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Surge in Saudi-US PE Exports Reported

China, Economics, Middle East, Olefins, Polyolefins, Projects, US
By John Richardson on 09-Apr-2010

Heading West,,Jeddah’s container port

 

Jeddahcontainer.jpg

Source of picture: http://ofwngayon.com/home/?p=257

 

By John Richardson

SABIC has increased its exports of PE to the US in response to high pricing and what could be weaker demand in China, a source with a North American producer told the blog earlier this week.

“I have heard of more linear-low density PE (LLDPE) cargoes in particular being shipped from Saudi Arabia, the source added.

The graph attached – View image shows the surge in US PE on the back of more expensive ethylene during Q1.

What does this trade – apparenly via both bulk containers to the bigger inland US converters and in bags to the smaller, coastal processors – also tell us about the China market?

PE indigestion in China seems high as a result of overstocking late last year and in early 2010.

“I remember that you had asked me where all the heavy imports in Q4 and January this year were going,” added the source with the North American PE producer.

“Now I can tell you – into warehouses! At the end of March, bonded warehouses had 2-3 times their level of normal stocks and we have no idea how bad the situation is inland, at all the warehouses where Yuan-priced domestic material is stored.”

China’s PE buyers have appeared to be standing on the sidelines over the last few weeks at a time when Saudi capacity is ramping. YanSab is apparently back at 100% after electrictiy-supply problems caused an outage earlier this year and the the second Sharq complex has just come on-stream.

But as we heard yesterday, a rise in oil prices might have brought China’s PE buyers back into the market in significant numbers.