SAO PAULO (ICIS)–Mexico remains the potential largest victim of the change in US trade policy, but practically no country in the world would be spared from an impact, analysts said this week. Mexico, Brazil GDP growth forecasts cut Mexico’s manufacturing impacted by US tariffs on automotive Latin American high interest rates to fall faster to prop up economy US high costs to still deter many manufacturers to relocate MEXICAN ISSUESIn a string of forecasts published by analysts at credit rating agencies and consultancies, Mexico was singled out as one of the countries most affected by US tariffs. Meanwhile, chemicals sources in Mexico have recently said demand has taken a turn for the better, especially after the US fell short of announcing any additional tariff on the country. However, other macroeconomic indicators have been mixed. On the negative side, the manufacturing purchasing managers’ index (PMI) fell further into contraction in April and added its 10th consecutive month in the red. On the other hand, Mexico’s GDP grew by 0.2% in the first quarter, compared with the first, a higher-than-expected figure which allows the country to avoid for the moment a technical recession – two consecutive quarters with negative growth. Mexico and Canada form, together with the US, the North American free trade zone under USMCA. Canada was also spared from any additional tariffs, but the two countries were already subject to some import tariffs implemented in February on sectors such as automotive or steel, among others. And it is the automotive tariffs, if prolonged in time in their current form, that could greatly dent Mexico’s economy, given the sector’s importance within manufacturing – it is a large global automotive producer, churning out nearly 3 million vehicles/year, of which around 80% are exported to the US. This week, London-headquartered consultancy Oxford Economics said it expects Mexico’s GDP growth to be flat in 2025, which is somewhere in the middle between the International Monetary Fund’s (IMF’s) forecast for a contraction of 0.3% and market consensus, which still sees some growth of a few tenths of a percentage point. “Mexico is the most open economy in the region with bilateral trade accounting for nearly 80% of GDP, out of which exports to the US account for over 25% of GDP. In fact, nearly 80% of all Mexican exports are directed to the US and currently face 25% tariffs on non-USMCA compliant goods on top of steel and aluminium,” said the analysts at Oxford Economics. The only Latin American country where investments are expected to grow in coming years is Argentina, the analysts added, while the rest of the region will post a slowdown, while Mexico will potentially see investments contracting. “Uncertainty around the future trade relationship with the US and the protection that the USMCA can bring is threatening billions in US investment,” said Oxford Economics. “The scale of this threat is substantial – last year alone, US investment in Mexico reached $16 billion, accounting for nearly half of the country’s total foreign direct investment. Even more concerning, over the last two decades, the US has invested over $300 billion in Mexico, creating a massive economic stake now under threat.” Analysts at BMI, a subsidiary of US credit rating agency Fitch, agreed that fixed investment is to fall sharply this year, a factor which could tip Mexico’s economy into recession in 2025. However, BMI’s report was published before Mexico’s statistical office Inegi said earlier this week that GDP growth in the first quarter stood at 0.2%, quarter on quarter, which is a weak figure but nonetheless allowed Mexico to avoid a ‘technical recession’ – two consecutive quarters with negative growth – for the time being. BMI cut its growth forecast for Mexico in 2025 and now expects a contraction in GDP of 0.5%, sharply lower than its prior forecast for modest growth of 0.2%. “The economy was already struggling prior to the latest shifts in US trade policy, with output having declined by a significant 0.6% quarter on quarter in Q4… Granted, it will only face an effective tariff rate of roughly 7.5% once all exemptions are accounted for (below the US’s weighted average rate of closer to 20%),” said the analysts. “But there is little incentive for firms expand their presence in Mexico when so much remains in flux. Combined with spillover effects from a more downbeat outlook for growth in the neighboring US (felt via reduced exports and softness in remittances), the likely trajectory for the Mexican economy is a challenging one.” S&P CUTS GDP GROWTH FORECAST – AGAINTrump’s second term seems to have brought even more uncertainty than the first, and analysts these days say their forecasts could be futile and valid only for a matter of hours. It is what US credit rating agency S&P said this week, as it downgraded GDP growth forecasts for Latin America’s two largest economies – Brazil and Mexico – as well as the world’s, including the US itself. “Our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly,” it began. To make