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Ammonia17-Feb-2025
The German government confirmed to ICIS it
will not impose company-specific RFNBO targets
The use of subsidies rather than quotas
proves starkly different to Dutch equivalent
scheme
Germany is to hold a general election on 23
February
LONDON (ICIS)–Germany’s federal ministry for
economic affairs and climate protection told
ICIS on 17 February that the country does not
aim to implement company-specific targets or
quotas for the use of renewable hydrogen, but
instead will aim to achieve the targets via
support mechanisms such as climate protection
agreements.
EU member states are obligated via the
renewable energy directive (RED III) to use
renewable fuels of non-biological origin
(RFNBO) across transport and industry. For
transport, 1% of total fuels used by 2030
should be RFNBO, whereas for industry, 42% of
hydrogen use should be RFNBO, rising to 60% by
2035.
Member states have until May 2025 to reflect
their means of implementing these targets, with
Finland already publishing its policy on RFNBO
in transport towards the end of 2024.
GERMAN RFNBO IN INDUSTRY
According to a spokesperson from the federal
ministry for economic affairs and climate
protection, the German government has decided
that “industrial targets will not be passed on
to companies in the form of a corresponding
company obligation or company-specific quota”.
Alternatively, the German government noted that
it’s “addressing the achievement of targets and
the ramp-up of RFNBOs on the demand side with a
series of instruments and measures, such as the
climate protection agreements, the federal fund
for industry and climate protection, the IPCEI
steel projects and the H2Global funding
program.”
This would mean that the German government aims
to see its industry RFNBO target met via
support mechanisms, rather than the use of
company-based penalties for failing to reach a
specific quota.
The latter method, namely quota-based drivers
which imply a penalty should a company miss its
target, has been pushed by EU hydrogen market
participants, predominantly on the seller side
of the market. This is because a penalty
mechanism would in theory drive up a would-be
hydrogen buyer’s willingness to pay.
For example, the ICIS German THE front-month
contract was assessed at €51.475/MWh on Friday
14 February, which equals €1.71 per 33.3kWh –
the amount of energy in a kilogram of hydrogen.
ICIS Hydrogen Foresight data indicates that
German willingness to pay for hydrogen is
expected to average €2.31/kg in 2025, while
RFNBO costs are expected to average €8.10/kg.
To bridge this gap, participants have been
highlighting the need for a mechanism where
parties would pay a penalty should they fail to
meet their quota, therefore increasing their
implied willingness to pay for RFNBO.
Member states have so far released little in
the way of industrial RFNBO targets. However,
in October 2024 the Dutch government
published a consultation for its proposal
to implement RED III targets via its HWI
scheme, where companies must ensure that by
2030 24% of their hydrogen use is RFNBO.
Participants will receive a certificate for
each unit of RFNBO used, which can be traded if
the obligated party wishes.
In essence, the Dutch HWI as it stands would
act as a quota-based scheme.
Speaking to ICIS in reaction to the proposed
RED III mechanism, one market participant said
they felt the scheme could face potential
changes following the approaching German
election on 23 February.
Another market participant said that they
viewed the potential of a subsidy-only RED III
implementation as negative as it showed the
country presented less of a push to
decarbonize, bringing more uncertainty to
developers. They added that the alternative
would be a lot of subsidies, which they were
sceptical of.
COST OF SUPPORTING RFNBO UPTAKE
ICIS Hydrogen Foresight data indicates that
industrial hydrogen demand in Germany could
reach 75TWh by 2030, approximately 85% of total
hydrogen demand in Germany by that time.
To balance willingness to pay across hydrogen
projects in the ICIS Hydrogen Foresight project
database with supply-side project costs, ICIS
data indicates that accumulative support across
capital and operational funding would need to
surpass €70 billion.
GERMAN GAS DEMAND REDUCTION
Should the German government’s approach result
in high levels of uptake of RFNBO across
industry, reducing overall natural gas demand,
this could ease gas and power prices.
However, in 2024 industrial natural gas offtake
totaled 332TWh, amounting to just under 40% of
Germany’s total gas demand for the year. As
such, even if all 75TWh of projected hydrogen
demand in industry moved from fossil fuel-based
supply to RFNBO, this would still leave a
substantial level of natural gas demand for
industrials intact.
Speciality Chemicals17-Feb-2025
SAO PAULO (ICIS)–Here are some of the stories
from ICIS Latin America for the week ended on
14 February.
NEWS
INSIGHT: US mulls
reciprocal tariffs on Brazil ethanol, cabinet
hopes steel quota is to be
kept
Although the new US administration has so far
only imposed tariffs on China, President Donald
Trump keeps using the tariff threat as a form
of negotiation and in the latter part of this
week it was the turn of Brazil’s ethanol.
