Xylenes

LONDIN (ICIS)–Here are the 2025 Europe Outlook stories which ran on ICIS news from 23 December 2024 to 3 January 2025. Click on a headline to read the full story. 2025 OUTLOOKS SUMMARY OUTLOOK ’25: Global fertilizer sector braced for a tricky start to 2025 The global fertilizer sector is bracing itself for a bumpy ride moving into 2025 as it starts the year with high operating costs and struggling grain markets, making affordability for farmers and growers a key concern. OUTLOOK ‘25: New production capacity expected to drive the ammonia market in 2025 Ammonia players are expecting more supply to come onstream in 2025 which could support a subdued market. OUTLOOK ‘25: Refining constraints, Dangote disruption, cracker closures to shake Europe naphtha market After a tumultuous 2024, the outlook for the naphtha and gasoline markets in 2025 reflects a complex interplay of supply dynamics, demand fluctuations, and geopolitical factors. OUTLOOK: 2025 will be critical to Europe pyrolysis oil scalability Legislative uncertainty, long commissioning times and macroeconomic headwinds will continue to negatively weigh on European pyrolysis oil market growth and investment decisions in 2025. OUTLOOK '25: Jet fuel demand poised for take-off despite oversupply worries Jet fuel demand in Europe is expected to maintain an upward trajectory in 2025 despite a potential supply glut. However, much will depend on the airline industry's ability to navigate through economic and geopolitical turbulence and its commitment to adopt sustainable aviation fuel (SAF). OUTLOOK ’25: Europe ethanol market could face supply challenges amid demand stability Mixed harvest yields in 2024 lead as one of several supply factors that is likely to shape the European ethanol market in 2025. OUTLOOK ’25: Europe biodiesel to face mixed supply, sluggish blending rates Evolving supply factors are set to meet relatively stable-to-low demand in the European biodiesel market for 2025. OUTLOOK '25: More of the same for Europe ethylene, propylene The best we can hope for is a re-run of 2024, European ethylene and propylene market players say, and there is very little expectation that Europe’s base case demand improves in any meaningful way in 2025. OUTLOOK '25: Europe ethanolamines market 2025 expectations subdued but braced for any supply shocks For 2025, similar underlying demand trends seen in the second half of 2024 are expected to carry across into the first half of 2025 with sentiment to remain broadly subdued. OUTLOOK '25: Europe PE faces triple threat of cost squeeze, overcapacity, longer supply chains European polyethylene (PE) markets face a triple whammy of high local costs, overcapacity globally and the risk of lengthening supply chains at a time when global trade flows are threatened by tariff wars in 2025 OUTLOOK ’25: Economic woes to continue stifling Turkish PE/PP demand Economic concerns continue to dampen demand expectations for Turkish polyethylene (PE) and polypropylene (PP) for the first half of 2025. OUTLOOK '25: Africa PE/PP players expect year of stagnation on oversupplied market Could 2025 finally be the year? A return to healthy polyethylene (PE) and polypropylene (PP) demand across Africa? OUTLOOK ’25: Positive view for European R-LDPE packaging grades, other sectors face tough start Demand for low and high melt flow index (MFI) grades of recycled low density polyethylene (R-LDPE) from the packaging sector will continue to grow in 2025 but construction-related grades may suffer due to low end-use market demand. OUTLOOK '25: Europe R-HDPE packaging/non-packaging divide deepens The fragmentation between packaging and non-packaging grades of Europe recycled high density polyethylene (R-HDPE) is expected to continue in 2025, while consolidation risk across the market remains high – particularly for companies heavily exposed to the construction sector. OUTLOOK '25: Europe R-PP increasingly fragmented by end-use demand Demand for Europe recycled polypropylene (R-PP) has radically diverged by the end-use market across 2024, and this is expected to continue in 2025. OUTLOOK '25: Europe PP players eye pain points from old plants, tariff threats and limp manufacturing 2024 was dominated by supply-driven dynamics and 2025 looks unlikely to be much different for Europe's polypropylene (PP) market. OUTLOOK '25: Europe Mixed plastic waste demand remains driven by mechanical recycling in 2025 Europe mixed plastic waste demand will remain weak for as long as overall industrial production remains limited by macroeconomic headwinds. OUTLOOK ’25: Europe ACN set for another year of confined demand Downstream demand constraints brought on by geopolitics-led macroeconomic challenges are anticipated to persist into 2025 for Europe's acrylonitrile (ACN) market. OUTLOOK ’25: Europe BDO demand pessimism to continue under the gloom of rising capacities in China There is a growing sense of apathy among players in the European butanediol (BDO) market when it comes to discussing demand hopes for 2025 as there are no expectations of an uptick and there is a prevalence of worry ahead of growing capacity in China in an already oversupplied market. OUTLOOK ’25: Europe SBR demand overshadowed by automotive challenges European styrene butadiene rubber (SBR) demand could lift slightly in January on restocking activity, but there are still longer-term concerns over the timeline for recovery of the automotive industry. OUTLOOK '25: Europe ABS and SAN demand to stay weak, imports unclear as ABS ADD investigation begins Demand has been mostly weak throughout 2024 in the Europe acrylonitrile butadiene styrene (ABS) and styrene-acrylonitrile (SAN) markets, as downstream sectors have continued to be impacted by ongoing pressures, and similar is expected to continue into 2025. OUTLOOK ’25: Europe OX market to see little demand recovery despite lower interest rates The European orthoxylene (OX) market is gearing up for 2025 with the expectation of stable-to-slightly firmer downstream demand, in particular from the second quarter onwards. OUTLOOK ’25: Europe PX demand to remain downbeat in H1 2025 amid downstream rationalizations, imports Paraxylene (PX) demand pessimism in Europe is expected to continue in the first half of 2025 due to the rationalization of downstream purified terephthalic acid (PTA) plants in the region. OUTLOOK '25: Europe CX, capro markets face stable, low demand in 2025 The European cyclohexane (CX) and caprolactam (capro) markets face broadly stable but overall weak demand in 2025, as a lack of optimism in key downstream sectors and ongoing challenging macroeconomic conditions hit sentiment. OUTLOOK ’25: Europe MX consumption to remain subdued Downstream requirements for mixed xylenes (MX) in Europe was limited in 2024 and there are similar expectations for 2025. OUTLOOK '25: Europe styrene market squeezed as imports climb, demand feeble The European styrene market is expected to face increased competition and complexity in 2025, requiring players to navigate fragile domestic supply, a bearish and uncertain demand outlook, and rising import volumes. OUTLOOK '25: Europe PS, EPS demand mostly unchanging, potential PS import competition Throughout 2024, the Europe polystyrene (PS) market has faced stable demand at a low level, and expandable polystyrene (EPS) demand has been very weak, as ongoing pressures have continued to impact downstream activity in both markets, and 2025 could be similar. OUTLOOK '25: Europe benzene market limps into 2025 as supply surplus, demand uncertainty prevails The Europe benzene market is expected to see generally sufficient supply in the first half of 2025, with tightness likely only in the Mediterranean region. OUTLOOK '25: Europe toluene supply conditions to be in better shape than demand Consumption of toluene in Europe ended up limited in 2024 with supply in relatively in good condition, with similar views for 