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Ethylene20-Dec-2024
LONDON (ICIS)–A hoped-for recovery in
Germany’s chemical industry has been pushed out
to 2026, as shown by an industry survey
presented at a webinar hosted by chemical
producers’ trade group VCI.
No recovery before 2026
Chemical production seen flat in 2025
Persistent lack of orders
The VCI survey, conducted in November, found
that 52% of German chemical companies expect a
recovery to only take place in 2026 or later,
whereas a previous survey conducted this summer
showed that a majority had expected a recovery
in 2025.
Now, only 22% expect a recovery in the second
half of 2025 while 8% expect it to occur in the
first half, according to the latest survey
As for sales and profits, 33% expect a sales
decline in 2025 and 46% expect lower profits.
Companies are particularly pessimistic about
sales expectations for Germany and Europe, but
are less pessimistic about business outside
Europe.
With nearly every second company expecting
falling profits next year, business will remain
difficult, said VCI economist Christiane
Kellermann.
LACK OF ORDERS
The share of companies complaining about a lack
of orders is around 40%, the same level as at
the start of the coronavirus lockdowns in early
2020, she said.
Producers have been complaining about a lack of
orders since the end of 2022, and there was
still no prospect of an improvement, she said.
The share of companies stating that a lack of
orders was no problem for them and that
business was good was “vanishingly small”, she
added.
New orders were weak both domestically and
internationally, she said.
LOSS OF COMPETITIVENESS
Germany as a place for industrial production is
losing competitiveness because of its high
bureaucratic costs, high labor costs, high
taxes and levies, and high energy costs, she
said.
Adding to these challenges is rising
geopolitical uncertainty, in particular in the
wake of Donald Trump’s victory in the 5
November US presidential election, she said.
Companies were trying to determine what Trump’s
second term as president will mean for them in
terms of trade
conflicts and tariffs.
They were not only worried about direct tariff
impacts, but also about the impact on China
where the tariffs are likely prompt producers
to ship more product to Europe, she said.
As for German politics, there are hopes that a
new government next year will address at least
some of the challenges the country faces, she
said.
The coalition government of Chancellor Olaf
Scholz collapsed last month,
and new elections are expected to be held in
February.
CHEMICAL PRODUCTION TO STAGNATE IN
2025
In 2024, total chemical-pharmaceutical
production rose 2.0%, led by a 4.0% increase in
chemicals, according to preliminary data,
Kellermann said.
2024, percentage change in production,
by major segments:
Inorganic basic chemicals: +7.0%
Petrochemicals: +8.5%
Polymers: +4.0%
Fine and specialty chemicals: -2.0%
Consumer chemicals: +2.0%
Pharmaceuticals: -1.5%
While some segments saw a significant
year-on-year increase in production, the
increases did not offset the declines in 2023,
she said.
Demand for chemicals across industrial
customers was weak, especially in Germany, she
said.
For 2025, VCI currently forecasts that
chemical/pharmaceutical production will inch up
0.5%, with chemical production expected to
stagnate:
Production, year-on-year %-changes
2025 forecast
2024 (based on
preliminary data)
2023
Chemicals &
pharmaceuticals
+0.5%
+2.0%
-7.9%
Chemicals (ex pharma)
flat
+4.0%
-10.4%
COMPANIES REACT
Companies are reacting to the challenges they
face in Germany with a range of measures,
Kellermann said.
They include restructuring; improvements in
productivity and energy efficiency; cost
cutting programmess; shifting production
abroad; divestments of businesses lines; and
plant closures, she said.
The country was seeing a permanent shutdown in
production, and this trend may accelerate, she
added.
Only 25% of the chemical companies surveyed
expect their investments in plants, equipment
and machinery at German locations to increase
next year, whereas 40% expect their investments
to decline.
On the other hand, 46% expect an increase in
their investments abroad.
Companies were investing, but not necessarily
in Germany, Kellermann said.
VCI chief economist Henrik Meincke, who also
presented at the webinar, said following steady
growth in the years after the 2008-2009 global
financial crisis, “multiple shocks” have hit
Germany’s economy and its energy-intensive
industrial producers since 2018:
2018/19: US-China trade conflict
2020: Pandemic lockdowns
2020/21: Supply chain crisis
2022: Ukraine war and energy price shock
2023: Inflation, and high interest rates to
contain it
Germany was currently in a stagflation phase,
with core-inflation above 2% – and this has
come at a time of enormous political and
economic risks as well as the challenge of
transforming the economy to net zero-emissions,
he said.
