27 January 2010 05:59 [Source: ICIS news]
By Prema Viswanathan
SINGAPORE (ICIS news)--Middle East suppliers have hiked regional polymer offers for February by $130-250/tonne (€92-178/tonne) over January on the back of high feedstock costs and tight supply, belying expectations of a price decline, industry sources said on Wednesday.
Some customers have already accepted the offers as supply was tight due to production issues in the region, the sources said.
“We had kept inventories low in anticipation of a price erosion which didn’t happen, so we are not in a position to bargain as we urgently need to replenish our stocks,” said a polymer end user in Saudi Arabia.
Polyethylene (PE) offers have shown the sharpest increase, surging by $250/tonne or 19% for low density PE (LDPE) in the Gulf Cooperation Council (GCC) and East Mediterranean (East Med) regions to $1,550-1,600/tonne CFR (cost and freight), traders and end users said.
Offers for high density PE (HDPE) and linear low density PE (LLDPE) have risen by $130/tonne to $1,350/tonne CFR GCC and $1,400-1,420/tonne CFR East Med.
Polystyrene (PS) offers have surged by $200/tonne or 14% to $1,540-1,560/tonne CFR GCC/East Med for general purpose PS (GPPS) and $1,640-1,670/tonne CFR GCC/East Med for high impact PS (HIPS). Polypropylene (PP) offers have risen by up to $130/tonne to $1,300-1,320/tonne CFR GCC/East Med for homopolymer grades
An outage in Saudi Arabia due to power supply issues and an upcoming two-month maintenance shutdown at Oman Polypropylene over February-March, which have tightened polymer supply have also exerted upward pressure on PE, PP and PS prices in the Middle East.
Rising prices in Asia and Europe were another factor prompting Middle East suppliers to hike offers, sources close to a supplier said.
Customers said they were unsure of the price direction in the key China market post-Chinese New Year holidays in mid-February and did not want to risk being caught with hand-to-mouth inventories.
“The market could go either way in February, so we can’t afford to kept stocks low,” said a PE converter in Dubai. “We were hopeful earlier of a price decline due to a slowdown in Chinese buying following the government’s measures to tighten credit, but the situation is very unclear right now.”
On a positive note, demand was stable-to-strong in the GCC, end users said.
But in the East Med, the outlook was mixed.
“In Syria and Jordan, demand is quite lacklustre, as many converters had covered their requirements last month, when prices were lower. But in Egypt and Lebanon, demand is much stronger,” said a trader in Jordan.
($1 = €0.71)
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