SAO PAULO (ICIS)–Brazilian President Luiz Inacio Lula da Silva signed into law an expanded tax relief regime for the country’s chemical and petrochemical producers, slashing levies on key inputs by more than 60% as the sector battles rising feedstock costs driven by the Middle East conflict. The law, published in the Official Gazette on Friday, expands the Special Tax Regime for the Chemical Industry, known as REIQ, raising the PIS/Cofins credit rate on eligible raw materials from 0.73% to 5.8%. Total budgetary resources allocated to the program will rise from Brazilian reais (R) 1.1 billion ($207 million) to R3.1 billion in 2026, with combined benefits from REIQ and a linked investment incentive scheme – Presiq – reaching up to R18 billion over the 2026-2031 period. Vice President and Development Minister Geraldo Alckmin, speaking at the signing ceremony in Sao Paulo, framed the timing as deliberate. “Unfortunately, with the war, the price of natural gas and inputs for the chemical industry has increased,” he said. “It is precisely at this moment that the president is reducing federal taxes on inputs for the chemical industry to improve competitiveness and investment, investment partnerships for innovation, and energy efficiency.” The measure drew an immediate welcome from industry. Jorge Villanueva, country manager in Brazil for Mexican chemicals producer Alpek, said the President’s signing was a “first historic” step in supporting chemicals producers, but conceded the most important part is yet to be realized. “REIQ reduces the tax burden on essential chemical and petrochemical inputs, helping stimulate domestic production, reduce idle capacity, protect jobs, and strengthen Brazil’s position in global value chains, especially in times of geopolitical tensions, economic uncertainty, supply chain stress, and volatile energy and feedstock markets,” said Villanueva. “Now comes the most important phase: execution. Raising operating rates, investing in capacity and modernization, and accelerating innovation and decarbonization, so this policy translates into real results for Brazil.” Latin America’s largest petrochemicals producer, Brazil’s Braskem, which is set to stand among the primary beneficiaries, said in a filing it remained committed to “mitigating the significant impacts” resulting from the prolonged downturn in the entire industry. ($1 = R5.30) Image: President Lula (third from the left) at the signing ceremony on 19 March in Sao Paulo (Image source: Brazilian government)

HOUSTON (ICIS)–Spot rates for US chemical tankers ex-US Gulf surged this week as the conflict in the Middle East has tightened chemical supply in Europe and has caused a shortage of space in the US Gulf-to-Europe trade lane, while Asia-US container rates edged higher as the conflicts impact on container shipping is a rapidly evolving situation and uncertainty remains massive. CHEM TANKER RATES SOAR The US chemical tanker market rose again for another week as most trade lanes have pushed higher, amid the ongoing tight tonnage situation which has caused rates to soar. For the US Gulf to South America trade lane, rates are steady as traders are seeking space for Brazil and focused on COA (contract of affreightment) deals. However, higher freight prices seem to be contributing to the softening of spot transactions as many deals fell through due to the higher rates. On the USG to ARA trade lane, the market was active this week as the ongoing tight tonnage situation for March/April is causing freight rates to surge, especially for smaller parcels. The market has seen a wide variety of inquiries such as methanol, glycols, styrene, base oils and various chemicals round out the demand leading to higher rates, but only a handful of cargoes are known to be fixed. For the USG to Asia, space also remains extremely tight as most owners are opting to maximize COA volumes. As a result, spot rates are pressured higher as they are supported by limited availability. Demand seems to be firming due to production issues across the Asian sector as several producers have declared force majeure due to limited feedstocks. It seems that MEG, methanol and ethanol have been the most frequently seen quoted in the market. The USG to India route has been relatively quiet as most of the cargoes seem to be shipping under COAs. Like the other routes, any of the regular owners who have any available space are offering unattractive rates, making it impossible for charterers. However, one large parcel of MEG was reported to be fixed from the USG to the region for April loading. Bunker prices ex-USG were higher once again, trending upward along with stronger energy prices. CONTAINER RATES Rates for shipping containers from east Asia and China to