Traders are moving US-origin ethylene dichloride cargoes to Thailand or India instead of China since an additional 25% tariff was imposed on US-origin EDC and PVC imports to China earlier this month, market sources said Thursday.
However the impact on PVC would likely be limited as China's PVC imports from the US are mostly for re-export, avoiding the tariff, sources said.
China imposed the additional 25% import tariff on US-origin EDC and PVC on April 2 in response to the US imposing an import tax on Chinese aluminum and steel products.
The US has long been a key exporter of EDC and PVC to China. The country sources around 70% of its EDC imports from the US and around 45% of its PVC imports, according to Chinese Customs data.
However, China's EDC total imports almost halved to 375,406 mt in 2017 from 664,312 mt in 2016 due to a surge in domestic production, the data showed.
Of China's total EDC imports in 2017, around 70% or 260,564 mt was sourced from the US, followed by 20% from South Korea, 4.9% from Taiwan and 5% from Indonesia, according to Chinese Customs.
Market sources said traders are trying to mitigate the impact of the tariff by moving US-origin cargoes to Thailand and India instead of China, and moving Asian-origin cargoes, mostly from South Korea and Taiwan, to China instead of Thailand and India.
In some cases, Chinese EDC end-users may also exempted from the additional tariff. "Some EDC buyers in China use EDC for PVC production that is exported. In such cases, they may be exempted from the additional EDC tariff," one market source said.
Some market sources said the impact on spot EDC prices from the tariff was still unclear.
The CFR Far East Asia EDC marker was hovering around $280-290/mt in early trade Thursday, compared with $245/mt a week earlier, according to S&P Global Platts data.
IMPACT SEEN LIMITED FOR PVC
On the other hand, market sources said the impact of China's tariffs would be limited for PVC, even though the US is a key PVC exporter to China.
"Most US cargoes to China are for re-export purposes, which are not subject to the additional tax," said one market source.
China imported around 360,000 mt of PVC from the US in 2017, up 38.6% year on year and comprising around 46% of China's total PVC imports in the year, according to Chinese Customs.
Another source said US-origin PVC has been long excluded from China's domestic market as the Chinese government imposed an 11-83% antidumping duty on US-origin PVC more than a decade ago.
The CFR China PVC marker was assessed at $940/mt Wednesday, down $20/mt from a week earlier, Platts data showed.
