Chemical Prices, Analytics and Forecasts

Canada’s government intervenes to end freight rail shutdown

TORONTO (ICIS)–Canada’s federal labor minister
has decided to refer the labor dispute between
the country’s two freight railroads and labor
union Teamsters Canada Rail Conference (TCRC)
to the Canada Industrial Relations Board (CIRB)
for binding arbitration, he said in a webcast
media briefing on Thursday.

Steven MacKinnon expects the CIRB to act “with
dispatch” and rail services at railroads
Canadian National (CN) and Canadian Pacific
Kansas City (CPKC), which shut
down effective Thursday morning, 00:01
eastern time, should resume within a couple of
days, he said.

With the decision, the minister reversed his
previous position.

Just hours before the shutdown took effect, he
had said the government would not intervene but
leave it to the parties to settle the dispute
through the collectives bargaining process, and
last week he rejected CN’s call for binding
arbitration.

However, in Thursday’s press briefing MacKinnon
said that he came to the conclusion that the
negotiations between the railroads and the
union were at an impasse and that collective
bargaining was not working to settle the
dispute.

He therefore decided to direct the CIRB

to settle the dispute through final binding
arbitration;
to extend the terms of the existing
collective agreements until new agreements are
signed.

The CIRB process was “generally a process that
does not take longer than two days”, he said.

However, he conceded that it was not yet quite
clear when exactly rail service will resume,
adding that the CIRB was an independent body
that follows its own procedures.

The CIRB is a quasi-judicial tribunal charged
with keeping the industrial peace in Canada.

The government has come under intense pressure
from trade
groups in Canada and the
US and from Canadian provincial premiers
(governors) to take quick action to end the
shutdown, which threatened the economy and
trade relations with the US.

MacKinnon acknowledged the concerns raised by
the chemical and fertilizer industries about
supplies of chlorine to treat drinking water
and the supply of potash fertilizer to farmers.

It was up to the government to ensure that
shipment of chlorine and fertilizer were not
disrupted, the minister said.

The railroads had stopped accepting shipments
of chlorine and other hazardous materials well
ahead of the 22 August shutdown.

Meanwhile, LyondellBasell on
Thursday declared force majeure on all rail
shipments to Canada and industrial chemical
producer Chemtrade Logistics
warned about impacts from the rail disruption
on its financial results.

With additional reporting by Adam
Yanelli

Thumbnail photo source: CN 

22-Aug-2024

LyondellBasell declares FM on rail shipments to Canada amid
CPKC, CN work stoppage

HOUSTON–Global chemicals major LyondellBasell
has declared force majeure on all rail
shipments to Canada after that country’s two
largest railroads shut
down operations after negotiations for a
new collective bargaining agreement stalled.

The shutdown at Canadian National Railway (CN)
and Canadian Pacific Kansas City (CPKC) began
at midnight eastern time on Thursday, with more
than 9,000 workers locked out after failing to
reach an agreement with their employees’ union.

CN and CPKC have issued all-commodity
embargoes, according to US railroad Norfolk
Southern (NS) in a service alert.

The embargos from CN and CPKC cover all NS
originated traffic destined for Canada and all
Canadian originated traffic destined for NS
destinations for all commodities.

US railroad CSX issued an embargo on all
shipments to and from CN and CPKC that contain
highly hazardous, toxic inhalation hazards and
poisonous inhalation hazards such as chlorine
gas, which is used for water treatment.

Container shipping company Hapag-Lloyd told
customers it has ships in various stages of
loading and unloading in Vancouver, Canada but
has three vessels on various services that are
under review because of the rail disruption.

On 21 August, the carrier said it is ceasing
taking new rail bookings originating in the US
and loading via a Canadian gateway.

Following is a map of the rail network and main
chemical production hubs in Canada.

BACKGROUND
The simultaneous rail disruption at CN and CPKC
has been looming over the chemical and other
industries for months.

Canada’s chemical production is heavily geared
towards export, with 80% destined for foreign
markets – primarily the US, accounting for 80%
of exports.