the US were mostly higher this week, with gains in the mid-single digits percentage. Rates from supply chain advisors Drewry rose by 4% from Shanghai to Los Angeles, and by 7% from Shanghai to New York. Drewry said it expects rates to be pressured higher amid the current geopolitical crisis. Rates from online freight shipping marketplace and platform provider Freightos rose by 1% to the West Coast and by 9% to the East Coast. Judah Levine, head of research at Freightos, said operational disruptions continue to be limited to Middle East-bound or originating cargo, with some knock-on congestion elsewhere. “As in previous disruptions like the Red Sea closure, carriers are now adjusting to the new reality and freight is finding its way,” Levine said. Levine noted that some major carriers like CMA CGM and Maersk are now accepting new bookings by diverting volumes to alternative accessible ports in the region – including ports in Oman, UAE, and Saudi Arabia – with containers moving on by land bridge. “Carriers are also relying heavily on ports in India with new shuttle services ferrying containers to those accessible Mideast ports – though even some of these, like UAE’s Fujairah are now being directly targeted by Iran,” Levine said. However, Levine said that for the rest of the container market, while operations are unaffected by the war, container rates are not likely to be spared. “Carriers have announced flat-rate global emergency fuel surcharges of several hundred dollars per FEU (40-foot equivalent unit) that will go into effect early next week,” Levine said. Levine said there is skepticism from some market players that the full increases from surcharges will stick. Rates from ocean and freight rates analytics firm Xeneta were slightly higher compared with the previous week. Xeneta Chief Analyst Peter Sand said he is seeing exactly what he anticipated when the conflict escalated – port congestion, deteriorating schedule reliability, longer transit times, and surcharges being pushed out across the board. “Shippers are exploring every available solution to keep supply chains moving without calling at Gulf ports, whether through land bridges, rerouting or alternative networks now being offered by carriers and freight forwarders,” Sand said. “Around 800,000 containers per month used to travel into the region affected by this crisis. Those goods still need to reach customers, and the industry is finding different ways to make that happen.” Lars Jensen, president of consultant Vespucci Maritime, said many of the announced rate increases were only to take effect from mid-March, hence not necessarily captured in the index rates yet. “But this could also be a sign that perhaps the global strengthening is not as forceful, except for cargo to/from the Gulf area,” Jensen said. Rates on the New York Shipping Exchange Freight Index (NYFI) rose by 1.3% to the West Coast this week and fell by 1.1% to the East Coast while rates on the Shanghai Containerized Freight Index (SCFI), which tracks rates for containers leaving Shanghai, edged slightly lower. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks. A container ship. Image source: Shutterstock Additional reporting by Kevin Callahan Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Logistics: Impact on chemicals and energy topic page

HOUSTON (ICIS)–The chemical industry will continue to contend with tariffs because the US will likely recreate much of the tariff regime that was dismantled by a recent decision by the nation’s top court. Tariffs are a key policy goal of the administration of President Donald Trump. It and other policies will be on the top of the minds of delegates heading into this year’s International Petrochemical Conference (IPC), hosted by the American Fuel & Petrochemical Manufacturers (AFPM). Deregulation is another goal, and the chemical industry noted a healthy dialogue with regulators. Tax reform, a third goal, has also benefited the chemical industry, although the Superfund tax has survived an effort in 2025 to repeal it. TARIFF UNCERTAINTY WILL CONTINUEUS President Donald Trump lost the ability to impose tariffs under the International Emergency Economic Powers Act (IEEPA) following a decision by the Supreme Court. Trump immediately recreated much of that regime by imposing 10% tariffs under another statute, known as Section 122. Unless Congress approves an extension, those tariffs will expire on 24 July. By then, the US could meet the requirements to impose tariffs under a different statute, Section 301. The US Trade Representative (USTR) has started investigations into the trade practices of 60 governments, a key step before the president can impose tariffs under Section 301. Hearings are scheduled at the end of