Hanjin's financial turmoil: Mass delay in petchem shipments

As Hanjin Shipping Co., South Korea’s largest shipping company filed for bankruptcy protection on Wednesday, 31 August 2016, many main ports around the world have denied entry or impounded Hanjin-operated ships. This has upset the global trade, including the Asia petrochemical sector. In fact, many buyers in the region having containers with this shipper are still puzzling about what would happen next, with most pointing to a serious delay in shipment. 

A brief survey in China shows that many buyers in this country are having en-routed Middle Eastern PP and PE cargoes using Hanjin shipping lines. A trader informed, “We have 300 tons of Middle Eastern homo-PP cargoes, which was scheduled to arrived by 10 September. However, Shanghai and Xiamen ports authorities have rejected the entry of Hanjin ships. We have informed our customers, and at the moment, we only can wait.”

Buyers here are advised to switch to other shippers, raising a possibility that shipping costs might increase sharply in the near term. On the other hand, other traders have been expressing their expectation for the near term outlook, “We think domestic supply might remain tight in the coming days due to the delay in number of shipment. This might keep the sentiment on the firm track, especially when demand is anticipated to pick up soon.”

Meanwhile, a buyer in Vietnam who has Saudi Arabia homo-PP injection cargoes on board said, “Our parcels supposed to arrive in days. We are not so sure what would be the next step to be taken, though one thing clear is that clearing custom document could be a huge hurdle.” 

Another Malaysian buyer added, “We have 100 tons of Middle Eastern PE cargoes just shipped out two days ago using Hanjin. We expect the cargoes to be delayed, and there is little we could do at the moment. We might source some nearby cargoes to meet our immediate need.” 

It is unclear on how long would these shipments be delayed, however, the impact is just beyond the PP and PE sectors as Indian PVC buyers are reporting the same issues. Would downstream end product market suffer from this matter, as most European and US ports are turning away Hanjin’s ships just when retailers in these regions are stocking up for the holidays ahead.