Epoxy resins

HOUSTON (ICIS)–As consumer concern for product sustainability continues to spur both regulatory and voluntary action within the recycled plastics space, recycled polypropylene (R-PP) resin has risen in interest. US recycled plastics markets continue to develop new grades of R-PP in response to converter and brand company demand in the packaging and durables space. Despite the desire to incorporate higher percentages of R-PP into existing products, the unique challenges with polypropylene (PP) collection infrastructure and limitations on the mechanical recycling processes have hindered widespread or rapid adoption. For example, those seeking R-PP tend to request post-consumer based material with food-contact approval, as well as natural or transparent color so that products can be modified to maintain prior brand design. Supply of these types of feedstocks are extremely limited, largely due to the fragmented PP collection landscape and mixed application of PP in existing consumer packaging. Moreover, only a handful of recyclers have received Letters of Non-Objection (LNOs) from the US Food and Drug Administration (FDA). As of the latest update, slightly more than 20 individual companies have received one or more LNOs. As such, a natural, food-grade R-PP resin is priced at roughly two times the price of virgin PP. Prices for white or light gray R-PP are slightly lower than natural but are limited to various design applications and in some cases still hold a premium against virgin. Similarly, black and dark gray materials are typically not as sought after due to their design limitations and thus trade at a much lower price on weaker demand. Regardless of the aesthetic or regulatory hurdles, an additional barrier to adoption for post-consumer R-PP resin continues to be mechanical properties and performance. Based on the mix of incoming feedstock items from curbside bales, such as cups, tubs and lids of various colors, sizes and applications, the blended properties of the final resin typically range from 12-20 Melt Flow Index (MFI, also referred to as melt) and 1.2-1.7 Izod. Thus, packaging and product converters with specific manufacturing and performance requirements must then compound material to achieve the final resin material, inherently limiting the percentage of post-consumer recycled (PCR) content. As such, recyclers note there has been increased quoting activity for their R-PP portfolio, but still limited conversion to substantial order volumes. In addition, pricing continues to show wide ranges based on a myriad of factors, including material quality, color, volume, production capability and buyer/supplier market knowledge. Overall demand for PP PCR remains strong from end markets such as food and beverage and personal care, which are driven by both regulatory and voluntary recycled content targets. Other end markets such as horticulture, durables, automotive and construction are slower to adopt, and instead have historically pursued post-industrial or low cost virgin material due to cost-effectiveness. ICIS is currently prototyping US R-PP market coverage. Prototype reports target those involved in the processing and purchasing of PP bales as well as mechanically recycled post-consumer and post-industrial PP resin within the US. These reports have market discussion on pricing, supply, demand and current news, split by post-consumer vs post-industrial market categories. If you are interested in learning more about this coverage and or receiving these prototype reports, please reach out to Emily.Friedman@icis.com.

