LONDON (ICIS)–UK inflation fell slightly in May from the previous month, according to the latest data from the Office for National Statistics (ONS) on Wednesday. The Consumer Prices Index (CPI) rose by 3.4% in the 12 months to May, compared with 3.5% in the 12 months to April. The Bank of England (BoE) lowered interest rates in May in an attempt to abate lofty inflation above its target of close to 2%. Transport was the key driver of cooling inflation, in part because of a drop in air fares and the price of motor fuels. Air fares fell by 5% between April and May, compared to a 14.9% rise between the same months a year prior. Vehicle excise duty was overstated in April, and was corrected in May, which also contributed to the decline in transport inflation. This offset rising prices for food and non-alcoholic beverages and costs of furniture and household goods, which was the highest level since December 2023 (but still below peaks of 2022). A UK-US trade deal was announced on 8 May, the first following US President Donald Trump’s mass tariff rollout, in which the UK agreed to the 10% baseline rate from the US but gained concessions for the automotive industry.

SINGAPORE (ICIS)–Japan’s chemical exports in May declined by 5.6% year on year to yen (Y) 928 billion ($6.4 billion), contributing to the first contraction in its overall shipments abroad in eight months which raises the risk of a technical recession in the world’s fourth-biggest economy.  Total May exports fall by 1.7% on year  May exports to US shrink by 11.1% on year  Negotiations on US tariff exemption ongoing Exports of organic chemicals fell by 16.8% year on year to Y148.7 billion in May, while shipments of plastic products slipped by 1.6% to Y266.7 billion, preliminary data from the Ministry of Finance (MOF) showed. By volume, May exports of plastic materials fell by 5.7% year on year to 413,270 tonnes. Japan’s total exports for the month fell by 1.7% year on year to Y8.13 trillion, reversing the 2.0% expansion in April and marked the first contraction in eight months – highlighting the impact of US President Donald Trump’s tariffs. With imports falling by 7.7% year on year to Y8.77 trillion in May, Japan registered a trade deficit of Y637.6 billion, extending its run of negative trade balances to two months. Overall shipments to the US – its largest export destination – fell by 11.1% year on year to Y1.51 trillion in May. Japan’s trade surplus with the US shrank 4.7% year on year to Y451.7 billion in May, marking the first decline in five months. Exports of cars to the US slumped by 24.2% year on year to Y358 billion in May, while shipments of motor vehicle parts fell by 19% to Y78.5 billion. Overall chemicals shipments to the US fell by 13% year on year to Y124.7 billion in May. It remains uncertain whether Japan’s attempts to secure an exemption from higher US tariffs will succeed. The 90-day suspension on US reciprocal tariffs aimed at narrowing a persistent trade gap with major trade partners are due to expire in early July for most countries, except China. For Japan, Trump has imposed a 25% tariff on imports of cars and auto parts, alongside a baseline tax of 10% on all other Japanese goods. In early June, the levy on steel and aluminum was doubled to 50%. These tariffs are set to remain in place for now, as Trump and Japanese Prime Minister Shigeru Ishiba failed to reach a deal on the sidelines of the Group of Seven leaders’ summit, despite two months of bilateral negotiations. The US’ 10% tariff across the board is slated to revert to 24% on 9 July, in line with announcements made in April. During talks at the G7 summit in Canada on 15 June, Ishiba confirmed that while the two countries have yet to finalize a trade package, they have agreed to continue discussions at the ministerial level. WORRIES OVER RECESSION GROWS The decline in exports and the widening trade deficit are fueling concerns that Japan’s economy could contract again in the second quarter, potentially ushering in a technical recession, which is defined as two consecutive quarters of contraction. Japan’s economy contracted by 0.2% on an annualized basis in the first quarter, while the country’s real GDP in price adjusted terms was flat from the previous quarter. The Bank of Japan (BOJ) on 17 June kept its policy rate steady at 0.5% and has reduced Japanese government bond purchases from by half to Y200 billion starting in April next year. In its policy statement, the BoJ reiterated that “it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them”. “The extreme level of uncertainty is holding back the BoJ from raising rates further in the near-term,” said Lee Hardman, senior currency analyst at Japan-based MUFG Research. “A trade deal between the US and Japan in the coming months could give the BoJ more confidence to hike rates further if global trade disruption eases as well.” The BOJ is expected to maintain a “wait-and-see stance for longer than expected”, with central bank governor Kazuo Ueda’s remarks on 17 June suggesting a reinforcement of