21 June 2013 12:59 [Source: ICIS news]
LONDON (ICIS)--African polyethylene (PE) prices have climbed by up to 3%, depending on grade and region, during the last month, ICIS data showed on Friday.
This resulted from producers increasing June offers by $30-50/tonne from May levels in an effort to recover margins following prices falling by up to $100/tonne (€76/tonne) from the middle of March to mid-May.
In eastern Africa, high density polyethylene (HDPE) film prices climbed from an average of $1,505/tonne CFR (cost & freight) eastern Africa on 22 May, to $1,520/tonne CFR eastern Africa on 19 June.
On the same dates, low density polyethylene (LDPE) climbed from $1,455/tonne CFR eastern Africa to $1,490/tonne, and linear low density polyethylene (LLDPE) from $1,450/tonne CFR to $1,460/tonne.
In North Africa, HDPE climbed from an average of $1,505/tonne CFR North Africa on 22 May to $1,520/tonne on 19 June. On the same dates, LDPE climbed from $1,510/tonne CFR north Africa to $1,530/tonne, and LLDPE from $1,475/tonne to $1,510/tonne.
In west Africa, HDPE climbed from an average of $1,555/tonne CFR west Africa on 22 May to $1,560/tonne on 19 June. On the same dates, LDPE climbed from $1,495/tonne CFR western Africa to $1,540/tonne, and LLDPE went up from an average of $1,495/tonne to $1,520/tonne CFR west Africa.
Producers cited buyers' low stocks when justifying June price hikes.
Many buyers refrained from purchasing from mid-March until early May on the expectation of both April and May offer prices falling.
However, there has been some resistance to the June price increases.
Many African buyers are said to be holding back on the expectation of prices softening in July.
On Tuesday a PE/PP (polypropylene) 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 roll over in the next month.”
Seasonal and cultural 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 Ramadan 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.
Three producers said buying was on a hand-to-mouth basis rather than any restocking.
($1 = €0.76)
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