SINGAPORE (ICIS)–Indonesia’s central bank kept its policy rate unchanged at 5.75% on Wednesday, a day after local stocks closed nearly 4% lower, on concerns over the country’s economic growth prospects and government finances. Jakarta composite index shed 3.8% on 18 March Rupiah remains under control, central bank says Economy projected to grow by 4.7-5.5% in 2025 Bank Indonesia (BI) kept the benchmark seven-day reverse repurchase rate steady at 5.75% and left its overnight deposit facility and lending facility rates unchanged at 5.00% and 6.50%, respectively. The rupiah (Rp), which initially fell in early trade, stabilized after BI’s announcement at Rp16,515 per US dollar, near its lowest level in five years. The BI’s move to keep rates stable was “consistent with efforts to keep the 2025 and 2026 inflation forecasts” within the target of 2.5% plus or minus one percentage point; “maintain rupiah exchange rate stability in line with fundamentals amidst persistent high global uncertainty, and contribute to economic growth”, the central bank said in a statement. BI also said that the rupiah exchange rate remains under control, supported by stabilization policies. The rupiah strengthened by 0.94% against the US dollar in March after weakening by 1.69% in February 2025, “influenced by reduced foreign capital inflows into regional stocks, including Indonesia, in line with global uncertainty”, BI said. “Bank Indonesia is looking for opportunities to lower rates, but a rate cut this month may come too soon following the policy easing in January. We look for the next policy rate cut in Q2,” said Lloyd Chan, senior currency analyst at Japan-based MUFG Global Markets Research Asi, in a note. In January, the central bank issued a surprise rate interest rate cut to support economic growth amid expectations of continued low inflation in 2025 and 2026. The move had sent the rupiah tumbling to a six-month low against the US dollar. BI’s decision comes after its benchmark Jakarta Composite Index (JCI) had slumped by 5%, triggering a temporary trading halt, and fell by as much as 7% at one point upon resuming trade, partly fueled by speculations that finance minister Sri Mulyani Indrawati is resigning. Sri Mulyani late on 18 March dispelled the resignation rumors, according to media reports, saying she will stay on as the finance chief, emphasizing that Indonesia’s fiscal health remains sound and the budget deficit for 2025 will stay at 2.5% of GDP. A budget deficit is a shortfall that occurs when government expenditures exceed revenues. The JCI was volatile in early Wednesday trade, initially tumbling by more than 1%, before rebounding to trade 1.42% higher at 6,311.66 as of 09:00 GMT. Indonesia’s sole cracker operator Chandra Asri’s shares were up by 13.4% on Wednesday. Indonesia is a net importer of several petrochemicals, including polyethylene (PE) and polypropylene (PP); while it is a major exporter of crude palm oil (CPO) and its downstream oleochemicals. ELEVATED FISCAL RISKS Japan’s Nomura Global Markets Research in a note said that it continues to see elevated fiscal risks and forecast a widening of the fiscal deficit to 2.9% of GDP in 2025, from 2.3% last year and versus the government’s target of 2.5%. “Recent changes pushed by President [Subianto] Prabowo, including an expansion of his priority programs, will cost an additional 0.9% of GDP, by our estimate,” Nomura said. The Indonesian government has not introduced any new revenue-generating measures, instead relying on enhanced tax administration efforts, which are expected to have a limited impact, it said. “President Prabowo’s instruction to perform budget cuts worth 1.3% of GDP could provide some offset, but this will likely be very difficult to achieve, given public pushback, in our view, and would weigh on domestic demand,” Nomura said. “Local sentiment, in our view, has dropped significantly, as these domestic policy concerns are exacerbating external risks.” 2025 GROWTH Indonesia’s economic growth is projected to remain strong in the range of 4.7-5.5% in 2025, despite persistent global uncertainties, BI said. Southeast Asia’s largest economy expanded by 5.03% in 2024, slowing from the 5.05% growth in 2023. Prabowo’s government aims to increase the real GDP growth rate to 8% within two to three years, from the 5% average over the past 10 years (excluding the Covid pandemic years of 2020-2021). This optimistic outlook is supported by robust household consumption, bolstered by consumer confidence, government spending and seasonal demand, BI said. Increased private investment, driven by positive producer sentiment and expanding order volumes, is expected to contribute significantly to this growth, it said. While external factors present challenges, particularly in mining and processing, growth in non-oil and gas exports and the agricultural sector are anticipated to offset these effects. Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Asia and Mideast isocyanates prices climbed rapidly immediately after the Lunar New Year holiday, followed by sharp corrections in mid to end-February. Ample supply has weighed on overall sentiment, and limited recovery in demand is expected for the rest of March. Ample Asian supply to keep buyers in China, SE Asia cautious MDI supply lengthy despite NE Asian producers’ turnarounds Post-Ramadan demand recovery expected in Mideast but players still pessimistic In this podcast, ICIS markets editor Shannen Ng and markets reporter Isaac Tan discuss market conditions and expectations for the near future.

