LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at key challenges for the autumn. 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.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 29 August. EU proposes to cut US import duties to zero on plastics, rubber, fertilizers The European Commission has set out its first detailed proposals to cut tariffs on US products flowing to Europe as negotiators continue to flesh out the terms of the US-EU trade deal agreed last month. Germany’s Evonik spins out infrastructure activities in Marl and Wesseling into new firmEvonik is spinning out its infrastructure activities in Marl and Wesseling chemicals parks to become new companies, the German firm said on Thursday in a statement. INSIGHT: How the shift to EVs and lightweighting are impacting automotive plastic useThe shift towards electric vehicles (EVs) currently taking place in Europe should ostensibly mean a boon for plastic markets serving the sector. EVs use significantly more plastic than cars run on internal combustion engines (ICEs). However, a trend towards lightweighting, and cost-saving measures, mean that some plastics may not see as large a growth in use as others. INSIGHT: Softer crude oil, seasonal low demand to drive Europe chemical prices down in August The majority of European petrochemical prices are expected to fall in August, driven by lower crude oil values and persistently subdued downstream demand. India’s Paradeep Phosphates secures 1.6 million-tonne agreement with Morocco’s OCP India’s Paradeep Phosphates Ltd (PPL) has announced a significant long-term supply agreement with Morocco’s OCP, securing 1.6 million tonnes of phosphate rock.

SINGAPORE (ICIS)–South Korea’s petrochemical shipments fell by 18.7% year on year to $3.38 billion in August, while semiconductor and automobile exports hit all-time highs for the month, official data showed on Monday. Overall exports growth slows to 1.3% year on year as US tariffs weigh Exports to the US fall 12%, largest drop since May 2020 August manufacturing PMI rises slightly to 48.3 – S&P Global Petrochemical exports in August fell largely due to falling product prices amid declining international oil prices, South Korea’s Ministry of Trade, Industry and Energy (MOTIE) said in a statement. The country’s overall exports rose by 1.3% year on year to $58.4 billion in August, down from the 5.8% growth in July, while imports fell by 4.0% year on year to $51.9 billion. The trade balance stood at a surplus of $6.51 billion in August, narrowing from July’s $6.61 billion. Semiconductors reached a historic high in August, up 27.1% year on year to $15.1 billion, the second consecutive month of record growth. The surge was driven by “favorable trends” in memory chip prices, and sustained demand for high-value memory products. Exports of automobiles also recorded a historic high in August, growing 8.6% year on year to $5.50 billion, as exports of hybrids, electric vehicles (EVs) and used cars all grew. Ship exports in August also grew 11.8% year on year to $3.14 billion amid deliveries of vessels ordered at high prices in 2022-2023. Exports grew in August to three out of nine major regions, including the Association of Southeast Asian Nations (ASEAN), the Middle East, and the Commonwealth of Independent States (CIS). August shipments to ASEAN reached a record high, growing 11.9% to $10.9 billion amid exports of semiconductors and ships. However, exports to both the US and China declined, with US shipments dropping 12.0% year on year and China shipments down by 2.9%. Declines in automobiles, general machinery and steel drove the decrease in US exports after hefty 50% tariffs on steel and aluminum were levied by US President Donald Trump. A 15% levy on South Korean goods also came into effect from 7 August, following a trade deal struck by the two countries, but an agreement to reduce auto tariffs to 15% from 25% has not been ratified. MANUFACTURING DECLINEFactory activity in South Korea continued to contract in August as the manufacturing purchasing managers’ index (PMI) rose slightly to 48.3 from 48.0 in July, according to data released by S&P Global on Monday. A number below 50 signifies contraction and the manufacturing sector has contracted for the seventh successive month, S&P Global said. “Both output and new orders remained in contraction territory, with both metrics little-changed from those seen in July,” said Usamah Bhatti, Economist at S&P Global Market Intelligence. Manufacturers reported challenging domestic economic conditions as well as the US tariff impact, which reduced both sales and production levels. However, the production outlook for the year ahead was positive with hopes of economic improvement, said S&P Global. “The degree of optimism was moderate, with hopes centred on