HOUSTON (ICIS)–Arrivals of container ships fell in May at the US West Coast ports of Los Angeles (LA) and Long Beach (LB) amid a trade war between the US and China but has shown a slight uptick in June while the two nations continue to negotiate a trade deal. Kip Louttit, executive director of the Marine Exchange of Southern California (MESC), said the ports of LA/LB, said May container ship arrivals were at 5.0/day, slightly below the 5.7/day that was the average prior to the pandemic. Through the first five days of June, arrivals are at 5.6/day, which is still slightly below the pre-pandemic norm. Import cargo at the nation’s major container ports is expected to surge in the near term amid a pause in reciprocal tariffs between the US and China, according to the Global Port Tracker report released today by the National Retail Federation (NRF) and Hackett Associates as shown in the following chart. NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said this is the busiest time of the year for US retailers as they enter the back-to-school season and prepare for the fall-winter holiday season. “Retailers had paused their purchases and imports previously because of the significantly high tariffs,” Gold said. “They are now looking to get those orders and cargo moving in order to bring as much merchandise into the country as they can before the reciprocal tariff and additional China tariff pauses end in July and August.” Gold said many retailers suspended or canceled orders after US President Donald Trump announced a 145% tariff on China in April but have resumed imports after tariffs were reduced to 30% and a 90-day pause that will last until 12 August was announced. The higher reciprocal tariffs on other nations have also been paused until 9 July as the administration negotiates with those countries. ASIA-US RATES SURGE Rates for shipping containers from Asia to the US have spiked over the past couple of weeks – and have almost doubled over the past four weeks – as demand has surged ahead of the possible reinstatement of tariffs while capacity remains tight. Rates from supply chain advisors showed drastic increases over the past two weeks, and weekly rates from online freight shipping marketplace and platform provider Freightos came out today with Asia-USWC rates at $5,488/FEU (40-foot equivalent unit) and at $6,410/FEU to the East Coast. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page Thumbnail image shows a container ship. Photo by Shutterstock

HOUSTON (ICIS)–Offshore potash marketing group Canpotex announced it is fully committed on volumes for potash sales through 30 September. The group said this is due to continued strong demand for potash, underpinned by solid fundamentals for agricultural commodities and a sustained focus on food security in many of Canpotex’s key markets. Canpotex is the offshore marketing company for Saskatchewan potash producers Nutrien and Mosaic and has been operating since 1972.

LONDON (ICIS)–Verbio’s ethenolysis plant under construction in Germany is expected to start up in 2026, a company official told ICIS. The plant will produce renewable chemicals based on rapeseed oil methyl ester. “The distillation columns are in, all the big-ticket items have been installed,” Marc Siegel, Verbio’s head of sales, Specialty Chemicals and Catalysts, said in an interview. While there were some delays, the project at the Bitterfeld chemicals park in Saxony-Anhalt state remains on budget, he said. Capacities: – 32,000 tonnes/year of methyl 9-decenoate (9-DAME) – 17,000 tonnes/year of 1-decene. Project cost: €80-100 million. Startup: early 2026 “We are seeing a lot of interest in the materials,” Siegel said. 9-DAME has applications in surfactants, lubricants, solvents, polymers and others while 1-decene is a precursor for lubricants, coating agents, surfactants, polymers and others. Siegel also noted an opportunity to convert 9-DAME, which is similar to C10 fatty acid methyl ester, into a C10 fatty acid or alcohol, replacing palm kernel oil (PKO). Customers would thus avoid the complex supply chains of PKO, and its price fluctuations. More important, however, they would reduce their carbon footprint, and they could put palm-free and GMO-free labels on their shampoos and other products, he said. Nongovernment organizations have created a lot of pressure against palm oil because of the environmental impacts of palm oil plantations, he noted. A NEW CHEMICAL INDUSTRY “Customers see the value of these renewable chemicals”, he said, adding that many companies have strong decarbonization targets. While Germany’s chemical industry was currently in crisis, renewable chemicals was its opportunity, he said. “All the companies are hurting now, but once we rebound, there will be a new chemical industry, otherwise we will end up as an industrial museum,” he said. “Sustainability is the way to go, chemical companies need to reinvent themselves in the things they do,” he said. For Verbio, the ethenolysis project is part of its strategy to reduce its reliance on biofuels, Siegel said. Biofuels is a heavily regulated market that leaves producers exposed to political decisions, he said and noted the changes in policies under the current US administration. The diversification into renewable chemicals will give Verbio additional mainstays outside the transport sector, he said. While Verbio plans to focus on producing and supplying the two renewable chemicals – 9-DAME and 1-decene – it does not intend to get involved in making downstream products, he added. Thumbnail photo of Verbio’s ethenolysis plant under construction at Bitterfeld, Germany. Source: Verbio

