Engineering plastics (POM, PBT)

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the fortnight ended on 18 April. NEWS Brazil's chemicals production in ‘free fall’ as idle capacity hits 40%Brazil's chemicals industry is facing its worst performance in 30 years, with the producing companies in the sector operating at just 60% of installed capacity during January and February, the country’s trade group Abiquim said. Mexico must do homework on USMCA compliance, set policy to prop up nearshoring – Evonik execMexico breathed a sigh of relief when the US spared it from very punitive tariffs, but the country should not turn complacent and use this as a catalyst to step up compliance with rules of origin clauses contained in the North America free trade deal USMCA, according to the director for Mexico at German chemicals major Evonik. US tariffs spark fears in Chile about even higher industrial goods importsUS import tariffs on China and other Asian countries are increasing fears in Chile that even higher amounts of imports will dent domestic plastics and wider manufacturing producers’ competitiveness, according to the CEO at the country’s plastics trade group Asipla. INSIGHT: Argentina’s chemicals remain uninvited to the recovery partyArgentina’s chemicals sector remains in the doldrums, with output in the first quarter lower year on year, according to sources, who are increasingly turning pessimistic about manufacturing’s prospects amid the push for economic liberalization. Brazil's inflation rises to 5.5% in March, further tightening expectedBrazil's annual rate of inflation rose to 5.5% in March, year on year, the highest level in more than two years and up from 5.1% in February, the country’s statics office said on Friday. Argentina’s chemicals, plastics output keeps falling but manufacturing, construction upArgentina’s chemicals and plastics output continued falling in February, year on year, but petrochemicals-intensive activity in construction and overall manufacturing rose, according to the country’s statistics office Indec. Argentina’s annual inflation down to 56%; monthly price rises accelerateArgentina’s annual rate of inflation fell in March to 55.9%, down from 65.9% in February, the country’s statistics office said on Friday. Argentina’s IMF bailout confirmed after Milei returns from Washington; tariffs deal more elusiveWhen President Javier Milei of Argentina travelled to Washington last week, most analysts expected him to return with an IMF bailout agreed and ready. On Wednesday, the Fund confirmed a bail out for Argentina for the second time in four years, affirming analyst expectations. PRICINGLatAm PP spot domestic prices lower in Brazil on ample supply, weak demandSpot domestic polypropylene (PP) prices were assessed lower in Brazil on ample supply and weak demand. In other Latin American countries, prices were steady. LatAm PE domestic prices fall in Brazil, Mexico on ample supply, soft demandDomestic polyethylene (PE) prices fell in Brazil and Mexico while being unchanged in other Latin American (LatAm) countries.

21-Apr-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 18 April. US tariffs spark fears in Chile about even higher industrial goods imports US import tariffs on China and other Asian countries are increasing fears in Chile that even higher amounts of imports will dent domestic plastics and wider manufacturing producers’ competitiveness, according to the CEO at the country’s plastics trade group Asipla. INSIGHT: Global chemical prices plunge with oil amid tariffs The tariffs imposed by the US and the uncertainty of what will follow has caused a crash in oil prices and is one of the main factors behind a global decline in chemical prices in the days after the country's April announcement of its reciprocal tariffs. Valero may shut down California refinery in 2026 Valero has submitted notice to the California Energy Commission of its intent to idle, restructure, or cease refining operations at its Benicia Refinery by the end of April 2026, the US refining major said in an update on Wednesday. Brazil's chemicals production in ‘free fall’ as idle capacity hits 40% Brazil's chemicals industry is facing its worst performance in 30 years, with the producing companies in the sector operating at just 60% of installed capacity during January and February, the country’s trade group Abiquim said. INSIGHT: Possible US mineral tariffs threaten chem, refiner catalysts The US is taking steps that could lead to tariffs on imports of up to 50 critical minerals, many of which are used to make catalysts for key processes used by refiners and chemical producers. Canada to keep using retaliatory tariffs, regardless of election outcome Canada will continue resorting to retaliatory tariffs against the US – regardless of which party, the incumbent Liberals or the opposition Conservatives, wins the upcoming 28 April federal election.

