06 August 2010 08:06 [Source: ICIS news]
By Prema Viswanathan
The trend was in line with the upbeat sentiment in the Asian market as crude hovered above $80/bbl, fuelling expectations that
Offers for raffia-grade PP into
Offers for low density PE (LDPE) were heard as high as $1,500/tonne CFR GCC, up $50/tonne from last week’s levels, according to market sources.
Earlier, PP and PE prices had bottomed and were even beginning to rise this week, reversing the steep downward trend witnessed since late May. (Please see graphs below)
Just last week most transactions in GCC region for August were concluded at $1,200-1,250/tonne CFR for raffia-grade PP and at $1,170-1,220/tonne CFR for film-grade high density PE (HDPE), marking a $50-80/tonne month-on-month decline.
Traders said the diversion of cargoes to the buoyant market in Asia kept supply tight in the
In the case of PP, availability from
PE supply has also been restricted by shutdowns, but the problem has not been as severe as that for PP, as
In any case, propylene prices have been surging much higher than ethylene prices, traders said.
A sharp rise in freight rates has also contributed to the surge in PE and PP prices, market sources said.
“Offers of black pipe-grade HDPE from southeast Asia into the Middle East have surged by $70/tonne week on week to $1,450/tonne CFR, partly due to rising freight rates,” said a
Freight rates have almost doubled to over $100/tonne currently from last year’s levels.
Supply chain issues relating to shipping delays at the Dammam port in
The Dammam port congestion is attributed to the increased output from existing Saudi Arabian plants and the start-up of new plants such as Yansab.
The Jebel Ali port has been facing a sharp rise in cargo volumes due to the diversion of consignments from
Distributors and traders said they had already exhausted their allocations for August and expected September allocations to be restricted.
Although the Muslim fasting month of Ramadan, beginning next week, is usually a period of low trading activity, this year the situation could be a bit different as customer inventories were very low, an end-user said.
“Processors have been keeping their stocks low, waiting for prices to bottom following the free fall over the past two months. So they were taken totally unawares when the situation reversed so suddenly,” he said.
Demand usually picks up in mid-September, after the week-long Eid ul-Fitr holidays at the end of Ramadan, said a trader.
“But this year, buying interest is expected to be much better than it was last year, when the global financial crisis cast a pall over the market,” he added.
Raffia-grade PP's offtake from the carpet industry was picking up in the region, a PP converter based in
“But now we’re slowly beginning to see good margins,” he said.
($1 = €0.76)
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