Vinyl acetate monomer (VAM)

HOUSTON (ICIS)–Chemical plants along the US Gulf Coast will face another active hurricane season, but any potential disruptions will be partially if not entirely offset by excess global capacity and weaker demand growth. Meteorologists expect up to 10 hurricanes in the Atlantic basin during this year's hurricane season, which starts in June and lasts through November The global supply glut of plastics and chemicals will continue in 2025 and beyond Global plastic and chemical demand will weaken because of tariffs and a prolonged manufacturing downturn BUSY HURRICANE SEASONMeteorologists expect a busy hurricane season as shown in the following table: AccuWeather CSU US 30-Year Average Hurricanes 7-10 9 6-10 7 Major hurricanes 3-5 4 3-5 3 TOTAL 13-18 17 13-19 14 *Major hurricanes have wind speeds of at least 111 miles/hour (178 km/hour) Sources: AccuWeather, Colorado State University (CSU), US National Oceanic and Atmospheric Administration (NOAA) Hurricanes directly affect the chemical industry because plants and refineries shut down in preparation for the storms, and they sometimes remain down because of damage. Power outages can last for days or weeks. Hurricanes shut down ports, railroads and highways, which can prevent operating plants from receiving feedstock or shipping out products. Most US petrochemical plants and refineries are on the Gulf Coast states of Texas and Louisiana, making them prone to hurricanes. Other plants and refineries are scattered farther east in the states of Mississippi, Alabama and Florida, a peninsula that is also a hub for phosphate production and fertilizer logistics. Hurricanes can shut down LNG terminals, most of which are concentrated along the Gulf Coast. If the outages last long enough, it can cause a local glut of natural gas and a decline in prices. US prices for ethane tend to rise and fall with those of natural gas, so a prolonged shutdown of LNG terminals would lower feedstock costs – especially if the hurricane also shuts down ethane crackers. Petrochemical plants outside of the US are becoming increasingly reliant on that country's exports of ethane, ethylene and liquefied petroleum gas (LPG), a feedstock for crackers and for propane dehydrogenation (PDH) units. Most of these terminals are on the Gulf Coast, leaving them vulnerable to disruptions caused by hurricanes. HOTTER SUMMER COULD REDUCE THROUGHPUT AT GAS PLANTSExtremely high temperatures can reduce the throughput of Texan natural gas processing plants, which extract ethane and other natural gas liquids (NGLs) from raw natural gas. Such reductions took place in 2024 during the peak summer months of August and September, when temperatures are typically at their highest in many parts of Texas. Texas has natural gas processing plants in the western and fractionation hubs in the eastern parts of the state. For both regions, summer temperatures should be 1-2°F higher than normal, according to AccuWeather, a meteorology firm. That amounts to 0.6-1.0°C higher. CHEM OVERCAPACITY GROWS BIGGERThe effect of any shutdowns of chemical plants will be blunted by excess global capacity. Companies have continued to start up new plants, despite the oversupply of plastics and chemicals. ICIS FORECASTS WEAKER 2025 DEMAND GROWTHAny disruptions to chemical production would take place amid weaker demand growth. ICIS forecasts that 2025 demand growth for most commodity plastics will slow from 2024 and remain well below levels in 2018 and earlier. The following chart ICIS past demand growth rates and forecasts for 2025. Source: ICIS Growth rates are slower in part due to uncertainty caused by US trade policy. ICIS expects global GDP to expand by 2.2% in 2025, down from 2.8% in 2024. Global manufacturing is expected to contract globally. The following breaks down forecasts for national purchasing managers' indices (PMI). Anything below 50 indicates contraction. Sources: Institute for Supply Management, S&P Global and JP Morgan RESUMPTION OF TARIFFS WOULD FURTHER WEAKEN DEMANDIn July, the US could resume imposing its higher reciprocal tariffs against much of the world, including the EU, following a 90-day pause announced in April. The EU is preparing a list of retaliatory tariffs that covers many US imports of commodity chemicals and plastics, including the following: Caustic soda Acetic Acid Vinyl acetate monomer (VAM) Polyethylene (PE) Polypropylene (PP) Polystyrene (PS) Acrylonitrile butadiene styrene (ABS) Polyvinyl chloride (PVC) Polyethylene terephthalate (PET) The US and EU may extend the pause or reach a trade agreement that would do away with the need for retaliatory tariffs. But if the two sides fail to reach an agreement, then the EU's retaliatory would likely reduce demand for US plastics and chemicals. Demand for US plastics and chemicals could take another hit in mid-August if the US and China resume triple-digit tariffs following their 90-day pause. The pause would expire right before hurricane season reaches its peak in the US. Insight article by Al Greenwood Thumbnail shows a hurricane. Image by NOAA.

