Latest US, Chinese tariff proposals cover wide swath of petchems, oil products

Author: Al Greenwood

2018/06/18

HOUSTON (ICIS)--The latest tariff proposals by the US and China cover a wide swath of petrochemicals and oil products, with the US list alone covering more than 150 different chemicals and derivatives.

Photo above shows a cargo ship on the Houston Ship Channel. Photo by Al Greenwood

China's proposed tariffs are not as numerous, but it also includes kerosene, diesel and other oil products as well as crude, propane and natural gas.

The American Chemistry Council (ACC) estimates that $5.4bn in US exports of chemicals and plastics would be exposed to China's proposed tariffs. If demand does not decline and tariffs are at 25%, then the Chinese government would collect $1.3bn in duties.

The chemical and refined-products tariffs that were proposed by China and the US made up a second set of duties, and they did not specify a date on which they would go into effect.

The first set from both countries would go into effect on 6 July.

A list of the proposed chemical and oil-product tariffs from China and the US is at the bottom. It includes the codes for each product's harmonised tariff schedule (HTS).

During the year, both the American Fuel & Petrochemical Manufacturers (AFPM) and the American Chemistry Council (ACC) have spoken out against the proposed tariffs.

At the AFPM's International Petrochemical Conference (IPC) in March the group's president deemed a US-China trade war as the No 1 threat to the industry.

The ACC also singled out a trade war during its more recent Annual Meeting, which was held in June.

Following the latest tariff proposals, the ACC said the US chemical industry has now been thrust on to the front lines of a trade war with China.

Market players and executives have been more measured in their response to the proposed tariffs.

For polyethylene terephthalate (PET), the effect should be limited. US imports from China fell sharply since antidumping duties imposed in 2016. Also, China is not among the top sources of imported PET.

For propane, China relies on it as feedstock to produce on-purpose propylene at its propane dehydrogenation (PDH) units.

Market sources said tariffs could disrupt trade flows, but US propane exports will eventually find a destination.

“It could put a damper on propane and butane; however, there are many other markets besides China that have an increasing appetite for both,” said a US-based natural-gas liquids (NGLs) broker.

Chinese tariffs on US acrylonitrile (ACN) exports may cause price inflation in China. However, while trade flows in the region may move around, net flows to global regions will likely remain stable.

According to one producer in the US, trade flows will probably “adjust to fit the new laws but the net flows to the regions will be the same”.

Executives expressed similar sentiments during the most recent earnings conference calls held earlier this year.

Rising demand for products such as polyethylene (PE) will have to be met, regardless of tariffs.

In this scenario, Chinese customers would replace US imports with PE shipments from other countries. The US will then export its PE to customers that saw their resin shipments diverted to China.

With that, trade flows would change, but demand would remain the same.

US polyvinyl chloride (PVC) market players were surprised by the announcements earlier this year that China’s list of potential retaliatory tariffs included polyvinyl chloride (PVC) and feedstock ethylene dichloride (EDC or 1,2-dichloroethane.)

China is the US’s second-largest PVC export market after Canada and the largest buyer of US EDC.

China already has import fees on US PVC, but these are not applied if the resin imported from the US is then made into products that are re-exported. Most US PVC exports to China are treated this way and market participants expect that that arrangement will continue. If that happens, then the proposed tariffs should have little impact on US PVC trade flows.

The fate of US EDC trade with China is harder to discern. It is not clear if the same rules will apply.

Declining shipments in recent months may be an indicator that market participants see that business as threatened by the tariffs.

About 40% of the EDC imported into China in February originated in the US. US EDC exports to China account for about 28% of the nation’s EDC shipments in 2017, according to data from the International Trade Commission (ITC).

US EDC producers have in the past year found new buyers in Brazil and in Europe. In Brazil, Braskem has de-bottlenecked its PVC plant and is buying EDC to increase vinyls production.

In Europe, chlor-alkali plant closures have left a couple of PVC plants in the Mediterranean market without ready access to chlorine. Inexpensive EDC from the US appears to be working for the feedstock.

That has put current estimates of the tariff outcome as likely rearranging trade routes, but not necessarily upsetting the markets.

