Japan to Raise Tariff on China's PET Bottle Material

Japan to Raise Tariff on China's PET Bottle Material

Hangzhou Xiaoshan’s Work Objectives of Renovating "Low, Small, Scattered" Industry

South China PE Soared amid Unreasonable S&D

Japan Ministry of Finance announced on August 24 that Japan will impose a 39.8% -53% anti-dumping import tariff on China-made polyethylene glycol terephthalate. Polyethylene glycol terephthalate is used for PET bottle. The tax rate change will take effect from September 2 for 4 months if the proposal is approved at the Cabinet meeting on 29 August. Japan Ministry of Finance said on H1 of 2017, 53.2% of imported polyethylene glycol terephthalate was from China.

In recent years, China was the largest country exported polyethylene glycol terephthalate to Japan. In 2006, the export volume of polyethylene glycol terephthalate to Japan surged from 3kt to 27kt, rising by 713%. From 2007-2008, the growth rate of export volume to Japan remained over 80%. From 2009, China became the largest exporter of polyethylene glycol terephthalate to Japan.

By the end of June 2010, the regional "low, small, scattered" problem will be effectively rectified, and the level of comprehensive utilization of resources will be significantly enhanced. Then the industrial ecological environment will be improved obviously. Meanwhile, in Hangzhou Xiaoshan, its quality of industrial development and the level of city integration will stand at the forefront of Zhejiang Province.

Details are followed. First, there will be more than 1,000 enterprises (workshops) to be shut down. Besides, the work will speed up the elimination of above 500 capacity projects (high-standard elimination) and put emphasis on renovating as well as improving more than 1,000 enterprises. Secondly, the “four-not” enterprises will be rectified completely. Thirdly, there will be more than 1 million square meters of standard plants to be reorganized and extended. Fourthly, to build more than 50 small micro-enterprise industrial parks (including high-tech parks), and to promote more than 1,000 small micro enterprises to enter into industrial parks and develop. In addition, to complete the small upgrade of more than 150 enterprises as well as old industrial parks. Lastly, to basically complete the infrastructure construction of industrial ecological park, new fiber material industrial park, high-end equipment manufacturing industrial park, intelligent manufacturing industrial park, etc.

In recent years, The PE prices in South China were higher than that in other regions in China. Taking LLDPE as an example, in 2017, the average LLDPE prices in South China were RMB 133/mt higher than that in East China, and RMB 288/mt than that in North China. The large supply gap in this area led to the influx of sources from other areas, and the arbitrage window kept opening. 

From the demand side, China’s PE apparent consumption volume in 2016 was 24,160kt. Hereinto, the consumption volume in South China was 5,650kt, taking up 23.4% of the total. The downstream industries were mainly blow molding industry, injection industry and extrusion molding industry. The plastic processing industries were mainly concentrated in the Pearl River Delta.

From the supply side, there were 4 PE producers in South China, respectively Sinopec Guangzhou Company, Sinopec Maoming Company, Fujian Refining & Petrochemical and Sinopec & Shell Petrochemicals. The total capacity was 2,540kt/mt. 2,009kt/a of PE was consumed by the local buyers and the rest was supplied to outside. The degree of self-sufficiency in South China was about 37%, far lower than the national average level of 58%. Thus most sources of PE in South China were imported or from other areas. According to statistics, the import volume of PE in South China was accessed at 2,900kt, taking up 51% of the total consumption volume in South China.

The shortage of supply in South China made the PE prices higher than the national average. The price spread between different regions attracted the inflow of imported sources, coal chemical sources and sources from other regions. However, 700kt/a PE unit at CNOOC & Shell Petrochemicals and PE units of some coal-to-olefin enterprises will be put into use during the 13th five-year plan period, and with the continuous improvement of South China warehouse construction at coal-made polyethylene enterprises, the resource self-sufficiency rate will be greatly improved in south China. The price spread of PE between South China and other regions is expected to shrink.