HOUSTON (ICIS)–The US will impose much lower tariffs on EU imports of chemical precursors, while it will maintain elevated rates on auto imports, according to details released on Thursday of their trade framework. The US did not specify the precursors. However, it does import benzene, paraxylene (PX) and methylene diphenyl diisocyanate (MDI) from the EU among other chemicals. Thursday’s announcements provide details about the commitments each side made under last month’s more general agreement. US COMMITMENTSThe US will cap many EU imports at a 15% tariff rate or at its most favored nation (MFN) rate – whichever is higher. The US will not stack the 15% tariffs on top of the MFN rates. The US will cap its tariff to 15% on EU imports of pharmaceuticals, semiconductors and lumber. These imports would have otherwise been subject to any additional tariffs that the US imposes following the investigations it is conducting under Section 232. The US will lower its tariffs on EU imports of automobiles and auto parts to 15% once the EU eliminates tariffs on all US imports of industrial goods. Until then, the US will continue to impose its Section 232 tariffs of 25% on these imports. Other tariffs can bring the total rate to up to 27.5%. There are some imports on which the US will impose the typically lower MFN rate instead of the 15% duty. The following producers qualify for this lower tariff rate: Chemical precursors. The US and the EU did not specify the precursors. The average MFN rate on US imports of chemicals is 2.7%. Natural resources that are not available in the US, such as cork. All aircraft and aircraft parts. Generic pharmaceuticals and their ingredients. The US will consider other imports that could fall under the lower MFN rate. The US will preserve its 50% tariffs on steel, aluminium and derivatives that it imposed under Section 232. However, it and the EU will consider cooperating on ring-fencing their domestic markets from overcapacity while ensuring secure supply chains between each other. This could include tariff-rate quotas. EU COMMITMENTSThe EU plans to eliminate tariffs on all industrial goods from the US. The EU said the reduction will save importers almost €5 billion. The EU plans to import $750 billion worth of US imports of LNG, crude oil and nuclear energy products through 2028. The EU intends to buy at least $40 billion of artificial intelligence (AI) chips from the US for its computer centers. The EU will invest an additional $600 billion into what the US considers its strategic sectors through 2028. The US did not identify these strategic sectors. The EU will substantially increase purchases of military and defense equipment from the US. The agreement did not specify an amount. The EU intends to provide preferential market access to a wide range of seafood and agricultural products from the US, such as tree nuts, dairy products, fresh and processed fruits and vegetables, processed foods, planting seeds, soybean oil, pork and bison meat. The EU plans to extend an earlier 2020 agreement to cover lobster and processed lobster. The EU and the US will work to address what the US considers to be non-tariff barriers on imports of food and agricultural products. These steps could include things like streamlining requirements for sanitary certificates for pork and dairy products. The EU said sensitive agricultural products such as beef, poultry, rice and ethanol are not covered by its offer. “From the outset, our position has been that liberalization from the EU side does not concern any sensitive agricultural products,” the EU said. The EU will recognize that some commodities from the US pose little risk to global deforestation, and it will address US concerns about the bloc’s EU Deforestation Regulation. The European Commission will provide more flexibility to its Carbon Border Adjustment Mechanism (CBAM) and address US concerns about the effects that the regulation will have on small and medium businesses. OTHER EU COMMITMENTSThe EU will take steps to prevent the prevent any reductions in US imports that could be caused by the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). The EU will consult with the US on digitization of trade procedures and implementing legislation being proposed on EU Customs Reform. AREAS OF JOINT ACTIVITIESThe US and EU will find ways to reduce or eliminate non-tariff barriers. The two will negotiate an agreement on cybersecurity. The two will cooperate on their response to China’s export restrictions on critical minerals. The two will cooperate on protecting and enforcing intellectual property as well as eliminating forced labor in their supply chains. The two sides will not adopt or maintain network usage fees or impose customs duties on electronic transmissions as part of a move to address unjustified digital trade barriers. Thumbnail image: The flags of the US and EU (Image source: Shutterstock)

