Phosphates

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)–Ridley Corporation has agreed to acquire Dyno Nobel’s fertilizer distribution business for (Australian dollar) A$300 million, the Australian animal nutrition company said on Monday. The deal to buy IPF Distribution includes an option to acquire its Geelong North Shore property for A$75 million. The Phosphate Hill fertilizer manufacturing operations, and the closure and remediation costs associated with the Gibson Island and Geelong manufacturing operations are excluded from the deal, Ridley said. IPF Distribution is part of Incitec Pivot Fertilisers, a manufacturer and distributor of fertilizers within the wider business of explosives maker Dyno Nobel. Completion of the transaction is expected by Q3 2025 and no later than 30 November, subject to certain agreed conditions.

12-May-2025

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

14-Apr-2025

HOUSTON (ICIS)–The Fertilizer Institute (TFI) said it is extending a sincere thanks to US President Donald Trump for including potash alongside critical minerals in the most recent executive order titled “Immediate Measures to Increase American Mineral Production.” The industry group said this designation sets into place a framework to ensure that potash and other national critical mineral resources are leveraged to create jobs and fuel American prosperity. For fertilizers it will help ensure a stable and abundant supply, which are critical to maintaining global competitiveness of US farmers, strengthening rural economies and keeping food prices in check. “Originally included in the first list of Critical Minerals created in 2018 under President Trump’s first administration, potash’s omission from the 2022 list was a mistake that a broad coalition of industry and consumer advocates have been working to remedy,” said Corey Rosenbusch, TFI president and CEO. TFI noted that 98% of annual US potash consumption comes from imports. Despite having natural reserves, the U.S. only accounts for 0.2% of global supply. There are additional seams that remain unmined due to regulatory uncertainty that has resulted in delayed permitting. Part of the regulatory uncertainty stems from a lack of clarity on potash’s critical mineral status. “We look forward to continuing to work with the Trump Administration on actions that will promote a strong and resilient fertilizer industry that supports U.S. agriculture and ensures affordable food prices for American families,” Rosenbusch said. “This includes continued engagement with the United States Geological Survey (USGS) with the goal of expanding on the executive order to ensure the permanent recognition of both potash and phosphate in their rightful place on the Critical Minerals list.”

