Published On: Fri, Sep 7th, 2012

Players upset with higher customs duties in Turkey

Players upset with higher customs duties in Turkey

Players upset with higher customs duties in Turkey

Players were caught by surprise yesterday with the news published on the Official Gazette that the Turkish cabinet agreed to lift the customs duties on LDPE, HDPE and homo PP imports from developing countries, as per the pricing service of ChemOrbis. According to the new decision, customs duties on LDPE imports from developing countries have been increased from 3% to 6.5%. Duties on HDPE and homo PP imports from the same group of countries were raised from 3% to 4.8% and duties on these origins will be lifted from 4.8% to 6.5% as of January 1, 2013.

This news caused frustration amongst many Turkish players as it took effect immediately without any warning. All buyers who have material on the way or at the port are also subject to the recent rise in duties unless they started their customs clearance procedure before September 6, according to a source from Boykan Customs Consultancy. As a result of this development, many import suppliers find themselves at a sudden disadvantage and higher customs duties, needless to say, mean rising costs for Turkish buyers.

A source from an Indian producer commented, “We are upset with the recent upward adjustment in customs duties. Some of our customers are now asking for discounts while we were planning to lift our PP offers due to rising costs. So we are considering holding our offers for a while in protest.” He added, “European origins are likely to be most competitive now that there is no country left to offer to Turkey with 3% duties.”

According to ChemOrbis Import Statistics, the major homo PP supplier to Turkey in the first seven months of 2012 is Saudi Arabia with 322,000 tons of imports, which is now subject to 4.8% customs duty instead of 3% until the end of the year. Saudi Arabia is followed by India as the second largest import homo PP supplier to Turkey with 54,000 tons of imports in the first seven months of 2012.

A Turkish converter also expressed his disappointment with the recent decision. “At first, Iranian LDPE was subject to additional charges of 7% and now all origins with 3% customs duties for LDPE are up to 6.5%.” A distributor said he thinks that the local LDPE market is set to record further increases in the near term given higher customs duties. Another distributor has already raised his locally held LLDPE film price by $30/ton right after the cabinet’s decision. “However, our prices do not see any interest yet and we cannot conclude deals,” he told ChemOrbis. He added, “Both customs and the PE market are now locked.”

A source from another Indian producer also reported his dissatisfaction over the new customs duties in Turkey. “We mainly export PP and PE to Turkey; however, our pipe and yarn grades will be less competitive now as a difference of $20-30/ton will be enough to create a big negative impact,” he commented.

ChemOrbis Import Statistics reveal that Azerbaijan is on the top of the list for Turkey’s main LDPE import suppliers with 22,000 tons of imports in the first seven months of this year. As for HDPE, Saudi Arabia is in the first place with 108,000 tons of imports, followed by Iran with 90,000 tons of imports and India with 40,000 tons during the same period.