Purified terephthalic acid (PTA)

SINGAPORE (ICIS)–Sentiment in Asia’s petrochemical markets remains cautious with prices of some products – particularly in the southeastern region – were rising on tight supply, amid escalating trade tensions between the US and its major trading partners, including China. China’s oversupply-driven exports weigh on markets; post-Lunar New Year demand weaker than expected US tariff fears cause jitters across downstream industries Methanol supply constraints persist TRADES REMAIN SUBDUED Market activity in key chemical segments remains muted as buyers were staying on the sidelines, waiting for clarity on US trade policies and overall demand recovery. In the benzene market, South Korea’s January exports to the US slumped by 81% year on year to 15,000 tonnes, according to ICIS data. The decline was attributed to increased European supply to the US. “The market is cautious as everyone is waiting for more clarity on US tariff policies,” a trader said. South Korea faces potential hefty tariffs under the US’ plan to impose reciprocal tariffs from 2 April, even though the two countries have an existing free trade agreement. In the caprolactam (capro) market, producers are grappling with poor margins while supply within China continues to grow. “Capro margins have been bad for six months now, and demand didn’t pick up post-Lunar New Year,” said a Chinese producer. Chinese producers were exporting more to southeast Asia and Europe, in view of a general oversupply of petrochemicals and muted demand in the domestic market and following the US’ new 20% tariffs on all Chinese goods. For polypropylene (PP), China has ramped up exports to Vietnam and other southeast Asian nations which were exerting downward pressure on prices. With more Chinese capacity coming online, this trade flow is likely to continue. Chinese producers are increasingly willing to accept lower margins to capture market share in the polyolefin markets, creating ripple effects across Asia and beyond, forcing regional producers to adjust pricing strategies to remain competitive. However, these actions could be met with antidumping duties (ADD) as southeast Asian governments act to protect domestic producers. SHIPPING SECTOR WARY OF US POLICIES US protectionism is on the rise again under President Donald Trump’s administration, with an ongoing probe being conducted on China’s shipbuilding industry, which may be slapped with potential duties of up to $1.5 million per vessel. This move aims to deter reliance on Chinese-built ships and, instead, encourage investment in the US shipbuilding sector. China dominates the global shipbuilding industry, with over 81% of new tankers being built in the country, according to shipbroker Xclusiv in a November report. The fear is that if these tariffs come through, immediate cost impacts will be felt, especially on long-haul trades. Meanwhile, weaker freight demand post-Lunar New Year has also softened freight rates. Most downstream producers in China resumed operations in H2 February, after an extended holiday break. China was on official holiday from 28 January to 4 February. The northeast Asia winter was milder than expected, which reduced seasonal trade flows. DISRUPTIONS TIGHTEN SUPPLY While some chemical markets struggle with oversupply, others are experiencing tight supply due to plant outages. For methanol, supply is constrained in Malaysia, with Petronas’ unit experiencing operational issues, and Sarawak Petchem’s unit shut from late January. Iranian methanol plants have also been offline due to winter gas shortages, pushing Indian import prices up by $60/tonne within a week. Meanwhile, Russian supply disruptions due to drone attacks have tightened naphtha availability, strengthening prices. On the acetic acid front, plant turnarounds in China, Malaysia, and Japan initially tightened supply, but these units have since restarted, thereby improving availability of the material. OUTLOOK MIXED Market players remain wary of near-term price movements as supply and demand fundamentals shift across regions. March shipments for PE and PP in southeast Asia have largely been sold out, while Indonesian buyers are reluctant to commit to April purchases amid the Muslim fasting month of Ramadan, which started 1 March. Ramadan is observed in most parts of southeast Asia including Indonesia, southeast Asia’s biggest economy with a predominantly Muslim population. With uncertainties surrounding US’ trade policies, Chinese exports, and geopolitical risks, market sentiment remains mixed. Players are closely monitoring tariff developments and the potential impacts of further supply disruptions in key markets. Focus article by Jonathan Yee Additional reporting from Seng Li Peng, Isaac Tan, Tan Hwee Hwee, Angeline Soh, Jasmine Khoo, Julia Tan, Josh Quah, Damini Dabholkar, Doris He, Jackie Wong Thumbnail image: At Qingdao Port in Shandong province, China on 6 March 2025. (Costfoto/NurPhoto/Shutterstock)

