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.

SINGAPORE (ICIS)–Bank Indonesia (BI) lowered its key interest rate – the seven-day reverse repurchase rate – by 25 basis points (bps) to 5.25% on Wednesday amid a trade deal struck by Indonesia with the US. Interest rate cut comes amid US trade deal Need for more household spending, but exports “quite good” Global economic growth to remain at around 3.0% – BI The central bank also lowered overnight deposit rates by 25 bps to 4.50%, and the lending rate by 25 bps to 6.00% amid “the need to continue to stimulate economic growth” as well as a lowered inflation forecast for 2025 and 2026. “Going forward, BI will continue to monitor the scope for interest rate reductions to stimulate economic growth while maintaining rupiah (Rp) exchange rate stability and achieving inflation targets in line with the dynamics of the global and domestic economies,” the central bank said. Indonesia is southeast Asia’s biggest economy and is a major importer of petrochemicals amid strong demand and limited local production. UNCERTAINTY OVER TARIFFS LOWERS OUTLOOKBI flagged global economic uncertainty rising again based on the US government’s latest ‘reciprocal’ tariffs that are planned to take effect on 1 August. As a result of slower economic growth brought about by the US’ tariffs, the central bank projects global economic growth in 2025 to remain weak, at around 3.0%. BI also emphasized the importance of stimulating Indonesia’s economic growth amid the weaking global economic outlook. The performance of Indonesia’s exports in the second quarter was “quite good”, supported by natural resource-based exports and manufactured products. Meanwhile, household consumption still needs to be increased, reflected in slowing retail sales. “Looking ahead, economic growth in the second half of 2025 is projected to improve, and overall for 2025 is projected to be in the range of 4.6-5.4%,” BI said. Indonesia’s latest GDP growth rate reading – for the first quarter of 2025 – was at 4.87% year on year. CPI inflation for Indonesia in June 2025 was recorded at 1.87% year on year, while core inflation fell to 2.37% year on year, said BI. TRADE DEALGoods from Indonesia to the US will receive a 19% levy, while US imports to Indonesia will not be subject to any duties, US President Donald Trump announced on his social media platform Truth Social. The new rate is significantly lower than the previously announced rate of 32%. Transshipments from countries subject to higher rates will be subjected to the higher rate on top of the Indonesia rate. In addition, Indonesia apparently committed to $15 billion in US energy purchases, $4.5 billion of American farm products and 50 Boeing jets, according to Trump. The US did not specify when the agreement will take effect. Hasan Nasbi, who is Indonesia President Prabowo Subianto’s spokesperson, called the deal “an extraordinary struggle” on Wednesday. Indonesia had a trade surplus of $17.9 billion with the US in 2024, according to the US trade representative. While the levy on Indonesian goods is lower than Vietnam’s 20%, Indonesia’s oleochemicals producers, which form the bulk of Indonesia’s exports to the US, are awaiting the announcement of other rates, notably Malaysia’s. Malaysia is also a large oleochemicals exporter and currently has 25% tariffs levied on its goods by the US, to take effect from 1 August unless a trade deal can be reached. Focus article by Jonathan Yee Infogram graphs by Nurluqman Suratman

HOUSTON (ICIS)–The US reached a trade deal with Indonesia, the nation’s president said on Tuesday. Under the agreement, the US will charge a tariff of 19% on imports from Indonesia, President Donald Trump said on social media. For transshipments from countries subject to higher rates, the US will impose the higher rate on top of the Indonesia rate. Indonesia will charge no tariffs on US imports, Trump said. Also, Indonesia will import $15 billion worth of US energy, $4.5 billion worth of US agricultural products and 50 jets from Boeing, a US aerospace company. Trump did not say if these were one-time purchases or annual purchases. The US did not specify when the agreement will take effect. The US had threatened to impose tariffs of 32% on Indonesia on 1 August had the two countries failed to reach a trade deal. Indonesia is a significant source of US imports of feedstock used to make oleochemicals, such as palm oil, palm kernel oil (PKO) and coconut oil as well as downstream fatty acids and fatty alcohols. Thumbnail shows bottles of detergent, a product that is made from oleochemicals. Image by Jochen Tack/imageBROKER/Shutterstock.

