Base oils

TORONTO (ICIS)–Canada’s investment tax credits and its price on carbon emissions have been key in attracting investments in low-carbon projects, led by Dow’s Path2Zero petrochemicals complex under construction in Alberta province. But will these incentives survive a likely change in government next year, with the Conservatives expected to oust Prime Minister Justin Trudeau's Liberals? Conservatives to scrap carbon tax Industrial carbon pricing critical for low-emission investments Carbon capture advantage might be lost The Chemistry Industry Association of Canada (CIAC) highlighted the election and uncertainties surrounding incentives and programs for low-carbon investments as a risk factor for the industry in its 2025 outlook webinar last week. As the country is moving into the election campaign season, “it is hard to say exactly where we are going politically,” said David Cherniak, CIAC policy manager, Business and Transportation. Companies were making investment decisions based on the incentive programs, and “we see the programs working, companies are getting ready to spend, and in the case of Dow, already spend real money to lower emissions and raise production here in Canada,” he said. In 2023 Dow made a final investment decision on Path2Zero and started construction in April 2024. Carbon pricing is seen as critical for the viability of such projects. CIAC supports industrial pricing and is advocating the importance of the government programs for winning chemistry investments, Cherniak said. The argument for low-carbon chemical production was clear, he said. Around the world the chemical industry’s customers were demanding low-carbon solutions and products, “irrespective of what Canada does,” he continued. As such, the real question is, “Do we want those chemistry products that meet that demand to come from somewhere else or do we want them to come from Canada?” Carbon pricing and programs offering incentives for low-carbon chemical production plants were “key building blocks” to get those facilities built in Canada, he said. If the low-carbon projects are not built in Canada they would be built elsewhere and Canada would end up ending importing their products, he said. “We think it’s way better to utilize Canada’s resources here, and see those investments won, and that is the message we are taking to all parties as we get ready for the election in 2025,” he said. However, “the political winds are blowing,” not just on the federal level but also with a likely election in Canada’s economically most powerful province, Ontario, he said. Canada has seen drastic policy reversals after changes in government before, with impacts on the chemical industry: In 2011 a Conservative government took Canada out of the Kyoto climate change accord, to which an earlier Liberal government had signed up, making Canada the world’s only country to exit Kyoto. On the provincial level, a new Conservative government in 2018 abolished a cap-and-trade carbon trading system a previous Liberal government had set up. AXE THE TAX On the federal level, the opposition Conservatives are far ahead of the Trudeau's Liberals in opinion polls on the election, which must be held by 20 October 2025 but will likely be called earlier. Under a relentless “Axe the Tax” campaign, the Conservatives have committed to abolishing the Liberals' consumer carbon tax, which took effect in 2019 and is currently at Canadian dollar (C$) 80/tonne (US$57/tonne), rising to C$170/tonne by 2030. However, the Conservatives have yet to state what they will do about industrial carbon pricing. Industrial carbon pricing is implemented by Canada’s provinces, with the federal government providing a “back-stop” with its “Output-Based Pricing System (OBPS)” that sets minimum requirements to ensure that heavy emitters pay for emissions. Industrial carbon pricing is making a bigger contribution to Canada’s emissions reductions than the consumer carbon tax, according to a study earlier this year. ANALYSTS Analysts at Capital Economics said in a recent report that with a likely change in government there is a high chance that Canada’s carbon tax will soon be scrapped. Positive impacts on inflation from the abolition of the tax would be temporary and any boost to the economy would be small, they said. However, “removing the carbon tax will remove an important investment incentive, both in reducing emissions in Canada’s high-emitting sectors and in emerging ‘green’ sectors,” the analysts said. If the future carbon price in Canada is expected to be zero, rather than rising to C$170/tonne by 2030, “that could weigh heavily on investment in Canada’s emergent ‘green’ industries that rely on a price on carbon to justify their development,” they said. They noted as a key example carbon capture, utilization and storage (CCUS), where Canada has an advantage over other nations, although CCUS is not without critics. Oil-rich Alberta province, which is home to a large proportion of Canada’s petrochemicals production, sees itself among the leaders in developing CCUS technology. Dow's project leverages on Alberta's carbon capture infrastructure. In June, Shell made a final investment decision (FID) to proceed with a carbon capture project at its refining and chemicals site in the province, where in 2015 it started up a first carbon capture facility. The Conservative Party of Canada and Dow did not respond to requests for additional comment. (US$1=C$1.40) Focus article by Stefan Baumgarten, with additional reporting by Jonathan Lopez Thumbnail photo of Dow's manufacturing site in Fort Saskatchewan; photo source: Dow