13-Dec-2024

PARIS (ICIS)–Global specialty chemicals producer Arkema aims to supercharge growth in key targeted markets by leveraging proprietary chemistries to develop new products with clear sustainability and performance benefits. From France-based Arkema’s spinoff from energy giant Total (now TotalEnergies) in 2006, the company has undergone a major transformation from a diversified chemical company with a mixed bag of commodity, intermediates and specialty businesses, to nearly a pure play specialty and materials business today. “We had to revisit the strategy of the company in-depth, and we had a strong belief at that time that there was an exponential growth [opportunity] in innovative and high performance materials,” said Thierry Le Henaff, chairman and CEO of Arkema, in a video interview with ICIS. “So our strategy was to focus on specialty materials around three segments – adhesives, coatings solutions, and also high performance additives and polymers in order to make Arkema a pure specialty player,” he added. Le Henaff is the 2024 ICIS CEO of the Year, having been selected in a vote among his peers – the CEOs and senior executives in the ICIS Top 40 Power Players. M&A STRATEGY AND LATEST DEALSThe latest move in the company’s transformation is the acquisition of Dow’s flexible packaging laminating adhesives business for $150 million which just closed on 2 December. The deal adds about $250 million in sales to Arkema’s Bostik adhesives business, and Le Henaff calls it a “step change” for Bostik in the flexible packaging adhesives market, giving it a unique opportunity to be a key partner for customers across the packaging industry. Arkema will spend around $50 million in implementation costs or capex related to the acquisition and is targeting about $30 million in annual cost and development synergies after five years. “We are going to continue to invest in… cost optimization, but at the same time continue to change the portfolio, which means to invest in M&A,” said Le Henaff. The Dow deal comes on top of major acquisitions such as a 54% stake in South Korea-based PI Advanced Materials (polyimide films for mobile devices and electric vehicles) in December 2023 and US-based Ashland’s performance adhesives business (pressure-sensitive adhesives for auto and buildings) in February 2022. While the company will now focus more on organic growth, bolt-on acquisitions will be an important part of Arkema’s strategy in the coming years, he noted. One such smaller bolt-on deal was the April 2024 acquisition of a 78% stake in Austria-based Proionic, a start-up company for the development of ionic liquids, a key component for the next generation of EV batteries. HYPER GROWTH SUBMARKETSSpeaking of organic growth, the Arkema CEO has an ambitious goal of growing sales in certain parts of its specialty businesses at a rate triple that of its overall business through 2028. These high growth areas are green energy and electric mobility; advanced electronics; efficient buildings and homes; sustainable lifestyle; and water filtration, medical devices and crop nutrition. “It is really with this combination of our technologies [in] these submarkets… where we want to multiply by three, the average growth of Arkema. This means that in this market, we could deliver 12% organic growth while for the average of Arkema it would be 4%,” said Le Henaff. Arkema aims to grow these businesses from around 15% of sales in 2023, to 25% of total sales, which are projected to be around €12 billion, by 2028. These high growth areas with three times higher sales than the group average will account for 50% of the company’s R&D budget. “We have about 15 technologies, superior technologies, where we can really differentiate ourselves. Our strategy is really to take advantage of this sustainability trend,” said Le Henaff. “In fact, the answer to climate change is through the solutions we can develop for customers. This is really the core of our strategy,” he added. Within electric mobility, in addition to the acquisition of a majority stake in Proionic, Arkema in January 2024 took a stake in Tiamat, a pioneer in sodium-ion battery technology – a potential alternative to lithium-ion batteries. RENEWABLE RAW MATERIALS AND DECARBONIZATIONArkema is also undertaking organic growth projects in these hyper growth submarkets. One key project is in bio-based polyamide 11, used in bicycle helmets, consumer goods, wire and cable and medical equipment. “We are adding more and more renewable raw materials in the product range we are offering to our customers. One good example and very emblematic [of our strategy] is this polyamide 11 made from castor oil, which is a fully sustainable, renewable, bio-sourced, high performance polymer,” said Le Henaff. “We are very proud of it, and we have just invested in a plant in Singapore to accelerate the growth of this