Styrene

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The multitude of factors which affect styrene markets at a local, regional and global level include upstream activity, particularly in the benzene market, plant operating capacity and status, macroeconomic factors and trends downstream in packaging and production. It is a lot to keep track of. The slightest shift can prompt a response which affects styrene prices and trade.

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Styrene news

S Korea Q1 economy contracts on weak consumption, exports

SINGAPORE (ICIS)–South Korea's economy shrank by 0.1% year on year in the first quarter as domestic consumption remained in the doldrums amid a prolonged political crisis, while exports fell on US tariffs, central bank data showed on Thursday. On a seasonally adjusted quarter-on-quarter basis, GDP contracted by 0.2% in the first three months of 2025, shrinking for the first time since Q2 2024, the Bank of Korea (BOK) said in a statement. Goods exports from Asia's fourth-largest economy slipped by 0.8% year on year in the first quarter, reversing the 2.6% growth in Q4 2024. Latest data for the first 20 days of April point to further weakness for South Korea's exports, falling by 5.2% year on year. South Korea is a major importer of raw materials like crude oil and naphtha, which it uses to produce a variety of petrochemicals, which are then exported. The country is a major exporter of aromatics such as benzene, toluene, and styrene. Private consumption, accounting for roughly half of the country's GDP, increased by 0.9% year over year in the first quarter, lower than the 1.6% growth seen in the fourth quarter of 2024. Manufacturing expanded at a slower pace of 0.4% year on year in the first quarter, from the 2.2% growth in the last three months of 2024. South Korea's economy is facing headwinds on multiple fronts. The country is still reeling from the political chaos triggered by former President Yoon Suk Yeol's surprise martial law declaration on 3 December, which lasted just a few hours, and ultimately led to his removal from office on 4 April. South Korea will hold a snap election on 3 June to replace Yoon after the country’s Constitutional Court unanimously upheld a decision by the legislature to impeach Yoon. The trade-dependent economy is also grappling with the impact of the US' broad tariff scheme. A 25% US reciprocal tariff announced for South Korea that was supposed to take effect on 9 April was suspended by US President Donald Trump for 90 days. During this temporary suspension, South Korea is subject to the 10% baseline tariff and its auto industry remains affected by a 25% tariff on automobiles, which is separate from the reciprocal tariff and not paused. The central bank forecasts a slower GDP growth of 1.5% for South Korea this year, after posting a 2.0% growth in 2024. BoK governor Rhee Chang-yong on 17 April, however, said that the growth forecast might still be too optimistic, citing Trump's tariff policy and its sectoral tariffs, as well as levies on China, which is South Korea’s biggest market. Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Thumbnail image: At a container pier in South Korea's southeastern port city of Busan on 1 November 2023.(YONHAP/EPA-EFE/Shutterstock)

