February 13, 2025

EVERCHEM UPDATE: VOL. 13 – TCPP Tariff Tango

In the latest installment of international trade drama, the United States has slapped anti-dumping and countervailing tariffs on Chinese suppliers of TCPP—the flame retardant that helps keep spray foam insulation from becoming spray foam bonfires.

Fun Fact – this entire episode was generated by AI:
– the voice over
– all videos
– the music
– the script/article was written by ChatGPT and refined by me
– the photos on the article
(I still had to edit the video, I’m not out of a job just yet)

Subscribe to the Urethane blog for more Everchem Updates here

February 13, 2025

More Anti Dumping Drama–Now on MDI

AD/CV Duties Sought on Methylene Diphenyl Diisocyanate

A petition filed Feb. 12 alleges that methylene diphenyl diisocyanate from China is being sold at less than fair value in the U.S. and benefiting from countervailable subsidies. The alleged average dumping margins range from 305.81 percent to 507.13 percent.

The product subject to this petition is used the production of polyurethanes for many applications, including the manufacture of rigid polyurethane foams used for home and refrigerator insulation, coatings, adhesives, binders and sealants. It is commonly called polymeric, monomeric, or modified MDI and is also known as methylene bisphenyl isocyanate, 4,4’-diphenylmethane diisocyanate, methylene di-p-phenylene ester of isocyanic acid, and methylene bis(4-phenyl isocyanate), among others.

MDI consists of an aromatic polyisocyanate material whose composition includes two or more isocyanate groups (i.e., functional groups containing a nitrogen atom, a carbon atom, and an oxygen atom bonded together) attached to one or more benzene rings (i.e., flat, symmetrical molecules made up of six carbon atoms arranged in a hexagonal ring) that are joined by methylene bridges (i.e., a carbon atom bound to two hydrogen atoms and connected by single bonds to two other distinct atoms in the rest of the molecule).

The petition covers MDI (1) irrespective of whether it has gone through a distillation process, (2) regardless of acid content, reactivity, functionality, freeze stability, physical form, viscosity, grade, purity, molecular weight, or packaging, (3) that has been processed in a third country, including by commingling, diluting, introducing or removing additives, or performing any other processing that would not otherwise remove the MDI from the scope if performed in the subject country, and (4) that is commingled or blended with MDI from sources other than China.

The petition does not cover (1) mixtures of MDI with other materials when the combined MDI component comprises less than 40 percent of the total weight of the mixture, (2) partially reacted MDI when its nitrogen-carbon-oxygen content is less than 10 weight percentage, or (3) any separately packaged polyol that would not fall within the scope if entered on its own.

MDI is currently classifiable under HTSUS subheadings 2929.10.8010 and 3909.31.0000 and may also be entered under subheadings 3506.91.5000, 3815.90.5000, 3824.99.2900, 3824.99.9397, 3909.50.5000, 3911.90.4500, 3920.99.5000, and 3921.13.5000.

The Department of Commerce and the International Trade Commission will next determine whether to launch AD and CV duty and injury investigations, respectively, on this product. There are strict statutory deadlines associated with these proceedings, so affected companies that wish to protect their interests should contact Sandler, Travis & Rosenberg as soon as possible.

https://www.strtrade.com/trade-news-resources/str-trade-report/advisories/ad-cv-duties-sought-on-methylene-diphenyl-diisocyanate

February 2, 2025

Tariff Thoughts

All About The New Trump Tariffs, And Why The Hysteria Is Overblown

by Tyler Durden

Sunday, Feb 02, 2025 – 02:35 PM

By Peter Tchir of Academy Securities

Some Tariff Basics

Report after report I read seems to jump straight to either the good from tariffs (getting others to pay our taxes, advantage to American manufacturing, etc.) or to the doom and gloom of tariffs (inflation, trade wars, etc.). While we all understand the basics of tariffs, or at least I think I do, it seems worth spending a minute or two making sure that we are all on the same page.