US proposed tariffs

HTS codes Product
27071000 Crude benzene
27072000 Crude toluene
27073000 Crude xylene
27101930 Lubricating oils, w/or w/o additives, fr petro oils and bitumin minerals (o/than crude) or preps 70%+ by wt fr petro oils
27101935 Lubricating greases from petro oil/bitum min/70%+ by wt fr petro oils but n/o 10% by wt of fatty acid salts animal/vegetable origin
27101940 Lubricating greases from petro oil/bitum min/70%+ by wt fr petro oils > 10% by wt of fatty acid salts animal/vegetable origin
34031910 Lubricating preparations containing 50% but less than 70% by weight of petroleum oils or of oils obtained from bituminous minerals
34031950 Lubricating preparations containing less than 50% by weight of petroleum oils or of oils from bituminous minerals
34039900 Lubricating preparations (incl lubricant-based preparations), nesoi
38112100 Additives for lubricating oils containing petroleum oils or oils obtained from bituminous minerals
38112900 Additives for lubricating oils, nesoi
39011010 Polyethylene having a specific gravity of less than 094 and having a relative viscosity of 144 or more, in primary forms
39011050 Polyethylene having a specific gravity of less than 094, in primary forms, nesoi
39012010 Polyethylene having a specific gravity of094 or more and having a relative viscosity of 144 or more, in primary forms
39012050 Polyethylene having a specific gravity of 094 or more, in primary forms, nesoi
39013020 Ethylene copolymer: Vinyl acetate-vinyl chloride-ethylene terpoly w/ < 50% deriv of vinyl acetate, exc polymer aromatic/mod arom monomers
39013060 Ethylene-vinyl acetate copolymers, nesoi
39019010 Polymers of ethylene, nesoi, in primary forms, elastomeric
39019055 Ethylene copolymers, in primary forms, other than elastomeric
39019090 Polymers of ethylene, nesoi, in primary forms, other than elastomeric
39021000 Polypropylene, in primary forms
39022010 Polyisobutylene, elastomeric, in primary forms
39022050 Polyisobutylene, other than elastomeric, in primary forms
39023000 Propylene copolymers, in primary forms
39029000 Polymers of propylene or of other olefins, nesoi, in primary forms
39031100 Polystyrene, expandable, in primary forms
39031900 Polystyrene, other than expandable, in primary forms
39032000 Styrene-acrylonitrile (SAN) copolymers, in primary forms
39033000 Acrylonitrile-butadiene-styrene (ABS) copolymers, in primary forms
39039010 Methyl methacrylate-butadiene-styrene (MBS) copolymers, in primary forms
39039050 Polymers of styrene, nesoi, in primary forms
39041000 Polyvinyl chloride, not mixed with any other substances, in primary forms
39042100 Polyvinyl chloride, mixed with other substances, nonplasticized, in primary forms
39042200 Polyvinyl chloride, mixed with other substances, plasticized, in primary forms
39043020 Vinyl chloride copolymer: Vinyl acetate-vinyl chloride-ethylene terpoly w/< 50% deriv vinyl acetate, exc polymer aromatic/mod arom monomers
39043060 Vinyl chloride-vinyl acetate copolymers, nesoi
39044000 Vinyl chloride copolymers nesoi, in primary forms
39045000 Vinylidene chloride polymers, in primary forms
39046100 Polytetrafluoroethylene (PTFE), in primary forms
39046910 Fluoropolymers,elastomeric, other than polytetrafluoroethylene, in primary forms
39046950 Fluoropolymers, other than elastomeric and other than polytetrafluoroethylene, in primary forms
39049010 Polymers of vinyl chloride or of other halogenated olefins, nesoi, in primary forms, elastomeric, in primary forms
39049050 Polymers of vinyl chloride or of other halogenated olefins, nesoi, in primary forms, other than elastomeric, in primary forms
39051200 Polyvinyl acetate, in aqueous dispersion
39051900 Polyvinyl acetate, other than in aqueous dispersion, in primary forms
39052100 Vinyl acetate copolymers, in aqueous dispersion
39052900 Vinyl acetate copolymers, other than in aqueous dispersion, in primary forms
39053000 Polyvinyl alcohols, whether or not containing unhydrolyzed acetate groups, in primary forms
39059110 Copolymers of vinyl esters or other vinyls, in primary forms, containing by weight 50% or more of derivatives of vinyl acetate
39059150 Copolymers of vinyl esters or other vinyls, in primary forms, nesoi
39059980 Polymers of vinyl esters or other vinyl polymers, in primary forms, nesoi
39061000 Polymethyl methacrylate, in primary forms
39069010 Acrylic polymers (except PMMA) in primary forms, elastomeric
39069020 Acrylic plastics polymers (except PMMA), in primary forms, nonelastomeric
39069050 Acrylic polymers (except plastics or elastomers), in primary forms, nesoi
39071000 Polyacetals in primary forms
39072000 Polyethers, other than polyacetals, in primary forms
39073000 Epoxide resins in primary forms
39074000 Polycarbonates in primary forms
39075000 Alkyd resins in primary forms