2025. OUTLOOK ’25: Europe PET/PTA markets hang by a thread in battle to survive The polyethylene terephthalate (PET) value chain in Europe remains in survival mode as consumption is negatively affected by macroeconomics, while costs and logistics remain challenging. OUTLOOK ’25: Europe R-PET hopes for better year but challenges remain Participants across the European recycled polyethylene terephthalate (R-PET) market are hoping for better demand from Q1 2025 after the Single Use Plastics Directive (SUPD) comes into force in January, but cheap PET, imports of R-PET flake and pellet, and unpredictable consumer spending all pose potential problems. OUTLOOK ’25: European MEG supply more limited at end Q1, demand expectations bearish European monethylene glycol (MEG) supply could be more balanced at the end of the first quarter or beginning of the second on turnarounds, but general concerns surrounding oversupply and slow demand continue to dampen expectations of a sustained market recovery. OUTLOOK '25: Low but steady demand expected in Europe nylon market Europe nylon 6 and nylon 6,6 markets face ongoing low but overall stable demand in 2025, as key downstream markets are in peril from persistently challenging macroeconomic conditions and low end-buyer demand. OUTLOOK 25’: PVC demand may return to growth but unlikely to offset overcapacity The polyvinyl chloride (PVC) market in Europe is likely to see a modest recovery in 2025 after demand weakness in 2024, but this will be offset by excess global capacity and low utilization rates at existing plants. OUTLOOK 25’: Last caustic soda producer to sit down is out 2025 is likely to resemble a high-stakes game of musical chairs for European chlor-alkali producers. OUTLOOK '25: Ample supply for Europe acetic acid and VAM despite import constraints, outages Weak demand was the most significant influence on European acetic acid and derivative vinyl acetate monomer (VAM) conditions throughout 2024. OUTLOOK '25: Europe AA bracing for ‘more of the same’ for 2025 The Europe acrylic acid (AA) market is bracing itself for “more of the same” with the challenges of 2024 set to roll into the New Year. OUTLOOK '25: Europe acrylate esters bracing for continued challenges in 2025 The Europe acrylate ester market is bracing for the challenges of 2024 to continue into 2025, with added geopolitical and economic volatility. OUTLOOK '25: Europe MMA set to see 2024 challenges continue into 2025 The Europe methyl methacrylate (MMA) is bracing itself for the challenges seen in 2024 to continue into the New Year. OUTLOOK '25: Europe PMMA hoping for demand growth, but bracing for stagnant market The Europe polymethyl methacrylate (PMMA) market is bracing for 2025 to be “more of the same” with the challenges of 2024 continuing. OUTLOOK '25: European phenol and acetone markets face demand stagnation and global capacity growth in 2025 Fresh global capacity, low domestic demand, logistics difficulties and volatile feedstocks will all challenge Europe's phenol and acetone markets in 2025. OUTLOOK '25: European refinery solvents to track feedstocks in 2025, demand trends unchanged In 2025, European refinery solvents markets will be pinned to the developments in upstream crude and energy sectors. OUTLOOK ’25: Europe methylene chloride consumption to remain stable in H1 Demand for methylene chloride (MEC) in Europe is projected to stay stable at a low level, as persistent challenges that plagued the market in 2024 are expected to continue in 2025. OUTLOOK '25: Europe EO demand expected to lift slightly in January European ethylene oxide (EO) 2025 discussions largely centred around stable-to-soft agreements, depending on starting point and account, at the end of 2024, even as demand is expected to increase in January. OUTLOOK ’25: Demand stagnates, capacity expands in Europe MPG, PO markets Players in the European mono propylene glycol (MPG) and upstream propylene oxide (PO) markets expect familiar challenges, including oversupply and weak demand, will persist well into 2025. OUTLOOK '25: Europe polyols and isocyanates demand recovery handicapped by sluggish downstream markets The polyols and isocyanates market in Europe is finishing 2024 with lethargic consumption, with 2025 being held back by slow momentum from major end user sectors. OUTLOOK '25: Slow start to 2025 expected in Europe propylene glycol ethers market, no significant supply concerns A subdued start is anticipated in the European market for propylene glycol ethers in 2025. Price changes are expected to continue to be led by availability fluctuations with few anticipating much demand recovery in the first half of the year and potentially beyond. OUTLOOK '25: Europe butyl glycol ethers market set for lacklustre H1 2025, focus remains on availability The outlook for the European butyl glycol (BG) and butyl di-glycol (BdG) market is largely subdued heading into 2025. Despite a spate of planned maintenances scheduled for Q1, there is not significant supply concern in the main. OUTLOOK ’25: Europe BPA market set to navigate various challenges The European bisphenol A (BPA) market is not likely to face an easy ride in terms of demand in 2025, with no sign of any recovery in key end sectors, a few lost outlets structurally and with competition from Asia likely to remain strong. OUTLOOK ’25: MA, PA demand weakness ongoing, H1 supply outlooks differ but Asian reliance growing European maleic anhydride (MA) and phthalic anhydride (PA) markets in Europe will face similar supply-demand dynamics in 2025 to those in 2024, with a challenging macroeconomic environment expected to continue crippling demand for most of the year and complex supply scenarios with difficult logistics continuing. OUTLOOK '25: Europe melamine still in survival mode amid poor demand, high production costs European melamine suppliers remain pressured by high production costs and low margins heading into 2025. OUTLOOK '25: Europe IPA and MEK supply to remain ample despite import constraints, capacity consolidation The European isopropanol (IPA) and methyl ethyl ketone (MEK) markets were defined by muted consumption and ample availability for most of 2024. OUTLOOK '25: Europe ECH supply rather than demand under the spotlight for 2025 Europe epichlorohydrin (ECH) supply rather than demand is likely to be subject to more change in 2025, in view of Westlake’s ECH Pernis plant idling and possible adjusted trade flows in response to various trade defense cases and measures. OUTLOOK ’25: Europe fatty acids, alcohols to grapple with ongoing high feedstock costs in H1 European oleochemicals face another challenging year ahead, with squeezed fatty alcohol supply and improved palm-based fatty acids availability versus elevated feedstock costs. OUTLOOK '25: EU epoxy players on the cusp of a new normal, pending EU AD decision EU Epoxy market players are preparing for a new normal in 2025 and shifts in sourcing strategy, based on expected anti-dumping (AD) duties on Chinese and other Asian product, but the prospect of a recovery remains slim. OUTLOOK ’25: Europe paraffin wax market likely to see minimal demand recovery The forecast for European paraffin wax in 2025 is weak, particularly during the first half. The market is expected to face ongoing challenges like those experienced in 2024. OUTLOOK '25: EU ADD leverage on Chinese TiO2 imports dimmed by weak demand The final EU anti-dumping measures on Chinese TiO2 imports are unlikely to bring any domestic support into 2025, despite profitability struggles in the TiO2 industry, as the underlying demand outlook remains bleak. OUTLOOK ’25: Poland’s Azoty, Orlen face hard yards on journey back to health When in November Poland’s Grupa Azoty fairly leapt at the chance to move into the government-backed production of explosives, it served as a further confirmation of the deep hole Europe’s second largest fertilizer maker finds itself in.

