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S Korean PTA, PET exports to EU enjoy 25% tariff cut due to FTA

https://www.chemnet.com   Jul 11,2011 Platts
South Korean purified terephthalic acid PET bottle chip exports to the European Union are enjoying a 25% cut in import tariffs which started July 1 as its free trade agreement with the continent takes effect.

Previously, South Korean PTA and PET exports to the EU were subjected to a 6.5% customs duty. Under the FTA, the duty will be reduced in four equal annual stages until it is totally eliminated. This means that South Korean PTA and PET import duty to the EU starting July will be at 4.875%.

For now, South Korean PTA makers said they do not expect to see any increase in exports to Europe. "We get very little inquiries from Europe. The market there is usually quite well balanced unless there's a plant outage," said a source from TK Industry.

Another source from Samsung Petrochemical Co. concurred. "We're already exporting to Europe. We could get a better price with lower taxes but I'm not sure if we could sell more volume over there," said the source.

Meanwhile, a Japanese trader said he had sold a few cargoes to the continent since the arbitrage opened between Asia and Europe. The European June contract price for PTA was Eur963/mt FD NWE ($1,377/mt) while the Asian spot price for June was $1,115/mt CFR China for Taiwan origin cargoes.

South Korean origin PTA tends to be around $10-15/mt lower than that of Taiwan origin cargoes because of antidumping duties imposed by China.

Including a freight cost of $90/mt and 4.875% import tariff, this means the South Korean cargoes would arrive in Northwest Europe at around $1,253/mt.

"The profit margin is very attractive," said the Japanese trader, adding that he had been getting queries from Italy, Spain, Portugal and Russia.

"Europe is increasing their PET capacity so we do see some opportunities there when the arbitrage is open," he added.

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