the dovish stance, Dutch banking and financial services firm ING said in a note. Ueda stated that inflation expectations have not yet anchored at 2% and expressed concerns about tariffs potentially affecting future wages. Japan’s core consumer price index (CPI) in April rose by 3.5% year on year. “Governor Ueda attributed the majority of downside risks to US trade policy. Therefore, we think that unless Japan and the US reach an agreement on tariffs, the BoJ is likely to maintain its current rate stance,” ING said. “Unlike early expectations that Japan might make a deal with the US, negotiations have dragged on longer than expected. Thus, the BoJ’s action may be delayed to early 2026.” ($1 = Y145.1) Focus article by Nurluqman Suratman Thumbnail image: At a port in Tokyo, Japan, 12 May 2025. (FRANCK ROBICHON/EPA-EFE/Shutterstock)

HOUSTON (ICIS)–PureCycle plans to reach 1 billion lb/year (454,000 tonnes/year) of capacity in the US by 2030, Europe and Asia, the US-base recycler of polypropylene (PP) said on Tuesday. As part of that push, PureCycle has started a partnership with IRPC Public Co Limited, under which PureCycle will build a 130 million lb/year line at IRPC’s complex in Rayong, Thailand. IRPC is a subsidiary of PTT. Construction should start in the second half of 2025, PureCycle said. The line should become operational in mid-2027. PureCycle will hold a 100% equity position, and IRPC will retain rights for 10% of the plant’s production. PureCycle has plans to build another 130 million lb/year plant in Antwerp, Belgium. It expects to receive final permits in 2026. The plant in Antwerp should become operational in 2028. PureCycle expects to begin construction on a Gen 2 facility in Augusta, Georgia, US, in mid-2026. The facility’s pre-processing (PreP) unit should be operational in mid-2026. The first purification line should be operational in 2029. PureCycle also plans to add compounding capabilities at the site, but it did not disclose timelines. The final Gen 2 design should have a capacity of more than 300 million lb/year before compounding, PureCycle said. The company will disclose design capacity in early 2026 after it finishes engineering. PureCycle will build another Gen 2 line in Thailand or Augusta. The following table summarizes PureCycle’s expansion plans. Figures are in millions of pounds per year. Site Capacity Belgium 130 Thailand 130 Augusta 300+ Augusta or Thailand 300+ TOTAL 860+ Source: PureCycle PureCycle has one operating facility in Ironton, Ohio, US, that has a capacity of 107 million lb/year. The following chart illustrates the timeline for the projects. Source: PureCycle PureCycle revealed the expansion plans when it announced that it raised $300 million from new and existing investors. Those investors include Duquesne Family Office, Wasserstein Debt Opportunities, Samlyn Capital, Pleiad Investment Advisors and Sylebra Capital Management. PureCycle recycles waste PP through a dissolution process. Thumbnail shows PP. Image by Shutterstock.

HOUSTON (ICIS)–Aguia Resources has received an offer for bank financing from Brazil’s Southern Development Bank (BRDE) for the development of the Tres Estradas phosphate project and upgrading a processing facility in the state of Rio Grande do Sul. The company said the approximately A$4 ($2.6) million loan will fund the capital expenditure required to start mining operations at Tres Estradas and to upgrade the processing facility which Aguia has leased from Dagoberto Barcellos (DB). The loan, which will be secured against the project surface rights held by Aguia, is for a period of 20 years. The DB plant currently has a processing capacity of approximately 100,000 tonnes/year but Aguia plans to increase that to a minimum of 300,000 tonnes/year by the end of 2026. Currently within the Rio Grande do Sul, which is one of the largest grain producing areas in Brazil, farmers rely completely on imported supply of phosphate. “The offer of finance from a government owned bank speaks volumes for the quality of the Tres Estradas project, confirming strong governmental and social support for the development,” said Warwick Grigor, Aguia Resources executive chairman. “Shareholders should be very pleased with this outcome as it is significantly better than spending A$30 million on a brand-new production facility, in both time and money, for the same production capacity.” A$1.00 = $0.68