My understanding is that the importer of a good pays the tariff to the government at the port or place of entry of the good into the country.

So, if you pay $100 for something from Canada or Mexico, you pay a $25 tariff, and your cost has increased to $125.

Which begs the question – who pays the $25 tariff?

One of the first things most importers will do is ask for a reduction in price from the exporter. If I was doing business thinking that something was only going to cost $100 and it now costs $125, I’d try to negotiate my purchase price down.

What I find “interesting” is if the exporter takes a 20% haircut, the price stays at $100. 20%off of $100 is $80. Then a 25% tariff on something for $80 is $20, getting us back to $100.

Step 1 is getting a discount, where even a 10% discount means the tariff only increases costs by 12.5%.

Now let’s look at the FX market (which maybe we should have done before step 1, but it would be a pain to rewrite stuff, and it isn’t really a step, as it is outside the control of the importer and the exporter, though no less important).

Since the summer, the Peso has declined by 20% versus the dollar and since late September, the Canadian Dollar has dropped by around 18%.

Let’s say that back in September, a Canadian exporter was happy to get paid 135 CAD. That translates into 100 USD for the importer. Let’s say that the Canadian exporter is still happy to accept the equivalent of 135 CAD. That drops the USD price to 93 for the importer. Making the “new” cost to the importer, including the tariff, “only” $116.25. This is all moving around in real time and has been a cumulative move, so this is a massive oversimplification, but still relevant.

The currency market is already helping the importer.

Step 2 is for the importer to figure out what amount of profit he is willing to forgo, if any. Assuming the importer was paying $100 it seems reasonable to assume that the price for the consumer is significantly more. For argument’s sake, let’s say the final price was $200. There is distribution and selling costs, etc. that the importer pays to sell the product on to the next leg. Maybe $200 is too high? Possibly, but I’m not sure it is that unreasonable for many finished goods. Now $25 out of $200 is “only” 12.5%. Giving up 12.5% is probably too much, but is 5% reasonable?

So, let’s look at this possibility (which as a whole, doesn’t seem too far-fetched to me).

Negotiate a 10% discount from the Canadian or Mexican exporter. Argue that it is “temporary” but crucial if you don’t want me (the importer) looking for alternative suppliers. Add in that you (the exporter) will also take a hit.

So, the Canadian exporter reduces the cost from 135 CAD to 121.5 CAD (in hopes it is temporary, and they don’t want to risk losing this customer to another provider of such goods).

Due to the big increase in the USD, the cost is only $83.40 (the importer has been making a lot of extra money in the past few months, but that is always a risk and may well have been hedged).

The 25% tariff is $20.85, bringing the total cost to $104.25.

In your planning, as of a month or two ago, you were anticipating a cost of $100. It is now just under $105. Do you raise your final prices, or leave them, at least for a little while, anticipating Canada (or Mexico) will make progress on fentanyl and the tariff will go away? That seems at least plausible, and it might depend on how easy it is for you to raise and lower prices. Is the hit to profit margin, hopefully a temporary one, worth not having to deal with a new supplier?

If the alternative supplier is Canadian or Mexican, they have the same problem.

If the supplier is from elsewhere, presumably there will be some logistics in getting their goods over in time.
The alternative, an American supplier, does look better as they were just given an effective cost benefit, but not really a 25% cost benefit. The dollar strength takes away some of the desire to shift to a domestic supplier. Presumably, the domestic supplier was already more expensive (or not as good, or there is some other reason why they weren’t being used). So, even with the indirect competitive boost, is it worth it?

Read more here: https://www.zerohedge.com/markets/all-about-new-trump-tariffs-and-why-hysteria-overblown

January 7, 2025

Formaldehyde

EPA finds formaldehyde an ‘unreasonable risk,’ industry says evaluation flawed

By Larry Adams

January 6, 2025 | 7:16 am CST

WASHINGTON, D.C. — The U.S. Environmental Protection Agency (EPA) released Jan. 2 the final risk evaluation for formaldehyde conducted under the Toxic Substances Control Act (TSCA). EPA has determined that formaldehyde presents an unreasonable risk of injury to human health, specifically to workers and consumers, under its conditions of use (COUs).  

