SINGAPORE (ICIS)–Japan’s core consumer price index (CPI) rose by 3.5% year on year in April, raising pressure on the central bank to continue raising interest rates, official data showed on Friday. Headline inflation, which includes all items, climbed by 3.6% year on year in April, steadying from a month ago. The Bank of Japan’s (BOJ) preferred measure of inflation, which excludes fresh food and fuel, rose 3.0% year on year in April, above the 2.9% gain recorded in March. Japan’s inflation has remained above the central bank’s 2% target since April 2022, prompting policymakers to gradually increase interest rates. In January, the BOJ raised its short-term interest rate to 0.5% from 0.25%, a sign of growing confidence in achieving its inflation target sustainably. While the BOJ has indicated further rate hikes are likely, it must also weigh external pressures such as potential impacts from US tariffs against ongoing domestic price increases, particularly in food.

HOUSTON (ICIS)–US trucking activity edged lower in April as the industry has yet to experience a recovery as it deals with tariff uncertainty and softening economic indicators, according to the American Trucking Associations (ATA) seasonally adjusted For-Hire Truck Tonnage Index. The index fell by 0.3% in April after contracting by 1.5% in March, as shown in the following chart. Source: American Trucking Associations ATA chief economist Bob Costello said the index has fallen for two consecutive months after surging in February to its highest since May 2024. “Unfortunately, a recovery that was expected this year hasn’t transpired as the industry deals with a freight market in flux from tariffs and softening economic indicators,” Costello said. The not seasonally adjusted index, which calculates raw changes in tonnage hauled, equaled 112.0 in April, 2.2% below March’s reading of 114.6. Both indices are dominated by contract freight, as opposed to traditional spot market freight. RATES EDGE HIGHER ON ROADCHECK WEEK Broker-posted spot rates in the FTR Transportation Intelligence Truckstop system for dry van and refrigerated equipment soared during the week ended 16 May (week 19) due to the annual International Roadcheck roadside inspection event, which was held 13-15 May. FTR’s Trucking Conditions Index reading for March improved to a positive 0.28 reading from -0.21 in February, as shown in the following chart. Avery Vise, FTR’s vice president of trucking, said more volatility is expected in the near term. “After a strong first quarter in freight volume – at least partially due to a pull-forward of imports in advance of tariffs – we expect more volatility in the months ahead as shippers respond to US trade policy shifts,” Vise said. “The recent short-term agreement between the US and China greatly reduces the potential near-term hit to freight volumes, but we still expect uncertainty and higher costs for consumers to be drags on the economy and freight,” Vise said. WHITE HOUSE ORDER COULD REDUCE DRIVERS Vise said a wild card that market participants are watching is whether renewed scrutiny concerning truck drivers’ English language skills and non-domicile commercial driver’s licenses (CDLs) will affect the driver supply significantly. US President Donald Trump signed an executive order recently aimed at, “ensuring anyone behind the wheel of a commercial vehicle is properly qualified and proficient in English”. ATA Senior Vice President of Regulatory & Safety Policy Dan Horvath said the executive order responds to its concerns on the uneven application of this existing regulation and looks forward to working with regulators on an enforcement standard. A distributor in the US chemical markets said it has not seen any disruptions in its trucking operations and suggested enforcement could be difficult. Trump’s order reversed a 2016 policy that said commercial vehicle drivers should not be placed out-of-service for English language proficiency (ELP) violations. The Commercial Vehicle Safety Alliance (CVSA), a nonprofit organization comprised of local, state, provincial, territorial and federal commercial motor vehicle safety officials and industry representatives, issued updated guidance this week that ELP violations will be out-of-service offenses again beginning 25 June.

