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Asia petrochemical trades wane; Trump’s tariff threat weigh on Feb outlook
SINGAPORE (ICIS)–Trades in Asia’s petrochemical markets have slowed down ahead of the Lunar New Year holiday, with a general oversupply in the region and the threat of US tariffs clouding the outlook in February. Some downstream plants start shutting down two weeks before the holiday Buyers mostly stay on sidelines while some suppliers raise prices Players cautiously optimistic over post-holiday demand Demand across oleochemicals, polyethylene (PE) film, acrylonitrile butadiene styrene (ABS), styrene acrylonitrile (SAN) has softened as factories wind down or shut operations ahead of the Lunar New Year holidays. The Lunar New Year, which falls on 29 January, is celebrated in most parts of northeast and southeast Asia, with China on holiday from 28 January to 4 February. Uncertainty over US trade policy under Donald Trump’s administration, which expressed its intention to impose 10% tariffs on China from 1 February, has weighed on market sentiment going into and during the holiday. “China is slowing down ahead the Lunar New Year. Buying interest is low as market players are going away back to their hometowns,” said a source in the PE pipe grade market. A southeast Asia-based glycerine producer said: “We have not been getting any enquiries from China recently for glycerine, so we have been focusing on other regions.” Same conditions were observed in Vietnam, which is on holiday from 27 January to 3 February. Spot transactions were minimal in Asia, with trade discussions mostly deferred until after the holidays. MARKET ACTIVITY TO RESUME H2 FEB In the Asian recycling market, active trades may only resume when major exporters in China and Taiwan are back in the second half of February from a prolonged holiday. China and Taiwan have the largest exporters of recycled polyethylene terephthalate (rPET), recycled polyethylene (rPE) and recycled polypropylene (rPP) pellets. Meanwhile, suppliers of PE pipe grade, titanium dioxide (TiO2), and caprolactam (capro), have either reduced spot supply or hiked prices before the holiday even though demand remains weak. In the TiO2 market, players deemed the price hike on 21 January was more in anticipation of some improvement in post-holiday demand. “I don’t expect many trades to happen before LNY [Lunar New Year]. Most buyers said they are covered,” one market player said. TRUMP WORRIES CONTINUE For capro, styrene monomer (SM) and monoethylene glycol (MEG), demand is expected to improve post-holiday on seasonal restocking or improved opportunities for Chinese exporters. However, uncertainties over US President Donald Trump’s trade policies, including potential 10% tariffs on Chinese products from 1 February, and oversupply in key markets are tempering optimism in the near term. In December 2024, ABS and SAN end-users ramped up production to frontload shipments of contractual volumes to the US ahead of Trump’s widely anticipated tariffs of as much as 60% on Chinese goods. This led to a marked increase in China’s styrenics exports for the month. Starting January, these end-use factories reduced their run rates, having met their contractual obligations, with some having shut their plants as early as last week. The pre-Lunar New Year period typically sets the stage for post-holiday recovery, when inventories are cleared and demand resumes. Market players were keeping a cautiously optimistic outlook on demand recovery. “Ethyl acetate (etac) inventories will rise [post-Lunar New Year holiday] with production, but [Chinese domestic] demand will remain weak in February,” said a China-based market source. All eyes are focused on how soon Trump will impose his promised tariffs, with actual market impact likely to be felt a month after the announcement, according to market players. Focus article by Jonathan Yee Additional reporting from Yvonne Shi, Izham Ahmad, Arianne Perez, Helen Yan, Angeline Soh, Seng Li Peng, Isaac Tan, Joson Ng, Tan Hwee Hwee, Luffy Wu, Yvonne Shi, Melanie Wee, Judith Wang Thumbnail image: At Qingdao Port in Shandong province, China, on 23 January 2025. (Costfoto/NurPhoto/Shutterstock)
Asia top stories – weekly summary
SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 24 January. INSIGHT: Asia braces for Trump’s trade upheaval By Nurluqman Suratman 20-Jan-25 12:00 SINGAPORE (ICIS)–Asian policymakers are bracing for the return of Donald Trump, dubbed “Trump 2.0,” with heightened concerns over increased trade tariffs, ahead of his inauguration as US president on 20 January. Oil prices mixed as Israel-Hamas ceasefire begins; supply concerns persist By Jonathan Yee 20-Jan-25 13:49 SINGAPORE (ICIS)–Oil prices were mixed on Monday afternoon amid easing tensions in the Middle East as the Israel-Hamas ceasefire took effect on 19 January, although supply concerns remain amid US sanctions on Russia’s energy sector. Asia PV-grade EVA market firms on supply curbs in China, outlook mixed By Helen Lee 21-Jan-25 17:21 SINGAPORE (ICIS)–After a slow start to the new year, Asia’s