China, ASEAN implement another round of duty reductions for 2012

As per the terms of the China-ASEAN Free Trade Agreement, China and the ASEAN-6 nations (Indonesia, Malaysia, Thailand, the Philippines, Singapore and Brunei Darussalam) implemented another round of customs duty reductions at the start of 2012, as per ChemOrbis. With effect from January 1, 2012, customs duties were eliminated on PP and PVC exports from Southeast Asia to China, ASEAN-6 nations have also abolished customs duties on Chinese PVC. The current duty status of PP exports from China to the ASEAN-6 nations remains unconfirmed as China is not a regular source of PP supply for any of the countries in question. Several Southeast Asian producers have already managed to conclude January import deals to China at prices standing at the upper end of the overall range after the removal of customs duties on Southeast Asian origins. Southeast Asian PP had been subject to a preferential duty of 5% prior to the removal of customs duties at the start of this year. A source at a Southeast Asian producer complained of slower than anticipated January sales to China following the removal of customs duty. A Thai producer managed to conclude some deals for small amounts of homo-PP injection to China for January, even as they offered lesser material for export this month, as per ChemOrbis. A source at a large trading house in China commented, “We do not expect the elimination of customs duties for Southeast Asian origins to have a significant impact on the market as Southeast Asian producers generally devote most of their production to their local markets.” China’s PVC market has been quiet in the first week of the year as most January business has already been concluded and new prices for February have yet to be announced. In 2011, Japan, Taiwan and the United States combined covered just under 87% of China’s total PVC imports of slightly under 1.2 million tons, with all Southeast Asian nations combining to account for just under 10% of PVC imports to China, according to data from Chinese Customs. In the past, Chinese PVC producers have responded to efforts by Southeast Asian producers to increase their market share in China by pressuring the government to pass protective measures, which has historically prevented Southeast Asian producers from attempting to significantly raise their PVC exports to the country. Players in Southeast Asia report that the ASEAN-6 nations have also eliminated customs duties on Chinese PVC imports as per their obligations under the terms of the China-ASEAN Free Trade Agreement. “We believe that we will be able to achieve more satisfactory sale prices now that customs duties on our materials have been eliminated in most of Southeast Asia,” reported a source at a Chinese producer. The producer said that they are seeing better buying interest since the elimination of customs duties on their products, although they complained that buyers in Indonesia still find their prices to be too high to accept. “We are more interested in buying Chinese PVC now that we no longer need to pay duties on this origin. We are planning to search the market for offers for Chinese origins next week,” reported a converter in Malaysia.