Vinyl chloride monomer (VCM)

HOUSTON (ICIS)–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. The US chemical industry, a massive net exporter of chemicals and plastics to the tune of over $30 billion annually, is particularly exposed to retaliatory tariffs. Chemical company earnings guidance for Q1 and all of 2025 is already subdued, with the one common theme from the investor calls being little-to-no help expected from macroeconomic factors this year. Tariffs only cloud the outlook further. Tariffs have long been a feature of US economic and fiscal policy. In the period to the 1940s, tariffs were used as a major revenue source to fund the federal government before the introduction of the income tax and were also used to protect domestic industries. After 1945, a neo-liberal world order arose, which resulted in a lowering of tariffs and other trade barriers and the rise of globalization. With the collapse of the Doha Round of trade negotiations in 2008, this drive stalled and began to reverse. Heading into this year’s International Petrochemical Conference (IPC) hosted by the American Fuel & Petrochemical Manufacturers (AFPM), it is clear that the neo-liberal world order has ended. Rising geopolitical tensions and logistics issues from COVID led many firms to diversify supply chains, leading to reshoring benefiting India, Southeast Asia, Mexico and others, and to the rise of a multi-polar world. It is also resulting in the rise of tariffs and other trade barriers around the world, most notably as US trade policy. FLUID US TRADE POLICYThe US administration’s policy stance on tariffs has been very fluid, changing from day to day. It is implementing 25% tariffs on steel and aluminium imports on 12 March and has already placed additional tariffs of 20% on all imports from China as of 4 March (10% on 4 February, plus 10% on 4 March). On 11 March, the US announced steel and aluminium tariffs on Canada would be ramped up to 50% in retaliation for Canadian province Ontario placing 25% tariffs on electricity exports to the US. Later, Ontario suspended the US electricity surcharge, and the US did not impose the 50% steel and aluminium tariff. The US had placed 25% tariffs on imports from Canada (10% on energy) and Mexico on 4 March but then on 5 March exempted automotive and then on 6 March announced a pause until 2 April. China retaliated by implementing 15% tariffs on US imports of meat, fish and various crops, along with liquefied natural gas (LNG) and coal. Canada retaliated with 25% tariffs on C$30 billion worth of goods on 4 March and then with the US pause, is delaying a second round of tariffs on C$125 billion of US imports until 2 April. Mexico planned to retaliate on 9 March but has not following the US pause. US President Trump has also threatened the EU with 25% tariffs. We have a trade war and as 1960s Motown artist Edwin Starr sang, “War, huh, yeah… What is it good for?… Absolutely nothing.” Canada, Mexico and China are the top three trading partners of the US, collectively making up over 40% of US imports and exports. The three North American economies, until recently, had low or non-existent tariffs on almost all of the goods they trade. This dates back to the 1994 NAFTA free trade agreement, which was renegotiated in 2020 as the USMCA (US-Mexico-Canada Agreement). A reasoning behind the tariff threats on Canada and Mexico is to force Canada and Mexico to stop illegal drugs and undocumented migrants from crossing into the US. These tariffs were first postponed in early February after both countries promised measures on border security, but apparently more is desired. But the US also runs big trade deficits with both countries. Here, tariffs are seen by the administration as the best way to force companies that want US market access to invest in US production. IMPACT ON AUTOMOTIVEUS automakers are the most exposed end market to US tariffs and potential retaliatory tariffs, as their supply chains are even more highly integrated with Mexico and Canada following the USMCA free trade deal in 2020. The USMCA established Rules of Origin which require a certain amount of content in a vehicle produced within the North America trading partners to avoid duties. For example, at least 75% of a vehicle’s Regional Value Content must come from within the USMCA partners – up from 62.5% under the previous NAFTA deal. Supply chains are deeply intertwined. In the North American light vehicle industry, materials, parts and components can cross borders – and now potential tariff regimes – more than six times before a finished vehicle is delivered to the dealer’s lot. US prices for those goods will likely rise. The degree to which they rise (extent to which tariffs costs will pass through) depends upon availability of alternatives, structure of the domestic industry and pricing power, and currency movements. In addition, some of the Administration’s polices dealing with deregulation, energy, and tax will have a mitigating effect on the negative impact of tariffs for the US. The 25% steel and aluminium tariffs will add nearly $1,500 to the cost of a light vehicle and will result in lower sales for the automotive industry which has been