THE imposition of safeguard duties on imported high-density polyethylene(HDPE) pellets and granules since 2023 has benefitted the domestic industry, represented by JG Summit Olefin Corp., in competition with imports.
In its final report on the monitoring of the industry dated Sept. 5, 2024, the Tariff Commission (TC) said JGSOC has complied with its commitments to make a positive adjustment to import competition.
The Department of Trade and Industry in September 2022 imposed safeguard duties on HDPE pellets and granules, raw materials used in plastic packaging, for three years. The order was implemented in January 2023.
The safeguard measure of P1,338 was slapped on each metric ton (MT) of HDPE pellets and granules on the first year but was lowered to P1,271 per MT on the second year. This will further drop to P1,208 per MT on the third year.
“In general, the imposition of the safeguard measure on imported HDPE pellets and granules can be said to have been helpful in providing support to the domestic industry. To date, it can be concluded that the intervention was timely and proper,m as it has provided breathing space for the domestic industry and has mainly contributed to its increasing competitiveness. The domestic industry is gearing towards increased competitiveness,” said the report signed by TC chair Marilou Mendoza and commissioners Ernesto Albano and Marissa Maricopa Padero.
Following the findings, the TC said the DTI secretary may opt to maintain the imposition of the safeguard measures as previously determined; or consider modification thereof, taking into account the efforts undertaken by the domestic industry, changed economic/financial circumstances, competitive discipline, and the public interest.
According to the TC, the cost-reduction measures adopted by JGSOC were effective in controlling manufacturing costs and have contributed to enhanced productivity.
It added JGSOC gained price advantage from the safeguard measure imposed on imports and boosted domestic sales and market share.
Combined with lower production costs, these allowed the industry to cut operating losses.
The report also cited the anticipated full commercial operation of JGSOC’s third production line, a new polyethylene (PE) plant plant called PE3 will provide the company with an edge in terms of producing new and improved PE grades.
However, TC noted JGSOC needs to continue with the completion/implementation of its remaining committed projects at the earliest possible time.
The report said JSOC has completed 12 measures dealing mainly with cost reduction projects, process information management systems and optimization of maintenance processes. Of these eight 8 measures were implemented before the imposition of the safeguard duty in January 2023.
The Commission added another two process information management systems are on schedule for full implementation this year.
The report said some measures were delayed due to their capital-intensive nature but that the industry is working towards the completion of these projects within 2024 to 2025.
