuel and chemical projects. US-based chemical producer Westlake stressed that it would conduct a cost analysis to take inflation into account before it would consider expanding a joint venture cracker. More companies could give more large-scale projects second thoughts if tariffs cause further inflation in raw materials. Oil and natural gas are important for the chemical industry because they are the predominant source of feedstock and energy. Chemical prices tend to rise and fall with those for gas. In the US, feedstock costs tend to rise and fall with those for natural gas because ethylene plants predominantly rely on ethane as a raw material. CERAWeek by S&P Global runs through Friday. Thumbnail shows Chris Wright, secretary of the US Department of Energy. Image by ICIS.

10-Mar-2025

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. 1.9% average inflation forecast kept for 2025-2026 Feb PMI reading in contraction mode at 49.9 Feb exports rebound weaker than expected Consumer price inflation in Asia’s fourth-largest economy eased last month to 2% on a year-on-year basis, slowing from the six-month high of 2.2% in January, data from Statistics Korea showed on Thursday. After staying below the central bank's 2% target in September-December 2024, inflation spiked in January due to rising global oil prices, compounded by weakness of the Korean won. "Going forward, consumer inflation is expected to fluctuate around the target level amid mixed factors of a weak local currency and low demand pressure," the Bank of Korea (BOK) said in a statement. The won (W) has strengthened 2% against the dollar this year, reaching around W1,440 against the US dollar on Thursday, after tumbling to its weakest level in almost 16 years in early January, with the downward pressure aggravated by a prolonged domestic political instability. Core inflation, which excludes volatile food and energy prices, also eased in February to 1.8%, from 1.9% in the previous month. South Korea's trade-reliant economy is facing numerous challenges, including the protectionist policies of the US’ Trump administration. In response to these headwinds and with inflation largely in line with expectations, the BOK has adopted a more accommodative monetary policy stance, cutting its benchmark interest rate three times since October 2024. On 25 February, the central bank cut its policy interest rates by 25 basis points to 2.75% as it revised down its GDP forecasts. GDP growth this year is projected at 1.5%, down from its previous estimate of 1.9% and lower than the 1.6% to 1.7% range indicated in January. For 2024, South Korea's final real GDP growth was confirmed at 2.0%, matching the preliminary estimate released in January, the BOK said on 5 March. Meanwhile, the central bank maintained its inflation average forecast of 1.9% for both this year and next. "Export growth has weakened amid a slump in consumption, driven by increased political uncertainties following the declaration of martial law and by a deterioration in weather conditions," the BOK said. "Trends in the domestic demand recovery and in export growth are forecast to be lower than previously expected due to deteriorating economic sentiment and due to U.S. tariff policies," it stated. South Korea is a major importer of raw materials like crude oil and naphtha, which it uses to produce a variety of petrochemicals, which are then exported. The country is a major exporter of aromatics such as benzene toluene and styrene. The country is experiencing a political crisis stemming from President Yoon Suk Yeol's controversial declaration of martial law in December, which has led to his impeachment and arrest. Its Constitutional Court is deciding President Yoon's fate, reviewing his impeachment after weeks of public trials, with his insurrection trial expected to take months and a verdict potentially reached by late 2025 or early 2026, according to media reports. ECONOMY LOSING STEAM South Korea’s industrial production shrank in January, with noted declines across output, consumption and investments. January’s overall industry output in January fell 2.7% year on year, reversing a 1.7% increase in December, official data showed on 4 March. Industrial output in South Korea's manufacturing and mining sector decreased by 2.3% in January compared with the same month last year. The services and construction sector output declined by 0.8% and 4.3%, respectively. Data released over the weekend showed that February exports rose 1.0% year on year, a sharp reversal of the 10.2% decline in January. Imports also increased, rising by 0.2% compared to a 6.4% drop in January, though this was below market expectations of a 2.6% rise. "While the timing of the Lunar New Year holiday adds volatility to the data, underlying momentum weakened in February,” Dutch banking and financial information services provider ING said in a note. The Lunar New Year, which is celebrated in most parts of northeast and southeast Asia, fell on 29 January. Conversely, car exports rebounded strongly by 17.7% year on year in February after falling in the previous three months. “Carmakers are likely to push their products out as early as possible before the reciprocal tariffs come into effect,” ING said. “We expect exports to remain a growth driver for the economy in the first quarter of 2025. Despite the moderation in exports, a sharper decline in imports should boost the positive contribution from net exports in Q1 2025.” MANUFACTURING PMI BACK IN CONTRACTION  S&P Global’s manufacturing PMI for South Korea dipped to 49.9 in February from 50.3 in January, even though output and new orders increased. This suggests that exports are likely to maintain their upward trajectory, while the domestic economy is acting as a drag on overall growth. “As suggested by the local business survey, business confidence remained weak amid political instability in Korea and uncertainty surrounding global trade,” ING said. “We expect the domestic political situation to become clearer in two weeks following the Constitutional Court ruling on the impeachment of President Yoon,” it added. “But US trade policy is likely to remain a headwind for businesses,” ING said. Focus article by Nurluqman Suratman Thumbnail image: At a container pier in South Korea's southeastern port city of Busan on 1 November 2023.(YONHAP/EPA-EFE/Shutterstock)

