Africa polymer prices rise breaking months of resistance

LONDON (ICIS)–African polymer players are facing rising costs as upward pressure from supply and global competition for product finally breaks their resistance.

Both polyethylene (PE) and polypropylene (PP) prices have risen as suppliers have pushed through prices increases following months of unsuccessful attempts.

African players have previously relied on stocks and weak demand has meant that suppliers have struggled to achieve any higher prices.

There has been some indication that PE sellers have been conservative with prices in their January offers, in an attempt to maintain market share before the arrival of volumes from expanded US and Indian capacity.

The imminent arrival of these new volumes has added to the confidence that buyers need not rush to purchase large quantities in the short term.

PP does not face the same future supply glut but buyers have still successfully managed to subdue prices until the past few weeks.

PP is tight globally, and this has been felt in Africa following reductions in allocations from the end of 2017.

Low prices and weak demand have put many suppliers off from offering product into Africa.

As Asia is now attracting high prices, they can demand better pricing from African buyers. Asian players, meanwhile, are stocking up before the market closes for the Lunar New Year holiday.

Korean offers of copolymer (COPO) are high, as they can achieve very good prices in China, and this is pulling up offers from elsewhere.

As most African buyers are unwilling to meet these demands, COPO supply has been very limited across the continent.

New offers have begun to dry up for both products as suppliers have sold out on their limited allocations.

Many players are only now returning to the market and finding it difficult to secure material, and stocks are being stretched and local producers cannot meet demand by themselves.

In Nigeria, Indorama offered rollovers from December, undercutting higher import offers but they are not capable of supplying all the demand in the country, but Nigerian players are mostly living from their stocks.

As well as tightness, rising crude prices are applying upward pressure to prices and this is expected to continue into February.

Relief may come in the middle of next month when large parts of Asia go on holiday for the Lunar New Year holiday.

Despite this, suppliers are expected to make higher offers in February.

PE is the most widely used plastic in the world, primarily found in packaging including plastic bags, plastic films and geomembranes. PP is used for packaging, ropes, carpets, plastic parts, loudspeakers and automotive parts.

Pictured: A market in Nigeria’s Benin City
Source: Environmental Images/Universal Images Group/REX/Shutterstock