BANGKOK (ICIS)–Asia’s petrochemical industry leaders are navigating a complex global landscape marked by unprecedented challenges, with a renewed focus on sustainability, innovation, and regional collaboration, industry leaders said on Friday. Oversupply, sluggish demand, trade conflicts weigh on industry Challenges open doors for transformation through digital innovation, efficiency Protectionist trade policies cast shadow over global economic activity Facing economic volatility, supply chain disruptions, and increasing environmental demands, top executives from across the region attending the Asia Petrochemical Industry Conference (APIC) in Bangkok emphasized that the industry must adapt to ensure continued prosperity. APIC 2025 with the theme “Ensuring a Transformed World Prosperity” runs on 15-16 May. “We are now standing at a defining crossroads,” Federation of Thai Industries, Petrochemical Industry Club (FTIPC) chairman Apichai Chareonsuk said, acknowledging formidable pressures on the industry. He cited “economic volatility, supply chain uncertainties, and rising expectations for environmental responsibility” among the list of complex challenges facing the petrochemical industry. However, he viewed these challenges as opportunities for progress. “These challenges are also opening doors to transformation- through digital innovation, resource efficiency, and sustainable development,” Chareonsuk said. INDIA AS BEACON OF GROWTH India, a giant emerging market in Asia, nonetheless, is a “beacon of growth” fueled by burgeoning end-use sectors, according to the country’s Chemicals and Petrochemical Manufacturers’ Association (CPMA) secretary general Shekhar Balakrishnan. The south Asian country is emerging as one of the fastest-growing economies in the world, he noted. This growth, he explained, is underpinned by a robust rise in end-use sectors, including automobiles, infrastructure, construction, among others. These sectors, he added, have propelled the petrochemical industry to new heights, adding that “the Indian petrochemical industry has entered a new phase of growth”. “As I speak, a new world-scale cracker is in its last stage of commissioning,” Balakrishnan said. Hindustan Petroleum Corp Ltd (HPCL) is slated to begin commercial operations at its refinery and petrochemical complex at Barmer in India’s western Rajasthan state this year. The complex can produce 820,000 tonnes/year of ethylene and 400,000 tonnes/year of propylene. Furthermore, he noted that across the country, “new investments covering a broad spectrum of petrochemicals are materializing to augment India’s production capabilities further and make the petrochemical industry in this part of the world even more robust”. Balakrishnan also drew attention to the widespread commitment to environmental responsibility in the region. “I will be failing in my duty if I do not highlight the tremendous efforts that organizations in India and the Asian region are making towards sustainability,” he remarked. He stressed the balance between the industry’s essential role and the need for responsible practices. “Petrochemicals are essential enablers of modern life … However, the collective challenge before us is to adopt smart, sustainable processes and technologies,” the CPMA secretary-general said. “The industry is actively embracing the circular economy, especially in polymers, creating huge opportunities for reuse and recycling while addressing the global crisis of material waste,” he added. Balakrishnan highlighted the success of the Extended Producer Responsibility (EPR) framework in India. “This is already yielding significant societal benefits and setting the stage for sustainable industrial growth.” “For instance, India today recycles over 90% of polyethylene terephthalate (PET) bottles into value-added articles.” PROTECTIONIST POLICIES PROLIFERATE Japan Petrochemical Industry Association (JPCA) chairman Koshiro Kudo said that “protectionist trade policies around the world” are casting a shadow over global economic activity. He also pointed to the disruptive influence on the industry of “growing geopolitical risks, fluctuations in tariff policies, economic security issues, problems in China’s real estate market, and the increasing frequency of natural disasters caused by climate change”. In Japan, the operating rate of ethylene plants “has remained below 90% since May 2022, and has recently dropped to around 80%, continuing in a very challenging situation.” Kudo also emphasized the industry’s environmental obligations, stating that it “is also expected to play a role in maintaining the balance of the ecosystem by recycling CO2 [carbon dioxide], as well as supplying materials”. Achieving sustainability necessitates that “international cooperation and technological innovation in the