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Ethylene23-Jul-2024
SAO PAULO (ICIS)–Brazil’s trade deficit in
chemicals narrowed by 9% in H1 2024 to $21.7
billion on the back of lower priced imports
entering the country, according to chemicals
trade group Abiquim.
In the January-June period, Brazil imported
$28.8 billion of chemicals, down 7.5% year on
year, while exports stood at $7.1 billion, down
4.8%.
In H1 2023, the chemicals trade deficit stood
at $23.7 billion and, for the full-year, it
stood
at $47.0 billion, the second highest figure
in the past 35 years, according to Abiquim.
Although the deficit narrowed, Abiquim was not
pleased and linked the improvement to lower
priced imports which, it said, continue denting
domestic producers’ market share.
“This apparent improvement in the chemicals
trade deficit is directly related to imports
with prices 15.3% lower than in the first half
of 2023, leveraging purchases of products on
the international market at prices largely
below the production costs practiced in
Brazil,” said the trade group.
“These products come mainly from Asian
countries, whose competitiveness has been
sustained by Russian raw materials purchased at
favorable prices due to the war in east
Europe.”
Abiquim has demanded high import tariffs on
several chemicals for the past few months; in
an interview with ICIS,
its director general Andre Passos said higher
tariffs were only one of the three legs of a
wider plan to protect domestic producers’
market share.
In June, Brazil’s chemicals trade unions joined
Abiquim to demand higher
tariffs.
“To show the worrying sings, it is enough to
highlight the volume in tonnes of these imports
[entering Brazil] in the first half at 27.9
million tonnes, up 9.1% year on year.
Highlights include the aggressive increases in
thermoplastic resins imports (up 41.2%),
thermosetting resins (26.8%), intermediates for
thermosetting resins (35.8%), intermediates for
synthetic fibers (22.1%) and other organic
chemical products (15.2%),” said the trade
group.
“This scenario is a serious threat to the
national production of chemical products and
has, above all, deteriorated the level of
utilization rates [which stood
in May at a record low of 58%]. Some
companies are considering hibernating plants,
shutdowns, and even deactivation of units.”
Polyvinyl Chloride23-Jul-2024
SINGAPORE (ICIS)–India will cut import duties
for methylene diphenyl diisocyanate (MDI) by
2.5 percentage points to 5.0% effective 24
July, with plans to review the country’s
overall tariff structure in the next six
months.
MDI was among raw materials identified by the
Indian government on which custom duties will
be reduced.
India’s finance minister Nirmala Sitharaman
announced the changes to the country’s Basic
Customs Duty (BCD) – a tax levied on imported
goods at the time of their entry into the
country – in her presentation of India’s
national budget for the fiscal year ending
March 2025 before parliament.
HIGHER DUTIES FOR SOME
PRODUCTSConversely, the minister
said that the customs duty for polyvinyl
chloride (PVC) flex films/flex banners will be
raised to 25% from 10% currently starting 24
July, “to curb their imports”.
Flex banners are commonly used for outdoor
advertising as billboards.
“PVC flex banners are non-biodegradable and
hazardous for environment and health,”
Sitharaman said.
The customs duty on ammonium nitrate will also
be raised to 10% from 7.5% from 24 July “to
support existing and new capacities in the
pipeline”, she said.
EXEMPTIONS FOR CRITICAL
MINERALSSitharaman also proposed
full exemption of 25 critical minerals from
import duties, a cut in duty rates for two
other products in the same category.
“Minerals such as lithium, copper, cobalt and
rare earth elements are critical for sectors
like nuclear energy, renewable energy, space,
defense, telecommunications, and high-tech
electronics,” she said.
“This [cut in import duty] will provide a major
fillip to the processing and refining of such
minerals and help secure their availability for
these strategic and important sectors,”
Sitharaman said.
As for the electronics sector, the finance
minister proposed to remove the BCD on
oxygen-free copper for the manufacture of
resistors.
GOV’T TO REVIEW CUSTOMS DUTY
STRUCTUREOver the next six
months, the Indian government will conduct a
thorough review of its customs duty rate
structure, Sitharaman said.
