April, 12, 2013 - According to Valor Economico newspaper, the Brazilian Foreign Trade Office (Secex) opened an investigation about the practice of dumping on imports of polypropylene resins from India, South Korea and South Africa. The investigation request was filed by the petrochemical giant Braskem, which claims to be harmed by low-cost imports of large quantities of this resin. Secex will also investigate if there are subsidies granted to local producers in South Africa and India.

"These countries practice predatory competition", according to Luciano Guidolin, vice president of polyolefins of Braskem. The Foreign Trade Chamber (CAMEX) already issued a decision favorable to Braskem in December 2010, applying by then anti-dumping measures on imports of polypropylene from the United States for five years, at U.S. $ 82.77 per tonne.

According to Valor Economico, Braskem says that polypropylene imports from South Africa, South Korea and India have increased 582% over the past five years, from 19,600 tonnes between April 2007 and March 2008 to 133,900 tons between April 2011 and March 2012.

Braskem became the leading producer of thermoplastic resins in the Americas after purchasing the polypropylene business of Dow. In Brazil, the company recovered share in the commodity thermoplastics market - Polypropylene, Polyethylene and PVC - , jumping from 65% to 70% in 2012.

According to Luciano Guidolin, the company has been harmed in recent years by the imports of large volumes of resins. "We sacrificed our margins, but the improvement in exchange rates during 2012 helped in market recovery," he said. According to the newspaper, the analysis of evidence for dumping will carried out by Secex considering the period from April 2011 to March 2012, while the proof of damage will consider April 2007 to March 2012.

The annual consumption of polypropylene in Brazil is estimated at 1.4 million tons, according to experts. The current price of the resin is between 2,200-2,400 dollars per ton.

Plastics processing industry complains

On the other hand, as reported by Valor Economico, Braskem has been a target of criticism by plastics converters which buy the raw material from the resin manufacturer and also import the resin.

"We became a hostage of Braskem," says Fernando Serrano, from textile company J. Serrano, which buys about 30,000 tons per year of polypropylene as well as PVC. "We always prefer to acquire resins from Braskem's resin, when prices are not prohibitive," he said.

Serrano said that he usually also acquire resins from the countries to be investigated by Secex. "It is a mistake to impose import duties on raw materials´ imports. If one wants to preserve the competitiveness of the processing plastics industry, finished products are the ones to be tariffed, "he said. The duties on polypropylene imports are 14%. By the end of 2013, the federal government raised the import duty of Polyethylene from 14% to 20%.

According to Jose Ricardo Roriz Coelho, president of Abiplast (Brazilian Association of the Plastics Industry) "Brazil has one of the highest import duties for resins in the world. The global average is around 7%, " he said. "The plastics processing industry [so-called third-generation petrochemical sector] is losing its competitiveness", said the trade leader. "Imported finished products have a 40% lower cost than those of the internal market."

Source: Valor Economico / Mônica Scaramuzzo