SAO PAULO (ICIS)–Latin America’s take-up of electric vehicles (EVs) has started to gain momentum, said the International Energy Agency (IEA) this week, with Chinese producers drawing customers with sharply lower prices than western, established brands. Globally, electric car sales stood at 14 million in 2023. The IEA predicts this could reach around 17 million in 2024, more than one in five cars sold worldwide. In the IEA words, these figures are already showing the update in EVs is “shifting from early adopters to the mass market.” Comparatively, Latin America’s numbers are still very low, however, with EV sales in 2023 at 90,000 units, according to the IEA’s Global EV Outlook 2024, its annual report on the industry. In Brazil, Latin America’s largest economy with 215 million people, sales stood at 50,000 units in 2023, which tripled 2022 sales but still represented just 3% of the market. In Mexico, a 130-million-strong country, EV sales in 2023 stood at 15,000, up 80% year on year but still only a market share of just over 1%. Elon Musk’s Tesla reported on Wednesday that Q1 sales and earnings had fallen fell due to increased competition from hybrid models. Meanwhile, China’s EV market has grown exponentially in just a decade as the state helped to ensure firms could compete in favourable conditions. The government took the decision to strongly develop its EV sector, with billions of dollars spent in subsidies over the last decade and a half, and now western players are playing catch up. BRAZIL ETHANOL EXCEPTIONAs well as Europe and the US, another key automotive market for EVs was Brazil. There, however, producers at least had a green fuel to justify their inaction: ethanol, which since the 1970s started to transform Brazil’s transport emissions landscape, although at the time the decision was mostly taken to avoid oil shocks the world had just witnessed. By the 2010s, when the key Paris Accord and successive upgrades to it were agreed, Brazil had already achieved some of the targets for transport emissions reductions. The country’s growing role as one of the world’s breadbaskets and ethanol-powered cars are, of course, related. Transport is going electric, however, and there are some attempts from western established players to start closing Brazil’s gap with the rest of the world – as well as the Chinese producers’ presence. “Growth in Brazil was underpinned by the entry of Chinese carmakers, such as BYD, Great Wall, and Chery, [whose models] immediately ranked among the best-selling models in 2023. Road transport electrification in Brazil could bring significant climate benefits given the largely low-emissions power mix, as well as reducing local air pollution,” said the IEA. “Today, biofuels are important alternative fuels available at competitive cost and aligned with the existing refuelling infrastructure. Brazil remains the world’s largest producer of sugar cane, and its agribusiness represents about one-fourth of GDP.” The Brazilian government approved at the end of 2023 the so-called Green Mobility and Innovation Programme, which provides tax incentives for companies to develop and manufacture low-emissions road transport technology, with nearly Brazilian reais (R) 19.0 billion ($4.0 billion) to be deployed up to 2028. Several major automotive producers do commercialise hybrid ethanol-electric models, but all-electric models have been more elusive. In comes China, again. BYD said earlier this year it plans to invest $600 million in a new plant in Brazil, its first outside Asia, aiming to produce 150,000 units per year. General Motors, long established in Brazil, also said around the same time it was to invest $1.4 billion up to 2028 at its Brazil facilities to implement a “complete renewal” of its vehicle portfolio, focusing on EVs. Stellantis – the company resulting from the merger of Italian-American conglomerate Fiat Chrysler Automobiles and France’s PSA Group – said recently it would invest €5.6 billion up to 2030 in South America, with most of the funds channelled to its Brazilian operations. These investments, overall, have given the beleaguered Brazilian automotive sector the impetus to potentially recover part of its old glory. Just a decade ago, Brazil produced well over 3 million cars per year. In 2023, it produced 2.3 million. But Chinese producers’ strong entry into Brazil’s market – as well as Mexico’s – could have lasting consequences for consumption patterns. Earlier in April, a source at a chemicals producer in Brazil, for whom the established producers are a key customer, conceded with some apprehension it had just purchased a China-made car. “Chinese brands