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Polyethylene14-Jun-2024
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson: China has set itself a
target that 40% of all the vehicles on its
roads will be electric by 2030. And by that
year, the aim is that all new-vehicle sales
will be electric vehicles (EVs). The country
wants to reach peak carbon emissions before
2030 and carbon neutrality before 2060.
“After 2030, it is going to be pretty much
impossible to get approval for a heavy industry
project because of the emissions targets,” said
a petrochemicals industry source.
This has led to suggestions that the resulting
lower availability of feedstocks from local
refineries will slow China’s push towards
complete petrochemicals self-sufficiency. I
disagree for the following reasons.
Despite a cap on local refinery capacity, I’ve
been told that local supply of naphtha, etc
shouldn’t be a problem until up to a least
2030, because refineries will be increasingly
turned in petrochemicals feedstock centers.
More naphtha and gasoil crackers are expected
to be added to refineries ahead of the 2030
cut-off point. Other heavier fractions from
refineries are also forecast to be increasingly
used as petrochemicals feedstocks.
And even if local feedstock supply does become
constrained after 2030, we shouldn’t assume
that this will restrict domestic production
because of the weaker-tonne economics of
importing raw materials.
China’s closer geopolitical relationships with
the Middle East, along with increased
availability of natural-gas liquids in the
Middle East, suggest that imports of feedstocks
will be available at the right costs.
My view is that China’s economic challenges
will result in annual average petrochemicals
consumption growth of 1-3% per year up until
2030. Beyond 2030 I see growth falling to
around 1%.
Weaker demand growth will of course make it
easier to increase petrochemicals
self-sufficiency.
Because recycling is mainly a “local for local”
business due to the restrictions on moving
plastic waste across borders growth of
recycling in China will, in my view again,
increase the country’s self-sufficiency in
polymers.
Recycling is exactly the type of higher-value
industry China needs to nurture as it attempts
to escape a middle-income trap made very deep
by its demographic challenges.
Security of local supplies of raw materials in
an ever-more uncertain geopolitical world will
add further momentum to the growth of recycling
in China.
Local virgin polymer and petrochemical plants
will run at high operating rates, supported by
maximising supply of feedstocks from local
refineries and by competitive imports of
feedstocks from China’s geopolitical partners.
This will further boost supply security.
Don’t be therefore distracted by suggestions
that the growth of EVs in China and the
country’s emissions targets will be good news
for petrochemical exporters to China.
China will become a vast continent-sized market
that will be just about entirely
self-sufficient. As I shall explore in a later
post, this will apply to specialty as well as
commodity grades of petrochemicals.
Overseas producers most focus on markets
elsewhere. As the chart below shows using
high-density polyethylene (HDPE) as an example,
the opportunities in other countries and
regions are big.
China lifted all petrochemicals boats during
the 1992-2021 Supercycle, making even the
least-competitive companies successful. This is
no longer the case.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author, and do not necessarily represent those
of ICIS.
Ammonia13-Jun-2024
HOUSTON (ICIS)–The US Department of
Agriculture (USDA) outlook for the corn crop is
unchanged relative to last month while for
soybeans, it is projecting there will be higher
beginning and ending stocks, according to the
June World Agricultural Supply and Demand
Estimate (WASDE) report.
For corn, the monthly update said along with no
adjustments to its corn forecast from May that
the season average price received by producers
remains at $4.40 per bushel.
The USDA did reveal it will release its acreage
report on 28 June, which will provide
survey-based indications of planted and
harvested area.
For soybeans, the WASDE said higher beginning
stocks reflect reduced crush for 2023-2024,
with it expected to be down by 10 million
bushels on lower soybean meal domestic use that
is partly offset by higher exports.
With increased supplies and no use changes, the
USDA said soybean ending stocks are projected
at 455 million bushels, up 10 million bushels.
The soybean price is forecast at $11.20 per
bushel, unchanged from last month.
The next WASDE report will be released on 12
July.
