Shandong Fengyuan Chemical to supply LFP materials to BYD Auto

China’s Shandong Fengyuan Chemical will supply lithium iron phosphate material (LFP) to BYD Auto from April 1 through March 31, 2028, as per Chemweek.

BYD’s subsidiary, Huizhou BYD Battery, did not mention volume details for the three-year supply contract. Fengyuan is China’s one of the leading LFP material producers. It has an LFP material capacity of 225,000 metric tons per year, while 75,000 metric tons per year is under construction, according to a company.

The market share of LFP batteries has been increasing over the past few years in China, displacing nickel-cobalt-manganese battery chemistry. LFP is known for its lower costs, superior thermal stability and extended service life.

China's installation of LFP power battery totaled 105.2 gigawatt hours (GWh) in the first three months of 2025, up 93.6% from the year-ago period and accounting for 80.8% of the total power battery installation, according to the China Automobile Battery Innovation Alliance.

BYD is a leading LFP battery producer of China. BYD’s LFP power battery installations reached 30.85 GWh during January-March, accounting for 29.3% of the country’s total, CABIA data showed.

In light of the rising prices of nickel and cobalt, LFP materials are anticipated to further increase their market share this year, driven by growing demand from the electric vehicle and energy storage sectors.

However, most manufacturers remained in the red amid a supply surplus in China, while losses at LFP material producers have narrowed to some extent mostly due to supportive LFP prices seen since the start of 2025.

Some players have exited the LFP market but overall production capacity remains ample, according to sources. With sufficient capacity availability, downstream buyers increasingly favor high-end LFP materials.

Platts, part of S&P Global Commodity Insights, assessed ex-works China calculations for LFP cathode active material at $4,237 per metric ton on April 15, down $22 per metric ton from a week earlier.

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China’s propane dehydrogenation (PDH) plants are expected to cut operating rates or even halt operations, while ethane crackers are considering feedstock diversification after the Chinese government imposed further retaliatory tariffs on US goods, as per Chemweek.

The escalated tariffs by China on US goods — currently at 125% — will hit Chinese PDH plant operators and ethylene producers hard, as the US has been a key supplier of feedstocks including propane and ethane to the country.

Chinese PDH plant operators, who have been suffering losses in recent months amid negative margins, source about half of their propane feedstock from the US, industry sources said. Their margins averaged at a negative 268.6 renminbi per metric ton (negative $36.7 per metric ton) in the first quarter of 2025, narrowing from an average of negative 328.3 renminbi per metric ton (negative $44.9 per metric ton) in fourth quarter of 2024, according to local energy information provider, JLC’s data.

The overall costs were already expected to increase by around 1,000-2,000 renminbi ($137-$274 per metric ton) when China first imposed a 34% tariff on US goods, said a JLC analyst, and this could go even higher with an additional 50% tariff on April 10, and another 41% on April 12.

The import cost of propane, which accounts for about 80% of the total production cost at PDH plants, plays a vital role in the survival of those plants, according to market sources to Platts, part of S&P Global Commodity Insights, who added that such plants typically have no alternative feedstocks available.

China has the world’s largest PDH processing capacity. Commodity Insights projected the total processing capacity at China’s PDH plants to reach 24.26 million metric tons (MMt) in 2025, up by 12.4% to 2.68 MMt from the 21.58 MMt/y in 2024.

The margins for cracking propane into propylene for Shandong PDH plants were in negative territory at around 268.6 renminbi ($36.8) per metric ton in the first quarter of this year, compared with a loss of 328.3 renminbi ($45) per metric ton in fourth quarter 2024, JLC data showed.

Several PDH plants in China cut operation rates in the first half of April following the hikes in import tariffs, with run rates of the surveyed 32 plants averaging 67.7% of capacity as of April 10, down by about 5 percentage points from a week earlier, JLC data showed.

These plants usually sign one-year term contracts with propane suppliers, so they would probably have to pay the cancellation fees, or lift the minimum amount based on their respective contracts amid lower operating rates, sources added.

