15 September 2010 17:39 [Source: ICIS news]
LONDON (ICIS)--African polyolefin spot prices appear to be levelling off this week as uncertainty over the direction of the market begins to weigh on buying sentiment, sources said on Wednesday.
Following gains of $100-120/tonne (€77-92/tonne) over August, low density polyethylene (LDPE) – widely considered to be one of the tightest polyolefin grades in northern Africa - was now widely assessed steady at $1,550-1,600/tonne CFR (cost and freight), according to ICIS.
While many sellers remained optimistic that prices and demand would spike following the Eid ul-Fitr holiday as buyers returned to the market to restock, there was no clear evidence of this as yet.
Indeed, players in the predominantly Islamic northern Africa PE and polypropylene (PP) markets largely remained on the sidelines, with most awaiting a clear indication from players in China where a pre-holiday lull in demand ahead of the national Mid-Autumn festival and the Golden Week holidays was already evident.
This, in turn, had also impacted demand in the wider African market, which regularly looks to the Chinese market as a precursor in terms of pricing.
One large seller offering into both northern and eastern Africa noted: “The markets are completely quiet and it seems that players have not yet fully returned from their [Eid] holidays,” before adding: “Most will probably wait and see what happens in China before they commit to large purchases. By that time, cracker issues will have been resolved and supply will have levelled out.”
This was echoed by a large South African trader, who felt that: “Asian prices will probably soften in the Chinese holidays due to the absence of buyers and softer upstream values.”
As such, many buyers and traders alike reported that only consumers in desperate need of prompt availability would purchase at current levels confirmed in Africa.
A large south east Asian producer commented: “Buyers are flush with inventories, but there are one or two who need to buy. We receive hardly any enquiries and none are keen to purchase in big volumes ahead of the Chinese holidays.”
($1 = €0.77)
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