Africa August polyolefin prices rise on reduced supply

27 July 2011 17:47  [Source: ICIS news]

LONDON (ICIS)--Initial August offers for African polyolefins from Middle East producers have risen by $20-60/tonne (€14-41/tonne), because of reduced supply on the back of firmer market sentiment in Asia and lower inventory levels, Middle East producers said on Wednesday.

Middle East producers are among Africa’s chief suppliers of polyethylene (PE) and polypropylene (PP).

Most PE producers confirm low inventory levels, however, a few distributors expressed uncertainty and said producers could be merely holding back volumes for this month in an effort to continue the upward direction of prices or to balance the markets when demand falls in August.

Supply from domestic producers in the market, especially in Egypt and South Africa, continues as normal.

Meanwhile, the picture on PP supply is clearer and reduced supply can be explained by production losses in the Middle East.

Al-Waha Petrochemical had shut its 450,000 tonne/year PP facility in Al-Jubail, Saudi Arabia, following technical issues, while National Petrochemical Industrial (NATPET) is operating its 400,000 tonne/year PP plant in Yanbu at low rates. Meanwhile, output at Petro Rabigh’s 700,000 tonne/year PP plant has been affected by the prolonged shutdown at its high olefins fluid catalytic cracker (HOFCC) in Rabigh, Saudi Arabia.

End-user acceptance of the newly increased offers is still uncertain and could curb the climb in prices that suppliers seek, especially in view of the expected fall in August demand in northern and western/southern Africa because of seasonal factors including the approach of Ramadan.

A Middle East producer said: “August offers will be revised depending on initial customer feedback.”

Prices for low density PE (LDPE) rebounded this week by as much as $50/tonne in some regions of Africa, although levels are still lower than those posted by Middle East suppliers. Two weeks ago, prices had fallen by as much as $50/tonne on the back of long supply from Europe.

Linear low density PE (LLDPE) and high density PE (HDPE) kept up their July increases and rose by $30/tonne across most regions, although prices still fall short of the high offers posted by Middle East suppliers.

Meanwhile, PP prices have been assessed up by $20-30/tonne for homopolymer PP, and by $30-40/tonne for copolymer PP.

($1 = €0.69)

By: Cuckoo James
+44 (0) 208 652 3214

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