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African PP, PE markets end June at near 3-year lows

by Nada Samir - nada@chemorbis.com
  • 27/06/2023 (02:07)
African PP and PE markets continued to follow a downward trajectory in June, marking the third month of slump. Suppliers have conceded this month to the mounting pressure from severe demand concerns and bearish sentiment in other global markets. Generally, current prices imply the lowest levels seen since November 2020, according to ChemOrbis Price Index.

Domestic markets continue to tack on losses in Nigeria

In Nigeria, the biggest polymer market in West Africa, initial PE and PP offers from major Middle Eastern suppliers indicated minor reductions as compared to May levels. However, they later conceded to much lower levels amid muted demand and globally bearish sentiment. Overall, these decreases have reached $120-140/ton for PP and $100-220/ton for PE when compared to the latest May deals.

On a related note, June PE offers from the domestic producer, ELEME, were down by NGN15,000-25,000/ton ($32-54/ton) over the latest May levels. Also, the producer’s PP offers saw decreases of NGN23,900-25,000/ton ($52-54/ton) from the previous levels. According to media sources, Nigeria’s naira weakens to a record low on the official market as the government has been adjusting the value of the naira gradually on the spot to avoid a large-scale devaluation.

Offers from Saudi major down after 2-month steadiness in Kenya

In East Africa, following the initial $40-70/ton decreases issued by a major Saudi producer for PP and PE grades in Kenya, players received additional decreases compared to the initially announced levels, with total decrease amount of $120-140/ton for PP and $120-160/ton for PE. “However, these decreases did not drive-up sales. Instead, it pushed players to the sidelines, triggering further price cut expectations,” a local source opined.

US cargoes provide competitive edge in Morocco

In North Africa, players in Morocco received initial June offers from Middle Eastern suppliers with slight decreases of €20-40/ton ($21-43/ton) for PE and €20/ton ($21/ton) for PP when compared to May levels. Soon after, additional €50-130/ton ($54-141/ton) reductions were reported amidst unresponsive demand.

Meanwhile, June offers for the US origin to Morocco offered a lot more competitive edge with respect to Middle Eastern suppliers. PE offers were down by a total decrease of $160-180/ton while PP grades were down by $110-120/ton when compared to May levels.

Tunisia, Algeria markets see June offers plummet

In Tunisia , Middle Eastern sellers also revealed their PP and PE offers for June with decreases from May. The overall amount of reductions have reached tremendous decreases of €200-220/ton ($217-238/ton) for PP and €200/ton ($217/ton) for PE when compared to initial May levels.

Likewise, Middle Eastern suppliers issued two consecutive rounds of reductions for their new June offers in Algeria. The total amount of reductions has reached $120/ton for PE and $110/ton for PP when compared to May levels. “We are not confident about making any purchases as prices keep going down and we are not certain whether prices have bottomed out, hence we prefer to adopt a cautious stance,” commented a local trader.

Players tread with caution amid bearish factors

Over the near term, regional players have started to discuss whether the bottom is near for PP, PE following the hefty decreases that took place since the previous month.

However, a lack of major improvement in demand amidst chronic economic challenges and long supplies keeps the outlook bearish for July. “Prices in Asia started to largely stabilize as producers have been trying to manage their stocks with rate cuts or shutdowns. Still, we are not sure about the sustainability of these efforts, especially with the approaching long Eid al-Adha holidays in the region,” opined some players.
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