26 June 2013 17:06 [Source: ICIS news]
LONDON (ICIS)--Producers of polyethylene and polypropylene for the African markets are likely to face greater resistance to July price hikes from buyers in east Africa compared with other regions of the continent, participants said this week.
“East Africa will be harder [to push through July price increases]”, a PE producer said on Wednesday. “We’ll try for a rollover or $10-20/tonne [€8-16/tonne] increase.”
“There will be resistance [to price hikes], especially from east Africa more than west and north,” a distributor said on Monday.
On Wednesday, a second distributor said: “Although Middle East and Korean producers are trying to increase prices of polymer commodities due to increased energy and feedstock prices, [east Afircan] end users and converters are not ready to absorb this shock and are resisting efforts of price increases.”
The reason for this expected resistance to price hikes in east Africa is low winter seasonal demand and political factors.
The second distributor continued: “All east Africa markets are slow now due to extended rain. It ultimately affects transportation of goods due to poor infrastructure”.
The source added that major east African converters export goods to the Congo, South Sudan, Angola and Burundi Markets, but a combination of rain and political and social tensions in these coutnries mean that consumption is reduced.
Furthermore, Kenya and Uganda are expecting financial budgets to be anounced, and in the run-up to this, business is slow.
There is also strong competition among producers for the east African markets, with Indian producers said to be offering cheaper volumes.
A second distributor explained: “India’s currency has devalued so much, they’re reluctant to import. [Indian] Producers are agressive in their interest to export from India, to get more dollars.”
($1 = €0.76)
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