Thumbnail photo of BASF’s Ludwigshafen
site; source: BASF
Ammonia19-Dec-2024
HOUSTON (ICIS)–Dakota Gasification Company has
confirmed that the company and fertilizer
producer OCI decided earlier this month to
dissolve their joint marketing venture N-7 and
that it will begin its own fertilizer sales and
marketing beginning 1 February.
This move comes after a strategic review by
both parties it was determined to dissolve the
joint venture, which was focused on selling
nitrogen fertilizers, industrial ammonia, urea
liquor and diesel exhaust fluid (DEF).
Since the partnership formed in July 2018, N-7
has shipped over 26.5 million short tons of
product to more than 520 customers in
3,100 cities.
The company said it will continue to offer the
same products moving forward including ammonia
and urea, and rather than reduce their
workforce this change has lifted levels.
“We have expanded our team with highly skilled
professionals to enhance our ability to deliver
exceptional products and service to our
customers,” said a Dakota Gasification Company
spokesperson.
The parent company said in a statement the
decision reflects a mutual recognition of the
unique growth opportunities available to both
companies independently.
“This partnership allowed us to serve our
customers with exceptional products while
achieving significant milestones together,”
said Daniel Gallagher, Basin Electric commodity
sales & trading director. “Dakota Gas
remains committed to producing and delivering
high-quality products to our customers.”
The companies will honor all agreements
previously undertaken by N-7 with a
spokesperson saying, “the market has responded
favorably to our decision”.
Netherlands-based OCI has not responded for
comment but when the partnership was first
announced it had stated N-7 would market and
distribute product from Iowa Fertilizer
Company, the OCI Partners operations in Texas
and the Dakota Gas facility in North Dakota.
In addition, it intended to market any imported
product from their operations outside North
America.
Ending the N-7 venture follows the sale of Iowa
Fertilizer Company and OCI Beaumont.
Speciality Chemicals19-Dec-2024
HOUSTON (ICIS)–With the 15 January target date
for a new master agreement between union dock
workers and US Gulf and East Coast ports
rapidly approaching, the Alliance for Chemical
Distribution (ACD) is urging both sides to push
back the deadline.
Negotiations between the dockworkers,
represented by the International Longshoremen’s
Association (ILA), and the ports, represented
by the United States Maritime Alliance (USMX),
have been stalled as each side is unwilling to
budge on issues surrounding
automation of ports.
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.
They also transport liquid chemicals in
isotanks.
ACD President and CEO Eric Byer outlined the
challenges hindering negotiations and
emphasized the significant economic and public
consequences of a contract lapse in a letter to
both parties.
Byer also highlighted the economic impacts the
previous three-day strike caused to
various industries and the challenges the
chemical distribution industry would face if
another strike were to occur.
Other challenges are the 29 January start of
the Lunar New Year, and the upcoming
inauguration and transition to the new
presidential administration.
“In early October, during the three-day lapse
in the master contract between the ILA and
USMX, there was a substantial economic impact,
weeks of supply chain disruptions, and
challenges in getting necessary supplies to
communities in the wake of the Hurricane Helene
disaster,” Byer said in the letter.
“Additionally, had the lapse continued for just
a few more days, it would have resulted in ACD
members losing stock of chemicals used for
critical processes, such as water treatment.”
In a 12 December post on social media,
President-elect Donald Trump expressed his
support for the
dockworkers in the labor dispute.
A strike would not have an impact on liquid
chemical tankers, which transport most chems.
For most traders and brokers who export
polyvinyl chloride (PVC), much of their
warehouse space is full and they are unable to
book vessels until after the 15 January
deadline because of the uncertainty.
“This could make for a very challenging first
quarter,” ICIS Senior Analyst Kelly Coutu said.
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Ethylene19-Dec-2024
HOUSTON (ICIS)–Chemical plants and
refineries along the Gulf Coast of the US
will likely face another winter that will be
warmer than usual but punctuated with brief
periods of freezing temperatures, which could
disrupt operations.
Meteorologists expect winter temperatures
in the US will be colder than the previous
year but still warmer than average.
A meteorologist in Texas warned that the
state could face another brief spell of
freezing temperatures similar to past
winters, such as the devastating Winter Storm
Uri in 2021.
Chemical plants in the Gulf Coast still
have trouble operating in freezing
temperatures despite improvements made since
Uri.
