India's petchem trading market faces turmoil after US sanctions

India’s petrochemical market was in flux on Oct. 10 after the US administration announced fresh sanctions against nine Indian entities trading Iranian petroleum products, as per Chemweek.

The new sanctions list from the Office of Foreign Assets Control (OFAC), a branch of the US Treasury Department, includes BK Sales Corp., C.J. Shah and Co., Chemovick Private Ltd., Haresh Petrochem Private Ltd., Indisol Marketing Private Ltd., Mody Chem, Paarichem Resources LLP and Shiv Texchem Pvt Ltd. Additionally, Vega Star Ship Management Private Ltd., a ship management services company, was also sanctioned.

This move follows barely weeks after OFAC imposed sanctions on eight India-based entities, including traders such as Ramniklal S Gosalia and Co., Jupiter Dye Chem Private Ltd., Global Industrial Chemicals Ltd. and Persistent Petrochem Private Ltd.

Trade sources said to Platts, part of S&P Global Commodity Insights, the sanctions could disrupt trade as many of these entities deal in multiple petrochemical commodities sourced from various countries.

“Some of the biggest petchem importers in India are on the list, so it’s quite a big issue now,” an East Asia-based seller said.

The move could cause “widespread disruption for the Indian chemical market,” a Southeast Asia-based seller said, adding that “many cargoes are enroute, which will be either stuck or will be sold at loss.”

Sellers feared that payments would get stuck for the cargoes already sold to the sanctioned entities or en route to India, creating huge losses for them.

“The market could get short in the coming days. Hardly any players are left now who have not traded in Iranian petchems” a Mumbai-based trader said.

Some sources indicated that the new list of sanctioned Indian entities could have a significant impact on the market.

“The chemical trading sector and Indian importers have been singularly targeted, and this will negatively impact the industry," a Middle East-based seller said. "Exporters from Asia and the US are unable to offer products as they do not know who will be impacted next, and they will not get paid despite having a confirmed Line of Credit in place. There will be turmoil in the short term until new instruments and companies are formed. This is surely not good for both importers and consumers in India.”

An end user said that sanctioned entities will find it difficult to import material.

"Methanol, styrene, MEG — all markets are going to be affected," the end user said. "Existing contracts for styrene may also be canceled or halted.”

Several Indian traders indicated that prices in the domestic markets are likely to increase. “For now, the offers are on hold,” said a Mumbai-based trader.

Another source based in Kolkata said, “Domestic prices are set to increase, and there will be supply tightness for chemical products in the near term.”

An India-based trader said that they were assessing the situation for the isocyanates market. The customer base remains unaffected for now, but suppliers may start facing challenges, the trader said.

The market for butyl acrylate is currently in wait-and-watch mode, according to an Indian trader. "This is a repetition of what happened a couple of months ago; the impact is not just on the butyl acrylate market but the entire chemicals industry," the Indian trader said.

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Sabic, the chemicals business of Saudi Aramco, sees opportunities in the anticipated growth in European demand for circular and sustainable plastics despite current petrochemical market headwinds, as per Chemweek.

“Europe is the innovation hub for us,” Sami Al-Osaimi, executive vice president/polymers at Sabic, said Oct. 8 in a briefing at the K 2025 plastics trade fair being held in Dusseldorf on Oct. 8-15.

Osaimi said Sabic continues to see “huge attention” in Europe to the development of circular solutions for products in applications including automotive, mobility and healthcare.

“This is where we see value creation and that’s our focus,” he said. Osaimi acknowledged that the global chemical industry — in the midst of a sustained downturn now in its fourth year due primarily to structural issues of oversupply and weak demand — is “having a challenging time… we see global demand swinging.”

Sabic permanently closed several petchem plants in Europe during an 18-month period from January 2024 to June 2025, including naphtha crackers at Geleen, Netherlands, and Wilton, UK, and a polycarbonate (PC) plant in Spain, as it responded to the downbeat market conditions and Europe’s lack of competitiveness in the olefins and polyolefins sectors compared with lower-cost regions.

Sabic has been “passing and navigating through those kind of challenges” for the past five decades, Osaimi said. He did not discount further rationalization of its asset portfolio in Europe, saying that Sabic “always assesses and reviews its operations and businesses, looking at how we can become more efficient.”

However, he noted that out of over 130 new polymer solutions and products being displayed by the company at K 2025, more than 120 were “coming from our assets in Europe.”

Sabic also remains focused on mechanical and chemical recycling solutions, in response to rising demand from its customers, he said.

In August, Sabic’s chemical recycling joint venture with Plastic Energy Ltd. at Geleen produced its first batch of pyrolysis oil (pyoil). The JV plant is slated to begin full commercial production later this year with a nameplate input capacity for 20,000 metric tons per year of mixed waste plastics.

The plant has been designed to integrate into Sabic’s petchems complex at Geleen for the onward production of polymers, using the pyoil volumes as a drop-in substitute for conventional naphtha.

Less than 30% of Europe’s 32 million metric tons of waste plastics is currently recycled, according to Plastic Energy.

The EU has a current goal under its Packaging and Packaging Waste Regulation (PPWR) for all packaging to be fully recyclable by 2030.

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INEOS founder and CEO Jim Ratcliffe addressed European politicians with an open letter warning of the critical situation of the region's chemical industry. He stated that 21 major chemical plants in Europe will soon cease operations, said the company.

Chemical production has already fallen by 30% in the UK, 18% in Germany, and 12% in France, according to the statement.