22-May-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 16 May. INSIGHT: Markets rally as US, China de-escalate tariffs stand-offMarkets and chemicals stocks rallied on Monday in the wake of an agreement by the US and China to dramatically cut reciprocal tariff rates for 90 days, signalling the first step in a de-escalation of trade tensions. INSIGHT: Limited improvements in demand for toluene and downstream sectors in EuropeNo significant growth is expected for toluene consumption in the near future, with long markets for certain isocyanates, a disappointing start to the summer driving season and tepid benzene demand stymying near-term growth hopes. INSIGHT: Sale of SABIC assets in Europe could make strategic senseA sale by SABIC of its European petrochemical assets could make strategic sense as the company has production in the Middle East, US and China, which benefit from much lower production costs. Europe butac sellers voice concerns over cheaper Chinese imports amid weak demandButyl acetate (butac) sellers in Europe have grown increasingly concerned about competitively-priced imports from China. As spot buying appetite in the continent is already subdued, domestic sellers are facing intense competition to offload material. European OX market flatlines as construction demand struggles, tariff uncertainty continuesHopes for a pick-up in European orthoxylene (OX) demand for the rest of 2025 are fading among downstream phthalic anhydride (PA) producers, as orders from the key construction sector remain flat year on year in the early stages of the warm season.

19-May-2025

BANGKOK (ICIS)–Sluggish domestic demand weighed on Japan’s petrochemical industry, resulting in reduced production volumes in 2024 compared with previous years, according to the Japan Petrochemical Industry Association (JPCA). 2024 ethylene output falls 6.3% Production of five major plastics shrink by 5% Japan economy forecast to grow by 1.2% in 2025 “Although some crackers in Southeast Asia and East Asia are reducing production, there are plans for capacity increases in crackers that significantly exceed demand in China,” JPCA said in a report prepared for the Asia Petrochemical Industry Conference (APIC) 2025. The conference is being held in Bangkok, Thailand from 15-16 May. Operating rates of crackers in Japan are expected to remain lowered, as with previous years, JPCA said. Japan's ethylene production in 2024 fell 6.3% year on year to 4.99 million tonnes, as domestic crackers have operated at below 90% of capacity since August 2022, with the monthly average run rate falling below 80% five times in 2024. Japan’s real GDP growth rate in 2024 was 0.1% amid weak exports, neutral growth in private consumption, and a slight increase in government consumption. For the whole of 2024, the country’s total production of five major plastics – namely, linear density polyethylene (PE), high density PE (HDPE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) – declined to 5.7 million tonnes, lower by 5.2% from 2023. Production (in thousand tonnes) Product 2024 2023 % change Ethylene 4,989 5,324 -6.3 LDPE 1,160 1,219 -4.8 HDPE 656 665 -1.4 PP 1,935 2,075 -6.8 PS 549 564 -2.7 PVC 1,406 1,496 -6.0 Styrene monomer (SM) 1,297 1,428 -9.2 Ethylene glycol (EG) 276 264 4.6 Acrylonitrile (ACN) 303 341 -11.2 Sources: METI, Japan Styrene Industry Association (PS, SM) and Vinyl Environmental Council (PVC) Domestic demand as ethylene equivalent in 2024  inched up by 1.4% to 3.92 million tonnes, according to JPCA data. While the global economy is expected to grow steadily in 2025, there is a risk of deterioration in the global economy and a corresponding decline in demand due to geopolitical issues, JPCA said, citing Russia's invasion of Ukraine, the Israel-Hamas war, as well as the tariff policy of the US Trump administration. The latter has caused costs of raw material prices to soar, JPCA said. Meanwhile, Japan's real GDP growth rate for 2025 is projected to accelerate to 1.2%, supported by increased exports, sustained growth in personal consumption, and increases in capital investment, said JPCA. Higher wage hikes in 2025 should help boost domestic consumption, it said. In the report, JPCA called on the petrochemical industry to adopt new roles and responsibilities in achieving carbon neutrality and advancing a recycling-oriented society. The report outlined a two-stage timeline: first, to reduce greenhouse gas emissions from existing facilities by immediately deploying currently available technologies; and second, to establish sustainable development goals by gradually introducing new technologies into society. “Not only corporate efforts but … collaboration and system design throughout the supply chain are required,” JPCA said. Focus article by Jonathan Yee