“I propose to undertake a comprehensive review
of the rate structure over the next six months
to rationalise and simplify it for ease of
trade, removal of duty inversion and reduction
of disputes,” she said.
“We will continue our efforts to simplify
taxes, improve taxpayer services, provide tax
certainty and reduce litigation while enhancing
revenues for funding the development and
welfare schemes of the government.”
It was not immediately clear how the revised
BCD structure will impact implementation of
import certifications of various chemicals
under the Bureau of Indian Standards (BIS).
BIS certification for some chemicals has been
extended many times
since they were introduced in 2019-20 to allow
domestic end-user industries more time to
adhere to the quality-control orders (QCO).
Focus article by Nurluqman
Suratman
Thumbnail image: At the Vallarpadam
Terminal in Kochi, Kerala, India. 2014 (By Olaf
Kruger/imageBROKER/Shutterstock)
Polyols23-Jul-2024
SINGAPORE (ICIS)–India will cut import duties
for methylene diphenyl diisocyanate (MDI) by
2.5 percentage points to 5.0% effective 24
July, the country’s finance minister Nirmala
Sitharaman announced on Tuesday.
MDI was among raw materials identified by the
Indian government on which custom duties will
be reduced.
Sitharaman announced the changes to the
country’s Basic Customs Duty (BCD) – a tax
levied on imported goods at the time of their
entry into the country – in her presentation
before parliament of India’s national budget
for the fiscal year ending March 2025.
Conversely, the minister said that the customs
duty for polyvinyl chloride flex films/flex
banners will be raised sharply from 10%
currently to 25% from 24 July “to curb their
imports”.
Flex banners are commonly used for outdoor
advertising as billboards.
“PVC flex banners are non-biodegradable and
hazardous for environment and health,”
Sitharaman said.
For ammonium nitrate, the custom duty will be
raised to 10% from 7.5% from 24 July “to
support existing and new capacities in the
pipeline”, she said.
(adds paragraphs 4-7)
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Polyols23-Jul-2024
SINGAPORE (ICIS)–India will cut import duties
for methylene diphenyl diisocyanate (MDI) by
2.5 percentage points to 5.0% effective 24
July, the country’s finance minister Nirmala
Sitharaman announced on Tuesday.
MDI was among the raw materials identified by
the Indian government on which custom duties
will be reduced.
Sitharaman announced the changes to the
country’s Basic Customs Duty (BCD) – a tax
levied on imported goods at the time of their
entry into the country – in her presentation
before parliament of India’s national budget
for the fiscal year ending March 2025.
Polyethylene23-Jul-2024
SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.
Conventional wisdom suggests that the
petrochemicals cycle may have bottomed out as
the prospects of interest rate cuts increase.
There are signs of recovery in the Europe. And
even in a high inflationary environment, the US
consumer kept on spending with unemployment at
record lows.
This, in my view, is a misreading of the data.
Because of the disproportionate influence of
China, what happens elsewhere doesn’t really
matter in the short- to medium-term.
China had a 22% share of the global population
in 1992 and a 9% share of global polymers
demand. By the end of this year, ICIS forecasts
that China’s share of the global population
will have slipped to 18%, but its share of
global polymers demand will have risen to 40%.
Too much global capacity was planned on the
basis of China’s petrochemicals demand growth
being at 6-8% per annum over the long term,
whereas 1-4% now appears to be more likely.
China’s petrochemicals capacity growth was
underestimated because of cost-per-tonne
economics used to assess projects. History
teaches us is that national strategic objective
also come into play.
One can argue, as the Rhodium Group does in an
18 July 2024 research paper, that China’s
economic growth may never return to previous
levels. This would mean no return to the
double-digit annual growth rates we saw in
petrochemicals demand during the Petrochemicals
Supercycle.
In today’s main chart, I kept to our base case
assumptions on global polypropylene (PP) virgin
production growth between 2024 and 2030, which
is almost the same as demand growth. I then
manually reduced capacity growth until I got
back to the historically very healthy operating
rate of 87% (operating rates being production
divided by capacity).