13-Jan-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 10 January. Europe chems at breaking point, urgent action needed – Cefic A new report commissioned by Cefic, Europe’s main petrochemical trade group, highlights the industry’s dire situation and calls for swift action to ensure its survival. Definitive EU ADDs on Chinese TiO2 imports get green light; graphic printing inks exempt Recently modified definitive EU antidumping duties (ADDs) have officially been applied to titanium dioxide (TIO2) imports from China with effect 9 January, except for TiO2 imports used in the production of white graphic printing inks, according to the European Commission. Europe butadiene outlook fairly positive, at least for H1 2025 European butadiene (BD) market sentiment for 2025 is reasonably positive, particularly for producers, and especially so for the first half of the year. Firming upstream costs put upward pressure on Europe PX, OX January contract talks Europe's paraxylene (PX) and orthoxylene (OX) contract price discussions for January will be impacted by firming feedstock mixed xylenes (MX) and gas costs, according to market sources. Europe PP buyers await January offers, watch for restocking signs Polypropylene (PP) players in Europe are waiting for offers from sellers to emerge, with many returning from Christmas and New Year holidays on 6-7 January.

13-Jan-2025

SINGAPORE (ICIS)–Here are the 2025 Asia Outlook stories which ran on ICIS news from 23 December 2024 to 3 January 2025. Click on a headline to read the full story. 2025 OUTLOOKS SUMMARY OUTLOOK '25: Asia naphtha Q1 sentiment upbeat on better demand Asia's naphtha market has rebounded from oversupply and weak demand, with sentiment expected to be lifted higher by gasoline buying interest, refinery maintenance and new cracker startups. OUTLOOK ’25: New C2 capacity in SE Asia may transform landscape While southeast Asian ethylene markets will see – by far – a smaller capacity expansion in 2025 compared to northeast Asia, expansion in the former is already shaping up to be significantly more impactful. INSIGHT: NE Asia C2 oversupply makes for soft landing in 2025 Northeast Asia ethylene markets are facing a wave of new China-led capacities in 2025 that will tip the fundamental scales further into oversupply for the continent. OUTLOOK ‘25: Asia, India brace for potentially more ethanolamines from China Participants in southeast Asia and India are bracing for a potential deluge of Chinese cargoes flowing into their markets in the first quarter of 2025. OUTLOOK ‘25: SE Asia PE to see sluggish start to 2025 as slow demand persists The southeast Asian polyethylene (PE) market is expected to face a sluggish start to the new year, with strong pricing competition and slow demand likely to guide sentiment. OUTLOOK '25: China PE faces surge in domestic capacity, trade challenges Despite expectations for a mild recovery in China's polyethylene (PE) demand in 2025, supported by the country’s stimulus policies, a supply-demand imbalance is likely to exert pressure on both domestic and foreign PE markets. OUTLOOK ‘25: South Asia PE, PP face supply pressure India’s polyethylene (PE) and polypropylene (PP) markets are expected to face sustained pressure amid healthy domestic supply. However, strong domestic demand growth is likely to aid market rebalancing to some extent. OUTLOOK '25: Tourism, plant turnarounds, geopolitics to shape Mideast PP/PE markets Weak market demand and an overall bearish sentiment were prevalent in both the Gulf Cooperation Council (GCC) and East Mediterranean (East Med) polymer markets in Q4 2024. OUTLOOK ’25: Demand for premium rPE, rPP cargoes from Asia to gain support from brands Sustainability targets of major brand owners will continue to lend support to the uptake of high-quality recycled polyolefins with certifications, in 2025. OUTLOOK '25: Asia C3 poised for sustained capacity expansions, increased spot talks Oversupply has been a running theme for the Asian propylene (C3) market for the past few years, as many C3 plants started up in the post-pandemic period while consumer demand struggled to keep up as economic recovery slowed. OUTLOOK ’25: China propylene market may enter a new cycle on fewer new PDH units expected China’s propylene market will continue to see new units come onstream in 2025, and the market may enter a new phase of structural transformation with the new capacities mainly coming from steam crackers and propane dehydrogenation (PDH) units. OUTLOOK ’25: Supply overhang maintains pressure on SE Asia PP market Southeast Asia’s polypropylene (PP) market will continue to see pressure from oversupply, which will lengthen further as new projects in China commence commercial operation. OUTLOOK ’25: China’s PP supply-demand imbalance to intensify, exports to continue China's polypropylene (PP) market is expected to become increasingly imbalanced in 2025, driven by continued export growth and a decline in imports. OUTLOOK '25: China BD supply and demand to increase, exports to balance market In 2025, butadiene (BD) capacity in China will expand and supply tightness in the local market is expected to ease compared with 2024. OUTLOOK ’25: Asia ACN supply growth to outpace demand, margins under pressure The acrylonitrile (ACN) market is likely to face another challenging year for regional producers with oversupply and competition from China to keep the wider Asia market under pressure. OUTLOOK ’25: Asia BDO remains a buyer’s market amid oversupply The Asia 1,4-butanediol (BDO) market is expected to come under even more pressure, with capacities in China still increasing and demand not keeping up with the expansions. OUTLOOK ’25: China BDO to remain mired in supply glut China's supply surplus in 1,4-butanediol (BDO) is expected to extend into 2025 amid a heavy schedule of new capacities – a situation that is likely to see domestic suppliers press for new solutions. OUTLOOK ’25: Asia PBT demand weakness continues, capacities stay idled In 2024, the Asian polybutylene terephthalate (PBT) market saw regional producers facing more competition from China-origin materials due to overcapacity there. OUTLOOK '25: Uneven automotive sector growth weighs on Asia synthetic rubber demand Import demand for various synthetic rubber grades in Asia – from styrene-butadiene-rubber (SBR), polybutadiene rubber (PBR) to acrylonitrile-butadiene-rubber (NBR) – will lean on how recovery and growth of major downstream industries behave. OUTLOOK '25: Asia PX looks to downstream demand growth, gasoline markets The paraxylene (PX) markets in Asia may fare better in 2025 than in 2024 due to capacity expansions in the downstream purified terephthalic acid (PTA) sector amid controlled run rates at PX facilities. OUTLOOK ’25: Asia MX to face persistent headwinds from lackluster derivatives demand The Asia mixed xylenes (MX) market is likely to see an extension of its existing demand struggles and bearish market sentiment going into 2025, with limited significant fundamental upturn expected in the long run. OUTLOOK ’25: Asia SM market focuses on China exports, contract-spot trade-offs For Asia's styrene monomer (SM) market players, the year 2024 was marked by squeezed margins, slow consumption recovery and a gradually transforming trade landscape. OUTLOOK ’25: China styrene expansion slows, all eyes on trade flows The pace of styrene capacity expansion in China is expected to slow in 2025, with only four units being put into operation including Shandong Chambroad Petrochemicals, Shandong Yulong PC, PetroChina Jilin and PetroChina Guangxi. OUTLOOK '25: Asia PS/EPS to see further competition and track SM changes Despite slow global end-consumption recovery for polystyrene (PS) and expandable polystyrene (EPS), Asian suppliers’ margins remained at workable levels, with production adjustment and flexible inventory management in second-half 2024. OUTLOOK '25: Asia benzene to begin new year on upbeat note The benzene markets in Asia are expected to rebound in H1 2025 from the traditional slowdown seen in Q4 2024, on the back demand drivers from both the East and the West. OUTLOOK ’25: China benzene to remain tightly balanced, supply growth to lag demand China's benzene market is expected to remain tightly balanced into 2025 on expectations of a rise in both supply and demand, although supply tightness may ease next year compared with 2024. OUTLOOK ‘25: Asia toluene market gears up for volatility, demand