Engineering plastics (POM, PBT)

LONDON (ICIS)–Senior Editor for Recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Eastern Europe bale bullishness eases Some northwest Europe flake sellers' views on August offers vary Swedish deposit return scheme (DRS) introduces R-PET cap from May 2025

26-Jul-2024

LONDON (ICIS)–Venezuelans go to the polls on Sunday with the hope of a free and fair election, in which case President Nicolas Maduro is widely expected to lose office in a country where the economy has been battered by years of mismanagement, corruption, and US sanctions. In the crude oil-rich country – Venezuela holds the world’s largest reserves – petrochemicals could naturally develop given the raw materials advantage. Back in the 1990s, with crude oil output at its peak, petrochemicals were tilted as a growing and booming sector in the country. The industry never took off. Since 2001, Venezuela has been run by the socialist PSUV party, first under the late President Hugo Chavez, who died in 2013, and later under his appointee successor, Nicolas Maduro, who won an election in 2018 widely seen as not free: the PSUV-led coalition won 256 out of 277 seats in the National Assembly. Venezuela’s demise has been rapid and deep: practically no institution in the country has been spared from the PSUV taking over it, and the election on Sunday has several times been postponed as Maduro tries to cling onto power for as long as he can. The powerful military are still for the most part rallying behind him. A state of terror has been the norm in the past few years, and the economy took a turn for the worse in the late 2010s and pushed around seven million Venezuelans to flee, mostly to neighboring countries or, those with the means, to countries such as the US or Spain. Sunday’s election is momentous because it has been tilted as one in which Maduro could allow a free vote – but many still fear that is not his nature. But independent opinion polls have consistently showed him trailing behind the unity opposition candidate, Edmundo Gonzalez, a 74-year-old diplomat who managed to avoid, like other opposition candidates before him, being banned from running. PETROCHEMICALSBefore North America renewed its status as a global energy power with the advent of the shale gas boom, crude oil derivatives were – and continue to be in most Latin American countries – the only game in town when it comes to petrochemicals raw materials. In the past 30 years, crude oil output peaked in 2000 at slightly more than 3 million barrels/day, stayed mostly stable under Chavez’s rule at around 2.5 million barrels/day, but has been on a downward trend since, according to data from the US Energy Information Administration (EIA). VENEZUELA CRUDE OIL PRODUCTIONJanuary 2000-July 2023 Million barrels/day Source: US’ Energy Information Administration Currently, Venezuela produces around 700,000 barrels/day. The reserves continue to be there, underground, but the facilities to extract that wealth have also been victims mismanagement and have had little maintenance. In 2023, as the world’s energy sector reeled from Russia’s attack against Ukraine, the US softened some of its sanctions on Venezuela – its crude oil was now more needed than ever – and signed the so-called Barbados Accords, which would imply lifting sanctions in exchange for a free and fair electoral process. Maduro backtracked from his word earlier in 2024 – as he kept banning candidates from the opposition to run in the process – and the US reimposed the sanctions which, in the abyss the country is, are used by the government as the excuse for the country’s malaise. Amid this backdrop over the past decades, the 1990s talk about petrochemicals being a sector which could potentially be a powerful exporter of downstream materials to the rest of the world has all but died. In June, the Venezuelan government said it was mulling building production facilities for petrochemicals and fertilizers together with Turkey’s industrial conglomerate Yildirim, but without giving much detail about timelines or budgets. However, such deals have been signed before and nothing came to fruition out of them. Yildrim had not responded to a request for comment at the time of writing. Meanwhile, in an interview with ICIS in May, an executive at chemicals distributor Manuchar – Belgium-headquartered but focused on emerging markets, with strong presence in Latin America – told the sad fate