Butadiene and c4s

SAO PAULO (ICIS)–The global petrochemicals downturn could potentially stretch to 2028, but the years-long crisis due to overcapacities may leave a lasting mark – lower for longer margins, according to a chemicals analyst at credit rating agency Fitch. Marcelo Pappiani, Fitch’s main analyst for Brazil’s petrochemicals, said that potentially lower spreads post-crisis, compared to the averages prior to the current downturn, could have deep financial implications for petrochemicals companies and their ability to borrow and/or invest. The analyst reminded how he started covering Brazil’s chemicals for Fitch in 2022 – at the time, the nascent downturn was expected to be a traditional downcycle lasting around two years, three at most. In an interview with ICIS in 2023, the analyst said the downturn could last to 2025. In another interview in 2024, he did not want to put an end date to what was already looking like a half-decade-long crisis, and warned that despite protectionist measures in Brazil, chemicals producers were far from being out of the woods. MARGINS LONG TERMFast forwarding to current times, Fitch is forecasting the downturn to last until 2028 as China’s relentless start-up of new capacities, while not having the domestic demand for them, will continue putting Chinese products in all corners of the world at very competitive prices. “We now expect the downcycle to last a bit longer, probably until 2028, because we are still seeing and probably will continue to see for a while some prices at the bottom. I have heard some industry players put the end to the downturn in 2030 – we will need to see, but indeed the end date for it has had to be pushed back several times already,” said Pappiani. “This is the most prolonged downcycle most companies have been through. And what we are trying to figure out here is, upon recovery, when spreads return to mid-cycle, are they going to be at the same level they were before?” The analyst went on to explain his theory by looking at a key financial metric in a company’s performance: the ratio earnings/debt. The higher the ratio, the more effort a company needs to focus on deleveraging; therefore, capital expenditure (capex) and other long-term productivity measures can suffer. “Post-crisis, are companies expecting to have the same levels of earnings and leverage than they were running before this turmoil? This is the million-dollar question. Those metrics will eventually recover from the current crisis-hit numbers, but I doubt it will be at the same levels as before. Some companies still think the market will recover to where it was: I don't seem to agree much, but let's see.” HOW TO DEAL WITH CHINAThe current downturn, closely linked to China’s state-driven economic policies, presents companies from market economies with many challenges they have not been able to overcome yet. The situation which has brought the petrochemicals industry to its knees is clear. China's state-supported companies are just producing for the sake of employment and social stability – so the system does not feel threatened – over profitability, which is what drives competitors in most other countries.  "The market is always saying about how companies need to rationalize – shut down plants that are not profitable and the likes. But what's rational for us here in the West might not be rational for people in China, where they are more concerned about employment, for instance,” said Pappiani. "But the point is that the amount of rationalization we have already seen hasn't been enough to compensate for this oversupply. Meanwhile, domestically, the Chinese government doesn't seem to be concerned too concerned today about that [high levels of indebtedness and the burden that will put on future generations of Chinese citizens].” Pappiani went on to say that long term, the petrochemicals sector will eventually balance out simply because the world’s growing population will continue devouring plastics and petrochemicals-derived materials. “Despite the current overcapacity challenges, plastics and chemical products will remain fundamental to the global economy. Together with ammonia for agriculture, cement for construction, and crude oil, plastic resins rank among the world's most critical materials,” said the Fitch analyst. “This structural dependency on plastic materials continues growing and seems set to continue doing so, despite sustainability concerns and as environmental considerations gain prominence." Interview article by Jonathan Lopez

18-Jun-2025

BARCELONA (ICIS)–Europe’s chemical distribution sector is bracing for the impact of multiple geopolitical and economic challenges, including the Israel/Iran conflict. All Iran’s monoethylene glycol (MEG), urea, ammonia and methanol facilities have been shut down For methanol this represents more than 9% of global capacity, for MEG it is 3% Brent crude spiked from $65/bb to almost $75/bbl, against backdrop of reports of attacks on gas fields and oil infrastructure If Iran closes the Strait of Hormuz this will severely disrupt oil and LNG markets Expect extended period of volatility and instability in the Middle East European distributors brace for a VUCA (volatile, uncertain, complex, ambiguous) world Prolonged period of poor demand looms, with no sign of an upturn Global overcapacity driven by China, subsequent wave of production closures across Europe both a threat and opportunity for distributors Suppliers and customers turn to distributors to help navigate impact of tariffs and geopolitical disruption In this Think Tank podcast, Will Beacham interviews Dorothee Arns, director general of the European Association of Chemical Distributors and Paul Hodges, chairman of New Normal Consulting. Click here to download the 2025 ICIS Top 100 Chemical Distributors listing 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.