(What applies to PP applies to other
petrochemicals and polymers. The ICIS data for
other products suggest similar steep reductions
in capacity growth versus our base to get back
to the long-term history of operating rates).
This led me to the conclusion that global PP
capacity growth would need to be just 1.6m
tonnes a year versus 5m tonnes a year under our
base case. Under our base case, we see global
operating rates averaging just 76% in
2024-2030.
Capacity growth of just 1.6m tonnes a year
versus our base case would require substantial
capacity closures in some regions. Closures are
never easy and take considerable time because
links with upstream refineries, environmental
clean-up and redundancy costs – and the
reluctance to be the “first plant out” in case
markets suddenly recover.
The sale of rationalisation suggested by just
1.6m tonnes a year of capacity growth therefore
suggests no full recovery in PP and in other
petrochemicals until, I am guessing, 2026.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author, and do not necessarily represent those
of ICIS.
Potassium Chloride (MOP)22-Jul-2024
HOUSTON (ICIS)–Railroad Canadian Pacific
Kansas City (CPKC) confirmed it had a
derailment incident involving a train carrying
potash volumes on the evening of 21 July, but
there were no injuries and no public safety
threat.
The company said multiple cars of a train
carrying potash derailed around 5pm CST near
Gull Lake, Saskatchewan, which is about 175
miles from Regina.
CPKC through a spokesperson that there were
approximately 18 cars involved which were
carrying unknown quantities of potash.
CPKC crews remain at the site working on the
clean-up with the cause of the derailment
currently under investigation.
The accident had blocked access in and out of
Gull Lake from the highway, but the company did
say that the railroad crossing on Provincial
Highway 37 was now open.
Speciality Chemicals22-Jul-2024
HOUSTON (ICIS)–The US election could see
Donald Trump return as president with
majorities in both legislative chambers, which
could bring a reduction in excessive red tape,
weaker support for electric vehicles (EVs) and
impose even more ponderous tariffs and trade
restrictions.
Incumbent President Joe Biden has dropped
out of the race, and current
polls show Trump ahead in the election
The House of Representatives and the Senate
are closely split between the nation’s two
major parties, so the Republican party could
obtain majorities in both legislative chambers
Regardless of who wins the presidential
election on 5 November, the outlook remains
pessimistic for tariff relief and trade deals
in the US
US TRADE POLICY WILL REMAIN
RESTRICTIVERegardless of who
wins the presidential election, US trade policy
will remain restrictive, which could leave the
nation’s chemical exports vulnerable to
retaliatory tariffs imposed during a trade
dispute. Also, tariffs could increase the cost
of imports of critical chemical intermediates.
Biden’s campaign website did not discuss trade
policy, and he recently dropped out of the
race. But he maintained many of the tariffs
that Trump introduced during his presidency in
2016-2020. In addition, Biden
raised tariffs on EVs from China.
He signed bills passed by Congress that
required local content rules for government
programs.
Trump’s platform proposed a baseline tariff,
with the candidate mentioning 10%
for most imports. For China, he mentioned
tariffs of more than 60% during
an interview on the television program Fox
News.
Trump’s campaign website
proposes a reciprocal trade act, under
which the US could match tariffs that another
country imposes on its exports. Although the
platform concedes that reductions are possible,
the proposal focuses on the potential of higher
tariffs.
TRUMP TO ROLL BACK BIDEN’S EV
POLICIESBiden did not mention
EVs on his campaign website. But during his
presidential term, the federal government used
multiple laws and regulatory statutes to
promote EV adoption.
If Trump becomes president, he has pledged to
cancel what he
calls the electric vehicle mandate. He
specified many of Biden’s policies that
encouraged the adoption of EVs.
EVs typically consume more plastics on a per
unit basis than automobiles powered by internal
combustion engines (ICEs). EVs also pose
different material challenges, which is
increasing demand for different plastics and
compounds.