their point clear, they added a note after detailing what tariff scenario they consider likely to stay in the medium term which read: “A note of caution about our latest revisions: we are in uncharted territory.” S&P latest revisions assume the following: A 10% across-the-board tariff on imports from all US trading partners as announced on 2 April, but not the country-specific tariffs now on a 90-day pause. A 25% US import tariff on autos, steel, aluminium, pharmaceuticals and semiconductors. The revisions include the “fully escalated tariffs” between the US (145% on Chinese imports) and China (125% on US imports), net of the carve-out for electronics imports into the US. The results of this are likely to cause a more pronounced economic slowdown across the board. GDP forecasts by S&P (change in %) 2025 Change from March forecast 2026 Change from March forecast 2027 Change from March forecast 2028 Change from March forecast Brazil 1.8 -0.1 1.7 -0.3 2.1 0.0 2.2 0.0 Mexico -0.2 -0.4 1.5 -0.2 2.2 0.0 2.3 0.0 US 1.5 -0.5 1.7 -0.2 2.1 -0.1 1.9 0.1 Canada 1.4 -0.3 1.5 -0.4 2.1 0.0 2.1 0.3 World 2.7 -0.3 2.6 -0.4 3.3 -0.1 3.3 0.0 The rest of Latin America will fare slightly better, when compared with Mexico’s outlook, not least because most countries in the region are likely to face a 10% tariff if no deal with the US is reached. Brazil’s economy, in any case, was widely expected to slow down after three years of bumper growth which led to widely extended fears by the end of 2024 of economic overheating. Further afield, forecast revisions have been less severe for most countries than for the global economy at large. BMI said Peru, Chile and Colombia are expected to maintain “relatively healthy and stable growth rates” with three countries, as well as Brazil, having a significantly lower dependence than Mexico on exports to the US, which could insulate them somewhat from direct trade war impacts. Argentina will be the exception as the country makes an attempt at an economic spring after years in the doldrums and a deep recession in 2023-2024. Overall and for the region, the current crisis could have at least one silver lining: as growth slows down, central banks will be keener to lower still-high interest rates to prop consumption. Rates across the region remain above historical average, even if the inflation crisis has subsided in most economies. Brazil’s rates currently stand at 14.25%, Mexico’s at 9.0%, Colombia’s at 9.25%, while Chile’s have come down considerably and stand at 5.0%. Still a long way from economic normalization, Argentina’s interest rates stand at 29%, in response to an inflation which still stood at 56% in March. “Central banks in Latin America are likely to cut more aggressively given that their current policy rates are above neutral. The recent appreciation of EM currencies against the US dollar leaves central banks with more scope to cut rates across the countries we cover,” said S&P. The analysts added that the combination of stronger currencies in emerging markets – Latin American economies fall under that category – and lower oil prices will help decrease inflation, given most of those economies are net importers of energy. A FINAL REFLECTIONS&P concluded saying that no matter how much President Trump would like to bring as much manufacturing back to the US as possible, current global trade and industrial trends make that scenario very unlikely. This could stem from Trump’s fixation on manufactured goods, without taking into account the trade balance in services, which mostly and largely favors the US in most cases, or the difference between savings by US consumers and companies and investment. S&P said US tariffs – in full or in part – are unlikely to substantially narrow the US trade balance, because its current account deficit will only narrow to the extent that the savings-investment difference narrows, and that would require some combination of lower investment (and slower growth) and higher savings (and less consumption). “If the tariffs do not materially move the US savings rate, then they will simply shift the trade balance between partners as exports minus imports remain unchanged. It’s also hard to see the US tariffs causing a wholesale return or reshoring of US manufacturing. Decades of trade driven largely by comparative advantage means that production is currently located where it is most cost-effective.” Taking the case of Asian supply chains, the cost of production there is often only a fraction of the cost of producing the same product in the US, or Europe; the currently proposed tariff rates are unlikely to close that gap. “To put it another way, relocating a large swath of goods back to the US would likely involve a substantial increase in costs,” the analysts at S&P concluded. Front page picture source: Mexico’s automotive trade group the Asociacion Mexicana de la Industria Automotriz (AMIA) Insight by Jonathan Lopez