17-Jun-2025

SINGAPORE (ICIS)–Malaysia's revised sales and services tax (SST) framework officially takes effect on 1 July, with the expanded scope now set to include a 5% tax on an extensive range of petrochemical products, including polyethylene (PE) and polypropylene (PP). Critical raw materials for downstream industries affected Capital expenditure items like machinery now taxed Malaysian industry body calls for further delay in implementation The government had first announced the revision of items subject to the sales tax on 18 October 2024, as part of its fiscal consolidation strategy under the 2025 budget. Under the updated framework, more than 4,800 harmonized system (HS) codes will now fall under the 5% sales tax bracket. Goods exempted from the updated sales tax include specific petroleum gases and other gaseous hydrocarbons that are currently under HS code 27.11. These include liquefied propane, butanes, ethylene, propylene, butylene, and butadiene. In their gaseous state, the list includes natural gas used as motor fuel. The measure, aimed at broadening the country's tax base and increasing revenue, was originally slated to begin on 1 May, but was delayed for two months after manufacturers urged policymakers to refrain from adding to their financial burden. The July revision of Malaysia's sales tax and the expansion of the service tax scope involve several key changes. The sales tax rate for essential goods consumed by the public will remain unchanged, while a 5% or 10% sales tax will be applied to discretionary and non-essential goods. The scope of the service tax will be broadened to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services. This includes critical raw materials for various downstream industries, from plastics and packaging to automotive manufacturing. Previously, many of these materials were zero-rated under the SST. The Federation of Malaysian Manufacturers (FMM) has publicly criticized the decision, calling it "highly damaging to industries” in a statement released on 12 June. According to estimates by the Ministry of Finance, the SST expansion is expected to generate around ringgit (M$) 5 billion in additional government revenue in 2025. “Although this may support the government’s fiscal objectives, the additional tax burden will be largely borne by businesses and has serious implications for operating costs, investment decisions, and long-term business sustainability,” FMM president Soh Thian Lai said in a statement. Soh highlighted that with this expansion, around 97% of goods in Malaysia's tariff system will now be subject to sales tax, representing a significant departure from a previously narrower tax base, to one where nearly all categories including industrial and commercial inputs are now taxable. Under the new sales tax order, 4,806 tariff lines are now subject to 5% tax, covering a wide range of previously exempt goods, according to the FMM. These include high-value food items, as well as a broad spectrum of industrial goods, such as industrial machinery and mechanical appliances, electrical equipment, pumps, compressors, boilers, conveyors, and furnaces used in manufacturing processes, it said. The 5% rate also applies to tools and apparatus for chemical, electrical, and technical operations, significantly broadening the range of taxable inputs used in production and operations. “The expanded scope now places a direct tax burden on machinery and equipment typically classified as capital expenditure. This includes items critical to upgrading production lines, automating processes, and scaling operations,” Soh said. The FMM "strongly urges the government to further delay the enforcement of the expanded SST scope beyond the scheduled date of 1 July", until the review is complete, and industries are ready. They also calling for a broader exemption list, especially for capital expenditure items like machinery and equipment, and a re-evaluation of including construction, leasing, and rental services, which they warn will "increase operational expenses and are expected to cascade through supply chains." “We are deeply concerned and caution that the untimely implementation of the expanded scope of taxes will exert inflationary pressure, as businesses already grappling with rising costs … may have no choice but to pass these additional burdens on to consumers,” the FMM added. The FMM has urged the government to postpone the implementation, citing insufficient lead time for businesses to adapt and calling for a comprehensive economic impact assessment. Malaysia’s manufacturing purchasing managers’ index (PMI) continued to contract in May, with a reading of 48.8, according to financial services provider S&P Global. Beyond the direct sales tax on goods, the revised SST also introduces an 8% service tax on leasing and rental services for commercial or business goods and premises. This could further compound cost burdens for capital-intensive sectors, including parts of the petrochemical industry that rely on leased machinery and industrial facilities. Focus article by Nurluqman Suratman Thumbnail image: PETRONAS Towers, Kuala Lumpur (Sunbird Images/imageBROKER/Shutterstock)