are newcomers and as such they are disrupting the market with lower prices. I paid for my electric car around R150,000 [$29,200], but some of the established brands are selling their EV models for well over R200,000,” the source said. While inaccessible for most Brazilians, where the minimum monthly wage stands at R1412 ($275), those who can afford SUVs are increasingly turning their eyes to Chinese brands. “They are good cars, and the prices are just so competitive – the choice for me was clear,” the source concluded. According to automotive publications, the cheapest EV car sold in Brazil, at R120,000, is manufactured by Chery Automobile, a state-owned Chinese manufacturer which is the third largest in its home market. CHINA MOVES INTO MEXICOChina’s approach to subsidising its EV industry is causing concern, especially in the US, now also in a race to prop up its own EV sector. Twenty Chinese EV companies have set up operations in Mexico, which is part of the tariff-free North American trade deal USCMA between Mexico, the US, and Canada. Washington fears Mexico could act as the gate of entry into the USMCA free trade zone after the US imposed hefty tariffs in most EV-related Chinese goods, precisely because of the generous state support they enjoy at home. Last week, Mexican media reported how the US had put pressure on Mexico to withdraw subsidies or any other Federal or state support for Chinese EV manufacturers; Mexican states are in a race to attract foreign direct investment (FID) in manufacturing, tapping into the nearshoring trend. Also last week, the Mexican Association of Automotive Distributors (AMDA) showed its concerns about Chinese firms “invading” the country’s automotive sector, according to a report in ABC Noticias. Since 2020, Chinese-manufactured products and brands have gained traction among Mexican consumers, capturing 8.2% of sales during the first quarter of 2024. Guillermo Rosales Zarate, AMDA’s president, said this influx had played a pivotal role in the industry’s recovery following the challenges posed by the Covid-19 pandemic, but the polite words stopped there. AMDA published a report, compiled with official data from Mexico’s statistical office Inegi, which showed the sharp increase in China-made automotive parts and vehicles now present in the market. “In this first quarter, the sale of products imported from China, manufactured in China and imported into the Mexican market, and sold through the various participating brands, already represents 19.2%,” said Cristina Vázquez Ruiz, coordinator of economic studies at AMDA. “If we extract Chinese brands from this percentage, this would represent 8.2% [of car sales in Mexico].” The IEA in its annual report stayed away from this controversy. The IEA is a lobby group which advocates for greener technologies and decarbonisation, as most of its key member countries – and financiers – lack the traditional energy sources of their own: the green transition for most of them is a simply a strategic must do. “Given its proximity to the US, Mexico’s automotive market is already well integrated with North American partners, and benefits from advantageous trade agreements, large existing manufacturing capacity, and eligibility for subsidies under the IRA [US regulation propping up green investments],” said the IEA. “As a result, local EV supply chains are developing quickly, with expectations that this will spill over into domestic markets. Tesla, Ford, Stellantis, BMW, GM, Volkswagen (VW), and Audi have all either started manufacturing or announced plans to manufacture EVs in Mexico.” Elsewhere in Latin America, EVs update has been rather poor. In Colombia, a country of 50 million, sales in 2023 stood at 6,000 units. In Costa Rica, with a population of five million, sales stood at 5,000 units. The IEA did not have date for other countries in the region. ELECTRIC BUSES STRONGERUptake of electric buses in Latin America, especially in urban areas where much of the investments required come from public or semi-public entities, has been stronger. City buses are easier to electrify than long-distance coaches thanks to their relatively fixed driving patterns and lower daily travel distances. Once again, Chinese manufacturers are exporting “large volumes” of electric buses, accounting for over 85% of electric city bus deployments in Latin America, said the IEA. “Cities across Latin America, such as Bogota and Santiago, have deployed nearly 6,500 electric buses to date. There are also longer-standing programmes, such as the Zero Emission Bus Rapid-deployment Accelerator partnership that was launched in 2019 to accelerate the deployment of zero-emission buses in major Latin American cities,” it added. “Buenos Aires is targeting a 50% zero emission bus fleet by 2030, and a wider study of 32 Latin American cities expects that 25,000 electric buses will be deployed by 2030, and 55,000 by 2050.” Globally, almost 50,000 electric buses were sold in 2023, equating to 3% of total bus sales and bringing the global stock to approximately 635,000, concluded the IEA. Front page picture: EV charging points. Source: Shutterstock Insight by Jonathan Lopez

