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Mid-Eastern sellers backpedal in Africa on competitive PP, PE offers from Asia

by Başak Ceylan - bceylan@chemorbis.com
  • 20/04/2021 (04:00)
In African polyolefin markets, the Middle Eastern suppliers’ determination to hike April prices sharply has been challenged as a growing resistance from buyers and competitively-priced Asian cargoes continue to pressure the markets downwards.

Nigerian PP, PE markets down as Saudi major backs down

West Africa’s largest market kicked off April on a strong footing, with sharp hikes from a major Saudi supplier. However, the landscape in Nigeria became increasingly competitive following an influx of South Korean PP and PE cargoes earlier last week. South African PPH raffia and inj. were also offered at competitive levels as compared to their Middle Eastern counterparts.

Amid this increased competition, the major Saudi producer resorted to cutting their initial prices late last week, bringing down the overall price range down.

“We are closely monitoring the global markets for a sense of direction as Asian market has started to slow down. Slow demand and high inventories are also pressuring the prices," a trader based in Lagos said.

Kenyan PP prices brought down on low end amid Chinese offers

The low-priced Chinese PP cargoes made their way into East Africa too. In contrast with $100-130/ton increases for Saudi materials, Chinese materials were offered at discounts from the previously available levels in March. The notable price difference between Chinese and the Saudi offers widened the price range, with drops at the lower ends.

“There is still resistance towards higher prices and buyers are only purchasing to cover their immediate requirements,” a trader in Nairobi said.

Saudi offers challenged by Chinese competition in Algeria

April offers for Saudi PPH raffia and inj. eclipsed the previous record set last month in Algeria, one of the two reference markets for North Africa. Much more competitive Chinese materials became available by mid-month. Although those Chinese offers stood much lower than their Middle Eastern counterparts, the interest towards these non-regular origin cargoes was limited at best. This was largely because of long lead times and concerns regarding their quality.

Will further drops follow in May?

Competitive offers are one of the main factors undermining the sellers’ bid to increase their offers sharply in April.

In addition to this, the Ramadan lull in demand and activities in regional markets with predominantly Muslim populations is also pressuring the sentiment greatly.

Players are now wondering whether the highly competitive nature of Asian cargoes will push more Middle Eastern sellers to loosen their pricing strategies. “There is pressure for lower prices as Asian imports are undercutting the offers of other producers. We may be looking at the start of downward adjustments,” a trader said.
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