Vietnam’s new import duty on PE fuels uncertainty amid mixed reactions

Vietnam has begun imposing a 2% import duty on select PE grades effective July 8, 2025, sparking uncertainty across the market as players grapple with implementation ambiguities and shifting supply-demand dynamics. Although the duty is not yet actively collected in many cases, its perceived impact is already showing in local pricing, especially for cargoes without certificate of origin (CO) from exempted countries.

Implementation hurdles

According to traders and converters, the new 2% import tax applies to HDPE and LLDPE from all origins except those accompanied by CO forms from select countries. LDPE and metallocene LLDPE remain unaffected.

However, practical enforcement remains inconsistent. “The 2% duty is effective from July 8, but so far, we haven’t paid it,” said a trader. “Many cargoes are still en route or have not boarded yet. It’s unclear how it will be applied until we receive an official notice from the government,” he added.

While the duty is officially announced, players note a lack of detailed implementation guidelines. The exemption list reportedly includes countries with CO forms such as Japan, South Korea, China, and some Southeast Asian nations, but the specifics for each product and origin remain murky.

As another trader summed up, “Until we receive an official circular from the government and actually go through customs clearance with tax payments, it’s hard to say how the market will truly react.”

Price movements reflect anticipation, not policy certainty

Despite the lack of official collection, market sentiment has begun to shift. “Local HDPE and LLDPE prices are already slightly higher,” the trader added. “This is partly due to the expected duty, especially for cargoes without CO form, and partly due to tight supply.”

Suppliers from the Middle East are reportedly quoting higher prices. Some players expect prices to stabilize in theory, as the lower VAT rate of 8% could offset the new 2% duty. However, short supply is currently supporting elevated prices.

Demand still sluggish; converters cautious

On the downstream side, converters remain wary. One buyer remarked, “Demand is weak, mainly because of the tariff policies. For now, we are only purchasing on a need basis.”

Looking ahead, market participants expect some relief in August, as a new wave of US-origin cargoes and domestic PE from Long Son Petrochemicals is scheduled to arrive after the 15th. This could ease the current supply tightness and potentially pressure prices down.