Mideast petchem demand mixed post-pandemic; polymers upbeat

Author: Felicia Loo

2021/10/29

SINGAPORE (ICIS)--The Middle East petrochemical market has emerged mixed in its demand for key petrochemicals, as the region gradually recovers from the impact of the peak pandemic.

Uptake of some commodities remains weak as a result of COVID-19 aftermath on consumption, raw material prices, and supply chain disruptions along with extremely high freight rates - all weighing in on the pace of demand recovery.

However, some others like polymers have begun a recovery in demand buoyed by improved downstream consumption, particularly in the food packaging space.

For polyolefins, a majority of converters in Saudi Arabia and UAE export finished goods to Europe and Africa and are seeing orders.

Riyadh season is expected to contribute to improved consumption of packaged foods and beverages, propping PE and PP demand.

However, both base oils and polymeric methylene diphenyl diisocyanate (PMDI) and buyers are hesitant to pick up polystyrene imported cargo from Asia due to high freight costs.

On Middle East base oils, there is ample supply of Group I material in the UAE market and demand for higher-priced spot cargoes is slow as a result.

Production levels among the major base oils producers located in the Middle East are expected to remain stable throughout the final quarter of the year, with no verified maintenance shutdowns scheduled till December.

With regards to PMDI, demand is expected to remain subdued through November.

In the Gulf Co-operation Council (GCC) , a slight shortage in material is expected into November due to a turnaround at a major Asian producer, although it is unlikely to impact the PMDI market in the Middle East due to tepid buying activity.

After all, vessel booking and congestion remains an issue at Asian ports.

On Middle East polystyrene, buyers in the East Mediterranean (East Med) market were hesitant to book Asian cargoes due to the high freight rates to the region and the unpredictability of arrival of the material.

Bucking the trend, polyethylene terephthalate (PET) in the GCC region sees supply tightness for import and regional cargo.

Supply tightness in other regions including the Americas and Europe markets have led to supply tightness in the region.

India imports were heard to be limited and to selected customers only and Chinese cargo supply saw recent steep price increases after recent good sales to other regions.

PET demand in the GCC region is healthy and stable, supported by events and increased tourism into the region.

Granted little to no activity was reported in the GCC and East Med countries for polypropylene (PP) markets due to October allocations being sold out in the weeks before, but November price announcements are expected soon.

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

Focus article by Felicia Loo

Image: Aerial view of Yangpu international container port in south China's Hainan Province on 26 May 2021. (Source: Xinhua/Shutterstock)