Saudis to hold talks with China on methanol exports

Published on July 6, 2009 by brooks | This story has been viewed 88 times

The Saudi ministry of trade and industry is in talks with China over allegations Saudi exporters are selling methanol at prices below the cost of production.

Saudi Basic Industries Corporation (Sabic), the largest methanol exporter in the kingdom, said in a statement yesterday it sought an amicable resolution in view of strong relations with China. Last month, China launched anti-dumping investigations into methanol imported from Saudi Arabia, Malaysia, Indonesia and New Zealand. In response, a delegation of Saudi trade officials and businessmen is travelling to China this week to discuss the claims.

China is a big market for Saudi petrochemical companies, which export 840,000 tonnes of methanol to China a year out of their total production of 6.2m tonnes at an estimated value of $2bn (€1.4bn, £1.2bn) in 2008. Sabic, which is 70 per cent owned by the Saudi government, accounts for 83 per cent of the kingdom’s total methanol production.

Citing the investigation, Sabic said in its statement that “no protective fees have been imposed [by China] on Saudi methanol and discussions are under ay to refute allegations of dumping”.

Another producer, Saudi International Petrochemical Co (Sipchem), said last week China had imposed a duty on methanol imports. Sipchem and the Council of Saudi Chambers of Commerce urged the government to impose retaliatory measures on Chinese goods such as steel and plastics, although the government has not responded to such demands.

“The government needs to move,” Abdul Rahman al-Zamil, a member of the board of Sipchem who also heads the National Centre for the Development of Saudi Exports told a press conference yesterday. “Everybody complains about Chinese merchandise. Chinese steel, plastics and electrical industries are hurting our industries because of dumping.”

Fawaz Al-Alami, former head of Saudi Arabia’s World Trade Organisation negotiation team, said he would meet the chambers of commerce next week to educate them on anti-dumping rules. Saudi Arabia joined the WTO in 2005 after years of negotiations.

“You cannot just bring your emotion into this subject. These companies have to prove they did not dump products in China,” Mr Alami told the FT.

“Simply retaliating is not conducive to relations with China, which is a major trade partner. The best way to resolve allegations is amicably or by formal procedures.”

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