FocusMiddle East PE, PP supply to normalise; price pressures to ease

16 February 2012 09:06  [Source: ICIS news]

By Ong Sheau Ling

Middle East PE, PP supply to normalise; price pressures to easeSINGAPORE (ICIS)--Supply of polyethylene (PE) and polypropylene (PP) from the Middle East is expected to normalise for forward March shipments, as major facilities that had outages, along with those that were shut for maintenance, started coming back on stream, industry sources said on Thursday.

With the resumption of regular volumes for March shipments, some market players hope the uptrend in PE and PP prices would soon stop.

January and February volume allocations for polymers were cut because of a slew of shutdowns in the Gulf Cooperation Council (GCC) countries, spurring a sharp increase in polymer prices, industry sources said. (Please see table below)

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE comprise the GCC.

Over the past four weeks, prices in India and the Middle East have risen by $20-140/tonne, or by 1.6-9.5%, for both linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) films. PP raffia prices spiked $70-110/tonne or 5.7-8.5% over the same period, according to ICIS.

“We have received notice from our suppliers that volumes of March shipments will be back to normal,” a converter based in Daman, India said.

Producers in the GCC region such as SABIC, LyondellBasell, National Industrialisation Co (TASNEE) are now either running their polymer facilities at full capacity or in the process of ramping up production, industry sources said.

Polymer supply declined in the Middle East in January following a power outage at Saudi Arabia’s major industrial site of Al-Jubail that temporarily halted production at some facilities. This was compounded by technical outages and turnarounds at some units in February, necessitating the cuts in supply allocations.

“With the PP import shortage, coupled with the firmer raw material costs, PP prices have been increasing steeply in the recent weeks,” a Mumbai-based trader said.

February shipments of both LLDPE and HDPE were reduced by more than half heading to India, while PP availability from the Gulf became tighter than PE supply, producers said.

On 10 February, LLDPE film were assessed at $1,290/tonne CFR GCC and $1,380/tonne CFR India Main Port; HDPE film at $1,440/tonne CFR GCC and $1,380/tonne CFR India Main Port, PP raffia prices at $1,385/tonne CFR GCC and $1,405/tonne CFR India Main Port, according to ICIS.

The normalisation of GCC shipment volumes should help stabilise polymer prices, industry sources said.

“The PP price increases in March maybe less than expected,” a Middle East-based converter said.

List of affected PE, PP facilities

Company

Location

Resins

Capacity (kt/year)

Shutdown period

Saudi Kayan Petrochemical

Al-Jubail, Saudi Arabia

HDPE

400

1-7 February

PP

350

Brief outage on 18-20 January

Ibn Zahr (Saudi European Petrochemical Co)

Al-Jubail, Saudi Arabia

PP

320

Brief outage on 18-20 January

PP

320

PP

500

Arabian Petrochemical Co (Petrokemya)

Al-Jubail, Saudi Arabia

HDPE

400

Brief outage on 18-20 January

LLDPE

400

Eastern Petrochemical (SHARQ)

Al-Jubail, Saudi Arabia

HDPE

400

Brief outage on 18-20 January

400

LLDPE

400

 

350

Al-Jubail Petrochemical Co (Kemya)

Al-Jubail, Saudi Arabia

LLDPE

850

Brief outage on 18-20 January

LDPE

220

Saudi Ethylene and Polyethylene Co (SEPC)

Al-Jubail, Saudi Arabia

LDPE

400

Brief outage on 18 January

HDPE

400

Saudi Polyolefins Co (SPC)

Al-Jubail, Saudi Arabia

PP

720

Outage from 19-20 January, with one of two lines shut again for six days

Al Waha Petrochemical

Al-Jubail, Saudi Arabia

PP

450

Outage in H2 January

Qatar Chemicals (Q-Chem)

Mesaieed, Qatar

HDPE

450

One month in February or March

HDPE

350

No planned turnaround

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Ong Sheau Ling
+65 6780 4359



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