Middle East Update
April 15, 2021
Mideast petrochemical supply mixed; demand slows amid Ramadan
Author: Felicia Loo
SINGAPORE (ICIS)–Petrochemical supply conditions are mixed in the Middle East, with trade limited for some products while cargo availability is tight when it comes to base oils, polyols and polystyrene in the first week of Ramadan.
The bulk of the region’s polyethylene (PE) and polypropylene (PP) business for April in the Middle East has been completed before the Muslim fasting month started on 12 April.
Demand is set to taper off due to shorter working hours in place in most Middle Eastern countries during Ramadan, which will end with the Eid ul-Fitr holiday.
Markets across the region are generally expected to pick up pace around mid-May.
In the East Mediterranean market, demand remains restricted with purchases being done on a need-to basis amid a sharp resurgence in coronavirus cases in Jordan and Lebanon.
With regards to polyethylene terephthalate (PET), imports Asian cargoes into the Middle East have slowed down.
Sellers were mostly looking to sell June or later deliveries, but buyers hesitate to commit on purchases amid recent price softening.
Downstream consumption in the Gulf Cooperation Council (GCC) may not experience the usual boost during the Eid holidays after Ramadan this year since big gatherings are restricted amid the pandemic.
PET bottle grade resins are typically used in bottle and sheet packaging applications
For isocyanates, trade is limited for polymeric methylene diphenyl diisocyanate (PMDI) and toluene diisocyanate (TDI) in the region.
Demand is slow and there have been few enquiries, also due to soft macroeconomic conditions.
Buyers are cautious, adopting a wait-and-see stance on the market, with a pick-up in consumption expected in mid-May while supply remains modest amid an outage at a regional facility.
For PMDI, supply from European suppliers is tight which coincides with slow demand in the GCC.
In the base oils market, supply is tight in the Middle East, with Group I supply not expected to improve soon.
Iranian producers may continue to float small-volume export tenders for the grade.
Over the last two weeks, Iranian producers have issued export sales tenders totalling just under 10,000 tonnes of Group I SN500 product, less than half the estimated monthly requirement of the UAE market.
In addition, Group II and III spot supply is expected to remain short.
There are minimal known turnarounds among base oils producers in the Middle East through the second quarter, but spot supply is likely to remain challenged as many producers have had to reduce output in part due to lower feedstock availability.
For 10-13.5% polyether polyols (POP), most customers in the Middle East have assumed a wait-and-see stance on the market this week amid tight supply in northeast Asia.
Less supply is available to the Middle East as most cargoes from northeast Asia had previously been sold to the US and Europe.
GCC polyols supply is seen to be limited due to unexpected upstream issues at a regional facility.
Meanwhile, polystyrene (PS) buyers in the Middle East reported a shortage of supply from a major regional producer, preventing it from making offers to some customers.
Spot availability was also hard to come by from other suppliers in Asia and Europe.
Focus article by Felicia Loo and Veena Pathare