Lower PP margins in Middle East amid weak plastic demand

31 October 2013 09:29  [Source: ICIS news]

PP film is widely used in the packaging industrySINGAPORE (ICIS)--Producers will likely face lower polypropylene (PP) margins because of weak plastic demand in the region, Dubai-based traders said on Thursday.

“Producers are under pressure. They are making less money now because downstream demand is weak,” a key Middle Eastern PP trader said.

Demand for plastics has been soft in the Middle East after some active buying activities ahead of the Muslim festival of Eid ul-Adha in mid-October.

Higher feedstock costs are also exerting pressure on their margins.

Propylene prices in Asia are at $1,450-1,470/tonne CFR (cost & freight) NE (northeast) Asia on 31 October in the afternoon, according to ICIS data.

PP offers in Middle East for November were quoted at low-to-mid $1,500s/tonne, according to the Dubai-based traders.

Producers typically target at least a $120/tonne spread between Middle East PP offers and Asia propylene offers to cover production costs.

“The traditional spread may not work anymore at this point. So producers need to settle for any profit they can make,” a separate Middle Eastern PP trader said.

By: Muhamad Fadhil
+65 6780 4356

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