03-Dec-2024

MUSCAT (ICIS)–Dow has attributed problems with plastics pollution to a lack of plastics recycling and not production, the US producer’s chair and CEO said at the 18th Annual Gulf Petrochemicals and Chemicals Association (GPCA) on Tuesday. Plastics are “essential” to the modern world, according to Jim Fitterling, and demand will only rise in the years ahead – but most countries have no roadmap to recycle plastics, let alone reduce production. Tensions between oil-producing nations, led by Saudi Arabia, and other nations advocating for a cut in plastics production, have stalled global treaty talks at the Intergovernmental Negotiating Committee (INC-5) in South Korea. The session concluded on 1 December with no definitive agreement. “When policymakers take it upon themselves to decide one type of energy is right and another type of energy is wrong, rather than asking what is right for each unique situation, that's when progress stops.” Dow is embracing innovation in its energy transition goals, with Fitterling asserting that its energy transition is “here to stay”. Through the company’s plan to “decarbonize and grow”, Dow aims to boost underlying earnings by over $3 billion while reducing greenhouse gas emissions by 5 million tonnes by 2030. Dow is working to transform plastics waste and other alternative feedstocks to commercialize 3 million metric tons of circular and renewable solutions annually,  and generate an anticipated $500 million of incremental run rate EBITDA by 2030, said Fitterling. However, Fitterling added that there is a need to “combat” the notion that recycling does not work, that “success will come from elimination rather than innovation”, as he asserted that recycling simply “isn’t available” to over three billion people globally. “Because for a vast majority of the world, it's not that recycling hasn't worked. It's that recycling isn't available.” Globally, less than 10% of plastic is recycled and approximately one-third of plastic packaging escapes collection systems, said Fitterling. The 18th edition of the GPCA is being held for the first time in Muscat, Oman this year and will conclude on 5 December. Thumbnail photo: Waste plastic bottles (Source: Shutterstock)

03-Dec-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 29 November 2024. ICIS Economic Summary: US election uncertainty over, policy impact to begin Much of the uncertainty surrounding the US election has been lifted, but there remain questions about the extent that stated policy goals will be achieved and their impact on the economy next year and beyond. INSIGHT: Deloitte expects more chem M&A as industry remains in flux The chemical industry is entering the new year amid an especially large amount of flux, with China receding as a demand driver, Europe contending with plant shutdowns and producers rearranging businesses through mergers and acquisitions (M&A). Canadian manufacturers fear ‘devastating’ impact from Trump's proposed 25% tariff New US tariffs on US-Canada trade would have a devastating impact on manufacturers, workers and consumers on both sides of the border, trade group Canadian Manufacturers and Exporters (CME) said on Tuesday. INSIGHT: LatAm chemicals face threats of US tariffs, global oversupply Chatter on challenges permeated the Latin American Chemical and Petrochemical Association (APLA) Annual Meeting as delegates faced down threats of global oversupply and the potential for new tariffs from the US. INSIGHT: US refiners to face higher oil, catalyst costs with Trump's tariffs The tariffs proposed by President-Elect Donald Trump on imports from Mexico, Canada and China would raise costs for the heavier grades of oil needed by US refineries as well as rare-earth elements used to make catalysts for downstream refining units. Argentina’s petchems prices to take time to fall despite import tax withdrawalArgentina’s decision to eliminate the so-called PAIS import tax earlier than planned is unlikely to have any impact on petrochemicals prices for now, sources said this week. LatAm PE domestic prices fall in Argentina, Brazil and MexicoDomestic polyethylene (PE) prices were assessed as lower in Argentina, Brazil and Mexico on the back of competitive offers from abroad and weak demand. In other Latin American (LatAm) countries, prices were unchanged.

