Africa PP prices increase by up to 4% in the last month

21 June 2013 17:11  [Source: ICIS news]

LONDON (ICIS)--African polypropylene (PP) prices have increased by up to 4% during the last month, ICIS data showed on Friday.

The extent of the price increase depends on grade and region, and it stems from producers increasing June offer prices by $30-50/tonne from May levels.

Citing buyers’ low stocks as justification for the hikes, producers were keen to recover margins following PP prices falling by up to $100/tonne from mid-March to the middle of May.

In Egypt, homopolymer raffia prices increased from an average of $1,512.50/tonne CFR on 22 May, to $1,530/tonne on 19 June. On the same dates, block copolymer climbed from $1,535/tonne CFR to $1,555/tonne.

In North Africa, the average homo raffia price climbed from $1,505/tonne CFR on 22 May to $1,535/tonne on 19 June, while block copolymer prices increased from an average of $1,530/tonne to $1,570/tonne.

In eastern Africa, homo raffia prices climbed from an average of $1,495/tonne CFR on 22 May to $1,505/tonne on 19 June. On the same dates, block copolymer increased from $1,502.50/tonne CFR to $1,560/tonne.

In western Africa, the average homopolymer raffia price climbed from $1,530/tonne CFR on 22 May to $1,547.50/tonne on 19 June. On the same dates, block copolymer climbed from an average of $1,547.50/tonne CFR to $1,585/tonne.

The success of these June price hikes has been patchy, however, with many buyers holding back.

Three producers said buying was on a hand to mouth basis rather than anything more substantial.

This is partly due to an expectation of prices falling in July as seasonal factors – winter in eastern and southern Africa, and the rainy season in western Africa - further slow demand, and new capacity in Asia and the Middle East increases the global supply of PP.

This increased capacity is expected to change trade flows.

Furthermore, if global supply outweighs demand, downward pressure could be exerted on PP prices.

 “People are not buying because of pricing,” a PP/PE trader said on Tuesday. “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 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.”

By: Jo Pitches
+44 208 652 3214

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