the company was victim of in the late 2010s. By then, the economy worsened sharply and, with it, security – or the lack of it, rather – created a dangerous country to live in, from Caracas to the provinces. The government’s terror state has included paramilitary groups which have had little regard for their own people. Most of Manuchar’s employees fled the country while they still had the means, and the human resources problem forced the company to basically idle all its facilities there, which remain dormant to this day, said Manuchar’s head for South America, Stefan Van Loock “We still have a legal entity in Venezuela, although it is dormant, and we do not have any sales there since the end of the 2010s. During our last months there, the situation had become untenable: we could not import materials, there were hardly any dollars available, so even if you got the imports, you could not pay for them most times…,” he said. “It was also becoming a human resources problem. I saw many Manuchar colleagues resign: ‘I cannot stay in Venezuela any longer, it has become too dangerous, and I am leaving’. It was a combination of all those factors that made us decide to wind down our operations there. We can only hope things improve.” It is interesting to read this piece published on ICIS in 2013 when Chavez died. At the time, there were still hopes petrochemicals could be developed as the country’s crude oil sector was still worth the name. Little we knew how much the country would quickly deteriorate in the next five years, although the article already hinted at constrains which would only become much bigger later. “Venezuela potentially could attract significant petrochemical industry investment although major industry players have tried and failed in the past to establish footholds in the country,” the article’s author, ICIS expert Nigel Davis, wrote at the time. “State-controlled producer Pequiven has plans to nearly triple its plastics production capacity to 1.86 million tonnes/year in 2016 from 694,000 tonnes/year, although its ability to do so is questioned against the backdrop of feedstock, power, and financing constraints.” And looking further into the archives, even with Chavez in power, companies across the world such as major ExxonMobil wanted to tap into Venezuela’s petrochemicals. In this agreement from 2004, the US energy major and domestic producer Pequiven was mulling a 50:50 joint venture to build a $2.5-3 billion petrochemicals complex – once again, it never got to break ground. HOPE LAST THING TO LOSEMillions of Venezuelans abroad are following the electoral campaign and, for the most part, are hoping their compatriots at home go and vote em masse on Sunday: the polls have consistently and overwhelmingly showed Maduro behind, so if a free election is held, the Chavismo may be coming to and in a few months. The structures it leaves behind will take years to dismantle, anyway, and success in building a fairer and freer Venezuela is not guaranteed. Even this week, as he sees his position threatened, Maduro rallied supporters with a violent rhetoric which raised alarms across Latin America: he said that if his party does not win the election, there could be a bloodbath. Even Brazil’s President Luiz Inacio Lula da Silva, normally shy in openly criticizing Maduro as he has a worrying tendency to flirt with far left and authoritarian leaders in the region, was blunt about his feelings. "I was shocked by Maduro's statement that if he loses the election, there will be a bloodbath … Maduro has to learn that when you win, you stay; when you lose, you leave and prepare to run again in the next election," said Lula, quoted by Brazil’s public news agency Agencia Brasil. Lula has sent to Venezuela his personal adviser on foreign policy, Celso Amorim, as part of international delegations who are to be observers in the election. Jose Marquez, a Venezuelan journalist exiled in Buenos Aires, said Sunday’s election could be the last chance to put Maduro out of office, calling on his compatriots to vote em masse against Maduro. “There are people who emigrated who are right now traveling to Venezuela just to vote on Sunday. The fact that there are people in the country who decide not to vote, perhaps in the last opportunity to remove Maduro from power, is disappointing but, above all, very sad,” said Marquez. Front page picture: Facilities operated by PDVSA Source: PDVSA Insight by Jonathan Lopez

