LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Blue bales and flake in eastern Europe, colourless flake in NWE see mid-month drops Bearish sentiment could persist into August Veolia closing MultiPET site by year-end European Commission clarifies use of imports in Single Use Plastics Directive 25% target

Market experts told ICIS that BESS operators are more likely to opt for a hybrid bidding strategy at the first Italian MACSE auction This would involve a diversified BESS portfolio partly safeguarded by the low-risk MACSE premium, and partly benefiting from merchant market upside Italian power spot spreads are likely to increase, rendering the merchant market more remunerative, a source from KYOS told ICIS LONDON (ICIS)– Multiple market experts, including a source from KYOS Energy Consulting, have told ICIS that BESS operators are likely to opt for a hybrid bidding strategy at the first MACSE (Electricity Storage Capacity Procurement) auction on 30 September, covering some of their fixed costs with MACSE incentives and leaving the rest of their battery storage portfolio free to take part in the merchant market. The source from KYOS told ICIS that “a ‘full-MACSE strategy’ is probably not the way to go for operators, as it would involve missing too much of an opportunity from wholesale trading. Instead, a hybrid MACSE strategy is likely what most operators will want to go for.” The same source suggested that “as long as solar buildout outpaces BESS deployment, we are likely to see day-ahead spreads increasing, together with the arbitrage potential from buying low at midday and selling high in the evening.” “Consequently, I don’t think an operator would want to lock themselves into a ‘full-MACSE’ scheme which leaves them unable to take advantage of these increasing spreads,” the same source concluded. An Italian power market analyst agreed with this assessment, suggesting that “it is likely that operators will opt for a hybrid strategy as different studies indicate this as the most remunerative; it allows a portion of the earnings of a BESS portfolio to be safeguarded by the MACSE scheme while leaving the other part to benefit from arbitrage on the merchant market.” “FULL MACSE” The MACSE mechanism offers newly constructed storage facilities long-term contracts that ensure a premium in €/MWh/year, received on a monthly basis for 15 years. In exchange, operators must use their storage capacity to provide time-shifting services as well as participate in the Ancillary Services Market (MSD). Operators will be able to retain 20% of the revenue earned on the MSD. According to an Italian BESS expert, this makes a ‘full-MACSE’ strategy the most likely choice for “totally risk-averse operators; it provides regular and certain revenue, less profitability with less risk.” MERCHANT MARKET On the other hand, the same BESS expert told ICIS that “operators more prone to risk are likely to expose some of their BESS portfolio on the merchant market and/or the capacity market.” The same BESS expert noted that, as the first MACSE auction does not offer incentives for northern zones, “BESS portfolios could be diversified with MACSE projects in the south and capacity market projects in the north.” HYBRID STRATEGY On the other hand, a head of power origination told ICIS that “at the level of potential merchant market revenue, Italy is one of the least enticing countries in Europe, given that negative prices do not form on its power market.” The MACSE approach likely to be the most popular, an Italian market regulatory specialist told ICIS, could be “a hybrid strategy with a diversified BESS portfolio.” This would balance the higher upside offered by the merchant market with the low-risk, regular MACSE monthly premium. OUTLOOK The post-2028 horizon poses the threat of “battery cannibalization” – the new BESS capacity contracted by MACSE could reduce price spreads, thus cannibalizing battery arbitrage margins. However, the source from KYOS told ICIS that “in the near future there will be more liquidity on the intraday market, and the wholesale market will hold a more significant share of revenue stream for BESS operators.” “As more BESS capacity comes online, we expect profits on ancillary markets to decrease as these markets become more saturated (because of their relatively smaller depth), causing operators to shift their focus to merchant markets,” the source concluded.

LONDON (ICIS)–Chinese wax producers may look at reviewing their selling strategies as the US-China have yet to announce a long-term deal ahead of the 12 August deadline. The Chinese CIF (cost, insurance and freight) paraffin wax spot prices have increased for four consecutive weeks as volume availability dropped. With no clear view on the negotiations between US and China, the upwards movements on Chinese wax prices may prove temporary. The shipping time for Chinese wax to reach the US is about a month, and considering the current agreement expires mid-August, any shipments starting their journey to the US late July face risks related to any political changes. A 90-day reduction in tariffs between the US and China encouraged sellers to shift their strategy. Immediately after the escalation of trade tariffs back in April, wax producers directed supplies into Europe to avoid the US import duties and lowered their prices to entice buyers. Since the US and China announced the trade truce as they negotiate a new trade deal, Chinese sellers have opted to shift volumes once again and send them to the US. This has so far led to a steady recovery in Chinese spot volumes offered in Europe given less availability in China. A flurry of Chinese wax volumes started to reach Europe in June, and the additional competition added some pressure on domestic spot prices for paraffin wax in recent weeks. But this was below expectations, because of refinery maintenance works in June and July in Poland and Hungary. Chinese CIF-origin wax volumes posted gains for the fourth consecutive week, rising $30/tonne to $1,270-1,340/tonne, Sources expected a quiet demand period in August given the holiday season, with further price developments in September. Uncertainty may also drive some Chinese sellers to focus on Europe as a destination for their volumes. A stronger US dollar was also having an impact with buying appetite under pressure as the purchasing power of the euro was reducing. The currency has been highly volatile since the beginning of the year. Focus article by Sophie Udubasceanu

