SINGAPORE (ICIS)–Economic growth in the East Asia and Pacific (EAP) region is projected to slow to 4.8% in 2024 from 5.1% in the previous year, primarily due to a deceleration of activity in China, the World Bank said. Downside risks to regional outlook remain China 2024 GDP growth to slow to 4.8% Global growth to stabilize at 2.6% Excluding China, growth in the region is expected to accelerate to 4.6% this year from 4.3% in 2023, bolstered by a recovery in global trade, the World Bank said in its June World Economic Prospects report released on 11 June. Over the next two years, the overall EAP GDP growth is projected to continue moderating to 4.2% in 2025 and 4.1% in 2026, as a further slowdown in China, Asia’s biggest economy and the second largest in the world, offsets a modest pick-up elsewhere in the region. “Although risks to the regional outlook have become somewhat more balanced since January, they remain tilted to the downside,” the World Bank said “Downside risks include a proliferation of armed conflicts and heightened geopolitical tensions around the world, further trade policy fragmentation, and weaker- than-expected growth in China, with adverse spillovers to the broader region.” However, faster-than-anticipated US growth could provide a positive counterbalance to these risks, potentially boosting regional activity. CHINA GROWTH SLOWS GDP growth for China this year was revised up to 4.8% from 4.5% previously, primarily due to stronger-than-expected activity in the early part of the year, particularly, exports. The forecast represents a slowdown from the 5.2% pace of expansion recorded in 2023. Consumption, however, is expected to slow down significantly this year amid weak consumer confidence following a strong expansion in 2023. Overall investment growth will remain subdued, supported by government spending, notably on infrastructure, but dampened by continued weakness in the property sector. Real estate activity is not expected to stabilize until the end of the year despite measures to support the sector, such as lower borrowing costs and deposit requirements. Both new property construction starts and bank lending for real estate were continuing to decline since the start of the year. For 2025, China’s growth is projected to soften further to 4.1%, lower than the previous forecast of 4.3%, mainly due to a weaker outlook for investment. A further deceleration to 4.0% is expected in 2026 as potential growth is hampered by slowing productivity, softer investment, and increasing demographic challenges, according to the World Bank. “With the population falling for the second consecutive year in 2023, and amid a low and declining fertility rate, demographic headwinds are expected to intensify, dragging potential growth lower,” the multilateral institution stated. EX-CHINA GROWTH REBOUNDS In the EAP region excluding China, economic activity is projected to rebound this year, following below-average growth in the previous year. This growth will be driven by an upswing in global goods trade, benefiting exports and industrial activity, and offsetting the effects of slowing growth in China. The strongest acceleration in activity is expected in export-oriented economies such as Thailand and Vietnam in southeast Asia. Additionally, the ongoing global tourism recovery from the pandemic, which was delayed in some EAP countries, will continue to boost service exports in economies such as Cambodia and Thailand. GDP growth in the EAP excluding China next year is expected to edge up to 4.7% and further up to 4.8% in 2026, as global trade strengthens and growth rates across the region converge towards their potential. GLOBAL GROWTH FORECAST STABLE World economic growth is projected to remain at 2.6% in 2024, marking the first time in three years that the pace of expansion will be stable despite ongoing geopolitical tensions and high interest rates. A modest increase to 2.7% is expected in 2025-2026, supported by moderate growth in trade and investment, based on World Bank’s projection. “Global risks remain tilted to the downside despite the possibility of some upside surprises. Escalating geopolitical tensions could lead to volatile commodity prices, while further trade fragmentation risks additional disruptions to trade networks,” it said. “Pronounced trade policy uncertainty – already at its highest level compared with other years of major elections since 2000 – could portend further trade restrictions and weigh on global trade.” While global inflation is projected to ease, the pace of moderation is slower than previously anticipated, averaging 3.5% this year. Due to persistent inflationary pressures, central banks in both advanced economies and emerging markets are expected to maintain a cautious approach to monetary policy easing. Consequently, average benchmark policy interest rates are projected to remain roughly double the 2000-19 average over the coming years. Focus article by Nurluqman Suratman

