SINGAPORE (ICIS)–China’s economic data in November were mixed, with weaker retail sales growth offset by some signs of stability in property prices and a slightly quicker industrial output growth, as policymakers brace for more US trade tariffs once President-elect Donald Trump takes office for a second time. Policy support to ramp up in coming months ahead Retail sales unexpectedly slowed in November Trump 2.0 adds significant risk to trade China’s November property market data showed signs of stabilization, with rates of declines for both new home and used home prices easing from the previous month to 0.2% and 0.35%, respectively. These were the smallest rates of decline recorded since June 2023 for new home prices and in May 2023 for used home prices, data from China’s National Bureau of Statistics (NBS) showed on 16 December. The numbers suggest the market may be bottoming out, with 21 of 70 cities reporting steady or rising new home prices, the highest proportion this year. Property investment in the country, however, continued to contract at double-digit rates in November, falling by 10.4% year on year, with new residential starts and completions contracting by 23.1% and 26.0%, respectively. “Real estate investment still likely faces some hurdles before it is no longer a headwind on growth – prices have not yet stabilized, but property inventories are still relatively elevated at this stage, and property developer sentiment remains cautious,” Dutch banking and financial services firm ING said in a note. “A second consecutive month of improving price data is a positive signal for the property market bottoming out, and we expect a trough to be established in 2025 and the start of an L-shaped recovery to take effect.” RETAIL SALES GROWTH SLOWS Meanwhile, China’s November retail sales growth surprisingly slowed to 3.0% year on year, down from October’s stronger-than-expected 4.8%. Trade-in policies continued to boost specific sectors in November, with household appliances posting a robust 22.2% year-on-year growth, albeit slower than previous months’ increase. Meanwhile, November automobile sales on a year-on-year basis surged to a nine-month high of 6.6%, coming from a 3.7% expansion in October. In contrast, petroleum and related products struggled, recording a 7.1% year-on-year contraction, as the transition to electric vehicles gains momentum. Household confidence clearly remains soft and it remains to be seen if the “vigorous support” for consumption promised next year will be effective in stimulating a recovery, according to ING. “We expect the rollout of supportive policies could take some time, but overall retail sales growth should recover in 2025.” INDUSTRIAL PRODUCTION EDGES HIGHER China’s industrial output showed a modest improvement in November, with the headline growth edging up to 5.4% year on year from 5.3% in October. “Export demand has been a contributor to solid industrial production growth in 2024, but this factor is expected to weaken somewhat in 2025 as tariffs set in,” ING said. The auto sector was a key driver, with output growth accelerating to 15.2% year on year in November, up from 4.8% in October. This uptick was mirrored in November passenger car output, which surged 14.1% year on year, nearly double the 7.7% growth seen in October, according to data from the China Passenger Car Association (CPCA). POLICY SUPPORT TO RAMP UP IN 2025 “Despite data coming in a little softer than expectations, with only one month of data still to come, China will likely manage to complete its ‘around 5%’ growth objective for 2024,” ING said. At the Central Economic Work Conference (CEWC) held on 11-12 December, China’s top leadership pledged to implement robust policy support measures in 2025. Heading into the conference, much of the attention centered on the scale of stimulus needed to bolster China’s growth. While the CEWC affirmed the need for more robust support measures, it remained tight-lipped on specifics. Detailed economic and social targets will be unveiled at the National People’s Congress (NPC) in March 2025, with concrete policy measures likely to follow. China’s fiscal deficit target and the special government bond issuance targets were both raised at the CEWC, which along with November’s Chinese yuan (CNY) 10 trillion debt package should create more room for fiscal stimulus in 2025, according to ING. “The speed and scale of domestic stimulus will likely play the biggest role in determining whether or not China’s economy will be able to maintain stable growth,” it said. “The eventual growth target setting at next year’s Two Sessions meetings in March will give a better indication of how confident policymakers are in terms of growth stabilization.” The Two Sessions are the annual gatherings of China’s top legislative and advisory bodies, the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), during