African polymers buyers set to benefit from Turkish lira crash

Source: ICIS News


LONDON (ICIS)--African polymer prices have stabilised this week but there is chance of further softening in the coming months as volumes originally allocated to Turkey are set to be offered into Africa.

- Turkish lira crash affects other emerging market currencies

- African market quiet, pick-up expected after rainy season 

- Pessimistic player forecasts 'catastrophic' October for demand  

Turkish demand has collapsed as the country's currency has continued to falter.

Despite some recovery in recent days, the lira remains almost 35% down on the US dollar this year.

The lira's crisis has affected other emerging markets' currencies, with the South African rand or the Indian rupee being the most affected this week.

Sellers are now looking to move their cargo to other markets, with Africa being a potential destination due to its currently steady demand level.

A polypropylene (PP) trader said a seller has already suggested that more volumes of copolymer will be available, but was unsure about volumes.

The extra volume is likely to subdue attempts to increase prices in Africa.

Demand is likely to remain limited during September due to the rainy season in east and west Africa, austerity measures in Egypt and the low season in South Africa.

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The upcoming Eid al-Adha religious holiday period in the Middle East (21-25 August) will make it difficult to gauge how much extra product will be made available, and suppliers in that region will be shut for most of the remainder of August.

As such, it will be unclear how much more product will be offered to African players.

There are no shortages of any products at the moment and demand is steady, but limited.

Africa has been attractive to some sellers recently as demand there remains stable, while in the rest of the world has weakened. As such, players have been competing on prices to secure market share.

There was some suggestion that even the end of the rainy season would not improve demand, with one player suggesting polymer prices could reach a nadir in October.

"October will be the catastrophic month, unless something significant happens in the market," said a source.

Under current conditions there is nothing to promote upwards price movement or encourage significant buying levels.

Shifts in the Asian or European markets may be needed to promote change in Africa.

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Pictured: South African rand coins and notes

Source: Veronica Garbutt/REX/Shutterstock

Focus article by Ben Lake