The American Chemical Council, on the other hand, said the EPA’s evaluation process was flawed and was not based on the best available science. The ACC warned that the EPA’s Final TSCA Risk Evaluation for Formaldehyde potentially jeopardizes domestic production and critical American industries.

According to the EPA, studies in people demonstrate that exposure to formaldehyde for a short periods, such as for 15 minutes (called an acute exposure) cause sensory irritation such as eye and respiratory inflammation. Sensory irritation effects go away when exposure stops. Inhaling formaldehyde for longer ‘chronic’ periods can reduce lung function and increase asthma and allergy-related conditions, and cancer. Skin contact with products containing formaldehyde can also cause allergic reactions.  Formaldehyde is not expected to persist in water or soils based on its physical and chemical properties; therefore, it is not expected in groundwater or surface water used for drinking water.

EPA’s risk evaluation focused on formaldehyde sources involved in the manufacturing, processing, distribution in commerce, use, and disposal of formaldehyde and formaldehyde-containing products and articles that are subject to TSCA. These may include composite wood furniture or other articles, plastics, paints, adhesives, and sealants. The highest releases of formaldehyde from articles occur when new.

EPA assessed human exposure for 63 TSCA conditions of use of formaldehyde. Of these, 58 conditions of use (50 occupational and 8 consumer) significantly contribute to the unreasonable risk determination. Workers who are in workplaces where formaldehyde is used are at the most risk from formaldehyde exposure, particularly if workers are not wearing personal protective equipment. Workers may be exposed to formaldehyde in air during manufacturing, processing, or use of formaldehyde and products and articles containing formaldehyde. Workers can also be exposed to formaldehyde by making skin contact with formaldehyde-containing materials. Most of the risk to workers is because of acute inhalation and dermal exposures. Cancer risk to workers under many conditions of use also supports the risk determination.

EPA also found some risk from chronic exposure to ambient air for people living near facilities that release formaldehyde. EPA did not determine that ambient air contributes significantly to the unreasonable risk determination.  

Industry objects

The American Chemistry Council’s Formaldehyde Panel issued the following statement on the U.S. Environmental Protection Agency’s (EPA) completion of the final risk evaluation for formaldehyde under the Toxic Substances Control Act (TSCA):

“While ACC acknowledges EPA made several important adjustments in the final risk evaluation, concerns remain about the agency’s continued disregard for statutory requirements on scientific quality, peer reviews, and engagement with public and interagency comments. TSCA requires that EPA reviews and regulates a chemical based on the best available science. This risk evaluation relies on a flawed assessment by EPA’s Integrated Risk Information System (IRIS) program – a program that has never been authorized by Congress, lacks transparency, and is out of step with the best available science and methods. EPA should go back to the scientific drawing board on formaldehyde instead of pursuing unaccountable lame duck actions that threaten the U.S. economy and key sectors that support health, safety and national security.

“Government agencies like Department of Defense, Department of Agriculture, the Centers for Disease Control and Prevention, and the Small Business Administration and EPA-selected expert peer reviewers have raised concerns about the shortened timeline, scientific shortcomings, and potential devastating effects of a flawed TSCA risk evaluation. Ignoring these concerns could result in overly restrictive regulation of this building block chemistry, handicapping America’s economy and creating reliance on overseas production.

“Despite minor improvements, EPA’s final evaluation concludes that virtually all conditions of use contribute to ‘unreasonable risk’ under TSCA. This includes 58 of 63 subcategories of formaldehyde uses, including subjecting all manufacturing, import, processing, distribution in commerce, recycling, disposal, and industrial use of formaldehyde and formaldehyde-derived products to potential bans or difficult-to-meet standards for some uses.

