SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 13 December. S Korea bourse extends fall as political woes deepen; petrochemical shares slump By Pearl Bantillo 09-Dec-24 15:36 SINGAPORE (ICIS)–South Korea’s benchmark stock market index continued to bleed on Monday amid political instability wrought by the shock martial law announcement on 3 December, with impeachment motions against President Yoon Suk Yeol dropped over the weekend due to lack of quorum. INSIGHT: India poised to take up growing role in Asia ethylene ecosystem By Josh Quah 09-Dec-24 18:22 SINGAPORE (ICIS)–As far as the numbers on paper go, India may not look like a conspicuous power in the ethylene markets. The south Asian country imported around 76,400 tonnes of ethylene in 2022, a figure that dropped to around 51,800 tonnes in 2023. China Nov export growth slows to 6.7% on year; imports fall 3.9% By Jonathan Yee 10-Dec-24 15:37 SINGAPORE (ICIS)–China’s exports in November grew at a slower year-on-year rate of 6.7% to $312.3 billion amid trading headwinds from a potential wave of tariffs to be levied by the incoming US administration. INSIGHT: Key takeaways for 2025 petrochemical market outlook at ICIS China customer day By Jenny Yi 10-Dec-24 19:15 SINGAPORE (ICIS)–A slow projected global recovery, the growing prominence of Africa and southern America for producers, and a bearish outlook for Asia olefins and aromatics prices in 2025 were among the topics discussed at the ICIS China Customer Day event in Shanghai on 21 November. Asian SBR import offers see support from firming upstream markets By Ai Teng Lim 11-Dec-24 13:18 SINGAPORE (ICIS)–Asian styrene-butadiene-rubber (SBR) producers are seeking to sell higher, citing upstream cost push. China to adopt looser monetary policy in 2025 as US tariffs loom By Jonathan Yee 11-Dec-24 15:36 SINGAPORE (ICIS)–China is expected to implement a “more proactive fiscal policy” and a “moderately loose” monetary policy for next year, according to the country’s top officials, amid economic headwinds and looming heavy tariffs from the US. UAE to impose 15% minimum top-up tax on large multinationals from Jan ‘25 By Jonathan Yee 12-Dec-24 12:28 SINGAPORE (ICIS)–The UAE will impose a minimum top-up tax (DMTT) on large multinational companies, to align its tax system to global standards. Strong PKO cost supports Asia fatty alcohol mid-cuts C12-14 By Helen Yan 12-Dec-24 13:50 SINGAPORE (ICIS)–Elevated feedstock palm kernel oil (PKO) prices and demand heading into 2025 are supporting Asia’s fatty alcohol mid-cuts C12-14 market. INSIGHT: Shift in rules on China phosphate ferts exports hit market sentiment By Rita Wang 12-Dec-24 19:50 SINGAPORE (ICIS)–A shift in the customs rules in China means that phosphate fertilizers will only be sold on the domestic market for the time being. However, sluggish demand as players work through winter reserves could stand to weigh on pricing. China domestic BD gains boost Asian market discussions By Ai Teng Lim 13-Dec-24 11:54 SINGAPORE (ICIS)–Sentiment is more upbeat this week in Asia’s spot butadiene (BD) import market amid recent strong gains in China’s domestic market.

HOUSTON (ICIS)–Planning to build their first US plant in Kentucky, Swedish producer Cinis Fertilizer announced it has been approved for tax incentives. The company said it is currently planning the construction of the company’s next production facility in Hopkinsville, Kentucky and has applied for both grants and tax incentives, nationally and locally. The Kentucky Economic Development Finance Authority (KEDFA) has preliminary approved a 15-year incentive agreement with Cinis Fertilizer under the Kentucky Business Investment program. For final approval and to receive the tax credits of up to $1.5 million, the company must invest about $109 million and meet annual targets such as creating 65 full-time jobs in Kentucky over 15 years and paying an average hourly wage of $38, including benefits. Additionally, KEDFA approved Cinis Fertilizer for up to $250,000 in tax incentives through the Kentucky Enterprise Initiative Act (KEIA). KEIA allows approved companies to recoup Kentucky sales and use tax on construction costs, building fixtures, equipment used in research and development and electronic processing. “We are grateful for the warm welcome we have received in Kentucky and look forward to contributing to the future of Hopkinsville,” said Jakob Liedberg, Cinis Fertilizer CEO. “Being granted these tax incentives is a great start and in parallel we are working on securing grants, where the processes and timelines are longer.” First announced in 2023, this will be the producer’s their third plant with the two other plants located in Sweden. The company has already signed a 10-year agreement with Ascend Elements, a leading American manufacturer of engineered battery materials, regarding the sourcing of sodium sulphate, and have arranged with potash producer K+S Minerals to purchase potassium chloride. This plant is scheduled to start in 2026, with it planned to have a capacity of up to 300,000 tonnes of potassium sulphate yearly.

