“Despite payment issues, China remains our focus”: Iranian traders

As reported earlier, Chinese government tightened banking regulation from which most Iranian materials imported to the country has to make payment through telegraphic Transfer (TT) method instead of opening Letter of Credit. This caused a lot of concern among buyers over cash flow problem, which dampened demand for this origin over the past month.

An Iranian trader said, “We have been attempting to divert our cargoes to Russia and Europe, however, China remains an important market to us.” The source added that they are stepping up measures to encourage cargoes off take in China amid payment issues. This included offering at more competitive prices to buyers.

In fact, couples of deals for Iranian LLDPE film are reported in China this week at $980/ton CFR China, TT 15-85% term. Though these deals are minority at the moment, many commented that three-digits prices could entice buying interest in China again.

Another traders selling Iranian material said, “We are collecting buy idea among Chinese customers while attempting to divert some cargoes to Vietnam. However, sales are slow as buyers are reluctant with the TT payment term.” Several customers reported that they could still open LC while buying Iranian material, however using EUR instead of USD. This is more complicated process, sources added.

It appears that Iranian suppliers are struggling to maintain a fair share in the world’s largest petrochemical importer – China. In 2016, Iran topped the list of HDPE and LDPE exporter to China with nearly 1.2 million tons and 483,000 tons respectively, according to China Custom Department.

Currently Iranian materials form the lower end of import PE to China at $1020-1025/ton for HDPE blow molding, $1070-1105/ton for HDPE film, 1100/ton for LDPE film and $980-1050/ton for LLDPE film, all based on CFR China, TT in advance term.