August outlook affected by summer holidays

2010-8-7 14:23:45

August outlook affected by Ramadan summer holidays

The month of August is a traditionally low season due to the summer holidays particularly in South Europe, where Italian buyers have already started to shut their plants. This has also coincided with Ramadan this year, which is set to be celebrated by the Muslim world for most of August. Ramadan will start August 11 and last until September 9, which will be followed by a three day holiday. Many players across the globe have started to comment about the effect of the upcoming Ramadan month will have on demand.

In Italy, the activity in spot markets has lost speed this week as increasingly more buyers are bringing their plants offline. Even though some large sized buyers, who are pleased with their end product orders, are planning to remain operational, the majority of the players will be sidelined from the market starting from next week. These shutdowns are expected to last at least for two weeks while the full resumption of market activity is not likely to occur until the beginning of September.

When looking at other markets, some players are concerned about the possible impacts of Ramadan on demand in Southeast Asia. According to the regional players in Muslim countries, namely Malaysia and Indonesia, demand may not be particularly good this month owing to Ramadan. An Indonesian PVC producer said that their higher offers are not meeting with acceptance in their local market due to players’ expectations of slower demand even though they are supported in raising their prices by higher import offers. Some PP and PE converters are also talking about shutting their plants down for a few weeks this month because of the upcoming start of Ramadan as governments in these countries impose restrictions on overland cargo transportation towards the end of the Ramadan month.

In Egypt, demand is mostly expected to slow down this month. Buyers are restricting their purchases to their immediate needs as they do not want to stock up ahead of their low season during Ramadan. In the PVC market, the domestic producer recently came back from their maintenance shutdown with a rollover on their prices despite upward pressure from higher imports. The expectations about slower demand for this month have played a role in the producer’s decision to roll over its prices, according to some sources. In the PE market, the domestic HDPE producer also returned from a maintenance shutdown with lower prices, which was expected in the midst of lower import prices as well as expectedly slow demand during Ramadan.

Likewise in Turkey, buyers are also expressing similar comments. Early in the week, particularly several PP buyers stated that it is a traditionally slow month and the recent firming in prices would not be sustainable in the medium term.