SINGAPORE (ICIS)–Escalating trade tensions with the US are casting a shadow over Vietnam’s growth trajectory in 2025, despite continued growth in exports as well as lower inflation. Inflation will stay below the government’s target of 4.5% to 5% this year – Moody’s Industrial output to slow due to poorer global demand, US tariffs 2025 GDP growth forecast cut to 5.8% from 6.5% Headline inflation rose by 3.1% year on year in April, unchanged from March, while core inflation, which excludes food and energy, also remained at 3.1%, data by Vietnam’s General Statistics Office (GSO) showed on 6 May. Industrial production growth in April slowed to 8.9% year on year, down from a revised 9.9% in March, displaying early signs of pressure on the manufacturing sector. “We expect growth to slow this year as reduced global demand and higher tariffs on Vietnamese goods in the US hurt manufacturing,” financial intelligence firm Moody’s Analytics said in a note on 6 May. Externally, Vietnam’s exports surged 19.8% year on year in April, outpacing March’s 14.5% rise, while imports jumped 22.9%, up from 19% previously. The country still posted a goods trade surplus of $600m in April, though markedly lower than the $1.6bn recorded in March. The US remained Vietnam’s largest export destination through the first four months of the year, but this position is increasingly uncertain. In early April, US President Donald Trump floated a 46% tariff on Vietnamese imports, which was quickly revised to a temporary 10% levy for 90 days pending trade talks. Moody’s Analytics expects Vietnam’s export growth to slow over the remainder of 2025 as the impact of higher US tariffs hits the manufacturing sector. It has downgraded its GDP growth forecast for 2025 to 5.8% from 6.5% to reflect US trade policy and rising tariffs. As part of its negotiation efforts with US trade officials which will begin on 7 May, Hanoi has proposed eliminating tariffs on US imports and could increase sourcing from the US to offset trade pressures. The government is aiming for 8% GDP growth for 2025 despite risks from US tariffs. Focus article by Jonathan Yee Visit the US tariffs, policy – impact on chemicals and energy topic page

SINGAPORE (ICIS)–Thailand’s inflation turned negative for the first time since March 2024, falling 0.22% year on year in April 2025 amid lower costs for energy products and personal care products, the country’s Trade Policy and Strategy Office (TPSO) said on 6 May. Inflation falls 0.22% amid lower crude prices Economic uncertainty, US trade war weigh on GDP Thailand GDP projected to grow by up to 2.0% in 2025 Core inflation – excluding fuel and fresh food prices – rose 0.98% in April, while there was a 0.21% decrease in inflation month on month from March. “The trend of the general inflation rate in May 2025 is expected to be at a level close to April 2025,” the TPSO said. Crude oil prices are falling and gasoline prices are expected to trend downwards, contributing to a negative consumer price index (CPI). The continuation of state subsidies would also weigh on the CPI, keeping it negative. The Bank of Thailand (BOT) reduced its key interest rate to 1.75% from 2.00% on 30 April, citing the US tariffs and its global trade war causing uncertainty in the economy. “The prevailing monetary policy framework seeks to maintain price stability, support sustainable growth and preserve financial stability,” the BOT said. “The Thai economy is projected to expand at a slower pace than anticipated, with more downside risks due to uncertainty in major economies’ trade policies and a decline in the number of tourists,” it added. Accordingly, Thailand’s GDP forecast for 2025 has been downgraded to around 1.3% in 2025 and 1.0% in 2026, if trade tensions intensify and US tariffs are set at higher rates, according to the BOT. On the other hand, if the 10% baseline tariffs by the US remain, Thailand’s GDP growth is forecast at 2.0% in 2025 and 1.8% in 2026, the BOT said. Further rate cuts are anticipated by Singapore-based UOB Global Economics and Market Research, possibly as early as the BOT’s next meeting in June, to support growth. “This reflects the central bank’s continued focus on maintaining sufficient policy space and its view that the full impact of global trade tensions would become more apparent in the second half of 2025,” UOB said in a note on 30 April. Inflation is expected to remain below the lower bound of the BOT’s target range of 1%–3%. Focus article by Jonathan Yee