39076100 Polyethylene terephthalate, having a viscosity number of 78 ml/g or higher
39076900 Polyethylene terephthalate, having a viscosity number less than 78 ml/g
39077000 Poly(lactic acid)
39079120 Unsaturated allyl resins, uncompounded
39079140 Unsaturated allyl resins, nesoi
39079150 Unsaturated polyesters, other than allyl resins in primary forms
39079920 Thermoplastic liquid crystal aromatic polyester copolymers
39079950 Other polyesters nesoi, saturated, in primary forms
39081000 Polyamide-6, -11, -12, -6,6, -6,9, -6,10 or -6,12 in primary form
39089020 Bis(4-amino-3-methylcyclohexyl)methaneisophthalic acid-laurolactam copolymer
39089070 Other polyamides in primary forms
39091000 Urea resins; thiourea resins
39092000 Melamine resins
39094000 Phenolic resins
39095010 Polyurethanes, elastomeric, in primary forms
39095020 Polyurethanes: cements, in primary forms
39095050 Polyurethanes, other than elastomeric or cements, in primary forms
39100000 Silicones in primary forms
39111000 Petroleum resins, coumarone, indene, or coumarone-indene resins and polyterpenes, in primary forms
39119010 Elastomeric polysulfides, polysulfones and other products specified in note 3 to chapter 39, nesoi, in primary forms
39119015 Specified carbodiimide or homopolymer with polyethylene thermoplastic goods
39119025 Thermoplastic polysulfides, polysulfones & oth products spec in note 3, chapt 39, cont aromatic monomer units or derived therefrom
39119035 Benzenamine; and hydrocarbon novolac cyanate ester
39119045 Thermosetting polysulfides, polysulfones & oth products spec in note 3, chapt 39, cont aromatic monomer units or derived therefrom
39119070 Chlorinated synthetic rubber
39119090 Polysulfides, polysulfones & other products specified in note 3 to chapter 39, nesoi
39121200 Cellulose acetates, nesoi, in primary forms, plasticized
39122000 Cellulose nitrates (including collodions), in primary forms
39123900 Cellulose ethers, other than carboxymethylcellulose and its salts, in primary forms
39129000 Cellulose and its chemical derivatives nesoi, in primary forms
39131000 Alginic acid, and its salts and esters, in primary forms
39139010 Chemical derivatives of natural rubber, nesoi, in primary forms
39139050 Natural polymers and modified natural polymers, nesoi, in primary forms
39140020 Cross-linked polyvinylbenzyltrimethylammonium chloride (Cholestyramine resin USP)
39140060 Ion-exchangers based on polymers of headings 3901 to 3913, in primary forms, nesoi
39161000 Monofilament with cross-section dimension over 1 mm, rods, sticks, profile shapes, at most surface-worked, of polymers of ethylene
39162000 Monofilament with cross-section dimension over 1 mm, rods, sticks, profile shapes, at most surface-worked, of polymers of vinyl chloride
39169010 Monofilament with cross-section dimension over 1 mm, rods, sticks, profile shapes, at most surface-worked, of acrylic polymers
39169030 Monafilament nesoi, of plastics, excluding ethylene, vinyl chloride and acrylic polymers
39169050 Rods, sticks and profile shapes, at most surface-worked, of plastics, nesoi
39172100 Tubes, pipes and hoses, rigid, of polymers of ethylene
39172200 Tubes, pipes and hoses, rigid, of polymers of propylene
39172300 Tubes, pipes and hoses, rigid, of polymers of vinyl chloride
39172900 Tubes, pipes and hoses, rigid, of other plastics nesoi
39173100 Flexible plastic tubes, pipes and hoses, having a minimum burst pressure of 276 MPa
39173200 Tubes, pipes and hoses, of plastics, other than rigid, not reinforced or otherwise combined with other materials, without fittings
39174000 Fittings of plastics, for plastic tubes, pipes and hoses, nesoi
39191010 Self-adhesive plates, sheets, other flat shapes, of plastics, in rolls n/o 20 cm wide, light-reflecting surface produced by glass grains
39191020 Self-adhesive plates, sheets, other flat shapes, of plastics, in rolls n/o 20 cm wide, not having a light-reflecting glass grain surface
39199010 Self-adhesive plates, sheets, other flat shapes, of plastics, light-reflecting surface produced by glass grains, nesoi
39199050 Self-adhesive plates, sheets, other flat shapes, of plastics, not having a light-reflecting surface produced by glass grains, nesoi
39201000 Nonadhesive plates, sheets, film, foil and strip, noncellular, not reinforced or combined with other materials, of polymers of ethylene
39202000 Nonadhesive plates, sheets, film, foil and strip, noncellular, not reinforced or combined with other materials, of polymers of propylene
39203000 Nonadhesive plates, sheets, film, foil and strip, noncellular, not reinforced or combined with other materials, of polymers of styrene
39204310 Nonadhesive plates/sheets/film/foil/strip made imitation of patent leather, of vinyl chloride polymers, not less 6% plasticizers
