Engineering plastics (POM, PBT)

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 14 March. European naphtha slides as demand wanes, refineries roar back Sentiment in Europe's naphtha spot market was weighed down by upstream crude volatility, weak blending demand and limited export opportunities in the week to 7 March despite ample liquidity in the physical space. Flagship Maasvlakte POSM plant to close in October – union 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. Europe chems stocks claw back losses as markets firm despite tariffs 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. 'Game changer' for Europe PE as EU plans retaliatory tariffs on US European polyethylene (PE) players are braced for a potentially big impact from the EU’s retaliatory tariffs on plastics from the US, in the latest twist of the growing trade war. INSIGHT: Can the chemicals sector tap into Europe’s rearmament era? Europe’s drive to drastically ramp up defence spending is likely to drive a wave of investment into the region’s beleaguered industrial sector, but existing military spending patterns and technical requirements could limit uplift for chemicals.

17-Mar-2025

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Colorless flake prices rise in Italy and Spain High feedstock bale costs still a concern Hopes for improved pellet demand from Q2

14-Mar-2025

HOUSTON (ICIS)–The new administration of US President Donald Trump is giving chemical companies a break on regulations and proposing tariffs on the nation's biggest trade partners and on the world. RELIEF FROM RED TAPEThe new administration marks a sharp break from the previous one of the former president,Joe Biden. He proposed a wave of regulations towards the end of his administration that increased costs while providing little benefit to the chemical industry. Several proposed rules under that previous administration will likely fall by the wayside, said Eric Byer, president and CEO of the Alliance for Chemical Distribution (ACD), a trade group that represents chemical distributors. So far under Trump, the regulatory climate has been mostly positive, Byer said. Trump pledged to reduce regulations, and late in his campaign, said he would purge 10 regulations for every one introduced by his administration. The government is conducting earnest analyses of the economic effects of rules, something that the previous administration had glossed over, Byer said. LESS RIGID ENVIRONMENTAL RULESThe Environmental Protection Agency (EPA) is reviewing how it evaluates existing chemicals for safety under its main program, known as TSCA. Among items it could review is the whole chemical approach that the agency adopted under the previous administration. That approach made it likely that the EPA would determine that a chemical posed an unreasonable risk. Such a finding would expose the chemical to more restrictions. For environmental regulations in general, the EPA announced numerous reviews of existing regulations that could have far-reaching effects on costs. The following lists some of the regulations under review: The National Emission Standards for Hazardous Air Pollutants (NESHAPs). The standards for chemical manufacturing will be among those that the EPA will initially review. The greenhouse gas reporting program. The Risk Management Program (RMP). One RMP rule compromised plant safety by requiring companies to share information that had been off limits since the 9/11 terrorist attacks, according to trade groups. The Technology Transitions Program. Currently, the program restricts the use hydrofluorocarbons (HFCs), which are used to make refrigerants and blowing agents for polyurethanes. Terminating the environmental justice and diversity, environment and inclusion (DEI) arms of the EPA. Environmental justice has made it harder to build chemical plants. Particulate matter national ambient air quality standards (PM 2.5 NAAQS). The review could lead to guidance from the EPA that increases both the flexibility and clarity of permitting obligations for chemical plants, according to the ACC. A rule by the previous administration that intended to account for what it described as the social cost of carbon. The Waters of the US Rule. The EPA wants to review the rule to reduce permitting and compliance costs. ENDING FAVORABLE EV RULESThe EPA is reviewing the tailpipe rule that was adopted by the previous administration. The tailpipe rule gradually reduced the carbon dioxide (CO2) emissions of automobiles. Critics have said that this and other regulations from the previous administration were so strict, they acted as bans on vehicles powered by internal combustion engines (ICE). The EPA will also review the standards for model years 2027 and later light-duty and medium-duty vehicles. The Department of Transportation (DOT) wants to reset the Corporate Average Fuel Economy (CAFE) standards, which critics say unduly favor electric vehicles (EVs) by being too strict. SUPERFUND TAX MAY BE RESCINDEDThe Republican controlled government could repeal the Superfund tax, which was imposed in 2022 on several building-block petrochemicals and their derivatives. Confusion arose over how to calculate the taxes for the derivatives. The government also seems to lack the resources to administer the program. So far, legislators have introduced bills in both legislative chambers that would repeal the tax, including Senate Bill 1195 and House of Representatives Bill 640. These would likely need to be part of a larger tax bill. Byer of the ACD said the repeal will not be easy. However, it does have a chance to succeed, and the effort is getting traction among legislators. The ACD, the ACC and the American Fuel & Petrochemical Manufacturers (AFPM) were among the trade groups that signed a letter urging Congress to repeal the tax. TARIFFS POSE RISK TO CHEMSThe tariffs adopted and being proposed by the US could increase costs of imports of steel and aluminium needed to build new plants and repair existing ones. They also increase the costs of minerals used to make catalysts as well as regional imports of plastics and chemicals. US tariffs also expose its chemical industry to retaliatory tariffs. US tariffs could cause short term logistical disruptions because companies will be re-arranging supply chains to avoid the taxes and to secure materials from new suppliers that could be farther away. "I think we will see some near-term reconfiguration of moving products because of the tariffed countries, predominantly China, Mexico and Canada," Byer said. "Either way, people will reconfigure. My hope is that the reconfiguration part will only last a few weeks to a few months at most so we can get back to just doing straight on trade deals and supply chain movements without to deal with tariff stuff." Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Insight article by Al Greenwood Thumbnail Photo: US Capitol. (By Lucky-photographer)

