Biden’s permit pause likely cut short by US election result Trump’s victory may lead to quicker Department of Energy permits Expected FID on Port Arthur expansion moves ahead of Cameron HOUSTON(ICIS)–Just hours after the US re-elected former US President Donald Trump on 5 November, US LNG export plant developer Sempra Infrastructure updated expectations around the timing of its next federal LNG permit. The second phase of Sempra’s Texas project Port Arthur LNG should receive authorization to export to countries outside the US Free Trade Agreement (FTA) from the Department of Energy (DOE) in the first half of 2025, Sempra executives said 6 November. “LNG is a very, very important tool of American foreign policy,” said Jeffrey Martin, CEO of Sempra Infrastructure’s parent company, during its third-quarter earnings call. “I think we have growing confidence in getting the permits we need for Port Arthur, phase two in the first half of next year.” No US LNG export projects have received a non-FTA permit from the DOE since 2023. In January, current President Joe Biden’s administration paused issuance of the permits. While campaigning, Trump said that if elected, he would immediately lift the pause on federal LNG permitting. France’s Technip Energies previewed the electoral result during its third-quarter earnings call on 31 October with CEO Arnaud Pieton’s statement that a Trump victory could faster lift the moratorium on DOE permits than if opponent Kamala Harris had won. COMMERCIAL TALKS Of the two expansion projects under development – the 13mtpa second phase of Port Arthur LNG, and a fourth production train at Cameron LNG that would add 6.75mtpa – CFO Karen Sedgwick said the company expects to make an FID on Port Arthur’s phase two first. “The timing of an FID decision on the Cameron expansion is uncertain at this point,” Sedgwick said. “We continue to work with our partners on the optimal timing for expansion.” Previously, the Cameron expansion FID was delayed in November 2022 and November 2023 . Port Arthur’s 13mtpa second phase requires the non-FTA permit to reach a final investment decision, in addition to lining up more long-term customers and securing financing. The expansion project has been under consideration since at least November 2022. Saudi Arabia’s state-backed Aramco agreed in June to purchase 5mtpa from Port Arthur’s second phase over 20 years, and that it would consider taking a 25% stake in the project. In August, Sempra Infrastructure CEO Justin Bird said the company hoped to have additional heads of agreements to discuss on Sempra’s Q3 call. “As noted in our Q2 call, we saw an increased interest in Port Arthur 2, and I’m happy to say that interest has further increased since the call and momentum continues to build,” Bird said. “Commercial discussions for offtake and project equity are ongoing, and I think we’re seeing better terms.” CONSTRUCTION UPDATES Construction at Sempra’s Energia Costa Azul LNG export project faced delays due to local workforce shortages in Sonora, Mexico, executives said in August. In the latest call, Sempra stuck with its most recent estimate that ECA would start commissioning in spring 2026. Sempra hired engineering company TechnipFMC in 2020 to handle engineering, procurement and construction for ECA with a lump-sum contract. Technip Energies split off from TechnipFMC in 2021. Rival EPC contractor Bechtel leads construction on Port Arthur LNG’s first phase – also 13mtpa – which remains on budget and on schedule, executives said 6 November.

