African polyethylene prices slip by around $20/tonne

31 March 2010 18:29  [Source: ICIS news]

LONDON (ICIS news)--African high density polyethylene (HDPE) prices slipped by $10-20/tonne (€7.5-15/tonne) this week as high upstream costs, improving availability and buyer hesitation continued to weigh on values, sources confirmed on Wednesday.

At least two Middle Eastern producers confirmed they were now offering reductions of $20/tonne on HDPE, which was immediately apparent in the eastern, northern and southern African markets that rely heavily on imports from the Middle East, sources said.

Elsewhere, linear low density polyethylene (LLDPE) spot prices also began to slip by $20/tonne on ample supply in both the eastern and northern African markets.

“Prices are starting to come down like crazy,” reported one Indian trader offering into the eastern African market. “China is sleeping and Middle Eastern suppliers are starting to move product into Africa at competitive prices as a result.”

Indeed, several sources noted reductions of up to $100/tonne had been seen on the HDPE market from one Middle Eastern supplier, although such offers had now been ‘withdrawn’ according to traders.

One global producer offering from its Saudi Arabian plant noted: “I do not understand why these Middle Eastern suppliers offer so low. The Chinese market is starting to recover and feedstock costs are so high. They cannot be making money on these prices.”

The western African market, meanwhile, remained stable.

A trader offering into the region said: “The [western African] market is buffered by its location – the Middle Eastern suppliers are more active in the eastern and northern [African] markets, and the downward sentiment has not reached western Africa yet.”

However, the source added similar decreases in coming weeks in the western African market could not be ruled out.

“April is still up in the air and prices are bouncing around,” the trader said. “The producers want increases, or a rollover at minimum, but demand [for HDPE and LLDPE] is not particularly good and buyers expect a price collapse. They will hold out until that happens.”

$1 = €0.75

By: Stephanie Wilson
+44 20 8652 3214

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