13-Mar-2025

MEXICO CITY (ICIS)–The US plastics sector is hopeful free trade in North America will ultimately prevail as the country renegotiates its trade deal with Canada and Mexico in 2026, according to the chief economist at the trade group Plastics Industry Association (PLASTICS). Perc Pineda, chief economist at the trade group, said the previous renegotiation of the North American trade deal USMCA had been beneficial for the three countries’ plastics sectors, pointing to higher percentage of regionally produced plastics going into the automotive sectors, for example. He added that history is already a guide about what happened in US President Donald Trump’s first term, when tariffs on China were imposed and a considerable number of companies operating there set up subsidiaries in other Asian countries such as Vietnam, which only replaced China as supplier but did not bring production back to the US or North America. All in all, Pineda admitted the current 'chaos' in the US trade policy after Trump’s second term started in January is creating uneasiness among plastics companies, but he said the focus should be on the “intent of the message” rather than the “theatrics” of how that message is delivered. Pineda was speaking at the plastics trade fair Plastimagen in Mexico City. USCMA HAS BEEN GOOD – DON’T BREAK ITPineda said the USMCA renegotiation under Trump’s first term, which replaced the previous NAFTA agreement from the 1990s, had caused positive effects on the regional plastics sector, which deepened its interconnectedness – the reason why he said it would be very difficult that the plastics sector ended with no trade agreement at all in the region. “We made progress when we transitioned from NAFTA to USMCA. For instance, we have now higher North American content in automotive trade, rising from 62.5% to 75%. That's an incentive for higher regional production in Mexico, in Canada, and the US. And that's good for economic growth,” said Pineda. In fact, he was confident that after the current uncertainty in the US trade policy the renegotiation of the USMCA due in 2026 would keep free trade in plastics after all, just like it happened in the transition from NAFTA. Pinda conceded the current shifts in trade policy coming out of the US – with tariffs being announced then quickly reversed, cancelled, or postponed on several occasions – is putting businesses on edge, as investment plans come into question due to the uncertainty. “This is where the chaos starts, troubling businesses. For instance, imports from Mexico that comply with USMCA would be excluded from the 25% tariff at least for another month [after the initial month suspension in February], meaning there a window for President Claudia Sheinbaum to negotiate,” said Pineda. “I trust USMCA will continue. You cannot convince me otherwise that there's not going to be a free trade of some kind. I remember the first time I spoke at Plastimagen in 2019 – we've been through this before. If history is our guide, we will once again face this challenge.” He added the proximity of Mexico and its relation to the manufacturing activity in automotive, for instance, where up to the 33,000 parts going into a vehicle, a third are plastics, would make an outlook without free trade troubling for that manufacturing sector and many others where trade between the countries is intense. “One good example regarding US trade policy is when it imposed tariffs on China. It prompted a lot of Chinese companies to go to other countries such Vietnam, Cambodia, Laos, Malaysia, or Thailand. [In short time] Vietnam suddenly was in the top 20 in the global plastics ranking, in which they had never been before,” said Pineda. “It's really a result of the change in trade policy that has shifted production of Chinese companies into subsidiaries in other Asian markets. The US now has a trade deficit in plastics with Vietnam on plastic products.” Pineda was asked how business can adapt to the volatility caused by the decision coming out of the White House nearly daily, in trade policy and practically everything else. “If there's one thing that I can say is focus on the intent of the message, and don’t be overwhelmed by the theatrics of it. I think the message has always been the same, but it is the messenger that is changing on how he is delivering the message, from hour to hour, day to day, month by month, year by year,” he said. “I am even surprised that even the financial markets [with heavy falls this week] are surprised: this is already something that he announced during his presidential campaign: it is the movie we've seen before. There will be fair trade eventually.” Pineda wanted to end with a thankful message, speaking to an overwhelmingly Mexican audience aware that the $800 million/year in Mexican plastics exports to the US could be hit hard if tariffs are imposed, according to calculations by the Mexican trade group Anipac. “I'd like to leave the stage by saying, on behalf of the more than 1 million workers in the US plastics industry: thank you very much, Mexico,” he said. “And to the plastics industry in Mexico, I’d like to thank you for sharing your vision and giving us interesting information.” Plastimagen runs on 11-13 March.

