Expandable polystyrene (EPS) and polystyrene (PS)

RIO DE JANEIRO (ICIS)–In just a few years, global automotive majors have switched their focus from a quick, all-electric production to a more hybrid model, an executive at US crude oil major Chevron said on Tuesday. Chris Castanien, global industry liaison at Chevron and lubricant additive expert, said that most automotive majors who had set up target to go all-electric or nearly all-electric by 2030 have dropped those plans as intake among consumers remains slow. This has happened even after authorities in North America or Europe have poured “tremendous amount of money in trying to force everyone” into the energy transition. Castanien was speaking to delegates at the 14th International Summit with the South American Market 2024 organized by specialized publication Lubes em Focus, which focuses on base oils. ICIS is a partner in the event. BILLIONS – BUT THE JUMP IS NOT HAPPENINGAnyone in the lubricants industry would be pleased to see the initially quick transition to electric mobility some authorities had planned is not happening – they are an interested party which would lose out much if ICE engines – combustion engines – ran on fuels would go out of the market. Therefore, Castanien was somehow pleased to list the many plans in the EU and the US which had planned for a quick electric vehicles (EVs) implementation, including the US’ $1 trillion New Green Deal in 2021 or the consequent $67 billion investments contemplated in the CHIPS Act or the $369 billion in the Inflation Reduction Act (IRA). “The US’ EPA [Environmental Protection Agency] had forced a ruling that by 2032 around two thirds of cars should be EVs; the EU issued a ban on ICE engines by 2035 – well, I think those targets will not happen,” said Catanien. “Moreover, now we are seeing a lot of protectionist tariffs against Chinese EVs: we want people to make and use EVs, but we don’t want the Chinese to make them.” The Chevron executive went on to say that the US is still a “long way” to meet its own targets on charging points, for instance, which added to the considerably higher cost of EVs is putting off consumers. And this consumers’ reluctance, he went on to say, is even happening when many jurisdictions are implementing fiscal incentives and rebates for EVs. “In the US, you even get the case of California, where HOVs [high occupancy vehicle lanes] are now allowing EVs even if it’s only the driver inside the car…” he said. Thus, the initial change planned by automotive majors – even with thousands of redundancies of ICE engines engineers – is giving way to a slower implementation of the EV push and mentioned the case of Germany’s major Mercedes. “Only a few years ago, Mercedes said they would be making all vehicles electric by 2030 – they don’t say that anymore. Their updated target is aiming to make 50% of its fleet electrical by that year,” said Castanien. “[US major] Ford has said it is losing $64,000 every time they sell an EV. Tesla was planning a gigafactory in Mexico: they have dropped those plans. The shift towards more hybrid vehicles and not purely EVs is happening – this is a big change.” The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). Base oils, also called lubricants, are used to produce finished lubes and greases for automobiles and other machinery. The 14th International Summit with the South American Market 2024 runs in Rio de Janeiro on 2-3 July.

