Chinese petrochemical tariffs have little impact

Fuel Fix:

China's proposed tariffs on certain U.S. petrochemicals are expected to have a limited impact on Gulf Coast exports even as new production capacity comes online to serve growing Asian markets.

The proposed tariffs, announced Wednesday, would include low-density polyethylene used in films and shopping bags, as well as PVC, polycarbonates, acrylates and some other chemicals. But they do not cover styrene or ethylene glycol, major U.S. chemicals exports to China used to make plastics, foams and polyester.

Jonas Oxgaard, a chemicals analyst with Sanford C. Bernstein & Co., a New York investment management and research firm, said most of the chemicals on the list are exported in small volumes to China. Only about 6 percent of low-density polyethylene manufactured in the U.S. is shipped to there, and he noted that much of that volume could be exported to other markets.

"India could take every single ton of (polyethylene) that we're currently shipping to China," he said.
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In the long run, it is going to be in the Chinese interests to open their markets to US goods and stop their current protectionism.  When that happens the US tariffs are likely to go away too.