By Jennifer Sanin and Tatjana Jovanovic 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 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. This article reflects the personal views of the authors and is not necessarily an expression of ICIS’s position.

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

LONDON (ICIS)–Economic growth in the UK strengthened in the first quarter with GDP estimated to have grown by 0.7%, according to official data on Thursday. The economy accelerated from the previous quarter when GDP grew by just 0.1%, the Office for National Statistics (ONS) said in its first estimate, which is subject to revision. The rate of growth in Q1 is the strongest in a year, since the first quarter of 2024 when GDP grew by 0.9%. Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 0.9% 0.5% 0% 0.1% 0.7% Growth in Q1 2025 was driven by an increase of 0.7% in the services sector. Production also grew, by 1.1%, while the construction sector remained flat, the ONS said. The Q1 figures were recorded before “Liberation Day” US trade tariffs were announced at the start of April, with these likely to be reflected in future economic data.

BANGKOK (ICIS)–Sluggish domestic demand weighed on Japan’s petrochemical industry, resulting in reduced production volumes in 2024 compared with previous years, according to the Japan Petrochemical Industry Association (JPCA). 2024 ethylene output falls 6.3% Production of five major plastics shrink by 5% Japan economy forecast to grow by 1.2% in 2025 “Although some crackers in Southeast Asia and East Asia are reducing production, there are plans for capacity increases in crackers that significantly exceed demand in China,” JPCA said in a report prepared for the Asia Petrochemical Industry Conference (APIC) 2025. The conference is being held in Bangkok, Thailand from 15-16 May. Operating rates of crackers in Japan are expected to remain lowered, as with previous years, JPCA said. Japan’s ethylene production in 2024 fell 6.3% year on year to 4.99 million tonnes, as domestic crackers have operated at below 90% of capacity since August 2022, with the monthly average run rate falling below 80% five times in 2024. Japan’s real GDP growth rate in 2024 was 0.1% amid weak exports, neutral growth in private consumption, and a slight increase in government consumption. For the whole of 2024, the country’s total production of five major plastics – namely, linear density polyethylene (PE), high density PE (HDPE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) – declined to 5.7 million tonnes, lower by 5.2% from 2023. Production (in thousand tonnes) Product 2024 2023 % change Ethylene 4,989 5,324 -6.3 LDPE 1,160 1,219 -4.8 HDPE 656 665 -1.4 PP 1,935 2,075 -6.8 PS 549 564 -2.7 PVC 1,406 1,496 -6.0 Styrene monomer (SM) 1,297 1,428 -9.2 Ethylene glycol (EG) 276 264 4.6 Acrylonitrile (ACN) 303 341 -11.2 Sources: METI, Japan Styrene Industry Association (PS, SM) and Vinyl Environmental Council (PVC) Domestic demand as ethylene equivalent in 2024  inched up by 1.4% to 3.92 million tonnes, according to JPCA data. While the global economy is expected to grow steadily in 2025, there is a risk of deterioration in the global economy and a corresponding decline in demand due to geopolitical issues, JPCA said, citing Russia’s invasion of Ukraine, the Israel-Hamas war, as well as the tariff policy of the US Trump administration. The latter has caused costs of raw material prices to soar, JPCA said. Meanwhile, Japan’s real GDP growth rate for 2025 is projected to accelerate to 1.2%, supported by increased exports, sustained growth in personal consumption, and increases in capital investment, said JPCA. Higher wage hikes in 2025 should help boost domestic consumption, it said. In the report, JPCA called on the petrochemical industry to adopt new roles and responsibilities in achieving carbon neutrality and advancing a recycling-oriented society. The report outlined a two-stage timeline: first, to reduce greenhouse gas emissions from existing facilities by immediately deploying currently available technologies; and second, to establish sustainable development goals by gradually introducing new technologies into society. “Not only corporate efforts but … collaboration and system design throughout the supply chain are required,” JPCA said. Focus article by Jonathan Yee