15-May-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 9 May. S Arabia's SABIC swings to Q1 net loss amid higher operating costs By Jonathan Yee 05-May-25 11:36 SINGAPORE (ICIS)–SABIC swung to a net loss of Saudi riyal (SR) 1.21 billion ($323 million) in the first quarter on the back of higher feedstock prices and operating costs, the Saudi Arabian chemicals giant said on 4 May. Ethane fuss cools for NE Asia C2, positions reassessed over Labor Day break By Josh Quah 05-May-25 20:24 SINGAPORE (ICIS)–The early May holidays probably could not have come at a more appropriate time for Asia ethylene players, with players noting that the pause in spot discussions was a good time to take stock of positions going into June shipment talks. Malaysia's Lotte Chemical Titan narrows Q1 net loss on improved margins By Nurluqman Suratman 06-May-25 14:46 SINGAPORE (ICIS)–LOTTE Chemical Titan (LCT) narrowed its first quarter (Q1) net loss to ringgit (M$) 125.7 million ($29.7 million) amid improved margins, the Malaysian producer said on 5 May. Singapore's Aster acquires CPSC at undisclosed fee By Nurluqman Suratman 07-May-25 12:33 SINGAPORE (ICIS)–Aster Chemicals and Energy has reached a sales and purchase agreement to acquire Chevron Phillips Singapore Chemicals (CPSC) through its affiliate, Chandra Asri Capital, at an undisclosed fee, the Singapore-based producer said on Wednesday. Vietnam’s economy to slow despite exports jump, lower inflation – Moody's By Jonathan Yee 07-May-25 16:16 SINGAPORE (ICIS)–Escalating trade tensions with the US are casting a shadow over Vietnam’s growth trajectory in 2025, despite continued growth in exports as well as lower inflation. China SM plagued by weak fundamentals and falling feedstock By Aviva Zhang 07-May-25 16:44 SINGAPORE (ICIS)–China’s styrene monomer (SM) prices fell sharply in April, as a result of decreasing crude oil prices and weak end-user demand expectations caused by the China-US tariff conflicts. The domestic market is likely to face headwinds from supply, feedstock and downstream sectors in May. Asia refined glycerine trades to Europe to be spurred by weak Chinese demand By Helen Yan 08-May-25 14:43 SINGAPORE (ICIS)–European demand for refined glycerine may lend support to regional glycerine producers in southeast Asia, who have been faced with persistently sluggish Chinese demand. Asia VAM plant margins to get a lift from westbound trades By Hwee Hwee Tan 09-May-25 13:08 SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) producers are eyeing improved netbacks from expansion in westbound shipments as regional trade margins narrow into the second quarter. Asia capro remains pressured by weak benzene, cautious demand outlook By Isaac Tan 09-May-25 13:11 SINGAPORE (ICIS)–Spot prices for caprolactam (capro) in Asia continued to soften in the week ending 7 May, weighed down by persistent losses in the upstream benzene market and a lack of recovery in downstream demand. China Apr export growth slows to 8.1% amid tariff uncertainty By Nurluqman Suratman 09-May-25 16:03 SINGAPORE (ICIS)–China's export growth slowed to 8.1% year on year in April from 12.4% in March in US dollar terms, underscoring the increasing impact of US tariffs amid ongoing uncertainty surrounding a potential trade agreement.

