China methanol ADD draws mixed reactions from SE Asia producers

26 October 2010 07:24  [Source: ICIS news]

By Heng Hui

SINGAPORE (ICIS)--China’s imposition of antidumping duties (ADD) on methanol imports drew mixed reactions from affected producers, with one considering halting shipments to the key market in the region next year, industry sources said on Tuesday.

China announced late on Monday that provisional ADDs above 9% would apply on methanol imports from Petronas of Malaysia, Kaltim Methanol Industri of Indonesia and Methanex New Zealand, effective 28 October.

Petronas of Malaysia was not concerned about the new trade policy on methanol, given current strong margins as Chinese prices remained high, a company source said.

China slapped a 9.3% duty on methanol from Petronas.

“The net effect is only over 4%, and China’s spot price is way above that percentage as compared to selling in other Asian countries,” the company source said.

As of last week, methanol was trading at around $360/tonne (€259/tonne) CFR China, its highest level since October 2008. This represented a 16% jump from the start of the year, based on ICIS data.

PT Kaltim Methanol Industri of Indonesia, meanwhile, was looking at an extreme measure of stopping exports to China in 2011, citing strong disadvantages with the tariff in place, said a company source.

Kaltim Methanol would be required to pay 9.4% tariff for product shipments into China, which meant that its imports would be more expensive than cargoes coming from the Middle East, said the source.

Methanex New Zealand could not be reached for comment.

Meanwhile, China had not imposed ADDs on Saudi Arabian producers after concluding - after more than a year of review - that these producers had not engaged in dumping activities.

“Everyone will complain except for the Saudis, and the real tax rate will be determined from 24 December,” said the Kaltim Methanol source.

China is conducting a second round of investigation on dumping activities until 24 December, when the final ADD rates were expected to be imposed. Affected producers were given 20 days to submit comments on the policy to the Ministry of Commerce.

China had launched the investigations on suspected dumping activities by Malaysia, Indonesia, New Zealand and Saudi Arabia in June 2009, as production rates at local plants tanked to just 30% in the first quarter and methanol prices declined $165-175/tonne (€134-142/tonne) CFR (cost and freight) China.

In 2009, Malaysia’s methanol exports more than doubled to 302,000 tonnes, Indonesia’s shipments totalled 226,000, up 63% from 2008 and from New Zealand, a total of 329,000 tonnes i was sent in 2009 from just 115,000 tonnes in 2008, based on industry estimates.

Methanol is used in the production of formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. It also has fuel applications - dimethyl ether (DME), biodiesel - and could be blended directly into gasoline.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Heng Hui
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