Focus story by Fahima Khail
SINGAPORE (ICIS)–Spot polyether polyols prices in the Middle East, including the Gulf Cooperation Council (GCC) area, have been largely stable during March despite Asia-based sellers’ bullish stance, but eventually any price increase will be determined by offers from Europe.
On 26 March import prices of slabstock flexible polyether in the region were at $1,850-1,900/tonne CFR (cost and freight) Middle East/GCC, unchanged from the previous week, according to ICIS data.
Sources said the recent depreciation of the Euro currency against the US dollar allowed European suppliers to offer material at least $50/tonne below Asia origin material.
This trend may continue during April that may not support price hikes in the region, some sources said.
“It’s European [polyol] makers’ decisions. If they increase the market price, we will be able to increase as well. They may announce roll overs during April or May. They just enjoy selling material to the Middle East, the price is stable, the exchange rate is good,” a Northeast-Asia based supplier said.
South Korea- and China-based producers have been finding it increasingly difficult to compete with cheaper European material because of continuous increases in feedstock propylene oxide (PO) prices. Therefore, limited offers are currently heard from Chinese suppliers, sources said.
A China based producer said it was currently selling less material to the Middle East and Africa region, adding that it was anticipating an increase in export volumes once “[the] euro rebounds”.
Polyether polyols prices in the Middle East, were largely stable-to-soft from early January until the end of February.
Sources said producers were under stock pressure and had lowered their offers to sell their material. However, buyers were largely on the sidelines in anticipation of further price declines.
Price falls in the feedstock PO markets had added further downward pressure to the import prices, sources said.
Falls in crude oil prices was also weighing down on import prices in the Middle East.
On 15 January import prices of slabstock flexible polyether polyols were at $2,100-2,150/tonne CFR Middle East/GCC, down by $50/tonne compared to the previous week. On 26 February prices stood at $1,780-1,850/tonne CFR Middle East/GCC.
However, the price direction for flexible polyols reversed upwards from early March as crude oil prices rebounded and feedstock PO and propylene costs rose.
Consequently import prices of flexible foam hiked by $20-50/tonne to $1,800-1,900/tonne CFR Middle East/GCC in the week ending 5 March, reaching levels at $1,850-1,900/tonne CFR Middle East/GCC on 12 March.
Sources said supply from major northeast Asian suppliers was shorter as they had already sold out cargoes for March shipment.
A northeast Asian supplier said it was already sold out and was not offering any cargoes. However, it was targeting an April price of $100/tonne above the published price ranges in anticipation of further price hikes in raw material costs.
The price hikes in March were short lived though, lasting only two weeks until 12 March.
Asia-based sellers continued to quote recent price increases in the feedstock PO and upstream propylene prices as the main reason to keep offers for slabstock flexible polyether polyols at or above $1,850-1,900/tonne CFR Middle East/GCC.
However, European suppliers continued to benefit from the depreciation of the euro currency, allowing them to offer material largely at $1,850/tonne CFR Middle East/GCC.
Chinese material was offered sporadically but failed to attract any buying interest.
During February and March some China based suppliers said they were not firmly offering material to the Middle East as the local Chinese market was giving better netbacks than the Middle East.
In addition high feedstock costs since early March made it difficult to compete with European material.
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections