A few days ago, the United States reciprocal tariffs landed, how much will China, as a global chemical power, be affected?

The reporter learned that the direct impact of tariffs may be limited, and the proportion of direct exports of China's chemical products is not high, most of which are exported in the form of downstream products, of which the proportion of rubber and plastic products exports is relatively high. Since the United States has imposed tariffs on Chinese tires before, plastics and their products are mainly exported directly to the United States.

At the same time, some U.S. products that are highly dependent on China have also been exempted from reciprocal tariffs. In this regard, the reporter of "China Times" asked relevant enterprises for verification, Jinhe Industrial (002597. SZ) secretary office staff said, "the company's sucralose and acesulfame potassium products are indeed not in the list of additional tariffs, in fact, there are also companies that produce sucralose in the United States, but relatively speaking, the company's product cost and price are more advantageous." ”

It should be pointed out that the U.S. tariffs have also given Chinese companies an opportunity, taking nucleating agents as an example, if China's counter-tariffs against the U.S. are implemented, domestic substitution is expected to continue to accelerate. The reporter noted that on April 7, when the overall decline of A-shares, the domestic nucleating agent company Chenghe Technology (688625. SH) once rose more than 19%, and from April 7 to April 11, the company's stock price rose more than 30%.

The proportion of exports is not high

Since 2018, the United States has repeatedly imposed tariffs on Chinese exports to the United States, resulting in a significant decline in the proportion of Chinese chemical exports to the United States in recent years. According to the statistics of the General Administration of Customs, in 2024, the total export value of chemical products represented by the chemical industry and its related industrial products, plastics and their products will be about 370.7 billion US dollars, of which the export value to the United States will be about 44.6 billion US dollars, accounting for about 12.03%.

The reporter learned that China's exports of chemical products to the United States, chemical fiber, tires, etc. account for a relatively large proportion, but some Chinese tire companies have carried out a global layout, and the impact of tariffs may be expected to be reduced accordingly.

The staff of the secretary office of the board of directors of Sailun Tire told the "China Times" reporter that the current tariffs have not yet been finally implemented, and there are certain variables. The tire product problem is mainly classified into Section 232, which is not for a specific country, but more of a common problem faced by the tire industry.

Regarding Section 232, the reporter inquired that on March 26, the United States announced that it would impose a 25% tariff on imported automobiles and certain auto parts in accordance with Section 232 of the U.S. Trade Expansion Act of 1962. On April 3, the United States issued the detailed rules of the 232 tariffs on automobiles and parts, and the scope of parts and components was expanded to include the customs codes of all-steel tires and semi-steel tires, and the goods of Mexico and Canada meet the exemptions of the USMCA.

Cinda Securities pointed out that this means that tires are within the scope of the 232 tariff, and the equivalent tariff will no longer be superimposed, that is, the tires imported by the United States except for ink and Canada will be subject to 25% tariffs, such as the original double anti-tariff, 232 tariffs will be superimposed on double anti-tariffs.

Sailun Tire staff told reporters that for tire companies with a majority of the domestic market or a small proportion of U.S. business, the impact will be relatively small. "The company adheres to the globalization strategy, and has built tire production bases in Qingdao, Weifang, Dongying, Shenyang, Vietnam, Cambodia, and is building production bases in Mexico and Indonesia."

The staff further said that if the main tire products are subject to 25% tariffs, then the company may need to raise prices in the terminal market, and then share some with dealers, and will not bear all the responsibilities of the company, which is relatively controllable.

It should be pointed out that although chemical fiber accounts for a high proportion of domestic chemical exports to the United States, for the chemical fiber industry, the proportion of direct exports to the United States is relatively low.

China is a major producer of chemical fibers, the global position is difficult to shake, related products in polyester filament, nylon fiber exports accounted for 8.6%, 7.9% of the output respectively, exports to the United States accounted for 0.1%, 0.5% of the total domestic exports respectively, so more is processed into textiles and clothing and then exported.