likely modest Asia toluene markets are bracing for a challenging trading environment, amid anticipated moderate demand in the first half of 2025 and increased supply. OUTLOOK ’25: China toluene seeks export opportunities amid subsiding gasoline demand The average price of China toluene during January-November 2024 fell by around 4% compared to the full-year average in 2023, according to ICIS data. OUTLOOK '25: Asia PET capacity additions to slow; trade flow shift continues Asia’s polyethylene terephthalate (PET) new capacity expansions are expected to slow down in 2025, while the global trade flow may shift further with more trade restrictions against Chinese exports. OUTLOOK '25: Asia PTA supply growth to outstrip demand, margins under pressure The purified terephthalic acid (PTA) market is expected to face a challenging year in 2025, with further expansion in supply, while demand is likely unable to catch up with the supply growth. OUTLOOK ’25: China PTA supply glut to increase despite slowing capacity expansion The capacity growth of China’s purified terephthalic acid (PTA) is expected to slow to about 8.3 million tonnes/year in 2025, down from 11.25 million tonnes/year in 2023. The 2024 capacity addition of 7.2 million tonnes/year was also lower than the 2023 level. OUTLOOK ‘25: China MEG market to see limited new capacities, slowing demand growth Planned new China monoethylene glycol (MEG) capacity for 2025 is still relatively limited, and fundamentals may not exert significant pressure, providing some support to the MEG market. OUTLOOK ’25: China DEG supply remains high, cautious outlook for demand Despite a lack of new capacity, domestic diethylene glycol (DEG) output still rose sharply in 2024 driven by improved co-product monoethylene glycol (MEG) margins. OUTLOOK '25: China’s capro self-sufficiency reshapes Asia trade The caprolactam (capro) market in the Asia-Pacific region in 2024 saw China achieve self-sufficiency as it shifted its trade status from a net importer to a net exporter. China looks to solidify its position as a key exporter in the region with an additional 600,000 tonnes/year of capro capacity to come online in 2025. OUTLOOK '25: China strengthens position in Asia-Pacific nylon trade The Asia-Pacific nylon market in 2024 saw demand grow largely in the Chinese domestic market due to increased demand for industrial plastics. OUTLOOK ’25: China caps ACN run rates, looks to increase exports The supply of acrylonitrile (ACN) in China's domestic market is expected to increase significantly in 2025, especially because Sinopec Zhenhai Refining & Chemical (ZRCC) and Sinochem Quanzhou are due to start up new units in the first half of the year. OUTLOOK ’25: Asia EDC suppliers to focus on contractual commitments amid suppressed demand Asia's ethylene dichloride (EDC) spot market is expected to remain structurally thin into 2025 due to lackluster downstream performance. OUTLOOK ’25: Mideast PVC trade shifts expected amid India ADDs, China supply growth Polyvinyl chloride (PVC) supply is expected to improve in the coming year with new capacities to the tune of 2 million tonnes slated to come online in China. OUTLOOK ’25: Asia caustic soda demand growth likely to be uneven Asia’s caustic soda spot market holds an optimistic demand outlook for certain markets, but players acknowledge that difficulties remain as market players head into 2025. OUTLOOK '25: Producers tweak Asia VAM plants as China supply-demand rebalances Tightening supply is expected to support vinyl acetate monomer (VAM) spot prices in Asia amid differing downstream demand outlooks for China and other major Asia markets. OUTLOOK ’25: Asia MMA trade flows shift significantly The winds of change are blowing hard for the methyl methacrylate (MMA) industry in Asia, with market players having witnessed significant shifts in trade flows and price influences in 2024. OUTLOOK ’25: China MMA to face export opportunities amid capacity changes worldwide Global supply and demand growth for methyl methacrylate (MMA) is expected to be roughly balanced in 2025, with capacity growth mainly concentrated in China and the US. OUTLOOK '25: New capacity to weigh on Asia phenol/acetone market Asia’s phenol/acetone to feedstock spread may remain in the negative territory for the fourth consecutive year amid new capacities and a gloomy demand outlook even as the industry undergoes capacity consolidation. OUTLOOK ’25: China phenol to face persistent supply-demand challenges China’s phenol capacity will continue to expand in 2025, but this will meet limited demand increases due to downstream margin pressure. OUTLOOK '25: China's acetone market to see increases in both supply and demand In 2025, both supply and demand for acetone in China are expected to increase, but there are market concerns that issues in some downstream sectors may limit the actual demand growth. OUTLOOK '25: China to dominate growth of Asia EVA supply, demand 2024 marked the year that China shifted to lower imports of ethylene vinyl acetate (EVA), and 2025 is set to see capacity additions in China increasingly meet demand growth – mainly from the downstream photovoltaics (PV) sector. OUTLOOK ’25: Asia PO imports demand likely to weaken further Asia’s propylene oxide (PO) import markets are likely to face further weakening in demand in 2025, with supply in China set to lengthen. OUTLOOK’25: China PO market faces challenge of oversupply China's propylene oxide (PO) capacity is expected to continue to grow in 2025 even as downstream capacity expands. Players largely hold the view oversupply will continue. OUTLOOK ’25: Asia polyols demand outlook mixed but pessimism dominant Demand in the Asian region for slabstock polyether polyols is expected to be flat for the first half of 2025, with the outlook for H2 hazy but largely pessimistic. OUTLOOK '25: Middle East polyols face supply pressures The Middle East polyols markets are expected to remain under pressure in 2025 due to persistent excess supply, relatively weak demand, and ongoing supply chain disruptions. These challenges are compounded by the addition of new polyols and propylene oxide (PO) capacities, macroeconomic uncertainties, and the volatility of upstream feedstock markets. OUTLOOK ’25: Asia isocyanates demand likely hampered, supply lengthy Asian import markets of methylene diphenyl diisocyanate (MDI) and toluene diioscyanate (TDI) are set to face lengthy supply in 2025, and the downstream sectors are likely to continue facing headwinds. OUTLOOK '25: Middle East isocyanates face demand, freight challenges In 2024, the isocyanates market in the Middle East experienced significant disruptions in shipping and supply chains due to a prolonged regional conflict. Despite these challenges, imports of polymeric methylene diphenyl diisocyanate (PMDI) increased year on year, while export volumes remained steady. Toluene diisocyanate (TDI) trade volumes were largely stable across both imports and exports. OUTLOOK '25: Asian PC market downturn to persist Asia's polycarbonate (PC) market is expected to remain downbeat in the next quarter as import demand is anticipated to be subdued but supplies will stay persistently high. OUTLOOK ’25: Asia's bisphenol A market faces challenges in 2025 Asia’s bisphenol A (BPA) market will remain hampered by ample supplies and weak demand through the first quarter of 2025 as trade wars impact exports of countries involved in the conflict and further erode consumer confidence. OUTLOOK ’25: China BPA capacity to expand further, export outlets sought New Chinese bisphenol A (BPA) capacities are expected to come into operation in 2025, which may reduce the country’s reliance on imports and help China turn into a major exporter to broader Asia. OUTLOOK ’25: Asia’s MA demand anticipated to pick up in Q1 on stimulus measures Asia’s maleic anhydride (MA) demand is expected to strengthen in early 2025 on restocking ahead of the Lunar New Year holidays. China’s planned economic stimulus measures to boost its domestic economy is likely to lend positive support to MA demand. OUTLOOK ’25: SE Asia to drive phthalic anhydride demand in early 2025 Sellers of lower priced Chinese origin phthalic anhydride (PA) material are expected to focus on southeast Asia post Lunar New Year, where demand is expected to remain firm in the first quarter of 2025. OUTLOOK '25: China plasticizers demand to remain subdued amid ample domestic supplyChina's import market for plasticizers