Chemicals
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Viewpoint: US housing to stymie chlor-vinyl in 1H 2026
Viewpoint: US housing to stymie chlor-vinyl in 1H 2026
Houston, 22 December (Argus) — An anemic US housing market is expected to continue restraining domestic demand for polyvinyl chloride (PVC) and chlor-alkali during the first half of 2026, prompting US producers to push more PVC into the export market. US Federal Reserve policymakers have cut their target interest rate three times since September, but market participants do not expect lower borrowing rates to significantly boost demand for housing — a major PVC derivative market — until the peak of construction season next summer at the earliest. To mitigate further price erosion and excess inventories, producers are expected to increase export sales, especially to India. PVC producers expect the Fed will continue to cut interest rates in 2026 to help stimulate the domestic housing market, which was listless this year on rising prices and elevated mortgage rates. But producers may be disappointed, as Fed policy makers have penciled in just one quarter-point rate cut for next year. Lower Fed target rates can influence borrowing costs for mortgages, business loans, and other expenditures in the homebuilding sector. Interest rates for a traditional 30-year fixed mortgage have remained above 6pc since September 2022, contributing to housing affordability issues that stretch back to 2021, according to data from Federal Reserve banks in St Louis and Atlanta. Housing starts have been weak in the past three years as mortgage rates surged. Starts were at a 1.31mn unit annual pace in August, down from about a 1.6mn rate in 2021-2022. US home builders have little incentive to develop new units, which in turn could support higher home prices in 2026 as homebuilding continues to be outpaced by a growing population. Meanwhile, weak housing demand and construction activity has left US PVC producers to manage an oversupplied domestic market, weighing on spot export prices and likely maintaining headwinds through the first quarter of 2026. Spot export prices have been rangebound from $550-595/metric tonne (t) fas Houston since mid-October, as US exporters vie with competitive Chinese volumes into India — the largest global importer of PVC. Exports from the US to India are anticipated to rebound in 2026 as much of the regulatory headwinds that crimped shipments this year are largely resolved. India earlier this year required foreign exporters to have their plants inspected and certified by the Bureau of Indian Standards (BIS) by June, which was eventually delayed to the end of the year. India in early November dropped those requirements, but confusion around the shifting BIS deadlines led US producers to limit shipments to India. Additionally, India approved preliminary anti-dumping rates on US and Chinese PVC exports but failed to fully implement the penalties — effectively eradicating the last trade barrier into the country. US PVC exports to India in January-September this year fell by 68pc from the same nine-month period last year, according to US Census Bureau trade data compiled by Global Trade Tracker (GTT), largely because of various regulations and evolving trade policies. Exporters, though, are expected to reclaim lost market share in India in 2026, especially as the US housing market is anticipated to remain weak until the third quarter. Increased exports should help draw down inventories early next year, after suppliers grappled with excess inventory and multi-year price lows. The export market may become more important to US producers if domestic demand remains weak. This is due to OxyChem's expanded Battleground plant in La Porte, Texas, coming on line by the end of 2026 or early 2027 and US chlor-alkali producer Olin focusing expansion plans on the PVC market. Caustic soda prices A bearish PVC market to start 2026 is expected to lend price support to caustic soda prices for fully integrated producers. Caustic soda is co-produced with chlorine, a critical feedstock for PVC manufacturing, and producers can increase caustic soda prices to preserve electrochemical unit (ECU) margins during periods of bearish PVC and chlorine market conditions. An ECU is comprised by 1t of chlorine and 1.1 dry metric tonnes (dmt) of caustic soda. Domestic producers and distributors raised caustic soda prices in monthly contract negotiations for much of 2025, helping to offset incrementally lower chlorine settlements, despite building caustic soda inventories during the second half of the year. Domestic caustic soda inventories are poised to end the year at elevated levels following an estimated 5-10pc cut in US consumption and largely steady production for much of 2025. But to sustain a pricing strategy that maintains value in caustic soda, suppliers with deep-water access are expected to boost exports in 2026, primarily to Europe and Brazil, or peel back operating rates. Further caustic soda price support next year is anticipated to be drawn from rising natural gas prices for electricity generation, which comprises about 70pc of total ECU variable costs in the US Gulf coast region, Argus estimates. Average natural gas costs into electricity are forecast to climb by nearly 8pc next year to $4.20/mmBtu, according to the US Energy Information Administration's Short-Term Energy Outlook . By Connor Hyde and Gordon Pollock Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Viewpoint: Tight lauric oils to support fatty alcohols
Viewpoint: Tight lauric oils to support fatty alcohols