SAO PAULO (ICIS)–Brazil’s trade union representing auditors at the Federal Revenue service, which are some of the best-paid civil servants in the country, accepted late on Monday the court’s ruling ordering the end of their nearly seven-month strike, said Sindifisco. Ruling ends what most Brazilians just saw as state-fueled privilege Striking workers average salary: $5,000/month; Brazil’s median: $400-500/month The strike had started affecting the state’s tax collection While the judge’s ruling ordering the end of the strike was published over the weekend, as of Monday morning Sindifisco maintained it had not been officially notified yet. In a written response to ICIS late on Monday, the union said it had been notified and in compliance with the “democratic state of law” it would accept the ruling, but did not disclose any details about more industrial action for coming weeks. The ruling put an end to one of the longest strikes by civil servants in Brazil, started in November, and a case which has showed some of Brazil’s wrongs – civil servants paid multiple times more than the average Brazilian, complaining about the lack of salary increases. The Federal Revenue auditors have mostly fought this battle alone, and along the way they did not gain any new friends. For the government, the ruling puts an end to a dispute which was becoming increasingly negative for the economy – goods piling up in customs points across Brazil’s vast geography – as well as the state’s ability to collect the taxes due on imports and exports. Finance Minister Fernando Haddad said in parliament in May that the strike was partly to blame for the lower-than-expected tax proceeds for 2025. The pressure was building up while Sindifisco was becoming increasingly isolated in its battle. Chemicals and fertilizers players, as well as most industrial companies, will have breathed a sigh of relief over the weekend as their concerns about trade flows had for months been increasing. The hangover from such an extended period of industrial action is expected to be tedious and things will take months, rather than weeks, to normalize, most analysts think. TIPPING POINTAs their demands kept falling in deaf ears with the government, Sindifisco stepped up the pressure in early June, calling for an even stricter industrial action. It proved lethal for its demands. The cabinet quickly puts its lawyers to work and convinced a judge that the latest strike action was affecting essential services that the state is mandated to deliver, as well as tax receipts. To make sure Sindifisco came around quickly, the judge’s ruling set a daily fine of Brazilian reais (R) 500,000 ($90,100) in case of non-compliance by the union. “Sindifisco states that it was formally notified today [Monday 9 June] of the preliminary decision of the Superior Court of Justice (STJ) granted by Judge Benedito Goncalves and, respecting the democratic rule of law, it will respect the ruling,” it said in its written statement late on Monday. “The essential activities carried out by the auditors will be protected, including the suspension of standard operations in customs units.” In his ruling, the judge specifically mentioned “standard operations”, which is nothing but a euphemism which means auditors do still go to work and in theory carry out their tasks, but they do so at a much slower rate, amounting practically to strike action as workloads pile up. Sindifisco said its legal affairs department is evaluating “all applicable legal measures” to discuss the court decision. However, it did not respond to questions about what its next strategy could be based on, considering they have exhausted practically all industrial actions possible, without succeeding in their demands. The union’s main demand is hefty increases in wages to recoup the losses in purchasing power accumulated since 2016, as they claim their wages have been increased only once since 2016. But even that clear and rather unfair circumstance has not moved public opinion, political parties or the cabinet to their turf. The reason being no other than auditors’ taxpayers-funded, very generous wages, are considering Brazilian standards. STATE-FUNDED PRIVILEGEA Federal Revenue auditor’s salary averages R28,000/month ($5,000/month), gross before taxes and social security contributions, according to the Brazilian site of specialized jobs service Glassdoor. That, in Brazil, is earned by less than 1% of the population. To make matters worse, those salaries are paid by all taxpayers, most of whom endure low salaries and long days at work – or take on two jobs – to make ends meet. The auditors’ salaries, which can also be found in other high-ranking civil servant positions, represents for many Brazilians the centuries-old, state-funded privilege, which tends to be concentrated in white Brazilians who come from healthy-income households and, almost certainly, went to the country’s best universities. The auditors’ reality is very far away from the daily reality for most Brazilians, fueling the country’s high levels of inequality and resentment from the bottom up. Wages for most Brazilians range between R1,518/month – the legal minimum wage, widely common in services jobs such as bars or shops – and around R3,000/month. No wonder the auditors’ plea… was never taken too seriously for most Brazilians or even considered just a bad joke. Opinion polls have been telling that story for months, but  Sindifisco seemed to fail to grasp the public’s mood and kept pushing. After the weekend’s ruling gave it the upper hand, the cabinet will be even less inclined to make any concessions now as it tries to rein in the fiscal deficit while keeping a good face in terms of welfare state spending, a difficult balance to