Pakistan PE/PP demand economic uncertainty - Arhive

This content has been archived. It may no longer be relevant

Pakistan PE/PP demand muted on political, economic uncertainty   Pakistan PE/PP demand economic uncertainty

Source:ICIS News

SINGAPORE (ICIS)–Polyolefin demand in Pakistan stayed muted for the week and is likely to remain so in August following an uncertain political and economic environment.

– Pakistan rupee falls 12% against the US dollar in two months

– Demand slows ahead of Hajj and Eid-ul Adha holidays

– Stocks in the country considered sufficient for now

The response to August-lifting polyethylene (PE) as well as polypropylene (PP) offers has remained lukewarm as buying interest was severely hampered by the recent weakness in the Pakistani rupee to the US dollar exchange rate.

Pakistan PE/PP demand economic uncertaintyPrior to a three percentage point recovery earlier this week, the Pakistani rupee fell more than 12 percentage points against the US dollar in the last two months.

Buyers grappled with losses on purchases undertaken in the last two months, payments for which were due in July.

“Customers have been hit by losses undertaken on LC (letter of credit) 90 day purchases, whose payments were due at a time when the rupee was significantly weaker to the US dollar,” a regional trader said.Pakistan PE/PP demand economic uncertainty

The high degree of volatility in the currency led most importers to assume a wait and see stance, despite generally lower PE and PP offers.Pakistan PE/PP demand economic uncertainty

Offers and acceptable selling levels for August-lifting linear low density PE (LLDPE) film lots from India as well as the Gulf Cooperation Council (GCC) emerged at $1,105-1,150/tonne CFR (cost & freight) Pakistan, down $20-30/tonne from the previous week.

The recent weakness across China and rest of Asia prompted sellers to drop prices for the grade, especially since supply remained ample.Pakistan PE/PP demand economic uncertainty

Separately, PP raffia/injection offers from the GCC have emerged at $1,250-1,260/tonne CFR Pakistan, down $40-60/tonne from early July, prompted by weaker Asian values and generally bearish sentiment.Pakistan PE/PP demand economic uncertainty

The upcoming Hajj and Eid ul-Adha holidays in late August have capped buying interest for August shipments, market sources said.Pakistan PE/PP demand economic uncertainty

“The Eid and Hajj holidays are likely to see lower production and trading activity, so resin demand will be lower this month,” an importer said.Pakistan PE/PP demand economic uncertainty

Market players waited for a clearer picture on the political situation, as they prepared for the newly elected Imran Khan to assume prime minister’s office later this month.

Apart from weakening rupee, depleting foreign exchange reserves amid overall economic uncertainty has also cast a shadow on general trade, market sources said.

Stocks in the domestic markets also deemed as sufficient for most PE and PP grades, especially since local purchasing had also slowed following the uncertain macroeconomic environment.Pakistan PE/PP demand economic uncertainty

On 27 July, ICIS assessed linear low density PE (LLDPE) film prices in the region at $1,135-1,170/tonne CFR Pakistan, down $5/tonne at the high end from the previous week.Pakistan PE/PP demand economic uncertainty

Spot PP raffia/injection prices were assessed in the same period at $1,250-1,280/tonne CFR Pakistan, down $20/tonne from the week before, ICIS data showed.

Pakistan PE/PP demand economic uncertainty(Inset: Pakistan’s Prime Minister-elect Imran Khan. Photographer: Xinhua News Agency/REX/Shutterstock)

By Veena Pathare
Related Topics