21-Mar-2025

HOUSTON (ICIS)–US polyurethane prices for toluene diisocyanate (TDI), methylene diphenyl diisocyanate (MDI) and a variety of polyether and polyester polyols continue to see increase pressure as the market assesses the impacts of potential tariffs on imports from Canada and Mexico, heading into this year’s International Petrochemical Conference (IPC). Because US domestic suppliers of polyurethane products expect a cascading inflationary effect of these tariffs, they are trying to price the cost of this inflation in new pricing offers for Q2. At the same time, these tariffs could hinder demand for polyurethane products in downstream industries such as automotive, construction, the comfort sector (furniture and bedding) and appliances. 25% TARIFFS RISK CAUSING DISRUPTION IN THE AUTOMOTIVE SECTORThe ongoing worldwide tariff conflict heightens the chances of the automobile sector experiencing a prolonged disruption phase. This could imply a halt in the production of several car models, increased prices for new vehicles, and production delays due to hurdles in product development for the subsequent years, experts say. Automotive seating consumes large volumes of TDI and flexible polyether polyols. Some analysts approximate that nearly one-third of North America's vehicle production could face reductions as a response to the 25% tariffs on Mexico and Canada imposed by US President Donald Trump. These cuts would be part of the automakers attempts to balance the escalated costs, and simultaneously, consumers might procrastinate their new car and truck purchases. Flavio Volpe, the President of the Automotive Parts Manufacturers' Association (APMA), representing Canada's OEM suppliers within the global auto industry, has shared that Canadian car parts suppliers have funneled more than $10 billion into parts facilities situated across 26 US states. These plants employ up to 48,000 US workers, equating to the workforce of roughly 5-10 large car and truck factories. Focusing on Michigan, it alone houses 55 Canadian parts factories employing 17,000 US workers. TARIFFS MIGHT HINDER CONSTRUCTION SECTOR RECOVERYThe latest US housing starts numbers brought some hope for a recovery of the construction sector, which consumes a large amount of MDI and rigid polyols. Housing is a key end-use market for chemistry in the form of paints, wire insulation, house-wrap, sealants, roofing materials, resilient flooring, vinyl siding and related products. New housing also generates sales of appliances, furniture, carpet, fixtures and window treatments. In total, each start engenders on average over $13,000 worth of chemistry. After plunging 9.8% month on month in January amid harsh winter weather, US housing starts rebounded 11.2% in February to an adjusted annual rate of 1.501 million, according to US Census Bureau data. February’s increase was led by an 11.4% gain in the single-family segment, noted Kevin Swift, ICIS senior economist for Global Chemicals. This segment is more sensitive to interest rates and housing costs that affect affordability. It is also more plastics intensive than the multifamily segment. DEMAND FROM THE COMFORT SECTOR REMAINS WEAKPoor demand continues to plague the comfort sector (furniture and bedding), with the latest sales on President's Day not showing the traditional consumer interest the industry expected. The comfort sector consumes the largest volumes of TDI and flexible polyether polyols. There is hope that demand might recover in the second half of the year. Labor Day is traditionally the strongest sales day of the year for furniture and bedding items. However, the latest consumer sentiment data does not bode well for expectations on consumer expenditures, which make up 70% of the US GDP. US consumer sentiment fell nearly 11% month on month in March amid ongoing economic policy and tariff uncertainties and inflation fears. The Michigan “Index of Consumer Sentiment” fell to 57.9 points in March, from 64.7 in February, according to preliminary results of the University of Michigan’s monthly consumer survey. Sentiment has now fallen for three consecutive months and is down 22% from December 2024. FLAME RETARDANTS FACE RISK OF SUBSTANTIAL INCREASESExpectations of further tariff increases are also feeding concerns about the rise of cost of flame retardants used in various polyurethane foams in the US. Case in point is Tris (chloropropyl) phosphate (commonly abbreviated TCPP), a chlorinated organophosphate flame retardant commonly added to polyurethane foams. TCPP is currently imported from China, often in blended form, but it can also be purchased as a sole product. Its cost in the US is currently above $2/lb and rising, although it's still available in Canada for 58 cents/lb. The prospect for further increases on imported products is having market participants scrambling to find TCPP alternatives that are economically viable. According to sources, some alternatives currently under consideration are Triethyl Phosphate (TEP), a halogen free flame retardant, and Tris(1,3-dichloro-2-propyl) phosphate (also known as chlorinated Tris, TDCP, TDCPP or Fyrol FR-2). There are other flame retardants available as well, but the key is to be able to find a solution that is economically viable compared to the cost of TCPP. Compounding the problem, last December China limited the sales of flame-retardant precursor antimony for exports, since antimony is also a dual-use product that can end up in military applications. Since 2020, antimony prices have increased over 234%, according to data from the Institute for Rare Earths and Metals. ANTICIPATION OF TARIFFS INFLATIONARY EFFECT DRIVES SUPPLIERS TO OFFER HIGHER PRICESCurrent negotiations for April and Q2 polyurethane pricing are wrapping up amid continued efforts by suppliers to increase prices. Especially in the flexible polyol segment, domestic suppliers are mentioning "margin improvement" and "inflation adjustment" needs as the main rationale for these price increases, which in some cases have come on top of prior increases announced in February for March. Foamers are fighting these increases, which have been offered for MDI and TDI as well. Fundamentals do not seem to support these Q2 increase efforts. To begin with, downstream demand is not recovering any time soon. Second, there is plenty of product in the market despite some minor turnarounds in effect for MDI and TDI between mid-March and mid-Aril. Third, feedstock costs are not justifying price increases, either. All main polyurethane feedstocks such as propylene, benzene, toluene, ethylene glycol and 1,4 butanediol (BDO) are moving on downtrend trajectories. Rather than being an adjustment to market dynamics, these increase pressures find their rationale in inflationary expectations of these tariffs, which polyurethane suppliers seem to be taking for granted. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Visit the Logistics: Impact on chemicals and energy topic page Focus article by Umberto Torresan (Thumbnail shows polyurethane foam. Image by Shutterstock.)

