Saudi Arabia’s Dammam port congestion to delay polyolefin supply

LONDON (ICIS)–Dammam port in Saudi Arabia is still congested with large numbers of containers that have not been dispatched, market players said on Wednesday.

This is causing a delay in dispatching polyolefin – polyethylene (PE) and polypropylene (PP) – containers from the country, sources added.

Saudi Arabia is one of the main polyolefin suppliers to Asia and Africa.

A polyolefin producer based in the country said: “Prices are softening now and we need to push material but we are unable to take out product. Supply will be slow.”

In a letter to customers dated 29 August, another Middle East polyolefin producer said: “As predicted, we are experiencing above average delays on shipping out of Saudi Arabia.

“Plants, ports, customs, shipping lines and most importantly the trucking companies are struggling to cope with this demand. This also means that trying to use other ports (like Jeddah) is not really an option and we are seeing congestion in all parts of the supply chain.”

The letter goes on to attribute the delay to a combination of factors including Ramadan in August, when shorter working hours and the summer heat slowed loading of containers.

Delays had also occurred in July as suppliers tried to ship higher-than-average volumes out of the region, the source added.

“The shipping lines indicate that all suppliers in the region are trying to do the same and with new suppliers increasing their production, the area is shipping more than it has ever done.”

Market players had expected the situation at the port to return to normal after the Eid ul-Fitr festival in early September.

However, this now seems unlikely because of operational deficiencies and the build-up in the ports.

Market sources said the delay could put downwards pressure on polyolefin prices being shipped to Asia and Africa.

“Customers will want a discount, as they know there will be a delay in delivery. They [Middle East] producers don’t have large warehouses, so they have to sell it off immediately. They did not sell during the one-month vacation. Now even if they want to sell, they cannot sell,” said a regular polyolefin distributor to Asia and Africa.

For more on polypropylene visit ICIS chemical intelligence