start with. But any public opinion’s perception that the cabinet was giving in would have added to an extended belief about some civil servants: they have it better than most private sector employees, not least because their jobs, once they passed exams and obtain the qualifications, are practically secured until retirement. A generous state pension follows. Literally, some civil servants, who are meant to serve the public, live in bubbles in the nicely designed and isolated Brasilia. Those civil servants are often seen as some sort of caste, and their salary demands have added to the perception. EXPECTED COMPETITIVE ELECTIONBrazil will soon enter an unofficial, year-long electoral campaign as its nearly 160 million voters will be called to the polls to choose a president and renew parliament in October 2026. Lula’s Workers’ Party (PT) and its governing coalition appear to have slim chances to revalidate their mandate as the PT’s core voters – low-income households – have greatly felt as of late the increase in basic items such as food, as a larger share of their spending goes to that. The government will not want to upset any potential voters by appearing to favor already privileged civil servants. The election could literally be decided by a few thousand votes, so any potential voter turning away would not be good news for the PT. To make things more confusing, the PT has yet to officially choose a presidential candidate as its hegemonic leader of the past three decades – Lula – keeps the incognita when enquired about it. And that is a rather strange circumstance, especially as the age of another President, that of US’ Joe Biden, became part of the public conversation after his debate debacle in June 2024. Be it because the Brazilian center-left has not been able to find a successor with the same appeal than Lula or be it because in Brazil’s idiosyncrasy blasting old age is considered rather rude, Lula’s age has not become part of the debate yet, at least to the same extent than it did in the US. Another strange circumstance as the signs of aging is evident for all to see. Biden was 81 during the debate; Lula would be 80 if he runs for re-election at the time of the poll but would be sworn in for his fourth mandate if he wins when he will have turned 81 already. Front page picture source: Brazil’s Federal Revenue press services Focus article by Jonathan Lopez

LONDON (ICIS)–Recent revisions of recycled content targets from major brands have led to questions about just how committed companies are to reducing their consumption of virgin plastic. But what are the underlying issues behind such decision? In this third episode of Sustainably Speaking, ICIS senior executive, business solutions group John Richardson is joined by Mark Victory and Matt Tudball, senior editors for recycling Europe, and Helen McGeough, global analyst team lead for plastic recycling at ICIS, to dive deeper into this topic. Key topics in the discussion include: Revised down recycled content targets do not mean lower recyclate demand The impact on current and future investment decisions for both mechanical and chemical recycling The importance of improving access to good-quality feedstocks The role of consumers and consumer pressure Spreads between packaging and non-packaging grades remain high, particularly for recycled polyolefins The impact of regulation on the US and European markets

Serbia eyes new gas interconnectors with Romania and North Macedonia by 2030 This could ensure domestic supply, serve as a transit route to Europe Srbijagas and Russia’s Gazprom in talks for a new long-term gas deal WARSAW (ICIS)– Serbia plans to build gas interconnectors with Romania and North Macedonia, diversifying its own gas needs and supporting supply security in the Balkan region over the coming years, as indicated by the country’s energy strategy released on 10 June. Balkan gas traders told ICIS that Serbia is expected to receive gas supplies from two routes: Romania’s Neptune Deep field and Azerbaijan. “Having three different gas supply options will guarantee Serbia’s energy security and diversification,” a local trader said. The government energy strategy released on 10 June said the country aims to build a 1.6 billion cubic meters (bcm)/year pipeline interconnection with Romania and 1.2bcm/year with North Macedonia. Both projects should be operational by 2030 as the government seeks private funding to aid their development. Serbia seeks to establish new supply routes: one from Greece’s new Alexandroupolis LNG terminal, where Serbian state supplier Srbijagas has booked 300 million cubic meters of capacity per year and a second from Romania’s Neptune Deep gas field. The Romanian field is expected to have 100bcm in reserves with the first gas output expected in 2027. “The North Macedonia route is expected to boost Azeri flows to Serbia and the region,” a second trader added. Back in November 2023, Srbijagas and Azerbaijan’s SOCAR signed a one-year gas supply contract of up to 400mcm supplied in 2024 with an option for 1bcm/year volumes in the following years. This winter Azeri gas flowed via the 1.8bcm/year Serbia-Bulgaria interconnector. GAZPROM TALKS Serbian gas supply will remain uninterrupted in the summer months thanks to the signing of a short-term gas deal with Russian producer Gazprom, the chief executive of Serbia’s incumbent Srbijagas, Dusan Bajatovic, said in a briefing on 27 May. Srbijagas’s current three-year deal for 2.2bcm/year  of supply expired on 31 May and the two firms signed an agreement covering the period 1 June- 31 September 2025 for 6 million cubic meters/day. Srbijagas and Gazprom are now negotiating a new long-term supply contract.

