Energy

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

03-Dec-2024

SINGAPORE (ICIS)–US carmaker General Motors (GM) and South Korea’s LG Energy Solution will join hands to develop prismatic battery cells for electric vehicles (EVs). “GM expects the prismatic cell technology developed under the agreement to power future GM electric vehicles, as part of the company’s strategy to diversify its supply chain, leveraging multiple chemistries and form factors,” GM said in a statement on 2 December. Prismatic cells feature a flat, rectangular shape with a rigid enclosure, which allows for space-efficient packaging within battery modules and packs. This can reduce EV weight and cost, while simplifying manufacturing by reducing the number of modules and mechanical components, GM said. The two companies are extending their 14-year battery technology partnership to include prismatic cell development. “LG Energy Solution has both experience with prismatic cell production and an extensive patent portfolio on battery design and manufacturing technologies, including packaging,” GM said. LG Energy solution executive vice president and head of advanced automotive battery division Wonjoon Suh said: “We look forward to deepening our collaboration to drive the right chemistry and battery combinations for continued growth in the EV market.” The automotive industry is a major global consumer of petrochemicals, which account for more than a third of the raw material costs of an average vehicle. EVs and associated battery markets, on the other hand, provide growth opportunity for the chemical industry. Chemical producers have been separately developing battery materials, as well as specialty polymers and adhesives, for the environment-friendly vehicles. “Together with LG Energy Solution, we’ve built Ultium Cells into one of the largest battery cell manufacturers in North America,” GM vice president of battery cell and pack Kurt Kelty said. Ultium Cells – which are currently being produced in Ohio and Tennessee in the US - power GM’s latest EVs including the Chevrolet Silverado EV, GMC Sierra EV, Cadillac LYRIQ, Chevrolet Blazer EV and Chevrolet Equinox EV, as well as the GMC HUMMER EV Pickup and sports utility vehicle (SUV). “We’re focused on optimizing our battery technology by developing the right battery chemistries and form factors to improve EV performance, enhance safety, and reduce costs,” Kelty said. In a separate statement on 2 December, GM said it has reached a non-binding agreement to sell its stake in the nearly completed Ultium Cells LLC battery cell plant in Lansing, Michigan to its joint venture partner LG Energy Solution. Financial details were not disclosed, but the transaction is expected to close in the first quarter of 2025. (Adds details throughout) Additional reporting by Pearl Bantillo Thumbnail image: Hummer electric vehicles at a General Motors factory in Detroit, Michigan, US – 17 November 2021 (By Dominick Sokotoff/Shutterstock)

03-Dec-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: As delegates gather for this year’s Gulf Petrochemicals and Chemicals Association (GPCA) in Oman, front-of-mind will, of course, be the global trading environment. Is the world willing or able to continue to absorb China’s manufacturing surpluses, including in chemicals and polymers as today’s post discusses? The ICIS data suggest there is nothing new in China dominating global capacities in polymers such as polyester fibres and PVC (although as China moves up the chemicals value chains, its dominance of EVA  and polycarbonate is new). But historic context is everything. In 2001-2021, trade tensions between the rest of the world and China were not where they are today. The world felt more able to accommodate China’s dominance of chemicals and other manufacturing value chains. We, of course, need to consider the implications of Donald Trump’s election victory and the EU’s growing concern over what it sees as Chinese overcapacity. A 29 November South China Morning Post article wrote as follows: The EU’s civil service [last week] flew officials and experts in, at von der Leyen’s personal invitation, from around Europe and the United States for a full day devoted to Chinese overcapacity – an issue former trade chief Valdis Dombrovskis described as a “significant threat”. “From steel and solar panels to shipbuilding and the automotive industry – this is not an abstract challenge, it is reality. And for many businesses, both in Europe and within our partners, it is an existential challenge,” Dombrovskis said. You can talk as much as you like about cost-per-tonne economics and about feedstock advantage, but it won’t get you very far in this post-Chemicals Supercycle world. Today’s blog is another example of why we need to broaden our analysis out to include a wide range of big picture factors that will shape the global chemicals industry. In this case, you need to build a matrix of countries, companies and chemicals products and then determine scenarios for the effect on all three of a much more uncertain global trading environment. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