petrochemical industry are essential, and it is necessary to fully leverage the power of chemistry”, he said. JPCA’s two-phase approach to structural reform is to focus first on applying available technologies to reduce greenhouse gas emissions and developing innovative technologies for further emission reductions, and then on applying new technologies to achieve sustainable development goals, Kudo said. He emphasized the need to transform petrochemical complexes into “environmentally friendly ‘sustainable complexes’ through technological innovation” to function as environmental and energy infrastructure hubs. Kudo also drew attention to the demographic challenge of declining birth rates across Asia. He stressed the need to utilize technologies such as digital transformation, “green” transformation, and artificial intelligence to improve plant operation efficiency, facilitate technology transfer, accelerate R&D, and improve safety. Korea Chemical Industry Association (KCIA) chairman Hak-Cheol Shin described the current market as an “unprecedented crisis marked by global oversupply, sluggish demand, and full-scale trade conflicts” which calls for regional unity. “Amidst growing uncertainties in the global trading order, closer solidarity and cooperation among us are more crucial than ever to ensure the sustainable growth of our industry.” “The external environment surrounding the petrochemical industry this year is more complex and challenging than ever before,” he said. Shin warned that “the implementation of US tariff policies is expected to bring about cataclysmic changes in global trade”. Exacerbating business challenges were “persistent oversupply centered around China” and “instability in raw material procurement stemming from the reorganization of global supply chains”, he said. If downstream industries weaken due to tariff shocks, the petrochemical industry’s growth momentum may also diminish, the KCIA chief said. Shin urged a proactive response to both market dynamics and increasing environmental demands. REGIONAL UNITY IS KEY “At this critical juncture, APIC members must demonstrate stronger solidarity and leadership than ever before,” KPIA’s Shin said. “While addressing internal and external risks such as trade conflicts and global oversupply, we must also remain fully responsive to the growing societal demands for enhanced environmental regulations, including carbon neutrality and key elements of the UN Plastics Treaty.” Shin stressed the need to “enhance operational efficiency, optimize energy utilization, and shift toward high-value-added products through the adoption of cutting-edge technologies” to minimize environmental impacts and reinforce competitiveness. “As we navigate global challenges – from climate change to economic volatility – our industry stands at the forefront of delivering solutions that balance growth, sustainability, and societal progress,” Malaysian Petrochemicals Association (MPA) president Bahrin Asmawi  said. Various initiatives are underway in line with Malaysia’s National Energy Transition Roadmap (NETR) and New Industrial Master Plan 2030 (NIMP 2030). These include investments in carbon capture, utilization, and storage (CCU), green hydrogen, and utilizing bio-based feedstocks, as well as accelerating adoption of renewable energy in production and chemical recycling. Asmawi stressed the indispensable nature of collaboration, saying: “No single entity can drive transformation alone.” MPA is committed to fostering partnerships with the government, investors, technology providers, and communities, he said. Asmawi also proposed a united front among APIC members to address trade policy challenges, particularly suggesting that regional cooperation could lead to “better effective negotiating deals” in the context of recent US tariff announcements. Petrochemical Industry Association of Taiwan (PIAT) chairman Mihn Tsao emphasized in his key address at APIC 2025 “both the urgency and the opportunity of our time.” The industry is “called upon to deliver not only economic value but also social and environmental responsibility,” he said. “Innovation, sustainability, and partnership are no longer optional – they are essential to our continued development.” Despite facing significant global headwinds in 2024, including geopolitical tensions, supply chain disruptions, inflation, and climate change, Tsao noted the Taiwanese industry’s resilience and “steadfast commitment to transformation”. This transformation, he explained, included intensified investments in green innovation, AI-driven process optimization, and sustainable material development. Taiwan has a formal commitment to net-zero emissions by 2050 through its “Climate Change Response Act” and the introduction of carbon fee regulations in 2024 as a “critical turning