02-Jul-2024

RIO DE JANEIRO (ICIS)–US manufacturing activity remained in contraction territory in June but output in the chemicals sector was healthy on the back of healthy new orders, the Institute of Supply Management’s (ISM's) purchasing managers’ index (PMI) survey showed on Monday. The PMI stood at 48.5% in June, down from 48.7 points in May. The contraction in June was the third consecutive monthly one, and the 19th in the last 20 months. Chemicals, however, posted healthy activity with one chemicals player reporting in the ISM survey “high volumes of customer orders”. In plastics and rubber, a respondent described increased orders on the back of seasonal restocking, but the sector overall remained in contraction territory. “Demand was weak again, output declined and inputs stayed accommodative. Demand slowing was reflected by the New Orders Index improving to marginal contraction, New Export Orders Index returning to contraction, Backlog of Orders Index dropping into stronger contraction territory and Customers’ Inventories Index moving into the low side of the ‘just right’ range, neutral for future production,” said Timothy R Fiore, chair of the ISM’s committee compiling the PMI index. “Output (measured by the Production and Employment indexes) declined compared to May, with a combined 3.5-percentage point downward impact on the Manufacturing PMI calculation. Panelists’ companies reduced production levels month over month as head count reductions continued in June.” According to ISM, eight manufacturing industries reported growth in June: printing and related support activities; petroleum and coal products; primary metals; furniture and related products; paper products; chemical products; miscellaneous manufacturing; and nonmetallic mineral products. Nine industries reported contraction: textile mills; machinery; fabricated metal products; wood products; transportation equipment; plastics and rubber products; food, beverage and tobacco products; electrical equipment, appliances and components; and computer and electronic Products. ICIS VIEWKevin Swift, economist at ICIS, highlighted how both new orders and order backlogs fell compared with May. “The reading came below expectations of improvement. The expansionary reading in March ended 16 months of contraction in manufacturing but since then, the trend has been soft. June marks a third contractionary reading and was disappointing… The chemical industry gained for the sixth month after 16 months of decline.” “New orders and order backlogs, when combined with the reading on inventories, are good indicators of future activity. Inventories contracted at faster pace as well. An uptick in orders could translate into higher production.” Earlier on Monday, analysts at S&P Global said manufacturing in Brazil – the Americas’ second largest economy – had recovered slightly from floods-hit May, although some economic challenges such as the depreciation of the Brazilian real were putting a cap on growth prospects, they added. US MANUFACTURING June 2024 Index Series Index Jun Series Index May Percentage Point Change Direction Rate of Change Trend* (Months) Manufacturing PMI 48.5 48.7 -0.2 Contracting Faster 3 New Orders 49.3 45.4 +3.9 Contracting Slower 3 Production 48.5 50.2 -1.7 Contracting From Growing 1 Employment 49.3 51.1 -1.8 Contracting From Growing 1 Supplier Deliveries 49.8 48.9 +0.9 Faster Slower 4 Inventories 45.4 47.9 -2.5 Contracting Faster 17 Customers’ Inventories 47.4 48.3 -0.9 Too Low Faster 7 Prices 52.1 57.0 -4.9 Increasing Slower 6 Backlog of Orders 41.7 42.4 -0.7 Contracting Faster 21 New Export Orders 48.8 50.6 -1.8 Contracting From Growing 1 Imports 48.5 51.1 -2.6 Contracting From Growing 1 Thumbnail shows an automobile manufacturing line. Image by Anna Szilagyi/EPA-EFE/Shutterstock)

01-Jul-2024

RIO DE JANEIRO (ICIS)–Sales growth in Brazil's manufacturing is being dented by challenging economic conditions, currency depreciation and order postponements after the floods crisis, analysts at S&P Global said on Monday. S&P Global’s manufacturing PMI Index for Brazil recovered nearly half a percentage point at 52.5 points, remaining in expansion territory. Any reading above 50.0 points shows expansion. Brazil manufacturing June May April March February January December 2023 November October September August July PMI index 52.5 52.1 55.9 53.6 54.1 52.8 48.4 49.4 48.6 49.0 50.1 47.8 Source: S&P Global REAL DEPRECIATION The Brazilian real has been weakening for weeks, and it was already mentioned by the PMI survey respondents as one key challenge they faced in June, via higher prices for imports. Crop losses resulting from the floods in the southernmost state of Rio Grande do Sul added to the issues. As a result, inflation rates for both input costs and output charges reached 23-month highs. “A sharper deterioration in suppliers' delivery times, which is inverted before entering the PMI calculation, also boosted the headline figure. The latest improvement in the health of the sector was solid by historic standards,” said S&P Global. “Underlying data showed that backlog clearing supported output growth in June, with some firms also noting better demand for certain goods. The rise in production was moderate, but this represented an improvement from the flood-related stagnation seen in May.” Manufacturers also faced rising cost pressures driven by real weakness and crop losses, with prices for several items including coffee, cotton, dairy, fabrics, oil, pulp, rice, steel, wheat and zinc higher. The overall inflation rate reached its highest in nearly two years. Factory gate charges similarly rose to the greatest extent since mid-2022, as firms passed additional costs onto their clients. Employment in the manufacturing sector continued to rise in June, attributed to investment in technology departments, new plant openings and efforts to increase production capacities. Despite the challenges, investment in additional equipment, new product releases and forecasts of better sales fueled business optimism in June. “The PMI survey showed that cost inflation, which ran at the highest since mid-2022, curbed growth of sales and production in June. Companies sought to protect margins by lifting selling prices to a substantial extent and tried to keep a lid on expenses by restricting input purchases and job creation,” said Pollyanna De Lima, economics associate director at S&P Global. "Although exchange rate depreciation could have bolstered exports, the increase in prices seems to have eroded international competitiveness. External orders still rose, but only marginally.”