Brazil’s Unigel
plans listing but location undisclosed, rules
out IPO – company
Unigel’s restructuring plan includes listing
shares on the stock exchange but not an initial
public offering (IPO) issuing new shares, a
spokesperson for the Brazilian chemicals
producer said to ICIS.
Brazil’s inflation slows
in January but monetary tightening to continue
– analysts
Brazil’s annual rate of inflation fell in
January to 4.56%, down from 4.83% in December,
the country’s statistical office, IBGE, said
this week.
INSIGHT: EU-Chile
trade deal could benefit chemicals indirectly
via higher minerals supply (part
1)
An interim trade accord between Chile and the
EU kicked off on 1 February and the 27-country
bloc is not shy about its main objective: get
preferential access to the Latin American
nation’s vast resources of raw materials.
Mexico’s
inflation falls in January nearing target,
automotive exports under
pressure
Mexico’s annual rate of inflation fell to 3.59%
in January, down sharply from December’s
4.2%, the country’s statistics office Inegi
said.
Brazil’s
automotive January production up 15% on healthy
demand at home, abroad
Brazil’s petrochemicals-intensive automotive
production rose more than 15%, year on year, to
175,500 units – the highest January output
since 2021 – while exports jumped over 50%, the
country’s trade group Anfavea said on Monday.
PRICING
LatAm
PE international prices stable to up on higher
US export
offersInternational
polyethylene (PE) prices were assessed as
stable to up on higher US export offers.
LatAm PP domestic
prices up in Mexico on higher feedstock
costs
Domestic polypropylene (PP) prices increased in
Mexico tracking higher propylene costs. In
other Latin American countries, prices were
unchanged.
Ethylene17-Feb-2025
HOUSTON (ICIS)–Here are the top stories from
ICIS News from the week ended 14 February.
IPEX: Asia finding a floor, up 1%;
PVC and PP drive 1.3% index fall in Europe;
USG toluene firms
The ICIS Petrochemical Index (IPEX) for
January shows that northeast Asian chemical
markets may be finding a floor after two
consecutive months of declines, with the
regional index up 1% – only its second gain
in six months, driven by a 14.7% surge in
butadiene due to rising crude oil costs.
US higher steel tariffs could
backfire, reduce capex in chemical,
industrial plants – ICIS
economist
Potential US 25% tariffs on steel and other
metals could ultimately reduce capital
expenditure (capex) in chemicals and
industrial plants as costs rise, according to
an economist at ICIS.
US’ 25% tariffs on all steel,
aluminium imports start 12
March
The US will start imposing 25% tariffs on all
steel and aluminium imports starting 12
March, under the executive order signed by US
President Donald Trump on 11 February.
INSIGHT: EU-Chile trade deal could
benefit chemicals indirectly via higher
minerals supply (part 1)
An interim trade accord between Chile and the
EU kicked off on 1 February and the
27-country bloc is not shy about its main
objective: get preferential access to the
Latin American nation’s vast resources of raw
materials.
INSIGHT: US reciprocal tariffs would
have little direct impact on commodity
chemicals markets –
analysis
The threat of US reciprocal tariffs is the
latest wrinkle in US trade policy, spurring
players to game out potential impacts. For
the US chemical industry, there should be
little direct impact on commodity markets as
imports largely originate from Canada and
South Korea – countries that already have
free trade agreements with the US.
Americas Styrenics sale process
delayed as better market conditions expected
later in 2025 – Trinseo
The potential sale of Americas Styrenics
(AmSty) – the 50/50 joint venture between
Trinseo and Chevron Phillips Chemical (CP
Chem) is being delayed as better market
conditions are expected later in 2025, said
the CEO of Trinseo.
Reciprocal tariffs will match taxes
on US goods by other countries; to take
effect in April
The US plans to impose reciprocal tariffs on
all countries as early as 2 April once the
required investigations have taken place,
President Donald Trump said on Thursday.
INSIGHT: US
mulls reciprocal tariffs on Brazil ethanol,
cabinet hopes steel quota is to be
kept
Although the new US administration has so far
only imposed tariffs on China, President
Donald Trump keeps using the tariff threat as
a form of negotiation and in the latter part
of this week it was the turn of Brazil’s
ethanol.
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Titanium Dioxide17-Feb-2025
LONDON (ICIS)–BASF is to sell its Brazilian
decorative paints business to Sherwin-Williams
for $1.15 billion and is set to begin exploring
options for other parts of its coatings
portfolio, the Germany-headquartered chemicals
major said on Monday.
The deal, to be structured as a share deal, is
expected to close in the second half of 2025,
with both companies to act fully independently
until the completion of the transaction, the
company said.
