FocusMiddle East PE, PP up $110/t in tight market

28 January 2008 07:56  [Source: ICIS news]

By Prema Viswanathan 

 

SINGAPORE (ICIS news)--Middle East polyethylene (PE) and polypropylene (PP) prices for February shipment cargoes have risen week on week by up to $110/tonne (€75/tonne), causing converters to suffer a severe margins squeeze, industry players said on Monday.

 

Producers cited intense supply constraints and rising feedstock prices as reasons behind the PE and PP price hikes, for the second time since December.

 

“Ethylene and propylene feedstock prices have been rising steadily, leaving polyolefins producers with no option but to raise their product prices,” said a producer.

 

End users, on the other hand, have been unable to pass on the polymer costs to their own customers.

 

“This is the second sharp rise in two months, so our customers are protesting,” said a Muscat-based converter.

 

A spate of turnarounds and shortages, coupled with diversion of regional cargoes to Europe, left Middle East customers with little bargaining power, a Dubai-based converter said.

 

“Producers get better netbacks from Europe, due to the growing strength of the euro, so we are left high and dry,” it added.

 

The sharpest rise was in the prices of copolymer grade PP, which rose by up to $110/tonne week on week in the Gulf Cooperation Council (GCC) region, on strong demand and restricted supply.

 

Prices of raffia and injection grade also rose by up to $80/tonne in the GCC, on limited availability.

 

In the case of PE, the most robust grade continued to be low density PE (LDPE), which surged $70-100/tonne from January levels, breaching the $1,900/tonne DEL (delivered) level for the first time ever in the East Mediterranean (East Med) region.

 

Availability of LDPE had been extremely restricted, with no new capacities coming on stream in recent months and upcoming start-ups in Iran delayed again.

 

Demand for linear low density PE (LLDPE) had also been bullish, with prices rising by $80/tonne month on month due to the delayed restart of the Eastern Petrochemical Co (Sharq) plant in Saudi Arabia and increased demand for LLDPE as a substitute for scarce LDPE.

 

High density PE (HDPE) film prices have also risen $70-80/tonne in the East Med, due to limited availability and rising demand in Asia.   

 

($1 = €0.68)

 

By: Prema Viswanathan
+65 6780 4359

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