02-Dec-2024

TORONTO (ICIS)–Shipments in Canada’s chemistry sector are expected to grow between 1-4% in 2025 and in the plastic sector they are expected to grow 2-3%, David Cherniak, policy manager, Business and Transportation, at the Chemistry Industry Association of Canada (CIAC), said in a webinar. Trade disputes and tariffs Canadian elections bring political uncertainties Renewed labor disruptions CIAC’s projections assume a pick-up in the global economic growth in 2025, he said but also warned of downside risks, in particular from possible US tariffs and Canada’s elections next year. The Ottawa-based trade group speaks for both Canada’s chemical and plastic industries. In chemicals, the 2025 growth would come after projected growth of about 2% for 2024, which was weaker than CIAC initially expected as interest rates did not fall by as much as had been anticipated, Cherniak said. The higher rates affected demand for chemicals from interest-sensitive end markets, in particular housing and auto, “which take up a lot of chemicals”, he said. TAILWINDS IN 2025 For 2025, CIAC sees a number of tailwinds for the industry, Cherniak said: Interest rates coming down, driving up demand for chemicals and plastics from housing, autos and other interest-rate sensitive markets, probably more towards the second half of the year. Increased diversification as Canada ships chemicals from its West Coast ports to new markets. Shutdowns of older plants in the global chemical industry. Canada’s “structural advantage” in production costs, due to low natural gas and energy prices. A weak Canadian dollar, which is “definitely a tailwind” for Canada’s highly export-dependent chemicals sector. New investments, with CIAC tracking 26 projects that could move to final investment decisions. HEADWINDS However, the industry is also facing “high political uncertainties” as Canada is heading into an election year, Cherniak said. A change in government could affect programs and incentives for investments in low-emission chemical projects, he noted. Another major headwind for the chemical industry is trade tensions, Cherniak said and went on to note the threat earlier this week by US President-elect Donald Trump to put a 25% tariff on all imports from Canada and Mexico. The US is the largest market by far for Canada’s chemicals industry. CIAC, for its part, will be making the case that the US-Canada chemical industry is integrated and that both the Canadian and the US economies are relying on the industry to perform well, he said. If implemented, Trump’s tariffs would not just harm the chemical and plastics industries but would have broad impacts across the overall economy, he added. However, tariffs were not just a US issue, he said. Rather, trade tensions related to chemicals were increasing globally, he said. In the past year alone, countries such as China, India, South Korea or Brazil targeted chemical products in trade disputes, he said. Brazil plans an investigation into polyethylene (PE) arriving from Canada and the US. According to CIAC data, Canada exports about Canadian dollar (C$) 4 million/month (US$3 million/month) of PE resin products to Brazil. Domestically, labor disputes and disruptions at Canada’s freight railroads or ports could yet again pose challenges for chemical producers in 2025, following this year’s disruptions, he said. A labor union has already obtained a mandate for a strike at freight rail carrier Canadian National that could begin on 1 January, and it is planning a strike vote at Canadian Pacific Kansas City (CPKC), it said this week. Taken together, trade tension and transport disruptions have made it harder to move chemicals around the world. Combined with weakness in key end markets, the entire global market could become unstable, he said. “A lot of different clouds are circling on the horizon, a lot of different things" could slow down what CIAC otherwise expects to be "a decent year", he said. (source: CIAC) (US$1=C$1.40) Thumbnail image show logo of Ottawa-based Chemistry Industry Association of Canada/Association canadienne de l’industrie de la chimie

