Chemicals

SINGAPORE (ICIS)–Singapore's GDP growth is projected to slow to 1-3% in 2025, as overall economic growth in its key trading partners is anticipated to ease slightly from 2024 levels, official estimates showed on Friday. 2024 GDP growth forecast raised to "around 3.5%" Global economic uncertainties have increased Singapore's Q3 petrochemical exports grew by 8.5% year on year In particular, the US economy is expected to slow due to easing labor market conditions, although investment growth will provide some support, the Ministry of Trade and Industry (MTI) said in a statement. In contrast, the eurozone will likely see a pickup in growth, driven by stronger consumption and investment recovery amid accommodative monetary policy. In Asia, China's GDP growth will moderate due to weaker exports from announced tariff hikes, but domestic consumption will cushion the slowdown as consumer sentiment improves and the property market stabilizes. Meanwhile, key Southeast Asian economies will experience steady growth, fueled by the upswing in global electronics demand. GLOBAL GROWTH RISKS WIDEN "Global economic uncertainties have increased, including uncertainty over the policies of the incoming US administration, with the risks tilted to the downside," the MTI said. Intensifying geopolitical conflicts and trade tensions could increase oil prices, production costs, and policy uncertainty, ultimately weakening global investment, trade, and growth, the ministry warned. Moreover, disruptions to the global disinflation process may lead to tighter financial conditions, desynchronized monetary policies, and exposed financial vulnerabilities, it added. Singapore's non-oil domestic exports (NODX) are projected to grow 1.0-3.0% in 2025, following a modest expansion of around 1.0% in 2024, a separate statement by trade promotion agency Enterprise Singapore said on Friday. "While the external environment is generally supportive of growth, uncertainties in the global economy such as a more challenging and competitive trade environment could weigh on global trade and growth," it said. 2024 GROWTH UPGRADEDFor 2024, the country's economic growth forecast for 2024 was raised to around 3.5%, above the range of its previous prediction of 2-3%, the MTI said. Singapore's stronger-than-expected economic showing in the first nine months and updated assessments of global and domestic economic conditions drove the upward revision in the GDP forecast. For the first three quarters of the year, GDP growth averaged 3.8% year on year. Singapore's economy grew 5.4% year on year in the third quarter of this year, up from the advanced estimates of 4.1%. In terms of trade, Singapore's petrochemical exports grew by 8.5% year on year in the third quarter, slowing from the 14.9% expansion in the preceding three months. Singapore's NODX grew by 9.2% year on year on year in the third quarter, swinging from the 6.5% contraction in the preceding three months. Singapore serves as a major petrochemical manufacturer and exporter in southeast Asia, with its Jurong Island hub hosting over 100 international chemical companies, including ExxonMobil and Shell. Focus article by Nurluqman Suratman

22-Nov-2024

CARTAGENA, Colombia (ICIS)–Next year's annual summit of the Latin American Petrochemical and Chemical Association (APLA) will take place in Cancun, Mexico, the organizers confirmed on Thursday. APLA 2025 will take place in November 2025 in the Mexican resort city in Cancun, Mexico. According to APLA, 940 delegates registered for this year's annual summit, which concluded on Thursday in Cartagena, Colombia. That figure represented an increase of 4.4% compared to the 900 registered attendees at last year's annual summit in Sao Paulo. "In 2024, we have had a record number of registered delegates as well as of participating companies, with 350 firms," said APLA's director general, Manuel Diaz. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia.

