Some polymer traders in China are re-exporting their spot imported LDPE and LLDPE cargoes in a bid to clear inventory in the face of weak domestic demand, sources said Wednesday.
This is an unusual practice because China usually absorbs most of its polymer imports, sources said. But traders have been unable to sell some of the cargoes they bought at higher prices and have since stored in bonded warehouses.
One trader was heard to have bought an LLDPE bonded warehouse cargo bonded warehouse in China at $1,090/mt last week. The cargo fetched $1,180/mt CFR when it was sold in Vietnam, where polyethylene resins are not taxed.
Sellers are also considering farther destinations like South America or West Africa as arbitrage windows have opened to those regions from Asia, another trader in China said.
In October, China exported 32,000 mt of PE, more than double its September exports.
Monthly exports are typically around 15,000-20,000 mt and are covered under long-term contracts or manufactured on tolling agreements for processing and exporting, traders said.
China's weak macroeconomic continues to drag down commodity prices including PE.
The economy grew 6.9% in the July-September quarter, slowing from 7% the previous quarter.
Demand for polyolefins applications in the packaging sector tracks economic growth.
