Africa PE producers target Oct rollovers, market expects decrease

LONDON (ICIS)–While some Middle East producers of polyethylene (PE) for the African market are aiming to hold October prices steady from September levels, distributors are expecting prices to soften on the back of several factors, sources said this week.

In contrast to the rest of the market, one producer described healthy demand and what it terms a “strong rollover” for HDPE prices: ”[At the] beginning we targeted a rollover, but now there could be a price increase.

”This is strange, I see that… There’s good demand in the market. Customers are asking for extra allocations, It’s a strong rollover. For some volumes customers don’t discuss [negotiate] prices.”

The source was unable to explain why it is experiencing strong demand from customers.

However, distributors say that customers are expecting October prices to soften, despite initial rollovers.

“Crude [oil] has low prices, China [Chinese prices] is down, African buying is hand to mouth,” a distributor covering the Egyptian market said. “The Turkey market is bad. There’s a lot of material [available], [African] buying prices are expensive. In Egypt customers are expecting [a producer] to decrease by $30-40/tonne.”

A second distributor said: “Suppliers have announced rollovers, which will be interpreted by customers as a sign of weakness, and when they see all other factors [exerting downward pressure on prices] their conclusion would be a reduction.”

However, any decreases are expected to be limited.
 
”We expect a price correction of no more than $10-$ 30/tonne,” this source continued. “Customers will have to buy [regardless] and get cargoes shipped out due to [their] low inventories, and the peak demand season is approaching.”