SINGAPORE (ICIS)–Japan’s chemical exports rose by 7.5% year on year to yen (Y) 1 trillion in February, supporting the fifth consecutive rise in overall exports abroad, official preliminary data showed on Wednesday. The country’s exports of organic fell by 2.1% year on year to Y180.7 billion in February, while shipments of plastic materials were up by 10.8% at Y282.5 billion, Ministry of Finance (MOF) data showed. By volume, shipments of plastic materials fell by 1.7% year on year to 429,716 tonnes. Japan’s total exports rose by 11.4% year on year to Y9.19 trillion in February, while imports slipped by 0.7% to Y8.61 trillion. This resulted in a trade surplus of around Y584 billion. By destination, Japan’s overall exports to China rose by 14.1% year on year in February, reversing the 6.2% decline in January. Total exports to the US rose by 10.5% year on year in February, while overall shipments to the Association of Southeast Asian Nations (ASEAN)  were up by 13.3%.

HOUSTON (ICIS)–The US Department of Agriculture (USDA) announced it is issuing up to $10 billion directly to agricultural producers through the Emergency Commodity Assistance Program (ECAP) for the 2024 crop year. Administered by USDA’s Farm Service Agency (FSA), officials said the ECAP will help agricultural producers mitigate the impacts of increased input costs and falling commodity prices. The announcement comes on National Agriculture Day, with US Secretary of Agriculture Brooke Rollins saying as producers are facing higher costs and market uncertainty that the Trump administration is ensuring they get the support they need without delay. “With clear direction from Congress, USDA has prioritized streamlining the process and accelerating these payments ahead of schedule, ensuring farmers have the resources necessary to manage rising expenses and secure financing for next season,” said Rollins. These economic relief payments are based on planted and prevented planted crop acres for eligible commodities for the 2024 crop year. For the key row crops grown during the US spring season, the USDA has set corn at a rate of $42.91 with soybeans $29.76/acre payment. Upland cotton and extra-long staple cotton is $84.74, wheat is at $30.69 and sorghum at $42.52. Producers must submit ECAP applications to their local FSA county office by 15 August and only one application is required for all eligible commodities nationwide. It can be submitted to FSA in-person, electronically by fax or by applying online at the FSA website. To streamline delivery the FSA will begin sending pre-filled applications to producers who already submitted acreage reports for 2024 eligible ECAP commodities when the signup period opens on 19 March. Producers who have not previously reported 2024 crop year acreage or filed a notice of loss for prevented planted crops must submit an acreage report by 15 August.

HOUSTON (ICIS)–As the landmark year, 2025, swiftly passes, many within the US recycled polyethylene terephthalate (R-PET) industry doubt the demand and market growth promised by voluntary brand goals and regulatory post-consumer recycled (PCR) content minimums will come to fruition. Despite this reality, the market has and will continue to see slow progress, with forecast growth even in the face of trade and macroeconomic uncertainties heading into this year’s Plastics Recycling Conference (PRC). MARKET SNAPSHOTOver the course of 2024, average US R-PET market prices saw increases across the board ranging from 2 cents/lb to over 6 cents/lb. More muted growth is expected throughout 2025. At present, East Coast bale, flake and pellet prices remain steady, on sufficient supply and unchanged demand trends despite March typically being a period of transition for the market. On the West Coast, bale prices remain under pressure from Mexican export interest, though domestic players are muted. Flake and pellet prices have shifted in line with bales, but remain under pressure from competitive recycled and virgin imports. Demand expectations across the US for the full spring season are mixed. Historically, demand from thermoformers who cater towards agricultural markets increases in the spring and summer alongside growing season. At the same time, demand from the beverage industry also tends to increase in the spring in preparation for summer bottled beverage consumption. Though, this year, ramp-up timing and intensity remains uncertain due to the impacts of tariffs and inflation on consumer spending. On the fiber side, demand is expected to remain weak and is typically not as seasonally driven. BRAND DEMAND AND SUPPLY LANDSCAPEWhen assessing PCR demand, there are two factors of influence: firstly, the overall product demand as referenced above, but then secondly, the transition from virgin packaging materials to recycled content. Hinging on the same macroeconomic uncertainty, late last year and early this year several brands have publicly stated it is likely they will miss their 2025 sustainability goals. Under this mentality, PCR sellers have noted that many brand and converter customers have downsized PCR growth plans throughout this year as a cost-savings mechanism. This comes as the most recent fast-moving consumer goods (FMCG) data suggests slowing progress, or even in the case of the 2023 Canadian Plastics Pact annual report, negative progress. According to the latest Ellen MacArthur Foundation Global Commitment report, nearly 1.6 million tonnes of additional recycled plastic would be needed for signatories to meet their 2025 targets, as compared to 2023 PCR volumes. On top of the overarching trend, much