HOUSTON (ICIS)–US builder confidence in the market for newly built single-family homes improved slightly in July following the passage of US President Donald Trump’s fiscal bill, the National Association of Home Builders (NAHB) reported on Thursday. Trump’s “One Big Beautiful Bill Act” provided a number of important wins for households, home builders and small businesses, and therefore should spur housing momentum after a disappointing spring, said NAHB chairman Buddy Hughes. However, confidence remained low for a 15th consecutive month as elevated interest rates and economic and policy uncertainty continued to act as headwinds for the housing sector. Confidence, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose from 32 points in June to 33 in July. Readings below the 50-point neutral mark indicate builder pessimism, and above 50 they indicate optimism. The housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates, Hughes said. NAHB expects single-family housing starts to decline in 2025 due to the ongoing housing affordability challenges. JULY HMI SURVEY: The HMI index gauging current sales conditions rose one point in July to a level of 36. The gauge for sales expectations in the next six months increased three points to 43. The gauge charting traffic of prospective buyers posted a one-point decline to 20, the lowest reading since end of 2022. REGIONAL HMI SCORES: The Northeast increased two points to 45. The Midwest held steady at 41. The South dropped three points to 30. The West fell three points to 25. The housing market is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins and derivative products, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibers, among many other materials. Please also visit the ICIS topic page: Macroeconomics: Impact on Chemicals. Frontpage thumbnail by Shutterstock

LONDON (ICIS)–Chemicals production in German contracted 3% in the first half of 2025 offsetting an expansion in pharmaceuticals output to drive the industry as a whole to a 1% contraction, trade body VCI said on Thursday. Industry productivity remains 15% below the pre-crisis levels seen in 2018, with no sign of a turnaround this year, according to VCI president and Covestro chief Markus Steilemann. “We are also seeing double-digit declines in other important sectors of the economy,” he said. Covestro, along with other Germany-based peers BASF and FUCHS Group,  downgraded full-year earnings expectations for 2025 in the last week on prolonged weak demand and the depressed macroeconomic environment. Uncertainty remains a key headwind for the sector, with 40% of VCI member companies lamenting the disorganised global trade environment, as industry balances continue to weaken. Chemicals exports weakened year on year during the period, while imports increased 2%, VCI said. Total sector sales dropped 0.5% year on year during the period as prices stagnated, and capacity utilisation stood below 80% into a third consecutive year, below the profitability threshold for many products. The decline in productivity was more pronounced for the polymer and basic chemicals sectors, where production fell 3.5%, while petrochemicals and derivatives output fell 2.5%. Fine and specialty chemicals production fell 3% in the first half of the year, while detergents and personal care products output dropped 1% over the same period. “In the medium term, there is no improvement in sight. Germany is struggling with the third recession in a row,” VCI said. “Neither the economic institutes nor the majority of VCI member companies expect an economic upturn in the second half of 2025.” Moves by Germany’s new federal government to increase public investment and reduce bureaucratic roadblocks is a welcome one, according to Steilemann, who called for further cuts to red tape and an easing of the country’s debt brake, a focus on affordability in energy policy. Diversifying trade and stronger integration of the EU as a market. Thumbnail image: Shutterstock

