27 December 2010 02:52 [Source: ICIS news]
By Prema Viswanathan
However, prospects for the second half of the year were less certain, as there were fears that an oversupply situation may emerge and exert downward pressure on prices, they added.
Prices of raffia grade PP had risen 17% to $1,370-1,400/tonne (€1,041-1,064/tonne) CFR (cost and freight) GCC (Gulf Cooperation Council) this year, while high density PE (HDPE) film prices had climbed back to December 2009 levels at $1,250-1,290/tonne CFR GCC after dipping in July this year, according to ICIS data.
A spate of outages and production cuts, coupled with firm demand has caused the spread between polyethylene (PE) and feedstock ethylene to widen to $70/tonne, from the negative spread seen in early 2010. The polypropylene (PP)-propylene spread, meanwhile, has increased from zero to $100/tonne.
End-users of PE and PP in the Middle East were reasonably confident they could pass on their high raw material costs to their customers in the early part of 2011, as exports of finished goods into Europe, Africa and the
“However, much will depend on how high PE prices rise and how the debt crisis in Europe pans out, and how soon the economic recovery in the
Demand for PE and PP, especially from the packaging segment, is set to grow by 7-8% in 2011 from the previous year, said another source at a Saudi producer.
“The Saudi Arabian economy, in particular, has been performing well this year, and we expect the trend to continue into 2011,” the source said.
Governments in the GCC (Gulf Cooperation Council) region have been offering special incentives to encourage the growth of the downstream sector in a bid to generate more employment.
Demand has also been growing at a robust 7-8% in the Iranian polymer market, but the sanctions imposed by the UN, US and EU have almost halted imports of grades such as copolymer PP and black pipe grade HDPE, which Iran does not produce.
But if prices rose too high in the
Other producers were not too concerned about the persistently high PE and PP prices.
“Producers have no option but to raise prices when feedstock values are on the rise,” said a source close to a Qatari producer.
If crude, ethylene and propylene values remain high in 2011, that could help support PE and PP prices next year, said a Dubai-based trader.
Prices of crude were at $88-89/bbl this week, up 25% from the same time last year. Ethylene prices were largely unchanged from last year at $1,170-1,200/tonne CFR northeast
($1 = €0.76)
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