COLD SPELLS CONTINUE TO DISRUPT GULF
COAST CHEM PLANTSBrief spells
of freezing temperatures are becoming an
annual feature of winters in the Gulf Coast,
even as the overall season becomes warmer,
according to a presentation made earlier this
year by Chris Coleman, the supervisor of
operational forecasting at Electric
Reliability Council of Texas (ERCOT), which
manages the flow of electricity in most of
the state.
This upcoming winter could continue the
trend.
Coleman warned that the state has a greater
than average chance of suffering from
freezing temperatures – even though the
season as a whole will be warmer than usual.
Meteorology firm AccuWeather also warned that
the US will be vulnerable to a blast of cold
temperatures despite the forecast for a warm
winter. Such blasts are caused by polar
vortexes, and February is the most probable
month when one will move across the eastern
US.
AccuWeather did not say whether such a polar
vortex could hit Texas.
CHANCES OF CHEM
OUTAGESFor chemical plants,
freezing temperatures can cause outages by
disrupting operations or by blackouts caused
by excessive electricity demand. Such a
demand spike caused the widespread plant
outages during winter storm Uri in 2021.
Since then, Texas has avoided state-wide
outages despite continued cold spells and
growing demand for electricity.
The state’s power grid is more reliable, and
it has conducted more weatherization
inspections, ERCOT said.
If the power grid in Texas holds up this
winter, then chemical disruptions would be
caused by freezing temperatures shutting down
operations at specific plants.
Even after Uri, steps taken by some companies
still did not prevent cold temperatures from
disrupting their operations.
During the freeze of December 2022,
TotalEnergies shut down its polypropylene
(PP) units at La Porte, Texas, even though
the company said it took all precautions
possible through freeze protection and heat
tracing.
US WINTER COOLER THAN
2023-2024Meteorologists at the
National Oceanic and Atmospheric
Administration (NOAA) expect winter
temperatures will be warmer than average for
the southern and eastern US.
That said, they will still be cooler than the
previous year, according to the Energy
Information Administration (EIA). Those
cooler temperatures have led the EIA to
expect average prices for natural gas to
reach $3.00/million Btu in 2025, up from
$2.20/million Btu in 2024.
Natural gas is important to the chemical
industry because they use it as fuel and
because it influences prices for ethane, the
predominant feedstock that US crackers use to
make ethylene.
MORE LNG TERMINALS WILL START
UPA growing source of gas
demand is made up of terminals that export
liquefied natural gas (LNG).
The following table lists the terminals that
should start up in 2025 and later. Capacity
figures are listed in millions of
tonnes/year.
Project
Developer
Capacity
Estimates Start Up
Corpus Christi Stage 3
Cheniere
10
2025
Plaquemines LNG
Venture Global
20
2025
Golden Pass LNG
ExxonMobil/QatarEnergy
15.6
2027
Port Arthur LNG
Sempra
13
2027
Rio Grande LNG Phase 1
NextDecade
17.6
2027
Insight article by Al
Greenwood
Thumbnail shows ice. Image by David J
Phillip/AP/Shutterstock
Polyethylene19-Dec-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
Lots of focus has been on the Trump effect on
the US trading relationship with China. But we
need to think more broadly than this. I see a
significant risk that next year we will see
trade tensions also increasing between other
countries and China for the reasons described
in today’s post.
See today’s, main slide, showing China’s
percentage shares of global capacities for some
polymers in 2009 (the beginning of China’s
giant economic stimulus programme) versus 2021
(the Evergrande Turning Point) and 2025.
Producers elsewhere, seeing charts such as this
one, could be anxious to protect market share
and avoid commoditisation for polymers such as
acrylonitrile butadiene styrene (ABS) and
ethylene vinyl acetate (EVA) which can be
higher value in some end-use applications.
In polypropylene (PP), China’s share of global
capacities was just 15% in 2009 and 26% in
2021. ICIS forecasts this will next year jump
to 45%. We have already seen an uptick in
protectionist measures against Chinese PP.
More broadly, China’s investment in
export-based manufacturing capacity has
accelerated since late 2021 to compensate for
the end of the property bubble.
China has dominated exports of finished goods
for 20-odd years. But ICIS data, such as
today’s first chart, and other data show that
this has gone to a different level since the
end of 2021.
International trade used to be a win/win game,
but the data suggest that China has recently
gained stronger positions in low, medium and
high-value manufacturing.
