Synthetic rubbers

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 railroad Norfolk Southern has advised customers that it will increase demurrage and storage charges for railcars in its yards to $110/railcar from $60/railcar, according to a customer notice on its website. The notice said that there will be no changes made to the existing service credit program. “This adjustment reflects our ongoing commitment to maintaining a safe, efficient, and reliable service – particularly in the handling and transport of hazardous materials,” the railroad said. Norfolk Southern said the increase will help support enhancements to the fluid movement of cargo. “A fluid, well-optimized network ensures that shipments move more predictably and reliably, minimizing delays and maximizing the availability of equipment when and where it’s needed most,” the railroad said. Some market participants suspect that other railroads could follow with similar increases on growing concerns of stagnant inventory on rail networks. DELAYS SEEN FROM CPKC CUTOVERChemical market participants on the CPKC system saw significant delays moving material in east Texas, Louisiana, and parts of Mississippi in May because of issues merging its operations system following the merger between Canadian pacific and Kansas City Southern in 2023. Speaking at the Wells Fargo Industrials & Materials Conference on Tuesday, CPKC chief operating officer Mark Redd acknowledged that there were issues with the cutover in those areas. Redd said some customers felt the brunt of some first-mile/last-mile customer service during the cutover. A market participant told ICIS that the issue caused delays and impacted shipments severely and affected the tracking of ethylene glycol (EG) shipments.

12-Jun-2025

LONDON (ICIS)–UK GDP fell in April following growth the previous month, the Office for National Statistics (ONS) announced on Thursday. Monthly GDP fell by 0.3%, following a 0.2% rise in March, although rose by 0.7% in the three months to April, compared with the three months to January. This followed 0.7% growth in the first quarter. Both the fall in output for April and the wider trend of growth were driven by activity in the services sector, falling 0.4% on the previous month, but rising by 0.6% over the three-month period. Overall production fell by 0.6% in April, driven by a decline in manufacturing, but also rose by 1.1% in the three months to April. This was reflected in output for the chemicals industry, which tracked a 0.13 percentage point (pp) decline for the month, but rose by 0.11pps over the past three months. In contrast, production of rubber and plastics products rose by 0.04pps for both periods. Sentiment has been clouded in the second quarter, due to the possibility of tariffs rolled out from the US. In the wake of US president Donald Trump’s Liberation Day announcement on 2 April, the UK has managed to secure a trade deal with the US, the EU, and other trading partners. The impact of new terms has not yet been felt in the market, and wider global macroeconomic conditions remain unclear.