21-Nov-2024

CARTAGENA, Colombia (ICIS)–Logistics are getting even more challenging, as climate change, armed conflicts and tariffs are making planning difficult, shipping experts said on a panel discussion at the Latin American Petrochemical and Chemical Association (APLA) Annual Meeting. “External threats are happening in a more frequent manner. So it’s harder for companies to plan and organize logistics and do just-in-time (JIT),” said Natalia Gil Betancourt, economic research leader at the Port of Cartagena. “Because of the armed conflict in the Red Sea, cargoes take 10-14 days longer and that has an impact and cost transferred to the end consumer,” she added. Trade wars and tariffs, part of deglobalization, along with reshoring, will also generate higher costs for the consumer, she noted. Meanwhile, the Panama Canal Authority, which has been hit by drought in late 2022 through 2024, will be under pressure to generate more revenue for the country, said Gabriel Mariscal, business manager – ship agency division at port agency services provider CB Fenton. “Strong El Ninos now occur more often – not once in 20 years. Droughts are more frequent. With climate, you don’t know what’s going to happen,” said Mariscal. Betancourt and Mariscal spoke on a panel at the APLA Annual Meeting. Droughts took down Panama Canal transits from 36 per day, to just around 18 during the worst point, he noted. The Panama Canal Authority is likely to consider new rules to raise profitability, including segmenting prices by type of vessel or even by emissions, he said. Meanwhile, ports are strategic convergence points and should work with industries such as chemicals as strategic partners, said Betancourt. “Anticipating things is very complicated. For example, COVID was a Black Swan event. Another issue is the rearranging of supply chains. Shipping agencies are also reorganizing networks and strategic pathways. All this will impact availability and cost,” said Betancourt. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Thumbnail image shows a container ship passing through the Panama Canal. Courtesy the Panama Canal Authority