Industry insiders told reporters that whether it is the pressure on direct exports of the United States or the transfer of downstream industries dragging down domestic demand, it is a short-term impact, and in the long run, it is only a change in the direction of trade flows. On the one hand, if domestic manufacturers cede the U.S. market, there will inevitably be gaps in other regions; On the other hand, if some downstream industries are transferred from China to other regions, domestic manufacturers can also actively explore new markets to make up for the weakening domestic demand.

Some products are exempt

It is worth noting that the Trump administration's Executive Order on Reciprocal Tariffs contains a list of exemptions listing specific tariff numbers and circumstances for goods eligible for tariff exclusions, including chemical products, including fluorite, sucralose, vitamins, potash, PTFE, etc. The industry expects the U.S. to have a low self-sufficiency rate for such products, so the U.S. exempts it from tariffs.

Taking sucralose as an example, as a fifth-generation high-power sweetener with bright demand prospects, the export volume of this product has maintained more than double-digit growth in recent years, and the industry has also formed a supply pattern of one overseas enterprise and several domestic enterprises in the past years of shock and reshuffle. Jinhe industrial staff told reporters that the company occupies more than 60% of the market share.

In addition, Trump's tariff policy provides an opportunity for the transformation and upgrading of the industry, and the intensification of global trade frictions has put forward higher requirements for supply chain management, and some high-end chemical products with high import dependence such as POE (polyolefin elastomer), electronic special gas, photoresist, COC/COP (cyclic olefin polymer) may accelerate domestic substitution.

China's tariff countermeasures against the United States are also conducive to accelerating domestic substitution of related products. Taking nucleating agent as an example, it is a polymer material additive used to improve the crystallinity of incomplete crystalline resin materials such as polypropylene and polyethylene, and accelerate its crystallization rate, which is a key raw material for the manufacture of modified plastics. Foreign advanced manufacturers such as Milliken of the United States and Adicon of Japan have a first-mover advantage in the development and use of nucleating agents, and have long occupied a dominant position in China's nucleating agent market.

In 2022, Milliken will start production at its new Gigafactory in Blacksburg, South Carolina, which will increase its Millad clarifier production capacity by more than 50% at full capacity, and the U.S. nucleating agent production capacity advantage may be consolidated again. According to Chenghe Technology's 2023 annual report and Guanyan report network, in 2023, China's dependence on foreign nucleating agents will be 70%, and overseas production capacity will still occupy a dominant position.

If China's counter-tariff measures against the United States can be implemented, in the short term, due to China's high dependence on overseas nucleating agents, overseas nucleating agent products may be difficult to be replaced immediately, but with the rapid growth of domestic production in recent years, the industry believes that the import substitution rate of nucleating agents is expected to increase in the future.

It is worth mentioning that while the U.S. reciprocal tariffs disrupted the capital market, domestic chemical companies also started a round of buybacks and increased holdings.

According to incomplete statistics, China National Petroleum Group announced that it would increase its holdings of PetroChina AH shares by 2.8-5.6 billion yuan, Sinopec Group announced that it would increase its holdings of Sinopec AH shares by 20-3 billion yuan, Rongsheng Holdings increased its holdings of Rongsheng Petrochemical by 10-2 billion yuan, the actual controller of Hengli Petrochemical increased its holdings of the company by 5-1 billion yuan, and the actual controller of Sailun Tire planned to increase its holdings by 5-1 billion yuan.

In terms of repurchase, the chairman of Hualu Hengsheng proposed to repurchase a total of 2-300 million yuan, the chairman of Wanhua Chemical proposed to repurchase 3-500 million yuan, Satellite Chemical proposed to repurchase the company's shares of 2-400 million yuan, and the chairman of Xinhecheng proposed to repurchase 3-600 million yuan.

Editor-in-charge: Li Future Editor-in-chief: Zhang Yuning

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