21-Apr-2025

HOUSTON (ICIS)–The US is taking steps that could lead to tariffs on imports of up to 50 critical minerals, many of which are used to make catalysts for key processes used by refiners and chemical producers. If the US ends up imposing the tariffs on the critical minerals, then they would take the place of the reciprocal tariffs. REFINING CATALYSTS AND AROMATICS MARKETSFluorspar is used to make hydrofluoric acid, a catalyst used in alkylation units. These units convert isobutane and propylene into alkylate, a high-octane blendstock. Cerium and lanthanum are used to make catalysts for fluid catalytic cracking (FCC) units. These units convert gas oils into gasoline and refinery grade propylene (RGP). If the US imposes tariffs on these catalysts and if the tariffs cause large enough price increases, then refiners could alter their operations to reduce their costs. If refiners lower alkylation operating rates, they may rely on other high-octane blendstock such as toluene or mixed xylenes (MX). Changes in alkylation and FCC rates would concurrently affect supply and demand for RGP. ANTIMONY AND PETChinese restrictions on antimony already have led producers to propose price increases for polyethylene terephthalate (PET), which relies on the mineral as a catalyst. If the US imposes tariffs on antimony, then it would further increase prices from the other countries that export the mineral to the US. BISMUTH AND POLYURETHANESBismuth is used as a catalyst for making polyurethanes. One such bismuth-based catalyst won an innovation award. OTHER CATALYSTSIridium, neodymium, rhodium, ruthenium, ytterbium and yttrium are all used to make catalysts, according to the US Geological Survey (USGS). Palladium and platinum are used in catalytic converters in automobiles. TIO2 AND PAINTS MARKETSThe US also considers titanium and zirconium as critical minerals. It is unclear if the US would impose tariffs on titanium metal or titanium oxide. However, the US list of critical minerals implies that the tariffs could include titanium oxide. Titanium oxide is the feedstock that is used to make titanium dioxide (TiO2), a white pigment that is used to make paints opaque. Producers of paints and coatings are already facing higher costs from US tariffs on steel. In 2023, Sherwin-Williams estimates that plastic and metal containers made up 15% of its product's costs. A tariff on titanium oxide would further increase costs for paints and coatings producers. Zirconium is a byproduct of processing mineral sands that contain titanium. TiO2 producers Tronox and Chemours operate such mines. Tronox's are in Australia and South Africa, and Chemours has mines in the US states of Florida and Georgia. FLUORSPAR AND FLUOROMATERIALSFluorspar is also the upstream feedstock for fluorochemicals and fluoropolymers. Polyurethane foams use fluorochemicals as blowing agents. Fluoropolymers include Teflon. These are becoming increasingly important in 5G equipment, semiconductor fabrication plants and lithium-ion batteries. Fluoropolymers are also used as membranes in hydrogen fuel cells and chlor-alkali plants. BARITE, CESIUM USED IN OIL PRODUCTIONBarite is used to make drilling mud. Cesium is used to make cesium formate drilling fluids, which are used by oil and gas producers. FLAME RETARDANTSAluminum and antimony are used to make flame retardants. INVESTIGATION TO PRECEDE ANY TARIFFSBefore the US imposes any tariffs on critical minerals, it will conduct an investigation under section 232 of the Trade Expansion Act of 1962. The US has used that section to impose tariffs on other products such as steel and aluminium. The scope of the investigation will include the 50 minerals deemed critical by the USGS, processed critical minerals and derivative products. Derivative products include semi-finished goods and final products "such as permanent magnets, motors, electric vehicles, batteries, smartphones, microprocessors, radar systems, wind turbines and their components and advanced optical devices", according to the order. The secretary of commerce will have 180 days to submit a final report of the investigation to the president. Recommendations will include tariffs and policies the US could adopt that would promote more production of critical minerals. LIST OF CRITICAL MINERALSThe following table shows the minerals that the US considers critical. Aluminium Magnesium Antimony Manganese Arsenic Neodymium Barite Nickel Beryllium Niobium Bismuth Palladium Cerium Platinum Cesium Praseodymium Chromium Rhodium Cobalt Rubidium Dysprosium Ruthenium Erbium Samarium Europium Scandium Fluorspar Tantalum Gadolinium Tellurium Gallium Terbium Germanium Thulium Graphite Tin Hafnium Titanium Holmium Tungsten Indium Vanadium Iridium Ytterbium Lanthanum Yttrium Lithium Zinc Lutetium Zirconium Source: USGS Insight article by Al Greenwood (Thumbnail shows a fuel pump that dispenses gasoline, which relies on critical minerals for production. Image by Shutterstock.)

