African PP prices mostly stable but sellers remain bullish

LONDON (ICIS)–African polypropylene (PP) prices have mostly held stable this week but sellers anticipate further opportunities for hikes in coming weeks, according to sources.

Sellers are bullish for the rest of the month and an increase in Asian propylene prices has added to their stance. 

Despite resistance to hikes, global pressure has begun to exert influence on the African market.

Climbing prices in Asia and Europe and looming supply issues connected with Hurricane Harvey in the US have led to mounting upwards price pressure. 

Demand is beginning to pick up across Africa as the rainy season comes to an end, but order levels remain in expected numbers.

Firming prices may be beginning to play on the minds of buyers, who would prefer to stock up prior to further hikes. 

Middle Eastern sellers may find themselves the main suppliers to Africa in the coming month while US sellers are struggling with logistics following Hurricane Harvey.

High Asian prices mean there is little incentive to offer much material for export to Africa, especially as it has lagged behind the recent global upwards trend.

The European market is expecting some tightness due to planned production stoppages in September and demand is improving after the summer holiday season.

Therefore, Europe is unlikely to provide much relief to Africa. 

Chinese production has been affected by government-enforced plant closures and limited PP volumes could restrict availability to Africa, as prices have not followed Asian trends.

Sellers will prefer the greater arbitrage opportunities provided by the Asian markets.

Korean sellers have already offered homopolymer at $1,300/tonne into Africa, according to a source, way above current market value.

These sellers are likely able to secure purchasers for all their volumes in Asia and any buyers from Africa will have to compete with Asian price levels, which sit above current African prices. 

Top picture: A municipal market in Vilanculos, Mozambique. Source: Design Pics Inc/REX/Shutterstock