"Eight of the world's top ten chemical companies are cutting back or leaving Europe, while all ten leading US producers, by contrast, are increasing investment and expanding production," Ratcliffe emphasized.

According to the businessman, the crisis is caused by restrictions imposed by European authorities: gas prices in the EU are four times higher than in the US, and high carbon taxes and tariffs remain, making production uncompetitive.

Ratcliffe called on the authorities to take three urgent measures: abolish "green" taxes and charges included in energy prices; eliminate carbon taxes; and introduce tariff protection for European producers.

The head of INEOS had previously warned of the imminent demise of the chemical industry in Europe. He emphasized that the total emissions tax bill in the region is approaching €100 million.

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Lion Elastomers LLC (Port Neches, Texas) will by year-end shut down production of butadiene-based rubber at its Orange, Texas facility, which was acquired from Firestone Polymers LLC in 2019, the company said in a press release Oct. 8.

The Orange facility has the capacity to produce 105,000 metric tons per year of polybutadiene rubber (PBR), 25,000 metric tons per year of solution styrene-butadiene rubber (SBR) and 10,000 metric tons per year of thermoplastic elastomers, according to data from S&P Global Commodity Insights.

"Since acquiring the site in 2019, Lion has strived to be a good steward in every way for this plant and the community," Bobby Rikhoff, vice president/manufacturing, said in the statement. "Winding down rubber production is a decision not taken lightly. The company has explored many options before coming to this decision."

Lion said about 100 employees will be affected. Lion Elastomer’s Port Neches facility has 180,000 metric tons per year of emulsion SBR capacity, and its Geismar, Louisiana facility has 135,000 metric tons per year of ethylene-propylene rubber capacity, according to data from S&P Global Commodity Insights.

US PBR capacity totaled 625,000 metric tons in 2024, according to data from Commodity Insights. Other US producers include Goodyear Tire & Rubber Co., Firestone Polymers, Arlanxeo and American Synthetic Rubber. The same companies also produce solution SBR. US solution SBR capacity totaled 464,000 metric tons in 2024.

Pricing for PBR in the US has consistently dropped throughout most of 2025, following upstream butadiene pricing. The olefin, in turn, has been affected by significant supply and weak demand in downstream and end-consumer markets, particularly in the tire and automotive industry.

Platts last assessed PBR at 70 cents per pound FOB US West Coast on Oct. 3, stable from Sept. 26, and 19 cents per pound below its year-to-date high, reached on Feb. 28.

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Austria is the latest EU member to join Germany in pushing for free carbon allowances in the EU Emissions Trading System (EU ETS) to be extended beyond a planned 2034 phaseout, arguing that the EU's Carbon Border Adjustment Mechanism (CBAM) must function effectively before imposing additional costs on European industry, as per Chemweek.

"Without an extension of the free certificates, there is a risk that value creation and emissions will simply be shifted because companies will be deprived of investment funds for the transformation," Austria's minister of economy, energy and tourism, Wolfgang Hattmannsdorfer, said in a statement. "As long as low-CO2 technologies cannot yet be implemented across the board, the industry needs a fair transition phase."

Germany is also calling for the European Commission to maintain free ETS allocations to prevent deindustrialization in the EU. Under current EU ETS rules, companies must purchase certificates for every metric ton of CO2 emitted, with free allocations provided to energy-intensive sectors to prevent carbon leakage.

These allocations are scheduled to phase out gradually starting in 2026, coinciding with CBAM implementation designed to level the playing field by imposing carbon costs on imports from countries with weaker climate policies.

The Austrian position specifically demands maintaining free allowances beyond 2034, along with the reform of CBAM by 2028 as the basis for any future reduction of EU allowances.

Hattmannsdorfer also said that the current timeline risks forcing companies to relocate production to countries with less stringent climate policies, potentially negating environmental benefits while damaging European economic interests.

"[Germany's] federal environment minister, Carsten Schneider, surprisingly spoke out in favor of extending free CO2 certificates in the Bundestag [parliament], arguing that CBAM must first function smoothly before industry can bear additional burdens," the Austrian ministry added in a statement. "In doing so, Germany is following the line that Austria's minister, Wolfgang Hattmannsdorfer, has been advocating in Brussels for weeks."

Energy-intensive sectors such as chemicals argue that they need more time to deploy commercially viable low-carbon technologies, while environmental advocates worry that extending free allocations could weaken decarbonization incentives.

The CBAM works alongside the EU ETS by imposing carbon pricing on imports, designed to prevent carbon leakage as Brussels phases out free emission allowances for domestic producers. Under the mechanism, importers must purchase CBAM certificates equivalent to the carbon content of goods from six covered sectors: aluminum, cement, electricity, fertilizers, iron and steel, and hydrogen.

CBAM is in a transitional phase, requiring importers to report emissions without financial penalties. The mechanism enters its definitive phase Jan. 1, 2026, when companies will be liable for their emissions. This is expected to have significant implications for carbon-intensive industries.

Brussels recently launched a call to gather stakeholder input as it refines technical aspects of emissions-intensity calculations, free allocation adjustments and carbon price deductions in preparation for CBAM to enter its definitive phase Jan. 1. The consultation was launched Aug. 28 and ran until Sept. 25.

The timing of the debate reflects broader tensions within EU climate policy as member states balance environmental ambitions with industrial competitiveness concerns.

Platts, part of S&P Global Commodity Insights, assessed EU allowances for December 2025 at €79.10 per metric ton CO2e on Oct. 8. The aim of CBAM is to level the playing field for EU companies, since most exporting countries do not have a carbon price as high as that of the EU ETS or lack a price on emissions altogether.

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