26-Jul-2024

BARCELONA (ICIS)–European petrochemical leaders should take inspiration from Japan, which is further ahead in reducing base chemicals while expanding in specialties and low carbon technologies. Japan hit by with high naphtha feedstock costs, growing global overcapacity 70% of crackers are more than 50 years old More than 10% of Japan’s crackers could close Downstream production also closing such as polyethylene terephthalate (PET) and paraxylene (PX) Japan basic chemicals losing ground, new focus on specialties Pushing materials for semiconductors, electronics Also expanding into bio-naphtha and pyrolysis oil Japanese companies want to licence their chemicals technologies Using ammonia and hydrogen to reduce dependence on LNG South Korea chemicals face existential crisis In this Think Tank podcast, Will Beacham interviews ICIS senior market development manager Itaru Kudose, ICIS senior consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

25-Jul-2024

SINGAPORE (ICIS)–Typhoon Gaemi made landfall on Taiwan’s eastern coast shortly before midnight on 24 July, bringing fierce winds and heavy rains to vast swathes of the island, with the Mailiao port remaining closed on Thursday. Financial markets and workplaces are also closed for a second consecutive day. Operations at the Mailiao port are expected to resume on 26 July after a three-day shutdown, according to market sources with direct knowledge of the matter. The port is operated by Taiwanese major Formosa Petrochemical Corp (FPCC) which primarily serves the company’s Mailiao refinery and petrochemical complex. The closure of Mailiao port is a precautionary measure taken for operational safety, according to a Formosa Plastics Corp (FPC) source, adding that operations at the company's ethylene vinyl acetate (EVA) plant in Mailiao were normal. Taiwan's major petrochemical complexes are in Toufen and Mailiao in the northwest; and Ta-sheh and Linyuan in Kaohsiung City in the south. Authorities in Taiwan have reported two weather-related fatalities and more than 200 others injured as the storm approached. Officials have evacuated more than 8,000 people across at-risk areas of the country. Prior to making landfall near Hualien County, Taiwanese authorities categorized Gaemi as a "severe typhoon," the highest level on their three-tier scale. This marked the first severe typhoon to hit the island since 2016. The storm has since weakened as it moved inland. At 08:30 local time (00:30 GMT), Gaemi was 80 kilometres northwest of Hsinchu, packing maximum winds of 90 kiometres/hour, Taiwan's Central Weather Administration (CWA) said in its latest update. A typhoon warning is in effect for Nantou, Chiayi, Chiayi City, Keelung City, Yilan, Changhua, New Taipei City, Hsinchu, Hsinchu City, Taoyuan City, Penghu, Taichung City, Taipei City, Tainan City, Taitung, Hualien, Miaoli, Kinmen, Yunlin, Lienchiang and Kaohsiung City, the CWA said. Over 4,000 people living in in northern regions, especially Hualien, were evacuated due to the storm. Hualien, a mountainous area prone to landslides, was also severely affected by a 7.2-magnitude earthquake earlier this year. Gaemi is expected to make its way across the Taiwan Strait towards Fujian and Zhejiang later on Thursday, with a red storm alert currently in place in both these provinces in southern China. The China Meteorological Administration (CMA) has issued a red typhoon warning, the highest level of alert, for strong winds expected in seas off the southeastern coast and coastal areas of Fujian and southern Zhejiang provinces. The Fujian Maritime Safety Administration has launched a Level I emergency response, the highest alert, in anticipation of Gaemi’s arrival, according to crisis management firm Crisis24. Ports have been closed and vessels have been ordered to return to shore, it said. Thumbnail photo shows the location of Typhoon Gaemi at 04:30 GMT on 25 July (Source: zoom.earth) Additional reporting by Angeline Soh, Helen Lee and Samuel Wong