“EPA’s suggested starting place for workplace limits continue to be inconsistent with the best available science and ignore practices that are already in place to protect workers, including the use of personal protective equipment. These workplace limits are significantly lower than the recently updated European Union occupational limits.

“Any assessment of formaldehyde must begin with the best available science. Formaldehyde is a natural part of our world and, through decades of responsible innovation and regulation, is essential to critical applications for housing, agriculture, transportation, healthcare, and national security. Formaldehyde technologies have broad roles in the economy, supporting over 1.5 million jobs and $1.6 trillion in manufacturing shipments and other economic output in 2023 in the United States.

“Effective implementation of the TSCA program has been plagued with challenges, and the final risk evaluation does not meet EPA’s requirement to use the best available science. If EPA continues on its current path during the two-year risk management phase, formaldehyde manufacturing and many of its downstream uses could be severely restricted or potentially banned in the United States.

“Formaldehyde is integral to modern life, and businesses and families rely on the important products it enables. Without robust formaldehyde manufacturing in the United States, we could face increased product prices, reduced economic output, and a loss of the U.S.’s competitive edge. In the coming months, we will collaborate with formaldehyde users to engage the next Administration and safeguard access to this essential chemical building block.”

https://www.woodworkingnetwork.com/news/woodworking-industry-news/epa-finds-formaldehyde-unreasonable-risk-industry-says-evaluation

It’s interesting how the ACC defends formaldehyde and yet promotes MDI for certain end-uses.

December 11, 2024

Epoxy Resin Antidumping Update

Preliminary Affirmative Determinations in the Antidumping Duty Investigations of Epoxy Resins from the People’s Republic of China, India, the Republic of Korea, Taiwan and Thailand.

On November 7, 2024, the U.S. Department of Commerce (Commerce) announced its preliminary affirmative determinations in the antidumping duty (AD) investigations of epoxy resins from People’s Republic of China (China), India, the Republic of Korea (Korea), Taiwan, and Thailand. Commerce is conducting concurrent countervailing duty (CVD) investigations of epoxy resins from China, India, Korea, and Taiwan.

Preliminary Dumping Rates 

China

*Rate based on facts available with adverse inferences.

India

*Rate is based on Adverse Facts Available (AFA).

Korea

Taiwan

Thailand

Case Calendar

NOTE: Commerce’s preliminary and final determination deadlines are governed by statute. For AD investigations, the deadlines are set forth in sections 733(b) and 735(a) of the Tariff Act of 1930, as amended (the Act). For CVD investigations, the deadlines are set forth in sections 703(b) and 705(a)(1) of the Act.
* This will take place only in the event of a final affirmative determination from Commerce.
** This will take place only in the event of final affirmative determinations from Commerce and the U.S. International Trade Commission (ITC).

IMPORT STATISTICS:

Source: U.S. Census Bureau, accessed through S&P Global Trade Atlas (Harmonized Tariff Schedule of the United States (HTSUS) subheading 3907.30.0000.

Other Case Information

• The petitioner is the U.S. Epoxy Resin Producers Ad Hoc Coalition, which consists of Olin Corporation (Clayton, MO) and Westlake Corporation (Houston, TX).
• For general information and next steps, please refer to a list of preliminary FAQs.
• To date, Commerce maintains 714 AD and CVD orders that provide relief to American companies and industries impacted by unfair trade. 
• Additional case information, including the scope of the investigations, are on file electronically via Enforcement and Compliance’s Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). Once you log in, please refer to case numbers:
  
  • China A-570-166, C-570-167
  • India A-533-926, C-533-927
  • Korea A-580-919, C-580-920
  • Taiwan A-583-876, C-583-877
  • Thailand A-549-850
•  

https://www.trade.gov/preliminary-affirmative-determinations-antidumping-duty-investigations-epoxy-resins-peoples