polymer,” he added. Its Rilsan bio-based PA 11 has an 80% lower carbon footprint versus traditional polyamide resins using fossil-based raw materials and conventional energy sources, according to the company. Arkema also recently launched more sustainable adhesive solutions, including its Kizen LIME range of packaging adhesives made with a minimum of 80% renewable ingredients, and Bostik Fast Glue Ultra+ for do-it-yourself (DIY) applications with 60% bio-based materials. Along with helping its customers decarbonize, the company is also decarbonizing its own operations, targeting a 48.5% reduction in Scope 1 and 2 emissions, and a 54% reduction in Scope 3 emissions by 2030 versus a 2019 base. One major project is to decarbonize its acrylics production in Carling, France by installing new purification technology. The €130 million project should result in a 20% reduction in CO2 emissions at the site by 2026. GLOBAL FOOTPRINTAlong with its transformation into pure play specialties, Arkema has also diversified its global footprint, with more exposure in North America than Europe. Today Arkema is a global player with close to 40% of sales in North America, 25% in Asia and around a third in Europe, versus Europe at about 60% of sales when it was spun off in 2006, the CEO pointed out. “I still believe in Europe, but it's clear that we have a gap in competitiveness and also in demand. The pace of demand is slower for Europe than it is for the rest of the world,” said Le Henaff. “It's very important that our governments and the European Commission understand that the cost of doing business in Europe is too high compared to what it is in the rest of the world because of legislation, because of the cost of energy, because of the cost of raw materials,” he added. There is much work to do on this front to get Europe back to competitiveness and growth, especially for chemicals, he said. DEMONSTRATING RESILIENCEArkema’s geographic diversification and specialties focus has made it more resilient to challenging macroeconomic markets. In Q3, sales rose 2.9% year on year to €2.39 billion and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 5.4% to €407 million, the latter driven by 9.0% growth in specialty materials, offsetting a 7.3% decline in intermediates segment. Its overall EBITDA margin expanded to 17.0% versus 16.6% a year ago. A strong focus on efficiency and a healthy balance sheet has served it well. “Arkema over 20 years has doubled in size and we have a set number of headcount. This means that competitiveness and productivity is very important for Arkema, even if we are less vocal than other companies on this topic,” said Le Henaff. On the balance sheet side, net debt of around €3.11 billion is “tightly controlled” at a conservative two times last 12 months EBITDA. TRANSFORMATION NEVER OVERKey to success for Arkema is to continuously evolve, be nimble and be open to growth opportunities. “It’s never over. The status quo in this world is not possible, because the world is changing all the time, because of demography, because of geopolitics, for plenty of reasons, so we have to move forward,” said Le Henaff. “There are plenty of opportunities, but the opportunities of today won't be the opportunities of tomorrow. So we really need to have a company which is structured to be able to catch these new opportunities which arise all the time,” he added. Meanwhile, on the macro-outlook for 2025, he is cautiously optimistic. “We are all cautious because we thought 2023 would be the year of the rebound and also 2024, so we have to be cautious for 2025. But I'm cautiously optimistic,” said Le Henaff. “I still think that we should have some kind of rebound for 2025. We'll see if I'm right or not, but in the meantime, I would say the most important thing is we need to continue [evolving]. We are very glad to be in a unique position because at the end of 2024, we will have nearly fully financed billions of euros of projects, including external growth and organic growth,” he added. PEOPLE AND CULTUREKey to any ongoing transformation is of course the people involved. Arkema deems it critical to keep its people engaged with the mission. “I think, in a world which is quite volatile, quite changing, it's very important to have fixed points,” said Le Henaff. First, the long-term strategy and vision has to be attractive. But equally as important is having a corporate culture with clear and simple values. These five values for Arkema are: Solidarity, Performance, Simplicity, Empowerment and Inclusion. It is the culture that amplifies the inherent strengths in an organization, including technology, and smooths the path for continued successful transformation in an uncertain world, he said. Interview article by Joseph Chang Watch the exclusive Q&A video interview with Arkema CEO Thierry Le Henaff on the 2024 ICIS CEO of the Year landing page.