SANTIAGO (ICIS)–Despite arrangements put in place to make the Panama Canal fit for a changing climate, future disruption at the Americas key shipping route will depend on a variable no-one can predict: the intensity of future El Niño weather phenomenon, according to an expert at maritime services provider CB Fenton on Tuesday. Gabriel Mariscal, business manager at the Panama-headquartered company, added that the climate change-related challenges for the Panama Canal have increased on the back of the new locks inaugurated in 2016 – the so-called NeoPanamax locks – which require more water than the old locks, called Panamax. Equally, more water will also be needed to cater for the demographic needs of an ever-growing Panama City, already a metropolis of 2 million people. El Niño is a climate phenomenon that emerges from variations in winds and sea surface temperatures over the tropical Pacific ocean, warming the waters, and disproportionally hitting tropical and subtropical countries on west Latin America. The El Niño which has just finished has been the hardest in history, with large-scale disruption in the Panama Canal due to the drought as well as putting against the ropes economies in countries such as Peru, where GDP fell in 2023 on the back of the weather phenomenon. Mariscal was speaking at an event about logistics organized by the Latin American Petrochemical and Chemical Association (APLA). NEW LOCKS, MORE WATERThe Panama Canal inaugurated with great fanfare its new locks in June 2016. The NeoPanamax locks are 427 meters (1,400 feet) long by 55 meters wide and 18.3 meters deep. NeoPanamax is used to designate ships that exceed the maximum size (Panamax) of the Miraflores, Pedro Miguel and Gatun locks first built. Meanwhile, Mariscal said the strongest El Niño phenomenon in the last 50 years occurred in 1982-1983, 1997-1998, and 2015-2016, but points to one big difference to now: the population in Panama City is already grown to 2 million people, around half of the country’s population. “Future disruption will really depend on the intensity of the El Niño event. El Niño has always existed, but the challenge now is that you have a Panama Canal that consumes much more water than before, even with the NeoPanamax locks reusing water,” said Mariscal. “So, adding up population growth and new locks using more water, consumption is now much larger. In 2023, that was a challenge for the Canal: they somehow expected disruption with this El Niño, but they didn’t expect it to come so soon [the last El Niño took place in 2018-2019, but it was not as severe].” PLANNING FOR A CHANGING CLIMATEMariscal works almost daily with the Panama Canal. He said he is glad to see the Authority has a meteorology and hydrology department which monitors climate issues closely and daily. For instance, he mentions that department was one of the first in the world to detect the end of the El Niño just passed, by detecting colder waters in Peru and Ecuador’s shores. “That allows them to make prompt decisions. Considering how important the Panama Canal is for the country’s economy, they know they cannot be laggards: they need to be ahead of the game. You can see this in other aspects in the country as well: in Panama City you see a lot of green spaces, for example,” said Mariscal. “This is not just by chance and to embellish the city: it is because we really need that green, so that it continues to rain where it has to rain to keep up water levels at the Canal where they must be.  The Panama Canal is leader in climate change-related disruption in the country.” Mariscal estimates that the Panama Canal, as well as the maritime-related services associated to it generate around 65% of Panama’s wealth, with tourism and banking services practically making up for the rest. The APLA Logistica event runs in Santiago on 11-12 June. Interview article by Jonathan Lopez Recasts to update spelling of El Nino to El Niño throughout

