ICIS Supply and Demand Database

SINGAPORE (ICIS)–In this video, ICIS analyst Jady Ma shares insights on the expanding acetic acid capacity in China and the new price point published in the ICIS acetic acid daily report from 24 March. Central China’s share in domestic acetic acid capacity expected to rise to 17% following Handsome Chemical’s new plant start-up around May Trading activities in Central China on the rise amid intensive start-up of new downstream capacities in recent two years Inter-regional trade flows become more flexible, arbitrage margins between central China and other regions drawing more attention ICN

24-Mar-2025

SINGAPORE (ICIS)–Indonesian producer Chandra Asri is reconfiguring how it develops its second petrochemical complex project (CAP-2), a company spokesperson told ICIS on Monday. The CAP-2 project's commencement will now begin with downstream units, starting with a chlor alkali – ethylene dichloride (CA-EDC) plant in Cilegon, company corporate director Suryandi said. Chandra Asri, whose operations are based in Banten, Cilegon province, is currently Indonesia’s sole cracker operator. Its CA-EDC project, which will be operated by its subsidiary Chandra Asri Alkali, will be able to produce 400,000 tonnes/year of caustic soda and 500,000 tonnes/year of EDC. Construction will begin in the early second half of 2025 and will take around two years to complete, according to Suryandi. Start-up will be pushed back to 2027 from the previous target of end-2026. "We are mindful of the challenges posed by global market volatility and Indonesia's petrochemical industry. As a result, the CAP-2 Project is currently being reconfigured," Suryandi said. The move follows Chandra Asri's tie-up with trading firm Glencore to acquire the Singapore petrochemical assets of Anglo-Dutch energy giant Shell. Suryandi added that the CA-EDC plant will be integrated into Chandra Asri's existing petrochemical complex and will utilize ethylene produced by the facility. "With the establishment of the CA-EDC plant, the company reaffirms its commitment to reducing Indonesia’s dependence on Chlor Alkali imports and contributing to the supply of EDC, which currently faces a regional deficit," he added. Chandra Asri in its initial plans said that the CAP-2 complex will increase the company's annual overall production capacity to more than 8 million tonnes from 4.2 million tonnes. Based on the original plan, the CAP-2 complex would include a new naphtha cracker as well as downstream units including butadiene, an aromatics recovery plant, high density polyethylene (HDPE) plant and a low density polyethylene (LDPE) plant and a polypropylene (PP) plant. The LDPE plant was to be the first in Indonesia. Thumbnail image: Chandra Asri's petrochemical manufacturing site in Cilegon, Banten province, Indonesia (Source: Chandra Asri website)

24-Mar-2025

TORONTO (ICIS)–Canada’s Prime Minister Mark Carney on Sunday called an election, to be held on 28 April. Carney, who on 14 March took over from Justin Trudeau, said he and his Liberal-led government needed a strong mandate from voters to confront the challenges posed by the US administration under President Donald Trump. “We are facing the most significant crisis of our lifetimes because of President Trump’s unjustified trade actions and his threats to our sovereignty,” Carney said. “President Trump claims that Canada isn’t a real country,” Carney said, adding: “He wants to break us, so America can own us.” Trump has repeatedly said that Canada was not a viable country and should join the US as its 51st state. In response to this challenge, Canada needed “to build a strong economy and a more secure Canada”, Carney said. The Liberals would, if re-elected, act quickly to diversify trade, remove interprovincial trade barriers, and build out energy and other infrastructure across the country, he said. CARBON PRICING Carney already suspended the federal consumer carbon tax but said that the government would retain and improve federal industrial carbon pricing as the most effective measure to control emissions. 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. The opposition Conservatives, who are running neck and neck with the Liberals in opinion polls about the election, announced last week they would abolish both the consumer carbon tax and federal industrial carbon pricing. Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing as a tool to encourage companies to reduce emissions in a cost-effective way, but the group has suggested a review to ensure that pricing levels and rules are still appropriate. In response to the tariff challenge, CIAC wants the government to implement pro-growth tax and regulatory policies; strengthen the country’s infrastructure; improve labor relations to avoid supply chain disruptions; and help diversify and expand Canada’s trade into new markets beyond North America. In chemicals and plastics, the tariff conflict affects about Canadian dollar (C$) 115 billion/year (US$80 billion/year) in US-Canada chemicals and plastics trade, according to CIAC. ($1= C$1.43) Please also visit US tariffs, policy – impact on chemicals and energy Thumbnail photo of Canada's flag; source: Government of Canada