05-Dec-2024

HOUSTON (ICIS)–Announced this week, beverage giant The Coca-Cola Company has updated many of their 2030 sustainability goals, in some cases delaying and minimizing targets, in other cases removing tangible goals all together. All goals have now been extended to a 2035 timeline. In support of this move, the company notes that they have assessed progress and identified challenges to achieving their original 2030 goals. This comes as companies grapple with the premium often associated with sought after food-grade, clear recycled resins, especially amid a weaker global macroeconomic environment. "These challenges are complex and require us to drive more effective and efficient resource allocation and work collaboratively with partners to deliver lasting positive impact," noted Bea Perez, Executive Vice President and Global Chief Communications, Sustainability & Strategic Partnerships Officer at The Coca‑Cola Company. This comes as the company has faced rocky unit case sales volumes in the North American market over the last several quarters. Most recently, the company posted flat quarter on quarter results, an improvement over negative volumes the prior quarter. In relation to packaging, the original goal of 50% recycled content by 2030 has been downgraded to a target of 35-40% recycled content in primary packaging. Specifically, they aim to reach 30-35% recycled content in their plastic packaging, which makes up nearly 50% of their packaging mix by number of units. In 2023, the company noted 27% of their primary packaging material by weight came from recycled content, 17% of which was recycled plastic. This now leaves a 10-year runway to achieve an additional increase of just 8% to reach their new recycled content target and 13% to reach their recycled plastic target. Additionally, the company has reduced their beverage container collection target from 100% by 2030 to 70-75% by 2035. As of 2023, the company noted 62% of the equivalent bottles and cans introduced into the market were collected for recycling or reuse. When looking at packaging design, the company noted they had converted more than 95% of their packaging to recyclable formats, nearing the 100% by 2025 goal. As many other converters and brand companies have also reckoned with, it can be very difficult to convert the final items, ones which typically require a complete re-design or additional cost to comply with recycling requirements. The company has now removed a virgin resin reduction goal, amid a poor result in 2023, where virgin plastic use actually increased due to business related growth. The prior reuse and refill goal was also removed. Coca-Cola now joins several other brand companies, such as Unilever, PepsiCo who have delayed or reduced their original ambitious goals amid bottom line pressure. It is uncertain how brand companies will demonstrate their commitment to packaging circularity sustainability in the long term, especially as leaders around the globe continue negotiating towards a global treaty on plastic pollution. While voluntary goals have boosted demand for recycled plastics markets, many recyclers and suppliers note that actual procurement efforts have been inconsistent. Many believe regulatory requirements are the only solution to securing long term demand for these materials.

05-Dec-2024

MUSCAT (ICIS)–Thailand’s PTT Global Chemical (PTTGC) is expected to begin producing sustainable aviation fuel (SAF) at its refinery in Map Ta Phut early next year, the company’s CEO Narongsak Jivakanun said. “We are commissioning, although it is on a small scale, but it is an important step – SAF [production] in Q1 next year using our existing oil refinery but blended with non-fossil fuel based raw material,” Jivakanun told ICIS on the sidelines of the 18th Annual Gulf Petrochemicals and Chemicals (GPCA) Forum in Muscat, Oman. The company plans to produce 500,000 liters of SAF per month, using up to 1,700 tonnes of used cooking oil per month as feedstock. SAF is used as a direct replacement for traditional fossil-based jet fuel to power aircraft. Moreover, by leveraging the mass balance approach, the change in how the refinery accommodates use of alternative feedstock in the production of SAF enables it to claim a portion of its downstream aromatics, polymers, and olefins output as non-fossil chemical products, he said. PTTGC is the first Thai company to upgrade its refinery with advanced technology to accommodate used cooking oil as feedstock. The company’s biorefinery project is a component of the company's three-pronged growth strategy – “Step Change, Step Out and Step Up” – which, in part, prioritizes business sustainability through decarbonization efforts, according to Jivakanun. PTTGC is also on track to fully start up a new fully integrated polylactic acid (PLA) unit at the Nakhon Sawan Biocomplex (NBC) by the end of next year, he said. The PLA project is being carried out by NatureWorks, the equal joint venture firm between the US’ Cargill and PTTGC and will use sugarcane sourced locally as feedstock. THAI SPECIALTIES HUB AMBITIONS  Allnex, a global specialty chemicals subsidiary of PTTGC, is currently planning to expand its specialty resins production in Map Ta Phut with an aim to develop the site to become a hub for selected coating resins serving the southeast Asia region, according to Jivakanun. “The plan is to develop a hub in Map Ta Phut so that they can share the infrastructure that [PTT]GC already has, utilities, the engineering and operational support," he said. "Expertise sharing between GC and allnex will enhance potential of value engineering resulted in cost savings into the project." The project is in the stage of finalizing the scope with an aim to produce specialty resins that most fit customer demands and requirements Allnex specializes in the production of industrial coating resins and additives. “We will go through the feasibility study as usual and we aim to confirm the investment for allnex Map Ta Phut hub within next year," Jivakanun added. Interview article by Nurluqman Suratman

