Pakistan PE, PP seen stable-to-soft amid Ramadan, heatwave

SINGAPORE (ICIS)–Spot polyethylene (PE) and polypropylene (PP) prices in Pakistan may remain stable-to-soft amid a seasonal production slowdown among downstream converters that is being aggravated by a heatwave that struck the south Asian country, industry sources said on Friday.

High density PE (HDPE) film prices are being quoted this week at mid- to high-$1,300/tonne levels CFR (cost and freight) Pakistan, while PP flat yarn were heard in the high-$1,200/tonne to low-$1,300/tonne CFR Pakistan levels, they said.

For the week ended 19 June, HDPE film prices were at $1,320-1,350/tonne CFR Pakistan, while PP raffia prices were at $1,270-1,300/tonne CFR Pakistan, according to ICIS.

Demand for polymers in Pakistan – a predominantly Muslim country – typically weakens during the observance of the holy fasting month of Ramadan, as working hours are reduced, traders said.

Ramadan started in mid-June.

However, production in the conversion industry was hit by the fatal heatwave in Karachi, Pakistan’s industrial port city in Sindh province, from 20 June, industry sources said.

As of 25 June, the death toll was estimated at around 1,000 as temperatures rose to as high as 46 degrees Celsius, according to media reports.

“Heatwave means everything will stop,” a Pakistan-based converter said.

“We will slow down our factory operations for now,” he added.

Though temperatures have come down a little and scattered showers have broken the intensity of the heatwave, it is expected to be a hot summer in the country, local media reports said.

The heatwave caused power cuts that highlighted crippling electricity shortage in Pakistan.

Power rationing is not uncommon in Pakistan. In rural areas, rationing meant residents enjoy about four to six hours of electricity, especially during warm weather.

But Karachi’s electricity grid is overwhelmed, as residents switch on fans and air conditioners as temperatures exceeded 40 degrees Celsius for days.

Meanwhile, sales of polymer resins in Pakistan have been weak as domestic converters have sufficient inventory, after procuring cargoes over the past three months, industry sources said.

Middle Eastern suppliers, however, are not inclined to cut their offers to Pakistan, notwithstanding the heatwave and the overall inactivity in the south Asian market.

On Thursday, a major Saudi producer even raised offers into Pakistan for both PE and PP by about $30-50/tonne from the previous week, citing tight supply, but these were rejected by buyers, who are opting to stay on the sidelines, industry sources said.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

Focus article by Muhamad Fadhil and Pearl Bantillo