UPDATED — A flood of alleged low-priced PET resin imports has led three U.S. PET makers to seek anti-dumping duties.
On March 10, PET makers DAK Americas, M&G Group and Nan Ya Plastics Corp. asked the U.S. Commerce Department and the U.S. International Trade Commission to impose anti-dumping and countervailing duties on PET imported from Canada, China, India and Oman.
On March 31 the Commerce Department said it would investigate the complaint.
Those four countries accounted for almost 53 percent of PET imported into the United States in 2014, according to a fact sheet released by Charlotte, N.C.-based DAK. Between 2012 and 2014, imports from those countries increased almost 44 percent to 725 million pounds.
“Subject imports captured an increasing share of the U.S. market during the 2012-14 period, while the domestic industry's market share declined,” DAK officials said in the fact sheet.
The value of imported PET from those countries increased almost 13 percent to $434 million between 2012 and 2014, according to the fact sheet, while the average unit value fell 13 percent to 60 cents per pound in that same comparison.
“As a result of the unfair competition from subject imports, the domestic industry suffered declines in production, sales and employment and in their financial performance,” DAK officials said.
The entire investigation process is expected to take about a year, officials added, with final determinations coming in spring 2016.
In a bit of irony, the filing comes almost exactly 10 years after ITC declined to place duties on PET imports from India, Indonesia and Thailand. At the time, market watchers cited higher 2004 profits in the U.S. PET market as a reason duties may have been rejected.
In an interview at NPE 2015 in Orlando, Fla., DAK executive John Cullen said the industry can document that the four countries named in the filing have been selling PET resin below fair market value, with some of that resin made at government-subsidized plants.
“We have to prove injury to the PET industry,” he said. “In 2004, the government found that there was dumping, but they said that we couldn't show harm. This time, unfortunately, we can.”
Last year, DAK closed its PET resin and feedstocks plant in Wilmington, N.C.
North American PET resin demand is declining as consumers drink fewer carbonated soft drinks — the material's largest end market — and as lightweighting allows less resin to be user per bottle for soft drinks, water and other beverages.
In spite of this trend, PET makers M&G and Indorama Ventures Public Co. Ltd. each have announced plans to add capacity in the region, partly because of access to affordable feedstocks.
Resin market analysts Phil Karig and Thomas Kelliher said that PET makers might have their work cut out for them in trying to fight the alleged dumping.
“There's a lot of leeway for the U.S. Department of Commerce to estimate these metrics on the basis of incomplete information or information that's not strictly comparable between countries,” said Karig, managing director of Mathelin Bay Associates LLC in St. Louis. “For example, lacking detailed information on market prices and production costs in China, a dumping determination might be made by comparing averages that confuse fiber and bottle grade PET prices and production economics.”
Karig added that the companies filing anti-dumping petitions “also often fill their legal briefs with information that can add to the confusion.”
“In this filing, the petitioners emphasized that PET imports in the last few years have caused what they refer to as ‘anemic' capacity utilization of 74 percent in the U.S.” he said. “What they failed to emphasize is that continuing ‘thin-walling' of water bottles and increased use of recycled PET have also had a big impact on capacity utilization rates. In addition, capacity utilization rates in the U.S. have been mired in the 70s for most of the past decade and domestic producers are partly responsible since they increased domestic PET capacity by more than 15 percent over the same time period.”
Kelliher, who is with Resin Technology Inc. in Fort Worth, Texas, added that “the way the PET landscape has shifted in the U.S., becoming more integrated and efficient, the U.S. will have some of the lowest cost PET and will be more competitive with imports.”