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Container shipping downturn implications for polymers

  • Spanish Market: Petrochemicals
  • 23/06/23

Polymer freight costs have been on a wild ride over the past couple of years, with container shipping rates hitting record highs in the middle of the Covid-19 pandemic and for the most part of 2021. But the past year has seen a reversal, with spot rates on most port pairs on front-haul lanes falling back to around pre-pandemic levels.

As of 22 June, Freightos-derived Argus polymer freight rates on the key Shanghai-Antwerp and Busan-Antwerp routes were $49.50/t and $52.50/t, respectively, down by 92-93pc from peaks of $650.50/t and $703/t on 9 December 2021. The downtrend began at the end of the first quarter 2022 as accelerating inflation in the eurozone and the US led to a cutback in consumer spending. With the subsidence of lingering bottlenecks, which had kept freight rates elevated and well above historical averages in the first half of 2022, rates on both lanes fell rapidly to mid-high double digits by the end of the year.

Economic headwinds and carriers' response

Macroeconomic developments lay at the heart of the steeper fall in the second half of 2022, with pent-up demand for goods receding as consumers tightened their belts. Central banks responded to persistently elevated inflation with tighter monetary supply and consecutive increases in interest rates — a cycle that is yet to end. As of 23 June, the US Federal Reserve rates are at a 16-year high of 5-5.25pc, and those of the ECB at a 22-year high of 3.5pc. The Bank of England has raised rates to a 15-year high of 5pc.

Inflation has eased slightly from peaks earlier in the year but remain well above central banks' targets of 2pc, which have induced market expectations of interest rates being higher for longer. Consequently the economic outlook for the coming quarters appears stagflationary at best, and recessionary at worst — both of which indicate low confidence of a short-term recovery in consumer spending.

Against this backdrop container carriers have taken supply-side measures, mainly in the form of blank sailings and slow steaming. The average sailing speed slowed by 4pc on the year to 13.8 knots in the first quarter, and could drop by 10pc before 2025, according to the shipping organisation Bimco.

These capacity management measures have helped in bringing some stability to container shipping markets, with Freightos-derived Argus polymer freight rates on the Shanghai-Antwerp and Busan-Antwerp lanes oscillating so far this year in a range of $49.50-71.50/t and $52.50-81/t, respectively. Meaningful upside could be distant, given the capacity additions on the horizon. New container ship orders stood at a record 7.5mn twenty foot-equivalent units (TEUs) in April — equivalent to 29pc of the existing fleet — of which 4.9mn TEUs were for delivery before the end of 2024. Bimco expects 0.9mn TEUs to be scrapped, and the fleet to reach 29.8mn TEUs by December 2024, around 16pc higher from December 2022.

Polymer sellers in a pickle

These developments will have profound implications on global polymer trade. Sellers are already challenged by bleak demand and oversupply, and this situation will be compounded by low freight rates and reduced logistical bottlenecks. High freight rates contributed to a wide disconnect between polymer prices globally, but these will now be kept in check by competitive exports from other regions.

In Europe the protection freight rates provided against competitive imports has gone, and producers are resorting to aggressive pricing strategies to defend their market share. The low ends of European spot prices for many polyethylene (PE) and polypropylene (PP) grades are below import parity prices in June, with sellers seeking to ensure offtake from buyers and mitigate the lingering supply overhang.

This underlying basis risk could constrain the amount of polymers being moved, even with the numerous new PE and PP plant start-ups on the horizon in Asia-Pacific. Many sellers and buyers in Europe are showing reduced appetite for working long-haul import arbitrages from east Asia, instead preferring sourcing domestically with shorter lead times to delivery — especially where price differentials are minimal. Shipping lead times have slightly increased on east Asia to Europe routes as a consequence of slow steaming. As of 22 June, average container shipping times on the Busan-Antwerp and Shanghai-Antwerp lanes were 46 and 39 days respectively, and could extend out to as many as 65 days, according to Freightos.

The lack of forward demand and price visibility make long-haul arbitrages a risky venture for many regions, where competitively priced alternatives are available. Many traders are also spooked by the sharp fall in European prompt spot PE and PP prices so far in the second quarter, and in June particularly, which could have resulted in negative financial returns on import trades in some cases. Any risks posed by extraordinary logistical disruptions — such as the six-day Suez Canal blockage in March 2021 — cannot be overlooked by sellers in their cost-benefit analysis of working long-haul imports. Yet the wide availability of import offers based off reduced freight rates will continue to give buyers leverage in pricing discussions, whether or not physical volumes increase.