point”, he said. Future focus areas must include developing high-value, low-carbon production, driving technological innovation through AI, and deepening international cooperation to secure competitiveness. “Collaboration across borders and industries is essential in addressing the global challenges we face: decarbonization, overcapacity, shifting geopolitical dynamics, and the fragmentation of the multilateral trading system.” For Singapore, efforts to transform its industry in line with national sustainability goals, include the Singapore Green Plan 2030 and the national net-zero ambition by 2050, Singapore Chemical Industry Council (SCIC) chairman Henri Nejade said. This transformation includes the development of Jurong Island into a Sustainable Energy & Chemicals Park focusing on sustainable products, sustainable production, and Carbon Capture and Utilization (CCU). Government initiatives like the establishment of a Future Energy Fund also support low-carbon and next-generation energy solutions. Nejade also emphasized the importance of regional cooperation in navigating regulatory landscapes through initiatives like the ASEAN Regulatory Co-operation Platform (ARCP). The ARCP is an industry-led initiative to drive greater engagements and capacity building involving all the regulators and industry representatives from all the 10 ASEAN member states. Such cooperation helps “address non-tariff barriers, thus helping to create conducive business environments.” Insight article by Nurluqman Suratman Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy. Thumbnail image: Leaders of the Asia Petrochemical Industry Conference (APIC) member countries. The event runs on 15-16 May in Bangkok, Thailand. (Nurluqman Suratman)

BANGKOK (ICIS)–The US tariff policies and other economic headwinds present significant challenges for chemical exporters in the Gulf Cooperation Council (GCC) region. Nevertheless, opportunities and avenues for cooperation exist, especially with Asia, according to the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA). “Navigating the complexities of global trade is a top priority,” Abdulwahab Al Sadoun told ICIS on the sidelines of the Asia Petrochemical Industry Conference (APIC) 2025. The GCC region comprises six Middle Eastern countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). The GPCA plays a pivotal role in facilitating partnerships between companies in both the GCC region and China, a strategy that has gained momentum in recent years, Al Sadoun said. “We estimate that GCC chemical producers hold equity in joint ventures processing approximately 2.7 million barrels/day of crude and operating over 23 million tonnes per year of downstream petrochemical capacity across China, South Korea, Malaysia and Singapore,” said Al Sadoun. While US tariff policies present significant challenges for GCC chemical exporters, Al Sadoun sees opportunities amid the turbulence. “Even a baseline 10% tariff will raise the price of GCC chemical products in the US market,” Al Sadoun said, citing a paper published by GPCA that highlighted the potential effects of US President Donald Trump’s tariffs. Some products that would be particularly affected are high-volume, price-sensitive exports such as urea, paraxylene (PX) and polyethylene terephthalate (PET). However, Asia’s dominance as a trading partner offers a silver lining. “Asia accounted for over half of our total exports in 2023,” Al Sadoun said, with China, India and Turkey among key markets. “If China reduces imports from the US, the GCC can step in to fill that gap, provided we act swiftly to capture market share and diversify our trade partners,” said Al Sadoun. Asia also accounts for well over half of global plastics consumption, with more than 50% of all GCC chemical exports already flowing to Asia, Al Sadoun added. “Recent joint ventures, such as Aramco’s partnerships at Panjin and Gulei in China, both designed around crude‑to‑chemicals schemes that convert more than 50% of each barrel directly into petrochemical feedstock, demonstrate how upstream strength can be paired with local finishing capacity,” Al Sadoun said. GCC CHEM PRODUCERS HAVE COMPETITIVE EDGEAmid falling oil prices in 2025, Al Sadoun believes chemical producers in the Gulf still hold an advantage over competitors reliant on naphtha. “While crude oil prices may be falling, the Arabian Gulf’s gas-based model still gives chemical producers a clear cost edge over their naphtha-reliant competitors.” At the same time, he emphasized the importance of continuing to optimize energy use and focus on higher-value projects. Companies are channeling investments into specialty elastomers, crude-to-chemicals complexes and downstream sectors such as mobility, packaging and electric vehicle (EV) materials, Al Sadoun said. “With plant