Speciality Chemicals13-Jun-2024
HOUSTON (ICIS)–Operations at US ports are
stable even as import volumes are at the
highest since 2022, and railroad performance
has improved over the past month, according to
analysts at freight forwarder Flexport.
RAILROADS
Speaking during a webinar to discuss the state
of freight, Nathan Strang, director of ocean
freight, US Southwest for Flexport, said its
customers are seeing lower dwell times for rail
cars at ports over the past month.
“I have been talking about how rail performance
to and through the West Coast has been
suffering a little bit,” Strang said,
describing his point of view in past webinars.
“I will say that we have seen real
improvement.”
Strang said West Coast port operations have
remained stable, with local pickup dwell at six
days for Los Angeles/Long Beach, at five days
in Seattle/Tacoma (SeaTac) and at four days in
Oakland.
“Trucking and transload capacity remain good
out of all US West Coast ports,” Strang said.
Rail traffic has risen for 19
consecutive weeks, with railcar loadings for
the week ended 8 June up 5.7% year on year
according to the Association of American
Railroads (AAR).
For the first 23 weeks of 2024, ended 8 June,
North American chemical railcar loadings rose
3.8% to 1,082,614 – with the US up 3.9% to
745,780.
In the US, chemical railcar loadings represent
about 20% of chemical transportation by
tonnage, with trucks, barges and pipelines
carrying the rest.
PORTS
Strang said that apart from the Port of
Charleston, South Carolina, volumes are moving
really well through the East Coast ports with
rail dwell averaging about two days.
Charleston is undergoing an infrastructure
project on its Wando Welch Terminal to expand
the docks.
Dock construction at Wando Welch terminal
started on 11 March, reducing berth space from
three to two berths for one year, with berths
given on first come, first serve basis.
Strang said some vessels are discharging at the
Port of Savannah, Georgia, and then moving
material to Wando Welch via trucks, or using
other terminals within the Port of Charleston
as space becomes available.
Overall port omissions from all carriers are
starting to reduce the extent of the delays,
with six to nine days delay expected in week
24, according to a port update from
Hapag-Lloyd.
ASIA PORTS CONGESTED
Strang said that things are opposite of the
conditions seen during the pandemic, when US
West Coast ports were dealing with huge
backloads and major congestion because of the
strong US consumer demand for goods.
“Shanghai and Singapore are seeing the most
congestion right now, but most ports within
Asia are seeing pretty heavy congestion,”
Strang said.
Carriers are even omitting Singapore on certain
services because of the amount of congestion in
Singapore, Strang said.
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Speciality Chemicals13-Jun-2024
HOUSTON (ICIS)–Chemical companies have started
the first half of 2024 announcing potential
sales and separations of several businesses,
which could lead up to busy cycle for mergers
and acquisitions (M&A).
Sustainability continues to influence
M&A decisions, although it will unlikely
lead to any large acquisitions.
Private equity firms could play a larger
role in M&A despite higher interest rates
because financial investors have plenty of
money.
Electronic materials could be another
M&A trend because of government incentives
for the semiconductor industry.
CHEMS EXPECT MORE
M&AMore than half of the
chemical executives who participated in a
survey expect M&A activity to increase in
the next 12-18 months, according to Kearney, a
consulting firm that conducts an annual report
about deal-making in the industry. By contrast,
18% expect M&A activity to decrease, and
32% expect activity to be roughly stable.
The sentiment is more positive than surveys
from the past few years, said Andy Walberer,
partner and global chemicals lead at global
strategy and management consultancy Kearney. He
made his comments while discussing Kearney’s
recent M&A report.
Part of that optimism comes from the divestment
plans and strategic reviews recently announced
by chemical companies, he said. Also,
executives at chemical companies are no longer
contending with the COVID-19 pandemic and the
subsequent supply-chain disruptions.
They have the headspace to think about medium-
and long-term strategy, he said.
SUSTAINABILITY CONTINUES INFLUENCING
DEALSSustainability will
unlikely lead to high-dollar deals, but it will
still be a noteworthy trend, Walberer said.
