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China taxes polyethylene from three U.S. sources
China is adding more than 9.2 million tons of us polyethylene capacity every year, a focal point of rising trade tensions between the two countries, the us chemistry council said on August 8. With most or all of its exports to Asia, China imposes tariffs on all levels of polyethylene.

China is adding more than 9.2 million tons of us polyethylene capacity every year, a focal point of rising trade tensions between the two countries, the us chemistry council said on August 8. With most or all of its exports to Asia, China imposes tariffs on all levels of polyethylene.

The United States is set to impose $16 billion in tariffs on Chinese products on August 23, the second round of $50 billion in tariffs after the tariffs on steel and aluminum in March. China said it would impose retaliatory tariffs of $16 billion on the same day, including $2.2 billion on chemicals and plastics.

According to the ACC, the second round included China imposing tariffs on three us sources of polyethylene: LDPE, LLDPE and HDPE. In China's $16 billion list, an earlier version included only LDPE. LDPE accounts for about 20 percent of the known 9.2 million tons/year polyethylene capacity in the United States.

However, the ACC on Wednesday released a revised list of retaliatory tariffs, including LLDPE and HDPE, which account for 42.4 percent and 37.3 percent of new PE capacity, respectively. The list also includes other resins and chemicals such as polyvinyl chloride, dichloroethylene, acrylonitrile and phenol, as well as naphtha, gasoline, diesel and liquefied propane and methanol. "" if you're going to ship to China, it's better to stop," "a dealer source said.

Officials have yet to specify whether goods already in transit will be affected. Some products, such as PVC, already face antidumping duties and are routinely re-exported, so U.S. market sources are not expected to be affected.

The cheap ingredients unearthed in the domestic natural gas boom have created nearly $200 billion in new chemical infrastructure for the us, including eight new steam cracking furnaces supplied by ethane and 13 new PE plants that will go into production in 2017-2019.

When LDPE was included in China's initial retaliatory tariffs on high chemicals, sources were not overly concerned, saying it accounted for a fifth of new capacity.

Concerns have been heightened by the fact that North America is already oversupplied, with the other two grades accounting for the vast majority of new exports. Asian demand is expected to grow faster than any other region, with China and India leading the pack, according to platts.

"It's worse than a hurricane." A market source said, referring to hurricane Harvey's unprecedented attack on Texas petrochemical's infrastructure nearly a year ago.

Another source noted that some producers would be able to cope with any consequences. For example, dupont's new Sadara conglomerate in Saudi Arabia can supply China, while its us operations can ship goods to other regions.

Trade flows will also change, the sources said. But at least some U.S. producers are likely to feel pressure after building factories that are mainly aimed at exporting to Asia's largest country, and global prices are likely to rise.

"All of this will lead to higher prices," said another trader. He pointed out that currency depreciation in other countries, including China, has helped push up domestic prices, which usually leads to higher export prices.

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