Policies that prolong the use of ICE-based
vehicles could extend the operating life of the
nation’s refineries. Companies could be more
willing to invest in maintenance and repairs if
they are confident that they could recoup their
investments.
Refineries produce many building block
chemicals, such as propylene, benzene, toluene
and mixed xylenes (MX).
BIDEN, TRUMP PRESENT EXTREMES ON CHEM
REGULATIONSBiden and Trump lay
on opposite extremes of regulations and policy.
Under Biden, the federal government has adopted
numerous regulations, many of which the
chemical industry has said provided them with
little benefit given the time and expense of
compliance.
The past six months has been described as
the worst regulatory environment that the
chemical industry has ever seen.
That burdensome regulatory climate could
persist if a Democrat wins the election, since
personnel from the Biden administration could
remain in place.
The following lists
some of the regulatory policies that could
either persist under a Democratic
administration or weaken under a Trump
administration:
The Environmental Protection Agency (EPA)
has adopted a whole chemical approach in
determining whether a substance poses an
unreasonable risk under the nation’s main
chemical-safety program, known as the Toxic
Substances Control Act (TSCA). The regulator
is currently reviewing vinyl chloride monomer
(VCM), acrylonitrile (ACN) and aniline, a
feedstock used to make methylene diphenyl
diisocyanate (MDI).
Changes to the Clean Waters Act, the Risk
Management Program (RMP) and the Hazard
Communication Standard that were made by Biden.
Biden has promoted environmental justice
throughout the federal government.
Environmental justice
could make it harder for chemical
companies to expand existing plants or build
new ones.
Because these are federal policies, a different
president could reverse them.
Trump could try to unravel some of Biden’s
rules to the degree possible under executive
authority. However, some of the rules will
persist because of entrenched bureaucracy or
because they are final.
The pace of new regulations would likely slow
under a Trump presidency.
He has pledged to restore his order that
for every new regulation introduced by the
federal government, two existing ones must be
eliminated.
OTHER POLICY
DIFFERENCESSuperfund
tax: If Trump wins the presidency and
Republicans win the legislative branch, that
could set up
a repeal of the Superfund tax, which
imposes taxes on several building-block
chemicals and their derivatives. Republican
legislators have already
introduced bills to repeal the tax.
Trump tax cuts:
Trump has pledged that he would make his
2017 tax cuts permanent. These are set to
expire at the end of 2025 from his previous
term in 2016-2020.
Oil production: Biden has
imposed several restrictions on oil and gas
production on federal land and on offshore
leases, although this did not stop production
from surging in the Permian Basin, much of
which is outside of government control. Trump
has pledged
to remove those restrictions.
Insight by Al Greenwood
Thumbnail shows US capitol. Image by
Lucky-photographer
Polyethylene22-Jul-2024
LONDON (ICIS)–Mexican petrochemicals have much
to gain under President-Elect Claudia Sheinbaum
as the country taps into the nearshoring trend,
which will require large public and private
investments, according to an executive at
polymers producer Braskem Idesa.
Sergio Plata, head of institutional relations
and communications at the mostly polyethylene
(PE) producer, added that nearshoring – North
American companies bringing back to the region
production facilities – will require a large
country effort, which the public sector alone
now dominates the energy sector, will not be
able to provide.
Plata added that the first signs from Sheinbaum
towards chemicals were encouraging: even as
President-Elect, she has already visited the
petrochemicals production hub in the state of
Veracruz – the largest in the country. In it,
she mentioned specific industry issues such as
supply of certain raw materials which were very
much welcomed by executives.
Last week, ICIS published the first
part of this interview, in which Plata said
supply of ethane from Mexico’s state-owned
crude oil major Pemex had stabilized after a
renegotiation of the contract’s terms, although
he added global PE market remained in the
doldrums and a recovery may not arrive until
the second half of 2025.
Braskem Idesa operates the Ethylene XXI complex
in Coatzacoalcos, south of the industrial state
of Veracruz, which has capacity to produce 1.05
million tonnes/year of ethylene and downstream
capacities of 750,000 tonnes/year for
high-density polyethylene (HDPE) and 300,000
tonnes/year for low-density polyethylene
(LDPE).