HOUSTON (ICIS)–Trucking activity in July rose slightly from the previous month, but forecasts from some analysts still have risks weighted more to the downside than the upside for the rest of the year. The monthly increase followed a decrease in June, according to the American Trucking Associations’ (ATA) advanced seasonally adjusted For-Hire Truck Tonnage Index and as shown in the following chart. Bob Costello, ATA chief economist, said increased housing starts and retail sales drove the July increase, with manufacturing output flat to down depending on the metric. “July truck tonnage increased sequentially, but did not erase the 0.7% decline in June,” Costello said. “Since March, truck tonnage has been in a tight range. The good news is truck freight volumes haven’t fallen much over that period, but we are not seeing many increases either.” The index, which is based on 2015 as 100, slipped 0.1% from the same month last year after falling 0.4% in June. Year-to-date, compared with the same period in 2024, tonnage was unchanged. The not seasonally adjusted index, which calculates raw changes in tonnage hauled, equaled 116.8 in July, 1.9% above June’s reading of 114.6. Both indices are dominated by contract freight, as opposed to traditional spot market freight. The June Freight Index – Shipments report from Cass Information Systems, shown below, showed a slight decrease as the trade war is having a variety of effects, with a few waves of pre-tariff inventory building and subsequent drawing down. “The trade war is having a variety of effects, with a few waves of pre-tariff inventory building and subsequent drawing down, but volumes were steady from May,” Cass said. The index could fall by 5% year on year on the normal seasonal pattern but could exceed seasonality given the recent rise in imports. Looking forward, Cass said visibility remains highly dependent on policy developments and legal challenges. “The uncertainty has lowered the economic outlook, and pre-tariff inventory building will lead to destocking regardless of the outcome of trade negotiations in the coming months,” Cass said. “The effects of tariffs may worsen, as higher goods prices reduce affordability and real incomes. With this outlook, the cycle upturn for the transportation industry remains elusive.” The Trucking Conditions Index (TCI) from FTR Transportation Intelligence, which combines five major conditions in the US full-load truck market into a single index, fell in June to its lowest of the year, as shown in the following chart. The big drop in June was due primarily to freight rates and fuel prices, FTR said, and the expectation is for trucking conditions to be much closer to neutral during most of the second half of 2025. Avery Vise, FTR’s vice president of trucking, said swings in freight volume and fuel prices – and to a lesser extent, freight rates – continue to generate volatility in trucking conditions. “So far, the economy is weathering tariffs and other stresses better than anticipated, and our latest freight outlook is not as weak as it was previously,” Vise said. “At least in the near term, though, we still believe forecast risks are weighted more to the downside than the upside.” Over-the-road transportation is the most common method of domestic chemical transportation, accounting for about 60% of the volume shipped, according to the American Chemistry Council (ACC). Truck transportation has a typically lower cost than other modes, and offers more flexibility (eg, less reliant on set schedules, like trains or airplanes). Some chemical companies have their own fleet of trucks while others use for-hire carriers.

LONDON (ICIS)–Construction output in the eurozone and EU fell for the second consecutive month in June, statistics agency Eurostat said on Thursday. Seasonally adjusted production in construction in June fell by 0.8% in the eurozone compared to May and was lower by 0.5% in the wider EU. In May, construction output fell by 2.1% in the eurozone and by 1.9% in the EU following strong growth in April. Total construction, % change with the previous month 2025 January February March April May June Eurozone 0.7 -1.2 0.0 4.5 -2.1 -0.8 EU 0.4 -1.1 -0.1 3.8 -1.9 -0.5 In the eurozone for June, building construction decreased by 1.8%; civil engineering increased by 0.5%; and specialized construction activities decreased by 0.2%. For the EU, building construction decreased by 1.6%; civil engineering decreased by 0.1%; and specialized construction activities increased by 0.3%. On a year-on-year basis, overall June construction output was up by 1.7% in the eurozone and by 1.9% in the EU. The construction sector is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins and derivative products, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibers, among many others.

LONDON (ICIS)–Business activity in the eurozone rose to a 15-month high in August, driven by the manufacturing sector, where production increased at the fastest pace in almost three and a half years. New orders returned to growth in August, ending a consecutive 14-month decline, S&P Global said in its flash Purchasing Managers’ Index (PMI) statement on Thursday. The eurozone composite PMI rose to a 15-month high of 51.1, up from 50.9 in July, according to data from the market intelligence group and the Hamburg Commercial Bank (HCOB), with output rising in each of the past eight months. The manufacturing output PMI hit a 41-month high in August, while manufacturing increased to a 38-month high. “Things are getting better. Economic activity has picked up in both manufacturing and services,” said HCOB chief economist Cyrus de la Rubia. “Overall, we’ve seen a slight acceleration in growth over the past three months. Despite headwinds like US tariffs and general uncertainty, businesses across the eurozone seem to be coping reasonably well.” In the UK, the composite PMI rose in August to a 12-month high, although driven by the services sector rather than manufacturing. “The flash UK PMI survey for August indicated that the pace of economic growth has continued to accelerate over the summer after a sluggish spring, the rate of expansion now at a one-year high. The services sector has led the expansion, but manufacturing also showed further signs of stabilizing,” said S&P chief business economist Chris Williamson.