17-Jun-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 June 2025. Asia-Europe VAM trade expansion driven by outages, US tariffs By Hwee Hwee Tan 13-Jun-25 15:01 SINGAPORE (ICIS)–Vinyl acetate monomer exports from Asia to Europe are on track for expansion during the second quarter, spurred by a push among traders to take positions before a regulatory quota waiving duties for imports into Europe is exhausted. Crude climbs more than 8% after Israeli strikes against targets in Iran By James Dennis 13-Jun-25 12:33 SINGAPORE (ICIS)–Crude prices surged, with Brent peaking nearly $9/barrel higher early on Friday, after Israel attacked targets in Iran, raising fears of a major escalation in conflict in the Middle East and resultant disruptions to crude production and exports from that region. INSIGHT: India’s BIS deadline may reshape global PVC trade landscape By Aswin Kondapally 11-Jun-25 14:00 MUMBAI (ICIS)–India is at a critical juncture in determining whether to implement or extend its Quality Control Orders (QCO) for polyvinyl chloride (PVC) resin sales under the Bureau of Indian Standards (BIS) Act, with the compliance deadline set for 24 June 2025. Asia crude glycerine offers fall as downstream ECH weakens in China By Helen Yan 12-Jun-25 11:42 SINGAPORE (ICIS)–Offers for crude glycerine in Asia declined, weighed down by weakness in downstream epichlorohydrin (ECH) market and bearish sentiment. ICIS China Petrochemical Price index May average falls on weak demand By Yvonne Shi 11-Jun-25 13:48 SINGAPORE (ICIS)–China's average petrochemical prices in May eased by 0.62% month on month as easing trade war concerns was offset by continued weakness in demand. Indian refineries plan green hydrogen projects worth Rs2 trillion By Priya Jestin 11-Jun-25 12:24 MUMBAI (ICIS)–India is currently planning green hydrogen initiatives worth around Indian rupees (Rs) 2 trillion ($23 billion), which include tenders for 42,000 tonne/year green hydrogen production by domestic oil refineries. INSIGHT: India’s BIS deadline may reshape global PVC trade landscape By Aswin Kondapally 11-Jun-25 14:00 MUMBAI (ICIS)–India is at a critical juncture in determining whether to implement or extend its Quality Control Orders (QCO) for polyvinyl chloride (PVC) resin sales under the Bureau of Indian Standards (BIS) Act, with the compliance deadline set for 24 June 2025. China vessel age limit stalls prompt trades with India By Hwee Hwee Tan 11-Jun-25 13:04 SINGAPORE (ICIS)–Prompt chemical tanker supply on China’s southbound trade lanes is expected to shrink following regulatory restrictions, constraining spot trades especially with India. INSIGHT: Hydrogen unlocking China's cement decarbonization potential By Patricia Tao 10-Jun-25 17:58 As China steps up efforts to meet its dual carbon targets, hydrogen is becoming a practical and strategic tool to cut emissions from the country’s highly carbon-intensive cement industry. INSIGHT: Countdown to China benzene futures debut: how will it affect the market? By Jenny Yi 10-Jun-25 17:11 SINGAPORE (ICIS)–On 14 May, the Dalian Commodity Exchange (DCE) issued a notice to solicit public opinions on proposed futures and options contracts for benzene along with the relevant rules. The deadline for feedback was 21 May 2025, marking the countdown to the launch of benzene futures and options in China. China's US exports to rebound on front-loading before Aug By Nurluqman Suratman 10-Jun-25 13:49 SINGAPORE (ICIS)–China's exports to the US are expected to rebound in June as exporters ramp up frontloading efforts before the 90-day trade truce between the two global economic superpowers expires in August. Asia, Mideast petrochemical markets brace for tough summer By Jonathan Yee 09-Jun-25 11:16 SINGAPORE (ICIS)–Tariff concerns and ample supply continue to exert pressure on petrochemical markets in both Asia and the Middle East, with regional demand staying weak, with consumption in India unlikely to pick up until September. INSIGHT: China polyester sector sees production cuts; tight supply boosts PTA/MEG By Cindy Qiu 09-Jun-25 12:00 SINGAPORE (ICIS)–China’s polyester producers are facing mounting cost pressure, as domestic purified terephthalic acid (PTA) and monoethylene glycol (MEG) prices reaped large gains after the Labour Day holiday (1-5 May 2025) on the back of tight supply.

