SINGAPORE (ICIS)–Asia’s journey towards a circular plastic economy is gaining momentum, but the region’s diverse waste management practices and fragmented regulations present challenges to realizing this vision. Harmonizing policies crucial for circularity Demand for recyclates driven by regulations Regional disparities impact global sustainability With a steady rise of plastic consumption in Asia, countries in the region have taken steps to promote the circular economy, including implementation of the Extended Producer Responsibility (EPR) policy, waste separation requirements and bans of single-use plastics, said Bala Ramani, director of sustainability consulting and Asia strategy advisor at ICIS. EPR shifts the financial and/or operational burden of post-consumer product management from governments to producers. Japan, South Korea, Taiwan, India, the Philippines, and Singapore have adopted the policy. However, the scope and depth of circularity strategies, which require legislation, currently vary widely across Asian countries because the region does not have an overarching administrative body like the EU in Europe to unify countries around sustainability goals. “As the economic and supply chain integration amongst the countries in Asia deepens, there is also a need for regional integration of circular economy policies,” Ramani said. Plastic circularity will be a core topic of the Asia Pacific Industry Conference (APIC) in Seoul, South Korea on 30-31 May, whose theme is “Trailblazing the path in a sustainable era.” REGIONAL DISPARITY While Japan, Taiwan and South Korea have been at the forefront of efficient waste resource management, countries in south and southeast Asia are still working toward setting up a well-managed waste management and recycling infrastructure, Ramani noted. While the “informal sector” plays a significant role in solid waste management in southeast Asia and parts of the Indian subcontinent, northeast Asian countries have established robust systems, reducing their need for such informal contributions, according to ICIS Asia Pacific plastic recycling analyst Joshua Tan. Nine out of the top 20 countries globally with the highest percentages of mismanaged plastic waste are in Asia, Tan noted, and this is particularly evident in coastal populations residing within 50 kilometres of the coast. The same nine countries are identified as major contributors to marine plastics pollution through rivers. Tan said that these countries generate some 844,000 tonnes of plastic waste annually, which is more than 20 times the capacity of a typical recycled polyethylene terephthalate (R-PET) recycling plant. “For Asia to achieve plastic circularity as a region, it will be imperative for the countries to harmonize policies, develop regional standards (design for recycling, industrial standards for recyclates, mandatory recycled content, trade restrictions etc) and facilitate regional cooperation,” Ramani said. CIRCULAR PLASTICS OFFER COMPETITIVE ADVANTAGE   Plastics are essential to sustainability across various sectors, from packaging and automotive to agriculture and construction, making effective plastic waste management and recycling crucial for their future viability, Ramani said. “As the chemical sector goes through this period of demand uncertainty and overcapacity especially for fossil-derived products such as virgin plastics, plastic recycling and circularity offers a means of competitive advantage and higher value-addition in the future to ultimately distinguish winners from losers.” While mechanical recycling is expected to play a significant role in addressing plastic waste in the region, chemical recycling will be necessary to complement these efforts, particularly due to the diverse waste management systems across different countries in the region, Ramani said. Mechanical recycling dominates the Asia-Pacific market with more than 18 million tonnes/year of installed capacity, dwarfing chemical recycling’s nascent 700,000 tonne/year capacity, according to Tan. And while plastic recyclates have become a global commodity, their trade is marked by a stark contrast with virgin plastic material, Ramani said, noting that while demand for recyclates is driven by regulations and brand commitments in certain regions, supply of consistent, high-quality material struggles to keep pace. Recyclates are secondary raw materials derived from either post-consumer household waste (PCR) or post-industrial waste (PIR), with PIR being easier to recycle due to less contamination. “This results in regional imbalances across the value chain from plastic waste collection and sorting to recovery/recycling and ultimately the end-use of recyclates, leading to supply-demand imbalances with prices ultimately driving movement of materials from one region to another.” These regional disparities in the plastics recycling value chain have not gone unnoticed, with significant implications for global sustainability efforts. In response to this challenge, Europe’s Antwerp Declaration, launched in February this year, sets ambitious goals for the chemical industry to adapt to rapid expansion of renewable energy, strengthen local supply chains, and shift towards sustainable products. The declaration – now signed by close to 1,200 organizations across 25 sectors – calls for urgent action from European governments to boost industry competitiveness and sustainability, requiring a massive increase in electricity production and a sixfold increase in industrial investments to achieve climate neutrality by 2050. “The recent launch of the Antwerp Declaration by the European chemicals and other industries is a further sign of the more local-for-local world we are moving towards,” said ICIS senior consultant John Richardson. “Local-for-local” supply chains involve chemicals as they are the building blocks for all the manufacturing and service supply chains, he noted. “Europe must prioritize new renewable energy projects and make it easy to install the necessary infrastructure… ‘Local-for-local’ domestic supply chains are critical for [supply] security,” Richardson said. “Governments need to lead in boosting demand for low carbon and circular products as Europe needs a strong single market for bio feedstocks, plastic waste, recycled materials and electricity,” he added. Focus article by Nurluqman Suratman Click here to view the ICIS Recycled Plastics Focus topic page. Thumbnail image: Plastic bottles made from polyethylene terephthalate (PET) are widely used for soft drinks and bottled water. PET can be fully recycled. (Source: Helmut Meyer Zur Capellen/imageBROKER/Shutterstock)