plagued in recent years by affordability issues. If it had been implemented, the 50% tariff on steel and aluminium imports from Canada would only compound the pricing impact. All things being equal, 25% tariffs on the metals would push down sales by about 525,000 units but some of the favorable factors cited above as well as not all costs being passed through to consumers will partially offset the effects of higher metal prices. Partially is the key word. Since so many parts, components, and finished vehicles are produced in Canada and Mexico, US 25% tariffs on all imports from Canada and Mexico would add further to the price effects. The economic law of demand holds that as prices of a good rise, demand for the good will fall. ECONOMIC IMPACTTariffs will dampen demand across myriad industries and markets, and could add to inflation. By demand, we mean the aggregate demand of economists as measured by GDP. Aggregate demand primarily consists of consumer spending, business fixed investment, housing investment, and government purchases of goods and services. Tariffs would likely add to inflation but the effects would begin to dissipate after a year or so. By themselves, the current round of tariffs on steel and aluminium and on goods from Canada, Mexico and China will dampen demand due to higher prices. Plus, as trading partners retaliate, US exports would be at risk. Preliminary estimates suggest the annual impact from these tariffs – in isolation – on US GDP during the next three years could average 1.4 percentage points from baseline GDP growth. Keep in mind that there are many moving parts to the economy and that the more favorable policies could offset some of this and, as a result, the average drag on GDP could be limited to a 0.5 percentage point reduction from the baseline. POTENTIAL GDP IMPACT OF US TARIFFS – 20% ON CHINA, 25% ON MEXICO AND CANADA Real GDP is a good proxy for what could happen in the various end-use markets for plastic resins and the reduction of US economic growth. In outlying years, however, tariffs could support reshoring and business fixed investment. The hits on Mexico and Canada would be particularly. China’s economic growth would be affected as well. But China can shift exports to other markets. Mexico and Canada have fewer options. Resilience will be key to growing uncertainty and will lead to shifting trade patterns and new market opportunities. This is where scenarios, sound planning and strategies, and leadership come into play. US EXPORTS AT RISK, SUPPLY CHAINS TO SHIFTUS PE exports are particularly vulnerable to retaliatory tariffs. The US is specifically targeting tariffs on countries and regions that absorb around 52% of US PE exports – China, the EU, Mexico and Canada, according to an ICIS analysis. Aside from PE, the US exports major volumes of PP, ethylene glycol (EG), methanol, PVC, styrene and vinyl chloride monomer (VCM), along with base oils to countries and regions targeted with tariffs. The US exports nearly 50% of PE production with China and Mexico being major outlets. China has only a 6.5% duty on imports of US PE, having provided its importers with waivers in February 2020 that took rates to pre-US-China trade war levels. The US-China trade war under the first US Trump administration started in 2018 with escalating tariffs on both sides, before a phase 1 deal was struck in December 2019 that removed some tariffs and reduced others. After the waivers offered by China to importers in February 2020, US exports of PE and other ethylene derivatives surged before falling back in 2021 from the COVID impact. They then rocketed higher through 2023 and remained at high levels in 2024. Since 2017, the year before the first US-China trade war, US ethylene and derivative exports to China are up more than 4 times, leaving them more exposed than ever to China. With tariff escalation, chemical trade flows would shift dramatically. Just one example is in isopropanol (IPA). Shell in Sarnia, Ontario, Canada, produces IPA, of which over 85% is shipped to the US, mainly to the northeast customers, said ICIS senior market analyst Manny Borges. “It is a better supply chain for the customers instead of shipping product from the US Gulf,” said Borges. “With the increase in tariffs, we will see several customers shifting volumes to domestic producers or countries where the tariffs are not applied,” he added. US IPA producers are running their plants at around 67% of capacity on average and have sufficient capacity to supply the entire domestic market, the analyst pointed out. This dynamic, where US producers supply more of the local market versus imports, would likely play out across multiple product chains as well, especially in olefins where the US is more than self-sufficient. Even as the US is more than self-sufficient in, and a big net exporter of PE, ethylene glycols, polypropylene (PP) and polyvinyl chloride (PVC), it imports significant quantities from Canada. In the event of a 25% tariff on imports from Canada, US producers could easily fill the gap, although logistics would have to be reworked. 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 Insight article by Kevin Swift and Joseph Chang