LONDON (ICIS)–BASF and Covestro’s moves to manage expectations for full-year earnings growth underline the precarity of global economic growth, with potential for heavy US tariffs on the EU only serving to further weigh on sentiment. The two Germany-based companies announced downgrades to their full-year growth expectations on 11 July, with both attributing the move to macroeconomic weakness. BASF now expects 2025 global GDP growth of 2.0-2.5% compared to earlier expectations of 2.6%. This is likely to drive down the company’s full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) pre-special items to €7.3-€7.7 billion from previous forecasts of €8-8.4 billion. In addressing the US’ shifting tariff plans, BASF executives have emphasised the global spread of the company’s operations, insulating the company from the direct impact of inter-regional trade barriers. Company CFO Dirk Elvermann estimated that 90% of its European revenues are derived from local production, as well as 90% in North America – 80% in the US – and 80% in Asia Pacific, a figure likely to rise once its Zhanjiang, China, Verbund  site starts up. This local resilience cannot offset the overall demand hit from a global manufacturing sector that has been impacted in some places by new trade barriers, and spooked by the global economic turmoil in others. Market demand for chemical products would likely grow less than previously expected, the company said in the press statement released last Friday. Due to continued high product availability on the market, margins continued to remain under pressure, especially upstream, it added. BASF’s revised earnings forecast represents a cut of 8% at the mid-point from previous expectations, while Covestro expects 2025 EBITDA to stand at €700 million – €1.1 billion, compared to previous guidance of €1-1.4 billion. Also attributing the downgrade to a weak economy with little hope of a short-term recovery. The announcement comes despite projected second-quarter earnings of €270 million, near the top of its earlier €200 million – €300 million guidance. The company also beat out consensus estimates for first-quarter EBITDA, despite levels halving from the same period a year earlier, hinting that more pain may be ahead in the second half of the year. GLOBAL SLOWDOWN BASF’s current GDP growth expectations are substantially below the 2.8% projected by the IMF in April, itself a 0.5 percentage point downgrade from forecasts the organisation issued in January. Projections are tougher than usual to make amid such a shifting global outlook, but the fact remains that each new global GDP forecast this year issued by almost any organisation is lower than the one that preceded it. So far, this has all taken place with few of the major new tariffs from the US coming into play, with the 2 April announcement of global levies paused through to July, and new numbers only beginning to emerge in the last week. TARIFF FEARS REVIVE So far, the US has proposed 50% tariffs on imports from Brazil and 20% tariffs on Vietnam and rates of 30% on China, along with potential plans for new rates for most goods from 21 other nations. This includes a new proposed tariff of 30% on EU goods, currently set to come into effect on 1 August. The expectation remains among investors that a deal will be struck between Washington and Brussels that will prevent that, with stronger German business sentiment in July driven in large part by that hope. Nevertheless, the prospect of 30% tariffs is “effectively prohibitive of mutual trade” according to European Commission trade minister Maros Sefcovic, speaking on the side lines of a Commission meeting on Monday. Sefcovic also expressed dismay at the US announcement of fresh EU tariffs while the two blocs are in the midst of negotiations. The proposed first wave of EU tariffs on US goods, totalling €21 billion, remains paused through to August, and the Commission has shared plans for a larger package of measures on around €72 billion of US imports. The Commission is also pushing harder to rebalance trade away from the US, with a focus at present on talks with Indonesia, Thailand, the Philippines, Malaysia and India. While the EU-US tariffs may be negotiated away or at least talked down from the current proposed levels – US President Donald Trump had previously proposed 50% rates on EU imports – the uncertainty around the many global talks is likely do dog economic growth well into the third quarter. Heightened investor caution and decision paralysis on bigger investments has been one of the dominant themes of 2025 so far in the wake of the tariff discussions, and this will continue to weigh on GDP and chemicals demand growth until the way ahead looks clearer. Despite moves in the sector, particularly in Europe, to push further up value chains towards more defensible positions in specialties, the chemicals sector remains tied to GDP growth rates. Players may be able to push growth a few points above global economic growth, but that capacity is limited, particularly when demand uncertainty is pushing buyers to maintain low inventories. There had been little hope for a strong recovery this year but at the current trajectory, global growth this year and next is likely to be lower even than 2024, making for even more of an uphill battle for players to push back to the middle of the cycle. BASF announces its full second-quarter results on 30 July, while Covestro is expected to release its financials for the period on 31 July. Insight by Tom Brown Thumbnail image credit: Shutterstock

