22 January 2014 17:24 [Source: ICIS news]
LONDON (ICIS)--The February price direction for Africa polyethylene (PE) remains unclear with expectations depending on competing supply and demand factors, market sources said this week.
Some producers have recently spoken of good demand. Combined with a lack of availability stemming from both planned and unplanned maintenance, this could continue to exert upward pressure on prices.
However, a contrasting influence on African prices comes from the Chinese market, which is slowing down for the forthcoming Lunar New Year holiday at the end of January.
Many Middle East producers often sell to China rather than Africa whenever possible as netbacks to the former are better.
With the forthcoming Chinese holiday having reduced demand there, some African market participants feel that the availability of volumes for Africa may improve.
Some feel this could exert downward pressure on African prices.
“Operators are now waiting for February pricing [to be announced],” a distributor in the North Africa market said “It’s a mixed atmosphere between an increase due to price diffferences versus other global areas [better prices are offered in the US, Europe and Asia], and potential price decreases due to Chinese New Year...”
The source added that end users are not anxious about February prices.
“End users are not nervous about the price evolution,” the source continued. “It will depend on offers and the demand balance. So far in North Africa, since last June, the prices have been very stable, balanced between a correct supply and poor dynamics in terms of demand.”
A producer also suggested that the competing factors may result in a stabilisation of prices. While acknowledging the possible impact of the Chinese market slowdown, the source added: “If you look at maintenance, that is what will make it [the market] balanced.”
Producers are expected to start announcing their Feburuary price targets from late this week.
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