12 April 2007 00:05 [Source: ICIS news]
HOUSTON (ICIS news)--Colombia has temporarily lowered import tariffs for low density polyethylene (LDPE) to 10% from 15% to alleviate supply problems in the country, market sources said on Wednesday.
Colombian resin buyers sought lower import tariffs to offset the decline of Venezuelan products coming into the country and to compensate for lower domestic production.
The measure also has volume limitations, the source said. The lower tariff rate will apply only to 16,109 tonnes entering the country during the 1 March-6 June period.
The new rule does not apply to other grades of polyethylene (PE).
The usual importers will share 90% of the total allocated volume at the lower tariff, while new importers will share the remaining 10%.
To qualify, established importers must have imported product for no less than two years during the 2004-2006 period, and will receive an allocation derived from the percentile participation of each importer during at least two of the above shown years.
New importers are those who did not import product during the above-mentioned years.
Although the decree has been in effect since 21 February, the allocations have been done recently, a source said. This means that the 16,109 tonnes of material will enter Colombia in the next eight weeks.
The flow of Venezuelan resins into Colombia diminished considerably due to increased domestic demand in Venezuela. The shortages created unmanageable supply gaps for Colombian buyers.
Ecopetrol production has been hampered by shortages of ethylene and frequent technical problems in one of two production units.
LDPE production in Colombia reached only 2,620 tonnes in March, according to Ecopetrol. Normal production averages about 4,000 tonnes/month, a company source said.
Despite the lower tariffs, LDPE supply in Colombia remains tight, according to domestic buyers and sellers.
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