LONDON (ICIS)–ICIS has received a written statement from the Directorate-General for the Environment (DG Env) confirming that under the current scope of Directive (EU) 2019/904 only recyclate made from post-consumer plastic waste placed on the EU market can count towards the 25% recycled content target set out in Directive 2019/904. ICIS contacted DG Env for clarification on the current scope of the SUPD and Implementing Decision 2023/2683 following publication of a previous article in June in which ICIS stated that only recycled polyethylene terephthalate (R-PET) produced using plastic waste in the EU can currently count towards the 25% recycled content target set out under the Single Use Plastics Directive (SUPD) following written confirmation from DG Env. ICIS received comments from market participants following the June article expressing differing views to that stated by DG Env, leading to a follow-up request for additional clarification, specifically seeking confirmation if R-PET flakes and/or food-grade pellet imported from third countries outside of the EU can be used in the calculation of recycled content in PET beverage bottles placed on the EU market. In its reply to ICIS on 11 July, DG Env stated: “Article 6(5), point (a), of the SUP Directive requires Member States to ensure that as of 2025, SUP beverage bottles made of polyethylene terephthalate as the major component that are placed on their markets contain at least 25 % recycled plastic on average. The Commission laid down the rules on the calculation, verification and reporting on recycled content in SUP beverage bottles in Implementing Decision 2023/2683. Article 1(2) of this Implementing Decision defines ‘recycled plastic’ as “plastic which was post-consumer plastic waste before recycling as defined in Article 3(17) of Directive 2008/98/EC and which has been produced by recycling” [emphasis added]. Article 1(1) defines ‘post-consumer plastic waste’ as “waste, as defined in Article 3(1) of Directive 2008/98/EC, that is plastic and that has been generated from plastic products that have been placed on the market” [emphasis added]. SUP Directive Art 3(6) defines ‘placing on the market’ as “the first making available of a product on the market of a Member State” [emphasis added]. From this it follows that plastic waste stemming from products that had been placed on the market of a third country does not qualify as ‘post-consumer plastic waste’, therefore recyclates being processed from such waste do not qualify as ‘recycled plastic’ pursuant to the above-mentioned definitions.” Market contacts had raised queries regarding the use of the phrase ‘R_imported’ in formula 4 of Annex 1 of Implementing Decision 2023/2683 on which ICIS sought additional clarification. To this DG Env stated: “Formula 4 of Annex I of Implementing Decision 2023/2683 serves to calculate the weight of recycled plastic that is used in the bottles that are placed on the market of a Member State. The term ‘R_imported’ has been included for completeness – together with the terms ‘R_in from other MS’, ‘R_out to other MS’ and ‘R_exported’ – to ensure that movements of bottles across the Member States’ borders can be taken into account. It is defined as the “weight of recycled plastic used in bottles that have been imported, i.e. moved into the Union from third countries, and placed on the market in the Member State”. As such, it covers recycled plastic in imported bottles, with the definition of ‘recycled plastic’ as cited above, i.e. recycled plastic stemming from plastic products that had been placed on the EU market, before – at some point, as products or as waste – they had been brought into a third country. Notably, formula 4 is a simple calculation formula to guide the Member States as to how to calculate the weight of the recycled content in SUP beverage bottles that they have to report to the Commission to show compliance with the recycled content targets. As explained above, it does not create any inconsistency with the definition of ‘recycled plastic’ in Implementing Decision 2023/2683.” FUTURE CHANGES However, the current definition of ‘post-consumer plastic waste’ is likely to change as the Commission is working on a new Implementing Decision that will replace 2023/2683. DG Env stated: “[W]e are working on a new Implementing Decision, which will replace Implementing Decision 2023/2683. Notably, the definition of ‘postconsumer plastic waste’ therein has been aligned with the definition in the new Packaging and Packaging Waste Regulation, which does include waste stemming from products that had been placed on the market of a third country. Therefore, once the new Implementing Decision is adopted and enters into force, such waste will be allowed to count towards the recycled content targets in the SUP Directive. The draft Implementing Decision, which is available to review and comment via the Have Your Say portal until 19 August 2025, in preamble 16 now reads as ‘Post-consumer plastic waste needs to be understood as waste generated from plastic products that have been placed on the market of a Member State or of a third country.’ This new draft version adds in the phrase ‘…of a Member State or of a third country’, which is not present in the existing Implementing Decision. This statement from DG Env gives clarity on what currently counts towards the SUPD target while confirming the draft Implementing Decision will allow for recycled plastic made from post-consumer waste placed on the market of a third country to be allowed to count towards the SUPD recycled content targets.

SINGAPORE (ICIS)–Neste will supply 7,400 tonnes (9.5 million liters) of unblended sustainable aviation fuel (SAF) to DHL Express at Singapore’s Changi Airport beginning this month for a year, the Finland-based company said on Tuesday. The SAF, which will account for approximately 35% to 40% of the overall fuel blend composition of DHL Express’ fleet of Boeing five 777 freighters, is produced at Neste’s refinery in Tuas, located in southwest Singapore. “We are excited to expand our cooperation with DHL to Singapore, a leading aviation hub in Asia-Pacific,” said Carl Nyberg, senior vice president, Commercial, Renewable Products at Neste. “It leverages our SAF production and supply capabilities in Singapore, and demonstrates how we are working with DHL globally to help the company achieve its air transportation decarbonization targets using a solution that is available at scale today,” Nyberg added. Said Christopher Ong, managing director for DHL Express Singapore: “This partnership with Neste to procure and uplift SAF for DHL Express’ international air cargo flights from Singapore is a significant milestone for us.” “Not only will it enable us to gain new strides in emissions reduction in air transport, it also allows us to strengthen our commitment to customers to provide more sustainable shipping options,” Ong said. The agreement will contribute to a target of 1% SAF use on all passenger and cargo flights from 2026 onwards, according to the statement. Neste’s SAF, made from renewable waste and residues including used cooking oil and animal fats, is certified for commercial aviation and can be blended up to 50% with conventional jet fuel without infrastructure changes. Neste’s global SAF production capacity is 1.5 million tonnes/year, with plans to grow to 2.2 million tonnes/year in 2027.