SINGAPORE (ICIS)--The near-term outlook for polyolefin prices in the East Mediterranean (East Med) markets remains mixed in the backdrop of persistently weak demand.
The recent weakness in markets across Asia, fuelled by a pileup in domestic inventories in China and slower post-Lunar New year holiday demand weighed on price expectations for April in the East Med.
Demand within the region, especially in Jordan remained weak owing to the ongoing weakness in finished goods exports to Iraq, the major market in the region.
Demand in countries such as Syria also remained weak owing to the hostile political climate there, market sources said.
“Moving finished goods from Jordan to Iraq via the Karameh border crossing remains difficult owing to higher duties put in place for all imports,” a Jordan-based trader said.
PE and PP processors looked to export to Iraq via Umm Qasr, but this resulted in a significantly higher voyage time since it was away from the key demand centre of Baghdad and also resulted in higher export costs, the trader said.
This weakness in downstream demand continued to weigh on buying appetite of regional importers, capping their ability to absorb higher polymer prices, market sources said.
Importers were thus hopeful of a possible reduction in April prices, as they had previously struggled to cope with the sharp hike in March prices earlier this month.
Limited supply and a lack of inventories are factors that could possibly limit the downside to prices for April, when offers are announced later this month, a regional importer said.
“Limited availability and firm spot feedstock values are likely to support suppliers’ attempts to rollover or moderate price declines for April,” a regional importer said.
Some suppliers in the Middle East were coming out from scheduled maintenance activities at their facilities and thus had limited inventories deeming a significant price drop difficult, the importer said.
Separately, a rebound in crude values and largely firm ethylene spot prices also meant expecting a significant drop in April prices was less likely, the importer said.
The completion of destocking activities by traders in Asia coupled with seasonally stronger demand ahead of the Muslim fasting month of Ramadan are also likely to moderate a significant drop in prices in the near-term, market sources said.
Ramadan is expected to start in the second half of May.
On 23 March, ICIS assessed PP raffia/injection prices in the region at $1,270-1,370/tonne CFR East Med, stable from the previous week.
High density PE (HDPE) film prices were assessed at $1,310-1,360/tonne CFR East Med, also unchanged from the week before, ICIS data showed.
Focus article by Veena Pathare