20 February 2014 14:02 [Source: ICIS news]
By Jo Pitches
LONDON (ICIS)--South African polyethylene (PE) and polyproylene (PP) producers’ March prices hikes could attract overseas producers back to the market as domestic and international prices move closer to parity, sources said this week.
A local PP producer recently announced March price hikes of 8-9%, while a local PE producer said it had increased its March prices for low density PE (LDPE) by 10% and for linear LDPE (LLDPE) by 11%.
Relatively low domestic prices, coupled with a weak rand has meant the South African market has not been viewed as attractive by international producers during recent months.
“We’re not selling much to South Africa,” an Asian producer said. “[The domestic producers'] market share is too big, too strong.”
However, with the major polymer markets such as China, Turkey and Europe having slowed down, some participants feel that international producers are looking to Africa.
“More people are looking at Africa to sell,” the Asian producer said. The source was interested in South Africa’s March price hikes.
The implication of this is that it may consider resuming business there if conditions become favourable.
The March domestic price increases are also a relief to importers, which have recently found it difficult to do business because of the weak rand and higher international prices.
“[The PE producer is] edging to low import [price] parity,” an importer said. “At the end of January, when we heard what they [the local PE producer] were going to call for March, some importers breathed a sigh of relief.”
A local producer is not concerned about the prospect of international suppliers returning to the South African market.
“This is exactly the case, 100% [that international suppliers will return]. On HDPE [high density PE] we compete with international players anyway, even with parity pricing we're still competitive,” the producer said.
The source added that on PE and PP the market is still dominated by the domestic producers. Regarding PP, the producer itself cannot fulfil all orders anyway, it said.
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