will likely continue to see thin trade in 2025, as demand for imports has steadily dwindled amid ample domestic supplies. OUTLOOK ’25: China 2-EH to face supply-demand headwinds in Q1 China's 2-ethyl hexanol (2-EH) market will face a challenging year in 2025, particularly in the first quarter, as a result of more ample supply and uncertainty in downstream demand. OUTLOOK '25: Asia to become net MIBK exporter in new year An excess methyl isobutyl ketone (MIBK) capacity emerging in Asia has dampened spot prices in the region and widened the arbitrage for trade across the Atlantic heading into 2025. OUTLOOK ’25: Asia acetic acid supply glut to balloon on capacity expansion Asia acetic acid supply is likely to outstrip demand on the back of China’s significant capacity growth into 2025, prompting producers to review regional plant run rates and supply contracts. OUTLOOK ‘25: China acetic acid to rely on cost support amid supply growth While China’s acetic acid market experienced fluctuations in 2024 , the mismatch in the growth of upstream and downstream capacities allowed acetic acid suppliers to maintain relatively healthy margins for most of the time. OUTLOOK ’25: China acrylic acid supply to rise, exports and run rates monitored China’s acrylic acid market is expected to see increasing supply in 2025 due to start-ups of new plants, and participants may turn their attention to the export market in the face of weak growth potential in domestic demand. OUTLOOK '25: China NBA supply to remain limited, demand to pick up in Q1 China’s domestic n-butanol (NBA) supply may remain tight in the first quarter of 2025, due to no unit start-up plans, multiple scheduled maintenance outages and low import volumes, while the launch of new downstream capacities may boost demand. OUTLOOK ’25: Lack of demand outlets may limit growth for Asia adipic acid Asia’s adipic acid markets have been through a tough 2024 on both demand and supply fronts. OUTLOOK ’25: Asia LAB remains stagnant, continues to underperform mid-cut fatty alcohols The Asia linear alkylbenzene (LAB) market remained mostly flat in the fourth quarter of 2024, and the malaise in the market looks set to continue into 2025. OUTLOOK '25: Asia ABS, SAN to start year on upbeat note The acrylonitrile-butadiene-styrene (ABS) and styrene acrylonitrile (SAN) markets in Asia are expected to start the new year on an upbeat note after festivity-driven trades, amid caution about possible tariffs on exports to the US. OUTLOOK ’25: Asia melamine demand could gain momentum, H2 '25 capacity additions monitored Asia’s melamine market could see some support in early 2025 from improving demand in China’s export market as buyers replenish inventories ahead of the Lunar New Year at end-January. OUTLOOK ‘25: Asia IPA margin pressure to persist amid new capacity Isopropanol (IPA) makers in Asia are bracing for a challenging start to 2025 as production margins remain poor and upcoming new capacity in China could disrupt market balance. OUTLOOK ‘25: Asia MEK tight supply may ease; cost pressure to persist Asia’s methyl ethyl ketone (MEK) markets gleaned support from tightened China supply in H2 December. OUTLOOK '25: Asia glycol ethers face demand headwinds, BG may tighten in Q2 The butyl glycol (BG) markets in Asia could see ample supply against a backdrop of tepid demand in Q1 2025, but supply could tighten in Q2. OUTLOOK '25: Asia ECH, LER oversupply to endure, ADD investigations to shape trade flows Asia's epichlorohydrin (ECH) and liquid epoxy resins (LER) markets will continue to grapple with regional oversupply, while antidumping duty (ADD) investigations of Asian LER makers in the US and Europe will shape trade flows. OUTLOOK ’25: Asia fatty acids demand to remain tepid in Q1 on upstream oil palm volatility Asia’s fatty acids demand for the first quarter of 2025 is expected to be tepid, due to volatility in the upstream oil palm complex and weak consumer confidence. OUTLOOK ’25: Volatile feedstock to weigh on Asia fatty alcohol mid-cuts in Q1 Buyers and sellers of fatty alcohols mid-cuts in Asia are expected to tussle over the market’s trajectory in the first quarter of 2025 amid volatile feedstock palm kernel oil (PKO) prices. OUTLOOK ’25: Asia glycerine Q1 supply may rise on Indonesia mandate Asia’s glycerine supply may increase in the first quarter of 2025 as Indonesia is poised to increase its biodiesel mandate to B40 in January 2025, up from B35 in 2024. OUTLOOK '25: Asia soap noodles demand tepid in Q1 on upstream volatility Asia’s soap noodles demand is likely to remain tepid in the first quarter of 2025 amid expected continued volatility in upstream crude palm oil (CPO) and palm kernel oil (PKO) markets. OUTLOOK ’25: Asia FAE demand to remain tepid in Q1 amid squeezed margins Asia’s demand for fatty alcohol ethoxylates (FAE) is likely to remain stable in the first quarter of 2025, but spot offers may be revised up due to squeezed margins. OUTLOOK ‘25: Asia Group II/III base oils supply to rise, demand to improve from March An increase in the supply of Asia Group II base oils is expected to gain traction from around mid-2025, with supply of heavy grade 500/600N likely to remain relatively tighter than that of light grade 150N. OUTLOOK '25: Asia Group I base oils to navigate supply tightness Entering into 2025, structural supply tightness of Group I base oils will remain the key market driver.  Where substitution is more likely, such as for SN150 and SN500, price dynamics will also depend on supply length for Group II 150N and 500N. On the other hand, brightstock availability will be a challenge amid supply disruptions in 2025. OUTLOOK ’25: China base oils demand unlikely to rebound sharply; imports to fall further Overall demand for base oils in China is unlikely to improve significantly in 2025, because the domestic economy will still face challenges. Base oils imports have been in a downtrend since 2020, and the market share of domestically produced cargoes has been continuously rising, which will extend into 2025. OUTLOOK '25: Asia's oxo-alcohols market braces for oversupply, squeezed margins Asia's oxo-alcohols spot markets are poised for a rocky year ahead due to oversupply and weak derivative margins, while a large buy-sell gap between Chinese buyers and Asian exporters will likely lead to more merchant volumes. OUTLOOK ’25: Asia AA, acrylates to see increased competition, slow demand growth The Asia glacial acrylic acid (AA) and acrylates market is going to see capacity expanding at a faster pace in 2025 than the expected demand growth in Asia. OUTLOOK ‘25: Asia etac, butac demand skewed towards conservative in H1 2025 Asia ethyl acetate (etac) and butyl acetate (butac) markets are bracing for a challenging demand landscape over the first half of 2025, factoring in supply length and macroeconomic concerns. OUTLOOK '25: Asia chemical freight unlikely to stir in Q1 2025 The chemical tanker market in Asia is expected to soften into Q1 2025, with lackluster demand persisting amid a likely warmer winter in the northern hemisphere. OUTLOOK '25: Asia methanol demand still uncertain amid new capacities The outlook for methanol in Asia continues to be uncertain, with factors such as additional capacity, seasonal gas issues and upcoming downstream demand expected to play a role in this. OUTLOOK ’25: China’s methanol demand growth may outpace supply increase amid slowing expansion China’s methanol market may remain balanced to tight in the first half of 2025, as supply increase may fall behind demand growth, but domestic and overseas supply are expected to sustain modest growth. OUTLOOK ’25: Asia MTBE demand to depend on gasoline, China’s oversupply remains The outlook for Asian methyl tertiary butyl ether (MTBE) remains uncertain, with factors such as added supply in China, volatility in crude prices and demand for gasoline expected to impact market movements in the coming months. OUTLOOK ’25: China MTBE supply-demand imbalance to intensify, exports remain key More capacity expansions and a lack of growth in gasoline blending amid sluggish domestic gasoline demand will keep methyl tertiary butyl ether (MTBE) producers in China under heavy pressure to maintain domestic sales in 2025, with exports still their main area for growth momentum. OUTLOOK ‘25: China titanium dioxide makers poised for challenges ahead Players in Asia’s spot titanium dioxide (TiO2) market are set to start the new year with two big questions.