24-Apr-2025

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 18 April 2025. INSIGHT: China SM feedstocks, end-products outlook clouded by US tariffs By Aviva Zhang 17-Apr-25 12:18 SINGAPORE (ICIS)–Escalating US-China trade tensions have driven significant fluctuations in China’s styrene monomer (SM) market, with feedstock import costs and constraints on end- products exports to continue to affect the market. INSIGHT: ICIS cuts April Asia chemical forecast as recession fears hit global market By Ann Sun 17-Apr-25 12:0 SINGAPORE (ICIS)–Uncertainty surrounding US tariff policies and the potential for a global recession continues to weigh on global oil prices, projecting a decline in chemical prices as a consequence. The knock-on effect on end markets, coupled with conservative business sentiment, will shape the price trend. Asia petrochemicals slump as US-China trade war stokes recession fears By Jonathan Yee 16-Apr-25 17:34 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. INSIGHT: US tariff barriers put further downward pressure on the Asian aromatics market By Jenny Yi 16-Apr-25 17:01 SINGAPORE (ICIS)–The macroeconomic repercussions from the escalating US-China trade war and potential for reduced end-market demand are expected to exert additional pressure on Asian aromatics markets. CHINAPLAS ’25: Asia polyolefin players gather for clarity amid US trade war By Jackie Wong 16-Apr-25 14:34 SINGAPORE/SHENZHEN, China (ICIS)–Polyolefin market players from Asia are gathering in China this week for an annual industry event under a cloud of uncertainty as the US embarks on a trade war that could potentially redefine trade flows in the region. China Q1 GDP growth at 5.4%; outlook dims amid trade war with US By Nurluqman Suratman 16-Apr-25 12:31 SINGAPORE (ICIS)–China's economy expanded by 5.4% year on year on the first quarter, unchanged from the previous quarter, official data showed on Wednesday, but the world’s second-biggest economy is generally expected to weaken due to the tit-for-tat trade war with the US. INSIGHT: Asia C2 awaits tariff response from Chinese ethane crackers By Josh Quah 16-Apr-25 12:00 SINGAPORE (ICIS)–Asia ethylene markets have settled into a disquieting calm belying the tumult of the past 10 tariff-packed days. The spotlight is now sharply on a segment of players – crackers that crack ethane into ethylene – that may have an impact on the import-export market depending on their response to the US-China trade war. INSIGHT: China propylene supply to fall amid trade tensions with US By Seymour Chenxia 15-Apr-25 14:4 SINGAPORE (ICIS)–Escalating US-China trade tensions are expected to raise production cost for Chinese propane dehydrogenation (PDH) plants and weaken overall domestic demand for propylene (C3) at the same time. Singapore slashes 2025 GDP growth on escalating US-China trade war By Jonathan Yee 14-Apr-25 12:06 SINGAPORE (ICIS)–Singapore's Ministry of Trade and Industry (MTI) on Monday cut the country's 2025 GDP growth forecast to 0-2% from a previous 1-3%, citing escalating US-China trade tensions and the impact of reciprocal tariffs on global trade. INSIGHT: China-US trade war to hurt NGL trades both ways By Lillian Ren 14-Apr-25 14:39 SINGAPORE (ICIS)–As one of the largest petrochemical producers globally, China plays a vital role in taking in US’ natural gas liquids (NGLs) such as ethane, propane and butane for propylene and ethylene production. High tariffs are expected to rule out US NGLs products from China market, which, in turn, will hurt buyers and producers in both countries. INSIGHT: China new energy storage capacity to surge by 2030 By Anita Yang 14-Apr-25 16:19 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.

21-Apr-2025

Canada to keep using retaliatory tariffs, regardless of election outcome

TORONTO (ICIS)–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. In an election debate on Thursday evening, Prime Minister Mark Carney and Pierre Poilievre, leader of the Conservatives, both said that retaliatory tariffs were necessary to deter the US tariff threat. However, Carney said that Canada could not impose full-scale “dollar-for-dollar” counter-tariffs, given that the US economy is more than 10 times larger than Canada’s economy. Rather, the Liberals would aim at counter-tariffs that have maximum impact on the US, but only minimum impact on Canada. In opinion polls about the elections, the Liberals are currently on track for their fourth consecutive victory since 2015. Carney took over from former Prime Minister Justin Trudeau on 14 March. AUTO EXEMPTION Carney also confirmed that the government will be granting exemptions to its 25% retaliatory tariffs on US autos that took effect on 9 April. The exemptions will apply to automakers that maintain production and investments in Canada, he said. According to information on the website of Canada’s finance ministry, a “performance-based remission framework” would allow automakers that continue to manufacture vehicles in Canada to import “a certain number” of US-assembled, USMCA-compliant vehicles into Canada, free of retaliatory tariffs. The number of tariff-free vehicles a company is permitted to import would be reduced if there are reductions in the automakers’ Canadian production or investments, according to the ministry. The automotive industry is a major global consumer of petrochemicals that contributes more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). Please also visit the ICIS topic pages:Automotive: Impact on chemicals, and US tariffs, policy – impact on chemicals and energy Thumbnail photo of Stellantis' Canadian auto assembly plant at Windsor, Ontario, where production was suspended because of tariff uncertainties (photo source: Stellantis)