SAO PAULO (ICIS)–Celanese will aim to weather what is becoming an increasingly “uncertain” second half of 2025 by reducing inventories and keeping firm cost controls, but also by reducing operating rates if demand is not there, the CEO at the US-based acetyls and engineered materials producer said on Tuesday. Scott Richardson added that key end markets for the company such as construction, automotive and consumer goods remain somehow in the doldrums, and occasional improvements in some subsegments during H1 may have just been an illusion of a strong recovery – before the storm. The CEO and the CFO Chuck Kyrish acknowledged, however, there is a high degree of uncertainty about whether slight improvements in H1 in some segments represented genuine demand improvements or temporary supply chain restocking as some customers, them too, would be preparing for a potential turbulent H2. “We are not assuming anything right now. We are continuing to be diligent on driving self-help actions, [and] we are focused on reducing inventory and are going to pull back on rates if we see any kind of reduction in demand,” said the CEO, speaking to reporters and chemical equity analysts. The CEO said that the company has been somehow shielded from any direct tariff hit, as its operations in China are mostly focused on the domestic market, but nonetheless the current uncertainty and instability will be one of the factors to make the second half of 2025 an uncertain one. He repeated that claim on several occasions. Celanese’s first-quarter sales fell, year on year, although it managed to narrow the net loss posted in the same quarter of 2024, the company said after the markets closed on Monday. The producer also announced that as part of its efforts to deleverage it is to fully divest its electronic pastes and ceramic tapes producer Micromax, acquired in 2022 as part of the $11 billion acquisition of DuPont’s Mobility & Materials (M&M) business. Despite the poor metrics for the first quarter, the financial results beat analysts’ consensus expectations which, together with the Micromax divestment and others which could be on the way, propped up Celanese stock by nearly 9% in Tuesday afternoon trading. AMID THE CHALLENGES, SAVINGSThe CEO said Celanese projects generating between $700-800 million in free cash flow for 2025, driven by optimized working capital management, lower capital expenditure (capex), and comprehensive cost-cutting measures totaling approximately $60 million expected in the latter half of the year. The chemical producer recorded stronger orders in March and April in its Engineered Materials sales volumes, but its Acetyl chain business delivered mixed results, with limited seasonal improvement in key segments including paints and coatings. “In engineered materials, we saw a much stronger March than we saw in January and February. April orders were in line with that March pickup, and the order book for May looks very similar. We are seeing a volume pickup from Q1 into Q2 from engineered materials. June is too early to say [and] there’s some uncertainty around where June orders will go,” said Richardson. “On the acetal side of things, we’re not seeing the normal seasonal pickup that we would typically see. Usually, Q2 is significantly better volumetrically in sectors like paints and coatings – we haven’t seen that. We’re seeing some of that, but not nearly at the level that we’ve seen historically in the past.” The CEO added that within that division, however, the segment producing acetate tow has posted higher sales volumes on the back of some Q1 seasonality. The product is mostly used in cigarette filters as well as Heat Not Burn (HTB) products and demand has been on the rise in countries like Indonesia, Bangladesh and India. Meanwhile, the producer’s beleaguered nylon business, which accounts for approximately 75% of the substantial $350 million profit deterioration in its Engineered Materials segment since 2021, has begun to stabilize following capacity reductions and operational adjustments. However, executives acknowledged considerable work remains to restore this segment to acceptable profitability levels amid persistent industry overcapacity and challenging pricing dynamics. “The industry has given up a lot of margins over the last several years, and it’s unsustainable. The actions that we started taking last year around capacity reductions, us flexing a different operating model here, hasn’t been enough yet. We are starting to see a stabilization here,” said the CEO. “We’ve been very consistent that our focus is on cash generation, and we are looking at a myriad of options on the divestiture side. It’s not just Micromax: we’ve talked about having a portfolio of things we’re looking at.” Capex has been reduced to maintenance levels, providing “significant” year-over-year improvement in free cash flow generation, according to Kyrish. Front page picture: Celanese produces acetyls and other chemicals widely used in the paints and coatings sector Picture source: imageBROKER/Shutterstock

LONDON (ICIS)– The electricity blackout which hit the Iberian Peninsula at the end of April has triggered widespread debate about the causes of the outage and risks facing European grids. As an investigation has now been launched, energy market expert, Aura Sabadus, spoke to Volodymyr Kudrytksyi, former CEO of the Ukrainian electricity grid operator, Ukrenergo, about the challenges facing Europe’s electricity transmission infrastructure and the lessons it can learn from Ukraine’s unrivalled efforts in keeping the grid stable even in the face of war-related destruction.

