Impact of Mexican anti-dumping investigation against Chinese PET resin enterprises

Recently, in response to applications from local polyester factories Alpek and Indorama, Mexico announced that it will initiate an anti-dumping investigation into PET bottle chip and PET fiber chips originating from China. The investigation will cover tariff codes 3907.61.01, 3907.69.99, with viscosities ranging from 0.60 to 0.88dL/g. This means that the investigation will cover both ordinary PET fiber chip and PET bottle chip, effectively eliminating the possibility of low-viscosity chip entering certain regions in the future.

Prior to this, Mexico had imposed a temporary tariff of 25% on imports in August 2023, which applied from August 16, 2023, to July 31, 2025. Even if Chinese PET bottle chip companies CIF prices plus a temporary import tariff of 25%, local bottle chip companies still do not have any price advantage, effectively demonstrating industry monopolization. Before Alpek's acquisition of M&G, the Mexican local PET bottle chip industry was a triopoly, with a balanced power dynamic. However, currently, there are only two companies, Alpek and Indorama, with a total capacity of 1.23 million tons, placing them in a monopolistic position in the industry. Downstream has limited bargaining power.

Looking at the import and export trade of PET bottle chip between China and Mexico in previous years, Mexico was not the main destination for Chinese PET bottle chip before 2016. However, it began to show up in the main export destination listing in 2018, with exports surpassing 70,000 tons for the first time. It then stabilized at around 50,000-60,000 tons before rapidly doubling in 2022 and reaching a historical high of 133,000 tons in 2023, accounting for around 3% of the export volume that year, similar to the previous Korean quantity. The two turning points in growth mainly occurred in 2017-2018 and 2021-2022. The former was due to local M&G's financial problems and restructuring, leading to a significant decline in the supply of PET bottle chip. Many downstream companies sought to purchase from Asia instead. The latter was due to factors such as the COVID-19 pandemic and droughts in Mexico, leading to high procurement prices for raw materials and increased pressure on the sales of PET bottle chip. Downstream customers turned to more cost-effective Asian sources.

Figure 1. Major export provinces for PET bottle chip from China to Mexico in 2023

 If Mexico imposes anti-dumping tariffs on Chinese PET bottle chip and PET fiber chip in the future, the North American market may totally close for Chinese PET bottle chip export companies. The potential salvation path for Chinese PET bottle chip companies is to indirectly enter the North American market through other Asian suppliers such as Vietnam and China Taiwan, but there will likely be a decrease in volume. Of course, apart from setting trade barriers against Chinese companies to protect local businesses, Mexico needs to address the key issues of reducing raw material and energy costs in order to benefit local downstream entities. Additionally, one-fourth of Mexico's local capacity is exported to the US market, and local apparent consumption totals around 900,000-1,000,000 tons. In the future, the US still plans to launch 1.1 million tons of new capacity. If local Mexican PET bottle chip companies fail to reduce their operational costs, it is highly likely that their export business will be heavily impacted, and their domestic market share may also be affected, either being replaced by new US capacity or being occupied by other Asian suppliers.