utilization in the Arabian Gulf running in the 90% range – far above most global peers – the region is well placed to ride out softer oil, provided it keeps lowering variable costs and broadening its product slate. “GPCA’s role is to benchmark those cost and efficiency gains across its membership and ensure best practice spreads quickly from one site to the entire Gulf cluster.” SUPPLY CHAIN RESILIENCE A KEY FOCUSSupply chain resilience has emerged as a critical focus for Arabian Gulf chemical producers. “Recent shocks, such as geopolitical flare-ups, pandemic-era port closures, even weather-driven canal disruptions, have confirmed that leading companies cannot simply react; they must anticipate, adapt and seize the openings that turbulence creates,” Al Sadoun said. Al Sadoun pointed out four lessons: the first, route flexibility; the second, the need for end-to-end visibility; third, the need for regional buffer stocks such as joint warehouses in key import markets; and lastly, digital risk forecasting. The use of tools such as artificial intelligence (AI), blockchain and the Internet of Things (IoT) are moving supply chain management from reactive to predictive, while diversified sourcing and strategic inventories reduce single region dependency, Al Sadoun said. FOCUS ON RENEWABLES Even as the GCC region continues to leverage its cost advantage through gas, its member countries are also committed to energy transition. “GCC nations aim to source 25-50% of their energy mix from renewables by 2030,” Al Sadoun said, adding that the region is also investing heavily in carbon capture, utilization and storage (CCUS), currently capturing 4.4 million tonnes of CO2 annually – 10% of the global CCUS capacity. Hydrogen production is another priority, with Oman, the UAE and Saudi Arabia setting ambitious targets. Oman has committed to producing 1 million tonnes of hydrogen by 2030, the UAE to 1.4 million tonnes of hydrogen by 2031 and Saudi Arabia aims for 4 million tonnes of hydrogen by 2030. “These initiatives are part of our strategy to reduce environmental impact while maintaining our competitive edge,” Al Sadoun emphasized. APIC 2025 runs in Bangkok, Thailand, from 15-16 May. Interview article by Jonathan Yee (recasts paragraphs 1 and 7 for clarity)

MUMBAI (ICIS)–India’s merchandise exports in April grew by 9% year on year to $38.5 billion, while the trade deficit for the month widened to $26.4 billion due to high imports of petroleum products, official data showed. The trade deficit in March 2025 was $21.5 billion, according to data from the Ministry of Commerce. “Last year, there were many problems. Trade route was a big problem with ships forced to avoid the Red Sea. There were supply issues. Cost of transport and insurance increased. But Indian exporters have shown that they have achieved resiliency in their business,” Indian commerce secretary Sunil Barthwal said during a press briefing. “India’s trade performance in April underscores the robust fundamentals of Indian exports despite global headwinds, including geopolitical tensions, inflationary trends, and supply chain disruptions,” Federation of Indian Export Organisations (FIEO) president S C Ralhan said. India’s merchandise imports in April rose by 19.1% year on year to $64.9 billion, with crude petroleum and products imports up by 25.6% at $20.7 billion, official data showed. Higher imports, particularly of capital goods and energy raw materials, reflects improving domestic demand and capacity expansion, FIEO chief Ralhan said. Meanwhile, trade with the US has increased in April, India’s commerce chief Barthwal said. India expects to conclude the first phase of the trade deal with the US by October this year, with an official Indian team expected to visit the US this month for trade talks. The south Asian nation expects to increase bilateral trade with the US to more than $500 billion by 2030. During his state visit to Qatar on 15 May, US President Donald Trump was quoted in the media as saying that an agreement with India is close. India’s April exports of petroleum products rose by nearly 4.7% year on year to $7.37 billion, while those of organic and inorganic chemicals dropped by around 9.1%, to 2.27 billion. Exports of pharmaceutical products rose by 2.4% to $2.49 billion. April man-made fabrics and yarn exports increased by 4.2% to $383.8 million, while plastics shipments rose by 4.6% to $696.4 million. Meanwhile, April imports of organic and inorganic chemical rose by 10.9% year on year to $2.45 billion, while those of artificial resins and plastic materials rose by 14.2% to $1.95 billion. April fertilizer imports rose by 10% to $653.6 million, while imports of chemical material and products more than doubled to $1.97 billion. Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy.