Polymer freight rates, NE Asia to NW Europe $/t

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04/04/25

US PE exports could lose market share on new tariffs

US PE exports could lose market share on new tariffs

Houston, 4 April (Argus) — US polyethylene (PE) traders are concerned that retaliatory tariffs announced this week by China and being considered by the European Union will close the door to two of the biggest markets for US resin exports. China announced today it will impose a 34pc tariff on all imports from the US from 10 April, while the EU is in the process of finalizing countermeasures this week, all in response to widespread tariffs announced by US president Donald Trump on 2 April. "This closes off China," said one US export trader. "And it looks like a full stop in Europe too." The US exported 2.4mn t of PE to China in 2024, representing 16.8pc of total US PE exports, according to data from Global Trade Tracker. Exports to the EU totaled 2.26mn t, representing 15pc of all US exports. US PE exports in 2024 totaled 14.2mn t, with exports representing 47pc of total sales last year. During the previous Trump administration, China provided waivers for certain tariffs, including on some PE grades. Some market participants have said that may be possible again, while others have said they see it as less likely, as China has become more self-sufficient, and has other alternative suppliers, such as the Middle East. "(China) is in a better position to impose tariffs on PE today than they were in 2018," said one North American PE producer. It will be difficult for US producers to make up for the loss of market share in China and the EU, which could result in producers needing to slow operating rates. For now, markets in Africa, Latin America and southeast Asia, remain open for US material, but traders are concerned that other top trading partners could also retaliate against the US, closing off additional markets. "There are not enough places to go with this stuff," the trader said. With limited export opportunities, the North American PE producer agreed that production would likely need to slow to keep material from backing up in the domestic market and causing domestic prices to fall. "The last time we saw tariff action from China, there was an impact on the domestic market," the producer said. "Pricing went down." For this week, US PE export pricing has held fairly steady as the market absorbs the tariff news. But market participants said they believe prices could move down in the coming weeks if production is not slowed. By Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US-origin PE, PP appear in provisional UK tariff list


04/04/25
04/04/25

US-origin PE, PP appear in provisional UK tariff list

London, 4 April (Argus) — The UK government has included polyethylene (PE) and polypropylene (PP) imports from the US in a list of products that could be subject to retaliatory tariffs. All PE and PP HS codes appear on the list published on 3 April. The document is at this stage for consultation and only indicative of goods that could fall under the review. No details are known so far on the tariff levels nor when they could be implemented, although the deadline for responses is 1 May. This comes after US President Donald Trump's announcement on 2 April of a minimum 10pc global levy on imports from all trade partners, in addition to existing levies. The tariff on imports from the UK is 10pc, and from the EU 20pc. The UK imported 173,000t of PE from the US in 2024 and 7,000t of PP. LLDPE under HS code 390140 was omitted from the UK tariff list, a grade which accounts for 45pc of all UK PE imports from the US. This means that 96,000t of PE would fall under the provisional tariffs. The UK has "a range of levers" at its disposal for responding to the US' levies and will continue speaking with Washington on an "economic prosperity deal", UK prime minister Keir Starmer said on 3 April. The import tariffs imposed by the US on 2 April present a "significant risk" to the global economy, according to the IMF . President Trump is holding firm on the tariffs , even as US stock prices tumble, but other US politicians are less convinced. The US Senate is attempting to block tariffs , but legislative action is unlikely to become law. By Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US plastics recyclers plagued by limited supply


