Ethylene oxide (EO)

SINGAPORE (ICIS)–ICIS senior analyst Joanne Wang discusses the recent rebound in China’s ethylene vinyl acetate (EVA) prices and gives a brief outlook for 2025. Some EVA plants switch to low density polyethylene (LDPE) production in Q4 on profit considerations EVA producers’ Q4 inventory low after destocking in the first three quarters Photovoltaic industry resumes replenishment in Q4, boosting demand ICN

24-Dec-2024

HOUSTON (ICIS)–Chemical plants and refineries along the Gulf Coast of the US will likely face another winter that will be warmer than usual but punctuated with brief periods of freezing temperatures, which could disrupt operations. Meteorologists expect winter temperatures in the US will be colder than the previous year but still warmer than average. A meteorologist in Texas warned that the state could face another brief spell of freezing temperatures similar to past winters, such as the devastating Winter Storm Uri in 2021. Chemical plants in the Gulf Coast still have trouble operating in freezing temperatures despite improvements made since Uri. COLD SPELLS CONTINUE TO DISRUPT GULF COAST CHEM PLANTSBrief spells of freezing temperatures are becoming an annual feature of winters in the Gulf Coast, even as the overall season becomes warmer, according to a presentation made earlier this year by Chris Coleman, the supervisor of operational forecasting at Electric Reliability Council of Texas (ERCOT), which manages the flow of electricity in most of the state. This upcoming winter could continue the trend. Coleman warned that the state has a greater than average chance of suffering from freezing temperatures – even though the season as a whole will be warmer than usual. Meteorology firm AccuWeather also warned that the US will be vulnerable to a blast of cold temperatures despite the forecast for a warm winter. Such blasts are caused by polar vortexes, and February is the most probable month when one will move across the eastern US. AccuWeather did not say whether such a polar vortex could hit Texas. CHANCES OF CHEM OUTAGESFor chemical plants, freezing temperatures can cause outages by disrupting operations or by blackouts caused by excessive electricity demand. Such a demand spike caused the widespread plant outages during winter storm Uri in 2021. Since then, Texas has avoided state-wide outages despite continued cold spells and growing demand for electricity. The state's power grid is more reliable, and it has conducted more weatherization inspections, ERCOT said. If the power grid in Texas holds up this winter, then chemical disruptions would be caused by freezing temperatures shutting down operations at specific plants. Even after Uri, steps taken by some companies still did not prevent cold temperatures from disrupting their operations. During the freeze of December 2022, TotalEnergies shut down its polypropylene (PP) units at La Porte, Texas, even though the company said it took all precautions possible through freeze protection and heat tracing. US WINTER COOLER THAN 2023-2024Meteorologists at the National Oceanic and Atmospheric Administration (NOAA) expect winter temperatures will be warmer than average for the southern and eastern US. That said, they will still be cooler than the previous year, according to the Energy Information Administration (EIA). Those cooler temperatures have led the EIA to expect average prices for natural gas to reach $3.00/million Btu in 2025, up from $2.20/million Btu in 2024. Natural gas is important to the chemical industry because they use it as fuel and because it influences prices for ethane, the predominant feedstock that US crackers use to make ethylene. MORE LNG TERMINALS WILL START UPA growing source of gas demand is made up of terminals that export liquefied natural gas (LNG). The following table lists the terminals that should start up in 2025 and later. Capacity figures are listed in millions of tonnes/year. Project Developer Capacity Estimates Start Up Corpus Christi Stage 3 Cheniere 10 2025 Plaquemines LNG Venture Global 20 2025 Golden Pass LNG ExxonMobil/QatarEnergy 15.6 2027 Port Arthur LNG Sempra 13 2027 Rio Grande LNG Phase 1 NextDecade 17.6 2027 Insight article by Al Greenwood Thumbnail shows ice. Image by David J Phillip/AP/Shutterstock

