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Demand slowdown accelerates in African PP, PE markets in June

by Başak Ceylan - bceylan@chemorbis.com
  • 14/06/2022 (02:48)
Although strategies for pricing differed from one regional market to another, there was one common theme among market players in Africa: deteriorating demand conditions and lacklustre buying activities amid rising inflation and other wider economic factors.

Nigeria faces weakened activities

In West Africa, the region’s largest polymer market saw ”very limited demand” for import cargoes, largely as a result of depreciating local currency, the Nigerian naira, against the US dollar. Persistent problems with dollar liquidity were among key deterrents to business in Nigeria.

In addition, the rainy season that began around early May also negatively affected demand in Nigeria. Buying was largely hand-to-mouth as buyers awaited for further price discounts in deal levels amid poor appetite in the market.

The latest levels for import PP offers were lower by around $150/ton as compared to May levels while PE offers were mostly stable. Domestic offers announced by ELEME were also NGN50,000/ton lower for PP and stable for PE as compared to previously available levels.

Recovery hopes dented by inflation in Kenya

In East Africa, offers from a major Saudi producer in Kenya were slightly lower for PP grades whereas PE offers were largely unchanged from May levels. According to players, demand was “average” while there were expectations that activities could start to recover by August, during which general elections are to be held.

However, growth forecasts for East Africa’s largest economy continued to cast shadow on near-term expectations, largely due to increases in the prices of fuel. Kenyan inflation rate climbed to 7.1% in May, indicating the highest level since February 2020.

Activities limited as buyers await discounts in N. Africa

In North Africa, the latest PP offers in Morocco were lower by around €100/ton while LDPE film and LLDPE C4 film offers were stable to softer by around €10/ton from last month. However, the latest HDPE offers flew in the face of current supply/demand fundamentals, weaker demand, and ample supply as they indicated increases of around $70-80/ton over last month. Although buyers tried to negotiate the HDPE offers down, citing weakened trading and demand in the country, sellers stood firm on their offers.

"Trading activity is very, very slow”, a trader said, adding that high inflation was affecting the whole market severely.

In Algeria, larger discounts were seen in June offers. PP offers were down by as much as $210/ton and PE offers were lower by around $50/ton as compared to last month.

However, the latest price drops were not enough to encourage high-volume purchases.

Tunisian markets were largely unchanged from May despite inflation taking its toll on demand from end-users. According to players, deals could conclude at lower levels by the end of the month.
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