GPCA supplement: Middle East PE, PP supply to normalize; price pressures to ease

19 March 2012 00:00  [Source: ICB]

Supply of polyethylene (PE) and polypropylene (PP) from the Middle East is expected to normalize 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 recently.

© Les Stone/Corbis Polymer shipments from the Middle East are set to return to normal

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.

From mid-January to mid-February, prices in India and the Middle East rose 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 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 normalization of GCC shipment volumes should help stabilize polymer prices, industry sources said.

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

By: Ong Sheau Ling
+65 6780 4359

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