HOUSTON (ICIS)–US importers rushed to book space on container ships out of China after the two countries agreed to a 90-day pause on reciprocal tariffs, according to data from shipping analyst Vizion. Ben Tracy, vice president of strategic business development at Vizion, said in a LinkedIn post that the rolling seven-day average for bookings from China to the US jumped to 21,530 TEUs (20-foot equivalent units) this week from 5,709 TEUs last week, an increase of 277%. “We are definitely starting to see the bookings return now that this temporary pause is in effect,” Tracy said. Ryan Petersen, CEO of US logistics platform provider Flexport, said in a social media post on Tuesday that ocean freight bookings from China to the US jumped by 35% on the first day since the pause. “A big backlog is looming,” Petersen said. “Soon the ships will be sold out.” The surge in traffic along the trade lane immediately contributed to a rise in spot rates, as was expected. Lars Jensen, president of consultant Vespucci Maritime, said this week that many carriers had already announced GRIs (general rate increases) for the Pacific trade before US President Donald Trump announced the ceasefire in the trade war. “This is not because the carriers were able to forecast this exact development, but rather because the carriers are in the habit of pre-emptively announcing GRIs,” Jensen said. “If market conditions are then strong, these might stick, otherwise they go unnoticed.” Rates for shipping containers are already showing increases week on week. Rates from online freight shipping marketplace and platform provider Freightos showed minimal increases earlier this week, but rates from supply chain advisors Drewry on Thursday showed significant increases of 19% from Shanghai to New York and 16% from Shanghai to Los Angeles. Arrivals at the West Coast ports of Los Angeles and Long Beach were slowing while the reciprocal tariffs were in place, but the ports saw record volumes in March and April as importers pulled forward volumes before the tariffs went into effect. May volumes are expected to be down by as much as 10%, according to officials at the Port of Long Beach. 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. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

LONDON (ICIS)– With the end of the Russian gas transit via Ukraine, Denmark and Poland are positioning themselves as a viable transit corridor for supplies to central and eastern Europe. The pending relaxation of Poland’s gas storage rules and a more efficient calculation of transmission tariffs is beginning to draw traders’ attention. Ukraine has ramped up imports and traders have booked firm quarterly capacity on the Ukrainian-Polish border for the first time ever in May. Although there are risks, including the possible resumption of gas flows via Nord Stream pipelines, Clement Johan Ulrichsen, head of gas market at Denmark’s grid operator Energinet and Stanislaw Brzeczkowski, chief engineer in the gas market division of the Polish counterpart, Gaz-System, tell ICIS that the Baltic Sea Gas Corridor offers a reliable and competitive alternative in the short and long-term.

LONDON (ICIS)–Expectations for a flurry of Chinese wax volumes to reach Europe in June sent bearish ripples through domestic spot prices for paraffin wax this week, despite the US and China agreeing to a temporary trade truce. Following Monday’s news that the US-China trade tariffs will be reduced for 90 days, there was little immediate positive impact on prices for domestic wax grades. In fact, spot prices were under pressure as the market is expected to absorb wax volumes originating in China from June onwards. Over the last month, Chinese wax sellers have been dropping their offers aiming to entice European buyers. The sale strategy looked to avoid the US import duties announced in April and find alternatives homes. European producers held back from bowing to pressure from the more affordable Chinese wax material and kept prices steady for several weeks. This week, ICIS published ranges for 52-54 °C, 56-58 °C and 60-62 °C shed value as the assessed timeframe is for cargoes loading or delivered four-to-six weeks forward from the date of publication. Chinese CIF-origin wax volumes also showed some weakness this week, inching down $30/tonne to $1,180-1,220/tonne, as freight rates fell further. Sources voiced expectations for some of the downwards trend to reverse slightly. The US-China truce may drive some sellers to review their strategy and take advantage of the 90-day drop in tariffs. But this may prove to be short-lived. This is because of the month-long shipping time for cargoes of Chinese wax to reach the US and the fact that the current deal ends in three months. This means any cargoes that begin the trip to the US in over two months time will be vulnerable to political developments and exposed to a deal falling through at the last minute should the vessel arrive after the 90-days period.

