30 November 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--Supply has become unexpectedly tight in the South African polyethylene (PE) market, leading to steep price increases, sources said on Wednesday.
Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) film grades are the tightest, mainly because of a supply shortage from local producer Sasol.
A source at Sasol said: “We have a shortage of LDPE and LLDPE, mainly LLDPE, because of monomer constraints. We are finding it very difficult to produce ethylene for our polyethylene plants.”
The source did not give the reason behind the monomer shortage.
Meanwhile, imports into the country are limited since a major importer, Saudi-based SABIC, suspended its November shipments on tax concerns.
Importing distributors said they had kept stock levels low due to expectations that demand in December would be sluggish because of the approaching holiday season in the country, which runs from mid-December until mid-January.
Many distributors in South Africa said they are even struggling to meet December demand, as the shortage from Sasol has created an unexpected hike in requests from customers.
This has led to price increases, mainly at the higher end of the price ranges available in South Africa, as distributors are offering their limited volumes at higher prices.
The low end of the price ranges for LDPE and LLDPE are largely unchanged as product from Sasol is available at a rollover for December, despite its supply shortage.
LDPE prices are at South African rand (R) 13,650–15,600/tonne FD (free delivered) South Africa as of Wednesday 30 November, an increase of R1,100/tonne ($132/tonne) at the higher end of the range.
LLDPE prices are at R12,400–14,000/tonne FD, and have increased by R250–1,600/tonne.
($1 = R8.36, $1 = €0.75)
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