18-Apr-2025

Asia petrochemicals slump as US-China trade war stokes recession fears

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

INSIGHT: Global chemical prices plunge with oil amid tariffs

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

SHIPPING: Asia-US container rates edge higher on tariffs, tighter capacity

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US reversed direction and edged slightly higher this week as US tariffs went into effect and as capacity tightened. The increases are in line with global average rates, which ticked higher by 3% this week, according to supply chain advisors Drewry and as shown in the following chart. Rates from Shanghai to Los Angeles rose by 3% and rates from Shanghai to New York rose by 2%, as shown in the following chart. Drewry expects rates to increase in the coming weeks due to tariffs and reduced capacity. Rates from online freight shipping marketplace and platform provider Freightos also rose over the week, with Asia-USWC rates up by 3% and Asia-USEC rates up by 5%. Judah Levine, head of research at Freightos, said many shippers rushed to get cargo loaded in the small window before tariffs went into effect, but noted that there are concerns that the sudden policy changes could also mean delays at US customs for arriving shipments. Levine said he expects to see a drop in demand for containers into the US as shippers wait for the situation to stabilize. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said global maritime supply chains have become more complex amid the trade war between the US and China. “Shippers will be monitoring freight costs across the major and secondary trades,” Sand said. “Japan, for example, is one the key trade partners with the US, so a rush to frontload goods could put upward pressure on spot rates on this trade.” Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES HOLD STEADY US liquid chemical tanker freight rates as assessed by ICIS held steady this week despite downward pressure for several trade lanes. There is downward pressure on rates along the USG-Asia trade lane as charterers are seeking to divert cargoes to other regions. Overall, most market participants continue to struggle with tariff uncertainties and other alternatives. As a result of the limited cargo activity, spot rates appear to be softening. However, methanol requirements from the region remain active to Asia. Similarly, rates from the USG to Rotterdam were steady this week, even as space among the regular carriers remains limited. However, several larger size cargos of caustic soda, methanol, MTBE, ethanol and styrene were seen in the market. Several outsiders have come on berth for both April and May, adding to the available tonnage for completion cargos. Easing demand for clean tankers has attracted those vessels to enter the chemical sector. Contract tonnage continues to prevail, with interest in styrene, methyl tertiary butyl ether (MTBE), methanol and ethanol. For the USG to South America trade lane, rates remain steady with a few inquiries for methanol and ethanol widely viewed in the market. Overall, the market was relatively quiet with fewer COA nominations, putting downward pressure on rates as more space has become available. On the bunker side, fuel prices have declined as well, on the back of plummeting energy prices, as a result week over week were softer. Additional reporting by Kevin Callahan Thumbnail image shows a stack of shipping containers. Image by Shutterstock

11-Apr-2025

INSIGHT: Tariffs put US chemical exports at risk, but optimism on trade deals emerges on eve of implementation

