SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. As you do your budget planning for 2025, don’t lose sight of what the ICIS data consistently tell us. Any recovery in demand next year is unlikely to make much of dent in the record levels of global oversupply up and down all the chemical values chains. Today’s blog is a reminder of why where are where we are today – Regular readers of the blog will have been prepared for these events. I of course get things wrong as we all do, but I have been warning about the China risks for more than a decade. I also identified the Evergrande Turning Point shortly after it happened in late 2021. Beyond 2025, this is what we can learn from the events in China: The problem during the Chemicals Supercycle was not enough people asked hard questions about the nature of demand growth in China. Instead, too much analysis focused on feedstock advantage only while assuming demand would take care of itself. We thus need to set up demand teams that build much more nuanced and in-depth scenarios about what could happen next in China and elsewhere. How will demographics, climate change, geopolitics and the energy and chemicals transitions shape future global consumption growth? Artificial intelligence is potentially a fantastic tool to help us model this complexity, provided we ask it the right questions and use a commodity in much shorter supply than chemicals: Commonsense. Good luck out there. Here’s to managing our way through these challenging times together. 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.

TORONTO (ICIS)–New US tariffs on US-Canada trade would have a devastating impact on manufacturers, workers and consumers on both sides of the border, trade group Canadian Manufacturers and Exporters (CME) said on Tuesday. “This is truly a lose-lose proposition,” the group said in reacting to news on Monday that President-elect Donald Trump plans to impose a 25% tariff on all imports from Canada and Mexico. “On January 20th, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the United States, and its ridiculous open borders,” Trump said on social media. The tariffs would remain in place until Canada and Mexico took action on drugs and immigrants entering the US, Trump said. Notably, he did not mention an exemption for US-Canadian energy trade. Trump previously proposed to raise tariffs by 10-20% on all imports, and by 60% on imports from China. CME said that Canada’s exports to the US were primarily materials and inputs used by US businesses to manufacture other products. As such, imposing tariffs would not just harm Canada’s economy – it would also hurt US manufacturers by increasing their costs and disrupting the deeply integrated supply chains that made North American manufacturing globally competitive, the group said. The economic relationship between Canada and the US is “enormous”, with Canadian dollar (C$) 2.5 billion (US$1.8 billion) in goods crossing the border every day in 2023, it said. Of that trade, 75% consists of manufactured goods, the group said. Trump claims that he wants US manufacturing to grow and thrive, but “these tariffs would have the opposite effect,” CME said. The group added that it was working closely with the federal government in Canada and partners at the US National Association of Manufacturers (NAM) to ensure the new Trump administration and other decision-makers “fully understand the consequences of this proposal”. “We believe Canada and the US must work together on policies that support the growth of manufacturing while strengthening our shared economic and national security and not pursuing policies that will undoubtedly harm US manufacturers, in addition to Canadian businesses and workers,” it added. CME represents all of Canada’s manufacturers. Among many others, its members include NOVA Chemicals and other chemical producers. The Chemistry Industry Association of Canada (CIAC), which speaks for Canada’s chemicals and plastics industries, said that companies on both sides of the border were still digesting the news of Trump’s tariffs, as was CIAC. The group expects to be able to provide comment soon. According to previous CIAC data, about 80% of Canada’s chemicals production goes into export, with about 80% of those exports going to the US. CANADIAN POLITICIANS REACT Canadian government officials said that Prime Minister Justin Trudeau spoke with Trump shortly after Trump announced the tariffs. The details of the conversation were not disclosed. Trudeau also spoke with the premiers (governors) of Canada’s Ontario and Quebec provinces, who warned of the risks the US tariffs pose to their respective economies. The premier of Ontario urged Trudeau to call a meeting with all premiers. The premier of oil-rich Alberta province, Danielle Smith, said on social media that the incoming Trump administration had “valid concerns related to illegal activities at our shared border”. Canada’s federal government needed to work with the US “to resolve these issues immediately, thereby avoiding any unnecessary tariffs on Canadian exports to the US”, she said. “As the largest exporter of oil and gas to the US, we look forward to working with the new administration to strengthen energy security for both the US and Canada,” she added. Last week, Canada’s finance minister and deputy prime minister Chrystia Freeland said that unlike Mexico, Canada was “more aligned today than ever” with the US with regard to concerns about China’s trade practices. Canada had followed the US tariffs on electric vehicles (EVs), steel and aluminum from China, meaning it was not a back door for Chinese goods into the US, she said. Meanwhile, some Canadian politicians have called for a US-Canada trade deal that would exclude Mexico. The current US-Mexico-Canada (USMCA) trade deal will be renegotiated in 2026. Last week, experts at Oxford Economics said that new US tariffs, and Canada’s retaliatory tariffs, would raise inflation. Oxford, in its models, assumes that US-Canada energy trade will be exempted from the tariffs. (U$1 = C$1.41) Thumbnail of photo Trudeau (left) meeting Trump in Washington in 2019 during Trump’s first presidency; photo source: Government of Canada