01-Jul-2024

LONDON (ICIS)–Eurozone manufacturing sector activity slipped further into contraction in June as demand slowed in most of the bloc’s largest economies, while conditions improved in the UK. The purchasing managers’ index (PMI) for the eurozone sector fell to 45.8 from 47.3 the previous month, representing the fastest rate of decline seen so far this year as demand weakened and new export orders saw a 28th consecutive monthly drop. Germany was the weakest-performing of the eight largest eurozone member state economies, with the manufacturing PMI sinking to 43.5, according to data from S&P Global. A PMI score of below 50.0 signifies decline. Despite the ongoing impact of Red Sea shipping disruption, manufacturers in the region reported further shortening of supplier delivery times. Despite steadily-falling order times, input costs for eurozone factories increased for the first time in 16 months, while the prices charged for finished items continued to fall in the face of the ongoing demand chill. Reported across much of the bloc, weaker demand resulted in manufacturers purchasing lower quantities of raw materials on the back of lower production requirements, with the drop in buying levels sharper than in May. “This decline comes after a record stretch of 25 consecutive months of falling demand, but a vague hope that things were improving in May when the respective index showed some increase,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which helps to assemble the PMI data. “This means that any significant recovery will likely be postponed until at least the end of the summer or the beginning of fall,” he added. Output in Greece remained on growth footing despite its manufacturing PMI dropping to a six-month low, standing at 54.0, with activity in Spain and the Netherlands also growing despite a slowdown in the rate of expansion. Conditions in Ireland, France, Italy and Austria remained contractionary, despite manufacturing output in Italy firming to a two-month high at 45.7. Manufacturing activity in the UK continued firm during the month, with activity remaining near May levels at 50.9 as broad-based new order intake across sub-sectors continued to drive growth. Despite the strong demand across manufacturing sectors, that growth was largely confined to orders to large firms, with demand falling for smaller and mid-sized businesses. Two months of stronger activity has also driven an increase in cost inflation, modest overall but particularly pronounced for input prices. “The performance of the domestic market remains a real positive, providing a ripe source of new contract wins,” said S&P Global director Rob Dobson. “In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe,” he added. Stronger manufacturing conditions in the UK, as well as certain key markets, increase the hope that the decline seen in the eurozone in June may be short-lived, according to de la Rubia. “We are inclined to see this more as a temporary blip rather than a sign of a prolonged downturn,” he said. “Manufacturing growth was seen in other parts of the world in June, such as the United States, UK, and India, according to their respective Flash PMI. This global recovery provides a supportive backdrop for Eurozone manufacturers.” Focus article by Tom Brown. Thumbnail photo: A production line at BMW's factory in Munich, Germany (Source: Anna Szilagyi/EPA-EFE/Shutterstock)

01-Jul-2024

LONDON (ICIS)–Strong UK manufacturing activity growth in June was offset by slowing expansion in the services sector, according to the latest Purchasing Managers’ Index (PMI) data. Growth among goods producers, driven by improved order book intakes and strong business confidence, drove the manufacturing output and manufacturing indexes to 26- and 23-month highs respectively. Conversely, services activity grew at its softest pace for seven months, with survey feedback indicating the slowdown was partly driven by a pause in client spending decisions in the run up to the UK election on 4 July. UK PMI Indexes June May Composite output 51.7 53.0 Services Business Activity 51.2 52.9 Manufacturing Output 54.2 53.4 Manufacturing 51.4 51.2 A figure above 50 in the index indicates expansion, and below 50 contraction. UK firms also faced a quickening of input cost inflation in June as severe global shipping constraints led to higher transport costs, index compiler S&P Global said. This rise fed through to quicker increases in output charges for both manufacturing and services companies, with producers raising prices at the sharpest rate since May 2023. “The slowdown in part reflects uncertainty around the business environment in the lead up to the general election, with many firms seeing a hiatus in decision making pending clarity on various policies,” said S&P chief business economist Chris Williamson. The latest PMI data for the eurozone indicated a slowdown in economic recovery at the end of the second quarter. Both data sets were released on Friday 21 June.

