25 May 2011 18:04 [Source: ICIS news]
LONDON (ICIS)--Local producer price initiatives for June in South Africa are down by R1,200/tonne ($172/tonne/€122/tonne ) for low density polyethylene (LDPE) and R800/tonne for linear low density polyethylene (LLDPE), traders said on Wednesday.
"There was a general expectation that prices will drop as demand is not strong. [Also], producer inventories are fairly high," a South Africa based distributor said.
Demand in the southern African region is slow due to the approaching winter and is not expected to pick p before August. Local producers were unavailable for comment.
Local product is priced in South African rand (R) while imports are priced in US dollars. Imports remain generally more expensive than local product, more so as the US dollar strengthened against the rand through May.
There are indications that local producer prices, which are normally announced six weeks in advance, could rollover in July.
However, this can only be confirmed nearer to the date as one producers is said to be facing ethylene shortages and has reportedly put customers on allocation for LDPE and LLDPE from June to August, according to a third party source.
The June price targets were posted before the production issues occurred.
Traders remain confident about the rollover. "The drop in demand can offset the supply shortage," one said.
($1 = R6.98; €1 = R9.85)
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