On the evening of May 13, the Tariff and Tax Commission of the State Council of China issued the Notice on Improving the Tariff Rate on Some Imports Originating in the United States. In response to the announcement by the United States Customs and Border Administration (CBP) on May 10 that more than 200 billion US dollars of tariffs were imposed on Chinese imports into the United States, it formally put forward countermeasures. Industry insiders said that the third round of tariff adjustment in the United States would hit chemicals and plastics products more widely than the previous two rounds, magnifying the impact on the United States, China and the global economy.
The list of tariff increases of 25% on $200 billion worth of goods released by the United States on May 10 is exactly the list of tariff increases of $200 billion issued by the U.S. Trade Office on July 10 last year. Among them, China's exports of a variety of chemical products to the United States, coupled with the tax increase list published and implemented last year, the United States imposed a 25% tariff on China's goods have covered the whole chemical industry chain products upstream and downstream.
According to the US Customs tax code, the list published by the U.S. Trade Office covers almost all chemicals involved in mineral products, products from chemical and related industries, as well as plastics, rubber and their products in three categories and 16 chapters.
Among the major categories of mineral products, & ldquo; salt; sulfur yellow; clay and stone; gypsum, lime and cement & rdquo; chapter one and & ldquo; mineral fuels, mineral oils and their distillation products; asphalt; mineral wax & rdquo; almost all the commodities in Chapter one entered the list. The former includes mineral raw materials such as salt and sulfur, and the latter includes important refineries such as coal, oil, natural gas, refined oil and naphtha.
Among the 11 chapters of products in chemical industry and related industries, only “ drug ” and “ explosives; pyrotechnic products; matches; ignition alloys; flammable materials products ” appeared less in the two chapters, and the rest of the products were almost omitted. In “ inorganic chemicals; organic and inorganic compounds of precious metals, rare earth metals, radioactive elements and their isotopes - rdquo; almost all metals, inorganic compounds and gases are listed in the chapter. In the chapter of “ Organic Chemicals ” the list of tax increases has not fallen from important chemical raw materials such as ethylene, propylene, benzene, toluene, ethylene glycol and other complex chemicals to professional chemicals. In the two chapters, products including nitrogenous fertilizer, phosphorus fertilizer, potassium fertilizer and various dyes and inks have been included in the tax increase list, including & ldquo; tannin extract and dye extract; tannic acid and its derivatives; dyes, pigments and other colorants; paints and varnishes; putty and other similar adhesives; ink, ink & rdquo; and products including nitrogen fertilizer, phosphorus fertilizer, potassium fertilizer and various dyes and inks.
In addition, combined with the previous tax increase list, the United States has imposed a 25% tariff on all kinds of plastics, rubber and their products in China. The new list includes plastic furniture, household decoration materials, plastic tapes, natural latex, synthetic rubber raw materials and other products.
Some insiders believe that for China, according to the volume of trade in 2018, caustic soda, titanium dioxide, acrylic acid, styrene-butadiene rubber and acetic acid will be the most affected chemicals. For the United States, the most affected bulk chemicals and polymers will be ethylene dichloride, polypropylene, titanium dioxide, n-butanol, butadiene and propylene glycol.
In addition, the implementation of 25% tariffs will certainly change the global industrial and trade flows and markets. Taking the high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) in the United States as examples, the second round of trade frictions between the United States and China was imposed a 25% tariff. From October 2018 to February 2019, the average monthly exports of HDPE and LLDPE to the Chinese market in the United States fell 58% and 62% respectively from the same period last year, according to Anxun's Supply and Demand Database. On the contrary, the United States is increasing PE exports to Southeast Asia and Latin America, which depresses prices in local markets.
The list of chemical products imported from the United States is sorted out, including ethanol, isobutanol, epichlorohydrin, phenol, n-butanol and propylene oxide. After the implementation of counter-measures in China, the impact on ethanol is greater.
Consciousness and reason are the key to overcome challenges
As for the trade war imposed by the United States on China, the Chinese government's answer is loud: talk, open the door; fight, accompany to the end. The chemical industry will stand with the motherland without hesitation.