April, putting the US on track to impose Section 301 tariffs before the Section 122 duties expire. Section 301 would be a more durable basis for the tariffs because the US used the same statute to impose tariffs on imports from China during Trump’s first term in 2018. Those tariffs still stand. Most likely, the chemical industry will continue to contend with tariffs and uncertainty about US trade policy. US COULD IMPOSE MORE SECTORAL TARIFFSThe US has imposed other tariffs under Section 232 on classes of imports such as steel, aluminium and automobiles. The following table summarizes the current tariffs imposed under Section 232 and the investigations that are still pending. Product Investigation Started Rate Autos and auto parts Completed 25% Copper products Completed 50% Steel Completed 50% Aluminium Completed 50% Softwood lumber Completed 10% Upholstered furniture Completed 25%, 30% on 1 Jan ’27 Kitchen cabinets, vanities Completed 25%, 50% on 1 Jan ’27 Medium duty trucks Completed 25% Heavy duty trucks Completed 25% Buses Completed 10% Critical minerals Completed No tariffs Semiconductors Completed 25% on few imports, may be expanded Hardwood Lumber 10-Mar-25 pending Pharmaceuticals 1-Apr pending Commercial aircraft 1-May pending Jet engines 1-May pending Polysilicon 1-Jul pending Unmanned aircraft systems 1-Jul pending Wind Turbines 13-Aug-25 pending Robotics and Industrial Machinery 2-Sep-25 pending PPE, Medical Consumables, Medical Equipment 2-Sep-25 pending Source: Bureau of Industry and Security (BIS) REVIEW DUE ON THE USMCAThe US, Canada and Mexico are required to review their trade agreement, known as the US-Mexico-Canada Agreement (USMCA). By 1 July 2026, the terms of the agreement require each of the countries to confirm whether they support extending the agreement for another 16 years. Without confirmation, the three will conduct annual reviews until they either reach an agreement, until the USMCA expires in 2036 or until one of the countries withdraws from the trade deal. The most likely scenario is that the US will demand changes, and three countries will conduct annual reviews, according to the Center for Strategic and International Studies (CSIS). However, there is a chance that the three extend the agreement for another 16 years. Mexico and Canada are the single largest trading partners of the US, and they are key markets for the nation’s chemical industry. “My hope is they can come to some sort of agreement,” said Eric Byer, president and CEO of the Alliance for Chemical Distribution (ACD), a trade group. If the countries extend the USMCA, the resulting agreement could conceivably serve as a template for resolving trade disputes with other countries, Byer said. BETTER REGULATORY CLIMATEThe regulatory climate under the new administration improved markedly from the previous one of former President Joe Biden, which Byer had described as one of the worst. A healthy dialogue is taking place between regulators and industry, he said. They are considering the companies’ perspective even when there is disagreement. Byer also noted progress in such policies as the Clean Water Discharge rule. SUPERFUND TAX MAY LIVE ANOTHER YEARThe 2025 tax law signed by the president brought some benefits to chemical distributors, but legislators chose not to repeal the Superfund tax. Byer is doubtful it could be repealed in 2026 because the US will hold midterm elections for the nation’s two legislative chambers. Congress typically becomes less active during midterm elections. For now, the ACD is working with the Internal Revenue Service (IRS) to find ways to improve reporting processes connected to the tax. REGULATORS NEED TO TAKE TIME ON PROPOSED RAL MERGERThe proposed merger between Union Pacific (UP) and Norfolk Southern (NS) was rejected earlier in 2025 by the Surface Transportation Board (STB) after the regulator found several problems in the application. The two railroad companies said they will refile their merger application with the STB on 30 April. The chemical industry has opposed the merger, and Byer said regulators need to conduct a careful, deliberate review. Such a review could take 120 days. Byer said the merger may not close in 2026. Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 29-31 March in San Antonio, Texas. Insight article by Al Greenwood Thumbnail shows shipping containers used in global trade. Image by Shutterstock. Visit the US tariffs, policy – impact on chemicals and energy topic page Visit the Macroeconomics: Impact on chemicals topic page Visit the Logistics: Impact on chemicals and energy topic page Photo source: Shutterstock