19-Dec-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Lots of focus has been on the Trump effect on the US trading relationship with China. But we need to think more broadly than this. I see a significant risk that next year we will see trade tensions also increasing between other countries and China for the reasons described in today's post. See today’s, main slide, showing China’s percentage shares of global capacities for some polymers in 2009 (the beginning of China's giant economic stimulus programme) versus 2021 (the Evergrande Turning Point) and 2025. Producers elsewhere, seeing charts such as this one, could be anxious to protect market share and avoid commoditisation for polymers such as acrylonitrile butadiene styrene (ABS) and ethylene vinyl acetate (EVA) which can be higher value in some end-use applications. In polypropylene (PP), China’s share of global capacities was just 15% in 2009 and 26% in 2021. ICIS forecasts this will next year jump to 45%. We have already seen an uptick in protectionist measures against Chinese PP. More broadly, China's investment in export-based manufacturing capacity has accelerated since late 2021 to compensate for the end of the property bubble. China has dominated exports of finished goods for 20-odd years. But ICIS data, such as today's first chart, and other data show that this has gone to a different level since the end of 2021. International trade used to be a win/win game, but the data suggest that China has recently gained stronger positions in low, medium and high-value manufacturing. What form will any increase in protectionism take in 2025? To what extent could it be short-term our "knee jerk" versus further strategic initiatives to reshore manufacturing? To what degree is it too late for strategies in some countries and regions? I've been recently polling people on the German auto industry. It is too late to turn around the decline in the industry, was the majority view. If true, this would obviously have huge implications for Germany’s chemicals companies. If "protectionism" and "China" are the words of the year in 2025, expect chemicals trade flows and pricing patterns to be significantly reshaped by announcements of investigations into new duties and the imposition of duties. Keeping on top of news on trade protectionism, especially if you can get the news before your competitors, will be a significant competitive advantage. And every action can promote a reaction. We must consider how China might respond to more duties. Its responses will of course also affect chemicals trade flows, pricing patterns and demand in different regions. Good luck out there. Next year is going to be very, very challenging for reasons beyond just protectionism. 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.

19-Dec-2024

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 December. Dow’s $2.4-3.0 billion infrastructure deal larger than expected Dow signed a deal to sell a minority stake in its US Gulf Coast infrastructure assets to a fund managed by Macquarie Asset Management for up to $3.0 billion – larger than expected, according to UBS. PCC's proposed USG chlor-alkali unit to add caustic length in unique development US caustic soda supplies will continue to grow in the coming years following an announcement by PCC Group that it intends to invest in a new 340,000 tons/year chlor-alkali plant at DeLisle, Mississippi. The new capacity will be built on Chemours site at DeLisle Mississippi with the intent to provide Chemours with reliable access to chlorine. The company intends to sell its caustic soda to strategic partners and into the open market. Construction on the unit is expected to begin in early-2026 and conclude in 2028. INSIGHT: New gas pipeline to provide support for ethane prices for US chems A new gas pipeline set to be built by Energy Transfer should provide support for natural gas and ethane prices in the Permian producing basin, lowering the likelihood that US chemical producers see another period of ultra-low costs for the main feedstock used to make ethylene. Olin to shut diaphragm chloralkali capacity that serves Dow's Freeport PO unit Olin plans to shut down its diaphragm-grade chloralkali capacity in Freeport, Texas, that provides feedstock to Dow's propylene oxide (PO) unit, the US-based chloralkali producer said on Thursday. ACC expects modest US chemicals volume recovery in 2025 – economist The American Chemistry Council (ACC) expects a 1.9% rebound in chemical volumes in 2025 after two consecutive years of declines as the US economy undergoes a soft landing and the housing market improves in the second half of the year, its chief economist said.