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the fortnight ended on 2 May. NEWSBrazil chems production still impacted by imports despite protectionist measures – Abiquim Brazil’s chemicals production structural woes, such as high production costs, remain while imports continue making their way unabated, despite protectionist measures deployed by the government, according to the director general at producers’ trade group Abiquim. INSIGHT: Mexico’s chemicals revive as tariffs woes ease (part 1)When Donald Trump won the US election with a larger-than-expected majority, Mexican chemicals players started making plans for their businesses under what promised to be a disruptive second term for trade relations between the two countries. Argentina savoring economic spring but recovery for all biggest task still pending – Evonik execAfter years in the doldrums, Argentina’s economy is finally going through some sort of “spring” thanks to sectors such as agricultural, mining and energy – but the country, however, is yet to achieve a recovery which works for all Argentinians, an executive at Germany’s chemicals major Evonik said. Mexico’s improved fortunes on US tariffs propping up petchems demand – Entec execMexico’s chemicals fortunes seem to be turning for the better after the country was spared from the most punitive US’ import taxes, according to an executive at chemicals distributor major Ravago’s Mexican subsidiary. INSIGHT: Argentina faces up to rising inflation after currency controls liftedArgentina’s decision to end foreign currency restrictions is set to devalue the peso’s official exchange rate and increase inflation but it was a vital step to normalizing a dysfunctional exchange rate system. Mexico launches antidumping investigation into US PVC importsThe Mexican government officially launched an antidumping investigation into imports of suspension polyvinyl chloride (PVC) resin from the US, following allegations of unfair trade practices that have impacted domestic industry at the end of April. Brazil’s Braskem Q1 higher priced PE, PP sales in Q1 cannot offset lower PVC volumesBraskem resin sales in its domestic market dropped by 4% in Q1, year on year, due to lower polyethylene (PE) and polypropylene (PP) sales volumes as the producer prioritized sales with higher added value, the Brazilian polymers major said. Mexico’s Orbia earnings fall again while ‘trying’ to guess potential green shoots – CEOOrbia’s Q1 sales and earnings fell again, year on year, with the Mexican chemicals producer already writing off any significant recovery in 2025 and “trying to figure out” potential green shoots for 2026, its CEO said on Friday. PRICINGLatAm PE international prices steady to lower on competitive US export pricesInternational polyethylene (PE) prices were assessed as steady to lower as US export prices remain competitive. LatAm PP domestic, international prices fall in Colombia, Mexico on cheaper feedstocksDomestic and international polypropylene (PP) prices fell in Colombia and Mexico tracking lower US propylene costs. In other Latin American (LatAm) countries, prices were unchanged. LatAm – Argentina PP domestic price range narrows as distributors try to compete with cheaper imports Domestic polypropylene (PP) price range was assessed as narrower in Argentina. Distributors’ prices have fallen to compete with cheaper imports.

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 2 May. China unofficial proposed tariff exemption list includes US PE, ethane but not EG China’s unofficial proposed tariff exemption list of 131 US products worth around $46 billion, or 28% of total imports, includes polyethylene (PE), along with other chemicals and key feedstock ethane, according to a document obtained by ICIS. US PPG’s order patterns remain steady despite tariffs US based paints and coatings producer PPG has so far seen no changes in order patterns from its customers, and it has maintained its full-year guidance despite the tariffs imposed by the US. INSIGHT: US suppliers maintain propane exports despite tariffs China’s tariffs on US shipments of liquefied petroleum gas (LPG) have yet to disrupt exports, and the companies that supply the material expect that will remain the case – even if prices fall. INSIGHT: CEOs face new problem as economy weakens, overcapacity worsens As the trade war puts a squeeze on already tepid economic growth, and deepens chromic global overcapacity in chemicals, CEOs may struggle to find fresh markets as they shift product flows to avoid the burden and uncertainty of tariffs. INSIGHT: Mexico renews nearshoring ambitions as tariffs woes ease As Mexico seems to have managed to navigate US President Donald Trump’s first 100 days in office relatively unscathed, compared with other emerging, manufacturing hub emerging economies, the country now looks again at its potential as a nearshoring hub. US tariffs may create COVID-like whiplash on chem markets – Huntsman The shock of US tariffs has caused customers to halt chemical purchases due to the uncertain trade policy, and that pause is reverberating throughout chemical chains in ways that resemble the COVID-19 pandemic in 2020, the CEO of US-based polyurethanes producer Huntsman said on Friday.