02-Dec-2024

MUSCAT (ICIS)–Gulf Cooperation Council (GCC) petrochemical players must formulate strategic international partnerships and invest in optimization and innovation to remain competitive, according to the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA). “In the short term, the [GCC petrochemicals] industry needs to urgently adapt to shifting market dynamics and explore new opportunities within products and markets,” Abdulwahab Al Sadoun told ICIS ahead of the 18th Annual GPCA Forum in Muscat, Oman on 2-5 December. "Formulating the right strategic partnerships, particularly with regards to the region’s top export market – China – will also be important in securing growth," he said. The GCC comprises six Middle Eastern countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The forum took place outside the UAE for the first time in 2022, when it was held in Riyadh, Saudi Arabia; in Doha, Qatar the following year; and in Muscat, Oman this year. The GCC petrochemical industry’s performance is closely interlinked with the health of the global economy, including changes in consumer demand patterns, regulatory and policy updates and demand fluctuations in end markets, Al-Sadoun said. “Aligning itself with key global objectives and ensuring their products and services provide meaningful solutions to the challenges we face will be vital in securing the industry’s future.” Al-Sadoun said that the forum’s theme of “Industry’s Next Chapter: Driving Sustainable Advancement for Global Progress” was timely as the GCC petrochemicals industry now stands at a crossroads in the chemical industry’s evolution. The world today is faced with "insurmountable challenges", Al-Sadoun said. Geopolitical turmoil, climate change, food insecurity, supply chain disruptions, and waste management are some of the megatrends impacting the chemical industry, society and planet, according to Al-Sadoun. “As the external environment around us continues to be in a state of change, so does the chemical industry need to evolve apace…The chemical and petrochemical sector plays an instrumental role as a solutions provider to some of these key challenges,” he said. “At the heart of our chemistry solutions lies the vision to contribute to global sustainable advancement – simultaneously enhancing our contributions to socio-economic prosperity, while at the same time preserving our planet and developing solutions that contribute to the energy transition and the circular economy.” DUAL CHALLENGE As the global population is projected to reach 9.7 billion by 2050, the industry will be faced with the dual challenge of meeting growing chemicals demand driven by an expanding, urbanized population, while at the same time meeting its obligations to decarbonize and preserve the environment, Al-Sadoun said. “As global discussions intensify around renewable energy sources and low-carbon technologies, major GCC players have announced net-zero emissions goals and are investing in green technologies, such as hydrogen production and renewable energy integration.” Advancing the circular economy is also an important factor in driving the sustainable transition, he said. Notable innovations across the GCC industry include Kuwait producer EQUATE’s Viridis 25, the region's first food-grade polyethylene terephthalate (PET) incorporating 25% chemically recycled material, reducing reliance on virgin PET, Al-Sadoun noted. Similarly, UAE polymers major Borouge has advanced recyclability through mono-material laminates and flexible packaging solutions, while Saudi Arabia chemicals giant SABIC continues to lead with its certified circular polymers made from 100% recycled plastic. Government-driven initiatives, such as Saudi Arabia’s Vision 2030 and the UAE’s Net Zero by 2050 Strategy, will also provide a supportive policy framework for industry-wide sustainability transitions, he noted. “However, industry players are under no illusion that the road to sustainability is long and ridden with challenges,” Al-Sadoun said. “It requires true collaboration, Public Private Partnerships (PPP) and the entire value chain to pull their weight to chart a viable pathway to sustainability,” he said. “The journey to achieving big goals is often a series of small, consistent steps…And this is what the industry needs to focus on – taking impactful, consistent actions every day." Interview article and infographic by Nurluqman Suratman Thumbnail image: GPCA secretary-general Abdulwahab Al-Sadoun (Source: GPCA)

