Petrochemicals prices decrease after demand drops

28 September 2009

Buyers delay orders while waiting for plants to begin production in the region

The price for key petrochemicals commodities fell more than 5 per cent between mid-August and mid-September because buyers are delaying orders while they wait for several major plants in the Middle East to begin production in the final quarter, says Bahrain-based investment bank Sico.

The price for the basic plastic high density polyethylene (LDPE), which is one of the most heavily traded of petrochemicals commodities, fell 5.5 per cent from $1,280 a tonne to $1,210 a tonne between 18 August and 18 September, according to a Sico report released on 27 September.

On average, prices for key petrochemicals commodities, fell 5.2 per cent during the month, the Sico research shows.

Three new plants in Saudi Arabia - owned by Saudi Ethylene & Polyethylene Company, Yanbu National Petrochemical Company, and Petro-Rabigh - have either started up or will start up before the end of 2009, adding 4 million tonnes of products to the market and potentially depressing prices further.

Global petrochemicals production is down 11.8 per cent in 2009, according to the American Chemistry Council. Analysts say underlying demand has fallen as much as 15-20 per cent since the end of 2008.

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