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May offers add to bearishness in Egypt, Mid-East PP, PE markets

by Pınar Polat -
  • 06/05/2020 (10:03)
PP and PE markets in Egypt and the Middle-East closed April on a decline as curfew and lockdown measures across the region in order to contain the spread of the COVID-19 outbreak curbed demand. As for May, offers both to import and local markets have indicated rollovers to a fresh round of decreases with the impact of the Ramadan lull and volatile crude oil futures.

Saudi major revises initial PP, PE offers to Egypt

In Egypt, where lockdown measures were eased due to the month of Ramadan, players initially received May PP and PE offers from a major Saudi producer with rollovers compared to April.

Early reactions to the latest pricing were tepid, with a trader opining, “We think that the major producer may consider adjusting its offers down later in the month, considering the limited demand amid the Ramadan lull.”

As players forecast earlier, the major producer’s offers were then revised down by around $40-60/ton from the initial levels due to the aggressive nature of US offers, as well as competitively-priced offers from the other Middle Eastern suppliers.

Local PP, PE offers considerably down in Egypt

In the local market, on the other hand, producers applied visible drops on their fresh May PE, PP offers on a monthly comparison.

ETHYDCO’s HDPE film offers were down by EGP1100/ton ($69/ton) while offers for HDPE inj., blow molding and LLDPE C4 film offers decreased EGP400-500/ton ($26-32/ton).

“Demand has not improved visibly and the sentiment remains bearish. We hope to see some recovery by the end of Ramadan,” a source from the producer said.

SIDPEC applied relatively larger decreases, cutting its new offers by EGP1700/ton ($95/ton) for HDPE film and by EGP1200-1300/ton ($76-82/ton) for HDPE inj. and blow molding.

OPC, one of the two local PP producers of Egypt, announced its May offers for PP raffia with a drop of around EGP770-780/ton ($49-50/ton) to the local market from last month.

LDPE film suffers most in UAE

The major Saudi supplier’s May PP and PE offers to the United Arab Emirates moved down by around $20/ton, except for LDPE film, which posted a heftier drop of around $70-80/ton.

A similar scenario was in place in the local market. A domestic producer’s May PP and PE offers retreated around $20/ton as compared to the latest levels in April.

A trader commented, “Demand is unlikely to show any improvement until the end of Ramadan. It might start to get better around June after the Eid holiday if COVID-19 related restrictions are loosened.”

Saudi major’s offers to its local market, Jordan differ

The major Saudi producer’s May offers for homo-PP grades to its own local market were all down by SAR225/ton ($60/ton). As for PE, offers for HDPE grades and LDPE film decreased SAR75/ton ($20/ton) and SAR150/ton ($40/ton), respectively except for LLDPE C4 film which were flat on the month.

In Jordan, an agent of the Saudi major producer reported that their supplier rolled over its May PE and PP offers to the country. “Market conditions are expected to recover in June after the Eid holiday,” he noted.

Revisions on initial May offers expected in Lebanon

A Lebanese trader reported that May PP offers they received were stable on the month while PE offers declined $20-30/ton.

“We expect to see some downward revisions in the coming weeks as demand is quite weak amid liquidity issues as well as the coronavirus outbreak. The government is allowing some activities to resume within five weeks in a controlled manner,” he commented.

US PE offers competitive edge in Egypt, UAE and Lebanon

While hesitant buying interest has already weighed on the markets, another factor putting extra downward pressure on prices was competitive US PE offers over the Middle Eastern origins.

In Lebanon, where US origin PE offers moved down by around $50-70/ton compared to latest April levels due to low production cost and limited demand, a trader noted that US materials are overwhelmingly available in the region.
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