SINGAPORE (ICIS)–Donald Trump’s return to the White House could intensify trade frictions with China, fostering decoupling of the world’s two biggest economies, with Chinese exporters looking at making advance shipments to the US before new tariffs are imposed. Hefty US tariffs to drag down China exports, GDP growth China may accelerate relocation of manufacturers Heavy flow of Chinese exports to US likely in H1 2025 In his election campaign, Trump has vowed to take four major actions against China upon winning, namely, revoke China’s Permanent Normal Trade Relations (PNTR) or most favoured nation status; impose tariffs of 60% or more on all Chinese goods; stop importing Chinese necessities within the four years of his second term as US president; and crack down on Chinese goods imported through third countries. In Trump’s first term as US government head in 2016-2020, Washington had launched five rounds of tariffs on around $550 billion worth of Chinese imports, raising the average duties on Chinese goods by more than fivefold to 15.4% from 2.7%. Based on calculations by investment bank China International Capital Corp (CICC), those tariffs had reduced China’s exports to the US by around 5.5% and dragged down China’s overall GDP by one percentage point. If a 60% tariff is imposed on Chinese goods in Trump’s second term, China’s overall export growth would be shaved by 2.1-2.6 percentage points and its GDP growth by 0.2-0.3 percentage points, CICC said in a research note. Most Chinese exporters, especially those which rely heavily on the US market, will face the fallout in terms of significant drop in export volumes and profits, CICC said. “Only those in high value-added and very competitive sectors can sustain that high tariff. This will accelerate the trend of Chinese companies moving manufacturing sites to third countries like Vietnam and Mexico to finally get into US markets,” it added. China has been actively expanding trade relations with partner countries in its belt-and-road project within Asia as well as Africa, as buffer against growing US import curbs on its goods. In 2023, ASEAN replaced the US as China’s biggest export destination. “That demonstrated resilience and competitiveness of Chinese products in global markets,” said Li Xunlei, chief economist at Hong Kong-based brokerage China Zhongtai International. China, however, is currently faces huge challenges, including slowing domestic demand, high debt, a property slump, and decoupling from western countries, he said. “One major headache now is that currency depreciation is difficult to implement this time, because [a] weakening yuan could trigger capital outflow,” Li said. In 2018-2019, China was able to offset the US tariffs by allowing the Chinese yuan (CNY) to depreciate by around 10%. This time, mitigating the ill-effects of a 60% US tariff would need the yuan to fall by 18% against the US dollar, which meant exchange rate of CNY8.5 to $1.0, which was not seen since the 1997 Asian financial crisis, Li pointed out. Some Chinese exporters have been looking to pre-ship goods to the US ahead of the potential imposition of new tariffs. A Guangdong-based shipping broker has received increasing inquiries for Q1 2025 container spaces from China to North America, because traders are trying to move cargoes as early as possible to avoid the tariff issue. These could mean a strong flow of Chinese exports – including consumer electronics, plastics, home appliances, among others – to the US in the first two quarters of next year. Insight article by Fanny Zhang ($1 = CNY7.16)

SINGAPORE (ICIS)–Donald Trump’s re-election as US president sets the stage for economic turbulence in Asia as regional businesses brace for significant increases in US tariffs. Trump set to impose levies of 60% or more on Chinese goods US tariffs on China to accelerate economic decoupling China must counteract fallout from potential US trade protectionism Asian financial markets opened mixed on Thursday as investors assessed Trump’s return to the White House after winning the 5 November US presidential election, with focus turning to the potential long-term impact of his economic and foreign policies. The other prominent victory for the Republican Party was re-taking of the US Senate, with the possibility of retaining control of the House of Representatives as well, which would give Trump unified control of the government. At 02:40 GMT, Japan’s Nikkei 225 slipped 0.39% to 39,335.52, South Korean benchmark KOSPI composite was 0.21% lower at 2,558.25 and Hong Kong’s Hang Seng Index edged 0.48% higher to 20,635.64. China’s mainland CSI 300 index was up 0.38% at 4,038.85. Chinese energy major PetroChina was up 0.52% in Hong Kong, LG Chem was down 3.11% in Seoul and Mitsui Chemicals rose 1.78% in Tokyo. POTENTIAL TARIFFS Trump has pledged to impose blanket tariffs of up to 20% on imports from all countries, with even steeper levies of 60% or more on Chinese goods, citing unfair trade practices that have contributed to US economic decline. China is expected to remain the primary target of additional US tariff measures due to its significant trade surplus with the US. The US has also become the top target of China’s anti-dumping cases for chemical imports, underscoring growing trade barriers between the world’s two biggest economies. While China will likely retaliate against new trade policies, its response will likely be measured to avoid escalating tensions. “Trump has the legal authority to implement tariffs without Congressional approval, and we expect trade restrictions will be imposed quickly,” Japan’s Nomura Global Markets Research said in a note on Thursday. According to Nomura’s forecasts, 60% tariffs on Chinese imports are likely to take effect by mid-2025. Additionally, a blanket 10% tariff may be imposed on all countries next year, although Canada and Mexico are expected to be exempt due to existing free-trade agreements. “The most pronounced impact on Asia will likely be through Trump’s policy on trade,” UOB Global Economics & Markets Research economists said in a note on Thursday. “It remains to be seen when and whether Trump will be able to carry through his tariff threats in their entirety.” Higher US tariffs on Chinese imports would likely speed up the economic separation of the world’s two largest economies and significantly disrupt supply chains across Asia, according to analysts. Imposing new tariffs also increases the risk of China taking retaliatory measures, potentially jeopardizing crucial collaborations on pressing