SINGAPORE (ICIS)–As China steps up efforts to meet its dual carbon targets, hydrogen is becoming a practical and strategic tool to cut emissions from the country’s highly carbon-intensive cement industry. Cement industry under carbon pressure From hydrogen as substitute to carbon utilization for new value Five-year window open for low-carbon pilots Cement accounts for around 13-14% of China’s total carbon dioxide (CO2) emissions, ranking it the third-largest industrial source after power and steel. Facing mounting pressure from both international carbon regulations and domestic policy, China can tap hydrogen as a promising route toward meaningful emissions reductions. China’s cement industry is estimated to have emitted about 1.20 billion tonnes of CO2 in 2023, down for a third straight year. Emissions stood at 1.23 billion tonnes of CO2 in 2020, when China’s cement clinker output peaked at 1.58 billion tonnes, and cement output hit 2.38 billion tonnes, according to China Building Materials Federation. Around 60% of this comes from the chemical reaction when limestone is heated to make clinker, a process that is difficult to change in the short term due to raw material constraints. Another 35% comes from fossil fuels combustion to generate heat for clinker production, which is a key substitution target. As of March 2025, China’s national ETS (Emissions Trading Scheme) expanded to include cement, alongside steel and aluminum, hence, the cement sector is also now fully exposed to carbon pricing. However, despite policy urgency, due to technical and equipment retrofitting complexities, the sector has moved slowly. The next five years will represent a pivotal window to scale pilot projects and validate decarbonization pathways. TWO ROUTES: CLEANER COMBUSTION & CARBON USE Hydrogen can help reduce emissions from cement mainly in two ways: fossil fuel substitution and carbon utilization. Fuel substitution with hydrogen is the immediate decarbonization leverage. Hydrogen can directly replace coal or gas in kilns. Its high calorific value and zero-carbon combustion profile make it an ideal fuel. However, because of its weak flame radiation and explosion risk, hydrogen is usually mixed with other fuels in current tests. European players lead the change: Cemex, a leading global building materials manufacturer, completed hydrogen retrofits at all its European cement plants by 2020, targeting a 5% CO2 reduction by 2030. Heidelberg Materials, another cement giant actively exploring hydrogen applications, achieved 100% net-zero fuel operation at its UK Ribblesdale plant in 2021, using a mix of 39% hydrogen, 12% meat and bone meal, and 49% glycerin. Another option is to combine CO2 capture from kiln exhausts with renewable hydrogen to synthesize e-methanol or e-methane. E-methanol and e-methane are synthetic fuels made by combining captured CO2 with renewable hydrogen using renewable electricity. LafargeHolcim, as one of the largest cement producers in the world, has multiple hydrogen decarbonisation projects across Europe. It is leading with its HyScale100 project in Germany, which aims to install electrolyzers at its Heide refinery, and combine electrolyzed hydrogen with CO2 from its Lägerdorf plant to produce e-methanol starting 2026. This model not only reduces emissions but also builds links across industries to create a circular carbon economy. CHINA: FROM POLICY PUSH TO PILOT PROJECTS Policy support is gaining momentum in China. The 2024 Special Action Plan for Cement Energy Saving and Carbon Reduction aims to raise alternative fuel use to 10% by 2025, explicitly naming hydrogen. The Ministry of Industry and Information Technology (MIIT) sets out a 2030 goal to commercialize low-carbon kilns using hydrogen. Amid the decarbonization policy signals, China’s major cement producers are also stepping up: The Beijing Building Materials Academy of Scientific Research (BBMA) under Beijing Building Materials Group (BBMG) completed China’s first industrial trial in December 2024 using >70% hydrogen in calcination. Anhui Conch Cement Company used 5% hydrogen in pre-calciners, cutting 0.01 tonnes of CO2 per tonne of clinker, albeit with an added cost of yuan (CNY) 32.7/tonne. Tangshan Jidong Cement is building a full hydrogen supply chain in partnership with China National Chemical Engineering. Hydrogen is also being produced on-site using waste heat from clinker kilns to power electrolysis – a promising approach to localize supply and enhance energy efficiency. CHALLENGES STILL AHEAD Despite policy and pilot momentum, commercialization hydrogen use in China’s cement sector still faces barriers. Renewable hydrogen costs are too high for wide use. Studies suggest it would need to fall below $0.37/kg to be cost-effective in cement under carbon trading. Hydrogen is hard to store and transport, and its flame instability requires kiln retrofits and safety systems. China also lacks unified national technical standards for using hydrogen in cement, slowing adoption. Hydrogen may not yet be ready for mass rollout, but it is clearly part of the future of cement in China. As production costs fall, carbon markets grow, and hydrogen technologies mature, hydrogen could become a real driver of change in one of China’s hardest-to-decarbonize sectors. Insight article by Patricia Tao