12-Mar-2025

LONDON (ICIS)–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. The Maasvlakte, Netherlands, plant, which has been offline for most of the last 12 months, will close on 1 October, according to an FNV representative, after the majority of union members at the site backed a deal on severance pay. “The plant at Maasvlakte will close definitely at October 1st,” the representative said. “A vast majority of our union members at Lyondell has voted in favor of a social plan in which the company and the trade unions have come to an agreement on a severance pay and outplacement,” the representative added. LyondellBasell declined to comment on the plans, with a spokesperson stating that no definitive decisions have been made at any of their operations. Joint venture partner Covestro also declined to comment. The unit was taken down for economic reasons between July and October 2024, before being brought down again in December. With a production capacity of 315,000 tonnes/year of PO and 680,000 tonnes/year of SM, the complex is the largest production facility of its type in Europe, but has faced increasing challenges as global capacities have grown and energy costs increased. The Netherlands site is among six in Europe that LyondellBasell placed under strategic review late last year, with the rest centered in the company’s core olefins and polyolefins (O&P) business. The five O&P sites under scrutiny in Europe are in Berre, France; Muenchmuenster, Germany; Brindisi, Italy; Tarragona, Spain; Carrington, UK; and Maasvlakte, Netherlands. Including Maasvlakte, around 15.1 million tonnes/year of chemicals production capacity is currently being rationalised, with the wave of closures rocking the industry increasingly rippling out to other regions, particularly Asia. Thumbnail photo: The Maasvlakte site (Source: LyondellBasell) Additional reporting by Fergus Jensen

11-Mar-2025

HOUSTON (ICIS)–Shipping container rates from Asia to both US coasts fell again this week as capacity has grown and as volumes have fallen after frontloading to beat tariffs, and liquid tanker rates rose on the transatlantic eastbound route and fell on the US Gulf to Asia trade lane. CONTAINER RATES Rates from Shanghai to Los Angeles fell by 9% this week, according to supply chain advisors Drewry, while rates from Shanghai to New York fell by 6%, as shown in the following chart. Rates to both US coasts are now at their lowest of the year, according to Drewry data. Global average rates in Drewry’s World Container Index fell by 3% and are also at their lowest over the past year, as shown in the following chart. Drewry expects rates to continue to decrease next week due to increased shipping capacity. Rates from online freight shipping marketplace and platform provider Freightos showed significant decreases this week, although their rates are slightly higher than Drewry’s. Judah Levine, head of research at Freightos, said that tariffs – or the threat of tariffs – led to many importers frontloading volumes to beat the announced levies. “The president’s proposed 60% tariffs on Chinese goods could go into effect as soon as April – as could a wider application of reciprocal tariffs on numerous countries – meaning the window to receive goods before then is about closed,” Levine said. Levine said that the combination of a seasonal slump in demand and the possible end of frontloading likely drove the sharp fall in transpacific ocean rates last week. “If frontloading of the past few months was significant enough, we could also expect to see subdued peak season demand and rates as a result,” Levine said. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES MIXED US chemical tanker freight rates assessed by ICIS were mixed week on week. Trade routes from the US remain mixed with several trade lanes slightly higher and others lower. Cargo moving into Asia weakens following the recent tariff announcements and this route has recently seen a decrease of cargoes, as the tariffs have all but halted any spot activity for this trade lane. As a result, rates have dipped from the previous week. On the other hand, the rates from USG to Rotterdam experienced upward pressure. For this trade lane freight rates for March have strengthened, given the amount of space left. A shipowner said it is expecting the trend to continue throughout March, with higher contract of affreightment (COA) utilization leaving very little available space. From the USG to Brazil, this market has remained relatively unchanged but is experiencing some downward pressure. While the market continues to be active it is further influenced by freight availability and a swing in trade lane dynamics. Demand remains soft particularly for larger parcels further pressuring some downward movement. On the USG to India trade lane, the market remains extremely soft with plenty of space available as outsiders have entered the market. As a result, this has placed downward pressure, and rates could fall further on the route if this persists. Several inquiries were seen for monoethylene glycol (MEG), methanol, ethanol, and vinyl acetate monomer (VAM), but few fixtures were seen in the market. With additional reporting by Kevin Callahan

