PETpla.net Insider 12 / 2010

MATERIAL / RECYCLING 18 PET planet insider Vol. 11 No. 12/10 www.petpla.net since 29th September 2010, the price of every tonne of PET from the UAE sold in the EU has increased by €42.34, PET from Pakistan costs €44.02 more. Ira- nian PET has since increased in price by €139.70 per tonne also. (For other current ADs and CVDs see Fig. 3). Long term consequences of the AD and CVD measures using PSF as an example Francesco Zanchi went on: “Although we were not successful in having the levies on PET from the three countries totally abolished, we can nevertheless claim a partial suc- cess. The fact is that at present most production capacity is already to be found in the Middle East and Asia. In two years the proportion will be even greater. That is why it is important for us to take a stand against measures of this kind – especially if we keep in mind the ever-increasing requirement for PET“. Zanchi then went on to explain what he thought would be the devastating effects levies of this kind may have specifically on the economy in the EU. Ironically, at first sight, they are designed to pro- tect Europe’s PET producers, but, he continued, “if we take polyester staple fibre (PSF) as an example, anti-dumping measures against PSF are intended to protect European fibre manufacturers from low cost imports from countries outside the EU. However, the European textile industry is thereby deprived of the opportunity to buy cheaper and more competitive products from lower-cost producers. And what has been the ulti- mate result of this? The European textile industry effectively no longer exists.” Even worse, Zanchi concluded, “only very few of the European fibre producers have survived.” The theme was taken up by Philippe De Baere from the law firm Van Bael & Bellis, who enlarged upon the reasons that may be applied by the EU Commis- sion for imposing anti-dumping levies. He made three points: “If price dumping Anti-dumping levies and countervailing duties at a glance In order to prevent any damage being done to producers in the European Union, the Community uses a system of anti-dumping and anti-subsidy measures against countries that supply the Community, at the same time taking advantage of competition-distorting dumping and/or banned subsidies. Based on the directive relating to protection against subsidised imports the Community may, in principle, levy anti-dumping and/or countervailing duties on any goods the import of which into the Community causes damage. Countervailing duties may then be levied if it is proven that a subsidy is granted for the goods in the exporting country in respect of the manufacture, production, export or transport thereof. should in fact take place i.e. that PET is sold at a higher price in the country of origin than in the EU, if there is a perceived threat to indigenous European producers, or if the measures are in the interests of the EU (a reason being cited more and more frequently). But to cite the argument that PET producers in the EU need to be pro- tected from imports from outside Europe is to take a very short-term view. In Europe PET producers employ around 3,000 people, but if imported goods are to be increasingly the subject of onerous anti-dumping and anti-subsidy meas- ures, we run the risk of jeopardising around 50,000 European jobs in related industries. The reason is that European processors will be obliged to purchase under conditions that are not, globally- speaking, competitive” he concluded. Price of cotton - a key driver Francesco Zanchi then considered trends in the price of PET. As already mentioned at the 2009 PET day (and reported in PETplanet at the time), care- ful attention should be paid not only to the price of crude oil and PET raw mate- rials - Paraxylene, PTA and MEG, but also, and perhaps more significantly, on the price of cotton. The reason given for the very high demand for polyester fibre over the past few months is primarily the shortage of its competitive prod- uct, namely cotton. Adverse weather conditions in China and the catastrophic floods in Pakistan resulted in a failure of the harvest which in turn meant a scar- city of cotton. Hence the price of cotton has risen to an all-time high. The consequence is a strong demand for polyester fibre whose prin- cipal raw materials are PTA and MEG. These could become scarce and / or more expensive which in turn will have an impact not only on the supply of poly- ester fibre but also in PET bottle produc- tion, where they are also used. Against this background, Zanchi went on to suggest that the price of cotton would be one of the key drivers of future PET price increases. The next few months, he was convinced, will see a further rise in the price of PET. Cotton price vs. polyester raw materials. This diagram shows how the prices for the polyester raw materials PTA and MEG are adjusted to the price of cotton. (Source: GSI) Summary of AD/CVD currently applicable to imports of PET. The EU has levied anti-dumping duties (AD) or coun- tervailing duties and/ or anti-subsidy duties (CVD or AS as appli- cable) on PET from the countries of origin listed. The table shows the framework within which these levies fluc- tuate and the date up to which they are valid. (Source: van Bael & Bellis)