Demand for petrochemical products in the Middle East is rising

Recently, according to news from AXIS Singapore, market demand for petrochemical products in the Middle East is on the rise, and market participants have to continue to cope with high freight rates and severe container shortages.

Polyethylene (PE) and polypropylene (PP) suppliers in the Gulf Cooperation Council (GCC) countries are looking forward to a recovery in Asia-led demand from now on. Due to the sluggish market demand for manufactured goods, China’s PE and PP import market remained weak in the second quarter, but the demand for plastics is expected to increase from September to supplement seasonal inventory for the fourth quarter holiday.

Lorenzo Meazza, Market Analyst at Acsens said: “For the remainder of 2021, China’s demand is expected to remain strong and the Middle East will increase exports. However, logistics issues continue, which may reduce the flexibility to respond to changes in demand. Taking into account that the global PE production capacity will increase, but because these projects are distributed in different regions, the new production still faces problems in terms of timely supply."

Severe shortage of container supply and high freight rates continue to exist, and may continue beyond 2021. GCC processors continue to bear high freight costs when exporting finished products. In addition to local sales, they also export finished PE products to Europe and Africa. Nevertheless, most of the population in the GCC area, which usually travels on holidays, may stay in the country, thereby stimulating demand for food, household goods and consumer goods, and packaging.

According to market participants, as for polyethylene terephthalate (PET), the UAE's demand outlook remains the same as the current one. Tight transportation conditions and high freight from Asia to the Middle East hindered Asia’s exports to GCC, but at the same time, tight transportation conditions restricted GCC’s exports to the Americas, leaving ample supply for the GCC market.