photovoltaic (PV)-grade ethylene vinyl acetate (EVA) prices rose for the first time since early December 2024 on revived demand for January and February shipments into the key China market. INSIGHT: Firming crude, plant outages provides support across Asia petchems in Jan By Jimmy Zhang 21-Jan-25 20:00 SINGAPORE (ICIS)–A substantial proportion of Asia petrochemical prices are expected to increase in January, with rising crude values providing the bulk of upward support early in the month, buoyed further by plant outages in some markets. Asia caustic soda pre-Lunar New Year supply may be crimped By Jonathan Chou 22-Jan-25 12:36 SINGAPORE (ICIS)–Asia’s liquid caustic soda supply conditions may be tighter than expected ahead of the upcoming major regional Lunar New Year holidays amid some regional producers’ turnarounds and the possibility of capped operating rates due to sluggish co-product conditions. Tonnage shortfall pulls back China solvent exports to Taiwan By Hwee Hwee Tan 23-Jan-25 10:52 SINGAPORE (ICIS)–An escalated trade spat has hindered regional tanker supply from adjusting in favor of changing petrochemical trade flows between China and Taiwan. Malaysia keeps key interest rate steady; steady GDP growth to be sustained in 2025 By Nurluqman Suratman 23-Jan-25 15:37 SINGAPORE (ICIS)–Malaysia’s central bank kept its benchmark interest rate unchanged on 22 January, amid expectations that the domestic economy will be able to sustain its growth momentum this year on manageable inflation levels. Gap between Asia rPET and PET prices stay wide despite recent gains By Arianne Perez 24-Jan-25 15:18 SINGAPORE (ICIS)–Asian spot prices of recycled polyethylene terephthalate (rPET) remain substantially higher than virgin plastics despite the recent double-digit increase in spot PET prices.
SHIPPING: Asia-US container rates plunge on Lunar New Year holiday lull
HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US plunged this week, as did global average rates amid the typical slowdown around the Lunar New Year (LNY) holiday. Meanwhile, shipowners are out with surcharges on various trade lanes, which could support rates at current levels even with the slowdown in volumes. Global average rates fell by 11% according to supply chain advisors Drewry and as shown in the following chart. Rates from Shanghai to Los Angeles fell by 8%, while rates from Shanghai to New York fell by 7%, as shown in the following chart. Drewry expects spot rates to decrease slightly in the coming week on the back of the Chinese Lunar New Year holidays. Rates from online freight shipping marketplace and platform provider Freightos also showed decreases, with a 10% fall from Asia to the West Coast and a 3% drop to the East Coast. Judah Levine, head of research at Freightos, said the lull around LNY is pressuring rates lower. CMA CGM has announced a congestion surcharge of $300/FEU originating from Callao and San Antonio to the US East Coast and US Gulf. Global shipping major Maersk announced peak season surcharges of $1,000 for all sizes of containers for shipments from Middle East countries to the US and Canada East Coast, effective 1 February. Hapag-Lloyd has announced peak season surcharges of $600/container from Chile to Asia. 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. RETURN TO SUEZ CANAL NOT IMMINENT While the ceasefire agreement between Israel and Hamas led to some optimism that transits through the Suez Canal could resume, passage of commercial vessels through the waterway are not imminent. Levine said there remains skepticism among shipping analysts that the Houthi rebels will refrain from attacks on commercial vessels in the Red Sea even during the first stage of the ceasefire. Negotiations on the second phase of the agreement are scheduled to begin on 5 February. Levine said ocean carriers do see the ceasefire as a promising first step, but only CMA CGM has said it will increase its use of the Suez Canal. Most carriers will not take the costly and complicated concrete steps to return to the Red Sea until they are confident that the route is and will remain safe. Many shippers and freight forwarded are also hesitant to change course. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said carriers will want assurance they have safe passage for crews and ships in the long term and that the situation will not suddenly deteriorate. PANAMA CANAL President Donald Trump surprised some when he said that the US should reclaim the Panama Canal. A US congressman has since introduced a bill that would authorize the purchase of the Panama Canal. The US is the largest user of the canal, with around 70% of all traffic heading to or coming from US ports. About 40% of US container traffic use the canal. The US relinquished control of the canal on 31 December 1999 in The Panama Canal Treaty, signed by then US President Jimmy Carter. Panamanian President Jose Raul Molino said the treaty, along with The Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, established the permanent neutrality of the Canal, guaranteeing its open and safe operation for all nations. The