24-Mar-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 21 March. Bearish sentiment prevails in Asia petrochemicals amid oversupply By Jonathan Yee 17-Mar-25 14:39 SINGAPORE (ICIS)–Weak downstream demand, exacerbated by economic and geopolitical uncertainties, keeps sentiment bearish and buyers cautious across petrochemical markets in Asia. China unveils consumption stimulus to safeguard growth By Fanny Zhang 17-Mar-25 16:00 SINGAPORE (ICIS)–China’s State Council announced on Sunday a special action plan to boost consumption, in fresh efforts to help achieve its growth target of around 5% for 2025. Monthly price gaps between Asia rPET, PET remain wide in Q1 By Arianne Perez 17-Mar-25 17:07 SINGAPORE (ICIS)–Average monthly spot prices between bottle-grade recycled polyethylene terephthalate (rPET) and polyethylene terephthalate (PET) pellets were persistently wide amid various factors in the Asian markets. Asia methanol in flux as Iran capacities expected to come onstream By Damini Dabholkar 17-Mar-25 17:26 SINGAPORE (ICIS)–The Asian methanol market has seen some price uncertainty over the last few weeks, with several market participants closely watching developments related to the start-up of methanol plants in Iran. INSIGHT: Asia chemical prices to soften in March amid crude oil losses – ICIS By Ann Sun 18-Mar-25 13:03 SINGAPORE (ICIS)–Asia’s petrochemical prices in March are expected soften due to downward pressure from crude oil losses. This forecast is driven by bearish sentiment caused by concerns over OPEC and its allies’ (OPEC+) planned output increase and the US’ trade policies. China remains net SM importer in 2024, setting stage for active exports in 2025 By Luffy Wu 18-Mar-25 16:04 SINGAPORE (ICIS)–Despite market players' rising focus on China's styrene monomer (SM) export market, the country remained a net SM importer in 2024 with an annual SM trade deficit of 159,719 tonnes. INSIGHT: China PET resin production growth to decelerate in 2025 By Jimmy Zhang 18-Mar-25 17:30 SINGAPORE (ICIS)–On an annual basis, China PET resin (mainly bottle grade) production growth remained quite high in both 2023 and 2024, at around 10% and 15% respectively. ICIS China February petrochemical index dips; March demand soft By Yvonne Shi 19-Mar-25 12:13 SINGAPORE (ICIS)–China’s domestic petrochemical prices weakened in February amid a sluggish market, with downstream factories slow to resume operations after the Lunar New Year holiday. PODCAST: Volatility seen in Asia, Mideast isocyanates amid recent supply changes By Damini Dabholkar 19-Mar-25 13:25 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. Indonesia central bank keeps policy interest rate at 5.75% after market rout By Nurluqman Suratman 19-Mar-25 17:38 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. Arbitrage widens for Asia-Europe acetic acid, etac spot trades By Hwee Hwee Tan 20-Mar-25 13:03 SINGAPORE (ICIS)–Traders leveraging on easing freight rates and a stronger euro have fixed several spot cargoes for acetyl products bound for Europe from China, lifting Asia-Atlantic trade volume into March. INSIGHT: Persistent capro oversupply sees plant closures, consolidation in Asia By Isaac Tan 20-Mar-25 14:00 SINGAPORE (ICIS)–The global caprolactam (capro) market is grappling with significant challenges, as oversupply from expanding Chinese production capacities, weak downstream demand, and rising margin pressures combine to create a pessimistic outlook for producers worldwide. Vopak's €1bn investments in energy transition projects underway – exec By Jonathan Yee 20-Mar-25 15:49 SINGAPORE (ICIS)–Dutch storage and infrastructure firm Vopak is doubling down on its energy transition strategy, re-affirming its commitment to invest €1 billion in low-carbon infrastructure through to 2030, the company’s Asia and Middle East chief told ICIS. Japan Feb core inflation at 3.0%; upholds interest rate hike hopes By Nurluqman Suratman 21-Mar-25 12:18 SINGAPORE (ICIS)–Japan's core consumer prices excluding fresh food in February rose by 3% year on year, remaining above the central bank's 2% target, reinforcing market expectations of further interest rate hikes this year. PODCAST: A tale of two olefins; C2, C3 to see diverging demand trends By Damini Dabholkar 21-Mar-25 13:32 SINGAPORE (ICIS)–Asia propylene (C3) editor Julia Tan speaks with Asia ethylene (C2) editor Josh Quah about the impact of recent tariff wars on downstream market sentiment, along with the markets' outlook for the second quarter.