SINGAPORE (ICIS)–Ample propylene (C3) supply in Asia and new downstream polypropylene (PP) capacities in China are expected to weigh on discussions in southeast Asia over the coming months. Asia C3 to lengthen after propane dehydrogenation (PDH) units restart in China; SE Asia volumes China PP exports to weigh on SE Asia discussions Asia PP prices to come under pressure in June-July In this podcast, ICIS editors Julia Tan, Jackie Wong and Lucy Shuai discuss current trends in Asia’s propylene and PP markets, and what we can expect going forward. (This podcast first ran on 16 May.) Visit us at Booth 13, Grand Ballroom Foyer of the Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.

SINGAPORE (ICIS)–Northeast Asia remained in oversupply of ethylene (C2), and downstream margins remained weak. Capacity growth in China is expected to slow down, while in southeast Asia, the market is likely to remain under pressure in H2 2024. NE Asia players on lookout for H2 arrivals Margins at stand-alone derivative units remain weak Weak NE Asia prices, open US arbitrage window weigh on SE Asia; downstream demand tepid In this podcast, ICIS markets editor Josh Quah and analysts Amy Yu and Shariene Goh discuss trends in the Asian ethylene market and what we can expect in the near future. Visit us at Booth 13, Grand Ballroom Foyer at the Grand InterContinental Seoul Parnas in South Korea. Book a meeting with ICIS here.

LONDON ICIS (ICIS)–The soda ash market narrative reminds one of Dickens’ A tale of two cities: “It was the best of times, it was the worst of times […]we had everything before us, we had nothing before us.” From the vertiginous highs of the post-pandemic boom to the slumbers brought in by high borrowing costs, soda ash players are navigating rougher seas with lows elongated compared to typical cyclical troughs and highs that had exhausted anyone involved in selling the molecule for over two years. Likewise, the promises of a boom in consumption via the lithium carbonate to support lithium-ion battery-run electric vehicles is also tempered by the idea that global oversupply could through the molecule back into the depressed mode and low margin era it has known for decades. Demand from the all-important flat glass applications servicing the construction and auto industries have stabilized after a year-long slow decline and is likely to remain slower in H2. Regionalism is at all-time highs, and supply from China is once again in the line of fire. ICIS soda ash editors Anne-Sophie Briant-Vaghela from Europe, Helen Lee from Asia, and Bill Bowen from the US talk about the changing market conditions as China switches from net exporter to net importer in Q1-Q2. Edited by Meeta Ramnani