17-Apr-2025

SAO PAULO (ICIS)–Brazil's chemicals industry is facing its worst performance in 30 years, with the producing companies in the sector operating at just 60% of installed capacity during January and February, the country’s trade group Abiquim said. According to the Abiquim-Fipe Economic Monitoring Report (RAC), all key indicators showed a decline in the two-month period, year on year: production fell by 5.6%, domestic sales dropped 0.8%, and national demand for industrial chemical products decreased by 4.0%. As domestic producers' market share diminishes, imports continue reaching Brazil’s shores at pace, with the country’s chemicals trade deficit continuing to increase. In the 12 months to February 2025, it reached $49.59 billion, up from $48.68 billion in the same 12-month comparable period a year prior. Imports now represent 49% of total domestic demand, with significant increases in thermoplastic resins (28.3%), other inorganic products (26.7%), and organic chemicals (25.1%). IDLENESSChemical plants’ 40% idleness average level in January-February was the worst recorded since data collection began in 1990, said the trade group, which represents mostly chemicals producers. Some product groups posted even higher idleness rates, such intermediates for fertilizers (44%), intermediates for plastics (48%), intermediates for synthetic fibers (41%), and intermediates for plasticizers (61%). February’s results were particularly concerning, with production plummeting 10.1% compared to January, domestic sales decreasing 4.5%, and national apparent consumption dropping 17.1%. Abiquim said companies attributed this poor performance to operational problems, idle units, plants in hibernation, low demand, raw material restrictions, electricity supply variations, and fewer operating days in February. Despite the clouds, prices for chemical products rose 5.1% between January and February 2025, with real prices increasing 3.6% when accounting for inflation. In dollar and euro terms, real prices are 11.3% and 11.2% higher, respectively, compared to 2024. Abiquim’s executive president, Andre Passos, preferred to see the glass half full – despite all evidence pointing to it being half empty – and said two state programs for the chemicals sector had the potential to turn things around by the end of this decade and “save” Brazilian chemicals. Passos said the breaks on some input materials, called REIQ, including provisions linking tax incentives to investments, was a re-implementation linked to investments to create new or expand existing capacities. Passos added that, only in 2025, companies could invest up to Brazilian reais (R) 1 billion thanks to the provisions included in the REIQ bill. ‘SAVE THE SECTOR’This week Abiquim focused on another bill, the Special Program for Sustainability of the Chemical Industry (Presiq). The Presiq acronym may be heard more often from now on if what Abiquim’s Passos said about it comes to pass – if implemented in full and correctly, Presiq could become the savior the struggling chemicals industry has for years been looking for. Earlier in April, Brazil’s parliament passed what could be considered the country’s response to the EU Green Deal or to the US IRA, now in danger of extinction: widespread tax incentives for companies going greener and embracing low-carbon processes and technologies. Presiq itself is an ambitious project which, beyond attracting more low-carbon investments, aims to bring the sector to near full capacity, targeting 95% utilization rates by the end of this decade. Presiq has two financial lines – one aimed at credits for the purchase of less polluting inputs and raw materials, such as natural gas versus other more polluting fossil fuels; secondly, the program will offer investment credits of up to 3% of invested value for petrochemical plants and chemical industries committed to expanding installed capacity. Starting in 2027, Presiq budgeted up to R4 billion for financial credits, and up to R1 billion for investment credits. “The Brazilian chemical sector is facing a delicate moment, aggravated by the trade war between the US and China. The government must take urgent measures to strengthen the national chemical industry, just as its international competitors have done with incentive programs,” said Passos. "The new law [Presiq] will help reduce the deficit in the chemical industry, and it could become an important source of revenue. It will also add value to the country through the sustainable use of natural resources. This plan can save the sector." Front page picture: Chemicals facilities in Brazil Source: Abiquim ($1 = R5.93)

16-Apr-2025

