Buying resumes: arrests two month fall in PE, PP from the Middle East

09-Aug-10
Polyolefin prices have nudged up as buying interest for polypropylene (PP) and polyethylene (PE) has gathered momentum in the Middle East market this week. As per ICIS, the trend is in line with upbeat sentiment in the Asian market as crude hovered above US$80, fuelling expectations that Middle East prices would continue to rise through September. Diversion of cargoes to the buoyant market in Asia has kept supply tight in the Middle East. A sharp rise in freight rates has also contributed to the surge in PE and PP prices. Freight rates have almost doubled to over US$100/ton from last year’s levels. Supply chain issues relating to shipping delays at Saudi Arabia’s Dammam port, and Dubai’s Jebel Ali port, have also contributed to the tightness. Congestion at Dammam port can be attributed to increased output from existing plants and new plant start-ups. The Jebel Ali port has been facing a sharp rise in cargo volumes due to the diversion of consignments from Iran, which has been re-routing its cargoes via Dubai due to the sanctions imposed by the United Nations and the EU. Offers for raffia PP into Dubai rose to US$1250/ton CFR GCC, with some suppliers offering cargoes at even US$1300/ton CFR GCC. Offers for low density PE (LDPE) were heard as high as US$1500/ton CFR GCC. PP availability from Saudi Arabia was further constrained by an outage at Petro Rabigh’s plant due to propylene shortage, as well as intermittent problems in previous months at the Al-Waha Petrochemicals plant. PE supply has also been restricted by shutdowns, but the problem has not been as severe as that for PP, as propylene prices have been surging much higher than ethylene prices. Also Middle East players enjoy better margins for PE than for PP due to extremely low ethylene feedstock costs compared with propylene. Distributors and traders said they had already exhausted their allocations for August and expected September allocations to be restricted. Processors stocks have been at low levels as they waited for prices to bottom after the free fall over the past two months. However, as this situation saw an abrupt reversal, they have been caught unawares. The traditional period of low trading activity in the month of Ramadan could be different this year.
  More News  Post Your Comment
{{comment.Name}} made a post.
{{comment.DateTimeStampDisplay}}

{{comment.Comments}}

COMMENTS

0

There are no comments to display. Be the first one to comment!

*

Name Required.

*

Email Id Required.

Email Id Not Valid.

*

Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.
*

Message Required.

Click to Change image  Refresh Captcha