SINGAPORE (ICIS)–India’s currency – the rupee – slumped to a record low in the week, pushing up both domestic and import prices of some petrochemicals in the south Asian country amid stable demand. Strong US dollar sends Indian rupee tumbling Acetone, EVA import prices jump India inflation within central bank target range The Indian rupee (Rs) is currently trading at above Rs86 against the US dollar, having shed more than 3% since the early November, when Donald Trump won the US election. At 07:10 GMT, the rupee was trading at Rs86.49. A strong US dollar and heavy outflows of short-term investments sent the currency tumbled to a record low of Rs86.9964 on 14 January, according to foreign exchange platform xe.com. India’s demand for overseas goods will likely be dented as a weaker currency makes imports more expensive. PETROCHEMICAL BUYERS TURN CAUTIOUS With import prices of several products on uptrend amid the rupee weakness, some buyers have adopted a wait-and-see attitude on markets. India is a major importer of petrochemicals including polymers. Rupee’s tumble has notably adversely affected PE Black 100 pipe import offers from Gulf Cooperation Council (GCC) and Asian sellers as buyers switch to domestic PE Natural. PE Black 100 and PE Natural are specific grades of high-density polyethylene (HDPE) used primarily for high pressure water pipes. In the recycled polyethylene (rPE) and recycled polypropylene (rPP) markets, downstream converters in India that import cargoes from northeast Asia are feeling the pinch. Fewer India-bound rPE and rPP cargoes are expected in the coming weeks, compounded by high intra-Asia freight rates. For exporters of recycled polyethylene terephthalate (rPET), meanwhile, there was no upsurge in shipments despite the rupee’s weakness. India continues to position itself as net exporter of rPET cargoes,  mainly bound to long-haul buyers in the Americas and in Europe. India’s aggressive expansion of rPET materials have posed competition to other Asian producers, particularly those in southeast Asia. In the toluene di-isocyanate (TDI) and ethanolamines markets, market sentiment is mixed. “Import and domestic prices for India TDI are unchanged from last week, but sentiment is mixed due to positive demand versus the weak rupee/US dollar rate,” a market player said. TDI is primarily used in the production of flexible polyurethane foams, which are widely used in furniture, bedding, and automotive seating. Meanwhile, after several months of decline, ethanolamines’ domestic prices moved higher, with players attributing the sudden rebound on the steep devaluation of the rupee, while demand was stable. For ethylene vinyl acetate (EVA) and acetone, import and domestic prices have spiked while demand was stable. EVA restocking momentum and discussions have been weighed down by the falling rupee due to higher cost of imports, market players said. “I have not booked yet because of the currency depreciation; import costs have gone up so it has really impacted importers… we’ll wait for negotiations with suppliers,” said a distributor. For acetone, fresh import demand is being hampered by the weak rupee amid a prevailing supply surplus in the Indian domestic market. US DOLLAR TO REMAIN STRONG The US dollar remains strong on better-than-expected job growth in the world’s largest economy, while the unemployment rate fell to 4.1%, reducing the chances of interest rate cuts by the Federal Reserve in February. A weaker currency fuels inflation as it raises the cost of imported goods. “The RBI intervened extensively in the FX market last year but the appointment of a new central bank governor last month has raised market expectations of a less active intervention approach to smooth the rupee’s volatility,” Netherlands-based banking and financial service firm ING said in a note on 13 January. “The recent equity market correction, foreign institutional investor (FII) outflows and overvaluation of the Indian rupee suggest that the rupee will continue to face downward pressure in the near term,” ING added. DEC INFLATION EASES; NOV INDUSTRIAL OUTPUT UP 5% India’s inflation rate eased to a four-month low of 5.22% in December from 5.48% in the previous month, continuing its decline from 6.21% recorded in October, official data showed. The December figure was within the 2.0% to 6.0% tolerance band set by the Reserve Bank of India (RBI). Easing food prices had some analysts predicting a possible cut in RBI’s repurchase rate as early as February, but the weakness of the rupee could delay adoption of a looser monetary policy. “We maintain our base case for RBI to begin monetary policy easing via a 25 bps points reduction to the repo rate in the upcoming Feb 2025 … meeting,” Singapore-based UOB Global Economics & Markets Research analysts said in a 14 January macro note. Meanwhile, India’s factory output in November, as measured through the Index of Industrial Production (IIP), rose 5.2% year on year driven by growth in manufacturing activity and power generation. Manufacturing output growth in November accelerated to 5.8% year on year from 1.3% in the same period last year. In April to November 2025, industrial output posted a slower year-on-year growth of 4.1% from 6.5% in the previous corresponding period. India, which is a giant emerging market in Asia, is expected to post a slower GDP growth of 6.6% in the fiscal year ending March 2024, down from 7.2% in the previous year, based on RBI’s projections. Nonetheless, India is still predicted to be the fastest-growing country in Asia, according to ING, which forecasts 6.8% growth for India for the current fiscal year. Focus article by Jonathan Yee Additional reporting by Helen Lee, Clive Ong, Shannen Ng, Veena Pathare, Nadim Salamoun and Arianne Perez Thumbnail image: Indian rupee notes – 5 January 2025 (Firdous Nazir/NurPhoto/Shutterstock)

