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African PE markets hit historical lows on greater competition from US supply

by Başak Ceylan -
  • 12/11/2019 (04:36)
Several key PE markets in Africa have reached multi-year lows or even historical lows in November so far. After failing to find a common ground in pricing in October, suppliers seemed to have conceded to the mounting pressure from slow demand this month. According to traders, another driver behind the decreases was an influx of competitively-priced US cargoes.


SIDPEC, ETHYDCO cut offers dramatically

After riding on the coattails of crude oil futures and the volatility in the import markets in October, domestic PE suppliers in Egypt reversed their pricing strategies for November. The recent declines in feedstock and energy prices along with the global downturn forced SIDPEC and ETHYDCO to cut prices.

ETHYDCO dropped offers as much as EGP800/ton ($46/ton) and SIDPEC offered drops of up to EGP1500/ton ($93/ton), aiming to entice some buying interest.

US cargoes offered at competitive levels

In the import market, the competitively-prices US cargoes dragged the overall ranges to their lowest in almost 10 years, according to ChemOrbis Price Index. Egypt’s PE markets have long been the target of US suppliers due to better netback opportunities.

Lower deals expected by end of Nov

Some major Middle Eastern producers went against the grain and they were seen grasping onto to the October increases. However, most buyers think that sluggish demand and the approaching year-end may force the Middle Eastern suppliers to concede to discounts.

North Africa

Markets see attractive US offers

It was a similar scene for the import PE markets of Algeria and Morocco. Despite the reluctance of Middle Eastern producers to cut offers, the ample availability of competitive US cargoes pushed the overall ranges for all PE grades on CIF North Africa basis to an all-time low.

East Africa

Saudi major announces $30-60/ton drops

Kenya’s import PE market saw $30-60/ton decreases compared to last month as buying interest for end-products has all but disappeared. The latest cuts pulled the average of HDPE film prices to their lowest since ChemOrbis began keeping record while LDPE and LLDPE C4 film offers were close to the all-time lows reached in September.

West Africa

ELEME’s offers lowest since 2013

Nigerian producer ELEME announced its November offers to the local market with NGN12,000/ton ($31/ton) drops when compared to last month. Despite the cuts, purchasing remained hand-to-mouth due to discouraging supply-demand dynamics amid the prolonged monsoon season. Trading was also subdued due to the closure of the Nigerian border to cross-border trade.

Saudi supplier reduces offers by $60/ton

A major Saudi producer, meanwhile, announced $60/ton lower HDPE film prices to Nigeria, largely due to the bearish sentiment.

ChemOrbis Price Index also suggests the lowest levels both for the import market and the local prices of ELEME since 2013, when the indexes started keeping records.

South Africa

US cargoes continue to form the low ends

In South Africa, PE suppliers announced decreases as much as $60/ton compared to a month earlier, with prices rangebound at historically low levels. As was the case in the other parts of the continent, US cargoes formed the lower ends of the price range.
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