16 April 2014 17:24 [Source: ICIS news]
LONDON (ICIS)—With the majority of April business in the African polyethylene (PE) market having been completed, thoughts are turning to May prices, with expectations of possible price hikes, sources said this week.
Both the rebound of the Chinese market and shortages of certain grades of PE, stemming from both planned and unplanned maintenance in the Middle East and Asia, are the reasons for these expectations, they added.
“On [African] prices, I hear China demand has picked up all of a sudden last week,” one Middle East based distributor said. “As a result all Middle Eastern [producers] are considering a $10-20/tonne price hike [for Africa].”
The source named one producer considering a $20/tonne increase on low-density polyethylene (LDPE). The producer in question confirmed this.
However, with end-user demand limited, and African prices already deemed too high, buyers are expected to resist any May increases.
A distributor covering North Africa said: “Producers want to improve margins, but will face strong resistance [from buyers] because of poor global demand.”
Nevertheless, following several months of hand to mouth buying, stocks are low throughout the chain.
As a result, the consensus is that market players urgently requiring volumes next month may have little option but to pay the prices producers seek.
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