Africa PE, PP Jan sales fall as prices climb on tight Middle East supply

16 January 2013 17:17  [Source: ICIS news]

Down arrowLONDON (ICIS)--African polyethylene (PE) and polypropylene (PP) January sales are poor as spot prices have risen on tight supply caused by production outages among dominant exporters in the Middle East, industry sources said on Wednesday.

Prices for high density polyethylene (HDPE) – the PE grade most in demand in Africa – have risen by 6% from an average of $1,450/tonne CFR northern Africa in mid-December 2012 to $1,540/tonne on 16 January.

"Sales volumes are still limited, not too many deals are being done. Customers are concerned about the higher prices, but suppliers are not under pressure [to lower prices], not at all," a US-based distributor that sells into Africa said.

A spate of production disruptions in the Middle East (see table) has tightened supply from the region into Africa, and – along with a bullish Chinese market – has exerted upward pressure on spot prices.

In western Africa inventory levels are said to be low, as buyers purchase only to meet immediate requirements.

"They are giving lower bids – that does not appeal to suppliers based on the high freight rates," the distributor said.

Freight rates from the Middle East to Nigeria are among the highest in Africa at $140/tonne, the source added.

A polyolefin producer based in Nigeria said: "The market remained [at a] stand-still here. Most of the buyers stayed away from buying, on the other hand sellers did not have enough stock to offer."

Sources maintain geo-political and macroeconomic factors in Africa have contributed to the drop in sales volumes.

The relatively stable Egyptian pound (£E) has been steadily devalued since the renewed political unrest in the country late in November last year, an Egyptian buyer said.

The currency, which was £E6.11 to the US dollar in mid-December, dropped to £E6.58 at one point on 16 January.

A polyolefin producer based in Egypt said: "Prices have increased in all markets, people are not going to accept that. It is a poor country. We are importing everything from outside and exporting very little."

A second Egyptian polyolefin producer added: "Everybody is hesitant to buy imports as nobody knows what the price will be in Egyptian pounds."

A Middle East producer said it was offering homopolymer raffia PP at $1,520-1,530/tonne (€1,140-1,148/tonne) CFR Egypt – much lower than its offers of $1,570-1,580/tonne CFR into the rest of northern Africa – because of the drop in value of the local currency.

Meanwhile, converters in Kenya are keeping stocks low as speculation mounts on the impact of the general elections due in March.

A distributor based in Kenya said: "In Kenya, elections on 4 March  is a factor effecting [sales], as in Africa elections have never been smooth. Converters are very much cautious – this time no one is building the inventories in [the] factory. Everyone is trying to minimise the risk."

Kenya's converters have sufficient inventories to meet their requirements until February, the distributor said, adding: "Once elections get over in March, demand will boost like anything for sure because all major converters are under-booked for now."

A second Kenyan distributor said: "During election time Kenyan buyers generally tend to lower consumption levels. It is mere speculation."

Company

Location

Product

Nameplate Capacity (tonnes/year)

Duration

Borouge-1

Ruwais, Abu Dhabi, UAE

LLDPE

300000

December 2012-
restart date unconfirmed

Borouge-1

Ruwais, Abu Dhabi, UAE

LLDPE

300000

December 2012-
restart date unconfirmed

Borouge-2

Ruwais, Abu Dhabi, UAE

HDPE

540,000 

January 2013
-(one and a half months)
restart date unconfirmed

Borouge-2

Ruwais, Abu Dhabi, UAE

PP

800,000 

January 2013
-(one and a half months)
restart date unconfirmed

Saudi Polymers

Al-Jubail, Saudi Arabia

PE

1.1m

10 Nov-Jan 2013

Saudi Polymers

Al-Jubail, Saudi Arabia

PP

400,000 

10 Nov-Jan 2013

PIC

Shuaiba, Kuwait

PP

150,000 

31 Dec-5 Jan 2013

PetroRabigh

Rabigh, Saudi Arabia

LLDPE

600,000 

January 2013.

PetroRabigh

Rabigh, Saudi Arabia

HDPE

300,000

January 2013.

PetroRabigh

Rabigh, Saudi Arabia

PP

700,000

January 2013.

Petrokemya (SABIC affiliate)

Al-Jubail, Saudi Arabia

LLDPE, HDPE

400,000 each

March (to be confirmed)

SEPC (Joint Venture)

Al-Jubail, Saudi Arabia

LLDPE, HDPE

400,000 each

April (to be confirmed)

Saudi Polyolefins Co.

Al-Jubail, Saudi Arabia

PP

720,000

April (to be confirmed)

NATPET

Yanbu, Saudi Arabia

PP

400,000

February (2nd-3rd week for 12-16 days)

($1 = €0.75)


By: Cuckoo James
+44 (0) 208 652 3214



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