SINGAPORE (ICIS)–US “reciprocal” tariffs are prompting a shift of trade flows and supply chains as market players in Asia seek alternative export outlets for some chemicals, while overall demand remains tepid amid growing fears of a global recession. US-China trade war 2.0 keeps market players on edge Regional traders wary amid US’ 90-day tariff suspension SE Asia prepares for US trade talks as China president visits Vietnam, Malaysia, Cambodia Trades across the equities and commodities markets last week have been highly volatile since the start of April in the wake of US President Donald Trump’s reciprocal tariffs, the highest of which was imposed on China. The higher-than-expected tariffs sparked concerns over a possible global recession that sent crude prices slumping last week, dragging down downstream aromatics products such as benzene and toluene. Trump had raised the reciprocal tariffs for China three times in as many days – from 34%, to 84% and to 125% on 9-11 April – with China responding in kind. Including the combined 20% tariffs imposed in the past two months, the US’ effective additional tariffs for China stand at 145%. In the polyethylene (PE) market, prices are softening as US-bound export orders shrink, while polypropylene (PP) exports from China to southeast Asia look set to decline. Most polyolefin players in Asia and beyond are currently attending the 37th International Exhibition on Plastics and Rubber Industries (Chinaplas) in Shenzhen, China, which will run up to 18 April. Some China-based market players said the event could provide them an opportunity to explore alternative markets by deepening their relationships with buyers in southeast Asia. Exports of chemicals and plastics used in automobiles to the US, meanwhile, are likely to shrink as well amid auto tariffs from the world’s biggest economy. Apart from PP, exports nylon, butadiene (BD), and styrene butadiene rubber (SBR) to the US are expected to decline. Trump, on 14 April, said he is considering possible exemptions to his 25% tariffs on imported automobiles and parts. His tariffs on all car imports took effect on 3 April, while those on automotive parts will take place no later than 3 May. The automotive sector is a major downstream industry for petrochemicals. China’s PE imports from the US spiked in early 2025 but this is expected to reverse sharply because of the trade war between the two countries. However, China has a substantial number of naphtha and coal-based PE plants starting up in 2025 with a combined PE capacity of more than 8 million tonnes, which should reduce the country’s dependence on imports. The US will also need to redirect surplus PE to alternative markets amid dwindling Chinese demand. Market players expect demand in the second quarter to be worse than the first three months of 2025 amid hefty US reciprocal tariffs hanging over countries in Asia when Trump’s three-month pause lapses. Implementation of the US’ reciprocal tariffs were suspended on 9 April, for 90 days, providing some reprieve to about 60 countries, except China. Freight rates between China and the US have already decreased due to the trade war as demand evaporates. However, vinyl acetate monomer (VAM) prices in India are bucking the general downtrend and have firmed up as the chemical is not directly subjected to US tariffs. VAM is primarily used in the production of adhesives, textiles, paints and coatings. SE ASIA PREPARE TRADE TALKS The 10-member ASEAN group pledged that they will not impose retaliatory tariffs on the US following an emergency meeting, opting to negotiate with the US. Among the nations scheduled for talks with the US are Vietnam, Thailand and Indonesia – all of which were slapped with high tariffs of up to 46%. Thailand intends to scrutinize imports more thoroughly to prevent cheap imports from China entering the country, as the US has warned against such “third-country” methods of evading tariffs. Anti-dumping duties are also being considered by Malaysia and Indonesia against China to counter an expected rise in cheap imports to their countries. Trade flows are still expected to change as China steps up talks and partnerships with the EU, as well as with southeast Asian countries such as Malaysia, Vietnam and Cambodia. While several Asian nations are lining up for discussions with the US government, China and the US have yet to schedule a meeting, heightening concerns of economic headwinds in the coming year. Singapore has revised down its GDP growth forecast for 2025 to between 0-2% on account of the US-China trade war, and other countries are expected to follow suit. Before the pause on reciprocal tariffs, the World Trade Organization (WTO) had forecast trade growth to contract by 1.0% in 2025, from 3.0% previously. Meanwhile, China President Xi Jinping is currently in southeast Asia – with state visits to Vietnam, Malaysia and Cambodia – up to 18 April, to forge stronger economic ties with its Asian neighbors amid an escalating trade war with the US. China posted an annualized Q1 GDP growth of 5.4%, unchanged form the previous quarter, while there is a consensus that the Asian economic giant would weaken from Q2 onward. Focus article by Jonathan Yee Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Additional reporting by Samuel Wong, Izham Ahamd, Jackie Wong, Hwee Hwee Tan, Joanne Wang, Lucy Shuai, Jonathan Chou, Angeline Soh, Melanie Wee, Shannen Ng and Josh Quah

