SINGAPORE (ICIS)--Polyethylene (PE) markets in the Gulf Cooperation Council (GCC) region are being weighed down by continued weakness in Asia amid recent escalation in the US-China trade tensions.Khor Fakkan port in Dubai, UAE (Photo by Deedee Degelia Brent Winebrenner Degelia/Mood Board/Shutterstock)
Despite initial expectations of a seasonal uptick to emerge after the summer lull in July and August, resin importers in the GCC remain bearish on demand improving in the near-term even as they await offers for September shipments.
In the week ending 23 August, spot prices of high density PE (HDPE) film were assessed at $1,000-1,050/tonne DEL (delivered) GCC; while LLDPE film at $1,000-1,060/tonne DEL GCC. Prices of both grades were stable from the previous week, ICIS data showed.
“China, as well as southeast Asia, have been declining with prices falling sharply so sentiment among GCC-based buyers remains weak,” a GCC-based trader said.
“With ample information on the China-US trade war available at hand, buyers are in no rush to book bulk volumes as they foresee the impact of the trade tensions to emerge further across global markets,” the trader said.
GCC demand typically weakens in the months of July and August, owing to the summer holidays as a large majority of the population travels outside of the region, affecting demand from the food packaging sector.
From the construction sector, demand for PE also weakens during this period as governments mandate shorter working hours owing to high daytime temperatures.
Processors, which typically look to replenish stocks in September to cater to seasonally stronger downstream uptake, have taken a cautious stance on the market, steering clear of bulk purchases.
At the same time, PE sellers in the GCC also remain under pressure to move volumes amid an oversupplied global market.
PE exports from the US have also been surging following shale-based start-ups, augmenting available spot supply to the global markets.
Attempts by sellers to liquidate stocks in the wake of rising supply has further weighed on buying interest, as buyers remain keen only on need-based purchases.
Regional importers look forward to some uptick in demand later in September, propped by a need to re-stock inventories for regional demand emerging before the year-end holidays.
But overall demand may not improve much amid a sluggish economic performance in the GCC.
Focus article by Veena Pathare
Click here to view related stories and content on the US-China trade war topic page.