30 November 2011 11:08 [Source: ICIS news]
SINGAPORE (ICIS)--An announcement by the Arab League late on Tuesday that economic sanctions will be put in place against Syria, effective from 3 December, has led to a mass withdrawal of offers from Gulf-based polymer producers to the affected country, industry sources said on Wednesday.
Foreign ministers from 19 Arab League countries voted in Cairo on 27 November, with two of Syria's immediate neighbours, Iraq and Lebanon, abstaining from the vote.
The Arab League approved sanctions against Syria, including an asset freeze and an embargo on investments, meaning there will be no dealings with Syria's central bank.
This further limits the payment options for polymer trading, market players said.
Syria is the largest consumer of polyethylene (PE) and polypropylene (PP) in the eastern Mediterranean region and therefore a key customer for most polymer producers based in the Gulf Cooperation Council (GCC) region.
In recent months, there was an uptick in demand from northern Syria, despite the ongoing violence in the central part of the country, sources said.
“We are receiving many enquiries from Aleppo [in northwest Syria]," a Jordanian trader who regularly sells to Syria said. "Because of the news on this sanction, we have to get cargoes via sea. But payment is still a problem.”
The trader added that he has to source cargoes from outside the Middle East to avoid land routes.
GCC-based PE and PP producers said they have withdrawn all offers for December cargoes as a result of this sanction.
This further increased the inventory of some Middle East producers, which had already been building up, industry players said.
Previously transacted Saudi cargoes are still on the roads heading to Syria at the moment, as there is no news on the closure of the Syria-Saudi Arabia border, they added.
Likewise, the Jordan-Syria border is still wide open, Jordanian traders said.
“Jordan is still under negotiation to be an exception from the Arab League sanctions on Syria, because Jordan has large business trade with Syria,” another Jordanian trader said. "If Jordan does not stay out of this sanction, the economy here will be affected."
A Gulf-based producer said: “To make payments in [UAE] dirhams at the Dubai-based banks is still feasible for the Syrians, but whether the central bank of Syria does have that much foreign currency... is unlikely.”
Another Jordanian trader said: “The situation is too complicated: we have to monitor it daily.”
Syria consumed about 200,000 tonnes of PE and 100,000 tonnes of PP in 2010, market players estimated.
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