Rail transportation plays a crucial role,
handling over 70% of Canadian chemical
producers’ shipments, with some relying
entirely on rail.

Officials from the chemical and other
industries have repeatedly warned about the
impacts simultaneous disruptions at
both railroads could have on Canada’s
already weak
economy and on trade with the US.

With additional reporting by Nurluqman
Suratman and Stefan Baumgarten

Thumbnail photo: A Canadian National train.
(Photo by Shutterstock)

22-Aug-2024

Canada government reluctant to intervene as freight rail
shutdown begins

TORONTO (ICIS)–As the unprecedented work
stoppage at both of Canada’s freight railroads

began on Thursday at 00:01 Eastern Time, it
remains unclear how or when it may end as the
government is reluctant to intervene.

Long-awaited rail shutdown starts
Government reluctant to intervene
Industry warns of economic and public
health impacts

Following lockout and strike notices, more than
9,000 workers at railroads Canadian Pacific
Kansas City (CPKC) and Canadian National (CN)
were locked out at midnight, labor union
Teamsters Canada Rail Conference (TCRC) and the
rail companies confirmed.

TCRC said that the parties were still far apart
in their negotiations but added that it would
remain at the bargaining table.

CPKC called on the government for binding
arbitration to end the dispute, but Canada’s
federal labor minister last week already
rejected a similar call by CN.

Speaking to Canadian public broadcaster CBC/RDI
a few hours before the rail shutdown began,
minister Steven MacKinnon said that the
government would rely on the collective
bargaining process to resolve the dispute,
which is about wages, benefits, work scheduling
and safety issues.

Collective bargaining was “a tried-and-true
method” that helped create prosperity for
Canadian companies and workers and build the
country over decades, he said.

“It works when people put the work in that is
required to get a deal, to make those
compromises at the table, and those are the
most enduring results, and that’s our plan,
that’s the only plan,” the minister said.

Asked about using “back-to-work legislation” to
end the dispute, he noted that Parliament is
currently not sitting.

However, the government was “always prepared
for any eventuality”, he indicated but did not
provide details.

INDUSTRY SAYS GOVERNMENT MUST ACT
NOW
Canadian and US trade groups, including the

US Chamber of Commerce, have called on the
Canadian government to step in and end the
dispute, potentially through binding
arbitration, or if need be, back-to-work
legislation.

The two railroads each day ship goods worth
more than Canadian dollar (C$) 1 billion
(US$735 million), and the shutdown threatens to

shut down the country’s entire economy and
harm trade with the US, the groups said.

Bob Masterson, president of trade group
Chemistry Industry Association of Canada
(CIAC), said that the rail disruption was no
longer an ordinary labor dispute that could be
resolved through bargaining between two
parties, with the government standing on the
sidelines, but rather involved important public
safety and health issues.

One of the railroads stopped accepting critical
chemicals, in particular chlorine and
derivatives for use in drinking water, already
on 12 August, as it began winding down
operations ahead of the work stoppage, and the
other railroad stopped accepting those products
shortly afterwards, he said.

With about 95% of the population relying on
treated drinking water, as of 12 August the
rail dispute therefore became “the interest of
every Canadian across the country”, Masterson
said.

Due to its dangerous nature, under law chlorine
can only be moved by rail, he noted.

The country was “on the road to a public health
crisis” and municipalities may soon need to
issue water boil advisories, “if you don’t
interrupt this now and return service on the
railways,” he said.

“The train towards a crisis is moving, it gets
faster and harder to stop every day, and the
time to stop it is now, and the only people
that have the responsibility and the tools and
authority to do so are the government of
Canada,” he said.

The chemical industry was at the front end of
this supply squeeze, “and we want all elected
officials to be focused on that”, he added.

HARM TO THE ECONOMY
In a separate statement to ICIS, trade group
CIAC reminded of the impacts of the rail
disruption on the overall Canadian economy, the
chemical industry, and chemical trade with the
US.

In Canada, about 80% of chemical production
goes into export, with about 80% of those
exports going to the US, according to CIAC.