LONDON (ICIS)–European markets rounded off the week on a slightly weaker note, as the IEA dubbed the conflict in the Middle East “the largest supply disruption in the history of the global oil market” on Friday. Stocks moderately down, more wait-and-see impact on market IEA publishes advice for chemical producers to switch feedstocks Some immediate price pressure on European chemicals markets. European chemicals commodities on the STOXX 600 market moderated, but not this is not an indicator of prolonged stability, as players are choosing to adopt a wait-and-see approach. The German DAX and French CAC bourses trended nearer to 2% down on the previous day, with the London FTSE less than 1.5% down in the same period. IEA ENCOURAGES CHEMS PRODUCERS TO SWITCH FEEDSTOCKSConcern remains for feedstock and refined products, as the chemicals sector remains one of the largest end users of crude oil. The IEA presented “a range of demand-side actions that governments, businesses and households can take to alleviate the economic impacts on consumers” following its decision to release 400 million barrels of oil reserves last week. “In the absence of a swift resolution, the impacts on energy markets and economies are set to become more and more severe,” said IEA Executive Director Fatih Birol. The IEA report encouraged the chemicals industry to switch feedstocks where possible and “optimise equipment operations and maintenance to reduce oil use in individual facilities by up to 5%”. “Prioritising the processing of oil feedstocks that are more available could help release pressure on the others. Meanwhile, industrial oil-consuming facilities can save additional fuel in the short-term through maintenance checks and optimising how equipment is operated,” the IEA advised. Measures include shutting down equipment when not in use, reducing temperatures and improving scheduling. The international body suggested governments incentivise a change from LPG to other oil products by compensating for the change in production mix, and provide guidance and “sector specific benchmarks to help facilities make quick savings.” “A walk-through of a facility with operational staff, combined with the use of energy management information systems, is often the first step to identify these opportunities.” Other strategies for governments and the general population include diverting LPG from transport to cooking and avoiding road/air transport where necessary. TENSE SENTIMENT FOR EUROPEAN CHEMICALS MARKETSSome of the pressure is starting to bear out for some commodities, with more appetite to secure material as the prospect of importing cargoes diminishes and storage is quickly consumed. While crude pricing climbed down somewhat off the highs of earlier in the week, they remained above $107/barrel, as of noon GMT. More significant price movements were seen further downstream, with gasoil futures hitting record highs, on supply constraints and dislocated supply chains. Olefins players are now in suspense, as the market braces for April upstream contract negotiations at the end of the month. While sellers can command a higher price for spot acrylonitrile (ACN), most buyers remain insulated from initial shocks on the contract market, and may feel the ripple effect of higher prices coming down the line. The most immediate and prominent risk of short feedstock supply leaves Asian producers more exposed, but the stranglehold on resources will still be felt in Europe in the second quarter. Expectations of an economic recovery in Europe have been kicked further down the road, as bearish sentiment looms over the markets. Focus article Morgan Condon

LONDON (ICIS)–Recycling editors Sam Lovatt and Matt Tudball speak about the indirect impact the Middle East conflict is having on the recycled polymers markets in Europe, and why some markets such as recycled polyethylene terephthalate (rPET) and recycled low density polyethylene (rLDPE) are feeling the consequences much quicker than recycled high density polyethylene (rHDPE) and recycled polypropylene (rPP). Topics covered include: Indirect impact of virgin polymer price rises Reaction from recycled market participants How rising fuel costs factor into recycled markets Concerns about higher energy and production costs Longer-term impact of the conflict on consumer spending

