South Africa PE, PP markets continue to suffer poor demand

10 April 2013 17:15  [Source: ICIS news]

LONDON (ICIS)--The South African polyethylene (PE) and polypropylene (PP) markets are still suffering muted demand for the products, sources said on Wednesday.

“Market conditions are still pretty dismal in terms of demand,” a trader said.

“I agree with the sentiment that the market is flat,” a second trader said.

A relatively weak South African rand against the US dollar has recently been hindering importers, rendering it expensive to bring volumes into the country.

A slight strengthening of the rand during recent days has so far made little difference.

If anything, the recent recovery in the local currency has made customers even more reluctant to commit to future orders,” the first trader said. “I think all the importers are praying for some sort of miracle at this stage as it seems that nothing short of one will do the trick in stimulating demand.”

The second trader said: “The strengthening of the rand is good news, but frankly it does not allow us to capitalise for April or even May supply, the reason being that most of the cargo arriving then would’ve been ordered at the higher purchase price and at the weaker forex rate.”

“The market is still flat, there are no fireworks,” a buyer said. “The exchange rate dropped slightly but it’s not making a significant change to pricing. We’re hoping the rand strengthens and things start looking better.”

Furthermore, importers face tough competition from South Africa’s domestic producers, who dominate the market.

“The dominance of the domestic producer on prices for LLDPE and LDPE is not allowing much opportunity for importers such as ourselves to compete,” the first trader said. “At the same time  reports are that the domestic producer remains well stocked.”

By: Jo Pitches
+44 208 652 3214

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