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UK industry gives mixed reaction to post-Brexit trade deal

December 30/2020

MOSCOW (MRC) -- The UK chemical industry has given a mixed reaction to the post-Brexit trade and cooperation agreement announced on 24 December by the EU and UK, said Chemweek.

The Chemical Industries Association (CIA; London, UK) says there is “some relief” that the deal confirms zero tariffs on EU-UK trade. However, a lack of clarity persists around the deal’s regulatory impact, it says. “We have consistently called for the threat of tariffs to be avoided, so we very much welcome the commitment and hard work from both parties in securing that outcome,” says Steve Elliott, chief executive of the CIA. “Failure here would have seen an annual cost of at least GDP1.0 billion [USD1.3 billion] to the chemical industry."
UK prime minister Boris Johnson, announcing the deal last Thursday, highlighted the potential for divergence by the UK from EU chemical legislation. The UK plans to launch its own version of the EU’s Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) regulation, called UK REACH. “The prime minister has mentioned chemicals as an industry where we have the potential to do our own thing. With that in mind we need to see, in particular, the extent of regulatory cooperation agreed with regard to the industry’s REACH responsibilities,” Elliott says.

UK chemical businesses have committed “a decade’s worth of investment” in gathering and presenting data for the EU’s REACH legislation, Elliott says. Failure to access this data following Brexit will leave the UK chemical industry “facing a bill of more than GDP1 billion in unnecessarily duplicating that work for a new UK regime.” Industry should work with the UK authorities to deliver a chemicals regulatory regime that is “efficient, innovation-friendly, and sensitive to international competitiveness. Such an approach will also enable us to provide reassurance over any health and environmental concerns,” Elliott says.
The EU-UK agreement overall “represents a mixed bag for our industry, [but] we shouldn’t underestimate the huge value that a deal brings in terms of certainty,” Elliott says. “Chemical businesses all over the UK have proved to be hugely resilient over this most uncertain and challenging of years, and a predictable trading environment with our most important market-place, coupled with emergence from COVID-19, should make 2021 a year to look forward to."

The Chemical Business Association (CBA; Crewe, UK), the country’s chemical distributor association, also notes regulatory uncertainty, particularly around the workability of UK REACH. “This deal, which has long been called for by business, is a long way from what the chemical sector required,” says Peter Newport, CBA chief executive. It means “a period of pragmatic enforcement by both parties is essential.  Industry must be given the detailed information it needs in order to comply with the new rules and regulations. Let’s all hope the ambition of this deal matches its detailed reality,” Newport says. UK REACH is “duplicative and unaffordable,” he says.

Despite zero tariffs, the trade agreement also brings an increase in non-tariff barriers including customs requirements. “The chemical industry still has issues with this agreement,” Newport says. “It imposes unwelcome bureaucracy on access to the UK’s largest export market for chemicals and its major supplier, through new and complex customs processes, as well as creating unnecessary logistic and supply-chain issues."

The chemical supply chain will ultimately judge the deal on whether it can “continue to deliver key chemical components to thousands of manufacturing and process companies in the UK and the EU,” Newport says.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, neftegaz, petrochemistry.
Category:General News
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