HOUSTON (ICIS)–Chemical plants along the US Gulf Coast will face another active hurricane season, but any potential disruptions will be partially if not entirely offset by excess global capacity and weaker demand growth. Meteorologists expect up to 10 hurricanes in the Atlantic basin during this year’s hurricane season, which starts in June and lasts through November The global supply glut of plastics and chemicals will continue in 2025 and beyond Global plastic and chemical demand will weaken because of tariffs and a prolonged manufacturing downturn BUSY HURRICANE SEASONMeteorologists expect a busy hurricane season as shown in the following table: AccuWeather CSU US 30-Year Average Hurricanes 7-10 9 6-10 7 Major hurricanes 3-5 4 3-5 3 TOTAL 13-18 17 13-19 14 *Major hurricanes have wind speeds of at least 111 miles/hour (178 km/hour) Sources: AccuWeather, Colorado State University (CSU), US National Oceanic and Atmospheric Administration (NOAA) Hurricanes directly affect the chemical industry because plants and refineries shut down in preparation for the storms, and they sometimes remain down because of damage. Power outages can last for days or weeks. Hurricanes shut down ports, railroads and highways, which can prevent operating plants from receiving feedstock or shipping out products. Most US petrochemical plants and refineries are on the Gulf Coast states of Texas and Louisiana, making them prone to hurricanes. Other plants and refineries are scattered farther east in the states of Mississippi, Alabama and Florida, a peninsula that is also a hub for phosphate production and fertilizer logistics. Hurricanes can shut down LNG terminals, most of which are concentrated along the Gulf Coast. If the outages last long enough, it can cause a local glut of natural gas and a decline in prices. US prices for ethane tend to rise and fall with those of natural gas, so a prolonged shutdown of LNG terminals would lower feedstock costs – especially if the hurricane also shuts down ethane crackers. Petrochemical plants outside of the US are becoming increasingly reliant on that country’s exports of ethane, ethylene and liquefied petroleum gas (LPG), a feedstock for crackers and for propane dehydrogenation (PDH) units. Most of these terminals are on the Gulf Coast, leaving them vulnerable to disruptions caused by hurricanes. HOTTER SUMMER COULD REDUCE THROUGHPUT AT GAS PLANTSExtremely high temperatures can reduce the throughput of Texan natural gas processing plants, which extract ethane and other natural gas liquids (NGLs) from raw natural gas. Such reductions took place in 2024 during the peak summer months of August and September, when temperatures are typically at their highest in many parts of Texas. Texas has natural gas processing plants in the western and fractionation hubs in the eastern parts of the state. For both regions, summer temperatures should be 1-2°F higher than normal, according to AccuWeather, a meteorology firm. That amounts to 0.6-1.0°C higher. CHEM OVERCAPACITY GROWS BIGGERThe effect of any shutdowns of chemical plants will be blunted by excess global capacity. Companies have continued to start up new plants, despite the oversupply of plastics and chemicals. ICIS FORECASTS WEAKER 2025 DEMAND GROWTHAny disruptions to chemical production would take place amid weaker demand growth. ICIS forecasts that 2025 demand growth for most commodity plastics will slow from 2024 and remain well below levels in 2018 and earlier. The following chart ICIS past demand growth rates and forecasts for 2025. Source: ICIS Growth rates are slower in part due to uncertainty caused by US trade policy. ICIS expects global GDP to expand by 2.2% in 2025, down from 2.8% in 2024. Global manufacturing is expected to contract globally. The following breaks down forecasts for national purchasing managers’ indices (PMI). Anything below 50 indicates contraction. Sources: Institute for Supply Management, S&P Global and JP Morgan RESUMPTION OF TARIFFS WOULD FURTHER WEAKEN DEMANDIn July, the US could resume imposing its higher reciprocal tariffs against much of the world, including the EU, following a 90-day pause announced in April. The EU is preparing a list of retaliatory tariffs that covers many US imports of commodity chemicals and plastics, including the following: Caustic soda Acetic Acid Vinyl acetate monomer (VAM) Polyethylene (PE) Polypropylene (PP) Polystyrene (PS) Acrylonitrile butadiene styrene (ABS) Polyvinyl chloride (PVC) Polyethylene terephthalate (PET) The US and EU may extend the pause or reach a trade agreement that would do away with the need for retaliatory tariffs. But if the two sides fail to reach an agreement, then the EU’s retaliatory would likely reduce demand for US plastics and chemicals. Demand for US plastics and chemicals could take another hit in mid-August if the US and China resume triple-digit tariffs following their 90-day pause. The pause would expire right before hurricane season reaches its peak in the US. Insight article by Al Greenwood Thumbnail shows a hurricane. Image by NOAA.

