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African PP, PE markets see hike attempts in January, viability mooted

by Nada Samir -
  • 26/01/2024 (10:44)
Polyolefins markets in Africa ended the weak undertone that prevailed across 2023. Tightening supplies from Mid-East producers and spiking freight rates have bolstered the sentiment to justify price hikes sought sporadically in some parts of the region, although their viability remains mooted given weaker than usual demand. Some regions are already seeing rollovers or even discounts.

Nigeria’s import markets up again after a short break

The biggest polymer market in West Africa made a bullish start to January, as Middle Eastern cargoes surfaced with $30-40/ton increases for PE when and mostly rollovers for PP when compared to initial December levels. Generally, players reported dull activities as the Nigerian currency plunged by a whopping 55% against the US dollar, suffering the worst currency hits in decades. According to media sources, Naira’s steep fall came in response to the new administration’s decision to float the currency, while they also removed fuel subsidies, all of which drove inflation to new highs, and the local currency sank to new lows.

Naira’s plunge supports ELEME hikes

Nigeria’s local producer ELEME announced NGN110,000-110,200/ton ($115-116/ton) increases for PE offers and NGN80,000-110,800/ton ($84-116/ton) increases for PP when compared to December levels. January marked the sixth month of increases for the producer as the producer continued to adjust its local prices offered on an NGN basis in line with the appreciating US dollar.

Kenyan market at a standstill, grapples with currency challenges

In Kenya, East Africa’s largest economy, a major Saudi producer’s new PE and PP offers witnessed no major changes from December levels. However, the country continues to battle its highest inflation in decades as the Kenyan shilling hit its lowest in 30 years. Players voiced their concerns about the economic measures the country has recently implemented such as the removal of fuel subsidies and the increase of taxes which contributed to the Shilling’s fall and the economic challenges faced in the East African country.

Demand not yet ready to support hikes in N. Africa

In North Africa, Middle Eastern sellers have attempted price hikes in Morocco while they asked for rollovers in Algeria and Tunisia, following the decreases issued during the previous two months. On the other hand, trading activity across the region remains disappointing as buyers continue to source on a needs-only basis.

In Algeria, after players first received January PP and PE offers mostly with rollovers when compared to latest December levels, sellers conceded to discounts of $20/ton to stir demand. “Trading activity remains stagnant, and buyers are reluctant to engage in new deals,” opined a trader.

Similarly, January PP and PE offers emerged in Tunisia largely unchanged when compared to December levels, with players reporting weak market movements.

In Morocco, however, initial Mid-Eastern January offers were reported with €40-50/ton ($44-55/ton) increases for PE and €20/ton ($22/ton) increases for PP when compared to initial December levels. “Our business is facing many challenges due to higher import costs and hindering economic conditions,” commented a manufacturer.

Will bullish sentiment prevail in February?

Although downstream demand has not provided meaningful support to African polyolefin markets so far amidst chronic economic challenges, bullish factors including skyrocketing freight rates on the back of the Red Sea turmoil and reduced supplies from Middle Eastern suppliers driven by the turnaround season continue to support a bullish outlook.
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