09 May 2012 20:41 [Source: ICIS news]
LONDON (ICIS)--Trade in the African polyethylene (PE) and polypropylene (PP) markets have stalled as buyers delay purchasing in the expectation of a fall in Middle East and Asian import offers, producers and distributors said on Wednesday.
Africa PE and PP import prices were assessed as mostly stable on 9 May, but prices are under downward pressure from softening feedstock ethylene and propylene spot prices in Asia and the initial rollover of May PE and PP offers are not seen to be workable anymore.
"I think that the market is buying minimum quantity, [and] that there will be a price correction in June driven by Asian and EU price corrections," said a Middle East PE and PP producer.
Spot Asian ethylene prices fell by $60-110/tonne (€46-85/tonne) to $1,230-1,300/tonne CFR (cost & freight) southeast Asia in the week ending on 4 May, as a slump in naphtha feedstock values and bearish conditions in key derivative markets limited the spot appetite for ethylene cargoes.
Meanwhile, propylene values dropped by $30-50/tonne to $1,350-1,400/tonne CFR southeast Asia in the same week.
"Crude and naphtha are going down, globally demand is bad. The EU elections did not help and India and China are slow. Producers announced a rollover but they are reducing [their] offers," said a distributor.
"We are flexible with the offers," said a PE producer that sells in Africa.
Additionally, prices next month are also expected to be under downward pressure because of seasonal factors, including monsoon rains in western Africa, sources said.
"Even in strong conditions, June, July are generally slower than other months," said the PE producer.
PE prices are at $1,570-1,600/tonne CFR northern Africa for low density PE (LDPE) grade, while PP copolymer prices are at $1,620-1,670/tonne CFR northern Africa.
($1 = €0.77)
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