04-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

SAO PAULO (ICIS)–Brazil is to start an investigation into polyethylene (PE) arriving on its shores from the US and Canada and whether the material constituted dumping, the government said. As previously reported by ICIS, the proposals to investigate came from polymers major Braskem and were backed by Brazil’s chemicals trade group representing producers, Abiquim. Braskem is the dominant PE producers in Brazil, and antidumping duties (ADDS) on US- and Canada-originated PE would considerably prop up its domestic market position. The start of investigation proceedings was published in Brazil’s Diario Oficial da Uniao (Official Gazette). The investigation is to be carried out by the Department of Commercial Defense (Decom), which is part of the Ministry of Industry’s Secretary of Foreign Trade. Braskem filed on July 31 a petition to initiate an investigation into the practice of dumping of PE resins exports to Brazil with US or Canadian origin. The analysis of the evidence of dumping is to consider the period from April 1, 2023 to March 31, 2024, while the period for analyzing potential damage caused to domestic producers is to consider the period from April 1, 2019 to March 31, 2024. “Due to the large number of producers/exporters from the US and Canada identified in the detailed data on Brazilian imports … the producers or exporters responsible for the largest reasonably investigable percentage of the export volume of the exporting country will be selected to send the questionnaire,” said Decom. “The absolute dumping margins determined for the purposes of this document reached $220.95/tonne and $264.99/tonne, and the relative margins were 21.4% and 26.9% for the US and Canada, respectively. It can be inferred that, if such dumping margins did not exist, domestic industry prices could have reached higher levels, reducing or even eliminating the effects of the investigated imports.” Braskem said earlier in November it is lobbying the Brazilian government to extend ADDs on polyvinyl chloride (PVC) beyond 2025 when they are due to expire. In October, the government implemented higher import tariffs on several chemicals, also after heavy pressure by domestic producers and their trade group Abiquim. Additional reporting by Bruno Menini

14-Nov-2024

TORONTO (ICIS)–The Port of Vancouver and other Canadian West Coast ports as well as the Port of Montreal were preparing on Wednesday to resume operations, but the exact timeline remains unclear, officials said in updates. The government on Tuesday directed the Canada Industrial Relations Board (CIRB) to order the resumption of all operations at the ports and to settle pending labor disputes through binding arbitration. It may take a couple of days before operations at the ports resume, according to the country’s labor minister. The CIRB is an independent agency with its own procedures. The Port of Vancouver acknowledged the government intervention but said that a timeline for full resumption of impacted operations has yet to be determined. The Port of Montreal said that cargo handling activities would gradually resume over the coming days, subject to when the CIRB issues its order. It would take several weeks to clear terminal backlogs and restore the fluidity of supply chains, it added. Labor disruptions at Vancouver and the other West Coast ports were at their 10th day on Wednesday, and at Montreal they were at their 14th day. In the chemical industry, trade group Chemistry Industry Association of Canada (CIAC) welcomed the government intervention. More than Canadian dollar (C$) 22 million ($15.7 million) of chemistry and plastic products was traded through Vancouver and other West Coast ports each day in 2023, for a total of C$8 billion for the year, CIAC said. This includes products that go into making chlorine and related products for municipal drinking water and exports of organic chemicals and resins to global markets, it said. The government needed to do more to avoid “harmful disruptions to our trade infrastructure”, said CIAC president and CEO Bob Masterson. Canada has a limited number of ports that are capable of handling large container ships that are capable of shipping goods to foreign markets, he said. “Continued disruptions signal the wrong message to our trading partners and companies who want to invest in Canada: that Canada cannot be relied on to get their products where they need to go,” he said. Meanwhile, the unions representing the port workers said they would challenge the government’s intervention in the disputes in court. Earlier, another labor union, Teamsters Canada Rail Conference (TCRC), filed a court challenge against the government's move in August to intervene and end a freight rail labor dispute. That case has not yet been decided. The unions argue that the government interventions violate workers' rights to strike. ($1=C$1.4) Thumbnail shows containers that are commonly handled in ports. Image by Costfoto/NurPhoto/Shutterstock

