Sellers in China remain under high sales pressure for Iranian PE

In China, PE traders selling Iranian cargoes have been facing payment issues since mid-May. Although concerns about this issue lost some steam in early June, they appear to have been renewed recently as players mostly reported that the amount of Iranian cargoes is quite high at warehouses this week, which is weakening the sentiment further.

A trader in Ningbo noted, “Small banks in China are able to open letters of credit for transactions with Iran while large banks are only executing transactions on cash terms. On top of that, Iranian cargoes need to be moved over the United Arab Emirates as banks accept transactions for this origin only through this destination. In order to relieve the sales pressure stemming from payment issues, Iranian producers had to give competitive offers.”

Another trader commented, “Iranian producers operating in China’s PE market are under a certain sales pressure nowadays following the payment issues in Chinese banks for Iranian cargoes. Therefore, Iranian sellers had to pull their offers down in order to compete with other origins. We think the amount of Iranian materials in the Chinese market will increase in the days ahead given this sales pressure and prices have still more room to decline considering the fact that Iran is one of the top PE suppliers of China.”

On the other hand, a Shanghai-based trader claimed that Iranian sellers still have many cargoes in China; however, the pressure is not as visible as before and prices are not that low already. “Traders are still trying to resolve payment issues. The market is expected to remain weak in July as demand for PE fails to catch high supply levels,” he added.

PE players in Southeast Asia also shared comments about the issue. A source from a Singaporean producer confirmed high supplies for Iranian materials in China in the face of payment issues.

A Singaporean trader also commented, “A global trader is having difficulties in selling Iranian cargoes in line with payment issues between China and Iran, which are not yet to be resolved so far. Therefore, we think the start-up of new capacities in Iran may be delayed as they are already facing pressure to sell their products.”