MUMBAI (ICIS)–India’s Bhansali Engineering Polymers Ltd (BEPL) plans to nearly triple its acrylonitrile butadiene styrene (ABS) capacity at Abu Road in the northwestern Rajasthan state to 200,000 tonnes/year by March 2026. The plant’s current capacity is 70,000 tonnes/year. The company has determined that a bigger expansion than initially planned is possible after awarding work on the expansion to Japan’s Toyo Engineering, it said in a filing to the Bombay Stock Exchange (BSE) on 20 April. In January 2024, BSEL had proposed a capacity expansion to 145,000 tonnes/year. “After [a] detailed analysis [by Toyo Engineering] it was concluded that overall ABS capacity of 200,000 tonnes/year can be achieved and will be a better option compared to the earlier proposal,” BEPL said. The expansion project will be funded through internal accruals, it said, adding that cost of the expansion project will be finalised by June.

TORONTO (ICIS)–Following the conclusion of a consultation period, Canada’s federal government has published a formal notice in the Canada Gazette for its planned Federal Plastics Registry. The registry will require plastic resin manufacturers, producers of plastic products and service providers to annually report on the amounts and types of plastic they put out in the market, and where the plastic ends up. Environment minister Steven Guilbeault said at a webcast press event on Monday that the registry would create an inventory of plastics data, with the objective of providing transparency about the production, distribution, sale, use and disposal of plastics in Canada. Industry knew what kind of plastics is being produced, to whom it is sold, and how it is used, the minister said. The registry, in turn, would put this information into one place and make it accessible to the public, researchers and non-governmental organizations, enabling them to track plastics production and plastics use, he said. The registry would have a similar role in fighting plastic pollution as the annual greenhouse gas (GHG) inventory reports the government uses in combatting emissions, he said, adding that without this information it was hard to tackle these challenges. The first phase of reporting to the plastics registry’s IT system is due to begin on 29 September 2025. UN PLASTICS POLLUTION TREATYIn related news, delegates from more than 170 countries on Tuesday gathered in Ottawa for the fourth session of the UN’s Intergovernmental Negotiating Committee on Plastic Pollution (INC-4) to develop an international legally binding treaty on containing plastic pollution. The event runs from 23-29 April. German chemical producers’ trade group VCI and Chemistry Industry Association of Canada (CIAC) said they are supporting the fight against plastics pollution. VCI is looking to INC-4 and a subsequent final INC-5 to be held in South Korea in November for a global commitment to a circular economy, in which plastic products are reused or recycled, rather than ending up as waste in the environment, it said. At the same time, VCI stressed the benefits of plastics. An across-the-board “demonization” of plastics would end up harming the climate and the environment, rather than helping it, said VCI director general Wolfgang Grosse Entrup. “A sustainable future requires plastics,” he said and pointed, as examples, to plastics used in wind turbines, electric vehicles (EV) and packaging – applications in which plastics help avoid carbon dioxide (CO2) emissions, he said. Likewise, CIAC vice president of policy Isabelle Des Chenes told media in a webcast event that plastics, for example, help preserve food. “There’s a lot of plastic and there’s a lot of plastic for a reason,” she added. Additional reporting by Tom Brown Thumbnail photo of environment minister Steven Guilbeault; photo source: government of Canada

