TORONTO (ICIS)–Canada’s investment tax credits and its price on carbon emissions have been key in attracting investments in low-carbon projects, led by Dow’s Path2Zero petrochemicals complex under construction in Alberta province. But will these incentives survive a likely change in government next year, with the Conservatives expected to oust Prime Minister Justin Trudeau’s Liberals? Conservatives to scrap carbon tax Industrial carbon pricing critical for low-emission investments Carbon capture advantage might be lost The Chemistry Industry Association of Canada (CIAC) highlighted the election and uncertainties surrounding incentives and programs for low-carbon investments as a risk factor for the industry in its 2025 outlook webinar last week. As the country is moving into the election campaign season, “it is hard to say exactly where we are going politically,” said David Cherniak, CIAC policy manager, Business and Transportation. Companies were making investment decisions based on the incentive programs, and “we see the programs working, companies are getting ready to spend, and in the case of Dow, already spend real money to lower emissions and raise production here in Canada,” he said. In 2023 Dow made a final investment decision on Path2Zero and started construction in April 2024. Carbon pricing is seen as critical for the viability of such projects. CIAC supports industrial pricing and is advocating the importance of the government programs for winning chemistry investments, Cherniak said. The argument for low-carbon chemical production was clear, he said. Around the world the chemical industry’s customers were demanding low-carbon solutions and products, “irrespective of what Canada does,” he continued. As such, the real question is, “Do we want those chemistry products that meet that demand to come from somewhere else or do we want them to come from Canada?” Carbon pricing and programs offering incentives for low-carbon chemical production plants were “key building blocks” to get those facilities built in Canada, he said. If the low-carbon projects are not built in Canada they would be built elsewhere and Canada would end up ending importing their products, he said. “We think it’s way better to utilize Canada’s resources here, and see those investments won, and that is the message we are taking to all parties as we get ready for the election in 2025,” he said. However, “the political winds are blowing,” not just on the federal level but also with a likely election in Canada’s economically most powerful province, Ontario, he said. Canada has seen drastic policy reversals after changes in government before, with impacts on the chemical industry: In 2011 a Conservative government took Canada out of the Kyoto climate change accord, to which an earlier Liberal government had signed up, making Canada the world’s only country to exit Kyoto. On the provincial level, a new Conservative government in 2018 abolished a cap-and-trade carbon trading system a previous Liberal government had set up. AXE THE TAX On the federal level, the opposition Conservatives are far ahead of the Trudeau’s Liberals in opinion polls on the election, which must be held by 20 October 2025 but will likely be called earlier. Under a relentless “Axe the Tax” campaign, the Conservatives have committed to abolishing the Liberals’ consumer carbon tax, which took effect in 2019 and is currently at Canadian dollar (C$) 80/tonne (US$57/tonne), rising to C$170/tonne by 2030. However, the Conservatives have yet to state what they will do about industrial carbon pricing. Industrial carbon pricing is implemented by Canada’s provinces, with the federal government providing a “back-stop” with its “Output-Based Pricing System (OBPS)” that sets minimum requirements to ensure that heavy emitters pay for emissions. Industrial carbon pricing is making a bigger contribution to Canada’s emissions reductions than the consumer carbon tax, according to a study earlier this year. ANALYSTS Analysts at Capital Economics said in a recent report that with a likely change in government there is a high chance that Canada’s carbon tax will soon be scrapped. Positive impacts on inflation from the abolition of the tax would be temporary and any boost to the economy would be small, they said. However, “removing the carbon tax will remove an important investment incentive, both in reducing emissions in Canada’s high-emitting sectors and in emerging ‘green’ sectors,” the analysts said. If the future carbon price in Canada is expected to be zero, rather than rising to C$170/tonne by 2030, “that could weigh heavily on investment in Canada’s emergent ‘green’ industries that rely on a price on carbon to justify their development,” they said. They noted as a key example carbon capture, utilization and storage (CCUS), where Canada has an advantage over other nations, although CCUS is not without critics. Oil-rich Alberta province, which is home to a large proportion of Canada’s petrochemicals production, sees itself among the leaders in developing CCUS technology. Dow’s project leverages on Alberta’s carbon capture infrastructure. In June, Shell made a final investment decision (FID) to proceed with a carbon capture project at its refining and chemicals site in the province, where in 2015 it started up a first carbon capture facility. The Conservative Party of Canada and Dow did not respond to requests for additional comment. (US$1=C$1.40) Focus article by Stefan Baumgarten, with additional reporting by Jonathan Lopez Thumbnail photo of Dow’s manufacturing site in Fort Saskatchewan; photo source: Dow

