EU FTA to boost Vietnam's polymer imports

Market: Petrochemicals
04/08/20

The EU-Vietnam free trade agreement (EVFTA) took effect from 1 August, which is expected to remove nearly 99pc of customs duties for goods traded between the two regions and increase Vietnam's polymers imports.

Vietnam is a key importer of polymers, with estimated imports of 5.59mn t/yr of polyethylene (PE), polypropylene (PP), polyethylene terephthalate and polyvinyl chloride in 2018, according to the Vietnam plastics association.

Vietnam's total exports to the EU are projected to increase by 42.7pc in 2025, while EU-origin imports into Vietnam are expected to rise rapidly with the EVFTA, according to Vietnam's planning and investment ministry. It is expected to boost Vietnam's GDP this year, which is projected to reach just 2.7-4.9pc as the Covid-19 crisis disrupts the global economy.

Vietnam's national assembly ratified the EVFTA and an investment protection agreement on 8 June after nearly 10 years of negotiations. Vietnam will remove 65pc of duties on EU-origin imports, while the EU will remove 71pc of duties on Vietnam-origin imports instantly. The remaining duties will be gradually removed over a period of 10 and seven years respectively.

Vietnam does not have any domestic PE production, making it fully dependent on imports. It has attracted new investment from Chinese converters, which have chosen Vietnam as their new conversion hub to circumvent restrictive tariffs on US-origin PE.

The country also imports around 70pc of its domestic PP requirements. Its existing PP producers are Nghi Son Refinery and Petrochemicals that produces 370,000 t/yr and Binh Son Refining and Petrochemical that operates a 150,000 t/yr plant.

South Korea's Hyosung is the latest PP producer to start up in Vietnam, starting partial operations of a petrochemical complex in Ba Ria-Vung Tau province in this year's first quarter. It currently produces up to 300,000 t/yr.

Long Son Petrochemicals, majority owned by Thailand's SCG, has plans for a 1mn t/yr PE plant and 450,000 t/yr PP unit in Vietnam, with commercial operations expected to start up in 2024.

By Yee Ying Ang

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EU FTA to boost Vietnam's polymer imports

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