BASF had marked the divestment of the Brazil
business as a
priority when it unveiled its new corporate
strategy in September 2024, with around 1,000
employees and two production sites, in Demarchi
and Jaboatao, included in the sale.
The business, which also includes paints brands
Suvinil and Glasu!, largely
operates in Brazil and has “limited synergies”
with BASF’s other coatings businesses, the
company said in a statement.
BASF projects further divestments in the
coatings space and will begin exploring options
for its other assets in the space in the next
few months.
“In the second quarter of 2025, BASF intends to
approach the market to further explore
strategic options for its remaining coatings
activities, which include automotive OEM
coatings, refinish coatings and surface
treatment,” the company said.
At its September strategy announcement last
year, CEO Markus Kamieth outlined an overhaul of BASF’s
structure to mark a clearer line between core
operations and “standalone units” serving
specific industries.
The company identified its chemicals,
materials, industrial solutions, and nutrition
and care segments as the core businesses, and
environmental catalyst and metal solutions,
battery materials, coatings, and agricultural
solutions categorised as standalone.
“In the coming years, BASF will focus on
strengthening and profitably growing its core
businesses. For the standalone businesses, BASF
will pursue active portfolio options where this
adds value for BASF and its shareholders,” the
company said at the time.
Thumbnail photo source: Shutterstock
Gas17-Feb-2025
UPDATE: China retaliates with 15% tariff on US LNG
SINGAPORE (ICIS)–China has announced a 15% tariff to be
imposed on coal and LNG imports from the United States as a
retaliation to US trade tariffs, the country’s Ministry of
Commerce said in a statement.
“In accordance with the Tariff Law of the People’s Republic
of China, the Customs Law of the People’s Republic of China,
the Foreign Trade Law of the People’s Republic of China and
other laws and regulations and the basic principles of
international law, and with the approval of the State
Council, additional tariffs will be imposed on some imported
goods originating from the United States starting from 10
February 2025.”
A 10% tariff will also be imposed on crude oil, agricultural
machinery, and a score of other products. US president Donald
Trump and Chinese President Xi Jinping are expected to talk
this week on trade and other issues.
The US has imposed 10% tariffs on Chinese goods starting 4
February.
“This will drive even more US volumes into Europe, and leave
portfolio players with suboptimal logistical flows,” said
Saul Kavonic, oil and gas analyst with research firm MST
Marquee.
“Chinese buyers will pay the tariffs, so will be trying to
minimize the US volumes they take contractually, and swap
that out for non-US volumes. This benefits other regional
producers such as Australia, who will be seen as relatively
more reliable after this.
“The negative impact on US LNG from these tariffs will only
partly offset the strong appetite from other buyers to
procure more US LNG under pressure from Trump to rebalance
trade deficits. The tariffs will create material market
inefficiencies, which will benefit some LNG traders in the
regions. It may push prices higher everywhere on the margin,
as flows become suboptimal.”
CHINA IMPORTS
China imported 4.4 million tonnes of LNG from the United
States in 2024, ICIS data shows, out of a total of 79.24
million tonnes.
If the tariff is enforced and stays beyond the upcoming
negotiations expected this week between US President Donald
Trump and Chinese President Xi Jinping, importers could
optimize the US-based positions by diverting them elsewhere.
However, the imposition of tariffs on energy by the Chinese
government fundamentally means higher energy costs for the
country, which increases the cost of industrial production
and inflationary pressure.
The growing tensions in the commercial relationship between
the countries could also equate to reluctance by Chinese
buyers to commit to new long-term positions with US-based
suppliers.
Political tensions with the US could turn Chinese buyers to
alternative sources of LNG and pipeline gas, including
Russia.
The move is the latest in a series of tariff exchanges that
so far have involved Canada and Mexico in addition to China.
The market anticipates that the next wave of tariffs could
target members of the European Union.
EU states are unlikely to impose retaliatory tariffs on
imported energy, as the cost of gas is already growing
following the halt of Russian pipeline gas supplies to the
region. Roman Kazmin
Petrochemicals17-Feb-2025
LONDON (ICIS)–Click
here to see the latest blog post on
Chemicals & The Economy by Paul Hodges,
which gives an update on the collapse underway
in China’s property market.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author and do not necessarily represent those
of ICIS. Paul Hodges is the chairman of
consultants New
Normal Consulting.
Crude Oil17-Feb-2025
SINGAPORE (ICIS)–S-Oil’s Shaheen
crude-to-chemical project in Ulsan, South Korea
is now 55% complete and is expected to start
commercial operations in the second half 2026,
the producer said on Monday.
