Zero tariff within ASEAN could divert Middle Eastern PE supplies to alternate regions

Singapore, Indonesia, Malaysia, the Philippines, Thailand and Brunei are the six members of the Association of South East Nations (ASEAN) that agreed, under a free trade pact to remove import duty for a range of products, including polyolefins, starting 2010. South East Asia’s plastic resin makers are readying for the enforcement of a zero tariff within the region and reduced tariffs on LLDPE from China from the beginning of 2010. The region is expected to witness increased supplies with the addition of new capacities, with start up of Thailand's PTT Chemical’s 400,000 tpa LLDPE plant and Panjin Petrochemical’s 300,000 tpa LLDPE/HDPE swing plant along with Sinopec Tianjin’s 300,000 tpa HDPE and LLDPE plant in China. Supplies will increase when PTT Chemicals’ new HDPE plant as well a 300,000 tpa LDPE plant start up by Q2-2010 and ExxonMobil starts up its new plants in Singapore to boost output to a total of over 2 mln tpa of PE capacity and over 1 mln tpa of PP capacity. This will coincide with the start up of additional capacities in the Middle East, at a time when the high demand countries of South East Asia adopt zero tariff policy to encourage intra regional trade, and China’s reliance on imports reduced over the short term due to increase in domestic supplies. Producers from the Middle East will find the 5-15% customs duties levied on their material into the ASEAN-6 as a hindrance to trade volumes. Hence they may have to scout for other markets to vend their polymers.
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