09 November 2012 11:34 [Source: ICB]
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. Some added 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 show.
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 on better availability. LLDPE softened by $10/tonne at the highend of the price range at end-October. PP prices in Kenya fell by up to $10/tonne.
Homopolymer raffia PP was selling at $1,470-1,500/tonne CFR eastern Africa. Copolymer PP was quoted at $1,500-1,520/tonne CFR.
Feedstock propylene FOB (free on board) South Korea spot prices had fallen 1% from late September to late October, ICIS data showed, supporting PP price falls in Kenya.
Underlying demand for PE and PP remains healthy in Kenya, two distributors said, although another cited confusion over the price fall.
"Demand is still good," it said. "But suddenly prices are crashing. Converters are confused."
A major Middle East producer offering homopolymer PP at a rollover - $1,540/tonne CFR eastern Africa - said: "In Kenya, demand is good... but people resist because they want a reduction. [Prices] are decreasing; this is expected."
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