24-Jun-2024

SINGAPORE (ICIS)–Malaysia's exports of chemicals and chemical products rose by 0.8% year on year to ringgit (M$) 6.31 billion in May amid signs that its overall trade weakness has bottomed out. Risks to trade outlook include geopolitical tensions and regional conflicts May export growth driven by manufactured and agriculture goods Demand for paper, petroleum, and palm oil drove exports to China Overall exports rose by 7.3% year on year to M$128.2 billion in May, while imports were up by 13.8% to $118.1 billion, data from the Department of Statistics Malaysia (DOSM) showed on 20 June. This resulted in a trade surplus of around M$10 billion, rebounding from the lowest level since May 2020 in the preceding month at M$7.7 billion, partly aided by a steeper slowdown in the growth of imports relative to exports. Economists at UOB Global Economics & Markets Research noted in a 20 June report that the two consecutive months of export growth indicate that Malaysia's trade performance may have reached its lowest point and is now on a path to recovery. The latest Malaysia S&P manufacturing Purchasing Mangers’ Index (PMI) also rose in May, suggesting improvement in manufacturing conditions on account of higher new orders, UOB said. "Exports of commodity products particularly mining goods remains subject to potential production shocks due to plant closures for maintenance while price effects are fading," it said. RISKS TO TRADE OUTLOOK "Malaysia’s external trade continues to recover at a gradual and bumpy pace in the near term," UOB said. However, given lingering logistical challenges, ongoing geopolitical tensions and regional conflicts that cast over the global trade outlook, Malaysia will not be spared should these downside risks escalate and trigger a wider adverse impact on the global economy, it said. The Red Sea crisis and ongoing conflict in the Middle East have already disrupted supply chains, causing delays and driving up shipping costs for certain sectors, UOB noted. Additionally, environmental concerns, such as the historically low water levels in the Panama Canal, a critical artery for global trade, pose further threats to the smooth flow of goods, it added. OPTIMISM FOR GROWTH DESPITE CHALLENGESUOB remains cautiously optimistic trade outlook for Malaysia with a projected export growth of 3.5% for this year. This forecast is slightly more conservative than Bank Negara Malaysia's estimate of 5.0% growth. In comparison, the country experienced a contraction of 8.0% in exports in 2023. "This is mainly supported by the ongoing improvement in E&E exports along with a global soft landing, a sustained recovery in China’s economy and expected global monetary policy loosening before year end," UOB said. "The Malaysian government’s bold and effective implementation of various national master plans including the Semiconductor Strategic Plan will be additional catalysts to the trade prospect in the short and medium term." While acknowledging potential slowdown risks in China due to "ongoing housing debacle and trade restrictions with the West," Malaysia's Hong Leong Bank in a note said that it anticipates sustained growth in the broader region to help mitigate these concerns. Barring unforeseen materialization of other downside risks, and supported by a "stable world economy," the bank remains optimistic about Malaysia's export outlook. Factors such as the uptick in the global tech cycle and still elevated commodity prices further bolster this positive outlook. Hong Leong Bank expects Malaysia's export growth to accelerate, potentially reaching double-digit figures in the second half of the year. However, the overall contribution to GDP growth may be moderated by a concurrent, or even stronger, recovery in imports, driven by the continued expansion of domestic demand. MAY EXPORTS GROWTH DRIVEN BY ELECTRONICS, PALM PRODUCTS May’s export growth was largely thanks to strong improvement in shipments of manufactured and agriculture goods. Exports of manufactured goods, which account for 86.2% of total exports, grew 8.3% year-on-year in May, following a 7.1% increase in April. This growth was fueled by robust demand for electrical and electronic (E&E) products, which saw a 7.6% increase in May compared to a 0.6% increase in April. Agriculture goods, comprising 7.1% of total exports, continued their upward trend with a 22.1% year on year increase in May, building on April's 13.8% growth. This was primarily driven by robust exports of palm oil and palm oil-based products, which rose 25.7% year on year in May thanks to increases in both volume and export prices. REGIONAL TRENDSExports to the US soared for the fifth consecutive month, recording a 17.4% year-on-year increase in May, closely following April's 17.3% growth. This surge was primarily attributed to higher shipments of E&E products. Exports to Singapore also experienced a significant boost, jumping 13.7% year on year in May after a 9.0% increase in April. This rise was also fueled by greater exports of E&E products. The robust growth in exports to Singapore, coupled with a fifth straight month of increased shipments to Vietnam, helped sustain a healthy 10.4% expansion in exports to the ASEAN region as a whole, slightly lower than April's 11.3%. While exports to the EU and China also grew, they recorded smaller gains of 7.2% and 1.6% respectively in May, compared to 11.3% and 2.1% in April. Resilient demand for palm oil & palm oil-based products, optical & scientific equipment, and chemicals & chemical products supported shipments to the EU. Meanwhile, exports to China were primarily driven by demand for paper & pulp products, refined petroleum products, and palm oil & palm oil-based agriculture goods. Thumbnail photo shows containers at a port in Butterworth, Malaysia. (Source: Vincent Thian/AP/Shutterstock) Focus article by Nurluqman Suratman