21-Nov-2024

HOUSTON (ICIS)–The US Environmental Protection Agency (EPA) could make a decision any day that would allow California to adopt an aggressive electric vehicle program, triggering similar programs in 12 other states and territories that will likely become the target for repeal under President-Elect Donald Trump. During his campaign, Trump has expressed opposition to policies that favor one drive-train technology over another, saying that he would  "cancel the electric vehicle mandate and cut costly and burdensome regulations". California's EV program is called Advanced Clean Cars II (ACC II), and it works by requiring EVs, fuel cells and plug-in hybrids to make up an ever-increasing share of the state's auto sales. Other programs that encourage the adoption of EVs could be more vulnerable to repeal and rollbacks under Trump ACC II COULD BOOST EV DEMAND IN 13 STATESBefore California can adopt its ACC II program for EVs, it needs the EPA to grant it a waiver from the US Clean Air Act.  The California Air Resources Board (CARB) said it is expecting a decision from the EPA at any time. If the EPA receives the waiver, then it will trigger the adoption of similar ACC II programs the following states and territories. The figures in parentheses represent each state's share of light-vehicle registrations. California (11.6%) New York (5.6%) Colorado (1.8%) Oregon (1.0%) Delaware (0.3%) Rhode Island (0.3%) Maryland (1.8%) Vermont (0.3%) Massachusetts (2.1%) Washington (1.9%) New Jersey (3.4%) Washington DC (not available) New Mexico (0.5) Source: CARB In total, the 13 states and territories represent at least 30.6% of US light-vehicle registrations, according to CARB. HOW THE ACCII SUPPORTS EV DEMANDThe following chart shows the share of electric-based vehicles that would need to be sold in California by model year under the state's ACC II regulations. Programs in other states and territories have similar targets. ZEV stands for zero-emission vehicle and includes EVs and vehicles with fuel cells Source: California Air Resources Board REPEALING THE ACC IIThe key to California's ACC II programs is the EPA's decision to grant it a waiver to the Clean Air Act. Trump will likely revoke that waiver if it is granted before he takes office, according to the law firm Gibson Dunn. It expects that California will respond by threatening to retroactively enforce the ACC II program once a friendlier president takes office after Trump's term ends in four years. Auto makers could choose to take California's threat seriously and reach an agreement with the state. A similar scenario unfolded during Trump's first term of office in 2016-2020 that involved California's earlier Advanced Clean Cars (ACC) program, according to Gibson Dunn. That program also required a waiver from the EPA, and the dispute was resolved only after Joe Biden restored the waiver after becoming president in 2021. For the possible dispute over the ACC II program, it could take the courts determine whether California can retroactively enforce the program. FEDERAL PROGRAMS ARE MORE VULNERABLE TO REPEALThe following federal programs could be more vulnerable to roll backs under Trump. The Environmental Protection Agency's (EPA) recent tailpipe rule, which gradually restricts emissions of carbon dioxide (CO2) from light vehicles. The Department of Transportation's (DoT) Corporate Average Fuel Economy (CAFE) program, which mandates fuel-efficiency standards. These standards became stricter in 2024. A tax credit worth up to $7,500 for buyers of EVs under the Inflation Reduction Act (IRA). Trade groups have argued that the CAFE standards and the tailpipe rules are so strict, they function as effective EV programs. They allege that automobile producers can only meet them by making more EVs. The following table shows the current tailpipe rule. Figures are listed in grams of CO2 emitted per mile driven. 2026 2027 2028 2029 2030 2031 2032 Cars 131 139 125 112 99 86 73 Trucks 184 184 165 146 128 109 90 Total Fleet 168 170 153 136 119 102 85 Source: EPA The following table shows the fuel efficiency standards under the current CAFE program. Figures are in miles/gallon. 2022 2027 2028 2029 2030 2031 Passenger cars 44.1 60.0 61.2 62.5 63.7 65.1 Light trucks 32.1 42.6 42.6 43.5 44.3 45.2 Light vehicles 35.8 47.3 47.4 48.4 49.4 50.4 Source: DOT Gibson Dunn expect Trump's administration will rescind the tailpipe rule and roll back the CAFE standards to levels for model year 2020 vehicles. That would lower the CAFE standards for light vehicles to 35 miles/gal. EVS AND CHEMICALSEVs represent a small but growing market for the chemical industry, because they consume a lot more plastics and chemicals than automobiles powered by ICEs. A mid-size EV contains 45% more plastics and polymer composites and 52% more synthetic rubber and elastomers, according to a May 2024 report by the American Chemistry Council (ACC). EVs also contain higher value materials such as carbon fiber composites and semiconductors, making the total value of chemistry in the automobiles up to 85% higher than in a comparable ICE, according to the ACC. The following chart compares material consumptions in EVs and ICEs. Source: ACC EVs have material challenges that go beyond making them lighter and more energy efficient, such as managing heat from their batteries and tolerating high voltages. Major chemical and material producer are eager to develop materials that can meet these challenges and command the price premiums offered by EVs. Most have EV portfolios and prominently feature them at trade shows A rollback of US incentives for EVs could slow their adoption and weaken demand for these materials. Materials most vulnerable to these rollbacks would include heat management fluids and chemicals used to make electrolytes for lithium-ion batteries, such as dimethyl carbonate (DMC) and ethyl methyl carbonate (EMC). Other materials used in batteries include polyvinylidene fluoride (PVDF) and ultra high molecular weight polyethylene (UHMW-PE). Insight by Al Greenwood Thumbnail shows an EV. Image by Michael Nigro/Pacific Press/Shutterstock

