Trump backyard on fire!The decision of adding 25% import duty to China has been opposed!Opportunities and challenges in the petrochemical industry go hand in hand

- May 25, 2019-

Hasty, rogue decisions were opposed

Only a day after the decision was made, the American chemical council raised strong objections

US President Donald trump, in a tweet on May 5, announced an additional 25% tariff on Chinese imports from Friday, once again stirring up trade frictions between the us and China.

Only a day later, on May 6, local time, the American chemical council issued a public statement expressing strong opposition to trump's tax plan.

"China is the third-largest export market for U.S. chemical manufacturers, and a trade war is hurting the industry," Cal Dooley, President of the American chemical council, said in a statement.

"We are beginning to see [the tariffs] disrupting supply chains, cutting off markets and showing signs of weakening the competitiveness of the U.S. chemical manufacturing industry," the statement said."Several of the chemicals that China supplies to the us are not available anywhere else and are critical to us manufacturing."

"" the future growth of our industry depends on a strong trade relationship with China and trade policies that create certainty and predictability for investors, not the threat of higher tariffs," "dooley noted.

While imports of chemicals from China rose 22.7 percent in 2018, retaliatory tariffs curtailed U.S. chemical exports to China, resulting in a 2.7 percent increase in 2018 - the chemicals trade deficit nearly tripled from $1.4 billion to $4 billion, the statement said.Year-over-year results deteriorated sharply in the fourth quarter, with chemical exports down 24%.The ACC believes the surge in imports is a direct result of companies building up inventories before each new tariff increase of 301 takes effect.

The ACC concluded by emphasizing that "the ACC and its members strongly urge President trump to waive the higher tariffs."

Us tariff moves hurt businesses, study says

The us government's imposition of tariffs on imported goods causes net losses to us consumers and businesses, according to two research papers published by us academics.

Experts, the federal reserve bank of New York at Princeton university and Columbia University academics published titled "2018 trade impact on the price and benefits", according to a study by the end of 2018, influenced by the tariff measures, the enterprises with import business and consumers pay taxes amounted to $3 billion a month on average, and an average of $1.4 billion a month welfare net loss, the decrease of real income.

The impact of us tariffs is almost entirely on domestic prices.In the first 11 months of 2018, U.S. tariff measures reduced cumulative real income for U.S. consumers and businesses by about $6.9 billion, the paper said.

Unilateralism and trade bullying by the United States have impacted and affected global economic growth. Last year, the global economy experienced a highly synchronized growth since the financial crisis.At the beginning of this year, the world bank, the international monetary fund and other well-known institutions predicted that this year's world economic growth will be better than last year.At the world petrochemical congress 2018 in Houston, us, in late march, 2018, many executives of multinational companies expressed optimism about the continued growth of the world petrochemical industry this year.However, with the escalating unilateralism and trade protectionism of the us government, especially the trade bullying since the beginning of this year, many uncertainties have been added to the world economic growth, and even the global economic growth that has been continuously optimistic this year and next has been plunged into a pessimistic situation.How much will a sino-us trade war affect the petrochemical industry?How should we respond?A trade war between China and the United States has little direct impact on the petrochemical industry, but its indirect and medium - and long-term effects should not be ignored, according to industry experts interviewed by zhou.

Analysis of the impact of tariffs

Round 1 list and impact score

Several negotiations have failed since trump signed a presidential memorandum imposing tariffs on Chinese imports on March 22, 2018.On June 15th America announced a 25% tariff on 1, 102 Chinese imports worth $50 billion.Of that, about $34 billion has been added since July 6.About $16 billion in merchandise has been added since August 23.The Chinese government was forced to take countermeasures and decided to impose 25% tariffs on 659 imports of about us $50 billion originating in the us.Another 114 items, including chemical products, medical equipment and energy products, will be levied from August 23.

In 2017, the trade volume of the petrochemical industry between China and the United States was $47.6 billion, accounting for 8.1 percent of the total import and export volume of $583.4 billion.Of this, us $22.5 billion was imported from the us and us $25.1 billion was exported to the us.Of the three petrochemicals on the us $34bn list to be taxed, only $1.8m, or 10.8 per cent, was exported to the us in 2017.Add in a total of 95 tax Numbers for petrochemicals in the $16 billion list, and total U.S. exports in 2017 totaled $1.82 billion, or 7.2% of total U.S. exports of petrochemicals of $25.1 billion.

China counter America's $34 billion listing, no petrochemical products in the original $16 billion list, released on August 9, after fully demonstrate the tax official listing, the number of the income tax adjustment from 108 to 93, which increased the ethylene, propylene, ethylene glycol, p-xylene, such as tax number 21, reduced the crude oil, lubricating oil additive, catalyst, etc. No. 36 of the income tax.Petrochemicals in the 93 tax brackets imported a total of 10.5 million tons from the United States in 2017.Among them, the largest import volume is 3.375 million tons of liquefied propane, 575,000 tons of polymer waste and waste materials, 560,000 tons of naphtha and fuel oil, 748 thousand tons of styrene, dichloroethane and ethylene glycol, 350,000 tons of petroleum coke and 160,000 tons of liquefied butane.The total import value is us $5.77 billion, accounting for 36% of us $16 billion and only 1.5% of us $390.4 billion in total petrochemical imports, so the direct impact is not significant.

