Africa PE and PP prices climb on global tightness

12 January 2011 16:20  [Source: ICIS news]

LONDON (ICIS)--African polyolefin spot values pushed $10-50/tonne (€8-39/tonne) higher this week for January business because of firmer crude oil costs and low availability, market sources said on Wednesday.

The largest gains were posted in the northern Africa polyethylene (PE) spot market, in which low density PE (LDPE) - widely assessed as the tightest grade -  was now trading at $1,740-1,760/tonne CFR (cost and freight) northern Africa, according to ICIS.

The polypropylene (PP) market also surged on short availability and high feedstock costs, with homopolymer and copolymer PP trading at a minimum of $1,450/tonne and $1,600/tonne CFR respectively throughout Africa.

The latest round of increases brought the total gains for January to $30-100/tonne, in line with producers' targets.

However, some producers in Europe expressed frustration because despite the recent gains, the African market remained largely unworkable as an export destination. Many attributed this to competitive Middle Eastern offers which had largely capped the potential increase.

In some cases, volumes from the Middle East were up to $100/tonne below those offered from Europe, although this was dependent on the grade and final destination of the product.

Confirmed business in Africa remained thin on the ground as many players had only just returned to their desks following the Christmas and New Year period, and were in the process of ramping up operations.  

“We have strong prices but not strong demand,” said a large trader.

“There’s not a lot of material in the market and even though demand is slow, it is still outpacing supply in many regions. This could get worse as more look to buy,” the trader added.

Several sellers said that there had been an increasing number of inquiries for product, but while several were optimistic that this would translate into sales, others said it was just buyers testing the market before committing to purchases. 

The cautious sentiment seen in the market for the past few weeks was expected to continue for the rest of January as consumers were likely to wait on the sidelines until the end of the Chinese Lunar New Year, due to commence on 2 February, which traditionally leads to lower demand in Asia.

One major producer in the Middle East said that African PE prices could gain as much as an additional $50/tonne before February, citing the increasing upstream costs and the need to firm up margins.

Elsewhere, one or two traders felt that values were probably close to reaching their peak and that further hikes would be capped at $20/tonne.

This was echoed by a number of converters, who said that they would continue to purchase material on an as-needed basis until prices started to fall.

“We simply will not take material if it goes any higher. We cannot afford to. It would make more sense to stop operations altogether than pay these prices,” one buyer said.

($1 = €0.77)

For more on PE and PP visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to
 ICIS connect


By: Stephanie Wilson
+44 20 8652 3214



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly