Africa PP prices drop further on softer crude, buyer resistance

Jo Pitches

14-Jan-2015

PP prices on downtrendLONDON (ICIS)–African polypropylene (PP) prices have fallen further on the back of even lower crude oil prices and resistance from customers, sources said this week.

With polymer prices having fallen in the major polymer markets such as China, and in light of the latest decrease of Brent values, where possible, African buyers are holding back for lower prices.

“We have started to see further price corrections from Middle East as well as Asian suppliers,” a distributor said regarding both West and North Africa. “As [the] crude [oil price] is not yet stable, the market sentiments are still weak and customers expect further price erosion.”

A West African producer that dropped its January PP prices by $90/tonne from December said on Tuesday: “Crude prices continue their unabated, incessant downward journey. ICE Brent is almost $45/bbl today, and looks like rushing towards $20/bbl.”

“Of course, since a long time crude has been in speculative territory, where rationale does not work. With that, all downstream products will track that collapse. Hence in the near term, prices are too volatile to predict, except the direction, downward,” it added. 

Some market participants speak of a stand-off between suppliers and customers, with both sides reluctant to back down on price targets.

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