Chemical companies are scrambling to secure
supplies of recycled and renewable feedstock.
Chemical executives and Kearney have noted the
gap between supply and demand for sustainable
feedstock.
To secure feedstock, companies have been
establishing partnerships or acquiring
businesses.
Walberer expects that trend to continue.
In other cases, chemical companies are making
sustainability M&A decisions in response to
government incentives and regulations, Walberer
said.
Kearney has seen some companies divest sections
of portfolios because of high carbon emissions,
Walberer said.
PRIVATE EQUITY HAS PLENTY OF DRY
POWDERHigher interest rates have
made M&A more challenging for private
equity firms because of their traditional
reliance on debt-financed acquisitions.
That said, private equity firms have built up
large stashes of dry powder. They could put
that money to work without debt, which has
become more expensive because of higher
interest rates.
At the same time, chemical valuations have
fallen.
“We see PE very active,” Walberer said.
Walberer noted that financial investors made up
26% of chemical deals in 2023, up from 7% in
2022 and above the historic range of 15-20%.
In particular, private equity firms may acquire
some of the infrastructure assets that chemical
companies are eager to divest.
Dow had expressed interest in selling more
of its infrastructure
after agreeing to divest its rail assets at
six sites in mid-2020.
Recent and upcoming carveouts could provide
private equity firms with more M&A
opportunities.
In December 2023, Solvay carved out its
specialty business, called Syensqo, from its
mostly commodity business.
DuPont expects
to complete its breakup into three
companies in the next 18-24 months.
CHANGING OUTLOOK FOR
EUROPEEuropean chemical M&A
experienced a slowdown because of the spike in
energy and feedstock costs that followed the
start of the war in Ukraine, according to the
Kearney report. It should continue declining in
the next 12-18 months before a possible
rebound.
“Amid ongoing challenges, big chemical players
are under stress, prompting them to review
their business models and restructure,” Kearney
said in a report regarding Europe.
In some cases, the owner of a business may
decide to put it on the market after realizing
it is no longer a core part of the company,
Walberer said. The corporation concludes that
it is no longer the best owner of the business
and decides to divest it.
“There are a lot of good examples of how new
owners have been able to improve the
performance of the business,” he said.
DuPont’s performance coatings business would
later flourish as Axalta Coatings Systems.
which was initially sold to Carlyle for $4.9
billion before becoming a publicly traded
company.
Another example is Nouryon, the surfactants
business that was spun off from AkzoNobel.
In other cases, the business’s performance has
suffered because of structural reasons, such as
high costs, Walberer said.
GOVERNMENT SEMICONDUCTOR INCENTIVES MAY
DRIVE M&AElectronic
materials could become another M&A trend
because of the incentives being lavished by
government, Walberer said.
The US, China, the EU, Japan, Germany and South
Korea are among the countries that created
semiconductor incentive programs worth billions
of dollars.
DuPont’s electronics business is one of the
three that will break out of the company. That
business itself is the product of acquisitions
made by DuPont.
CHEM M&A ACTIVITY OVER THE
YEARSTypically, the value of
chemical M&A is $100 billion to $120
billion per year, a level it reached in 2022
and 2023, Walberer said.
The COVID pandemic and its subsequent recovery
distorted M&A in 2020 and 2021. Values in
2019 and 2016 spiked because of large deals
such as the Dow and DuPont merger and Aramco
acquiring a large stake in SABIC.
ANNOUNCEMENTS IN 2024The
following lists some of the major chemical
M&A announcements made so far in 2024.
February 26:
PPG explores strategic alternatives for
its architectural coatings business in the US
and Canada.
It could reach a decision by the end of
the third quarter.
March 4:
Evonik agrees to sell its superabsorbents
business to International Investors Group
(ICIG).
March 13: Trinseo
seeks to sell its stake in Americas
Styrenics. It later clarified that
the entire joint venture is for sale.
May 6:
BASF plans to sell its idled ammonia,
methanol and melamine units in Ludwigshafen,
Germany.
