South Africa PE, PP producers to face downward price pressure

24 April 2013 17:54  [Source: ICIS news]

LONDON (ICIS)--Polyethylene (PP) and polypropylene (PP) producers in South Africa are likely to face pressure to soften their June offer prices, sources said on Tuesday.

“PE  and PP [prices] are coming off drastically, they’re off another $30-40/tonne internationally,” a distributor said. “Local producers will have to follow suit. May numbers [monthly prices] are called already, so we will see those [new prices] mid to end of next month.”

PE and PP demand in South Africa has been flat during recent weeks. This is thought to stem partly from buyers holding back, expecting lower prices in the coming weeks as they monitor the softening of prices elsewhere in the world.

A second distributor said: “There’s downward pressure, people are not buying. We’re expecting a $20/tonne decrease on PE. On PP a decrease is expected of $25-50/tonne. People are holding back. They have enough stock. There’s no urgency to buy.”

A buyer said: “There’s a  bleak outlook, domestic prices will have to soften in June. We hope for prices  5% lower in June from domestic producers.”

However, a producer said that that it is too soon to predict where June offer prices could be.

“Yes, the market is flat,” the producer said. “Buyers are waiting for things to pan out internationally before commiting to volumes."

The volatile exchange rate of the South African rand against the US dollar is also complicating things further.

“The Rand is tricky,” the producer continued. “It’s fluctuating a lot [against the US dollar]. Regarding June prices, it depends on the monomer contracts [nearer the time], will have to see how that develops.”

By: Jo Pitches
+44 208 652 3214

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