 Middle East plastics producers have much to look forward to in 2007, while Asian Polyethylene (PE) and Polypropylene (PP) manufacturers can expect a downturn in prices for at least the first part of the year. Demand for PE and PP in the Middle East is expected to remain healthy in 2007, increasing 6 percent on average as compared to 2006. Several facilities are expected to shutdown operations for maintenance, but the loss of production will likely be offset by new capacity coming on stream in Iran. Overall supplies are not expected to be quite as tight as were seen in 2006, and prices, which reached a 13 year high in 2006, are also predicted to stabilize in 2007. During the first few weeks of the year, however, supplies remained tight and prices rose nearly 4 percent.
Like the Middle East, prices for PE and PP in Southeast Asia are not likely to be sustained at the very high levels experienced in 2006. The market will remain robust, however, with growth expected around 10 percent as a result of strong demand in the infrastructure, construction, retail and agriculture sectors. Supply is expected to remain balanced or slightly tight.
PP and PE prices in the rest of Asia, however, are expected to fall through February, picking up again after the Chinese New Year holidays. Weak demand, lower crude oil prices, lower Chinese prices, and oversupply of inexpensive imported material have placed downward price pressure on polymers in Asia, causing a decline of as much as 4 percent. Prices are expected to rebound in March when buyers return to the market. A drop in upstream monomer prices or crude oil could have a negative impact later on in 2007. Analysts don't believe, however, that new capacity that came on stream in 2006 and is expected to be available in 2007, will upset the market balance as growing demand in China is expected to offset the additional supply. With lower import tariffs, some traders expect that imports of PE and PP into the country are likely to increase in 2007. |
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