HOUSTON (ICIS)–The tariff deal that the US has reached with China did not eliminate the duties on steel, aluminium and auto parts, all of which could lower automobile production and reduce demand for the plastics and chemicals used to make the vehicles. The US maintained its 25% sectoral tariffs on Chinese imports of steel, aluminium and auto parts. It levies the same tariffs on imports from much of the world. Imports from Canada and Mexico can avoid the tariffs if they comply with the nations’ trade agreement, known as the US-Mexico-Canada Agreement. Oxford Economics expects US auto production will fall by -2.0% to -0.9% year on year in 2025. Fitch Ratings, a credit rating agency, lowered its US auto sales forecast by 6.7% and warned of production cuts. WHY ARE AUTOS IMPORTANT TO CHEMSAutomobiles made in North American contain an average of 198 kg of plastic, according to ICIS, making them an important end market for producers. Polypropylene (PP) is the most commonly used resin in North American automobiles followed by polyurethanes and nylon, as shown in the following charts. In addition, automobiles are large end markets for paints and coatings. In all, the typical automobile has nearly $4,000 worth of chemistry WHAT CHEMS SAY ABOUT AUTOSCelanese, whose Engineered Materials segment is heavily dependent on autos, stressed the uncertainty about the effects that tariffs will have on this key end market during the second half of the year. It will prepare by reducing inventory, controlling costs and lowering operating rates if warranted by demand weakness. Polyurethanes producer Huntsman is seeing automobile build rates drop low-single digit percentages. By the time order patterns trickle through original equipment manufacturers (OEMs) and down to chemical companies, Huntsman is seeing double-digit drops in some order patterns. AdvanSix warned that uncertainty surrounding tariffs is affecting the market for nylon and other engineering plastics. Axalta Coating Systems, which makes auto paint, warned of a $50 million gross annualized charge from tariffs. Axalta lowered its 2025 sales guidance to $5,300-5,375 million from $5,350-5,400 million. Earnings guidance remained unchanged. Steps that Axalta could take to offset a portion of that hit include insourcing production capacity to domestic plants; sourcing raw materials locally; reformulating products; managing strategic inventory; and executing pricing actions. TARIFFS RAISE AUTO COSTS, THREATEN OUTPUTTariffs on auto inputs will increase costs for vehicles, and producers will likely pass through a portion of those higher costs to customers. The size of those cost pass throughs will play a large role in the tariffs’ effects on chemical demand. Higher prices for automobiles will discourage sales. Lower sales will reduce auto production and cut demand for plastics and chemicals used to make those vehicles. THE EFFECT SO FAR ON AUTO BUILDSPrior to the announcement of the US and China trade deal, Ford estimated that the gross cost impact from the tariffs is $2.5 billion. Among that, half will come from imported and exported parts as well as the effect that steel and aluminium tariffs will have on domestic prices. The rest is from imported vehicles. Already, Stellantis halted production for two weeks at a plant in Windsor, Ontario Province, Canada, because of tariffs. AUTO’S EXPOSURE TO TARIFFSThe US auto industry’s exposure to tariffs is not trivial because the country imports enormous amounts of auto parts, steel and aluminium. Many of these products are subject to 25% sectoral tariffs or 10% baseline tariffs. More than 50% of the content of cars assembled in the US is imported, according to a 3 May CNN article, citing US government statistics. AUTO PART TARIFFSThe following chart breaks down 2024 general imports by country for auto parts under the 8708 code of the harmonized tariff schedule (HTS). Figures are in billions of dollars. Source: US International Trade Commission (ITC) Not all auto parts will be hit by the 25% tariffs. Some parts are excluded. Those from Mexico and Canada will escape the levy if they comply with the USMCA. STEEL AND ALUMINIUM TARIFFSThe following chart shows 2024 general imports of iron and steel under the HTS codes 7206-7224. These codes cover iron and nonalloy steel; stainless steel; and other alloy steel. The chart breaks down the imports by country and lists the value in trillions of dollars. Source: ITC Metal imports from the UK will be exempt under a recent trade deal, as indicated by a press conference in that country. Imports from Canada and Mexico would be exempt from these tariffs if they comply with the USMCA. Not