SAO PAULO (ICIS)–Brazil’s trade deficit in chemicals narrowed by 9% in H1 2024 to $21.7 billion on the back of lower priced imports entering the country, according to chemicals trade group Abiquim. In the January-June period, Brazil imported $28.8 billion of chemicals, down 7.5% year on year, while exports stood at $7.1 billion, down 4.8%. In H1 2023, the chemicals trade deficit stood at $23.7 billion and, for the full-year, it stood at $47.0 billion, the second highest figure in the past 35 years, according to Abiquim. Although the deficit narrowed, Abiquim was not pleased and linked the improvement to lower priced imports which, it said, continue denting domestic producers’ market share. “This apparent improvement in the chemicals trade deficit is directly related to imports with prices 15.3% lower than in the first half of 2023, leveraging purchases of products on the international market at prices largely below the production costs practiced in Brazil,” said the trade group. “These products come mainly from Asian countries, whose competitiveness has been sustained by Russian raw materials purchased at favorable prices due to the war in east Europe.” Abiquim has demanded high import tariffs on several chemicals for the past few months; in an interview with ICIS, its director general Andre Passos said higher tariffs were only one of the three legs of a wider plan to protect domestic producers’ market share. In June, Brazil’s chemicals trade unions joined Abiquim to demand higher tariffs. “To show the worrying sings, it is enough to highlight the volume in tonnes of these imports [entering Brazil] in the first half at 27.9 million tonnes, up 9.1% year on year. Highlights include the aggressive increases in thermoplastic resins imports (up 41.2%), thermosetting resins (26.8%), intermediates for thermosetting resins (35.8%), intermediates for synthetic fibers (22.1%) and other organic chemical products (15.2%),” said the trade group. “This scenario is a serious threat to the national production of chemical products and has, above all, deteriorated the level of utilization rates [which stood in May at a record low of 58%]. Some companies are considering hibernating plants, shutdowns, and even deactivation of units.”

SINGAPORE (ICIS)–India will cut import duties for methylene diphenyl diisocyanate (MDI) by 2.5 percentage points to 5.0% effective 24 July, with plans to review the country’s overall tariff structure in the next six months. MDI was among raw materials identified by the Indian government on which custom duties will be reduced. India’s finance minister Nirmala Sitharaman announced the changes to the country’s Basic Customs Duty (BCD) – a tax levied on imported goods at the time of their entry into the country – in her presentation of India’s national budget for the fiscal year ending March 2025 before parliament. HIGHER DUTIES FOR SOME PRODUCTSConversely, the minister said that the customs duty for polyvinyl chloride (PVC) flex films/flex banners will be raised to 25% from 10% currently starting 24 July, “to curb their imports”. Flex banners are commonly used for outdoor advertising as billboards. “PVC flex banners are non-biodegradable and hazardous for environment and health,” Sitharaman said. The customs duty on ammonium nitrate will also be raised to 10% from 7.5% from 24 July “to support existing and new capacities in the pipeline”, she said. EXEMPTIONS FOR CRITICAL MINERALSSitharaman also proposed full exemption of 25 critical minerals from import duties, a cut in duty rates for two other products in the same category. “Minerals such as lithium, copper, cobalt and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defense, telecommunications, and high-tech electronics,” she said. “This [cut in import duty] will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors,” Sitharaman said. As for the electronics sector, the finance minister proposed to remove the BCD on oxygen-free copper for the manufacture of resistors. GOV’T TO REVIEW CUSTOMS DUTY STRUCTUREOver the next six months, the Indian government will conduct a thorough review of its customs duty rate structure, Sitharaman said. “I propose to undertake a comprehensive review of the rate structure over the next six months to rationalise and simplify it for ease of trade, removal of duty inversion and reduction of disputes,” she said. “We will continue our efforts to simplify taxes, improve taxpayer services, provide tax certainty and reduce litigation while enhancing revenues for funding the development and welfare schemes of the government.” It was not immediately clear how the revised BCD structure will impact implementation of import certifications of various chemicals under the Bureau of Indian Standards (BIS). BIS certification for some chemicals has been extended many times since they were introduced in 2019-20 to allow domestic end-user industries more time to adhere to the quality-control orders (QCO). Focus article by Nurluqman Suratman Thumbnail image: At the Vallarpadam Terminal in Kochi, Kerala, India. 2014 (By Olaf Kruger/imageBROKER/Shutterstock)

SINGAPORE (ICIS)–India will cut import duties for methylene diphenyl diisocyanate (MDI) by 2.5 percentage points to 5.0% effective 24 July, the country’s finance minister Nirmala Sitharaman announced on Tuesday. MDI was among raw materials identified by the Indian government on which custom duties will be reduced. Sitharaman announced the changes to the country’s Basic Customs Duty (BCD) – a tax levied on imported goods at the time of their entry into the country – in her presentation before parliament of India’s national budget for the fiscal year ending March 2025. Conversely, the minister said that the customs duty for polyvinyl chloride flex films/flex banners will be raised sharply from 10% currently to 25% from 24 July “to curb their imports”. Flex banners are commonly used for outdoor advertising as billboards. “PVC flex banners are non-biodegradable and hazardous for environment and health,” Sitharaman said. For ammonium nitrate, the custom duty will be raised to 10% from 7.5% from 24 July “to support existing and new capacities in the pipeline”, she said. (adds paragraphs 4-7)

SINGAPORE (ICIS)–India will cut import duties for methylene diphenyl diisocyanate (MDI) by 2.5 percentage points to 5.0% effective 24 July, the country’s finance minister Nirmala Sitharaman announced on Tuesday. MDI was among the raw materials identified by the Indian government on which custom duties will be reduced. Sitharaman announced the changes to the country’s Basic Customs Duty (BCD) – a tax levied on imported goods at the time of their entry into the country – in her presentation before parliament of India’s national budget for the fiscal year ending March 2025.

