Sentiment is bearish among Middle East producers as the coronavirus pandemic is impacting the demand in key export markets globally. Saudi Arabia and the UAE announced its measures to bolster their economies with packages worth a combined $55bn, with more likely to come. What is the direct impact on regional refiners and petrochemical producers in the Mideast Gulf and to their supply chains?
The start of the coronavirus outbreak coincided with an already pre-scheduled refinery maintenance programme in the Mideast Gulf. This capacity is scheduled to be back online soon, but operators may extend their turnarounds to keep units offline for some time given the prevailing market conditions.
Given the recent fall in oil and naphtha prices, petrochemical feedstock costs are compressed. Freight becomes a higher proportion of the final price and may provide a competitive benefit to regional petrochemical producers.
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