SINGAPORE (ICIS)–China’s exports to the US are expected to rebound in June as exporters ramp up frontloading efforts before the 90-day trade truce between the two global economic superpowers expires in August. China May exports to US shrink 34.5% year on year China’s imports from the US fall by 18.6% US-bound freight rates from China remain elevated Despite the tariff rollback in mid-May, US-bound exports fell by 34.5% year on year in May to $28.8 billion, a sharper decline than the 20.9% fall recorded in April, official data showed on 9 June. “The boost from the US tariff rollback should be more significant in June, as it might take a couple of weeks to restore the logistics network that was disrupted by what had nearly become a US-China trade embargo,” Japan’s Nomura Global Markets Research said in note. “This could be because, as bilateral trade collapsed in April amid exceptionally high tariffs imposed by the two countries, many container ships for US-China shipping lanes were re-routed to other lanes.” A 90-day trade truce between China and the US was agreed on 12 May but ongoing negotiations face threats from slow rare-earth shipment approvals. US tariffs on Chinese goods were at 30% from 14 May to 12 August, while China levies 10% duties on US imports. The sharp recovery in container bookings and freight rates also indicate an incoming rebound in US-bound exports in June, according to Nomura. “The temporary trade truce will provide room for exports to strengthen in June-August before the momentum reverses with payback from the strong frontloading to-date,” said Ho Woei Chen, an economist at Singapore-based UOB Global Economics & Markets Research. China’s imports from the US fell by 18.6% year on year to $10.8 billion in May, a steeper decline than the 13.9% fall recorded in April, “perhaps due to similar issues with near-term shipping capacity”, Nomura noted. As a result, the US share in China’s total exports fell further to 9.1% in May from 14.7% for the whole of 2024. Following substantial export contraction and a less severe import decline, China’s trade surplus with the US decreased further to $18.0 billion in May from $20.5 billion in April. OVERALL EXPORT GROWTH SLOWS China’s overall exports fell by 4.8% year on year to $316.1 billion in May, slowing from the 8.1% growth in April. Imports fell by a steeper rate of 3.4% year on year to $212.9 billion in May, from the 0.2% contraction in April. China’s overall trade surplus increased 25% year on year to $103.2 billion in May. Export growth to its largest market, ASEAN, which is also widely viewed as a major rerouting pathway for Chinas’ US-bound shipments, slowed to 14.8% year on year in May from 21.1% in April. This was mainly a result of base effects, as growth of exports to ASEAN surged to 24.8% year on year in May last year from 13.0% a month earlier, Nomura noted. Among ASEAN countries, Vietnam and the Philippines took in higher volumes of Chinese exports in May. China’s exports to the EU, Canada and Australia improved in May, as exporters shifted to developed markets other than the US. “The acceleration of exports to other economies has helped China’s exports remain relatively buoyant in the face of the trade war,” Lynn Song, chief economist for Greater China at Dutch banking and financial information services firm ING said in a note. EXPORTS IN MAJOR CATEGORIES MIXED IN MAY China’s ships and semiconductors registered solid double-digit export growth, while shipments of motor vehicles and auto parts also picked up. Demand for chips, in particular, continued to benefit from the pause in US tariffs on technology products such as smartphones, computers, and semiconductors. However, exports of rare earth materials shrunk sharply, and products such as handbags, footwear, toys, and furniture declined due to a drop in US demand. US-CHINA TRADE TALKS RESUME Following a rapid re-escalation in late May, trade tensions between the US and China eased on 5 June following a phone call between US President Donald Trump and China President Xi Jinping. It set the stage for a new round of dialogue between their top trade officials in London this week. Ahead of the trade talks, China reportedly approved temporary export licenses to rare earth suppliers of the top three