Panama Canal remains the primary route for trade between Asia and the US Gulf and East Coast. LIQUID TANKER RATES US chemical tanker freight rates assessed by ICIS were largely stable week on week, with just the USG to Brazil trade lane seeing a slight increase on smaller volumes but overall unchanged. The market remained quiet this week, with COA volumes steady. For cargoes moving in and out of South America some space remains available, capping the gains seen on the week. Strong interest that was seen over the past two months is waning, which is likely to put additional pressure on freight rates. Volumes from the US continue to flow, but cargo moving into Asia is slowing because of the Lunar New Year holiday. However, monoethylene glycol (MEG) and ethanol entered the market for February loading. A different scenario is playing out on the transatlantic eastbound route where February loading space is already available for spot but on a limited basis. On the other hand, there seems to be a lot of interest on the USG to India trade lanes as there is a lot of lube oils interest for January with limited spot space remaining as owner await COA nominations. Several inquiries were seen for methanol, ethanol and vinyl acetate monomer (VAM). Additional reporting by Kevin Callahan

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US ExxonMobil may build cracker, PE plant in Texas
HOUSTON (ICIS)–ExxonMobil may build an ethane cracker and polyethylene (PE) plant near Corpus Christi, Texas, the company said in an application for a tax break. If ExxonMobil proceeds with the project, it would be built in Calhoun county, which is north of Corpus Christi, the application said. Construction could start in 2025 and finish at the end of 2030. Production could start in 2031, the application said. ExxonMobil is considering other locations for the possible project, including the Middle East, Asia and other sites in North America. ExxonMobil did not disclose capacity figures. The total capital investment could be $8.6 billion. In a statement, ExxonMobil said it was evaluating multiple locations around the world for a future chemical plant. It acknowledged the advantages of a project on the Gulf Coast, which it could integrate with its operations in the Permian basin. “While this site has potential, we are very early in our evaluation process,” ExxonMobil said. “Filing for a tax abatement before a final decision is required by law and is part of our due diligence to gain greater clarity for our shareholders and the community. “As we look to meet global demand for our products, we’ll continue to evaluate the market conditions before we make a decision,” the company said. ExxonMobil is involved in another petrochemical project in nearby San Patricio county under the Gulf Coast Growth Ventures joint venture with SABIC. That project produces ethylene, PE and ethylene glycols. Thumbnail shows PE pellets. Image by ICIS. (adds comments from ExxonMobil, paragraphs 6-8)
ICIS Economic Outlook: Policy uncertainty clouds US economic outlook but fundamentals solid
CHARLOTTE, North Carolina (ICIS)–There is uncertainty about the extent that stated US policy goals on tariffs will be achieved and their impact on the economy this year and beyond. Yet for now, the US economy remains on solid ground. An extension of the 2017 tax cuts would be positive, as would deregulation and higher defense spending. On the other hand, immigration restrictions and tariff increases would take away from growth and could foster inflationary pressures. It is possible that new tariffs will be measured. Higher inflationary pressures of late have raised interest rates, which could subtract from US growth. It is clear from looking at year-earlier comparisons that the US economy is slowing. The US remains in the late stage of the business cycle, but there is likely more room for the economy to run. December featured a solid employment report. There are 1.1 job openings per unemployed person, a level back to pre-pandemic levels. With a balanced labor market, incomes are holding up for consumers and providing support for the US economy. The headline December Consumer Price Index (CPI) was up 2.9% year on year, a third month of higher comparisons. Economists expect inflation to average 2.5% this year, down from 2.9% in 2024, 4.1% in 2023 and 8.0% in 2022. This is still above the Fed’s target. CPI inflation is expected to stabilize at 2.5% in 2026 and soften to 2.3% in 2027. That said, expectations of stronger growth and higher inflation have pushed up interest rates, as measured by the 10-year Treasury yield. US MANUFACTURING PMI IMPROVESTurning to the production side of the economy, the December ISM US Manufacturing PMI registered 49.3, an improvement from November’s reading. Overall manufacturing production contraction moved into positive territory, and new orders strengthened further. Order backlogs and inventories moved closer to breakeven, suggesting the start of a restocking cycle. Seven of the 18 industries surveyed expanded. The ISM US Services PMI rose 2.0 points to 54.1, a good expansionary