21-Jun-2024

SAO PAULO (ICIS)–Despite Colombia’s Supreme Court ruling correcting some aspects of the tax on single-use plastics approved by Congress, the industry is still largely skeptical about the tax’s principle or about a smooth implementation, according to the president at plastics trade group Acoplasticos. Daniel Mitchell added that the regulations put a burden on companies’ finances and may, in the medium and long run, affect their ability to invest in new technologies and processes to make the circular economy a reality. Since President Gustavo Petro took office, Colombia has passed two significant regulations affecting the plastic chain: the tax on plastics, and the progressive elimination in the market of single-use plastics. The first law, the tax on plastics came into effect at the end of 2022 but legislators left some open questions as to who would pay the tax. So much so that Colombia’s Supreme Court ruled in November correcting some aspects of the law, although it did not question the principle of the tax. In August 2023, the head of chemicals at Colombia’s industrial trade group Andi, Daniela Sotello, had already said in an interview with ICIS that the tax’s implementation had proved troublesome and explained how, at the time, many players in the chain were still uncertain of who would pay the tax. SUPREME COURT RULINGIt is good there is more clarity now, not least because the first phase of the tax on single-use plastics is coming into force on 7 July, as planned in the original regulation’s text. A second phase in the mid-2022s will start implementing recycling targets and the regulation should be fully implemented by 2030. “Thankfully, there is more clarity now on who should pay the tax, with the Supreme Court ruling it must be absorbed by producers and not users of the plastics. However, this brings yet another confusion to the table: is it the producers of plastics, the polymers producers, or the producers of the products packed in those plastics?” said Mitchell. “We lived with the initial confusion [producers paying or users paying] for 11 months, until November 2023 ruling. The first payment of the tax was done at the end of the fiscal year in February 2024, as planned.” In the end, players managed to muddle through the confusion and managed to pay the tax, although Mitchell says it did cause a slight uptick in prices which, he concedes, is obviously the purpose of the tax so consumption is reduced. But then, some particularities in the Colombian law are striking. For instance, the prices of soft drinks in plastic bottles are not included in the tax: according to the law, Coca-Cola and others are included in the so-called "basic family basket". According to Acoplasticos, prices for the final products with plastics which were included in the regulation have increased between 0.5% and 4% due to the plastic tax. “In sophisticated packaging, cosmetics and the likes, prices of the final product have risen around 4%, although in that chain the impact can go up to 6% in some cases. In most cases, the increases in prices have been between 1% and 2%,” said Mitchell. “For the consumers, the price rises have not been as noticeable as some feared. To give you an idea, the tax collected in its first year Colombian pesos (Ps) 70 billion ($17m). I imagine that amount, when divided by the 45 million Colombian consumers, was not that noticeable in their pockets, but the tax has put a burden on plastics producers and its customers, not least for the chaotic implementation.” THE PLASTIC PROBLEMClarified the first hurdles, the more meaningful debate. A trade group representing plastics producers will invariably oppose a tax on their operations, but the plastics industry remains on the eye of the storm in the debate about sustainability. Plastics producers have for decades operated with healthy profits most years. Meanwhile, plastics pollution has grown in little more than half a century into a problem which is causing most humans, according to several studies, to carry plastics in them: homo plastic so to speak. While no producer will accept direct responsibility in the pollution problem, some sources within the chain in Latin America say the industry could have at least done one thing better. According to the CEO of Chile’s plastics trade group Asipla, Magdalena Balcells, producers knew a long time ago the plastic pollution problem was becoming serious, and either were late to talk about it and alert the authorities, or ignored it completely. “Obviously, a company producing plastics has no competencies about the plastic waste, which falls on the authorities. Plastics have a big demand and are indispensable in so many applications. The debate has really taken off, rightly so, in the past 15 years – before that, the talk was mostly about how plastics were so useful and almost a win-win for all elements in the chain,” said Mitchell. “Things have changed, and I really think the circular economy is taking off. This is due to a combination of regulation, private sector initiatives, and more engagement from consumers. We need to reach a system where there is not waste, full stop.” – But in such a scenario, plastic producers of today would effectively run out of a business? If everything is recycled, there would not be a need to produce virgin material? – You will always have a small number of applications in which, at least for now, you cannot use recycled materials. Also, I think that while we may aim to recycle all plastics, the demand for plastics will always be larger than that supply of recyclable material. ($1 = Ps4,172) Interview article by Jonathan Lopez Front page picture: Plastic bottles and plastic rubbish are shredded and pressed; archive image Source Jochen Tack/imageBROKER/Shutterstock

