LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 27 June. Spain’s Fertiberia presses ahead with layoffs despite 10-day strike actionFertiberia will push ahead with layoffs affecting 54 of its workers and will carry out negotiations to maintain the “sustainability” of its operations, the Spanish fertilizers producer told ICIS this weekend. INSIGHT: Long supply, weak pre-summer demand to drive most Europe chemicals prices down in JuneThe majority of European petrochemical prices are expected to decline in June, driven by long supply and few signs of seasonal demand uptick. SABIC confirms permanent closure of Wilton, UK cracker, LDPE will continue to runSaudi producer SABIC has confirmed it will not restart its Olefins 6 cracker based at Wilton, UK ending several months of “Will it, won’t it?” speculation. INSIGHT: No major near-term recovery expected for MX and PX in EuropeDemand for mixed xylenes (MX) and paraxylene (PX) in Europe has been limited from the start of 2025, with no sign of recovery in the near term. Volatile feedstocks drive European refinery solvents marketsEuropean refinery solvents markets players have their work cut out this month trying to keep up with feedstock changes, with volatile June costs to feed into July pricing targets.

TORONTO (ICIS)–Canada and the US have agreed to resume trade negotiations with a view towards reaching a deal by 21 July, Canada’s finance ministry announced late on Sunday (29 June). The announcement came after US President Donald Trump said on 27 June that the US was terminating with immediate effect all trade discussions with Canada, and he threatened to impose new tariffs against Canada to protest that nation’s digital services tax (DST). Canada’s finance ministry said in a statement that the government decided to rescind the tax “in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.” In line with the revocation of the tax, “Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by 21 July 2025,” the ministry said. The tax came into force on 28 June 2024 and collection was scheduled to begin on 30 June 2025. A trade agreement is important for Canada’s chemical industry, which in 2024 exported Canadian dollar (C$) $55.6 billion ($40.6 billion) worth of chemicals and chemical products, with 77% of those exports going to the US, according to data from trade group Chemistry Industry Association of Canada (CIAC). ($1 = C$1.37) Additional reporting by Al Greenwood Please also visit the ICIS topic page: US tariffs, policy – impact on chemicals and energy

SINGAPORE (ICIS)–China’s expansion of its carbon market and the EU’s implementation of Carbon Border Adjustment Mechanism (CBAM) are reshaping the landscape for high-emission industries. Steel, aluminum, and cement are under increasing pressure to decarbonize, and hydrogen is emerging as a strategic solution. In this podcast, ICIS analysts Patricia Tao and Lewis Unstead compare China and Europe’s approaches to decarbonizing heavy industry, and discuss the role of hydrogen in this transformation. China expands ETS to heavy industries, covering 60% of national carbon emissions EU’s CBAM revision delays cost phase, sharpens carbon price signals for global exporters Hydrogen pilots advance in steel, cement, aluminium—but scale-up faces major economic barriers Both China and EU face similar hurdles in hydrogen application —high costs, infrastructure gaps, and subsidy dependency

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 27 June. Asia petrochemical shares fall; oil rises as US enters Israel-Iran war By Nurluqman Suratman 23-Jun-25 13:05 SINGAPORE (ICIS)–Asia’s petrochemical shares dipped while oil prices rose on Monday, after the US bombed Iran’s nuclear facilities, raising fears of retaliation from Tehran which could disrupt global oil supplies. Oil dips 2.2% after Trump’s claim of Iran-Israel ceasefire By Jonathan Yee 24-Jun-25 10:44 SINGAPORE (ICIS)–Oil prices dipped below the $70/barrel mark on Tuesday after US President Donald Trump unilaterally declared a ceasefire in the Iran-Israel conflict, which he dubbed a “12-day war”. China petchem futures track oil price tumble on easing geopolitical crisis By Fanny Zhang 24-Jun-25 11:52 SINGAPORE (ICIS)–China’s petrochemical futures plunged on Tuesday, tracking the sharp retreat in crude oil as US President Donald Trump’s announcement of an Iran-Israel ceasefire eased fears of supply disruptions. UPDATE: Crude falls $2/bbl; Trump says Israel-Iran ceasefire takes effect By Jonathan Yee 24-Jun-25 16:05 SINGAPORE (ICIS)–Oil prices declined by more