On Wednesday, the United States announced an anti-dumping duty on fine denier polyester staple fiber imports from China and India. Reliance Industries is one of the main polyester exporters from India to the US. “US Secretary of Commerce Wilbur Ross announced the affirmative final determinations in the countervailing duty (CVD) investigations of fine denier polyester staple fibre from the People’s Republic of China (China) and India, finding that exporters from China and India received countervailable subsidies of 41.73 to 47.55 percent and 9.50 to 25.28 percent, respectively,” US Department of Commerce said in its statement.
According to a factsheet shared by the US Department of Commerce, in its investigation on India, the department calculated a preliminary dumping rate of 2.66 per cent for RIL. Bombay Dyeing & Manufacturing Company was the second Indian company which was made a mandatory respondent to the investigations and was assigned a dumping rate of 21.43 percent, the fact sheet stated.
“The US will no longer sit back and watch as its domestic businesses are destroyed by unfair foreign government subsidies,” Ross was quoted in the statement.
RIL is the largest producer of polyester fibre and yarn in the world, with a capacity of 2.5 million tonnes per annum more than half of almost half of India's overall capacity of 4.5 MT. RIL earlier in November stated it expects a growth of 5 per cent per annum in this segment in India, higher than the global growth rate of 3 percent per annum. For the financial year 2016-17, demand for polyester in India grew at 3 percent on a year on year basis. Per capita consumption of polyester globally comes to the tune of 6 kilogram (kg) per person, compared to 3 kg per person in India and 11 kg per person in China.
An email query sent to RIL remained unanswered. “Demand for polyester has been good in the last few quarters as crude prices were low. However, with the rise in crude prices, this is likely to change. For RIL, polyester is a small part of its larger petrochemical business, so I do not expect it to be a significant hit for the company at large. In addition, its share of exports to US of its total polyester production may also be lower. Having said that, one needs to look at what exactly is the duty to access the financial hit,” said an analyst.