Page 184 - CW E-Magazine (2-4-2024)

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favourable export outlet for US PVC “US producers have plans to bring China trade war which featured tariffs Europe shutdowns open door exported around 900,000-tonnes of EG ing competition in global commodity
exports. Asia is less favourable as pric- 1.2-billion lb/year (544,000 tonnes/ from both sides on a wide range of The US petrochemical industry is to China, up from about 630,000-tonnes chemicals:
es are low and the region is oversup- year) of new capacity in 2024, which chemicals and plastics. China slapped in prime position to boost exports to in 2022, making it the leading destination
plied. Certain producers are supplying will keep pricing subdued without retaliatory tariffs on imports from the Europe as high-cost plants in Europe for such exports, according to the ICIS 1. Chinese state-owned enterprises
some exports to Vietnam and southeast stronger demand increases from down- US of PE, polypropylene (PP), ethy- shut down amid massive restructuring. Supply and Demand Database. China (SOEs) continuing to build capacity
Asia, but on a more limited basis,” said stream markets like building and con- lene glycol (EG) and PVC among other was followed by Turkey, Belgium, for self-suffi ciency in raw materi-
Coutu. Westlake on its Q4 earnings struction, and infrastructure building,” chemicals. The integrated chemical production Mexico and Brazil as key destinations. als and thus willing to accept much
call in late February said solid sales said Coutu. model, exemplified by BASF’s lower margins.
momentum is continuing in 2024, sup- A 60% tariff on Chinese imports Verbund concept, is unravelling in Overall US EG exports rose 3% in 2. Middle East Big Oil seeking to
porting pricing momentum. Exports Threat of US-China trade war, Part-2 to the US would trigger a massive Europe as commodity overcapacity in 2023 and are expected to grow another convert more of the oil barrel into
fi gured more prominently in US PVC With geopolitical tensions and response, which would hit not only China intensifi es competition world- 3-5% in 2024, said Antulio Borneo, petrochemicals and plastics (crude
and caustic soda for the company in deglobalisation on the ascent, an export- chemicals, but the wider US eco- wide. vice president, PET chain at CDI. oil to chemicals) rather than fuel,
Q4. Westlake also produces PE. focused strategy becomes more tenuous. nomy as China could limit exports as they see fuel demand peaking
A key risk for US chemical exports is of key semiconductor and electric BASF is restructuring its Lud- “The US continues to be advan- and declining in the energy transi-
Destocking in PVC, as in many the potential for a renewed US-China vehicle (EV) battery materials in wigshafen, Germany, site – the larg- taged with costs very comparable to tion.
other polymer chains, has run its trade war following US Presidential retaliation. est chemical site in the world – which the Middle East. There has been a lot of 3. US shale gas advantaged players
course with converters now cauti- elections in November. will entail plant shutdowns. Indorama new glycols capacity from 2019-2022 continuing to build capacity for
ously restocking in hopes for a China is also becoming more self- is reviewing six operating assets in the and those units can run full out,” said export markets.
modest spring construction season. In February, former US President suffi cient in a wide range of chemicals ‘West’ for potential shutdown. Borneo, adding that the US hit record
Many producers are looking to H2 Donald Trump and the Republican and plastics as it continues to build EG production in Q2 2023. This is putting the big squeeze on
2024 for more robust demand growth, nominee, said he would impose tariffs capacity. While these do not involve PE or commodity chemical producers in
Coutu pointed out. of at least 60% on all Chinese imports PVC assets, they highlight the grow- While China continues to add EG Europe, Japan, South Korea and Brazil,
and 10% tariffs on all other US imports. For high volume US exports such as ing trend of capacity rationalisation in capacity, much of this is fully integra- which simply cannot compete with the
Meanwhile, pricing is expected to While some would dismiss this as PE, trade fl ows could shift, with the Europe. There has already been a rash ted into the polyethylene terephthalate growing fl ood of cheap, subsidised and
be stable in 2024 with modest seasonal campaign rhetoric, the threat to US-China US exporting more to other regions of chemical plant shutdowns in Europe, (PET)/polyester fi bre chain, he pointed out. cost-advantaged products.
fl uctuations. More capacity should cap trade is very real. such as Europe and southeast Asia, with many more to come. BASF will
upside to pricing, but also boost export and Middle East producers exporting unveil details of its restructuring in H2. Thus, China will continue to require “We see imports from China com-
volumes. Trump in 2018 triggered the US- more to China. EG imports. About two-thirds of its EG ing in [to Europe], in an order of mag-
Massive shutdowns of European requirements come from internal pro- nitude like never before,” said BASF
capacity open the door to higher import duction, giving it a measure of security CEO Martin Brudermuller on the com-
volumes – from the US, Middle East of supply as well as fl exibility to take pany’s Q4 earnings call in February.
and Asia, all regions where capacity advantage of more cost-competitive “Very clearly, there is capacity com-
continues to expand. imports, he noted. ing up in many product lines in China,
overcapacities for the domestic market,
US EG exports to rise Three key forces intensifying com- and the market there is also sluggish.
Meanwhile, China continues to petition So, they also take every opportunity for
import substantial volumes of EG, includ- The US petrochemical industry exporting and selling every ton some-
ing from the US. In 2023, the US is one of three key forces intensify- where in the world,” he added.

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