HOUSTON (ICIS)–HB Fuller plans to shut down nearly one-third of its plants globally and drastically reduce the number of warehouses it has in North America, the US-based adhesives producer said on Wednesday. When HB Fuller completes the shutdowns in its fiscal year of 2030, it will have 55 plants globally, down from 82, the company said. By the end of 2027, HB Fuller will have 10 warehouses in North America, down from 55. HB Fuller expects to cut annual pre-tax costs by $75 million/year by the time it completes the shutdowns. The company expects to spend $150 million over the next five years to shut down the sites. “Our manufacturing footprint consolidation, coupled with our planning and logistics reorganization, are important steps in our strategic plan to achieve an EBITDA margin consistently greater than 20%,” said Celeste Mastin, CEO. “These actions will not only reduce costs through improved capacity utilization, they will also enable us to better serve our customers and reduce future capital expenditure requirements.” As an adhesives producer, HB Fuller’s raw materials include tackifying resins, polymers, synthetic rubber, plasticizers, and vinyl acetate monomer (VAM).

HOUSTON (ICIS)–A ceasefire and hostage release agreement between Israel and Hamas announced on Wednesday is unlikely to have much of an impact on crude oil and chemical markets, though it could lower the geopolitical premium. The agreement was reached through diplomacy by the US, Egypt, and Qatar, and will be implemented for the most part by the incoming administration of President-elect Donald Trump, US President Joe Biden said in remarks from the White House. ICIS feedstocks analyst Barin Wise said he does not expect that the deal will have a meaningful impact on crude oil markets because the affected region is not oil producing. “This may trim the geopolitical premium in crude since it eliminates a hot spot in the Middle East,” Wise said. “However, if we look at the market today, crude is up big on other factors, more than offsetting any effect the ceasefire may have.” Crude prices surged on Wednesday largely in response to fresh US sanctions on Russia, which the International Energy Agency said could crimp global supply. Futures prices for WTI settled on Tuesday at $77.50/bbl and rose to $79.51/bbl before midday. WTI settled at $80.04/bbl on Wednesday. IMPACT ON SUEZ CANAL TRAFFIC The agreement could help with capacity constraints in commercial shipping as container ships have been avoiding the Suez Canal for more than a year because of attacks by Houthi rebels on commercial vessels. Ships have been forced to use the much longer route around the Cape of Good Hope, which tightened shipping capacity and pushed costs for shipping containers higher. The reopening of the Suez Canal would have the greatest impact on normalizing the Asia-to-Europe container shipping route, but would also affect Asia-US rates, as shipping capacity would surge once carriers were able to access the shorter route. Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and shipped in tankers, container ships transport polymers – such as polyethylene (PE) and polypropylene (PP) – are shipped in pellets. They also transport liquid chemicals in isotanks. Thumbnail image shows a crude oil tanker. Photo by Shutterstock

LONDON (ICIS)–In December 2024, the European bioplastics industry met in Berlin at the European Bioplastics Conference (EBC) to discuss innovations, barriers to growth and the future outlook for production capacity, demand and changes in legislation. ICIS Recycling Analyst Alexandra Tomczyk attended the conference and updates us on the current state of play for the bioplastics market. Some of the key takeaways included: Global capacities are set to grow rapidly in the next 5 years It’s unclear how the rise of bioplastic packaging will impact the goals set in Packaging and Packaging Waste Regulations Bioplastics are only one of a range of tools needed to improve the sustainability of plastics

