Singapore (ICIS) - Participants in the polymer polyol market in the Middle East have largely accepted Saudi Arabia’s new spot supply from Sadara Chemical. Although demand in the region is weak, it is not expected to have a significant impact on the market.
Sadara starts selling polymer blended polyols (POP) to customers in the Middle East this week
According to ICIS data, on August 22, the spot import price of 10-13.5% POP barrels in the Middle East stabilized at 1,550-1,650/ton CFR (Cost and Freight) for the fourth consecutive week in the Middle East.
Some suppliers slightly increased their offer prices in response to the increased pressure on their profit margins caused by Asian propylene oxide (PO) prices.
But these suppliers admit that it is difficult to establish contact with buyers with higher prices.
As a result, market prices have remained unchanged this week, although the additional supply from Sadara is expected to put pressure on prices when the demand environment is already weak.
"Many [Middle East] market participants have just ended their holidays," said an Asian source. "Not many people are actively discussing it now."
Sadara started producing polyols in 2017, but previously only produced traditional grade polyols.
But even so, most market participants know that given Sadara's relationship with the Dow Chemical Company and the premium of polymer polyols relative to traditional polyols, it is only a matter of time before the Saudi company starts producing POP.
Sadara owns 65% of Saudi Aramco and Dow owns 35%.
According to market news, the POP material provided by Sadara contains 10%, 15% and 25% polymer content, which is the most commonly used grade in the Middle East.
According to market sources, in the absence of any transaction, the price of traditional polyols is usually about US$50/ton lower than CFR POP in the Middle East.
However, other market sources said that during periods of strong POP demand, the gap on the basis of CFR may widen to US$100/ton.
However, given that the Middle East polyol market is already very competitive, some suppliers did raise some concerns about the increased supply.
"This may be bad news," said an Asian supplier, referring to the new POP supply from Sadara.
Due to weak downstream demand from end-users of flexible foam in the region, demand for polyols is generally weak, consistent with the price trend of co-components such as toluene diisocyanate (TDI).
Polyols and isocyanates can be combined to produce polyurethane (PU) foam products, such as mattresses and insulating boards.
Sadara's other products include ethylene, propylene, ethylene oxide (EO), butyl glycol (BG), amines, propylene oxide (PO), propylene glycol (PG), polyols and isocyanates.
Focus articles by Izham Ahmad
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