than $2/barrel on Tuesday afternoon in Asia, as US President Donald Trump said that the Israel-Iran ceasefire – which was confirmed by Israel – is now in effect. S Korea’s GS Caltex launches study for biofuel plant in Indonesia recycling palm oil waste By Jonathan Yee 25-Jun-25 13:15 SINGAPORE (ICIS)–South Korean oil refiner GS Caltex will launch a feasibility study for a project in Indonesia aimed at producing biofuel by processing palm oil mill waste, the company said on 24 June. INSIGHT: China could become net PP exporter after three months of exporter status By Lucy Shuai 25-Jun-25 17:49 SINGAPORE (ICIS)–China’s polypropylene (PP) has maintained a net exporter status for three consecutive months from March to May 2025. With the continuous increase in domestic supply, China’s PP may turn into a net exporter this year. Asian naphtha supply concerns ease, but not entirely gone By Li Peng Seng 26-Jun-25 11:26 SINGAPORE (ICIS)–Asia’s naphtha intermonth spread rose this week, driven by concerns over Middle Eastern supplies although the situation has somewhat stabilized following a ceasefire between Iran and Israel. India methanol prices to correct as Iran-Israel conflict tensions ease By Damini Dabholkar 26-Jun-25 13:43 SINGAPORE (ICIS)–Prices of methanol in India corrected sharply on Wednesday after the ceasefire between Iran and Israel began. Asia, Mideast petrochemical markets weigh Iran-Israel ceasefire, looming tariffs By Jonathan Yee 27-Jun-25 12:31 SINGAPORE (ICIS)–The Asia and Middle East chemical markets are grappling with a volatile mix of geopolitical developments, tariff uncertainties, and a persistent supply overhang against a backdrop of subdued demand.

HOUSTON (ICIS)–The US is threatening to impose tariffs against Canada in the next seven days to protest the nation’s digital services tax, US President Donald Trump said on Friday. Canada’s digital services tax goes into effect on Saturday. “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump said on social media. “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.” The US and Canada reached an agreement earlier this year, under which they would not impose tariffs on goods that comply with the nation’s trade deal, known as the US-Mexico-Canada Agreement (USMCA). Canada exports large amounts of plastics and chemicals to the US, especially to the northern border states that are far from the petrochemical plants along the Gulf Coast. Canada also exports large amounts of potash and crude oil to the US.

HOUSTON (ICIS)–The US and China have made further progress on easing trade restrictions that each country had imposed on shipments of ethane and rare earth products. A spokesperson for China’s Ministry of Commerce said on Friday that the two countries have further confirmed the details of a framework they had earlier reached in London about the trade restrictions. In the latest development, China will review and approve export applications of controlled items that satisfy the country’s conditions, according to a translation of the spokesperson’s comments. Accordingly, the US will cancel a series of restrictive measures. The ministry did not specify the products that are subject to the latest development of the trade restrictions. However, past comments and media reports indicated that China had restricted shipments to the US of magnets made of rare earth elements, which had the potential to disrupt US production of automobiles. The US had imposed restrictions on shipments to China of jet engines, chip software and ethane. The US has recently loosened its restrictions on ethane shipments to China. However, it is not allowing companies to complete the shipments by off-loading the ethane to customers in China. It is unclear if the latest development between China and the US will allow such unloading to take place in the future. At present, five producers in China’s coastal areas are fed with ethane and propane, including Lianyungang Petrochemical (Satellite Chemical), Wanhua Chemical, SP Chemicals, Ningbo Huatai Shengfu and Sanjiang Chemical. Satellite is particularly exposed to import restrictions because its crackers rely solely on ethane. The US is the only country in the world that exports ethane overseas. If the US continues to restrict ethane shipments, China cannot find another source. US, CHINESE TRADE TENSIONS SPREAD TO EXPORT RESTRICTIONSTensions between the US and China have spread from tariffs to trade restrictions, under which each country requires licenses before they would allow the export of certain products that they