SAO PAULO (ICIS)–Braskem is to divest its controlling stake at Upsyde, a recycling joint venture in the Netherlands, as the company aims to focus on its core chemicals and plastics production, the Brazilian polymers major said. The joint venture with Terra Circular was announced in 2022 and is still under construction. When operational, it will have production capacity of 23,000 tonnes/year of recycled materials from plastic waste. Braskem’s exit from Upsyde is likely related to the company’s pressing need to reduce debt and increase cash flow rather than a rethinking of its green targets, according to a chemicals equity analyst at one of Brazil’s major banks, who preferred to remain anonymous. Braskem’s spokespeople did not respond to ICIS requests for comment at the time of writing. The two companies never officially announced the plant’s start-up, and in its annual report for 2024 (published Q1 2025) Braskem still spoke about the project as being under construction. “Upsyde is focused on converting hard-to-recycle plastic waste through patented technology to make circular and resilient products 100% from highly recyclable plastic,” it said at the time. “Upsyde aims to enhance the circular economy and will have the capacity to recycle 23,000 tonnes/year of mixed plastic waste, putting into practice a creative and disruptive model of dealing with these types of waste.” BACK TO THE COREBraskem said it was divesting its stake at Upsyde to focus on production of chemicals and polymers – its portfolio’s bread and butter – and linked the decision to the years-long downturn in the petrochemicals sector, which hit the company hard. Financial details or timelines were not disclosed in the announcement, published on the site of its Mexican subsidiary, Braskem Idesa. “Considering a challenging environment for the petrochemical industry and a prolonged downcycle exacerbated by high energy costs and reduced economic activity in Europe, Braskem is redirecting all resources toward its core business: the production of chemicals and plastics,” Braskem said. “We remain committed to our sustainability agenda, as demonstrated by our recent investment in expanding biopolymer capacity in Brazil and the development of a new biopolymer plant project in Thailand.” The company went on to say it will also continue to maintain “several active partnerships” to advance research and potential upscaling capabilities for chemical recycling, projects for some of which Braskem has signed agreements to be off-takers for specialized companies. The European plastics trade group PlasticsEurope was until this week listing Upsyde as a project which would make a “tangible impact by upcycling mixed and hard-to-recycle” plastic waste in Europe. That entry, however, has now been taken down. Terra Circular and PlasticsEurope had not responded to a request for comment at the time of writing. Braskem’s management said earlier in 2025 the green agenda remains key for its portfolio, adding it would aim to leverage Brazil biofuels success story to increase production of green-based polymers, a sector the company has already had some success with production of an ethanol-based polyethylene (PE), commercialized under the branded name Green PE. The other leg to become greener, they added, was a long-term agreement with Brazil’s state-owned energy major for the supply of natural gas to its Duque de Caxias, Rio de Janeiro, facilities to shift from naphtha to ethane. Last week, Braskem said that deal could unlock R4.3 billion ($785 million)  in investments at the site. GREEN STILL HAS WAY TO GOThe chemicals analyst who spoke to ICIS this week said for the moment there would be no sign of Braskem aiming to trim its green agenda, which has ambitious targets for 2030 in terms of production of recycled materials. He added Braskem’s shift from naphtha-based production to a more competitive ethane-based production will require large investments in coming years, so a strategy to increase cash flow as well as reduce high levels of debt would be divesting non-core assets and the divestment in the Dutch joint venture would be part of that plan. “Braskem has high debt levels, and they are looking for ways to reduce leverage. What they may be thinking is that, despite this divestment in a purely green project, they can still give a green spin to their operations if we consider the green PE, for which they have been expanding production,” said the analyst. “I don’t think they would be relinquishing or giving up any of their initiatives to go green, but I think it’s probably part of some initiatives they must increase efficiency and reduce costs and capital needs. So, they probably just saw this business as a main candidate to be divested.” ($1 = R5.50) Front page picture: Braskem’s plant in Triunfo, Brazil producting green PE Source: Braskem Focus article by Jonathan Lopez 

Ukraine’s high import needs spurs flurry of CEE gas-trading activity as more transmission corridors emerge Grid operators vie to offer attractive solutions, slashing tariffs or increasing capacity Increased CEE hub liquidity would breed further interest LONDON (ICIS)–Ukrainian gas incumbent Naftogaz has become the first company in central and eastern Europe (CEE) to use the Danish-Polish transit corridor for spot bookings to Ukraine, several traders active in the region told ICIS. Sources say there is a flurry of activity across theCEE gas market, driven primarily by high importing interest and soaring prices in Ukraine. Gas in Ukraine is trading at an estimated €9.30/MWh premium over the equivalent front-month TTF contract. A CEE trader said Naftogaz had made reservations on the Danish-Polish Baltic Pipe for a total