07-Mar-2025

HOUSTON (ICIS)–US-listed shares of chemical companies fell sharply – many by more than 5% – on Monday as the US proceeds with plans to impose tariffs on Canada, Mexico and China, its three biggest trading partners. The selloff in chemical shares was sharper than that for the general market. The following table shows the stock indices followed by ICIS. Index 3-Mar Change % Dow Jones Industrial Average 43,191.24 -649.67 -1.48% S&P 500 5,849.72 -104.78 -1.76% Dow Jones US Chemicals Index 851.42 -17.99 -2.07% S&P 500 Chemicals Industry Index 901.32 -17.93 -1.95% Shares of every US-listed company followed by ICIS fell. TUESDAY'S TARIFFSUnless the nations reach last-minute deals, the US will impose 25% tariffs on all imports from Mexico, 10% tariffs on all energy imports from Canada and 25% tariffs on all other imports from Canada. The US will also proceed with an additional 10% that it proposed on all imports from China, according to a post from the White House’s Rapid Response account on social media platform X. This is on top of the 10% in new tariffs that the US already imposed earlier in 2025 on imports from China. EFFECT ON US MARKETSWhile the US has large trade surpluses in polyethylene (PE), it still imports large amounts of the plastic from Canada. Many of these imports go to processors in the bordering states of Illinois, Michigan and Ohio. These states are far from most of the plastic plants in the US, which are concentrated in Texas and Louisiana. Processors in these states that border Canada will need to pay the tariffs or pay higher shipping costs to secure material from suppliers farther away. The US also imports notable amounts of purified terephthalic acid (PTA) from Canada and Mexico as well as methylene diphenyl diisocyanate (MDI) from China. The US receives large Canadian shipments of ammonia and potassium chloride, which is also known as muriate of potash (MOP). At least one company, Canada's Chemtrade Logistics, said it expected to pass a larger part of the tariffs to its customers. Chemtrade Logistics exports sodium chlorate, chlorine and sulfuric acid to the US. RETALIATIONChina already has retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles. China has restricted exports of antimony and bismuth. Antimony is used to make catalysts for polyethylene terephthalate (PET), and bismuth is used to make catalysts for polyurethanes. Canada had proposed retaliatory tariffs of 25% on Canadian dollars (C$) 155 billion ($107 billion) worth of US imports. The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others. Canada was preparing a second list, worth C$125 billion. All three countries could impose retaliatory tariffs on the substantial exports of PE, polyvinyl chloride (PVC) and other ethylene derivatives from the US. OTHER POSSIBLE US TARIFFSThe US has threatened to impose tariffs of 25% on imports from the EU. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. In early April, the US said it would introduce retaliatory tariffs on imports from the rest of the world. These tariffs will consider what the US considers non-tariff trade barriers, such as value added tax (VAT) systems. CHEM STOCK PERFORMANCEThe following table shows the performances of US-listed shares followed by ICIS. Symbol Name $ Current Price $ Change % Change ASIX AdvanSix 26.82 -1.10 -3.94% AVNT Avient 41.23 -1.54 -3.60% AXTA Axalta Coating Systems 35.1 -1.11 -3.07% BAK Braskem 3.52 -0.17 -4.61% CC Chemours 13.86 -1.09 -7.29% CE Celanese 47.02 -3.92 -7.70% DD DuPont 78.83 -2.53 -3.11% DOW Dow 36.06 -2.05 -5.38% EMN Eastman 94.46 -3.39 -3.46% FUL HB Fuller 55.73 -1.01 -1.78% HUN Huntsman 16.04 -0.89 -5.26% KRO Kronos Worldwide 8.43 -0.32 -3.66% LYB LyondellBasell 73.41 -3.42 -4.45% MEOH Methanex 41.47 -2.57 -5.84% NEU NewMarket 562.65 -7.46 -1.31% NGVT Ingevity 45.24 -2.42 -5.08% OLN Olin 23.87 -1.52 -5.99% PPG PPG 111.72 -1.50 -1.32% RPM RPM International 123.09 -0.80 -0.65% SCL Stepan 58 -3.375 -5.50% SHW Sherwin-Williams 356.73 -4.75 -1.31% TROX Tronox 7.02 -0.615 -8.06% TSE Trinseo 4.62 -0.30 -6.10% WLK Westlake 108.71 -3.59 -3.20% ($1 = C$1.45) Please also visit the US tariff, policy – impact on chemicals and energy topic page Thumbnail shows money. Image by ICIS.