BANGKOK (ICIS)–External factors continue to pressure Thailand’s petrochemical industry, driven by new capacity additions from low-cost producers, particularly those in the Middle East, according to a report by the Federation of Thai Industries, Petrochemical Industry Club (FTIPC). Global PE, PP, PX oversupply weigh on Thai industry Trade tensions threaten Thailand export growth Proposed US tariff hikes could disrupt supply chains Despite these obstacles, the industry is on a gradual recovery path, driven by increasing demand in key sectors such as food packaging, pharmaceuticals, and electronics, the FTIPC said in a report released for the Asia Petrochemical Industry Conference (APIC) 2025. The two-day conference in Bangkok, Thailand, ends on 16 May. However, domestic consumption remains under pressure due to high household debt levels, which could impact the demand for durable goods and related petrochemical products. Here is a summary of the FTIPC’s outlook for petrochemical products produced in Thailand this year: Southeast Asia’s second-largest economy expanded in 2024 by 2.5%, accelerating from the 2.0% growth in 2023. Household consumption growth over the period slowed to 4.4% from 6.9% in 2023. The Bank of Thailand in March said that it expects Thailand’s economy to grow just above 2.5% in 2025, falling short of earlier projections, as high household debt and structural challenges in manufacturing continue to hinder an uneven recovery. While signs of recovery are evident, the industry still grapples with significant challenges, particularly global oversupply in polyethylene (PE), polypropylene (PP), and paraxylene (PX), the FTIPC said. “This oversupply continues to strain profit margins,” it said. Additionally, geopolitical tensions, trade restrictions, and economic slowdowns in major export markets such as China and Europe pose further risks to growth. Thailand is currently facing a 36% tariff on its exports to the US, with a temporary pause on these tariffs set to expire in July. “The United States has raised concerns among Thai industries, particularly those heavily dependent on exports, by proposing tariff increases,” FIPTC said. “If implemented, these tariff hikes could disrupt supply chains, elevate production costs, and pose significant challenges for Thai exporters,” it added. “Higher import duties may reduce competitiveness and profitability, forcing businesses to reassess their market strategies and cost structures,” it said. Looking ahead, Thailand’s petrochemical sector must navigate a volatile global market while capitalizing on domestic demand growth. Strategic investments in feedstock diversification, sustainability, and advanced manufacturing are crucial for the sector’s success. “To remain competitive, industry leaders will need to focus on cost optimization, innovation, and regional collaboration to strengthen their market position and drive long-term growth,” the FTIPC said. Furthermore, Thailand’s PTT Global Chemical (PTTGC) is set to become the country’s first chemical producer to integrate US-imported ethane as an alternative feedstock. Under the agreement, PTTGC will secure an annual supply of 400,000 tons of ethane to meet growing market demand in a highly competitive environment. The company expects to begin receiving imported ethane in 2029. PTTGC has entered into long-term agreements with key partners, including Very Large Ethane Carriers (VLECs) service agreements with parent firm PTT Public Co (PTT) and Malaysia’s liquefied gas transportation firm MISC. Additionally, PTTGC has signed a long-term terminal service agreement with Thai Tank Terminal C (TTT) to facilitate the delivery and storage of ethane at the Map Ta Phut Terminal in Rayong. Meanwhile, the Thai plastics industry is facing growing competition from finished goods imported from China and competitive supplies from the Middle East. This influx of lower-cost products is intensifying market pressure, potentially affecting domestic manufacturers in Thailand. Moreover, China’s oversupply across sectors like EVs, electronics, and plastics has impacted manufacturing in Southeast Asia, including Thailand. Thailand’s overall polymer consumption has seen a slight increase last year. However, Thai converters are facing significant challenges from geopolitical uncertainties, a global economic slowdown, and high inflation rates, exacerbated by a rise in major polymer imports from China and the Middle East. Insight article by Nurluqman Suratman Thumbnail image: At the Thai-Chinese Rayong Industrial Zone, located at the east coast of Thailand on 29 December 2021. (Xinhua/Shutterstock)