24-Mar-2025

SAN ANTONIO (ICIS)—Dow Chemical has indefinitely shut down its ethylene glycols (EG) unit at its Seadrift, Texas site, according to a company representative at this year’s International Petrochemicals Conference (IPC). The site went down due to an electrical failure before Winter Storm Enzo in late January, and remained down for the planned maintenance, originally scheduled for mid-February. The EG unit at the site has an annual capacity of 300,000 tonnes, according to the ICIS Supply & Demand Database. The ethylene oxide (EO) unit at the site is expected to restart in May, following the turnaround. Dow will focus on producing purified EO at the site for other derivatives consumption, including ethanolamines and glycol ethers. 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

23-Mar-2025

SAN ANTONIO (ICIS)–Here is a summary of chemical market stories, heading into this year’s International Petrochemical Conference (IPC). Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas. 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. AFPM '25: 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. 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 IPC have plenty to talk about. 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. AFPM ’25: US propane supply long; ethane prices rising The US petrochemical industry is seeing a glut of upstream propane supply and rising prices for key feedstock ethane. AFPM ’25: Weak demand takes toll on US ethylene as supply concerns ease Persistently poor demand, underpinned by worries over global tariff policies and a sluggish US economy are putting downward pressure on US ethylene prices. AFPM ’25: US propylene demand weak despite recent supply disruptions Weak demand in the US propylene market has counterbalanced recent supply disruptions, pushing spot prices and sentiment lower. AFPM ’25: US BD supply lengthening; rubber demand optimistic US butadiene (BD) has been rather balanced in Q1 despite a couple of planned turnarounds and cracker outages limiting crude C4 deliveries, but supply is expected to lengthen, and demand is cautiously optimistic. AFPM ’25: US aromatics supply ample amid low demand Domestic supply of aromatics is ample and demand is relatively poor. AFPM ’25: US methanol exports, bunker fuel demand to grow, but domestic demand sentiment low US methanol participants’ outlook on the key downstream construction and automotive sectors has dimmed, but optimism continues for export growth and bunker fuel demand. AFPM ’25: Tariffs, weak demand weigh on US base oils Uncertain US trade policy paired with already weak finished lubricant demand weighs on base oil market sentiment. AFPM ’25: Trade policies dampening outlook for Americas PE The US polyethylene (PE) industry started 2025 with some early successes amid the backdrop of lower year-on-year GDP growth. Now, with the impact of volatile tariff policy on top of the aforementioned lower GDP forecast, the outlook for PE has fallen. AFPM '25: Tariffs to shape the trajectory of caustic soda in US and beyond The North American caustic soda market is facing continued headwinds coming via potential tariffs, a challenged PVC market and planned and unplanned outages. US President Donald Trump has threatened to implement tariffs on Mexico, Canada and the EU as well as on products that are directly tied to caustic soda but has delayed enactment on multiple occasions. These delays have bred uncertainty in the near-term outlook, impacting markets in the US and beyond. AFPM '25: US PVC to face headwinds from tariffs, economy The US polyvinyl chloride (PVC) market is facing continued headwinds as tariff-related uncertainties persist. 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. AFPM ’25: US spot EG supply balanced-to-tight on heavy turnaround season; EO balanced Supply in the US ethylene glycols (EG) market is balanced-to-tight as the market is undergoing a heavy turnaround season. The US ethylene oxide (EO) market is balanced as demand from derivatives including surfactants is flat. AFPM ’25: US PET prices facing upward price pressure on tariffs, China’s antimony exports ban, peak seasonUS polyethylene terephthalate (PET) prices continue to face volatility as the market assesses the impacts of potential tariffs on imports from Canada and Mexico. AFPM ’25: US PP volatility persists amid weak demand The US polypropylene (PP) market is facing weak demand, raw material volatility and tariff uncertainty. AFPM ’25: US ACN rationalization inevitable amid declining demand Production of acrylonitrile (ACN) in the US is being reduced or shuttered as already weak demand continues to fall and as downstream plants are shutting down. Changes to the supply/demand balance, trade flows and tariff uncertainties are weighing on market participants. AFPM ’25: US nylon trade flows shifting amid global capacity changes, tariff uncertainties US nylon imports and exports are changing as capacity becomes regionalized and geographically realigned. The subsequent changes to trade flows, price increase initiatives and tariff uncertainties are weighing on market participants. AFPM ’25: US ABS, PC face headwinds from closure and oversupply The US acrylonitrile butadiene styrene (ABS) and polycarbonate (PC) markets are lackluster and oversupplied. Demand remains soft kicking off the year, and the closure of INEOS’s Addyston, Ohio, ABS facility and tariff uncertainties continue to pressure ABS and PC markets. AFPM ’25: US styrene market facing oversupply amid weak demand, trade uncertainty The US