which key policies, laws, and leadership appointments are discussed and approved. To achieve this, the government is likely to expand its successful equipment upgrading and consumer goods trade-in program beyond automobiles and home appliances, Ho Woei Chen, an economist at Singapore-based UOB Global Economics & Markets Research, said in a note on 13 December. Future initiatives may encompass a broader range of categories, including services such as tourism and entertainment, as well as emerging areas such as digital and green consumption, Ho said. Additionally, investments in technological innovation, industrial upgrading, and domestic infrastructure – including transportation, energy, and urban renewal projects – are expected to receive a significant boost, she added. “We do expect Beijing to ramp up fiscal deficit and fiscal spending in 2025, but we believe how to spend might be even more relevant than how much will be spent, because this is not a typical downcycle for China,” Japan’s Nomura Global Markets Research said in a note. “Due to the property meltdown, fiscal issues and worsening tensions with the US, China’s economy is not in a normal downcycle, so it may take much more than the recent ‘bazooka’ stimulus package to truly reboot the economy.” A meaningful recovery in China in 2025 will likely require Beijing to tackle several key challenges, including clearing the property market backlog, reforming the fiscal system, strengthening the social welfare system, and easing geopolitical tensions, Nomura noted. “We remain cautious on Beijing’s resolution in clearing the property sector, which has been contracting for almost four years, as the CEWC mentioned little new measures to clear property markets. The CEWC memo did mention reforming the fiscal system, but no details were provided.” THE NEW CHALLENGE IN 2025: TRUMP 2.0 Trump’s victory, coupled with a Republican sweep in the US sets the stage for significant trade policy shifts in 2025 for the world’s biggest economy, as concerns rise over the potential imposition of 60% tariffs on Chinese goods. Nomura expects tariffs to be introduced in a phased manner throughout 2025, mirroring the gradual rollout seen during Trump’s first term. “We assume the actual implementation that would directly impact China’s exports to the US will occur from around mid-2025 and will be mostly concentrated in H2 2025, with some front-loading in H1 2025,” it said. “There is a possibility that the incoming Trump administration may take action to tackle the issue of Chinese export rerouting to the US via third countries, and we believe such a threat is a real risk to China’s export growth over the next couple of years.” Nomura predicts China’s export growth will experience a temporary surge, rising to 8.5% year over year in Q4 2024, up from 6.0% in Q3 2024. This increase is attributed to frontloading, as Chinese exporters rush to avoid the US tariffs in 2025. However, Nomura expects export growth to slow significantly in 2025 due to the anticipated trade headwinds and the frontloading that occurred in Q4 2024. Insight article by Nurluqman Suratman Thumbnail photo: A commercial housing building under construction in Nanjing, China. (Source: Costfoto/NurPhoto/Shutterstock)

TORONTO (ICIS)–Canadian CEOs and business trade groups are warning about the state of Canada’s fiscal policies. Finance minister resigns Deficit larger than expected Canada struggles to respond to US tariff threat Chrystia Freeland on Monday resigned as finance minister and deputy prime minister, saying that she was “at odds” with Prime Minister Justin Trudeau over the best way forward for Canada amid the tariff threat by US President-elect Donald Trump. Trump said on 25 November that as one of his first actions after taking office on 20 January he would impose a 25% tariff on all imports from Canada and Mexico, which would remain in place until the two countries took action on drugs and immigrants entering the US. The tariffs would have a devastating impact on Canada’s economy, which relies on the US as its largest export market by far. In the chemicals and plastics industry, nearly two-thirds of Canadian shipments are exported to the US, according to trade group Chemistry Industry Association of Canada (CIAC). In her resignation letter, Freeland said that Canada needed to take Trump’s threat “extremely seriously” and needed to “keep its fiscal powder dry” to have reserves for a coming “tariff war” with the US. That meant that the government could not afford “costly political gimmicks”. Trudeau’s Liberal-led government recently implemented a two-month sales tax holiday for a number of goods, including beer, cider and restaurant meals, and it promised a Canadian dollar (C$) 250 (US$175) tax rebate for 18.7 million “working Canadians”. The measures, estimated to cost more than C$6 billion, have been criticized by economists. The