21-Mar-2025

TORONTO (ICIS)–Canada’s central bank will work to ensure that US tariffs, and Canada’s reciprocal duties, will not turn into an inflation problem, the bank’s governor said during a webcast event on Thursday afternoon. Monetary policy cannot solve a trade conflict Tariffs to impact oil, farming, manufacturing Tariffs are a structural change that needs a structural response While the tariffs will slow Canada’s GDP growth and raise prices, the tariff-induced direct price increases must not be allowed to spread into “ongoing generalized inflation”, Tiff Macklem, governor of the Bank of Canada, said in a speech to the Calgary economic development agency in Alberta. US tariffs on Canadian exports will be paid by the US company buying those goods, and the company will pass at least some of the cost onto the US consumer, Macklem said. However, the same goes for the retaliatory tariffs Canada imposes on goods imported from the US, he said. As such, higher tariffs will raise prices, causing inflation to rise for a period as the upward pressure on prices from higher costs will outweigh the downward pressure from a weaker economy, he said. Businesses have already lowered their sales outlooks, notably in manufacturing and sectors that depend on consumer spending, he said. Companies are also holding back on investment plans. “Businesses are telling us they are delaying or cancelling investments and scaling back on hiring,” Macklem said. However, as Canadians worry about trade uncertainty, “we don’t want them to have to worry about inflation as well”, he said. What the bank can and must do is ensure that higher prices from a trade conflict do not become ongoing inflation, he said. “We are committed to maintaining price stability over time,” he said, adding: “There should be no uncertainty about that.” The tariffs and resulting uncertainties will – if maintained – particularly hurt certain sectors and regions in Canada, he said. ENERGY For oil-rich Alberta province, the impact on the energy industry from a 10% US tariff is “a major concern”. At the same time, however, the tariffs are also “a big issue” for US Midwest refineries that have invested in equipment to refine heavy Canadian oil, he said. About 94% of Canadian crude oil exports go to the US, mostly through north-south pipelines, he said. The launch of the Trans Mountain oil pipeline expansion last year increased access to overseas markets for Canadian oil, and new export capacity for liquefied natural gas (LNG) is due to come online, he noted. These capacities would help to diversify markets for Canadian energy exports, he said, but also pointed out that these investments are designed to increase Canada’s export capacity – not replace US demand, he said. FERTILIZERS Although the US has temporarily exempted fertilizers, including potash, from tariffs, “uncertainty remains,” he said. With spring seeding to begin soon, farmers on both sides of the border are already feeling pressure from low grain prices, he said. US farmers import potash from Saskatchewan to add potassium to their soil, while Canadian farmers often need US phosphate to fertilize their crops, he said. Canadian farmers also buy machinery and equipment from the US, he said. He also noted that China has imposed a 100% tariff on Canadian canola, effective 20 March, in retaliation for the 100% tariff Canada placed on electric vehicles (EVs) from China. China is the top market for Canadian canola, with an export value of close to Canadian dollars (C$) 5 billion ($3.5 billion), he said. ALUMINUM, STEEL Industries in other parts of Canada, particularly in Ontario and Quebec, will be disrupted by the 25% US tariffs on steel and aluminum. In 2024, the US imported about one-quarter of its steel and 40% of its aluminum from Canada, and Canada imported one-quarter of its steel and one-fifth of its aluminum from the US, he said. Those cross-border flows mean these sectors will be hit by both US tariffs and counter-tariffs, he said, adding: “It’s going to hurt output and increase prices.” Monetary policy could not target specific industries or regions, he said. “We have one monetary policy for the whole country,” he said. A challenge for the Bank of Canada will be trying to assess by how much tariffs will dent demand, how much of the tariff burden will be passed on to consumer prices, and how quickly the burden will be passed on, he said. A faster pass-through means inflation will rise faster, but it will also come down faster, “provided monetary policy does its job”. “So, we’re watching closely how the costs of tariffs and uncertainty pass through to consumer prices,” he said. “Our mandate is price stability, and low inflation is the best way we can support the economic and financial well-being of Canadians in good times and bad,” he said. While monetary policy “cannot solve a trade war”, the bank could help avoid adding damage to the economy by ensuring that inflation remains anchored at the bank's 2% inflation target, he said. Helping the Bank of Canada will be its co-operation with central banks around the world, he said. Central bank governors meet regularly to exchange information and consult each other, he said. “As central banks, we are all in this together,” Macklem said. STRUCTURAL CHANGE If not resolved, Canada’s tariff conflict with its largest trading partner by far would become a “structural change” that requires a structural solution, Macklem said. High tariffs would put Canada on a permanently lower growth path, he said. “We are going to earn less, we are going to consume less, because we are going to have less income,” he said. One way to at least partially offset the negative structural change caused by the tariff conflict would be “positive structural reform”, he said. Such a reform would include removing the barriers to the country’s interprovincial trade, he said. Despite many attempts over the years, Canada never agreed on interprovincial free trade as in many cases it is easier to trade north to south, rather than across Canada. The barriers between the country's 10 provinces and three territories include actual trade restrictions, as well as different provincial regulations for the accreditation of professionals, Macklem said. With the tariff conflict, Canada may now finally remove its interprovincial barriers, which would increase commerce east-west across the country, he said. This positive structural reform could offset “at least some of the consequences of this very negative structural shock we are facing with the US,” he said. It would, however, be difficult and take time for Canada to try to replace the millions of US consumers it may be losing, he said. While hoping for the best, Macklem did not seem too optimistic about the chances of resolving the tariff conflict with the administration of US President Donald Trump. “There is a certain level of trust that has been broken,” he said, and he noted that “Trump has threatened our sovereignty, repeatedly referring to Canada as the 51st state.” Regarding Canada's upcoming federal election, Macklem said the bank's commitment to low inflation was independent of which political party is in government. Canada’s new prime minister, Mark Carney, is expected to call an election on Sunday (23 March), which will likely be held on 28 April or 5 May, public broadcaster CBC reported on Thursday, citing unnamed government sources. Carney, who took over from Justin Trudeau on 14 March, is a former governor of the Bank of Canada and of the Bank of England. CHEMICAL INDUSTRY Trade group the Chemistry Industry Association of Canada (CIAC) has said that to cope with the tariff challenge, Canada needs a competitiveness framework to attract investment and stimulate economic growth. CIAC wants the government to implement pro-growth tax and regulatory policies; strengthen the country’s infrastructure; improve labor relations to avoid supply chain disruptions; and help diversify and expand Canada’s trade into new markets beyond North America. In chemicals and plastics, the tariff conflict affects about C$115 billion in US-Canada chemicals and plastics trade, according to CIAC. Focus article by Stefan Baumgarten $1 = C$1.43 Please visit US tariffs, policy – impact on chemicals and energy Tumbnail photo of Tiff Macklem, governor of the Bank of Canada; photo source: Bank of Canada