HOUSTON (ICIS)–As consumer concern for product sustainability continues to spur both regulatory and voluntary action within the recycled plastics space, recycled polypropylene (R-PP) resin has risen in interest. US recycled plastics markets continue to develop new grades of R-PP in response to converter and brand company demand in the packaging and durables space. Despite the desire to incorporate higher percentages of R-PP into existing products, the unique challenges with polypropylene (PP) collection infrastructure and limitations on the mechanical recycling processes have hindered widespread or rapid adoption. For example, those seeking R-PP tend to request post-consumer based material with food-contact approval, as well as natural or transparent color so that products can be modified to maintain prior brand design. Supply of these types of feedstocks are extremely limited, largely due to the fragmented PP collection landscape and mixed application of PP in existing consumer packaging. Moreover, only a handful of recyclers have received Letters of Non-Objection (LNOs) from the US Food and Drug Administration (FDA). As of the latest update, slightly more than 20 individual companies have received one or more LNOs. As such, a natural, food-grade R-PP resin is priced at roughly two times the price of virgin PP. Prices for white or light gray R-PP are slightly lower than natural but are limited to various design applications and in some cases still hold a premium against virgin. Similarly, black and dark gray materials are typically not as sought after due to their design limitations and thus trade at a much lower price on weaker demand. Regardless of the aesthetic or regulatory hurdles, an additional barrier to adoption for post-consumer R-PP resin continues to be mechanical properties and performance. Based on the mix of incoming feedstock items from curbside bales, such as cups, tubs and lids of various colors, sizes and applications, the blended properties of the final resin typically range from 12-20 Melt Flow Index (MFI, also referred to as melt) and 1.2-1.7 Izod. Thus, packaging and product converters with specific manufacturing and performance requirements must then compound material to achieve the final resin material, inherently limiting the percentage of post-consumer recycled (PCR) content. As such, recyclers note there has been increased quoting activity for their R-PP portfolio, but still limited conversion to substantial order volumes. In addition, pricing continues to show wide ranges based on a myriad of factors, including material quality, color, volume, production capability and buyer/supplier market knowledge. Overall demand for PP PCR remains strong from end markets such as food and beverage and personal care, which are driven by both regulatory and voluntary recycled content targets. Other end markets such as horticulture, durables, automotive and construction are slower to adopt, and instead have historically pursued post-industrial or low cost virgin material due to cost-effectiveness. ICIS is currently prototyping US R-PP market coverage. Prototype reports target those involved in the processing and purchasing of PP bales as well as mechanically recycled post-consumer and post-industrial PP resin within the US. These reports have market discussion on pricing, supply, demand and current news, split by post-consumer vs post-industrial market categories. If you are interested in learning more about this coverage and or receiving these prototype reports, please reach out to Emily.Friedman@icis.com.

NEW YORK (ICIS)–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. “We do expect the Fed rate cuts to stimulate demand for durable goods and investment, and certainly loosen things up in the housing sector,” said Martha Moore, chief economist at the ACC, at a press briefing. “When the differential between the mortgage rates most people got during the pandemic years and what they are now starts to come closer together, that will hopefully increase some transactions in the housing market,” she added. The economist also sees an improvement in manufacturing and industrial production globally in 2025, which should help US exports, although trade policy is very much uncertain with the threat of tariffs by the incoming Trump administration, she noted. Yet she sees a recovery in demand for US chemicals, although a modest one, in 2025, and weighted to H2 2025 as the lag effects of the US Federal Reserve’s rate cuts take hold. Yet here there is also uncertainty on the trajectory of rate cuts, given sticky inflation. “Weakness persisted in 2024, led by specialties and basic chemicals… but next year we expect to see volume growth across all segments,” Moore stated. “We’ve got good energy fundamentals here in the US and the ethane advantage persists. Capacity expansions in manufacturing from reshoring [in the US] and nearshoring [in Mexico] are expected to drive chemical sales in the years ahead,” she added, noting that Mexico is one of the US’ top trading partners. The economist sees 2024 US chemical volumes down 0.4% following a decline of 0.2% in 2023, capping off a dismal period for the industry. Volume declines in 2024 are expected to be led by specialty chemicals (-3.2%) and basic chemicals (-1.5%), offset partially by agricultural chemicals (+1.2%) and a strong gain in consumer products (+5.0%). Within US specialties, there is softness in architectural coatings and automotive chemicals, she noted. The global picture in chemicals is quite different, with a 3.8% gain in volumes expected for 2024, led by Asia Pacific (+4.8%). Europe volumes should rise 1.9% in 2024 off a very sharp decline in 2023. Looking to 2025, Moore expects world chemicals output to increase 3.1% with gains across all regions. For the overall US economy, the economist sees 2025 GDP growth to slow to 2.0% versus an expected 2.7% in 2024. She sees housing starts improving to 1.40 million in 2025 from 1.35 million in 2024, and light vehicle sales rising to 16.2 million in 2025 from 15.7 million in 2024. TRUMP ADMINISTRATION IMPACTWith the incoming Trump administration, the ACC will be closely tracking developments on regulations, transportation and tariffs. “We’ll be keeping an eye on any policy and regulatory changes, [especially] chemical management regulatory policies – things like TSCA (Toxic Substances and Control Act),” said Scott Jensen, director of Issue Communications at the ACC. “We’ve had some issues in the past few years when it comes to new and existing chemical reviews, and then of course we’ll be keeping an eye on trade and tariffs pretty closely, along with transportation issues,” he added. LOOMING DOCKWORKERS STRIKEMost immediate on the transportation and trade front is a potential US East Coast and Gulf Coast dockworkers strike on 15 January if the union and shipping companies do not reach a deal working out a dispute on the future of automation at the ports. “It’s a big deal. Those are some of the biggest ports for us to not only export chemistry but also import,” said Jensen. On 12 December, President-Elect Donald Trump backed the International Longshoremen’s Association (ILA) union and its members, saying the harm to workers far outweighs the benefit of money saved by automation. Focus article by Joseph Chang Thumbnail shows a flask used in chemistry. Image by Fotohunter.

