Where will Mid-Eastern PE head in August?
In China, following the significant losses on futures prices, the firming trend in the PE market faltered over the past week while it was replaced by a stable to softer track, with demand concerns gaining more prominence. Players reported that sentiment softened despite expectations of better demand in line with the start of the high season for agricultural film.
A player commented, “We believe that the current stable to soft trend might persist in China in the near term given fluctuating energy and futures markets as well as demand concerns in major global markets. Plus, deep-sea origins like US and Brazil were reported at competitive levels to China this week in line with the start-up of new capacities in those regions, plus weak economic conditions in Latin America.”
PE players in Southeast Asia are expecting to feel the impact of the recent softening in China over the near term although the market was able to preserve a stable to firm trend this week. Players noted that the support from healthy demand in Indonesia after the Eid holidays may not be long-lived as demand in other regional markets remains muted.
Coming to the European PE markets, players are readying to enter the summer holidays, which means that demand from the region will be mostly absent for 2-3 weeks in August.
In Turkey, the post-holiday optimism in the PE market faded this week as players retreated to the sidelines given concerns arising from a military coup attempt that occurred last weekend. The market had already witnessed slight step backs prior to the political tension. For the near term, PE players are expecting limited activities amidst a stagnant atmosphere.
Egypt has recently realized one of its most important projects in their national plan which is to produce ethylene and its derivatives through ETHYDCO. According to a source from the Egyptian Petrochemicals Holding Company (ECHEM), Egypt’s second PE producer ETHYDCO achieved commercial production at its LLDPE plant as of last week although the producer was yet to confirm it by the time of press. ETHYDCO has 460,000 tons/year ethylene and 400,000 tons/year integrated PE capacity. The launch of the project means that Egypt will become more self-sufficient in PE production soon.
Looking at African markets, persistently sluggish demand amidst depreciating local currencies continue to hinder trading activities across the region while players’ August expectations are mostly calling for a stable to softer trend for PE.
Middle Eastern suppliers’ own markets are also on a stable to soft note. Several buyers operating in the regional markets reported that discounts were obtainable on July deals given unpromising demand.
Considering all these factors in global PE markets, Middle Eastern suppliers may struggle to achieve their sell ideas in August unless they try to support the markets with unexpected supply limitations.
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