NEW YORK (ICIS)–2 April 2025 – dubbed ‘Liberation Day’ by US President Trump – saw a sweeping and substantial salvo of reciprocal tariffs, with a baseline tariff set at 10% but for many countries, much higher customized levels. The higher reciprocal tariffs are scheduled to come into effect on 9 April, with the baseline 10% tariff imposed on 5 April. However, as of 8 April, there is emerging optimism on the potential for trade deals following comments from US President Trump that South Korea and China want to make a deal, and from administration officials that the US is in discussions with a number of countries. The reciprocal tariff levels – which include 34% on China, 20% on the EU, 46% on Vietnam, 32% on Taiwan, 26% on India, 25% on South Korea and 24% on Japan – were very much higher than anticipated. For China, 34% in reciprocal tariffs to come into effect on 9 April would be on top of the previous 20% tariffs the US implemented in February (10%) and March (10%), catapulting additional US tariffs on China this year to 54%. Products that fall under US sectoral tariffs, such as 25% on autos and auto parts, in effect since 5 April, will be exempt from the reciprocal tariffs. Products flagged for upcoming sectoral tariffs – pharmaceuticals, semiconductors, lumber and copper – will also be exempt from reciprocal tariffs. For Canada and Mexico, the US 25% tariff will remain in place, but only for non-USMCA (US-Mexico-Canada Agreement) compliant imports. DIRECT IMPACT ON US CHEMICAL MARKETSTariffs will undoubtedly raise costs for the US chemical industry and its customers, in the form of logistics, feedstocks and components such as additives and catalysts. For certain product chains where the US is self-sufficient, the direct impact should be somewhat limited. For example, Canada is the dominant exporter of chemicals and plastics to the US, but these are primarily in the olefins chain – polyethylene (PE), polypropylene (PP), propylene and ethylene glycol (EG) – where the US is more than self-sufficient and a big net exporter. These should also be USMCA compliant and thus exempt from tariffs. Even if there was a disruption, US producers in the US Gulf Coast could ship more volumes of ethylene and propylene derivatives domestically, replacing imports from Canada – although at higher logistics costs to some locations. The aromatics chain is more complicated. The US is a large net importer of benzene, toluene, xylenes and paraxylene (PX) – the bulk of which comes from South Korea, which is being hit with a 25% reciprocal tariff. The EU also exports aromatics to the US and will be subject to a 20% tariff. The US is a major importer of methylene diphenyl diisocyanate (MDI) with China and the EU as major suppliers. With 20% in additional tariffs imposed on all China exports in two stages – February (10%) and March (10%) – on top of the existing 25% tariff on China MDI, the US tariff on MDI from China is 45%. Adding the 34% reciprocal tariff brings this to a whopping 79% tariff level by 9 April. US EXPORTS IN CROSSHAIRS FOR RETALIATIONThe bigger risk to the US is for chemical and plastics exports. The US runs a chemical trade surplus of over $30 billion, according to the American Chemistry Council. Already China has announced a 34% tariff on all US imports to go into effect 10 April, while the EU prepares €18 billion in tariffs that would go into effect 15 April. The latter, which is in retaliation for US steel and aluminium tariffs, includes US PE and other polymers and chemicals. Even as the US is a much larger goods importer than exporter, particularly with China, it is the reverse for the US chemical industry, which will bear the brunt of the impact. “US goods exports to China in 2024 were $143.55 billion. The US imports far more – $462.64 billion – but this will have an impact on the US chemical industry as we compete against producers in the Middle East and elsewhere in Asia,” said Kevin Swift, ICIS senior economist for global chemicals. “This is the first large retaliatory challenge. Let’s hope it doesn’t devolve into a swirling beggar-thy-neighbor trade war,” he added. The new China 34% tariff on imports from the US could result in a $34 billion falloff in US exports of all goods to the nation – about a 24% decline, according to an analysis by Swift. Since 2018, the year that the first US-China trade war kicked off by the first Trump administration, US commodity chemical net exports have surged 88% to 2024, and are thus far more exposed to retaliatory tariffs than ever before. During this period, US exports of commodity chemicals and polymers to the world have increased 28% while imports declined 5%, according to the ICIS Supply and Demand Database. Top US chemical and polymers exports are linear low density PE (LLDPE), high density PE (HDPE), EG, polyvinyl chloride (PVC), caustic soda, methanol, low density PE (LDPE), vinyl chloride monomer (VCM), polypropylene (PP) and styrene. If China puts an additional 34% import tariff on US PE, the economics for exports do not work, even with the substantial US cost advantage. “With a 34% tariff on top of the current 6.5% tariff, US PE margins go negative at current production costs. US PE demand has been weak so far this year, particularly exports, down 8.1% year on year,” said Harrison Jacoby, director of PE at ICIS. “We see rebalancing of trade – less US PE into China, more to Europe. The industry already saw the start of this trend in 2024, with more US PE