styrene market is transitioning from a period of supply tightness to one of potential oversupply, driven by weak derivative demand and the recent restart of Styrolution’s Bayport, Texas, unit. This return to full operation, coupled with subdued demand, suggests ample supply in the short term. AFPM ’25: US PS faces slow start to 2025 amid weak demand Domestic polystyrene (PS) demand started the year off weaker than expected, with limited restocking and slower markets. AFPM ’25: US phenol/acetone face challenging outlook heading into Q2 US phenol and acetone are grappling with a lot of moving pieces. AFPM ’25: US MMA facing new supply amid volatile demand heading into Q2 US methyl methacrylate (MMA) is facing evolving supply-and-demand dynamics. Roehm's new plant in Bay City, Texas, is in the final stage of start-up, but is not in operation yet. There is anticipation of sample product being available in Q2 for qualification purposes. AFPM ’25: US epoxy resins in flux amid duties, tariffs heading into Q2 US epoxy resins is grappling with changes in duties and trade policies. AFPM ’25: Acetic acid, VAM eyes impact of tariffs on demand, outages on supply The US acetic acid and vinyl acetate monomer (VAM) markets are waiting to see what impact shifting trade and tariff policy will have on domestic and export demand, while disruptions are beginning to tighten VAM supply. AFPM '25: US etac, butac, glycol ethers markets focus on upcoming paints, coatings demand US ethyl acetate (etac), butyl acetate (butac) and glycol ethers market participants are waiting to see if the upcoming paints and coatings season will reinvigorate demand that has been in a long-term slump. AFPM ’25: Low demand for US oxos, acrylates, plasticizers countering feedstock cost spikes US propylene derivatives oxo alcohols, acrylic acid, acrylate esters and plasticizers have been partly insulated from upstream costs spikes by low demand, focusing outlooks on volatile supply and uncertain demand. AFPM ’25: N Am expectations for H2 TiO2 demand rebound paused amid tariff implementations After initial expectations of stronger demand for titanium dioxide (TiO2) in the latter half of 2025, the North American market is now in flux following escalating tariff talks. AFPM ’25: US IPA, MEK markets look to supplies, upstream costs US isopropanol (IPA) market has an eye on costs as upstream propylene supplies are volatile, while the US methyl ethyl ketone (MEK) market is evaluating the impact of global capacity reductions. AFPM ’25: US melamine prices continue to face upward pressure on duties, tight supply US melamine is experiencing upward pricing pressure, thanks in large part to antidumping and countervailing duty sanctions and tight domestic supply. AFPM '25: US polyurethane industry braces for cascade effect of tariffs US polyurethane prices for toluene diisocyanate (TDI), methylene diphenyl diisocyanate (MDI) and a variety of polyether and polyester polyols continue to see increase pressure as the market assesses the impacts of potential tariffs on imports from Canada and Mexico. AFPM ’25: US BDO market eyes costs, demand outlook uncertain US 1,4 butanediol (BDO) production costs have been mounting, and margins have been crunched. Supply is ample and demand has been lackluster. AFPM ’25: US propylene glycol demand begins softening after prior feedstock-driven uptick After a cold winter with strong demand for seasonal propylene glycol (PG) end-uses in antifreeze and de-icers in many parts of the US, demand is starting to cool. AFPM ’25: US MA sentiment cautious ahead of potentially volatile Q2 US maleic anhydride (MA) is facing a volatile economic backdrop. Spot feedstock normal butane has fallen below $1/gal in March due to the end of peak blending season and strong production. AFPM ’25: US PA, OX face trade uncertainty, production constraints US phthalic anhydride (PA) and orthoxylene (OX) demand remains relatively weak. Prices have been remaining flat and are expected to settle lower this month after losing mixed xylene (MX) price support and underlying crude oil price declines. AFPM '25: Tight feedstock availability to keep US fatty acids, alcohols firm despite demand woes Tight supplies and high prices for oleochemical feedstocks are expected to keep US oleochemicals prices relatively firm, as continued macroeconomic headwinds, including escalating trade tensions between the US and other countries, only further weigh on consumer sentiment and discourage players from taking long-term positions. AFPM '25: Historic drop in biodiesel production to keep US glycerine relatively firm A drop in US biodiesel production to levels not seen since Q1 2017 is likely to keep the floor on US glycerine prices relatively firm through at least H1 as imports of both crude and refined material fail to fully offset the short-term shortfalls in domestic supply. PRC ’25: US R-PET demand to fall short of 2025 expectations, but still see slow growth 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. PRC ’25: US pyrolysis recycling players churning through regulatory, economic uncertainty As both regulatory and economic landscapes continue to change, production and commercialization progress among pyrolysis based plastic recyclers continues to be mixed. Pyrolysis, a thermal depolymerization/conversion technology which targets polyolefin-heavy mixed plastic waste, or tires, is expected to become the dominant form of chemical recycling over the next decade. 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 Visit the Recycled Plastics topic page

