Chinese traders re-export LDPE for higher margins

31 August 2010 11:58  [Source: ICIS news]

SINGAPORE (ICIS)--Chinese traders have been re-exporting film grade low density polyethylene (LDPE) to markets in Latin America and Africa where margins are higher, industry sources said on Tuesday.

The margins from re-exports were at least $30/tonne (€24/tonne) higher than what was achievable if the product was sold into the domestic market, Chinese traders said.

For instance, Iranian LDPE re-exported at around $1,400/tonne FOB (free on board) China yields an ex-bonded warehouse price of $1,380/tonne CFR (cost and freight) China, but the same cargo could only fetch an ex-bonded warehouse price of around $1,350/tonne CFR China if it was sold domestically, a trader in east China said.

LDPE imported from Turkey and Malaysia had also been re-exported to Latin America and Africa in recent weeks, Chinese traders said.

LDPE was assessed at $1,500-1,550/tonne CFR Africa, $1,896-2,052/tonne delivered Argentina and Chile, and $1,320-1,400/tonne CFR China for the week ended 27 August, according to ICIS.

It was unclear exactly how much LDPE had been re-exported from China in the past month but most of the re-export deals consisted of less than 500 tonnes each, the Chinese traders said.

The re-exports were unlikely to change the global LDPE trade flow as China was still a major net LDPE importer, they added.

China imported 931,735 tonnes of LDPE in the first seven months this year, about 14% higher from the 818,930 tonnes imported in the same period last year, according to data from the China customs.

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By: Chow Bee Lin
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