16-Jun-2025

HOUSTON (ICIS)–US-listed shares of chemical companies fell sharply on Friday and performed worse than the overall market following the growing conflict between Israel and Iran. Iranian missiles hit Tel Aviv in a retaliatory attack that reportedly caused injuries, according to the Wall Street Journal. Most of the missiles were intercepted or fell short, according to Reuters and the Wall Street Journal, which reported the Israeli military. Earlier, Israeli warplanes attacked multiple sites in Iran. Following news of the attacks, the major US stock indices followed by ICIS fell, but not as sharply as shares of chemical companies. The following table shows the major indices followed by ICIS. Index 13-Jun Change % Dow Jones Industrial Average 42,197.79 -769.83 -1.79% S&P 500 5,967.97 -68.29 -1.13% Dow Jones US Chemicals Index 832.55 -12.02 -1.42% S&P 500 Chemicals Industry Index 885.14 -15.59 -1.73% The following table shows the US-listed shares followed by ICIS. Name $ Current Price $ Change % Change AdvanSix 23.99 -0.49 -2.00% Avient 34.3 -1.42 -3.98% Axalta Coating Systems 28.79 -1.37 -4.54% Braskem 3.67 -0.07 -1.87% Chemours 10.98 -0.49 -4.27% Celanese 54.63 -2.24 -3.94% DuPont 66.87 -1.57 -2.29% Dow 29.9 -0.24 -0.80% Eastman 76.19 -1.93 -2.47% HB Fuller 54.16 -1.92 -3.42% Huntsman 10.9 -0.64 -5.55% Kronos Worldwide 6.23 -0.22 -3.41% LyondellBasell 60.1 -0.03 -0.05% Methanex 36 1.57 4.56% NewMarket 648.7 -6.24 -0.95% Olin 20.38 -0.67 -3.18% PPG 106.3 -5.73 -5.11% RPM International 108.08 -6.78 -5.90% Stepan 54.42 -1.26 -2.26% Sherwin-Williams 335.88 -20.32 -5.70% Tronox 5.56 -0.23 -3.97% Trinseo 3.4 0.02 0.59% Westlake 77.3 -1.32 -1.68% Methanex shares rose after it passed a regulatory milestone in its $2.05 billion purchase of the methanol business of OCI Global. Meanwhile, Brent and WTI crude futures both rose by nearly $4/bbl. US producers idled three oil drilling rigs, bringing the total to 439, the lowest figure since October 2021. EUROPEAN SHARES FELL EARLIER IN THE DAYEarlier, Europe chemicals stocks and equities markets fell in morning trading on Friday in the wake of Israel’s strikes across Iran, including nuclear facilities, with the prospect of additional attacks chilling sentiment. The International Atomic Energy Agency (IAEA) confirmed on Friday that Iran’s Natanz nuclear enrichment facility had been struck in the first salvo of strikes that also hit residential areas as part of attacks on military leaders and nuclear scientists. Israel’s Prime Minister, Benjamin Netanyahu, stated on Friday that strikes will continue “for as many days as it takes” to remove nuclear enrichment facilities, as US Secretary of State Marco Rubio urged the Iranian government not to respond. The IAEA noted on Thursday that Iran is potentially in breach of its non nuclear-proliferation agreements for the first time since the early 2000s, but Rafael Mariano Grossi, director general of the nuclear watchdog, attacked the strikes on Friday. “Nuclear facilities must never be attacked, regardless of the context or circumstances,” he said, noting that there is presently no elevation at the Natanz site. MARKETS Oil prices soared in the wake of the strikes, with Brent crude futures jumping nearly $5/barrel on Friday to $74.31/barrel, the highest level since April, while WTI futures were trading at $73.15/barrel, the highest since January. Equities slumped as commodities surged, with Asia bourses universally closing in the red and all key European stock indices trading down in morning trading. The STOXX 600 chemicals index was trading down over 1% as of 10:30 BST, in line with general markets, with stock prices for a third of the 21 component companies down 2-3%. The hardest-hit were Fuchs, LANXESS and Umicore, which saw stocks fall 3.72%, 3.24% and 2.97% compared to Thursday’s close. The situation has also had a dramatic impact on fertilizers markets, with Iran a key global exporter of urea, and some contacts reporting disruption in Israel’s supply of gas to Egypt. SHIPPING Shipping could also face further disruption, with the UK’s Maritime Trade Operations (UKMTO) monitor publishing an advisory on Wednesday – before the start of the Israel  strikes – that increased Middle East military activity could impact on mariners. “Vessels are advised to transit the Arabian Gulf, Gulf of Oman and Straits of Hormuz with caution,” the watchdog said. Around 20% of global oil trade passes through along the Strait of Hormuz, and any move by Iran to block the route could have a huge impact on freight traffic that is still disrupted by firms avoiding the Red Sea in the wake of Houthi strikes. Activity in the Red Sea is understood to have subsided in recent weeks after a US-Houthi ceasefire but shipping firms remain leery of the route, and the attacks on Iran could further inflame tensions in the region. Higher risk and insurance price hikes could also drive shipping prices through the region steadily higher. The upward movement for shipping prices had showed signs of plateauing this week, with China-Europe and China-US route charge steady week on week as of 12 June after weeks of surges, according to Drewry Supply Chain Advisors. Some freight indices continued to climb, however, with the Baltic Exchange’s dry bulk sea freight index up 9.6% as of 12 June, the highest level since October 2024. Thumbnail image: Iran Tehran Israel Strike – 13 June 2025. Iran's IRIB state TV reported explosions in areas of the capital of Tehran and counties of Natanz, Khondab and Khorramabad. (Xinhua/Shutterstock) Additional reporting by Tom Brown

