FocusAfrica PE, PP producers confident of June price hikes

22 May 2013 16:28  [Source: ICIS news]

By Jo Pitches

LONDON (ICIS)--Producers of polyethylene (PE) and polypropylene (PP) for the African markets are confident of pushing through price hikes in June, despite talk of resistance from buyers, sources said this week.

One HDPE producer said: “We are rather optimistic on price increases next month, and are going for a $70/tonne [€55/tonne] increase [from May levels].”

Producers are using buyers' low stocks to justify price hikes. Many buyers held back from purchasing from mid-March until early May on the expectation of both April and May offer prices falling.

A combination of softer feedstock costs, lower PE and PP prices in Asia, and poor demand in much of Africa saw producers reduce African PE and PP prices significantly during the last two months.

Now, with demand and prices traditionally increasing during the summer months, buyers have been keen to restock prior to any price hikes.

“People are asking for additional quantities, more than 50kt [50,000 tonnes],” a PP producer said. “Demand is picking up. We’re targeting [an increase of] $30-50/tonne [for June].”

Producers' attempts to increase June prices are expected to be more successful in north Africa than in other regions, as buyers in Muslim countries are keen to build stocks before Ramadan in July.

“We’re ready to increase,” the PP producer added. “Ramadan is coming, they [buyers] have to prepare. They have no choice but to pay, they’re not resisting.”

Another PE/PP producer said: “It’s quite strong, demand is good. East and north Africa prices are increasing. It [stronger demand] should last a few weeks. After Ramadan, shipments will slow down. [We’re seeking] a $30-40/tonne increase in June for all the [African] regions.”

While spot market activity is muted this week because of a lack of availability and due to many participants attending the Chinaplas 2013 event, PE and PP spot prices are already showing an increase of up to $50/tonne from a month ago.

However, the latter producer spoke of some resistance from buyers.

“There’s resistance [to price increases] in West Africa,” the source said. “There are more offers and better availability there.”

($1 = €0.78)

By: Jo Pitches
+44 208 652 3214

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