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SINGAPORE (ICIS)–Malaysia's revised sales and services tax (SST) framework officially takes effect on 1 July, with the expanded scope now set to include a 5% tax on an extensive range of petrochemical products, including polyethylene (PE) and polypropylene (PP). Critical raw materials for downstream industries affected Capital expenditure items like machinery now taxed Malaysian industry body calls for further delay in implementation The government had first announced the revision of items subject to the sales tax on 18 October 2024, as part of its fiscal consolidation strategy under the 2025 budget. Under the updated framework, more than 4,800 harmonized system (HS) codes will now fall under the 5% sales tax bracket. Goods exempted from the updated sales tax include specific petroleum gases and other gaseous hydrocarbons that are currently under HS code 27.11. These include liquefied propane, butanes, ethylene, propylene, butylene, and butadiene. In their gaseous state, the list includes natural gas used as motor fuel. The measure, aimed at broadening the country's tax base and increasing revenue, was originally slated to begin on 1 May, but was delayed for two months after manufacturers urged policymakers to refrain from adding to their financial burden. The July revision of Malaysia's sales tax and the expansion of the service tax scope involve several key changes. The sales tax rate for essential goods consumed by the public will remain unchanged, while a 5% or 10% sales tax will be applied to discretionary and non-essential goods. The scope of the service tax will be broadened to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services. This includes critical raw materials for various downstream industries, from plastics and packaging to automotive manufacturing. Previously, many of these materials were zero-rated under the SST. The Federation of Malaysian Manufacturers (FMM) has publicly criticized the decision, calling it "highly damaging to industries” in a statement released on 12 June. According to estimates by the Ministry of Finance, the SST expansion is expected to generate around ringgit (M$) 5 billion in additional government revenue in 2025. “Although this may support the government’s fiscal objectives, the additional tax burden will be largely borne by businesses and has serious implications for operating costs, investment decisions, and long-term business sustainability,” FMM president Soh Thian Lai said in a statement. Soh highlighted that with this expansion, around 97% of goods in Malaysia's tariff system will now be subject to sales tax, representing a significant departure from a previously narrower tax base, to one where nearly all categories including industrial and commercial inputs are now taxable. Under the new sales tax order, 4,806 tariff lines are now subject to 5% tax, covering a wide range of previously exempt goods, according to the FMM. These include high-value food items, as well as a broad spectrum of industrial goods, such as industrial machinery and mechanical appliances, electrical equipment, pumps, compressors, boilers, conveyors, and furnaces used in manufacturing processes, it said. The 5% rate also applies to tools and apparatus for chemical, electrical, and technical operations, significantly broadening the range of taxable inputs used in production and operations. “The expanded scope now places a direct tax burden on machinery and equipment typically classified as capital expenditure. This includes items critical to upgrading production lines, automating processes, and scaling operations,” Soh said. The FMM "strongly urges the government to further delay the enforcement of the expanded SST scope beyond the scheduled date of 1 July", until the review is complete, and industries are ready. They also calling for a broader exemption list, especially for capital expenditure items like machinery and equipment, and a re-evaluation of including construction, leasing, and rental services, which they warn will "increase operational expenses and are expected to cascade through supply chains." “We are deeply concerned and caution that the untimely implementation of the expanded scope of taxes will exert inflationary pressure, as businesses already grappling with rising costs … may have no choice but to pass these additional burdens on to consumers,” the FMM added. The FMM has urged the government to postpone the implementation, citing insufficient lead time for businesses to adapt and calling for a comprehensive economic impact assessment. Malaysia’s manufacturing purchasing managers’ index (PMI) continued to contract in May, with a reading of 48.8, according to financial services provider S&P Global. Beyond the direct sales tax on goods, the revised SST also introduces an 8% service tax on leasing and rental services for commercial or business goods and premises. This could further compound cost burdens for capital-intensive sectors, including parts of the petrochemical industry that rely on leased machinery and industrial facilities. Focus article by Nurluqman Suratman Thumbnail image: PETRONAS Towers, Kuala Lumpur (Sunbird Images/imageBROKER/Shutterstock)