What form will any increase in protectionism
take in 2025? To what extent could it be
short-term our “knee jerk” versus further
strategic initiatives to reshore manufacturing?
To what degree is it too late for strategies in
some countries and regions? I’ve been recently
polling people on the German auto industry. It
is too late to turn around the decline in the
industry, was the majority view. If true, this
would obviously have huge implications for
Germany’s chemicals companies.
If “protectionism” and “China” are the words of
the year in 2025, expect chemicals trade flows
and pricing patterns to be significantly
reshaped by announcements of investigations
into new duties and the imposition of
duties.
Keeping on top of news on trade protectionism,
especially if you can get the news before your
competitors, will be a significant competitive
advantage.
And every action can promote a reaction. We
must consider how China might respond to more
duties. Its responses will of course also
affect chemicals trade flows, pricing patterns
and demand in different regions.
Good luck out there. Next year is going to be
very, very challenging for reasons beyond just
protectionism.
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.
Ethylene18-Dec-2024
HOUSTON (ICIS)–US listed shares of chemical
companies fell sharply on Wednesday, with many
falling by more than 4%, after the Federal
Reserve lowered its expectations for rate cuts
and raised them for inflation.
The following table summarizes the major
indices followed by ICIS.
Index
18-Dec
Change
%
Dow Jones Industrial Average
42,326.87
-1,123.03
-2.58%
S&P 500
5,872.16
-178.45
-2.95%
Dow Jones US Chemicals Index
829.38
-21.74
-2.55%
S&P 500 Chemicals Industry Index
871.47
-23.78
-2.66%
The Federal Reserve
lowered its benchmark federal funds rate by
a quarter point as expected. However, it now
expects to lower rates by a half point in 2025,
down from earlier expectations of cuts totaling
1 point.
Meanwhile, inflation may not reach the Fed’s
target until 2027.
The prospect of fewer rate cuts contributed to
a run-up in yields for longer term government
debt.
The yield on 10-year Treasury notes rose past
4.5%, a level it last reached at the end of
May.
Yield on these notes affects rates for other
types of longer term debt, notably those for
30-year mortgages.
Elevated mortgage rates have made housing
unaffordable for a growing number of consumers.
That has lowered demand for houses, appliances
and furniture, all important end markets for
many plastics and chemicals.
If longer term rates remain elevated, it is
unlikely that chemical markets will recover as
expected in the second half of 2025.
DEFICIT CONTRIBUTES TO ELEVATED
MORTGAGE RATESAnother trend
elevating rates on longer term debt is the
growing size of the government deficit.
To fund the expanding deficit, the US will
issue larger amounts of government debt. An
increase in the supply of debt will lower
prices, and yields on debt are inversely
related to price.
PRICES FOR US-LISTED CHEMICAL
SHARESThe following table lists
the US-listed shares of chemical companies
followed by ICIS.
Symbol
Name
$ Current
Price
$ Change
% Change
ASIX
AdvanSix
28.72
-1.38
-4.58%
AVNT
Avient
42.37
-3.55
-7.73%
AXTA
Axalta Coating Systems
35.01
-1.38
-3.79%
BAK
Braskem
3.98
-0.29
-6.79%
CC
Chemours
17.36
-0.85
-4.67%
CE
Celanese
67.94
-0.47
-0.69%
DD
DuPont
77.62
-2.51
-3.13%
DOW
Dow
40.15
-0.42
-1.04%
EMN
Eastman
90.95
-4.40
-4.61%
FUL
HB Fuller
69.81
-2.16
-3.00%
HUN
Huntsman
18.3
-0.26
-1.40%
KRO
Kronos Worldwide
9.77
-0.19
-1.91%
LYB
LyondellBasell
74.8
-0.64
-0.85%
MEOH
Methanex
45.75
-1.37
-2.91%
NEU
NewMarket
522.36
-16.76
-3.11%
NGVT
Ingevity
41.61
-1.79
-4.12%
OLN
Olin
34.1
-1.37
-3.86%
PPG
PPG
121.25
-0.81
-0.66%
RPM
RPM International
126.49
-4.93
-3.75%
SCL
Stepan
68.33
-3.17
-4.43%
SHW
Sherwin-Williams
348.66
-14.13
-3.89%
TROX
Tronox
10.53
0.39
3.85%
TSE
Trinseo
5.41
-1.17
-17.78%
WLK
Westlake
115.54
-2.00
-1.70%
Ammonia18-Dec-2024
HOUSTON (ICIS)–The US Department of
Agriculture (USDA) announced it is making more
than $116 million in investments for domestic
fertilizer production to increase competition,
lower fertilizer costs for farmers and lower
food costs for consumers.
