LONDON (ICIS)–Europe markets tumbled in afternoon trading on Wednesday, reversing earlier gains as the euro fell in value against the US dollar amid fears over the introduction of fresh tariff measures by the incoming US administration. A robust start to the day by Europe stock exchanges reversed course as trading continued. A speedy resolution to a US political fight that had been expected to be closer-fought and potentially take longer to be decided reassured investors, but a surging dollar and jitters over the potential for fresh duties on exports to Europe unsettled traders. Robust trading goosed stock valuations across Europe shortly after press called the election for Donald Trump, with bouses in Germany, France and the UK up 0.85%-1.15% That rally subsided over the course of the day as a surging dollar and tariff worries unsettled markets, with the value of the euro dropping 2 cents against the dollar, from $1.09:€1 on Tuesday evening to $1.07:€1 in afternoon trading on Wednesday. Germany’s DAX index was trading down 1.18% while France’s CAC 40 had shed 0.83% of its value and the UK FTSE 100 slumped 0.23% as of 16:13 GMT. Particularly hard-hit were German automaker stocks, with Volkswagen shares plunging 5.70%, Porsche down 4.54%, BMW plummeting 6.47% and Mercedes-Benz shares dropping 6.44% on fears of steeper tariffs on vehicle exports to the US. The new president-elect, the first person to win two non-consecutive terms in office, had spoken on the campaign trail of plans for additional import tariffs, particularly for China but also for Europe. Donald Trump has set out plans to impose tariffs of up to 20% on all external trading partners and 60% on products from China, which economics institute Ifo estimated could cost Germany-based businesses €33 billion per year if they are introduced. Germany-based chemicals trade body VCI on Wednesday stated that businesses in both Germany and the EU need to diversify trade flows along with improving international competitiveness, due to the prominence of the US as a destination. The US is Germany’s second-largest trading partner after the EU. “For firms, uncertainty over the US tariff regimes for their industry and the risk of retaliatory measures by policymakers elsewhere will clearly be a huge problem when forward planning,” said Oxford Economics director of global macro research Ben May. “This, combined with potentially higher borrowing costs, could be a strong disincentive to delay or cancel investment,” he added. US markets are substantially more bullish at present, with the Dow and Nasdaq trading up 3.15% and 2.02% as of 16:34. Canada exchanges booked more modest increases, while central and southern American exchanges fared worse, with the Brazil Stock Exchange Index and Mexico’s S&P/BMV IPC index trading down.

LONDON (ICIS)–Relatively flat demand trends and evolving global supply dynamics evident in H2 2024 are expected to largely persist within the European acrylonitrile-butadiene-styrene (ABS) and acrylonitrile (ACN) markets in Q1 2025. In this latest podcast, Europe ABS report editor Stephanie Wix and her counterpart on the Europe ACN report, Nazif Nazmul, share the latest developments and expectations for what lies ahead. Macroeconomic challenges expected to continue limiting ABS and ACN demand through Q4 into Q1 2025 ABS and ACN availability likely to remain lengthy Import-led ABS competition could increase in Q1 2025 ABS is the largest-volume engineering thermoplastic resin and is used in automobiles, electronics and recreational products. ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers.