SAO PAULO (ICIS)–Brazil’s importers of chemicals are lobbying the cabinet not to implement the hikes to import tariffs proposed by the country’s producers, represented by trade group Abiquim. Brazil’s Chamber of Foreign Commerce (Camex), a body under the government’s umbrella, concluded on 30 April a public consultation about import tariffs on chemicals. In it, Abiquim presented more than 60 proposals to hike import tariffs, while individual companies presented dozens more. In total, the proposals contemplate hikes in import tariffs in more than 100 products, most of them to be raised from 12.6% to 20%. Some proposals, however, aim to raise some import tariffs from 9% to 35%. A decision by Camex is expected in coming weeks. IMPORTERS MOBILIZEA key actor lobbying against the tariff hikes is Brazil’s plastics transformers trade group Abiplast, who benefit from imports into the country. Abiquim often describes those imports as coming into Brazil at “depredatory prices” which are putting some national production chains at risk due to unfair competition. China’s overcapacities continue casting a shadow in the global chemical industry, and Latin America’s historical trade deficit in the sector makes the region the perfect ground for Chinese producers to send their product, at times below costs of production. On the other hand, Abiplast and consumer groups have said a hike in import tariffs would only increase prices for consumers and industrial players alike and would only benefit Brazil’s chemicals producers. “There should be no increase in import tariffs as this is not a viable solution at this moment, nor at any time in the future. An increase would result in direct increases in prices in the Brazilian market,” said to ICIS a spokesperson for the trade group. Earlier in May, sources in Brazil’s chemicals sector said to ICIS it would be unwise to hike import tariffs right now, as the country reels from severe flooding in Rio Grande do Sul, which has a strong plastics sector, and when more imports may be needed. The floods have brought the state’s industrial fabric to a standstill, although the petrochemicals hub of Triunfo, near Porto Alegre, restarted in mid-May albeit at a slow pace as infrastructure in the state is still heavily disrupted. Abiquim, however, remains unrelentless in its request for fast action, arguing that the restart at Triunfo, with Brazil’s polymers major Braskem leading the way, will be enough to guarantee supply, without the need for more imports. Braskem has a commanding voice in Abiquim. “We don’t agree [with any pause in the hike, if finally approved, because of the floods’ effect]. Braskem resumed operations last week and, furthermore, the high level of predatory imports [in past months] mean that resin producing companies had sufficient stocks to supply the market,” said to ICIS a spokesperson at the trade group. Abiquim is hopeful it will gain the day. His lobbying to the government has gone as high as President Luiz Inacio Lula da Silva, with whom the trade group and a few chemicals producers met last week in Brasilia to make their case for the import tariffs hike. Lula’s center-left cabinet has been since the start more friendly towards chemicals producers than his predecessor Jair Bolsonaro, who favored a more free-market line. In 2023, the cabinet hiked import tariffs for several polymers twice, and reintroduced a tax break for chemicals called REIQ. Lula’s Workers’ Party (PT) main constituency is industrial workers, to whom the President promised during the electoral campaign to create more and better paid industrial jobs. Propping up domestic chemicals production would fall within that line of action. However, after Lula’s meeting with Abiquim, the backlash followed. According to a report by Brazilian daily Valor, Abiplast and 15 other trade groups have requested their own meeting with the President, hoping to stop the proposed increases in import tariffs. Among others, the groups opposing the hike include those representing sectors such as personal care, cleaning products, rubber articles, non-woven fabrics, paints, mattresses, toys, electronics, pharmaceutical products, food, polyolefin fibers, fabrics and clothing, footwear and civil construction. The groups said they were aiming to show to the President the “importance of tariff balance in maintaining industrial activities” in Brazil. BIG (AND CLOSED) CHEMICALS SECTORBrazil’s chemicals demand has always surpassed domestic supply, and around half of the country’s needs are covered by imports. That has been the case in the past few years. What has made the past year extraordinary is China dumping its product in Latin America, depressing prices – and margins for local producers. The fact that a 215-million market such as Brazil has not developed a bigger chemicals industry is surprising. Moreover, the country produces mostly commodity chemicals, which are to suffer from global downturns more than the higher-margin specialized grades. A source at Brazil’s chemicals industry, who deals with Braskem on a regular basis, was not impressed with Abiquim or Braskem’s strong stance in favor of higher tariffs. The source said it preferred to remain anonymous because “creating animosity by going against” the company’s position could put its business relationship at risk. “This [request for higher tariffs] is the cry of business mediocrity, which sees import restrictions as the solution to its productivity and technology problems. A country must not be built on protectionism but on investment in technology, productive capacity, creativity, and scale,” said the source. “Brazil’s political class has never prioritized competition as a source of development. Businessmen want to be alone in their businesses and the Federal Government wants to keep only Petrobras [in the crude oil sector] as a form of political financing.” Petrobras is the state-owned energy major, which holds a commanding position in the market despite other foreign players having some licenses to explore for and produce crude oil. The source added that when import tariffs are hiked generally, for all foreign potential exporters to Brazil, that is very different to potential anti-dumping duties (ADDs) imposed against a certain country – in this case, potentially China. “If the request was about ADDs on China’s product, this would be reasonable. But Abiquim and Braskem’s request for hikes in import tariffs will affect all imports and this is not correct … We need more competition, not less. With more competition, some companies would have to close their doors indeed,” it said. “Other companies, however, those which are more efficient, intelligent and audacious, would grow. Competition is always good and bringing foreign companies to compete in the local market would be interesting. Whenever and invariably private companies need the government to survive, there is a decrease in productivity and investments in new technologies.” However, the government’s ears are so open to chemicals producers’ demands that, on top of two import tariffs hikes in 2023 and the reintroduction of REIQ, earlier this year the cabinet announced the imposition of ADDs on US’ polypropylene (PP). The measure was taken even though US PP imports into Brazil only represented 5% of the total in 2023 – 26,000 tonnes out of nearly 510,000 tonnes. Braskem is Brazil’s sole producer of PP as well as polyethylene (PE), the two mostly widely used polymers. A second source in the Brazilian chemicals distribution sector said the import tariff hikes could benefit all parts of the chain – apart from producers, distributors and transformers as well – but only if all players rise prices in line with the increase in the import tariffs. “If the tariffs are finally hiked, it could represent a problem for us at first if Braskem lowers its prices, for instance – my product acquired pre-import tariff hike would be more expensive and I would have difficulty placing it in the market,” said the distribution source. “If Braskem does not lower its prices immediately, I would be able to maintain my prices. But if prices drop, I would be facing higher costs and lower selling prices: my margins would be greatly squeezed.” Focus article by Jonathan Lopez Additional reporting by Bruno Menini

