N Africa PE price crash unlikely with more Mideast material

07 April 2009 16:07  [Source: ICIS news]

LONDON (ICIS news)--Major drops in polyethylene (PE) prices are unlikely in North Africa in the coming months despite buyers’ anticipations of a price crash due to the potential of extra Middle Eastern material being available, market sources said on Tuesday.

“It is highly unlikely that there will be a collapse in PE prices. A decrease of $50-100/tonne (€38-75/tonne) is possible, but the figure of $300-400/tonne which is going around is nonsense,” an Egyptian trader said.

The trader’s comments came in response to a growing expectation among many buyers that a glut of Middle Eastern material would soon appear on the market and force prices down.

“China is buying like crazy at the moment. And, because demand in the Middle East is weak, Middle Eastern producers are shifting as much material eastwards as possible,” a buyer source said.

“The problem will be that Chinese buying will be short-lived. As soon as it stops, a load of PE will be shifted back towards Africa and everything will collapse.”

Demand for PE in North Africa was reported to be low, which certain players thought would exacerbate the potential impact of surplus material.

“No one is buying currently, so the market may soon be oversupplied. The general global PE price trend is up, but with the current market situation that will not happen here,” a distributor in northwest Africa said.

“However, in spite of this possible oversupply, it is still highly unlikely we’ll see enormous changes in prices,” he said.

Low density polyethylene (LDPE) prices in the region were reported by industry sources to be around $1,080-1,100/tonne CFR (cost and freight) North Africa.

($1 = €0.75)

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By: Stuart Moir
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