HOUSTON (ICIS)–US President-Elect Donald Trump has pledged to impose more tariffs, lower corporate taxes and lighten companies’ regulatory burden, a continuation of what US chemical producers saw during his first term of office in 2016-2020. More tariffs could leave chemical exports vulnerable to retaliation because of their magnitude and the size of the global supply glut. Trump pledged to reverse the surge in regulations that characterized term of President Joe Biden. Lower corporate taxes could benefit US chems, but longer term, rising government debt could keep interest rates elevated and prolong the slump in housing and durable goods. MORE TARIFFSTrump pledged to add more tariffs to the ones he introduced during his first term as president, as show below. Baseline tariffs of 10-20%, mentioned during an August 14 rally in Asheville, North Carolina. Tariffs of 60% on imports from China. A reciprocal trade act, under which the US would match tariffs imposed on its exports. WHY TRADE POLICY MATTERS FOR CHEMICALSTrade policy is important to the US chemical industry because producers purposely built excess capacity to take advantage of cheap feedstock and profitably export material abroad. Such large surpluses leave US chemical producers vulnerable to retaliatory tariffs. The danger is heightened because the world has excess capacity of several plastics and chemicals, and plants are running well below nameplate capacity. At the least, retaliatory tariffs would re-arrange supply chains, adding costs and reducing margins. At the worst, the retaliatory tariffs would reach levels that would make US exports uncompetitive in some markets. Countries with plants running below nameplate capacity could offset the decline in US exports by raising utilization rates. Baseline tariffs would hurt US chemical producers on the import side. The US has deficits in some key commodity chemicals, principally benzene, melamine and methyl ethyl ketone (MEK). In the case of benzene, companies will not build new refineries or naphtha crackers to produce more benzene. Buyers will face higher benzene costs, and those costs will trickle down to chemicals made from benzene. Tariffs on imports of oil would raise costs for US refiners because they rely on foreign shipments of heavier grades to optimize downstream units. The growth in US oil production is in lighter grades from its shale fields, and these lighter grades are inappropriate for some refining units. REGULATORY RELIEFUnder Trump, the US chemical industry should get a break from the surge in regulations that characterized the Biden administration. The flood led the Alliance for Chemical Distribution (ACD) to call the first half of 2024 the worst regulatory climate ever for the chemical industry. The American Chemistry Council (ACC) has warned about the dangers of excessive regulations and urged the Biden administration to create a committee to review the effects new proposals could have on existing policies. Trump said he would re-introduce his policy of removing two regulations for every new one created. Trump has a whole section of his website dedicated to what he called the “wasteful and job-killing regulatory onslaught”. One plank of the platform of the Republican Party is to “cut costly and burdensome regulations”. LOWER TAXES AT EXPENSE OF DEFICITTrump pledged to make nearly all of the 2017 Tax Cuts and Jobs Act (TCJA) permanent and add the following new tax cuts, according to the Tax Foundation, a policy think tank. Lower the corporate tax rate for domestic production to 15%. Eliminate green energy subsidies in the Inflation Reduction Act (IRA). Exempt tips, Social Security benefits and overtime pay from income taxes. At best, the resulting economic growth, the contributions from tariffs and cuts in government spending would offset the effects of the tax cuts. The danger is that the tariffs, the cuts and the growth growth are insufficient to offset the decline in revenue that results from the tax cuts. The Tax Foundation is forecasting the latter and expects that that the 10-year budget deficit will increase by $3 trillion. To fund the growing deficit, the US government will issue more debt, which will increase the supply of Treasury notes and cause their price to drop. Yields on debt are inversely related to prices, so rates will increase as prices drop. Economists have warned that a growing government deficit will maintain elevated rates for 10-year Treasury notes, US mortgages and other types of longer term debt. Higher rates have caused some selective defaults among chemical companies and led to a downturn in housing and durable goods, two key chemical end markets. If the US deficit continues to grow and if interest rates remain elevated, then more US chemical companies could default and producers could contend with a longer downturn in housing and durable goods. A second post-election insight piece, covering the future landscape for energy policy, will run on Thursday at 08:00 CST. Front page picture: The US Capitol in Washington  Source: Lucky-photographer Insight article by Al Greenwood

