Price and market trends: Middle East petrochemical sales surge ahead of Ramadan

08 May 2014 17:28 Source:ICIS Chemical Business

Buyers build inventories ahead of the month-long Ramadan holiday which will start at towards the end of June

Buyers of Middle East petrochemicals have been stocking up on inventory ahead of the month-long Muslim fasting month of Ramadan, when the regional ports are expected to experience severe congestion, industry sources said on 1 May.

The major ports of Dammam, Jubail and Jeddah in Saudi Arabia will be operating at shorter hours during Ramadan, which will start in the evening of 28 June, they said.

 

 Saudi ports will operate on shorter hours during Ramadan

Copyright: International Ports Services

“We are bracing ourselves for massive congestions in these three ports during Ramadan. We are currently stocking up so we are not caught out with low inventories,” a major petrochemical buyer said.

Petrochemical sales in the Gulf Cooperation Council (GCC) region have been firming, according to producers. These producers are not ruling out increasing raw material prices should supply tighten.

The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

“We typically see good demand in the GCC before Ramadan. Buyers are worried they may not get material and are in a rush to stock up,” said a source from a Saudi chemical producer.

The month-long Ramadan will coincide with the summer months in the Middle East, where temperatures reach at least the high-40 degrees Celsius.

“The summer as it is will slow down [port] operations. During Ramadan, many workers will find it tough to do manual labour,” said a source close to a regional oil producer. Port employees also work reduced hours during Ramadan and leave as early as 3:00 pm local time in Saudi Arabia before breaking their fast in the evening, according to a source close to a Saudi petrochemical buyer.

Muslims pray five times a day, including the Zuhr, which usually takes place before noon, and Asar, which occurs just after 3:00 pm local time.

“Workers will be lethargic. With reduced hours, operations will be slowed down even more. Everything will come to a standstill,” a source close to a major Saudi supplier said.

Should temperatures reach record highs, ports may also issue temporary work-stop orders, the supplier said.

TEMPORARY WAREHOUSES
At least two petrochemical producers are expected to lease temporary warehouses near the UAE port town of Fujairah during Ramadan to bypass the expected congestion at the Saudi ports.

“The temporary warehouses near Fujairah will help [suppliers] reduce time wasted waiting in Saudi ports,” a GCC-based distributor said.

The GCC producers are expected to stock up products from May so they are able to ship material to the nearby south Asia region “at a moment’s notice” during Ramadan.

Eid-ul-Fitr, which marks the end of Ramadan, typically meant long holidays for Middle Eastern workers.

By Muhamad Fadhil