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US tariffs could crash auto industry: Ontario
US tariffs could crash auto industry: Ontario
Calgary, 4 March (Argus) — The tightly-intertwined US and Canadian auto manufacturing industry could grind to a halt in as little as 10 days due to US tariffs, according to Ontario premier Doug Ford. Raw materials and partially assembled vehicle components can cross the US-Canadian border between manufacturing plants as many as eight times before becoming a finished vehicle, Ford said today. But the 25pc tariffs the US imposed on most Canadian and Mexican goods effective today will add costs and disrupt supply chains. Canada and the US could have combined efforts to make the two countries the safest and secure, Ford said, but "... unfortunately, one man, president Trump has chosen chaos instead." Ontario, Canada's largest province by population and a major vehicle manufacturing hub, may also cut nickel exports to the US, Ford said, and may put a 25pc surcharge onto electricity flows into New York, Minnesota and Michigan if the tariffs persist. Canada supplied about 46pc of US nickel from 2019-2022 according to the US Geological Survey, and nearly 36TWh of electric power to the US. Ontario is also banning US companies from government contracts, including cancelling a $100mn contract with Elon Musk's Starlink internet services. Ford also directed the Liquor Control Board of Ontario (LCBO) to remove US products from its store shelves, meaning other retailers, bars and restaurants will also be unable to restock American goods. The LCBO is the largest purchaser of alcohol in the world, according to Ford, selling nearly C$1bn in products, including 3,600 products from 35 US states. Ontario's action comes after Prime Minister Justin Trudeau announced Canada's retaliation of 25pc tariffs on $30bn of US imports, followed by another $125bn of imports in 21 days' time. Canadian energy exports to the US are subject to a lower 10pc tariff. Alberta premier Danielle Smith called the US tariffs "both foolish and a failure in every regard." She called on her Canadian peers to fast-track the construction of dozens of resource projects to help relieve the country's dependence on the US for sales. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Japan petchem producers urged to turn to ethane
Japan petchem producers urged to turn to ethane
Declining exports and demand signal that Japan's petchem sector is lagging behind its competitors, writes Nanami Oki Tokyo, 5 March (Argus) — Japan's petrochemical producers should convert their ethylene steam crackers to low-cost ethane rather than naphtha and LPG and should do so now before the challenges become impossible, refinery integration research association Ring says. Japan has a total cracking capacity of around 6.8mn t/yr, most of which is naphtha-fed with about 6.2mn t/yr of this coming with the flexibility to crack some degree of LPG, Argus data show (see table). Operators should turn to cheaper ethane imported from the US, Ring says, adding that it is concerned Japan's petrochemical sector is falling behind international competitors such as China , South Korea and Vietnam in a burgeoning feedstock transition to ethane. The country's petrochemical sector is already struggling from declining exports and domestic demand, pressured by regional oversupply driven by China. This has prompted Japanese firms to cut production of ethylene and other petrochemicals while focusing more on high-performance goods. But overseas competitors will catch up with Japanese technologies to generate these value-added products, so it is crucial to secure cheaper feedstock in the long term, Ring says. Switching to ethane-fed crackers could help domestic firms retain their competitiveness, with potential cost reductions of up to $400/t of ethylene output, Ring estimates. But the industry faces headwinds if it is to transition, the association says. One issue is that the companies do not have requisite funds for large-scale investments in switching to ethane that the associated infrastructure requires as a result of stagnant growth. Japanese producers with crackers — Mitsui Chemicals, Sumitomo Chemical, Mitsubishi Chemical, Tosoh and Resonac — have all posted lower profits from their basic petrochemicals divisions on shrinking margins in the past five years. The transition also requires infrastructure including storage facilities and ethane barges and ships to enable imports from the US, adding significant costs. Japanese firms are unlikely to have adequate infrastructure, let alone funding, to invest in such capacity and some, along with the country's authorities, have begun exploring converting existing facilities to alternative fuels such as hydrogen and ammonia