12-May-2025

SAO PAULO (ICIS)–Celanese will aim to weather what is becoming an increasingly “uncertain” second half of 2025 by reducing inventories and keeping firm cost controls, but also by reducing operating rates if demand is not there, the CEO at the US-based acetyls and engineered materials producer said on Tuesday. Scott Richardson added that key end markets for the company such as construction, automotive and consumer goods remain somehow in the doldrums, and occasional improvements in some subsegments during H1 may have just been an illusion of a strong recovery – before the storm. The CEO and the CFO Chuck Kyrish acknowledged, however, there is a high degree of uncertainty about whether slight improvements in H1 in some segments represented genuine demand improvements or temporary supply chain restocking as some customers, them too, would be preparing for a potential turbulent H2. "We are not assuming anything right now. We are continuing to be diligent on driving self-help actions, [and] we are focused on reducing inventory and are going to pull back on rates if we see any kind of reduction in demand," said the CEO, speaking to reporters and chemical equity analysts. The CEO said that the company has been somehow shielded from any direct tariff hit, as its operations in China are mostly focused on the domestic market, but nonetheless the current uncertainty and instability will be one of the factors to make the second half of 2025 an uncertain one. He repeated that claim on several occasions. Celanese’s first-quarter sales fell, year on year, although it managed to narrow the net loss posted in the same quarter of 2024, the company said after the markets closed on Monday. The producer also announced that as part of its efforts to deleverage it is to fully divest its electronic pastes and ceramic tapes producer Micromax, acquired in 2022 as part of the $11 billion acquisition of DuPont’s Mobility & Materials (M&M) business. Despite the poor metrics for the first quarter, the financial results beat analysts' consensus expectations which, together with the Micromax divestment and others which could be on the way, propped up Celanese stock by nearly 9% in Tuesday afternoon trading. AMID THE CHALLENGES, SAVINGSThe CEO said Celanese projects generating between $700-800 million in free cash flow for 2025, driven by optimized working capital management, lower capital expenditure (capex), and comprehensive cost-cutting measures totaling approximately $60 million expected in the latter half of the year. The chemical producer recorded stronger orders in March and April in its Engineered Materials sales volumes, but its Acetyl chain business delivered mixed results, with limited seasonal improvement in key segments including paints and coatings. “In engineered materials, we saw a much stronger March than we saw in January and February. April orders were in line with that March pickup, and the order book for May looks very similar. We are seeing a volume pickup from Q1 into Q2 from engineered materials. June is too early to say [and] there's some uncertainty around where June orders will go,” said Richardson. “On the acetal side of things, we're not seeing the normal seasonal pickup that we would typically see. Usually, Q2 is significantly better volumetrically in sectors like paints and coatings – we haven't seen that. We're seeing some of that, but not nearly at the level that we've seen historically in the past.” The CEO added that within that division, however, the segment producing acetate tow has posted higher sales volumes on the back of some Q1 seasonality. The product is mostly used in cigarette filters as well as Heat Not Burn (HTB) products and demand has been on the rise in countries like Indonesia, Bangladesh and India. Meanwhile, the producer’s beleaguered nylon business, which accounts for approximately 75% of the substantial $350 million profit deterioration in its Engineered Materials segment since 2021, has begun to stabilize following capacity reductions and operational adjustments. However, executives acknowledged considerable work remains to restore this segment to acceptable profitability levels amid persistent industry overcapacity and challenging pricing dynamics. "The industry has given up a lot of margins over the last several years, and it's unsustainable. The actions that we started taking last year around capacity reductions, us flexing a different operating model here, hasn't been enough yet. We are starting to see a stabilization here," said the CEO. "We've been very consistent that our focus is on cash generation, and we are looking at a myriad of options on the divestiture side. It's not just Micromax: we've talked about having a portfolio of things we're looking at." Capex has been reduced to maintenance levels, providing "significant" year-over-year improvement in free cash flow generation, according to Kyrish. Front page picture: Celanese produces acetyls and other chemicals widely used in the paints and coatings sector Picture source: imageBROKER/Shutterstock