SINGAPORE (ICIS)–Japan’s chemical exports in June declined by 5.2% year on year to yen (Y) 978.5 billion ($6.6 billion), amid a second consecutive month of overall exports declining, preliminary data from the Ministry of Finance (MOF) showed. Exports of organic chemicals fell by 15.8% year on year to Y145.3 billion in June, while shipments of plastic products slipped by 3.7% to Y283.6 billion, the MOF said on Thursday. By volume, June exports of plastic materials fell by 9.4% year on year to 416,008 tonnes. Japan’s total exports for the month fell by 0.5% year on year to Y9.16 trillion, continuing a decline beginning in May as US President Donald Trump’s 25% tariffs on all automobiles weighed on Asia’s third-largest economy. Overall imports rose by 0.2% year on year to Y9 trillion in June, resulting in a trade surplus of Y153 billion. Overall shipments to the US – its largest export destination – fell by 11.4% year on year to Y1.71 trillion in June. Japan’s trade surplus with the US shrank by 22.9% year on year to Y669.3 billion in June. Exports of cars to the US slumped by 25.3% year on year to Y415 billion in June, while shipments of motor vehicle parts fell by 15.5% to Y90.6 billion. Overall chemicals shipments to the US fell by 10.3% year on year to Y133.5 billion in June. Japan has thus far failed to strike a trade deal with the US, nor has it managed to stave off an additional 25% tariff on automobiles. The US has slapped a 25% rate on all goods from Japan to take effect on 1 August if a deal cannot be reached. More trade talks are set to take place amid an upcoming upper house election in Japan on 20 July, which could threaten the Japanese Prime Minister Shigeru Ishiba’s party’s position in Parliament. ($1 = Y148.5)

SINGAPORE (ICIS)–Singapore’s petrochemical exports fell by 10.2% year on year to (S$) 1.09 billion in June, but overall non-oil domestic exports (NODX) rose ahead of US tariffs which are expected to weigh on the trade-reliant economy in the latter half of this year. NODX to US down 4.8% year on year in June; exports to most key markets decline Payback from export front-loading to dampen H2 GDP growth Singapore still awaiting official US tariff notification Singapore’s NODX rose by 13% year on year to S$15.4 billion last month, reversing the 3.9% contraction in May and marking the strongest expansion since July 2024, Enterprise Singapore data showed on Thursday. For the first six months of 2025, overall NODX rose by 5.2% year on year. Shipments of non-electronic NODX, which includes pharmaceuticals and chemicals, rose by 14.5% year on year to S$12 billion in June, reversing the 5.8% decline in the preceding month. NODX to the US fell by 4.8% year on year in June, extending the 20.6% decline in May, while exports to Japan, Indonesia, Malaysia, Thailand and the EU also decreased. Singapore is a leading petrochemical manufacturer and exporter in southeast Asia, with more than 100 international chemical companies, including ExxonMobil and Aster Chemicals & Energy, based at its Jurong Island hub. Singapore’s economy grew by 4.3% in the second quarter from a year earlier, but significant global economic uncertainty persists in the second half, driven by unclear US tariff policies. For the first half of 2025, the annual average GDP growth was 4.2%, supported by front-loading of exports and to a smaller extent production in anticipation of further US tariffs. Singapore posted GDP growth of 4.4% in 2024. “The payback from earlier front-loading is likely to dampen growth in H2 2025, further weighed down by the potential drag from the US reciprocal tariffs,” said Jester Koh, an economist at Singapore’s UOB Global Economics & Markets Research. US President Donald Trump has informed several nations that tariffs ranging from 20% to 50% will take effect on 1 August, and cautioned that any retaliatory measures would be met with a like-for-like response. Singapore has not yet received official notification of these new tariffs from the Trump administration. Its exports continue to be subject to the 10% baseline tariff previously announced in April. Meanwhile, southeast Asian neighbors Vietnam and Indonesia have successfully negotiated agreements with Washington for tariffs below the levels initially threatened by President Trump. “For Singapore, the priority appears to be negotiating concessions on future pharmaceutical tariffs which Trump has threatened could reach as high as 200%,” Koh said. A tariff-induced slowdown in Singapore’s key trading partners could further intensify downside risks to growth, he noted. “Singapore is likely the most exposed to external growth shocks in major economies (US, EU, China) given its high share of domestic value added in final demand originating from these markets,” Koh said. Singapore’s Deputy Prime Minister Gan Kim Yong is expected to head to the US later this month for trade talks and intends to continue discussions on the country’s pharmaceutical exports. The country’s central bank now expects tariffs to hit production and exports “with a lag, especially when the boost from frontloading dissipates”, Monetary Authority of Singapore (MAS) managing director Chia Der Jiun said on 16 July. “At this juncture, the impact of tariffs and uncertainty have yet to assert in a major way… For now, economic activity and output have been resilient, but front-loading will not continue indefinitely and will have to be paid back,” Chia said. “Consumption and investment will likely soften in the months ahead. Consistent with this, forward looking survey-based indicators of consumer and business confidence are slipping,” he added. Focus article and interactives by Nurluqman Suratman Visit the US tariffs, policy – impact on chemicals and energy topic page