London, 18 December (Argus) — Limited lauric oils supplies should maintain upward pressure on mid-cut fatty alcohol values into 2026. Lauric oils are a key feedstock used in the production of oleochemicals such as fatty alcohols and are primarily sourced from coconut oil (CNO) and palm kernel oil (PKO). Fatty alcohols are used in a variety of products including personal care, cosmetics, as well as in industrial applications. The fourth quarter of 2025 has been plagued with limited demand and uncertainty over the EU Deforestation Regulation (EUDR) implementation date, pushing lauric oils and mid-cut alcohols prices down. Mid-cut fatty alcohols prices hit a high of $3,100/t fob southeast Asia in early August, but prices have since declined to a low of $2,400/t in mid-December, according to latest Argus data. Tighter supply could lend support to CNO and PKO values in 2026, which could help to push mid-cut fatty alcohols prices up as costs are passed down. CNO supply has been flat for years, and new coconut tree planting in Asia will take a number of years to boost yields. PKO supplies will likely remain tight in Malaysia, even though palm oil output has risen in the country. The Malaysian Palm Oil Board (MPOB) expects palm oil production at around 19.5mn t this year, potentially hitting a record 20mn t. But PKO is a popular cocoa butter substitute and continues to command strong demand from the confectionary industry. In Indonesia, the world's largest palm producer, supplies of PKO could be curbed next year, following severe floods this and the government's palm plantation land seizure. Additional fatty alcohols capacity has come on stream in southeast Asia during the second half of 2025, and this additional demand is likely to pull on lauric oil supplies next year. Demand uncertainty On the demand side, European consumption has fallen significantly this year owing to the ongoing uncertainty surrounding the implementation of the EUDR, according to market participants. The regulation, originally slated to come into effect at the end of 2024, was pushed back to the end of 2025. But on 17 December, the European Parliament backed an additional one-year delay. This opens up the European market to more palm oil and PKO than would have been the case had the EUDR come into effect. This will likely put further upward pressure on mid-cut alcohols prices in 2026 as demand picks up from Europe. The EUDR delay postpones application of due diligence requirements by one year for large and medium operators from 30 December 2026. Small operators have until 30 June 2027. By Neha Popat Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
US tariffs hit Brazil rosin ester sales for 1Q 2026
US tariffs hit Brazil rosin ester sales for 1Q 2026
London, 17 December (Argus) — Brazilian rosin ester sellers are losing first-quarter 2026 orders as US buyers avoid imports facing 50pc tariffs. Talks to ease duties have progressed, but US customers have already secured early-2026 volumes elsewhere, limiting Brazil's near-term sales. Even if tariffs fall soon, shipments would not reach the US in time for first-quarter delivery, sellers said. The US is a key market for gum rosin and rosin esters used in road marking and hot melt adhesives. Shutdowns at crude tall oil (CTO) refineries in DeRidder, Louisiana, and Crossett, Arkansas, cut 300,000 t/yr of US tall oil refining capacity. The closures sharply reduced domestic tall oil rosin (TOR) and TOR ester output, creating an opportunity for Brazilian product to fill the gap. Global Trade Tracker (GTT) data show Brazilian gum rosin exports to the US hit a record high of 4,602t in 2024, supported by the CTO refinery shutdowns. But exports have fallen sharply since then, totalling just 1,551t in January-November this year. Gum rosin can substitute for TOR in some applications, and both feedstocks are upgraded into rosin esters. But tariffs have kept US buyers reliant on domestic TOR ester and alternative tackifiers for adhesives and road marking. Southern European rosin esters are gradually entering the US market to cover some of the drop in Brazilian sales, sellers and buyers said. Midpoint European CTO prices fell by 18.7pc on the year to €650/t ex-mill in the fourth quarter of 2025. In contrast, Brazilian pine oleoresin prices rose by 13.8pc to 5,150 reals/t (€804/t) at the forest on 15 December from a year earlier. Pine oleoresin and CTO are feedstocks for gum rosin and TOR production, respectively, which are then upgraded into rosin esters. European derivative producers use both Brazilian gum rosin and local TOR for rosin ester output. Lost first-quarter sales and tariffs will likely curb second-quarter volumes next year, Brazilian suppliers said. Larger Brazilian sellers saw double-digit growth in the first half of 2024 compared with the same period in 2023, but orders for the first half of 2026 are at risk because of missed US sales in the opening quarter. By Leonardo Siqueira Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
IG4 moves closer to Braskem control
IG4 moves closer to Braskem control
Sao Paulo, 15 December (Argus) — Latin America's largest petrochemical company Braskem said it received notice that its controlling shareholder Novonor has signed a 60-day exclusivity agreement with private equity firm IG4 to buy its shares of Braskem and credits guaranteed by them. Braskem said IG4 also has an agreement with Novonor's creditor banks to acquire all credits against Novonor and related entities that are secured by Braskem shares, worth close to R20bn ($3.71bn). If implemented, a fund advised by IG4 or an affiliate would become the direct or indirect holder of Braskem common and preferred shares representing 50.1pc of voting capital and 34.3pc of total capital. Novonor would retain preferred shares equal to 4pc of Braskem's capital, without governance rights beyond those set by law. The transaction must be approved by Brazil's antitrust watchdog Cade. In July Cade cleared without restrictions a proposed sale of Novonor's controlling stake to Petroquimica Verde, an investment fund linked to businessman Nelson Tanure. While that approval removed a key regulatory hurdle it did not finalize the transaction, which expired after a 90-day exclusivity period. The competition for Braskem's ownership it taking place amid financial struggles for the company and intense market volatility. Fitch Ratings recently downgraded the company's credit rating to CCC+ from BB-, citing refinancing risks and persistent negative free cash flow. By Isabela Mendes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
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