06-Mar-2025

HOUSTON (ICIS)–US-listed shares of chemical companies fell sharply – many by more than 5% – on Monday as the US proceeds with plans to impose tariffs on Canada, Mexico and China, its three biggest trading partners. The selloff in chemical shares was sharper than that for the general market. The following table shows the stock indices followed by ICIS. Index 3-Mar Change % Dow Jones Industrial Average 43,191.24 -649.67 -1.48% S&P 500 5,849.72 -104.78 -1.76% Dow Jones US Chemicals Index 851.42 -17.99 -2.07% S&P 500 Chemicals Industry Index 901.32 -17.93 -1.95% Shares of every US-listed company followed by ICIS fell. TUESDAY'S TARIFFSUnless the nations reach last-minute deals, the US will impose 25% tariffs on all imports from Mexico, 10% tariffs on all energy imports from Canada and 25% tariffs on all other imports from Canada. The US will also proceed with an additional 10% that it proposed on all imports from China, according to a post from the White House’s Rapid Response account on social media platform X. This is on top of the 10% in new tariffs that the US already imposed earlier in 2025 on imports from China. EFFECT ON US MARKETSWhile the US has large trade surpluses in polyethylene (PE), it still imports large amounts of the plastic from Canada. Many of these imports go to processors in the bordering states of Illinois, Michigan and Ohio. These states are far from most of the plastic plants in the US, which are concentrated in Texas and Louisiana. Processors in these states that border Canada will need to pay the tariffs or pay higher shipping costs to secure material from suppliers farther away. The US also imports notable amounts of purified terephthalic acid (PTA) from Canada and Mexico as well as methylene diphenyl diisocyanate (MDI) from China. The US receives large Canadian shipments of ammonia and potassium chloride, which is also known as muriate of potash (MOP). At least one company, Canada's Chemtrade Logistics, said it expected to pass a larger part of the tariffs to its customers. Chemtrade Logistics exports sodium chlorate, chlorine and sulfuric acid to the US. RETALIATIONChina already has retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles. China has restricted exports of antimony and bismuth. Antimony is used to make catalysts for polyethylene terephthalate (PET), and bismuth is used to make catalysts for polyurethanes. Canada had proposed retaliatory tariffs of 25% on Canadian dollars (C$) 155 billion ($107 billion) worth of US imports. The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others. Canada was preparing a second list, worth C$125 billion. All three countries could impose retaliatory tariffs on the substantial exports of PE, polyvinyl chloride (PVC) and other ethylene derivatives from the US. OTHER POSSIBLE US TARIFFSThe US has threatened to impose tariffs of 25% on imports from the EU. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. In early April, the US said it would introduce retaliatory tariffs on imports from the rest of the world. These tariffs will consider what the US considers non-tariff trade barriers, such as value added tax (VAT) systems. CHEM STOCK PERFORMANCEThe following table shows the performances of US-listed shares followed by ICIS. Symbol Name $ Current Price $ Change % Change ASIX AdvanSix 26.82 -1.10 -3.94% AVNT Avient 41.23 -1.54 -3.60% AXTA Axalta Coating Systems 35.1 -1.11 -3.07% BAK Braskem 3.52 -0.17 -4.61% CC Chemours 13.86 -1.09 -7.29% CE Celanese 47.02 -3.92 -7.70% DD DuPont 78.83 -2.53 -3.11% DOW Dow 36.06 -2.05 -5.38% EMN Eastman 94.46 -3.39 -3.46% FUL HB Fuller 55.73 -1.01 -1.78% HUN Huntsman 16.04 -0.89 -5.26% KRO Kronos Worldwide 8.43 -0.32 -3.66% LYB LyondellBasell 73.41 -3.42 -4.45% MEOH Methanex 41.47 -2.57 -5.84% NEU NewMarket 562.65 -7.46 -1.31% NGVT Ingevity 45.24 -2.42 -5.08% OLN Olin 23.87 -1.52 -5.99% PPG PPG 111.72 -1.50 -1.32% RPM RPM International 123.09 -0.80 -0.65% SCL Stepan 58 -3.375 -5.50% SHW Sherwin-Williams 356.73 -4.75 -1.31% TROX Tronox 7.02 -0.615 -8.06% TSE Trinseo 4.62 -0.30 -6.10% WLK Westlake 108.71 -3.59 -3.20% ($1 = C$1.45) Please also visit the US tariff, policy – impact on chemicals and energy topic page Thumbnail shows money. Image by ICIS.

