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Mid-Eastern PP, PE sellers adopt divergent policies in global markets

  • 04/11/2016 (03:39)
Middle Eastern polyolefin producers unveiled their November offers to major PP and PE markets. They are aiming for increases in Turkey and Southeast Asia, but they announced rollovers and decreases in Egypt and Africa.

In Turkey, new Middle Eastern PE and PP prices emerged higher for November, which was expected considering the fact that this market has been under upwards pressure from poor netbacks relative to other markets. Offers from the region were priced with hikes ranging between $10-40/ton over October.

Reduced supplies on a number of plant shutdowns in Saudi Arabia, Oman, India and Egypt as well as producers’ preference to focus on other export markets that provide healthier netbacks paved the way for firmer prices. “A Saudi Arabian major will be able to supply 1/3 of our requirements this month given its limited allocation,” a Turkish HDPE film converter reported. A second buyer commented, “The market may stabilize in December considering the unsupportive upstream chain whereas the short term outlook is firm on tightness. The prevailing offers are reasonable based on levels in China.”

In Southeast Asia, a Middle Eastern producer announced PE increases of $10-20/ton. A producer source noted, “Buyers deem the current LLDPE offers as too high since prices were $40/ton lower before the increases that took place in China’s market. For HDPE, buyers are giving lower bids but we are not accepting them.”

Another Saudi Arabian producer issued increases of $10/ton for HDPE and LLDPE film and $20-30/ton for homo-PP. “It is hard to conclude LLDPE deals as some customers switched to HDPE due to the big gap between HDPE and LLDPE,” said a producer source. The company will have a maintenance at their cracker in November for 21 days. Consequently, its 900,000 tons/year PE plants will be shut while the PPBC line will also be affected.

On the other hand, Middle Eastern producers followed an opposite pricing strategy in Egypt and other African markets.

An Egyptian buyer received PP and PE offers from a major Saudi producer with rollovers from October, except for HDPE pipe offers which were decreased. “The producer rolled over their prices for five months in a row. This was in line with expectations as the market is not ready to absorb any increases. Activity is muted amidst the increasing USD parity and the problematic opening of LCs,” the buyer noted.

“Middle Eastern suppliers are unable to increase their offers to Egypt this month due to the poor market conditions and difficulties in financing imports. Supplies are short in the local market and many plants were shut given the poor demand,” another converter similarly said.

Another Saudi producer applied slight increases of $10/ton on its homo PP and LDPE film offers, but lowered their HDPE film and b/m offers by $30/ton from October. “Demand is still below normal levels given the poor market state," said a distributor of the producer.

A trader in Algeria received a Saudi major’s November PP and PE prices with $40-50/ton drops from October. “The market is suffering from poor financial circumstances and the dinar depreciation against the US dollar. Players are only buying limited quantities given the poor demand. We are expecting other producers to reveal their offers with rollovers to declines as well,” he said.

In Tunisia, a Saudi major cut its offers by €20/ton for LDPE film, by €30/ton for HDPE inj. and kept its homo PP offers flat. Its new LLDPE c4 film and HDPE film offers were flat to €10/ton lower. "Although prices are very competitive now, demand is not encouraging us to buy big amounts. In addition, the country is suffering from bad economic conditions and political issues," said a buyer.
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