SINGAPORE (ICIS)–Indonesia’s fledgling Butonas Petrochemical is preparing a 1 million tonnes/year methanol plant in Bojonegoro, East Java, to fill the country’s domestic demand and national energy goals from 2029, according to the company’s president Ignatius Tallulembang. Plant will run on natural gas and carbon dioxide feedstocks Methanol demand is expected to surge as Indonesia scales up its renewable fuel programs Butonas also planning to build a bioethanol plant The methanol plant is designated as one of 77 national strategic projects for the 2025-2029 period, as outlined by Indonesian President Prabowo Subianto. Indonesia consumes around 2.35 million tonnes/year of methanol, with domestic supply from Kaltim Methanol Industri (KMI) limited to around 680,000 tonnes, leaving an import gap of 1.75 million tonnes that the methanol facility in Bojonegoro is designed to help close, Tallulembang told ICIS. Butonas Petrochemical was founded in 2021 to aid in Indonesia’s evolving energy and environmental challenges through “bold, scalable solutions” and leading the country’s transition to low carbon energy, according to Tallulembang. PLANT COMMISSIONING IN 2029 Butonas aims to commission the plant in 2029 to coincide with the full implementation of B40 and B50 biodiesel blending mandates that require fatty acid methyl ester (FAME) production. “Methanol is a key component in biodiesel synthesis, and demand is expected to rise sharply as Indonesia scales up its renewable fuel programs,” said Tallulembang. The B40 biodiesel mandate, which contains 40% palm oil, aims to increase domestic energy security, reduce fossil fuel imports, and support the palm oil industry. Butonas has selected French gas firm Air Liquide as its technology provider, and the steam methane reforming (SMR) design is “optimized for scalability, energy integration, and environmental performance”, said Tallulembang. The 130-hectare plant will run on 90 million cubic feet of treated natural gas and 24 million cubic feet of carbon dioxide, sourced directly from the nearby JTB Gas Processing Facility operated by Pertamina EP Cepu, Tallulembang said. Negotiations for the Gas Sales Agreement (GSA) with the gas operator are well advanced, with signing targeted in the fourth quarter of 2025, Tallulembang confirmed. The co-utilization of vented carbon dioxide will help lower emissions while enhancing methanol yield, aligning with global low-carbon standards, he said. A date has not been set for plant construction to begin currently, with land acquisition still in the works. STRATEGIC SHIFTS POSSIBLEIn the face of domestic and international competition faced by Indonesia’s evolving biofuel and petrochemical sectors, Butonas says it is focused on building a platform for “long-term value creation” to meet Indonesia’s methanol needs and reduce its reliance on imports. The plant, once running, can save the Indonesian government an estimated 5 million tonnes/year of diesel, or 38 billion barrels, and replace them with FAME, saving money via foreign currency exchange as well, Tallulembang said. Although the plant will primarily supply the domestic market initially, operations are being structured to allow for regional exports if market dynamics shift, Tallulembang said. “That optionality is key to navigating future volatility,” added Tallulembang. The process design selected for the plant is also tied to “scalability, energy integration and environmental performance”. “That gives us a cost and compliance edge as regulations tighten and carbon pricing mechanisms evolve,” Tallulembang said. Butonas is also planning to build a bioethanol plant alongside the methanol plant to support Indonesia’s clean energy transition, but it is currently in “early development” and has been placed on the back burner as the methanol plant takes priority. Tallulembang said the bioethanol plant remains an important part of Butonas’ long-term strategy. “By reducing import dependency and supporting clean fuel programs, we’re contributing directly to Indonesia’s energy security, current account improvement, and long-term sustainability goals.” Thumbnail photo shows Ignatius Tallulembang, the President of Butonas Petrochemical Indonesia (Source: Butonas) Interview article by Jonathan Yee

LONDON (ICIS)–UK inflation increased in July to its highest level in 18 months, according to official data on Wednesday. The Consumer Prices Index (CPI) rose by 3.8% in the 12 months to July, up from 3.6% in June. The increase was mainly driven by transport, particularly air fares, the Office for National Statistics (ONS) said in a statement. Monthly inflation has generally trended up over the past year, with the July 2025 figure the highest recorded since January 2024, when the rate was 4.0%. This current rate is way above the Bank of England’s target of close to but not exceeding 2%. At its latest meeting, the bank’s monetary policy committee cut interest rates as it tries to balance a sluggish economy against rising inflation.

