Mirrors India’s imminent move to slap anti-dumping duties on LDPE
The Department of Trade and Industry (DTI) recently requested the Tariff Commission (TC) to probe the reported surge in the volume of imported resins, particularly of High-Density Polyethylene (HDPE) and Linear Low-Density Polyethylene (LLDPE). The DTI request to the TC was fueled by its own in-depth review based on a safeguard measure petition filed by the JG Summit Olefins Corporation (JGSOC) to protect Philippine petrochemical manufacturers from unfair foreign competition.
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.
“The duties are being requested to safeguard the local manufacturing industry,” said a spokesperson for the petitioning company, adding that “historically, HDPE and LLDPE imports tend to undercut the prices of the domestic industry”.
Following India’s lead
The local petrochemical industry is hoping that the government can support and safeguard Philippine manufacturers from unfair foreign competition, similar to what India did recently.
The Indian government is expected to impose anti-dumping duties (ADD) on Low Density Polyethylene (LDPE) imports from Saudi Arabia, Singapore, Thailand and the US.
The country’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 US$17.05 and US$216.76 per ton on various producers and suppliers from said countries.
“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,” a notification from the Indian ministry recently read. “Thus, the domestic industry has suffered a material injury.”
Imports cause “serious injury” to local industry
In the Philippines, the TC’s investigation began in September last year upon the prompting of the DTI, which reviewed documented applications from JGSOC, as well as and imports data covering the petitioned products.
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.
JGSOC is a member of the Association of Petrochemical Manufacturers of the Philippines, whose member companies have built over USD 3 billion in state-of-the-art petrochemical plants, contributes Php 2.5 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.
Unemployment, income loss feared
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%).
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 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.