of 1848MWh over three days to test the route, importing gas sourced on the local exchange. The Polish state incumbent Orlen holds a long-term booking for 8 billion cubic meters annually on the Baltic Pipe to Denmark. But the Danish grid operator Energinet is keen to market the remaining 2bcm/year capacity for North Sea gas or Danish VTP imports to other regional companies. A trader said the route was increasingly considered by companies due to the ease of doing business in Denmark. Anticipated lower short-term transmission tariffs in Poland and the doubling of firm export capacity from Poland to Ukraine were also cited as reasons. Last week Polish gas grid-operator Gaz-System and its Ukrainian counterpart, GTSOU announced the doubling of firm export capacity to Ukraine from six million cubic meters (mcm) daily to 11.5mcm/day from 1 July. LNG IMPORTS VIA POLAND, LITHUANIA Traders say they are also considering imports from Poland’s Swinoujscie  offshore terminal or Lithuania’s Klaipeda floating storage and regasification unit (FSRU). However, several noted that regional countries have limited market liquidity as the bulk of volumes is traded on the spot market. A source at the Klaipeda terminal told ICIS on 17 June that the company was planning to offer more regasification slots on a spot basis in upcoming months. He said that there are around 33 long-term contract unloadings each year, but operator KN Energies is planning to offer another four to five spot slots. He added  the terminal has a 30-day regasification capacity window which would fit the profile of standard monthly transmission-capacity bookings. RAPID CHANGES The CEE trader said the region was changing at a very rapid pace with grid operators vying to offer attractive solutions. Last month, transmission-system operators in south-east Europe said they would offer bundled firm export capacity from Greece to Ukraine at a discounted tariff. The first auction for Route 1 monthly bundled capacity will be held on 23 June and the five operators along the Trans-Balkan corridor will be holding a call with regional companies on 19 June to explain the new product. The CEE trader said: “We’ve seen a massive increase in firm export capacity from Poland to Ukraine. Moldova is reportedly planning to offer tariff discounts. “The Greek regulator is considering offering capacity for the superbundled capacity not only from LNG terminals but also from the VTP. Gaz-System said if Route 1 offers discounted tariffs they also may consider discounting tariffs. The southern route is more difficult from an operational point of view but it looks interesting,” the trader added.

BARCELONA (ICIS)–Europe’s chemical distribution sector is bracing for the impact of multiple geopolitical and economic challenges, including the Israel/Iran conflict. All Iran’s monoethylene glycol (MEG), urea, ammonia and methanol facilities have been shut down For methanol this represents more than 9% of global capacity, for MEG it is 3% Brent crude spiked from $65/bb to almost $75/bbl, against backdrop of reports of attacks on gas fields and oil infrastructure If Iran closes the Strait of Hormuz this will severely disrupt oil and LNG markets Expect extended period of volatility and instability in the Middle East European distributors brace for a VUCA (volatile, uncertain, complex, ambiguous) world Prolonged period of poor demand looms, with no sign of an upturn Global overcapacity driven by China, subsequent wave of production closures across Europe both a threat and opportunity for distributors Suppliers and customers turn to distributors to help navigate impact of tariffs and geopolitical disruption In this Think Tank podcast, Will Beacham interviews Dorothee Arns, director general of the European Association of Chemical Distributors and Paul Hodges, chairman of New Normal Consulting. Click here to download the 2025 ICIS Top 100 Chemical Distributors listing 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 organising 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.

LONDON (ICIS)–Business confidence in Germany rose for the second month in a row in June on the back of growth in investment and consumer demand. The ZEW economic sentiment indicator for Germany increased to 47.5 points, up 22.3 points from May, the economic institute said on Tuesday. ZEW’s June indicator for the current situation in the country was also higher although still firmly in negative territory at -72 points, up by 10 points from May. “Confidence is picking up. In June 2025, the ZEW indicator sees another tangible improvement,” ZEW said. “Recent growth in investment and consumer demand have been contributing factors. This development also seems to strengthen the assessment that the fiscal policy measures announced by the new German government can provide a boost to the economy,” the group added. The eurozone’s economic sentiment indicator and current situation indexes were also higher in June from the previous month, rising to 35.3 points (up 23.7) and 30.7 points (up 11.7) respectively.

