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Sun 28 Nov 2010 09:45 PM

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Saudi petrochemical makers to take Indian duty dispute to WTO

India levied a duty of 6.5% per ton on Saudi exports to protect its polypropylene products

Saudi petrochemical makers to take Indian duty dispute to WTO
DUTY DISPUTE: The duty on export of polypropylene will hinder producers from expanding sales in India (Getty Images)

Saudi Basic Industries Corp, the world’s biggest petrochemical maker, plans to ask the World Trade Organization to pressure India to lift an anti dumping duty it imposed on Saudi polypropylene, an official said.

India last week levied a duty of 6.5 percent per ton on Saudi exports of polypropylene products, in an effort to protect its own producers of the chemical. Other Saudi manufacturers affected by the duty include Advanced Petrochemicals Co and National Industrialization Co.

“This is an unjust decision by India, and we can’t tolerate it,” said, a trade representative for Saudi petrochemical makers, speaking today in a telephone interview. “The next stop for Saudi petrochemical producers will be the World Trade Organization.” Al Zamil heads the Riaydh based Export Development Center, which promotes Saudi exports other than crude oil.

He said the Indian decision will not have a great financial impact on the kingdom’s producers, as total petrochemical exports from Saudi Arabia to India amount to what he described as a “modest” $200 million a year. Saudi suppliers can easily shift their exports to China and other markets to avoid losses, he said.

The kingdom’s largest markets for non oil products in terms of value in the second quarter of 2010 were the UAE followed by China, Singapore, and then India, according to the government’s central department of statistics.

Al Zamil said: “The only people who are going to be seriously damaged now from this decision are the 600,000 Indian manufacturers who are looking forward to importing cheap polypropylene from Saudi Arabia.”

Saudi polypropylene makers only began exporting to India a few years ago, and the duty will hinder producers from expanding sales there, he said, adding that the Indian market has promising potential. Saudi Arabia’s Al Rajhi bank said in a report issued in August that India, together with China and Brazil, has “huge underserved petrochemicals markets” that offer a “lucrative” opportunity for Saudi suppliers.

The Chinese government, after a yearlong investigation, decided last month not to impose anti dumping duties on Saudi methanol producers.

Al Zamil said: “We had so many claims against us in the past from many countries such as Turkey and China, and not a single country was able to prove that Saudi petrochemical makers were dumping their products in their markets.”

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