LONDON (ICIS)–The latest tranche of US sanctions on Russia’s oil trade could affect flows from the country, while weather-related production shut-ins in North America could also impact global supply, the International Energy Agency (IEA) said. Announced on 10 January, the US imposed aggressive new sanctions on Russia’s oil trade, naming 183 vessels, including Russia-owned tankers and the ”shadow vessels” understood to be utilized to evade trade blockades. The shadow fleet refers to ships indirectly owned or controlled by Russia through shell companies or intermediaries to evade detection and sanctions. Over 100 of the sanctioned tankers had transported Russian crude to China and/or India in 2024, according to Matt Wright, lead freight analyst at data and analytics firm France-based Kpler. “When it comes to buyers, China and India, in general, tend to steer clear of dealing directly with tankers and entities blacklisted by the US Treasury,” he said in a note earlier this week. US moves “may affect oil supply flows” the IEA said in its latest oil market report, but official purchases of Russia crude will still be possible at certain price points. “Exports on non-shadow tankers remain viable for Russian oil purchased below price caps,” the IEA said. Further complicating the early 2025 supply picture is scope for production constraints in the US in the event of extreme weather, with a winter freeze last year cutting output in the US and Canada by over 1.8 million barrels/day. A smaller drop is expected this year, but there could still be scope for weather in the region to tighten supplies, the IEA said. Potential for additional US sanctions on Iran-origin oil to be introduced by the new administration could also hit global supplies, the agency added, with sentiment already driving some players to pill back from oil supplies from Iran and Russia. “There is heightened speculation that the incoming US administration will take a tougher stance on Iran’s oil exports, compounding the impact of US Treasury sanctions on Tehran,” the IEA said. 1.5 million barrels day of additional supply is expected from non-OPEC countries this year , and total output growth of 1.8 million/barrel day against 1.05 million barrels/day demand growth, according to the agency. While supply growth is likely is likely to be sufficient to cover demand, the fresh Russia sanctions could provide more headroom for OPEC+ signatory countries to release more barrels into the market after delaying the end dates for some production cuts. OPEC, also releasing its latest market predictions on Wednesday, left 2025 demand growth forecasts unchanged at 1.4 million barrels/day, and non-OPEC+ supply growth projections at 1.1 million barrels/day amid global GDP expansion of 3.1%. The cartel projects that demand and non-OPEC supply growth will remain around 2025 levels next year. Focus article by Tom Brown Thumbnail photo: An oil pipeline running through Alaska, US (Source: Shutterstock)

LONDON (ICIS)–Inflation in the UK eased by 0.1 percentage point in December as compared with the previous month, slightly tapering the steady upward movement of consumer pricing in the country in recent months. UK inflation dipped to 2.5% in December compared with 2.6% the previous month as upward movement for transport costs was offset by lower hotel and restaurant prices, according to the UK Office for National Statistics (ONS). Upward price pressure from services, which has remained stubbornly high, eased slightly to 4.4% compared with 5% in November. A decline in inflation levels could potentially reduce pressure on the UK government after a decline in the value of the sterling and a surge in borrowing costs amid unease over public spending cuts, global volatility over the prospect of fresh US tariffs, and inflation.

LONDON (ICIS)–The German economy contracted 0.2% in 2024 – the second consecutive year of economic decline for the eurozone’s biggest economy – driven by energy costs, increasing export competition and economic uncertainty, according to the first calculations from the Federal Statistical Office (Destatis). As the country rounds off two years of economic decline, preliminary data for Q4 2024 points to a 0.1% decline, the agency added, with a full announcement incorporating more data scheduled for 30 January. Manufacturing output dropped 3% in the year, according to Destatis, with production in energy-intensive industries such as chemicals and metal-working hit particularly hard. The decline in the construction sector was even sharper, with output shrinking 3.8% over the course of the year. “Cyclical and structural pressures stood in the way of better economic development in 2024,” said Destatis president Ruth Brand.

