Some Mideast polyolefins demand to remain weak on regional unrest

27 April 2011 13:07  [Source: ICIS news]

SINGAPORE (ICIS)--Demand for polyolefins in some parts of the Middle East is expected to remain sluggish next month despite a rollover in May offers amid ongoing political unrest in the region, market sources said on Wednesday.

Business has waned significantly in Syria, where many converters say they are running their units at minimum operating rates of 30-50%.

Polymer consumption has also slowed down in Jordan’s capital of Amman, according to a trader based in the country.

“Whatever PE [polyethylene] or PP [polypropylene] offers there are in the market, nobody is interested to buy,” the trader said.

A key Saudi Arabia-based major issued offers for linear low density polyethylene (LLDPE) at $1,540/tonne (€1,047/tonne) DEL (delivered) East Med (east Mediterranean), low density polyethylene (LDPE) at $1,840–1,860/tonne DEL, high density polyethylene (HDPE) film at $1,540/tonne DEL and HDPE blowmoulding at $1,550–1,560/tonne DEL.

The recent closure of the Jordan-Syria border has also had a negative effect on demand, as cargoes from Gulf Cooperation Council (GCC) countries can no longer enter Syria by truck with fresh material.

“April parcels will not be affected. But if the situation is prolonged, we can’t dispatch our May cargoes,” the source with the key Saudi major said.

A trader active in Syria and Jordan said: “Syria’s PE and PP consumption is double than in Jordan. If Syria is not producing enough finished goods, this is a good chance for the Jordanians to increase their production output to export their finished products to countries like Iraq.”

Converters in Egypt are not actively seeking new material, as they are still running at reduced rates. Business is expected to return to normal levels only after presidential and parliamentary elections are held in Egypt later this year, according to market sources in the region.

“Egypt is the largest polymer market in the east Med, but now we are not seeing so, as the amount of imports that Egypt is taking in has been low,” a Saudi Arabia-based polyolefins maker said.

Another Saudi polyolefins producer said: “In Egypt, PE converters are running at below 50%, while PP converting plants are running at 50-70%. Perhaps others are operating [at] higher [rates], but in general there has been only a slight pick-up in business since the political unrest earlier this year.”

Regarding PP, the lack of local material resulting from poor operating rates at Oriental Petrochemicals Co's plant – which is the sole producer of PP in Egypt – has forced converters to source alternatives from abroad.

In 2010, PE consumption in Egypt was about 600,000 tonnes; in Syria it was about 200,000 tonnes; and in Jordan it was about 70,000–80,000 tonnes.

Last year, Egypt consumed 300,000 tonnes of PP, while Syria and Jordan consumed 90,000–100,000 tonnes and 30,000–35,000 tonnes, respectively.

“It remains unclear how much these countries in east Med will grow this year. We can only hope that the consumption will remain unchanged, without a repeat of the economic downturn in 2008,” a GCC-based polyolefins maker said.

($1 = €0.68)

For more on polyolefins visit ICIS chemical intelligence

By: Ong Sheau Ling
+65 6780 4359

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