As the world's largest producer of chemical products, the intensification of trade frictions and a large proportion of tariff increases between the two sides will inevitably have some adverse effects on the domestic chemical industry. Firstly, enterprises are facing the double extrusion of high export cost and further depreciation by American importers; secondly, the United States has a strong selectivity for imports from China, while China has a high dependence on imports from the United States; thirdly, because of export hindrance, products converted to domestic sales will intensify the domestic market competition.
However, China's economy, which is heading for high-quality development, has accumulated strong resilience and vitality. Throughout the 70-year history of chemical industry development since the founding of New China, we have gradually grown and strengthened on the basis of poverty and poverty. During this period, we have experienced a long period of foreign technology blockade, and also encountered large and small trade barriers. However, we are still developing into a major producer of chemical products at a rate that attracts worldwide attention. We have reason to believe that the temporary difficulties brought about by the trade war are totally unable to prevent the whole industry from steadfastly moving forward.
It can be said that we are ready and able to fight this trade war. For a period of time, in the face of the upcoming trade war, the chemical industry has made great efforts for the good, but also made good plans for the worst, seriously studying the impact of the trade war on the whole industry, and actively looking for countermeasures. In fact, in 2018, U.S. imports of chemical products from China increased by 22.7%, but U.S. exports of chemical products to China increased by only 2.7%, resulting in a doubling of the U.S. trade deficit in chemical products to China, reaching $40.4 billion. It has been proven time and again that every American repression results in US jumping higher.As far as import and export are concerned, after years of layout, the diversification of China's chemical import and export market has already taken shape, and we do not depend on any market. China's chemical exports are mainly concentrated in Asia, especially in Northeast Asia. Therefore, the US tariff imposed on China's export products has limited impact on the domestic chemical market.
China has a huge market for chemical products. Authoritative bodies predict that in the next few years, the average annual growth rate of global demand for industrial products will be about 4%. Most of the growth will come from developing countries, of which 2/3 will come from the Asia-Pacific region. The potential and space of stimulating domestic demand in China is huge. As long as the industry realizes the healthy and orderly development of high, middle and low-end products as soon as possible, the negative impact of trade frictions will be weakened or even weakened.
According to the trade data of 2018, when the United States imposed tariffs on bulk chemicals, caustic soda, titanium dioxide, acrylic acid, styrene-butadiene rubber and acetic acid will be the most affected, as well as polymer MDI, butanone and so on. The impact on some products has been assimilated in previous trade frictions. However, from the point of view of the whole production chain, most chemical products are raw material products in the upper and middle reaches, which are directly affected by the downstream demand. Although the direct impact of tariff imposed by the United States on chemical products is expected to be limited, the impact on its downstream products may be much greater than that on chemical products themselves, while the indirect impact on chemical products is relatively large.
As a countermeasure, the Tariff and Tax Commission of the State Council issued a notice imposing tariffs on some imported goods originating in the United States, including 1527 chemical products. As soon as the measures were introduced, the U.S. chemical companies suffered serious injuries and were in deep sorrow.
China imports relatively large proportion of chemical products from the United States, mainly ethanol, isobutanol, epichlorohydrin, phenol, n-butanol and propylene oxide. China's implementation of counter-measures, in addition to the impact on ethanol, is expected to have little impact on other chemical products. For example, in the second half of 2018, after the imposition of tariffs by China and the United States, the import of isobutanol from the United States dropped sharply, and in 2019, there was almost no import of isobutanol from the United States. Previously, the import of propylene oxide from the United States was also decreasing year by year. At present, the main sources of circulation in the market are Korean and Middle East.
Of course, not fearing challenges does not mean not attaching importance to them. On the contrary, sobriety and reason are the key to overcoming challenges. Specifically for some sub-industries, some products and some chemical enterprises, the trade war has brought about great losses. In the long run, the whole industry must be prepared for a long-term war and take appropriate countermeasures. Against the background that foreign demand may continue to face challenges, we should solve structural problems and further improve the industrial chain; at the same time, we should greatly stimulate the innovation vitality of enterprises, catch up with developed countries in the field of high-end chemicals, and thus get rid of the dependence on imports from the United States and even from abroad. At present, our high dependence on some imported products should become the future vane of the industry.