06-May-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 2 May. India RIL oil-to-chemicals fiscal Q4 earnings fall on poorer margins By Nurluqman Suratman 28-Apr-25 11:57 SINGAPORE (ICIS)–India's Reliance Industries Limited (RIL) late on 25 April reported a 10% year-on-year drop in its oil-to-chemicals (O2C) earnings before interest, tax, depreciation and amortization (EBITDA) on poorer transportation fuel cracks and subdued downstream chemical deltas. Asia naphtha market strengthens but uncertainties linger By Li Peng Seng 28-Apr-25 15:01 SINGAPORE (ICIS)–Asia’s naphtha intermonth spread hit a three-week high recently as market sentiment recovered following stronger demand from China, but the market ahead could be choppy on the back of volatile crude oil and trade war uncertainties. PODCAST: MMA market turmoil in China and Asia amid rising supply, weak demand By Yi Liang 28-Apr-25 15:19 SINGAPORE (ICIS)–In this podcast, ICIS analysts Jasmine Khoo and Mason Liang will talk about the current situation and outlook for the methyl methacrylate (MMA) market. INSIGHT: China new energy vehicle industry to continue driving polymer industry development By Chris Qi 28-Apr-25 18:31 SINGAPORE (ICIS)–China's automotive industry has maintained rapid growth over the last few years, with the expansion of the country's new energy vehicle (NEV) sector particularly notable, now accounting for 70% of global production. China’s Sinopec enters $4bn JV with Saudi Aramco unit for Fujian project By Jonathan Yee 29-Apr-25 12:19 SINGAPORE (ICIS)–China’s state-owned Sinopec has entered a joint venture (JV) with an Asian unit of Saudi Aramco to manage the second phase of a refining and petrochemical complex at Gulei in Fujian province, it said on 28 April. Asia glycerine may see restocking after Labour Day holiday By Helen Yan 29-Apr-25 14:34 SINGAPORE (ICIS)–Asia’s glycerine market may see a pick-up in restocking activities after the May Day or Labour Day holiday as Chinese buyers hold back their purchases, given the sluggish downstream epichlorohydrin (ECH) market and uncertainties over the US-China trade war. China Apr manufacturing activity shrinks on US tariffs pressure By Jonathan Yee 30-Apr-25 12:09 SINGAPORE (ICIS)–China’s manufacturing activity shrank in April as export orders weakened amid the intensifying trade war with the US, official data showed on Wednesday. INSIGHT: Rising costs to curtail China PDH runs, mixed impact on C3 derivatives By Seymour Chenxia 30-Apr-25 13:00 SINGAPORE (ICIS)–Chinese PDH producers are likely to lower operating rates as US-China trade tensions drive up propane import costs, which is expected to tighten propylene supply. However, the impact on downstream markets will be mixed due to varying feedstock sources. Asia VAM market to slow as China solar drive eases By Hwee Hwee Tan 02-May-25 11:35 SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) supply is lengthening as spot demand tied to a major downstream sector is softening into May.