29-Nov-2024

LONDON (ICIS)–With the latest COP29 climate summit concluded, the lack of momentum in talks so far is the latest of an increasing number of warning signs about the state of the drive to mitigate climate change globally. Opening remarks from the host nation describing its oil reserves as a gift from God is an entirely understandable sentiment for Azerbaijan, but not one that sets the stage for ambitious carbon mitigation talks. The non-attendance of some key ministers such as France’s Ecological Transition Minister Agnes Pannier-Runacher further reduced the possibility of a significant breakthrough at the event. NEW PLEDGES, LIMITED SCOPE Despite worries that the summit would wrap up with no new agreements, negotiators did successfully push through several new accords, although the scope is fairly limited. 25 nations, mostly made up of the most developed nations, agreed not to develop any new ‘unabated’ -i.e. without mitigation measures such as carbon capture – coal plants. With signatories including the UK, Germany, Canada and France, the impact of the measure could prove limited, given that the UK officially exited coal this year, France has pledged to do so by 2027, and core coal power growth is centred in the developing world. The choice of wording to include that key “unabated” detail, also leaves the door open for fresh new capacities even in the signatory countries. While abatement measures would limit the impact of fresh coal capacities and the expense of carbon capture would straiten the economics of proposed new plants, the agreement fails to fully close the door on coal even among those 25 nations. The closing hours of the event also saw negotiators successfully draft a last-minute accord to channel funds to the developing world to help curb and abate the impact of climate change. Under the terms of the deal, richer nations are to invest $300 billion annually by 2035 to the effort, a substantial sum that falls far short of the $1.3 trillion the developing world has been pushing for. GLOBAL CONSENSUS FRAYS FURTHER The Azerbaijan summit had been presented by the scientific community as the last chance saloon for measures that could keep global temperature increases to 1.5 degrees Celsius. Meanwhile, the omission of any mention of fossil fuel transition in the leader’s statement at the G20 summit, which took place in the same week, was another ominous indicator of the fraying global consensus. The election of Donald Trump in the US, a climate change sceptic who during his previous term in office scrapped the US’s commitment to the Paris Agreement, is likely to limit developed world support for multilateral action, and embolden countries that value fossil fuels as a contributor to GDP. This scepticism and gridlock at the political level is filtering down through to businesses and consumers. This year’s EPCA was the first to see a key speaker voice scepticism over the viability of the EU’s 2030 CO2 reduction targets. Others, such as Covestro’s Markus Steilemann, have expressed reservations about the likelihood of Europe being ready to phase out internal combustion engine cars by the stated deadline. “The loading infrastructure isn't ready [in Europe], that's the biggest challenge,” he said. “That is something that only public services and the government can solve in building the infrastructure, making sure that the infrastructure has sufficient green electricity, and also the grids are capable of dealing with this additional load,” he added. “That's why I see a high risk that Europe will miss its targets, and that will also amplify the trend of consumers to be very sceptical in terms of buying electric vehicles,” he said. Electric vehicle sales have slowed in 2024 after years of growth, and plans by Trump to cut subsidies for new units and the increasing protectionism in the EU around China imports, signal further trouble ahead. Disquiet over the feasibility of upcoming emissions reduction targets has grown to the point where executives such as outgoing Brenntag chief Christian Kohlpaintner have started to publicly question whether they will remain in place. “I ‘m a little less optimistic [than some players] that we can actually accomplish our goal of reducing CO2 to the level we have committed ourselves,” Kohlpaintner said. “My anticipation is that politicians five to 10 years down the road will basically kill those targets.” A CHANGED LANDSCAPE From an industrial perspective, the massive erosion in EU competitiveness since 2022 and the focus on cost-cutting over growth investments and R&D has reduced executive appetite for large-scale new investments on less proven “We’re undergoing this huge transition at a time where demand is gone. You want industry to invest 6.6 times its historic average every year from now until 2050 when there’s no demand for more sustainable products,” Cefic director general Marco Mensink said, speaking at the end of October. Even in sectors such as sustainable aviation fuel where binding mandates are being rolled out, caution over the pace of demand growth has led Shell to postpone the launch of its new plant. In its second-quarter 2024 results, the company booked an $800 million write-down from the delay. DEMAND OPACITY Longstanding economic woes downstream of the chemicals sector have also made future demand much more difficult to gauge. For a long time, the chemicals sector has lagged steel and other heavy industry in matching its sustainable materials commitments to what firms in core end markets such as automotive have targeted. But, with the vehicle sector growing below expectations and widespread closures and layoffs across the industry, how have those demand expectations shifted and what would that mean for a chemicals producer that had committed to then? Weaker economic conditions have also served to limit options for governments, with debt levels trending higher across most of the developed world and limited fiscal headroom reducing the potential for large-scale new investment programmes. Progress continues to be made, with the European Commission reporting that carbon emissions fell 8% in 2023 after several years of increases. The growth of renewable energy as a component of the power sector was a key driver of the decline, but a 7.5% decline in energy-intensive industry CO2 output was driven by the longstanding manufacturing sector recession. The Commission’s own interpretation of the current trajectory of emission reductions points to the region missing its 2030 targets, although levels are projected to fall sharply over the next half-decade. EU emissions Source: European Commission Progress is still being made on all fronts, from heavy industry to the power sector to governments. And it was always likely to be the case that such an ambitious reworking of how economies function would be a messy transition, with lots of stops and starts as the landscape around the transition shifts. In difficult economic conditions, companies will always prioritise the necessary steps to staying solvent and profitable. But, with the world’s carbon sink barely functioning last year and plankton populations struggling to adapt to rising ocean temperatures, the warning signs of accelerating ecological collapse are growing. The global community is struggling to form a consensus on how to address it. Insight by Tom Brown Clarification: recasts annual sum pledged to developing countries for decarbonisation

