The October polyethylene and polypropylene allocation to Asia from Middle East may be lower because of high European prices, industry sources said this week.
European PE and PP prices have jumped since the start of September as converters replenished stocks amid rising feedstock costs.
High density polyethylene prices were akso being pushed up on the back of tight supply in Europe as three European producers have placed HDPE supplies under force majeure.
Sources said Middle Eastern producers are likely to allocate more material to Europe in October due to the huge price difference in the two regions.
"Europe prices is $300/mt higher than Asian prices. Therefore, it make sense to allocate more material to the European market," said a Japanese trader Friday.
The FOB Northwest Europe markers were assessed at $1,742.50/mt Wednesday.
In Asia, HDPE-film was assessed at $1,330/mt CFR Far East Asia and $1,348/mt CFR Southeast Asia Wednesday.
Meanwhile, FOB Northwest Europe homopolymer grades of polypropylene were assessed at $1,732.50/mt Wednesday. In Asia, PP raffia was assessed at $1,425/mt CFR Far East Asia and $1,432/mt CFR Southeast Asia Wednesday.
PP injection was at $1,432/mt CFR Far East Asia and $1,417/mt CFR Southeast Asia Wednesday.
Middle Eastern producers typically announce their new offers after the 20th of each month.
Asian producers and traders are receiving inquiries from European buyers this week especially for HDPE-film, PP raffia and PP injection. Most inquiries from Europe were heard to be for prompt shipments, sources said.
"Europe PE and PP prices are very high and end-users are looking for material from Asia. I've had quite a few inquiries from Europe," a Southeast Asian producer said.
Despite the open arbitrage window, markets sources were skeptical that this will result in a steep rise in Asian prices as demand remained sluggish.
"Customers' demand is not strong and they are pressing for lower prices currently, as they are unable to pass on the costs," a trader said.