shifting from China to Europe. Now we need to see how Europe reacts on 13 April with its proposed retaliation targeting US PE, if they will increase their current 6.5% duty,” he added. In retaliation for US 25% tariffs on steel and aluminium imports that took effect on 12 March, the EU plans a new round of tariffs on around €18 billion of imports from the US, which includes high density PE (HDPE), linear low density PE (LLDPE) and low density PE (LDPE) along with a range of plastics and rubber products. This would be implemented in mid-April following a consultation period. The US is also a major exporter of PE to Europe. Total US PE exports to China and Europe were 32% of total US PE exports in 2024, according to the ICIS Supply and Demand Database. “The big picture is there are two low-cost PE regions that are the only net exporters – the US and Canada and the Middle East. These regions will continue to fill global production shortfalls, optimizing to mitigate the impact of tariffs,” said Jacoby. However, demand growth is likely to fall as a trade war will only further weaken demand for all goods and services, he added. Retaliatory tariffs on key US chemical exports could also have ripple effects throughout the chain. For example, retaliatory tariffs on US PE could lower cracker operating rates, in turn reducing crude C4 (CC4) feedstock coming out of those crackers for butadiene (BD) production. “I am concerned about impacts on our suppliers and customers. If there’s an impact on the ethylene industry which causes rate reductions because exports [of derivatives such as PE] get tougher, that would have an indirect effect on our supply of CC4s,” said Ed Dineen, CEO of BD producer TPC Group, in an interview with ICIS at the International Petrochemical Conference (IPC), hosted by the American Fuel and Petrochemical Manufacturers (AFPM). HIT TO KEY END MARKETSKey chemical end markets such as housing, automotive and durable goods will be burdened with higher costs with these reciprocal tariffs. Demand in these sectors has already been struggling for more than two years. “The economic law of demand holds that as prices of a good rise, demand for the good will fall,” said Kevin Swift, ICIS senior economist for global chemicals. US sectoral tariffs of 25% on steel and aluminium, in effect since March, will add nearly $1,500 to the cost of a light vehicle and result in lower sales for the automotive industry, he estimated. This would push down sales by about 525,000 units if the cost is fully pushed through, said Swift. In addition, 25% sectoral tariffs on autos and auto parts will put further upward pressure on pricing, in turn lowering demand further. The ultimate price impact, and not just for automotive, will also depend on consumer demand. It is likely the higher costs from tariffs will be shared by producers, suppliers and consumers. Housing costs are also poised to rise, with sectoral tariffs on steel and aluminum, and signaled tariffs on lumber and copper, along with reciprocal tariffs that will cover other imported goods such as vinyl floors, furniture, carpets and appliances. Consumer confidence is unlikely to improve anytime soon. The Conference Board’s consumer confidence reading in March for future expectations plunged 9.6 points, to 65.2, the lowest in 12 years. Inflation expectations for the next 12 months rose from 5.8% in February to 6.2% in March as consumers were concerned about high prices and the impact of tariffs. One silver lining is that other countries may lower their tariffs and trade barriers in response to US reciprocal tariffs, opening markets for US exports and in turn leading to the US lowering its reciprocal tariff levels. WALL STREET CUTS EARNINGS ESTIMATESIn the meantime, Wall Street is making sizeable cuts to US chemical company profit forecasts, with tariffs expected to squeeze margins in the form of higher costs as well as lower demand. “Uncertainty over tariffs has weakened US PE/PP trading volumes and we expect shifts in trade flows to create near-term negative supply chain/production impacts, which could be negative for Q1,” said UBS analyst Joshua Spector in a 7 April research note. “We are lowering estimates and price targets to better reflect a global [slowdown] that spills into 2026 and 2027,” said Jefferies analyst Laurence Alexander in a 7 April research note. “While we could easily be proven wrong by a couple of tweets (either escalating further or shifting from dramatic action to symbolism, bluff and rhetoric), we are adjusting our framework to reflect the current state of policy,” said Alexander. THE BIG PICTUREUltimately, US President Trump aims to engineer a “once in a hundred year pendulum shift” in the global economy and geopolitical order, said Rana Foroohar, global business columnist at the Financial Times, at the IPC hosted by the AFPM. “Tariffs are for real. Tariffs are here to stay…Trump sees the global economy as a giant gaming table, with the US consumer market as the biggest chip to put down. And he is going to use it in ways we haven’t seen in half a century, if not more,” said Foroohar. “This imbalance between Wall Street and Main Street – between the asset growth economy and the income-led economy – is really at the heart of what’s going on today…Cheaper is going away [and] place matters,” Foroohar added. Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy Infographics by Yashas Mudumbai Insight article by Joseph Chang and Yashas Mudumbai

