LONDON (ICIS)–Europe adipic acid and downstream nylon 6,6 markets face bleak prospects for demand in December, followed by a broadly flat outlook in 2025, with overall weak consumption from key derivative markets. Over the past few months, very slow demand and ample supply have continued to dominate European markets alongside rising costs of production. In this latest podcast, ICIS editors Meeta Ramnani and Marta Fern share the latest developments and expectations for what lies ahead. Seasonal destocking to weaken buying interest further in December Demand could stay low in 2025; recovery depends on macroeconomic factors Q1 2025 could bring restocking; its magnitude unclear Asian adipic acid import volumes likely to increase in Q1

CARTAGENA, Colombia (ICIS)–Mexico’s nearshoring trend will continue, even with the prospect of changes with the incoming US Trump administration as the US and Mexico economies are growing more and more interconnected, said the head of Evonik’s Mexico business. “Mexico is the 14th largest global economy, and an economy geared for exports – not only to North America but other regions,” said Martin Toscano, president of Evonik Mexico, at the Latin American Petrochemical and Chemical Association (APLA) Annual Meeting. Mexico is the 9th largest exporter globally and becoming one step closer to the 3rd largest auto parts manufacturer. It is also the leading business partner to the US, he pointed out. Currently over 80% of Mexico’s exports are to the US, totaling $455 billion in 2023. The US now imports more from Mexico than from China. The US in turn exported $324 billion of goods to Mexico, he noted. Key Mexico exports to the US include transport equipment (including autos and parts), medical and scientific instruments, electronics, machinery, and rubber and plastic. TRUMP IMPACT ON NEARSHORING “Trump 47 (referring to the upcoming 47th US President) is not going to be that different from 45 (last Trump administration). US and Mexico interests go beyond rhetoric,” said Toscano. “No region is an island – they rely on net inflows. The world is too interconnected to just switch off. Economies depend on exports but also imports,” he added, pointing out that the US is unlikely to reshore everything. Nearshoring is natural for Mexico because of its proximity to the US and the USMCA (US-Mexico-Canada Agreement) free trade agreement (FTA). But nearshoring is also distributed across Latin America, with other countries such as Brazil and Argentina ready to play greater roles, he pointed out. US President-Elect Trump has threatened companies – both in the US and abroad – that move production to Mexico to export to the US, with tariffs. However, the US holds over 40% of total foreign direct investment (FDI) in Mexico, making it a major stakeholder in Mexico exports, he noted. “The US has a very important role… but there is also a significant European presence. There is a continuing diversification of the investment base,” said Toscano. Mexico also has FTAs with 23 countries – the 7th most of any country in the world – with access to over 60% of global GDP. This as well as increasing government investment in infrastructure and a growing middle class make it an attractive market for investment, he pointed out. “All this investment in Mexico has generated greater well-being – better jobs and income. This means people start consuming more for basic needs – food, protein, personal care products, cleaning products and household items,” said Toscano. The executive also sees a boost for US economy with the incoming Trump administration. “Simplifying regulations can be good. It can turn to a negotiation point when USMCA sunsets [in 2026]. This can make Mexico adopt certain [simplified] regulatory elements,” said Toscano. “With the Trump administration, Mexico has to take some topics seriously. Nearshoring is a window of opportunity, and if we don’t know how to do it, we will lose,” he added. RULES OF ORIGIN, DEAL-BASED WORLD At the APLA Annua Meeting, former head of Argentina’s central bank and current director of the Asia School of Business, Martin Redrado, said Mexico should be prepared for the US being much stricter on its “rules of origin”. Under the USMCA rules of origin, exporters must show that a product has a certain minimum percentage of components from the region (US, Mexico, Canada) to avoid import duties. Redrado said Latin American countries should now follow a transactional policy as we move from a “rule-based world to deal-based world”. This requires a transactional approach to negotiations. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Focus article by Joseph Chang Thumbnail shows the flag of Mexico. Image by Shutterstock.

