Weakness extends to June in Saudi Arabian PP, PE markets
Uptrend snaps after nearly a year
The uptrend began in the second half of 2020 in Saudi Arabia, supported by a growing optimism in global markets following the pandemic-led slumps. Shutdowns at several cracker and derivative plants in Saudi Arabia, compounded with a global shortage of supplies, also drove the rapid increases in the first and the early second quarter.
Expectations began to shift in late April, with most players forecasting a softer pricing amid the Ramadan lull and diminished activities amid relentless price increases. The major producer’s PP prices for May declined by SAR375/ton ($100/ton) while PE offers were tentatively stable during the month, snapping the uptrend that had been in place for nearly a year.
June offers indicate drops for both PP, PE
The major local producer announced June offers with decreases ranging between SAR113/ton ($30/ton) to SAR338/ton ($90/ton) for PE grades while PP offers declined by SAR750/ton ($200/ton) as compared to May. This marked the second month in a row that the producer’s PP offers declined while it was the first decline in almost a year for PE grades.
A trader reported that price reductions were in line with expectations while also noting that the market was calm with slow activities.
More drops expected to follow
“The general sentiment is that the weakening in demand remains,” a trader said and more suppliers are now expected to follow the major producer’s lead in cutting prices. Players citing the balanced supply said that an increase was highly unlikely to be supported without a production disruption during the month.
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