Think Tank: MidEast isocyanates wary of Qatar crisis

Izham Ahmad

16-Jun-2017

Isocyanates market players in the Middle East are fretting over possible adverse consequences of a prolonged diplomatic row between Qatar and its fellow Gulf Cooperation Council (GCC) members.

Saudi Arabia, Bahrain, the UAE – members of the GCC to which Qatar belongs – and Egypt decided on 5 June to cut diplomatic and trade ties with Qatar, which they deem to be supporting terrorism that causes instability in the region.

So far, the political rift has not had a direct impact on the isocyanates market, although prices softened in view of weak demand amid the Muslim fasting month of Ramadan, which began on 27 May.

In the week ended 8 June, spot import prices of toluene di-isocyanate (TDI) to the GCC were at $3,500-3,550/tonne CFR (cost & freight) GCC, down by $100/tonne from the previous week. Import prices of polymeric methyl di-p-phenylene isocyanate (PMDI), meanwhile, were stable-to-soft at $2,550-2,650/tonne CFR GCC, down by $50/tonne at the low end of the previous week’s range.

Isocyanates are used with polyether polyols in the polyurethane (PU) industry to make flexible or rigid foam products.

There have so far been few signs of any immediate impact on the isocyanates market aside from the hit on transportation. Producers and traders said their main shipping agents were already reluctant to call at Qatari ports for fear of being banned from the other ports.

“I heard some shipping lines already refuse to accept any cargo bound for Qatar ports,” said one market source.

Dubai-based port operator DP World announced on 6 June a ban on all Qatar vehicles and cargoes at UAE ports with immediate effect, while shipping agents at Saudi Arabian sea ports have been instructed not to receive or unload cargo from any Qatari vessels.

“I have some shipments heading there now – I don’t know how this will work out,” said another market source in northeast (NE) Asia.

The Middle East region itself is not a huge market for isocyanates, with only about a 3% and a 2% share in global 2017 TDI and MDI consumption, respectively, according to the ICIS Supply and Demand Database.

Qatar produces basic chemicals, polyethylene (PE), as well as methanol. It is also the world’s biggest supplier of liquefied natural gas (LNG) but in itself is not a major buyer of isocyanates.

The bigger concern would be how the crisis would affect broader regional economic conditions, as well as trade ties between the GCC.

Image: Jurgen Wiesler/imageBROKER/REX/Shutterstock

 

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