20 January 2010 06:00 [Source: ICIS news]
(Clarifies price information in the 10th paragraph.)
By Prema Viswanathan
SINGAPORE (ICIS news)--The current polyolefins price spike in the Middle East and south Asia caused by mounting feedstock costs may not last long due to buyer resistance, sources close to suppliers and customers said on Wednesday.
“Increasing resistance from buyers is making it hard for suppliers to continue hiking prices,” a source close to a ?xml:namespace>
“We are worried that if prices keep rising on the back of higher feedstocks, we may see a crash as we did in late 2008, when prices hit unsustainable highs.”
End-users said they were finding it difficult to pass down their PE and PP costs to their customers.
“We would rather wait before making large purchases, as prices are too high currently and our margins are getting squeezed,” a Saudi Arabian PP converter said.
He said he expects prices to soften in the coming weeks, as supply was more plentiful in the Middle East, with several new plants ramping up their operating rates to around 70-80%, up from the 50-60% seen late last year.
“I have purchased limited volumes at high prices, but am unwilling to commit to large quantities at present,” said a PE converter.
Surging ethylene, propylene and naphtha values caused PE and PP prices in south Asia to increase by up to $130/tonne (€91/tonne) and $100/tonne, respectively, on 15 January compared with the previous week; in the Middle East, both PE and PP prices increased by $90/tonne over the same period, according to global chemical market intelligence service ICIS pricing.
High density PE (HDPE) film jumped to $1,400/tonne CFR (cost and freight) in
“Suppliers have been justifying their price hikes, citing high feedstock costs and tight supply, but demand is not robust enough to sustain the rally,” said an Indian trader.
At current price levels, traders in
On the supply side, the signals were confusing this week. Market sources in the east Mediterranean indicated a possible cut in allocations and further price hikes, especially for PE, due to supply constraints.
In the GCC region, however, buyers said there was adequate availability, despite a power outage in late December, which caused a production disruption in
In India, buyers were indicating that supply would be more abundant following the restart of Haldia Petrochemical's facility in West Bengal this week after a prolonged turnaround.
($1 = €0.70)
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