May 8: LyondellBasell
starts strategic review of the bulk of
its operations in Europe.
May 8:
Shell agrees to sell its refinery and
petrochemical assets in Singapore to the
CAPGC joint venture.
May 22: DuPont plans
to break up into three companies,
including one focusing on electronics and
another on water.
Insight article by Al
Greenwood
Thumbnail image by ICIS.
Ethylene13-Jun-2024
SAO PAULO (ICIS)–The drought affecting the
Altamira petrochemicals hub in Mexico’s state
of Tamaulipas is not yet affecting the supply
of chemicals, but the water restrictions for
industrial players could continue, sources said
this week.
The modest rainfall in the past few days has
not resulted in any great improvement in water
supplies, with households still suffering water
restrictions. Supplies to industrial players
will only resume when supply for households is
normalized.
Earlier this week, Mexico’s chemicals producer
Alpek declared force
majeure on supply of purified terephthalic
acid (PTA) out of Altamira. The producer has
the capacity to produce 1 million tonnes/year
in two plants at the petrochemicals hub.
Sources in the US PTA and polyethylene
terephthalate (PET) markets have said they
fear
disruptions to supply if the crisis in
Altamira continues.
In May, the critical situation affecting water
supply to residents in the area prompted
authorities to halve
water supply to industrial players, with
many of them declaring force
majeures thereafter.
This week, a well-connected source in the
Mexican petrochemicals industry limited the
current crisis, for now, to production issues,
with supplies of all materials still flowing.
“What we are hearing in the market is not about
shortages – for now, it is limited to a
production problem,” the source said.
“A lot of US product also comes to Mexico, so
for now there is no supply problem as such.
However, everything will depend on how long it
takes for this to be resolved so industry can
return to normal production.”
Weather patterns developing normally, Mexico’s
east coast should be entering the rainy and
hurricane season soon, which could start to
ease Altamira’s drought.
However, with residents in the area still
suffering water restrictions in their homes,
normalization in water supplies to industrial
players should still take some time.
The light rain in the past few days, however,
may already be starting to show positive
effects.
Last week, local media in Altamira reported how
the Champayan lagoon, west of the city and a
natural spot very much loved by the locals, had
dried up overnight.
On 11 June, residents woke up to a lagoon with
water again.
ELECTIONS STOLE FOCUS FROM
DROUGHTMexico concluded on 2
June an electoral process which kept political
parties’ focus away from the drought developing
in Tamaulipas, said the source in Mexican
petrochemicals.
“Altamira is located in an area which doesn’t
lack water. The drought became a perfect storm
on the back of the authorities’ poor response.
In an election year, instead of investing
resources to reverse the drought situation
months ago, those resources went to the
electoral campaigns,” it said.
“Having so much water in the area, they could
have installed pumps in certain rivers to
transfer water to other rivers, which could
have solved the situation preventively. They
are pumping water now, but now turned out to be
too late for industrial players. In addition to
the drought, the campaign had the greatest
impact in the current crisis.”
Last week, the government of Tamaulipas ordered
that tanker trucks be sent to the south of the
state from other municipalities not affected as
harshly by the drought, as well as from other
Mexican states.
The trucks will not sort out the dire situation
at industrial parks, however, because the water
is being deployed to households only.
The latest report by the public body in Mexico
monitoring the drought, published on 5 June and
covering up to 31 May, continued showing the
state of Tamaulipas in the Gulf Coast as one of
the hot spots suffering the current crisis.
MEXICO DROUGHT
MONITORTamaulipas (east) suffers
‘exceptional drought’ amid a nationwide
crisis
Color scale: Yellow, abnormally dry; light
orange, moderate drought; orange, severe
drought; red, extreme drought; brown,
exceptional drought
Source: Mexico’s National Water Commission,
part of the National Meteorological Service.
