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Gas12-Feb-2025
Additional reporting by Ed Cox
LONDON (ICIS)–The 2022 energy crisis has left
the EU between a rock and a hard place.
Record gas prices caused by the Russia-Ukraine
war combined with costly climate policies to
deal a heavy blow to industrial production,
triggering widespread plant closures and an
economic downturn.
The ensuing need to respond to industrial
decline while also stemming social and
political turmoil caused by soaring energy
costs prompted lawmakers to adopt a
controversial wholesale gas price cap, which
expired at the end of January.
Although prices have fallen since the record
levels seen in 2022 they remain stubbornly high
by historical standards and have recorded a
sustained increase so far in 2025. This has
further heightened calls from large consumers
to push for urgent measures to curb energy
costs, fearing the imminent collapse of
industrial production.
And the concerns are legitimate. Europe faces
geopolitical volatility and growing competition
from China and the US.
However, reports that the EU may now consider
introducing a new gas price cap to stave off
industrial decline should come under public
scrutiny because of serious risks.
A first risk relates to the fact that a price
cap would impair the market’s ability to
attract more supply if needed.
Such a risk would be both short- and long-term
as European buyers have secured only a fraction
of the LNG volumes already contracted by Asian
companies.
In January 2025, LNG covered almost 37% of EU
and British gas supply, according to ICIS data.
However, putting a figure on the percentage of
Europe’s contracted LNG relative to future
demand is challenging. This is in part due to
great uncertainty over Europe’s gas demand
alongside the complexities of LNG contracts.
But the underlying message that Europe only
contracts a portion of its LNG demand – and is
heavily dependent on market prices to attract
remaining supply – is correct.
The need for a robust, market-based TTF
reference price in reflecting Europe’s LNG
demand relative to other markets will only
increase in line with a dependency on US LNG
imports, and in the event that Russian pipeline
gas does not return.
Beyond 2023, the majority of LNG contracts with
European companies are for supply from the US
on a free-on-board basis, meaning there is no
contractual commitment to deliver to Europe.
Price signals from buyers in Europe, Asia,
South America and the Middle East play a key
role in determining the destination of these
cargoes. Europe has only received sufficient
LNG in recent months to cover gas demand
because the TTF has pulled supplies inwards,
and away from other global buyers.
Large future LNG contracts are also in place
with Qatar, but they typically contain
diversion rights. It has not been the policy of
the EU, nor of European LNG buyers, to commit
to large, fixed-destination contracts given the
expected long-term drop in Europe’s gas demand.
In any case, few sellers would commit to such
business with the prospect of a price cap and
with other global buyers potentially more
attractive.
And there are other risks related to financial
stability and the credibility of EU markets as
they would no longer accurately reflect the
bloc’s supply-demand balance.
An artificially capped price could lead to
higher margin requirements but would also put a
strain on the EU’s overall budget, leading to
soaring debt. This is because of the gap
between regulated and free market prices, which
would ultimately have to be borne by EU
taxpayers.
The EU might consider other options such as
reducing regulations and red tape, or ensuring
companies have all the flexibility they need to
attract more supplies.
Although the EU has a fine line to tread –
preserving the bloc’s competitiveness while
ensuring security of gas supply – introducing a
gas price cap would have a deeply harmful
impact on markets.
Ethylene12-Feb-2025
LONDON (ICIS)–German chemical producers’ trade
group VCI wants the country’s new government,
to be formed after early elections on 23
February, to maintain the so-called “debt
brake” (Schuldenbremse).
Debt brake ensures fiscal discipline
Economy weak, but fiscal position strong
Reform may drive investments to boost
economy
A dispute over government spending priorities
contributed to the collapse of the coalition
government under Chancellor Olaf Scholz in
November.
Under the constitutionally enshrined fiscal
rule, structural budget deficits cannot exceed
0.35% of GDP. The rule can be suspended in
times of emergency, as it was during the
pandemic and the start of the Ukraine war.
In the current election campaign, political
parties are now debating whether to retain,
ditch, or reform the fiscal rule.