Construction of the $7bn
project at the Onsan Industrial Complex of
Ulsan City started in March
2023, with
mechanical completion targeted by the first
half of 2026.
South Korean refiner S-Oil is 63%-owned by
Saudi Aramco, the world’s largest crude
exporter.
The Shaheen project – named after the Arabic
word for “falcon” – will have a 1.8 million
tonne/year mixed-feed cracking facility; an
880,000 tonne/year linear low density
polyethylene (LLDPE) unit; and a 440,000
tonne/year high density PE (HDPE) plant.
The site will have a thermal crude-to-chemical
(TC2C) facility, which will convert crude
directly into petrochemical feedstocks such as
liquefied petroleum gas (LPG) and naphtha, and
the cracker is expected to recycle waste heat
for power generation in the refinery.
The company currently produces a range of
petrochemicals and fuels including benzene,
mixed xylenes, ethylene, methyl tertiary butyl
ether (MTBE), paraxylene, polypropylene,
propylene, propylene oxide, biodiesel, and
potentially bio-based aviation and other
bio-derived products at its Onsan site.
S-Oil plans to supply feedstock to domestic
petrochemical downstream companies mainly
through pipelines.
“To this end, the construction of
logistics-related infrastructure, such as a new
pipeline network, is being carried out at the
same time,” it said.
Long-term agreements for stable supply of raw
materials are being signed between S-Oil and
petrochemical companies located at the two
industrial complexes in Ulsan, which would
boost competitiveness of domestic value chain,
the company said.
Speciality Chemicals17-Feb-2025
LONDON (ICIS)–Here are some of the top
stories from ICIS Europe for the week ended
14 February.
Europe MX and PX
chemical value chain braces for headwinds
amid downstream closures and tariff
threats
Downstream demand for mixed xylenes (MX) and
paraxylene (PX) in Europe has been limited at
the start of 2025, with permanent shutdowns
and the threat of tariffs among the hurdles
to a meaningful recovery.
Germany’s battered
chemical industry holds its breath ahead of
general election
Germany is set to head to the polls on 23
February amid one of the most challenging
economic scenarios the country has faced in
post-war times.
EU
gas price cap proposals would drive shipments
to other regions – ICIS expert
Proposals under consideration in the European
Commission to temporarily cap natural gas
pricing would likely result in the diversion
of supplies away from Europe and tighten
supply in the region, an ICIS analyst said on
Wednesday.
EU
promises plan to save chemicals as Clean
Industrial Deal approaches
The European Commission has promised to
address the plight of the region’s
energy-intensive petrochemical sector later
this year as it gears up for the publication
of the Clean Industrial Deal on 26 February.
IPEX: Asia finding a
floor, up 1%; PVC and PP drive 1.3% index
fall in Europe; USG toluene firms
The ICIS Petrochemical Index (IPEX) for
January shows that northeast Asian chemical
markets may be finding a floor after two
consecutive months of declines, with the
regional index up 1% – only its second gain
in six months, driven by a 14.7% surge in
butadiene due to rising crude oil costs.
Isopropanol17-Feb-2025
SINGAPORE (ICIS)–The US International Trade
Commission (ITC) will start on 5 March a
preliminary antidumping probe on imports of
methylene diphenyl diisocyanate (MDI) from
China, acting on a petition from BASF and Dow
Chemical.
The MDI Fair Trade Coalition – consisting of
BASF Corp (Florham Park, New Jersey); and Dow
Chemical (Midland, Michigan) – filed the
petition on 12 February, citing dumping
margins of 305.81% to 507.13% for the Chinese
material, according to ITC’s statement.
ITC will make a preliminary determination on
possible dumping by end-March 2025.
The petition named producers BASF
Polyurethane (Chongqing), Covestro Polymers
(China), Shanghai Lianheng Isocyanate, Wanhua
Chemical Group, and Wanhua Chemical Ningbo as
allegedly dumping MDI into the US.
China’s Wanhua Chemical is the world’s
largest MDI producer.
In 2024, the US imported around 229,000
tonnes of MDI from China, which accounted for
57%
of total US MDI imports. The US in turn
exported minimal amounts of MDI to China.
Chinese MDI is currently subject to 35%
tariffs in the US, after the additional 10%
levy implemented on 4 February 2025.
In his first term as US president, Donald
Trump had imposed a 25% tariff on a host of
Chinese goods, including MDI in May 2019.
China, on the other hand, has a 31.5% tariff
on imports of US MDI – a 25% tariff on top of
the baseline 6.5% duty.
(Adds paragraphs 4-9)
Thumbnail image: Heavy Fog Hit Shanghai
Port, China – 16 February 2025
(Costfoto/NurPhoto/Shutterstock)
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