the launch and mass production of new products and an alleviation of domestic economic malaise. There was concern noted, however, regarding the timing of any recovery and the potential prolonged impact of US tariffs,” said Bhatti. GOVERNMENT ANNOUNCES MORE MEASURESSouth Korea’s Minister of Trade, Industry and Energy Kim Jung-kwan said in a statement that the government will prepare “reliable and tangible policies” following feedback from export companies amid tough conditions and US tariffs. “To minimize damage to small and medium-sized enterprises caused by US tariff measures, we plan to announce and implement support measures,” Kim said. The measures will focus on easing management burdens, maintaining export momentum with market diversification and strengthening the competitiveness of “key and promising” industries, said Kim. Previously, the government said it will announce measures to help the ailing petrochemical industry but warned that companies needed to voluntarily restructure their operations as well as cut their overall annual naphtha cracking capacity by up to 3.7 million tonnes. Thumbnail photo shows trade cargo containers at Busan port, Korea (Source: YONHAP/EPA-EFE/Shutterstock) Focus article by Jonathan Yee

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 29 August. Asian naphtha improves on tighter supplies; market to hold steady By Li Peng Seng 25-Aug-25 10:35 SINGAPORE (ICIS)–Asia’s naphtha front-month open-specification price for first-half October hit a three-week high on 22 August, driven not only by crude but also by demand and tighter supplies. India’s sweeping tax reforms to boost chemical demand pre-Diwali By Jonathan Yee 26-Aug-25 10:25 SINGAPORE (ICIS)–India’s proposed sweeping tax reforms on large home appliances, televisions and automotives are set to not only boost downstream demand before the Diwali festive holiday in October, but also demand for chemicals such as polypropylene (PP), polyvinyl chloride (PVC) and polyethylene (PE). INSIGHT: South Korea C2 restructuring signals urgency to shift landscape By Josh Quah 26-Aug-25 10:48 SINGAPORE (ICIS)–The South Korean government has announced its plans to reduce ethylene production by 2.7-3.7m tonnes/year, roughly equivalent to the permanent shutdown of three or four crackers of nearly one million tonnes/year each. Asia butyl-A to see longer supply, low demand; India may offer some support By Corey Chew 27-Aug-25 14:35 SINGAPORE (ICIS)–The Asian acrylates market is expected to see more supply in China from September onwards as BASF’s Zhanjiang plant has already started butyl acrylate (butyl-A) production in second-half August. Asia PX likely ample on healthy margins, amid new downstream start-ups By Samuel Wong 28-Aug-25 13:03 SINGAPORE (ICIS)–Asia’s paraxylene (PX) demand is expected to find support from the impending start-up of new downstream capacities. INSIGHT: China crude-based benzene to face high costs, weak demand in golden Sept, silver Oct By Yoyo Liu 28-Aug-25 17:47 SINGAPORE (ICIS)–China’s crude-based benzene supply and demand have both grown in August. Meanwhile, crude oil volatility and high naphtha costs have provided a floor for benzene prices, while divergent downstream demand and weak end-user consumption have capped the upside potential. INTERVIEW: Germany’s Evonik will continue Asia investments regardless of tariffs By Jonathan Yee 29-Aug-25 12:14 SINGAPORE (ICIS)–Evonik is ramping up plant and research investments in Asia to hit their growth targets, while mitigating direct shocks from US tariffs by targeting “local-from-local” production, according to Claus Rettig, President Asia Pacific at the German-based specialty chemicals firm. S Korea keeps key rate steady, 2025 GDP growth forecast raised to 0.9% By Nurluqman Suratman 29-Aug-25 12:24 SINGAPORE (ICIS)–The Bank of Korea (BoK) held its key interest rate steady at 2.50% on 28 August, taking a a wait-and-see approach as near-term growth improved amid reduced US tariff-related uncertainties.

HOUSTON (ICIS)–Join Emily Friedman, ICIS US recycled plastics senior editor in Episode 5 of Sustainably Speaking alongside Arianne Perez, Asia recycled plastic senior editor, and Joshua Dill, Americas recycled plastic analyst, as they discuss the implications of weak domestic recycled polyethylene terephthalate (R-PET) markets between the US and Asia. Even as local feedstock markets tumble, both regions are seeing further downwards pressure from global trade. Some questions answered during this episode: What is the current state of US and Asian R-PET markets? Are dropping US prices influencing Asian markets? How has the evolving tariff policy impacted US R-PET and PET imports via the 3907 HS code? What is the end of year outlook for US and Asian R-PET markets considering the weak environment at present?