At the same time, Canada-based chemical
producers rely on rail to ship more than 70% of
their products, with some exclusively using
rail.

US-Canada chemical trade,
2023:

Canadian exports of industrial chemicals to
the US: Canadian dollar C$18.9 billion,
according to CIAC data.
Canadian imports of industrial chemicals
from the US: C$17.5 billion.

More than C$76 million of industrial chemical
products move on Canada’s rail network daily,
which comes to about C$28 billion a year.

Industrial chemicals include basic chemicals,
synthetic resins, rubbers and synthetic
fibers. Chemicals account for nearly 10%
of total Canadian freight rail traffic.

Furthermore, the chemical industry’s customers
in the automobile, forest products,
construction, minerals and other industries
rely on rail to ship their products.

According to estimates by the Conference Board
of Canada, a two-week rail shutdown would
result in a C$3 billion loss in nominal GDP
this year.

A four-week shutdown could lower GDP by nearly
C$10 billion in 2024 and result in nearly
50,000 job losses, the board said.

The lost income would be felt by households,
businesses and government, the board said.

Canada’s trucking industry was not a viable
alternative to rail as it does not have the
required capacity or enough drivers, the board
noted.

Industry commentators said that the government
could not allow the rail stoppage to last more
than 7-10 days, after which it would likely
need to use back-to-work legislation or binding
arbitration to end the dispute.

However, binding arbitration takes time, and
even with Parliament sitting and working at an
expedited pace, it would take a couple of days
for back-to-work legislation to become law.

In another complication, Prime Minister Justin
Trudeau’s Liberal-led minority government
relies on support from the left-leaning New
Democratic Party (NDP) to keep it in power.

The NDP, however, is close to labor unions and
has warned Trudeau against imposing binding
arbitration or back-to-work legislation.

While the work stoppage started on 22 August,
its negative impacts for chemical producers and
other industries kicked in earlier as they
needed to rearrange logistics and prepare for
potential plant shutdowns.

In the chemical industry, it can be costly to
ramp down and restart large petrochemical
plants as they are in continuous operation and
require a reliable, uninterrupted rail service.

Depending on how long a rail disruption lasts,
it can take weeks, if not months, for the
chemical producers to get production rate back
to normal.

The following table by the American Association
of Railroads (AAR) shows Canadian freight rail
traffic, including chemicals, for the week
ended 17 August and the first 33 weeks of 2024:

(US$1 = C$1.36)

Thumbnail photo source: CN

Focus article by Stefan
Baumgarten

22-Aug-2024

BLOG: A murky future for China’s exports: Implications for
chemicals

SINGAPORE (ICIS)–Click
here to see the latest blog post on Asian
Chemical Connections by John Richardson.

Whereas it might be reasonably straightforward
to assess the future of China’s direct
chemicals exports (today I look at polyester
fibres and polypropylene as examples of the
kind trade tension Heat Maps you need to
create), the outlook for China’s exports of
manufactured goods is murkier.

See today’s blog post for a full explanation,
and the see the summary below:

In practical terms, because China
completely dominates some manufacturing chains,
there may be no alternatives to China. It could
be in the best interests of the West to do
“win, win” deals with China. Take electric
vehicles as an example. If you assume that EVs
are going to dominate the EU market, and that
the EU auto industry cannot catch up with
China, why not invite China in to build EV
factories in the EU, thereby protecting local
jobs? This is what the Americans did with the
Japanese auto industry back in the 1980s.
Or industrial policy could work in the
opposite direction as the China split with the
West widens. A good example is the US Inflation
Reduction Act. This might over the long-term
even apply to value chains where China
dominates including EVs. The split could widen
to the point where we are much less dependent
on China for everything from our smartphone
components to our polyester shirts.
Or in practical terms, will, as I said,
deals be done and the world muddles through via
Chinese car factories in Europe and exports
from third-party countries like Turkey, Vietnam
and Mexico? (Chinese components go to these
countries, are assembled and move onto the
West, thereby getting around the “sound and
fury” signifying not a great deal of
antidumping duties. This to some extent is
already happening).Now that the Chemicals
Supercycle is over, much more in-depth scenario
planning is essential.