13-Jun-2025

Energy markets price in increased risk following Israeli strikes on Iran but impact on fundamentals limited Retaliation from Iran highly likely, strong response expected given Israeli attack severity But energy market participants cautious on longer-term escalation risks, citing regional examples of geopolitical tension with limited lasting price impact Brent crude would need to near $100/bbl for oil-linked LNG contracts to match current LNG spot market prices Unfolding situation further supports already bullish picture for coming months across energy markets In the early hours of 13 June, Israel launched a wave of attacks targeting Iran’s nuclear programme, with strikes on nuclear infrastructure as well as the killing of scientists and military figures. Iran’s foreign minister called the attacks a “declaration of war” and vowed to retaliate. ICIS experts share views on the potential next steps and the future impact across the energy complex.  Did the strike take energy markets by surprise? (Matthew Jones, Head of Power Analytics) An Israeli strike on Iran’s nuclear capabilities has been a significant market risk for many months. Back in January, we predicted this occurrence in 2025. While there had not been much sign of an impending attack in the first few months of the year, there were reports in late May that Israel was preparing a move, while the US began to pull staff out of the Middle East on Tuesday 10 June, after news emerged that strikes could be imminent. The exact timing was not clear, but markets were aware of rapidly increasing risk. What price impact have we seen so far across the commodity complex? (Gemma Blundell-Doyle, Crude Market Reporter) Oil prices spiked by almost 10% on Friday morning, to their highest since January this year. Brent crude reached $78.48/barrel at 03:41 London time. At 14:30 it remained elevated at $74.33/barrel. (Rob Dalton, Senior Gas Market Reporter) European gas prices rose on Friday morning with the ICIS TTF front-month up 6% to €38.50 ($44.30)/MWh, a three-month high. (Anna Coulson, Senior Power Market Reporter) Bullish European gas supported power prices, with the German front month rising 2.2% from Thursday’s close to €82.75/MWh by 13:50 on Friday. (Ed Cox, Global LNG Editor) East Asian LNG (ICIS EAX) spot prices rose 8% on Friday to $13.43/MMBtu, the highest since March. Asian spot prices have been increasing since early June, in line with a firmer ICIS TTF. Global gas price forward curves 13 June 2025, Source: ICIS, CME Is the price impact risk-based, or have we seen a direct impact on fundamentals so far? (Gemma Blundell-Doyle) Oil fundamentals were on Friday afternoon unchanged. The National Iranian Oil Refining and Distribution Company said refining and storage facilities had not been damaged and continued to operate. (Rob Dalton) The immediate, price-driven response across the TTF was fuelled by rising risk premiums and speculative positioning, with particular concern surrounding the shutdown of Israel’s offshore gas fields. Market participants remain cautious about the longer-term risks of escalation, with many pointing to the 2024 Israel-Iran conflict as an example of geopolitical tension with limited lasting impact on pricing. (Ed Cox) No immediate fundamental LNG impact with outright spot LNG demand limited from key Asian buyers, partly due to market prices sitting well above oil-linked LNG contracts. LNG buyers closely monitor oil prices, which are still used to price most Asian LNG procurement. Most oil-linked contracts take a historic oil price of at least three months previous, so higher Brent today would impact LNG contracts later in the year. Brent would need to go closer to $100/bbl for oil-linked LNG contracts to match current LNG spot prices and to encourage buyers to switch to more spot offtake. ICIS understands that Egyptian fertilizer producers have already shut down at least three urea plants because of measures taken by Israel to temporarily halt gas production. Israel supplies over 30 million cubic metres/day of gas to Egypt, which already faces major supply shortages. Any extended reduction in Israeli gas supply could mean Egypt has to buy additional LNG cargoes to cover the shortage. Egypt has recently committed to buy what could be close to 10 million tonnes of LNG in 2025 and 2026 from a variety of sellers through large tenders. It may call on the market for additional cargoes which in turn could further support global spot prices. What next? (Matthew Jones) You could see different levels of response from Iran. The least consequential would be similar to the events of April 2024 playing out again, in which Iran fires missiles and drones at Israel, which shoots most of them down. Given Iran’s weak position this cannot be ruled out. But it seems more likely that Iran will attempt a stronger response given the severity of the Israeli attack. That could include attacks on targets in the Persian Gulf, including on tankers or oil refineries. Iran could conclude that creating energy market turbulence is the best way to get the US to restrain Israeli action. The most consequential response would be the closing of the Straits of Hormuz through which massive volumes of global oil and LNG travel. Such an event would have major bullish consequences for global energy markets but should be seen as low probability as Iran will be very reluctant to alienate key allies like China. It would also be physically very difficult for Iran to close the Strait even if it wanted to. (Ed Cox) For LNG, the narrative around a potential Straits of Hormuz closure will return, even if this would represent a major further escalation from Iran with little clarity on practical implementation. Almost 20% of global LNG production will pass through Hormuz from Qatar and the UAE in 2025 so the global LNG market will naturally focus closely on events. LNG and wider shipping flows via the nearby Suez Canal remain constrained due to the risk of attack and there is limited scope for a major impact on LNG shipping given the large number of new vessels coming to the market which is suppressing charter rates. But we should expect major LNG buyers to analyse current stocks and review emergency supply security plans in response to these events. Global LNG exports and share of trade using the Strait of Hormuz. Source: ICIS (Andreas Schroeder, Head of Gas Analytics) A wider Middle East conflict could have serious implications for Egyptian gas markets. The country has switched to becoming an importer of LNG since 2024 and is set to increase imports going forward. A major buy tender was issued recently. There is now talk of around 100-110 cargos needed overall in 2025 instead of the previously expected 60-70. We forecast 6.3 million tonnes of LNG imports, nearly tripling the 2.4 million tonnes of 2024. Egypt also receives LNG via pipeline from Jordan’s Aqaba import terminal, which imported 0.8 million tonnes in 2024. In addition, Israel is a major pipeline supplier to Egypt with around 10 bcm/year covering a fifth of Egyptian demand. Should a regional conflict escalate further, an extended stop of Israeli gas exports to Egypt could imply even stronger LNG intake into Egypt for the remainder of 2025. Egyptian LNG imports. Source: ICIS (Gemma) The US and Iran are set to meet in Oman on 15 June to continue ongoing nuclear talks. The Israeli strike on Iran will be on the agenda. US president Trump has urged Iran to make a deal regarding its nuclear programme and to prevent further attacks from Israel, bit it is unlikely Iran will concede without retaliation. Where could commodity prices go in coming days and weeks? (Ajay Parmar, Director, Energy & Refining) We expect Iran to retaliate and tensions to escalate further. This will likely cause oil prices to remain elevated for the coming weeks. If a resolution is found later this month, prices could begin to retreat, but for now, we see them remaining elevated in June and July as a result of this escalation. (Ed Cox) The TTF is ever more influenced by geopolitical events given Europe’s dependency on LNG imports. Often, TTF volatility does not match changes in regional gas fundamentals as traders are changing positions to consider wider macro views. It is possible the TTF could swing by 5-10% daily while uncertainty over further escalation continues. Even though oil pricing plays a limited role in European gas price formulation, it is likely the TTF would follow higher Brent in the context of an overall bullish energy market. (Rob Dalton) Even before recent developments, the near-term outlook for European gas markets had already tilted bullish due to a summer injection demand gap. An escalating conflict would heighten the risk of a broader move higher across the entire near curve, placing increased emphasis on refilling storage sites in the near term. How does the news impact your broader view of the current energy market complex? (Matthew Jones) We held a webinar on 12 June in which we presented a bullish view for the European energy commodity complex in H2 2025. We see significant upside risk to prices in the coming months, stemming from expectations for rising carbon prices, gas storage targets shifting volume risk to winter, the potential continuation of low wind speeds and fears over the return of stress corrosion issues at French reactors. The Israeli attack on Iran and the potential consequences we have outlined here further support that bullish picture for the coming months. (Ed Cox) From an LNG perspective, the fundamental outlook from Asia is not strong in the short term, largely due to weak economic performance from China. European gas looks more bullish. But the correlation between the TTF and Asian spot LNG is strong with the potential for prices in both markets to rise further on Middle East concerns, even if the immediate fundamental impact is focused on Israeli gas supply to Egypt.