12-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

SAO PAULO (ICIS)–Brazil’s higher import tariffs for dozens of chemicals in place since October have already pushed up costs for industrial players, who are already passing those higher costs onto customers, according to the head at the trade group of industrial chemicals importers Associquim. Rubens Medrano, president of the Brazilian Association of Distributors of Chemical and Petrochemical Products (Associquim), which represents companies employing around 7,000 people across Brazil, would not make a prediction about whether tariffs will be lowered again in October – when the current 12-month measure is due to expire. But he did say manufacturing is feeling the pinch, adding that the international and domestic economic scenarios are worsening, and higher tariffs are not making life easier for the many companies in Brazil which import chemicals and petrochemicals – half of the large country’s demand for chemicals is covered by imports. Brazil’s several changes to chemicals imports over the years, depending on who is in government and whose lobbying policymakers listen to the most, has become a recurrent saga, and one that is certain to provide a few more acts. PRODUCERS GOT THEIR WAY ON TARIFFS – IS IT PAYING OFF?The current situation was meant to benefit domestic producers – of which there are not many, with the market being controlled by a few large players, most prominently polymers producer Braskem, Latin America’s largest petrochemicals producer. Higher tariffs, the narrative went, should encourage domestic purchases of chemicals, with the narrative quickly turning to protecting Brazilian jobs, one narrative the current government is very sensitive to. But Brazil’s 220-million person market requires many more chemicals than it produces domestically, making imports indispensable for many manufacturing firms to operate. This has been a constant feature over the decades as producers never got to specialize but stayed in the commodity – and prone to be hit by global downturns – chemicals market. In the current act in the tariffs saga, Braskem and its lobbying arm Abiquim have been the main characters, with their months-long lobbying paying off last year when tariffs were sharply increased. Or, at least, that was the thinking when the measure was implemented. The reality is proving stickier though: Braskem’s poor financial results in the fourth quarter, meant to be the first one to show positive effects from tariffs, called that theory into question. Unipar, the other large chemicals producer who lobbied via Abiquim for higher tariffs for the main chemicals it produces, is due to release its financial results later this week. Unigel, embroiled in its own financial woes as it restructures its debt aiming to keep afloat, has not published financial results since 2023. Associquim – and the trade group representing plastics transformers Abiplast – fell on the losing side of the last tariffs act. But as Abiplast’s president Jose Ricardo Roriz said in October, they will “continue to fight” to reverse the higher tariffs. A Brazilian senator has also started a campaign against the tariffs, with heated words towards Braskem and what he considered the firm’s market dominance. LET’S START 2025, THENOne of Brazil’s funniest and probably truthful sayings goes: “The year only starts in truth after Carnival” – which this year fell very late, with the last Carnival events only taken place last weekend. The economy does function in January and February, but at a slower pace. A summer pace: for most Brazilians, the saying is just part of the idiosyncrasy and responds to the sort of seasons: the summer is slightly hotter than other seasons. Kids are off school in January and those families who can afford it will holiday away. Lobbyists are already gearing up for their work as the year starts. A key date for them will be the revision of the tariffs in October, so expect to hear from them more in coming months as they lobby to reverse course. This interview with Associquim being an example of it. “Distributors do not import just for the sake of importing. We usually have the criterion that we import products that are not produced domestically. However, the increase in import tariffs, increasing input costs, ends up harming several end consumer companies,” said Associquim’s Medrano. “I don’t think that’s the solution… The companies in our association are already paying more and passing this on to the consumer, of course. We don’t work with thermoplastics – we represent players in the industrial products category, and electrochemical distributors. Any increase in import costs will represent an increase in the final cost. The Brazilian consumer will be the one to pay for this.” Medrano said Abiquim’s intense lobbying running up to October was healthy and legitimate action