04-Mar-2025

Correction: In the ICIS article headlined "US imports record setting 492,101 tonnes of plastic scrap in 2024 as tariffs loom" dated 26 February, please read in the second paragraph … 250,961 tonnes in 2024 … instead of … 59,222 … A corrected article follows. HOUSTON (ICIS)–The US has maintained its status as a net importer of plastic scrap, bringing in a record volume of 492,101 tonnes in 2024 according to recently released data from the US International Trade Commission (ITC). Leading the way, imports of polyethylene terephthalate (PET) scrap have broken their own record, at 250,961 tonnes in 2024, making up roughly 49% of plastic scrap imports. At the same time, PET scrap exports to Mexico reached record highs, coming in at 46,307 tonnes in 2024, a 32% increase year on year (YoY). As Canada remains the top trade partner for US plastic scrap, it remains to be seen what will happen should the US continue to impose trade tariffs and duties on imported goods. Canada remains largest scrap trade partner amid tariff threat PET scrap imported into US increased 23% YoY PET scrap exported to Mexico increased 32% YoY ANNUAL DATA BREAK RECORDS, QUARTERLY DATA SOFTENSFull year 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the Harmonized System (HS) code 3915 – have increased 10% YoY. Plastic scrap imports include items such as used bottles but also other forms of recycled feedstock such as purge, leftover pairings and flake material. Recently, the US Customs and Border Patrol (CBP) issued statements to several importers of PET flake that the HS code 3907 which designates PET resin should be used instead, thus it is expected the US actually imported more PET flake than represented in these numbers. Throughout 2024, stagnant PET bottle collection volumes, paired with increasing bottle exports, led to a need for imported PET scrap material. This was further supported by the cost proposition of cheaper imported flake. As a result, recycled flake imports are seen as both a help and harm to the broader US recycling market. When broken down by country, Canada remains the leader of PET scrap imports, followed by Thailand, Ecuador and Japan. Canada continues to give up market share despite volumes increasing 2% YoY. This pales in comparison to the rapid export volume growth from Thailand, Japan and Ecuador, at an increase of 68%, 75%, and 29% YoY, respectively. Market participants confirmed they saw a notable rise in imported recycled resin activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor, and facility costs related to recycling. Asian countries now account for more than 44% of PET scrap imports, compared to the 26% market share from Canada and Mexico. In 2023, the Canada/Mexico market share was at 34%, and was as high as 44% in 2022, showing a complete reversal over the last few years. Imports of all other subcategories of plastic scrap, including polyethylene (PE), polystyrene (PS), and polyvinylchloride (PVC), were relatively steady. When looking at PE scrap imports, they decreased marginally in 2024 (1%), and Canada/Mexico remain the largest exporters to the US at 69% and 18% of PE scrap imports respectively. Despite the strong annual data, Q4 data individually did show some weakness. In comparison to Q4 2023, Q4 2024 was down 7% as 2023 data was unusually strong. Scrap imports typically slow at the end of the year as players reduce inventory ahead of year end accounting, thus it comes as no surprise that Q4 imports were down 6% compared to Q3 imports. When looking at Q4 specifically, PET scrap imports  were down 16% compared to Q3 and down 9% compared to Q4 2023. For the full breakdown of US plastic scrap imports, click here to see the latest numbers. TOTAL EXPORTS DOWN, PET EXPORTS UPThough total US plastic scrap exports fell 2% in 2024, exports of PET scrap, largely in the form of bales, jumped 24% YoY. Mexico in particular continues to be a key end market for US PET bale material, making up 57% of the 81,018 tonnes exported. This resulted in 46,307 tonnes of material being sent to Mexico, an increase of 32% YoY. While the US has always exported a portion of domestic PET bale material to other countries, exports to Mexico surged over the last year. This growing trade relationship is largely attributed to new capacity in Mexico, paired with strong local demand which has elevated local bale prices. Mexican recyclers have been purchasing US PET bales as a lower-cost option with higher availability. Exports of US bales to Mexico – particularly from the southern areas of the US such as Texas and parts of California – continue to challenge domestic recyclers who struggle to secure adequate volumes of bale feedstock. As export demand continues put upwards pressure on bale pricing, local recyclers find themselves stuck between rising feedstock costs and very competitive import virgin and recycled pricing, thus unable to pass along those increased costs. PET scrap exports were also sent to Malaysia and Vietnam, at 12% and 7% of PET exports respectively. Overall, exports of other types of plastic scrap continue to slow, following the Chinese National Sword and Basel Convention adoption several years ago. Total plastic scrap exports in Q4 were down QoQ and YoY. PE continues to be a leading polymer type for US plastic scrap exports, representing 35% of total plastic scrap exports. India receives over a quarter of US PE scrap material followed by Canada at 16%. For the full breakdown of US plastic scrap exports, click here to see the latest numbers. TARIFFS BETWEEN CANADA, MEXICO TO IMPACT RECYCLINGA tariff decision on imports from Mexico and Canada could come as soon as next Tuesday, 4 March. From a bale or flake feedstock perspective, some northern and southern US recyclers will source material from Canada and Mexico, which would result in elevated feedstock pricing either from the tariffs themselves or the resultant increase in domestic feedstock demand. On the finished post-consumer recycled (PCR) flake and resin side, US customers who purchase materials from Canadian or Mexican recyclers may instead seek volumes from US recyclers which could support some struggling players or further strain players whose facilities are already running at high capacity. Retaliatory tariffs from either country could harm exports of US plastic scrap material. Canada and Mexico were the top countries for plastic scrap exports – 34% and 21%, respectively. Waste and recycling has always been a regional business, and any barriers that prevent regional dynamics could lead to negative consequences for recycling market viability.

