Mideast to gain from China's tariffs on US petchems

The Middle East stands as the most likely beneficiary when China levies its proposed 25 percent tariff on U.S. polyethylene and liquid propane, as it will have to look for alternative source markets.

“The Middle East is already China’s biggest source for polyethylene and can further boost exports to the country,” Goldman Sachs said in a new report.

Another potential country to benefit is South Korea, it added.

China imports 12.7 million tons of polyethylene a year, of which the US currently accounts for only 600,000 tons.

Purchases from the US have the “potential to grow more than threefold over the next two years if the tariffs aren’t implemented,” US investment bank noted.  

While China is the third-biggest export market for the US for propane, London-based industry consultant Energy Aspects said though the tariffs won’t hurt America as much as intended, the most likely alternative option is the Middle East, as more supplies come on stream there.

Last week, the US threatened to apply import duties on nearly $50 billion on Chinese imports across 1,300 categories of products.

In retaliation, China raised import duties by up to 25 percent on 128 US products, including certain fruits and nuts.