Saudi major approaches Mediterranean PE markets with lower August prices
In Turkey, converters reported receiving new PE offers from the major producer with a monthly decrease of $50/ton. Even after the drops, the seller’s prices continued to form the upper ends of the overall offer ranges. Now, buyers believe that the seller will eventually have to adjust their prices further down.
A packager stated, “We did not purchase any material from the producer this week since our business is not performing that great due to the recent gloomy atmosphere. We believe that prices remain under further downwards pressure.” A second manufacturer argued, “We heard that the Saudi Arabian producer is not able to sell smoothly at those current levels. We plan to negotiate with them to obtain additional drops since those levels are unworkable for us.”
Earlier in the week, some players claimed that there were already very low import LLDPE prices from the Middle East. China based netback calculations indicate that PE prices still have room to come down to as low as $1300-1330/ton for LDPE, $1300-1320/ton for HDPE film and $1240-1250/ton for LLDPE film on CFR Turkey basis, according ChemOrbis PE Polymer Digest. The rumored LLDPE offers below $1300/ton are justified by this theoretical calculation while other products are also likely to break below the $1300/ton threshold throughout August.
In Egypt, the same major Saudi Arabian producer revealed their August PE prices with decreases of up to $50/ton from July levels. In fact, players’ expectations had centered on larger price cuts from the seller before the announcement. “Overall demand is very slow and the higher USD parity hinders import purchases. Therefore, we were expecting larger decrease amounts than those actually announced,” a trader who received those latest levels said. More regional PE producers are expected to reveal price cuts for the new month taking discouraging demand and unsupportive costs into account, players opine in general.
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