08 June 2011 06:51 [Source: ICIS news]
By Ong Sheau Ling
“[Middle East] Prices [for] the rest of June are likely to make further minor downward corrections, based on the current market situation in
PP raffia prices tumbled for the third consecutive week after hitting a 10-month high, shedding $120/tonne to $1,590-1,630/tonne DEL (delivered) GCC (Gulf Cooperation Council) and $1,620-1,650/tonne DEL East Med (Mediterranean), market sources said.
Meanwhile, prices of various linear low density PE (LLDPE) film, high density PE (HDPE) film and low density PE (LDPE) film for June shipments fell $50-70/tonne over the same three-week period, they said.
On Wednesday, prices of linear low density polyethylene (LLDPE) film are quoted at $1,430-1,450/tonne DEL GCC and at $1,460-1,480/tonne DEL East Med.
Low density PE (LDPE) film prices hover at $1,750-1,790/tonne DEL GCC and $1,770-1,790/tonne DEL East Med, while high density PE (HDPE) film values are at $1,420-1,450/tonne DEL GCC and at $1,450-1,480/tonne East Med, market sources said.
“This is the last lap for price support before Ramadan [Muslim fasting month] kicks in on 1 August, as demand will dwindle. If prices of PE and PP do not normalise by July, we can only achieve better pricing in the fourth quarter,” he added.
Several traders based in
“Our customers did not buy much cargoes in May, so for June, they have to restock. However, prices seem likely to fall further and hence, customers are holding back,” said a Dubai-based polyolefins trader.
An Oman-based converter said: “We are buying just enough material to cover us for June. We do not want to risk buying high-cost raw material in view of a falling market.”
“PP prices have to fall harder than PE naturally, because in the past few months, PP prices have been jumping at $100/tonne per month. There is no support [to] prices at all,” said a Jordan-based converter.
Converters are worried that the restart of two major PP facilities in
National Petrochemical Industrial Co (NATPET) is expected to restart its 400,000 tonne/year PP plant at
“We are actually afraid that the polymer [PP] prices will fall below that of the monomer [propylene]. If that really happens, I do not know what will happen to the Asian makers,” said a Saudi PE and PP producer.
Spot prices of feedstock propylene were discussed at $1,450-1,470/tonne CFR (cost and freight) NE (northeast) Asia, narrowing the price spread to
“The price gap between PP and propylene is barely $100/tonne, compared to the traditional spread of $150-250/tonne. [Asian] PP producers are under tremendous pressure to minimise their loss and at the same time, to sell some products in the current weak demand,” said a GCC PP maker.
China's petrochemical giant Sinopec is expected to cut its June PP output by around 40,000 tonnes – the company’s second production cut amid a margin squeeze caused by low prices and high production cost, largely on account of high international crude prices.
“Makers in the
“Not only is the PP market not looking good, PE is not performing as well,” he added.
Asian PE makers are likely to further cut production on the back of weak demand. Sinopec is also expected to reduce its PE output by another 80,000 tonnes this month.
Meanwhile, the ongoing political turmoil in
In addition, a GCC producer was heard undercutting mainstream offers, pressuring its regional counterparts to lower their offers, market sources said.
“The presence of such cheaper material is also affecting the sentiment. This [GCC] producer is very aggressive,” said another Saudi PE and PP maker.
($1 = €0.68)
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