19-Jun-2024

SINGAPORE (ICIS)–China has slammed EU’s proposal to impose provisional tariffs on imports of Chinese electric vehicles (EVs), denouncing it as a "blatant act of protectionism”, raising concerns that a trade war between Asia’s biggest economy and a new western front is brewing. EU tariffs on Chinese EVs to rise to 27-48% Retaliatory measures from China likely EU imports of China cars surge sevenfold over three years "The European side has disregarded facts and WTO [World Trade Organization] rules, ignored China's repeated strong opposition, and ignored the appeals and dissuasion of multiple EU member state governments and industries," China’s Ministry of Commerce said in a statement issued late on 12 June. The European Commission on 12 June notified Chinese automakers, including EV giant BYD, Geely, and state-owned SAIC Motor Corp, that it will impose additional provisional tariffs of 17% to 38% on imported Chinese EVs from around 4 July. These will be applied to existing 10% tariffs imposed on all Chinese EVs, with the final rate determined by each carmaker's level of cooperation with EU's anti-subsidy investigation launched in September last year. NEW FRONT FOR TIT-FOR-TAT TRADE WAR China’s commerce ministry has urged the EU to "immediately correct its wrong practices" and "properly handle trade frictions through dialogue and consultation". The ministry said it will "resolutely take all necessary measures to firmly defend the legitimate rights and interests of Chinese companies". "This move by the European side not only harms the legitimate rights and interests of the Chinese electric vehicle industry but will also disrupt and distort the global automotive industry chain and supply chain, including the EU," it said. The EU's move follows the US' tariff hikes announced last month on Chinese imports of EVs, batteries and other materials, starting 1 August. In 2018, then US President Donald Trump initiated a trade war with China by imposing tariffs on Chinese imports to address alleged trade imbalances, intellectual property theft, and unfair trade practices. China retaliated with tariffs on US goods, escalating tensions between the two biggest economies in the world. While reviews by the US and EU on Chinese goods were under way, Beijing launched in May an anti-dumping investigation into imported polyoxymethylene (POM) copolymer, also known as polyformaldehyde copolymer – a key material in electronics and automotive manufacturing. China's commerce ministry alleged that the plastic is being sold below market value, harming domestic producers. The probe, targeting imports from the US, EU, Taiwan, and Japan, could last up to 18 months and is seen as a direct response to their recent trade barriers against Chinese goods. In the case of Taiwan, China has also suspended tariff concessions on 134 more products from the island, including base oil, chemicals, and chemical products, citing Taiwan’s supposed violations of the Cross-Strait Economic Cooperation Framework Agreement (ECFA) with the mainland. Meanwhile, Japan’s tightened export controls on 23 types of semiconductor manufacturing equipment that took effect on July 2023 was deemed in line with restrictions imposed by the US and the Netherlands, potentially hindering China's access to advanced chipmaking technology. China may issue further retaliatory measures, potentially impacting global supply chains and escalating trade tensions with major economies in the west. The automotive industry is a major global consumer of petrochemicals that contributes more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). CHINA 2023 CAR EXPORTS TO EU SURGE China’s exports of automobiles to the EU have surged over the past year, particularly in the battery electric vehicle (BEV) segment, according to Nomura Global Markets Research. Cars produced in China accounted for 20% of all BEV registrations in the EU during the first two months of 2024, it said, citing data from automotive business intelligence firm JATO Dynamics. An analysis of January-April 2024 sales figures from China’s top three EV manufacturers in the EU, however, suggests that their overall presence in the region is still nascent, Nomura noted. In 2023, EU’s imports of Chinese EVs surged to $11.5 billion, more than sevenfold increase from $1.6 billion in 2020, according to think thank Rhodium Group. China accounted for 37% of EU’s total EV imports last year, it said. In the first quarter of 2024, about 40% of China’s EV exports or 145,002 units went to Europe, according to official customs data. Focus article by Nurluqman Suratman Thumbnail image: An electric car at a charging station near the European Commission building in Brussels, Belgium. (Xinhua/Shutterstock)