Braskem Idesa is a joint venture made up of
Brazil’s polymers major Braskem (75%) and
Mexican chemical producer Grupo Idesa (25%).
WHAT SORT OF PRESIDENT SHE WILL
BESheinbaum won
an overwhelming majority in the
Presidential election in June, with 60% of the
vote, and her party Morena achieved a
‘supermajority’ in parliament of two-thirds
which initially spooked financial
markets and brought the Mexican peso down.
Financial analysts have warned that, for Mexico
to tap into the nearshoring trend, its
infrastructure – transport but also aged
electricity transmission lines – will
need to be upgraded during the remaining of
this decade.
That effort, most analysts agree, will only be
possible with large sums of private investment,
so the state-owned electricity utility CFE may
need to give some way to private players.
Equally, during Andres Manuel Lopez Obrador’s
term, Mexico’s emissions rose, in opposition to
the country’s commitments agreed in the 2015
Paris Accord and later enshrined into its
domestic law.
Lopez Obrador handpicked Sheinbaum to succeed
him. Despite not being that apart
generationally – he is 70, she is 62 – the
President-Elect is a climate scientist who
started her career in environmental roles, and
most analysts think she may run free from her
successor – by personal choice or forced by the
circumstances – in issues like climate, if she
wants to keep Mexico as a respected economy
which fulfils its commitments.
“I think she has a very clear vision in this
regard – she knows the commitments [Mexico
adhered to]. Something we are liking a lot is
the appointments she is making – people with
experience to work in the departments they are
being appointed to: they have the necessary
technical knowledge,” said Plata.
“We have also seen her approaching the private
sector and that, without a doubt, for us as an
industry that is a very good start. In those
meetings, our concerns about compliance with
regulations have been raised. Something is very
clear: to grasp the opportunities in
nearshoring, collaboration with private sector
is essential to bring real benefits to all
Mexicans.”
Plata said that, while Sheinbaum has not met
Braskem Idesa yet, she has had a busy schedule
meeting with industrialists, including with the
country’s chemicals trade group Aniq as well as
the Veracruz industrial trade group, which
Plata presides.
“When she visited the south of Veracruz, she
talked about reactivating the petrochemical
industry, and talked about very specific issues
that the industry is worried about, such
production of ethane, of ethylene, of ammonia:
things that sounded very good to us,” said
Plata.
MEXICO, VENEZUELA
COMPARISONSHe was asked if,
given Morena’s ‘supermajority’ in parliament,
Mexico could become a new Venezuela – when the
governing party takes over all resorts of power
and the country stops being a democracy worth
the name.
“I really believe that her vision is
constructive, and she intends to work with the
private sector so her Administration can work
for everyone. We will have to see what
decisions she takes along the way. For
instance, she has spoken many times about the
interoceanic corridor [a project to link
Mexico’s east and west coasts by water],” said
Plata.
“Precisely, the promotion of the corridor has
at its base the chemicals and the
petrochemicals industries, because one of the
objectives of the corridor is to take advantage
of the raw materials in the area, which would
benefit petrochemicals but also agriculture,
for instance, and give added value. We see
plenty of opportunities there.”
Front page picture: Braskem Idesa’s
facilities in Coatzacoalcos
Source: Braskem Idesa
Interview article by Jonathan
Lopez
Potassium Chloride (MOP)22-Jul-2024
HOUSTON (ICIS)–Offshore potash marketing group
Canpotex announced it is fully committed on
volumes for potash sales through 30 September.
The group said this commitment comes amid
continued strong demand for potash and
widespread engagement in all major offshore
markets.
Canpotex said this level of demand is being
supported by solid fundamentals for
agricultural commodities, as well as
recognition of the clear value and
affordability of potash in key growing regions.
In addition, it has seen that the focus on food
security and food quality continues in many of
their markets.
Canpotex is the offshore marketing company for
Saskatchewan potash producers Nutrien and
Mosaic and has been operating since 1972.
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