Africa PE producers target September price hikes

04 September 2013 17:34  [Source: ICIS news]

LONDON (ICIS)--While some producers of polyethylene (PE) for the African markets are yet to announce their September offers, several are targeting a price hike, they said on Wednesday.

Feedstock costs have increased considerably, with crude oil futures prices having recently surged on fears of the crisis in Syria - and the possible military intervention of western nations - disrupting the supply of crude oil from the Middle East.

“Oil prices jumped last month,” an HDPE producer said. “PE Should be $100/tonne more than in August, looking at oil [prices].”

The source said it is targeting an average $30/tonne increase for HDPE.

“Customers have low inventories, demand is much stronger than last month,” the producer said. “[We] almost sold our allocations and some extra.”

Other PE producers are aiming for September increases of $10-70/tonne.

However, while some producers speak of the market uncertainty stemming from volatile crude oil prices encouraging extra buying, most particpants agree that demand remains low across Africa, with buying on a hand to mouth basis.

A polymer distributor in the east African market doubts the ability of producers to push through price increases. 

“Buyers are showing strong resistance to the increase in prices,” the source said. “Inventory levels across the east African markets, from Kenya, Uganda and Tanzania, everywhere, are very high due to dull demand in downstream markets.”

“My personal understanding is that prices will be stable for September,” the source said.

($1 = €0.76)

By: Jo Pitches
+44 208 652 3214

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