BARCELONA (ICIS)–Two liquids-to-chemicals project announcements by Saudi Aramco highlight a new source of rapid capacity growth which will add to global overcapacity. Middle East oil and gas companies want to push crude-oil-to-chemicals (COTC) as demand for transport fuels declines Saudi Aramco aims to convert around 4 million barrels/day of crude oil into chemicals by 2030 versus about 1 million barrels/day currently Demand growth will not be sufficient to meet rising supply More closures will be needed to balance the market In this Think Tank podcast, Will Beacham interviews ICIS market development executive John Richardson 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.

SINGAPORE (ICIS)–Singapore’s chemicals output in October fell by 2.2% year on year, but overall production is expected to continue posting growth well into early next year, led by the electronics sector. Oct overall manufacturing output up 1.2% year on year Key exports fell by 4.6% year on year in Oct Outlook for 2025 remains cloudy on expected protectionist measures Output from the specialties segment fell by 31.7% year on year in October on lower production of mineral oil additives and biofuels, data from Singapore’s Economic Development Board (EDB) showed on Tuesday. October petroleum output declined by 0.3% year on year, while petrochemical output grew by 4.6%. In January-October this year, output from the chemicals cluster posted a 5.0% year-on-year growth. Singapore’s overall manufacturing output in October rose by 1.2% year on year, partly driven by the electronics sector which grew by 4.3%. On a seasonally adjusted month-to-month basis, manufacturing output barely grew, inching up 0.1% in October. Singapore is a leading petrochemical manufacturer and exporter in southeast Asia, with more than 100 international chemical companies, including ExxonMobil and Shell, based at its Jurong Island hub. “For the rest of 2024 and into early next year, growth momentum in trade-related sectors (including manufacturing) should be sustained, supported by the ongoing upturn in the electronics cycle,” said Jester Koh, an associate economist at Singapore-based UOB Global Economics & Markets Research. Tailwinds from some front-loading of exports and attendant ramp up in production ahead of [US President-elect Donald] Trump’s proposed tariffs would also lend support to overall industrial output, Koh said. On 22 November, Singapore downgraded its full-year 2024 non-oil domestic exports (NODX) growth forecast to around 1%, from an earlier projection of 4-5% made in August, according to trade promotion agency Enterprise Singapore. “While the external environment is generally supportive of growth, uncertainties in the global economy such as a more challenging and competitive trade environment could weigh on global trade and growth,” it said. Trump on 26 November said that he would sign an executive order upon taking office on 20 January 2025 to impose a 25% tariff on imports from Canada and Mexico and also outlined “an additional 10% tariff, above any additional tariffs” on imports from China. For 2025, the outlook remains cloudy, and downside risks could emanate from further protectionist measures under Trump’s ‘America First’ policy, elevated geopolitical tensions, possible peak in the electronics cycle and uncertainty over the pace of monetary easing by major central banks, UOB’s Koh said. Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Asian petrochemical shares were mostly lower on Tuesday after US President-elect Donald Trump threatened to impose an additional 10% tariffs on Chinese goods. In a post on social media platform Truth Social on Tuesday, Trump also said that he would impose 25% tariff on all products from Mexico and Canada, citing concerns over illegal immigration and drug trafficking. At 03:15 GMT, Japan’s Mitsui Chemicals was down 1.22% in Tokyo; Taiwan’s Formosa Petrochemical Corp declined by 1.25% in Taipei; and South Korea’s Hanwha Corp fell by 2.79% in Seoul. Japan’s benchmark Nikkei 225 was down by 1.34% at 38,260.38; South Korea’s KOSPI Composite slipped by 0.56% to 2,520.14; while China’s CSI 300 index inched up by 0.16% to 3,854.09. “I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail,” Trump said. “Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America.” Trump is set to be inaugurated as the next US president on 20 January 2025. “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States,” Trump said in a post on Truth Social. He stated that the tariff will remain in effect until Mexico and Canada address the issues of illegal immigration and the influx of deadly synthetic opioid fentanyl into the US. During his election campaign, Trump promised to implement sweeping new tariffs aimed at protecting American industries, promoting domestic manufacturing, and reducing reliance on foreign imports. Trump had said he intends to impose 60% tariffs on Chinese imports and 10-20% tariffs on products from other countries, among others, arguing that the measures can create more factory jobs, shrink the federal deficit, and lower prices for American-made goods by making foreign goods more expensive, Dutch banking and financial information services provider ING said in a note. In 2024, the US imported goods worth around $3.1 trillion, with $427 billion or around 14% of the total coming from China, according to ING. Thumbnail image: Busy Yangzhou Port in Jiangsu, China – 16 November 2024 (Shutterstock)