SAO PAULO (ICIS)–Brazil’s private sector posted in October the fastest rate of expansion since mid-2022, analysts at S&P Global said on Tuesday. S&P’s composite PMI index stood in October at a very healthy 55.6 points, up from September’s 55.2 points. Any reading above 50.0 points shows economic expansion. S&P compiles the composite PMI index putting together the manufacturing and services indices, according to each’s weight in the economy. Last week, S&P said Brazil’s petrochemicals-intensive manufacturing sectors had performed well in October thanks to a healthy order book, both in the domestic market as well as abroad, with export orders rising. This week, the analysts said the services sectors – which are predominant in the economy – had also posted healthy performance in October, with the index at 56.2 points, up from 55.8 points in September. COMPOSITE PMI“Stronger increases in both factory production and services activity fueled growth of Brazilian private sector output … The main determinant of growth was a substantial improvement in demand for goods and services. Aggregate sales increased at the quickest pace in 28 months, spurred by a faster increase in the service economy,” said S&P. “Less encouragingly, employment data showed the joint weakest rise in private sector jobs since October 2023. Manufacturers hired staff at the slowest pace for 10 months, while cost considerations at service providers led to a broad stagnation of recruitment efforts. Input costs at the composite level rose at the weakest rate in four months, reflecting a notable slowdown in the manufacturing industry.” BRAZIL MANUFACTURING PMI October September August July June May April March February January December 2023 November PMI index 52.9 53.2 50.4 54.0 52.5 52.1 55.9 53.6 54.1 52.8 48.4 49.4 Source: S&P Global

HOUSTON (ICIS)–US polyester film producer Polyplex expects the expansion project at its Decatur, Alabama, production facility to start up in the first quarter of 2025, according to market participants at this year’s PackExpo. The site has added a new biaxially oriented polyethylene terephthalate (BOPET) line with an annual capacity of 50,000 tonnes. Additionally, they have increased resin capacity from 58,000 to 86,000 tonnes for captive consumption, according to a press release from the company. The site is expected to reduce lead times for PET film in the US, which is currently a net importing market. PackExpo runs through Wednesday. PET resins can be broadly classified into bottle, fibre or film grade, named according to the downstream applications. Bottle grade resin is the most commonly traded form of PET resin and it is used in bottle and container packaging through blow molding and thermoforming. Fibre grade resin goes into making polyester fibre, while film grade resin is used in electrical and flexible packaging applications. PET can be compounded with glass fibre for the production of engineering plastics. DAK Americas, Indorama, Nan Ya Plastics Corporation and Far Eastern New Century (FENC) are PET producers in the US.

LONDON (ICIS)–UK-headquartered recycler Viridor intends to close its Avonmouth mechanical recycling facility following a strategic review, the company announced in a press release on Tuesday. The Avonmouth facility has a nameplate capacity of 80,000 tonnes/year of recycled polymers output concentrated on recycled polyolefins. Viridor is conducting a separate review of its Rochester mechanical recycling plant. The company attributed the decision to challenging market conditions, along with an absence of planned UK legislation to increase UK recycling rates. The company also cited low cost imports entering Europe and displacing domestic supply, echoing comments made by Plastics Recyclers Europe (PRE) on 24 October. “If circular plastics are to thrive in Europe, then plant closures are damaging to that progress. However, Viridor has been restructuring over a period of time including selling their waste business. While this is a refocus for Viridor, it leaves the UK market with reduced supply of recycled polymers,” said Helen McGeough, global analyst lead, plastics recycling, ICIS. Across both recycled polyethylene (R-PE) and recycled polypropylene (R-PP) players in recent weeks, recycled flake and pellet producers have complained of negative margins in non-packaging grades. While packaging demand in Europe has remained firmer than non-packaging across 2024 to date, and new packaging projects continue to onboard in Q4, there has been increasing bearishness in the sector since October as players focus on core business due to strained macroeconomic conditions. Viridor said it will continue to invest in polymer recycling through its Quantafuel subsidiary – which is focused on pyrolysis-based chemical recycling. ICIS assesses more than 100 grades throughout the recycled plastic value chain globally – from waste bales through to pellets. This includes recycled polyethylene (R-PE), recycled PET (R-PET), R-PP, mixed plastic waste and pyrolysis oil. On 1 October ICIS launched a recycled polyolefins agglomerate price range as part of the Mixed Plastic Waste and Pyrolysis Oil (Europe) pricing service. For more information on ICIS’ recycled plastic products, please contact the ICIS recycling team at recycling@icis.com Thumbnail photo: Sorting at a plastics recycling facility (Source: Shutterstock)

BARCELONA (ICIS)–Market forces and long-term trends such as global overcapacity and sustainability will have more impact on chemical companies than who wins the US presidential election. Chemical companies driven more by long-term trends than government policy Consumer demand for more sustainable products will drive chemical markets US relies heavily on exports for its low-cost polymers Donald Trump promises to hike tariffs by 10-20% on all imports, 60% on Chinese imports Trump may ease US chemicals regulation, Kamala Harris may tighten Questions over investments in the green transition In this Think Tank podcast, Will Beacham interviews ICIS market development executive, Nigel Davis, and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organizing regular updates to help the industry understand current market trends. Register here. Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.