USDA is awarding the funds through the
Fertilizer Production Expansion Program to help
eight facilities expand innovative fertilizer
production in California, Colorado, Georgia,
Indiana, Iowa, Kansas, Michigan, Oklahoma and
Wisconsin.
“When we invest in domestic supply chains, we
drive down input costs and increase options for
farmers. Through today’s investments to make
more fertilizer, USDA is bringing jobs back to
the United States, lowering costs for families,
and supporting farmer income,” said Tom
Vilsack, USDA Secretary.
Through the Fertilizer Production Expansion
Program, the USDA has invested $517 million in
76 fertilizer production facilities to expand
access to domestic fertilizer options for
growers in 34 states and Puerto Rico.
It is expected these efforts will see US
fertilizer production increase by 11.8 million
short tons annually and create more than 1,300
jobs in rural communities.
Projects receiving this round of funding
include California company Biofiltro USA Inc.
which will use a $2.3 million grant to
construct a new facility to process manure from
dairy cows and yield more than 33,000 cubic
yards of composted fertilizer alternative
annually.
In Georgia, Reve Solutions Inc. will have $1.3
million to expand a biosolid fertilizer
composter and increase capacity through
additional equipment and working capital for
two production locations. This undertaking is
expected to generate more than 30,000 short
tons of fertilizer nutrient and create five new
jobs.
There is also a $2.3 million grant going to
Kansas-based Farmers Cooperative Association
who will expand an existing dry fertilizer
facility with additional storage and processing
capacity. The project will improve the
efficiency of order processing and will
increase its dry fertilizer production to
24,500 short tons per year.
Ethylene18-Dec-2024
HOUSTON (ICIS)–The Federal Reserve lowered on
Wednesday its benchmark interest rate by a
quarter point while reducing the number of cuts
it expects to make in 2025.
The quarter point decline brings the benchmark
federal funds rate to 4.25-4.50%.
Fed members and presidents expect the rate will
fall to 3.9% by the end of 2025. That
represents two quarter-point cuts.
Earlier in September, the group expected the
rate would fall to 3.4%, which represented four
quarter-point cuts.
The group expects inflation will remain above
the Fed’s target of 2%, according to
projections they made in regards to the core
personal consumption expenditures (PCE), which
the central bank’s preferred measure of
inflation.
The 2025 forecast for core PCE is 2.5%, up from
September’s forecast of 2.2%. The group does
not expect inflation will reach its target
until 2027.
CHEMS STILL STRUGGLING WITH ELEVATED
LONG-TERM RATESSo far, the
current reductions in the federal funds rate
have not translated into reductions in longer
term rates, such as 10-year treasury notes and
30-year mortgages for home loans.
Both remain elevated, and that has limited
demand for housing as well as appliances,
furniture and other durable goods. These are
all large end markets for several plastics and
chemicals. Weak demand in these core markets
have depressed several plastic and chemical
markets.
Rates for longer term debt remain elevated, in
part, because of the growing size of the US
deficit. The US funds the deficit by issuing
larger amounts of debt. Those larger debt
issuances have raised rates for longer term
government debt and private debt with similar
maturities.
ECONOMIC GROWTH REMAINS
SOLIDIn
comments identical to its November
statement, the Fed said the US economy
continues to grow at a solid pace, and
unemployment remains low. Inflation remains
elevated despite making progress towards the
Fed’s 2% target.
The following table summarizes the Fed’s
economic projections and compares them to the
ones it made in September.
2024
2025
2026
2027
GDP
2.5
2.1
2
1.9
Sept GDP
2
2
2
2
Unemployment
4.2
4.3
4.3
4.3
Sept Unemployment
4.4
4.4
4.3
4.2
PCE Inflation
2.4
2.5
2.1
2
Sept PCE Inflation
2.3
2.1
2
2
Core PCE
2.8
2.5
2.2
2
Sept Core PCE
2.6
2.2
2
2
Fed Funds Rate
4.4
3.9
3.4
3.1
Sept Fed Funds Rate
4.4
3.4
2.9
2.9
Source: Fed
Thumbnail shows dollars. Image by
ICIS.
Ethylene18-Dec-2024
SAO PAULO (ICIS)–Brazil’s chemicals producers
are confident the sector would be mostly spared
from potentially higher US import tariffs as
the latter maintains a clear trade surplus in
bilateral commerce, the country’s trade group
Abiquim said to ICIS.