HOUSTON (ICIS)–Costs for ethane, the predominate feedstock for US ethylene plants, could face upward pressure with the startup of the first train of the Golden Pass liquefied natural gas (LNG) project, which has reached a new milestone following setbacks earlier this year. The project’s owner, Golden Pass LNG Terminal, had reached an agreement with the contractor in regards to the commercial terms for the completion of the full scope of the first train of the project, according to a statement published on Monday by Chiyoda International, a contractor. Chiyoda and CB&I are partners in the joint venture that is building the terminal. Another joint venture is the owner of the terminal. That joint venture is made up of QatarEnergy (70%) and ExxonMobil (30%). Earlier in November, ExxonMobil said the first train of Golden Pass should start up at the end of 2025. The joint venture and the contractors are in talks to amend the contract to complete the second and third train of the LNG terminal, Chiyoda said. The second train could start up six months after the first one, ExxonMobil had said earlier in November. The third train could take another six months to start up. The three trains at Golden Pass will have the capacity to export 15.6 million tonnes/year. GOLDEN PASS SOURCE OF UPWARD PRESSURE ON CHEM COSTSLNG terminals such as Golden Pass increase demand for natural gas, which can cause prices for the fuel to rise. That, in turn, can affect costs for ethane, the main feedstock used to make ethylene in the US. When natural gas prices are high relative to ethane prices, ethane rejection becomes more attractive, said Kojo Orgle, feedstock analyst for ICIS. Orgle monitors the US markets for ethane and other petrochemical feedstock. Increased ethane rejection, in turn, tightens supply fundamentals and puts upward pressure on ethane prices, Orgle said. Rising natural gas demand for LNG exports could effectively elevate ethane prices. One LNG project should start up by the end of 2024, when Cheniere begins operations at stage three of its 10 million tonne/year LNG project in Corpus Christi, Texas. Another source of cost pressure on ethane is growing capacity to export ethane. Midstream companies are expanding ethane terminals. On the other hand, US supplies of ethane should continue growing because of rising production of oil and natural gas. LIMITED DEMAND GROWTH FROM US CRACKERSDomestic demand for ethane should see limited growth because few companies are building new crackers in the US. The only confirmed US project is a joint-venture cracker that Chevron Phillips Chemical and QatarEnergy should start up in late 2026 in Texas. Shintech could build a cracker in Louisiana, but the company has yet to announce a final investment decision (FID). DETAILS OF GOLDEN PASS PROJECTThe Golden Pass terminal is being developed at Sabine Pass, Texas, next to Louisiana. The project has faced delays following the bankruptcy of its former lead contractor, Zachry Industrial. Earlier in October, Golden Pass LNG was granted an additional three years to finish construction of the plant, extending the deadline to 30 November 2029. The Texas project had also requested to the Department of Energy that its deadline for the start of commercial operations be extended to 2027. Additional reporting by Lars Kjoellesdal Thumbnail shows natural gas. Image by Shutterstock

