US PE exports to Europe disappear as US-China trade tensions ease, price decline reverses.
Petrotahlil :Imports of cheap, competitive US-produced spot low density and linear low density polyethylene, which had been pricing below the Eur1,000/mt FD NWE mark, are now in limited supply in Europe, traders say, enabling sellers to reverse the discounting seen in June and July.
The Northwest European LDPE market was assessed Tuesday at Eur990/mt FD NWE, up Eur10/mt day on day, as buyers were unable to land trucks as low as the Eur950/mt FD bid levels seen last week.
Although bid levels were still seen at the Eur950/mt level in some quarters, European offers were now resolutely holding at Eur1,040/mt FD NWE.
"It is very limited now ... more Eur1,000/mt or above now. Less imports is a reality indeed," another PE consumer said Tuesday.
Another PE consumer, who noted that suppliers were not willing to entertain offers below Eur1,000/mt, said: "We didn't see that much LDPE in imports."
The jump in European PE imports in the second quarter of 2019 coincided with a rise in US-China trade tensions in May, which led President Donald Trump to raise tariffs on $200 billion of Chinese imports to 25% from 10%. China retaliated three days later, introducing fresh tariffs on $60 billion of American exports. Extra tariffs on an additional $300 billion worth of Chinese goods were also being considered, pending a US public consultation period in June.
However, the additional tariffs were suspended at the G20 gathering in Osaka at the end of June, following a meeting between Trump and Chinese President Xi Jinping, cooling tensions.
"It is clear that the US is impacting [European markets] ... the US [players] have big, new capacity and if they are not able to sell it to China, they will decrease the price and sell it in Europe," the second PE consumer said Tuesday.
The Chinese market is an important importer of a number of polyethylene grades and the increase in tariffs was said to have displaced US volumes originally destined for China, with a significant portion arriving in Europe.
According to the latest Eurostat data, European imports of LLDPE jumped 50% month on month in May to 353,981 mt.
European LDPE and high density polyethylene imports rose 35% and 25% month on month in May, respectively. LDPE imports totaled at 279,919 mt in May, up from 235,443 mt in April, while HDPE imports totaled 828,031 mt, up from 662,529 mt, the data showed.
The surge in imports from May pushed spot prices 15% lower in June and July.
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