BARCELONA (ICIS)–Plastics and chemical producers need to find more effective ways to tackle the problem of plastic waste after UN treaty negotiations ended without agreement at the weekend. Consumer demand will drive improvements in plastic waste management Chemical companies need to reconnect with brands/consumers We will move out of current ‘trough of despair’ about recycling End of globalization may mean national/regional treaties are more effective UN Intergovernmental Negotiating Committee concluded in Busan, South Korea, on 1 December, with no definitive agreement Around 100 countries backed proposals, with a small number of hold-outs In this Think Tank podcast, Will Beacham interviews ICIS market engagement executive Nigel Davis and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is 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.

MUSCAT (ICIS)–Dow has attributed problems with plastics pollution to a lack of plastics recycling and not production, the US producer’s chair and CEO said at the 18th Annual Gulf Petrochemicals and Chemicals Association (GPCA) on Tuesday. Plastics are “essential” to the modern world, according to Jim Fitterling, and demand will only rise in the years ahead – but most countries have no roadmap to recycle plastics, let alone reduce production. Tensions between oil-producing nations, led by Saudi Arabia, and other nations advocating for a cut in plastics production, have stalled global treaty talks at the Intergovernmental Negotiating Committee (INC-5) in South Korea. The session concluded on 1 December with no definitive agreement. “When policymakers take it upon themselves to decide one type of energy is right and another type of energy is wrong, rather than asking what is right for each unique situation, that’s when progress stops.” Dow is embracing innovation in its energy transition goals, with Fitterling asserting that its energy transition is “here to stay”. Through the company’s plan to “decarbonize and grow”, Dow aims to boost underlying earnings by over $3 billion while reducing greenhouse gas emissions by 5 million tonnes by 2030. Dow is working to transform plastics waste and other alternative feedstocks to commercialize 3 million metric tons of circular and renewable solutions annually,  and generate an anticipated $500 million of incremental run rate EBITDA by 2030, said Fitterling. However, Fitterling added that there is a need to “combat” the notion that recycling does not work, that “success will come from elimination rather than innovation”, as he asserted that recycling simply “isn’t available” to over three billion people globally. “Because for a vast majority of the world, it’s not that recycling hasn’t worked. It’s that recycling isn’t available.” Globally, less than 10% of plastic is recycled and approximately one-third of plastic packaging escapes collection systems, said Fitterling. The 18th edition of the GPCA is being held for the first time in Muscat, Oman this year and will conclude on 5 December. Thumbnail photo: Waste plastic bottles (Source: Shutterstock)

SINGAPORE (ICIS)–Indonesia and Canada have signed a Comprehensive Economic Partnership Agreement (CEPA) in Jakarta after negotiations that lasted 2.5 years. The free trade pact was signed on 2 December in Jakarta is expected to take effect in 2026, according to Indonesia’s Ministry of Trade. “Through this Indonesia-Canada CEPA, market access for Indonesian products will be wider to the North American region, especially Canada,” Indonesian trade minister Budi Santoso said. In addition to trade in goods, the agreement will also provide preferential treatment for Indonesian service providers, including the business services, telecommunications, construction, tourism, and transportation sectors, he added. Indonesia, which is southeast Asia’s biggest economy, is Canada’s 22nd largest merchandise trading partner with two-way merchandise trade totalling $5.1 billion in 2023, data from the Canadian government showed. The southeast Asian country is Canada’s largest export market in the region, and a key destination for Canadian agricultural products, manufactured goods, and natural resources, it added. In January–September 2024, the total value of Indonesia-Canada trade was $2.6 billion, up by 4% year on year, according to Indonesia’s trade ministry.