to capitalise on anticipated growth in renewable fuels. Ring and Japan's economy, trade and industry ministry (Meti) have also expressed concern that a switch to ethane for cracking could create shortages in supplies of other basic petrochemicals other than ethylene because ethane feedstock yields mainly ethylene. Japanese companies have attempted to develop butadiene production from alternative feedstocks such as bioethanol and recycled oils for decarbonisation. But such technologies are at the early stages of development and their profitability remains hamstrung by high costs. Ring the changes Developing new propane dehydrogenation plants could help Japan prevent propylene shortfalls, but this is unlikely to be feasible given the levels of investment and acreage required at existing petrochemical complexes. The country's petrochemical producers could convert a proportion of their individual crackers to be fed with ethane in a flexible set-up instead of replacing the unit. Japanese crackers have many different components varying in age that will be difficult to replace under an ethane-only system, Ring says. It would also be preferable to diversify feedstocks for supply security, it says. Japan's ethylene production fell by 2.4pc on the year to 4.99mn t in 2024, the JPCA says, the lowest since its records began in 1999. Average cracker operating rates stood at 79.9pc last year, down by 0.9 percentage points from 2023, falling below 80pc for the first time since 2014 — when the first JPCA data on utilisation were available. Japan's petrochemical sector use of LPG fell by 13pc on the year to 1.39mn t in 2024, data from the Japan LPG Association show. NE Asia cracker cash margins Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
New US export capacity to dampen pressure on VLGC rates
New US export capacity to dampen pressure on VLGC rates
A slew of LPG capacity expansion projects could lift the number of VLGCs loading on the Gulf coast, writes Yohanna Pinheiro London, 4 March (Argus) — Planned LPG export capacity expansions on the US Gulf coast over the next three years could taper some previously forecast downward pressure on VLGC freight rates, in turn caused by a weighty influx of newbuilds scheduled for 2027 delivery. US midstream operator Targa Resources announced plans late last month to expand its 450,000 b/d (14mn t/yr) Galena Park LPG terminal in Houston to 625,000 b/d by the third quarter of 2027. This came after peers MPLX and Oneok unveiled their project to develop a new 400,000 b/d LPG export facility in Texas City. These projects join rival firms Energy Transfer's and Enterprise Products' plans to expand their 480,000 b/d Nederland and 763,000 b/d Baytown terminals by 250,000 b/d and 300,000 b/d, respectively, by 2026 — although these will also incorporate ethane. These projects could in theory add about 65 VLGCs/month loading on the Gulf coast once completed, although the ethane and liftings by midsize gas carriers will mean it is likely to be lower. VLGCs employed on a Gulf coast to east Asia voyage, which takes 28-45 days, stood at around 139/month last year compared with 119/month in 2023, Kpler data show, after Panama Canal transits improved and 40 newbuild VLGCs were delivered. About 100 more new vessels will have hit the water by late 2028, most due for delivery in 2027, threatening to oversupply the market. Scrapping is unlikely to balance it, despite more than 15pc of the fleet being 25 years old or more, because they will find employment in less conventional markets such as Iran. The strong VLGC orderbook was fuelled by a rush to embrace a nascent ammonia fuel market. But the adoption of ammonia has been slow and market participants do not expect enough demand to absorb the added VLGC availability before 2030. Several of the very large ammonia carriers have not been contracted by projects still under development, meaning they are likely to ship LPG until the demand from ammonia emerges. Increased capacity on the US Gulf coast could help offset this vessel supply pressure, but whether the LPG import demand in longer-haul markets matches this is uncertain. Fee-for-all The world's largest VLGC owner, BW LPG, along with a range of freight market participants have highlighted a more immediate concern from the US government's recently announced proposal to impose fees on Chinese-built vessels and shipowners with newbuild orders at Chinese yards calling at US ports. "[The measure] would have very disruptive implications on the whole shipping market… trading houses, shipping companies, oil and energy majors all have Chinese-built vessels in their fleet," chief executive Kristian Sorensen says. About 15pc of the global VLGC fleet of around 400 vessels were built in China, most of them having