13-Nov-2024

HOUSTON (ICIS)–Under US President Donald Trump, US chemical companies will unlikely see the full-blown tariffs that he has proposed during his campaign, but they will operate under a faster growing economy with higher inflation and interest rates that will settle at an elevated rate, economists at Oxford Economics said on Monday. Oxford is forecasting what it calls a limited Trump scenario, under which his administration will not fully adopt the policies he proposed during his campaign. Tariffs will be limited, targeted and phased in, while Congress will limit growth in the government deficit by restraining some of his tax cuts and spending measures. Oxford's baseline scenario for 2025 does not change much because it is assuming that Trump will focus most of his first year in office on extending the tax cuts of his earlier administration, said Ryan Sweet, chief US economist for Oxford Economics. He made his comments during a presentation. The consultancy's forecast for 2025 GDP is a tenth of a point higher versus its estimate in October, he said. Inflation will rise by a tenth of a point in 2025. Trump is inheriting a strong economy, so there is little risk of recession. In these initial years, the biggest effect on the US economy will be tax cuts, and these should increase growth in GDP, said Bernard Yaros, lead US economist for Oxford. After 2026, Oxford assumes Trump will adopt some of his immigration restrictions, and it is expecting GDP growth to fall below its earlier forecast. Stricter immigration policies will reduce the supply of labor and slow down the consumption of goods and services. LIMITED TARIFFSOxford expects the Trump administration will not impose the widespread tariffs it proposed during its campaign, which included 60% duties on Chinese imports and baseline tariffs of 10-20% on all imports. Yaros said these campaign proposals were likely negotiating tactics. Sweet expects that Trump will require Congress to pass some of his tariffs, and legislators will not pass such high rates, Sweet said. In other cases, advisors and trade representatives will restrain Trump. For China, Trump will likely impose tariffs of 25% on major categories, such as machinery, electronics and chemicals, Yaros said. For the EU, Canada and Mexico, Trump will likely impose very targeted tariffs on steel, aluminum, base metals and motor vehicles, Yaros said. For Canada and Mexico in particular, Trump will unlikely adopt measures that will threaten the United States-Mexico-Canada Agreement (USMCA), the trade agreement that his administration signed during his first term. That trade deal was one of the signature achievements of Trump's administration, so he will not want to pursue policies that will threaten the upcoming renewal of that agreement, Yaros said. While the tariffs will be limited, they will still be a drag on the economy by nudging inflation higher, reducing real consumer income, tempering consumer spending and encouraging the misallocation of resources, Yaros said. LIMITED TARIFFS REDUCE RETALIATION RISK FOR CHEMSOxford's scenario will limit the risk of countries imposing retaliatory tariffs on US exports. US chemical producers were vulnerable to such tariffs because they purposely added capacity for export over the years, particularly for polyethylene (PE) and polyvinyl chloride (PVC). The magnitude of these exports and the existence of a global glut in plastics and chemicals would make US chemical exports a likely target for retaliatory tariffs. On the import side, the US does have deficits in key commodity chemicals, such as benzene. Targeted tariffs could carve out exceptions for benzene was well as other chemicals in which the US has a trade deficit, such as methyl ethyl ketone (MEK) and melamine. Targeted tariffs will likely rule out duties on imports of oil. US refineries rely on imports of heavier grades of oil to optimize the operations of some of their units. US shale oil makes up nearly all of the growth in the nation's crude production, and that oil is made up of light grades. Meanwhile, tariffs could shield some chemicals from competition, such as epoxy resins. CONGRESS MAY LIMIT GROWTH IN DEFICITOxford pointed out that some moderate Republicans could restrain some of Trump's tax and spending proposals to limit growth in the government deficit, Yaros said. Other economists have expressed concerns that the US will issue larger amounts of government debt to fund the growing deficit. That would lead to a cascade effect that could ultimately increase rates for US mortgages, which would slow down the housing market and the plastics and chemicals connected to that market. Still, all of Oxford's scenarios forecast a rise in the government deficit. SLOWER RATE CUTS BY FEDOxford expects Trump's policies will be inflationary, which will prompt the Federal Reserve to slow down the pace of cuts on their benchmark federal funds rate. It expects the federal funds rate will settle at 3.125%, versus its forecast of 2.75% that was made in October. TRUMP WILL PRESERVE MOST RENEWABLE TAX CREDITSTrump will likely preserve most of the tax credits in the Inflation Reduction Act (IRA) because most of them benefitted states controlled by his party, the Republicans, Yaros said. These include tax credits on renewable fuels, renewable power, hydrogen and carbon capture. The exception will include incentives for electric vehicles (EV), which Trump had singled out during his campaign, Yaros said. OXFORD'S FORECASTThe following chart shows Oxford's new baseline forecast and compares it with a scenario under which the policies of the previous administration are maintained. The following chart shows Oxford's forecast that assumes Trump will fully adopt all of his campaign proposals. This is not the consultancy's baseline forecast because it does not expect such a full-blown Trump scenario will happen. Thumbnail shows the US Capitol. Image by  photo by Lucky-photographer.

