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Players evaluate possible impacts of Ramadan on PP, PE demand

  • 12/05/2017 (09:09)
Turkey, the Middle East and some Southeast Asian countries are set to enter the month of Ramadan, which is celebrated by Muslim countries, starting from end May. Global polymer players are evaluating the possible impacts of that period on demand.

PP and PE markets have been on a weak path in the Middle East and Asia in the recent couple of months with declining energy costs, comfortable supplies and discouraging demand casting a shadow on the outlook. Now, some players argue that activity will further be depressed given the approaching Ramadan.

Sellers in Turkey lamented that buying appetite is still dampened as buyers refrain from building any stocks due to their expectations about additional price cuts for PP and PE. Some players do not expect the market to shift up before July while a Mid-Eastern source noted, “Buyers are bidding for much lower levels and therefore, we are not optimistic about a shift in trend over the near term. Ahead of Ramadan, our business should have been vivid but unfortunately sales are slow."

Similar concerns about unsatisfactory demand ahead of Ramadan are voiced in Southeast Asia. A PP trader in Indonesia complained that he still held high inventories given the fact that end users’ replenishment activity lags behind expectations despite the approaching Ramadan. “They think prices still have room to come down further. Therefore, we can hardly predict a trend change considering the ongoing downward pressure on the market,” he noted.

A manufacturer in Malaysia also keeps buying hand to mouth due to volatile energy complex, saying he does not have plan to buy raw material in June amidst slower end demand compared to 2016.

In the Middle East, Saudi players reported that they were anticipating better demand in May given the approaching Ramadan, but the market sentiment remains weak. Some buyers in Jordan also commented, “Demand is expected to retreat further as the approaching month of Ramadan is expected to slow market activities."

In Egypt, a steady to softer trend was in place in PP and PE markets in the face of comfortable availability and stagnant demand. A seller said, “We were expecting better demand ahead of Ramadan while it remains disappointing amidst the stringent economic conditions in Egypt.”

There are also several buyers who report some improvement in their end business both in the Middle East and Southeast Asia. Some buyers point out that there is an improvement but it is below their expectations while others say that although their business has been better, they prefer to wait in the midst of the prevailing decrease expectations. Yet, players concur that this improvement is not considerable enough to put a cap on the existing softening in place across these regions.
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