The Tariff Commission (TC) recommended that the Department of Trade and Industry (DTI) maintain the safeguard measures on high-density polyethylene (HDPE) pellets and granules imports, following a recent public hearing with industry stakeholders, including importers.
It said the final decision on whether to maintain or modify the safeguard measures rests with the DTI secretary.
The TC’s evaluation, released Sept. 5, 2024, indicated that these measures have been successful in achieving their goal of strengthening the local industry to compete with imports.
The domestic HDPE industry, represented solely by JG Summit Olefins Corp. (JGSOC), made significant strides in improving its competitiveness.
The TC determined that JGSOC implemented eight measures prior to the imposition of the definitive safeguard measure in January 2023, including the expansion of naphtha cracker plants, adoption of alarm management and access control systems, benchmarking studies, and spare parts optimization, among others.
It said these efforts, combined with additional measures implemented since then, resulted in increased productivity, boosted domestic sales and reduced operating losses.
The safeguard measures, implemented in 2022, were put in place to support the development of the local HDPE industry and protect it from import competition.
The amount of the safeguard duty imposed for the first year was P1,338/metric ton (MT), P1,271/MT for the second year and for the third year, P1,208/MT.
The duty is applied to HDPE classified under AHTN 2017 Code 3901.20.
The TC found out that sales to the domestic market fell between 2021 and 2023. In 2022, despite a curtailment in industry production, finished goods inventory rose 78 percent, indicating a market preference for low-priced imports, leading to a 30-percent fall in domestic sales.
A 15-percent uptick was achieved in 2023 when the safeguard measure was imposed, demonstrating its effectiveness in discouraging imports.
The domestic industry also exported HDPE during the period of investigation (POI) from 2022 to 2023, which helped dispose of excess inventories.
Domestic sales and export sales accounted for 77 percent and 33 percent, respectively, of average sales volume during the POI. JGSOC’s export sales from 2021 to 2023 averaged 32,609 MT yearly.