global issues like climate change and artificial intelligence (AI). “US-China relations are already frosty, and trade tariffs (if implemented) may exacerbate the situation,” Singapore-based bank OCBC said in a note. “However, Trump is also a negotiator and may be inclined to cut a deal if he gets what he wants. Hence, the question is whether there will be a deal. The strategic industries most at risk remain advanced manufacturing, especially semiconductors, EVs [electric vehicles], solar panels etc.” In 2023, US imports from China hit a 14-year low of $427 billion, equivalent to 2.4% of China’s nominal GDP. Since 2021, trade tariffs on China have been ratified and extended under US President Joe Biden. As a result, China lost its status as the US’ main trade partner for goods. The proportion of Chinese imports to the US fell significantly in the past two years from almost 19% at the start of 2022 to only 13.5% at the end of 2023, according to ratings firm Moody’s. The proposed 60% tariffs on Chinese goods would substantially impact China’s growth, effectively cutting off US demand for a large portion of Chinese imports. “Given the structural slowdown in its economy, China needs to offset the negative impact from any potential new trade protectionist measures with stronger domestic policy responses in order to stabilize growth,” UOB said. SPOTLIGHT ON CHINA’S NEXT MOVES The ongoing National People’s Congress Standing Committee meeting on 4-8 November is under intense scrutiny as market observers await announcements on China’s fiscal policy support. Key decisions expected include an additional yuan (CNY) 6 trillion ($836 billion) bond issuance to address hidden local government debts and CNY1 trillion for bank recapitalization. The upcoming Politburo meeting in early December and the Central Economic Work Conference (CEWC) will outline China’s economic agenda for 2025. These gatherings will set the stage for the National People’s Congress (NPC) in March 2025, where pivotal economic targets will be unveiled, including GDP growth, fiscal deficit, and local government special bonds issuance quota. These announcements will provide crucial guidance on China’s economic direction for the year ahead. While China is a primary focus, other regions including ASEAN are also exposed to potential policy risks due to their significantly increased trade surpluses with the US since 2018. This surge is largely attributed to supply chain diversification aimed at evading tariffs and trade restrictions implemented during Trump’s first term. “In ASEAN, there continues to be positive spillovers from the supply chain shifts leading to a brighter trade outlook this year while import demand strengthened across key Asian countries amid improving job market and domestic policy support,” UOB said. Asian exports will face more scrutiny, there will more regulatory headaches, but the region’s scale, excellence in manufacturing and logistics, strong corporate and public sector balance sheets will hold them in good stead during Trump 2.0, Singapore-based bank DBS said in note. With more Chinese companies offshoring export-focused production to southeast Asia, a second Trump administration may start to target these countries for trade-related violations, risk and strategic consulting firm Control Risks said. “One area to watch would be southeast Asia’s automotive sector, where Chinese players are flooding and dominating the original equipment manufacturer industry as the region gears up to fulfil ambitions of being a hub for the production, assembly and export of electric vehicles in the coming decade.” “Tariffs are an unambiguous negative for the region, but Asia’s strong ties with the US and China would survive Trump,” DBS said. “The region’s openness to trade and commerce makes it more attractive to investors, especially as the contrast with an inward-looking West becomes stark. This election marks a firm rightward shift of the US; Asia has to learn to live with it.” Insight article by Nurluqman Suratman ($1 = CNY7.18) Thumbnail image: At Lianyungang port in China on 25 October 2024.(Costfoto/NurPhoto/Shutterstock)

HOUSTON (ICIS)–Nutrien said demand in North America for the fall fertilizer application has been supported by a relatively early harvest along with the need to replenish soil nutrients following a period of lower field activity in the third quarter. In its latest market outlook, the Canadian fertilizer major said favorable growing conditions in the US have supported expectations for record corn and soybean yields and significant soil nutrient removal in 2024. The company did note that prospective crop margins have declined compared to the historically high levels in recent years, however Nutrien’s view is most growers in the key region of the US Midwest remain in a healthy financial position. One positive factor that the producer sees is that global grain stocks remain below historical average levels which support export demand for North American crops and firm prices for key agriculture commodities such as rice, sugar and palm oil. Looking at crop nutrient, Nutrien said it has raised 2024 global potash shipment forecast to 70 million – 72 million tonnes primarily driven by stronger expected demand in Brazil and Southeast Asia. The company said it believes the increase in global shipments this year has been driven by an underlying increase in consumption in key markets. The forecast for global potash shipments in 2025 is between 71 million – 74 million tonnes, which Nutrien said supported by the need to replenish soil nutrient levels and the relative affordability of potash. It does anticipate limited new capacity next year and the potential for incremental supply tightness with demand growth. Regarding global ammonia the producer said prices have been supported by supply outages, project delays and higher European natural gas values. For urea Nutrien said that Chinese export restrictions, production challenges from major exporters and strong demand from India and Brazil have tightened the global urea market. It noted that US nitrogen inventory was estimated to be well below average levels at the end of the third quarter, and the company is expecting it will support demand in the fourth quarter of 2024 and early 2025. For global phosphates, the situation remains tight which is furthered by Chinese export restrictions and production outages in the US. Nutrien said it anticipates some impact on global demand due to tight supply and weaker affordability relative to potash and nitrogen.