22-Mar-2025

HOUSTON (ICIS)–The Fertilizer Institute (TFI) said it is extending a sincere thanks to US President Donald Trump for including potash alongside critical minerals in the most recent executive order titled “Immediate Measures to Increase American Mineral Production.” The industry group said this designation sets into place a framework to ensure that potash and other national critical mineral resources are leveraged to create jobs and fuel American prosperity. For fertilizers it will help ensure a stable and abundant supply, which are critical to maintaining global competitiveness of US farmers, strengthening rural economies and keeping food prices in check. “Originally included in the first list of Critical Minerals created in 2018 under President Trump’s first administration, potash’s omission from the 2022 list was a mistake that a broad coalition of industry and consumer advocates have been working to remedy,” said Corey Rosenbusch, TFI president and CEO. TFI noted that 98% of annual US potash consumption comes from imports. Despite having natural reserves, the U.S. only accounts for 0.2% of global supply. There are additional seams that remain unmined due to regulatory uncertainty that has resulted in delayed permitting. Part of the regulatory uncertainty stems from a lack of clarity on potash’s critical mineral status. “We look forward to continuing to work with the Trump Administration on actions that will promote a strong and resilient fertilizer industry that supports U.S. agriculture and ensures affordable food prices for American families,” Rosenbusch said. “This includes continued engagement with the United States Geological Survey (USGS) with the goal of expanding on the executive order to ensure the permanent recognition of both potash and phosphate in their rightful place on the Critical Minerals list.”

21-Mar-2025

HOUSTON (ICIS)–US polyurethane prices for toluene diisocyanate (TDI), methylene diphenyl diisocyanate (MDI) and a variety of polyether and polyester polyols continue to see increase pressure as the market assesses the impacts of potential tariffs on imports from Canada and Mexico, heading into this year’s International Petrochemical Conference (IPC). Because US domestic suppliers of polyurethane products expect a cascading inflationary effect of these tariffs, they are trying to price the cost of this inflation in new pricing offers for Q2. At the same time, these tariffs could hinder demand for polyurethane products in downstream industries such as automotive, construction, the comfort sector (furniture and bedding) and appliances. 25% TARIFFS RISK CAUSING DISRUPTION IN THE AUTOMOTIVE SECTORThe ongoing worldwide tariff conflict heightens the chances of the automobile sector experiencing a prolonged disruption phase. This could imply a halt in the production of several car models, increased prices for new vehicles, and production delays due to hurdles in product development for the subsequent years, experts say. Automotive seating consumes large volumes of TDI and flexible polyether polyols. Some analysts approximate that nearly one-third of North America's vehicle production could face reductions as a response to the 25% tariffs on Mexico and Canada imposed by US President Donald Trump. These cuts would be part of the automakers attempts to balance the escalated costs, and simultaneously, consumers might procrastinate their new car and truck purchases. Flavio Volpe, the President of the Automotive Parts Manufacturers' Association (APMA), representing Canada's OEM suppliers within the global auto industry, has shared that Canadian car parts suppliers have funneled more than $10 billion into parts facilities situated across 26 US states. These plants employ up to 48,000 US workers, equating to the workforce of roughly 5-10 large car and truck factories. Focusing on Michigan, it alone houses 55 Canadian parts factories employing 17,000 US workers. TARIFFS MIGHT HINDER CONSTRUCTION SECTOR RECOVERYThe latest US housing starts numbers brought some hope for a recovery of the construction sector, which consumes a large amount of MDI and rigid polyols. Housing is a key end-use market for chemistry in the form of paints, wire insulation, house-wrap, sealants, roofing materials, resilient flooring, vinyl siding and related products. New housing also generates sales of appliances, furniture, carpet, fixtures and window treatments. In total, each start engenders on average over $13,000 worth of chemistry. After plunging 9.8% month on month in January amid harsh winter weather, US housing starts rebounded 11.2% in February to an adjusted annual rate of 1.501 million, according to US Census Bureau data. February’s increase was led by an 11.4% gain in the single-family segment, noted Kevin Swift, ICIS senior economist for Global Chemicals. This segment is more sensitive to interest rates and housing costs that affect affordability. It is also more plastics intensive than the multifamily segment. DEMAND FROM THE COMFORT SECTOR REMAINS WEAKPoor demand continues to plague the comfort sector (furniture and bedding), with the latest sales on President's Day not showing the traditional consumer interest the industry expected. The comfort sector consumes the largest volumes of TDI and flexible polyether polyols. There is hope that demand might recover in the second half of the year. Labor Day is traditionally the strongest sales day of the year for furniture and bedding items. However, the latest consumer sentiment data does not bode well for expectations on consumer expenditures, which make up 70% of the US GDP. US consumer sentiment fell nearly 11% month on month in March amid ongoing economic policy and tariff uncertainties and inflation fears. The Michigan “Index of Consumer Sentiment” fell to 57.9 points in March, from 64.7 in February, according to preliminary results of the University of Michigan’s monthly consumer survey. Sentiment has now fallen for three consecutive months and is down 22% from December 2024. FLAME RETARDANTS FACE RISK OF SUBSTANTIAL INCREASESExpectations of further tariff increases are also feeding concerns about the rise of cost of flame retardants used in various polyurethane foams in the US. Case in point is Tris (chloropropyl) phosphate (commonly abbreviated TCPP), a chlorinated organophosphate flame retardant commonly added to polyurethane foams. TCPP is currently imported from China, often in blended form, but it can also be purchased as a sole product. Its cost in the US is currently above $2/lb and rising, although it's still available in Canada for 58 cents/lb. The prospect for further increases on imported products is having market participants scrambling to find TCPP alternatives that are economically viable. According to sources, some alternatives currently under consideration are Triethyl Phosphate (TEP), a halogen free flame retardant, and Tris(1,3-dichloro-2-propyl) phosphate (also known as chlorinated Tris, TDCP, TDCPP or Fyrol FR-2). There are other flame retardants available as well, but the key is to be able to find a solution that is economically viable compared to the cost of TCPP. Compounding the problem, last December China limited the sales of flame-retardant precursor antimony for exports, since antimony is also a dual-use product that can end up in military applications. Since 2020, antimony prices have increased over 234%, according to data from the Institute for Rare Earths and Metals. ANTICIPATION OF TARIFFS INFLATIONARY EFFECT DRIVES SUPPLIERS TO OFFER HIGHER PRICESCurrent negotiations for April and Q2 polyurethane pricing are wrapping up amid continued efforts by suppliers to increase prices. Especially in the flexible polyol segment, domestic suppliers are mentioning "margin improvement" and "inflation adjustment" needs as the main rationale for these price increases, which in some cases have come on top of prior increases announced in February for March. Foamers are fighting these increases, which have been offered for MDI and TDI as well. Fundamentals do not seem to support these Q2 increase efforts. To begin with, downstream demand is not recovering any time soon. Second, there is plenty of product in the market despite some minor turnarounds in effect for MDI and TDI between mid-March and mid-Aril. Third, feedstock costs are not justifying price increases, either. All main polyurethane feedstocks such as propylene, benzene, toluene, ethylene glycol and 1,4 butanediol (BDO) are moving on downtrend trajectories. Rather than being an adjustment to market dynamics, these increase pressures find their rationale in inflationary expectations of these tariffs, which polyurethane suppliers seem to be taking for granted. 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 Umberto Torresan (Thumbnail shows polyurethane foam. Image by Shutterstock.)