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.

22-Aug-2024

India’s Chemplast Sanmar to invest Rs1.6bn in specialty
chemicals

MUMBAI (ICIS)–India’s Chemplast Sanmar plans
to invest rupee (Rs) 1.6 billion ($19 million)
to expand the capacity at its custom
manufactured chemical division (CMCD) at
Berigai in the southern Tamil Nadu state.

The increase in capacity will help the company
cater to growing demand in various industrial
sectors, a company source said.

Chemplast commissioned the first phase of the
CMCD in September 2023 and expects to bring the
second phase on stream by September 2025, the
source added.

The CMCD project which produces advanced
intermediates for the agrochemical,
pharmaceuticals and fine chemicals segments,
will help the company expand into fine
chemicals and pharmaceuticals, broaden its
portfolio and access new markets and customers,
he said.

“We have recently signed a new letter of intent
(LOI) with an agrochemical innovator for an
advanced intermediate for a new active
ingredient. This is the fifth LOI that we have
signed over the past 20 months,” the source
added.

In addition to the CMCD division, Chemplast has
a production capacity of 107,000 tonnes/year of
specialty paste polyvinyl chloride (PVC)
from its units at Cuddalore and Mettur in Tamil
Nadu.

Chemplast’s wholly owned subsidiary Chemplast
Cuddalore Vinyls Ltd operates 331,000
tonnes/year of suspension PVC capacity in Tamil
Nadu.

The company also produces caustic soda,
chlorochemicals, hydrogen peroxide at its three
manufacturing facilities in the Tamil Nadu
state and in Karaikal in the union territory of
Puducherry.

($1 = Rs83.94)

22-Aug-2024

Canada’s rail shutdown begins as CN, CPKC lock out workers

SINGAPORE (ICIS)–Canada’s two largest railways
have shut their operations after labor contract
negotiations hit an impasse.

The shutdown at the Canadian National Railway
(CN) and Canadian Pacific Kansas City (CPKC)
began at midnight eastern time on Thursday,
with more than 9,000 workers locked out after
failing to reach an agreement with their
employees’ union.

“CN has formally locked out employees
represented by [rail labor union] Teamsters
Canada Rail Conference (TCRC) as of 22 August
at 00:01 eastern time, after the union did not
respond to another offer by CN in a final
attempt to avoid a labour disruption,” CN said
in a statement.

“Without an agreement or binding arbitration,
CN had no choice but to finalize a safe and
orderly shutdown and proceed with a lockout.”

CPKC in a separate statement announced that it
will lock out employees in two stages.

The lockout will first affect members of the
TCRC Train and Engine (T&E) division,
beginning at 00:01 eastern time on Thursday.

Later, at 00:01 Mountain Time on the same day,
members of the TCRC Rail Traffic Controller
(RCTC) division will also be locked out.

“CPKC is acting to protect Canada’s supply
chains, and all stakeholders, from further
uncertainty and the more widespread disruption
that would be created should this dispute drag
out further resulting in a potential work
stoppage occurring during the fall peak
shipping period,” the company said.

“Delaying resolution to this labor dispute will
only make things worse.”

The simultaneous rail disruption at CN and CPKC
has been looming over the chemical and other
industries for months.

Canada’s chemical production is heavily geared
towards export, with 80% destined for foreign
markets – primarily the US, accounting for 80%
of exports.

Rail transportation plays a crucial role,
handling over 70% of Canadian chemical
producers’ shipments, with some relying
entirely on rail.

Officials from the chemical and other
industries have repeatedly warned
about the impacts simultaneous
disruptions at both railroads could have on
Canada’s already weak
economy and on trade with the US.

22-Aug-2024

Thai PTT seeks potential partners amid business strategy
review

SINGAPORE (ICIS)–Thailand’s national oil and
gas firm PTT is conducting a strategic review
of its businesses and ls looking for potential
partners in downstream operations.