10-Mar-2025

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 7 March. China Feb manufacturing activity rebounds on seasonality By Fanny Zhang 03-Mar-25 11:47 SINGAPORE (ICIS)–China's official manufacturing purchasing managers' index (PMI) in February marked a return to expansion territory after a soft January reading as factories resumed operations after the Lunar New Year (LNY) holiday. INSIGHT: China set to maintain "around 5%" growth target By Nurluqman Suratman 04-Mar-25 11:00 SINGAPORE (ICIS)–China's "Two Sessions" this week will be closely watched as the government work report is released, outlining the country's policy priorities for the year amid escalating trade tensions with the US. UPDATE: ADNOC, OMV agree on polyolefins JV worth $60 billion By Jonathan Yee 04-Mar-25 16:45 SINGAPORE (ICIS)–Austria’s OMV and the UAE’s Abu Dhabi National Oil Co (ADNOC) on Tuesday agreed to form a $60 billion joint venture (JV) by combining polyolefins businesses Borouge and Borealis following two-year talks. Asia acetic acid market softens on easing supply, downstream turnarounds By Hwee Hwee Tan 05-Mar-25 14:05 SINGAPORE (ICIS)–Asian spot prices for acetic acid imports and exports are being dampened by lengthening supply and softening demand tied to a downstream sector. China targets record 2025 budget deficit to rev up economy By Fanny Zhang 05-Mar-25 14:50 SINGAPORE (ICIS)–China has set its 2025 fiscal deficit target at a record yuan (CNY) 5.66 trillion ($780 billion), equivalent to around 4% of GDP, to fund the government’s stimulus measures and ensure the world’s second-biggest economy would post a 5% growth. Thai central bank lowers interest on slower economic growth, global trade tensions By Jonathan Yee 05-Mar-25 15:34 SINGAPORE (ICIS)–Slower than expected economic growth and downside risks such as escalating global trade tensions spurred by US trade policy led Thailand’s central bank to cut its key interest rate by 0.25 percentage points to 2.00 on 26 February, the Bank of Thailand (BOT) said. PODCAST: Asia propylene demand curbed by weaker PO margins By Damini Dabholkar 06-Mar-25 00:07 SINGAPORE (ICIS)–The northeast Asian propylene import markets have been weighed down by lengthening supply amid restarts at propane dehydrogenation (PDH) units. However, lower affordability levels from derivatives such as propylene oxide (PO) have also curbed import demand. China PP suppliers persist with export end goal amid margin challenges By Jackie Wong 06-Mar-25 11:08 SINGAPORE (ICIS)–Despite poor margins for polypropylene (PP), suppliers in China are expected to continue to persevere with their plans to expand their export sales network and win market shares in southeast Asia. South Korea Feb inflation eases amid growing economic headwinds By Nurluqman Suratman 06-Mar-25 13:50 SINGAPORE (ICIS)–South Korea's headline inflation eased in February, giving the central bank flexibility to loosen monetary policy to boost economic activity amid a slowdown. Thai PTTGC hopes to snap out of losses; eyes US ethane feed for crackers By Nurluqman Suratman 07-Mar-25 14:46 SINGAPORE (ICIS)–Imports of US ethane feedstock will be a key component of Thai producer PTT Global Chemical's (PTTGC) broader strategy to recover from recent losses, alongside initiatives to enhance competitiveness and expand into high-value businesses.

