India PP dumping: The story continues

By Malini Hariharan

The fight against anti-dumping duties (ADD) imposed by India on polypropylene (PP) exported by Saudi Arabia, Singapore and Oman is not yet over.

Some of the major companies that face ADD have taken the matter to the Indian Customs, Excise and Service Tax Appellate Tribunal and the issue is due to come up for hearing later this month.

Among the producers affected by the ADD are Singapore-based ExxonMobil Chemical Asia Pacific, Saudi Yanbu Petrochemical Company, an affiliate of Sabic, and Saudi Polyolefins Company.

Regular readers of the blog will remember that final ADD was imposed on product from the three countries was imposed last year despite strong protests from exporters.

The duties came after local producers led by Indian major Reliance Industries complained about the heavy influx of product during April-December 2008.

India’s commerce ministry subsequently ruled in favour of the domestic producers and further said that the Saudi formula for pricing propane, feedstock for PP, gives Saudi producers an ‘unfair advantage’ over other international producers. More than the duties the India’s reading of the Kingdom propane discount structure become a matter of concern for the Saudis as they run the risk of similar cases being filed by other countries.

This is the first time that the Saudi price formula for propane and butane, which is linked to naphtha and gives local buyers a discount of around 30% on the Japan CFR (cost and freight) naphtha price, has been termed as unfair by another country.

Saudi Arabia later threatened to take the issue to the World Trade Organization (WTO) but has yet to do so. It has instead been exerting maximum political pressure to ensure that India withdraws the duties. Delegations have been visiting Delhi and the Saudi ambassador to India recently said that the ADD issue is likely to be discussed at a high-level meeting due later this year unless it is resolved quickly. “It will be on the top the meeting’s agenda,” he said.

The Indian government has withstood Saudi pressure quite well so far. But it is uncertain if it can continue to do is given Saudi Arabia’s position as a major supplier of crude oil to the country.

A source familiar with developments told the blog that India’s oil ministry is now involved in the case and will be paying close attention to see that the issue does not create problems in oil supplies.

“They [Saudis] are expecting the duties to be removed; they are confident,” the source added.

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