in a market democratic economy, where companies and their funded trade groups “try to show” to the government their side of the argument. Medrano declined to comment on whether Braskem’s Q4 results indicated that the tariffs had not had the desired impact. ‘DIFFICULT TIMES’ GLOBALLY – AND LOCALLYAs 2025 is about to enter is second quarter, a common consensus is forming: the global economy and the largest economy in Latin America are showing signs of fatigue, with manufacturing especially feeling the heat. The slowdown was taken for granted by most economists even without considering the US’ President Donald Trump proposed tariffs after storming into the White House in January. Trump’s trade policies could hit Brazil in many fronts. Trump views steel as the true sign of industrial prowess, and his proposed tariffs on that product could directly hurt Brazil, which keeps a healthy steel production which makes it a net exporter, with more than 3.5 million tonnes/year sold to the US. Another sector which could be hit is one of the country’s own success stories: ethanol, as Brazil overtakes the US as a global producer thanks to lower costs, hot weather, abundant water, and previous trade wars, which made the largest grain consumer China turn away from US farmers' output. Contributing to the doom and gloom, US credit rating agency Moody’s said in February the potential tariff-induced economic hit to Latin America’s economy would only be recouped by 2028, with lower output and lower employment on the cards. However, the expected economic slowdown could play in favor of those who are lobbying for lower tariffs. Despite the healthier-than-expected manufacturing performance in February, Brazil’s manufacturing has been on a slowing trend for months, and this does not play well with the music the government wants to sell to voters. A fall in jobs in manufacturing could greatly harm President Luiz Inacio Lula da Silva's Workers’ Party (PT) chances of re-election in 2026, as that constituency forms the backbone of the party’s electorate. Amid yet another crisis in the many he has experienced, Associquim’s Medrano preferred to end on an optimistic note. “The global petrochemical industry is in trouble. Let’s see where we are in October, but a decrease in tariffs could take place – it will all depend on how the Brazilian economy behaves in the coming months. If the economy grows, there will be a shortage of products, making imports important in addition to the usual supply and demand patterns,” said Medrano. “Usually, at the beginning of the year, we see a replenishment of stocks as companies reduced their operations ahead of the summer break. This year, however, this replenishment of stocks has been lower and slower than normal. “We are living in difficult times. Not only nationally, but internationally. Adding to that, international trade is very disrupted and could even be more disrupted in coming quarters. Things are not normal, or at least not the normal we became accustomed to in past decades. “However, we have been through worse times and, for sure, we will get through them. I don’t want to be too pessimistic.” Finally, a quick note to readers in Brazil: happy new year. Front page picture: Port of Santos in Sao Paulo, Latin America’s largestSource: Port of Santos Authority Insight by Jonathan Lopez

11-Mar-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 7 March 2025. Europe glycerine spot prices rise on prolonged shortages Constrained crude glycerine availability evident over an extended length of time has exerted upward pricing pressure on all glycerine grades in the European market, resulting in spot prices rising this week. INSIGHT: Half a decade on from the pandemic, feedstock pricing volatility remains widespread and perhaps irreversible Next week marks half a decade since major lockdowns were enforced across Europe in response to the coronavirus pandemic, and the obvious thing to do would be to reflect back on how much life has changed over the past five years. Europe colorless PET bottle bale prices rise for first time since Q2 2024 Reduced supply and higher demand from the downstream recycled polyethylene terephthalate (R-PET) flake sector have seen colorless (C) post-consumer PET bottle bale prices in northwest Europe (NWE) rise for the first time since April 2024. Europe chems stocks tank amid tariff-driven global sell-off European chemicals stocks fell on Tuesday in line with a wider market sell-off as the US prepares to impose wide-ranging tariffs on Mexico and Canada and China announced retaliatory tariffs on the US, deepening global trade tensions. BASF not looking to tailwinds for 2025 earnings growth BASF expects to increase earnings in 2025, with most units other than chemicals expected to contribute to annual growth, but it is not expecting much support from economic tailwinds this year.