11-Nov-2024

HOUSTON (ICIS)–Recently released data from the US International Trade Commission shows imports of polyethylene terephthalate (PET) scrap have reached record highs, following a slight dip the previous quarter. This is in spite of recent efforts from the US Customs and Border Patrol (CBP) to shift imports of recycled polyethylene terephthalate (R-PET) flake material away from the plastic scrap harmonized schedule (HS) code and towards the PET HS code. Imports and exports of other types of plastic scrap remain relatively steady quarter on quarter (QoQ), though Canada and Mexico continue to fade as trade partners for plastic scrap. US remains a net importer of plastic scrap, largely on PET scrap imports PET scrap imported into US increased 22% QoQ YTD PET scrap exports to Mexico surpass 2023 volumes IMPORTS SURGE, LARGELY DRIVEN BY PETQ3 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915 – have increased 12% QoQ quarter on quarter, and 11% year on year when comparing with Q3 2023. Plastic scrap imports include items such as used bottles, but also other forms of recycled feedstock such as purge, leftover pairings and also flake material. Imports totalled 129,137 tonnes in Q3, with PET making up 54% of that volume at 70,094 tonnes. This is the highest volume of PET scrap ever imported in a single quarter. Year to date (YTD) volume at 191,738 tonnes remains just shy of the 2023 total amount, 204,278. Demand for R-PET flake was solid throughout Q3, especially as ocean freight rates began to normalize from late spring highs. Moreover, the Q3 typically is the peak in bottled beverage demand, the largest end market for US R-PET resin. At this same time, market players noted that domestic PET bottle bale feedstocks were surprisingly limited in availability, adding to the increased interest in supplementary imported flake feedstocks for recyclers. Though this data could be impacted in the near future due to recent efforts from US Customs who have directed several market players to use the virgin PET HS code, 3907, when importing flake. Market players have traditionally used the plastic scrap code as it is a duty free item, whereas the PET code carries a 6.5% duty, unless the country of origin has a free trade agreement with the US. The top countries who have sent PET scrap to the US include Canada, Thailand and Japan, respectively. While Canada makes up 24% of PET scrap imports alone, of the top 10 origin countries, those based in Asia make up 44% of all PET scrap import volumes, followed by those in the Latin American region at 15%. Market participants confirm they have seen a notable rise in imported R-PET activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor and facility costs related to R-PET. As more imports from Asian and Latin American countries continue to increase, Canada and Mexico could both see a reversal of their previous growth trend on total scrap exports to the US. Imports of all other subcategories of plastic scrap, including polyethylene (PE), polystyrene (PS), and polyvinylchloride (PVC) were relatively steady. PE scrap imports made up 12% of Q3 plastic scrap imports, driven by shipments from Canada at 68% of the YTD volume, followed by Mexico at 17% of the YTD volume. Germany surprisingly has increased PE scrap exports to the US fourfold, though the total volume remains small, at 1,210 tonnes YTD. YTD, the US remains a net importer of plastic scrap. MEXICO REMAINS KEY BUYER OF US PET BALES