16-Apr-2025

HOUSTON (ICIS)–The tariffs imposed by the US and the uncertainty of what will follow has caused a crash in oil prices and is one of the main factors behind a global decline in chemical prices in the days after the country's April announcement of its reciprocal tariffs. The following chart shows the sharp declines among the seven building-block chemicals. Notably, the declines continued even after the US paused the implementation of the higher reciprocal tariffs and settled for the relatively lower 10% rate against most countries. The exception is China, which has been responding to US tariffs with matching rates. The two countries are now imposing triple-digit tariffs on each others' imports. While the US has made exceptions for critical minerals, pharmaceuticals and electronics, China has made none. China's tariffs include the large amounts of natural gas liquids (NGLs) that it imports as feedstock for its propane dehydrogenation (PDH) units and its ethane crackers. LOWER OIL PRICESPrices for plastics and petrochemicals tend to rise and fall with those for oil. Oil prices have been falling since the start of the year, but the decline accelerated rapidly following the April tariff announcements by the US, as shown in the following table. Figures are in dollars per barrel. 2-Jan 1-Apr 14-Apr Brent 75.93 74.49 64.88 WTI 73.13 71.20 61.53 The decline was remarkable because it happened despite the weakening of the US dollar. The US dollar index has fallen by 8% as of 14 April since the start of the year. Oil prices tend to rise when the dollar weakens. This relationship has broken down in part because of plans by OPEC and its allies (OPEC+) to increase May production by an amount much higher than anticipated. But another reason is lower demand. Following the reciprocal tariff announcement by the US, ICIS lowered its forecast for global oil demand by 10%. ICIS also lowered its forecast for Brent oil prices for the rest of the year. Lower oil prices are manifesting themselves in aromatics markets, which are closely tied to crude. Export declined month on month for toluene and other aromatics from South Korea to the US for gasoline blending for March loading. Prices of toluene in India tumbled to fresh three-year lows. FALLING CHEM DEMANDDemand for plastics and chemicals also tends to rise and fall with the economy. Economists have started lowering their forecasts for growth, according to a periodic survey conducted by The Wall Street Journal. Survey participants also increased the chances of a recession. Tariffs will act like a sales tax. Companies and consumers will treat the tax like any other – they will take steps to avoid it by purchasing fewer goods. If one applied the US baseline tariff of 10% to the $3.3 trillion of goods the US imported in 2024, that comes to $3.3 billion in taxes. That represents a lot of potential purchases that US companies and consumers could defer or abandon. RPM International, a US producer of coatings, adhesives and sealants, expects that the slow- to no-growth environment of the past 18 months will persist. RPM's comments are notable because they were made on 8 April, after the US announced its reciprocal tariffs. UNCERTAINTYUncertainty is starting to paralyze some key chemical end markets. The auto industry in the US is already showing signs of this, RPM said. In European polyethylene (PE) markets, buyers are retreating to the side lines rather than committing to volumes in the current climate. “All in all, people are being careful, and that's not just converters that also consumers. People are worried about the future, and it's probably affecting demand further down chain as well," said ICIS markets editor Ben Monroe-Lake. “All in all, people are being careful, and that's not just converters that also consumers. People are worried about the future, and it's probably affecting demand further down chain as well.” REDIRECTED TRADE FLOWSBy imposing such broad tariffs, the US has erected a formidable trade barrier around its economy, which has caused exporters to redirect their shipments to other markets. This is especially true of Chinese exports. The US has created an effective embargo of Chinese imports by increasing its tariffs by 145% in 2025. Even with the recent exemptions adopted by the US, a large portion of Chinese imports will need to find new markets. The following table shows 2024 US general imports from China. Figures are in US dollars. Chapter Description Value 29 Organic chemicals 8,519,224,570 39 Plastics and plastic products 19,290,918,758 All Chapters Total 438,947,386,145 Source: US International Trade Commission (ITC) Similarly, China's 125% tariffs on shipments from the US would cause a large amount of products to be redirected, as shown in the following table. Figures are in US dollars. Chapter Description Value 27 Coal; mineral fuels, oils and products 14,727,138,106 29 Organic chemicals 3,980,594,815 39 Plastics and plastic products 7,452,840,887 All Chapters Total 143,545,739,507 Source: US ITC Given the tariff rates, it's likely that direct trade between the US and China will crater, said Lynn Song, chief economist, Greater China, at ING. Re-arranging global trade flows on such a scale will affect local chemical markets directly and indirectly through the influx of end products made with plastics and chemicals. The world was already contending with an oversupply of chemicals. This will aggravate it Such concerns have already appeared in east Chinese markets for certain grades of linear low density polyethylene (LLDPE) and high density polyethylene (HDPE), which reached multi-year lows. Market players are worried that US tariffs will cause a decline in demand for Chinese products that use these plastic grades. Similar concerns are arising in the Middle East among buyers and sellers of polymeric methylene diphenyl diisocyanate (PMDI) US auto tariffs could cause producers in the rest of the world to reduce output of vehicles and parts. These auto tariffs are global, and they are separate from the reciprocal tariffs. As such, the US auto tariffs are still in effect. If auto producers lower output, that will reduce demand for plastics and chemicals used in auto production, such as polypropylene (PP), nylon, butadiene (BD), and styrene butadiene rubber (SBR) “I may have to tweak my operations if I lose access to the US market, and if so, certainly I would be prudent now not to overcommit on forward deliveries of raw materials including EPDM,” said an auto parts maker in southeast Asia. Ethylene Propylene Diene Monomer (EPDM) refers to a synthetic rubber. DEFLATIONARY SPIRALIf companies expect declines to continue, then they may postpone purchases, setting off a deflationary spiral, in which sellers lower prices each time buyers defer purchases. Such a dynamic could emerge in European ethylene market and its PP market. US TARIFFS COULD MAKE THE COUNTRY THE EXCEPTIONAlthough US prices for building blocks have fallen since the April tariff announcement, many have still raised their expectations for inflation. RPM said on 8 April that the tariffs announced at that time would raise its raw material costs for its US operations by 4.3%. RPM's forecast did not take into account the 90-day pause on tariffs that the US announced on 9 April. That said, others are expecting prices in general to increase. Seasonally adjusted, a net 30% of US small business owners planned price hikes in March, up one point from February and the highest reading since March 2024. CHINA'S NGL TARIFFS MAY CREATE US GLUTChina's tariffs of 125% do not carve out any exemptions for ethane, liquefied petroleum gas (LPG) or other natural gas liquids (NGLs). China imports large amounts of these feedstocks from the US If China maintains the tariffs on NGLs, it could cause a supply glut of these primary chemical feedstocks in the US. The country does not have the chemical capacity to absorb the shipments that would normally go to China, and it is unlikely that the rest of the world can fully offset the loss of China as an export destination. If China maintains its tariffs on US NGLs, ICIS expects that US ethane and propane prices will decline. Insight article by Al Greenwood Additional reporting by Vicky Ellis, Ajay Parmar, Nurluqman Suratman, Isaac Tan, Nel Weddle, Melanie Wee, Kojo Orgle and Jonathan Yee Infographics by Yashas Mudumbai (Thumbnail shows a flask, which commonly holds chemicals. Image by Fotohunter.)