SINGAPORE (ICIS)–Saudi Arabia’s Basic Chemical Industries (BCI) has extended its Memorandum of Understanding (MoU) with Italmatch’s Middle East unit to supply chemicals to Italmatch’s facilities in the PlasChem Park in Jubail Industrial City. The MoU, first signed in May 2023, was extended to 31 Dec 2025, BCI said in a filing on the Saudi bourse Tadawul on 4 May. Italy-based Italmatch has extended the timeline on increased scope and additional technical work to modify product processes to match the local market, it added. The deal involves the supply of chlorine, caustic soda and hydrochloric acid to Italmatch’s facilities. Financial details of the deal were not disclosed. Saudi Arabia’s BCI manufactures chlorine gas, hydrochloric acid, caustic soda, and sodium hypochlorite at a site near Dammam, according to the company’s website.

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 2 May. Europe PE, PP spot pricing stable to soft as softer May anticipatedEuropean polyethylene (PE) and polypropylene (PP) spot pricing is stable to soft following the unpredictable trade wars at the beginning of the month. Players are universally expecting a softer month in May. Spanish refineries, chemicals restart after nationwide power outageRefineries and chemical sites in Spain have taken their first steps towards restarting operations following Monday’s nationwide power outage which forced widespread shutdowns. European phenol/acetone market reacts with surprise to Orlen closure newsThe European phenol and acetone market has reacted with surprise to the news that Orlen is to decommission its phenol and acetone plant in Plock, Poland, by the end of this year. Europe acrylic acid contract prices fall in April as feedstock costs subsideThe Europe acrylic acid (AA) market has seen the freely negotiated contract prices for April settle at a slight decrease. INSIGHT: CEOs face new problem as economy weakens, overcapacity worsensAs the trade war puts a squeeze on already tepid economic growth, and deepens chromic global overcapacity in chemicals, CEOs may struggle to find fresh markets as they shift product flows to avoid the burden and uncertainty of tariffs.

SINGAPORE (ICIS)–The ASEAN+3 region, comprising the 10 ASEAN (Association of Southeast Asian Nations) ASEAN nations plus China, Japan, and South Korea, is projected to achieve a stable economic growth rate of 4.3% in 2025, from a 4.4% expansion in 2024, according to a joint statement on Monday. The 28th ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting co-chaired by Malaysia and China and held in Milan, Italy on 4 May, focused on strategies to bolster regional financial stability and cooperation amid economic headwinds. ASEAN comprises 10 countries from southeast Asia, namely, Thailand, Vietnam, Indonesia, Malaysia, Singapore, Philippines, Laos, Cambodia, Brunei and Myanmar. “Over the medium term, ASEAN+3 is expected to remain a key driver of the global economy, contributing to more than 40% of global growth,” they said. Inflation, meanwhile, is expected to remain below 2.0% this year. The region will look at carefully recalibrating monetary policy based on domestic conditions, as well as maintain exchange rate flexibility as a buffer against external shocks. It also added that the regions reaffirms its “full commitment to multilateralism, and a rules-based, non-discriminatory, free, fair, open, inclusive, equitable, and transparent multilateral trading system, with the World Trade Organization (WTO) at its core”. The US and China are locked in a trade war, with both nations slapping tariffs in excess of 100% on each other.

SINGAPORE (ICIS)–SABIC swung to a net loss of Saudi riyal (SR) 1.21 billion ($323 million) in the first quarter on the back of higher feedstock prices and operating costs, the Saudi Arabian chemicals giant said on 4 May. in Saudi Riyal (SR) billion Q1 2025 Q1 2024 % Change Sales 34.59 32.69 5.8 EBITDA 2.5 4.51 -44.6 Net income -1.21 0.25 The company reported a Q1 revenue increase driven by higher sales volumes, though this gain was partially tempered by lower average selling prices, it said in a filing on the Saudi bourse, Tadawul. Despite this revenue growth, Q1 net profit faced pressure from a rise in other operating expenses, primarily due to a one-time SR 1.07 billion cost associated with a strategic restructuring expected to yield future cost reductions. QUARTER ON QUARTER PERFORMANCESABIC’s sales volume and average selling prices were relatively stable quarter over quarter, supported by higher production volumes in the chemicals and polymers units, although this was offset by lower overall sales volumes. In the first quarter, revenue of the petrochemicals segment was at SR31.5 billion, representing a quarter-over-quarter decrease of 1%, primarily driven by continued oversupply and weaker demand. While methanol