East Africa PE, PP markets growing rapidly

Focus piece by Jo Pitches

LONDON (ICIS)–The polyethylene (PE) and polypropylene (PP) markets in East Africa are starting to grow rapidly as economies improve and preferences for certain products change, according to market participants this week.

“The average growth rate for the plastics manufacturers in general is 15%-20%, which translates to three times the GDP growth rate annually,” a distributor based in Kenya said on Tuesday. “East Africa has always had the potential and will continue to experience good growth rates which may not necessarily be commensurate with profits.”

The source continued: “The change from glass and tin, which were mainly used for consumer goods and industrial applications, [to plastics] has been transitional for the past 10 years if not more. The edible oil sector has driven up the demand for HDPE [high-density polyethylene] blow jerry cans and PP copolymer buckets that are easily transported to the most remote corners of the country.”

A Middle East-based producer also recently spoke of growing demand in East Africa, particularly Uganda and Tanzania.

This source spoke of some of its customers installing new production lines, or planning to do so.

“The market is growing,” the producer said. “Some customers are growing at more than 20% per year. It’s mainly for rigid packaging and blowmoulding jerry cans. [People are] Switching from glass to plastic bottles. Our order books are progressing very well.”

On Tuesday, a Middle East based distributor operating in the African markets said: “Kenya, Tanzania, [business in those countries has] improved a lot. Middle East suppliers are always selling product there. I can see potential in East Africa. There is a lot of improvement in this market.”

The distributor added that Kenya in particular is leading the way in the region as its economy is stronger that that of other countries.

“[the market is] reaching stability, there’s a good appetite for polymers.”

A second distributor agreed: “[These] economies, where traditional materials were used all these years, I have seen plastics making inroads for their functionality. So commodity products would go well, [for] HDPE blow moulding and film for carry bags.”

Nevertheless, prices in East Africa tend to be lower than those of other regions of the continent because of strong competition between suppliers selling there, the source said.

Meanwhile, demand in more mature economies on the continent is increasing in other sectors, the source added.

“Towards matured economies within Africa, the growth is coming out of flexible packaging and specialities. We clearly see that the commodity is growing as use of plastics is becoming more and more popular, but slowly specialities too are catching up.