Reduced supplies push Mid-Eastern PP, PE markets up in July; is it here to stay in August?

Across the Middle East, the PE trend has turned bullish in July for the first time since April whereas Saudi Arabia pioneered PP hikes relatively earlier in June. Limited availability amid speculated supply cuts by major producers has been mainly blamed for the recent firmness, although there are few shutdowns or reduced rates confirmed by the regional producers.

Saudi PE market rebounds, PP tacks on gains

In Saudi Arabia, July PP offers marked a second month of consecutive increases after a short-lived price drop recorded in May. Nevertheless, the size of price hikes seems to be relatively small, as ChemOrbis Price Index is yet to go back up to April levels. Generally, PP offers were slightly up by SAR26/ton ($7/ton) when compared to June levels.

On the other hand, new July PE offers from a Saudi major indicated SAR38-150/ton ($10-40/ton) increases when compared to June levels with LDPE offers exhibiting the largest hike amid its more constrained supply. According to market sources, trading activities witnessed some improvements with replenishing activities following Eid al-Adha lull in late June.

Emirati markets see first hikes since April

Middle Eastern producers also opted for price hikes in the the United Arab Emirates. Major regional suppliers applied increases of $30-40/ton on PE and up to $50/ton increases on PP compared to latest June levels.

Also, locally-held PP cargoes were $60/ton higher from their latest June levels, indicating the first hike attempt after three consecutive months of rollovers. “The new offers came in line with expectations amid restricted availability and globally bullish sentiment,” a market source opined.

East Med markets see modest hikes, ebbing demand weighs

In the East Mediterranean region, players in Lebanon and Jordan received July PE and PP offers with increases when compared to June levels. Geopolitical tensions may have also added to the sellers’ firm stance. Players in Jordan reported $20/ton and $50/ton respective increases for July PP and PE grades.

Likewise, initial July PP and PE offers surfaced in Lebanon with $20/ton and $30-40/ton increases respectively from June. “Sellers attempted to raise their offers higher, but the market did not absorb any additional hikes given the current political and economic situation,” a local source stated.

Will further hikes follow in August?

Players across the region expect resin prices to remain on the firm side during the upcoming term, with supply tightness considered a key factor supporting the firm footing. However, it has been more than two months when the planned turnarounds ended and there is no official announcement about the current production status of these regional producers, although the market is widely speculating about the reduced availability. Therefore, to what extent supply is tight is debatable. Plus, concerns over sluggish end-user demand, especially with the persistent geopolitical tensions across the region along with dwindling crude oil futures might put a cap on potential hike requests.

Plus, the rally in Asian markets has already started to falter in the past few weeks while demand concerns are gaining prominence to set the tone of the market in the nearby Turkish market.