Plastics players reluctant to conclude business in North Africa

03 March 2011 17:16  [Source: ICIS news]

LONDON (ICIS)--Players in the plastics industry are reluctant to conclude transactions in North Africa as escalating political violence in Libya and logistical issues in Egypt have disrupted both shipping and credit lines in the region, sources said on Thursday.

The violent political unrest in Libya has largely brought plastics trading in the country to a halt, as production of polyethylene (PE) and polypropylene (PP) was wound down and ports closed.

A PE tender from Libya to Turkey was understood to have been concluded a few weeks ago. It remains unclear when the tender will be fulfilled.

“Libyan ports are closed due to political instability in the country. No shipments are likely to be done in the near future, and there is no news about the shipment of 8,000 tonnes pending to be shipped to Turkey after the last tender,” a Middle East-based polymers trader said.  

The status of Ras Lanuf Oil & Gas Processing Co's (RASCO) cracker at Ras Lanuf, Libya, also remains unclear. It was widely reported that the unit was shut down over the weekend of 19-20 February for safety reasons.

However, three cargoes of Libyan crude oil left their loading ports on 2 March.

In Egypt, the main issue plaguing the market is the lack of credit, with importers and domestic players opting to conclude cash-only deals.

A polyvinyl chloride (PVC) trader in Turkey said: “Egyptian operations are running again now and things are getting back to normal. A small cargo from a local producer is expected this week, and they have announced a tender for 3,000 tonnes due to ship in mid-March.

“We are still a little wary because they ask for cash payments before loading. We are concerned that the tension could affect the port, so it is a big gamble. But some traders are willing to pay.”   

This was echoed by a source with Egyptian PE producer SIDPEC, who said that although domestic production has now largely returned to normal, local buyers are struggling to secure credit.

A Middle East-based seller confirmed that it had concluded a homopolymer PP deal in Egypt at $1,750/tonne (€1,260/tonne) CFR (cost and freight), with a condition of fixed payment, which was above the spot market price of $1,700-1,730/tonne CFR northern Africa, according to data from ICIS.

The seller said that those buyers looking for material were mainly concerned with sourcing product, with price very much a secondary factor.

In addition to the lack of credit, deep-sea export opportunities remain sporadic as the availability of ships in Egypt is limited.

The source said: “No shipping agent will send an empty boat to Egypt for us to use for exports. There are no regular ships, and it makes it very difficult for us. We rely on exports. We hope that it will return to normal in the next month.”   

($1 = €0.72)

For more on SIDPEC's plant, visit the ICIS plants and projects database
For more on PE, PP and PVC, visit
ICIS chemical intelligence

By: Stephanie Wilson
+44 20 8652 3214

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