LONDON (ICIS)–Construction activity in both the eurozone and EU tracked a mild incline compared to the previous month, according to the latest official data on Wednesday. Production fell by 0.1% in both the eurozone and wider EU compared to August, accounting for seasonal adjustment, with building construction the main lag on activity, falling 0.8% and 0.9% respectively. Monthly losses were offset by gains in civil engineering activity (up 1.4% in the eurozone and 0.6% in the EU). Specialised construction activity fell 0.4% and 0.2% respectively. Compared to a year prior, overall production construction fell by 1.6% in the eurozone and by 2.0% in the EU with declines consistent across all sectors. Building construction accounted for the biggest decline in both blocs, falling by 1.6% and 2.7% respectively on September 2023’s output. Civil engineering activity fell by 0.5% in the eurozone and by 2.2% in the EU, with specialised building activity falling by 2.2% in the eurozone and by 1.9% in the EU. Numerous petrochemicals and specialty chemicals are key ingredients in products used for modern construction, including adhesives, ad-mixtures, sealants, coatings, paints, flooring, insulation and water proofing.

LONDON (ICIS)–UK inflation rose in October to its highest level in six months, driven up by rising energy prices, according to official data on Wednesday. The consumer prices index (CPI) increased by 2.3% in the 12 months to October, up from 1.7% in September. Housing and household services, mainly electricity and gas prices, were the biggest factors pushing inflation higher, the Office for National Statistics (ONS) said. The UK’s inflation rate has trended down since October 2022, when it hit 11.1% in the wake of surging energy prices following Russia’s invasion of Ukraine. The Bank of England (BoE) cut its key interest rate twice this year as inflation eased, heading below its target of close to but not exceeding 2% in September. Eurozone inflation also increased in October, rising to 2% from 1.7% in September.

SINGAPORE (ICIS)–Avantium has signed a multi-year collaboration agreement to pilot the production of polylactic-co-glycolic acid (PLGA) from carbon dioxide (CO2), with Thai producer SCG Chemicals (SCGC), the Netherlands-based circular polymer materials firm said on Wednesday. PLGA is a biodegradable, recyclable polyester which is an alternative for conventional fossil-based polyesters. “Under this agreement, SCGC will provide support for all stages of technology development,” Avantium said in a statement. Financial details of the deal were not disclosed. “Additionally, SCGC will work with Avantium on developing various PLGA applications, aiming to bring these sustainable solutions to market.” Avantium and SCGC have spent the past year exploring the properties of PLGA to perfect its formulation for large-scale polymer applications, with a focus on barrier properties, recyclability, and environmental impact. As part of the collaboration, Avantium grants SCGC an option to negotiate license deal to utilize its Volta technology, including PLGA production, within southeast Asia. Avantium’s Volta technology uses electrochemistry to convert CO2 to high-value products and chemical building blocks including glycolic acid. Glycolic acid, combined with lactic acid, can be used to produce PLGA polyester in existing manufacturing assets.