13-Jun-2025

LONDON (ICIS)–Europe chemicals stocks and equities markets fell in morning trading on Friday in the wake of Israel’s missile strikes across Iran, including nuclear facilities, with the prospect of additional attacks chilling sentiment. The International Atomic Energy Agency (IAEA) confirmed on Friday that Iran’s Natanz nuclear enrichment facility had been struck in the first salvo of strikes that also hit residential areas as part of attacks on military leaders and nuclear scientists. Israel’s Prime Minister, Benjamin Netanyahu, stated on Friday that strikes will continue “for as many days as it takes” to remove nuclear enrichment facilities, as US Secretary of State Marco Rubio urged the Iranian government not to respond. The IAEA noted on Thursday that Iran is potentially in breach of its non nuclear-proliferation agreements for the first time since the early 2000s, but Rafael Mariano Grossi, director general of the nuclear watchdog, attacked the strikes on Friday. “Nuclear facilities must never be attacked, regardless of the context or circumstances,” he said, noting that there is presently no elevation at the Natanz site. MARKETS Oil prices soared in the wake of the strikes, with Brent crude futures jumping nearly $5/barrel on Friday to $74.31/barrel, the highest level since April, while WTI futures were trading at $73.15/barrel, the highest since January. Equities slumped as commodities surged, with Asia bourses universally closing in the red and all key European stock indices trading down in morning trading. The STOXX 600 chemicals index was trading down over 1% as of 10:30 BST, in line with general markets, with stock prices for a third of the 21 component companies down 2-3%. The hardest-hit were Fuchs, LANXESS and Umicore, which saw stocks fall 3.72%, 3.24% and 2.97% compared to Thursday’s close. The situation has also had a dramatic impact on fertilizers markets, with Iran a key global exporter of urea, and some contacts reporting disruption in Israel’s supply of gas to Egypt. SHIPPING Shipping could also face further disruption, with the UK’s Maritime Trade Operations (UKMTO) monitor publishing an advisory on Wednesday – before the start of the Israel  strikes – that increased Middle East military activity could impact on mariners. “Vessels are advised to transit the Arabian Gulf, Gulf of Oman and Straits of Hormuz with caution,” the watchdog said. Around 20% of global oil trade passes through along the Strait of Hormuz, and any move by Iran to block the route could have a huge impact on freight traffic that is still disrupted by firms avoiding the Red Sea in the wake of Houthi strikes. Activity in the Red Sea is understood to have subsided in recent weeks after a US-Houthi ceasefire but shipping firms remain leery of the route, and the attacks on Iran could further inflame tensions in the region. Higher risk and insurance price hikes could also drive shipping prices through the region steadily higher. The upward movement for shipping prices had showed signs of plateauing this week, with China-Europe and China-US route charge steady week on week as of 12 June after weeks of surges, according to Drewry Supply Chain Advisors. Some freight indices continued to climb, however, with the Baltic Exchange’s dry bulk sea freight index up 9.6% as of 12 June, the highest level since October 2024. Focus article by Tom Brown Thumbnail image: Iran Tehran Israel Strike – 13 June 2025. Iran's IRIB state TV reported explosions in areas of the capital of Tehran and counties of Natanz, Khondab and Khorramabad. (Xinhua/Shutterstock)