SINGAPORE (ICIS)–Saudi petrochemical giant SABIC has lowered its capital expenditure (capex) guidance for 2024 as it prioritizes investments in higher-margin opportunities to mitigate overcapacity in the face of poor global demand. Full-year capex cut to $3.3 billion to $3.9 billion Future capex to focus on China, low-carbon projects Margins to remain under pressure for rest of 2024 SABIC reduced its full-year capex by about 25% to between $3.3 billion and $3.9 billion, from $4 billion and $5 billion previously, it said in its third-quarter earnings report released on 4 November. The new capex projection comes after SABIC swung to net profit of Saudi riyal (SR) 1 billion ($267 million) in Q3, from a loss of SR2.88 billion in the same period of last year. This turnaround is primarily due to higher operating income, driven by improved gross profit margins and a divestment gain from the firm’s functional forms business. Q3 losses from discontinued operations, mainly related to the Saudi Iron and Steel Co (Hadeed), decreased significantly from the same period last year. On a quarter-on-quarter basis, however, SABIC net profit fell by 54% mostly due to previous Q2 non-cash gains partly resulting from new regulations on Islamic tax. The reversal of zakat provision, which is a mandatory Islamic tax on wealth, resulted in a non-cash benefit of SR545 million in Q2 2024. SABIC registered a Q3 zakat expense of SR397 million. FOCUS ON CHINA Ratings firm Fitch in a note said that it expects SABIC’s capex to grow to an average of SR17 billion ($4.5 billion) in 2024-2025 and around SR14 billion in 2026-2027. “In our view, investments will be driven by expansion of its low carbon product portfolio and a pipeline of opportunities in China and the Middle East,” it said. This includes the recently sanctioned $6.4 billion joint venture petrochemical complex in Fujian, China, as well as the construction of the largest on-purpose single train methyl tertiary butyl ethe (MTBE) plant in the world in Saudi Arabia,” Fitch said. SABIC is exploring options for a petrochemical complex in Oman and an oil-to-chemicals project in Ras Al-Khair in its home country, according to the ratings firm. Fitch also expects acceleration of “green capex” after 2025 as SABIC plans to earmark 10% of its annual expenditures on carbon-neutrality initiatives by 2030. “The key projects will be focused on improved energy efficiencies, increased use of renewable energy in operations, and carbon capture of up to a potential 2 million tonnes, leveraging Saudi Aramco’s carbon capture and storage (CCS) hub in Jubail,” Fitch said. SABIC, which is 70% owned by oil giant Aramco, had stated in August that its long-term focus would remain on optimizing its portfolio and restructuring underperforming assets. PORTFOLIO OPTIMIZATION AMID MARKET CHALLENGES SABIC CEO Abdulrahman Al-Fageeh said on 4 November that overcapacity continues to weigh on the petrochemicals market, with current utilization rates remaining below long-term averages. “Furthermore, PMI [manufacturing purchasing managers’ index] data indicated a decline in global economic conditions,” he added. The company has initiated several portfolio-optimization measures, including discontinuing its naphtha cracker in the Netherlands and disposals of non-core assets such as its steel unit Hadeed in 2023 and a recently announced divestments of 20% shareholding in Aluminium Bahrain (Alba). SABIC’s margins are expected to remain under pressure this year before they gradually recover to mid-cycle levels of around 20% by 2026 on market improvement and portfolio-optimization measures, according to Fitch. ($1 = SR3.75) Focus article by Nurluqman Suratman

