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US HDPE, LLDPE exports to China down sharply amid tariffs

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US HDPE, LLDPE exports to China down sharply amid tariffs

Highlights

Trade tariffs in place for more than a year

HDPE, LLDPE flows to China down, LDPE flows up

Tariffs have sharply reduced exports of two grades of US polyethylene amid the ongoing US-China trade dispute, according to data from the US International Trade Commission.

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As new US startups have brought more high density and linear low density polyethylene production on line, flows into China, the largest global demand center, have retreated since China imposed 25% tariffs on those grades in August last year. Those tariffs, like the rest China has imposed on the US products, were in response to tariffs the US first imposed on Chinese products.

USITC data showed that during the first nine months of 2019, China received 121,255 mt of US HDPE, down 57% from the January-September period of 2018.

Over the same period in 2019, US LLDPE flows fell 37% on the year to 54,747 mt.

However, flows of US low density PE to China more than doubled to 204,199 mt from 75,911 mt, the data showed. China did not impose tariffs on LDPE last year.

US producers have started up 72% of 6.4 million mt/year of new PE capacity coming online from 2017-2019 in the first wave of new petrochemical infrastructure to be built to exploit cheap ethane unearthed by the US natural gas shale boom. The remaining 1.77 million mt/year is slated to start up by year-end, barring any delays.

The second and potentially third waves are expected to bring another 7.27 million mt of new PE capacity come online after 2020. HDPE and LLDPE make up more than 90% of the known new capacity either in operation, under construction or planned, while LDPE makes up about 6.5%.

OVERALL US PE EXPORTS UP

While flows to China have fallen for the two grades facing tariffs since August 2019, overall exports were up sharply, reflecting the increased output, USITC data showed.

In the January-September period this year, the US exported 1.62 million mt of HDPE, up 44% from the same period in 2018. The 2019 amount also surpasses the 2.52 million mt exported throughout 2018.

LLDPE outflows rose 24% in the first nine months of 2019 to 710,948 mt compared to the same period last year, and 972,850 mt in LDPE exports was 52.6% higher than in the January-September period of 2018.

Flows to Vietnam increased notably for all three grades, the data showed. HDPE and LLDPE exports to Vietnam rose more than five times over the January-September period to 122,607 mt and 86,268 mt, respectively, compared to the same span in 2018. LDPE flows more than doubled to 26,7639 mt.

Flows to Belgium also rose significantly for all the three grades in the first nine months of 2019 compared to the same span in 2018. HDPE and LDPE flows to Belgium nearly tripled to 158,530 mt and 38,764 mt, respectively, while LLDPE flows rose more than 11% to 60,301 mt, the data showed.

While polyethylene is used to make the most-used plastics in the world, each grade has a different makeup to satisfy specific uses. HDPE is used to make natural gas transmission pipes, milk jugs, grocery bags, paint jugs and toys, while LLDPE is used in making heavy-duty packaging, such as trash bags and stretch film for industrial use. LDPE, the oldest type of polyethylene, is used to make food packaging, carpet backing, hot melt adhesives and road stabilizers.

-- Kristen Hays, kristen.hays@spglobal.com

-- Edited by Kshitiz Goliya, newsdesk@spglobal.com

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