39204350 Nonadhesive plate/sheet/film/foil/strip, noncellular, not comb w/other materials, of vinyl chloride polymers, not less 6% plasticizer, nesoi
39204900 Nonadhesive plates, sheets, film, foil, strip, noncellular, not combined w/other materials, of polymers of vinyl chloride, < 6% plasticizers
39205110 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polymethyl methacrylate, flexible
39205150 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polymethyl methacrylate, not flexible
39205910 Nonadhesive plates,sheets, film, foil and strip, noncellular, not combined with other materials, of acrylic polymers, flexible, nesoi
39205940 Transparent sheeting containing 30% or more by weight of lead
39205980 Plates, sheets, film, etc, noncellular, not reinforced, laminated, combined, of other acrylic polymers, nesoi
39206100 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polycarbonates
39206200 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polyethylene terephthalate
39206310 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of unsaturated polyesters, flexible
39206320 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of unsaturated polyesters, not flexible
39206900 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polyesters, nesoi
39207100 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of regenerated cellulose
39207300 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of cellulose acetate
39207905 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of vulcanized fiber
39207910 Nonadhesive films, strips, sheets, noncellular, not combined with other materials, of other cellulose derivatives nesoi, n/o 0076 mm thick
39207950 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of cellulose derivatives, nesoi
39209100 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polyvinyl butyral
39209200 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polyamides
39209300 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of amino-resins
39209400 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of phenolic resins
39209910 Nonadhesive film, noncellular, not combined with other materials, of plastics nesoi, flexible, over 0152mm thick, not in rolls
39209920 Nonadhesive film, strips and sheets, noncellular, not combined with other materials, of plastics nesoi, flexible
39209950 Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of plastics, nesoi
39211100 Nonadhesive plates, sheets, film, foil and strip, cellular, of polymers of styrene
39211211 Nonadhesive plates, sheets, film, foil, strip, cellular, of polymers of vinyl chloride, with man-made textile fibers, over 70% plastics
39211215 Nonadhesive plates, sheets, film, foil, strip, cellular, of polymers of vinyl chloride, with man-made textile fibers, n/o 70% plastics
39211219 Nonadhesive plates, sheets, film, foil and strip, cellular, of polymers of vinyl chloride, combined with textile materials, nesoi
39211250 Nonadhesiveplates, sheets, film, foil and strip, cellular, of polymers of vinyl chloride, not combined with textile materials
39211311 Nonadhesive plates, sheets, film, foil and strip, cellular, of polyurethanes, with man-made textile fibers, over 70% plastics
39211315 Nonadhesive plates, sheets, film, foil and strip, cellular, of polyurethanes, with man-made textile fibers, not over 70 percent plastics
39211319 Nonadhesive plates, sheets, film, foil and strip, cellular, of polyurethanes, combined with textile materials nesoi
39211350 Nonadhesive plates, sheets, film, foil and strip, cellular,of polyurethanes, not combined with textile materials, nesoi
39211400 Nonadhesive plates, sheets, film, foil and strip, cellular, of regenerated cellulose
39211900 Nonadhesive plates, sheets, film, foil and strip, cellular, of plastics nesoi
39219011 Nonadhesive plates, sheets, film, foil, strip, of noncellular plastics combined with man-made fibers, n/o 1492 kg/sq m, over 70% plastics
39219015 Nonadhesive plates, sheets, film, foil, strip, of noncellular plastics combined with man-made fibers, n/o 1492 kg/sq m, n/o 70% plastics
39219019 Nonadhesive plates, sheets, film, foil and strip, of noncellular plastics combined with textile materials, nesoi, not over 1492 kg/sq m
39219021 Nonadhesive plates, sheets, film, foil and strip, of noncellular plastics combined with cotton, over 1492 kg/sq m
39219025 Nonadhesive plates, sheets, film, foil and strip, of noncellular plastics combined with man-made fibers, over 1492 kg/sq m
39219029 Nonadhesive plates, sheets, film, foil and strip, of noncellular plastics combined with textile materials, nesoi, over 1492 kg/sq m
39219040 Nonadhesive plates, sheets, film, foil and strip, flexible, nesoi, of noncellular plastics
39219050 Nonadhesive plates, sheets, film, foil and strip, nonflexible, nesoi, of noncellular plastics