16-Dec-2024

SINGAPORE (ICIS)–South Korea’s benchmark stock market index was closed lower on Monday, snapping four straight days of gains, after the country’s parliament impeached President Yoon Suk Yeol over the weekend for imposing a short-lived martial law on 3 December. The KOSPI composite index slipped 0.22% to settle at 2,488.97, with shares of major petrochemical companies closing mixed. The Korean won (W) eased against the US dollar at W1,437.68 as of 08:00 GMT, weaker than the previous session’s closing of W1,435.45. The won had plunged to an almost two-year low of above W1,440 to the US dollar when Yoon declared martial law late on 3 December which lasted about six hours. South Korea’s National Assembly on 14 December voted 204-85 to impeach Yoon for imposing martial law, which plunged the country into political instability and economic uncertainty. A two-thirds majority was required to approve the motion, which was the second one filed after the first motion on 7 December failed. Yoon’s political duties have been suspended pending a Constitutional Court decision, which is expected in 180 days, on whether to re-instate or remove him from office. Prime Minister Han Duck-soo became the acting President upon Yoon’s impeachment, stating that his mission is to “swiftly stabilize the confusion in state affairs” during a Cabinet meeting. Han talked to outgoing US President Joe Biden by phone on 15 December, reassuring him that "South Korea will carry out its foreign and security policies without disruption", according to a statement from Han's office. EYES ON 2025 Separately, finance minister Choi Sang-mok on Monday said he has written a letter to financial institutions and world leaders to explain the government’s response to the recent political situation and to request their trust and support in the South Korean economy. During an emergency ministerial meeting on 15 December, strategies were heard for economic stabilization and growth in the short- and long-term. For one, the finance ministry will announce its economic policy direction for 2025 by the end of the year, along with a mid- to long-term strategy to be released in January 2025. Meanwhile, the Ministry of Trade, Industry and Energy (MOTIE) is also drafting support measures for the petrochemical industry in preparation for the Trump-led US government in January 2025, which is threatening to impose tariffs on all imported goods. The US, along with China, is a major trading partner of South Korea. South Korea’s measures are expected to take effect in Q1 2025. The country – which is a major exporter of ethylene and aromatics, such as benzene, toluene and styrene monomer (SM) – is reeling from a combination of weak external demand and overcapacity in China. (updates closing levels for index, share prices; adds details throughout) Thumbnail image: South Korean Prime Minister Han Duck-soo, who assumed office as acting president after the parliamentary impeachment of President Yoon Suk-yeol, speaks to reporters at the government complex in central Seoul, South Korea, 15 December 2024. (YONHAP/EPA-EFE/Shutterstock)

16-Dec-2024

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 December. S Korea bourse extends fall as political woes deepen; petrochemical shares slump By Pearl Bantillo 09-Dec-24 15:36 SINGAPORE (ICIS)–South Korea’s benchmark stock market index continued to bleed on Monday amid political instability wrought by the shock martial law announcement on 3 December, with impeachment motions against President Yoon Suk Yeol dropped over the weekend due to lack of quorum. INSIGHT: India poised to take up growing role in Asia ethylene ecosystem By Josh Quah 09-Dec-24 18:22 SINGAPORE (ICIS)–As far as the numbers on paper go, India may not look like a conspicuous power in the ethylene markets. The south Asian country imported around 76,400 tonnes of ethylene in 2022, a figure that dropped to around 51,800 tonnes in 2023. China Nov export growth slows to 6.7% on year; imports fall 3.9% By Jonathan Yee 10-Dec-24 15:37 SINGAPORE (ICIS)–China's exports in November grew at a slower year-on-year rate of 6.7% to $312.3 billion amid trading headwinds from a potential wave of tariffs to be levied by the incoming US administration. INSIGHT: Key takeaways for 2025 petrochemical market outlook at ICIS China customer day By Jenny Yi 10-Dec-24 19:15 SINGAPORE (ICIS)–A slow projected global recovery, the growing prominence of Africa and southern America for producers, and a bearish outlook for Asia olefins and aromatics prices in 2025 were among the topics discussed at the ICIS China Customer Day event in Shanghai on 21 November. Asian SBR import offers see support from firming upstream markets By Ai Teng Lim 11-Dec-24 13:18 SINGAPORE (ICIS)–Asian styrene-butadiene-rubber (SBR) producers are seeking to sell higher, citing upstream cost push. China to adopt looser monetary policy in 2025 as US tariffs loom By Jonathan Yee 11-Dec-24 15:36 SINGAPORE (ICIS)–China is expected to implement a “more proactive fiscal policy” and a “moderately loose” monetary policy for next year, according to the country’s top officials, amid economic headwinds and looming heavy tariffs from the US. UAE to impose 15% minimum top-up tax on large multinationals from Jan ‘25 By Jonathan Yee 12-Dec-24 12:28 SINGAPORE (ICIS)–The UAE will impose a minimum top-up tax (DMTT) on large multinational companies, to align its tax system to global standards. Strong PKO cost supports Asia fatty alcohol mid-cuts C12-14 By Helen Yan 12-Dec-24 13:50 SINGAPORE (ICIS)–Elevated feedstock palm kernel oil (PKO) prices and demand heading into 2025 are supporting Asia’s fatty alcohol mid-cuts C12-14 market. INSIGHT: Shift in rules on China phosphate ferts exports hit market sentiment By Rita Wang 12-Dec-24 19:50 SINGAPORE (ICIS)–A shift in the customs rules in China means that phosphate fertilizers will only be sold on the domestic market for the time being. However, sluggish demand as players work through winter reserves could stand to weigh on pricing. China domestic BD gains boost Asian market discussions By Ai Teng Lim 13-Dec-24 11:54 SINGAPORE (ICIS)–Sentiment is more upbeat this week in Asia’s spot butadiene (BD) import market amid recent strong gains in China’s domestic market.

