Impact of Trade War on Propylene Market

On June 15, the U.S. issued a list of products which would be imposed tariffs on and it would impose a tariff of 25% on approximately 50 billion USD of imported products from China. Approved by the State Council of China, the Customs Tariff Commission of the State Council issued an announcement and decided to impose a tariff of 25% on 659 items of products valuing approximately 50 billion USD imported from the U.S. In the products list, there were many propylene-related products including liquefied ethylene, liquefied propylene, liquefied butylene, liquefied butadiene, liquefied propane, acrylonitrile, etc. However, SCI holds that trade war will have a limited impact on propylene market.

On June 15, 2018, the U.S. issued a list of products subjected to tariffs and would impose a tariff of 25% on approximately 50 billion USD of imported products from China. Therein, the U.S. will impose a tariff on about 34 billion USD of imported products from July 6, 2018. Meanwhile, the U.S. will begin to solicit public opinions on about imposing a tariff on 16 billion USD of imported products.

Impact of Tariff on Liquefied Ethylene, Liquefied Propylene Liquefied Butylene and Liquefied Butadiene

The HS code of above products was 27111400, which was the HS code of mix products, but the HS code of propylene was 29012200. Therefore, it was assessed the correlation between those products and propylene was not large.

If the trade war impacts China’s propylene import volume from the U.S., the impact will be limited. Seen from the above chart, China only imported 7.2kt of propylene resources from the U.S. in 2017, taking up 0.23% of the total propylene import volume in China.

The major origins of imported propylene resources are South Korea, Taiwan Province and Japan. The overall import volume from these three origins accounts for nearly 90% of the total. In addition, Thailand, Philippines, Indonesia, Malaysia and other Southeast Asian countries also export propylene resources to China, and the overall import volume from these countries accounts for about 10%. Generally speaking, the import of U.S. propylene will have a limited impact on China propylene market.

In conclusion, SCI reckons the trade war only has a limited impact on the propylene market. Propylene market will remain normal. There will be many PDH units to be put into operation in the future. In the propylene downstream industry, the capacity will also continue expanding, including the acrylonitrile capacity. Participants can focus on the SCI report to learn about whether the propylene import pattern changes.