MOSCOW (MRC) -- Any future phases of the US-China trade deal could fundamentally change Turkish polymer trade flows, reported S&P Global with reference to Turkish traders' statement.
The Phase 1 trade deal signed mid-January between Washington and Beijing has had a minimal impact on tariffs, according to the American Chemistry Council. However, Turkish traders say any future trade deal phases may result in lower US volumes and greater Iranian volumes into the key Turkish polymer market.
"That is important the US-China agreement so more US material will go to China. Iran will get some problems with exports from this, they have not so many places to move material so Turkey will be increasingly important for Iranian material," a Turkish trader said.
Europe has been a major destination for US polymer production since China imposed retaliatory tariffs on selected US-origin goods in response to 2018 and 2019 US tariffs. US material accounted for some 16% of Turkish polyethylene imports through 2019 to November, with US LLDPE material some 28.9% or 141,160 mt of LLDPE imports, according to Turkish statistics agency Turkstat.
Chinese tariffs on US-origin material in 2018 caused competitively priced US material to be available in Turkey, providing greater competition for Iranian material. Iran's share of LLDPE imports by Turkey shrank to 9.59% in 2019 from 20.65% in 2016, according to Turkstat data.
Sources said Iran was facing further challenges caused by US sanctions and entities which trade with Iranian companies.
"The loser [from the deal] is Iran. It means more US material to the Far East so Iranian material cannot come so often to China. They will have to sell more to Turkey or Eastern Europe instead," a second trader said.
Traders said those dealing with Iranian producers were exercising extra caution due to the potential for further sanctions ahead.
"With the Iranian crisis there is limited information about Iranian producers. They are shipping existing orders, but for new orders sellers are hesitant to give offers as they do not know what material will still be coming with any new sanctions," a trader said.
Iran was a significant origin of Chinese polymer imports during 2019, with Iranian material accounting for some 18.63% or 1,352,787 mt of Chinese HDPE imports to November according to Chinese customs data. Iranian material also accounted for some 22.02% or 688,001 mt of Chinese LDPE imports, but market sources said this would be less affected by any trade deal due to lower US LDPE production.
China is set to remain the world's top demand center for polyethylene during the 2020s, according to S&P Global Platts Analytics, with demand in Asia projected to grow 5.3% a year in theregion up to 2027. The US is set to bring some 13.5 million mt/year of new polyethylene capacity online by 2029 to capitalize on increased volumes of cheap ethane from the US shale gas boom.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers.
MRC