Slide deepens in Middle Eastern PP, PE markets through May

Following the softening sentiment that kicked off in April in Middle Eastern polyolefin markets, offers for May have been announced mostly with decreases, as the downturn deepens. Sentiment in the regional markets remained pressured by slackening buying activities amid mounting inflation and recession woes.

Saudi markets see first decline of 2023

In Saudi Arabia, new May offers from a major domestic producer indicated rollovers to SAR263/ton ($70/ton) decreases for PE and mostly rollovers to decreases of SAR113/ton ($30/ton) for PP grades. These decreases marked the first since 2023 kicked off. Likewise, another domestic producer adopted a similar pricing policy for May, announcing rollovers or up to SAR113/ton ($30/ton) decreases for PE and PP grades as compared to last month.

According to market sources, trading activity is recovering, although it remains below average as buyers are acting cautiously amidst volatile markets.

Emirati markets see drops of $20-40/ton

In the United Arab Emirates, Middle Eastern suppliers had initially unveiled their new offers for May with rollovers to decreases ranging between $20-40/ton as compared to latest April levels. However, these levels witnessed further downward revisions soon after.

Meanwhile, the country’s local PP supplier, Borouge, has rolled over its latest April deals into May, following the $60/ton decrease announced last month. The producer was the first one triggering the bearish undertone back in April.

“The market is quiet amidst lengthened supplies. We prefer to do back-to-back business given the uncertain outlook for the upcoming term,” a local manufacturer commented.

Additional discounts obtained in East Med markets

In East Mediterranean markets, a major Saudi supplier’s initial May offers to Lebanon were steady to $30/ton lower as compared to the initial April levels. According to local sources, buyers resisted the newly announced offers; therefore, sellers offered additional discounts of up to $40/ton. Players noted that purchases remain tied to basic needs as unfavorable economic conditions continue to hinder trading activity.

On a related note, initial May offers to Jordan surfaced with $10-30/ton decreases for PE and rollovers for PP when compared to April; however, sellers stepped back from their initial offers and additional discounts of $40-50/ton were reported. Generally, players voiced their concerns amid the persistently weak trading activity and blurry market outlook, which keeps their margins under pressure.

Will bear run persist in Mid-Eastern polyolefin markets?

Players across the region expect the bear run to sustain until the end of May, citing rising inflation and retreating final sales. Meanwhile, oscillating energy complex amidst weak global fundamentals on one side, and renewed concerns over oil supply after the economic worries in the world’s two biggest oil consumers, the US and China, on the other side keep June outlook under check.