17-Jun-2025

SINGAPORE (ICIS)–Singapore's petrochemical exports in May fell by 17.8% year on year to Singapore dollar (S$) 968 million ($756 million), weighing down on overall non-oil domestic exports (NODX), official data showed on Tuesday. The country's NODX for the month fell by 3.5% year on year to S$13.7 billion, reversing the 12.4% growth posted in April, data released by Enterprise Singapore showed. Non-electronic NODX – which includes chemicals and pharmaceuticals fell by 5.3% year on year to S$10 billion in May, reversing the 9.3% growth in April. Overall NODX to six of Singapore's top 10 trade partners declined in May 2025, with falls in shipments to the US, Thailand, and Malaysia, while those to Taiwan, Indonesia, South Korea, and Hong Kong increased. Singapore is a leading petrochemical manufacturer and exporter in southeast Asia, with more than 100 international chemical companies, including ExxonMobil and Aster Chemicals & Energy, based at its Jurong Island hub. ($1 = S$1.28)

17-Jun-2025

HOUSTON (ICIS)–Arrivals of container ships at the busy US West Coast ports of Los Angeles and Long Beach (LA/LB) are slowly returning to normal after the trade war between the US and China slowed cargo movement between the two nations, according to the Marine Exchange of Southern California (MESC). Kip Louttit, MESC executive director, said the registration process for vessels bound for LA/LB projects a slight uptick in the coming two weeks. Container ships on the way to LA/LB averaged 58.9/day in January, which fell to 47.2/day in May amid trade tensions between the US and China. The average has climbed to 51.8/day over the first 14 days of June, and 52.1/day over the past 17 days. “This is an indicator of a slight increase in ship arrivals over next 1-2 weeks,” Louttit said. Louttit said there are 17 container ships scheduled to arrive at the twin ports over the next three days, which is normal. Container ships at berth at the ports of LA/LB dipped from an average of 19.4/day in April to 15.6/day in May. The average was 12.3/day over the first six days of June but jumped to 15.1/day for all 14 days in June, with 21 at berth on Friday and 14 at berth on Saturday. Maritime information specialists at MESC said there are 49 container ships “blank sailing” that will skip Los Angeles or Long Beach through 1 August, which is two more than the previous week. Blank sailings are when an ocean carrier cancels or skips a scheduled port call or region in the middle of a fixed rotation, typically to control capacity. Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said capacity is returning to the transpacific trade – up 28% since mid-May – as carriers react to shippers rushing cargo during the 90-day window of lower tariffs. “This increased capacity and a slowing in the cargo rush should see a return of the downward pressure on spot rates we saw during Q1 prior to the ‘Liberation Day’ tariff announcement,” Sand said. Rates for shipping containers from east Asia and China to the US are at 10-month highs. 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), which are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers. They also transport liquid chemicals in isotanks.