26-Feb-2025

NEW YORK (ICIS)–Strong crosswinds are sweeping across the US economic outlook. On the one hand, there is renewed business optimism based on expected tax cuts, deregulation and reshoring. But US trade policy along with geopolitical risks are clouding the outlook – not just for the US but for economies abroad. The ICIS base case is for a “solid landing” with US GDP growth of 2.3% projected for 2025 versus 2.8% in 2024. Yet additional significant tariffs would dent the outlook. There is heightened uncertainty on the tariff front, as the US has delayed 25% tariffs on Canada and Mexico until early March, and plans to implement reciprocal tariffs against all countries, including tariffs in response to what it considers non-tariff trade barriers such as value-added tax (VAT) systems. The latter would put the EU in the crosshairs, in particular. US additional tariffs of 10% have already been implemented on China but that may just be the start, as overall trade policy is being reviewed with China being a particular focus. These reviews, along with reviews on reciprocal tariffs, are scheduled to be completed on 1 April. WHAT IS TROUBLING MARKETS?Along with US trade policy uncertainty, several recent negative data points are sparking concerns about growth prospects. Not only did the University of Michigan Consumer Sentiment Index fall sharply to 64.7 in February versus 71.7 in January, but consumer long-term annual inflation expectations jumped to 3.5% – the highest in 30 years. And the S&P Global Flash US Service Purchasing Managers’ Index (PMI) for February fell into contraction territory (below 50) to 49.7 – a 25-month low. Earlier, US retail sales in January 2025 fell 0.9% from December 2024 – much more than expected. However, sales were up 4.2% year on year. US MANUFACTURING PMI TURNS POSITIVEOn the positive side, manufacturing, which has essentially been in recession for two years, is finally perking up. The ISM US Manufacturing PMI for January 2025 moved into expansion (over 50) with a reading of 50.9 following 26 consecutive months of contraction. While one month does not make a trend, the manufacturing PMI has been improving for months and a break into positive territory can only be viewed as a positive. CHEMICALS SEE NO HELP FROM MACROSYet commentary from chemical companies on earnings calls on Q1 and overall 2025 guidance has one common theme – little to no help expected from macroeconomic factors. This is a stark contrast to the past two years when managements were all talking about a H2 recovery. Contrarians may take this as a positive sign. Managements finally throwing in the towel could represent a meaningful bottom and portend an upturn to come, especially against a backdrop of the manufacturing PMI moving into expansion. Yet managements see continued weakness in residential building and construction, automotive and consumer durables. Many chemical stocks are trading at multi-year lows. At least expectations are depressed. DISINFLATION STALLSMeanwhile, disinflation has clearly stalled, with the core Consumer Price Index (CPI) – excluding food and energy – ticking up to 3.3% in January. This key inflation measure has stalled in the 3.2-3.3% range since June 2024. Yet the 10-year Treasury yield at around 4.4% has backed off from its recent high of 4.8% in January, perhaps reflecting economic growth concerns related to US trade policy uncertainty. Still, high long-term interest rates continue to be a major headwind for housing affordability. HOUSING AND AUTO OFF TO SLOW STARTUS housing starts in January plunged 9.8% month on month to a seasonally