12-Jun-2025

SINGAPORE (ICIS)–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. Cement industry under carbon pressure From hydrogen as substitute to carbon utilization for new value Five-year window open for low-carbon pilots Cement accounts for around 13-14% of China's total carbon dioxide (CO2) emissions, ranking it the third-largest industrial source after power and steel. Facing mounting pressure from both international carbon regulations and domestic policy, China can tap hydrogen as a promising route toward meaningful emissions reductions. China’s cement industry is estimated to have emitted about 1.20 billion tonnes of CO2 in 2023, down for a third straight year. Emissions stood at 1.23 billion tonnes of CO2 in 2020, when China’s cement clinker output peaked at 1.58 billion tonnes, and cement output hit 2.38 billion tonnes, according to China Building Materials Federation. Around 60% of this comes from the chemical reaction when limestone is heated to make clinker, a process that is difficult to change in the short term due to raw material constraints. Another 35% comes from fossil fuels combustion to generate heat for clinker production, which is a key substitution target. As of March 2025, China's national ETS (Emissions Trading Scheme) expanded to include cement, alongside steel and aluminum, hence, the cement sector is also now fully exposed to carbon pricing. However, despite policy urgency, due to technical and equipment retrofitting complexities, the sector has moved slowly. The next five years will represent a pivotal window to scale pilot projects and validate decarbonization pathways. TWO ROUTES: CLEANER COMBUSTION & CARBON USE Hydrogen can help reduce emissions from cement mainly in two ways: fossil fuel substitution and carbon utilization. Fuel substitution with hydrogen is the immediate decarbonization leverage. Hydrogen can directly replace coal or gas in kilns. Its high calorific value and zero-carbon combustion profile make it an ideal fuel. However, because of its weak flame radiation and explosion risk, hydrogen is usually mixed with other fuels in current tests. European players lead the change: Cemex, a leading global building materials manufacturer, completed hydrogen retrofits at all its European cement plants by 2020, targeting a 5% CO2 reduction by 2030. Heidelberg Materials, another cement giant actively exploring hydrogen applications, achieved 100% net-zero fuel operation at its UK Ribblesdale plant in 2021, using a mix of 39% hydrogen, 12% meat and bone meal, and 49% glycerin. Another option is to combine CO2 capture from kiln exhausts with renewable hydrogen to synthesize e-methanol or e-methane. E-methanol and e-methane are synthetic fuels made by combining captured CO2 with renewable hydrogen using renewable electricity. LafargeHolcim, as one of the largest cement producers in the world, has multiple hydrogen decarbonisation projects across Europe. It is leading with its HyScale100 project in Germany, which aims to install electrolyzers at its Heide refinery, and combine electrolyzed hydrogen with CO2 from its Lägerdorf plant to produce e-methanol starting 2026. This model not only reduces emissions but also builds links across industries to create a circular carbon economy. CHINA: FROM POLICY PUSH TO PILOT PROJECTS Policy support is gaining momentum in China. The 2024 Special Action Plan for Cement Energy Saving and Carbon Reduction aims to raise alternative fuel use to 10% by 2025, explicitly naming hydrogen. The Ministry of Industry and Information Technology (MIIT) sets out a 2030 goal to commercialize low-carbon kilns using hydrogen. Amid the decarbonization policy signals, China’s major cement producers are also stepping up: The Beijing Building Materials Academy of Scientific Research (BBMA) under Beijing Building Materials Group (BBMG) completed China’s first industrial trial in December 2024 using >70% hydrogen in calcination. Anhui Conch Cement Company used 5% hydrogen in pre-calciners, cutting 0.01 tonnes of CO2 per tonne of clinker, albeit with an added cost of yuan (CNY) 32.7/tonne. Tangshan Jidong Cement is building a full hydrogen supply chain in partnership with China National Chemical Engineering. Hydrogen is also being produced on-site using waste heat from clinker kilns to power electrolysis – a promising approach to localize supply and enhance energy efficiency. CHALLENGES STILL AHEAD Despite policy and pilot momentum, commercialization hydrogen use in China’s cement sector still faces barriers. Renewable hydrogen costs are too high for wide use. Studies suggest it would need to fall below $0.37/kg to be cost-effective in cement under carbon trading. Hydrogen is hard to store and transport, and its flame instability requires kiln retrofits and safety systems. China also lacks unified national technical standards for using hydrogen in cement, slowing adoption. Hydrogen may not yet be ready for mass rollout, but it is clearly part of the future of cement in China. As production costs fall, carbon markets grow, and hydrogen technologies mature, hydrogen could become a real driver of change in one of China’s hardest-to-decarbonize sectors. Insight article by Patricia Tao

