Playing field leveled in Turkey on customs duty change

(apic-online) -- Turkey is set to face an upward revision in customs duties on HDPE and homo PP imports out of developing countries from 4.8% to 6.5% as of January 1, 2013. This is the second phase of the customs duty revision as they were first raised to 4.8% from 3% on September 6. Customs duties on LDPE imports from developing countries were immediately increased from 3% to 6.5% on the same date.

Players in Turkey have already started to calculate the costs of their import cargoes for homo PP and HDPE mainly from the Middle East and Iran taking the revised 6.5% duty into account. This is because anything offered on import basis will be subject to the new regulation if delivered after January 1.

This situation hampers the advantage of the main homo PP and HDPE suppliers to Turkey which had lower import duties, namely the Middle East and Iran, although these two regions still maintain their advantage for low feedstock costs and short distance to Turkey.

Accordingly, Far East Asia, from where imports are already subject to 6.5% duty, is the first region that may gain a chance to compete against the regular sources in Turkey. South Korea is likely to be the prominent origin to find its way from Far East Asia to Turkey considering the country’s large PP and PE capacities. South Korea hosts a total PP capacity of more than 2,800,000 tons/year and a total HDPE capacity of more than 1,800,000 tons/year with several major producers.

Under the agreement, customs duties on LLDPE, HDPE, EVA, PP copolymer, EPS, PET and PS imports will be eliminated between the two countries as of the date on which the agreement takes effect. Customs duties on other polymers including LDPE, homo PP and PVC will be cut by a ratio of one to six from the current 6.5% duty and will continue to be lowered by the same amount on January 1 of the following six years. Accordingly, LDPE, homo PP and PVC imports from South Korea to Turkey are expected to have an initial customs duty of around 5.5% when the free trade agreement is put into practice in the first year. These are expected to be completely lifted on the sixth year after the implementation of the agreement.

MRC

MOSCOW (Market Report) -- Weather conditions will be a core driver for Russian PVC market in January-February 2013, said MRC analysts.

Currently, the local converters of polyvinyl chloride (PVC) began to stop their capacities on the turnaround on the back of extreme cold weather in the most parts of Russia. First of all, it concerns major producers of window profiles, the main consumers of PVC. If such weather and low demand for finished products made of PVC remain in January and February next year, there will be no deficit of feedstock in the market.

Otherwise there is a serious possibility of the deficit of PVC, since domestic makers have only a short-term stock inventories, and the external supply is limited for many reasons.

The stoppage Karpatneftekhim (Lukoil Group) is one of these factors. As a consequence, the market will lack about 8,000-9,000 of PVC per month over the first three months of next year.

Besides, sharp increase in export prices of PVC in the U.S. was not expected by market players. The demand in the domestic PVC market in the United States showed a steady increase (the consumption over last ten months grew by 10%), resulting in exports cuts from 44% to 35%. However, the demand for North American PVC from external markets remains high and, as a result, last month export prices rose on average by USD100/tonne.

The strikes of dockers in the ports on the eastern coast of the U.S., and planned shutdowns of several factories in the first quarter of 2013 (in particular, FPC USA, Oxywinyls, Shin-tech) also put pressure on the market. Many traders have already warned their clients about possible problems with the January shipments of PVC from the U.S.

Chinese makers of acetylene PVC can also spring surprises. Currently, the severe colds in the north of China (-20 degrees Celsius) result in the difficulties in PVC deliveries to Kazakhstan.

"The beginning of the year was not typical for the Russian PVC market. Large volumes of resin at the Russian producers’ and traders’ stocks (about 50,000 tonnes), and bad weather caused the low demand and excess supply of PVC in the Russian market. But in January and February of next year the market situation can dramatically change" – said MRC analyst, Sergey Karaichentsev.

According to him, in 2012, Russian producers reached the end of their resource to increase the production of PVC, and their stock inventories can be described as "maximum permissible."