deem could be used for military purposes. Earlier in 2024, China imposed restrictions on exports to the US of antimony, a catalyst used by producers of polyethylene terephthalate (PET). On 4 February, it restricted exports of tungsten, tellurium, bismuth metal, indium and molybdenum. Bismuth is used to make catalysts for polyurethanes and for acrylonitrile (ACN) in the SOHIO process. Bismuth is also used to make radiopaque additives, which make plastics visible under x-ray. It is unclear if the London framework reached by China and the US covers exports of bismuth and antimony. Thumbnail Photo: Polyethylene, which is made from ethylene that can be derived from ethane. (Image by ICIS)

HOUSTON (ICIS)–US-based adhesives producer HB Fuller raised its guidance because of the success of its focus on pricing, cost cutting and portfolio management and not because it sees signs that it will get any additional help from the economy. “Looking ahead, we expect a continued challenging operating environment characterized by a high level of uncertainty and constrained demand. Also, while the dollar has recently weakened, we expect currencies to remain unpredictable,” HB Fuller CEO Celeste Mastin said. She made her comments during an earnings conference call. “Our assumption is that volumes will be constrained for the remainder of the year.” The company’s new guidance expects slightly weaker volumes in the second half of the year, Mastin said. Profits and margins will grow, however, because of pricing actions and raw material purchasing leverage. HB Fuller is typically the first major US-listed chemical company to release its results during the earnings season, as its fiscal year runs through November. As a result, HB Fuller’s comments provide a preview about the trends that other chemical companies could discuss during their earnings presentations. When companies discussed Q1 earnings earlier in 2025, they had discounted any help that macroeconomics could have on their performance. Instead, any growth in profits would have to come from self-help measures like pricing and cost cutting. While HB Fuller is just one company, its comments show that, so far, that trend is holding, and self-help will likely play a large role in companies’ performance during the earnings season. After HB Fuller revealed its higher earnings guidance, its shares rose by nearly 11% on Thursday. The following table shows HB Fuller’s latest earnings guidance and compares it with its previous forecast. Figures are in millions of dollars. Current Previous Revenue Down 2-3% Down 2-4% Organic Revenue 0-2% 0-2% Adjusted EBITDA 615-630 600-625 Source: HB Fuller LIMITED TARIFF EXPOSUREHB Fuller had adopted a strategy of producing in the same regions from which it sells to its customers, which strengthens customer service and limits its exposure to tariffs, Mastin said. Overall, 97% of what HB Fuller makes is sold in the same region, she said. In the US, the figure is 99%. In China, it is 96%. For those parts of HB Fuller’s business that are exposed to tariffs, the company will address it through sourcing and pricing. The larger question that HB Fuller and other chemical companies have is the effect that tariffs will have on volumes. “The way we look at that is we need to be prepared for potentially lower volumes given potentially more constrained economies,” Mastin said. END MARKET SNAPSHOTAs a global adhesives producer, HB Fuller serves many of the same end markets as upstream commodity chemical producers. Many of its applications go into packaging, construction, automobiles and electronics. HB Fuller is also exposed to the solar industry. HB Fuller selling adhesives to more applications within the automotive sector, particularly in Asia Pacific. In the past, its adhesives had been used in interior trim of automobiles, Mastin said. These are expanding to exterior trim, powertrains, sealing applications and thermal management for batteries and braking systems. The company is benefiting from the trend of automobile producers adding more electronics to their vehicles, Mastin said. HB Fuller also noted strength in medical applications. The company has gained share in flexible packaging. Its electronics business continues to take market share. Mastin noted wins in aerospace and defense in the US, particularly in radar assemblies, pressure sensors, tires and fighter jet fiber-optic communications. Demand from residential construction remains slow, but this end market makes up less than 6% of HB Fuller’s revenue. Roofing remains strong. Demand for adhesives