Singapore (ICIS)-Participants in the isocyanate market in the Middle East are concerned about the possible adverse consequences of the long-term diplomatic dispute between Qatar and its Gulf Cooperation Council (GCC) member states.
Saudi Arabia, Bahrain, the United Arab Emirates — members of the Gulf Cooperation Council to which Qatar belongs — and Egypt decided on June 5 to sever diplomatic and trade relations with Qatar. They believe that Qatar supports terrorism that causes instability in the region.
Industry sources said that so far, political disagreements have not had a direct impact on the isocyanate market, although prices have weakened due to weak demand during the Muslim holy month of Ramadan, which began on May 27.
According to ICIS data, as of the week of June 8, the spot import price of toluene diisocyanate (TDI) to GCC was US$3,500-3,550/ton CFR (Cost and Freight) GCC, a decrease of US$100/ton from the previous week.
At the same time, the import price of polymerized methyl di-p-phenylene isocyanate (PMDI) changed from stable to weak, at US$2,550-2,650/ton CFR GCC, falling by US$50/ton at the low end of the previous week's range.
In the polyurethane (PU) industry, isocyanates are used together with polyether polyols to make soft or rigid foam products.
So far, apart from the blow to transportation, there are few signs that this dispute has had any direct impact on the isocyanate market.
Isocyanate producers and traders said that their main shipping agents have been reluctant to call at Qatar ports because of fear of being banned by other ports such as the UAE and Saudi Arabia.
"I heard that some shipping companies have refused to accept any cargo destined for Qatar ports," a market source said.
DP World, a Dubai-based port operator, announced on June 6 that it would immediately ban all Qatar vehicles and cargo in UAE ports, while shipping agents in Saudi Arabian seaports have been instructed not to receive or unload cargo from any Qatar vessel.
"I have some goods going there now, and I don't know how it turns out," said another market source in Northeast Asia (NE) Asia.
According to the ICIS supply and demand database, the Middle East itself is not a huge market for isocyanates, and only accounted for about 3% and 2% of global TDI and MDI consumption in 2017.
Qatar produces basic chemicals, polyethylene (PE) and methanol. It is also the world's largest supplier of liquefied natural gas (LNG), but it is not itself a major buyer of isocyanates.
The greater concern is how the crisis will affect the broader regional economic situation and trade relations between the Gulf Cooperation Council.
A source in Northeast Asia said: "Qatar's polyurethane market itself is not very large, but the long-term impact on the entire economy may be very serious, not just the polyurethane market."
A source in the Middle East said the dispute "will have serious long-term effects."
"But let's see if it can last," he said.
Focus articles by Izham Ahmad
Picture: Map of the Gulf Cooperation Council (GCC) countries and Egypt (Source: OpenStreetMap)
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