Business Council of Canada (BCC) said that it was “deeply troubling” that Freeland believed the government was opting for “costly political gimmicks at a time when federal finances are severely strained.” The BCC represents CEOs of Canadian-based companies. Members include, among others, the heads of BASF Canada, Shell Canada, and of ExxonMobil’s Canadian affiliate, Imperial Oil. Canada needed stable and credible leadership that recognizes the seriousness of the significant economic headwinds over the coming weeks, including the looming US tariffs, the council said. The BCC also noted that despite assurances in the 2024 budget that the government would limit the federal deficit to C$40.1 billion, its latest fiscal update on Monday showed that that number ballooned to C$61.9 billion. “By not keeping its economic promises, the federal government is sending the message that it can’t be trusted to manage the public finances”, said BCC president and CEO Goldy Hyder. Another trade group, Canadian Manufacturers and Exporters (CME) said that Canada was facing a “significant economic threat that demands a decisive, coordinated federal response”. “Canadian manufacturers need political stability, and a government committed to implementing policies that foster resilience, attract investment, and drive growth”, said Dennis Darby, president and CEO of CME. POLITICAL CRISIS Trudeau has come under increasing pressure to step down, even from members of his Liberal party. However, he has said he would lead the Liberals into the next election, which needs to be held by October 2025 but will likely be called earlier. The minority Liberal government needs the support of at least one opposition party in parliament to hang on to power. Two parties, the Conservatives and the Bloc Quebecois, want to bring the government down as soon as possible, they have said. The left-leaning New Democrats have called on Trudeau to resign but have not said whether they would vote to bring the government down. The Conservatives are far ahead of the Liberals in opinion polls on elections. The elections and political uncertainties affect investment decisions in the chemical industry, chemical trade group CIAC has said. The bottom line is that Canada finds itself in political turmoil – at a time when is should be united in the face of the US tariff threat. Thumbnail of photo Trudeau (left) meeting Trump in Washington in 2019 during Trump’s first presidency; photo source: Government of Canada (US$1=C$1.43)

SAO PAULO (ICIS)–US President-elect Donald Trump said late on Monday that his administration may impose higher tariffs on goods from Brazil. In a surprise press conference, Trump spoke at length about his proposed strategy to use import tariffs to make the US wealthier, before adding that many countries charge more tariffs on US goods than vice versa. Brazil was included, but the single mention – almost in passing – had the corporate and financial circles in Brazil talking on Tuesday. “We’re going to be treating people very fairly. But the word reciprocal is important, because if somebody charges us… If India charges us a 100% [import tariffs on US goods], do we charge them nothing for the same?” said Trump. “India charges us a lot. Brazil charges us a lot. If they want to charge us, that’s fine, but we’re going to charge them the same thing. That’s a big statement.” Asked by a reporter about concerns that higher import tariffs will prop up inflation, Trump replied, “Make our country rich. Tariffs will make our country rich.” According to figures from the Brazilian government, total trade in goods between Brazil and the US was around $75 billion in 2023. The US is Brazil’s second largest export market after China, and the third largest source of foreign products to Brazil, accounting for 15.8% of total Brazilian imports. Chemicals trade group Abiquim had not responded to a request for comment at the time of writing. In Latin America, Trump also said he will impose higher import tariffs on Mexican goods in his first day in office on 20 January. Mexican and Canadian goods are currently part of a free trade zone within the North American USMCA free trade agreement (FTA). Earlier this month, Mexican chemicals trade group ANIQ expressed its concern about import tariffs given the integration between the chemicals sectors in both countries after nearly 40 years of free trade. “The chemical industries of both countries are deeply integrated throughout their value chain: raw materials cross borders to be transformed into industrial chemical products, which return in both directions to become products with higher added value,” ANIQ said. “The chemical industry once again expresses its support for collaboration and maintaining a solid commercial relationship that will boost economic growth and ensure North America’s competitiveness and sustainability in global markets.”

