Sector News

Key petchem end markets most affected by US-China tariffs – UBS

April 10, 2018
Chemical Value Chain

Chemical end markets like agriculture, automobile and aircrafts are most likely to be impacted by the growing tensions between the US and China over trade tariffs, Swiss investment bank UBS said on Monday.

On 4 April, China’s Ministry of Commerce announced a 25% increase in tariffs on 106 products originating from the US.

One of the products impacted is E-series glycol ethers, for which US anti-dumping duty (ADD) rates will increase to 37.5%-75.5% from 12 April, up from 10.6%-14.1% currently in place since January 2013.

A Dow Chemical source said to ICIS on 6 April that in order to avoid the highest rate (75.5%) imposed on the company’s US glycol ether exports, it was planning to change its global trade flows, ending US glycol ethers exports to China.

“[Dow will] cut immediately all supplies from north America to China,” the source said.

“This is going to disrupt current trade flows, especially for Dow as we got a very high tax rate and we’re one of the main exporters in the US. We plan to supply even more from Saudi Arabia to China,” it added.

Dow is a partner at joint venture Sadara Chemical in Saudi Arabia with the country’s crude oil major Aramco. The facility has the capacity to produce 200,000 tonnes/year of glycol ethers.

Other chemical majors are also likely to be rethinking their global trade strategies, with petrochemical markets impacted in the process.

The list of end markets compiled by UBS affects chemical imports to China are estimated to be worth nearly $2.2bn, including propane, acrylonitrile (ACN) and lubricants, according to UBS.

Whereas the total value of products impacted are valued over $48bn, accounting for over 30% of total US exports to China.

Consequences for end markets could prove significant, with key products affected including soybeans ($14bn), automobile ($13bn), aircrafts ($10bn), plastics and chemicals ($6bn), liquid gas ($2bn), cotton ($1bn) and other agricultural products such as corn, beef and tobacco.

China accounts for over 60% of the US’ total soybean exports, 10% of total auto-motives and 10% of total aircraft exports.

Companies most likely to be impacted in the automobile industry include BASF, Umicore, Johnson Matthey and Ems-Chemie.

Meanwhile, K+S, Yara and ICL are estimated to be most impacted in agriculture, according to UBS.

Pictured above: Dow and Aramco’s joint venture Sadara Chemical in Saudi Arabia. The US producer has said it will increase exports to China from the facility
Source: Sadara Chemical

By Eashani Chavda

Source: ICIS News

comments closed

Related News

December 3, 2022

Corteva to acquire Stoller Group for $1.2 billion

Chemical Value Chain

Corteva (Indianapolis, Indiana) says it has signed a definitive agreement to acquire Stoller Group (Houston, Texas), a producer of biostimulants and plant nutrition products, for $1.2 billion. Stoller is one of the largest independent biologicals companies globally, with operations in more than 60 countries and more than $400 million in annual sales.

December 3, 2022

OMV introduces new corporate structure to drive sustainable growth and innovation

Chemical Value Chain

OMV has announced its new corporate structure today, designed to fully enable the delivery of Strategy 2030. The new organization will be built on five distinct areas. In addition to the CEO and CFO areas, three business segments will be established: Chemicals & Materials, Fuels & Feedstock, and Energy.

December 3, 2022

What does the current downturn in industrial manufacturing mean for executives searching for a senior role in the chemicals industry?

Chemical Value Chain

The European petchem sector is readying for some tough quarters. It’s a different picture in the US. So is this the best time ever to find a new role in the chemical industry? If you are in Europe, you would expect me to say probably not. But actually, it depends. So let me give you four answers to this question.