"So, they can not save the situation. Moreover, the Russian producers of polyvinyl chloride will have to accumulate feedstock in beginning of next year for the period of planned maintenance, when the buying activity usually goes up, so, that there can be a knock-on effect in the market. If there is a deficit in the market, it will have a chance to last more than two months" - said the analyst.


MRC

(plastemart) -- The American Chemistry Council (ACC) and Society of Plastics Engineers (SPE) announced a new partnership that will increase the value of both associations to their respective members and increase awareness that plastic materials and products are contributing to a more sustainable future.

Through the partnership, members of both organizations will enjoy certain reciprocal benefits, and, to some extent, the associations agreed to use each other’s communication channels.

"Our partnership with ACC’s Plastics Division will provide value to our members by enhancing access to market data and information on the sustainability of plastics, and by creating a framework to better leverage the expertise and the communications networks that exist within this industry," said Willem De Vos, SPE’s chief executive officer.

"Plastics engineers are working every day to bring innovative materials and applications to life,"said Steve Russell, ACC’s vice president of plastics. "Through this new partnership we hope to support their work through access to more comprehensive information about the sustainability of plastics across a variety of applications."

We remind that, as MRC reported earlier, Halopolymer had become the first Russian company to enter the American Society of Plastics Industry, (SPI). This organization is one of the most influential in the United States and represents the interests of market participants of plastics industry.
MRC

MOSCOW (MRC) -- In December, many market participants increased PET purchases in the Russian market on a price growth of Asian PET, reduction of total stocks of granulate as well as enhancing sales of Russian soft drinks and beer producers. Increasing demand for the material resulted in a rise of price offers by Russian plants, according to ICIS-MRC Price report.

Last week, prices went up by more than Rb1,000/tonne. Price dispersion of Russian bottle PET grew to the level of Rb61,500-63,000/tonne, CPT Moscow, including VAT. The activization of market players in December was caused by several factors. In the first half of the month, converters made preliminary purchases in anticipation of New Year holidays. The shortage of contract volumes was compensated by spot purchases. By the end of the week many domestic producers reported absence of available spot volumes at their warehouses.

Another important factor in the procurement start-up is renewal of an upward trend of bottle PET prices in the Asian markets. Over the past three weeks, export prices of Korean and Chinese PET rose by more than USD100/tonne. The factors for a price increase were still obvious in late November. They decided to resume purchases of feedstock on expectations of a price increase, according to a Russian converter.

Small volumes of imports in the second half of the year added to an increased interest in spot purchases. There were practically no purchases of the material in the foreign markets due to a downward trend in September-November. Producers used their stocks for manufacturing of preforms without resorting to purchases of large volumes, both in the domestic and foreign markets.

It is worth noting that still in November the bottom level of Russian PET granulate prices for spot shipments made Rb58,000/tonne. Demand in the market was quite weak and many Russian producers reported absence of consumer activity in the spot market.

MRC

MOSCOW (MRC) – The total production of PVC in Russia over eleven months amounted to 538,300 tonnes, up 8% year on year, according MRC ScanPlast.

Last month total output of suspension PVC (SPVC) in Russia decreased by 2% compared to October and reached 55,350 tonnes. Largest Russian makers SayanskKhimPlast and Kaustik (Sterlitamak) reduced volumes while Kaustik (Volgograd) and Sibur-Neftekhim, on the contrary, increased their production.

In January-November 2012, the total of Russian production of suspension PVC made about 538,300 tonnes, up 8% from last year’s figures. SayanskKhimPlast over eleven months produced about 247,000 tonnes of resin, in the year-end the company plans to produce 270,000 tonnes of PVC.

Despite the limited supply of ethylene in July-September, Kaustik (Sterlitamak) this year increased the production of PVC to 18,800 tonnes, up 16% year on year.

Technical problems in May did not let Volgograd Khimprom this year increase its production volumes. In January - November, the company cut production by 5% to 79,200 tonnes. Sibur-Neftekhim, on the contrary, increased its output to 31,200 tonnes. Next year the company plans to stop the production of chlorine completely.


MRC