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US shale products flood Asia markets as China builds tariff wall

Tokyo - Chemical products made from U.S. shale gas are flooding Southeast Asia as Chinese tariffs keep them out of what was supposed to be their largest market.

Tokyo - Chemical products made from U.S. shale gas are flooding Southeast Asia as Chinese tariffs keep them out of what was supposed to be their largest market, with the resulting supply glut dimming earnings prospects at petrochemical companies. “Additional tariffs imposed in the trade war have made it difficult for U.S. companies to export large quantities of shale gas products to China,” Japan Petrochemical Industry Association Chairman Kohei Morikawa told reporters Thursday, referring to the 25% surcharge slapped on American goods. “The products have been shipped instead to Europe and Central and South Americas, and are coming to Asia as well,” said Morikawa, president of Showa Denko. Ethylene prices plunged to $900 a ton in December from $1,400 in September in Asian markets.
With products diverted from China pushing down prices, high-flying petrochemical companies could now join the list of industries brought down by a drawn-out trade war between the world’s two largest economies. The trend is particularly worrisome for Japanese producers, which have managed to improve plant operational rates through painstaking streamlining in light of the U.S. shale boom.
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