29-Nov-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The US has gained an estimated $2.2 billion in linear low density polyethylene (LLDPE) sales turnover in China since the 1992-2021 Chemicals Supercycle came to an end. It has gained $859 million in high density PE (HDPE). And its exports in tonnes have also surged. This has occurred as Saudi Arabia, Iran and South Korea, etc have lost a lot of ground. The US gains are the result of a big drop in import tariffs in February 2020, thanks to a trade deal, and of course the strong US ethane-based cost position. In a deflationary or disinflationary Chinese economy, cost is the king. But Donald Trump’s election victory has pushed us into a world of uncertainty. Almost anything might now happen. This brings to my mind the fabulous science fiction series of books and TV and radio shows, "The Hitchhiker’s Guide to the Galaxy", and its Infinite Improbability Drive. This is defined as such: The infinite improbability drive is a wonderful new method of crossing interstellar distances in a mere second, without all that tedious mucking about in hyperspace. As soon as the ship's drive reaches infinite improbability, it passes through every conceivable point in every conceivable universe simultaneously. In one of any number of scenarios, let’s assume that China responds to increased US tariffs with increased tariffs on imports of US PE, as it did in 2017. Then the US loss could be to the gain of South Korea, Iran, etc. But, as we saw in 2017, the US might not lose out as whole. Its export flows to southeast Asia, Europe and Latin America might increase as other countries fill the gap created in China. Here’s some advice: Put the ICIS data into something akin to an Infinite Improbability Drive and you might get the answers you need. 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.

29-Nov-2024

SINGAPORE (ICIS)–South Korea’s central bank on Thursday made a surprise cut to its key interest rate, following a similar move in the previous month, amid concerns over economic implications of the US’ impending tariffs on all foreign goods. The Bank of Korea (BoK) reduced its benchmark interest rate by 25 basis points to 3.00% as the country grapples with global economic uncertainties and a strengthening of the US dollar, it said on Thursday. “In the future, the global economy and international financial markets are expected to be affected by the new US administration's economic policy implementation, changes in major countries' monetary policies, and geopolitical risks,” the BoK said in a statement. As of 02:30 GMT, the South Korean won (W) was trading at W1,394 against the US dollar. South Korea is heavily reliant on trade, with China and the US as its biggest trade partners. Korea’s domestic economy has also weakened amid slowing export growth, although demand is recovering gradually, it added. The country's Q3 GDP growth stood at 1.5%, continuing its deceleration from a 2.3% pace set in Q2. Accordingly, the BoK has revised down its growth forecast for 2024 to 2.2% from 2.4%, and for 2025, to 1.9% from 2.1%. The country’s inflation rate of 1.3% in October was well below the 2.0% target and is expected to remain stable amid a decline in international oil prices and low demand pressure, but a volatile exchange rate might push inflation up if the US dollar continues to strengthen. A stronger US dollar also raises import costs, which would cause domestic prices to increase. The BoK will conduct its next meeting on 16 January 2025. ($1 = W1,394) Thumbnail image: South Korea's capital city, logged a record November snowfall, with more than 16 cm of snow blanketing Seoul – 27 November 2024.(Xinhua/Shutterstock)