MUSCAT (ICIS)–In this special edition of the ICIS podcast, Asia deputy news editor Nurluqman Suratman speaks with ICIS market development executive John Richardson on the sidelines of the 18th Annual Gulf Petrochemicals and Chemicals (GPCA) Forum on current issues facing the industry. Ongoing issues over a UN plastics treaty highlight divide between major producers and smaller players Upcoming US tariffs to change trade flows, dynamics for Middle East Global oversupply remains in focus as China demand growth slows Thumbnail image: At the 18th Annual GPCA Forum in Muscat, Oman – 3 December 2024 (By Nurluqman Suratman)

SINGAPORE (ICIS)–US carmaker General Motors (GM) and South Korea’s LG Energy Solution will join hands to develop prismatic battery cells for electric vehicles (EVs). “GM expects the prismatic cell technology developed under the agreement to power future GM electric vehicles, as part of the company’s strategy to diversify its supply chain, leveraging multiple chemistries and form factors,” GM said in a statement on 2 December. Prismatic cells feature a flat, rectangular shape with a rigid enclosure, which allows for space-efficient packaging within battery modules and packs. This can reduce EV weight and cost, while simplifying manufacturing by reducing the number of modules and mechanical components, GM said. The two companies are extending their 14-year battery technology partnership to include prismatic cell development. “LG Energy Solution has both experience with prismatic cell production and an extensive patent portfolio on battery design and manufacturing technologies, including packaging,” GM said. LG Energy solution executive vice president and head of advanced automotive battery division Wonjoon Suh said: “We look forward to deepening our collaboration to drive the right chemistry and battery combinations for continued growth in the EV market.” The automotive industry is a major global consumer of petrochemicals, which account for more than a third of the raw material costs of an average vehicle. EVs and associated battery markets, on the other hand, provide growth opportunity for the chemical industry. Chemical producers have been separately developing battery materials, as well as specialty polymers and adhesives, for the environment-friendly vehicles. “Together with LG Energy Solution, we’ve built Ultium Cells into one of the largest battery cell manufacturers in North America,” GM vice president of battery cell and pack Kurt Kelty said. Ultium Cells – which are currently being produced in Ohio and Tennessee in the US - power GM’s latest EVs including the Chevrolet Silverado EV, GMC Sierra EV, Cadillac LYRIQ, Chevrolet Blazer EV and Chevrolet Equinox EV, as well as the GMC HUMMER EV Pickup and sports utility vehicle (SUV). “We’re focused on optimizing our battery technology by developing the right battery chemistries and form factors to improve EV performance, enhance safety, and reduce costs,” Kelty said. In a separate statement on 2 December, GM said it has reached a non-binding agreement to sell its stake in the nearly completed Ultium Cells LLC battery cell plant in Lansing, Michigan to its joint venture partner LG Energy Solution. Financial details were not disclosed, but the transaction is expected to close in the first quarter of 2025. (Adds details throughout) Additional reporting by Pearl Bantillo Thumbnail image: Hummer electric vehicles at a General Motors factory in Detroit, Michigan, US – 17 November 2021 (By Dominick Sokotoff/Shutterstock)

NEW YORK (ICIS)–The ISM US Manufacturing Purchasing Managers’ Index (PMI) improved to 48.4 in November – up 1.9 points from 46.5 in October, but remains in contraction (below 50) for the eighth consecutive month, and 24 out of the last 25 months. The November reading “was above expectations and although still contractionary, welcome news”, said Kevin Swift, ICIS senior economist for global chemicals. However, the “rolling recession” in manufacturing continues, he added. Only three sectors out of 18 expanded and the chemical industry again was not one of them. Overall manufacturing production rose 0.6 points to 46.8, a less contractionary reading. New orders moved up to a slightly expansionary 50.4 reading, but order backlogs contracted at a faster pace – a 41.8 reading, down 0.5 points from October. Both new orders and order backlogs, when combined with the reading on inventories, are good indicators of future activity, Swift pointed out. The inventories reading fell to 41.8 versus 42.6 in October. With still contracting inventories, an uptick in orders could translate into higher production, he noted. “Demand remains weak, as companies prepare plans for 2025 with the benefit of the election cycle ending. Suppliers continue to have capacity, with lead times improving, but some product shortages are reappearing,” said Swift. “Customers’ inventories were deemed at the ‘too low’ level which could be positive for future new orders. Prices, however, eased back towards stable levels. Prices are sensitive to changes in supply and demand, and tend to provide a leading signal,” he added. High mortgage rates continue to hamper demand for new housing construction, which is a key market for adhesives and sealants, one respondent in Chemical Products noted. EUROPE WEAK, CHINA IMPROVESMeanwhile, in Europe the HCOB Eurozone Manufacturing PMI put together and released by S&P Global contracted further to 45.2 in November versus 46.0 in October, marking the 29th consecutive month of contraction. The Caixin China General Manufacturing PMI released by S&P Global saw an improvement to 51.5 in November from 50.3 in October – its second consecutive month of expansion.