13-Jun-2025

SINGAPORE (ICIS)–Tariff concerns and ample supply continue to exert pressure on petrochemical markets in both Asia and the Middle East, with regional demand staying weak, with consumption in India unlikely to pick up until September. Aromatics trade flows shift amid tariff uncertainty Monsoon season weighs on India demand GCC producers upbeat on Syria AROMATICS UNDER PRESSURE AMID TARIFFS In the aromatics market, supply is expected to be tight as increased tariff uncertainties continue `to disrupt traditional trade flows. Mixed xylene (MX) and downstream paraxylene (PX) were in steep backwardation, where in spot prices are higher than futures prices, amid freight constraints and high US demand. Benzene, which closely tracks falling crude prices, continued to underperform its aromatics peers. Benzene from South Korea has not been flowing into the US and were mostly going into China, market sources said. South Korea is a major exporter of aromatics products. Its overall petrochemical shipments in May declined by 20.8% year on year, weighed down by sharp falls in upstream crude prices. For solvent grade mixed xylenes, South Korea exported last month an estimated 50,696 tonnes, of which around 27% was destined for the US, according to ICIS data on 2 June. Strong exports to the US coincide with the start of the summer driving season in the northern hemisphere, when demand for octane boosters like MX and toluene, which goes into gasoline blending, picks up. This strong US gasoline demand expectation is supporting the supply tightness, despite weaker downstream activity in China. Asia’s aromatics tightness is likely to persist through June-August, as market participants adapt to tariff policies and freight cost pressures from front-loading following a trade war truce between the US and China. The US’ 90-day suspension on “reciprocal” tariffs on most countries except China ends on 9 July. A potential escalation of the US-China trade war after the 90-day truce could intensify uncertainties, though a resolution might stabilize flows by late Q3. For shipping, market players are expecting freight rates to start to drop again in July-August. MONSOON ONSET DEPRESSES INDIA PLASTICS DEMAND Prices for plastics in India are under pressure from the monsoon season, as well as more supply coming from China, market sources said. This year’s monsoon season, which typically runs from June-September, arrived eight days early and is projected to bring above-average rainfall, said the India Meteorological Department (IMD) on 24 May. During India’s monsoon period, manufacturing activity tends to moderate, especially the packaging sector as well as the food and beverage sector, weakening end-product demand. Concurrently, domestic supply is ample, pushing down prices for Indian polyethylene (PE), polypropylene (PP), high-density polyethylene (HDPE) and low-density polyethylene (LDPE). But post-monsoon season from September, demand is likely to pick up as agriculture and construction sector activity rises and the harvesting season commences. The festive season, which includes the Diwali (Hindu Festival of Lights) running from 18-23 October, is likely to increase demand for end-products such as plastics, hence, boost production leading to the holiday. Demand for chemicals such as PE, PP and PVC and synthetic rubbers is expected to improve after September. India’s strong domestic consumption would shield it from the US-China tariff war, whose impact on the south Asian nation’s petrochemical trades is mostly on sentiment and not on actual demand. China, however, has tried to push more material to India with cut prices amid the US-China trade war, as domestic demand in the world’s second-largest economy remained weak. The country is already redirecting PE and PP to Africa and India to offset reduced US access. But this offsetting has eased temporarily due to freight costs more than doubling in recent weeks. GCC SEES RENEWED OPPORTUNITY IN SYRIA In the Middle East, Syria is opening up following a regime change and the consequent lifting of sanctions by both the US and EU. A cargo of wheat arrived at the Syrian port of Tartous for the first time in around 11 years, according to news reports. The opening of Syria’s market – after years of civil war and international sanctions – bodes well for GCC petrochemical producers. The GCC bloc consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Suppliers are looking to increase their trades with Syria, as converters in the country begin running their plants at higher rates, with the possibility of new plants to be built. On 29 May, the Syrian government inked a $7 billion strategic Memorandum of Understanding (MoU) with a consortium of companies led by Qatar’s UCC Holding to develop power generation projects. More such agreements, particularly as trade increases, could pave the way for increased demand in the country for chemicals and chemical products, after civil war disrupted life in Syria since 2011. Focus article by Jonathan Yee Additional reporting by Aswin Kondapally, Nadim Salamoun, Jasmine Khoo, Samuel Wong, Melanie Wee, and Angeline Soh. Thumbnail image: At Qingdao Port in east China's Shandong Province, 4 June 2025. (Shutterstock)