all of these steel imports would be used in automobiles But the chart does illustrate that the US imports iron and steel from many countries that will be covered by the 25% tariffs. The following chart provides a similar breakdown for 2024 general imports of articles of iron and steel under Chapter 72. Figures are in trillions of dollars. Source: ITC The following chart provides the country breakdown for 2024 general imports of aluminium and articles thereof under Chapter 76. Figures are in trillions of dollars. Source: ITC OTHER THREATS TO DOMESTIC AUTO PRODUCTIONTariffs are taxes, and taxes reduce economic growth. Slower GDP growth translates to lower sales and production. ICIS expects that US economic growth will slow to 1.5% in 2025 from 2.8% in 2024. Growth in 2026 could be 1.7%. The country has a 34% chance of slipping into a recession in the next 12 months. Many US consumers bought automobiles to avoid paying tariffs. Those purchases made ahead of the tariffs will come at the expense of future sales. US SELF-SUFFICIENT FOR MANY PLASTICS, CHEMS USED IN AUTOSMany of the plastics and chemicals used by the US auto industry are produced in abundance in the country, and that will limit customers’ exposure to the nation’s tariffs for those products used in automobiles. The US is self-sufficient in polypropylene (PP), polyvinyl chloride (PVC) and polyethylene (PE), a plastic used in packaging and fuel tanks. Nylon is excluded from the tariffs. Polyurethanes, the second most common polymer used in automobiles, are made with methylene diphenyl diisocyanate (MDI), and a substantial amount of US MDI imports comes from China. The US also relies on imports of acrylonitrile butadiene styrene (ABS), much of which comes from Mexico, South Korea and Taiwan. Additional reporting by Stefan Baumgarten, Joseph Chang and Jonathan Lopez Insight article by Al Greenwood (Thumbnail shows automobile. Image by Shutterstock)

By Jennifer Sanin and Tatjana Jovanovic This article reflects the personal views of the authors and is not necessarily an expression of ICIS’s position. LONDON (ICIS)–The EU’s choice to oust dissenters from the decision-making process on a Russian gas ban is an act of political desperation. Recently, the European Commission presented its plan to end Russian fossil fuel imports by 2027 but failed to offer much detail until the release of legislative proposals in June. While decisions on sanctions require a unanimous vote to pass, legislation can pass via “qualified majority”. Restricting trade with a country seems like the definition of a sanction, but the EU’s choice to make it a legislative issue conveniently sidelines the inevitable dissent from less compliant member states. Both Slovakia and Hungary , whose main gas supplier is Russia, have vehemently rejected the proposal and are seeking joint action to counter it. More and more eastern European populations further impoverished by high energy costs are turning against the EU’s stance on Russian energy. The common scare tactic of Russian gas supply weaponization can not be wielded against these states, as they are clearly more concerned about the EU cutting off their access to affordable energy than Russian President Vladimir Putin himself. Intelligence agencies and media outlets can blame the trend on “Russian interference” all they like, but reliance on costly and volatile global LNG is hardly conducive to a stable energy price for consumers. “Not being supplied by Russian gas means getting dependent on the US, which is not really reliable at the moment,” one trader said. “Hard to get the gas over unless you reverse flow from west EU,” another trader added. “And relying on LNG as well… so I get [their concerns].” Indeed, the cost of firm annual transit from Netherlands to Slovakia totals €3.27/MWh compared with just €1.36/MWh to pull on Hungary’s Turkstream volumes, which themselves are contracted at a discount to the TTF. A moral argument? Diversity of supply ought to mean just that: a mix of all possible sources, including the huge fuel-rich land just over the border. Business itself does not necessarily bend to geopolitical shifts. For a long time after Russia’s invasion, Ukraine continued making money off transiting its aggressor’s gas to Europe. Plenty of US and European trading partners either violate human rights outright or hold deeply opposing cultural values – China’s oppression of Uyghurs, Saudi Arabia’s war in Yemen, Sharia law in Qatar to give a few examples. Following the logic of doing business exclusively with “morally righteous” partners, Europe would have to limit its trade to only include secular Western states. The