21-Mar-2025

HOUSTON (ICIS)–Nutrien is anticipating that corn plantings will range between 91-93 million acres with the projected increase combined with a shortened fall application season in 2024, supporting their outlook for strong North American fertilizer demand in the first half of this year. The fertilizer producer said in an earnings release that it feels interest in soybean sowings will be strong as well with their projections for upcoming plantings to range from 84 million acres up to 86 million acres this spring. It noted that global grain stocks-to-use ratios remain historically low, and demand remains strong, providing a supportive environment for ag commodity prices in 2025. Not only is the outlook favourable in the US but also in Brazil as Nutrien said generally favorable soil moisture and stronger crop prices are expected to lead to an increase in safrinha corn acreage by approximately 5%. The company said strong grain and oilseed export demand is supporting grower economics. Looking at potash, Nutrien said global shipments rebounded to approximately 72.5 million tonnes in 2024. They were driven by improved supply and supportive application economics that contributed to increased demand in key markets such as China, Brazil and southeast Asia. The producer is forecasting global potash shipments between 71 million tonnes and 75 million tonnes in 2025. It noted that the high end of the range captures the potential for stronger underlying global consumption and the lower end captures the potential for reduced supply availability. Nutrien said it anticipates possible supply tightness with limited global capacity additions in 2025 and reported operational challenges and maintenance work in key producing regions. For global urea and UAN their prices have increased in Q1 of 2025 and are being driven by strengthening demand in key import markets and restricted supply, including continued Chinese urea export restrictions. The producer said global ammonia prices have recently trended lower due to seasonal demand weakness and the anticipation of incremental supply in the US and export capacity from Russia. It does expect North American natural gas prices to remain highly competitive compared to Europe and Asia, with Henry Hub natural gas prices projected to average between $3.25-3.50/MMBtu for the year. Looking at the US nitrogen supply and demand balance the company expects it to be tight ahead of the spring applications, as nitrogen fertilizer net imports in the first half of the 2024-2025 fertilizer year were down approximately 60% compared to the five-year average. Overall nitrogen demand for the spring season is expected to be strong due to the limited fall ammonia application and the potential uptick in corn acreage. For phosphates Nutrien said the markets remain firm, particularly in North America where inventories were estimated to be historically low entering 2025. It is anticipating that Chinese phosphate exports will see levels like 2024, with total exports ranging between 6 and 7 million tonnes. Currently the situation in India with their tight supply should help push demand higher ahead of their key planting season. “The outlook for our business in 2025 is supported by expectations for strong crop input demand and firming potash fundamentals,” said Ken Seitz, Nutrien president and CEO.