SINGAPORE (ICIS)–Thailand’s Constitutional Court has on Friday dismissed Thailand Prime Minister Paetongtarn Shinawatra after she was found guilty of ethics violations during a leaked call with former Cambodian Prime Minister Hun Sen. The decision paves the way for the election of a new prime minister and ends the term of Paetongtarn after just one year, throwing Thailand into further political turmoil amid economical headwinds and border conflicts with Cambodia. Deputy Prime Minister Phumtham Wechayachai of Paetongtarn’s cabinet is the acting prime minister and will remain in office until an election is called, although there is no deadline, according to news media reports. Thailand’s GDP grew 2.8% year on year in the second quarter amid front-loading of exports ahead of the US imposing 19% tariffs on the country’s goods from 7 August. GDP growth is forecast to grow at 2.3% in 2025, down from 2.5% in 2024, said the Bank of Thailand in June.

LONDON (ICIS)–Covestro has completed the acquisition of Swiss multilayer adhesive films company Pontacol for an undisclosed sum as part of a strategic portfolio expansion, it said on Friday. The Germany-headquartered polymer materials producer said the deal would open up new growth opportunities, driven by increasing demand in future markets such as medical technology, mobility, and the textile industry. The transaction, which was announced in June and closed on 28 August, includes two specialized production sites in Switzerland and Germany that will transfer to Covestro.

SINGAPORE (ICIS)–Evonik is ramping up plant and research investments in Asia to hit their growth targets, while mitigating direct shocks from US tariffs by targeting “local-from-local” production, according to Claus Rettig, President Asia Pacific at the German-based specialty chemicals firm. Evonik is undergoing a significant strategic transformation, aiming to increase its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) by €1 billion to €2.7 billion by 2027 from €1.7 billion in 2023, Rettig told ICIS. €500 million will come from growth and the other €500 million from cost efficiencies via cost reductions among other measures, Rettig said. Asia has been earmarked as a region for further investment by Evonik and one example of this is its new alkoxides plant on Singapore’s Jurong Island, marking Evonik’s fifth plant in the country. When deciding where to build the alkoxides plant, Rettig said Singapore made sense as a base as Evonik already had existing infrastructure in place on Jurong Island, which would save costs while still allowing the company to service customers in Indonesia and Malaysia, who typically purchase alkoxides from China and Saudi Arabia. Indonesia’s growing focus on biodiesel production also serves as an opportunity for the company, who hopes to ramp up the plant’s operating rate to 100% “by the end of 2026”. As of this year, Indonesia has a B40 – 40% blend of palm oil with diesel fuel for domestic consumption – mandate and aims for B50 in the coming years. Finally, the 100,000 tonnes/year alkoxides plant in Singapore complements Evonik’s three plants located in Germany, Argentina and the US, being its first “world-scale” plant of its kind. “With all the uncertainties [surrounding geopolitical tensions], we want to be very balanced in our footprint,” said Rettig. KEY FOCUS ON ASIASales in Asia only amounted to a quarter of Evonik’s total as of 2024, but the company is aiming for a third of sales to come from the region by 2032, with China making up roughly half of that amount. Meanwhile, Europe’s sales made up 45% of Evonik’s total in 2024, and around 30% of sales was from the Americas. “I think nobody doubts Asia is and will remain the fastest-growing region in the world in chemicals, and that’s why we also allocate overproportional investments into Asia [to increase our footprint there],” said Rettig. While China remains a key focus in Evonik’s Asia operations, the company is also targeting India and southeast Asia for growth. For example, plants in India and Japan are due to open by the end of the year, Rettig said. TARIFF IMPACTPlants that mainly serve the country they are built in are useful for Evonik in mitigating direct risks from US tariffs, which are projected to reduce global GDP growth in 2025 to 3.0% from 3.2% in 2024. However, the indirect impact from geopolitical tensions is much harder to quantify, Rettig said. “Its not really easy to judge at all how much could be affected,” he said. Regardless, Evonik will proceed with their investments “based on fundamentals”, which still remain whether tariffs exist or not. “The growing population, the age of the population, the growing middle class, these are the fundamentals that stay in place regardless of tariffs,” said Rettig. Other factors such as the Regional Comprehensive Economic Partnership, which comprises Asia’s largest economies such as China, Indonesia, Japan and South Korea, will also be crucial for the company in the coming years if it wishes to hit their 33% sales target by 2032. Thumbnail photo: Claus Rettig is also a board member at the Singapore Economic Development Board (EDB). Source: Singapore EDB  Interview article by Jonathan Yee