13-Jan-2025

Additional reporting by Aura Sabadus LONDON (ICIS) — On 1 January 2025, Russian gas transit flows via Ukraine stopped amid the expiry of a five-year agreement between the two countries which have been in conflict since February 2022. The transit stop has been the base case view of the majority of market participants and it was priced in well before 1 January 2025. Therefore it had little impact on European gas and power prices in recent sessions. Despite the expectation that flows would cease to transit Ukraine, the end of the agreement resulted in an immediate supply drop to the Czech Republic and Austria. However, the scrapping of the German storage levy from 1 January 2025 incentivized flows from Germany to the region, partly offsetting the supply drop via Ukraine. The below infographic shows the shift in flows to the region after the transit halt on 1 January, drawing a comparison between flows on 31 December 2024 and on 3 January 2025 across the key interconnection points. In particular, the halt to the Russian gas transit through Ukraine halted flows to Slovakia and Moldova, and therefore from Slovakia to the rest of the region. Conversely, German gas exports to Czech Republic and to Austria increased to offset the drop in Russian gas flows reaching the region via Ukraine. Romanian exports also increased to support Moldova’s gas supply, as flows from Ukraine ceased. Nevertheless, ICIS data also indicates that since 2022 a strong LNG supply intake has rapidly replaced the drop in Russian gas flows to Europe, with flows via Sudzha remaining among the latest available Russian volumes via pipeline reaching Europe until 31 December 2024. Currently the only remaining source of Russian gas supply via pipeline is the TurkStream2 gas corridor, transiting via Turkey and delivering gas to Europe through the Bulgarian and Serbian infrastructure up to Hungary. Europe still receives Russian gas in the form of LNG supplies. ICIS ANALYSTS VIEWS “We expect gas storage withdrawals to be strong in the first quarter of 2025 and we will have a close look at them. ICIS Gas Foresight expects Austrian storage to deplete from current 80% levels towards 63% in April 2025 in the new base case absent Ukrainian gas transit” ICIS gas analyst Andreas Schroeder said. ICIS data showed that EU gas storages were 66% full as of 6 January. “LNG imports to Europe should increase again after a relatively weak 2024. Austrian OMV has secured capacity at LNG terminals to provide Austria with gas via Germany” Schroeder added. Security of supply in Europe is guaranteed and ICIS Gas Foresight estimates that LNG imports into the eleven EU countries considered in the model (Austria, Belgium, Czechia, France, Germany, Hungary, Italy, Netherlands, Poland, Slovakia and Spain) plus Great Britain will increase year on year by 232TWh (15 million tonnes of LNG or 21bcm) in 2025. In January, LNG imports are set to increase 7% year on year. ICIS Gas Foresight forecasts the fullness level for the EU11+GB region to fall by 12 percentage points month-on-month by the end of January. On European power markets, increases in the gas price will likely be reflected in increased power prices, particularly in those countries where gas-fired generation is still a large component of the power supply mix. “For the February ‘25 contract across pretty much all European power markets we saw prices higher on 21 November 2024 than they were on 2 January 2025. The primary reason for this is that coal prices have fallen since that point” ICIS power analyst Matthew Jones said. “Electricity flows from Slovakia to Ukraine continued on 2 January, which is relevant as Slovakia’s PM Fico had threated to stop flowing power to Ukraine in the event of no new gas deal. Slovakia tends to export to Ukraine, so stopping those flows would have been bearish for Slovakian power prices” Jones added.

07-Jan-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 3 January. Europe PX demand to remain downbeat in H1 2025 amid downstream rationalizations, imports Paraxylene (PX) demand pessimism in Europe is expected to continue in the first half of 2025 due to the rationalization of downstream purified terephthalic acid (PTA) plants in the region. Europe PMMA hoping for demand growth, but bracing for stagnant market The Europe polymethyl methacrylate (PMMA) market is bracing for 2025 to be “more of the same” with the challenges of 2024 continuing. Europe BDO demand pessimism to continue under the gloom of rising capacities in China There is a growing sense of apathy among players in the European butanediol (BDO) market when it comes to discussing demand hopes for 2025 as there are no expectations of an uptick and there is a prevalence of worry ahead of growing capacity in China in an already oversupplied market. Europe PP players eye pain points from old plants, tariff threats and limp manufacturing 2024 was dominated by supply-driven dynamics and 2025 looks unlikely to be much different for Europe's polypropylene (PP) market.

06-Jan-2025

SAO PAULO (ICIS)–The Colombian economy picked up strength at the end of 2024, and higher spending on gross capital formation such as petrochemical-intensive public works and machinery could see "close to 3%” growth in 2025, according to the country’s central bank. The Banco de la Republica published this week minutes of its monetary policy committee meeting earlier in December which resulted in an interest rate cut of 25-basis points to 9.5%. In its final assessment of the economy's performance in 2024, the central bank said inflation was converging towards its target of 3%, but said it will do so “more slowly than projected” on due to a weaker Colombian peso and higher for longer US interest rates. The rate of inflation in Colombia stood at 5.2% in November, down from 5.41% in October, the fifth month of decline. The central bank also called on Gustavo Petro’s cabinet to be realistic about public finances and fiscal discipline, and questioned whether fiscal parameters the government had set itself for 2025 will be met. TO-PREPANDEMIC LEVELSHowever, overwhelming sentiment in the minutes was one of optimism about an economy which has a more secure footing in healthier growth, with an increase in gross capital formation a key part of that. In fact, after sluggish growth posted since the pandemic, next year the Colombian economy could hit some of the indicators in line with those pre-2020. Economic growth reached 2.0% in Q3, said the bank, driven by a 20.3% jump in gross capital formation. The Economic Tracking Indicator showed 3.1% growth in October. Gross capital formation measures economy-wide investment in fixed assets plus inventory changes. Fixed assets include infrastructure improvements, machinery and equipment purchases, and construction of buildings like schools, homes, offices, and industrial facilities. “They [board members] consider there is room to further propel the rebound in gross capital formation enjoyed during the third quarter to ensure greater economic dynamism that will bring the Colombian economy closer to the growth rates observed before the pandemic. In this regard, they note that the 1.8% GDP growth projected for Colombia in 2024 is lower than the average GDP expansion recently estimated for Latin America (2.1%),” said the minutes. “They stress that the recent recovery in specific components of gross fixed capital formation, such as civil works and machinery and equipment, which contribute more than 50% to fixed investment, suggests that an improvement of close to 3.0% could be reached in 2025 for Colombia, which is higher than the forecast for Latin America (2.3%), and will help it recover the position it held for almost a decade before 2020.” Healthy economic indicators can also lead to higher prices on the back of strong demand, so the central bank also adopted a cautious stance on monetary easing. The bank projects slower inflation convergence to target in 2025, citing currency depreciation pressures and their impact on prices, adding that additional inflationary pressures are expected from minimum wage increases and regulated price adjustments. Market volatility has increased due to concerns over 2025 budget financing gaps and recent reforms to regional funding transfers, while external pressures have increased due to tighter global financial conditions, a slower pace of US interest rates cuts and falling commodity prices which have affected Colombia's terms of trade. Colombia’s state-owned energy major Ecopetrol is a key income generator for the Treasury. “They [board members] agreed that 2025 may bring a challenging macroeconomic scenario that requires vigilance and harmonization in both monetary and fiscal policy design,” the bank said. Earlier in December, Colombia’s statistical office DANE said industrial production expanded 1.1% in October year on year, while the nation's leading economic indicator showed broad-based growth acceleration across major sectors. The reading was in line with the manufacturing PMI index for November, which showed broad-based improvement on better demand. Meanwhile, DANE’s main economic indicator for activity across the economy, also published earlier in December, rose 2.94% in October, year on year, an improvement from September's downwardly revised 1.07% increase. Within petrochemicals, however, the story may be more mixed as domestic producers will continue to face stiff competition from competitive imports. All petrochemicals players interviewed by ICIS at the annual meeting of the Latin American Petrochemical and Chemical Association (APLA) held in Colombia's Cartagena in November, spoke of challenging market conditions in 2025. This included Ecopetrol's petrochemicals division, its subsidiary producing polypropylene (PP) Essentia and plastics distributor Grupo Almatia. Prices closed the year with decreases. Latin American PP values, for instance, fell in Colombia and Chile on the back of competitive offers from abroad as well as lower feedstock costs. Focus article by Jonathan Lopez 