from solar panel producers had fallen because of overcapacity in the industry. HB Fuller has been responding to this weakness by targeting more differentiated applications within the solar industry HB Fuller noticed a temporary pause in exports from China during Q2, and that could extend for a couple more months, Mastin said. After that, volumes should improve because of new designs being introduced by electronics producers. During Q2, HB Fuller saw weakness from end-of-line packaging and beverage labelling applications Costs for raw materials continue to decline, but they remain higher from year-ago levels, Mastin said. HB Fuller responded by reallocating raw materials to different suppliers during Q1. Those moves should have an effect on the company through the second half of its fiscal year. As an adhesives producer, HB Fuller’s raw materials include tackifying resins, polymers, synthetic rubber, plasticizers and vinyl acetate monomer (VAM). The company’s adhesives are used in construction, packaging, automobiles and other end markets shared by many plastics and chemicals. Thumbnail Photo: Adhesive. (Image by Shutterstock)

TORONTO (ICIS)–Canadian auto industry companies must consider all options – from shifting production to the US to preparing for bankruptcy – as they face uncertainties posed by US tariffs, lawyers at Toronto-based law firm Torys said in a webinar. The auto industry is a key end market for the chemical and plastics industries, with shifts or changes in one sector impacting the other. In Canada, the auto industry “matters, it matters a lot,” said lawyers Adam Slavens and Ryan Lax, and went on to note that the industry generates more than Canadian dollar (C$) $100 billion (US$73 billion) in annual revenue and contributes more than C$19 billion to GDP. Slavens and Lax said tariffs were a “blunt tool” for US President Donald Trump to use in trying to shift auto manufacturing from Canada and Mexico to the US. The north American auto industry is integrated, and it would take the US years to expand plants or build new ones and set up the required supply chains, they said. However, Canadian-based auto and parts companies could not just hunker down and hope that the next president will reverse course after Trump’s term ends in early 2029, they said. The thrust of Trump’s policies will likely last, and the tariff and trade issues have become “a new normal” as the US consensus around free trade has weakened, they said. As it stands, although USMCA-compliant autos and auto parts made in Canada can, for the time being, continue to enter the US tariff-free, no final deal has been reached, creating uncertainty that makes it hard to make investment decisions, they said. There was a “fundamental uncertainty” over the outcome of the tariff dispute and the re-negotiations of the US-Mexico-Canada (USMCA) trade deal, they added. The questions facing decision makers in the auto industry today were “Where to build the next plant? Where to spend the next investment dollar, in the US or Canada?” – decisions that were hard to make given the level of uncertainty, they said. “Folks don’t know how to plan for their businesses, in view of the uncertainty and the unpredictability, there are no clear rules of the game that folks can be assured will apply for the coming five or ten years,” Lax added. MITIGATION The lawyers suggested a number of measures for Canadian-based auto firms to mitigate or withstand the impacts of tariffs, including: Shift some production to the US. Review intra-company transfer pricing to reduce tariff liabilities. Become indispensable by focusing on niche components neither a US nor a Mexican competitor can offer. Expand outside of North America, although this was a “difficult proposition” given that the European auto industry has its “own issues”. Review supply chain contracts, on the “very good assumption” that someone in the supply chain will have “an issue, at some point” over the near or long term. Review contracts with customers or suppliers to determine liability for tariff costs. Consider force majeure, renegotiate or terminate contracts. Include forced majeure clauses covering tariff risks in new contracts. For the time being, hold back on spending and avoid capital investments, to improve cash flow. Avoid hiring new employees. If the business is already in “a greater degree of distress”, consider restructuring under Canada’s Companies’ Creditors Arrangement Act (CCAA). Furthermore, firms should apply for “remissions” or exemptions from Canadian retaliatory tariffs, the