SINGAPORE (ICIS)--China is set to impose more anti-dumping duties (ADDs) on chemical imports this year amid escalating trade tensions with the US but there has been no major shift in the market sentiment for the affected products.
Market players are still mulling the long-term implications of these duties.
China on Wednesday increased tariffs on 106 products originating from the US by 25%, but did not provide a firm timeline on when they will be implemented.
The tariffs would be 25% and cover medium density PE (MDPE), all grades of low density PE (LDPE) and most grades of linear low-density PE (LLDPE).
Beijing’s announcement came hours after the US said that it would slap 25% tariffs on some 1,300 industrial products from China, which included chemicals and motor vehicles.
China had earlier announced several new ADD rulings on different chemicals in the first quarter, including bisphenol A (BPA) and styrene monomer (SM), with another five awaiting a final decision by the country’s commerce ministry sometime this year. (please see table below)
The country’s Ministry of Commerce on 4 April raised the anti-dumping duties (ADDs) for butyl glycol (BG) and butyl di-glycol (BDG) originating from the US and the EU.
In comparison, the country finalised four ADDs on chemical imports in 2017, one in 2016 and two in 2015.
China started to impose preliminary ADDs on SM of South Korea, Taiwan and US origin started from 13 February this year after starting a probe in June last year. The final decision on the ADDs is expected to be released in June this year.
Prices of imported styrene have been higher than those of domestic cargoes since 2017, traders said, adding that with the ADD imposed, the domestic styrene industry could be pushed to the brink of overcapacity.
The Ministry of Commerce later on 28 February finalised the ADDs of 9.7% on imports of BPA from Thai producer PTT Phenol, and a 31% rate for all other Thai producers with effect from 6 March.
Import demand for BPA in China has since been lackluster, with trade activity partly hampered by a wide buy-sell gap.
Preliminary ADD deposits of 10.1% were levied on BPA imports from PTT Phenol in November 2017. The probe on imports of the raw material from Thailand began in March 2017.
Spot prices of BPA on a CFR (cost and freight) China basis stood at $1,635/tonne as of 30 March 2018, slightly down from month-earlier levels at $1,655/tonne CFR China, according to ICIS data.
However, ongoing or upcoming plant turnarounds are expected to cushion the BPA market in the near term, even as buying appetite is curbed ahead of the Qing Ming holiday in China and Taiwan on 4-6 April.
Moreover, expanded downstream capacity such as Wanhua Chemical’s 70,000 tonne/year polycarbonate (PC) plant located in Yantai, Shandong is expected to encourage demand for the raw material.
Prior to the ADD probe, China’s imports of BPA from Thailand were exempt from ADD.
BPA imports from Taiwan, South Korea, Japan and Singapore are subject to ADD, which range from 4.7-37.1%.
Further upstream, the ministry of commerce on 26 March began investigations on phenol imports from the US, EU, South Korea, Japan and Thailand, prompting some Chinese importers to look towards the Middle East as a source of deep-sea phenol.
The ministry’s probe is expected to be completed before 26 March 2019, but may extend by another six months.
China-based phenol traders said that the probe has not caused any short-term panic in the market but will result in a short-term boost for domestic prices.
Apart from phenol, China has also filed a new anti-dumping case on ortho dichlorobenzene (ODCB) imports from Japan and India this year, while five other chemicals currently under probe are pending a ruling this year.
Of the five pending cases, four involves US suppliers. Market sources said that it is almost certain that the four chemical products involved in the probe will have ADDs imposed on them following increased trade tensions between the US and China.
Meanwhile, the probe on anti-dumping of Korean and Japanese acrylonitrile butadiene rubber (NBR) imports into China is still ongoing.
“It is still too early to say what the impact will be, given that the ADD probe is still ongoing and there is still time,” a Japanese NBR maker said.
The ADD probe is a year-long investigation and the final decision is only expected in Nov 2018 or may even be extended till May 2019, according to the Chinese authorities.
Currently, there is no significant impact on NBR import prices into China, according to northeast Asian NBR makers.
Japan-origin NBR is usually a premium grade and caters mostly to long-term contract customers while Korea-origin NBR is usually sold on a spot basis.
However, if ADDs were to be imposed, and if the ADDs are hefty, NBR producers from South Korea and Japan will likely consider diverting their exports to other markets in Asia including southeast Asia and India.
|ADD rulings announced in 2018|
|1||Ortho chloro para nitro aniline (OCPNA)||India||ADD, anti-subsidy duty, 5 years from 13 Feb||Final ruling|
|2||Bisphenol-A (BPA)||Thailand||ADD, 5 years from 6 Mar||Final ruling|
|3||Methyl isobutyl ketone (MIBK)||South Korea, Japan, South Africa||ADD, 5 years from 20 Mar||Final ruling|
|4||Meta phenoxy benzaldehyde (MPB)||India||Deposits, from 8 Feb||Preliminary ruling|
|5||Styrene monomer (SM)||US, South Korea, Taiwan||Deposits, from 13 Feb||Preliminary ruling|
|6||Butyl glycol (BG) and Butyl di-glycol (BDG)||US, EU||ADD from 12 April||Final ruling|
|Expired ADDs now under review|
|1||Nonyl phenol||India, Taiwan||Under review, ADD continues||5 year ADD expired on 28 Mar|
|2||Resorcinol||US, Japan||Under review, ADD continues||5 year ADD expired on 22 Mar|
|Probes pending for ruling in 2018|
|1||Halogenated butyl rubber||US,EU,Singapore||Under probe||starts from 30 Aug 2017|
|2||Hydrogen Iodide (HI)||US, Japan||Under probe||starts from 16 Oct 2017|
|3||Monoethanolamine (MEA)||US, Saudi Arabia, Malaysia, Thailand||Under probe||starts from 30 Oct 2017|
|4||Acrylonitrile-butadiene rubber (NBR)||Japan, South Korea||Under probe||starts from 9 Nov 2017|
|5||Butanol||US, Malaysia, Taiwan||Under probe||starts from 29 Dec 2017|
|Products being probed in 2018|
|1||Phenol||US, EU, South Korea, Japan, Thailand||Under probe||starts from 26 Mar|
|2||Ortho dichlorobenzene (ODCB)||Japan, India||Under probe||starts from 23 Jan|
|Products with ADD due to expire in 2018|
|1||Toluidine||EU||ADD, 28 Jun 2013 - 27 Jun 2018|
|2||BPA||Japan, South Korea, Singapore, Taiwan||ADD, 30 Aug 2013 - 28 Aug 2018|
|3||Polyvinyl chloride (PVC)||US, South Korea, Japan, Taiwan||ADD, 28 Sep 2015 - 27 Sep 2018|
|4||Methyl ethyl ketone (MEK)||Japan, Taiwan||ADD, 21 Nov 2013 - 20 Nov 2018|
With additional reporting by Nurluqman Suratman, Li Li Chng, Helen Yan and Melanie Wee
Top Image: World’s largest automated port in Shanghai, China. (Photographer: Imaginechina/REX/Shutterstock)
Focus article by Fanny Zhang