The Urethane Blog

Middle East Demand

Mideast petrochemical demand may improve; shipping woes remain

Author: Felicia Loo


SINGAPORE (ICIS)–Petrochemical demand in Middle East may see some improvement, shored up by post-summer restocking, although concerns remain about high freight costs and difficulties in securing empty containers and vessel space.

September is the archetypal month when peak demand kicks off for some products.

For base oils, market sentiment remains on a largely even keel, with any improvement in year-end demand tied to economic recovery.

Steady Iran Group I supply will be expected over the coming weeks, with mild improvement likely for Group II Asian bulk supply to the UAE.

While there are minimal known turnarounds so far among base oils producers in the Middle East throughout the second half of the year, spot supply for Group I and Group II are improving, albeit slowly.

There are concerns that slow automotive sales around the world could further dampen demand for downstream finished lubricants.

For polyethylene (PE), demand in the Gulf Cooperation Council (GCC) is likely to remain stable from August, with players looking forward to restocking for a seasonal Q4 demand uptick.

The GCC is home to several processors which export finished goods to Europe and Africa, and they are expect a steady flow of enquiries from buyers ahead of the year-end holiday season.

Regional players are also awaiting clarity on any impact on cargo availability following power supply issues at key PE facilities in Saudi Arabia earlier this month.

For general purpose polystyrene (GPPS), prices in the GCC market were stable as high freight costs are offset by lower cost of feedstock styrene monomer (SM).

Concerning toluene diisocyanate (TDI), regional buyers have procured volumes for delivery in September – the start of peak demand season for downstream foam markets.

Sellers are worried over worsening freight issues such as a shortage in empty containers, uncertainties in the cargo loading date and possible delays.

Regarding polymeric methylene diphenyl diisocyanate (PMDI), expectations are that demand should pick up over the next few months, on increased construction activity after the summer.

For polyols, activity has been subdued, with buyers maintaining a wait-and-watch stance on the market due to the volatility of feedstock propylene oxide (PO).

Buyers are not in a hurry to procure volumes and are waiting for PO prices to stabilise.

High freight costs and difficulties in securing empty containers and vessel space are also issues affecting the polyols market.

Focus article by Felicia Loo