21-Mar-2025

TORONTO (ICIS)–Canada’s central bank will work to ensure that US tariffs, and Canada’s reciprocal duties, will not turn into an inflation problem, the bank’s governor said during a webcast event on Thursday afternoon. Monetary policy cannot solve a trade conflict Tariffs to impact oil, farming, manufacturing Tariffs are a structural change that needs a structural response While the tariffs will slow Canada’s GDP growth and raise prices, the tariff-induced direct price increases must not be allowed to spread into “ongoing generalized inflation”, Tiff Macklem, governor of the Bank of Canada, said in a speech to the Calgary economic development agency in Alberta. US tariffs on Canadian exports will be paid by the US company buying those goods, and the company will pass at least some of the cost onto the US consumer, Macklem said. However, the same goes for the retaliatory tariffs Canada imposes on goods imported from the US, he said. As such, higher tariffs will raise prices, causing inflation to rise for a period as the upward pressure on prices from higher costs will outweigh the downward pressure from a weaker economy, he said. Businesses have already lowered their sales outlooks, notably in manufacturing and sectors that depend on consumer spending, he said. Companies are also holding back on investment plans. “Businesses are telling us they are delaying or cancelling investments and scaling back on hiring,” Macklem said. However, as Canadians worry about trade uncertainty, “we don’t want them to have to worry about inflation as well”, he said. What the bank can and must do is ensure that higher prices from a trade conflict do not become ongoing inflation, he said. “We are committed to maintaining price stability over time,” he said, adding: “There should be no uncertainty about that.” The tariffs and resulting uncertainties will – if maintained – particularly hurt certain sectors and regions in Canada, he said. ENERGY For oil-rich Alberta province, the impact on the energy industry from a 10% US tariff is “a major concern”. At the same time, however, the tariffs are also “a big issue” for US Midwest refineries that have invested in equipment to refine heavy Canadian oil, he said. About 94% of Canadian crude oil exports go to the US, mostly through north-south pipelines, he said. The launch of the Trans Mountain oil pipeline expansion last year increased access to overseas markets for Canadian oil, and new export capacity for liquefied natural gas (LNG) is due to come online, he noted. These capacities would help to diversify markets for Canadian energy exports, he said, but also pointed out that these investments are designed to increase Canada’s export capacity – not replace US demand, he said. FERTILIZERS Although the US has temporarily exempted fertilizers, including potash, from tariffs, “uncertainty remains,” he said. With spring seeding to begin soon, farmers on both sides of the border are already feeling pressure from low grain prices, he said. US farmers import potash from Saskatchewan to add potassium to their soil, while Canadian farmers often need US phosphate to fertilize their crops, he said. Canadian farmers also buy machinery and equipment from the US, he said. He also noted that China has imposed a 100% tariff on Canadian canola, effective 20 March, in retaliation for the 100% tariff Canada placed on electric vehicles (EVs) from China. China is the top market for Canadian canola, with an export value of close to Canadian dollars (C$) 5 billion ($3.5 billion), he said. ALUMINUM, STEEL Industries in other parts of Canada, particularly in Ontario and Quebec, will be disrupted by the 25% US tariffs on steel and aluminum. In 2024, the US imported about one-quarter of its steel and 40% of its aluminum from Canada, and Canada imported one-quarter of its steel and one-fifth of its aluminum from the US, he said. Those cross-border flows mean these sectors will be hit by both US tariffs and counter-tariffs, he said, adding: “It’s going to hurt output and increase prices.” Monetary policy could not target specific industries or regions, he said. “We have one monetary policy for the whole country,” he said. A challenge for the Bank of Canada will be trying to assess by how much tariffs will dent demand, how much of the tariff burden will be passed on to consumer prices, and how quickly the burden will be passed on, he said. A faster