25-Jul-2024

HOUSTON (ICIS)–The US election could see Donald Trump return as president with majorities in both legislative chambers, which could bring a reduction in excessive red tape, weaker support for electric vehicles (EVs) and impose even more ponderous tariffs and trade restrictions. Incumbent President Joe Biden has dropped out of the race, and current polls show Trump ahead in the election The House of Representatives and the Senate are closely split between the nation's two major parties, so the Republican party could obtain majorities in both legislative chambers Regardless of who wins the presidential election on 5 November, the outlook remains pessimistic for tariff relief and trade deals in the US US TRADE POLICY WILL REMAIN RESTRICTIVERegardless of who wins the presidential election, US trade policy will remain restrictive, which could leave the nation's chemical exports vulnerable to retaliatory tariffs imposed during a trade dispute. Also, tariffs could increase the cost of imports of critical chemical intermediates. Biden's campaign website did not discuss trade policy, and he recently dropped out of the race. But he maintained many of the tariffs that Trump introduced during his presidency in 2016-2020. In addition, Biden raised tariffs on EVs from China. He signed bills passed by Congress that required local content rules for government programs. Trump's platform proposed a baseline tariff, with the candidate mentioning 10% for most imports. For China, he mentioned tariffs of more than 60% during an interview on the television program Fox News. Trump's campaign website proposes a reciprocal trade act, under which the US could match tariffs that another country imposes on its exports. Although the platform concedes that reductions are possible, the proposal focuses on the potential of higher tariffs. TRUMP TO ROLL BACK BIDEN'S EV POLICIESBiden did not mention EVs on his campaign website. But during his presidential term, the federal government used multiple laws and regulatory statutes to promote EV adoption. If Trump becomes president, he has pledged to cancel what he calls the electric vehicle mandate. He specified many of Biden's policies that encouraged the adoption of EVs. EVs typically consume more plastics on a per unit basis than automobiles powered by internal combustion engines (ICEs). EVs also pose different material challenges, which is increasing demand for different plastics and compounds. Policies that prolong the use of ICE-based vehicles could extend the operating life of the nation's refineries. Companies could be more willing to invest in maintenance and repairs if they are confident that they could recoup their investments. Refineries produce many building block chemicals, such as propylene, benzene, toluene and mixed xylenes (MX). BIDEN, TRUMP PRESENT EXTREMES ON CHEM REGULATIONSBiden and Trump lay on opposite extremes of regulations and policy. Under Biden, the federal government has adopted numerous regulations, many of which the chemical industry has said provided them with little benefit given the time and expense of compliance. The past six months has been described as the worst regulatory environment that the chemical industry has ever seen. That burdensome regulatory climate could persist if a Democrat wins the election, since personnel from the Biden administration could remain in place. The following lists some of the regulatory policies that could either persist under a Democratic administration or weaken under a Trump administration: The Environmental Protection Agency (EPA) has adopted a whole chemical approach in determining whether a substance poses an unreasonable risk under the nation's main chemical-safety program, known as the Toxic Substances Control Act (TSCA). The regulator is currently reviewing vinyl chloride monomer (VCM), acrylonitrile (ACN) and aniline, a feedstock used to make methylene diphenyl diisocyanate (MDI). Changes to the Clean Waters Act, the Risk Management Program (RMP) and the Hazard Communication Standard that were made by Biden. Biden has promoted environmental justice throughout the federal government. Environmental justice could make it harder for chemical companies to expand existing plants or build new ones. Because these are federal policies, a different president could reverse them. Trump could try to unravel some of Biden's rules to the degree possible under executive authority. However, some of the rules will persist because of entrenched bureaucracy or because they are final. The pace of