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Africa’s PP, PE markets up in February, as supplies outweigh scant demand

by Nada Samir -
by Esra Ersöz -
  • 27/02/2024 (02:43)
The bullish sentiment, which partly showed up in January after 3 months has prevailed African polyolefin markets this month. Tightening supply conditions were the main driver behind price hike requests, even though demand remains under severe pressure from economic challenges.

West African PP, PE markets fully head north

In Nigeria, the largest African market, PE and PP offers from a major Saudi producer indicated increases of $30-100/ton after they tracked a steady to firmer path during January. A local distributor argued that shipments from both the US and the Middle East are scarce, particularly for HDPE film and therefore, HDPE prices witnessed the largest hikes.

Meanwhile, rising costs of imported goods contribute to overall inflationary pressures, dampening demand further.

ELEME’s hikes intact for the 7th straight month

Nigeria’s local producer ELEME announced NGN230,000-232,800/ton ($157-160/ton) increases for PE offers and NGN229,400-244,000/ton ($156-168/ton) increases for PP when compared to January levels. According to market sources, the Naira depreciation remains the main factor supporting continuous price hikes.

Price hike announcements still lag swift depreciation of Nigerian naira

Nevertheless, despite ELEME’s efforts to adjust its prices higher, the depreciation of the Nigerian naira has outpaced the amount of increases issued by the producer. As can be seen from the graph on the left, ChemOrbis Price Index suggests that cumulative gains in average local prices reached NGN834,500/ton, nearly 85% in other words, since July 2023, hitting a renewed all-time-high.

Nevertheless, the dollar equivalence of the producer’s prices, which is calculated based on an average parity of each related week, tells a different story as the dollar-equivalent prices were up by around $580-600/ton on average from July to December. This cumulative increase equaled to around 48-50%. However, the dollar-equivalent prices were down in January and February despite the hikes issued on NGN basis, with a total loss of more than $600/ton, 35% in other words. The slump gained speed particularly in February as the Nigerian naira has swiftly depreciated against the US dollar. This can be viewed from the ChemOrbis Price Wizard graph on the right.

*Right click the images and open in a new tab to view the full-sized graphs.

Kenyan markets hit 8-months high

In Kenya, the largest economy in East Africa, February PP and PE offers from a Saudi major indicated around $50-70/ton increases over latest January levels, after they were substantially unchanged through January. “Supplies from Middle Eastern producers are not ample, but demand remain tied to the basic needs amid disappointing end-product sales,” a trader reported.

Following the recent price hikes, the overall import range climbed to its highest since June 2023, according to ChemOrbis Price Index.

Supply snarls boost North African markets

In North Africa, players in Morocco reported February PE and PP offers with €20-50/ton ($21-54/ton) and €30/ton ($32/ton) respective increases when compared to the latest January levels. Apart from the issued hikes, LDPE offers remained mostly unchanged from January. Supplies were reported limited this month. However, buyers showed resistance towards the price hike requests amidst below-average end-products demand.

In Tunisia, Middle Eastern sellers also revealed their PE offers for February with €20-50/ton ($21-54/ton) increases from January while kept their PP offers mostly unchanged moth-over-month.

In Algeria, regional suppliers revealed February prices with $80/ton increases when compared to January. Moreover, February PP prices recorded increases of $100/ton on a monthly basis. According to market sources, limited supplies as well as improving demand approaching the Holy month of Ramadan led to price hikes and sellers remained firm on their offers.

Outlook firm despite demand concerns

Over the near term, polyolefin prices are expected to remain firm across the continent amidst restrained supplies as well as higher feedstock costs. “Although current market conditions provide little incentive for a demand rebound, African markets may continue to remain firm in March,” a regional distributor remarked.
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