10-Mar-2025

HOUSTON (ICIS)–US-listed shares of chemical companies fell sharply – many by more than 5% – on Monday as the US proceeds with plans to impose tariffs on Canada, Mexico and China, its three biggest trading partners. The selloff in chemical shares was sharper than that for the general market. The following table shows the stock indices followed by ICIS. Index 3-Mar Change % Dow Jones Industrial Average 43,191.24 -649.67 -1.48% S&P 500 5,849.72 -104.78 -1.76% Dow Jones US Chemicals Index 851.42 -17.99 -2.07% S&P 500 Chemicals Industry Index 901.32 -17.93 -1.95% Shares of every US-listed company followed by ICIS fell. TUESDAY'S TARIFFSUnless the nations reach last-minute deals, the US will impose 25% tariffs on all imports from Mexico, 10% tariffs on all energy imports from Canada and 25% tariffs on all other imports from Canada. The US will also proceed with an additional 10% that it proposed on all imports from China, according to a post from the White House’s Rapid Response account on social media platform X. This is on top of the 10% in new tariffs that the US already imposed earlier in 2025 on imports from China. EFFECT ON US MARKETSWhile the US has large trade surpluses in polyethylene (PE), it still imports large amounts of the plastic from Canada. Many of these imports go to processors in the bordering states of Illinois, Michigan and Ohio. These states are far from most of the plastic plants in the US, which are concentrated in Texas and Louisiana. Processors in these states that border Canada will need to pay the tariffs or pay higher shipping costs to secure material from suppliers farther away. The US also imports notable amounts of purified terephthalic acid (PTA) from Canada and Mexico as well as methylene diphenyl diisocyanate (MDI) from China. The US receives large Canadian shipments of ammonia and potassium chloride, which is also known as muriate of potash (MOP). At least one company, Canada's Chemtrade Logistics, said it expected to pass a larger part of the tariffs to its customers. Chemtrade Logistics exports sodium chlorate, chlorine and sulfuric acid to the US. RETALIATIONChina already has retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles. China has restricted exports of antimony and bismuth. Antimony is used to make catalysts for polyethylene terephthalate (PET), and bismuth is used to make catalysts for polyurethanes. Canada had proposed retaliatory tariffs of 25% on Canadian dollars (C$) 155 billion ($107 billion) worth of US imports. The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others. Canada was preparing a second list, worth C$125 billion. All three countries could impose retaliatory tariffs on the substantial exports of PE, polyvinyl chloride (PVC) and other ethylene derivatives from the US. OTHER POSSIBLE US TARIFFSThe US has threatened to impose tariffs of 25% on imports from the EU. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. In early April, the US said it would introduce retaliatory tariffs on imports from the rest of the world. These tariffs will consider what the US considers non-tariff trade barriers, such as value added tax (VAT) systems. CHEM STOCK PERFORMANCEThe following table shows the performances of US-listed shares followed by ICIS. Symbol Name $ Current Price $ Change % Change ASIX AdvanSix 26.82 -1.10 -3.94% AVNT Avient 41.23 -1.54 -3.60% AXTA Axalta Coating Systems 35.1 -1.11 -3.07% BAK Braskem 3.52 -0.17 -4.61% CC Chemours 13.86 -1.09 -7.29% CE Celanese 47.02 -3.92 -7.70% DD DuPont 78.83 -2.53 -3.11% DOW Dow 36.06 -2.05 -5.38% EMN Eastman 94.46 -3.39 -3.46% FUL HB Fuller 55.73 -1.01 -1.78% HUN Huntsman 16.04 -0.89 -5.26% KRO Kronos Worldwide 8.43 -0.32 -3.66% LYB LyondellBasell 73.41 -3.42 -4.45% MEOH Methanex 41.47 -2.57 -5.84% NEU NewMarket 562.65 -7.46 -1.31% NGVT Ingevity 45.24 -2.42 -5.08% OLN Olin 23.87 -1.52 -5.99% PPG PPG 111.72 -1.50 -1.32% RPM RPM International 123.09 -0.80 -0.65% SCL Stepan 58 -3.375 -5.50% SHW Sherwin-Williams 356.73 -4.75 -1.31% TROX Tronox 7.02 -0.615 -8.06% TSE Trinseo 4.62 -0.30 -6.10% WLK Westlake 108.71 -3.59 -3.20% ($1 = C$1.45) Please also visit the US tariff, policy – impact on chemicals and energy topic page Thumbnail shows money. Image by ICIS.

04-Mar-2025

HOUSTON (ICIS)–The US will proceed with its proposed 25% tariffs on most goods from Canada and Mexico, and the nation will increase tariffs on imports from China by another 10%, all effective on 4 March, the president said on Thursday. In addition, the US will proceed with its proposed reciprocal tariffs on 2 April, President Donald Trump said on social media. The 4 March date still leaves time for the US to reach some agreement with Canada or Mexico to cancel or delay the proposed tariffs. The US agreed to a 30-day delay with Canada and Mexico on 3 February, the day before it had initially planned to impose the tariffs. On Wednesday, 26 February, Mexico's president said such an agreement was in the works. No agreement was reached with China, so the 10% tariffs went into effect. China retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles. RATIONAL FOR THE TARIFFSThe US will proceed with the tariffs, because Trump said illegal drugs that are made in China continue to enter the country from Canada and Mexico. "Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels. A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China," Trump said on social media. "We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled. China will likewise be charged an additional 10% Tariff on that date." THE PROPOSED TARIFFSUnder the proposal, the US will impose tariffs of 25% on all imports from Mexico. It would impose tariffs of 25% on all Canadian imports except energy. Energy imports from Canada would receive tariffs of 10%. Canada had already proposed retaliatory tariffs of 25% on Canadian dollar (C$) 155 billion ($108 billion) worth of US imports. The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others. Canada was preparing a second list, worth C$125 billion. EFFECT ON CHEMICALSCanada is a large source of imports of polyethylene (PE) to plastic processing hubs in the bordering states of Michigan, Illinois and Ohio. In addition, Canada exports PE to Texas. Canada also exports notable amounts of polypropylene (PP) and ammonia to the US. The nation accounts for nearly 90% of all US imports of potassium chloride, also known as muriate of potash (MOP). Mexico and Canada export meaningful amounts of purified terephthalic acid (PTA) to the US. China exports notable amounts of methylene diphenyl diisocyanate (MDI). Mexico and China are important sources of the main feedstock used to make fluorochemicals and fluoropolymers. OTHER TARIFFS PROPOSALS The US has threatened to impose tariffs of 25% on imports from the EU. On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium. Please also visit the US tariff, policy – impact on chemicals and energy topic page ($1 = C$1.44) Thumbnail photo: Containers. (By XINHUA/Shutterstock)