21-Nov-2024

CARTAGENA, Colombia (ICIS)–Mexico’s nearshoring trend will continue, even with the prospect of changes with the incoming US Trump administration as the US and Mexico economies are growing more and more interconnected, said the head of Evonik’s Mexico business. “Mexico is the 14th largest global economy, and an economy geared for exports – not only to North America but other regions,” said Martin Toscano, president of Evonik Mexico, at the Latin American Petrochemical and Chemical Association (APLA) Annual Meeting. Mexico is the 9th largest exporter globally and becoming one step closer to the 3rd largest auto parts manufacturer. It is also the leading business partner to the US, he pointed out. Currently over 80% of Mexico’s exports are to the US, totaling $455 billion in 2023. The US now imports more from Mexico than from China. The US in turn exported $324 billion of goods to Mexico, he noted. Key Mexico exports to the US include transport equipment (including autos and parts), medical and scientific instruments, electronics, machinery, and rubber and plastic. TRUMP IMPACT ON NEARSHORING “Trump 47 (referring to the upcoming 47th US President) is not going to be that different from 45 (last Trump administration). US and Mexico interests go beyond rhetoric,” said Toscano. “No region is an island – they rely on net inflows. The world is too interconnected to just switch off. Economies depend on exports but also imports,” he added, pointing out that the US is unlikely to reshore everything. Nearshoring is natural for Mexico because of its proximity to the US and the USMCA (US-Mexico-Canada Agreement) free trade agreement (FTA). But nearshoring is also distributed across Latin America, with other countries such as Brazil and Argentina ready to play greater roles, he pointed out. US President-Elect Trump has threatened companies – both in the US and abroad – that move production to Mexico to export to the US, with tariffs. However, the US holds over 40% of total foreign direct investment (FDI) in Mexico, making it a major stakeholder in Mexico exports, he noted. “The US has a very important role… but there is also a significant European presence. There is a continuing diversification of the investment base,” said Toscano. Mexico also has FTAs with 23 countries – the 7th most of any country in the world – with access to over 60% of global GDP. This as well as increasing government investment in infrastructure and a growing middle class make it an attractive market for investment, he pointed out. “All this investment in Mexico has generated greater well-being – better jobs and income. This means people start consuming more for basic needs – food, protein, personal care products, cleaning products and household items,” said Toscano. The executive also sees a boost for US economy with the incoming Trump administration. “Simplifying regulations can be good. It can turn to a negotiation point when USMCA sunsets [in 2026]. This can make Mexico adopt certain [simplified] regulatory elements,” said Toscano. “With the Trump administration, Mexico has to take some topics seriously. Nearshoring is a window of opportunity, and if we don’t know how to do it, we will lose,” he added. RULES OF ORIGIN, DEAL-BASED WORLD At the APLA Annua Meeting, former head of Argentina’s central bank and current director of the Asia School of Business, Martin Redrado, said Mexico should be prepared for the US being much stricter on its “rules of origin”. Under the USMCA rules of origin, exporters must show that a product has a certain minimum percentage of components from the region (US, Mexico, Canada) to avoid import duties. Redrado said Latin American countries should now follow a transactional policy as we move from a “rule-based world to deal-based world”. This requires a transactional approach to negotiations. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Focus article by Joseph Chang Thumbnail shows the flag of Mexico. Image by Shutterstock.

20-Nov-2024

LONDON (ICIS)–Construction activity in both the eurozone and EU tracked a mild decline compared to the previous month, according to the latest official data on Wednesday. Production fell by 0.1% in both the eurozone and wider EU compared to August, accounting for seasonal adjustment, with building construction the main lag on activity, falling 0.8% and 0.9% respectively. Monthly losses were offset by gains in civil engineering activity (up 1.4% in the eurozone and 0.6% in the EU). Specialised construction activity fell 0.4% and 0.2% respectively. Compared to a year prior, overall production construction fell by 1.6% in the eurozone and by 2.0% in the EU with declines consistent across all sectors. Building construction accounted for the biggest decline in both blocs, falling by 1.6% and 2.7% respectively on September 2023's output. Civil engineering activity fell by 0.5% in the eurozone and by 2.2% in the EU, with specialised building activity falling by 2.2% in the eurozone and by 1.9% in the EU. Numerous petrochemicals and specialty chemicals are key ingredients in products used for modern construction, including adhesives, ad-mixtures, sealants, coatings, paints, flooring, insulation and water proofing. (recasts, clarifying first paragraph)

