The addition of a 25% tariff on dichloroethane may boost the price of competing products
On April 4, 2018, the Ministry of Commerce of the People's Republic of China issued an announcement that it will impose a 25% tariff on imports of soybeans and other agricultural products, automobiles, chemicals, and aircraft imported from the United States, involving dichloroethane. The tariff number is 29037100. The final measure and effective time will be announced separately.
In 2017, China’s total imports of dichloroethane were 375,400 tons, of which total imports from the United States were 260,500 tons, accounting for 69.41% of total imports. Due to the deregulation of the import of dichloroethane in 2018, China's imports of dichloroethane totaled 143,900 tons in January-February 2018, an increase of 82.38% year-on-year, of which total imports from the United States amounted to 92,300 tons, accounting for total imports. The amount of 64.14%.
Since 2018, due to the impact of export resources, the price of domestic dichloroethane has dropped sharply. The price dropped from 2,700 yuan/ton at the beginning of the year to 1900 yuan/ton, a decrease of 29.63%. Although prices have risen by the end of March, they have not yet caught up with the price level at the beginning of the year. The increase in import tariffs has caused the price of U.S. imports to rise, which in turn has stimulated the recovery of domestic prices of dichloroethane.
According to Haofei Chemical, in 2017, the dichloroethane price started to diverge from that of competing products. Dichloroethane was far lower than that of methylene chloride. In the solvent industry, it accounted for the market share of methylene chloride. There is a clear squeeze. At present, the domestic market price of methylene chloride in Shandong is 2,820 yuan/ton, and the price of dichloroethane in Jiangsu and Zhejiang is kept at 2,200 yuan/ton. Under the precondition that the import tariff of dichloroethane is established, the price of dichloroethane will be in Jiangsu and Zhejiang. The actual pick-up price of the solvent industry in Guangdong and other regions will catch up with or even exceed that of methylene chloride. On the one hand, it will stimulate the market demand for methylene chloride, and on the other hand, the demand for dichloroethane will also be squeezed.
Haofei Chemical believes that currently, the price of dichloroethane is rising, and the drop in the price of methylene chloride is starting. With the tariff imposed on U.S. imports, it is expected that the domestic price of ethylene dichloride will be significantly driven. Dichloromethane will also be affected by the decrease in the competitiveness of competing products and the demand will increase, which will in turn stimulate the rise of methylene chloride prices.