10-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

HOUSTON (ICIS)–Rates for shipping containers from Asia to the US spiked again this week – and have almost doubled over the past four weeks – as demand has surged ahead of the possible reinstatement of tariffs while capacity remains tight. Supply chain advisors Drewry said the latest sudden, short-term strengthening in supply-demand balance in global container shipping has reversed the trend of declining rates which had started in January. Rates from Shanghai to Los Angeles spiked by 57% this week while rates from Shanghai to New York jumped by 39%, according to Drewry and as shown in the following chart. The drastic increases are seen from other shipping analysts as well. On the Shanghai Containerized Freight Index (SCFI), the Shanghai-USWC rate rose by 58% to $5,172/FEU (40-foot equivalent unit), the largest week-on-week percentage gain since 2016 as strong demand has coincided with tight supply, though capacity is increasing as carriers resume previously suspended services and reinstate blank sailings. Sea-Intelligence CEO Alan Murphy said almost 400,000 TEUs (20-foot equivalent units) are coming back online in the near term. “If we aggregate it across June/July for Asia-USWC, then in June, the lines are increasing capacity 12.8% compared to before the tariff pause, and in July, the capacity injection is increasing to 16.5% compared to the pre-pause situation,” Murphy said. “Capacity has also ramped up sharply compared to just a week ago, with this injection of capacity equaling 397,000 TEU across the two months.” The growth in capacity is shown in the following chart from Sea-Intelligence. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said the spike is likely because shippers are so concerned about getting goods moving during the 90-day window that they are willing to pay more. “Right now, it seems carriers are telling shippers to jump, and some are replying ‘how high?’,” Sand said. “This will not last because capacity is heading back to the transpacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up,” Sand said. “Spot rates are expected to peak in June before downward pressure returns.” Rates from online freight shipping marketplace and platform provider Freightos have yet to capture the dramatic increase, but Judah Levine, head of research at the company, said 1 June general rate increases (GRIs) are starting to push daily prices up sharply. “Rates have spiked 72% to the West Coast since last week to $4,765/FEU and 44% to the East Coast to $5,721/FEU, with more increases likely and additional hikes announced for mid-month,” Levine said. Analysts at US logistics platform provider Flexport said they expect a further rush of cargo from southeast Asia to the US West Coast toward the end of June. Flexport analysts expect carriers to be back to full capacity on the transpacific eastbound trade lane by the end of June, noting that week 23 capacity is 11% below standard levels but is expected to exceed standard levels by 3% by week 25. 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 US chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates decreased from the US Gulf to Europe. The USG to Rotterdam route is overall steady as weaker demand is being offset by limited availability, particularly for larger parcels. Larger requirements are well represented, with several larger lots of methanol, methyl tertiary butyl ether (MTBE) and caustic soda fixed or indicated to the ARA. There was also some interest in sending some smaller lots of glycols and styrene. From the USG to Asia, the uptick in interest to rush glycols to beat the deadline to China seems to have all but ended as the market saw only a few new inquiries. On the other hand, several larger parcels of methanol were either fixed or quoted to the region. As contract of affreightment (COA) volumes are being firmed, and due to the absence of market participants, freight rates have eased some, with more downward pressure on smaller parcels. On the USG to Brazil trade lane, the market has been steady, leading rates to remain unchanged week on week. There was a stable level of spot activity with only a handful of new requirements. Overall, the market remains slow despite several cargoes being quoted and fixed. Despite the uptick in inquiries there is not enough significant activity that would suggest any increase in demand, with caustic soda, glycols and styrene the most active. The regular owners have space remaining and are trying to fill space while supporting current freight levels. Activity typically picks up during summer months, but this is not currently being seen. As a result, freight rates are now expected to remain steady for the time being. Focus story by Adam Yanelli Additional reporting by Kevin Callahan Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

