04 August 2010 17:51 [Source: ICIS news]
LONDON (ICIS)--There has been a shift in sentiment in the African polymer markets as the first price increases in two months were recorded in both northern and eastern Africa, sources confirmed on Wednesday.
The eastern Africa polyethylene (PE) market registered the largest price gains, with ICIS having assessed low density polyethylene (LDPE) – which is still widely considered to be the tightest grade – increasing by $30/tonne (€23/tonne) to trade at $1,430-1,470/tonne CFR (cost & freight) eastern Africa.
Some upward movement was also noted in the polypropylene (PP) market, with lower priced business gaining $20/tonne to leave both homopolymer and copolymer PP prices in northern Africa at $1,260-1,280/tonne and $1,370-1,420/tonne CFR, respectively.
Many players said that the upward price trend would filter through the wider African market, as Middle Eastern sellers have now raised their offers by $20-50/tonne, while offers from the US, Europe and Asia were also said to be increasing.
Driving the upward trend was largely seen to be a revival of buying interest in China, which pushed Asian PE and PP values up by $10-50/tonne in the past week. This in turn was now drawing African traders and buyers back into the market, sources said.
A number of African players reported that lower prices – which had been available from Asian and Middle Eastern sellers as late as 29 July – have now disappeared, as sellers either raised their offers or withdrew them altogether in order to assess the direction of the market.
Overall, sources expected the upward price movement to be more pronounced in the PE market, as PP had proved more resilient to the recent downward pressure that has plagued both markets for the past few months.
However, many players were still sceptical as to whether the improving sentiment in both the African and Asian markets was sustainable.
While several sellers said they are optimistic that the current recovery would be a long-term trend, citing stronger Chinese demand and the start of the Indian festival season, others said that buying interest in Africa remained sporadic.
A major producer said that it was hard to tell why prices were improving. “It could be because of some pre-buying ahead of the Ramadan holiday, but I guess we will know for sure in a few weeks.”
However, there also remained a wide disparity between Asian and African prices, which further weighed on sentiment, as a number of players said they are afraid that African prices would fall in line with those seen in Asia.
One key trader in southern Africa – where PP prices actually decreased by $20-30/tonne this week – said: “We are hearing lots of warnings that the PE prices are going to move up in the next few weeks, but those buying large quantities will still be able to secure discounts. The prices have some way to fall yet.”
($1 = €0.76)
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