reading. The Manufacturing PMI for Canada was in positive territory for a fourth month while that for Mexico contracted again slightly. Brazil’s manufacturing PMI expanded for a twelfth month, but at a slower pace. Euro area manufacturing has been in contraction for 30 months. The UK PMI remains in contraction. China’s manufacturing PMI was slightly positive for a third month, indicative of a stalling recovery. AUTO AND HOUSING OUTLOOKTurning to the demand side of the economy, light vehicle sales improved again in December, and although inventories have moved up this past year, they remain low. Affordability continues to be the issue and is providing headwinds, although the year ended on a solid note. We expect light vehicle sales of 16.31 million in 2025, before improving to 16.53 million in 2026 and 16.95 million in 2027. This would bring activity back to the last peak in 2018. Housing activity continues to be muted amid affordability issues as 30-year mortgage rates returned to over 7%, along with low builder confidence. We expect housing starts will average 1.41 million in 2025 and improve to 1.45 million in 2026 and to 1.59 million in 2027. Demographic factors will support activity through the end of the decade. There is significant pent-up demand for housing and a shortage of inventory. RETAIL SALES PICK UPRetail sales were lackluster for much of this year, but Q4 results were robust. Sales at food services and drinking places also remained positive. Overall consumer spending continues to improve but may be slowing. Business fixed investment has been languid of late, but led by a need to boost productivity and by reshoring initiatives, this will take over from consumer spending as a driver of the US economy. This is typical in the late-stage of the business cycle. US GDP FORECASTUS GDP rebounded 6.1% in 2021 and then slowed to a 2.5% gain in 2022. The much-anticipated recession failed to emerge for a variety of reasons, and in 2023, the economy expanded 2.9% followed by an estimated 2.7% in 2024. This pace is well above long-term growth potential. Q4 2024 economic growth will be strong, but a slowdown in quarterly economic gains towards long-term growth potential suggests that in 2025 the economy could rise 2.2%, followed by another 2.2% gain in 2026 and 2.0% growth in 2027. Deregulation, energy and tax reform as well as other initiatives could aid economic growth. The US continues to outpace other advanced nations. Recent results suggest that Europe’s economic prospects appear stagnant amid many structural and competitiveness headwinds. China appears to be attempting to export its way out of a soft economy. The stimulus provided will likely have only a modest effect on improving growth prospects and rising trade tensions may hinder growth.
INSIGHT: Argentina’s chemicals, manufacturing could be collateral victims of liberalization push
SAO PAULO (ICIS)–Argentina’s cabinet drive to shift the economy from staunch protectionism into liberal bastion is increasing fears among chemicals and wider manufacturing players that the country’s beleaguered industrial fabric is yet to suffer further losses in output in coming years. As production costs in Argentina remain higher than in key manufacturing hubs such as China and the US, industrialists fear the country’s battle against inflation – the number one priority of Javier Milei’s administration – is to increase liberalizing measures that could hurt domestic industrial producers. This week, Argentina’s largest industrial trade group, the UIA, called on the government to make use of antidumping duties (ADDs) to protect the country’s manufacturers against unfair competition. The call for an increased use of ADDs comes as the cabinet lowers import taxes, so cheaper production from abroad can make its way to Argentina and, ultimately, lower prices for consumers: winning the battle against inflation will mark Milei’s term, and he is decided to win that battle, at any cost. Consumers may end up being winners in the equation, rightly so after the country’s crisis pushed more than 50% of Argentinians into poverty, according to official figures. But where there are winners, there are losers and, increasingly, chemicals and manufacturing players fear they will on that side of the equation. CHEAP IMPORTS, POTENTIAL PLANT SHUTDOWNSMacroeconomically, Argentina has turned a corner, and consumers are starting to buy into the recovery narrative. This week, the country’s statistics office Indec said output rose in November, both year on year and month on month, although the petrochemicals-intensive manufacturing and construction continued contracting. Moreover, two much-followed indicators compiled by Buenos Aires’ University Torcuato Luca di Tena showed positive trends: consumer confidence is up and, most importantly, its so-called Leading Indicator compiling ten different economic data sources, was showing the economy had entered an “expansionary phase” in the last quarter of 2024. The annual rate of inflation has more than halved in the past twelve months, standing at nearly 118% in December but down