Critics of the Schuldenbremse say that it
hinders public investments, needed to help
revive the country’s economy, which has been
weak since 2018. GDP shrank in both 2024 and
2023.
However, VCI’s position is clear: The
Schuldenbremse has proven itself as it managed
to halt the trend of growing debt/GDP ratios,
the group said in a position paper this week.
FISCAL DISCIPLINEThe
fiscal rule, anchored in the constitution,
ensured that spending does not exceed means and
that the current generation does not live at
the expense of future ones, VCI said.
As a result, Germany has a relatively low level
of debt and low debt service obligations –
giving it the financial capacity to react in
times of crisis, whereas higher-indebted EU
countries needed to rely on the solidarity of
their neighbors or eurobonds, the group said.
VCI acknowledged that the Schuldenbremse is
being questioned in light of the current
“massive economic downturn and the immense
investment backlog,” and it said that the rule
was “not perfect”.
However, the country’s current problems
reflected the “political deficits” of the past,
when government neglected necessary investments
in infrastructure, security, education, and
research and development, it said.
REFORM
VCI would not rule out a “moderate reform” of
the Schuldenbremse, allowing for temporarily
higher deficits, as long as the debt-to-GDP
ratio remains below 60%, it said.
Reforming the debt brake could buy time until
investments and reforms start to pay off,
said VCI chief economist Henrik Meincke.
The government’s priority, however, must be “to
clearly prioritize expenses and focus on
investments”, he said.
Meincke urged a “fundamental course correction”
in industrial policy, with a focus on the
government’s core tasks, a sharp reduction in
bureaucracy, and “tax revenue invested in
security, education and infrastructure, as a
priority”.
Any reform of the debt brake must not be “a
quick fix” as that would not solve the
country’s structural problems, the economist
said.
Analysts at ING said the current political
debate about public finances in Germany may
create the impression that the country was
close to bankruptcy, which was not the case at
all.
German government debt had stabilized slightly
above 60% of GDP and was expected to stay there
until 2026, analysts said.
“Germany has by far the lowest government debt
ratio of the larger eurozone countries,” they
added.
Thumbnail photo of Friedrich Merz, head of
the opposition conservative Christian
Democratic Union (CDU), which leads in opinion
polls. The CDU favors retaining the
Schuldenbremse, but Merz has said he may be
open to discussions about reforming it. Photo
source: CDU
Polyethylene Terephthalate12-Feb-2025
LONDON (ICIS)–Senior editor for Recycling
Matt
Tudball asks Carolina
Perujo Holland, senior analyst for
Plastics Recycling, and Travis
Klein, senior analyst for PET how the
markets in Europe compare with other regions in
terms of competitiveness, impact of regulations
and feedstock costs.
Carolina and Travis also give a brief
description about their presentations at the
ICIS PET Value Chain Conference, which takes
place 6-7 March in Amsterdam.
Click
here to register and see the full
agenda.

Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Hydrogen12-Feb-2025
SINGAPORE (ICIS)–The Trump administration
swiftly withdrew financial support for its
hydrogen sector, while China is accelerating
hydrogen expansion with strong policy backing.
In this podcast, ICIS hydrogen analysts
Patricia Tao and Anita Yang discuss how these
developments could gradually shift the global
hydrogen market’s center of gravity over the
next three to five years.
US hydrogen competitiveness in global
market weakens
China integrating hydrogen into its
national energy strategy
Global hydrogen market is likely to shift
in the next three to five years.
Speciality Chemicals11-Feb-2025
HOUSTON (ICIS)–The International
Longshoremen’s Association (ILA) wage scale
committee voted unanimously to approve the
tentative agreement between the union and US
Gulf and East Coast ports, setting up a vote by
the full membership later this month.
An ILA strike was averted in January
when a tentative deal was reached between the
two parties with both sides agreeing to work
under the existing pact while awaiting the
ILA’s full wage scale committee and the
scheduling of a ratification vote from the full
membership.
The wage scale committee consists of more than
200 ILA union locals from Maine to Texas.
The new agreement and all its benefits are
retroactive to 1 October 2024, and, if ratified
by ILA members, will be in effect until 30
September 2030.
