South Africa PE, PP demand declines further

17 April 2013 17:02  [Source: ICIS news]

LONDON (ICIS)--South African requirements for polyethylene (PE) and polypropylene (PP) have declined further this week, sources said on Wednesday.

In addition to depressed demand stemming from wider poor macroeconomic conditions, a weak South African rand against the US dollar has proven problematic to importers during recent weeks, rendering imported volumes considerably more expensive than locally-produced material.

Now softer feedstock prices are exacerbating the situation, with many buyers expecting lower prices.

“It’s got worse in terms of demand,” a trader said. “Crude oil prices are plummeting, customers are expecting lower prices. They want an immediate effect. It’s very lacklustre, very depressing. People are panicking. Importers are panicking.”

It is thought that, facing pressure to sell, importers’ offers are now below those of domestic producers.

“Everyone has got material, but customers are sitting back,” the source continued. “April is naturally a slow month in South Africa, plus the market is depressed. It’s worse than the same time last year.”

A second trader said: “It’s pretty tough, things are very volatile. Import decisions are more difficult, with the rand weak. Demand is down 20%  from last year. There’s no light on horizon.”

“It’s very flat, a very soft market,” a buyer said. “[There’s a] Large volume of imports coming in, but consumer spend is way down. Demand is soft, customers have enough. The outlook is not good.”

By: Jo Pitches
+44 208 652 3214

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