“PTT has been reviewing and improving its
business strategy and model regularly in line
with the changing competitive environment of
the industry,” the company told ICIS in an
e-mailed statement on Thursday.

“Finding a strong partnership is one of tools
that PTT may consider which there are several
ways of partnership, not be limited to only the
divestment, it can be a joint ventures or other
methods,” it said.

PTT CEO Kongkrapan Intarajang was quoted on 21
August by newswire agency Bloomberg as
saying that the company is looking for partners
to provide expertise and funding for some of
its petrochemical and refinery units.

PTT group’s petrochemical operations include
refining, production of olefins, aromatics,
polymers, fertilizers, liquefied petroleum gas
(LPG), and base oils, as well as trading of
petrochemical products.

These operations are carried out through
subsidiaries PTT Global Chemical, Thai Oil, and
IRPC

“We are in talks with several potential
investors who are interested in taking stakes
in subsidiaries to gain a gateway for expansion
in southeast Asia,” Intarajang was quoted as
saying by Bloomberg.

“We will be quite careful about any new
partners. They must have the technology and
expertise that can add a lot of value.”

PTT said that “there is no conclusion
regarding the news related to petrochemical and
refinery business now”.

Notwithstanding its pursuit of strategic
partnerships, the company said that PTT intends
to retain controlling stakes in its key
business units.

This will ensure that “PTT can have majority
control in order to align the goals of the
entire PTT group, as all flagship companies are
important parts of PTT’s strategy,” it added.

22-Aug-2024

Canada needs to act on rail stoppage, now – chem group CIAC

TORONTO (ICIS)–Canada’s federal government
needs to exercise its authority and act quickly
on the complete freight rail stoppage, set to
start midnight at 00:01 Eastern Time, trade
group Chemistry Industry Association of Canada
(CIAC) said.

The simultaneous rail disruption at both of the
country’s freight railroads, Canadian National
(CN) and Canadian Pacific Kansas City (CPKC),
has been looming over the chemical and other
industries for months.

It was apparent that the rail labor dispute
could not be resolved through collective
bargaining, CIAC told ICIS in an update on
Wednesday.

The government therefore should impose binding
arbitration, with a prohibition on the right to
strike/lockout, the group said.

Failing that, parliamentarians could be
recalled to pass back-to-work legislation, CIAC
said.

“We believe it is important for the government
to act sooner rather than later to mitigate any
impacts to the Canadian economy and the workers
who support it, and our trading relationships,”
it said.

It was government’s and parliament’s role to
protect the public interest, from both a public
safety perspective and in terms of protecting
Canadian workers and businesses broadly from
the economic harm that was already being caused
by the pending rail stoppage, the group said.

As for public safety, CIAC noted in particular
the continued rail supply of chlorine to
municipalities to ensure safe drinking water.

LEARNING FROM THE US
Compared with Canada, the US under its Railway Labor Act
(RLA), 1926, was more adept at ensuring that
railways keep operating during labor disputes,
CIAC said.

The RLA nearly eliminates the risk of shutdowns
while allowing for business and labor to
negotiate, the group said.

In fact, there have been very few rail labor
disruptions in the US over the past 100 years,
CIAC said, adding: “Just one, lasting one day.”

CIAC is advocating that Canada follow the US
approach in order to avoid the near-annual
disruptions of Canada’s rail and port
infrastructure, it said.

CHEMICALS AND RAIL
In Canada, about 80% of chemical production
goes into export, with about 80% of those
exports going to the US, according to CIAC.

At the same time, Canada-based chemical
producers rely on rail to ship more than 70% of
their products, with some exclusively using
rail.

US-Canada chemical trade,
2023:

Canadian exports of industrial chemicals to
the US: Canadian dollar (C$)18.9 billion ($13.9
billion), according to CIAC data.
Canadian imports of industrial chemicals
from the US: C$17.5 billion in 2023.

More than C$76 million of industrial chemical
products move on Canada’s rail network daily,
which comes to about C$28 billion a year.

Industrial chemicals include basic chemicals,
synthetic resins, rubbers and synthetic
fibers. Chemicals account for nearly 10%
of total Canadian freight rail traffic.