16-Jun-2025

SAO PAULO (ICIS)–Colombia’s plastics industry is managing to navigate through a turbulent period for the country’s macroeconomics and growing at over 3%, but the cabinet’s fiscal issues and intensifying Chinese imports pose risks, according to the president of trade group Acoplasticos. Daniel Mitchell added plastics in Colombia can consider themselves lucky as growth over 3% exceeds that of the wider manufacturing sectors as well as the overall growth in the country. Mitchell said that, while imports into Colombia continue at pace, the country’s exports have showed particularly strong momentum in the plastic chain – according to Acoplasticos, plastic product exports rose 7% while plastic materials exports surged 15%, effectively compensating for weaker domestic market conditions. Acoplasticos represents the entire plastics value chain, though maintains primary focus on manufacturing rather than commercial distribution activities. FISCAL POLICY ADDS UNCERTAINTY Last week, the Colombian government activated an ‘escape clause’ to the so-called fiscal rule, a clause normally only used in emergencies or calamities, the last time being the pandemic. On this occasion, there is not an emergency per se, but the cabinet is decided to go through with its intention to increase spending ahead of the election. Left-leaning President Gustavo Petro’s electoral program was clear in its aim to expand the welfare state, but as Petro’s term nears its end, that higher spending has been financed with debt rather than regular, tax-led higher income. Activating the escape clause and practically dismantling the rules which had made Colombia a relatively stable economy in Latin America in the past few years will add pressure to investors who are wary of unstable macroeconomics. Chemicals sources said to ICIS last week the measure could increase borrowing costs, as both public and private borrowing became harder due to investors’ distrust of loose fiscal policies. Industry leaders are showing the same concerns. Last week, the main industrial trade group Andi – in which chemicals is represented as well – said nascent, growing investments in Colombia could now be put on hold due to the uncertainty, and Acoplasticos joins that. "We are quite concerned. There are three elements that have come together: the cabinet recently increased withholding tax rates, requiring companies to pay higher advance portions of next year's income tax during the current year. This provides the government with additional, immediate cash flow – but it reduces available resources for the following year: it’s short-termism in a fiscal maneuver which could have profound medium-term consequences,” said Mitchell. “Additionally, the government has indeed activated the ‘escape clause’ for the fiscal rule, effectively allowing breach of established fiscal discipline mechanisms. This decision permits higher government borrowing and increased fiscal deficits, enabling expanded current spending without regard for future fiscal sustainability. “Finally, the third concerning element involves publication of the medium-term fiscal framework, outlining public finance perspectives over the coming years. To add to the previous woes, most analysts think this framework reflects a concerning ‘spend today and don't think much about what will happen tomorrow or in future years’ approach, which greatly undermines confidence in fiscal responsibility,” said Mitchell. These fiscal policy decisions carry significant repercussions for Colombia's financial standing and broader economic stability, Mitchell went on to say, and the deteriorating fiscal outlook is almost certain to increase the country risk premiums, which in turn can lead to higher interest rates for public debt and reducing fiscal space for future policy responses. There are widespread concerns among Colombia economic heads that if the government insists on a looser fiscal policy, credit rating agencies could move to downgrade the sovereign rating, making it more expensive for Colombia to go out to global markets to issue debt. "There is a risk that credit rating agencies will review Colombia's rating and possibly remove our investment grade status and downgrade us in their categories. This scenario would further increase interest rates and limit government borrowing capacity while constraining private sector access to international financing,” said Mitchell. Fiscal discipline – or the appearance of it – is so important and is so absent in Colombia currently that there are concerns the deterioration in the public finances will almost inevitably and quickly depreciate the Colombian peso’s exchange rate, in turn making imports more expensive. This all will be an issue for Colombia’s central bank, who was meant to continue lowering interest rates as the peak of the inflation crisis has been left behind. But the new scenario of rising imports due to the lower peso, sooner or later filtering down to the consumer in the shops, could put a span in the works of monetary policy easing. "Obviously, by maintaining or not being able to reduce interest rates, this affects economic growth, affects investment prospects, buying machinery, buying appliances, buying automobiles, buying housing, which are sectors tied to the chemical sector, to the plastics sector,” said Mitchell. “Currency dynamics present mixed implications for plastics: a depreciated peso increases raw material costs for domestic producers reliant on imported inputs, though it benefits exporters by making their products more competitive in international markets. But, overall, I think currency weakness generally pressures the industrial sector downwards, while economic deceleration reduces domestic consumption." CHINA As well as domestic issues for companies, chemicals and plastics imports from Asia, the Middle East, or the US, continue to present Colombia and the wider Latin America with a near-existential crisis. With lower production costs – via actual lower costs or via heavy subsidies to keep its citizens employed – China is now dumping its excess product in practically all industrial sectors, and chemicals and polymers have been at the center of it. Far from easing, China seems to be sending product at yet more competitive prices, and the competitive pressure continues escalating, gradually but persistently, across most plastic product segments. Mitchell said that while some categories like packaging containers face limited import competition due to transportation economics, virtually all other tradeable plastic products encounter Chinese competition at prices significantly below domestic production costs. Colombia's approach to addressing unfair trade practices maintains a case-by-case methodology rather than implementing broad protective measures such as higher import tariffs. The Ministry of Commerce investigates specific complaints regarding antidumping violations and safeguard measures, with mixed results depending on individual case merits. Recent examples include a polyvinyl chloride (PVC) antidumping complaint filed two years ago that was rejected by the government, while a current antidumping case regarding plastic films remains under review. “These cases reflect ongoing industry efforts to address unfair competition, though without systematic government support for broad protective measures – it has ruled in favor in some cases, it has ruled against in others," said Mitchell. OPEN ELECTON ALSO ADDS TO UNCERTAINTY As Colombia approaches a critical electoral period with congressional elections scheduled for March 2026 and presidential elections in May, the political uncertainty seems to grow rather than narrowing the option as the election gets closer. President Petro's approval ratings hover around 30%, suggesting his party will face electoral vulnerability for the presidential election, as Colombia's second-round presidential system requires majority support exceeding 50% in the first round, or a final round between the two most voted candidates in the first round. However, political dynamics remain highly uncertain with numerous potential candidates and no clear front runner emerging. To add to the uncertainty, Colombians are still reeling from the terrorist attack a week ago witnessed on national television against one of the presidential candidates, right-leaning Miguel Uribe, who remains in hospital in critical condition. Opinion polls would suggest Petro’s time in politics may be approaching its end, but Mitchell reminded a few months in politics can feel much longer, and more so in a very fluid electoral landscape in which there is no clear favorite yet, with several candidates polling at the low double-digits. The second and final round seems more open than ever. "When you look at the government's popularity indices, the logic is that no [they will not revalidate their mandate]. Because his popularity is around 30%, which is not a majority. But obviously everything is very uncertain at this moment, and the truth is that there are many candidates," he concluded. This interview took place over the phone on 13 June. Front page picture source: Acoplasticos Interview article by Jonathan Lopez