16-Dec-2024

HOUSTON (ICIS)–Olin plans to shut down its diaphragm-grade chloralkali capacity in Freeport, Texas, that provides feedstock to Dow's propylene oxide (PO) unit, the US-based chloralkali producer said on Thursday. Dow plans to shut down that PO unit at the end of 2025, and those plans prompted Olin to close the diaphragm-grade chloralkali capacity that serves the Dow facility. Olin's is restricting the shutdown to capacity that relies on asbestos-based technology. US regulators seek to end the use of asbestos in the chloralkali industry. The amount of diaphragm-grade chloralkali capacity that Olin plans to shut down at Freeport amounts to 450,000 electrochemical units (ECUs), according to the company. Olin already has shut down its diaphragm-grade chloralkali capacity in McIntosh, Alabama. It plans to transition its chloralkali capacity in Plaquemine, Louisiana, to non-asbestos-based technology, the company said. Chloralkali units produce caustic soda and chlorine. Thumbnail shows salt, which is used to make caustic soda and chlorine. Image by Alessandra Sarti/imageBROKER/Shutterstock (

12-Dec-2024

HOUSTON (ICIS)–A new gas pipeline set to be built by Energy Transfer should provide support for natural gas and ethane prices in the Permian producing basin, lowering the likelihood that US chemical producers see another period of ultra-low costs for the main feedstock used to make ethylene. Energy Transfer's new Hugh Brinson pipeline, previously known as Warrior, will ship natural gas from the Waha Hub in West Texas, to Maypearl, Texas, which is south of Dallas. The first phase of the project will ship 1.5 billion cubic feet/day of natural gas. Operations should start by the end of 2026. Depending on demand, Energy Transfer could concurrently start construction on a second phase that will increase the pipeline's capacity to 2.2 billion cubic feet/day. Energy Transfer's pipeline is the second major one announced in the past six months. Earlier, a new joint venture announced Blackcomb, a pipeline that can ship up 2.5 billion cubic feet/day of natural gas from the Permian basin to the Agua Dulce area in south Texas. Blackcomb will be developed by joint venture made up of Targa and WPC, itself a joint venture made up of WhiteWater, MPLX and Enbridge. NEW PIPELINES TO SUPPORT ETHANE BY REDUCING LIKELIHOOD OF NEGATIVE WAHA PRICESThe two new pipelines should provide West Texas with sufficient capacity to take away natural gas from the Waha Hub and prevent regional prices from falling below zero. The Waha Hub is the main pricing point for the natural gas produced by the oil wells in the Permian basin. Prices at the hub spent much of 2024 below zero because existing pipeline capacity was insufficient to take away excess supplies, which were growing because of rising oil production and gas-to-oil ratios across the basin. When gas prices at Waha fall below zero, it creates a powerful incentive for processing plants to recover as much ethane as possible from the gas stream. Any ethane that remains in the gas stream is sold for its fuel value. When gas prices are negative, producers are unable to capture any value for the ethane left behind. By maximizing ethane recovery, processing plants also free up existing pipeline space, allowing more natural gas to be taken out of West Texas. The surge in ethane recovery increased the amount of the feedstock available to the market. At one point in 2024, ethane prices fell below 12 cents/gal, a low not seen since the COVID pandemic. Since that low, the start up of the Matterhorn Express pipeline has increased takeaway capacity in the Permian, which caused Waha gas prices to rise above zero. Colder temperatures also supported prices for natural gas by increasing demand. Ethane prices are now trading above 20 cents/gal. LNG, ETHANE TERMINALS ALSO INFLUENCE COST FOR CHEM FEEDSPricing at the Waha Hub is one of the many factors that can influence the cost of ethane for chemical producers. Maintenance on one or more of the pipelines that takes away gas from the Permian basin can also depress Waha prices and, potentially, those for ethane. The proliferation of liquefied natural gas (LNG) terminals on the Gulf Coast is playing an increasing role in natural gas and ethane prices. These terminals are vulnerable to disruptions caused by hurricanes and tropical storms that pass through the Gulf of Mexico. These storms can disrupt LNG operations and temporarily shut down a large source of gas demand in the US. If the outage lasts long enough, it can cause a meaningful increase in US supplies of natural gas. That can lower prices for gas as well as the recovery cost for ethane. Midstream companies are increasing their capacity to export ethane overseas, which should support prices for the feedstock. Enterprise is adding 120,000 bbl/day of capacity via the first phase of the Neches River Terminal project, scheduled to come online in mid-2025. A second phase, due online in the first half of 2026, will add up to another 180,000 bbl/day of ethane export capacity. Enterprise and Navigator are adding ethane export capabilities as part of the expansion projects at their existing ethylene terminal in Morgan's Point. Energy Transfer is also adding 250,000 barrels/day of flexible export capacity, which is scheduled to start up during the second half of next year. Similarly, new crackers will increase demand for ethane. The only confirmed new US cracker is a joint-venture cracker that Chevron Phillips Chemical and QatarEnergy should start up in late 2026 in Texas. Shintech could build a cracker in Louisiana, but the company has yet to announce a final investment decision (FID). Insight article by Al Greenwood Thumbnail shows natural gas. Image by Hollandse Hoogte/Shutterstock