of the market presently remains in wait-and-see mode due to the whiplash effect of proposed US tariffs, though few players are heard to be operating strongly with consistent year-round demand. The fragmentation of the market persists, as was highlighted during off-peak season last year, and underscores the evolving landscape of polyethylene terephthalate (PET) recycling infrastructure. While some large players who have become entrenched as a premier provider of R-PET see strong order books, other standalone players continue to struggle. Adding to the mixed messaging, several players expect expanded capacity in 2025 such as Republic Services, D6 and Circularix, while another player, Evergreen, has announced a partial facility closure. Future investments in R-PET, whether domestic or international, have largely been paralyzed by the risk that market sentiment and trade policies could shift with each administration, and investments take several years to come to fruition. POLICYWhile not a primary driver of US international trade, plastic scrap and recycled plastic do have strong exposure to international markets, particularly Canada and Mexico as waste is regional and typically market economics hinge on location proximity. To be clear, the proposed 25% tariff on imported goods from Canada and Mexico does include recycled plastic and plastic scrap. When looking at bale and flake supply, tariffs could push US recyclers who are close to Mexico and Canada away from international supply, and towards domestic volumes, thus further straining the limited collection system. The US imported 133 million lbs of PET scrap in 2024, with Canada leading the globe as the US’s strongest PET scrap trade partner, followed by Thailand, Ecuador and Japan. Moreover, several US converters and brands have partnered with Canadian and Mexican recyclers over the last several years and now may seek supply relationships with domestic recyclers to avoid additional tariff-related costs. This could be seen as a positive force for the domestic recycling market, though players expect little further support from the current administration, as sustainability and environmental progress has not been identified as a key priority. No federal policies are expected. Despite the ongoing negotiations of the Global Plastics Treaty, based on President Trump’s second withdrawal from the Paris Climate Accord, it is unlikely the US will support another global sustainability effort. Instead, state-level legislation is expected to continue carrying PCR momentum, with several proposed extended producer responsibility (EPR) bills as well as some PCR mandates active within various state legislatures. Moreover, as existing policies continue to take shape, such as defining the regulations of California’s Senate Bill 54, or the implementation of Oregon’s EPR program starting this July, the industry hopes that regulation provides a stronger foundation for recycled plastic market growth over voluntary goals which shift with economic sentiment. Hosted by Resource Recycling Inc, the PRC takes place on 24-26 March in National Harbor, Maryland. ICIS will be presenting “Shaping the Future of Recycled Plastics: Trends and Forecasts” on Monday, 24 March at 11:15 local time in room Potomac D. As well as attending our session, we would love to connect with you at the show – please stop by our booth, #308. Visit the Recycled Plastics topic page Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Visit the Logistics: Impact on chemicals and energy topic page Focus article by Emily Friedman

HOUSTON (ICIS)–The US polyvinyl chloride (PVC) market is facing continued headwinds as tariff-related uncertainties persist heading into this year’s International Petrochemical Conference (IPC). The domestic PVC market is expected to grow between 1-3% in 2025 but continues to face challenges in housing and construction. Meanwhile, export markets continue to wrestle with the threat of protectionist policies and tariffs at home and abroad. The domestic PVC market has been healthy to start the year but has been saddled with excess supply following capacity additions in late Q4. The new capacity, coupled with strong run rates, resulted in high levels of inventory to start the year. This added supply comes in contrast to a US housing market plagued by high prices and high borrowing costs. The pressure of these variables, coupled with exceptionally cold weather, was evident in January housing statistics, where housing starts slumped 9.8% to a 1.366-million-unit pace led by a steep 13.5% decline in the multifamily segment. Despite this, production and sales remained firm in February. Production was expected to decline in March due to turnarounds by two US producers. There was some positive economic news with 30-year mortgage rates easing in March and falling to their lowest levels of 2025 at 6.63% in early March before inching to 6.65% in mid-March. Still, current levels were well above levels considered necessary to spur demand, generally considered to be around 5.0-5.5%. Additionally, inflation appeared to stabilize in February, coming in at 2.8%, lower than the forecast 2.9% and below January levels of 3%. Despite these developments, consumer confidence remains weak. The US PVC export market will also face its share of challenges coming primarily via protectionist policies. Potential 25% tariffs on Mexico and Canada could present challenges as the US exports significant volumes of PVC to each country and then brings back the converted goods for use in medical, building and construction, auto and industrial