16-Jun-2025

This article reflects the personal views of the author and is not necessarily an expression of ICIS's position LONDON (ICIS)–In his latest article about Europe's position in our world of escalating military tensions and warfare director of Eurointelligence Wolfgang Munchau cited US chess player Bobby Fischer as saying: “Tactics flow from a superior position.” Munchau is positing that Europe is increasingly using 'tactics' as opposed to 'strategy'. His argument rings very true when it comes to Europe's energy policy and its stance towards Russia – the aggressor in the brutal Ukraine war that has now lasted for three years. The European Commission has recently announced the 18th sanctions package against Russia aimed at hitting its president Vladimir Putin where it hurts – energy exports – one of his main sources of income. “Russia's goal is not peace, it is to impose the rule of might. Therefore, we are ramping up pressure on Russia. Because strength is the only language that Russia will understand,” President of the European Commission Ursula von der Leyen and High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the European Commission (HR/VP) Kaja Kallas said in a joint statement on 10 June. To back up its strong words with actions the Commission is proposing a transaction ban for the sabotaged Nord Stream 1 and 2 pipelines that have been inactive since September 2022. "This means that no EU operator will be able to engage directly or indirectly in any transactions regarding the Nord Stream pipelines. There is no return to the past," the Commission's high officials said. The proposal to sanction Nord Stream 1&2 has puzzled many energy experts. "So, why is now Europe rushing to sanction these pipelines, which have not transported gas in almost three years?" asked postdoctoral fellow and energy observer Francesco Sassi. The measure is linked to EU’s Roadmap to phase out all imports of Russian energy by 2027, which it believes will help to end the war in Ukraine. “Every sanction weakens Russia's ability to fight. So, Russia wants us to believe that they can continue this war forever. This is simply not true,” Kallas said. The Commission may achieve its goal of inflicting financial pain on Putin’s war economy. But its rejection of Russian energy should be viewed in the wider context of Europe’s obsession with phasing out fossil fuels as such and its headlong pursuit of Net Zero goals and policies. Net Zero recently came under fire from the most unlikely critic – former British Prime Minister Tony Blair. “Despite the past 15 years seeing an explosion in renewable energy and despite electric vehicles becoming the fastest-growing sector of the vehicle market, with China leading the way in both, production of fossil fuels and demand for them has risen, not fallen, and is set to rise further up to 2030,” Blair said. “Leaving aside oil and gas, in 2024 China initiated construction on 95 gigawatts of new coal-fired energy, which is almost as much as the total current energy output from coal of all of Europe put together. Meanwhile, India recently announced they had reached the milestone of 1 billion tonnes of coal production in a single year,” he added. Blair concluded that any strategy based on “either “phasing out” fossil fuels in the short term or limiting consumption is a strategy doomed to fail”. In the past few years, it has become abundantly clear that European industries have been severely hurt by high energy prices to the point when they are closing down production and relocating to more industry-friendly parts of the world. When it comes to natural gas, Ukraine itself is struggling to secure adequate supplies for this winter, which is putting further upwards pressure on European hub prices and increasing Europe’s appetite for LNG, drawing cargoes away from other continents. So whose interests is the European Commission defending? And whom is it hurting the most? “We Westerners are, by our inclination, more tactical than strategic. We like to close in. That is not necessarily a bad thing, for as long as you have an underlying strategy in place,” Munchau concluded his analysis. Coming back to Bobby Fisher, what position of ‘superiority’ can Europe boast these days? If it is not an economic one, the rest is an empty moral posturing.

