LONDON (ICIS)–Denmark’s Dan Jorgensen will prioritise ending Russian LNG imports and lowering energy prices when he takes up the post of EU energy commissioner on 1 December, Ursula von der Leyen confirmed on 27 November. The European Parliament narrowly approved Von der Leyen’s new college of commissioners in a vote on 27 November, and the European Council of EU leaders formally endorsed the new Commission on 28 November, clearing it to start work. Von der Leyen told the European Parliament the that the outgoing Commission had done much to respond to surging energy prices that followed Russia’s invasion of Ukraine, but that “the price of energy is structurally still too high and has to go down”. She said Jorgensen’s previous experience – he was Denmark’s energy and climate minister from 2019 to 2022 – would help in this work. However, industry players have questioned whether the stated goal of ceasing all Russian gas imports is compatible with lowering prices. Torben Brabo, former international director at Danish gas and power transmission system operator Energinet and former president of Gas Infrastructure Europe, told ICIS it was key that Jorgensen used the word ‘independent’ when asked about the subject in his confirmation hearing. “For me, there are huge differences between being independent of Russian gas and [having] no Russian gas,” Brabo said. While over-reliance on Russian supply had been naïve, Brabo said, the molecules remained the cheapest available, while ending all supply also required the added costs of maintaining overcapacity to import other sources. “Let’s say we have 5-10% of our gas supply coming from Russia, with the option of more. Then we would have cheaper gas – and cheaper energy costs for end-users. We could probably use the bargaining [chip] on all the other imports, and thereby get even cheaper gas from them, and we could probably rely on a slightly smaller gas system in total or repurpose for hydrogen or other green gasses,” Brabo said. The European Commission has a stated aim of ending Russian gas imports by 2027, but Jorgensen said in his hearing he aimed to accelerate this process. WELL-QUALIFIED FOR COMMISSIONER Brabo was positive about Jorgensen’s prospects for the commissioner role, citing success in Denmark with industrial climate partnerships and Denmark’s first of its kind binding climate law. The partnerships forced stakeholders in 13 different sectors into implementation mode. “Instead of just being pro the government or in opposition, they were actually put in the driver’s seat, because they should make a recipe for how the government could help them,” he explained. Jorgensen’s time as minister also required ideological flexibility to support the end goal of decarbonisation, with the Baltic Pipe between Norway and Poland a good example. While the massive fossil infrastructure was not on the government’s agenda, Energinet was asked to make a plan and Poland bought 80% of the capacity for 15 years, helping Poland shift from coal to a more stable, secure gas supply. “Even though that [Jorgensen] would rather have seen money go for green investments, he was supportive on this objective mechanism, respecting the neighbouring countries and their needs,” Brabo said. NUCLEAR VIEWS Jorgensen was also drawn repeatedly on the topic of nuclear power during his hearing. He said he supported countries right to choose their power mix but also didn’t believe it was for the EU to fund construction of nuclear plants. Teresa Ribera, who as the Commission’s executive vice-president for a clean, just and competitive transition will oversee Jorgensen’s work, broadly sidestepped questions about support for nuclear during her own confirmation hearing on 12 November. “I think he has mainly been playing on his own half of the sports arena in the past … It will be interesting to see how he needs to not only stand in the very green Danish goal, but he needs to stand in the middle of the arena, looking at all possibilities,” said Brabo. FOLLOW THROUGH NEEDED Jorgensen’s ability to implement is a question mark. Alongside the affordable energy plan, part of the clean industrial deal due, as well as a plan to exit Russia gas within the Commission’s first 100 days. An electrification action plan will follow in due course, and he needs to help ensure the large volume of Green Deal legislation for the previous five years is implemented. Jorgensen’s successor in Denmark was told to focus on implementation, Brabo said, with fewer new targets. “And now [Jorgensen’s] come to the Commission in a larger scale, invited to do this second stage, which will be interesting,” he said.

SINGAPORE (ICIS)–South Korea’s central bank on Thursday made a surprise cut to its key interest rate, following a similar move in the previous month, amid concerns over economic implications of the US’ impending tariffs on all foreign goods. The Bank of Korea (BoK) reduced its benchmark interest rate by 25 basis points to 3.00% as the country grapples with global economic uncertainties and a strengthening of the US dollar, it said on Thursday. “In the future, the global economy and international financial markets are expected to be affected by the new US administration’s economic policy implementation, changes in major countries’ monetary policies, and geopolitical risks,” the BoK said in a statement. As of 02:30 GMT, the South Korean won (W) was trading at W1,394 against the US dollar. South Korea is heavily reliant on trade, with China and the US as its biggest trade partners. Korea’s domestic economy has also weakened amid slowing export growth, although demand is recovering gradually, it added. The country’s Q3 GDP growth stood at 1.5%, continuing its deceleration from a 2.3% pace set in Q2. Accordingly, the BoK has revised down its growth forecast for 2024 to 2.2% from 2.4%, and for 2025, to 1.9% from 2.1%. The country’s inflation rate of 1.3% in October was well below the 2.0% target and is expected to remain stable amid a decline in international oil prices and low demand pressure, but a volatile exchange rate might push inflation up if the US dollar continues to strengthen. A stronger US dollar also raises import costs, which would cause domestic prices to increase. The BoK will conduct its next meeting on 16 January 2025. ($1 = W1,394) Thumbnail image: South Korea’s capital city, logged a record November snowfall, with more than 16 cm of snow blanketing Seoul – 27 November 2024.(Xinhua/Shutterstock)

