China targets US PVC, EDC with tariffs

The list of potential tariffs proposed by China on 4 April hits the US vinyls industry directly with proposed tariffs of 25% on polyvinyl chloride (PVC) and ethylene dichloride (EDC).

China is the second largest foreign market for US PVC, taking about 11% of total US exports, or about 306,079 tonnes in 2017, according to US government trade figures. Those sales came to about $250m in 2017.

China is the top destination for US EDC, a PVC feedstock. China bought 370,844 tonnes of EDC in 2017, according to data from the US International Trade Commission (ITC). That is 28% of all US EDC exports. EDC values are only about a quarter of those for PVC.

“I was still worried about NAFTA when the administration started messing with China,” said a representative of a major US PVC producer.

He gave several reasons for supporting trade agreements. They create steady, predictable sales, build trusted market structures, maximise economic efficiencies and strengthen international connections and interactions.

China’s list of potential tariff targets is in response to the $60bn in tariffs proposed by the US. Recently, China listed ethanol as subject to 15% in additional tariffs in response to the US action. Most of the items targeted were agricultural products, including fruits, nuts, wine and a few other items, including recycled aluminium.

On 4 April, China issued a broader list of proposed tariff targets, dragging in PVC, EDC and some forms of polyethylene (PE), particularly low density polyethylene (LDPE) and linear low density PE (LLDPE).

The trade fight has been a concern among US chemical executives, and it provided a subtext to the recent International Petrochemical Conference (IPC), held in San Antonio, Texas, by the American Fuel & Petrochemical Manufacturers (AFPM).

China has become a ready buyer of chemicals from the US, especially low-cost plastics made from ethane derived from abundant shale gas.

EDC exports to China eased back in 2017, but US PVC exports to China have been growing.

Buying interest from China has helped chemical manufacturing become one of the strongest job creators in the US, with several plant expansions for plastics now in the works aimed at growing Asia markets. Two US PVC manufacturers, Formosa Plastics and Shintech, have production expansions in the works to meet rising global demand for the resin.

The US exported 31% of the PVC produced in 2017, according to the ITC.

Major US PVC producers include Occidental Chemical, Westlake Chemical, Shintech and Formosa Plastics.