28-Nov-2024

HOUSTON (ICIS)–The tariffs proposed by President-Elect Donald Trump on imports from Mexico, Canada and China would raise costs for the heavier grades of oil needed by US refineries as well as rare-earth elements used to make catalysts for downstream refining units. Trump said he intends to issue an executive order that would impose tariffs of 25% on imports from Mexico and Canada on January 20, his first day of office. He also announced intentions to impose a tariff of 10% on imports from China. This would be on top of the existing duties that the US already imposes on Chinese imports. Trump could decide to modify or even withdraw the proposals – especially if the US can reach a deal that addresses illegal immigration and drugs, the impetus behind the proposed tariffs. However, the tariffs as they are proposed by Trump would raise costs for key inputs used by US refiners. Outside of fuels, it could rise costs for fluoromaterials, since Mexico is the source of most of the imported feedstock. US REFINERIES DESIGNED FOR IMPORTS OF HEAVIER CRUDESUS refineries are generally designed to process grades of crude that are heavier than the oil it produces domestically from shale, said Michael Connolly, principal refining analyst for ICIS. As a result, the US exports its surplus of light oil and imports the heavier grades needed by its refineries. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units, Connolly said. In 2023, the majority of those imports came from Canada and Mexico, as shown in the following table showing the top five sources of foreign crude. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 100 Source: Energy Information Administration (EIA) "If this tariff was to apply to crude, it would be damaging to the US refining industry and thus the US economy," Connolly said. The damage would stem from the nation's position as the world's largest exporter of refined products. In 2023, the US was the world's largest exporter of gasoline, with shipments of 900,000 bbl/day, according to the EIA. More than 500,000 bbl/day of those exports went to Mexico. The US is also a major exporter of distillate fuel oil, with shipments reaching 1.12 million bbl/day in 2023, according to the EIA. For petrochemicals, FCC units are important sources of propylene, so tariffs could have an effect on margins for propylene derivatives. FCC operations could receive another blow from the additional tariffs that the US could impose on imports of rare-earth materials from China. RARE EARTHS AND FCC CATALYSTSFCC catalysts are made with lanthanum and cerium. For most categories, China was the main source of these rare earths in 2023, as shown in the following table. Figures are in kilograms. HTS Code Product Imports from China Total imports  % 2846.10.0050 Cerium compounds other than cerium oxides 1,121,069 1,958,581 57.2 2846.90.2005 Rare-earth oxides except cerium oxides containing lanthanum as the predominant metal 52,045 479,885 10.8 2805.30.0005 Lanthanum, not intermixed or interalloyed 144,182 144,242 100.0 2846.90.8070 Mixtures of rare-earth carbonates containing lanthanum as the predominant metal 102,423 119,626 85.6 2805.30.0010 Cerium, not intermixed or interalloyed 3,262 3,466 94.1 Source: US International Trade Commission (ITC) Lanthanum and cerium are byproducts of the production of neodymium and dysprosium, two rare earth materials that are used to make magnets. TARIFFS ON MEXICAN HYDROFLUORIC ACIDIf the tariffs go through, they could raise costs for US producers of fluoromaterials. Hydrofluoric acid is the feedstock for almost all fluorochemicals and fluoropolymers, and Mexico accounted for all of the 87 million kg of acid that the US imported in 2023, according to the ITC. Fluorochemicals are used to make refrigerants as well as blowing agents used to make polyurethane foams. Another fluorochemical, lithium hexafluorophosphate (LiPF6), is used as an electrolyte in lithium-ion batteries. For fluoropolymers, demand is growing because of their use in semiconductor fabrication plants (fabs), 5G telecommunication equipment and membranes used in fuel cells and green-hydrogen electrolysers. Hydrofluoric acid is also used as a catalyst in many alkylation units at refineries. Insight article by Al Greenwood Thumbnail shows a pump used to dispense fuel produced from refineries. Image by Shutterstock.