HOUSTON (ICIS)–In a late-Thursday post on social media, President-elect Donald Trump expressed his support for dockworkers in the labor dispute between US Gulf and East Coast ports and the International Longshoremen’s Association (ILA). The ILA and the ports, represented in the negotiations by the US Maritime Alliance (USMX), are facing a 15 January deadline to complete a new master agreement. The union has vowed to strike if its demands on limiting automation are not met. In a post on Truth Social after meeting with union president Harold Daggett, Trump said “the amount of money saved [by automation] is nowhere near the distress, hurt, and harm it causes for American workers”. Trump said he would rather see the ports spend money on labor instead of “machinery, which is expensive, and which will constantly have to be replaced”. “For the great privilege of accessing our markets, these foreign companies should hire our incredible American workers, instead of laying them off, and sending those profits back to foreign countries,” Trump said. The USMX responded in a post to its website. “We appreciate and value President-elect Trump’s statement on the importance of American ports,” the USMX said. “But this contract goes beyond our ports – it is about supporting American consumers and giving American businesses access to the global marketplace – from farmers, to manufacturers, to small businesses, and innovative start-ups looking for new markets to sell their products.” The USMX contends that to achieve this, there is a need for modern technology that is proven to improve worker safety, boost port efficiency, increase port capacity, and strengthen supply chains. “ILA members’ compensation increases with the more goods they move – the greater capacity the ports have and goods that are moved means more money in their pockets,” the USMX said. “We look forward to working with the President-elect and the incoming administration on how our members are working to support the strength and resilience of the US supply chain and making crucial investments that support ILA members and millions of workers and businesses across the entire domestic supply chain, improving efficiency and creating even more high-paying jobs for ILA members,” the USMX said. A strike would not have an impact on liquid chemical tankers, which transport most chems. But 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. No negotiations are currently underway with slightly less than five weeks left before the deadline.

SAO PAULO (ICIS)–Brazil’s petrochemicals-intensive automotive output is expected to grow by 6.8% in 2025, compared with 2024, to nearly 2.75 million, the country’s trade group Anfavea said on Thursday. The healthy increase will be supported by higher sales, both at home and abroad as the economies of key Brazilian trade partners such as Argentina improve in 2025. The likely final figures for 2024 published by Anfavea on Thursday sharply improved over those published in July, when the trade group said increasing imports of foreign-made vehicles, mostly Chinese, was jeopardizing domestic producers’ market share. At the time, it said 2024 output should end up being 4.9% higher than in 2023 at 2.44 million units. On Thursday, however, it said output growth in 2024 is likely to be of 10.7%, compared with 2023, to 2.57 million units. Brazil automotive 2024 2025 forecast Change 2024 vs 2025 with current forecast Output 2,574,000 2,749,000 6.8% Sales 2,650,000 2,802,000 5.6% Exports 402,600 428,000 6.2% ABNORMAL 2024“Normally, the second half [of the year] is slower but this year we had a fantastic second half, the best in the last 10 years, after a start to the year with some problems such strikes in government agencies and the floods in Rio Grande do Sul, among others,” said Anfavea’s director general, Marcio de Lima Leite. “As a result, Brazil was the market that grew the most among the main global markets. We hope to start the year at this accelerated pace and make 2025 the last step before returning to the level of 3 million units sold.” Brazil automotive November 2024 November 2023 Change January-November 2024 January-November 2023 Change Production 236,100 202,700 16.5% 2,359,500 2,153,300 9.6% Sales 253,500 212,600 19.2% 2,377,500 2,060,100 15.4% Exports 39,300 24,100 63.4% 366,700 378,200 -3.0% Anfavea said “the best news” for the sector in 2024 was employment, with 10,000 new jobs created during 2024, while employment creation in the automotive chain as a whole stood at 100,000, the trade group said. “In total, our sector is responsible for 1.3 million highly qualified jobs, and we hope that the current investment cycle announced of [Brazilian reais] (R) 130 billion [$21.7 billion] will create even more jobs, not only on the assembly line but also in something strategic for the country, which is research and development,” said Leite. The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material costs of an average vehicle. The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA).