PANAMA CITY (ICIS)–The Panama Canal is working to develop new products and services for different client segments while managing capacity constraints that have affected operations, particularly following the severe drought impacts of 2024, an executive at the Panama Canal Authority (PCA) said. Arnoldo Cano, manager of strategic planning at the PCA, outlined plans to make the canal more resilient through future droughts. Additionally, the PCA is working with private and public bodies to come up with new business lines which can guarantee a healthy financial performance. Cano was speaking to delegates at the logistics conference organized annually by the Latin American Petrochemical and Chemical Association (APLA). LARGER VESSELS”The canal’s growth practically since its opening has not been driven by an increase in the number of transits – the growth in volume and canal business has really been driven by growth in transit size, as vessels transit roughly the same number of transits each year but are evidently much larger,” said Cano. “The expansion with a third set of locks has allowed a significant increase in the number of massive transits, almost a multiplication of cargo volume from that route.” However, this growth was severely impacted by the 2024 drought, which caused a significant drop in both transit numbers and cargo volumes. Cano said that ensuring water supply represents one of the most important initiatives to minimize the probability of similar disruptions recurring. Beyond water security, the canal is developing new business models to serve different types of clients more effectively. The current booking system operates on a first-come, first-served basis with prior reservations to ensure maximum capacity utilization. “This model has been successful for certain types of clients, especially service clients and data clients who benefit from the system. But we need alternative approaches,” said Cano. “We continue exploring alternatives for clients never registered in different businesses, who we think could benefit enormously from different schemes to ensure canal capacity is available to clients, so they have certainty of access to a transit slot when they need to make the decision to transit through the canal.” The Panama Canal connects more than 180 ports worldwide, making it a critical nexus for international shipping. Cano said the PCA is working hard to develop “flexible solutions” that provide certainty regarding transit dates, costs and capacity availability while maintaining the waterway’s sustainability. The PCA continues working on initiatives both independently and in collaboration with government and private sector partners to enhance the value proposition beyond simply reducing transportation costs through shorter routes, he concluded. The APLA logistics conference ran in Panama City on 20-21 May.

PANAMA CITY (ICIS)–Latin America’s chemicals transportation sector is grappling with a severe driver shortage, an aging workforce, and mounting safety challenges that threaten regional supply chains, according to industry executives this week. The trucking industry across the region faces multiple structural problems, with the average driver’s age reaching approximately 55 years, with younger workers showing reluctance to join the profession. In Mexico, the problem has become especially acute, according to Pablo Alvarez, a consultant at Excellence Freight, who estimated the country suffers from a shortage of nearly 100,000 truck operators, with similar patterns emerging across other Latin American countries. Alvarez was speaking to delegates at the logistics conference organized annually by the Latin American Petrochemical and Chemical Association (APLA). ROAD SECURITY, TOUGH LIFESYTYLE“Road security has emerged as a primary concern deterring potential drivers. Organized crime, kidnappings, assaults, murders, and the risk of death are some of the major factors deterring them,” said Alvarez. “With drivers carrying valuable chemical cargoes sometimes worth millions of dollars, they are becoming attractive targets for criminal organizations.” The lifestyle demands of long-haul trucking further compound recruitment challenges for chemicals firms. While wages are quite competitive as the industry tries to overcome the driver shortages, truck operators frequently spend extended periods away from home, with some trips lasting up to 10 days to cross regional borders. This creates work-life balance issues that particularly affect efforts to attract younger workers and women to the profession. As wages are already competitive, companies must therefore improve working conditions beyond just salaries, said Martin Rojas, an executive at the International Road Transport Union (IRU). “After a long trip, probably 10 days to reach the destination, being received properly is very important. We see practices where drivers wait 12 hours for loading or unloading only to be rushed through the remainder of their tasks, and that is simply not good,” said Rojas. Infrastructure limitations further complicate operations, with many drivers forced to park alongside highways due to insufficient rest facilities. Meanwhile, long wait times at border crossings also add to operational inefficiencies and driver frustration. WIDER LATIN AMERICAThe labor shortage has broader implications for Latin America’s chemical industry, which relies heavily on road transportation to move products across the region’s vast distances. Companies are beginning to explore collaborative approaches to address working conditions, professional development, and industry image to make trucking a more attractive career. “We have much more to offer operators than just wages. This is a great opportunity for the industry to help the transportation sector fulfill this region’s needs and attract people to work as transport operators,” concluded Rojas. The APLA logistics conference in Panama City was held on 20-21 May.

LONDON (ICIS)–The European Parliament has voted to support changes to the EU’s carbon border adjustment mechanism (CBAM) to ease the administrative burden on 90% of importers. MEPs on Thursday voted to adopt a new “de minimis” mass threshold of 50 tonnes, which will exempt most importers who import only small quantities of CBAM goods, such as SMEs and individuals. At the same time, environmental objectives would remain achievable because 99% of total CO2 emissions from imports of iron, steel, aluminium, cement and fertilizers would still be covered by the rules, the European Parliament said in a statement. “This approach enables us to simplify matters for companies without dismantling or weakening the CBAM,” said rapporteur Antonio Decaro, who is chair of the environment, climate and food safety committee. “We will continue to work quickly to bring legal clarity and certainty to all CBAM stakeholders,” Decaro added. The European Parliament is now ready to start negotiations with the European Council on finalizing the legislation, it said.

