China will remove import tariffs on some US-origin polymers next week, in a move that is likely to precipitate a sudden shift in global trade flows.
China's finance ministry (MoF) said today that polypropylene (PP) block copolymer and certain grades of linear-low density polyethylene (LLDPE) from the US would no longer be subject to restrictive 25pc tariffs from 26 December. The exemption will last for one year.
Further details, and confirmation of other affected grades, were not immediately available.
The MoF announcement came a few days after the US delayed indefinitely the imposition of new tariffs on imports from China, after Washington and Beijing concluded negotiations on an interim trade agreement.
Chinese buyers have mainly avoided importing US-origin polymers in 2019 because of the restrictive tariffs, instead favouring supplies from southeast Asia and the Middle East.
The tariff exemption move could encourage US producers to shift their exports away from Europe and Turkey to instead sell more in China, adding more options for cost-conscious Chinese buyers.
This may leave Middle East and southeast Asian producers under increased pressure and facing rising competition to sell into China, a key export market.
Supply of PP and LLDPE is likely to increase in Asia in 2020, when new capacity is due to come on line in Malaysia, Oman and Russia.
The interim trade deal agreed late last week would lower the tariff rate on roughly 20pc of the volume of US imports from China to 7.5pc from 15pc, as well as postponing new tariffs. China has agreed in return to purchase $50bn of agricultural commodities and another $200bn worth of energy and manufactured products and services in the next two years, the US says. But details are unclear and the deal may not be finalised and signed until early January.
By Muhamad Fadhil and Yee Ying Ang
