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Ethylene glycol will enjoy tariff reductions, and prices will make waves again in 2020



The Office of the Tariff Commission of the State Council recently issued a notice that starting from March 2, 2020, the Tariff Commission of the State Council will accept applications from relevant domestic ent…

The Office of the Tariff Commission of the State Council recently issued a notice that starting from March 2, 2020, the Tariff Commission of the State Council will accept applications from relevant domestic enterprises in China, and on the basis of reviewing the relevant applications one by one, For imported goods purchased from the United States by relevant enterprises that meet the conditions and in accordance with marketization and commercialization principles, China’s counter-tariffs under Section 301 measures against the United States will no longer be levied for a certain period of time, and enterprises are supported to import goods from the United States based on commercial considerations.
According to its announcement, Annex No. 2 of [2020] announced the list of goods that can be applied for exclusion, including 696 8-digit tax items, covering goods with strong demand in our domestic market, including soybeans, crude oil, wood and other U.S. agricultural products, energy products, manufactures. Among chemical products, PX, styrene and ethylene glycol are all on the list. Applications for tariff reductions and exemptions for PX, styrene and ethylene glycol originating from the United States will take effect from March 2.
In recent years, with the gradual increase in domestic ethylene glycol production capacity, dependence on ethylene glycol imports has gradually decreased. According to statistics, my country’s total ethylene glycol production capacity in 2019 was 10.93 million tons, with a production capacity growth rate of 1.8%. The growth rate declined last year, mainly due to the decline in domestic ethylene glycol prices in 2019, which resulted in less than expected production capacity. In 2019, domestic imports of ethylene glycol totaled 9.95 million tons, an increase of 1.48% over last year. Saudi Arabia continued to rank first in imports due to its cost advantage, accounting for 45%. Relatively speaking, due to the impact of Sino-US trade frictions, the United States only imported 9.95 million tons of ethylene glycol in 2019. Imports were 69,600 tons, accounting for 1%.
In 2019, the world’s new ethylene glycol production capacity will further increase. In addition to China and other Asian countries, the United States’ production capacity is also growing rapidly. According to incomplete statistics, a total of 1.78 million tons/year of new production capacity was put into operation in the United States in 2019. These include MEGlobal International’s 700,000-ton ethylene glycol plant; Lotte Chemical’s 700,000-ton ethylene glycol plant; and Sasol Chemical’s 380,000-ton ethylene glycol plant. Currently, Formosa Plastics’ 800,000-ton ethylene glycol unit in Texas is still under construction and is scheduled to be put into operation in 2020. In 2022, Exxon Mobil and Sabic’s 1.1 million-ton/year plant near Corpus Christi, Texas new device.
In recent years, with the growth of ethylene glycol production in North America, ethylene glycol exports will also be forced to continue to increase. According to data, North American ethylene glycol exports have increased significantly since 2018, and it is expected that by 2020 The annual new export volume is approximately one million tons. Currently, Northeast Asia still plays the role of the largest demander for ethylene glycol, and China is the world’s largest consumer of MEG. In the future, more ethylene glycol from the United States may flow to Northeast Asia and even China.
In 2019, the domestic ethylene glycol market was overall sluggish, with a decline of nearly 35% for the whole year. In 2020, the pace of commissioning of large-scale petrochemical plants and new coal-to-ethylene glycol plants will accelerate, and the contradiction between supply and demand will intensify. The supply side of ethylene glycol will face greater challenges. This time, the Tariff Commission of the State Council announced the marketization of goods subject to tariffs imposed by the United States and Canada. Procurement policies may lead to the import of more American sources, putting further pressure on product prices. </p

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