SINGAPORE (ICIS)–Chinese oil company CNOOC and Anglo-Dutch energy major Shell have taken a final investment decision (FID) to expand their joint petrochemical complex in Daya Bay, Huizhou in southern China. The expansion by their joint venture firm CNOOC and Shell Petrochemicals Co (CSPC)  is expected to be completed in 2028, Shell said in a statement. Financial details of the investment were not disclosed. The expansion will include a third cracker with a planned capacity of 1.6 million tonne/year of ethylene; as well as associated downstream derivatives units producing chemicals including linear alpha olefins It will also include a new facility which will produce 320,000 tonnes/year of high-performance specialty chemicals such as polycarbonates (PC) and carbonate solvents. CSPC is a 50-50 joint venture owned by Shell Nanhai BV, a subsidiary of Shell, and CNOOC Petrochemicals Investment Ltd, an affiliate of CNOOC. (Recasts first two paragraphs for clarity)

HOUSTON (ICIS)–Ocean carriers will increase blank sailings around the Lunar New Year holiday to support elevated container rates, but now that the labor issues at US Gulf and East Coast ports have been resolved, some analysts think rate growth will slow, or shippers could even see lower rates. Emily Stausbøll, senior shipping analyst at ocean and freight rate analytics firm Xeneta, said spot rates may now begin to fall but warned that shippers still face other supply chain threats in 2025. “Looking ahead, it is likely spot rate growth will now soften on trades into the US from Asia, suggesting a brighter outlook for shippers negotiating new long-term contracts,” Stausbøll said. “Shippers must remain cautious, however, because it will not take much for freight rates to begin spiraling once again, particularly given the ongoing conflict in the Red Sea and the return of [President-elect Donald] Trump to the White House, which could escalate the US-China trade war,” Stausbøll said. Alan Murphy, CEO of Sea-Intelligence, defines the four-week Lunar New Year period as the week of the holiday plus the following three weeks. Murphy said carriers have so far scheduled blanked capacity of 9.0%, which is in sharp contrast with the 22.8% blanked in 2024, and the average reduction of 18.3% from 2016-2019. For context, the blanked percentage in 2021 (where pandemic demand was surging) was higher at 10.7%. “Under normal circumstances, this would mean significant blank sailings announcements in the upcoming weeks, since it is highly unlikely that carriers would be satisfied with this level of excess capacity,” Murphy said. “This would result in a situation reminiscent of 2023 and 2024, where significant capacity cuts were made very close to Lunar New Year.” CHANGING ALLIANCES Several major carriers are restructuring alliances in 2025, which is also adding some uncertainty to shipping. Shipping alliances are agreements between carriers to collaborate globally on specific trade routes. This will be the most significant shift in alliances since 2017, according to analysts at freight forwarder Flexport. The changes will see Mediterranean Shipping Co (MSC) breaking from the 2M alliance with Maersk and will service customers alone with its expanded fleet now the largest in the market. MSC said it will incorporate more direct call services. Maersk and Hapag-Lloyd will form the Gemini Alliance, with a reduced number of port calls that they say will improve reliability. The Ocean alliance consists of OOCL, Evergreen, COSCO, and CMA CGM. The Premier alliance will be made up of Ocean Network Express (ONE), South Korean shipping line HMM, and Taiwan’s Yang Ming. Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said it remains to be seen if there will be any improved service metric from the shifts. “The rollout and adjustment period will probably stretch into March,” Levine said. “This is going to coincide with easing seasonal demand, so it could be a factor that pushes rates down if we do see some competitiveness between the new alliances that they compete for customers.” Levine also said the adjustment period could lead to increased schedule disruptions as vessels are being moved into place for these new services. CEASEFIRE, SUEZ CANAL On a side note, container ships have been avoiding the Suez Canal for more than a year because of attacks by Houthi rebels on commercial vessels. A ceasefire in the Gaza conflict could potentially end attacks in the Red Sea, reopening the Suez Canal. This would have the greatest impact on normalizing the Asia-to-Europe container shipping route but would also affect Asia-US rates as shipping capacity would surge once carriers no longer must divert away from the Suez Canal. 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. They also transport liquid chemicals in isotanks. Focus article by Adam Yanelli