See more here, in Spanish
Front page picture: The Port of Altamira,
Mexico’s state of Tamaulipas
Source: Altamira Municipality
Focus article by Jonathan
Lopez
Crude Oil13-Jun-2024
SINGAPORE (ICIS)–China has slammed EU’s
proposal to impose provisional tariffs on
imports of Chinese electric vehicles (EVs),
denouncing it as a “blatant act of
protectionism”, raising concerns that a trade
war between Asia’s biggest economy and a new
western front is brewing.
EU tariffs on Chinese EVs to rise to 27-48%
Retaliatory measures from China likely
EU imports of China cars surge sevenfold
over three years
“The European side has disregarded facts and
WTO [World Trade Organization] rules, ignored
China’s repeated strong opposition, and ignored
the appeals and dissuasion of multiple EU
member state governments and industries,”
China’s Ministry of Commerce said in a
statement issued late on 12 June.
The European Commission on 12 June notified
Chinese automakers, including EV giant BYD,
Geely, and state-owned SAIC Motor Corp, that it
will impose additional provisional tariffs of
17% to 38% on imported Chinese EVs from around
4 July.
These will be applied to existing 10% tariffs
imposed on all Chinese EVs, with the final rate
determined by each carmaker’s level of
cooperation with EU’s anti-subsidy
investigation launched in September last year.
NEW FRONT FOR TIT-FOR-TAT TRADE
WAR
China’s commerce ministry has urged the EU to
“immediately correct its wrong practices” and
“properly handle trade frictions through
dialogue and consultation”.
The ministry said it will “resolutely take all
necessary measures to firmly defend the
legitimate rights and interests of Chinese
companies”.
“This move by the European side not only harms
the legitimate rights and interests of the
Chinese electric vehicle industry but will also
disrupt and distort the global automotive
industry chain and supply chain, including the
EU,” it said.
The EU’s move follows the US’ tariff hikes
announced last month on Chinese imports of
EVs, batteries and other materials, starting 1
August.
In 2018, then US President Donald Trump
initiated a trade war with China by imposing
tariffs on Chinese imports to address alleged
trade imbalances, intellectual property theft,
and unfair trade practices. China retaliated
with tariffs on US goods, escalating tensions
between the two biggest economies in the world.
While reviews by the US and EU on Chinese goods
were under way, Beijing launched in May an
anti-dumping
investigation into imported polyoxymethylene
(POM) copolymer, also known as
polyformaldehyde copolymer – a key material in
electronics and automotive manufacturing.
China’s commerce ministry alleged that the
plastic is being sold below market value,
harming domestic producers.
The probe, targeting imports from the US, EU,
Taiwan, and Japan, could last up to 18 months
and is seen as a direct response to their
recent trade barriers against Chinese goods.
In the case of Taiwan, China has also suspended tariff
concessions on 134 more products from the
island, including base oil, chemicals, and
chemical products, citing Taiwan’s supposed
violations of the Cross-Strait Economic
Cooperation Framework Agreement (ECFA) with the
mainland.
Meanwhile, Japan’s tightened export controls on
23 types of semiconductor manufacturing
equipment that took effect on July 2023 was
deemed in line with restrictions imposed by the
US and the Netherlands, potentially hindering
China’s access to advanced chipmaking
technology.
China may issue further retaliatory measures,
potentially impacting global supply chains and
escalating trade tensions with major economies
in the west.
The automotive industry is a major global
consumer of petrochemicals that contributes
more than one-third of the raw material costs
of an average vehicle.
The automotive sector drives demand for
chemicals such as polypropylene (PP), along
with nylon, polystyrene (PS), styrene butadiene
rubber (SBR), polyurethane (PU), methyl
methacrylate (MMA) and polymethyl methacrylate
(PMMA).
CHINA 2023 CAR EXPORTS TO EU
SURGE
China’s exports of automobiles to the EU have
surged over the past year, particularly in the
battery electric vehicle (BEV) segment,
according to Nomura Global Markets Research.
Cars produced in China accounted for 20% of all
BEV registrations in the EU during the first
two months of 2024, it said, citing data from
automotive business intelligence firm JATO
Dynamics.
