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)

Taiwan’s incumbent announces higher March prices CPC continues to grapple with LNG costs Island ramps up receiving LNG capacity SINGAPORE (ICIS)–Taiwan’s main power company announced a hike in its posted prices for natural gas in March, citing globally higher LNG prices, according to an official notice . This comes as it faces pressure to buy more LNG supplies from the US and manage a sharp energy transition from nuclear and coal power generation fuels. Electricity prices will rise by 3%, while industrial users will face a 10% increase, as CPC Corp grapples with mounting financial pressure. The price adjustments come amid a sustained surge in global LNG costs that has pushed up prices of imported LNG cargoes into the island. According to data collected by ICIS, spot cargoes into Taiwan have ticked up in the recent months, at higher prices. CPC has held onto a policy to absorb the increase costs for residential users, a practice set to continue in March, despite a government-approved pricing formula that typically passes on these costs to consumers. However, with the company’s debt ratio reaching 93%, absorbing such losses is becoming unsustainable, according to the notice. Soaring LNG prices, driven by a cold snap and heightened European demand as well as EU stockpiling regulations have led to stiff competition for LNG. All of which has stretched Taiwan’s energy budget in the past months. The state-owned company has mostly absorbed losses to shield residential users from price hikes, holding rates for users steady through January and February citing ongoing Lunar New Year festivities alongside its price-stabilization policy. While industrial prices last rose in December, residential rates have remained unchanged for months and were even cut last May. At the same time, Taiwan has also looked to shore up its trade ties with the US after President Donald Trump took office and began issuing a slew of import tariffs and calling for more onshoring of manufacturing from trade partners with a surplus, such as Taiwan. In response, Taiwan has said it could invest in the proposed Alaska LNG project and buy more US LNG cargoes. As well, Taiwan Semiconductor Manufacturing Company (TSMC) has also pledged to invest in high-end chip manufacturing in the US. Taiwan also relies on de facto US military support as it faces a push for reunification with the Chinese mainland that could be enforced by a blockade of post and incoming LNG shipments. Taiwan has some offtake from the US including deals with TotalEnergies for Cameron LNG, and supplies from US producer Cheniere. LNG TO BECOME DOMINANT ENERGY SOURCE Even as the island grapples with high costs of bringing in LNG cargoes, it remains committed to its LNG push, expanding infrastructure at a rapid clip . Taiwanese incumbents, both the state-owned CPC Corp and Taiwan Power Co (Taipower) are investing in large-scale LNG storage tanks, regasification units, and gas-fired power plants. For instance, under expansion plans, Taipower will add 2.7mtpa by 2026 and another 3mtpa by 2029, taking its total receiving capacity to close to 11mpta. Meanwhile, Yung An terminal will be boosted by 2mtpa. Still, energy security remains a key concern as Taiwan leans heavily on imported liquefied natural gas to meet rising demand. “Taiwan has no piped gas and minimal domestic production, so LNG accounts for nearly 100% of the country’s gas supply,” said ICIS analyst Yuanda Wang. This leaves the island vulnerable to price swings alongside geopolitical uncertainty. Compounding the challenge is a nuclear-free policy shuttering two nuclear reactors . Taiwan will become fully nuclear-free in May 2025 as the 950MW Maanshan Unit 2 shuts down, leaving an 8.8TWh power shortfall , according to forecasts by ICIS. Last year, Jane Liao, a vice president at CPC, told a conference that the utility expects to see more LNG purchases into 2025 on the back of the retirement Taiwan’s nuclear plants. “We need to continue the purchasing,” Liao added. Premier Cho had also in July reaffirmed the commitment to reduce reliance on coal. As the island phases out these sources, it will inevitably turn to LNG to fill in the gap in its energy mix. ICIS modeling forecasts Taiwan’s power demand will rise by 12.5% in the first quarter of 2025, with LNG imports expected to hit 21.1 million tonnes in 2025. As energy prices rise and Taiwan doubles down on its LNG ambitions, businesses and consumers brace for higher costs. The island now faces a delicate balancing act: maintaining price stability while deepening its long-term reliance on LNG. (ICIS analyst Yuanda Wang contributed to this story)