HOUSTON (ICIS)–The new biofuel mandate proposed by the US calls for larger amounts of renewable fuel to be blended into gasoline and diesel, all while penalizing companies that import biofuels or the feedstock needed to make them domestically. The proposed mandate, called the Renewable Fuels Standard (RFS), will not just increase costs in the fuel market. Oleochemical producers rely on the same feedstocks to make fatty acids. The proposed penalty on imports of feedstock will increase demand for domestically produced material, which will raise prices for oleochemical producers and others company that use natural oils to produce goods. The following table shows the proposed RFS. The mandate volumes for each fuel is listed as renewable identification numbers (RINs), which is the unit of measurement used to determine compliance with the RFS. For ethanol, 1 RIN is equivalent to 1 gallon. For distillates, each gallon is worth more than 1 RIN to take into account their higher energy density. Figures in the table are listed in billions of RINs. 2023 2024 2025 2026 2027 Cellulosic biofuel 0.84 1.09 1.38 1.30 1.36 Biomass-based diesel 4.51 4.86 5.36 7.12 7.50 Advanced biofuel 5.94 6.54 7.33 9.02 9.46 Total renewable fuel 20.94 21.54 22.33 24.02 24.46 Implied conventional biofuels 15.00 15.00 15.00 15.00 15.00 Source: Environmental Protection Agency (EPA) The proposed RFS will increase costs in the following ways: It will require more advanced biofuels to be blended into finished fuels. Advanced biofuels typically cost more. It assumes that the same volume of conventional ethanol will be added into a shrinking domestic market for gasoline. This will require gasoline to contain higher concentrations of ethanol at a time when most service stations cannot handle fuels containing more than 10% ethanol. Companies will have to meet the RFS mandate by purchasing more expensive advanced biofuels biofuels such as renewable diesel. Imported biofuels or domestic biofuels fuels made from imported feedstock will receive a 50% discount towards meeting the biofuel mandate. This proposed discount would further increase compliance costs if refiners cannot obtain domestic biofuels or feedstock. Previous US policies already have raised biofuel costs. Tariffs have increased the costs of imported biofuels and the feedstocks needed to make them. In addition, US companies have fewer tax incentives to increase biofuel capacity. In all, the proposed RFS could increase compliance costs by nearly $70 billion annually in 2026 and 2027, according to studies commissioned by the American Fuel & Petrochemical Manufacturers (AFPM), a trade group that represents refiners. That is nearly twice as high as the previous record year for RFS compliance. The small refinery exemptions that the US recently announced will do little – if anything – to offset the costs of the proposed RFS. Those exemptions did not lower the biofuel mandate. Instead, they exemptions simply reallocated the obligations from the small refiners to larger ones. ETHANOL HITS BLENDING CEILINGIdeally, the fuel market would meet mandated volumes for total renewable fuels by blending conventional ethanol. Ethanol is typically cheaper than advanced fuels, and the proposed RFS assumes that this will happen. The mandate implies that blenders will continue adding 15 billion gal/year of conventional ethanol in the years 2026 and 2027, a figure unchanged from 2023-2025. However, US gasoline demand will continue declining, as shown in the following chart. Figures show millions of barrels per day of gasoline supplied to the US market. Source: Energy Information Administration To meet the mandate, finished gasoline will need to contain higher concentrations of ethanol, and fuel stations will need to the equipment necessary to store and distribute those higher blends. The problem is most fuel stations in the US can handle gasoline with maximum ethanol blends of 10% (E10). A relatively small number of fuel stations have the equipment and infrastructure necessary to handle gasoline with blends of 15% ethanol (E15) and 85% ethanol (E85), as shown in the following table: Total fueling stations 150,000 E15 3,000 E85 4,200 Sources: American Petroleum Institute (API), US Department of Energy (DoE) The lack of fuel stations that can distribute E15 and E85 makes it difficult to blend more ethanol in a shrinking market for domestic gasoline. US forecasts for fuel consumption acknowledge this ceiling on ethanol