US polyethylene exports to Latin America rose in October as target diversification continued to take shape amid trade tensions with China, according to US International Trade Commission data released Friday.
Overall, US exports of PE reached a record 441,232.1 mt in October, beating the previous record, set in June, by more than 10%.
The cumulative gains came as PE exports to China fell for a fourth straight month to settle at a 5.1% share, the result of demand destruction tied to 25% tariffs on two key grades of US-origin PE.
October's overall export PE gains came as domestic demand has slowed in recent months, sources have said. It also comes on the heels of US production capacity rising 19.7% from the beginning of 2017 through the third quarter of this year, according to the American Chemistry Council.
Latin America saw its share of exports from the US rise in tandem with the overall gains, reaching 192,073.4 mt for all grades combined -- the highest total since July 2016, when the US sent 199,289.8 mt.
Exports to Latin America in October represented a 43.5% share, with the volume rising 14.4% from September and 40.5% year on year.
While month-on-month export gains can be at least partially attributed to domestic demand shifts and capacity additions, year-on-year increases more reflected Hurricane Harvey's impact on the US Gulf Coast in the second half of last year, when the storm severely affected output and logistics for months.
HDPE TRAFFIC DRIVES GAINS
By grade, high-density PE exports to Latin America represented the biggest source of growth, reaching 108,375.6 mt for its highest total since 116,143.1 mt in August 2016. October's HDPE exports to Latin America rose 10.1% month on month and 42.2% year on year.
Exports of low-density PE to Latin America came to 49,095.8 in October, a record that represented a 3.2% increase over the previous high set in May 2008. October's LDPE exports rose 30.5% from September and jumped 69.8% compared with the first month of Q4 2017.
Linear-LDPE exports to Latin American markets totaled 31,071.9 mt in October, up 4.8% for the month and 2.7% for the year, with the lack of more substantial gains tied to other key export regions seeing bigger increases. By comparison, US exports of LLDPE to Europe rose 62.3% for the month, while exports to Canada jumped 32.9% in October. The US also sent 11.5% more LLDPE volumes to Vietnam in October compared with September shipments.
Each of the top five Latin American countries in terms of PE exports from the US -- Brazil, Chile, Colombia, Mexico and Peru -- saw October bring both month-on-month and year-on-year gains, with only Mexico showing minimal growth from September.
Mexico, the primary recipient of PE exports from the US to Latin America, saw volumes bound for its markets rise to 79,995.4 mt to open Q4, up just 0.8% for from September and 16.3% year on year.
MEXICO MARKETS COMPLICATED
That growth in exports to Mexico was not stronger in October is in part from a sense of market saturation, sources have said, adding that currency woes are also pushing down domestic demand.
Local producers Braskem Idesa and Pemex have both reported strong competition from US imports, according to recent market feedback, although US exporters have found little in the way of relief in Mexico from a volume standpoint.
Mexican distributors and converters have been dealing with elevated stocks while practicing a "hand-to-mouth" approach of buying minimal hold-over volumes and waiting out a price floor on US- and Mexico-origin resins, sources have said.
Elsewhere, US exports of PE to Brazil reached an all-time high of 27,122 mt in October, besting by the previous record of 25,483.5 mt set in January 2014. Compared with the previous month, October's PE exports to Brazil rose 23.5% in October and 151.1% for the year.
Colombia, which typically represents the second strongest South American market for US PE exports, saw its volumes rise to a record 20,196.2 in October, representing an 8.7% increase from the previous record set in May 2015. Compared with September's volumes, US exports of PE to Colombia rose 28.5% for the month and 65.7% for the year.
Combined PE exports out of the US to Chile totaled 12,910.6 mt in October, up 34.4% on the month and 72.6% for the year. Peru, which historically has taken in as much as, or slightly less than, Chile, saw its volumes from the US rise to 11,716.1 mt to open Q4, up 39.8% from September and 84.8% from October 2017.
