Mideast Gulf PE production to slow during Ramadan

Polyethylene (PE) production in the Middle East is expected to fall as the region marks the Muslim fasting month of Ramadan on 24 April while battling the Covid-19 pandemic.

Employees working at Mideast Gulf petrochemical plants are likely to reduce their hours during Ramadan, when practicing Muslims do not drink or eat from dawn to dusk. Plant employees typically refrain from overly strenuous physical activities as a result.

This year's fasting month also coincides with the start of the hot summer period, when temperatures can peak at up to 50⁰C.

Commercial staff in marketing and sales teams are already mostly working from home because of strict lockdowns in Mideast Gulf countries.

UAE's financial hub of Dubai has imposed a 24-hour lockdown as part of new measures aimed at stemming the spread of the coronavirus.

Saudi Arabia is also under a round-the-clock curfew in an effort to slow the pandemic, including at petrochemical production hubs such as Dammam and Jubail.

Demand pressure

The production slowdown comes as Mideast Gulf PE producers are under severe pressure from weak downstream demand in key export markets, including Turkey, India and China.

Major Middle East PE suppliers and distributors include Saudi Arabia's Sabic and Tasnee, UAE-based-Borouge, Oman's OQ, Qatar's Muntajat and Kuwait's Equate.

Falling PE prices are feeding into wider commercial decisions on whether or not to continue running plants at maximum capacity during Ramadan.

"Producers may look to cut rates soon," a Middle East producer said.

PE prices are weakening in Asia-Pacific, a major export market for Middle East producers, on the back of tepid manufacturing activity.

Converters in east China maintained 70-80pc production rates this week, while buyers in north China operated at 65-75pc. Downstream PE demand in the construction and agriculture sectors has stayed weak.

Linear low-density PE (LLDPE) prices in China were at $710/t cfr yesterday, according to Argus data, slipping by $10/t from a week earlier.

Feedstock ethylene prices in Asia plummeted to record lows this week, falling below $300/t cfr northeast Asia yesterday.

Supply chains

Port operations in the Middle East are also expected to slow during Ramadan because of reduced manpower and shorter working days.

"Port discharge timings in Saudi will take longer than usual," a Dubai based petrochemical trader said.

Muslims in the region will mark the Eid-ul-Fitr holidays after the month-long Ramadan ends on 23 May.

By Muhamad Fadhil, Yee Ying Ang and China staff