African PE, PP tightness expected to continue into May

(recasts, clarifying lead)

LONDON (ICIS)–The tightness of supply currently being seen for polyethylene (PE) and polypropylene (PP) across several markets in Africa is expected to continue into May, keeping prices firm, sources said on Wednesday.

With several Middle Eastern and an Indian supplier in various states of shutdown, demand in markets such as Egypt and East and West Africa has increased due to a lack of available material.

“Demand is very good. We saw a big shortage in Africa and people want materials at any price, “ a Middle Eastern producer said, adding that manufacturers of finished goods in Africa want to keep their machines running at any cost.

“Many customers [were] expecting more availability but realised the market is short. [A Middle Eastern producer] told a customer that… April will be short, but in May the situation should come back to normal,” a distributor in the West African market said, adding: “but as we approach May I don’t think [availability will improve].”

A second distributor in West Africa said the current outage at Indian producer Reliance’s facility in India is due to end on 20 April, but the producer will be covering backlogs from earlier in the year before it can start sending material to Africa, with Indian material expected to reach West Africa by end of June.

However, one market source said stock levels in the region were fairly healthy, as buyers had built up inventories when prices dipped at the beginning of the year. But the source did say that anyone looking for material in the market now will have to pay substantially higher prices.

“In June, all producers will be back [from maintenance]. May is going to be similar to April, June will see some supplies coming in, and in July there will be a huge supply,” the distributor said.

East Africa is also experiencing a lack of supply resulting in higher prices due to outages.

“Supply is low. Customers who were buying 1,000 tonnes [previously are now] only getting 400 tonnes,” an East African distributor said.

“The market [price] in East Africa is rising because of tightness. Reliance were out for two months, Sabic are not on full capacity, LyondellBasell are off-stream at the moment, and Natpet do not have much material in that market,” a second distributor to East Africa said.