FocusWest Africa PE, PP demand expected to slow

24 May 2013 14:03  [Source: ICIS news]

By Jo Pitches

LONDON (ICIS)--The slight improvement in demand for polyethylene (PE) and polypropylene (PP) in West Africa is expected to be short-lived because of seasonal, cultural, religious and political factors, sources said this week.

“Demand is good being seasonal time,” a Nigeria-based producer said on Friday. “But we are about to enter a slowdown during upcoming Ramadan [in July], and then maybe rain [the rainy season in West Africa].”

On 14 May, a distributor said: “In West Africa, the rainy season starts from June until September so customers will buy big quantities in July and August so the product arrives in September.”

In Nigeria, religious and political tensions are also damaging demand.

The producer said: “At present demand is also affected (hopefully temporarily) in the north-eastern part of Nigeria as the Federal Government declared an emergency [rule], affecting trade and economic activities.”

On 15 May, Nigerian President Goodluck Jonathan declared a state of emergency in three states following a series of attacks by Islamist militant groups.

On the same date, the BBC reported that Nigeria is suffering conflicts over land, religion and oil. On 14 May, 53 people were reportedly killed and 13 villages burnt in central Nigeria's Benue state.

On 23 May, suicide bombers reportedly killed and wounded a number of people when, in separate incidents, they attacked a military barracks and a mine run by French nuclear group Areva in Niger.

Further limiting PE and PP demand, buyers in West Africa purchased significant volumes during recent weeks when prices were understood to have reached the bottom of the cycle.

“It’s true that during last the month, converters have booked reasonable quantities to cover them for another two months at least,” the producer said on Friday.

Furthermore, while prices across most of Africa are facing upward pressure – producers are on average targeting June price hikes of $30-40/tonne [€23-31/tonne] because of buyers’ low inventories and their need to restock – there is said to be greater resistance to price hikes in West Africa than other regions.

“There’s greater resistance in West Africa,” a producer said on 22 May. “There are more offers and greater availability [of material] there.”

($1 = €0.77)

By: Jo Pitches
+44 208 652 3214

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