Oversupply means muted impact from Saudi attacks, but escalation could halt Mideast chems exports

BARCELONA (ICIS)–Oversupply and poor demand mean that the impact on many global chemical markets from the Saudi attacks will be muted, ICIS experts said on Thursday.

Taking China polyethylene (PE) as an example, around 900,000 tonnes of excess stock is sitting in local warehouses, so disruption to supply from Saudi Arabia will have a negligible effect, according to John Richardson, ICIS senior consultant, Asia.

Richardson estimated that lost production from Saudi Arabia could amount to only 1-2% of global PE production for 2019, assuming a four-month shutdown of natural gas liquids supply and a 50% cut to ethane availability.

Richardson pointed out that China polypropylene prices fell in the aftermath of the attacks.

Shashank Shekhar, ICIS Head of Middle East, said the attacks highlight just how resilient global chemical supply chains are.

The large number of products potentially affected shows how diversified Saudi chemical production has become, Shekhar added.

Any escalation of the conflict, and closure of the Strait of Hormuz, would have a huge impact on oil and chemical markets, both experts warned, with export of most Middle East chemical production cut off.

Will Beacham, Deputy Editor at ICIS Chemicals Business interviews John Richardson and Shashank Shekar.

Interactive content by Miguel Rodriguez-Fernandez

Click here to see the ICIS Saudi drone attacks Topic Page