27-Nov-2024

TORONTO (ICIS)–New US tariffs on US-Canada trade would have a devastating impact on manufacturers, workers and consumers on both sides of the border, trade group Canadian Manufacturers and Exporters (CME) said on Tuesday. “This is truly a lose-lose proposition,” the group said in reacting to news on Monday that President-elect Donald Trump plans to impose a 25% tariff on all imports from Canada and Mexico. “On January 20th, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the United States, and its ridiculous open borders,” Trump said on social media. The tariffs would remain in place until Canada and Mexico took action on drugs and immigrants entering the US, Trump said. Notably, he did not mention an exemption for US-Canadian energy trade. Trump previously proposed to raise tariffs by 10-20% on all imports, and by 60% on imports from China. CME said that Canada’s exports to the US were primarily materials and inputs used by US businesses to manufacture other products. As such, imposing tariffs would not just harm Canada’s economy – it would also hurt US manufacturers by increasing their costs and disrupting the deeply integrated supply chains that made North American manufacturing globally competitive, the group said. The economic relationship between Canada and the US is “enormous”, with Canadian dollar (C$) 2.5 billion (US$1.8 billion) in goods crossing the border every day in 2023, it said. Of that trade, 75% consists of manufactured goods, the group said. Trump claims that he wants US manufacturing to grow and thrive, but “these tariffs would have the opposite effect,” CME said. The group added that it was working closely with the federal government in Canada and partners at the US National Association of Manufacturers (NAM) to ensure the new Trump administration and other decision-makers “fully understand the consequences of this proposal”. “We believe Canada and the US must work together on policies that support the growth of manufacturing while strengthening our shared economic and national security and not pursuing policies that will undoubtedly harm US manufacturers, in addition to Canadian businesses and workers,” it added. CME represents all of Canada’s manufacturers. Among many others, its members include NOVA Chemicals and other chemical producers. The Chemistry Industry Association of Canada (CIAC), which speaks for Canada’s chemicals and plastics industries, said that companies on both sides of the border were still digesting the news of Trump's tariffs, as was CIAC. The group expects to be able to provide comment soon. According to previous CIAC data, about 80% of Canada’s chemicals production goes into export, with about 80% of those exports going to the US. CANADIAN POLITICIANS REACT Canadian government officials said that Prime Minister Justin Trudeau spoke with Trump shortly after Trump announced the tariffs. The details of the conversation were not disclosed. Trudeau also spoke with the premiers (governors) of Canada’s Ontario and Quebec provinces, who warned of the risks the US tariffs pose to their respective economies. The premier of Ontario urged Trudeau to call a meeting with all premiers. The premier of oil-rich Alberta province, Danielle Smith, said on social media that the incoming Trump administration had “valid concerns related to illegal activities at our shared border”. Canada’s federal government needed to work with the US “to resolve these issues immediately, thereby avoiding any unnecessary tariffs on Canadian exports to the US”, she said. “As the largest exporter of oil and gas to the US, we look forward to working with the new administration to strengthen energy security for both the US and Canada,” she added. Last week, Canada’s finance minister and deputy prime minister Chrystia Freeland said that unlike Mexico, Canada was “more aligned today than ever” with the US with regard to concerns about China’s trade practices. Canada had followed the US tariffs on electric vehicles (EVs), steel and aluminum from China, meaning it was not a back door for Chinese goods into the US, she said. Meanwhile, some Canadian politicians have called for a US-Canada trade deal that would exclude Mexico. The current US-Mexico-Canada (USMCA) trade deal will be renegotiated in 2026. Last week, experts at Oxford Economics said that new US tariffs, and Canada’s retaliatory tariffs, would raise inflation. Oxford, in its models, assumes that US-Canada energy trade will be exempted from the tariffs. (U$1 = C$1.41) Thumbnail of photo Trudeau (left) meeting Trump in Washington in 2019 during Trump’s first presidency; photo source: Government of Canada

26-Nov-2024

BARCELONA (ICIS)–Two liquids-to-chemicals project announcements by Saudi Aramco highlight a new source of rapid capacity growth which will add to global overcapacity. Middle East oil and gas companies want to push crude-oil-to-chemicals (COTC) as demand for transport fuels declines Saudi Aramco aims to convert around 4 million barrels/day of crude oil into chemicals by 2030 versus about 1 million barrels/day currently Demand growth will not be sufficient to meet rising supply More closures will be needed to balance the market In this Think Tank podcast, Will Beacham interviews ICIS market development executive John Richardson 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.

26-Nov-2024