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

Source: ICIS News

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