Chinese PE players weigh likely impact of Iran sanctions

Players in China’s PE markets are evaluating the likely impact of the latest round of Western sanctions on Iran as they formulate their business plans going forward, as per ChemOrbis. Most Chinese players predicted that the sanctions would not have a drastic effect on their business in the short term while adding that the sanctions may introduce significant changes into the structure of China’s polymer trade going forward. For the first ten months of 2011, Iran has been the third largest exporter of HDPE to China, exporting a total of 336,303 tons at nearly 12% of China’s total HDPE imports, according to data from Chinese Customs. Iran has been the largest LDPE exporter to China so far in 2011, exporting a total of 253,570 tons. Iranian LDPE has accounted for around 21.3% of China’s total LDPE imports this year, exporting nearly twice as much as South Korea, the second largest LDPE exporter to China. Iran has been the seventh largest LLDPE exporter to China for the first ten months of the year, exporting a total of 73,025 tons, around 3.6% of China’s total import volume. “The newest round of sanctions has not yet had any major impact on our business in China,” stated a trader dealing in Iranian cargoes. “Exports from Iran to China are up around 15% over the past year and we may attempt to sell in larger volumes to China if the sanctions push Iranian material out of the European market,” the trader commented. A source from a global producer operating a joint venture HDPE plant in Iran reported that, “our sales are proceeding smoothly and we have not experienced any major difficulties from the sanctions yet. “ The producer added that they do most of their business for Iranian materials with a select group of traders who place regular purchase orders. Issues arranging payment with Iranian companies have presented roadblocks to some Chinese buyers interested in purchasing Iranian cargoes. One trader commented, “we cannot arrange payment to Iran now and we can only do business by routing payments to offices in Hong Kong and other locations outside Iran.” “We may have to reduce the amount of business we do with Iranian firms if stiffer sanctions are applied in the future,” the trader added as per the plastics pricing service ChemOrbis. A converter stated that it is possible to purchase material directly from the China representative offices of Iranian firms, but added that, “these firms generally want to be paid in cash or by T/T and we do not have sufficient cash reserves to do business on these terms." While Chinese firms generally say that they are still doing business as usual with Iranian companies, local representatives of international firms are taking a more cautious stance towards dealing with Iranian cargoes. A trading house based in South Korea commented, “we have greatly reduced the amount of business we are doing with Iranian companies through our offices in China.”