Sentiment weakens across African PP, PE markets in November

African polyolefin markets have seen bears return after two months of firming trend, following the globally weaker sentiment. Also, the challenging economic headwinds and liquidity issues have continued to hit the markets hard across the region.

Nigeria continues to buck the weaker trend in the rest of the region

In Nigeria, the largest African market, offers from a major Saudi Arabian producer indicated mostly rollovers over the latest October levels. Local sources noted that the high inflation levels, dwindling consumer purchasing power as well as local currency depreciation all raise concerns about the ability to sustain their business. “Hence, discounts could be achieved for serious bids,” a distributor opined.

In the local market, ELEME even maintained its price hikes into the 4th month and announced NGN150,000-151,800/ton ($179-181/ton) increases for PE and NGN179,700-228,800/ton ($214-272/ton) increases for PP as compared to the latest October levels. According to local sources, the producer continues to work with their operating rates at half of its capacity.

As was the case in previous months, Nigeria has continued to defy the weakening sentiment in the rest of the region, deferring price decreases as much as possible, while it tends to react the bullish sentiment the first.

Kenyan markets largely down on weak demand

In East Africa, a Saudi Arabian producer’s new PP and PE offers to Kenyanmarkets were $20/ton down as compared to October levels. This marks the first decline since early August. According to media sources, the Kenyan shilling slid to a fresh low during November while higher fuel costs pushed transport and electricity prices higher. “The country faces a very tight financial situation due to high-interest rates and the depreciating shilling,” commented a local source.

Buyers could obtain larger discounts than initial announcements in North Africa

In North Africa, sellers tried to maintain their firming stance for November. However, the unfavorable business environment and persistently weak demand have weighed on the sentiment and pulled prices down.

In Algeria, initial November PP and PE offers surfaced with mostly rollovers from October; yet prices were later adjusted down by $50/ton when compared to latest October levels. Buyers complained about the persistently weak demand, in addition to the recent political instability which has hindered the market further.

In Morocco, Middle Eastern suppliers revealed new November PE and PP offers with rollovers to €10/ton ($11/ton) and €30/ton ($32/ton) increases respectively when compared to October levels. Nevertheless, they retreated from their initially announced levels and discounts of €30-50/ton ($32-53/ton) were passed on deals amidst buyers’ resistance.

In Tunisia, November PE and PP offers emerged with €30/ton ($32/ton) decreases when compared to October levels. “Purchases are kept to the bare minimum as the economic struggles continue to threaten the market’s stability,” said a local source.

Will further drops arrive in December?

Players across the region continue to voice their concerns about the weak market fundamentals amidst dwindling crude oil futures, rising inflation rates and diminishing hopes of any demand improvements over the near term, hence, the bearish sentiment may permeate the markets further next month.