07 January 2014 06:04 [Source: ICIS news]
By Veena Pathare
SINGAPORE (ICIS)--Buoyant demand for polyvinyl chloride in the Middle East will provide a further boost to regional prices of the material in the face of limited availability and rising cost of feedstock ethylene, market sources said.
PVC was assessed at $1,030-1,050/tonne (€752-767/tonne) CFR (cost and freight) GCC (Gulf Cooperation Council) and at $1,035-1,060/tonne CFR East Mediterranean (East Med) in the week ended 3 January, according to ICIS data.
Demand for PVC in the Middle East is expected to record good growth, driven by multiple large-scale infrastructure projects that are scheduled to take off in the region this year, industry sources said.
Many of these projects are expected to be completed over the next three to five years.
Construction is a major downstream sector for PVC.
Last November, Dubai won the bid to host the World Expo 2020. Construction works are expected to begin this year, bolstering the UAE’s economic outlook for 2014, according to market participants.
Saudi Arabia, on the other hand, is expected to continue its heavy investments in the construction and housing sectors, boding well for PVC demand growth.
The country is the fastest growing economy in the Middle East and is touted as the largest construction hub in the GCC.
Oman, meanwhile, has plans to spend close to $14.8bn on infrastructure in the coming years. The amount – which represents about half the cost of the country’s 8th Five-Year Development Plan for 2011-2015 – has been set aside for major overhaul of roads, ports and airports, with an aim to link all three modes of transportation in the country.
This is in addition to Oman’s investment in the national railway project. Construction of the 2,244-kilometre rail project, is expected to begin late this year and is due for completion in one phase in 2018.
Middle East prices are likely to be on an uptrend early in the year, also on the back of higher US and Asian offers that are due to be announced in the coming weeks.
The Middle East is predominantly a PVC importer, sourcing almost half its requirements from the US, and Asia, industry sources said.
But exports from the US have slowed down as the country caters to strong demand in its domestic market. Limited availability could drive up prices of January and February-shipping US cargoes, they said.
“US domestic demand is expected to be strong throughout the first quarter, and export volumes are likely to be reduced by 30% or so, driving [up] prices,” said a key importer of US cargoes to the Middle East.
PVC offers from Asia, on the other hand, have been rising since late 2013 and are expected to remain bullish in the first half of 2014, because of high ethylene prices that pushed up the cost of ethylene dichloride (EDC) and PVC feedstock vinyl chloride monomer (VCM), market sources said.
In the East Mediterranean markets, PVC demand may not be as strong, as the region continues to face political turmoil in countries such as Syria, Egypt and Iraq. The bulk of the PVC demand for construction activities in the region is expected to come Egypt, Jordan and Lebanon.
($1 = €0.73)
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