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.

SINGAPORE (ICIS)–China’s November manufacturing purchasing managers index (PMI) rose to a seven-month high of 50.3, remaining in expansion territory for the second straight month, official data showed on Monday. A private manufacturing PMI survey by media group Caixin showed similar trend, with a much higher November reading of 51.5, up from 50.3 in the previous month. The Chinese government’s stimulus measures were cited as major expansion drivers. According to China’s National Bureau of Statistics (NBS), both supply and demand improved in November, with the sub-production index rising to 52.4 from October’s 52.0, while the sub-new order index rising to 50.8 in November from 50.0 in October. Meanwhile, Caixin’s November production index increased to the highest since July 2024, with the new order index hitting its highest since March 2023. Companies surveyed cited some recovery in external orders, with November exports of big-ticket and intermediate items rebounding, while those of consumer products declined.

MUSCAT (ICIS)–The 19th Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum will be held in Bahrain next year, according to GPCA secretary general Abdulwahab Al-Sadoun. The annual forum is the flagship chemical industry gathering in the Gulf Cooperation Council (GCC) which comprises of 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. It was then held in Doha, Qatar the following year; and in Muscat, Oman this year. This year, the 18th Annual GPCA Forum kicked off on Monday in Muscat, Oman and will run up to 5 December, with the theme “Industry’s Next Chapter: Driving Sustainable Advancement for Global Progress”. Last year’s GPCA Forum in Qatar attracted more than 5,000 delegates.

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)

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 29 November. Final round of UN plastics treaty talks begin in South Korea By Nurluqman Suratman 25-Nov-24 12:23 SINGAPORE (ICIS)–The fifth and final round of United Nations (UN)-led negotiations for a global plastics treaty to combat plastic pollution kicked off in Busan, South Korea, on Monday. INSIGHT: China cuts PV export tax rebate; EVA sector faces margin squeeze By Joanne Wang 25-Nov-24 18:04 SINGAPORE (ICIS)–China’s Ministry of Finance and the State Administration of Taxation announced on 15 November a reduction in export tax rebate rate for solar products, including photovoltaic (PV), batteries and other certain products, from 13% to 9%. Asia petrochemical shares slip; Trump eyes 10% new tariffs for China By Nurluqman Suratman 26-Nov-24 12:00 SINGAPORE (ICIS)–Asian petrochemical shares were mostly lower on Tuesday after US President-elect Donald Trump threatened to impose an additional 10% tariffs on Chinese goods. Asia fatty alcohol mid-cuts demand weighed down by feedstock PKO volatility By Helen Yan 27-Nov-24 10:23 SINGAPORE (ICIS)–Asia’s fatty alcohol mid-cuts market is likely to see a lull in spot activities in the near term as a widening buy-sell price gap has hampered trades. World Plastics Council, Global Plastics Alliance urge governments to secure UN plastics treaty By Nurluqman Suratman 27-Nov-24 12:12 SINGAPORE (ICIS)–The World Plastics Council (WPC) and Global Plastics Alliance (GPA) members are urging governments to finalize a landmark treaty to end plastic pollution through scaled-up waste management and recycling, while respecting countries’ differing needs. Thailand to compete for spot Asia ACN, MMA as PTTAC plants close By Jonathan Yee 27-Nov-24 15:22 SINGAPORE (ICIS)–Thailand will have to tap the spot Asian markets for acrylonitrile (ACN) and methyl methacrylate (MMA) for its domestic requirements starting 2025 following closures of PTT Asahi Chemical (PTTAC)’s plants in Map Ta Phut. S Korea central bank cuts key interest rate anew; trims GDP forecasts By Jonathan Yee 28-Nov-24 11:56 SINGAPORE (ICIS)–South Korea’s central bank on Thursday made a surprise cut to its key interest rate, following a similar move in the previous month, amid concerns over economic implications of the US’ impending tariffs on all foreign goods. Asia butac, etac markets languish in slow demand By Melanie Wee 29-Nov-24 13:44 SINGAPORE (ICIS)–Asia-Pacific butyl acetate (butac) markets were undermined by slowing demand entering the year-end lull against a backdrop of ample regional supply.

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

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

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The US has gained an estimated $2.2 billion in linear low density polyethylene (LLDPE) sales turnover in China since the 1992-2021 Chemicals Supercycle came to an end. It has gained $859 million in high density PE (HDPE). And its exports in tonnes have also surged. This has occurred as Saudi Arabia, Iran and South Korea, etc have lost a lot of ground. The US gains are the result of a big drop in import tariffs in February 2020, thanks to a trade deal, and of course the strong US ethane-based cost position. In a deflationary or disinflationary Chinese economy, cost is the king. But Donald Trump’s election victory has pushed us into a world of uncertainty. Almost anything might now happen. This brings to my mind the fabulous science fiction series of books and TV and radio shows, “The Hitchhiker’s Guide to the Galaxy”, and its Infinite Improbability Drive. This is defined as such: The infinite improbability drive is a wonderful new method of crossing interstellar distances in a mere second, without all that tedious mucking about in hyperspace. As soon as the ship’s drive reaches infinite improbability, it passes through every conceivable point in every conceivable universe simultaneously. In one of any number of scenarios, let’s assume that China responds to increased US tariffs with increased tariffs on imports of US PE, as it did in 2017. Then the US loss could be to the gain of South Korea, Iran, etc. But, as we saw in 2017, the US might not lose out as whole. Its export flows to southeast Asia, Europe and Latin America might increase as other countries fill the gap created in China. Here’s some advice: Put the ICIS data into something akin to an Infinite Improbability Drive and you might get the answers you need. 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.

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.