SINGAPORE (ICIS)–Malaysia’s revised sales and services tax (SST) framework officially takes effect on 1 July, with the expanded scope now set to include a 5% tax on an extensive range of petrochemical products, including polyethylene (PE) and polypropylene (PP). Critical raw materials for downstream industries affected Capital expenditure items like machinery now taxed Malaysian industry body calls for further delay in implementation The government had first announced the revision of items subject to the sales tax on 18 October 2024, as part of its fiscal consolidation strategy under the 2025 budget. Under the updated framework, more than 4,800 harmonized system (HS) codes will now fall under the 5% sales tax bracket. Goods exempted from the updated sales tax include specific petroleum gases and other gaseous hydrocarbons that are currently under HS code 27.11. These include liquefied propane, butanes, ethylene, propylene, butylene, and butadiene. In their gaseous state, the list includes natural gas used as motor fuel. The measure, aimed at broadening the country’s tax base and increasing revenue, was originally slated to begin on 1 May, but was delayed for two months after manufacturers urged policymakers to refrain from adding to their financial burden. The July revision of Malaysia’s sales tax and the expansion of the service tax scope involve several key changes. The sales tax rate for essential goods consumed by the public will remain unchanged, while a 5% or 10% sales tax will be applied to discretionary and non-essential goods. The scope of the service tax will be broadened to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services. This includes critical raw materials for various downstream industries, from plastics and packaging to automotive manufacturing. Previously, many of these materials were zero-rated under the SST. The Federation of Malaysian Manufacturers (FMM) has publicly criticized the decision, calling it “highly damaging to industries” in a statement released on 12 June. According to estimates by the Ministry of Finance, the SST expansion is expected to generate around ringgit (M$) 5 billion in additional government revenue in 2025. “Although this may support the government’s fiscal objectives, the additional tax burden will be largely borne by businesses and has serious implications for operating costs, investment decisions, and long-term business sustainability,” FMM president Soh Thian Lai said in a statement. Soh highlighted that with this expansion, around 97% of goods in Malaysia’s tariff system will now be subject to sales tax, representing a significant departure from a previously narrower tax base, to one where nearly all categories including industrial and commercial inputs are now taxable. Under the new sales tax order, 4,806 tariff lines are now subject to 5% tax, covering a wide range of previously exempt goods, according to the FMM. These include high-value food items, as well as a broad spectrum of industrial goods, such as industrial machinery and mechanical appliances, electrical equipment, pumps, compressors, boilers, conveyors, and furnaces used in manufacturing processes, it said. The 5% rate also applies to tools and apparatus for chemical, electrical, and technical operations, significantly broadening the range of taxable inputs used in production and operations. “The expanded scope now places a direct tax burden on machinery and equipment typically classified as capital expenditure. This includes items critical to upgrading production lines, automating processes, and scaling operations,” Soh said. The FMM “strongly urges the government to further delay the enforcement of the expanded SST scope beyond the scheduled date of 1 July”, until the review is complete, and industries are ready. They also calling for a broader exemption list, especially for capital expenditure items like machinery and equipment, and a re-evaluation of including construction, leasing, and rental services, which they warn will “increase operational expenses and are expected to cascade through supply chains.” “We are deeply concerned and caution that the untimely implementation of the expanded scope of taxes will exert inflationary pressure, as businesses already grappling with rising costs … may have no choice but to pass these additional burdens on to consumers,” the FMM added. The FMM has urged the government to postpone the implementation, citing insufficient lead time for businesses to adapt and calling for a comprehensive economic impact assessment. Malaysia’s manufacturing purchasing managers’ index (PMI) continued to contract in May, with a reading of 48.8, according to financial services provider S&P Global. Beyond the direct sales tax on goods, the revised SST also introduces an 8% service tax on leasing and rental services for commercial or business goods and premises. This could further compound cost burdens for capital-intensive sectors, including parts of the petrochemical industry that rely on leased machinery and industrial facilities. Focus article by Nurluqman Suratman Thumbnail image: PETRONAS Towers, Kuala Lumpur (Sunbird Images/imageBROKER/Shutterstock)