HOUSTON (ICIS)–Several ICIS market experts share insightful facts related to their respective plastics markets, amid conversations with industry professionals at PackExpo ’24. Though each market comes with a host of uncertainties, the broader US plastic packaging industry continues to navigate mixed demand and various supply challenges in 2024 and beyond. Bottled beverage sector made up 15% of all US packaging revenue in 2023. US polyethylene terephthalate (PET) production to remain 3 billion lb short of domestic demand in 2025. US polystyrene (PS) production has been impacted by outages since July 2024. US polypropylene (PP) prices have been volatile, with price movements 11 out of the last 12 months. US polyethylene (PE) inventories are the highest they have been since May 2023. US recycled PET (R-PET) market facing onslaught of imports. 2Q2024 PET scrap import volumes were above 125 million lb. PackExpo runs through 7 November and is hosted in Chicago, Illinois.

HOUSTON (ICIS)–Chemical trade groups in the US urged President-Elect Donald Trump to pursue policies that would support more domestic production and provide regulatory certainty. “Chemistry enables affordable housing, reliable infrastructure and effective, modern healthcare technologies. It is not only the driving force behind everyday products like smartphones and computers, but it is also what helps keep our nation safe and less dependent on foreign countries,” the American Chemistry Council (ACC) said in a statement congratulating Trump on his victory. “To meet that demand and protect America’s future, we will work with the Trump administration and new Congress to commit to policies that support growing domestic chemical production right here at home,” the group said. The Alliance for Chemical Distribution (ACD) also congratulated Trump and said it looked forward to working with the administration and Congress to provide regulatory certainty, strengthen chemical security and renew trade programs. The ACD did not specify the trade programs. However, the chemical industry has long advocated the revival of two programs, the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB). The GSP eliminated duties on thousands of products from more than 100 developing countries. The MTB temporarily reduced or suspended import tariffs on specific products. In regards to security, the ACC and the ACD have urged Congress to revive the nation’s main anti-terrorism program for chemical sites, which is known as the Chemical Facility Anti-Terrorism Standards (CFATS). The program helped the chemical industry protect their plants, warehouses and distribution centers from terrorist attacks. Because CFATS was a federal program, it discouraged the proliferation of individual state programs, which would have increased compliance costs. The ACD and the ACC have warned about the surge in regulations that occurred under the administration of US President Joe Biden. Many of them have provided the industry with little benefit while increasing compliance costs. The American Fuel & Petrochemical Manufacturers (AFPM) also congratulated Trump. “The US needs strong refining, petrochemical and midstream energy industries, and that requires a policy environment that allows American energy to compete globally, innovate for consumers and extend US energy leadership and security for the betterment of the American people,” said Chet Thompson, CEO of the AFPM. (adds AFPM’s comments, paragraph 11)

SAO PAULO (ICIS)–Brazil’s petrochemicals-intensive automotive sector posted in October its best sales since 2014 at nearly 265,000 units, the country’s trade group Anfavea said on Wednesday. Healthy sales at home propped up output, which stood at nearly 250,000 units during October and was also propped by overseas sales, with exports rising during the month, compared with September. Year-to-date in October, however, exports still register a negative reading of more than 7%, when compared with the same 10-month period of 2023, as key trading partners such as Argentina remain in financial trouble, reducing consumers’ purchases of Brazilian-manufactured vehicles. “Although this was the second-best month of the year in terms of production, we are still below the registrations, due to the high volume of imports,” said Anfavea’s president, Marcio de Lima, focusing on an issue – imports from China, specifically – which the trade group have been raising alarms for much of this year. In July, Anfavea said several producers with facilities in Brazil – most of them the traditional, established players – are pointing to an “uncontrolled” influx of cars manufactured overseas which are hitting domestic producers’ market share. China-produced vehicles, most of them electric or hybrid, are quickly gaining market share in Brazil and elsewhere in Latin America. Anfavea called on the government to establish tariffs as other jurisdictions – the US or the EU – have done on China-manufactured vehicles. “Another good news in October was the increase of 7,000 direct jobs in the last 12 months, with the potential to generate another 70,000 jobs in the automotive chain. This is the indicator that makes us happiest, as we have great responsibility for the approximately 1.2 million workers in the automotive sector,” said De Lima. Brazil automotive October September Change January-October 2024 January-October 2023 Change Production 249,200 230,000 8.3% 2,123,400 1,950,600 8.9% Sales 264,900 236,300 12.1% 2,124,000 1,847,500 15% Exports 43,500 41,600 4.6% 327,800 354,200 -7.4% 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)–Europe markets tumbled in afternoon trading on Wednesday, reversing earlier gains as the euro fell in value against the US dollar amid fears over the introduction of fresh tariff measures by the incoming US administration. A robust start to the day by Europe stock exchanges reversed course as trading continued. A speedy resolution to a US political fight that had been expected to be closer-fought and potentially take longer to be decided reassured investors, but a surging dollar and jitters over the potential for fresh duties on exports to Europe unsettled traders. Robust trading goosed stock valuations across Europe shortly after press called the election for Donald Trump, with bouses in Germany, France and the UK up 0.85%-1.15% That rally subsided over the course of the day as a surging dollar and tariff worries unsettled markets, with the value of the euro dropping 2 cents against the dollar, from $1.09:€1 on Tuesday evening to $1.07:€1 in afternoon trading on Wednesday. Germany’s DAX index was trading down 1.18% while France’s CAC 40 had shed 0.83% of its value and the UK FTSE 100 slumped 0.23% as of 16:13 GMT. Particularly hard-hit were German automaker stocks, with Volkswagen shares plunging 5.70%, Porsche down 4.54%, BMW plummeting 6.47% and Mercedes-Benz shares dropping 6.44% on fears of steeper tariffs on vehicle exports to the US. The new president-elect, the first person to win two non-consecutive terms in office, had spoken on the campaign trail of plans for additional import tariffs, particularly for China but also for Europe. Donald Trump has set out plans to impose tariffs of up to 20% on all external trading partners and 60% on products from China, which economics institute Ifo estimated could cost Germany-based businesses €33 billion per year if they are introduced. Germany-based chemicals trade body VCI on Wednesday stated that businesses in both Germany and the EU need to diversify trade flows along with improving international competitiveness, due to the prominence of the US as a destination. The US is Germany’s second-largest trading partner after the EU. “For firms, uncertainty over the US tariff regimes for their industry and the risk of retaliatory measures by policymakers elsewhere will clearly be a huge problem when forward planning,” said Oxford Economics director of global macro research Ben May. “This, combined with potentially higher borrowing costs, could be a strong disincentive to delay or cancel investment,” he added. US markets are substantially more bullish at present, with the Dow and Nasdaq trading up 3.15% and 2.02% as of 16:34. Canada exchanges booked more modest increases, while central and southern American exchanges fared worse, with the Brazil Stock Exchange Index and Mexico’s S&P/BMV IPC index trading down.

LONDON (ICIS)–Relatively flat demand trends and evolving global supply dynamics evident in H2 2024 are expected to largely persist within the European acrylonitrile-butadiene-styrene (ABS) and acrylonitrile (ACN) markets in Q1 2025. In this latest podcast, Europe ABS report editor Stephanie Wix and her counterpart on the Europe ACN report, Nazif Nazmul, share the latest developments and expectations for what lies ahead. Macroeconomic challenges expected to continue limiting ABS and ACN demand through Q4 into Q1 2025 ABS and ACN availability likely to remain lengthy Import-led ABS competition could increase in Q1 2025 ABS is the largest-volume engineering thermoplastic resin and is used in automobiles, electronics and recreational products. ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers.