Africa PE, PP producers target July rollover, buyers seek decrease

18 June 2013 16:43  [Source: ICIS news]

LONDON (ICIS)--The majority of polyethylene (PE) and polypropylene (PP) producers for the African markets will target a price rollover for July, while buyers are likely to argue for a decrease, market participants said on Tuesday.

“We expect a price rollover for July,” a PE/PP producer said. “We don't see the monomer price going down, and shipments from Saudi [Arabia] are delayed because of Ramadan. We expect demand to be stable into July.”

A second PE/PP producer said: “We'll aim for a rollover in July. People are taking a gamble, but you've got to go with what's sensible. If you look at fundamentals, you go with a rollover.”

“My personal expectation is that a rollover would be convenient,” a third PE/PP producer said. “Oil has been stable, supply and demand is balanced, generally speaking.”

While all three speak of sluggish demand and hand-to-mouth buying, one argues that reduced capacity is balancing the effects of muted demand.

While some of the shutdowns mentioned could not be confirmed, Saudi Polyolefins shut down its 720,000 tonne/year PP plant in Al-Jubail for scheduled maintenance on 5 June. The turnaround is expected to last until 20 June.

However, many African buyers are said to be holding back on the expectation of prices softening in July.

A PE/PP trader said: “People are not buying because of pricing. People think prices will fall in the next 15-20 days. China is not buying, India is not buying, Turkey is a problem. We’re expecting a drop of $40-50/tonne [in African prices] in July.”

A PE/PP trader based in east Africa said: “Market demand in east Africa has been very low this month, usually June and July are always slow. Prices are still the same [for now], but feedstock prices for PP and PE are on a downward trend. So maybe prices [will] go down or rollover in the next month.”

Other factors are also dampening African demand, supporting a July price decrease.

In northern Africa, Muslim market participants are now believed to have finished restocking before the Ramadan holiday in July.

The rainy season in western Africa is also subduing demand, as is the eastern African winter, with consumption of water and soft drinks falling.

By: Jo Pitches
+44 208 652 3214

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