An analysis of January-April 2024 sales figures
from China’s top three EV manufacturers in the
EU, however, suggests that their overall
presence in the region is still nascent, Nomura
noted.
In 2023, EU’s imports of Chinese EVs surged to
$11.5 billion, more than sevenfold increase
from $1.6 billion in 2020, according to think
thank Rhodium Group.
China accounted for 37% of EU’s total EV
imports last year, it said.
In the first quarter of 2024, about 40% of
China’s EV exports or 145,002 units went to
Europe, according to official customs data.
Focus article by Nurluqman Suratman
Thumbnail image: An electric car at a
charging station near the European Commission
building in Brussels, Belgium.
(Xinhua/Shutterstock)
Crude Oil13-Jun-2024
SINGAPORE (ICIS)–China’s consumer inflation
rate is expected to remain weak in the near
future on persistently weak domestic demand,
raising worries about the risk of deflation as
the nation’s economic recovery struggles to
gain traction.
This comes as the country’s consumer price
index (CPI) rose by a mere 0.3% year-on-year in
May, unchanged from April and well below the
government’s 3% target.
“Amid still-weak domestic demand, we expect CPI
inflation to stay slightly
above zero in the near term and producer price
index (PPI) inflation to be slightly less
negative on a low base,” Japan’s Nomura Global
Markets Research said in a note.
China’s headline inflation rate is projected to
remain positive but stay mild under 1% until
the third quarter of this year, said Ho Woei
Chen, an economist with Singapore-based UOB
Global Economics & Markets Research.
“The deflation in the fourth quarter of 2023
will provide a low base for CPI to rebound more
strongly in the last quarter of the year,” Ho
said.
UOB’s full-year forecast for China’s headline
inflation is at 0.7% for 2024, compared with
0.2% in 2023, “but current trajectory suggests
that the risk is to the downside”, she added.
Meanwhile, factory gate prices continued their
downward spiral, with the PPI falling for the
20th consecutive month in May.
The PPI declined by 1.4% year on year in May, a
slight improvement from the 2.5% drop in April.
“The pace of PPI deflation is expected to ease
but this had been slower than expected as oil
prices stayed muted and overcapacity in some
industries weighed on the prices of
manufactured goods,” Ho said.
“Increasing tariffs imposed on Chinese goods
may further delay the price recovery.”
The persistent low inflation is a stark
contrast to the high inflation plaguing Western
economies, further fueling fears of deflation
as China grapples with sluggish consumer
spending – a key obstacle to the country’s
uneven recovery from the pandemic.
While inflation is likely to remain low in the
second quarter, it should begin to pick up in
the second half of the year, Dutch banking and
financial information services provider ING
said in a note.
“Although inflation is set to pick up this year
as the drag from falling food prices fades, it
is anticipated to remain well below target amid
slowing consumption and weak demand pressures,”
the World Bank said in its June Global Economic
Prospects report released on 11 June.
“Producer price pressures are also set to
remain weak in the context of subdued activity
and softening prices for commodities,
particularly energy and metals.”
China’s economic growth is projected to ease to
4.8% in 2024, down from 5.2 percent in 2023, as
activity is expected to soften in the latter
half of this year, according to World Bank
estimates.
While a potential uptick in goods exports and
industrial activity, bolstered by a global
trade recovery, is anticipated, this will
likely be counterbalanced by weaker domestic
consumption, it added.
“We expect domestic and external demand to
continue diverging over the near term, as the
property fallout sustains and the economy
rebalances itself,” Nomura said.
“Export growth is likely to remain resilient in
the near term, thanks to a low base, the
resilient US economy, the global tech upswing,
the price advantage of Chinese products and
some front-loading ahead of scheduled or
threatened tariff hikes.”
Focus article by Nurluqman
Suratman
Ethylene12-Jun-2024
HOUSTON (ICIS)–The US labor market has cooled
from its overheated conditions two years ago,
but the Federal Reserve still wants more signs
that inflation is approaching its goal of 2%
before it starts lowering its benchmark
interest rate, the chairman of the central bank
said on Wednesday.