pass-through means inflation will rise faster, but it will also come down faster, “provided monetary policy does its job”. “So, we’re watching closely how the costs of tariffs and uncertainty pass through to consumer prices,” he said. “Our mandate is price stability, and low inflation is the best way we can support the economic and financial well-being of Canadians in good times and bad,” he said. While monetary policy “cannot solve a trade war”, the bank could help avoid adding damage to the economy by ensuring that inflation remains anchored at the bank's 2% inflation target, he said. Helping the Bank of Canada will be its co-operation with central banks around the world, he said. Central bank governors meet regularly to exchange information and consult each other, he said. “As central banks, we are all in this together,” Macklem said. STRUCTURAL CHANGE If not resolved, Canada’s tariff conflict with its largest trading partner by far would become a “structural change” that requires a structural solution, Macklem said. High tariffs would put Canada on a permanently lower growth path, he said. “We are going to earn less, we are going to consume less, because we are going to have less income,” he said. One way to at least partially offset the negative structural change caused by the tariff conflict would be “positive structural reform”, he said. Such a reform would include removing the barriers to the country’s interprovincial trade, he said. Despite many attempts over the years, Canada never agreed on interprovincial free trade as in many cases it is easier to trade north to south, rather than across Canada. The barriers between the country's 10 provinces and three territories include actual trade restrictions, as well as different provincial regulations for the accreditation of professionals, Macklem said. With the tariff conflict, Canada may now finally remove its interprovincial barriers, which would increase commerce east-west across the country, he said. This positive structural reform could offset “at least some of the consequences of this very negative structural shock we are facing with the US,” he said. It would, however, be difficult and take time for Canada to try to replace the millions of US consumers it may be losing, he said. While hoping for the best, Macklem did not seem too optimistic about the chances of resolving the tariff conflict with the administration of US President Donald Trump. “There is a certain level of trust that has been broken,” he said, and he noted that “Trump has threatened our sovereignty, repeatedly referring to Canada as the 51st state.” Regarding Canada's upcoming federal election, Macklem said the bank's commitment to low inflation was independent of which political party is in government. Canada’s new prime minister, Mark Carney, is expected to call an election on Sunday (23 March), which will likely be held on 28 April or 5 May, public broadcaster CBC reported on Thursday, citing unnamed government sources. Carney, who took over from Justin Trudeau on 14 March, is a former governor of the Bank of Canada and of the Bank of England. CHEMICAL INDUSTRY Trade group the Chemistry Industry Association of Canada (CIAC) has said that to cope with the tariff challenge, Canada needs a competitiveness framework to attract investment and stimulate economic growth. CIAC wants the government to implement pro-growth tax and regulatory policies; strengthen the country’s infrastructure; improve labor relations to avoid supply chain disruptions; and help diversify and expand Canada’s trade into new markets beyond North America. In chemicals and plastics, the tariff conflict affects about C$115 billion in US-Canada chemicals and plastics trade, according to CIAC. Focus article by Stefan Baumgarten $1 = C$1.43 Please visit US tariffs, policy – impact on chemicals and energy Tumbnail photo of Tiff Macklem, governor of the Bank of Canada; photo source: Bank of Canada

21-Mar-2025

SINGAPORE (ICIS)–Asia propylene (C3) editor Julia Tan speaks with Asia ethylene (C2) editor Josh Quah about the impact of recent tariff wars on downstream market sentiment, along with the markets' outlook for the second quarter. NE Asia C2 to see demand support from new PVC start-ups in China NE Asia C3 length to weigh on markets; import demand weak amid ample domestic supply New capacity start-ups in China to lengthen supply in olefins markets in Q2

21-Mar-2025