Price erosion continues inside Middle Eastern polyolefins markets

After having wrapped up a slow year in terms of activities, Middle Eastern PP and PE markets made a weak start to the year. Although most suppliers approached the regional markets either with rollovers or price decreases, some producers used supply issues as leverage to push for increases. However, those prices contrasted strikingly with present demand conditions.

Saudi major goes for rollovers to decreases for January

In Saudi Arabia, a major producer’s January PE offers were stable to SAR112/ton ($30/ton) softer as compared to last month. The major producer’s PP offers were likewise stable or SAR75/ton ($20/ton) lower on the month. Following the major’s announcements, other local producers announced their offers SAR75-188/ton ($20-50/ton) with decreases for PP and PE grades.

Local Emirati producer’s offers at odds with general trend

In the United Arab Emirates , import sellers announced monthly decreases of $10-30/ton for PE and PP grades. However, the recent price decreases were not enough to lure buyers back to the market. “We are reluctant to make new purchases for now. Demand has yet to stabilize and the outlook is still blurry. In addition to this, we have already secured most of our needs in late December," a trader based in Dubai said.

While buyers continued to push for price concessions amid weak demand and a dim outlook, the country’s local supplier increased their PP offers by as much as $100/ton. According to the producer, tighter allocations amid lower production rates factored into higher pricing. Buyers, on the other hand, thought these levels were out of line with the current state of demand.

East Med markets pressured heavily by economic problems

East Mediterranean markets continued to grapple with economic problems, which remained a constant burden on activities, particularly in Lebanon. Import PP and PE suppliers revealed their new January offers in Lebanon with $30/ton decreases before conceding to ever lower levels in deal. According to traders, chronic USD shortage and high inflation continued to weigh heavily on transactions, limiting purchases to immediate needs.

“The widening gap between the official foreign exchange rates and the parallel markets has had a profound effect on activities, even to the point of limiting our access to daily necessities,” a manufacturer in Fanar said.

January offers in Jordan were likewise softer on the month, with PP grades witnessing monthly drops of around $20/ton. Although players reported a slight improvement in demand following the year-end lull, high inflation and rising cost of living remained as key factors pressuring the activities.

February expectations start to take shape

Middle Eastern players are taking a cautious stance, observing global markets to see whether the recent uptick in PP and PE pricing will have a reflection on their regional markets. As several Middle Eastern producers have already adopted a firm approach in export markets, such as in China, Southeast Asia and Turkey, some players forecast stronger pricing in February. However, weak demand is largely expected to keep any potential upside limited.