new regulations would likely slow under a Trump presidency. He has pledged to restore his order that for every new regulation introduced by the federal government, two existing ones must be eliminated. OTHER POLICY DIFFERENCESSuperfund tax: If Trump wins the presidency and Republicans win the legislative branch, that could set up a repeal of the Superfund tax, which imposes taxes on several building-block chemicals and their derivatives. Republican legislators have already introduced bills to repeal the tax. Trump tax cuts: Trump has pledged that he would make his 2017 tax cuts permanent. These are set to expire at the end of 2025 from his previous term in 2016-2020. Oil production: Biden has imposed several restrictions on oil and gas production on federal land and on offshore leases, although this did not stop production from surging in the Permian Basin, much of which is outside of government control. Trump has pledged to remove those restrictions. Insight by Al Greenwood Thumbnail shows US capitol. Image by Lucky-photographer

22-Jul-2024

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 19 July. NEWS Braskem Idesa ethane supply more stable, PE prices to recover in H2 2025 – exec Supply of ethane from Pemex to polyethylene (PE) producer Braskem Idesa is now more stable after a renegotiation of the contract – but the global PE market remains in the doldrums, according to an executive at the Mexican firm. INSIGHT: Colombia’s wide single-use plastics ban kicks off amid industry reluctance Colombia’s single-use plastic ban, which affects a wide range of products, kicks off amid some industry reluctance after a hurried implementation, and with provisions to revise the legislation after a one year trial period. Brazil’s chemicals capacity utilization falls to record low in May at 58% The utilization rate at Brazil's chemical plants fell to 58% in May, the lowest level since records began in 1990, the country’s chemicals trade group Abiquim said on Wednesday. Brazil’s floods hit GDP growth in 2024 but strong recovery in 2025 – IMF The IMF has revised Brazil’s economic outlook for 2024, with GDP growth now forecast at 2.1%, down from an earlier projection of 2.2%, because of the floods in Rio Grande do Sul. Mota-Engil, PEMEX agree to build new ammonia, urea and AdBlue plant in Mexico Mota-Engil, through its subsidiary MOTA-ENGIL MEXICO, has signed an agreement with Pemex Transformación Industrial, a subsidiary of state-owned energy major Petróleos Mexicanos (“PEMEX”), to construct a fertilizer plant in Escolin in the state of Vera Cruz. Harvest Minerals undertakes rare earth elements exploration at Brazil fertilizer project Fertilizer producer Harvest Minerals announced a two-phase rare earth elements exploration program has commenced at its Arapua project in Brazil. Stolthaven Terminals chosen as potential operator for Brazil green ammonia export terminal Logistics firm Stolthaven Terminals announced that in cooperation with Global Energy Storage (GES), it has been selected as the only potential operator to design, build and operate a green ammonia terminal in Brazil to be located within the industrial export zone at Pecem in the state of Ceara. Silver Valley Metals selling Idaho project to refocus on Mexico lithium and SOP project Brownfield exploration company Silver Valley Metals announced it has signed an asset purchase agreement for the Ranger-Page project in Idaho which will allow it to refocus efforts at its lithium and potash project in central Mexico. BHP enters into further agreement with Vale over 2015 Brazil dam failure BHP announced it has entered into an agreement with Vale regarding group action proceedings in the UK in respect of the Fundao Dam failure in Brazil which occurred in 2015. PRICING Lat Am PE international prices stable to up on higher US export offers International polyethylene (PE) prices were assessed as steady to higher across Latin American countries on the back of higher US export offers. PP domestic prices fall in Argentina on sluggish demand, ample supply Domestic polypropylene (PP) prices were assessed lower in Argentina on the back of sluggish demand and ample supply. In other Latin American countries, prices were unchanged. US Gulf sees PVC price decline, Latin America stays stable Polyvinyl chloride (PVC) demand in Brazil has shown fluctuations from weak-to-stable this July, accompanied by sufficient supply. Although market prices have stabilized, local prices continue to face pressure following a recent price drop in the US Gulf market.

