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Competitive US PE offers emerge in SEA after latest round of US-China tariffs

  • 15/08/2018 (04:13)
The trade tension between China and the US intensified further over the past week, with the US administration announcing tariffs of $16 billion on Chinese imports and China immediately vowing to retaliate with equivalent tariffs.

The revised list published by China’s Ministry of Commerce contains 333 US goods worth approximately $16 billion in retaliatory tariffs, including HDPE, LLDPE, and EVA while LDPE is no longer enclosed. China’s new tariffs are expected to enter into force on August 23.

While the influence of this news was spreading, several Asian PE players anticipated that Southeast Asia may become US sellers’ primary preference as an export outlet since US cargoes may not offer a competitive edge in China after the approaching implementation of the latest round of tariffs. Players also expect US cargoes to offer more competitive edges relative to other origins and weigh on prices.

Players’ concerns over seeing increasing amount of US PE cargoes at competitive levels across regional markets were proven right to some extent this week.

A Malaysian converter reported receiving US LLDPE offers at more competitive levels when compared to Middle-Eastern origins. “The Southeast Asian market is being offered US cargoes and we think that the amount will gradually increase after August 23 when the latest round of tariffs will be effective. We are not rushing to make purchases from the latest offers we have received as we expect to see more attractive levels next week,” he commented.

A Vietnamese trader also opined, “The shipment period for US materials takes about 45-50 days. Still, we have managed to conclude some deals given their competitive levels. Despite supply issues, we think that weak demand and the escalating trade war between China and the US will prevent PE prices from increasing significantly as a lot of US cargoes are directed to Southeast Asia now.”
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