U.S. chemical companies hope Biden brings change from times of ‘disagreement’; Wood Mackenzie sees U.S.-China trade continuing to decline; Mexican chemical industry worried about possible new railway blockades in 2021
U.S. chemical companies see Biden as bringing change from times of ‘disagreement’
The American Chemistry Council (ACC) welcomed U.S. President Joe Biden’s decision to rejoin the Paris Agreement immediately after the inauguration of his four-year term on Jan. 20, and said that it looks forward to changes from times of disagreement.
“Instead of disagreement and discord, ACC and its members look forward to forging new relations that enable our industry to continue to innovate and create American jobs,” the statement said. The next four years promise to be transformative, it added.
During the four-year administration of former President Donald Trump the council voiced disagreement with a policy of trade tariffs against some of the most important markets for U.S. chemicals such as China and Europe, and insisted on the need to foster free trade rather than barriers.
The ACC said it supported Biden’s decision to reverse his predecessor’s move to pull the U.S. of The Paris Agreement. The agreement is a legally binding accord by nearly 200 countries signed in December 2015 that aims to reduce carbon emissions through long-term strategies that include an increasing use of renewable energy.
As demand for low and zero emissions solutions continues to grow in the future, “so too will the demand for the products of chemistry, including plastics,” the ACC said.
“Virtually every low-carbon electricity, energy efficiency and transportation technology is made possible by the chemical industry, including solar panels, wind turbines, electric and high-efficiency vehicles, energy-efficient building products, low-emissions fuels, and advanced batteries,” the ACC said.
The ACC also approved of Biden’s nomination of Martin Oberman as new chair of the Surface Transportation Board (STB). The STB regulates railway freight. Chemical companies use railcars as the primary mode for nationwide distribution of chemical commodities including resins.
There have been ongoing disagreements regarding pricing and service between railway companies and the chemical industry.
“Modernizing our nation’s freight rail policies is critical to helping build back our economy and grow U.S. manufacturing,” the ACC said.
“We look forward to working with chairman Oberman and the other members of the Board to adopt much needed reforms that will ensure large and small businesses have access to affordable and reliable service,” it added.
Wood Mackenzie see U.S.-China trade continuing to decline
U.S. President Joe Biden’s administration could bring positive change to the U.S.-China relations yet trade volumes could decline in part due to likely continued efforts to shorten supply chains, while a decision to rejoin the Paris Agreement may bring positive ripples across continents, WoodMackenzie analysts said.
“While we believe that the potential for further economic decoupling between China and the U.S. still exists under a Biden administration, a less confrontational president may reduce this risk,” said Yanting Zhou, senior economist at the energy research and consultancy organization Wood Mackenzie in a January statement.
In addition, “Biden maintained that the U.S. lost more than it gained in the U.S.-China trade war as higher tariffs have raised the cost of goods for U.S. households,” he said.
However, “efforts to shorten supply chains will continue, as will China’s effort to strengthen its ties with Asia and Europe. Therefore, we believe that the trade relationship will remain fractious and volumes between the two countries are likely to fall gradually,” he said.
The return of the U.S. to the Paris Agreement may increase pressure on U.S. and Asian companies to set more aggressive emission targets, said Prakash Sharma, research director at Wood Mackenzie.
As for the re-entry of the U.S. into the Paris Agreement, he said that it may have positive ripples both in the U.S. and in Asia.
“With the U.S. back in the agreement, we can expect a surge in net-zero 2050 policy announcements,” Sharma said.
If U.S. “majors such as ExxonMobil and Chevron also raise their climate ambitions in response, then Asian national oil companies like CNOOC, PTT, ONGC etc., will come under pressure to do more,” Sharma said.
Mexican chemical industry worried about possible new railway blockades in 2021
The Mexican National Association of the Chemical Industry (ANIQ) said on Jan. 17 it met with officials of the country’s umbrella business guild Concamin to evaluate the impact on the country’s chemical plants from several blockades of railways last year and possible new blockades in 2021.
The groups will continue meetings during the rest of the year to evaluate impact on businesses and want to ask the federal and state governments for participation, it said. The Mexican regions most affected in 2020 were Michoacan, Puebla, Chihuahua and Sonora.
“The blockades not only limited rail transport but affected the entire supply and distribution chain, as well as highway and maritime transport. The accumulation of railcar and containers saturated storage areas and industries didn’t receive raw materials for the operation of their companies,” the report said.
According to Mexican press reports, diverse Mexican groups blocked railways in 2020 during protests for several unrelated reasons. In Michoacan railways were blocked nearly two months by school teacher unions demanding work.
In Chihuahua, railways that are key for transportation in and out of the United States through El Paso, Texas were blocked in protests related to irrigation water for farming. Mexican farmers, affected by a harsh drought last year, opposed the cession of water to the U.S. to repay debt.
Other areas of North America saw railways interrupted because of protests last year. Early in 2020 Canada also saw blockades of railways at different points in solidarity with native communities that were protesting against plans to build pipelines.
By Renzo Pipoli