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Conventional wisdom suggests that the petrochemicals cycle may have bottomed out as the prospects of interest rate cuts increase. There are signs of recovery in the Europe. And even in a high inflationary environment, the US consumer kept on spending with unemployment at record lows. This, in my view, is a misreading of the data. Because of the disproportionate influence of China, what happens elsewhere doesn’t really matter in the short- to medium-term. China had a 22% share of the global population in 1992 and a 9% share of global polymers demand. By the end of this year, ICIS forecasts that China’s share of the global population will have slipped to 18%, but its share of global polymers demand will have risen to 40%. Too much global capacity was planned on the basis of China’s petrochemicals demand growth being at 6-8% per annum over the long term, whereas 1-4% now appears to be more likely. China’s petrochemicals capacity growth was underestimated because of cost-per-tonne economics used to assess projects. History teaches us is that national strategic objective also come into play. One can argue, as the Rhodium Group does in an 18 July 2024 research paper, that China’s economic growth may never return to previous levels. This would mean no return to the double-digit annual growth rates we saw in petrochemicals demand during the Petrochemicals Supercycle. In today’s main chart, I kept to our base case assumptions on global polypropylene (PP) virgin production growth between 2024 and 2030, which is almost the same as demand growth. I then manually reduced capacity growth until I got back to the historically very healthy operating rate of 87% (operating rates being production divided by capacity). (What applies to PP applies to other petrochemicals and polymers. The ICIS data for other products suggest similar steep reductions in capacity growth versus our base to get back to the long-term history of operating rates). This led me to the conclusion that global PP capacity growth would need to be just 1.6m tonnes a year versus 5m tonnes a year under our base case. Under our base case, we see global operating rates averaging just 76% in 2024-2030. Capacity growth of just 1.6m tonnes a year versus our base case would require substantial capacity closures in some regions. Closures are never easy and take considerable time because links with upstream refineries, environmental clean-up and redundancy costs – and the reluctance to be the “first plant out” in case markets suddenly recover. The sale of rationalisation suggested by just 1.6m tonnes a year of capacity growth therefore suggests no full recovery in PP and in other petrochemicals until, I am guessing, 2026. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

HOUSTON (ICIS)–Railroad Canadian Pacific Kansas City (CPKC) confirmed it had a derailment incident involving a train carrying potash volumes on the evening of 21 July, but there were no injuries and no public safety threat. The company said multiple cars of a train carrying potash derailed around 5pm CST near Gull Lake, Saskatchewan, which is about 175 miles from Regina. CPKC through a spokesperson that there were approximately 18 cars involved which were carrying unknown quantities of potash. CPKC crews remain at the site working on the clean-up with the cause of the derailment currently under investigation. The accident had blocked access in and out of Gull Lake from the highway, but the company did say that the railroad crossing on Provincial Highway 37 was now open.