Second round list and its impact on the petrochemical industry

On July 10, the us side proposed the second round of us $200 billion trade tariff increase list, involving 6,031 kinds of commodities. From September 24, 10% tariff will be imposed, and the tariff will increase to 25% in 2019.Trump also issued a warning that China would immediately add another $267 billion to the list if it retaliated.The $200 billion product list covers 6,031 items, accounting for 38 percent to 46 percent of China's total exports to the United States in 2017.It includes high-end manufacturing industries such as chemicals, pharmaceuticals, electrical machinery and equipment, low-end manufacturing industries such as wood products, and consumer goods such as food and furniture.

The final list, compared to the original version, excluded 297 products from the original list, including 142 chemical and plastic products.According to the ACC, the final list still covers 1,363 chemical and plastic products, with imports worth $12.9 billion in 2017.Chemicals, synthetic preparations and pigments;Chemical fiber, fiber materials, etc.

The second round of us $60 billion counter-list announced by China will impose tariffs of 10 percent or 5 percent on 5,207 us $60 billion goods from the United States, involving 978 tariff codes for petrochemical products, which will also take effect from September 24, 2018.The first step is to impose a 10 per cent tariff on 535 of them and a 5 per cent tariff on 443.Second, if the us side raises tariffs by another us $200 billion, we will impose tariffs of 25%, 20%, 10% and 5% respectively on the categories of products listed in the four annexes.

In the comprehensive consideration of the two rounds of lists, namely the list of 250 billion us dollars, there are 927 tax items related to petrochemical products. In 2017, the export value of these products to the us was 13.62 billion us dollars, accounting for about 7% of the total export value, so the direct impact is not significant.Since July 6, in terms of the petrochemical industry as a whole economic operation has been maintained to a good situation, in terms of the industry as a whole export delivery value continued to grow significantly, it is not directly affected.Of course, there is no denying that the overdraft effect of "order grabbing" factors has not yet shown its impact on exports.

The indirect and medium - term effects cannot be ignored

Although the direct impact is not large, but the petrochemical industry is an important supporting industry of the national economy, machinery, communications, light industry, textile, furniture and other products are increased taxes, will indirectly affect petrochemical coatings, pigments, synthetic materials and other raw materials supporting products.For example, the export of quartz stone, because the United States listed it in the tax list, for quartz stone supporting the production of unsaturated polyester resin was affected, and then will affect styrene, phthalic anhydride, maleic anhydride and other related products;Because of the lag effect of indirect effects, the impact of some products may be more obvious next year.

In addition, medium - and long-term effects will gradually emerge, such as liquefied propane, liquefied natural gas and energy products.More than a dozen propane dehydrogenation units have been set up in China.Liquefied natural gas (LNG) as well as in 2015, imports from the United States is only more than 60000 tons, tripled in 2016, in 2017 and increased nearly 7 times, compared to the United States has become China's sixth largest liquefied natural gas (LNG) source, the current domestic quasi ethane cracking ethylene device has more than 20 sets, and ethane import rely mainly on the United States in the future.So both the indirect and medium - and long-term effects cannot be ignored.Especially for propane and future ethane cracking enterprises that mainly rely on the import from the United States, there are also some enterprises whose export market is mainly in the United States, which has a more serious impact on enterprises.

Opportunities and challenges in the petrochemical industry go hand in hand!

In this situation, the petrochemical industry should be calm thinking, calm response.Looking at the history of mankind and the modern history of the world, especially the various challenges in the process of the rise of great powers, we should broaden our historical horizon and accurately position the historical orientation of China's development process.

In particular, the petrochemical industry as an industrial field, as a pillar industry of the national economy, should first enhance the ability to innovate.Impose tariffs on American petrochemical products, especially the original anti-dumping measures proposed to take the products, we can dialectically as opportunities, targeting high-end petrochemical fields and products, in view of the major key technology, especially the seriously restrict the development of the industry for many years their technology, strengthen the innovation platform construction, increase the intensity of innovation, industry and enterprise's core competitiveness, become bigger and stronger to do best.

Second, we should accelerate the transformation and upgrading.Petrochemical industry "low-end products crowded, high-end products lack of" structural contradictions are still outstanding, by petrochemical power across the country of deployment, with new energy, new chemical materials, specialty chemicals, high-end film materials as the main target, increase the intensity of structural adjustment and transformation and upgrading, speed up the short board, promote high-end petrochemical products supporting ability.

Finally, be prepared for the long term.In terms of the economy as a whole, the direct impact of trade frictions has yet to be felt and is expected to be felt gradually starting in 2019.As long as every enterprise becomes stronger and better, and China's petrochemical industry becomes bigger and stronger, and truly achieves the goal of becoming a petrochemical power, we will be able to cope with it.In fact, we already have such a foundation, we also have such a condition, the majority of petrochemical enterprises and entrepreneurs also have such ability.

History tells us that: every process of the rise of great powers, in special historical period will be strong not strong will face a crucial period of 10 years or so, in this special period, and in the critical stage has to deal with a very severe challenges, the Chinese nation to realize great power dream is come in such a special historical period, we implement a petrochemical power across also walk in such a critical stage, as long as we do not fear the winds and waves, continuous innovation, rational, pragmatic and enterprising, no power can stop the great rejuvenation of the Chinese nation!