Chinese proposed tariffs

HTS code Product
27040010 Coke and semi-coke
27040090 Carbon
27050000 Gas, water gas, furnace gas and similar gases
27074000 Naphthalene
27075000 250°C distilled aromatics ≥65% of other aromatic mixtures
27079990 Other aromatic products such as distilled coal tar
27081000 Tar asphalt
27082000 Tar asphalt coke
27090000 Petroleum oils and oils obtained from bituminous minerals, crude
27101210 Vehicle gasoline and aviation gasoline
27101220 Naphtha
27101230 Rubber solvent oil, paint solvent oil, extraction solvent oil
27101291 Nonene
27101299 Other light oil fraction products
27101911 Aviation kerosene
27101912 Lamp kerosene
27101919 Other kerosene fraction products
27101922 Fuel oil No 5, No 7
27101923 Diesel
27101929 Other fuel oil
27101991 lubricating oil
27101992 Grease
27101993 Lubricant base oil
27101994 Liquid paraffin and heavy liquid paraffin
27101999 Other heavy oil and heavy oil products
27102000 Product oil containing biodiesel and products based on it
27109100 Polychlorinated biphenyls (PCBs), PCT (PCTs), Polybrominated biphenyls (PBBs), waste oil
27109900 Other waste oil
27111200 Liquid propane
27111310 Liquefied butane infused cigarette lighter
27111390 Other liquefied butane
27111910 Other liquefied fuels infused with cigarette lighters
27111990 Other LPG and hydrocarbon gases
27112100 Gaseous natural gas
27112900 Gaseous petroleum gas and other hydrocarbon gases
27121000 Vaseline
27122000 Paraffin, oil content by weight <0.75%
27129010 Microcrystalline wax
27129090 Other mineral waxes and similar products
27131110 Sulfur content is less than3% of uncalcined petroleum coke
27131190 Other uncalcined petroleum coke
27131210 Sulfur content is less than 0.8% of calcined petroleum coke
27131290 Other calcined petroleum coke
27132000 asphalt
27139000 Other oil residues
27141000 Asphalt shale, oil shale and tar sand
27149010 Natural asphalt (Asphalt)
27149020 Emulsified asphalt
27149090 Asphalt rock
27150000 Asphalt mixture based on natural asphalt, etc.
34031900 Mineral oil 70% of lubricant
34039900 Oil-free or oil extracted from bituminous minerals
39011000 Polyethylene having a specific gravity of less than 0.94, in primary forms
39014090 Other ethylene alpha olefin copolymers with a specific gravity of less than 0.94
39019090 Other polymers of ethylene, in primary forms
39041090 Polymers of vinyl chloride or of other halogenated olefins, in primary forms
39069090 Other primary shape acrylic polymers
39072090 Other primary-shaped polyethers
39073000 Primary shape epoxy
39074000 Primary shape polycarbonate
39079999 Polyacetals, other polyethers and epoxide resins, in primary forms; polycarbonates, alkyd resins, polyallyl esters and other polyesters, in primary forms  (3)
39081011 Polyamide-6,6
39089010 Aromatic polyamides and their copolymers
39089020 Semi-aromatic polyamides and their copolymers
39089090 Other polyamides in primary form
39100000 silicones in primary form
39119000 Petroleum resins, coumaroneindene resins, polyterpenes, polysulphides, polysulphones and other products specified in Note 2 to this Chapter, not elsewhere specified or included, in primary forms  (6)
39121100 Primary-shaped, unplasticized cellulose acetate
39199090 Other self-adhesive plastic plates, sheets, films and other materials
39201090 Other vinyl polymer boards, sheets, films, foils, etc.
39206200 Plates, sheets, film, foil and strip, of poly(ethylene terephthalate), noncellular and not reinforced, laminated, supported or similarly combined with other materials
39209990 Other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials  (3)
39219090 Other Plastic Plates, Sheets, Films, Foil and Strips
39269090 Other plastic products
40023990 Halogenated butyl rubber sheet, sheet, tape

Additional reporting by David Haydon, Bill Bowen, Lucas Hall, Amanda Hay and Steven McGinn