05-Jun-2025

LONDON (ICIS)–LyondellBasell has entered into exclusive talks with an industrial investor for the sale of four European production sites, slightly over a year after launching a review of its asset base in the region. The company entered into the talks with AEQUITA, a Germany-based investment group specialising in turnarounds and carve-outs. Other assets acquired by the firm include a bake disc technology company purchased from Bosch, a cloud solutions business from Fujitsu, and a glass manufacturer from Saint-Gobain. AEQUITA is in position to take control of four sites of the nine operated by LyondellBasell in Europe in the deal, spanning France, Germany, Spain and the UK. Sites to be sold Site Production (tonnes/year) Berre, France Ethylene (465,000 tonnes/year) LDPE (320,000 tonnes/year PP (350,000 tonnes/year Propylene (255,000 tonnes/year) Munchsmunster, Germany Ethylene (300,000 tonnes/year) HDPE (320,000 tonnes/year) Propylene (190,000 tonnes/year) Carrington, UK PP (210,000 tonnes/year) Tarragona, Spain PP (390,000 tonnes/year) That leaves LyondellBasell with its Knapsack and Wesseling, Germany, site – collectively its largest production centre in Europe – as well as Frankfurt, Germany; Moerdijk, Netherlands; Brindisi, Italy and Tarragona, Spain. Collectively, the sites represent a “scaled” olefins and polyolefins platform with operations close to customer demand, LyondellBasell said, although the size of the crackers in the portfolio are smaller than many capacities that have come on-stream in the last few years. “We are confident in our ability to accelerate their development under AEQUITA’s ownership approach,” said Christoph Himmel, Managing Partner at AEQUITA. The current agreement entered into takes the form of a put option deed, which grants the owner the right but not the obligation to sell an asset at a specific price. In this case, AEQUITA has agreed to purchase at the agreed-upon terms if LyondellBasell opts to exercise the option after concluding works council consultation processes. The financial terms of a sale have not yet been disclosed, but the current timeline would see the deal close in the first half of 2026, LyondellBasell added. The Europe review is part of a wider shift in footing towards three key pillars for the business. Announced in 2023, this is based on prioritizing spending on businesses where the company “has leading positions in expanding and well-positioned markets”, growing circular solutions earnings to $1 billion/year by 2030, and shifting from cost controls to a broader idea of value creation. The company’s strategy for its remaining European asset base will be based around sustainability and the circular economy, according to Lyondell CEO Peter Vanacker. “Europe remains a core market for LyondellBasell and one we will continue to participate in following this transaction with more of a focus on value creation through establishing profitable leadership in circular and renewable solutions," he said. Update adds detail throughout Thumbnail photo: LyondellBasell's site in Wesseling, Germany, one of the European assets it is retaining (Source: LyondellBasell)

05-Jun-2025

COLORADO SPRINGS, Colorado (ICIS)–Uncertainty surrounding tariffs is tempering what could be a recovery in US demand for polypropylene (PP), executives at Braskem said on Wednesday. Uncertainty about the final makeup of tariffs and their effects on end markets have caused consumers and companies to delay purchases, said Alexandre Elias, vice president, PP, North America and Europe, Braskem. Elias made his comments in an interview with ICIS on the sidelines of the annual meeting of the American Chemistry Council (ACC). Companies are reluctant to build inventories and make investments – especially industrial PP customers that have long investment cycles, Elias said. TARIFFS HAVE COUNTERVAILING EFFECTS ON AUTOAutomobiles are one of the main end markets for PP, and the tariffs have had mixed effects on production, contributing to the uncertainty of PP demand from the sector. The US has imposed tariffs on imports of automobiles and auto parts, which could ultimately stimulate local production and PP demand. Prior to those tariffs, consumers splurged on automobiles to beat the tariffs. All of that pre-buying lowered inventories of US autos, said Bill Diebold, vice president – commercial, Braskem America, polyolefins. US producers will ultimately replenish those inventories, which will further increase auto output and PP demand. On the other hand, consumer confidence has fallen after the introduction of the tariffs and that tends to slow demand growth for automobiles and other durable goods that are made with PP. Chinese restrictions on shipments of rare earth magnets could cause some automobile companies to shut down production within weeks if they cannot find workarounds, according to an article from the Wall Street Journal, a business publication. The US recently increased its tariffs on imports of steel and aluminium to 50% from 25%, which would increase production costs for US automobiles and potentially make them less affordable. The future of the tariffs themselves is uncertain because the US frequently changes the rates. It could impose new tariffs, and the courts could rule that the US lacks authority to impose them under a key provision. The interactions of all of these variables make it difficult to forecast PP demand from the US automobile industry, Elias said. PP DEMAND REMAINS FLAT YEAR ON YEARIn the US, PP demand is up in Q2 versus Q1 but flat year on year, Diebold said. Similarly demand improved in Q1 versus Q4, the latter of which was a challenging time for the US market, Diebold said. Packaging, another major end market for PP, remains strong. PP is enjoying a boost from a wave of product substitutions, Elias said. Over the years, many polystyrene (PS) processors have switched to PP because of its price. Many of those substitutions have played out, but a smaller wave is now taking place. That said, uncertainty could be capping the potential of product substitutions from other processors. LPG RESTRICTIONS TO CHINA COULD ALTER PP TRADE FLOWSGlobal trade flows of PP could change significantly if the US restricts exports of liquefied petroleum gas (LPG) to China. China relies heavily on US LPG shipments to provide feedstock for its large fleet of propane dehydrogenation (PDH) units, which produce on-purpose propylene. The US already has imposed restrictions on exports of ethane to China, which would disrupt a few ethane crackers in the country. If trade tensions rise, it could expand the restrictions to cover LPG. Global markets got a taste of the ramifications of restricted LPG shipments earlier this year when China increased tariffs on US imports by triple digits. Had China maintained those increases, Chinese propylene production would likely fall, according to ICIS. China could still procure LPG from exporters from other parts of the world, but that would increase costs and make some production uncompetitive. Lower Chinese propylene production would have a cascading effect. It could lower domestic production of PP and cut down on Chinese exports to other parts of Asia. That, in turn, could allow domestic Asian producers to sell more material locally, allowing them to be less aggressive about exporting PP, Elias said. "This could have a significant impact on trade flows globally," Elias said. In fact, restrictions on US LPG shipments to China would likely have a bigger effect on PP trade flows then actual tariffs on the resin. So far, the introduction of US tariffs has had little direct effect on US PP, because the market is relatively balanced. In 2023 and 2024, apparent consumption was about 85% of total production in the US, according to the ICIS Supply and Demand Database. Braskem does have an option to export PP from a terminal in Charleston, South Carolina, but this terminal functions more as a way to take advantage of arbitrage opportunities and leverage its PP plants in North America, Elias said. As an option, it has worked well. LITTLE NEED FOR NEW PROPYLENE CAPACITYBraskem relies on third parties for propylene for its PP plants in the US. So far, there is no need for Braskem to build its own propylene capacity, Elias said. The US is long in propylene, as illustrated by the global competitiveness of its exports, he said While Braskem has relied on propylene imports from Canada, trade tensions between it and the US have eased. Were trade tensions to resume and cause an increase in tariffs, Braskem could manage around it, Elias said. The ACC Annual Meeting runs through Wednesday. Focus article by Al Greenwood Thumbnail shows a product made with PP. Image by Shutterstock.