02-Dec-2024

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

29-Nov-2024

LONDON (ICIS)–The EU-Mercosur free trade deal is a geopolitical move to reduce Europe’s dependency on China, a German government official told participants at a webinar hosted by German chemical producers’ trade group VCI. EU needs Mercosur to diversify and counter China Trade deal nearly finalized, but ratification may take time EU wants to de-risk, US seeks to de-couple from China “The agreement has a geo-strategic and geo-political significance” because Germany and the EU do not want to depend on any one country or region,” said Christian Forwick, director general, External Economic Policy, at Germany’s federal economic affairs ministry “Our wake-up call was the Russia-Ukraine war”, Forwick said. In the wake of the war, Germany lost access to the cheap Russian natural gas, which had helped power its chemicals and other energy-intensive industrial production. The EU and the Mercosur nations – Brazil, Argentina, Uruguay, Paraguay – are on track to sign a free trade deal at next month’s Mercosur summit in Uruguay next month, the official said. The European Commission has been invited to the summit, scheduled for 4-5 December in Montevideo. Negotiations are close to being finalized, with only minor details to be sorted out, Forwick said. “We have a ‘time window’ to conclude a deal now”, he said. Forwick did not comment on recent protests against the free trade deal by farmers in France and elsewhere, who are worried about a surge of low-cost agricultural imports into the EU. Following signing, the Mercosur deal will need to be approved by the European Council, and it must be ratified by each of the 27 EU countries. Ratification can be a drawn-out process. For example, the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU from 2017 has up to now only been applied provisionally because it has not yet been ratified by all of the EU member states. CHINA CHALLENGE Mathias Blum, head of external trade at VCI, said that for Germany’s chemical industry an EU-Mercosur trade deal would be an important building block in efforts to diversify markets. China is the world’s largest chemicals market and is therefore important for Germany’s chemical-pharmaceuticals industry, he said. However, China is not just a customer, but also a strong competitor, using “fair and unfair methods”, he said. Forwick noted that the US approach to China was more severe than the EU’s. Whereas the EU focuses on “de-risking”, the US is pursuing a “decoupling” from China in certain sectors such as autos, and with Donald Trump’s victory in the election the US is expected to continue imposing tariffs on products from China, he said. While Germany, for its part, has become more careful in its trading and investment relations with China, it continues to see the country as an important market, he said. “I would not advise any company to exit China because of the geopolitical situation”, he said. Germany continued to believe in a market economy and the advantages of globalization, he said. “We do not believe that we should or could produce everything in Europe”, an approach that contrasted with the US efforts to make everything domestically, he said. “The better, more innovative products are created through international cooperation”, including cooperation with China, which has technology advantages in certain sectors, he said. Europe was innovative and benefited from the integration into the “international research community”, but on the negative side it has high electricity prices and lacks a common capital market, among other weaknesses, he noted. Thumbnail photo of European Commission President Ursula von der Leyen and China's President Xi Jinping; photo source: EU

