Chinese PE bag converters to up EU exports in July

12 July 2006 10:19  [Source: ICIS news]

SHANGHAI (ICIS news)--Chinese converters were scrambling to export polyethylene (PE) bags to Europe ahead of upcoming anti-dumping tariffs on their product, company officials said on Wednesday.

The companies sprung into action after receiving the European Commision’s (EC) notice on Thursday evening that Chinese high-density PE (hdPE) bags would be slapped with a tariffs ranging from 10.8-15.2%.

It has not been confirmed when the duties would kick in, although converters expect them start on 1 September - just ahead of the pre-Christmas peak season. The bag producers were seeking to increase exports in July as the freight to Europe takes at least a month.

“We will work overtime in July to get as much out as possible,” said a converter in east China.

Converters said that the 10.8-15.2%tariffs would wipe out their profit margins, which were generally around 10% for most medium sized companies that produce around 300-500 tonnes/month. Another converter in eastern China that did not respond to the anti-dumping probe has to pay a higher duty of 15.2%, said a company source, and was probably in deeper trouble.

In the medium term, converters were exploring other markets in Asia and looking at ways they could circumvent the tariffs. Most, however, they admitted that they had few options left to protest the anti-dumping measures as time had run out.

Only one Chinese company was exempted from the EC tariffs. Nantong Huasheng Plastics Products, a Sino-US joint venture that had sought legal counsel separately from the others, was also exempt from a similar anti-dumping suit in 2004 for retail PE bags.

A few Chinese converters were still unaware of the EC’s anti-dumping tariff as the official announcement was likely to be made only on 20 July, said some domestic importers.

“The real impact on short-term spot prices of hdPE film grade and low-density PE (ldPE) film grade has yet to be clear,” said one importer.

Most market players, however, agreed that the demand for both imported and domestic hdPE and ldPE would slow down from September. LdPE is blended with hdPE for packaging applications.

According to the EC’s anti-dumping proposal, the product concerned included almost all types of plastics bags containing at least 20% of PE and of a thickness not exceeding 100 micrometres.

ICIS Shanghai bureau contributed to this article.

By: Becky Zhang
+65 6780 4359

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