05-May-2025

SINGAPORE (ICIS)–Asia's petrochemical markets are poised for a resurgence in activity following the May Day holidays, with discussions subdued as buyers await signs of recovery and producers restart plants over the coming months. Producers to restart plants, refill inventories after holidays Delayed purchases until after holidays US has contacted China for trade talks – Chinese state media The May Day or Labor Day holiday is celebrated in China from 1-5 May, and in most other Asian countries on 1 May. Japan and South Korea also observe several days of holiday in May. Feedstock propane supply-demand fundamentals are being weighed on by the ongoing US-China trade war, which is affecting the cost of propane imports and could lead to reduced operating rates for propane dehydrogenation (PDH) units. This may tighten propylene supply in the longer term, potentially supporting prices if demand picks up. Demand has been sluggish in the propylene market, weighing prices down as producers maintain low inventories ahead of 1 May. However, after the Labor Day holiday, there is an expectation of increased supply, which may lead to a more balanced supply-demand scenario as they resume normal operations. Separately, the glycerine market in Asia is expected to see a notable pick-up in restocking activities after the holidays. Chinese buyers, who have been holding back purchases due to a sluggish downstream epichlorohydrin (ECH) market and uncertainties surrounding the US-China trade war, are likely to return to the market. “We will wait until after the Labor Day holidays before we commit to any purchases as we expect the downstream ECH market to slow down after the holidays,” a Chinese buyer said. The ECH market, a key downstream sector for glycerine, is anticipated to experience a price drop after the holidays due to demand remaining weak amid the US-China trade war. Asia's butyl glycol (BG) import prices were assessed as lower this week amid a bearish market sentiment amid unimproved demand conditions. In southeast Asia, the glycol ethers market is undergoing price adjustments as producers lower offers in anticipation of the Labor Day holidays. China's export prices for propylene glycol ether (PGE) also softened as sellers looked to increase sales before the holiday. Meanwhile, propylene glycol prices are expected to remain stable as market participants await the outcomes of the holiday period. In China, domestic prices have held steady, but the overall sentiment remains cautious due to the impact of the holiday on production and logistics. The stability in pricing reflects balanced supply-demand fundamentals, though any unexpected disruptions post-holiday could lead to short-term volatility. PRODUCERS ADJUSTING OUTPUT The acetic acid market is experiencing softening spot prices due to lengthening supply as plants restart operations following maintenance turnarounds. However, the holiday period is likely to further influence supply dynamics, with some producers adjusting output to manage inventory levels. In China, a new plant tied to a downstream ethylene vinyl acetate (EVA) unit has come online. It is among other plants in Asia with a combined capacity of nearly 1.8 million tonnes/year which have either already restarted or are restarting in May, EVA-linked vinyl acetate monomer (VAM) demand is generally expected to slow as June approaches, when a pricing policy in China – which has spurred a rush in solar panel installations across the country – comes into effect. Concerns of slowing demand were kept on the boil in Asia ethyl acetate (etac) markets amid fluid developments surrounding trade tensions between the US and China, and its potential ripple effect on sentiment in the days ahead. Notably, market players were conscious of weakening product spreads or etac production margins. Eroding margins have thus left regional suppliers with little room to scale back asking levels, despite the current market climate that was viewed as largely skewed towards buyers. EYES ON POSSIBLE TRADE TALKSAs the US-China trade war persists, both sides have indicated a willingness to engage with each other on trade talks. On Friday, a spokesperson of China’s Ministry of Commerce said that senior US officials have “repeatedly expressed their willingness” to negotiate with China on tariffs, according to state media outlet CCTV. The spokesperson said that the US has sent requests hoping to talk to China, and the Asian country is currently evaluating them. “China's position is consistent. If we fight, we will fight to the end; if we talk, the door is open,” the spokesperson said. Meanwhile, US President Donald Trump has maintained that trade talks are ongoing between the two largest economies in the world, which Chinese state media denied. Amid US tariffs, manufacturing activity continued to remain sluggish across Asia, including China and Japan. In April, China's manufacturing activity shrank as export orders weakened due to the escalating trade war with the US. The official purchasing managers' index (PMI) dropped to 49.0, indicating contraction, down from 50.5 in March. Japan's manufacturing PMI rose to 48.7 in April from 48.4 in March, marking the tenth consecutive month of contraction. Focus article by Jonathan Yee Additional reporting by Seymour Chenxia, Helen Yan, Julia Tan, Joy Foo and Matthew Chong and Melanie Wee.

02-May-2025

LONDON (ICIS)–Europe's oxo-alcohols and derivatives markets have been largely characterized by uncertainty and cautious behavior. Offtake from the coatings sector but increases in spring, but sentiment is subdued as players are struggling to plan amid ongoing tariff uncertainty and wider economic weakness. Oxo-alcohols and butyl acetate reporter Marion Boakye joins acrylate esters editor Mathew Jolin-Beech and glycol ethers editor Cameron Birch to discuss current conditions along the oxo-alcohols value chain.  