lawyers said. Trump’s primary aim seems to be to keep Chinese vehicles out of the market, the lawyers said, citing remarks by the US ambassador to Canada on 25 June during a webinar that Slavens and Lax attended. The US wants an integrated north American auto manufacturing industry, the ambassador stated, and he said “there can’t not be a deal with Canada”, according to the lawyers. As such, a US-Canada trade deal should be a matter of time and the uncertainties would eventually go away – although Canada might end up with less auto investments than historically, they said. Once there is more clarity, private equity firms may step in and build an investment thesis around Canada’s remaining auto industry, they added. AUTOS AND CHEMICALS The automotive industry is a major global consumer of petrochemicals that contribute more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals, such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). Demand for chemicals in auto production comes from, for example, antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tires and hoses, upholstery fibers, coatings and adhesives, according to Kevin Swift, ICIS Senior Economist for Global Chemicals. Virtually every component of a light vehicle, from the front bumper to the rear taillights, features some chemistry, with the latest data indicate that polymer use is about 423 pounds (192kg) per vehicle, Swift said. Meanwhile, electric vehicles (EVs) and associated battery markets are an important growth opportunity for the chemical industry, with chemical producers developing battery materials, as well as specialty polymers and adhesives for EVs. (US$1= C$1.37) Thumbnail photo of cars Honda assembles at Alliston, 100km north of Toronto, where the Japanese auto major is postponing a multi-billion dollar investment in electric vehicles and batteries (Photo source: Honda) Please visits the ICIS topic pagesAutomotive: Impact on chemicals US tariffs, policy – impact on chemicals and energy

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. “Those who cannot remember the past are doomed to repeat it.” Winston Churchill’s words resonate because of parallels between China’s real estate-bubble and its current surge in high-tech manufacturing. The last bubble led to extraordinary and unsustainable demand for petrochemicals, ultimately going “pop” in late 2021 with the Evergrande default. This shift meant Chinese petrochemicals demand growth projections plummeted from 6-8% per annum to a more realistic 1-4%, contributing significantly to today’s record oversupply. Now, a new narrative emerges around a potential tech bubble, particularly in electric vehicles (EVs), solar panels and batteries Here’s why we should pay close attention: EV Market Overcapacity: China’s vehicle production exploded to over 31 million units in 2024, leading to intense competition. Of the 169 automakers operating in China today, more than half hold less than 0.1% market share. Only a handful, like BYD, Li Auto, and Series, are consistently profitable, while many others are burning cash. This has triggered aggressive price wars, with market leader BYD implementing significant price cuts. Solar & Battery Oversupply: Chinese solar companies faced sharp declines in 2024, with companies seeing a 28.8% drop in revenue and a 72.2% plunge in profits. The average operating rate in China’s automotive battery industry was 49.5% in 2024. In 2023, China’s lithium-ion battery production alone was enough to meet global demand, with total global capacity at nearly 2,600 GWh. The Export Challenge & Protectionism: To manage surpluses, Chinese high-tech companies are aggressively exporting. However, this is clashing with rising protectionism. The US has imposed a 100% tariff on Chinese EVs, and the EU has also applied duties. China’s growth model has historically relied on investment, often debt-financed, over consumption. This, combined with worsening demographics—with projections showing China’s population potentially falling to as little as 373 million by 2100 (down from 1.41 billion in 2022 and a projected 1.2-1.3 billion by 2050)—raises critical questions about the sustainability of this high-tech push and its broader economic implications. Just as the previous credit caused significant disruption to the global petrochemicals industry, we cannot afford to ignore the risks of a high-tech bubble bursting. What are your thoughts? Is history set to repeat itself, or can China navigate these challenges differently? 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.