HOUSTON (ICIS)–Global average container rates ticked lower last week, along with rates from Shanghai to the US West Coast, but rates from Asia-New York held steady during what is typically the slow season for transpacific ocean freight. Shipping analysts said rates remain elevated for several reasons, most significantly the frontloading of imports ahead of possible renewed labor strife at US Gulf and East Coast ports. The possible implementation of new tariffs proposed by the incoming Trump administration is also keeping upward pressure on rates. Global average rates fell by 2% for the week ended 29 November, as shown in the following chart from supply chain advisors Drewry. The following chart from Drewry shows the rates from Asia to both US coasts. Drewry expects spot rates to be relatively stable this week. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said inland truck and rail rates could also face upward pressure as tariffs aimed specifically at Canada and Mexico could lead to increased cross-border volumes. Levine said congestion remains minimal at US ports, including the main West Coast port of Los Angeles/Long Beach. Kip Louttit, executive director of the Marine Exchange of Southern California (MESC), said container ship traffic through the port continues to be steady with 67 container ships enroute and 12 scheduled to arrive in the next three days. 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. LIQUID RATES STEADY Overall, US chemical tanker freight rates were largely stable this week for several trade lanes, with the exception being the USG-to-Brazil trade lane, as that market picked up this week following activity during the APLA conference in Colombia. Part space has limited availability as most owners are awaiting contract of affreightment (COA) nominations. The USG-Asia trade lane remains steady as spot tonnage remains readily available and multiple cargoes of glycol and styrene are interested in December and January loadings, supporting the market. Similarly, on the transatlantic front, the eastbound leg remains steady as there was limited space available which readily absorbed the few fresh enquiries for small specialty parcels stemming from the USG bound for Antwerp. Various glycol, ethanol, methyl tertiary butyl ether (MTBE) and methanol parcels were seen quoted to ARA and the Mediterranean as methanol prices in the region remain higher. Additionally, ethanol, glycols and caustic soda were seen in the market to various regions. However, it is also clear that space is becoming very tight until the end of the year, keeping rates firm. The CPP market firmed, limiting the number of tankers offering into the chemical market, thus keeping rates stable. Additional reporting by Kevin Callahan

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 29 November 2024. ICIS Economic Summary: US election uncertainty over, policy impact to begin Much of the uncertainty surrounding the US election has been lifted, but there remain questions about the extent that stated policy goals will be achieved and their impact on the economy next year and beyond. INSIGHT: Deloitte expects more chem M&A as industry remains in flux The chemical industry is entering the new year amid an especially large amount of flux, with China receding as a demand driver, Europe contending with plant shutdowns and producers rearranging businesses through mergers and acquisitions (M&A). Canadian manufacturers fear ‘devastating’ impact from Trump’s proposed 25% tariff New US tariffs on US-Canada trade would have a devastating impact on manufacturers, workers and consumers on both sides of the border, trade group Canadian Manufacturers and Exporters (CME) said on Tuesday. INSIGHT: LatAm chemicals face threats of US tariffs, global oversupply Chatter on challenges permeated the Latin American Chemical and Petrochemical Association (APLA) Annual Meeting as delegates faced down threats of global oversupply and the potential for new tariffs from the US. INSIGHT: US refiners to face higher oil, catalyst costs with Trump’s tariffs The tariffs proposed by President-Elect Donald Trump on imports from Mexico, Canada and China would raise costs for the heavier grades of oil needed by US refineries as well as rare-earth elements used to make catalysts for downstream refining units. Argentina’s petchems prices to take time to fall despite import tax withdrawalArgentina’s decision to eliminate the so-called PAIS import tax earlier than planned is unlikely to have any impact on petrochemicals prices for now, sources said this week. LatAm PE domestic prices fall in Argentina, Brazil and MexicoDomestic polyethylene (PE) prices were assessed as lower in Argentina, Brazil and Mexico on the back of competitive offers from abroad and weak demand. In other Latin American (LatAm) countries, prices were unchanged.