LONDON (ICIS)–German business sentiment dropped to its lowest point since May 2020 in December, according to the latest data from the Ifo Institute on Tuesday. The Ifo Business Climate Index fell to 84.7 points, down from  85.6 points in November, with the decline driven by pessimistic expectations. Although companies viewed the current situation as better, the Ifo stated that ‘the weakness of the German economy has become chronic.’ The manufacturing sector bucked the trend of improved current business conditions. Poor sentiment was compounded by deteriorating orders and the announcement of production cutbacks. Meanwhile, the index for the construction sector rose, driven by an improved assessment of current business conditions, mitigating the impact of deteriorating expectations. The outlook for wholesalers weighed down sentiment for the trade sector, compounded by dissatisfaction from retailers. Weaker expectations weighed on sentiment in the services sector despite an uptick in the current situation. Seasonal strength from the catering sector was not enough to offset concerns the transport and logistics sector have about business in the coming months. This supports the outlook that conditions will remain challenging in 2025 for German businesses. According to an Ifo Institute survey, only 12.6% of German companies surveyed expect an improvement in the coming year. In contrast 31.3% anticipate further deterioration and 56.1% predict no change to their economic situation in 2025. “Companies are currently seeing no signs of an economic upturn. In view of the fact that the economy has already performed poorly in 2024, these figures are worrying,” said Ifo head of surveys Klaus Wohlrabe. Thumbnail photo: Berlin (Source: Shutterstock)

SINGAPORE (ICIS)–Asia’s oxo-alcohols market continues to face challenges amid capacity expansions in China. Weak demand from downstream plasticizers sector Upstream support from propylene unlikely Demand recovery to take some time In this latest podcast, ICIS senior editor Julia Tan speaks with ICIS analyst Lina Xu on the latest developments and expectations for what lies ahead in 2025.

MUMBAI (ICIS)–India’s state-owned Hindustan Petroleum Corp Ltd (HPCL) plans to invest rupees (Rs) 46.79 billion ($551 million) to expand the lube oil base stocks (LOBS) production at its Mumbai refinery by 289,000 tonnes/year or by about 61%. “The company board has approved the ‘Lube Modernization and Bottoms Upgradation Project’ at the Mumbai Refinery,” it said in a statement to the Bombay Stock Exchange on 16 December. This project will increase the company’s LOBS production to 764,000 tonnes/year from current 475,000 tonnes/year with production of superior grade Group II+ and Group III LOBS, it added. HPCL expects to start producing the additional premium base oils via a new integrated hydrocracker and catalytic dewaxing unit by 2027-2028. ($1= Rs84.91)

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. To paraphrase William Shakespeare, I see last week’s fuss about China’s new economic stimulus as being full of sound and fury, signifying hardly anything. The hard reality is that China is undergoing a period of a much lower GDP and therefore chemicals demand growth. Nothing can change this trajectory, for reasons I discuss in detail in today’s post. During 2025, the problem will remain far too much global capacity chasing much weaker-than-expected demand up and down all the chemicals value chains because the consensus on China was wrong. So, to add to my five forecasts for 2025 which I published last week, here is a sixth: There will be no significant improvements during next year in China’s CFR polyethylene (PE) and polypropylene (PP) price spreads over CFR Japan naphtha costs. The 2024 final numbers are almost in. We can see that the downturn in spreads that followed the Evergrande Turning Point continues. Let’s start with PE where 2022-2024 average spread for the three grades was just $300/tonne. This compares with a spread in 1993-2021 – during the Chemicals Supercycle – that averaged $532/tonne. The average 2022-2024 PP spread was $240/tonne as against $562/tonne during the Supercycle. Please don’t be distracted by unhelpful noise. Instead, place all your focus on retooling your tactics and strategies to deal with the post-Supercycle chemicals world. 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.

