Asian players: GCC tension might affect Qatari petrochemical shipment

Media outlets on Monday, 5 June 2017 reported that Saudi Arabia, Egypt, Bahrain and the United Arab Emirates (UAE) have cut diplomatic and economic ties with Qatar by the accusation that the country is backing Iran and Islamist group.

Saudi Arabia and its allies immediately suspend land, air and sea travel to and from Qatar. Asian players quickly become concern over petrochemical shipment from the country, as these cargoes usually need to pass through UAE water and reach Asia through Strait of Hormuz via Omani territory.

However, up to this moment business is still as usual for Qatar based petrochemical producer with a source said, “We have not been informed about any delay in shipment from the plant side and therefore we still able to take order from customers.” Industry experts claim that shipment from Qatar should only be affected in term of the voyage time, as shippers need to avoid certain routes.     

Chinese buyers reported receiving Qatar LLDPE film at $1080/ton CFR China, LC AS term and several sources have expressed the intention to make purchases, “There are still so much of uncertainties, however prices are competitive and we plan to buy some quantity.”

Southeast Asian buyers are more cautious as most shipments to this market are based on costs, insurance, freight term. A buyer said, “Insurance companies might also charge higher premium for these cargoes due to high risk. Therefore, at the moment we prefer to wait and see on the sideline.”

Qatar is the largest LNG exporter in the world and produces mainly polyethylene (PE). Its largest PE export destination is China and with reduced accessibility to neighboring GCC market, Qatari producers might allocate more material to Asia.