outcome of the war can not rationally be linked to eastern Europe’s consumption of Russian gas, and the ban is blatantly an ideological one. Cheap Russian gas? One riposte to the concept of “cheap” Russian gas is to say that Gazprom supplied European companies under legacy oil-linked contracts, which eventually turned out more expensive than hub pricing amid gas market liberalisation. Already in 2015, many of these legacy contracts were re-written to incorporate TTF linkage . Then in 2018, the Russian energy giant adapted by selling excess volumes on an electronic sales platform at TTF-linked prices, which ICIS covered extensively at the time. Anyway, specific contract terms are a distraction from the crucial point that Russian pipeline gas is a flexible and abundant source of supply that would ease volatility across Europe, not just regional hubs. Slovak energy company SPP recently argued that lack of infrastructure capacity makes eastern Europe more vulnerable to supply crunches. This could be addressed with infrastructure expansion but uncertainty around Europe’s fossil fuel phase-out and a possible Russia-Ukraine peace deal makes such projects hard to plan. Speculators’ paradise One could also ask who stands to gain from such a volatile energy price environment while European consumers and industry suffer. The total removal of Europe’s most flexible supply source would almost inevitably expose the markets to price swings, and a volatile environment is most attractive for wealthy speculative traders. TTF front-month at-the-money implied volatility – the option market’s measure of a contract’s future price swings – skyrocketed after the invasion and has hovered over 50% ever since. That is much higher than the benchmark contract for most liquid commodity, Brent crude M+2, and therefore more lucrative for high-risk speculative traders. At-the-money July ’25 Brent implied volatility stood at around 30% on 14 May. The market impact of heightened speculative activity is a hotly debated topic , specifically its impact on inflating prices (in the case of net longs)– but most sources polled by ICIS agree it can exacerbate volatility. This begs the question… who are the winners of the EU’s political grandstanding? While it is no secret that eastern Europe is often used as a playground for West versus East, this latest proposal may have gone a step too far.

BANGKOK (ICIS)– South Korea’s petrochemical production is projected to decline by 1.4% in 2025, with export volumes expected to contract by 4.2%, while domestic demand is forecast to increase by 2.3%. Industry to remain export-driven Domestic consumption to reverse 6.6% contraction in 2024 Economic recovery likely limited “The operating rate is expected to decline slightly due to continued oversupply and the rapid pace of production expansion from China,” the Korea Petrochemical Industry Association (KPIA) said in a report prepared for the Asia Petrochemical Industry Conference (APIC) 2025. The conference is being held in Bangkok, Thailand on 15-16 May. “[With] trade protectionism spreading worldwide, it is expected that operating rates will be further adjusted due to a decline in [exports],” KPIA said. Full-year petrochemical production for 2025 is expected to shrink to 20.7 million tons, as economic recovery is expected to be limited, amid an oversupply in China. However, purchases are expected to gradually pick up, especially in major demand centers. South Korea’s petrochemical production in 2024 declined by 1.4% to 21.1 million tons. Its petrochemical export volumes in 2025 are projected to decline further to 12.3m tons, after shrinking by 3.1% in 2024. South Korea is a major exporter of synthetic resins, synthetic fiber and synthetic rubber, with overseas sales accounting for a substantial portion of total production of these products. S Korea 2025 Petrochemical Industry Forecasts (in ‘000 tons) Products Production Exports Exports share to total output (%) 2024 actual export growth (%) 2025 projected export growth (%) Synthetic resins 14,946 9,533 63.8 -1.1 0.3 Synthetic fibre raw materials 5,193 2,401 46.2 -2.6 -6.1 Synthetic rubber 614 387 63.0 0.6 -2.9 Source: KPIA “In 2025, the petrochemical industry is expected to face even more difficult times ahead … Overall, the export-driven growth trend is expected to continue,” the KPIA said. Domestic petrochemical consumption this year is projected to grow by 2.3% to 9.5m tons, reversing a 6.6% contraction in 2024. Due to intensifying competition with low-priced Chinese products, however, the pace of domestic demand recovery is expected to be limited, according to KPIA. Focus article by Jonathan Yee