A question of balance

By Malini Hariharan

It is not surprising to read that at a time when many producers around the world are cutting production, cost-advantaged producers in the Middle East will be maintaining operations at their polyethylene (PE) and polypropylene (PP) plants.

Producers in the region with access to cheap feedstockts are expected to run their plants at full for the rest of the year, writes Ong Sheau Ling on ICIS news.

Producers are instead cutting prices to move volumes, especially for polyethylene (PE), posing a big problem for high-cost producers in Asia.

Linear low density polyethylene (LLDPE) film of Saudi origin is reportedly being sold at $1,140-1,160/tonne CFR China, $20-40/tonne cheaper than South Korean product.

A weak home market has also not dampened producers’ enthusiasm. November polypropylene (PP) prices have fallen by around 7% in the Gulf Cooperation Council (GCC) market to match those in China.

This move on part of Middle East producers raises question on how quickly markets will return to balance. Unless there is a significant recovery in buying, especially in China, deeper cuts might be needed in Asia and elsewhere in the world.

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