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Middle Eastern PP, PE supplies remain limited in global markets

  • 08/02/2017 (06:26)
Players in major markets including Turkey, Egypt and China have been reporting limited PP and PE supplies from the Middle East since the beginning of the year. Prior to the Lunar New Year celebrations in China, where players just started to return to their desks from a long holiday, Middle Eastern sources voiced higher sell ideas citing several scheduled or unplanned turnarounds. The Mediterranean markets also started February with hike announcements in line with reports about less availability from Saudi Arabia, the UAE and Qatar.

The UAE-based Borouge, a joint venture between the Abu Dhabi National Oil Company (ADNOC) and Austria’s Borealis, experienced disruptions at its PP lines at the Ruwais petrochemical complex by mid-January due to a fire that occurred on January 12 at the Ruwais refinery.

Meanwhile, a Qatari producer plans to shut its 500,000 tons/year HDPE, 650,000 tons/year LDPE (No 1, No 2 and No 3) and 500,000 tons/year LLDPE plants for maintenance between March and April for two weeks. By mid-January, the supplier faced production issues at its plant, which affected LDPE in particular.

A trader based in Shanghai commented, “Players are yet to return from holiday which keeps buying activity modest for now. If PP prices move up further due to maintenances, this may boost more demand for local materials.”

A film converter in Vietnam reported higher LLDPE and HDPE prices compared to before the holiday in China. “We are willing to purchase some material this week to avoid possible additional increases although we are covered until end February. However, sellers have very limited quantities,” he said. A large trader in the country also reported that a global PE producer is set for a turnaround between April and June although he is not sure about which production line will be down. “The producer was offering increases prior to the holiday due to its reduced allocation,” he added. Another seller expects to hear $20/ton hikes from Saudi PP sources.

According to a trader based in Singapore, both PE and PP import prices increased around $10-$20/ton. “A Saudi producer’s PE lines were down since January 20, while only its HDPE unit restarted so far. Moreover, a global producer is planning to conduct a turnaround at its LLDPE lines along with its cracker in Singapore at the end of March,” he stated. He also believes that the market’s direction will be clearer next week as more buyers will have returned in China. “Since supplies are limited due to maintenance season especially for PP, prices may see new thresholds,” he noted.

In Egypt, a trader was offered increases between $50-80/ton for February shipment PP and PE cargos, attributing this situation to limited availability from Qatar. Another Middle Eastern producer will deliver its very limited allocation to its regular customers only, he added, although he thinks deals may be done at slightly lower levels than initial announcements.

“We raised our Saudi Arabian PP and PE offers between $10-40/ton this week in line with limitations from our supplier. We are pleased with inquiries so far,” a trader reported. A player received $30/ton increases for Saudi Arabian PP and PE given reduced supplies from sources.

According to a buyer, demand has started to pick up as lack of adequate supplies pushed some players to buy despite overall economic conditions and moderate end markets. A converter in the UAE commented, “Overall Middle Eastern suppliers are tight which is supporting the firming trend for this month. Meanwhile, our end product orders slightly improved.”

Similarly, Middle Eastern availability is considered limited in Turkey’s import market. Homo PP fibre, injection and LDPE grades are particularly deemed tight which pushed prices visibly higher for February. A Middle Eastern producer stated, “We raised our PE prices for February due to our tight quotas amidst production issues for LDPE and LLDPE. We are not open to negotiate.” Another Middle Eastern source noted, “PE buyers are showing resistance to our HDPE prices. Yet, our February allocation is rather limited for PE while our PP production might also be down for a few months.”
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