HOUSTON (ICIS)–The US has started an investigation into Brazilian policies under Section 301, the same provision it used to impose tariffs on numerous Chinese imports in 2018. Any tariffs that the US imposes after it completes the Section 301 tariff could prove more durable than the 50% duties it proposed on Brazilian imports under the International Emergency Economic Powers Act (IEEPA). Such tariffs are unprecedented, and they are being challenged in US court. The US will schedule a hearing about the Section 301 investigation on 3 September. MORE US TARIFFS EXPOSES CHEM EXPORTS TO RETALIATIONBrazil is among the countries that export benzene to the US, although not to the magnitude of South Korea or the EU. By contrast, Brazil is a large importer of caustic soda, polyethylene (PE) and base oils from the US, leaving these products vulnerable to retaliatory tariffs. The US is a minor supplier of fertilizer to Brazil’s large agricultural sector. The Brazilian president has not published a response to the US investigation. However, Brazil has threatened to invoke its economic reciprocity law, which establishes criteria to suspend trade concessions, investments and obligations to intellectual property rights in response to unilateral actions passed by countries that diminish Brazilian competitiveness in global markets. It has created a government committee that will consider both countermeasures and negotiations to address the unilateral actions. ALLEGATIONS FROM THE USThe US made the following allegations in regards to Brazilian trade practices. The US accused Brazil of retaliating against companies that allegedly fail to abide to Brazilian policies on political speech. These allegations concern digital trade and electronic payment services, and the US made similar allegations when it proposed 50% tariffs on Brazilian imports. The US accused Brazil of imposing what it described as lower preferential tariffs on imports from “certain globally competitive trade partners”. The US did not identify the countries, but China is Brazil’s largest trading partner. The US accused Brazil of failing to enforce anti-corruption and transparency measures. The US accused Brazil of weak enforcement of intellectual property rights. The US criticized Brazil for imposing tariffs on its exports of ethanol instead of allowing it to enter duty free. The US accused Brazil of illegal deforestation, which it alleged undermines the competitiveness of its exports of timber and agricultural products. Thumbnail shows the Brazilian flag. Image by Fernando Bizerra Jr/EPA/REX/Shutterstock

EU energy commissioner confirms legal basis for Russia phaseout untested Commmission legal services confident force majeure would apply MEPs to next meet on topic in October LONDON (ICIS)—The EU’s energy chief acknowledged on 15 July that the European Commission could not guarantee the legal basis underpinning the bloc’s proposal to end Russian gas imports by 2028 and the plan was subject to challenges. “In a potential court case, it will be the individual contract that will be held up against the measures – this goes without saying,” EU energy commissioner Dan Jorgensen told MEPs. “So therefore there’s no 100% guarantee ever, it depends what’s on the paper,” he said. However, Jorgensen said the but said he was confident that proposal’s wording prohibiting imports of Russian pipeline gas and LNG meant force majeure applied and would negate any risk. Lawmakers in a joint session of the European Parliament’s trade and energy committees pressed Jorgensen repeatedly on whether the proposals were legally sound and how to strengthen this. While the lead MEPs for both committees urged the Commission to be more ambitious by phasing out Russia supply sooner and removing emergency clauses which would allow supply to resume, Jorgensen said countries’ concerns were valid. While he disagreed politically with Hungary and Slovakia’s criticisms, he said he hoped the inclusion of the emergency measures would calm those concerns. “The populations of those countries … have a legitimate right to know that whatever we do will not interfere with the prices or security of supply,” Jorgensen said, citing his experience working on emergency plans as Denmark’s energy minister after Russia cut supply to Europe in 2022. While there is broad support for the legislation in the Parliament, Jorgensen noted some national governments may prefer a more cautious approach. While two countries were vocally opposed to the plan, Jorgensen said “to be quite honest” that other countries also had found aspects of the plan worrying and this sentiment likely remained. While this was fair, he said he was confident the proposal would guarantee security of supply, amid declining gas consumption, rising LNG supply and development of domestic supplies and biomethane. Jorgensen’s home country of Denmark holds the rotating presidency of member states until the end of December and aims to finalise the legislation by then. The process will not require unanimity, unlike sanctions, but a speedy resolution may be challenging with Hungary and Slovakia opposed. Slovak prime minister Robert Fico said in a press release on 15 July that the Commission should allow his country a derogation, allowing it to fulfil its contract with Russia’s Gazprom until it ends in 2034. He said Slovakian diplomats were instructed to delay a vote on the EU’s 18th sanctions package against Russia in response, which include targeting transactions with the Nord Stream pipelines, Russian oil revenues and the shadow fleet. EU delegations were also scheduled to discuss the proposal at technical level on 15 July. MEPs will next meet about the proposals in October.