27-Dec-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 20 December. Stagnant manufacturing, overcapacity, looming trade war weigh on Europe chems in 2025 Europe’s petrochemical sector will be under even more pressure in 2025 as demand from the region’s manufacturing sector remains in contraction, global overcapacity gets worse and amid the possibility of increased exports from China and the US. Europe melamine December contracts roll over, Q4 contracts rise on margin pressure European December melamine contracts were assessed steady, in line with market feedback. Europe paraxylene December contract price up €5/tonne The Europe paraxylene (PX) December contract reference price rose €5/tonne from November's levels. German business sentiment weakest since May 2020 German business sentiment dropped to its lowest point since May 2020 in December, according to the latest data from the Ifo Institute on Tuesday. Eurozone private sector closes out 2024 in contraction as manufacturing slows The eurozone private sector ended the year on a bearish note as output contracted driven by a weakening manufacturing sector, which offset a return to growth for services.

23-Dec-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 20 December. Study on Oman’s Duqm petrochemical complex to be completed in 2025 By Jonathan Yee 16-Dec-24 15:09 SINGAPORE (ICIS)–A feasibility study for a joint venture petrochemical complex in the Duqm Special Economic Zone (SEZ) in Oman will be completed in 2025, an official from Oman’s national oil and gas company OQ told ICIS. UPDATE: South Korea bourse closes lower, won softer after Yoon’s impeachment By Jonathan Yee 16-Dec-24 16:52 SINGAPORE (ICIS)–South Korea’s benchmark stock market index was closed lower on Monday, snapping four straight days of gains, after the country’s parliament impeached President Yoon Suk Yeol over the weekend for imposing a short-lived martial law on 3 December. UPDATE: ChemOne's Malaysia $5.3bn complex start-up delayed to Q4 2028 By Nurluqman Suratman 16-Dec-24 21:21 SINGAPORE (ICIS)–ChemOne Group has delayed the start-up of its $5.3 billion Pengerang Energy Complex (PEC) in Johor, Malaysia to Q4 2028, after facing "complex financing" issues, the CEO of the project's operator said on Monday. Malaysia Lotte Chemical Titan to shut some PE, PP units in line with cracker shutdown By Izham Ahmad 17-Dec-24 12:30 SINGAPORE (ICIS)–Malaysia’s Lotte Chemical Titan will shut some of its downstream polyethylene (PE) and polypropylene (PP) plants to account for a reduction in feedstock after it shuts down one of its crackers in Pasir Gudang, according to market sources. INSIGHT: China economy ends 2024 on mixed note amid Trump 2.0 concerns By Nurluqman Suratman 18-Dec-24 13:07 SINGAPORE (ICIS)–China's economic data in November were mixed, with weaker retail sales growth offset by some signs of stability in property prices and a slightly quicker industrial output growth, as policymakers brace for more US trade tariffs once President-elect Donald Trump takes office for a second time. INSIGHT: China oil demand to peak in 2026 as transportation fuel drags By Fanny Zhang 19-Dec-24 14:00 SINGAPORE (ICIS)–China is expected to see its overall oil demand peaking in 2026 amid ongoing changes in the key transportation market, analysts said. Oil prices fall on stronger US dollar, looming US government shutdown By Jonathan Yee 20-Dec-24 11:55 SINGAPORE (ICIS)–Oil prices fell sharply on Friday on a stronger US dollar and amid a looming US government shutdown over the failure to pass a budget bill in the House of Representatives. Asia BD imports stay supported by China domestic market bull run By Ai Teng Lim 20-Dec-24 14:31 SINGAPORE (ICIS)–Sentiment is buoyant in Asia’s butadiene (BD) import market as sellers chase higher selling targets, emboldened by what they perceive as strong buying power in China. Bank of Japan maintains interest rates as Nov core inflation surges By Jonathan Yee 20-Dec-24 14:50 SINGAPORE (ICIS)–The Bank of Japan (BOJ) has kept its interest rates unchanged as inflation levels rose to 2.7% year on year in November, raising analyst expectations of a rate hike in Q1 2025.

