China ethanolamines players cautious as initial ADDs take effect

24 July 2018 05:20 Source:ICIS News

SINGAPORE (ICIS)--China’s ethanolamines players have started import discussions about two weeks since preliminary antidumping duties (ADD) on imports took effect on 23 June, but have remained largely cautious about the market.

Activity in the spot import market had slowed down from late May to mid-July on concerns about the ADDs, which were slapped on material from the US, Saudi Arabia, Malaysia and Thailand, with rates ranging from 11.7% to 97.3%.

Discussions restarted in the second half of July after “weeks of silence”, market sources said, but buyers currently have sufficient stocks to last them throughout this month, and have the option to procure local cargoes.

Last week, import offers to China were generally lower from some of the affected producers.

To take into account the impact of ADDs, ICIS has started normalising the CIF (cost, insurance & freight) China assessments for monoethanolamines (MEA), diethanolamines (DEA) and triethanolamines (TEA) to a non anti-dumping duty (ADD) basis, but still subject to 6.5% import duty.

Spot CIF China prices of MEA, TEA and DEA were assessed at $1,150/tonne; $1,160/tonne; and $1,175/tonne, respectively, in the week ended 18 July,  according to ICIS data.

China is a major importer of ethanolamines in Asia.

In March, its imports of the material stood at 19,498 tonnes, more than double February’s volume and up 31% year on year, official data showed.

While the ADD imposition was widely expected to be announced sometime in June, the magnitude of the duties announced stunned market players.

The ADD rates were higher than expected and some market players are expected to appeal for a reduction before the final rates are set.

China’s ADD probe is expected to complete by 30 October 2018 and may be extended to 30 April 2019.

With high preliminary ADDs in place, US and Thailand ethanolamines may be shunned by Chinese buyers.

The impact for US and Thailand cargoes may not be extensive as China has been largely importing from Saudi Arabia and Malaysia lately, some market sources said.

Saudi Arabian cargoes are subject to a 6.5% import duty but were slapped with lower ADD rates, while those from Malaysia are duty-exempt with relatively low ADD rates.

China’s ADDs could translate to increased availability of import supply to other markets such as India and southeast Asia gradually.

Some producers may opt to allocate more cargoes to other markets in Asia or beyond the region, while others could focus on catering to their local markets.

But it would be difficult to remove China as an export market given its size, market players said.

As an offshoot of Chinese ADDs, ethanolamines production may be ramped up in China and in those Asian countries that are not affected by the measure.

Import sellers and buyers in China held mixed expectations about whether the final rates could change significantly from the preliminary numbers and preferred to observe the situation.

Upcoming spot trades or discussions in the next few months could exert influence on the final findings of the ADD investigation, market sources said.

Focus article by Kheng Wee Loy

Picture: Soaps. Ethanolamines are used in personal care and household products, detergents and herbicides. (Source: Monkey Business Images/REX/Shutterstock)

By Kheng Wee Loy