HOUSTON (ICIS)–The US election could see Donald Trump return as president with majorities in both legislative chambers, which could bring a reduction in excessive red tape, weaker support for electric vehicles (EVs) and impose even more ponderous tariffs and trade restrictions. Incumbent President Joe Biden has dropped out of the race, and current polls show Trump ahead in the election The House of Representatives and the Senate are closely split between the nation’s two major parties, so the Republican party could obtain majorities in both legislative chambers Regardless of who wins the presidential election on 5 November, the outlook remains pessimistic for tariff relief and trade deals in the US US TRADE POLICY WILL REMAIN RESTRICTIVERegardless of who wins the presidential election, US trade policy will remain restrictive, which could leave the nation’s chemical exports vulnerable to retaliatory tariffs imposed during a trade dispute. Also, tariffs could increase the cost of imports of critical chemical intermediates. Biden’s campaign website did not discuss trade policy, and he recently dropped out of the race. But he maintained many of the tariffs that Trump introduced during his presidency in 2016-2020. In addition, Biden raised tariffs on EVs from China. He signed bills passed by Congress that required local content rules for government programs. Trump’s platform proposed a baseline tariff, with the candidate mentioning 10% for most imports. For China, he mentioned tariffs of more than 60% during an interview on the television program Fox News. Trump’s campaign website proposes a reciprocal trade act, under which the US could match tariffs that another country imposes on its exports. Although the platform concedes that reductions are possible, the proposal focuses on the potential of higher tariffs. TRUMP TO ROLL BACK BIDEN’S EV POLICIESBiden did not mention EVs on his campaign website. But during his presidential term, the federal government used multiple laws and regulatory statutes to promote EV adoption. If Trump becomes president, he has pledged to cancel what he calls the electric vehicle mandate. He specified many of Biden’s policies that encouraged the adoption of EVs. EVs typically consume more plastics on a per unit basis than automobiles powered by internal combustion engines (ICEs). EVs also pose different material challenges, which is increasing demand for different plastics and compounds. Policies that prolong the use of ICE-based vehicles could extend the operating life of the nation’s refineries. Companies could be more willing to invest in maintenance and repairs if they are confident that they could recoup their investments. Refineries produce many building block chemicals, such as propylene, benzene, toluene and mixed xylenes (MX). BIDEN, TRUMP PRESENT EXTREMES ON CHEM REGULATIONSBiden and Trump lay on opposite extremes of regulations and policy. Under Biden, the federal government has adopted numerous regulations, many of which the chemical industry has said provided them with little benefit given the time and expense of compliance. The past six months has been described as the worst regulatory environment that the chemical industry has ever seen. That burdensome regulatory climate could persist if a Democrat wins the election, since personnel from the Biden administration could remain in place. The following lists some of the regulatory policies that could either persist under a Democratic administration or weaken under a Trump administration: The Environmental Protection Agency (EPA) has adopted a whole chemical approach in determining whether a substance poses an unreasonable risk under the nation’s main chemical-safety program, known as the Toxic Substances Control Act (TSCA). The regulator is currently reviewing vinyl chloride monomer (VCM), acrylonitrile (ACN) and aniline, a feedstock used to make methylene diphenyl diisocyanate (MDI). Changes to the Clean Waters Act, the Risk Management Program (RMP) and the Hazard Communication Standard that were made by Biden. Biden has promoted environmental justice throughout the federal government. Environmental justice could make it harder for chemical companies to expand existing plants or build new ones. Because these are federal policies, a different president could reverse them. Trump could try to unravel some of Biden’s rules to the degree possible under executive authority. However, some of the rules will persist because of entrenched bureaucracy or because they are final. The pace of new regulations would likely slow under a Trump presidency. He has pledged to restore his order that for every new regulation introduced by the federal government, two existing ones must be eliminated. OTHER POLICY DIFFERENCESSuperfund tax: If Trump wins the presidency and Republicans win the legislative branch, that could set up a repeal of the Superfund tax, which imposes taxes on several building-block chemicals and their derivatives. Republican legislators have already introduced bills to repeal the tax. Trump tax cuts: Trump has pledged that he would make his 2017 tax cuts permanent. These are set to expire at the end of 2025 from his previous term in 2016-2020. Oil production: Biden has imposed several restrictions on oil and gas production on federal land and on offshore leases, although this did not stop production from surging in the Permian Basin, much of which is outside of government control. Trump has pledged to remove those restrictions. Insight by Al Greenwood Thumbnail shows US capitol. Image by Lucky-photographer

HOUSTON (ICIS)–Offshore potash marketing group Canpotex announced it is fully committed on volumes for potash sales through 30 September. The group said this commitment comes amid continued strong demand for potash and widespread engagement in all major offshore markets. Canpotex said this level of demand is being supported by solid fundamentals for agricultural commodities, as well as recognition of the clear value and affordability of potash in key growing regions. In addition, it has seen that the focus on food security and food quality continues in many of their markets. Canpotex is the offshore marketing company for Saskatchewan potash producers Nutrien and Mosaic and has been operating since 1972.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 19 July. Westlake appoints Jean-Marc Gilson as new CEO, effective today US-based chemical and building materials producer Westlake Corp has appointed Jean-Marc Gilson as president and CEO, effective 15 July. He succeeds Albert Chao, who becomes executive chairman of the Westlake board of directors. SW ’24: US fertilizer demand lacking as farm economics unsupportive Unfavorable farming fundamentals, including weaker grain prices, high cost of credit, and weather issues will continue to hit demand for fertilizers, said market participants on the sidelines of the Southwestern fertilizer conference (14-18 July). SHIPPING: USG-Asia liquid chem tanker rates plunge on ample space availability after Beryl Liquid chemical tanker rates from the US Gulf to Asia are plunging this week as plant shutdowns and delays in the aftermath of Hurricane Beryl have led to “gaping large holes of space”, shipping brokers said on Wednesday. INSIGHT: OUTLOOK: US chems may see revival of programs, UN plastic treaty The US chemical industry could see the return of some popular trade and chemical-safety programs later this year, and customers of the major railroads could get their first chance to switch carriers if they get bad service. Global IT issues impact energy trading; Trayport services return IT issues that impacted energy trading systems on Friday morning were gradually being resolved, with market participants regaining access to critical applications. ICIS Economic Summary: US eyes coming interest rate cuts as consumer spending, inflation eases With solid progress on disinflation and the labor market easing, financial markets are sharpening their focus on the coming interest rate cut cycle, with the first move expected in September. Ten-year Treasury yields are collapsing and economically sensitive stocks surging, as consensus moves to as much as three cuts of 25 basis points by the Federal Reserve in 2024 and further easing next year.