20-Feb-2025

Correction: In the ICIS story headlined “INSIGHT: US tariffs unleash higher costs to nation's chem industry” dated 3 February 2025, the wrong volumes were used for the following imports: Canadian ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94; Canadian polyethylene having a specific gravity of 0.94 or more, in primary forms; Canadian polyethylene having a specific gravity of less than 0.94, in primary forms; Canadian polypropylene, in primary forms; Canadian mixed xylene isomers; Mexican polypropylene, in primary forms; and Mexican cyclohexane. The US did not import cyclohexane from Mexico in 2023. A corrected story follows. HOUSTON (ICIS)–The tariffs that the US will impose on all imports from Canada, Mexico and China will unleash higher costs for the nation's chemical industry, create supply-chain snarls and open it to retaliation. For Canada, the US will impose 10% tariffs on imports of energy and 25% tariffs on all other imports. For Mexico, the US imposed 25% tariffs on all imports but the countries' presidents said on Monday the tariffs are being paused for a month. For China, the US will impose 10% tariffs on all imports. US IMPORTS LARGE AMOUNTS OF PE FROM CANADAUS petrochemical production is concentrated along its Gulf Coast, which is far from many of its manufacturing hubs in the northeastern and midwestern parts of the country. As a result, individual states import large amounts of polyethylene (PE) from Canada – even though the nation as a whole has a large surplus of the material. Even Texas imports large amounts of PE from Canada – despite its abundance of plants that produce the polymer. In addition, polyester plants in North and South Carolina import large amounts of the feedstocks monoethylene glycol (MEG) and purified terephthalic acid (PTA) from Canada. The US as a whole imports significant amounts of polypropylene (PP) and polyvinyl chloride (PVC) from Canada – again, despite its surplus of these plastics. The following table lists some of the main plastics and chemicals that the US imported from Canada in 2023. The products are organized by their harmonized tariff schedule (HTS) code. HTS PRODUCT MEASUREMENT VOLUMES 3901.40.00 Ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94 kilograms 1,319,817,405 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 1,088,071,523 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 420,561,390 2917.36.00 Terephthalic acid and its salts kilograms 407,710,439 2905.31.00 Ethylene Glycol kilograms 329,542,378 3902.10.00 Polypropylene, in primary forms kilograms 271,201,880 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 188,800,413 2902.44.00 Mixed xylene isomers liters 746,072 2905.12.00 Propan-1-ol (Propyl alcohol) and Propan-2-ol (isopropyl alcohol) kilograms 87,805,095 3901.30.60 Ethylene-vinyl acetate copolymers kilograms 71,372,396 Source: US International Trade Commission (ITC) IMPORTS FROM MEXICOMexico is not as large of a source of US petrochemical imports as Canada, but shipments from the country are still noteworthy. The following table lists some of the main plastics and chemicals that the US imported from Mexico in 2023. HTS PRODUCT MEASUREMENT VOLUMES 2917.36.00 Terephthalic acid and its salts kilograms 69,230,708 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 34,674,435 2915.24.00 Acetic anhydride kilograms 25,294,318 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 24,005,371 2915.31.00 Ethyl acetate kilograms 18,855,544 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 14,469,582 3902.10.00 Polypropylene, in primary forms kilograms 8,849,478 Source: US International Trade Commission (ITC) IMPORTS FROM CHINAChina remains a significant source for a couple of noteworthy chemicals despite the effects of the tariffs that US President Donald Trump imposed during his first term in office. The following table shows 2023 US imports from China. HTS PRODUCT MEASUREMENT VOLUMES 29152100 Acetic acid kilograms 21,095,566 39093100 Poly(methylene phenyl isocyanate) (crude MDI, polymeric MDI) kilograms 206,642,886 Source: US International Trade Commission (ITC) China's shipments of plastics goods are more significant. OIL TARIFFS WILL HIT US REFINERSCanada and Mexico are the largest sources of imported crude oil in the US, and the heavier grades from these countries complement the lighter grades that the US produces in abundance. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units. Refiners cannot swap out heavier Canadian and Mexican grades with lighter US grades. Instead, they will need to pay the tariffs or find another supplier of heavier grades, possibly at a higher cost. The following table shows the largest sources of imported crude in 2023. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 Source: Energy Information Administration (EIA) US refiners could take another hit from higher catalyst costs. These are made from rare earth elements, and China remains a key source. TARIFFS TO RAISE COSTS FOR FERTILIZERCanada is the world's largest producer of potash, and it exports massive amounts to the US. It is unclear how the US could find another source. Russia and Belarus are the world's second and third largest potash producers. Together, the three accounted for 65.9% of global potash production in 2023, according to the Canadian government. Canada accounts for significant shares of other US imports of fertilizers. The following table lists some of Canada's fertilizer shipments to the US in 2023 and shows its share of total US imports. Figures are from 2023. HTS PRODUCT MEASUREMENT VOLUME % 31042000 Potassium chloride metric tonne 11850925 88.8 31023000 Ammonium nitrate, whether or not in aqueous solution metric tonne 295438 76.6 31024000 Mixtures of ammonium nitrate with calcium carbonate or other inorganic nonfertilizing substances metric tonne 29203 75.7 31055100 Mineral or chemical fertilizers, containing nitrates and phosphates metric tonne 1580 66.1 31022100 Ammonium sulfate metric tonne 947140 49.6 31052000 Mineral or chemical fertilizers, containing the three fertilizing elements nitrogen, phosphorus and potassium metric tonne 147850 41.4 Source: US ITC SUPPLY CHAIN SNARLSIf US companies choose to avoid the tariffs and seek other suppliers, they could be exposed to delays and supply chain constraints. Other companies outside of the petrochemical, plastic and fertilizer industries will also be seeking new suppliers. The scale of these disruptions could be significant because Canada, Mexico and China are the largest trading partners in the US. The following table lists the top 10 US trading partners in 2023 based on combined imports and exports. Country Total Exports ($) General Imports ($) TOTAL Mexico 322,742,472,406 475,215,965,697 797,958,438,103 Canada 354,355,997,349 418,618,659,183 772,974,656,532 China 147,777,767,493 426,885,009,750 574,662,777,243 Germany 76,697,761,127 159,272,068,221 235,969,829,348 Japan 75,683,130,214 147,238,042,342 222,921,172,556 South Korea 65,056,093,590 116,154,470,335 181,210,563,925 UK 74,315,228,810 64,217,031,774 138,532,260,584 Taiwan 39,956,725,574 87,767,403,487 127,724,129,061 Vietnam 9,842,922,146 114,426,076,081 124,268,998,227 Source: US ITC RETALIATIONUS petrochemical exports would be tempting targets for retaliation because of their magnitude and the global capacity glut. China, in particular, could impose tariffs on US chemical imports and offset the disruptions by increasing rates at under-utilized plants. So far, none announced plans to target chemicals on Sunday. Canada's plans to impose 25% tariffs on $30 billion in US goods does not include oil, refined products, chemicals or plastics. That batch of tariffs will take place on February 4. Canada will impose 25% tariffs on an additional $125 billion worth of US goods following a 21-day comment period, it said. The government did not highlight plastics or chemicals in this second batch of tariffs. Instead, it said the tariffs will cover passenger vehicles and trucks, including electric vehicles, steel and aluminium products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles and recreational boats. In a statement issued on Sunday, Mexico's president made no mention of retaliatory tariffs. Instead, she said she will provide more details about Mexico's response on Monday. China said it will start legal proceedings through the World Trade Organization (WTO) and take corresponding countermeasures. RATIONALE BEHIND THE TARIFFSThe US imposed the tariffs under the nation's International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat. In a fact sheet, Trump cited illegal immigration and illicit drugs. Saturday's executive order is the first time that a US president imposed tariffs under IEEPA. Prior IEEPA actions lasted an average of nine years. They can be terminated by a vote in Congress. Insight article by Al Greenwood (Thumbnail shows containers, in which goods are commonly shipped. Image by Shutterstock)