ILA rank-and-file members will receive details
of the agreement approved by the wage scale
committee at local meetings over the next two
weeks and then participate in the ratification
vote on 25 February.
The specific details of the agreement will not
be made public.
The two sides agreed on the financial part of
the deal in early October, ending a three-day
strike, with
commitments to continue negotiating on other
issues, specifically automation and
semi-automation at ports, which the union
opposed because of the threat of losing jobs
previously done by humans.
The labor issue would have had no impact on
liquid chemical tanker traffic in and out of
ports as they typically serve private terminals
and do not require the same labor as container
ships.
Container ships and costs for shipping
containers are relevant to the chemical
industry because while most chemicals are
liquids and are shipped in tankers, container
ships transport polymers, such as polyethylene
(PE) and polypropylene (PP), are shipped in
pellets.
They also transport liquid chemicals in
isotanks.
Ethylene11-Feb-2025
SAO PAULO (ICIS)–An interim trade accord
between Chile and the EU kicked off on 1
February and the 27-country bloc is not shy
about its main objective: get preferential
access to the Latin American nation’s vast
resources of raw materials.
Chemicals players on both sides have welcomed
the trade deal, although trade in chemicals is
likely to remain limited as Chile’s natural
trading partners in the sector have always been
the US and Asia.
Under the terms of the free trade agreement
(FTA), 99.9% of EU exports will enter Chile
duty-free, whilst EU firms gain equal treatment
with domestic companies across Chilean service
sectors, including finance, telecommunications,
maritime transport, and delivery services.
European businesses bidding for government
contracts in Chile, Latin America’s
fifth-largest economy, will receive enhanced
market access through streamlined procurement
procedures.
CHEMICALS: COLATERAL
WINNERS?While chemicals
companies in Chile and the EU may not feel much
of an impact from the trade deal, chemicals
players in the 20-million population Latin
American economy showed relief that closer ties
are being developed with the EU, rather than
China.
In 2023, the EU enjoyed a trade surplus in
chemicals with Chile of €120 million, the
result of EU exporting €770 million worth of
chemicals to Chile, while the latter’s exports
to the EU stood at €649 million, according to
figures from Europe-wide chemicals trade group
Cefic.
In a written response to ICIS, a spokesperson
for Cefic said three quarters of the EU exports
to Chile were consumer chemicals and
specialties. In the case of Chile’s exports to
the EU, 80% of them were of inorganic
chemicals.
Cefic said that while chemicals are not at the
center of the trade deal, lithium and other
minerals as well as metals are, and that could
ultimately benefit the chemicals industry if
the EU was to achieve a (green) industrial
revival.
In fact, the interim deal which came into
effect on 1 February, which replaced a previous
association agreement, included changes and
updates to energy and raw materials: the
association agreement came into force in 2002:
hydrogen and lithium existed already then, but
were little spoken about.
On the one hand, EU chemicals firms cannot wait
to see their energy bills fall, and more so
following the 2022 energy and natural gas shock
after Russia invaded Ukraine.
Chile’s prime position to produce green
hydrogen – strong sunlight and winds for the
renewable energy, and abundant water – could
turn the country into an exporter of the gas
upon which most hopes to decarbonize the
industrial sectors have been placed.
Green energies such as hydrogen have the
potential to lower the EU’s high energy bill.
Several European companies have announced plans
to build green hydrogen plants in Latin America
– where costs are lower than at home – aiming
to export to Europe most of the hydrogen
produced.
On the other hand, EU manufacturers are anxious
to secure stable supply of the minerals they
require to make the green transition the EU
itself is pushing them to implement. By having
access to those minerals, manufacturing in the
EU could see a revival and indirectly push up
demand for chemicals.
“While EU-Chile chemicals trade is not major in
comparison with other trade relationships,
trade with Chile is important, especially due
to Chile’s leading position in the supply of
certain raw materials,” said the Cefic
spokesperson.
