Phenol Safeguard Effect May See Rising Phenol Price in Coming Months

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The Government of India has initiated Safeguard Investigation on Phenol on complaint of HOCL and Deepak Phenolics. Although, Phenol is on Anti-dumping net from seven countries such as Chinese Taipei, EU, Korea, Singapore, South Africa, Taiwan and USA. But, Indian Laminate, Plywood and Panel industry, which are major user of phenol in India, fear that any Anti-dumping effect would lead to sharp price increase in phenol.If there would be imposition of safegaurd duty on import of phenol, the cost for many product will escalate in coming time. ILMA (Indian Laminates Manufacturers Association, FIPPI (Federation of Indian Plywood and Panel Industry) are opposing the move of safegaurd duty on import of phenol.

It is noted that Laminates and Plywood are major user of phenol and they consume approximately 60% of total consumption. Mr Vikas Agarwal, President, ILMA said to The Ply Reporter that ILMA is opposing the move, because it will lead to monopolistic trend by domestic producers and they will control the entire market and the cost of phenol will increase further. He says that the domestic phenol producers can feed only 60 % of Indian requirements,hence after any further import duty will damage the interest of Laminate producers, and cost will go up.

Despite the fact that there is a demand supply gap, the petitioners have claimed that large imports of subject goods are entering into Indian market which are at level higher than required to bridge the gap between demand and supply of subject goods. The rate of increase in imports of subject goods is considered significant considering their quantum during Q1 of 2019-20 as compared to previous quarters. The petitioners have claimed that imposition of anti- dumping duty by China coupled with oversupply of Phenol globally and US-China trade war were unforeseen circumstances leading to increase in imports into India.

One of the major applicants i.e, M/s Deepak Phenolics which started its production in November, 2018, has claimed significant decline in sales and capacity utilization for the product during Q1 of 2019-20. The petitioners have also claimed that market share of domestic industry has declined whereas that of imports of subject goods have increased during Q1 of 2019-20. They have also claimed that their profits have declined during Q1 as a result of price pressures caused by increased imports.

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