PE and PP prices tumble by 20% this month: markets at standstill

03-Oct-08

A 20% fall was witnessed in Polypropylene (PP) and polyethylene (PE) prices across the Middle East and South Asia - this is quickest drop seen in a single month in almost ten years. The recent developments make the future direction of polymer prices very unclear, with volatile feedstock and crude values adding to the unstable market conditions. Such a state of volatility has stunned buyers bringing markets to a virtual standstill. Buyers now prefer to wait in the sidelines, in anticipation of a further drop in spot prices- as they await prices to bottom out. As per ICIS Pricing, PP raffia was assessed at US$1520-1550/ton CFR GCC and US$1390-1475/ton CFR India last week, down as much as US$340/ton; and HDPE film grade tumbled by US$250/ton to $1560-1580/ton CFR GCC and US$1480-1500/ton CFR India. Demand has been weaker from downstream processors of PP and PE in the Middle East during the Muslim holy month of Ramadan and the Eid-ul-Fitr holidays. China has also embarked on a week long National holiday. USA is the main export market for processed products from Asia, particularly China. Hence, even when the processors return from the holiday break, market outlook appears bearish in the face of gloomy global economic outlook intensified by the US financial crisis