CIAC members see reliable rail services as a
key factor in deciding whether to locate a new
facility or expand operations in Canada, the
group said.

Likewise, investors see rail service as
essential when they are “looking to Canada to
take advantage of our skilled labor and
abundant and well-priced natural resources”, it
added.

CANADIAN
POLITICSAlthough the chemical
and other industries have repeatedly warned about the
impacts simultaneous disruptions at both
railroads could have on Canada’s weakening economy and
on trade with the US, the federal government
under Prime Minister Justin Trudeau has yet to
act decisively.

While CIAC declined to speculate about the
reasons for the government’s hesitation,
political commentators noted that Trudeau’s
Liberal-led minority government relies on the
left-leaning New Democratic Party (NDP) to keep
it in power.

Earlier this week, the NDP, which is close
to labor unions, warned Trudeau against
imposing binding arbitration or back-to-work
legislation, as this would undermine the rail
workers’ right to bargain for collective
agreements.

If the NDP withdraws its support in parliament,
the government would fall. In current opinion
polls, the Liberals are well behind the
opposition Conservatives.

Map by Miguel Rodriguez Fernandez

Rail labor union Teamsters Canada Rail
Conference (TCRC) on Sunday served the required
72-hour strike notice on CPKC, following CPKC’s
earlier lockout notice, and CN served a 72-hour
lockout notice on TCRC.

The railroads continued to wind down operations
on Wednesday ahead of the start of the work
stoppage on Thursday.

Trudeau said in webcast remarks to media on
Wednesday that the government was following the
issue “extremely closely”, adding that it was
in the best interest of the railroads and the
union to find a negotiated resolution.

Federal labor minister Steven MacKinnon, who
met with the railroads and TCRC on Tuesday,
continues to press for a negotiated settlement
of the labor dispute, which is about wages,
benefits, work scheduling and safety issues.

“Get a deal at the table. Workers, farmers,
businesses and all Canadians are counting on
it,” he said on social media.

MacKinnon last week rejected CN’s call to refer
the dispute to the Canadian Industrial
Relations Board (CIRB) for binding arbitration.

Industry commentators said that the government
could not allow the rail stoppage to last more
than 7-10 days, after which it would likely
need to use back-to-work legislation or binding
arbitration to end the dispute.

The following table by the American Association
of Railroads (AAR) shows Canadian freight rail
traffic, including chemicals, for the week
ended 17 August and the first 33 weeks of
2024:

($1=C$1.36)

Thumbnail photo source: CPKC

21-Aug-2024

Japan July chemical shipments rise 12%, overall exports
recovery continue

SINGAPORE (ICIS)–Japan’s chemical exports rose
12% year on year to yen (Y) 1.04 trillion in
July, driven in part by increased plastic
materials shipments abroad, with a weaker yen
also contributing to the inflated trade figures
overall, official data showed on Wednesday.

Trade deficit of Y622 billion recorded in
July, reversing June surplus
Overall exports to key trade partner China
increase 7.2% in July
Yen hit 38-year low against US dollar in
July

The growth in July chemical exports extends the
upward trend to seven consecutive months,
building on favorable low base effects
following a string of contractions throughout
most of 2023.

The country’s exports of plastic materials rose
by 16.6% year on year to Y303.8 billion in
July, the Ministry of Finance (MOF) said in a
statement.

By volume, exports of plastic materials rose by
8.9% year on year to 471,703 tonnes.

Shipments of organic chemicals rose by 19.4%
year on year to Y185.5 billion in July.

Exports of motor vehicles rose by 6.2% year on
year to Y1.69 trillion in July, while shipments
of motor vehicle parts were up by 4.4% at Y376
billion.

Japan’s overall exports rose by 10.3% year on
year to Y9.62 trillion in July, while imports
were up 16.6% at Y10.2 trillion.

This resulted in a trade deficit of around Y622
billion, reversing the surplus of about Y224
billion in June.

By region, shipments to the US rose 7.3% year
on year, a slightly slower pace than the
previous month, while exports to China
increased 7.2%.

