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Europe’s dumping case on US and Egyptian PVC: A look at early reactions and possible impacts on trade flows

by Manolya Tufan - mtufan@chemorbis.com
  • 28/11/2023 (12:46)
The European Commission (EC) initiated a dumping investigation on S-PVC imports from Egypt and the US around mid-November. While participants have expressed their divergent projections along with the possibilities for the upcoming term, let’s also take a quick look at how things evolved up to this point.

What happened?

It has been some time import sources have cemented their presence in Europe . This was a reflection of acute supply snarls and energy surcharges that pushed prices to the unprecedented levels within the bloc during the longest rising streak between June 2020 and April 2022, which in turn encouraged other global suppliers to turn their focus to Europe.

Needless to say, this coincided with the slowing consumption across global markets amid economic challenges in the aftermath of the pandemic. Inflated price levels couldn’t be sustained as rising import volumes triggered competition, which coupled with a sharp demand contraction paved the way for downward corrections since around Q2 2022.

All in all, the probe followed a complaint that was lodged in early October on protection against dumped imports from countries outside the European Union. According to the allegations, S-PVC imports originating in Egypt and the US are being dumped and thereby causing injury to the industry. While the investigation is estimated to be completed within 13 to 14 months, provisional measures may be imposed earlier than that.

What do import statistics say?

The chart below, created by ChemOrbis Stats Wizard Pro, shows the union’s cumulative PVC imports for the years 2020 to 2023. The data highlight a steady growth in the import PVC market, even though 2023 data is not complete yet. Cumulative PVC imports in the first 9 months of 2023 reached beyond 550,000 tons, almost catching the full imports of 2022 imports totalling 567,000 tons.

PVC–EU27–Imports

Looking at imports from the US and Egypt to the bloc, there has been a significant increase since 2020, when the pandemic started to upend the trade norms and flows.

As can be seen in the pie chart generated by ChemOrbis Stats Wizard Pro below, the United States dethroned Mexico, which is Europe’s regular import supplier in free circulation without any customs duties, becoming the union’s largest supplier in the January-September period of 2023, with around 43% share. This suggests an eightfold increase when compared to the first nine months of 2020 imports.

When it comes to Egypt, imports more than quadrupled in January-September 2023 period when compared to the same period of 2020.

EU27 Import Suppliers by Partners – ChemOrbis Stats Wizard Pro


Knee-jerk reaction from regional players

Allegations about US and Egyptian S-PVC imports being dumped into the EU have been a drawback for buyers after the news broke, although some participants remained skeptical. This has not been the only reason due to the year-end lull and the stagnation in overall demand, let alone the narrow gap between the import and spot markets. Processors are expected to refrain from import purchases in the near future, with a gap of less than €100/ton between the two markets.

As PVC contract negotiations have been underway, both converters and end users are pushing for discounts. It remains to be seen if this news will serve as a catalyst to push prices up through 2024 and lure buyers back to the contract market.

A potential anti-dumping duty would require buyers to reduce their purchasing volumes from the import market in the following months, while buyers mostly think that pricing will be pivotal to determine this. They said, “We can continue to cover our needs from the import market next year if prices remain competitive regardless of the probe. At this point, we think that US PVC suppliers may continue to provide attractive prices. Their production costs are way less than European counterparts.”

EU producers thrive to protect their market share

Lower run rates failed to provide suppliers with the leverage to boost margins amid the competitive pressure from the import market. On the contrary, PVC supplies continued to outpace demand regardless of the output cuts.

European market has been mostly trading over other global PVC markets, which encouraged import suppliers to divert their cargos to the bloc when global markets are on a downward trend. Moreover, one of the impetuses behind this challenging decision may stem from lower export pricing amid the continuous deterioration of market conditions.

Trade flow shifts are ahead

Import flows will definitely change in case anti-dumping duties start to be applied. Bearing gloomy expectations for early 2024 in mind, consumption levels will not be moving in lockstep with the PVC production across the board. That is to say, supply may continue to surpass demand when EU-bound shipments will be stranded in the US and Egyptian warehouses.

Will Türkiye bear the brunt of possible antidumping duties in Europe?

Import cargos are highly likely to find their way to Türkiye after Europe shuts the door for imports for these origins. Players in nearby Türkiye opined, “More PVC volumes from Egypt may be diverted to Türkiye given its proximity advantage. Meanwhile, European sources may be less available as they would curb exports to supply their own customers.”

Elaborating further, sources added, “This seems like a reflection of unpromising demand outlook within the bloc. If anti-dumping duties are applied, US and Egyptian sources will direct more cargoes to Türkiye, which will eventually weigh on the market.”

As a side note, US PVC is already subject to antidumping duties in Türkiye; however, it is still one of the leading import sources as re-exporters are exempt from paying duties. Egyptian PVC, meanwhile, is free from customs duties given the free trade agreement in place.
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