LONDON (ICIS)–The European Parliament made the decision to impose higher tariffs on fertilizers and certain agricultural products from Russia and Belarus on Thursday. The new rates are expected to come into effect from 1 July, to give stakeholders time to prepare for the changes. The move is a significant one, aimed at addressing both food security concerns within the EU and limiting financial resources available to Russia amid its ongoing conflict with Ukraine. Tariffs on nitrogen-based fertilizers will increase gradually over three years, starting from 6.5% + €40/tonne from 1 July 2025 and potentially reaching around 100%. This steep rise in tariffs is designed to make trade economically unfeasible. An additional duty of 50% will be applied to specific farm produce imported from these countries. EU tariffs for urea, AN, CAN and UAN of Russian origin Time period Proposed tariff From 1 July 2025 until 30 June 2026 6.5% ad valorem + €40/tonne From 1 July 2026 until 30 June 2027 6.5% ad valorem + €60/tonne From 1 July 2027 until 30 June 2028 6.5% ad valorem + €80/tonne From 1 July 2028 6.5% ad valorem + €315/tonne ad valorem “according to the value” The primary goal of these tariffs is twofold: To safeguard EU food security by reducing dependency on imports that may be compromised due to geopolitical tensions. To limit the revenue streams that support Russian military operations in Ukraine. These measures could lead to increased prices for fertilizers and affected agricultural products within the EU, impacting farmers’ production costs. There may also be shifts in supply chains as producers seek alternative sources or adjust their strategies in response to higher import costs. This action reflects broader efforts by the EU to respond strategically to international conflicts while ensuring stability within its own markets. Thumbnail image source: Shutterstock

BARCELONA (ICIS)–Participants at the Asia Petrochemical Industry Conference (APIC) expect chronic oversupply conditions hurting the chemical sector will start to rebalance by 2028-2030. China overcapacity, trade war is causing an unprecedented crisis Polyethylene (PE), polypropylene (PP), paraxylene (PX) in structural oversupply Hopes for rebalancing by 2028-2030 as plants shut down, capacity build slows Demand is flat but India is the exception – a beacon of growth for the region Taiwan, Thailand struggle to compete against China, Middle East Trade war will cause “cataclysmic” changes in global trade Sustainability still seen as a growth driver, especially for polymers Growing reliance on US ethane for chemical production in Asia In this Think Tank podcast, Will Beacham interviews John Richardson from the ICIS market development team and ICIS deputy news editor for Asia, Nurluqman Suratman. 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.

SINGAPORE (ICIS)–Singapore’s Ministry of Trade and Industry (MTI) on Thursday maintained its 0.0-2.0% GDP growth forecast for 2025, while confirming 3.9% GDP growth for the first quarter. GDP grew 3.9% in Q1 2025 Heightened uncertainty, hesitancy weigh on outlook Key exports to be at lower end of 1-3% for 2025 The forecast was maintained even as the US reached agreements with China and the UK recently, as inflation growth in the US and heightened uncertainty weigh on consumption, MTI said in a statement. However, the outlook appeared slightly improved compared to April as major economies engage in trade talks with the US. Significant uncertainty could lead to more hesitancy in economic activity, while a re-escalation in tariff actions would ignite a global trade war, “which will upend global supply chains, raise costs and cause a sharper global economic slowdown”, MTI said. “Against this backdrop, the growth of outward-oriented sectors in Singapore is expected to slow over the course of the year,” said MTI. US tariff measures are expected to weigh adversely particularly on Singapore’s manufacturing sector, given its export exposure to the US market and slowing growth in global end-markets. The transport engineering cluster, however, is a bright spot for Singapore, MTI said. Global trade is also expected to soften in the second half of the year as front-loading exports slow, and these factors combined for MTI’s 2025 GDP forecast being maintained at 0-2%. Q1 GDP GROWTHSingapore’s manufacturing sector expanded by 4.0% year on year in the first quarter, declining from the 7.4% growth in the previous quarter, driven by the electronics, precision engineering and transport engineering clusters, MTI said. Overall, Singapore’s GDP grew by 3.9% in the first quarter of 2025, down from 5.0% growth in the previous quarter. “On a year-on-year basis, GDP growth in the first quarter was largely driven by the wholesale trade, manufacturing and finance & insurance sectors,” MTI said. Meanwhile, the accommodation and food & beverage services sectors contracted in the first quarter. Separately, the southeast Asian country also expects non-oil domestic exports (NODX) to be at the lower end of its 1-3% forecast for 2025 amid tariffs and economic headwinds, according to Enterprise Singapore (EnterpriseSG) on Thursday. NODX grew by 3.3% year on year in Q1 2025, improving from 2.4% growth year on year in the previous quarter. In the first quarter, Singapore’s petrochemical exports amounted to Singapore dollar (S$) 4.45 billion ($3.45 billion), declining by approximately 4.2% from the same period in 2024. Focus article by Jonathan Yee