Suspend EU import duties for polyethylene!
The supply situation for European polyolefin processors is becoming increasingly precarious. A noticeable development here is the number of force majeure announcements for PE and PP. It seems rather strange that so many plants tend to experience problems at a time when demand is rising and the market is caught in the grasps of a psychologically motivated upward hype – even though costs are trending stable. Clearly, this is just a matter of coincidence, which all too often yields – utterly wrong (!) – conclusions about the root causes of these FMs.

At the same time, it is becoming painfully clear that European processors are increasingly dependent on imports. For some time already, simple LLDPE grades are being sourced almost exclusively from the Middle East. On the HDPE front, too, the closures of European facilities have not been without repercussions. The further tightening effect of the high EU import duties already started rearing its head last year.

This trend has been reinforced by the decline in oil prices – to which the euro’s weakness must now be added. For Middle Eastern production lines, this combination of factors has made Europe more unattractive than ever as an export destination. On the flip side, the export opportunities for materials such as PP and PVC have improved significantly. The result is that a high number of processors are now experiencing acute shortages. There are already reports of several converters buying overpriced international volumes in a desperate attempt at securing volumes.

It would be interesting to ask the European foreign trade authorities whose production lines exactly they want to protect with these tariffs. Quite a number of the products slapped with duties are no longer produced in the EU. It might be worthwhile for these officials to increase their communications with the competition authorities. The question begs to be asked: At a time of low base costs and a weak euro, is it really necessary to protect producers? Might it not be better to prioritise the processing sector’s interests from an overall economic standpoint? After all, the latter is considered to be the backbone of the European economy – at least according to official politico speak.

And finally – if an unexpected situation arises, in which a political ruling has an extremely counterproductive effect, would it not be best to at least consider suspending that regulation temporarily?

Daniel Stricker
01.04.2015 [230876-0]
Published on 01.04.2015

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