FocusAfrica PE / PP markets take ‘wait and see’ approach

14 August 2013 17:03  [Source: ICIS news]

By Jo Pitches

LONDON (ICIS)--With many participants in the African polyethylene (PE) and polypropylene (PP) markets only just returning to work following the Muslim festival of Eid al-Fitr, producers said this week they are taking a 'wait and see' approach to gauge demand levels before deciding on September price targets.

“We'll see whether to increase prices later this week or early next week,” one PE/PP producer said on Tuesday.

“We'll see how the customers take it. India and Turkey are bad in terms of demand, Africa is OK. Next week we'll have a better idea,” the producer added.

While high crude oil prices and shortages of some grades encouraged PE and PP producers to increase August prices, most had little choice but to settle at a rollover from July because of muted demand across Africa.

The Muslim fasting month of Ramadan followed by the Eid holiday quietened the north African market and parts of west Africa.

The rainy season has also muted demand in west Africa, while in east Africa, the winter low season and a new Railway Development Levy of 1.5% on all imported goods for domestic use have subdued requirements for PE and PP.

However, with tight supply increasing prices in China, and European prices also facing upwards pressure because of higher feedstock costs, as well as delayed shipments from Saudi Arabia and better-than-expected demand, some producers of PE and PP for the African markets are considering September price hikes.

“People they know there is a shortage of LDPE,” a PE producer said.

“Offers will start floating in from [another producer], which has a huge capacity. We’ll wait and see. There’ll be a better picture next week.”

A distributor said on Tuesday: “[People are] waiting. The second half of August will be interesting, to see if demand comes back. It will hold the trend for September.”

One PE/PP producer revising offer prices on a weekly basis is already targeting an increase of $40/tonne.

A PP producer believes there is leeway for a $20-30/tonne increase of homopolymer raffia prices in September.

($1 = €0.75)

By: Jo Pitches
+44 208 652 3214

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