11-Dec-2024

SINGAPORE (ICIS)–South Korea’s benchmark stock market index continued to bleed on Monday amid political instability wrought by the shock martial law announcement on 3 December, with impeachment motions against President Yoon Suk Yeol dropped over the weekend due to lack of quorum. KOSPI composite index falls for fourth session Petrochemical shares tumble along; Nov exports fall 5.6% year on year Yoon may be stripped of presidential powers At the close of trade on Monday, the KOSPI composite index shed 67.58 points or 2.78% at 2,360.58, with shares of major petrochemical companies slumping. The Korean won also weakened sharply against the US dollar. The pair was trading W1,437.27 as of 07:04 GMT. When martial law was declared late on 3 December, the won tumbled to a near two-year low above W1,440 levels versus the greenback. PETROCHEMICAL EXPORTS FALLINGSouth Korea is a major exporter of ethylene, as well as aromatics, such as benzene, toluene and styrene monomer (SM). The overall industry is reeling from a combination of weak external demand and overcapacity in China. South Korean industries, including chemicals, rely heavily on exports to China, whose self-sufficiency has grown over the years. In November, South Korea’s petrochemical exports declined by 5.6% year on year to $3.6 billion. In the first 11 months of 2024, however, its petrochemical export volume increased by 7.5% year on year, the Ministry of Trade, Industry and Energy (MOTIE) said on 5 December. Market players said that port operations in Daesan have been unsteady because of strong winds, causing delays in cargo deliveries. “Petrochemical exports are facing difficulties due to unforeseen factors such as falling product prices linked to oil prices and bad weather,” the first vice minister of MOTIE Park Sung-taek said after a recent visit to the refinery of Hyundai OIlbank and the production/export site of Hyundai Chemical. For Hyundai Oilbank, the arrival of five carriers and three crude oil import vessels were delayed because of inclement weather in late November, while delays also hit shipment of five product carriers of Hyundai Chemical, MOTIE noted. “In order to prevent disruptions in exports, we will diversify the types of oil reserves from the existing heavy crude oil to light crude oil in consideration of the types of oil used by each refinery, and greatly simplify the oil reserve lending process so that companies can quickly provide oil reserves when necessary," Park said. EMERGENCY MEETINGS OF FINANCIAL REGULATORS CONTINUEThe economic managers of Asia’s fourth-largest economy – led by Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok – have been holding daily emergency meetings before markets open to ensure financial markets stability, keeping their promise to provide “unlimited liquidity”. “The participants agreed that, as domestic and international uncertainties still persist, relevant organizations should maintain a closer emergency cooperation and response system and mobilize all capabilities to respond in order to minimize the economic impact of the political situation. In a statement on Monday, the Ministry of Economy and Finance said that “as domestic and international uncertainties still persist, relevant organizations should maintain a closer emergency cooperation and response system and mobilize all capabilities to respond in order to minimize the economic impact of the political situation”. South Korea intends to activate a market stabilization fund worth won (W) 40 trillion ($28 billion) following the country’s brief dalliance with martial law, with its slowing economy facing the prospect of increased US tariffs in 2025. For the stock market, the MOEF said that W30 billion of the value-up fund “has already been invested”, with W70 billion to be injected this week, with another W30 billion scheduled to be implemented sequentially. YOON SURVIVES IMPEACHMENT BUT MAY BE STRIPPED OF POWERSBecause of lack of quorum, South Korean President Yoon managed to survive impeachment on 7 December, which was set into motion following his declaration of a six-hour long martial law that disrupted markets. “The impeachment vote failed to gain the 200-vote hurdle needed to suspend the president from duties,” Singapore-based UOB Global Economics & Markets Research said in a note on Monday. “The opposition bloc needed only eight votes from the ruling PPP [People Power Party] to impeach Yoon as votes by three PPP members had prompted protesters outside the National Assembly to chant “five more to go,” it said. On 8 December, PPP leader Han Dong-hoon said that Prime Minister Han Duck-soo will manage the nation’s affairs as an exit plan for Yoon is being prepared, the constitutionality of which is being questioned by the opposition Democratic Party of Korea (DPK). Focus article by Pearl Bantillo Additional reporting by Jonathan Yee Thumbnail image: Lawmakers in the voting chamber during the plenary session for the impeachment vote of President Yoon Suk Yeol at the National Assembly in Seoul, South Korea on 7 December 2024.(JEON HEON-KYUN/POOL/EPA-EFE/Shutterstock)

