Africa PE producers target rollover to small increase in August

25 July 2013 13:21  [Source: ICIS news]

LONDON (ICIS)--Producers of polyethylene (PE) for the African markets are likely to roll over July prices into August, or increase them slightly, they said this week.

“It’s a flat situation of demand,” a low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) producer said on Tuesday. “We’re carrying the same prices. We plan to roll over [prices into August]. There’s pressure from buyers. [demand is] very slow because of Ramadan. I don't see an uptick in the immediate future. We are more focused on the demand side, it’s a rollover situation.”

While recent higher crude oil prices are encouraging producers to protect their margins by attempting to increase August PE prices, market fundamentals do not necessarily support further price hikes. African PE prices already climbed in June and July.

Shorter working hours during Ramadan and holidays are slowing business. Furthermore, the winter in east Africa and the rainy season in west Africa have also resulted in subdued business during recent weeks.

A second producer said on Tuesday: “We are seeing the market as stable for now and  [there has not been] much change in prices since we discussed last time.  We are also targeting a roll over for August, except for LDPE where we see the potential to increase prices marginally due to the shortage of material after some outages in Asia.”

The source added that it will target an increase of $20/tonne on LDPE for now.

“We are looking at the European market,” a third producer said. “It’s still unclear, but [August prices will be] a rollover at least. There’s pressure from buyers to reduce prices, there are firm bids only at lower levels. They’re [buyers] not in a hurry to buy.

“August could be slow, they're [buyers] not in a big shape or big mood. Companies close for a week during Eid,” the source added.

Producers are expected to announce their August offer prices in the coming days.

By: Jo Pitches
+44 208 652 3214

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