28/03/25
28/03/25

US plastics recyclers plagued by limited supply

Houston, 28 March (Argus) — US plastics recyclers are having trouble sourcing sufficient feedstocks because of stagnant collection volumes, according to speakers at the 2025 Plastics Recycling Conference this week in Maryland. For producers of recycled polyethylene terephthalate (rPET), recycled polypropylene (rPP) and recycled polyethylene (rPE), feedstock supply tightness has increased significantly this year. Rising demand and stagnant volumes are squeezing an industry that was already low on feedstocks, causing pricing for recycled feedstocks to jump dramatically over the past six months. Since October, prices for natural high density polyethylene (HDPE) bales have more than doubled, polypropylene bale prices have increased by 84pc, and US west coast PET bales have increased in price by 34pc, according to Argus data. While prices for each material are affected by different sets of factors, they all face tighter supplies, because the US is not collecting enough recyclables to meet demand for recycled polymers. While recyclers have increased their input capacities and consumer products companies have purchased more recycled resin, collection volumes for the US remained stagnant in 2021 and 2022, according to the latest data from the Association of Plastics Recyclers and Stina, and recyclers say the situation has not improved. "We're really bumping up against a ceiling in terms of volume for rPET production," said Lauren Laibach, director of data services at the National Association for PET Container Resources (NAPCOR). NAPCOR's 2023 PET recycling report found that the US's gross recycle rate rose to 33pc, a 4pc increase from 2022, but the rate increase was largely a result of fewer PET bottles being available for recycling. Improving collection volumes of recyclables is a problem mostly out of recyclers' hands, as state and local policy-makers are largely responsible for improving rates and investing in recycling infrastructure. However, extended producer responsibility (EPR) programs, including in Oregon and California, are expected to boost investment in recycling infrastructure. Recyclers in particularly dire situations, such as flake producers on the US west coast, may require more legislation if they are to survive. PET recycler Evergreen shut down its flake and wash line in California this week due to financial difficulties with producing flake. Bottle deposit systems, a tax credit for recyclers or a prioritization of US material under EPR schemes could help improve domestic supply of PET bottles, Laibach said. "We can't expect any sustainable, long-term improvement without policy intervention," Laibach said. By Zach Kluver Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Brazil bets on plastics despite global uncertainties


28/03/25
28/03/25

Brazil bets on plastics despite global uncertainties

Sao Paulo, 28 March (Argus) — Brazil's plastics industry expects investments of R10.5bn/yr ($1.8bn/yr) for the next few years despite potential tariff threats that could upend trading relationships, plastic industry association Abiplast said. Factory expansions, advancements in sustainable packaging, new recycling technologies and enhancements in reverse logistics will fuel the investments, the association said at its Plasticos Brasil industry event. Despite the optimism, Latin American polymers markets are experiencing a period of uncertainty caused by global market disruptions resulting from tariff threats by US president Donald Trump and other factors. The threats of tariffs and retaliations has disturbed traditional plastic resin flows, resulting in lower prices throughout the region, with the effects most evident in the region's largest market, Brazil. A global polymer trader told Argus that polyethylene (PE) prices have reached record lows, with high-density polyethylene (HDPE) blow molding grades dropping close to $900/t during the week, compared with the $1,040–1,080/t range on 27 February. Other PE grades, as well as polypropylene (PP) prices, have followed a similar downward trend. On the other hand, offers of low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) grades are limited, but the scarcity is not pushing these grades upward, according to the source. Instead of taking advantage of discounts, many buyers are postponing purchasing decisions in anticipation of further price drops, leading to fewer deals. Resin produced in the US and the Middle East is also being sold by Chinese traders at prices significantly lower than fresh offers from the original producers. These additional volumes, offered as re-exports, have depressed global prices, particularly in Latin America and especially in Brazil. As a result, some traders continue to lose market share in Brazil, they told Argus. This trend is part of a downturn in the petrochemical industry's cycle, which some traders said will persist for at least a couple more years. Despite these challenges, many market participants were emphatic that they closed many contracts and that they remain optimistic. Regional developments Brazilian chemical giant Braskem told Argus that Mexican joint venture Braskem Idesa's new ethane import terminal is scheduled to start up in May. With the move, the Mexican JV will serve all of its PE plant's feedstock needs with ethane imported from the US. It remains unclear if the Trump administration's threats about imposing fees on Chinese-made vessels when they dock in US ports could impede Braskem's strategy in the region. Braskem's first vessel, the Chinese-built 19,000t Brilliant Future , recently began transporting ethane to Braskem Idesa's complex from the US and a second vessel, with similar specifications and the same route, will be delivered in June. Brazil's Unipar Carbocloro new $35mn plant in Camacari, in northeastern Bahia state, is gradually ramping up its capacity utilization as operations start, with an official opening scheduled for early April. The plant is designed to produce 10,000 t/yr of chlorine, 12,000 t/yr of caustic soda, 25,000 t/yr of hydrochloric acid and 20,000 t/yr of sodium hypochlorite. Unipar also said that the gradual resumption of operations at its Bahia Blanca, Argentina, plant is progressing as planned. The plant went off line on 7 March because of torrential rains. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

RecyClass updates recycling methodology ahead of PPWR


27/03/25
27/03/25

RecyClass updates recycling methodology ahead of PPWR

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