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

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

By Ong Sheau Ling

SINGAPORE (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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