SINGAPORE — Tempers are flaring among petrochemical producers in the Asia-Pacific region over dumping allegations, as debt-laden firms fall over one another in a desperate attempt to export excess resin and feedstock inventories.
The deepening Asian currency turmoil has resulted in a local price war. For example, spot prices of purified terephthalic acid in Asia have dipped to less than $500 per ton, vs. $600 per ton in September. PTA is an essential raw material in the production of polyester products, including PET resin.
Falling prices have prompted several Asian countries to put up trade barriers and threaten to renege on earlier free-trade commitments to the Association of Southeast Asian Nations Free Trade Area and the World Trade Organization.
Recently, petrochemical producers from South Korea, Indonesia and Thailand went to the WTO to oppose India's move to impose anti-dumping duties on PTA in response to complaints from domestic producers. They say India has raised its import duty on PTA from 27 percent to more than 40 percent.
In addition, India's Polystyrene Producers Association has filed a petition with the Indian authorities accusing producers in South Korea, Japan, Malaysia and Taiwan of dumping PS in the domestic market.
India feels it is acting according to WTO guidelines in invoking trade protection to help domestic industries, according to G.V. Ramakrishnathe, chairman of India's Disinvestment Commission. Ramakrishnathe made the comments during an anti-dumping meeting with the Confederation of Indian Industry.
Meanwhile India, together with South Korea, Indonesia, Iran and the United Arab Emirates, is among the countries accused of dumping PVC resin into Australia by ICI Australia Ltd.
``One of the first products that starts to get dumped in Australia when product gets long around the world is PVC. It seems to find itself out from every orifice in the universe,'' ICI Australia's managing director, Philip Weickhardt, said during a recent luncheon with the Securities Institute of Australia.
Australia's Anti-Dumping Authority has responded by slapping provisional anti-dumping duties on PVC imports from India, Germany, Hungary, the Netherlands and Israel. Anti-dumping duties already imposed on Thailand, China, Japan, France and Canada is likely to be extended to October 2002, industry sources said.
Thailand's petrochemical producers are lobbying to stop the government's scheduled reductions in import tariffs on five categories of resins Jan. 1, as a nationwide recession tightens its grip on the languishing industry.
Recently, the government proposed slashing import tariffs on polypropylene, polyethylene, PS, PVC and ABS. Import tariffs on these items are scheduled to be cut from 27 percent to 20 percent, as part of Thailand's commitment to the ASEAN Free Trade Area agreement.
The Federation of Thai Industries and local petrochemical operators are afraid that the tariff reductions would admit cheap imports from countries such as China and South Korea, which are eager to unload their excess inventory.
Early this month, Industry Minister Somsak Thepsuthin asked the Thai cabinet to postpone the tariff reductions, pointing out that other ASEAN members have not reduced their import tariffs for these resins.
Among petrochemical exporters, China remains the favorite whipping boy of anti-dumping activists. For example, China's third-largest trading partner, the European Union, has filed 69 anti-dumping actions against it, most of them targeted at plastic feedstock and end products, according to the official Xinhua News Agency.
Meanwhile, Malaysia's petrochemical sector is alive and kicking, and is expected to help prop up the country's sagging economy.
In late November, the Malaysian Petrochemicals Association was created to boost the industry further.
During the launching ceremony, the Minister of International Trade and Industry Datuk Seri Rafidah Aziz said that the new association would help achieve Malaysia's goal to make petrochemicals a linchpin of the manufacturing-based economy.
In the first seven months of the year, total output from the petrochemicals sector grew 26.8 percent, compared with 19.6 percent for the whole of 1995, according to Rafidah.
This contrasts with Malaysia's economic downturn, which has been accelerated by the plummeting value of the ringgit against the U.S. dollar. Analysts expect 1998 growth of gross domestic product to fall to less than 5 percent, vs. a projected 7.7 percent this year.
Malaysia's prime minister, Mahathir Mohamad, has ordered several major infrastructural projects to be shelved.
However, Mohamad said he remains optimistic about the petrochemical sector, and has allowed investments in this area to proceed as planned, including a styrene plant next year and a PS production plant scheduled for 2003.