Middle East LLDPE film extends slump on weak China market

29 June 2011 11:34  [Source: ICIS news]

Mideast LLDPE film extends slumpSINGAPORE (ICIS)--Spot prices of linear low density polyethylene (LLDPE) film in the Middle East continued to plunge, taking the cue from the key China market, market players said on Wednesday.

Offers for July LLDPE film cargoes were at $1,280-1,290/tonne (€896-903/tonne) DEL (delivered) Saudi Arabia and $1,320-1,350/tonne DEL Dubai, down $100-120/tonne week on week, they said.

The GCC offers for July cargoes were about $130-150/tonne lower than the prices for June shipments.

Prices have fallen by 13% from the year’s peak in of $1,520-1,560/tonne DEL Dubai in early April, tracking the slide in Chinese prices, according to ICIS data. (Please see the graph below)

Meanwhile, mounting LLDPE inventory of Middle Eastern producers lead them to substantially lower offers to entice buyers, market sources said, adding that procurement by converters is very limited.

“Operating rates of regional LLDPE facilities are still high, and even at full tilt for some units,” a Saudi Arabian producer said.

But he is hopeful that Saudi Arabian producers will find relief from pressures of having high stocks, citing that LLDPE makers in the country did not cut production even when prices troughed in end-2008.

Regional converters do not welcome the price slump in LLDPE as it as creates difficulty in cost management. They said they prefer a gradual price decline.

“Prices are like crashing here, this is worrying,” said a Saudi converter.

Converters need to average out their costs, especially with business slowing down ahead of Ramadan - the Muslim fasting month that will start on 1 August, said a second Saudi converter.

“We can’t see when the prices will bottom out,” the second converter said.

“There is no peak season for the film sector this year as a result of this downtrend,” a third Saudi converter said.

Middle East and China LLDPE prices

($1 = €0.70)

By: Ong Sheau Ling
+65 6780 4359

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