FocusMideast polymers to pick up after Ramadan

04 September 2008 10:54  [Source: ICIS news]

By Prema Viswanathan

SINGAPORE (ICIS news)--Polymer trade has slowed to a crawl in most countries in the Middle East and is likely to revive only in October, when the Muslim holy month of Ramadan ends, producers, traders and end-users said on Thursday.

“Most converters in the Gulf Cooperation Council (GCC) region and the East Mediterranean reduce their plant operating rates by 20-30% during Ramadan, which began on 1 September, resulting in lower consumption of polymers,” a Dubai-based end user said.

The slowdown in buying and weak sentiment in Asia had caused prices in the Middle East to slide sharply for polypropylene (PP) and polyethylene (PE).

PP and PE were assessed at $1,830-1,920/tonne CFR (cost and freight) and $1,800-1,870/tonne CFR respectively, a fall of up to 10% from a month earlier according to global chemical market intelligence service ICIS pricing.

The sharp fall in Asian prices and crude values had dampened sentiment in the Middle East, and most end-users were waiting for the announcement of October offers from major regional suppliers later this month, traders said.

“There is an anticipation that PE and PP prices will fall further in October in the Middle East, so buyers want to maintain only hand-to-mouth inventories at present,” a Jordan-based trader said.

Prices had been rising consistently this year from on strong demand and snug supply caused by outages, resulting in a heavy cost burden for converters.

“It has been very difficult to pass on the rocketing polymer prices to our customers, so our margins have taken a severe hit,” said a Muscat, Oman-based converter.

With several new capacities due to start up in the Middle East in the next few months, buyers are expecting prices to fall sharply.

The only countries in the region where demand continues to be strong are Iran and Israel.

“In Iran, Ramadan has traditionally had very little effect on polymer trade,” said a Tehran-based trader. "The appetite for imports continues to be strong, although buyers face a liquidity crunch due to credit curbs imposed by Iranian banks to combat inflation."

In Israel, sentiment is bullish on the back of export-led demand during the pre-Christmas manufacturing season, traders and converters said.

“Despite the economic slowdown, we are getting plenty of orders for finished goods from customers in the US and Europe,” said a Haifa-based converter.

Click here to find out more on the European polyethylene margin report
For more on PP and PE visit ICIS chemical intelligence
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By: Prema Viswanathan
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