Middle East PE outlook stable-to-firm as July offers awaited

21 June 2017 04:22 Source:ICIS News

Focus article by Veena Pathare

SINGAPORE (ICIS)--The near-term outlook for polyethylene (PE) prices in the Middle East remains stable to firm as a result of a an expected firming of demand post Eid ul-Fitr holidays toward the end of the month.

The Gulf Cooperation Council (GCC) and East Mediterranean (East Med) markets are expected to have stable-to-firm demand with most suppliers and a few buyers expecting a recovery in off take when business resumes after the Eid ul-Fitr holiday - marking the end of the Muslim fasting month of Ramadan - in end June.

“We are expecting demand in July to be better than June because buyers will look to restock inventories after the Eid holiday,” a supplier source said.

“PE prices for July are thus likely to be supported by improved demand and we don’t foresee any major price decline,” the source added.

Some regional importers were uncertain of a major uptake in demand owing to the upcoming summer holidays.

According to these importers, annual school holidays in the months of July and August coupled with high day time temperatures typically slow demand in key downstream markets such as construction and food packaging.

An embargo on Qatar-origin cargoes in the Middle East is also likely to prop firmer discussions for some PE grades in the Middle East, market sources said.

In the recent weeks, the GCC region has faced a shortage in low density PE (LDPE) film availability following the rift between Qatar and other countries in the region that put an embargo on all Qatar-origin products.

Regional converters, especially those from the dairy industry, were said to be particularly affected because of the ensuing shortage in LDPE milk pouch and other special grades typically sourced from Qatar, market sources said.

The fate of business with Qatar remains largely uncertain in view of the recent political developments and converters are unsure of how to secure the required cargoes, market sources said.

Importers in the East Med market of Jordan also deem fewer cargoes to come in from Qatar in view of the closure of borders with its neighbouring countries.

Moreover, the shipment of these via sea instead of land freight rendered them higher-priced and unattractive, importers said.

“Qatar-origin PE cargoes are now offered on a CFR Aqaba/Amman basis, instead of the previous DEL (delivered) to the customer warehouse by land. These are now more expensive as compared to cargoes from other sellers in the GCC,” a Jordan-based importer said.

According to some market players, the gap in prices between Asia and the Middle East could widen in the months ahead.

A lack of business in key Middle Eastern markets meant that Asia could see an increase in inflow of Qatar-origin PE cargoes, affecting Asian prices, market players said. 

Many of the African markets were now inaccessible to Qatar-origin PE cargoes, owing to the closure of ports of call in Dubai.

However, the absence of spot Qatar-origin material in the Middle East could mean buyers have to pay higher to secure cargoes from other sellers in the region, market sources said.

On 16 June, ICIS assessed spot LDPE film prices in the GCC at $1,260-1,330/tonne CFR (cost & freight) GCC, up by $20/tonne at the low end from the previous week.

Prices for the grade in the East Med were assessed by ICIS as unchanged from the previous week at $1,200-1,270/tonne CFR East Med.

High density PE (HDPE) prices in the region were assessed stable week on week at $1,130-1,230/tonne CFR GCC and at $1,100-1,130/tonne CFR East Med in the same period, according to ICIS data.

 

By Veena Pathare