HOUSTON (ICIS)–Energy Transfer plans to acquire WTG Midstream for $3.25 billion, the latest deal in an ongoing consolidation of the industry that provides feedstocks to chemical plants. Energy Transfer is acquiring WTG from affiliates of Stonepeak, the Davis Estate and Diamondback Energy, it said on Tuesday. The deal should close in Q3 2024. The deal includes eight natural gas processing plants that have a total capacity of 1.3 billion cubic feet/day. Two additional plants are under construction that will add another 400 million cubic feet/day of capacity, with the first starting up in Q3 2024 and the second in Q3 2025. Natural gas processing plants extract ethane and other natural gas liquids (NGLs) from raw gas produced from oil and gas wells. The NGLs are then shipped to fractionators which extract the individual products. Ethane and other NGLs are the main feedstock that US crackers use to make ethylene. The deal also includes a 20% stake in the Belvieu Alternative Natural Gas Liquid (BANGL) pipeline. The BANGL will stretch for 425 miles (683 km) and will have an initial capacity of 125,000 barrels/day, expandable to more than 300,000 barrels/day. It will connect the Permian basin to the fractionation hub in Sweeny, Texas, on the Gulf Coast. The pipeline could be completed in H1 2025. Other partners in the pipeline include MPLX and Rattler Midstream, a company formed by Diamondback Energy. SURGE IN MIDSTREAM M&AEnergy Transfer’s acquisition is the latest in a surge of deals in the midstream industry. The following lists some of the more recent mergers and acquisitions (M&A). Phillips 66 agreed to buy Pinnacle Midland Parent from Energy Spectrum Capital for $550 million ONEOK is buying NGL pipelines from Easton Energy for $280 million EQT is acquiring Equitrans Midstream in a deal that the Wall Street Journal valued at $5.5 billion Energy Transfer completed its $7.1 billion merger with Crestwood Equity Partners in November 2023 ONEOK completed its $18.8 billion acquisition of Magellan Midstream Partners in September 2023 Phillips 66 completed a deal for additional units of DCP Midstream, raising its stake to 86.8% The deals come amid a flurry of new projects being built by midstream companies, which includes processing plants, pipelines, fractionators and terminals. When completed, the infrastructure will provide feedstock to petrochemical plants in the US and the world. Thumbnail shows pipeline. Image by Global Warming Images/REX Shutterstock

LONDON (ICIS)–Expectations OPEC+ will extend production cuts at a meeting on 2 June could see benchmark crude prices rise this week. The beginning of the US driving season is likely to also provide reprieve to recent demand concerns. ICIS experts outline five factors that could drive crude prices in week 22.

BARCELONA (ICIS)–Chemical distributors are seeing signs of a sequential improvement in demand, but increasing geopolitical volatility threatens any recovery, according to the head of trade group Fecc. Sequential improvement in demand, destocking winds down Red Sea disruption highlights continuing fragility of supply chains Geopolitics creates growing instability and volatility Europe chemicals need political support Permitting needs to speed up to enable low carbon energy transfer South Korea chemicals under intense pressure to consolidate Click here to download the 2024 ICIS Top 100 Chemical Distributors. In this Think Tank podcast, Will Beacham interviews Dorothee Arns, Director General of Fecc (European Association of Chemical Distributors), ICIS Senior Consultant Asia John Richardson and Paul Hodges, chairman of New Normal Consulting. 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.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at how chemical prices are starting to slide in Asia and Europe 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. Paul Hodges is the chairman of consultants New Normal Consulting.