09-Dec-2024

SINGAPORE (ICIS)–Days before the shock declaration of martial law in South Korea by President Yoon Suk-yeol, political wranglings stalled the 2025 budget deliberations of Asia’s fourth-biggest economy. Opposition DPK wants heavy cut in 2025 national budget Impeachment looms for President Yoon No impact on petrochemical operations/trades “Tensions between the ruling PPP [People Power Party] and main opposition Democratic Party of Korea (DPK) have escalated as both sides have been unable to come to a consensus on the budget,” according to BMI Country Risk & Industry Research, a unit of Fitch Solutions Group in a note on Wednesday. DPK has proposed heavy cuts – to the tune of won (W) 4.1 trillion ($2.9 billion) – to the Yoon administration’s proposed budget of W677.4 trillion for next year, which represents a 3.2% increase from 2023. “As things stand, Yoon’s proposed 2025 budget … faces the risk of being watered down to KRW673.3trn amid strong opposition from the DPK which holds a parliamentary majority,” BMI stated. QUITE AN UNEXPECTED MOVE Most South Koreans, including players in the petrochemical industry, like the rest of the world, were baffled at Yoon’s declaration of emergency martial law late on 3 December. The last time the highly industrialized country in Asia faced martial law was in 1979, and no recent developments in the geopolitical and financial sectors of the country indicated that such a drastic measure would be taken. At close to midnight, Yoon had declared martial law – which meant military rule and curbs on civil rights – on national television noting that it was meant to crack down on pro-North Korean forces and protect the constitutional order in the country. "Martial law was quite surprising for us to hear because it hasn't happened in the last 40 years," said a soda ash distributor. The declaration of martial law and its withdrawal hours later has thrown South Korea into political instability. It was highly disruptive for market sentiment that for a time, suspension of trading was mulled, but was eventually called off when the martial law was rescinded about six hours after it was declared. South Korea’s Ministry of Finance and Economy and the Bank of Korea assuaged market fears of disruption by offering “unlimited liquidity support” to ensure market stability, immediately after the martial law declaration. The won weakened near two-year lows against the US dollar on 3 December at around W1,440 but recovered to around W1,412 levels as of Wednesday afternoon. The benchmark KOSPI composite index closed off lows at 2,464.00, down 1.44% from the previous day, after falling nearly 2% in intraday trade. “For now, we expect limited implications for the economy and financial markets as the Bank of Korea and the Ministry of Finance have responded swiftly by reassuring investors,” BMI said. “Notably, the central bank committed to boosting short-term liquidity and enacting measures to stabilise the FX [foreign exchange] markets, which aligns with our view that risks around the South Korean won, should remain contained for now,” it added. The central bank held an emergency monetary policy meeting on Wednesday morning, with the Monetary Board deciding “to keep all options open and to actively take market stabilization measures until markets are fully stabilized”. In late November, the BoK issued its second interest rate cut in as many months to prop up the economy, while trimming its GDP growth forecasts for this year to 2.2%, and for 2025 to 1.9%. In Q3, the country's GDP growth decelerated to 1.5% from a 2.3% pace set in Q2. The South Korean economy is expected to face added pressure next year amid US threats to impose tariffs on all imported goods. Like most