HOUSTON (ICIS)–The tariffs proposed by President-Elect Donald Trump on imports from Mexico, Canada and China would raise costs for the heavier grades of oil needed by US refineries as well as rare-earth elements used to make catalysts for downstream refining units. Trump said he intends to issue an executive order that would impose tariffs of 25% on imports from Mexico and Canada on January 20, his first day of office. He also announced intentions to impose a tariff of 10% on imports from China. This would be on top of the existing duties that the US already imposes on Chinese imports. Trump could decide to modify or even withdraw the proposals – especially if the US can reach a deal that addresses illegal immigration and drugs, the impetus behind the proposed tariffs. However, the tariffs as they are proposed by Trump would raise costs for key inputs used by US refiners. Outside of fuels, it could rise costs for fluoromaterials, since Mexico is the source of most of the imported feedstock. US REFINERIES DESIGNED FOR IMPORTS OF HEAVIER CRUDESUS refineries are generally designed to process grades of crude that are heavier than the oil it produces domestically from shale, said Michael Connolly, principal refining analyst for ICIS. As a result, the US exports its surplus of light oil and imports the heavier grades needed by its refineries. Those imports help fill out refining units that process heavier crude fractions, such as hydrocrackers, cokers, base oil units and fluid catalytic cracking (FCC) units, Connolly said. In 2023, the majority of those imports came from Canada and Mexico, as shown in the following table showing the top five sources of foreign crude. Figures are listed in thousands of barrels/day. COUNTRY IMPORTS % Canada 3,885 59.9 Mexico 733 11.3 Saudi Arabia 349 5.4 Iraq 213 3.3 Colombia 202 3.1 Total US imports 6,489 100 Source: Energy Information Administration (EIA) “If this tariff was to apply to crude, it would be damaging to the US refining industry and thus the US economy,” Connolly said. The damage would stem from the nation’s position as the world’s largest exporter of refined products. In 2023, the US was the world’s largest exporter of gasoline, with shipments of 900,000 bbl/day, according to the EIA. More than 500,000 bbl/day of those exports went to Mexico. The US is also a major exporter of distillate fuel oil, with shipments reaching 1.12 million bbl/day in 2023, according to the EIA. For petrochemicals, FCC units are important sources of propylene, so tariffs could have an effect on margins for propylene derivatives. FCC operations could receive another blow from the additional tariffs that the US could impose on imports of rare-earth materials from China. RARE EARTHS AND FCC CATALYSTSFCC catalysts are made with lanthanum and cerium. For most categories, China was the main source of these rare earths in 2023, as shown in the following table. Figures are in kilograms. HTS Code Product Imports from China Total imports  % 2846.10.0050 Cerium compounds other than cerium oxides 1,121,069 1,958,581 57.2 2846.90.2005 Rare-earth oxides except cerium oxides containing lanthanum as the predominant metal 52,045 479,885 10.8 2805.30.0005 Lanthanum, not intermixed or interalloyed 144,182 144,242 100.0 2846.90.8070 Mixtures of rare-earth carbonates containing lanthanum as the predominant metal 102,423 119,626 85.6 2805.30.0010 Cerium, not intermixed or interalloyed 3,262 3,466 94.1 Source: US International Trade Commission (ITC) Lanthanum and cerium are byproducts of the production of neodymium and dysprosium, two rare earth materials that are used to make magnets. TARIFFS ON MEXICAN HYDROFLUORIC ACIDIf the tariffs go through, they could raise costs for US producers of fluoromaterials. Hydrofluoric acid is the feedstock for almost all fluorochemicals and fluoropolymers, and Mexico accounted for all of the 87 million kg of acid that the US imported in 2023, according to the ITC. Fluorochemicals are used to make refrigerants as well as blowing agents used to make polyurethane foams. Another fluorochemical, lithium hexafluorophosphate (LiPF6), is used as an electrolyte in lithium-ion batteries. For fluoropolymers, demand is growing because of their use in semiconductor fabrication plants (fabs), 5G telecommunication equipment and membranes used in fuel cells and green-hydrogen electrolysers. Hydrofluoric acid is also used as a catalyst in many alkylation units at refineries. Insight article by Al Greenwood Thumbnail shows a pump used to dispense fuel produced from refineries. Image by Shutterstock.

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