FocusMiddle East PE, PP imports into Africa set to stay expensive

27 February 2013 17:13  [Source: ICIS news]

LONDON (ICIS)--The prospect of ongoing supply tightness in the Middle East and a rise in upstream costs could keep polyethylene (PE) and polypropylene (PP) imports into Africa expensive, and some grades could edge closer to historically high price levels, industry sources said on Wednesday.

A major Saudi producer said it would be targeting a price of $1,720/tonne (€1,324/tonne) CFR northern Africa in March for block copolymer PP (BCPP). BCPP prices are currently at $1,630-1,650/tonne CFR northern Africa.

Prices close to the producer's targets were last seen in the first half of 2011 due to tight supply and high crude oil prices.

Recent plant shutdowns in the Middle East (see table below) have resulted in reduced producer stock levels, while many converters in Africa are said to be low on stocks as a result of purchasing minimal volumes for months.

The producer said: "Suppliers have shutdowns, C3 prices have increased, especially in February and the beginning of March there will be tight supply. And demand is picking up after [the] Chinese New year."

On average, ethylene CFR southeast Asia prices have increased by 7% from $1,382/tonne in late January to $1,475/tonne in late February, while propylene CFR southeast Asia prices have gone up by 3% from $1,315/tonne to $1,355/tonne in the same time period.

A second Saudi producer that announces offers on a weekly basis said: "We have increased LDPE [prices] by $20/tonne, HDPE by $40/tonne. PP didn’t change."

However, there is the likelihood of producers failing to achieve their targets in March, a South Korean PP producer said.

"I personally think market price will roughly go up by $50-100/tonne but [we] do not have confidence this time," the producer said.

A distributor that purchases product from Asia and sells in Africa said: "Middle East has been increasing prices since the beginning of the year, and that has meant many of our customers prefer to wait rather than buy big quantities.  There is demand in Africa, it just has been slower than before."

In Nigeria, a local producer said prices have inched up quite significantly. However, it added that buyers are afraid to book volumes "at this current level".

Buyers' response to the bullish producer stance will become clearer in the next few days, the producer added.

However, converters with low inventories might not have a choice but to buy at the proposed price levels if rising demand in China dries up the remaining PE, PP stocks in the Middle East, industry sources said.

There were also concerns that prices might decline once Middle East supply returns to normal after the plant shutdowns.

($1 = €0.77)

Company

Location

Product

Nameplate

Capacity

(tonnes/year)

Duration

Borouge-2

Ruwais, Abu Dhabi, UAE

HDPE

540,000 

January 2013 (restarting)

Borouge-2

Ruwais, Abu Dhabi, UAE

PP

800,000 

January 2013 (restarting)

PetroRabigh

Rabigh, Saudi Arabia

LLDPE

600,000 

Late December-January 2013 (restarting)

PetroRabigh

Rabigh, Saudi Arabia

HDPE

300,000

Late December-January 2013 (restarting)

PetroRabigh

Rabigh, Saudi Arabia

PP

700,000

Late December-January 2013 (restarting)

SEPC

(Joint venture)

Al-Jubail, Saudi Arabia

LDPE,

HDPE

400,000 

each

Postponed its scheduled turnaround from March to a later unconfirmed date

NATPET

Yanbu, Saudi Arabia

PP

400,000

Late January – late February/early March

Oman Oil Refineries and Petroleum Industries Co (Orpic)’s Oman Polypropylene (OPP)

Sohar

PP

340,000

Late February (for 45-days)

Arabian Petrochemical Co (Petrokemya) - a wholly owned affiliate of SABIC

Al-Jubail, Saudi Arabia

HDPE, LLDPE

400,000 each

Late February-mid-March

Al-Waha Petrochemical Co (JV: Sahara and LyondellBasell)

Al-Jubail, Saudi Arabia

PP

450,000

14 February – Late Feb (restarted)


By: Cuckoo James
+44 (0) 208 652 3214



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