15-Apr-2025

LONDON (ICIS)–Germany’s April business confidence fell at the sharpest rate since the start of the Russia-Ukraine war, driven down by the US government’s recently announced “Liberation Day” trade tariffs. The ZEW economic sentiment indicator for Germany fell by 65.6 points in April from the previous month into negative territory at -14 points, the economic institute said on Tuesday. March’s index had risen sharply month on month on expectations of higher government spending and the recent European Central Bank (ECB) interest rate cut. “The erratic changes in the US trade policy are weighing heavily on expectations in Germany, which have sharply declined,” said ZEW president Achim Wambach. “It is not only the consequences the announced reciprocal tariffs may have on global trade, but also the dynamics of their changes, that have massively increased global uncertainty.” Export-intensive sectors such as automotives, chemicals, and the metal, steel and mechanical engineering sectors are particularly affected, ZEW said. The group’s economic sentiment indicator for the eurozone also fell sharply in April, down by 58.3 points to -18.5 points. ZEW’s current economic situation index for Germany improved slightly but was lower in the eurozone. Both were firmly in negative territory in April at -81.2 points and -50.9 points respectively.

15-Apr-2025

SAO PAULO (ICIS)–US import tariffs on China and other Asian countries are increasing fears in Chile that even higher amounts of imports will dent domestic plastics and wider manufacturing producers’ competitiveness, according to the CEO at the country’s plastics trade group Asipla. ‘Tremendously chaotic’ situation sparked by US makes forecasts futile Chile’s economy more ‘dynamic’ than expected, says central bank Potential global slowdown could derail course Asipla’s Magdalena Balcells said to ICIS making forecasts has become difficult due to the “tremendously chaotic” situation regarding US tariffs but said that even with the 90-day pause to tariffs on some Asian countries, the 10% US tariff remaining in place could already impact Chilean producers. Over the weekend, the White House also announced some exemptions for electronic goods, a key demand from US technological majors such as Apple which have important operations in China and elsewhere in Asia. Petrochemicals and plastics producers in Chile and the wider Latin America have been under pressure for years as global oversupply for many products intensified with new capacities coming on stream in the US, Asia and the Middle East. EXACERBATE CHILE COMPETITIVE ISSUES“Even with the current, temporary US 10% import tariff, there are fears that countries subject to that tariff will aim to export to countries without that tariff burden, which will exacerbate Chile’s competitiveness problems with products coming from Asia. Now, products which didn't arrive here may start reaching us with greater force,” said Balcells. “Another issue is what will happen with raw materials that won't be able to reach the US. This is set to cause changes in the market, because China is now a big producer of raw materials. We will have to continue monitoring the effects in what admittedly is a scenario of chaos created by the actions of [US President Donald] Trump. Amid this chaos, it’s very difficult to predict anything.” In a written response to ICIS, Jorge Gaete, head of logistics Chile’s sole producer of polypropylene (PP) Petroquim, said the company does not forecast an impact in its operations “for now” but pointed to a potential wider economic slowdown as a worry. “The US tariffs are a huge issue indeed. The 10% in place can affect some markets such as fruits, wine and pulp, although not copper [Chile’s main export], which is exempt from the 10% tax,” said Gaete. “However, with the fall in global stock markets from Asia to Wall Street, we will be greatly affected as a country, since most of our investments are invested there [in US assets].” ‘SIGNIFICANT RISE IN UNCERTAINTY’Last week, Chile’s central bank said the external outlook had “become more complex, with a significant rise in uncertainty” as geopolitical tensions escalated, and the US imposed its “first set” of tariff measures. The minutes from the last monetary policy committee in March, which voted to keep interest rates unchanged at 5%, showed central bankers’ increasing concerns about the external environment potentially hitting the Chilean economy in coming months. This could derail an economy which, the bank said, had been “more dynamic than expected” at the end of 2024 and start of 2025, with final GDP figures for last year putting growth at 2.6%, above the 2.3% projected in December. “Concerns about global growth had increased, especially in that economy [the US], where services inflation also continued to persist. This combination of lower growth and greater inflationary pressures created a complex outlook for the [US central bank the] Federal Reserve,” said the Banco Central de Chile. “The evolution of global financial markets was notable, with patterns markedly different from other episodes of tension. Part of this was because the economic repercussions of the tariff measures were estimated, for now, to be more significant in the US than in other countries. Thus, in the former, doubts about future growth and a preference for safe assets had given way to a stock market decline and a reduction in long-term rates.” External shocks allowing, the bank said Chile’s inflation should converge towards the 3% target in coming quarters, although it remained “elevated”. By the time the committee met in March, the latest annual inflation rate figure available was for February, at 4.7%. However, inflation ticked up to 4.9% in March, according to the Chile’s statistical office INE earlier in April. The latest data available for economic output, covering February and published on 1 April, showed Chile's petrochemicals-intensive manufacturing output rose by 1.7%, compared with February 2024. However, according to the central bank’s reference Monthly Economic Activity Index (Imacec), Chile’s overall economic output fell by 0.1% in February due to a 7.4% fall in mining activity and a major power outage which hit some industrial facilities. Front page picture: City of Valparaiso and its port, one of Chile's largest Picture source: Valparaiso Port Authority  Focus article by Jonathan Lopez

