Is bottom nearing in polyolefin markets in Middle East and Africa

Players operating both in the Middle Eastern and African markets received September PP and PE prices from the Middle Eastern producers with three digit declines, indicating more than US$150/ton drops, as per ChemOrbis pricing service. However, now, players in these markets have started to question if the polyolefin markets are nearing the bottom. Many agree that supplies are rather limited when compared to August but they continue to highlight weak demand, which may prevent increases or at least limit the decrease amounts. In the Middle East, a Jordanian converter reported receiving new September import offers from different Middle Eastern producers while adding, “Saudi producers issued significant decreases this month and they are willing to offer further discounts in return for large volume purchases. Overall supply levels are comfortable but sellers might try to limit the availability in order to be able to pull up prices. Regarding our end product demand, it showed some slight improvements but it is still below normal levels. Therefore, we think that a stable to slightly firmer trend might be possible. Since we lack a clear view of the market, we are mulling over making some fresh purchases these days.” In Lebanon, a trader noted, “We feel like suppliers are limiting their availability in an attempt to preserve the market level. PE supplies are not that ample while demand is moderate. These days, players feel obligated to make some fresh purchases as they have been meeting their urgent needs for a long while.” In Saudi Arabia, a trader remarked, “Despite the noticeable decreases they recorded, September offers are still considered very high amidst discouraging demand. Overall supply levels are comfortable but we heard in the market that one of the Saudi producers might have a maintenance shutdown although the start date of the shutdown has not been voiced. Yet, we think that it might be after the Eid Holiday.” According to ChemOrbis Production news, PetroRabigh will have a 50 day maintenance shutdown in October at their LLDPE and HDPE film plants with a combined capacity of 900,000 tpa. The producer will also have a PP shutdown at their 600,000 tpa plant during the same period. In United Arab Emirates, a trader who received offers from a major Saudi producer said, “Despite the September decreases, we still think that prices have room to come down as overall demand remains thin. Nevertheless, players have started to feel worried that suppliers might attempt to limit their production in order to prop up an increase.” Looking at African markets, players voiced similar comments. A trader offering both to Kenya and United Republic of Tanzania, commented, “A major Saudi producer adjusted down their September prices many times this month but buyers continue to show resistance towards their prices. However, for now, they seem adamant on their offer levels and they refuse to accept any lower bids even in return for deals. Plus, the producer is said to be experiencing some delays on their deliveries and therefore, buyers do not have the option to postpone their purchases as it would cause further delays. Meanwhile, we think demand performs relatively better these days.” The trader also noted that the Saudi producer’s HDPE injection supplies are a bit tighter than other PE grades. A Nigerian trader also highlighted that Middle Eastern LDPE film supplies appear somewhat limited while adding that they received good number of inquiries for LLDPE film. Tunisian buyers, too, confirm slightly limited supplies. A converter operating in Tunisia, who obtained offers from Saudi Arabian and European producers, said, “Supplies are limited this month but buyers, who are hoping to get further discounts, are still resisting the current levels. In general, a cautious stance prevails on the buyers’ side.” A different Tunisian converter remarked, “September supplies are limited from a major Saudi producer when compared to August. Yet, overall demand is below moderate due to the summer holidays as well as the consecutive religious holidays, Ramadan and Eid. Therefore, we see that prices are still negotiable amidst weak buying interest.” Egyptian players are also questioning the supply issues. A PE converter said, “A Middle Eastern producer announced their prices briefly before they withdrew their offers since they do not have comfortable stocks for September. Meanwhile, the distribution market lacks sufficient cargoes and therefore, prices have started to stabilize a bit. Demand performs moderately and supply issues may start surfacing soon.” According to ChemOrbis, a trader operating in the country also cited, “We are offering on behalf of two different Middle Eastern producers but neither of them holds sufficient stocks. This month, we see slower demand and our customers are asking for discounts while limiting their purchases to 50-75 tons. However, we are not willing to offer more than $5-10/ton discounts and these are only for our regular customers.”