PH petrochem industry presses safeguard duties on resin imports

The local petrochemical industry has pressed for the imposition of safeguard duties to curb the surge in importation of resins, particularly of High-Density Polyethylene (HDPE) and Linear Low-Density Polyethylene (LLDPE) to protect local manufacturers from unfair competition.

In a statement, the JG Summit Olefins Corporation (JGSOC), which represents the industry, even urged the Philippine government to mirror the plan of the Indian government to impose anti-dumping duties (ADD) on Low Density Polyethylene (LDPE) imports from Saudi Arabia, Singapore, Thailand and the US.

According to JGSOC, India’s Ministry of Commerce and Industry said the ADD to be levied are commensurate to the estimated damage incurred on sole domestic LDPE producer Reliance Industries, Ltd., between the years 2016-2017 and 2018-2019. The ADD was fixed between $17.05 and $216.76 per ton on various producers and suppliers from said countries.

JGSOC quoted a notification from the Indian ministry that read, “While the domestic industry has not suffered an injury in terms of its volume parameters, the imports have adversely impacted the profitability of the domestic industry. Thus, the domestic industry has suffered a material injury.”

HDPE is used in consumer and industrial packaging, while LLDPE is used for laminated films and general-purpose bags. Within the ASEAN, both raw materials are charged zero tariffs.

Also, the Department of Trade and Industry (DTI) has asked the Tariff Commission (TC) to probe the reported surge in the volume of imported resins, particularly HDPE and LLDPE in support of the JGSOC petition.

In its initial reports, the DTI found that there was a substantial increase in imported HDPE from 2015 to 2019. This is especially true in 2016 (181%), and 2019 (26%). LLDPE imports also increased significantly during the same periods, especially in 2018 (38%).

The DTI’s own report said the industry suffered a loss of market share, and saw a decline in domestic sales, production, utilization rate, reduction in labor productivity, leading to incurred losses and an increase in inventory.

JGSOC claimed in its filing of the safeguard measures petition, that the volume of HDPE and LLDPE - key raw materials used in many consumer products - being imported into the country in recent years were in quantities that are substantial to cause serious injury to the local petrochemical industry.

“The duties are being requested to safeguard the local manufacturing industry,” said JGSOC in a statement, adding that “historically, HDPE and LLDPE imports tend to undercut the prices of the domestic industry.”

Unchecked imports can disable the ability of local petrochemical producers from continuing operations, and corrode domestic self-sufficiency. “If left uncorrected, the backlash will inevitably lead to unemployment and income loss for thousands of Filipinos who make their living directly and indirectly from the industry,” warned the local petrochemical producer.

The damage of these import surges on the Philippine petrochemical industry is estimated to be worse than those sustained by Indian companies.

The local petrochemical industry expressed hope that government can support and safeguard Philippine manufacturers from unfair foreign competition, similar to what India did recently.

JGSOC is a member of the Association of Petrochemical Manufacturers of the Philippines, whose member companies have built over $3 billion in state-of-the-art petrochemical plants, contributes P2.5 billion in annual tax remittances, while directly employing over 5,000 Filipinos.

JGSOC, being an industry pioneer and the largest polyethylene (PE) and polypropylene (PP) resin manufacturer in the country, filed the safeguards measure petition with the DTI.