Earlier, the Federal Reserve voted to maintain
interest rates at 5.25-5.5%. It also lowered
its forecast for future rate cuts to one
quarter-point decline, down from three in its
last forecast in March.
The Fed also slightly increased its forecast
for inflation.
The US central bank has a dual mandate of
promoting maximum employment and price
stability.
Earlier in the decade, the nation’s ultra-tight
labor market contributed to wage inflation.
The labor market remains strong, but it is
gradually cooling and rebalancing, said Jerome
Powell, Fed chairman. He made his comments
during a press conference following the Fed’s
interest rate announcement.
Job openings remain high and exceed the number
of unemployed people. Wages are running above a
sustainable path, Powell said.
Still, those job openings have fallen from even
higher levels, he said. Increased immigration
and higher rates of labor participation have
helped restore balance in the job market.
Powell said the current US labor market is
comparable to the years immediately before the
COVID-19 pandemic, when the unemployment rate
reached multidecade lows.
In addition to the cooling labor market, Powell
highlighted the May consumer price index (CPI),
a measure of inflation
that was published earlier on Wednesday.
Month on month, the CPI was unchanged.
“We welcome today’s reading and hope for more
like that,” Powell said.
The Fed itself noted that inflation has made
modest progress in recent months in approaching
its 2% target.
Still, Powell stressed that the Federal Reserve
needs more signs that inflation is under
control before it will start loosening monetary
policy and lowering rates.
In fact, when data like the CPI is released on
the same day that the Fed publishes its
economic forecasts, most members do not update
their projections, Powell said. “You don’t want
to be too motivated by a single data point.”
The need for more data helps explain why the
Fed increased its forecast for 2024 inflation
while noting modest progress towards meeting
the 2% goal.
That progress took place in recent months.
Progress needs to continue before the Fed is
confident that it can start lowering interest
rates without triggering an even faster rate of
inflation.
Speciality Chemicals12-Jun-2024
LONDON (ICIS)–Germany’s auto industry is
opposed to tariffs on electric vehicles (EVs)
from China, trade group German Association of
the Automotive Industry said on Wednesday.
The group, known as VDA in its German acronym,
was reacting to a European Commission proposal of tariffs
on battery electric vehicles (BEVs) from China
after an investigation concluded they benefited
from unfair subsidies.
VDA said the proposed tariffs were not the
right tool to strengthen the competitiveness of
Europe’s auto industry.
Instead, the tariffs would further escalate the
risk of trade conflicts, to the detriment of
Germany’s automakers, it said.
“The fact is that we need China to solve global
problems,” in particularly in dealing with the
climate crisis, it said.
China played a crucial role in a successful
transformation towards electromobility and
digitalization, and a trade conflict would
jeopardize this transformation, the group said.
However, VDA added that the extent of the
subsidies China grants EV makers was “a
challenge” for Europe and it called on China to
make “constructive proposals” to settle the
dispute.
Germany ranks
first in Europe and second after China
globally in terms of EV production, and the
bulk of German EV production goes into export,
according to VDA data released this week.
Industry observers have noted that
Germany-based EV production relies on imports
of materials and batteries from China.
The US last month announced tariff
hikes on Chinese imports of EVs, batteries and
other materials, starting 1 August.
In related news, the business climate in
Germany’s automotive industry
deteriorated in May amid fears about
impacts on German automakers from the conflict
with China, according to a recent survey by
Munich-based ifo research.
The automotive industry is a major global
consumer of petrochemicals that contributes
more than one-third of the raw material costs
of an average vehicle.
The automotive sector drives demand for
chemicals such as polypropylene (PP), along
with nylon, polystyrene (PS), styrene butadiene
rubber (SBR), polyurethane (PU), methyl
methacrylate (MMA) and polymethyl methacrylate
(PMMA).
Additional reporting by Graeme
Paterson
Please also visit the ICIS
topic page Automotive: Impact on chemicals
Thumbnail photo shows a Volkswagen EV;
photo source: Volkswagen
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