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PP, PE markets in Mid-East, Africa set to remain weak into 2020

by Başak Ceylan -
  • 03/12/2019 (09:47)
Initial PP and PE offers in the Middle East and Africa show that markets are looking set to stay soft through December as sellers seek to destock before the conclusion of the year. Most sources expect prices to fall further as more suppliers are expected to announce their new prices this week.

Trading activities almost at stall speed

November was marked by multi-year lows, or even historical lows, in several key markets in Africa. This was largely due to weaker seasonal demand, made worse by the arrival of seasonal rains. The situation was no different in the Middle East, where trading remained undermined by the sluggish buying interest and comfortable supply availability throughout the month.

Middle Eastern sellers struggled to protect their margins in view of lower prices and sources noted that they began facing the threat of heavily discounted volumes from the US and Asia.

Saudi Arabia

Local PP prices shed nearly 10% in 9 weeks

For December, a major Saudi producer lowered domestic offers for both PP and PE grades, in line with expectations. The latest drops brought the Saudi major’s domestic PP prices to their lowest levels since early 2016, as per ChemOrbis Price Wizard. The data also shows that the major Saudi producer’s PP offers have declined almost 10% since the start of the final quarter.

Domestic PE markets at all-time lows

The downturn in local PE prices was much sharper in Saudi Arabia. Tepid demand exacerbated by the approaching year-end, as well as the recent losses in most global markets, dragged the domestic PE prices to their lowest ever recorded by ChemOrbis.

North Africa

Sellers take tentative steps into year-end in Algeria

Middle Eastern sellers were seen taking tentative steps in Algeria, with the latest offers indicating rollovers for the third month in a row. "Trading has been consistently slow all through the year, mainly as a result of harsh economic climate in the region," an Algerian source said.

The overall range for all PE grades on CIF North Africa hit an all-time low in November amid competitively-priced US cargoes.

Egyptian buyers ignore initial offers in bearish market

In the northeast corner of Africa, Egyptian players first saw stable December offers from the major Saudi producer. However, buyers finally gained the upper hand and adjusted offers were revealed early this week, with drops of around $20/ton for PE and $60-80/ton for PP compared to the initial levels.

Most buyers are still waiting for further announcements, expecting greater price drops near year-end.

SIDPEC, ETHYDCO cut offers for 2nd month in a row

Domestic PE suppliers in Egypt employed the same pricing strategy they used in November and cut their prices as much as $100/ton, based on prevailing exchange rates. Sources from both producers complained about the lackluster demand and said they cut their respective offers in an attempt to destock before the year-end.

East Africa

End of year destocking contributed to the continued low demand in Kenya as well. The Saudi major decreased its PP and PE offers by $50-70/ton from November but buying sentiment showed no improvement, a converter said.

West Africa

Nigerian producer ELEME announced its December offers to its local market with decreases as much as NGN10,000/ton ($28/ton) from last month. This marked the second straight month the producer cut offers for both PP and PE grades. In addition to weaker market fundamentals, trading was further dampened by the continued closure of Nigeria’s borders.
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