been built in South Korea and Japan. And 24 of the 107 VLGCs on order are at Chinese yards, he says. BW LPG's VLGC fleet of 54 includes 11 Chinese-built ships. The company remains optimistic on the outlook for the rest of 2025, despite the political and legislative uncertainty, as warmer weather in the northern hemisphere widens the US-Asia LPG arbitrage and additional export capacity on the Gulf coast opens later in the year. Further cargoes will also emerge from Qatar's North Field expansion , increasing vessel demand, BW LPG says. The potential for delays to re-emerge at the Panama Canal and an intense drydocking schedule for 80 vessels could also support rates, it says. This outlook is shared by New York-listed rival Dorian LPG, which does not expect US-China tensions to disrupt the LPG trade because of China's dependency on US exports. Norwegian owner Avance Gas meanwhile suggests more aggressive US sanctions on Iran could push demand from the shadow fleet to the conventional market, supporting VLGC rates. VLGC owners' results 4Q24 ±% 4Q23 2024 ±% 2023 BW LPG Profit $mn 39.7 -75.5 394.9 -19.9 TCE $/d 37,890 -50.2 48,300 -23.4 Dorian LPG Profit $mn 21.3 -78.7 161.2 -47.0 TCE $/d 36,071 -49.9 46,710 -25.3 Avance Gas Profit $mn 210.1 242.2 443.0 171.0 TCE $/d 28,200 -63.0 46,200 -22.5 US LPG sea export capacity exports VLGC rates VLGC newbuild orderbook Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Mexico LPG retailers struggle as price cap hits margins
Mexico LPG retailers struggle as price cap hits margins
The spread between wholesale prices and retail price caps will now no longer cover operational costs, writes Cas Biekmann Mexico City, 4 March (Argus) — The spread between Mexican state-owned Pemex's LPG wholesale prices and government-controlled retail price caps is no longer enough to cover operational costs, domestic distributors association Amexgas has warned after three consecutive months of the cap remaining relatively unchanged. The average of 2,747 city specific LPG retail price caps, set by energy regulator the CRE, stood at 10.91 pesos/litre ($2.02/USG) for the week ending 8 March, with maximum prices ranging from Ps9.64/l to Ps12.54/l across the country owing to differing logistics costs. The average wholesale price from Pemex's 26 selling points was Ps8.22/l for the week, resulting in an average margin between the two rates of Ps2.69/l. This is not enough to cover the costs of salaries, fuel and maintenance, Amexgas said on 24 February. Inflationary pressures and regulatory changes, which force distributors to prove their regulatory compliance with several government entities, have further driven up operational costs, LPG distributors say. Amexgas does not oppose the government's price controls but disagrees with the way the CRE's methodology fails to adequately factor rising international LPG prices. Mexican imported propane prices from the US Gulf coast stood at 97.20¢/USG ($507.50/t) on 3 March, up by 5pc from a year earlier — when the price was 88.89¢/USG, the price cap was Ps10.64/l, Pemex's wholesale prices averaged Ps6.69/l and the margin was Ps3.95/l, or 47pc higher. The depreciation of the peso against the US dollar has also weighed on domestic LPG prices, as Mexico sources more than 60pc of its supply from imports. The exchange rate stood at Ps20.43/$1 on 3 March, compared with Ps17.02/$1 a year earlier, according to Mexico's central bank data. Mexico's LPG distributors recently urged the government to consider altering the price cap and simplify regulatory hurdles . Amexgas members in November 2024 announced plans to strike , citing lower profit margins and scarcer LPG supply. Government promises to establish working groups to tackle these problems prevented the strike from happening. But the government has since said it would not remove the price cap to protect families from potential LPG price hikes. Talks between the CRE and distributors are ongoing, but a new strike is not off the table, market participants say. Mexico largely relies on last-mile distributors to deliver LPG tanks and cylinders to residential and rural customers. Private-sector firms have played a crucial role in distributing LPG in Mexico for decades and prior to the country's landmark 2014 liberalisation of the energy market. Pemex's LPG imports dropped by 12pc on the year to 73,100 b/d (195,400t) in January, the lowest since October 2023, company data show, as US propane and butane prices increased. Mont Belvieu propane prices on the US Gulf coast averaged 89.7¢/USG ($468.50/t) in January, an 11pc increase from 80.5¢/USG a year earlier, as demand in the US grew when a winter storm hit in mid-January. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
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