African PP, PE markets continue to rise in March under shadow of growing demand woes

Polyolefins markets in Africa extended gains into the second month, with globally bullish sentiment and tightening supplies from Mid-East producers cited as main reasons supporting price hikes; defying weaker than usual demand. However, the sustainability of this rally is mooted given the mounting economic concerns across the region as well as fading optimism about the global bullishness.

Price rally persisted in West Africa

In Nigeria, the largest African market, PE and PP offers from a major Saudi producer indicated increases of $60-80/ton and $60-70/ton respectively over the latest February levels. According to market sources, the overall trading activity in the country remains below average with players voicing their concerns amid high inflation rates and unfavorable economic and political conditions.

ELEME hikes local offers, operates at significantly reduced rates

Nigeria’s local producer ELEME announced NGN40,000-40,200/ton ($87/ton) increases for PE offers and NGN35,000-36,300/ton ($76-79/ton) increases for PP offers as compared to latest February levels.The producer continues to run their operations at halved of their overall capacity, according to local sources.

Triple-digit hikes announced in Kenya, but discounts achieved

Over in East Africa, March PE offers in Kenya were steady to $100/ton higher when compared to the latest February deals. Also, PP prices recorded an increase of up to $100/ton when compared to February deals. A local distributor stated that new offers came in line with previous expectations given the firming sentiment in the region. “However, lower done deals could be achievable amidst hiking inflation rates, soaring USD and stumbling end business demand.”

Hikes fail to stir buying in North Africa

In Egypt, the largest North African market, Mid-Eastern suppliers unveiled new PP and PE offers with rollovers to up to $100/ton increases from February, with the largest price hikes seen in PP grades. Also, local polyolefins producers revealed their March offers with rollovers or increases over February, which was notably reflected on distribution market levels. “Although new offers were in line with market expectations, rising inflation as well as an ongoing devaluation of EGP and an FX shortage continued to leave their mark on trading in Egyptian markets,” a distributor noted.

Initial March offers announced in Tunisia were higher by as much as €30/ton (32/ton) over initial February prices. However, buyers managed to conclude deals with discounts of €30-50/ton ($32-53/ton) for PP and rollovers to €30/ton ($32/ton) for PE. Despite the step-back from initial March offers, prices still show an increment of €20-40/ton ($21-42/ton) for PP and PE when compared to February levels.

In Algeria, March prices were revealed with $20-50/ton increases for PP and $20-80/ton hikes for PE as compared to February levels. Players noted that they are expecting lower done deals as the market is being pressured by poor trading activity and foggy outlook amid harsh economic conditions.

Likewise, In Morocco, players reported new March offers with rollovers to €40/ton ($43/ton) increases for PE and €60-110/ton ($64-118/ton) for PP when compared to initial February offers. Restricted supplies from regional polyolefin producers were cited as a main reason supporting firming sentiment.

April outlook gets blurry

Although the rest of March may remain firm in most of the African polyolefin markets, players are highly concerned about the sustainability. First and foremost, Mid-Eastern producers’ plants are expected to be back from maintenance shutdowns in April. Second, the Asian markets, mainly China, are not drawing a bullish picture to propel the rest of the world further higher. As a third note, demand is well below average across Africa as climbing economical concerns are dampening the outlook.

“Demand is still subject to concerns amidst local currencies deflation against the USD and mounting inflation. Ramadan is nearing and it is traditionally a slower month,” a distributor said.