SINGAPORE (ICIS)–Malaysia’s overall exports in July jumped by 6.8% year on year, due to front-loaded shipments before the US’ reciprocal tariffs took effect on 7 August. The export growth reversed two months of contraction and was primarily driven by a 22.5% year on year jump in electrical & electronic (E&E) exports, preliminary official data showed on 19 August. Total imports in July grew 0.6% year on year, resulting in a trade surplus of ringgit (M$) 14.98 billion ($3.54 billion). July exports to the US grew 3.8% year on year to M$18.47 billion amid higher exports of E&E products, manufactures of metal and rubber products. Exports to other major trading partners such as mainland China (6.8% year on year), Singapore (22.2%) and Taiwan (46.6%) also grew in July amid front-loading of shipments. Chemical and chemical product exports shrank 10.7% year on year in July. Although Malaysia’s prospects were boosted by the US reducing ‘reciprocal’ tariffs to 19% from 25% previously, its trade outlook is still subject to downside risks for the rest of the year, said Singapore-based UOB Global Economics & Markets Research in a note on 19 August. Uncertainty persists regarding US-China trade talks after reciprocal tariffs were further suspended to 10 November, and the effect of 19% tariffs will be reflected starting this month, UOB said. In light of these downside risks, the bank kept its 2025 full-year export growth forecast at 3.8% tentatively, down from the country’s 5.8% shipment growth in 2024. Visit US tariffs, policy – impact on chemicals and energy ($1 = M$4.23)

SINGAPORE (ICIS)–Japan’s chemical exports fell by 7.3% year on year to yen (Y) 961 billion in July, weighing on overall shipments abroad which declined for the third straight month, official data showed on Wednesday. Exports of organic chemicals fell by 19.4% year on year to Y149.3 billion in July, while shipments of plastic materials dipped by 2.3% to Y296.8 billion, according to data published by the Ministry of Finance. By volume, exports of plastic materials fell by 4.0% year on year to 452,847 tonnes in August. Japan’s overall exports fell by 2.6% year on year to Y9.36 trillion in July, while imports were 7.5% lower at Y9.48 trillion. This resulted in a trade deficit of around Y118 billion last month. Japanese exports of automobiles and motor vehicle parts to the US plunged 27.1% and 17.4%, respectively, in July after Washington imposed a 10% baseline tariff in April on top of a separate 25% duty on cars. A 15% reciprocal tariff on Japanese imports as well as automobiles and auto parts took effect on 7 August following a trade deal reached between Tokyo and Washington in July. Elsewhere, Japan’s exports to China fell by 3.5% year on year in July, continuing the losing streak for the fifth straight month, while those to the EU slipped 3.4% and those to southeast Asia were down by 2.9%. Japan’s economy grew at a faster-than-expected annualized rate of 1.0% in the second quarter, driven by robust exports that weathered trade tensions with the US, according to preliminary government data released last week.

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Is AI a new dawn for humanity, or a bubble waiting to burst? Is the trade war a mere inconvenience, or a threat to global stability? In a world filled with contradictory “facts” and endless noise, analysts can no longer rely on single forecasts. This is especially true in our post-Chemicals Supercycle world, where complexity is the only certainty. This is why I believe in scenario planning—it’s the only sensible approach. My latest analysis explores three potential futures for the US and global economies over the next three years, shaped by the interplay of AI innovation and trade policy, with a focus of course on the petrochemical implications. Best-Case: Pragmatism PrevailsTrade normalises, AI focuses on practical applications. Petrochemical markets see booming demand and stability, speeding up rebalancing and reducing the need for extensive plant closures. Medium-Case: The Divided EconomyPersistent trade friction meets continued AI hype. Petrochemicals see trade routes shift and demand growth slow, requiring more extensive capacity closures. Worst-Case: Political ParalysisA catastrophic double shock: a trade war that chokes off supply chains and an “AI winter” that bursts the tech bubble. Petrochemical markets face fragmentation and a deep contraction, forcing massive capacity shutdowns. Understanding these divergent outcomes is critical for strategic decision-making. 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.