LONDON (ICIS)–Germany’s chemicals and production is expected to have increased by 2% in 2024, while output growth is set to slow next year, sales could stagnate and prices fall, trade group VCI said on Friday. The chemicals sector drove the projected 2024 productivity uptick, with output increasing 8% and helping to offset a 1.5% decline in pharmaceuticals sector productivity, driven by supply chain issues, capacity bottlenecks and high costs. Despite the overall increase in output expected for this year, productivity in the sector remains 16% below levels seen in 2018, with the drop more pronounced for chemicals. Projected sales of €221 billion represent a 2% annual decline in 2024, while sales are expected to have fallen by 2.5%. The declines in sales and pricing are expected to be less substantial next year but there is little hope for a pronounced uptick, with no volume growth expected year on year and pricing to fall 0.5%. Even the muted 0.5% forecast productivity increase is expected to be driven largely by the pharmaceuticals sector, with the chemicals sector alone expected to stagnate. “Our stocktaking is bleak,” said VCI president and Covestro chief Markus Steilemann. “The only ray of light is that the rapid downturn of the last two years has not continued.” VCI, German’s largest trade group for the chemicals sector, projects more closures in the domestic industry in future, as average operating rates remain at lossmaking levels. ”On average, capacity utilisation of production plants was only 75%. In four consecutive years mow, the chemical and pharmaceutical industry has clearly been below the base value for profitable operation,” the VCI said. “In consequence… plants were permanently shut down in recent months. Yet more closures are likely to follow,” the association added. Some companies are currently projecting an upward trend for summer or autumn 2025, but every second company is bracing for a recovery to occur in 2026 or later, the VCI said. Thumbnail photo: Evonik’s production complex in Marl, Germany (Source: Evonik)

LONDON (ICIS)–Economic growth in the UK fell for the second consecutive month in October, mostly driven by a decline in production output, according to official data on Friday. Monthly real GDP fell by 0.1%, following a fall of 0.1% in September. “Production fell by 0.6% in October 2024 and was the largest contributor to the overall fall in GDP in the month. Construction fell by 0.4%, while services showed no growth,” the Office for National Statistics (ONS) said. October’s GDP figure is a first estimate and subject to revision. On a quarterly basis, GDP has slowed throughout the year with 0.7% growth in Q1, 0.5% in Q2 and 0.1% in Q3.

SINGAPORE (ICIS)–China has pledged to boost domestic consumption and implement a looser monetary policy amid a looming trade war with the US when Donald Trump takes office in 2025. The pledges were made on 12 December after the two-day annual Central Economic Work Conference (CEWC) of China’s top officials to set the country’s 2025 economic agenda, according to state-owned news agency Xinhua. The proactive policy stance largely echoes the recommendations of the Political Bureau of the Communist Party of China (Politburo) on 9 December. Chinese leaders signalled their aim to reduce the reserve requirement ratio (RRR) of banks, and key interest rates “at an appropriate timing to ensure ample liquidity”, policies that will likely weaken the yuan (CNY). A weaker yuan would make Chinese exports more competitive in the global market, at a time when they are facing high tariffs from the US. Ahead of the expected US tariff imposition, Chinese exporters have started to frontload shipping goods to the US in November 2024 following Trump’s victory in the US presidential elections. China is the world’s second-biggest economy. The country’s domestic spending, which has been on a downtrend in 2024, will also be tackled, with Chinese leaders urging efforts to “vigorously boost consumption, improve investment efficiency, and expand domestic demand”. A special campaign dedicated to stimulating consumption should be implemented, and efforts should be made to increase the incomes and alleviate the burdens of low- and middle-income groups, according to the meeting. Fiscal stimulus measures were introduced around end-September but were deemed insufficient for China to achieve its GDP growth target of around 5% in 2024. China aims to maintain “steady economic growth” next year, based on the CEWC report, although growth targets and specific stimulus plans will only be released at the National People’s Congress (NPC) in March 2025. ($1 = CNY7.28)