HOUSTON (ICIS)–Recently released data from the 2024 Ellen MacArthur Foundation (EMF) Global Commitment report shows brands continue to make progress against their sustainability goals, albeit at a much slower pace than required. The Global Commitment was initiated in 2018, where both private and public entities joined as signatories, agreeing to work towards several packaging sustainability goals including virgin plastic reduction, increased use of post-consumer recycled (PCR) content, elimination of problematic packaging, increased design for circularity among packaging portfolios and increased application of reuse models across packaging and products. Of the 140 signatories who contributed to the most recent report, 91 are packaged goods companies, packaging producers, or retailers, who account for roughly 20% of the world’s plastic packaging. While these unified goals have demonstrated a positive model for collaboration and voluntary action, this latest report underscores the necessity of additional global policy to unify all packaging players towards a circular economy. At present, signatories are largely outperforming the remaining 80% of the market when it comes to positive sustainable actions. As with all complex problems, it requires multiple solutions. As stated in the report, “Regulation will not solve everything, given the highly complex nature of plastic and packaging waste. Voluntary business action will continue to play a crucial role in innovating, showing what’s possible, and creating demand for solutions”. According to the 2023 packaging volume data, the weighted average of PCR content has increased to 14% from 12% in 2022. This is still far from the weighted average goal of 26% across the signatories by 2025. In total, these efforts amount to over 2.5 million metric tons of PCR having been produced and used in packaging in 2023, up from roughly 2.3 million metric tons in 2023. This is in comparison to the potential demand for over 4 million metric tons of PCR if signatories were to reach their goals based on 2023 total plastic volumes. Looking at the past several years of progress, PCR growth has seen steady 2% increases year on year, though unfortunately this pace is far behind what is needed to reach the ambitious 2025 deadline. At this pace, signatories would collectively reach their goals in 2029, which feels particularly poignant as many individual companies have shifted their timelines from 2025 to 2030 amid growing bottom line pressure and lack of progress. The report confirms as much, transparently stating that many signatories are likely to miss key 2025 targets. That being said, progress is varied among players, with some much closer or already having surpassed initial PCR goals. Per the report, cosmetic sector signatories lead with 31% PCR use on average in 2023, while food sector signatories are only at 10% on average. This could be due to the mixed regulation across the globe regarding food contact approval, as well as the different margin implications between food packaging and other consumer goods items. Even if companies do miss their goals, EMF notes that the Global Commitment has fundamentally transformed data reporting and industry definition practices, a success in itself. According to the report, 45% of signatories now utilize third-party data verification measures which further support data transparency and accountability. When looking at the progress across the other main goals of the Global Commitment, virgin plastic volumes have decreased as companies make targeted efforts to reduce their footprint, though this can also be attributed lower product volumes being produced and sold in the midst of a weak macroeconomic environment as well as carry over destocking from 2023. Unfortunately, only 32% of signatories with a virgin plastic reduction target have either achieved or are on track to meet their target. Bear in mind, these reports publish at a delay and thus actions towards progress in 2024 have largely already taken place, or in some unfortunate cases, have not. This comes as the United Nations Environment Assembly (UNEA) wraps up the fifth and last Intergovernmental Negotiation Committee (INC-5) at the end of the month, with the hopes of having a global treaty on plastic pollution by the end of the year. It remains to be seen how signatories will pursue a final push towards these goals in 2025, amid an uncertain regulatory and economic global environment. Additional reporting by Corbin Olson

CARTAGENA, Colombia (ICIS)–Latin America stands at a crucial turning point as global economic and political dynamics shift, with significant opportunities in energy, food security and technological advancement, an economist said on Tuesday. Martin Redrado, director at the Buenos Aires-based Fundacion Capital, said Latin America is uniquely positioned to benefit from changing global trade patterns, particularly as the world moves from a rules-based system to a more transactional approach. The economist was speaking to delegates at the annual meeting of the Latin American Petrochemical and Chemical Association (APLA). Mexico has emerged as a primary beneficiary of nearshoring initiatives, while South American nations including Colombia, Brazil, Argentina and Chile are increasingly attracting international attention. The region’s energy sector is projected to play a vital role in global security, with forecasts indicating Latin America will produce 11 million barrels of oil daily by 2030, representing 25% of global production, said Redrado. Brazil is expected to double its offshore pre-salt oil production, while Argentina’s Vaca Muerta development promises significant gas production potential. The economist said regarding food security, Latin America’s position appeared equally strong, with the region already controlling half of global corn exports and 60% of soybean exports, with Brazil leading as a major meat exporter. “Latin American will have a central role to play in food security. Today the world has 8 billion inhabitants, and it is estimated that by 2030 around 2.3 billion of those 8 billion will become middle class,” said Redrado. “The middle class consumes more protein, and clearly Latin American, with half of the total corn exports in the world and 60% of soybean exports, is well placed to cater for that demand.” Technological integration, particularly artificial intelligence, is reshaping traditional industries, said Redrado, noting AI applications in agricultural soil analysis, weather forecasting, and pest control are enhancing productivity. Similar advances, he concluded are being made in energy sector efficiency and construction monitoring. INFRASTRUCTURE STILL BEHINDHowever, infrastructure remains a significant challenge, and Redrado said Latin America must improve both physical and digital connectivity, including enhanced petrochemical infrastructure and better regional integration. The push for private sector participation in infrastructure development is growing, with negotiations ongoing for increased US involvement under the Trump administration. Summing up, Redrado said that as global tensions persist in Europe and the Middle East, Latin America’s relative stability and strategic distance from these conflicts, combined with existing free trade agreements with the US, position the region favorably for sustainable economic growth and development. The 44th APLA annual meeting takes place 18-21 November in Cartagena, Colombia. Front page picture source: Shutterstock