04-Mar-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 28 February. Any new ethylene for VCM expansion would require cost review – US Westlake Before Westlake would consider expanding ethylene capacity at a joint-venture cracker, it would need to conduct a cost analysis that would take into account higher labor and material costs caused by inflation, the chief financial officer said on Monday. INSIGHT: Global fatty alcohols markets decouple as Europe, US tight despite weak sentiment in Asia Global fatty alcohol markets are decoupling from recent movements in southeast Asia, heading into the Palm & Lauric Oils Price Outlook Conference (POC) this week, as European and to a lesser degree US supplies tighten despite demand-driven downward pressure in southeast Asia. INSIGHT: Dematerialization and its implications for plastics, synthetic rubbers and fibers George Harrison once sang about “…living in the material world”, a perfect setting for the subject at hand – dematerialization. It’s a subject I first wrote about back in 1982. The recent DeepSeek AI model release employed a “do more with less” strategy that provided me with the idea to take another look at dematerialization. US-Mexico import tariffs deal could be finalized this week – Sheinbaum Mexican President Claudia Sheinbaum is seeking to finalize an agreement with the US administration this week so her country could prevent 25% import tariffs on Mexican goods scheduled to take effect next week. US to proceed on Mexican, Canadian tariffs; raise China rate by another 10% The US will proceed with its proposed 25% tariffs on most goods from Canada and Mexico, and the nation will increase tariffs on imports from China by another 10%, all effective on 4 March, the president said on Thursday. INSIGHT: US PE exports most vulnerable to retaliatory tariffs – ICIS analysis Among the massive exports of cost-advantaged US chemicals and plastics across the world, none is more vulnerable to retaliatory tariffs than polyethylene (PE). SHIPPING: US fees on China-based ships to cause unintended consequences – analysts The US Trade Representative’s (USTR) proposal to charge up to $1.5 million to Chinese-owned ships entering US ports could cause severe congestion and delays to supply chains, according to shipping analysts.

