Escalating Russia-Ukraine conflict affect on China PET bottle chip export

Recently, the escalating conflict between Russia and Ukraine has become the focus of global attention. As China's traditional export destinations for PET bottle chip, Russia and Ukraine are very important to China's foreign trade.

Geographically, Russia is adjacent to China. Chinese PET bottle chip first arrives at Vostochny Port in far east Russia by ship, and then transferred to local downstream enterprises by trains. Since PET bottle chip producer in Russia is limited, downstream enterprises need to import PET to meet their own needs. As the trade relationship between Russia and the European Union is also relatively delicate, so most PET bottle chip are imported from China. However, for Russia, as the possible battlefield sites are far away from the far east, whether Russia and Ukraine go to war or not, the impact on the local procurement of PET bottle chip from China is relatively limited. What we need to pay attention to is that Europe and United States may strengthen economic sanctions against Russia, thus devaluing the rouble and dampening Chinese PET bottle chip export.

As the geopolitical intersection of the European Union and Russia, Ukraine's geographical location is very important, but Ukraine is relatively far away from China, which brings certain restrictions to the trade between China and Ukraine.

Russia imports of PET bottle chips from Chinese mainland have risen year by year, from more than 50,000 tons in 2017 to 220,000 tons in 2021, tripling in five years and accounting for more than 7% of China's exports of PET bottle chip. Ukraine, on the other hand, fluctuates relatively greatly every year. The proportion of Ukraine's imports of PET bottle chip from China is basically declining year by year before 2021, mainly because Ukraine is actually far away from China. Neighboring suppliers also have a great influence on it. The launch of new capacity in India and the Middle East has also hindered the export of Chinese PET bottle chip. But against a backdrop of tight global supply in 2021, exports of PET bottle chips from China to Ukraine rebounded to an all-time high.

In addition to the two states that currently declared independence, we also need to take a look at the southern port of Odessa. This is an important commercial port in Ukraine and the largest port on the north shore of the Black Sea. The foreign trade volume of the port of Odessa once accounted for more than 50% of the total foreign trade volume of the Soviet Union, which shows the importance of its strategic position. If the conflict between Russia and Ukraine escalates later, then this port is bound to be what Russia wants. At the same time, Odessa is also a Russian-speaking area, which is culturally inextricably linked to Russia. Whether the conflict continues to escalate in the future, or if there is a direct war, whether it is the interruption of Russian supply or economic and trade sanctions, it will undoubtedly have a significant impact on Ukraine's foreign trade. Ukraine is likely to completely become a landlocked country after losing control of Crimea. In that case, it is likely that it will be very difficult for Ukraine to purchase PET from China or Southeast Asia by sea in the later period.

Note: Percentage of Russian speakers in all Ukraine

If the war ends quickly, the daily game between the United States and Russia may be carried out for a long time, so that the actual impact on local PET demand in Ukraine is limited, and it is expected that PET import demand will continue to rise steadily. If the conflict between Russia and Ukraine eases finally, under the current situation of political premium in energy prices, the downward adjustment pressure from crude oil to end user sectors will intensify at that time, and this impact is expected to be global, rather than the foreign trade of the two countries alone.