BARCELONA (ICIS)–Recent cracker closure announcements in Europe and Japan may be the first of many as the industry grapples with chronic overcapacity driven by China and the Middle East. Three cracker closure announcements in Europe, Japan since late March 1.4 million tonnes of capacity affected, but up to 20 million may be needed Europe, Japan, South Korea suffer from higher costs Negative chemicals demand growth possible in China China still dominates global chemical markets Opportunity to pivot sites to low carbon, local markets In this Think Tank podcast, Will Beacham interviews ICIS Insight Editor Nigel Davis, 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)–Eurozone private sector activity continued to thaw in April, moving further into growth territory as a resurgent service sector offset a manufacturing industry sinking deeper into contraction. North-south divide eases as Germany, France condition improve Manufacturing sector weakens in eurozone, UK Input cost inflation likely to pressure European Central Bank The eurozone composite purchasing managers’ index (PMI) for the month firmed to 51.4, a substantial increase from 50.3 in March and the highest level in nearly a year, as the bloc continued to gradually lift out of a protracted downturn. A PMI score of above 50.0 signifies growth. The north-south divide that has characterised recent months, with Mediterranean nations firming while Germany and France remained mired in contraction, eased during the month, with more-broad-based momentum among key economies. Germany returned to growth during the month, while France came close to stabilising, according to PMI data provider S&P Global. Momentum also continued to build for the UK economy, which hit an 11-month high of 54.0, despite the manufacturing sector slipping back into recessionary territory at 49.1, with momentum also sinking for producers in the eurozone. At 45.6, the eurozone manufacturing sector PMI reading represented a four-month low and the 13th consecutive month of contraction, although the industry outlook was buoyed by signals of firmer demand driven by the global inventory cycle. Price pressures intensified slightly during the month as average input costs across the goods and services sector saw the fastest combined increase over the past year after cooling in March. Despite manufacturing sector input pricing remaining on contraction footing, the decline was the smallest in 14 months. Higher cost and sales price inflation is likely to be noted by the European Central Bank’s monetary policy committee, according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which helps to assemble the eurozone PMI dat. Odds are still strong for the first interest rate cuts to fall in  June, he added, but the price increases are likely to present a stronger challenge to the decision, and potentially slow the cadence of additional reductions. “The PMI figures are poised to test the ECB’s willingness to cut interest rates in June. Accelerated increases in input costs, likely driven not only by higher oil prices but also, more concerningly, by higher wages, are a cause for scrutiny,” he said. “Concurrently, service sector companies have raised their prices at a faster rate than in March, fuelling expectations that services inflation will persist. Despite these factors, we expect the ECB to cut rates in June. However, we… expect a more cautious approach,” he added. Consultancy Oxford Economics also expects the first rate cut to come in June despite the growing evidence of stronger upward pressure on inflation. “The increase in output prices remains above its long-term average, driven by the services sector, but we do not think sticky services prices will prevent the ECB from cutting rates in June,” said Oxford senior economist Leo Barincou. Despite the ongoing disruption in the Red Sea, supply chains continued to tighten, with manufacturing supplier delivery times falling for the third consecutive month as a result of fewer shipping delays. A steep reduction in input purchases by eurozone manufacturers also eased pressure on logistics. Early second-quarter conditions point so far to a 0.3% expansion in eurozone GDP and a 0.4% uptick in for the UK compared to the first three months of the year, according to the data. Focus article by Tom Brown. Thumbnail photo: A statue of a bull outside the Amsterdam Stock Exchange, Netherlands (Source: Hollandse Hoogte/Shutterstock)

LONDON (ICIS)–The urea market is expected to remain subdued as Chinese exports resume over the next few months and given Iranian producers eagerness to move product before any fresh sanctions are imposed. China exports to resume but challenges remain Iran offers over 200,000 tonnes for May India’s return unlikely before June In this podcast, ICIS senior editors Sylvia Traganida and Deepika Thapliyal discuss the global supply and demand situation for urea and ammonia, and the future developments for both products.

