FOCUS: China PVC exporters hit by Turkey quota

02 April 2007 07:52  [Source: ICIS news]

By Yao Wang

SINGAPORE (ICIS news)--Turkey has slapped a new quota on Chinese polyvinyl chloride (PVC) resin imports on expiry of temporary tariffs imposed over a year ago expired, market sources in China said on Monday.

The Turkish Council of Ministers has agreed to introduce a new quota on Chinese imports effective March 21, sources said, adding that the anti-dumping investigation was concluded without adding further measures.

Eight Chinese producers -- Shanghai Chlor-alkali, Qilu Petrochemicals, LG Dagu, Tianjin Dagu, Xinjiang Tianye, Yibin Petrochemicals, Yuhang and Sinochem – will be qualified to export PVC to Turkey with total annual quota of 25,000 tonnes for general trade in 2007.

This will be followed by an annual increment of 5% for the next 5 years till 2011. The China Chlor-Alkali Industry Association will be responsible for coordinating internal quota allocation, they added.

The Turkish move, however, disappointed many Chinese market players who were expecting Sino-Turkey PVC trade volumes to be brought back to the pre-anti dumping levels.

“Based on our historical export volumes to Turkey, 25,000 tonnes only account for a couple of months of our trading volume to Turkey. Eight producers to share the quota of two months volume of one supplier in a year, I would say the decision is next to nothing,” lamented one of the selected Chinese producers.

Chinese PVC exports to Turkey surged after February 2006, with imports reaching up to 15,000 tonnes/month last summer.

This led the Turkish Council of Ministers to impose temporary protective measures on PVC imports from China to investigate the possible damages and threats on the production or competition.

In mid-August 2006, Turkey decided to impose temporary protective measures against Chinese PVC imports by imposing a collateral requirement of $320/tonne for 200 days.

Import figures for Chinese PVC fell sharply as a result, as most buyers were reluctant to pay this additional amount and cancelled their orders. Chinese suppliers had to divert their material to destinations other than Turkey.

The anti-dumping measure met with opposition from many local converters in Turkey who complained that it reduced their competitiveness in the export market.

Non-profit organisations in the Turkish plastics industry also opposed the decision, saying that the imposed measures curtailed the competitive opportunities of the local PVC converters.

They added that the domestic producer, state-owned Petrokimya Holding (Petkim), can only supply 21% of the total PVC requirements of the country and the $320/ton additional tax would do nothing but increase the domestic and import feedstock prices

Chinese PVC imports in the last three months of 2006 were about equal to the amount imported in a single month before the anti-dumping was put into practice. Only buyers with re-export incentives were interested in this origin at that time.

Some industry sources speculated that the protective measures were prompted by on-going talks to privatise Petkim. As much as 51% of Turkey’s sole producer of basic chemicals and thermoplastics, with 200,000 tonnes/year PVC capacity, is up for sale by mid-Jun 2007.

Aiming to attract investors in a favorable bidding environment, Turkish authorities had implemented protective measures since 2003, they added.

However, the sale was dogged by problems including an earthquake which damaged some of the company’s facilities and the failure in 2003 of potential suitor Standart Kimya to come up with the required cash, industry sources said.

Some Chinese market players also believe that this is not the end of the talks between China and Turkey, but rather the beginning of the next round of talks as they suspect the Turkish government is trying to gain more bargaining power in the face of a ballooning trade imbalance between the two countries.

“Judging by the measures, which are particular to China, the Turkey government seems to be trying to put more pressure on China to reduce the trade surplus between the two countries. So it looks like this is not the end,” said a Chinese trader in Mandarin.

“It is not enough. We will continue to talk with our Turkish counterparts and the government officials to achieve free trade,” said one of the selected Chinese producers in Mandarin.

By: Yao Wang
+65 6780 4359

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