PET bottle chip export trade barriers overview

As of the end of 2022, China's exports of PET bottle chip reached around 4.52 million tons (calculated based on tariff codes 39076110 and 39076910), accounting for approximately 40% of the global total export volume. However, as China's export volume continues to grow, there are increasingly more trade barriers imposed by foreign countries on Chinese PET bottle chip. The following is a summary of the countries and regions that have imposed certain tariff barriers on China's exports of PET bottle chip.

Figure 1. List of countries and regions with trade barriers on China PET bottle chip export:

US and Japan, the insistence of net importing countries

According to current statistics, the demand for PET bottle chip in Japan is around 900,000 to 1 million metric tons, and over 90% of it needs to be imported from abroad. Of this, approximately 200,000 metric tons are used for heat-resistant PET food and beverage containers (without antimony catalyst), and local Japanese factories can supply around 100,000 metric tons. The main suppliers are domestic companies like Mitsui and Mitsubishi, while the remaining portion mainly comes from mainland China and Taiwan. Additionally, over half of the demand comes from the production of bottled drinking water and beverages, and a quarter comes from the production of sheet products. After imposing anti-dumping tariffs on PET bottle chip produced in China, Japanese downstream manufacturing companies were initially forced to purchase raw materials at prices about 50% higher than those in China. However, due to political reasons and other factors, Japan has maintained the anti-dumping tariffs on China after five years of implementation.

In recent years, the United States has also been increasing its imports of PET bottle chip from overseas. The quantity reached around 1.42 million metric tons in 2022, which represents a growth of nearly 76% compared to 2019. The imports-exports spread has also expanded to around 1.38 million metric tons, indicating a significant increase in the U.S.' import dependency. After implementing double anti-dumping measures on PET bottle chip produced in China, the United States has seen a rapid increase in imports from sources such as Oman and Vietnam.

As for Brazil and Mexico, they have chosen to follow suit.

On November 25, 2022, Brazil's Economic Ministry's Foreign Trade Committee Management Executive Committee (GECEX) issued Resolution No. 419 of 2022, which affirmed the positive final ruling on the first sunset review of the anti-dumping measures on PET resin (in Portuguese: Resina PET) with a specific viscosity of 0.70-0.88 dl/g, originating from mainland China and India. It was decided to continue imposing anti-dumping duties on the implicated products from China and India for a period of 5 years, with duty rates ranging from $87.23 to $143.01 per metric ton for China, and $193.78 to $468.97 per metric ton for India. The relevant tariff numbers for the implicated products are 3907.61.00 and 3907.69.00. The resolution became effective on the date of its publication.

Figure 2. Brazilian anti-dumping duties on PET Resin from mainland China and India during sunset review

On August 15, 2023, Mexican President Andrés Manuel López Obrador issued a decree to amend the tariff schedule of the General Import and Export Tariff Law. The decree focuses on imposing temporary import tariffs ranging from 5% to 25% on 392 tariff items, including steel, aluminum, bamboo, rubber, chemical products, oils, soaps, paper, cardboard, ceramic products, glass, electrical materials, musical instruments, and furniture. Specifically, the import tariff on PET bottle chip will be increased from 10% to 25%.

Mexico recently announced a sudden temporary increase in import tariffs on nearly 400 product categories, primarily targeting China and India, as the European Union and the United States have free trade agreements with Mexico. Among these, China export volume to Mexico is the highest.

South Africa, India and Turkey: to protect their domestic market share

South Africa and India, to a greater extent, have implemented measures to protect their domestic market share of PET bottle chip. They have provided certain tariff concessions to one of the PET bottle chip factories in China, rather than completely blocking imports.

South Africa: On May 19, 2020, the South African government announced anti-dumping tariffs on PET chip (HS code starting with 39076) originating from mainland China. The rates imposed were 28.26% for Zhejiang Wankai, 26.4% for Far Eastern Shanghai, 28.89% for other companies, and exemptions were granted to Sanfame (including Jiangyin Xingye, Xingyu, and Xingtai). Additionally, the general import tariff on PET bottle chip from China to South Africa is currently 15%. Therefore, the majority of Chinese PET bottle chip exporters to South Africa face a total tariff of 43.89% (15%+28.89%).

According to CCFGroup statistics, South Africa's annual consumption of PET bottle chip is around 200,000 to 250,000 metric tons. There is only one local PET bottle chip company, Hosaf, with a production capacity of around 128,000 metric tons before capacity expansion. After overcoming bottlenecks and expanding capacity, it has currently reached around 240,000 metric tons as of 2017. Without external competitors, it can generally meet the local demand.

India: Starting from August 5, 2020, India imposed anti-dumping duties on PET bottle chip originating from China. The affected HS codes are 39076100, 39076910, and 39076190 (starting from January 1, 2020, using this customs code). This does not include recycled PET resin. The majority of domestic PET bottle chip exporters will face an anti-dumping duty of $200.66 per metric ton. However, among them, Jiangyin Chengold faces a duty of $146.11 per metric ton, Sanfame faces a duty of $60.92 per metric ton, and Wankai faces a duty of $15.54 per metric ton.

Figure 3. Final anti-dumping ruling of India on Polyethylene Terephthalate (PET) Resin from China

According to CCFGroup statistics, India's annual consumption of PET bottle chip is over 1.2 million metric tons. The major domestic PET bottle chip factories in India are Indorama and Reliance, with JBF operating at a low rate and the remaining being smaller facilities. The total domestic production capacity is around 2 million metric tons. Without external competition, theoretically, India would still need to export around 800,000 metric tons to maintain a supply-demand balance. However, if the domestic market share is taken over by foreign competitors and the export market performs poorly, it may pose challenges for the PET producers in India. This is why India has been in a relatively conflicted position regarding PET bottle chip products from China. They want to restrict more Chinese imports, but at the same time, local end-user industries prefer to purchase higher-cost-effective products from overseas due to higher local prices.

Turkey: On November 13, 2020, the Turkish Ministry of Trade issued Announcement No. 2020/6, affirming safeguard measures on imported Polyethylene Terephthalate (PET). It decided to impose safeguard measures duties on the implicated products for a period of three years. The specific duty rates are as follows: $0.060 per kilogram for the first year, $0.058 per kilogram for the second year, and $0.056 per kilogram for the third year. The announcement became effective from the date of publication. The Turkish customs code for the implicated products is 3907.69.00.00.00.

On May 11, 2023, the Turkish Ministry of Trade issued Announcement No. 2023/2, in response to applications from domestic companies. It initiated the first sunset review investigation on safeguard measures for imported PET. The Turkish customs code for the implicated products is 3907.69.00.00.00. The announcement became effective from the date of publication. The final ruling will be made within nine months, unless there is an extension of six months.

Summary and Outlook

Taking all factors into consideration, the US and Japan have chosen to maintain the status quo after the first round of anti-dumping, countervailing, or other tariff increases. Turkey is currently in the sunset review process. The EU has initiated a new anti-dumping investigation after the previous anti-dumping measures against China ended. Mexico's sudden increase in import tariffs is primarily targeted at China and India, countries outside of free trade agreements. In the future, Chinese PET bottle chip exporters need to maintain their cost advantages in raw materials while also exploring opportunities outside of these markets to circumvent some of the additional tariffs.