03-Mar-2025

HOUSTON (ICIS)–The US will proceed with its proposed 25% tariffs on most goods from Canada and Mexico, and the nation will increase tariffs on imports from China by another 10%, all effective on 4 March, the president said on Thursday. In addition, the US will proceed with its proposed reciprocal tariffs on 2 April, President Donald Trump said on social media. The 4 March date still leaves time for the US to reach some agreement with Canada or Mexico to cancel or delay the proposed tariffs. The US agreed to a 30-day delay with Canada and Mexico on 3 February, the day before it had initially planned to impose the tariffs. On Wednesday, 26 February, Mexico's president said such an agreement was in the works. No agreement was reached with China, so the 10% tariffs went into effect. China retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles. RATIONAL FOR THE TARIFFSThe US will proceed with the tariffs, because Trump said illegal drugs that are made in China continue to enter the country from Canada and Mexico. "Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels. A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China," Trump said on social media. "We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled. China will likewise be charged an additional 10% Tariff on that date." THE PROPOSED TARIFFSUnder the proposal, the US will impose tariffs of 25% on all imports from Mexico. It would impose tariffs of 25% on all Canadian imports except energy. Energy imports from Canada would receive tariffs of 10%. Canada had already proposed retaliatory tariffs of 25% on Canadian dollar (C$) 155 billion ($108 billion) worth of US imports. The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others. Canada was preparing a second list, worth C$125 billion. EFFECT ON CHEMICALSCanada is a large source of imports of polyethylene (PE) to plastic processing hubs in the bordering states of Michigan, Illinois and Ohio. In addition, Canada exports PE to Texas. Canada also exports notable amounts of polypropylene (PP) and ammonia to the US. The nation accounts for nearly 90% of all US imports of potassium chloride, also known as muriate of potash (MOP). Mexico and Canada export meaningful amounts of purified terephthalic acid (PTA) to the US. China exports notable amounts of methylene diphenyl diisocyanate (MDI). Mexico and China are important sources of the main feedstock used to make fluorochemicals and fluoropolymers. OTHER TARIFFS PROPOSALS The US has threatened to impose tariffs of 25% on imports from the EU. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. Please also visit the US tariff, policy – impact on chemicals and energy topic page ($1 = C$1.44) Thumbnail photo: Containers. (By XINHUA/Shutterstock)

27-Feb-2025

HOUSTON (ICIS)–Before Westlake would consider expanding ethylene capacity at a joint-venture cracker, it would need to conduct a cost analysis that would take into account higher labor and material costs caused by inflation, the chief financial officer said on Monday. The additional ethylene could be used by Westlake's vinyl chloride monomer (VCM) plant in Geismar, Louisiana, which it is expanding. Westlake has not provided an update on when that VCM expansion project could start operations. The additional VCM capacity would require ethylene from the merchant market. Westlake could reduce its exposure to the merchant market by increasing its ethylene capacity. One option for Westlake would be to expand its joint-venture cracker in Westlake Louisiana. Westlake has a 50% stake with Lotte Chemical in the LACC joint venture. "It is important that we find a way to cost effectively be able to try to shorten that merchant position in ethylene," said Steven Bender, chief financial officer. He made his comments during an earnings conference call. "But we want to do this in a cost-effective, value-added way," he said. Westlake could achieve that through a number of ways, including a debottlenecking project at the joint venture cracker, Bender said. The joint venture cracker could be expanded by about 40%, Bender said. If Lotte participates, Westlake would be entitled to half of the ethylene produced by the expansion project. Westlake would then need to get a fresh estimate about the cost of the project on a dollar per pound investment basis, Bender said. "As we all know, there has been labor inflation and materials cost inflation, so I would not want to rely on anything that we have done in the last couple of years as an indicator of capital cost for that," he said. Bender did not provide any estimates about cost inflation, and he did not specify any causes of the cost increases. OTHER PROJECTS SAW COST INFLATIONOther companies reported in 2023 large cost increases that led some to delay or cancel projects. Alpek, Indorama and Far Eastern New Century (FENC) temporarily halted work on an integrated polyester plant because of high costs. Phillips 66 said the project costs for its renewable diesel project in California rose by more than 40%. Chemtrade Logistics put on hold its ultrapure sulfuric acid plant project after costs rose by 50%. RESUMPTION OF STEEL, ALUMINUM TARIFFSConstruction costs could rise further after tariffs of 25% go into effect on 12 March on imports of steel and aluminum products. The following will take place under the tariff order: The US will withdraw the exemptions to the 25% steel tariffs that it granted to South Korea, Argentina, Australia, Brazil, Mexico, the EU, Japan, the UK and Ukraine. More steel products will fall under the tariff. The US will restrict the ability for companies to seek exemptions from the duties. The US will raise its tariff on imports of aluminum to 25% from 10% while terminating agreements it had reached with Argentina, Australia, Canada, Mexico, the EU and the UK. The 25% tariff will cover more aluminum products. Thumbnail shows pipe composed of polyvinyl chloride (PVC), which is made from VCM. Image by Shutterstock.

