Mid-East PP, PE markets stuck between bullish costs, weak fundamentals; May outlook murky

In the Middle East, polyolefin markets snapped a two-month uptrend in April. The persistent strength in upstream costs, driven by rallying crude oil benchmarks, failed to propel April PP and PE prices higher amid a holiday-shortened month but put a floor under prices in Saudi Arabia and the UAE, while East-Med markets have already pioneered weaker prices. Now, attention has turned towards the possible pricing scenarios for May.

Saudi PP market bucks the overall trend, PE stable

In Saudi Arabia, new April PE offers from a major domestic producer indicated mostly rollovers from March. Meanwhile, PP offers indicated slight increases of SAR38-75/ton ($10-20/ton) on a monthly basis.

According to ChemOrbis Price Index, local PP prices remain at their lowest since October 2020 despite the consecutive hikes since last February. Supplies were also balanced as two major PP plants recently returned from a 45-day shutdown. “The pre-holiday period did not live up to traditional standards, but it wasn’t disappointing,” a local distributor opined.

Emirati markets grapple with weak downstream demand

In the United Arab Emirates, major regional suppliers addressed the market with $10-20/ton decreases for PE and mostly rollovers for PP compared to latest March levels. Concerns over reduced downstream demand remained intact during April, as buyers complained about the unsatisfactory outlook for end-product demand. Hence purchases remain tied to basic only needs.

Also, April offers from the country’s local PP producer, Borouge, indicated rollovers following the minor increases issued during March. Players reported that reduced supplies from the producer remained balanced with weak derivative demand. On a related note, Borouge’s PP units had been shut for maintenance from January to late March.

East Med markets pioneer weakening prices

In East Mediterranean region, a major Saudi producer’s PP and PE offers to Jordan were announced with decreases as compared to initial march offers, while the overall price ranges indicated mostly rollovers compared to the latest March deals.

Meanwhile, initial April PP and PE offers surfaced in Lebanon largely with rollovers when compared to initial March levels, yet sellers stepped down from their announced levels and discounts of $20/ton were achieved for PP, whereas PE deals were down by $10-20/ton when compared to the latest March deals and about $50/ton down when compared to initial April levels.

According to local sources, sellers were opened to negotiate their offers amidst thin trading activities and fractionally more comfortable supply levels.

Buyer-seller tug of war amid dull demand, surging oil

Players across the region expect no major prices changes until the end of April after PP and PE sellers across the region had yielded to the pressure from lower bids earlier this month ahead of an extended holiday period. However, players started questioning the sustainability of the recent price slide in May, having Brent crude oil prices hovering over $90/bbl . “High costs are likely to prevent steep price declines. Also, supplies are not long and buyers should be back to replenish, which might hopefully create extra demand,” a regional distributor opined.