WARSAW (ICIS)–Politics surrounding the 13-year agreement between Bulgaria’s state-controlled gas supplier Bulgargaz and Turkey’s counterpart BOTAS for access to the Turkish gas grid or LNG terminals has highlighted the need for a new strategy when negotiating long-term supply deals. The two firms are in the process of renegotiating the deal and were expected to reach an agreement by 2 May, but no news or details were given in the meeting between the two energy minsters Zhecho Stankov and Alparslan Bayraktar on the same day in Istanbul. Currently Bulgargaz does not import gas under the agreement with BOTAS and owes close to Bulgarian Lev 300m (€150m) in fees to the Turkish firm, under the agreement seen by ICIS. On 3 January 2023, Bulgargaz signed a deal to access the Turkish gas grid or LNG terminals operated by BOTAS and import 1.85 billion cubic metres (bcm)/year. ICIS revealed in July 2023 that under this deal BOTAS and Bulgargaz will share interconnection capacity at the Strandzha-Malkoclar border point on the Bulgarian side of the Trans-Balkan pipeline. The current technical border entry capacity of Bulgarian system amounting to 106.4GWh/day at the Strandzha-Malkoclar would be split in half between the two companies. However,  Bulgargaz committed to book the whole capacity of 106.4GWh/day for 13 years. Out if the total, Bulgargaz has booked 53.2GWh/day for its own needs regardless whether it uses it or not. The remaining half – also paid for by Bulgargaz – belongs to BOTAS, which can sublet the capacity to third parties based on non-transparent criteria. The agreement was touted as an vital diversification achievement for Bulgaria in 2023. Under the current clauses of the deal Bulgaria loses Bulgarian Levs 1m (€512 000) per day from reserved but unused gas import capacity, former prime minister Boiko Borissov said in April. Arguably, a deal securing new sources of supply for Europe should be welcome. However, the 13-year deal was negotiated on the political level between Turkish president Tayyip Erdogan and Bulgaria’s counterpart Rumen Radev without revealing any information on the contract or expert input from the Bulgarian gas community, including traders. A new approach and strategy is needed given the current market conditions. Firstly, in terms of demand more flexible volumes should have been negotiated. Bulgarian gas demand is typically around 3bcm a year but it is covered by 1bcm Azeri volume, and 1bcm volume booked at upcoming Alexandropoulois LNG terminal in Greece. Bulgargaz-BOTAS deal offers 1.85bcm/year but on 19 April the members of parliament said the actucal volumes are 1.8bcm/year. Currently, the Bulgarian gas market is oversupplied and the BOTAS deal does not enough flexibility to reduce the negotiated volumes. Secondly, the deal hinders competition as it does not allow other companies on both sides of the border to access capacity and compete based on regular tenders. Third-party access should be ensured as talks between both side continue on renegotiating the deal. The 13-year deal could have worked well for Bulgargaz if the company launched a 10-year LNG tender between 2024 and 2034 to be delivered into Turkish LNG terminals. This would have ensured lower prices and predictability of gas supplies. The signing of any long-term gas deals should be subject to detailed scrutiny. Views and assessment of gas demand, competition and price affordability must be considered. Finally, the deal could see Bulgargaz paying over $2.3 billion for booked capacity regardless of whether it uses it or not threatening the financial situation of the Bulgarian supplier. This should be avoided at all costs as the Bulgarian consumers could be asked to foot the bill. This article reflects the personal views of the author and is not necessarily an expression of ICIS’s position.

