FocusSyrian exodus, Muslim Haj boost Mideast TDI, polyols demand

17 August 2012 05:42  [Source: ICIS news]

By Ong Sheau Ling

Syrian refugee camp in TurkeySINGAPORE (ICIS)--An influx of refugees escaping war-torn Syria into Jordan and other neighbouring countries, as well as the upcoming Islamic pilgrimage to Mecca in Saudi Arabia, will lead to a spike in demand for mattresses in the Middle East, market players in the toluene di-isocyanate (TDI) and polyols industry said on Friday.

TDI and polyols go into the manufacture of flexible polyurethane (PU) foam, which is used in mattresses.

“Till date, there are about 150,000 refugees from Syria in Jordan and they are staying in tents. The UN [United Nations] has to buy mattresses for them to sleep [on],” a foam maker based in Jordan said.

As the Syrian crisis worsens, there is a likelihood of more refugees that will bolster demand for PU mattresses, he added.

Thousands of Syrians have been fleeing the violence of the political upheaval in their home country since March 2011, to seek shelter in neighbouring nations.

About 17,000 people were killed in Syria since the uprising began 17 months ago against incumbent President Bashar Al-assad, according to 14 August statement from the United Nations.

Official record from the UN High Commission for Refugees (UNCHR) showed that registered refugees from Syria totalled 157,577 so far in Jordan, Lebanon, Iraq and Turkey but the number may not reflect the entire Syrian refugee population.

In Saudi Arabia, demand for mattresses is also expected to strengthen in the months leading to the annual Muslim pilgrimage known as the Haj, Dubai-based traders said.

Pilgrims start the trek towards the Islamic holy land of Mecca in November.

“There will be close to 2m people attending the Haj, and staying there for at least three, four days,” a Dubai-based trader said.

“[Saudi Arabian] foamers have to start producing foams from [the] second half of September, so they will have to start stocking up TDI and polyols beginning end-August,” a northeast Asian producer said.

Demand will strongly pick up next week following the Eid-ul-Fitr celebration, which marks the end of the Muslim fasting month of Ramadan, they said. For this reason, some TDI and polyols producers are confident of raising prices for September cargoes.

On 16 August, TDI prices were assessed as $2,800-2,900/tonne (€2,268-2,349/tonne) CFR (cost and freight) GCC (Gulf Cooperation Council) and $2,850-2,900/tonne CFR East Med (East Mediterranean), according to ICIS.

Flexible polyols slabstocks prices were at $2,050-2,150/tonne CFR Middle East on 16 August, ICIS data showed.

Some Middle East foam makers, however, said that the spike in demand is expected to be short-lived.

“We do not how long the Syrian [political unrest] situation will last, so we can’t be sure how long the support to TDI can be,” a Jordanian buyer said.

Globally, there is an oversupply of TDI and demand typically slows down around the fourth quarter, market sources said, and they doubt that prices will increase significantly from the recent pick-up in demand.

Polyols prices, on the other hand, may still be on an uptrend in the Middle East, tracking gains in upstream propylene prices in Europe and Asia.

“Perhaps we may see a $50/tonne increase in polyols for September shipments,” another Dubai-based trader said.

European August propylene contracts were settled at €1,055/tonne ($$1,302/tonne), up by €120/tonne from July. Average spot Asian propylene prices were at $1,340/tonne CFR NE (northeast Asia) on 10 August, up $40/tonne from early July, ICIS data showed.

($1 = €0.81)

Additional reporting by Pearl Bantillo

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By: Ong Sheau Ling
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