22-Jul-2024

LONDON (ICIS)–Senior editor for polyethylene terephthalate (PET), Caroline Murray, and senior editor for Recycling, Matt Tudball, discuss the current state of the PET and recycled PET (R-PET) markets and the uncertainties that both face for the rest of the year, including: Lower-than-expected PET demand PET exports head out of Europe High freight costs hit imports Upcoming recycled content targets for R-PET Lack of clarity about recycling legislation Limited availability of food-grade R-PET pellets

22-Jul-2024

LONDON (ICIS)–Senior editor for recycling Matt Tudball discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Bullish outlook for eastern Europe bales and flake Upwards pressure appearing when market usually quietens down for summer Wider market expects bale supply to improve during August Outlook from September onwards still uncertain

19-Jul-2024

HOUSTON (ICIS)–The US chemical industry could see the return of some popular trade and chemical-safety programs later this year, and customers of the major railroads could get their first chance to switch carriers if they get bad service. The year is turning out to be a busy and potentially productive one despite the presidential election Key trade and security bills for the chemical industry could pass during the lame duck session, which falls between the November 5 election day and the January 20 inauguration Globally, the final round of negotiations for the UN plastics treaty should take place near the end of the year UN PLASTICS TREATYThe concern of the chemical industry is that the ratified plastic treaty could include caps or curbs on the production of plastic. Companies such as BASF have advocated that the treaty should focus on curbing pollution instead. Chemical companies have noted a growing consensus around the industry's views, leading them to be optimistic about the upcoming negotiations. The next round of talks is scheduled for November 25 through December 1 in Busan, South Korea. Formal ratification could take place in early 2025. RECRIPROCAL SWITCHING MAY GET FIRST TRIALReciprocal switching in the US will become effective in September, which will allow chemical companies to switch rail carriers if they can demonstrate substandard service. Reciprocal switching will be limited to Class 1 railroad companies, which are the biggest carriers. Redress for bad service is not automatic, and the process will require time, effort and legal fees on the part of chemical companies. "The question is how laborious and costly will that process be when you file a complaint?" said Eric Byer, president of the Alliance for Chemical Distribution (ACD) the new name for the National Association of Chemical Distributors (NACD). Still, it is possible that a chemical company upset with its rail service takes the plunge and files the first request for reciprocal switching. NEW RAIL BILL AND POSSIBLE TANK CAR BANA rail safety bill that passed the Senate shortly after the Norfolk Southern train derailment in Ohio state has recently received momentum that could push it into law. That momentum is coming from HR 8996, a sister bill that was introduced in the House of Representatives by Troy Nehls (Republican-Texas) and Seth Moulton (Democrat-Massachusetts). Related to the bill is a possible ban on DOT 111 tank cars. The ban is also connected to the derailment, since it is part of a settlement agreement between the US and Norfolk Southern. The agreement proposes that Norfolk Southern stop using its own DOT-111 tank cars and that it encourages its customers to do the same. The ACD is concerned that the agreement could be the first step in an outright ban of DOT 111 tank cars. Such a ban could take place before the industry has time to replace the tank cars. Hazardous materials would then be shipped by truck, which is more dangerous. A ban would also disrupt the movement of chemicals if it happens too quickly. REVIVAL OF CHEM SECURITY PROGRAMLegislators could revive the nation's main anti-terrorism program for chemical sites, which is known as the Chemical Facility Anti-Terrorism Standards (CFATS). CFATS has been inactive for about a year, after a bill that would have re-authorized it was blocked by US Senator Rand Paul (Republican-Kentucky). While CFATS has lost its authorization, it has not lost funding. Were Congress to re-authorize CFATS, employees who were associated with the program could be reassigned to it. Senators could attempt to revive CFATS through an amendment to the National Defense Authorization Act (NDAA), Byer said. That could happen later in September or during the lame duck legislative session, Byers said. Another tactic would add an amendment to the appropriations bill, he said. Congress will likely consider the appropriations bill during the lame duck session. REVIVAL OF TRADE PROGRAMSTwo trade programs popular with the chemical industry could also be revived during the lame duck session. The Generalised System of Preferences (GSP) expired at the end of 2020, and it eliminated duties on thousands of products from more than a 100 developing countries. Prior to its expiration, the GSP had existed for decades. Byer said a bill could bring back the GSP program and make it retroactive to January 1, 2021. If such a bill becomes law, companies would receive rebates for the taxes they paid while the GSP program was inactive. The GSP has typically been coupled with another expired trade program, known as the Miscellaneous Tariff Bill (MTB), Byer said. The MTB temporarily reduced or suspended import tariffs on specific products, and it could be packaged with any other legislative action that would revive the GSP. ELECTION SEASON TO LIMIT NEW BILLS, POLICIESOutside of the trade and security bills, Byer does not expect a lot of new legislation because of the elections. Similarly, the pace of new policies and rulemaking at federal agencies should slow down. Any regulatory relief would be a welcomed change because the first half of 2024 was the worst regulatory climate that the chemical industry has ever seen, Byer said. The regulatory climate could change after the elections on November 5. Otherwise, the chemical industry may have to turn to the courts to challenge policies that have a questionable basis and a harmful effect on companies. Insight article by Al Greenwood Thumbnail shows plastic waste. Image by HOTLI SIMANJUNTAK/EPA-EFE/Shutterstock