24-Feb-2025

HOUSTON (ICIS)–Rates for shipping containers from Asia to the US fell significantly this week on increased capacity, while spot rates for liquid chemical tankers were stable to softer. CONTAINER RATES Global average container rates continue to fall, dropping by 10% this week, according to supply chain advisors Drewry and as shown in the following chart. Average global rates have fallen by almost 30% from 9 January, according to Drewry data, after rising from late October amid frontloading volumes ahead of a possible union labor strike at US Gulf and East Coast ports. Rates from Shanghai to New York plunged by 13% from the previous week, while rates form Shanghai to Los Angeles plummeted by 11% week on week, according to Drewry data and as shown in the following chart. Rates to Los Angeles are down by 29% from early-January, and rates to New York are down by 27.6% over that time. Drewry expects a slight decrease in spot rates next week as capacity increases. Deliveries of new container ships and a slowdown in recycling older vessels have led to an increase of 2.4 million TEUs (20-foot equivalent units) since the beginning of 2024. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said during a webinar that market players are watching two future dates – 4 March, when the reassessment of the Mexico and Canada 25% tariffs takes place, and the 1 April deadline when investigations should be complete on President Donald Trump’s reciprocal tariffs. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATES STEADY-TO-SOFTER Rates for liquid chemical tankers ex-US Gulf were stable to softer this week, with slight decreases seen on the US Gulf-Asia trade lane for small parcels and on the US Gulf to Brazil route. Rates for larger parcels on the US Gulf-Asia trade lane were unchanged amid a slowdown in activity. Shipping brokers are seeing inquiries along this route for ethanol, monoethylene glycols (MEG) and ethylene dichloride (EDC) for March shipping dates. Falling rates on the US Gulf-Brazil trade lane are because there is plenty of open space for the rest of February and into March, brokers said, and limited spot activity. A broker said it is seeing an increase in inquiries for this trade lane which could help steady the market. On the transatlantic eastbound route, a broker said there are plenty of inquiries and that most of the regular contract shipowners have been able to secure smaller parcels to help fill out their vessels. Shipments of styrene monomer (SM) were fixed to Europe, as well as methanol and caustic soda.

21-Feb-2025

SINGAPORE (ICIS)–South Korea’s government on 18 February unveiled an emergency trade package worth at least won (W) 366 trillion ($255 billion), the largest ever, as economic cushion amid a global trade war. Of that amount, trade insurance worth W100 trillion will be provided to small and medium-sized enterprises (SMEs), the Ministry of Economy and Finance said at a 18 February meeting chaired by Acting President Choi Sang-mok. Tax incentives will be offered to companies with existing businesses overseas which may be looking at relocating back to South Korea amid the trade situation. The ministry said that there will also be a W1.2 trillion marketing budget to further boost promotional efforts for SMEs, including in the “Global South”, referring to the emerging economies of Brazil, Vietnam and South Africa, among others. In 2024, South Korea’s exports were at an all-time high of $683.7bn, up by 8.1% in the previous year. For 2025, however, export prospects are more uncertain than ever due to recent announcement of policies by the Trump administration in the US, said Choi. US President Donald Trump has announced reciprocal tariffs as well as tariffs of around 25% on vehicle imports, which could hit South Korea hard. The US’ 25% tariffs on steel and aluminium will take effect on 12 March, while its additional 10% tariffs on Chinese goods took effect on 4 February. In January, South Korea had prepared a W10 trillion stabilization fund  amid concerns about fresh US tariffs before Trump's inauguration as the 47th US president. South Korea’s petrochemical industry is a major exporter of the feedstock ethylene, as well as aromatics such as benzene, toluene and styrene monomer (SM). However, an oversupply from China as well as weakening demand overseas have posed ongoing challenges for the industry. ($1 = W1,439.23)