20-Nov-2024

SINGAPORE (ICIS)–Avantium has signed a multi-year collaboration agreement to pilot the production of polylactic-co-glycolic acid (PLGA) from carbon dioxide (CO2), with Thai producer SCG Chemicals (SCGC), the Netherlands-based circular polymer materials firm said on Wednesday. PLGA is a biodegradable, recyclable polyester which is an alternative for conventional fossil-based polyesters. "Under this agreement, SCGC will provide support for all stages of technology development," Avantium said in a statement. Financial details of the deal were not disclosed. "Additionally, SCGC will work with Avantium on developing various PLGA applications, aiming to bring these sustainable solutions to market." Avantium and SCGC have spent the past year exploring the properties of PLGA to perfect its formulation for large-scale polymer applications, with a focus on barrier properties, recyclability, and environmental impact. As part of the collaboration, Avantium grants SCGC an option to negotiate license deal to utilize its Volta technology, including PLGA production, within southeast Asia. Avantium’s Volta technology uses electrochemistry to convert CO2 to high-value products and chemical building blocks including glycolic acid. Glycolic acid, combined with lactic acid, can be used to produce PLGA polyester in existing manufacturing assets.

20-Nov-2024

CARTAGENA, Colombia (ICIS)–Latin America stands at a crucial turning point as global economic and political dynamics shift, with significant opportunities in energy, food security and technological advancement, an economist said on Tuesday. Martin Redrado, director at the Buenos Aires-based Fundacion Capital, said Latin America is uniquely positioned to benefit from changing global trade patterns, particularly as the world moves from a rules-based system to a more transactional approach. The economist was speaking to delegates at the annual meeting of the Latin American Petrochemical and Chemical Association (APLA). Mexico has emerged as a primary beneficiary of nearshoring initiatives, while South American nations including Colombia, Brazil, Argentina and Chile are increasingly attracting international attention. The region's energy sector is projected to play a vital role in global security, with forecasts indicating Latin America will produce 11 million barrels of oil daily by 2030, representing 25% of global production, said Redrado. Brazil is expected to double its offshore pre-salt oil production, while Argentina's Vaca Muerta development promises significant gas production potential. The economist said regarding food security, Latin America's position appeared equally strong, with the region already controlling half of global corn exports and 60% of soybean exports, with Brazil leading as a major meat exporter. “Latin American will have a central role to play in food security. Today the world has 8 billion inhabitants, and it is estimated that by 2030 around 2.3 billion of those 8 billion will become middle class,” said Redrado. “The middle class consumes more protein, and clearly Latin American, with half of the total corn exports in the world and 60% of soybean exports, is well placed to cater for that demand.” Technological integration, particularly artificial intelligence, is reshaping traditional industries, said Redrado, noting AI applications in agricultural soil analysis, weather forecasting, and pest control are enhancing productivity. Similar advances, he concluded are being made in energy sector efficiency and construction monitoring. INFRASTRUCTURE STILL BEHINDHowever, infrastructure remains a significant challenge, and Redrado said Latin America must improve both physical and digital connectivity, including enhanced petrochemical infrastructure and better regional integration. The push for private sector participation in infrastructure development is growing, with negotiations ongoing for increased US involvement under the Trump administration. Summing up, Redrado said that as global tensions persist in Europe and the Middle East, Latin America's relative stability and strategic distance from these conflicts, combined with existing free trade agreements with the US, position the region favorably for sustainable economic growth and development. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Front page picture source: Shutterstock

19-Nov-2024

BARCELONA (ICIS)–European chemical producers may have to keep paying high energy prices as geopolitical instability impacts sentiment more than the fundamentals of supply and demand. Europe spot electricity prices up 76% this year, ICIS TTF gas price up 40% Fear drives markets more than fundamentals which remain bearish Demand is reduced compared to five-year average, supply plentiful Above average temperatures forecast into December in Europe Gas storage around 90%, well above 5-year average New sources of US, Qatari liquefied natural gas (LNG) due onstream in 2025 Renewable energy will ramp up quickly in Europe Donald Trump may increase LNG supply by unfreezing projects In this Think Tank podcast, Will Beacham interviews ICIS gas and cross-commodity expert, Aura Sabadus, and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson's ICIS blogs.

