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Chemical Material Cost Rises Due To The Trade The Trade War Between China And U.S
- Apr 12, 2018 -


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UBS, the Swiss investment bank, said on Monday that the tension between China and the United States in terms of trade tariffs has become more tense, most likely affecting chemical, automobile and aircraft and other chemical end markets.

On April 4, the Chinese Ministry of Commerce announced that it imposed a tariff of 25% on 106 products originating in the United States. E-series glycol ethers are one of the affected products. From April 12, the US anti-dumping tax rate will increase to 37.5-75.5%. The tax rate implemented since January 2013 was 10.6-14.1%.

 A Dow Chemical company official told on April 6th that in order to avoid the high tax rate (75.5%) imposed on US Glycol ether export products, the company is planning to change the flow of global trade and end US China's glycol ether exports and Dow will immediately cut off all North American supply to China. This move will affect the current trade flow, especially Dow, because we face a very high tax rate, and is the main exporter of the United States. We plan to increase the supply of Saudi Arabia to China. 

Dow and Saudi Arabian crude oil giant Aramco established a joint venture in Saudi Arabia, Sadara Chemical. The factory can produce 200,000 tons of ethylene glycol ether. Other large chemical companies may also rethink their global trade strategies and the petrochemical market will be affected. 

According to the list of end markets prepared by UBS, the total value of China's imported chemicals is close to US$2.2 billion, including propane, acrylonitrile (ACN) and lubricants. However, the total value of the affected products is estimated to exceed 48 billion U.S. dollars, accounting for more than 30% of U.S. total exports to China. The terminal market may face serious consequences. 

The main products affected include soybean (USD 14 billion), automobiles (USD 13 billion), aircraft (USD 10 billion), plastics and chemicals (USD 6 billion), liquefied gas (USD 2 billion), and cotton (USD 1 billion). And other agricultural products such as corn, beef, and tobacco. More than 60% of soybean exports, 10% of automobile exports, and 10% of aircraft exports to the United States are exported to China. 

Companies most likely to be affected in the automotive industry include BASF, Umicore, Johnson Matthey, and Ems-Chemie. UBS also said that K+S, Yara and ICL are expected to be the most affected agricultural enterprises.