Australia's Customs and Border Protection Service is investigating allegations that North American manufacturers dumped linear low density polyethylene into the Australian market.
The investigation began after Australia's sole LLDPE maker, Qenos Pty. Ltd. of Melbourne, asked customs officials to levy a dumping duty on Canadian and U.S. manufacturers.
Customs' initial investigation agreed with the Qenos claim, and inspectors were in the process of completing a statement of essential facts for the continuing formal investigation.
Parties were invited to comment within 20 days of the statement's public release.
By Oct. 30, Australian officials must make a recommendation to the federal customs minister on whether to impose penalties.
Under investigation are Canadian firms Dow Chemical Canada Inc. and Nova Chemicals Corp., and U.S. companies Chevron Phillips Chemical Co. LLC, Formosa Plastics Corp., Dow Chemical Co., and Exxon Mobil Chemical Co.
Qenos General Manager Stephen Bell told investigators that the firm had been forced to meet importers' prices to maintain market share. Most of the imported LLDPE was rotational molding grade with ultraviolet stablilizer, according to Qenos.
In a letter to customs, Chevron Phillips said it only imported medium density PE to Australia.
Qenos was unable to meet the Australian market demand for LLDPE of 352 million pounds per year, as it produced only 265 million pounds, said Stephen Orava, an attorney at King & Spalding LLP in Washington, which is representing Dow in the case.
Also, Qenos did not produce all LLDPE grades, so imports were needed and Qenos itself imported some grades, Orava said.
His 21-page statement to customs claimed that the global financial crisis and Qenos' shift from making film- and packaging-grade LLDPE to rotomolding grades were the reasons for the Australian firm's declining profit.
The end of a drought in Australia also influenced the market, because 2007 was a boom year for LLDPE water-storage tanks, Orava said.
Peter Hexter, corporate account manager for Dow Chemical (Australia) Ltd., said Dow did not import rotomolding-grade LLDPE into Australia from the U.S. or Canada.
Melbourne-based Aperio Group Pty. Ltd., which buys LLDPE from both Qenos and import sources, said there is no conclusive evidence of damage to Qenos' business because of imports which at times were priced higher than the domestic product.
Another company whose name customs did not release accused Qenos of withholding supply before a price increase and said that because Qenos is the only Australian producer of LLDPE, competition from imports benefits the market.
The unnamed firm also claimed that the imported LLDPE was inferior to Qenos' material, so Qenos could not argue that they were interchangeable.
Qenos' plants in Sydney and Melbourne produce high, low and linear low density PE and specialty polymers.
Qenos is a subsidiary of China National Bluestar (Group) Co. Ltd., a joint venture between China National Chemical Corp. (ChemChina) of Beijing and financial advising firm Blackstone Group LP of New York.
Copyright 2009 Crain Communications Inc. All Rights Reserved.