prices improved, monoethylene glycol (MEG) prices were flat amid higher supply and weak demand, along with polypropylene (PP). Meanwhile, polyethylene (PE) prices were supported by global demand, but offset by additional supply. Polycarbonate (PC) prices were lower in the first quarter, mainly due to weak demand across major markets and oversupply. OUTLOOK Manufacturing Purchasing Managers Index (PMI) growth remained slow over the quarter, indicating business pessimism, SABIC CEO Abdulrahman Al-Fageeh said. “Our growth projects are progressing according to plan, including the Petrokemya MTBE plant and SABIC Fujian complex,” Al-Fageeh said. “We are focused on driving operational excellence, advancing transformation, and pursuing selective growth, while maintaining financial discipline and delivering long-term value,” added Al-Fageeh. SABIC projects an expenditure range of $3.5-4.0 billion for the year. SABIC is 70%-owned by energy giant Saudi Aramco. Thumbnail shows a SABIC production facility (Source: SABIC) ($1 = SR3.75)

SINGAPORE (ICIS)–The People’s Action Party (PAP) won a supermajority in Singapore’s parliament in what was Prime Minister Lawrence Wong’s first election as leader. The PAP captured 87 of 97 seats in a general election held on 3 May, including five uncontested seats, official final results showed early Sunday. The Workers’ Party, the leading opposition, held its ground with 10 seats across three constituencies but failed to expand its parliamentary foothold. Wong, who assumed the premiership last year in Singapore’s first leadership shift in two decades, now holds a “strong mandate” to lead the nation for the next five years, he said on 4 May. Singapore is a leading petrochemical manufacturer and exporter in southeast Asia, with more than 100 international chemical companies, including ExxonMobil, based at its Jurong Island hub.

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 2 May. India RIL oil-to-chemicals fiscal Q4 earnings fall on poorer margins By Nurluqman Suratman 28-Apr-25 11:57 SINGAPORE (ICIS)–India’s Reliance Industries Limited (RIL) late on 25 April reported a 10% year-on-year drop in its oil-to-chemicals (O2C) earnings before interest, tax, depreciation and amortization (EBITDA) on poorer transportation fuel cracks and subdued downstream chemical deltas. Asia naphtha market strengthens but uncertainties linger By Li Peng Seng 28-Apr-25 15:01 SINGAPORE (ICIS)–Asia’s naphtha intermonth spread hit a three-week high recently as market sentiment recovered following stronger demand from China, but the market ahead could be choppy on the back of volatile crude oil and trade war uncertainties. PODCAST: MMA market turmoil in China and Asia amid rising supply, weak demand By Yi Liang 28-Apr-25 15:19 SINGAPORE (ICIS)–In this podcast, ICIS analysts Jasmine Khoo and Mason Liang will talk about the current situation and outlook for the methyl methacrylate (MMA) market. INSIGHT: China new energy vehicle industry to continue driving polymer industry development By Chris Qi 28-Apr-25 18:31 SINGAPORE (ICIS)–China’s automotive industry has maintained rapid growth over the last few years, with the expansion of the country’s new energy vehicle (NEV) sector particularly notable, now accounting for 70% of global production. China’s Sinopec enters $4bn JV with Saudi Aramco unit for Fujian project By Jonathan Yee 29-Apr-25 12:19 SINGAPORE (ICIS)–China’s state-owned Sinopec has entered a joint venture (JV) with an Asian unit of Saudi Aramco to manage the second phase of a refining and petrochemical complex at Gulei in Fujian province, it said on 28 April. Asia glycerine may see restocking after Labour Day holiday By Helen Yan 29-Apr-25 14:34 SINGAPORE (ICIS)–Asia’s glycerine market may see a pick-up in restocking activities after the May Day or Labour Day holiday as Chinese buyers hold back their purchases, given the sluggish downstream epichlorohydrin (ECH) market and uncertainties over the US-China trade war. China Apr manufacturing activity shrinks on US tariffs pressure By Jonathan Yee 30-Apr-25 12:09 SINGAPORE (ICIS)–China’s manufacturing activity shrank in April as export orders weakened amid the intensifying trade war with the US, official data showed on Wednesday. INSIGHT: Rising costs to curtail China PDH runs, mixed impact on C3 derivatives By Seymour Chenxia 30-Apr-25 13:00 SINGAPORE (ICIS)–Chinese PDH producers are likely to lower operating rates as US-China trade tensions drive up propane import costs, which is expected to tighten propylene supply. However, the impact on downstream markets will be mixed due to varying feedstock sources. Asia VAM market to slow as China solar drive eases By Hwee Hwee Tan 02-May-25 11:35 SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) supply is lengthening as spot demand tied to a major downstream sector is softening into May.