19-Nov-2024

CARTAGENA, Colombia (ICIS)–Latin American chemicals producers should be prepared to face a prolonged downturn which could extend to 2030 as newer capacities globally keep coming online, according to the director general at the Latin American Petrochemical and Chemical Association (APLA). Manuel Diaz said global manufacturing is not recovering at the speed the chemicals industry would need for supply and demand to rebalance anytime soon, and Latin America – the quintessential ‘price taker’ region as its trade deficit makes it dependent on imports from other regions – must prepare for the most prolonged downturn in chemicals in living memory. Diaz spoke to ICIS ahead of the APLA annual meeting which kicked off on Monday. “This is pretty much what we are going to be talking about in the 2024 annual meeting: oversupply of products and raw materials, of ethylene. There are still many plants being announced, so it seems that at least until 2027, I would say 2030, the pressure on profitability is going to be very strong,” said Diaz. “Companies in Latin America should be prepared because, while new plants are still being started up, there is no sign of a world recovery strong enough to get there. A silver lining could be found in the fact that there is still considerable population growth: from now until 2050, we will have a growth in the world population like what would be, so to speak, adding a new India [the most populous country with 1.45 billion people].” Diaz, an Argentinian national, said he expects more plants will shut down in his home country as the national chemicals industry adapts to a more liberalized market under Javier Milei’s administration. In October, US chemicals major Dow said it would stop producing polyether polyols at its site in San Lorenzo, in Argentina’s province of Santa Fe, on the back of poor economics caused by global oversupply, while Argentina’s Petroquimica Rio Tercero shut its toluene diisocyanate (TDI) plant in Cordoba arguing the same reason. “I think we will see a reorganization in the sector, especially in Argentina. There will be some plants that are no longer sufficiently attractive from a profitable or product point of view – there will be a trend to concentrate on more profitable products,” said Diaz. “In the case of Dow, for instance, the plant they shut in Argentina was not the only plant of that type that it shuts down globally, that is why I think this is not a problem only in Argentina or Brazil – it is a global problem, a problem of competitiveness.” Diaz said we must think about China’s “differently” in order to understand the current downcycle, much of it related to that country’s overcapacities as its economy is not growing at the expected, pre-pandemic-like rates. “From our place in the world, we see everything as an economic curve and a capital curve, but the Chinese sees it from the point of view of a work curve. So, it is not a case that they are subsidizing the product itself for an easier sale,” said Diaz. “What they are doing, in my opinion, is subsidizing companies so job creation does not slow down – economic growth there is the priority.” He went on to reflect on how the globalization rates up to 2020 may have gone too far, adding the pandemic showed us how it was a mistake to focus on just a few countries – or just China, in many cases – as the main source for manufactured goods. – So, is the world coming back to a protectionist wave, like that of the 1930s? – “Now we see countries around the world thinking about how to protect their manufacturing sectors from China’s oversupplies, so maybe that globalizing cycle [up to 2020] has ended, the trend of setting up plants in the cheapest place and so on. I think the pandemic left us messages,” said Diaz. “Messages around the fact that we can't have a dependency on a single place from where all the electronic chips come from, for instance. So, I think it's not going to be just Brazil [where protectionist measures are enacted] but in many other Latin American countries – it is a contingency measure.” Finally, about the potential the new US administration under Donald Trump may impose import tariffs on Mexico, Diaz said “reality may end up surpassing” ideology, referring to the high dependance US manufacturers also have from Mexico’s manufacturers. The two countries’ economies became highly linked from the 1990s, when the first North American free trade deal, NAFTA, was signed. The situation did not change much after the first Donald Trump administration renegotiated NAFTA to give way to the current USMCA trade deal. “We have two new administrations in the US and Mexico. We will see what they end up doing, but what is clear is that there will be alternatives [to import tariffs being imposed]. Trump also knows that US companies buy a lot from Mexico, and in a protectionist spiral Mexico could also impose tariffs, so US companies would end up being affected as well,” said Diaz. “That is the reality that applies to everything, and that is why I say that reality normally surpasses your ideological vision: One thing is what I can say in the campaign, a different one may be what you implemented once you are in office.” Thumbnail shows money from Latin America. Image by ICIS. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Interview article by Jonathan Lopez

18-Nov-2024