19-Feb-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 14 February. SE Asia PE plant shutdowns deemed necessary for rebalancing By Izham Ahmad 10-Feb-25 10:57 SINGAPORE (ICIS)–A recent wave of plant shutdowns among polyethylene (PE) producers across southeast Asia has been seen by some as a reflection of how dire the situation in the market is. Malaysia's Lotte Chemical Titan incurs record Q4 loss; '25 outlook downbeat By Nurluqman Suratman 10-Feb-25 14:44 SINGAPORE (ICIS)–Lotte Chemical Titan (LCT) incurred its largest-ever quarterly loss, with analysts expecting the Malaysian producer to remain in the red in 2025 amid weak economic conditions and an oversupply of petrochemical products. INSIGHT: Strong hydrogen push in China to reshape global industry amid US pullback By Patricia Tao 10-Feb-25 18:23 SINGAPORE (ICIS)–The US has suspended financial support for its own hydrogen sector, while China is ramping up efforts to expand its hydrogen industry. The sharp policy divergence between the two countries could accelerate the global hydrogen market’s shift and reshape the industry landscape over the next three to five years. Asia polyester tracks rising costs despite weak post-holiday demand By Judith Wang 11-Feb-25 12:57 SINGAPORE (ICIS)–Asia’s polyester export discussions edged up in line with the higher cost pressure after the Lunar New Year holiday, while buying activities were limited as end-user demand remained weak. SE Asia VAM market rallies on crimped supply, demand surge By Hwee Hwee Tan 12-Feb-25 12:43 SINGAPORE (ICIS)–The southeast Asia vinyl acetate monomer (VAM) import market is being buoyed by resurgent restocking demand and supply disruptions into February. INSIGHT: US policy shift raises concerns on future of CCS, blue ammonia value chain By Bee Lin Chow 12-Feb-25 13:04 SINGAPORE (ICIS)–The unfolding political battle in the US over national economic interest and energy security has raised concerns about potential implications for its emerging carbon capture and storage (CCS) and blue ammonia sectors, and the potential spillover impact on Asia. PODCAST: US hydrogen subsidy halt vs China’s expansion – what’s next for the global market? By Anita Yang 12-Feb-25 15:45 SINGAPORE (ICIS)–The Trump administration swiftly withdrew financial support for its hydrogen sector, while China is accelerating hydrogen expansion with strong policy backing. INSIGHT: India may offer tariff concessions to US as PM Modi meets Trump By Priya Jestin 13-Feb-25 14:18 MUMBAI (ICIS)–India may offer the US tariff cuts on various products, including electronics and automobiles – major downstream sectors of petrochemicals – to avoid US President Donald Trump’s “reciprocal duties”, which may deal a big blow to the south Asian nation’s exports. Vietnam to raise 2025 GDP growth target to 8% to fuel socioeconomic growth By Jonathan Yee 13-Feb-25 16:08 SINGAPORE (ICIS)–Vietnam announced on 12 February it would raise its GDP growth target for 2025 to 8.0% from 6.5-7.0%, with industrial manufacturing and foreign investment expected to drive growth. Singapore 2024 petrochemical exports grow 4.6%; trade risks stay high By Nurluqman Suratman 14-Feb-25 14:00 SINGAPORE (ICIS)–Singapore’s petrochemical exports in 2024 rose by 4.6%, supporting the overall growth in non-oil shipments abroad which is being threatened by ongoing trade frictions among major economies.

17-Feb-2025