from its peak at nearly 300% in mid-2024. The state posted fiscal surpluses in some months of 2024, something unheard of in Argentina for decades, and squeezed consumers are holding off showing their pain in the streets, a well-established tradition in the country. So far, the majority still buys Milei’s disruptive narrative, aware the previous corruption-prone, protectionist system was unsustainable. The overall upbeat mood has made some in the chemicals industry hopeful that sooner rather than later they will also ride the recovery wave. Others, however, are turning increasingly pessimistic about a liberalized economy in which smaller chemicals players will have it very difficult to survive the current global oversupply. In an interview with ICIS this week, Manuel Diaz, the director general at Buenos Aires-headquartered trade group the Latin American Petrochemical and Chemical Association (APLA) and an Argentinian national himself, said the country’s progress in bringing down both inflation and the fiscal deficit has been remarkable. He conceded, however, many chemical companies in the country are now analyzing their outlook as the new liberalizing policies are to force them to adapt to global competition, which was not a factor in the previous protectionist system. There have already been some plant closures. At the end of 2024, US chemicals major Dow, who is the sole producer of polyethylene (PE) in Argentina, shut its polyols plant in San Lorenzo, citing global competitiveness issues. Local producer Rio Tercero’s shut its toluene di-isocyanate (TDI) plant in Cordoba arguing the same. APLA’s Diaz said there could be other plant closures in coming quarters, but they would affect small facilities which are uncompetitive in the global market, but he remained confident about larger facilities, which should weather the storm and come out on the other side still functioning and profitable. “Overall economic expectations are turning positive. In chemicals, the plant closures we have seen in Argentina is something we can also see in other markets, such as Europe. But in Argentina’s case, I think more plant closures will be contained to small facilities whose global competitiveness is difficult with higher production costs,” said Diaz. “In general, companies will try to accommodate a new reality, and I am confident many will be able to do that. Moreover, let’s look ahead: with crude and gas output from the Vaca Muerta fields expected to increase, there is a big potential for chemicals. Also for some fertilizers such as urea.” Diaz’s optimistic assessment is not shared by all other chemicals and wider manufacturing players. In its call this week for a larger use of ADDs to protect domestic production, industrial trade group UIA highlighted how small- and medium-sized enterprises (SMEs) would need extra protection from global markets if they are to keep their activity. Some of those SMEs would be the small chemicals plants Diaz was referring to. According to the UIA, Argentina currently has 94 ADDs in place, 50 of which are directed at products from China. Globally, Argentina occupies the sixth place in terms of ADDs in place, with 5.6% of the total. The country is behind the US (21.5% of the total), India (14.3%), Brazil (7.1%), Turkey (5.9%), and China (5.7%). Meanwhile, a third of total ADDs in the world are directed at China, according to the UIA figures. The 94 ADDs in place in Argentina are still a reminiscence of the previous protectionist system: Milei’s intended plans to turn the economy around will be a years-long process. If the President succeeds, it would amount to a “regime change” economically, said metaphorically an economist at Buenos Aires-headquartered Fundacion Capital in an interview with ICIS last year. While the UIA praised changes passed this week by the cabinet simplifying the ADDs application procedures for companies, it also said that without them many companies may go out of business in the current global oversupplied markets for industrial goods. “These tools are essential to combat unfair competition. The impact of these measures is crucial for local SMEs, which face significant challenges, including one of the highest tax burdens in the world, high logistics costs, and difficulties in accessing competitive financing,” said the UIA. “In contrast, products imported from certain countries reach the local market with falsified prices, subsidized at their origin, and with lower labor costs. This situation generates unfair competition that threatens the sustainability of the national industry. “In developed economies such as the US and the EU, these tools have proven effective in protecting local investment and employment.” BUCKING THE TRENDThe 2020s will be remembered by chemicals players as a time of global oversupply which plunged the industry into a years-long downturn. And China will be at the center of those memories, as the country turned from chemicals importer to net exporter – and doing so with distorted trade practices which helped it dampen its excess product abroad. For a couple of years now, Latin America