South Africa PE demand starts to pick up following slow period

07 August 2013 17:07  [Source: ICIS news]

LONDON (ICIS)--Following many weeks of muted demand in the South African polyethylene market business is now starting to pick up, participants said on Wednesday.

“I would say we've seen a bit of an uptick in terms of demand in the market,” a distributor said.

“The mood in the domestic market and the pull [demand] has been a lot stronger than its been since the beginning of this year, for LLD [linear low density polyethylene] and LD [low density polyethylene]. It’s a bit of  ray of light.”

A second distributor said: ”There’s been an increase in sales. We’ve seen nice orders. Good volumes have been sold. We’ve sold locally, there’s huge demand for LDPE, globally it's tight.”

The first source attributed this uptick to a domestic producer announcing a rolling of August prices into September.

“That’s given us an opportunity to sell product quite convincingly for August as well as September,” the source said. “That’s been the biggest factor. We’ve been able to book forward, which we haven't been able to do before.”

The second distributor said the increase in demand was down to customers realising that prices may be on a longer upward trend than they may initially have thought.

One domestic producer increased its August prices for LLDPE by around 16% and LDPE by approximately 20% from July levels.

The company in question explained a fortnight ago that the price hikes stem from higher international PE prices, and because of the recent weakening of the South African rand.

A second domestic producer increased August HDPE prices by 14-15% from July levels, citing the aforementioned feedstock price hikes and the weak rand against the US dollar

“The reality has hit home, that prices are increasing,” the second distributor said. “Cheap parcels that were floating around have been gobbled up. Cutomsers have realised it's not just a [price] spike, it's longer term.”

By: Jo Pitches
+44 208 652 3214

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