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Sept PP, PE trend begins to take shape in Saudi Arabia

by Başak Ceylan - bceylan@chemorbis.com
  • 01/09/2020 (09:21)
Price discussions for September have gotten underway this week in Saudi Arabia. Two domestic producers have announced stable to firmer offers for PP and PE grades. The figures, while more or less within expectations, indicated a slowdown in the pace of gains.

August ends with high offers, moderate demand

August ended with moderate demand and comfortable availability for most grades, as the buying appetite was broadly muted across the market. August offers from local suppliers were higher by around SAR110-187/ton ($30-50/ton) over their previous levels.

However, the firmer outlook was slightly tempered by slow activities amid the Eid holiday lull in early August. Despite slower-than-usual activities, prices trended higher throughout the month.

Saudi major’s offers stable to firmer from August

A major local producer’s offers were modestly higher by SAR75-78/ton ($20-21/ton) for PPH grades, and HDPE film and HDPE inj. as compared to August. The major producer’s HDPE b/m., LDPE film and LLDPE C4 film offers, meanwhile, were unchanged from their latest reported levels.

These changes brought the major producer’s September offers to SAR3488/ton ($930/ton) PPH raffia and inj., SAR3625/ton ($967/ton) for PPH fibre, SAR3600-3750/ton ($960-1000/ton) for LDPE film, SAR3185/ton ($849/ton) for LLDPE C4 film, SAR3435/ton ($916/ton) for HDPE film, SAR3485/ton ($929/ton) for HDPE inj., and SAR3410/ton ($909/ton) HDPE b/m, all on FD Jeddah, cash basis.

“We actually did not plan to see increases for PPH grades, but the suppliers also increased them slightly,” a Saudi player reported. The player also added that they purchased some materials as they did not buy any materials last month. “We see a better appetite for buying. Buyers who had been unwilling to commit to purchases may return to market for new materials,” the player said.

Another local supplier opts for rollovers

A different local producer opted for a different pricing strategy and rolled over offers from August. Accordingly, the producer’s September offers were at more competitive levels compared to the major producer at SAR3000/ton ($800/ton) for PPH raffia and inj., and SAR3262/ton ($870/ton) for HDPE film and LLDPE C4 film, all FD Jeddah, cash.

“Saudi markets are still calm, in terms of overall activities. However, there are visible indications that buying interest is better than last month,” a trader said.

Sentiment improves but remains some way from full recovery

Most players agreed that the market sentiment in Saudi Arabia has improved as compared to the previous months. Although the general sentiment was that the worst of the demand-slump caused by the pandemic is over, markets are still away from normal trading conditions.

At the same time, the latest data available from the Saudi Health Ministry show a decreasing number of COVID-19 cases in the country. In view of this stable period in positive cases, Saudi authorities reopened land borders with the United Arab Emirates (UAE), Bahrain, and Kuwait on August 5. Borders had been closed since March 7. However, international flights remain suspended until at least September 29.
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