adjusted annual rate of 1.37 million, which was 0.7% below year-ago levels. This may reflect seasonal issues as January featured adverse winter weather, but it also reflects a weak market amid low builder confidence. ICIS projects US housing starts to rise to 1.41 million in 2025 – up from 1.36 million in 2024. US light vehicle sales in January fell 6.9% month on month to a seasonally adjusted annual rate of 15.6 million units but were up 3.8% from a year ago. ICIS forecasts light vehicle sales improving to 16.3 million units in 2025 – up from 15.8 million in 2024 but still below pre-pandemic 2019 sales of 17.0 million. Yet US tariffs of 25% on Mexico and Canada, if implemented, would cause havoc in the automotive sector in particular, as supply chains among the three countries are highly integrated.

24-Feb-2025

LONDON (ICIS)–Eurozone private sector output remained unchanged month on month in February as firmer manufacturing sector industry offset weaker services, while input cost inflation continued to rise. Manufacturing productivity in the bloc contracted for the 23rd consecutive month, but generated the most robust performance in nine months in February, with a flash purchasing managers’ index (PMI) score of 48.7 compared to 47.1 in January. A PMI score of above 50.0 signifies growth. The flash UK manufacturing PMI in contrast dropped to the lowest level in over a year during the month, shedding nearly two points to 46.4 compared to January as sales fell in export and domestic markets and confidence sank. The recovery trajectory differed among core eurozone economies, with Germany posting a second consecutive monthly increase in output and French private sector output declining by the sharpest rate in nearly 18 months. The trend of hotter input cost pricing seen in January continued this month at the sharpest rate since April 2023, hinting at intensifying inflationary pressures in early 2025. This makes conditions more difficult for the European Central Bank (ECB), which is due to meet in early March. “With just two weeks to go before the ECB meeting, the price front is sending bad news,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which assembles the eurozone PMI data with S&P Global. “The statements by the ECB President [Christine Lagarde] can be interpreted as meaning that inflation can only be considered defeated once the services inflation is under control. The HCOB PMI shows that this is definitely not the case,” he said. “Input prices for goods are now rising more sharply. These depend, among other things, on energy prices and, in this context, [ECB board member] Isabel Schnabel… strongly recommended discussing a pause on interest rates at the next rate-setting meeting,” he added. The UK flash composite PMI – comprising services and manufacturing – fell modestly month on month to 50.5 but remained in growth territory, as an increase in service sector output to 51.1 offset the manufacturing decline. Despite the uptick, the decline in private employment during the month has been the most pronounced since November 2020 as wage pressures increased company costs. “The lack of growth alongside rising price pressures points to a stagflationary environment which will present a growing dilemma for the Bank of England,” said S&P Global Market Intelligence chief business economist Chris Williamson. “While marginal output growth was eked out in February, order books deteriorated at a rate not seen since August 2023 to hint at likely cuts to business activity in the coming months unless demand revives,” he added. Thumbnail photo source: Shutterstock

21-Feb-2025