09-Jun-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 6 June. China factory output contracts anew despite US-China tariff pause By Jonathan Yee 02-Jun-25 14:34 SINGAPORE (ICIS)–China’s official manufacturing purchasing managers’ index (PMI) in May remained below the expansion threshold of 50.0 but was up from the previous month amid a pause in the US-China tariff war. INSIGHT: Will feedstock optimization be enough to survive Asia C2 oversupply? By Josh Quah 03-Jun-25 12:00 SINGAPORE (ICIS)–Investing into feedstock slate projects is one survival strategy gaining steam among players – and was still very much in the conversations on the side lines of the APIC 2025 conference. S Korea faces economic crossroads as it heads to polls amid political turmoil, tariffs By Jonathan Yee 03-Jun-25 15:25 SINGAPORE (ICIS)–South Korea is at a crossroads as it heads to the polls on Tuesday, six months after ex-President Yoon Suk Yeol’s martial law declaration led to his removal from office, resulting in political turmoil that has been compounded by trade uncertainties and the tariffs imposed by the US on most of the world. INSIGHT: Asian manufacturing stutters in May as tariff headwinds continue By Nurluqman Suratman 04-Jun-25 11:00 SINGAPORE (ICIS)–Asia's factories largely remained under pressure in May, as subdued global demand and persistent uncertainty surrounding US trade policies continued to bite, according to the latest purchasing managers' index (PMI) data. S Korea final Q1 GDP shrinks 0.2% on quarter amid US tariffs By Jonathan Yee 05-Jun-25 12:40 SINGAPORE (ICIS)–South Korea’s revised real GDP shrank by 0.2% on-quarter, unchanged from advanced estimates in April, the first on-quarter contraction in nine months, central bank data showed on Thursday. China ethane crackers face feedstock challenge as US restricts supply By Fanny Zhang 05-Jun-25 16:43 SINGAPORE (ICIS)–Operations at China’s ethane crackers that rely solely on US supply will likely be disrupted, at least in the short term, as the US restricts exports of the feedstock gas. INSIGHT: Faced with intensifying ADDs, Asia’s PET producers mull options to stay in the industry By Judith Wang 06-Jun-25 10:00 SINGAPORE (ICIS)–Facing intensifying anti-dumping duties (ADDs) in key markets, Asian polyethylene terephthalate (PET) producers are having to find ways beyond simply slashing offers to stay in the business. Malaysia's PETRONAS to cut 5,000 jobs by yearend By Nurluqman Suratman 06-Jun-25 11:10 SINGAPORE (ICIS)–Malaysian state energy giant PETRONAS is shedding 10% of its workforce by the end of the year to navigate challenging operating conditions, primarily driven by falling crude prices. Mideast polyols to face pressure post-Eid amid softer costs, demand By Isaac Tan 06-Jun-25 14:52 SINGAPORE (ICIS)–Middle Eastern import prices for polyether polyols are likely to remain under pressure after the Muslim festival of Eid ul-Adha, weighed down by weaker feedstock costs in China and seasonally subdued downstream demand.

09-Jun-2025

SINGAPORE (ICIS)–Malaysian state energy giant PETRONAS is shedding 10% of its workforce by the end of the year to navigate challenging operating conditions, primarily driven by falling crude prices. Some 5,000 staff to be affected by the ongoing "right-sizing" process will be notified by the end of this year, PETRONAS president and CEO Tengku Muhammad Taufik Tengku Aziz was quoted as saying by state media Bernama. The company chief held a press briefing in Kuala Lumpur on 5 June to make the announcement. "PETRONAS 2.0 will be run differently, organized differently, will have different work processes, and to move towards that, we will have to correct the work process," he said. The company did not immediately respond to ICIS’ queries on the job cuts. PETRONAS aims for a lean and nimble operation, even if oil prices were to reach $100 per barrel, Muhammad Taufik said. "There is a logic, an assumption set, and a projection that backs it up. Over time, we have seen this—those who have tracked our history will know that when the fields were easier, our profit before tax margin was around 35 to 40 per cent," he said. "Today, it is [between] 25% and 38%. These margins are going to shrink further … So the value-added (PETRONAS) 2.0 has to transform into an organization that monetizes molecules commercially and competitively, not just at home, but also abroad," he said. In 2024, PETRONAS reported a 32% year-on-year decline in its after-tax profit to Malaysian ringgit (M$) 55.1 billion ($13 billion), as revenue fell by 7% due to lower average realized prices. Its petrochemicals arm – PETRONAS Chemicals Group – had a 30.7% slump in net profit over the same period to M$1.18 billion, despite a 7% increase in sales to M$30.7 billion. PETRONAS' budget is predicated on Brent crude trading between $75/barrel and $80/barrel. Currently, the crude benchmark is hovering near $65/barrel, marking a roughly 13% decrease year on year, influenced by global trade tensions and increased output by OPEC and its allies (OPEC+). ($1 = M$4.23) Thumbnail image: PETRONAS Twin Towers in Kuala Lumpur, Malaysia – 15 March 2025 (Md Rafayat Haque Khan/ZUMA Press Wire/Shutterstock)

06-Jun-2025