FocusLDPE hits new high in Mid-East, south Asia

23 August 2007 07:05  [Source: ICIS news]

By Prema Viswanathan

SINGAPORE (ICIS news)--Low density polyethylene (LDPE) film prices in the Middle East and south Asia have risen by up to 6.3% or $100/tonne this week to record highs due to extremely tight supply and low customer inventories, suppliers, traders and end-users said on Thursday.

Prices have been steadily rising since the beginning of August, and have yet to peak, suppliers and traders said.

"Availability has been severely restricted due to outages in Europe, resulting in the diversion of cargoes to that region from the Middle East and southeast Asia," said a Dubai-based trader.

Prices had hit $1,700/tonne CFR (cost and freight) in Kuwait, Syria, Jordan and Lebanon, while deals were reported in Oman and Bahrain at $1,650-1,670/tonne CFR.

A supplier said it had sold cargoes to India and Pakistan at $1,680-1,700/tonne CFR and $1,660-1,680/tonne CFR respectively.

Low customer inventories and strong demand from the packaging segment were also supporting high prices, traders and converters said.

"So strong is the demand that customer resistance is non-existent right now. Converters have grabbed our offers without any negotiation, said a Middle East supplier.

"We are running flat out but are still finding it difficult to cope with enquiries."

A Dubai-based converter said that it was able to absorb the high LDPE prices by increasing its exports to Europe, where the strong euro ensured higher margins.

Outages at the Borealis and INEOS plants in Europe have been restricting supply. Strong demand in Europe also prompted Dow Chemical last week to stop accepting new orders for August.

Persistently high ethylene and East-West freight costs have also lent support to the surge in LDPE prices.

The major LDPE producers in the Middle East and Asia include Saudi Basic Industries Corp (SABIC), Qatar Petrochemical Co (Qapco), LG Chem and Petlin Malaysia.

By: Prema Viswanathan
+65 6780 4359

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