10-Mar-2025

HOUSTON (ICIS)–The US government is coming to embrace tariffs as a central part of its economic and fiscal policies, a development that could see such measures persist and threaten margins for the nation's chemical producers. Countries on the receiving end of US tariffs may retaliate by imposing duties on US exports of chemical and plastics. Such exports are vulnerable to retaliatory tariffs because of the magnitude of the US trade surplus in these products and because the world has excess petrochemical capacity. During his state of the union address, US President Donald Trump explained how tariffs are part of his strategy to increase the country's manufacturing base. TARIFFS FOR NEGOTIATIONS AND POLICYThe US already has used tariffs as a negotiating tool. In these cases, the tariffs went away once the US achieved its goals. Colombia agreed to accept migrant deportations after the US threatened to impose tariffs. The US agreed to a one-month pause on proposed tariffs after Canada and Mexico agreed to additional steps intended to address illicit drugs. The nation's proposed reciprocal tariffs could conceivably be removed if countries remove their tariffs on imports or address what the US considers to be trade barriers. Once tariffs become fundamental components of economic policy, it is likely that they will persist. TARIFFS BECOMING KEY PART OF US ECONOMIC POLICYDuring his state of the union address, Trump said manufacturers will add capacity in the US to avoid tariffs being imposed on their products. While producers do not pay the tariffs, the duties do make their products more expensive than those made by domestic manufacturers. The foreign producers could lower their prices to offset the tariffs, abandon the market or add capacity in the US to avoid the tariffs. The following lists some of Trump's comments about tariffs and economic policy: "They will come because they won't have to pay tariffs if they build in America." "All that was important to them was they didn't want to pay the tariffs, so they came, and they are building, and many other companies are coming." (Trump said this after after discussing the plans by TSMC to invest $165 billion in the US.) "If you don't make our product in America, however, under the Trump administration, you will pay a tariff, and in some cases, a rather large one. Other countries have used tariffs against us for decades, and now it's our turn to start using them against other countries." USING TARIFFS FOR SECURITY AND REVENUEAn executive order from 20 January requested that Trump's administration study the creation of an external revenue service to collect revenue generated from tariffs and duties. During Trump's state of the union address, he expressed concerns that the nation's security could be threatened by its reliance on foreign supplies of aluminium, copper, lumber and steel. "I have also imposed a 25% tariff on foreign aluminium, copper, lumber and steel, because if we don't have, as an example, steel and lots of other things, we don't have any military, and frankly we just won't have a country very long," he said. US TARIFFS MAY BE HERE TO STAYWhat's significant isn't whether tariffs achieve any of these long-term goals of raising government revenue, enhancing security or promoting economic growth. What matters is that the US sees tariffs as a critical tool for achieving these long-term goals. Tariffs are not going away. The tariff delays that the US announced on some imports from Canada and Mexico are not terminations. Once the delay expires, the US could impose the tariffs. So far, the US is showing no signs of abandoning tariffs as a policy tool or backing down on the reciprocal tariffs that it plans to impose on 2 April on all imports. The reciprocal tariffs will consider duties as well as what the US considers to be nontrade barriers, such as value-added taxes (VAT). "The reciprocal tariffs will go into effect on April 2, and he feels strongly about that. No matter what. No exemptions," said Karoline Leavitt, White House Press Secretary. "He said they should get on it, start investing start moving, shift production here to the United States of America where they will pay no tariff. That's the ultimate goal. " Insight article by Al Greenwood Thumbnail shows capitol. Image by Lucky-photographer

07-Mar-2025

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: FD NWE colourless (C) bale prices rise for first time since May 2024 FD NWE C and mixed coloured flake prices rise at low end in March Food-grade pellet range widens, as UK C flake range narrows

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