A Trade War Could Trigger A Rise In Global PE Prices
- Nov 03, 2018 -

Trade patterns are changing as Chinese sources from other regions and [us producers] move to empty markets, such as middle eastern producers of plastic materials PE moving some products from Europe to China and us producers selling more to Europe and elsewhere.

Global demand is fixed in the short term and will not change because of a trade war. Supply is also fixed. So supply and demand are pretty balanced.

China's import and export of PE from the United States will not be affected by the 25% tariff, only by the domestic consumption tariff. Whatever the tariffs, China's domestic demand for plastics will continue to grow, as continued urbanization leads to greater demand for finished plastics, such as food packaging.

One result of the current volatility in energy prices and trade uncertainty is that us PE producers may reconsider new customer groups, and if China is no longer the main destination for PE exports, us companies will certainly reconsider adjusting their marketing plans.

In a short period of time, due to the butterfly effect brought by trade war, the imbalance of supply and demand caused by trade war, for Chinese consumers and the global market of plastic raw materials PE, the price of products may rise due to the tariff.

From the above analysis of operating costs, PE plastics global prices are likely to rise. If you're a PE seller in China, importing from the U.S. and now having to import from elsewhere, then your cost curve will go up. So these costs are being passed on.

According to economic experts, if the us-china trade war goes on, it could affect growth rates. Because a tariff is essentially a tax, and in the long run it will slow economic growth, that may not be good news for either side of a trade war.