COATZACOALCOS, Mexico (ICIS)–Mexico’s new ethane import terminal in the state of Veracruz is poised to transform the country’s struggling petrochemical sector by alleviating critical raw material shortages, according to the chief at the facility. Cleantho de Paiva, CEO at the Terminal Quimica Puerto Mexico (TQPM) in Veracruz’s municipality of Coatzacoalcos, said the terminal should start up in May and be able to import 80,000 barrels of ethane, mostly from the US. Natural gas derivative ethane has become the prime choice to produce polymers in North America after the US’s shale gas boom in the 2010s. The ethane will be primarily delivered to polyethylene (PE) major Braskem Idesa, a joint venture between the Brazilian and Mexican chemicals producers of the same name. TQPM is, at the same time, a joint venture between Braskem Idesa and Dutch company Advario. ICIS visited TQPM on 15 March – a few pictures shown at the bottom. FINALLY, START-UP PLANNED FOR MAYThe terminal’s years-long construction is a key project of Braskem Idesa, which until now has been dependent on supply of inputs mostly from Mexico’s crude oil major Pemex, supply which at a time was unstable and below what had been agreed. The situation became so critical that Braskem Idesa, which operates one of Latin America’s newest PE complexes, was forced to seek alternative supply arrangements. Industry analysts have pointed to Pemex’s supply shortfalls as a major constraint on Mexico’s petrochemical sector growth. The terminal’s financing was at some point in doubt, although the parties agreed to inject further cash last year so it could be finalized in 2025. TQPM will make it easier for Braskem Idesa to secure inputs necessary to produce PE, without depending on Pemex, whom at the same time would be able to redirect the inputs it was delivering to the PE producer to other petrochemicals companies. A common theme for Mexican chemicals companies is the lack of raw materials, so any additional supply is always welcome news, said de Paiva. “This project has a very important impact on the development of the national petrochemical industry, because it’s precisely to complement access to raw materials that we lack today. With a capacity to import up to 80,000 barrels per day of ethane, this will significantly exceed the 63,000 barrels Braskem Idesa currently requires for its operations,” said de Paiva. “The issue of the lack of ethane in the country is structural. Since the US is the largest producer and exporter of petrochemical ethane, building this terminal gives us access to import sufficient raw material. “When the terminal comes into operation, Pemex, which currently has an obligation to supply a certain amount to Braskem Idesa, will no longer have it and will be able to direct this raw material to its own petrochemical complexes and also resume its operating capacity,” he added. This cascading effect could benefit Mexico’s broader petrochemical industry, potentially allowing Pemex to better serve other domestic manufacturers once relieved of its Braskem Idesa commitments. De Paiva described this as a “structuring” event for Mexico’s manufacturing industry as it could allow the country’s petrochemical industry to return to operating its plants at higher capacities. The executive offered a segment-by-segment assessment of Mexico’s chemical industry, noting varying conditions across different product categories. He said polypropylene (PP) production, led by Indelpro – a joint venture between Mexico’s Alpek and the US’s LyondellBasell – as well as production of polyethylene terephthalate (PET) are performing quite well. It is the PE market which faces significant shortages, said de Paiva. PEMEX ASSETSAddressing questions about the state of Pemex’s aging petrochemical assets, de Paiva suggested that proper maintenance and technological upgrades could extend the operational life of even decades-old facilities. Some players in Mexico’s chemicals industry think there is room for joint ventures with the private sector to revive some of Pemex’s assets. That was the opinion of Martin Toscano, director for Mexican operations at Germany’s chemicals major Evonik, in an interview with ICIS. Other players, however, think the only way forward would be privatization so Pemex, which recurrently needs bailing out from the Mexican Treasury, would stop being a burden for the taxpayer, according to Javier Soriano, director at chemicals distributor Quimisor. De Paiva said he could not opine about Pemex’s assets, but did say that if plants are properly maintained they should be able to run for decades after start-up. “Petrochemical plants must operate for 30, 40, even 50 years, but they must maintain a continuous maintenance and technological upgrade program. Braskem’s experience in Brazil offers a glimpse of this: the company successfully operates plants of similar age, but with consistent investments in modernization,” said de Paiva. Before being appointed CEO at TQPM – a position he will keep for some time after the start-up in May, he said – de Paiva spent decades working for Braskem in Brazil, his country of origin. The terminal’s completion comes at a critical time for Mexico’s manufacturing sector, which has been looking to capitalize on nearshoring opportunities as global companies seek to reduce dependence on Asian supply chains. Industry experts suggest that resolving raw material constraints could position Mexico’s petrochemical sector for significant growth, particularly given its proximity to the US market and competitive labor costs. De Paiva concluded saying that once TQPM is up and running, that will create room for Braskem Idesa to think about potential expansions. The terminal’s storage tanks, being painted The dock where two Braskem Idesa-owned vessels will unload the ethane, to come mostly from the US Work was energetic even on a Saturday (15 March) as TQPM’s two partners want to inaugurate the facility in less than two months Miniature TQPM; right bottom, detail of area’s map and the pipelines (yellow line) connecting the terminal with Braskem Idesa’s facilities, some 10km away Pictures source: ICIS  Interview article by Jonathan Lopez