HOUSTON (ICIS)–Celanese plans to cut its quarterly dividend by 95% in Q1 2025 and idle plants in every region after third-quarter adjusted earnings fell well below guidance, the US-based acetyls and engineered materials producer said on Monday. Q3 adjusted earnings/share were $2.44 versus an earlier guidance of $2.75-3.00. Celanese shares were down by more than 13% in afterhours trading. Celanese is taking the following steps to cut down debt: It will temporarily idle plants in every region to reduce manufacturing costs through the end of 2024 It expects to generate an expected $200 million inventory release in the fourth quarter. The idling includes 10 sites in the company’s Engineered Materials segment. In the first half of the fourth quarter, Celanese has temporarily idled the company’s Singapore production of acetic acid, vinyl acetate monomer (VAM), esters and vinyl acetate emulsions (VAE). In Frankfurt, Germany, the company is idling its VAM plant and plans to use it as swing capacity to meet demand. It will start a program to reduce costs by more than $75 million by the end of 2025. The cost cutting will target selling, general and administrative (SG&A) expenses. It will target $400 million in 2025 capital expenditures, a figure below 2024 levels. It will close on a 364-day delayed draw prepayable term loan for up to $1 billion. It will draw on the term loan in Q1 2025 towards $1.3 billion in maturing debt. TOUGH THIRD QUARTERThe plant shutdowns, dividend reduction and cost cutting follow a third quarter that saw demand degrade rapidly and acutely in automobiles and industrial end markets. “Auto in Europe and North America experienced a shock to the demand patterns that had been relatively steady for the previous several quarters, with swift sales declines in both regions that led to a pullback in auto builds,” said Scott Richardson, chief operating officer. Demand remained slow in Asia but did not show the same trajectory as the Americas. The company noted that prices in China for undifferentiated nylon polymer reflects supply that is growing faster than demand. Demand remained weak in paints, coatings and construction. New capacity for VAM came online and outpaced demand, amplifying the weakness in construction as well as in solar panels. Excess inventories in solar panels is weakening demand for ethylene vinyl acetate (EVA). The weakness more than offset the gains that Celanese made from its synergy projects in its Mobility and Materials (M&M) acquisition and from its acetic acid expansion project in Clear Lake, Texas. WORSE FOURTH QUARTERQ4 destocking in the automotive and industrial end markets should be heavier than normal, and Celanese expects demand to worsen in the fourth quarter. The destocking should be temporary and contained in the quarter. In Engineered Materials, Celanese expects a $40 million hit from the destocking. Another $15 million hit will come from seasonal declines associated with product mix. A further $15 million will come from temporarily idling capacity in the segment. For acetyls, Celanese is not seeing any indications of demand growth in anticipation of the first quarter or as a result of stimulus from China. For the company, Q4 adjusted earnings/share should be $1.25. Q3 FINANCIAL PERFORMANCEThe following table shows the company’s Q3 financial performance. Figures are in millions of dollars. Q3 24 Q3 23 % Change Sales 2,648 2,723 -2.8% Cost of sales 2,026 2,050 -1.2% Gross profit 622 673 -7.6% Net income 116 951 -87.8% Source: Celanese Earnings in Q3 2023 reflect a $503 million one-time gain from the sale of assets. Thumbnail shows adhesive, which is made with VAM. Image by Shutterstock.