Corrected: China imposes provisional ADD on caprolactam from the US, EU

24 January 2011 07:18  [Source: ICIS news]

Imports of capro from the EU and US are now subjected to leviesCorrection: In the ICIS story headlined "China imposes provisional ADD on caprolactam from the US, EU" dated 24 January 2011, please read in the 12th paragraph ... selling capro in China at far higher prices than in [the] EU and America ... instead of ... selling capro in [the] EU and America at far higher prices than in China .... A corrected story follows.

By Fanny Zhang

GUANGZHOU (ICIS)--China announced on Monday anti-dumping duties (ADD) on caprolactam imported from the US and EU, a move industry sources said will pose short-term pain to the downstream nylon sector but will benefit the entire chain in the long term.

Effective 25 January, provisional duties ranging from 4.3% to 25.5% would apply as temporary anti-dumping measures on caprolactam (capro) imported from the EU and the US, said China’s Ministry of Commerce. (Please see table below)

Domestic nylon producers, the biggest downstream industry for capro, feel squeezed as the duties are an additional cost.

“This will definitely increase our cost, as we’re mainly buying [capro] from BASF and DSM. Their products have higher quality against domestic ones,” said a source from Guangdong Xinhui Meida Nylon.

Most nylon producers said they had not made a decision on whether to increase their domestic purchases as they needed to consider several factors such as price, quality and delivery terms. 

One nylon producer based in Hebei province said China’s heavy dependence on capro imports was not good for the industry as overseas suppliers could raise their prices whenever they wished.

“Domestic capro demand stands at around 1.2m tonnes/year at present, while capacity is only some 500,000 tonnes/year. So, almost all nylon producers need to buy the material from overseas,” the source said, adding that his company procures 80%-90% from domestic markets.

The anti-dumping move could also help support a capacity expansion of domestic production, some industry players said.

“If dumping continues, [the] domestic industry would [find it] hard to survive and downstream industries’ margins, already razor-thin, would be eroded further,” said one trader, adding that the entire chain’s distribution of profits should not be restricted to the upstream sector.

“By constraining imports, the measure brings room for domestic producers [to lift] their capacities. Once they shake off their dependence on imports, our entire industry would have [a] louder voice in [the] international market,” said the trader.

However, overseas capro suppliers were disappointed with the ADD.

“It’s hard to understand [why the ADD was introduced] as [China does not have] enough capacity to meet demand. Further, we’re selling capro in China at far higher prices than in [the] EU and America,” said one major capro producer based in Europe.

One Japan-based capro supplier was taken aback saying: “How will the Chinese nylon makers survive?"

In the spot market, talk of higher priced spot deals of Belarus origin reaching the $3,300/tonne (€2,409/tonne) CFR (cost & freight) China mark, along with the newly announced anti-dumping measures swept most market players to the sidelines on Monday.

The market was also quiet because of a lack of clear direction and a slowdown ahead of the Lunar New Year holidays in early February, traders said.

Capro spot prices rose by $70-100/tonne week on week to $3,120-3,200/tonne CFR Taiwan and $3,140-$3,200/tonne CFR China on 19 January, ICIS data showed.

This is the highest price for capro since records were maintained from early 2008.

February contracts of Japanese origin were also heard as going to be offered at close to $3,250/tonne CFR NE (northeast) Asia, one northeast Asian distributor and one Taiwan-based buyer said.

The tight supply also caused January contract prices to be concluded at $2,950-2,960/tonne CFR NE Asia, up by $150-160/tonne compared with December, ICIS data showed.

The Chinese government started a one-year anti-dumping investigation in April 2010.

One major nylon producer in Taiwan said the temporary measures might be reviewed after June as there was typically a six-month gap between the ruling of the provisional and final rates.

Company

ADD (%)

EU

DSM Fibre Intermediates

8

LANXESS

13.3

UBE Chemical Europe

4.3

BASF Antwerpen

12.1

DOMO Caproleuna

4.3

Zaklady Azotowe W Tarnowie-Moscicach

20.4

Zaklady Azotowe “Pulawy”

15.5

All others

25.5

The US

DSM Chemicals North America

11

Honeywell Resins & Chemicals

6.6

BASF

12.1

All others

24.2

($1 = €0.73)

Additional reporting by Junie Lin

For more on caprolactam, visit ICIS chemical intelligence
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Fanny Zhang
+65 6780 4359



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