LNG charter rates hit fresh lows Sources concerned rates could fall further, backwardating or turning negative Such low rates likely mean more steam ships scrapped or laid up next year LONDON (ICIS)–LNG spot charter rates continue to decline as shipping sources become concerned that prices are shifting into backwardation and that negative rates are emerging in the market. Negative rates are expected to hit steam-propelled vessels soon, with these already at zero, according to several sources on Monday. Shipping rates have fallen to the lowest levels recorded by ICIS due to growing length in the shipping market, with over 60 LNG carriers delivered over the course of 2024 and more than 80 expected in 2025 and in 2026, according to ICIS data. That means shipping capacity is growing faster than expected production increases over the coming two years. Another source added last week that spreads between lower charter rates in December and higher rates in February could be deceptive. They said rates for charters over the coming three months could quickly tumble as backwardation sets in. Rates are usually expected to be in contango in early winter. Putting December Two-stroke vessels at close to $10,000s/day, they added that “January and February won’t be any better, with the market really struggling under so many new vessels.” Others who said rates of around $20,000/day were still fair for Two-stroke vessels last Friday also said on Monday that they had slipped below this level, as the market reaches more consensus over continued rate drops. Sources also have mixed views on whether rates could drop even further. “Who knows [if prices have bottomed now]” said one broker. “You think it’s going up and then it softens again.” Some chartering agreements were also reported at the end of last week. CHARTER AGREEMENTS The MEGA 2-stroke Saint Barbara was chartered out to INPEX’s IT Marine Transport PTE (ITMT) for a loading from Darwin with redelivery to Japan in the low $20,000s/day. But Bp chartered in the MEGI Two-stroke Global Energy for 19 December from the US Gulf for $10,000/day, with ADNOC chartering in a 149,000cbm SEFE vessel from Das Island between 15-30 December for a multi-month charter at the same rate. NEGATIVE RATES Steam vessel rates, most at risk of turning negative, were quoted at between $4,000/day-$11,000/day last week, with these quoted at zero on 25 November. Shipping rates are normally assessed on a round-trip basis, as reflected in most physical chartering agreements. If a vessel is let for multiple journeys, its re-delivery to a specified point is also usually included. Although one source on Monday also said they thought prices had now hit a floor, hire rates could go even lower and trade in negative territory “to get closer to one way economics,” explained another. This essentially means that no ballast bonus is included in a charter price, so that the owner must pay entire costs to move a vessel to its next desired location once a delivery is made. One source said that every time the market expects charter rates have hit a floor in recent weeks, rates then soften further, while a third said that while negative rates may not come to place, “they are clearly now a very real possibility”. “Some smaller vessels will probably now do the laden leg for zero as long as the vessel can be kept cold,” said another, although for most vessels repositioning is still expected to be covered and that most charterers are only looking at vessels of around 174,000cbm. Steam vessel lay-ups are also being considered by some shipowners, they added, saying they had not seen this yet because of the higher costs. “Initial lay-up fees can be over $1m, so we’ve not seen this happening yet. “But I am sure next year a lot of steamers will go into lay-up …or just be scrapped,” they added. Lay-ups can also cost around $20,000/day. Additional reporting from Lars Kjoellesdal

LONDON (ICIS)–November’s polyethylene (PE) and polypropylene (PP) prices have eased in the face of dispiriting demand and as maintenance season comes to a close in Europe. ICIS senior editors Vicky Ellis and Ben Lake weigh up what’s behind the November trends, how forex and logistics might be affecting the markets and what’s in store for December. They also discuss ICIS coverage of European PE, PP players adapting value propositions in the face of an evolving market, and Think Tank’s podcast episode: Trump trade war will drive end of globalization for chemicals. Editing by Will Beacham

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 22 November. INSIGHT: Europe, US chemicals have most to lose from a new trade war Donald Trump’s resounding victory in the US presidential election gives him a powerful mandate for a policy agenda which includes ramping up trade tariffs across the board as he pursues his re-shoring agenda. APLA ’24: LatAm chems should prepare for rebalancing to take place only from 2030 onwards – APLA Latin American chemicals producers should be prepared to face a prolonged downturn which could extend to 2030 as newer capacities globally keep coming online, according to the director general at the Latin American Petrochemical and Chemical Association (APLA). APLA ’24: Latin America poised for strategic growth amid global shifts – economist 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. INSIGHT: Chems firms struggle to gain traction in Q3 The chemicals sectors’ third-quarter earnings period has underlined how little momentum has built up in the last 12 months, and how tepid expectations are for the closing months of the year. APLA ’24: Mexico nearshoring critical as US-Mexico economies intertwined – Evonik exec 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. APLA ’24: Logistics more challenging to plan with increasing external threats – panel Logistics are getting even more challenging, as climate change, armed conflicts and tariffs are making planning difficult, shipping experts said on a panel discussion at the Latin American Petrochemical and Chemical Association (APLA) Annual Meeting. Canada to see higher inflation on Trump tariffs – economists Fallout from the policies and tariffs proposed by US President-elect Donald Trump will inevitably affect Canada’s economy, in particular the manufacturing sector, according to Oxford Economics.