SINGAPORE (ICIS)–Saudi Aramco continues its quest for downstream petrochemical investments in the world’s second-biggest economy, adding Hengli Petrochemical in a list of target companies in which the global energy giant intends to acquire a strategic stake. The acquisitions in China are in line with Aramco’s Vision 2030 of expanding its downstream business. Aramco is currently in discussion to acquire a 10% stake in Hengli Petrochemical as the companies signed a memorandum of understanding (MOU) on 22 April covering supply of crude and raw material, product sales and technology licensing. Hengli Petrochemical owns and operates a refinery and petrochemical complex at Liaoning province with 400,000 bbl/day of refining and 1.5 million tonnes/year ethylene capacities. The Chinese producer also operates several chemical plants in Jiangsu and Guangdong provinces. The deal “aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements”, Aramco said in a statement on 22 April. Since 2022, Aramco has embarked on major investments in China, which involved taking strategic stakes in companies with major petrochemical projects under way. Chinese companies Planned investments Date of announcement Remarks Hengli Petrochemical 10% stake 22 Apr 2024 Rongsheng Petrochemical Cross acquisition talks – Rongsheng to acquire 50% stake in Saudi Aramco Jubail Refinery Co (SASREF); Aramco to take a maximum 50% stake in Rongsheng’s Ningbo Zhongjin Petrochemical 2 Jan 2024 To jointly develop Zhongjin’s upgrading/expansion and a new advanced materials project in Zhoushan Shandong Yulong Petrochemical 10% stake 11 Oct 2023 Shandong Energy is currently building a refining and petrochemical complex in Yantai called Shandong Yulong Petrochemical – a joint venture project with Chinese conglomerate Nanshan Group Shenghong Petrochemical 10% stake 27 Sept 2023 Rongsheng Petrochemical 10% stake 27 Mar 2023 Deal completed in Jul ’23 Huajin Aramco Petrochemical Co (HAPCO) a $12 billion joint venture, Aramco holds 30% 11 Mar 2022, final investment decision made Project broke ground in Mar ’23; to come on stream in 2026 Aramco CEO Amin Nasser in late March indicated that the company intends to continue making further investments in China’s chemicals sector with local partners, noting that the country has a “vitally important” place in the company’s global investment strategy. The energy giant aims to increase its liquids-to-chemicals throughput to 4 million barrels per day by 2030, which will require a wider footprint in China, the world’s biggest chemical market, analysts said. The investments will fuel further growth in the Chinese economy, they added. Focus article by Fanny Zhang Thumbnail image: The Guoyuan Port Container Terminal in Chongqing, China, on 29 February 2024. (Costfoto/NurPhoto/Shutterstock)

SINGAPORE (ICIS)–Aramco and China’s Hengli Group have entered into discussions regarding the potential acquisition of a 10% stake in Hengli Petrochemical, the Chinese company said on Tuesday. Based on the memorandum of understanding (MoU) signed on 22 April, the partners will also cooperate on crude and raw material supply, product sales as well as technology licensing, it said. The deal “aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements”, Aramco said in a separate statement. Hengli Petrochemical owns and operates a refinery and petrochemical complex at Liaoning province with 400,000 bbl/day of refining and 1.5 million tonnes/year ethylene capacities. The company also owns several chemical plants in Jiangsu and Guangdong provinces.

HOUSTON (ICIS)–US corn plantings are now 12% completed with soybeans at 8%, according to the latest US Department of Agriculture (USDA) weekly crop progress report. While some areas continue to see wet weather, the current pace of the corn crop is equal to the 12% achieved in 2023 and ahead of the five-year average of 10% completed. Texas remains in the lead with 68% of its crop finished, followed by North Carolina at 51%. There is now 3% of the crop emerged, which is ahead of the 2% rate of last year and the five-year average of 2%. Soybeans have reached 8% completed, with the current progress equal to the 8% achieved in 2023 and above the five-year average of 4%. The top state for plantings is Arkansas with 43% of their soybeans done, with Louisiana close behind with 42% of its crop planted. For the other key crops, the USDA said cotton was now at 11% planted, with sorghum at 17% and spring wheat up to 15% completed.