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Will Mid-Eastern PP, PE markets rebound in February?

by Nada Samir - nada@chemorbis.com
by Esra Ersöz - eersoz@chemorbis.com
  • 29/01/2024 (17:29)
Middle Eastern PP and PE markets saw January offers from regional sellers with rollovers to decreases from December. Concerns about heightened tension in the Red Sea failed to buoy the market sentiment, unlike the rest of the globe, while regional producers are going ahead with maintenance shutdowns to offset limited downstream demand. Eyes are now on February offers amidst swirling questions of whether the markets hit the bottom this month.

Saudi PE markets stable while PP saw discounts

A major Saudi supplier’s new PE offers to their local market indicated mostly rollovers as compared to December levels. Meanwhile, the major cut PP prices for the second consecutive month, issuing SAR450/ton ($120/ton) decreases from December. “The new offers met our expectations amid persistently weak demand while the bullish effect from a nearing turnaround spate planned in February as well as growing tensions in the region, keep prices under check,” a distributor remarked.

The recent discussion about the new pricing mechanism Saudi Arabia considers for PP buyers has also stayed at the fore throughout January. The kingdom considers possible limitations on export PP sales through resellers. This has fueled some confusion among players both locally and regionally and has already found reflection on the nearby markets with higher prices, creating concerns over supply flows.

Emirati markets at a standstill

In the United Arab Emirates, Middle Eastern suppliers revealed their initial January offers mostly with rollovers from December after recording constant decreases over the past two months. “The market remains quiet amidst the ongoing political tension as well as poor derivative demand,” a market source opined.

Similarly, the country’s local produce, Borouge, addressed the market with rollovers compared to December offers. According to ChemOrbis Production News Pro, the PP plant has been shut due to maintenance work since earlier this month following the planned turnaround at Adnoc’s refinery in Ruwais.

At the same time, Dubai introduced new measures to restrict and ban single-use plastics in January. According to this new regulation, shopping bags made up of HDPE film may take a hit and demand may be dampend further, while garbage bags and strech films used for food packaging are excluded from this ban. The extent of this ban and its implications on PP and particularly on PE demand is yet to be seen.

Weak activities keep markets calm in East Med

In East Mediterranean region, a major Saudi producer’s PP and PE offers to Jordan were announced with minor hikes of $10/ton as compared to December ranges. Local sources noted that end demand remains below average, and buyers are resisting any hike attempts.

On a related note, players in Lebanon received January PP and PE offers from a Saudi major mostly unchanged from the latest December levels. Generally, players remain alarmed by the rising political conflict and the harsh economic conditions. “Buyers either buy on a limited basis or remain on the sidelines,” commented a local source.

Have prices bottomed out in the Middle East?

The spillover impact from new Saudi regulations of PP exports, the Red Sea turmoil and its effect on freight rates, the ongoing as well as planned turnarounds in Q1 and the political unrest across the region, are all expected to push for prices hikes in February. “Whether these factors will help Middle Eastern sellers hold an upper hand in negotiations to seek price hikes next month is yet to be seen while underlying demand remains quite fragile across the board,” a market source opined.
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