of Asia, the country is heavily reliant on exports, with China and the US as its biggest trade partners. South Korea's export growth in November weakened to 1.4% year-on-year to $56.4 billion, while imports shrank by 2.4% to $50.7 billion, indicating domestic weakness. YOON’S FUTURE UNCERTAIN Calls for Yoon’s resignation is mounting, with lawmakers from DPK saying that if he does not resign immediately, steps will be taken to have him impeached. “We anticipate heightened political uncertainty in the near term. Yoon is now under intense pressure to resign. If he does not, we expect that it is only a matter of time before he is impeached,” BMI said. “If so, we believe Prime Minister Han Duck-soo will step in as interim leader, paving the way for elections to be held within 60 days, in accordance with the constitution,” it added. According to Korean news agency Yonhap, opposition parties – DPK and five others, including the Rebuilding Korea Party and Reform Party, submitted on Wednesday afternoon a motion to impeach President Yoon to the National Assembly. The motion – which was signed by 190 opposition lawmakers and one independent lawmaker, with no support from any ruling party lawmakers – will be reported to a parliamentary plenary session on 5 December and then put to a vote on either 6 December or 7 December. South Korea’s law requires that an impeachment motion be put to a vote between 24 and 72 hours after the motion is reported to a plenary session, Yonhap said. Yoon, an inexperienced politician, became the 20th president of the country in May 2022 and is currently serving the third of his five years of office. Previously, he was South Korea's chief prosecutor. In its note, BMI noted that PPP leader Han Dong-hoon had urged Yoon to explain his decision and to dismiss defense minister Kim Yong-hyun, who advised the president to declare martial law “even as the finance and foreign ministers advised against it”. “The silver lining we think is that the swift reversal of the martial law underscores the resilience of South Korea’s institutions,” it said. NO IMPACT ON PETROCHEMICAL TRADESPlayers in the petrochemical industry are monitoring the political developments but noted no immediate impact on the commodities markets. "Politically, [it is] still unstable as the President is getting pressure to resign," a source at a phenol/acetone producer said. South Korea is a major exporter of ethylene, as well as aromatics such as benzene, toluene and styrene monomer (SM). "At this moment the situation has settled down, but we'll see how the government will respond to the issue,” the soda ash distributor said. “From the industrial side there is no huge impact because plants/factories are always running at full capacity so now we don't see any impact," he said. "But long-term impact, we'll need to see how other foreign companies and assets may move out of South Korea," the distributor added. For the time being, players are more pre-occupied with unsteady port operations in Daesan because of heavy winds which are affecting trades and cargo deliveries. Meanwhile, South Korea's petrochemical industry has its own troubles stemming from Asia's overcapacity. In the case of of major player Lotte Chemical, which swung into a net loss of W514 billion in Q3 2024, the company is making big changes to its  portfolio, selling or closing commodities businesses as it refocuses on higher margin specialties. South Korean industries, including chemicals, rely heavily on exports to China, whose self-sufficiency has grown over the years. Insight article by Pearl Bantillo ($1 = W1,414) Additional reporting by Fanny Zhang, Jonathan Chou, Evangeline Cheung, Helen Lee, Shannen Ng, Josh Quah and Clive Ong

04-Dec-2024