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Asian makers of plastic bottle materials mount offensive in Japan

Anti-dumping duties on Chinese imports create business opportunities

Japan has increased imports of PET resin preforms, which are made into plastic bottles, from Thailand and Taiwan.

TOKYO -- Asian manufacturers of plastic bottle materials are on the offensive in Japan, after the Tokyo government last year imposed anti-dumping duties of up to 53% on imports of PET resin from China.

Major South Korean petrochemical company Hyosung plans to start shipping polyethylene terephthalate preforms -- tubes that are shaped into plastic bottles -- possibly in 2019.

Hyosung is holding talks with leading Japanese beverage makers for the supply of PET preforms. The company eventually hopes to sell 3 billion of them, equal to more than 10% of total PET bottle shipments in Japan.

Hyosung is confident in the new venture as it will use Chinese-made PET resin to produce the preforms.

A marketing official of the Japanese unit of Hyosung said the company would launch the new venture because of a "mistake" committed by Japan, referring to the anti-dumping duties introduced by the Japanese government in September 2017.

Japan imported 470,000 tons of PET resin from China in 2016. The duties have slashed the volume of imports to less than one-tenth of that figure.

"We can duly maintain price competitiveness as we will make use of the Chinese product that has lost the Japanese market and become cheaper," the Hyosung Japan official said.

In a related development, Indorama Polymers of Thailand has agreed to supply its PET resin to Japan's Suntory Beverage & Food.

A major Japanese trading house has been increasing imports of PET resin to Japan under a contract signed with a Thai resin manufacturer earlier this year, an official said. The trading house plans to sell some 200,000 tons to Japan in 2018, up fourfold from the previous year.

According to government data, Japan imported 497,000 tons of PET resin in the first six months of 2018, down 8% from a year earlier. The decrease was minimized because imports from supply sources such as Thailand and Taiwan increased sharply and made up for the decline in imports from China.

Asian PET resin makers are staging marketing offensives in Japan partly because Japanese-made products cannot cover supply shortages caused by the contraction of imports from China.

Top Japanese chemical companies such as Mitsubishi Chemical and Mitsui Chemicals, which asked the government to levy duties on Chinese imports, have been cutting back on facilities to produce PET resin. Mitsubishi Chemical, for example, closed a domestic plant, with an annual manufacturing capacity of 60,000 tons, in March and produced 190,000 tons in the January-June period, down 10% from a year earlier, despite the imposition of duties.

PET resin prices in Japan have risen about 30% to 170 yen ($1.53) per kilogram since the introduction of duties due to an increase in imports of products priced higher than those from China. The plea for duties by Japanese chemical companies, complaining about falls in domestic PET resin prices due to unfairly low-priced imports from China, has proved successful.

But the request for duties has provoked a "fierce backlash" from domestic users that have become reliant on Chinese-made PET resin as a result of Japanese petrochemical makers' domestic capacity reductions, according to an executive of a major trading house.

An escalating trade war between the U.S. and China is casting a shadow over the PET resin market down the road because the material is included in the second phase of trade sanctions the U.S. slapped on China in August.

The impact of the U.S. move will be limited as Asia and Europe are the main destinations of PET resin exports from China, said consultancy Amerex. But Chinese-made PET resin, shut out of the U.S. market, could throw the world market into confusion.

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