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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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28/03/25

Brazil bets on plastics despite global uncertainties

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.

Singapore opens methanol bunkering licence applications


26/03/25
26/03/25

Singapore opens methanol bunkering licence applications

Singapore, 26 March (Argus) — Singapore's Maritime and Port Authority (MPA) today issued a notice seeking applications for methanol bunkering licences. Successful applicants would be able to supply methanol as a marine fuel in the port of Singapore between 1 January 2026 to 31 December 2030. The agreement includes end-to-end bunkering, which means supplying the fuel, barge operations, storage and safe bunkering onto vessels. Licensees would need to have trained manpower for safe handling of the fuel and have at least one IMO Type II barge. The licensees also need to ensure that the methanol they supply "meet the specified carbon intensity on a well-to-wake basis, demonstrate a transparent and accurate chain of custody methodology to track emissions from source to delivery." This implies the methanol supply needs to have reduced carbon emissions, and be produced via carbon capture (CC) technology or from biomass and renewable sources of energy. Methanol participants do not expect this announcement to significantly impact the current regional methanol market in the short term, as they expect initial volumes to be limited. Some methanol traders had hoped that the government would provide financial incentives for the uptake as a marine fuel. "The industry concern is….no financial support from the Singapore government," said a methanol trader. This announcement comes after MPA announced a new methanol bunkering standard earlier this month. Methanol is one of the early alternative marine fuels, with newbuild order books going past 300 as major container liners and other segments booked dual-fuelled methanol vessels, according to Norwegian classification society DNV's Alternative Fuels Insight . Maersk, among other vessel owners, has been leading the use of methanol as a marine fuel in its fleet. But limited supply of green methanol has slowed the process of its adoption in the past year or so, said market participants. By Mahua Mitra Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

India amends, finalises e-PVC anti-dumping duties


24/03/25
24/03/25

India amends, finalises e-PVC anti-dumping duties

Singapore, 24 March (Argus) — India's Ministry of Finance (MCI) has finalised anti-dumping duties (ADDs) on imports of paste polyvinyl chloride (e-PVC) from China, South Korea, Malaysia, Norway, Taiwan and Thailand. ADDs on the listed e-PVC export origins will be imposed for a period of five years from 13 June 2024, backdated to the imposition date of initial ADDs . These will be levied for e-PVC imports between 12 December 2024 and 20 March 2025, according to MCI in the Gazette of India on 21 March. As per the initial anti-dumping investigation, finalised ADDs will be excluded for PVC resin with a K-value below 60, PVC blending resins, co-polymers of PVC paste resin, battery separator resins and the brand "Biovyn" produced by European PVC producer Inovyn. Most e-PVC producers that were named under the initial anti-dumping investigation face higher finalised ADDs than their original value, except for South Korea's Hanwha Solutions, where ADDs remained at $0/t, and Malaysia's Kaneka Paste, for which ADDs dropped from $317/t to $0/t. In conjunction with this investigation, Indian authorities are also currently conducting an anti-dumping investigation on e-PVC imports from the EU and Japan . Argus last assessed e-PVC homopolymer import prices into India at $920-950/t cfr India on 21 March. By Michael Vitiello E-PVC anti-dumping duties (India) $/t Country of export Country of export Producer Initial duty Final duty China Any Formosa Industries (Ningbo) 546 595 China Any Shenyang Chemical 115 248 China Any Other Chinese producers except above 600 707 Any China Any 600 707 South Korea Any Hanwha Solutions 0 0 South Korea Any Other South Korean producers except above 41 89 Any South Korea Any 41 89 Malaysia Any Kaneka Paste 317 0 Malaysia Any Other Malaysian producers except above 375 516 Any Malaysia Any 375 516 Taiwan Any Formosa Plastics 118 247 Taiwan Any Other Taiwanese producers except above 168 373 Any Taiwan Any 168 373 Thailand Any TPC Paste Resin 195 343 Thailand Any Other Thai producers except above 252 421 Any Thailand Any 252 421 Norway Any Any 328 495 Any Norway Any 328 495 Source: India's Ministry of Finance Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Japan’s MGC, JFE to recycle CO2 to produce methanol


24/03/25
24/03/25

Japan’s MGC, JFE to recycle CO2 to produce methanol

Tokyo, 24 March (Argus) — Japanese methanol supplier Mitsubishi Gas Chemical (MGC) and steel maker JFE Steel have agreed to conduct a pilot project to produce methanol by recycling CO2, including gas derived from JFE's steel production. The project is expected to begin in the 2026 fiscal year, the companies announced on 24 March. MGC has started building a 100 t/yr methanol plant for this project in the Mizushima industrial complex, west Japan. The companies will make methanol using CO2, including gas that comes from JFE's steel production. Petrochemical company Mitsubishi Chemical will then use the methanol to produce propylene, which is a feedstock for plastics production. The new plant will be a mobile facility, as MGC is considering conducting similar methanol production trials in different places in the future. Separately, MGC is also considering launching a green methanol plant after the 2030 fiscal year, which can supply around 1mn t/yr of methanol, the same capacity as a conventional plant. The company expects an increase in global demand for methanol, especially as an alternative fuel for vessels. MGC has over 7.5mn t/yr of global methanol production capacity. The group seeks to reduce CO2 emissions by 39pc in the 2030 fiscal year compared with the 2013 fiscal year levels, and to achieve net zero emissions by the fiscal year 2050. By Kohei Yamamoto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU opens anti-dumping probe into China adipic acid


20/03/25
20/03/25

EU opens anti-dumping probe into China adipic acid

London, 20 March (Argus) — The European Commission has opened an anti-dumping investigation into imports of adipic acid from China. Two European chemical producers, Germany's Lanxess and Italy's Radici Chimica lodged a complaint with the commission claiming distortions in China's chemical market that could result in dumping of product in export markets. Interested parties have until 29 March to request a hearing with regard to the opening of the investigation and until 20 April to comment on the complaint. China shipped 111,800t of adipic acid to the EU in 2024 according to customs data, up by 10.1pc year on year and 60pc higher than the 2019-2023 average exports of 70,000t/yr. German chemicals giant BASF is to end adipic acid production at its Ludwigshafen site this year, it said in August, commenting at the time on the "changed market environment." By Laura Tovey-Fall Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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