Saudi PP market bucks the bullish trend across Mid-East PP, PE markets

Across the Middle East, PP and PE prices have extended their gains into the second straight month, except from the Saudi PP market, which has marked the first declines since May. Price increases in the rest of the region’s PP markets were not as visible as in PE, while reduced supplies continued to be blamed for the increases despite stagnant demand. Players are now questioning if the recent downturn in the Saudi PP market is a harbinger of a bearish trend that may soon emerge in the rest of the region.

Saudi LDPE and LLDPE markets hit 15-month highs; PP moves back down to May levels

In Saudi Arabia, new August PE offers from a major domestic producer indicated SAR37-113/ton ($10-30/ton) increases from July. According to data from ChemOrbis Price Wizard, LLDPE and LDPE prices have reached their highest levels since the second quarter of 2023.

However, the major’s PP offers emerged with SAR52-72/ton ($14-19/ton) decreases when compared to July, following two months of price hikes. According to the ChemOrbis Price Index, the price increases seen in June and July have largely been reversed by the declines announced in August, bringing prices nearly back to their May levels.

Indeed, although the Saudi producers pioneered the price increases back in June, when the rest of the region was still bearish, they applied relatively small price hikes. The weakness of demand and the bearish trend in Asian and the nearby Turkish market appear to have taken their toll on PP pricing of Saudi producer to their local markets.

Emirati markets continue to rise albeit cautiously

In the United Arab Emirates, Middle Eastern suppliers revealed their initial August PP and PE offers with rollovers to up to $30/ton increases when compared to the latest July levels. According to market sources, weak market fundamentals amidst below-average demand kept the import hikes amounts limited.

On a related note, local PP cargoes were $50/ton higher from their latest July levels. “The new offers came in line with expectations amidst the dry-up of locally held cargoes,” a market source opined.

East Med markets see bigger price hikes than the rest of the region

In East Mediterranean region, a major Saudi producer’s PP and PE offers to Jordan were announced with $50-60/ton and $40-50/ton increases respectively when compared to July levels.

Likewise, initial August PP and PE offers surfaced in Lebanon with $40/ton and $50-80/ton respective increases from July.

Markets continued to head north for the second straight month due to supply constraints. Additionally, the ongoing shipping disruptions have contributed to the higher prices. “Tensions between Israel, Iran and Lebanon-based Hezbollah grew, stoking concerns across the region and crippling trading activity,” a market source opined.

Will Mid-Eastern markets maintain uptrend in September?

Over the near term, players across the region are questioning the sustainability of these price hikes during September, amidst opposing factors of persistent supply hiccups and shipping disruptions on one side, and the bearish pressure from weaking global markets on the other side.

According to some, the downturn that has just kicked off in Saudi PP market is an early indicator of a bearish trend that will soon affect the rest of the region. Others, however, argue that the shipping disruptions will continue to keep supplies limited in the region and therefore, they will put a floor under possible price decreases, leading to stable prices.