US automakers, as Trump claimed Xi agreed to restart the flow of rare earth minerals. “As US and China resumed trade negotiations this week, China’s Commerce Ministry confirmed that it has granted approval to some applications for the export of rare earths which will likely lead to a recovery in rare earth exports in June,” UOB’s Ho said. “Following the Phase 1 trade deal in 2020, we think an eventual trade deal this time would likely commit China to reduce its trade surplus with the US by increasing its US imports,” she said. While the baseline tariff rate for China is likely to be raised, the two countries may find common ground on the Trump administration’s concerns regarding China’s involvement in the fentanyl trade, according to Ho. “This could potentially lead to a removal of the 20% fentanyl-related tariff, in the optimistic scenario. Thus, it is conceivable that the “final” US tariff rate on imports from China may settle between 30% to 60%.” CONTAINER FREIGHT RATES ON THE RISE US-bound freight rates have remained elevated, while growth in weekly container throughput dropped to 1.3% year on year on 8 June from 10.2% a week earlier, which “dims the outlook of China’s overall exports”, Nomura said. The China Containerized Freight Index (CCFI), which tracks average shipping prices from China’s 10 major ports, rose 3.3% week on week as of 6 June, it said. This included a 1.6% increase to Europe and a 4.1% rise to the US East Coast. In contrast, the Ningbo Container Freight Index (NCFI), tracking outbound container shipping costs, eased 0.4% week on week on 6 June, according to Nomura. Specifically, it saw a 9.1% decline to the US West Coast and remained unchanged for the US East Coast during the same period. Internationally, the Freightos Baltic Index (FBX), reflecting spot rates for 40-foot containers across 12 global trade lanes, surged by 52.3% week on week on 6June, “indicating a significant jump in global shipping costs”, Nomura said. Focus article by Nurluqman Suratman Please also visit US tariffs, policy – impact on chemicals and energy Thumbnail image: Containers pile up at Longtan Container Terminal of Nanjing Port in Nanjing City, Jiangsu Province, China, on 9 June 2025. (Costfoto/NurPhoto/Shutterstock)

SAO PAULO (ICIS)–Mexico is well-positioned to benefit from the global trade reorganization started by the US as it takes a stronger stance against China and replicate the resounding success of the 1990s, when the first North America free trade agreement (FTA) NAFTA was signed, the president of the country’s chemicals trade group ANIQ said. José Carlos Pons, who is also the CFO at Mexican chemicals producer Alpek, said Mexico, the wider North America and the world at large still face some persistent Chinese overcapacity of industrial goods which are flooding markets, but said North America together would face that threat in a better position. Pons has just started his tenure as ANIQ president at a time when the trade group is navigating shifts in trade policies as well as domestic issues such as the potential for – or lack of – nearshoring as well as policy issues in which companies fully disagree with the left-leaning government of Claudia Sheinbaum. Pons did not want to enter into much detail about the latter, however, because as he explained in the first part of this interview, ANIQ’s lobbying strategy is to now go “hand in hand” with the government. According to him, Sheinbaum is honestly trying to fix the beleaguered, state-owned energy major Pemex, which would at the same time greatly help chemicals raw material supply reliability. NAFTA, USMCA, SOMETHING ELSE? Soon after taking office in January, US President Donald Trump imposed hefty import tariffs on Mexico and Canada because, he said, the two countries should do more on migration and fentanyl trade – a powerful drug which has caused havoc across the US. However, when the tariffs were about to kick off, the US announced it was pausing them for one month. It was a timely decision for Mexico: the country is almost completely dependent on the fate of the US economy, as it exports around 80% of its output north of the border. That dependance is what makes Corporate Mexico wary of even contemplating a break-up of the now called USMCA FTA, the successor to NAFTA which Trump negotiated during his first term. Pons is optimistic in all fronts – home front and external front – as a relatively young executive who arrives to the helm of ANIQ in some of the most challenging times for Mexico in the past three decades. “I do feel on the side of the optimists. All this issue of tariffs and economic reorganization of imports and exports in the world – if the US plays a strong role against Asia, as I believe it will end up playing, then what can happen is that Mexico is super