LONDON (ICIS)–In this ICIS energy podcast, energy news editor Jake Stones is joined by ICIS head of gas analytics Andreas Schroeder and ICIS energy managing editor Jamie Stewart to discuss the role speculative participants play in European gas and power markets today. Schroeder and Stewart provide a summary of recent bull and bear runs in EU energy markets, and look at the significance of speculative financial players’ trading behaviors and how these have transformed market dynamics.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 14 March. US energy secretary optimistic as tariff proposals in early days The US is still in the early stages of its tariff proposals, which could increase the costs of the steel and aluminium needed for oil and gas production, but vigorous dialogue about their effect on the economy is taking place behind closed doors, the secretary of energy said on Monday. AFPM ’25: Shippers weigh tariffs, port charges on global supply chains Whether it is dealing with on-again, off-again tariffs, new charges at US ports for carriers with China-flagged vessels in their fleets, or booking passage through the Panama Canal, participants at this year’s International Petrochemical Conference (IPC) have plenty to talk about. AFPM ‘25: US tariffs, retaliation risk heightens uncertainty for chemicals, economies The threat of additional US tariffs, retaliatory tariffs from trading partners, and their potential impact is fostering a heightened level of uncertainty, dampening consumer, business and investor sentiment, along with clouding the 2025 outlook for chemicals and economies. INSIGHT: Tariff war escalates as EU new round of retaliation includes US PE, plastic products Yet another front is opening up on the US tariff war – this one with the EU. In retaliation for US 25% tariffs on steel and aluminium imports that took effect on 12 March, the EU plans to not only roll out old measures, but launch new more significant tariffs directly targeting US polyethylene (PE) and other plastic products. AFPM ’25: INSIGHT: New US president brings chems regulatory relief, tariffs The new administration of US President Donald Trump is giving chemical companies a break on regulations and proposing tariffs on the nation’s biggest trade partners and on the world. Dow to announce decisions on European asset footprint on Q1 and Q2 earning calls – CFO Dow plans to announce decisions from its European asset review on its Q1 and Q2 earnings calls, its chief financial officer (CFO) said. Canada’s new prime minister to focus on trade diversification and security Canada’s new prime minister, Mark Carney, will focus on diversifying the country’s trade relationships and improving its security, he said on Friday after officially taking over from Justin Trudeau. AFPM ’25: LatAm chemicals face uncertain outlook amid oversupply, trade policy woes Latin American petrochemicals face ongoing challenges from oversupplied markets and poor demand, with survival increasingly dependent on government protectionist measures.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the changes underway in oil markets. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author and do not necessarily represent those of ICIS. Paul Hodges is the chairman of consultants New Normal Consulting.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 14 March. European naphtha slides as demand wanes, refineries roar back Sentiment in Europe’s naphtha spot market was weighed down by upstream crude volatility, weak blending demand and limited export opportunities in the week to 7 March despite ample liquidity in the physical space. Flagship Maasvlakte POSM plant to close in October – union The largest propylene oxide/styrene monomer (POSM) production complex in Europe is expected to close in October, union FNV said on Tuesday, after an agreement was reached between operator LyondellBasell and employees at the site. Europe chems stocks claw back losses as markets firm despite tariffs European chemicals stocks firmed in early trading on Wednesday as markets rebounded from the sell off of the last week, despite the onset of US tariffs on aluminium and steel and Europe’s pledge to retaliate. ‘Game changer’ for Europe PE as EU plans retaliatory tariffs on US European polyethylene (PE) players are braced for a potentially big impact from the EU’s retaliatory tariffs on plastics from the US, in the latest twist of the growing trade war. INSIGHT: Can the chemicals sector tap into Europe’s rearmament era? Europe’s drive to drastically ramp up defence spending is likely to drive a wave of investment into the region’s beleaguered industrial sector, but existing military spending patterns and technical requirements could limit uplift for chemicals.