“Chile is a key supplier of lithium and copper
for the EU, two metals that are key for the EU
chemicals industry in applications like cathode
active materials for EVs [electric vehicles] or
catalysts. In the future, Chile’s hydrogen
exports can also become even more relevant due
to the EU’s green transition.”
In terms of polymers, Chile’s annual
consumption stands at around 1.3 million
tonnes, and the country’s output is far from
covering even half of that, according to
figures by the country’s plastics trade group
Asipla.
Local production of polymers, said Asipla,
stands at 260,000 tonnes, comprising 200,000
tonnes from recycling and approximately 60,000
tonnes of virgin material. Some company names
include Petroquim, Chile’s sole producer of
polypropylene (PP), or Styropec producing
polystyrene (PS) and expandable polystyrene
(EPS).
Magdalena Balcells is Asipla’s CEO, and one of
the most no-nonsense lobbyists this
correspondent has met in almost two years in
Latin America. In June last year, her straight
talk at an industry event captivated the
audience – although that audience was, of
course, friendly terrain.
“Despite China’s transition from petrochemical
importer to exporter in the past few years,
producers like Petroquim have been able to
maintain their market position through
established client relationships built on
trust, certification, and rigor: advantages
which are less predictable with Chinese
suppliers,” said Balcells.
In this interview, like in a
previous one in 2024, Balcells insisted
Chile’s policymakers tended to think the
country is a developed economy where recycling
policies could be easy to implement. This push,
however, has prompted many plastic companies to
get a grip with sustainability, she said, and
that can only be a good thing.
On trade relations, Asipla’s CEO is crystal
clear on her feelings about China. Asked
whether a deal with the EU, any deal, will
always be preferable to one with China, she
said:
“Always preferable. The EU and Chile share a
common language, a common way of doing business
and trade. Chile’s OECD membership facilitates
European trade relations. With China,
everything becomes… very difficult,” said
Balcells.
“Chinese exports of industrial goods imports
continue to present a significant challenge in
terms of price competition, across many
industrial sectors, in Chile and the wider
Latin America. But for Chile, the EU is a very
important commercial partner and one with which
it is still relatively easy to operate. This
FTA should be a positive.”
In a written response to ICIS, the head of
logistics at Petroquim, Jorge Gaete, confirmed
the company does not expect a great impact from
the EU-Chile trade deal, but welcomed it
nevertheless as it should benefit the Chilean
economy as whole and partly protect it from the
new protectionist wave.
“This FTA is not of great importance for the
chemical industry, and we don’t expect it to
represent major benefits for Petroquim. This
trade deal, however, is important for the issue
of minerals such as lithium and copper, which
are the great reserves Chile has,” said Gaete.
“Moreover, now with the [US President Donald]
Trump government and all the reforms he is
implementing or planning to implement,
including the increases in import tariffs, I
believe that we as a country will benefit from
the agreement with the EU.”
Last week, Trump
mentioned tariffs on metals, including
copper, which would hit the Chilean economy
hard: the country is the second largest
producer of copper globally, and its exports
are a key employment- and foreign
reserves-generator.
Chile’s chemicals trade group Asiquim did not
immediately respond to a request for comment.
This article is the first part of this
Insight. The second part, to be published on
Wednesday (12 February), will focus on Chile’s
vast natural resources, paramount to kick start
green mobility and green industry, and the EU’s
desire to get hold of as much of them as it
can
Insight by Jonathan Lopez
Front thumbnail: Shipping containers with
flags of Chile and European Union
(Shutterstock)
Speciality Chemicals11-Feb-2025
BARCELONA (ICIS)–Europe’s petrochemical sector
is in the middle of a crisis which EU
leaders can only solve through bold action,
according to Ilham Kadri, president of Cefic
and CEO of Syensqo.
More than 11 million tonnes of European
chemicals capacity slated to close
Decline can be reversed with strong EU
political action
Simplify bureaucracy, lower energy costs,
finance low carbon transition
EU needs to stimulate demand for low carbon
products, create level playing field against
global competition
Time to turn words into action through EU
Clean Industrial Deal, new chemicals strategy
Chemicals CEOs in Europe need to examine
their portfolios to identify where they can win
against global competitors
Europe has a lot to offer – cutting edge
technology, talent
Region needs a strong economy and that is
only possible with a strong chemical industry
In this Think Tank podcast, Will
Beacham interviews Ilham
Kadri, CEO of Syensqo and president of
Cefic and the International Council of Chemical
Associations (ICCA).
