Limited supply of PP and PVC in the Middle East; weak base oil demand

The supply and demand situation in the petrochemical market in the Middle East is mixed, with limited supply of PP and PVC cargoes
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However, on the other hand, the consumption of base oil is low, while the consumption of pipe grade PE is stable
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PP in the Middle East was supported by limited supplies and strong net export earnings
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Demand in the Gulf Cooperation Council (GCC) is healthy, while demand in Jordan has slowed amid rising unemployment and rising prices for finished goods
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PVC in GCC and Eastern Mediterranean is supported by supply constraints and higher freight rates in Asia
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In China, ship delays due to a number of issues including congestion, driver shortages and strict quarantine measures also pose challenges
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Some producers in Northeast and Southeast Asia have already sold out their October shipments, and as China's dual-control policy further tightens supply, many players have stepped back and waited for further clarity on November shipment offers
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Some players in the GCC and the Eastern Mediterranean are still waiting for shipments booked for July or August, which has caused some downstream plants to reduce operating rates due to unexpected shortages of raw materials
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Operations at many factories in China have been curtailed, and provinces have sought to keep energy consumption within annual limits set by Beijing under a dual-control policy aimed at protecting the environment
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In the Middle East, some grades of base oils are well-supplied, while demand in the region's main trading hub, the United Arab Emirates, remains generally subdued
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From a production standpoint, base oil producers in the Middle East are expected to see very few confirmatory outages in the final quarter of the year
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There are rumors of a maintenance shutdown at Group III producers in the region, but this has not been confirmed
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As for the pipe grade PE in the Middle East, most buyers only purchase basic needs and keep demand stable
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The infrastructure and plumbing works required to prepare for Expo 2020 Dubai have been completed, with limited demand for other plumbing works
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Meanwhile, there has also been an increase in deals and discussions to ship PE and PP to the GCC and the Eastern Mediterranean in October due to tight supply
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GCC demand is healthy, supported by seasonal restocking for the year-end festive season
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Saudi Arabia and the United Arab Emirates are large processing centers in the Middle East, with processing plants in the region exporting finished products to markets in Europe and Africa
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However, demand in the Eastern Mediterranean region has been challenged by a bleak post-pandemic economic outlook
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The spread of the outbreak in Jordan has been brought under control through the government's vaccination efforts
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Still, according to market sources, issues such as rising finished product costs and rising employment are still plaguing the local economy
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As a result, PE and PP processors are unable to pass on the full amount of resin cost and freight increases to their customers and end users
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