LONDON (ICIS)–Covestro’s Q1 2025 earnings before interest, tax, depreciation and amortization (EBITDA) halved compared to last year, but were at the upper end of its forecast, the German producer announced on Tuesday. € million Q 1 2025 Q1 2024 % change EBITDA* 137 273 -49.8 Sales 3,477 3,510 -0.9 Net income -160 -35 357.1 Free Cash Flow (FCF) -253 -129 96.1 *EBITDA – earnings before interest, tax, depreciation and amortization Key points The key driver of EBITDA fall was the planned closure of the POSM site in Maasvlatke, Netherlands. The closure hit earnings in the Performance Materials segment. Although sales remained stable year, margins were eroded by high energy costs. The Solutions & Specialties segment marked a slight decrease in sales compared to last year (from €1.8 billion to €1.7 billion), as increased sales volumes and positive exchange rate effects were not enough to offset the decline in average selling prices. “The first quarter of this fiscal year has once again demonstrated the volatile and challenging nature of a market environment increasingly characterized by trade conflicts and growing protectionism,” said Covestro CFO Christian Baier. CEO Markus Steilemann said the Q1 figures showed that Covestro remains “on course… with stable sales but continued pressure on earnings.” Outlook In response to volatile changes in US tariff policy, Covestro narrowed its EBITDA guidance to €1.0-1.4 billion (previously €1.0-1.6 billion), with an FCF range forecast to stay €0-300 million. Covestro continues to implement its sustainable future strategy, focusing on sustainable growth, saving €400 million globally by 2028 from increased efficiency and digitalization, while pushing towards fully circular and climate-neutral production. “Whoever hesitates in these turbulent times loses. But whoever acts prudently now can shape the future. That is precisely what we are doing – with full conviction, high speed and a clear vision,” said Steilemann Thumbnail image credit: Covestro

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the likely impact of President Trump’s tariff war on US stock markets. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author and do not necessarily represent those of ICIS. Paul Hodges is the chairman of consultants New Normal Consulting.

LONDON (ICIS)–Economic growth in the eurozone grew more than initially thought in April but remained subdued as demand conditions weakened. The eurozone composite purchasing managers’ index (PMI) was revised up by S&P Global from its flash estimate but was still at a two-month low of 50.4, down from 50.9 in March. The group’s eurozone services business activity PMI for April was also revised up but only to a five-month low of 50.1, down from 51.0 in March. A PMI reading of below 50.0 signifies contraction. S&P said its April HCOB (Hamburg Commercial Bank) PMI data showed a sustained upturn in private sector business activity across the eurozone since the start of the year, but the trend was “subdued and well below its long-term average.” Soft demand conditions were limiting the speed of growth, the market intelligence firm said in a statement. “Eurozone economic growth slowed at the start of the second quarter, following a pick-up in the first three months of the year,” said Cyrus de la Rubia, chief economist at HCOB. “The services sector, which is a major player, practically stagnated in April. Even though manufacturing output saw a surprising uptick, it wasn’t enough to prevent the overall slowdown in growth.”

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China is in the process of drafting its 15th Five-Year Plan (2026–2030) in a geopolitical and economic environment that suggests the need for greater self-reliance. It might be fair to assume this will include a continued push toward petrochemical self-sufficiency. But China is to cap refinery capacity from 2027 onwards due to the rise of electric vehicles. This reduced need for gasoline could mean not enough new naphtha, LPG or other refinery feedstocks to support further petrochemical plant construction. China might instead import more feedstocks from the Middle East or continue to repurpose existing refineries to make more petrochemical feedstock. This is already the direction of travel through Saudi Aramco investments in China. Add rumours of coal-to-chemicals rationalisation and closures of older plants, and the picture gets even murkier. Conflicting reports say either China is slowing petrochemical construction following the trade war —or pressing ahead and raising operating rates to the mid-80% range (up from high-70s post-Evergrande Turning Point). Demand is another major variable. Growth was already slowing before the trade war and could now turn negative in 2025. A document from China Customs (25 April) pointed to possible waivers for US polyethylene and ethane imports—but not for ethylene glycol or propane. Nearly 60% of China’s propane imports came from the US in 2024. With a 125% tariff still in place, China would be unable to replace those volumes quickly, putting PDH propylene production under pressure. This matters: 32% of China’s propylene capacity is now PDH-based, and 70% of propylene is used to make PP. ICIS expects PDH operating rates to fall to below 59% in 2025 (from 70% in 2024). Could this mean a propylene shortage? Not necessarily. Output from crackers, refineries and coal could increase—especially if, as one Middle East source suggests, China pursues greater PP self-sufficiency. Taking into account all these variables, and the extent to which China can export PP based on the level of trade tensions, consider these scenarios for China’s PP net imports in 2025–2028: The ICIS Base Case: They average 3m tonnes/year. Alternative 1: 600,000 tonnes/year with some years of net exports Alternative 2: 1.4m tonnes/year, with again some years of net exports My gut feel is that China will do its best to boost petrochemicals self-sufficiency. But you cannot take my always fallible words as the final words. You must extend and deepen your scenario planning in this ever-murkier environment. 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.