demand. They expect demand to decline, as shown in the following chart. Figures show millions of barrels/day of ethanol consumed in the US. Source: EIA Once the gasoline pool hits that ceiling for ethanol blending, blenders will have to meet the RFS mandate buy obtaining more expensive advanced biofuels such as biodiesel, renewable diesel, sustainable aviation fuel (SAF) and cellulosic fuels. In particular, renewable diesel and SAF have no blending limits, so the fuel market would face no physical constraints in using these fuels instead of conventional ethanol to meet their RFS mandates. However, the AFPM wars that such a strategy could prove way more costly than using conventional ethanol. It accounts for half of the $70 billion in annual compliance costs, according to the AFPM studies. IMPORTED BIOFUELS TO BECOME TWICE AS EXPENSIVEUnder the proposed RFS, imports of biofuels and domestic biofuels made from imported feedstock will receive a 50% discount towards meeting the biofuels mandate. In other words, it will be twice as expensive to rely on imported biofuels or feedstock to meet the proposed RFS mandates. The discount on imported feedstock will have more widespread effects because the biofuel industry is just one of many sectors that use natural oils. Oleochemical producers and other oil-dependent industries also rely on natural oils, so they will be competing with renewable fuels producers for limited quantities of domestic feedstock. The effects of this feedstock displacement would be amplified if biofuel producers replace imports of used cooking oil with domestic oils. Most of this used cooking oil is used to make biofuels, according to the business intelligence and analytical firm GlobalData. Moreover, the US imports significant amounts of used cooking oil, as shown in the following chart. Figures are in kilograms and reflect 2024 imports for consumption under the Harmonized Tariff Schedule (HTS) code 15180040. Source: US International Trade Commission (figures in kilograms) US TARIFFS INCREASE COMPLIANCE COSTS FOR DIESEL-TYPE BIOFUELSEven without the RFS, compliance costs will likely increase because of tariffs, which the US has imposed on some of its largest suppliers of feedstock used to make biofuels. In 2024, China was the largest US supplier of imports of used cooking oil, Brazil was the largest for tallow and Argentina for refined soybean oil. The following chart shows the US 2024 trade balance for tallow (HTS code 150210) and refined soybean oil (HTS code 150710). Figures are in kilograms, and they show imports for consumption and domestic exports for 2024.  Source: ITC The US could conceivably replace these imports with domestically produced soybean oil, but it will need to increase production and install crushing capacity to provide enough feedstock to offset the imports. It will also present logistic challenges, since supply chains would need to be re-arranged to accommodate the new sources of feedstock. If the new supply chains require domestic shipping, then the Jones Act could further increase costs because it requires shipping between US ports to be conducted by ships built, flagged, owned and crewed domestically. US TAX CODE PROVIDES FEWER INCENTIVES FOR RENEWABLE FUELSThe US tax code is reducing its incentives for biofuel production, which will make it more expensive for companies to increase production to meet the larger mandate in the proposed RFS. The biodiesel blender tax credit expired at the end of 2024. It provided a $1 tax incentive for each gallon of pure biodiesel or renewable diesel blended into petroleum-based diesel. By contrast, the section 45Z Clean Fuel Production Credit (CFPC) provides a 35 cent/gal benefit for sustainable aviation fuel (SAF) and 20 cents/gal for all other fuel. The credit rises to $1.75/gal for SAF and $1.00/gal for all others for producers that meet prevailing wage and apprenticeship requirements. However, feedstocks must be sourced from the US, Canada or Mexico. HOW THE RFS WORKSThe RFS requires that a mandated volume of biofuel is added to the nation’s fuel pool. The RFS distinguishes among the different types of biofuels by their feedstock, the process used to produce them and their effect on greenhouse gas emissions. The following table summarizes the different classes of biofuels. Code Content Greenhouse Gas Reduction Renewable Fuel D-6 Any biomass, including corn starch At least 20% versus petroleum Advanced Biofuels D-5 Any renewable biomass except corn-starch-based ethanol At least 50% versus petroleum Biomass-based Diesel D-4 Biodiesel, renewable diesel At least 50% versus diesel Cellulosic biofuel D-3, D-7 Made from cellulose, hemicellulose or lignin At least 60% versus petroleum Source: EPA Insight article by Al Greenwood Thumbnail shows corn, which can be used to make ethanol. Image by Shutterstock.