27-Feb-2025

HOUSTON (ICIS)–Before Westlake would consider expanding ethylene capacity at a joint-venture cracker, it would need to conduct a cost analysis that would take into account higher labor and material costs caused by inflation, the chief financial officer said on Monday. The additional ethylene could be used by Westlake's vinyl chloride monomer (VCM) plant in Geismar, Louisiana, which it is expanding. Westlake has not provided an update on when that VCM expansion project could start operations. The additional VCM capacity would require ethylene from the merchant market. Westlake could reduce its exposure to the merchant market by increasing its ethylene capacity. One option for Westlake would be to expand its joint-venture cracker in Westlake Louisiana. Westlake has a 50% stake with Lotte Chemical in the LACC joint venture. "It is important that we find a way to cost effectively be able to try to shorten that merchant position in ethylene," said Steven Bender, chief financial officer. He made his comments during an earnings conference call. "But we want to do this in a cost-effective, value-added way," he said. Westlake could achieve that through a number of ways, including a debottlenecking project at the joint venture cracker, Bender said. The joint venture cracker could be expanded by about 40%, Bender said. If Lotte participates, Westlake would be entitled to half of the ethylene produced by the expansion project. Westlake would then need to get a fresh estimate about the cost of the project on a dollar per pound investment basis, Bender said. "As we all know, there has been labor inflation and materials cost inflation, so I would not want to rely on anything that we have done in the last couple of years as an indicator of capital cost for that," he said. Bender did not provide any estimates about cost inflation, and he did not specify any causes of the cost increases. OTHER PROJECTS SAW COST INFLATIONOther companies reported in 2023 large cost increases that led some to delay or cancel projects. Alpek, Indorama and Far Eastern New Century (FENC) temporarily halted work on an integrated polyester plant because of high costs. Phillips 66 said the project costs for its renewable diesel project in California rose by more than 40%. Chemtrade Logistics put on hold its ultrapure sulfuric acid plant project after costs rose by 50%. RESUMPTION OF STEEL, ALUMINUM TARIFFSConstruction costs could rise further after tariffs of 25% go into effect on 12 March on imports of steel and aluminum products. The following will take place under the tariff order: The US will withdraw the exemptions to the 25% steel tariffs that it granted to South Korea, Argentina, Australia, Brazil, Mexico, the EU, Japan, the UK and Ukraine. More steel products will fall under the tariff. The US will restrict the ability for companies to seek exemptions from the duties. The US will raise its tariff on imports of aluminum to 25% from 10% while terminating agreements it had reached with Argentina, Australia, Canada, Mexico, the EU and the UK. The 25% tariff will cover more aluminum products. Thumbnail shows pipe composed of polyvinyl chloride (PVC), which is made from VCM. Image by Shutterstock.

24-Feb-2025

LONDON (ICIS)–In this podcast, market editors Zubair Adam (MX) and Miguel Rodriguez Fernandez (PX) discuss the challenges for future demand. MX are traded in two grades. The isomer-grade xylene is mainly used as a feedstock for PX and OX production, while the main application for solvent grade is as a raw material for dye, organic pigment, perfume and medicines, as well as a general solvent for paint and agricultural pesticides. PX is widely used as a building block to manufacture other industrial chemicals, notably DMT and purified terephthalic acid (PTA), which is used in the production of PET.

