NPRA ’10: Protectionism, new capacities loom over Asia MEG

29 March 2010 00:33  [Source: ICIS news]

By Tahir Ikram

SAN ANTONIO, Texas (ICIS news)--The monoethylene glycol (MEG) market in Asia faces a challenge from protectionism and new capacities in the short term, although the long-term outlook is healthy, a senior industry executive said on Sunday.

“Protectionism is a concern,” the executive - who asked not be named - said on the sidelines of the International Petrochemical Conference (IPC) in San Antonio, Texas.

China and India – the two biggest demand-growth sources for MEG – and Turkey were a source of concern for protectionism, the executive said.

Although no anti-dumping duty (ADD) was imposed by China and India on MEG imports recently, the executive said there was “enough noise in the system” to cause concern.

Turkey, another major market, has also been looking at imposing ADDs against Saudi Arabia and Kuwait for MEG.

Dumping, under international trade law, occurs when a manufacturer in one country exports a product to another country at a price which is either below the price it charges in its home market or below its cost of production.

The affected producers contend that the charges are baseless, even as producers in India and China argue to the contrary.

“There is no protectionism in India,” said Bijoy Chatterjee, secretary of Chemicals & Petrochemicals at India’s Ministry of Chemicals & Fertilizers. “We are doing all, within the framework of the law,” Chatterjee told ICIS news.

Demand growth in China and India, estimated up to 7-8% annually, was giving strong support to the MEG market in the region.

According to industry sources, the total global demand for MEG, a commonly used intermediate in the production of polyester fibres that go into clothes, was estimated at 19m tonnes/year.

The global demand growth for MEG was seen at up to 6%, although new capacities in the Middle East and Asia were threatening to keep the market under pressure for a couple of years.

In recent months industry players have expressed concern over new MEG capacities emerging from two news plants in Saudi Arabia (PetroRabigh and Sharq) and the Shell Chemicals plant in Singapore.

“The new capacity is estimated to be 40% to 50% more than what the world wants,” the executive said, but added the market in Asia remained “resilient”.

Hosted by the National Petrochemical & Refiners Association (NPRA), the IPC continues through Tuesday.

To discuss issues facing the chemical industry go to ICIS connect

By: Tahir Ikram
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