SANTIAGO (ICIS)–Chemicals tanker prices have risen globally 30-75% in the past four years on a lack of liquidity, an expert at Chile-headquartered chemicals bulk operator Ultratank said on Tuesday. Mathias Dummer, market analyst at Ultratank, added since pandemic-hit 2020 prices have steadily grown, especially those for second-hand tankers, which have gone up as much as 75% to around $35 million per chemical tanker. Before the pandemic, those prices stood at around $26 million. According to Dummer, prices for second-hand tankers have risen sharply on the back of strong returns in the spot markets as well as tonnage illiquidity. In newbuild chemical tankers, prices have gone up since 2020 by 30% to around $40 million, said Dummer. Before the pandemic, newbuild prices stood at around $32 million. Dummer was speaking at an event about logistics organized by the Latin American Petrochemical and Chemical Association (APLA). HIGHER LOGISTICS COSTS FOR LONGER?The analyst said the higher costs for chemical tankers could be here to stay, because chemicals market fundamentals would support in years to come strong freight markets and as long as key conflicts globally remain unresolved. “The embargo on Russian crude and the situation in the Red Sea is supporting higher tonne miles and keeping swing tonnage away. If solutions to both conflicts are reached, freight markets will likely adjust downwards, but this will be highly dependent on how easily supply chains can adjust back,” said Dummer. “Ship operators are facing higher costs, which will likely support higher rates, even if trading gets back to normal.” Moreover, the analyst added that the chemical tankers fleet is ageing, which makes it a heavily pollutant sector, while international regulations from the International Maritime Organization (IMO), an UN-dependent body, are pushing the industry towards decarbonization. “The road to shipping decarbonization will pose additional challenges and may further hinder the fleets’ productivity by forcing slower sailing speeds and retiring ships from the market,” said Dummer. “The use of renewable fuels will likely increase operational costs.” The APLA Logistica event runs in Santiago on 11-12 June.

LONDON (ICIS)–While the butanediol (BDO) and polybutylene terephthalate (PBT) markets in Europe have benefited from challenges in importing volumes from Asia, demand remains subdued for sectors. Limited imports from Asia through H1 2024 aided European demand Economic attractiveness of imports remains, but logistical constraints hamper appetite Demand holding steady through Q2, but macroeconomic concerns persist In this podcast, ICIS Europe engineering plastics editor Meeta Ramnani and ICIS Europe BDO editor Yashas Mudumbai discuss the current dynamics and the outlook ahead.

SINGAPORE (ICIS)–Freight rates for very large gas carriers or VLGCs from the US to Asia are expected to remain firm for the rest of June as the US-Asia arbitrage window for propane is wide open.

HOUSTON (ICIS)–INEOS Styrolution will close its 445,000 tonnes/year styrene production plant in Sarnia, Ontario, Canada, by June 2026, the company announced Tuesday. Styrolution has been involved in a dispute with Canadian government officials over the plant after a nearby indigenous group complained about benzene emission levels from the site. The company shut the plant for maintenance in April after the complaints surfaced. But Styrolution said that was not the reason for the plant closure. “Our decision to permanently close the Sarnia site by June 2026 is irrespective of the current situation,” the company said in a news release. Styrene producers in North America, as well as globally, have been battling poor economics due to over-capacity. North American styrene operating rates have been under 70% so far this year. China, once a key outlet for North American styrene, has added significant styrene capacity over the past three years. China commissioned 3.7 million tonnes of styrene capacity in 2023 alone. “This difficult business decision to permanently close our Sarnia site was made following a lengthy evaluation process and is based on the economics of the facility within a wider industry context,” Styrolution CEO Steve Harrington said. “The long-term prospects for the Sarnia site have worsened to the point that it is no longer an economically viable operating asset.” Even with the loss of styrene supply to the market, the Sarnia plant closure in April has had no impact on styrene spot prices. “Additional large investments that are unrelated to the potential costs of restarting operations would be necessary in the near future. Such investments would be economically impractical given today’s challenging industry environment,” Harrington said. In late May, Canada’s federal environment minister extended an order imposing stricter benzene emission controls on plants operating at the Sarnia petrochemicals production hub in southern Ontario, close to the US border and Detroit, Michigan, for two years. The order came after an Ontario provincial ministry suspended production operations at Styrolution’s Sarnia styrene plant following the complaints from residents about potentially high benzene emissions. In addition to styrene, the Sarnia plant has ethylbenzene production capacity of 490,000 tonnes/year, according to the ICIS Supply and Demand Database. Styrolution operates two additional styrene plants in North America – the 770,000 tonnes/year facility in Bayport, Texas, and the 455,000 tonnes/year plant in Texas City, Texas. The Sarnia plant represents approximately 7% of North American nameplate styrene capacity. Styrene is a chemical used to make latex and polystyrene resins, which in turn are used to make plastic packaging, disposable cups and insulation. Major North American styrene producers include AmSty, INEOS Styrolution, LyondellBasell Chemical, Shell Chemicals Canada, Total Petrochemicals and Westlake Styrene. Thumbnail shows a cup made of polystyrene (PS), which is one of the main derivatives of styrene. Image by ICIS.