Chinese producers using ethane as a feedstock plan to file an appeal with the government to exempt ethane feedstocks from the tariffs, local market sources said to Platts, given that the US is almost the sole supplier of bulk ethane shipments globally, according to S&P Global Market Intelligence’s Global Trade Analytics Suite.

Beyond that, players like Wanhua Chemical Group aim to diversify their feedstock supplies and may rely more on naphtha under the increased tariffs on US ethane imports, given the generally recovering price spread between ethylene and naphtha from January to April.

About 70% of China’s ethylene production is currently derived from naphtha, according to Sinopec's Economics and Development Research Institute 2024 annual report, but with higher yields and much better margins, industry players have long seen ethane cracking as a saving grace.

Analysts and market sources initially expected ethane cracking to remain profitable even with a 34% tariff on US feedstock, but a further 91% tariff from China has thwarted such hopes.

China imported 175,000 b/d of ethane in the first two months of 2025, down by 7.9% from 190,000 b/d in 2024. But the supply from the US increased to 99% in January-February 2025, from 98.2% in 2024, and 97.8% in 2023, data from the General Administration of Customs showed.

Chinese propane importers will likely have to source feedstock from the Middle East and other regions following the additional tariffs, market sources said.

Cargo swaps, a strategy used during the 2019 US-China trade conflict, may resurface as Chinese importers seek partners to swap US cargoes.

“If [Chinese importers] switch to other alternative sources with lower import tariff, the price of those cargoes will likely be pushed up, while at the same time, other buyers from Southeast Asian countries may switch to procure from the US,” a Northeast Asia industry source said to Platts.

S&P Global Commodities at Sea anticipates significant shifts in propane trade flows, with US LPG potentially redirected to India and Southeast Asia, while Algerian LPG may increasingly head to China.

“China’s importers may need to source about 15 MMt/year of their propane imports from other regions following the increased tariffs on the US supply,” another trade source said.

However, with the export volume from the Middle East comparatively lower than the US, it is unlikely for them to be able to meet their demand from other regions, sources said. The deficit will likely be met by purchasing US propane indirectly from other countries, they added.

In line with the quick expansion of the PDH capacity in China, the country’s propane imports reached 29.24 MMt in 2024, up by 13.8% from a year earlier, General Administration of Customs data showed.

At the same time, China’s reliance on US propane increased to 59.2% in 2024, making it the biggest supplier.

On the ethane front, ethane crackers might have to increase purchases of naphtha to make up for the loss in ethane feedstock, but the extent of switching would be clearer down the road as these crackers are fairly new and companies are still assessing how much naphtha is needed to replace the shortfall in ethane, according to sources with knowledge of the matter.

On April 10, China's Wanhua Chemical bought two 25,000 metric tons naphtha cargoes with a minimum of 65% paraffin content via a tender that closed on April 9. One cargo for delivery over May 11-20 to Yantai was awarded at a premium of about $13 per metric ton to Mean of Platts Japan naphtha assessments, CFR, with pricing over the second half of April prior to delivery, trade sources said.

The cracker is currently using a 50:50 feed of ethane and naphtha, but its configuration might be tweaked to favor more naphtha if shipments of ethane are cut, a source close to the matter told Platts.

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Eight European countries have joined the EU sanctions against Belarus endorsed by the Council of the European Union on March 27, 2025, as per Interfax.

"The Council decided that 25 natural persons and seven legal persons should be included in the list of natural and legal persons, entities and bodies subject to restrictive measures," the Council of the European Union said.

"Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, North Macedonia, Norway and Ukraine align themselves with this Council decision. They will ensure that their national policies conform to this Council decision," it said. "The European Union takes note of this commitment and welcomes it," the Council said.