This interview was recorded on 31 January,
2025.
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.
Crude Oil11-Feb-2025
SINGAPORE (ICIS)–The US will start imposing
25% tariffs on all steel and aluminium imports
starting 12 March, under the executive order
signed by US President Donald Trump on 11
February.
For South Korea, the US’ decision effectively
cancels the annual tariff-free quota agreed
upon between the two countries since 2018.
South Korea currently benefits from duty-free
quota for 2.63 million tonnes of steel exports
to the US, set under a 2018 bilateral agreement
– based on 70% of the northeast Asian country’s
2015-2017 average annual exports – with US
tariffs applying to excess volumes.
At the close of trade on Tuesday, shares of
South Korean steel firm POSCO was down 0.84%,
while the benchmark KOSPI Index inched up 0.71%
to close at 2,539.05.
Foreign steel accounts for about 25% of US
steel consumption, with Canada, Brazil, and
Mexico being the largest suppliers, followed by
South Korea and Vietnam, according to data from
the American Iron and Steel Institute (AISI).
The new tariffs would terminate tariff-free
quota deals with South Korea and other major
metal exporters to safeguard American
industries, the White House document said.
“Increasing and persistently high import
volumes from countries exempted from the duties
or subject to other alternative agreements like
quotas and tariff-rate quotas have captured the
benefit of U.S. demand at the domestic
industry’s expense and transmitted harmful
effects onto the domestic industry,” Trump said
in the document.
“From 2022 to 2024, imports from countries
subject to quotas (Argentina, Brazil and South
Korea) increased by approximately 1.5 million
metric tons, even as U.S. demand declined by
more than 6.1 million tons during the period.”
Trump also on 10 February announced plans to
impose “reciprocal” tariffs on countries with
duties on US goods within the next two days.
ICIS senior economist for global chemicals
Kevin Swift had said that the US tariffs on
steel and other metals would translate to
higher cost and could ultimately reduce capital
expenditure in chemicals and industrial
plants.
Polyethylene11-Feb-2025
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
At first glance, the latest ICIS ethylene
operating rate forecast is alarming. Even by
2035, global operating rates could still be
below their long-term average—potentially
marking a 14-year downturn since the Evergrande
Turning Point in late 2021.
But here’s the good news: This is a live
situation, and industry adaptation is
inevitable. The future is not set in stone—it
will be shaped by the decisions we make today.
The Data Speaks
• ICIS base case projections show an average
6.3 million tonnes per year of new
capacity.
• However, by reducing this to 2.5 million
tonnes per year, operating rates could return
to 87%—the long-term norm.
• The question is: When and how will the market
rebalance?
Plant Closures, Project Delays &
Cancellations: The Unknowns
Balancing the market means making difficult
decisions, but shutdowns and project delays are
far from straightforward:
• Timing uncertainty – Could the upturn come
sooner than expected?
• High exit costs – Environmental clean-up and
pension liabilities complicate shutdowns.
• China’s role – Ageing plants, coal-based
capacity, refinery feedstock limits, and
regulatory shifts could drive rationalisation,
but when and to what extent?
• Government intervention – Will policy sustain
industries in Europe & South Korea, or will
we see major consolidations?
Your Three-Point Plan for
Success
1. Update the data every six months – Ethylene
is just the start. Conduct the same detailed
analysis for every product, country, and
region.
2. Stay ahead of trade policy – As global trade
tensions rise, import tariffs will shift market
dynamics. Companies that act early will gain an
advantage.
3. Leverage AI & analytics – Cost savings
and efficiencies from AI-driven tools like Ask
ICIS are already transforming decision-making.
What This Means for You
Yes, the downturn is severe, but opportunities
remain. A data-driven approach will enable your
business to adapt, optimise, and position
itself for the recovery. Are you ready?
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.
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