This article reflects the personal views of the author and is not necessarily an expression of ICIS’s position. Romanian pro-EU candidate favours free trade but is less outspoken on clean energy Polish and Romanian presidential candidates’ position on Russia could sway EU policies Rise of populist parties across CEE could lead to fragmentation of markets LONDON (ICIS)– Romanians and Poles will be heading to the polls on Sunday and their vote could hardly be more consequential for the direction of energy markets in central Europe and arguably the EU as a whole. Apart from holding presidential elections on the same day, there are many other notable similarities. As mayors of Bucharest and Warsaw, educated at elite EU universities, Romania’s presidential candidate Nicusor Dan and his Polish counterpart Rafal Trzaskowski have strong pro-EU agendas. At the opposite end, Romania’s populist far-right candidate George Simion and Poland’s Karol Nawrocki prefer to champion the cause of the EU-disillusioned grassroots. But there are also differences. While Dan and Trzaskowski promote the EU’s market-based economic model, the Romanian candidate is less outspoken in favour of clean forms of generation than his Polish counterpart. Simion, on the other hand, embraces economic nationalism, with a strong emphasis on state control over natural resources. He bemoans the abnormal weight of spot trading in the Romanian gas market, caused primarily by heavy market regulation and taxation, but proposes the continuation of state intervention. Like Nawrocki, he advocates preserving coal-fired generation but acknowledges the role of renewables in the installed capacity mix. Perhaps the most critical point in the candidates’ electoral campaigns remains their position on Russia. Unlike Simion, leader of the far right AUR party, who has been more amenable to a rapprochement with Moscow, Nawrocki continues his Law and Justice Party’s anti-Russia narrative. Nevertheless, Simion’s recent fleeting trip to Poland to endorse the conservative candidate elicited sarcastic remarks from the Polish prime minister Donald Tusk who said the encounter ‘had made Russia happy.’ If elected, their position on Russia will matter to the wider EU market on several accounts. In Romania’s case, a Simion win would swell the chorus of populist eastern European leaders such as Hungary’s Viktor Orban or Slovakia’s Robert Fico opposing Russian sanctions and favouring the resumption of Russian oil and gas supplies to Europe. With a standing ban on entering Ukraine and Moldova, Simion has already expressed opposition to supporting Ukraine’s war efforts and insisted on protecting Romania’s interests rather than supporting neighbouring countries. This raises questions about his commitment to facilitating the expansion of cross-border electricity and gas interconnections with Ukraine and Moldova and ultimately threatens to undermine Kyiv and Chisinau’s EU membership bids. Although Nawrocki’s political stance on Russian fossil imports is unclear it is equally uncertain whether as an EU sceptic he would lend support to EU Russian sanctions. In hindsight, Romania and Poland have benefited from substantial EU funds, collectively raking in over €300 billion since their accession in 2007 and 2004. Even so, large swathes of the population remain disillusioned as distortive national economic policies have been preventing an equitable distribution of funds. This is symptomatic of all central and eastern European countries, where the population felt left behind, even though their countries had been net beneficiaries of EU support since accession. The emergence of populist movements with strong nationalist, interventionist and anti-EU agendas across central and eastern Europe may not lead to a full breakup of the bloc but threatens to fragment energy markets and inject further political instability in an already volatile environment. As central and eastern Europe’s largest countries, the outcome of Sunday’s elections in Romania and Poland will provide a tantalizing insight into the direction that the EU will take and policies that it intends to pursue in the long term.

SINGAPORE (ICIS)–Growth in the Asia-Pacific Economic Cooperation (APEC) region is expected to slow sharply to 2.6% in 2025 and 2.7% in 2026 as escalating trade tensions and policy uncertainty weigh on investment and trade, the group said in a report released on Thursday. The region posted a 3.6% growth in 2024. Economic and trade activity across the 21 APEC member economies has slowed considerably, with export volumes projected to barely grow in 2025, according to the new report by the APEC Policy Support Unit. Source: APEC Forecast export volume growth for the group was 0.4% in 2025, while import volume growth will be even lower at 0.1%. They represent a sharp deceleration from 2024, when export and import volumes grew by 5.7% and 4.3%, respectively. “From tariff hikes and retaliatory measures to the suspension of trade facilitation procedures and the proliferation of non-tariff barriers, we are witnessing an environment that is not conducive to trade,” APEC Policy Support Unit director Carlos Kuriyama said. “This uncertainty is hurting business confidence and leading many firms to delay investments and new product launches until the situation becomes more predictable,” Kuriyama added. While challenges persist, the report highlights an opportunity for member economies to strengthen cooperation and build resilience through structural reforms and open trade. Kuriyama urged APEC economies to recommit to cooperation and stability. He noted that restoring confidence in trade requires not only easing tensions, but also expanding into new markets, strengthening supply chain resilience and improving transparency of trade rules and procedures. The report was released ahead of the two-day Ministers Responsible of Trade Meeting in Jeju, South Korea, which opened on Thursday.