On March 27, the European Union expanded the list of sanctions against Belarus with 25 individuals and seven legal entities. These include Integral, managing company of the Integral holding (a major microelectronics manufacturer), Planar (a major manufacturer of microelectronics, both civilian and military), and the Precision Electromechanical Plant (part of the Belarusian State Authority for Military Industry, which, according to the EU, produces ballistic missiles). In terms of individuals, the sanctions apply to Planar General Director Sergei Avakov, Precision Electromechanical Plant Director Yury Cherny, members of the Belarusian Central Elections Committee, a number of judges, head of the Belarusian Presidential Property Management Directorate Yury Nazarov and his deputies.

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Trinseo PLC (Berwyn, Pennsylvania) is partnering with MagREEsource (Noyarey, France) to integrate dissolution-based recycling of polycarbonate (PC) with the recycling of rare earth magnets, as per Chemweek.

The companies have signed a memorandum of understanding, according to a press release issued by Trinseo on April 7.

Dissolution is a physical process that does not entail any chemical conversion. Trinseo says its dissolution-based PC recycling technology requires minimal sorting and allows the extraction of PC from all end-of-life products, even mixed or contaminated materials. A pilot plant employing the technology has been online at Trinseo’s site in Terneuzen, Netherlands, since May 2023.

“The extracted PC is recycled into new materials with over 70% cradle-to-gate estimated product carbon footprint reduction compared to its virgin counterpart, while non-PC components, including magnets, remain for further recycling,” Trinseo stated. “This two-stage process is particularly effective for consumer and industrial products made primarily of PC and containing magnetic systems, especially neodymium magnets vital for low-carbon applications such as wind turbines, electric vehicle motors, and automation.”

MagREEsource, a spinoff of the French National Center for Scientific Research (CNRS), is commercializing a hydrogenation-based process for the recycling of rare earth magnets. The company’s 50 metric tons per year pilot plant at Noyarey went online in 2024, and MagREEsource intends to begin construction of a 1,000 metric tons per year “MagFactory” in 2026.

“Our collaboration has potential to benefit the value chain as byproducts of Trinseo’s dissolution process could serve as input materials for our process. Byproduct magnets are an important part of supply for our MagFactory” said Erick Petit, president and co-founder of MagREEsource. “Given the European Union’s ambitious sustainability plans, these innovations from MagREEsource and Trinseo contribute to advancing the EU industry’s progress toward sustainability targets by enabling increased material recovery and emissions reduction.”

We remind, Trinseo announced that it has reached agreements to license its technology and transfer polycarbonate production equipment from its plant in Stade, Germany to Deepak, an Indian company. The deal is valued at $52.5 million. The asset sale agreement follows Trinseo’s decision to exit polycarbonate production entirely. The closure is part of a company restructuring program announced by Trinseo on September 30, 2024.

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Brenntag (Essen, Germany) said Gaomi Silver Hawk New Materials Incorporated Co., Ltd. (Gaomi, China) has appointed the company as its distributor for hydroxy ethyl cellulose (HEC) and methyl hydroxy ethyl cellulose (MHEC) to serve the coatings, adhesives, sealants and elastomers (CASE) and construction segments in Bangladesh, India, Nepal and Sri Lanka, as per Chemweek.

Gaomi Silver Hawk is a leading Chinese manufacturer of cellulose ether, using high-quality cotton pulp as its primary raw material. Through etherification, it produces HEC and MHEC at its advanced facility in Shandong Province.

HEC and MHEC are versatile polymers widely used in applications such as food, pharmaceuticals, personal care and coatings, said Brenntag.

“In addition to ensuring reliable supply, we will harness the technical expertise of our team at our Innovation and Application Center in Mumbai, to provide value-added services, helping our customers optimize performance and achieve their formulation goals,” said Santosh Satam, director CASE APAC, Brenntag Specialties.

We remind, Brenntag (Essen, Germany) faced losses that it could not compensate for even through cost savings. Sales in 2024 fell by 3.4% to €16.24 billion, and EBITDA fell by 12.9% to €1.1 billion. Net profit fell by almost 25% to €536 million.

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