29-Apr-2025

SAO PAULO (ICIS)–Mexico’s chemicals fortunes seem to be turning for the better after the country was spared from the most punitive US’ import taxes, according to an executive at chemicals distributor major Ravago’s Mexican subsidiary. Pedro Escalona, sales director at Entecresins Mexico, said demand for most polymers has notably picked up in the past weeks, with order which were on hold now flowing to more optimistic customers. Among the main polymers, only polypropylene (PP) remains in the doldrums, said Escalona, haunted by low prices for the monomer. Overall though sentiment is on the up and has been so especially since 2 April, when the US announced sweeping tariffs but spared its trade partners within the USMCA free trade zone, Mexico and Canada. Prior tariffs in some sectors, however, remain, and Escalona said automotive seems for now the most problematic sector. “For the rest, people seem to start assuming Mexico will be spared from the worst possible scenario,” said Escalona. WHAT ONE MONTH CAN CHANGESpeaking to Escalona, practically everything seems to have changed in one month, with exception of PP. In an interview with ICIS during the plastics trade fair Plastimagen in Mexico City in mid-March, the Entec executive painted a doom-and-gloom picture of both chemicals and wider manufacturing, with falling prices and domestic and overseas woes mounting. As of Thursday, 24 April, this is what he had to say: “Even a month ago, or even less, even two weeks ago, there were a lot of people holding orders, saying they were unsure whether they would need the product for May, or even for June. Some large clients, while not cancelling any orders, were starting to say they may need to lower consumption going forward,” said Escalona. “But in the last few weeks, there is more confidence in general, and people are already confident in going out to make purchases. Everyone seems to be more optimistic in that we don't think anything will finally happen that will significantly affect Mexico’s economy.” A stone on the positive story, however, remains the large, petrochemicals intensive automotive sector on which US President Donald Trump had imposed tariffs prior to 2 April. Analysts have said the tariffs, in their current form, could greatly dent the sector’s competitiveness. But sources in chemicals remain optimistic Mexico could use this chance to increase its USMCA compliance, mostly related to rules of origin which would at the same increase its manufacturing stance and integrate it even more with the US economy. As the US tries to contain China’s formidable rise in global supply chains, other sources have said the US would shoot itself on the foot going against Canada and Mexico, economies which are now well integrated within the North American free trade zone. The battle should be, they said, North America as a block versus the other large trading blocs. “Automotive still has over its head a lot of uncertainty, because there are some issues that haven't been fully defined yet regarding automotive components. That's the only one that still has some uncertainty,” said Escalona. “Demand is not the best it could be, but it is not too bad either. PP is still suffering from low prices for the monomer, which is expected to fall further. But for the rest of plastics, PE [polyethylene], PS [polystyrene], and for PET [polyethylene terephthalate] there has been some notable price rises.” Escalona said that US companies must have done their important bit of lobbying to the Trump administration about how harming tariffs on Mexico could be for them, as well. The absence of Mexico and Canada on the board Trump exhibited on 2 April quickly raised the prospects that, behind the scenes, renegotiation of the USMCA deal is well underway, an assessment Escalona deemed possible. But equally, he said there may be starting to be a realization within the Trump administration that punitive, sudden import tariffs to certain countries – not least China – would deprive the US of key markets it needs to sell materials of which it is oversupplied. “[Very punitive tariffs on Mexico] Just wasn't convenient for the US. We’ll need to see what happens, but I think the US is also going to have to sit down and negotiate with China. The US is full of raw materials it exports to China – monomers such ethane, propane, benzene… That’s why prices are falling,” said Escalona. “There are many things they plan for, and the initial strategy was to renegotiate with tariffs as a pressure measure. But clearly, they are going to have to reconsider this and fine-tune several aspects.” DOMESTIC FRONT: LESS OPTIMISMWhile most analysts think Mexico has done good progress on issues key for Trump, such migration at the border and stricter measures to control fentanyl trade – a powerful drug which has caused havoc across the US – the domestic policies of President Claudia Sheinbaum remain a red flag for many chemicals players. With a declared intention to expand the welfare state, Mexico may be turning into the ‘nanny state’ which does not incentivize competitiveness, some sources said at Plastimagen. Moreover, fiscal policy has been loose under Sheinbaum’s predecessor, also from the left-leaning Morena party. The expansion in the welfare state was mostly funded by debt, and fiscal deficits were recurrent. Sheinbaum has promised to remedy that and seems more open to the necessary private investments needed in Mexico to propel it to be a key part in the nearshoring trend – North American companies bringing manufacturing facilities closer to home. But Sheinbaum has ploughed through other measures in parliament which are worrying business. Thanks to the supermajority of two thirds of seats in Parliament voters granted Morena in June 2024 – and propelled Sheinbaum to the top with 60% of popular vote – the government approved a judicial reform, which most analysts agree is to weaken the rule of law, in a country much needed of stronger rule of law. A key measure in the bill was that judges would be elected by voters, which has sparked fears the well-funded and strong organized crime will have it easier to silence the judiciary. Escalona, not impressed, said those elections for judges have started and told how he feels weird seeing advertisements by candidates on boards or media outlets. Seeing adverts to vote for judges clearly does not feel right, he came to say. “We have had plenty of politicians who were not prepared or educated for the positions they were chosen for. While it’s not optimal, it can be expected in a democracy. But the job of a judge, and in country like Mexico, is a completely different matter,” he said. “And, invariably, you can see all kinds of people running to be judges. It’s tremendous. We’ll need to see how this pans out, but everyone seems to agree that this will weaken the rule of law – and that is not good for economic development and stability." Interview article by Jonathan López Clarification: Re-casts subsidiary name in paragraph two. Entec Polymers, as written previously, is Ravago's subsidiary in the US

24-Apr-2025

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