08 June 2011 15:31 [Source: ICIS news]
LONDON (ICIS)--Polyethylene (PE) price offers for June from domestic producers in Egypt have rolled over from May despite the $50/tonne (€34/tonne) decrease in PE prices in the rest of northern Africa, market sources said on Wednesday.
ICIS assessed prices for linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) grades at $1,470–1,490/tonne and $1,450–1,470/tonne CFR (cost and freight) northern Africa, respectively.
The LLDPE and HDPE prices are largely reflective of offers from countries in the Middle East, where prices are comparatively low because of pressure from continuing soft demand in the key market of China.
In spite of the sharp drops in the global PE markets, June PE offers in Egypt stand relatively high at $2,260/tonne CFR for LLDPE and $1,800/tonne CFR for HDPE, unchanged from May.
Ongoing difficulties with securing credit, resulting from the political turmoil in Egypt earlier in the year, are limiting the volume of PE available from outside sources, which makes it possible for domestic producers to keep prices stable, according to a local supplier.
In spite of the tight supply, domestic producers could be forced to lower prices next month because of weak demand from PE buyers, who are unable to pass on costs further downstream.
Consumption in the downstream packaging industry is low, which reflects the weakness in the regional economy.
According to the African Development Bank, the military conflict in Libya and the political situation in Egypt will slow economic growth in northern Africa to 0.7% in 2011, compared with 4.7% in 2010.
Sub-Saharan Africa will grow faster this year than northern Africa, according to the latest African Economic Outlook report. Growth in northern Africa will increase to above 5% in 2012, the report said. Until then, buyers are unlikely to be able to afford the high domestic polymer prices.
Some PE industry sources share this view. Trade will pick up only later on in the year after Egypt holds presidential elections, a source said.
“Egypt’s economy is slow. Home-appliances consumption has come down, including exports to Syria, Libya, etc. We expect [prices] to come down,” said a local buyer.
($1 = €0.68)
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