BARCELONA (ICIS)–Europe sources far less of its chemical feedstocks from the Middle East than Asia does, meaning it is more insulated from the direct impact of the war. Europe naphtha markets much less dependent on Middle East than Asia Europe only gets 30% of its crude from the Middle East compared with 60% for Asia Opening of INEOS Project ONE ethane-based cracker may force closure of naphtha-fed crackers Oil product markets have tightened faster than crude Margins for oil refineries that can access crude oil are rising Alternatives to bypass Strait of Hormuz limited – maximum 5 million barrels/day compared with 20 million barrels/day before the conflict ICIS forecasts crude oil demand growth will plateau from 2028 Petrochemicals, aviation fuel will drive demand growth Most advantaged refineries combine good feedstock supply, flexibility and market access Other refineries will have to adopt innovative strategies to survive and thrive In this Think Tank podcast, Will Beacham interviews ICIS senior analysts David Jorbenaze and Paolo Scafetta. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (rPET) market, including: Flake prices rise, Polish bales increase rPET flake demand driven by lack of PET Bullish sentiment ahead of April price talks

LONDON (ICIS)–The EU chemicals trade balance fell in January compared with a year prior, according to the latest data from Eurostat on Friday, on withering export levels. The sector remained in surplus, bringing in €15.4 billion into the EU economy but this was markedly down from the €23.0 billion in January 2025. In € billion, monthly change versus previous year Source: Eurostat For much of the previous year, the chemicals sector outperformed other segments, even going against the trend of depreciation for the total trade balance, supported by viable export opportunities. For January 2026, however, exports for the industry totalled €39.8 billion, 23% down on the previous year. Imports also fell to €24.4 billion, but the pace was more moderate at a 15.1% decline year on year. The chemicals segment remained the strongest of the manufactured goods recorded, but there was growth in the “other” segment, as well a modest tick up for food and drink. Source: Eurostat Overall, the EU recorded a trade balance of -€5.9 billion in January, edging further into negative territory from -€5.4 billion in January 2025. Exports fell by 10% to €189.2 billion, while imports fell by 9.5% to €195.1 billion.   Source: Eurostat A month prior, the EU recorded a trade surplus of €12.3 billion, with the shift driven by a slump in the machinery and vehicles sector, with its surplus diminished to €1.7 billion from €16.2 billion in December. The energy sector eased some of the pressure from its annual deficit, rising to -€21.5 billion versus -€29.3 billion a year prior. For the whole year, the EU recorded a reduced trade surplus of €130.0 billion compared with €140.2 billion in 2024. Exports to almost all key trading partners fell in January. The trade balance remained relatively stable on the previous year, with a notable exception being the US, where the trade surplus was almost half the value recorded for January 2025. Source: Eurostat This could be explained by the more volatile trading relationship with the US in the wake of the Liberation Day tariffs initially announced on 2 April 2025. TRADE BALANCE OUTLOOKAs the war in the Middle East rolls on, pressure on energy supply and infrastructure has intensified. While Europe is not a key buyer of oil from the Middle East, it does consume liquefied natural gas (LNG) from the region, particularly since the Russian invasion of Ukraine in 2022. Energy prices have already surged, and with Qatar’s Ras Laffan LNG infrastructure damaged, leaving European chemical producers vulnerable to further spikes in input costs. Muc of European production capacity has been taken off line in the past year as domestic manufacturers struggle to compete with cheaper imports. While costing is more expensive for producers globally, not all European capacity has come back online, as producers hesitate to commit as uncertainty prevails over how the conflict will evolve, and what impact this will have on market fundamentals. The challenging macroeconomic climate could allow for more export opportunities, but European producers are not insulated from rising costs or diminished demand. Producers may opt to hold material and adopt a wait-and-see stance, or solidify domestic trade, rather than seeking buyers further afield.

LONDON (ICIS)–The US-Israel-Iran war has unleashed extreme volatility across chemical markets, with base oils prices rallying in the first half of March on the back of production woes, spikes in feedstock and shipping costs and supply chain disruption. The latest attacks are set to cripple the market as the hit on QatarEnergy’s Pearl gas-to-liquids (GTL) facility is set to keep 2 million tonnes of base oils offline for a minimum of a year. The ICIS base oils team looked at the key drivers and what to watch out for next. Amanda Hay, Lucas Hall, Sophie Udubasceanu, Sam Wright, Michael Connolly, Michelle Liew, Olivia Dai and Whitney Shi discuss the global outlook for base oils. Additional reporting by Jean Zou and Lynn Tan Click here to listen to the podcast in a new window.