29-Nov-2024

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

29-Nov-2024

LONDON (ICIS)–Denmark’s Dan Jorgensen will prioritise ending Russian LNG imports and lowering energy prices when he takes up the post of EU energy commissioner on 1 December, Ursula von der Leyen confirmed on 27 November. The European Parliament narrowly approved Von der Leyen’s new college of commissioners in a vote on 27 November, and the European Council of EU leaders formally endorsed the new Commission on 28 November, clearing it to start work. Von der Leyen told the European Parliament the that the outgoing Commission had done much to respond to surging energy prices that followed Russia’s invasion of Ukraine, but that “the price of energy is structurally still too high and has to go down”. She said Jorgensen’s previous experience – he was Denmark’s energy and climate minister from 2019 to 2022 – would help in this work. However, industry players have questioned whether the stated goal of ceasing all Russian gas imports is compatible with lowering prices. Torben Brabo, former international director at Danish gas and power transmission system operator Energinet and former president of Gas Infrastructure Europe, told ICIS it was key that Jorgensen used the word ‘independent’ when asked about the subject in his confirmation hearing. “For me, there are huge differences between being independent of Russian gas and [having] no Russian gas,” Brabo said. While over-reliance on Russian supply had been naïve, Brabo said, the molecules remained the cheapest available, while ending all supply also required the added costs of maintaining overcapacity to import other sources. “Let’s say we have 5-10% of our gas supply coming from Russia, with the option of more. Then we would have cheaper gas – and cheaper energy costs for end-users. We could probably use the bargaining [chip] on all the other imports, and thereby get even cheaper gas from them, and we could probably rely on a slightly smaller gas system in total or repurpose for hydrogen or other green gasses,” Brabo said. The European Commission has a stated aim of ending Russian gas imports by 2027, but Jorgensen said in his hearing he aimed to accelerate this process. WELL-QUALIFIED FOR COMMISSIONER Brabo was positive about Jorgensen’s prospects for the commissioner role, citing success in Denmark with industrial climate partnerships and Denmark’s first of its kind binding climate law. The partnerships forced stakeholders in 13 different sectors into implementation mode. “Instead of just being pro the government or in opposition, they were actually put in the driver’s seat, because they should make a recipe for how the government could help them,” he explained. Jorgensen’s time as minister also required ideological flexibility to support the end goal of decarbonisation, with the Baltic Pipe between Norway and Poland a good example. While the massive fossil infrastructure was not on the government’s agenda, Energinet was asked to make a plan and Poland bought 80% of the capacity for 15 years, helping Poland shift from coal to a more stable, secure gas supply. “Even though that [Jorgensen] would rather have seen money go for green investments, he was supportive on this objective mechanism, respecting the neighbouring countries and their needs,” Brabo said. NUCLEAR VIEWS Jorgensen was also drawn repeatedly on the topic of nuclear power during his hearing. He said he supported countries right to choose their power mix but also didn’t believe it was for the EU to fund construction of nuclear plants. Teresa Ribera, who as the Commission's executive vice-president for a clean, just and competitive transition will oversee Jorgensen's work, broadly sidestepped questions about support for nuclear during her own confirmation hearing on 12 November. “I think he has mainly been playing on his own half of the sports arena in the past … It will be interesting to see how he needs to not only stand in the very green Danish goal, but he needs to stand in the middle of the arena, looking at all possibilities,” said Brabo. FOLLOW THROUGH NEEDED Jorgensen’s ability to implement is a question mark. Alongside the affordable energy plan, part of the clean industrial deal due, as well as a plan to exit Russia gas within the Commission’s first 100 days. An electrification action plan will follow in due course, and he needs to help ensure the large volume of Green Deal legislation for the previous five years is implemented. Jorgensen’s successor in Denmark was told to focus on implementation, Brabo said, with fewer new targets. “And now [Jorgensen’s] come to the Commission in a larger scale, invited to do this second stage, which will be interesting,” he said.

28-Nov-2024

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

27-Nov-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. As you do your budget planning for 2025, don’t lose sight of what the ICIS data consistently tell us. Any recovery in demand next year is unlikely to make much of dent in the record levels of global oversupply up and down all the chemical values chains. Today’s blog is a reminder of why where are where we are today – Regular readers of the blog will have been prepared for these events. I of course get things wrong as we all do, but I have been warning about the China risks for more than a decade. I also identified the Evergrande Turning Point shortly after it happened in late 2021. Beyond 2025, this is what we can learn from the events in China: The problem during the Chemicals Supercycle was not enough people asked hard questions about the nature of demand growth in China. Instead, too much analysis focused on feedstock advantage only while assuming demand would take care of itself. We thus need to set up demand teams that build much more nuanced and in-depth scenarios about what could happen next in China and elsewhere. How will demographics, climate change, geopolitics and the energy and chemicals transitions shape future global consumption growth? Artificial intelligence is potentially a fantastic tool to help us model this complexity, provided we ask it the right questions and use a commodity in much shorter supply than chemicals: Commonsense. Good luck out there. Here’s to managing our way through these challenging times together. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

27-Nov-2024