Saudi Arabia March PP rises on tight supply: ICIS

Saudi Arabia’s polypropylene (PP) producers have increased prices for March cargoes amid tight supply, ICIS reported Thursday.

For PP flat yarn (raffia) purchases on 90-day credit basis, a major producer was offering $1,110/tonne DEL (delivered) Saudi Arabia, up by around $50/tonne from its February prices.

Another major producer quoted $1,080/tonne DEL Saudi Arabia for cash purchases, up $80/tonne from February, it was reported.

Other suppliers are also hiking March offers because of limited availability of PP in the country, unnamed market sources were quoted as saying.

On Feb. 24, PP raffia prices were assessed at $980/tonne DEL Saudi Arabia, unchanged from the previous week.

Lower propane supply in Saudi Arabia has limited the production of propylene and consequently PP, the sources said.

PP supply in the kingdom has also been affected by an unplanned shutdown at Petro Rabigh’s 700,000 tonne/year PP unit, which was closed for a month starting Jan. 19.

Petro Rabigh had suspended operations at its petrochemical complex in Rabigh due to a technical malfunction at a utility unit.

Meanwhile, one of the major producers in Saudi Arabia had overbooked Feb. cargoes, limiting its March allocations, market sources said.

The price hikes are expected to lead to lower sales volumes as demand in the country has remained largely sluggish, they added.

The higher prices will also likely hit the profitability of PP processors, another unnamed source was quoted as saying.

“The finished products’ selling price has not gone up to the same extent as feedstock costs have risen, hitting bottom lines significantly,” the source said.

Purchases of PP end-products in the country have remained low mostly due to austerity measures enforced by the government after following oil prices crash from mid-2014, industry sources said.