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Economy

Petrochemical firms seen at risk without import duties

THE local petrochemicals industry is seen to struggle after the government’s decision not to impose safeguard duties on the importation of linear low-density polyethylene (LLDPE) pellets and granules.

JG Summit Olefins Corp. President Patrick Henry C. Go said that the recommendation of the Tariff Commission (TC) to not grant safeguard duties will be detrimental to the local petrochemicals industry.

LLDPE resin is used for various products such as food, beverage, consumer products, and packaging.

“The TC recommendation not to grant safeguard duties on imported LLDPE will be detrimental to the local petrochemical industry and will only benefit foreign resin manufacturers as they continue to increase the volume of their exports of resin products into the country,” Mr. Go said in a statement over the weekend.

“In the long run, if this influx of foreign resins remains unabated, a different environment will possibly materialize where the biggest drivers in the country’s petrochemical industry will be foreign companies instead of the local petrochemical players, which are struggling to survive and compete with much larger foreign petrochemical companies who continue to flood our markets with their oversupply of products,” he added.

Further, Mr. Go said the local petrochemicals industry needs government support such as trade remedies to become competitive and attain long-term viability.

“In order for many local industries, including the domestic petrochemical industry, to become globally competitive and achieve long-term viability, the support of the government in the form of trade remedies is needed in areas where trade imbalances adversely affect the particular local industry who is still in the process of catching up to foreign competition,” Mr. Go said.

In 2021, the Department of Trade and Industry (DTI) asked the TC to conduct an investigation on the safeguard duties for LLDPE resins. This is after the DTI found out in its preliminary investigation that there was a “causal link” between the higher LLDPE imports and serious injury to the local industry.

The TC issued a summary report dated May 23 in its website saying that it recommends “no definitive general safeguard measure be imposed on the importations of the LLDPE pellets and granules subject to this investigation.”

“There was no increase in imports of LLDPE pellets and granules, both in absolute terms and relative to domestic production, during the period of investigation from 2015 to June 2021,” the TC report said.

“Since it has been established that LLDPE pellets and granules were not imported in increased quantities (whether absolute or relative to domestic production) during the period of investigation, the determination of serious injury or threat thereof, causation, and unforeseen developments has become moot and academic,” it added.

The TC has yet to release its summary report for the ongoing petition of safeguard measures against high-density polyethylene pellets and granules imports, which was also previously requested by the DTI. The resin is used in the production of consumer and industrial packaging. — Revin Mikhael D. Ochave

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