LONDON (ICIS)–On November 15, OMV Gas Marketing and Trading said Russia’s Gazprom Export would cut supplies following a decision by the Austrian company to stop payments.  Despite the announcement, gas continues to flow, sparking questions over what lies behind the supply cut announcement and new arrangement.  In this brief Q&A, ICIS responds to questions based on information cross-checked with multiple sources in Ukraine, Slovakia and Austria. 1. Why did Gazprom Export cut contractual gas supplies to Austria’s OMV? Under Russian legislation, exports of natural gas are subject to a 30% duty, in fact shouldered by European off-takers. Sources familiar with Gazprom’s long-term EU contracts say the producer is prohibited from paying the levy itself. This means that if an importer halts payments, Gazprom Export is obliged to stop supplies. OMV Gas Marketing and Trading announced on 13 November that it would stop payments for Russian gas exports to recover €230m in compensation awarded by an arbitral tribunal. The award is to cover non-delivered gas in 2022. That resulted in Russia stopping delivering gas under the long-term contract with OMV. 2. Russian gas is still flowing to Austria. How come? Although OMV said on November 15 that Gazprom Export would reduce gas deliveries to zero from the following day, flows transiting Ukraine and Slovakia and delivered into Austria have continued as normal. Data published by regional grid operators indicate that gas is also exported on to neighboring Italy and the Czech Republic, although it is unclear whether the volumes are of Russian origin. Data verified by ICIS with multiple Ukrainian, Slovak and Austrian sources show that Gazprom Export continues to transit the gas via Slovakia up to the Austrian border. From there it is reportedly transferred to a western European counterparty which has a transport contract with transmission operator Gas Connect Austria. This explains why there have only been minor changes in nominations on the Ukrainian-Slovak and Slovak-Austrian borders. Considering the minor impact on flows and even price spreads, many market sources interviewed by ICIS have raised questions over whether this transfer had been pre-arranged. Neither OMV nor Gazprom responded to questions from ICIS. 3. How long is this arrangement going to last? Possibly until January 1, 2025 when Ukraine’s current transit agreement with Russia expires. 4. Are there other companies involved in this arrangement? This is unlikely. Slovak-importer SPP also has an import contract for Russian gas. Sources in the country say most of the volumes are transited by Gazprom and offtaken by the buyer on the local virtual trading point, however. 5. Has anything changed in relation to the transit agreement in Ukraine and Slovakia? No. Ukrainian sources confirm there were no changes in the transit and transfer arrangement. Slovak sources close to grid-operator Eustream say Gazprom continues to hold long-term transmission capacity at the Velke Kapusany border point with Ukraine. Gazprom’s booked entry capacity at Velke Kapusany amounts to 141,500,000 cubic meters (at 20°C). Exit capacity at Baumgarten on the Slovak-Austrian border stands at 138,500,000. Gazprom has booked transit capacity via Slovakia until 2028. 6. Following this latest transfer, has anything changed in OMV’s long-term import agreement with Gazprom? Based on public statements, all we know for now is that OMV is no longer off-taking gas under its long-term agreement with Russia. It is possible that following the arbitration award and OMV’s subsequent refusal to pay for supplies, Gazprom would not resume contractual deliveries under the terms of the agreement. This is due to expire in 2040. Events could also lead to the renegotiation of the contract, with OMV likely looking to shorten the duration of the deal and reduce imports. OMV is under pressure by the Austrian government as well as the EU to reduce its dependence on Russian gas and has taken steps to secure Norwegian pipeline gas and LNG.

BARCELONA (ICIS)–European chemical producers may have to keep paying high energy prices as geopolitical instability impacts sentiment more than the fundamentals of supply and demand. Europe spot electricity prices up 76% this year, ICIS TTF gas price up 40% Fear drives markets more than fundamentals which remain bearish Demand is reduced compared to five-year average, supply plentiful Above average temperatures forecast into December in Europe Gas storage around 90%, well above 5-year average New sources of US, Qatari liquefied natural gas (LNG) due onstream in 2025 Renewable energy will ramp up quickly in Europe Donald Trump may increase LNG supply by unfreezing projects In this Think Tank podcast, Will Beacham interviews ICIS gas and cross-commodity expert, Aura Sabadus, and Paul Hodges, chairman of New Normal Consulting. 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. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.