BARCELONA (ICIS)–Methanol has long-term potential as a major player in the energy transition, especially for use as a marine fuel. Methanol mainly made from coal in China, natural gas elsewhere Used to make formaldehyde, acetic acid, in China mainly coal-based methanol to olefins (MTO) Q2 typically sees peak demand for Europe construction but subdued this year Concerns about overcapacity globally as new projects come onstream Use as marine fuel may be a big driver of growth long term Energy transition offers great opportunities In this Think Tank podcast, Will Beacham interviews ICIS senior editor Eashani Chavda and ICIS Insight editor Nigel Davis. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.

SANTIAGO (ICIS)–Announcements of closures for high-cost assets, especially in Europe and northeast Asia, are likely to accelerate in coming quarters as the global petrochemicals industry is forced to rationalize, according to an ICIS analyst on Tuesday. Antulio Borneo, vice president for the polyethylene terephthalate (PET) and polyester chain at ICIS, said announcements of closures for steam crackers – the key facility to produce petrochemicals – in Europe are to accelerate after two key players already said they were shutting theirs. Earlier in 2024, US energy major ExxonMobil said it was to shut its cracker in Gravenchon, France, and Saudi petrochemicals major SABIC said it would shut its facility in Geleen, the Netherlands. “High-cost assets reside mainly in Europe and northeast Asia; the pressure to rationalize old and inefficient assets will intensify as time passes, but it will be expensive,” said Borneo. “Announcements of permanent closures of chemicals plants are expected to gain momentum throughout 2024.” Borneo was speaking at an event about logistics organized by the Latin American Petrochemical and Chemical Association (APLA). The consultant went on to say that Europe’s crackers are, on average, nearly 45 years old, while those in northeast Asia – excluding China – are on average just over 30 years old. With the global oversupply in petrochemicals expected to take years to be absorbed and take the market back into balance, those old assets are first on the line to be shut, concluded Borneo. The APLA Logistica event runs in Santiago on 11-12 June.

Finland hopes to enforce ban on Russian LNG in spring 2025 Finland would be first to use an EU option to unilaterally ban Russian gas and LNG Finland will most likely rely on supply from Norway and the US at small-scale terminals LONDON (ICIS)–Finland’s government has told ICIS it hopes to enforce a ban on Russian LNG in spring 2025, after proposing the legislation this winter. “The legislative proposal on banning Russian gas is due winter 2024-2025 …most likely early 2025,” Director General of the Energy Department at the Ministry of Economic Affairs and Employment, Riku Huttunen, told ICIS.
“After that the ban might be in force in spring 2025.” His comments follow last week’s news that Finland will propose by winter legislation to ban. Finland’s LNG import terminal, Inkoo, already effectively bans Russian LNG due to the terminal’s rules of operation. LNG is still imported from Russia at Finland’s Pori and Tornio terminals under long-term agreements. The two small-scale terminals are not connected to Finland’s gas grid. Finland’s foreign trade statistics indicate that 65% of gas imports in the fourth quarter 2023 came from the US, with 23% coming from Norway and 7% from Russia. Replacing Russian supplies to the small-scale market following winter is expected to go ahead relatively smoothly. “The LNG market is quite liquid at the moment, so I expect no difficulties in replacing the small amounts of Russian LNG still used in Finland,” said Huttunen. “The companies make the commercial decisions,” he said. “Currently, the most important suppliers to the Finnish-Baltic gas market are Norway and the US.” Finland’s Ministry of Economic Affairs and Employment cited earlier this month European Commission analysis that gas supply over winter 2024-2025 will be sufficient to meet Europe’s needs. It also referred to the completion of repair work on the Balticonnector.