In fact, given the clear advantage in bilateral
trade, Abiquim said that instead of tariffs
they may need to prepare for the US to
“facilitate” chemicals trade with Brazil, a net
importer of chemicals.
Earlier this week, US President-elect Donald
Trump mentioned Brazil for the
first time as a potential target for higher
tariffs because, he argued, Brazil’s import
tariffs on US goods are much higher than the
other way around.
In a written response to ICIS, Abiquim said it
“understands” that countries may impose
“legitimate emergency tariffs” as a short-term
remedy to trade distortions caused by “unfair”
imports.
It could not be otherwise, after the trade
group lobbied hard during 2024 – and successfully achieved
– for the Brazilian government to hike import
tariffs for a wide of chemicals, as domestic
continued losing market share to imports.
“We will monitor the eventual developments of
this recent [Trump] announcement, especially
given the fact that Brazilian chemical products
do not have predatory potential in the US
market,” said Abiquim.
“In other words, we do not expect the
imposition of barriers on Brazilian chemicals,
but rather more facilitation. Since the
chemical balance is clearly favorable to the
US, we do not foresee significant restrictions
on US imports of chemicals [from Brazil].”
The US-Brazil bilateral trade in chemicals has
clearly been favoring the US in the past few
years, after the country’s shale gas boom made
it a net exporter of petrochemicals.
According to figures by Brazil’s foreign trade
chamber Comex and compiled by Abiquim, Brazil’s
trade deficit in chemicals with the US stood at
$7.4 billion in 2023.
The figure was lower than in 2022 as imports
from Asia, mostly from China, increased during
the year, but Brazil’s deficit with the US
still represented a big chunk of Brazil’s
chemicals imports deficit during that year,
which stood
at $47 billion.
Brazil trade with US
Imports
Exports
Surplus/deficit
2023
2022
2023
2022
2023
2022
ChemicalsIn
‘000 dollars
9,873,319
11,946,685
2,472,086
2,907,413
-7,401,233
-9,039,272
In tonnage
7,016,919
7,809,290
2,193,470
2,483,008
-4,823,449
-5,326,282
According to figures from the US
government, US exports of goods and services to
Brazil stood at $37.9 billion in 2023, down
more than 25% from 2022, although still an
overall trade surplus as Brazil exported to the
US goods and services worth $36.9 billion, down
2% percent from 2022.
In total, the bilateral trade value stood at
$74.8 billion in 2023.
“The US purchased a record $29.9 billion in
manufactured products from Brazil in 2023,
accounting for 81% of total US imports from
Brazil, reaffirming the US as the top
destination for Brazilian value-added goods,”
said the US government.
Key industrial Brazilian exports to the US
included semi-finished iron and steel products,
aircrafts and aircraft parts, and civil
engineering equipment, it added.
POTENTIAL RETURN OF GSP
PROGRAMMoreover, Abiquim said it
is expectant to see if the US Congress renews
the Generalized System of Preferences (GSP), a
program which provided duty-free treatment for
thousands of products from designated
beneficiary countries and territories (BDCs),
mostly developing countries.
At the height of the Cold War in the 1970s, the
GSP was designed to increase trade with
developing countries. The duty-free trade
applied both ways, with US companies who
purchased under the program exempt from import
tariffs.
The GSP was authorized by the Trade Act of 1974
and implemented in 1976 but expired in 2020 and
is currently pending US Congressional action
for renewal.
“It is essential to bear in mind that Brazil
does not apply discriminatory tariff barriers
against the US in the chemical sector and, on
the other hand, with regard to access to the US
market, Abiquim awaits with great expectation
the reactivation of the US tariff benefits
program [US-GSP],” it said.
“[Its reactivation] will reinvigorate the entry
with lower import taxes into the US of several
chemical products originating in Brazil which
would benefit from the regime.”
The US’ chemicals trade group the American
Chemistry Council (ACC) and Brazil’s industrial
trade group CNI said to ICIS they would not
comment at this stage on Trump’s Brazil
remarks.
The US’ trade groups the American Fuel &
Petrochemical Manufacturers (AFPM) and the
Society of Chemical Manufacturers &
Affiliates (SOCMA) had not responded to a
request for comment at the time publishing.
Front page picture: Chemicals facilities in
Brazil
Source: Abiquim
Focus article by Jonathan
Lopez
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