applications. Reciprocal tariffs could increase the cost of these imports and dent US PVC demand. Additionally, US PVC exports face existing and potential tariff threats from a number of other trading partners including India, Canada, Mexico, Brazil and the EU. Given the challenges in the domestic market and current growth levels, US producers will need to export more than one-third of their production to maintain operating rates in the mid-80s% range, a tall task considering adequate supply and the proliferation of tariffs and antidumping duties (ADDs). To the south, the Latin America PVC market also faces significant challenges, with demand trends differing across key regional markets. A combination of economic pressures and the potential of US tariffs is reshaping the landscape, influencing both supply and demand dynamics. In Brazil, PVC demand remains weak, largely due to persistently high interest rates and ongoing economic uncertainty. These factors have led to buyer hesitancy, reducing the country’s dependence on US PVC imports. The outlook for Brazil’s construction sector in 2025 presents a mixed scenario that could influence PVC market dynamics in different ways. The Brazilian Chamber of the Construction Industry (CBIC) projects a 2.3% growth in the sector’s GDP. At the same time, Sinduscon-SP and Fundacao Getulio Vargas (FGV) have a slightly more optimistic forecast, expecting a 3.0% expansion. This growth is primarily driven by ongoing projects and newly contracted developments set to begin in the coming months, particularly in infrastructure and real estate. However, broader macroeconomic factors may temper this momentum. The expectation of slower economic growth, higher inflation exceeding the target ceiling and rising interest rates could cool investment and business activity. If these conditions lead to tighter credit and reduced consumer confidence, demand for new real estate developments could soften, impacting the need for PVC-based materials used in construction applications like pipes, fittings and profiles. Colombia is also experiencing economic difficulties, though the exact demand trends remain unclear. The overall sentiment is cautious, with expectations for stable-to-weak demand in the near term. Meanwhile, Argentina faces persistent investment shortfalls in critical sectors, which continue to hinder PVC demand. This adds to the difficulties for US exporters separately aiming to maintain market share in the country. Mexico, as a key importer of US PVC, brings in around 350,000 tonnes annually. However, the introduction of new tariffs is expected to raise costs for downstream segments that export goods to the US, which reduces the competitiveness of US exports and demand could soften. Pricing dynamics are also likely to shift, if the additional tariff scenario among Mexico, Canada and the US changes in April, as the US Gulf PVC producers could face lower operational rates if demand from their primary export destinations declines. This could lead to production cutbacks, raising per-unit production costs. For the Americas as a whole, uncertainty remains a prevalent theme. 2025 looks to be a challenging year and the effect of proposed tariffs from the Trump administration and retaliatory tariffs on PVC demand is unclear, with economic and inflationary factors adding further uncertainty to the 2025 outlook. Policy and economic health will continue to drive demand in 2025 and producers will need to manage production and inventories closely, control costs and target alternative outlets for exports to mitigate the risks that lie ahead. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Visit the Logistics: Impact on chemicals and energy topic page Focus article by Kevin Allen and Daniel Lopes Thumbnail source: Shutterstock

TORONTO (ICIS)–Depending on who wins the next election, Canada may soon be without federal carbon pricing. Opposition Conservatives to scrap carbon pricing Ruling Liberals would retain industrial carbon pricing Industry sees carbon pricing as “backbone” of decarbonization Canada’s opposition Conservatives have finally clarified their position on federal industrial carbon pricing – they would abolish it, if they win the next election, they said, along with the federal consumer carbon tax. This would lower prices in the Canadian steel, aluminum, natural gas, food production, concrete and all other major industries, boost the economy, and allow “our companies to become competitive again with the United States”, the party said on Monday. Canada’s provinces could still address carbon emissions “as they like but will have the freedom to get rid of these industrial taxes that the federal government has forced them to impose”, party leader Pierre Poilievre said. Instead of carbon pricing or a carbon tax, the Conservatives would use technology “to protect our environment” they said. In particular, they would expand the eligibility for certain investment tax credits (ITCs), they said. The Conservatives’ announcement came after Canada’s minority Liberal government, under its new prime minister, Mark Carney, suspended the consumer carbon tax. The suspension was one of Carney’s very first actions after taking over from Justin Trudeau last week. However, Carney said that his government would retain and improve federal industrial carbon pricing as the most effective measure to control emissions. The premier (governor) of oil-rich Alberta province, Danielle Smith, said that she was concerned Carney’s government would “significantly increase the industrial carbon tax”, which would be just as damaging to Alberta’s economy as the consumer carbon tax had been. She suggested that federal industrial carbon pricing was a hidden carbon tax, rather than a transparent one. CHEMICALS Industrial carbon pricing is seen as key in attracting investments in low-carbon projects, such as Dow’s Path2Zero petrochemicals complex under construction in Alberta province. Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing. Carbon pricing and programs offering incentives for low-carbon chemical production plants were needed to get those facilities built in Canada, the group has said. “We support industrial carbon pricing as the backbone of decarbonization across this country,” CIAC and other industrial trade groups said in a joint statement last year. Industrial carbon markets were the most flexible and cost-effective way to incentivize industry to systematically reduce emissions, they said. ENVIRONMENTALIST Environmental Defense said that Canada’s industrial carbon pricing has “effectively driven down pollution levels more than any other measure”. The group also said that federal carbon pricing was needed if Canada is to diversify its exports towards other markets, away from the US. For example, Canada would not be able to access the European market without strong environmental rules like industrial carbon pricing, the group noted. The EU is implementing a Carbon Border Adjustment Mechanism (CBAM) that puts a price on the emissions of carbon-intensive goods imported into the EU. CANADIAN ELECTION Carney, who does not have a seat in parliament, is expected to call an election possibly as early as this week. Once called, the election will likely take place in late April or early May. Following Trudeau’s resignation announcement on 6 January, the tariff threat from the US, and US President Donald Trump’s repeated suggesting that Canada should become part of the US, the Liberals have caught up with the opposition Conservatives in opinion polls about the next federal election. By law, the elections must be held before the end of October. Focus article by Stefan Baumgarten Thumbnail photo source: International Energy Agency

BARCELONA (ICIS)–Moves by Germany and across Europe to boost defence spending could give a significant uplift to the region’s beleaguered chemical industry. Need to maintain robust national or regional supply chains may benefit chemical industry in Europe, which is threatened with closures German defence/infrastructure spending boost could be 2% of GDP, larger than increase linked to German reunification, post-war Marshall Plan Rising defence spending in Europe would help boost electricity demand significantly, estimates vary from 7%-30% Data-driven technology for defence would also raise electricity demand Will raise demand for gas and renewable-based power Europe will need to become more self-sufficient in energy, driven by renewables In this Think Tank podcast, Will Beacham interviews ICIS gas and cross-commodity expert, Aura Sabadus; Nigel Davis and John Richardson from the ICIS market development team; and Paul Hodges, chairman of New Normal Consulting. 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.

LONDON (ICIS)–Business sentiment in Germany jumped this month to the highest level since the onset of the Russia-Ukraine war, driven by expectations of higher government spending and the recent interest rate cut from the European Central Bank (ECB). The metric of German business sentiment compiled by the ZEW economic institute surged 25.6 points to 51.6 points in March, the highest single monthly increase since January 2023 and the strongest reading since February 2022. Source: ZEW Russia invaded Ukraine at the end of that month, resulting in years of political uncertainty and higher energy costs for European industry. The sharp uptick follows recent elections in Germany that will likely result in the formation of a centrist coalition government and expectations of a drastic increase in spending on infrastructure and defense. Incoming Chancellor Friedrich Merz is expected to convene an emergency vote on Tuesday to push new spending plans which are expected to ease long-standing debt controls and deliver new investment. As a proportion of annual GDP, spending is expected to exceed that seen during the post-World War II Marshall Plan and German reunification in the early 1990s, according to economic consultants TS Lombard. The emergency vote is being conducted with the outgoing German government, as a strong showing for the far-left Die Linke and far-right Alternative for Germany (AfD) in this year’s elections could complicate a vote requiring near-unanimity. Two-thirds of outgoing German ministers need to back the bill for it to pass. European markets rallied on Tuesday in anticipation of the spending approval, with Germany’s DAX up 1.06% compared to Mondays close as of 12:04 GMT. “The brighter mood is likely due to positive signals regarding the future German fiscal policy, for example the agreement on the multi-billion-euro financial package for the federal budget,” said ZEW president Achim Wambach. “In particular, prospects for metal and steel manufacturers as well as the mechanical engineering sector have improved,” he added. The ECB’s move to cut interest rates earlier this month despite higher input cost inflation and the potential for retaliatory EU-US tariffs from next month was also a factor in firmer business prospects, Wambach added. The ZEW sentiment indicator is based on a survey of 350 analysts from the banking, insurance and industrial sectors. Thumbnail photo: The seat of German parliament in Berlin German (Source: Shutterstock)