Offers slashed by Middle Eastern polymer manufacturers in buyers market

24-Jan-15

Polymer producers in the Middle East have been aggressively cutting offers to keep existing customers and secure new ones in what is largely seen as a buyers’ market, as the continued plunge of crude values was dragging down polymers prices, as per sources in ICIS. Offers for high density polyethylene (HDPE) film were heard in high US$1200/ton cost and freight (CFR) Gulf Cooperation Council (GCC) levels, while polypropylene (PP) raffia offers were quoted in mid- to high-US$1100/ton CFR GCC levels. Few deals were concluded at these prices. “Producers are resorting to a simple tactic. Undercut competitors to win market share,” said a source close to a Saudi supplier. Producers are wary of losing loyal customers if they failed to match the low prices of their competitors, a UAE-based trader said. Amid intense competition, plastic processors are able to pick and choose from which supplier to buy. “The fall in polymer prices is so conservative. There is still room for a further correction. Oil fell by so much since the middle of last year,” a Saudi-based buyer said. HDPE film prices in the GCC have shed 17% since July last year, while PP raffia prices fell by 22% over the same period, according to ICIS data. Crude prices, on the other hand, have plunged by over 50% since July 2014 Middle East polymer prices are expected to be weighed down by oversupply concerns as UAE’s Borouge is ramping up production at the third phase of its expansion in Ruwais (Borouge 3). "Borouge is expected to compete aggressively and will likely shake up the polymer market in the Middle East in 2015,” a GCC-based buyer said.