China Jan-July PE imports from Iran surge 49.5% to 619,700 tonnes

23 August 2012 11:59  [Source: ICIS news]

SINGAPORE (ICIS)--China’s polyethylene (PE) imports from Iran in the first seven months of the year surged 49.5% year on year to 619,700 tonnes in spite of the tightened international sanctions against the Middle Eastern country, official data showed on Thursday.

Iranian material accounted for 14.5% of China’s total PE imports of 4.27m tonnes for the period, according to China Customs data.

China mainly imports low density PE (LDPE), high density PE (HDPE) film and injection grades from Iran.

Iran is an important supplier of petroleum, polyolefin and other petrochemical products for China, said a Chinese PE producer, adding that the northeast Asian country is unlikely to stop importing from the Middle Eastern nation.

The US has led the imposition of financial and trade sanctions against Iran in November 2011 on the Middle Eastern country’s suspected nuclear weapons programme. Sanctions were tightened in July.

The sanctions will affect the voyage time and payment modes,” a trader in east China said.

Only Chinese and Iranian ships can now undertake transportation of Iranian cargoes and this often results in inconsistent voyage times or delayed shipments, a Chinese trader said.

We will not negotiate for new [Iranian] cargoes, unless we are certain of the loading dates [from the Iranian ports],” another Chinese trader said.

Cash payment will be the most important mode in the near future, as letters of credit payable in euro could no longer be easily obtained because of the sanctions, a third Chinese trader said.

The emerging trend of cash payment, however, will be a big burden for Chinese buyers.

"[Paying in cash] requires a high requirement of capital strength, which is difficult given this economic environment,” the third trader said.

It remains uncertain whether the issues with voyage time and payment modes will eventually lead to lower imports of Iranian material by China, said  

As shipment delays entail costs, buying interest for Iranian cargoes may weaken, said a south China-based trader.

If the Iranians start to offload at attractive prices, the buying interest will return. So, imports from Iranian may still remain high,” another trader said. 

Additional reporting by Rain Dong and Ong Sheau Ling

By: Amy Yu

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