Africa polyethylene spot gains on low availabilty, firm feedstock

02 December 2009 17:58  [Source: ICIS news]

LONDON (ICIS news)--African polyethylene (PE) spot prices gained $30-60/tonne (€20-40/tonne) from late November on limited availability and firm feedstock costs, despite dwindling local demand, market sources said on Wednesday.

The biggest gains were seen in the western Africa PE market, where reduced supply from the Middle East and Asia left buyers, seeking prompt delivery material, little choice but to purchase from Europe where prices were significantly higher across all grades.

The shortfall of availability across the wider African market was widely attributed to strong buying interest and more attractive pricing in the key Chinese market, causing a large proportion of sellers from traditional suppliers to redirect volumes to Asia.

“Offers from Korea and the Far East are limited,” said one trader in western Africa, “as most of them are sold out, prices have definitely moved up and we have raised high density PE [HDPE] and linear low density PE [LLDPE] prices to around $1,300-1,350/tonne [€858-891/tonne CFR western Africa].”

However, there was some concern that the recent bull run of higher prices in both Asia and Africa could be coming to an end, as buying interest in both regions was beginning to show signs of weakening.

A trader based in South Africa noted: “Volumes in November have not been what we were expecting, in fact sales were around 30-35% down on our expectations and December does not look much better so far.”

This was echoed by a European trader selling into the continent, who said: “Demand globally was very slow in November, it is normally a good month.”

The source added, “A number of markets in Africa are caught up in a credit crisis and this makes things worse. Factor in everyone wanting to end the year with low stocks and it makes demand really slow.”

($1 = €0.66)

ICIS has launched weekly pricing reports in Africa for polyethylene and polypropylene. For more information contact Nadine Spoeri
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By: Stephanie Wilson
+44 20 8652 3214

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