At a time when the United States will impose tariffs on several commodities this week, Sinopec companies seem to be calm and accelerate the search for alternative suppliers.
However, some companies admit that due to tariff restrictions, the contracts they signed a few months ago will face losses.
Today (August 23), a 25% tariff on US$16 billion worth of US origin goods has taken effect. Petrochemical companies have been busy looking for alternatives to importing from the US, gaining new supply channels and reducing the possibility of loss.
For example, some buyers of ethylene glycol (EG) said they are no longer imported from the United States.
'We have a new supply source, and we don't buy American goods now.' A big buyer said.
China is heavily dependent on EG imports, although the proportion of the United States has been declining over the past few years.
Figure: Qingdao Container Terminal, Shandong, China
Similarly, acrylonitrile buyers have given up on the United States and turned to other regions for supply. The United States has played an important role in the Chinese market.
The increase in domestic production of acrylonitrile also led to a decrease in imports.
Some key end users of acrylonitrile, such as ABS producers, have said that it is common to get goods from other factories in Asia instead of shipping them from the US.
An ABS producer said: 'We have factories in other parts of Asia to ensure supply (from these plants) for use in China.'
Some polyolefin traders say they have stopped buying US products and turned to Middle Eastern suppliers. They added that it has become increasingly difficult to apply for a bank letter of credit to fund their purchase of any US goods.
'No one can accept a 25% increase in costs.' A trader said.
'Even if you import goods that are not currently on the tariff list, banks are worried about future risks. There is no sign of a easing of Sino-US trade wars,' he added.
Some Chinese polyolefin buyers are trying to re-export the goods they received in the previous months, when the tariffs on these products are not expected to reach 25%.
The rapid development of trade disputes between China and the United States prompted the United States to publish several ever-changing product lists, which may be affected by tariffs, which further increases uncertainty.
China's first tariff announcement excludes several polyethylene grades, but in the latest updated list, low density polyethylene (LLDPE) and high density polyethylene (HDPE) are included.
However, low density polyethylene (LDPE) is not included in the list.
According to sources, in order to reduce losses, these polyolefin buyers are trying to re-export contracted goods to markets such as South Korea and Vietnam.
The Chinese trade delegation held a round of talks with the US trade delegation in Washington on Wednesday.
However, most Sinopec raw materials companies said they have no hope of any positive results in the negotiations.