South Africa PP pre-buying leads to shortages of certain grades

20 February 2014 12:57 Source:ICIS News

LONDON (ICIS)--Pre-buying of polypropylene ahead of a domestic producer’s March price hikes has resulted in shortages of certain grades, market participants said this week.

“There has been some panicked buying in the South African market due to the level of [the price] increase in March," a producer said. "Demand is only falsely up due to this “sell out” before [the price] increases," it added.

A local producer recently announced March price hikes of 8-9%.

A PP buyer said, “I have established that demand for local resin was up in January and [this] has continued into February. One producer informs [me] that they are very busy and can’t keep up.”

“There will definitely be pre-buying prior to the March price increase,” the source continued. “But only to the extent where producers have stock available.”

When asked whether there are indeed shortages of certain grades, the producer in question replied: “What's happened is that every single person and their dog is trying to buy additional material [before the March price hikes take effect].  We're oversubscribed [for certain grades], but it’s just temporary. “

The producer added that there are no issues with production.

The problem is merely pre-buying of particular grades, the source said.

“It’s mainly on PP speciality grades,” the producer explained.

By Jo Pitches