19-Feb-2025

SAO PAULO (ICIS)–Brazilian chemicals producer Unigel has concluded its debt restructuring process worth Brazilian reais (R) 5.1 billion ($885 million) after a Sao Paulo business court greenlit the plans drawn up by creditors. Unigel said it would be able to deleverage its debts by around 50% with the restructuring process’ conversion of R5.1 billion of existing debt into new financial instruments. The restructuring puts an end to the decades-long private ownership of Unigel in the hands of its founder, 88-year-old Henri Armand Szlezynger. “The execution of the RE [restructuring] Plan marks a pivotal transition in Unigel’s governance framework, with Option A [main] Creditors now holding a 50% stake in the company’s equity structure,” said Unigel. The new majority owners headhunted for the CEO position the Brazilian executive Dario Gaeta, with decades of experience at industrial and agricultural companies. Up to 2024, he was chief operating officer at ethanol producer Atvos and, prior to that, he was the CEO at Tiete Agroindustrial, another company in the sugar and ethanol sector, according to Gaeta’s LinkedIn profile. Former CEO Roberto Noronha has been demoted to board member, and the vice president who has overseen the restructuring, Daniel Zilberknop, an old name in Unigel, has been appointed chairman of the board. Unigel’s new board composition Position Name Representative Chairman of the Board Daniel Zilberknop Independent CEO Dario Gaeta Not provided Board Member Marc Buckingham Szlezynger Cigel Board Member Roberto Noronha Santos Cigel Board Member Pedro Wongtschowski Cigel Board Member Fabio de Barros Pinheiro Creditors Board Member Kofi William Bentsi-Enchill Creditors Board Member Gregorio Mario Charnas Creditors The restructuring plan also signals an exit from the fertilizers sector, as already outlined at the beginning of the restructuring process by creditors. High prices for natural gas – fertilizers’ main feedstock – was the main cause for that part of the business to start faltering, dragging the rest behind it in the end. Some plants which were leased to Unigel by Brazil’s state-owned energy major Petrobras are reportedly on course to return under Petrobras’ umbrella, even if Unigel may continue operating them. Unigel, then, is to remain mostly what it was before it ventured into fertilizers and was caught up in a major sector downturn. The company mostly produces styrenics and acrylics. For products and capacities, see bottom table. SULPHURIC ACID PLANTEarlier in January, Unigel presented plans to finish construction of its sulphuric acid plant in the state of Bahia, which had been paused as the company's financial woes increased. Unigel said it would invest $36.8 million to finish up the plant in Camacari, aiming to start it up by September. Production capacities were not disclosed. When fully functioning, the plant will allow Unigel to reduce its acid purchases in the open market. Acid is a key chemical used in many other chemical and industrial processes. Jonathan Szwarc, head of Latin America credit research at data firm specializing in leveraged capital markets Debtwire, who covered Unigel in the past, said by reducing its dependency on imports the sulphuric acid plant was a sound project from which Unigel’s could start building up its recovery. “The numbers for that project are sound. From my time covering Unigel, I remember the return on investment was expected to be very healthy: in up to four years, the company expects to have paid off the investment, such are the large amounts of acid it has to purchase in the open market,” said Szwarc. Earlier this month, Unigel also presented, for the first time in several quarters, a financial forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) up to 2030. The company has not published any financial results since 2023, a provision contemplated under Brazilian corporate law for companies in financial distress. For 2025, Unigel said it expected upsides coming from a 5% increase in Brazil’s styrene import tariff ($4 million positive contribution) and a higher rate in the REIQ tax benefit system for chemicals companies ($14 million). According to Unigel, its EBITDA could rise to $182 million by 2030. Unigel forecasts 2025 2026 2027 2028 2029 2030 EBITDA (in $ million) 49 142 164 176 173 182 Whether Unigel’s medium-term forecasts are realized remains to the seen, as it ultimately is a company in very deep financial distress for the past year and a half, operating in a market – petrochemicals – which is going through one of the longest sector’s downturns. “2030 is indeed quite a long forecast on this occasion. But, of course, for a judge to approve your restructuring plan you must present some sort of credible plan: detailed forecasts on financials, on spreads, on production…” said Szwarc. “Whether those forecasts end up realized, that’s another matter. But as we say in this world – an Excel [spreadsheet] can withstand almost anything,” he concluded, ironically. ($1 = R5.76) Additional information by Yashas Mudumbai Focus article by Jonathan Lopez 