16-Jun-2025

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 13 June. Brazilian court orders end to six-month customs auditors' strike A Brazilian judge has ordered customs workers to end their nearly seven-month strike after the government argued the industrial action was causing financial harm as goods pile up at ports and customs facilities across the country. SHIPPING: May container ship arrivals fall at US ports of LA, LB, but on the uptick in June Arrivals of container ships fell in May at the US West Coast ports of Los Angeles (LA) and Long Beach (LB) amid a trade war between the US and China but has shown a slight uptick in June while the two nations continue to negotiate a trade deal. INSIGHT: Chems need more than cost cutting during multi-year slump Chemical companies can find more ways to grow profits beyond cost cutting as they enter another year of slow economic growth in the longest downturn in years. UPDATE: US chem shares sell off amid Israel, Iran attacks US-listed shares of chemical companies fell sharply on Friday and performed worse than the overall market following the growing conflict between Israel and Iran.

16-Jun-2025

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at CEO concerns over tariff and trade wars. 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.

16-Jun-2025

MUMBAI (ICIS)–India’s DCM Shriram plans to acquire specialty chemicals producer Hindusthan Specialty Chemicals Ltd (HSCL) for Indian rupees (Rs) 3.75 billion ($44 million). “This move positions DCM Shriram for strategic expansion into the advanced materials segment, unlocking synergies with its existing chemicals portfolio,” the company said in a disclosure to the Bombay Stock Exchange (BSE) on 12 June. The acquisition of HSCL is expected to be completed by September, it added. HSCL has a facility at Jhagadia in the western Gujarat state which is located close to DCM Shriram’s existing chemicals complex. This will allow for quick integration and growth, DCM said. Apart from a 17,000 tonne/year liquid epoxy resin unit, HSCL also produces reactive diluents, hardeners, formulated resins and other products used in the aerospace, electronics, renewable energy, electric vehicles and defence sectors at the site. “This acquisition is a pivotal step in our chemicals growth strategy and a catalyst for DCM Shriram’s entry into advanced materials, which offers robust forward integration with our chlor-alkali platform, while positioning us at the intersection of India’s expanding presence in sunrise sectors like renewables, mobility, and aerospace,” DCM Shriram chairman and managing director Ajay Shriram said. DCM Shriram is a chlor-alkali producer in India with a combined production capacity of nearly 1 million tonnes/year at Jhagadia in Gujarat, and Kota in Rajasthan. In February 2024, the company had announced plans to invest Rs10 billion to set up a greenfield epoxy resins manufacturing plant. Separately, the company expects to begin operations at its 51,000 tonne/year epichlorohydrin (ECH) plant soon, a company source said. “The commissioning of the ECH plant has been delayed due to an issue in one of the equipment and was addressed by our technology suppliers,” he said. The ECH plant will be commissioned in phases, with the first phase of operations expected to begin this month, the company source said. ($1 = Rs86.05)

