SAN ANTONIO (ICIS)--A number of industry executives attending this year’s International Petrochemical Conference underscored the importance of free trade, and are wary of the protectionist stance taken by the US and China against each other in recent weeks.
Although most chemicals are not expected to be hit by the tariffs, concerns that a trade war is brewing between the biggest and second-biggest economies of the world have been weighing down on market sentiment, creating uncertainties that tend to slow trade down.
Expectations that the US and China will begin negotiations this week provided a lift to the global equities markets.
“Free and fair trade has been good for our country, for US consumers and for us [the chemical industry]. Global demand for our projects continues to rise [and] this is why we support NAFTA [the North American Free Trade Agreement between the US, Mexico and Canada],” American Fuels & Petrochemicals Manufacturers (AFPM) CEO Chet Thompson said.
Based on estimates from the American Chemical Council (ACC), some $133bn worth of industry investments may be at risk by the US decision to impose import tariffs of 25% on steel and 10% on aluminium.
Last week, US President Donald Trump announced that tariffs may be imposed on up to $60bn worth of Chinese goods, to which China responded with a plan to slap tariffs on 128 US goods, including pork (25%) and recycled aluminium, and American steel pipes (15%).
On 26 March, China proposed to hike tariffs on US ethanol to 45% from 30% currently. The US is China’s top suppliers of ethanol.
Middle East-based companies EQUATE Petrochemical in Kuwait and Qatar Chemical also weighed on the call for trade liberalisation.
“We, as a company, believe in free trade. This is what we think is optimal for the world, so I would say that at this stage, there is no major impact but we are keeping an eye on it,” EQUATE Petrochemical CEO and president Ramesh Ramachandran said.
“Clearly, the right thing for the entire industry is for free trade to exist across the world,” he said.
Qatar Chemical (Q-Chemical) chief executive Nasser Jeham Al-Kuwari warned that putting up trade barriers would affect projects in the US, echoing ACC’s comments.
“The US must play it smart. Tariffs would hurt [the] industry [of both the US and China]… they should talk to each other,” Al-Kuwari said.
Other industry players are not too concerned about the possibility of a trade war between the US and China, upbeat that the current tensions will ease and will be resolved soon enough.
At the close of China's National People's Congress on 20 March, China Premier Li Keqiang had said that no winner will emerge from a trade war scenario as it goes against the foundations of trade, which are negotiation, consultation and dialogue, and pledged to continue to cut import tariffs.
Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 25-27 March in San Antonio, Texas.
Focus article by Pearl Bantillo