Though exports of PET scrap, largely in the form of bales, fell QoQ tonnes, YTD volumes have already surpassed that of 2023. Mexico in particular continues to be a key end market for US bale material, making up 59% of the 18,362 tonnes of PET scrap exports. While the US has always exported a portion of domestic PET bale material to other countries, exports to Mexico have surged over the last year. This growing trade relationship is largely attributed to new capacity in Mexico, paired with strong local demand which has elevated local bale prices. As a result, Mexican recyclers have been purchasing US PET bales as a lower cost option with higher availability. YTD exports of PET scrap to Mexico are already 3,333 tonnes above 2023 total PET scrap volumes. Exports of US bales to Mexico, particularly from the Southern areas of the US such as Texas and parts of California, continue to challenge domestic recyclers, who struggle to secure adequate volumes of bale feedstock. Furthermore, as export demand continues put upwards pressure on bale pricing, local recyclers find themselves stuck between rising feedstock costs and very competitive import virgin and recycled pricing, thus unable to pass along those increased costs. PET scrap exports to Malaysia have also surpassed 2023 volumes, at present by over 2,400 tonnes. On the other hand, volumes to Germany are now 2,966 tonnes short of 2023, showing the shift from European demand to Asian and Mexican demand. Overall, exports of other types of plastic scrap continue to slow, following the Chinese National Sword and Basel Convention adoption several years ago. Total plastic scrap exports down QoQ but similar to levels seen this time last year. Canada and Mexico receive 56% of US plastic scrap exports, followed by several Asian countries including Malaysia, India, Vietnam and Indonesia which in total 28% of exports. PE continues to be a leading polymer type for US plastic scrap exports, coming in at 32,519 tonnes this quarter, roughly 32%. Insight by Emily Friedman

11-Nov-2024

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 8 November. Weak EU TIO2 market unaffected by China export drop; effects to come later The steep provisional EU antidumping duties (ADDs) on Chinese titanium dioxide (TiO2) have led to a staggering fall of 63% in Chinese exports of the product to Europe late in the third quarter of 2024 from the highs earlier this year, but the effects on supply are yet to be felt, illustrating just how weak demand is. Europe PET gathers momentum amid higher freight rates, weaker euro Polyethylene terephthalate (PET) in Europe is still a bed of uncertainty when it comes to actual end demand, but PET resin buyers are seeking to secure volumes nevertheless. Europe markets up, China down as Trump wins second term as US President European stock markets rallied in early trading while China bourses closed down as Donald Trump secured a second term in office as US President. UK's Viridor to close Avonmouth mechanical recycling plant UK-headquartered recycler Viridor intends to close its Avonmouth mechanical recycling facility following a strategic review, the company announced on Tuesday. Eurozone manufacturing slump enters record-breaking 28th month, latest PMIs show The eurozone manufacturing economy is still contracting, albeit at a slightly slower pace, according to new purchasing manager indices (PMIs) which mark the longest downturn since data collection began in 1997.

11-Nov-2024