04-Feb-2025

Correction: In the ICIS story headlined “INSIGHT: US tariffs unleash higher costs to nation's chem industry” dated 3 February 2025, the wrong volumes were used for the following imports: Canadian ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94; Canadian polyethylene having a specific gravity of 0.94 or more, in primary forms; Canadian polyethylene having a specific gravity of less than 0.94, in primary forms; Canadian polypropylene, in primary forms; Canadian mixed xylene isomers; Mexican polypropylene, in primary forms; and Mexican cyclohexane. The US did not import cyclohexane from Mexico in 2023. A corrected story follows. HOUSTON (ICIS)–The tariffs that the US will impose on all imports from Canada, Mexico and China will unleash higher costs for the nation's chemical industry, create supply-chain snarls and open it to retaliation. For Canada, the US will impose 10% tariffs on imports of energy and 25% tariffs on all other imports. For Mexico, the US imposed 25% tariffs on all imports but the countries' presidents said on Monday the tariffs are being paused for a month. For China, the US will impose 10% tariffs on all imports. US IMPORTS LARGE AMOUNTS OF PE FROM CANADAUS petrochemical production is concentrated along its Gulf Coast, which is far from many of its manufacturing hubs in the northeastern and midwestern parts of the country. As a result, individual states import large amounts of polyethylene (PE) from Canada – even though the nation as a whole has a large surplus of the material. Even Texas imports large amounts of PE from Canada – despite its abundance of plants that produce the polymer. In addition, polyester plants in North and South Carolina import large amounts of the feedstocks monoethylene glycol (MEG) and purified terephthalic acid (PTA) from Canada. The US as a whole imports significant amounts of polypropylene (PP) and polyvinyl chloride (PVC) from Canada – again, despite its surplus of these plastics. The following table lists some of the main plastics and chemicals that the US imported from Canada in 2023. The products are organized by their harmonized tariff schedule (HTS) code. HTS PRODUCT MEASUREMENT VOLUMES 3901.40.00 Ethylene-alpha-olefin copolymers, having a specific gravity of less than 0.94 kilograms 1,319,817,405 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 1,088,071,523 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 420,561,390 2917.36.00 Terephthalic acid and its salts kilograms 407,710,439 2905.31.00 Ethylene Glycol kilograms 329,542,378 3902.10.00 Polypropylene, in primary forms kilograms 271,201,880 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 188,800,413 2902.44.00 Mixed xylene isomers liters 746,072 2905.12.00 Propan-1-ol (Propyl alcohol) and Propan-2-ol (isopropyl alcohol) kilograms 87,805,095 3901.30.60 Ethylene-vinyl acetate copolymers kilograms 71,372,396 Source: US International Trade Commission (ITC) IMPORTS FROM MEXICOMexico is not as large of a source of US petrochemical imports as Canada, but shipments from the country are still noteworthy. The following table lists some of the main plastics and chemicals that the US imported from Mexico in 2023. HTS PRODUCT MEASUREMENT VOLUMES 2917.36.00 Terephthalic acid and its salts kilograms 69,230,708 3901.10.50 Polyethylene having a specific gravity of less than 0.94, in primary forms kilograms 34,674,435 2915.24.00 Acetic anhydride kilograms 25,294,318 3904.10.00 Polyvinyl chloride, not mixed with any other substances, in primary forms kilograms 24,005,371 2915.31.00 Ethyl acetate kilograms 18,855,544 3901.20.50 Polyethylene having a specific gravity of 0.94 or more, in primary forms kilograms 14,469,582 3902.10.00 Polypropylene, in primary forms kilograms 8,849,478 Source: US International Trade Commission (ITC) IMPORTS FROM CHINAChina remains a significant source for a couple of noteworthy chemicals despite the effects of the tariffs that US President Donald Trump imposed during his first term in office. The following table shows 2023 US imports from China. HTS PRODUCT MEASUREMENT VOLUMES 29152100 Acetic acid kilograms 21,095,566 39093100 Poly(methylene phenyl isocyanate) (crude MDI, polymeric MDI) kilograms 206,642,886 Source: US International Trade Commission (ITC) China's shipments of plastics goods are more significant. OIL TARIFFS WILL HIT US REFINERSCanada and Mexico are the largest sources of imported crude oil in the US, and the heavier grades from these countries complement the lighter grades that the US produces in abundance. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units. Refiners cannot swap out heavier Canadian and Mexican grades with lighter US grades. Instead, they will need to pay the tariffs or find another supplier of heavier grades, possibly at a higher cost. The following table shows the largest sources of imported crude in 2023. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 Source: Energy Information Administration (EIA) US refiners could take another hit from higher catalyst costs. These are made from rare earth elements, and China remains a key source. TARIFFS TO RAISE COSTS FOR FERTILIZERCanada is the world's largest producer of potash, and it exports massive amounts to the US. It is unclear how the US could find another source. Russia and Belarus are the world's second and third largest potash producers. Together, the three accounted for 65.9% of global potash production in 2023, according to the Canadian government. Canada accounts for significant shares of other US imports of fertilizers. The following table lists some of Canada's fertilizer shipments to the US in 2023 and shows its share of total US imports. Figures are from 2023. HTS PRODUCT MEASUREMENT VOLUME % 31042000 Potassium chloride metric tonne 11850925 88.8 31023000 Ammonium nitrate, whether or not in aqueous solution metric tonne 295438 76.6 31024000 Mixtures of ammonium nitrate with calcium carbonate or other inorganic nonfertilizing substances metric tonne 29203 75.7 31055100 Mineral or chemical fertilizers, containing nitrates and phosphates metric tonne 1580 66.1 31022100 Ammonium sulfate metric tonne 947140 49.6 31052000 Mineral or chemical fertilizers, containing the three fertilizing elements nitrogen, phosphorus and potassium metric tonne 147850 41.4 Source: US ITC SUPPLY CHAIN SNARLSIf US companies choose to avoid the tariffs and seek other suppliers, they could be exposed to delays and supply chain constraints. Other companies outside of the petrochemical, plastic and fertilizer industries will also be seeking new suppliers. The scale of these disruptions could be significant because Canada, Mexico and China are the largest trading partners in the US. The following table lists the top 10 US trading partners in 2023 based on combined imports and exports. Country Total Exports ($) General Imports ($) TOTAL Mexico 322,742,472,406 475,215,965,697 797,958,438,103 Canada 354,355,997,349 418,618,659,183 772,974,656,532 China 147,777,767,493 426,885,009,750 574,662,777,243 Germany 76,697,761,127 159,272,068,221 235,969,829,348 Japan 75,683,130,214 147,238,042,342 222,921,172,556 South Korea 65,056,093,590 116,154,470,335 181,210,563,925 UK 74,315,228,810 64,217,031,774 138,532,260,584 Taiwan 39,956,725,574 87,767,403,487 127,724,129,061 Vietnam 9,842,922,146 114,426,076,081 124,268,998,227 Source: US ITC RETALIATIONUS petrochemical exports would be tempting targets for retaliation because of their magnitude and the global capacity glut. China, in particular, could impose tariffs on US chemical imports and offset the disruptions by increasing rates at under-utilized plants. So far, none announced plans to target chemicals on Sunday. Canada's plans to impose 25% tariffs on $30 billion in US goods does not include oil, refined products, chemicals or plastics. That batch of tariffs will take place on February 4. Canada will impose 25% tariffs on an additional $125 billion worth of US goods following a 21-day comment period, it said. The government did not highlight plastics or chemicals in this second batch of tariffs. Instead, it said the tariffs will cover passenger vehicles and trucks, including electric vehicles, steel and aluminium products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles and recreational boats. In a statement issued on Sunday, Mexico's president made no mention of retaliatory tariffs. Instead, she said she will provide more details about Mexico's response on Monday. China said it will start legal proceedings through the World Trade Organization (WTO) and take corresponding countermeasures. RATIONALE BEHIND THE TARIFFSThe US imposed the tariffs under the nation's International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat. In a fact sheet, Trump cited illegal immigration and illicit drugs. Saturday's executive order is the first time that a US president imposed tariffs under IEEPA. Prior IEEPA actions lasted an average of nine years. They can be terminated by a vote in Congress. Insight article by Al Greenwood (Thumbnail shows containers, in which goods are commonly shipped. Image by Shutterstock)

03-Feb-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 31 January. INSIGHT: Shipping caution remains over Suez route, Europe chemicals nervous Shipping companies are still in “wait and see” mode over a shift back to using the Suez Canal, while many chemical producers in Europe may hope it stays out of action for as long as possible. Europe BDO players eye China market fundamentals to gauge outlook for 2025 European butanediol (BDO) market players are eagerly awaiting a sense of long-term direction, with fundamentals largely unchanged since the start of the year and the impact of market movements in China after the Lunar New Year holidays a key focus. EU proposes import tariffs on Russian and Belarusian nitrogen-based fertilizers The European Commission has adopted a proposal to impose tariffs on a number of agricultural products from Russia and Belarus, as well as on certain nitrogen-based fertilizers. EU commercial vehicle sales up 5.5% in 2024 New commercial vehicle registrations in the EU increased by 5.5% in 2024, with trucks the only segment posting a decline, according to the latest figures from the European Automobile Manufacturers’ Association (ACEA). Indian phosphate buyers look to budget for clarity on subsidies After the phosphoric acid price settlement between Jordan’s JPMC and India’s Coromandel International Limited (CIL), phosphate buyers in India are now focusing on the upcoming budget for more clarity on the cost of importing product.

03-Feb-2025

HOUSTON (ICIS)–Customers in several US states closer to Canada than its Gulf Coast petrochemical hubs import large amounts of plastics and chemicals from the country, including materials that the US produces in abundance, and these shipments could soon become subject to tariffs totalling hundreds of millions of dollars. US President Donald Trump has said he could announce on February 1 tariffs of up to 25% on imports from Canada and Mexico. Even though the US has large surpluses of many plastics and chemicals, domestic companies still import large amounts of these materials from Canada. These customers face the prospects of higher tariffs from Canadian imports or potentially higher shipping costs from suppliers that are farther away. CANADIAN EXPORTS TO NORTHERN STATESUS plastics and chemicals production is concentrated on the Gulf Coast in the south, which is far from the manufacturing and plastic processing hubs in Michigan, Illinois and Ohio in the north. These and other northern US states are much closer to Canada's petrochemical plants in Sarnia, Ontario province, than they are to the Gulf Coast. The following table shows various plastics and chemicals that Canadian exported in 2023 to Michigan, Illinois and Ohio. The bottom row shows how much customers from each state would pay if a 25% tariff was levied on the total value of these 2023 exports. Export figures are in tonnes. HTS Code Description Michigan (tonnes) Illinois (tonnes) Ohio (tonnes) 3901.10.00 PE having a specific gravity of less than 0.94 30,403 41,967 59,908 3901.20.00 PE having a specific gravity of 0.94 or more 125,693 66,493 85,328 3901.40.00 Ethylene-alpha-olefin copolymers 163,543 155,042 88,793 3902.10.00 Polypropylene 6,232 122,970 20,694 3901.30.00 Ethyl vinyl acetate copolymer 55 55,012 2,526 2905.31.00 Ethylene glycol 5 152,746 8,634 Total tariff bill $119,027,186 $243,701,358 $103,054,090 Source: Statistics Canada CANADIAN IMPORTS FROM THE CAROLINASNorth and South Carolina are also large destinations for Canadian exports. These states are home to auto plants as well as facilities that make polyethylene terephthalate (PET), which uses monoethylene glycol (MEG) and purified terephthalic acid (PTA) as feedstocks. The following table shows 2023 shipments made to these states. The bottom row shows how much customers would pay if a 25% tariff was levied on the total value of these exports. Export figures are in tonnes. HTS Code Description South Carolina (tonnes) North Carolina (tonnes) 3904.10.00 PVC, not mixed with any other substances 428 134,433 2905.31.00 Ethylene glycol 66,973 2,731 2917.36.00 Terephthalic acid and its salts 102,162 162,505 3901.10.00 PE having a specific gravity of less than 0.94 25,379 13,076 3901.20.00 PE having a specific gravity of 0.94 or more 79,301 30,278 3901.40.00 Ethylene-alpha-olefin copolymers 98,070 40,879 3902.10.00 Polypropylene 38,763 1,033 Total tariff bill $168,380,231 $166,512,281 Source: Statistics Canada Even though Texas is home to many plastics and chemical plants, it is still a destination for a large amount of plastic exports from Canada. The following table shows 2023 shipments made to Texas. The bottom row shows how much customers would pay if a 25% tariff was levied on the total value of these exports. Export figures are in tonnes. HTS Code Description Texas (tonnes) 3901.10.00 PE having a specific gravity of less than 0.94 62,300 3901.20.00 PE having a specific gravity of 0.94 or more 189,247 3901.40.00 Ethylene-alpha-olefin copolymers 185,610 3902.10.00 Polypropylene 21,315 Total tariff bill $145,297,714 Source: Statistics Canada CONSEQUENCES OF TARIFFSWhether the US proposes the tariffs on February 1 is still up in the air. Trump has used the threat of tariffs as a negotiating tool in the past, as he did against Mexico during his first term and against Colombia earlier this month. In both cases, the US reached agreements with the countries without imposing the tariffs. If the US does impose the tariffs, customers could pay the additional tax, or they could find another supplier. For states closer to Canada, new suppliers could increase shipping times and costs. If the tariffs are broad enough, customers will be competing for cargo space with other companies that are also procuring supplies from new suppliers. The tariffs could make the US plastic and chemical markets more vulnerable to weather disruptions because most of its production is concentrated along the Gulf Coast. This region of the US is vulnerable to hurricanes and, increasingly, to sub-freezing temperatures. Since 2021, the Gulf Coast has had spells of sub-freezing temperature every winter season. The region's plants were not designed to operate in such low temperatures, so they typically suffer from unplanned outages during the winter. Canadian material made US chemical and plastic supply chains more resilient by offering an alternative to Gulf Coast material. HOW CANADIAN TARIFFS COULD UNFOLDIf the US does pursue tariffs against Canada, it will likely do so under the International Emergency Economic Powers Act (IEEPA) of 1977, said Jacob Jensen, a data analyst for the American Action Forum (AAF), a think tank. The IEEPA allows the president to propose actions to address a severe national security threat. In the case of tariffs, immigration, fentanyl or both would be declared as national emergencies, and that would trigger IEEPA. Once the president notifies Congress through a letter or a speech, the tariffs could be imposed. Imposing tariffs under IEEPA would be a first for the US, Jensen said. It could also be long term. The average duration of an IEEPA order is nine years. They can be terminated by a vote in Congress. The US can impose tariffs under other laws, but the ones that Trump proposed for Canada do not meet the parameters under those regulations. Tariffs under Section 301 address unfair trade practices and require investigations. The US has not started such an investigation on Canadian trade practices. Tariffs under Section 232 cover specific products and are not broad-based like the ones Trump proposed against Canada. Tariffs under Section 201 are intended to provide temporary relief for a group of products or an industry. They are not broad-based. Tariffs under Section 122 have a limit of 15%. Tariffs under Section 338 have no precedence and could face court challenges. OTHER POTENTIAL TARIFFSSince winning the election, Trump also proposed tariffs of 25% on imports from Mexico and 10% on imports from China. During his campaign, Trump proposed the following tariffs: Baseline tariffs of 10-20% on all imports. Tariffs of 60% on imports from China. A reciprocal trade act, under which the US would match tariffs that other countries impose on its exports. Insight by Al Greenwood

30-Jan-2025