has been at the centre of this global oversupply. The region’s chemicals production can only cover around 50% of its demand, so Latin America’s trade deficit in chemicals makes the region a ‘price taker’ at the mercy of global markets. A prime target, therefore, for Chinese state-controlled, heavily subsidized chemicals producers. The region’s two largest economies, Brazil and Mexico, are large users of ADDs to protect their domestic industries. As observed in the UIA data on ADDs, Brazil is the third country globally with most ADDs in place (7.1%) but Mexico also featured high on the list, in ninth place with 3.8% of the total. The EU and Canada were in seventh and eighth place, with 5.5% and 4.9% of the total, respectively. Amid a rise in protectionism best reflected by the return of Donald Trump to the US presidency, Argentina is bucking the trend aiming to be the champion of liberal policies. The country tried something similar in the 1990s under Carlos Menem’s presidency, an experiment which did not end up well. The current push for liberalization has so far come with a key factor which did not happen in the 1990s: public sector spending is sharply down as Milei aims to trim down the size of state. That was a key factor in 2024 to dampen demand. It remains to be seen whether a more liberalized economy set to be based in services will leave any room for some industry to thrive in Argentina. Chemicals-wise, the country has the advantage of feedstock, but the full benefits of Vaca Muerta will take some years to bear fruit. In the interregnum, many chemical sources fear they may go out of business permanently. Sources who deal with cabinet officials have said to ICIS that when the officials are pushed on how local manufacturing production may suffer under liberalization measures, their response is always the same: in a free market, those who cannot compete should not be in the market. This week, Milei said he would withdraw Argentina from the free trade bloc Mercosur with Bolivia, Brazil, Paraguay, and Urugay if that was a necessary condition to sign a free trade deal with the US. Milei is Latin America’s most staunch supporter of President Trump, although economically their agendas diverge greatly. Milei has in the past referred to Mercosur’s trading rules as having “become a prison” which dwarfs competition. This week, asked in an interview with Bloomberg if he would be willing to leave the bloc, he said: “If that was the extreme condition [to sign other trade deals], yes. There are, however, mechanisms by which it can be done being within Mercosur. So, we say it can be achieved without having to abandon what we have in terms of Mercosur.” Mercosur and the 27-country EU signed in December a free trade agreement after more than 20 years in the making which would create a 700-million consumer free trade area. The deal, however, still has to be fully ratified after it sparked protests among some economic sectors, mostly in the EU, such as farmers. The cabinet officials’ reasoning about uncompetitive companies going bust in a true free market leaves chemicals sources perplexed and disappointed, but after one year of Milei firmly installed in the Casa Rosada presidential palace, players are starting to assume they may need to change their business model – less production and more trading and/or distribution, for example – if their companies are to survive. “In the next few years, Argentina’s economy will do very well, but not everyone will do well. Exports-wise, oil and gas, mining, or agriculture will boom. Those with stable jobs will be fine, merchants will be fine, importers will be fine, but clearly industrialists will not be fine,” said a chemicals source in Buenos Aires this week. “Industrialists will suffer because the Argentine government has not yet lowered any of the production costs, be it taxes or costs of the corporatist inefficiency that exists in Argentina, and that makes it difficult for them to compete against imported products that are so cheap. “In other words, I think that industry will suffer in coming years and destroy employment. But employment is not part of the conversation today: it’s all about inflation. Until employment is not part of public opinion’s concerns, the government believes it can ride the wave and win the next election. But, along the way, I fear industrial fabric is set to be lost.” Insight by Jonathan Lopez
VIDEO: Europe R-PET FD NWE colourless flake, eastern Europe colourless bale prices rise
LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: FD NWE Colourless flake prices rise at the low end Eastern Europe Colourless bale prices also rise this week Delta between PET and R-PET flake and food-grade pellet remains high
Eurozone private sector returns to growth in January as inflation heats up
