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Nearly sixteen months after initiating an investigation, Indonesia's foreign trade governing authority has recommended imposing a substantial anti-dumping duty (ADD) on imports of polypropylene (PP) block copolymer resins from five countries: South Korea, Vietnam, the United Arab Emirates, Malaysia, and Singapore. The move aims to combat illegal dumping and protect the interests of domestic producers.
The Anti-Dumping Committee of Indonesia (KADI), the designated foreign trade authority, has proposed final ADD levies ranging from 7.17 to 29.01 percent on products under HS code 3902.30.90, which includes PP block copolymer resins. However, the authority has not specified a timeline for implementing the ADD. Traders anticipate its enforcement within the next two months. PP block copolymer is widely used in applications such as automotive parts, electronic devices, packaging, and various other goods requiring enhanced flexibility and rigidity.
A copy of the ADD recommendation proposal reviewed by Polymerupdate revealed a significant reduction in the duty rates for South Korean imports, ranging from 7.17 to 19.58 percent, compared to the previously proposed rates of up to 82.83 percent. Additionally, the authority has recommended ADD rates of 11.4 percent for Vietnam, 21.02 percent for the United Arab Emirates, 13.45–29.01 percent for Malaysia, and 11.6–13.06 percent for Singapore.
Investigation begins in 2023
KADI initiated an anti-dumping duty (ADD) investigation on imports of PP block copolymer resins in July 2023, following a complaint filed by Indonesian producer Chandra Asri. The investigation focused on select exporters from South Korea, Singapore, Malaysia, Vietnam, and the United Arab Emirates, which collectively accounted for a significant 84 percent of Indonesia’s PP block copolymer resin imports in 2022. The scope of the investigation was later expanded to include five local Indonesian importers.
Chandra Asri provided import data for PP block copolymer resins from various countries covering the period between 2020 and 2021, with the primary contentious period being the 12 to 18 months ending in 2021. Exporters were instructed to submit their responses to KADI by August 27, 2023. As is often the case, some foreign suppliers submitted their export data through their respective embassies in Indonesia, but the data provided was insufficient to substantiate their claims of innocence.
The complainant argued, “The increasing imports of PP block copolymer resins into Indonesia have threatened the margins of domestic producers, as the landed cost of these imports is cheaper than the prevailing local market prices. Consequently, the profitability and sustainability of local producers have been jeopardized due to illegal dumping. Domestic producers claim to have lost substantial market share over the past two years.”
Unfavourable fundamentals
Southeast Asian polymer producers faced significant challenges between 2020 and 2022, starting with weak demand during the Covid-19 lockdowns, followed by a slower-than-expected recovery in the post-pandemic period. Higher feedstock costs and supply risks, exacerbated by the Russia-Ukraine war, acted as a multiplier effect, further eroding profit margins and raising concerns about sustainability. Additionally, an oversupply in the Asia-Pacific region since 2021 intensified competition among regional producers, putting additional pressure on prices.
Meanwhile, China rapidly expanded its PP production capacity during this period, significantly reducing its import requirements. As a result, global producers began seeking alternative export markets. Indonesia, which imports more than half of its PP demand, emerged as an attractive destination for regional producers, especially since the country is not expected to commission any new PP plants until at least the end of 2025.
Target companies
KADI has recommended a 7.17 percent anti-dumping duty (ADD) on South Korea's S-Oil Corp and SABIC Asia Pacific (Singapore). An 11.4 percent duty has been proposed on PP block copolymer resin imports from Vietnam's Hyosung Vina Chemicals Co and other companies. The authority has also recommended a 14.81 percent ADD on South Korea's HD Hyundai Chemicals and Lotte Chemicals Corp, along with a 15.81 percent levy on Polymirae Co, Ulsan PP Co, and Daelim Co. South Korean exporters, including Basell Asia Pacific Ltd (Hong Kong), Hanwha TotalEnergies Petrochemical Co, and others, face an ADD levy of 19.58 percent.
The recommendation letter suggests a 21.02 percent ADD levy on Abu Dhabi Polymers Co (Borouge) – Sole Proprietorship LLC and other companies in the United Arab Emirates. Meanwhile, Malaysia's Lotte Chemical Titan (M) and Lotte Chemical Titan Corp are proposed to attract an ADD of 13.45 percent, while other companies in Malaysia would face a levy of 29.01 percent. In Singapore, The Polyolefin Company (Singapore) is proposed to be subjected to an 11.6 percent ADD, while ExxonMobil Asia Pacific and other companies would attract a levy of 13.06 percent.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