well-positioned for greater investments,” said Pons. “Mexico has natural advantages in serving the US market. Today in many of the industries we are a very relevant supplier to the US. We are connected by pipeline, so to speak, to the US. When there is a competitive supply that Mexico has, Mexico remains the most convenient place to source for the US – it is next door.” It has been widely reported that USMCA renegotiations, for which the deadline is 2026, are in full swing and both officials from Mexico and Canada have recently said they are hopeful USMCA will be renegotiated and revived, ultimately making North America stronger versus other big economies. “I think that commercial logic and economic logic will prevail. Trump, if he understands anything very well, it is economic logic and from that point of view I believe that the logic of Canada-US-Mexico integration will stand out. The last renewal of the free trade agreement was positive in general, with no major changes,” said Pons. “In fact, I think we put some order on some of the issues, some of them affecting chemicals, so from that point of view it has been favorable for us. We are understandably focused on the short-term news, but if we take a slightly longer-term view, I think it [current renegotiations] can end up benefitting the region.” Following on with the soft lobbying ANIQ is deploying, he praised the cabinet for keeping a cold head before adversity and having gone through momentous crisis points relatively unscathed. Moreover, Sheinbaum’s popularity ratings are almost unheard of in democracies: around 80% of Mexicans have a positive view of her. “I perceive a Mexican government that is calm, serene, looking more at the long term than the short term, not reacting hastily to attacks, as if taking certain pauses. If you remember, after some tariffs were imposed on Mexico in February, Sheinbaum said the Mexican government would ‘answer in a week’ – they purposefully wanted to give space for conversations to happen,” said Pons. “I think it has been handled well, it has been handled with composure and I think that is just what is needed.” When pressed about domestic policy issues including a judicial reform which has sparked fears among most experts in Mexico and abroad, because it could weaken the rule of law rather than strengthen it, Pons was cautious but conceded companies are concerned: without legal certainty, investments come harder. “One of the important work areas is legal certainty and we are worried as an industry about the change that could occur to legal certainty with this change,” he said. “I think we have to understand exactly the implications of this judicial reform, of the new judges we are going to have.” CHINA FORMIDABLE RISEOn Chinese competition, which has hit chemicals hard as there is oversupply for the main petrochemicals and polymers, Pons did say the scale of overcapacity affecting global markets is huge, unheard of, and conceded there are still many question marks surrounding how this will end – and when. “We have seen that in practically all sectors there is excess capacity. China has been very aggressive. For instance, take polyester textile fibers as an example – if today the whole world closed its production capacity and China maintained its capacity, there would still be 30% excess capacity,” said Pons. He mentioned polyethylene terephthalate (PET), which happens to be one of the main products which Alpek manufactures and he oversees as CFO. “It is no surprise that most countries already have trade protections against China. For example, in one of the businesses I participate in at the company, PET has a 105% antidumping duty [ADD] in the US against China. Mexico just decreed an antidumping duty against PET as well. So, it is very clear that all governments understood that there is an intention that is not commercial, not fair trade, which is what we seek as an industry.” Pons did not think the West at large – or, more specifically, market, democratic economies – had been caught off-guard by the rapid ascent of China in the industrial goods global league. “In fact, what much of the industry I represent has been doing is improving its competitiveness. There are many investments going on. Mexico’s companies are investing $1.5 billion in maintenance and competitiveness. “All those projects and millions of dollars are focused on improving and putting us on par in competitiveness against the Chinese,” said Pons. The first part of this interview was published on 6 June on ICIS news, under the headline “Mexico’s Pemex turnaround key to unlock $50 billion chemicals investments – ANIQ”. Click here to read it.  Front page picture: Facilities operated by Mexico’s polyethylene (PE) producer Braskem Idesa  Source: ICIS Interview article by Jonathan Lopez