Middle East PE, PP offers for September increase on tight supply

27 August 2009 13:21  [Source: ICIS news]

SINGAPORE (ICIS news)--Middle East offers for polyethylene (PE) and polypropylene (PP) for September loading have risen by $20-30/tonne from August levels on the back of tight supply caused by production issues, market sources said on Thursday.

“Allocations have been reduced quite sharply due to supply constraints, prompting suppliers to raise their price targets,” said a supplier.

However, buyers said they would only purchase enough to cover their immediate requirements, as business would be slow during Ramadan - a holy month for Muslims - which began on 22 August.

“We have no option but to accept the supplier’s offers, as our inventories are low due to low availability in the past few weeks,” said an end user in Oman.

A spate of outages and production cuts at PE and PP plants in the Middle East has severely restricted supply. Besides the unscheduled shutdowns in Iran and Saudi Arabia, there had also been production cuts at Ibn Zahr’s No 1 and No 2 PP lines at Al Jubail, Saudi Arabia, due to a shortage of propylene feedstock caused by propane gas availability issues, a source close to the company said. The lines have a combined capacity of 640,000 tonnes/year.

PP offers into the Gulf Cooperation Council (GCC) region for September were hiked this week to $1,170-1,200/tonne delivered (DEL), while PE offers were raised to $1,250-1,350/tonne DEL.

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By: Prema Viswanathan
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