In contrast, shipments to the EU declined 5.3%
year on year.

WEAKER YEN INFLATING EXPORT
FIGURESThe MOF reported that
that the yen averaged 159.77 against the US
dollar in July, marking a 12.3% decline in
value compared to the same period last year.

The yen plummeted to a 38-year low against the
US dollar on 3 July, breaching the
162-per-dollar threshold for the first time
since December 1986, as divergent monetary
policies between Japan and the US continued to
drive the currency’s decline.

Higher interest rates in the US make
dollar-denominated assets more attractive due
to higher yields compared with Japanese assets.

The yen has made strong gains after the BOJ’s
decision on 31 July to raise interest rates to
levels not seen since 2007, following the one
on 19 March this year when the central bank
lifted a negative interest rate policy and
ended equity purchases and yield curve
controls.

On Wednesday, the yen was trading at around
145.5 to the dollar. The rate has fluctuated
over the last 30 days, with a high of 156.9 and
a low of 144.7.

EXPORTS PROPELLING ECONOMY TO
RECOVERY
After a two-quarter slump, Japan’s economy
bounced back in the April-June period, posting
an annualized growth rate of 3.1%, driven by a
resurgence in consumer spending and continued
exports growth.

“We expect the latest growth rebound to extend
into Q3 supported by an extension of the
consumption rebound, aided by influx of
tourists and accelerated tech investments,”
Alvin Liew, senior economist at Singapore-based
UOB Global Economics & Markets Research
said.

The rebound in consumption is likely to
encourage the central bank to stay the course
on its monetary policy normalization path, but
recent market volatility may prompt the central
bank to exercise greater caution, Liew said.

“We continue to expect the BOJ to stay on the
rate tightening trajectory although it may not
be a continuous cycle and likely to be a
limited normalization path.”

Focus article by Nurluqman
Suratman

21-Aug-2024

EU plans up to 36.3% definitive tariffs on EV imports from
China

SINGAPORE (ICIS)–The European Commission (EC)
has announced a draft decision to impose up to
36.3% definitive countervailing duties on
imports of battery electric vehicles (EVs) from
China.

The draft rates are lower than the provisional
duties published on 4 July and took effect on 5
July, the commission said on 20 August.

 China car
companies

Definitive duties
(draft)

Provisional duties

BYD

17.0%

17.4%

Geely

19.3%

19.9%

SAIC

36.3%

37.6%

Other cooperating companies

21.3%

20.8%

All other non-cooperating companies

36.3%

37.6%

The Commission said that definitive measures
must be imposed no later than four months after
imposition of provisional duties and definitive
findings will be published by 30 October 2024
at the latest.

It granted a lower individual duty rate of
9% to US EV maker Tesla as it was classified as
an exporter from China at this stage, down from
the 20.8% provisional rate.

The duties, once finalized, will be in force
for five years.

In a response to EC’s decision, China’s
Ministry of Commerce said that the EU’s ruling
discriminates between different types of
Chinese companies which distorted the results
of the investigation.

“The final ruling was based on the ‘facts’
unilaterally identified by the EU, rather than
the facts recognized by both sides. China
firmly opposes this and is highly concerned,”
the ministry said.

The China Association of Automotive
Manufacturers (CAAM) voiced strong opposition
to the decision, saying that the European
Commission seriously “distorted the facts” of
China’s EV industry.

The EU duties bring great risk and
uncertainties to Chinese companies’ operations
and investment in the bloc, damage their
business confidence, as well as impact EU’s
development of EV industry, the association
said.

The automotive industry is a major global
consumer of petrochemicals, which account for
more than a third of the raw material costs of
an average vehicle.

EVs and associated battery markets provide
growth opportunity for the chemical industry,
with chemical producers separately developing
battery materials, as well as specialty
polymers and adhesives for the
environment-friendly vehicles.

Thumbnail image: Cars for export at Yantai
port in China – 07 August 2024
(Costfoto/NurPhoto/Shutterstock)

21-Aug-2024