23-Dec-2024

SINGAPORE (ICIS)–China's economic data in November were mixed, with weaker retail sales growth offset by some signs of stability in property prices and a slightly quicker industrial output growth, as policymakers brace for more US trade tariffs once President-elect Donald Trump takes office for a second time. Policy support to ramp up in coming months ahead Retail sales unexpectedly slowed in November Trump 2.0 adds significant risk to trade China's November property market data showed signs of stabilization, with rates of declines for both new home and used home prices easing from the previous month to 0.2% and 0.35%, respectively. These were the smallest rates of decline recorded since June 2023 for new home prices and in May 2023 for used home prices, data from China's National Bureau of Statistics (NBS) showed on 16 December. The numbers suggest the market may be bottoming out, with 21 of 70 cities reporting steady or rising new home prices, the highest proportion this year. Property investment in the country, however, continued to contract at double-digit rates in November, falling by 10.4% year on year, with new residential starts and completions contracting by 23.1% and 26.0%, respectively. "Real estate investment still likely faces some hurdles before it is no longer a headwind on growth – prices have not yet stabilized, but property inventories are still relatively elevated at this stage, and property developer sentiment remains cautious," Dutch banking and financial services firm ING said in a note. "A second consecutive month of improving price data is a positive signal for the property market bottoming out, and we expect a trough to be established in 2025 and the start of an L-shaped recovery to take effect." RETAIL SALES GROWTH SLOWS Meanwhile, China's November retail sales growth surprisingly slowed to 3.0% year on year, down from October's stronger-than-expected 4.8%. Trade-in policies continued to boost specific sectors in November, with household appliances posting a robust 22.2% year-on-year growth, albeit slower than previous months’ increase. Meanwhile, November automobile sales on a year-on-year basis surged to a nine-month high of 6.6%, coming from a 3.7% expansion in October. In contrast, petroleum and related products struggled, recording a 7.1% year-on-year contraction, as the transition to electric vehicles gains momentum. Household confidence clearly remains soft and it remains to be seen if the "vigorous support" for consumption promised next year will be effective in stimulating a recovery, according to ING. "We expect the rollout of supportive policies could take some time, but overall retail sales growth should recover in 2025." INDUSTRIAL PRODUCTION EDGES HIGHER China's industrial output showed a modest improvement in November, with the headline growth edging up to 5.4% year on year from 5.3% in October. "Export demand has been a contributor to solid industrial production growth in 2024, but this factor is expected to weaken somewhat in 2025 as tariffs set in," ING said. The auto sector was a key driver, with output growth accelerating to 15.2% year on year in November, up from 4.8% in October. This uptick was mirrored in November passenger car output, which surged 14.1% year on year, nearly double the 7.7% growth seen in October, according to data from the China Passenger Car Association (CPCA). POLICY SUPPORT TO RAMP UP IN 2025 "Despite data coming in a little softer than expectations, with only one month of data still to come, China will likely manage to complete its ‘around 5%’ growth objective for 2024," ING said. At the Central Economic Work Conference (CEWC) held on 11-12 December, China's top leadership pledged to implement robust policy support measures in 2025. Heading into the conference, much of the attention centered on the scale of stimulus needed to bolster China's growth. While the CEWC affirmed the need for more robust support measures, it remained tight-lipped on specifics. Detailed economic and social targets will be unveiled at the National People's Congress (NPC) in March 2025, with concrete policy measures likely to follow. China's fiscal deficit target and the special government bond issuance targets were both raised at the CEWC, which along with November's Chinese yuan (CNY) 10 trillion debt package should create more room for fiscal stimulus in 2025, according to ING. "The speed and scale of domestic stimulus will likely play the biggest role in determining whether or not China's economy will be able to maintain stable growth," it said. "The eventual growth target setting at next year's Two Sessions meetings in March will give a better indication of how confident policymakers are in terms of growth stabilization." The Two Sessions are the annual gatherings of China's top legislative and advisory bodies, the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), during which key policies, laws, and leadership appointments are discussed and approved. To achieve this, the government is likely to expand its successful equipment upgrading and consumer goods trade-in program beyond automobiles and home appliances, Ho Woei Chen, an economist at Singapore-based UOB Global Economics & Markets Research, said in a note on 13 December. Future initiatives may encompass a broader range of categories, including services such as tourism and entertainment, as well as emerging areas such as digital and green consumption, Ho said. Additionally, investments in technological innovation, industrial upgrading, and domestic infrastructure – including transportation, energy, and urban renewal projects – are expected to receive a significant boost, she added. "We do expect Beijing to ramp up fiscal deficit and fiscal spending in 2025, but we believe how to spend might be even more relevant than how much will be spent, because this is not a typical downcycle for China," Japan's Nomura Global Markets Research said in a note. "Due to the property meltdown, fiscal issues and worsening tensions with the US, China’s economy is not in a normal downcycle, so it may take much more than the recent ‘bazooka’ stimulus package to truly reboot the economy." A meaningful recovery in China in 2025 will likely require Beijing to tackle several key challenges, including clearing the property market backlog, reforming the fiscal system, strengthening the social welfare system, and easing geopolitical tensions, Nomura noted. "We remain cautious on Beijing’s resolution in clearing the property sector, which has been contracting for almost four years, as the CEWC mentioned little new measures to clear property markets. The CEWC memo did mention reforming the fiscal system, but no details were provided." THE NEW CHALLENGE IN 2025: TRUMP 2.0 Trump's victory, coupled with a Republican sweep in the US sets the stage for significant trade policy shifts in 2025 for the world’s biggest economy, as concerns rise over the potential imposition of 60% tariffs on Chinese goods. Nomura expects tariffs to be introduced in a phased manner throughout 2025, mirroring the gradual rollout seen during Trump's first term. "We assume the actual implementation that would directly impact China’s exports to the US will occur from around mid-2025 and will be mostly concentrated in H2 2025, with some front-loading in H1 2025," it said. "There is a possibility that the incoming Trump administration may take action to tackle the issue of Chinese export rerouting to the US via third countries, and we believe such a threat is a real risk to China’s export growth over the next couple of years." Nomura predicts China's export growth will experience a temporary surge, rising to 8.5% year over year in Q4 2024, up from 6.0% in Q3 2024. This increase is attributed to frontloading, as Chinese exporters rush to avoid the US tariffs in 2025. However, Nomura expects export growth to slow significantly in 2025 due to the anticipated trade headwinds and the frontloading that occurred in Q4 2024. Insight article by Nurluqman Suratman Thumbnail photo: A commercial housing building under construction in Nanjing, China. (Source: Costfoto/NurPhoto/Shutterstock)

18-Dec-2024

SINGAPORE (ICIS)–South Korea’s benchmark stock market index was closed lower on Monday, snapping four straight days of gains, after the country’s parliament impeached President Yoon Suk Yeol over the weekend for imposing a short-lived martial law on 3 December. The KOSPI composite index slipped 0.22% to settle at 2,488.97, with shares of major petrochemical companies closing mixed. The Korean won (W) eased against the US dollar at W1,437.68 as of 08:00 GMT, weaker than the previous session’s closing of W1,435.45. The won had plunged to an almost two-year low of above W1,440 to the US dollar when Yoon declared martial law late on 3 December which lasted about six hours. South Korea’s National Assembly on 14 December voted 204-85 to impeach Yoon for imposing martial law, which plunged the country into political instability and economic uncertainty. A two-thirds majority was required to approve the motion, which was the second one filed after the first motion on 7 December failed. Yoon’s political duties have been suspended pending a Constitutional Court decision, which is expected in 180 days, on whether to re-instate or remove him from office. Prime Minister Han Duck-soo became the acting President upon Yoon’s impeachment, stating that his mission is to “swiftly stabilize the confusion in state affairs” during a Cabinet meeting. Han talked to outgoing US President Joe Biden by phone on 15 December, reassuring him that "South Korea will carry out its foreign and security policies without disruption", according to a statement from Han's office. EYES ON 2025 Separately, finance minister Choi Sang-mok on Monday said he has written a letter to financial institutions and world leaders to explain the government’s response to the recent political situation and to request their trust and support in the South Korean economy. During an emergency ministerial meeting on 15 December, strategies were heard for economic stabilization and growth in the short- and long-term. For one, the finance ministry will announce its economic policy direction for 2025 by the end of the year, along with a mid- to long-term strategy to be released in January 2025. Meanwhile, the Ministry of Trade, Industry and Energy (MOTIE) is also drafting support measures for the petrochemical industry in preparation for the Trump-led US government in January 2025, which is threatening to impose tariffs on all imported goods. The US, along with China, is a major trading partner of South Korea. South Korea’s measures are expected to take effect in Q1 2025. The country – which is a major exporter of ethylene and aromatics, such as benzene, toluene and styrene monomer (SM) – is reeling from a combination of weak external demand and overcapacity in China. (updates closing levels for index, share prices; adds details throughout) Thumbnail image: South Korean Prime Minister Han Duck-soo, who assumed office as acting president after the parliamentary impeachment of President Yoon Suk-yeol, speaks to reporters at the government complex in central Seoul, South Korea, 15 December 2024. (YONHAP/EPA-EFE/Shutterstock)

16-Dec-2024