Africa PE,PP markets await January price announcements

18 December 2013 17:16 Source:ICIS News

LONDON (ICIS)--While business in the African polyethylene (PE) market has wound down as Christmas holidays and the year-end looms, thoughts have turned to January pricing with producers expected to target price hikes, participants said this week.

Reasons for this include an expectation of restocking in the new year, and producers' keeness to raise prices following many prices having held steady in December.

A Middle East producer of homopolymer raffia said: “January prices will go up more, $30-40/tonne. The justification is that demand is [will be] going up”.

“The market expects January prices to increase,” a producer of high density polyethylene (HDPE) said last week. “Customers are talking about an increase in January. We know January [prices] will increase.”

However, distributors question the likelihood of producers succeeding in  pushing through January price hikes. They argue that African demand is unlikely to support higher prices then.

A distributor in the west African market said: “My feeling is that some suppliers will push for an increase, however I am not sure how it would be absorbed by the African market. The main reason is that most of the plastic convertors in Africa will be closed and demand will be low.”

Nevertheless, some market participants speak of shortages of low density polyethylene (LDPE) in Africa. With netbacks better from China than from Africa, Middle East and Asian producers are keen to sell to the former rather than the latter wherever possible.

As a result, lack of availability could support African prices for this grade.

By Jo Pitches