China is set to impose more antidumping duties (ADDs) on chemical imports this year amid escalating trade tensions with the US. However, there has been no major shift in market sentiment for the affected products. Market players are still mulling the long-term implications of these duties.
China on 4 April imposed tariffs of 25% on 106 products originating from the US, but did not provide a firm timeline on when they will be implemented. The tariffs will 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.
BUTYL GLYCOL DUTIES
The country’s Ministry of Commerce on 4 April raised the antidumping duties (ADDs) for butyl glycol (BG) and butyl di-glycol (BDG) originating from the US and the EU.
In comparison, China 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 from 13 February this year after starting a probe in June 2017. The final decision on the ADDs is expected to be released in June 2018.
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 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 lacklustre, 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 was 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, China is expected to encourage demand for the raw material.
Prior to the 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%.
LOOKING TO MIDDLE EAST PHENOL
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.
ADD CASE ON ODCB
Apart from phenol, China has also filed a new antidumping 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 involve 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.
NBR PROBE 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 November 2018 or may even be extended until 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 South 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.
Additional reporting by Nurluqman Suratman, Li Li Chng, Helen Yan and Melanie Wee