31 October 2012 10:59 [Source: ICIS news]
By Cuckoo James
Middle East PE is being offered into Kenya and the wider African markets at a rollover-to-a-decrease of $30/tonne (€23/tonne) for November business, with most producers keen to sell at a rollover.
While buyer acceptance of the fresh offers remains uncertain in other African regions because of the Eid al-Adha holidays across many parts of the Middle East and Africa, distributors selling into Kenya confirmed prices in the country have slipped, with some adding that buyers expect more decreases on bearish international markets.
PE import prices in Kenya have fallen by up to $30/tonne in value, distributors in the country said.
The price fall is being attributed not to fundamentals in Kenya, but to softer feedstock Asian ethylene spot prices and slow demand in the key Chinese PE import market.
Spot ethylene cost and freight (CFR) southeast Asia prices slipped 4% on average from late September to late October, ICIS data showed.
Among the PE grades, high density polyethylene (HDPE) prices have alone held steady at $1,460-1,490/tonne CFR eastern Africa on relatively better demand and tighter supply. The grade is currently the most expensive in Kenya.
But buyers are reluctant to commit to normal volumes at a rollover. “Customers are hesitant because they think prices will come down. India is going into Diwali and Europe is at year end,” a distributor based in Kenya said.
Spot prices for low density polyethylene (LDPE) – the second most expensive PE grade – have decreased by $20-30/tonne to $1,380-1,400/tonne CFR eastern Africa.
Linear low density polyethylene (LLDPE) is trading slightly cheaper than LDPE at $1,370-1,390/tonne eastern Africa due to better availability. LLDPE softened by $10/tonne at the high-end of the price range this week.
Meanwhile, PP prices in Kenya decreased by a maximum value of $10/tonne.
Homopolymer raffia PP was selling at $1,470-1,500/tonne CFR eastern Africa, while copolymer PP was quoted at $1,500-1,520/tonne CFR.
Feedstock propylene (free on board) FOB South Korea spot prices had slipped 1% on average from late September to late October, ICIS data showed, lending support to the downward movement in PP prices in Kenya.
Underlying demand for both PE and PP remains healthy in Kenya, a couple of distributors said, although the fall in prices based on international market dynamics has created "confusion", added a distributor.
“Demand is still good, there is no problem in demand. But suddenly prices are crashing. All the converters are confused,” the source said.
A major Middle East producer that is offering homopolymer PP at a rollover, at $1,540/tonne CFR eastern Africa, said: “In Kenya, the demand is good... but people resist because they want a reduction. It [prices] are decreasing, this is expected.”
($1 = €0.77)
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