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Feature: India's MEG antidumping probe faces opposition from GCC producers, textile buyers

Highlights

India buyers concerned over higher textile manufacturing cost if antidumping duty imposed

US MEG exports to India increases

Antidumping findings likely to be out July 2020 or later

Singapore — India's antidumping investigation on monoethylene glycol imports has drawn the ire of Gulf Cooperation Council producers as well as the textile end-user market in the country, which is concerned about how antidumping duties would raise the production cost of textiles, industry sources said Wednesday.

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This has not affected Indian MEG prices yet as the case is still in the investigation stage, but a new trend appears to be emerging -- an increase in US MEG imports amid planned expansions in that country.

Antidumping complaints by Indian MEG producers against major MEG exporters to the country were dominating market discussions, with no decision or antidumping duties in sight yet. Antidumping investigations typically take six months or longer from the date of submission of documents, which was January 31 in this case, one of the MEG exporters to India explained.

The Indian government has been investigating imports over January-September 2019 from Saudi Arabia, Kuwait, Oman, the UAE and Singapore, according to one of the GCC producers who received a notice from India's customs department.

In December, a local producer, in its filing to India's Ministry of Commerce said MEG export prices of the five countries were lower than their domestic prices. The producer did not comment when approached by S&P Global Platts.

"As the regional body for the Arabian Gulf chemical industry, GPCA calls for the immediate termination of the partial antidumping investigation into regional MEG imports into India," Abdulwahab Al-Sadoun, Secretary General of the Gulf Petrochemicals and Chemicals Association, said mid-May in a statement.

Earlier, on April 6, "Indian authorities terminated the investigation for the sole imports from Saudi Arabia, and continued the investigation into imports from Kuwait, Oman and the United Arab Emirates," according to a statement published on India's Ministry Of Commerce website.

Two other MEG producers in Singapore and India declined to comment on the antidumping investigations.

A few Indian MEG buyers and one GCC producer, however, said imported MEG prices were similar to local delivered prices. Domestic India MEG prices are generally based on the Asian benchmark CFR China marker -- which has fallen from around $600/mt CFR China to $420/mt CFR China over January-May due to demand destruction on the back of the coronavirus pandemic.

The combined MEG export volume from the four GCC states -- Kuwait, Saudi Arabia, Oman and the UAE -- to India was 455,875 mt over January-August 2019, according to GPCA. Kuwait supplied 47% of the total, Saudi Arabia 38%, Oman 3%, and the UAE 4%, according to GPCA statistics. Import volumes since January this year are not unavailable after India went into lockdown late March.

India imported around 634,714 mt of MEG for the financial year ended 2019, according to the Indian customs department, while total demand is at 2.15 million-2.5 million mt/year, and growing at 9%-10%, according to market observers.

Indian Oil Corp.'s new 350,000 mt/year MEG plant is scheduled to start up next year, but the additional capacity is still insufficient to fulfill India's growing appetite for MEG, Indian buyers said. India is the second largest importer of MEG from GCC countries.

US MEG FLOW TO INDIA EXPECTED TO RISE

Some buyers were waiting for the delivery of US cargoes for late June-July arrival as the cargoes booked a month earlier were reported to be at attractive prices. The US exported 20,376 mt of MEG to India in Q1 2020, according to US International Trade Commission data. This represented an acceleration compared with the 31,531 mt exported for the whole of 2019.

The trend of US cargoes to India is expected to continue as there are new MEG expansions planned in the US, with cargoes targeted to be sold in Asia, including India, market sources said.

Taiwanese Nan Ya Plastics' -- a subsidiary of Formosa -- 800,000 mt/year MEG plant in Texas is expected to come online in the second half of the year. The US also increased its MEG output by 1.7 million mt in 2019, reflecting startups of Lotte Chemical's 700,000 mt/year plant in Lake Charles, Louisiana; Sasol's 380,000 mt/year ethylene glycol/MEG unit in Lake Charles; and MEGlobal's 750,000 mt/year plant in Freeport, Texas.