08-Apr-2025

PODCAST: Europe PO, SM, look to further shutdowns as closures increase market fragility

LONDON  (ICIS)–European propylene oxide (PO) and styrene monomer (SM) will remain oversupplied following the closure of LyondellBasell and Covestro’s flagship complex in the Netherlands, but the erosion of local capacity is leaving markets increasingly fragile. In this podcast, ICIS Insight editor Tom Brown speaks to Nicole Simpson, ICIS markets editor for PO, and Fergus Jensen, senior editor for styrene, about the likely fallout from the planned shutdown. Europe PO market chronically oversupplied, operating rates remain low Further shutdowns needed for PO market to come back into balance LyondellBasell may be able to meet demand from Europe, US plants Styrene market also looks to more shutdowns, but closure further reduces Europe capacity Domestic market increasingly dependent on imports, making the market increasingly fragile Shipping delays and plant outages having a more dramatic impact Still over 700,000 tonnes excess capacity in Europe PO market Imports of PO to Europe limited by infrastructure requirements, transport regulation Players starting to invest in import facilities, but remain in early stages POSM capacity continues to exceed demand, but PO a more of a driver than styrene Three other POSM units remain in Europe Click here to listen to the podcast.

27-Mar-2025

Asia automakers’ shares slump on US’ 25% tariffs on car imports

SINGAPORE (ICIS)–Shares of automotive companies in Asia slumped on Thursday after US President Donald Trump signed an executive order imposing 25% tariffs on all foreign-made cars from 2 April. At 2:30 GMT, Japanese carmakers Honda Motor was down by 2.75%, Nissan Motor declined by 2.56%, and Toyota Motor fell by 3.24% in Tokyo. South Korean Hyundai Motor was down by 3.24%, while Kia declined by 3.25% in Seoul. Being major car exporters to the US, Japan and South Korea are expected to take heavy hits from US tariffs. Chinese electric vehicle (EV) companies, however, appeared unaffected, BYD – China’s biggest EV producer – gained 0.85% on the Hong Kong Stock Exchange. There would be no exceptions on the tariffs, while US-Mexico-Canada Agreement (USMCA)-compliant automobile parts will remain tariff free, according to Japan-based MUFG Global Markets Research. Meanwhile, Trump considers Hyundai’s recently announced plan to invest $21 billion in the US as a win for his tariff policy. Apart from reducing the US trade deficit with other nations, Trump’s tariff policy also aims to attract more investments into the US. The automotive sector is a major downstream sector for petrochemicals, which account for a third of raw material costs of an average vehicle. Automotives drive demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), and styrene butadiene rubber (SBR). The US Federal Reserve maintained its short-term interest rates in the 4.25-4.50% range last week, as tariff uncertainty stoked fears of rising inflation. Uncertainty over tariffs could dampen market sentiment more than the tariffs themselves, Minneapolis Federal Reserve Bank president Neel Kashkari said.  Visit the US tariffs, policy – impact on chemicals and energy topic page Thumbnail image: Japan car exports – July 2014 (Everett Kennedy Brown/EPA/Shutterstock)

27-Mar-2025

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 21 March. Europe spot PE prices freeze mid-March on tariffs, no sign of panic Polyethylene (PE) spot prices in Europe are flat in mid-March after news of the EU-US tariffs brought trading activity to a halt, although little "panic" was seen in the week to 14 March. German economic sentiment rallies to pre-war levels on government spending plans Business sentiment in Germany jumped this month to the highest level since the onset of the Russia-Ukraine war, driven by expectations of higher government spending and the recent interest rate cut from the European Central Bank (ECB). LyondellBasell, Covestro confirm closure of Maasvlakte, Netherlands POSM site LyondellBasell and Covestro have confirmed the shutdown of the joint venture propylene oxide/styrene monomer (POSM) plant, the companies announced on Tuesday. INSIGHT: Major macro reversal as Europe and China prepare to ramp up stimulus while US aims to cut spending In the global chemical and economic landscape, the US has for many years been the ‘cleanest shirt in the dirty laundry basket’ with slowing but steady GDP growth, abundant and cheap energy, big government stimulus for infrastructure projects and a tilt towards reshoring. Europe domestic base oils market shrugs off tariffs threat Concerns in the European base oils market about the imminent US-EU trade dispute are limited to the wider economic impact long term, but participants dismissed an immediate effect given an exclusion for oil and oil products. INSIGHT: How short will Europe PE get if tariff war sticks? As the prospect of EU tariffs on US polyethylene sinks in, players in Europe will be gauging how exposed the region is, how short the market could get, and where replacements could come from, if tariffs are prohibitively high.

24-Mar-2025

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