13-Jun-2024

LONDON (ICIS)–Germany’s auto industry is opposed to tariffs on electric vehicles (EVs) from China, trade group German Association of the Automotive Industry said on Wednesday. The group, known as VDA in its German acronym, was reacting to a European Commission proposal of tariffs on battery electric vehicles (BEVs) from China after an investigation concluded they benefited from unfair subsidies. VDA said the proposed tariffs were not the right tool to strengthen the competitiveness of Europe’s auto industry. Instead, the tariffs would further escalate the risk of trade conflicts, to the detriment of Germany’s automakers, it said. “The fact is that we need China to solve global problems,” in particularly in dealing with the climate crisis, it said. China played a crucial role in a successful transformation towards electromobility and digitalization, and a trade conflict would jeopardize this transformation, the group said. However, VDA added that the extent of the subsidies China grants EV makers was “a challenge” for Europe and it called on China to make “constructive proposals” to settle the dispute. Germany ranks first in Europe and second after China globally in terms of EV production, and the bulk of German EV production goes into export, according to VDA data released this week. Industry observers have noted that Germany-based EV production relies on imports of materials and batteries from China. The US last month announced tariff hikes on Chinese imports of EVs, batteries and other materials, starting 1 August. In related news, the business climate in Germany’s automotive industry deteriorated in May amid fears about impacts on German automakers from the conflict with China, according to a recent survey by Munich-based ifo research. The automotive industry is a major global consumer of petrochemicals that contributes more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). Additional reporting by Graeme Paterson Please also visit the ICIS topic page Automotive: Impact on chemicals Thumbnail photo shows a Volkswagen EV; photo source: Volkswagen

12-Jun-2024

HOUSTON (ICIS)–INEOS Styrolution will close its 445,000 tonnes/year styrene production plant in Sarnia, Ontario, Canada, by June 2026, the company announced Tuesday. Styrolution has been involved in a dispute with Canadian government officials over the plant after a nearby indigenous group complained about benzene emission levels from the site. The company shut the plant for maintenance in April after the complaints surfaced. But Styrolution said that was not the reason for the plant closure. “Our decision to permanently close the Sarnia site by June 2026 is irrespective of the current situation,” the company said in a news release. Styrene producers in North America, as well as globally, have been battling poor economics due to over-capacity. North American styrene operating rates have been under 70% so far this year. China, once a key outlet for North American styrene, has added significant styrene capacity over the past three years. China commissioned 3.7 million tonnes of styrene capacity in 2023 alone. “This difficult business decision to permanently close our Sarnia site was made following a lengthy evaluation process and is based on the economics of the facility within a wider industry context,” Styrolution CEO Steve Harrington said. “The long-term prospects for the Sarnia site have worsened to the point that it is no longer an economically viable operating asset.” Even with the loss of styrene supply to the market, the Sarnia plant closure in April has had no impact on styrene spot prices. “Additional large investments that are unrelated to the potential costs of restarting operations would be necessary in the near future. Such investments would be economically impractical given today’s challenging industry environment,” Harrington said. In late May, Canada’s federal environment minister extended an order imposing stricter benzene emission controls on plants operating at the Sarnia petrochemicals production hub in southern Ontario, close to the US border and Detroit, Michigan, for two years. The order came after an Ontario provincial ministry suspended production operations at Styrolution's Sarnia styrene plant following the complaints from residents about potentially high benzene emissions. In addition to styrene, the Sarnia plant has ethylbenzene production capacity of 490,000 tonnes/year, according to the ICIS Supply and Demand Database. Styrolution operates two additional styrene plants in North America – the 770,000 tonnes/year facility in Bayport, Texas, and the 455,000 tonnes/year plant in Texas City, Texas. The Sarnia plant represents approximately 7% of North American nameplate styrene capacity. Styrene is a chemical used to make latex and polystyrene resins, which in turn are used to make plastic packaging, disposable cups and insulation. Major North American styrene producers include AmSty, INEOS Styrolution, LyondellBasell Chemical, Shell Chemicals Canada, Total Petrochemicals and Westlake Styrene. Thumbnail shows a cup made of polystyrene (PS), which is one of the main derivatives of styrene. Image by ICIS.

11-Jun-2024