Mideast petrochemical markets mixed; some offers rise amid US outages

Author: Felicia Loo

2021/09/09

SINGAPORE (ICIS)--Middle East’s petrochemical markets are mixed, with polyethylene terephthalate (PET) enjoying good sales to the Americas in the aftermath of Hurricane Ida, and offers for polyethylene (PE) and polypropylene (PP) have increased amid supply shortages from Saudi Arabia.

Some markets in the region are, however, in the lull, in part due to hefty freight rates for shipments from Asia and the continuous uncertainty over shipping logistics.

For the time being, sales for PET cargo to the Americas from the Gulf Cooperation Council (GCC) are healthy amid tightening supply in the Americas.

DAK Americas has declared a force majeure (FM) on its US plant following Hurricane Ida, in addition to existing production outages in the Americas, including Indorama’s plant in Brazil.

Hurricane Ida slammed into the US Gulf Coast on 29 August, with Louisiana, a petrochemical hub, taking the brunt of the force.

GCC offers for PET to the GCC region were buoyed by good sales amid better netback in the Americas.

For September PE and PP cargoes, offers in the East Mediterranean markets have increased due to supply shortfall from Saudi Arabia.

A power outage in Saudi Arabia in early August had disrupted production at key PE and PP units in Jubail.

For the Middle Eastern toluene diisocyanate (TDI) market, demand has improved gradually, supporting higher offers prompted by hefty freight costs from Asia.

Some producers have started offering October shipments, but changes in supply fundamentals are expected as some Asian suppliers have turnarounds planned in Q4.

As regards Middle Eastern polyols, demand has been subdued because buyers are under no pressure to purchase material.

Some northeast Asian sellers have raised offers to capture high freight costs from Asia to the Middle East and also to reflect firmer feedstock prices this week in China.

For polystyrene (PS), the market is relatively quiet at present because demand from the packaging and construction industries has been stagnant over the last few weeks.

Demand is expected to pick up in Q4 when more tourists are allowed to travel to the Middle East.

For base oils, Group I supply from Iran is likely to remain stable, while Group II Asian bulk supply to the UAE is expected to increase.

Middle East demand may improve, but slow auto sales could crimp recovery.

Known turnarounds at regional base oils plants are few, with spot supply for Group I and Group II are improving, albeit slowly.

Focus article by Felicia Loo

Additional reporting by Hazel Goh, Damini Dabholkar, Veena Pathare and Izham Ahmad

Photo: At Hamad port in Doha-Qatar on 14 June 2017. (By Noushad Thekkayil/EPA/Shutterstock)