04-Jun-2025

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Is the petrochemicals industry really a free market? Or have we been telling ourselves a comforting fiction? As we sift through margins, P&Ls, and operating rates to predict a recovery, we might be asking the wrong questions. Let’s rewind to 2014. While China’s state media signalled a major push toward self-sufficiency in petrochemicals, many Western analysts dismissed it — seeing China through the lens of profit maximisation. But I was told way back in 2000 that China’s strategy had just as much to do with jobs and economic value creation as with profits. Fast forward to today: polyester fibres, , polyethylene terephthalate (PET) film and bottle grade resins, purified terephthalic acid (PTA), styrene and polypropylene (PP),— China is nearly or completely self-sufficient in these markets. The drivers? National security, supply certainty, and industrial policy. And it’s not just China. Middle East investments — underpinned by cheap feedstocks, state ownership, and now oil demand substitution — follow similar, non-market logic. If key players haven’t been led by market signals alone, what happens next? Despite the deepest downturn in petrochemical history — likely to stretch into 2028 — new capacities keep rising. Not from those chasing short-term profit, but from those with long-term, state-backed agendas. Just a modest rise in China’s PP operating rates above the ICIS base case assumption could flip China into being a net exporter by 2027. The trade war may play a role here, as it has increased supply security concerns. True, there are more private petrochemical companies in China than ten years ago. But this latest wave of investment is more state-owned-enterprise-led than the previous one. And private companies can also benefit from local and central government support Saudi investments in refinery-to-petrochemicals will persist. More ethane crackers in the Middle East will be built. China’s plant-build costs are often 50%+ lower than the U.S., thanks to relentless innovation support. So… what does this mean for producers operating on pure market terms? Can they survive, let alone thrive, in a landscape shaped by strategic ambition rather than shareholder return? Your thoughts are welcome. Let’s start the conversation. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

04-Jun-2025