LONDON (ICIS)–Private sector activity in the eurozone returned to a growth footing for the first time in nearly half a year in January, with an expanding service sector counterbalancing stronger but still contractionary manufacturing. Eurozone composite purchasing managers’ index (PMI) firmed to 50.2 in January compared to 49.6 in December, driven by a reading of 51.4 for the service sector, a slight decline compared to 51.6 the previous month but still firmly in growth territory. A PMI score of above 50.0 signifies growth. The manufacturing PMI rose to 46.1, an improvement on the previous month but still a long way from growth. Representing the first modest growth in private sector output since August 2024, the uptick saw employment rates stabilise but input costs rise sharply, resulting in the highest rate of inflation in 21 months. Business activity in Germany, which recorded its second consecutive year of negative GDP growth in 2024, stabilised after six months of private sector recession, while conditions in France remained negative but eased slightly month on month. Ongoing demand weakness limited the pace of recovery, with new orders falling for the eight consecutive month, and new export orders – including intra-eurozone trade – dropping on a monthly basis for almost three years, according to Hamburg Commercial Bank (HCOB) and S&P Global. “Ahead of the ECB meeting next week, news on the price front is not encouraging,” said HCOB chief economist Cyrus de la Rubia. “Worryingly, input prices in manufacturing have increased, ending four months of stable or decreasing costs.” “Given the weak state of the economy, the ECB will likely stick to its gradual pace of cutting interest rates, for the time being,” he added. Despite the intensifying inflationary pressures, the return to growth footing remains a welcome development after months of grim news for eurozone industry, according to Oxford Economics’ Leo Barincou. “January’s flash PMIs provides some hope that the eurozone’s economic recovery may finally gain some speed,” he said. The UK’s composite PMI also firmed, rising to 50.9 compared to 50.4 in December, with manufacturing strengthening while remaining in contraction at 48.2 and service sector activity ratcheting up to 51.2. The same demand weakness that slowed the rate of eurozone growth made itself felt in the UK, with new work rates falling at the fastest pace since October 2023. Input costs rose, with the rate of inflation the highest in a year and a half. “Inflation pressures have meanwhile reignited, pointing to a stagflationary environment which poses a growing policy quandary for the Bank of England,” said S&P Global Market Intelligence chief business economist Chris Williamson. Thumbnail photo: Frankfurt, Germany’s financial centre (Source: Shutterstock)
Singapore eases monetary policy; trims 2025 inflation forecast
SINGAPORE (ICIS)–Singapore’s central bank effectively loosened its monetary policy  on Friday – by allowing a more gradual appreciation of the Singapore dollar (S$) – as inflationary pressures have eased. The Monetary Authority of Singapore (MAS), which utilizes foreign exchange as its primary policy tool, reduced slightly the slope of the Singapore dollar (S$) nominal effective exchange rate (NEER) policy band to “ensure medium-term stability”, it said in a statement. The NEER refers to the value of Singapore dollar against a basket of currencies of its major trading partners. The monetary policy easing on Friday was the first since March 2020. The width of the S$NEER policy band and the level at which it is centered were left unchanged, the central bank said. “Overall, the pace of consumer price increases has moderated across a broad range of goods and services, and core inflation is presently low and stable,” MAS said. Singapore’s average core inflation in Q4 2024 fell to 1.9% from 2.7% in Q3. MAS reduced its average core inflation forecast for 2025 to 1.0-2.0%, down from 1.5-2.5% previously. Business cost- and demand-driven inflationary pressures are expected to remain contained. However, imported costs should stay moderate amid projected global oil price declines and favorable supply conditions in key food commodity markets. Singapore possesses no hydrocarbon resources and imports crude oil for its refining and petrochemical industries. More than 100 global chemical firms, including energy majors ExxonMobil and Shell, are housed at its petrochemical hub Jurong Island. Singapore’s GDP growth is forecast to moderate to 1.0-3.0% in 2025, on global trade policy changes, which could weigh on the domestic manufacturing and trade-related services sectors, said MAS. As a trade-dependent economy, Singapore has a reliance on global commerce, meaning changes are likely to weigh on its domestic economy. “Global economic policy uncertainty has risen since the October [2024] monetary policy review, mainly reflecting expectations of increasing trade policy frictions,” MAS added. Following a period of frontloading of exports amid fears of Donald Trump’s America First administration imposing tariffs on foreign goods, manufacturing and trade activity globally is anticipated to normalize. Still-strong wage growth amid supportive labor market conditions should support steady consumer spending in advanced economies, though global growth could slow over 2025. ($1 = S$1.35)
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