HOUSTON (ICIS)–Two world-scale joint venture projects being developed by Chevron Phillips Chemical and QatarEnergy remain on track to start operations in 2026, Phillips 66 said on Monday. Phillips 66 and Chevron hold equal stakes in Chevron Phillips Chemical (CP Chem). The US project is Golden Triangle Polymers, an integrated polyethylene (PE) complex in Orange, Texas. Chevron Phillips holds a 51% stake, and construction started in 2023. The Qatari project in Ras Laffan is another integrated PE project. It is a 70:30 joint venture between QatarEnergy and CP Chem. Construction on this project started in 2024. PHILLIPS 66 CAPEX BUDGETPhillips 66 provided the updates on the two petrochemical projects when it revealed its 2025 capital budget, as shown in the following table. Figures are in millions of dollars. Sustaining Growth TOTAL Midstream 429 546 975 Refining 414 408 822 Marketing & Specialties 63 91 154 Renewable Fuels 18 56 74 Corporate and other 74 1 75 TOTAL 998 1,102 2,100 Source: Phillips 66 Phillips 66’s proportionate share of capital spending in its CP Chem and WRB Refining joint ventures is $877 million, and its inclusion would bring Phillips 66’s total 2025 capital spending to $3 billion. The joint ventures’ spending will be self funded, Phillips 66 said. WRB Refining is a 50:50 joint venture made up of Phillips 66 and Cenovus Energy. The joint venture owns the Wood River refinery in Illinois and the Borger refinery in Texas. WRB’s capital spending will direct its capital spending on sustaining projects, Phillips 66 said. PHILLIPS TO SELL STAKE IN OIL PIPELINEA subsidiary of Phillips 66 has agreed to sell its 25% non-operated stake in the Gulf Coast Express Pipeline to an affiliate of ArcLight Capital Partners. Pre-tax proceeds from the sale should total $865 million. The sale should close in January 2025. Thumbnail shows PE. Image by ICIS.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 December. Dow’s $2.4-3.0 billion infrastructure deal larger than expected Dow signed a deal to sell a minority stake in its US Gulf Coast infrastructure assets to a fund managed by Macquarie Asset Management for up to $3.0 billion – larger than expected, according to UBS. PCC’s proposed USG chlor-alkali unit to add caustic length in unique development US caustic soda supplies will continue to grow in the coming years following an announcement by PCC Group that it intends to invest in a new 340,000 tons/year chlor-alkali plant at DeLisle, Mississippi. The new capacity will be built on Chemours site at DeLisle Mississippi with the intent to provide Chemours with reliable access to chlorine. The company intends to sell its caustic soda to strategic partners and into the open market. Construction on the unit is expected to begin in early-2026 and conclude in 2028. INSIGHT: New gas pipeline to provide support for ethane prices for US chems A new gas pipeline set to be built by Energy Transfer should provide support for natural gas and ethane prices in the Permian producing basin, lowering the likelihood that US chemical producers see another period of ultra-low costs for the main feedstock used to make ethylene. Olin to shut diaphragm chloralkali capacity that serves Dow’s Freeport PO unit Olin plans to shut down its diaphragm-grade chloralkali capacity in Freeport, Texas, that provides feedstock to Dow’s propylene oxide (PO) unit, the US-based chloralkali producer said on Thursday. ACC expects modest US chemicals volume recovery in 2025 – economist The American Chemistry Council (ACC) expects a 1.9% rebound in chemical volumes in 2025 after two consecutive years of declines as the US economy undergoes a soft landing and the housing market improves in the second half of the year, its chief economist said.