18-Jul-2024

MADRID (ICIS)–Colombia’s single-use plastic ban, which affects a wide range of products, kicks off amid some industry reluctance after a hurried implementation, and with provisions to revise the legislation after a one year trial period. The law that came into force on 7 July implemented a ban on eight plastics: carrier bags for packing supermarket purchases; bags for fruits and vegetables; plastic packing for magazines and newspapers; bags for storing clothes coming out of the laundry; plastic holders for balloons; cotton swabs; straws; and stirrers. The regulation establishes that those plastic products must be replaced by sustainable alternatives, such as biodegradable and compostable materials or recycled materials, or reusable non-plastic materials. It is a wide-ranging ban approved in parliament in 2022, although the plastics industry has criticized that details about the implementation of the law were only published at the end of June, barely two weeks before the kick-off date. Environmental groups have welcomed the measure, hoping more countries in Latin America will implement similar legislation in a region where plastics are omnipresent. MORE TO COMEApart from the eight plastic products banned from 7 July, the ban has set a transition period ranging from two to eight years, depending on the type of plastic, to allow merchants time to adapt to the new regulations. By 2030, plastics to be eliminated or transformed into reusable materials include containers, packaging, and bags for non pre-packaged liquids; disposable plates, trays, and cutlery; confetti, tablecloths, and streamers; containers, packaging, and bags for deliveries; sheets for serving or packaging foods for immediate consumption; wrappers for fruits and vegetables; stickers for fruits; handles for dental floss; and straws for containers of up to three liters. The law establishes exceptions for single-use plastics in certain cases, including exceptions for plastics used for medical purposes; packaging of biological or chemical waste; food products of animal origin; and those made with 100% recycled plastic raw material sourced from national post-consumer material. The regulation also mandates that public entities cannot acquire prohibited single-use plastics if sustainable alternatives are available, and these entities must implement reduction campaigns. Colombia’s National Environmental Licensing Authority (ANLA in its Spanish acronym) will oversee and enforce these measures. Among the measures included in the law, there is a request from distributors of plastic bags to submit reports on the rational use and recycling of bags in their inventory and must submit an Environmental Management Plan for packaging waste by 31 December. The law clearly will put an administrative burden on companies, not least distributors and the role they have been assigned as guardians of the law. In an interview with ICIS, the CEO of QuimicoPlasticos, a chemicals distributor in Colombia, said he thinks many aspects of the law will have to be reversed, not least points such as the nationally sourced recycled plastics as substitutes, given that recycling is in its infancy in the country and there will not be enough supply for years. QuimicoPlastics is a family-run distributor founded in 1982 and employs 80 people. It imports raw materials which distributes to the plastic packaging sectors (rigid and flexible) with end markets such agriculture, construction, food, and hygiene. The company was founded by the father of the current CEO, Federico Londoño, who has been on the post for 12 years. He has got low opinions about the law. “The law goes much further than a country like Colombia can afford. Moreover, globally and here in Colombia there are investments companies have made which are researching alternatives to, say, trays made of EPS [expandable polystyrene], but with laws like this the burden on companies grows and incentives for investment diminish,” said Londoño. It is a criticism shared across Latin America. In an interview with ICIS in June, the head of Chile’s plastics trade group Asipla also said parliamentarians push for sustainability was at times detached from the country’s reality. Before QuimicoPlasticos’ Londoño, the head of Colombia’s plastics trade group Acoplasticos also showed skepticism in an interview with ICIS about the law banning such wide range of single-use plastics. Before the law on single-use plastics, Colombia had already approved a tax on plastics production, which was marred with confusion in its initial stages of implementation. The moves around plastics have been welcome by environmental groups, some of them with the support of major consumer goods producers such as Washington-based Ocean Conservancy; in its website, it says some of its partners include Coca-Cola, Ikea, or Garnier, among many others. “With over 11 million tonnes of plastics entering the ocean each year, this law [banning single-use plastics] is a huge win for Colombia and the ocean,” said in a statement Edith Cecchini, director of international plastics at Ocean Conservancy. “Single-use plastic bags, straws, and stirrers are among the top ten most commonly found items polluting beaches and waterways worldwide by Ocean Conservancy’s International Coastal Cleanup. Ocean Conservancy applauds Colombia for this important step to prevent plastic pollution and protect marine life, and we hope that other countries will follow suit.” EXPANDING PUBLIC SERVICESThe push for sustainability by the left-leaning cabinet presided over by Gustavo Petro goes hand in hand with plans to increase tax receipts to finance the expansion in the welfare state Petro campaigned for. The cabinet has been under pressure to put the public accounts in order after posting fiscal deficits for most of Petro’s term. In June, the government published its fiscal plan for the coming years, hoping to quell fears among investors. Most analysts argued that the cabinet’s plans are too optimistic. For instance, it forecasts crude oil prices at around $90/barrel on average for the coming years, as a big chunk of Colombia’s income comes from its state-owned oil major Ecopetrol. To reassure investors, Finance Minister Ricardo Bonilla announced spending cuts worth Colombian pesos (Ps) 20 trillion ($5.1 billion, equivalent to 1.2% of GDP) to meet the target set out by the new fiscal plan 2024. “Even so, there’s reason for concern. For one thing, the government made clear that there would be no cuts to social spending; instead, a lot of the adjustment (around one third) will come in the form of cuts to public investment,” said Capital Economics at the time. Manufacturing, meanwhile, has been in the doldrums for much of 2023 and 2024, except for a positive spell in the first quarter. According to QuimicoPlasticos’ CEO, the government’s economic policy is deterring investments and creating uncertainty. “The economy is not going well. Industrial companies are suffering a high degree of uncertainty, because the fiscal burden on them continues to increase. This is no surprise, of course, when some public official within the cabinet have publicly said companies ‘steal from the people’ and they should be taxed more,” said Londoño. “Treating industrial companies as cash cows is wrong: these are the companies which need large sums in capital investments, and increasing taxes on them only deters that. If we add to that, for example, that the cabinet wants to reduce the role of fossil fuels in the country’s exports due to environmental reasons, you get a worrying picture for the coming years.” ($1 = Ps3,946) Insight by Jonathan Lopez

16-Jul-2024