03-Feb-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 31 January. INSIGHT: Shipping caution remains over Suez route, Europe chemicals nervous Shipping companies are still in “wait and see” mode over a shift back to using the Suez Canal, while many chemical producers in Europe may hope it stays out of action for as long as possible. Europe BDO players eye China market fundamentals to gauge outlook for 2025 European butanediol (BDO) market players are eagerly awaiting a sense of long-term direction, with fundamentals largely unchanged since the start of the year and the impact of market movements in China after the Lunar New Year holidays a key focus. EU proposes import tariffs on Russian and Belarusian nitrogen-based fertilizers The European Commission has adopted a proposal to impose tariffs on a number of agricultural products from Russia and Belarus, as well as on certain nitrogen-based fertilizers. EU commercial vehicle sales up 5.5% in 2024 New commercial vehicle registrations in the EU increased by 5.5% in 2024, with trucks the only segment posting a decline, according to the latest figures from the European Automobile Manufacturers’ Association (ACEA). Indian phosphate buyers look to budget for clarity on subsidies After the phosphoric acid price settlement between Jordan’s JPMC and India’s Coromandel International Limited (CIL), phosphate buyers in India are now focusing on the upcoming budget for more clarity on the cost of importing product.

03-Feb-2025

LONDON (ICIS)–The European Commission has adopted a proposal to impose tariffs on a number of agricultural products from Russia and Belarus, as well as on certain nitrogen-based fertilizers. In the proposal, the first round of tariffs will come into place on 1 July 2025. For fertilizers, on top of the existing duty of 6.5%, the tariff would be subject to an additional specific duty that would gradually increase, starting at €40/tonne or €45/tonne, depending on the type of fertilizer (corresponding to around 13% in ad valorem equivalent). The duty would increase to a prohibitive level of €315/tonne or €430/tonne respectively, three years after the start of the proposed regulation’s application (a level of about 100% in ad valorem equivalent). In the three-year transitional period, the prohibitive tariffs would also be introduced if imports from Russia and Belarus are above certain specified volumes. The increase in tariffs will not affect the transit of goods to countries outside the EU. The agricultural products affected by the new tariffs constitute 15% of agricultural imports from Russia in 2023 that had not yet been subject to increased tariffs. Once adopted by the European Parliament and the Council, all agricultural imports from Russia would be the subject of EU tariffs. The EU said the tariffs will support the growth of domestic production and the EU's fertilizer sector, which has suffered during the energy crisis. They will also ensure a steady fertilizer supply and, most importantly, for fertilizers to remain affordable for farmers. The proposal includes mitigating measures, should EU farmers see a substantial increase in fertilizer prices. In the press release, the EU expected the tariffs to negatively impact Russian export revenues, thus impacting Russia's ability to wage its war of aggression against Ukraine. Major fertilizer producers in Europe have been lobbying the EU to take immediate action against Russian fertilizer imports. The producers have called on the European Commission to act against the high volume of imports from Russia, in what is described as "unfair trade' due to the impact of Russian and Belarusian imports. They have expressed their frustration that the threat of Russian imports was not being taken seriously and not enough was being done to protect them ahead of the spring campaign which is now underway. A week ago, German fertilizer company SKW Piesteritz said it had been forced to shut one of its two ammonia plants for an indefinite period because of cheap fertilizers from Russia, coupled with high costs in Germany and an unfavorable political climate. Top Five European urea importers 2023 Importing country  Imports 2023 (tonnes)  Russian imports (%) France Customs                         1,671,913 15 Poland Customs                         1,160,717 30 Spain Customs                            997,551 10 United Kingdom HMRC                            977,229 13 Germany Customs                            921,321 37 Calls for a 30% tariff on Russian and Belarusian imports on all fertilizers no later than February was described by one supplier to Europe as “a bold move ahead of the season”. The new season for buying and application is underway in some parts of Europe. In areas where temperatures are higher than normal, urea will be applied in the next 7-10 days. Aside from the impact of cheap Russian fertilizer on the EU, participants are also worried about Europe’s growing reliance on Russia imports, the potential threat to EU food supply and a derailing of the region's plan to decarbonize. It is widely discussed that Russia will push European fertilizer producers out of the market, and replace gas with fertilizer imports. Urea is produced from ammonia and carbon dioxide. It has a 46% nitrogen content, which is the highest nitrogen content of any solid nitrogen fertilizer.  Urea can be applied by itself to the soil or mixed with phosphate and potash. Thumbnail photo source: Shutterstock

29-Jan-2025