14-Apr-2025

SINGAPORE (ICIS)–New energy storage plays a crucial role in ensuring power balance in China, especially in effectively addressing the intermittent issues of new energy generation. It helps alleviate the dual pressures of power supply security and consumption. China new energy storage capacity more than double by 2030 China new energy storage capacity at 73.76 million kW/168 million kWh by the end of 2024 Policy support accelerates rapid development of new energy storage By fully considering market and price factors, it can achieve a win-win situation of ensuring power balance and profitability. The new energy storage market in China has great development potential in the future. The cumulative installed capacity of new energy storage in China is expected to exceed 100 gigawatts (GW) by 2025, according to the Energy Storage Industry Research White Paper 2025 released by the Institute of Engineering Thermophysics on 10 April. The capacity is likely to surpass 200GW by 2030, more than double the 2024 level of 73.76GW. NEW ENERGY GENERATION CAPACITY EXCEEDS COAL POWER FOR FIRST TIME China's "dual carbon" goals, announced in September 2020, aim to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. As the "dual carbon" goals approach, China's power structure is continuously evolving towards cleaner energy, with the proportion of non-fossil energy, especially new energy, steadily increasing. The total wind and solar power generation in 2024 increased by 20% to 1,288.4 billion kilowatt hours (kWh), according to data from the National Bureau of Statistics (NBS). As of February 2025, the installed capacity of wind and solar power totalled 1.45 billion kW, surpassing coal power for the first time to become the largest power source in China. This achievement came nearly six years ahead of the 2030 target of 1.2 billion kW for wind and power generation installed capacity. The national new energy utilization rate was 96.3% as of December 2024, according to data from the State Grid Energy Research Institute released at the 3rd China Energy Storage Conference and Exhibition in end-March. NEW ENERGY GENERATION AND STORAGE AS KEY SUPPORT FOR POWER SUPPLY Due to the randomness and volatility of new energy generation output, coupled with the integration of a large number of power electronic devices into the grid, the operation of power system faces challenges such as supply stability and consumption. New energy generation combined with new energy storage will provide key support for power supply. In terms of ensuring supply, new energy generation has insufficient output capacity during peak power load periods. The balancing capacity of wind power is 5-15%, while the balancing capacity of solar power during the evening peak is almost 0, data from the State Grid Energy Research Institute showed. During consecutive days of no sunlight and no winds, the prolonged low output of new energy may lead to temporary power shortages. On the consumption side, the growth of new energy installed capacity will continue to maintain a rapid growth momentum, surpassing the growth rate of system regulation capacity. Hence the utilization rate of new energy is expected to be on a downward trend in the future. The total installed capacity of power generation nationwide will exceed 3.6 billion kW in 2025, with an additional new energy generation installed capacity of over 200 million kW, according to the National Energy Administration's Energy Work Guidelines for 2025, released in February. Additionally, changes due to technical characteristics present new challenges to the operational risks of the power system. New energy storage features fast regulation speed and the ability to charge and discharge, providing regulation capabilities in both time and space scales. Through the innovative application of grid-forming energy storage, it is an important solution to the many challenges of large-scale integration of new energy. POLICY SUPPORT ACCELERATES RAPID DEVELOPMENT OF NEW ENERGY STORAGE Governments at national and local levels have introduced policies in areas such as ancillary services, demand response, and direct subsidies to encourage the strategic development of new energy storage. The Energy Law of the People's Republic of China, promulgated in November 2024, proposed the rational layout and active, orderly development and construction of pumped storage power stations. It also promotes the high-quality development of new energy storage and emphasizes the regulatory role of various types of energy storage in the power system. The National Development and Reform Commission and the National Energy Administration (NEA) jointly issued the Notice on Deepening Market-oriented Reform of New Energy Grid-connected Electricity Prices and Promoting High-quality Development of New Energy on 27 January 2025, marking the formal establishment of a dual-driven mechanism of policy and market for the energy storage industry. The configuration of energy storage should not be used as a prerequisite for the approval, grid connection, and grid access of new energy projects, which will fully leverage the decisive role of the market in resource allocation and facilitate the formation of a more mature and comprehensive business model for energy storage, the notice stated. At the local level, governments of 18 provinces, municipalities and autonomous regions released 32 batches of energy storage demonstration project lists from 2021 to 2024.  Over 40 cities in eight provinces have introduced subsidies for user-side energy storage. For example, the subsidy amount for initial investment in energy storage projects ranges from yuan (CNY)100 to CNY200 per kWh in Shenzhen and Dongguan of Guangdong province, and in Shanghai. Subsidies for the charge and discharge volumes of energy storage projects range from CNY0.15 to CNY0.30 per kWh, with a subsidy period of two to three years in cities such as Wuhu in Anhui, Ningbo, and Wenzhou in Zhejiang. The nationwide operational new energy storage capacity reached 73.76 million kW/168 million kWh by the end of 2024, about 20 times the level in 2020, at the end of the 13th Five-Year Plan period  and more than double compared with end-2023 levels, according to NEA data. Data from the State Grid Corporation of China (SGCC) showed that the installed capacity of new energy storage in its operating area reached 58.61 million kW/137.86 million kWh by the end of 2024, more than double their 2025 levels. During the 15th Five-Year Plan period (2026-2030), an additional 180 million kW of new energy storage is expected to be added, with an effective capacity of 160 million kW, covering 27.4% of the incremental demand for power generation. ELECTROCHEMICAL ENERGY STORAGE DEVELOPMENT STANDS OUT Currently, there are dozens of new energy storage technology routes in China, including advanced compressed air energy storage, flywheel energy storage, lithium iron phosphate batteries, vanadium redox flow batteries, and sodium-ion batteries, each suitable for different scenarios based on their characteristics. Among them, electrochemical energy storage (such as lithium-ion batteries, lead-acid batteries, flow batteries, and sodium-sulfur batteries) has become the mainstream form of new energy storage due to its high efficiency, high power density, and high energy density. The dominant role of lithium-ion battery storage has been further strengthened, with over 97% of the newly added new energy storage in 2024 coming from this type of storage. There was a total of 1,473 operational electrochemical energy storage stations by the end of 2024, with a total installed capacity of 62.13GW/141.37GWh, according to data from the National Electrochemical Energy Storage Power Station Safety Monitoring Information Platform. Among these, lithium-ion battery storage installed capacity was 135.76GWh, representing 96.03% of the total (with 99.91% of lithium-ion projects being lithium iron phosphate). However, lithium-ion batteries have relatively poor thermal stability and are prone to thermal runaway issues. As the number of energy storage projects increases, higher requirements are placed on safety technology and management capabilities. The platform data also showed that in 2024, China saw significant improvement in the operational performance of electrochemical energy storage compared to the previous year. The average annual operation time was 1,649 hours, an increase of around 510 hours compared to 2023. The average annual utilization time was 911 hours, an increase of about 300 hours year on year. The total charging electricity was 8,991GWh, and the discharging electricity was 7,980GWh, with an average conversion efficiency of 88.75%. Energy storage is mainly used in three major application scenarios: the power generation side, the grid side, and the user side. Currently, energy storage stations on the user side are relatively profitable, while the profit margins for the power generation side and the grid side are limited. Based on a typical 20-year lifespan and 350 charge-discharge cycles per year for batteries, the energy storage market needs to achieve a revenue of CNY0.42 per kWh, Zheng Yaodong, an expert from China Southern Power Grid said at the 3rd China Energy Storage Conference and Exhibition. However, this is difficult to achieve under the current domestic market mechanism. In the future, the development of new energy storage business models should follow a comprehensive market system approach, including the capacity market, energy market, and ancillary services market, to gradually improve and perfect the business models. Insight article by Anita Yang ($1 = CNY7.30)

