Global Market Analysis

Navigating the Prisoner’s Dilemma in Rising Protectionist Policy – Policy Benefiting Local Manufacturers May Not Benefit Consumers!

October 18, 2024

Daily Chemical Reaction

Navigating the Prisoner’s Dilemma in Rising Protectionist Policy – Policy Benefiting Local Manufacturers May Not Benefit Consumers!

Key Findings

General Thoughts: We discuss the implementation of higher import taxes on PVC (and other polymers) in Brazil this week as an example of rising but costly country-level protectionist activities to help domestic manufacturers.
Supply Chain/Commodities: We provide general commentary on the global PVC market before attending the ChemOrbis Global Petrochemical Conference next week and flag relevant industry news to close the week.
Energy/Upstream: We highlight global refinery margin weakness in 3Q24 and the recent drop in global ethylene production margins as we provide further views on the oil market push into chemicals despite global oversupply.
Sustainability/Energy Transition: We provide a few views on the global plastics recycling market and IEA views on recycling rates that are unlikely to be realized absent more direct value chain incentives to enable its growth.
Downstream/Other Chemicals: We discuss the recent decline in global freight rates as a risk to high-cost chemical markets, such as Europe, and food price inflation that we think will prove hard to curb amid rising crop demand.

Exhibit 1: US spot PVC prices reflect a discount to Asia, Brazil, and NW Europe, and we highlight the recent uptick in Brazil spot PVC prices ahead of the uptick in import taxes that went into effect October 15 for 12 months.