24 August 2011 16:52 [Source: ICIS news]
LONDON (ICIS)--Polypropylene (PP) prices in Africa have fallen by $20/tonne (€14/tonne) following lower September offers from eastern Asia producers, industry sources said on Wednesday.
The reduction follows a drop in Chinese prices over the last few weeks for both homopolymer and copolymer PP grades, sources added.
Apart from South Africa, where local producers have a huge market share due to competitive prices based on large scale production, Africa is a net importer of PP, especially from the Middle East, India and eastern Asia.
Prices for PP imports into China had reduced by $20-30/tonne last week.
Following this reduction, eastern Asian producers announced a decrease of $50-60/tonne for September for both homopolymer and copolymer PP grades.
The producers had previously been holding onto high offers of $1,740/tonne CFR (cost and freight) northern Africa and $1,800/tonne CFR western Africa for copolymer PP. Offers from the producers had been deemed as uncompetitive by buyers.
PP prices are stopped from falling further by other importers into the region seeking a rollover.
Producers based in the Middle East are targeting a rollover for September offers despite the lower crude prices in August and September. However, formal announcements are yet to come through from most.
Although October crude futures are selling at $85.15/bbl for the US benchmark WTI and at $108.95 for the European benchmark Brent as of noon Wednesday, a handful of PP producers have tentatively started offering product based on the rollover prices.
A few are waiting on the sidelines, along with the buyers, to better gauge market direction.
Despite the stable to soft prices, PP is still being thinly traded in Africa. For the third week in a row, markets were quiet because of seasonal factors, including Ramadan in northern Africa and rainfall in western Africa.
Trade was muted in other regions, following uncertainty regarding the global economic climate and its influence on PP prices.
Sources expressed hope that the markets will pick up once most producers announce September offers.
($1 = €0.69)
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