HOUSTON (ICIS)–Several ICIS market experts share insightful facts related to their respective plastics markets, amid conversations with industry professionals at PackExpo ’24. Though each market comes with a host of uncertainties, the broader US plastic packaging industry continues to navigate mixed demand and various supply challenges in 2024 and beyond. Bottled beverage sector made up 15% of all US packaging revenue in 2023. US polyethylene terephthalate (PET) production to remain 3 billion lb short of domestic demand in 2025. US polystyrene (PS) production has been impacted by outages since July 2024. US polypropylene (PP) prices have been volatile, with price movements 11 out of the last 12 months. US polyethylene (PE) inventories are the highest they have been since May 2023. US recycled PET (R-PET) market facing onslaught of imports. 2Q2024 PET scrap import volumes were above 125 million lb. PackExpo runs through 7 November and is hosted in Chicago, Illinois.

HOUSTON (ICIS)–Chemical trade groups in the US urged President-Elect Donald Trump to pursue policies that would support more domestic production and provide regulatory certainty. “Chemistry enables affordable housing, reliable infrastructure and effective, modern healthcare technologies. It is not only the driving force behind everyday products like smartphones and computers, but it is also what helps keep our nation safe and less dependent on foreign countries,” the American Chemistry Council (ACC) said in a statement congratulating Trump on his victory. “To meet that demand and protect America’s future, we will work with the Trump administration and new Congress to commit to policies that support growing domestic chemical production right here at home,” the group said. The Alliance for Chemical Distribution (ACD) also congratulated Trump and said it looked forward to working with the administration and Congress to provide regulatory certainty, strengthen chemical security and renew trade programs. The ACD did not specify the trade programs. However, the chemical industry has long advocated the revival of two programs, the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB). The GSP eliminated duties on thousands of products from more than 100 developing countries. The MTB temporarily reduced or suspended import tariffs on specific products. In regards to security, the ACC and the ACD have urged Congress to revive the nation’s main anti-terrorism program for chemical sites, which is known as the Chemical Facility Anti-Terrorism Standards (CFATS). The program helped the chemical industry protect their plants, warehouses and distribution centers from terrorist attacks. Because CFATS was a federal program, it discouraged the proliferation of individual state programs, which would have increased compliance costs. The ACD and the ACC have warned about the surge in regulations that occurred under the administration of US President Joe Biden. Many of them have provided the industry with little benefit while increasing compliance costs. The American Fuel & Petrochemical Manufacturers (AFPM) also congratulated Trump. “The US needs strong refining, petrochemical and midstream energy industries, and that requires a policy environment that allows American energy to compete globally, innovate for consumers and extend US energy leadership and security for the betterment of the American people,” said Chet Thompson, CEO of the AFPM. (adds AFPM’s comments, paragraph 11)

SAO PAULO (ICIS)–Brazil’s petrochemicals-intensive automotive sector posted in October its best sales since 2014 at nearly 265,000 units, the country’s trade group Anfavea said on Wednesday. Healthy sales at home propped up output, which stood at nearly 250,000 units during October and was also propped by overseas sales, with exports rising during the month, compared with September. Year-to-date in October, however, exports still register a negative reading of more than 7%, when compared with the same 10-month period of 2023, as key trading partners such as Argentina remain in financial trouble, reducing consumers’ purchases of Brazilian-manufactured vehicles. “Although this was the second-best month of the year in terms of production, we are still below the registrations, due to the high volume of imports,” said Anfavea’s president, Marcio de Lima, focusing on an issue – imports from China, specifically – which the trade group have been raising alarms for much of this year. In July, Anfavea said several producers with facilities in Brazil – most of them the traditional, established players – are pointing to an “uncontrolled” influx of cars manufactured overseas which are hitting domestic producers’ market share. China-produced vehicles, most of them electric or hybrid, are quickly gaining market share in Brazil and elsewhere in Latin America. Anfavea called on the government to establish tariffs as other jurisdictions – the US or the EU – have done on China-manufactured vehicles. “Another good news in October was the increase of 7,000 direct jobs in the last 12 months, with the potential to generate another 70,000 jobs in the automotive chain. This is the indicator that makes us happiest, as we have great responsibility for the approximately 1.2 million workers in the automotive sector,” said De Lima. Brazil automotive October September Change January-October 2024 January-October 2023 Change Production 249,200 230,000 8.3% 2,123,400 1,950,600 8.9% Sales 264,900 236,300 12.1% 2,124,000 1,847,500 15% Exports 43,500 41,600 4.6% 327,800 354,200 -7.4% The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA).

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)