SINGAPORE (ICIS)–Saudi energy and chemical giant Saudi Aramco has signed 34 Memoranda of Understanding (MoUs) and agreements potentially worth about $90 billion in total, with major US companies. The deals cover a range of fields, including liquefied natural gas (LNG), fuels, chemicals, emission-reduction technologies, artificial intelligence (AI) and other digital solutions, manufacturing, asset management, short-term cash investments, and procurement of materials, equipment, and services, the company said on 14 May. “Our US-related activities have evolved over the decades, and now include multi-disciplinary R&D, the Motiva refinery in Port Arthur, start-up investments, potential collaborations in LNG, and ongoing procurement,” Saudi Aramco president and CEO Amin Nasser said. “As Aramco pursues an ambitious value-driven growth strategy, we believe that aligning with world-class partners supports further development of our operations, strategic diversification of our portfolio, industrial innovation, and ongoing capability development within the Kingdom,” he added. The MoUs and agreements signed by Aramco and its Aramco Group Companies are as follows: Downstream Honeywell UOP: MoU related to technology licensing for an aromatics project. Motiva: MoU related to an aromatics project in Port Arthur, subject to a final investment decision. Afton Chemical: MoUs related to development and supply of chemical fuel additives in pipelines and retail fuel offerings. ExxonMobil: MoU related to evaluating a significant upgrade to the SAMREF (Saudi Aramco Mobil Refinery Company) refinery and expanding the facility into a world-class integrated petrochemical complex. Upstream Sempra Infrastructure: MoU related to previously announced HOA (head of agreement) regarding LNG equity and offtake stake in Port Arthur LNG 2. Woodside Energy: Collaboration Agreement to explore global opportunities, including an equity interest and LNG offtake from the Louisiana LNG project. Additionally, both companies are exploring opportunities for a potential collaboration in lower-carbon ammonia. NextDecade: Final Agreement to purchase 1.2 million tonnes per annum of LNG for a 20-year term from Train 4 of the Rio Grande LNG Facility, subject to certain conditions, including a positive final investment decision of Train 4. Technology & innovation Amazon/AWS (Amazon Web Services): non-binding Strategic Framework agreement related to collaboration on digital transformation and lower-carbon initiatives. NVIDIA: MoU related to developing advanced Industrial AI computing infrastructure, establishing an AI Hub and AI Enterprise platforms, an Engineering and Robotics Center of Excellence, training and upskilling, and collaborating with NVIDIA’s startup ecosystem. Qualcomm: MoU with Aramco Digital that aims to explore entry into a strategic collaboration that will focus on key digital transformation use cases, leveraging Aramco Digital’s 450 megahertz (MHz) 5G industrial network to connect intelligent edge devices with on-device AI capabilities, including smartphones, rugged industrial devices, robots, drones, cameras, sensors, and other IoT devices. Technical Services Procured Materials and Services: MoUs were signed to reflect the existing relationships with strategic US suppliers: SLB, Baker Hughes, McDermott, Halliburton, Nabors, Helmerich & Payne, Valaris, NESR (National Energy Services Reunited), Weatherford, Air Products, KBR, Flowserve, NOV, Emerson, GE Vernova, and Honeywell. These suppliers provide high-standard materials and professional services that help support Aramco’s projects and operations. Strategy & Corporate Development Guardian Glass: MoU to localize specialty glass manufacturing for architectural applications in the Kingdom of Saudi Arabia. Finance Wisayah asset management agreements with PIMCO (Pacific Investment Management Co), State Street Corporation, and Wellington. Agreements for short-term cash investments through a unified investment fund, the “Fund of One,” with BlackRock, Goldman Sachs, Morgan Stanley, and PIMCO.

Lower storage targets to apply for 2025, MEP confirms These may be enacted in July, if negotiators can agree a compromise by the end of June Next round of talks set for 3 June BRUSSELS (ICIS)–Revisions to Europe’s gas storage targets will apply to 2025 once agreed, with talks likely to wrap up quickly, a MEP involved in the negotiations confirmed to ICIS on 14 May. Jens Geier, who represents the European Parliament’s centre-left Socialist & Democratic group in compromise negotiations to agree the final law, told ICIS the intention was to implement the rules for the current gas storage filling season. Speaking at a policy debate on affordable energy convened by Energy Traders Europe in Brussels, Geier said the majority of lawmakers agreed on a need to avoid sending market signals about when to buy gas. “You don’t have to be a socialist to believe that when Germany has to buy, it has to fill up [stocks by two more percentage points] for the first of August, it’s an invitation to raise prices,” Geier said, talking about speculation over changing filling targets. ICIS assessments have shown a correlation between agreement in each step of the revision process and the spreads between the Dutch TTF Q3 ’25 and front-winter contracts. The discount averaged €0.548/MWh below Winter ’25 between 9-23 April, correlating with details of the Council position. The discount then widened to €0.955/MWh from 24 April-7 May, after the ITRE committee vote suggested a speedy resolution to negotiations. This is in stark contrast with the first three months of 2025, when the Dutch TTF Q3 ’25 held an average premium of €2.769 over Winter ’25. TRILOGUE TALKS A delegation from the Parliament began so-called trilogue negotiations on 13 May, with EU countries, represented by the Council of the EU, and with the European Commission also attending. The talks aim to find a compromise between positions adopted by the Council and the Parliament. Geier said the first round of discussions went well and that co-legislators were like-minded about not needing the “harsh regulation” of 90% filling targets. “We can believe in the traders that they will provide security of supply,” Geier said, calling for trust in the market backed by penalties if it failed to deliver. Geier told the panel he thought a maximum of two more rounds of talks at political level would be needed to agree a deal, saying most of the work would be done at technical level. He also said he hoped the deal could be concluded before Poland’s Council presidency concludes in June, telling ICIS he hoped the final deal could be endorsed by the full parliament in July. An EU source confirmed the next discussions would take place on 3 June, after a very positive first round.