14-Apr-2025

MUMBAI (ICIS)–India’s Deepak Chem Tech Ltd (DCTL) plans to set up a manufacturing complex to produce phenol, acetone and isopropyl alcohol (IPA) at a cost of Indian rupee (Rs) 35 billion ($407 million). The company will build a 300,000 tonne/year phenol unit, a 185,000 tonne/year acetone plant and a 100,000 tonne/year IPA line at Dahej in the western Gujarat state, its parent firm Deepak Nitrite Ltd (DNL) said in a statement to the Bombay Stock Exchange (BSE) on 9 April. It expects to fund the new project through a mix of debt and equity. DCTL is a wholly owned subsidiary of DNL. “The new capacity of phenol and acetone would be integrated to produce polycarbonate (PC) resins,” DNL said. In November 2024, DCTL announced plans to build a new 165,000 tonne/year PC plant in Dahej using technology from US-based engineering materials producer Trinseo. Trinseo sold its PC technology license, as well as all of its proprietary PC equipment at Stade, Germany to DCTL last year. DCTL expects to begin operations at all the new plants in the fiscal year ending March 2028. Once the plants are operational, DCTL “will be one of the most integrated producers of PC,” it said, adding that the complex will help Deepak to meet India's growing market demand for PC-based products. To make its Dahej complex fully integrated, DNL’s wholly owned subsidiary Deepak Phenolics Ltd (DPL) entered into a 15-year agreement with Petronet LNG for the procurement of 250,000 tonne/year of feedstock propylene and 11,000 tonnes/year of hydrogen in October 2024. DPL currently produces 330,000 tonnes/year of phenol, 200,000 tonnes/year of acetone and 80,000 tonnes/year of IPA at its production complex at Dahej. In March, Deepak Advanced Materials Limited (DAML), another wholly owned subsidiary of DNL, began operations at its PC compounds facility at Vadodara in the Gujarat state. This facility produces PC compounds for the electronic and mobility sectors. Separately, DCTL also plans to invest Rs2.20 billion to build a plant that will manufacture specialty fluorochemicals. DNL also plans to commission its greenfield 40,000 tonne/year methyl isobutyl ketone (MIBK) and 8000 tonne/year methyl isobutyl carbinol (MIBC) plants before September 2025. ($1 = Rs86.01)

11-Apr-2025