Iranian PE Seen As Threat To China Price Recovery

Business, China, Economics, Middle East, Polyolefins

By John Richardson

IRANIAN polyethylene (PE) exports to China could help to cap or even prevent a recovery in pricing during the second half of this year.

Although in volume terms, Iranian material only accounts for a small percentage of the total market, in sentiment and therefore price-setting terms, it seems to be playing an increasingly important role.

Shipments of low-density PE (LDPE) to China from Iran have in particular increased quite sharply in January-May of this year compared with the same period in 2009, according to my colleagues at ICIS pricing.

A report on ICIS news yesterday said that Iranian shipments to Pakistan were consistently $30-40/tonne below cargoes from other Middle Easern countiries, in order to offset the impact of worries over delayed shipments.

“Iranian material to China is also nearly always priced below material from other countries because of reliability of supply and sanctions issues,” said a Shanghai-based polyolefins trader.

“Concerns over reliability of supply relate to difficulty in always achieving stable production at Iranian plants.

“And because of the increasingly tough sanctions regime, the Chinese buyers are in a strong position as they know that Iran now has fewer other options.”

One other option is to move Iranian material to Iran, place it in bonded warehouses, and then re-export it to Southeast Asia and elsewhere..

“When these re-exports occur – which are never great in total volume and can also involve shipments to China from other destinations – this is taken as a sign that a market is in severe distress. This can contribute to sudden and quite sharp declines in the CFR China price,” the trader added.

As we reported earlier this week, there are plenty other reasons to believe that further downward pressure on PE is likely to continue for the next few months. One consultant sees no light at the end of the tunnel until as late as the second half of next year.

PREVIOUS POST

What's next for Honam?

22/07/2010

By Malini Hariharan Honam Petrochemical’s plan to acquire Malaysia’s...

Learn more
NEXT POST

China PE, PP Production Up By 30%

26/07/2010

By John Richardson and Malini Hariharan CHINA’S polyethylene (PE) and poly...

Learn more
More posts
Developing world polymers demand unlikely to see quick rebound
20/09/2020

By John Richardson THIS IS a tragedy in the genuine sense of the word, not just in the so-often misu...

Read
China’s policy dilemma: raising local demand while protecting exports
13/09/2020

  By John Richardson IN THIS Western-centric world, a huge amount of ink is split over the cons...

Read
China’s polyethylene demand good so far in 2020 but beware of risks ahead
10/09/2020

Note that all the comparisons in this post are on a year-on-year basis unless otherwise stated By Jo...

Read
Ah, I see: China’s booming demand mystery a little closer to being solved
08/09/2020

  Note that all the data comparisons below are on a year-on-year basis By John Richardson THE P...

Read
The China polyester mystery continues in a world turned upside down
07/09/2020

By John Richardson SOMETHING very strange is happening in China’s polyester industry which has eno...

Read
China will struggle to boost local retail sales during rest of 2020 with export outlook uncertain
04/09/2020

By John Richardson IF IT were easy, then there would be an oversupply of owners of large yachts in M...

Read
Pandemic and the developing world: No quick and easy solutions
01/09/2020

By John Richardson POVERTY alleviation in low-income developing countries could be set back a decade...

Read
The pandemic and petrochemicals demand: a whole new approach is required
30/08/2020

By John Richardson MONITORING demand has never been harder because of the pandemic. One of my collea...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more