16-Jun-2025

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 13 June. ESA ’25: Global sulphuric acid market seeking clarity on H2 supply securityOffer pricing remains stable-to-firm across the global sulphuric acid market as Q2 nears its end – although market players’ views are sharply divided on the supply outlook for the second half of 2025. Europe PS and EPS markets face long supply as demand remains stableEuropean polystyrene (PS) and expandable polystyrene (EPS) markets are navigating a landscape characterized by long supply conditions and stable demand, which is expected to continue unchanged into Q3. Verbio to start up renewable chemicals plant next yearVerbio’s ethenolysis plant under construction in Germany is expected to start up in 2026, a company official told ICIS. Europe June epoxy stable to soft; summer could weigh on pricesEurope epoxy resins price discussions have been relatively stable for June so far,  but with some softening here and there, with ongoing margin challenges counterbalanced by subdued fundamentals. European jet fuel prices extend gains as demand recovers, capping supply dragEuropean jet fuel prices extended gains in the week to 11 June in response to a pick up in buying interest as seasonal demand gets underway. Markets slump, oil soars in wake of Iran strikesEurope chemicals stocks and equities markets fell in morning trading on Friday in the wake of Israel’s missile strikes across Iran, including nuclear facilities, with the prospect of additional attacks chilling sentiment.

16-Jun-2025

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The global petrochemical industry is already battling a deep, structural downturn. While we've seen no impact on already dire polyethylene (PE) and polypropylene (PP) margins in northeast and southeast Asia from the trade war, the Israel-Iran crisis presents a new set of risks for polyolefins and all the other products. Today, I want to share a first pass at three headline scenarios for how this latest crisis could impact the global economy, and by extension, petrochemicals – Scenario 1: The Best-Case – De-escalation and Containment. International mediation leads to a swift reduction in direct confrontation. Retaliatory actions are limited, avoiding critical infrastructure. Diplomatic channels resume, potentially reigniting broader regional security talks. Oil Prices: Rapid return to pre-crisis levels; spikes short-lived. Inflation: Minimal sustained impact; stable energy costs. Supply Chains: Minor, localised disruptions; vital Strait of Hormuz remains secure. Investment: Quick rebound in confidence; risk assets recover. Scenario 2: The Medium-Case – Protracted Tensions and Proxy Conflicts Averted full-scale direct war, but high tensions persist. The region sees intensified "shadow wars" and proxy conflicts. Occasional targeted strikes or cyberattacks, but no full escalation. Diplomatic efforts are slow and largely ineffective. Oil Prices: Elevated and volatile due to persistent geopolitical risk. Inflation: Sustained upward pressure as higher energy costs feed into all sectors. Supply Chains: Increased shipping insurance, minor rerouting; higher logistics costs. Investment: Increased risk aversion; volatile equity markets; flight to safe havens. Scenario 3: The Worst-Case – Full-Scale Regional War & Strait of Hormuz Closure Direct military conflict spirals out of control, potentially drawing in other global powers. Iran close or severely disrupts the Strait of Hormuz. Oil Prices: Big surge to long-term historic highs. Inflation: Hyperinflationary pressures globally; severe cost-of-living crisis. Supply Chains: Widespread and severe paralysis of global trade; blockades, severe shortages. Global Recession/Depression: High probability of a severe global economic downturn. Financial Markets: Extreme volatility; sharp declines; systemic crisis risk. Conclusion: Understanding scenarios is crucial for strategic planning. Even "medium" level tensions will have significant, widespread consequences. 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.

16-Jun-2025